Quarterly report pursuant to Section 13 or 15(d)

Note 10 - Segment Information

v3.20.2
Note 10 - Segment Information
9 Months Ended
Sep. 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 September 30,

   

Nine Months Ended September 30,

 
   

2020

   

2019

   

2020

   

2019

 

Net sales:

                               

Primary Reporting Segment

  $ 13,294     $ 16,254     $ 42,718     $ 56,979  
China     640       525       2,156       2,138  

Russia and Kazakhstan

    190       244       602       662  

Total net sales

  $ 14,124     $ 17,023     $ 45,476     $ 59,779  
                                 

Income (loss) from operations:

                               

Primary Reporting Segment

  $ 2,715     $ 2,974     $ 6,038     $ 7,506  

China

    134       (795 )     64       (1,530 )

Russia and Kazakhstan

    (59 )     (82 )     (37 )     (138 )

Total income from operations for reportable segments

    2,790       2,097       6,065       5,838  

Unallocated corporate expenses

    (2,122 )     (3,161 )     (6,662 )     (9,615 )

Other income, net

    385       323       603       1,128  

Income (loss) before income taxes

  $ 1,053     $ (741 )   $ 6     $ (2,649 )

 

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

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2020

   

2019

   

2020

   

2019

 

Net sales from external customers:

                               

United States

  $ 338     $ 551     $ 1,202     $ 1,607  

Canada

    132       313       536       808  

Peru

    357       581       954       1,938  

Hong Kong1

    11,132       13,575       36,238       48,465  

China

    640       525       2,156       2,138  
Taiwan     771       649       2,261       2,340  

South Korea

    52       98       220       288  

Russia and Kazakhstan

    190       244       602       662  

Europe

    259       343       747       1,017  

Other foreign countries

    253       144       560       516  

Total net sales

  $ 14,124     $ 17,023     $ 45,476     $ 59,779  

 


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.