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