| Summary of Significant Accounting Policies | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) Basis of preparation and liquidity
The accompanying unaudited Condensed Consolidated Financial
Statements have been prepared in accordance with accounting
principles generally accepted in the United States and with the
instructions to Form 10-Q and Article 8 of Regulation S-X.
Accordingly, they do not include all information and notes required
by accounting principles generally accepted in the United States
for complete financial statements. In the opinion of management,
all adjustments (consisting of only normal recurring adjustments)
considered necessary to present fairly the Company’s results
of operations, financial position and cash flows have been made.
The results of operations and cash flows for the three and
nine months ended September 30, 2015, are not necessarily
indicative of the results of operations and cash flows that may be
reported for the remainder of 2015 or for future periods.
The Company reported net loss of $4,402 and $9,946 from continuing
operations, net loss of $387 and $41,950 from discontinued
operations for the three and nine months ended September 30,
2015, respectively, and net cash used in operating activities of
$7,058 for the nine months ended September 30, 2015. As of
September 30, 2015, the Company had an accumulated deficit of
$52,506.
Principles of consolidation
The consolidated financial statements include the financial
statements of the Company and its subsidiaries. All significant
transactions among the Company and its subsidiaries have been
eliminated upon consolidation.
(b) Use of estimates
The preparation of consolidated financial statements in accordance
with United States generally accepted accounting principles
(“US GAAP”) requires the Company’s management to
make estimates and assumptions relating to the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements
and the reported amounts of revenue and expenses during the
reporting period. Significant items subject to such estimates and
assumptions include the allowance for doubtful receivables; useful
lives and residual values of property and equipment and intangible
assets; recoverability of the carrying amount of property and
equipment, goodwill and intangible assets; fair values of financial
instruments; and the assessment of contingent obligations. These
estimates are often based on complex judgments and assumptions that
management believes to be reasonable but are inherently uncertain
and unpredictable. Actual results could differ from these
estimates.
(c) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and bank deposits
with original maturities of three months or less, which are
unrestricted as to withdrawal and use.
The Group’s cash and bank deposits were held in major
financial institutions located in the United States, which
management believes have high credit ratings. The cash and bank
deposits held in the United States, denominated in USD, amounted to
$9,078 and $5,996 as of September 30, 2015 and
December 31, 2014, respectively.
Financial instruments and related items, which potentially subject
the Company to concentrations of credit risk, consist principally
of cash investments. The Company places its temporary cash
instruments with well-known financial institutions within the
United States, and, at times, may maintain balances in United
States banks in excess of the $250 thousand dollar US Federal
Deposit Insurance Corporation insurance limit. The Company monitors
the credit ratings of the financial institutions to mitigate this
risk.
(d) Accounts receivable
Accounts receivable are due from customers and are generally
unsecured, which consist of amounts billed but not yet collected.
None of the Group’s accounts receivable bear interest.
The allowance for doubtful accounts is management’s best
estimate of the amount of probable credit losses in the
Group’s existing accounts receivable. Management determines
the allowance based on reviews of customer-specific facts and
economic conditions. Account balances are charged off against the
allowance after all means of collection have been exhausted and the
potential for recovery is considered remote. The Group does not
have any off-balance-sheet credit exposure related to its
customers.
(e) Property and equipment
Property and equipment are stated at cost, net of accumulated
depreciation or amortization. Expenditures for maintenance,
repairs, and minor renewals are charged to expense in the period
incurred. Betterments and additions are capitalized. Depreciation
is calculated on the straight-line method over the estimated useful
lives of the assets, taking into consideration the assets’
salvage or residual value. The estimated useful lives of property
and equipment are as follows:
Computer and network equipment 5-7 years
Furniture, fixtures and office equipment 3-5 years
Leasehold improvements 7 years
When items of property and equipment are retired or otherwise
disposed of, loss/income is charged or credited for the difference
between the net book value and proceeds received thereon.
(f) Intangible assets other than goodwill
The Group’s intangible assets are amortized on a straight
line basis over their respective estimated useful lives, which are
the periods over which the assets are expected to contribute
directly or indirectly to the future cash flows of the Group. The
Group’s intangible assets represent purchased intellectual
property and related litigation costs, and capitalized software
development costs, with estimated useful lives of 3-10 years.
In accordance with ASC 350-40
“Software — internal use
software”
(g) Goodwill
Goodwill represents the difference between the purchase price and
the estimated fair value of the net assets acquired when accounted
for by the purchase method of accounting. As of September 30,
2015, the goodwill balance relates to the October 2, 2014
acquisition of Interactive Data by TBO.
In accordance with FASB ASC 350, “Intangibles - Goodwill
and Other”
(h) Impairment of long-lived assets
Finite-lived intangible assets are amortized over their respective
useful lives and, along with other long-lived assets, are evaluated
for impairment periodically whenever events or changes in
circumstances indicate that their related carrying amounts may not
be recoverable in accordance with FASB ASC 360-10-15,
“ Impairment or Disposal of Long-Lived Assets
Asset recoverability is an area involving management judgment,
requiring assessment as to whether the carrying value of assets can
be supported by the undiscounted future cash flows. In calculating
the future cash flows, certain assumptions are required to be made
in respect of highly uncertain matters such as revenue growth
rates, gross margin percentages and terminal growth rates.
No impairment loss once recognized is subsequently reversed even if
facts and circumstances indicate recovery.
(i) Fair Value of Financial Instruments
FASB ASC 820 “Fair Value Measurements and
Disclosures”
These tiers include:
• Level 1 – defined as observable
inputs such as quoted prices in active markets;
• Level 2 – defined as inputs
other than quoted prices in active markets that are either directly
or indirectly observable; and
• Level 3 – defined as
unobservable inputs in which little or no market data exists,
therefore requiring an entity to develop its own assumptions.
The fair value of the Group’s financial assets and
liabilities approximate their carrying amount because of the
short-term maturity of these instruments.
(j) Revenue recognition
The Company generally recognizes revenue when persuasive evidence
of an arrangement exists, delivery has occurred or a service has
been rendered, the price is fixed or determinable and collection is
reasonably assured.
Revenue from data fusion operations is generally recognized on
(a) a transactional basis determined by the customers’
usage, (b) a monthly fee or (c) a combination of both.
Revenues pursuant to contracts containing a monthly fee are
recognized ratably over the contract period, which is generally 1
year. Revenues pursuant to transactions determined by the
customers’ usage are recognized when the transaction is
complete. Costs associated with separately priced customer service
contracts are generally recognized as follows: (a) costs are
expensed as incurred; and (b) losses are recognized on
contracts where the expected future costs exceed expected future
revenue. No such loss contracts exist as of September 30,
2015.
Customer payments received in excess of the amount of revenue
recognized are recorded as deferred revenue in the consolidated
balance sheets, and are recognized as revenue when the services are
rendered.
(k) Cost of revenues
Cost of revenues, related to data fusion operations, consist
primarily of data acquisition and infrastructure costs.
(l) Advertising and promotion costs
Advertising and promotion costs are charged to operations as
incurred. Advertising and promotion costs, included in sales and
marketing expenses amounted to $52 and $140 for the three and nine
months ended September 30, 2015, respectively.
(m) Share-based payments
The Group accounts for share-based payments to employees in
accordance with ASC Topic 718, “Compensation—Stock
Compensation
The Company accounts for share-based payments to non-employees in
accordance with ASC 505-50, “ Equity-Based Payments to
Non-Employees
(n) Income taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and
tax credit carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates or laws is
recognized in income in the period that the change in tax rates or
laws is enacted. A valuation allowance is provided to reduce the
amount of deferred tax assets if it is considered more likely than
not that some portion or all of the deferred tax assets will not be
realized.
The Group applies ASC Topic 740 “ Income Taxes
For the quarter ended September 30, 2015, management believes,
due to recent losses, that it is now more likely than not that the
Company will not realize the benefits of its net deferred tax
assets and has therefore there was no deferred tax assets
recognized during this period.
(o) Loss per share
Basic loss per share is computed by dividing net loss attributable
to common shareholders by the weighted average number of common
shares outstanding during the periods. Diluted loss per share
reflects the potential dilution that could occur if securities or
other contracts to issue common shares were exercised or converted
into common shares and is calculated using the treasury stock
method for stock options and unvested shares. Common equivalent
shares are excluded from the calculation in the loss periods as
their effects would be anti-dilutive.
On March 19, 2015, the Company effected the Reverse Split. The
principal effect of the Reverse Split was to decrease the number of
outstanding shares of the Company’s common shares. All per
share amounts and shares outstanding for all the periods presented
have been retroactively restated to reflect the Reverse Split.
(p) Contingencies
In the ordinary course of business, the Company is subject to loss
contingencies that cover a wide range of matters. An estimated loss
from a loss contingency such as a legal proceeding or claim is
accrued if it is probable that a liability has been incurred and
the amount of the loss can be reasonably estimated. In determining
whether a loss should be accrued, the Company evaluates, among
other factors, the degree of probability and the ability to make a
reasonable estimate of the amount of loss.
(q) Segment reporting
The Group has one operating segment, the data fusion operations, as
defined by ASC Topic 280, “ Segment Reporting
(r) Significant concentrations and risks
Concentration of Credit Risk
Assets that potentially subject the Group to significant
concentration of credit risk primarily consist of cash and cash
equivalents, and accounts receivable. As of September 30, 2015
and December 31, 2014, all of the Group’s cash and cash
equivalents were deposited in financial institutions located in the
United States, which management believes are of high credit
quality. Accounts receivable are typically unsecured and are
derived from revenue earned from customers. The risk with respect
to accounts receivable is mitigated by credit evaluations the Group
performs on its customers and its ongoing monitoring process of
outstanding balances.
Concentration of Customers
During the nine months ended September 30, 2015, the Group
recognized revenue from one major customer, accounting for 17% of
the total revenue from data fusion operations.
As of September 30, 2015, one customer accounted for 21% of
the Group’s accounts receivable.
Concentration of Suppliers
Two data suppliers accounted for 36% and 23% of the total data
purchases during the three months ended September 30, 2015.
During the nine months ended September 30, 2015, the
Group’s purchases from these data suppliers accounted for 28%
and 30% of the total data purchases.
As of September 30, 2015, two data suppliers accounted for 39%
and 31% of the Group’s accounts payable.
(s) Recently issued accounting standards
In May 2014, FASB and the International Accounting Standards Board
(“IASB”) issued Accounting Standards Update
(“ASU”) No. 2014-09 (“ASU 2014-09”),
“Revenue from Contracts with Customers (Topic
606)”
In January 2015, FASB issued ASU No. 2015-01 (“ASU
2015-01”), “ Income Statement-Extraordinary and
Unusual Items (Subtopic 225-20): Simplifying Income Statement
Presentation by Eliminating the Concept of Extraordinary
Items
In February 2015, FASB issued ASU No. 2015-02 (“ASU
2015-02”), “Consolidation (Topic 810): Amendments to
the Consolidation Analysis”.
Except for the ASUs above, for the nine months ended
September 30, 2015, FASB has issued ASUs No. 2015-01
through ASU No. 2015-16, which are not expected to have a
material impact on the consolidated financial statements upon
adoption. |
