Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 03, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | One Horizon Group, Inc. | |
Entity Central Index Key | 225,211 | |
Document Type | 10-Q | |
Trading Symbol | OHGI | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 35,290,423 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 932 | $ 1,772 |
Accounts receivable (net), | 2,963 | 3,560 |
Other assets | 657 | 402 |
Total current assets | 4,552 | 5,734 |
Property and equipment, net | 68 | 96 |
Intangible assets, net | 9,168 | 9,823 |
Investment | 18 | 18 |
Total assets | 13,806 | 15,671 |
Current liabilities: | ||
Accounts payable | 174 | 223 |
Accrued expenses | 186 | 220 |
Accrued compensation | 99 | 18 |
Income taxes | 90 | 90 |
Current portion of long-term debt | 5 | |
Total current liabilities | 549 | 556 |
Long-term liabilities | ||
Amount due to related parties | 2,343 | 2,354 |
Convertible debenture | 2,852 | 2,636 |
Deferred income taxes | 193 | 215 |
Mandatorily redeemable preferred shares | 74 | 73 |
Total liabilities | 6,011 | 5,834 |
Equity | ||
Preferred stock: $0.0001 par value, authorized 50,000,000; issued and outstanding 170,940 shares (December 2015 - 170,940) | 1 | 1 |
Common stock: $0.0001 par value, authorized 200,000,000 shares issued and outstanding 35,347,283 shares (December 2015 - 35,147,283) | 3 | 3 |
Additional paid-in capital | 36,580 | 36,070 |
Retained Earnings (Deficit) | (28,927) | (26,201) |
Accumulated other comprehensive income | 138 | (36) |
Total One Horizon Group, Inc., stockholders' equity | 7,795 | 9,837 |
Total liabilities and equity | $ 13,806 | $ 15,671 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock: par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock: authorized | 50,000,000 | 50,000,000 |
Preferred stock: issued | 170,940 | 170,940 |
Preferred stock: outstanding | 170,940 | 170,940 |
Common stock: par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock: authorized | 200,000,000 | 200,000,000 |
Common stock: issued | 35,347,283 | 35,147,283 |
Common stock: outstanding | 35,347,283 | 35,147,283 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||||
Revenue | $ 366 | $ 108 | $ 975 | $ 853 |
Cost of revenue | ||||
Hardware, calls and network charges | 49 | 47 | 75 | 108 |
Amortization of software development costs | 493 | 580 | 1,005 | 1,092 |
Total cost of revenue | 542 | 627 | 1,080 | 1,200 |
Gross margin | (176) | (519) | (105) | (347) |
Expenses: | ||||
General and administrative | 878 | 569 | 1,842 | 1,492 |
Depreciation | 15 | 16 | 30 | 36 |
Research and development | 186 | 160 | 374 | 322 |
Total expenses | 1,079 | 745 | 2,246 | 1,850 |
Loss from operations | (1,255) | (1,264) | (2,351) | (2,197) |
Other income and expense: | ||||
Interest expense | (176) | (284) | (356) | (374) |
Interest expense - related parties | (1) | |||
Foreign exchange | 2 | (76) | 9 | 9 |
Interest income | 1 | |||
Total other income and expense | (174) | (360) | (347) | (365) |
Loss before income taxes | (1,429) | (1,624) | (2,698) | (2,562) |
Income taxes (recovery) - deferred | (11) | (45) | (22) | (45) |
Net loss for the period | (1,418) | (1,579) | (2,676) | (2,517) |
Net income (loss) attributable to the non-controlling interest | (31) | (36) | ||
Net Income (Loss) for the period attributable to One Horizon Group, Inc. | (1,418) | (1,548) | (2,676) | (2,481) |
Less: Preferred Dividends | (25) | (25) | (50) | (50) |
Net loss attributable to One Horizon Group, Inc. Common stockholders | $ (1,443) | $ (1,573) | $ (2,726) | $ (2,531) |
Earnings per share attributable to One Horizon Group, Inc. stockholders | ||||
Basic net loss per share (in dollars per share) | $ (0.04) | $ (0.05) | $ (0.08) | $ (0.07) |
Diluted net loss per share (in dollars per share) | $ (0.04) | $ (0.05) | $ (0.08) | $ (0.07) |
Weighted average number of shares outstanding Basic and diluted (in shares) | 35,185 | 33,281 | 35,165 | 33,281 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Condensed Consolidated Statements Of Comprehensive Income | ||||
Net income (loss) | $ (1,418) | $ (1,579) | $ (2,676) | $ (2,517) |
Other comprehensive income: | ||||
Foreign currency translation adjustment gain | 546 | 624 | 174 | 643 |
Comprehensive income (loss) | (872) | (955) | (2,502) | (1,874) |
Comprehensive income (loss) attributable to the non-controlling interest | (31) | (36) | ||
Total comprehensive income (loss) | $ (872) | $ (924) | $ (2,502) | $ (1,838) |
Consolidated Statement of Equit
Consolidated Statement of Equity (unaudited) - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings (Deficit) [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Balance at beginning at Dec. 31, 2015 | $ 1 | $ 3 | $ 36,070 | $ (26,201) | $ (36) | $ 9,837 |
Balance at beginning (in shares) at Dec. 31, 2015 | 171 | 35,148 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | (2,676) | (2,676) | ||||
Foreign currency translations | 174 | 174 | ||||
Preferred dividends | (50) | (50) | ||||
Issuance of common shares for services | 134 | 134 | ||||
Issuance of common shares for services (in shares) | 200 | |||||
Options issued for services | 376 | 376 | ||||
Balance at ending at Jun. 30, 2016 | $ 1 | $ 3 | $ 36,580 | $ (28,927) | $ 138 | $ 7,795 |
Balance at ending (in shares) at Jun. 30, 2016 | 171 | 35,348 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Operating activities: | ||
Net loss for the period | $ (2,676) | $ (2,481) |
Adjustment to reconcile net loss for the period to net cash provided by (used in) operating activities: | ||
Depreciation of property and equipment | 30 | 36 |
Amortization of intangible assets | 1,005 | 1,092 |
Increase in allowance for doubtful accounts | 200 | |
Amortization of debt issue costs | 66 | 66 |
Amortization of beneficial conversion feature | 50 | 51 |
Amortization of debt discount | 100 | 99 |
Amortization of deferred compensation | 107 | |
Amortization of shares issued for services | 4 | |
Options issued for services | 376 | 279 |
Net income (loss) attributable to non-controlling interest | (36) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 397 | 168 |
Other assets | (125) | 7 |
Accounts payable and accrued expenses | (2) | (370) |
Deferred income taxes | (22) | (45) |
Net cash provided by (used in) operating activities | (597) | (1,027) |
Cash used in investing activities: | ||
Acquisition of intangible assets | (207) | (560) |
Acquisition of property and equipment | (4) | (1) |
Proceeds from disposition of property and equipment | 32 | |
Net cash (used in) investing activities | (211) | (529) |
Cash provided by (used in) financing activities: | ||
Increase (decrease) in long-term borrowing, net | (5) | (171) |
Advances from (repayments to) related parties, net | (11) | (610) |
Dividends paid | (50) | (50) |
Net cash provided by (used in) financing activities | (66) | (831) |
Increase (decrease) in cash during the period | (874) | (2,387) |
Foreign exchange effect on cash | 34 | 85 |
Cash at beginning of the period | 1,772 | 3,172 |
Cash at end of the period | 932 | 870 |
Supplementary Information: | ||
Interest paid | 69 | 76 |
Income taxes paid | ||
Non-cash transactions: | ||
Common stock issued for services to be provided | $ 134 |
Description of Business and Pri
Description of Business and Principles of Consolidation | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Principles of Consolidation | Note 1. Description of Business, Organization and Principles of Consolidation Description of Business One Horizon Group, Inc., (the Company or Horizon) develops proprietary software primarily in the Voice over Internet Protocol (VoIP) and bandwidth optimization markets (Horizon Globex) and provides it to telecommunication companies under perpetual license arrangements (Master License) throughout the world. In addition, the Company either sells related user licenses and software maintenance services to or enters into revenue sharing agreements with telecommunication companies. Horizon, through its Chinese company Suzhou Aishuo Network Information Co. Ltd. provides the Aishuo App to end user customer through App stores based in China. Our Aishuo customers purchase call credits for Public Service Telephone Network (PSTN) access using a variety of Chinese on-line payment services including Union Pay and Apple Pay. Interim Period Financial Statements The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) for interim financial information and with the Securities and Exchange Commission instructions. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for such interim period. The results reported in these interim consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and note disclosure normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the Securities and Exchange Commissions rules and regulations. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission on March 31, 2016. Principles of Consolidation The condensed consolidated financial statements include the accounts of One Horizon Group, Inc. and its wholly owned subsidiaries One Horizon Group plc, Horizon Globex GmbH, Abbey Technology GmbH, One Horizon Group Pte., Limited, Horizon Globex Ireland Limited, Global Phone Credit Limited and One Horizon Hong Kong Limited, and its wholly-owned subsidiary, Horizon Network Technology Co. Ltd. (HNT). In addition, included in the condensed consolidated financial statements for the three and six months ended June 30, 2016, are the accounts of Suzhou Aishuo Network Information Co., Ltd. which is controlled by One Horizon Group, Inc. through various contractual arrangements (Note 3). During the year ended December 31, 2015, the minority parties which held ownership interests in HNT returned their shareholdings to HNT such that HNT is now fully owned by the Company. The amount of consolidated net loss attributable to the Company and the non-controlling interest, up to the time that the shareholdings were returned, are both presented in the face of the Condensed Consolidated Statement of Operations. All significant intercompany balances and transactions have been eliminated. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Reclassification Certain amounts in the 2015 financial statements have been reclassified to conform to the 2016 financial presentation. These reclassifications have no impact on net loss. Basis of Accounting and Presentation These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States Foreign Currency Translation The reporting currency of the Company is the United States dollar. Assets and liabilities of operations other than those denominated in U.S. dollars, primarily in Switzerland, Ireland, the United Kingdom and China, are translated into United States dollars at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the period. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in general and administrative expenses. Cash Cash and cash equivalents include bank demand deposit accounts and highly liquid short term investments with maturities of three months or less when purchased. Cash consists of checking accounts held at financial institutions in the United Kingdom, Switzerland, Ireland, Singapore, Hong Kong and China which, at times, balances may exceed insured limits. The Company has not experienced any losses related to these balances, and management believes the credit risk to be minimal. Accounts Receivable Accounts receivable result primarily from sale of software and licenses to customers and are recorded at their principal amounts. The categories of sales and receivables and their terms of payment are as follows: a) Master License Agreement (Agreement) deposits b) Software consultancy and hardware fees c) Maintenance and operational fees and end user licenses fees The revenue share agreement was introduced in October 2014, and at that time the Company reported that it had converted a significant number of its customers to a revenue share basis of collection. Accounts receivable balances from certain customers arose from revenue recognised prior to September 30, 2014 (prior revenue was recognized in accordance with revenue recognition policies in place at that time - see Revenue Recognition note). Those revenue share arrangements changed the basis under which the customers would pay their existing balances, as described, effective starting as early as October 1, 2014. At December 31, 2015 a significant portion of those receivables that will be paid under the revenue share agreement remained uncollected. Considering the effects of the revenue share arrangements on collection of accounts receivable and the timing of those collections, along with other factors, management estimated the amount of existing accounts receivable they expect to collect within 12 months of the balance sheet date from those customers operating under revenue share arrangements. The portion of the receivable balance expected to be collected in more than 12 months was considered a non-current receivable. The Company maintains its opinion that current and non-current accounts receivable continue to be due from their customers. Further, management is of the opinion that its customers are contractually obligated to pay the full amount due as provided under the Master License Agreements executed by each of its customers. At December 31, 2015, management believed there was general uncertainty in the collection of those balances considered long-term and increased the general provision for doubtful accounts by $5.7 million to cover those balances. The slow-pay uncertainties arise from a number of factors, including the effects of revenue share arrangements, the extended time customers are talking to generate significant revenue under revenue share arrangements, and general technological changes in the industry. At June 30, 2016, due to continuing uncertainty in the timing of collections of amounts due from certain customers, management reassessed the collectability of its accounts receivable balances and has decided to write off balances where there is significant uncertainty over the timing of the collection against the allowance previously recorded. As a result of the management decision the amount of the gross accounts receivable has been reduced by $6.0 million and the allowance for doubtful accounts has been similarly reduced. As at June 30, 2016 the remaining allowance for doubtful accounts is at $238,000 of which $200,000 has been provided in 2016. For any future collections of amounts written off, the Company will account for those as recoveries of written-off receivables, and will include those amounts in other income (non-operating income). The Company has strong collection history in category a) and category b) and generally does not believe that an allowance for doubtful accounts for these categories is necessary. For accounts receivable in category c) the Company records an allowance for doubtful accounts for the receivable balance that is expected to be collected under revenue share arrangements in more than 12 months. There was an allowance of $238,000 and $6,055,000 for doubtful accounts at June 30, 2016 and December 31, 2015, respectively. Receivables are generally unsecured. Account balances are charged off against the allowance when the Company determines that certain receivable will probably not be recovered. The Company does not have off-balance sheet credit exposure related to its customers. As of December 31, 2015 and December 31, 2014, two customers accounted for 24% and 28%, respectively, of the accounts receivable balance. Property and Equipment Property and equipment is primarily comprised of leasehold property improvements, motor vehicles and equipment that are recorded at cost and depreciated or amortized using the straight-line method over their estimated useful lives as follows: motor vehicles 5 years, equipment between 3 and 5 years, leasehold property improvements, over the lesser of the estimated remaining useful life of the asset or the remaining term of the lease. Repairs and maintenance are charged to expense as incurred. Expenditures that substantially increase the useful lives of existing assets are capitalized. Fair Value Measurements Fair value is defined as the exchange price that will be received for an asset or paid to transfer a liability (an exit price) in the principal. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered to be observable and the third unobservable: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Intangible Assets Intangible assets include software development costs and customer lists and are amortized on a straight-line basis over the estimated useful lives of five years for customer lists and ten years for software development. The Company periodically evaluates whether changes have occurred that would require revision of the remaining estimated useful life. The Company performs periodic reviews of its capitalized intangible assets to determine if the assets have continuing value to the Company. The Company expenses all costs related to the development of internal-use software as incurred, other than those incurred during the application development stage, after achievement of technological feasibility. Costs incurred in the application development stage are capitalized and amortized over the estimated useful life of the software. Internally developed software costs are amortized on a straight-line basis over the estimated useful life of the software. The Company performs periodic reviews of its capitalized software development costs to determine if the assets have continuing value to the Company. Costs for assets that are determined to be of no continuing value are written off. The amortization of these costs is included in cost of revenue over the estimated life of the products. During the six months ended June 30, 2016 and 2015, software development costs of $207,000 and $560,000, respectively, have been capitalized. Impairment of Other Long-Lived Assets The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. During the six months ended June 30, 2016 and 2015, the Company identified no impairment losses related to the Companys long-lived assets. Revenue Recognition The Company recognizes revenue when it is realized or realizable and earned. The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with a customer and that a delivery has occurred or services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. ● Software and licenses revenue from sales of perpetual licenses to telecom entities is recognized at the date of invoices raised for installments due under the agreement, unless payment terms exceed one year, as described below, presuming all other relevant revenue recognition criteria are met. Revenue from sales of perpetual licenses to other entities is recognized over the agreed collection period. ● Revenues for user licenses purchased by customers are recognized when the user license is delivered. ● Revenues for maintenance services are recognized over the period of delivery of the services. ● Effective October 1, 2014, the Company amended certain existing customer contracts with respect to the terms under which those customers would pay the Company for perpetual licenses, user licenses and maintenance services provided by the Company. Existing customer contracts required payments for maintenance services to be made based on contractually specified fixed amounts, which were billed regularly through September 2014. Through that date the Company recorded revenue for licenses and maintenance services when those licenses and services were billed. Revenue for user licenses was recorded as earned and revenue for maintenance services was recorded based on a fixed annual fee, billed quarterly. The Company has modified the payment terms under certain of those existing customer contracts by entering into Revenue Sharing agreements with those customers. Under the terms of these Revenue Sharing agreements, future payments will be due from the customer when that customer has generated revenue from its customers who subscribe to use the Horizon products and services. Hosted services are offered to customers on revenue share arrangements whereby the Company can provide fully terminated services and sells vouchers for minutes which can be resold by the customer. Sales for this service are recognized when the supply is made and the invoice raised. Effective October 1, 2014, revenue has been recorded by the Company when it invoices the customer for the revenue share due to the Company. Certain customers who entered into revenue sharing arrangements had outstanding balances due to the Company as of September 30, 2014, which balances were included in accounts receivable as at that date. Payments received after September 30, 2014, from those customers under revenue sharing agreements have been applied to the customers existing accounts receivable balances first. For those customers having balances due at September 30, 2014, revenue related to perpetual and user licenses and maintenance services are recorded only after existing accounts receivable balances are fully collected. ● Revenues from Aishuo retail sales are recognized when the PSTN calls and texts are made. Where the Company has entered into a Revenue Share with the customer, then all future revenue from granting of user licenses and for maintenance services will be recognized when the Company has delivered user licenses and is entitled to invoice. We enter into arrangements with telecommunication entities in which a customer purchases a combination of software licenses, maintenance services and post-contract customer support (PCS). As a result, judgment is sometimes required to determine the appropriate accounting, including how the price should be allocated among multiple deliverable elements. PCS may include rights to upgrades, when and if available, support, updates and enhancements. When vendor specific objective evidence (VSOE) of fair value exists for all elements in a multiple element arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values of various elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price between deliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elements such as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In the absence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to the residual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit of accounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No sales arrangements to date include undelivered elements for which VSOE does not exist. For purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption that the fee in the transaction is not fixed and determinable. This presumption however, may be overcome if persuasive evidence demonstrates that the Company has a business practice of extending payment terms and has been successful in collecting under the original terms, without providing any concessions. In doing so, the Company considers if the arrangement is sufficiently similar to historical arrangements in terms of similar customers and products is assessing whether there is evidence of a history of successful collection. In order to determine the companys historical experience is based on sufficiently similar arrangements, the Company considers the various factors including the types of customers and products, product life cycle, elements Included in the arrangement, length of payment terms and economics of license arrangement. During the three months ended June 30, 2016, $272,000 or 74% of the Companys revenue was concentrated in the hands of one major customer. In the three months ended June 30, 2015 the equivalent amount was $35,000 or 32% of the revenue. During the six months ended June 30, 2016, $795,000 or 81% of the Companys revenue was concentrated in the hands of one major customer. In the six months ended June 30, 2015, $500,000 or 59% of the Companys revenue was concentrated in the hands of one major customer Advertising Expenses It is the Companys policy to expense advertising costs as incurred. Advertising costs incurred during the six month periods ended June 30, 2016 and 2015 were $39,000 and $nil respectively. Research and Development Expenses Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, costs related to the development of new products, significant enhancements to existing products, and the portion of costs of development of internal-use software required to be expensed. Research and development costs are charged to operations as incurred with the exception of those software development costs that may qualify for capitalization. The Company expensed research and development costs in the six month period ended June 30, 2016 and 2015 of $374,000 and $322,000 respectively. Debt Issue Costs Debt issue costs related to long-term debt are capitalized and amortized over the term of the related debt using the effective interest method. Income Taxes Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance. The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively. Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Companys estimates and assumptions may differ significantly from tax benefits ultimately realized. Net Loss per Share Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the three and six month periods ended June 30, 2016 and 2015, outstanding stock options, warrants and convertible debt are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations. Accumulated Other Comprehensive Income (Loss) Other comprehensive income (loss), as defined, includes net loss, foreign currency translation adjustments, and all changes in equity (net assets) during a period from non-owner sources. To date, the Company has not had any significant transactions that are required to be reported in other comprehensive income (loss), except for foreign currency translation adjustments. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilities assumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions. Financial Instruments The carrying value of our financial assets and liabilities such as cash, accounts receivable and accounts payable approximate their fair values based on level 1 inputs in the fair value hierarchy because of the short maturity of these instruments. Due to the conversion features and other terms, it is not practical to estimate the fair value of amounts due to related parties and long term debt. Share-Based Compensation The Company accounts for stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes valuation model, which includes subjective judgments about the expected life of the awards, forfeiture rates and stock price volatility. Recently Issued Accounting Standards Not Yet Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2014-09 Revenue From Contracts with Customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of this ASU is that an entity should recognize revenue when it transfers 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. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The original effective date for ASU 2014-09 would have required the Company to adopt beginning in its first quarter 2017. In July 2015, the FASB voted to amend ASU 2014-09 by approving a one year deferral of the effective date as well as providing the option to early adopt the standard on the original effective date. Accordingly, the Company may adopt the standard in either its first quarter of 2017 or 2018. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the timing of its adoption and the impact of adopting the new revenue standard on its consolidated financial statements. Recently Issued Accounting Standards Adopted There have been no significant changes to the Companys significant accounting policies as described in the Companys Annual Report on Form 10-K for the year-ended December 31, 2015. During the three months ended March 31, 2016, the Company adopted Accounting Standards Update (ASU) ASU 2015-03, Simplifying the Presentation of Debt Issuance Cost |
Suzhou Aishuo Network Informati
Suzhou Aishuo Network Information Co. Ltd. | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Suzhou Aishuo Network Information Co. Ltd. | Note 3. Suzhou Aishuo Network Information Co. Ltd. The Company has control of a Chinese entity Suzhou Aishuo Network Information Co. Ltd.(Aishuo) through various contractual arrangements in place. As a result of this control, one hundred percent of the operations, assets, liabilities and cash flows of Aishuo have been consolidated in the accompanying consolidated financial statements. Summarized assets, liabilities and results of operations of Aishuo are as follows: (in thousands) June 30 December 31 2016 2015 Assets $ 11 $ 43 Intercompany receivables/(payables) (261 ) (123 ) Other liabilities (39 ) (60 ) Revenue 134 56 Net Loss (154 ) (286 ) |
Property and Equipment, net
Property and Equipment, net | 6 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Note 4. Property and Equipment, net Property and equipment consist of the following: (in thousands) June 30 December 31 2016 2015 Equipment $ 289 $ 291 Less accumulated depreciation (221 ) (195 ) Property and equipment, net $ 68 $ 96 |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 5. Intangible Assets Intangible assets consist primarily of software development costs and customer and reseller relationships which are amortized over the estimated useful life, generally on a straight-line basis with the exception of customer relationships, which are generally amortized over the greater of straight-line or the related assets pattern of economic benefit. (in thousands) June 30 December 31 2016 2015 Horizon software $ 18,381 $ 17,879 ZTEsoft Telecom software 457 469 Contractual relationships 885 885 19,723 19,233 Less accumulated amortization (10,555 ) (9,410 ) Intangible assets, net $ 9,168 $ 9,823 Amortization of intangible assets for each of the next five years is estimated to be $2,000,000 per year |
Convertible Debenture
Convertible Debenture | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Convertible Debenture | Note 6. Convertible Debenture In December 22, 2014 the Company closed a private placement with gross proceeds of $3,500,000 under Regulation S whereby we issued to an investor a convertible debenture that is convertible into 1,555,556 shares of common stock, Class C warrant to purchase 388,889 shares of common stock, Class D warrant to purchase 388,8889 shares of common stock and the potential for performance warrants. The unsecured convertible debenture is for a term of three years from date of issue and has an interest rate of 8% per annum, payable quarterly in arrears in either cash, shares of common stock or a combination of cash and shares of common stock. The Company has the right to repurchase the convertible debenture upon notice at any time after the first twelve months. The Class C and Class D warrants have a term of four years and are each entitled to purchase one-fourth of a share of common stock. In total the Company issued 388,889 Class C warrants and 388,889 Class D warrants. Performance Warrants associated with the convertible debenture were potentially issuable and exercisable based on the Companys annual reported subscriber numbers, twenty-four (24) months after December 22, 2014, as reflected in our 2014 Form 10-K. In the first quarter of 2016 the Company announced it has achieved the required number subscriber downloads and therefore the additional performance warrants are not issuable by the Company. Proceeds received in 2014 from the convertible debentures were allocated between the convertible debenture and warrants based on their relative fair values. The resulting discount for the warrants is amortized using the effective interest method over the life of the debentures. The relative fair value of Class C and Class D warrants resulted in a discount of $598,500 at the date of issuance. After allocating a portion of the proceeds to the warrants, the effective conversion price of the convertible debentures was determined to result in a beneficial conversion feature. The beneficial conversion feature has a relative fair value of $302,994 at the date of issuance and is being amortized over the life of the convertible debenture. The beneficial conversion feature discount is amortized using the effective interest method over the life of the debentures. The amortization of the debt discount is included in interest expense in the consolidated statement of operations. A total of 1,555,556 shares of common stock have been reserved for the potential conversion of the convertible debenture. |
Related-Party Transactions
Related-Party Transactions | 6 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Note 7. Related-Party Transactions Amounts due to related parties include the following: (in thousands) June 30 December 31 2016 2015 Loans due to stockholders (current officers and directors) $ 2,343 $ 2,354 At June 30, 2016, $2,343,000 of related party debt was outstanding and will mature on April 1, 2017, which is unsecured and is interest free. |
Share Capital
Share Capital | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Share Capital | Note 8. Share Capital Preferred Stock The Companys authorized capital includes 50,000,000 shares of preferred stock of $0.0001 par value per share. The designation of rights including voting powers, preferences, and restrictions shall be determined by the Board of Directors before the issuance of any shares. On July 21, 2014, the Company completed a private placement of 170,940 shares of mandatorily convertible Series A Preferred Stock that also included 100,000 Class B warrants, each warrant convertible to one share of common stock at an exercise price of $4 per share. The net proceeds of the offering were $982,000 after deducting offering costs. The holders of Series A Preferred Stock are entitled to receive cumulative dividends during a period of twenty-four (24) months from and after the Issuance Date (the Dividend Period). During the Dividend Period for each outstanding share of Series Preferred Stock, dividends shall be payable quarterly in cash, at the rate of 10% per annum on or before each ninety (90) day period following the Issuance Date (each a Dividend Payment Date), with the first Dividend Payment Date to occur promptly following the three month period following the Issuance Date, and continuing until the end of the Dividend Period. Following the expiration of the Dividend Period, the holders of Series A Preferred Stock shall not be entitled to any additional dividend payment or coupon rate. Shares of Series A Preferred Stock are convertible in whole or in part, at the option of the holders, into shares of common stock at $5.85 per share prior to the Maturity, and all outstanding shares of Series A Preferred Stock shall automatically convert to shares of common stock upon maturity, provided however, at no time may holders convert shares of Series A Preferred Stock if the number of shares of common stock to be issued pursuant to such conversion would cause the number of shares of common stock beneficially owned by such holder and its affiliates to exceed 9.99% of the then issued and outstanding shares of common stock outstanding at such time, unless the holder provides us with a waiver notice in such form and with such content specified in the Series A Certificate of Designation. Shares of Series A Preferred Stock are redeemable, at the option of the holders commencing any time after 12 months from and after the closing at a price equal to the original purchase price plus all accrued but unpaid dividends. In the event that the Company completes a financing of $10 million or greater prior to maturity, the Series A Preferred Stock will be redeemed at a price equal to the original purchase price plus all accrued but unpaid dividends. 170,940 shares of Series A preferred stock are issued and outstanding as of June 30, 2016. Mandatorily Redeemable Preferred Shares (Deferred Stock) The Companys subsidiary OHG is authorized to issue 50,000 shares of deferred stock, par value of £1. These shares are non-voting, non-participating, redeemable and have been presented as a long-term liability. Common Stock The Company is authorized to issue 200 million shares of common stock, par value of $0.0001 per share. During the six months ended June 30, 2016 the Company issued 200,000 shares of common stock for services to be provided with a fair value of $133,960. On August 10, 2015, in connection with an Underwriting Agreement dated August 4, 2015 (the Underwriting Agreement) with Aegis Capital Corp. (Aegis), as representative of the several underwriters named therein (the Underwriters), the Company closed a firm commitment underwritten public offering of 1,714,286 shares of Common Stock, and warrants to purchase up to an aggregate of 857,143 shares of Common Stock at a combined offering price of $1.75 per share and accompany warrant. Pursuant to the Underwriting Agreement, the Underwriters exercised an option to purchase 151,928 additional shares of Common Stock and 75,964 additional warrants. The net proceeds of the offering were approximately $2.89 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The warrants offered have a per share exercise price of $2.50 (subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our Common Stock and also upon any distributions of assets, including cash, stock or other property to our stockholder), are exercisable immediately and will expire three years from the date of issuance. Subject to applicable laws, the warrants may be offered for sale, sold, transferred or assigned without our consent. Stock Purchase Warrants At June 30, 2016, the Company had reserved 3,233,746 shares of its common stock for the following outstanding warrants: Number of Warrants Exercise Price Expiry 116,760 $ 0.86 no expiry date 1,209,675 4.25 January 2019 100,000 4.00 July 2016 68,850 2.25 December 2018 402,786 3.00 December 2018 402,568 3.50 December 2018 857,143 2.50 August 2018 75,964 2.50 September 2018 During the six months ended June 30, 2016 60,000 warrants were forfeited, no warrants issued and none exercised. If, at the time of exercise of warrants issued pursuant to the financing of August 2015, wherein a total of 933,107 warrants were issued, that the shares issued upon exercise are not able to be included in a registration statement then the holder may request that the warrants so exercised be done on a cashless basis. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Note 9. Stock-Based Compensation The shareholders approved a stock option plan on August 6, 2013, the 2013 Equity Incentive Plan. This stock option plan is for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, cash bonuses and other stock-based awards to employees, directors and consultants of the Company. There are 3,000,000 shares of common stock available for granting awards under the plan. Each year, commencing 2014 until 2016, the number of shares of common stock available for granting awards shall be increased by the lesser of 1,000,000 shares of common stock and 5% of the total number of shares of common stock outstanding. On January 1, 2014, 2015 and 2016 the number of shares available for granting awards under the 2013 Equity Incentive Plan was increased by 1,000,000 shares. During the year ended December 31, 2014, the Company issued options to purchase 500,000 shares of common stock under the 2013 Equity Incentive Plan. The options become fully vested on January 15, 2017 and are exercisable, at an exercise price of $4.54 per common share, until January 15, 2024. During the year ended December 31, 2015, the Company issued options to purchase 564,000 shares of common stock under the 2013 Equity Incentive Plan. The fair value of the options issued, using the Black-Scholes option pricing model is estimated to be $370,000 prior to a point that forfeiture rate has been applied. The options have an exercise price of $1.09 and vest over three years. There have been no options issued in the six months ended June 30, 2016 A summary of the Companys 2013 Equity Incentive Plan as of June 30, 2016, is as follows: Weighted Number of Exercise Outstanding at December 31, 2014 500,000 $ 4.54 Options issued 564,000 1.09 Options forfeited (120,000 ) 4.54 Outstanding at December 31, 2015 and June 30, 2016 944,000 2.48 The fair value of these options, using the Black-Scholes option-pricing model, is estimated to be $2,576,000. This expense, less an estimated forfeiture rate of 30%, will be recognized over the three year vesting periods. The amount of $312,000 and $279,000 has been recognized during the six months ended June 30, 2016 and 2015, respectively. As at June 30, 2016 there was unrecognized compensation expense of approximately $411,000 to be recognized over the remaining vesting periods. For the 2013 Equity Incentive Plan there were no options issued, exercised or forfeited during the six months ended June 30, 2016. Prior to the 2013 Equity Incentive Plan the Company issued stock options to directors, employees, advisors, and consultants. A summary of the Companys other stock options as of June 30, 2016, is as follows: Weighted Number of Exercise Outstanding at December 31, 2014 584,650 $ 0.53 Options issued 291,900 0.53 Options forfeited (850 ) 0.51 Outstanding at December 31, 2015 and June 30, 2016 875.700 $ 0.53 The grant date fair value of the options issued, using the Black-Scholes option-pricing model, is estimated to be $255,000. This expense is being recognized over the 2 year vesting period. The amount of $64,000 and $nil has been recognized during the six months ended June 30, 2016 and 2015, respectively. As at June 30, 2016 there was unrecognized compensation expense of approximately $127,000 to be recognized over the remaining vesting period. There were no options issued, exercised or forfeited during the six months ended June 30, 2016. The following table summarizes stock options outstanding at June 30, 2016: Number Outstanding at June 30, Average Remaining Contractual Life Number Exercisable at June 30, Intrinsic Value at June 30, Exercise Price 2016 (Years) 2016 2016 $ 0.53 291,900 4.00 291,900 67,137 0.53 291,900 6.00 291,900 67,137 0.53 291,900 9.25 - - 4.54 380,000 7.50 - - 1.09 564,000 9.00 - - At June 30, 2016, 6,875,700 shares of common stock were reserved for all outstanding options and future commitments under the 2013 Equity Incentive Plan. The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies Contractual Commitments The Company incurred total rent expense of $33,000 and $28,000, respectively, for the six month periods ended June 30, 2016 and 2015. Minimum contractual commitments, as of June 30, 2016, is as follows: Operating leases 2016 4,000 Legal Proceedings In 2012, we sold certain former subsidiaries engaged in provision of satellite service in 2012 to Broadband Satellite Services (BSS), a company incorporated under laws of England and Wales. Horizon Globex, a company incorporated in Switzerland and a subsidiary of us, had provided these subsidiary companies with software and IT services. In connection with its acquisition of our former subsidiary companies, BSS entered into three agreements with Horizon Globex pursuant to which BSS continued to use Horizon Globex to supply software and IT services. Notwithstanding the fact that Horizon Globex has provided such ongoing software and IT services, BSS has failed to pay our fees pursuant to the agreements. As a result, on December 23, 2014, we initiated legal proceedings in the High Court, Queens Bench Division, Commercial Court No. 2014 folio 1560 against BSS in the United Kingdom to collect such fees in the amount of $640,000. Subsequently, BSS asserted counter claims in the amount of $5.8 million, alleging among other claims, civil fraud in connection with the sale of subsidiary companies. Based on the timing of these claims, which were never raised until we filed our action against BSS, it is our position that these claims are specious and represent nothing more than an attempt to improve BSS's negotiating position with regard to our legitimate claims against it. As a result, we plan to continue to carry out our claims against BSS to the fullest extent possible and to defend BSS's counter-claims vigorously. We note further that several of BSS's counter claims may be time barred by applicable sections of the contracts and plan to assert the same as an affirmative defense to such counter claim. Notwithstanding our views with regard to our claims against BSS and BSS's counterclaims, litigation is by its nature unpredictable and therefore we cannot guarantee with certainty the outcome of our dispute with BSS. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | The Company has two business segments, both of which involve the development and licensing of software for mobile VoIP. One for business to business line and one for business to consumer line, primarily represented by Aishuo. For the three and six months ended June 30, 2016 and 2015 activity in the business to consumer line is not material for separate segment presentation. The Companys revenues were generated in the following geographic areas: (in thousands) Three months ended June 30, Six months ended June 30, 2016 2015 2016 2015 China $ 74,000 $ 4,000 $ 134,000 $ 7,000 Rest of Asia $ 275,000 $ 86,000 $ 823,000 $ 270,000 Europe and Russia $ 10,000 $ 7,000 $ 11,000 $ 7,000 The Americas $ 7,000 $ 11,000 $ 7,000 $ 569,000 Total $ 366,000 $ 108,000 $ 975,000 $ 853,000 |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Reclassification | Reclassification Certain amounts in the 2015 financial statements have been reclassified to conform to the 2016 financial presentation. These reclassifications have no impact on net loss. |
Basis of Accounting and Presentation | Basis of Accounting and Presentation These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States |
Foreign Currency Translation | Foreign Currency Translation The reporting currency of the Company is the United States dollar. Assets and liabilities of operations other than those denominated in U.S. dollars, primarily in Switzerland, Ireland, the United Kingdom and China, are translated into United States dollars at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the period. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in general and administrative expenses. |
Cash | Cash Cash and cash equivalents include bank demand deposit accounts and highly liquid short term investments with maturities of three months or less when purchased. Cash consists of checking accounts held at financial institutions in the United Kingdom, Switzerland, Ireland, Singapore, Hong Kong and China which, at times, balances may exceed insured limits. The Company has not experienced any losses related to these balances, and management believes the credit risk to be minimal. |
Accounts Receivable | Accounts Receivable Accounts receivable result primarily from sale of software and licenses to customers and are recorded at their principal amounts. The categories of sales and receivables and their terms of payment are as follows: a) Master License Agreement (Agreement) deposits b) Software consultancy and hardware fees c) Maintenance and operational fees and end user licenses fees The revenue share agreement was introduced in October 2014, and at that time the Company reported that it had converted a significant number of its customers to a revenue share basis of collection. Accounts receivable balances from certain customers arose from revenue recognised prior to September 30, 2014 (prior revenue was recognized in accordance with revenue recognition policies in place at that time - see Revenue Recognition note). Those revenue share arrangements changed the basis under which the customers would pay their existing balances, as described, effective starting as early as October 1, 2014. As of December 31, 2015 a significant portion of those receivables that will be paid under the revenue share agreement remained uncollected. Considering the effects of the revenue share arrangements on collection of accounts receivable and the timing of those collections, along with other factors, management estimated the amount of existing accounts receivable they expect to collect within 12 months of the balance sheet date from those customers operating under revenue share arrangements. The portion of the receivable balance expected to be collected in more than 12 months was considered a non-current receivable. The Company maintains its opinion that current and non-current accounts receivable continue to be due from their customers. Further, management is of the opinion that its customers are contractually obligated to pay the full amount due as provided under the Master License Agreements executed by each of its customers. At December 31, 2015, management believed there was general uncertainty in the collection of those balances considered long-term and increased the general provision for doubtful accounts by $5.7 million to cover those balances. The slow-pay uncertainties arise from a number of factors, including the effects of revenue share arrangements, the extended time customers are talking to generate significant revenue under revenue share arrangements, and general technological changes in the industry. At June 30, 2016, due to continuing uncertainty in the timing of collections of amounts due from certain customers, management reassessed the collectability of its accounts receivable balances and has decided to write off balances where there is significant uncertainty over the timing of the collection against the existing allowance brought forward. As a result of the management decision the amount of the gross accounts receivable has been reduced by $6.0 million and the allowance for doubtful accounts has been similarly reduced. As at June 30, 2016 the remaining allowance for doubtful accounts is at $238,000 of which $200,000 has been provided in 2016. For any future collections of amounts written off, the Company will account for those as recoveries of written-off receivables, and will include those amounts in other income (non-operating income). The Company has strong collection history in category a) and category b) and generally does not believe that an allowance for doubtful accounts for these categories is necessary. For accounts receivable in category c) the Company records an allowance for doubtful accounts for the receivable balance that is expected to be collected under revenue share arrangements in more than 12 months. There was an allowance of $238,000 and $6,055,000 for doubtful accounts at June 30, 2016 and December 31, 2015, respectively. Receivables are generally unsecured. Account balances are charged off against the allowance when the Company determines that certain receivable will probably not be recovered. The Company does not have off-balance sheet credit exposure related to its customers. As of December 31, 2015 and December 31, 2014, two customers accounted for 24% and 28%, respectively, of the accounts receivable balance. |
Property and Equipment | Property and Equipment Property and equipment is primarily comprised of leasehold property improvements, motor vehicles and equipment that are recorded at cost and depreciated or amortized using the straight-line method over their estimated useful lives as follows: motor vehicles 5 years, equipment between 3 and 5 years, leasehold property improvements, over the lesser of the estimated remaining useful life of the asset or the remaining term of the lease. Repairs and maintenance are charged to expense as incurred. Expenditures that substantially increase the useful lives of existing assets are capitalized. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the exchange price that will be received for an asset or paid to transfer a liability (an exit price) in the principal. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered to be observable and the third unobservable: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities. |
Intangible Assets | Intangible Assets Intangible assets include software development costs and customer lists and are amortized on a straight-line basis over the estimated useful lives of five years for customer lists and ten years for software development. The Company periodically evaluates whether changes have occurred that would require revision of the remaining estimated useful life. The Company performs periodic reviews of its capitalized intangible assets to determine if the assets have continuing value to the Company. The Company expenses all costs related to the development of internal-use software as incurred, other than those incurred during the application development stage, after achievement of technological feasibility. Costs incurred in the application development stage are capitalized and amortized over the estimated useful life of the software. Internally developed software costs are amortized on a straight-line basis over the estimated useful life of the software. The Company performs periodic reviews of its capitalized software development costs to determine if the assets have continuing value to the Company. Costs for assets that are determined to be of no continuing value are written off. The amortization of these costs is included in cost of revenue over the estimated life of the products. During the six months ended June 30, 2016 and 2015, software development costs of $207,000 and $560,000, respectively, have been capitalized. |
Impairment of Other Long-Lived Assets | Impairment of Other Long-Lived Assets The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. During the six months ended June 30, 2016 and 2015, the Company identified no impairment losses related to the Companys long-lived assets. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when it is realized or realizable and earned. The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with a customer and that a delivery has occurred or services have been rendered, the price is fixed and determinable, and collectability is reasonably assured. ● Software and licenses revenue from sales of perpetual licenses to telecom entities is recognized at the date of invoices raised for installments due under the agreement, unless payment terms exceed one year, as described below, presuming all other relevant revenue recognition criteria are met. Revenue from sales of perpetual licenses to other entities is recognized over the agreed collection period. ● Revenues for user licenses purchased by customers are recognized when the user license is delivered. ● Revenues for maintenance services are recognized over the period of delivery of the services. ● Effective October 1, 2014, the Company amended certain existing customer contracts with respect to the terms under which those customers would pay the Company for perpetual licenses, user licenses and maintenance services provided by the Company. Existing customer contracts required payments for maintenance services to be made based on contractually specified fixed amounts, which were billed regularly through September 2014. Through that date the Company recorded revenue for licenses and maintenance services when those licenses and services were billed. Revenue for user licenses was recorded as earned and revenue for maintenance services was recorded based on a fixed annual fee, billed quarterly. The Company has modified the payment terms under certain of those existing customer contracts by entering into Revenue Sharing agreements with those customers. Under the terms of these Revenue Sharing agreements, future payments will be due from the customer when that customer has generated revenue from its customers who subscribe to use the Horizon products and services. Hosted services are offered to customers on revenue share arrangements whereby the Company can provide fully terminated services and sells vouchers for minutes which can be resold by the customer. Sales for this service are recognized when the supply is made and the invoice raised. Effective October 1, 2014, revenue has been recorded by the Company when it invoices the customer for the revenue share due to the Company. Certain customers who entered into revenue sharing arrangements had outstanding balances due to the Company as of September 30, 2014, which balances were included in accounts receivable as at that date. Payments received after September 30, 2014, from those customers under revenue sharing agreements have been applied to the customers existing accounts receivable balances first. For those customers having balances due at September 30, 2014, revenue related to perpetual and user licenses and maintenance services are recorded only after existing accounts receivable balances are fully collected. ● Revenues from Aishuo retail sales are recognized when the PSTN calls and texts are made. Where the Company has entered into a Revenue Share with the customer, then all future revenue from granting of user licenses and for maintenance services will be recognized when the Company has delivered user licenses and is entitled to invoice. We enter into arrangements with telecommunication entities in which a customer purchases a combination of software licenses, maintenance services and post-contract customer support (PCS). As a result, judgment is sometimes required to determine the appropriate accounting, including how the price should be allocated among multiple deliverable elements. PCS may include rights to upgrades, when and if available, support, updates and enhancements. When vendor specific objective evidence (VSOE) of fair value exists for all elements in a multiple element arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values of various elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price between deliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elements such as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In the absence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to the residual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit of accounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No sales arrangements to date include undelivered elements for which VSOE does not exist. For purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption that the fee in the transaction is not fixed and determinable. This presumption however, may be overcome if persuasive evidence demonstrates that the Company has a business practice of extending payment terms and has been successful in collecting under the original terms, without providing any concessions. In doing so, the Company considers if the arrangement is sufficiently similar to historical arrangements in terms of similar customers and products is assessing whether there is evidence of a history of successful collection. In order to determine the companys historical experience is based on sufficiently similar arrangements, the Company considers the various factors including the types of customers and products, product life cycle, elements Included in the arrangement, length of payment terms and economics of license arrangement. During the three months ended June 30, 2016, $272,000 or 74% of the Companys revenue was concentrated in the hands of one major customer. In the three months ended June 30, 2015 the equivalent amount was $35,000 or 32% of the revenue. During the six months ended June 30, 2016, $795,000 or 81% of the Companys revenue was concentrated in the hands of one major customer. In the six months ended June 30, 2015, $500,000 or 59% of the Companys revenue was concentrated in the hands of one major customer |
Advertising Expenses | Advertising Expenses It is the Companys policy to expense advertising costs as incurred. Advertising costs incurred during the six month periods ended June 30, 2016 and 2015 were $39,000 and $nil respectively. |
Research and Development Expenses | Research and Development Expenses Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, costs related to the development of new products, significant enhancements to existing products, and the portion of costs of development of internal-use software required to be expensed. Research and development costs are charged to operations as incurred with the exception of those software development costs that may qualify for capitalization. The Company expensed research and development costs in the six month period ended June 30, 2016 and 2015 of $374,000 and $322,000 respectively. |
Debt Issue Costs | Debt Issue Costs Debt issue costs related to long-term debt are capitalized and amortized over the term of the related debt using the effective interest method. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance. The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively. Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Companys estimates and assumptions may differ significantly from tax benefits ultimately realized. |
Net Loss per Share | Net Loss per Share Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the three and six month periods ended June 30, 2016 and 2015, outstanding stock options, warrants and convertible debt are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations. |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Other comprehensive income (loss), as defined, includes net loss, foreign currency translation adjustments, and all changes in equity (net assets) during a period from non-owner sources. To date, the Company has not had any significant transactions that are required to be reported in other comprehensive income (loss), except for foreign currency translation adjustments. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilities assumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions. |
Financial Instruments | Financial Instruments The carrying value of our financial assets and liabilities such as cash, accounts receivable and accounts payable approximate their fair values based on level 1 inputs in the fair value hierarchy because of the short maturity of these instruments. Due to the conversion features and other terms, it is not practical to estimate the fair value of amounts due to related parties and long term debt. |
Share-Based Compensation | Share-Based Compensation The Company accounts for stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes valuation model, which includes subjective judgments about the expected life of the awards, forfeiture rates and stock price volatility. |
Recently Issued Accounting Standards Not Yet Adopted | Recently Issued Accounting Standards Not Yet Adopted In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2014-09 Revenue From Contracts with Customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of this ASU is that an entity should recognize revenue when it transfers 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. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The original effective date for ASU 2014-09 would have required the Company to adopt beginning in its first quarter 2017. In July 2015, the FASB voted to amend ASU 2014-09 by approving a one year deferral of the effective date as well as providing the option to early adopt the standard on the original effective date. Accordingly, the Company may adopt the standard in either its first quarter of 2017 or 2018. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the timing of its adoption and the impact of adopting the new revenue standard on its consolidated financial statements. |
Recently Issued Accounting Standards Adopted | Recently Issued Accounting Standards Adopted There have been no significant changes to the Companys significant accounting policies as described in the Companys Annual Report on Form 10-K for the year-ended December 31, 2015. During the three months ended March 31, 2016, the Company adopted Accounting Standards Update (ASU) ASU 2015-03, Simplifying the Presentation of Debt Issuance Cost |
Suzhuo Aishuo Network Informati
Suzhuo Aishuo Network Information Co. Ltd. (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of assets, liabilities and results of operations of Aishuo | Summarized assets, liabilities and results of operations of Aishuo are as follows: (in thousands) June 30 December 31 2016 2015 Assets $ 11 $ 43 Intercompany receivables/(payables) (261 ) (123 ) Other liabilities (39 ) (60 ) Revenue 134 56 Net Loss (154 ) (286 ) |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consist of the following: (in thousands) June 30 December 31 2016 2015 Equipment $ 289 $ 291 Less accumulated depreciation (221 ) (195 ) Property and equipment, net $ 68 $ 96 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible assets consist primarily of software development costs and customer and reseller relationships which are amortized over the estimated useful life, generally on a straight-line basis with the exception of customer relationships, which are generally amortized over the greater of straight-line or the related assets pattern of economic benefit. (in thousands) June 30 December 31 2016 2015 Horizon software $ 18,381 $ 17,879 ZTEsoft Telecom software 457 469 Contractual relationships 885 885 19,723 19,233 Less accumulated amortization (10,555 ) (9,410 ) Intangible assets, net $ 9,168 $ 9,823 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of amount due to related parties | Amounts due to related parties include the following: (in thousands) June 30 December 31 2016 2015 Loans due to stockholders (current officers and directors) $ 2,343 $ 2,354 |
Share Capital (Tables)
Share Capital (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of stock purchase warrants | At June 30, 2016, the Company had reserved 3,233,746 shares of its common stock for the following outstanding warrants: Number of Warrants Exercise Price Expiry 116,760 $ 0.86 no expiry date 1,209,675 4.25 January 2019 100,000 4.00 July 2016 68,850 2.25 December 2018 402,786 3.00 December 2018 402,568 3.50 December 2018 857,143 2.50 August 2018 75,964 2.50 September 2018 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of equity incentive plan | A summary of the Companys 2013 Equity Incentive Plan as of June 30, 2016, is as follows: Weighted Number of Exercise Outstanding at December 31, 2014 500,000 $ 4.54 Options issued 564,000 1.09 Options forfeited (120,000 ) 4.54 Outstanding at December 31, 2015 and June 30, 2016 944,000 2.48 |
Schedule of other stock options | A summary of the Companys other stock options as of June 30, 2016, is as follows: Weighted Number of Exercise Outstanding at December 31, 2014 584,650 $ 0.53 Options issued 291,900 0.53 Options forfeited (850 ) 0.51 Outstanding at December 31, 2015 and June 30, 2016 875.700 $ 0.53 |
Schedule of stock options outstanding exercise price range | The following table summarizes stock options outstanding at June 30, 2016: Number Outstanding at June 30, Average Remaining Contractual Life Number Exercisable at June 30, Intrinsic Value at June 30, Exercise Price 2016 (Years) 2016 2016 $ 0.53 291,900 4.00 291,900 67,137 0.53 291,900 6.00 291,900 67,137 0.53 291,900 9.25 - - 4.54 380,000 7.50 - - 1.09 564,000 9.00 - - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of minimum contractual commitments | Minimum contractual commitments, as of June 30, 2016, is as follows: Operating leases 2016 4,000 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of revenues by geographic areas | The Companys revenues were generated in the following geographic areas: (in thousands) Three months ended June 30, Six months ended June 30, 2016 2015 2016 2015 China $ 74,000 $ 4,000 $ 134,000 $ 7,000 Rest of Asia $ 275,000 $ 86,000 $ 823,000 $ 270,000 Europe and Russia $ 10,000 $ 7,000 $ 11,000 $ 7,000 The Americas $ 7,000 $ 11,000 $ 7,000 $ 569,000 Total $ 366,000 $ 108,000 $ 975,000 $ 853,000 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details Narrative) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2016USD ($)Number | Jun. 30, 2015USD ($)Number | Jun. 30, 2016USD ($)Number | Jun. 30, 2015USD ($)Number | Dec. 31, 2015USD ($)Number | Dec. 31, 2014 | |
Allowance for doubtful accounts | $ 238 | $ 238 | $ 6,055 | |||
Allowance for doubtful accounts for the current period | 200 | 200 | ||||
Increase (decrease) in the allowance for doubtful accounts | 6,000 | $ 5,700 | ||||
Capitalized cost for software development | 207 | $ 560 | 207 | $ 560 | ||
Advertising costs | 39 | 0 | ||||
Research and development costs | $ 186 | $ 160 | $ 374 | $ 322 | ||
Customer Lists [Member] | ||||||
Useful life of intangible assets | 5 years | |||||
Software Development [Member] | ||||||
Useful life of intangible assets | 10 years | |||||
Motor Vehicle [Member] | ||||||
Useful life | 5 years | |||||
Equipment [Member] | ||||||
Useful life | 3 years | |||||
Leasehold Property Improvements [Member] | ||||||
Useful life | 5 years | |||||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | ||||||
Number of customers | Number | 2 | |||||
Percentage of concentration risk | 24.00% | 28.00% | ||||
Customer Concentration Risk [Member] | Sales Revenue [Member] | ||||||
Number of customers | Number | 1 | 1 | 1 | 1 | ||
Revenue | $ 272 | $ 35 | $ 795 | $ 500 | ||
Percentage of concentration risk | 74.00% | 32.00% | 81.00% | 59.00% |
Suzhuo Aishuo Network Informa29
Suzhuo Aishuo Network Information Co. Ltd. (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Assets | $ 13,806 | $ 13,806 | $ 15,671 | ||
Net loss | (1,418) | $ (1,548) | (2,676) | $ (2,481) | |
Suzhou Aishuo Network Information Co. Ltd [Member] | |||||
Assets | 11 | 11 | 43 | ||
Intercompany receivables/(payables) | (261) | (261) | (123) | ||
Other liabilities | $ (39) | (39) | (60) | ||
Revenue | 134 | 56 | |||
Net loss | $ (154) | $ (286) |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Less accumulated depreciation | $ (221) | $ (195) |
Property and equipment, net | 68 | 96 |
Equipment [Member] | ||
Property and equipment, gross | $ 289 | $ 291 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Intangible assets, gross | $ 19,723 | $ 19,233 |
Less accumulated amortization | (10,555) | (9,410) |
Intangible assets, net | 9,168 | 9,823 |
Horizon Software [Member] | ||
Intangible assets, gross | 18,381 | 17,879 |
ZTEsoft Telecom Software [Member] | ||
Intangible assets, gross | 457 | 469 |
Contractual Relationships [Member] | ||
Intangible assets, gross | $ 885 | $ 885 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) $ in Thousands | Jun. 30, 2016USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Amortization of intangible assets first year | $ 2,000 |
Amortization of intangible assets second year | 2,000 |
Amortization of intangible assets third year | 2,000 |
Amortization of intangible assets four year | 2,000 |
Amortization of intangible assets fifth year | $ 2,000 |
Convertible Debenture (Details
Convertible Debenture (Details Narrative) - Private Placement [Member] - 8% Convertible Debenture [Member] - USD ($) $ in Thousands | Dec. 22, 2014 | Jun. 30, 2016 |
Debt face amount | $ 3,500 | |
Number of common shares issued upon conversion | 1,555,556 | |
Debt instrument term | 3 years | |
Fair value of warrant | $ 598,500 | |
Fair value of debt beneficial conversion feature | $ 302,994 | |
Common stock reserved for potential conversion of the convertible debenture | 1,555,556 | |
Class C Warrant [Member] | ||
Number of warrant shares issued upon conversion | 388,889 | |
Warrant term | 4 years | |
Class D Warrant [Member] | ||
Number of warrant shares issued upon conversion | 388,889 | |
Warrant term | 4 years |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Related Party Transactions [Abstract] | ||
Loans due to stockholders (current officers and directors) | $ 2,343 | $ 2,354 |
Related-Party Transactions (D35
Related-Party Transactions (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Related Party Transactions [Abstract] | |
Due from related party | $ 2,343 |
Maturity date | Apr. 1, 2017 |
Share Capital (Details)
Share Capital (Details) | 6 Months Ended |
Jun. 30, 2016$ / sharesshares | |
First Warrant [Member] | |
Number of Warrants | shares | 116,760 |
Exercise Price (in dollars per share) | $ / shares | $ 0.86 |
Second Warrant [Member] | |
Number of Warrants | shares | 1,209,675 |
Exercise Price (in dollars per share) | $ / shares | $ 4.25 |
Expiry | 2019-01 |
Third Warrant [Member] | |
Number of Warrants | shares | 100,000 |
Exercise Price (in dollars per share) | $ / shares | $ 4 |
Expiry | 2016-07 |
Fourth Warrant [Member] | |
Number of Warrants | shares | 68,850 |
Exercise Price (in dollars per share) | $ / shares | $ 2.25 |
Expiry | 2018-12 |
Five Warrant [Member] | |
Number of Warrants | shares | 402,786 |
Exercise Price (in dollars per share) | $ / shares | $ 3 |
Expiry | 2018-12 |
Six Warrant [Member] | |
Number of Warrants | shares | 402,568 |
Exercise Price (in dollars per share) | $ / shares | $ 3.50 |
Expiry | 2018-12 |
Seven Warrant [Member] | |
Number of Warrants | shares | 857,143 |
Exercise Price (in dollars per share) | $ / shares | $ 2.50 |
Expiry | 2018-08 |
Eight Warrant [Member] | |
Number of Warrants | shares | 75,964 |
Exercise Price (in dollars per share) | $ / shares | $ 2.50 |
Expiry | 2018-09 |
Share Capital (Details Narrativ
Share Capital (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Aug. 10, 2015 | Jul. 21, 2014 | Jun. 30, 2016 | Dec. 31, 2015 |
Preferred stock, authorized | 50,000,000 | 50,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||
Preferred stock, issued | 170,940 | 170,940 | ||
Preferred stock, outstanding | 170,940 | 170,940 | ||
Temporary equity issued | $ 74 | $ 73 | ||
Common stock, authorized | 200,000,000 | 200,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||
Fair value issued for services | $ 133,960 | |||
Number of shares issued for services | 200,000 | |||
Aegis Capital Corp [Member] | Underwriting Agreement [Member] | ||||
Number of shares issued upon new issue | 1,714,286 | |||
Share price (in dollars per share) | $ 1.75 | |||
Number of additional shares issued upon new issue | 151,928 | |||
Net proceeds from issuance public offering | $ 2,890 | |||
Warrant [Member] | ||||
Number of common shares reserved for outstanding warrants | 3,233,746 | |||
Number of warrants forfeited | 60,000 | |||
Warants outstanding | 933,107 | |||
Warrant [Member] | Aegis Capital Corp [Member] | Underwriting Agreement [Member] | ||||
Exercise price (in dollars per share) | $ 2.50 | |||
Debt instrument term | 3 years | |||
Number of shares issued upon new issue | 857,143 | |||
Number of additional shares issued upon new issue | 75,964 | |||
Mandatorily Redeemable Preferred Shares [Member] | One Horizon Group Plc [Member] | ||||
Temporary equity issued | $ 50,000 | |||
Mandatorily Redeemable Preferred Shares [Member] | One Horizon Group Plc [Member] | GBP [Member] | ||||
Temporary equity par value (in pound per share) | $ 1 | |||
Private Placement [Member] | ||||
Proceeds from private placement | $ 982 | |||
Private Placement [Member] | Class B Warrant [Member] | ||||
Number of shares issued | 100,000 | |||
Description of warrants conversion terms | Each warrant convertible to one share of common stock | |||
Exercise price (in dollars per share) | $ 4 | |||
Private Placement [Member] | 10% Series A Convertible Preferred Stock [Member] | ||||
Number of shares issued | 170,940 | |||
Conversion price (in dollars per share) | $ 5.85 | |||
Description of redemption terms | Company completes a financing of $10 million or greater prior to Maturity, the Series A Preferred Stock will be redeemed at a price equal to the original purchase price plus all accrued but unpaid dividends. | |||
Preferred stock, issued | 170,940 | |||
Preferred stock, outstanding | 170,940 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - 2013 Equity Incentive Plan [Member] - $ / shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding at beginning | 944,000 | 500,000 | |
Options issued | 564,000 | 564,000 | 500,000 |
Options forfeited | (120,000) | (120,000) | |
Outstanding at ending | 944,000 | 944,000 | 500,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||
Outstanding at beginning | $ 2.48 | $ 4.54 | |
Options issued | 1.09 | 1.09 | $ 4.54 |
Options forfeited | 4.54 | 4.54 | |
Outstanding at ending | $ 2.48 | $ 2.48 | $ 4.54 |
Stock-Based Compensation (Det39
Stock-Based Compensation (Details 1) - Other Stock Options [Member] - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding at beginning | 875.700 | 584,650 |
Options issued | 291,900 | 291,900 |
Options forfeited | (850) | (850) |
Outstanding at ending | 875,700 | 875.700 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Outstanding at beginning | $ 0.53 | $ 0.53 |
Options issued | 0.53 | 0.53 |
Options forfeited | 0.51 | 0.51 |
Outstanding at ending | $ 0.53 | $ 0.53 |
Stock-Based Compensation (Det40
Stock-Based Compensation (Details 2) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($)shares | |
Exercise Price $0.53 [Member] | |
Number Outstanding | 291,900 |
Average Remaining Contractual Life (Years) | 4 years |
Number Exercisable | 291,900 |
Intrinsic Value | $ | $ 67,137 |
Exercise Price $0.53 [Member] | |
Number Outstanding | 291,900 |
Average Remaining Contractual Life (Years) | 6 years |
Number Exercisable | 291,900 |
Intrinsic Value | $ | $ 67,137 |
Exercise Price $0.53 [Member] | |
Number Outstanding | 291,900 |
Average Remaining Contractual Life (Years) | 9 years 3 months |
Number Exercisable | |
Intrinsic Value | $ | |
Exercise Price $4.54 [Member] | |
Number Outstanding | 380,000 |
Average Remaining Contractual Life (Years) | 7 years 6 months |
Number Exercisable | |
Intrinsic Value | $ | |
Exercise Price $1.09 [Member] | |
Number Outstanding | 564,000 |
Average Remaining Contractual Life (Years) | 9 years |
Number Exercisable | |
Intrinsic Value | $ |
Stock-Based Compensation (Det41
Stock-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Aug. 06, 2013 | |
Other Stock Options [Member] | |||||
Grant date fair value | $ 255 | ||||
Vesting period | 2 years | ||||
Compensation expense | $ 64 | $ 0 | |||
Unrecognized compensation expense | $ 127 | ||||
2013 Equity Incentive Plan [Member] | |||||
Number of shares available for grants | 3,000,000 | ||||
Number of additional shares added to available for grants per year | 1,000,000 | ||||
Number of shares options granted/issued | 564,000 | 564,000 | 500,000 | ||
Fair value of option issued | $ 370,000 | ||||
Description of vesting period terms | The options become fully vested on January 15, 2017 | ||||
Weighted average exercise price (in dollars per share) | $ 1.09 | $ 1.09 | $ 4.54 | ||
Expiration date | Jan. 15, 2024 | ||||
Grant date fair value | $ 2,576 | ||||
Forfeiture rate | 30.00% | ||||
Vesting period | 3 years | 3 years | |||
Compensation expense | $ 312 | $ 279 | |||
Unrecognized compensation expense | $ 411 | ||||
Number of common stock reserved for future issuance | 6,875,700 |
Commitments and Contingencies42
Commitments and Contingencies (Details) $ in Thousands | Jun. 30, 2016USD ($) |
Operating leases | |
2,016 | $ 4 |
Commitments and Contingencies43
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | Dec. 23, 2014 | Jun. 30, 2016 | Jun. 30, 2015 |
Rent expense | $ 33 | $ 28 | |
Civil Fraud In connection With Sale Of Subsidary [Member] | |||
Name of defendant | Broadband Satellite Services | ||
Domicile of litigation | High Court, Queens Bench Division, Commercial Court No. 2014 folio 1560. | ||
Claim amount | $ 640 | ||
Amount of counter claim by defendant | $ 5,800 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues | $ 366 | $ 108 | $ 975 | $ 853 |
China [Member] | ||||
Revenues | 74 | 4 | 134 | 7 |
Rest of Asia [Member] | ||||
Revenues | 275 | 86 | 823 | 270 |
Europe and Russia [Member] | ||||
Revenues | 10 | 7 | 11 | 7 |
The Americas [Member] | ||||
Revenues | $ 7 | $ 11 | $ 7 | $ 569 |
Segment Information (Details Na
Segment Information (Details Narrative) | 6 Months Ended |
Jun. 30, 2016Number | |
Segment Reporting [Abstract] | |
Number of segments | 2 |