SEGMENT AND GEOGRAPHIC INFORMATION

12 Months Ended

Dec. 31, 2013

SEGMENT AND GEOGRAPHIC INFORMATION [Abstract]

SEGMENT AND GEOGRAPHIC INFORMATION

22. SEGMENT AND GEOGRAPHIC INFORMATION

Segment reporting

The Company's chief operating decision maker has been identified as the Chief Executive Officer who reviews results of operations by business lines when making decisions about allocating resources and assessing performance of the Company. The Company has therefore determined that each business line represents an operating segment and there are three operating segments presented: WVAS, mobile games and internet games.

The Company does not allocate any assets to its operating segments as management does not believe that allocating these assets is useful in evaluating these segments' performance. Accordingly, the Company has not made disclosure of total assets by reportable segment.

	For the years ended December 31,
	2011			2012			2013
Revenues
WVAS	$	80,265,942		$	77,765,502		$	63,922,188
Mobile games		40,850,452			21,190,283			17,069,010
Internet games		38,892,041			87,423,923			98,449,212
		160,008,435			186,379,708			179,440,410
Sales tax
WVAS		(1,390,901	)		(1,053,179	)		(968,969	)
Mobile games		(621,069	)		(219,306	)		(160,728	)
Internet games		(1,815,853	)		(4,521,072	)		(4,656,918	)
		(3,827,823	)		(5,793,557	)		(5,786,615	)
Cost of revenues
WVAS		(50,758,629	)		(52,655,523	)		(43,085,208	)
Mobile games		(25,247,963	)		(10,934,999	)		(7,780,237	)
Internet games		(15,923,649	)		(39,539,750	)		(45,534,441	)
		(91,930,241	)		(103,130,272	)		(96,399,886	)
Gross profit
WVAS		28,116,412			24,056,800			19,868,011
Mobile games		14,981,420			10,035,978			9,128,045
Internet games		21,152,539			43,363,101			48,257,853
		64,250,371			77,455,879			77,253,909
Operating expenses
Product development		(15,416,944	)		(18,382,383	)		(26,401,720	)
Selling and marketing		(20,891,615	)		(24,586,039	)		(26,674,024	)
General and administrative		(11,582,200	)		(11,629,273	)		(8,976,176	)
Impairment loss on goodwill and intangible assets		(20,259,169	)		-			(1,562,386	)
Total operating expenses		(68,149,928	)		(54,597,695	)		(63,614,306	)
Changes in fair value of contingent
consideration for business acquisition	$	(3,729,513	)	$	-		$	-
Government subsidies	$	319,319		$	301,359		$	2,176,449
(Loss) income from operations	$	(7,309,751	)	$	23,159,543		$	15,816,052

Service lines of WVAS

The WVAS include services delivered through the 2.5G mobile networks, which comprise Wireless Application Protocol ("WAP") services and Multimedia Messaging Services ("MMS"), and services delivered through 2G technology platforms, which comprise Short Messaging Services ("SMS"), Interactive Voice Response services ("IVR"), and Color Ring Back Tones ("CRBT"). Revenues of WVAS by service line for the years ended December 31, 2011, 2012 and 2013 are as follows:

	For the years ended December 31,
	2011		2012		2013
WVAS
2.5 Generation
- WAP	$	2,355,376	$	2,688,051	$	719,897
- MMS		6,573,187		3,392,146		1,113,005
		8,928,563		6,080,197		1,832,902
2 Generation
- SMS	$	37,096,542	$	39,178,143	$	32,334,591
- IVR		12,661,930		13,437,961		14,884,236
- CRBT and others		21,578,907		19,069,201		14,870,459
		71,337,379		71,685,305		62,089,286
	$	80,265,942	$	77,765,502	$	63,922,188

Service lines of mobile games

The mobile games revenues are derived from feature phone revenues and smart phone revenues. Revenues of mobile games by service line for the years ended December 31, 2011, 2012 and 2013 are as follows:

	For the years ended December 31,
	2011		2012		2013
Mobile games
- Feature phone	$	40,850,452	$	15,613,441	$	10,232,105
- Smart phone		-		5,576,842		6,836,905
	$	40,850,452	$	21,190,283	$	17,069,010

Service lines of internet games

The internet games revenues are derived from online game operation revenues and licensing revenues including royalties. Revenues of internet games by service line for the years ended December 31, 2011, 2012 and 2013 are as follows:

	For the years ended December 31,
	2011		2012		2013
Internet games
Online game operation	$	33,337,889	$	82,197,478	$	95,965,162
Licensing arrangement		5,554,152		5,226,445		2,484,050
	$	38,892,041	$	87,423,923	$	98,449,212

Geographical information

The Company's operations are mainly located in its country of domicile (i.e. the PRC) and to a lesser extent, overseas. The Company's revenues by geographic areas (based on location of the other signing party of the revenue contract) are detailed below:

	For the years ended December 31,
	2011		2012		2013
PRC	$	154,455,308	$	176,466,462	$	173,539,400
Asia-pacific		4,502,636		3,702,017		913,465
Europe and America		1,050,491		6,211,229		4,987,545
	$	160,008,435	$	186,379,708	$	179,440,410

The Company's long-lived assets as of December 31, 2012 and 2013 were all located in the PRC.