Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2015shares | |
Document and Entity Information [Abstract] | |
Document Type | 20-F |
Amendment Flag | false |
Entity Current Reporting Status | Yes |
Entity Well-known Seasoned Issuer | No |
Document Period End Date | Dec. 31, 2015 |
Entity Registrant Name | KONGZHONG CORP |
Entity Central Index Key | 1,285,137 |
Trading Symbol | KZ |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | FY |
Entity Filer Category | Accelerated Filer |
Entity Common Stock, Shares Outstanding | 1,884,133,063 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 38,304,364 | $ 105,093,178 |
Term deposits | 25,121,350 | 16,907,346 |
Available-for-sale securities | 64,755,514 | 20,013,487 |
Held-to-maturity securities | 26,746,643 | 24,358,555 |
Accounts receivables, net of allowance of $316,966 and $684,929 as of December 31, 2014 and 2015 | 24,484,916 | 30,244,289 |
Prepaid expenses and other current assets | 24,895,555 | $ 19,069,904 |
Loans to third parties | 14,685,980 | |
Loans to related party | 32,850,989 | |
Amount due from related party | 285,003 | |
Restricted cash | 58,466,799 | $ 53,375,960 |
Total current assets | 310,597,113 | 269,062,719 |
Rental deposits | 1,397,233 | 1,444,524 |
Property and equipment, net | 4,653,874 | $ 5,659,191 |
Long-term investments | 4,772,809 | |
Goodwill | 84,769,989 | $ 90,019,108 |
Acquired intangible assets, net | $ 12,515,609 | 55,509,804 |
Restricted cash | 10,885,357 | |
Total assets | $ 418,706,627 | 432,580,703 |
Current liabilities | ||
Accounts payable (including accounts payable of the consolidated variable interest entities ("VIEs") without recourse to the Company of $31,546,430 and $28,062,583 as of December 31, 2014 and 2015, respectively) | 28,074,663 | 31,599,317 |
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the consolidated VIEs without recourse to the Company of $13,469,803 and $14,946,594 as of December 31, 2014 and 2015, respectively) | 16,024,243 | 16,580,351 |
Short-term bank loans (including short-term bank loans of the consolidated VIEs without recourse to the Company of $nil and $nil as of December 31, 2014 and 2015, respectively) | 49,962,510 | 42,428,890 |
Deferred revenue (including deferred revenue of the consolidated VIEs without recourse to the Company of $4,622,404 and $7,887,744 as of December 31, 2014 and 2015, respectively) | 7,917,350 | 4,652,010 |
Income tax payable (including income tax payable of the consolidated VIEs without recourse to the Company of $1,223,526 and $195,846 as of December 31, 2014 and 2015, respectively) | 4,966,845 | 5,529,899 |
Total current liabilities | $ 106,945,611 | $ 100,790,467 |
Commitments and contingencies (Note 26) | ||
Long-term liabilities (including long-term liabilities of the consolidated VIEs without recourse to the Company of $9,860,000 and $nil as of December 31, 2014 and 2015, respectively) | $ 9,860,000 | |
Total liabilities | $ 106,945,611 | 110,650,467 |
Ordinary shares ($0.0000005 par value; 1,000,000,000,000 shares authorized, 1,882,073,063 and 1,884,133,063 shares issued and outstanding as of December 31, 2014 and 2015, respectively) | 943 | 942 |
Additional paid-in capital | 166,874,541 | 162,687,212 |
Warrants | 3,346,000 | 5,548,000 |
Accumulated other comprehensive income | 61,603,388 | 57,531,228 |
Statutory reserves | 11,467,537 | 11,467,537 |
Retained earnings | 68,468,607 | 84,695,317 |
Total shareholders' equity | 311,761,016 | 321,930,236 |
Total liabilities and shareholders' equity | $ 418,706,627 | $ 432,580,703 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Accounts receivables, allowance | $ 684,929 | $ 316,966 |
Accounts payable | 28,074,663 | 31,599,317 |
Accrued expenses and other current liabilities | 16,024,243 | 16,580,351 |
Short-term bank loans | 49,962,510 | 42,428,890 |
Deferred revenue | 7,917,350 | 4,652,010 |
Income tax payable | $ 4,966,845 | 5,529,899 |
Long-term liabilities | $ 9,860,000 | |
Ordinary shares, par value | $ 0.00 | $ 0.00 |
Ordinary shares, shares authorized | 1,000,000,000,000 | 1,000,000,000,000 |
Ordinary shares, shares issued | 1,884,133,063 | 1,882,073,063 |
Ordinary shares, shares outstanding | 1,884,133,063 | 1,882,073,063 |
VIEs [Member] | ||
Accounts payable | $ 28,062,583 | $ 31,546,430 |
Accrued expenses and other current liabilities | $ 14,946,594 | $ 13,469,803 |
Short-term bank loans | ||
Deferred revenue | $ 7,887,744 | $ 4,622,404 |
Income tax payable | $ 195,846 | 1,223,526 |
Long-term liabilities | $ 9,860,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues | $ 179,113,428 | $ 227,595,969 | $ 173,653,795 |
Cost of revenues (including impairment on intangible assets of $250,553, $nil and $35,209,933 for 2013, 2014 and 2015, respectively) | (139,362,586) | (129,279,063) | (96,399,886) |
Gross profit | 39,750,842 | 98,316,906 | 77,253,909 |
Operating expenses | |||
Product development (including share-based compensation expense of $305,385, $545,060 and $578,398 for 2013, 2014 and 2015, respectively) | (24,189,619) | (25,107,372) | (26,401,720) |
Selling and marketing (including share-based compensation expense of $111,198, $nil and $nil for 2013, 2014 and 2015, respectively) | (25,890,472) | (42,522,684) | (26,674,024) |
General and administrative (including share-based compensation expense of $1,157,146, $1,002,720 and $467,050 for 2013, 2014 and 2015, respectively) | $ (13,484,211) | (12,564,600) | (8,976,176) |
Impairment loss on intangible assets | (1,323,260) | (1,562,386) | |
Total operating expenses | $ (63,564,302) | (81,517,916) | (63,614,306) |
Government subsidies | 1,573,577 | 1,138,909 | 2,176,449 |
Income (loss) from operations | (22,239,883) | 17,937,899 | 15,816,052 |
Interest income | 5,381,984 | $ 8,864,742 | $ 6,763,938 |
Interest income from loans to third parties | 1,514,160 | ||
Interest income from loans to related party | 1,078,843 | ||
Interest expense | $ (883,974) | $ (895,056) | $ (693,282) |
Impairment loss on cost method investment | (1,999,999) | (2,000,000) | |
Exchange gain (loss) | $ (802,710) | $ (271,666) | $ 1,487,343 |
Gain on sale of available-for-sales securities | 536,016 | ||
Dividend received | 628,417 | ||
Net income (loss) before income tax expense and loss in equity method investments | (14,787,147) | $ 23,635,920 | $ 21,374,051 |
Income tax expense | (796,866) | (1,047,999) | (712,402) |
Net income (loss) after income tax expense before loss in equity method investments | (15,584,013) | $ 22,587,921 | $ 20,661,649 |
Loss in equity method investments | (642,697) | ||
Net income (loss) | $ (16,226,710) | $ 22,587,921 | $ 20,661,649 |
Net income (loss) per share, basic | $ (0.01) | $ 0.01 | $ 0.01 |
Net income (loss) per share, diluted | $ (0.01) | $ 0.01 | $ 0.01 |
Weighted average shares used in calculating basic net income (loss) per share | 1,882,296,976 | 1,828,191,540 | 1,714,924,612 |
Weighted average shares used in calculating diluted net income (loss) per share | 1,882,296,976 | 1,875,520,094 | 1,751,621,340 |
Net income (loss) | $ (16,226,710) | $ 22,587,921 | $ 20,661,649 |
Foreign currency translation adjustments | (17,309,886) | (1,665,311) | $ 8,944,839 |
Unrealized gain on available-for-sale securities | 21,382,046 | 3,633,437 | |
Other comprehensive income | 4,072,160 | 1,968,126 | $ 8,944,839 |
Comprehensive income (loss) | $ (12,154,550) | $ 24,556,047 | $ 29,606,488 |
CONSOLIDATED STATEMENTS OF COM5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract] | |||
Cost of revenues, impairment on intangible assets | $ 35,209,933 | $ 250,553 | |
Share-based compensation expense | 1,045,448 | $ 1,547,780 | 1,573,729 |
Product Development [Member] | |||
Share-based compensation expense | $ 578,398 | $ 545,060 | 305,385 |
Selling and Marketing [Member] | |||
Share-based compensation expense | 111,198 | ||
General and Administrative [Member] | |||
Share-based compensation expense | $ 467,050 | $ 1,002,720 | $ 1,157,146 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Total | Ordinary shares [Member] | Additional paid-in capital [Member] | Warrants [Member] | Accumulated other comprehensive income [Member] | Statutory reserves [Member] | Retained earnings [Member] |
Balance at Dec. 31, 2012 | $ 282,884,068 | $ 832 | $ 126,786,049 | $ 15,566,332 | $ 46,618,263 | $ 10,572,330 | $ 83,340,262 |
Balance (in shares) at Dec. 31, 2012 | 1,678,097,663 | ||||||
Issuance of ordinary shares for share-based compensation | 849,038 | $ 18 | 849,020 | ||||
Issuance of ordinary shares for share-based compensation (in shares) | 35,000,000 | ||||||
Share-based compensation recognized | 1,573,729 | 1,573,729 | |||||
Repurchase of ordinary shares | (10,123,821) | $ (32) | (10,123,789) | ||||
Repurchase of ordinary shares (in shares) | (78,214,600) | ||||||
Warrants exercised | $ 27,820,000 | $ 100 | $ 32,967,232 | $ (5,147,332) | |||
Warrants exercised (in shares) | 200,000,000 | 200,000,000 | |||||
Provision for statutory reserves | $ 151,418 | $ (151,418) | |||||
Other comprehensive income | $ 8,944,839 | $ 8,944,839 | |||||
Net income (loss) | 20,661,649 | $ 20,661,649 | |||||
Balance at Dec. 31, 2013 | 332,609,502 | $ 918 | $ 152,052,241 | $ 10,419,000 | $ 55,563,102 | $ 10,723,748 | $ 103,850,493 |
Balance (in shares) at Dec. 31, 2013 | 1,834,883,063 | ||||||
Issuance of ordinary shares for share-based compensation | 436,625 | $ 4 | 436,621 | ||||
Issuance of ordinary shares for share-based compensation (in shares) | 7,190,000 | ||||||
Share-based compensation recognized | 1,547,780 | 1,547,780 | |||||
Repurchase of ordinary shares | (12,410) | ||||||
Repurchase of ordinary shares | (12,410) | ||||||
Warrants exercised | $ 5,940,000 | $ 20 | $ 8,662,980 | $ (2,723,000) | |||
Warrants exercised (in shares) | 40,000,000 | 40,000,000 | |||||
Warrants forfeited | $ (2,148,000) | $ (2,148,000) | |||||
Provision for statutory reserves | $ 743,789 | $ (743,789) | |||||
Other comprehensive income | $ 1,968,126 | $ 1,968,126 | |||||
Dividends to shareholders ($0.002 per ordinary share) | (40,999,308) | $ (40,999,308) | |||||
Net income (loss) | 22,587,921 | 22,587,921 | |||||
Balance at Dec. 31, 2014 | 321,930,236 | $ 942 | $ 162,687,212 | $ 5,548,000 | $ 57,531,228 | $ 11,467,537 | $ 84,695,317 |
Balance (in shares) at Dec. 31, 2014 | 1,882,073,063 | ||||||
Issuance of ordinary shares for share-based compensation | 939,882 | $ 1 | 939,881 | ||||
Issuance of ordinary shares for share-based compensation (in shares) | 2,060,000 | ||||||
Share-based compensation recognized | $ 1,045,448 | 1,045,448 | |||||
Warrants expired | $ 2,202,000 | $ (2,202,000) | |||||
Other comprehensive income | $ 4,072,160 | $ 4,072,160 | |||||
Dividends to shareholders ($0.002 per ordinary share) | 0 | ||||||
Net income (loss) | (16,226,710) | $ (16,226,710) | |||||
Balance at Dec. 31, 2015 | $ 311,761,016 | $ 943 | $ 166,874,541 | $ 3,346,000 | $ 61,603,388 | $ 11,467,537 | $ 68,468,607 |
Balance (in shares) at Dec. 31, 2015 | 1,884,133,063 |
CONSOLIDATED STATEMENTS OF CHA7
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | Oct. 17, 2014 | Dec. 31, 2014 |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY [Abstract] | ||
Dividend to shareholders, per ordinary share | $ 0.022 | $ 0.002 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating activities: | |||
Net income (loss) | $ (16,226,710) | $ 22,587,921 | $ 20,661,649 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 10,143,494 | 21,523,098 | 4,988,007 |
Loss (gain) on disposal of property and equipment | 137,755 | (6,807) | 30,714 |
Provision of bad debt | 684,929 | $ 316,966 | $ 342,442 |
Gain on sale of available-for-sales securities | $ (536,016) | ||
Impairment loss on cost method investment | $ 1,999,999 | $ 2,000,000 | |
Impairment loss on intangible assets | $ 35,209,933 | 1,323,260 | 1,812,939 |
Share-based compensation | 1,045,448 | 1,547,780 | 1,573,729 |
Imputed interest on long-term liabilities | 140,000 | $ 600,000 | $ 600,000 |
Loss in equity method investment | 642,697 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 3,534,239 | $ (13,318,909) | $ 6,723,022 |
Prepaid expenses and other current assets | 32,461 | (11,204,252) | (3,037,894) |
Rental deposits | (5,153) | (647,735) | (29,697) |
Accounts payable | (2,384,443) | 4,478,116 | (2,757,184) |
Deferred revenue | 3,522,177 | 2,370,611 | (1,621,249) |
Accrued expenses and other liabilities | (3,704,288) | 320,302 | 4,513,352 |
Income tax payable | (444,101) | (821,047) | (70,320) |
Net cash provided by operating activities | $ 31,792,422 | 31,069,303 | 35,729,510 |
Investing activities: | |||
Purchase of intangible assets | $ (98,094) | $ (1,565,294) | |
Acquisition of equity method investments | $ (2,581,340) | ||
Loan repayment from third parties | 11,595,052 | ||
Purchase of term deposits | (9,988,890) | $ (18,520,623) | $ (20,824,178) |
Proceeds from disposal of term deposits | 1,735,614 | 6,077,749 | 16,710,813 |
Purchase of held-to-maturity securities | (61,703,184) | (191,037,877) | (259,536,862) |
Proceeds from disposal of held-to-maturity securities | 58,174,073 | 218,358,093 | 226,240,067 |
Purchase of property and equipment | (2,272,912) | (3,121,667) | $ (4,969,144) |
Proceeds from disposal of property and equipment | 34,260 | 6,807 | |
Release of restricted cash | 9,988,890 | 15,000,000 | |
Addition of restricted cash | (9,240,718) | $ (42,401,935) | |
Temporary advances | (3,263,970) | ||
Purchase of available-for-sales securities | (27,126,971) | $ (16,380,050) | |
Proceeds from sale of available-for-sales securities | 1,500,251 | ||
Loans to related party | (34,352,373) | ||
Loans to third parties | (26,442,729) | ||
Net cash used in investing activities | $ (93,944,947) | $ (32,117,597) | $ (43,944,598) |
Financing activities: | |||
Deferred payment for acquisition of business | (2,880,600) | (3,000,000) | |
Repurchase of ordinary shares | (12,410) | (10,123,821) | |
Proceeds from exercise of employee stock options | $ 939,882 | 436,625 | 849,038 |
Deferred payments for intangible assets | (10,396,162) | (21,827,993) | (6,588,420) |
Proceeds from bank borrowing | $ 7,533,620 | $ 42,428,890 | 9,000,000 |
Repayment of bank borrowing | (9,000,000) | ||
Proceeds from exercise of warrants | $ 5,940,000 | $ 27,820,000 | |
Dividends paid to shareholders | (40,999,308) | ||
Net cash provided (used in) by financing activities | $ (1,922,660) | (16,914,796) | $ 8,956,797 |
Effect of foreign exchange rate changes | (2,713,629) | (371,461) | 1,991,304 |
Net increase (decrease) in cash and cash equivalents | (66,788,814) | (18,334,551) | 2,733,013 |
Cash and cash equivalents, beginning of year | 105,093,178 | 123,427,729 | 120,694,716 |
Cash and cash equivalents, end of year | 38,304,364 | 105,093,178 | 123,427,729 |
Supplemental disclosures of cash flow information | |||
Income taxes paid | 1,359,920 | 1,887,582 | 909,496 |
Interest paid | $ 743,974 | 119,400 | $ 93,282 |
Non-cash investing and financing activities: | |||
Warrants forfeited | $ 2,148,000 | ||
Warrants expired | $ 2,202,000 | ||
Consideration payable in connection with purchase of intangible assets | $ 196,110 | $ 4,784,675 |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2015 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES [Abstract] | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES KongZhong Corporation ("KongZhong") was incorporated under the laws of the Cayman Islands on May 6, 2002. KongZhong and its consolidated entities (collectively, the "Company") provide internet games services, mobile games services and wireless interactive entertainment, media and community value-added services to customers of the telecommunications operators. As of December 31, 2015, details of the Company's significant majority-owned subsidiaries and VIEs are as follows: Incorporation or Shareholder/ Legal Name acquisition date/place nominee owner ownership Principal activities % Subsidiaries: KongZhong Information Technologies (Beijing) Co., Ltd July 2002 People's Republic of China KongZhong 100 Providing consulting and technology KongZhong China Co., Ltd. ("KongZhong China") June 2005 the PRC KongZhong 100 Providing consulting and technology Success Blueprint Limited ("Success Blueprint") October 2009 British Virgin Islands KongZhong 100 Providing novel license to overseas Dacheng Holdings Limited ("Dacheng Holdings") January 2010 Cayman Islands KongZhong 100 Providing internet games services Dacheng Investment (Hong Kong) Limited ("Dacheng Hong January 2010 Hong Kong KongZhong 100 Providing internet games services Noumena Innovation (BVI) Ltd. ("Noumena") March 2012 British Virgin Islands KongZhong 100 Providing smart mobile games services Noumena Productions limited March 2012 Hong Kong Noumena 100 Providing smart mobile games services KongZhong (Singapore) Pte. Ltd. November 2014 Singapore KongZhong China 100 Providing mobile games and internet VIEs: Beijing AirInbox Information Technologies Co., Ltd. ("Beijing April 2002 the Linguang Wu 45 Providing wireless AirInbox ") SonglinYang 42 value-added services Guijun Wang 10 to mobile phone users Zhen Huang 3 Beijing Wireless Interactive Network Technologies Co., Ltd. February 2005 the Yang Yang 40 Providing wireless ("Beijing ") Jingye Sun 30 value-added services Li Ai 30 to mobile phone users Beijing Chengxitong Information Technology Co., Ltd ("Beijing November 2005 the Yang Li 90 Providing wireless Chengxitong ") Xuelei Wu 10 value-added services to mobile phone users Incorporation or Shareholder/ Legal Name acquisition date/place nominee owner ownership Principal activities % Beijing Xinrui Network Technology Co., Ltd. ("Beijing Xinrui ") January 2006 the Guijun Wang 51 Providing wireless Yang Li 49 value-added services to mobile phone users Shanghai Mailifang Communication Co., Ltd. ("Shanghai March 2009 the Xu Guo 90 Mobile games developing services Mailifang ") Yang Yang 10 Xiamen Xinreli Technology Co., Ltd. (" ") June 2009 the Tao Jia 80 Providing wireless Junhong Chen 20 value-added services to mobile phone users Shanghai Dacheng Network Technology Co., Ltd. ("Shanghai January 2010 the Leilei Wang 59 Providing internet games services Dacheng ") Zhen Yang 41 Subsidiaries of VIE: Beijing Boya Wuji Technologies Co., Ltd. March 2004 the Beijing AirInbox 100 Providing internet games services Tianjin Mammoth Technologies Co., Ltd. ("Tianjin Mammoth") May 2005 the Beijing AirInbox 95 Mobile games developing services Beijing WINT 5 Beijing Shiyuan Leya Culture Communication Co., Ltd. July 2008 the Beijing Xinrui 100 Providing wireless value-added services to mobile phone users Nanjing Net Book Culture Co., Ltd. October 2009 the Beijing Chengxitong 100 Providing internet novel services Beijing Yin'ao Fulai Culture Development Co., Ltd., May 2012 the Beijing Xinrui 100 Providing wireless value-added services to mobile phone users Beijing Shangshu Boer Culture Communication Co., Ltd., July 2012 the Beijing Xinrui 100 Providing wireless value-added services to mobile phone users Shanghai KongZhong Brilliant Game Co., Ltd. ("KongZhong July 2012 the Shanghai Dacheng 100 Providing internet games services Brilliant") KongZhongWang JP Co., Ltd. June 2014 Japan Shanghai 100 Providing mobile games services Dacheng (Singapore) Pte. Ltd. November 2014 Singapore Shanghai Dacheng 100 Providing mobile games and games services Shanghai Star E-Sport Network Technology Co., Ltd ("Star E- December 2015 the PRC Shanghai Dacheng 100 Providing mobile games and Sports") games services The VIE arrangements PRC laws, rules and regulations currently restrict foreign ownership of business entities providing The VIEs hold the requisite licenses and permits necessary to conduct the Company's value-added telecommunications business. KongZhong Beijing or KongZhong China (collectively, the "Foreign Owned Subsidiaries") have entered into the following contractual arrangements with Beijing AirInbox, Beijing WINT, Beijing Chengxitong, Shanghai Mailifang, Xiamen Simlife, Beijing Xinrui and Shanghai Dacheng (collectively the "VIE Companies"), that enable the Company to (1) have power to direct the activities that most significantly affects the economic performance of the VIEs, and (2) receive the economic benefits of the VIEs that could be significant to the VIEs. Accordingly, the Company is considered the primary beneficiary of the VIEs and has consolidated the VIEs' financial results of operations, assets and liabilities in the Company's consolidated financial statements. Name of Foreign Owned Subsidiaries Name of VIE Companies KongZhong Beijing Beijing AirInbox KongZhong Beijing Beijing WINT KongZhong Beijing Beijing Chengxitong KongZhong Beijing Shanghai Mailifang KongZhong Beijing Xiamen Simlife KongZhong China Beijing Xinrui KongZhong China Shanghai Dacheng In making the conclusion that the Company is the primary beneficiary of the VIE Companies, the Company believes the Company's rights under the terms of the exclusive option agreements provide it with a substantive kick out right. More specifically, the Company believes the terms of the exclusive option agreements are exercisable and legally enforceable under PRC laws, rules and regulations currently in effect. A simple majority vote of the Company's board of directors is required to pass a resolution to exercise the Company's rights under the exclusive option agreements, for which consent of the shareholders of VIE Companies is not required. The Company's rights under the exclusive option agreements give the Company the power to control the shareholders of VIE Companies and thus the power to direct the activities that most significantly impact the VIE Companies' economic performance. In addition, the Company's rights under the powers of attorney also reinforce the Company's abilities to direct the activities that most significantly impact the VIE Companies' economic performance. The Company also believes that this ability to exercise control ensures that the VIE Companies will continue to execute and renew services agreements and pay service fees to the Company. The technical and consulting services agreements are automatically renewed and may only be terminated at the Company's sole discretion. The Company has the sole discretion to determine the amounts of the technical and consulting service fees. As a result, the Company believes that it has the rights to receive substantially all of the economic benefits from the VIE Companies. • Agreements that provide the Foreign Owned Subsidiaries effective control over the VIE Companies Business operation agreement The business operation agreements of Beijing AirInbox and Xiamen Simlife will expire in 2016 and 2024, respectively. The business operation agreement of Beijing AirInbox will be automatically extended for another ten years unless KongZhong Beijing writes to terminate the agreement three months before the expiration of the agreement. The business operation agreement of Xiamen Simlife will be automatically extended for another ten years unless KongZhong Beijing writes to terminate the agreement three months before the expiration of the agreement. The business operation agreements of the remaining VIEs do not contain any expiration date. The termination of the agreements requires thirty day written notice from the Foreign Owned Subsidiaries. The VIEs have no authority to terminate the business operation agreements. Power of attorney Exclusive option agreement Equity pledge agreement • Agreements that transfer economic benefits to the Foreign Owned Subsidiaries Exclusive technical and consulting services agreement The exclusive technical and consulting services agreements of Beijing AirInbox, Shanghai Mailifang, Beijing Xinrui and Shanghai Dacheng will expire in 2024, 2019, 2019 and 2020, respectively. The exclusive technical and consulting services agreements of these VIEs will be automatically extended for another ten years unless the relevant Foreign Owned Subsidiaries write to terminate the agreements three months before the expiration of the agreements. The technical and consulting services agreements of the remaining VIEs do not contain any expiration provision. The agreements may be terminated only at the option of the Foreign Owned Subsidiaries and the VIEs have no authority to terminate the exclusive technical and consulting services agreements. Risks in relation to the VIE structure The Company believes that the contractual arrangements with VIE Companies and their subsidiaries and their current shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company's ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could: • Revoke the business and operating licenses of the Foreign Owned Subsidiaries, VIE Companies and their subsidiaries; • Discontinue or restrict the operations of any related-party transactions among the Foreign Owned Subsidiaries, VIE Companies and their subsidiaries; • Impose fines or other requirements on the Foreign Owned Subsidiaries, VIE Companies and their subsidiaries; • Require the Company or Foreign Owned Subsidiaries, VIE Companies and their subsidiaries to revise the relevant ownership structure or restructure operations; and/or • Restrict or prohibit the Company's use of the proceeds of the additional public offering to finance the Company's business and operations in China. The Company's ability to conduct its business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate VIE Companies and their subsidiaries in its consolidated financial statements as it may lose the ability to exert effective control over VIE Companies and their subsidiaries and their shareholder, and it may lose the ability to receive economic benefits from VIE Companies and their subsidiaries. The interests of the shareholders of the VIE Companies may diverge from that of the Company and that may potentially increase the risk that they would seek to act contrary to the contractual terms, for example by influencing the VIE Companies not to pay the service fees when required to do so. The Company cannot assure that when conflicts of interest arise, shareholders of the VIE Companies will act in the best interests of the Company or that conflicts of interests will be resolved in the Company's favor. Currently, the Company does not have existing arrangements to address potential conflicts of interest. The shareholders of VIE Companies may encounter in their capacity as beneficial owners and directors of VIE Companies, on the one hand, and as beneficial owners and directors of the Company, on the other hand. The Company believes the shareholders of VIE Companies will not act contrary to any of the contractual arrangements and the exclusive option agreements provide the Company with a mechanism to remove the current shareholders of VIE Companies should they act to the detriment of the Company. The Company relies on certain current shareholders of VIE Companies, as directors and executive officers of the Company, to fulfill their fiduciary duties and abide by laws of the PRC and Cayman Islands and act in the best interest of the Company. If the Company cannot resolve any conflicts of interest or disputes between the Company and the shareholders of VIE Companies, the Company would have to rely on legal proceedings, which could result in disruption of its business, and there is substantial uncertainty as to the outcome of any such legal proceedings. The Company's ability to control the VIE Companies also depends on the powers of attorney the Foreign Owned Subsidiaries have to vote on all matters requiring shareholder approvals in the VIE Companies. As noted above, the Company believes the powers of attorney are legally enforceable but may not be as effective as direct equity ownership. The following financial statement amounts and balances of KongZhong's VIEs were included in the accompanying consolidated financial statements: As of December 31, 2014 2015 Total current assets $ 134,777,487 $ 128,036,594 Total assets $ 211,055,266 $ 152,077,211 Total current liabilities $ 50,862,163 $ 51,092,767 Total liabilities $ 60,722,163 $ 51,092,767 For the years ended December 31, 2013 2014 2015 Revenues $ 168,999,541 $ 217,859,413 $ 174 ,098,045 Net income (loss) $ 16,439,680 $ 22,996,737 $ (14,850,655) For the years ended December 31, 2013 2014 2015 Net cash provided by operating activities $ 28,830,017 $ 26,682,007 $ 35,146,076 Net cash (used in) provided by investing activities $ ( 38,188,141 ) $ 28,503,343 $ (18,783,750) Net cash (used in) financing activities $ ( 6,588,420 ) $ ( 21,201,273 ) $ (10,396,162 ) The VIEs contributed an aggregate of 97.3 95.7 97.2 48.8 36.3 54.9 47.8 There are no consolidated VIEs' assets that are collateral for the VIEs' obligations and can only be used to settle the VIEs' obligations. There are no creditors (or beneficial interest holders) of the VIEs that have recourse to the general credit of the Company or any of its consolidated subsidiaries. There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests, that require the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs ever needs financial support, the Company or each of its subsidiaries may, at its option and subject to statutory limits and restrictions, provide financial support to its VIEs through loans to the shareholders of the VIEs or entrustment loans to the VIEs. Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of their statutory reserve and their share capital, to the Company in the form of loans and advances or cash dividends. Please refer to Note 27 for disclosure of restricted net assets. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). Basis of consolidation The consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries, and its VIEs. All inter-company transactions and balances have been eliminated upon consolidation. Cash and cash equivalents Cash and cash equivalents consist of cash on hand and accounts that have the general characteristics of demand deposits in that the customer may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. Term deposits The balance represents the Company's investments in time deposits with financial institutions with remaining maturities of greater than three months when purchased. Restricted cash Restricted cash is related to deposits placed with financial institutions to secure the repayment of bank loans (Note 13) and to issue a standby letter of credit in favor of the game licensor in connection with the requirements of a game license agreement entered into during 2012. The deposits are restricted to withdrawal or usage. As of December 31, 2014 and 2015, the restricted cash related to the repayment of bank loans amounted to $ 42.4 48.8 21.9 10.9 9.7 Fair value Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company measures certain assets, including the cost method investments, at fair value on a nonrecurring basis when they are deemed to be other-than-temporarily impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include management judgments, future performance projections, etc. An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary. Held-to-maturity securities Investments in securities that the Company has the positive intent and ability to hold the securities to maturity are classified as held-to-maturity securities and recorded at amortized cost. Available-for-sale securities Investments in securities that have readily determinable fair value not classified as held-to-maturity or trading are classified as available-for-sale securities. Available-for-sale securities comprise of debt and equity securities which are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income. Realized gains or losses are included in earnings during the period in which the gain or loss is realized. The Company reviews its investments in securities, including held-to-maturity securities and available-for-sale securities, for other-than-temporary impairment based on the specific identification method. The Company considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds the investment's fair value, the Company considers, among other factors, general market conditions, government economic plans, the duration and the extent to which the fair value of the investment is less than the cost, and the Company's intent and ability to hold the investment, in determining if impairment is needed. Use of estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Company's financial statements include impairment of goodwill and other intangible assets, impairment of cost method investment, revenue recognition, valuation allowance for deferred tax assets, share-based compensation expense, and recoverability of loans receivable. Actual results could differ from those estimates. Loans receivable, net Loans receivable primarily represent loan balances that the management has the intent and ability to hold for the foreseeable future or until maturity or payoff. Loans receivable are recorded at unpaid principal balances, net of unearned income and allowance that reflects the Company's best estimate of the amounts that will not be collected. Allowance for loan losses The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. The Company performs an evaluation of the adequacy of the allowance. The allowance is based on the Company's assessment on the adverse situations that may affect the borrower's ability to repay, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. There is no Property and equipment, net Property and equipment are carried at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Computer and transmission equipment 3 Furniture and office equipment 3 Motor vehicles 3 Leasehold improvements Over the shorter of the lease term or useful lives Communication equipment 1 Office building 20 Acquired intangible assets (other than indefinite lived intangible assets), net Acquired intangible assets, other than indefinite lived intangible assets, are carried at cost less accumulated amortization and impairment. The amortization of such acquired intangible assets is recognized over the expected useful lives of the assets. Impairment of long-lived assets Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets. Subsequent reversal of a previously recognized impairment loss is prohibited. Goodwill and indefinite-lived intangible assets The excess of the purchase price over the fair value of net assets acquired is recorded on the consolidated balance sheets as goodwill. Goodwill is not amortized but is evaluated by the Company at least annually (at December 31) for impairment following a two-step process. The first step compares the fair value of each reporting unit (operating segment or one level below an operating segment) to its carrying amount, including goodwill. As of December 31, 2014 and 2015, there were three The Company has determined that the Company's trademarks do not have determinable useful lives. Consequently, the carrying amount of trademarks are not amortized but is tested for impairment annually or more frequently if events or changes in circumstances indicate that the assets might be impaired. Such impairment test consists of a comparison of the fair value of the trademarks with their carrying amount and an impairment loss is recognized if and when the carrying amounts of the trademarks exceed their fair values. The estimates of fair values of intangible assets not subject to amortization are determined using various discounted cash flow valuation methodologies. Significant assumptions are inherent in this process, including estimates of discount rates. Discount rate assumptions are based on an assessment of the risk inherent in the respective intangible assets. No impairment loss was recorded during the years ended December 31, 2013, 2014 and 2015. Equity method investments Investment in an entity where the Company can exercise significant influence, but not control, is accounted for using the equity method. Under the equity method, the investment is initially recorded at cost and adjusted for the Company's share of undistributed earnings or losses of the investee. When the Company's carrying value in an equity method investee is reduced to zero, no further losses are recorded in the Company's consolidated financial statements unless the Company guaranteed obligations of the investee company, has committed additional funding or made additional financial support including loans and advances. When the Company needs to share further losses, the Company recognized such further losses based on the ownership level of the particular loan or advance held by the Company to which the relevant losses are being applied. When the investee company subsequently reports income, the Company will not record its share of such income until it exceeds the amount of its share of losses not previously recognized. An equity method investment is written down to fair value if there is evidence of a loss in value which is other than temporary. The Company may estimate the fair value of its equity method investments by considering factors such as recent investee equity transactions, discounted cash flow analysis, and recent operating results. (see Note 8). Cost method investments For investments in investees over which the Company does not have significant influence, the Company carries the investments at cost. The Company reviews the cost method investments for impairment whenever events or circumstances indicate that an other-than-temporary decline has occurred. An impairment loss is recognized in earnings equal to the amount of the investment's carrying amount in excess of its fair value at the assessment date. The fair value of the investment would then become the new cost basis of the investment. Impairment losses of $2 million, $2 million and $nil million were recorded for the years ended December 31, 2013, 2014 and 2015, respectively (see Note 8). Revenue recognition and cost of revenues The Company's revenues are derived from internet games services, mobile games services and WVAS. The Company's revenues are net of sales tax. (i) Internet games The internet games revenues are primarily derived from internet games operation revenues and licensing revenues. Online game operation revenues The Company adopts the item-based revenue model. The basic game play functions are free of charge or require an initial fee to access the game, and players are charged for purchases of in-game items. Revenue from the initial fee to access the game is recognized ratably based on the period during which the player is expected to continue to play the game. Revenues from the sales of in-game items are recognized when the items are consumed by the players or over the estimated lives of the items. Cash received but not converted into in-game money is initially recorded as advances from customers, which are transferred as deferred revenue upon conversion into in-game money. Revenues from licensing arrangement The Company enters into licensing arrangements with various licensees who provide the internet games services in PRC and overseas. A licensing arrangement usually includes license of the games and support and maintenance services after the commercial launch of the games, which include bug fixes, technical support via telephone and site visit, and unspecified upgrades on a when-and-if-available basis for certain period. The licensees pay non-refundable upfront fee for the license and support and maintenance services. For the licensing arrangements, the vendor specific objective evidence ("VSOE") of fair value of the support and maintenance services, which is the last element to be delivered, has been established based on renewal prices. Therefore, under the residual method, the amount of consideration allocated to the license of games equals the total arrangement consideration less the fair value of the support and maintenance services, which is fully recognized as revenue from license of games upon the commercial launch of the games by the licensee. The arrangement consideration allocated to the support and maintenance services is recognized as revenue from support and maintenance services ratably over the service period, which is usually one year. For the licensing arrangements entered prior to the establishment of the VSOE of fair value of the support and maintenance services, the entire licensing arrangement is accounted for as one accounting unit resulting in the upfront fee being recognized on a straight line basis over the support and maintenance services period beginning from the commercial launch of the games by the licensee. According to certain licensing arrangements, the Company is also entitled to ongoing usage-based royalties determined based on the amount charged to the players' accounts or services payable by players in a given country or region. The usage-based royalties are recognized when they are earned, provided that the collection is probable. (ii) Mobile games The mobile games revenues are derived from both carrier billing channels and non-carrier billing channels. Revenues from carrier billing channels The Company recognizes revenues collected and collectable from carrier billing channels through providing mobile games services on the platforms of China Mobile Communications Corporation ("China Mobile"), China United Network Communications Group Co., Ltd. ("China Unicom"), and China Telecommunications Corporation ("China Telecom") (collectively, the "Mobile Operator"). Mobile phone users download the mobile games in the same manner as the WVAS and the Company recognizes revenues from such services in the same way as the WVAS revenues are recognized. Mobile phone users could also download games on Android platforms and the Company recognizes revenues from such services in the same way as revenues from non-carrier billing channels. Revenues from non-carrier billing channels The Company recognizes revenues collected and collectable from non-carrier billing channels through providing mobile games services on platforms such as global Android and iOS platforms. Mobile phone users download the mobile games on Android and iOS platforms. The Company adopts the item-based revenue model. The basic game play functions are free of charge, and players are charged for purchases of in-game items. Revenues from the sales of in-game items are recognized when the items are consumed by the players. (iii) WVAS WVAS revenues are derived from providing personalized interactive entertainment, media and community services primarily to mobile phone customers of the Mobile Operator. The Company contracts with the Mobile Operator for the transmission of WVAS as well as for billing and collection services. The Mobile Operator provides the Company with monthly statements that represent the principal evidence that service has been delivered and triggers revenue recognition for a substantial portion of the Company's revenues. In certain instances, when a statement is not received within a reasonable period of time, the Company makes an estimate of the revenues and cost of revenues for the period covered by the statement based on internally generated information, historical experience, verbal communication with Mobile Operator, and/or other assumptions that are believed to be reasonable under the circumstances. The Mobile Operator remits to the Company only amounts net of the following items: (1) allowance that Mobile Operator has made for the doubtful debts in respect of the amounts due to the Company from its customers, (2) the Mobile Operator's fees for the services provided to the Company, including billing and collection services, and (3) the Mobile Operator's transmission charges. China Unicom and China Telecom do not provide an itemized analysis of their remittances and the Company is therefore unable to determine what allowance, if any, for doubtful or bad debts should be recorded with respect to services delivered through them. China Mobile occasionally specifies the allowance it makes for doubtful debts. As a result, the Company's revenue recognition is based upon the amounts reported on the Mobile Operator's monthly statements, which are net of doubtful debts and represent the amounts the Company reasonably believes will be collected. The Company records the following fees paid to the Mobile Operator as cost of revenues: • Service fees paid to the Mobile Operator which are charged to the Company as a percentage, ranging from 15 70 • Fixed transmission fees that are charged on a basis of each transmission (regardless whether the customers can be billed or pay the Mobile Operator) In addition, cost of revenues includes amounts paid to content providers and certain payments to handset manufacturers with whom the Company has cooperation agreements. Sales taxes The Company reports revenues net of sales taxes. Sales taxes recorded were $ 5,786,615 333,622 Value-added taxes On January 1, 2012, the PRC Ministry of Finance and the State Administration of Taxation officially launched a pilot value-added taxes ("VAT") reform program ("Pilot Program"), applicable to businesses in selected industries. Businesses in the Pilot Program would pay VAT instead of sales tax. Starting from August 1, 2013, the Pilot Program was expanded to cover all regions in the PRC. Starting from June 1, 2014, the telecommunications service industry as a whole was included in the Pilot Program. The applicable VAT rates are 6 3 The VAT are excluded from the Company's revenues. Allowance for credit losses The allowance for credit losses related to accounts receivable is maintained at a level considered by management to be adequate to absorb an estimate of probable future losses existing at the balance sheet date. In estimating probable losses, the Company reviews accounts that are past due or in bankruptcy and accounts that may have higher credit risk using information available about the customers. The Company arrives at an estimated loss for specific doubtful accounts. This process is based on estimates, and ultimate losses may differ from those estimates. Receivable balance is written off when the Company determines that the balance is uncollectible. Subsequent recoveries, if any, are credited to the allowance when received. The Company considers an accounts receivable balance past due when payment has not been received within the stated terms. The charges related to allowance for credit losses for the years ended December 31, 2013, 2014 and 2015 342,442 316,966 684,929 Movement of allowance for credit losses is as follows: Balance at Charged to Balance at beginning of the year expense Written-off end of the year 2013 $ 5,626 $ 342,442 $ ( 5,626 ) $ 342,442 2014 $ 342,442 $ 316,966 $ ( 342,442 ) $ 316,966 2015 $ 316,966 $ 684,929 $ (316,966 ) $ 684,929 The allowance for credit losses arising from end users in WVAS and mobile games services has been net off with account receivables in the monthly statements provided by the Mobile Operator. The Company has not experienced any significant credit losses related to the net receivables in monthly statements provided by Mobile Operator. Operating leases Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of comprehensive income (loss) on a straight-line basis over the lease period. Government subsidies The Company receives subsidies from the local government authorities as incentives for local area development and technology development. The Company records the government subsidies that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs, as income in certain periods. The Company recognized total government subsidies of $ 2,176,449 1,138,909 1,573,577 Foreign currency translation The functional and reporting currency of KongZhong is US dollar. The functional currency of the Company's subsidiaries and VIEs in the PRC is Renminbi ("RMB"). Assets and liabilities are translated from each entity's functional currency to the reporting currency at the exchange rate on the balance sheet date. Equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income. Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical exchange rates. Transactions in currencies other than the applicable functional currencies during the year are converted into the functional currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the consolidated statements of comprehensive income (loss). Product development expenses Product development expenses which consist primarily of the compensation and related costs for employees associated with the development and programming of mobile data content and internet games content are expensed as incurred. Income taxes Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. Comprehensive income (loss) Comprehensive income (loss) includes net income (loss), unrealized gain on available-for-sale securities and foreign currency translation adjustments. Comprehensive income is reported in the statements of comprehensive income. Advertising costs The Company expenses advertising costs as incurred. Total advertising expenses were $ 8,412,925 5,726,530 4,889,444 Share-based compensation Share-based compensation with employees is measured based on the grant date fair value of the equity instrument. The Company recognizes the compensation costs net of a forfeiture rate on a straight-line basis over the requisite service period of the award, with the amount of compensation expenses recognized in any period not less than the portion of the grant date fair value of the options vested during that period, which is generally the vesting period of the award. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change. Net income (loss) per share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the year. Diluted net income (loss) per ordinary share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares. The dilutive effect of the stock options, nonvested shares and warrants is computed using treasury stock method. Warrants Warrants which give the holder the right to exercise the warrant for a share instrument which is not redeemable by the Company are classified as a financial instrument in the consolidated balance sheets. Warrants are measured at fair value at the date of issuance and are not remeasured at subsequent reporting dates. Recently issued accounting standards adopted In April 2014, the Financial Accounting Standards Board ("FASB") issued a new pronouncement which amends the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in US GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization's operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. This disclosure will provide information about the ongoing trends in a reporting organization's results from continuing operations. The amendments in the Accounting Standard Update ("ASU") were effective in the first quarter of 2015 for public organizations with calendar year ends. The adoption of this guidance did not have a significant effect on the Company's consolidated financial statements. Recent accounting pronouncements not yet adopted In August 2015, the FASB issued a new pronouncement, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in this ASU defer the effective date of ASU 2014-09 by one year. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance for all entities. Public business entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact on its consolidated financial statements of adopting this guidance. In September, 2015, the FASB issued a new pronouncement, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments eliminate the requirement to retrospectively account for those adjustments. In November, 2015, the FASB issued a new pronouncement which changes how deferred taxes are classified on organizations' balance sheets. In January, 2016, the FASB issued a new pronouncement which is intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The new guidance makes targeted improvements to existing US GAAP by: • Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; • Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; • Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; • Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; • Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and • Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance permits early adoption of the own credit provision. The Company does not expect the adoption of this guidance will have a significant effect on its consolidated financial statements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . The guidance supersedes existing guidance on accounting for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. For operating leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the guidance is permitted. In transition, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currentl |
AVAILABLE-FOR-SALE SECURITIES
AVAILABLE-FOR-SALE SECURITIES | 12 Months Ended |
Dec. 31, 2015 | |
AVAILABLE-FOR-SALE SECURITIES [Abstract] | |
AVAILABLE-FOR-SALE SECURITIES | 3. AVAILABLE-FOR-SALE SECURITIES The carrying amount and fair value of the Company's available-for-sale securities as of December 31, 2014 and 2015 were as follows: As of December 31, 2014 Original cost Gross unrealized gains Gross unrealized losses Provision for decline in value Carrying amount and fair value Short-term investment: Ourgame International Holdings Limited ("Ourgame") (a) $ 16,380,050 $ 3,633,437 - - $ 20,013,487 As of December 31, 2015 Original cost Gross unrealized gains Gross unrealized losses Provision for decline in value Carrying amount and fair value Short-term investment: Ourgame (a) $ 17,281,947 $ 27,186,579 - - $ 44,468,526 Forgame Holdings Limited ("Forgame") (b) $ 22,825,900 - $ (2,538,912 ) - $ 20,286,988 Long-term investment: Debt securities (c) $ 2,401,378 $ 367,816 - - $ 2,769,194 (a) In February 2014, the Company made an investment in Ourgame, a company incorporated in the Cayman Islands and principally engaged in development and operation of online card and board games, for a consideration of 100 16.3 In 2015, the Company recognized a realized gain of 48,872 on a partial disposal of the shares in Ourgame and received a cash dividend of 628,417 which were recorded in the statements of comprehensive income (loss). The cost of securities sold is determined based on specific identification method. (b) In December 2014, the Company entered into an agreement to acquire 8.89 million issued ordinary shares of Forgame, a company incorporated in the Cayman Islands, principally engaged in developing, licensing and operating webgames and mobile games, and listed in Hong Kong, for a total consideration of 124.51 16.1 The acquisition was completed in January 2015. In 2015, the Company recognized a realized gain 487,144 on a partial disposal of the shares in Forgame which was recorded in the statements of comprehensive income (loss). The cost of securities sold is determined based on specific identification method. (c) In February 2015, the Company entered into a preferred share purchase agreement with the shareholders of Cream Soft Games Co., Ltd. ("Cream Soft"), a company incorporated in the Republic of Korea and principally engaged in mobile game development. The Company purchased, for a cash consideration of 0.8 3,275 convertible redeemable preferred shares, which represented a 20 voting interest in Cream Soft. At any time and from time to time on or after February 16, 2020, the Company may require Cream Soft to redeem the preferred shares. In April 2015, the Company entered into a preferred share purchase agreement with the shareholders of Blue Mobile Capital Ltd. ("Blue Mobile"), a company incorporated in the Cayman Islands and principally engaged in mobile game publishing and development. The Company purchased, for a cash consideration of 0.8 1,764,706 convertible redeemable preferred shares, which represented a 15 voting interest in Blue Mobile. At any time and from time to time on or after August 3, 2020, the Company may require Blue Mobile to redeem the preferred shares. In May 2015, the Company entered into an investment agreement with the owners of Shenzhen Ruilan Imagination Technology Co., Ltd. ("RL"), a company established in the PRC, principally engaged in mobile game publishing and development and owned by the same founding shareholders of Blue Mobile. The Company purchased a 15 0.8 At any time and from time to time on or after August 5, 2020 without consummation of a qualified initial public offering of RL as stipulated in the investment agreement, the Company may require RL to redeem the purchased capital. As of December 31, 2015, the contractual maturities of the above available-for-sales debt securities are due within two five Management of the Company determined there was no impairment on such investments during the years ended December 31, 2014 and 2015. |
HELD-TO-MATURITY SECURITIES
HELD-TO-MATURITY SECURITIES | 12 Months Ended |
Dec. 31, 2015 | |
HELD-TO-MATURITY SECURITIES [Abstract] | |
HELD-TO-MATURITY SECURITIES | 4. HELD-TO-MATURITY SECURITIES The balance represents the Company's investments in debt securities issued by the PRC banks with original maturities longer than 3 months but less than one year and the Company has positive intent and ability to hold to maturity. |
LOANS TO THIRD PARTIES
LOANS TO THIRD PARTIES | 12 Months Ended |
Dec. 31, 2015 | |
LOANS TO THIRD PARTIES [Abstract] | |
LOANS TO THIRD PARTIES | 5. LOANS TO THIRD PARTIES In August 2015, the Company entered into an agreement with Galassia International Holding Shares Limited and its subsidiary (collectively, "Galassia"), third parties. Pursuant to the agreement, a loan in the principal amount of 17 million at an interest rate of 10 per annum was made to Galassia in August 2015. The repayment of the loan was secured by certain personal guarantees from the founding owners of Galassia and the loan was repayable within three 3.7 million. The remaining amount of the loan together with relevant interests was subsequently settled in April 2016. In June and September 2015, the Company entered two loan agreements with Beijing ShenLanZhiGuang Co., Ltd ("SLZG"), a third party, and loans of an aggregated amount of 1.4 was made to SLZG. The loans were interest-free, unsecured and repayable on demand. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following: As of December 31, 2014 2015 Prepayment to service providers $ 9,561,090 $ 6,821,978 Employee advances 332,923 224,116 Other deposits 1,134,027 1,344,705 Interest receivables 5,063,320 8,425,322 VAT recoverable 2,174,745 3,881,988 Other current assets 803,799 4,197,446 $ 19,069,904 $ 24,895,555 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY AND EQUIPMENT, NET [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 7. PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: As of December 31, 2014 2015 Computer and transmission equipment $ 17,305,410 $ 12,110,198 Furniture and office equipment 1,288,057 968,474 Motor vehicles 860,109 807,339 Leasehold improvements 2,885,943 2,724,033 Communication equipment 541,704 453,001 Office building 703,384 662,807 23,584,607 17,725,852 Less: accumulated depreciation (17,925,416 ) (13,071,978 ) $ 5,659,191 $ 4,653,874 Depreciation expenses for the years ended December 31, 2013, 2014 and 2015 are $ 2,202,865 2,319,480 2,828,428 |
LONG-TERM INVESTMENTS
LONG-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2015 | |
LONG-TERM INVESTMENTS [Abstract] | |
LONG-TERM INVESTMENTS | 8. LONG-TERM INVESTMENTS The Group's long-term investments consist of the following: As of December 31, 2014 2015 Cost method investments $ - $ - Equity method investments - 2,003,615 Available-for-sale securities (Note 3) - 2,769,194 $ - $ 4,772,809 Cost method investments (a) In February 2012, the Company acquired certain preferred shares in U4iA Games, Inc. ("U4iA"), a developer and publisher of a free-to-play, console-quality, browser-based first person shooter game for 2 2.4 Since the completion of this investment, U4iA has been in a continuous loss-making position and failed to create the type of profit generating business that was contemplated at the time of the Company's investment. As a result, the Company recorded a full impairment loss of 2 million in the year ended December 31, 2013 since it did not expect any positive cash flows from the investment in U4iA in the future and had no intention to hold this investment for recovery. (b) In October 2012, the Company acquired certain preferred shares in Meteor Entertainment Inc. ("Meteor"), a developer 2 2.5 1.2 Since the completion of this investment, Meteor has been in a continuous loss-making position and failed to create the type of profit-generating business that was contemplated at the time of the Company's investment. As a result, the Company recorded a full impairment loss of 2 million in the year ended December 31, 2014 since it did not expect any positive cash flows from the investment in Meteor in the future and had no intention to hold this investment for recovery. Equity method investments (a) In January 2015, the Company and two individuals, Bai Yanyan (“Bai”) and Chen Wei (“Chen”) entered into an agreement to establish a new company, KongZhong Galaxy (Tianjin) Culture Media Co., Ltd. (“KongZhong Galaxy”) which is principally engaged in film production and investment. The Company paid a capital contribution of 0.3 million, which represented a 35 equity ownership interest in KongZhong Galaxy. The Company has significant influence but does not have control over KongZhong Galaxy. Accordingly the Company recorded its interest in KongZhong Galaxy as an equity method investment. For the year ended December 31, 2015, the Company recorded in the consolidated statement of comprehensive income its share of loss of 0.41 million, of which $ 0.3 zero and the remaining 0.1 million was adjusted to the balance of the loans extended to KongZhong Galaxy (Note 25). (b) In March 2015, the Company entered into an equity purchase agreement with the owner of Shanghai Magic Wing Network Technology Co., Ltd. ("Magic Wing"), a company engaged in internet games development. The Company purchased a 21.05 equity ownership interest in Magic Wing for a cash consideration of 1.2 million. The Company has significant influence but does not have control over Magic Wing. Accordingly the Company recorded its interest in Magic Wing as an equity method investment. The Company recorded its share of the loss of 0.23 million for the year ended December 31, 2015. (c) In 2015, the Company invested $ 1.0 12.8 ownership in F50 Ventures Fund, L.P. ("F50"), which is a Cayman Islands exempted limited partnership. F50 invests in companies in consumer mobile, enterprise, cloud computing and big data, gaming, smart hardware, robotics, IoT and wearable industries, in order to generate investment returns. As of December 31, 2015, the Company accounted for the investment using equity method and recognized its share of loss 0.003 |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2015 | |
GOODWILL [Abstract] | |
GOODWILL | 9. GOODWILL The change in the carrying amounts of goodwill by reporting unit which is the same as reportable segment is as follows: 2014 2015 Internet Mobile Internet Mobile games games WVAS Total games games WVAS Total Gross amount: Beginning balance $ 70,506,823 $ 20,882,730 $ 44,035,400 $ 135,424,953 $ 70,315,547 $ 20,827,251 $ 44,023,083 $ 135,165,881 Exchange differences (191,276 ) (55,479 ) (12,317 ) (259,072 ) (4,056,333 ) (1,176,551 ) (261,181 ) (5,494,065 ) Ending balance 70,315,547 20,827,251 44,023,083 135,165,881 66,259,214 19,650,700 43,761,902 129,671,816 Accumulated impairment loss: Beginning balance (3,279,803 ) - (41,878,521 ) (45,158,324 ) ( 3,270,905 ) - ( 41,875,868 ) ( 45,146,773 ) Exchange differences 8,898 - 2,653 11,551 188,691 - 56,255 244,946 Ending balance (3,270,905 ) - (41,875,868 ) (45,146,773 ) (3,082,214 ) - (41,819,613 ) (44,901,827 ) Goodwill, net $ 67,044,642 $ 20,827,251 $ 2,147,215 $ 90,019,108 $ 63,177,000 $ 19,650,700 $ 1,942,289 $ 84,769,989 As of December 31, 2014 and 2015, the Company performed an annual impairment test on goodwill. The Company estimated the fair values of the reporting units using the income approach valuation methodology. The cash flow discount rate and terminal value growth rates being used for internet games, mobile games and WVAS reporting units were as follows: Discount rates Terminal value growth rates 2014 2015 2014 2015 Reporting units: Internet games 27 % 27 % 3 % 3 % Mobile games 26 % 26 % 3 % 3 % WVAS 26 % 26 % 1 % 1 % Based on the results of the goodwill impairment test, the fair value of each reporting unit was more than the respective carrying value. |
ACQUIRED INTANGIBLE ASSETS, NET
ACQUIRED INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2015 | |
ACQUIRED INTANGIBLE ASSETS, NET [Abstract] | |
ACQUIRED INTANGIBLE ASSETS, NET | 10. ACQUIRED INTANGIBLE ASSETS, NET Acquired intangible assets, net consist of the following: As of December 31, 2014 As of December 31, 2015 Gross Net Gross Net carrying Accumulated Exchange Accumulated carrying carrying Accumulated Exchange Accumulated carrying Amortization amount amortization difference impairment amount amount amortization difference impairment amount period Intangible assets not subject to amortization Trademarks with indefinite life $ 282,182 $ - $ 8,388 $ - $ 290,570 $ 282,182 $ - $ (8,374) $ - $ 273,808 N/A Intangible assets subject to amortization Agreements with Mobile Operator 3,113,746 (3,113,746 ) - - - 3,113,746 (3,113,746 ) - - - 3 Operating platforms 243,974 (243,974 ) - - - 243,974 (243,974\ ) - - - 5 Service licenses 57,071 (57,071 ) - - - 57,071 (57,071 ) - - - 3 Contracts with content providers 120,999 (120,999 ) - - - 120,999 (120,999 ) - - - 1 Non-compete agreement 388,516 (388,516 ) - - - 388,516 (388,516 ) - - - 2 Self-developed contents 379,089 (379,089 ) - - - 379,089 (379,089 ) - - - 2 Product technologies 4,966,102 (4,966,102 ) - - - 4,966,102 (4,966,102 ) - - - 3 Contracts with service providers 5,713 (5,713 ) - - - 5,713 (5,713 ) - - - 1 Subscriber list 16,710 (16,710 ) - - - 16,710 (16,710 ) - - - 1 Trademarks 36,874 (36,874 ) - - - 36,874 (36,874 ) - - - 1 Core technologies 8,281,231 (6,947,441 ) 243,038 - 1,576,828 8,281,231 (7,242,002 ) (248,707) - 790,522 5 Software 115,150 (65,464 ) 3,875 - 53,561 172,549 (92,222 ) (6,351) - 73,976 5 Game licenses 80,381,424 (22,127,367 ) 1,239,249 (6,540,004 ) 52,953,302 80,381,424 (29,003,257 ) (745,446) (39,725,967 ) 10,906,754 3 Employment contract 380,898 (380,898 ) - - - 380,898 (380,898 ) - - - 3 Copyright 813,074 (181,584 ) 4,053 - 635,543 813,074 (299,440 ) (43,085) - 470,549 6 Total $ 99,582,753 $ (39,031,548 ) $ 1,498,603 $ (6,540,004 ) $ 55,509,804 $ 99,640,152 $ (46,346,613 ) $ (1,051,963) $ (39,725,967 ) $ 12,515,609 During 2013 and 2014, the Company obtained certain new game licenses from third party game developers. The intangible assets recognized comprise the relevant initial license fee payments, minimum royalty fee payments and value of warrants issued in connection with obtaining these licenses. The Company recorded intangible assets relating to the game licenses by reference to the fair values of cash installment payments and warrants because the fair values of the game licenses were not readily determinable at the transaction dates. The Company estimated the useful lives of the game licenses to be three The weighted average amortization period of the intangible assets subject to amortization was three The Company recorded amortization expenses of $ 2,785,142 19,203,618 7,315,066 5,140,270 3,875,303 3,127,159 96,362 2,707 For purposes of recognition and measurement of an impairment loss, each intangible asset is considered the lowest level asset group that generates identifiable independent cash flow. In 2014, owing to the uncertainty of the success of a game development, the carrying amount of US$ 4,721,260 1,323,260 1,250,000 2,148,000 originally issued for acquisition of the game licenses. Starting from 2015, owing to the unexpected significant deterioration in performance of Guild War 2, the carrying amount 35,209,933 35,209,933 |
ACCOUNTS PAYABLE
ACCOUNTS PAYABLE | 12 Months Ended |
Dec. 31, 2015 | |
ACCOUNTS PAYABLE [Abstract] | |
ACCOUNTS PAYABLE | 11. ACCOUNTS PAYABLE Accounts payable consisted of the following: As of December 31, 2014 2015 Game license fees payable $ 13,246,572 $ 11,730,997 Fees payable to content and channel providers 5,075,274 1,810,868 Royalty fees payable 11,622,820 13,580,816 Fees payable to mobile operators 968,382 405,702 Others 686,269 546,280 $ 31,599,317 $ 28,074,663 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2015 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: As of December 31, 2014 2015 Accrued welfare benefits $ 196,455 $ 344,371 Accrued payroll and bonus 5,719,423 5,298,312 Advance from customers 793,565 1,628,693 Accrued professional service fees 3,663,273 3,662,042 Accrued marketing expense 5,545,844 4,724,276 Other tax payables - 237,568 Others 661,791 128,981 $ 16,580,351 $ 16,024,243 |
SHORT-TERM BANK LOAN
SHORT-TERM BANK LOAN | 12 Months Ended |
Dec. 31, 2015 | |
SHORT-TERM BANK LOAN [Abstract] | |
SHORT-TERM BANK LOAN | 13. SHORT-TERM BANK LOAN In October 2014, the Company entered into a financing agreement with a bank and obtained US dollars loans totaling $ 42,428,890 for the purpose of special cash dividend distribution. The repayment was originally expected to be in October 2015, and was subsequently extended to October 2016 after a negotiation with the bank in 2015. The repayment of the loan was secured by a pledge of RMB deposits 267,000,000 42.4 41.1 The pledged deposits were recorded as current restricted cash as of December 31, 2014 and 2015. In January 2015, the Company entered into a financing agreement with a bank and obtained US dollars loans totaling $ 7,533,620 50,000,000 7.7 The pledged deposits were recorded as current restricted cash as of December 31, 2015. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | 14. INCOME TAXES KongZhong and Dacheng Holdings are companies incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, they are not subject to tax on either income or capital gain. Under the current Hong Kong Inland Revenue Ordinance, Dacheng Hong Kong is subject to 16.5% income tax on its taxable income generated from operations in Hong Kong. The Company's subsidiaries, VIEs and VIEs' subsidiaries established in the PRC are subject to income tax rate of 25%, except for the following, according to the PRC Enterprise Income Tax Law (the "EIT Law"), which adopted a unified income tax rate of 25% for both domestic and foreign enterprises. In 2014, KongZhong Beijing, Beijing AirInbox, Beijing Xinrui, Tianjin Mammoth renewed their "high and new technology enterprise" ("HNTE") status for additional six years and in 2015 KongZhong China renewed its HNTE status for additional six years. The HNTE status allows qualifying China-based enterprises to use a 15% tax rate for three years. After the first six years, enterprises will go through a new application process in order to renew their HNTE status. The Company believes it is highly likely that its qualifying entities will continue to obtain the renewal of the HNTE status in the future and has assumed so in calculating deferred tax assets and liabilities. Xiamen Simlife, Shanghai Dacheng and KongZhong Brilliant qualified for software enterprise for tax purposes. They were entitled to an exemption from income tax for two years commencing from the first year that presents accumulated earnings under the PRC tax law and entitled to a 50% relief from income tax for the following three years. The preferential tax treatment of Xiamen Simlife started in 2010, Shanghai Dacheng started in 2011 and KongZhong Brilliant started in 2014. As of December 31, 2014 2015 Current deferred tax assets Accrued expenses $ 616,812 $ 301,218 Less: valuation allowance (616,812 ) (301,218 ) Current deferred tax assets, net $ - $ - Non-current deferred tax assets Net operating loss carry forwards 2,100,763 4,083,163 Depreciation and amortization - 133,548 Impairment on intangible assets - 4,401,242 Less: valuation allowance (2,100,763 ) (8,617,953 ) Non-current deferred tax assets, net $ - $ - The Company operates through multiple subsidiaries and VIEs and the valuation allowance is considered on each individual entity basis. A full valuation allowance has been established because the Company believes that it is more likely than not that its deferred tax assets will not be realized as it does not expect to generate sufficient taxable income in the future. The tax losses carried forward as of December 31, 2015 amounted to $ 24,680,182 The income taxes expense consists of: For the years ended December 31, 2013 2014 2015 Current $ 722,971 $ 1,047,999 $ 796,866 Deferred (10,569 ) - - Total $ 712,402 $ 1,047,999 $ 796,866 A reconciliation between the statutory PRC enterprise income tax rate and the Company's effective tax rate is as follows: For the years ended December 31, 2013 2014 2015 % % % Applicable rate for reconciliation purpose (note) 25 25 (25 ) Effect of tax holiday granted to PRC entities (6.5 ) (7.4 ) (0.6 ) Effect on tax rates in different tax jurisdiction (2.3 ) (7.1 ) (6.6 ) Tax effect of expenses that are not deductible in determining taxable profit (note) 1.1 1.0 2.2 Tax effect of allowable special deduction in determining taxable profit (note) (14.9 ) (16.8 ) (17.3 ) Change in valuation allowance 0.9 9.7 41.9 Effective tax rate for the year 3.3 4.4 (5.4 ) Note: The domestic tax rate in the jurisdiction where the operation of the Company is substantially based is used. Expenses that are not deductible included accrued salary and accrued bonus which exceeded the upper limit of deduction under the EIT Law. Special deduction is an extra 50% deduction allowable under the EIT Law in respect of qualifying product development expense incurred. If the tax holidays granted to the relevant subsidiaries and VIEs were not available, the impact on income tax provision and earnings per share amounts would be as follows: For the years ended December 31, 2013 2014 2015 Increase in income tax expense $ 1,399,105 $ 1,758,665 $ 89,074 Impact on net income per ordinary share-basic $ 0.00 $ 0.00 $ 0.00 Impact on net income per ordinary share-diluted $ 0.00 $ 0.00 $ 0.00 The Company did not identify any significant unrecognized tax benefits or incur any interest or penalties related to potential underpaid income tax expenses for each of the three years ended December 31, 2015. The Company does not expect to have a significant increase or decrease on unrecognized tax benefits within 12 months from December 31, 2015. Under EIT Law, a "resident enterprise" which may include an enterprise established outside of the PRC with management located in the PRC, will be subject to the PRC income tax. If the PRC tax authorities subsequently determine that the Company and its subsidiaries registered outside the PRC should be deemed a resident enterprise, the Company and its subsidiaries registered outside the PRC will be subject to the PRC income tax at a rate of 25%. Under applicable accounting principles, a deferred tax liability should be recorded for taxable temporary differences attributable to the excess of financial reporting over tax basis, including those differences attributable to a more than 50% interest in a domestic subsidiary. However, recognition is not required in situations where the tax law provides a means by which the reported amount of that investment can be recovered tax-free and the enterprise expects that it will ultimately use that means. The Company has not recorded any such deferred tax liability attributable to the undistributed earnings of its financial interest in VIE affiliates because the Company believes such excess earnings can be distributed in a manner that would not be subject to tax. Aggregate undistributed earnings of the Company's subsidiaries, VIEs and its VIEs' subsidiaries located in the PRC that are available for distribution to the Company of approximately $ 233,725,362 |
LONG-TERM LIABILITIES
LONG-TERM LIABILITIES | 12 Months Ended |
Dec. 31, 2015 | |
LONG-TERM LIABILITIES [Abstract] | |
LONG-TERM LIABILITIES | 15. LONG-TERM LIABILITIES In connection with the acquisition of the intangible assets relating to a game license obtained in 2012, the Company was required to make certain cash payments by installment. The total cash installment payments amounted to $ 55,000,000 53,460,269 Based on the expected payment date, the Company has recorded the non-current portion of the payment liabilities 9,860,000 under long-term liabilities as of December 31, 2014 which was included in game license fees payable under accounts payable as of December 31, 2015. |
SHARE REPURCHASE
SHARE REPURCHASE | 12 Months Ended |
Dec. 31, 2015 | |
SHARE REPURCHASE [Abstract] | |
STOCK REPURCHASE | 16. SHARE REPURCHASE On October 26, 2012, the Board of Directors authorized to purchase the American Depositary Shares ("ADS", each representing 40 20,000,000 5,000,000 362,807 2,071,731 1,592,558 10,123,821 during 2013. During 2014 and 2015, there were no share repurchases |
EMPLOYEE EQUITY INCENTIVE PLAN
EMPLOYEE EQUITY INCENTIVE PLAN | 12 Months Ended |
Dec. 31, 2015 | |
EMPLOYEE EQUITY INCENTIVE PLAN [Abstract] | |
EMPLOYEE EQUITY INCENTIVE PLAN | 17. EMPLOYEE EQUITY INCENTIVE PLAN The Company's 2002 employee equity incentive plan ("2002 Plan") allows the Company to offer a variety of incentive awards to employees, consultants or external service advisors of the Company. Options to purchase 105,000,000 32,000,000 40,000,000 140,000,000 80,000,000 four 25 6.25 10 As of December 31, 2015, 6,744,940 2,682,500 71,680,000 The Company recognizes the compensation costs net of estimated forfeitures on a straight-line basis over the requisite service period of the award, which is generally the vesting period. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of share-based compensation expense to be recognized in future periods. Stock options A summary of the stock option activities is as follows: Outstanding options Weighted Weighted average Number of average grant-date options exercise price fair value Options outstanding at January 1, 2013 43,054,457 $ 0.10 $ 0.08 Granted 13,320,000 $ 0.21 $ 0.06 Forfeited (1,515,040 ) $ 0.12 $ 0.08 Exercised (8,602,960 ) $ 0.10 $ 0.06 Options outstanding at December 31, 2013 46,256,457 $ 0.10 $ 0.12 Granted 9,520,000 $ 0.22 $ 0.06 Forfeited (8,832,517 ) $ 0.22 $ 0.06 Exercised (4,052,480 ) $ 0.11 $ 0.09 Options outstanding at December 31, 2014 42,891,460 $ 0.14 $ 0.12 Forfeited (1,327,000 ) $ 0.16 $ 0.05 Exercised (8,915,040 ) $ 0.11 $ 0.08 Options outstanding at December 31, 2015 32,649,420 $ 0.14 $ 0.13 There were no The fair value of each option granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for each applicable period. Option grants 2013 2014 2015 Weighted average risk-free interest rate 0.60 % 0.81 % N/A Weighted average expected option life 2.75 2.75 N/A Weighted average volatility rate 54.36 % 52.94 % N/A Weighted average dividend yield - - N/A (1) Risk-free interest rate Risk-free interest rate was estimated based on the yield to maturity of treasury bonds of the United States with a maturity period close to the expected life of the options. (2) Expected life The expected life was estimated based on historical and other economic data trended into the future. (3) Volatility The volatility of the underlying ordinary shares during the life of the options was estimated based on the historical stock price volatility of KongZhong over a period comparable to the expected life of the options. (4) Dividend yield The dividend yield was estimated by the Company based on its expected dividend policy over the expected life of the options. (5) Exercise price The exercise price of the options was determined by the Board of Directors. (6) Fair value of underlying ordinary shares The closing market price of the ADSs of KongZhong as of the grant date was used to determine the fair value of the ordinary shares on that date. The weighted average per share fair value of options granted in each year was as follows: For the years ended December 31, 2013 2014 2015 Stock options $ 0.26 $ 0.22 N/A The total intrinsic value of options exercised during the years ended December 31, 2013, 2014 and 2015 was $ 31,708 111,476 731,689 The following table summarizes information with respect to stock options outstanding at December 31, 2015: Options outstanding Options exercisable Weighted Weighted Weighted Weighted average average Aggregate average average Aggregate Number exercise remaining intrinsic Number exercise remaining intrinsic outstanding price contractual life value exercisable price contractual life value Average exercise price $ 0.07 4,064,337 476,544 4,064,337 476,544 $ 0.09 1,600,000 160,400 1,600,000 160,400 $ 0.10 6,925,040 640,566 6,925,040 640,566 $ 0.12 2,000,000 136,000 2,000,000 136,000 $ 0.13 2,772,520 172,364 2,772,520 172,364 $ 0.14 400,000 18,500 100,000 4,625 $ 0.15 2,112,523 77,635 2,112,523 77,635 $ 0.19 7,655,000 - 3,315,000 - $ 0.22 5,120,000 - 1,895,000 - Total 32,649,420 $ 0.14 5.94 1,682,009 24,784,420 $ 0.12 5.25 1,668,134 The number of the options expected to vest was 7,865,000 0.20 8.13 13,875 Nonvested shares A summary of the nonvested share activities is as follows: Number of Weight average nonvested grant-date shares outstanding fair value Nonvested shares outstanding at January 1, 2013 22,555,000 $ 0.13 Vested (12,885,000 ) $ 0.15 Nonvested shares outstanding at December 31, 2013 9,670,000 $ 0.11 Granted 3,680,000 $ 0.22 Forfeited (825,000 ) $ 0.11 Vested (5,525,000 ) $ 0.12 Nonvested shares outstanding at December 31, 2014 7,000,000 $ 0.16 Granted 2,640,000 $ 0.14 Vested (5,120,000 ) $ 0.13 Nonvested shares outstanding at December 31, 2015 4,520,000 $ 0.18 There were no The weighted average per share fair value of nonvested shares granted in each year was as follows: For the years ended December 31, 2013 2014 2015 Nonvested shares N/A $ 0.22 $ 0.14 The total intrinsic value of shares vested in the year of 2013, 2014 and 2015 was $ 2,325,743 747,256 960,000 The following table summarizes information with respect to nonvested shares outstanding at December 31, 2015: Nonvested share outstanding Aggregate Number intrinsic outstanding value Grant date May 21, 2014 2,240,000 420,000 January 5, 2015 2,280,000 427,500 Total 4,520,000 847,500 The Company recorded share-based compensation expenses of $ 1,573,729 1,547,780 1,045,448 1,067,466 Year 2016 489,493 2017 459,433 2018 118,540 Total 1,067,466 That cost is expected to be recognized over a weighted average period of 2.24 |
WARRANTS
WARRANTS | 12 Months Ended |
Dec. 31, 2015 | |
WARRANTS [Abstract] | |
WARRANTS | 18. WARRANTS In March 2009, the Company issued to Nokia Growth Partner ("NGP"), 80 10,000,000 During 2012, in connection with the acquisition of intangible assets relating to game licenses, the Company issued a number of tranches of warrants as part of the consideration. The warrants are exercisable by the warrant holders starting from the commercial launch dates of respective games. The warrants were not determined as free standing financial instruments required to be measured at fair value at subsequent reporting dates since the underlying warrants were issued as part of settlement consideration for the purchases of game licenses and were not redeemable. The warrants held by the holders are required to be classified as equity and were recognized at the fair value of $ 14,889,000 The following table sets forth information regarding the warrants issued during 2012: No. of underlying Price per Fair value Exercisable Total Issue date shares share per warrant period fair value Tranch 1 May 11, 2012 120,000,000 $ 0.1485 $ 0.0372 One year from $ 4,470,000 Tranch 2 May 11, 2012 40,000,000 0.1485 0.0681 Three years from 2,723,000 Tranch 3 May 11, 2012 40,000,000 0.1485 0.0837 Three years from 3,346,000 Tranch 4 August 2, 2012 40,000,000 0.1985 0.0537 One year from 2,148,000 Tranch 5 August 28, 2012 40,000,000 $ 0.1750 $ 0.0550 One year from 2,202,000 Total 280,000,000 $ 14,889,000 The fair value of the warrants issued during 2012 was determined by the Company using Binomial Option Pricing Model with the following assumptions: Tranch 1 Tranch 2 Tranch 3 Tranch 4 Tranch 5 Risk-fee rate of return 0.952 % 1.674 % 1.916 % 1.185 % 1.186 % Expected remaining contractual lives of the warrants 1 4 5 1.8 2.1 Volatility 63.2 % 58.5 % 66.6 % 56.6 % 54.5 % Expected dividend yield - - - - - Exercisable multiple was not considered by the Company in the valuation since it was assumed that the warrant holders have no incentive to exercise the warrants before maturity as the Company does not pay dividends, and theoretically, holders of call options are better off to hold the warrants until maturity. During 2013, warrants to purchase 120 17,800,000 40 5,940,000 In addition, warrants to purchase 40 million of ordinary shares were forfeited in 2014 and warrants to purchase of 40 million of ordinary shares were expired in 2015. As of December 31, 2015, the warrants for the purchases of up to 40 million ordinary shares of the Company remained outstanding. The exercise of the warrants, the corresponding issuance of ordinary shares and expiry of warrants were recorded in equity. A summary of the warrant activities is as follows: Number of underlying shares Underlying shares outstanding at January 1, 2013 360,000,000 Exercised (200,000,000 ) Underlying shares outstanding at December 31, 2013 160,000,000 Exercised (40,000,000 ) Forfeited (40,000,000 ) Underlying shares outstanding at December 31, 2014 80,000,000 Expired (40,000,000 ) Underlying shares outstanding at December 31, 2015 40,000,000 |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2015 | |
SEGMENT AND GEOGRAPHIC INFORMATION [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | 19. SEGMENT AND GEOGRAPHIC INFORMATION Segment reporting The Company's chief operating decision maker has been identified as the Chief Executive Officer who reviews results of operations by business lines when making decisions about allocating resources and assessing performance of the Company. The Company has therefore determined that each business line represents an operating segment and there are three The Company does not allocate any assets to its operating segments as management does not believe that allocating these assets is useful in evaluating these segments' performance. Accordingly, the Company has not made disclosure of total assets by reportable segment. For the years ended December 31, 2013 2014 2015 Revenues Internet games $ 93,792,294 $ 118,099,837 $ 105,045,280 Mobile games 16,908,282 45,036,427 24,646,661 WVAS 62,953,219 64,459,705 49,421,487 173,653,795 227,595,969 179,113,428 Cost of revenues Internet games (45,283,888 ) (61,443,104 ) (52,368,813 ) Mobile games (7,780,237 ) (22,977,318 ) (14,776,616 ) WVAS (43,085,208 ) (44,858,641 ) (37,007,224 ) Impairment loss on intangible assets included in Internet games segment (Note) (250,553) - (35,209,933 ) (96,399,886 ) (129,279,063 ) (139,362,586 ) Gross profit Internet games 48,508,406 56,656,733 52,676,467 Mobile games 9,128,045 22,059,109 9,870,045 WVAS 19,868,011 19,601,064 12,414,263 Impairment loss on intangible assets included in Internet games segment (Note) (250,553) - (35,209,933 ) 77,253,909 98,316,906 39,750,842 Operating expenses Product development (26,401,720 ) (25,107,372 ) (24,189,619 ) Selling and marketing (26,674,024 ) (42,522,684 ) (25,890,472 ) General and administrative (8,976,176 ) (12,564,600 ) (13,484,211 ) Impairment loss on intangible assets (1,562,386 ) (1,323,260 ) - Total operating expenses (63,614,306 ) (81,517,916 ) (63,564,302 ) Government subsidies $ 2,176,449 $ 1,138,909 $ 1,573,577 Income (loss) from operations $ 15,816,052 $ 17,937,899 $ (22,239,883 ) Note: The cost of revenues for internet games segment in 2013 and 2015, amounted to $ 45,534,441 87,578,746 48,257,853 17,466,534 Service lines of internet games The internet games revenues are derived from online game operation revenues and licensing revenues including royalties. Revenues of internet games by service line for the years ended December 31, 2013, 2014 and 2015 are as follows: For the years ended December 31, 2013 2014 2015 Internet games Online game operation $ 91,308,244 $ 116,756,333 $ 104,671,006 Licensing arrangement 2,484,050 1,343,504 374,274 $ 93,792,294 $ 118,099,837 $ 105,045,280 Service lines of mobile games The mobile games revenues comprise revenues from carrier billing channels and revenues from non-carrier billing channels. Revenues of mobile games by service line for the years ended December 31, 2013, 2014 and 2015 are as follows: For the years ended December 31, 2013 2014 2015 Mobile games - Carrier billing channels $ 10,135,756 $ 23,808,707 $ 12,057,097 - Non-carrier billing channels 6,772,526 21,227,720 12,589,564 $ 16,908,282 $ 45,036,427 $ 24,646,661 Service lines of WVAS The WVAS include Wireless Application Protocol ("WAP") services, Multimedia Messaging Services ("MMS"), Short Messaging Services ("SMS"), Interactive Voice Response services ("IVR"), and Color Ring Back Tones ("CRBT"). Revenues of WVAS by service line for the years ended December 31, 2013, 2014 and 2015 are as follows: For the years ended December 31, 2013 2014 2015 WVAS - SMS $ 31,844,446 $ 31,922,975 $ 21,336,865 - IVR 14,658,612 13,210,504 3,957,328 - MMS 1,096,133 968,026 945,771 - WAP 708,984 364,750 366,180 - CRBT and others 14,645,044 17,993,450 22,815,343 $ 62,953,219 $ 64,459,705 $ 49,421,487 Items included in measure of segment profit For the years ended December 31, 2013 2014 2015 Depreciation and amortization Internet games $ 1,808,259 $ 6,095,769 $ 2,798,822 Mobile games 485,671 4,258,966 1,395,782 WVAS 2,694,077 11,168,363 5,948,890 4,988,007 21,523,098 10,143,494 For the years ended December 31, 2013 2014 2015 Share-based compensation Internet games $ 570,511 $ 438,362 $ 288,463 Mobile games 153,230 306,273 143,857 WVAS 849,988 803,145 613,128 1,573,729 1,547,780 1,045,448 Geographical information The Company's operations are mainly located in its country of domicile (i.e. the PRC) and to a lesser extent, overseas. The Company's revenues by geographic areas (based on location of the other signing party of the revenue contract) are detailed below: For the years ended December 31, 2013 2014 2015 PRC $ 167,752,785 $ 221,935,017 $ 174,199,110 Asia-pacific 913,465 162,797 7,937 Europe and America 4,987,545 5,498,155 4,906,381 $ 173,653,795 $ 227,595,969 $ 179,113,428 The Company's long-lived assets as of December 31, 2014 and 2015 were all located in the PRC. |
CASH DIVIDEND
CASH DIVIDEND | 12 Months Ended |
Dec. 31, 2015 | |
CASH DIVIDEND [Abstract] | |
CASH DIVIDEND | 20. CASH DIVIDEND On October 17, 2014, the Board of Directors of the Company declared a special one-time cash dividend of $ 40,999,308 0.022 0.88 there was no cash dividend. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2015 | |
FAIR VALUE MEASUREMENTS [Abstract] | |
FAIR VALUE MEASUREMENTS | 21. FAIR VALUE MEASUREMENTS Measured on recurring basis The Company measured its financial assets and liabilities including time deposits, available-for-sale securities and game license payment liabilities at fair value on a recurring basis as of December 31, 2014 and 2015. Cash equivalents included time deposits that can been withdrawn at any time and are stated at fair value. The investment in listed equity securities are stated at fair value. The Company classified such financial assets as investments within Level 1 of the fair value hierarchy because they are valued based on the quoted market price in an active market. The Company did not have Level 2 investments as of December 31, 2014 and 2015. Game license payment liabilities arising from the acquisition of intangible assets relating to a game license obtained in 2012 are classified within Level 3 of the fair value hierarchy because the Company recorded the present value of the installment payment liabilities using discounted cash flow ("DCF") method. The significant unobservable input used in the DCF model was the discount rate of 3.25 The Company measured the fair value of investment in convertible redeemable preferred shares of Blue mobile and purchased capital of RL based on a valuation which utilizes market approach to determine the equity value and the options-pricing method to determine the allocated values between preferred shares and common shares. The investments in Blue Mobile and RL are classified within Level 3 of the fair value hierarchy because the Company used unobservable inputs to value the investment. The significant unobservable input includes the market multiple estimated based on stock prices and price to sales ratios of comparable companies in the same industry. The Company measured the fair value of investment in convertible redeemable preferred shares of Cream Soft based on a valuation which utilizes income approach to determine the relevant equity value and options-pricing method to determine the allocated value to preferred shares. The investment in Cream Soft is classified within Level 3 of the fair value hierarchy because the Company used unobservable inputs to value the investment. The significant unobservable inputs include the forecast financial performance of the investee business and discount rate to determine the fair value of the business. The following table shows the fair value of the Company's financial assets and liabilities measured at recurring basis as of December 31, 2014 and 2015: As of December 31, 2014 As of December 31, 2015 Fair Value Measurements at the Reporting Date Using Fair Value Measurements at the Reporting Date Using Quoted prices in Significant Quoted prices in Significant active markets other Significant active markets other Significant for identical observable unobservable for identical observable unobservable instruments inputs inputs Total instruments inputs inputs Total (level 1) (level 2) (level 3) balance (level 1) (level 2) (level 3) balance Time deposits $ 40,777,831 $ - $ - $ 40,777,831 $ 31,775,348 $ - $ - $ 31,775,348 Available-for-sale securities 20,013,487 - - 20,013,487 64,755,514 - 2,769,194 67,524,708 Game license payment liabilities - - 19,860,000 19,860,000 - - 10,000,000 10,000,000 A movement of the Company's financial assets and liabilities measured at a recurring basis using significant unobservable inputs is as follows: Available-for-sale Game license Balance as of January 1, 2013 $ - $ 43,660,000 Gains or losses for the period Earnings - 600,000 Other comprehensive income - - Settlements - (5,000,000 ) Balance as of December 31, 2013 - 39,260,000 Gains or losses for the period Earnings - 600,000 Other comprehensive income - - Settlements - (20,000,000 ) Balance as of December 31, 2014 $ - $ 19,860,000 Purchases 2,401,378 - Gains or losses for the period Earnings - 140,000 Other comprehensive income 367,816 - Settlements - (10,000,000 ) Balance as of December 31, 2015 $ 2,769,194 $ 10,000,000 Measured on nonrecurring basis Goodwill, cost method investments and other intangible assets are measured at fair value on a nonrecurring basis and they are recorded at fair value only when impairment is recognized. Those assets are considered as level 3 assets because the Company used unobservable inputs to determine their fair value. The Company measured the fair value of the purchased intangible using the "cost," "income approach-excess earnings" or "with & without" valuation methods. In addition, the Company measured the fair value of intangible assets using income approach method based on which to recognize the impairment loss in 2014 and 2015. The unobservable inputs include forecast financial performance of the acquired businesses or assets and discount rates to determine the fair value of these purchased assets. The Company measured the fair value of cost method investment in Meteor using income approach method based on which to recognize the impairment loss in 2014. The unobservable inputs include forecast financial performance and future cash flow to determine the fair value of the cost method investment. Intangible assets purchased with issued warrants as consideration are measured at fair value on a nonrecurring basis on the transaction date (see Note 18). |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2015 | |
NET INCOME (LOSS) PER SHARE [Abstract] | |
NET INCOME (LOSS) PER SHARE | 22. NET INCOME (LOSS) PER SHARE The following table sets forth the computation of basic and diluted net income per share: For the years ended December 31, 2013 2014 2015 Net income (loss) (numerator), basic and diluted $ 20,661,649 $ 22,587,921 $ (16,226,710 ) Shares (denominator): Weighted average ordinary shares outstanding used in computing basic net income (loss) per share 1,714,924,612 1,828,191,540 1,882,296,976 Effect of dilutive securities: Plus incremental weighted average ordinary shares from assumed conversions of stock options, nonvested shares and warrants using the treasury stock method 36,696,728 47,328,554 - Total weighted average shares used in computing diluted net income (loss) per share 1,751,621,340 1,875,520,094 1,882,296,976 Net income (loss) per share, basic $ 0.01 $ 0.01 $ (0.01 ) Net income (loss) per share, diluted $ 0.01 $ 0.01 $ (0.01 ) The dilutive effects of the options, nonvested shares and warrants are calculated using the treasury stock method. Under the treasury stock method, the proceeds from the assumed conversion of options, nonvested shares and warrants, which include the benefit of the compensation costs attributable to future services and not yet recognized, are used to repurchase outstanding ordinary shares using average market prices. For the years ended December 31, 2013, 2014 and 2015, the Company had the following securities outstanding which could potentially dilute basic net income (loss) per share in the future, but were excluded from the computation of diluted net income (loss) per share in 2013, 2014 and 2015 as their effects would have been antidilutive: For the years ended December 31, 2013 2014 2015 Options, nonvested shares and warrants 11,320,000 97,392,523 77,169,420 |
CONCENTRATIONS
CONCENTRATIONS | 12 Months Ended |
Dec. 31, 2015 | |
CONCENTRATIONS [Abstract] | |
CONCENTRATIONS | 23. CONCENTRATIONS (a) Dependence on Mobile Operator The revenue of the Company is primarily derived from cooperative arrangements with the Mobile Operator in the PRC. The major operators cooperated with the Company are China Mobile, China Unicom and China Telecom. If the strategic relationship with the Mobile Operator in the PRC is terminated or scaled-back, or if the Mobile Operator alters the revenue sharing arrangements, the Company's WVAS business would be adversely affected. The following table shows the revenues and percentage of total revenues derived from those operators for the years ended December 31, 2013, 2014 and 2015: For the years ended December 31, 2013 2014 2015 Percentage of total revenues Revenues collected through operators China Mobile 30 % 27 % 23 % China Unicom 5 % 4 % 3 % China Telecom 6 % 5 % 4 % Mobile games revenues collected through operators China Mobile 6 % 10 % 7 % China Unicom - - - China Telecom - - - WVAS revenues collected through operators China Mobile 24 % 17 % 16 % China Unicom 5 % 4 % 3 % China Telecom 6 % 5 % 4 % Net accounts receivable from the operators as of December 31, 2014 and 2015 were as follows: Percentage of accounts receivable as of December 31, 2014 2015 China Mobile 58 % 66 % China Unicom 7 % 7 % China Telecom 9 % 9 % Other than disclosed above, there was no customer with 10% or more of total accounts receivable. (b) Internet games revenue The Company derived the majority of internet games revenue from two games which accounted for approximately 51 50 55 (c) Credit risk In WVAS and mobile games services, the Company depends on the billing system of the Mobile Operator to charge the mobile phone users and collect payments from them. The Company generally does not require collateral for its accounts receivable and has not experienced any significant credit losses for any periods presented. |
PRC CONTRIBUTION PLAN AND PROFI
PRC CONTRIBUTION PLAN AND PROFIT APPROPRIATION | 12 Months Ended |
Dec. 31, 2015 | |
PRC CONTRIBUTION PLAN AND PROFIT APPROPRIATION [Abstract] | |
PRC CONTRIBUTION PLAN AND PROFIT APPROPRIATION | 24. PRC CONTRIBUTION PLAN AND PROFIT APPROPRIATION The employees of the Company in the PRC participate in a government-mandated defined contribution plan pursuant to which pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company accrue these benefits based on certain percentages of the employees' salaries. The total provision for such employee benefit was $ 5,135,732 4,799,750 4,911,874 Pursuant to the laws applicable to the PRC's Foreign Investment Enterprises and local enterprises, the Company's subsidiaries in the PRC must make appropriations from after-tax profit to non-distributable reserve funds as determined by the boards of directors of the relevant subsidiaries. For foreign enterprises, these reserve funds include (i) a statutory surplus reserve fund and (ii) a general surplus reserve fund. Subject to certain cumulative limits, the general reserve fund requires annual appropriations of 10 As of December 31, 2014 and 2015, the total statutory reserve amounted to $ 11,467,537 11,467,537 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | 25. RELATED PARTY TRANSACTIONS Details of related party balances as of December 31, 2014 and 2015 and transactions for the years ended December 31, 2013, 2014 and 2015 are as follows: (a) Loans to related party As of December 31, Note 2014 2015 KongZhong Galaxy (i) $ - $ 32,850,989 (b) Amount due from related party As of December 31, Note 2014 2015 Magic Wing (ii) - 285,003 (C) Amount due to related party As of December 31, Note 2014 2015 Prosten Technology Holdings Limited ("Prosten") (iii) $ 198,051 $ - (d) Transactions with related parties For the years ended December 31, Note 2013 2014 2015 Interest income from loans to KongZhong Galaxy (i) $ - $ - $ 1,078,843 License fee charged by Magic Wing (ii) - - 22,993 Mobile value-added services provided by Prosten (iii) $ 1,010,354 $ 79,188 $ - (i) In 2015, the Company made various loans to KongZhong Galaxy, an equity method investee of the Company to finance KongZhong Galaxy's business operations. The loans were unsecured, interest bearing at 7 and repayable within one The relevant interest receivable amounting to $ 1,078,843 (ii) In 2015, the Company recorded costs of game license fees of $22,993 to Magic Wing, an equity method investee of the Company. As of December 31, 2015, the balance of prepaid license fees was $285,003. (iii) Leilei Wang, the Chief Executive Officer, indirectly owns more than 10 of Prosten. Prosten and its subsidiaries engage in the business of providing solutions to companies that provide mobile and search services In 2013 and 2014, Prosten and its subsidiaries provided the Company mobile value-added services valued at $1.0 million and $0.1 million, respectively. No service was provided by Prosten and its subsidiaries during 2015. The accounts payable to Prosten and its subsidiaries as of December 31, 2014 were 198,051 which was fully settled in 2015. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 26 COMMITMENTS AND CONTINGENCIES (a) Operating lease as lessee The Company leases certain office premises under non-cancelable leases. Rental expenses under operating leases for the years ended December 31, 2013, 2014 and 2015 were $ 3,449,577 3,905,147 4,285,832 Future minimum lease payments under non-cancelable operating leases agreements are as follows: Year ending 2016 $ 3,872,536 2017 1,688,411 2018 913,832 2019 612,526 (b) Purchase obligations The Company entered into a series of agreements with content providers to develop WVAS, mobile games and internet games. The future minimum purchase obligations payments under non-cancelable purchase agreements are approximately as follows: Year ending 2016 $ 1,557,290 2017 1,044,133 2018 106,926 2019 173 2020 and thereafter - (c) Sales tax The subsidiaries and VIEs incorporated in the PRC are subject to the sales tax at rates of 3 5 4,910,109 |
RESTRICTED NET ASSETS
RESTRICTED NET ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
RESTRICTED NET ASSETS [Abstract] | |
RESTRICTED NET ASSETS | 27. RESTRICTED NET ASSETS Relevant PRC laws and regulations restrict the Company's PRC subsidiaries and VIEs from transferring a portion of their net assets, equivalent to the balance of their statutory reserves and their share capital, to KongZhong in the form of loans, advances or cash dividends. The balance of restricted net assets were $ 76,657,282 92,973,766 47,850,580 50,514,213 28,806,702 42,459,553 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | 28. SUBSEQUENT EVENTS a. In November 2015, the Company entered into an agreement to partially dispose of its investment in Ourgame to Glassy Mind Holdings Limited, a third party, at a price of HK$ 6.1062 239.4 30.9 80 25.1 2.63 b. The loan to Galassia together with related interests outstanding as of December 31, 2015 were fully settled in cash in April 2016. c. In March 2016, the Company extended the repayment terms of certain loans to KongZhong Galaxy in an aggregated amount of $ 7.2 |
CONDENSED FINANCIAL INFORMATION
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY | 12 Months Ended |
Dec. 31, 2015 | |
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY [Abstract] | |
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY | BALANCE SHEETS (In US dollars) As of December 31, 2014 2015 Current assets Cash and cash equivalents $ 18,154,644 $ 5,616,759 Available-for-sale securities 20,013,487 64,755,514 Prepaid expenses and other current assets 48,162 4,024,878 Loan to third party - 13,300,000 Loans to related party - 1,612,000 Total current assets 38,216,293 89,309,151 Long-term investments 364,913,556 334,485,472 Total assets $ 403,129,849 $ 423,794,623 Liabilities and shareholders' equity Current liabilities Accrued expenses and other current liabilities 71,835 969,263 Advances from subsidiaries 38,698,888 61,101,834 Short-term bank loans 42,428,890 49,962,510 Total liabilities $ 81,199,613 $ 112,033,607 Ordinary shares 942 943 Additional paid-in capital 162,687,212 166,874,541 Warrants 5,548,000 3,346,000 Accumulated other comprehensive income 57,531,228 61,603,388 Retained earnings 96,162,854 79,936,144 Total shareholders' equity 321,930,236 311,761,016 Total liabilities and shareholders' equity $ 403,129,849 $ 423,794,623 STATEMENTS OF COMPREHENSIVE INCOME (In US dollars) For the years ended December 31, 2013 2014 2015 Operating expenses Product development (305,385 ) (545,060 ) (578,398 ) Selling and marketing (214,856 ) (16,795 ) (109,956 ) General and administrative (1,173,778 ) (1,223,687 ) (1,238,999 ) Total operating expenses and loss from operation $ (1,694,019 ) $ (1,785,542 ) $ (1,927,353 ) Interest income 129,500 36,346 11,852 Interest income from loans to related party - - 32,534 Interest income from loan to third party - - 540,274 Interest expense (693,280 ) (895,056 ) (883,974 ) Impairment loss on cost method investment (2,000,000 ) (1,999,999 ) - Investment income - - 1,161,132 Gain on sale of available-for-sales securities - - 536,016 Dividend received - - 628,417 Equity in earnings of subsidiaries and variable interest entities 24,919,448 27,232,172 (15,164,476 ) Net income (loss) before income tax expense $ 20,661,649 $ 22,587,921 $ (16,226,710 ) Income tax expense - - - Net income (loss) $ 20,661,649 $ 22,587,921 $ (16,226,710 ) STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (In US dollars) Accumulated other Total Ordinary shares Additional comprehensive Retained shareholders' Shares Amount paid-in capital Warrants income earnings equity Balance as of January 1, 2013 1,678,097,663 $ 832 $ 126,786,049 $ 15,566,332 $ 46,618,263 $ 93,912,592 $ 282,884,068 Issuance of ordinary shares for share-based compensation 35,000,000 18 849,020 - - - 849,038 Share-based compensation recognized - - 1,573,729 - - - 1,573,729 Repurchase of ordinary shares (78,214,600 ) (32 ) (10,123,789 ) - - - (10,123,821 ) Warrants exercised 200,000,000 100 32,967,232 (5,147,332 ) - - 27,820,000 Other comprehensive income - - - - 8,944,839 - 8,944,839 Net income - - - - - 20,661,649 20,661,649 Balance as of December 31, 2013 1,834,883,063 $ 918 $ 152,052,241 $ 10,419,000 $ 55,563,102 $ 114,574,241 $ 332,609,502 Issuance of ordinary shares for share-based compensation 7,190,000 4 436,621 - - - 436,625 Share-based compensation recognized - - 1,547,780 - - - 1,547,780 Repurchase of ordinary shares - - (12,410 ) - - - (12,410 ) Warrants exercised 40,000,000 20 8,662,980 (2,723,000 ) - - 5,940,000 Warrants forfeited - - - (2,148,000 ) - - (2,148,000 ) Other comprehensive income - - - - 1,968,126 - 1,968,126 Dividends to shareholders - - - - - (40,999,308 ) (40,999,308 ) Net income - - - - - 22,587,921 22,587,921 Balance as of December 31, 2014 1,882,073,063 $ 942 $ 162,687,212 $ 5,548,000 $ 57,531,228 $ 96,162,854 $ 321,930,236 Issuance of ordinary shares for share-based compensation 2,060,000 1 939,881 - - - 939,882 Share-based compensation recognized - - 1,045,448 - - - 1,045,448 Warrants expired - - 2,202,000 (2,202,000 ) - - - Other comprehensive income - - - - 4,072,160 - 4,072,160 Net loss - - - - - (16,226,710 ) (16,226,710 ) Balance as of December 31, 2015 1,884,133,063 943 166,874,541 3,346,000 61,603,388 79,936,144 311,761,016 STATEMENTS OF CASH FLOWS (In US dollars) For the years ended December 31, 2013 2014 2015 Operating activities: Net cash used in operating activities $ (1,237,414 ) $ (3,468,054 ) $ (2,675,869 ) Investing activities: Acquisition of equity method investments - - (1,000,000 ) Purchase of available-for-sales securities - (16,380,050 (26,326,715 Proceeds from sale of available-for-sales securities - - 1,500,251 Loans to related party - - (1,612,000 Loans to third parties - - (17,000,000 Loan repayment from third parties - - 3,700,000 Net cash used in investing activities $ - $ (16,380,050 ) $ (40,738,464 ) Financing activities: Repurchase of ordinary shares (10,123,821 ) (12,410 ) - Proceeds from exercise of employee stock options 849,038 436,625 939,882 Proceeds from bank borrowing - 42,428,890 7,533,620 Advances from subsidiaries 2,335,666 5,417,880 23,514,181 Repayment to subsidiaries - (190,490 (1,111,235 ) Proceeds from exercise of warrants 27,820,000 5,940,000 - Dividends paid to shareholders - (40,999,308 - Net cash provided by financing activities $ 20,880,883 $ 13,021,187 $ 30,876,448 Net increase (decrease) in cash and cash equivalents 19,643,469 (6,826,917 ) (12,537,885 ) Cash and cash equivalents, beginning of year 5,338,092 24,981,561 18,154,644 Cash and cash equivalents, end of year $ 24,981,561 $ 18,154,644 $ 5,616,759 1. BASIS FOR PREPARATION The condensed financial information of KongZhong has been prepared using the same accounting policies as set out in KongZhong's consolidated financial statements, except that KongZhong used the equity method to account for investments in its subsidiaries and variable interest entities. 2. INVESTMENTS IN SUBSIDIARIES AND VARIABLE INTEREST ENTITIES KongZhong and its subsidiaries and variable interest entities are included in the consolidated financial statements where the inter-company balances and transactions are eliminated upon consolidation. For the purpose of KongZhong's stand-alone financial statements, its investments in subsidiaries and variable interest entities are reported using the equity method of accounting. KongZhong's share of income and losses from its subsidiaries and variable interest entities is reported as equity in earnings of subsidiaries and variable interest entities in the accompanying condensed financial information of KongZhong. |
SUMMARY OF SIGNIFICANT ACCOUN38
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Basis of presentation | Basis of presentation The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). |
Basis of consolidation | Basis of consolidation The consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries, and its VIEs. All inter-company transactions and balances have been eliminated upon consolidation. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents consist of cash on hand and accounts that have the general characteristics of demand deposits in that the customer may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty. |
Term deposits | Term deposits The balance represents the Company's investments in time deposits with financial institutions with remaining maturities of greater than three months when purchased. |
Restricted cash | Restricted cash Restricted cash is related to deposits placed with financial institutions to secure the repayment of bank loans (Note 13) and to issue a standby letter of credit in favor of the game licensor in connection with the requirements of a game license agreement entered into during 2012. The deposits are restricted to withdrawal or usage. As of December 31, 2014 and 2015, the restricted cash related to the repayment of bank loans amounted to $ 42.4 48.8 21.9 10.9 9.7 |
Fair value | Fair value Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company measures certain assets, including the cost method investments, at fair value on a nonrecurring basis when they are deemed to be other-than-temporarily impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include management judgments, future performance projections, etc. An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary. |
Held-to-maturity securities | Held-to-maturity securities Investments in securities that the Company has the positive intent and ability to hold the securities to maturity are classified as held-to-maturity securities and recorded at amortized cost. |
Available-for-sale securities | Available-for-sale securities Investments in securities that have readily determinable fair value not classified as held-to-maturity or trading are classified as available-for-sale securities. Available-for-sale securities comprise of debt and equity securities which are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive income. Realized gains or losses are included in earnings during the period in which the gain or loss is realized. The Company reviews its investments in securities, including held-to-maturity securities and available-for-sale securities, for other-than-temporary impairment based on the specific identification method. The Company considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds the investment's fair value, the Company considers, among other factors, general market conditions, government economic plans, the duration and the extent to which the fair value of the investment is less than the cost, and the Company's intent and ability to hold the investment, in determining if impairment is needed. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Company's financial statements include impairment of goodwill and other intangible assets, impairment of cost method investment, revenue recognition, valuation allowance for deferred tax assets, share-based compensation expense, and recoverability of loans receivable. Actual results could differ from those estimates. |
Loans receivable, net | Loans receivable, net Loans receivable primarily represent loan balances that the management has the intent and ability to hold for the foreseeable future or until maturity or payoff. Loans receivable are recorded at unpaid principal balances, net of unearned income and allowance that reflects the Company's best estimate of the amounts that will not be collected. |
Allowance for loan losses | Allowance for loan losses The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. The Company performs an evaluation of the adequacy of the allowance. The allowance is based on the Company's assessment on the adverse situations that may affect the borrower's ability to repay, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. There is no |
Property and equipment, net | Property and equipment, net Property and equipment are carried at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Computer and transmission equipment 3 Furniture and office equipment 3 Motor vehicles 3 Leasehold improvements Over the shorter of the lease term or useful lives Communication equipment 1 Office building 20 |
Acquired intangible assets (other than indefinite lived intangible assets), net | Acquired intangible assets (other than indefinite lived intangible assets), net Acquired intangible assets, other than indefinite lived intangible assets, are carried at cost less accumulated amortization and impairment. The amortization of such acquired intangible assets is recognized over the expected useful lives of the assets. |
Impairment of long-lived assets | Impairment of long-lived assets Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets. Subsequent reversal of a previously recognized impairment loss is prohibited. |
Goodwill and indefinite-lived intangible assets | Goodwill and indefinite-lived intangible assets The excess of the purchase price over the fair value of net assets acquired is recorded on the consolidated balance sheets as goodwill. Goodwill is not amortized but is evaluated by the Company at least annually (at December 31) for impairment following a two-step process. The first step compares the fair value of each reporting unit (operating segment or one level below an operating segment) to its carrying amount, including goodwill. As of December 31, 2014 and 2015, there were three The Company has determined that the Company's trademarks do not have determinable useful lives. Consequently, the carrying amount of trademarks are not amortized but is tested for impairment annually or more frequently if events or changes in circumstances indicate that the assets might be impaired. Such impairment test consists of a comparison of the fair value of the trademarks with their carrying amount and an impairment loss is recognized if and when the carrying amounts of the trademarks exceed their fair values. The estimates of fair values of intangible assets not subject to amortization are determined using various discounted cash flow valuation methodologies. Significant assumptions are inherent in this process, including estimates of discount rates. Discount rate assumptions are based on an assessment of the risk inherent in the respective intangible assets. No impairment loss was recorded during the years ended December 31, 2013, 2014 and 2015. |
Equity method investments | Equity method investments Investment in an entity where the Company can exercise significant influence, but not control, is accounted for using the equity method. Under the equity method, the investment is initially recorded at cost and adjusted for the Company's share of undistributed earnings or losses of the investee. When the Company's carrying value in an equity method investee is reduced to zero, no further losses are recorded in the Company's consolidated financial statements unless the Company guaranteed obligations of the investee company, has committed additional funding or made additional financial support including loans and advances. When the Company needs to share further losses, the Company recognized such further losses based on the ownership level of the particular loan or advance held by the Company to which the relevant losses are being applied. When the investee company subsequently reports income, the Company will not record its share of such income until it exceeds the amount of its share of losses not previously recognized. An equity method investment is written down to fair value if there is evidence of a loss in value which is other than temporary. The Company may estimate the fair value of its equity method investments by considering factors such as recent investee equity transactions, discounted cash flow analysis, and recent operating results. (see Note 8). |
Cost method investments | Cost method investments For investments in investees over which the Company does not have significant influence, the Company carries the investments at cost. The Company reviews the cost method investments for impairment whenever events or circumstances indicate that an other-than-temporary decline has occurred. An impairment loss is recognized in earnings equal to the amount of the investment's carrying amount in excess of its fair value at the assessment date. The fair value of the investment would then become the new cost basis of the investment. Impairment losses of $2 million, $2 million and $nil million were recorded for the years ended December 31, 2013, 2014 and 2015, respectively (see Note 8). |
Revenue recognition and cost of revenues | Revenue recognition and cost of revenues The Company's revenues are derived from internet games services, mobile games services and WVAS. The Company's revenues are net of sales tax. (i) Internet games The internet games revenues are primarily derived from internet games operation revenues and licensing revenues. Online game operation revenues The Company adopts the item-based revenue model. The basic game play functions are free of charge or require an initial fee to access the game, and players are charged for purchases of in-game items. Revenue from the initial fee to access the game is recognized ratably based on the period during which the player is expected to continue to play the game. Revenues from the sales of in-game items are recognized when the items are consumed by the players or over the estimated lives of the items. Cash received but not converted into in-game money is initially recorded as advances from customers, which are transferred as deferred revenue upon conversion into in-game money. Revenues from licensing arrangement The Company enters into licensing arrangements with various licensees who provide the internet games services in PRC and overseas. A licensing arrangement usually includes license of the games and support and maintenance services after the commercial launch of the games, which include bug fixes, technical support via telephone and site visit, and unspecified upgrades on a when-and-if-available basis for certain period. The licensees pay non-refundable upfront fee for the license and support and maintenance services. For the licensing arrangements, the vendor specific objective evidence ("VSOE") of fair value of the support and maintenance services, which is the last element to be delivered, has been established based on renewal prices. Therefore, under the residual method, the amount of consideration allocated to the license of games equals the total arrangement consideration less the fair value of the support and maintenance services, which is fully recognized as revenue from license of games upon the commercial launch of the games by the licensee. The arrangement consideration allocated to the support and maintenance services is recognized as revenue from support and maintenance services ratably over the service period, which is usually one year. For the licensing arrangements entered prior to the establishment of the VSOE of fair value of the support and maintenance services, the entire licensing arrangement is accounted for as one accounting unit resulting in the upfront fee being recognized on a straight line basis over the support and maintenance services period beginning from the commercial launch of the games by the licensee. According to certain licensing arrangements, the Company is also entitled to ongoing usage-based royalties determined based on the amount charged to the players' accounts or services payable by players in a given country or region. The usage-based royalties are recognized when they are earned, provided that the collection is probable. (ii) Mobile games The mobile games revenues are derived from both carrier billing channels and non-carrier billing channels. Revenues from carrier billing channels The Company recognizes revenues collected and collectable from carrier billing channels through providing mobile games services on the platforms of China Mobile Communications Corporation ("China Mobile"), China United Network Communications Group Co., Ltd. ("China Unicom"), and China Telecommunications Corporation ("China Telecom") (collectively, the "Mobile Operator"). Mobile phone users download the mobile games in the same manner as the WVAS and the Company recognizes revenues from such services in the same way as the WVAS revenues are recognized. Mobile phone users could also download games on Android platforms and the Company recognizes revenues from such services in the same way as revenues from non-carrier billing channels. Revenues from non-carrier billing channels The Company recognizes revenues collected and collectable from non-carrier billing channels through providing mobile games services on platforms such as global Android and iOS platforms. Mobile phone users download the mobile games on Android and iOS platforms. The Company adopts the item-based revenue model. The basic game play functions are free of charge, and players are charged for purchases of in-game items. Revenues from the sales of in-game items are recognized when the items are consumed by the players. (iii) WVAS WVAS revenues are derived from providing personalized interactive entertainment, media and community services primarily to mobile phone customers of the Mobile Operator. The Company contracts with the Mobile Operator for the transmission of WVAS as well as for billing and collection services. The Mobile Operator provides the Company with monthly statements that represent the principal evidence that service has been delivered and triggers revenue recognition for a substantial portion of the Company's revenues. In certain instances, when a statement is not received within a reasonable period of time, the Company makes an estimate of the revenues and cost of revenues for the period covered by the statement based on internally generated information, historical experience, verbal communication with Mobile Operator, and/or other assumptions that are believed to be reasonable under the circumstances. The Mobile Operator remits to the Company only amounts net of the following items: (1) allowance that Mobile Operator has made for the doubtful debts in respect of the amounts due to the Company from its customers, (2) the Mobile Operator's fees for the services provided to the Company, including billing and collection services, and (3) the Mobile Operator's transmission charges. China Unicom and China Telecom do not provide an itemized analysis of their remittances and the Company is therefore unable to determine what allowance, if any, for doubtful or bad debts should be recorded with respect to services delivered through them. China Mobile occasionally specifies the allowance it makes for doubtful debts. As a result, the Company's revenue recognition is based upon the amounts reported on the Mobile Operator's monthly statements, which are net of doubtful debts and represent the amounts the Company reasonably believes will be collected. The Company records the following fees paid to the Mobile Operator as cost of revenues: • Service fees paid to the Mobile Operator which are charged to the Company as a percentage, ranging from 15 70 • Fixed transmission fees that are charged on a basis of each transmission (regardless whether the customers can be billed or pay the Mobile Operator) In addition, cost of revenues includes amounts paid to content providers and certain payments to handset manufacturers with whom the Company has cooperation agreements. |
Sales taxes | Sales taxes The Company reports revenues net of sales taxes. Sales taxes recorded were $ 5,786,615 333,622 |
Value-added taxes | Value-added taxes On January 1, 2012, the PRC Ministry of Finance and the State Administration of Taxation officially launched a pilot value-added taxes ("VAT") reform program ("Pilot Program"), applicable to businesses in selected industries. Businesses in the Pilot Program would pay VAT instead of sales tax. Starting from August 1, 2013, the Pilot Program was expanded to cover all regions in the PRC. Starting from June 1, 2014, the telecommunications service industry as a whole was included in the Pilot Program. The applicable VAT rates are 6 3 The VAT are excluded from the Company's revenues. |
Allowance for credit losses | Allowance for credit losses The allowance for credit losses related to accounts receivable is maintained at a level considered by management to be adequate to absorb an estimate of probable future losses existing at the balance sheet date. In estimating probable losses, the Company reviews accounts that are past due or in bankruptcy and accounts that may have higher credit risk using information available about the customers. The Company arrives at an estimated loss for specific doubtful accounts. This process is based on estimates, and ultimate losses may differ from those estimates. Receivable balance is written off when the Company determines that the balance is uncollectible. Subsequent recoveries, if any, are credited to the allowance when received. The Company considers an accounts receivable balance past due when payment has not been received within the stated terms. The charges related to allowance for credit losses for the years ended December 31, 2013, 2014 and 2015 342,442 316,966 684,929 Movement of allowance for credit losses is as follows: Balance at Charged to Balance at beginning of the year expense Written-off end of the year 2013 $ 5,626 $ 342,442 $ ( 5,626 ) $ 342,442 2014 $ 342,442 $ 316,966 $ ( 342,442 ) $ 316,966 2015 $ 316,966 $ 684,929 $ (316,966 ) $ 684,929 The allowance for credit losses arising from end users in WVAS and mobile games services has been net off with account receivables in the monthly statements provided by the Mobile Operator. The Company has not experienced any significant credit losses related to the net receivables in monthly statements provided by Mobile Operator. |
Operating leases | Operating leases Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of comprehensive income (loss) on a straight-line basis over the lease period. |
Government subsidies | Government subsidies The Company receives subsidies from the local government authorities as incentives for local area development and technology development. The Company records the government subsidies that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs, as income in certain periods. The Company recognized total government subsidies of $ 2,176,449 1,138,909 1,573,577 |
Foreign currency translation | Foreign currency translation The functional and reporting currency of KongZhong is US dollar. The functional currency of the Company's subsidiaries and VIEs in the PRC is Renminbi ("RMB"). Assets and liabilities are translated from each entity's functional currency to the reporting currency at the exchange rate on the balance sheet date. Equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income. Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical exchange rates. Transactions in currencies other than the applicable functional currencies during the year are converted into the functional currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the consolidated statements of comprehensive income (loss). |
Product development expenses | Product development expenses Product development expenses which consist primarily of the compensation and related costs for employees associated with the development and programming of mobile data content and internet games content are expensed as incurred. |
Income taxes | Income taxes Current income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the financial statements. Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. The impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes. |
Comprehensive income (loss) | Comprehensive income (loss) Comprehensive income (loss) includes net income (loss), unrealized gain on available-for-sale securities and foreign currency translation adjustments. Comprehensive income is reported in the statements of comprehensive income. |
Advertising costs | Advertising costs The Company expenses advertising costs as incurred. Total advertising expenses were $ 8,412,925 5,726,530 4,889,444 |
Share-based compensation | Share-based compensation Share-based compensation with employees is measured based on the grant date fair value of the equity instrument. The Company recognizes the compensation costs net of a forfeiture rate on a straight-line basis over the requisite service period of the award, with the amount of compensation expenses recognized in any period not less than the portion of the grant date fair value of the options vested during that period, which is generally the vesting period of the award. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change. |
Net income (loss) per share | Net income (loss) per share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the year. Diluted net income (loss) per ordinary share reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares. The dilutive effect of the stock options, nonvested shares and warrants is computed using treasury stock method. |
Warrants | Warrants Warrants which give the holder the right to exercise the warrant for a share instrument which is not redeemable by the Company are classified as a financial instrument in the consolidated balance sheets. Warrants are measured at fair value at the date of issuance and are not remeasured at subsequent reporting dates. |
Recently issued accounting standards adopted | Recently issued accounting standards adopted In April 2014, the Financial Accounting Standards Board ("FASB") issued a new pronouncement which amends the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in US GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization's operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. This disclosure will provide information about the ongoing trends in a reporting organization's results from continuing operations. The amendments in the Accounting Standard Update ("ASU") were effective in the first quarter of 2015 for public organizations with calendar year ends. The adoption of this guidance did not have a significant effect on the Company's consolidated financial statements. |
Recent accounting pronouncements not yet adopted | Recent accounting pronouncements not yet adopted In August 2015, the FASB issued a new pronouncement, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in this ASU defer the effective date of ASU 2014-09 by one year. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance for all entities. Public business entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact on its consolidated financial statements of adopting this guidance. In September, 2015, the FASB issued a new pronouncement, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments eliminate the requirement to retrospectively account for those adjustments. In November, 2015, the FASB issued a new pronouncement which changes how deferred taxes are classified on organizations' balance sheets. In January, 2016, the FASB issued a new pronouncement which is intended to improve the recognition and measurement of financial instruments. The ASU affects public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The new guidance makes targeted improvements to existing US GAAP by: • Requiring equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; • Requiring public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; • Requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; • Eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; • Eliminating the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and • Requiring a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance permits early adoption of the own credit provision. The Company does not expect the adoption of this guidance will have a significant effect on its consolidated financial statements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) . The guidance supersedes existing guidance on accounting for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. For operating leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the guidance is permitted. In transition, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact on its consolidated financial statements of adopting this guidance. |
ORGANIZATION AND PRINCIPAL AC39
ORGANIZATION AND PRINCIPAL ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES [Abstract] | |
Details of The Company's Subsidiaries and Variable Interest Entities | Incorporation or Shareholder/ Legal Name acquisition date/place nominee owner ownership Principal activities % Subsidiaries: KongZhong Information Technologies (Beijing) Co., Ltd July 2002 People's Republic of China KongZhong 100 Providing consulting and technology KongZhong China Co., Ltd. ("KongZhong China") June 2005 the PRC KongZhong 100 Providing consulting and technology Success Blueprint Limited ("Success Blueprint") October 2009 British Virgin Islands KongZhong 100 Providing novel license to overseas Dacheng Holdings Limited ("Dacheng Holdings") January 2010 Cayman Islands KongZhong 100 Providing internet games services Dacheng Investment (Hong Kong) Limited ("Dacheng Hong January 2010 Hong Kong KongZhong 100 Providing internet games services Noumena Innovation (BVI) Ltd. ("Noumena") March 2012 British Virgin Islands KongZhong 100 Providing smart mobile games services Noumena Productions limited March 2012 Hong Kong Noumena 100 Providing smart mobile games services KongZhong (Singapore) Pte. Ltd. November 2014 Singapore KongZhong China 100 Providing mobile games and internet VIEs: Beijing AirInbox Information Technologies Co., Ltd. ("Beijing April 2002 the Linguang Wu 45 Providing wireless AirInbox ") SonglinYang 42 value-added services Guijun Wang 10 to mobile phone users Zhen Huang 3 Beijing Wireless Interactive Network Technologies Co., Ltd. February 2005 the Yang Yang 40 Providing wireless ("Beijing ") Jingye Sun 30 value-added services Li Ai 30 to mobile phone users Beijing Chengxitong Information Technology Co., Ltd ("Beijing November 2005 the Yang Li 90 Providing wireless Chengxitong ") Xuelei Wu 10 value-added services to mobile phone users Incorporation or Shareholder/ Legal Name acquisition date/place nominee owner ownership Principal activities % Beijing Xinrui Network Technology Co., Ltd. ("Beijing Xinrui ") January 2006 the Guijun Wang 51 Providing wireless Yang Li 49 value-added services to mobile phone users Shanghai Mailifang Communication Co., Ltd. ("Shanghai March 2009 the Xu Guo 90 Mobile games developing services Mailifang ") Yang Yang 10 Xiamen Xinreli Technology Co., Ltd. (" ") June 2009 the Tao Jia 80 Providing wireless Junhong Chen 20 value-added services to mobile phone users Shanghai Dacheng Network Technology Co., Ltd. ("Shanghai January 2010 the Leilei Wang 59 Providing internet games services Dacheng ") Zhen Yang 41 Subsidiaries of VIE: Beijing Boya Wuji Technologies Co., Ltd. March 2004 the Beijing AirInbox 100 Providing internet games services Tianjin Mammoth Technologies Co., Ltd. ("Tianjin Mammoth") May 2005 the Beijing AirInbox 95 Mobile games developing services Beijing WINT 5 Beijing Shiyuan Leya Culture Communication Co., Ltd. July 2008 the Beijing Xinrui 100 Providing wireless value-added services to mobile phone users Nanjing Net Book Culture Co., Ltd. October 2009 the Beijing Chengxitong 100 Providing internet novel services Beijing Yin'ao Fulai Culture Development Co., Ltd., May 2012 the Beijing Xinrui 100 Providing wireless value-added services to mobile phone users Beijing Shangshu Boer Culture Communication Co., Ltd., July 2012 the Beijing Xinrui 100 Providing wireless value-added services to mobile phone users Shanghai KongZhong Brilliant Game Co., Ltd. ("KongZhong July 2012 the Shanghai Dacheng 100 Providing internet games services Brilliant") KongZhongWang JP Co., Ltd. June 2014 Japan Shanghai 100 Providing mobile games services Dacheng (Singapore) Pte. Ltd. November 2014 Singapore Shanghai Dacheng 100 Providing mobile games and games services Shanghai Star E-Sport Network Technology Co., Ltd ("Star E- December 2015 the PRC Shanghai Dacheng 100 Providing mobile games and Sports") games services |
Subsidiaries And VIEs, Contractual Arrangements | Name of Foreign Owned Subsidiaries Name of VIE Companies KongZhong Beijing Beijing AirInbox KongZhong Beijing Beijing WINT KongZhong Beijing Beijing Chengxitong KongZhong Beijing Shanghai Mailifang KongZhong Beijing Xiamen Simlife KongZhong China Beijing Xinrui KongZhong China Shanghai Dacheng |
Financial Information of the Company's VIE and VIEs Subsidiaries | As of December 31, 2014 2015 Total current assets $ 134,777,487 $ 128,036,594 Total assets $ 211,055,266 $ 152,077,211 Total current liabilities $ 50,862,163 $ 51,092,767 Total liabilities $ 60,722,163 $ 51,092,767 For the years ended December 31, 2013 2014 2015 Revenues $ 168,999,541 $ 217,859,413 $ 174 ,098,045 Net income (loss) $ 16,439,680 $ 22,996,737 $ (14,850,655) For the years ended December 31, 2013 2014 2015 Net cash provided by operating activities $ 28,830,017 $ 26,682,007 $ 35,146,076 Net cash (used in) provided by investing activities $ ( 38,188,141 ) $ 28,503,343 $ (18,783,750) Net cash (used in) financing activities $ ( 6,588,420 ) $ ( 21,201,273 ) $ (10,396,162 ) |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Property, Plant and Equipment, Estimated Useful Lives | Computer and transmission equipment 3 Furniture and office equipment 3 Motor vehicles 3 Leasehold improvements Over the shorter of the lease term or useful lives Communication equipment 1 Office building 20 |
Allowance for Credit Losses | Balance at Charged to Balance at beginning of the year expense Written-off end of the year 2013 $ 5,626 $ 342,442 $ ( 5,626 ) $ 342,442 2014 $ 342,442 $ 316,966 $ ( 342,442 ) $ 316,966 2015 $ 316,966 $ 684,929 $ (316,966 ) $ 684,929 |
AVAILABLE-FOR-SALE SECURITIES (
AVAILABLE-FOR-SALE SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
AVAILABLE-FOR-SALE SECURITIES [Abstract] | |
Schedule of carrying amount and fair value of the available-for-sale securities | As of December 31, 2014 Original cost Gross unrealized gains Gross unrealized losses Provision for decline in value Carrying amount and fair value Short-term investment: Ourgame International Holdings Limited ("Ourgame") (a) $ 16,380,050 $ 3,633,437 - - $ 20,013,487 As of December 31, 2015 Original cost Gross unrealized gains Gross unrealized losses Provision for decline in value Carrying amount and fair value Short-term investment: Ourgame (a) $ 17,281,947 $ 27,186,579 - - $ 44,468,526 Forgame Holdings Limited ("Forgame") (b) $ 22,825,900 - $ (2,538,912 ) - $ 20,286,988 Long-term investment: Debt securities (c) $ 2,401,378 $ 367,816 - - $ 2,769,194 |
PREPAID EXPENSES AND OTHER CU42
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | As of December 31, 2014 2015 Prepayment to service providers $ 9,561,090 $ 6,821,978 Employee advances 332,923 224,116 Other deposits 1,134,027 1,344,705 Interest receivables 5,063,320 8,425,322 VAT recoverable 2,174,745 3,881,988 Other current assets 803,799 4,197,446 $ 19,069,904 $ 24,895,555 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
PROPERTY AND EQUIPMENT, NET [Abstract] | |
Property, Plant And Equipment | As of December 31, 2014 2015 Computer and transmission equipment $ 17,305,410 $ 12,110,198 Furniture and office equipment 1,288,057 968,474 Motor vehicles 860,109 807,339 Leasehold improvements 2,885,943 2,724,033 Communication equipment 541,704 453,001 Office building 703,384 662,807 23,584,607 17,725,852 Less: accumulated depreciation (17,925,416 ) (13,071,978 ) $ 5,659,191 $ 4,653,874 |
LONG-TERM INVESTMENTS (Tables)
LONG-TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
LONG-TERM INVESTMENTS [Abstract] | |
Schedule of long-term investments | As of December 31, 2014 2015 Cost method investments $ - $ - Equity method investments - 2,003,615 Available-for-sale securities (Note 3) - 2,769,194 $ - $ 4,772,809 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
GOODWILL [Abstract] | |
Change in Carrying Amounts | 2014 2015 Internet Mobile Internet Mobile games games WVAS Total games games WVAS Total Gross amount: Beginning balance $ 70,506,823 $ 20,882,730 $ 44,035,400 $ 135,424,953 $ 70,315,547 $ 20,827,251 $ 44,023,083 $ 135,165,881 Exchange differences (191,276 ) (55,479 ) (12,317 ) (259,072 ) (4,056,333 ) (1,176,551 ) (261,181 ) (5,494,065 ) Ending balance 70,315,547 20,827,251 44,023,083 135,165,881 66,259,214 19,650,700 43,761,902 129,671,816 Accumulated impairment loss: Beginning balance (3,279,803 ) - (41,878,521 ) (45,158,324 ) ( 3,270,905 ) - ( 41,875,868 ) ( 45,146,773 ) Exchange differences 8,898 - 2,653 11,551 188,691 - 56,255 244,946 Ending balance (3,270,905 ) - (41,875,868 ) (45,146,773 ) (3,082,214 ) - (41,819,613 ) (44,901,827 ) Goodwill, net $ 67,044,642 $ 20,827,251 $ 2,147,215 $ 90,019,108 $ 63,177,000 $ 19,650,700 $ 1,942,289 $ 84,769,989 |
Schedule of estimated fair values of the reporting units using the income approach valuation methodology | Discount rates Terminal value growth rates 2014 2015 2014 2015 Reporting units: Internet games 27 % 27 % 3 % 3 % Mobile games 26 % 26 % 3 % 3 % WVAS 26 % 26 % 1 % 1 % |
ACQUIRED INTANGIBLE ASSETS, N46
ACQUIRED INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ACQUIRED INTANGIBLE ASSETS, NET [Abstract] | |
Schedule of Intangible Assets, Net | As of December 31, 2014 As of December 31, 2015 Gross Net Gross Net carrying Accumulated Exchange Accumulated carrying carrying Accumulated Exchange Accumulated carrying Amortization amount amortization difference impairment amount amount amortization difference impairment amount period Intangible assets not subject to amortization Trademarks with indefinite life $ 282,182 $ - $ 8,388 $ - $ 290,570 $ 282,182 $ - $ (8,374) $ - $ 273,808 N/A Intangible assets subject to amortization Agreements with Mobile Operator 3,113,746 (3,113,746 ) - - - 3,113,746 (3,113,746 ) - - - 3 Operating platforms 243,974 (243,974 ) - - - 243,974 (243,974\ ) - - - 5 Service licenses 57,071 (57,071 ) - - - 57,071 (57,071 ) - - - 3 Contracts with content providers 120,999 (120,999 ) - - - 120,999 (120,999 ) - - - 1 Non-compete agreement 388,516 (388,516 ) - - - 388,516 (388,516 ) - - - 2 Self-developed contents 379,089 (379,089 ) - - - 379,089 (379,089 ) - - - 2 Product technologies 4,966,102 (4,966,102 ) - - - 4,966,102 (4,966,102 ) - - - 3 Contracts with service providers 5,713 (5,713 ) - - - 5,713 (5,713 ) - - - 1 Subscriber list 16,710 (16,710 ) - - - 16,710 (16,710 ) - - - 1 Trademarks 36,874 (36,874 ) - - - 36,874 (36,874 ) - - - 1 Core technologies 8,281,231 (6,947,441 ) 243,038 - 1,576,828 8,281,231 (7,242,002 ) (248,707) - 790,522 5 Software 115,150 (65,464 ) 3,875 - 53,561 172,549 (92,222 ) (6,351) - 73,976 5 Game licenses 80,381,424 (22,127,367 ) 1,239,249 (6,540,004 ) 52,953,302 80,381,424 (29,003,257 ) (745,446) (39,725,967 ) 10,906,754 3 Employment contract 380,898 (380,898 ) - - - 380,898 (380,898 ) - - - 3 Copyright 813,074 (181,584 ) 4,053 - 635,543 813,074 (299,440 ) (43,085) - 470,549 6 Total $ 99,582,753 $ (39,031,548 ) $ 1,498,603 $ (6,540,004 ) $ 55,509,804 $ 99,640,152 $ (46,346,613 ) $ (1,051,963) $ (39,725,967 ) $ 12,515,609 |
ACCOUNTS PAYABLE (Tables)
ACCOUNTS PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ACCOUNTS PAYABLE [Abstract] | |
Accounts Payable | As of December 31, 2014 2015 Game license fees payable $ 13,246,572 $ 11,730,997 Fees payable to content and channel providers 5,075,274 1,810,868 Royalty fees payable 11,622,820 13,580,816 Fees payable to mobile operators 968,382 405,702 Others 686,269 546,280 $ 31,599,317 $ 28,074,663 |
ACCRUED EXPENSES AND OTHER CU48
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract] | |
Accrued Expenses and Other Current Liabilities | As of December 31, 2014 2015 Accrued welfare benefits $ 196,455 $ 344,371 Accrued payroll and bonus 5,719,423 5,298,312 Advance from customers 793,565 1,628,693 Accrued professional service fees 3,663,273 3,662,042 Accrued marketing expense 5,545,844 4,724,276 Other tax payables - 237,568 Others 661,791 128,981 $ 16,580,351 $ 16,024,243 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
INCOME TAXES [Abstract] | |
Components of Deferred Tax Assets and Liabilities | As of December 31, 2014 2015 Current deferred tax assets Accrued expenses $ 616,812 $ 301,218 Less: valuation allowance (616,812 ) (301,218 ) Current deferred tax assets, net $ - $ - Non-current deferred tax assets Net operating loss carry forwards 2,100,763 4,083,163 Depreciation and amortization - 133,548 Impairment on intangible assets - 4,401,242 Less: valuation allowance (2,100,763 ) (8,617,953 ) Non-current deferred tax assets, net $ - $ - |
Income Taxes Expense | For the years ended December 31, 2013 2014 2015 Current $ 722,971 $ 1,047,999 $ 796,866 Deferred (10,569 ) - - Total $ 712,402 $ 1,047,999 $ 796,866 |
Effective Tax Rate | For the years ended December 31, 2013 2014 2015 % % % Applicable rate for reconciliation purpose (note) 25 25 (25 ) Effect of tax holiday granted to PRC entities (6.5 ) (7.4 ) (0.6 ) Effect on tax rates in different tax jurisdiction (2.3 ) (7.1 ) (6.6 ) Tax effect of expenses that are not deductible in determining taxable profit (note) 1.1 1.0 2.2 Tax effect of allowable special deduction in determining taxable profit (note) (14.9 ) (16.8 ) (17.3 ) Change in valuation allowance 0.9 9.7 41.9 Effective tax rate for the year 3.3 4.4 (5.4 ) Note: The domestic tax rate in the jurisdiction where the operation of the Company is substantially based is used. Expenses that are not deductible included accrued salary and accrued bonus which exceeded the upper limit of deduction under the EIT Law. Special deduction is an extra 50% deduction allowable under the EIT Law in respect of qualifying product development expense incurred. |
Tax Holidays | For the years ended December 31, 2013 2014 2015 Increase in income tax expense $ 1,399,105 $ 1,758,665 $ 89,074 Impact on net income per ordinary share-basic $ 0.00 $ 0.00 $ 0.00 Impact on net income per ordinary share-diluted $ 0.00 $ 0.00 $ 0.00 |
EMPLOYEE EQUITY INCENTIVE PLAN
EMPLOYEE EQUITY INCENTIVE PLAN (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
EMPLOYEE EQUITY INCENTIVE PLAN [Abstract] | |
Stock Option Activities | Outstanding options Weighted Weighted average Number of average grant-date options exercise price fair value Options outstanding at January 1, 2013 43,054,457 $ 0.10 $ 0.08 Granted 13,320,000 $ 0.21 $ 0.06 Forfeited (1,515,040 ) $ 0.12 $ 0.08 Exercised (8,602,960 ) $ 0.10 $ 0.06 Options outstanding at December 31, 2013 46,256,457 $ 0.10 $ 0.12 Granted 9,520,000 $ 0.22 $ 0.06 Forfeited (8,832,517 ) $ 0.22 $ 0.06 Exercised (4,052,480 ) $ 0.11 $ 0.09 Options outstanding at December 31, 2014 42,891,460 $ 0.14 $ 0.12 Forfeited (1,327,000 ) $ 0.16 $ 0.05 Exercised (8,915,040 ) $ 0.11 $ 0.08 Options outstanding at December 31, 2015 32,649,420 $ 0.14 $ 0.13 |
Fair Value Assumptions | Option grants 2013 2014 2015 Weighted average risk-free interest rate 0.60 % 0.81 % N/A Weighted average expected option life 2.75 2.75 N/A Weighted average volatility rate 54.36 % 52.94 % N/A Weighted average dividend yield - - N/A |
Weighted Average Fair Value of Options Granted | For the years ended December 31, 2013 2014 2015 Stock options $ 0.26 $ 0.22 N/A |
Stock Options Outstanding | Options outstanding Options exercisable Weighted Weighted Weighted Weighted average average Aggregate average average Aggregate Number exercise remaining intrinsic Number exercise remaining intrinsic outstanding price contractual life value exercisable price contractual life value Average exercise price $ 0.07 4,064,337 476,544 4,064,337 476,544 $ 0.09 1,600,000 160,400 1,600,000 160,400 $ 0.10 6,925,040 640,566 6,925,040 640,566 $ 0.12 2,000,000 136,000 2,000,000 136,000 $ 0.13 2,772,520 172,364 2,772,520 172,364 $ 0.14 400,000 18,500 100,000 4,625 $ 0.15 2,112,523 77,635 2,112,523 77,635 $ 0.19 7,655,000 - 3,315,000 - $ 0.22 5,120,000 - 1,895,000 - Total 32,649,420 $ 0.14 5.94 1,682,009 24,784,420 $ 0.12 5.25 1,668,134 |
Nonvested Share Activities | Number of Weight average nonvested grant-date shares outstanding fair value Nonvested shares outstanding at January 1, 2013 22,555,000 $ 0.13 Vested (12,885,000 ) $ 0.15 Nonvested shares outstanding at December 31, 2013 9,670,000 $ 0.11 Granted 3,680,000 $ 0.22 Forfeited (825,000 ) $ 0.11 Vested (5,525,000 ) $ 0.12 Nonvested shares outstanding at December 31, 2014 7,000,000 $ 0.16 Granted 2,640,000 $ 0.14 Vested (5,120,000 ) $ 0.13 Nonvested shares outstanding at December 31, 2015 4,520,000 $ 0.18 |
Schedule of weighted average per share fair value of nonvested shares granted | For the years ended December 31, 2013 2014 2015 Nonvested shares N/A $ 0.22 $ 0.14 |
Nonvested Shares Outstanding | Nonvested share outstanding Aggregate Number intrinsic outstanding value Grant date May 21, 2014 2,240,000 420,000 January 5, 2015 2,280,000 427,500 Total 4,520,000 847,500 |
Schedule of Unrecognized Compensation Cost | Year 2016 489,493 2017 459,433 2018 118,540 Total 1,067,466 |
WARRANTS (Tables)
WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
WARRANTS [Abstract] | |
Warrants Issued | No. of underlying Price per Fair value Exercisable Total Issue date shares share per warrant period fair value Tranch 1 May 11, 2012 120,000,000 $ 0.1485 $ 0.0372 One year from $ 4,470,000 Tranch 2 May 11, 2012 40,000,000 0.1485 0.0681 Three years from 2,723,000 Tranch 3 May 11, 2012 40,000,000 0.1485 0.0837 Three years from 3,346,000 Tranch 4 August 2, 2012 40,000,000 0.1985 0.0537 One year from 2,148,000 Tranch 5 August 28, 2012 40,000,000 $ 0.1750 $ 0.0550 One year from 2,202,000 Total 280,000,000 $ 14,889,000 |
Fair Value of Warrants, Assumptions Used | Tranch 1 Tranch 2 Tranch 3 Tranch 4 Tranch 5 Risk-fee rate of return 0.952 % 1.674 % 1.916 % 1.185 % 1.186 % Expected remaining contractual lives of the warrants 1 4 5 1.8 2.1 Volatility 63.2 % 58.5 % 66.6 % 56.6 % 54.5 % Expected dividend yield - - - - - |
Schedule of Warrant Activities | Number of underlying shares Underlying shares outstanding at January 1, 2013 360,000,000 Exercised (200,000,000 ) Underlying shares outstanding at December 31, 2013 160,000,000 Exercised (40,000,000 ) Forfeited (40,000,000 ) Underlying shares outstanding at December 31, 2014 80,000,000 Expired (40,000,000 ) Underlying shares outstanding at December 31, 2015 40,000,000 |
SEGMENT AND GEOGRAPHIC INFORM52
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |
Segment Reporting | For the years ended December 31, 2013 2014 2015 Revenues Internet games $ 93,792,294 $ 118,099,837 $ 105,045,280 Mobile games 16,908,282 45,036,427 24,646,661 WVAS 62,953,219 64,459,705 49,421,487 173,653,795 227,595,969 179,113,428 Cost of revenues Internet games (45,283,888 ) (61,443,104 ) (52,368,813 ) Mobile games (7,780,237 ) (22,977,318 ) (14,776,616 ) WVAS (43,085,208 ) (44,858,641 ) (37,007,224 ) Impairment loss on intangible assets included in Internet games segment (Note) (250,553) - (35,209,933 ) (96,399,886 ) (129,279,063 ) (139,362,586 ) Gross profit Internet games 48,508,406 56,656,733 52,676,467 Mobile games 9,128,045 22,059,109 9,870,045 WVAS 19,868,011 19,601,064 12,414,263 Impairment loss on intangible assets included in Internet games segment (Note) (250,553) - (35,209,933 ) 77,253,909 98,316,906 39,750,842 Operating expenses Product development (26,401,720 ) (25,107,372 ) (24,189,619 ) Selling and marketing (26,674,024 ) (42,522,684 ) (25,890,472 ) General and administrative (8,976,176 ) (12,564,600 ) (13,484,211 ) Impairment loss on intangible assets (1,562,386 ) (1,323,260 ) - Total operating expenses (63,614,306 ) (81,517,916 ) (63,564,302 ) Government subsidies $ 2,176,449 $ 1,138,909 $ 1,573,577 Income (loss) from operations $ 15,816,052 $ 17,937,899 $ (22,239,883 ) Note: The cost of revenues for internet games segment in 2013 and 2015, amounted to $ 45,534,441 87,578,746 48,257,853 17,466,534 |
Schedule of items included in measure of segment profit | For the years ended December 31, 2013 2014 2015 Depreciation and amortization Internet games $ 1,808,259 $ 6,095,769 $ 2,798,822 Mobile games 485,671 4,258,966 1,395,782 WVAS 2,694,077 11,168,363 5,948,890 4,988,007 21,523,098 10,143,494 For the years ended December 31, 2013 2014 2015 Share-based compensation Internet games $ 570,511 $ 438,362 $ 288,463 Mobile games 153,230 306,273 143,857 WVAS 849,988 803,145 613,128 1,573,729 1,547,780 1,045,448 |
Geographic Information | For the years ended December 31, 2013 2014 2015 PRC $ 167,752,785 $ 221,935,017 $ 174,199,110 Asia-pacific 913,465 162,797 7,937 Europe and America 4,987,545 5,498,155 4,906,381 $ 173,653,795 $ 227,595,969 $ 179,113,428 |
Internet Games [Member] | |
Segment Reporting Information [Line Items] | |
Service Lines | For the years ended December 31, 2013 2014 2015 Internet games Online game operation $ 91,308,244 $ 116,756,333 $ 104,671,006 Licensing arrangement 2,484,050 1,343,504 374,274 $ 93,792,294 $ 118,099,837 $ 105,045,280 |
Mobile Games [Member] | |
Segment Reporting Information [Line Items] | |
Service Lines | For the years ended December 31, 2013 2014 2015 Mobile games - Carrier billing channels $ 10,135,756 $ 23,808,707 $ 12,057,097 - Non-carrier billing channels 6,772,526 21,227,720 12,589,564 $ 16,908,282 $ 45,036,427 $ 24,646,661 |
WVAS [Member] | |
Segment Reporting Information [Line Items] | |
Service Lines | For the years ended December 31, 2013 2014 2015 WVAS - SMS $ 31,844,446 $ 31,922,975 $ 21,336,865 - IVR 14,658,612 13,210,504 3,957,328 - MMS 1,096,133 968,026 945,771 - WAP 708,984 364,750 366,180 - CRBT and others 14,645,044 17,993,450 22,815,343 $ 62,953,219 $ 64,459,705 $ 49,421,487 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
FAIR VALUE MEASUREMENTS [Abstract] | |
Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis | As of December 31, 2014 As of December 31, 2015 Fair Value Measurements at the Reporting Date Using Fair Value Measurements at the Reporting Date Using Quoted prices in Significant Quoted prices in Significant active markets other Significant active markets other Significant for identical observable unobservable for identical observable unobservable instruments inputs inputs Total instruments inputs inputs Total (level 1) (level 2) (level 3) balance (level 1) (level 2) (level 3) balance Time deposits $ 40,777,831 $ - $ - $ 40,777,831 $ 31,775,348 $ - $ - $ 31,775,348 Available-for-sale securities 20,013,487 - - 20,013,487 64,755,514 - 2,769,194 67,524,708 Game license payment liabilities - - 19,860,000 19,860,000 - - 10,000,000 10,000,000 |
Schedule of movement of the Company's financial assets and liabilities measured at a recurring basis using significant unobservable inputs | Available-for-sale Game license Balance as of January 1, 2013 $ - $ 43,660,000 Gains or losses for the period Earnings - 600,000 Other comprehensive income - - Settlements - (5,000,000 ) Balance as of December 31, 2013 - 39,260,000 Gains or losses for the period Earnings - 600,000 Other comprehensive income - - Settlements - (20,000,000 ) Balance as of December 31, 2014 $ - $ 19,860,000 Purchases 2,401,378 - Gains or losses for the period Earnings - 140,000 Other comprehensive income 367,816 - Settlements - (10,000,000 ) Balance as of December 31, 2015 $ 2,769,194 $ 10,000,000 |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
NET INCOME (LOSS) PER SHARE [Abstract] | |
Schedule of Basic and Diluted Net Income (Loss) Per Share | For the years ended December 31, 2013 2014 2015 Net income (loss) (numerator), basic and diluted $ 20,661,649 $ 22,587,921 $ (16,226,710 ) Shares (denominator): Weighted average ordinary shares outstanding used in computing basic net income (loss) per share 1,714,924,612 1,828,191,540 1,882,296,976 Effect of dilutive securities: Plus incremental weighted average ordinary shares from assumed conversions of stock options, nonvested shares and warrants using the treasury stock method 36,696,728 47,328,554 - Total weighted average shares used in computing diluted net income (loss) per share 1,751,621,340 1,875,520,094 1,882,296,976 Net income (loss) per share, basic $ 0.01 $ 0.01 $ (0.01 ) Net income (loss) per share, diluted $ 0.01 $ 0.01 $ (0.01 ) |
Antidilutive Securities Excluded from Computation of Earnings Per Share | For the years ended December 31, 2013 2014 2015 Options, nonvested shares and warrants 11,320,000 97,392,523 77,169,420 |
CONCENTRATIONS (Tables)
CONCENTRATIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
CONCENTRATIONS [Abstract] | |
Schedule of Revenue and Accounts Receivable Concentrations | For the years ended December 31, 2013 2014 2015 Percentage of total revenues Revenues collected through operators China Mobile 30 % 27 % 23 % China Unicom 5 % 4 % 3 % China Telecom 6 % 5 % 4 % Mobile games revenues collected through operators China Mobile 6 % 10 % 7 % China Unicom - - - China Telecom - - - WVAS revenues collected through operators China Mobile 24 % 17 % 16 % China Unicom 5 % 4 % 3 % China Telecom 6 % 5 % 4 % Percentage of accounts receivable as of December 31, 2014 2015 China Mobile 58 % 66 % China Unicom 7 % 7 % China Telecom 9 % 9 % |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
Schedule of related party balances and transactions | (a) Loans to related party As of December 31, Note 2014 2015 KongZhong Galaxy (i) $ - $ 32,850,989 (b) Amount due from related party As of December 31, Note 2014 2015 Magic Wing (ii) - 285,003 (C) Amount due to related party As of December 31, Note 2014 2015 Prosten Technology Holdings Limited ("Prosten") (iii) $ 198,051 $ - (d) Transactions with related parties For the years ended December 31, Note 2013 2014 2015 Interest income from loans to KongZhong Galaxy (i) $ - $ - $ 1,078,843 License fee charged by Magic Wing (ii) - - 22,993 Mobile value-added services provided by Prosten (iii) $ 1,010,354 $ 79,188 $ - (i) In 2015, the Company made various loans to KongZhong Galaxy, an equity method investee of the Company to finance KongZhong Galaxy's business operations. The loans were unsecured, interest bearing at 7 and repayable within one The relevant interest receivable amounting to $ 1,078,843 (ii) In 2015, the Company recorded costs of game license fees of $22,993 to Magic Wing, an equity method investee of the Company. As of December 31, 2015, the balance of prepaid license fees was $285,003. (iii) Leilei Wang, the Chief Executive Officer, indirectly owns more than 10 of Prosten. Prosten and its subsidiaries engage in the business of providing solutions to companies that provide mobile and search services In 2013 and 2014, Prosten and its subsidiaries provided the Company mobile value-added services valued at $1.0 million and $0.1 million, respectively. No service was provided by Prosten and its subsidiaries during 2015. The accounts payable to Prosten and its subsidiaries as of December 31, 2014 were 198,051 which was fully settled in 2015. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Schedule of Future Minimum Lease Payments under Non-Cancelable Operating Lease Agreements | Future minimum lease payments under non-cancelable operating leases agreements are as follows: Year ending 2016 $ 3,872,536 2017 1,688,411 2018 913,832 2019 612,526 |
Future Minimum Purchase Obligations Payments Under Non-Cancelable Purchase Agreements | The Company entered into a series of agreements with content providers to develop WVAS, mobile games and internet games. The future minimum purchase obligations payments under non-cancelable purchase agreements are approximately as follows: Year ending 2016 $ 1,557,290 2017 1,044,133 2018 106,926 2019 173 2020 and thereafter - |
CONDENSED FINANCIAL INFORMATI58
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY [Abstract] | |
Schedule of balance sheets | As of December 31, 2014 2015 Current assets Cash and cash equivalents $ 18,154,644 $ 5,616,759 Available-for-sale securities 20,013,487 64,755,514 Prepaid expenses and other current assets 48,162 4,024,878 Loan to third party - 13,300,000 Loans to related party - 1,612,000 Total current assets 38,216,293 89,309,151 Long-term investments 364,913,556 334,485,472 Total assets $ 403,129,849 $ 423,794,623 Liabilities and shareholders' equity Current liabilities Accrued expenses and other current liabilities 71,835 969,263 Advances from subsidiaries 38,698,888 61,101,834 Short-term bank loans 42,428,890 49,962,510 Total liabilities $ 81,199,613 $ 112,033,607 Ordinary shares 942 943 Additional paid-in capital 162,687,212 166,874,541 Warrants 5,548,000 3,346,000 Accumulated other comprehensive income 57,531,228 61,603,388 Retained earnings 96,162,854 79,936,144 Total shareholders' equity 321,930,236 311,761,016 Total liabilities and shareholders' equity $ 403,129,849 $ 423,794,623 |
Schedule of statements of comprehensive income | For the years ended December 31, 2013 2014 2015 Operating expenses Product development (305,385 ) (545,060 ) (578,398 ) Selling and marketing (214,856 ) (16,795 ) (109,956 ) General and administrative (1,173,778 ) (1,223,687 ) (1,238,999 ) Total operating expenses and loss from operation $ (1,694,019 ) $ (1,785,542 ) $ (1,927,353 ) Interest income 129,500 36,346 11,852 Interest income from loans to related party - - 32,534 Interest income from loan to third party - - 540,274 Interest expense (693,280 ) (895,056 ) (883,974 ) Impairment loss on cost method investment (2,000,000 ) (1,999,999 ) - Investment income - - 1,161,132 Gain on sale of available-for-sales securities - - 536,016 Dividend received - - 628,417 Equity in earnings of subsidiaries and variable interest entities 24,919,448 27,232,172 (15,164,476 ) Net income (loss) before income tax expense $ 20,661,649 $ 22,587,921 $ (16,226,710 ) Income tax expense - - - Net income (loss) $ 20,661,649 $ 22,587,921 $ (16,226,710 ) |
Schedule of statements of changes in shareholder's equity | Accumulated other Total Ordinary shares Additional comprehensive Retained shareholders' Shares Amount paid-in capital Warrants income earnings equity Balance as of January 1, 2013 1,678,097,663 $ 832 $ 126,786,049 $ 15,566,332 $ 46,618,263 $ 93,912,592 $ 282,884,068 Issuance of ordinary shares for share-based compensation 35,000,000 18 849,020 - - - 849,038 Share-based compensation recognized - - 1,573,729 - - - 1,573,729 Repurchase of ordinary shares (78,214,600 ) (32 ) (10,123,789 ) - - - (10,123,821 ) Warrants exercised 200,000,000 100 32,967,232 (5,147,332 ) - - 27,820,000 Other comprehensive income - - - - 8,944,839 - 8,944,839 Net income - - - - - 20,661,649 20,661,649 Balance as of December 31, 2013 1,834,883,063 $ 918 $ 152,052,241 $ 10,419,000 $ 55,563,102 $ 114,574,241 $ 332,609,502 Issuance of ordinary shares for share-based compensation 7,190,000 4 436,621 - - - 436,625 Share-based compensation recognized - - 1,547,780 - - - 1,547,780 Repurchase of ordinary shares - - (12,410 ) - - - (12,410 ) Warrants exercised 40,000,000 20 8,662,980 (2,723,000 ) - - 5,940,000 Warrants forfeited - - - (2,148,000 ) - - (2,148,000 ) Other comprehensive income - - - - 1,968,126 - 1,968,126 Dividends to shareholders - - - - - (40,999,308 ) (40,999,308 ) Net income - - - - - 22,587,921 22,587,921 Balance as of December 31, 2014 1,882,073,063 $ 942 $ 162,687,212 $ 5,548,000 $ 57,531,228 $ 96,162,854 $ 321,930,236 Issuance of ordinary shares for share-based compensation 2,060,000 1 939,881 - - - 939,882 Share-based compensation recognized - - 1,045,448 - - - 1,045,448 Warrants expired - - 2,202,000 (2,202,000 ) - - - Other comprehensive income - - - - 4,072,160 - 4,072,160 Net loss - - - - - (16,226,710 ) (16,226,710 ) Balance as of December 31, 2015 1,884,133,063 943 166,874,541 3,346,000 61,603,388 79,936,144 311,761,016 |
Schedule of statements of cash flows | For the years ended December 31, 2013 2014 2015 Operating activities: Net cash used in operating activities $ (1,237,414 ) $ (3,468,054 ) $ (2,675,869 ) Investing activities: Acquisition of equity method investments - - (1,000,000 ) Purchase of available-for-sales securities - (16,380,050 (26,326,715 Proceeds from sale of available-for-sales securities - - 1,500,251 Loans to related party - - (1,612,000 Loans to third parties - - (17,000,000 Loan repayment from third parties - - 3,700,000 Net cash used in investing activities $ - $ (16,380,050 ) $ (40,738,464 ) Financing activities: Repurchase of ordinary shares (10,123,821 ) (12,410 ) - Proceeds from exercise of employee stock options 849,038 436,625 939,882 Proceeds from bank borrowing - 42,428,890 7,533,620 Advances from subsidiaries 2,335,666 5,417,880 23,514,181 Repayment to subsidiaries - (190,490 (1,111,235 ) Proceeds from exercise of warrants 27,820,000 5,940,000 - Dividends paid to shareholders - (40,999,308 - Net cash provided by financing activities $ 20,880,883 $ 13,021,187 $ 30,876,448 Net increase (decrease) in cash and cash equivalents 19,643,469 (6,826,917 ) (12,537,885 ) Cash and cash equivalents, beginning of year 5,338,092 24,981,561 18,154,644 Cash and cash equivalents, end of year $ 24,981,561 $ 18,154,644 $ 5,616,759 |
ORGANIZATION AND PRINCIPAL AC59
ORGANIZATION AND PRINCIPAL ACTIVITIES (Significant Majority-Owned Subsidiaries and VIEs) (Details) | 12 Months Ended |
Dec. 31, 2015 | |
KongZhong Information Technologies (Beijing) Co Ltd (KongZhong Beijing) [Member] | |
Subsidiaries: | |
Incorporation or acquisition date | Jul. 31, 2002 |
Legal ownership | 100.00% |
KongZhong China Co Ltd (KongZhong China) [Member] | |
Subsidiaries: | |
Incorporation or acquisition date | Jun. 30, 2005 |
Legal ownership | 100.00% |
Success Blueprint Limited (Success Blueprint) [Member] | |
Subsidiaries: | |
Incorporation or acquisition date | Oct. 31, 2009 |
Legal ownership | 100.00% |
Dacheng Holdings Limited (Dacheng Holdings) [Member] | |
Subsidiaries: | |
Incorporation or acquisition date | Jan. 31, 2010 |
Legal ownership | 100.00% |
Dacheng Investment (Hong Kong) Limited (Dacheng Hong Kong) [Member] | |
Subsidiaries: | |
Incorporation or acquisition date | Jan. 31, 2010 |
Legal ownership | 100.00% |
Noumena Innovation (BVI) Ltd. (Noumena) [Member] | |
Subsidiaries: | |
Incorporation or acquisition date | Mar. 31, 2012 |
Legal ownership | 100.00% |
Noumena Productions limited [Member] | |
Subsidiaries: | |
Incorporation or acquisition date | Mar. 31, 2012 |
Legal ownership | 100.00% |
KongZhong (Singapore) Pte. Ltd. [Member] | |
Subsidiaries: | |
Incorporation or acquisition date | Nov. 30, 2014 |
Legal ownership | 100.00% |
Beijing AirInbox Information Technologies Co Ltd (Beijing AirInbox) [Member] | |
VIEs: | |
Incorporation or acquisition date | Apr. 30, 2002 |
Beijing AirInbox Information Technologies Co Ltd (Beijing AirInbox) [Member] | Linguang Wu [Member] | |
VIEs: | |
Legal ownership | 45.00% |
Beijing AirInbox Information Technologies Co Ltd (Beijing AirInbox) [Member] | SonglinYang [Member] | |
VIEs: | |
Legal ownership | 42.00% |
Beijing AirInbox Information Technologies Co Ltd (Beijing AirInbox) [Member] | Guijun Wang [Member] | |
VIEs: | |
Legal ownership | 10.00% |
Beijing AirInbox Information Technologies Co Ltd (Beijing AirInbox) [Member] | Zhen Huang [Member] | |
VIEs: | |
Legal ownership | 3.00% |
Beijing Wireless Interactive Network Technologies Co Ltd (Beijing WINT) [Member] | |
VIEs: | |
Incorporation or acquisition date | Feb. 28, 2005 |
Beijing Wireless Interactive Network Technologies Co Ltd (Beijing WINT) [Member] | Yang Yang [Member] | |
VIEs: | |
Legal ownership | 40.00% |
Beijing Wireless Interactive Network Technologies Co Ltd (Beijing WINT) [Member] | Jingye Sun [Member] | |
VIEs: | |
Legal ownership | 30.00% |
Beijing Wireless Interactive Network Technologies Co Ltd (Beijing WINT) [Member] | Li Ai [Member] | |
VIEs: | |
Legal ownership | 30.00% |
Beijing Chengxitong Information Technology Co Ltd (Beijing Chengxitong) [Member] | |
VIEs: | |
Incorporation or acquisition date | Nov. 30, 2005 |
Beijing Chengxitong Information Technology Co Ltd (Beijing Chengxitong) [Member] | Yang Li [Member] | |
VIEs: | |
Legal ownership | 90.00% |
Beijing Chengxitong Information Technology Co Ltd (Beijing Chengxitong) [Member] | Xuelei Wu [Member] | |
VIEs: | |
Legal ownership | 10.00% |
Beijing Xinrui Network Technology Co Ltd (Beijing Xinrui) [Member] | |
VIEs: | |
Incorporation or acquisition date | Jan. 31, 2006 |
Beijing Xinrui Network Technology Co Ltd (Beijing Xinrui) [Member] | Guijun Wang [Member] | |
VIEs: | |
Legal ownership | 51.00% |
Beijing Xinrui Network Technology Co Ltd (Beijing Xinrui) [Member] | Yang Li [Member] | |
VIEs: | |
Legal ownership | 49.00% |
Shanghai Mailifang Communication Co Ltd (Shanghai Mailifang) [Member] | |
VIEs: | |
Incorporation or acquisition date | Mar. 31, 2009 |
Shanghai Mailifang Communication Co Ltd (Shanghai Mailifang) [Member] | Yang Yang [Member] | |
VIEs: | |
Legal ownership | 10.00% |
Shanghai Mailifang Communication Co Ltd (Shanghai Mailifang) [Member] | Xu Guo [Member] | |
VIEs: | |
Legal ownership | 90.00% |
Xiamen Xinreli Technology Co Ltd (Xiamen Simlife) [Member] | |
VIEs: | |
Incorporation or acquisition date | Jun. 30, 2009 |
Xiamen Xinreli Technology Co Ltd (Xiamen Simlife) [Member] | Tao Jia [Member] | |
VIEs: | |
Legal ownership | 80.00% |
Xiamen Xinreli Technology Co Ltd (Xiamen Simlife) [Member] | Junhong Chen [Member] | |
VIEs: | |
Legal ownership | 20.00% |
Shanghai Dacheng Network Technology Co Ltd (Shanghai Dacheng) [Member] | |
VIEs: | |
Incorporation or acquisition date | Jan. 31, 2010 |
Shanghai Dacheng Network Technology Co Ltd (Shanghai Dacheng) [Member] | Leilei Wang [Member] | |
VIEs: | |
Legal ownership | 59.00% |
Shanghai Dacheng Network Technology Co Ltd (Shanghai Dacheng) [Member] | Zhen Yang [Member] | |
VIEs: | |
Legal ownership | 41.00% |
Beijing Boya Wuji Technologies Co Ltd (Beijing Boya Wuji) [Member] | |
VIEs: | |
Incorporation or acquisition date | Mar. 31, 2004 |
Beijing Boya Wuji Technologies Co Ltd (Beijing Boya Wuji) [Member] | Beijing AirInbox [Member] | |
VIEs: | |
Legal ownership | 100.00% |
Tianjin Mammoth Technologies Co Ltd (Tianjin Mammoth) [Member] | |
VIEs: | |
Incorporation or acquisition date | May 31, 2005 |
Tianjin Mammoth Technologies Co Ltd (Tianjin Mammoth) [Member] | Beijing AirInbox [Member] | |
VIEs: | |
Legal ownership | 95.00% |
Tianjin Mammoth Technologies Co Ltd (Tianjin Mammoth) [Member] | Beijing WINT [Member] | |
VIEs: | |
Legal ownership | 5.00% |
Beijing Shiyuan Leya Culture Communication Co Ltd (Beijing Shiyuan Leya) [Member] | |
VIEs: | |
Incorporation or acquisition date | Jul. 31, 2008 |
Beijing Shiyuan Leya Culture Communication Co Ltd (Beijing Shiyuan Leya) [Member] | Beijing Xinrui [Member] | |
VIEs: | |
Legal ownership | 100.00% |
Nanjing Net Book Culture Co Ltd (Nanjing Zhulang) [Member] | |
VIEs: | |
Incorporation or acquisition date | Oct. 31, 2009 |
Nanjing Net Book Culture Co Ltd (Nanjing Zhulang) [Member] | Beijing Chengxitong [Member] | |
VIEs: | |
Legal ownership | 100.00% |
Beijing Yin'ao Fulai Culture Development Co Ltd [Member] | |
VIEs: | |
Incorporation or acquisition date | May 31, 2012 |
Beijing Yin'ao Fulai Culture Development Co Ltd [Member] | Beijing Xinrui [Member] | |
VIEs: | |
Legal ownership | 100.00% |
Beijing Shangshu Boer Culture Communication Co Ltd [Member] | |
VIEs: | |
Incorporation or acquisition date | Jul. 31, 2012 |
Beijing Shangshu Boer Culture Communication Co Ltd [Member] | Beijing Xinrui [Member] | |
VIEs: | |
Legal ownership | 100.00% |
Shanghai KongZhong Brilliant Game Co Ltd [Member] | |
VIEs: | |
Incorporation or acquisition date | Jul. 31, 2012 |
Shanghai KongZhong Brilliant Game Co Ltd [Member] | Shanghai Dacheng [Member] | |
VIEs: | |
Legal ownership | 100.00% |
KongZhongWang JP Co., Ltd. [Member] | |
VIEs: | |
Incorporation or acquisition date | Jun. 30, 2014 |
KongZhongWang JP Co., Ltd. [Member] | Shanghai Dacheng [Member] | |
VIEs: | |
Legal ownership | 100.00% |
Dacheng (Singapore) Pte. Ltd. [Member] | |
VIEs: | |
Incorporation or acquisition date | Nov. 30, 2014 |
Dacheng (Singapore) Pte. Ltd. [Member] | Shanghai Dacheng [Member] | |
VIEs: | |
Legal ownership | 100.00% |
Shanghai Star E-Sport Network Technology Co., Ltd (""Star E-Sports"") [Member] | |
VIEs: | |
Incorporation or acquisition date | Dec. 31, 2015 |
Shanghai Star E-Sport Network Technology Co., Ltd (""Star E-Sports"") [Member] | Shanghai Dacheng [Member] | |
VIEs: | |
Legal ownership | 100.00% |
ORGANIZATION AND PRINCIPAL AC60
ORGANIZATION AND PRINCIPAL ACTIVITIES (Financial Information of the Company's VIEs) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Variable Interest Entity [Line Items] | |||
Total current assets | $ 310,597,113 | $ 269,062,719 | |
Total assets | 418,706,627 | 432,580,703 | |
Total current liabilities | 106,945,611 | 100,790,467 | |
Total liabilities | 106,945,611 | 110,650,467 | |
Net cash provided by operating activities | 31,792,422 | 31,069,303 | $ 35,729,510 |
Net cash (used in) provided by investing activities | (93,944,947) | (32,117,597) | (43,944,598) |
Net cash (used in) financing activities | $ (1,922,660) | $ (16,914,796) | $ 8,956,797 |
Sales [Member] | Variable Interest Entity Concentration Risk [Member] | |||
Variable Interest Entity [Line Items] | |||
Concentration risk, percentage | 97.20% | 95.70% | 97.30% |
Assets, Total [Member] | Variable Interest Entity Concentration Risk [Member] | |||
Variable Interest Entity [Line Items] | |||
Concentration risk, percentage | 36.30% | 48.80% | |
Liabilities, Total [Member] | Variable Interest Entity Concentration Risk [Member] | |||
Variable Interest Entity [Line Items] | |||
Concentration risk, percentage | 47.80% | 54.90% | |
VIEs [Member] | |||
Variable Interest Entity [Line Items] | |||
Total current assets | $ 128,036,594 | $ 134,777,487 | |
Total assets | 152,077,211 | 211,055,266 | |
Total current liabilities | 51,092,767 | 50,862,163 | |
Total liabilities | 51,092,767 | 60,722,163 | |
Revenues | 174,098,045 | 217,859,413 | $ 168,999,541 |
Net income (loss) | (14,850,655) | 22,996,737 | 16,439,680 |
Net cash provided by operating activities | 35,146,076 | 26,682,007 | 28,830,017 |
Net cash (used in) provided by investing activities | (18,783,750) | 28,503,343 | (38,188,141) |
Net cash (used in) financing activities | $ (10,396,162) | $ (21,201,273) | $ (6,588,420) |
SUMMARY OF SIGNIFICANT ACCOUN61
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) | 12 Months Ended | ||
Dec. 31, 2015USD ($)segments | Dec. 31, 2014USD ($)segments | Dec. 31, 2013USD ($) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
Number of reporting units | segments | 3 | 3 | |
Restricted cash related to repayment of bank loans | $ 48,800,000 | $ 42,400,000 | |
Restricted cash related to requirement of game license agreement | $ 9,700,000 | 21,900,000 | |
Allowance for loan losses | |||
Restricted cash recorded as a non-current asset | 10,885,357 | ||
Sales taxes | $ 5,786,615 | ||
Reversal of over provision for sales tax | 333,622 | ||
Impairment loss on intangible assets | $ 35,209,933 | 1,323,260 | 1,812,939 |
Impairment loss on cost method investment | 1,999,999 | 2,000,000 | |
Government subsidies | $ 1,573,577 | 1,138,909 | 2,176,449 |
Advertising expenses | $ 4,889,444 | $ 5,726,530 | $ 8,412,925 |
Minimum [Member] | |||
Service fees paid, percent | 15.00% | ||
Maximum [Member] | |||
Service fees paid, percent | 70.00% |
SUMMARY OF SIGNIFICANT ACCOUN62
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Property, Plant and Equipment Estimated Useful Lives) (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Computer and Transmission Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Furniture and Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Motor Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Communication Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 1 year |
Office Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 20 years |
SUMMARY OF SIGNIFICANT ACCOUN63
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Allowance for Credit Losses) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
Balance at beginning of the year | $ 316,966 | $ 342,442 | $ 5,626 |
Charged to expense | 684,929 | 316,966 | 342,442 |
Written-off | (316,966) | (342,442) | (5,626) |
Balance at end of the year | $ 684,929 | $ 316,966 | $ 342,442 |
AVAILABLE-FOR-SALE SECURITIES64
AVAILABLE-FOR-SALE SECURITIES (Schedule of Carrying Amount and Fair Value of Available-for-Sale Securities) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||
Carrying amount and fair value | $ 2,769,194 | |
Ourgame International Holdings Limited ("Ourgame") [Member] | ||
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||
Original cost | 17,281,947 | $ 16,380,050 |
Gross unrealized gains | $ 27,186,579 | $ 3,633,437 |
Gross unrealized losses | ||
Provision for decline in value | ||
Carrying amount and fair value | $ 44,468,526 | $ 20,013,487 |
Forgame Holdings Limited ("Forgame") [Member] | ||
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||
Original cost | $ 22,825,900 | |
Gross unrealized gains | ||
Gross unrealized losses | $ (2,538,912) | |
Provision for decline in value | ||
Carrying amount and fair value | $ 20,286,988 | |
Debt securities [Member] | ||
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||
Original cost | 2,401,378 | |
Gross unrealized gains | $ 367,816 | |
Gross unrealized losses | ||
Provision for decline in value | ||
Carrying amount and fair value | $ 2,769,194 |
AVAILABLE-FOR-SALE SECURITIES65
AVAILABLE-FOR-SALE SECURITIES (Narrative) (Details) HKD in Thousands, ¥ in Millions | 1 Months Ended | 12 Months Ended | ||||||||
May. 31, 2015USD ($) | Apr. 30, 2015USD ($)shares | Feb. 28, 2015USD ($)shares | Feb. 28, 2014USD ($) | Feb. 28, 2014CNY (Â¥) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Jan. 31, 2015USD ($)shares | Jan. 31, 2015HKDshares | |
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||||||||||
Realized gain from partial disposal of shares | $ 536,016 | |||||||||
Cash dividend received | 628,417 | |||||||||
Impairment to available-for-sale securities | $ 0 | $ 0 | ||||||||
Minimum [Member] | ||||||||||
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||||||||||
Contractual maturities of the available-for-sales debt securities | 2 years | |||||||||
Maximum [Member] | ||||||||||
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||||||||||
Contractual maturities of the available-for-sales debt securities | 5 years | |||||||||
Ourgame [Member] | ||||||||||
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||||||||||
Payments to acquire available-for-sale securities | $ 16,300,000 | ¥ 100 | ||||||||
Realized gain from partial disposal of shares | $ 48,872 | |||||||||
Cash dividend received | 628,417 | |||||||||
Forgame [Member] | ||||||||||
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||||||||||
Realized gain from partial disposal of shares | $ 487,144 | |||||||||
Number of shares owned | shares | 8,890,000 | 8,890,000 | ||||||||
Cost of investment | $ 16,100,000 | HKD 124,510 | ||||||||
Cream Soft Games Co., Ltd. [Member] | ||||||||||
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||||||||||
Payments to acquire available-for-sale securities | $ 800,000 | |||||||||
Convertible redeemable preferred shares acquired | shares | 3,275 | |||||||||
Percentage of voting interest acquired | 20.00% | |||||||||
Blue Mobile Capital Ltd [Member] | ||||||||||
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||||||||||
Payments to acquire available-for-sale securities | $ 800,000 | |||||||||
Convertible redeemable preferred shares acquired | shares | 1,764,706 | |||||||||
Percentage of voting interest acquired | 15.00% | |||||||||
RL [Member] | ||||||||||
AVAILABLE-FOR-SALE SECURITIES [Line Items] | ||||||||||
Payments to acquire available-for-sale securities | $ 800,000 | |||||||||
Percentage of voting interest acquired | 15.00% |
LOANS TO THIRD PARTIES (Details
LOANS TO THIRD PARTIES (Details) | 1 Months Ended | 4 Months Ended | 12 Months Ended | |||
Dec. 31, 2015USD ($) | Aug. 31, 2015USD ($) | Sep. 30, 2015USD ($)Item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loan repayment from third parties | $ 11,595,052 | |||||
Cash used to fund loans to third parties | $ 26,442,729 | |||||
Galassia [Member] | Loan [Member] | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Principal amount of loans to third party | $ 17,000,000 | |||||
Third party loan, interest rate | 10.00% | |||||
Period from the date of the repayment demand notice for loan repayment | 3 months | |||||
Loan repayment from third parties | $ 3,700,000 | |||||
Beijing ShenLanZhiGuang Co., Ltd. [Member] | Loan agreement [Member] | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Number of loan agreements | Item | 2 | |||||
Cash used to fund loans to third parties | $ 1,400,000 |
PREPAID EXPENSES AND OTHER CU67
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS [Abstract] | ||
Prepayment to service providers | $ 6,821,978 | $ 9,561,090 |
Employee advances | 224,116 | 332,923 |
Other deposits | 1,344,705 | 1,134,027 |
Interest receivables | 8,425,322 | 5,063,320 |
VAT recoverable | 3,881,988 | 2,174,745 |
Other current assets | 4,197,446 | 803,799 |
Total prepaid expenses and other current assets | $ 24,895,555 | $ 19,069,904 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | |||
Total | $ 17,725,852 | $ 23,584,607 | |
Less: Accumulated depreciation | (13,071,978) | (17,925,416) | |
Property, Plant and Equipment, Net | 4,653,874 | 5,659,191 | |
Depreciation | 2,828,428 | 2,319,480 | $ 2,202,865 |
Computer and Transmission Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total | 12,110,198 | 17,305,410 | |
Furniture and Office Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total | 968,474 | 1,288,057 | |
Motor Vehicles [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total | 807,339 | 860,109 | |
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total | 2,724,033 | 2,885,943 | |
Communication Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total | 453,001 | 541,704 | |
Office Building [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Total | $ 662,807 | $ 703,384 |
LONG-TERM INVESTMENTS (Schedule
LONG-TERM INVESTMENTS (Schedule of Long-Term Investments) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
LONG-TERM INVESTMENTS [Abstract] | ||
Cost method investments | ||
Equity method investments | $ 2,003,615 | |
Available-for-sale securities (Note 3) | 2,769,194 | |
Long-term investments | $ 4,772,809 |
LONG-TERM INVESTMENTS (Cost Met
LONG-TERM INVESTMENTS (Cost Method Investments) (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Oct. 31, 2012 | Feb. 29, 2012 | |
Cost method investments [Line Items] | |||||
Impairment loss on cost method investment | $ 1,999,999 | $ 2,000,000 | |||
U4iA [Member] | |||||
Cost method investments [Line Items] | |||||
Ownership interest | 2.40% | ||||
Cost of investment | $ 2,000,000 | ||||
Impairment loss on cost method investment | $ 2,000,000 | ||||
Meteor [Member] | |||||
Cost method investments [Line Items] | |||||
Ownership interest | 1.20% | 2.50% | |||
Cost of investment | $ 2,000,000 | ||||
Impairment loss on cost method investment | $ 2,000,000 |
LONG-TERM INVESTMENTS (Equity M
LONG-TERM INVESTMENTS (Equity Method Investments) (Details) | 1 Months Ended | 12 Months Ended | |||
Mar. 31, 2015USD ($) | Jan. 31, 2015USD ($)Item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||||
Number of individuals entered into agreement | Item | 2 | ||||
Cash consideration paid | $ 2,581,340 | ||||
Equity in earnings of subsidiaries and variable interest entities | (642,697) | ||||
Reduction in carrying amount of investment | 2,003,615 | ||||
KongZhong Galaxy [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Cash consideration paid | $ 300,000 | ||||
Ownership interest | 35.00% | ||||
Equity in earnings of subsidiaries and variable interest entities | $ 410,000 | ||||
Carrying amount of investment reduced to zero | 300,000 | ||||
Reduction in carrying amount of investment | 0 | ||||
Remaining carrying amount of investment adjusted to loan | $ 100,000 | ||||
Magic Wing [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Cash consideration paid | $ 1,200,000 | ||||
Ownership interest | 21.05% | ||||
Equity in earnings of subsidiaries and variable interest entities | 230,000 | ||||
F50 [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Cash consideration paid | $ 1,000,000 | ||||
Ownership interest | 12.80% | ||||
Equity in earnings of subsidiaries and variable interest entities | $ 3,000 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill [Line Items] | ||
Gross amount: Beginning balance | $ 135,165,881 | $ 135,424,953 |
Exchange differences | (5,494,065) | (259,072) |
Gross amount: Ending balance | 129,671,816 | 135,165,881 |
Accumulated impairment loss: Beginning balance | (45,146,773) | (45,158,324) |
Exchange differences | 244,946 | 11,551 |
Accumulated impairment loss: Ending balance | (44,901,827) | (45,146,773) |
Goodwill, net | 84,769,989 | 90,019,108 |
Internet Games [Member] | ||
Goodwill [Line Items] | ||
Gross amount: Beginning balance | 70,315,547 | 70,506,823 |
Exchange differences | (4,056,333) | (191,276) |
Gross amount: Ending balance | 66,259,214 | 70,315,547 |
Accumulated impairment loss: Beginning balance | (3,270,905) | (3,279,803) |
Exchange differences | 188,691 | 8,898 |
Accumulated impairment loss: Ending balance | (3,082,214) | (3,270,905) |
Goodwill, net | $ 63,177,000 | $ 67,044,642 |
Internet Games [Member] | Goodwill [Member] | ||
Goodwill [Line Items] | ||
Discounted cash flow rate | 27.00% | 27.00% |
Terminal value growth rate | 3.00% | 3.00% |
Mobile Games [Member] | ||
Goodwill [Line Items] | ||
Gross amount: Beginning balance | $ 20,827,251 | $ 20,882,730 |
Exchange differences | (1,176,551) | (55,479) |
Gross amount: Ending balance | $ 19,650,700 | $ 20,827,251 |
Accumulated impairment loss: Beginning balance | ||
Exchange differences | ||
Accumulated impairment loss: Ending balance | ||
Goodwill, net | $ 19,650,700 | $ 20,827,251 |
Mobile Games [Member] | Goodwill [Member] | ||
Goodwill [Line Items] | ||
Discounted cash flow rate | 26.00% | 26.00% |
Terminal value growth rate | 3.00% | 3.00% |
WVAS [Member] | ||
Goodwill [Line Items] | ||
Gross amount: Beginning balance | $ 44,023,083 | $ 44,035,400 |
Exchange differences | (261,181) | (12,317) |
Gross amount: Ending balance | 43,761,902 | 44,023,083 |
Accumulated impairment loss: Beginning balance | (41,875,868) | (41,878,521) |
Exchange differences | 56,255 | 2,653 |
Accumulated impairment loss: Ending balance | (41,819,613) | (41,875,868) |
Goodwill, net | $ 1,942,289 | $ 2,147,215 |
WVAS [Member] | Goodwill [Member] | ||
Goodwill [Line Items] | ||
Discounted cash flow rate | 26.00% | 26.00% |
Terminal value growth rate | 1.00% | 1.00% |
ACQUIRED INTANGIBLE ASSETS, N73
ACQUIRED INTANGIBLE ASSETS, NET (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Finite-Lived Intangible Assets [Line Items] | |||
Accumulated amortization | $ (46,346,613) | $ (39,031,548) | |
Amortization of acquired intangible assets | $ 7,315,066 | 19,203,618 | $ 2,785,142 |
Impairment loss of intangible assets | $ 1,323,260 | 1,562,386 | |
Cost of revenues, impairment on intangible assets | $ 35,209,933 | $ 250,553 | |
Amortization expenses for 2016 | 5,140,270 | ||
Amortization expenses for 2017 | 3,875,303 | ||
Amortization expenses for 2018 | 3,127,159 | ||
Amortization expenses for 2019 | 96,362 | ||
Amortization expenses for 2020 and thereafter | 2,707 | ||
Total | |||
Goss carrying amount | 99,640,152 | $ 99,582,753 | |
Accumulated amortization | (46,346,613) | (39,031,548) | |
Exchange difference | (1,051,963) | 1,498,603 | |
Impairment | (39,725,967) | (6,540,004) | |
Net carrying amount | $ 12,515,609 | $ 55,509,804 | |
Weighted Average [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization period | 3 years | 3 years | |
Trademarks [Member] | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Gross carrying amount | $ 282,182 | $ 282,182 | |
Exchange difference | $ (8,374) | $ 8,388 | |
Impairment | |||
Net carrying amount | $ 273,808 | $ 290,570 | |
Agreements with Mobile Operator [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 3,113,746 | 3,113,746 | |
Accumulated amortization | $ (3,113,746) | $ (3,113,746) | |
Exchange difference | |||
Impairment | |||
Net carrying amount | |||
Amortization period | 3 years | ||
Total | |||
Accumulated amortization | $ (3,113,746) | $ (3,113,746) | |
Operating Platforms [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 243,974 | 243,974 | |
Accumulated amortization | $ (243,974) | $ (243,974) | |
Exchange difference | |||
Impairment | |||
Net carrying amount | |||
Amortization period | 5 years | ||
Total | |||
Accumulated amortization | $ (243,974) | $ (243,974) | |
Service Licenses [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 57,071 | 57,071 | |
Accumulated amortization | $ (57,071) | $ (57,071) | |
Exchange difference | |||
Impairment | |||
Net carrying amount | |||
Amortization period | 3 years | ||
Total | |||
Accumulated amortization | $ (57,071) | $ (57,071) | |
Contracts with Content Providers [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 120,999 | 120,999 | |
Accumulated amortization | $ (120,999) | $ (120,999) | |
Exchange difference | |||
Impairment | |||
Net carrying amount | |||
Amortization period | 1 year | ||
Total | |||
Accumulated amortization | $ (120,999) | $ (120,999) | |
Non-compete Agreements [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 388,516 | 388,516 | |
Accumulated amortization | $ (388,516) | $ (388,516) | |
Exchange difference | |||
Impairment | |||
Net carrying amount | |||
Amortization period | 2 years | ||
Total | |||
Accumulated amortization | $ (388,516) | $ (388,516) | |
Self-Developed Contents [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 379,089 | 379,089 | |
Accumulated amortization | $ (379,089) | $ (379,089) | |
Exchange difference | |||
Impairment | |||
Net carrying amount | |||
Amortization period | 2 years | ||
Total | |||
Accumulated amortization | $ (379,089) | $ (379,089) | |
Product Technologies [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 4,966,102 | 4,966,102 | |
Accumulated amortization | $ (4,966,102) | $ (4,966,102) | |
Exchange difference | |||
Impairment | |||
Net carrying amount | |||
Amortization period | 3 years | ||
Total | |||
Accumulated amortization | $ (4,966,102) | $ (4,966,102) | |
Contracts with Service Providers [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 5,713 | 5,713 | |
Accumulated amortization | $ (5,713) | $ (5,713) | |
Exchange difference | |||
Impairment | |||
Net carrying amount | |||
Amortization period | 1 year | ||
Total | |||
Accumulated amortization | $ (5,713) | $ (5,713) | |
Subscriber List [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 16,710 | 16,710 | |
Accumulated amortization | $ (16,710) | $ (16,710) | |
Exchange difference | |||
Impairment | |||
Net carrying amount | |||
Amortization period | 1 year | ||
Total | |||
Accumulated amortization | $ (16,710) | $ (16,710) | |
Trademarks [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 36,874 | 36,874 | |
Accumulated amortization | $ (36,874) | $ (36,874) | |
Exchange difference | |||
Impairment | |||
Net carrying amount | |||
Amortization period | 1 year | ||
Total | |||
Accumulated amortization | $ (36,874) | $ (36,874) | |
Core Technologies [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 8,281,231 | 8,281,231 | |
Accumulated amortization | (7,242,002) | (6,947,441) | |
Exchange difference | $ (248,707) | $ 243,038 | |
Impairment | |||
Net carrying amount | $ 790,522 | $ 1,576,828 | |
Amortization period | 5 years | ||
Total | |||
Accumulated amortization | $ (7,242,002) | (6,947,441) | |
Software [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 172,549 | 115,150 | |
Accumulated amortization | (92,222) | (65,464) | |
Exchange difference | $ (6,351) | $ 3,875 | |
Impairment | |||
Net carrying amount | $ 73,976 | $ 53,561 | |
Amortization period | 5 years | ||
Total | |||
Accumulated amortization | $ (92,222) | (65,464) | |
Game Licenses [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 80,381,424 | 80,381,424 | |
Accumulated amortization | (29,003,257) | (22,127,367) | |
Exchange difference | (745,446) | 1,239,249 | |
Impairment | (39,725,967) | (6,540,004) | |
Net carrying amount | $ 10,906,754 | 52,953,302 | |
Amortization period | 3 years | ||
Carrying amounts | $ 35,209,933 | 4,721,260 | |
Write back of an unpaid consideration | 1,250,000 | ||
Forfeiture of the warrant | 2,148,000 | ||
Total | |||
Accumulated amortization | (29,003,257) | (22,127,367) | |
Employment Contract [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 380,898 | 380,898 | |
Accumulated amortization | $ (380,898) | $ (380,898) | |
Exchange difference | |||
Impairment | |||
Net carrying amount | |||
Amortization period | 3 years | ||
Total | |||
Accumulated amortization | $ (380,898) | $ (380,898) | |
Copyrights [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goss carrying amount | 813,074 | 813,074 | |
Accumulated amortization | (299,440) | (181,584) | |
Exchange difference | $ (43,085) | $ 4,053 | |
Impairment | |||
Net carrying amount | $ 470,549 | $ 635,543 | |
Amortization period | 6 years | ||
Total | |||
Accumulated amortization | $ (299,440) | $ (181,584) |
ACCOUNTS PAYABLE (Details)
ACCOUNTS PAYABLE (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
ACCOUNTS PAYABLE [Abstract] | ||
Game license fees payable | $ 11,730,997 | $ 13,246,572 |
Fees payable to content and channel providers | 1,810,868 | 5,075,274 |
Royalty fees payable | 13,580,816 | 11,622,820 |
Fees payable to mobile operators | 405,702 | 968,382 |
Others | 546,280 | 686,269 |
Total | $ 28,074,663 | $ 31,599,317 |
ACCRUED EXPENSES AND OTHER CU75
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract] | ||
Accrued welfare benefits | $ 344,371 | $ 196,455 |
Accrued payroll and bonus | 5,298,312 | 5,719,423 |
Advance from customers | 1,628,693 | 793,565 |
Accrued professional service fees | 3,662,042 | 3,663,273 |
Accrued marketing expense | 4,724,276 | $ 5,545,844 |
Other tax payables | 237,568 | |
Others | 128,981 | $ 661,791 |
Total accrued expenses and other current liabilities | $ 16,024,243 | $ 16,580,351 |
SHORT-TERM BANK LOAN (Details)
SHORT-TERM BANK LOAN (Details) | 1 Months Ended | 12 Months Ended | ||||
Jan. 31, 2015USD ($) | Oct. 31, 2014USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2015CNY (Â¥) | |
Short-term Debt [Line Items] | ||||||
Proceeds from bank borrowing | $ 7,533,620 | $ 42,428,890 | $ 9,000,000 | |||
Notes Payable to Banks One [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Proceeds from bank borrowing | $ 42,428,890 | |||||
Pledged deposits | 41,100,000 | $ 42,400,000 | ¥ 267,000,000 | |||
Notes payable to banks, Two [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Proceeds from bank borrowing | $ 7,533,620 | |||||
Pledged deposits | $ 7,700,000 | ¥ 50,000,000 |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Income tax rate | [1] | (25.00%) | 25.00% | 25.00% |
Tax losses carried forward | $ 24,680,182 | |||
Tax losses carried forward, expiration | Dec. 31, 2020 | |||
Undistributed earnings of the Company's VIEs and its VIEs subsidiaries | $ 233,725,362 | |||
[1] | The domestic tax rate in the jurisdiction where the operation of the Company is substantially based is used. Expenses that are not deductible included accrued salary and accrued bonus which exceeded the upper limit of deduction under the EIT Law. Special deduction is an extra 50% deduction allowable under the EIT Law in respect of qualifying product development expense incurred. |
INCOME TAXES (Components of Def
INCOME TAXES (Components of Deferred Income Tax Assets and Liabilities) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current deferred tax assets | ||
Accrued expenses | $ 301,218 | $ 616,812 |
Less: valuation allowance | $ (301,218) | $ (616,812) |
Current deferred tax assets, net | ||
Non-current deferred tax assets | ||
Net operating loss carry forwards | $ 4,083,163 | $ 2,100,763 |
Depreciation and amortization | 133,548 | |
Impairment on intangible assets | 4,401,242 | |
Less: valuation allowance | $ (8,617,953) | $ (2,100,763) |
Non-current deferred tax assets, net |
INCOME TAXES (Income Taxes Expe
INCOME TAXES (Income Taxes Expense) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
INCOME TAXES [Abstract] | |||
Current | $ 796,866 | $ 1,047,999 | $ 722,971 |
Deferred | (10,569) | ||
Total | $ 796,866 | $ 1,047,999 | $ 712,402 |
INCOME TAXES (Effective Tax Rat
INCOME TAXES (Effective Tax Rate) (Details) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
INCOME TAXES [Abstract] | ||||
Applicable rate for reconciliation purpose | [1] | (25.00%) | 25.00% | 25.00% |
Effect of tax holiday granted to PRC entities | (0.60%) | (7.40%) | (6.50%) | |
Effect on tax rates in different tax jurisdiction | (6.60%) | (7.10%) | (2.30%) | |
Tax effect of expenses that are not deductible in determining taxable profit | [1] | 2.20% | 1.00% | 1.10% |
Tax effect of allowable special deduction in determining taxable profit | [1] | (17.30%) | (16.80%) | (14.90%) |
Change in valuation allowance | 41.90% | 9.70% | 0.90% | |
Effective tax rate for the year | (5.40%) | 4.40% | 3.30% | |
[1] | The domestic tax rate in the jurisdiction where the operation of the Company is substantially based is used. Expenses that are not deductible included accrued salary and accrued bonus which exceeded the upper limit of deduction under the EIT Law. Special deduction is an extra 50% deduction allowable under the EIT Law in respect of qualifying product development expense incurred. |
INCOME TAXES (Tax Holidays) (De
INCOME TAXES (Tax Holidays) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
INCOME TAXES [Abstract] | |||
Increase in income tax expense | $ 89,074 | $ 1,758,665 | $ 1,399,105 |
Impact on net income per ordinary share-basic | $ 0 | $ 0 | $ 0 |
Impact on net income per ordinary share-diluted | $ 0 | $ 0 | $ 0 |
LONG-TERM LIABILITIES (Details)
LONG-TERM LIABILITIES (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
LONG-TERM LIABILITIES [Abstract] | ||
Total cash installment payments | $ 55,000,000 | |
Present value of total cash installment payments | $ 53,460,269 | |
Long-term liabilities | $ 9,860,000 |
SHARE REPURCHASE (Details)
SHARE REPURCHASE (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 26, 2012 | |
Equity, Class of Treasury Stock [Line Items] | ||||
Repurchase of ADSs, amount | $ 10,123,821 | |||
2012 Purchase Plan [Member] | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Number of shares in each American Depositary Shares | 40 | |||
Authorized ADSs to be repurchased, shares | 5,000,000 | |||
Authorized ADSs to be repurchased, amount | $ 20,000,000 | |||
Repurchase of ADSs, in shares | 1,592,558 | 362,807 | ||
Repurchase of ADSs, amount | $ 10,123,821 | $ 2,071,731 |
EMPLOYEE EQUITY INCENTIVE PLA84
EMPLOYEE EQUITY INCENTIVE PLAN (Narrative) (Details) - shares | 1 Months Ended | 12 Months Ended | |||||
Dec. 31, 2008 | Dec. 31, 2015 | Dec. 31, 2005 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2006 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number outstanding | 4,520,000 | 7,000,000 | 9,670,000 | 22,555,000 | |||
Employee Stock Option [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of options outstanding | 32,649,420 | 42,891,460 | 46,256,457 | 43,054,457 | |||
Ordinary shares available for future grant, shares | 6,744,940 | ||||||
Restricted Stock [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Ordinary shares available for future grant, shares | 2,682,500 | ||||||
2002 Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized | 105,000,000 | ||||||
Additional shares authorized | 32,000,000 | ||||||
Expiration period | 10 years | ||||||
2006 Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized | 40,000,000 | ||||||
Additional shares authorized | 140,000,000 | ||||||
Vesting period | 4 years | ||||||
2006 Plan [Member] | Share-based Compensation Award, Tranche One [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting rate | 25.00% | ||||||
2006 Plan [Member] | Share-based Compensation Award, Tranche Two [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting rate | 6.25% | ||||||
2013 Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized | 80,000,000 | ||||||
Shares reserved for issuance | 71,680,000 |
EMPLOYEE EQUITY INCENTIVE PLA85
EMPLOYEE EQUITY INCENTIVE PLAN (Stock Option Activities) (Details) - Employee Stock Option [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Number of options | |||
Options outstanding, beginning balance | 42,891,460 | 46,256,457 | 43,054,457 |
Granted | 9,520,000 | 13,320,000 | |
Forfeited | (1,327,000) | (8,832,517) | (1,515,040) |
Exercised | (8,915,040) | (4,052,480) | (8,602,960) |
Options outstanding, ending balance | 32,649,420 | 42,891,460 | 46,256,457 |
Weighted average exercise price | |||
Options outstanding, ending balance | $ 0.14 | $ 0.10 | $ 0.10 |
Granted | 0.22 | 0.21 | |
Forfeited | 0.16 | 0.22 | 0.12 |
Exercised | 0.11 | 0.11 | 0.10 |
Options outstanding, ending balance | 0.14 | 0.14 | 0.10 |
Weighted average grant-date fair value | |||
Options outstanding, ending balance | 0.12 | 0.12 | 0.08 |
Granted | 0.06 | 0.06 | |
Forfeited | 0.05 | 0.06 | 0.08 |
Exercised | 0.08 | 0.09 | 0.06 |
Options outstanding, ending balance | $ 0.13 | $ 0.12 | $ 0.12 |
EMPLOYEE EQUITY INCENTIVE PLA86
EMPLOYEE EQUITY INCENTIVE PLAN (Fair Value Assumptions) (Details) - Employee Stock Option [Member] | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average risk-free interest rate | 0.81% | 0.60% | |
Weighted average expected option life | 2 years 9 months | 2 years 9 months | |
Weighted average volatility rate | 52.94% | 54.36% | |
Weighted average dividend yield |
EMPLOYEE EQUITY INCENTIVE PLA87
EMPLOYEE EQUITY INCENTIVE PLAN (Weighted Average Fair Value of Options Granted) (Details) - Employee Stock Option [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted | $ 0.22 | $ 0.26 | |
Total intrinsic value of options exercised | $ 731,689 | $ 111,476 | $ 31,708 |
EMPLOYEE EQUITY INCENTIVE PLA88
EMPLOYEE EQUITY INCENTIVE PLAN (Stock Options Outstanding) (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Number outstanding | 32,649,420 | |||
Weighted average exercise price | $ 0.14 | |||
Weighted average remaining contractual life | 5 years 11 months 8 days | |||
Aggregate intrinsic value | $ 1,682,009 | |||
Number exercisable | 24,784,420 | |||
Weighted average exercise price | $ 0.12 | |||
Weighted average remaining contractual life | 5 years 3 months | |||
Aggregate intrinsic value | $ 1,668,134 | |||
Employee Stock Option [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Average exercise price | $ 0.14 | $ 0.14 | $ 0.10 | $ 0.10 |
Options expected to vest | 7,865,000 | |||
Options expected to vest, weighted-average exercise price | $ 0.20 | |||
Options expected to vest, weighted-average remaining contractual term | 8 years 1 month 17 days | |||
Options expected to vest, aggregate intrinsic value | $ 13,875 | |||
$0.07 [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Average exercise price | $ 0.07 | |||
Number outstanding | 4,064,337 | |||
Aggregate intrinsic value | $ 476,544 | |||
Number exercisable | 4,064,337 | |||
Aggregate intrinsic value | $ 476,544 | |||
$0.09 [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Average exercise price | $ 0.09 | |||
Number outstanding | 1,600,000 | |||
Aggregate intrinsic value | $ 160,400 | |||
Number exercisable | 1,600,000 | |||
Aggregate intrinsic value | $ 160,400 | |||
$0.10 [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Average exercise price | $ 0.10 | |||
Number outstanding | 6,925,040 | |||
Aggregate intrinsic value | $ 640,566 | |||
Number exercisable | 6,925,040 | |||
Aggregate intrinsic value | $ 640,566 | |||
$0.12 [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Average exercise price | $ 0.12 | |||
Number outstanding | 2,000,000 | |||
Aggregate intrinsic value | $ 136,000 | |||
Number exercisable | 2,000,000 | |||
Aggregate intrinsic value | $ 136,000 | |||
$0.13 [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Average exercise price | $ 0.13 | |||
Number outstanding | 2,772,520 | |||
Aggregate intrinsic value | $ 172,364 | |||
Number exercisable | 2,772,520 | |||
Aggregate intrinsic value | $ 172,364 | |||
$0.14 [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Average exercise price | $ 0.14 | |||
Number outstanding | 400,000 | |||
Aggregate intrinsic value | $ 18,500 | |||
Number exercisable | 100,000 | |||
Aggregate intrinsic value | $ 4,625 | |||
$0.15 [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Average exercise price | $ 0.15 | |||
Number outstanding | 2,112,523 | |||
Aggregate intrinsic value | $ 77,635 | |||
Number exercisable | 2,112,523 | |||
Aggregate intrinsic value | $ 77,635 | |||
$0.19 [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Average exercise price | $ 0.19 | |||
Number outstanding | 7,655,000 | |||
Aggregate intrinsic value | ||||
Number exercisable | 3,315,000 | |||
Aggregate intrinsic value | ||||
$0.22 [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Average exercise price | $ 0.22 | |||
Number outstanding | 5,120,000 | |||
Aggregate intrinsic value | ||||
Number exercisable | 1,895,000 | |||
Aggregate intrinsic value |
EMPLOYEE EQUITY INCENTIVE PLA89
EMPLOYEE EQUITY INCENTIVE PLAN (Nonvested Share Activities) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Number of nonvested shares outstanding | |||
Nonvested shares outstanding, beginning balance | 7,000,000 | 9,670,000 | 22,555,000 |
Granted | 2,640,000 | 3,680,000 | |
Forfeited | (825,000) | ||
Vested | (5,120,000) | (5,525,000) | (12,885,000) |
Nonvested shares outstanding, ending balance | 4,520,000 | 7,000,000 | 9,670,000 |
Weight average grant-date fair value | |||
Nonvested shares outstanding, beginning balance | $ 0.16 | $ 0.11 | $ 0.13 |
Granted | 0.14 | 0.22 | |
Forfeited | 0.11 | ||
Vested | 0.13 | 0.12 | 0.15 |
Nonvested shares outstanding, ending balance | $ 0.18 | $ 0.16 | $ 0.11 |
Intrinsic value of shares vested | $ 960,000 | $ 747,256 | $ 2,325,743 |
EMPLOYEE EQUITY INCENTIVE PLA90
EMPLOYEE EQUITY INCENTIVE PLAN (Schedule of Weighted Average Per Share Fair Value of Nonvested Shares Granted) (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
EMPLOYEE EQUITY INCENTIVE PLAN [Abstract] | ||
Weighted average per share fair value of nonvested shares granted | $ 0.14 | $ 0.22 |
EMPLOYEE EQUITY INCENTIVE PLA91
EMPLOYEE EQUITY INCENTIVE PLAN (Nonvested Shares Outstanding) (Details) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number outstanding | 4,520,000 | 7,000,000 | 9,670,000 | 22,555,000 |
Aggregate intrinsic value | $ 847,500 | |||
May 21, 2014 [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number outstanding | 2,240,000 | |||
Aggregate intrinsic value | $ 420,000 | |||
Grant Date Eight [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number outstanding | 2,280,000 | |||
Aggregate intrinsic value | $ 427,500 |
EMPLOYEE EQUITY INCENTIVE PLA92
EMPLOYEE EQUITY INCENTIVE PLAN (Stock-Based Compensation Expense) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
EMPLOYEE EQUITY INCENTIVE PLAN [Abstract] | |||
Share-based compensation expense | $ 1,045,448 | $ 1,547,780 | $ 1,573,729 |
2,016 | 489,493 | ||
2,017 | 459,433 | ||
2,018 | 118,540 | ||
Total | $ 1,067,466 | ||
Stock-based compensation, weighted average period | 2 years 2 months 26 days |
WARRANTS (Schedule of Outstandi
WARRANTS (Schedule of Outstanding Warrants) (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Class of Warrant or Right [Line Items] | ||||
No. of underlying shares | 40,000,000 | 80,000,000 | 160,000,000 | 360,000,000 |
Total fair value | $ 3,346,000 | $ 5,548,000 | $ 14,889,000 | |
Warrants exercised (in shares) | 40,000,000 | 200,000,000 | ||
Proceeds from exercise of warrants | $ 5,940,000 | $ 27,820,000 | ||
NGP and Fit Run Limited [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants exercised (in shares) | 80,000,000 | |||
Proceeds from exercise of warrants | $ 10,000,000 | |||
Other Warrant Holders [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants exercised (in shares) | 40,000,000 | 120,000,000 | ||
Proceeds from exercise of warrants | $ 5,940,000 | $ 17,800,000 | ||
Tranch 1 [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
No. of underlying shares | 120,000,000 | |||
Price per share | $ 0.1485 | |||
Fair value per warrant | $ 0.0372 | |||
Total fair value | $ 4,470,000 | |||
Tranch 2 [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
No. of underlying shares | 40,000,000 | |||
Price per share | $ 0.1485 | |||
Fair value per warrant | $ 0.0681 | |||
Total fair value | $ 2,723,000 | |||
Tranch 3 [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
No. of underlying shares | 40,000,000 | |||
Price per share | $ 0.1485 | |||
Fair value per warrant | $ 0.0837 | |||
Total fair value | $ 3,346,000 | |||
Tranch 4 [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
No. of underlying shares | 40,000,000 | |||
Price per share | $ 0.1985 | |||
Fair value per warrant | $ 0.0537 | |||
Total fair value | $ 2,148,000 | |||
Tranch 5 [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
No. of underlying shares | 40,000,000 | |||
Price per share | $ 0.1750 | |||
Fair value per warrant | $ 0.0550 | |||
Total fair value | $ 2,202,000 | |||
Warrants Issued During 2012 [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
No. of underlying shares | 280,000,000 | |||
Total fair value | $ 14,889,000 |
WARRANTS (Assumptions Used) (De
WARRANTS (Assumptions Used) (Details) | 12 Months Ended |
Dec. 31, 2012 | |
Tranch 1 [Member] | |
Class of Warrant or Right [Line Items] | |
Risk-fee rate of return | 0.952% |
Expected remaining contractual lives of the warrants | 1 year |
Volatility | 63.20% |
Expected dividend yield | |
Tranch 2 [Member] | |
Class of Warrant or Right [Line Items] | |
Risk-fee rate of return | 1.674% |
Expected remaining contractual lives of the warrants | 4 years |
Volatility | 58.50% |
Expected dividend yield | |
Tranch 3 [Member] | |
Class of Warrant or Right [Line Items] | |
Risk-fee rate of return | 1.916% |
Expected remaining contractual lives of the warrants | 5 years |
Volatility | 66.60% |
Expected dividend yield | |
Tranch 4 [Member] | |
Class of Warrant or Right [Line Items] | |
Risk-fee rate of return | 1.185% |
Expected remaining contractual lives of the warrants | 1 year 9 months 18 days |
Volatility | 56.60% |
Expected dividend yield | |
Tranch 5 [Member] | |
Class of Warrant or Right [Line Items] | |
Risk-fee rate of return | 1.186% |
Expected remaining contractual lives of the warrants | 2 years 1 month 6 days |
Volatility | 54.50% |
Expected dividend yield |
WARRANTS (Schedule of Warrant A
WARRANTS (Schedule of Warrant Activities) (Details) - shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Class of Warrant or Right [Line Items] | |||
Underlying shares outstanding, beginning balance | 80,000,000 | 160,000,000 | 360,000,000 |
Exercised | (40,000,000) | (200,000,000) | |
Forfeited | (40,000,000) | ||
Expired | (40,000,000) | ||
Underlying shares outstanding, ending balance | 40,000,000 | 80,000,000 | 160,000,000 |
SEGMENT AND GEOGRAPHIC INFORM96
SEGMENT AND GEOGRAPHIC INFORMATION (Segment Reporting) (Details) | 12 Months Ended | ||
Dec. 31, 2015USD ($)segments | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of segments | segments | 3 | ||
Revenues | $ 179,113,428 | $ 227,595,969 | $ 173,653,795 |
Cost of revenues | (139,362,586) | $ (129,279,063) | (96,399,886) |
Impairment loss on intangible assets | (35,209,933) | (250,553) | |
Gross profit | 39,750,842 | $ 98,316,906 | 77,253,909 |
Impairment loss on intangible assets | (35,209,933) | (250,553) | |
Product development | (24,189,619) | $ (25,107,372) | (26,401,720) |
Selling and marketing | (25,890,472) | (42,522,684) | (26,674,024) |
General and administrative | $ (13,484,211) | (12,564,600) | (8,976,176) |
Impairment loss on intangible assets included in Internet games segment | (1,323,260) | (1,562,386) | |
Total operating expenses | $ (63,564,302) | (81,517,916) | (63,614,306) |
Government subsidies | 1,573,577 | 1,138,909 | 2,176,449 |
Income (loss) from operations | (22,239,883) | 17,937,899 | 15,816,052 |
Internet Games [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 105,045,280 | 118,099,837 | 93,792,294 |
Cost of revenues | (52,368,813) | (61,443,104) | (45,283,888) |
Gross profit | 52,676,467 | 56,656,733 | 48,508,406 |
Cost of revenues including impairment loss on intangible assets | 87,578,746 | 45,534,441 | |
Gross profit including impairment loss on intangible assets | 17,466,534 | 48,257,853 | |
Mobile Games [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 24,646,661 | 45,036,427 | 16,908,282 |
Cost of revenues | (14,776,616) | (22,977,318) | (7,780,237) |
Gross profit | 9,870,045 | 22,059,109 | 9,128,045 |
WVAS [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenues | 49,421,487 | 64,459,705 | 62,953,219 |
Cost of revenues | (37,007,224) | (44,858,641) | (43,085,208) |
Gross profit | $ 12,414,263 | $ 19,601,064 | $ 19,868,011 |
SEGMENT AND GEOGRAPHIC INFORM97
SEGMENT AND GEOGRAPHIC INFORMATION (Service Lines of Mobile and Internet Games) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue, Major Customer [Line Items] | |||
Revenues | $ 179,113,428 | $ 227,595,969 | $ 173,653,795 |
Internet Games [Member] | |||
Revenue, Major Customer [Line Items] | |||
Revenues | 105,045,280 | 118,099,837 | 93,792,294 |
Internet Games [Member] | Online Game Operation [Member] | |||
Revenue, Major Customer [Line Items] | |||
Revenues | 104,671,006 | 116,756,333 | 91,308,244 |
Internet Games [Member] | Licensing Arrangement [Member] | |||
Revenue, Major Customer [Line Items] | |||
Revenues | 374,274 | 1,343,504 | 2,484,050 |
Mobile Games [Member] | |||
Revenue, Major Customer [Line Items] | |||
Revenues | 24,646,661 | 45,036,427 | 16,908,282 |
Mobile Games [Member] | Carrier Billing Channels [Member] | |||
Revenue, Major Customer [Line Items] | |||
Revenues | 12,057,097 | 23,808,707 | 10,135,756 |
Mobile Games [Member] | Non-Carrier Billing Channels [Member] | |||
Revenue, Major Customer [Line Items] | |||
Revenues | $ 12,589,564 | $ 21,227,720 | $ 6,772,526 |
SEGMENT AND GEOGRAPHIC INFORM98
SEGMENT AND GEOGRAPHIC INFORMATION (Service Lines of WVAS) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue from External Customer [Line Items] | |||
Revenues | $ 179,113,428 | $ 227,595,969 | $ 173,653,795 |
WVAS [Member] | |||
Revenue from External Customer [Line Items] | |||
Revenues | 49,421,487 | 64,459,705 | 62,953,219 |
WVAS [Member] | SMS [Member] | |||
Revenue from External Customer [Line Items] | |||
Revenues | 21,336,865 | 31,922,975 | 31,844,446 |
WVAS [Member] | IVR [Member] | |||
Revenue from External Customer [Line Items] | |||
Revenues | 3,957,328 | 13,210,504 | 14,658,612 |
WVAS [Member] | MMS [Member] | |||
Revenue from External Customer [Line Items] | |||
Revenues | 945,771 | 968,026 | 1,096,133 |
WVAS [Member] | WAP [Member] | |||
Revenue from External Customer [Line Items] | |||
Revenues | 366,180 | 364,750 | 708,984 |
WVAS [Member] | CRBT and Others [Member] | |||
Revenue from External Customer [Line Items] | |||
Revenues | $ 22,815,343 | $ 17,993,450 | $ 14,645,044 |
SEGMENT AND GEOGRAPHIC INFORM99
SEGMENT AND GEOGRAPHIC INFORMATION (Items Included in Measure of Segment Profit) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting Information [Line Items] | |||
Depreciation and amortization | $ 10,143,494 | $ 21,523,098 | $ 4,988,007 |
Share-based compensation | 1,045,448 | 1,547,780 | 1,573,729 |
Internet Games [Member] | |||
Segment Reporting Information [Line Items] | |||
Depreciation and amortization | 2,798,822 | 6,095,769 | 1,808,259 |
Share-based compensation | 288,463 | 438,362 | 570,511 |
Mobile Games [Member] | |||
Segment Reporting Information [Line Items] | |||
Depreciation and amortization | 1,395,782 | 4,258,966 | 485,671 |
Share-based compensation | 143,857 | 306,273 | 153,230 |
WVAS [Member] | |||
Segment Reporting Information [Line Items] | |||
Depreciation and amortization | 5,948,890 | 11,168,363 | 2,694,077 |
Share-based compensation | $ 613,128 | $ 803,145 | $ 849,988 |
SEGMENT AND GEOGRAPHIC INFOR100
SEGMENT AND GEOGRAPHIC INFORMATION (Geographical Information) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | $ 179,113,428 | $ 227,595,969 | $ 173,653,795 |
PRC [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | 174,199,110 | 221,935,017 | 167,752,785 |
Asia Pacific [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | 7,937 | 162,797 | 913,465 |
Europe and America [Member] | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Revenues | $ 4,906,381 | $ 5,498,155 | $ 4,987,545 |
CASH DIVIDEND (Details)
CASH DIVIDEND (Details) - USD ($) | Oct. 17, 2014 | Dec. 31, 2015 | Dec. 31, 2014 |
CASH DIVIDEND [Abstract] | |||
Cash dividend | $ 40,999,308 | $ 0 | $ 40,999,308 |
Dividend declared, per ordinary share | $ 0.022 | $ 0.002 | |
Dividend declared, per American Depositary Share | $ 0.88 |
FAIR VALUE MEASUREMENTS (Schedu
FAIR VALUE MEASUREMENTS (Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | $ 2,769,194 | |
Obligations [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Discounted cash flow rate | 3.25% | |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Time deposits | $ 31,775,348 | $ 40,777,831 |
Available-for-sale securities | 67,524,708 | 20,013,487 |
Game license payment liabilities | 10,000,000 | 19,860,000 |
Quoted prices in active markets for identical investments (level 1) [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Time deposits | 31,775,348 | 40,777,831 |
Available-for-sale securities | $ 64,755,514 | $ 20,013,487 |
Game license payment liabilities | ||
Significant other observable inputs (level 2) [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Time deposits | ||
Available-for-sale securities | ||
Game license payment liabilities | ||
Significant unobservable inputs (level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Time deposits | ||
Available-for-sale securities | $ 2,769,194 | |
Game license payment liabilities | $ 10,000,000 | $ 19,860,000 |
FAIR VALUE MEASUREMENTS (Sch103
FAIR VALUE MEASUREMENTS (Schedule of Movement of Financial Assets and Liabilities Measured at Recurring Basis using Significant Unobservable Inputs) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Available-for-sale securities | |||
Balance as of beginning of the period | |||
Purchases | $ 2,401,378 | ||
Earnings | |||
Other comprehensive income | $ 367,816 | ||
Settlements | |||
Balance as of end of the period | $ 2,769,194 | ||
Game license payment liabilities | |||
Balance as of beginning of the period | $ 19,860,000 | $ 39,260,000 | $ 43,660,000 |
Purchases | |||
Earnings | $ 140,000 | $ 600,000 | $ 600,000 |
Other comprehensive income | |||
Settlements | $ (10,000,000) | $ (20,000,000) | $ (5,000,000) |
Balance as of end of the period | $ 10,000,000 | $ 19,860,000 | $ 39,260,000 |
NET INCOME (LOSS) PER SHARE (Co
NET INCOME (LOSS) PER SHARE (Computation of Basic and Diluted Net Income (Loss) Per Share) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
NET INCOME (LOSS) PER SHARE [Abstract] | |||
Net income (loss) (numerator), basic and diluted | $ (16,226,710) | $ 22,587,921 | $ 20,661,649 |
Shares (denominator): | |||
Weighted average ordinary shares outstanding used in computing basic net income (loss) per share | 1,882,296,976 | 1,828,191,540 | 1,714,924,612 |
Effect of dilutive securities: | |||
Plus incremental weighted average ordinary shares from assumed conversions of stock options, nonvested shares and warrants using the treasury stock method | 47,328,554 | 36,696,728 | |
Total weighted average shares used in computing diluted net income (loss) per share | 1,882,296,976 | 1,875,520,094 | 1,751,621,340 |
Net income (loss) per share, basic | $ (0.01) | $ 0.01 | $ 0.01 |
Net income (loss) per share, diluted | $ (0.01) | $ 0.01 | $ 0.01 |
NET INCOME (LOSS) PER SHARE (An
NET INCOME (LOSS) PER SHARE (Antidilutive Securities Excluded from Computation of Earnings Per Share) (Details) - shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Options, nonvested shares and warrants [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of potential anti-dilutive shares outstanding | 77,169,420 | 97,392,523 | 11,320,000 |
CONCENTRATIONS (Details)
CONCENTRATIONS (Details) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Internet Games [Member] | Sales [Member] | Internet Game A [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 55.00% | 50.00% | 51.00% |
China Mobile [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 23.00% | 27.00% | 30.00% |
China Mobile [Member] | Accounts Receivable [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 66.00% | 58.00% | |
China Mobile [Member] | Mobile Games [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 7.00% | 10.00% | 6.00% |
China Mobile [Member] | WVAS [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 16.00% | 17.00% | 24.00% |
China Unicom [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 3.00% | 4.00% | 5.00% |
China Unicom [Member] | Accounts Receivable [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 7.00% | 7.00% | |
China Unicom [Member] | Mobile Games [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | |||
China Unicom [Member] | WVAS [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 3.00% | 4.00% | 5.00% |
China Telecom [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 4.00% | 5.00% | 6.00% |
China Telecom [Member] | Accounts Receivable [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 9.00% | 9.00% | |
China Telecom [Member] | Mobile Games [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | |||
China Telecom [Member] | WVAS [Member] | Sales [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration risk, percentage | 4.00% | 5.00% | 6.00% |
PRC CONTRIBUTION PLAN AND PR107
PRC CONTRIBUTION PLAN AND PROFIT APPROPRIATION (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
PRC CONTRIBUTION PLAN AND PROFIT APPROPRIATION [Abstract] | |||
Provision for employee benefits | $ 4,911,874 | $ 4,799,750 | $ 5,135,732 |
General reserve fund appropriations, percent of profit | 10.00% | ||
Statutory reserves | $ 11,467,537 | $ 11,467,537 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | ||
Related Party Transaction [Line Items] | ||||
Interest income | $ 1,078,843 | |||
Interest receivable included in prepaid expenses and other current assets | $ 8,425,322 | $ 5,063,320 | ||
Prosten Technology Holdings Limited [Member] | ||||
Related Party Transaction [Line Items] | ||||
Accounts payable to Prosten and its subsidiaries | 198,051 | |||
Amount due to related party | [1] | 198,051 | ||
Mobile value-added services | [1] | $ 79,188 | $ 1,010,354 | |
Leilei Wang [Member] | Prosten Technology Holdings Limited [Member] | ||||
Related Party Transaction [Line Items] | ||||
Equity Method Investment, Ownership Percentage | 10.00% | |||
KongZhong Galaxy [Member] | ||||
Related Party Transaction [Line Items] | ||||
Amounts due from related parties | [2] | $ 32,850,989 | ||
Interest income | [2] | $ 1,078,843 | ||
Repayment term | 1 year | |||
Interest receivable included in prepaid expenses and other current assets | $ 1,078,843 | |||
Interest rate percentage | 7.00% | |||
Magic Wing [Member] | ||||
Related Party Transaction [Line Items] | ||||
Amounts due from related parties | [3] | $ 285,003 | ||
License fee | [3] | $ 22,993 | ||
[1] | Leilei Wang, the Chief Executive Officer, indirectly owns more than 10% of Prosten. Prosten and its subsidiaries engage in the business of providing solutions to companies that provide mobile and search services. In 2013 and 2014, Prosten and its subsidiaries provided the Company mobile value-added services valued at $1.0 million and $0.1 million, respectively. No service was provided by Prosten and its subsidiaries during 2015. The accounts payable to Prosten and its subsidiaries as of December 31, 2014 were $198,051 which was fully settled in 2015. | |||
[2] | In 2015, the Company made various loans to KongZhong Galaxy, an equity method investee of the Company to finance KongZhong Galaxy's business operations. The loans were unsecured, interest bearing at 7% per annum, and repayable within one year. The loans could be extended upon mutual agreement of the parties, while the Company did not have such agreement or intent to do so as of December 31, 2015. The relevant interest receivable amounting to $1,078,843 as of December 31, 2015 was included in prepaid expenses and other current assets. | |||
[3] | In 2015, the Company recorded costs of game license fees of $22,993 to Magic Wing, an equity method investee of the Company. As of December 31, 2015, the balance of prepaid license fees was $285,003. |
COMMITMENTS AND CONTINGENCIE109
COMMITMENTS AND CONTINGENCIES (Operating Leases) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |||
Rental expenses under operating leases | $ 4,285,832 | $ 3,905,147 | $ 3,449,577 |
2,016 | 3,872,536 | ||
2,017 | 1,688,411 | ||
2,018 | 913,832 | ||
2,019 | $ 612,526 |
COMMITMENTS AND CONTINGENCIE110
COMMITMENTS AND CONTINGENCIES (Purchase Obligations and Sales Tax) (Details) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Recorded Unconditional Purchase Obligation [Line Items] | |
2,016 | $ 1,557,290 |
2,017 | 1,044,133 |
2,018 | 106,926 |
2,019 | $ 173 |
2020 and thereafter | |
Potential additional business tax, amount | $ 4,910,109 |
Minimum [Member] | |
Recorded Unconditional Purchase Obligation [Line Items] | |
Sales tax | 3.00% |
Maximum [Member] | |
Recorded Unconditional Purchase Obligation [Line Items] | |
Sales tax | 5.00% |
RESTRICTED NET ASSETS (Details)
RESTRICTED NET ASSETS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Restricted net assets | $ 92,973,766 | $ 76,657,282 |
VIEs [Member] | ||
Restricted net assets | 50,514,213 | 47,850,580 |
Subsidiaries [Member] | ||
Restricted net assets | $ 42,459,553 | $ 28,806,702 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) HKD / shares in Units, HKD in Millions, $ in Millions | 1 Months Ended | |||
Feb. 29, 2016USD ($) | Mar. 31, 2016USD ($) | Nov. 30, 2015USD ($) | Nov. 30, 2015HKDHKD / shares | |
Glassy Mind Holdings Limited | ||||
Subsequent Event [Line Items] | ||||
Price per share (In HK dollars per share) | HKD / shares | HKD 6.1062 | |||
Cost of investment | $ 30.9 | HKD 239.4 | ||
Forgame Holdings Limited [Member] | ||||
Subsequent Event [Line Items] | ||||
Percentage of total consideration which to be paid in cash immediately | 80.00% | 80.00% | ||
Subsequent Event [Member] | Glassy Mind Holdings Limited | ||||
Subsequent Event [Line Items] | ||||
Proceed from sale of investment | $ 25.1 | |||
Subsequent Event [Member] | Forgame Holdings Limited [Member] | ||||
Subsequent Event [Line Items] | ||||
Ownership interest | 2.63% | |||
Subsequent Event [Member] | KongZhong Galaxy [Member] | ||||
Subsequent Event [Line Items] | ||||
Aggregated amount of loans extended | $ 7.2 |
CONDENSED FINANCIAL INFORMAT113
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (Schedule of Balance Sheets) (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets | ||||
Cash and cash equivalents | $ 38,304,364 | $ 105,093,178 | $ 123,427,729 | $ 120,694,716 |
Available-for-sale securities | 64,755,514 | 20,013,487 | ||
Accounts Receivable (net) | 24,484,916 | 30,244,289 | ||
Prepaid expenses and other current assets | 24,895,555 | $ 19,069,904 | ||
Loan to third party | 14,685,980 | |||
Loans to related party | 285,003 | |||
Total current assets | 310,597,113 | $ 269,062,719 | ||
Long-term investments | 4,772,809 | |||
Total assets | 418,706,627 | $ 432,580,703 | ||
Current liabilities | ||||
Accrued expenses and other current liabilities | 16,024,243 | 16,580,351 | ||
Short-term bank loans | 49,962,510 | 42,428,890 | ||
Total liabilities | 106,945,611 | 110,650,467 | ||
Ordinary shares | 943 | 942 | ||
Additional paid-in capital | 166,874,541 | 162,687,212 | ||
Warrants | 3,346,000 | 5,548,000 | 14,889,000 | |
Accumulated other comprehensive income | 61,603,388 | 57,531,228 | ||
Total shareholders' equity | 311,761,016 | 321,930,236 | 332,609,502 | 282,884,068 |
Total liabilities and shareholders' equity | 418,706,627 | 432,580,703 | ||
Parent Company [Member] | ||||
Current assets | ||||
Cash and cash equivalents | 5,616,759 | 18,154,644 | 24,981,561 | 5,338,092 |
Available-for-sale securities | 64,755,514 | 20,013,487 | ||
Prepaid expenses and other current assets | 4,024,878 | $ 48,162 | ||
Loan to third party | 13,300,000 | |||
Loans to related party | 1,612,000 | |||
Total current assets | 89,309,151 | $ 38,216,293 | ||
Long-term investments | 334,485,472 | 364,913,556 | ||
Total assets | 423,794,623 | 403,129,849 | ||
Current liabilities | ||||
Accrued expenses and other current liabilities | 969,263 | 71,835 | ||
Advances from subsidiaries | 61,101,834 | 38,698,888 | ||
Short-term bank loans | 49,962,510 | 42,428,890 | ||
Total liabilities | 112,033,607 | 81,199,613 | ||
Ordinary shares | 943 | 942 | ||
Additional paid-in capital | 166,874,541 | 162,687,212 | ||
Warrants | 3,346,000 | 5,548,000 | ||
Accumulated other comprehensive income | 61,603,388 | 57,531,228 | ||
Retained earnings | 79,936,144 | 96,162,854 | ||
Total shareholders' equity | 311,761,016 | 321,930,236 | $ 332,609,502 | $ 282,884,068 |
Total liabilities and shareholders' equity | $ 423,794,623 | $ 403,129,849 |
CONDENSED FINANCIAL INFORMAT114
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (Schedule of Statements of Comprehensive Income) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statements of comprehensive income [Line Items] | |||
Revenues | $ 179,113,428 | $ 227,595,969 | $ 173,653,795 |
Cost of revenues | (139,362,586) | (129,279,063) | (96,399,886) |
Gross profit | 39,750,842 | 98,316,906 | 77,253,909 |
Operating expenses | |||
Product development | (24,189,619) | (25,107,372) | (26,401,720) |
Selling and marketing | (25,890,472) | (42,522,684) | (26,674,024) |
General and administrative | (13,484,211) | (12,564,600) | (8,976,176) |
Total operating expenses | (63,564,302) | (81,517,916) | (63,614,306) |
Income (loss) from operations | (22,239,883) | 17,937,899 | 15,816,052 |
Interest income | 5,381,984 | $ 8,864,742 | $ 6,763,938 |
Interest income from loans to related party | 1,078,843 | ||
Interest income from loan to third party | 1,514,160 | ||
Interest expense | $ (883,974) | $ (895,056) | $ (693,282) |
Impairment loss on cost method investment | $ (1,999,999) | $ (2,000,000) | |
Gain on sale of available-for-sales securities | $ 536,016 | ||
Dividend received | 628,417 | ||
Equity in earnings of subsidiaries and variable interest entities | (642,697) | ||
Income tax expense | (796,866) | $ (1,047,999) | $ (712,402) |
Net income (loss) | (16,226,710) | 22,587,921 | 20,661,649 |
Parent Company [Member] | |||
Operating expenses | |||
Product development | (578,398) | (545,060) | (305,385) |
Selling and marketing | (109,956) | (16,795) | (214,856) |
General and administrative | (1,238,999) | (1,223,687) | (1,173,778) |
Total operating expenses | (1,927,353) | (1,785,542) | (1,694,019) |
Interest income | 11,852 | $ 36,346 | $ 129,500 |
Interest income from loans to related party | 32,534 | ||
Interest income from loan to third party | 540,274 | ||
Interest expense | $ (883,974) | $ (895,056) | $ (693,280) |
Impairment loss on cost method investment | $ (1,999,999) | $ (2,000,000) | |
Investment income | $ 1,161,132 | ||
Gain on sale of available-for-sales securities | 536,016 | ||
Dividend received | 628,417 | ||
Equity in earnings of subsidiaries and variable interest entities | (15,164,476) | $ 27,232,172 | $ 24,919,448 |
Net income (loss) before income tax expense and loss in equity method investments | $ (16,226,710) | $ 22,587,921 | $ 20,661,649 |
Income tax expense | |||
Net income (loss) | $ (16,226,710) | $ 22,587,921 | $ 20,661,649 |
CONDENSED FINANCIAL INFORMAT115
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (Schedule of Statements of Changes in Shareholder's Equity) (Details) - USD ($) | Oct. 17, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Statements of changes in shareholder's equity [Line Items] | ||||
Balance | $ 321,930,236 | $ 332,609,502 | $ 282,884,068 | |
Issuance of ordinary shares for share-based compensation | 939,882 | 436,625 | 849,038 | |
Share-based compensation recognized | $ 1,045,448 | 1,547,780 | 1,573,729 | |
Repurchase of ordinary shares | (10,123,821) | |||
Repurchase of ordinary shares | (12,410) | |||
Warrants exercised | $ 5,940,000 | $ 27,820,000 | ||
Warrants exercised (in shares) | 40,000,000 | 200,000,000 | ||
Warrants forfeited | $ (2,148,000) | |||
Warrants expired | ||||
Other comprehensive income | $ 4,072,160 | 1,968,126 | $ 8,944,839 | |
Dividends to shareholders ($0.002 per ordinary share) | $ (40,999,308) | 0 | (40,999,308) | |
Net income (loss) | (16,226,710) | 22,587,921 | 20,661,649 | |
Balance | 311,761,016 | 321,930,236 | 332,609,502 | |
Ordinary shares [Member] | ||||
Statements of changes in shareholder's equity [Line Items] | ||||
Balance | $ 942 | $ 918 | $ 832 | |
Balance (in shares) | 1,882,073,063 | 1,834,883,063 | 1,678,097,663 | |
Issuance of ordinary shares for share-based compensation | $ 1 | $ 4 | $ 18 | |
Issuance of ordinary shares for share-based compensation (in shares) | 2,060,000 | 7,190,000 | 35,000,000 | |
Share-based compensation recognized | ||||
Repurchase of ordinary shares | $ (32) | |||
Repurchase of ordinary shares (in shares) | (78,214,600) | |||
Warrants exercised | $ 20 | $ 100 | ||
Warrants exercised (in shares) | 40,000,000 | 200,000,000 | ||
Warrants forfeited | ||||
Warrants expired | ||||
Other comprehensive income | ||||
Dividends to shareholders ($0.002 per ordinary share) | ||||
Net income (loss) | ||||
Balance | $ 943 | $ 942 | $ 918 | |
Balance (in shares) | 1,884,133,063 | 1,882,073,063 | 1,834,883,063 | |
Additional paid-in capital [Member] | ||||
Statements of changes in shareholder's equity [Line Items] | ||||
Balance | $ 162,687,212 | $ 152,052,241 | $ 126,786,049 | |
Issuance of ordinary shares for share-based compensation | 939,881 | 436,621 | 849,020 | |
Share-based compensation recognized | 1,045,448 | 1,547,780 | 1,573,729 | |
Repurchase of ordinary shares | (12,410) | (10,123,789) | ||
Warrants exercised | $ 8,662,980 | $ 32,967,232 | ||
Warrants forfeited | ||||
Warrants expired | $ 2,202,000 | |||
Other comprehensive income | ||||
Dividends to shareholders ($0.002 per ordinary share) | ||||
Net income (loss) | ||||
Balance | $ 166,874,541 | $ 162,687,212 | $ 152,052,241 | |
Warrants [Member] | ||||
Statements of changes in shareholder's equity [Line Items] | ||||
Balance | $ 5,548,000 | $ 10,419,000 | $ 15,566,332 | |
Issuance of ordinary shares for share-based compensation | ||||
Share-based compensation recognized | ||||
Repurchase of ordinary shares | ||||
Warrants exercised | $ (2,723,000) | $ (5,147,332) | ||
Warrants forfeited | $ (2,148,000) | |||
Warrants expired | $ (2,202,000) | |||
Other comprehensive income | ||||
Dividends to shareholders ($0.002 per ordinary share) | ||||
Net income (loss) | ||||
Balance | $ 3,346,000 | $ 5,548,000 | $ 10,419,000 | |
Accumulated other comprehensive income [Member] | ||||
Statements of changes in shareholder's equity [Line Items] | ||||
Balance | $ 57,531,228 | $ 55,563,102 | $ 46,618,263 | |
Issuance of ordinary shares for share-based compensation | ||||
Share-based compensation recognized | ||||
Repurchase of ordinary shares | ||||
Warrants exercised | ||||
Warrants forfeited | ||||
Warrants expired | ||||
Other comprehensive income | $ 4,072,160 | $ 1,968,126 | $ 8,944,839 | |
Dividends to shareholders ($0.002 per ordinary share) | ||||
Net income (loss) | ||||
Balance | $ 61,603,388 | $ 57,531,228 | $ 55,563,102 | |
Parent Company [Member] | ||||
Statements of changes in shareholder's equity [Line Items] | ||||
Balance | 321,930,236 | 332,609,502 | 282,884,068 | |
Issuance of ordinary shares for share-based compensation | 939,882 | 436,625 | 849,038 | |
Share-based compensation recognized | $ 1,045,448 | 1,547,780 | 1,573,729 | |
Repurchase of ordinary shares | (10,123,821) | |||
Repurchase of ordinary shares | (12,410) | |||
Warrants exercised | 5,940,000 | 27,820,000 | ||
Warrants forfeited | (2,148,000) | |||
Warrants expired | ||||
Other comprehensive income | $ 4,072,160 | 1,968,126 | 8,944,839 | |
Dividends to shareholders ($0.002 per ordinary share) | (40,999,308) | |||
Net income (loss) | (16,226,710) | 22,587,921 | 20,661,649 | |
Balance | 311,761,016 | 321,930,236 | 332,609,502 | |
Parent Company [Member] | Ordinary shares [Member] | ||||
Statements of changes in shareholder's equity [Line Items] | ||||
Balance | $ 942 | $ 918 | $ 832 | |
Balance (in shares) | 1,882,073,063 | 1,834,883,063 | 1,678,097,663 | |
Issuance of ordinary shares for share-based compensation | $ 1 | $ 4 | $ 18 | |
Issuance of ordinary shares for share-based compensation (in shares) | 2,060,000 | 7,190,000 | 35,000,000 | |
Share-based compensation recognized | ||||
Repurchase of ordinary shares | $ (32) | |||
Repurchase of ordinary shares (in shares) | (78,214,600) | |||
Warrants exercised | $ 20 | $ 100 | ||
Warrants exercised (in shares) | 40,000,000 | 200,000,000 | ||
Warrants forfeited | ||||
Warrants expired | ||||
Other comprehensive income | ||||
Dividends to shareholders ($0.002 per ordinary share) | ||||
Net income (loss) | ||||
Balance | $ 943 | $ 942 | $ 918 | |
Balance (in shares) | 1,884,133,063 | 1,882,073,063 | 1,834,883,063 | |
Parent Company [Member] | Additional paid-in capital [Member] | ||||
Statements of changes in shareholder's equity [Line Items] | ||||
Balance | $ 162,687,212 | $ 152,052,241 | $ 126,786,049 | |
Issuance of ordinary shares for share-based compensation | 939,881 | 436,621 | 849,020 | |
Share-based compensation recognized | 1,045,448 | 1,547,780 | 1,573,729 | |
Repurchase of ordinary shares | (12,410) | (10,123,789) | ||
Warrants exercised | $ 8,662,980 | $ 32,967,232 | ||
Warrants forfeited | ||||
Warrants expired | $ 2,202,000 | |||
Other comprehensive income | ||||
Dividends to shareholders ($0.002 per ordinary share) | ||||
Net income (loss) | ||||
Balance | $ 166,874,541 | $ 162,687,212 | $ 152,052,241 | |
Parent Company [Member] | Warrants [Member] | ||||
Statements of changes in shareholder's equity [Line Items] | ||||
Balance | $ 5,548,000 | $ 10,419,000 | $ 15,566,332 | |
Issuance of ordinary shares for share-based compensation | ||||
Share-based compensation recognized | ||||
Repurchase of ordinary shares | ||||
Warrants exercised | $ (2,723,000) | $ (5,147,332) | ||
Warrants forfeited | $ (2,148,000) | |||
Warrants expired | $ (2,202,000) | |||
Other comprehensive income | ||||
Dividends to shareholders ($0.002 per ordinary share) | ||||
Net income (loss) | ||||
Balance | $ 3,346,000 | $ 5,548,000 | $ 10,419,000 | |
Parent Company [Member] | Accumulated other comprehensive income [Member] | ||||
Statements of changes in shareholder's equity [Line Items] | ||||
Balance | $ 57,531,228 | $ 55,563,102 | $ 46,618,263 | |
Issuance of ordinary shares for share-based compensation | ||||
Share-based compensation recognized | ||||
Repurchase of ordinary shares | ||||
Warrants exercised | ||||
Warrants forfeited | ||||
Warrants expired | ||||
Other comprehensive income | $ 4,072,160 | $ 1,968,126 | $ 8,944,839 | |
Dividends to shareholders ($0.002 per ordinary share) | ||||
Net income (loss) | ||||
Balance | $ 61,603,388 | $ 57,531,228 | $ 55,563,102 | |
Parent Company [Member] | Retained Earnings [Member] | ||||
Statements of changes in shareholder's equity [Line Items] | ||||
Balance | $ 96,162,854 | $ 114,574,241 | $ 93,912,592 | |
Issuance of ordinary shares for share-based compensation | ||||
Share-based compensation recognized | ||||
Repurchase of ordinary shares | ||||
Warrants exercised | ||||
Warrants forfeited | ||||
Warrants expired | ||||
Other comprehensive income | ||||
Dividends to shareholders ($0.002 per ordinary share) | $ (40,999,308) | |||
Net income (loss) | $ (16,226,710) | 22,587,921 | $ 20,661,649 | |
Balance | $ 79,936,144 | $ 96,162,854 | $ 114,574,241 |
CONDENSED FINANCIAL INFORMAT116
CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (Schedule of Statements of Cash Flows) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating activities: | |||
Net cash provided by operating activities | $ 31,792,422 | $ 31,069,303 | $ 35,729,510 |
Investing activities: | |||
Acquisition of equity method investments | (2,581,340) | ||
Purchase of available-for-sales securities | (27,126,971) | $ (16,380,050) | |
Proceeds from sale of available-for-sales securities | 1,500,251 | ||
Loans to related party | (34,352,373) | ||
Loans to third parties | (26,442,729) | ||
Loan repayment from third parties | 11,595,052 | ||
Net cash used in investing activities | $ (93,944,947) | $ (32,117,597) | $ (43,944,598) |
Financing activities: | |||
Repurchase of ordinary shares | (12,410) | (10,123,821) | |
Proceeds from exercise of employee stock options | $ 939,882 | 436,625 | 849,038 |
Proceeds from bank borrowing | $ 7,533,620 | 42,428,890 | 9,000,000 |
Proceeds from exercise of warrants | 5,940,000 | $ 27,820,000 | |
Dividends paid to shareholders | (40,999,308) | ||
Net cash provided (used in) by financing activities | $ (1,922,660) | (16,914,796) | $ 8,956,797 |
Net increase (decrease) in cash and cash equivalents | (66,788,814) | (18,334,551) | 2,733,013 |
Cash and cash equivalents, beginning of year | 105,093,178 | 123,427,729 | 120,694,716 |
Cash and cash equivalents, end of year | 38,304,364 | 105,093,178 | 123,427,729 |
Parent Company [Member] | |||
Operating activities: | |||
Net cash provided by operating activities | (2,675,869) | $ (3,468,054) | $ (1,237,414) |
Investing activities: | |||
Acquisition of equity method investments | (1,000,000) | ||
Purchase of available-for-sales securities | (26,326,715) | $ (16,380,050) | |
Proceeds from sale of available-for-sales securities | 1,500,251 | ||
Loans to related party | (1,612,000) | ||
Loans to third parties | (17,000,000) | ||
Loan repayment from third parties | 3,700,000 | ||
Net cash used in investing activities | $ (40,738,464) | $ (16,380,050) | |
Financing activities: | |||
Repurchase of ordinary shares | (12,410) | $ (10,123,821) | |
Proceeds from exercise of employee stock options | $ 939,882 | 436,625 | $ 849,038 |
Proceeds from bank borrowing | 7,533,620 | 42,428,890 | |
Advances from subsidiaries | 23,514,181 | 5,417,880 | $ 2,335,666 |
Repayment to subsidiaries | $ (1,111,235) | (190,490) | |
Proceeds from exercise of warrants | 5,940,000 | $ 27,820,000 | |
Dividends paid to shareholders | (40,999,308) | ||
Net cash provided (used in) by financing activities | $ 30,876,448 | 13,021,187 | $ 20,880,883 |
Net increase (decrease) in cash and cash equivalents | (12,537,885) | (6,826,917) | 19,643,469 |
Cash and cash equivalents, beginning of year | 18,154,644 | 24,981,561 | 5,338,092 |
Cash and cash equivalents, end of year | $ 5,616,759 | $ 18,154,644 | $ 24,981,561 |