Quarterly report pursuant to Section 13 or 15(d)

Note 11 - Segment Information

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Note 11 - Segment Information
 6 Months Ended
Jun. 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 June 30,

    

Six Months Ended June 30,

  
   

2023

    

2022

    

2023

    

2022

  

Net sales:

                                

Primary Reporting Segment

   $ 10,139     $ 12,770     $ 21,470     $ 23,647  

China

     247       486       663       967  

Russia and Kazakhstan

     125       104       239       292  

Total net sales

   $ 10,511     $ 13,360     $ 22,372     $ 24,906  
                                 

Income (loss) from operations:

                                

Primary Reporting Segment

   $ 1,501     $ 2,242     $ 3,328     $ 4,157  

China

     (243 )     (23 )     (263 )     (15 )

Russia and Kazakhstan

     (26 )     (49 )     (84 )     (96 )

Income from operations for reportable segments, net

     1,232       2,170       2,981       4,046  

Unallocated corporate expenses

     (1,975 )     (1,955 )     (4,118 )     (4,214 )

Other income, net

     442       175       1,123       285  

Income (loss) before income taxes

   $ (301 )   $ 390     $ (14 )   $ 117  

 

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

 

   

Three Months Ended June 30,

    

Six Months Ended June 30,

  
   

2023

    

2022

    

2023

    

2022

  

Net sales from external customers:

                                

United States

   $ 272     $ 272     $ 551     $ 528  

Canada

     157       164       327       301  

Peru

     483       327       810       809  

Hong Kong1

     8,306       10,716       17,979       19,492  

China

     247       486       663       967  

Taiwan

     454       624       908       1,193  

Japan

     107       136       189       371  

Malaysia and Singapore

     68       95       153       220  

Russia and Kazakhstan

     125       104       239       292  

Europe

     199       304       385       505  

Other foreign countries

     93       132       168       228  

Total net sales

   $ 10,511     $ 13,360     $ 22,372     $ 24,906  

 

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.