Quarterly report pursuant to Section 13 or 15(d)

Note 11 - Segment Information

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Note 11 - Segment Information
6 Months Ended
Jun. 30, 2022
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

11. SEGMENT INFORMATION

 

The Company sells products to a member network that operates in a seamless manner from market to market, except for the China market where it sells to some consumers through an e-commerce platform, and the Russia and Kazakhstan market where the Company’s engagement of a third-party service provider results in a different economic structure than its other markets. Otherwise, the Company believes that all of its other operating segments have similar economic characteristics and are similar in the nature of the products sold, the product acquisition process, the types of customers products are sold to, the methods used to distribute the products, and the nature of the regulatory environment. Therefore, the Company aggregates its other operating segments (including its Hong Kong operating segment) into a single reporting segment (the “Primary Reporting Segment”).

 

The Company reviews its net sales and operating income (loss) by operating segment, and reviews its assets and capital expenditures on a consolidated basis and not by operating segment. As such, net sales and operating income (loss) are presented by reportable segment and assets and capital expenditures by operating segment are not presented. Segment operating income is adjusted for certain direct costs and commission allocation.

 

The Company’s operating information by geographic area are as follows (in thousands):

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Net sales:

                               

Primary Reporting Segment

  $ 12,770     $ 15,333     $ 23,647     $ 28,103  

China

    486       587       967       1,095  

Russia and Kazakhstan

    104       232       292       423  

Total net sales

  $ 13,360     $ 16,152     $ 24,906     $ 29,621  
                                 

Income (loss) from operations:

                               

Primary Reporting Segment

  $ 2,242     $ 2,546     $ 4,157     $ 5,245  

China

    (23 )     53       (15 )     46  

Russia and Kazakhstan

    (49 )     (58 )     (96 )     (106 )

Income from operations for reportable segments, net

    2,170       2,541       4,046       5,185  

Unallocated corporate expenses

    (1,955 )     (2,156 )     (4,214 )     (4,580 )

Other income (expense), net

    175       (59 )     285       (39 )

Income before income taxes

  $ 390     $ 326     $ 117     $ 566  

 

The Company’s net sales by geographic area are as follows (in thousands):

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2022

   

2021

   

2022

   

2021

 

Net sales from external customers:

                               

United States

  $ 272     $ 328     $ 528     $ 639  

Canada

    164       170       301       341  

Peru

    327       628       809       1,144  

Hong Kong1

    10,716       12,704       19,492       23,026  

China

    486       587       967       1,095  

Taiwan

    624       715       1,193       1,406  

Japan

    136       187       371       336  

Malaysia and Singapore

    95       131       220       206  

Russia and Kazakhstan

    104       232       292       423  

Europe

    304       261       505       611  

Other foreign countries

    132       209       228       394  

Total net sales

  $ 13,360     $ 16,152     $ 24,906     $ 29,621  

 


1 Substantially all of our Hong Kong revenues are derived from the sale of products that are delivered to members in China. See “Item 1A. Risk Factors” in this report and in our most recent Annual Report on Form 10-K.