Rekor Systems, Inc. Segments Disclosure

FASB ASC Topic 280, Segment Reporting, requires that an enterprise report selected information about reportable segments in its financial reports issued to its stockholders. Beginning with the first quarter of 2019, the Company changed its operating and reportable segments from one segment to two segments: the Technology Segment and the Professional Services Segment. The two segments reflect the Company’s separate focus on technology products and services versus professional services.

 

The Company provides general corporate services to its segments; however, these services are not considered when making operating decisions and assessing segment performance. These services are reported under “Corporate Services” below and these include costs associated with executive management, financing activities and public company compliance.

 

Transfer prices between the operating segments were determined on current market values or cost plus markup of the seller’s business segment.

 

Summarized financial information concerning the Company’s reportable segments is presented below (dollars in thousands):

 

		Technology				Professional Services				Corporate Services				Elimination				Consolidated
Year Ended December 31, 2019
Revenues		$	5,469			$	13,874			$	-			$	(23	)		$	19,320
Gross profit			3,817				6,468				-				(23	)			10,262
Loss from operations*			(2,259	)			(1,560	)			(5,293	)			23				(9,089	)
Loss from operations held for sale (including impairment of goodwill of $1,022,000)			-				(1,146	)			-				-				(1,146	)
* Including intangible assets impairment			-				1,549				-				-				1,549
Year Ended December 31, 2018
Revenues		$	3,522			$	16,532			$	-			$	-			$	20,054
Gross profit			1,880				8,196				-				-				10,076
Loss from operations			(832	)			(381	)			(3,910	)			-				(5,123	)
Income from operations held for sale			-				86				-				-				86

 

Information about the Company’s revenue in different geographic regions, which is attributable to the Company’s operations located primarily in the United States, Canada, and other countries is as follows (dollars in thousands):

 

		Year ended December 31,
			2019				2018				2019				2018
		Technology								Professional Services
United States		$	4,052			$	3,449			$	13,851			$	16,357
Canada			654				73				-				78
Other			763				-				-				97
Total Revenue		$	5,469			$	3,522			$	13,851			$	16,532

 

Except for the United States and Canada, total revenue in any single country was less than 10% of consolidated revenue.

 

Additional information relating to the Company’s business segments is as follows (dollars in thousands):

 

		December 31,
		2019				2018
Assets:
Technology		$	16,625			$	4,294
Professional services			5,726				5,510
Corporate services			509				1,461
Total assets from continuing operations			22,860				11,265
Assets from operations held for sale			6,132				6,790
Total assets		$	28,992			$	18,055

 

Information about the Company’s total assets in different geographic regions is as follows (dollars in thousands): 

 

		December 31,
		2019				2018
United States		$	1,220			$	1,320
Canada			70				70
Accumulated Depreciation			(807	)			(928	)
Total property and equipment, net		$	483			$	462

 

Long-lived assets by segment is as follows (dollars in thousands):

 

		December 31,
		2019				2018
Technology		$	14,875			$	3,122
Professional Services			540				2,195
Corporate			430				3
Consolidated		$	15,845			$	5,320

 

Total net additions to long-lived assets by segment are as follows (dollars in thousands):

 

		Year ended December 31,
		2019				2018
Technology		$	12,998			$	1,013
Professional Services			701				376
Corporate			564				-
Consolidated		$	14,263			$	1,389

 

Depreciation and amortization expense are allocated to all segments based on usage. Total depreciation and amortization expense, by segment, is as follows (dollars in thousands):

 

		Year ended December 31,
		2019				2018
Technology		$	1,245			$	322
Professional Services			485				725
Corporate			137				-
Consolidated		$	1,867			$	1,047