Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.21.2
Segment Information
9 Months Ended
Sep. 30, 2021
Segment Information  
Segment Information

16.          Segment 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 worldwide.

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 public 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 “Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide. The “Solutions” segment is a cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide.

As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada, Europe and the United Kingdom with the domestic segments as the international operations provide the same products and services to similar clients and are considered together when the Company’s 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 an individual segment business unit. The Company only identifies accounts receivable, vendor prepayments and inventory by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment. The following segment reporting information of the Company is provided:

Nine months ended

Three months ended

September 30,

September 30,

2021

  

2020

  

2021

  

2020

Revenue:

Distribution

$

188,785

$

168,536

$

64,094

$

57,059

Solutions

 

18,289

 

11,588

 

4,817

 

3,860

 

207,074

 

180,124

 

68,911

 

60,919

Gross Profit:

Distribution

$

25,985

$

20,390

$

9,298

$

6,585

Solutions

 

7,155

 

2,125

 

2,021

 

652

 

33,140

 

22,515

 

11,319

 

7,237

Direct Costs:

Distribution

$

11,073

$

8,387

$

3,484

$

2,993

Solutions

 

3,620

 

992

 

1,092

 

275

 

14,693

 

9,379

 

4,576

 

3,268

Segment Income Before Taxes: (1)

Distribution

$

14,912

$

12,003

$

5,814

$

3,592

Solutions

 

3,535

 

1,133

 

929

 

377

Segment Income Before Taxes

 

18,447

 

13,136

 

6,743

 

3,969

General and administrative

$

9,619

$

7,487

$

3,185

$

2,725

Legal and financial advisory expenses, net - unsolicited bid and related matters

1,752

(81)

Acquisition related costs

982

344

Amortization and depreciation expense

1,177

403

381

164

Interest, net

 

362

 

105

60

19

Foreign currency transaction (loss) gain

(107)

211

 

(41)

 

(67)

Income before taxes

$

7,906

$

2,828

$

3,196

$

769

(1) Excludes general corporate expenses including interest and foreign currency transaction (loss) gain.

    

    

    

As of

As of 

September 30,

December 31,

Selected Assets by Segment:

2021

2020

Distribution

$

113,441

$

106,930

Solutions

 

19,973

 

20,807

Segment Select Assets

 

133,414

 

127,737

Corporate Assets

 

38,322

 

37,796

Total Assets

$

171,736

$

165,533

Geographic areas and net sales mix related to operations for the three and nine months ended September 30, 2021 and 2020 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.

    

Nine months ended

    

Three months ended

September 30, 2021

September 30, 2021

Distribution

  

Solutions

Total

Distribution

  

Solutions

Total

Geography

              

              

              

              

USA

$

152,789

$

9,194

$

161,983

$

53,744

$

2,030

$

55,774

Europe and United Kingdom

 

18,758

 

8,020

 

26,778

 

5,789

 

2,449

 

8,238

Canada

 

17,238

 

1,075

 

18,313

 

4,561

 

338

 

4,899

Total net sales

$

188,785

$

18,289

$

207,074

$

64,094

$

4,817

$

68,911

Timing of Revenue Recognition

              

              

              

              

Transferred at a point in time where the Company is principal (1)

$

171,151

$

13,064

$

184,215

$

57,917

$

3,167

$

61,084

Transferred at a point in time where the Company is agent (2)

 

17,634

 

5,225

 

22,859

 

6,177

 

1,650

 

7,827

Total net sales

$

188,785

$

18,289

$

207,074

$

64,094

$

4,817

$

68,911

    

Nine months ended

    

Three months ended

September 30, 2020

September 30, 2020

Distribution

  

Solutions

Total

Distribution

  

Solutions

Total

Geography

              

              

              

              

USA

$

154,727

$

10,251

$

164,978

$

53,857

$

3,553

$

57,410

Europe and United Kingdom

 

6,283

 

 

6,283

 

1,748

 

 

1,748

Canada

 

7,526

 

1,337

 

8,863

 

1,454

 

307

 

1,761

Total net sales

$

168,536

$

11,588

$

180,124

$

57,059

$

3,860

$

60,919

Timing of Revenue Recognition

              

              

              

              

Transferred at a point in time where the Company is principal (1)

$

155,038

$

10,913

$

165,951

$

52,706

$

3,664

$

56,370

Transferred at a point in time where the Company is agent (2)

 

13,498

 

675

 

14,173

 

4,353

 

196

 

4,549

Total net sales

$

168,536

$

11,588

$

180,124

$

57,059

$

3,860

$

60,919

(1) Includes net sales from third-party hardware and software products.

(2) Includes net sales from third-party maintenance, software support and services.

Geographic identifiable assets related to operations as of September 30, 2021 and December 31, 2020 were as follows.

    

September 30,

December 31,

 

Identifiable Assets by Geographic Areas

2021

    

2020

USA

$

110,114

$

114,126

Canada

20,649

18,514

Europe and United Kingdom

40,973

32,893

Total

$

171,736

$

165,533