Annual report pursuant to Section 13 and 15(d)

Note 12 - Segment Information

v3.20.4
Note 12 - Segment Information
 12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

12.    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 retail 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 (loss) is adjusted for certain direct costs and commission allocation.

 

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

 

   

Year Ended December 31,

  
   

2020

    

2019

  

Net sales:

                
Primary Reporting Segment   $ 58,243     $ 73,693  
China     2,940       2,941  
Russia and Kazakhstan     888       980  

Total net sales

   $ 62,071     $ 77,614  
                 

Income (loss) from operations:

                
Primary Reporting Segment   $ 9,277     $ 9,339  
China     330       (1,719 )
Russia and Kazakhstan     (96 )     (115 )

Total income (loss) from operations for reportable segments

     9,511       7,505  
Unallocated corporate expenses     (8,842 )     (14,528 )
Other income, net     821       1,426  

Income (loss) before income taxes

   $ 1,490     $ (5,597 )

 

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

 

   

Year Ended December 31,

  
   

2020

    

2019

  

Net sales from external customers:

                

United States

   $ 1,573     $ 2,003  

Canada

     765       1,048  

Peru

     1,453       2,380  

Hong Kong1

     49,169       62,724  

China

     2,940       2,941  

Taiwan

     3,034       3,126  

Russia and Kazakhstan

     888       980  

Europe

     1,050       1,370  

Other foreign countries

     1,199       1,042  

Total net sales

   $ 62,071     $ 77,614  

 

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”.

 

The Company’s net sales by product and service are as follows (in thousands):

 

   

Year Ended December 31,

  
   

2020

    

2019

  

Net sales by product and service:

                

Product sales

   $ 55,840     $ 73,048  

Administrative fees, freight and other

     6,991       6,106  

Less: sales returns

     (760 )     (1,540 )

Total net sales

   $ 62,071     $ 77,614  

 

During June 2020, the Company modified its fee structure associated with certain electronic (eWallet) accounts held by members in Hong Kong, resulting in increased administrative fees recognized as revenue in 2020. Due to system constraints, it is impracticable for the Company to separately disclose sales by product category for the years presented.

 

The Company’s long-lived assets by geographic area are as follows (in thousands):

 

   

December 31,

  
   

2020

    

2019

  

Long-lived assets:

                

United States

   $ 227     $ 379  

Hong Kong

     146       135  

China

     47       57  

Other foreign countries

     119       164  

Total long-lived assets

   $ 539     $ 735