11. 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. We allocate 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. 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 deconsolidated MLG's consolidated net assets and noncontrolling interest from our consolidated financial statements beginning on February 22, 2020, the date that control ceased. We use pre-tax net income (loss) as the measure to determine our reportable segments. Other consists of MLG, which was deconsolidated beginning February 22, 2020, 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 transactions 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 three months ended March 31, 2020 and 2019.

The following table summarizes information about reportable segments and a reconciliation to consolidated net income (loss) for the three months ended March 31, 2020 and 2019 (in thousands):



	Three months ended March 31,
	Retail			tZERO			MVI			Other			Total
2020
Revenue, net	$	339,598		$	10,239		$	1,574		$	162		$	351,573
Cost of goods sold	265,392			8,767			1,574			—			275,733
Gross profit	74,206			1,472			—			162			75,840
Operating expenses	82,835			12,258			2,908			3,983			101,984
Interest and other income (expense), net (1)	(299		)	(1,782		)	8,833			3			6,755
Pre-tax income (loss)	$	(8,928	)	$	(12,568	)	$	5,925		$	(3,818	)	(19,389		)
Provision for income taxes													176
Net loss (2)													$	(19,565	)

2019
Revenue, net	$	362,625		$	4,496		$	608		$	—		$	367,729
Cost of goods sold	290,640			3,357			608			—			294,605
Gross profit	71,985			1,139			—			—			73,124
Operating expenses	85,336			15,553			4,253			4,000			109,142
Interest and other income (expense), net (1)	135			(963		)	(5,164		)	(4		)	(5,996		)
Pre-tax loss	$	(13,216	)	$	(15,377	)	$	(9,417	)	$	(4,004	)	(42,014		)
Provision for income taxes													878
Net loss (2)													$	(42,892	)

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(1)	— Excludes intercompany transactions eliminated in consolidation, which consist primarily of service fees and interest. The net amounts of these intercompany transactions were $1.1 million and $415,000 for the three months ended March 31, 2020 and 2019.


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

Upon deconsolidation of MLG, we recognized our retained equity interest in MLG as an equity method security held by our MVI segment which resulted in a $10.7 million gain included in Interest and other income (expense), net in the table above for our MVI segment for the three months ended March 31, 2020. See Note 2. Accounting Policies, Principles of consolidation, for additional details on the gain recognized.

For the three months ended March 31, 2020 and 2019, substantially all of our revenues were attributable to customers in the United States. At March 31, 2020 and December 31, 2019, substantially all our property and equipment were located in the United States.