10. Segment Reporting
The Company sells enterprise-class digital signage solutions
to customers worldwide and provides advertising services through digital place-based networks. The Company had two separate
reporting business segments – Enterprise and Media until the Media business was divested on July 1, 2015. The segments
were separated for reporting purposes for the following reasons:
| · | The segments had different business models. 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 Media segment sold 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 shared
in the advertising revenue. |
| · | The Enterprise segment realizes a higher gross margin on revenues than the Media segment did. |
| · | Each segment had a different head of operations that managed the segment. Each segment head used discrete financial information
about his individual segment and regularly reviewed the operating results of that component. |
| · | Media business was held for sale and is classified as discontinued operations on the financial statements. |
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. The impact of the loss on the long-term contract is reflected
in the Enterprise segment. See Note 5, Discontinued Operations.
An analysis of the two reporting business segments follows:
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Three Months Ended
September 30, |
|
Three Months Ended
September 30, |
| 2015 |
2014 |
| |
|
Media |
|
Enterprise |
|
Media |
|
Enterprise |
| |
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|
|
|
|
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|
|
|
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| Revenues |
|
$ |
5 |
|
$ |
10,194 |
|
$ |
3,916 |
|
$ |
9,997 |
| Cost of revenues |
|
|
46 |
|
|
4,764 |
|
|
2,942 |
|
|
2,086 |
| Gross profit (loss) |
|
$ |
(41) |
|
$ |
5,430 |
|
$ |
974 |
|
$ |
7,911 |
| Gross profit (loss)% |
|
|
-820.0% |
|
|
53.3% |
|
|
24.9% |
|
|
79.1% |
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Nine Months Ended
September 30, |
|
Nine Months Ended
September 30, |
| |
|
2015 |
2014 |
| |
|
Media |
|
Enterprise |
|
Media |
|
Enterprise |
| |
|
|
|
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|
|
|
|
|
|
|
|
| Revenues |
|
$ |
3,960 |
|
$ |
28,843 |
|
$ |
11,898 |
|
$ |
27,167 |
| Cost of revenues |
|
|
4,107 |
|
|
12,391 |
|
|
8,840 |
|
|
15,130 |
| Gross profit (loss) |
|
$ |
(147) |
|
$ |
16,452 |
|
$ |
3,058 |
|
$ |
12,037 |
| Gross profit (loss)% |
|
|
-3.7% |
|
|
57.0% |
|
|
25.7% |
|
|
44.3% |
Beginning with the third quarter of 2015, the remaining segment
is Enterprise.
|