v3.26.1
Note 12 - Segment Reporting
 6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Segment Reporting [Text Block]

Note 12 - Segment Reporting

 

The Company currently operates in three segments: (1) "Digital Assets", which represents the business surrounding the Company's treasury activity with Bittensor, (2) “Managed Services”, which represents the business surrounding managed services for video collaboration and network solutions, and (3) “Collaboration Products”, which represents the business surrounding the Company's Mezzanine™ product offerings. The Company continually evaluates its operations for changes in its segment activity. Although operations resulting from the Manako TLDA could become a separate segment in the future, its operations are currently reported in the Corporate, or unallocated segment. Management will continue to evaluate the materiality of the operations and its impact on the Company for possible separation.

 

For the three and six months ended June 30, 2026, and 2025, the CODM for the three segments, was Peter Holst, the Company's President and Chief Executive Officer. Management reviewed the information provided to the CODM and updated the presentation of that information, including Significant Segment Expenses ("SSEs").

 

Certain information concerning the Company’s segments for the three and six months ended June 30, 2026, and 2025, is presented in the following tables (in thousands):

 

  

Three Months Ended June 30, 2026

 
  

2026

  

2025

  

% Change

 

Revenue

            

Digital Assets

 $105  $2   5150%

Managed Services

  415   497   (16)%

Collaboration Products

  2   93   (98)%

Consolidated

  522   592   (12)%
             

Cost of revenues

            

Digital Assets

  6   —   100%

Managed Services

  239   360   (34)%

Collaboration Products

  3   4   (25)%

Consolidated

  248   364   (32)%
             

Gross Margin

            

Digital Assets

  99   2   4850%

Managed Services

  176   137   28%

Collaboration Products

  (1)  89   (101)%

Consolidated

  274   228   20%
             

Operating expenses

            

Digital Assets (1)

  100   —   100%

Collaboration Products (2)

  —   8   (100)%

Corporate (3)

  1,015   903   12%

Consolidated

  1,115   911   22%
             

Other income (expense), net

            

Digital Assets (4)

  (2,461)  31   (8039)%

Corporate (5)

  13   47   (72)%

Consolidated

  (2,448)  78   (3238)%

Net loss before taxes

  (3,289)  (605)  444%

Income tax expense

  1   —   100%

Net loss

 $(3,290) $(605)  444%

 

 

  

Six Months Ended June 30, 2026

 
  

2026

  

2025

  

% Change

 

Revenue

            

Digital Assets

 $191  $2   9450%

Managed Services

  836   1,005   (17)%

Collaboration Products

  202   207   (2)%

Consolidated

  1,229   1,214   1%
             

Cost of revenues

            

Digital Assets

  12   —   100%

Managed Services

  462   731   (37)%

Collaboration Products

  11   6   83%

Consolidated

  485   737   (34)%
             

Gross Margin

            

Digital Assets

  179   2   8850%

Managed Services

  374   274   36%

Collaboration Products

  191   201   (5)%

Consolidated

  744   477   56%
             

Operating expenses

            

Digital Assets (1)

  199   —   100%

Collaboration Products (2)

  7   —   100%

Corporate (3)

  1,938   1,851   5%

Consolidated

  2,144   1,851   16%
             

Other income (expense), net

            

Digital Assets (4)

  (211)  31   (781)%

Managed Services

  —   (1)  (100)%

Corporate (5)

  19   74   (74)%

Consolidated

  (192)  104   (285)%

Net loss before taxes

  (1,592)  (1,270)  25%

Income tax expense

  1   7   (86)%

Net loss

 $(1,593) $(1,277)  25%

 

 (1)Operating expenses related to the Company's Digital Assets segment include cash and stock-based advisory fees.
 (2)

Operating expenses related to the Company's Collaboration Products Segment include sales and marketing and other miscellaneous expenses.

 (3)

Corporate operating expenses include costs that are not specific to a particular segment but are general to the group. These include expenses for administrative, information technology, and accounting staff, general liability and other insurance, professional fees, and similar corporate expenses.

 (4)Other income (expense) for the Company's Digital Assets segment includes unrealized gains and losses from revaluations of the Company's digital assets. The three and six months ended June 30, 2026 also include realized gains and losses on the sale of digital assets.
 (5)Unallocated other income in Corporate is primarily related to interest income.

 

The Company’s SSEs for each segment include direct labor costs and segment-based management expenses (collectively, “labor and labor related”), costs to purchase, store, and ship inventory, and inventory impairments (inventory and inventory related), circuit and network cost of revenue, other non-inventory cost of revenue, research and development costs, and bad debt recovery, as these are specific costs regularly provided to the CODM and used to evaluate segment performance. Other segment items include expenses recorded within cost of revenue and operating expenses, which are not regularly provided to the CODM. The CODM evaluates segment profit each period against historical results, factoring in macroeconomic factors such as the cost of labor and supplies, to assess segment performance.

 

  

Three Months Ended June 30, 2026

 
  

Digital Assets

  

Managed Services

  

Collaboration Products

  

Total

 
                 

Revenue

                

Digital Assets

 $105  $—  $—  $105 

Network Services

  —   400   —   400 

Video Collaboration

  —   13   2   15 

Professional and other services

  —   2   —   2 

Total revenue

  105   415   2   522 
                 

Significant Segment Expenses

                

Labor and labor-related (1)

  —   71   —   71 

Cash digital asset transaction fees

  6   —   —   6 

Advisory fees

  18   —   —   18 

Stock-based expense

  82   —   —   82 

Circuit and network cost of revenue

  —   168   3   171 

Unrealized net loss on digital asset revaluation

  2,295   —   —   2,295 

Realized net loss on disposal of digital assets

  166   —   —   166 

Segment net profit

 $(2,462) $176  $(1) $(2,287)

Segment net profit margin %

  (2345)%  42%  (50)%    
                 

Unallocated (income) expense

                

Corporate expenses (3)

              1,013 

Amortization expense

              2 

Interest income

              (13)

Loss before income tax expense

             $(3,289)

 

  

Three Months Ended June 30, 2025

 
  

Digital Assets

  

Managed Services

  

Collaboration Products

  

Total

 
                 

Revenue

                

Digital Assets

 $2  $—  $—  $2 

Network Services

  —   481   93   574 

Video Collaboration

  —   11   —   11 

Professional and other services

  —   5   —   5 

Total revenue

  2   497   93   592 
                 

Significant Segment Expenses

                

Labor and labor-related (1)

  —   65   6   71 

Circuit and network cost of revenue

  —   295   —   295 

Unrealized net gain on digital asset revaluation

  (31)  —   —   (31)

Other segment items (2)

  —   —   6   6 

Segment profit

 $33  $137  $81  $251 

Segment profit margin %

  1650%  28%  87%    
                 

Unallocated (income) expense

                

Corporate expenses (3)

              903 

Interest income

              (47)

Loss before income tax expense

             $(605)

 

 

(1)

Includes direct labor costs (including sales and marketing costs), employment taxes, employee benefits, workers’ compensation, and office expenses.

 

(2)

Other segment items include other income and expenses, net, interest expense, certain professional services, and miscellaneous taxes and fees.

 

(3)

Represents general and administrative costs, less the amounts allocated to the segments for labor and benefits, general liability insurance, professional services, property taxes, and interest income. 

 

For the three and six months ended June 30, 2026, and 2025, no material revenue was attributable to any individual foreign country, and all foreign revenue is billed in US Dollar. Revenue by geographic area is allocated as follows (in thousands):

 

  

Three Months Ended June 30,

 
  

2026

  

2025

 

Domestic

 $271  $278 

Foreign

  251   314 
  $522  $592 

 

 

  

Six Months Ended June 30,

 
  

2026

  

2025

 

Domestic

 $705  $573 

Foreign

  524   641 
  $1,229  $1,214 

 

The Company considers a significant customer to be one that comprises more than 10% of the Company’s consolidated revenues or accounts receivable. The loss of or a reduction in sales or anticipated sales to the Company's most significant or several of its smaller customers could have a material adverse effect on the Company's business, financial condition, and results of operations.

 

Concentration of consolidated revenues was as follows:

 

   

Three Months Ended June 30,

 
   

2026

  

2025

 
 

Segment

 

% of Revenue

  

% of Revenue

 

Customer A

Managed Services

  77%  82%

 

   

Six Months Ended June 30,

 
   

2026

  

2025

 
 

Segment

 

% of Revenue

  

% of Revenue

 

Customer A

Managed Services

  66%  83%

 

Staking rewards on the Company's digital assets made up 20% and 16% of the Company's consolidated revenue for the three and six months ended June 30, 2026, respectively.

 

Concentration of consolidated accounts receivable was as follows:

 

   

As of June 30,

 
   

2026

  

2025

 
 

Segment

 

% of Accounts Receivable

  

% of Accounts Receivable

 

Customer A

Managed Services

  33%  12%

Customer B

Collaboration Products

  —%  20%

Customer C

Collaboration Products

  —%  42%

Customer D

Managed Services

  68%  25%