Annual report pursuant to Section 13 and 15(d)

Industry, Segment and Geographic Financial Information

v3.20.4
Industry, Segment and Geographic Financial Information
 12 Months Ended
Dec. 31, 2020
Industry, Segment and Geographic Financial Information  
Industry, Segment and Geographic Financial Information

14.  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 worldwide. 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, 2020 and 2019 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 2020 or 2019.

 

 

 

 

 

 

 

 

 

 

    

2020

    

2019

 

Net sales to Unaffiliated Customers:

 

 

              

 

 

              

 

USA

 

$

221,354

 

$

186,488

 

Canada

 

 

16,846

 

 

11,751

 

Europe and United Kingdom

 

 

13,368

 

 

10,520

 

Total

 

$

251,568

 

$

208,759

 

 

 

 

 

 

 

 

 

 

 

    

December 31,

 

December 31,

 

Identifiable Assets by Geographic Areas at December 31,

 

2020

    

2019

 

USA

 

$

114,126

 

$

113,257

 

Canada

 

 

18,514

 

 

8,368

 

Europe and United Kingdom

 

 

13,301

 

 

4,656

 

Unallocated

 

 

19,592

 

 

 —

 

Total

 

$

165,533

 

$

126,281

 

 

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 “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 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,

 

  

2020

  

2019

Revenue:

 

 

 

 

 

 

Distribution

 

$

233,740

 

$

193,558

Solutions

 

 

17,828

 

 

15,201

 

 

 

251,568

 

 

208,759

Gross Profit:

 

 

 

 

 

 

Distribution

 

$

29,136

 

$

26,773

Solutions

 

 

3,904

 

 

3,194

 

 

 

33,040

 

 

29,967

Direct Costs:

 

 

 

 

 

 

Distribution

 

$

12,453

 

$

10,104

Solutions

 

 

1,767

 

 

1,526

 

 

 

14,220

 

 

11,630

Segment Income Before Taxes: (1)

 

 

 

 

 

 

Distribution

 

$

16,683

 

$

16,669

Solutions

 

 

2,137

 

 

1,668

Segment Income Before Taxes

 

 

18,820

 

 

18,337

 

 

 

 

 

 

 

General and administrative

 

$

9,709

 

$

9,264

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

 

 

1,586

 

 

120

Acquisition related costs

 

 

1,518

 

 

 —

Amortization and depreciation expense

 

 

704

 

 

487

Interest, net

 

 

121

 

 

500

Foreign currency transaction gain

 

 

796

 

 

82

Income before taxes

 

$

6,220

 

$

9,048

 

(1) Excludes general corporate expenses including legal and financial advisory expenses, net – unsolicited bid and related matters, acquisition related costs, amortization and depreciation expense, interest, and foreign currency transaction gains.

 

 

 

 

 

 

 

 

 

 

    

 

    

 

    

 

 

As of

 

As of 

 

 

 

December 31,

 

December 31,

 

Selected Assets by Segment:

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Distribution

 

$

100,841

 

$

99,602

 

Solutions

 

 

7,304

 

 

5,603

 

Segment Select Assets

 

 

108,145

 

 

105,205

 

Goodwill and Intangible Assets

 

 

19,592

 

 

 —

 

Corporate Assets

 

 

37,796

 

 

21,076

 

Total Assets

 

$

165,533

 

$

126,281

 

 

 

 

 

 

 

 

 

 

 

 

Year ended

 

 

 

 

 

Disaggregation of Revenue:

 

December 31,

 

December 31,

 

 

 

2020

 

2019

 

Distribution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hardware, software and other products

 

$
214,403

 

$
175,771

 

Software - security & highly interdependent with support

 

 
8,122

 

 
6,898

 

Maintenance, support & other services

 

 
11,215

 

 
10,889

 

Net Sales

 

$
233,740

 

$
193,558

 

 

 

 

 

 

 

 

 

Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hardware, software and other products

 

$
16,059

 

$

13,564

 

Software - security & highly interdependent with support

 

 
145

 

 

288

 

Maintenance, support & other services

 

 
1,624

 

 

1,349

 

Net Sales

 

$
17,828

 

$
15,201

 

 

The Company had two customers that each accounted for more than 10% of total consolidated net sales for the year ended December 31, 2020. For the year ended December 31, 2020, CDW Corporation (“CDW”) and Software House International Corporation (“SHI”), accounted for 24%, and 14%, respectively, of consolidated net sales and as of December 31, 2020, 19% and 9%, respectively, of total net accounts receivable. For the year ended December 31, 2020, Sophos and SolarWinds accounted for 20% and 12%, respectively of our consolidated purchases.

 

For the year ended December 31, 2019, CDW and 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.

 

Our top five customers accounted for 52% and 56% of consolidated net sales for the years ended December 31, 2020 and 2019, respectively.