Note 12 - Segment Reporting

Segment information reported in the tables below represents the operating segments of the Company organized in a manner consistent with which separate information is available and for which segment results are evaluated regularly by our President and CEO, who is our chief operating decision-maker (CODM), in assessing performance, allocating resources and awarding incentive compensation. Our CODM evaluates our operations and allocates resources on the basis of three segments, which are our reportable segments as noted below. Our revenues are substantially all derived from the U.S. market, and all revenues presented are from external customers; we have no intercompany revenues.

The Company’s reportable segments are as follows:

	·	Procurement: Assists our customers in procuring third-party hardware, software, and professional services on their behalf that are used in our integration services as we integrate these components to deliver a completed system to our customers. Although this activity drives some of the work done in the systems integration business, its activities and financial results are reviewed separately from the systems integration segment results.
	·	Systems Integration: Integrates IT equipment for OEM vendors and customers to be used inside data center environments, including MDCs. This includes AI-enabled computer technology as well as more traditional data center equipment. This segment also provides other computer equipment configuration services for our customers.
	·	Facilities Management: Involved in the design, project management and maintenance of data centers and mission-critical business operations.

The CODM evaluates the performance of the segments based on segment revenue, gross profit and pre-tax income, by comparing actual results to historic results and previously forecast financial information. Segment results are exclusive of certain corporate activities and expenses that are not allocated to specific segments, and which are reconciled below to our consolidated pre-tax income.

Other consolidated assets not specifically attributable to or allocated to business segments are principally cash and cash equivalents, prepaids and deposits, certain fixed assets, and operating lease right-of use assets. Other operating expenses (income) in the following tables generally represent property taxes, rent and related costs, travel and entertainment, professional fees, office supplies and other similar items utilized by the specific reportable segments but not separately identified in the tables below as none of the costs are individually significant.

Information regarding our reportable segments is presented below (in thousands):

	Procurement			Systems Integration		Facilities Management		Total Segments
Year Ended December 31, 2025:
Total revenue	$	197,476		$	40,337	$	7,906	$	245,719
Cost of revenue		182,302			25,209		3,154		210,665
Cost of revenue - depreciation		-			2,672		-		2,672
Segment gross profit		15,174			12,456		4,752		32,382
Payroll and benefits excluded from cost of revenues		-			3,866		582		4,448
Depreciation and amortization expense		-			797		10		807
Bank factoring fees		3,214			375		70		3,659
Loss on sale or disposal of assets		-			658		-		658
Other operating expenses (income)		(7	)		1,495		62		1,550
Interest expense		-			651		-		651
Interest income		-			-		-		-
Other expense		-			1		-		1
Segment pre-tax income		11,967			4,613		4,028		20,608
Capital expenditures		-			33,374		-		33,374

	Procurement		Systems Integration		Facilities Management		Total Segments
Year Ended December 31, 2024:
Total revenue	$	117,519	$	22,620	$	8,005	$	148,144
Cost of revenue		109,697		13,021		3,075		125,793
Cost of revenue - depreciation		-		-		-		-
Segment gross profit		7,822		9,599		4,930		22,351
Payroll and benefits excluded from cost of revenues		-		2,228		430		2,658
Depreciation and amortization expense		-		476		11		487
Bank factoring fees		2,333		307		94		2,734
Loss on sale or disposal of assets		-		-		-		-
Other operating expenses (income)		-		1,392		54		1,446
Interest expense		-		-		-		-
Interest income		-		-		-		-
Other expense		-		215		-		215
Segment pre-tax income (loss)		5,489		4,981		4,341		14,811
Capital expenditures		-		8,475		2		8,477

	Procurement		Systems Integration			Facilities Management		Total Segments
Year Ended December 31, 2023:
Total revenue	$	38,515	$	8,817		$	7,067	$	54,399
Cost of revenue		33,256		7,121			3,021		43,398
Cost of revenue - depreciation		-		-			-		-
Segment gross profit		5,259		1,696			4,046		11,001
Payroll and benefits excluded from cost of revenues		-		1,673			403		2,076
Depreciation and amortization expense		-		153			8		161
Bank factoring fees		1,779		88			104		1,971
Loss on sale or disposal of assets		-		-			-		-
Other operating expenses (income)		-		763			71		834
Interest expense		-		-			-		-
Interest income		-		-			-		-
Other expense		-		-			-		-
Segment pre-tax income (loss)		3,480		(981	)		3,460		5,959
Capital expenditures		-		372			31		403

The table below reconciles total segment pre-tax income for each period presented above to consolidated pre-tax income (in thousands):

	Year Ended December 31,
	2025			2024			2023
Total segment pre-tax income	$	20,608		$	14,811		$	5,959
Less: Unallocated SG&A and depreciation		14,938			9,260			6,180
Plus: Unallocated interest income, net		1,657			562			355
Less other expense (plus other income)		(206	)		(21	)		-
Consolidated pre-tax income (loss)	$	7,533		$	6,134		$	134

The table below presents segment total assets for December 31, 2025 and 2024 (in thousands):

	Procurement		Systems Integration		Facilities Management		Total Segments
Total Segment Assets at December 31, 2025	$	26,159	$	44,661	$	903	$	71,723
Total Segment Assets at December 31, 2024		19,319		25,855		932		46,106

The table below reconciles combined segment total assets for each period above to consolidated total assets (in thousands):

	Year Ended December 31,
	2025		2024
Combined total assets included in segments	$	71,723	$	46,106
Plus items not allocated to segments:
Cash and cash equivalents		85,510		23,222
Other receivables		56		-
Prepaid expenses and other current assets		1,642		230
Property and equipment, net		286		29
Lease right-of-use asset		15,294		24,213
Deferred tax asset, net of valuation allowance		7,917		-
Other assets		2,507		2,768
Consolidated total assets	$	184,935	$	96,568

Historical Timeline

Fiscal Year	Filed
2025	Mar 18, 2026	Showing above
2024	Apr 15, 2025

2023	Mar 29, 2024

About Segments Disclosures

Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.

Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.

TSS, Inc. Segments Disclosure

Historical Timeline

About Segments Disclosures

Other Available Disclosures