Document and Entity Information	12 Months Ended
Document and Entity Information	Dec. 31, 2014
Document and Entity Information
Entity Registrant Name	LightInTheBox Holding Co., Ltd.
Entity Central Index Key	0001523836
Document Type	20-F
Document Period End Date	Dec. 31, 2014
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	Non-accelerated Filer
Entity Common Stock, Shares Outstanding	97,619,363
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets
Cash and cash equivalents	$ 75,358	$ 23,745
Term deposit	5,802	79,958
Restricted cash	2,267	1,360
Accounts receivable	695	259
Inventories, net	9,845	7,081
Prepaid expenses and other current assets	5,189	8,890
Total current assets	99,156	121,293
Property and equipment, net	3,664	3,002
Intangible assets, net	249	266
Goodwill	690	690
Long-term deposit	708	640
TOTAL ASSETS	104,467	125,891
Current Liabilities
Accounts payable (including accounts payable of the consolidated VIEs without recourse to LightInTheBox Holding Co., Ltd. of $36 and $23 as of December 31, 2013 and December 31,2014,respectively)	25,236	18,677
Advance from customers (including advance from customers of the consolidated VIEs without recourse to LightInTheBox Holding Co., Ltd. of $4 and nil as of December 31, 2013 and December 31, 2014, respectively)	10,979	10,263
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 $1,449 and $2,251 as of December 31, 2013 and December 31, 2014,respectively)	25,069	15,560
Total current liabilities	61,284	44,500
TOTAL LIABILITIES	61,284	44,500
EQUITY
Ordinary shares ($0.000067 par value; 707,825,710 shares authorized; 99,194,991 and 100,354,801 shares issued as of December 31, 2013 and December 31, 2014, respectively; 99,194,991 and 96,617,349 shares outstanding as of December 31, 2013 and December 31, 2014 respectively)	7	7
Additional paid-in capital	155,872	153,124
Accumulated deficit	(101,608)	(71,621)
Accumulated other comprehensive loss	(131)	(119)
Treasury shares, at cost (nil and 3,737,452 shares as of December 31, 2013 and December 31, 2014, respectively)	(10,957)
TOTAL EQUITY	43,183	81,391
TOTAL LIABILITIES AND EQUITY	$ 104,467	$ 125,891

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Accounts payable (in dollars)	$ 25,236	$ 18,677
Advance from customers (in dollars)	10,979	10,263
Accrued expenses and other current liabilities (in dollars)	25,069	15,560
Ordinary shares, par value (in dollars per share)	$ 0.000067	$ 0.000067
Ordinary shares, shares authorized	707,825,710	707,825,710
Ordinary shares, shares issued	100,354,801	99,194,991
Ordinary shares, shares outstanding	96,617,349	99,194,991
Treasury stock, shares	3,737,452	0
Consolidated VIEs
Accounts payable (in dollars)	23	36
Advance from customers (in dollars)	0	4
Accrued expenses and other current liabilities (in dollars)	$ 2,251	$ 1,449

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
CONSOLIDATED STATEMENTS OF OPERATIONS
Net revenues	$ 382,407	$ 292,417	$ 200,010
Cost of goods sold	237,095	165,267	116,465
Gross profit	145,312	127,150	83,545
Operating expenses:
Fulfillment	23,926	15,963	10,088
Selling and marketing	105,186	84,245	53,418
General and administrative	46,916	31,929	22,369
Total operating expenses	176,028	132,137	85,875
Loss from operations	(30,716)	(4,987)	(2,330)
Exchange loss on offshore bank accounts	(1,556)
Interest (expense) income and other	2,355	237	(1,881)
Loss before income taxes	(29,917)	(4,750)	(4,211)
Income taxes expenses	(70)	(69)	(19)
Net loss	(29,987)	(4,819)	(4,230)
Accretion for Series C convertible redeemable preferred shares		1,621	2,971
Net loss attributable to ordinary shareholders	$ (29,987)	$ (6,440)	$ (7,201)
Net loss per ordinary share-basic (in dollars per share)	$ (0.30)	$ (0.09)	$ (0.20)
Net loss per ordinary share-diluted (in dollars per share)	$ (0.30)	$ (0.09)	$ (0.20)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (29,987)	$ (4,819)	$ (4,230)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments, net of tax of nil	(12)	(89)	(8)
Total comprehensive loss	$ (29,999)	$ (4,908)	$ (4,238)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References+ Details

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) (USD $) In Thousands, except Share data, unless otherwise specified	Series A convertible preferred shares Preferred Shares	Series B convertible preferred shares Preferred Shares	Ordinary shares.	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Treasury stock at cost	Total
Balance at Dec. 31, 2011	$ 5,000	$ 11,270	$ 2	$ 5,668	$ (22)	$ (57,980)		$ (36,062)
Balance (in shares) at Dec. 31, 2011	15,000,000	17,522,725	32,198,411
Increase (Decrease) in Stockholders' Equity
Vesting of nonvested shares (in shares)			4,482,147
Share-based compensation				2,695				2,695
Accretion for Series C convertible redeemable preferred shares						(2,971)		(2,971)
Net loss						(4,230)		(4,230)
Beneficial conversion feature of convertible notes				2,096				2,096
Foreign currency translation adjustments, net of tax of nil					(8)			(8)
Balance at Dec. 31, 2012	5,000	11,270	2	10,459	(30)	(65,181)		(38,480)
Balance (in shares) at Dec. 31, 2012	15,000,000	17,522,725	36,680,558
Increase (Decrease) in Stockholders' Equity
Conversion of preferred shares upon IPO	(5,000)	(11,270)	3	59,359				43,092
Conversion of preferred shares upon IPO (in shares)	(15,000,000)	(17,522,725)	42,174,290
Conversion of convertible notes upon IPO				8,000				8,000
Conversion of convertible notes upon IPO (in shares)			2,224,610
Issuance of common shares upon IPO (net of offering costs of $9,883)			2	70,795				70,797
Issuance of common shares upon IPO (in shares)			16,984,736
Vesting of nonvested shares (in shares)			767,397
Exercise of share options				193				193
Exercise of share options (in shares)			363,400
Share-based compensation				4,318				4,318
Accretion for Series C convertible redeemable preferred shares						(1,621)		(1,621)
Net loss						(4,819)		(4,819)
Foreign currency translation adjustments, net of tax of nil					(89)			(89)
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
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 adjustments, net of tax of nil					(12)			(12)
Balance at Dec. 31, 2014			$ 7	$ 155,872	$ (131)	$ (101,608)	$ (10,957)	$ 43,183
Balance (in shares) at Dec. 31, 2014			96,617,349

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
CONSOLIDATED STATEMENTS OF CASH FLOWS
Net loss	$ (29,987)	$ (4,819)	$ (4,230)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	1,855	1,361	1,031
Share-based compensation	2,518	4,318	2,695
Exchange loss on offshore bank accounts	1,556
Write-off of rental deposit			242
Inventory write-down	1,206	(420)	218
Amortization of debt discount		956	1,140
Interest on convertible notes		413	744
Changes in operating assets and liabilities:
Accounts receivable	(447)	12	(176)
Inventories	(4,000)	(864)	(1,003)
Prepaid expenses and other current assets	3,639	(1,148)	(5,807)
Long-term deposit	(79)	(337)	(225)
Accounts payable	6,567	9,508	4,020
Advance from customers	818	3,130	3,641
Accrued expenses and other current liabilities	9,465	3,042	5,109
Net cash provided by (used in) operating activities	(6,889)	15,152	7,399
Cash flows from investing activities
Purchase of property and equipment	(2,576)	(2,451)	(917)
Maturity of term deposit	157,519
Purchase of term deposits	(84,855)	(79,958)
Deposit in restricted cash	(907)	(143)	(367)
Payment for business acquisition		(1,000)
Net cash (used in) provided by investing activities	69,181	(83,552)	(1,284)
Cash flows from financing activities
Proceeds from issuance of convertible notes			8,000
Proceeds from exercise of share options	230	193
Proceeds from initial public offering		75,030
Repurchase of ordinary shares	(10,650)
Payment of professional fees related to initial public offering		(3,127)	(930)
Net cash provided by (used in) financing activities	(10,420)	72,096	7,070
Net increase in cash and cash equivalents	51,872	3,696	13,185
Effect of exchange rate changes on cash and cash equivalents	(259)	77	1
Cash and cash equivalents at beginning of year	23,745	19,972
Cash and cash equivalents at end of year	75,358	23,745	19,972
Supplemental cash flow information:
Income taxes paid	(70)	(69)	(12)
Interest paid		$ (1,157)

ORGANIZATION AND PRINCIPAL ACTIVITIES

12 Months Ended

Dec. 31, 2014

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, variable interest entities (“VIEs”) and VIE’s subsidiary (collectively referred to the “Group”), is primarily involved in online retailing to sell and deliver products to consumers around the world.

As of December 31, 2014, details of the Company’s subsidiaries, its VIEs and VIE’s subsidiary are as follows:

	Later of
	acquisition/	Place of	Percentage of
	Incorporation	incorporation	legal ownership	Principal activities
Subsidiaries
Light In The Box Limited (“Light In The Box”)	June 13, 2007	Hong Kong	100%	Online retail
Lanting International Holding Limited (“Lanting International”)	December 19, 2013	Hong Kong	100%	Investment holding
LightInTheBox International Logistic Co., Ltd. (“LightInTheBox Logistic”)	December 3, 2010	Hong Kong	100%	Logistic
LITB, Inc.	December 18, 2013	United States	100%	Marketing and software development and technology support
Lightinthebox Trading(Shenzhen) Co., Ltd. (“Lanting Jishi”)	October 21, 2008	People’s Republic of China	100%	Online retail
Light In The Box(Suzhou) Trading Co., Limited (“Lanting Suzhou”)	December 2, 2013	People’s Republic of China	100%	Online retail
Light In The Box (Chengdu) Technology Co., Limited	November 11, 2014	People’s Republic of China	100%	Software development and information technology support
LightInTheBox (UK) Limited	May 26, 2009	United Kingdom	100%	Inactive
LITB Netherlands B.V.	September 22, 2014	Netherlands	100%	Marketing

VIEs
Shenzhen Lanting Huitong Technologies Co., Ltd. (“Lanting Huitong”)	June 24, 2008	People’s Republic of China	Consolidated VIE	Software development and information technology support
Beijing Lanting Gaochuang Technologies Co., Ltd. (“Lanting Gaochuang”)	December 6, 2011	People’s Republic of China	Consolidated VIE	Software development and information technology support

VIE’s (Lanting Huitong’s) wholly owned subsidiary
Shanghai Ouku Network Technologies Co., Ltd. (“Shanghai Ouku”)	August 24, 2010	People’s Republic of China	VIE’s subsidiary	Online retail

History of the Group and corporate reorganization

The Group commenced its operation in June 2007, with the establishment of 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.

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 Lanting Huitong and 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 and their subsidiaries 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,
	2013		2014

Total assets	$	2,042	$	2,988
Total liabilities	$	1,489	$	2,274

	Year ended December 31,
	2012			2013			2014

Net revenues	$	2,743		$	300		$	58
Net loss	$	(204	)	$	(179	)	$	(725	)

	Year ended December 31,
	2012			2013			2014

Net cash provided by operating activities	$	200		$	647		$	769
Net cash used in investing activities	$	(298	)	$	(798	)	$	(895	)

There are no consolidated VIEs’ assets that are collateral for the VIEs’ obligations and can only be used to settle the VIEs’ obligations.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

+ References+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2014

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 Company, its subsidiaries, its VIEs and VIE’s subsidiary. 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, fair value of ordinary shares, 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 represents cash collected by the delivery service providers on behalf of the Group, as a result of completed sales transactions in the PRC under cash-on-delivery terms, and has not been remitted back to the Group. As of December 31, 2013 and 2014, there was no allowance for doubtful accounts due to the nature of the receivables which is cash collected from customers and in-transit to the Group.

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 goods sold 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 or estimated useful life of the assets
Furniture, fixtures and office equipment		5 years
Software and IT equipment		3 years

Acquired 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/Tradename		Indefinite life
Technology		3 Years
Members		4 Years

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 stock

Treasury stock represents 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 stock is recorded at cost.

Revenue recognition

Revenue is stated net of value added tax (“VAT”) and return allowances.

The Group recognizes revenue from the sale of apparel, 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. 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, takes legal title to the inventory when the orders are placed by end customers, 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 sales 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 return period is 30 days after delivery. 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 goods sold. Shipping costs incurred for sales of products and recognized as cost of goods sold were $40,694, $63,917 and $94,509 for the years ended December 31, 2012, 2013 and 2014 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 accounts under prepaid expenses and other current assets or accrued expenses and other current liabilities.

Cost of goods sold

Cost of sales 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.

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. Changes in estimated chargebacks are recognized through a cumulative catch-up adjustment in the period of change and will impact the amount of general and administrative expenses in that period.

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, receivable from processing agencies and accounts payable approximate their fair values due to short-term maturities.

Foreign currency translation

The functional currency of the Company, Light In The Box, Lanting International, LightInTheBox Logistic, LITB, Inc., LightInTheBox (UK) Limited and LITB Netherlands B.V. is the United States dollar (“U.S. dollar”). The financial records of the Group’s subsidiaries and VIE entities located in the PRC are maintained in their local currencies, the Renminbi (“RMB”), which are also the functional currencies of these entities.

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, 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, 2012, 2013 or 2014, 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.

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.

The Group’s Series A convertible preferred shares, Series B convertible preferred shares and Series C convertible redeemable preferred shares are participating securities as the preferred shares participate in undistributed earnings on an as-if-converted basis. Nonvested shares are also participating securities as they enjoy identical dividend rights as ordinary shares. Accordingly, the Group uses the two-class method whereby undistributed net income is allocated on a pro rata basis to each participating share to the extent that each class may share in income for the period. Undistributed net loss is not allocated to preferred shares because they are not contractually obligated to participate in the loss allocated to the ordinary and nonvested shares.

Diluted loss per ordinary share reflects the potential dilution that could occur if securities were exercised or converted into ordinary shares. The Group had convertible preferred shares, convertible redeemable preferred shares, stock options, nonvested shares and convertible notes, which could potentially dilute basic earnings per share in the future. To calculate the number of shares for diluted income per share, the effect of the convertible preferred shares, convertible redeemable preferred shares and convertible notes is computed using the as-if-converted method; and the effect of the stock options and nonvested shares is 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 Cayman Islands, the PRC and Hong Kong. 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 $683, $56,602 and $48,144 at December 31, 2012, 2013 and 2014, respectively.

Recent accounting pronouncements

In May 2014, the FASB issued a new pronouncement which affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This accounting standard updates (“ASU”) will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts. In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (e.g., assets within the scope of Topic 360, Property, Plant, and Equipment, and intangible assets within the scope of Topic 350, Intangibles—Goodwill and Other) are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this ASU.

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.

For a public entity, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted.

An entity should apply the amendments in this ASU using one of the following two methods:

1. Retrospectively to each prior reporting period presented and the entity may elect any of the following practical expedients:

For completed contracts, an entity need not restate contracts that begin and end within the same annual reporting period.

For completed contracts that have variable consideration, an entity may use the transaction price at the date the contract was completed rather than estimating variable consideration amounts in the comparative reporting periods.

For all reporting periods presented before the date of initial application, an entity need not disclose the amount of the transaction price allocated to remaining performance obligations and an explanation of when the entity expects to recognize that amount as revenue.

2. Retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. If an entity elects this transition method it also should provide the additional disclosures in reporting periods that include the date of initial application of:

The amount by which each financial statement line item is affected in the current reporting period by the application of this ASU as compared to the guidance that was in effect before the change.

An explanation of the reasons for significant changes.

The Company is currently evaluating the impact on its consolidated financial statements of adopting this guidance

In June 2014, the FASB issued a new pronouncement which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation — Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved.

The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Group does not expect the adoption of this guidance will have a significant effect on its consolidated financial statements.

In August, 2014, the FASB issued a new pronouncement which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements. Further, an entity must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern.” The new standard is effective for fiscal years ending after December 15, 2016. The Group does not expect the adoption of this guidance will have a significant effect on its consolidated financial statements.

- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

+ References+ Details

PREPAID EXPENSES AND OTHER CURRENT ASSETS

12 Months Ended

Dec. 31, 2014

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,
	2013		2014

Receivable from processing agencies (1)	$	4,659	$	2,332
Prepayment to suppliers	1,525		1,166
Interest receivable	721		297
Option exercise receivable	663		130
Rental deposits and prepaid rents	339		414
Staff advance	104		24
Others	879		826
Total	$	8,890	$	5,189

(1)

Receivables from processing agencies represented cash that had been received from customers but held by the processing agencies as of December 31, 2013 and 2014. The receivables were collected by the Group subsequent to the respective period end.

PROPERTY AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2014

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,
	2013			2014

Leasehold improvements	$	3,043		$	3,723
Furniture, fixtures and office equipment	1,817			2,431
Software and IT equipment	2,099			3,059
Property and equipment, gross	6,959			9,213
Less: Accumulated depreciation	(3,957		)	(5,549		)
Property and equipment, net	$	3,002		$	3,664

Depreciation expenses incurred for the years ended December 31, 2012, 2013 and 2014 are $1,031, $1,361and $1,838, respectively.

- Definition

The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures.

+ References+ Details

GOODWILL

12 Months Ended

Dec. 31, 2014

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.

The changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2014 were as follows:

	2013		2014
	Ador		Ador

Beginning balance	$	—	$	690
Charge for the year	690		—
Ending balance	690		$	690

ACQUIRED INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2014

ACQUIRED INTANGIBLE ASSETS, NET

ACQUIRED INTANGIBLE ASSETS, NET

7.ACQUIRED 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, 2013										December 31, 2014
	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	$	1,220	$	—		$	(1,010	)	$	210	$	1,220	$	—		$	(1,010	)	$	210

Intangible assets subject to amortization:
- Technology Platform	90		(90		)	—			—		90		(90		)	—			—
- Non-compete Agreement	9		(7		)	(2		)	—		9		(7		)	(2		)	—
- Customer Base	32		(22		)	(10		)	—		32		(22		)	(10		)	—
- Technology	36		—			—			36		36		(12		)	—			24
- Members	20		—			—			20		20		(5		)	—			15
	$	1,407	$	(119	)	$	(1,022	)	$	266	$	1,407	$	(136	)	$	(1,022	)	$	249

The amortization expenses incurred for the years ended December 31, 2012, 2013 and 2014 were nil, nil and $17, respectively. The Group expects to record amortization expenses of $17, $17, $5 and nil for the years ended December 31, 2015, 2016, 2017, and 2018, respectively.

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

12 Months Ended

Dec. 31, 2014

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

8.ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

	As of December 31,
	2013		2014

Accrued payroll and staff welfare	$	9,147	$	13,154
Individual income tax withheld	875		621
VAT payable	152		327
Accrued professional fees	1,950		2,284
Accrued advertising fees	1,004		5,343
Credit card processing charges	401		449
Accrued sales return (1)	751		1,417
Other accrued expenses	1,280		1,474
Total	$	15,560	$	25,069

(1)

Accrued sales return represents the estimated sales return at the end of each of the respective years, and assumes products returned will have no value to the Group. Movements during the respective years are as follows:

	2013			2014

Balance at January 1	$	116		$	751
Allowance for sales return made in the year	9,897			14,418
Utilization of accrued sales return	(9,262		)	(13,752		)
Balance at December 31	$	751		$	1,417

ORDINARY SHARES	12 Months Ended
ORDINARY SHARES	Dec. 31, 2014
ORDINARY SHARES
ORDINARY SHARES	9.ORDINARY SHARES In June 2013, the Company completed its IPO of ADSs on the New York Stock Exchange with a total issuance of 8,492,368 ADSs at issuing price of $9.5 per ADS. Each ADS represents two ordinary shares of the Company. As such, the total ADSs represent 16,984,736 ordinary shares. Total net proceeds received were $75,030 from the IPO and the concurrent private placements, net of offering costs of $4,235. In December 2013, the board of directors approved the Company to repurchase up to $20,000 of its own outstanding ADSs within one year from December 2013. Pursuant to the share repurchase plan, the Company repurchased 1,868,726 ADSs as of December 31, 2014, representing 3,737,452 ordinary shares, with a total consideration of approximately $10,957. The shares repurchased by the Company were accounted for at cost as treasury stock.

SHARE OPTIONS

12 Months Ended

Dec. 31, 2014

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 2011, the Company granted 484,000 share options under the 2008 Plan to employees at exercise prices ranged from $0.96 to $4.29 per share, respectively. These share options vest over a period ranged from three to four years.

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.

The fair value of each option granted was estimated on the date of grant using binomial option pricing model with the following assumptions during the applicable periods:

	2013	2014

Risk-free interest rate	3.06%-3.83%	3.75%-4.05%
Exercise multiple	2-2.8	2.2-2.8
Expected volatility	56%-60%	57.09%-63.88%
Expected dividend yield	0%	0%
Fair value of ordinary shares	$4.75-$4.97	$2.53-$3.26

(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

Before the Company’s IPO, the estimated fair value of the ordinary shares underlying the options as of the respective grant dates was determined based on a retrospective valuation. When estimating the fair value of the ordinary shares on the grant dates, management has considered a number of factors, including the result of the third-party appraisals prepared by independent valuation firms, and equity transactions of the Company.

After the Company’s IPO, 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, 2014, and changes during the year then ended is presented below:

			Weighted average
			exercise price
	Options granted		per option

Outstanding at January 1, 2014	1,562,850		$	1.71
Granted	1,797,300		$	2.53
Exercised	(548,800	)	$	0.37
Forfeited	(305,050	)	$	3.87
Outstanding at December 31, 2014	2,506,300		$	2.35

The following table summarizes information regarding the share options granted as of December 31, 2014:

	As of December 31, 2014
				Weighted-
		Weighted-		average remaining
		average exercise		contractual	Aggregate
	Options Number	price per option		life (years)	intrinsic value

Options
Outstanding	2,506,300	$	2.35	8.26	$	2,712
Exercisable	669,238	$	0.67	8.26	$	1,559
Expected to vest	1,469,650	$	2.69	9.35	$	922

The total intrinsic value of options exercised during the years ended December 31, 2012, 2013 and 2014 were nil, $1,235, and $119, respectively.

The weighted average grant date fair value of options granted during the years ended December 31, 2013 and 2014 was $2.45 and $1.42, respectively.

For the years ended December 31, 2012, 2013 and 2014, the Group recorded share-based compensation expense of $216, $280 and $291 related to the options under the 2008 Plan, respectively. As of December 31, 2014, there was $1,054 of unrecognized compensation cost related to the options, which is expected to be recognized over a weighted-average period of 3.2 years.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References+ Details

NONVESTED SHARES

12 Months Ended

Dec. 31, 2014

NONVESTED SHARES

NONVESTED SHARES

11.NONVESTED SHARES

Nonvested shares granted to employees under the 2008 Plan

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.

The holders of the nonvested shares are entitled to voting rights, but shall not be entitled to dividends before vesting.

Nonvested shares granted to employees under the 2008 Plan - continued

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, 2014	995,202	$	4.52
Granted	2,800,300	$	2.54
Forfeited

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
Issuance of common shares upon IPO, offering costs	$ 9,883