Quarterly report pursuant to Section 13 or 15(d)

Note 11 - Segment Information

v3.22.2.2
Note 11 - Segment Information
 9 Months Ended
Sep. 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 September 30,

    

Nine Months Ended September 30,

  
   

2022

    

2021

    

2022

    

2021

  

Net sales:

                                

Primary Reporting Segment

   $ 11,241     $ 13,576     $ 34,888     $ 41,679  

China

     346       501       1,313       1,596  

Russia and Kazakhstan

     129       199       421       622  

Total net sales

   $ 11,716     $ 14,276     $ 36,622     $ 43,897  
                                 

Income (loss) from operations:

                                

Primary Reporting Segment

   $ 1,967     $ 2,558     $ 6,124     $ 7,803  

China

     (71 )     5       (86 )     51  

Russia and Kazakhstan

     (36 )     5       (132 )     (101 )

Income from operations for reportable segments, net

     1,860       2,568       5,906       7,753  

Unallocated corporate expenses

     (2,005 )     (2,089 )     (6,219 )     (6,669 )

Other income (expense), net

     187       (53 )     472       (92 )

Income before income taxes

   $ 42     $ 426     $ 159     $ 992  

 

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

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2022

    

2021

    

2022

    

2021

  

Net sales from external customers:

                                

United States

   $ 332     $ 279     $ 860     $ 918  

Canada

     149       140       450       481  

Peru

     290       608       1,099       1,752  

Hong Kong1

     9,424       11,201       28,916       34,227  

China

     346       501       1,313       1,596  

Taiwan

     482       584       1,675       1,990  

Japan

     157       204       528       540  

Malaysia and Singapore

     96       120       316       326  

Russia and Kazakhstan

     129       199       421       622  

Europe

     188       258       693       869  

Other foreign countries

     123       182       351       576  

Total net sales

   $ 11,716     $ 14,276     $ 36,622     $ 43,897  

 

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.