Revenue: Our revenue for continuing operations for the year ended December 31, 2018 was approximately $787,000 as compared to ~~Filipinos throughout~~approximately $714,000 for the year ended December 31, 2017, an increase of approximately $73,000 or 10.2%. The increase was primarily due to revenue generated from companies acquired in the year.

Cost of Revenue: Cost of revenue was primarily the amortization of intangible assets relating to subsidiaries acquired together with intellectual property associated with the secure messaging.

Gross Deficit: Gross deficit for the year ended December 31, 2018 was approximately $1.45 million as compared to $0.15 million for the year ended December 31, 2017. The increased deficit is primarily due to the increase in amortization.

Operating Expenses: Operating expenses including general and administrative expenses, consultancy expenses, depreciation and impairment charges were approximately $12.8 million for the year ended December 31, 2018, as compared to approximately $4.3 million, for the same period in 2017, an increase of approximately $8.5 million or 200%. The increase in expenses primarily arose due to an increase in non-cash consulting expenses paid in shares and an impairment charge related to our secure messaging software.

Other Income (Expense): Net other income totaled $0.56 million for the year ended December 31, 2018, and increase of $1.22 million over the year ended December 31, 2017. The increase in net other income is due primarily to a decrease in interest expense charges and other income recognized from the planned disposition of Banana Whale.

Net Loss: Net loss from continuing operations for the year ended December 31, 2018 was approximately $13.7 million as compared to a net loss of $5.1 million for the same period in 2017. Going forward, management believes the Company will continue to grow the business and increase profitability through acquisitions.

Foreign Currency Translation Adjustment: Our reporting currency is the U.S. dollar. Our local currencies, Hong Kong Dollars, British pounds and Chinese Renminbi, are our functional currencies. Results of operations and cash flow are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate at the end of the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of shareholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

The following table sets forth a summary of our approximate cash flows for the periods indicated:

Net cash used by operating activities from continuing operations was approximately $3.0 million for the year ended December 31, 2018 as compared to approximately $0.4 million for the same period in 2017. The increase in cash used in operating activities from continuing operations is largely due to the increase in cash expenditures in 2018 as compared to 2017 related to the newly acquired entities.

Net cash used in investing activities from continuing operations was approximately $0.17 million for the year ended December 31, 2018. Net cash used in investing activities was primarily focused on acquisition and investment in acquired subsidiaries.

Net cash provided by financing activities from continuing operations amounted to approximately $3.5 million for 2018 and $1.5 million for 2017. Cash provided by financing activities in 2018 and 2017 was primarily from the sale of Common Stock and conversion of warrants, net of related costs.

Our working capital surplus as of December 31, 2018, was approximately $1.6 million, as compared to a working capital surplus of approximately $0.9 million for the same date in 2017.

~~Research & Development~~We have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

~~During the fiscal year 2016, we spent approximately $500,000 on capitalizable research and development together with approximately $600,000 on expensed research and development.~~

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Our significant accounting policies are described in notes accompanying the consolidated financial statements. The preparation of the consolidated financial statements requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. Estimates are based on information available as of the date of the financial statements, and accordingly, actual results in future periods could differ from these estimates. Significant judgments and estimates used in the preparation of the consolidated financial statements apply critical accounting policies described in the notes to our consolidated financial statements.

We consider our recognition of revenues, accounting for the consolidation of operations, accounting for stock-based compensation, accounting for intangible assets and related impairment analyses, the allowance for doubtful accounts and accounting for equity transactions, to be most critical in understanding the judgments that are involved in the preparation of our consolidated financial statements.

Additionally, we consider certain judgments and estimates to be significant, including those relating to the timing of revenue recognition from the sales of perpetual licenses to certain Tier 1 and Tier 2 telecom entities, those relating to the determination of vendor specific objective evidence (“VSOE”) for purposes of revenue recognition, allowance for doubtful accounts, useful lives for amortization of intangibles, determination of future cash flows associated with impairment testing of long-lived assets, determination of the fair value of stock options and other assessments of fair value. We base our estimates on historical experience, current conditions and on other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates and assumptions.

Together with our critical accounting policies set out above, our significant accounting policies are summarized in Note 2 of our audited financial statements as of ~~December 31, 2016.~~

~~The Company recognizes revenue when it is realized or realizable~~ and earned. The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred or services have been rendered, price is fixed and determinable, and collectability is reasonably assured.

Where the Company has entered into a Revenue Share with the customer then all future revenue from granting of user licenses and for maintenance services will be recognized when the Company has delivered user licenses and is entitled to invoice.

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 unspecified 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.~~

~~If the presumption cannot be overcome due to a lack of such evidence, revenue is recognized as payments become due, assuming all other revenue recognition criteria has been met.~~

~~The following table sets forth information from our statements of operations~~ for the year ended December 31, ~~2016 and 2015.~~ 2018.

~~Comparison of year ended December 31, 2016 and 2015 (in thousands)~~Revenue Recognition

~~Revenue:~~ Our revenue for the year ended December 31, 2016 was approximately $1.6 million as compared to approximately $1.5 million for the year ended December 31, 2015, an increase of roughly $0.1 million or 5%. The increase was primarily due to increase in B2B business primarily in the Asia region.

291.

Digital secure messaging revenue involves the sale of user licenses, at a fixed price per license, to the customers, which is our sole performance obligation under the existing licensing agreements. The Company recognizes the revenue from the sale of the user licenses when the valid licenses have been delivered to the customer’s server in useable form.

123Wish derives income from user subscriptions, sale of merchandise, sale of tickets for experiences with social media influencers and artists, and the sale of corporate sponsorships, each of which is a separate performance obligation. User subscriptions cover a defined period of time (typically one month) and the revenue is recognized as the Company satisfies the requisite performance obligation (over the defined subscription period). Sale of merchandise and tickets are recognized when the customer has paid for the item and when the merchandise and/or ticket has been delivered to the customer. Corporate sponsorship packages are non-refundable and relate to brand association. The Company has no further service deliverable to the sponsor and the revenue is recognized when the agreement is entered into by both parties and the required marketing materials have been delivered to the corporate sponsor for their use.

Love Media House derives income from recording and video services. Income is recognized when the recording and video services are performed and the final customer product is delivered and the point at which the performance obligation is satisfied. These revenues are non-refundable.

Banana Whale derives income primarily through licensing arrangements with gaming customers. Under these arrangements, Banana Whale provides the customers with a license (functional IP), implementation services and ad-hoc support, which may include unspecified upgrades and enhancements. The Company has determined that these promised goods and services represent one combined performance obligation since the individual promised goods or services are not distinct in the context of the contract. The revenues earned from the arrangements are primarily based on usage-based royalties. As the Company has determined that the license is the predominant item to which the royalty relates, revenues are recognized when the related sale or usage by the customer occurs.

Browning Production & Entertainment, Inc derives income from the advertising associated with the airing of television series produced by BP&E and also license income from the show of series on certain channels based on the number of viewers attracted.

~~Cost of Revenue:~~ Recent Accounting PronouncementsCost of revenue for hardware calls and network charges was approximately $0.1 million for the year ended December 31, 2016, compared to approximately the same amount for the year ended December 31, 2015. Our cost of sales is primarily composed of the amortization of software development costs together with the costs of hardware, calls and network charges.

~~Gross Profit~~: ~~Gross profit before~~In May 2014, the ~~amortization charge~~Financial Accounting Standards Board issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements of Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition” and most industry-specific guidance on revenue recognition throughout the ASC. The new standard is principles-based and provides a five step model to determine when and how revenue is recognized. The core principle of the new standard is that revenue should be recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also requires disclosure of qualitative and quantitative information surrounding the amount, nature, timing and uncertainty of revenues and cash flows arising from contracts with customers. The new standard, as updated in 2015, was effective for us in the first quarter of the year ~~ended~~ending December 31, ~~2016 was approximately $1.5 million~~2018 and can be applied either retrospectively to all periods presented or as ~~compared to $1.4 millionfor the previous year. Our gross profits increased by 6% from 2015 to 2016. The increase was mainly due to the increase in B2B business primarily in the Asia region.~~

~~Operating Expenses:~~ Operating expenses including general and administrative expenses, allowance for doubtful accounts, depreciation and research and development expenses were approximately $ 4.4 million or 272% of revenue for the year ended December 31, 2016,a cumulative-effect adjustment as compared to approximately $4.9 million, or 322% of sales for the same period in 2015, a decrease of $0.5 million. The decrease in expenses arose due to the reduction in provision for doubtful accounts of $0.4 million in the year ended December 31, 2016 when compared to the same period in 2015. General and administrative expenses were approximately $3.3 million for the year ended December 31, 2016 as compared to approximately the same amount as the same period in 2015.

~~Net Loss:~~ Net loss for the year ended December 31, 2016 was approximately $5.5 million as compared to a net loss of $6.3 million for the same period in 2015. Going forward, management expects to generate a growth in revenue based on the roll out of the ~~products primarily in~~date of adoption. We have evaluated the China, Asia and Latin America regions. Going forward, management believes the Company will continue to grow the business and increase profitability if we are successful in selling the Horizon B2B solution to new telecommunications company customers globally and the B2C service to end users.

~~Foreign Currency Translation Adjustment:~~ Our reporting currency is the U.S. dollar. Our local currencies, Swiss Francs, Euro, British pounds and Chinese Renminbi, are our functional currencies. Results of operations and cash flow are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate at the endimpact of the ~~period. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of shareholders’ equity. Transaction gains~~new accounting standard on our revenue recognition policies and ~~losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.~~

Currency translation adjustments resulting from this process are included in accumulated other comprehensive income in the consolidated statement of shareholders' equity and amounted to approximately $65,000 for the year ended December 31, 2016.

~~Liquidity and Capital Resources~~

As we continue to pursue our operations and our business plan, we expect to incur further losses in 2017 which when combined with our continued investment in our intellectual property, will generate negative cash flows. As of December 31, 2016 the Companyit did not have any available credit facilities. As a result we are in the process of seeking new financing by way of sale of either convertible debt or equities. Whilst we have been successful in the past in obtaining the necessary capital to supportan impact on our investment and operations there is no assurance that we will be able to obtain additional financing under acceptable terms and conditions, or at all. As a result , our auditors’ report for our 2016 Financial Statements, which are included as part of this report, contains a statement concerning our ability to continue as a “going concern”.

~~Years Ended December 31, 2016 and December 31, 2015~~financial statements.

~~The following table sets forth a summary~~ In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. This ASU applies to all companies that enter into contracts with customers to transfer goods or services. This ASU is effective for public entities for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but not before interim and annual reporting periods beginning after December 15, 2016. Entities have the choice to apply the ASU either retrospectively to each reporting period presented or by recognizing the cumulative effect of ~~our approximate cash flows for~~applying these standards at the ~~periods indicated:~~

For the Years Ended
December 31
(in thousands)
2016 2015
Net cash used in operating activities (1,303 ) (2,115 )
Net cash used in investing activities (475 ) (1,072 )
Net cash provided by financing activities 334 1,787

Net cash used by operating activities was approximately $1.3 million for the year ended December 31, 2016 as compared to approximately $2.1 million for the same period in 2015. The decrease in cash used in operating activities is largely due to the deferraldate of ~~payments to vendors during 2016~~

~~Net cash used in investing activities was approximately $0.5 million~~initial application and ~~$1.1 million for the years ended December 31, 2016 and 2015, respectively. Net cash used in investing activities was primarily focused on investment in software development costs.~~

Net cash provided by financing activities amounted to approximately $0.3 million for 2016 and $1.8 million for 2015. Cash provided by financing activities in 2016 primarily from the sale of Common Stock in September, October and December 2016, net of related costs. Cash provided by financing activities in 2015 was primarily due to the sale of Common Stock in August and September 2015.

~~Our working capital deficit as of December 31, 2016, was approximately $1.9 million, as compared to working capital of approximately $3.9 million for the same date in 2015.~~

~~Off-Balance Sheet Arrangements~~

not adjusting comparative information. We have ~~no off-balance sheet arrangements that~~evaluated the impact of the new accounting standard on our revenue recognition policies and it did not have ~~or are reasonably likely to have, a current or future effect~~an impact on ~~its~~our financial ~~condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.~~statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements, including the independent registered public accounting firm’s report on our financial statements, are included beginning at page F-1 immediately following the signature page of this report.

~~ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE~~

~~(a)~~ ~~Dismissal of Independent Certifying Accountant~~.

~~(1) Previous Independent Public Accounting Firm~~

On October 12, 2016, Peterson Sullivan LLP (“Peterson”) resigned as One Horizon Group, Inc.’s (the “Company”) independent registered public accounting firm. The report of Peterson on the Company’s financial statements for the year ended December 31, 2014, did not contain an adverse opinion or disclaimer of opinion, and such report was not qualified or modified as to uncertainty, audit scope, or accounting principles. During the year ended December 31, 2014, there were no disagreements between the Company and Peterson on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. No reportable event, as described in Item 304(a)(1)(v) of Regulation S-K, has occurred from the resignation of Peterson.

~~As a result of Peterson’s resignation, Peterson determined not to reissue their report on our financial statements for fiscal year ended December 31, 2015.~~

~~(2) New Independent Public Accounting Firm~~

On October 12, 2016, the Company entered into an engagement with Cherry Bekaert LLP (“Cherry”) to retain Cherry as the Company’s independent public accounting firm. On October 12, 2016, the audit committee of the Company approved and ratified the engagement of Cherry as its new independent registered public accounting firm.

Cherry re-audited our financial statements for the fiscal year ended December 31, 2015 and determined there is no material change to the prior report issued by Peterson for that period, but for the emphasis of matter paragraph with respect to the restatement of the previously reported consolidated financial statement as of and for the year ended December 31, 2015.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including ~~its~~our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Disclosure Controls. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our ~~chief executive officer~~Chief Executive Officer and our ~~chief financial officer,~~Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures for the period ended December 31, ~~2016. Based on~~2018. Our Chief Executive Officer and Chief Financial Officer concluded that due to the ~~foregoing, our chief executive officer and chief~~deficiency in the internal control over financial ~~officer concluded that~~reporting discussed below, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not ~~operating effectively~~effective as of December 31, 2016. Our disclosure controls and procedures were not effective because of the “material weaknesses” described below under “Management’s Annual Report on Internal Controls Over Financial Reporting”.2018.

Management’s Report on Internal Control over Financial Reporting

Our management is also responsible for establishing and maintaining adequate internal controls over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors (notably, the Audit Committee thereof), management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

·● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

·● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, our internal control over financial reporting may not prevent or detect all misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our Chief Executive Officer and our Chief Financial Officer, has assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2016.~~2018. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the ~~Tread way~~Treadway Commission (COSO) in Internal ~~Control—Integrated Framework. Because~~Control-Integrated Framework (2013). Due to a lack of accounting personnel, the Company's inability to segregate various accounting functions, lack of a control function over original documentation of agreements, and a lack of a documented control environment with respect to our operating entities, management has concluded that there was a material ~~weaknesses described~~weakness in ~~the following paragraphs, management believes~~our internal control environment based on these matters and has concluded that as of December 31, ~~2016,~~2018, our internal control over financial reporting was not ~~effective based on those criteria.~~effective.

~~A “material weakness” is defined under the SEC rules as a deficiency, or a combination~~This annual report does not include an attestation report of ~~deficiencies, in~~our registered public accounting firm regarding internal control over financial ~~reporting such that there is a reasonable possibility that a material misstatement~~reporting. The rules of ~~a company’s annual or interim financial statements will~~the Securities and Exchange Commission do not ~~be prevented or detected on a timely basis~~require an attestation of the Management’s report by our ~~internal controls. As a result of its review, management concluded that we had material weaknesses~~registered public accounting firm in ~~our internal control over financial reporting process consisting of the following:~~this annual report.

(i) Lack of in-house US GAAP Expertise. Currently we do not have sufficient in-house expertise in US GAAP reporting. Instead, we rely on the expertise and knowledge of external financial advisors to account for transactions in accordance with US GAAP.

~~During the years ended December 31, 2015 and 2016, we implemented the following measures to remediate the material weaknesses identified:~~

During 2015 and 2016, the Company engaged external CPA consultants to provide the Company with improved in-house US GAAP expertise. Despite these measures which were intended to address the identified material weaknesses as well as to enhance our overall internal control environment, management concluded that as of December 31, 2016, the material weaknesses identified above had not been fully remediated.

~~Management Plan to Remediate Material Weaknesses~~

~~We intend to continue in the future using external financial advisors throughout the year to assist on the reporting of complex transactions and the overall review of the quarterly and annual filings.~~

Changes in Internal Control over Financial Reporting

~~Other than described above, during~~During the ~~fourth quarter of the fiscal~~ year ended December 31, ~~2016,~~2018, there were no ~~other~~ changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The following table and text set forth the names and ages of all directors and executive officers as of April 3, 2017. There are no family relationships among our directors and executive officers. Each director is elected at our annual meeting of shareholders and holds office until the next annual meeting of shareholders, or until his successor is elected and qualified. Also provided herein are brief descriptions of the business experience of each director, executive officer and advisor during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws. None of our officers or directors is a party adverse to us or has a material interest adverse to us. Each director has been elected to the term indicated. Directors whose term of office ends in 2016 shall serve until the next Annual Meeting of Stockholders and until their successors are elected and qualified.

Name Age Principal Occupation or Employment First Became Director Current
Board Term
Expires

Brian Collins 49 President, Chief Executive Officer, Chief Technology Officer, Director 12/10/12 2017

Martin Ward 59 Chief Financial Officer, Director 12/10/12 2017

Nicholas Carpinello 67 Owner, Carpinello Enterprises LLC, Director 3/7/13 Until the date of removal or resignation

Richard Vos 71 Director 8/21/2013 Until the date of removal or resignation

Robert Law 66 Director 8/28/2013 Until the date of removal or resignation

Robert Vogler 66 Director 1/8/14 Until the date of removal or resignation
Name Age Position
Mark White 58 President, Chief Executive Officer and Director
Martin Ward 61 Chief Financial Officer and Director
Nicholas Carpinello 69 Director
Richard Vos 73 Director
Robert Law 68 Director
Aling Zhang 61 Director
Pengfei Li 31 Director

~~Brian Collins~~Mark White.
Mr. ~~Collins~~White was appointed as ~~the~~President, Chief Executive ~~Office~~Officer and ~~President~~a director on ~~July 28, 2014.~~September 8, 2017. Mr. ~~Collins also acts~~White previously served as the ~~Chairman of the Board of the Company upon his appointment~~Company’s Chief Executive Officer from November 30, 2012 to July 24, 2014 and as a director from December 2012 to July 2014. From July 2014 to August 2017, he was engaged as a private investor seeking business and investment opportunities. Mr. White served as the Chief Executive Officer of One Horizon Group, PLC from 2004 to November 2012. His entrepreneurial career in the ~~Company.~~distribution of electronic equipment and telecommunications spans over 20 years. He founded Next Destination Limited in 1993, the European distributor for Magellan GPS and satellite products, and sold the business in 1997. Prior to that, Mr. ~~Collins~~White was ~~earlier appointed~~Chief Executive Officer for Garmin Europe, where he built up the company’s European distribution network. He previously sold Garmin’s GPS products through Euro Marine Group Ltd, a company he formed in 1990, which established distribution in Europe for U.S. manufacturers of marine electronic equipment. Earlier in his career, Mr. White was the Sales Director for Cetrek Limited, a maritime autopilot manufacturer.
Martin Ward. Mr. Ward has served as ~~Vice President and~~ Chief ~~Technology~~Financial Officer onsince November 30, 2012 and a director onsince December 10, 2012. Prior to his appointment as Vice President and Chief Technology Officer, Mr. Collins had served as Chief Technology Officer of One Horizon Group, PLC since 2010, following the acquisition by One Horizon Group of Abbey Technology GmbH, a company that was founded by, and employed, Mr. Collins in 1999, and which became a subsidiary of One Horizon Group upon its acquisition. He is the co-inventor of the Horizon Platform, and has over 20 years’ experience in the technology sector with a background in software engineering. Abbey Technology developed software systems for the Swiss banking industry. Prior to his employment at Abbey, he worked as a software engineer for Credit Suisse First Boston Equities in Zurich. Earlier in his career, between 1993 and 1996, he worked as a software engineer for Sybase, an information technology company, in California and Amsterdam. Mr. Collins graduated in 1990 with a BSc Hons in Computer Systems from the University of Limerick, Ireland. He also undertook further software research and development at International Computers Limited between 1990 and 1993. Mr. Collins brings experience founding and working at technology companies along with extensive knowledge of software engineering.
35
~~Martin Ward~~
Mr. Ward ~~was appointed Chief Financial Officer on November 30, 2012 and director on December 10, 2012. Prior to his appointment as Chief Financial Officer, Mr. Ward had~~ served as the Chief Financial Officer and Company Secretary of One Horizon Group, PLC ~~since 2004.~~from 2004 to November 2012. Prior to joining One Horizon Group, Mr. Ward was a partner at Langdowns DFK, a United Kingdom-based chartered accountancy practice. Earlier in his career, between 1983 and 1987, he worked for PricewaterhouseCoopers as an Audit Manager. Mr. Ward is a fellow of the Institute of Chartered Accountants of England and Wales. ~~Mr. Ward brings significant experience in accounting, corporate finance and public company reporting.~~

Nicholas ~~Carpinello~~Carpinello.
Mr. Carpinello ~~was appointed~~has served as a director onsince March 7, 2013. He has been the owner of Carpinello Enterprises LLC d/b/a Cottman Transmission Center, a national auto service franchise, since 2004 and also has worked as a consultant to SatCom Distribution Inc. (“SDI”), assisting in various business, tax and financial matters of US operations of UK-based distributors of satellite communication hardware and airtime, since 2005. Prior to November 2012, SDI was a subsidiary of One Horizon Group PLC. Mr. Carpinello’s years of professional experience are extensive, and include experience as CFO and Treasurer with multinational public and private manufacturers of armored vehicles and, later in his career, CFO of privately-held companies in the computer science field. He is a Certified Public Accountant, an alumnus of Arthur Andersen & Co., and holds a BA degree in Accounting from the University of Cincinnati. ~~The Board decided that Mr. Carpinello should serve as a director because of his significant U.S. public company experience, as well as years of experience as a certified public accountant.~~
36

Richard ~~Vos~~Vos.
Mr. Vos was appointed as a director on August 28, 2013. Mr. Vos has been a non-executive director of NSSC Operations Ltd., which operates the National Space Centre in the United ~~Kingdom. He is the~~Kingdom, until February 2018 and was chairman of its audit committee. From August 2014 to March 2017. Mr. Vos ~~since August 2014 has been~~was a non-executive director of Tawsat Limited and Tawsat Holdings Limited, both Irish registered companies which hold intellectual property in certain satellite operations.

Mr. Vos was an Independent Director from 2007 to January 2017 of Avanti ~~Communications~~Communication Group plc, a public company listed on the London Stock Exchange (LSE:AVN), where he was chairman of its remuneration committee and ~~past chairman of its~~ audit committee. From June 2005 to June 2010, Mr. Vos was a director of our United Kingdom ~~subsidiary,~~subsidiary. One Horizon Group plc (formerly SatCom Group Holdings plc) (“One Horizon UK”), and from October 2006 to June 2010 was also Chairman. From July 2005 to March 2010, One Horizon UK was listed on the Alternative Investment Market of the London Stock Exchange (AIM: SGH). From October 2008 to October 2010, Mr. Vos served as a director of TerreStar Europe Ltd., a former start-up business seeking to provide mobile satellite services in Europe. From April 2003 to 2009, Mr. Vos was chairman of the Telecommunications and Navigation Advisory Board of the British National Space Centre (subsequently reconstituted as the United Kingdom Space Agency). From September 2006 to June 2009, Mr. Vos was a director of Avanti Screenmedia Group plc, formerly listed on the London Stock Exchange (LSE:ASG), which provided satellite and other services. Mr. Vos obtained his Bachelor of Arts with Honors in Modern Languages from University of London in 1968, and his Diploma in Management Studies from ~~Kingston~~Kingdom Polytechnic in 1973. ~~He is a member of the Institute of Directors.~~
Robert ~~Law~~Law.
Mr. Law ~~was appointed~~has served as a director onsince August 28, 2013. ~~Between May~~From 1990 ~~and January~~to 2016, Mr. Law ~~has~~ served as chief executive officer of Langdowns DFK Limited (“Langdowns”), a United Kingdom-based accounting, tax and business advisory firm, and ~~since~~from 1979 ~~has~~to 2018 served as a director of Langdowns. Also, ~~between May~~from 1990 ~~and January~~to 2016, Mr. Law ~~has been~~served as the chief executive officer of Southern Business Advisers LLP (“Southern Business Advisers”), a United Kingdom-based business associated with Langdowns that also offers accounting, tax and business advisory services, ~~and has been~~was a member of Southern Business Advisers since 1979. Mr. Law is a Fellow of the Institute of Chartered Accountants in England and Wales (“ICAEW”)~~.  Mr. Law~~, having qualified as an ICAEW Chartered Accountant in 1976.

~~Robert Vogler~~Ajing Zhang.
Mr. ~~Vogler~~Zhang was appointed as a director onin January ~~8, 2014.~~2019. Hewas managing director of Shanghai Suonengderui Energy Science and Technology Development Co., Ltd. from March 2011 to April 2018. From March 2010 to February 2011 he was Executive Deputy General Manager of China Energy Conservation and Environmental Protection Shanghai Company. From June 2006 to March 2010 he was Deputy General Manager of Shanghai Citelum Kighting Design Co. LTd. From March 2003 to June 2006 he was Assistant General Manager of Oriental Pearl Group Co., Ltd. From May 1992 to March 2003, he was Assistant General Manager and Financial Manager of Oriental Pearl Taxi Co., Ltd. From April 1989 to May 1992 he was Finance Supervisor of Shanghai Qichongtian Hotel. Mr. Zhang received a Bachelor’s degree from Shanghai Lixin College of Accounting in 1987 (where he majored in Accounting), a postgraduate degree from East China Normal University in 1999 )(where he majored in Economic Information Management) and a Master’s degree from Macau University of Science and Technology in 2004 (where he majored in Business Administration Management).
Pengfei Li. Mr. Li was appointed as a director in January 2019. He has been Investment Director of Dachao Asset Management (Shanghai) Co., Ltd., of which Mr. Wu is Chairman, since January 2018. From June 2015 to December 2017 he was Assistant resident of Shanghai Lighter Capital Management Co., Ltd. From June 2013 to June 2015 he was Investment Manager of Shanghai Fosun Hiogh Technology (Group) Co., Ltd/Shanghai Yuyuan Gold and Jewelry Group Ltd. Mr. Li received a ~~long-standing history as~~Bachelor’s degree from Shanghai University of Engineering Science in 2011 (where he majored in International Economics and Trade) and a ~~successful~~Master of Science degree from the University of Brighton (United Kingdom) in 2013 (where he majored in MSc Finance and Investment).
There are no family relationships among our directors and executive officers. Each director is elected at our annual meeting of shareholders and ~~business owner. He also has extensive experiences~~holds office until the next annual meeting of shareholders, or until his successor is elected and ~~practices as an accounting specialist.  Mr. Vogler has been~~qualified, or his earlier death, resignation or removal. Officers are elected by and serve at the ~~owner and Chairman~~discretion of the Board of ~~Kreivo AG,~~Directors.

Information Concerning the Board of Directors
Board Leadership Structure and the Board’s Role in Risk Oversight.
The Board of Directors currently does not have a Chairman. Our Chief Executive Officer acts as the Chairman of the Board. The Board determined that in the best interest of the Company the most effective leadership structure at this time is not to separate the roles of Chairman and Chief Executive Officer. A combined structure provides the Company with a single leader who represents the Company to our stockholders, regulators, business partners and other stakeholders, among other reasons set forth below. Should the Board conclude otherwise, the Board will separate the roles and appoint an ~~accounting~~independent Chairman.
● This structure creates efficiency in the preparation of the meeting agendas and related Board materials as the Company’s Chief Executive Officer works directly with those individuals preparing the necessary Board materials and is more connected to the overall daily operations of the Company. Agendas are also prepared with the permitted input of the full Board of Directors allowing for any concerns or risks of any individual director to be discussed as deemed appropriate. The Board believes that the Company has benefited from this structure, and Mr. White’s continuation in the combined role of the Acting Chairman and Chief Executive Officer is in the best interest of the stockholders.
● The Company believes that the combined structure is necessary and allows for efficient and effective oversight, given the Company’s relatively small size, its corporate strategy and focus.
The Board of Directors does not have a specific role in risk oversight of the Company. The Chairman, President and ~~bookkeeping company~~Chief Executive Officer and other executive officers and employees of the Company provide the Board of Directors with information regarding the Company’s risks.
Compensation of Directors
Non-employee directors are entitled to receive compensation for serving ~~Swiss companies~~as directors and may receive option grants from our company. Employee directors do not receive any compensation for their services as directors. All of our directors are reimbursed for expenses incurred by them in ~~a variety~~connection with attending Board of ~~industries with operations throughout Europe since 1974. Mr. Vogler~~Directors’ meetings. The following table sets forth all cash compensation paid by us, as well as certain other compensation paid or accrued, in 2018, to each of our non-employee directors.
Name Fees
Earned
or
Paid in
Cash
($) Stock
Awards
($) Option
Awards
($) Non-Equity
Incentive
Plan
Compensation
($) Nonqualified
Deferred
Compensation
Earnings
($) All Other
Compensation
($) Total ($)
Nicholas Carpinello 18,000 0 0 0 0 0 18,000
Robert Law 16,000 0 0 0 0 0 16,000
Richard Vos 16,000 0 0 0 0 0 16,000
Independent Directors
Our Board of Directors has ~~served~~determined that Nicholas Carpinello, Robert Law and Richard Vos are “independent directors” within the meaning of NASDAQ Marketplace Rule 5605(a)(2).As of March 8, 2019, our common stock is quoted on the ~~Boards~~OTCQB tier of ~~other Swiss accounting firms such as RV Revisions AG, Impe Zug AG~~the OTC Markets and ~~also served as President of Lüfta Baar, a HVAC Company also based in Switzerland. Mr. Vogler is not a director of any public companies except One Horizon.~~ceased trading on Nasdaq.

Board Meetings; Committees and Membership

~~Significant Employees~~
~~Qingsong  Li~~
~~Mr. Li, aged 40, was appointed the General Manager~~The Board of Horizon Network Technology Co., Ltd at the end of 2012. Mr. Li was the Deputy General Manager of Nanjing ZTEsoft CO., Ltd, in charge of international marketing and national business development from 2008 to 2012. Before that period, he was a Software Engineer(2002-2003), Chief of International Development Team(2003-2004), Deputy Head of International Sales Department(2004-2005) and Head of International Sales Department(2006-2007) of Nanjing ZTEsoft Co., Ltd. Mr. Li graduated from Southeast University, Nanjing with a master degree in System Engineering and Hefei University of Technology with a bachelor degree in Accounting and minor in Computer Science.
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~~Peter Hall~~
Peter Hall, aged 43, joined One Horizon Group in 2011 and was appointed Chief Information Officer in August 2014. Before joining the Company, he worked at Microsoft within the Premier Field Engineering Division (2008-2011). Between 2004 and 2008 he worked as a Security Consultant for Atos Origin and a CRM software company, AIT Group plc, between 1998 and 2002. Mr. Hall hasDirectors held ~~the CISSP certification since 2010. He graduated from the University of Sheffield in 1995 and also holds an MSc (Distinction) Degree from University College London in 2006.~~
~~Andrew Le Gear~~
Dr. Andrew Le Gear, aged 34, joined One Horizon Group in 2013 and was appointed Chief Horizon Architect in September 2015. Before joining the Company, he worked as a Senior Solutions Architect at Dell Inc. (2012-1013),and as an Equity Trading Software Engineer at Lehman Brothers Inc. and Nomura Plc. (2007-2012). Prior to this he was co-founder of Juneberi Ltd., a research driven software tech start up (2004-2007). Dr. Le Gear graduated from the University of Limerick in 2003 and again in 2006, with a B.Sc. in Computer Systems and a Ph.D. in Computer Science respectively.
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~~Section 16(a) Beneficial Ownership Reporting Compliance~~
Section 16(a) of the Exchange Act and the rules thereunder require our officers and directors, and persons that own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and to furnish us with copies. Based solely on our review of the copies of the Section 16(a) forms received by us, or written representations from certain reporting persons, we believe that none of our officers, directors, and greater than 10% beneficial owners filed on a timely basis reports required by Section 16(a) of the Exchange Act prior to the Share Exchange on November 30, 20127 meetings during the fiscal year ended December 31, ~~2012. After~~2018 (“fiscal 2018”). During fiscal 2018, each of the ~~Share Exchange, we believe that none of our officers,~~ directors ~~and beneficial owners with~~then in office attended more than ~~10% shareholding, failed to file on a timely basis reports required by Section 16(a)~~75% of the ~~Exchange Act during~~aggregate of (i) the ~~fiscal year ended December 31, 2016.~~
~~Board Committees~~
~~Committees~~total number of meetings of the Board of Directors and (ii) the total number of meetings of all committees of the Board on which such director served.

We maintain the following committees of the Board of Directors: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each committee is comprised entirely of directors who are “independent” within the meaning of NASDAQ Marketplace Rule 5605(a)(2). Each committee acts pursuant to a separate written charter, and each such charter has been adopted and approved by the Board of Directors. Copies of the committee charters are available on our website at airindustriesgroup.com under the heading “Investor Relations.” As of March 8, 2019, our common stock is quoted on the OTCQB tier of the OTC Markets and ceased trading on Nasdaq.
Audit Committee

Our Audit Committee consists of Nicholas Carpinello, Robert Law and Richard Vos, each of whom is independent. The Audit Committee assists the Board of Directors oversight of (i) the integrity of financial statements, (ii) our compliance with legal and regulatory requirements, (iii) the independent auditor’s qualifications and independence, and (iv) the performance of our internal audit function and independent auditor, and prepares the report that the Securities and Exchange Commission requires to be included in our annual proxy statement. The audit committee operates under a written charter. Mr. Carpinello is the Chairman of our audit committee.

The Board of Directors determined that Mr. Carpinello possesses accounting or related financial management experience that qualifies him as financially sophisticated within the meaning of Rule 4350(d)(2)(A) of the Nasdaq Marketplace Rules and that he is an “audit committee financial expert” as defined by the rules and regulations of the SEC.As of March 8, 2019, our common stock is quoted on the OTCQB tier of the OTC Markets and ceased trading on Nasdaq.

A copy of current charter of Audit Committee is available on the Company’s websitehttp://content.stockpr.com/onehorizongroup/media/6f6926ac07f2526da1eaa0d94f84c6d7.pdf
Nominating and Corporate Governance Committee

The purpose of the Nominating and Corporate Governance Committee is to assist the Board of Directors in identifying qualified individuals to become members of our Board of Directors, in determining the composition of the Board of Directors and in monitoring the process to assess Board effectiveness. Each of Nicholas Carpinello, Robert Law and Richard Vos are members of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee operates under a written charter. Mr. Richard Vos is the Chairman of the Nominating and Corporate Governance Committee.

·● Our Nominating and Corporate Governance Committee has, among the others, the following authority and responsibilities:

·● To determine and recommend to the Board, the criteria to be considered in selecting nominees for the director;

·●
To identify and screen candidate consistent with such criteria and consider any candidates recommended by our stockholders pursuant to the procedures described in our proxy statement or in accordance with applicable laws, rules and regulations and provisions of our charter documents.

·● To select and approve the nominees for director to be submitted to a stockholder vote at the annual meeting of stockholders.

A copy of current charter of Nominating and Corporate Governance Committee is available on the Company’s websitehttp://content.stockpr.com/onehorizongroup/media/8eccadeceb1ccc10b249cc5ab2456058.pdf
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Compensation Committee

The Compensation Committee is responsible for overseeing and, as appropriate, making recommendations to the Board of Directors regarding the annual salaries and other compensation of our executive officers and general employees and other policies, and for providing assistance and recommendations with respect to our compensation policies and practices. Each of Nicholas Carpinello, Robert Law and Richard Vos are members of the Compensation Committee. The Compensation Committee operates under a written charter. Mr. Robert Law is the Chairman of Compensation Committee.

As required by Rule 10C-1(b)(2), (3) and (4)(i)(vi) under the Securities Exchange Act of 1934 (the “Act”), our Compensation Committee has, among the others,  the following responsibilities and authority.

·● The compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser.
·● The compensation committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the compensation committee or said group.

·● The Company must provide for appropriate funding, as determined by the compensation committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the compensation committee or said group.
·● The compensation committee select, or receive advice from, a compensation consultant, legal counsel or other adviser to the compensation committee or said group, other than in-house legal counsel, only after conducting an independence assessment with respect to the adviser as provided for in the Act.

A copy of current Charter of Compensation Committee is available on the Company’s websitehttp://content.stockpr.com/onehorizongroup/media/abf14232f92dbd65d5ee4c83d7b1fa3b.pdf

Code of Ethics

Our board of directors has adopted a Policy Statement on Business Ethics and Conflicts of Interest (“Code of Ethics”) applicable to all employees, including the Company’s chief executive officer and chief financial officer. A copy of the Code of Ethics and Business Conduct is available on the Company’s website http://content.stockpr.com/onehorizongroup/media/250c1db923f658aca6cc69dfc35c7f89.pdf

~~Board Leadership Structure~~Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act and the ~~Board’s Role~~rules thereunder require our officers and directors, and persons that own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ~~Risk Oversight.~~ownership with the Securities and Exchange Commission and to furnish us with copies. Based solely on our review of the copies of the Section 16(a) forms received by us, or written representations from certain reporting persons, we believe that during the fiscal year ended December 31, 2018 all of our officers, directors, and beneficial owners of more than 10% of our outstanding shares of common stock filed on a timely basis all reports required by Section 16(a) of the Exchange Act.

~~The~~Stockholder Communications
OHGI stockholders who want to communicate with our Board ~~of Directors currently does not have a Chairman. Our Chief Executive Officer acts as~~or any individual director can write to:
One Horizon Group, Inc.
649 NE 81^st Street
Miami FL 33138
Attn: Board Administration
Your letter should indicate that you are an OHGI stockholder.  Depending on the Chairman of the Board. The Board determined that in the best interest of the Company the most effective leadership structure at this time is not to separate the roles of Chairman and Chief Executive Officer. A combined structure provides the Company with a single leader who represents the company to our stockholders, regulators, business partners and other stakeholders, among other reasons set forth below. Should the Board conclude otherwise, the Board will separate the roles and appoint an independent Chairman.subject matter, management will:

· ~~This structure creates efficiency in~~● Forward the preparation of the meeting agendas and related Board materials as the Company’s Chief Executive Officer works directly with those individuals preparing the necessary Board materials and is more connectedcommunication to the ~~overall daily operations of the Company. Agendas are also prepared with the permitted input of the full Board of~~Director or Directors ~~allowing for any concerns or risks of any individual director~~ to be discussed as deemed appropriate. The Board believes that the Company has benefited from this structure, and Mr. Collin’s continuation in the combined role of the Acting Chairman and Chief Executive Officerwhom it is ~~in the best interest of the stockholders.~~addressed;
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· ~~The Company believes that~~● Attempt to handle the ~~combined structure~~inquiry directly, for example where it is ~~necessary and allows~~a request for ~~efficient and effective oversight, given~~information about OHGI or it is a stock-related matter; or
● Not forward the ~~Company’s relatively small size, its corporate strategy and focus.~~communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic.

~~The~~At each Board meeting, a member of management presents a summary of all communications received since the last meeting that were not forwarded and makes those communications available to the Directors does not have a specific role in risk oversight of the Company. The Chairman, President and Chief Executive Officer and other executive officers and employees of the Company provide the Board of Directors with information regarding the Company’s risks.
on request.
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ITEM 11.  EXECUTIVE COMPENSATION

The following tables set forth, for ~~each of~~ the ~~last two completed fiscal years of the Company,~~periods indicated, the total compensation awarded to, earned by or paid to ~~any~~each person who ~~was a~~served as the principal executive officer during the ~~preceding~~ fiscal year ended December 31, 2018 (“Fiscal 2018”) and ~~every~~each other ~~highest compensated~~ executive ~~officers earning more than~~officer whose total compensation awarded to, earned by or paid to such other executive officer for Fiscal 2018 was in excess of $100,000 ~~during~~for services rendered in all capacities to the ~~last fiscal year~~Company and its subsidiaries (together, the “Named Executive Officers”).

2018 Summary Compensation Table: Executives

Name and
Principal
Position Period Salary
($) Bonus
($) Stock
Award(s)
($) Option
Awards
($) Non-
Equity
Incentive
Plan
Compensation Non-
Qualified
Deferred
Compen-
sation
Earnings
($) All Other
Compensation
($) Total ($) Period Salary
($) Bonus
($) Stock
Award(s)
($) Option
Awards
($) Non-
Equity
Incentive
Plan
Compensation Non-
Qualified
Deferred
Compensation
Earnings
($) All Other
Compensation
($) Total ($)

Brian Collins, CEO (1) Year ended 12/31/16 360,000 0 0 0 0 0 0 360,000

Year ended 12/31/15 360,000 0 0 357,000 0 0 0 717,000
Mark White CEO (1) Year ended 12/31/18 480,000 0 0 0 0 0 0 480,000
Year ended 12/31/17 160,000 0 1,504,000 0 0 0 0 1,664,000
Martin Ward, CFO(2) Year ended 12/31/16 254,000 0 0 0 0 0 0 254,000 Year ended 12/31/18 240,000 0 0 0 0 0 0 240,000
Year ended 12/31/15 287,000 0 0 0 0 0 0 287,000 Year ended 12/31/17 240,000 0 0 0 0 0 0 240,000
(1) For the year ended December 31, 2018, Mr. White was paid in US Dollars. For the year ended December 31, 2017, Mr. White’s remuneration was accrued in US Dollars, that remuneration remains unpaid. Mr. White was awarded a stock award of 1.6 million shares with a value of approximately $1.5 million for the signing of the 5 year employment contract. The value was based on the closing stock price at the date of execution of the contract.

~~(1)~~(2) ~~Mr. Collins was appointed our Chief Executive Officer effective July 28, 2014 and our chief technology officer effective November 30, 2012.~~ For the ~~two~~ years ended December 31, ~~2016,~~2017 and 2018, Mr. ~~Collins~~Ward was paid predominately in US Dollars.

~~(2)~~ Mr. Ward was appointed our Chief Financial Officer effective November 30, 2012. For the period ended December 31, 2016, Mr. Ward was paid predominately in British pounds, with conversion rate of £1.00 = $1.351, which rate represents the average exchange rate for that period. For the period ended December 31, 2015, Mr. Ward was paid predominately in British pounds (GBP 1 = USD 1.5288).
We have entered into an Amended and Restated Employment Agreement with Mark White which continues for an initial term through July 31, 2022, and which automatically renews for one year terms thereafter, subject to the rights of both parties to terminate the Agreement. Mr. White’s Employment Agreement provided for a signing grant of 1,600,000 shares of the Company’s common stock, an annual salary of $480,000 per annum, an annual bonus to be determined by the Board and an acquisition bonus whereby Mr. White will receive additional shares each time the Company completes an acquisition of a new business. Mr. White’s Agreement contains customary non-disclosure and non-compete provisions which are operative during the term of his agreement and for one year thereafter. Mr. White’s agreement provides for severance of one year’s salary if his agreement is terminated by the Company without cause or in the event of a change in control of the Company. In addition we have agreed that upon termination of Mr. White’s Employment Agreement upon request we would register our shares of common stock then held by him for sale under the Securities Act of 1933, as amended.

We have entered into an Employment Agreement with Martin Ward which continues for an initial term through July 31, 2022, and which automatically renews for one year terms thereafter, subject to the rights of both parties to terminate the Agreement. Mr. Ward’s Employment Agreement provides for an annual salary of $240,000 per annum and an annual bonus to be determined in accordance with a program to be developed by the Board of Directors. Mr. Ward’s Agreement contains customary non-disclosure and non-compete provisions which are operative during the term of his agreement and for one year thereafter. Mr. Ward’s agreement provides for severance of one year’s salary if his agreement is terminated by the Company without cause or in the event of a change in control of the Company. In addition we have agreed that upon termination of Mr. Ward’s Employment Agreement upon request we would register our shares of common stock then held by him for sale under the Securities Act of 1933, as amended.
Pension Benefit

None during the periods covered in this Report.

Nonqualified Deferred Compensation

None during the periods covered in this Report.

Retirement/Resignation Plans

None during the periods covered in this Report.

Outstanding Equity Awards at ~~2016~~2018 Year-End

As of the year ended December 31, 2016, there were unexercised options to purchase an aggregate of 364,000, shares of common stock that were not vested held by any of the Company’s named executive officers.
None.
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~~Compensation of Directors~~
Our directors are reimbursed for expenses incurred by them in connection with attending Board of Directors’ meetings. The following table sets forth all cash compensation paid by us, as well as certain other compensation paid or accrued, in 2016, to each of the following named directors.
Name Fees
Earned
or
Paid in
Cash
($) Stock
Awards
($) Option
Awards
($) Non-Equity
Incentive
Plan
Compensation
($) Nonqualified
Deferred
Compensation
Earnings
($) All Other
Compen-
sation
($) Total ($)
Nicholas Carpinello 18,000 0 0 0 0 0 18,000
Brian Collins 360,000 0 0 0 0 0 360,000
Robert Law 16,000 0 0 0 0 0 16,000
Richard Vos 16,000 0 0 0 0 0 16,000
Martin Ward 254,000 0 0 0 0 0 254,000
Robert Vogler 18,000 0 0 0 0 0 18,000
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial ownership of our Common Stock as of April ~~3, 2017~~10, 2019 by (i) each person (or group of affiliated persons) who is known by us to own more than five percent (5%) of the outstanding shares of our Common Stock, (ii) each director, executive officer and director nominee, and (iii) all of our directors, executive officers and director nominees as a group. As of April ~~3, 2017,~~10, 2019, we had ~~37,316,714~~88,401,431 shares of Common Stock issued and outstanding.
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Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of ~~March 21, 2016.~~April 10, 2019. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named ~~above,~~below, any shares that such person or persons has the right to acquire within 60 days of ~~March 21, 2016~~April 10, 2019  is deemed to be outstanding for such person, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.

Name of Person or Group Amount And
Nature of
Beneficial
Ownership(1) Percent

Principal Stockholders:

Alexandra Mary Johnson
44 Fairway Lakes Village
Fritton, Great Yarmouth, NR31 9EY
United Kingdom 1,942,666 5.3 %

Adam Christe Thompson
547A Wellington Road
Crisfield, MD 21817 1,942,666 5.3 %

Mark White(2) 4,262,397 11.6 %

Named Executive Officers and Directors:

Brian Collins 6,247,074 16.9 %

Martin Ward 3,059,609 8.3 %

Richard Vos 20,413 *

Nicholas Carpinello 10,700 *

Robert Law 10,684 *

Robert Vogler 205,284 *
All Executive Officers and Directors as a Group (6 persons): 9,553,764 25.9 %
Name Amount And
Nature of
Beneficial
Ownership(1) Percent

Owners of More than 5% of Outstanding Shares:

Zhanmang Wu 15,354,409 17.4 %

BK Consulting Group, LLC 4,750,000 5.4 %

Directors and Named Executive Officers:

Mark White 4,140,603 4.7 %

Martin Ward 1,369,738 1.5 %

Richard Vos 3,402 *

Nicholas Carpinello 1,781 *

Robert Law 1,781 *
*
All Executive Officers and Directors as a Group (5 persons): 5,517,305 6.2 %

* Less than 1%.
(1) Except as otherwise indicated, each of the stockholders listed above has sole voting and investment power over the shares beneficially owned.
~~(2)~~ ~~Mr. White was appointed our chief executive officer effective November 30, 2012 and resigned on July 24, 2014 due to personal reasons.~~
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ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Our Policy Concerning Transactions with Related ~~Party Transactions~~Persons

Under Item 404 of SEC Regulation S-K, a related person transaction is any actual or proposed transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to which we or our subsidiaries were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years and in which any of our directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of our voting securities (a “significant shareholder”), or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest.
We recognize that transactions between us and any of our Directors or Executives or with a third party in which one of our officers, directors or significant shareholders has an interest can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than the best interests of our Company and stockholders.
The Audit Committee of the Board of Directors is charged with responsibility for reviewing, approving and overseeing any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K), including the propriety and ethical implications of any such transactions, as reported or disclosed to the Committee by the independent auditors, employees, officers, members of the Board of Directors or otherwise, and to determine whether the terms of the transaction are not less favorable to us than could be obtained from an unaffiliated party.
Amounts due to related parties include the following: (in thousands)

December 31 December 31 December 31,
2016 2015 2018
Loans due to stockholders
Loans due to stockholders and related parties
Due within one year $ - $ - $ 1,205
Long-term 2,343 2,354 0
$ 2,343 $ 2,354 $ 1,205

The ~~balance~~foregoing transactions were reviewed and approved by the Audit Committee or our Board of ~~$2,343,000 matures on April 1, 2018 and bears no interest.~~Directors. We believe that the terms of each transaction were not less favorable to us than those terms that could be obtained from an unaffiliated third party.

Director Independence

~~In the quarter ended March 31, 2015 the Company entered into a sales contract in the normal course~~Our Board of business with a customer (Horizon Latin America) which the Company holds minority ownership interest. The customer purchased perpetual software license for $500,000. The Company owns a cost based investment interest of 10% in the customer with limited voting rights or board representation.
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~~Promoters and Certain Control Persons~~
None of our management or other control persons were “promoters” (within the meaning of Rule 405 under the Securities Act), and none of such persons took the initiative in the formation of our business or received any of our debt or equity securities or any of the proceeds from the sale of such securities in exchange for the contribution of property or services, during the last five years.
~~Director Independence~~
Under the definition of independent directors found in Nasdaq Rule 5605(a)(2),we currently have four independent directors, Nicholas Carpinello, Robert Law, Robert Vogler and Richard Vos. The audit committee is comprised of Nicholas Carpinello (chair), Robert Law and Richard Vos, the compensation committee is comprised of Nicholas Carpinello, Robert Law (chair) and Richard Vos, and the corporate governance/nominating committee is comprised ofDirectors has determined that Nicholas Carpinello, Robert Law and Richard Vos ~~(chair), all~~are “independent directors” within the meaning of ~~whom are independent.~~NASDAQ Marketplace Rule 5605(a)(2).As of March 8, 2019, our common stock is quoted on the OTCQB tier of the OTC Markets and ceased trading on Nasdaq.

ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee pre-approves all audit and permissible non-audit services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services.
Principal Accountant Fees and Services
As required by our Audit Committee charter, our Audit Committee pre-approved the engagement of Cherry Bekaert LLP for all audit and permissible non-audit services. The Audit Committee annually reviews the audit and permissible non-audit services performed by our principal accounting firm and reviews and approves the fees charged by our principal accounting firm. The Audit Committee has considered the role of Cherry Bekaert LLP in providing tax and audit services and other permissible non-audit services to us and has concluded that the provision of such services, if any, was compatible with the maintenance of such firm’s independence in the conduct of its auditing functions.

Aggregate fees for professional services rendered to the Company by ~~Peterson Sullivan LLP (“Peterson”) and~~ Cherry Bekaert LLP (“Cherry”) for the years ended December 31, ~~2016~~2018 and ~~2015~~2017 were as follows:

Services Provided 2016 2015 2018 2017
Audit Fees $ 167,000 $ 150,000 $ 101,684 $ 88,700
Audit Related Fees 0 30,000 16,100 0
Tax Fees 0 0 20,000 0
All Other Fees 0 0 0 0
Total $ 167,000 $ 180,000 $ 137,784 $ 88,700

Audit Fees

Audit fees billed ~~by Peterson, the Company’s prior independent registered public accounting firm, and~~ by Cherry, the Company’s current independent registered public accounting firm, were for the audit of our annual consolidated financial statements, including any fees related to other filings with the SEC.

Audit-Related Fees
~~Audit-related fees billed in 2015 were for the work undertaken in respect of amendments to the 2015 consolidated financial statements~~.
46
~~Tax Fees~~

There were no$16,100 of audit related fees incurred in 2018 in relation to work on Form S-3 registration statements issued.
Tax Fees
There were $20,000 of tax fees billed or accrued during the Reported Periods.

All Other Fees

There were no other fees billed or accrued during the Reported Periods.
~~Preapproval Policies and Procedures~~
~~Before the independent registered accountants are engaged to render audit services or non audit activities, the engagement is approved by the audit committee.~~
47

PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
The consolidated financial statements and Report of Independent Registered Public Accounting Firm are listed in the Index to Financial Statements on page F-1 and included beginning on page F-2.
(2) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting regulations of the SEC are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein.
(3) Exhibits.

Exhibit
Number Title of Document Location

~~Item 2~~2.1 ~~Plan of acquisition, reorganization, arrangement, liquidation or succession~~
~~2.1~~ Agreement and Plan of Merger effective as of August 26, 2013
Incorporated by reference from Definitive Information Statement on Form 14C Appendix C
filed May 26, 2013

~~Item 3~~2.2 ~~Articles of Incorporation and Bylaws~~Stock Purchase Agreement with Brian Collins dated August 11, 2017 Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed August 14, 2017

3.1 Amendment to Articles of Incorporation as filed December 27, 2012, with the Pennsylvania Department of State Corporate Bureau Incorporated by reference from the Current Report on Form 10-K filed May 13, 2013

~~3. 2~~3.2 Amendment to Articles of Incorporation as filed, with the Pennsylvania Department of State Corporate Bureau
Incorporated by reference from Definitive Information Statement on Form 14C Appendix B
filed May 26, 2013

~~3. 3~~3.3 Amended and restated articles of incorporation of BICO, Inc as filed,  with the Pennsylvania Department of State Corporate Bureau
Incorporated by reference from Definitive Information Statement on Form 14C Appendix F
filed May 26, 2013

~~3. 4~~3.4 Bylaws of BICO, Inc. as filed, with the Pennsylvania Department of State Corporate Bureau Incorporated by reference from Definitive Information Statement on Form 14C Appendix G filed May 26, 2013

3.5 Certificate of incorporation of  One Horizon Group, Inc., as filed, with Delaware Secretary of State Incorporated by reference from Definitive Information Statement on Form 14C Appendix D filed May 26, 2013

3.6 Certificate of Amendment to Certificate of Incorporation effecting a 1-for-6 reverse stock split Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed May 1, 2017.
3.7 Certificate of Designation for Series A-1 Convertible Preferred Stock Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed July 14, 2017.
3.8 Bylaws of One Horizon Group, Inc., as filed, with Delaware Secretary of State Incorporated by reference from Definitive Information Statement on Form 14C Appendix E filed May 26, 2013
48

Exhibit
Number Title of Document Location
~~Item 10~~4.1 ~~Material Contracts~~Common Stock Purchase Warrant dated May 1, 2013 Incorporated by reference to Exhibit 4.1 of Quarterly Report on Form 10-Q/A filed May 30, 2013

~~10.1~~4.2 Form of Class A Warrant Incorporated by reference from Current Report on Form 8-K filed July 25, 2014.
4.3 Form of Class B Warrant Incorporated by reference from Current Report on Form 8-K filed July 25, 2014
4.5 Form of Convertible Debenture Incorporated by reference from Current Report on Form 8-K filed December 29, 2014
4.6 Form of Amended and Restated Class C Warrant Incorporated by reference from Current Report on Form 8-K filed January 23, 2015
4.7 Form of Amended and Restated Class D Warrant Incorporated by reference from Current Report on Form 8-K filed January 23, 2015
4.8 Form of Amended and Restated Performance Warrant Incorporated by reference from Current Report on Form 8-K filed January 23, 2015
4.9 Form of Amended and Restated Placement Agent Warrant Incorporated by reference from Current Report on Form 8-K filed January 23, 2015
4.10 Form of Warrant Incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed July 18, 2017
4.11 Form of Warrant issued to Bespoke Growth Partners, Inc. Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-3 (File No. 333-221300) filed October 17, 2017
4.12 Form of warrants issued to First Choice International Company, Inc. Incorporated by reference to the exhibits to Exhibit 10.1 to Current Report on Form 8-K Filed December 19, 2017
4.13
Warrant issued to BK Consulting Group, LLC, as amended
Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-3 filed on September 10, 2018 and declared effective on September 14, 2018
4.14
Form of Warrant issued to First Choice International Company, Inc Incorporated by reference to Exhibit A to Exhibit 10.1 to Current Report on Form 8-K filed on October 9, 2018

Exhibit
Number Title of Document Location
10.1 Loan Agreement dated January 22, 2013 between the Company and Mark White Incorporated by reference to the Quarterly Report on Form 10-Q/A filed on May 30, 2013

10.2 Loan Agreement dated January 22, 2013 between the Company and Brian Collins Incorporated by reference to the Quarterly Report on Form 10-Q/A filed on May 30, 2013

10.3 Subscription Agreement, as amended, dated as of February 18, 2013, between the Company and Patrick Schildknecht Incorporated by reference to the Quarterly Report on Form 10-Q/A filed on May 30, 2013

10.4 Warrant Agreement, dated as of February 18, 2013, between the Company and Patrick Schildknecht Incorporated by reference from the Current Report  on Form 10-8K filed September 5, 2013

10.5 Advisory Agreement dated as of April 15, 2013 between the Company and TriPoint Global Equities, LLC Incorporated by reference to the Quarterly Report on Form 10-Q/A filed on May 30, 2013

10.6 ~~Common Stock Purchase Warrant dated May 1, 2013~~
~~10.6~~ Amended and Restated Subscription Agreement, dated as of August 30, 2013, between the Company and Patrick Schildknecht Incorporated by reference from the Current Report on Form ~~10-8K~~8-K filed September 5, 2013

10.7 Amended and Restated Warrant Agreement, dated as of August 30, 2013, between the Company and Patrick Schildknecht
Incorporated by reference from the Current Report on Form 8-K filed September 5, 2013

10.8 Form of Independent Director Agreement between the Company and Richard Vos/Nicholas Carpinello/Robert Law Incorporated by reference from the Current Report on Form 8-K filed August 22, 2013

10.9 From of Indemnification Agreement between the Company and Richard Vos/Nicholas Carpinello/Robert Law Incorporated by reference from the Current Report on Form 8-K filed August 22, 2013

10.10 Agreement, dated November 29, 2013, between One Horizon Group, Inc. and Newport Coast Securities, Inc. Incorporated by reference from the Current Report on Form 8-K filed December 3, 2013

10.11 Director Agreement between the Company and Robert Vogler dated January 8, 2014 Incorporated by reference from the Current Report on Form 8-K filed January 13, 2014

10.12 Securities Purchase Agreement dated July 21, 2014 Incorporated by reference from the Current Report on Form 8-K filed on July 25, 2014

49

	50
10.25		Form of Securities Purchase Agreement dated July 14, 2017.	Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed July 18, 2017.

10.26		Exchange Agreement dated January 18, 2018 with Once In A Lifetime, LLC	Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed January 24, 2018

1 0.27		Exchange Agreement dated February 26, 2018 with C-Rod, Inc.	Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed February 28, 2018

10.28†		Employment Agreement with Mark White	Incorporated by reference to Exhibit 10.28 to Annual Report on Form 10-K filed April 2, 2018

10.29†		Employment Agreement with Martin Ward	Incorporated by reference to Exhibit 10.29 to Annual Report on Form 10-K filed April 2, 2018

10.30†		2018 Equity Incentive Plan	Incorporated by reference to Exhibit 10.30 to Annual Report on Form 10-K filed April 2, 2018

10.31	Exchange Agreement dated as of May 18, 2018 by and among One Horizon Group, Inc., Banana Whale Studios, Sargon Petros, Mark Hogbin, Rita Liu and Jeremy Chung	Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on May 24, 2018

10.32	Subscription Agreement dated as of August 29, 2018	Incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-3 filed on September 10, 2018 and declared effective on September 14, 2018

10.33	Consulting Agreement dated as of March 30, 2018 with BK Consulting Group, LLC	Incorporated by reference to Exhibit 10.2 to Registration Statement on Form S-3 filed on September 10, 2018 and declared effective on September 14, 2018

10.34	Subscription Agreement dated as of September 21, 2018.	Incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed on September 21, 2018

10.35	Securities Purchase Agreement dated as of October 4, 2018 with First Choice International Company, Inc.	Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on October 9, 2018

10.36	Exchange Agreement dated as of October 22, 2018 for the acquisition of a majority of the outstanding shares of Browning	Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on October 24, 2018

10.37	Settlement Agreement relating to the Wu Litigation	Incorporated by reference to Registration Statement on Form S-3 (Registration No. 333-227971) filed October 24, 2018 and declared effective November 2, 2018

10.38	Consulting Agreement with One Percent Investments, Inc.	Incorporated by reference to Exhibit 10.6 to Quarterly Report on Form 10-Q filed November 16, 2018

10.39	Securities Purchase Agreement with Bespoke Growth Partners, Inc.	Incorporated by reference to Exhibit 10.7 to Quarterly Report on Form 10-Q filed November 16, 2018

10.40	Securities Purchase Agreement with BK Consulting Group, LLC.	Incorporated by reference to Exhibit 10.8 to Quarterly Report on Form 10-Q filed November 16, 2018

Exhibit Number	Title of Document	Location
~~Item 14.~~14.1	~~Code of Ethics~~

~~14.1~~	Policy Statement on Business Ethics and Conflicts of Interest	Incorporated by reference from the Annual Report on Form 10-KSB for the year ended December 31, 2004, filed May 23, 2005

~~14.2~~21.1	~~Insider Trading Policy~~Subsidiaries	~~Incorporated by reference from the Registration Statement on Form S-1 filed February 5, 2015~~Filed as part of this report

23.1	Consent of Cherry Bekaert, LLP	Filed as part of this report

~~Item 31.~~31.1	~~Rule 13a-14(a)/15d-14(a) Certifications~~

~~31.1~~	Certification of Principal Executive Officer Pursuant to Rule 13a-14	Filed as part of this report

31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14	Filed as part of this report

~~Item 32.~~32.1	~~Section 1350 Certifications~~

~~32.1~~	Certification of ~~Chief~~Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed as part of this report

~~32.2~~101.INS	~~Certification~~XBRL Instance	Filed as part of ~~Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,~~this report

101.SCH	XBRL Taxonomy Extension Schema	Filed as ~~Adopted Pursuant to Section 906~~part of ~~the Sarbanes-Oxley Act~~this report

101.CAL	XBRL Taxonomy Extension Calculation	Filed as part of ~~2002~~this report

101.DEF	XBRL Taxonomy Extension Definition	Filed as part of this report

101.LAB	XBRL Taxonomy Extension Labels	Filed as part of this report

101.PRE	XBRL Taxonomy Extension Presentation	Filed as part of this report

† Management contract, compensation plan or arrangement.

Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ONE HORIZON GROUP, INC.

Date: April ~~10, 2017~~15, 2019	By:	/s/ ~~Brian Collins~~Mark White
		~~Brian Collins~~Mark White
		President and ~~Principal~~Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby appoints Mark White and Martin Ward, and each of them, as attorneys-in-fact with full power of substitution, severally, to execute in the name and on behalf of the registrant and each such person, individually and in each capacity stated below, one or more amendments to the annual report on Form 10-K, which amendments may make such changes in the report as the attorney-in-fact acting deems appropriate and to file any such amendment to the annual report on Form 10-K with the Securities and Exchange Commission.

Pursuant to the requirements ~~of Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant ~~has duly caused this report to be signed~~and in the capacities and on ~~its behalf by~~ the ~~undersigned, thereunto duly authorized.~~

~~Dated: April 10, 2017~~dates indicated.

	~~By:~~	~~/s/ Brian Collins~~Signature	Title	Date
		~~Brian Collins~~
/s/ Mark White		President, Chief Executive Officer and Director (principal executive officer)	April 15, 2019

Mark White	~~By:~~	~~/s/ Martin Ward~~

/s/ Martin Ward	Chief Financial Officer and Director (principal financial officer and principal accounting officer)		April 15, 2019
Martin Ward
	~~Chief Financial Officer, Principal Finance and Accounting Officer and~~
/s/ Nicholas Carpinello	Director		April 15, 2019

Nicholas Carpinello	~~By:~~	~~/s/ Robert Vogler~~

/s/ Robert ~~Vogler~~Law	Director		April 15, 2019
Robert Law
	~~Director~~

	~~By:~~	~~/s/ Nicholas Carpinello~~
		~~Nicholas Carpinello~~
/s/ Richard Vos		Director	April 15, 2019
Richard Vos

ONE HORIZON GROUP, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

	~~By:~~Page
Reports of Independent Registered Public Accounting Firm	~~/s/ Robert Law~~F-1
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 2018 and 2017		~~Robert Law~~	F-2
Consolidated Statements of Operations for the Years Ended December 31, 2018 and 2017	F-3
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2018 and 2017	~~Director~~F-4
Consolidated Statements of Temporary and Stockholders’ Equity for the Years Ended December 31, 2018 and 2017	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018 and 2017	F-6
Notes to Consolidated Financial Statements	F-8

	~~By:~~	~~/s/ Richard Vos~~
		~~Richard Vos~~
		~~Director~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~Report of Independent Registered Public Accounting Firm

To the Board of Directors and ~~Shareholders~~

Stockholders of
One Horizon Group, Inc.

~~Limerick, Ireland~~

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of One Horizon Group, Inc. (the “Company”) as of December 31, ~~2016~~2018 and ~~2015~~2017, and the related consolidated statements of operations, comprehensive loss, stockholders’ ~~deficit~~equity, and cash flows for each of the years then ~~ended. These financial statements are~~ended, and the ~~responsibility of~~related notes (collectively referred to as the ~~Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.~~

~~We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States of America)~~“financial statements”). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis of designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements ~~referred to above~~ present fairly, in all material respects, the financial position of the Company atas of December 31, ~~2016~~2018 and ~~2015~~2017, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

Going Concern Matters

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s evaluations of the events and conditions and management’s plans ~~in regard to these~~regarding those matters are also described in Note ~~2 to the financial statements.~~2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~As discussed in Note 12~~Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board of the United States of America (“PCAOB”) and are required to be independent with respect to the ~~consolidated~~Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the ~~2015 consolidated~~purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, ~~have been restated~~whether due to ~~correct~~error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a ~~misstatement.~~test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Cherry Bekaert LLP

Tampa, Florida

~~Date:~~ April ~~10, 2017~~

~~F-1~~

15, 2019

We have served as the Company’s auditors since 2016.

ONE HORIZON GROUP, INC.

Consolidated Balance Sheets

December 31, ~~2016~~2018 and ~~2015~~2017

(in thousands, except share data)

2016 2015
(As
Restated,
note 12)
Assets
Current assets:
Cash $ 260 $ 1,772
Accounts receivable, net 1,208 1,760
Other assets 472 402
Total current assets 1,940 3,934

Property and equipment, net 42 96
Intangible assets, net 8,407 9,823
Investments 17 18

Total assets $ 10,406 $ 13,871

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable $ 364 $ 223
Accrued expenses 206 220
Accrued compensation 156 18
Income taxes payable 90 90
Convertible debenture, net 3,068 -
Current portion of long-term debt - 5
Total current liabilities 3,884 556

Long-term liabilities
Long term debt, net of current portion - -
Amount due to related parties 2,343 2,354
Convertible debenture - 2,636
Deferred income taxes 172 215
Mandatorily redeemable preferred shares 62 73
Total liabilities 6,461 5,834

Stockholders' Equity
One Horizon Group, Inc. stockholders' equity
Preferred stock: $0.0001 par value, authorized 50,000,000; issued and outstanding 170,940 shares 1 1
Common stock: $0.0001 par value, authorized 200,000,000 shares, issued and outstanding 35,147,283 (2016)and 33,281,069 (2015) 4 3
Additional paid-in capital 37,501 36,070

Retained Earnings (Deficit) (33,590 ) (28,001 )
Accumulated other comprehensive income/(loss) 29 (36 )
Total stockholders' equity 3,945 8,037
Total liabilities and stockholders' equity $ 10,406 $ 13,871
December 31,
2018 2017

Assets
Current assets:
Cash $ 353 $ 763
Accounts receivable, net 325 102
Prepaid compensation 550 550
Investment 100 —
Other receivable 2,022 —
Advances to acquisition target 70 —
Deferred production costs 87 —
Other current assets 386 28
3,893 1,443
Current assets of discontinued operations 129 —
Total current assets 4,022 1,443

Property and equipment, net 3 2
Goodwill 2,213 —
Intangible assets, net 3,184 5,340
Prepaid compensation (non-current) 1,467 2,017
Non current assets of discontinued operations 36 —

Total assets $ 10,925 $ 8,802

Liabilities, Temporary Equity and Stockholders’ Equity

Current liabilities:
Accounts payable $ 334 $ 167
Accrued expenses 156 55
Accrued compensation 181 251
Deferred income 177 —
Notes payable 101 32
Notes payable, related parties 205 —
Convertible notes, net of debt discount of $155 — 45
Promissory notes, related parties 1,000 —
2,154 550
Current liabilities of discontinued operations 301 —
Total current liabilities 2,455 550

Long-term liabilities

Promissory notes, related parties — 1,000

Total liabilities 2,455 1,550

Temporary Equity - redeemable common stock outstanding 848,611 605 —

Stockholders’ Equity
One Horizon Group, Inc. stockholders’ equity
Preferred stock: $0.0001 par value, authorized 50,000,000; nil shares issued or outstanding — —
Common stock: $0.0001 par value, authorized 200,000,000 shares, issued and outstanding 87,559,672 (2018) and 30,255,123 (2017) 8 3
Additional paid-in capital 62,600 48,356
Share subscription receivable (1,425 ) —
Accumulated (Deficit) (54,854 ) (41,085 )
Accumulated other comprehensive loss (35 ) (22 )
Total One Horizon Group, Inc stockholders’ equity 6,294 7,252
Non-controlling interest 1,571 —
Total stockholders’ equity 7,865 7,252
Total liabilities, temporary equity and stockholders’ equity $ 10,925 $ 8,802

See accompanying notes to consolidated financial statements.
~~F-2~~

ONE HORIZON GROUP, INC.
Consolidated Statements of Operations
For the years ended December 31, ~~2016~~2018 and ~~2015~~2017
(in thousands, except per share data)

Years ended December 31, Years ended December 31,
2016 2015 2018 2017
(As
Restated,
note 12
Revenue $ 1,615 $ 1,532 $ 787 $ 714
Cost of revenue
Hardware, calls and network charges 98 116
Amortization of intangibles 2,010 2,111
Software and production costs 91 —
Amortization of intangible assets 2,148 855
2,108 2,227 2,239 855
Gross deficit (493 ) (695 ) (1,452 ) (141 )

Expenses:
General and administrative 3,267 3,326 7,139 4,236
Increase in Allowance for doubtful accounts 455 934
Acquisition related costs 1,874 —
Depreciation 59 67 1 17
Research and development 605 579
Intangible asset impairment charge 3,761 —
4,386 4,906 12,775 4,253

Loss from operations (4,879 ) (5,601 ) (14,227 ) (4,394 )

Other income and expense:
Interest expense (712 ) (722 ) (428 ) (666 )
Interest expense - related parties - (2 )
Gain on settlement of lease - 36
Foreign currency exchange 9 (29 )
Interest income - 2
Other income (Note 3) 989 —
Foreign currency exchange (losses)/gains (5 ) 1
(703 ) (715 )
556 (665 )
Loss from continuing operations before income taxes (5,582 ) (6,316 )
Income taxes benefit (43 ) (20 )
Net loss (5,539 ) (6,296 )

Loss attributable to non-controlling interest - (50 )
Net loss attributable to One Horizon Group, Inc. (5,539 ) (6,246 )
Less: Preferred dividends (50 ) (100 )
Loss from continuing operations (13,671 ) (5,059 )

Loss from discontinued operations (908 ) (2,375 )
Net loss for the year (14,579 ) (7,434 )
Net loss attributable to non controlling interest 810 —
Net loss attributable to One Horizon Group, Inc. Common stockholders $ (5,589 ) $ (6,346 ) $ (13,769 ) $ (7,434 )

Earnings per share
Basic and diluted net loss per share $ (0.16 ) $ (0.18 )
- Continuing operations $ (0.27 ) $ (0.40 )
- Discontinued operations $ (0.02 ) $ (0.19 )
Weighted average number of shares outstanding
Basic and diluted 35,411 33,996 50,857 12,534

See accompanying notes to consolidated financial statements.
~~F-3~~

ONE HORIZON GROUP, INC.
Consolidated Statements of Comprehensive Loss
For the years ended December 31, ~~2016~~2018 and ~~2015~~2017
(in thousands)

Years ended December 31,
2016 2015
(As
Restated,
note 12
Net loss $ (5,539 ) $ (6,296 )
Other comprehensive (loss):
Foreign currency translation adjustment gain (loss) 65 (99 )
Comprehensive loss (5,474 ) (6,395 )
Comprehensive loss attributable to the non-controlling interest - (50 )

Total comprehensive loss $ (5,474 ) $ (6,345 )
Years ended December 31,
2018 2017

Net loss $ (13,769 ) $ (7,434 )
Other comprehensive loss:
Foreign currency translation adjustment loss (13 ) (51 )

Total comprehensive loss $ (13,782 ) $ (7,485 )

See accompanying notes to consolidated financial statements.
~~F-4~~

ONE HORIZON GROUP, INC.
Consolidated Statements of ~~Stockholders'~~Temporary and Stockholders’ Equity
For the years ended December 31, ~~2016~~2018 and ~~2015~~2017
(in thousands)

Preferred
Stock Common Stock Additional
Paid-
in Capital Deferred
Compensation Retained
Earnings
(Deficit) Accumulated
Other
Comprehensive
Income
(Loss) Non-
controlling
Interest Total
Stockholders'
Equity
Number
of
Shares Amount Number
of
Shares Amount

Balance December 31, 2014
(Restated, note 12) 171 $ 1 33,282 $ 3 $ 32,163 $ (214 ) $ (21,655 ) $ 63 $ 291 $ 10,652
Net loss (6,246 ) (50 ) (6,296 )
Foreign currency translations (99 ) (99 )
Preferred dividends (100 ) (100 )
Amortization of deferred compensation 214 214
Options issued for services 660 660
Common Stock issued for cash 1,866 3,266 3,266
Contribution of shares of subsidiary 241 (241 ) -
Costs of financing (391 ) (391 )
Amounts owing to related party forgiven 131 131

Balance December 31, 2015
(restated, note 12)
171 $ 1 35,148 $ 3 $ 36,070 $ - $ (28,001 ) $ (36 ) $ - $ 8,037

Net loss (5,539 ) (5,539 )
Foreign currency translation 65 65
Preferred dividends (50 ) (50 )
Issuance of common stock for cash 1,374 1 524 525
Common Stock issued for services 347 204 204
Options issued for services 703 703
Balance December 31, 2016 171 $ 1 36,869 $ 4 $ 37,501 $ - $ (33,590 ) $ 29 $ - $ 3,945
Temporary Equity Common Stock Additional
Paid-In Stock Subscription Accumulated Accumulated Non-Controlling Total
Stockholders’
Shares Amount Shares Amount Capital Receivable Deficit OCI Interest Equity
Balance January 1, 2017 — $ — 6,145 $ 1 $ 37,504 — $ (33,590 ) $ 29 $ — $ 3,944

Net loss — — — — — — (7,434 ) — — (7,434 )

Foreign currency translation — — — — — — — (51 ) — (51 )

Deemed distribution — — — — 61 — (61 ) — — —

Shares issued for services provided — — 4,275 — 4,170 — — — — 4,170

Shares issued for exercise of warrants — — 1,521 — 980 — — — — 980

Options issued for services — — — — 132 — — — — 132

Warrants issued for services — — — — 1,486 — — — — 1,486

Reclassification of redeemable preference shares — — — — 62 — — — — 62

Shares issued in settlement of debt — — 897 — 692 — — — — 692

Conversion of preferred shares and note payable to common stock — — 4,000 1 (500 ) — — — — (499 )

Conversion of debenture to common stock — — 13,000 1 3,349 — — — — 3,350

Beneficial conversion feature — — — — 155 — — — — 155

Shares issued for sale of stock — — 417 — 265 — — — — 265

Balances, December 31, 2017 — $ — 30,255 $ 3 $ 48,356 $ — $ (41,085 ) $ (22 ) $ — $ 7,252

Net loss — — — — — — (13,769 ) — (810 ) (14,579 )

Foreign currency translation — — — — — — — (13 ) — (13 )

Shares issued for business combinations — — 12,277 1 3,340 — — — 2,381 5,722

Shares issued for exercise of warrants — — 8,675 — 2,096 — — — — 2,096

Shares issued for services provided 171 199 11,474 2 4,748 — — — — 4,750

Shares issued for sale of stock — — 21,525 2 2,672 (1,425 ) — — — 1,249

Shares issued for IP agreement — — 3,000 — 548 — — — — 548

Shares issued for conversion of debt 677 406 — — — — — — — —

Shares issued for settlement agreement — — 354 — 96 — — — — 96

Beneficial conversion feature — — — — 200 — — — — 200

Warrant modification expense — — — — 544 — — — — 544

Balances, December 31, 2018 848 $ 605 87,560 $ 8 $ 62,600 $ (1,425 ) $ (54,854 ) $ (35 ) $ 1,571 $ 7,865

See accompanying notes to consolidated financial statements.
~~F-5~~

ONE HORIZON GROUP, INC.
Consolidated Statements of Cash Flows
For the years ended December 31, ~~2016~~2018 and ~~2015~~2017
(in thousands)

Years ended December 31, Years ended December 31,
2016 2015 2018 2017
(As
Restated,
note 12
Cash used in operating activities:
Operating activities:
Net loss for the year $ (5,539 ) $ (6,246 ) $ (13,671 ) $ (5,059 )

Adjustment to reconcile net loss for the year to net cash used in operating activities:
Depreciation of property and equipment 59 67 2 17
Amortization of intangible assets 2,010 2,111 2,148 855
Increase in allowance for doubtful accounts 455 934
Amortization of debt issue costs 132 132 — 132
Amortization of beneficial conversion feature 100 101 355 101
Amortization of debt discount 200 199 — 199
Amortization of deferred compensation - 214
Impairment charge 3,761 —
Amortization of shares issued for services 47 - 550 270
Gain on settlement of lease - (36 )
Warrants issued for services received 544 1,530
Options issued for services received 703 660 — 132
Common shares issued for services received 70 - 4,949 1,244
Net loss attributable to non-controlling interest - (50 )
Other income (930 ) —
Changes in operating assets and liabilities:
Accounts receivable 96 (50 ) (180 ) (100 )
Other assets 18 174 (465 ) 17
Accounts payable and accrued expenses 389 (302 ) (179 ) 280
Income taxpayable - (3 )
Deferred income taxes (43 ) (20 )
Deferred revenue 105 —
Net cash flows from continuing operating activities (3,012 ) (382 )

Net cash used in operating activities (1,303 ) (2,115 )
Net cash flows from discontinued operating activities (39 ) (321 )

Net cash flows from operating activities (3,051 ) (703 )

Cash used in investing activities:

Acquisition of intangible assets (467 ) (1,063 )
Cash consideration of acquisitions (net of cash acquired) (168 ) —
— —
Acquisition of property and equipment (8 ) (9 ) (2 ) (2 )
Net cash used in investing activities (475 ) (1,072 )
Net cash flows from investing activities – continuing operations (170 ) (2 )

Cash flow from financing activities:
Cash flows from investing activities – discontinued operations (980 ) (261 )

Decrease in long-term borrowing, net (5 ) (144 )
Net cash flows from investing activities (1,150 ) (263 )

Cash flows from financing activities:

Cash proceeds from exercise of warrants 2,096 980
Cash proceeds from issuance of common stock 400 2,875 1,449 465
Preferred dividends paid (50 ) (100 )
Repayments to related parties (11 ) (844 )
Net cash provided by financing activities 334 1,787
Advances from/(repayments to) related parties (29 ) 32
Net cash flows from financing activities – continuing operations 3,516 1,477
Cash flows from financing activities – discontinued operations 301 —
Net cash flows from financing activities 3,817 1,477

Decrease in cash during the year (1,444 ) (1,400 )
Increase/(decrease) in cash during the year (384 ) 511
Foreign exchange effect on cash (68 ) - (26 ) (8 )
Cash at beginning of the year 1,772 3,172
Cash at end of the year $ 260 $ 1,772

Cash at the beginning of the year - continuing operations 763 106
Cash at the beginning of the year – discontinued operations — 154
Cash at end of the year – total $ 353 $ 763

See accompanying notes to consolidated financial statements.
~~F-6~~

ONE HORIZON GROUP, INC.
Consolidated Statements of Cash Flows (continued)
For the years ended December 31, ~~2016~~2018 and ~~2015~~2017
(in thousands)

Year ended December 31, Year ended December 31,
2016 2015 2018 2017

Interest paid $ 209 $ 216
Cash paid for interest $ — $ —
Non-cash transactions:
Common stock issued for services provided 204 -
Common stock issued in acquisitions $ 5,722 $ —
Common stock issued for software $ 548 $ —
Common stock issued for settlement of accrued compensation 125 - $ — $ 662
Reclassification of preferred shares $ — $ 62
Forgiveness of related party debt for sale of discontinued operations $ — $ 1,968

See accompanying notes to consolidated financial statements.
~~F-7~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, ~~2016~~2018 and ~~2015~~2017

Note 1. Description of Business, Organization and Principles of Consolidation

Description of Business

One Horizon Group, Inc (“the Company”) has the following core businesses following the acquisition of 123Wish Inc., ~~(the “Company” or “Horizon”~~Love Media House, Inc (formerly called C-Rod, Inc.) ~~develops proprietary software primarily~~, Banana Whale Studios PTE Ltd and Browning Productions & Entertainment, Inc. 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. In addition, the Company either sells related user licenses and software maintenance services to or enters into revenue sharing agreements with telecommunication companies. Horizon, through its Chinese company Suzhou Aishuo Network Information Co. Ltd., provides the Aishuo App to end user customers through App stores based in China. Our Aishuo customers purchase call credits for Public Service Telephone Network (PSTN) access using a variety of Chinese on-line payment services including Union Pay and Apple Pay.
~~Principles of Consolidation and Combination~~
The 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 Group Pte., Limited, Horizon Globex Ireland Limited, Global Phone Credit Limited and One Horizon Hong Kong Limited, and its wholly-owned subsidiary, Horizon Network Technology Co. Ltd. (“HNT”). In addition, included in the consolidated financial statements as of and for the yearsyear ended December 31, ~~2016~~2018 (See Note 3). The core trading businesses are:
(i) Secure Messaging – offers digitally secure messaging software and sells licenses primarily into the gaming, security and educational markets.
(ii) 123Wish – an experience based platform where subscribers have a chance to play and win experiences from celebrities, athletes and artists.
(iii) Love Media House (formerly called C-Rod) -a full-service music production, artist representation and digital media business.
(iv) Banana Whale Studios (“BWS”) – a B2B software provider in the online gaming industry that develops and supplies online games to Asian gaming platforms.The interest in BWS was disposed on in February 2019 (see note 4)
(v) Browning Productions & Entertainment - a television filming and production company was acquired on October 23, 2018.
The Company is based in the United States of America, Hong Kong, Singapore, China and ~~2015, are~~ the ~~accounts~~United Kingdom.
Current Structure of the Company
The Company has the following subsidiaries:
Subsidiary name % Owned
● 123Wish, Inc. 51%
● One Horizon Hong Kong Ltd 100%
● Horizon Network Technology Co. Ltd 100%
● Love Media House, Inc 100%
● Global Phone Credit Limited 100%
● Browning Production & Entertainment Inc. 51%
In addition to the subsidiaries listed above, Suzhou Aishuo Network Information Co., ~~Ltd. which~~Ltd (“Suzhou Aishuo”) is a limited liability company, organized in China and controlled by ~~One Horizon Group, Inc. through~~us via various contractual ~~arrangements (Note 3).~~arrangements. Suzhou Aishuo is treated as one of our subsidiaries for financial reporting purposes in accordance with GAAP.

During the year ended December 31, 2015, the minority parties which held ownership interests in HNT returned their shareholdings to HNT such that HNT is now fully owned by the Company. The amount of net loss attributable toIn February 2019 the Company ~~and the non-controlling~~entered into to an agreement to acquire a majority interest ~~up to the time that the shareholdings were returned, are both presented~~ in ~~the Consolidated statement of operations.~~Maham LLC.

All significant intercompany balances and transactions have been eliminated in consolidation.
~~F-8~~

Note 2. Summary of Significant Accounting Policies

Liquidity and Capital Resources

~~As we continue to pursue our operations~~Historically, the Company has incurred net losses and ~~our business plan, we expect to incur further losses in 2017 which when combined with our continued investment in our intellectual property, will generate~~ negative cash ~~flows. As~~flows from operations. The Company has principally financed these losses from the sale of equity securities.
On February 4, 2019 the Company sold its equity stake in BWS for $2.0 million of which $1.5 million was received in cash immediately and the balance is payable by December 31, ~~2016,~~2019. The impact on the Company’s liquidity is twofold, (i) the immediate increase in cash balances of $1.5 million, and (ii) the ceasing of the investment funding to cover the Banana Whale software development.
In addition, and as more fully described in Note 3, the Company ~~did not have any available credit facilities. As~~acquired three additional operating entities during 2018. Coupled with the reduction of expenses due to the disposal of the interest in BWS described above, the Company projects the results of these acquisitions will provide positive cash contributions to the Company’s corporate and central costs by the fourth quarter of 2019.
At December 31, 2018, the Company had cash of $353,000. In addition, in February 2019, the Company received cash proceeds of $1,500,000 together with a promissory note for $500,000 for the disposal of the Company’s interest in BWS. Together with the cash on hand as a result ~~we are in~~of these transactions and based on the ~~process~~Company’s current operational plan and budget, the Company believes that it is probable that it has will have sufficient cash to fund its operations into at least the second quarter of ~~seeking new financing by way of sale of either convertible~~2020.
However, actual results could materially differ from the Company’s projections. Accordingly, the Company may be required to raise additional funds through various sources, such as equity and debt ~~or equities. Whilst we have been successful in~~financings. While the ~~past in obtaining the necessary capital to support our investment and operations~~Company believes it is probable that such financings could be secured, there iscan be no assurance ~~that we~~the Company will be able to ~~obtain~~secure additional sources of funds to support its operations, or if such funds are available, that such additional financing ~~under~~will be sufficient to meet the Company’s needs or on terms acceptable ~~terms and conditions, or at all. In the event, we are unable~~ to obtain sufficient additional funding when needed in order to fund our ongoing research and development activities as well as our operations, we would not be able to continue as a going concern and maybe forced to severely curtail or cease operations and liquidate the Company. As a result, our auditors’ report for our 2016 Financial Statements, which are included as part of this report, contains a statement concerning our ability to continue as a “going concern”.us.

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, Ireland,~~Singapore, the United Kingdom and China, are translated into United States dollars at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the period. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations.

Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in ~~Other income~~general and ~~expense.~~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~~receivable, concentrations and revenue recognition
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)1. ~~Master License Agreement (“Agreement”) deposits– Deposits are payable in accordance with~~Digital secure messaging revenue involves the ~~terms~~sale of user licenses, at a fixed price per license, to the customers, which is our sole performance obligation under the existing licensing agreements. The Company recognizes the revenue from the sale of the ~~Agreement. Payment terms may vary from Agreement~~user licenses when the valid licenses have been delivered to ~~Agreement, with payment due generally within 30 days of~~ the ~~execution of an Agreement.~~customer’s server in useable form.

b)2. ~~Software consultancy~~123Wish derives income from user subscriptions, sale of merchandise, sale of tickets for experiences with social media influencers and ~~hardware fees~~ –artists, and the sale of corporate sponsorships, each of which is a separate performance obligation. User subscriptions cover a defined period of time (typically one month) and the revenue is recognized as the Company satisfies the requisite performance obligation (over the defined subscription period). Sale of merchandise are recognized when the customer has paid for the item and when the merchandise has been delivered to the customer. Corporate sponsorship packages are non-refundable and relate to brand association. The ~~terms of payment are fixed terms, with payment normally due within stated terms, normally 30 days from~~Company has no further service deliverable to the ~~date of~~sponsor and the ~~invoice.~~revenue is recognized when the agreement is entered into by both parties and the required marketing materials have been delivered to the corporate sponsor for their use.

~~F-9~~3. Love Media House derives income from recording and video services. Income is recognized when the recording and video services are performed and the final customer product is delivered and the point at which the performance obligation is satisfied. These revenues are non-refundable.

c)4. ~~Maintenance~~Banana Whale derives income primarily through licensing arrangements with gaming customers. Under these arrangements, Banana Whale provides the customers with a license (functional IP), implementation services and ~~operational fees~~ad-hoc support, which may include unspecified upgrades and ~~end user licenses fees~~ ~~– Payments vary~~enhancements. The Company has determined that these promised goods and services represent one combined performance obligation since the individual promised goods or services are not distinct in the context of the contract. The revenues earned from the arrangements are primarily based on usage-based royalties. As the Company has determined that the license is the predominant item to which the royalty relates, revenues are recognized when the related sale or usage by the customer to ~~customer. For customers who have not entered into a revenue share agreement,~~which the terms of payment are fixed and payment is due within stated terms, normally 30 days from the date of the invoice. For customers who have entered into a revenue share agreement, the Company will receive an agreed proportion of a customer’s revenue from the customer’s operation of the Horizon service. The proportion of a customer’s revenue received is used to pay the receivable balance until the balance is paid.royalty relates, occurs.

~~Receivables are generally unsecured. Account balances are charged off against the allowance when the Company determines that certain receivable will probably not be recovered.~~
5. Browning Production & Entertainment, Inc derives income from the advertising associated with the airing of television series produced by BP&E and also license income from the show of series on certain channels based on the number of viewers attracted advertising. The advertising revenue is recognized when the series to which the advertising relates is aired. Customer payments received prior to the satisfaction of the company’s performance obligation are recorded as deferred revenue in the Company’s consolidated balance sheet.

The Company does not have off-balance sheet credit exposure related to its customers. As of December 31, ~~2016 and December 31, 2015, two~~2018 three customers accounted for ~~61% and 51%, respectively,~~68% of the accounts receivable balance and as of December 31, 2017, one customer accounted for 100% of the accounts receivable balance. Two customers accounted for 31% of the revenue for the year ended December 31, 2018 and one customer accounted for 76% of the revenue for the year ended December 31, 2017.

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements of Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition” and most industry-specific guidance on revenue recognition throughout the ASC. The new standard is principles-based and provides a five step model to determine when and how revenue is recognized. The core principle of the new standard is that revenue should be recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also requires disclosure of qualitative and quantitative information surrounding the amount, nature, timing and uncertainty of revenues and cash flows arising from contracts with customers. Topic 606 was effective for us in the first quarter of the year ended December 31, 2018 and adoption did not have a material impact on our financial statements.

~~Property~~In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and ~~Equipment~~
~~Property~~Licensing.” ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. This ASU applies to all companies that enter into contracts with customers to transfer goods or services. Topic 606 was effective for us in the first quarter of the year ending December 31, 2018 and ~~equipment is primarily comprised of equipment that is recorded at cost and depreciated or amortized using the straight-line method over their estimated useful lives of between 3 and 5 years.~~adoption did not have a material impact on our financial statements.

~~Repairs and maintenance are charged to expense as incurred. Expenditures that substantially increase the useful lives of existing assets are capitalized.~~
Intangible Assets

Intangible assets include software development costs, acquired technology and customer lists and are amortized on a straight-line basis over the estimated useful lives ofranging from four to five ~~years for customer lists and ten years for software development.~~years. 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. ~~Based on these valuations, no~~As a result of this review, an impairment ~~charges were~~change relating to Horizon Software totaling $3.8 million was recognized ~~during either of~~in the ~~years December 31, 2016 or 2015.~~
The Company expenses software development costs as incurred until technological feasibility has been established, at which time those costs are capitalized until the product is available for general release to customers. Judgement is required in determining when technical feasibility of a product is established. The Company has determined that after technological feasibility for software products is reached, the Company continues to address all high risk development issues through coding and testing prior to release of the products to customers. The amortization of these costs is included in cost of revenue over the estimated life of the products.
~~During the years~~year ended December 31, ~~2016 and 2015 software development costs of $467,000 and $1,063,000 respectively, have been capitalized.~~
2018 (2017: $nil).
~~F-10~~

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 years ended December 31, ~~2016~~2018 and ~~2015~~2017 the Company recorded no impairment losses related to the Company’s long-lived ~~assets.~~
~~Revenue Recognition~~
assets other than the previously discussed intangible asset impairment charge. The ~~Company recognizes revenue when it~~impairment determination is ~~realized or realizable~~subject to a high degree of estimation uncertainty and ~~earned. The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with~~are ongoing as we continue to develop 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 telecom entities is recognized at date of invoices raised for installments due under the agreement, unless payment terms exceed one year, as described below, presuming all other relevant revenue recognition criteria are met. Revenue from sales of perpetual licenses to other entities is recognized over the agreed collection period.
· ~~Revenue for user licenses purchased by customers is recognized when the user license is delivered.~~
· ~~Revenue for maintenance services is 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. Hosted services are offered to customers on revenue share arrangements whereby the Company can provide fully terminated services and sells vouchers for minutes which can be resold by the customer. Sales for this service are recognized when the supply is made and the invoice raised.
Effective October 1, 2014 revenue has been 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 are recorded only after existing accounts receivable balances are fully collected.
· ~~Revenues from Aishuo retail sales are recognized when the PSTN calls and texts are made.~~
Where the Company has entered into a Revenue Share with the customer, then all future revenue from granting of user licenses and for maintenance services will be recognized when the Company has delivered user licenses and is entitled to invoice.
~~F-11~~
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.acquired companies.

~~For purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption thatthe fee in the transaction is not fixed and determinable.~~
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.
During the year ended December 31, 2016 $1,175,000 or 73% of the Company’s revenue was concentrated in the hands of one major customer. During the year ended December 31, 2015, $1,205,000 or 79% of the Company’s revenue was concentrated in the hands of two customers.
~~Advertising Expenses~~
~~It is the Company’s policy to expense advertising costs as incurred. Advertising costs incurred during the years ended December 31, 2016 and 2015 were $39,000 and $30,000, respectively.~~
~~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 years ended December 31, 2016 and 2015 of $605,000 and $579,000, respectively.
~~Debt Issue Costs~~
In accordance with the ASU No. 2015-03 the debt issue costs related to long-term debt are shown as a reduction of debt outstanding 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.
~~F-12~~

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. Historically the Company has not filed income tax returns and the related required informational filings in the US. Certain informational filings if not filed contain penalties. The Company is currently addressing this issue with advisors to determine the amount ~~if any,~~ of potential payments due. Given the complexity of the issue the Company is unable to quantify a range of potential ~~loss, if any.~~loss. Accordingly no liability has been recorded in the accompanying consolidated balance sheets in respect of this ~~matter~~matter. However, such potential penalties may be material to the Company’s financial statements.

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 years ended December 31, ~~2016~~2018 and ~~2015,~~2017, all outstanding ~~stock options,~~ warrants ~~and convertible debt~~ 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 ~~comparisons.~~computations.

Accumulated Other Comprehensive Income (Loss)
Other comprehensive income (loss), as defined, includes net income (loss), foreign currency translation adjustment, and all changes in equity (net assets) during a period from non-owner sources. To date, the Company has not had any significant transactions that are required to be reported in other comprehensive income (loss), except for foreign currency translation adjustments.

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, 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.
~~F-13~~

Stock-based payments
~~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 option pricing model, which includes subjective judgements about the expected life of the awards, forfeiture rates and stock price volatility.

~~Recently Issued Accounting Standards Not Yet Adopted~~Fair Value Measurements
GAAP establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by GAAP are described below:
● Level 1 - Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
● Level 2 - Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
● Level 3 - Pricing inputs that are generally observable inputs and not corroborated by market data.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The Company’s Level 3 financial liabilities consist of contingent consideration relating to the acquisitions of 123Wish and LMH which requires significant judgment or estimation (see Note 3).

Note 3. Acquisitions
123Wish, Inc.
In February 2018 the Company completed the acquisition of a 51% controlling interest in 123 Wish, Inc. (formerly Once in a Lifetime LLC) a Delaware corporation in exchange for the issuance of 1,333,334 fully paid and non-assessable shares of common stock with a fair value of $1.39 million. In addition, the Company shall issue fully paid and non-assessable shares of common stock equal to 2.5 times of the net, after tax, earnings of 123 Wish for the nine month period after the date of acquisition and fully paid and non-assessable shares of common stock equal to 4.5 times the net, after tax, earnings of 123 Wish for the second six month period after the date of acquisition. 123 Wish, Inc. has proprietary applications which use the social media aspect of the internet.
The following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed (In thousands):
Consideration Paid:
Common stock $ 1,387
Non controlling interest 1,353
$ 2,740

Fair values of identifiable assets acquired and liabilities assumed:

Assets acquired:
Cash $ 14
Other intangible assets 2,307
Goodwill 419

Net Assets Acquired $ 2,740
The consideration paid was 1,333,334 common shares valued at $1.04 per share. Separately identifiable intangible assets include technology which were valued by management using discounted cash flow and replacement cost approaches.
As of December 31, 2018, the Company has estimated that no additional share amounts will need to be issued as contingent consideration and therefore is not included in the Company’s allocation of the purchase price in the table above.
Love Media House, Inc. (formerly C-Rod, Inc.)
In March 2018 the Company completed the acquisition of 100% ownership of Love Media House, Inc. (“LMH”) a Florida corporation in exchange for $150,000 cash and 3,376,147 fully paid and non-assessable shares of common stock with a fair value of $1.9 million. LMH is in the music and video content business. The financial statements of LMH have been included in the consolidated financial statements from the date of acquisition.

The following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed (In thousands):
Consideration Paid:
Cash $ 150
Common stock 1,885
$ 2,035

Fair values of identifiable assets acquired and liabilities assumed:

Assets acquired:
Cash $ 5
Other intangible assets 900
Goodwill 1,172
Total assets acquired 2,077

Liabilities assumed:
Accounts payable 42
Total Liabilities Assumed 42

Net Assets Acquired $ 2,035
Separately identifiable intangible assets were customer relationships and were valued by management using discounted cash flow and replacement cost approaches.
As of December 31, 2018, the Company has estimated that no additional share amounts will need to be issued as contingent consideration and therefore is not included in the Company’s allocation of the purchase price in the table above.
Banana Whale Studios PTE Ltd

In May ~~2014,~~2018 the ~~Financial Accounting Standards Board~~Company completed the acquisition of 51% ownership of Banana Whale Studios PTE Ltd (“~~FASB”~~BWS”) ~~issued Accounting Standard Update (“ASU”) 2014-09 –~~~~Revenue From Contracts with Customers~~ ~~which will supersede nearly~~a Singapore corporation. The acquisition of Banana Whale was based on an earnout formula solely and should Banana Whale fail to reach forecasted profit numbers during the first 24 months then some, or all ~~existing revenue recognition guidance under U.S. GAAP.~~of the shares allocated would be refundable to the Company.
At the time of acquisition 7,383,000 shares of common stock were placed in escrow for payment of the confirmed earn out. However, based on the terms of the ultimate disposition (note 4) of BWS no shares were ultimately transferred or other consideration paid. 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~~following table summarizes the consideration topaid and the fair value of the assets acquired and liabilities assumed in May 2018 (In thousands):
Consideration Paid:
Common stock $ —
Non-controlling interest 894
$ 894

Fair values of identifiable assets acquired and (liabilities) assumed:
Assets acquired:
Cash $ 42
Accounts receivable 11
Equipment 37
Other receivable 2,022
Liabilities assumed:
Accounts payable (288 )
$ 1,824
Bargain purchase gain $ 930
On February 4, 2019 the Company sold it’s holding in Banana Whale for $2.0 million of which $1.5 million was in cash on completion and the ~~entity expects to be entitled~~balance was a note receivable for $500,000 payable by December 31, 2019. The note is secured by a pledge of Banana Whale shares held in the name the four founding shareholders of Banana Whale. The pledged shares are held in escrow pending the payout of the Note.
Browning Production & Entertainment
In October 2018 the Company completed the acquisition of 51% ownership of Browning Productions & Entertainment, Inc. (“Browning Productions”) a Florida corporation in exchange for ~~those goods or services. This ASU also requires additional disclosure about~~$10,000 cash and an allocation of 300,000 fully paid shares of common stock with a fair value of $101,100. Of these shares, 150,000 have been issued with the ~~nature, amount, timing~~remaining balance of 150,000 to be issued upon receipt of audited financial statements of Browning Productions. The Company had previously paid a deposit of $10,000 cash and ~~uncertainty~~35,000 fully paid shares of ~~revenue and cash flows arising from customer contracts, including significant judgements and changes in judgements and assets recognized from costs incurred to obtain or fulfill~~common stock with a ~~contract.~~fair value of $18,200.

The ~~original effective date for ASU 2014-09 would have required~~following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed as of October 22, 2018 (In thousands):
Consideration Paid:
Common stock $ 119
Cash 20
Non-controlling interest 134
$ 273
Fair values of identifiable assets acquired and (liabilities) assumed:
Assets acquired:
Cash $ —
Accounts receivable 43
Other assets 23
Equipment 2
Goodwill 622
Liabilities assumed:
Accounts payable (42 )
Deferred revenue (72 )
Loans and advances (303 )

Net Assets Acquired $ 273

Note 4. Discontinued Operations
In November 2018 the management of the Company’s then 51% controlled subsidiary, Banana Whale Studios PTE Ltd., entered into discussions whereby the Company would sell its shares of BWS to ~~adopt beginning in its first quarter 2017. In July 2015,~~a third party. Under the ~~FASB voted to amend ASU 2014-09 by approving~~agreement dated January 31, 2019, the Company received cash of $1,500,000 and a ~~one year deferral~~promissory note of $500,000 and the return of the ~~effective date as well as providing the option~~7,383,000 Company shares issued on acquisition. The Company shares are held in Escrow for three months to ~~early adopt the standard on the original effective date. Accordingly,~~secure certain warranties given by the Company may adopt the standard in either its first quarter of 2017 or 2018. The new revenue standard may be applied 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 ~~it consolidated financial statements.~~closure.

~~Note 3. Suzhou Aishuo Network Information Co. Ltd.~~
The Company has ~~control of a Chinese entity Suzhou Aishuo Network Information Co. Ltd. (“Aishuo”) through various contractual arrangements. As a result of this control, one hundred percent of~~accounted for the operations ~~assets, liabilities and cash flows of Aishuo have been consolidated in the accompanying consolidated financial statements.~~
~~Summarized assets, liabilities and results~~as discontinued operations. The statement of operations ~~prior to eliminations in consolidation, of Aishuo are~~include discontinued operations as follows:(in thousands)

December 31 December 31
2016 2015

Assets $ 5 $ 43
Intercompany receivables/(payables) (355 ) (123 )
Other liabilities (12 ) (60 )
Revenue 224 56
Net Loss (292 ) (286 )
~~F-14~~
Year ended
December 31,
2018

Revenue $ 156
Cost of Revenue
Hardware 504
504
Gross Deficit (348 )
Expenses
General and administrative 551
Depreciation 9
560
Loss from Discontinued Operations $ (908 )

~~Note 4. Property and Equipment, net~~The balance sheet of discontinued operations as at December 31, 2018 is as follows: (in thousands)

~~Property~~
December 31,
2018

Current assets
Cash $ 18
Accounts Receivable 111
129
Property and equipment 36
$ 165
Current liabilities
Accounts payable $ 1
Loans payable 300
   $ 301
Shareholder deficiency (136 )
$ 165
In the year ended December 31, 2017 the Company disposed of a Voice over I.P. software business together with the subsidiaries incorporated in Ireland, Switzerland and ~~equipment consist~~United Kingdom, which were involved in that business segment to Mr. Collins, the former Chief Executive Officer of the ~~following:~~~~(in~~Company. In consideration Mr. Collins forgave the liability of $1.97 million then due to Mr. Collins. The Company accounted for the operations of this business segment as discontinued operations. The 2017 statement of operations include discontinued operations as follows (in thousands)

December 31 December 31
2016 2015

Equipment $ 285 $ 291
Less accumulated depreciation (243 ) (195 )
Property and equipment, net $ 42 $ 96
Year ended
December 31,
2017

Revenue $ 496
Cost of Revenue 1,012
Gross Deficit (516 )
Expenses
General and administrative 998
Depreciation 5
Research and development 255
1,258
Impairment Loss (622 )
Income Taxes 21
Loss from Discontinued Operations $ (2,375 )

Note 5. Intangible Assets

Intangible assets consist primarily of software development costs, intellectual property 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.~~basis.(in thousands)

December 31 December 31 December 31 December 31
2016 2015 2018 2017

Horizon software $ 18,634 $ 17,879 $ — $ 6,527
ZTEsoft Telecom software 438 469
123Wish Platform intellectual property 548 —
Social online application software 2,307 —
Customer lists 885 885 900 —
19,957 19,233
3,755 6,527
Less accumulated amortization (11,550 ) (9,410 ) (571 ) (1,187 )

Intangible assets, net $ 8,407 $ 9,823 $ 3,184 $ 5,340

Amortization of intangible assets for each of the next four years is estimated to be approximately ~~$2,100,000~~$796,000 per ~~year~~
~~F-15~~
~~Note 6. Convertible Debenture~~year.

InNote 6. Goodwill
The following is the detail of the Goodwill that arose on acquisitions described in Note 3:
December 31 December 31
2018 2017

123Wish, Inc. $ 419 $ —
Love Media House, Inc. (formerly C. Rod, Inc.) 1,172 —
Browning Productions & Entertainment, Inc 622
$ 2,213 $ —
Note 7. Notes Payable, Related Parties
As of December ~~22, 2014~~31, 2018 amounts totalling $205,000 were owed to certain members of the management at subsidiary companies. The amounts are unsecured, interest free and have no specified repayment dates.

Note 8. Notes Payable
a) Promissory notes.
The promissory notes due to Zhanming Wu ($500,000) and the Company’s CEO, Mark White ($500,000), both considered related parties, including accrued interest of 7% per annum from issuance, are due for repayment on August 31, 2019. The promissory notes were issued as a result of the re-organization of the Company ~~closed a private placement~~in August 2017 involving the removal of $3,500,000 under Regulation S whereby we issued to an investor a convertible debenture that is convertible into 1,555,556 shares of common stock, Class C warrant to purchase 388,889 shares of common stock, Class D warrant to purchase 388,889Redeemable Preference Shares and the Debenture totaling in exchange for new shares of common stock and the ~~potential for performance warrants.~~promissory notes.

The unsecured convertible debenture is for a term of three years from 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.b) Other notes payable.

~~The Class C and Class D warrants have a term of four years~~Notes payable by Browning Productions & Entertainment, Inc. totaling $101,000 are due to unrelated parties and are ~~each entitled to purchase one-fourth~~repayable on demand and interest bearing at average rates of ~~a share of common stock. In total the Company issued 388,889 Class C warrants and 388,889 Class D warrants.~~5.4% per year.

Note 9. Share Capital

Performance Warrants associated with the convertible debenture were potentially issuable and exercisable based on the Company’s annual reported subscriber numbers, twenty-four (24) months after December 22, 2014, as reflected in our 2014 Form 10-K. In the first quarter of 2016 the Company announced it has achieved the required number subscriber downloads and therefore the additional performance warrants are not issuable by the Company.
Proceeds received in 2014 from the convertible debentures were allocated between the convertible debenture and warrants based on their relative fair values. The resulting debt discount 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 is being 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 in interest expense in the consolidated statements of operations.
~~A total of 1,555,556 shares of common stock have been reserved for the potential conversion of the convertible debenture.~~
~~Note 7. Related-Party Transactions~~
~~Amounts due to related parties include the following:~~~~(in thousands)~~
December 31 December 31
2016 2015

Loans due to stockholders (current officers and directors) $ 2,343 $ 2,354
~~F-16~~
~~At December 31, 2016, $2,343,000 of related party debt was outstanding and will mature on April 1, 2018, which is unsecured and is interest free.~~
In the quarter ended March 31, 2015 the Company entered into a sales contract in the normal course of business with a customer (Horizon Latin America) which the Company holds minority ownership interest. The customer purchased perpetual software license for $500,000. As at December 31, 2015 Horizon Latin America owed the Company $250,000 (2015: $400,000)
~~The Company owns a cost based investment interest of 10% in the customer with limited voting rights or board representation.~~
~~Note 8. 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.
The holders of Series A Preferred Stock were entitled to receive cumulative dividends during a period of twenty-four (24) months from and after the Issuance Date (the “Dividend Period”). The Dividend Period ended on July 21, 2016. During the Dividend Period for each outstanding share of Series Preferred Stock, dividends were 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 December 31, 2016.~~
~~F-17~~
~~Mandatorily Redeemable Preferred Shares (Deferred Stock)~~
The Company’s subsidiary OHG has in issue 50,000 shares of deferred stock, par value of £1 to third parties. 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 year ended December 31, ~~2016~~2018 the Company:

·● ~~issued 200,000~~Issued 225,000 shares of common stock for services with a fair value of $357,750
● Issued 1,333,334 shares of common stock, with a fair value of $1.4 million, for the acquisition of 51% of Once in a Lifetime
● Issued 100,000 shares of common stock for services provided with a fair value of $204,000
● Issued 504,167 shares of common stock for conversion of convertible note and accrued interest in the amount of $302,500
● Issued 172,222 shares of common stock for conversion of convertible note and accrued interest in the amount of $103,000
● Issued 172,222 shares of common stock for services provided with a fair value of $200,000
● Issued 750,000 shares of common stock for exercise of warrants at a price of $0.75 per share.
● Issued 50,000 shares of common stock for services provided with a fair value of $80,000.
● Issued 1,376,147 shares of common stock, with a fair value of $1,541,285, as part consideration for the acquisition of Love Media House, Inc.
● Issued 100,000 shares of common stock for services to be provided with a fair value of ~~$133,960~~$85,000.
● Issued 225,000 shares of common stock for services to be provided with a fair value of $168,750
● Issued 850,000 shares of common stock for services provided with a fair value of $425,000
·● ~~issued 1,018,925~~Issued 7,383,000 shares of common stock, for the acquisition of 51% of Banana Whale Studios Pte., Ltd see note 3.
● Issued 1,575,000 shares of common stock for services provided with a fair value of $787,500
● Issued 850,000 shares of common stock for exercise of warrants at a price of $0.50 per share
● Issued 600,000 shares of common stock for services provided with a fair value of $306,000
● Issued 300,000 shares of common stock for services provided with a fair value of $150,000
● Issued 1,750,000 shares of common stock for cash of $0.20 per share
● Issued 1,850,000 shares of common stock for exercise of warrants at a price of $0.10 per share
● Issued 35,000 shares of common stock, with a fair value of $18,200, for an option to acquire an interest in Browning Productions.
● Issued 1,525,000 shares of common stock for cash of $114,375
● Issued 975,000 shares of common stock for exercise of warrants at a price of $0.075 per share
● Issued 4,500,000 shares of common stock for cash of $360,000
● Issued 1,000,000 shares of common stock for services provided with a fair value of $175,000
● Issued 3,000,000 shares of common stock for acquisition of software with a fair value of $548,000
● Issued 150,000 shares of common stock, with a fair value of $51,000, for the acquisition of 51% of Browning Productions.
● Issued 5,550,000 shares of common stock for services provided with a fair value of $1,148,000
● Issued 4,250,000 shares of common stock for cash of $324,500
● Issued 4,250,000 shares of common stock for exercise of warrants at a price of $0.20 per share
● Issued 354,409 shares of common stock, with a fair value of $96,000, pursuant to a settlement
● Issued 2,000,000 shares of common stock, with a fair value of $344,000, as an adjustment to the purchase price of Love Media House, Inc.
● Issued 9,500,000 shares of common stock for subscription receivable of $1,425,000
During the year ended December 31, 2017 the Company:
● Issued 91,667 shares of common stock for services provided with a fair value of $176,055
● Issued 127,366 shares of common stock for exercise of warrants at a price of $0.80 per share
● Issued 417,461 shares of common stock for cash proceeds of ~~$400,000~~$265,000
·● ~~issued 45,000~~Issued 859,802 shares of common stock for settlement of related party loan in the amount of $662,048
● Issued 3,000,000 shares of common stock in connection with five year employment contracts for executives with a fair value of $2,750,000
● Issued 55,556 shares of common stock for exercise of warrants at a price of $0.80 per share
● Issued 37,500 shares of common stock for settlement of amount owing of $30,000
● Issued 13,000,000 shares of common stock as part of settlement of convertible debenture and accrued interest in the amount of $3,350,000
● Issued 4,000,000 shares of common stock for redemption of 555,555 shares of Series A-1 Preferred Stock
● Issued 108,333 shares of common stock for services ~~received~~provided with a fair value of ~~$33,750~~$83,416
·● ~~issued 457,366~~Issued 833,334 shares of common stock ~~in part settlement~~for the exercise of ~~accrued compensation in~~warrants at a price of $0.60 per share
● Issued 1,075,000 shares of common stock for services provided with a fair value of $1,161,000
● Issued 350,000 shares of common stock for the ~~amount~~exercise of ~~$160,535~~warrants at a price of $0.60 per share
● Issued 155,000 shares of common stock for the exercise of warrants at a price of $0.80 per share

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”), the Company 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 accompanying warrants. Pursuant to the Underwriting Agreement, the Underwriters exercised an option to purchase 151,928 additional shares of Common Stock and 75,964 additional warrants. The net proceeds of the offering were approximately $2.89 million, 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 the Company’s consent.
Stock Purchase Warrants
AtAs at December 31, ~~2016,~~2018, the Company had reserved ~~3,898,941~~185,169 shares of its common stock for the ~~following~~ outstanding ~~warrants:~~warrants with weighted average exercise price of $0.80. Such warrants expire at various times up to July 2020.
Number of Warrants Weighted average
exercise price Expiry Intrinsic value

3,898,941 2.73 To December 2019 -

During the year ended December 31, ~~2016 160,000~~2018, 5,225,000 warrants were issued, 301,219 warrants were forfeited ~~764,195~~and 8,675,000 warrants were ~~issued and none exercised.~~exercised, for proceeds of $2,096,000.

~~F-18~~
During the year ended December 31, 2018, the Company agreed to reduce the exercise price on 6.5 million outstanding warrants, which resulted in additional compensation cost of $544,000, in order to obtain additional funding.

~~If, at~~Under the ~~time~~engagement agreement with Maxim Group LLC, the Company has agreed for any financing arranged by Maxim for the Company, during the contractual period, the Company will in addition to paying a cash fee of ~~exercise~~up to 7% of ~~warrants issued pursuant~~funds raised to deliver a cash warrant to Maxim to purchase shares in the ~~financing~~Company equal to 4% of ~~August 2015, wherein a total~~the number of ~~933,107 warrants were issued, that the~~ shares issued ~~upon exercise are~~in the financing. The warrants will be exercisable at 120% of the pricing of the common stock issued in the raise. The exercisable period is 12 months from the date of the raise, thereafter if not ~~able to be included in a registration statement then the holder may request that~~exercised the warrants ~~so exercised be done on a cashless basis.~~will lapse.

Note 9.10. Stock-Based Compensation

The shareholders approved a stock option plan on August 6, 2013, the 2013 Equity Incentive Plan (“2013 Plan”). The 2013 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~~ Following the reorganization in August 2017, all outstanding employee stock ~~available for granting awards~~options were forfeited under the ~~2013 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%~~rules of the total number of shares of common stock outstanding. On each of January 1, 2014, 2015 and 2016 the number of shares available for granting awards under the 2013 Plan has been increased by 1,000,000 shares.Plan.

There have been no options issued in the ~~year~~years ended December 31, ~~2016.~~2017 and 2018.

A summary of the 2013 Plan options for the ~~years~~twelve months ended December 31, ~~2015 and 2016,~~2017, is as follows:

Number of Weighted
Average
Options Exercise Price

Outstanding at January 1, 2015 500,000 $ 4.54
Options issued 564,000 1.09
Options forfeited (120,000 ) 4.54
Outstanding at December 31, 2015 944,000 $ 2.48
Options forfeited (96,500 ) 2.52
Outstanding at December 31, 2016 847,500 2.47
Number of Weighted
Average
Options Exercise Price

Outstanding at January 1, 2017 141,250 $ 14.83
Forfeited (141,250 ) 22.61
Outstanding at December 31, 2017 — N/A

~~As at~~During the year ended December 31, ~~2016~~2018 there was ~~unrecognized compensation expense of approximately $167,000~~no stock option activity relating to ~~be recognized over the remaining vesting periods.~~
~~At December 31, 2016, 4,936,000 shares of common stock were reserved for all outstanding options and future commitments under~~ the 2013 ~~Equity Incentive~~ Plan.

Prior to the 2013 Plan the Company issued stock options to employees ~~“Other Stock Options”.~~under other stock plans.

A summary of the Company’s other stock options for the ~~years~~year ended December 31, ~~2015 and 2016,~~2017, is as follows:

Number of Weighted
Average
Options Exercise Price

Outstanding at January 1, 2015 584,650 $ 0.53
Options issued 291,900 $ 0.53
Options forfeited (850 ) $ 0.51
Outstanding at December 31, 2015 875,700 $ 0.53
Options issued - -
Options forfeited - -
Outstanding at December 31, 2016 875,700 $ 0.53
~~F-19~~
Number of Weighted
Average
Options Exercise Price

Outstanding at January 1, 2017 145,950 $ 3.18
Forfeited (145,950 ) 22.61
Outstanding at December 31, 2017 — N/A

~~As of December 31, 2016 there was unrecognized compensation expense of approximately $64,000, related to Other Stock Options, to be recognized over the remaining vesting period.~~
~~The following table summarizes all stock options outstanding at December 31, 2016:~~
Number Average Number Intrinsic
Outstanding Remaining Exercisable Value
at Contractual at at
December 31, Life December 31, December 31,
Exercise Price 2016 (Years) 2016 2016

$ 0.53 291,900 3.50 291,900 -
0.53 291,900 5.50 291,900 -
0.53 291,900 8.75 291,900 -
4.54 340,000 7.00 - -
1.09 507,500 8.50 - -
Total 1,723,200 875,700 -
~~The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model.~~
~~The assumptions used in calculating the grant date fair value of options and other stock options granted during~~During the year ended December 31, ~~2015 were as follows:~~
· ~~Risk free interest rate~~ ~~2.50%~~
· ~~Expected term~~ ~~2–3 years~~
· ~~Volatility~~ ~~95–123%~~
· ~~Dividend~~ –
· ~~forfeiture rate~~ ~~0–30%~~
~~Note 10. Income Taxes~~2018 there was no stock option activity relating to other stock plans.

In March, 2018 the Company adopted an Equity Incentive Plan (“the 2018 Plan”) to provide additional incentives to the employees, directors and consultants of the Company to promote the success of the Company’s business. During the year ended December 31, 2018, no common stock of the Company was issued under the 2018 Plan.
Note 11. Income tax benefit of $43,000 and $20,000 in 2016 and 2015, respectively, is recognized for the impact of deferred tax assets and liabilities, which represent consequences of events that have been recognized differently in the financial statements under GAAP than for tax purposes. Taxes
The difference between the U.S. statutory federal tax rate ~~of 34% in 2016 and 2015~~ and the provision for income tax recorded by the Company is primarily attributable to the change in the Company’s valuation allowance against its deferred tax assets and to a lesser extent to the tax the differential on losses in foreign countries.

~~F-20~~
Deferred Tax Assets
~~The Company’s United Kingdom subsidiary has non-capital losses of approximately $10.9 million available for future deductions from taxable income derived in the United Kingdom, which do not expire.~~ The potential benefit of net operating loss carryforwards has not been recognized in the ~~combined~~consolidated financial statements since the Company cannot determine that it is more likely than not that such benefit will be utilized in future years. The tax years 2006 through ~~2015~~2017 remain open to examination by federal authorities ~~and other~~in certain jurisdictions in which the Company operates namely ~~United Kingdom, Switzerland, Ireland,~~ China and Hong Kong. The components of the net deferred tax ~~asset~~assets and the amount of the valuation allowance are as follows:(in thousands)

December 31
2018 2017

Deferred tax assets
Net operating loss carryforwards 3,577 2,138
Valuation allowance (3,577 ) (2,138 )
Net deferred tax assets $ — $ —

December 31
2016 2015

Deferred tax assets
Net operating loss carryforwards - International 6,097 4,527
Valuation allowance (6,097 ) (4,527 )
Net deferred tax assets $ - $ -
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 became law (the “Tax Act”). The ~~increase in~~Tax Act enacts a broad range of changes to the ~~valuation allowance was $529,000~~Internal Revenue Code of 1986, as amended (the “IRC”). The Tax Act, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating losses, allows for the ~~year ended December 31, 2016~~expensing of capital expenditures and ~~$449,000 for~~puts into effect the ~~year ended December 31, 2015.~~
~~Note 11. Commitments~~migration from a “worldwide” system of taxation to a territorial system. The tax reform did not have a material impact to our financial statements as our net deferred tax assets and ~~Contingencies~~
~~Contractual Commitments~~
~~The Company incurred rent expense of $63,000~~liabilities are fully reserved. We urge our stockholders to consult with their legal and ~~$86,000, respectively, for the years ended December 31, 2016 and 2015.~~
~~There are no minimum contractual lease commitments in excess of one year from December 31, 2016.~~
~~Legal Proceedings~~
Since 2014 the Company has been involved in legal proceedings with Broadband Satellite Services Limited (“BSS”) to whom we sold had sold former subsidiaries in 2012. In December 2016 the parties agreed to drop their respective claims and counterclaims without any payment required to paid by either party. As a result the Company has written off receivable amounts due by BSS totaling approximately $455,000 in the Company’s books having provided previously an amount totaling approximately $605,000 against the original unpaid sales invoices.
~~F-21~~
~~Note 12. Restatements~~
~~In the first quarter of 2017, management’s working with the Company’s advisers and auditors’ reviewed the pace of rollout of the Company’s licensed software~~tax advisors with respect to ~~revenue share customers over the previous two years. Based on the review~~any such legislation and the ~~slower than forecasted commercial roll out by some~~potential tax consequences of the customers during the past two years management determined that the timing of the write off of slow paying account receivable balances should be altered. Accordingly the previously reported balances as outlined below have been restated. As a result, the allocation of the provision for uncertain accounts receivable madeinvesting in ~~2015 and 2016 was restated as follows.~~our common stock.
~~Annual Balance Sheet data:~~
December 31, 2014 December 31, 2015
As reported As restated As reported As restated
$000’s $000’s $000’s $000’s

Accounts receivable 9,072 2,644 3,560 1,760
Total current assets 12,820 6,392 5,734 3,934
Total assets* 24,406 17,978 15,934 14,134
Retained earnings deficit (15,227 ) (21,655 ) (26,201 ) (28,001 )
Total stockholders’ equity 17,080 10,652 9,837 8,037
~~Quarterly Balance Sheet data:~~
March 31, 2015 June 30, 2015 September 30, 2015
As reported As restated As reported As restated As reported As restated
$000’s $000’s $000’s $000’s $000’s $000’s

Accounts receivable current portion 5,879 2,567 5,448 2,476 3,811 2,510
Total current assets 8,386 5,074 6,887 3,915 6,903 5,206
Accounts receivable, net of current portion 3,116 0 3,456 0 5,127 0
Total assets* 23,024 16,596 21,823 15,395 22,870 16,442
Retained earnings deficit (16,185 ) (22,613 ) (17,758 ) (24,186 ) (19,386 ) (25,814 )
Total stockholders’ equity 16,305 9,877 15,287 8,859 16,321 9,893
March 31, 2016 June 30, 2016 September 30, 2016
As reported As restated As reported As restated As reported As restated
$000’s $000’s $000’s $000’s $000’s $000’s

Accounts receivable current portion 3,058 1,258 2,963 1,163 3,037 1,237
Total current assets 5,114 3,314 4,552 2,752 3,840 2,040
Total assets* 14,943 13,143 13,806 12,006 12,793 10,993
Retained earnings deficit (27,484 ) (29,284 ) (28,927 ) (30,727 ) (30,420 ) (32,220 )
Total stockholders’ equity 9,114 7,314 7,795 5,995 6,586 4,786
* = Prior to giving effect to the implementation of ASU 2015-03 (Note 2).
~~F-22~~
~~Statement of operations data:~~
December 31, 2015
As reported As restated
$000’s $000’s

Increase in allowance for doubtful accounts 5,562 934
Loss from operations (10,229 ) (5,601 )
Loss from operations before income taxes (10,944 ) (6,316 )
Net loss for the year (10,924 ) (6,296 )
Net loss for the year attributable to One Horizon Group, Inc (10,874 ) (6,246 )
Net loss attributable to One Horizon Group Inc common stockholders (10,974 ) (6,346 )
Earnings per share – basic $ (0.32 ) $ (0.18 )
Earnings per share – diluted $ (0.30 ) $ (0.16 )
There was no impact of the restatement on the previously reported quarterly income statements during the years ended December 31, 2015 and 2016 as previously filed on Form 10-Q as the allowance was initially recorded the fourth quarter of each year. Accordingly such information has not been presented in this restatement

Note ~~13.~~12. Segment Information

The Company has ~~two~~the following business segments ~~both of which involve~~for the ~~development and licensing of software for mobile VoIP. One for business to business line and one for business to consumer line, primarily represented by Aishuo. For the years~~year ended December 31, ~~2016~~2018 and ~~2015 activity in the business to consumer line is not material for separate segment presentation.~~2017.

The Company’s revenues for continuing operations were generated in the following ~~geographic areas:~~~~(in~~business segments (in thousands)
December 31, December 31,
2018 2017

Sale of secure messaging licenses $ 228 $ 714
123Wish (from January 2018) 109 —
Love Media House (from March 2018) 446 —
Browning Productions (from November 2018) 4
Total $ 787 $ 714
The following is a detail of the Company’s cost of sales by business segment:
December 31, December 31,
2018 2017

Sale of secure messaging licenses including amortization of software $ 1,577 $ 855
123Wish (from January 2018) 404 —
Love Media House (from March 2018) 258 —
Browning Productions (from November 2018) — —
Total $ 2,239 $ 855
The following is a detail of the Company’s general and administrative and other expenses by business segment:
December 31, December 31,
2018 2017

Sale of secure messaging licenses including impairment charge $ 4,021 $ —
123Wish (from January 2018) 869 —
Love Media House (from March 2018) 490 —
Browning Productions (from November 2018) 12 —
Corporate 7,383 4,253
Total $ 12,775 $ 4,253
The following is a detail of the Company’s other income and expenses by business segment:
December 31, December 31,
2018 2017

Sale of secure messaging licenses $ — $ —
123Wish (from January 2018) — —
Love Media House (from March 2018) — —
Browning Productions (from November 2018) 22 —
Corporate 534 (665)
Total $ 556 $ (665)

The following is a detail of the continuing net (loss) by business segment:
December 31, December 31,
2018 2017

Sale of secure messaging licenses $ (5,327 ) $ (149)
123Wish (from January 2018) (760 ) —
Love Media House (from March 2018) (135) —
Browning Productions (from November 2018) 14 —
Corporate (7,463 ) (4,910 )
Total $ (13,671 ) $ (5,059 )
Note 13. Legal proceedings

Year ended December 31,
2016 2015

China $ 224 $ 57
Rest of Asia 1,325 900
Europe and Russia 48 25
The Americas 7 550
$ 1,615 $ 1,532
~~Note 14. Subsequent events~~
On ~~February 28, 2017,~~May 30, 2018, Zhanming Wu (“Wu”), the record owner of 15,000,000 shares of common stock of One Horizon Group, Inc. (the “Company”)  ~~received a notice from The Nasdaq Stock Market LLC (“Nasdaq”) Listing Qualifications Staff (the “Staff”) stating that~~, commenced an action in the ~~Staff has determined, unless~~Court of Chancery of the State of Delaware [Case No.2018-0387-JRS; the “Injunction Action”] against the Company ~~timely requests an appeal~~and its directors and officers (collectively, the “Director Defendants”) alleging multiple breaches of contract between the Company and Wu, and seeking (i) damages; (ii) to enjoin the Company from issuing, offering, selling or granting any shares of its common stock to any person or entity, or consummate any merger, acquisition or similar transaction without the prior approval of Wu, and to prevent the Individual Defendants from undermining that right by engaging in any further transactions designed to entrench themselves as directors and officers of the ~~Staff’s determination, before Nasdaq’s Hearing Panel (the “Panel”), by March 7, 2017,~~Company and to ~~delist~~dilute Wu’s stock ownership below 30% of the outstanding shares of the Company, (iii) to enforce Wu’s right to appoint four directors to the Company’s common stock from the Nasdaq Capital Market because the Company is not in compliance with the $1.00 minimum bid price requirement (the “Minimum Bid Price”) for continued listing set forth in the Nasdaq Listing Rule 5550(a)(2).The Company filed a request for a hearing before the Panel, on March 2, 2017, which request will stay any delisting or suspension action by the Staff pendingBoard of Directors, (iv) to rescind the issuance of 7,383,000 shares to the ~~Panel’s decision~~former stockholders of Banana Whale Studios Pte. Ltd (“Banana Whale”) in exchange for 51% of the outstanding shares of Banana Whale (the “Banana Whale Acquisition”), (iv) to obtain a declaration that the Individual Defendants have breached their fiduciary duty of loyalty by taking actions to entrench themselves on the Company’s Board of Directors; and (v) seeking an award of attorneys’ fees and costs in connection with the ~~expiration of any extension granted by~~litigation and such other relief as the ~~Panel.~~Court deems fair and equitable.
~~F-23~~

On ~~March 3, 2017,~~June 11, 2018, Wu commenced a second action in the ~~Staff informed~~Court of Chancery of the State of Delaware [Case No.2018-0427-JRS; the “225 Action”] under Section 225 of the Delaware General Corporation Law seeking (i) to appoint four directors to the Company’s Board of Directors, (ii) to enjoin the Company that they were granted a hearing to be held on April 20, 2017 (the “Hearing”). As such, the delisting action, referenced above, has been stayed, pending a final written decision by the Panel at the Hearing.
~~At the Hearing, the Company will present~~and its plan to regain compliance with the Minimum Bid Price by effecting a reverse stock split. On March 3, 2017, the Company filed a preliminary proxy statement with the Securities and Exchange Commission in connection with special meeting of stockholders (the “Stockholders’ Meeting”) to be held on April 14, 2017.  One of the proposals being submitted to a vote of the stockholders at the Stockholders’ Meeting is the approval of a 6 to 1 reverse stock split of all of the issued and outstandingaffiliates from issuing, offering, selling or granting any shares of the Company’s common ~~stock. Management believes~~stock to any person or entity, or consummate any merger, acquisition or similar transaction without the prior approval of Wu during the pendency of the action and (iii) seeking an award of attorneys’ fees and costs in connection with the litigation and such other relief as the Court deems fair and equitable.
On October 15, 2018, the parties entered into an agreement (the “Settlement Agreement”) which provides for the immediate cessation of all activities in the two actions and which will result in the dismissal of the two actions upon the fulfillment by the Company of certain conditions. Among the conditions to dismissal which the Company is required to meet to obtain the complete dismissal of the actions are the issuance of 354,409 shares to Wu to reimburse a portion of the expenses incurred in connection with the actions, the nomination and election to the Company’s Board of Directors of up to two individuals designated by Wu, the redemption of up to approximately 850,000 shares of common stock at $0.65 each, from certain investors whom Wu recommended to invest in the Company (the “Additional Investors”) should they request that ~~effecting~~ the ~~reverse stock split will allow~~Company do so and the facilitation of the sale of shares of the Company’s common stock by Wu, including the registration of such shares for sale under the Securities Act. Based on ASC 840, which requires that conditionally redeemable securities be classified outside of permanent stockholders’ equity, $605,000 was reclassified as mezzanine equity effective October 15, 2018. Pending the re-election of Wu’s nominees to ~~regain compliance with Nasdaq Listing Rule 5550(a)(2), which should allow~~the Board of Directors at the Company’s ~~common stock to~~2018 Annual Meeting of Stockholders, the Company will continue to ~~trade on~~comply with the ~~Nasdaq Capital Market. Assuming~~terms of the ~~reverse stock split proposal is approved~~Status Quo Order issued in July in connection with the 225 Action. The 225 Action will be dismissed and the Company will no longer be obliged to comply with the Status Quo Order upon the re-election of Wu’s nominees to the Board of Directors at the Company’s 2018 Annual Meeting of Stockholders.
A Stipulation of Dismissal in respect of the Injunction Action will be filed and the parties will exchange releases upon the fulfillment of certain conditions, including the registration of Wu’s shares and the removal of the restrictive legend from Wu’s shares and the shares held by the ~~Company’s stockholders,~~Additional Investors. Notwithstanding such dismissal, should the ~~Company’s board~~registration of ~~directors currently intends~~Wu’s shares lapse for any reason prior to ~~effect~~October 1, 2019, Wu shall be entitled to enforce his rights under the ~~reverse stock split, unless it determines that doing so would not~~side letters which were the basis of many of his claims, which letters are deemed to be a part of the Settlement Agreement as if set forth therein. If the Dismissal Stipulation has been filed in the Injunction Action and Wu’s shares have remained continuously registered until October 1, 2019, the ~~desired effect~~side letters shall be deemed of ~~satisfying the Minimum Bid Price requirement.~~no force and effect.

F-26
~~F-24~~

Delaware		46-3561419
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)


~~T1-017 Tierney Building, University of~~649 NE 81^st Street ~~Limerick, Limerick, Ireland.~~ Miami
		~~N/A~~FL 33138
(Address of principal executive offices)		(Zip Code)

~~Title of each class~~		~~Name of each exchange on which~~ ~~registered~~
~~n/a~~		~~n/a~~

Large accelerated filer ¨☐	Accelerated filer ¨☐
Non-accelerated filer ¨☑	Smaller reporting company þ☑
~~(Do not check if smaller reporting company)~~Emerging growth company ☐

Item	Description	Page
	Cautionary Note Regarding Concerning-Looking Statements	3

	Part I
Item 1	Business	4
Item 1A	Risk Factors	13
Item 1B2	~~Unresolved Staff Comments~~Properties	16
Item 23	~~Properties~~Legal Proceedings	2016
Item 34	~~Legal Proceedings~~	20
~~Item 4~~	Mine Safety Disclosures	2016

	Part II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2117
Item 6	Selected Financial Data	2218
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2319
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	3123
Item 8	Financial Statements and Supplementary Data	23
Item 9A	Controls and Procedures	23
Item 9B	Other Information	24

	Part III
Item 10	Directors, Executive Officers and Corporate Governance	25
Item 11	Executive Compensation	30
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	31
Item 913	~~Changes in~~Certain Relationships and ~~Disagreements with Accountants on Accounting~~Related Transactions, and ~~Financial Disclosure~~Director Independence	31
~~Item 9A~~	~~Controls and Procedures~~	33
Item 9B14	~~Other Information~~Principal Accounting Fees and Services	34

	Part ~~III~~IV
Item 1015	Exhibits, Financial Statement Schedules	36
Item 16	~~Directors, Executive Officers and Corporate Governance~~Form 10-K Summary	35
~~Item 11~~	~~Executive Compensation~~	42
~~Item 12~~	~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~	43
~~Item 13~~	~~Certain Relationships and Related Transactions, and Director Independence~~	45
~~Item 14~~	~~Principal Accounting Fees and Services~~	4640
	Signatures
	~~Part IV~~
~~Item 15~~	~~Exhibits, Financial Statement Schedules~~	48

	~~Signatures~~	5241

·●	Horizon Network Technology Co. Ltd	100%
●	Love Media House, Inc. (acquired March 2018)	100%
●	Browning Productions & Entertainment, Inc. (acquired October 2018)	51%

Location	Approximate size	Approximate monthly rent

Ireland	840 sqft	$	2,050
China	1,900 sqft	$	1,400
UK	120 sqft	$	1, 250

	Low		High

Fiscal year ending December 31, 2016:
Quarter ended December 31	$	0.22	$	0.65
Quarter ended September 30		0.52		1.27
Quarter ended June 30		0.61		0.85
Quarter ended March 31		0.78		1.17

Fiscal year ending December 31, 2015:
Quarter ended December 31	$	0.90	$	1.62
Quarter ended September 30		1.11		3.34
Quarter ended June 30		1.03		5.84
Quarter ended March 31		1.21		3.92

Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted- average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)

Equity compensation plans approved by security holders	847,500	$	2.47		4,936,000

	For the Year Ended						Year to Year Comparison
	December 31,						Increase/			Percentage
	2018			2017			(decrease)			Change

Revenue	$	787		$	714		$	73			10.2	%

Cost of revenue
Software and production costs		91			—			91			N/A
Amortization of intangible assets		2,148			855			1,293			151.2	%
		2,239			855

Gross deficit		(1,452	)		(141	)		(1,311	)		(929.8	)%

Operating Expenses

General and administrative		7,139			4,236			2,903			68.5	%
Acquisition services		1,874			—			1,874			N/A
Depreciation		1			17			(16	)		(94.1	)%
Impairment charge		3,761			—			3,761			N/A
Total Operating Expenses		12,775			4,253			8,522			200.4	%

Loss from Operations		(14,227	)		(4,394	)		9,833			223.8	%

Other Income(expense)
Interest expense		(428	)		(666	)		238			35.7	%
Other Income		989			—			989			N/A
Foreign currency exchange (losses) gains		(5	)		1			(6	)		(600.0	)%


Loss from continuing operations	$	(13,671	)	$	(5,059	)		(8,612	)		(170.2	)%

	For the Years Ended December 31 (in thousands)
	2018			2017
Net cash used in operating activities from continuing operations		(3,012	)		(382	)
Net cash used in operating activities from discontinued operations		(39	)		(321	)
Net cash used in investing activities from continuing operations		(170	)		(2	)
Net cash used in investing activities from discontinued operations		(980	)		(261	)
Net cash provided by financing activities from continuing operations		3,516			1,477
Net cash provided by financing activities from discontinued operations		301			—

·	Software and licenses – revenue from sales of perpetual licenses to telecom entities is recognized at the date of invoices raised for installments due under the agreement, unless payment terms exceed one year, as described below, presuming all other relevant revenue recognition criteria are met.

·	~~Revenue for user licenses purchased by customers is recognized when the user license is delivered except as set out below.~~

·	~~Revenue for maintenance services is recognized over the period of delivery of the services except as set out below.~~

·	Effective as of October 1, 2014, the Company amended certain existing customer contracts with respect to the terms under which those customers would pay the Company for perpetual licenses, user licenses and maintenance services provided by the Company. Existing customer contracts required payments for maintenance services to be made based on contractually specified fixed amounts, which were billed regularly through September 2014. Through that date the Company recorded revenue for licenses and maintenance services when those licenses and services were billed. Revenue for user licenses was recorded as earned and revenue for maintenance services was recorded based on a fixed annual fee, billed quarterly. The Company has modified the payment terms under certain of those existing customer contracts by entering into Revenue Sharing agreements with those customers. Under the terms of these Revenue Sharing agreements, future payments will be due from the customer when that customer has generated revenue from its customers who subscribe to use the Horizon products and services. Effective October 1, 2014 revenue will be recorded by the Company when it invoices the customer for the revenue share due to the Company. Certain customers who entered into revenue sharing arrangements had outstanding balances due to the Company as of September 30, 2014, which balances were included in accounts receivable at that date. Payments received after September 30, 2014, from those customers under revenue sharing agreements have been applied to the customer’s existing accounts receivable balances first. For those customers having balances due at September 30, 2014, revenue related to perpetual and user licenses and maintenance services will be recorded only after existing accounts receivable balances are fully collected.

	For the Year Ended December 31,						Year to Year Comparison
	2016			2015 (restated)			Increase/ (decrease)			Percentage Change

Revenue	$	1,615		$	1,532		$	83			5.4	%

Cost of revenue
Hardware, calls and network charges		98			116			(18	)		(15.5	)%
Amortization of software development costs		2,010			2,111			(101	)		(4.8	)%
		2,108			2,227

Gross margin		(493	)		(695	)		(202	)		(29.1	)%

Operating Expenses

General and administrative		3,267			3,326			(59	)		(0.2	)%
Increase in Allowance for doubtful accounts		455			934			(501	)		(53.6	)%
Depreciation		59			67			(8	)		(11.9	)%
Research and development		605			579			26			4.5	%
Total Operating Expenses		4,386			4,906			(520	)		(10.6	)%

Loss from Operations		(4,879	)		(5,601	)		(722	)		(12.9	)%

Other Income(Expense)
Interest expense		(712	)		(722	)		10			1.4	%
Interest expense - related parties		-			(2	)		2			100	%
Gain on settlement of lease		-			36			(36	)		(100	)%
Foreign Exchange gain/(loss), net		9			(29	)		38			131.0	%
Interest income		-			2			(2	)		(100	)%

Loss for continuing operations before income taxes		(5,582	)		(6,316	)		(734	)		(11.3	)%

Income tax recovery		(43	)		(20	)		(23	)		(115.0	)%
Net loss for the year		(5,539	)		(6,296	)		(757	)		(12.0	)%

	For the Years Ended December 31 (in thousands)
	2016			2015
Net cash used in operating activities		(1,303	)		(2,115	)
Net cash used in investing activities		(475	)		(1,072	)
Net cash provided by financing activities		334			1,787

Name	Age	Principal Occupation or Employment	First Became Director	Current Board Term Expires

Brian Collins	49	President, Chief Executive Officer, Chief Technology Officer, Director	12/10/12		2017

Martin Ward	59	Chief Financial Officer, Director	12/10/12		2017

Nicholas Carpinello	67	Owner, Carpinello Enterprises LLC, Director	3/7/13	Until the date of removal or resignation

Richard Vos	71	Director	8/21/2013	Until the date of removal or resignation

Robert Law	66	Director	8/28/2013	Until the date of removal or resignation

Robert Vogler	66	Director	1/8/14	Until the date of removal or resignation

Name	Age	Position

Mark White	58	President, Chief Executive Officer and Director

Martin Ward	61	Chief Financial Officer and Director

Nicholas Carpinello	69	Director

Richard Vos	73	Director

Robert Law	68	Director

Aling Zhang	61	Director

Pengfei Li	31	Director

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Nicholas Carpinello		18,000		0		0		0		0		0		18,000
Robert Law		16,000		0		0		0		0		0		16,000
Richard Vos		16,000		0		0		0		0		0		16,000

·●	Our Nominating and Corporate Governance Committee has, among the others, the following authority and responsibilities:

·●	To determine and recommend to the Board, the criteria to be considered in selecting nominees for the director;


·●	The compensation committee shall be directly responsible for the appointment, compensation and oversight of the work of any compensation consultant, legal counsel and other adviser retained by the compensation committee or said group.


·●	The compensation committee select, or receive advice from, a compensation consultant, legal counsel or other adviser to the compensation committee or said group, other than in-house legal counsel, only after conducting an independence assessment with respect to the adviser as provided for in the Act.

·	~~The Company believes that~~●	Attempt to handle the ~~combined structure~~inquiry directly, for example where it is ~~necessary and allows~~a request for ~~efficient and effective oversight, given~~information about OHGI or it is a stock-related matter; or

	●	Not forward the ~~Company’s relatively small size, its corporate strategy and focus.~~communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic.

Name and Principal Position	Period	Salary ($)		Bonus ($)		Stock Award(s) ($)		Option Awards ($)		Non- Equity Incentive Plan Compensation		Non- Qualified Deferred Compen- sation Earnings ($)		All Other Compensation ($)		Total ($)		Period	Salary ($)		Bonus ($)		Stock Award(s) ($)		Option Awards ($)		Non- Equity Incentive Plan Compensation		Non- Qualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)

Brian Collins, CEO (1)	Year ended 12/31/16		360,000		0		0		0		0		0		0		360,000

	Year ended 12/31/15		360,000		0		0		357,000		0		0		0		717,000
Mark White CEO (1)																		Year ended 12/31/18		480,000		0		0		0		0		0		0		480,000
																		Year ended 12/31/17		160,000		0		1,504,000		0		0		0		0		1,664,000
Martin Ward, CFO(2)	Year ended 12/31/16		254,000		0		0		0		0		0		0		254,000	Year ended 12/31/18		240,000		0		0		0		0		0		0		240,000
	Year ended 12/31/15		287,000		0		0		0		0		0		0		287,000	Year ended 12/31/17		240,000		0		0		0		0		0		0		240,000

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compen- sation ($)		Total ($)
Nicholas Carpinello		18,000		0		0		0		0		0		18,000
Brian Collins		360,000		0		0		0		0		0		360,000
Robert Law		16,000		0		0		0		0		0		16,000
Richard Vos		16,000		0		0		0		0		0		16,000
Martin Ward		254,000		0		0		0		0		0		254,000
Robert Vogler		18,000		0		0		0		0		0		18,000

Name of Person or Group	Amount And Nature of Beneficial Ownership(1)		Percent

Principal Stockholders:

Alexandra Mary Johnson 44 Fairway Lakes Village Fritton, Great Yarmouth, NR31 9EY United Kingdom		1,942,666		5.3	%

Adam Christe Thompson 547A Wellington Road Crisfield, MD 21817		1,942,666		5.3	%

Mark White(2)		4,262,397		11.6	%

Named Executive Officers and Directors:

Brian Collins		6,247,074		16.9	%

Martin Ward		3,059,609		8.3	%

Richard Vos		20,413		*

Nicholas Carpinello		10,700		*

Robert Law		10,684		*

Robert Vogler		205,284		*
All Executive Officers and Directors as a Group (6 persons):		9,553,764		25.9	%

Name	Amount And Nature of Beneficial Ownership(1)		Percent

Owners of More than 5% of Outstanding Shares:

Zhanmang Wu		15,354,409		17.4	%

BK Consulting Group, LLC		4,750,000		5.4	%

Directors and Named Executive Officers:

Mark White		4,140,603		4.7	%

Martin Ward		1,369,738		1.5	%

Richard Vos		3,402		*

Nicholas Carpinello		1,781		*

Robert Law		1,781		*
				*
All Executive Officers and Directors as a Group (5 persons):		5,517,305		6.2	%

*	Less than 1%.
(1)	Except as otherwise indicated, each of the stockholders listed above has sole voting and investment power over the shares beneficially owned.

	December 31		December 31		December 31,
	2016		2015		2018
Loans due to stockholders
Loans due to stockholders and related parties
Due within one year	$	-	$	-	$	1,205
Long-term		2,343		2,354		0
	$	2,343	$	2,354	$	1,205

Services Provided	2016		2015		2018		2017
Audit Fees	$	167,000	$	150,000	$	101,684	$	88,700
Audit Related Fees		0		30,000		16,100		0
Tax Fees		0		0		20,000		0
All Other Fees		0		0		0		0
Total	$	167,000	$	180,000	$	137,784	$	88,700

~~10.13~~Exhibit Number	Title of Document	Location
10.13	Form of ~~Class B Warrant~~Securities Purchase Agreement dated July 14, 2017	Incorporated by reference ~~from the~~to Exhibit 10.1 to Current Report on Form 8-K filed on July ~~25, 2014~~18, 2017

10.14	Form of ~~Class A Warrant~~Stock Purchase Agreement dated August 10, 2017 with Brian Collins, former CEO	Incorporated by reference ~~from the Current~~to Exhibit 10.1 to Quarterly Report on Form ~~8-K~~10-Q filed ~~on July 25, 2014~~August 14, 2017

10.15	Amendment to Certain Transaction Documents dated August 15, 2014	Incorporated by reference from the Current Report on Form 8-K filed on August 8, 2014

10.16	Securities Purchase Agreement dated December 22, 2014	Incorporated by reference from the Current Report on Form 8-K filed on December 29, 2014

10.17	~~Form~~Agreement with Zhanming Wu for conversion of Convertible Debenture	Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed September 8, 2017

10.18	Registration Rights Agreement dated December 22, 2014	Incorporated by reference from the Current Report on Form 8-K filed on December 29, 2014

~~10.18~~10.19	~~Registration Rights~~ Agreement with Mark White dated ~~December 22, 2014~~August 4, 2017 for Exchange of Series A-1 Preferred Stock	Incorporated by reference ~~from the~~to Exhibit 10.2 to Current Report on Form 8-K filed ~~on December 29, 2014~~September 8, 2017

~~10.19~~10.20	~~Form of Amended and Restated Class C Warrant~~Consulting Agreement dated October 17, 2017 with Bespoke Growth Partners, Inc.	Incorporated by reference ~~from the Current Report~~to Exhibit 10.1 to Registration Statement on Form ~~8-K~~S-3(File No. 333-221300) filed ~~on January 23, 2015~~October 17, 2017

~~10.20~~10.21	~~Form of Amended and Restated Class D Warrant~~Agreement dated December 6, 2017 with Maxim Group LLC	Incorporated by reference ~~from the Current~~to Exhibit 10.21 to Annual Report on Form ~~8-K~~10-K filed ~~on January 23, 2015~~April 2, 2018

~~10.21~~10.22	~~Form of Amended and Restated Performance Warrant~~Agreement dated December 13, 2017 with First Choice International Company, Inc.	Incorporated by reference ~~from the~~to Exhibit 10.1 to Current Report on Form 8-K filed ~~on January 23, 2015~~December 19, 2017

~~10.22~~10.23	~~Form of Amended and Restated Placement Agent Warrant~~	~~Incorporated by reference from the Current Report on Form 8-K filed on January 23, 2015~~

~~10.23~~	Indemnification Agreement between the Company and Brian Collins	Incorporated by reference from the Annual Report on Form 10-K filed on April 1, 2015

10.24	Indemnification Agreement between the Company and Martin Ward dated	Incorporated by reference from the Annual Report on Form 10-K filed on April 1, 2015

	2016			2015
					(As Restated, note 12)
Assets
Current assets:
Cash	$	260		$	1,772
Accounts receivable, net		1,208			1,760
Other assets		472			402
Total current assets		1,940			3,934

Property and equipment, net		42			96
Intangible assets, net		8,407			9,823
Investments		17			18

Total assets	$	10,406		$	13,871

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable	$	364		$	223
Accrued expenses		206			220
Accrued compensation		156			18
Income taxes payable		90			90
Convertible debenture, net		3,068			-
Current portion of long-term debt		-			5
Total current liabilities		3,884			556

Long-term liabilities
Long term debt, net of current portion		-			-
Amount due to related parties		2,343			2,354
Convertible debenture		-			2,636
Deferred income taxes		172			215
Mandatorily redeemable preferred shares		62			73
Total liabilities		6,461			5,834

Stockholders' Equity
One Horizon Group, Inc. stockholders' equity
Preferred stock: $0.0001 par value, authorized 50,000,000; issued and outstanding 170,940 shares		1			1
Common stock: $0.0001 par value, authorized 200,000,000 shares, issued and outstanding 35,147,283 (2016)and 33,281,069 (2015)		4			3
Additional paid-in capital		37,501			36,070

Retained Earnings (Deficit)		(33,590	)		(28,001	)
Accumulated other comprehensive income/(loss)		29			(36	)
Total stockholders' equity		3,945			8,037
Total liabilities and stockholders' equity	$	10,406		$	13,871

	Years ended December 31,						Years ended December 31,
	2016			2015			2018			2017
				(As Restated, note 12
Revenue	$	1,615		$	1,532		$	787		$	714
Cost of revenue
Hardware, calls and network charges		98			116
Amortization of intangibles		2,010			2,111
Software and production costs								91			—
Amortization of intangible assets								2,148			855
		2,108			2,227			2,239			855
Gross deficit		(493	)		(695	)		(1,452	)		(141	)

Expenses:
General and administrative		3,267			3,326			7,139			4,236
Increase in Allowance for doubtful accounts		455			934
Acquisition related costs								1,874			—
Depreciation		59			67			1			17
Research and development		605			579
Intangible asset impairment charge								3,761			—
		4,386			4,906			12,775			4,253

Loss from operations		(4,879	)		(5,601	)		(14,227	)		(4,394	)

Other income and expense:
Interest expense		(712	)		(722	)		(428	)		(666	)
Interest expense - related parties		-			(2	)
Gain on settlement of lease		-			36
Foreign currency exchange		9			(29	)
Interest income		-			2
Other income (Note 3)								989			—
Foreign currency exchange (losses)/gains								(5	)		1
		(703	)		(715	)
								556			(665	)
Loss from continuing operations before income taxes		(5,582	)		(6,316	)
Income taxes benefit		(43	)		(20	)
Net loss		(5,539	)		(6,296	)

Loss attributable to non-controlling interest		-			(50	)
Net loss attributable to One Horizon Group, Inc.		(5,539	)		(6,246	)
Less: Preferred dividends		(50	)		(100	)
Loss from continuing operations								(13,671	)		(5,059	)


Loss from discontinued operations								(908	)		(2,375	)
Net loss for the year								(14,579	)		(7,434	)
Net loss attributable to non controlling interest								810			—
Net loss attributable to One Horizon Group, Inc. Common stockholders	$	(5,589	)	$	(6,346	)	$	(13,769	)	$	(7,434	)

Earnings per share
Basic and diluted net loss per share	$	(0.16	)	$	(0.18	)
- Continuing operations							$	(0.27	)	$	(0.40	)
- Discontinued operations							$	(0.02	)	$	(0.19	)
Weighted average number of shares outstanding
Basic and diluted		35,411			33,996			50,857			12,534

	Preferred Stock			Common Stock				Additional Paid- in Capital			Deferred Compensation			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interest			Total Stockholders' Equity
	Number of Shares		Amount	Number of Shares		Amount

Balance December 31, 2014 (Restated, note 12)	171	$	1	33,282	$	3	$	32,163		$	(214	)	$	(21,655	)	$	63		$	291		$	10,652
Net loss														(6,246	)					(50	)		(6,296	)
Foreign currency translations																	(99	)					(99	)
Preferred dividends														(100	)								(100	)
Amortization of deferred compensation											214												214
Options issued for services								660															660
Common Stock issued for cash				1,866				3,266															3,266
Contribution of shares of subsidiary								241												(241	)		-
Costs of financing								(391	)														(391	)
Amounts owing to related party forgiven								131															131

Balance December 31, 2015 (restated, note 12)	171	$	1	35,148	$	3	$	36,070		$	-		$	(28,001	)	$	(36	)	$	-		$	8,037

Net loss														(5,539	)								(5,539	)
Foreign currency translation																	65						65
Preferred dividends														(50	)								(50	)
Issuance of common stock for cash				1,374		1		524															525
Common Stock issued for services				347				204															204
Options issued for services								703															703
Balance December 31, 2016	171	$	1	36,869	$	4	$	37,501		$	-		$	(33,590	)	$	29		$	-		$	3,945

	Temporary Equity				Common Stock				Additional Paid-In			Stock Subscription			Accumulated			Accumulated			Non-Controlling			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital			Receivable			Deficit			OCI			Interest			Equity
Balance January 1, 2017		—	$	—		6,145	$	1	$	37,504			—		$	(33,590	)	$	29		$	—		$	3,944

Net loss		—		—		—		—		—			—			(7,434	)		—			—			(7,434	)

Foreign currency translation		—		—		—		—		—			—			—			(51	)		—			(51	)

Deemed distribution		—		—		—		—		61			—			(61	)		—			—			—

Shares issued for services provided		—		—		4,275		—		4,170			—			—			—			—			4,170

Shares issued for exercise of warrants		—		—		1,521		—		980			—			—			—			—			980

Options issued for services		—		—		—		—		132			—			—			—			—			132

Warrants issued for services		—		—		—		—		1,486			—			—			—			—			1,486

Reclassification of redeemable preference shares		—		—		—		—		62			—			—			—			—			62

Shares issued in settlement of debt		—		—		897		—		692			—			—			—			—			692

Conversion of preferred shares and note payable to common stock		—		—		4,000		1		(500	)		—			—			—			—			(499	)

Conversion of debenture to common stock		—		—		13,000		1		3,349			—			—			—			—			3,350

Beneficial conversion feature		—		—		—		—		155			—			—			—			—			155

Shares issued for sale of stock		—		—		417		—		265			—			—			—			—			265

Balances, December 31, 2017		—	$	—		30,255	$	3	$	48,356		$	—		$	(41,085	)	$	(22	)	$	—		$	7,252

Net loss		—		—		—		—		—			—			(13,769	)		—			(810	)		(14,579	)

Foreign currency translation		—		—		—		—		—			—			—			(13	)		—			(13	)

Shares issued for business combinations		—		—		12,277		1		3,340			—			—			—			2,381			5,722

Shares issued for exercise of warrants		—		—		8,675		—		2,096			—			—			—			—			2,096

Shares issued for services provided		171		199		11,474		2		4,748			—			—			—			—			4,750

Shares issued for sale of stock		—		—		21,525		2		2,672			(1,425	)		—			—			—			1,249

Shares issued for IP agreement		—		—		3,000		—		548			—			—			—			—			548

Shares issued for conversion of debt		677		406		—		—		—			—			—			—			—			—

Shares issued for settlement agreement		—		—		354		—		96			—			—			—			—			96

Beneficial conversion feature		—		—		—		—		200			—			—			—			—			200

Warrant modification expense		—		—		—		—		544			—			—			—			—			544

Balances, December 31, 2018		848	$	605		87,560	$	8	$	62,600		$	(1,425	)	$	(54,854	)	$	(35	)	$	1,571		$	7,865

	Year ended December 31,				Year ended December 31,
	2016		2015		2018		2017

Interest paid	$	209	$	216
Cash paid for interest					$	—	$	—
Non-cash transactions:
Common stock issued for services provided		204		-
Common stock issued in acquisitions					$	5,722	$	—
Common stock issued for software					$	548	$	—
Common stock issued for settlement of accrued compensation		125		-	$	—	$	662
Reclassification of preferred shares					$	—	$	62
Forgiveness of related party debt for sale of discontinued operations					$	—	$	1,968

	(iii)	Love Media House (formerly called C-Rod) -a full-service music production, artist representation and digital media business.
	(iv)	Banana Whale Studios (“BWS”) – a B2B software provider in the online gaming industry that develops and supplies online games to Asian gaming platforms.The interest in BWS was disposed on in February 2019 (see note 4)
	(v)	Browning Productions & Entertainment - a television filming and production company was acquired on October 23, 2018.