Quarterly report pursuant to Section 13 or 15(d)

Note 11 - Segment Information

v3.23.3
Note 11 - Segment Information
 9 Months Ended
Sep. 30, 2023
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 September 30,

    

Nine Months Ended September 30,

  
   

2023

    

2022

    

2023

    

2022

  

Net sales:

                                

Primary Reporting Segment

   $ 10,249     $ 11,241     $ 31,719     $ 34,888  

China

     254       346       917       1,313  

Russia and Kazakhstan

     112       129       351       421  

Total net sales

   $ 10,615     $ 11,716     $ 32,987     $ 36,622  
                                 

Income (loss) from operations:

                                

Primary Reporting Segment

   $ 1,880     $ 1,967     $ 5,208     $ 6,124  

China

     (160 )     (71 )     (423 )     (86 )

Russia and Kazakhstan

     (47 )     (36 )     (131 )     (132 )

Income from operations for reportable segments, net

     1,673       1,860       4,654       5,906  

Unallocated corporate expenses

     (1,965 )     (2,005 )     (6,083 )     (6,219 )

Other income, net

     585       187       1,708       472  

Income before income taxes

   $ 293     $ 42     $ 279     $ 159  

 

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

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2023

    

2022

    

2023

    

2022

  

Net sales from external customers:

                                

United States

   $ 276     $ 332     $ 827     $ 860  

Canada

     180       149       507       450  

Peru

     365       290       1,175       1,099  

Hong Kong1

     8,412       9,424       26,391       28,916  

China

     254       346       917       1,313  

Taiwan

     552       482       1,460       1,675  

Japan

     152       157       341       528  

Malaysia and Singapore

     54       96       207       316  

Russia and Kazakhstan

     112       129       351       421  

Europe

     182       188       567       693  

Other foreign countries

     76       123       244       351  

Total net sales

   $ 10,615     $ 11,716     $ 32,987     $ 36,622  

 

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 our most recent Annual Report on Form 10-K.