Quarterly report pursuant to sections 13 or 15(d)

12. Segment Information

v2.4.0.8
12. Segment Information
6 Months Ended
Jun. 30, 2013
Notes to Financial Statements  
12. Segment Information

12.    Segment Information

The Company complies with the accounting and reporting requirements on Disclosures about Segments of an Enterprise and Related Information. The guidance requires disclosures of segment information on the basis that is used internally for evaluating segment performance and for determining the allocation of resources to the operating segments.

 

The Company has two reportable segments that it operates and manages – Carrier Services and Business Services. These segments are organized by the products and services that are sold and the customers that are served. The Company measures and evaluates its reportable segments based on revenues and gross profit margins. The Company’s executive, administrative and support costs are allocated to the Company’s operating segments and are included in segment income. The Company’s segments and their principal activities consist of the following:

 

Carrier Services

Carrier Services includes the termination of carrier traffic utilizing Voice over Internet Protocol (“VoIP”) technology as well as traditional TDM (circuit switched) technology. VoIP permits a less costly and more rapid interconnection between the Company and international telecommunications carriers, and generally provides better profit margins for the Company than does TDM technology. The Company currently interconnects with over 270 carrier customers and vendors, and is working to expand its interconnection relationships, particularly with carriers in emerging markets.

 

Business Services

The Company provides a full portfolio of Unified Communications and cloud services, including VoIP solutions, private network services, broadband Internet access and a variety of cloud services and other advanced communications services to small and medium-sized businesses, as well as enterprise customers. These services are sold through both the Company’s direct sales force and its partner sales program, which utilizes the efforts of independent third-party distributors to sell the Company’s products and services. The Business Services segment includes the results of operations of NBS effective as of October 29, 2012.

 

Operating segment information for the three and six months ended June 30, 2013 and 2012 is summarized as follows: 

 

Three Months Ended June 30, 2013

    Carrier Services   Business Services   Corporate and Unallocated   Consolidated
 Revenues   $ 6,738,527     $ 7,491,650     $ —       $ 14,230,177  
 Cost of revenues (exclusive of                                
 depreciation and amortization)     5,938,937       3,666,597       —         9,605,534  
 Gross profit     799,590       3,825,053       —         4,624,643  
 Depreciation and amortization     69,578       803,005       —         872,583  
 Selling, general and administrative expenses     1,822,070       2,611,778       —         4,433,848  
 Interest expense     86,386       583,345               669,731  
 Other (income) expenses     (100,302 )     (28,108 )     —         (128,410 )
 Gain on extinguishment of accounts payable     2,908,882       —         —         2,908,882  
 Net income (loss)   $ 1,830,740     $ (144,967 )   $ —       $ 1,685,773  

  

Three Months Ended June 30, 2012

 

    Carrier Services   Business Services   Corporate and Unallocated   Consolidated
 Revenues   $ 9,621,378     $ 598,058     $ —       $ 10,219,436  
 Cost of revenues (exclusive of                                
 depreciation and amortization)     8,576,046       387,743       —         8,963,789  
 Gross profit     1,045,332       210,315       —         1,255,647  
 Depreciation and amortization     82,275       11,679       —         93,954  
 Selling, general and administrative expenses     1,279,310       979,075       —         2,258,385  
 Interest expense     23,267       23,267               46,534  
 Other expenses (income)     93,661       (2,267 )     —         91,394  
 Net loss   $ (433,181 )   $ (801,439 )   $ —       $ (1,234,620 )
                                 
 Total assets   $ 1,868,527     $ 1,381,748     $ 1,239,299     $ 4,489,574  

 

  

Six Months Ended June 30, 2013

 

    Carrier Services   Business Services   Corporate and Unallocated   Consolidated
 Revenues   $ 15,431,815     $ 14,966,783     $ —       $ 30,398,598  
 Cost of revenues (exclusive of                                
 depreciation and amortization)     13,920,475       7,436,655       —         21,357,130  
 Gross profit     1,511,340       7,530,128       —         9,041,468  
 Depreciation and amortization     139,076       1,583,422       —         1,722,498  
 Selling, general and administrative expenses     3,663,636       5,037,809       —         8,701,445  
 Interest expense     180,428       1,148,822               1,329,250  
 Other (income) expenses     (379,205 )     486,869       —         107,664  
 Gain on extinguishment of accounts payable     2,908,882                       2,908,882  
 Net income (loss)   $ 816,287     $ (726,794 )   $ —       $ 89,493  
                                 
 Capital expenditures   $ 49,768     $ 468,566     $ 17,497     $ 535,831  

 

 

Six Months Ended June 30, 2012

 

    Carrier Services   Business Services   Corporate and Unallocated   Consolidated
 Revenues   $ 20,581,093     $ 1,173,047     $ —       $ 21,754,140  
 Cost of revenues (exclusive of                                
 depreciation and amortization)     18,262,516       746,033       —         19,008,549  
 Gross profit     2,318,577       427,014       —         2,745,591  
 Depreciation and amortization     170,059       22,118       —         192,177  
 Selling, general and administrative expenses     2,481,579       1,827,947       —         4,309,526  
 Interest expense     53,382       53,383               106,765  
 Other expenses (income)     167,139       (9,445 )     —         157,694  
 Net loss   $ (553,582 )   $ (1,466,989 )   $ —       $ (2,020,571 )
                                 
 Capital expenditures   $ 70,958     $ 4,272     $ 2,073     $ 77,303