SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(b) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All inter-company transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation.

Cash and cash equivalents

(d) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, demand deposits and term deposits with an original maturity of three months or less and are readily convertible to known amount of cash.

Accounts receivable, net

(f) Accounts receivable, net

The Group maintains an allowance for credit losses in accordance with ASC Topic 326, Credit Losses (“ASC 326”) and records the allowance for credit losses as an offset to accounts receivable. The estimated credit losses charged to the allowance is classified as “General and administrative” in the consolidated statements of operations. The Group assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist, primarily based on similar business line, service or product offerings and on an individual basis when the Group identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Group considers historical collectability based on past due status, the age of the accounts receivable balances, credit quality of the Group’s customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Group’s ability to collect from customers. Accounts receivable balances are written off after all collection efforts have been exhausted.

Accounts receivable represents amounts that the Group has the unconditional right to consideration. As of December 31, 2024 and 2025, accounts receivable included accounts receivable for cash collected by supplemental online outlets, and accounts receivable for logistic services. As of December 31, 2024 and 2025, the allowance for credit losses for accounts receivable was $1,853 and $1,858, respectively. For the years ended December 31, 2023, 2024 and 2025, the recognized credit losses for accounts receivable were $nil, $19 and $nil, respectively.

Property and equipment, net

(h) Property and equipment, net

Property and equipment, net is stated at cost less accumulated depreciation and impairment, if any.

Depreciation is calculated on a straight-line basis over the following estimated useful lives:


		Useful lives
Furniture, fixtures and office equipment		1 - 5 years
Leasehold improvements		Lesser of the lease term or estimated useful life of the assets
Vehicles		4 - 10 years
IT equipment		1 - 3 years

Internal use software

(j) Internal use software

The Group capitalizes payroll costs incurred for the development of computer software for internal use pursuant to ASC Topic 350-40, Intangibles—Goodwill and Others—Internal use software. The Group capitalizes the costs during the development of the project, when it is determined that it is probable that the project will be completed, and the software will be used as intended. Costs related to preliminary project activities, post-implementation activities, training and maintenance are expensed as incurred. Internal use software is amortized on a straight-line basis over its estimated useful life, which is generally three years. Capitalized internal use software is recorded in “Intangible assets, net” on the consolidated balance sheets.

Impairment of long-lived assets and definite-lived intangible assets

(l) Impairment of long-lived assets and definite-lived intangible assets

Long-lived assets, such as property and equipment and definite-lived intangible assets, are stated at cost less accumulated depreciation or amortization and any impairment.

The Group evaluates the recoverability of long-lived assets whenever events or changes in circumstances indicate that a long-lived asset’s carrying amount may not be recoverable. The Group compares the carrying amount of long-lived assets against the estimated undiscounted future cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the asset over the fair value of the asset. Fair value is estimated based on various valuation techniques and assumptions, including the discounted cash flow method based on estimated future cash flows. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts.

Treasury shares

(n) Treasury shares

Treasury shares represent shares of the Company’s shares 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 are excluded from the weighted average outstanding shares in calculation of net (loss) / income per ordinary share. Treasury shares are recorded at cost incurred to purchase the shares in the consolidated balance sheets.

Gains on sales of treasury stock not previously accounted for as constructively retired shall be credited to additional paid-in capital; losses may be charged to additional paid-in capital to the extent that previous net gains from sales or retirements of the same class of stock are included therein, otherwise to retained earnings.

Contract liabilities

Contract liabilities

A contract liability is recognized when the Group has an obligation to transfer goods or services to a customer for which the Group has received consideration from the customer. It is included in advance from customers on the consolidated balance sheets.

Changes in the Group’s contract liabilities are presented in the following table for the years ended December 31, 2024 and 2025:


		Years ended December 31,
		2024			2025
Contract liabilities as of January 1		$	11,201		$	6,625
Cash received in advance, net of VAT			236,087			190,902
Revenue recognized from opening balance of contract liabilities			(11,201)			(6,625)
Revenue recognized from contract liabilities arising during current year			(229,462)			(181,980)
Contract liabilities as of December 31		$	6,625		$	8,922

The Group has elected the practical expedient not to disclose the information about remaining performance obligations which are part of contracts that have an original expected duration of one year or less.

Fulfillment

(q) Fulfillment

Fulfillment costs represent those costs incurred in operating and staffing the Group’s fulfillment and customer service centers, including (i) costs attributable to buying, receiving, inspecting, and warehousing inventories, (ii) picking, packaging, and preparing customer orders for shipment, (iii) payment processing and related transaction costs, and (iv) rental expenses of leased warehouses and depreciation of logistics and electronic equipment.

General and administrative

(s) 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, as well as facility and equipment costs attributable to these functions, such as depreciation and rental expense, professional fees, provision for credit losses 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 telecommunications cost. The research and development expenses for the years ended December 31, 2023, 2024 and 2025 were $19,105, $15,527 and $10,270, respectively.

General and administrative expenses also include chargebacks relating to fraudulent credit card activities 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 expenses for the years ended December 31, 2023, 2024 and 2025 were $2,338, $681 and $758, respectively.

Financial instruments and fair value measurements

(u) Financial instruments and fair value measurements

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.

The Group’s financial instruments primarily consist of cash and cash equivalents, restricted cash, accounts receivable, other current assets, long-term investments, short-term borrowings, accounts payable, advance from customers and accrued expenses and other current liabilities.

The carrying values of cash and cash equivalents, restricted cash, accounts receivable, other current assets, short-term borrowings, accounts payable, advance from customers and accrued expenses and other current liabilities as of December 31, 2024 and 2025 approximate their fair values due to the short-term maturities of these instruments. Goodwill, long-term investments and long-lived assets are measured at fair value on a nonrecurring basis only when impairment is recognized. The Group estimates the fair value of the reporting unit using the discounted cash flow method under the income approach. The discounted cash flows are based on the financial forecast developed by management for planning purposes. Cash flows beyond the forecasted period are estimated using a terminal value calculation. The fair values of long-lived assets are determined based on various valuation methods, including the replacement cost method, the relief from royalty method and the excess earning method. The fair value measurement of long-term investments is described in (k) Long-term investments.

Certain assets are measured at a non-recurring basis. The following tables present the fair value hierarchy for the assets at December 31, 2024 and 2025:

Fair value measurement

at December 31, 2024 using

 

Quoted prices in

 

Significant

 

Significant

 

Carrying Value at

active markets

observable

unobservable

Total losses

December 31, 2024

(Level 1)

inputs (Level 2)

inputs (Level 3)

for the year

Non-recurring fair value measurements for:

Long-term investments

$

73

$

—

$

—

$

73

$

—

Fair value measurement

at December 31, 2025 using

Quoted prices in

Significant

Carrying Value at

active markets

observable

unobservable

Total losses

December 31, 2025

(Level 1)

inputs (Level 2)

inputs (Level 3)

for the year

Non-recurring fair value measurements for:

Long-term investments

$

77

$

—

$

—

$

77

$

—

For long-term investments which consist of equity securities accounted for under the measurement alternative, when there are observable price changes in orderly transactions for identical or similar investments of the same issuer, the investments are re-measured to fair value. The non-recurring fair value measurements for these investments require management to estimate a price adjustment for the different rights and obligations between a similar instrument of the same issuer with an observable price change in an orderly transaction and the investment held by the Group. These non-recurring fair value measurements were measured as of the observable transaction dates. The Company uses valuation methodologies including the back-solve method and an equity allocation model which requires management to use the observable transaction price at the transaction date and other unobservable inputs (level 3) such as expected volatility, discount for lack of marketability and probability of exit events as it relates to an initial public offering, liquidation and redemption preferences.

Income taxes

(w) Income taxes

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. 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’s estimated liability for unrecognized tax benefits is periodically assessed for adequacy and may be affected by changing interpretations of laws, rulings by tax authorities, changes and / or developments with respect to tax audits, and expiration of the statute of limitations. The actual benefits ultimately realized may differ from the Group’s estimates. As each audit is concluded, adjustments, if any, are recorded in the Group’s consolidated financial statements. Additionally, in future periods, changes in facts, circumstances, and new information may require the Group to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized in the period in which the changes occur.

The Group applies the provisions of ASC Topic 740, Income Taxes (“ASC 740”), in accounting for uncertainty in income taxes. ASC 740 clarifies the accounting for uncertainty in income taxes by prescribing the recognition threshold a tax position is required to meet before being recognized in the financial statements. The Group has elected to classify interest and penalties related to an uncertain tax position, if and when required as part of income tax expense in the consolidated statements of comprehensive income.

Share-based compensation

(y) Share-based compensation

Share-based payment transactions with employees, including share options and nonvested shares 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 service conditions and 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 awards 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 equity awards are accounted as a modification under which the Group calculate whether there is any excess of the fair value of the modified award over the fair value of the original award immediately before its terms are modified, measured based on the share price and other pertinent factors at the modification date. For vested awards, the Group recognizes incremental compensation cost in the period of the modification occurred and for unvested awards, 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.

Income / (loss) per share

(aa) Income / (loss) per share

Basic income / (loss) per ordinary share is computed by dividing net income / (loss) attributable to ordinary shareholders by weighted average number of ordinary shares outstanding during the period.

Diluted income / (loss) per ordinary share reflects the potential dilution that could occur if securities were exercised or converted into ordinary shares and is calculated by dividing net income / (loss) attributable to ordinary shareholders by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the year. Ordinary equivalent shares consist of ordinary shares issuable upon the vest of nonvested shares or exercise of outstanding share options (using the treasury stock method). Ordinary equivalent shares are calculated based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. Ordinary equivalent shares are not included in the denominator of the diluted loss per share calculation when inclusion of such shares would be anti-dilutive.

Currency convertibility risk

(cc) Currency convertibility 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 and restricted cash denominated in RMB amounted to $1,638 and $1,046 as of December 31, 2024 and 2025, respectively.