Annual report pursuant to Section 13 and 15(d)

Industry, Segment, and Geographic Financial Information

v3.19.3.a.u2
Industry, Segment, and Geographic Financial Information
12 Months Ended
Dec. 31, 2019
Industry, Segment, and Geographic Financial Information  
Industry, Segment, and Geographic Financial Information

12.  Industry, Segment and Geographic Financial Information

 

The Company distributes software developed by others through resellers indirectly to customers worldwide.  We also resell computer software and hardware developed by others and provide technical services directly to customers in the USA and Canada. We also operate a sales branch in Europe to serve our customers in this region of the world.

 

Geographic revenue and identifiable assets related to operations as of and for the years ended December 31, 2019 and 2018 were as follows. Revenue is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile. No one country other than the USA represents more than 10% of net sales for 2019 or 2018.

 

 

 

 

 

 

 

 

 

 

    

2019

    

2018

 

Net sales to Unaffiliated Customers:

 

 

              

 

 

              

 

USA

 

$

186,488

 

$

159,275

 

Canada

 

 

11,751

 

 

12,036

 

Rest of the world

 

 

10,520

 

 

10,133

 

Total

 

$

208,759

 

$

181,444

 

 

 

 

 

 

 

 

 

 

 

    

2019

    

2018

 

Identifiable Assets by Geographic Areas at December 31,

 

 

               

 

 

               

 

USA and rest of the world

 

$

117,913

 

$

100,762

 

Canada

 

 

8,368

 

 

7,209

 

Total

 

$

126,281

 

$

107,971

 

 

FASB ASC Topic 280, “Segment Reporting,” requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the Company’s Chief Operating Decision Maker (CODM) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s CODM is the Chief Executive Officer.

 

The Company is organized into two reportable operating segments. The “Lifeboat Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide. The “TechXtend” segment is a value-added reseller of software, hardware and services for corporations, government organizations and academic institutions in the USA and Canada.

 

As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada with the domestic segments as they provide the same products and services to similar clients and are considered together when the CODM decides how to allocate resources.

 

Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to a business unit. The Company only identifies accounts receivable and inventory by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment.

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

  

2019

  

2018

Revenue:

 

 

 

 

 

 

Lifeboat Distribution

 

$

193,558

 

$

163,564

TechXtend

 

 

15,201

 

 

17,880

 

 

 

208,759

 

 

181,444

Gross Profit:

 

 

 

 

 

 

Lifeboat Distribution

 

$

26,773

 

$

23,441

TechXtend

 

 

3,194

 

 

3,479

 

 

 

29,967

 

 

26,920

Direct Costs:

 

 

 

 

 

 

Lifeboat Distribution

 

$

10,104

 

$

8,920

TechXtend

 

 

1,526

 

 

1,707

 

 

 

11,630

 

 

10,627

Segment Income Before Taxes: (1)

 

 

 

 

 

 

Lifeboat Distribution

 

$

16,669

 

$

14,521

TechXtend

 

 

1,668

 

 

1,772

Segment Income Before Taxes

 

 

18,337

 

 

16,293

 

 

 

 

 

 

 

General and administrative

 

$

9,771

 

$

9,692

Separation expenses

 

 

100

 

 

2,446

Interest, net

 

 

500

 

 

907

Foreign currency transaction gain

 

 

82

 

 

55

Income before taxes

 

$

9,048

 

$

5,117

 

(1) Excludes general corporate expenses including separation, interest, and foreign currency transaction expenses.

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

December 31,

 

Selected Assets by Segment:

 

2019

 

2018

 

 

 

 

 

 

 

 

 

Lifeboat Distribution

 

$

99,602

 

$

77,610

 

TechXtend

 

 

5,603

 

 

11,542

 

Segment Select Assets

 

 

105,205

 

 

89,152

 

Corporate Assets

 

 

21,076

 

 

18,819

 

Total Assets

 

$

126,281

 

$

107,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disaggregation of Revenue:

 

Year ended December 31,

 

 

2019

    

2018

Lifeboat Distribution

 

 

 

 

 

 

 

 

 

 

 

 

 

Hardware, software and other products

 

$

175,771

 

$

148,570

Software - security & highly interdependent with support

 

 

6,898

 

 

6,087

Maintenance, support & other services

 

 

10,889

 

 

8,907

Net Sales

 

$

193,558

 

$

163,564

 

 

 

 

 

 

 

TechXtend

 

 

 

 

 

 

 

 

 

 

 

 

 

Hardware, software and other products

 

$

13,564

 

$

16,300

Software - security & highly interdependent with support

 

 

288

 

 

440

Maintenance, support & other services

 

 

1,349

 

 

1,140

Net Sales

 

$

15,201

 

$

17,880

 

The Company had two customers that each accounted for more than 10% of total consolidated net sales for the year ended December 31, 2019. For the year ended December 31, 2019, CDW Corporation (“CDW”) and Software House International Corporation (“SHI”), accounted for 26%, and 16%, respectively, of consolidated net sales and as of December 31, 2019,  43% and 12%, respectively, of total net accounts receivable. For the year ended December 31, 2019, Sophos and SolarWinds accounted for 22% and 17%, respectively of our consolidated purchases.

 

For the year ended December 31, 2018, CDW and SHI accounted for 26%, and 17%, respectively, of consolidated net sales and as of December 31, 2018, 36% and 15%, respectively, of total net accounts receivable. For the year ended December 31, 2018, Sophos and SolarWinds accounted for 24% and 15%, respectively of our consolidated purchases.

 

Our top five customers accounted for 56% and 55% of consolidated net sales for the years ended December 31, 2019 and 2018, respectively.