Quarterly report pursuant to Section 13 or 15(d)

Note 10 - Segment Information

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Note 10 - Segment Information
 6 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

10.    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 (loss) 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,

  
   

2020

    

2019

    

2020

    

2019

  

Net sales:

                                

Primary Reporting Segment

   $ 15,416     $ 22,671     $ 29,424     $ 40,725  
China     818       557       1,516       1,613  

Russia and Kazakhstan

     170       200       412       418  

Total net sales

   $ 16,404     $ 23,428     $ 31,352     $ 42,756  
                                 

Income (loss) from operations:

                                

Primary Reporting Segment

   $ 2,008     $ 3,710     $ 3,323     $ 4,532  

China

     13       (424 )     (70 )     (735 )

Russia and Kazakhstan

     104       (31 )     22       (56 )

Total income from operations for reportable segments

     2,125       3,255       3,275       3,741  

Unallocated corporate expenses

     (1,942 )     (3,259 )     (4,540 )     (6,454 )

Other income, net

     125       373       218       805  

Income (loss) before income taxes

   $ 308     $ 369     $ (1,047 )   $ (1,908 )

 

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

 

   

Three Months Ended June 30,

    

Six Months Ended June 30,

  
   

2020

    

2019

    

2020

    

2019

  

Net sales from external customers:

                                

United States

   $ 372     $ 514     $ 863     $ 1,055  

Canada

     143       210       404       496  

Peru

     238       669       598       1,357  

Hong Kong1

     13,693       19,524       25,106       34,890  

China

     818       557       1,516       1,613  
Taiwan     550       1,057       1,490       1,691  

South Korea

     41       84       168       190  

Russia and Kazakhstan

     170       200       412       418  

Europe

     255       331       488       674  

Other foreign countries

     124       282       307       372  

Total net sales

   $ 16,404     $ 23,428     $ 31,352     $ 42,756  

 

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.