Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 |
Principles of Consolidation [Policy Text Block] | (a) Principles of Consolidation |
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The consolidated financial statements include the accounts of YOU On Demand and (a) YOU On Demand’s wholly-owned subsidiary China Broadband, Ltd., ("CB Cayman"), (b) the wholly-owned subsidiary of CB Cayman: YOU On Demand (Asia) Limited (“YOD Hong Kong”, formerly Sinotop Group Limited), (c) YOD Hong Kong’s PRC subsidiary: YOU On Demand (Beijing) Technology Co., Ltd. (“YOD WFOE”), (d) YOD WFOE’s variable interest entity: Beijing Sino Top Scope Technology Co., Ltd.(“Sinotop Beijing”) and (e) Sinotop Beijing’s subsidiary Zhong Hai Shi Xun Information Technology Co., Ltd. (“Zhong Hai Video”). All material intercompany transactions and balances are eliminated upon consolidation. |
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Effective July 31, 2013, the Company sold its 51% interest in Jinan Broadband and as such, the operating results of Jinan Broadband was reported as discontinued operations in our consolidated statements of operations for the year ended December 31, 2013. Unless otherwise indicated, all disclosures and amounts in the Notes to the Consolidated Financial Statements relate to the Company’s continuing operations. |
Basis of Presentation [Policy Text Block] | (b) Basis of Presentation |
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The Company prepares and presents its consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). |
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Reclassifications |
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Certain amounts in the prior period presented have been reclassified to conform to the current period consolidated financial statement presentation. These reclassifications have no effect on previously reported consolidated net income or cash flows. |
Long-term Equity Investments [Policy Text Block] | (c) Long-term Equity Investments |
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Investments in entities where the Company can exercise significant influence, but not control, is classified as a long-term equity investment and accounted for using the equity method. Under the equity method, the investment is initially recorded at cost and adjusted for the Company’s share of undistributed earnings or losses of the investee. Investment losses are recognized until the investment is fully written down as the Company does not guarantee the investee’s obligations nor it is committed to provide additional funding. |
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Management regularly evaluates the carrying value of its long-term equity investments based on performance and the financial position of the investee, as well as other evidence of market value. Such evaluation includes, but is not limited to, reviewing the investee’s cash position, recent financings, projected and historical financial performance, cash flow forecasts and financing needs. An impairment charge is recorded when the carrying amount of the investment exceeds its fair value and the impairment is determined to be other-than-temporary. |
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As of and for the year ended December 31, 2014 and 2013, the Company’s long-term equity investments are comprised of the Company’s investment in Shandong Lushi Media Co., Ltd. (“Shandong Media”) and Hua Cheng Hu Dong (Beijing) Film and Television Communication Co., Ltd. (“Hua Cheng”), which are 30% and 39%, respectively, owned by Sinotop Beijing. |
Use of Estimates [Policy Text Block] | (d) Use of Estimates |
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The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the related disclosure of contingent assets and liabilities, at the date of the consolidated financial statements and during the reporting period. Actual results could differ from those estimates. |
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The most significant estimates relate to the useful lives of property and equipment and intangible assets subject to amortization, property and equipment, goodwill and intangible asset impairment assessments, allowance for doubtful accounts, fair value of financial instruments, share-based payments, contingent purchase consideration and warrant liabilities, and valuation allowance of deferred tax assets. These estimates may be adjusted as more current information becomes available, and any adjustment made could be significant. |
Foreign Currency Translation [Policy Text Block] | (e) Foreign Currency Translation |
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The Company uses the United States dollar (“US$” or “USD”) as its reporting currency. The functional currency of YOU On Demand Holdings, Inc., CB Cayman and YOD Hong Kong is the USD while the functional currency of Sinotop Beijing, Zhonghai Video and YOD WFOE is Renminbi (“RMB”). In the consolidated financial statements, the financial information of the entities which uses RMB as their functional currency has been translated into USD. Assets and liabilities are translated at the exchange rates on the balance sheet date, equity amounts are translated at the historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the period. Translation adjustments arising from these are reported as foreign currency translation adjustments and are shown as a component of other comprehensive loss in the statement of comprehensive loss. |
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Foreign currency transactions denominated in currencies other than functional currency are translated into the functional currency using the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are re-measured at the applicable rates of exchange in effect at that date. Foreign exchange gains and losses resulting from the settlement of such transactions and from re-measurement at year end are recognized in foreign currency exchange gain/(loss) in the consolidated statement of operations. |
Cash and cash equivalents [Policy Text Block] | (f) Cash and Cash Equivalents |
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Cash and cash equivalents consist of cash on hand and highly liquid investment securities with original maturities as of the date of purchase of three months or less. The Company deposits its cash balances with a limited number of banks. |
Accounts Receivable [Policy Text Block] | (g) Accounts Receivable |
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Accounts receivable are recognized at invoiced amounts, less an allowance for uncollectible accounts, if any. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company reviews the collectability of its receivables on an ongoing basis. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. |
Property and Equipment [Policy Text Block] | (h) Property and Equipment |
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Property and equipment are stated at cost less accumulated depreciation. Expenditures for major renewals and improvements, which extend the original estimated economic useful lives of applicable assets, are capitalized. Expenditures for normal repairs and maintenance are charged to expense as incurred. The costs and related accumulated depreciation of assets sold or retired are removed from the accounts and any gain or loss thereon is recognized in our statement of operations. Depreciation is provided for on a straight-line basis over the estimated useful lives of the respective assets. |
Intangible Assets [Policy Text Block] | (j) Intangible Assets |
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Intangible assets are stated at acquisition fair value or cost, less accumulated amortization. The Company amortizes its intangible assets with definite lives over their estimated useful lives and reviews these assets for impairment when an indicator for potential impairment exists. The Company is currently amortizing its intangible assets with definite lives over periods generally ranging between 5 to 20 years. The estimated useful lives are 20 years for the charter/cooperation agreements and 5 years for software licenses. |
Website development costs [Policy Text Block] | (k) Website Development Costs |
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Website development costs are stated at acquisition fair value or cost less accumulated amortization. The Company capitalizes website development costs associated with graphics design and development of the website application and infrastructure. Costs related to planning, content input, and website operations are expensed as incurred. The Company amortizes website development costs over three years. |
Goodwill [Policy Text Block] | (l) Goodwill |
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In accordance with Financial Accounting Standards Boards (“FASB”) Accounting Standards Codification (“ASC”) 350-20, Goodwill , the Company performs impairment test for its goodwill annually as of December 31, or more frequently, if indicators of potential impairment exist, to determine if the carrying value of goodwill is impaired. The Company reviews goodwill for impairment based on its identified reporting units, which are defined as reportable segments or groupings of businesses one level below the reportable segment level. In September 2011, the FASB issued amended guidance on testing goodwill for impairment. The guidance provides entities with an option to perform a qualitative assessment to determine whether further quantitative impairment testing is necessary, or to proceed directly to performing the first step of the goodwill impairment test. |
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Under the qualitative assessment, the Company would first assess qualitative factors to determine if it is more-likely-than-not the fair value of the reporting unit is less than its carrying value of the reporting unit’s assets and liabilities (including goodwill). If management determines that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying value, or if management is unable to reach a conclusion based on qualitative assessments, then the first and second steps of the goodwill impairment is performed. |
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Under the quantitative assessment, if the two-step goodwill impairment test is required, the fair value of the reporting unit is first compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying amount, an indication of goodwill impairment exists for the reporting unit and the Company must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. If the fair value of the reporting unit exceeds its carrying amount, step two does not need to be performed. |
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For the purpose of goodwill impairment testing, the Company is considered as a reporting unit. Based on the annual goodwill impairment test performed in the fourth quarter of 2014 and 2013, management concluded that the fair value of the reporting unit exceeded its carrying value. No impairment loss was recognized for the periods presented. |
Impairment of Long-Lived Assets [Policy Text Block] | (m) Impairment of Long-Lived Assets |
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Long-lived assets, including property, equipment and, intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Impairment loss recognized for the year ended December 31, 2014 and 2013 amounted to nil and $311,000, respectively. |
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Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale are presented separately in the appropriate asset and liability sections of the balance sheet. |
Warrant Liabilities [Policy Text Block] | (n) Warrant Liabilities |
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We account for derivative instruments and embedded derivative instruments in accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities , as amended. The amended standard requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and measure these instruments at fair value. Fair value is estimated using the Monte Carlo simulation method. |
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We also follow ASC 815-40 Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in, a Company’s Own Stock , which requires freestanding contracts that are settled in a company’s own stock, including common stock warrants, to be designated as an equity instrument, asset or a liability. Under these provisions a contract classified as an asset or a liability must be carried at fair value, with any changes in fair value recorded in the results of operations. A contract classified as an equity instrument must be included in equity, with no fair value adjustments required. The asset/liability derivatives are valued on an annual basis using the Monte Carlo simulation method. Significant assumptions used in the valuation included exercise dates, fair value for our common stock, volatility of our common stock and a risk-free interest rate. Gains or losses on warrants are included in “Changes in fair value of warrant liabilities” in our consolidated statement of operations. |
Advertising & Marketing Expense [Policy Text Block] | (o) Advertising & Marketing Expenses |
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The Company expenses advertising and marketing costs as incurred, which are included in selling expense. Advertising and marketing costs were approximately $359,000 and $533,000 for the years ended December 31, 2014 and 2013, respectively. |
Income Taxes [Policy Text Block] | (p) Income Taxes |
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The Company accounts for income taxes in accordance with the asset and liability method. Deferred taxes are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A tax valuation allowance is established, as needed to reduce net deferred tax assets to the amount expected to be realized. The Company also follows ASC 740-10 for accounting for uncertainty in income taxes. |
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The accounting for an uncertain tax position is a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. |
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Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. |
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The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in our consolidated statements of operation. |
Revenue Recognition [Policy Text Block] | (q) Revenue Recognition |
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Revenue is recorded as services are provided. The Company generally recognizes all revenues in the period in which the service is rendered, provided that persuasive evidence of an arrangement exists, the sales price is fixed or determinable, and collection is reasonably assured. For certain contracts that involve sub-licensing content within the specified license period, revenue is recognized in accordance with ASC Subtopic 926-605, Entertainment-Films – Revenue Recognition . That is, if the arrangement includes a nonrefundable minimum guarantee, all contents have been delivered in accordance with the terms of the arrangement and there are no substantive future obligations from the Company, then revenue is recognized upon delivery. The Company records deferred revenue for payments received from customers for the performance of future services and recognize the associated revenue in the period that the services are performed. |
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In accordance with ASC 605-25, Revenue Recognition – Multiple Element Arrangements , contracts with multiple element deliverables are separated into individual units for accounting purposes when the unit determined to have standalone value to the customer and performance of service is considered probable. Since the contract price is for all deliverables, the Company allocates the arrangement consideration to all deliverables at the inception of the arrangement on the basis of their relative selling price. Revenue related to each unit is recognized when the Company’s obligations under the contract have been satisfied and all revenue recognition criteria are met. |
Net Loss Per Share Attributable to YOU On Demand Shareholders [Policy Text Block] | (r) Net Loss Per Share Attributable to YOU On Demand Shareholders |
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Basic and Diluted net loss per share attributable to YOU On Demand shareholders have been computed by dividing the net loss by the weighted average number of common shares outstanding. The assumed exercise of dilutive warrants, less the number of treasury shares assumed to be purchased from the proceeds of such exercises using the average market price of the Company’s common stock during each respective period, have been excluded from the calculation of diluted net loss per share for all periods presented as their effect would be anti-dilutive. |
Share-Based Payment [Policy Text Block] | (s) Share-Based Payment |
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The Company awards share options and other equity-based instruments to its employees, directors and consultants (collectively “share-based payments”). Compensation cost related to such awards is measured based on the fair value of the instrument on the grant date and recognizes the cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. The amount of cost recognized is adjusted to reflect the expected forfeiture prior to vesting. When no future services are required to be performed by the employee in exchange for an award of equity instruments, and if such award does not contain a performance or market condition, the cost of the award is expensed on the grant date. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. |
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The Company also awards stocks and warrants for service to consultants for service and accounts for these awards under ASC 505-50, Equity – Equity-Based Payments to Non-Employees . Under the applicable guidance, fair value of the awards is assessed upon measurement date and recognized as cost or expenses when the services are provided. If the related services are completed upon issuance date, measurement date is determined to be the date the awards are issued. |
Reportable Segment [Policy Text Block] | (t) Reportable Segment |
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The Company has one operating business segment, video content and media, in which the chief operating decision maker reviews the operating results of the segment to determine the allocation of resources and the measuring of performance. |
Recent Accounting Pronouncements [Policy Text Block] | (u) Recent Accounting Pronouncements |
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In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU) 2014-09, creating a new Topic 606, Revenue from Contracts with Customers , to supersede the revenue recognition under current Topic 605, Revenue Recognition, and most industry-specific guidance. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of 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 good or services. The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a customer, as well as disclosure requirements for qualitative and quantitative information that should be included in financial statements. For public entities, the amendment becomes effective for annual or interim reporting periods beginning after December 15, 2016. Early adoption is not permitted. The Company is currently evaluating the impact on its consolidated financial statement of adopting this guidance. |