Segment Reporting
 12 Months Ended
Dec. 31, 2014
Segment Reporting [Abstract]  
Segment Reporting

19. Segment Reporting

 

The Company provides advertising services through digital place-based networks and sells enterprise-class digital signage solutions to customers worldwide. The Company has two separate reporting business segments - Media and Enterprise - for the following reasons:

 

·

The segments have different business models. The Media segment sells advertising to major corporate advertisers and the advertising is placed on screens owned by business partners. In return for the use of their screens, the business partners share in the advertising revenue. The Enterprise segment sells intelligent visual solutions that consist of its proprietary software and hardware products and third-party displays. The Enterprise segment also provides installation services and maintenance and support services to corporate customers.

·

The segments have different economic characteristics. The Media segment is projected to have a higher rate of sales growth than the Enterprise segment. The Enterprise segment realizes a higher gross margin on revenues than the Media segment.

·

Each segment has a different head of operations that manages the segment. Each segment head uses discrete financial information about his individual segment and regularly reviews the operating results of that component.

 

Since the Company operates as a highly integrated entity which is characterized by substantial inter-segment cooperation and sharing of personnel and assets, it limits its segment reporting to revenues, cost of revenues, and gross profit by segment.

An analysis of the two reporting business segments follows:

 

                                       
    Successor Company   Successor Company     Predecessor Company
    Twelve Months   April 20, 2013     February 1, 2013
Ended Through   Through
December 31, December 31,   April 19,
2014 2013   2013
    Media   Enterprise   Media   Enterprise     Media   Enterprise
                                       
Revenue   $ 16,507,209   $ 40,985,604   $ 16,859,940   $ 33,417,707       -   $ 7,157,315
Cost of Revenue     12,814,119     23,855,707     10,718,458     18,967,138       -     2,971,467
Gross Profit     3,693,090     17,129,897     6,141,482     14,450,569       -     4,185,848
Gross Profit %     22.4%     41.8%     36.4%     43.2%       -     58.5%

 

For the twelve months ended December 31, 2014, the Media segment’s Cost of Revenue includes a charge of $2,732,050 related to an estimated loss recognized on a long-term contract.

 

During the period February 1, 2013 through April 19, 2013, the Enterprise segment realized a gross margin of 58.5%. The Predecessor Company consisted only of the Enterprise segment during this period, and, as a result, there were no advertising segment revenues on which the Company realizes a lower gross margin.