BUSINESS SEGMENTS

Segment information has been prepared in accordance with ASC Topic 280 Segment Reporting. We determined our segments based on how we manage our business. Beginning in the first quarter of 2019, we began allocating corporate support costs (administrative functions such as finance, human resources, and legal) to our operating segments based on their estimated usage and based on how we manage our business. Comparative prior year information has not been recast and as a result our corporate support costs for those comparative prior periods remain allocated to our Retail segment. Our Medici business includes two reportable segments, tZERO and the unconsolidated financial information for Medici Ventures ("MVI"). MVI was identified as a reportable segment separate from Other during 2019. We have recast prior period segment information to conform with current year presentation. MVI consists of the Medici business not associated with tZERO or MLG. We use pre-tax net income (loss) as the measure to determine our reportable segments. As a result, the MLG portion of our Medici Business is not significant as compared to our Retail, tZERO, and MVI segments. Other consists of MLG and our unallocated corporate support costs.

Our Retail segment primarily consists of amounts earned through e-commerce sales through our Website, excluding intercompany transactions eliminated in consolidation.

Our tZERO segment primarily consists of amounts earned through securities transaction through our broker-dealers and costs incurred to execute our tZERO business initiatives, excluding intercompany transactions eliminated in consolidation.

Our MVI segment primarily consists of costs incurred to create or foster a set of products and solutions that leverage blockchain technology to generate efficiencies and increase security and control, excluding intercompany transactions eliminated in consolidation.

We do not allocate assets between our segments for our internal management purposes, and as such, they are not presented here. There were no significant inter-segment sales or transfers during the years ended December 31, 2019, 2018 and 2017.

The following table summarizes information about reportable segments and a reconciliation to consolidated net income (loss) for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	Retail			tZERO			MVI			Other			Total
2019
Revenue, net	$	1,434,974		$	21,582		$	2,749		$	113		$	1,459,418
Cost of goods sold	1,147,025			16,551			2,749			—			1,166,325
Gross profit	287,949			5,031			—			113			293,093
Operating expenses (1)	332,372			54,911			14,778			14,521			416,582
Interest and other income (expense), net (2)	559			2,442			(14,039		)	(8		)	(11,046		)
Pre-tax loss	$	(43,864	)	$	(47,438	)	$	(28,817	)	$	(14,416	)	(134,535		)
Provision for income taxes													185
Net loss (3)													$	(134,720	)

2018
Revenue, net	$	1,800,187		$	19,043		$	2,362		$	—		$	1,821,592
Cost of goods sold	1,452,195			13,127			2,362			—			1,467,684
Gross profit	347,992			5,916			—			—			353,908
Operating expenses	506,113			47,006			8,316			9,679			571,114
Interest and other income (expense), net (2)	(476		)	233			(2,498		)	(7		)	(2,748		)
Pre-tax loss	$	(158,597	)	$	(40,857	)	$	(10,814	)	$	(9,686	)	(219,954		)
Benefit for income taxes													(2,384		)
Net loss (3)													$	(217,570	)



	Retail			tZERO			MVI			Other		Total
2017
Revenue, net	$	1,728,104		$	16,493		$	159		$	—	$	1,744,756
Cost of goods sold	1,392,558			11,647			—			—		1,404,205
Gross profit	335,546			4,846			159			—		340,551
Operating expenses	365,648			17,101			4,436			—		387,185
Interest and other income (expense), net (2)	4,680			—			(5,780		)	—		(1,100		)
Pre-tax loss	$	(25,422	)	$	(12,255	)	$	(10,057	)	$	—	(47,734		)
Provision for income taxes												64,188
Net loss (3)												$	(111,922	)

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(1)	— Corporate support costs for the year ended December 31, 2019 have been allocated $42.0 million, $6.0 million, $4.2 million, and $7.8 million, to Retail, tZERO, MVI, and Other, respectively. Unallocated corporate support costs of $6.0 million are included in Other.


(2)	— Excludes intercompany transactions eliminated in consolidation, which consist primarily of service fees and interest. The net amounts of these intercompany transactions were $2.7 million, $3.5 million, and $2.0 million for the years ended December 31, 2019, 2018 and 2017, respectively.


(3)	— Net loss presented for segment reporting purposes is before any adjustments attributable to noncontrolling interests.

For the years ended December 31, 2019, 2018 and 2017, substantially all our sales revenues were attributable to customers in the United States. At December 31, 2019 and 2018, substantially all our fixed assets were located in the United States.