Touchpoint (TGHI) 10-Q 19 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 14, 2015
Document And Entity Information
Entity Registrant Name	One Horizon Group, Inc.
Entity Central Index Key	225,211
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
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
Entity Common Stock, Shares Outstanding		34,893,495
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,015

Consolidated Balance Sheets (Un

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash	$ 870	$ 3,172
Accounts receivable (net), current portion	5,448	9,072
Other assets	569	576
Total current assets	6,887	12,820
Accounts receivable (net), net of current portion	3,456	0
Property and equipment, net	126	212
Intangible assets, net	11,006	10,960
Investment	19	19
Debt issue costs	329	395
Total assets	21,823	24,406
Current liabilities:
Accounts payable	164	556
Accrued expenses	382	360
Accrued compensation	15	15
Income taxes	94	93
Amounts due to related parties	100	600
Current portion of long-term debt	10	73
Total current liabilities	765	1,697
Long-term liabilities
Long term debt, net of current portion	0	108
Amount due to related parties	2,488	2,598
Convertible debenture	2,748	2,598
Deferred income taxes	190	235
Mandatorily redeemable preferred shares	90	90
Total liabilities	6,281	7,326
Equity
Preferred stock: $0.0001 par value, authorized 50,000,000; issued and outstanding 170,940 shares (December 2014 - 170,940)	1	1
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
Additional paid-in capital	32,442	32,163
Deferred compensation	(107)	(214)
Retained Earnings (Deficit)	(17,758)	(15,227)
Accumulated other comprehensive income	706	63
Total One Horizon Group, Inc., stockholders' equity	15,287	16,789
Non-controlling interest	255	291
Total Equity	15,542	17,080
Total liabilities and equity	$ 21,823	$ 24,406

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, Authorized	50,000,000	50,000,000
Preferred stock, issued shares	170,940	170,940
Preferred stock, outstanding shares	170,940	170,940
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, Authorized	200,000,000	200,000,000
Common stock, Issued	33,281,069	33,281,069
Common stock, outstanding	33,281,069	33,281,069

Consolidated Statements of Oper

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Consolidated Statements Of Operations
Revenue	$ 108	$ 1,304	$ 853	$ 2,489
Cost of Revenue:
Hardware	47	66	108	128
Amortization of software development costs	580	483	1,092	969
Cost of Revenue	627	549	1,200	1,097
Gross margin	(519)	755	(347)	1,392
Expenses:
General and administrative	729	1,190	1,814	2,318
Depreciation	16	46	36	94
Total Expenses	745	1,236	1,850	2,412
Loss from operations	(1,264)	(481)	(2,197)	(1,020)
Other income and expense:
Interest expense	(284)	(20)	(374)	(20)
Interest expense - related parties	(1)	(35)	(1)	(75)
Foreign exchange	(76)	(10)	9	(19)
Interest income	0	1	1	2
Other income and expense	(361)	(64)	(365)	(112)
Income (loss) before income taxes	(1,625)	(545)	(2,562)	(1,132)
Income taxes (recovery) - deferred	(45)	0	(45)	(156)
Net Income (Loss) for the period	(1,580)	(545)	(2,517)	(976)
Net loss attributable to non-controlling interest	(31)	(22)	(36)	(65)
Net Income (Loss) for the period atrributable to One Horizon Group, Inc.	(1,549)	(523)	(2,481)	(911)
Less: Preferred stock dividends	(25)	0	(50)	0
Net loss attributable to One Horizon Group, Inc. Common stockholders	$ (1,574)	$ (523)	$ (2,531)	$ (911)
Loss per share
Basic net loss per share	$ (0.05)	$ (0.02)	$ (0.07)	$ (0.03)
Diluted loss per share	$ (0.05)	$ (0.02)	$ (0.07)	$ (0.03)
Weighted average number of shares outstanding
Basic and diluted	33,281	32,935	33,281	32,935

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Consolidated Statements Of Comprehensive Income Loss
Net loss	$ (1,580)	$ (545)	$ (2,517)	$ (976)
Other comprehensive income:
Foreign currency translation adjustment gain (loss)	624	(84)	643	(65)
Total	(956)	(629)	(1,874)	(1,041)
Comprehensive income (loss) attributable to the non-controlling interest	(31)	(22)	(36)	(65)
Total comprehensive income (loss)	$ (925)	$ (607)	$ (1,838)	$ (976)

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Equity - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands	Preferred Stock	Common Stock	Additional Paid-In Capital	Deferred Compensation	Retained Earnings (Deficit)	Accumulated Other Comprehensive Income (Loss)	Non-controlling Interest	Total
Beginning Balance, Shares (in thousands) at Dec. 31, 2014	171	33,282
Beginning Balance, Amount at Dec. 31, 2014	$ 1	$ 3	$ 32,163	$ (214)	$ (15,227)	$ 63	$ 291	$ 17,080
Net income (loss)					(2,481)		(36)	(2,517)
Foreign currency translation						643		643
Preferred dividends					(50)			(50)
Amortization of deferred compensation				107				107
Options issued for services, Amount			279					279
Ending Balance, Shares (in thousands) at Jun. 30, 2015	171	33,282
Ending Balance, Amount at Jun. 30, 2015	$ 1	$ 3	$ 32,442	$ (107)	$ (17,758)	$ 706	$ 255	$ 15,542

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash provided by (used in) operating activities:
Net loss for the period	$ (2,481)	$ (911)
Adjustment to reconcile net income for the period to net cash provided by (used in) operating activities:
Depreciation of property and equipment	36	94
Amortization of intangible assets	1,092	969
Amortization of debt issue costs	66	0
Amortization of beneficial conversion feature	51	0
Amortization of debt discount	99	0
Amortization of deferred compensation	107	0
Common shares issued for services received	0	65
Options issued for services	279	258
Net income (loss) attributable to non-controlling interest	(36)	(65)
Changes in operating assets and liabilities:
Accounts receivable	168	(674)
Other assets	7	(715)
Accounts payable and accrued expenses	(370)	276
Deferred income taxes	(45)	(156)
Net cash provided by (used in) operating activities	(1,027)	(859)
Cash used in investing activities:
Acquisition of intangible assets	(560)	(637)
Acquisition of property and equipment	(1)	(49)
Proceeds from disposition of property and equipment	32	0
Net cash (used in) investing activities	(529)	(686)
Cash flow from financing activities:
Increase (decrease) in long-term borrowing, net	(171)	(30)
Advances from (repayments to) related parties, net	(610)	0
Dividends paid	(50)	0
Net cash provided by (used in) financing activities	(831)	(30)
Increase (decrease) in cash during the period	(2,387)	(1,575)
Foreign exchange effect on cash	85	(71)
Cash at beginning of the period	3,172	2,070
Cash at end of the period	870	424
Supplementary Information:
Interest paid	76	0
Income taxes paid	$ 0	$ 0

1. Description of Business, Org

1. Description of Business, Organization and Principles of Consolidation	6 Months Ended
	Jun. 30, 2015
Description Of Business Organization And Principles Of Consolidation
1. Description of Business, Organization and Principles of Consolidation	Description of Business One Horizon Group, Inc., (the “Company” or “Horizon”) develops proprietary software primarily in the Voice over Internet Protocol (VoIP) and bandwidth optimization markets (“Horizon Globex”) and provides it to telecommunication companies under perpetual license arrangements (“Master License”) throughout the world. The Company sells related user licenses and software maintenance services as well. The company also operates its own chinese retail VOIP service, branded Aishuo. Interim Period Financial Statements The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the Securities and Exchange Commission’ instructions. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for such interim period. The results reported in these interim consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and note disclosure normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the Securities and Exchange 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. Principles of Consolidation The June 30, 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	6 Months Ended
	Jun. 30, 2015
Summary Of Significant Accounting Policies
2. Summary of Significant Accounting Policies	Basis of Accounting and Presentation These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States Foreign Currency Translation The reporting currency of the Company is the United States dollar. Assets and liabilities of operations other than those denominated in U.S. dollars, primarily in Switzerland, the United Kingdom and China, are translated into United States dollars at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the period. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in general and administrative expenses. Cash Cash and cash equivalents include bank demand deposit accounts and highly liquid short term investments with maturities of three months or less when purchased. Cash consists of checking accounts held at financial institutions in the United Kingdom, Switzerland, Ireland, Singapore, Hong Kong and China which, at times, balances may exceed insured limits. The Company has not experienced any losses related to these balances, and management believes the credit risk to be minimal. Accounts Receivable Accounts receivable result primarily from sale of software and licenses to customers and are recorded at their principal amounts. The categories of sales and receivables and their terms of payment are as follows: a) Master License Agreement (“Agreement”) deposits – these deposits are payable in accordance with the terms of the Agreement. The deposits are invoiced and recognized 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 deposits are due to be paid. 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 to 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 these 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 had 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 for those customers will be collected first before further revenue of this category is recognized in the future. 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 30 days from date of invoice. 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 that 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 debts to reduce the related receivable to the amount we believe to be collectable. There was an allowance of $592,000 and $492,000 for doubtful accounts at June 30, 2015 and December 31, 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 June 30, 2015 and December 31, 2014, two customers accounted for 21% and 28%, respectively, of the accounts receivable balance. 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 has been recorded, averaging approximately 1.5% per annum for payments expected to be received beyond 12 months. Property and Equipment Property and equipment is primarily comprised of leasehold property improvements, motor vehicles and equipment that are recorded at cost and depreciated or amortized using the straight-line method over their estimated useful lives as follows: motor vehicles – 5 years, equipment – between 3 and 5 years, leasehold property improvements, over the lesser of the estimated remaining useful life of the asset or the remaining term of the lease. Repairs and maintenance are charged to expense as incurred. Expenditures that substantially increase the useful lives of existing assets are capitalized. Fair Value Measurements Fair value is defined as the exchange price that will be received for an asset or paid to transfer a liability (an exit price) in the principal. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered to be observable and the third unobservable: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Intangible Assets Intangible assets include software development costs and customer lists and are amortized on a straight-line basis over the estimated useful lives of five years for customer lists and ten years for software development. The Company periodically evaluates whether changes have occurred that would require revision of the remaining estimated useful life. The Company performs periodic reviews of its capitalized intangible assets to determine if the assets have continuing value to the Company. The Company expenses all costs related to the development of internal-use software as incurred, other than those incurred during the application development stage, after achievement of technological feasibility. Costs incurred in the application development stage are capitalized and amortized over the estimated useful life of the software. Internally developed software costs are amortized on a straight-line basis over the estimated useful life of the software. The Company performs periodic reviews of its capitalized software development costs to determine if the assets have continuing value to the Company. Costs for assets that are determined to be of no continuing value are written off. The amortization of these costs is included in cost of revenue over the estimated life of the products. During the six months ended June 30, 2015 and 2014 software development costs of $560,000 and $637,000, respectively, have been capitalized. Impairment of Other Long-Lived Assets The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. During the six months ended June 30, 2015 and 2014 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. ● Software and licenses – revenue from sales of perpetual licenses to top-tier telecom entities is recognized at the inception of the arrangement, presuming all other relevant revenue recognition criteria are met. Revenue from sales of perpetual licenses to other entities is recognized over unless payment terms exceed one year, as described below, the agreed collection period. ● Revenues for user licenses purchased by customers are recognized when the user license is delivered. ● Revenues for maintenance services are recognized over the period of delivery of the services. ● Effective October 1, 2014, the Company amended certain existing customer contracts with respect to the terms under which those customers would pay the Company for perpetual licenses, user licenses and maintenance services provided by the Company. Existing customer contracts required payments for maintenance services to be made based on contractually specified fixed amounts, which were billed regularly through September 2014. Through that date the Company recorded revenue for licenses and maintenance services when those licenses and services were billed. Revenue for user licenses was recorded as earned and revenue for maintenance services was recorded based on a fixed annual fee, billed quarterly. The Company has modified the payment terms under certain of those existing customer contracts by entering into Revenue Sharing agreements with those customers. Under the terms of these Revenue Sharing agreements, future payments will be due from the customer when that customer has generated revenue from its customers who subscribe to use the Horizon products and services. 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 as 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. 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 In order to determine the company’s historical experience is based on sufficiently similar arrangements, the Company considers the various factors including the types of customers and products, product life cycle, elements included in the arrangement, length of payment terms and economics of license arrangement. The Company does not presently have any such contracts where this presumption has been overcome. Advertising Expenses It is the Company’s policy to expense advertising costs as incurred. No advertising costs were incurred during the three and six month periods ended June 30, 2015 and 2014. 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. The Company expensed research and development costs in the six month period ended June 30, 2015 and 2014 of $252,000 and $nil, respectively. Debt Issue Costs Debt issue costs related to long-term debt are capitalized and amortized over the term of the related debt using the effective interest method. Income Taxes Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance. The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively. Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The 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 and six month periods ended June 30, 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. Accumulated Other Comprehensive Income (Loss) Other comprehensive income (loss), as defined, includes net loss, foreign currency translation adjustments, and all changes in equity (net assets) during a period from non-owner sources. To date, the Company has not had any significant transactions that are required to be reported in other comprehensive income (loss), except for foreign currency translation adjustments. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilities assumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions. Financial Instruments The carrying value of our financial assets and liabilities such as cash, accounts receivable and accounts payable approximate their fair values based on level 1 inputs in the fair value hierarchy because of the short maturity of these instruments. Due to the conversion features and other terms, it is not practical to estimate the fair value of amounts due to related parties and long term debt. Share-Based Compensation The Company accounts for stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes valuation model, which includes subjective judgements 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. The original effective date for ASU 2014-09 would have required the Company to adopt beginning in its first quarter 2017. In July 2015, the FASB voted to amend ASU 2014-09 by approving a one year deferral of the effective date as well as providing the option to early adopt the standard on the original effective date. Accordingly, the Company may adopt the standard in either its first quarter of 2017 or 2018. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the timing of its adoption and the impact of adopting the new revenue standard on its consolidated financial statements.

3. China Operations

3. China Operations	6 Months Ended
	Jun. 30, 2015
China Operations
3. China Operations	The Group have control of two Chinese entities Horizon Network Technology Co. Ltd (“HNT”) and Suzhou Aishuo Network Information Co. Limited (“AISHUO”) The results of operations, assets, liabilities and cash flows of HNT and AISHUO have been consolidated in the accompanying condensed consolidated financial statements as the Company owns a controlling interest in HNT and has full control of AISHUO through contracts in place. 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	6 Months Ended
	Jun. 30, 2015
Property And Equipment Net
4. Property and Equipment, net	Property and equipment consist of the following: (in thousands) June 30 December 31 2015 2014 Leasehold improvements $ - $ 265 Motor vehicle - 120 Equipment 296 348 296 733 Less accumulated depreciation (170 ) (521 ) Property and equipment, net $ 126 $ 212

5. Intangible Assets

5. Intangible Assets	6 Months Ended
	Jun. 30, 2015
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) June 30 December 31 2015 2014 Horizon software $ 18,509 $ 16,936 ZTEsoft Telecom software 499 495 Contractual relationships 885 885 19,893 18,316 Less accumulated amortization (8,887 ) (7,356 ) Intangible assets, net $ 11,006 $ 10,960 Amortization of intangible assets for each of the next five years is estimated to be $2,000,000 per year

6. Long-term Debt

6. Long-term Debt	6 Months Ended
	Jun. 30, 2015
Long-term Debt, Unclassified [Abstract]
6. Long-term Debt	Long – term liabilities consist of the following (in thousands) June 30 December 31 2015 2014 Vehicle loan $ - $ 32 Equipment loan 10 15 Office term loan - 134 10 181 Less current portion (10 ) (73 ) Balance $ - $ 108 During the six months ended June 30, 2015 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 Administrative expenses.

7. Convertible Debenture

7. Convertible Debenture	6 Months Ended
	Jun. 30, 2015
Convertible Debenture
7. Convertible Debenture	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 quarter of a share of common stock at a price of $3.00; iii) one Class D warrant entitling the holder to purchase one quarter of a share of common stock at a price of $3.50 and iv) a pro-rata share of potential performance warrants. The unsecured 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 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. A total of 1,555,556 shares of common stock have been reserved for the potential conversion of the convertible debenture.

8. Related-Party Transactions

8. Related-Party Transactions	6 Months Ended
	Jun. 30, 2015
Related Party Transactions [Abstract]
8. Related-Party Transactions	Amounts due to related parties include the following: (in thousands) June 30 December 31 2015 2014 Loans due to stockholders (current and former officers and directors) Due within one year $ 100 $ 600 Long-term 2,488 2,598 $ 2,588 $ 3,198 At June 30, 2015, $2,588,000 of related party debt was outstanding. $100,000 is interest free and will be repaid during 2015. The remaining balance of $2,488,000 matures on April 1, 2016 is unsecured and carries an annual interest rate of 0.21%. During the six months ended June 30, 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 a perpetual software license, requiring initial payments of $500,000, which has been recognized as revenue in the six months ended June 30, 2015. The Company owns a cost based investment interest of 19% in the customer with no voting rights or board representation therein.

9. Share Capital

9. Share Capital	6 Months Ended
	Jun. 30, 2015
Share Capital
9. Share Capital	Preferred Stock 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. The holders of Series A Preferred Stock are entitled to receive cumulative dividends during a period of twenty-four (24) months from and after the Issuance Date (the “Dividend Period”). During the Dividend Period for each outstanding share of Series Preferred Stock, dividends shall be payable quarterly in cash, at the rate of 10% per annum on or before each ninety (90) day period following the Issuance Date (each a “Dividend Payment Date”), with the first Dividend Payment Date to occur promptly following the three month period following the Issuance Date, and continuing until the end of the Dividend Period. Following the expiration of the Dividend Period, the holders of Series A Preferred Stock shall not be entitled to any additional dividend payment or coupon rate. Shares of Series A Preferred Stock are convertible in whole or in part, at the option of the holders, into shares of common stock at $5.85 per share prior to the Maturity, and all outstanding shares of Series A Preferred Stock shall automatically convert to shares of common stock upon Maturity, provided however, at no time may holders convert shares of Series A Preferred Stock if the number of shares of common stock to be issued pursuant to such conversion would cause the number of shares of common stock beneficially owned by such holder and its affiliates to exceed 9.99% of the then issued and outstanding shares of common stock outstanding at such time, unless the holder provides us with a waiver notice in such form and with such content specified in the Series A Certificate of Designation. Shares of Series A Preferred Stock are redeemable, at the option of the holders commencing any time after 12 months from and after the closing at a price equal to the original purchase price plus all accrued but unpaid dividends. In the event that the Company completes a financing of $10 million or greater prior to Maturity, the Series A Preferred Stock will be redeemed at a price equal to the original purchase price plus all accrued but unpaid dividends. 170,940 shares of Series A preferred stock are issued and outstanding as of June 30, 2015. 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. Common Stock The Company is authorized to issue 200 million shares of common stock, par value of $0.0001. During the six months ended June 30, 2015 no shares of common stock were issued. During the year ended December 31, 2014, the Company: · issued 15,000 shares of common stock for services received with a fair value of $64,500. · 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 75,000 shares of common stock for services received with a fair value of $322,500 · issued 246,000 shares of common stock in settlement of amounts owing of $553,500 Stock Purchase Warrants At June 30, 2015, the Company had reserved 2,811,642 shares of its common stock for the following outstanding warrants: Number of Warrants Exercise Price Expiry 116,760 $0.86 no expiry date 1,209,675 4.25 January 2019 100,000 4.00 July 2016 60,000 6.55 December 2015 68,850 2.25 December 2018 402,786 3.00 December 2018 402,568 3.50 December 2018 450,000 - May 2017 There were no warrants issued or exercised during the six months ended June 30, 2015.

10. Stock-Based Compensation

10. Stock-Based Compensation	6 Months Ended
	Jun. 30, 2015
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. 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 common share, to 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 period ended June 30, 2015, the Company issued options to purchase 564,000 shares of common stock under the 2013 Equity Incentive Plan. The fair value of the options issued, using the Black-Scholes option pricing model is estimated to be $259,000. The options have an exercise price of $1.09 and vest over three years. A summary of the Company’s 2013 Equity Incentive Plan as of June 30, 2015, is as follows: Number of Weighted Average Options Exercise Price Outstanding at December 31, 2014 500,000 $ 4.54 Options issued 564,000 1.09 Outstanding at June 30, 2015 1,064,000 2.71 The fair value of these options, using the Black-Scholes option-pricing model, is estimated to be $2,570,000. This expense, less an estimated forfeiture rate of 30%, will be recognized over the three year vesting periods. The amount of $279,000 has been recognized during the six months ended June 30, 2015. As at June 30, 2015 there was unrecognized compensation expense of approximately $1,050,000 to be recognized over a period of 3 years. For the 2013 Equity Incentive Plan there were 564,000 options issued and none were exercised or forfeited during the six months ended June 30, 2015. 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 June 30, 2015, is as follows: Number of Weighted Average Options Exercise Price Outstanding at December 31, 2014 584,650 $ 0.53 Options forfeited 850 0.51 Outstanding at June 30, 2015 583,800 $ 0.53 There were no options issued or exercised and 850 options were forfeited during the six months ended June 30, 2015. The following table summarizes stock options outstanding at June 30, 2015: Number Outstanding at June 30, Average Remaining Contractual Life Number Exercisable at June 30, Intrinsic Value at June 30, Exercise Price 2015 (Years) 2015 2015 $ 0.53 291,900 5.00 291,900 764,778 0.53 291,900 7.00 291,900 764,778 4.54 500,000 8.00 - - 1.09 564,000 10.00 - - At June 30, 2015, 5,583,800 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.

11. Commitments and Contingenci

11. Commitments and Contingencies	6 Months Ended
	Jun. 30, 2015
Commitments And Contingencies
11. Commitments and Contingencies	The Company entered into an agreement during 2013 with a consultant to pay for certain services to be provided by the issuance of options to purchase 291,900 shares of common stock of the Company. Contractual Commitments The Company incurred total rent expense of $28,000 and $47,000, respectively, for the six month periods ended June 30, 2015 and 2014. Minimum contractual commitments, as of June 30, 2015, is as follows: Operating Long-term leases Financing 2015 $ 20,000 $ 6,000 2016 - 4,000 Legal Proceedings In 2012, we sold certain former subsidiaries engaged in provision of satellite service in 2012 to Broadband Satellite Services (“BSS”), a company incorporated under 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.

12. Subsequent Event

12. Subsequent Event	6 Months Ended
	Jun. 30, 2015
Subsequent Events [Abstract]
12. Subsequent Event	On August 10, 2015, in connection with an Underwriting Agreement dated August 4, 2015 (the “Underwriting Agreement”) with Aegis Capital Corp. (“Aegis”), as representative of the several underwriters named therein (the “Underwriters”), we closed a firm commitment underwritten public offering of 1,714,286 shares of Common Stock, and warrants to purchase up to an aggregate of 857,143 shares of Common Stock at a combined offering price of $1.75 per share and accompany Warrant. Pursuant to the Underwriting Agreement, we granted the Underwriters an option for a period of 45 days to purchase up to 257,142 additional shares of Common Stock and/or 128,571 additional Warrants, in each case, solely to cover over-allotments, if any. The net proceeds from the Offering are approximately $2.64 million, or approximately $ 3.054 million if the underwriters exercise in full their option to purchase additional shares and warrants, after deducting underwriting discounts and commissions and estimated Offering expenses payable by us. The warrants offered have a per share exercise price of $2.50 (subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our Common Stock and also upon any distributions of assets, including cash, stock or other property to our stockholder), are exercisable immediately and will expire three years from the date of issuance. Subject to applicable laws, the warrants may be offered for sale, sold, transferred or assigned without our consent.

2. Summary of Significant Acc20

2. Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2015
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
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. Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in general and administrative expenses.
Cash	Cash and cash equivalents include bank demand deposit accounts and highly liquid short term investments with maturities of three months or less when purchased. Cash consists of checking accounts held at financial institutions in the United Kingdom, Switzerland, Ireland, Singapore, Hong Kong and China which, at times, balances may exceed insured limits. The Company has not experienced any losses related to these balances, and management believes the credit risk to be minimal.
Accounts Receivable	Accounts receivable result primarily from sale of software and licenses to customers and are recorded at their principal amounts. The categories of sales and receivables and their terms of payment are as follows: a) Master License Agreement (“Agreement”) deposits – these deposits are payable in accordance with the terms of the Agreement. The deposits are invoiced and recognized 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 deposits are due to be paid. 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 to 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 these 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 had 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 for these customers will be collected first before further revenue of this category is recognized in the future. 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 30 days from date of invoice. 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 that 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 debts to reduce the related receivable to the amount we believe to be collectable. There was an allowance of $592,000 and $492,000 for doubtful accounts at June 30, 2015 and December 31, 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 June 30, 2015 and December 31, 2014, two customers accounted for 21% and 28%, respectively, of the accounts receivable balance. 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 has been recorded, averaging approximately 1.5% per annum for payments expected to be received beyond 12 months.
Property and Equipment	Property and equipment is primarily comprised of leasehold property improvements, motor vehicles and equipment that are recorded at cost and depreciated or amortized using the straight-line method over their estimated useful lives as follows: motor vehicles – 5 years, equipment – between 3 and 5 years, leasehold property improvements, over the lesser of the estimated remaining useful life of the asset or the remaining term of the lease. Repairs and maintenance are charged to expense as incurred. Expenditures that substantially increase the useful lives of existing assets are capitalized.
Fair Value Measurements	Fair value is defined as the exchange price that will be received for an asset or paid to transfer a liability (an exit price) in the principal. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered to be observable and the third unobservable: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities.
Intangible Assets	Intangible assets include software development costs and customer lists and are amortized on a straight-line basis over the estimated useful lives of five years for customer lists and ten years for software development. The Company periodically evaluates whether changes have occurred that would require revision of the remaining estimated useful life. The Company performs periodic reviews of its capitalized intangible assets to determine if the assets have continuing value to the Company. The Company expenses all costs related to the development of internal-use software as incurred, other than those incurred during the application development stage, after achievement of technological feasibility. Costs incurred in the application development stage are capitalized and amortized over the estimated useful life of the software. Internally developed software costs are amortized on a straight-line basis over the estimated useful life of the software. The Company performs periodic reviews of its capitalized software development costs to determine if the assets have continuing value to the Company. Costs for assets that are determined to be of no continuing value are written off. The amortization of these costs is included in cost of revenue over the estimated life of the products. During the six months ended June 30, 2015 and 2014 software development costs of $560,000 and $637,000, 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 six months ended June 30, 2015 and 2014 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. ● Software and licenses – revenue from sales of perpetual licenses to top-tier telecom entities is recognized at the inception of the arrangement, presuming all other relevant revenue recognition criteria are met. Revenue from sales of perpetual licenses to other entities is recognized over unless payment terms exceed one year, as described below,the agreed collection period. ● Revenues for user licenses purchased by customers are recognized when the user license is delivered. ● Revenues for maintenance services are recognized over the period of delivery of the services. ● Effective October 1, 2014, the Company amended certain existing customer contracts with respect to the terms under which those customers would pay the Company for perpetual licenses, user licenses and maintenance services provided by the Company. Existing customer contracts required payments for maintenance services to be made based on contractually specified fixed amounts, which were billed regularly through September 2014. Through that date the Company recorded revenue for licenses and maintenance services when those licenses and services were billed. Revenue for user licenses was recorded as earned and revenue for maintenance services was recorded based on a fixed annual fee, billed quarterly. The Company has modified the payment terms under certain of those existing customer contracts by entering into Revenue Sharing agreements with those customers. Under the terms of these Revenue Sharing agreements, future payments will be due from the customer when that customer has generated revenue from its customers who subscribe to use the Horizon products and services. 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 as 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. 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. In order to determine the company’s historical experience is based on sufficiently similar arrangements, the Company considers the various factors including the types of customers and products, product life cycle, elements included in the arrangement, length of payment terms and economics of license arrangement. The Company does not presently have any such contracts where this presumption has been overcome.
Advertising Expenses	It is the Company’s policy to expense advertising costs as incurred. No advertising costs were incurred during the three and six month periods ended June 30, 2015 and 2014.
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. The Company expensed research and development costs in the six month period ended June 30, 2015 and 2014 of $252,000 and $nil, respectively.
Debt Issue Costs	Debt issue costs related to long-term debt are capitalized and amortized over the term of the related debt using the effective interest method.
Income Taxes	Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance. The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively. Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The 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 and six month periods ended June 30, 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.
Accumulated Other Comprehensive Income (Loss)	Other comprehensive income (loss), as defined, includes net loss, foreign currency translation adjustments, and all changes in equity (net assets) during a period from non-owner sources. To date, the Company has not had any significant transactions that are required to be reported in other comprehensive income (loss), except for foreign currency translation adjustments.
Use of Estimates	The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilities assumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions.
Financial Instruments	The carrying value of our financial assets and liabilities such as cash, accounts receivable and accounts payable approximate their fair values based on level 1 inputs in the fair value hierarchy because of the short maturity of these instruments. Due to the conversion features and other terms, it is not practical to estimate the fair value of amounts due to related parties and long term debt.
Share-Based Compensation	The Company accounts for stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes valuation model, which includes subjective judgements 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. The original effective date for ASU 2014-09 would have required the Company to adopt beginning in its first quarter 2017. In July 2015, the FASB voted to amend ASU 2014-09 by approving a one year deferral of the effective date as well as providing the option to early adopt the standard on the original effective date. Accordingly, the Company may adopt the standard in either its first quarter of 2017 or 2018. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the timing of its adoption and the impact of adopting the new revenue standard on its consolidated financial statements.

4. Property and Equipment, net

4. Property and Equipment, net (Tables)	6 Months Ended
	Jun. 30, 2015
Property And Equipment Net Tables
Property and equipment	June 30 December 31 2015 2014 Leasehold improvements $ - $ 265 Motor vehicle - 120 Equipment 296 348 296 733 Less accumulated depreciation (170 ) (521 ) Property and equipment, net $ 126 $ 212

5. Intangible Assets (Tables)

5. Intangible Assets (Tables)	6 Months Ended
	Jun. 30, 2015
Intangible Assets Tables
Intangible Assets	June 30 December 31 2015 2014 Horizon software $ 18,509 $ 16,936 ZTEsoft Telecom software 499 495 Contractual relationships 885 885 19,893 18,316 Less accumulated amortization (8,887 ) (7,356 ) Intangible assets, net $ 11,006 $ 10,960

6. Long-term Debt (Tables)

6. Long-term Debt (Tables)	6 Months Ended
	Jun. 30, 2015
Long-term Debt Tables
Long - term liabilities	June 30 December 31 2015 2014 Vehicle loan $ - $ 32 Equipment loan 10 15 Office term loan - 134 10 181 Less current portion (10 ) (73 ) Balance $ - $ 108

8. Related-Party Transactions (

8. Related-Party Transactions (Tables)	6 Months Ended
	Jun. 30, 2015
Related-party Transactions Tables
Related-Party Transactions	June 30 December 31 2015 2014 Loans due to stockholders (current and former officers and directors) Due within one year $ 100 $ 600 Long-term 2,488 2,598 $ 2,588 $ 3,198

9. Share Capital (Tables)

9. Share Capital (Tables)	6 Months Ended
	Jun. 30, 2015
Share Capital Tables
Stock Purchase Warrants	Number of Warrants Exercise Price Expiry 116,760 $0.86 no expiry date 1,209,675 4.25 January 2019 100,000 4.00 July 2016 60,000 6.55 December 2015 68,850 2.25 December 2018 402,786 3.00 December 2018 402,568 3.50 December 2018 450,000 - May 2017

10. Stock-Based Compensation (T

10. Stock-Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2015
Stock-based Compensation Tables
Summary of the Company's stock options	A summary of the Company’s 2013 Equity Incentive Plan as of June 30, 2015, is as follows: Number of Weighted Average Options Exercise Price Outstanding at December 31, 2014 500,000 $ 4.54 Options issued 564,000 1.09 Outstanding at June 30, 2015 1,064,000 2.71 A summary of the Company’s other stock options as of June 30, 2015, is as follows: Number of Weighted Average Options Exercise Price Outstanding at December 31, 2014 584,650 $ 0.53 Options forfeited 850 0.51 Outstanding at June 30, 2015 583,800 $ 0.53
Stock options outstanding	Number Outstanding at June 30, Average Remaining Contractual Life Number Exercisable at June 30, Intrinsic Value at June 30, Exercise Price 2015 (Years) 2015 2015 $ 0.53 291,900 5.00 291,900 764,778 0.53 291,900 7.00 291,900 764,778 4.54 500,000 8.00 - - 1.09 564,000 10.00 - -

11. Commitments and Contingen27

11. Commitments and Contingencies (Tables)	6 Months Ended
	Jun. 30, 2015
Commitments And Contingencies Tables
Lease Commitments	Operating Long-term leases Financing 2015 $ 20,000 $ 6,000 2016 - 4,000

2. Summary of Significant Acc28

2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Allowance doubtful accounts	$ 592		$ 492
Software development costs	560	$ 637
Research and development costs	$ 252	$ 0
2 Customers
Percentage accounts receivable of customers	21.00%
2 Customers
Percentage accounts receivable of customers			28.00%

4. Property and Equipment, ne29

4. Property and Equipment, net (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Property And Equipment Net Details
Leasehold improvements	$ 0	$ 265
Motor vehicles	0	120
Equipment	296	348
Property and equipment, gross	296	733
Less accumulated depreciation	(170)	(521)
Property and equipment, net	$ 126	$ 212

5. Intangible Assets (Details)

5. Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Intangible Assets Details
Horizon software	$ 18,509	$ 16,936
ZTEsoft Telecom software	499	495
Contractual relationships	885	885
Intangible assets, Gross	19,893	18,316
Less accumulated amortization	(8,887)	(7,356)
Intangible assets, net	$ 11,006	$ 10,960

5. Intangible Assets (Details N

5. Intangible Assets (Details Narrative) $ in Thousands	Jun. 30, 2015USD ($)
Intangible Assets Details Narrative
Amortization expected over next five years	$ 2,000

6. Long-term Debt (Details)

6. Long-term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Long-term Debt Details
Vehicle loan	$ 0	$ 32
Equipment loan	10	15
Office term loan	0	134
Total	10	181
Less current portion	(10)	(73)
Balance	$ 0	$ 108

8. Related-Party Transactions33

8. Related-Party Transactions (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Loans due to stockholders (current and former officers and directors)
Due within one year	$ 100	$ 600
Long-term	2,488	2,598
Loans due to stockholders	$ 2,588	$ 3,198

9. Share Capital (Details)

9. Share Capital (Details) - Jun. 30, 2015 - $ / shares	Total
Warrants A
Number of warrants	116,760
Exercise Price	$ 0.86
Expiry	no expiry date
Warrants B
Number of warrants	1,209,675
Exercise Price	$ 4.25
Expiry	Jan - 19
Warrants C
Number of warrants	100,000
Exercise Price	$ 4
Expiry	Jul16
Warrants D
Number of warrants	60,000
Exercise Price	$ 6.55
Expiry	Dec15
Warrants E
Number of warrants	68,850
Exercise Price	$ 2.25
Expiry	Dec18
Warrants F
Number of warrants	402,786
Exercise Price	$ 3
Expiry	Dec18
Warrants G
Number of warrants	402,568
Exercise Price	$ 3.50
Expiry	Dec18
Warrants H
Number of warrants	450,000
Exercise Price
Expiry	May17

10. Stock-Based Compensation (D

10. Stock-Based Compensation (Details) - 6 months ended Jun. 30, 2015 - $ / shares	Total
Number of Options
Number of Options Outstanding, Beginning	500,000
Number of Options Issued	564,000
Number of Options Outstanding, End	1,064,000
Weighted Average Exercise Price
Weighted Average Exercise Price Outstanding, Beginning	$ 4.54
Weighted Average Exercise Price Issued	1.09
Weighted Average Exercise Price Outstanding, Ending	$ 2.71
Other Stock Options
Number of Options
Number of Options Outstanding, Beginning	584,650
Number of Options Issued	850
Number of Options Outstanding, End	583,800
Weighted Average Exercise Price
Weighted Average Exercise Price Outstanding, Beginning	$ 0.53
Weighted Average Exercise Price Issued	0.51
Weighted Average Exercise Price Outstanding, Ending	$ 0.53

10. Stock-Based Compensation 36

10. Stock-Based Compensation (Details 1) - Jun. 30, 2015 - USD ($) $ / shares in Units, $ in Thousands	Total
Stock Option Plan 1 [Member]
Exercise Price	$ 0.53
Number of options outstanding	291,900
Average Contractual Life Remaining	5 years
Number of options exercisable	291,900
Intrinsic value	$ 764,778
Stock Option Plan 2 [Member]
Exercise Price	$ 0.53
Number of options outstanding	291,900
Average Contractual Life Remaining	7 years
Number of options exercisable	291,900
Intrinsic value	$ 764,778
Stock Option Plan 3 [Member]
Exercise Price	$ 4.54
Number of options outstanding	500,000
Average Contractual Life Remaining	8 years
Stock Option Plan 4 [Member]
Exercise Price	$ 1.09
Number of options outstanding	564,000
Average Contractual Life Remaining	10 years

10. Stock-Based Compensation 37

10. Stock-Based Compensation (Details Narrative)	Jun. 30, 2015shares
Stock-based Compensation Details Narrative
Common stock reserved	5,583,800

11. Commitments and Contingen38

11. Commitments and Contingencies (Details) $ in Thousands	Dec. 31, 2014USD ($)
Long Term Financing
2,015	$ 6,000
2,016	4,000
Operating Leases
2,015	$ 20,000

11. Commitments and Contingen39

11. Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Commitments And Contingencies Details Narrative
Rent expense	$ 28	$ 47