Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended |
Mar. 31, 2015 | |
Document And Entity Information | |
Entity Registrant Name | One Horizon Group, Inc. |
Entity Central Index Key | 225211 |
Document Type | S-1 |
Document Period End Date | 31-Mar-15 |
Amendment Flag | TRUE |
Amendment Description | This amendment is being filed to comply with regulations. |
Current Fiscal Year End Date | -19 |
Is Entity a Well-known Seasoned Issuer? | No |
Is Entity a Voluntary Filer? | No |
Is Entity's Reporting Status Current? | Yes |
Entity Filer Category | Smaller Reporting Company |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |||
Current assets: | |||
Cash | $1,923 | $3,172 | $2,070 |
Accounts receivable (net), current portion | 5,879 | 9,072 | 7,264 |
Other assets | 584 | 576 | 139 |
Total current assets | 8,386 | 12,820 | 9,473 |
Accounts receivable (net), net of current portion | 3,116 | 0 | |
Property and equipment, net | 138 | 212 | 315 |
Intangible assets, net | 11,004 | 10,960 | 12,760 |
Investment | 18 | 19 | 23 |
Debt issue costs | 362 | 395 | 0 |
Total assets | 23,024 | 24,406 | 22,571 |
Current liabilities: | |||
Accounts payable | 113 | 556 | 661 |
Accrued expenses | 323 | 360 | 964 |
Accrued compensation | 14 | 15 | 59 |
Income taxes | 94 | 93 | 117 |
Amounts due to related parties | 350 | 600 | 3,500 |
Current portion of long-term debt | 12 | 73 | 65 |
Total current liabilities | 906 | 1,697 | 5,366 |
Long-term liabilities | |||
Long term debt, net of current portion | 0 | 108 | 184 |
Amount due to related parties | 2,578 | 2,598 | 0 |
Convertible debenture | 2,624 | 2,598 | 0 |
Deferred income taxes | 235 | 235 | 445 |
Mandatorily redeemable preferred shares | 90 | 90 | 90 |
Total liabilities | 6,433 | 7,326 | 6,085 |
Equity | |||
Preferred stock: $0.0001 par value, authorized 50,000,000; issued and outstanding 170,940 shares (December 2014 - 170,940) | 1 | 1 | 0 |
Common stock: $0.0001 par value, authorized 200,000,000 shares issued and outstanding 33,281,069 shares (December 2014 - 33,281,069) | 3 | 3 | 3 |
Additional paid-in capital | 32,292 | 32,163 | 28,269 |
Deferred compensation | -161 | -214 | 0 |
Retained Earnings (Deficit) | -16,185 | -15,227 | -13,319 |
Accumulated other comprehensive income | 355 | 63 | 1,137 |
Total One Horizon Group, Inc., stockholders' equity | 16,305 | 16,789 | 16,090 |
Non-controlling interest | 286 | 291 | 396 |
Total Equity | 16,591 | 17,080 | 16,486 |
Total liabilities and equity | $23,024 | $24,406 | $22,571 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Consolidated Balance Sheets Parenthetical | |||
Preferred stock, par value | $0.00 | $0.00 | $0.00 |
Preferred stock, Authorized | 50,000,000 | 50,000,000 | 50,000,000 |
Preferred stock, issued shares | 170,940 | 170,940 | 0 |
Preferred stock, outstanding shares | 170,940 | 170,940 | 0 |
Common stock, par value | $0.00 | $0.00 | $0.00 |
Common stock, Authorized | 200,000,000 | 200,000,000 | 200,000,000 |
Common stock, Issued | 33,281,069 | 33,281,069 | 32,920,069 |
Common stock, outstanding | 33,281,069 | 33,281,069 | 32,920,069 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 |
Consolidated Statements Of Operations | ||||
Revenue | $745 | $1,185 | $5,122 | $9,106 |
Cost of Revenue: | ||||
Hardware | 61 | 62 | 362 | 545 |
Amortization of software development costs | 512 | 486 | 1,890 | 1,908 |
Cost of Revenue | 573 | 548 | 2,252 | 2,453 |
Gross margin | 172 | 637 | 2,870 | 6,653 |
Expenses: | ||||
General and administrative | 1,085 | 1,128 | 4,933 | 6,706 |
Depreciation | 20 | 48 | 146 | 166 |
Total Expenses | 1,105 | 1,176 | 5,079 | 6,872 |
Loss from operations | -933 | -539 | -2,209 | -219 |
Other income and expense: | ||||
Interest expense | -90 | -40 | -16 | -25 |
Interest expense - related parties | 36 | -297 | ||
Foreign exchange | 85 | -9 | 8 | -158 |
Interest income | 1 | 2 | 1 | |
Other income and expense | -5 | -48 | 30 | -479 |
Loss before income taxes | -938 | -587 | -2,179 | -698 |
Income taxes (recovery) - deferred | 0 | -156 | -210 | 0 |
Net loss for the period | -938 | -431 | -1,969 | -698 |
Net loss attributable to non-controlling interest | -5 | -43 | -105 | -104 |
Net Income (Loss) for the period atrributable to One Horizon Group, Inc. | -933 | -388 | -1,864 | -594 |
Less: Preferred stock dividends | -25 | 0 | -44 | 0 |
Net Loss attributable to common stockholders | ($958) | ($388) | ($1,908) | ($594) |
Loss per share | ||||
Basic net loss per share | ($0.03) | ($0.01) | ($0.06) | ($0.02) |
Diluted loss per share | ($0.03) | ($0.01) | ($0.06) | ($0.02) |
Weighted average number of shares outstanding | ||||
Basic and diluted | 33,281 | 32,934 | 32,981 | 31,661 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 |
Consolidated Statements Of Comprehensive Income Loss | ||||
Net loss | ($933) | ($388) | ($1,864) | ($594) |
Other comprehensive income: | ||||
Forgin currency translation adjustment gain (loss) | 292 | 19 | -1,074 | 682 |
Total | -641 | -369 | -3,043 | -16 |
Comprehensive loss attributable to the non-controlling interest | -5 | -43 | -105 | -104 |
Total comprehensive loss | ($646) | ($412) | ($2,938) | $88 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 |
Cash provided by (used in) operating activities: | ||||
Net income (loss) for the period | ($933) | ($388) | ($1,864) | ($594) |
Adjustment to reconcile net income for the period to net cash provided by (used in) operating activities: | ||||
Depreciation of property and equipment | 20 | 48 | 146 | 166 |
Amortization of intangible assets | 512 | 486 | 1,890 | 1,908 |
Increase in allowance for doubtful accounts | 100 | 0 | 180 | 0 |
Amortization of debt issue costs | 33 | 0 | ||
Amortization of beneficial conversion feature | 26 | 0 | ||
Amortization of deferred compensation | 53 | 0 | ||
Common shares issued for services received | 0 | 65 | 174 | 643 |
Options issued for services | 129 | 129 | 516 | 0 |
Warrants issued for services | 187 | 0 | ||
Net income (loss) attributable to non-controlling interest | -5 | -43 | -105 | -104 |
Changes in operating assets and liabilities: | ||||
Accounts receivable | -23 | 50 | -1,988 | -6,287 |
Other assets | -8 | -612 | -437 | -3 |
Accounts payable and accrued expenses | -481 | -400 | -244 | 488 |
Income taxes | 0 | -156 | -210 | 0 |
Deferred income taxes | 0 | -156 | -210 | 0 |
Net cash provided by (used in) operating activities | -577 | -821 | -1,755 | -3,760 |
Cash used in investing activities: | ||||
Acquisition of intangible assets | -289 | -350 | -1,122 | -1,211 |
Acquisition of property and equipment | -48 | -49 | -131 | |
Proceeds from disposition of property and equipment | 32 | |||
Other assets | 4 | -23 | ||
Net cash (used in) investing activities | -257 | -398 | -1,167 | -1,365 |
Cash flow from financing activities: | ||||
Increase (decrease) in long-term borrowing, net | -169 | -15 | -68 | 0 |
Net proceeds from issuance of preferred stock | 982 | 0 | ||
Proceeds from issuance of common stock | 0 | 6,000 | ||
Proceeds from issuance of convertible debenture, net | 3,202 | 0 | ||
Repurchase of common stock | 0 | -4 | ||
Advances from (repayments to) related parties, net | -270 | 0 | -33 | 500 |
Net cash provided by (used in) financing activities | -439 | -15 | 4,083 | 6,496 |
Increase (decrease) in cash during the period | -1,273 | -1,234 | 1,161 | 1,371 |
Foreign exchange effect on cash | 24 | -47 | -59 | 0 |
Cash at beginning of the period | 3,172 | 2,070 | 2,070 | 699 |
Cash at end of the period | 1,923 | 789 | 3,172 | 2,070 |
Supplementary Information: | ||||
Interest paid | 0 | 0 | 0 | 0 |
Income taxes paid | 0 | 0 | 0 | 0 |
Non-cash transactions: | ||||
Non-cash transactions | 0 | 0 | ||
Common stock issued for services received | 65 | 643 | ||
Settlement of subscription receivable through partial repayment of loan payable | 0 | 500 | ||
Common stock issued for settlement of debt | 822 | |||
Common stock issued for services to be received in the future | 0 | |||
Fair value of warrants issued for services received | $187 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Preferred Stock | Common Stock | Additional Paid-In Capital | Deferred Compensation | Retained Earnings (Deficit) | Stock Subscriptions Receivable | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total |
In Thousands, except Share data | |||||||||
Beginning Balance, Amount at Dec. 31, 2012 | $3 | $21,630 | ($12,725) | ($500) | $455 | $8,863 | |||
Beginning Balance, Shares (in thousands) at Dec. 31, 2012 | 30,846 | ||||||||
Sale of subsidiary shares to non-controlling interest | 500 | 500 | |||||||
Net loss | -594 | -104 | -698 | ||||||
Foreign currency translation | 682 | 682 | |||||||
Receipt of subscription receivable by offset against shareholder loan | 500 | 500 | |||||||
Common stock issued on exercise of warrants, shares | 1,168 | ||||||||
Commons stock issued, Shares | 807 | ||||||||
Commons stock issued, Amount | 6,000 | 6,000 | |||||||
Common stock issued for services received, Shares (in thousands) | 101 | ||||||||
Common stock issued for services received, Amount | 643 | 643 | |||||||
Common stock repurchased, shares | -1 | ||||||||
Common stock repurchased, amount | -4 | -4 | |||||||
Options issued for services, Amount | 0 | ||||||||
Ending Balance, Amount at Dec. 31, 2013 | 3 | 28,269 | -13,319 | 1,137 | 396 | 16,486 | |||
Ending Balance, Shares (in thousands) at Dec. 31, 2013 | 32,921 | ||||||||
Net loss | -1,864 | -105 | -1,969 | ||||||
Foreign currency translation | -1,074 | -1,074 | |||||||
Common stock issued on exercise of warrants, shares | 6,000,000 | 6,000,000 | |||||||
Common stock issued in settlement of debt | 246 | 822 | 822 | ||||||
Fair value of warrants issued for services received | 187 | 187 | |||||||
Issuance of warrants in connection with convertible debenture | 599 | 599 | |||||||
Beneficial conversion feature in connection with convertible debenture | 303 | 303 | |||||||
Warrants issued as part of debt issue costs | 98 | 98 | |||||||
Common stock issued for services received, Shares (in thousands) | 40 | ||||||||
Common stock issued for services received, Amount | 108 | 65 | 173 | ||||||
Common Stock issued for services to be received in the future, Shares | 75 | ||||||||
Common Stock issued for services to be received in the future, Amount | 323 | -323 | 0 | ||||||
Preferred stock issued for cash, Shares | 171 | ||||||||
Preferred stock issued for cash net of offering costs of $18, Amount | 1 | 981 | 982 | ||||||
Preferred dividends | -44 | -44 | |||||||
Costs of financing | -108 | -108 | |||||||
Options issued for services, Amount | 516 | 516 | |||||||
Ending Balance, Amount at Dec. 31, 2014 | 1 | 3 | 32,163 | -214 | -15,227 | 63 | 291 | 17,080 | |
Ending Balance, Shares (in thousands) at Dec. 31, 2014 | 171 | 33,282 | 17,080 | ||||||
Net loss | -933 | -5 | -938 | ||||||
Foreign currency translation | 292 | 292 | |||||||
Common stock issued on exercise of warrants, shares | 6,000 | 6,000 | |||||||
Preferred dividends | -25 | -25 | |||||||
Amortization of deferred compensation | 53 | 53 | |||||||
Options issued for services, Amount | 129 | 129 | |||||||
Ending Balance, Amount at Mar. 31, 2015 | $1 | $3 | $32,292 | ($161) | ($16,185) | $355 | $286 | $16,591 | |
Ending Balance, Shares (in thousands) at Mar. 31, 2015 | 171 | 33,282 |
1_Description_of_Business_Orga
1. Description of Business, Organization and Principles of Consolidation | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Description Of Business Organization And Principles Of Consolidation | ||
1. Description of Business, Organization and Principles of Consolidation | Description of Business | Description of Business |
One Horizon Group, Inc., (the “Company” or “Horizon”) develops proprietary software primarily in the Voice over Internet Protocol (VoIP) and bandwidth optimization markets (“Horizon Globex”) and provides it under perpetual license arrangements (“Master License”) throughout the world. The Company sells related user licenses and software maintenance services as well. | One Horizon Group, Inc., (the “Company” or “Horizon”) develops proprietary software primarily in the Voice over Internet Protocol (VoIP) and bandwidth optimization markets (“Horizon Globex”) and provides it under perpetual license arrangements (“Master License”) throughout the world. The Company sells related user licenses and software maintenance services as well. | |
Interim Period Financial Statements | Principles of Consolidation | |
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the Securities and Exchange Commission’s instructions. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for such interim period. The results reported in these interim consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and note disclosure normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on April 1, 2015. | The December 31, 2014 and 2013 consolidated financial statements include the accounts of One Horizon Group, Inc. and its wholly owned subsidiaries One Horizon Group Plc, Horizon Globex GmbH, Abbey Technology GmbH, One Horizon Hong Kong Limited, Horizon Globex Ireland Limited, Global Phone Credit Limited, One Horizon Group Pte., Limited and Aishuo Network Information Co., Ltd. together with Horizon Network Technology Co. Ltd. which is a 75% owned subsidiary. | |
Principles of Consolidation and Combination | All significant intercompany balances and transactions have been eliminated. | |
The March 31, 2015 and 2014 consolidated financial statements include the accounts of One Horizon Group, Inc. and its wholly owned subsidiaries One Horizon Group plc, Horizon Globex GmbH, Abbey Technology GmbH, One Horizon Hong Kong Limited, Horizon Globex Ireland Limited, Global Phone Credit Limited, One Horizon Group Pte., Limited and Aishuo Network Information Co., Ltd. together with Horizon Network Technology Co. Ltd. which is a 75% owned subsidiary. | ||
All significant intercompany balances and transactions have been eliminated. |
2_Summary_of_Significant_Accou
2. Summary of Significant Accounting Policies | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Dec. 31, 2014 | |||
Summary Of Significant Accounting Policies | ||||
2. Summary of Significant Accounting Policies | Basis of Accounting and Presentation | |||
Basis of Accounting and Presentation | ||||
These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States | ||||
These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States | ||||
Foreign Currency Translation | ||||
Foreign Currency Translation | ||||
The reporting currency of the Company is the United States dollar. Assets and liabilities of operations other than those denominated in U.S. dollars, primarily in Switzerland, the United Kingdom and China, are translated into United States dollars at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the period. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. | ||||
The reporting currency of the Company is the United States dollar. Assets and liabilities of operations other than those denominated in U.S. dollars, primarily in Switzerland, the United Kingdom and China, are translated into United States dollars at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the period. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. | ||||
Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in other income and expense. | Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in general and administrative expenses. | |||
Cash | Cash | |||
Cash and cash equivalents include bank demand deposit accounts and highly liquid short term investments with maturities of three months or less when purchased. Cash consists of checking accounts held at financial institutions in the United Kingdom, Switzerland, Ireland, Singapore, Hong Kong and China which, at times, balances may exceed insured limits. The Company has not experienced any losses related to these balances, and management believes the credit risk to be minimal. | Cash and cash equivalents include bank demand deposit accounts and highly liquid short term investments with maturities of three months or less when purchased. Cash consists of checking accounts held at financial institutions in the United Kingdom, Switzerland, Ireland, Singapore, Hong Kong and China which, at times, balances may exceed insured limits. The Company has not experienced any losses related to these balances, and management believes the credit risk to be minimal. | |||
Accounts Receivable | Accounts Receivable | |||
Accounts receivable result primarily from sale of software licenses, hardware and consultancy fees to customers and are recorded at their principal amounts. The categories of sales and receivables and their terms of payment are as follows: | Accounts receivable result primarily from sales of software, user licenses and maintenance services to customers and are recorded at their principal amounts. Receivables are considered past due once they exceed the terms of the sales transaction. When necessary, the Company provides an allowance for doubtful accounts that is based on a review of outstanding receivables, historical collection information, and current economic conditions. There was an allowance of $492,000 and $212,000 for doubtful accounts at December 31, 2014 and 2013, respectively. Receivables are generally unsecured. Account balances are charged off against the allowance when the Company determines it is probable the receivable will not be recovered. The Company does not have off-balance sheet credit exposure related to its customers. As at December 31, 2014 and December 31, 2013, two customers accounted for 28% and three customers accounted for 22%, respectively, of the accounts receivable balance. | |||
a) | Master License Agreement (“Agreement”) deposits – these deposits are payable in accordance with the terms of the Agreement. The deposits are invoiced and recognised when the agreement is signed providing the deposits are due to be received within 12 months. When the deposits under the agreement are due in later periods then the later deposits are invoiced when the later deposits are due to be paid. | Property and Equipment | ||
b) | Maintenance and operational fees and end user licenses – these charges are invoiced and recognized when the customer is due to pay them under the Agreement. In some Agreements the charges are invoiced and payable when the service/licenses have been delivered by the Company. In the remaining cases the Company has agreed a Revenue Share basis of payment whereby the Company receives an agreed proportion of the Customer’s revenue from its operation of the Horizon service. In this circumstances the income for Maintenance and operational fees together with End user licenses are not recognized until the income is invoiced and due. In 2014 the Company reported that it has converted a significant number of its customers to a Revenue Share basis of collection (see note in Revenue Recognition note) and the balance outstanding at the point of conversion will be collected first before further revenue of this category is recognized in the future. | |||
Property and equipment is primarily comprised of leasehold property improvements, motor vehicles and equipment that are recorded at cost and depreciated or amortized using the straight-line method over their estimated useful lives as follows: motor vehicles – 5 years, equipment – between 3 and 5 years, leasehold property improvements, over the lesser of the estimated remaining useful life of the asset or the remaining term of the lease. | ||||
c) | Software consultancy – When customers require customization of software then the Company quotes a fixed project amount or a day rate for the work. When the Customer has confirmed their approval and the work has been undertaken then the Consultancy is invoiced and the revenue recognized. The terms of payment are that the fee is payable within the stated terms, normally 30 days from date of invoice. | |||
d) | Hardware – this comprises of the supply of ancillary equipment which on occasional basis customers ask us to source and supply. The Company quotes the price for delivery and upon delivery invoices the Customer with payment due within stated terms, normally within 30 days of invoice. | Repairs and maintenance are charged to expense as incurred. Expenditures that substantially increase the useful lives of existing assets are capitalized. | ||
When necessary, the Company provides an allowance for doubtful accounts that is based on a review of outstanding receivables, historical collection information, and current economic conditions. The Company has strong collection history in all categories except category b) and does not believe an allowance for doubtful accounts for these categories is necessary. For receivables in category b), when we become aware of a specific customer’s inability to meet its financial obligations, such as in the case of bankruptcy or deterioration in the customer’s operating results, financial position, or credit rating, we record a specific reserve for bad debt to reduce the related receivable to the amount we believed to be collectible. There was an allowance of $592,000 and $492,000 for doubtful accounts at March 31, 2015 and December 31, 2014, respectively. Receivables are generally unsecured. The Company does not have off-balance sheet credit exposure related to its customers. As at March 31, 2015 and December 31, 2014, two customers accounted for 20% and 28%, respectively, of the accounts receivable balance. | Fair Value Measurements | |||
Where the Company considers the receivable balances of certain customers, under category (b) above to be received in more than 12 months the relevant balances are shown as a non current asset. A provision for a discount for the deferred payments totaling $100,000 averaging approximately to a discount of 1.5% per annum for payments expected to be received beyond 12 months. | Fair value is defined as the exchange price that will be received for an asset or paid to transfer a liability (an exit price) in the principal. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered to be observable and the third unobservable: | |||
Property and Equipment | Level 1 – Quoted prices in active markets for identical assets or liabilities. | |||
Property and equipment is primarily comprised of leasehold property improvements, motor vehicles and equipment that are recorded at cost and depreciated or amortized using the straight-line method over their estimated useful lives as follows: motor vehicles – 5 years, equipment – between 3 and 5 years, leasehold property improvements, over the lesser of the estimated remaining useful life of the asset or the remaining term of the lease. | Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||
Repairs and maintenance are charged to expense as incurred. Expenditures that substantially increase the useful lives of existing assets are capitalized. | Level 3 – Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities. | |||
Fair Value Measurements | Intangible Assets | |||
Fair value is defined as the exchange price that will be received for an asset or paid to transfer a liability (an exit price) in the principal. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered to be observable and the third unobservable: | Intangible assets include software development costs and customer lists and are amortized on a straight-line basis over the estimated useful lives of five years for customer lists and ten years for software development. The Company periodically evaluates whether changes have occurred that would require revision of the remaining estimated useful life. The Company performs periodic reviews of its capitalized intangible assets to determine if the assets have continuing value to the Company. | |||
Level 1 – Quoted prices in active markets for identical assets or liabilities. | ||||
The Company expenses software development costs as incurred until technological feasibility has been established, at which time those costs are capitalized until the product is available for general release to customers. Judgement is required in determining when technological feasibility of a product is established. The Company has determined that after technological feasibility for software products is reached, the Company continues to address all high risk development issues through coding and testing prior to the release of the products to customers. The amortization of these costs is included in cost of revenue over the estimated life of the products. | ||||
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||||
During the years ended December 31, 2014 and 2013 software development costs of $1,122,000 and $1,211,000, respectively, have been capitalized. | ||||
Level 3 – Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities. | ||||
Impairment of Other Long-Lived Assets | ||||
Intangible Assets | The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. During the years ended December 31, 2014 and 2013 the Company identified no impairment losses related to the Company’s long-lived assets. | |||
Intangible assets include software development costs and customer lists and are amortized on a straight-line basis over the estimated useful lives of five years for customer lists and ten years for software development. The Company periodically evaluates whether changes have occurred that would require revision of the remaining estimated useful life. The Company performs periodic reviews of its capitalized intangible assets to determine if the assets have continuing value to the Company. | Revenue Recognition | |||
The Company expenses software development costs as incurred until technological feasibility has been established, at which time those costs are capitalized until the product is available for general release to customers. Judgement is required in determining when technological feasibility of a product is established. The Company has determined that after technological feasibility for software products is reached, the Company continues to address all high risk development issues through coding and testing prior to the release of the products to customers. The amortization of these costs is included in cost of revenue over the estimated life of the products. | The Company recognizes revenue when it is realized or realizable and earned. The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred or services have been rendered, price is fixed and determinable, and collectability is reasonably assured. | |||
During the three months ended March 31, 2015 and 2014 software development costs of $289,000 and $350,000, respectively, have been capitalized. | ||||
● | Software and licenses – revenue from sales of perpetual licenses to customers when payments for the licenses are fixed is recognized at the inception of the arrangement, unless the payment term exceeds one year and then only if the presumption that the license fee is not fixed or determinable can be overcome, presuming all other relevant revenue recognition criteria are met. If the presumption cannot be overcome, revenue is recognized as payments from the customer become due. Revenue from sales of perpetual licenses when payments for the licenses are payable over a period exceeding a year and those payments are variable based on customer usage is recognized as payments from the customer become due. | |||
Impairment of Other Long-Lived Assets | ||||
● | Revenue for user licenses purchased by customers is recognized when the user license is delivered except as set out below. | |||
The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. During the three months ended March 31, 2015 and 2014 the Company identified no impairment losses related to the Company’s long-lived assets. | ||||
● | Revenue for maintenance services is recognized over the period of delivery of the services except as set out below. | |||
Revenue Recognition | ||||
● | Effective as of October 1, 2014, the Company amended certain existing customer contracts with respect to the terms under which those customers would pay the Company for perpetual licenses, user licenses and maintenance services provided by the Company. Existing customer contracts required payments for maintenance services to be made based on contractually specified fixed amounts, which were billed regularly through September 2014. Through that date the Company recorded revenue for licenses and maintenance services when those licenses and services were billed. Revenue for user licenses was recorded as earned and revenue for maintenance services was recorded based on a fixed annual fee, billed quarterly. The Company has modified the payment terms under certain of those existing customer contracts by entering into Revenue Sharing agreements with those customers. Under the terms of these Revenue Sharing agreements, future payments will be due from the customer when that customer has generated revenue from its customers who subscribe to use the Horizon products and services. Effective October 1, 2014 revenue will be recorded by the Company when it invoices the customer for the revenue share due to the Company. Certain customers who entered into revenue sharing arrangements had outstanding balances due to the Company as of September 30, 2014, which balances were included in accounts receivable at that date. Payments received after September 30, 2014, from those customers under revenue sharing agreements have been applied to the customer’s existing accounts receivable balances first. For those customers having balances due at September 30, 2014, revenue related to perpetual and user licences and maintenance services will be recorded only after existing accounts receivable balances are fully collected. | |||
The Company recognizes revenue when it is realized or realizable and earned. The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred or services have been rendered, price is fixed and determinable, and collectability is reasonably assured. | ||||
Where the Company has entered into a Revenue Share with the customer then all future revenue from granting of user licenses and for maintenance services will be recognized when the Company has delivered user licenses and is entitled to invoice. | ||||
● | Software and licenses – revenue from sales of perpetual licenses to customers when payments for the licenses are fixed is recognized at the inception of the arrangement, unless the payment term exceeds one year and then only if the presumption that the license fee is not fixed or determinable can be overcome, presuming all other relevant revenue recognition criteria are met. If the presumption cannot be overcome, revenue is recognized as payments from the customer become due. Revenue from sales of perpetual licenses when payments for the licenses are payable over a period exceeding a year and those payments are variable based on customer usage is recognized as payments from the customer become due. | |||
We enter into arrangements in which a customer purchases a combination of software licenses, maintenance services and post-contract customer support (“PCS”). As a result, judgment is sometimes required to determine the appropriate accounting, including how the price should be allocated among the deliverable elements if there are multiple elements. PCS may include rights to upgrades, when and if available, support, updates and enhancements. When vendor specific objective evidence (“VSOE”) of fair value exists for all elements in a multiple element arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values of various elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price between deliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elements such as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In the absence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to the residual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit of accounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No sales arrangements to date include undelivered elements for which VSOE does not exist. | ||||
● | Revenue for user licenses purchased by customers is recognized when the user license is delivered except as set out below. | |||
For purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption that the fee in the transaction is not fixed and determinable. This presumption however, may be overcome if persuasive evidence demonstrates that the Company has a business practice of extending payment terms and has been successful in collecting under the original terms, without providing any concessions. In doing so, the Company considers if the arrangement is sufficiently similar to historical arrangements in terms of similar customers and products is assessing whether there is evidence of a history of successful collection. | ||||
● | Revenue for maintenance services is recognized over the period of delivery of the services except as set out below. | |||
In order to determine the company’s historical experience is based on sufficiently similar arrangements, the Company considers the various factor including the types of customers and products, product life cycle, elements Included in the arrangement, length of payment terms and economics of license arrangement. | ||||
● | Effective as of October 1, 2014, the Company amended certain existing customer contracts with respect to the terms under which those customers would pay the Company for perpetual licenses, user licenses and maintenance services provided by the Company. Existing customer contracts required payments for maintenance services to be made based on contractually specified fixed amounts, which were billed regularly through September 2014. Through that date the Company recorded revenue for licenses and maintenance services when those licenses and services were billed. Revenue for user licenses was recorded as earned and revenue for maintenance services was recorded based on a fixed annual fee, billed quarterly. The Company has modified the payment terms under certain of those existing customer contracts by entering into Revenue Sharing agreements with those customers. Under the terms of these Revenue Sharing agreements, future payments will be due from the customer when that customer has generated revenue from its customers who subscribe to use the Horizon products and services. Effective October 1, 2014 revenue will be recorded by the Company when it invoices the customer for the revenue share due to the Company. Certain customers who entered into revenue sharing arrangements had outstanding balances due to the Company as of September 30, 2014, which balances were included in accounts receivable at that date. Payments received after September 30, 2014, from those customers under revenue sharing agreements have been applied to the customer’s existing accounts receivable balances first. For those customers having balances due at September 30, 2014, revenue related to perpetual and user licenses and maintenance services will be recorded only after existing accounts receivable balances are fully collected. | If the presumption cannot be overcome due to a lack of such evidence, revenue should be recognized as payments become due, assuming all other revenue recognition criteria has been met. | ||
Where the Company has entered into a Revenue Share with the customer then all future revenue from granting of user licenses and for maintenance services will be recognized when the Company has delivered user licenses and is entitled to invoice. | Leases | |||
We enter into arrangements in which a customer purchases a combination of software licenses, maintenance services and post-contract customer support (“PCS”). As a result, judgment is sometimes required to determine the appropriate accounting, including how the price should be allocated among the deliverable elements if there are multiple elements. PCS may include rights to upgrades, when and if available, support, updates and enhancements. When vendor specific objective evidence (“VSOE”) of fair value exists for all elements in a multiple element arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values of various elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price between deliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elements such as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In the absence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to the residual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit of accounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No sales arrangements to date include undelivered elements for which VSOE does not exist. | Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. | |||
For purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption that the fee in the transaction is not fixed and determinable. This presumption however, may be overcome if persuasive evidence demonstrates that the Company has a business practice of extending payment terms and has been successful in collecting under the original terms, without providing any concessions. In doing so, the Company considers if the arrangement is sufficiently similar to historical arrangements in terms of similar customers and products is assessing whether there is evidence of a history of successful collection. | Assets held under finance leases are recognized as assets of the Company at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. | |||
In order to determine the company’s historical experience is based on sufficiently similar arrangements, the Company considers the various factor including the types of customers and products, product life cycle, elements Included in the arrangement, length of payment terms and economics of license arrangement. | Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. | |||
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term. | ||||
Leases | ||||
Advertising Expenses | ||||
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. | ||||
It is the Company’s policy to expense advertising costs as incurred. No advertising costs were incurred during the years ended December 31, 2014 and 2013. | ||||
Assets held under finance leases are recognized as assets of the Company at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. | ||||
Research and Development Expenses | ||||
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. | ||||
Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, related to the development of new products, significant enhancements to existing products, and the portion of costs of development of internal-use software required to be expensed. Research and development costs are charged to operations as incurred with the exception of those software development costs that may qualify for capitalization. The Company incurred research and development costs that are included in general and administration expenses in the amount of $703,000 and $739,000 in the years ended December 31, 2014 and 2013 respectively. | ||||
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term. | ||||
Debt Issue Costs | ||||
Advertising Expenses | ||||
Debt issue costs related to long-term debt are capitalized and amortized over the term of the related debt using the effective interest method. | ||||
It is the Company’s policy to expense advertising costs as incurred. No advertising costs were incurred during the three month periods ended March 31, 2015 and 2014. | ||||
Income Taxes | ||||
Research and Development Expenses | ||||
Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance. | ||||
Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, related to the development of new products, significant enhancements to existing products, and the portion of costs of development of internal-use software required to be expensed. Research and development costs are charged to operations as incurred with the exception of those software development costs that may qualify for capitalization. In addition to the expenditure capitalized within Intangible Assets the Company incurred research and development costs in the three month periods ended March 31, 2015 and 2014 of $135,000 and $nil, respectively. | ||||
The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively. | ||||
Debt Issue Costs | ||||
Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company’s estimates and assumptions may differ significantly from tax benefits ultimately realized. | ||||
Debt issue costs related to long-term debt are capitalized and amortized over the term of the related debt using the effective interest method. | ||||
Net Loss per Share | ||||
Income Taxes | ||||
Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the years ended December 31, 2014 and 2013, outstanding stock options and warrants are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations. | ||||
Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance. | ||||
Accumulated Other Comprehensive Income (Loss) | ||||
The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively. | ||||
Other comprehensive income (loss), as defined, includes net income, foreign currency translation adjustment, and all changes in equity (net assets) during a period from non-owner sources. To date, the Company has not had any significant transactions that are required to be reported in other comprehensive income (loss), except for foreign currency translation adjustments. | ||||
Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company’s estimates and assumptions may differ significantly from tax benefits ultimately realized. | ||||
Use of Estimates | ||||
Net Loss per Share | The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions. | |||
Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the three month periods ended March 31, 2015 and 2014, outstanding stock options and warrants are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations. | Financial Instruments | |||
Accumulated Other Comprehensive Income (Loss) | The carrying amounts of our financial assets and liabilities such as cash, accounts receivable and accounts payable approximate their fair values based on level 1 inputs in the fair value hierarchy because of the short maturity of these instruments. Due to the conversion features and other terms, it is not practical to estimate the fair value of amounts due to related parties and long term debt. | |||
Other comprehensive income (loss), as defined, includes net loss, foreign currency translation adjustment, and all changes in equity (net assets) during a period from non-owner sources. To date, the Company has not had any significant transactions that are required to be reported in other comprehensive income (loss), except for foreign currency translation adjustments. | Share-Based Compensation | |||
Use of Estimates | The Company accounts for share-based awards at fair value on date of grant and recognizes compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes option pricing model, which includes subjective judgements about the expected life of the awards, forfeiture rates and stock price volitility. | |||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items, accounts receivable aging, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilities assumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions. | Recently Issued Accounting Standards | |||
Financial Instruments | In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09 – Revenue from Contracts with Customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of this ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU will be effective for us in our first quarter of 2017. Early adoption is not permitted. The ASU allows for either full retrospective or modified retrospective adoption. We are evaluating the transaction method that will be elected and the potential effects of the adoption of this ASU on our financial statements. | |||
The carrying value of our financial assets and liabilities such as cash, accounts receivable and accounts payable approximate their fair values based on level 1 inputs in the fair value hierarchy because of the short maturity of these instruments. Due to the conversion features and other terms, it is not practical to estimate the fair value of amounts due to related parties and long term debt. | ||||
Share-Based Compensation | ||||
The Company accounts for stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes valuation model, which includes subjective judgments about the expected life of the awards, forfeiture rates and stock price volatility. | ||||
Recently Issued Accounting Standards | ||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09 – Revenue From Contracts with Customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of this ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU will be effective for us in our first quarter of 2017. Early adoption is not permitted. The ASU allows for either full retrospective or modified retrospective adoption. We are evaluating the transaction method that will be elected and the potential effects of the adoption of this ASU on our financial statements. |
3_China_Operations
3. China Operations | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
China Operations | ||
3. China Operations | During the year ended December 31, 2013, the Company established a subsidiary in China, Horizon Network Technology Co. Ltd. (“HNT”). The establishment of HNT is part of the Company’s strategic plan to expand the application of mobile software and related marketing efforts into emerging markets. The Company contributed $1.5 million for a 75% ownership interest in HNT. The remaining 25% ownership interest in HNT was acquired by non-related parties through the transfer of noncash assets with a fair value of $500,000. | |
During the year ended December 31, 2013 the Company established a subsidiary in China, Horizon Network Technology Co. Ltd. (“HNT”). The establishment of HNT is part of the Company’s strategic plan to expand the application of mobile software and related marketing efforts into emerging markets. The Company contributed $1.5 million for a 75% ownership interest in HNT. The remaining 25% ownership interest in HNT was acquired by non-related parties through the transfer of noncash assets with a fair value of $500,000. | ||
The results of operations, assets, liabilities and cash flows of HNT have been consolidated in the accompanying condensed consolidated financial statements as the Company owns a controlling interest. The ownership interests in HNT held by parties other than the Company are presented separately from the Company’s equity on the Consolidated Balance Sheet. The amount of consolidated net loss attributable to the Company and the non-controlling interest are both presented on the face of the Consolidated Statement of Operations. | ||
The results of operations, assets, liabilities and cash flows of HNT have been consolidated in the accompanying condensed consolidated financial statements as the Company owns a controlling interest. The ownership interests in HNT held by parties other than the Company are presented separately from the Company’s equity on the Consolidated Balance Sheet. The amount of consolidated net loss attributable to the Company and the non-controlling interest are both presented on the face of the Consolidated Statement of Operations. |
4_Property_and_Equipment_net
4. Property and Equipment, net | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Property And Equipment Net | ||||||||||||||||||
4. Property and Equipment, net | Property and equipment consist of the following: (in thousands) | Property and equipment consist of the following: (in thousands) | ||||||||||||||||
31-Mar | 31-Dec | December | 31-Dec | |||||||||||||||
2015 | 2014 | 2014 | 2013 | |||||||||||||||
Leasehold improvements | $ | - | $ | 265 | Leasehold improvements | $ | 265 | $ | 265 | |||||||||
Motor vehicle | - | 120 | Motor vehicle | 120 | 120 | |||||||||||||
Equipment | 290 | 348 | Equipment | 348 | 310 | |||||||||||||
290 | 733 | 733 | 695 | |||||||||||||||
Less accumulated depreciation | (152 | ) | (521 | ) | Less accumulated depreciation | (521 | ) | (380 | ) | |||||||||
Property and equipment, net | $ | 138 | $ | 212 | Property and equipment, net | $ | 212 | $ | 315 |
5_Intangible_Assets
5. Intangible Assets | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Intangible Assets | ||||||||||||||||||
5. Intangible Assets | Intangible assets consist primarily of software development costs and customer and reseller relationships which are amortized over the estimated useful life, generally on a straight-line basis with the exception of customer relationships, which are generally amortized over the greater of straight-line or the related asset’s pattern of economic benefit. (in thousands) | Intangible assets consist primarily of software development costs and customer and reseller relationships which are amortized over the estimated useful life, generally on a straight-line basis with the exception of customer relationships, which are generally amortized over the greater of straight-line or the related asset’s pattern of economic benefit. (in thousands) | ||||||||||||||||
31-Mar | 31-Dec | December | 31-Dec | |||||||||||||||
2015 | 2014 | 2014 | 2013 | |||||||||||||||
Horizon software | $ | 17,669 | $ | 16,936 | Horizon software | $ | 16,936 | $ | 17,599 | |||||||||
ZTEsoft Telecom software | 498 | 495 | ZTEsoft Telecom software | 495 | 497 | |||||||||||||
Contractual relationships | 885 | 885 | Contractual relationships | 885 | 885 | |||||||||||||
19,004 | 18,316 | 18,316 | 18,981 | |||||||||||||||
Less accumulated amortization | (8,048 | ) | (7,356 | ) | Less accumulated amortization | (7,356 | ) | (6,221 | ) | |||||||||
Intangible assets, net | $ | 11,004 | $ | 10,960 | Intangible assets, net | $ | 10,960 | $ | 12,760 | |||||||||
Amortization of intangible assets for each of the next five years is estimated to be $2,000,000 per year | Amortization of intangible assets for each of the next five years is estimated to be $1,900,000 per year | |||||||||||||||||
6_Longterm_Debt
6. Long-term Debt | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Long-term Debt, Unclassified [Abstract] | ||||||||||||||||||
6. Long-term Debt | Long – term liabilities are shown below (in thousands). | Long – term liabilities consist of the following (in thousands) | ||||||||||||||||
31-Mar | 31-Dec | December | 31-Dec | |||||||||||||||
2015 | 2014 | 2014 | 2013 | |||||||||||||||
Vehicle loan | $ | - | $ | 32 | Vehicle loan | $ | 32 | $ | 51 | |||||||||
Equipment loan | 12 | 15 | Equipment loan | 15 | 27 | |||||||||||||
Office term loan | - | 134 | Office term loan | 134 | 171 | |||||||||||||
12 | 181 | 181 | 249 | |||||||||||||||
Less current portion | (12 | ) | (73 | ) | Less current portion | (73 | ) | (65 | ) | |||||||||
Balance | $ | - | $ | 108 | Balance | $ | 108 | $ | 184 | |||||||||
During the quarter the Company negotiated early settlement of the Office term loan balance. As a result a gain of $37,000 was realized and reflected under the General and Administration expenses. |
7_Convertible_Debenture
7. Convertible Debenture | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Convertible Debenture | ||
7. Convertible Debenture | On December 22, 2014 the Company closed a financing of $3.5 million pursuant to which the Company issued to one investor i) a convertible debenture that is convertible into 1,555,556 shares of common stock, at any time, at a price of $2.25 per share; ii) 388,889 Class C warrants entitling the holder to purchase 388,889 shares of common stock at a price of $3.00 per share; iii) 388,889 Class D warrants entitling the holder to purchase 388,889 share of common stock at a price of $3.50 per share and iv) 450,000 performance warrants which are potential exercisable based on the Company’s annual reported subscriber numbers, twenty four (24) months after December 22, 2014 as reflected in the Company’s Annual Report on Form 10-K for the year ending December 31, 2016. | On December 22, 2014 the Company closed a financing of $3.5 million consisting of 1,555,556 units, whereby each unit included i) the right to convert, at any time, into one share of common stock at a price of $2.25; ii) one Class C warrant entitling the holder to purchase one share of common stock at a price of $3.00; iii) one Class D warrant entitling the holder to purchase one share of common stock at a price of $3.50 and iv) a pro-rata share of potential performance warrants. |
The convertible debenture is for a term of three years from the date of issue and has an interest rate of 8% per annum, payable quarterly in arrears either in cash, shares of common stock or a combination of cash and shares of common stock. The Company has the right to repurchase the convertible debenture upon notice at any time after the first twelve months. | The convertible debenture is for a term of three years from the date of issue and has an interest rate of 8% per annum, payable quarterly in arrears in either cash, shares of common stock, or a combination of cash and shares of common stock. The Company has the right to repurchase the convertible debenture upon notice at any time after the first twelve months. | |
The Class C and Class D warrants have a term of four years and are each entitled to purchase one-fourth of a share of common stock. In total the Company issued 388,889 Class C warrants and 388,889 Class D warrants. | The Class C and Class D warrants have a term of four years and are each entitled to purchase one-fourth of a share of common stock. In total the Company issued 388,889 Class C warrants and 388,889 Class D warrants related to the convertible debenture. | |
The performance warrants, each entitling the holders to purchase shares of common stock for cash at the then current market price per share, are exercisable dependent on the number of subscribers the Company has as at December 31, 2016. The Company issued 450,000 performance warrants which can be exercised in full if there is no less than 5 million subscribers, pro-rated if there is more than 5 million but less than 15 million subscriber, or in zero if there are more than 15 million subscribers. | The Company will issue a maximum of 450,000 performance warrants, each entitling the holders to purchase shares of common stock for cash at the then current market price, dependent on the number of subscribers the Company has as at December 31, 2016. The number of performance warrants issued will be a ratio with 450,000 performance warrants being issued if there is less than 5 million subscribers and no performance warrants if there are more than 15 million subscribers. | |
Proceeds received from the convertible debentures were allocated between the convertible debenture and warrants based on their relative fair values. The resulting discount for the warrants is amortized using the effective interest method over the life of the debentures. The relative fair value of Class C and Class D warrants resulted in a discount of $598,500 at the date of issuance. After allocating a portion of the proceeds to the warrants, the effective conversion price of the convertible debentures was determined to result in a beneficial conversion feature. The beneficial conversion feature has a relative fair value of $302,994 at the date of issuance and will be amortized over the life of the convertible debenture. The beneficial conversion feature discount is amortized using the effective interest method over the life of the debentures. The amortization of the debt discount is included as interest expense in the consolidated statement of operations. | Proceeds received from the convertible debentures were allocated between the convertible debenture and the warrants based on their relative fair values. The resulting discount for the warrants is amortized using the effective interest method over the life of the debentures. The relative fair value of Class C and Class D warrants resulted in a discount of $598,500 at the date of issuance. After allocating a portion of the proceeds to the warrants, the effective conversion price of the convertible debentures was determined to result in a beneficial conversion feature. The beneficial conversion feature has a relative fair value of $302,994 at the date of issuance and will be amortized over the term of the convertible debenture. The beneficial conversion feature discount is amortized using the effective interest method over the life of the debentures. The amortization of the debt discount is included as interest expense in the consolidated statement of operations. | |
A total of 1,555,556 shares of common stock have been reserved for the potential conversion of the convertible debenture. | A total of 1,711,112 share of common stock have been reserved for the potential conversion of the convertible debenture. |
8_RelatedParty_Transactions
8. Related-Party Transactions | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||
8. Related-Party Transactions | Amounts due to related parties include the following: (in thousands) | Amounts due to related parties include the following: (in thousands) | ||||||||||||||||
31-Mar | 31-Dec | 31-Dec | 31-Dec | |||||||||||||||
2015 | 2014 | 2014 | 2013 | |||||||||||||||
Loans due to stockholders (current and former officers and directors) | Loans due to stockholders (current and former officers and directors) | |||||||||||||||||
Due within one year | $ | 350 | $ | 600 | Due within one year | $ | 600 | $ | 3,500 | |||||||||
Long-term | 2,578 | 2,598 | Long-term | 2,598 | - | |||||||||||||
$ | 2,928 | $ | 3,198 | $ | 3,198 | $ | 3,500 | |||||||||||
At March 31, 2015, $2,928,000 of related party debt was outstanding. $350,000 is interest free and will be repaid during 2015. The remaining balance of $2,578,000 matures on April 1, 2016 and carries an annual interest rate of 0.21%. | At December 31, 2014, $3,198,000 of related party debt was outstanding. $600,000 is interest free and will be repaid during 2015. The remaining balance of $2,598,000 matures on April 1, 2016 and carries an annual rate of interest of 0.21%. | |||||||||||||||||
During the quarter ending March 31, 2015 the Company entered into a sales contract, in the normal course of business with a customer (Horizon Latin America) in which the Company holds an equity interest. The customer purchased perpetual software license $500,000, which has been recognized in the first quarter of 2015. The Company owns a cost based investment interest of 19% in the customer with no voting rights or board representation therein. | During 2014 the Company settled a total of $1,672,000 approximately of related party debt, by a combination of: | |||||||||||||||||
i. | paying $250,000 | |||||||||||||||||
ii. | issuing a new note payable of $600,000 to be repaid in 2015 | |||||||||||||||||
iii. | Issuing 246,000 new shares of common stock | |||||||||||||||||
The difference between the amount of related party debt eliminated and the fair value of consideration paid by the company is considered a capital transaction and resulted in an increase of $269,000 to additional paid in capital. |
9_Share_Capital
9. Share Capital | 3 Months Ended | 12 Months Ended | ||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||
Share Capital | ||||||||||||||||
9. Share Capital | Preferred Stock | Preferred Stock | ||||||||||||||
The Company’s authorized capital includes 50,000,000 shares of preferred stock of $0.0001 per share par value. The designation of rights including voting powers, preferences, and restrictions shall be determined by the Board of Directors before the issuance of any shares. | The Company’s authorized capital includes 50,000,000 shares of preferred stock of $0.0001 par value. The designation of rights including voting powers, preferences, and restrictions shall be determined by the Board of Directors before the issuance of any shares. | |||||||||||||||
On July 21, 2014 the Company completed a private placement of 170,940 shares of mandatorily convertible Series A Preferred Stock that also included 100,000 Class B warrants, each warrant convertible to one share of common stock at an exercise price of $4 per share. The net proceeds of the offering were $982,000 after deducting offering costs. | On July 21, 2014 the Company completed a private placement of 170,940 shares of mandatorily convertible Series A Preferred Stock that also included 100,000 Class B warrants, each warrant convertible to one share of common stock at an exercise price of $4 per share. The net proceeds of the offering were $982,000 after deducting offering costs. | |||||||||||||||
The holders of Series A Preferred Stock are entitled to receive cumulative dividends during a period of twenty-four (24) months from and after the Issuance Date (the “Dividend Period”). During the Dividend Period for each outstanding share of Series Preferred Stock, dividends shall be payable quarterly in cash, at the rate of 10% per annum on or before each ninety (90) day period following the Issuance Date (each a “Dividend Payment Date”), with the first Dividend Payment Date to occur promptly following the three month period following the Issuance Date, and continuing until the end of the Dividend Period. Following the expiration of the Dividend Period, the holders of Series A Preferred Stock shall not be entitled to any additional dividend payment or coupon rate. | The holders of Series A Preferred Stock are entitled to receive cumulative dividends during a period of twenty-four (24) months from and after the Issuance Date (the “Dividend Period”). During the Dividend Period for each outstanding share of Series Preferred Stock, dividends shall be payable quarterly in cash, at the rate of 10% per annum on or before each ninety (90) day period following the Issuance Date (each a “Dividend Payment Date”), with the first Dividend Payment Date to occur promptly following the three month period following the Issuance Date, and continuing until the end of the Dividend Period. Following the expiration of the Dividend Period, the holders of Series A Preferred Stock shall not be entitled to any additional dividend payment or coupon rate. | |||||||||||||||
Shares of Series A Preferred Stock are convertible in whole or in part, at the option of the holders, into shares of common stock at $5.85 per share prior to the Maturity, and all outstanding shares of Series A Preferred Stock shall automatically convert to shares of common stock upon Maturity, provided however, at no time may holders convert shares of Series A Preferred Stock if the number of shares of common stock to be issued pursuant to such conversion would cause the number of shares of common stock beneficially owned by such holder and its affiliates to exceed 9.99% of the then issued and outstanding shares of common stock outstanding at such time, unless the holder provides us with a waiver notice in such form and with such content specified in the Series A Certificate of Designation. | Shares of Series A Preferred Stock are convertible in whole or in part, at the option of the holders, into shares of common stock at $5.85 per share prior to the Maturity, and all outstanding shares of Series A Preferred Stock shall automatically convert to shares of common stock upon Maturity, provided however, at no time may holders convert shares of Series A Preferred Stock if the number of shares of common stock to be issued pursuant to such conversion would cause the number of shares of common stock beneficially owned by such holder and its affiliates to exceed 9.99% of the then issued and outstanding shares of common stock outstanding at such time, unless the holder provides us with a waiver notice in such form and with such content specified in the Series A Certificate of Designation. | |||||||||||||||
Shares of Series A Preferred Stock are redeemable, at the option of the holders commencing any time after 12 months from and after the closing at a price equal to the original purchase price plus all accrued but unpaid dividends. In the event that the Company completes a financing of $10 million or greater prior to Maturity, the Series A Preferred Stock will be redeemed at a price equal to the original purchase price plus all accrued but unpaid dividends. | Shares of Series A Preferred Stock are redeemable, at the option of the holders commencing any time after 12 months from and after the closing at a price equal to the original purchase price plus all accrued but unpaid dividends. In the event that the Company completes a financing of $10 million or greater prior to Maturity, the Series A Preferred Stock will be redeemed at a price equal to the original purchase price plus all accrued but unpaid dividends. | |||||||||||||||
170,940 shares of Series A preferred stock are issued and outstanding as of March 31, 2015. | 170,940 shares of Series A preferred stock are issued and outstanding as of December 31, 2014. | |||||||||||||||
Mandatorily Redeemable Preferred Shares (Deferred Stock) | ||||||||||||||||
Mandatorily Redeemable Preferred Shares (Deferred Stock) | ||||||||||||||||
The Company’s subsidiary OHG is authorized to issue 50,000 shares of deferred stock, par value of £1.These shares are non-voting, non-participating, redeemable and have been presented as a long-term liability. | ||||||||||||||||
The Company’s subsidiary OHG is authorized to issue 50,000 shares of deferred stock, par value of £1per share.These shares are non-voting, non-participating, redeemable and have been presented as a long-term liability. | ||||||||||||||||
Common Stock | ||||||||||||||||
Common Stock | ||||||||||||||||
The Company is authorized to issue 200 million shares of common stock, par value of $0.0001. | ||||||||||||||||
The Company is authorized to issue 200 million shares of common stock, par value of $0.0001 per share. | ||||||||||||||||
During the year ended December 31, 2014, the Company: | ||||||||||||||||
During the three months ended March 31, 2015, no share of common stock was issued. | ||||||||||||||||
· | issued 15,000 shares of common stock for services received with a fair value of $64,500. | |||||||||||||||
During the year ended December 31, 2014, the Company: | · | issued 25,000 shares of common stock for services received, in connection with the $1 million private placement, with a fair value of $107,500 | ||||||||||||||
● | issued 15,000 shares of common stock for services received with a fair value of $64,500. | · | issued 75,000 shares of common stock for services received in the future with a fair value of $322,500 | |||||||||||||
● | issued 25,000 shares of common stock for services received, in connection with the $1 million private placement, with a fair value of $107,500 | · | issued 246,000 shares of common stock in settlement of amounts owing of $553,500 | |||||||||||||
● | issued 75,000 shares of common stock for services received with a fair value of $322,500 | During the year ended December 31, 2013, the Company: | ||||||||||||||
● | issued 246,000 shares of common stock in settlement of amounts owing of $553,500 | |||||||||||||||
· | issued 5,000 shares of common stock for services received with a fair value of $30,000 | |||||||||||||||
Stock Purchase Warrants | · | issued 62,543 shares of common stock for services received with a fair value of $562,891. | ||||||||||||||
At March 31, 2015, the Company had reserved 2,811,642 shares of its common stock for the following outstanding warrants: | · | issued 806,452 shares of common stock for $6 million cash. | ||||||||||||||
· | issued 33,333 shares of common stock for services received with a fair value of $50,000. | |||||||||||||||
Number of Warrants | Exercise Price | Expiry | ||||||||||||||
· | issued 1,167,600 shares of common stock upon the exercise of warrants with an exercise price of $nil | |||||||||||||||
116,760 | $ | 0.86 | no expiry date | |||||||||||||
1,209,675 | 4.25 | January 2019 | Stock Purchase Warrants | |||||||||||||
100,000 | 4 | Jul-16 | ||||||||||||||
60,000 | 6.55 | Dec-15 | At December 31, 2014, the Company had reserved 2,811,642 shares of its common stock for the following outstanding warrants: | |||||||||||||
68,850 | 2.25 | Dec-18 | ||||||||||||||
402,786 | 3.00 | Dec-18 | Number of Warrants | Exercise Price | Expiry | |||||||||||
402,568 | 3.50 | Dec-18 | ||||||||||||||
450,000 | - | May-17 | 116,760 | $ | 0.86 | no expiry date | ||||||||||
1,209,675 | 4.25 | January 2019 | ||||||||||||||
There were no warrants issued or exercised during the three months ended March 31, 2015. | 100,000 | 4 | Jul-16 | |||||||||||||
60,000 | 6.55 | Dec-15 | ||||||||||||||
68,850 | 2.25 | Dec-18 | ||||||||||||||
402,786 | 3 | Dec-18 | ||||||||||||||
402,568 | 3.5 | Dec-18 | ||||||||||||||
450,000 | - | May-17 | ||||||||||||||
During the year ended December 31, 2014 there were 100,000 warrants issued in connection with the $1 million private placement and 805,354 warrants issued in connection with the $3.5 million convertible debenture. An additional 450,000 performance warrants have been issued in connection with the $3.5 convertible debenture with the number of warrants, and exercise price, to be determined upon completion of the December 31, 2016 fiscal year. In addition there was an additional warrants issued to the holders of each of the 403,226 warrants issued in connection with the financing of February, 2013 such that there are now 1,209,675 warrants outstanding related to this financing. Further the exercise price for these warrants was reduced to $4.25 per share and the exercise period extended to January 2019. There were no warrants exercised during the year ended December 31, 2014. | ||||||||||||||||
10_StockBased_Compensation
10. Stock-Based Compensation | 3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | ||||||||||||||||||||||||||||||||||||
Stock-based Compensation | |||||||||||||||||||||||||||||||||||||
10. Stock-Based Compensation | The shareholders approved a stock option plan on August 6, 2013, the 2013 Equity Incentive Plan. This stock option plan is for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, cash bonuses and other stock-based awards to employees, directors and consultants of the Company. | The shareholders approved a stock option plan on August 6, 2013, the 2013 Equity Incentive Plan. This stock option plan is for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, cash bonuses and other stock-based awards to employees, directors and consultants of the Company. | |||||||||||||||||||||||||||||||||||
There are 3,000,000 shares of common stock available for granting awards under the plan. Each year, commencing 2014, until 2016, the number of shares of common stock available for granting awards shall be increased by the lesser of 1,000,000 shares of common stock and 5% of the total number of shares of common stock outstanding. | There are 3,000,000 shares of common stock available for granting awards under the plan. Each year, commencing 2014, until 2016, the number of shares of common stock available for granting awards shall be increased by the lesser of 1,000,000 shares of common stock and 5% of the total number of shares of common stock outstanding. | ||||||||||||||||||||||||||||||||||||
During the year ended December 31, 2014, the Company issued options to purchase 500,000 shares of common stock under the 2013 Equity Incentive Plan. The options become fully vested on January 15, 2017 and are exercisable, at an exercise price of $4.54 per share, until January 15, 2024. On January 1, 2015, the number of shares available for granting awards under the 2013 Equity Incentive Plan was increased by 1,000,000 shares. | During the year ended December 31, 2014 the Company issued options to purchase 500,000 shares of common stock under the 2013 Equity Incentive Plan. The options become fully vested on January 15, 2017 and are exercisable, at an exercise price of $4.54 per common share, to January 15, 2024. On January 1, 2014 the number of shares available for granting awards under the 2013 Equity Incentive Plan was increased by 1,000,000 shares. | ||||||||||||||||||||||||||||||||||||
A summary of the Company’s 2013 Equity Incentive Plan as of March 31, 2015, is as follows: | A summary of the Company’s 2013 Equity Incentive Plan as of December 31, 2014, is as follows: | ||||||||||||||||||||||||||||||||||||
Number of | Weighted Average | Number of | Weighted Average | ||||||||||||||||||||||||||||||||||
Options | Exercise Price | Options | Exercise Price | ||||||||||||||||||||||||||||||||||
Outstanding at December 31, 2014 | 500,000 | $ | 4.54 | Outstanding at December 31, 2013 | - | $ | - | ||||||||||||||||||||||||||||||
Options issued | - | - | Options issued | 500,000 | 4.54 | ||||||||||||||||||||||||||||||||
Outstanding at March 31, 2015 | 500,000 | 4.54 | Outstanding at December 31, 2014 | 500,000 | 4.54 | ||||||||||||||||||||||||||||||||
The fair value of these options, using the Black-Scholes option-pricing model, is estimated to be $2,200,000. This expense, less an estimated forfeiture rate of 30%, will be recognized over the three year vesting period. The amount of $129,000 has been recognized during the three months ended March 31, 2015. As at March 31, 2015 there was unrecognized compensation expense of approximately $900,000 to be recognized over a period of 1.75 years. | The fair value of these options, using the Black-Scholes option-pricing model, is estimated to be $2,200,000. This expense, less an estimated forfeiture rate of 30%, will be recognized over the three year vesting period. The amount of $516,000 has been recognized during the year ended December 31, 2014. As at December 31, 2014 there was unrecognized compensation expense of approximately $1.03 million to be recognized over a period of 2 years. | ||||||||||||||||||||||||||||||||||||
Prior to the 2013 Equity Incentive Plan the Company issued stock options to directors, employees, advisors, and consultants. | Prior to the 2013 Equity Incentive Plan the Company issued stock options to directors, employees, advisors, and consultants. | ||||||||||||||||||||||||||||||||||||
A summary of the Company’s other stock options as of March 31, 2015, is as follows: | A summary of the Company’s other stock options as of December 31, 2014, is as follows: | ||||||||||||||||||||||||||||||||||||
Number of | Weighted Average | Number of | Weighted Average | ||||||||||||||||||||||||||||||||||
Options | Exercise Price | Options | Exercise Price | ||||||||||||||||||||||||||||||||||
Outstanding at December 31, 2014 | 584,650 | $ | 0.53 | Outstanding at December 31, 2013 | 584,650 | $ | 0.53 | ||||||||||||||||||||||||||||||
Options forfeited | - | - | Options forfeited | - | - | ||||||||||||||||||||||||||||||||
Outstanding at March 31, 2015 | 584,650 | $ | 0.53 | Outstanding at December 31, 2014 | 584,650 | $ | 0.53 | ||||||||||||||||||||||||||||||
There were no options issued, exercised or forfeited during the three months ended March 31, 2015. | |||||||||||||||||||||||||||||||||||||
Other than the options to purchase 500,000 common shares under the 2013 Equity Incentive Plan, there were no options issued, exercised or forfeited during the year ended December 31, 2014. | |||||||||||||||||||||||||||||||||||||
The following table summarizes stock options outstanding at March 31, 2015: | |||||||||||||||||||||||||||||||||||||
The following table summarizes stock options outstanding at December 31, 2014: | |||||||||||||||||||||||||||||||||||||
Number | Average | Number | Intrinsic | ||||||||||||||||||||||||||||||||||
Outstanding | Remaining | Exercisable | Value | Number | Average | Number | Intrinsic | ||||||||||||||||||||||||||||||
at | Contractual | at | at | Outstanding | Remaining | Exercisable | Value | ||||||||||||||||||||||||||||||
March 31, | Life | March 31, | March 31, | at | Contractual | at | at | ||||||||||||||||||||||||||||||
Exercise Price | 2015 | (Years) | 2015 | 2015 | December 31, | Life | December 31, | December 31, | |||||||||||||||||||||||||||||
$ | 0.51 | 850 | 0.58 | 850 | $ | 917 | Exercise Price | 2014 | (Years) | 2014 | 2014 | ||||||||||||||||||||||||||
0.53 | 291,900 | 5.25 | 291,900 | 312,333 | $ | 0.51 | 850 | 0.83 | 850 | $ | 1,258 | ||||||||||||||||||||||||||
0.53 | 291,900 | 7.75 | 291,900 | 312,333 | 0.53 | 291,900 | 5.5 | 291,900 | 426,174 | ||||||||||||||||||||||||||||
4.54 | 500,000 | 8.75 | 166,667 | - | 0.53 | 291,900 | 8 | - | - | ||||||||||||||||||||||||||||
4.54 | 500,000 | 9 | - | - | |||||||||||||||||||||||||||||||||
At March 31, 2015, 5,584,650 shares of common stock were reserved for all outstanding options and future commitments under the 2013 Equity Incentive Plan. | |||||||||||||||||||||||||||||||||||||
At December 31, 2014, 4,584,650 shares of common stock were reserved for all outstanding options and future commitments under the 2013 Equity Incentive Plan. | |||||||||||||||||||||||||||||||||||||
The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model. | |||||||||||||||||||||||||||||||||||||
The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of the options granted were: risk-free interest rate of 1.68%, a 3 year expected life, a dividend yield of 0.0%, and a stock price volatility factor of 192% |
11_Commitments_and_Contingenci
11. Commitments and Contingencies | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Commitments And Contingencies | ||||||||||||||||||
11. Commitments and Contingencies | The Company has an agreement with a consultant to pay for certain services provided during 2013 by the issuance of options to purchase 291,900 shares of common stock of the Company. | The Company has an agreement with an employee to pay for certain services provided during 2013 by the issuance of options to purchase 291,900 shares of common stock of the Company. | ||||||||||||||||
Contractual Commitments | Contractual Commitments | |||||||||||||||||
The Company incurred total rent expense of $21,000 and $42,000, respectively, for the three month periods ended March 31, 2015 and 2014. | The Company incurred total rent expense of $100,000 and $200,000, respectively, for the years ended December 31, 2014 and 2013. | |||||||||||||||||
Minimum contractual commitments, as of March 31, 2015, are as follows: | Minimum contractual commitments, as of December 31, 2014, is as follows: | |||||||||||||||||
Operating | Long-term | Operating | Long-term | |||||||||||||||
leases | Financing | leases | Financing | |||||||||||||||
2015 | $ | 19,000 | $ | 9,000 | 2015 | $ | 112,000 | $ | 73,000 | |||||||||
2016 | - | 3,000 | 2016 | 67,000 | 53,000 | |||||||||||||
2017 | 67,000 | 40,000 | ||||||||||||||||
Legal Proceedings | 2018 | 67,000 | 15,000 | |||||||||||||||
In 2012, we sold certain former subsidiaries engaged in provision of satellite service in 2012 to Broadband Satellite Services (“BSS”), a company incorporated under the laws of England and Wales. Horizon Globex, a company incorporated in Switzerland and a subsidiary of us, had provided these subsidiary companies with software and IT services. In connection with its acquisition of our former subsidiary companies, BSS entered into three agreements with Horizon Globex pursuant to which BSS continued to use Horizon Globex to supply software and IT services. Notwithstanding the fact that Horizon Globex has provided such ongoing software and IT services, BSS has failed to pay our fees pursuant to the agreements. As a result, on December 23, 2014, we initiated legal proceedings in the High Court, Queen’s Bench Division, Commercial Court No. 2014 folio 1560 against BSS in the United Kingdom to collect such fees in the amount of $640,000. Subsequently, BSS asserted counter-claims in the amount of $5.8 million, alleging among other claims, civil fraud in connection with the sale of subsidiary companies. Based on the timing of these claims, which were never raised until we filed our action against BSS, it is our position that these claims are specious and represent nothing more than an attempt to improve BSS’s negotiating position with regard to our legitimate claims against it. As a result, we plan to carry out our claims against BSS to the fullest extent possible and to defend BSS’s counter-claims vigorously. We note further that several BSS counter-claims may be time barred by applicable sections of the contracts and plan to assert the same as an affirmative defense to such counter-claim. Notwithstanding our views with regard to our claims against BSS and BSS’s counter-claims, litigation is by its nature unpredictable and therefore we cannot guarantee with certainty the outcome of our dispute with BSS. | Legal Proceedings | |||||||||||||||||
In 2012, we sold certain former subsidiaries engaged in provision of satellite service in 2012 to Broadband Satellite Services (“BSS”), a company incorporated under laws of England and Wales. Horizon Globex, a company incorporated in Switzerland and a subsidiary of us, had provided these subsidiary companies with software and IT services. In connection with its acquisition of our former subsidiary companies, BSS entered into three agreements with Horizon Globex pursuant to which BSS continued to use Horizon Globex to supply software and IT services. Notwithstanding the fact that Horizon Globex has provided such ongoing software and IT services, BSS has failed to pay our fees pursuant to the agreements. As a result, on December 23, 2014, we initiated legal proceedings in the High Court, Queens Bench Division, Commercial Court No. 2014 folio 1560 against BSS in the United Kingdom to collect such fees in the amount of $640,000. Subsequently, BSS asserted counter claims in the amount of $5.8 million, alleging among other claims, civil fraud in connection with the sale of subsidiary companies. Based on the timing of these claims, which were never raised until we filed our action against BSS, it is our position that these claims are specious and represent nothing more than an attempt to improve BSS's negotiating position with regard to our legitimate claims against it. As a result, we plan to continue to carry out our claims against BSS to the fullest extent possible and to defend BSS's counter-claims vigorously. We note further that several of BSS's counter claims may be time barred by applicable sections of the contracts and plan to assert the same as an affirmative defense to such counter claim. Notwithstanding our views with regard to our claims against BSS and BSS's counterclaims, litigation is by its nature unpredictable and therefore we cannot guarantee with certainty the outcome of our dispute with BSS. |
11A_Income_Taxes
11A. Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
11. Income Taxes | Income taxes are recognized for the amount of taxes payable for the current year and for the impact of deferred tax assets and liabilities, which represent consequences of events that have been recognized differently in the financial statements under GAAP than for tax purposes. | ||||||||
Income (loss) before income taxes consisted of the following (in thousands): | |||||||||
31-Dec | |||||||||
2014 | 2013 | ||||||||
United States | $ | (943) | $ | -1,474 | |||||
International | -607 | 466 | |||||||
Total | $ | (1,550) | $ | -1,008 | |||||
Deferred Tax Assets | |||||||||
As of December 31, 2014, the Company had federal net operating losses of $2.4 million available for future deduction from taxable income derived in the United States. The Company’s United Kingdom subsidiary has non-capital losses of approximately $13.0 million available for future deductions from taxable income derived in the United Kingdom, which do not expire. The potential benefit of net operating loss carryforwards has not been recognized in the combined financial statements since the Company cannot determine that it is more likely than not that such benefit will be utilized in future years. The tax years 2006 through 2013 remain open to examination by federal authorities and other jurisdictions in which the Company operates. The components of the net deferred tax asset and the amount of the valuation allowance are as follows: (in thousands) | |||||||||
31-Dec | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets | |||||||||
Net operating loss carryforwards - United States | $ | 829 | $ | 508 | |||||
Net operating loss carryforwards - International | 3,249 | 2,924 | |||||||
Valuation allowance | -4,078 | -3,432 | |||||||
Net deferred tax assets | $ | - | $ | - | |||||
The increase in the valuation allowance was $646,000 for the year ended December 31, 2014 and $922,000 for the year ended December 31, 2013. |
12_Segment_Information
12. Segment Information | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Segment Reporting [Abstract] | |||||
12. Segment Information | The Company has one business segment, which is the development of software for licensing to the telecommunications industry. | ||||
The Company’s revenues were generated in the following geographic areas: | |||||
2014 | 2013 | ||||
Europe | $0.7 million | $3.7 million | |||
Asia | $3.7 million | $4.7 million | |||
Russia | $0.1 million | $0.4 million | |||
USA | $0.6 million | $0.3 million | |||
2_Summary_of_Significant_Accou1
2. Summary of Significant Accounting Policies (Policies) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Dec. 31, 2014 | |||
Summary Of Significant Accounting Policies Policies | ||||
Basis of Accounting and Presentation | These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States | |||
These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States | ||||
The reporting currency of the Company is the United States dollar. Assets and liabilities of operations other than those denominated in U.S. dollars, primarily in Switzerland, the United Kingdom and China, are translated into United States dollars at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the period. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. | ||||
Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in general and administrative expenses. | ||||
Foreign Currency Translation | The reporting currency of the Company is the United States dollar. Assets and liabilities of operations other than those denominated in U.S. dollars, primarily in Switzerland, the United Kingdom and China, are translated into United States dollars at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the period. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. | The reporting currency of the Company is the United States dollar. Assets and liabilities of operations other than those denominated in U.S. dollars, primarily in Switzerland, the United Kingdom and China, are translated into United States dollars at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the period. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. | ||
Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in general and administrative expenses. | Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in general and administrative expenses. | |||
Cash | Cash and cash equivalents include bank demand deposit accounts and highly liquid short term investments with maturities of three months or less when purchased. Cash consists of checking accounts held at financial institutions in the United Kingdom, Switzerland, Ireland, Singapore, Hong Kong and China which, at times, balances may exceed insured limits. The Company has not experienced any losses related to these balances, and management believes the credit risk to be minimal. | Cash and cash equivalents include bank demand deposit accounts and highly liquid short term investments with maturities of three months or less when purchased. Cash consists of checking accounts held at financial institutions in the United Kingdom, Switzerland, Ireland, Singapore, Hong Kong and China which, at times, balances may exceed insured limits. The Company has not experienced any losses related to these balances, and management believes the credit risk to be minimal. | ||
Accounts Receivable | Accounts receivable result primarily from sale of software and licenses to customers and are recorded at their principal amounts. Receivables are considered past due once they exceed the terms of the sales transaction. When necessary, the Company provides an allowance for doubtful accounts that is based on a review of outstanding receivables, historical collection information, and current economic conditions. There was an allowance of $592,000 and $212,000 for doubtful accounts at March 31, 2015 and 2014, respectively. Receivables are generally unsecured. Account balances are charged off against the allowance when the Company determines it is probable the receivable will not be recovered. The Company does not have off-balance sheet credit exposure related to its customers. As at March 31, 2015 and 2014, two customers accounted for 20% and 22%, respectively, of the accounts receivable balance. | Accounts receivable result primarily from sales of software, user licenses and maintenance services to customers and are recorded at their principal amounts. Receivables are considered past due once they exceed the terms of the sales transaction. When necessary, the Company provides an allowance for doubtful accounts that is based on a review of outstanding receivables, historical collection information, and current economic conditions. There was an allowance of $492,000 and $212,000 for doubtful accounts at December 31, 2014 and 2013, respectively. Receivables are generally unsecured. Account balances are charged off against the allowance when the Company determines it is probable the receivable will not be recovered. The Company does not have off-balance sheet credit exposure related to its customers. As at December 31, 2014 and December 31, 2013, two customers accounted for 28% and three customers accounted for 22%, respectively, of the accounts receivable balance. | ||
Property and Equipment | Property and equipment is primarily comprised of leasehold property improvements, motor vehicles and equipment that are recorded at cost and depreciated or amortized using the straight-line method over their estimated useful lives as follows: motor vehicles – 5 years, equipment – between 3 and 5 years, leasehold property improvements, over the lesser of the estimated remaining useful life of the asset or the remaining term of the lease. | Property and equipment is primarily comprised of leasehold property improvements, motor vehicles and equipment that are recorded at cost and depreciated or amortized using the straight-line method over their estimated useful lives as follows: motor vehicles – 5 years, equipment – between 3 and 5 years, leasehold property improvements, over the lesser of the estimated remaining useful life of the asset or the remaining term of the lease. | ||
Repairs and maintenance are charged to expense as incurred. Expenditures that substantially increase the useful lives of existing assets are capitalized. | Repairs and maintenance are charged to expense as incurred. Expenditures that substantially increase the useful lives of existing assets are capitalized. | |||
Fair Value Measurements | Fair value is defined as the exchange price that will be received for an asset or paid to transfer a liability (an exit price) in the principal. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered to be observable and the third unobservable: | Fair value is defined as the exchange price that will be received for an asset or paid to transfer a liability (an exit price) in the principal. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered to be observable and the third unobservable: | ||
Level 1 – Quoted prices in active markets for identical assets or liabilities. | Level 1 – Quoted prices in active markets for identical assets or liabilities. | |||
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |||
Level 3 – Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities. | Level 3 – Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities. | |||
Intangible Assets | Intangible assets include software development costs and customer lists and are amortized on a straight-line basis over the estimated useful lives of five years for customer lists and ten years for software development. The Company periodically evaluates whether changes have occurred that would require revision of the remaining estimated useful life. The Company performs periodic reviews of its capitalized intangible assets to determine if the assets have continuing value to the Company. | Intangible assets include software development costs and customer lists and are amortized on a straight-line basis over the estimated useful lives of five years for customer lists and ten years for software development. The Company periodically evaluates whether changes have occurred that would require revision of the remaining estimated useful life. The Company performs periodic reviews of its capitalized intangible assets to determine if the assets have continuing value to the Company. | ||
The Company expenses software development costs as incurred until technological feasibility has been established, at which time those costs are capitalized until the product is available for general release to customers. Judgement is required in determining when technological feasibility of a product is established. The Company has determined that after technological feasibility for software products is reached, the Company continues to address all high risk development issues through coding and testing prior to the release of the products to customers. The amortization of these costs is included in cost of revenue over the estimated life of the products. | The Company expenses software development costs as incurred until technological feasibility has been established, at which time those costs are capitalized until the product is available for general release to customers. Judgement is required in determining when technological feasibility of a product is established. The Company has determined that after technological feasibility for software products is reached, the Company continues to address all high risk development issues through coding and testing prior to the release of the products to customers. The amortization of these costs is included in cost of revenue over the estimated life of the products. | |||
During the three months ended March 31, 2015 and 2014 software development costs of $289,000 and $350,000, respectively, have been capitalized. | During the years ended December 31, 2014 and 2013 software development costs of $1,122,000 and $1,211,000, respectively, have been capitalized. | |||
Impairment of Long-Lived Assets | The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. During the three months ended March 31, 2015 and 2014 the Company identified no impairment losses related to the Company’s long-lived assets. | The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. During the years ended December 31, 2014 and 2013 the Company identified no impairment losses related to the Company’s long-lived assets. | ||
Revenue Recognition | The Company recognizes revenue when it is realized or realizable and earned. The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred or services have been rendered, price is fixed and determinable, and collectability is reasonably assured. | The Company recognizes revenue when it is realized or realizable and earned. The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred or services have been rendered, price is fixed and determinable, and collectability is reasonably assured. | ||
● | Software and licenses – revenue from sales of perpetual licenses to customers when payments for the licenses are fixed is recognized at the inception of the arrangement, unless the payment term exceeds one year and then only if the presumption that the license fee is not fixed or determinable can be overcome, presuming all other relevant revenue recognition criteria are met. If the presumption cannot be overcome, revenue is recognized as payments from the customer become due. Revenue from sales of perpetual licenses when payments for the licenses are payable over a period exceeding a year and those payments are variable based on customer usage is recognized as payments from the customer become due. | |||
● | Software and licenses – revenue from sales of perpetual licenses to customers when payments for the licenses are fixed is recognized at the inception of the arrangement, unless the payment term exceeds one year and then only if the presumption that the license fee is not fixed or determinable can be overcome, presuming all other relevant revenue recognition criteria are met. If the presumption cannot be overcome, revenue is recognized as payments from the customer become due. Revenue from sales of perpetual licenses when payments for the licenses are payable over a period exceeding a year and those payments are variable based on customer usage is recognized as payments from the customer become due. | |||
● | Revenue for user licenses purchased by customers is recognized when the user license is delivered except as set out below. | |||
● | Revenue for user licenses purchased by customers is recognized when the user license is delivered except as set out below. | |||
● | Revenue for maintenance services is recognized over the period of delivery of the services except as set out below. | |||
● | Revenue for maintenance services is recognized over the period of delivery of the services except as set out below. | |||
● | Effective as of October 1, 2014, the Company amended certain existing customer contracts with respect to the terms under which those customers would pay the Company for perpetual licenses, user licenses and maintenance services provided by the Company. Existing customer contracts required payments for maintenance services to be made based on contractually specified fixed amounts, which were billed regularly through September 2014. Through that date the Company recorded revenue for licenses and maintenance services when those licenses and services were billed. Revenue for user licenses was recorded as earned and revenue for maintenance services was recorded based on a fixed annual fee, billed quarterly. The Company has modified the payment terms under certain of those existing customer contracts by entering into Revenue Sharing agreements with those customers. Under the terms of these Revenue Sharing agreements, future payments will be due from the customer when that customer has generated revenue from its customers who subscribe to use the Horizon products and services. Effective October 1, 2014 revenue will be recorded by the Company when it invoices the customer for the revenue share due to the Company. Certain customers who entered into revenue sharing arrangements had outstanding balances due to the Company as of September 30, 2014, which balances were included in accounts receivable at that date. Payments received after September 30, 2014, from those customers under revenue sharing agreements have been applied to the customer’s existing accounts receivable balances first. For those customers having balances due at September 30, 2014, revenue related to perpetual and user licenses and maintenance services will be recorded only after existing accounts receivable balances are fully collected. | |||
● | Effective as of October 1, 2014, the Company amended certain existing customer contracts with respect to the terms under which those customers would pay the Company for perpetual licenses, user licenses and maintenance services provided by the Company. Existing customer contracts required payments for maintenance services to be made based on contractually specified fixed amounts, which were billed regularly through September 2014. Through that date the Company recorded revenue for licenses and maintenance services when those licenses and services were billed. Revenue for user licenses was recorded as earned and revenue for maintenance services was recorded based on a fixed annual fee, billed quarterly. The Company has modified the payment terms under certain of those existing customer contracts by entering into Revenue Sharing agreements with those customers. Under the terms of these Revenue Sharing agreements, future payments will be due from the customer when that customer has generated revenue from its customers who subscribe to use the Horizon products and services. Effective October 1, 2014 revenue will be recorded by the Company when it invoices the customer for the revenue share due to the Company. Certain customers who entered into revenue sharing arrangements had outstanding balances due to the Company as of September 30, 2014, which balances were included in accounts receivable at that date. Payments received after September 30, 2014, from those customers under revenue sharing agreements have been applied to the customer’s existing accounts receivable balances first. For those customers having balances due at September 30, 2014, revenue related to perpetual and user licences and maintenance services will be recorded only after existing accounts receivable balances are fully collected. | |||
Where the Company has entered into a Revenue Share with the customer then all future revenue from granting of user licenses and for maintenance services will be recognized when the Company has delivered user licenses and is entitled to invoice. | ||||
Where the Company has entered into a Revenue Share with the customer then all future revenue from granting of user licenses and for maintenance services will be recognized when the Company has delivered user licenses and is entitled to invoice. | ||||
We enter into arrangements in which a customer purchases a combination of software licenses, maintenance services and post-contract customer support (“PCS”). As a result, judgment is sometimes required to determine the appropriate accounting, including how the price should be allocated among the deliverable elements if there are multiple elements. PCS may include rights to upgrades, when and if available, support, updates and enhancements. When vendor specific objective evidence (“VSOE”) of fair value exists for all elements in a multiple element arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values of various elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price between deliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elements such as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In the absence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to the residual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit of accounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No sales arrangements to date include undelivered elements for which VSOE does not exist. | ||||
We enter into arrangements in which a customer purchases a combination of software licenses, maintenance services and post-contract customer support (“PCS”). As a result, judgment is sometimes required to determine the appropriate accounting, including how the price should be allocated among the deliverable elements if there are multiple elements. PCS may include rights to upgrades, when and if available, support, updates and enhancements. When vendor specific objective evidence (“VSOE”) of fair value exists for all elements in a multiple element arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values of various elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price between deliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elements such as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In the absence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to the residual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit of accounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No sales arrangements to date include undelivered elements for which VSOE does not exist. | ||||
For purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption that the fee in the transaction is not fixed and determinable. This presumption however, may be overcome if persuasive evidence demonstrates that the Company has a business practice of extending payment terms and has been successful in collecting under the original terms, without providing any concessions. In doing so, the Company considers if the arrangement is sufficiently similar to historical arrangements in terms of similar customers and products is assessing whether there is evidence of a history of successful collection. | ||||
For purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption that the fee in the transaction is not fixed and determinable. This presumption however, may be overcome if persuasive evidence demonstrates that the Company has a business practice of extending payment terms and has been successful in collecting under the original terms, without providing any concessions. In doing so, the Company considers if the arrangement is sufficiently similar to historical arrangements in terms of similar customers and products is assessing whether there is evidence of a history of successful collection. | ||||
In order to determine the company’s historical experience is based on sufficiently similar arrangements, the Company considers the various factor including the types of customers and products, product life cycle, elements Included in the arrangement, length of payment terms and economics of license arrangement. | ||||
In order to determine the company’s historical experience is based on sufficiently similar arrangements, the Company considers the various factor including the types of customers and products, product life cycle, elements Included in the arrangement, length of payment terms and economics of license arrangement. | ||||
If the presumption cannot be overcome due to a lack of such evidence, revenue should be recognized as payments become due, assuming all other revenue recognition criteria has been met. | ||||
Leases | Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. | |||
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. | ||||
Assets held under finance leases are recognized as assets of the Company at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. | ||||
Assets held under finance leases are recognized as assets of the Company at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. | ||||
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. | ||||
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. | ||||
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term. | ||||
Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term. | ||||
Advertising Expenses | It is the Company’s policy to expense advertising costs as incurred. No advertising costs were incurred during the three month periods ended March 31, 2015 and 2014. | |||
It is the Company’s policy to expense advertising costs as incurred. No advertising costs were incurred during the years ended December 31, 2014 and 2013. | ||||
Research and Development Expenses | Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, related to the development of new products, significant enhancements to existing products, and the portion of costs of development of internal-use software required to be expensed. Research and development costs are charged to operations as incurred with the exception of those software development costs that may qualify for capitalization. In addition to the expenditure capitalized within Intangible Assets the Company incurred research and development costs in the three month periods ended March 31, 2015 and 2014 of $135,000 and $nil, respectively. | Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, related to the development of new products, significant enhancements to existing products, and the portion of costs of development of internal-use software required to be expensed. Research and development costs are charged to operations as incurred with the exception of those software development costs that may qualify for capitalization. The Company incurred research and development costs that are included in general and administration expenses in the amount of $703,000 and $739,000 in the years ended December 31, 2014 and 2013 respectively. | ||
Debt Issue Costs | Debt issue costs related to long-term debt are capitalized and amortized over the term of the related debt using the effective interest method. | Debt issue costs related to long-term debt are capitalized and amortized over the term of the related debt using the effective interest method. | ||
Income Taxes | Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance. | Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance. | ||
The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively. | The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively. | |||
Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company’s estimates and assumptions may differ significantly from tax benefits ultimately realized. | Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company’s estimates and assumptions may differ significantly from tax benefits ultimately realized. | |||
Net Loss per Share | Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the three month periods ended March 31, 2015 and 2014, outstanding stock options and warrants are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations. | Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the years ended December 31, 2014 and 2013, outstanding stock options and warrants are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations. | ||
Accumulated Other Comprehensive Income (Loss) | Other comprehensive income (loss), as defined, includes net income, foreign currency translation adjustment, and all changes in equity (net assets) during a period from non-owner sources. To date, the Company has not had any significant transactions that are required to be reported in other comprehensive income (loss), except for foreign currency translation adjustments. | Other comprehensive income (loss), as defined, includes net income, foreign currency translation adjustment, and all changes in equity (net assets) during a period from non-owner sources. To date, the Company has not had any significant transactions that are required to be reported in other comprehensive income (loss), except for foreign currency translation adjustments. | ||
Use of Estimates | The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilities assumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions. | The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions. | ||
Financial Instruments | The carrying value of our financial assets and liabilities such as cash, accounts receivable and accounts payable approximate their fair values based on level 1 inputs in the fair value hierarchy because of the short maturity of these instruments. Due to the conversion features and other terms, it is not practical to estimate the fair value of amounts due to related parties and long term debt. | The carrying amounts of our financial assets and liabilities such as cash, accounts receivable and accounts payable approximate their fair values based on level 1 inputs in the fair value hierarchy because of the short maturity of these instruments. Due to the conversion features and other terms, it is not practical to estimate the fair value of amounts due to related parties and long term debt. | ||
Share-Based Compensation | The Company accounts for stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes valuation model, which includes subjective judgments about the expected life of the awards, forfeiture rates and stock price volatility. | The Company accounts for share-based awards at fair value on date of grant and recognizes compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes option pricing model, which includes subjective judgements about the expected life of the awards, forfeiture rates and stock price volitility. | ||
Recently Issued Accounting Standards | In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09 – Revenue From Contracts with Customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of this ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU will be effective for us in our first quarter of 2018. Early adoption is not permitted. The ASU allows for either full retrospective or modified retrospective adoption. We are evaluating the transaction method that will be elected and the potential effects of the adoption of this ASU on our financial statements. | |||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09 – Revenue from Contracts with Customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of this ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU will be effective for us in our first quarter of 2017. Early adoption is not permitted. The ASU allows for either full retrospective or modified retrospective adoption. We are evaluating the transaction method that will be elected and the potential effects of the adoption of this ASU on our financial statements. |
4_Property_and_Equipment_net_T
4. Property and Equipment, net (Tables) | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Property And Equipment Net Tables | ||||||||||||||||||
Property and equipment | 31-Mar | 31-Dec | December | 31-Dec | ||||||||||||||
2015 | 2014 | 2014 | 2013 | |||||||||||||||
Leasehold improvements | $ | - | $ | 265 | Leasehold improvements | $ | 265 | $ | 265 | |||||||||
Motor vehicle | - | 120 | Motor vehicle | 120 | 120 | |||||||||||||
Equipment | 290 | 348 | Equipment | 348 | 310 | |||||||||||||
290 | 733 | 733 | 695 | |||||||||||||||
Less accumulated depreciation | (152 | ) | (521 | ) | Less accumulated depreciation | (521 | ) | (380 | ) | |||||||||
Property and equipment, net | $ | 138 | $ | 212 | Property and equipment, net | $ | 212 | $ | 315 | |||||||||
5_Intangible_Assets_Tables
5. Intangible Assets (Tables) | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Intangible Assets Tables | ||||||||||||||||||
Intangible Assets | 31-Mar | 31-Dec | December | 31-Dec | ||||||||||||||
2015 | 2014 | 2014 | 2013 | |||||||||||||||
Horizon software | $ | 17,669 | $ | 16,936 | Horizon software | $ | 16,936 | $ | 17,599 | |||||||||
ZTEsoft Telecom software | 498 | 495 | ZTEsoft Telecom software | 495 | 497 | |||||||||||||
Contractual relationships | 885 | 885 | Contractual relationships | 885 | 885 | |||||||||||||
19,004 | 18,316 | 18,316 | 18,981 | |||||||||||||||
Less accumulated amortization | (8,048 | ) | (7,356 | ) | Less accumulated amortization | (7,356 | ) | (6,221 | ) | |||||||||
Intangible assets, net | $ | 11,004 | $ | 10,960 | Intangible assets, net | $ | 10,960 | $ | 12,760 |
6_Longterm_Debt_Tables
6. Long-term Debt (Tables) | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Long-term Debt Tables | ||||||||||||||||||
Long - term liabilities | 31-Mar | 31-Dec | December | 31-Dec | ||||||||||||||
2015 | 2014 | 2014 | 2013 | |||||||||||||||
Vehicle loan | $ | - | $ | 32 | Vehicle loan | $ | 32 | $ | 51 | |||||||||
Equipment loan | 12 | 15 | Equipment loan | 15 | 27 | |||||||||||||
Office term loan | - | 134 | Office term loan | 134 | 171 | |||||||||||||
12 | 181 | 181 | 249 | |||||||||||||||
Less current portion | (12 | ) | (73 | ) | Less current portion | (73 | ) | (65 | ) | |||||||||
Balance | $ | - | $ | 108 | Balance | $ | 108 | $ | 184 |
8_RelatedParty_Transactions_Ta
8. Related-Party Transactions (Tables) | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Related-party Transactions Tables | ||||||||||||||||||
Related-Party Transactions | 31-Mar | 31-Dec | 31-Dec | 31-Dec | ||||||||||||||
2015 | 2014 | 2014 | 2013 | |||||||||||||||
Loans due to stockholders (current and former officers and directors) | Loans due to stockholders (current and former officers and directors) | |||||||||||||||||
Due within one year | $ | 350 | $ | 600 | Due within one year | $ | 600 | $ | 3,500 | |||||||||
Long-term | 2,578 | 2,598 | Long-term | 2,598 | - | |||||||||||||
$ | 2,928 | $ | 3,198 | $ | 3,198 | $ | 3,500 | |||||||||||
9_Share_Capital_Tables
9. Share Capital (Tables) | 3 Months Ended | 12 Months Ended | ||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||
Share Capital Tables | ||||||||||||||||
Stock Purchase Warrants | Number of Warrants | Exercise Price | Expiry | Number of Warrants | Exercise Price | Expiry | ||||||||||
116,760 | $ | 0.86 | no expiry date | 116,760 | $ | 0.86 | no expiry date | |||||||||
1,209,675 | 4.25 | January 2019 | 1,209,675 | 4.25 | January 2019 | |||||||||||
100,000 | 4 | Jul-16 | 100,000 | 4 | Jul-16 | |||||||||||
60,000 | 6.55 | Dec-15 | 60,000 | 6.55 | Dec-15 | |||||||||||
68,850 | 2.25 | Dec-18 | 68,850 | 2.25 | Dec-18 | |||||||||||
402,786 | 3.00 | Dec-18 | 402,786 | 3 | Dec-18 | |||||||||||
402,568 | 3.50 | Dec-18 | 402,568 | 3.5 | Dec-18 | |||||||||||
450,000 | - | May-17 | 450,000 | - | May-17 | |||||||||||
10_StockBased_Compensation_Tab
10. Stock-Based Compensation (Tables) | 3 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | ||||||||||||||||||||||||||||||||||||
Stock-based Compensation Tables | |||||||||||||||||||||||||||||||||||||
Summary of the Company's stock options | Number of | Weighted Average | Number of | Weighted Average | |||||||||||||||||||||||||||||||||
Options | Exercise Price | Options | Exercise Price | ||||||||||||||||||||||||||||||||||
Outstanding at December 31, 2014 | 500,000 | $ | 4.54 | Outstanding at December 31, 2013 | - | $ | - | ||||||||||||||||||||||||||||||
Options issued | - | - | Options issued | 500,000 | 4.54 | ||||||||||||||||||||||||||||||||
Outstanding at March 31, 2015 | 500,000 | 4.54 | Outstanding at December 31, 2014 | 500,000 | 4.54 | ||||||||||||||||||||||||||||||||
Number of | Weighted Average | Number of | Weighted Average | ||||||||||||||||||||||||||||||||||
Options | Exercise Price | Options | Exercise Price | ||||||||||||||||||||||||||||||||||
Outstanding at December 31, 2014 | 584,650 | $ | 0.53 | Outstanding at December 31, 2013 | 584,650 | $ | 0.53 | ||||||||||||||||||||||||||||||
Options forfeited | - | - | Options forfeited | - | - | ||||||||||||||||||||||||||||||||
Outstanding at March 31, 2015 | 584,650 | $ | 0.53 | Outstanding at December 31, 2014 | 584,650 | $ | 0.53 | ||||||||||||||||||||||||||||||
Stock options outstanding | Number | Average | Number | Intrinsic | Number | Average | Number | Intrinsic | |||||||||||||||||||||||||||||
Outstanding | Remaining | Exercisable | Value | Outstanding | Remaining | Exercisable | Value | ||||||||||||||||||||||||||||||
at | Contractual | at | at | at | Contractual | at | at | ||||||||||||||||||||||||||||||
March 31, | Life | March 31, | March 31, | December 31, | Life | December 31, | December 31, | ||||||||||||||||||||||||||||||
Exercise Price | 2015 | (Years) | 2015 | 2015 | Exercise Price | 2014 | (Years) | 2014 | 2014 | ||||||||||||||||||||||||||||
$ | 0.51 | 850 | 0.58 | 850 | $ | 917 | $ | 0.51 | 850 | 0.83 | 850 | $ | 1,258 | ||||||||||||||||||||||||
0.53 | 291,900 | 5.25 | 291,900 | 312,333 | 0.53 | 291,900 | 5.5 | 291,900 | 426,174 | ||||||||||||||||||||||||||||
0.53 | 291,900 | 7.75 | 291,900 | 312,333 | 0.53 | 291,900 | 8 | - | - | ||||||||||||||||||||||||||||
4.54 | 500,000 | 8.75 | 166,667 | - | 4.54 | 500,000 | 9 | - | - |
11_Commitments_and_Contingenci1
11. Commitments and Contingencies (Tables) | 3 Months Ended | 12 Months Ended | ||||||||||||||||
Mar. 31, 2015 | Dec. 31, 2014 | |||||||||||||||||
Commitments And Contingencies Tables | ||||||||||||||||||
Lease Commitments | Operating | Long-term | Operating | Long-term | ||||||||||||||
leases | Financing | leases | Financing | |||||||||||||||
2015 | $ | 19,000 | $ | 9,000 | 2015 | $ | 112,000 | $ | 73,000 | |||||||||
2016 | - | 3,000 | 2016 | 67,000 | 53,000 | |||||||||||||
2017 | 67,000 | 40,000 | ||||||||||||||||
2018 | 67,000 | 15,000 | ||||||||||||||||
11A_Income_Taxes_Tables
11A. Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Income (loss) before income taxes | 31-Dec | ||||||||
2014 | 2013 | ||||||||
United States | $ | (943) | $ | -1,474 | |||||
International | -607 | 466 | |||||||
Total | $ | (1,550) | $ | -1,008 | |||||
Deferred Tax Assets | 31-Dec | ||||||||
2014 | 2013 | ||||||||
Deferred tax assets | |||||||||
Net operating loss carryforwards - United States | $ | 829 | $ | 508 | |||||
Net operating loss carryforwards - International | 3,249 | 2,924 | |||||||
Valuation allowance | -4,078 | -3,432 | |||||||
Net deferred tax assets | $ | - | $ | - | |||||
12_Segment_Information_Tables
12. Segment Information (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Segment Reporting [Abstract] | |||||
Schedule of Segment Reporting Information | 2014 | 2013 | |||
Europe | $0.7 million | $3.7 million | |||
Asia | $3.7 million | $4.7 million | |||
Russia | $0.1 million | $0.4 million | |||
USA | $0.6 million | $0.3 million | |||
2_Summary_of_Significant_Accou2
2. Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2015 |
Allowance for doubtful accounts | $492 | $212 | $592 |
Software development costs | $1,122 | $1,211 | |
Motor vehicles [Member] | |||
Property and Equipment estimated useful lives | P5Y | ||
Equipment [Member] | Minimum [Member] | |||
Property and Equipment estimated useful lives | P3Y | ||
Equipment [Member] | Maximum [Member] | |||
Property and Equipment estimated useful lives | P5Y | ||
Accounts Receivable [Member] | |||
Concentration Risk Percentage | 28.00% | 22.00% |
2_Summary_of_Significant_Accou3
2. Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 |
Allowance doubtful accounts | $592 | $492 | $212 | |
Software development costs | 289 | 350 | ||
Research and development costs | $135 | |||
2 Customers | ||||
Percentage accounts receivable of customers | 20.00% | |||
2 Customers | ||||
Percentage accounts receivable of customers | 28.00% |
4_Property_and_Equipment_net_D
4. Property and Equipment, net (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |||
Property And Equipment Net Details | |||
Leasehold improvements | $265 | $265 | |
Motor vehicles | 120 | 120 | |
Equipment | 290 | 348 | 310 |
Property and equipment, gross | 290 | 733 | 695 |
Less accumulated depreciation | -152 | -521 | -380 |
Property and equipment, net | $138 | $212 | $315 |
5_Intangible_Assets_Details
5. Intangible Assets (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |||
Intangible Assets Details | |||
Horizon software | $17,669 | $16,936 | $17,599 |
ZTEsoft Telecom software | 498 | 495 | 497 |
Contractual relationships | 885 | 885 | 885 |
Intangible assets, Gross | 19,004 | 18,316 | 18,981 |
Less accumulated amortization | -8,048 | -7,356 | -6,221 |
Intangible assets, net | $11,004 | $10,960 | $12,760 |
5_Intangible_Assets_Details_Na
5. Intangible Assets (Details Narrative) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Intangible Assets Details Narrative | ||
Amortization expected over next five years | $2,000 | $1,900 |
6_Longterm_Debt_Details
6. Long-term Debt (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |||
Long-term Debt Details | |||
Vehicle loan | $32 | $51 | |
Equipment loan | 12 | 15 | 27 |
Office term loan | 134 | 171 | |
Total | 12 | 181 | 249 |
Less current portion | -12 | -73 | -65 |
Balance | $0 | $108 | $184 |
8_RelatedParty_Transactions_De
8. Related-Party Transactions (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |||
Loans due to stockholders (current and former officers and directors) | |||
Due within one year | $350 | $600 | $3,500 |
Long-term | 2,578 | 2,578 | 0 |
Loans due to stockholders | $2,928 | $3,198 | $3,500 |
8_RelatedParty_Transactions_De1
8. Related-Party Transactions (Details Narrative) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2014 |
Related Party Transactions [Abstract] | |
Loans from related parties | $600 |
Long term loans | $2,598 |
Interest rate of Long term loans | 0.21% |
9_Share_Capital_Details
9. Share Capital (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Warrants A | ||
Number of warrants | 116,760 | 116,760 |
Exercise Price | $0.86 | |
Expiry | B B B B B no expiry date | |
Warrants B | ||
Number of warrants | 1,209,675 | 1,209,675 |
Exercise Price | $4.25 | |
Expiry | B B B B B January 2019 | |
Warrants C | ||
Number of warrants | 100,000 | 100,000 |
Exercise Price | $4 | |
Expiry | 16-Jul | |
Warrants D | ||
Number of warrants | 60,000 | 60,000 |
Exercise Price | $6.55 | |
Expiry | 15-Dec | |
Warrants E | ||
Number of warrants | 68,850 | 68,850 |
Exercise Price | $2.25 | |
Expiry | 18-Dec | |
Warrants F | ||
Number of warrants | 402,786 | 402,786 |
Exercise Price | $3 | |
Expiry | 18-Dec | |
Warrants G | ||
Number of warrants | 402,568 | 402,568 |
Exercise Price | $3.50 | |
Expiry | 18-Dec | |
Warrants H | ||
Number of warrants | 450,000 | 450,000 |
Exercise Price | ||
Expiry | 17-May |
9A_Share_Capital_Details_A
9A. Share Capital (Details A) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Mar. 31, 2015 | |
Warrants A | ||
Number of warrants | 116,760 | 116,760 |
Exercise Price | $0.86 | |
Warrants B | ||
Number of warrants | 1,209,675 | 1,209,675 |
Exercise Price | $4.25 | |
Expiration | 31-Jan-19 | |
Warrants C | ||
Number of warrants | 100,000 | 100,000 |
Exercise Price | $4 | |
Expiration | 31-Jul-16 | |
Warrants D | ||
Number of warrants | 60,000 | 60,000 |
Exercise Price | $6.55 | |
Expiration | 31-Dec-15 | |
Warrants E [Member] | ||
Number of warrants | 68,850 | 68,850 |
Exercise Price | $2.25 | |
Expiration | 31-Dec-18 | |
Warrants F [Member] | ||
Number of warrants | 402,786 | 402,786 |
Exercise Price | $3 | |
Expiration | 31-Dec-18 | |
Warrants G [Member] | ||
Number of warrants | 402,568 | 402,568 |
Exercise Price | $3.50 | |
Expiration | 31-Dec-18 | |
Warrants H [Member] | ||
Number of warrants | 450,000 | 450,000 |
Exercise Price | ||
Expiration | 30-May-17 |
9_StockBased_Compensation_Deta
9. Stock-Based Compensation (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Number of Options | |||
Number of Options Outstanding, Beginning | 500,000 | ||
Number of Options Issued | 500,000 | ||
Number of Options Outstanding, End | 500,000 | 500,000 | |
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding, Beginning | $4.54 | ||
Weighted Average Exercise Price Issued | $4.54 | ||
Weighted Average Exercise Price Forfeited | |||
Weighted Average Exercise Price Outstanding, Ending | $4.54 | $4.54 | |
Other Stock Options | |||
Number of Options | |||
Number of Options Outstanding, Beginning | 584,650 | 584,650 | |
Number of Options Issued | |||
Number of Options Outstanding, End | 584,650 | 584,650 | |
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding, Beginning | $0.53 | $0.53 | |
Weighted Average Exercise Price Forfeited | |||
Weighted Average Exercise Price Outstanding, Ending | $0.53 | $0.53 |
9A_StockBased_Compensation_Det
9A. Stock-Based Compensation (Details A) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Number of Options | ||
Number of Options Outstanding, Beginning | 500,000 | |
Number of Options Issued | 500,000 | |
Number of Options Outstanding, End | 500,000 | 500,000 |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $4.54 | |
Weighted Average Exercise Price Issued | $4.54 | |
Weighted Average Exercise Price Outstanding, Ending | $4.54 | $4.54 |
Other Stock Options | ||
Number of Options | ||
Number of Options Outstanding, Beginning | 584,650 | 584,650 |
Number of Options Issued | ||
Number of Option Forfeited | ||
Number of Options Outstanding, End | 584,650 | 584,650 |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $0.53 | $0.53 |
Weighted Average Exercise Price Forfeited | ||
Weighted Average Exercise Price Outstanding, Ending | $0.53 | $0.53 |
9_StockBased_Compensation_Deta1
9. Stock-Based Compensation (Details 1) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Stock Option Plan 1 [Member] | ||
Exercise Price | $0.51 | $0.53 |
Number of options outstanding | 850 | 291,900 |
Average Contractual Life Remaining | 6 months 29 days | |
Number of options exercisable | 850 | 291,900 |
Intrinsic value | $917 | |
Stock Option Plan 2 [Member] | ||
Exercise Price | $0.53 | $0.53 |
Number of options outstanding | 291,900 | 291,900 |
Average Contractual Life Remaining | 5 years 3 months | |
Number of options exercisable | 291,900 | |
Intrinsic value | 312,333 | |
Stock Option Plan 3 [Member] | ||
Exercise Price | $0.53 | $4.54 |
Number of options outstanding | 291,900 | 500,000 |
Average Contractual Life Remaining | 7 years 9 months | |
Number of options exercisable | 291,900 | |
Intrinsic value | $312,333 | |
Stock Option Plan 4 [Member] | ||
Exercise Price | $4.54 | |
Number of options outstanding | 500,000 | |
Average Contractual Life Remaining | 8 years 9 months | |
Number of options exercisable | 166,667 |
9A_StockBased_Compensation_Det1
9A. Stock-Based Compensation (Details 1A) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Mar. 31, 2015 |
Stock Option Plan [Member] | ||
Exercise Price | $0.51 | |
Number of options outstanding | 850 | |
Average Contractual Life Remaining | 9 months 29 days | |
Number of options exercisable | 850 | |
Intrinsic value | $1,258 | |
Stock Option Plan 1 [Member] | ||
Exercise Price | $0.53 | $0.51 |
Number of options outstanding | 291,900 | 850 |
Average Contractual Life Remaining | 5 years 6 months | |
Number of options exercisable | 291,900 | 850 |
Intrinsic value | 426,174 | |
Stock Option Plan 2 [Member] | ||
Exercise Price | $0.53 | $0.53 |
Number of options outstanding | 291,900 | 291,900 |
Average Contractual Life Remaining | 8 years | |
Number of options exercisable | 291,900 | |
Intrinsic value | ||
Stock Option Plan 3 [Member] | ||
Exercise Price | $4.54 | $0.53 |
Number of options outstanding | 500,000 | 291,900 |
Average Contractual Life Remaining | 9 years | |
Number of options exercisable | 291,900 | |
Intrinsic value |
10_StockBased_Compensation_Det
10. Stock-Based Compensation (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Stock-based Compensation Details Narrative | ||
Common stock reserved | 5,584,650 | 4,584,650 |
Option to purchase common stock | 500,000 | |
Fair Value of Options using Black Scholes option pricing model estimated amount | $2,200 | $2,200 |
Estimated forfeiture rate | 30.00% | 30.00% |
Fair value of options using the Black-Scholes option-pricing model estimated | 129 | 516 |
Unrecognized compensation expense | $1,030 | |
Unrecognized compensation expense recognized period | 2 years |
10A_StockBased_Compensation_De
10A. Stock-Based Compensation (Details Narrative A) (USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Stock-based Compensation Details Narrative | ||
Common stock reserved | 5,584,650 | 4,584,650 |
Risk-free interest rate | 1.68% | |
Expected life | 3 years | |
Dividend yield | 0.00% | |
Stock price volatility | 192.00% | |
Option to purchase common stock | 500,000 | |
Fair Value of Options using Black Scholes option pricing model estimated amount | $2,200 | $2,200 |
Estimated forfeiture rate | 30.00% | 30.00% |
Fair value of options using the Black-Scholes option-pricing model estimated | 129 | 516 |
Unrecognized compensation expense | $1,030 | |
Unrecognized compensation expense recognized period | 2 years |
11A_Income_Taxes_Details_A
11A. Income Taxes (Details A) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
A. Income Taxes Details | ||
United States | ($943) | ($1,474) |
International | -607 | 466 |
Total | ($1,550) | ($1,008) |
11A_Income_Taxes_Details_1A
11A. Income Taxes (Details 1A) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deferred tax assets | ||
Net operating loss carryforwards - United States | $829 | $508 |
Net operating loss carryforwards - International | 3,249 | 2,924 |
Valuation allowance | -4,078 | -3,432 |
Net deferred tax assets |
11A_Income_Taxes_Details_Narra
11A. Income Taxes (Details Narrative A) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ||
Federal net operating losses | $2,400 | |
Non-capital losses | 13,000 | |
Change in valuation allowance | $646 | $922 |
11_Commitments_and_Contingenci2
11. Commitments and Contingencies (Details) (USD $) | Mar. 31, 2015 |
In Thousands, unless otherwise specified | |
Long Term Financing | |
2015 | $73 |
2016 | 53 |
Operating Leases | |
2015 | 112 |
2016 | $67 |
11A_Commitments_and_Contingenc
11A. Commitments and Contingencies (Details A) (USD $) | Mar. 31, 2015 |
In Thousands, unless otherwise specified | |
Operating Leases | |
2015 | $112 |
2016 | 67 |
2017 | 67 |
2018 | 67 |
Long Term Financing | |
2015 | 73 |
2016 | 53 |
2017 | 40 |
2018 | $15 |
11_Commitments_and_Contingenci3
11. Commitments and Contingencies (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 |
Commitments And Contingencies Details Narrative | ||||
Rent expense | $21 | $42 | $100 | $200 |
12_Segment_Information_Details
12. Segment Information (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 |
Revenues | $745 | $1,185 | $5,122 | $9,106 |
Europe [Member] | ||||
Revenues | 700 | 3,700 | ||
Asia [Member] | ||||
Revenues | 3,700 | 4,700 | ||
Russia [Member] | ||||
Revenues | 100 | 400 | ||
USA [Member] | ||||
Revenues | $600 | $300 |