Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2016shares | |
Document and Entity Information | |
Entity Registrant Name | LightInTheBox Holding Co., Ltd. |
Entity Central Index Key | 1,523,836 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2016 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Accelerated Filer |
Entity Common Stock, Shares Outstanding | 137,820,605 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 89,517 | $ 30,901 |
Restricted cash | 1,559 | 1,606 |
Accounts receivable | 2,401 | 920 |
Inventories | 10,587 | 11,261 |
Prepaid expenses and other current assets | 9,674 | 5,053 |
Total current assets | 113,738 | 49,741 |
Property and equipment, net | 1,071 | 2,209 |
Intangible assets, net | 215 | 232 |
Goodwill | 690 | 690 |
Long-term rental deposit | 638 | 658 |
Long-term investment | 1,849 | 1,963 |
TOTAL ASSETS | 118,201 | 55,493 |
Current Liabilities | ||
Accounts payable (including accounts payable of the consolidated VIEs without recourse to LightInTheBox Holding Co., Ltd. of $22 and $20 as of December 31, 2015 and December 31,2016, respectively) | 22,523 | 29,351 |
Advance from customers (including advance from customers of the consolidated VIEs without recourse to LightInTheBox Holding Co., Ltd. of nil and nil as of December 31, 2015 and December 31, 2016, respectively) | 8,758 | 8,282 |
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to LightInTheBox Holding Co., Ltd. of $1,760 and $1,537 as of December 31, 2015 and December 31, 2016, respectively) | 21,084 | 19,983 |
Total current liabilities | 52,365 | 57,616 |
TOTAL LIABILITIES | 52,365 | 57,616 |
SHAREHOLDERS' EQUITY (DEFICIT) | ||
Ordinary shares ($0.000067 par value; 750,000,000 shares authorized; 101,847,447 and 145,754,507 shares issued as of December 31, 2015 and December 31, 2016, respectively; 94,456,773 and 137,820,605 shares outstanding as of December 31, 2015 and December 31, 2016, respectively) | 10 | 7 |
Additional paid-in capital | 236,949 | 159,190 |
Treasury shares, at cost (7,390,674 and 7,933,902 shares as of December 31, 2015 and December 31, 2016, respectively) | (20,806) | (19,996) |
Accumulated deficit | (149,738) | (141,015) |
Accumulated other comprehensive loss | (579) | (309) |
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) | 65,836 | (2,123) |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 118,201 | $ 55,493 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts payable (in dollars) | $ 22,523 | $ 29,351 |
Advance from customers (in dollars) | 8,758 | 8,282 |
Accrued expenses and other current liabilities | $ 21,084 | $ 19,983 |
Ordinary shares, shares authorized | 750,000,000 | 750,000,000 |
Ordinary shares, shares issued | 145,754,507 | 101,847,447 |
Ordinary shares, shares outstanding | 137,820,605 | 94,456,773 |
Treasury stock, shares | 7,933,902 | 7,390,674 |
Consolidated VIEs | ||
Accounts payable (in dollars) | $ 20 | $ 22 |
Advance from customers (in dollars) | 0 | 0 |
Accrued expenses and other current liabilities | $ 1,537 | $ 1,760 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net revenues | |||
Product sales | $ 262,083 | $ 312,332 | $ 382,282 |
Services | 30,404 | 11,431 | 125 |
Total net revenues | 292,487 | 323,763 | 382,407 |
Cost of revenues | |||
Product sales | 160,566 | 196,753 | 236,982 |
Services | 28,371 | 10,601 | 113 |
Total cost of revenues | 188,937 | 207,354 | 237,095 |
Gross profit | 103,550 | 116,409 | 145,312 |
Operating expenses: | |||
Fulfillment | 17,052 | 22,419 | 23,926 |
Selling and marketing | 61,090 | 91,614 | 105,186 |
General and administrative | 34,492 | 41,535 | 46,916 |
Total operating expenses | 112,634 | 155,568 | 176,028 |
Loss from operations | (9,084) | (39,159) | (30,716) |
Exchange loss on offshore bank accounts | (120) | (938) | (1,556) |
Interest income | 518 | 773 | 2,355 |
Total other income (loss) | 398 | (165) | 799 |
Loss before income taxes | (8,686) | (39,324) | (29,917) |
Income taxes expenses | (54) | (49) | (70) |
(Loss) gain from long-term investment | 17 | (34) | |
Net loss | (8,723) | (39,407) | (29,987) |
Net loss attributable to ordinary shareholders | $ (8,723) | $ (39,407) | $ (29,987) |
Net loss per ordinary share-basic (in dollars per share) | $ (0.07) | $ (0.41) | $ (0.30) |
Net loss per ordinary share-diluted (in dollars per share) | $ (0.07) | $ (0.41) | $ (0.30) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||
Net loss | $ (8,723) | $ (39,407) | $ (29,987) |
Other comprehensive loss, net of tax: | |||
Foreign currency translation adjustments, net of tax of nil | (270) | (178) | (12) |
Total comprehensive loss | $ (8,993) | $ (39,585) | $ (29,999) |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||
Foreign currency translation adjustments, tax | $ 0 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Ordinary Shares | Additional Paid-in Capital | Treasury shares, at cost | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Balance at Dec. 31, 2013 | $ 7 | $ 153,124 | $ (119) | $ (71,621) | $ 81,391 | |
Balance (in shares) at Dec. 31, 2013 | 99,194,991 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of ordinary shares upon vesting of nonvested shares (in shares) | 611,010 | |||||
Exercise of share options | 230 | 230 | ||||
Exercise of share options (in shares) | 548,800 | |||||
Share-based compensation | 2,518 | 2,518 | ||||
Repurchase of ordinary shares | $ (10,957) | (10,957) | ||||
Repurchase of ordinary shares (in share) | (3,737,452) | |||||
Net loss | (29,987) | (29,987) | ||||
Foreign currency translation adjustment | (12) | (12) | ||||
Balance at Dec. 31, 2014 | $ 7 | 155,872 | (10,957) | (131) | (101,608) | 43,183 |
Balance (in shares) at Dec. 31, 2014 | 96,617,349 | |||||
Balance at Dec. 31, 2013 | $ 7 | 153,124 | (119) | (71,621) | 81,391 | |
Balance (in shares) at Dec. 31, 2013 | 99,194,991 | |||||
Balance at Dec. 31, 2016 | $ 10 | 236,949 | (20,806) | (579) | (149,738) | 65,836 |
Balance (in shares) at Dec. 31, 2016 | 137,820,605 | |||||
Balance at Dec. 31, 2014 | $ 7 | 155,872 | (10,957) | (131) | (101,608) | 43,183 |
Balance (in shares) at Dec. 31, 2014 | 96,617,349 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of ordinary shares upon vesting of nonvested shares (in shares) | 1,316,696 | |||||
Exercise of share options | 122 | 122 | ||||
Exercise of share options (in shares) | 175,950 | |||||
Share-based compensation | 3,196 | 3,196 | ||||
Repurchase of ordinary shares | (9,039) | (9,039) | ||||
Repurchase of ordinary shares (in share) | (3,653,222) | |||||
Net loss | (39,407) | (39,407) | ||||
Foreign currency translation adjustment | (178) | (178) | ||||
Balance at Dec. 31, 2015 | $ 7 | 159,190 | (19,996) | (309) | (141,015) | (2,123) |
Balance (in shares) at Dec. 31, 2015 | 94,456,773 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of ordinary shares upon private placement, net of issuance costs | $ 3 | 75,420 | 75,423 | |||
Issuance of ordinary shares upon private placement (in shares) | 42,500,000 | |||||
Issuance of ordinary shares upon vesting of nonvested shares (in shares) | 1,367,560 | |||||
Exercise of share options | 22 | 22 | ||||
Exercise of share options (in shares) | 39,500 | |||||
Share-based compensation | 2,317 | 2,317 | ||||
Repurchase of ordinary shares | (810) | (810) | ||||
Repurchase of ordinary shares (in share) | (543,228) | |||||
Net loss | (8,723) | (8,723) | ||||
Foreign currency translation adjustment | (270) | (270) | ||||
Balance at Dec. 31, 2016 | $ 10 | $ 236,949 | $ (20,806) | $ (579) | $ (149,738) | $ 65,836 |
Balance (in shares) at Dec. 31, 2016 | 137,820,605 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
Net loss | $ (8,723) | $ (39,407) | $ (29,987) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 1,395 | 2,135 | 1,855 |
Share-based compensation | 2,317 | 3,196 | 2,518 |
Exchange loss on offshore bank accounts | 120 | 938 | 1,556 |
Loss (gain) from equity method investment | (17) | 34 | |
Inventory write down | 3,286 | 1,890 | 1,206 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (1,707) | (246) | (447) |
Inventories | (2,642) | (3,326) | (4,000) |
Prepaid expenses and other current assets | (4,659) | 106 | 3,639 |
Long-term rental deposit | (2) | 33 | (79) |
Accounts payable | (6,813) | 4,117 | 6,567 |
Advances from customers | 476 | (2,697) | 818 |
Accrued expenses and other current liabilities | 1,635 | (4,674) | 9,465 |
Net cash used in operating activities | (15,334) | (37,901) | (6,889) |
Cash flows from investing activities | |||
Purchases of property and equipment | (334) | (769) | (2,576) |
Maturity of term deposit | 43,054 | 157,519 | |
Purchase of term deposit | (37,708) | (84,855) | |
Withdrawal (deposit) in restricted cash | 47 | 661 | (907) |
Payment for long term investment | (2,100) | ||
Net cash provided by (used in) investing activities | (287) | 3,138 | 69,181 |
Cash flows from financing activities | |||
Proceeds from exercise of share options | 22 | 122 | 230 |
Net proceeds from offering upon private placement | 75,423 | ||
Repurchases of ordinary shares | (810) | (9,346) | (10,650) |
Net cash (used in) provided by financing activities | 74,635 | (9,224) | (10,420) |
Net increase (decrease) in cash and cash equivalents | 59,014 | (43,987) | 51,872 |
Effect of exchange rate changes on cash and cash equivalents | (398) | (470) | (259) |
Cash and cash equivalents at beginning of year | 30,901 | 75,358 | 23,745 |
Cash and cash equivalents at end of year | 89,517 | 30,901 | 75,358 |
Supplemental cash flow information: | |||
Income taxes paid | $ (54) | $ (49) | $ (70) |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2016 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES LightInTheBox Holding Co., Ltd. (the “Company”), incorporated in the Cayman Islands in March 2008 by five founding shareholders, together with its consolidated subsidiaries and variable interest entities (“VIEs”) (collectively referred to the “Group”), is primarily involved in online retailing to sell and deliver products to consumers around the world. History of the Group and corporate reorganization The Group commenced its operation in June 2007, with the establishment of Light In The Box Limited (“Light In The Box”) in June 2007 in Hong Kong by the same five founding shareholders of the Company. Light In The Box subsequently became the Company’s subsidiary through a share for share exchange in April 2008 which has been accounted for in a manner akin to a pooling of interest as if the Company had been in existence and owned Light In The Box since June 2007. Lightinthebox Trading(Shenzhen) Co., Ltd.(“Lanting Jishi”) was established in October 2008 in the People’s Republic of China (the “PRC”) as a wholly owned subsidiary of Light In The Box. The VIE arrangements The PRC regulations currently limit direct foreign ownership of business entities providing value-added telecommunications services, advertising services and Internet services in the PRC where certain licenses are required for the provision of such services. To comply with these PRC regulations, the Group currently conducts certain aspects of its business in the PRC through Shenzhen Lanting Huitong Technologies Co. Ltd. (“Lanting Huitong”) and Beijing Lanting Gaochuang Technologies Co., Ltd. (“Lanting Gaochuang”), both of which are VIEs. Lanting Huitong was established by the shareholders of the Company in June 2008 in the PRC. Through the contractual arrangements (as described below) among Lanting Jishi, Lanting Huitong and the respective shareholders of Lanting Huitong, Lanting Huitong became the Group’s VIE. In order to obtain the benefit granted to domestic enterprises that are held by Chinese nationals who have previously studied overseas, the Chief Executive Officer (“CEO”) and Lanting Huitong established Lanting Gaochuang in December 2011, each holding 51% and 49% of Lanting Gaochuang, respectively, in the China Beijing Wangjing Overseas Students Pioneer Park. Through a series of contractual arrangements (as described below) among Lanting Jishi, Lanting Gaochuang and the respective shareholders of Lanting Gaochuang, Lanting Gaochuang became the Group’s VIE. Agreements that provide Lanting Jishi effective control over Lanting Huitong and Lanting Gaochuang (collectively, the “VIEs”) Powers of Attorney: Each shareholder of the VIEs has executed a power of attorney appointing Lanting Jishi or its designee to be his or her attorney and irrevocably authorizing them to vote on his or her behalf on all of the matters concerning the VIEs that may require shareholders’ approval. The powers of attorney will be valid as long as the shareholders remain as shareholders of the VIEs. Equity disposal agreement: The agreements granted Lanting Jishi or its designated party exclusive options to purchase, when and to the extent permitted under PRC law, all or part of the equity interests in the VIEs. The exercise price for the options to purchase all or part of the equity interests will be the minimum amount of consideration permissible under the then applicable PRC law. The agreement will be valid until Lanting Jishi or its designated party purchases all the shares from shareholders of the VIEs. The equity disposal agreement will be valid until the liquidation of the VIEs, unless terminated earlier at Lanting Jishi’s sole discretion. Spousal consent letters: Pursuant to spousal consent letters, the spouses of certain shareholders of Lanting Huitong acknowledged that the equity interests of Lanting Huitong held by and registered in the name of his/her spouse will be disposed of pursuant to the equity disposal and share pledge agreements. These spouses understand that such equity interests are held by their respective spouse on behalf of Lanting Jishi, and they will not take any action to interfere with the disposition of such equity interests, including, without limitation, claiming that such equity interests constitute communal property of marriage. The spousal consent letters will be valid until the liquidation of Lanting Huitong, unless terminated earlier at Lanting Jishi’s sole discretion. Loan Agreement: Under the loan agreement entered into in December 2011 between Lanting Jishi and the CEO, Lanting Jishi extended a loan in the amount of $41 (RMB255, 000) to the CEO to be contributed as 51% of the registered capital of Lanting Gaochuang. Under this agreement, the CEO agrees that without prior written consent from Lanting Jishi, Lanting Gaochuang may not enter into any transaction that could materially affect its assets, liabilities, interests or operations, and there will be no earnings distribution in any form by Lanting Gaochuang before such loan has been repaid. This loan can only be repaid by transferring all of the CEO’s equity interest in Lanting Gaochuang to Lanting Jishi or a third party designated by Lanting Jishi, and submitting all proceeds from such transaction to Lanting Jishi. The loan agreement has a term of ten years and will be extended automatically, unless indicated otherwise by Lanting Jishi in writing three months prior to the contract expiration date. Agreements that transfer economic benefits to Lanting Jishi Business operation agreements: The shareholders of the VIEs and the VIEs agreed that the VIEs may not enter into any transaction that could materially affect the assets, liabilities, interests or operations of the VIEs, without prior written consent from Lanting Jishi or other party designated by Lanting Jishi. In addition, directors, supervisors, chairman, general managers, financial controllers or other senior managers of the VIEs must be Lanting Jishi’s nominees. Lanting Jishi is entitled to any dividend declared by the VIEs. The business operation agreement will be valid until the liquidation of the VIEs, unless terminated earlier at Lanting Jishi’s sole discretion. Exclusive technical support and consulting service agreements: Lanting Jishi agreed to provide the VIEs with technology support and consulting services. The VIEs agreed to pay a service fee annually equal to substantially all of the net income of the VIEs. The exclusive technical support and consulting service agreement will be valid until the liquidation of the VIEs, unless terminated earlier at Lanting Jishi’s sole discretion. Share pledge agreement: The shareholders of the VIEs pledged all of their respective equity interests in favor of Lanting Jishi to secure the obligations of the VIEs, and the shareholders under the VIE agreements, including the business operation agreements, and the exclusive technical support and consulting service agreements described above. If the VIEs or any of the shareholders of the VIEs breaches any of their respective contractual obligations under these agreements, Lanting Jishi, as pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. The shareholders of the VIEs agreed not to transfer, sell, pledge, dispose of or otherwise create any new encumbrance on their respective equity interests in the VIEs, without Lanting Jishi’s prior written consent. Unless terminated at Lanting Jishi’s sole discretion, each share pledge agreement will be valid till the completion of all the contractual obligations of the VIEs, or any of the shareholders of the VIEs under the various agreements, including the business operation agreements, the technical support and consulting service agreements and equity disposal agreements. Since the Company, through Lanting Jishi, its wholly owned subsidiary, has (1) the power to direct the activities of Lanting Huitong and Lanting Gaochuang that most significantly affect their economic performance and (2) the right to receive the benefits from them, the Company is the primary beneficiary of both entities and has consolidated them as VIEs since their respective inceptions. Risks in relation to VIE structure The Group believes that Lanting Jishi’s contractual arrangements with the VIEs are in compliance with the PRC law and are legally enforceable. The shareholders of the VIEs are also shareholders of the Company and therefore have no current interest in seeking to act contrary to the contractual arrangements. However, uncertainties in the PRC legal system could limit the Group’s ability to enforce these contractual arrangements and if the shareholders of the VIEs were to reduce their interest in the Company, their interests may diverge from that of the Company and that may potentially increase the risk that they would seek to act contrary to the contractual terms, for example by influencing the VIEs not to pay the service fees when required to do so. The Company’s ability to control the VIEs also depends on the power of attorney Lanting Jishi has to vote on all matters requiring shareholder approval in the VIEs. As noted above, the Company believes this power of attorney is legally enforceable but may not be as effective as direct equity ownership. In addition, if the legal structure and contractual arrangements were found to be in violation of any existing PRC laws and regulations, the PRC government could: revoke the Group’s business and operating licenses; require the Group to discontinue or restrict operations; restrict the Group’s right to collect revenues; block the Group’s websites; revoke the benefits provided by the Wangjing Pioneer Park; require the Group to restructure the operations in such a way as to compel the Group to establish a new enterprise, re-apply for the necessary licenses or relocate their businesses, staff and assets; impose additional conditions or requirements with which the Group may not be able to comply; or take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business. The imposition of any of these penalties may result in a material and adverse effect on the Group’s ability to conduct the Group’s business. In addition, if the imposition of any of these penalties causes the Group to lose the rights to direct the activities of the VIEs and its subsidiaries or the right to receive their economic benefits, the Group would possibly no longer be able to consolidate the VIEs. The following consolidated financial information of the Group’s VIEs was included in the accompanying consolidated financial statements as of and for the years ended, after elimination of intercompany balances and transactions within the Group: As of As of December 31, December 31, 2015 2016 Total assets $ $ Total liabilities $ $ Year ended December 31, 2014 2015 2016 Net revenues $ $ $ Net loss $ ) $ ) $ ) Year ended December 31, 2014 2015 2016 Net cash provided by (used in) operating activities $ $ ) $ ) Net cash (used in) provided by investing activities $ ) $ $ — Net cash provided by financing activities $ — $ — $ — As of December 31, 2016, there was no pledge or collateralization of the consolidated VIEs’ assets. None of the consolidated VIEs’ assets can only be used to settle the VIEs’ obligations. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Basis of consolidation The consolidated financial statements include the financial statements of the Group, its subsidiaries and its VIEs. All inter-company transactions and balances are eliminated upon consolidation. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported amount of revenues and expenses in the financial statements and accompanying notes. Actual results may differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s financial statements include revenue recognition, inventory valuation, impairment of goodwill and intangible assets, share-based compensation and income taxes. Cash and cash equivalents Cash and cash equivalents consist of cash on hand, demand deposits with financial institutions and term deposits with an original maturity of three months or less. Term deposit Term deposit with an original maturity of greater than three months and less than one year is classified as held-to-maturity investments and carried at amortized cost. The term deposits mature within one year and are subject to penalty for early withdrawal before their maturity. Restricted cash Restricted cash consists of cash which is held under the Group’s name in an escrow account as deposits withheld by third party payment processing agencies and the deposits fluctuate with the volume of payment processed. Accounts receivable Accounts receivable on our consolidated balance sheets consist of accounts receivable for our logistic services an account receivable for cash collected by the delivery service providers on behalf of the Group under the cash-on-delivery product sales within PRC. The Group considers many factors in assessing the collectability of its accounts receivable, such as the age of the amounts due, the customer's payment history, creditworthiness, financial conditions of the customers and industry trend. An allowance for doubtful accounts is recorded in the period in which a loss is determined to be probable. As of December 3l, 2015 and 2016, the Company has determine the risk of uncollected receivable is remote. Inventories Inventories are accounted for using the first-in-first-out method, and are valued at the lower of cost or market value. Adjustments are recorded to write down the cost of inventory to the estimated market value due to slow-moving merchandise and broken assortments, which is dependent upon factors such as historical trends with similar merchandise, inventory aging, and historical and forecasted consumer demand. Write downs are recorded in cost of revenues in the consolidated statements of operations. Property and equipment, net Property and equipment, net is stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated on a straight-line basis over the following estimated useful lives: Useful lives Leasehold improvements Lesser of the lease term Furniture, fixtures and office equipment 5 years Software and IT equipment 3 years Intangible assets, net Intangible assets, other than goodwill, resulting from the acquisitions of entities accounted for using the acquisition method of accounting are estimated by management based on the fair value of assets acquired. Identifiable intangible assets are carried at cost less accumulated amortization. Amortization of technology and members are computed using the straight-line method over the estimated useful lives. Useful lives Domain name/Trade name Indefinite life Technology 3 Years Members 4 Years Long-term investment Equity investment in an entity where the Group can exercise significant influence, but not control, is accounted for using the equity method. Whether or not the Group can exercise significant influence with respect to an equity investee depends on an evaluation of several factors including, among others, the Group’s representation on the investee’s board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee. Under the equity method, the investment is initially recorded at cost and adjusted for the Group’s share of undistributed earnings or losses of the investee. The management regularly evaluates the impairment of the equity investment based on performance and the financial position of the investee as well as other evidence of market value. Such evaluation includes, but is not limited to, reviewing the investee’s cash position, recent financings, projected and historical financial performance, cash flow forecasts and financing needs. An impairment charge is recorded when the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. Impairment of long-lived assets and intangible assets with definite life Long-lived assets, such as property and equipment and definite-lived intangible assets, are stated at cost less accumulated depreciation or amortization. The Group evaluates the recoverability of long-lived assets, including identifiable intangible assets, with determinable useful lives, whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. The Group measures the carrying amount of long-lived asset against the estimated undiscounted future cash flows associated with it. Impairment exists when the sum of the expected future net cash flows is less than the carrying value of the asset being evaluated. Impairment loss is calculated as the amount by which the carrying value of the asset exceeds its fair value. Fair value is estimated based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Group to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. Impairment of Goodwill and Indefinite-lived intangible assets Goodwill and intangible assets deemed to have indefinite useful lives are not amortized, but tested for impairment annually or more frequently if event and circumstances indicate that they might be impaired. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. The Group performs a two-step goodwill impairment test. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of the affected reporting unit’s goodwill to the carrying value of that goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. In estimating the fair value of each reporting unit the Group estimates the future cash flows of each reporting unit, the Group has taken into consideration the overall and industry economic conditions and trends, market risk of the Group and historical information. An intangible asset that is not subject to amortization is tested for impairment at least annually or if events or changes in circumstances indicate that the asset might be impaired. Such impairment test compares the fair values of assets with their carrying value amounts and an impairment loss is recognized if and when the carrying amounts exceed the fair values. The estimates of fair values of intangible assets not subject to amortization are determined using various discounted cash flow valuation methodologies. Significant assumptions are inherent in this process, including estimates of discount rates. Business combinations The assets acquired, the liabilities assumed, and any noncontrolling interest of the acquiree at the acquisition date, if any, are measured at their fair values as of that date. Goodwill is recognized and measured as the excess of the total consideration transferred plus the fair value of any noncontrolling interest of the acquiree, if any, at the acquisition date over the fair values of the identifiable net assets acquired. Acquisition costs are expensed when incurred. Consideration transferred in a business acquisition is measured at the fair value as of the date of acquisition. For shares issued in a business combination, if any, the Group estimates the fair value as of the date of acquisition. Treasury shares, at cost Treasury shares represent shares of the Company’s stock that have been issued, repurchased by the Company, and that have not been retired or canceled. These shares have no voting rights and are not entitled to receive dividends and excluded from the weighted average outstanding shares in calculation of net income per share. Treasury shares are recorded at cost. Revenue recognition Product sales Revenue is stated net of value added tax (“VAT”) and return allowances. The Group recognizes revenue from the sale of apparel and other general merchandise through its websites and other online platforms. The Group recognizes revenue when the following four revenue recognition criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the selling price is fixed or determinable, and (iv) collectability is reasonably assured. The Group defers the recognition of revenue and the related product costs for shipments that are in-transit to the customer. Payments received in advance of delivery are classified as advances from customers. The Group recognizes the revenue at the time the end customers receive the products even for international shipment. Amounts collected by delivery service providers but not remitted to the Group are classified as accounts receivable on the consolidated balance sheets. Certain employees of the Group register in supplemental online outlets under their own name as these websites require registration using identity cards of individuals to sell the Group’s product on behalf of the Group. The Group has contractual arrangements with these employees which require them to transfer customers’ payments received to the Group for the sale of the products. The Group evaluates the sales transactions performed by these employees on behalf of the Group to determine whether to recognize the revenues on a gross or net basis. The determination is based upon an assessment as to whether the Group acts as a principal or agent when selling the products. All of the revenues involving employees performing sales transactions on the supplemental online outlets on behalf of the Group are currently accounted for on a gross basis since the Group is the primary obligor, has general and physical inventory risk, latitude in establishing prices, discretion in supplier selection and credit risks. In arrangements whereby certain suppliers place the products at the Group’s premises, the risk and rewards of ownership of the products passed to the Group upon confirmation of orders by the Group’s customers. All of the revenues involving these arrangement are accounted for on a gross basis since the Group is the primary obligor, has physical inventory risk, latitude in establishing prices, discretion in supplier selection and credit risks. The Group periodically provides incentive offers to its customers to encourage purchases. Current discount offers, when accepted by its customers, are treated as a reduction to the purchase price of the related transaction and are included as a net amount in revenue. The Group also provides discount reward, which may only be used in the future, to customers who have made a current purchase. As the right of receiving future discount does not represent a significant and incremental discount to the customer, the discount is treated as a reduction of revenue when the future transaction takes place. The Group established a membership program whereby a registered member earns certain points for visiting one of the Group’s websites. Points could only be redeemed in connection with a future purchase. Such points, when redeemed, were charged as costs of sales at the time of future purchase. Since the points were earned not based on past sales transactions, no accrual was made at the time when earned by the registered members. Promotional free products, which cannot be redeemed for cash are normally shipped together with current qualified sales. Cost of these promotional items or free products are recorded as cost of revenue when the revenue of the current qualified sales is recognized. The Group allows customers to return goods within a period of time subsequent to the delivery of the goods purchased. The Group changed its sales return policy in 2014 to offer returns for items from 7 days to 30 days of receipt of shipment. The Group estimates return allowance based on historical experience. The estimation of return allowances is adjusted to the extent that actual returns differ, or are expected to differ. Changes in the estimated return allowance are recognized through a cumulative catch-up adjustment in the period of change and will impact the amount of net revenues in that period. Outbound shipping charges to customers are included as a part of the revenues. Outbound shipping-related costs are included in the cost of product sales. Shipping costs incurred for sales of products and recognized as cost of product sales were $94,396, $70,314 and $59,964 for the years ended December 31, 2014, 2015 and 2016 respectively. VAT on sales is calculated at 17% on revenue from sale of products in the PRC and paid after deducting input-VAT on purchases. The net VAT balance between input-VAT and output-VAT is reflected in the consolidated financial statement as prepaid expenses and other current assets or accrued expenses and other current liabilities. Services The Group derive services revenue mainly from provision of logistic services to small businesses in China. Service revenue is recognized when persuasive evidence of an arrangement exists, service has been performed, the fee is fixed or determinable and collectability is reasonably assured. Revenue for logistic services are recognized when the packages are delivered to the recipients. Cost of revenues Product sales Cost of goods sold primarily consists of the purchase price of consumer products sold by the Group on its websites, inbound and outbound shipping charges, packaging supplies and inventory write-down. Shipping charges to receive products from its suppliers are included in inventory cost, and recognized as cost of sales upon sale of products to its customers. Services Cost of services primarily consists of the shipping charges and cost of packaging supplies directly incurred relating to logistic services. Shipping charges are recognized as cost of revenue upon delivery service is completed when the goods are delivered to destination. Fulfillment Fulfillment costs represent those costs incurred in operating and staffing the Group’s fulfillment and customer service centers, including costs attributable to buying, receiving, inspecting, and warehousing inventories; picking, packaging, and preparing customer orders for shipment; payment processing and related transaction costs. Selling and marketing Selling and marketing expenses consist primarily of search engine marketing and advertising, affiliate market program expenditure, public relations expenditures; and payroll and related expenses for personnel engaged in selling, marketing and business development. The Group pays to use certain relevant key words relating to its business on major search engines and the fee is on a “cost-per-click” basis. The Group also pays commissions to participants in its affiliate program when customer referrals result in product sales, and the Group classifies such costs as selling and marketing expenses in the consolidated statements of operations. Advertising includes fees paid to on-line advertisers who assist the Group to advertise at targeted websites. Such fees are paid at fixed rate or calculated based on volume directed to the Group’s website. General and administrative General and administrative expenses consist of payroll and related expenses for employees involved in general corporate functions such as accounting, finance, tax, legal, and human resources; costs associated with the use by these functions of facilities and equipment, such as depreciation expense and rent; professional fees and other general corporate costs. Also included in general and administrative expenses are payroll and related expenses for employees involved in product research and development, and systems support, as well as server charges and costs associated with telecommunications. General and administrative expenses also include credit losses relating to fraudulent credit card activities which resulted in chargebacks from the payment processing agencies. The Group estimates chargebacks based on historical experience. The estimation of chargebacks is adjusted to the extent that actual chargebacks differ, or are expected to differ. The chargeback incurred for the years ended December 31, 2014, 2015 and 2016 are $748, $1,227 and $2,354. Fair value Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows: · Level 1-inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. · Level 2-inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3-inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. Financial instruments Financial instruments of the Group primarily consist of cash and cash equivalents, term deposit, restricted cash, receivable from processing agencies, accounts payable. The carrying values of cash, term deposit, restricted cash, accounts receivable from processing agencies and accounts payable approximate their fair values due to short-term maturities. Foreign currency translation The Company’s functional currency is the US$. The Company’s subsidiaries, VIEs and its VIE’s subsidiary determine their functional currencies based on the criteria of ASC topic 830, Foreign Currency Matters. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statements of operations. The Group’s entities with functional currency of RMB and Euro, translate their operating results and financial position into the U.S. dollar, the Group’s reporting currency. Assets and liabilities are translated using the exchange rates in effect on the balance sheet date. Revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive loss. Income taxes Deferred income taxes are provided using the asset and liability method. Under this method, deferred income taxes are recognized for tax credits and net operating losses available for carry forwards and significant temporary differences. Deferred tax assets and liabilities are classified as current or non-current based upon the classification of the related asset or liability in the financial statements or the expected timing of their reversal if they do not relate to a specific asset or liability. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws and regulations applicable to the Group as enacted by the relevant tax authorities. The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. The Group did not recognize any income tax due to uncertain tax position or incur any interest and penalties related to potential underpaid income tax expenses for the years ended December 31, 2014, 2015 or 2016, respectively. Comprehensive loss Comprehensive loss includes net loss and foreign currency translation adjustments and is reported in the consolidated statements of comprehensive loss. Share-based compensation Share-based payment transactions with employees, such as share options are measured based on the grant date fair value of the equity instrument. The Group has elected to recognize compensation expense using the straight-line method for all employee equity awards granted with graded vesting provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant-date value of the options that are vested at that date, over the requisite service period of the award, which is generally the vesting period of the award. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of share-based compensation expense to be recognized in future periods. Changes in the terms or conditions of share options are accounted as a modification under which the Group calculate whether there is any excess of the fair value of the modified option over the fair value of the original option immediately before its terms are modified, measured based on the share price and other pertinent factors at the modification date. For vested options, the Group recognizes incremental compensation cost in the period of the modification occurred and for unvested options, the Group recognizes, over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date. Operating leases Leases where the rewards and risks of ownership of assets primarily remain with the lessor are accounted for as operating leases. Some of operating lease agreements of the Group contain provisions for future rent increases, rent free periods, or periods in which rent payments are reduced (abated). The total amount of rental payments due over the lease term is being charged to rent expense on the straight-line method over the term of the lease. The difference between rent expense recorded and the amount paid is credited or charged to other accrued expenses, which is included in “Accrued expenses and other current liabilities” in the accompanying consolidated balance sheets. Loss per share Basic loss per ordinary share is computed by dividing net loss attributable to ordinary shareholders by weighted average number of ordinary shares outstanding during the period. Diluted loss per ordinary share reflects the potential dilution that could occur if securities were exercised or converted into ordinary shares. The Group has share options and nonvested shares, which could potentially dilute basic earnings per share in the future. To calculate the number of shares for diluted income per share, the effects of the share options and nonvested shares are computed using the treasury stock method. Significant risks and uncertainties The Group participates in an industry with rapid changes in regulations, customer demand and competition and believes that changes in any of the following areas could have a material adverse effect on the Group’s future financial position, results of operations, or cash flows: advances and trends in e-commerce industry; changes in certain supplier and vendor relationships; regulatory or other PRC related factors; and risks associated with the Group’s ability to keep and increase the market coverage. Concentration of credit risk Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and advances to suppliers. The Group places its cash and cash equivalents with financial institutions located in the PRC and Hong Kong, United States and Netherland. Accounts receivable primarily comprise amounts receivable from product delivery service providers. These amounts are collected from customers by the service providers upon product delivery. With respect to advances to product suppliers, the Group performs on-going credit evaluations of the financial condition of its suppliers. Foreign currency risk The RMB is not a freely convertible currency. The PRC State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China foreign exchange trading system market. The Group’s cash and cash equivalents denominated in RMB amounted to $6,939 and $2,028 at December 31, 2015 and 2016, respectively. Recent accounting pronouncements In July 2015, the Financial Accounting Standards Board (“FASB”) issued a new pronouncement Inventory (Topic 330): Simplifying the Measurement of Inventory. The current guidance requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The amendments do not apply to inventory that is measured using last-in, first-out (“LIFO”) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (“FIFO”) or average cost. An entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Group is currently evaluating the impact on its consolidated financial statements of adopting this guidance. In May 2014, the FASB issued, Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The guidance substantially converges final standards on revenue recognition between the FASB and the International Accounting Standards Board providing a framework on addressing revenue recognition issues and, upon its effective date, replaces almost all exiting revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: · Step 1: Identify the contract (s) with a customer. · Step 2: Identify the performance obligations in the contract. · Step 3: Determine the transaction price. · Step 4: Allocate the transaction price to the performance obligations in the contract. · Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, FASB issued its final standard formally amending the effective date of the new revenue recognition guidance. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new revenue guidance may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Group is in the process of evaluating the impact of adoption of this guidance on its consolidated financial statements. In November, 2015, the FASB issued a new pronouncement which changes how deferred taxes are classified on organizations’ balance sheets. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The Group does not expect the adoption of this guidance will have a significant effect on its consolidated financial statements. See Note 12 to the consolidated financial statements for a discussion on income |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 3. PREPAID EXPENSES AND OTHER CURRENT ASSETS Components of other current assets which are included in the prepaid expenses and other current assets are as follows: As of December 31, 2015 2016 Receivable from processing agencies (1) $ $ Prepayments to suppliers Rental deposits and prepaid rents Option exercise receivable Deferred expense ADR tax adjustment Others Total $ $ (1) Receivables from processing agencies represented cash that had been received from customers but held by the processing agencies as of December 31, 2015 and 2016. The receivables were collected by the Group subsequent to the respective year end. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 4. PROPERTY AND EQUIPMENT, NET The components of property and equipment are as follows: As of December 31, 2015 2016 Leasehold improvements $ $ Furniture, fixtures and office equipment Software and IT equipment Property and equipment Less: Accumulated depreciation ) ) Property and equipment, net $ $ Depreciation expenses incurred for the years ended December 31, 2014, 2015 and 2016 are $1,838, $2,118 and $1,378, respectively. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL | |
GOODWILL | 5. GOODWILL On December 31, 2013, the Group acquired the fashion-focused site business from Ador Inc. The acquired assets were recorded at fair value at the date of acquisition, including net working capital of $44, goodwill of $690 and other intangible assets of $266. There was no change to the carry amount of goodwill since acquisition. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2016 | |
INTANGIBLE ASSETS, NET | |
INTANGIBLE ASSETS, NET | 6. INTANGIBLE ASSETS, NET The Group’s intangible assets, presented in the following table, arose from the acquisition of Shanghai Ouku on May 24, 2010 and the acquisition of the fashion-focused site business from Ador Inc. on December 31, 2013. December 31, 2015 December 31, 2016 Gross Accumulated Net Gross Accumulated Net carrying Accumulated impairment carrying carrying Accumulated impairment carrying amount amortization loss amount amount amortization loss amount Intangible assets not subject to amortization: Trademark/Domain Name $ $ — $ ) $ $ $ — $ ) $ Intangible assets subject to amortization: - Technology Platform ) — — ) — — - Non-compete Agreement ) ) — ) ) — - Customer Base ) ) — ) ) — - Technology ) — ) — — - Members ) — ) — $ $ ) $ ) $ $ ) $ ) $ The amortization expenses incurred for the years ended December 31, 2014, 2015 and 2016 were $17, $17 and $17, respectively. The remaining carry balance at December 31, 2016 of intangible assets subject to amortization of $5 will be fully amortized during the year ending December 31, 2017. |
LONG-TERM INVESTMENT
LONG-TERM INVESTMENT | 12 Months Ended |
Dec. 31, 2016 | |
LONG-TERM INVESTMENT | |
LONG-TERM INVESTMENT | 7. LONG-TERM INVESTMENT On February 6, 2015, the Group acquired 30% equity interest of Shantou Demon Network Technology Co., Ltd. (“Demon”), with $2,100 cash consideration. Demon owns an online website specialized in cross-border packages tracking. The Group has significant influence but does not have control over Demon. Accordingly the Group recorded it as an equity method investment. During the years ended December 31, 2015 and 2016, The Group recorded its share of loss of $34 and share of income of $17 in the consolidated statement of operations. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of December 31, 2015 2016 Accrued payroll and staff welfare $ $ Individual income tax withheld VAT payable Accrued professional fees Accrued advertising fees Credit card processing charges Accrued sales return (1) Other accrued expenses Total $ $ (1) Accrued sales return represents the gross profit effect of estimated sales return at the end of each of the respective years assuming products returned had no value to the Group. Movements during the respective years are as follows: As of December 31, 2015 2016 Balance at January 1 $ $ Allowance for sales return made in the year Utilization of accrued sales return ) ) Balance at December 31 $ $ |
ORDINARY SHARES
ORDINARY SHARES | 12 Months Ended |
Dec. 31, 2016 | |
ORDINARY SHARES | |
ORDINARY SHARES | 9. ORDINARY SHARES In December 2013, the board of directors approved the Company to repurchase up to $20,000 of its own outstanding American Depositary Shares (“ADS”) within one year from December 2013. On December 16, 2014, the Company extended its existing share repurchase program for an additional 12-month through December 15, 2015. On June 8, 2016, the Company announced a share repurchase program of up to $10 million worth of its outstanding ADS representing its ordinary shares from June 15, 2016 through June 14, 2017. Pursuant to the share repurchase plan, the Company repurchased 1,868,726 ADSs, 3,695,337 ADSs and 3,966,951 ADSs as of December 31, 2014, December 31, 2015 and December 31, 2016, representing 3,737,452 ordinary shares, 7,390,674 ordinary shares and 7,933,902 ordinary shares with a total consideration of approximately $20,806. The shares repurchased by the Company had not been retired or canceled and were accounted for at cost as treasury shares. In March 2016, the Company issued and sold 21,250,000 ADSs (representing 42,500,000 ordinary shares) though a private placement offering. The proceeds, net of issuance cost of $1,077, were $75,423. In connection with the issuance of ordinary shares, the Group also granted a warrant to the investor to purchase up to 7,455,000 ordinary shares (equivalent to 3,727,500 ADS) at exercise price of $2.75 per ordinary share. The warrant is exercisable as of September 30, 2016 and expire on March 30, 2018. The Group accounts for the warrant under the authoritative guidance in accounting for derivative financial statements indexed to and potentially settled in, a company’s own stock and has determined the warrant should be classified as equity in its consolidated financial statements at fair value at the date of grant. No subsequent charges in fair value will be recognized. The Group uses the Black-Scholes pricing model to value the warrant and determined the fair value of the warrant at the date of the grant is immaterial. |
SHARE OPTIONS
SHARE OPTIONS | 12 Months Ended |
Dec. 31, 2016 | |
SHARE OPTIONS | |
SHARE OPTIONS | 10. SHARE OPTIONS On October 27, 2008, the Company adopted the 2008 Share Incentive Option Plan (“2008 Plan”) for the granting of share options to employees to reward them for services provided to the Company and to provide incentives for future services. Pursuant to the 2008 Plan, total shares that the 2008 Plan was authorized to grant were 4,444,444 shares. In May 2014, the Company authorized the issuance of an additional 6,900,000 ordinary shares to support the Company’s business expansion and recruiting plans. The majority of the options will vest over four years where 25% of the options will vest at the end of the first year after the grant date through the fourth year. The share options expire 10 years from the date of grant. In 2013, the Company granted 307,250 share options under the 2008 Plan to employees at exercise price of $4.75 per share. These share options vest over a period ranged from three to four years. In 2014, the Company granted 1,797,300 share options under the 2008 Plan to employees at exercise prices ranged from $1.84 to $3.26 per share. These share options vest over a period ranged from three to four years. In 2015, the Company granted 546,400 share options under the 2008 Plan to employees at exercise prices at $2.25 per share. These share options vest over a period from three months to four years. In 2016, the Company granted 4,000 share options under the 2008 Plan to employees at exercise prices at $1.40 per share. These share options vest for four years. The fair value of each option granted was estimated on the date of grant or modification using binomial option pricing model with the following assumptions during the applicable periods: 2015 2016 Risk-free interest rate % % Exercise multiple Expected volatility % % Expected dividend yield % % Fair value of ordinary shares $ $ (1) Risk-free interest rate Risk-free interest rate was estimated based on the yield to maturity of China international government bonds with a maturity period close to the contractual term of the options. (2) Exercise multiple Exercise multiple represents the value of the underlying share as a multiple of exercise price of the option which, if achieved, results in exercise of the option. (3) Volatility The volatility of the underlying ordinary shares during the life of the options was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the contractual term of the options. (4) Dividend yield The dividend yield was estimated by the Group based on its expected dividend policy over the contractual term of the options. (5) Fair value of underlying ordinary shares The fair value of the underlying ordinary shares is determined based on the closing market price of the ADS of the Company as of the grant date. A summary of the stock option activity under the 2008 Plan as of December 31, 2016, and changes during the year then ended is presented below: Weighted average exercise price Options granted per option Outstanding at January 1, 2016 $ Granted $ Exercised ) $ Cancelled and Forfeited ) $ Outstanding at December 31, 2016 $ The following table summarizes information regarding the share options granted as of December 31, 2016: As of December 31, 2016 Weighted- Weighted- average remaining average exercise contractual Aggregate Options Number price per option life (years) intrinsic value Options Outstanding $ $ Exercisable $ $ Expected to vest $ $ — The total intrinsic value of options exercised during the years ended December 31, 2014, 2015 and 2016 were $$119, $253, and $26 respectively. The weighted average grant date fair value of options granted during the years ended December 31, 2014, 2015 and 2016 was $1.42, $1.28 and $0.8, respectively. For the years ended December 31, 2014,2015 and 2016, the Group recorded share-based compensation expense of $291, $5 and $102 related to the options under the 2008 Plan, respectively. As of December 31, 2016, there was $562 of unrecognized compensation cost related to the options, which is expected to be recognized over a weighted-average period of 1.98 years. |
NONVESTED SHARES
NONVESTED SHARES | 12 Months Ended |
Dec. 31, 2016 | |
NONVESTED SHARES | |
NONVESTED SHARES | 11. NONVESTED SHARES In 2011, the Company granted 1,820,010 nonvested shares to certain employees. These nonvested shares vest over a four year period from the date of the grant. In 2013, the Company granted 711,571 nonvested shares to certain officers and employees. These nonvested shares vest over a period ranged from two to four years. In 2014, the Company granted 2,800,300 nonvested shares to certain officers and employees. These nonvested shares vest over a period ranged from three to four years. In 2015, the Company granted 3,154,800 nonvested to certain officers and employees. These nonvested shares vest over a period from three months to four years. In 2016, the Company granted 296,000 nonvested to certain officers and employees. These nonvested shares vest over a period from the date of grant to four years. The holders of the nonvested shares are entitled to voting rights, but shall not be entitled to dividends before vesting. The following table summarizes information regarding the nonvested shares granted and vested: Weighted average grant date Number of Shares fair value Outstanding at January 1, 2016 $ Granted $ Forfeited ) $ Vested ) $ Outstanding at December 31, 2016 $ The total fair value of shares vested during the years ended December 31, 2014, 2015 and 2016, was $2,123, $2,791 and $3,070 respectively. For the years ended December 31, 2014, 2015 and 2016, the Group recorded share-based compensation expenses of $2,227, $3,191 and $2,215 related to the nonvested shares, respectively. As of December 31, 2016, there was $4,735 of unrecognized compensation costs related to nonvested shares, which are expected to be recognized over a weighted-average period of 2.05years. Total share-based compensation expenses for share options and nonvested shares for the years ended December 31, 2014, 2015 and 2016 were as follows: Year ended December 31, 2014 2015 2016 Fulfillment $ $ $ Selling and marketing General and administrative Total $ $ $ |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES Cayman Islands The Company is a tax-exempted company incorporated in the Cayman Islands and is not subject to tax on income or capital gains. Hong Kong Light In The Box, Lanting International Holding Limited (“Lanting International”), (LightInTheBox International Logistic Co., Ltd.(“LightInTheBox Logistic”), Light Square Limited(“Light Square”) are located in Hong Kong and subject to Hong Kong profits tax at 16.5% with respect to the profit generated from Hong Kong. PRC Except Lanting Huitong and Lanting Gaochuang, other entities of the Group domiciled in the PRC are subject to 25% statutory income tax rates in accordance with the Enterprise Income Tax Law (“EIT Law”) in the periods presented. Lanting Huitong qualified as a “software enterprise” and therefore enjoyed a two-year income tax exemption starting from 2010, the first profit making year, followed by a reduced tax rate of 12.5% for the subsequent three years. Lanting Huitong is subject to 25% statutory income tax rate starting from 2015. Lanting Gaochuang qualified as a “software enterprise” in 2012 and therefore is entitled to a two-year income tax exemption starting from 2013, its first profit making year, followed by a reduced tax rate of 12.5% for the subsequent three years. For the years ended December 31, 2014, 2015 and 2016, income tax expense included in the consolidated statements of operations were attributable to the Group’s PRC subsidiary and VIEs and comprised current tax expense $70, $49 and $54, respectively. There was no material deferred tax expense for the years ended December 31, 2014, 2015 and 2016. The principal components of the deferred tax assets and liabilities are as follows: As of December 31, 2015 2016 Current deferred tax assets: Accrued payroll $ $ Accrued expenses Accrued inventory provision Less: Valuation allowance ) ) Current deferred tax assets, net — — Non-current deferred tax asset: Net operating loss carry forwards Less: Valuation allowance ) ) Non-current deferred tax asset, net — — Total deferred tax asset, net $ — $ — The Group had no deferred tax liabilities as of December 31, 2014, 2015 and 2016. The Group operates through its subsidiaries and VIEs and the valuation allowance is considered on each individual subsidiary and VIE basis. The net operating loss carry forwards of the subsidiaries and VIEs registered in the PRC of $52 will expire on various dates through 2020. The Group has recognized a full valuation allowance against deferred tax assets as the Group believes that it is more likely than not that its deferred tax assets will not be realized as it does not expect to generate sufficient taxable income in the near future. Movement of valuation allowance As of December 31, 2015 2016 Balance at beginning of the period $ $ Additions Reversals ) — Balance at end of the period $ $ Reconciliation between the expense of income taxes computed by applying the PRC tax rate to loss before income taxes and the actual provision for income taxes is as follows: Years ended December 31, 2014 2015 2016 Loss before provision of income tax $ ) $ ) $ ) Statutory tax rate in the PRC % % % Income tax at statutory tax rate ) ) ) Non-deductible expenses Effect of income tax holiday and preferential tax rates ) ) ) Utilisation of tax loss previously not recognized — ) ) Effect of income tax rate differences in jurisdictions other than the PRC Changes in valuation allowances Income tax expense $ $ $ The Group did not identify significant unrecognized tax benefits for the years ended December 31, 2014, 2015 and 2016. The Group did not incur any interest related to unrecognized tax benefits, did not recognized any penalties as income tax expenses and also does not anticipate any significant change in unrecognized tax benefits within 12 months from December 31, 2016. Uncertainties exist with respect to how the current income tax law in the PRC applies to the Group’s overall operations, and more specifically, with regard to tax residency status. The EIT Law includes a provision specifying that legal entities organized outside of the PRC will be considered residents for Chinese Income tax purposes if the place of effective management or control is within the PRC. The implementation rules to the new EIT law provide that non-resident legal entities will be considered PRC residents if substantial and overall management and control over the manufacturing and business operations, personnel, accounting and properties occurs within the PRC. On April 22, 2009, the State Administration of Taxation (the “SAT”) issued the Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China. Circular 82, though technically only applies to China-controlled overseas registered enterprises, has made detailed explanations and clarification with respect to “substantial and overall management and control” over production and business operations, personnel, accounting and properties which provides a general guidance for the determination of PRC tax resident. Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Group does not believe that the legal entities organized outside of the PRC within the Group should be treated as residents for EIT law purposes. However, if the PRC tax authorities subsequently determine that the Company and its subsidiaries registered outside the PRC should be deemed resident enterprises, the Company and its subsidiaries registered outside the PRC will be subject to the PRC income taxes, at a rate of 25%. If any entity within the Group that is outside the PRC were to be a non-resident for PRC tax purposes dividends paid to it out of profits earned after January 1, 2008 would be subject to a withholding tax at a rate of 10%, subject to reduction by an applicable tax treaty with the PRC. As of December 31, 2015 and December 31, 2016, the Company’s subsidiaries located in the PRC recorded aggregate accumulated deficits. Accordingly, no deferred tax liability has been accrued for the Chinese dividend withholding taxes. In the future, aggregate undistributed earnings of the Company’s subsidiaries located in the PRC, if any, that are taxable upon distribution to the Company, will be considered to be indefinitely reinvested, because the Group does not have any plan to pay cash dividends on its ordinary shares in the foreseeable future and intends to retain most of its available funds and any future earnings for use in the operation and expansion of its business. In accordance with relevant the PRC tax administration laws, tax years from 2010 to 2014 of the Group’s PRC entities remain subject to tax audits as of December 31, 2016, at the tax authority’s discretion. |
LOSS PER SHARE
LOSS PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
LOSS PER SHARE | |
LOSS PER SHARE | 13. LOSS PER SHARE The following table sets forth the computation of basic and diluted net loss per ordinary share for the following years: 2014 2015 2016 Numerator: Net loss attributable to ordinary shareholders of LightInTheBox Holding Co., Ltd. $ ) $ ) $ ) Denominator: Weighted average number of shares used in calculating net loss per ordinary share —basic and diluted Net loss per ordinary share-basic and diluted $ ) $ ) $ ) As a result of the Group’s net loss for each of the three years ended December 31, 2016, 2,506,300, 1,374,050 and 965,850 options outstanding and 2,583,337, 3,315,264 and 1,906,167 nonvested shares outstanding as of December 31, 2014, 2015 and 2016 respectively, were excluded from the computation of diluted net loss per share as their inclusion would have been anti-dilutive. |
EMPLOYEE RETIREMENT BENEFIT
EMPLOYEE RETIREMENT BENEFIT | 12 Months Ended |
Dec. 31, 2016 | |
EMPLOYEE RETIREMENT BENEFIT | |
EMPLOYEE RETIREMENT BENEFIT | 14. EMPLOYEE RETIREMENT BENEFIT Full time employees in the PRC participate in a government-mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. The PRC labor regulations require the Group to make contributions based on certain percentages of the employees’ basic salaries. Other than the contribution, there is no further obligation under these plans. The total contribution for such employee benefits was $5,544, $5,159, and $3,711 for the years ended December 31, 2014, 2015 and 2016, respectively. |
STATUTORY RESERVES AND RESTRICT
STATUTORY RESERVES AND RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
STATUTORY RESERVES AND RESTRICTED NET ASSETS | |
STATUTORY RESERVES AND RESTRICTED NET ASSETS | 15. STATUTORY RESERVES AND RESTRICTED NET ASSETS In accordance with the PRC laws and regulations, the group is required to provide for certain statutory reserves, namely general reserve, enterprise expansion reserve, and staff welfare and bonus reserve, all of which are appropriated from net profit as reported in their PRC statutory accounts. The Group’s subsidiaries are required to allocate at least 10% of their after-tax profits to the general reserve until such reserve has reached 50% of their respective registered capital. Appropriations to the enterprise expansion reserve and the staff welfare and bonus reserve are to be made at the discretion of the board of directors of each of the Group’s subsidiaries. There are no appropriations to these reserves by the Group’s PRC (mainland) subsidiaries for the years ended December 31, 2014, 2015 and 2016. As a result of these PRC laws and regulations and the requirement that distributions by the PRC entities can only be paid out of distributable profits computed in accordance with the PRC GAAP, the PRC entities are restricted from transferring a portion of their net assets to the Group. Amounts restricted include paid-in capital and the statutory reserves of the Company’s PRC subsidiaries and VIEs. As of December 31, 2016, the amounts of capital represented the amount of net assets of the relevant subsidiaries and VIEs in the Group not available for distribution amounted to $5,089. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2016 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 16. SEGMENT REPORTING The Group’s chief operating decision maker has been identified as the Chief Executive Officer who reviews consolidated results when making decisions about allocating resources and assessing performance of the Group. The Group uses the management approach to determine the operating segments. The management approach considers the internal organization and reporting used by the Group’s chief operating decision maker for making decisions, allocating resources and assessing the performance. Prior to 2016, the Group’s operations were organized into one operating segment. In 2016, following the further expansion in service business and revenue generated from services beginning to account for a material portion of the total revenue, the Group operated and reviewed its performance in two segments: (i) Product sales which consisted of online retailing of consumer products, and (ii) Services which consisted of provision of services such as logistic services to other e-commerce retailers. The segment information reported prior to year ended December 31, 2016 was modified to be consistent with that of 2016. Furthermore, the Group’s chief operating decision maker evaluates performance based on each reporting segment’s net revenues, costs and gross profit and is not provided with asset information by segment. The following table presents selected financial information relating to the Group’s segments: For year ended December 31, 2016 Product sales Services Consolidated Revenues $ $ $ Cost of revenues Gross profit Unallocated operating expenses Loss from operations ) Exchange loss on offshore bank accounts. ) Interest income Loss before income tax expense $ ) For year ended December 31, 2015 Product sales Services Consolidated Revenues $ $ $ Cost of revenues Gross profit Unallocated operating expenses Loss from operations ) Exchange loss on offshore bank accounts. ) Interest income Loss before income tax expense $ ) For year ended December 31, 2014 Product sales Services Consolidated Revenues $ $ Cost of revenues Gross profit Unallocated operating expenses Loss from operations ) Exchange loss on offshore bank accounts. ) Interest income Loss before income tax expense $ ) Components of the Group’s Product sales are presented in the following table: For the years ended December 31, 2014 2015 2016 Apparel $ $ $ Other general merchandise Total product sales revenues $ $ $ The following table summarizes the Group’s total net revenues generated in different geographic locations and as a percentage of total net revenues. For the years ended December 31, 2014 2015 2016 Revenues % Revenues % Revenues % Europe $ $ $ North America Other countries Total net revenues $ $ $ North America’s net revenues include revenues from the United States of, $65,376, $74,296and $66,475 during the years ended December 31, 2014, 2015 and 2016 respectively. Europe’s net revenues include revenues from France of $52,264, $39,571 and $31,321 during the years ended December 31, 2014, 2015 and 2016, respectively. As of December 31, 2014, 2015 and 2016 substantially all of long-lived assets of the Group are located in the PRC. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 17. FAIR VALUE MEASUREMENTS The Group had no financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2014, 2015 and 2016. Goodwill and other intangible assets are measured at fair value on a nonrecurring basis when impairment is recognized. The Group estimated the fair value of a reporting unit using the discounted cash flow method under the income approach. The discounted cash flows were based on five years financial forecasts developed by management for planning purposes and estimated discount rates. Cash flows beyond the forecasted period were estimated using a terminal value calculation. The fair values of intangible asset were determined based on various valuation methods, including the replacement cost method the relief from royalty method. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 18. RELATED PARTY TRANSACTIONS The Group entered into indemnification agreements with certain directors. These agreements require the company to indemnify such individuals, to the fullest extent permitted by law, for certain liabilities to which they may become subject to as a result of their affiliation with the Company. Zhejiang Aokang Shoes Co., Ltd. (“Aokang”) became a shareholder of the Company in 2015 and held 17.8% of the outstanding shares of the Company as of December 31, 2016. In 2016, the Company purchased goods from Aokang amounted to $5. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 19. COMMITMENTS AND CONTINGENCIES (1) Commitments Lease commitment The Group has operating lease agreements for warehouses and offices. Rent expenses under operating leases for the years ended December 31, 2014, 2015 and 2016.were $3,906, $4,461 and $4,247 respectively. Future minimum lease payments under non-cancellable operating lease agreements as of December 31, 2016 are as follows: 2017 $ 2018 2019 $ (2) Contingencies The Group’s PRC subsidiaries and VIEs, have not fully paid the contributions for employee benefit plans as required by applicable PRC regulations. While the Group believes it has made adequate provision of such outstanding amounts in the consolidated financial statements, prior failure to make payments may be in violation of applicable PRC labor-related laws and the Group may be subject to fines up to maximum of 3 times if it fails to rectify any such breaches within the period prescribed by the relevant authorities. As of December 31, 2016, there had been no actions initiated by the relevant authorities. The Group is unable to reasonably estimate the actual amount of fines and penalty that may rise if the authorities were to become aware of the non-compliance and were to take action. The Group’s PRC subsidiaries and VIEs did not withhold appropriate amount of individual income tax prior to its IPO as required by applicable PRC tax laws. While the Group believes it has made adequate provision of such outstanding amounts in the consolidated financial statements, and in March 2013, the accrued amounts were substantially paid by the Group on a voluntary basis to the relevant tax authority, the Group may still be subject to future fines or levies for such non-compliance. As of December 31, 2016, there had been no actions initiated by the relevant authorities. The Group is unable to reasonably estimate the actual amount of fines or levies that may rise if the authorities were to take action. The Group is subject to periodic legal or administrative proceedings in the ordinary course of business. The Group does not believe that any currently pending legal or administrative proceeding to which the Group is a party will have a material effect on its business or financial condition. |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation | Basis of presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Basis of consolidation | Basis of consolidation The consolidated financial statements include the financial statements of the Group, its subsidiaries and its VIEs. All inter-company transactions and balances are eliminated upon consolidation. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the reported amount of revenues and expenses in the financial statements and accompanying notes. Actual results may differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s financial statements include revenue recognition, inventory valuation, impairment of goodwill and intangible assets, share-based compensation and income taxes. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents consist of cash on hand, demand deposits with financial institutions and term deposits with an original maturity of three months or less. |
Term deposit | Term deposit Term deposit with an original maturity of greater than three months and less than one year is classified as held-to-maturity investments and carried at amortized cost. The term deposits mature within one year and are subject to penalty for early withdrawal before their maturity. |
Restricted cash | Restricted cash Restricted cash consists of cash which is held under the Group’s name in an escrow account as deposits withheld by third party payment processing agencies and the deposits fluctuate with the volume of payment processed. |
Accounts receivable | Accounts receivable Accounts receivable on our consolidated balance sheets consist of accounts receivable for our logistic services an account receivable for cash collected by the delivery service providers on behalf of the Group under the cash-on-delivery product sales within PRC. The Group considers many factors in assessing the collectability of its accounts receivable, such as the age of the amounts due, the customer's payment history, creditworthiness, financial conditions of the customers and industry trend. An allowance for doubtful accounts is recorded in the period in which a loss is determined to be probable. As of December 3l, 2015 and 2016, the Company has determine the risk of uncollected receivable is remote. |
Inventories | Inventories Inventories are accounted for using the first-in-first-out method, and are valued at the lower of cost or market value. Adjustments are recorded to write down the cost of inventory to the estimated market value due to slow-moving merchandise and broken assortments, which is dependent upon factors such as historical trends with similar merchandise, inventory aging, and historical and forecasted consumer demand. Write downs are recorded in cost of revenues in the consolidated statements of operations. |
Property and equipment, net | Property and equipment, net Property and equipment, net is stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated on a straight-line basis over the following estimated useful lives: Useful lives Leasehold improvements Lesser of the lease term Furniture, fixtures and office equipment 5 years Software and IT equipment 3 years |
Intangible assets, net | Intangible assets, net Intangible assets, other than goodwill, resulting from the acquisitions of entities accounted for using the acquisition method of accounting are estimated by management based on the fair value of assets acquired. Identifiable intangible assets are carried at cost less accumulated amortization. Amortization of technology and members are computed using the straight-line method over the estimated useful lives. Useful lives Domain name/Trade name Indefinite life Technology 3 Years Members 4 Years |
Long-term investment | Long-term investment Equity investment in an entity where the Group can exercise significant influence, but not control, is accounted for using the equity method. Whether or not the Group can exercise significant influence with respect to an equity investee depends on an evaluation of several factors including, among others, the Group’s representation on the investee’s board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee. Under the equity method, the investment is initially recorded at cost and adjusted for the Group’s share of undistributed earnings or losses of the investee. The management regularly evaluates the impairment of the equity investment based on performance and the financial position of the investee as well as other evidence of market value. Such evaluation includes, but is not limited to, reviewing the investee’s cash position, recent financings, projected and historical financial performance, cash flow forecasts and financing needs. An impairment charge is recorded when the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. |
Impairment of long-lived assets and intangible assets with definite life | Impairment of long-lived assets and intangible assets with definite life Long-lived assets, such as property and equipment and definite-lived intangible assets, are stated at cost less accumulated depreciation or amortization. The Group evaluates the recoverability of long-lived assets, including identifiable intangible assets, with determinable useful lives, whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. The Group measures the carrying amount of long-lived asset against the estimated undiscounted future cash flows associated with it. Impairment exists when the sum of the expected future net cash flows is less than the carrying value of the asset being evaluated. Impairment loss is calculated as the amount by which the carrying value of the asset exceeds its fair value. Fair value is estimated based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Group to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. |
Impairment of Goodwill and Indefinite-lived intangible assets | Impairment of Goodwill and Indefinite-lived intangible assets Goodwill and intangible assets deemed to have indefinite useful lives are not amortized, but tested for impairment annually or more frequently if event and circumstances indicate that they might be impaired. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. The Group performs a two-step goodwill impairment test. The first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of the affected reporting unit’s goodwill to the carrying value of that goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill. In estimating the fair value of each reporting unit the Group estimates the future cash flows of each reporting unit, the Group has taken into consideration the overall and industry economic conditions and trends, market risk of the Group and historical information. An intangible asset that is not subject to amortization is tested for impairment at least annually or if events or changes in circumstances indicate that the asset might be impaired. Such impairment test compares the fair values of assets with their carrying value amounts and an impairment loss is recognized if and when the carrying amounts exceed the fair values. The estimates of fair values of intangible assets not subject to amortization are determined using various discounted cash flow valuation methodologies. Significant assumptions are inherent in this process, including estimates of discount rates. |
Business combinations | Business combinations The assets acquired, the liabilities assumed, and any noncontrolling interest of the acquiree at the acquisition date, if any, are measured at their fair values as of that date. Goodwill is recognized and measured as the excess of the total consideration transferred plus the fair value of any noncontrolling interest of the acquiree, if any, at the acquisition date over the fair values of the identifiable net assets acquired. Acquisition costs are expensed when incurred. Consideration transferred in a business acquisition is measured at the fair value as of the date of acquisition. For shares issued in a business combination, if any, the Group estimates the fair value as of the date of acquisition. |
Treasury shares, at cost | Treasury shares, at cost Treasury shares represent shares of the Company’s stock that have been issued, repurchased by the Company, and that have not been retired or canceled. These shares have no voting rights and are not entitled to receive dividends and excluded from the weighted average outstanding shares in calculation of net income per share. Treasury shares are recorded at cost. |
Revenue recognition | Revenue recognition Product sales Revenue is stated net of value added tax (“VAT”) and return allowances. The Group recognizes revenue from the sale of apparel and other general merchandise through its websites and other online platforms. The Group recognizes revenue when the following four revenue recognition criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the selling price is fixed or determinable, and (iv) collectability is reasonably assured. The Group defers the recognition of revenue and the related product costs for shipments that are in-transit to the customer. Payments received in advance of delivery are classified as advances from customers. The Group recognizes the revenue at the time the end customers receive the products even for international shipment. Amounts collected by delivery service providers but not remitted to the Group are classified as accounts receivable on the consolidated balance sheets. Certain employees of the Group register in supplemental online outlets under their own name as these websites require registration using identity cards of individuals to sell the Group’s product on behalf of the Group. The Group has contractual arrangements with these employees which require them to transfer customers’ payments received to the Group for the sale of the products. The Group evaluates the sales transactions performed by these employees on behalf of the Group to determine whether to recognize the revenues on a gross or net basis. The determination is based upon an assessment as to whether the Group acts as a principal or agent when selling the products. All of the revenues involving employees performing sales transactions on the supplemental online outlets on behalf of the Group are currently accounted for on a gross basis since the Group is the primary obligor, has general and physical inventory risk, latitude in establishing prices, discretion in supplier selection and credit risks. In arrangements whereby certain suppliers place the products at the Group’s premises, the risk and rewards of ownership of the products passed to the Group upon confirmation of orders by the Group’s customers. All of the revenues involving these arrangement are accounted for on a gross basis since the Group is the primary obligor, has physical inventory risk, latitude in establishing prices, discretion in supplier selection and credit risks. The Group periodically provides incentive offers to its customers to encourage purchases. Current discount offers, when accepted by its customers, are treated as a reduction to the purchase price of the related transaction and are included as a net amount in revenue. The Group also provides discount reward, which may only be used in the future, to customers who have made a current purchase. As the right of receiving future discount does not represent a significant and incremental discount to the customer, the discount is treated as a reduction of revenue when the future transaction takes place. The Group established a membership program whereby a registered member earns certain points for visiting one of the Group’s websites. Points could only be redeemed in connection with a future purchase. Such points, when redeemed, were charged as costs of sales at the time of future purchase. Since the points were earned not based on past sales transactions, no accrual was made at the time when earned by the registered members. Promotional free products, which cannot be redeemed for cash are normally shipped together with current qualified sales. Cost of these promotional items or free products are recorded as cost of revenue when the revenue of the current qualified sales is recognized. The Group allows customers to return goods within a period of time subsequent to the delivery of the goods purchased. The Group changed its sales return policy in 2014 to offer returns for items from 7 days to 30 days of receipt of shipment. The Group estimates return allowance based on historical experience. The estimation of return allowances is adjusted to the extent that actual returns differ, or are expected to differ. Changes in the estimated return allowance are recognized through a cumulative catch-up adjustment in the period of change and will impact the amount of net revenues in that period. Outbound shipping charges to customers are included as a part of the revenues. Outbound shipping-related costs are included in the cost of product sales. Shipping costs incurred for sales of products and recognized as cost of product sales were $94,396, $70,314 and $59,964 for the years ended December 31, 2014, 2015 and 2016 respectively. VAT on sales is calculated at 17% on revenue from sale of products in the PRC and paid after deducting input-VAT on purchases. The net VAT balance between input-VAT and output-VAT is reflected in the consolidated financial statement as prepaid expenses and other current assets or accrued expenses and other current liabilities. Services The Group derive services revenue mainly from provision of logistic services to small businesses in China. Service revenue is recognized when persuasive evidence of an arrangement exists, service has been performed, the fee is fixed or determinable and collectability is reasonably assured. Revenue for logistic services are recognized when the packages are delivered to the recipients. |
Cost of revenues | Cost of revenues Product sales Cost of goods sold primarily consists of the purchase price of consumer products sold by the Group on its websites, inbound and outbound shipping charges, packaging supplies and inventory write-down. Shipping charges to receive products from its suppliers are included in inventory cost, and recognized as cost of sales upon sale of products to its customers. Services Cost of services primarily consists of the shipping charges and cost of packaging supplies directly incurred relating to logistic services. Shipping charges are recognized as cost of revenue upon delivery service is completed when the goods are delivered to destination. |
Fulfillment | Fulfillment Fulfillment costs represent those costs incurred in operating and staffing the Group’s fulfillment and customer service centers, including costs attributable to buying, receiving, inspecting, and warehousing inventories; picking, packaging, and preparing customer orders for shipment; payment processing and related transaction costs. |
Selling and marketing | Selling and marketing Selling and marketing expenses consist primarily of search engine marketing and advertising, affiliate market program expenditure, public relations expenditures; and payroll and related expenses for personnel engaged in selling, marketing and business development. The Group pays to use certain relevant key words relating to its business on major search engines and the fee is on a “cost-per-click” basis. The Group also pays commissions to participants in its affiliate program when customer referrals result in product sales, and the Group classifies such costs as selling and marketing expenses in the consolidated statements of operations. Advertising includes fees paid to on-line advertisers who assist the Group to advertise at targeted websites. Such fees are paid at fixed rate or calculated based on volume directed to the Group’s website. |
General and administrative | General and administrative General and administrative expenses consist of payroll and related expenses for employees involved in general corporate functions such as accounting, finance, tax, legal, and human resources; costs associated with the use by these functions of facilities and equipment, such as depreciation expense and rent; professional fees and other general corporate costs. Also included in general and administrative expenses are payroll and related expenses for employees involved in product research and development, and systems support, as well as server charges and costs associated with telecommunications. General and administrative expenses also include credit losses relating to fraudulent credit card activities which resulted in chargebacks from the payment processing agencies. The Group estimates chargebacks based on historical experience. The estimation of chargebacks is adjusted to the extent that actual chargebacks differ, or are expected to differ. The chargeback incurred for the years ended December 31, 2014, 2015 and 2016 are $748, $1,227 and $2,354. |
Fair value | Fair value Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows: · Level 1-inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. · Level 2-inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3-inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. |
Financial instruments | Financial instruments Financial instruments of the Group primarily consist of cash and cash equivalents, term deposit, restricted cash, receivable from processing agencies, accounts payable. The carrying values of cash, term deposit, restricted cash, accounts receivable from processing agencies and accounts payable approximate their fair values due to short-term maturities. |
Foreign currency translation | Foreign currency translation The Company’s functional currency is the US$. The Company’s subsidiaries, VIEs and its VIE’s subsidiary determine their functional currencies based on the criteria of ASC topic 830, Foreign Currency Matters. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the functional currency during the year are converted into functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statements of operations. The Group’s entities with functional currency of RMB and Euro, translate their operating results and financial position into the U.S. dollar, the Group’s reporting currency. Assets and liabilities are translated using the exchange rates in effect on the balance sheet date. Revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive loss. |
Income taxes | Income taxes Deferred income taxes are provided using the asset and liability method. Under this method, deferred income taxes are recognized for tax credits and net operating losses available for carry forwards and significant temporary differences. Deferred tax assets and liabilities are classified as current or non-current based upon the classification of the related asset or liability in the financial statements or the expected timing of their reversal if they do not relate to a specific asset or liability. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws and regulations applicable to the Group as enacted by the relevant tax authorities. The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. The Group did not recognize any income tax due to uncertain tax position or incur any interest and penalties related to potential underpaid income tax expenses for the years ended December 31, 2014, 2015 or 2016, respectively. |
Comprehensive loss | Comprehensive loss Comprehensive loss includes net loss and foreign currency translation adjustments and is reported in the consolidated statements of comprehensive loss. |
Share-based compensation | Share-based compensation Share-based payment transactions with employees, such as share options are measured based on the grant date fair value of the equity instrument. The Group has elected to recognize compensation expense using the straight-line method for all employee equity awards granted with graded vesting provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant-date value of the options that are vested at that date, over the requisite service period of the award, which is generally the vesting period of the award. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of share-based compensation expense to be recognized in future periods. Changes in the terms or conditions of share options are accounted as a modification under which the Group calculate whether there is any excess of the fair value of the modified option over the fair value of the original option immediately before its terms are modified, measured based on the share price and other pertinent factors at the modification date. For vested options, the Group recognizes incremental compensation cost in the period of the modification occurred and for unvested options, the Group recognizes, over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original award on the modification date. |
Operating leases | Operating leases Leases where the rewards and risks of ownership of assets primarily remain with the lessor are accounted for as operating leases. Some of operating lease agreements of the Group contain provisions for future rent increases, rent free periods, or periods in which rent payments are reduced (abated). The total amount of rental payments due over the lease term is being charged to rent expense on the straight-line method over the term of the lease. The difference between rent expense recorded and the amount paid is credited or charged to other accrued expenses, which is included in “Accrued expenses and other current liabilities” in the accompanying consolidated balance sheets. |
Loss per share | Loss per share Basic loss per ordinary share is computed by dividing net loss attributable to ordinary shareholders by weighted average number of ordinary shares outstanding during the period. Diluted loss per ordinary share reflects the potential dilution that could occur if securities were exercised or converted into ordinary shares. The Group has share options and nonvested shares, which could potentially dilute basic earnings per share in the future. To calculate the number of shares for diluted income per share, the effects of the share options and nonvested shares are computed using the treasury stock method. |
Significant risks and uncertainties | Significant risks and uncertainties The Group participates in an industry with rapid changes in regulations, customer demand and competition and believes that changes in any of the following areas could have a material adverse effect on the Group’s future financial position, results of operations, or cash flows: advances and trends in e-commerce industry; changes in certain supplier and vendor relationships; regulatory or other PRC related factors; and risks associated with the Group’s ability to keep and increase the market coverage. |
Concentration of credit risk | Concentration of credit risk Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and advances to suppliers. The Group places its cash and cash equivalents with financial institutions located in the PRC and Hong Kong, United States and Netherland. Accounts receivable primarily comprise amounts receivable from product delivery service providers. These amounts are collected from customers by the service providers upon product delivery. With respect to advances to product suppliers, the Group performs on-going credit evaluations of the financial condition of its suppliers. |
Foreign currency risk | Foreign currency risk The RMB is not a freely convertible currency. The PRC State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into foreign currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China foreign exchange trading system market. The Group’s cash and cash equivalents denominated in RMB amounted to $6,939 and $2,028 at December 31, 2015 and 2016, respectively. |
Recent accounting pronouncements | Recent accounting pronouncements In July 2015, the Financial Accounting Standards Board (“FASB”) issued a new pronouncement Inventory (Topic 330): Simplifying the Measurement of Inventory. The current guidance requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The amendments do not apply to inventory that is measured using last-in, first-out (“LIFO”) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (“FIFO”) or average cost. An entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Group is currently evaluating the impact on its consolidated financial statements of adopting this guidance. In May 2014, the FASB issued, Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The guidance substantially converges final standards on revenue recognition between the FASB and the International Accounting Standards Board providing a framework on addressing revenue recognition issues and, upon its effective date, replaces almost all exiting revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: · Step 1: Identify the contract (s) with a customer. · Step 2: Identify the performance obligations in the contract. · Step 3: Determine the transaction price. · Step 4: Allocate the transaction price to the performance obligations in the contract. · Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. In August 2015, FASB issued its final standard formally amending the effective date of the new revenue recognition guidance. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new revenue guidance may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Group is in the process of evaluating the impact of adoption of this guidance on its consolidated financial statements. In November, 2015, the FASB issued a new pronouncement which changes how deferred taxes are classified on organizations’ balance sheets. The ASU eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The amendments apply to all organizations that present a classified balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The Group does not expect the adoption of this guidance will have a significant effect on its consolidated financial statements. See Note 12 to the consolidated financial statements for a discussion on income tax balances. In January, 2016, the FASB issued a new pronouncement which is intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The new guidance makes targeted improvements to existing U.S. GAAP by: · Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; · Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; · Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; · Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; · Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and · Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance permits early adoption of the own credit provision. The Group is currently evaluating the impact on its consolidated financial statements of adopting this guidance. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance supersedes existing guidance on accounting for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. For operating leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the guidance is permitted. In transition, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Group is currently evaluating the impact on its consolidated financial statements of adopting this guidance. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation, which simplifies the accounting for the taxes related to stock based compensation, including adjustments to how excess tax benefits and a company’s payments for tax withholdings should be classified. The guidance will be effective for the fiscal year beginning after December 15, 2016, including interim periods within that year. The Group is in the process of evaluating the impacts of the adoption of this ASU. In November, 2016, the FASB issued a new pronouncement, ASU 2016-18, which amends ASC 230 to add or clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. Key requirements of the ASU are as follows: An entity should include in its cash and cash-equivalent balances in the statement of cash flows those amounts that are deemed to be restricted cash and restricted cash equivalents. The ASU does not define the terms “restricted cash” and “restricted cash equivalents” but states that an entity should continue to provide appropriate disclosures about its accounting policies pertaining to restricted cash in accordance with other GAAP. The ASU also states that any change in accounting policy will need to be assessed under ASC 250. A reconciliation between the statement of financial position and the statement of cash flows must be disclosed when the statement of financial position includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. Changes in restricted cash and restricted cash equivalents that result from transfers between cash, cash equivalents, and restricted cash and restricted cash equivalents should not be presented as cash flow activities in the statement of cash flows. An entity with a material balance of amounts generally described as restricted cash and restricted cash equivalents must disclose information about the nature of the restrictions. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Group is in the process of evaluating the impacts of the adoption of this ASU. In January, 2017, the FASB issued a new pronouncement, ASU 2017-01, which clarifies the definition of a business in ASC 805. The amendments in the ASU are intended to make application of the guidance more consistent and cost-efficient. The ASU narrows the definition of a business and provide a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. Specifically, the ASU: Provides a “screen” for determining when a set is not a business. Specifies that if the screen’s threshold is not met, a set cannot be considered a business unless it includes an input and a substantive process that together significantly contribute to the ability to create outputs. Narrows the definition of the term “output” to be consistent with the description of outputs in ASC 606. For public business entities, the ASU is effective for annual periods beginning after December 15, 2017, including interim periods therein. Early adoption is permitted. The ASU must be applied prospectively on or after the effective date. The Group is in the process of evaluating the impacts of the adoption of this ASU. In January, 2017, the FASB issued a new pronouncement, ASU 2017-04, which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of step 2 of the goodwill impairment test. As a result, under the ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, the ASU clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units in connection with an entity’s testing of reporting units for goodwill impairment. The ASU also clarifies that an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. For public business entities that are SEC filers, the ASU is effective prospectively for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Group is in the process of evaluating the impacts of the adoption of this ASU. |
ORGANIZATION AND PRINCIPAL AC29
ORGANIZATION AND PRINCIPAL ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
Consolidated financial information of the Group's VIE and their subsidiaries included in consolidated financial statements after elimination of intercompany balances and transactions within the Group | As of As of December 31, December 31, 2015 2016 Total assets $ $ Total liabilities $ $ Year ended December 31, 2014 2015 2016 Net revenues $ $ $ Net loss $ ) $ ) $ ) Year ended December 31, 2014 2015 2016 Net cash provided by (used in) operating activities $ $ ) $ ) Net cash (used in) provided by investing activities $ ) $ $ — Net cash provided by financing activities $ — $ — $ — |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of estimated useful lives of property and equipment | Useful lives Leasehold improvements Lesser of the lease term Furniture, fixtures and office equipment 5 years Software and IT equipment 3 years |
Schedule of estimated useful lives of identifiable intangible assets | Useful lives Domain name/Trade name Indefinite life Technology 3 Years Members 4 Years |
PREPAID EXPENSES AND OTHER CU31
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
Schedule of components of other current assets which are included in the prepaid expenses and other current assets | As of December 31, 2015 2016 Receivable from processing agencies (1) $ $ Prepayments to suppliers Rental deposits and prepaid rents Option exercise receivable Deferred expense ADR tax adjustment Others Total $ $ (1) Receivables from processing agencies represented cash that had been received from customers but held by the processing agencies as of December 31, 2015 and 2016. The receivables were collected by the Group subsequent to the respective year end. |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of components of property and equipment | As of December 31, 2015 2016 Leasehold improvements $ $ Furniture, fixtures and office equipment Software and IT equipment Property and equipment Less: Accumulated depreciation ) ) Property and equipment, net $ $ |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INTANGIBLE ASSETS, NET | |
Schedule of intangible assets | December 31, 2015 December 31, 2016 Gross Accumulated Net Gross Accumulated Net carrying Accumulated impairment carrying carrying Accumulated impairment carrying amount amortization loss amount amount amortization loss amount Intangible assets not subject to amortization: Trademark/Domain Name $ $ — $ ) $ $ $ — $ ) $ Intangible assets subject to amortization: - Technology Platform ) — — ) — — - Non-compete Agreement ) ) — ) ) — - Customer Base ) ) — ) ) — - Technology ) — ) — — - Members ) — ) — $ $ ) $ ) $ $ ) $ ) $ |
ACCRUED EXPENSES AND OTHER CU34
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2015 2016 Accrued payroll and staff welfare $ $ Individual income tax withheld VAT payable Accrued professional fees Accrued advertising fees Credit card processing charges Accrued sales return (1) Other accrued expenses Total $ $ (1) Accrued sales return represents the gross profit effect of estimated sales return at the end of each of the respective years assuming products returned had no value to the Group. |
Schedule of movements in accrued sales return | As of December 31, 2015 2016 Balance at January 1 $ $ Allowance for sales return made in the year Utilization of accrued sales return ) ) Balance at December 31 $ $ |
SHARE OPTIONS (Tables)
SHARE OPTIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SHARE OPTIONS | |
Schedule of assumptions used for estimating the fair value of each option granted on the date of grant | 2015 2016 Risk-free interest rate % % Exercise multiple Expected volatility % % Expected dividend yield % % Fair value of ordinary shares $ $ (1) Risk-free interest rate Risk-free interest rate was estimated based on the yield to maturity of China international government bonds with a maturity period close to the contractual term of the options. (2) Exercise multiple Exercise multiple represents the value of the underlying share as a multiple of exercise price of the option which, if achieved, results in exercise of the option. (3) Volatility The volatility of the underlying ordinary shares during the life of the options was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the contractual term of the options. (4) Dividend yield The dividend yield was estimated by the Group based on its expected dividend policy over the contractual term of the options. (5) Fair value of underlying ordinary shares The fair value of the underlying ordinary shares is determined based on the closing market price of the ADS of the Company as of the grant date. |
Summary of the stock option activity under the 2008 Plan | Weighted average exercise price Options granted per option Outstanding at January 1, 2016 $ Granted $ Exercised ) $ Cancelled and Forfeited ) $ Outstanding at December 31, 2016 $ |
Summary of information regarding the share options granted | As of December 31, 2016 Weighted- Weighted- average remaining average exercise contractual Aggregate Options Number price per option life (years) intrinsic value Options Outstanding $ $ Exercisable $ $ Expected to vest $ $ — |
NONVESTED SHARES (Tables)
NONVESTED SHARES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
NONVESTED SHARES | |
Summary of information regarding the nonvested shares granted and vested | Weighted average grant date Number of Shares fair value Outstanding at January 1, 2016 $ Granted $ Forfeited ) $ Vested ) $ Outstanding at December 31, 2016 $ |
Schedule of share-based compensation expenses | Year ended December 31, 2014 2015 2016 Fulfillment $ $ $ Selling and marketing General and administrative Total $ $ $ |
INCOME TAXES (Table)
INCOME TAXES (Table) | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
Schedule of principal components of the deferred tax assets and liabilities | As of December 31, 2015 2016 Current deferred tax assets: Accrued payroll $ $ Accrued expenses Accrued inventory provision Less: Valuation allowance ) ) Current deferred tax assets, net — — Non-current deferred tax asset: Net operating loss carry forwards Less: Valuation allowance ) ) Non-current deferred tax asset, net — — Total deferred tax asset, net $ — $ — |
Schedule of movement of valuation allowance | As of December 31, 2015 2016 Balance at beginning of the period $ $ Additions Reversals ) — Balance at end of the period $ $ |
Schedule of reconciliation between the expense of income taxes computed by applying the PRC tax rate to loss before income taxes and the actual provision for income taxes | Years ended December 31, 2014 2015 2016 Loss before provision of income tax $ ) $ ) $ ) Statutory tax rate in the PRC % % % Income tax at statutory tax rate ) ) ) Non-deductible expenses Effect of income tax holiday and preferential tax rates ) ) ) Utilisation of tax loss previously not recognized — ) ) Effect of income tax rate differences in jurisdictions other than the PRC Changes in valuation allowances Income tax expense $ $ $ |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
LOSS PER SHARE | |
Schedule of computation of basic and diluted net loss per ordinary share | 2014 2015 2016 Numerator: Net loss attributable to ordinary shareholders of LightInTheBox Holding Co., Ltd. $ ) $ ) $ ) Denominator: Weighted average number of shares used in calculating net loss per ordinary share —basic and diluted Net loss per ordinary share-basic and diluted $ ) $ ) $ ) |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SEGMENT REPORTING | |
Schedule of financial information relating to the segments | For year ended December 31, 2016 Product sales Services Consolidated Revenues $ $ $ Cost of revenues Gross profit Unallocated operating expenses Loss from operations ) Exchange loss on offshore bank accounts. ) Interest income Loss before income tax expense $ ) For year ended December 31, 2015 Product sales Services Consolidated Revenues $ $ $ Cost of revenues Gross profit Unallocated operating expenses Loss from operations ) Exchange loss on offshore bank accounts. ) Interest income Loss before income tax expense $ ) For year ended December 31, 2014 Product sales Services Consolidated Revenues $ $ Cost of revenues Gross profit Unallocated operating expenses Loss from operations ) Exchange loss on offshore bank accounts. ) Interest income Loss before income tax expense $ ) |
Schedule of components of product sales | For the years ended December 31, 2014 2015 2016 Apparel $ $ $ Other general merchandise Total product sales revenues $ $ $ |
Summary of total net revenues generated in different geographic locations and as a percentage of total net revenues | For the years ended December 31, 2014 2015 2016 Revenues % Revenues % Revenues % Europe $ $ $ North America Other countries Total net revenues $ $ $ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Table) | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum lease payments under non-cancellable operating lease agreements | Future minimum lease payments under non-cancellable operating lease agreements as of December 31, 2016 are as follows: 2017 $ 2018 2019 $ |
ORGANIZATION AND PRINCIPAL AC41
ORGANIZATION AND PRINCIPAL ACTIVITIES - Details of the Entity's Subsidiaries and VIEs (Details) - shareholder | 1 Months Ended | |
Mar. 31, 2008 | Jun. 30, 2007 | |
Details of the entity's subsidiaries, its VIEs and VIE's subsidiary | ||
Number of founding shareholders | 5 | |
Light In The Box | ||
Details of the entity's subsidiaries, its VIEs and VIE's subsidiary | ||
Number of founding shareholders | 5 |
ORGANIZATION AND PRINCIPAL AC42
ORGANIZATION AND PRINCIPAL ACTIVITIES - VIE Arrangements and Loan Agreement (Details) - 12 months ended Dec. 31, 2011 - Consolidated VIEs $ in Thousands | CNY (¥) | USD ($) |
Lanting Gaochuang | CEO | ||
The VIE arrangements | ||
Ownership interest in VIE (as a percent) | 51.00% | |
Lanting Gaochuang | Lanting Huitong | ||
The VIE arrangements | ||
Ownership interest in VIE (as a percent) | 49.00% | |
Lanting Jishi | CEO | ||
Loan Agreement | ||
Amount of loan extended | ¥ 255,000 | $ 41 |
Loan agreement term | 10 years |
ORGANIZATION AND PRINCIPAL AC43
ORGANIZATION AND PRINCIPAL ACTIVITIES - Consolidated Financial Information of the Group's VIEs and Subsidiaries (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated financial information of the Group's VIE and its subsidiaries included in consolidated financial statements | |||
Consolidated | $ 292,487 | $ 323,763 | $ 382,407 |
Net loss | (8,723) | (39,407) | (29,987) |
Net cash provided by (used in) operating activities | (15,334) | (37,901) | (6,889) |
Net cash (used in) provided by investing activities | (287) | 3,138 | 69,181 |
Net cash provided by financing activities | 74,635 | (9,224) | (10,420) |
VIE and its subsidiaries | |||
Consolidated financial information of the Group's VIE and its subsidiaries included in consolidated financial statements | |||
Total assets | 56 | 227 | |
Total liabilities | 1,557 | 1,782 | |
Consolidated | 5 | 5 | 58 |
Net loss | (52) | (128) | (725) |
Net cash provided by (used in) operating activities | (131) | (247) | 769 |
Net cash (used in) provided by investing activities | $ 44 | $ (895) | |
Amount of consolidated VIEs' assets that are collateral for the VIEs' obligations | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable and Property and Equipment, Net (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Furniture, fixtures and office equipment | |
Property and equipment, net | |
Useful lives | 5 years |
Software and IT equipment | |
Property and equipment, net | |
Useful lives | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets, Net (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Technology | |
Acquired intangible assets, net | |
Useful lives | 3 years |
Members | |
Acquired intangible assets, net | |
Useful lives | 4 years |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition, General and Administrative Expense and Foreign Currency Risk (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Revenue recognition | |||
Number of criteria to be met prior to recognition of revenue | item | 4 | ||
Return period, subsequent to the receipt of shipment | 30 days | 7 days | |
Shipping costs | $ 59,964 | $ 70,314 | $ 94,396 |
VAT on sales as a percentage on revenue from the sale of products | 17.00% | ||
General and administrative | |||
Chargeback incurred | $ 2,354 | 1,227 | 748 |
INCOME TAXES | |||
Income tax due to uncertain tax positions | 0 | 0 | $ 0 |
Foreign currency risk | Denominated in RMB | |||
Foreign currency risk | |||
Cash and cash equivalents, term deposit and restricted cash | $ 2,028 | $ 6,939 |
PREPAID EXPENSES AND OTHER CU47
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||
Receivable from processing agencies | $ 1,671 | $ 2,329 |
Prepayment to suppliers | 6,933 | 1,554 |
Rental deposits and prepaid rents | 198 | 218 |
Option exercise receivable | 149 | 22 |
Deferred expense | 287 | 311 |
ADR tax adjustment | 258 | 332 |
Others | 178 | 287 |
Total | $ 9,674 | $ 5,053 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property and equipment, net | |||
Property and equipment | $ 8,950 | $ 9,340 | |
Less: Accumulated depreciation | (7,879) | (7,131) | |
Property and equipment, net | 1,071 | 2,209 | |
Depreciation expense | 1,378 | 2,118 | $ 1,838 |
Leasehold improvements | |||
Property and equipment, net | |||
Property and equipment | 3,748 | 3,887 | |
Furniture, fixtures and office equipment | |||
Property and equipment, net | |||
Property and equipment | 2,345 | 2,440 | |
Software and IT equipment | |||
Property and equipment, net | |||
Property and equipment | $ 2,857 | $ 3,013 |
GOODWILL (Details)
GOODWILL (Details) - Ador Inc. - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended |
Dec. 31, 2013 | Dec. 31, 2016 | |
GOODWILL | ||
Net working capital | $ 44 | |
Goodwill acquired during the year | 690 | |
Other intangible assets | $ 266 | |
Changes to carrying amount of goodwill | $ 0 |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible assets, net | |||
Gross carrying amount | $ 1,407 | $ 1,407 | |
Less: Accumulated amortization | (170) | (153) | |
Less: Accumulated impairment loss | (1,022) | (1,022) | |
Net carrying amount | 215 | 232 | |
Amortization expenses | 17 | 17 | $ 17 |
Expected amortization expenses | |||
Amortization of intangible assets in the next fiscal year | 5 | ||
Technology Platform | |||
Intangible assets, net | |||
Intangible assets subject to amortization | 90 | 90 | |
Less: Accumulated amortization | (90) | (90) | |
Non-compete Agreement | |||
Intangible assets, net | |||
Intangible assets subject to amortization | 9 | 9 | |
Less: Accumulated amortization | (7) | (7) | |
Less: Accumulated impairment loss | (2) | (2) | |
Customer Base | |||
Intangible assets, net | |||
Intangible assets subject to amortization | 32 | 32 | |
Less: Accumulated amortization | (22) | (22) | |
Less: Accumulated impairment loss | (10) | (10) | |
Technology | |||
Intangible assets, net | |||
Intangible assets subject to amortization | 36 | 36 | |
Less: Accumulated amortization | (36) | (24) | |
Net carrying amount | 12 | ||
Members | |||
Intangible assets, net | |||
Intangible assets subject to amortization | 20 | 20 | |
Less: Accumulated amortization | (15) | (10) | |
Net carrying amount | 5 | 10 | |
Trademark/Domain Name | |||
Intangible assets, net | |||
Intangible assets not subject to amortization | 1,220 | 1,220 | |
Less: Accumulated impairment loss | (1,010) | (1,010) | |
Net carrying amount | $ 210 | $ 210 |
LONG-TERM INVESTMENT (Details)
LONG-TERM INVESTMENT (Details) - USD ($) | Feb. 06, 2015 | Dec. 31, 2016 | Dec. 31, 2015 |
LONG-TERM INVESTMENT | |||
Loss (gain) from equity method investment | $ (17,000) | $ 34,000 | |
Demon | |||
LONG-TERM INVESTMENT | |||
Percentage of equity interest | 30.00% | ||
Cash consideration | $ 2,100 | ||
Loss (gain) from equity method investment | $ (17,000) | $ 34,000 |
ACCRUED EXPENSES AND OTHER CU52
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||
Accrued payroll and staff welfare | $ 12,944 | $ 12,817 | ||
Individual income tax withheld | 591 | 605 | ||
VAT payable | 287 | 301 | ||
Accrued professional fees | 3,283 | 1,808 | ||
Accrued advertising fees | 596 | 634 | ||
Credit card processing charges | 551 | 376 | ||
Accrued sales return | $ 2,465 | $ 1,417 | 1,927 | 2,465 |
Other accrued expenses | 905 | 977 | ||
Total | $ 21,084 | $ 19,983 | ||
Movements in accrued sales return | ||||
Balance at the beginning of the period | 2,465 | 1,417 | ||
Allowance for sales return made in the year | 12,370 | 17,491 | ||
Utilization of accrued sales return | (12,908) | (16,443) | ||
Balance at the end of the period | $ 1,927 | $ 2,465 |
ORDINARY SHARES (Details)
ORDINARY SHARES (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 16, 2014 | Mar. 31, 2016 | Dec. 31, 2013 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Jun. 08, 2016 |
Amount of stock repurchase plan authorized by the board of directors | $ 10,000 | ||||||||
Total consideration to share repurchase plan | $ 810 | $ 9,039 | $ 10,957 | ||||||
Net proceeds from offering upon private placement | $ 75,423 | ||||||||
Warrant | |||||||||
Maximum number of ordinary shares into which the warrant maybe converted | 7,455,000 | ||||||||
Issuance of ordinary shares (in ADS) | 3,727,500 | ||||||||
Exercise price of warrant per ordinary share | $ 2.75 | ||||||||
Private Placement | |||||||||
Net issuance costs | $ 1,077 | ||||||||
Net proceeds from offering upon private placement | $ 75,423 | ||||||||
ADS | |||||||||
Amount of stock repurchase plan authorized by the board of directors | $ 20,000 | ||||||||
Period to repurchase shares | 1 year | ||||||||
Additional Period to repurchase shares | 12 months | ||||||||
Repurchase of outstanding shares (in share) | 3,966,951 | 3,695,337 | 1,868,726 | ||||||
ADS | Private Placement | |||||||||
Issuance of ordinary shares (in share) | 21,250,000 | ||||||||
Ordinary Shares | |||||||||
Repurchase of outstanding shares, equivalent to ordinary shares (in shares) | 7,933,902 | 7,390,674 | 3,737,452 | ||||||
Total consideration to share repurchase plan | $ 20,806 | ||||||||
Ordinary Shares | Private Placement | |||||||||
Issuance of ordinary shares (in share) | 42,500,000 |
SHARE OPTIONS - Options Details
SHARE OPTIONS - Options Details and Assumptions Used to Estimate Fair Value of Options Granted (Details) - 2008 Plan | Oct. 27, 2008shares | May 31, 2014shares | Dec. 31, 2016$ / sharesshares | Dec. 31, 2015$ / sharesshares | Dec. 31, 2014$ / sharesshares | Dec. 31, 2013$ / sharesshares |
Share options | ||||||
Shares authorized to grant | shares | 4,444,444 | |||||
Additional shares authorized to issue | shares | 6,900,000 | |||||
Share options | ||||||
Share options | ||||||
Vesting period | 4 years | 4 years | ||||
Vesting percentage at the end of the first year through the fourth year | 25.00% | |||||
Expiration period | 10 years | |||||
Shares options granted | shares | 4,000 | 546,400 | 1,797,300 | 307,250 | ||
Exercise price of shares options granted (in dollars per share) | $ 1.40 | $ 2.25 | $ 4.75 | |||
Assumptions used for estimating the fair value of options granted on the date of grant | ||||||
Risk-free interest rate | 1.69% | 3.59% | ||||
Exercise multiple | 2.8 | 2.2 | ||||
Expected volatility (as a percent) | 59.70% | 61.20% | ||||
Expected dividend yield (as a percent) | 0.00% | 0.00% | ||||
Fair value of ordinary shares (in dollars per share) | $ 0.83 | $ 1.28 | ||||
Share options | Minimum | ||||||
Share options | ||||||
Vesting period | 3 months | 3 years | 3 years | |||
Exercise price of shares options granted (in dollars per share) | $ 1.84 | |||||
Share options | Maximum | ||||||
Share options | ||||||
Vesting period | 4 years | 4 years | 4 years | |||
Exercise price of shares options granted (in dollars per share) | $ 3.26 |
SHARE OPTIONS - Summary of Stoc
SHARE OPTIONS - Summary of Stock Option Activity (Details) - 2008 Plan - Share options - $ / shares | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Options granted | ||||
Balance at the beginning of the period (in shares) | 1,374,050 | |||
Granted (in shares) | 4,000 | 546,400 | 1,797,300 | 307,250 |
Exercised (in shares) | (39,500) | |||
Cancelled and Forfeited (in shares) | (372,700) | |||
Balance at the end of the period (in shares) | 965,850 | 1,374,050 | ||
Weighted average exercise price per option | ||||
Balance at the beginning of the period (in shares) | $ 1.98 | |||
Granted (in dollars per share) | 1.40 | $ 2.25 | $ 4.75 | |
Exercised (in dollars per share) | 1.24 | |||
Cancelled and Forfeited (in dollars per share) | 2.45 | |||
Balance at the end of the period (in dollars per share) | 1.82 | 1.98 | ||
Weighted average fair value per option at grant date | ||||
Granted (in dollars per share) | $ 0.8 | $ 1.28 | $ 1.42 |
SHARE OPTIONS - Details of Shar
SHARE OPTIONS - Details of Share Options Granted (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Additional disclosures | |||
Share-based compensation expense | $ 2,317 | $ 3,196 | $ 2,518 |
2008 Plan | Share options | |||
Options Number | |||
Outstanding (in shares) | 965,850 | 1,374,050 | |
Exercisable (in shares) | 567,288 | ||
Expected to vest (in shares) | 398,562 | ||
Weighted-average exercise price per option | |||
Outstanding (in dollars per share) | $ 1.82 | $ 1.98 | |
Exercisable (in dollars per share) | 1.44 | ||
Expected to vest (in dollars per share) | $ 2.36 | ||
Weighted-average remaining contractual life (years) | |||
Outstanding | 6 years 2 months 5 days | ||
Exercisable | 4 years 10 months 17 days | ||
Expected to vest | 8 years 11 days | ||
Aggregate intrinsic value | |||
Outstanding (in dollars) | $ 256 | ||
Exercisable (in dollars) | 256 | ||
Additional disclosures | |||
Total intrinsic value of options exercised | $ 26 | $ 253 | $ 119 |
Weighted average grant date fair value of options | $ 0.8 | $ 1.28 | $ 1.42 |
Share-based compensation expense | $ 102 | $ 5 | $ 291 |
Unrecognized compensation cost | $ 562 | ||
Weighted-average period of recognition of unrecognized compensation cost | 1 year 11 months 23 days |
NONVESTED SHARES (Details)
NONVESTED SHARES (Details) - 2008 Plan - Nonvested shares - shares | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2011 | |
Nonvested shares | |||||
Nonvested shares granted | 296,000 | 3,154,800 | 2,800,300 | 711,571 | 1,820,010 |
Vesting period | 4 years | ||||
Minimum | |||||
Nonvested shares | |||||
Vesting period | 3 months | 3 years | 2 years | ||
Maximum | |||||
Nonvested shares | |||||
Vesting period | 4 years | 4 years | 4 years | 4 years |
NONVESTED SHARES - Summary of N
NONVESTED SHARES - Summary of Nonvested Shares Granted and Vested (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2011 | |
Weighted average grant date fair value | |||||
Incremental compensation expenses | $ 2,317 | $ 3,196 | $ 2,518 | ||
2008 Plan | Nonvested shares | |||||
Number of Shares | |||||
Outstanding at the beginning of the period (in shares) | 3,315,264 | ||||
Granted (in shares) | 296,000 | 3,154,800 | 2,800,300 | 711,571 | 1,820,010 |
Forfeited (in shares) | (337,537) | ||||
Vested (in shares) | (1,367,560) | ||||
Outstanding at the end of the period (in shares) | 1,906,167 | 3,315,264 | |||
Weighted average grant date fair value | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 2.52 | ||||
Granted (in dollars per share) | 1.70 | ||||
Forfeited (in dollars per share) | 2.36 | ||||
Vested (in dollars per share) | 2.25 | ||||
Outstanding at the end of the period (in dollars per share) | $ 2.61 | $ 2.52 | |||
Fair value of shares vested | $ 3,070 | $ 2,791 | $ 2,123 | ||
Incremental compensation expenses | 2,215 | $ 3,191 | $ 2,227 | ||
Unrecognized compensation cost | $ 4,735 | ||||
Weighted-average period of recognition of unrecognized compensation cost | 2 years 18 days |
NONVESTED SHARES - Share-based
NONVESTED SHARES - Share-based Compensation Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based compensation expenses | |||
Incremental compensation expenses | $ 2,317 | $ 3,196 | $ 2,518 |
Fulfillment | |||
Share-based compensation expenses | |||
Incremental compensation expenses | 211 | 185 | 46 |
Selling and marketing | |||
Share-based compensation expenses | |||
Incremental compensation expenses | 458 | 580 | 231 |
General and administrative | |||
Share-based compensation expenses | |||
Incremental compensation expenses | $ 1,648 | $ 2,431 | $ 2,241 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2010 | |
Income taxes | ||||||
Statutory income tax rates (as a percent) | 25.00% | 25.00% | 25.00% | |||
Current tax expense (benefit) | $ 54 | $ 49 | $ 70 | |||
Current deferred tax assets: | ||||||
Accrued payroll | 2,730 | 2,650 | ||||
Accrued expenses | 88 | 69 | ||||
Accrued inventory provision | 382 | 369 | ||||
Less: Valuation allowance | (3,200) | (3,088) | ||||
Non-current deferred tax asset: | ||||||
Net operating loss carry forwards | 16,618 | 16,232 | ||||
Less: Valuation allowance | (16,618) | (16,232) | ||||
Deferred tax liabilities | 0 | 0 | 0 | |||
Movement of valuation allowance | ||||||
Balance at beginning of the period | 19,320 | 13,707 | ||||
Additions | 498 | 5,993 | ||||
Reversals | (380) | |||||
Balance at end of the period | 19,818 | 19,320 | 13,707 | |||
Reconciliation between the expense of income taxes computed by applying the PRC tax rate to loss before income taxes and the actual provision for income taxes | ||||||
Loss before provision of income tax | $ (8,686) | $ (39,324) | $ (29,917) | |||
Statutory income tax rates (as a percent) | 25.00% | 25.00% | 25.00% | |||
Income tax at statutory tax rate | $ (2,172) | $ (9,831) | $ (7,479) | |||
Non-deductible expenses | 20 | 8 | 92 | |||
Effect of income tax holiday and preferential tax rates | (11) | (25) | (76) | |||
Utilisation of tax loss previously not recognized | (124) | (298) | ||||
Effect of income tax rate differences in jurisdictions other than the PRC | 1,843 | 4,582 | 2,468 | |||
Changes in valuation allowances | 498 | 5,613 | 5,065 | |||
Income tax expense | $ 54 | 49 | $ 70 | |||
Hong Kong | Light In The Box | ||||||
Income taxes | ||||||
Statutory income tax rates (as a percent) | 16.50% | |||||
Reconciliation between the expense of income taxes computed by applying the PRC tax rate to loss before income taxes and the actual provision for income taxes | ||||||
Statutory income tax rates (as a percent) | 16.50% | |||||
Hong Kong | Lanting International | ||||||
Income taxes | ||||||
Statutory income tax rates (as a percent) | 16.50% | |||||
Reconciliation between the expense of income taxes computed by applying the PRC tax rate to loss before income taxes and the actual provision for income taxes | ||||||
Statutory income tax rates (as a percent) | 16.50% | |||||
Hong Kong | LightInTheBox Logistic | ||||||
Income taxes | ||||||
Statutory income tax rates (as a percent) | 16.50% | |||||
Reconciliation between the expense of income taxes computed by applying the PRC tax rate to loss before income taxes and the actual provision for income taxes | ||||||
Statutory income tax rates (as a percent) | 16.50% | |||||
Hong Kong | Light Square | ||||||
Income taxes | ||||||
Statutory income tax rates (as a percent) | 16.50% | |||||
Reconciliation between the expense of income taxes computed by applying the PRC tax rate to loss before income taxes and the actual provision for income taxes | ||||||
Statutory income tax rates (as a percent) | 16.50% | |||||
PRC | ||||||
Income taxes | ||||||
Statutory income tax rates (as a percent) | 25.00% | |||||
Non-current deferred tax asset: | ||||||
Net operating loss carry forwards | $ 52 | |||||
Reconciliation between the expense of income taxes computed by applying the PRC tax rate to loss before income taxes and the actual provision for income taxes | ||||||
Statutory income tax rates (as a percent) | 25.00% | |||||
Additional disclosures | ||||||
Withholding tax rate on dividends distributed to non-resident entities (as a percent) | 10.00% | |||||
Deferred tax liability accrued for the Chinese dividend withholding taxes | $ 0 | $ 0 | ||||
PRC | Lanting Huitong | ||||||
Income taxes | ||||||
Statutory income tax rates (as a percent) | 25.00% | 25.00% | ||||
Income tax exemption period | 2 years | |||||
Reduced tax rate for three years subsequent the exemption period (as a percent) | 12.50% | 12.50% | 12.50% | |||
Period for reduced tax rate | 3 years | |||||
Reconciliation between the expense of income taxes computed by applying the PRC tax rate to loss before income taxes and the actual provision for income taxes | ||||||
Statutory income tax rates (as a percent) | 25.00% | 25.00% | ||||
PRC | Lanting Gaochuang | ||||||
Income taxes | ||||||
Income tax exemption period | 2 years | |||||
Reduced tax rate for three years subsequent the exemption period (as a percent) | 12.50% | 12.50% | 12.50% | |||
Period for reduced tax rate | 3 years |
LOSS PER SHARE - Computation of
LOSS PER SHARE - Computation of Basic and Diluted Net Loss Per Ordinary Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Numerator: | |||
Net loss attributable to ordinary shareholders of LightInTheBox Holding Co., Ltd. | $ (8,723) | $ (39,407) | $ (29,987) |
Shares (denominator): | |||
Weighted average number of shares used in calculating net loss per ordinary share -basic and diluted | 127,180,801 | 94,970,054 | 99,001,560 |
Net loss per ordinary share-basic and diluted | $ (0.07) | $ (0.41) | $ (0.30) |
LOSS PER SHARE - Shares Exclude
LOSS PER SHARE - Shares Excluded From the Calculation of Diluted Loss Per Share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share options | |||
Shares excluded from the calculation of diluted loss per share | |||
Shares excluded from the calculation of diluted loss per share | 965,850 | 1,374,050 | 2,506,300 |
Nonvested shares | |||
Shares excluded from the calculation of diluted loss per share | |||
Shares excluded from the calculation of diluted loss per share | 1,906,167 | 3,315,264 | 2,583,337 |
EMPLOYEE RETIREMENT BENEFIT (De
EMPLOYEE RETIREMENT BENEFIT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
EMPLOYEE RETIREMENT BENEFIT | |||
Total contribution for employee benefits | $ 3,711 | $ 5,159 | $ 5,544 |
STATUTORY RESERVES AND RESTRI64
STATUTORY RESERVES AND RESTRICTED NET ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
STATUTORY RESERVES AND RESTRICTED NET ASSETS | |||
Minimum percentage of after-tax profit required to be transferred to general reserve till such reserve reaches specified percentage of registered capital | 10.00% | ||
General reserve as a percentage of registered capital up to which after-tax profit of PRC subsidiaries and VIEs shall be transferred | 50.00% | ||
Discretionary appropriations to enterprise expansion reserve, staff welfare and bonus reserve | $ 0 | $ 0 | $ 0 |
Amount of restricted net assets of consolidated subsidiaries and VIE not available for distribution | $ 5,089 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($)segment | Dec. 31, 2014USD ($) | |
Segment reporting | |||
Number of operating segments | segment | 2 | 1 | |
Product sales | $ 262,083 | $ 312,332 | $ 382,282 |
Services | 30,404 | 11,431 | 125 |
Consolidated | 292,487 | 323,763 | 382,407 |
Cost of revenues | 160,566 | 196,753 | 236,982 |
Cost of services | 28,371 | 10,601 | 113 |
Cost | 188,937 | 207,354 | 237,095 |
Gross profit | 103,550 | 116,409 | 145,312 |
Unallocated operating expenses | 112,634 | 155,568 | 176,028 |
Loss from operations | (9,084) | (39,159) | (30,716) |
Exchange loss on offshore bank accounts | (120) | (938) | (1,556) |
Interest income | 518 | 773 | 2,355 |
Loss before income tax expense | (8,686) | (39,324) | (29,917) |
Product sales | |||
Segment reporting | |||
Product sales | 262,083 | 312,332 | 382,282 |
Cost of revenues | 160,566 | 196,753 | 236,982 |
Gross profit | 101,517 | 115,579 | 145,300 |
Services | |||
Segment reporting | |||
Services | 30,404 | 11,431 | 125 |
Cost of services | 28,371 | 10,601 | 113 |
Gross profit | $ 2,033 | $ 830 | $ 12 |
SEGMENT REPORTING - Components
SEGMENT REPORTING - Components of product sales (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment reporting | |||
Product sales | $ 262,083 | $ 312,332 | $ 382,282 |
Product sales | |||
Segment reporting | |||
Product sales | 262,083 | 312,332 | 382,282 |
Product sales | Apparel | |||
Segment reporting | |||
Product sales | 89,291 | 118,673 | 138,570 |
Product sales | Other general merchandise | |||
Segment reporting | |||
Product sales | $ 172,792 | $ 193,659 | $ 243,712 |
SEGMENT REPORTING - Segment cos
SEGMENT REPORTING - Segment cost by product sales and services (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment reporting | |||
Cost of product sales | $ 160,566 | $ 196,753 | $ 236,982 |
Cost of services | 28,371 | 10,601 | 113 |
Total cost of revenues | 188,937 | 207,354 | 237,095 |
Product sales | |||
Segment reporting | |||
Cost of product sales | 160,566 | 196,753 | 236,982 |
Services | |||
Segment reporting | |||
Cost of services | $ 28,371 | $ 10,601 | $ 113 |
SEGMENT REPORTING - Summary of
SEGMENT REPORTING - Summary of revenues and percentage of revenues by geographical locations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment reporting | |||
Revenues | $ 292,487 | $ 323,763 | $ 382,407 |
Total net revenues | |||
Segment reporting | |||
Revenues (as a percent) | 100.00% | 100.00% | 100.00% |
Europe | |||
Segment reporting | |||
Revenues | $ 145,185 | $ 184,057 | $ 239,176 |
Europe | Total net revenues | |||
Segment reporting | |||
Revenues (as a percent) | 49.60% | 56.80% | 62.50% |
France | |||
Segment reporting | |||
Revenues | $ 31,321 | $ 39,571 | $ 52,264 |
North America | |||
Segment reporting | |||
Revenues | $ 77,814 | $ 88,790 | $ 81,675 |
North America | Total net revenues | |||
Segment reporting | |||
Revenues (as a percent) | 26.60% | 27.40% | 21.40% |
United States | |||
Segment reporting | |||
Revenues | $ 66,475 | $ 74,296 | $ 65,376 |
Other countries | |||
Segment reporting | |||
Revenues | $ 69,488 | $ 50,916 | $ 61,556 |
Other countries | Total net revenues | |||
Segment reporting | |||
Revenues (as a percent) | 23.80% | 15.80% | 16.10% |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Fair value measurements | |||
Period of financial forecasts on which discounted cash flows is based | 5 years | ||
Recurring | |||
Fair value measurements | |||
Financial assets | $ 0 | $ 0 | $ 0 |
Financial liabilities | $ 0 | $ 0 | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - AoKang $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Related Party Transaction | |
Percentage of outstanding shares held | 17.80% |
Goods purchased | $ 5 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Lease Commitment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
COMMITMENTS AND CONTINGENCIES | |||
Rent expenses under operating leases | $ 4,247 | $ 4,461 | $ 3,906 |
Future minimum lease payments under non-cancellable operating lease agreements | |||
2,017 | 3,759 | ||
2,018 | 2,448 | ||
2,019 | 261 | ||
Total | $ 6,468 |
COMMITMENTS AND CONTINGENCIES72
COMMITMENTS AND CONTINGENCIES - Contingencies (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Failure to make payments of contributions for employee benefit plans | |
Contingencies | |
Maximum fines ( as a percent) | 300.00% |