Segment, Customer and Geographical Reporting

12 Months Ended

Sep. 30, 2018

Segment Reporting Disclosure [Text Block]

Note 16 – Segment, Customer and Geographical Reporting

Segment Financial Information

Operating segments are based upon Dynasil’s internal organizational structure, the manner in which the operations are managed, the criteria used by the Chief Operating Decision Makers (CODM) to evaluate segment performance and the availability of separate financial information. Dynasil reports three reportable segments: optics (“Optics”), innovation and development (formerly Contract Research, now “Innovation and Development”), and biomedical (“Biomedical”). Within these segments, there is a segregation of operating segments based upon the organizational structure used to evaluate performance and make decisions on resource allocation, as well as availability and materiality of separate financial results consistent with that structure. Dynasil’s Optics segment aggregates four operating segments – Dynasil Fused Silica, Optometrics, Hilger Crystals, and Evaporated Metal Films – that manufacture commercial products, including optical crystals for sensing in the security and medical imaging markets, as well as optical components, optical coatings and optical materials for scientific instrumentation and other applications. The Innovation and Development segment is one of the largest small business participants in U.S. government-funded research. The Biomedical segment consists of a single operating segment, Dynasil Biomedical Corporation (“Dynasil Biomedical”), a medical technology incubator which owns rights to certain early stage medical technologies. Dynasil Biomedical holds the Company’s stock of the Xcede joint venture which is developing a tissue sealant technology and currently has no other operations.

The Company’s segment information is summarized below:

Results of Operations for the Fiscal Year Ended September 30,
2018
	Optics			Innovation and Development (formerly Contract Research)			Biomedical			Total
Revenue	$	23,053,000		$	17,628,000		$	-		$	40,681,000
Gross profit		7,667,000			7,569,000			-			15,236,000
GM %		33	%		43	%		-			37	%
Operating expenses		7,003,000			7,072,000			817,000			14,892,000
(Gain) loss on sale of assets		-			-			-			-
Impairment of long-lived assets		-			-			182,000			182,000
Operating income (loss)		664,000			497,000			(999,000	)		162,000

Depreciation and amortization		1,006,000			237,000			14,000			1,257,000
Capital expenditures		2,033,000			211,000			73,000			2,317,000

Intangibles, net		390,000			162,000			203,000			755,000
Goodwill		961,000			4,939,000			-			5,900,000
Total assets	$	22,946,000		$	8,376,000		$	210,000		$	31,532,000

Results of Operations for the Fiscal Year Ended September 30,
2017
	Optics			Innovation and Development (formerly Contract Research)			Biomedical			Total
Revenue	$	19,282,000		$	18,002,000		$	-		$	37,284,000
Gross profit		6,562,000			7,336,000			-			13,898,000
GM %		34	%		41	%		-			37	%
Operating expenses		6,183,000			6,856,000			1,381,000			14,420,000
(Gain) loss on sale of assets		-			-			60,000			60,000
Impairment of long-lived assets		-			-			-			-
Operating income (loss)		379,000			480,000			(1,441,000	)		(582,000	)

Depreciation and amortization		970,000			257,000			11,000			1,238,000
Capital expenditures		575,000			338,000			69,000			982,000

Intangibles, net		467,000			196,000			324,000			987,000
Goodwill		1,001,000			4,939,000			-			5,940,000
Total assets	$	20,445,000		$	8,078,000		$	574,000		$	29,097,000

Customer Financial Information

For the year ended September 30, 2018, there was one customer that represented 10% of the total Optics segment revenue. For the year ended September 30, 2017, there were no customers that represented more than 10% of the total Optics segment revenue.

For the years ended September 30, 2018 and 2017, the top three customers for the Innovation and Development segment were each various agencies of the U.S. Government. For the years ended September 30, 2018 and 2017, these customers made up 60% and 55%, respectively, of Innovation and Development revenue.

The Biomedical segment did not have any revenue in the years ending September 30, 2018 and 2017.

Geographic Financial Information

Revenue by geographic location in total and as a percentage of total revenue, for the years ended September 30, 2018 and 2017 are as follows:

	2018					2017
Geographic Location	Revenue		% of Total			Revenue		% of Total
United States	$	30,765,000		76	%	$	29,154,000		78	%
Europe		6,491,000		16	%		4,397,000		12	%
Other		3,425,000		8	%		3,733,000		10	%
	$	40,681,000		100	%	$	37,284,000		100	%