SEGMENT AND GEOGRAPHIC INFORMATION

12 Months Ended

Dec. 31, 2015

SEGMENT AND GEOGRAPHIC INFORMATION [Abstract]

SEGMENT AND GEOGRAPHIC INFORMATION

19. 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: internet games, mobile games and WVAS.

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,
	2013			2014			2015
Revenues
Internet games	$	93,792,294		$	118,099,837		$	105,045,280
Mobile games		16,908,282			45,036,427			24,646,661
WVAS		62,953,219			64,459,705			49,421,487
		173,653,795			227,595,969			179,113,428
Cost of revenues
Internet games		(45,283,888	)		(61,443,104	)		(52,368,813	)
Mobile games		(7,780,237	)		(22,977,318	)		(14,776,616	)
WVAS		(43,085,208	)		(44,858,641	)		(37,007,224	)
Impairment loss on intangible assets included in Internet games segment (Note)		(250,553)			-			(35,209,933	)
		(96,399,886	)		(129,279,063	)		(139,362,586	)
Gross profit
Internet games		48,508,406			56,656,733			52,676,467
Mobile games		9,128,045			22,059,109			9,870,045
WVAS		19,868,011			19,601,064			12,414,263
Impairment loss on intangible assets included in Internet games segment (Note)		(250,553)			-			(35,209,933	)
		77,253,909			98,316,906			39,750,842
Operating expenses
Product development		(26,401,720	)		(25,107,372	)		(24,189,619	)
Selling and marketing		(26,674,024	)		(42,522,684	)		(25,890,472	)
General and administrative		(8,976,176	)		(12,564,600	)		(13,484,211	)
Impairment loss on intangible assets		(1,562,386	)		(1,323,260	)		-
Total operating expenses		(63,614,306	)		(81,517,916	)		(63,564,302	)
Government subsidies	$	2,176,449		$	1,138,909		$	1,573,577
Income (loss) from operations	$	15,816,052		$	17,937,899		$	(22,239,883	)

Note: The cost of revenues for internet games segment in 2013 and 2015, amounted to $45,534,441 and $87,578,746 which included impairment charges of $250,553 and $35,209,933, respectively. The gross profit for internet games segment in 2013 and 2015, amounted to $48,257,853 and $17,466,534, which included impairment charges of $250,553 and $35,209,933, respectively. Prior period information is presented in a manner that is consistent with the current period segment reporting.

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, 2013, 2014 and 2015 are as follows:

	For the years ended December 31,
	2013		2014		2015
Internet games
Online game operation	$	91,308,244	$	116,756,333	$	104,671,006
Licensing arrangement		2,484,050		1,343,504		374,274
	$	93,792,294	$	118,099,837	$	105,045,280

Service lines of mobile games

The mobile games revenues comprise revenues from carrier billing channels and revenues from non-carrier billing channels. Revenues of mobile games by service line for the years ended December 31, 2013, 2014 and 2015 are as follows:

	For the years ended December 31,
	2013		2014		2015
Mobile games
- Carrier billing channels	$	10,135,756	$	23,808,707	$	12,057,097
- Non-carrier billing channels		6,772,526		21,227,720		12,589,564
	$	16,908,282	$	45,036,427	$	24,646,661

Service lines of WVAS

The WVAS include Wireless Application Protocol ("WAP") services, Multimedia Messaging Services ("MMS"), 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, 2013, 2014 and 2015 are as follows:

	For the years ended December 31,
	2013		2014		2015
WVAS
- SMS	$	31,844,446	$	31,922,975	$	21,336,865
- IVR		14,658,612		13,210,504		3,957,328
- MMS		1,096,133		968,026		945,771
- WAP		708,984		364,750		366,180
- CRBT and others		14,645,044		17,993,450		22,815,343
	$	62,953,219	$	64,459,705	$	49,421,487

Items included in measure of segment profit 

	For the years ended December 31,
	2013		2014		2015
Depreciation and amortization
Internet games	$	1,808,259	$	6,095,769	$	2,798,822
Mobile games		485,671		4,258,966		1,395,782
WVAS		2,694,077		11,168,363		5,948,890
		4,988,007		21,523,098		10,143,494

	For the years ended December 31,
	2013		2014		2015
Share-based compensation
Internet games	$	570,511	$	438,362	$	288,463
Mobile games		153,230		306,273		143,857
WVAS		849,988		803,145		613,128
		1,573,729		1,547,780		1,045,448

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,
	2013		2014		2015
PRC	$	167,752,785	$	221,935,017	$	174,199,110
Asia-pacific		913,465		162,797		7,937
Europe and America		4,987,545		5,498,155		4,906,381
	$	173,653,795	$	227,595,969	$	179,113,428

The Company's long-lived assets as of December 31, 2014 and 2015 were all located in the PRC.