As filed with the Securities and Exchange Commission on September 18, 2019

Registration No. ________



As filed with the Securities and Exchange Commission on April 24, 2015Registration No. 333-201900  
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,

WASHINGTON, D.C. 20549

AMENDMENT NO.  2 TO

FORM S-1

REGISTRATION STATEMENT

UNDER
THE SECURITIES ACT OF 1933

One Horizon Group, Inc.

ONE HORIZON GROUP, INC.

(Exact name of Registrantregistrant as specified in its charter)

Delaware 73727812 46-3561419

(State or Other Jurisdictionother jurisdiction of Incorporation

incorporation or Organization)organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

 Identification Number)No.)


4300 Biscayne Blvd., Suite 203

T1-017 Tierney Building, University of Limerick, Limerick, IrelandMiami, Florida 33137

.(305) 420-6640

+353-61-518477

(Address, including zip code, and telephone number,

including area code, of Registrant’sregistrant’s principal executive offices)

Copies

Mark White

Chief Executive Officer and President

One Horizon Group, Inc.

4300 Biscayne Blvd., Suite 203

Miami, Florida 33137

(305) 420-6640

(Name, address and telephone number of agent for service)

With copies to:

Louis E. Taubman, Esq.F
Hunter Taubman Weiss LLP
130 w. 42nd Street,

Laura Anthony, Esq.

Craig D. Linder, Esq.

Anthony L.G., PLLC

625 N. Flagler Drive, Suite 1050

New York, NY 10036

600

West Palm Beach, FL 33401

Phone: (561) 514-0936

Fax: (561) 514-0832

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement becomes effective.registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. þ


If this Form is filed to register additional securities for an offering pursuant totop Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.company, or an “emerging growth company”. See the definitions of “large accelerated filer”,filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one):


Large accelerated fileroAccelerated filero
Non-accelerated fileroSmaller reporting companyþ
 
(Do not check if a smaller reporting company)Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐




CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered Amount to be Registered (1)  Proposed maximum offering price per share(2)  Proposed maximum aggregate offering price  Amount of registration fee 
             
Common Stock underlying Class C Warrants  404,445(3) $1.42  $574,311.9  $66.74 
                 
Common Stock underlying Class D Warrants  404,445(4)  1.42   574,311.9   66.74 
                 
Common Stock underlying Placement Agent Warrants  62,222(5)  1.42   88,355.24   10.27 
                 
Common Stock underlying Performance Warrants  450,000(6)  1.42   639,000.00   74.19��
                 
Common Stock  2,093,723(7)  1.42   2,973,086.66   345.47 
Common Stock  2,822,764(8)  1.80   5,080,975.20   590.41 
Total  6,237,599      $9,930,040.90  $1153.82(9) 

Title of Each Class of Securities to be Registered Amount to
be
Registered
  Proposed
Maximum
Aggregate Offering Price
Per Share
  Proposed Maximum
Aggregate Offering Price (1)
  Amount of
Registration Fee
 
                 
Common stock, $0.0001 par value per share, by Selling Stockholder  1,221,309(2) $0.46875(3) $572,489  $69.39(4)

(1)PursuantEstimated pursuant to Rule 416 under457(a) of the Securities Act of 1933, this registration statement includes an indeterminate number of additional shares as may be issuable as a result of stock splits or stock dividends which occur during this continuous offering.
(2)Estimatedamended (the “Securities Act”) solely for purposes of calculating the registration fee in accordance with Rule 457(c)fee.

(2)Represents common shares offered for resale by Crown Bridge Partners, LLC, a New York limited liability company (the “Selling Stockholder”), which shares are issuable by One Horizon Group, Inc. (the “Company”) pursuant to the Equity Purchase Agreement, dated as of July 18, 2019 (“Equity Line”), between the Company and the Selling Stockholder.  The Company’s calculation of the maximum number of common shares that may be registered for resale under the Securities ActEquity Line pursuant to this Registration Statement is as follows:  non-affiliate float of 1933, as amended based upon3,006,509 (75,162,742 pre-reverse split) common shares multiplied by $0.57125 ($0.02285 pre-reverse split), which represents the average of the bidhigh and askedlow prices for the common share on July 24, 2019, divided by three, which yields $572,489. Based on the average of the high and low prices for the common share of $0.46875 ($0.01875 pre-reverse split) on August 2, 2019, which was the last business day before the date the Equity Purchase Agreement was executed on August 5, 2019 (the effective date of the Equity Purchase Agreement), we can register up to 1,221,309 common shares for resale pursuant to the Equity Line.

(3)This offering price has been estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of the Securities Act with respect to the common shares registered hereunder, based upon the price of $0.46875 ($0.01875 pre-reverse split), which was the Registrant'saverage of the high and low prices for the Company’s common stockshare on August 5, 2019, as quotedreported on the Nasdaq CapitalOTC Market Group, Inc.’s OTCQB tier.

(4)Computed in accordance with Section 6(b) of $1.42the Securities Act as in effect on February 3, 2015 for the shares included in the original report and $1.80 on April 16, 2015 for additional shares added in the Amendment No.1 to the original report.September 18, 2019.

In accordance with Rule 416(a) under the Securities Act, the registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUSSUBJECT TO COMPLETION, DATED SEPTEMBER 18, 2019
  
(3)Represents shares of common stock underlying Class C Warrants at an exercise price of $3.00 per share that the Company issued to an investor and the placement agent pursuant to the financing they closed on December 22, 2014 (the “Class C Warrant(s)”).
(4) Represents shares of common stock underlying Class D Warrants at an exercise price of $3.50 per share that the Company issued to an investor and the placement agent pursuant to the financing they closed on December 22, 2014 (the “Class D Warrant(s)”).
(5)Represents shares of common stock underlying Placement Agent Warrants at an exercise price of $2.25 per share that the Company issued to the placement agent pursuant to the financing they closed on December 22, 2014 (the “Placement Agent Warrant(s)”).
(6) Represents the maximum amount of shares of common stock underlying Performance Warrants which were issued pursuant to December 2014 Offering (as defined herein below) and exercisable based on  the Company’s  annual reported subscriber numbers, twenty four (24) months after December 22, 2014 as reflected in the Company’s  Annual Report on Form 10-K for the year ending December 31, 2016 (the “2016 Form 10-K”) that the Company issued  to an investor pursuant to the financing they closed on December 22, 2014 (the “Performance Warrant(s), together with Class C Warrants, Class D Warrants and Placement Agent Warrants, are referred as “Warrants” herein below).
(7) Represents amount of shares of Common Stock that the Company issued to investors pursuant to various financings the Company conducted before and after the Share Exchange
(8)Represents amount of shares of Common Stock that the Company issued to investors in various offerings prior to and after the Share Exchange which the Company agreed to register after the filing of the initial registration statement on Form S-1 on February 5, 2015.
(9)The Company paid a registration fee of $563.40 in connection with the filing of the initial registration statement on Form S-1 on February 5, 2015.

1,221,309 SHARES OF COMMON STOCK

 

ONE HORIZON GROUP, INC.

 


EXPLANATORY NOTE

We filed, on April 24, 2015, Amendment No. 1 (the “Amendment No.1”

This Prospectus (this “Prospectus”to our registration statement on Form S-1 filed on February 5, 2015, file No. 333-201900 (the “Original Report”) to respond to an SEC comment letter we received on March 3, 2015 and to confirm the disclosure hereinrelates to the disclosures in our annual report on Form 10-K for the fiscal years ended December 31, 2014offer and 2013 which we filed on April 1, 2015. However, duesale from time to an unexpected underlying error, we were not abletime of up to furnish Exhibit 101 to Amendment No. 1 in accordance with Rule 4051,221,309 shares of Regulation S-T. Exhibit 101 to provide the consolidated financial statements and related notes in XBRL (eXtensible Business Reporting Language, the “XBRL”common stock, par value $0.0001 (“Common Stock”). Therefore, we are filing this Amendment No. 2 (the “Amendment No.2”) to Original Report solely to furnish Exhibit 101 to Amendment No.2 in accordance with Rule 405, of Regulation S-T. Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form S-1/A formatted in XBRL. This Amendment No.2 does not modify or update those disclosures present in Amendment No.1 except with regard to the modification described in this Explanatory Note. As much, this Amendment No. 2 continues to speak as of April 24, 2015 and should be read in conjunction with the Amendment No.1.



THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.  THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES PUBLICLY UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.  THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED APRIL 24, 2015
PROSPECTUS
One Horizon Group, Inc.
6,237,599 Shares of Common Stock
 This prospectus relates toa Delaware corporation, by Crown Bridge Partners, LLC, a New York limited liability company (the “Selling Stockholder”).  We are registering the resale of up to 6,237,599 shares of common stock of One Horizon Group, Inc., a Delaware corporation (the “Company”), $0.0001 par value (the “Common Stock”), including (a) 404,4451,221,309 shares of Common Stock issuable upon exerciseunder an equity line in the amount of Class C Warrants; (b) 404,445$10,000,000 (the “Equity Line”) established by the Equity Purchase Agreement, dated as of July 18, 2019 (“Equity Line”), between us and the Selling Stockholder, as more fully described in this Prospectus. The resale of such shares by the Selling Stockholder pursuant to this Prospectus is referred to as the “Offering.”

We are not selling any securities under this Prospectus and will not receive any of the proceeds from the sale of shares of Common Stock issuable upon exerciseby the Selling Stockholder. We will, however, receive proceeds from our sale of Class D Warrants; (c) 62,222our shares of Common Stock issuable upon exercise of Placement Agent Warrants: (d)under the Equity Line to the Selling Stockholder.

The Equity Purchase Agreement with Selling Stockholder provides that Selling Stockholder is committed to purchase up to 450,000$10,000,000 (“Maximum Commitment Amount”) of our Common Stock over the course of its term. The term of the Equity Purchase Agreement commenced on August 5, 2019 and will end on the earlier of (i) the date on which the Selling Stockholder has purchased Common Stock from us pursuant to the Equity Purchase Agreement equal to the Maximum Commitment Amount, (ii) July 18, 2022, or (iii) written notice of termination by us.

We may draw on the Equity Line from time to time, as and when we determine appropriate in accordance with the terms and conditions of the Equity Purchase Agreement. The 1,221,309 shares of Common Stock included in this prospectus represent a portion of the Common Stock issuable upon exerciseto the Selling Stockholder under the Equity Purchase Agreement.

The Selling Stockholder is an “underwriter” within the meaning of Performance Warrants issued and to be vested and exercisable  based on  our  annual reported subscriber numbers, twenty four (24) months after December 22, 2014 as reflected inSection 2(a)(11) of the 2016 Form 10-K, and (e) 4,916,487Securities Act. The Selling Stockholder may sell the shares of Common Stock issueddescribed in this Prospectus in a number of different ways and outstanding to investorsat varying prices. See “Plan of Distribution” for more information about how the Selling Stockholder may sell the shares of Common Stock being registered pursuant to various financingsthis Prospectus.

We will pay the Company closed beforeexpenses incurred in registering the shares of Common Stock, including legal and afteraccounting fees. See “Plan of Distribution.”

Our principal executive offices are located at 4300 Biscayne Blvd., Suite 203, Miami, Florida 33137.

A reverse stock split (“Reverse Stock Split”) of the Share Exchange (defined herein below).  The selling stockholders named herein may sell common stock from time to timeoutstanding shares of the Common Stock in the principal market onrange from one-for-two (1-for-2) to one-for-fifty (1-for-50), which ratio was to be selected by the stock is tradedBoard of Directors, was approved by our Board of Directors and by our shareholders at the prevailing market price,annual meeting of the shareholders held on December 27, 2018 as described in that proxy statement on that certain Definitive Schedule 14A filed with the SEC on November 28, 2018. The board of directors anticipates setting the ratio of the reverse stock split, and the reverse stock split becoming effective following approval by FINRA of the reverse stock split, prior to the effective date of the registration statement (of which this prospectus forms a part).

Except as otherwise indicated and except in our financial statements, all references to Common Stock, share data, per share data and related information depict an assumed 1-for-25 Reverse Stock Split until final determination by the Board as if it was effective and as if it had occurred at prices related to such prevailing market price,the beginning of the earliest period presented. The 1-for-25 Reverse Stock Split, when effective, will combine each twenty-five shares of our outstanding Common Stock into one share of Common Stock, without any change in negotiated transactions or a combinationthe par value per share, and the 1-for-25 Reverse Stock Split correspondingly will adjust, among other things, the exercise rate of such methods of sale. Weour warrants and options into Common Stock. No fractional shares will not receivebe issued in connection with the 1-for-25 Reverse Stock Split, and any proceedsfractional shares resulting from the sales by1-for-25 Reverse Stock Split will be rounded up to the selling stockholders.


nearest whole share.

Our common stockCommon Stock is currently quoted on the NASDAQ CapitalOTC Market Group, Inc.’s OTCQB tier under the symbol OHGI. Prior to July 9, 2014,“OHGI.” On September 16, 2019, the last reported sale price of our Common Stock was $0.375 ($0.015 pre-reverse split).

Investing in our common stock was quotedinvolves a high degree of risk. See “Risk Factors” beginning on page 14 of this Prospectus.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this Prospectus is _________, 2019.

TABLE OF CONTENTS

Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSii
INDUSTRY AND MARKET DATAiii
TRADEMARKS AND COPYRIGHTSiii
PROSPECTUS SUMMARY1
SUMMARY HISTORICAL FINANCIAL DATA13
RISK FACTORS14
DESCRIPTION OF BUSINESS28
USE OF PROCEEDS38
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS38
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK39
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS40
DIRECTORS AND EXECUTIVE OFFICERS50
EXECUTIVE COMPENSATION54
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT62
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS64
DESCRIPTION OF CAPITAL STOCK65
SELLING STOCKHOLDER69
PLAN OF DISTRIBUTION70
SHARES ELIGIBLE FOR FUTURE SALE72
LEGAL MATTERS72
EXPERTS72
DISCLOSURE OF COMMISSION’S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES73
WHERE YOU CAN FIND ADDITIONAL INFORMATION73
INDEX TO FINANCIAL STATEMENTSF-1

i

You should rely only on the OTCBB underinformation contained in this Prospectus. We have not authorized anyone to provide you with information that is different from that contained in this Prospectus. This Prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the symbol OHGI. Prior to January 31, 2013, our common stock was quoted under the symbol ICMC.

offer or sale is not permitted. The selling stockholders,information in this Prospectus is complete and any broker-dealer executing sell orders on behalfaccurate only as of the selling stockholders, may be deemed to be “underwriters”date on the front cover regardless of the time of delivery of this Prospectus or of any sale of our securities.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements included and incorporated by reference in this prospectus constitute “forward-looking statements” within the meaning of the within the meaning of Section 27A of the Securities Act of 1933, as amended.  Commissions received by any broker-dealer may be deemed underwriting commissions underamended, or the Securities Act, and Section 21B of 1933,the Securities Exchange Act of 1934, as amended.

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.  YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT.  
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The dateamended, or the Exchange Act.

Words such as “may,” “should,” “anticipate,” “estimate,” “expect,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance, identify forward-looking statements. Forward-looking statements represent management’s present judgment regarding future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks include, but are not limited to, risks and uncertainties relating to our current cash position and our need to raise additional capital in order to be able to continue to fund our operations; our ability to retain our managerial personnel and to attract additional personnel; competition; our ability to protect intellectual property rights, and any and other factors, including the risk factors identified in the documents we have filed, or will file, with the Securities and Exchange Commission. Please also see the discussion of risks and uncertainties under the caption “Risk Factors,” beginning on page 14 of this prospectus is April 24, 2015.prospectus.

ii



TABLE OF CONTENTS
Item 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges1
Item 4. Use of Proceeds12
Item 5. Determination of Offering Price12
Item 6. Dilution12
Item 7. Selling Security Holders12
Item 8. Plan of Distribution16
Item 9. Description of Securities18
Item 10. Interests of Named Experts and Counsel21
Item 11. Information with respect to the Registrant21
Item 11A. Material Changes100
Item 12. Incorporation of Certain Information by Reference100
Item 12A. Disclosure of Commission Position on Indemnification for Securities Act Liabilities100
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuances and Distribution101
Item 14. Indemnification of Directors and Officers101
Item 15. Recent Sales of Unregistered Securities101
Item 16. Exhibits and Financial Statement Schedule101
Item 17. Undertakings103

We have not authorized any person to give you any supplemental information or to make any representations for us. You should not rely upon any information about us that is not

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this prospectus or in oneany document incorporated herein by reference might not occur. Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of our public reports filed with the Securities and Exchange Commission (“SEC”) and incorporated into this prospectus. Information contained inrespective dates of this prospectus or the date of the document incorporated by reference in our public reports may become stale. this prospectus. We expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws.

You should not assume thatrely only on the information contained in this prospectus, any prospectus supplement or the documents incorporated by reference arein this prospectus we have authorized to be delivered to you in connection with this offering. We have not authorized anyone to provide you with information that is different. The information contained or incorporated by reference in this prospectus we authorize to be delivered to you in connection with this offering is accurate only as of any date other than theirthe respective dates thereof, regardless of the time of delivery of this prospectus or of any sale of our securities offered hereby. It is important for you to read and consider all information contained in this prospectus we authorize to be delivered to you in connection with this offering, including the shares.documents incorporated by reference therein, in making your investment decision. You should also read and consider the information in the documents to which we have referred you under the captions “Where You Can Find More Information.”

INDUSTRY AND MARKET DATA

We are responsible for the disclosure in this prospectus. However, this prospectus includes industry data that we obtained from internal surveys, market research, publicly available information and industry publications. The market research, publicly available information and industry publications that we use generally state that the information contained therein has been obtained from sources believed to be reliable. The information therein represents the most recently available data from the relevant sources and publications and we believe remains reliable. We did not fund and are not otherwise affiliated with any of the sources cited in this prospectus. Forward-looking information obtained from these sources is subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this prospectus.

TRADEMARKS AND COPYRIGHTS

We own or have rights to trademarks or trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. In addition, we own or have the rights to copyrights, trade secrets and other proprietary rights that protect the content of our products and the formulations for such products. This prospectus may also contain trademarks, service marks and trade names of other companies, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to, and should not be read to, imply a relationship with or endorsement or sponsorship of us. Solely for convenience, some of the copyrights, trade names and trademarks referred to in this prospectus are listed without their ©, ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our copyrights, trade names and trademarks. All other trademarks are the property of their respective owners.

iii

PROSPECTUS SUMMARY

This summary highlights material information concerning our business and this offering. This summary does not contain all of the information that you should consider before making your investment decision. You should carefully read the entire prospectus and the information incorporated by reference into this prospectus, including the information presented under the section entitled “Risk Factors” and the financial condition,data and related notes, before making an investment decision. This summary contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results contemplated in the forward-looking statements as a result of operationsfactors such as those set forth in “Risk Factors” and prospects may have changed since those dates. The selling stockholders are offering“Cautionary Statement Regarding Forward-Looking Statements.” Unless otherwise indicated, except for our financial statements and the notes thereto, all references to sell, and seeking offers to buy, shares of our common stock, only in jurisdictions where offersshare data, per share data and sales are permitted.

related information depict as if the Reverse Stock Split was effective.

In this prospectus, unless the context indicates otherwise, “One Horizon,” the “Company,” “we,” “us,“our,and “our”“ours” or “us” refer to One Horizon Group, Inc., a Delaware corporation, and its subsidiaries.

All dealers that effect transactions

Overview 

We are a holding company which, through our operating subsidiaries, is engaged in these securities, whether or not participating in this offering, may be required to deliver a prospectus.  This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters.

ITEM 3. SUMMARY INFORMATION, RISK FACTORS AND RATIO OF EARNINGS TO FIXED CHANGES
This summary highlights selected information appearing elsewhere in this prospectus. While this summary highlights what we consider to be the most important information about us, you should carefully read this prospectusdigital media, entertainment and the registration statement of which this prospectus is a part in their entirety before investing in our common stock, and our financial statements and related notes beginning on page 31 and 37, respectively. Unless the context requires otherwise, the words the “Company,” “One Horizon” “we,” “us” or “our” are references to the combined business of One Horizon Group, Inc. and its consolidated subsidiaries.  References to “secure messaging businesses, described below.

Horizon Globex” are references to our wholly-owned subsidiary, Horizon Globex GmbH; references to “Abbey Technology” are references to our wholly-owned subsidiary, Abbey Technology GmbH; References to “China” or “PRC” are references to the People’s Republic of China.  References to “RMB” are to Renminbi, the legal currency of China, and all references to “$” and dollar are to the U.S. dollar, the legal currencyCurrent Structure of the United States. All market and industry data provided in this prospectus represents information that is generally available to the public and was not prepared for us for a fee. We did not fund nor were we otherwise affiliated with these sources and we are not attempting to incorporate the information on external web sites into this prospectus. We are only providing textual referenceCompany

As of the information of market and industry data and the web addresses provided in this prospectus are not intended to be hyperlinks and we do not assure that those external web sites will remain active and current.

Special Note Regarding Forward-Looking Statements
This report contains forward-looking statements and information that are based on the beliefs of our management as well as assumptions made by and information currently available to us.  Such statements should not be unduly relied upon.  When used in this report, forward-looking statements include, but are not limited to, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and similar expressions, as well as statements regarding new and existing products, technologies and opportunities, statements regarding market and industry segment growth and demand and acceptance of new and existing products, any projections of sales, earnings, revenue, margins or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements regarding future economic conditions or performance, uncertainties related to conducting business in China, any statements of belief or intention, and any statements or assumptions underlying any of the foregoing.  These statements reflect our current view concerning future events and are subject to risks, uncertainties and assumptions.  There are important factors that could cause actual results to vary materially from those described in this report as anticipated, estimated or expected, including, but not limited to: competition in the industry in which we operate and the impact of such competition on pricing, revenues and margins, volatility in the securities market due to the general economic downturn; Securities and Exchange Commission (the “SEC”) regulations which affect trading in the securities of “penny stocks,” and other risks and uncertainties.  Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward- looking statements, even if new information becomes available in the future.  Depending on the market for our stock and other conditional tests, a specific safe harbor under the Private Securities Litigation Reform Act of 1995 may be available.  Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) expressly state that the safe harbor for forward-looking statements does not apply to companies that issue penny stock.  Because we may from time to time be considered to be an issuer of penny stock, the safe harbor for forward-looking statements may not apply to us at certain times.
1

Our Company
We develop and license software to telecommunications operators through our wholly-owned subsidiaries Horizon Globex GmbH and Abbey Technology GmbH, each incorporated under the laws of Switzerland (“Horizon Globex” and “Abbey Technology,” respectively).  Specifically, Horizon Globex and Abbey Technology develop software application platforms that optimize mobile voice, instant messaging and advertising communications over the internet, collectively, the “Horizon Platform.” Our proprietary software techniques (“SmartPacket™”) use internet bandwidth more efficiently than other techniques that are unable to provide a low-bandwidth solution.  The Horizon Platform is a bandwidth-efficient Voice over Internet Protocol (“VoIP”) platform for smartphones and tablets, and also provides optimized data applications including multi-media messaging and mobile advertising.  Using our SmartPacket™ platform, we have been able to significantly improve the efficiency by which voice signals are transmitted by radio over the Internet resulting in a 10X reduction in mobile spectrum required to transmit a VoIP call. We license our software solutions to telecommunications network operators and service providers in the mobile, fixed line, cable TV and satellite communications markets.  We are an ISO 9001 and ISO 20000-1 certified company with assets and operations in Switzerland, Ireland, the United Kingdom, China, India, Russia, Singapore and Hong Kong.

The Horizon Platform delivers a turnkey mobile VoIP solution to telecommunications operators.  We believe that the technology underlying SmartPacket™, is the world’s most bandwidth-efficient VoIP technology.  Our VoIP platform allows voice calls over the Internet that use as little as 4kbps of data compared to around 48kbps offered by other optimized VoIP platforms, thereby enabling voice communications over limited bandwidth and congested cellular telecom data networks including 2G, 3G and 4G.  The kbps rates above include bi-directional voice communication including IP overhead.

 History and Background
(1)Share Exchange
On November 30, 2012, the Company (then known as Intelligent Communication Enterprise Corporation, referred herein below as “ICE Corp.”), and One Horizon Group PLC, a public limited company incorporated in the United Kingdom (“One Horizon UK”), consummated a share exchange (the “Share Exchange”), pursuant to which ICE Corp. acquired One Horizon UK stock from its then existing shareholders in exchange for 29,755,794 shares of ICE Corp.’s common stock. Upon completion of this transaction, the shareholders of One Horizon UK controlled approximately 96% of the outstanding stock of ICE Corp. and One Horizon UK became a subsidiary of ICE Corp. The transaction has been accounted for as a reverse acquisition, whereby ICE Corp. is the legal acquirer and One Horizon UK is the legal acquiree and accounting acquirer. On December 27, 2012, the Company changed its name to One Horizon Group, Inc.

To record the accounting effects of the reverse acquisition, the assets and liabilities of One Horizon UK (the accounting acquirer) are recognized and measured at their precombination carrying amounts. The assets and liabilities of ICE Corp. (the accounting acquiree) are recognized and measured consistent with accounting for business combinations, including recognition of fair values, effective as of November 30, 2012, the date of the Share Exchange transaction.
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(2)History of ICE Corp before the Share Exchange
ICE Corp was incorporated in Pennsylvania in 1972 as Coratomic, Inc. It changed its name to Biocontrol Technology, Inc. in 1986; BICO, Inc. in 2000; Mobiclear Inc. in 2006; and Intelligent Communication Enterprise Corporation in 2009.
Prior to the Share Exchange, ICE Corp had two operational businesses: Modizo, and Global Integrated Media Limited (GIM). The Modizo business consisted of a celebrity blogging application, while the GIM business consisted of custom publishing, advertising design, brand building, media representation, website design and development and market research programs. These operations had employees and expenses, and generated gross revenue of roughly $205,000 for the nine months ended September 30, 2012.  As the GIM and Modizo businesses did not fit within the Company’s business plan after the Share Exchange, both operational businesses were sold on December 31, 2012 for the return of 70,000 shares of the Company’s common stock held by the purchaser, which had a fair value of $420,000.
(3) One Horizon UK
One Horizon UK, was incorporated in the United Kingdom on March 8, 2004. Prior to the Share Exchange, the consolidated financial statements of One Horizon UK for its fiscal years ended June 30, 2012 and 2011 consisted of two main business segments: (1) the Horizon Globex business segment including  One Horizon UK and two of its subsidiaries, Abbey Technology and Horizon Globex;  and (2) the Satcom Global business segment. However, the Satcom Global business was sold on October 25, 2012 as it became unprofitable. One the same day, Abbey Technology sold certain satellite billing software utilized in the Satcom Global business to the same purchaser. The entire purchase price for the software was paid by means of an offset against amounts owed by Abbey Technology and its affiliates to Satcom Global FZE, an entity acquired by the purchaser in connection with the purchase of the Satcom Global business.
(4)  Current Shareholding Structure of the Company
Global Phone Credit Ltd, incorporated in Hong Kong on December 15, 2012, is a wholly subsidiary of the Company.  One Horizon Group Pte Ltd, incorporated in Singapore on November 28, 2012, is a wholly owned subsidiary of One Horizon UK.  One Horizon Hong Kong Ltd is a wholly-owned subsidiary offiling this prospectus, the Company and was formed in 2012. One Horizon Hong Kong Ltd currently holdshas the Company’s 75% equity interest in Horizon Network Technology Co., Ltd., a subsidiary incorporated in China during 2013.  Horizon Globex Ireland Ltd, an Irish company incorporated on August 7, 2013, is a wholly owned subsidiary of the Company.
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following subsidiaries:

Subsidiary name% Owned
123Wish, Inc. (acquired February 2018)51%
One Horizon Hong Kong Ltd100%
Horizon Network Technology Co. Ltd100%
Love Media House, Inc. (acquired March 2018)100%
Browning Productions & Entertainment, Inc. (acquired October 2018)51%

In addition to the subsidiaries listed above, Suzhou Aishuo Network Information Co., Ltd (“Suzhou Aishuo”) is a limited liability company, organized in China and controlled by us via various contractual arrangements. Suzhou Aishuo is treated as one of our subsidiaries for financial reporting purposepurposes in accordance with generally accepted accounting principles in the United States (“GAAP”).


(e) Reverse Stock Split, ChangeSummary Description of Domicile Change of Fiscal Year and Change in Contractual Billing ArrangementsBusinesses

On August 29, 2013, our 1-for-600 reverse stock split became effective for purposes

As of the securities markets.date of filing of this prospectus, we have the following three core businesses:

123Wish, Inc. formerly Once In A Lifetime, LLC (“123Wish”) – an experience based platform where subscribers have a chance to play and win experiences from celebrities, athletes and artists.

Love Media House, Inc. formerly known as C-Rod, Inc. (“Love Media House”) –a full-service music production, artist representation and digital media business that providesa broad range of entertainment services including branding and advertising, video and photo production, recording (including music production, arranging, mixing and mastering), songwriting (arranging writing sessions with experienced and multi-platinum writers), artist development, digital distribution, billboard chart promotion, and consulting and life coaching. The entertainment marketplace is highly competitive. The team at Love Media House, headed by Chis Rodriguez, has worked with many famous artists and achieved many Billboard numbers and giving Love Media House an important edge in promoting new talent.

Browning Productions & Entertainment, Inc. (“Browning Productions”) – a full service video production company and executive producer for all entertainment projects. Browning Productions has been selected to produce and distribute numerous television programs spanning dozens of episodes in 2019 for acclaimed television networks including A&E, FYI and History Channel.

The Company is based in the United States of America, Hong Kong, Singapore, China and the United Kingdom.

For the fiscal years ended December 31, 2018 and 2017, we generated revenues of $787,000 and $714,000, respectively; and reported net losses of $14,579,000 and $7,434,000, respectively, and negative cash flow from operating activities of $3,051,000 and $703,000, respectively. For the six months ended June 30, 2019, we generated revenues of $454,000 and reported a net loss of $1,840,000, and negative cash flow from operating activities of $1,401,000. As noted in our consolidated financial statements, we had an accumulated deficit of approximately $56,594,000 and recurring losses from operations as of June 30, 2019. We anticipate that we will continue to report losses and negative cash flow. Our auditors have raised substantial doubt regarding our ability to continue as a going concern as a result of the reverse stock split, our issuedhistorical recurring losses and outstanding sharesnegative cash flows from operations. See “Risk Factors” - We have a history of common stock decreased from approximately 18.9 billion pre-reverse stock split sharesoperating losses and our auditors have indicated that there is a substantial doubt about our ability to approximately 31.5 million post-reverse stock split shares.continue as a going concern.


Description of Products and Services

Entertainment Production Services (Love House and Browning Productions)

The primary business of Love House and Browning Productions are entertainment production services. Video projects are divided into four parts: (i) pre-production, (ii) production, (iii) post-production and (iv) distribution. During pre-production, the client describes the need and the purpose of the production. Production is the part of the process where raw materials that will be formed into the final product are created. Post-production is where the first rough cut of the final product is created. Client input is then used to create the final version of the production.

Video production services through Browning Productions include production of television shows, commercials, corporate videos, music videos, film, motion pictures (full length features), make-up and hair, casting, writing, producing, directing, stunts, post production services, graphic design (animation and special effects), audio production, and audio mastering and integration. Music production services through Love House include recording (including music production, arranging, mixing and mastering), songwriting (arranging writing sessions with experienced and multi-platinum writers), artist development, digital distribution, billboard chart promotion, branding and advertising, video and photo production, and consulting and life coaching.

Browning Productions has produced and has ownership rights to dozens of national and international television programs currently airing on a number of the most recognized television networks including A&E, FYI and History Channel. Browning Productions distributes content on a proprietary Internet/Over-The-Top (“OTT”) content platform that operates in conjunction with Verizon Digital Media Services (“VDMS”). Current productions of Browning Productions include “Wine Warriors”; the spin-off “Whisky Warriors, for which Browning Productions recently secured the Big Sky Film Grant from the State of Montana’s Film Office, “Training Grounds”; a new docuseries called “The Cryptos,” unveiling the inner workings of the cryptocurrency industry, soon to be distributed on one of the world’s most widely recognized global business news networks; and “America’s Crowdfunding,” an equity crowd-funding television series (the concept is “Shark Tank” meets “America’s Got Talent,” where the viewers vote with their wallets for equity stakes in the featured companies) in conjunction with Equity Bender, among others.

We also provide through Browning Productions marketing services and branded entertainment. Branding and name recognition is generally achieved through exposure in repetition. Through branded entertainment, a product or service stands out throughout a television series in precise placement from segment to segment for each viewer to see or hear, where the product or service is referred or mentioned by the celebrity cast. The pinnacle of all product or service inclusion into television is to allow for a full integration into the storyline and scripting of the segments centering the brand in the show content, which we believe is one of the best forms of marketing for any product or service.

The recording studio of Love House is a facility for sound recording and mixing. Ideally both the recording and monitoring spaces are specially designed by an acoustician to achieve optimum acoustic properties (acoustic isolation or diffusion or absorption of reflected sound that could otherwise interfere with the sound heard by the listener). The typical recording studio consists of a room called the “studio” or “live room”, where instrumentalists and vocalists perform; and the “control room”, where sound engineers sometimes with producer(s) as well operate either professional audio mixing consoles or computers with specialized software suites to manipulate and route the sound for analogue or digital recording. Often, there will be smaller rooms called “isolation booths” present to accommodate loud instruments such as drums or electric guitar, to keep these sounds from being audible to the microphones that are capturing the sounds from other instruments, or to provide “drier” rooms for recording vocals or quieter acoustic instruments.

Our recording studios through Love House may be used to record musicians, voice-over artists for advertisements or dialogue replacement in film, television or animation, foley, or to record their accompanying musical soundtracks.

Competitive Strengths

We believe our competitive strengths through Browning Productions include:

Excellent reputation:We believe we have earned an excellent reputation for our creative ability, innovation, execution and on-time delivery of complex and challenging media content.


Our creative storytelling capabilities:We believe our creative content turns ideas into visual, relatable stories that resonate with consumers and influences their behavior. We believe that our years of experience and access to creative talent allow us to tell compelling stories whether in seconds or minutes.

Diverse, creative talent base:We employ or represent directors and designers, technical directors and other artists who we believe deliver a unique combination of creative direction (character, world and story development) and execution (unique and high quality imagery and related production content).

Strong relationships with advertising agencies and brands:We have produced highly successful and creative advertising campaigns for our customers, many of which are global brands which we believe have allowed us to develop long-standing, strong relationships with leading advertising agencies and brands. We are often commissioned to create multiple campaigns for brands over many years, acting as the go-to production company for these clients. In addition, despite that some of our competitors are larger than us, we have been able to compete effectively with them and win projects from new and existing clients.

End-to-end solution:We have developed in-house production processes that enable us to serve as a one-stop-shop, providing a full suite of solutions to the advertising industry and brands. We are able to conduct a project from concept through design and all stages of production using in-house and contracted creative talent when necessary.

We believe our competitive strengths through Love House include:

High quality services: We provide high quality sound recording and audio production services. We have a high end recording and production studio for use for customers.  Use of the studio is billed on an hourly basis plus fees relating to the rental of the studio. Reproduction of recorded materials will also be sold to customers. The benefits that are afforded to clients in our studio include:

a convenient, reasonably priced recording studio.

a comfortable studio experience that allows artists to record their music while being in an inviting atmosphere.

high end audio equipment that will make high quality sound recordings for our clients.

professional and expert staff members that will help artists mix and produce their albums with minimal hassle.

Supplemental Services to Music Production: We also provide songwriting (arranging writing sessions with experienced and multi-platinum writers), artist development, digital distribution, billboard chart promotion, branding and advertising, video and photo production.

Competition

The team at Love Media House, headed by Chis Rodriguez, has worked with many famous artists and achieved many Billboard numbers giving Love House an important edge in promoting new talent. The team at Browning Productions, headed by William Browning, has produced and has ownership rights to dozens of national and international television programs currently airing on a number of the most recognized television networks including A&E, FYI and History Channel. Notwithstanding, the entertainment marketplace is highly competitive. There are few barriers of entry in the business and level of competition is extremely high. There are many video production companies and recording studios in United States. Many of these companies may have a greater, more established customer base than us.  

Our Industry

We create branded advertising and entertainment content primarily for television, digital and other platforms.

The global advertising market is large and growing.  Global advertising spending was a $591 billion global market in 2017, projected to grow to $724 billion in 2020, according to eMarketer. The U.S. is currently Browning Productions’ customers’ primary target market. eMarketer forecasts that the U.S. will have the largest share of global advertising spending in 2020, which it estimates will be $243 billion. As Browning Productions’ business grows, we expect to capitalize on the large and expanding demand for services such as Browning Productions.

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Television spending continues to be strong. Television has historically been the single largest advertising medium worldwide. Zenith forecasts that television advertising in the U.S. peaked in 2017 at $69 billion and will decline slightly to $66 billion in 2020. Television and online video together are becoming more important to advertisers seeking to build brands than either form alone.

Digital advertising spending is increasing. Digital technologies have transformed media consumption, viewing habits and social interaction. Content is being viewed at ever-increasing rates on wired and wireless smart devices across the globe. In 2017, global digital advertising spending surpassed global television advertising spending for the first time, according to MAGNA. MAGNA projects that, in 2018, U.S. digital advertising spending will exceed $100 billion and will account for half of total U.S. advertising sales for the first time. MAGNA projects that U.S. digital advertising sales will be $163 billion by 2023.

Creative short-form video content attracts audiences. Given the proliferation of entertainment channels, capturing the attention of audiences is becoming increasingly challenging. We believe that brands are seeking creative content in short-form video that includes animation and mixed media to evoke emotions that resonate with viewers. According to AOL Advertising, while online video consumption is increasing across all video lengths, short-form video is growing the fastest. According to AOL Advertising, 59% of consumers watch videos that are under one minute long every day.

Our Growth Strategy

We intend to build upon our proven ability to aggregate large audiences for brands by continuing to make compelling content that is viewable on both traditional and new platforms. We have begun to implement the growth strategies described below, and expect to continue to do so over the several years following this offering. Although the net proceeds of this offering will be available to assist us to implement our growth strategies, we cannot estimate the ultimate amount of capital needed to achieve our expected growth. We may need additional capital to implement these strategies, particularly in the event we pursue acquisitions of complementary businesses or technologies.

We intend to grow our business by:

Capitalizing on market trends in advertising and digital media: We believe our long history of creating award-winning content for television provides us with the expertise to continue to capture television advertising spending. We also believe our expertise in delivering entertaining, narrative-based short-form video content positions us well for the expected growth in digital advertising. We intend to build our core business by leveraging the increased use of animation and visual effects to differentiate marketing messages and capture audiences in the growing digital media market.

Implementing client service teams: We believe we can increase recurring work from our existing clients with a more client-focused approach to delivering our services. We are hiring account directors with knowledge of the needs of brands in key industries so that we can collaborate more closely with brands and the advertising agencies. By doing so, we believe we can get involved earlier and more intimately in a particular pitch.

Expanding direct-to-brand sales: Brands are increasingly working directly with content creators, bypassing advertising agencies. We believe this industry disruption is being caused by the desire of brands to obtain greater cost-effectiveness, transparency and control over customer data. We believe that we can increase our direct-to-brand sales by increasing business development efforts with brands. We recently reorganized our sales organization to include a specific focus on brand management.

Growing through acquisitions:We believe that the highly fragmented content creation media industry, which is comprised primarily of small-to-medium-sized private companies, provides us with significant opportunities to grow our business through acquisitions. We intend to pursue acquisitions that provide services within our current core product offerings, extend our geographic reach and expand our product offerings.

Cross-selling services: Our ability to produce diverse, engaging content across various media platforms allows us to offer clients a one-stop-shop for all of their content needs. We intend to cross-sell our various capabilities to drive additional revenue from existing clients and to seek to win new clients.

Further developing intellectual property:We intend to build upon our success in developing original series that we own and license to brands, networks and major and new digital media studios. When we develop an original series, we retain the copyright of that content. By licensing to other platforms portions of the content from original series that we develop, we can create additional revenue streams from development fees, brand license fees, distribution license fees and ancillary sources (such as from foreign viewership).


Expanding our geographic presence: We believe that by expanding our physical presence into select international regions, we will be better able to attract and retain internationally-based brands as clients. With a physical presence outside of the U.S., we believe we can provide better customer service and offer local talent who can work more intimately with internationally-based brands than we can from our offices in the U.S.

Expanding our talent roster: We intend to continue to seek to attract and retain world-class creative and technical talent, thereby increasing our ability to win jobs and build brand equity through additional high quality creative content. We believe that our reputation and our client base will allow us to continue to attract top creative talent.

Celebrity Experience Marketplace (123Wish)

123Wish, available in the Apple App Store, Google Play and www.123wish.com, is a subscription-based, experience marketplace that focuses on providing users with exclusive opportunities to enjoy personalized, dream experiences with some of the world’s most renowned social media influencers including Super Influencer Jake Paul and Team 10 as well as celebrities, professional athletes, fashion designers, and artists while supporting a diverse range of charities.

123Wish provides experiences to fans of high profile celebrities but with the ability to ensure charities can benefit from proceeds of subscriptions paid. 123Wish is a super fan platform bringing fans closer to their favorite influencers, celebrities, musicians and more. 123Wish offers its users unique experiences, face time sessions, weekly giveaways, limited edition merchandise, VIP events, video shouts and exclusive video content.

The influencer or celebrity for each 123Wish experience selects a philanthropic cause to benefit or is randomly matched to a non-profit organization. Once the charitable contribution goal for an experience has been met and the designated timeframe for entry has expired, 123Wish randomly selects the winner who receives exclusive access to interact with the influencer or celebrity. Yet, everyone who enters wins a specialized gift for participation, which may include limited edition merchandise, gift cards or personalized video or voice messages from experience contributors.

Each 123Wish subscriber will soon have a digital wallet and will receive four digital coins each month that his or her subscription remains active, which the subscriber may contribute to charity. 123Wish are committed to making at least $1,000,000 in digital coin value available for charitable contribution premised on the number of subscribers. Development for inclusion of the coin technology is underway and we will be providing blockchain integration.

Competitive Strengths

We believe our competitive strengths through 123Wish include:

Excellent reputation:We believe we have earned an excellent reputation for providing users with exclusive opportunities to enjoy personalized, dream experiences with celebrities.

Contacts with Celebrities: We have successfully established relationships with a number of social media influences, music artists and other celebrities to ensure the success of our experience marketplace.

Regulatory Status

Certain jurisdictions, including California where 123Wish maintains it principal offices, have regulations that require 123Wish to register as a commercial fundraiser and notify governmental authorities of events that it is sponsoring. The failure to comply with applicable regulations could subject 123Wish to fines and other penalties, including being enjoined from conducting solicitation activities for charitable purposes within the jurisdiction and other civil remedies provided by law.


Summary Risk Factors

Our business is subject to numerous risks and uncertainties, including those in the section entitled “Risk Factors” and elsewhere in this prospectus. These risks include, but are not limited to, the following:

our history of losses;
our inability to attract sufficient demand for our services and products;
our limited visibility into the timing and certainty of future projects;

our ability to successfully execute our growth and acquisition strategy and manage effectively our growth;

fluctuations in production schedules and project volumes may cause our revenues and cash flows to vary from quarter to quarter;

changes in the competitive environment in our industry and the markets we serve, and our ability to compete effectively;

our dependence on a strong brand image;

our cash needs and the adequacy of our cash flows and earnings;

our dependence upon our executive officers, founders and key employees;

our ability to attract and retain qualified personnel;

the effects of restrictions imposed by our indebtedness on our current and future operations;

our reliance on our technology systems, the impact of technological changes and cybersecurity risks;

our ability to protect our trademarks or other intellectual property rights;

potential litigation from competitors or customers; and

the business risks of both domestic U.S. and international operations.

In addition, the report of our independent registered public accounting firm for the two years ended December 31, 2018 contains a statement with respect to substantial doubt as to our ability to continue as a going concern as a result of recurring losses from operations and negative cash flows.

CORPORATE HISTORY

We were initially incorporated in Pennsylvania in 1972 as Coratomic, Inc. We changed our name five times thereafter, with the last name change ofin 2012 to One Horizon Group, Inc.In addition, we changed our domicile from Pennsylvania to Delaware became effective on August 26,in 2013.  The change of domicile had also been approved by the Board of Directors and by shareholders at our Annual Meeting held on August 6, 2013.


Additional information regarding the reverse stock split and change of domicile can be found in a definitive information statement filed with the Securities and Exchange Commission on June 26, 2013 and which was mailed to all shareholders of record as of July 5, 2013.

On February 13, 2013, we changed the Company's fiscal year end from June 30 to December 31. As a result of this change, the Company filed transition report on Form 10-KT on May 13, 2013 to include the financial information for the six-month transition period from July 1, 2012 to December 31, 2012 (the "Transition Period").
During the last quarter of 2014, we negotiated with some tier-2 customers to change the contractual billing arrangements from fixed price for licenses and maintenance services supplied, to a revenue share arrangement where we receive a percentage of all future revenue generated by the customers from services to their subscribers using the Horizon platform. In the medium to long term, this

Our authorized capital is expected to generate recurring income over a long term especially with customers operating in niche areas with limited subscriber numbers with high Average Revenue Per User.

Recent Developments
(a)  Business Operation

In February 2015, we announced  the rollout of our platform in China, brand named Aishuo.  This rollout entails multiple strategies including advertisements, search engine optimization, press releases, event marketing, business-traveler direct marketing, as well as other on and off-line promotions as well as leveraging the brand new One Horizon Sponsored-Call platform.  Brand building and technology awareness activities will start in App Stores, Internet forums and social media outlets immediately and will run indefinitely. The Aishuo product has just been delivered to major stores in China app marketplace including Baidu’s 91.com and Baidu.com, the Tencent App store MyApp.com, 360 Qihoo store 360.cn and the every growing Xiaomi store mi.com. The Aishuo smartphone app is expected to drive multiple revenue streams from the supply of its value-added services including the rental of Chinese telephone phone numbers linked to the app, low cost local and international calling plans and sponsorship from advertisers.  Subscribers can top up their app credit from major online payment services in China including AliPay (from Alibaba), Union Pay, PayPal and Tenent’s WeChat payment service. The service, branded SmartCall, will be available in Google Play later in the year. This service rollout represents yet another tier 1 mobile carrier deployment in Asia. According to a study from Australian market research company Roy Morgan Research, the amount of smartphone ownerships doubled from 12% of the population to 24% in Indonesia during March 2012 to March 2013, which are approximately 60 million.
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In December 2014, Tier 1 Telecom operators, including Smartfren Telcom, Tbk in Indonesia , made  One Horizon software available to customers as a standard feature upon activation of devices. This gives users the ability to acquire a free virtual SIM, a unique identifier that allows for calls from ‘application to application’ or ‘application to landline/mobile phones’, by simply registering the App.  Having the App on the device eliminates the step of the user needing to seek out and download the App.  It is anticipated that Smartfren Telcom will target to pre-install the smartcall app in more than 4 million units of their Andromax phones in 2015.

During the three months ended September 30, 2014, our One Horizon mobile VoIP app was added by SingTel to their existing One Horizon software platform for mobile satellite services.  SingTel is Asia's leading communications group with over 500 million mobile customers in 25 countries, including Bangladesh, India, Indonesia, the Philippines and Thailand.

SingTel AIO Connect is a comprehensive unified communications service for both business users and crew onboard ships. It enables instant messaging, email, Internet surfing, Voice-over-IP (VoIP) and voicemail in a single, integrated application. This service has already succeeded in bringing optimized VoIP, Messaging over IP and compressed Internet surfing to SingTel's mobile satellite subscribers connected using mobile Internet over satellite; the toughest of all mobile Internet environments. This mobile VoIP app can be downloaded from the Apple App Store and Google's Play Store.

Our optimized software platform is being used by a pre-paid VoIP Smartphone application launched by Smart Communications, Inc, (“Smart”). Smart is the Philippines' leading wireless services provider with 57.3 million subscribers on its GSM network as of end-June 2013. Smart rolled out its smartphone mobile app, branded Link Plus, as a pre-paid Over The Top ("OTT") Android App that is available to download from the Google Play Store. Once Link Plus is installed on the smartphone, the user's app will receive a new Virtual SIM Filipino telephone number from Smart.

We believe that winning new business with SingTel and Smart demonstrates the acceptance of our carrier-grade technology by tier 1 operators, especially in Asia.  

During 2014 fiscal year, we commenced the first phase of its infrastructure rollout in six cities in China: Tianjin, Beijing, Chongqing, Changchun, Nanjing and Shijiazhuang.  These initial locations will connect to the national telephone network to commence the commissioning of the VoIP service in China, brand name Aishuo.  To date, we have successfully installed eight servers in  support of Chinese smart phone app with interconnecgs to the ALiPay and UnionPay credit card and micro-payments services in China.   The smart phone app will be able to provide various optimized internet value added services to its mobile subscribers including but not limited to voice and social media services including text, picture, video and geo-location messaging. These value added services are made possible through the creation of a "Virtual SIM" and One Horizon's proprietary communication software, an industry first. Combined with One Horizon's location aware mobile advertising services, the Aishuo branded smart phone app is expected to drive multiple revenue streams from the supply of its value-added services. The service will seek to acquire 15 million new app subscribers for the smartphone app over a two-year period and expects to achieve industry average revenues per user (ARPU) for similar social media apps.
We continued building up the Chinese core network rollout.  The Global Exchange (network control center) was placed in a high availability Data Center in Shanghai and eight (8) Horizon line servers were connected to the telecommunications network.  This level of rollout allowed us to issue a preliminary Android Application (App) to a group of Chinese students in Nanjing for them to evaluate the user Interface and the core features of our optimized smartphone App.  Based on this feedback the research and development teams in Ireland and China made some adjustments to the Application look and feel service to accommodate this target user community.
On November 4, 2013, we announced that we have further expanded our software suite of products by embedding a GPS location and tracking service into our smart phone App; the service is designed to work in conjunction with its advanced mobile App advertising service.

On September 17, 2013, we opened a new software research and development office in the Nexus Innovation Centre on the campus of the University of Limerick in Ireland employing 3 software engineers. This on campus R&D office is focused on the research of the core software architecture as opposed to the mobile application developments and a lot of engineering and academics surrounding is required. We believe we will benefit from Irish Software Foundation’s creative thinking and further advance ourselves in research of our unique mobile VoIP solutions.

On July 29, 2013, we announced the release of our voice over IP (VoIP) technology as a software-library for smartphone App developers.  The Horizon software library allows smartphone app developers to integrate the Horizon VoIP optimizations with their current and their future apps.  Apps such as on-line gaming can now carry the gamer's voice in a high-quality and reliable way especially while on wireless networks such as 3G, bringing a new level of mobility to games that benefit from voice communications. Another use for the library is in the plethora of existing VoIP apps that currently employ inefficient SIP protocols. App-based gaming developers can now upgrade their users' voice-communication experience by deploying Horizon and integrating the Horizon software library in their apps. 

On May 20, 2013, we announced the launch of new social networking features in its Horizon Call app on Android, enabling service providers to further differentiate themselves from over-the-top ("OTT") players by offering innovative, integrated mobile Voice, Messaging and Advertising services over Internet Protocol ("IP").
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(b)  Offering and Market Related

On December 22, 2014, we closed a private placement of $3,500,000 (the “Closing”) in reliance upon the exemption from securities registration afforded by Regulation S (“Regulation S”) as promulgated under the Securities Act of 1933, as amended (the “December 2014 Offering”). In connection with the Offering, we issued to an investor (the “Investor”) a convertible debenture that is convertible into 1,555,556200,000,000 shares of common stock,Common Stock, par value $0.0001 per share (the “Common Stock”), Class C warrant to purchase 388,889and 50,0000,000 shares of Common Stock and Class D warrant to purchase 388,889 shares of Common Stock. Furthermore, the Investor received  additional consideration in the form of a performance warrant to purchase up to 450,000 shares of Common Stock based on our annual reported subscriber numbers, twenty four (24) months after the Closing, as is reflected in our Annual Report on Form 10-K for the year ending December 31, 2016 (the “2016 Form 10-K”), if we fail to achieve 15.0 million subscribers at that time. In addition, the placement agent in the Offering received placement agent warrant, Class C warrant and Class D warrant to purchase 62,222, 15,556 and 15,556 shares of Common Stock, respectively; and a cash fee of $280,000.

In July 2014, we closed a private placement of $1,000,000  for a total of 10 units at a purchase price of $100,000 per unit, each consisting of, (i) 17,094 shares of our  Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share ( the “Series A Preferred Stock”), initially convertible into 17,094 shares of Common Stock, and (ii) 10,000 Class B Warrants ( the “Class B Warrant(s)”), each exercisable to purchase 1 share of Common Stock at an exercise price of $4.00 per share (the “July 2014 Offering”). The July 2014 Offering  was completed in reliance upon the exemption from securities registration afforded by Regulation S.

Our common stock commenced trading on the NASDAQ Capital Market on July 9, 2014 under the same ticker symbol "OHGI".  

In February 2013, we closed a Reg. S offering whereby we issued an aggregate of 806,451 shares of our common stock and a three-year warrant to purchase 403,225 shares of our Common stock at an exercise price of $7.44 per share for a total consideration of $6,000,000 ( the “February 2013 Offering”). In August 2013, we amended the offering with the investor in the offering whereby we reduced the exercise price of the warrant from $7.44 per share to $5.94 per share. In addition, the expiration date of Class A warrants was extended an additional 12 months.

(c)     Corporate Governance

On November 10, 2014, as one of our continuous measures to improve our internal controls and procedure over the financial reporting and disclosure, our Board of Directors adopted a tracking form which was designed to track related party transactions. Upon adoption, management will review and pre-approve related party transaction and submit the tracking form to the Board for review and ratification on quarterly basis.

On July 28, 2014, we appointed Brian Collins the Chief Executive Officer of the Company. Mr. Collins is the co-inventor of the Horizon Platform, and has over 20 years’ experience in the technology sector with a background in software engineering. Mr. Collins brings experience in founding and operating technology companies along with his extensive knowledge of software engineering.

Principal Executive Office

Our principal executive offices are located at T1-017 Tierney Building, University of Limerick, Limerick, Ireland., Tel 353-61-518477.
Risk Factors
The securities offered by this prospectus are speculative and involve a high degree of risks associated with our business.  
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The Offering
Common Stock being offered by Selling StockholdersUp to 6,237,599 shares(1)
Common Stock outstanding32,933,209 shares as of April 17, 2015
Common Stock outstanding after the Offering32,933,209
Use of Proceeds
We will not receive any proceeds from the sale of shares by the Selling Stockholders, although we may receive proceeds of up to $2,768,892 if all of Class C Warrants, Class D Warrants and Placement Agent Warrants are exercised for cash. In addition, we may receive additional proceeds if any Performance Warrants are vested and exercised for cash. We will not receive any additional proceeds to the extent that the Warrants are exercised by cashless exercise.
Trading SymbolOHGI
Risk FactorsThe securities offered by this prospectus are speculative and involve a high degree of risk and investors purchasing securities should not purchase the securities unless they can afford the loss of their entire investment.
(1)
This prospectus relates to the resale by the Selling Stockholders of up to 6,237,599 shares of our Common Stock, including (a) 404,445 shares of Common Stock underlying Class C Warrants; (b) 404,445 shares of Common Stock underlying Class D Warrants; (c) 62,222 shares of Common Stock underlying Placement Agent Warrants, and (d) up to 450,000 shares of Common Stock issuable upon exercise of Performance Warrants (defined herein below) issued and exercisable based on  our  annual reported subscriber numbers, twenty four (24) months after December 22, 2014 as reflected in the 2016 Form 10-K, and (e) 4,916,487 shares of Common Stock issued by the Company to investors in various financings before and after the Share Exchange. The selling stockholders named herein may sell common stock from time to time in the principal market on which the stock is traded at the prevailing market price, at prices related to such prevailing market price, in negotiated transactions or a combination of such methods of sale. We will not receive any proceeds from the sales by the selling stockholders.
Summary Financial Information
The following summary financial data for the fiscal years ended December 31, 2014 and 2013 were derived from the consolidated financial statements. This information is only a summary and does not provide all of the information contained in our financial statements and related notes. You should read the “Management’s Discussion and Analysis or Plan of Operation” beginning on page 34 of this prospectus and our financial statements and related notes included elsewhere in this prospectus.
7

Statement of Operations Data:  ((in thousands, except per share data)
  For the Years Ended December 31, 
  2014  2013 
Revenue $5,122  $9,106 
Cost of revenue  2,252   2,453 
Gross margin  2,870   6,653 
         
Expenses:        
    General and administrative  4,933   6,706 
     Depreciation  146   166 
         
Loss  from operations  (2,209)  (219) 
         
Other income and expense:        
     Interest expense  (16)  (25)
     Interest expense-related party, net  36    (297) 
     Foreign exchange  8   (158) 
     Interest income  2   1 
   30   (479)
         
Income (loss) from continuing operations before income taxes  (2,179)  (698) 
         
Income taxes (recovery)  (210)   - 
Net loss for the year  (1,969)  (698) 
         
Loss attributable to non-controlling interest  (105)      (104)  
      Net Loss for the year attributable to One Horizon Group, Inc.  (1,864)   (594)
         
Less: Preferred dividends  (44)   - 
 
Net Loss attributable to One Horizon Group, Inc. common stockholders
 $(1,908) $(594) 
         
Earnings per share        
Basic net loss per share $(0.06) $(0.02) 
Diluted net loss per share $(0.06) $(0.02) 
         
Weighted average number of shares outstanding        
Basic and diluted  32,981   31,661 
8

Balance Sheet Data:   
   December 31, 
   2014   2013 
Assets        
Current assets:        
Cash $3,172  $2,070 
Accounts receivable, net  9,072   7,264 
Other assets  576   139 
Total current assets  12,820   9,473 
         
Property and equipment, net  212   315 
Intangible assets, net  10,960   12,760 
Investment  19   23 
 Debt issue costs  395     
Total assets $24,406  $22,571 
         
Liabilities and Stockholders' Equity        
         
Total current liabilities  1,697   5,366 
         
Long-term liabilities        
Long-term debt  108   184 
Amount due to related parties  2,598   - 
Convertible debenture  2,598   - 
Deferred income taxes  235   445 
Mandatorily redeemable preferred shares  90   90 
Total liabilities  7,326   6,085 
         
Stockholders' Equity        
Total liabilities and stockholders' equity $24,406  $22,571 
9


RISK FACTORS
 Not applicable

ITEM 4.  USE OF PROCEEDS
We will not receive any proceeds from the sale of shares by the Selling Stockholders, although we may receive proceeds of up to $2,768,892 if all of Class C Warrants, Class D Warrants and Placement Agent Warrants are exercised for cash. In addition, we may receive additional proceeds if any Performance Warrants are vested and exercised for cash. We will not receive any additional proceeds to the extent that the Warrants are exercised by cashless exercise. We expect to use the proceeds received from the exercise of the Warrants, if any, for general working capital purposes. We cannot assure you however that any of the Warrants will ever be exercised.
ITEM 5.  DETERMINATION OF OFFERING PRICE

Not applicable.
ITEM 6.  DILUTION

Not applicable.

ITEM 7.  SELLING STOCKHOLDERS
We are registering for resale shares of our Common Stock underlying Warrants issued pursuant to a financing we closed on December 22, 2014 and shares of our Common Stock issued in various financings we closed prior to and after the Share Exchange. We are registering the shares to permit the Selling Stockholders and their pledgees, donees, transferees and other successors-in-interest that receive their shares from a Selling Stockholder as a gift, partnership distribution or other non-sale related transfer after the date of this prospectus to resell the shares when and as they deem appropriate in the manner described in the “Plan of Distribution.”  As of the date of April 17, 2015, there were 32,933,209 shares of Common Stock issued and outstanding. 
The following table sets forth:
the name of the Selling Stockholders,
the number of shares of our Common Stock that the Selling Stockholders beneficially owned prior to the offering for resale of the shares under this prospectus,
the maximum number of shares of our Common Stock that may be offered for resale for the account of the Selling Stockholders under this prospectus, and
the number and percentage of shares of our Common Stock beneficially owned by the Selling Stockholders after the offering of the shares (assuming all of the offered shares are sold by the Selling Stockholders).
Except Tripoint Global Equities, LLC, Robert Vogler, Wan Ke and Qingsong Li, we have not had a material relationship with any of the Selling Stockholders within the last three years.
Each Selling Stockholder may offer for sale all or part of the Shares from time to time. The table below assumes that the Selling Stockholders will sell all of the Shares offered for sale. A Selling Stockholder is under no obligation, however, to sell any Shares pursuant to this prospectus.
10

Name of Selling Stockholder Shares of Common Stock Beneficially Owned Prior to Offering (1)  Maximum Number of Shares of Common Stock to be Sold   Number of Shares of Common Stock Owned After Offering (2)  Percentage Ownership After Offering (3) 
             
Da Chao Asset Management (Shanghai) Co., Ltd(4)  1,227,778   1,227,778   0   * 
TriPoint Global Equities, LLC (5)  209,210   209,210   0   * 
Primary Capital LLC (6)  46,667   46,667   0   * 
Almaro Holding AG (7)  291,900   291,900   0   * 
Jean Arnaud Estienne Albert De Mestral (8)  97,300   97,300   0   * 
Niall O’Riordan (9)  194,600   194,600   0   * 
Robert Vogler (10)  194,600   194,600   0   * 
Patrik Schidknecht (11)  1,003,576   1,003,576   0   * 
Roland Leutwiler (12)  150,000   150,000   0   * 
Martin Eberhard (13)  285,000   285,000   0   * 
Mark Hawtin (14)  100,000   100,000   0   * 
Iroko Holding AG (15)  97,300   97,300   0   * 
PMG Partners SICAV (for PP Global Opportunity Fund)(16)  970,903   970,903   0   * 
Hans Wick (17)  87,570   87,570   0   * 
Adelheid Schidknecht (18)  96,000   96,000   0   * 
PMG Focus Funds  SICAV (for PFF-Piz Palue) (19)  128,333   128,333   0   * 
Hinvest Holding GMBH (20)  145,044   145,044   0   * 
Annette Witschi (21)  33,333   33,333   0   * 
Stefan Laeng (22)  29,190   29,190   0   * 
Oscar Weber (23)  100,000   100,000   0   * 
Michael Fullemann (24)  16,667   16,667   0   * 
Marc Schumacher (25)  85,000   85,000   0   * 
Nicole Schumacher-Hublard (26)  46,667   46,667   0   * 
Aline Lara Schildknecht (27)  3,000   3,000   0   * 
Leonie S Schildknecht (28)  3,000   3,000   0   * 
Maya Ringler (29)  1,666   1,666   0   * 
Qingsong Li (30)  221,844   221,844   0   * 
Wan Ke (31)  20,578   20,578   0   * 
SK Holding AG (32)  350,873   350,873   0   * 
TOTAL  6,237,599   6,237,599   0   * 
* Represents beneficial ownership of less than one percent of our outstanding shares.
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1)  
The Selling Stockholders became our shareholders pursuant to several financings we closed before and after the Share Exchange and/or private transfers between and among certain shareholders. Those financings include (a) an offering of One Horizon UK to 9 investors in April-May 2012 prior to the Share Exchange which results in issuing 1,265,873 shares of Common Stock of the Company, given the effect of the Share Exchange and 1:600 reverse split,  for a total consideration of approximately $3.25 million, ( the “April-May 2012 Offering by One Horizon UK”),  (b) an offering of One Horizon UK to 2 investors in November-December 2012 prior to the Share Exchange which resulted in issuing 389,200 shares of Common Stock of the Company, given the effect of the Share Exchange and the 1:600 reverse split, for a total consideration of $2 million (the “November-December 2012 Offering by One Horizon UK”), (c) February 2013 Offering (as defined herein above) whereby the Company issued an aggregate amount of 806,451 shares of Common Stock and  Class A warrant to purchase 403,225 shares of Common Stock for a total consideration of $6 million, (d) December 2014 Offering (as defined herein above) whereby the Company issued an investor a convertible debenture that is convertible into 1,555,556 shares of Common Stock, Class C and D warrant to purchase 388,889 and 388,889 shares of Common Stock, a performance warrant to purchase up to 450,000 shares of Common Stock for a consideration of $3.5 million. The placement agent in the offering received placement agent warrant, Class C warrant and Class D warrant to purchase 62,222, 15,556 and 15,556 shares of Common Stock, respectively; and a cash fee of $280,000. Among all the Selling Stockholders, Tripoint Global Equities, LLC is retained as the Company’s financial consultant and it was the placement agent in December 2014 Offering and July 2014 Offering; Robert Vogler is an independent director of the Board of the Directors of the Company ,Qingsong Li was appointed the General Manager of Horizon Network Technology Co., Ltd at the end of 2012 and is considered as a significant employee of the Company. Wan Ke is an employee of Horizon Network Technology Co., Ltd.
2) Since we do not have the ability to control how many, if any, of their shares each of the selling shareholders listed above will sell, we have assumed that the selling shareholders will sell all of the shares offered herein for purposes of determining how many shares they will own after the Offering and their percentage of ownership following the offering.
3)All Percentages have been rounded up to the nearest one hundredth of one percent.
4)
Consists of (1) 388,889 shares of Common Stock underlying Class C Warrant, (2) 388,889 shares of Common Stock underlying Class D Warrant, , and (3) up to 450,000 shares of Common Stock underlying Performance Warrant issued and exercisable pursuant to December 2014 Private Placement . Da Chao Asset Management (Shanghai) Co., Ltd (“Da Chao”) became our shareholder pursuant to the Private Placement we closed on December 22, 2014 (the “December 2014 Private Placement”). Accordingly, prior to the Offering, Da Chao may own shares of Common Stock underlying the convertible debenture and/or Warrants received in December 2014 Private Placement. However, based upon the terms of both the convertible debenture and Warrants, holders may not convert the convertible debenture and/or exercise the Warrants, if on any date, Da Chao would be deemed to the beneficial owner of more than 19.99%, depending upon their agreement, of the then outstanding shares of our Common Stock. See “Prospectus Summary – Recent Developments - Financing” and “Description of Securities.” Notwithstanding the above, the numbers reported in this table are not subject to a 19.99% limitation on beneficial ownership of our outstanding Common Stock because this 19.99% limitation on beneficial ownership does not prevent Da Chao from selling some of its holdings and then receiving additional shares. In this way, Da Chao could sell more than this restriction without holding more than 19.99% beneficial ownership of our outstanding Common Stock. The person having voting, dispositive or investment powers over Da Chao is Mr. Wu, Zhan Ming. The address for Da Chao is 1502 15F, Aurora Plaza, 99 Fucheng Road, Shanghai China, 200120
5)
Consists of  (1) 7,778 shares of Common Stock underlying Class C Warrant, (2) 7,778 shares of Common Stock underlying Class D Warrant, (3) 31,111 shares of Common Stock underlying Placement Agent Warrant,   which were acquired as placement agent compensation shares in connection with December 2014 Private Placement; (4) 62,452 shares of Common Stock issued pursuant to an advisory agreement dated April 15, 2013 between Tripoint Global Equities, LLC (“Tripoint”)  and the Company; (5) 75,000 shares of Common Stock issued pursuant to an advisory agreement dated July 1, 2014 between Tripoint Global Equities LLC and the Company, and (6) 25,000 shares of Common Stock issued as compensation shares to Tripoint Global Equities LLC as exclusive placement agent in $1M offering the Company closed on July 21, 2014. Tripoint’s holding of shares of Common Stock on a sum of (1), (2) and (3) is  subject to a 19.99% limitation on beneficial ownership of our Common Stock.  as more fully described in note 4 above. Notwithstanding the above, the numbers reported in this table are not subject to a 19.99% limitation on beneficial ownership of our outstanding Common Stock because this 19.99% limitation on beneficial ownership does not prevent Tripoint from selling some of its holdings and then receiving additional shares.  Mark Elenowitz and Michael Boswell share voting and dispositive power over the securities held by TriPoint. The address for TriPoint is 130 West 42nd Street, 10th FL.NY, NY 10036. Tripoint is the placement agent in December 2014 Private Placement and July 2014 Private Placement.
6)
Consists of  (1) 7,778 shares of Common Stock underlying Class C Warrant, (2) 7,778 shares of Common Stock underlying Class D Warrant, and (3) 31,111 shares of Common Stock underlying Placement Agent . Tripoint assigned portion of its warrants received in connection with December 2014 Private Placement to Primary Capital LLC (“Primary”)  as Primary acted as its sub placement agent. Primary’s holding of shares of Common Stock on a sum of (1), (2) and (3) is subject to a 19.99% limitation on beneficial ownership of our Common Stock as more fully described in note 4 above, however, the numbers in this table are not subject to such restriction. The Person having voting and dispositive power over Primary Capital LLC is John Leo. The address for Primary Capital LLC is 90 Broad Street, Suite 905, New York, NY 10004. Tripoint hired Primary Capital LLC as its sub placement agent and assigned portion of Warrants as its compensation.
 7)Represents 291,100 shares of Common Stock held by Almaro Holding AG which were acquired pursuant to November-December 2012 Offering of One Horizon UK. The Person having voting and  dispositive power over Almaro Holding AG is Jurg Schaeppi. The address for Almaro Holding AG is Paradiesweg 23, 8645 Jona, Switzerland
8)Represents 97,300 shares of Common Stock held by Jean Arnaud Estienne Albert De Mestral which were acquired in connection with November-December 2012 Offering by One Horizon UK. The address for Jean Arnaud Estienne Albert De Mestral is Route Suisse 9, 1295 Mies, Switzerland.
9)Represents 194,552 shares of Common Stock held by Mr. Niall O’Riordan acquired in connection with April-May 2012 Offering by One Horizon UK. The address is Breitenacher 11, 8126 Zumikon, Switzerland
10)Represents 194,600 shares of Common Stock held by Mr. Robert Vogler which were acquired in April-May 2012 Offering by One Horizon UK. Mr. Vogler has served on the Company’s Board of Directors since January 8, 2014. The address for Mr. Vogler is C/O Kreivo AG, PO Box 4459, 6304 Zug, Switzerland.
11)Represents 1,003,576 shares of Common Stock held by Mr. Patrik Schidknecht which were acquired from two shareholders of the Company (940,000 shares  and 63,576 shares, respectively) in January 2015 via private transfers . The address for Mr. Schidlknecht is Laettenstrasse 17, Uitikon 8142, Switzerland.
12)Represents 150,000 shares of Common Stock held by Mr. Roland Leutwiler which were acquired in connection with February 2013 Offering of the Company. The address for Mr. Roland Leutwiler is Chalet Muchetta, CH-7050 Arosa.
12

13)Represents 285,000 shares of Common Stock held by Martin Eberhard among which 150,000 shares were acquired from a shareholder of the Company in January 2015 via a private transfer and 135,000 shares were acquired in connection with February 2013 Offering. The address is Giessen 18, 8820 Waedenswil, Switzerland.
14)Represents 100,000 shares of Common Stock held by Mr. Mark Hawtin which were acquired in connection with February 2013 Offering of the Company. The address is 7 First St, London SW# 2LB, United Kingdom.
15)Represents 97,300 shares of Common Stock held by Iroko Holding Ag which were acquired in connection with April-May 2012 Offering by One Horizon UK. The Person having voting and dispositive power over Iroko Holding Ag is John Kelly. The address is C/O Walser & Partner AG Zug, Bahnhofstrasse 11, 6301 Zug , Switzerland.
16)Represents 970,903 shares of Common Stock held by PMG Partners SICAV (for PP Global Opportunity Fund)  among which 160,000 shares were acquired from a shareholder of the Company in April 2015 via a private transfer, 600,000 shares were acquired from a shareholder of the Company in January 2015 via a private transfer and 210,913 shares were originally acquired by another fund in connection with April-May 2012 Offering by One Horizon UK and later transferred to PMG Partners SICAV (for PP Global Opportunity Fund) when it was launched in November 2013. The Person having voting and dispositive power over PMG Partners SICAV PLC is Dr. Raowl Dobal. The address is 168 St. Christopher St, Valletta VLT 1467, Malta.
17)Represents 87,570 shares of Common Stock held by Hans Wick acquired in April-May 2012 Offering by One Horizon UK. The address is c/o Arbora AG, Gartenstrasse 38, 8002 Zuerich, Switzerland
18)Represents 53,000 shares of Common Stock held by Adelheid Schidknecht which were acquired in connection with February 2013 Offering (as defined herein in the Report) and 43,000 shares of Common Stock acquired from an existing investor of the Company via a private transfer in January 2015. The address is Gugelstrasse 2, 8115 Huettikon, Switzerland.
19)
Represents 128,333 shares of Common Stock held by PMG Focus Funds  SICAV (for PFF-Piz Palue) among which, 70,000 shares were acquired from a shareholder of the Company  in January 2015 via a private transfer and 58,333 shares were acquired in connection with February 2013 Offering. The Person having voting and dispositive power over PMG Focus Funds  is Dr. Raoul Dobal. The address is 168 St Christopher St, Valletta VLT 1467, Malta.
20)Represents 145,044 shares of Common Stock held by Hinvest Holding GmbH among which 75,894 shares were acquired in April-May 2012 Offering by One Horizon UK, 39,150 shares were acquired in connection with February 2013 Offering and 30,000 shares were acquired from a shareholder of the Company in January 2015 via a private transfer. The Person having voting and dispositive power over Hinvest Holding GmbH is  Oliver Von Hoff.  The address is Blegistrasse 19, 6345 Baar, Switzerland.
21)Represents 33,333 shares of Common Stock held by Annette Witschi which were acquired in connection with February 2013 Offering of the Company. The address is Himmelistrasse 6, 8700 Kuesnacht, Switzerland.
22)Represents 29,190 shares of Common Stock held by Stefan Laeng acquired pursuant to April-May 2012 Offering by One Horizon UK. The address is Haldenacherstrasse 3, 8142 Uitikon, Switzerland.
23)Represents 100,000 shares of Common Stock held by Oscar Weber among which 20,000 shares were acquired in connection with February 2013 Offering and 80,000 shares were acquired from a shareholder of the Company in January 2015 via a private transfer. The address is Saeumerstr. 31, 8832 Wollerau, Switzerland.
24)Represents 16,667 shares of Common Stock held by Michael Fuellemann which were acquired in connection with February 2013 Offering. The address is Pflugsteinstrasse 50, 8703 Erlenbach, Switzerland.
25)Represents 85,000 shares of Common Stock held by Marc Schumacher among which 25,000 shares were acquired in connection with February 2013 Offering and  60,000 shares were acquired from a shareholder of the Company in January 2015 via  a private transfer. The address is Chrattengass 5, 8605 Gutenswil, Switzerland.
26)Represents 46,667 shares of Common Stock held by Nicole Schumacher. Mrs. Nicole Schumacher acquired 30,000 shares of Common Stock from a shareholder of the Company in January 2015 via a private transfer and inherited 16,667 shares from her deceased husband Willy Schumacher which were acquired in connection with February 2013 Offering. The address is Raubbuehlstrasse 13, 8600 Duebendorf, Switzerland.
27)Represents 3,000 shares of Common Stock held by Aline Lara Schildknecht which were acquired in connection with February 2013 Offering. The address is Laettenstrasse 17, 8142 Uitikon, Switzerland.
28)Represents 3,000 shares of Common Stock held by Leonie S Schildknecht which were acquired in connection with February 2013 Offering. The address is Lattenstrasse 17, 8142 Uitikon, Switzerland.
29)
Represents 1,666 shares of Common Stock held by Maya Ringler which were acquired in connection with February 2013 Offering of the Company. The address is Im Gruet 4, 8805 Richterswil, Switzerland.
30)
Represents 221,844 shares of Common Stock held by Qingsong Li which were acquired from a shareholder of the Company in November 2012 via a private transfer. The address is Room 507 Unit 4 BLDG 20, Cuiping Wan Huayuancheng  No. 129 Jiangjun Ave. , Nanjing City, China, 211100
31)Represents 20,578 shares of Common Stock held by Wan Ke which were acquired from a shareholder of the Company in November 2012 via a private transfer. The address is Room 507 Unit 4 BLDG 20, Cuiping Wan Huayuancheng  No. 129 Jiangjun Ave. , Nanjing City, China, 211100
32)Represents 350,873 shares of Common Stock held by SK Holding AG which were acquired from  an existing shareholder of the Company in January 2015 via a private transfer. The Person having voting and dispositive power over SK Holding AG is Patrick Schildknecht. The address is Im Ruostel 24, 8844 Euthal, Switerland.
13

ITEM 8.  PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their Shares on any stock exchange, market or trading facility on which the Shares are traded or quoted or in private transactions. These sales may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling Shares:
ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors;
block trades in which the broker-dealer will attempt to sell the Shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
an exchange distribution in accordance with the rules of the applicable exchange;
privately negotiated transactions;
to cover short sales made after the date that this registration statement is declared effective by the SEC;
broker-dealers may agree with the Selling Stockholders to sell a specified number of such Shares at a stipulated price per share;
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
a combination of any such methods of sale; and
any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell Shares under Rule 144 under the Securities Act, if  all of the conditions in Rule 144(i)(2) are satisfied at the time of the proposed sale, rather than under this prospectus.
In connection with the sale of the Common Stock or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the Common Stock in the course of hedging the positions they assume. The Selling Stockholders may also sell shares of the Common Stock short and deliver these securities to close out their short positions, or loan or pledge the Common Stock to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of Shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.
14

The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the Shares owned by them and, if they default in the performance of their secured obligations, the amendment or supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 will be filed amending the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this prospectus and the pledgees or secured parties may offer and sell shares of Common Stock from time to time under the supplement or amendment to this prospectus.
The Selling Stockholders also may transfer the shares of Common Stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The Selling Stockholders and any broker-dealers or agents that are involved in selling the Shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the Shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Shares will be paid by the Selling Stockholder and/or the purchasers. Each Selling Stockholder has represented and warranted to the Company that it acquired the securities subject to this registration statement in the ordinary course of such Selling Stockholder’s business and, at the time of its purchase of such securities such Selling Stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.
TriPoint Global Equities, LLC (“TriPoint Global”) and Primary Capital LLC (“Primary Capital”) are registered broker dealers and FINRA member firms;  and listed as Selling Stockholders in this prospectus. They served as placement agent for December 2014 Private Placement.   

FINRA Rule 5110 requires FINRA member firms (unless an exemption applies) to satisfy the filing requirements of Rule 5110 in connection with the resale, on behalf of Selling Stockholders, of the securities on a principal or agency basis. NASD Notice to Members 88-101 states that in the event a Selling Stockholder intends to sell any of the shares registered for resale in this prospectus through a member of FINRA participating in a distribution of our securities, such member is responsible for insuring that a timely filing, if required, is first made with the Corporate Finance Department of FINRA and disclosing to FINRA the following:
it intends to take possession of the registered securities or to facilitate the transfer of such certificates;
the complete details of how the selling shareholders’ shares are and will be held, including location of the particular accounts;
whether the member firm or any direct or indirect affiliates thereof have entered into, will facilitate or otherwise participate in any type of payment transaction with the selling shareholders, including details regarding any such transactions; and
in the event any of the securities offered by the selling shareholders are sold, transferred, assigned or hypothecated by any selling shareholder in a transaction that directly or indirectly involves a member firm of FINRA or any affiliates thereof, that prior to or at the time of said transaction the member firm will timely file all relevant documents with respect to such transaction(s) with the Corporate Finance Department of FINRA for review.
No FINRA member firm may receive compensation in excess of that allowable under FINRA rules, including Rule 2710, in connection with the resale of the securities by the selling shareholders, which total compensation may not exceed 8%.
We have advised each Selling Stockholder that it may not use Shares registered on this registration statement to cover short sales of Common Stock made prior to the date on which this registration statement shall have been declared effective by the Commission. If a Selling Stockholder uses this prospectus for any sale of the Common Stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such Selling Stockholders in connection with resales of their respective Shares under this registration statement.
15

We are required to pay all fees and expenses incident to the registration of the Shares, but the Company will not receive any proceeds from the sale of the Common Stock. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
ITEM 9.  DESCRIPTION OF SECURITIES TO BE REGISTERED

Authorized Capital Stock

We have 250,000,000 shares of authorized capital stock, consisting of 200 million shares of Common Stock, par value $0.0001, and 50 million shares of the Company’s Preferred Stock, par value $0.0001.
Common Stock

As of April 17, 2015, 32,933,209 shares of our Common Stock are issued and outstanding. Holders of Common Stock are entitled to cast one vote for each share on all matters submitted to a vote of shareholders, including the election of directors. The holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared by the Board out of funds legally available therefore. See “Dividend Policy.” Such holders do not have any preemptive or other rights to subscribe for additional shares. All holders of Common Stock are entitled to share ratably in any assets for distribution to shareholders upon the liquidation, dissolution or winding up of the Company. There are no conversion, redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Common Stock are fully paid and nonassessable.
Preferred Stock

The Board is authorized, without further action by the shareholders, to issue, from time to time, up to 50 million shares of preferred stock in one or more classes or series. Similarly, the Board will be authorized to fix or alter the designations, powers, preferences, and the number of shares which constitute each such class or series of preferred stock. Such designations, powers or preferences may include, without limitation, dividend rights (and whether dividends are cumulative), conversion rights, if any, voting rights (including the number of votes, if any, per share), redemption rights (including sinking fund provisions, if any), and liquidation preferences of any unissued shares or wholly unissued series of preferred stock.

Series A Preferred Stock

On July 21, 2014, the Company completed a private placement of 170,940 shares of Series A Preferred Stock that also included 100,000 Class B warrants convertible into common stock on a one-to-one basis at an exercise price of $4.00 per share.  The proceeds of the offering were $1,000,000 (the “July 2014 Private Placement”). As the date hereof, 170,940 shares of Series A Preferred Stock remain outstanding. Unless converted earlier, each share of Series A Preferred Stock will automatically convert on July 20, 2016, into Common Stock at a conversion price of $5.85 per share, subject to anti-dilution adjustments.  Subject to certain restrictions, at any time prior to July 20, 2016, holders of Series A Preferred Stock may elect to convert all or a portion of their shares into common stock at the conversion rate.

The holders of Series A Preferred Stock are entitled to receive cumulative dividends during a period of twenty-four (24) months from and after July 21, 2014. During that period for each outstanding share of Series A Preferred Stock, dividends shall be payable quarterly in cash, at the rate of 10% per annum on or before each ninety (90) day period following July 21, 2014, with the first payment date to occur promptly following the three month period following July 21, 2014, and continuing until the end of the dividend payment period. Following the expiration of the dividend payment 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 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 July 20, 2016, the Series A Preferred Stock will be redeemed at a price equal to the original purchase price plus all accrued but unpaid dividends.
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Convertible Debenture

In connection with December 2014 Private Placement, we issued a Convertible Debenture that is convertible into 1,555,556 shares of Common Stock; the Convertible Debenture will, by its principal terms,

(a)  Carry a dividend at an annual rate of 8%, payable quarterly in arrears, in cash or shares of Common Stock, or a combination of cash and shares of Common Stock at the Investors’ option;

(b)  Mature on the thirty six (36) month anniversary of the Closing including principal and any unpaid interest (the “Maturity Date”)

(c)  Convertible at any time after the issuance until the Maturity Date into one (1) Share of Common Stock at an initial conversion price of $2.25 per share, subject to adjustment pursuant to the terms of the Convertible Debenture; and

(d)  Carry a prepayment clause pursuant to which we may repurchase any or all outstanding Convertible Debenture in cash for 120% of their face value on ten(10) business days’ notice at any time after the twelve (12) month anniversary of the Closing while the Investors have the right to convert their Convertible Debenture within five (5) business days after written notice of such prepayment.

The Common Stock Warrants

As of the date hereof, there are 2,811,642  Warrants issued and outstanding.
Class A Warrant

On February 18, 2013, the Company entered into a subscription agreement with a non-U.S. shareholder of the Company (the “Investor”), pursuant to which it sold an aggregate of 806,451 shares of the Company’s common stock for an aggregate consideration of $6,000,000 and Class A Warrant to purchase 403,225 shares of Common Stock at a price of $5.94 per share (the “February 2013 Private Placement”). In connection with July 2014 Private Placement, we reduced the exercise price of Class A Warrant from $5.94 per share to $4.25 per share and increased the amount of shares of Common Stock underlying  Class A Warrant from 403,225 to 1,209,675.  In addition, the expiration date of Class A warrants was extended an additional 12 months; and
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Class B Warrant

In connection with July 2014 Private Placement, we issued 100,000 Class B Warrants.  Each Class B Warrant, by its principal terms,

(a)entitles the holder to purchase one (1) share of Common Stock;
(b)is exercisable at any time after consummation of the July 2014 Private Placement and shall expire on the date that is three (3) years following the original issuance date of the Series B Warrants;
(c)is exercisable, in whole or in part, at an exercise price of $4.00 per share;
(d)is exercised either for cash, or cashless subject to satisfaction of certain conditions set forth in the Class B Warrant; and

Class C Warrants

In connection with December 2014 Private Placement, we issued 1,617,780 Class C Warrant to purchase up to 404,445 shares of Common Stock to an investor and the placement agent.  Each Class C Warrant, by it principal terms,

(a)Entitles the holder to purchase one forth (1/4) share of Common Stock;
(b)Is exercisable at any time after the issuance and shall expire on the date that is four (4) years following the original issuance date of the Class C Warrants;
(c)Is  exercisable, in whole or in part, at an initial exercise price of $3.00 per share of Common Stock, subject to adjustment as set forth in the Class C Warrant; and,
(d)Is exercised either for cash, or cashless subject to satisfaction of certain conditions set forth in the Class C Warrant; and .
Class D Warrants
In connection with December 2014 Private Placement, we issued 1,617,780 Class D Warrant to purchase up to 404,445 shares of Common Stock to an investor and the placement agent. Each Class D Warrant, by its principal terms,

(a)Entitles the holder to purchase one forth (1/4) share of Common Stock;
(b)Is exercisable at any time after the issuance and shall expire on the date that is four (4) years following the original issuance date of the Class D Warrants;
(c)Is exercisable, in whole or in part, at an exercise price of $3.50 per share of Common Stock, subject to adjustment as set forth in the Class D Warrant; and,
(d)Is exercised either for cash,  or cashless subject to satisfaction of certain conditions set forth in the Class D Warrant; and

Performance Warrants

The Performance Warrants were issued  pursuant to December 2014 Private Placement and exercisable based on our annual reported subscriber numbers, twenty four (24) months after December 22, 2014, as is reflected in our 2014 Form 10-K.  After 24 months, if we fail to achieve 5.0 million subscribers450,000 Performance Warrants should vest and become exercisable to purchase 450,000 shares of Common Stock. If we achieve subscriber  numbers between 5.0 million and 15.0 million, a pro rata number of Performance Warrants will vest based on 450,000 Performance Warrants for 5.0 million subscribers and 0 Performance Warrants for 15.0 million subscribers. If we achieve more than 15.0 million subscribers, no  Performance Warrants should vest and become exercisable.
Performance Warrants are issued at an exercise price of the daily value weighted average price for the Common Stock for the 30 trading day period ending the day prior the date the 2016 Form 10-K is reported.

The Placement Agent Warrants

In connection with December 2014 Private Placement, we issued 62,222 Placement Agent Warrant to purchase up to 62,222 shares of Common Stock to an investor and the placement agent. Each Class D Warrant, by its principal terms,

(a)Entitles the holder to purchase one share of Common Stock;
(b)Is exercisable at any time after the issuance and shall expire on the date that is four (4) years following the original issuance date of the Placement Agent Warrants;
(c)Is exercisable, in whole or in part, at an exercise price of $2.25  per share of Common Stock, subject to adjustment as set forth in the Placement Agent Warrant; and,
(d)Is exercised either for cash,  or cashless subject to satisfaction of certain conditions set forth in the Placement Agent Warrant.
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Registration Rights

Pursuant to the Registration Rights Agreement we entered into with the investor of December 2014 Private Placement, we agreed to register all of the shares of Common Stock underlying Warrants issued and issuable in connection with December 2014 Private Placement.

Transfer Agent

The transfer agent for our common stock and preferred stock is Nevada Agency and Transfer Company 50 West Liberty Street, Suite 880, Reno NV 89501, Tel: 775-322-0626
Item 10.  Interest of Named Experts and Counsel
Legal Matters
Certain legal matters with respect to the shares of common stock offered hereby will be passed upon for us by Hunter Taubman Weiss LLP, New York, New York 10036.

Experts
The audited consolidated financial statements of One Horizon Group, Inc. and subsidiaries included herein and elsewhere in the registration statement have been audited by Peterson Sullivan LLP., independent registered public accounting firm, for the periods and to the extent set forth in their Report appearing herein and elsewhere in the registration statement. Such financial statements have been so included in reliance upon the report of such firm given upon the firm’s authority as experts in accounting and auditing.

Item 11.  Information with Respect to the Registrant
We develop and license software to telecommunications operators through our indirect wholly-owned subsidiaries Horizon Globex GmbH and Abbey Technology GmbH, each incorporated under the laws of Switzerland (“Horizon Globex” and “Abbey Technology,” respectively). Specifically, Horizon Globex and Abbey Technology develop software application platforms that optimize mobile voice, instant messaging and advertising communications over the internet, collectively, the “Horizon Platform.” Both subsidiaries do this by using proprietary software techniques that use internet bandwidth more efficiently than other technologies that are unable to provide a low-bandwidth solution. The Horizon Platform is a bandwidth-efficient Voice over Internet Protocol (“VoIP”) platform for smartphones and tablets, and also provides optimized data applications including messaging and mobile advertising. We license our software solutions to telecommunications network operators and service providers in the mobile, fixed line and satellite communications markets. We are an ISO 9001 and ISO 20000-1 certified company with assets and operations in Switzerland, the United Kingdom, China, India, Singapore and Hong Kong.
The Horizon Platform delivers a turnkey mobile VoIP solution to telecommunications operators. We believe that the technology underlying the Horizon Platform, which we call SmartPacket™, is the world’s most bandwidth-efficient VoIP technology. Our VoIP technology is able to transmit voice at 2kbps compared to around 8kbps offered by other VoIP platforms, thereby enabling voice communications over limited bandwidth and congested cellular telecom data networks including 2G, 3G and 4G.
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Industry

Rapid Growth in Global Telecommunication Services Market

The global telecommunication services market continues to experience growth. This growth is mainly being driven by the growth in the number of mobile subscribers. Although the mobile VoIP (or “mVoIP”) is a small percentage of the total revenue generated by mobile telecommunications providers, Visiongain, an independent business information provider for the telecommunications industry, among others, expects this market to grow significantly as a number of commercial and technological factors alter mobile voice communications (http://www.visiongain.com/Press_Release/475/The-Voice-Over-Internet-Protocol-(VoIP)-Market-2013-2018). These factors include innovative smartphone designs with improved user interfaces and acoustics, increased acceptance of VoIP and overall increases in broadband penetration. According to Visiongain.  In 2013,  “VoIP is poised for explosive growth, underpinned by the widespread adoption of integrated social media based VoIP solutions”; like those provided by One Horizon.  Visiongain further advises that “it is very important for Operators to embrace VoIP and focus on building viable business models that are mutually beneficial to the VoIP service provider and telecom operator”.  We are precisely targeting this operator market with our turnkey mobile VoIP solution branded for each of our operator customers.
The growth of smartphones and tablets is a key driver for us in increasing the number of customers and revenue.  In 2013, the number of smartphones shipped exceeded one billion according to International Data Corporation (https://www.idc.com/getdoc.jsp?containerId=prUS24645514), a provider of market intelligence in the industry. This represents an increase of 38.4% on the number of smartphones shipped in 2012.  Smartphones consume 24X more data than the “feature phones” that they replace due to higher usage of data, VoIP, and video services, which creates a significant strain on existing carrier infrastructure and creating potentially severe network congestion issues particularly in high density and high population markets.

The increase in mobile data consumption has been driven by the availability of cheap GSM (global system for mobile communications) data and the massive uptake of smartphones and tablets, devices on which our mobile application, Horizon Call, was designed to run.
In its paper titled “Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2013–2018” Cisco projects global mobile data traffic to increase 13-fold between 2013 and 2018 (source link:http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/white_paper_c11-520862.html). According to Cisco, at the end of 2012, the number of mobile-connected devices exceeded the number of people on earth, and by 2017, it is expected that there will be 1.4 mobile devices per capita. According to Cisco, in 2017, it is expected that 4G will account for ten percent of connections, but 45 percent of total traffic. Horizon Call addresses the need for efficient data on the next generation networks while tackling the need for efficient data usage on legacy networks in the world’s most populous countries.
Our Technology
We have a very detailed knowledge of these wireless data network issues and have invented a totally new solution to overcome latency and jitter in a way that achieves a much higher likelihood of a packet arriving in time and not being dropped. Our awareness of these problems led us to develop a completely new algorithm for sending and receiving (and ordering) voice packets so as to reduce the likelihood of packet loss due to congestion, we call it SmartPacket™.
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SmartPacket™ Technology
The core of the Horizon solution is our truly innovative SmartPacket™ technology. This enables VoIP from only 2 kilobytes/second (kbps) compared to around 8kbps from other VoIP platforms available today.  This industry-leading solution has been developed in-house and is fully compatible with digital telecommunications standards.  This technology is capable of interconnecting any phone system over IP - on mobile, fixed and satellite networks.  Our SmartPacket™ technology is not based on SIP (Session Initiation Protocol) or RTP (Real-time Transport Protocol).  Rather, the Horizon signaling protocol is much simpler and benchmark testing has shown that it consumes significantly less bandwidth.  Our SmartPacket™ technology is the world’s most bandwidth efficient IP communication platform designed for mobile communications. The technology optimizes packet flow, delivery and playback and delivers excellent call quality, reduced latency and jitter.   As a further illustration, the technology is considerably more efficient in the way it handles silence.  Traditional VoIP calls send the same amount of data in both directions, regardless of whether or not someone is speaking.  SmartPacket™ technology is designed to detect silence and send heartbeats instead of data, reducing cost and enhancing clarity.  This results in a better user experience and more flexibility than any other VoIP-based solution.
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Our Benchmark Testing: Horizon vs G.729
G.729 is a type of audio compression that is typically used in VoIP. Our testing has shown that Horizon is at least 4 times more efficient, depending on which voice quality you select. As a result, you can talk for at least four times longer.
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Proprietary and patent-pending
The Horizon Platform has been developed entirely in-house and is fully compatible with digital telecommunications standards. It is capable of interconnecting any phone system over IP – on mobile, fixed and satellite networks.
The Horizon Platform was initially developed for the mobile satellite market by Abbey Technology to make the best use of the limited wireless bandwidth available, to minimize the amount of data consumed and ultimately to reduce costs for the end-user.
We further developed the Horizon Platform for the broader telecommunications market focusing on the mobile data sector. This sector also benefits from our optimized mobile VoIP software that allows voice calls over new and legacy cellular telecom data networks. With the explosive growth in smartphone sales and increased usage of mobile data services, mobile operators face the challenge of dealing with increasingly congested networks, more dropped calls and rising levels of churn. Since the wireless spectrum is a finite resource, it is not always possible, or can be cost prohibitive, to increase network capacity. For these reasons, we believe that the demand for solutions to optimize the use of IP bandwidth will inevitably increase.

Our Strategy
We have developed a mobile application, “Horizon Call,” that enables highly bandwidth-efficient VoIP calls over a smartphone using a 2G/EDGE, 3G, 4G/LTE, WiFi or WiMax connection. Our Horizon Call application is currently available for the iPhone and for Android handsets.
Unlike the majority of mobile VoIP applications, Horizon Call creates a business-to-business solution for mobile operators, our customers Telecommunications operators are able to license, brand and deploy on a “white-labeled” basis that they can optimize to their business strategies.  The operators decide how to integrate our application within their portfolio, how to offer it commercially and can customize it according to their own branding.  Our solution helps them to manage rising traffic volumes while combating the competitive threat to their voice telephony revenues from other mobile VoIP applications by giving its mobile data customers a more efficient mobile VoIP solution that adds value to their mobile data network.
We are positioning ourselves as an operator-enabler by licensing our technology to mobile operators in a manner that can be fully customized to the needs of their subscribers. As shown below, operators are able to offer our platform to deliver branded smartphone applications to their existing customers to reduce lost Voice/Text revenue and minimize customer churn.
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By offering Horizon Call to their existing customer base, our customers can offer innovative data-based voice and data services that differentiate themselves from the existing Over The Top (“OTT”) data applications running on their networks. OTT refers to voice and messaging services that are delivered by a third party to an end user’s smartphone, leaving the mobile network provider responsible only for transporting internet data packets and not the value-added content. The Horizon Call voice services allow the mobile operators’ customers to make VoIP calls under the mobile operators’ call plans, thereby allowing the mobile operator to capture the value-added content, including voice calls, text messaging, voice messaging, group messaging, multimedia messaging, and advertising, that would have otherwise gone to the providers of other OTT services.
Horizon Call runs on both smartphone and tablet devices and, as networks become more congested, software services such as Horizon Call become ever more relevant. We believe that although more network capacity will eventually come on stream with 4G/LTE, it, like all other highways, will quickly become congested and this is why we believe that Horizon Call is ideally placed to add value to mobile data networks.
Incumbent mobile operators are suffering a reduction in revenue per user due to the OTT software services on mobile devices. These OTT applications, such as Skype, Viber, WeChat, and WhatsApp, can negatively impact mobile operators’ traditional revenue streams of voice and SMS (short message service). As shown below, the Horizon Platform positions the Company to enable mobile operators to operate their own OTT solution branded in their image allowing use on all mobile data networks.
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In addition to delivering new data services to their existing customers, mobile operators can offer their brand of Horizon Call on any other operators’ handsets. Because the Horizon Call application can be installed on the smartphone from the Internet, the potential customer base for the operators’ data application surpasses the customer base that they can reach through traditional mobile phone SIM card distribution. We believe that this service innovation, coupled with the fact that the Horizon Call application can also use existing mobile operator pre-paid credit redemption and distribution services, presents a very compelling service offering against  OTT services.

We believe that emerging markets represent a key opportunity for Horizon Call because these are significant markets with high population densities, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones. More than one-quarter of the world’s population will use smartphones in 2015, and by 2018, over 2.56 billion or one-third of all people worldwide will be smartphone users.  Asia-Pacific will account for over half of all smartphone users in 2015, estimated at 951.5 M users. Globally, China is the largest smartphone market with an estimated 574.2 M handsets.  (http://www.emarketer.com/Article/2-Billion-Consumers-Worldwide-Smartphones-by-2016/1011694). These factors will put increased pressure on mobile operators to manage their network availability.
In this context, where necessary, we are forming a number of joint ventures with local partners in regions of various emerging markets to seize upon this opportunity.

Through one subsidiary, One Horizon Hong Kong, we invested $1.5 million for a 75% equity stake in our joint venture, Horizon Network Technology Co., Ltd, while our partner, ZTE Corporation, the second largest mobile handset manufacturer in the world and the fourth largest telecommunications equipment supplier in the world, holds a 25% equity stake in the joint venture. The Company is not a guarantor of any debt related to this joint venture.
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Aishuo in China
To address the explosive growth in China, One Horizon are launching an own-brand smartphone VoIP service, called Aishuo.  To facilitate the rollout of the Aishuo solution across during the fiscal year 2014, we commenced the first phase of our infrastructure rollout in six major cities in China: Tianjin, Beijing, Chongqing, Changchun, Nanjing and Shijiazhuang.  These initial locations will connect to the national telephone network to commence the commissioning of the VoIP service in China.  To date, we have successfully installed eight servers in  support of Chinese smart phone app with interconnects to the AliPay and UnionPay credit card and micro-payments services in China.  We have also uploaded the App to the biggest smartphone App stores in China including Baidu, Tencent and Qihoo.  The smart phone app will be able to provide various optimized internet value added services to its mobile subscribers including but not limited to voice and social media services such as text, picture, video and geo-location messaging. These value added services are made possible through the creation of a "Virtual SIM" and One Horizon's proprietary communication software, an industry first. Combined with One Horizon's location aware mobile advertising services, the Aishuo branded smart phone app is expected to drive multiple revenue streams from the supply of its value-added services. The service will seek to acquire 15 million new app subscribers for the smartphone app over a two-year period and expects to achieve industry average revenues per user (ARPU) for similar social media apps.

Marketing
Our marketing objective is to become a broadly adopted solution in the regions of the world with large concentrations of smartphone users and high network congestion. We aim at becoming the preferred solution for carriers who wish to deploy branded VoIP solutions that enable them to minimize revenue erosion, reduce churn, increase the effective capacity of their network infrastructure and improve user experience. We employ an integrated multi-channel approach to marketing, whereby we evaluate and focus our efforts on selling through Tier 1 and Tier 2 telecommunications companies to enable them to provide the Horizon Platform to their customers. We routinely evaluate our marketing efforts and try to reallocate budgets to identify more effective media mixes.
We conduct marketing research to gain consumer insights into brand, product, and service performance, and utilize those findings to improve our messaging and media plans. Market research is also leveraged in the areas of testing, retention marketing, and product marketing to ensure we bring compelling products and services to market.
Sales
Direct Sales.Our primary sales channel for the products and services of Horizon Platform is the sale of Horizon Platforms to Tier 1 and Tier 2 telecommunications companies to enable them to provide the product and services to their customers. We continue our efforts to develop new customers in Europe, the Middle East, Asia, Africa, South America, and, in the near future, North America.
Strategic Ventures.In addition to our direct sales channel, we also offer increased sales through our  strategic venture channel. In this context, as mentioned above, we are working towards forming a number of strategic ventures in areas where regulatory issues require local representation.
Target Markets. The markets for our primary and joint venture channels will have high population density, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones.
Competition
The Company’s direct competitors for its technology primarily consist of systems integrators that combine various elements of SIP (Session Initiation Protocol) dialers and media gateways. Other dial-back solutions exist but they are not IP-based. Because SIP dialers and media gateways currently are unable to provide a low bandwidth solution, they do not currently compete with the Company’s technology in those markets in which their high bandwidth needs are unsupported by the existing cellular networks. They do, however, compete in those markets where the cellular networks are accessible by those SIP dialers and gateways.
The Company licenses the Horizon Platform to mobile operators, who in turn may offer the application to their end-user subscribers. The Company’s principal competitors for the mobile operators’ end-users are Skype, Viber, WeChat, and WhatsApp. Having a mobile operator’s subscriber opt to use the operator’s (branded) Horizon Call service instead of existing OTT services means that the mobile operator will gain market share of some of the OTT voice and messaging traffic. We are unaware of any other companies that seek to license VoIP technology directly to mobile operators.
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One of the Company’s key competitive advantages is that it is not a threat to mobile operators. Rather, the Company’s Horizon Platform is a tool that can be used by mobile operators to compete against the OTT provider’s applications that are running on their networks. Through the Horizon Platform, mobile operators are able to compete directly with OTT services that, by their design, divert voice and messaging services away from mobile operators. The solution is delivered completely and is easy to install and operate. This means that a mobile operator has a turnkey mobile voice and messaging solution to deploy to its customer (i.e., the end-user).
The turnkey Horizon software platform and the Horizon SmartPacket™ technology give us a competitive advantage by managing credit, routing, rating, security, performance, billing and monitoring. Horizon SmartPacket™ is the world’s lowest bandwidth voice compression and transmission protocol and is 100% developed and owned by the Company. Though other software companies can offer part of this solution space,   we believe none offers it in such a complete and integrated fashion as we do. We believe it will take a substantial number of years to copy/replicate the Horizon Platform in its entirety, by which time we believe the Horizon Platform will have improved and further distanced itself from potential competition.
Intellectual Property
Our strategy with respect to our intellectual property is to patent our core software concepts wherever possible. The Company’s current software patent application, which is pending in Switzerland, reflects this strategy and protects the Horizon Platform and the central processing service of the Horizon Platform.
The Company endeavors to protect its internally developed systems and technologies. All of our software is developed “in-house,” and then licensed to our customers. We take steps, including by contracts, to ensure that any changes, modifications or additions to the Horizon Platform requested by our customers remain the sole intellectual property of the Company.
Research and Development and Software Products
During 2014, we expanded our Irish software development team with the addition of a new senior software developer at our recently opened software research and development office at the Nexus Innovation Center on the campus of the University of Limerick. As part of this process, we signed an agreement with the Industrial Development Agency (IDA) Ireland whereby IDA granted certain financial assistance toward the cost of establishing and carrying a service undertaking for a software development center in Ireland in connection with our VoIP software platform. The software development center is intended to give employment of up to 25 persons and should allow us to more quickly increase the size of this research and development team. We believe that the further expansion of our Irish development team will allow the further advance of our unique mobile VoIP solutions.
We completed the development and continued to refine the Horizon billing system. The completion of the Horizon Billing System software add-on package allows one Horizon to deliver an additional turn-key element to our customers that will allow our customers to invoice their customers and enterprise on a postpaid monthly basis. This adds greater flexibility and reach to the Horizon platform as offered by our customers to those subscribers that wish to utilize the service on a post paid basis.

We expanded our software development capabilities for China by hiring 4 new junior software developers in our Horizon Nanjing JV, known as Horizon Network Technology Co. Ltd. We believe that the expansion of our software development team at our Chinese joint venture will support the company’s strategy of continuing to develop our products in areas with high population density, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones while working within the constraints of local regulations.
We continued our research and development of the Horizon product platform throughout 2014. The Swiss based team made significant strides towards the next generation of the product suite with particular emphasis going to the User Interface (UI) re-engineering and the new Horizon concept of Sponsored Calls. Sponsored calls allow 3rd parties to display and play a multi-media advertisement for their goods and services to App users and in return for listening to the advertisement, the user gets a free call. Further to the UI the Research and Development for version 2.0, our Irish based team made progress on the latest multi-core solution with a view to releasing this software to our customers in 2015. Further research is on-going in the area of Wi-Fi to 3G [and vice-versa] 'radio handoff' to allow uninterrupted calls when Internet radio signals are arriving and leaving the smartphone. Our concept of multi-ring handsets is also being developed and marks a very exciting new feature to our smartphone offering where our App, a business landline, an assistants phone etc. can all ring at once when a main-number is dialed. The software team in China is working on a new method for Direct Inward Dial number rental for the Chinese marketplace and developing all the interfaces for the Software Development Kits [SDK] required for the Baidu, Tencent and Qihoo App stores.
During the last quarter of 2014, the expansion of the Horizon advertising platform to allow the industry first of User-Selectable-Sponsored-Calls was developed in Switzerland and Ireland R&D centers, and released on the Horizon product suite in China by the Chinese team, brand name Aishuo. A User-Selectable-Sponsored-Calls allows would-be advertisers to sponsor a call or calls to a certain amount in time or price. The user selects their sponsor and then must listen to their audio advertisement prior to the call being placed. Further to this, in Ireland, the R&D team developed a brand new multi-ring solution of our App to be able to receive incoming calls on multiple devices at the same time. This differs from existing app technologies in that it also includes the functionality to receive the call to user’s apps, home, office, mobile, all at the same time so a call will never be missed.
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Employees
As of December 31, 2014, we had 25 employees, all of whom were full-time employees.

Description of Property
We do not currently own any real property.  In March 2015, we leased offices of approximately 840 square feet with a monthly rent of $1,600 in Ireland as our new principal executive offices.  We have offices consisting of approximately 2,60 square feet of leased space in Baar, Switzerland, for which we pay $900 a month.   We also have an office consisting of approximately 400 square feet in London, United Kingdom, for which we pay $2,500 a month.

Executive Offices
Our offices are located at T1-017 Tierney Building, University of Limerick, Limerick, Ireland.
FOR ADDITIONAL INFORMATION
We are a reporting company and file annual, quarterly and current reports, proxy statements and other information with the SEC. For further information with respect to the Company, you may read and copy its reports, proxy statements and other information, at the SEC public reference rooms at 100 F. Street, N.E., Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330  for more information about the operation of the public reference rooms. The Company’s SEC filings are also available at the SEC’s web site at http://www.sec.gov.
Copies of Company’s Annual Reports on Form 10K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are all available at our website (http://www.onehorizongroup.com/)  free of charge, within a week after we file same with the SEC or by sending a request for a paper copy to our outside securities counsel: Hunter Taubman Weiss LLP, 230 W 42nd Street Suite 1050, New York NY 10036.
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Legal Proceedings
We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business.
We are currently not a party to any material legal or administrative proceedings and are not aware of any pending or threatened legal or administrative proceedings, to the best of our knowledge, against us except the following:

In 2012, we sold certain former subsidiaries engaged in provision of satellite service in 2012 to Broadband Satellite Services (“BSS”), a company incorporated under laws of England and Wales. Horizon Globex, a company incorporated in Switzerland and a subsidiary of us, had provided these subsidiary companies with software and IT services.  In connection with its acquisition of our former subsidiary companies, BSS entered into three agreements with Horizon Globex pursuant to which BSS continued to use Horizon Globex to  supply  software and IT services.  Notwithstanding the fact that Horizon Globex has provided such ongoing software and IT services, BSS has failed to pay our fees pursuant to the agreements.  As a result, on December 23, 2014, we initiated legal proceedings in the High Court, Queens Bench Division, Commercial Court No. 2014 folio 1560 against BSS in the United Kingdom to collect such fees in the amount of $640,000.  Subsequently, BSS asserted counter claims in the amount of $5.8 million, alleging among other claims,  civil fraud in connection with the sale of subsidiary companies.   Based on the timing of these claims, which were never raised until we filed our action against BSS, it is our position that these claims are specious and represent nothing more than an attempt to improve BSS's negotiating position with regard to our legitimate claims against it.   As a result, we plan to continue to carry out our claims against BSS to the fullest extent possible and to defend BSS's counter-claims vigorously.  We note further that several of BSS's counter claims may be time barred by applicable sections of the contracts and plan to assert the same as an affirmative defense to such counter claim. Notwithstanding our views with regard to our claims against BSS and BSS's counterclaims, litigation is by its nature unpredictable and therefore we cannot guarantee with certainty the outcome of our dispute with BSS.

MARKET FOR OUR COMMON STOCK, DIVIDENDS AND
RELATED STOCKHOLDER INFORMATION
Our common stock is quoted on the NASDAQ Capital Market under the symbol OHGI. Prior to July 9, 2014, our common stock was quoted on the OTCBB under the symbol OHGI. Prior to January 31, 2013, our common stock was quoted under the symbol ICMC.
The following table sets forth the high and low bid information, as reported by Nasdaq on its website, www.nasdaq.com, for our common stock for each quarterly period in 2014, 2013 and 2012. Prior to November 30, 2012, the bid information reflects bid information of the Company prior to the Share Exchange. The information reflects inter-dealer prices reflecting a reverse split on a 1 for 600 basis effective August 29, 2013, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
  Low  High 
       
Fiscal year ending December 31, 2015:      
Quarter ended March 31 $1.35  $3.92 
         
Fiscal year ending December 31, 2014:        
Quarter ended December 31 $1.91  $3.20 
Quarter ended September 30  1.55   4.85 
Quarter ended June 30  3.50   5.91 
Quarter ended March 31  4.00   6.50 
         
Fiscal year ending December 31, 2013:        
Quarter ended December 31 $3.75  $6.75 
Quarter ended September 30  6.50   6.75 
Quarter ended June 30  6.00   11.40 
Quarter ended March 31  3.60   21.60 
         
Fiscal year ended December 31, 2012:        
Quarter ended December 31 $3.12  $36.00 
Quarter ended September 30  3.06   11.94 
Quarter ending June 30  0.00   16.80 
Quarter ended March 31  6.00   18.00 
29

As of April 17, 2015, the closing bid price of the common stock was $1.84 and we had approximately 207 record holders of our common stock. This number excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed.

As of December 31, 2014, there are 1,084,650 options issued to employees and none exercised.  We  issued 116,760 warrants with an exercise price of $0.86 per share to an investor in 2012. In February 2013 Offering, we issued 403,225 Class A Warrant with an exercise price of $5.94 per share to purchase 403,225 shares of Common Stock to an investor as part of the $6.0 million subscription agreement signed. In July  2014 Offering,  we issued 170,940 shares of Series A Preferred Stock convertible into 170,940 shares of Common Stock, 100,000 Class B Warrants to purchase up to 100,000 shares of Common Stock at a price of  $4.00 per share; and we also issued 25,000 shares of Common Stock to the placement agent. In connection with and as a consideration to the closing of the July 2014 Offering, we reduced the exercise price of Class A warrants issued in the February 2013 Offering from $5.94 to $4.25 per share and increased the amount of shares issuable upon exercise of Class A warrants from 403,225 to 1,209,675. In December 2014 Offering, we issued 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 388,889 shares of Common Stock and Performance Warrant to purchase up to 450,000 shares of Common Stock. In addition, the placement agent in the December 2014 Offering received placement agent warrant, Class C warrant and Class D warrant to purchase 62,222, 15,556 and 15,556 shares of Common Stock, respectively.
Effective August 11, 1993, the SEC adopted Rule 15g-9, which established the definition of a "penny stock," for purposes relevant to the Company, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) that the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) states that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stock in both public offerings and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks

Dividend Policy
The payment of cash dividends by us is within the discretion of our board of directors and depends in part upon our earnings levels, capital requirements, financial condition, any restrictive loan covenants, and other factors our board considers relevant. Since the share exchange in 2012, we have not declared or paid any dividends on our common stock and we do not anticipate paying such dividends in the foreseeable future. We intend to retain earnings, if any, to finance our operations and expansion.
Description of Equity Compensation Plans Approved By Shareholders
Prior to the Share Exchange, One Horizon UK had authorized securities for issuance under equity compensation plans that have not been approved by the stockholders, but none under equity compensation plans that were approved by the stockholders. The following table shows the aggregate amount of securities authorized for issuance under all equity compensation plans as of December 31, 2014:


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  500,000   4.54   3,500,000 
Equity compensation plans not approved by security holders  584,650  $0.53   0 
Total  1,084,650  $2.38   3,500,000 
30


The securities referenced in the table above reflect stock options granted beginning in 2005 pursuant to individual compensation arrangements with the Company’s employees. 292,750 of such options are fully vested and 291,900 of such options vest on December 31, 2015.   850 of such options are expiring in 2015; 291,900 are expiring in 2020; and 291,900 are expiring in 2022. The number of options in the table above reflect a conversion that occurred in connection with the Share Exchange, whereby the number of options (to purchase One Horizon UK shares) held by each employee was increased by 175.14 times and the exercise price was decreased by the option exercise price divided by 175.14, and additionally reflect a 1-for-600 reverse stock split effected as of August 6, 2013.
Recent Sales of Unregistered Equity Securities
On November 30, 2012, we (previously, ICE Corp.) and One Horizon UK, a United Kingdom-based company, consummated the Share Exchange, pursuant to which ICE Corp. will acquire all of the issued and outstanding shares of One Horizon UK in exchange for 29,755,794 shares of our Common Stock. We also issued options to purchase an aggregate 360,221 shares of the Company’s common stock to holders of One Horizon UK options in exchange for such options, and created a pool of an additional 1,868,160 shares of the Company’s Common Stock reserved for the issuance of such shares upon the exercise of options and warrants that One Horizon UK has agreed to issue in the future to certain employees. On the date of closing, more than 98.9% of One Horizon UK shareholders’ offers of exchange had been received. Following the closing, additional One Horizon UK shareholders have offered their shares for exchange, and as of April 29, 2013, we owned approximately 99% of the outstanding shares of One Horizon UK. In the issuance above, no general solicitation was used and the transactions were negotiated directly with our existing shareholders. The securities were issued in reliance upon the exemption from registration afforded by Regulation S and Section 4(a)(2) of the Securities Act of 1933, as amended, which exempts transactions by an issuer not involving any public offering. In support thereof, the recipients of the common stock made certain written representations, acknowledged that the securities constituted restricted securities, and consented to a restrictive legend on the certificates to be issued.

In April-May 2012, One Horizon UK offered to 9investors 1,265,873 shares of Common Stock of the Company, given the effect of the Share Exchange and 1:600 reverse split, for a total consideration of approximately $3.25 million (the “April 2012 Offering by One Horizon UK”).
31


In November-December, 2012,  One Horizon UK offered to 2 investors 389,200 shares of Common Stock of the Company, given the effect of the Share Exchange and the 1:600 reverse split, for a total consideration of $2 million (the “November-December 2012 Offering by One Horizon UK”).
On January 22, 2013, Mr. Mark White, our former Chief Executive Officer, and Mr. Brian Collins, our current Chief Executive Officer and Chief Technology Officer, each made a one year loan to us of $250,000, each of which bears interest at a rate of .21% per annum, prepayable at our option at any time following issuance in cash or in shares of Common Stock at the rate of $5.16 per share.  In exchange, we issued to each of Messrs. White and Collins a convertible promissory note, in the initial principal amount of each loan which is convertible into 48,650 shares of Common Stock to each loaner. The Convertible Notes, together with any shares of Common Stock issuable by the registrant upon the payment thereof, were issued in reliance upon the exemption from registration afforded by Regulation S and on Section 4(a)(2) of the Securities Act of 1933, as amended, which exempts transactions by an issuer not involving any public offering.
In February 2013, we closed a Reg. S offering whereby we issued an aggregate of 806,451 shares of our common stock and a three-year warrant to purchase 403,225 shares of our Common stock at an exercise price of $7.44 per share for a total consideration of $6,000,000 (the “February 2013 Offering”). In August 2013, we amended the offering with the investor in the offering whereby we reduced the exercise price of the warrant from $7.44 per share to $5.94 per share.

In April 2013 we entered into an advisory agreement with Tripoint to provide business and corporate development services to us pursuant to which we issued 62,452 shares of Common Stock to Tripoint.

In May 2013, we signed an amendment to our agreement with an investor relations firm, pursuant to which we issued the firm a warrant to purchase up to 62,543 shares of the Company’s Common Stock, subject to vesting, at an exercise price of $7.2 per share, with 12,509 shares vesting on each of May 1, 2013, October 15, 2013, January 15, 2014 and April 14, 2014. Exercise of the warrants is also subject to certain performance metrics set forth in the warrant. The warrant is exercisable for five years.

During six months ended June 30, 2013, we issued  a total of 5,000 shares of common stock to an individual as compensation for certain business development and related services that were performed from November 1, 2012 to April 30, 2013 pursuant to an agreement.  

In July 2013, we issued 33,333 shares of common stock as compensation for certain business services.  The issuance was made in reliance on the exemption from registration provided by Regulation S of the Securities Act of 1933, as amended, as an offshore transaction involving only a non-U.S. offeree/purchaser. No placement agent was utilized in connection with the offer and sale of these shares. 

In July 2014, we issued 75,000 shares of  Common Stock to Tripoint pursuant to an advisory agreement dated July 1, 2014 between us and Tripoint. The issuance was made in reliance on the exemption from registration as set forth in Section 4(a)(2) of the Securities Act.

In July 2014, we also closed a private placement of $1,000,000  for a total of 10 units at a purchase price of $100,000 per Unit, each consisting of, (i) 17,094 shares of the Company’s Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share, initially convertible into 17,094 shares of the Company’s common stock, par value $0.0001 per share and (ii) 10,000 Class B Warrants, each exercisable to purchase 1 share of Common Stock at an exercise price of $4.00 per share (the “July 2014 Offering”“Preferred Stock”). The July 2014 Offering  was completed in reliance upon the exemption from securities registration afforded by Regulation S. In connection with July 2014 Offering, we issued 25,000 shares of Common Stock to Tripoint, the exclusive placement agent, as compensation shares.

On September 11, 2014, we entered into two mutual release agreements with each of two creditors of One Horizon Group Plc pursuant to which we issued a total of 123,000 shares of Common Stock to those two creditors in exchange of their agreements to waive their outstanding loans in a total amount of $276,750. The issuance was made in reliance on the exemption from registration as set forth in Section 4(a)(2) of the Securities Act.

On December 22, 2014, we closed a private placement of $3,500,000 in reliance upon the exemption from securities registration afforded by Regulation S (the “December 2014 Offering”). In connection with the December 2014 Offering, 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 and Class D warrant to purchase 388,889 shares of Common Stock. Furthermore, the investor is eligible to receive additional consideration in the form of a performance warrant to purchase certain amount of shares of Common Stock based on our annual reported subscriber numbers, twenty four (24) months after the Closing, as is reflected in our Annual Report on Form 10-K for the year ending December 31, 2016 (the “Form 10-K”), if we fail to achieve 15.0 million subscribers at that time. In addition, Tripoint, the placement agent in the Offering received placement agent warrant, Class C warrant and Class D warrant to purchase 62,222, 15,556 and 15,556 shares of Common Stock, respectively; and a cash fee of $280,000.


 *  All share amounts and prices described herein above are adjusted to reflect  a reverse split of 1-for-600 that went effective on August 29, 2013.
32


Repurchases of Equity Securities
We have not repurchased  any equity securities during the periods covered by this Report.

Financial Statements
33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Shareholders
One Horizon Group, Inc.
Limerick, Ireland

We have audited the accompanying consolidated balance sheets of One Horizon Group, Inc. ("the Company") as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income (loss), shareholders' equity (deficit), and cash flows for the years ended December 31, 2014, and 2013.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  The Company has determined that it 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 for 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 consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of One Horizon Group, Inc. as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the years ended December 31, 2014 and 2013, in conformity with accounting principles generally accepted in the United States.

/S/ Peterson Sullivan LLP

Seattle, Washington
March 31, 2015

ONE HORIZON GROUP, INC.
Consolidated Balance Sheets
December 31, 2014 and 2013
(in thousands, except share data)
  2014  2013 
       
Assets      
       
Current assets:      
Cash $3,172  $2,070 
Accounts receivable, net  9,072   7,264 
Other assets  576   139 
Total current assets  12,820   9,473 
         
Property and equipment, net  212   315 
Intangible assets, net  10,960   12,760 
Investment  19   23 
Debt issue costs  395   - 
Total assets $24,406  $22,571 
         
Liabilities and Stockholders' Equity        
         
Current liabilities:        
Accounts payable $556  $661 
Accrued expenses  360   964 
Accrued compensation  15   59 
Income taxes  93   117 
Amount due to related parties  600   3,500 
Current portion of long-term debt  73   65 
Total current liabilities  1,697   5,366 
         
Long-term liabilities        
Long term debt  108   184 
Amount due to related parties  2,598   - 
Convertible debenture  2,598   - 
Deferred income taxes  235   445 
Mandatorily redeemable preferred shares  90   90 
Total liabilities  7,326   6,085 
         
         
Equity        
One Horizon Group, Inc. stockholders' equity        
Preferred stock:        
$0.0001 par value, authorized 50,000,000;        
issued and outstanding 170,940 shares (2013 - nil)  1   - 
Common stock:        
$0.0001 par value, authorized 200,000,000 shares        
issued and outstanding 33,281,069 shares (2013  32,920,069);  3   3 
Additional paid-in capital  32,163   28,269 
Deferred Compensation  (214)  - 
Retained Earnings (Deficit)  (15,227)  (13,319)
Accumulated other comprehensive income  63   1,137 
Total One Horizon Group, Inc. shareholders' equity  16,789   16,090 
Non-controlling interest  291   396 
Total equity  17,080   16,486 
         
Total liabilities and equity $24,406  $22,571 
See accompanying notes to consolidated financial statements.
F-1

ONE HORIZON GROUP, INC.
Consolidated Statements of Operations
For the years ended December 31, 2014 and 2013
(in thousands, except per share data)
  Year ended December 31, 
  2014  2013 
       
Revenue $5,122  $9,106 
         
Cost of revenue        
Hardware  362   545 
Amortization of intangibles  1,890   1,908 
   2,252   2,453 
Gross margin  2,870   6,653 
         
Expenses:        
  General and administrative  4,933   6,706 
  Depreciation  146   166 
   5,079   6,872 
         
Loss from operations  (2,209)  (219)
         
Other income and expense:        
  Interest expense  (16)  (25)
  Interest expense - related parties, net  36   (297)
  Foreign exchange  8   (158)
  Interest income  2   1 
   30   (479)
         
Loss from continuing operations before income taxes  (2,179)  (698)
         
Income taxes (recovery)  (210)  - 
Net loss for the year  (1,969)  (698)
         
Loss attributable to non-controlling interest  (105)  (104)
Net loss for the year atrributable to One Horizon Group, Inc.  (1,864)  (594)
         
Less: Preferred dividends  (44)  - 
         
Net loss attributable to One Horizon Group, Inc. Common stockholders $(1,908) $(594)
         
Earnings per share        
         
  Basic net loss per share $(0.06) $(0.02)
         
  Diluted net loss per share $(0.06) $(0.02)
         
Weighted average number of shares outstanding        
        Basic and diluted  32,981   31,661 
See accompanying notes to consolidated financial statements.
F-2

ONE HORIZON GROUP, INC.
Consolidated Statements of Comprehensive Income (Loss)
For the years ended December 31, 2014 and 2013
(in thousands)
  Year ended December 31, 
  2014  2013 
       
Net income (loss) $(1,969) $(698)
Other comprehensive income:        
Forgin currency translation adjustment gain (loss)  (1,074)  682 
Comprehensive income (loss)  (3,043)  (16)
         
    Comprehensive income (loss) attributable to the non-controlling interest  (105)  (104)
         
Total comprehensive income (loss) $(2,938) $88 
See accompaying notes to consolidated financial statements.
F-3

ONE HORIZON GROUP, INC.
Consolidated Statements of Stockholders' Equity
For the years ended December 31, 2014 and 2013
(in thousands)
 Preferred Stock  Common Stock  Additional Paid-in Capital  Deferred Compensation  Retained Earnings (Deficit)  Subscriptions Receivable  Accumulated Other Comprehensive Income (Loss)  Non-controlling Interest  Total Stockholders' Equity 
 Number of Shares Amount  Number of Shares Amount                      
                                
Balance December 31, 2012-  -   30,846  $3  $21,630  $-  $(12,725) $(500) $455  $-  $8,863 
                                          
Sale of subsidiary shares to non-controlling interest                                   500   500 
Net Income       -   -   -       (594)      -   (104)  (698)
Foreign currency translations       -   -   -       -       682       682 
                                          
                                          
Receipt of subscription receivable by offset against shareholder loan                           500           500 
Common stock issued for cash       807   -   6,000                       6,000 
Common stock issued for services received       101   -   643                       643 
Common stock repurchased       (1)  -   (4)                      (4)
Common stock issued on exercise of warrants       1,168   -   -                       - 
                                          
                                          
Balance December 31, 2013-  -   32,921  $3  $28,269  $-  $(13,319) $-  $1,137  $396  $16,486 
                                          
                                          
Net income (loss)                       (1,864)          (105)  (1,969)
Foreign currency translations                               (1,074)      (1,074)
Preferred dividends                       (44)              (44
Common stock issued for services received       15       65                       65 
                                          
Common stock issued for services to be received in the future       75       323   (323)                    
                                          
Amortization of deferred compensation                   109                   109 
                                          
Options issued for services               516                       516 
                                          
Preferred Stock issued for cash171  1           981                       982 
                                          
Common stock issued for services received       25   108                           108 
Costs of financing           (108)                          (108)
Common stock issued in settlement of debt       246   -   822                       822 
Fair value of warrants issued for services received               187                       187 
Issuance of warrants in connection with convertible debenture               599                       599 
Beneficial conversion feature in connection with convertible debenture               303                       303 
Warrants issued as part of debt issue costs               98                       98 
                                          
Balance December 31, 2014171 $1   33,282  $3  $32,163  $(214) $(15,227) $-  $63  $291  $17,080 
See accompanying notes to consolidated financial statements.
F-4

ONE HORIZON GROUP, INC.
Consolidated Statements of Cash Flows
For the years ended December 31, 2014 and 2013
(in thousands)
  Year ended December 31, 
  2014  2013 
Cash provided by (used in) operating activities:      
       
       
Operating activities:      
Loss for the year $(1,864) $(594)
         
Adjustment to reconcile net income (loss) for the year to     
net cash provided by (used in) operating activities:        
Depreciation of property and equipment  146   166 
Amortization of intangible assets  1,890   1,908 
Increase in allowance for doubtful accounts  180   - 
Options issued for services received  516   - 
Warrants issued for services  187   - 
Common shares issued for services received  174   643 
Net income (loss) attributable to non-controlling interest  (105)  (104)
Changes in operating assets and liabilities        
    net of effects of acquistions:        
   Accounts receivable  (1,988)  (6,287)
   Other assets  (437)  (3)
   Accounts payable and accrued expenses  (244)  488 
   Income taxes  -   23 
   Deferred income taxes  (210)  - 
         
Net cash provided by (used in) operating activities  (1,755)  (3,760)
         
Cash used in investing activities:        
         
Acquisition of intangible assets  (1,122)  (1,211)
Acquisition of property and equipment  (49)  (131)
Other assets  4   (23)
         
Net cash provided by (used in) investing activities  (1,167)  (1,365)
         
Cash flow from financing activities:        
         
         
Increase (decrease) in long-term borrowing, net  (68)  - 
Cash proceeds from issuance of common stock  -   6,000 
Proceeds from issuance of preferred stock, net  982   - 
Proceeds from issuance of convertible debenture, net  3,202   - 
Repurchase of common stock  -   (4)
Advances from related parties, net of repayment  (33)  500 
         
Net cash provided by financing activities  4,083   6,496 
         
         
Increase in cash during the year  1,161   1,371 
Foreign exchange effect on cash  (59)  - 
         
Cash at beginning of the year  2,070   699 
         
Cash at end of the year $3,172  $2,070 
See accompanying notes to consolidated financial statements.
F-5

ONE HORIZON GROUP, INC.
Consolidated Statements of Cash Flows (continued)
For the years ended December 31, 2014 and 2013
(in thousands)
  Year ended December 31, 
  2014  2013 
       
Interest paid $-  $- 
Income taxes paid  -   - 
         
Non-cash transactions:        
         
Common stock issued for services received  65   643 
Settlement of subscription receivable through partial repayment        
   of loan payable  -   500 
Common stock issued for settlement of debt  822   - 
Common stock issued for services to be received in the future  323   - 
Fair value of warrants issued for services received  187   - 
See accompanying notes to consolidated financial statements.
F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014
Note 1.  Description of Business and Principles of Consolidation

Description of Business

One Horizon Group, Inc., (the “Company” or “Horizon”) develops proprietary software primarily in the Voice over Internet Protocol (VoIP) and bandwidth optimization markets (“Horizon Globex”) and provides it under perpetual license arrangements (“Master License”) throughout the world. The Company sells related user licenses and software maintenance services as well.
Principles of Consolidation

The December 31, 2014 and 2013 consolidated financial statements include the accounts of One Horizon Group, Inc. and its wholly owned subsidiaries OHG, Horizon Globex GmbH, Abbey Technology GmbH, One Horizon Hong Kong Limited, Horizon Globex Ireland Limited, Global Phone Credit Limited, One Horizon Group Pte., Limited and Aishuo Network Information Co., Ltd. together with Horizon Network Technology Co. Ltd. which is a 75% owned subsidiary.

All significant intercompany balances and transactions have been eliminated.
Note 2.  Summary of Significant Accounting Policies

Basis of Accounting and Presentation

These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States
Foreign Currency Translation
The reporting currency of the Company is the United States dollar. Assets and liabilities of operations other than those denominated in U.S. dollars, primarily in Switzerland, the United Kingdom and China, are translated into United States dollars at the rate of exchange at the balance sheet date.  Revenues and expenses are translated at the average rate of exchange throughout the period.  Gains or losses from these translations are reported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold or liquidated.  The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations.

Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in general and administrative expenses.
F-7

Cash

Cash and cash equivalents include bank demand deposit accounts and highly liquid short term investments with maturities of three months or less when purchased. Cash consists of checking accounts held at financial institutions in the United Kingdom, Switzerland, Ireland, Singapore, Hong Kong and China which, at times, balances may exceed insured limits.  The Company has not experienced any losses related to these balances, and management believes the credit risk to be minimal.

Accounts Receivable

Accounts receivable result primarily from sales of software, user licenses and maintenance services to customers and are recorded at their principal amounts. Receivables are considered past due once they exceed the terms of the sales transaction. When necessary, the Company provides an allowance for doubtful accounts that is based on a review of outstanding receivables, historical collection information, and current economic conditions. There was an allowance of $492,000 and $212,000 for doubtful accounts at December 31, 2014 and 2013, respectively. Receivables are generally unsecured. Account balances are charged off against the allowance when the Company determines it is probable the receivable will not be recovered. The Company does not have off-balance sheet credit exposure related to its customers. As at December 31, 2014 and December 31, 2013, two customers accounted for 28% and three customers accounted for 22%, respectively, of the accounts receivable balance.

Property and Equipment

Property and equipment is primarily comprised of leasehold property improvements, motor vehicles and equipment that are recorded at cost and depreciated or amortized using the straight-line method over their estimated useful lives as follows: motor vehicles – 5 years, equipment – between 3 and 5 years, leasehold property improvements, over the lesser of the estimated remaining useful life of the asset or the remaining term of the lease.

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

Fair Value Measurements

Fair value is defined as the exchange price that will be received for an asset or paid to transfer a liability (an exit price) in the principal.  Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs.  To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered to be observable and the third unobservable:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

Intangible Assets
Intangible assets include software development costs and customer lists and are amortized on a straight-line basis over the estimated useful lives of five years for customer lists and ten years for software development.  The Company periodically evaluates whether changes have occurred that would require revision of the remaining estimated useful life.  The Company performs periodic reviews of its capitalized intangible assets to determine if the assets have continuing value to the Company.
F-8

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 technological 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 the 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 ended December 31, 2014 and 2013 software development costs of $1,122,000 and $1,211,000, respectively, have been capitalized.

Impairment of Other Long-Lived Assets

The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred.  An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate.  Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets.  During the years ended December 31, 2014 and 2013 the Company identified no impairment losses related to the Company’s long-lived assets.

Revenue Recognition

The Company recognizes revenue when it is realized or realizable and earned.  The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred or services have been rendered, price is fixed and determinable, and collectability is reasonably assured.
Software and licenses – revenue from sales of perpetual licenses to customers when payments for the licenses are fixed is recognized at the inception of the arrangement, unless the payment term exceeds one year and then only if the presumption that the license fee is not fixed or determinable can be overcome, presuming all other relevant revenue recognition criteria are met. If the presumption cannot be overcome, revenue is recognized as payments from the customer become due. Revenue from sales of perpetual licenses when payments for the licenses are payable over a period exceeding a year and those payments are variable based on customer usage is recognized as payments from the customer become due.
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 licences and maintenance services will be recorded only after existing accounts receivable balances are fully collected.
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 upgrades, when and if available, support, updates and enhancements. When vendor specific objective evidence (“VSOE”) of fair value exists for all elements in a multiple element arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values of various elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price between deliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elements such as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In the absence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to the residual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit of accounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No sales arrangements to date include undelivered elements for which VSOE does not exist.

For purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption that the fee in the transaction is not fixed and determinable.   This presumption however, may be overcome if persuasive evidence demonstrates that the Company has a business practice of extending payment terms and has been successful in collecting under the original terms, without providing any concessions.  In doing so, the Company considers if the arrangement is sufficiently similar to historical arrangements in terms of similar customers and products is assessing whether there is evidence of a history of successful collection.

In order to determine the company’s historical experience is based on sufficiently similar arrangements, the Company considers the various factor including the types of customers and products, product life cycle, elements Included in the arrangement, length of payment terms and economics of license arrangement.
F-9

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

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognized as assets of the Company at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.

Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.
Advertising Expenses

It is the Company’s policy to expense advertising costs as incurred.  No advertising costs were incurred during the years ended December 31, 2014 and 2013.

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 incurred research and development costs that are included in general and administration expenses in the amount of $703,000 and $739,000  in the years ended December 31, 2014 and 2013 respectively.
Debt Issue Costs

Debt issue costs related to long-term debt are capitalized and amortized over the term of the related debt using the effective interest method.

Income Taxes

Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled.  Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction.  The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized.  The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence).  The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance.

The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return.  Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively.
F-10

Because tax laws are complex and subject to different interpretations, significant judgment is required.  As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions.  The Company’s estimates and assumptions may differ significantly from tax benefits ultimately realized.

Net Loss per Share

Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period.  Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities.  For the years ended December 31, 2014 and 2013, outstanding stock options and warrants are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share.  Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations.
Accumulated Other Comprehensive Income (Loss)

Other comprehensive income (loss), as defined, includes net income, 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.

Financial Instruments

The carrying amounts 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 share-based awards at fair value on date of grant and recognizes 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 volitility.

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09 – Revenue from Contracts with Customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principal of this ASU is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. This ASU will be effective for us in our first quarter of 2017. Early adoption is not permitted. The ASU allows for either full retrospective or modified retrospective adoption. We are evaluating the transaction method that will be elected and the potential effects of the adoption of this ASU on our financial statements.
F-11

Note 3.  China Operations

During the year ended December 31, 2013 the Company established a subsidiary in China, Horizon Network Technology Co. Ltd. (“HNT”). The establishment of HNT is part of the Company’s strategic plan to expand the application of mobile software and related marketing efforts into emerging markets. The Company contributed $1.5 million for a 75% ownership interest in HNT. The remaining 25% ownership interest in HNT was acquired by non-related parties through the transfer of noncash assets with a fair value of $500,000.

The results of operations, assets, liabilities and cash flows of HNT have been consolidated in the accompanying condensed consolidated financial statements as the Company owns a controlling interest. The ownership interests in HNT held by parties other than the Company are presented separately from the Company’s equity on the Consolidated Balance Sheet. The amount of consolidated net loss attributable to the Company and the non-controlling interest are both presented on the face of the Consolidated Statement of Operations.

Note 4.  Property and Equipment, net

Property and equipment consist of the following: (in thousands)

  December  December 31 
  2014  2013 
       
Leasehold improvements $265  $265 
Motor vehicle  120   120 
Equipment  348   310 
   733   695 
Less accumulated depreciation  (521)  (380)
         
Property and equipment, net $212  $315 

Note 5.  Intangible Assets

Intangible assets consist primarily of software development costs and customer and reseller relationships which are amortized over the estimated useful life, generally on a straight-line basis with the exception of customer relationships, which are generally amortized over the greater of straight-line or the related asset’s pattern of economic benefit. (in thousands)

  December  December 31 
  2014  2013 
       
Horizon software $16,936  $17,599 
ZTEsoft Telecom software  495   497 
Contractual relationships  885   885 
   18,316   18,981 
Less accumulated amortization  (7,356)  (6,221)
         
Intangible assets, net $10,960  $12,760 
Amortization of intangible assets for each of the next five years is estimated to be $1,900,000 per year
F-12

Note 6.  Long-term Debt
Long – term liabilities consist of the following (in thousands)

  December  December 31 
  2014  2013 
       
Vehicle loan $32  $51 
Equipment loan  15   27 
Office term loan  134   171 
   181   249 
Less current portion  (73)  (65)
         
Balance $108  $184 
Note 7.  Convertible Debenture

On December 22, 2014 the Company closed a financing of $3.5 million consisting of 1,555,556 units, whereby each unit included i) the right to convert, at any time, into one share of common stock at a price of $2.25; ii) one Class C warrant entitling the holder to purchase one share of common stock at a price of $3.00; iii) one Class D warrant entitling the holder to purchase one share of common stock at a price of $3.50 and iv) a pro-rata share of potential performance warrants.

The convertible debenture is for a term of three years from the date of issue and has an interest rate of 8% per annum, payable quarterly in arrears in either cash, shares of common stock, or a combination of cash and shares of common stock. The Company has the right to repurchase the convertible debenture upon notice at any time after the first twelve months.

The Class C and Class D warrants have a term of four years and are each entitled to purchase one-fourth of a share of common stock. In total the Company issued 388,889 Class C warrants and 388,889 Class D warrants related to the convertible debenture.

The Company will issue a maximum of 450,000 performance warrants, each entitling the holders to purchase shares of common stock for cash at the then current market price, dependent on the number of subscribers the Company has as at December 31, 2016. The number of performance warrants issued will be a ratio with 450,000 performance warrants being issued if there is less than 5 million subscribers and no performance warrants if there are more than 15 million subscribers.

Proceeds received from the convertible debentures were allocated between the convertible debenture and the warrants based on their relative fair values. The resulting discount for the warrants is amortized using the effective interest method over the life of the debentures. The relative fair value of Class C and Class D warrants resulted in a discount of $598,500 at the date of issuance. After allocating a portion of the proceeds to the warrants, the effective conversion price of the convertible debentures was determined to result in a beneficial conversion feature. The beneficial conversion feature has a relative fair value of $302,994 at the date of issuance and will be amortized over the term of the convertible debenture. The beneficial conversion feature discount is amortized using the effective interest method over the life of the debentures. The amortization of the debt discount is included as interest expense in the consolidated statement of operations.

A total of 1,711,112 share of common stock have been reserved for the potential conversion of the convertible debenture.
F-13

Note 8.  Related-Party Transactions

Amounts due to related parties include the following: (in thousands)

  December 31  December 31 
  2014  2013 
       
Loans due to stockholders (current and former officers and directors)      
                    Due within one year $600  $3,500 
                    Long-term  2,598   - 
  $3,198  $3,500 

At December 31, 2014, $3,198,000 of related party debt was outstanding. $600,000 is interest free and will be repaid during 2015. The remaining balance of $2,598,000 matures on April 1, 2016 and carries an annual rate of interest of 0.21%.

During 2014 the Company settled a total of $1,672,000 approximately of related party debt, by a combination of:

i.  paying $250,000
ii.  issuing a new note payable of $600,000 to be repaid in 2015

iii.  Issuing 246,000 new shares of common stock

The difference between the amount of related party debt eliminated and the fair value of consideration paid by the company is considered a capital transaction and resulted in an increase of $269,000 to additional paid in capital.
Note 9.  Share Capital

Preferred Stock

The Company’s authorized capital includes 50,000,000 shares of preferred stock of $0.0001 par value. The designation of rights including voting powers, preferences, and restrictions shall be determined by the Board of Directors before the issuance of any shares.
On July 21, 2014 As of the Company completed a private placement of 170,940date hereof, 3,930,646 (98,266,169 pre-reverse split) shares of mandatorily convertibleour Common Stock are issued and outstanding and no preferred stock is issued and outstanding. 

During the year ended December 31, 2017, we restructured our operations and simplified and strengthened our capital structure by:

Selling certain of our operating subsidiaries (the “Discontinued Entities”) to our former Chief Executive Officer pursuant to a Stock Purchase Agreement entered into August 10, 2017, in consideration for the forgiveness of $1,968,243 payable to our former CEO.

Issuing: (A) (i) 520,000 (13,000,000 pre-reverse split) shares of our common stock in exchange for $3,000,000 principal amount of an outstanding subordinated debenture in the principal amount of $3,500,000 and the forgiveness of accrued and unpaid interest thereon, and (ii) our 7% promissory note in the principal amount of $500,000 for the surrender of the remaining principal amount of the debenture; (B) 160,000 (4,000,000 pre-reverse split) shares of our common stock and our 7% promissory note in the principal amount of $500,000 for all of the outstanding shares of our Series A-1 Convertible Preferred Stock; and (C) 34,392 (859,802 pre-reverse split) shares of our common stock to our Chief Financial Officer in exchange for $662,048 of indebtedness payable to him.


The restructuring and simplification and strengthening of our capital structure has allowed us to concentrate on developing our secure messaging business, which has focused on gaming, educational and security applications in China and Hong Kong, while seeking acquisition opportunities. In September 2017, Mark White who had previously served as our Chief Executive Officer, was appointed Chief Executive Officer to develop and implement our acquisition strategy.

Acquisition of a Controlling Interest in Once In A Preferred Stock that also included 100,000 Class B warrants, each warrant convertibleLifetime LLC

On February 22, 2018, we acquired 51% of the membership interests in Once In A Lifetime LLC, a Florida limited liability company d/b/a/ 123Wish (“123 Wish”), pursuant to one sharean Exchange Agreement dated January 18, 2018, with 123Wish and its members in consideration for 53,333 (1,333,334 pre-reverse split) shares of our common stock, atplus an exercise priceadditional number of $4 per share. Theshares of our common stock based upon the net proceedsafter tax earnings of 123Wish during the six month periods ending six and twelve months after the completion of the offering were $982,000acquisition. Once In A Lifetime LLC has been merged into our newly formed majority-owned Delaware subsidiary, 123Wish, Inc.

123 Wish is a subscription-based, experience marketplace that focuses on providing users with exclusive opportunities to enjoy personalized, dream experiences with social media influencers, including Jake Paul and Team 10, as well as celebrities, professional athletes, fashion designers and artists, while supporting a diverse range of charities.

Acquisition of C-Rod, Inc.

On March 20, 2018, we acquired C–Rod, Inc., including its record label, Velveteen Entertainment, and media division, Mues Media (collectively, the “C-Rod Companies”) pursuant to an Exchange Agreement dated February 27, 2018 with C-Rod, Inc., Christopher Rodriguez and Patricia Rodriguez, in consideration for $150,000, 55,045 (1,376,147 pre-reverse split) shares of our common stock issued to Cap United LLC, plus an additional number of shares of our common stock based upon the net after deducting offering costs.


The holderstax earnings of Series A Preferred Stock are entitled to receive cumulative dividendsC-Rod during a period of twenty-four (24) months from andthe two years ending after the Issuance Date (the “Dividend Period”). During the Dividend Period for each outstanding share of Series Preferred Stock, dividends shall be payable quarterly in cash, at the rate of 10% per annum on or before each ninety (90) day period following the Issuance Date (each a “Dividend Payment Date”), with the first Dividend Payment Date to occur promptly following the three month period following the Issuance Date, and continuing until the endcompletion of the Dividend Period. Followingacquisition. On May 2, 2018, we amended the expirationarticles of incorporation of C-Rod, Inc. to change its corporate name to Love Media House, Inc. 

C-Rod, Inc., a music production company founded in 2002 by Grammy-nominated, multi-platinum producer and composer Christopher Rodriguez, regularly works with artists, which have included many celebrity acts.

Acquisition of a Controlling Interest in Banana Whale Studios Pte. Ltd.

On May 18, 2018,we entered into and consummated an Exchange Agreement (the “Exchange Agreement”) with Banana Whale Studios Pte. Ltd., a Singapore corporation (“Banana Whale”), and the founding shareholders of Banana Whale (the “Banana Whale Stockholders”), pursuant to whichwe acquired 51% of the Dividend Period, the holdersoutstanding shares (“Controlling Interest in Banana Whale”) of Series A Preferred Stock shall not be entitled to any additional dividend payment or coupon rate.

SharesBanana Whale in exchange for a number of Series A Preferred Stock are convertible in whole or in part, at the option of the holders, intoour shares of common stock at $5.85 per share priorto be based upon the earnings of Banana Whale. Banana Whale is a B2B software provider in the $100+ billion-dollar gaming industry focusing on innovation and next generation games and entertainment. As a condition to closing the acquisition, Banana Whale Stockholders demanded and we deposited in escrow for their benefit 295,320 (7,383,000 pre-reverse split) shares of our common stock (“OHGI Shares”) with a fair value of $4,983,000 as security for our obligation to issue such shares to which they may become entitled. If the number of shares to which the Banana Whale Stockholders become entitled is less than 295,320 (7,383,000 pre-reverse split), the excess shares will be returned to us for cancellation. We also granted Banana Whale the right to use our secure messaging software.

Acquisition of 123Wish Software

Pursuant to the Maturity,terms of that certain Agreement on Sale of 123Wish Software dated September 27, 2018 (“Software Sale Agreement”), among us, Once in a Lifetime Platform LLC (“OIALP”), and allOne Horizon Hong Kong Limited (“OHHK”), OIALP sold and assigned to OHHK eighty percent (80%) of the intellectual property rights to OIALP’s software platform and App that underlies 123Wish’s business in exchange for our making an additional investment of $100,000 into 123Wish without requiring the minority shareholders in 123Wish (some of whom are members of OIALP) to put up matching funds and our issuing 120,000 (3,000,000 pre-reverse split) shares of its common stock to members of OIALP.


Acquisition of a Controlling Interest in Browning Productions& Entertainment, Inc.

On October 22, 2018, we entered into an Exchange Agreement (“Browning Exchange Agreement”) pursuant to which we acquired a majority of the outstanding shares (the “Controlling Interest in Browning”) of Series A Preferred Stock shall automatically convertBrowning Productions&Entertainment, Inc., a Florida corporation (“Browning Productions”), from William J. Browning, the sole stockholder of Browning. Browning Productions produces television programs which have aired internationally as well as nationally.

In exchange for the controlling interest in Browning Productions, we paid Mr. Browning $10,000 and issued to him 12,000 (300,000 pre-reverse split) shares of common stock, upon Maturity, provided however, at no time may holders convert shares of Series A Preferred Stock if theplus an additional number of shares of common stock which can be up to a maximum of 680,000 (17,000,000 pre-reverse split) shares, determined by dividing two and a half times the net after tax earnings of Browning Productions during the twelve month period ending December 31, 2019 by the average of the closing price of our common stock during the ten consecutive trading days immediately preceding the end of 2019.

Though the terms of this transaction only required a $20,000 cash payment ($10,000 in cash under the non-binding letter of intent and $10,000 in cash under the Browning Exchange Agreement) to Mr. Browning, we were required to provide Browning Productions with a working capital loan in an initial amount of $150,000, which is to be repaid out of the post-closing net profit of Browning Productions as well as earmark an additional $150,000 in cash for future investment in Browning Productions (to assist in funding the future operations of Browning Productions).

We have a right of first refusal to purchase the remaining shares of Browning Productions.

Disposition of a Controlling Interest in Banana Whale Studios Pte. Ltd.  

On February 4, 2019, we entered into and consummated an agreement (the “Agreement”) with Banana Whale and the Banana Whale Stockholders, pursuant to which we sold the Controlling Interest in Banana Whale in exchange for $2,000,000, consisting of $1,500,000 in cash and a $500,000 promissory note bearing interest at 5% per annum payable on December 31, 2019 (the “BWS Note”). Under the BWS Note, Banana Whale can prepay the BWS Note in whole or in part without premium or penalty. Pursuant to the BWS Note, the Banana Whale Stockholders agreed to guarantee the payments of all amounts due thereunder on a limited-recourse basis. On February 4, 2019, we also entered into a Pledge and Escrow Agreement with the Banana Whale Stockholders pursuant to which the Banana Whale Stockholders agreed to place the Controlling Interest in Banana Whale in escrow as security for payment of the BWS Note.

The Agreement also terminated certain of the remaining obligations under the Exchange Agreement which was previously entered into by us and the Banana Whale Stockholders, releasing us, Banana Whale and the Banana Whale Stockholders from their remaining obligations thereunder. Pursuant to the Exchange Agreement, we had agreed to acquire the Controlling Interest in Banana Whale in exchange for a number of our shares to be based upon the earnings of Banana Whale. Under the Agreement, the Company agreed to leave the OHGI Shares in escrow and together with the Banana Whale Stockholders, to instruct the escrow agent that the OHGI Shares will remain in escrow for a period of at least 90 days pending an absence of asserted claims under the Agreements indemnification provisions. 

Proposed Acquisition of a Controlling Interest in Maham

Pursuant to the terms of a definitive Exchange Agreement, dated February 20, 2019, among us, Maham LLC (“Maham”), the members of Maham, and Mr. Hauswirth (the “Maham Exchange Agreement”), we agreed to (i) issue to the members of Maham unregistered shares of Common Stock equal to (a) 25% of the dollar value the Members have invested in Maham to date, with all non-cash investment based equity owned by members will be exchanged at the same valuation as the valuation of Maham at the time that such non-cash investment based equity was issued, divided by (b) the market value of OHGI Common Stock, determined in accordance with the terms of the Exchange Agreement, as of the closing date (the “Initial Shares”), and (ii) upon completion of the second 12-month period following the closing, issue up to a maximum of 680,000 (17,000,000 pre-reverse split) unregistered shares to the members of Maham on a pro-rata basis based on their holdings, which number of additional shares will be equal to two-and-a-half times (2.5x) the net after-tax earnings of Maham for the First Adjustment Period (as defined in the Maham Exchange Agreement), divided by the market value of our Common Stock. Upon the closing of the Maham transaction, we will own 51% of the issued and outstanding interests in Maham.

Adoption of One Horizon Group, Inc. Amended and Restated 2018 Equity Incentive Plan

Our board of directors and shareholders adopted and approved on November 2, 2018 and December 27, 2018, respectively, the One Horizon Group, Inc. Amended and Restated 2018 Equity Incentive Plan, effective December 27, 2018, under which stock options and restricted stock may be granted to officers, directors, employees and consultants. Under the Plan, 600,000 (15,000,000 pre-reverse split) shares of Common Stock, par value $0.0001 per share, are reserved for issuance, subject to increase pursuant to the terms and conditions as set forth in the Plan. 

8

Voluntary Termination By OHGI of Listing of Common Stock on the Nasdaq Capital Market

Our common stock commenced trading on the Nasdaq Capital Market (“Nasdaq”) on July 9, 2014 under the ticker symbol “OHGI”. On May 10, 2018, the Company received notice (the “Notice”) from Nasdaq indicating that the Company’s common stock did not meet the continued listing requirement as set forth in Nasdaq Listing Rule 5550(a)(2) based on the closing bid price of the common stock for the preceding 30 business days.

Under Nasdaq Listing Rule 5810(c)(3)(A), the Company received a 180-calendar day grace period from the date of the Notice to regain compliance by meeting the continued listing standard of a minimum closing bid price of at least $1.00 per share for 10 consecutive business days during the 180-calendar day grace period ended on November 6, 2018. During the grace period, the Company was unable to regain compliance with the minimum bid price standard.

In accordance with NASDAQ Listing Rule 5810(c)(3)(A), in addition to such initial grace period, the Company could be afforded an additional 180-calendar day compliance period, provided that on the 180th calendar day of the initial grace period, the Company (i) met the applicable market value of publicly held shares requirement for continued listing and all other applicable requirements for initial listing on the Nasdaq (except for the bid price requirement) and (ii) notified Nasdaq of its intent to cure the minimum bid price deficiency. Prior to expiration of the initial grace period, the Company requested an additional 180-calendar day compliance period and notified Nasdaq of the Company’s compliance with the stated listing standards and its intent to cure the minimum bid price deficiency through a reverse stock split, if necessary. On November 7, 2018, the Company received written notification from Nasdaq granting an additional 180-calendar day period, to regain compliance with the minimum bid price requirement described above. This second 180-calendar day period relates exclusively to the bid price deficiency and we could be delisted during the 180-calendar day period for failure to maintain compliance with any other listing requirements that occurs during the 180-calendar day period.

During subsequent interactions between the Company and the Nasdaq it became apparent that the Nasdaq may make a finding of noncompliance with the stockholder approval requirements of Nasdaq Listing Rule 5635 and may initiate delisting proceedings against the Company.

As a result of the foregoing, on February 26, 2019, Martin Ward, Chief Financial Officer of the Company, approved the voluntary termination of the listing of OHGI’s common stock on the Nasdaq. On March 8, 2019, the Company filed an application on Form 25 with the SEC to voluntarily terminate its Nasdaq listing. The delisting from the Nasdaq became effective on March 8, 2019. As of March 8, 2019, the Company’s common stock is quoted on the OTCQB tier of the OTC Markets under the ticker symbol “OHGI.” The transition from the Nasdaq to the OTCQB did not materially affect the Company’s business operations.

Recent Developments

Reverse Stock Split

A reverse stock split (“Reverse Stock Split”) of the outstanding shares of the Common Stock in the range from one-for-two (1-for-2) to one-for-fifty (1-for-50), which ratio was to be selected by the Board of Directors, was approved by our Board of Directors and by our shareholders at the annual meeting of the shareholders held on December 27, 2018 as described in that proxy statement on that certain Definitive Schedule 14A filed with the SEC on November 28, 2018. The board of directors anticipates setting the ratio of the reverse stock split, and the reverse stock split becoming effective following approval by FINRA of the reverse stock split, prior to the effective date of the registration statement (of which this prospectus forms a part).

Except as otherwise indicated and except in our financial statements, all references to Common Stock, share data, per share data and related information depict an assumed 1-for-25 Reverse Stock Split until final determination by the Board as if it was effective and as if it had occurred at the beginning of the earliest period presented. The 1-for-25 Reverse Stock Split, when effective, will combine each twenty-five shares of our outstanding Common Stock into one share of Common Stock, without any change in the par value per share, and the 1-for-25 Reverse Stock Split correspondingly will adjust, among other things, the exercise rate of our warrants and options into Common Stock. No fractional shares will be issued in connection with the 1-for-25 Reverse Stock Split, and any fractional shares resulting from the 1-for-25 Reverse Stock Split will be rounded up to the nearest whole share.


Issuance of Additional Shares of Common Stock in Connection with Acquisition of a Controlling Interest in Browning Productions& Entertainment, Inc.

On May 16, 2019, we issued 81,933 (2,048,334 pre-reverse split) shares of Common Stock to Browning Companies International LLC to modify the Browning Exchange Agreement at a value of $1.547 ($0.06188 pre-reverse split) per share (for an aggregate value of $126,760).

Rescission of Issuance of Common Stock to Certain Investors

On July 17, 2019, we rescinded the issuance of an aggregate of 340,000 (8,500,000 pre-reverse split) shares of Common Stock to certain investors, which were originally acquired for a purchase price of $3.75 ($0.15 per pre-reverse split) share (for a total aggregate purchase price of $1,275,000).

Issuance of Common Stock to Consultant

On June 28, 2019, we issued the 200,000 (5,000,000 pre-reverse split) shares of Common Stock with an aggregate fair value of $150,000 to One Percent Investments, Inc., a Delaware corporation (the “Consultant”), in exchange for proposed consulting services to the Company relating to the Company’s further development and implementation of its corporate and business plan and potential merger and/or acquisition activities, alliances, joint ventures and corporate restructuring. When issuing the shares of Common Stock, the Company relied on the exemption from the registration requirements of the Securities Act of 1933, as amended, available to it under Section 4(a)(2) thereunder as a transaction by an issuer not involving any public offering of securities.

Proposed Acquisition of a Controlling Interest in Redspots

In May 2019, we entered into a preliminary, non-binding letter of intent to acquire a majority interest in Redspots Creative (Hong Kong) Company Limited (Redspots Creative), a multi-media production company, in a stock transaction based on post-closing, future earnings. Redspots Creative provides two dimensional (2D) and three dimensional (3D) video production services, as well as augmented/virtual reality (AR/VR) interactive technologies and products through a robust and proprietary AR platform.  We anticipate this planned acquisition to be transformational to our business as we have the ability to leverage Redspots across our major media and digital platforms.

Issuance of Convertible Note

On July 11, 2019, we issued a convertible note to Bespoke Growth Partners, Inc. in the principal amount of $100,000. The note is payable in full on January 11, 2020 and bears interest at the rate of 20.00% per annum. Accrued interest on the note is payable on the eleventh day of each month. The note may not be prepaid in whole or in part except as set forth in the note. Any amount of principal or interest on the note which is not paid when due shall bear interest at the rate of the lesser of 28% per annum or the maximum amount permitted under applicable law from the due date until paid. The note may be convertible into shares of common stock of our company at any time only following an event of default at a price per share of 50% (representing a 50% discount) of the lowest one trading price for our common stock during the 20-trading day period ending on the latest completed trading day prior to the date of conversion.

Financing Transaction Related to the Offering

The Equity Line

On August 5, 2019 (the “Closing Date”), the Company entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”) with Crown Bridge Partners, LLC (“Selling Stockholder”), dated as of July 18, 2019, pursuant to which, upon the terms and subject to the conditions thereof, the Selling Stockholder is committed to purchase shares of the Company’s common stock (the “Put Shares”) at an aggregate price of up to $10,000,000 (the “Maximum Commitment Amount”) over the course of its term. The term of the Equity Purchase Agreement commenced on August 5, 2019 and will end on the earlier of (i) the date on which the Selling Stockholder has purchased Put Shares pursuant to the Equity Purchase Agreement equal to the Maximum Commitment Amount, (ii) July 18, 2022, or (iii) written notice of termination by the Company.

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From time to time over the term of the Equity Purchase Agreement, commencing on the date on which a registration statement registering the Put Shares (the “Registration Statement”) becomes effective, the Company may, in its sole discretion, provide the Selling Stockholder with a put notice (each a “Put Notice”) to purchase a specified number of the Put Shares (each a “Put Amount Requested”) subject to the limitations discussed below and contained in the Equity Purchase Agreement. Upon delivery of a Put Notice, the Company must deliver the Put Amount Requested as Deposit Withdrawal at Custodian (DWAC) shares to Selling Stockholder within two trading days.

The actual amount of proceeds the Company receives pursuant to each Put Notice (each, the “Put Amount”) is to be determined by multiplying the Put Amount Requested by the applicable purchase price. The purchase price for each of the Put Shares equals 82% of the lesser of the (i) “Market Price,” which is defined as the lowest traded price for any trading day during the 15 trading days immediately preceding the respective date of the put, or (ii) “Valuation Price,” which is defined as the lowest traded price during the seven trading days following the clearing date associated with the applicable Put Notice. Within four trading days following the end of the valuation periods, the Buyer will deliver the Put Amount to the Company via wire transfer.

The Put Amount Requested pursuant to any single Put Notice must have an aggregate value of at least $10,000, and cannot exceed the lesser of (i) $175,000, and (ii) 200% of the average daily trading value of the common stock in the 15 trading days immediately preceding the Put Notice.

In order to deliver a Put Notice, certain conditions set forth in the Equity Purchase Agreement must be met, as provided therein. In addition, the Company is prohibited from delivering a Put Notice if: (i) the sale of Put Shares pursuant to such conversionPut Notice would cause the Company to issue and sell to Selling Stockholder, or Selling Stockholder to acquire or purchase,  a number of shares of the Company’s common stock that, when aggregated with all shares of common stock purchased by Selling Stockholder pursuant to all prior Put Notices issued under the Equity Purchase Agreement, would exceed the Maximum Commitment Amount; or (ii) the issuance of the Commitment Shares pursuant to a request for the Commitment Shares would cause the Company to issue and sell to Selling Stockholder, or Selling Stockholder to acquire or purchase, an aggregate number of shares of common stock that would result in Selling Stockholder beneficially owned by such holder and its affiliates to exceed 9.99%owning more than 4.99% of the then issued and outstanding shares of the Company’s common stock.

On August 5, 2019, in connection with the execution of the Equity Purchase Agreement, the Company agreed to issue, and issued, 173,552 (4,338,793 pre-reverse split) shares of the Company’s common stock outstanding(the “Commitment Shares”) to Selling Stockholder as a commitment fee.

Registration Rights Agreement

On the Closing Date, the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with Selling Stockholder pursuant to which the Company is obligated to file the Registration Statement to register the resale of the Commitment Shares and Put Shares. Pursuant to the Registration Rights Agreement, the Company must (i) file the Registration Statement within 45 calendar days from the Closing Date, (ii) use reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act of 1933, as amended, as promptly as possible after the filing thereof, and (iii) use its reasonable efforts to keep such Registration Statement continuously effective under the Securities Act until all of the Commitment Shares and Put Shares have been sold thereunder or pursuant to Rule 144.

Loan

In coordination with the Equity Purchase agreement, on July 24, 2019, the Company entered into a six month loan with Labrys Fund, LP of $180,000 issued at a 10% original issue discount, the Company therefore received net proceeds of $162,000. The loan is at an annual coupon rate of 12%.

Use of Proceeds

We intend to use the proceeds from the Equity Line for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the Board of Directors deems to be in the best interest of the Company.

We intend to raise additional capital through equity and debt financing as needed, though there cannot be any assurance that such funds will be available to us on acceptable terms, on an acceptable schedule, or at all. 


Corporate Information

Our principal executive offices are located at 4300 Biscayne Blvd., Suite 203, Miami, Florida 33137, and our telephone number at that location is (305) 420-6640. The URL for our website is www.onehorizongroup.com. The information contained on or connected to our website is not incorporated by reference into, and you must not consider the information to be a part of, this prospectus.

Transfer Agent

The transfer agent and registrar, for our common stock is Island Stock Transfer, LLC. The transfer agent and registrar’s address is at 15500 Roosevelt Boulevard, Suite 301, Clearwater, Florida 33760. The transfer agent’s telephone (727) 289-0010.

The Offering

Securities Offered by the Selling Stockholder1,221,309 shares of Common Stock
Common Stock Outstanding before Offering3,930,646 (98,266,169 pre-reverse split) shares
Common Stock Outstanding after Offering5,151,955 shares, assuming all 1,221,309 shares are sold to the Selling Stockholder under the Equity Line.  If we sell less shares of Common Stock to the Selling Stockholder under the Equity Line, we have substantially less Common Stock outstanding after the Offering.

Use of ProceedsWe will not receive any of the proceeds from the sale of the Common Stock registered hereunder. We will receive proceeds from our sales of Common Stock to the Selling Stockholder under the Equity Line. We intend to use such proceeds, if any, as set forth under “Use of Proceeds” beginning on page 38.
Risk FactorsAn investment in our securities involves a high degree of risk and could result in a loss of your entire investment. Further, the issuance to, or sale by, the Selling Stockholder of a significant amount of shares being registered in this Registration Statement at any given time could cause the market price of our common stock to decline and to be highly volatile and we do not have the right to control the timing and amount of any sales by the Selling Stockholder of such shares. Prior to making an investment decision, you should carefully consider all of the information in this Prospectus and, in particular, you should evaluate the risk factors set forth under the caption “Risk Factors” beginning on page 14.
Symbol on the OTCQBOHGI

12

SUMMARY HISTORICAL FINANCIAL DATA

The following table presents our summary historical financial data (in thousands, except for per share data) for the periods indicated. The selected historical consolidated financial data for the years ended December 31, 2018 and 2017 and the balance sheet data as of December 31, 2018 and 2017 are derived from the audited financial statements. The selected historical financial data for the six months ended June 30, 2019 and 2018 and the balance sheet data as of June 30, 2019 and 2018 are derived from our unaudited financial statements.

Historical results are included for illustrative and informational purposes only and are not necessarily indicative of results we expect in future periods, and results of interim periods are not necessarily indicative of results for the entire year.The summary financial data presented below should be read in conjunction with, and are qualified in their entirety by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the notes thereto included elsewhere in this prospectus.

  

Year Ended
December 31,
2018

  

Year Ended
December 31,
2017

  

Six Months Ended
June 30,
2019

  

Six Months Ended
June 30,
2018

 
        (unaudited) 
Statement of Operations Data            
Total revenues $787  $714  $454  $544 
Total cost of revenues  2,239   855   545   1,078 
Gross margin (deficiency)  (1,452)  (141)  (91)  (534)
Total operating expenses  12,775   4,253   2,268   5,001 
Loss from operations  (14,227)  (4,394)  (2,359)  (5,535)
Total other income (expense)  556   (665)  519   (391)
Loss on continuing operations  (13,769)  (5,059)  (1,840)  (5,926)
Loss on discontinued operations  (908)  (2,375)  -   (296)
Loss for the period  (14,579)  (2,375)  (1,840)  (6,222)
Net loss attributable to non-controlling interest  810   -   100   466 
Net loss attributable to One Horizon Group, Inc stockholders  (13,769)  (7,434)  (1,740)  (5,756)
Net loss per share, basic and diluted – continuing operations $(0.27) $(0. 40) $(0.02) $(0.16)
Net loss per share, basic and diluted – discontinued operations $(0.02) $(0.19) $-  $(0.01)
                 
Balance Sheet Data (at period end)                
Cash and cash equivalents $353  $763  $847  $604 
Working capital (deficit) (1) $1,567  $893  $131  $1,812 
Total assets $10,925  $8,802  $9,286  $22,868 
Total liabilities $2,455  $1,550  $2,817  $1,660 
Temporary Equity – redeemable common stock $605  $-  $605  $- 
Stockholders’ equity (deficit) $7,865  $7,252  $5,864  $21,208 

(1)Working capital (deficit) represents total current assets less total current liabilities.


RISK FACTORS

An investment in our securities involves a high degree of risk. Before you invest in our securities, you should give careful consideration to the following risk factors, in addition to the other information included in this prospectus, including our financial statements and related notes, before deciding whether to invest in our securities. The occurrence of any of the adverse developments described in the following risk factors could materially and adversely harm our business, financial condition, results of operations or prospects. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. 

RISKS RELATED TO OUR BUSINESS

We have a history of operating losses and our auditors have indicated that there is a substantial doubt about our ability to continue as a going concern.

For the fiscal years ended December 31, 2018 and 2017, we reported net losses of $14,579,000 and $7,434,000, respectively, and negative cash flow from operating activities of $3,051,000 and $703,000, respectively. For the six months ended June 30, 2019 and 2018, we reported net losses of $1,840,000 and 6,222,000, respectively, and negative cash flow from operating activities of $1,401,000 and $1,519,000, respectively. As of June 30, 2019, we had an aggregate accumulated deficit of approximately $56,594,000. Such losses have historically required us to seek additional funding through the issuance of debt or equity securities. Our long term success is dependent upon among other things, achieving positive cash flows from operations and if necessary, augmenting such cash flows using external resources to satisfy our cash needs. As a result of our acquisitions during 2018 and a disposition of a certain subsidiary in early 2019, we project to have positive cash flows to fund operations during 2019. However, we may be unable to achieve these goals and actual results could differ from our estimates and assumptions, accordingly, we may have to supplement our cash flow, by debt financing or sales of equity securities. There can be no assurance that we will be able to obtain additional funding, if needed, on commercially reasonable terms, or of all.

As a result of these net losses and cash flow deficits and other factors, our independent auditors issued an audit opinion with respect to our consolidated financial statements for the two years ended December 31, 2018 that indicated that there is a substantial doubt about our ability to continue as a going concern.

Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. These adjustments would likely include substantial impairment of the carrying amount of our assets and potential contingent liabilities that may arise if we are unable to fulfill various operational commitments. In addition, the value of our securities, including common stock issued in this offering, would be greatly impaired. Our ability to continue as a going concern is dependent upon generating sufficient cash flow from operations and obtaining additional capital and financing, including funds to be raised in this offering. If our ability to generate cash flow from operations is delayed or reduced and we are unable to raise additional funding from other sources, we may be unable to continue in business even if this offering is successful. For further discussion about our ability to continue as a going concern and our plan for future liquidity, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Ability to Continue as a Going Concern.”

We are a holding company and depend upon our subsidiaries for our cash flows.

We are a holding company. All of our operations are conducted, and almost all of our assets are owned, by our subsidiaries. Consequently, our cash flows and our ability to meet our obligations depend upon the cash flows of our subsidiaries and the payment of funds by these subsidiaries to us in the form of dividends, distributions or otherwise. The ability of our subsidiaries to make any payments to us depends on their earnings, the terms of their indebtedness, including the terms of any credit facilities and legal restrictions. Any failure to receive dividends or distributions from our subsidiaries when needed could have a material adverse effect on our business, results of operations or financial condition.

Future acquisitions or strategic investments could disrupt our business and harm our business, results of operations or financial condition.

We may in the future explore potential acquisitions of companies or strategic investments to strengthen our business. Even if we identify an appropriate acquisition candidate, we may not be successful in negotiating the terms or financing of the acquisition, and our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business.

Acquisitions involve numerous risks, any of which could harm our business, including:

straining our financial resources to acquire a company;

anticipated benefits may not materialize as rapidly as we expect, or at all;


diversion of management time and focus from operating our business to address acquisition integration challenges;

retention of employees from the acquired company;

cultural challenges associated with integrating employees from the acquired company into our organization;

integration of the acquired company’s accounting, management information, human resources and other administrative systems;

the need to implement or improve controls, procedures and policies at a business that prior to the acquisition may have lacked effective controls, procedures and policies; and

litigation or other claims in connection with the acquired company, including claims from terminated employees, former stockholders or other third parties.

Failure to appropriately mitigate these risks or other issues related to such strategic investments and acquisitions could result in reducing or completely eliminating any anticipated benefits of transactions, and harm our business generally. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses or the impairment of goodwill, any of which could have a material adverse effect on business, results of operations or financial condition.

We may require additional funding for our growth plans, and such funding may result in a dilution of your investment.

We have estimated our funding requirements in order to implement our growth plans.

If the costs of implementing such plans should exceed these estimates significantly or if we come across opportunities to grow through expansion plans which cannot be predicted at this time, unlessand our funds generated from our operations prove insufficient for such purposes, we may need to raise additional funds to meet these funding requirements.

These additional funds may be raised by issuing equity or debt securities or by borrowing from banks or other resources. We cannot assure you that we will be able to obtain any additional financing on terms that are acceptable to us, or at all. If we fail to obtain additional financing on terms that are acceptable to us, we will not be able to implement such plans fully if at all. Such financing even if obtained, may be accompanied by conditions that limit our ability to pay dividends or require us to seek lenders’ consent for payment of dividends, or restrict our freedom to operate our business by requiring lender’s consent for certain corporate actions.

Further, if we raise additional funds by way of a rights offering or through the holder provides us with a waiver noticeissuance of new shares, any shareholders who are unable or unwilling to participate in such forman additional round of fund raising may suffer dilution in their investment.

Our executive officers do not reside in the United States.

Our U.S. stockholders would face difficulty in:

Effecting service of process within the United States on our executive officers, if considered necessary.

Enforcing judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against the executive officers.

Enforcing judgments of U.S. courts based on civil liability provisions of U.S. federal securities laws in foreign courts against the executive officers.

Bringing an original action in foreign courts to enforce liabilities based on the U.S. federal securities laws against the executive officers.


Accordingly, persons contemplating an investment in our common stock should seriously consider these factors before making an investment decision.

Our future success depends on the continuing efforts of our key employees and our ability to attract, hire, retain and motivate highly skilled and creative employees in the future.

Our future success depends on the continuing efforts of our executive officers, our founders and other key employees, in particular to Mark White, our Chief Executive Officer, and Martin Ward, our Chief Financial Officer. We rely on the leadership, knowledge and experience that our executive officers, founders and key employees provide. They foster our corporate culture, which we believe has been instrumental to our ability to attract and retain new talent. Any failure to attract new or retain key creative talent could have a material adverse effect on our business, financial condition and results of operations.

The market for talent in our key areas of operations, including California and New York, is intensely competitive, which could increase our costs to attract and retain talented employees. As a result, we may incur significant costs to attract and retain employees, including significant expenditures related to salaries and benefits and compensation expenses related to equity awards, and we may lose new employees to our competitors or other companies before we realize the benefit of our investment in recruiting and training them.

Employee turnover, including changes in our management team, could disrupt our business. The loss of one or more of our executive officers, founders or other key employees, or our inability to attract and retain highly skilled and creative employees, could have a material adverse effect on our business, results of operations or financial condition.

We believe our corporate culture has contributed to our success and, if we are unable to maintain it as we grow, our business could be harmed.

We believe our corporate culture has been a key element of our success. However, as our organization grows, it may be difficult to maintain our culture, which could reduce our ability to attract and maintain new talent and operate effectively. The failure to maintain the key aspects of our culture as our organization grows could result in decreased employee satisfaction, increased difficulty in attracting top talent and increased turnover and could compromise the quality of our client service, all of which are important to our success and to the effective execution of our business strategy. Accordingly, if we are unable to maintain our corporate culture as we grow our business, this could have a material adverse effect on our business, results of operations or financial condition.

We may not have sufficient insurance coverage and an interruption of our business or loss of a significant amount of property could have a material adverse effect on our financial condition and operations.

We currently do not maintain any insurance policies against loss of key personnel and business interruption as well as product liability claims. If such events were to occur, our business, financial performance and financial position may be materially and adversely affected.

We could become involved in claims or litigations that may result in adverse outcomes.

From time-to-time we may be involved in a variety of claims or litigations. Such proceeding may initially be viewed as immaterial, but could prove to be material. Litigations are inherently unpredictable and excessive verdicts do occur. Given the inherent uncertainties in litigation, even when we can reasonably estimate the amount of possible loss or range of loss and reasonably estimable loss contingencies, the actual outcome may change in the future due to new developments or changes in approach. In addition, such claims or litigations could involve significant expense and diversion of management’s attention and resources from other matters.

We may be unable to adequately safeguard our intellectual property or we may face claims that may be costly to resolve or that limit our ability to use such intellectual property in the future.

Our business is reliant on our intellectual property. Our software is the result of our research and development efforts, which we believe to be proprietary and unique. However, we are unable to assure you that third parties will not assert infringement claims against us in respect of our intellectual property or that such claims will not be successful. It may be difficult for us to establish or protect our intellectual property against such third parties and we could incur substantial costs and diversion of management resources in defending any claims relating to proprietary rights. If any party succeeds in asserting a claim against us relating to the disputed intellectual property, we may need to obtain licenses to continue to use the same. We cannot assure you that we will be able to obtain these licenses on commercially reasonable terms, if at all. The failure to obtain the necessary licenses or other rights could cause our business results to suffer.


Where litigation is necessary to safeguard our intellectual property, or to determine the validity and scope of the proprietary rights of others, this could result in substantial costs and diversion of our resources and could have a material adverse effect on our business, financial condition, operating results or future prospects.

We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery and anti-kickback laws with respect to our activities outside the United States.

We distribute our products to locations within and outside the United States as well as operate our business within and outside the United States. The U.S. Foreign Corrupt Practices Act, and other similar anti-bribery and anti-kickback laws and regulations, generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. We cannot assure you that we will be successful in preventing our agents from taking actions in violation of these laws or regulations. Such violations, or allegations of such violations, could disrupt our business and result in a material adverse effect on our financial condition, results of operations and cash flows.

We are subject to a number of risks related to credit card and debit card payments we accept.

We accept payments through credit card and debit card transactions. For credit card and debit card payments, we pay interchange and other fees, which may increase over time. An increase in those fees would require us to either increase the prices we charge for our services which could cause us to lose clients or suffer an increase in our operating expenses, either of which could harm our operating results. If we or any of our processing vendors have problems with our billing software, or the billing software malfunctions, it could have an adverse effect on our customer satisfaction and could cause one or more of the major credit card companies to disallow our continued use of their payment products. In addition, if our billing software fails to work properly and, as a result, we do not automatically charge our clients’ credit cards, debit cards or bank accounts on a timely basis or at all, we could lose revenues, which would harm our operating results. If we fail to adequately control fraudulent credit card and debit card transactions, we may face civil liability, diminished public perception of our security measures and significantly higher credit card and debit card related costs, each of which could adversely affect our business, financial condition and results of operations. The termination of our ability to process payments on any major credit or debit card would significantly impair our ability to operate our business.

Security breaches of confidential customer information, in connection with our electronic processing of credit and debit card transactions, or confidential employee information may adversely affect our business.

Our business requires the collection, transmission and retention of large volumes of customer and employee data, including credit and debit card numbers and other personally identifiable information, in various information technology systems that are maintained internally and by third parties with whom we contract to provide services. The integrity and protection of that customer and employee data is critical to us. Our customers and employees have a high expectation that we and our service providers will adequately protect their personal information.

The information, security and privacy requirements imposed by governmental regulation are increasingly demanding. Our systems may not be able to satisfy these changing requirements and customer and employee expectations, or may require significant additional investments or time in order to do so. Efforts to hack or breach security measures, failures of systems or software to operate as designed or intended, viruses, operator error or inadvertent releases of data all threaten our information systems and records. A breach in the security of our service providers’ information technology systems could lead to an interruption in the operation of our systems, resulting in operational inefficiencies and a loss of profits. A significant theft, loss or misappropriation of, or access to, customers’ or other proprietary data or other breach of our information technology systems could result in fines, legal claims or proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, which could disrupt our operations, damage our reputation and expose us to claims from customers and employees, any of which could have a material adverse effect on our financial condition and results of operations.


We rely on third parties to provide services in connection with our business, and any failure by these third parties to perform their obligations could have an adverse effect on our business, financial condition and results of operations.

We have entered into agreements with third parties that include, but are not limited to, information technology systems (including hosting our website, mobile application and our point of sale system), software development and support, select marketing services, employee benefits servicing and video production and distribution. Services provided by third-party suppliers could be interrupted as a result of many factors, such as acts of nature or contract disputes. Accordingly, we are subject to the risks associated with the third parties’ abilities to provide these services to meet our needs. Any failure by a third party to provide services for which we have contracted on a timely basis or within expected service level and performance standards could result in a disruption of our business and have an adverse effect on our business, financial condition and results of operations.

RISKS RELATED TO OUR VIDEO AND MUSIC PRODUCTION SERVICES (BROWNING PRODUCTIONS AND LOVE MEDIA HOUSE)

Our contemplated video and audio production projects or services may not be accepted by distributors and/or the marketplace and our business may fail as a direct result of such lack of market acceptance.

The ultimate profitability of any video or audio production project, service or product we offer, depends upon its ultimate audience appeal in relation to the cost of its production and distribution. The audience appeal of a given concept depends, among other things, on unpredictable critical reviews and changing public tastes and such appeal cannot be anticipated with certainty. If certain segments of the viewing public do not like, are willing to pay for, or otherwise approve of our productions, our business may fail.

Cost overruns could affect our results of operations and may cause the failure of our business.

The costs of completing video or audio production projects are often underestimated and may be increased by factors beyond our control. Such factors may include weather conditions, illness of technical and artistic personnel, labor disputes, governmental regulations, equipment breakdowns and other production disruptions.  While we intend to engage production personnel who have demonstrated abilities to complete projects within assigned budgets, the risk of a project running over budget is always significant and may have a substantial adverse impact on our future profitability.

We may be responsible for expenses incurred for a project that has been cancelled.

A client can cancel a project after awarding it to us. Often the contracts we enter into have cancellation terms that obligate the client to reimburse us for expenses incurred for a project that has been cancelled. Our project schedules typically require quick turnarounds and, as a result, we normally book resources required for the project promptly upon the award of the contract. Some of our projects may be cancelled after we have incurred expenses, and we may not be able to obtain reimbursement for these expenses. Our inability to recover expenses that we incur on cancelled projects could have a material adverse effect on our business, results of operations or financial condition.

It may become increasingly expensive to operate in the media business.

The cost of producing videos and music has steadily increased and may continue to increase in the future. For example, costs to maintain or obtain the latest technologies to produce high-quality work in animation and mixed media has been increasing. If costs continue to increase without proportionate increases in revenues, this could have a material adverse effect on our business, results of operations or financial condition.

We are subject to legal or reputational risks that could restrict our activities or negatively impact us.

Our video and music production businesses are subject to specific rules, prohibitions, restrictions, labeling disclosures and warning requirements. Existing and proposed laws and regulations concerning user privacy, use of personal information and on-line tracking technologies also could affect the efficacy and profitability of internet-based and digital marketing. We could be exposed to liabilities for content we have created for our clients if their products, claims or other factors are challenged. We could suffer reputational risk as a result of legal action or from undertaking work that may be challenged by consumer groups or considered controversial, which may have a material adverse effect on our business, results of operations or financial condition.

Our business could be adversely affected by economic developments in the video and audio entertainment industries and/or the economy in general.

Our business of providing video and audio production services is highly competitive. It is also partially dependent on the availability of potential viable projects and necessary funding to successfully complete such projects. Accordingly, we will need to locate promising projects and be able to secure necessary funding, in what may be uncertain markets.  We are therefore susceptible to not only the economics of the entertainment business, but also the economy in general.  Any significant downturn in the market or in general economic conditions would likely negatively affect our business and your investment in our common stock.


Future growth and development of operations will depend on acceptance of our business plan. If our video and audio production services and projects are not deemed desirable and suitable for purchase, and we cannot establish a viable customer base, we may not be able to generate future revenues. This would result in a failure of our business and a loss of any investment one makes in our shares.

The acceptance of the company’s video and audio production services by customers is critically important to our success. We cannot be certain that our offered services will be appealing to prospective customers and, as a result, there may not be a demand for these services. This would likely limit future sales and we may never realize significant revenues. We intend to offer our services to video and entertainment professionals through networking and existing industry connections. There is no guarantee that interest in our services will develop, which could adversely affect our future business and revenues.

If sufficient demand for our services does not materialize, our business would be materially affected, which could result in the loss of your entire investment.

Demand for our services depends on many factors, including:

the number of customers we can attract and retain over time;

the economy in general and, in periods of rapidly declining economic conditions, customers may defer services, such as ours, to pay their own debts to remain solvent;

the competitive environment in the video and audio production markets may force us to reduce prices below desired pricing level or increase promotional spending;

the ability to anticipate changes in user preferences and to meet customers’ needs in a timely, cost-effective manner.

All these factors could result in immediate and longer-term declines in demand for our offered services, which could adversely affect our sales, cash flows and overall financial condition. As a result, an investor could lose his or her entire investment.

Our future success depends on our ability to develop services, products and projects and to sell them to distribution channels. The inability to establish distribution channels, may severely limit our growth prospects.

Our future business success is completely dependent on our ability to successfully develop services, products and projects and secure viable distribution channels. Revenues derived therefrom will represent vital funds necessary for our continued operations. The loss or damage of any of our business relationships and or revenues derived therefrom, will result in the inability to market our services, products and projects.

Competition in markets in which we operate is extensive and varied and our competitors are mostly larger and more established than we are.

Our business and the industry in which we operate are subject to extreme competition. There can be no guarantee that we can develop or sustain a market position or expand our business to successfully compete with other larger and more established companies. We anticipate the intensity of future competition will increase.

We compete with many entities in providing similar services to prospective customers. Such competitor entities include: (i) a variety of large nationwide businesses engaged in the video and audio production services industry, including but not limited to companies that have established loyal customer bases over several decades; (ii) video hardware and software companies that have an established customer base, have the same or a similar business plan as we do, and may be looking to expand nationwide; and (iii) a variety of other local and national video software and hardware companies with which we either currently or may, in the future, compete.


Many current and potential competitors are well established, have longer operating histories, significantly greater financial, operational resources and name recognition than we have. As a result, these competitors may have more credibility with both existing and potential customers, be able to offer more services, and more aggressively promote and sell their services. Our competitors may also be able to support more aggressive pricing than us, which could adversely affect sales, cause us to decrease prices to remain competitive, or otherwise reduce the overall gross profit earned on our services.

Changes in user preferences and discretionary spending may have a material adverse effect on our revenue, results of operations and financial condition.

Our future success depends, in part, upon the popularity of our services and our ability to develop our services and products in a way that appeals to users. Shifts in user preferences away from our offered services, our inability to develop effective production services and products that appeal to users, or material changes in our services that are not accepted by prospective users could harm our business. Also, our future success depends, to a significant extent, on discretionary user spending, which is influenced by general economic conditions and availability of discretionary income. Accordingly, we may experience an inability to generate revenue during economic downturns or during periods of uncertainty, where users decide to acquire less expensive services or products, or to forego expenditures due to a lack of available capital. Any material decline in discretionary spending could have a material adverse effect on our sales, results of operations, business and financial condition.

Our quarterly results of operations may fluctuate in the future. As a result, we may fail to meet or exceed the expectations of securities analysts or investors, which could cause our stock price to decline.

The video and audio production services business is extremely competitive and commercial success of any service is often dependent on factors beyond our control, including to market acceptance and quality of our services. Our quarterly results of operations have in the past, and may in the future, fluctuate as a result of a variety of factors, many of which are outside of our control, including limited visibility of the timing and certainty of future services and projects. In future periods, our revenue or profitability could decline or grow more slowly than we expect. If our quarterly revenues or results of operations do not meet or exceed the expectations of securities analysts or investors, the price of our common stock could decline substantially. In addition to the other risk factors set forth in this “Risk Factors” section, factors that may cause fluctuations in our quarterly revenues or results of operations include:

our ability to increase sales to existing clients and attract new clients;

our failure to accurately estimate or control costs;

the potential loss of significant clients;

maintaining appropriate staffing levels and capabilities relative to projected growth;

adverse judgments or settlements in legal disputes; and

general economic, industry and market conditions and those conditions specific to media companies such as us.

We believe that our quarterly revenues and results of operations on a year-over-year and sequential quarter-over-quarter basis may vary significantly in the future and that period-to-period comparisons of our results of operations may not be meaningful. You should not rely on the results of prior quarters as an indication of future performance.

Fluctuations in production schedules and project volume may cause our revenues and cash flows to vary from quarter to quarter.

Our revenues, cash flows from operations, results of operations and other key operating and financial measures have varied in the past, and may vary in the future, significantly from quarter to quarter due to video or audio production schedules and project volume. Often our clients engage in an evaluation process that frequently involves not only our pitch but also pitches of our competitors. We have limited control over the timing and mix of individual projects which could result in material fluctuations of our revenues, cash flows, results of operations and other key operating and financial measures from period to period.


If our clients experience financial distress, or seek to change or delay payment terms, this could negatively affect our business, results of operations or financial condition.

We have a diverse client base, and at any given time, one or more of our clients may experience financial difficulty, file for bankruptcy protection or go out of business. Unfavorable economic and financial conditions could result in an increase in client financial difficulties that affect us. If our clients experience financial difficulties, they may be unable to pay for commitments that we have entered into on their behalf, or may seek to significantly delay or otherwise alter payment terms. This could result in reduced revenues as well as write-offs of accounts receivable and expenditures billable to clients, and if such difficulties were severe, reduced liquidity. Accordingly, if our clients experience financial distress, this could have a material adverse effect on our business, results of operations or financial condition.

Failure of third-party distributors upon which we may rely, could adversely affect our business and result in the loss of your investment.

We will likely rely on third party distributors for marketing our services and products, both nationally and internationally. The loss of a significant distributor could have a material adverse effect on our business, financial condition and results of operations. Distributors may also provide services to competing business, as well as larger, national or international entities and may be, to varying degrees, influenced by their continued business relationships with these companies. Independent distributors may be influenced by a large competitor if they rely on that competitor for a significant portion of their sales. While we believe that the relationships between the company and distributors are generally good, many relationships are relatively new and untested and there can be no assurance that distributors will continue to effectively market and distribute our services and products. The loss of any distributor or the inability to replace a poorly performing distributor in a timely fashion could have a material adverse effect on our business, financial condition and results of operations. Furthermore, no assurance can be given that we will successfully attract new distributors as they increase their presence in their existing markets or expand into new markets.

It is possible that our projects may infringe on other patented, trademarked or copyrighted concepts. Litigation arising out of infringement or other commercial disputes could cause us to incur expenses and impair our competitive advantage.

We cannot be certain that our products or projects will not infringe upon patents, trademarks, copyrights or other intellectual property rights held by third parties. Because we may rely on third parties to help develop some of our projects, we cannot ensure that litigation will not arise from disputes involving these third parties. We may incur substantial expenses in defending against prospective claims, regardless of their merit. Successful claims against us may result in substantial monetary liability, significantly impact our results of operations in one or more quarters, or materially disrupt the conduct of our business. Our success depends in part on our ability to obtain and enforce intellectual property protection for our products and projects, to preserve our trade secrets and to operate without infringing the proprietary rights of third parties, as previously stated.

The validity and breadth of claims covered in our copyrights and trademarks that we intend to file involve complex legal and factual questions and, therefore, may be highly uncertain. No assurances can be given that any future copyright, trademark or other applications:

(i)will be issued;
(ii)that the scope of any future intellectual property protection will exclude competitors or provide competitive advantages to the company;
(iii)that any copyrights or trademarks will be held valid if subsequently challenged;
(iv)that others will not claim rights in, or ownership of, the potential copyrights or trademarks or other proprietary rights held by us; or
(v)that our intellectual property will not infringe, or be alleged to infringe, the proprietary rights of others.


Furthermore, there can be no assurance that others have not developed or will not develop similar projects. Also, whether or not additional intellectual property protection is issued to the company, others may hold or receive intellectual protection covering projects that were subsequently developed by the company. No assurance can be given that others will not, or have not independently developed or otherwise acquired substantially equivalent intellectual property.

Our business could be adversely affected if we fail to protect our intellectual property.

We generally enter into confidentiality agreements with our employees, freelancers and vendors to control access to and distribution of our intellectual property or that of our clients. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use our or our clients’ intellectual property without authorization. Policing unauthorized use of creative content is difficult. The steps we take may not prevent misappropriation of intellectual property and our confidentiality agreements may not be enforceable. In addition, we may be required to litigate in the future to enforce our intellectual property rights, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and diversion of resources. In the event we are unable to prevent or are required to defend misappropriations of intellectual property, this could have a material adverse effect on our business, results of operations or financial condition.

Others may assert intellectual property infringement claims against us.

We are subject to the possibility of claims that our clients’ products, services or techniques misappropriate or infringe the intellectual property rights of third parties. Infringement or misappropriation claims (or claims for indemnification resulting from such claims) may be asserted or prosecuted against us. We create and use characters in our content; because of the competitive advantages that are derived from identifiable characters, we must carefully define our own characters, both to protect the characters we have created from infringement and to avoid claims of others that we have infringed on their characters. Irrespective of the validity or the successful assertion of such claims, we would incur significant costs and diversion of resources with respect to the defense thereof, which could have a material adverse effect on our business, results of operations or financial condition.

We may be subject to claims that we have wrongfully hired an employee from a competitor or that we or our employees have wrongfully used or disclosed alleged confidential information or trade secrets of their former employers.

As is commonplace in our industry, we employ individuals who were previously employed at other companies with whom we compete. Although no claims against us are currently pending, we may be subject in the future to claims that our employees or prospective employees are subject to a continuing obligation to their former employers (such as non-competition or non-solicitation obligations) or claims that our employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

We depend on advanced technologies and computer systems and we cannot predict the effect that rapid technological change or alternative forms of entertainment may have on us or our industry.

Our industry continues to undergo significant changes as a result of technological developments. Because we are required to maintain advanced digital imagery products to continue to win business, we must ensure that our production environment integrates the latest tools and techniques developed in the industry. However, the rapid growth of technology and shifting consumer tastes prevent us from being able to accurately predict the overall effect that technological growth or the availability of alternative forms of advertising may have on the potential revenues from, and profitability of, our content. To enhance our technologies, we are required to purchase third-party licenses, which can result in significant expenditures. In some cases, the licenses are not available on commercially reasonable terms, or at all. At the time we purchase licenses, we do not know if the related technology will enhance our revenues. Furthermore, the licensed software could have errors or defects that may result in a delay in delivery of our content and which could result in significantly increased production costs and our ability to complete work in a timely fashion. Such delays could have an adverse effect on our brand name and our relationship with our clients, which, given our reliance on our core strategic client relationships, could result in a decrease in our revenues. As a result, in the event that we do not keep pace with technological advancements, or our technologies do not meet our expectations, this could have a material adverse effect on our business, results of operations or financial condition.


We rely heavily on information technology systems and could face cybersecurity risks.

We rely heavily on information technologies and infrastructure to manage and conduct our business. This includes the production and digital storage of content and client information and the development of new business opportunities and creative content. The incidence of malicious technology-related events, such as cyberattacks, ransomware, computer hacking, computer viruses, worms or other destructive or disruptive software and other malicious activities could have a negative impact on our business and productivity. In addition, the prevalent use of mobile devices that access confidential information increases the risk of data security breaches, which could lead to the loss of confidential information or other intellectual property. We have taken preventative steps and seek to follow industry best practices, including the use of firewalls, deployment of antivirus software and regular patch maintenance updates; however no system is completely immune from these types of attacks. If we become subject to cyber breach, this could have a material adverse effect on our business, results of operations or financial condition.

Power outages, equipment failure, natural disasters (including extreme weather) or terrorist activities can impact an entire system. We have designed our systems to provide replication across our United Kingdom, United States and Hong Kong locations, including data and toolsets designed to allow most or all work-related activities to continue if there is a disruption at one location. However, in the event of such a disruption, our ability to operate nonetheless may be adversely affected. Human error may also affect our systems and result in disruption of our services or loss or improper disclosure of client and personal data, business information, including intellectual property, or other confidential information. We also utilize third parties to store, transfer or process data, and system failures or network disruptions or breaches in the systems of such third parties could adversely affect our reputation or business. Any such breaches or breakdowns could expose us to legal liability, be expensive to remedy, result in a loss of our or our clients’ or vendors’ proprietary information and damage our reputation. In addition, such a breach may require notification to governmental agencies, the media or other individuals pursuant to various federal and state privacy and security laws, if applicable. Efforts to develop, implement and maintain security measures are costly, may not be successful in preventing these events from occurring and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. We take precautions to limit access to sensitive information to only those individuals requiring it. Any significant distribution in our equipment or loss or improper disclosure of data could have a material adverse effect on our business, results of operations or financial condition.

Our networks and systems may require significant expansion to accommodate new processing and storage requirements.

We may experience limitations relating to the capacity of our networks, systems and processes. In the future, we may need to expand our network and systems at a more rapid pace than we have in the past if our networks and systems cannot accommodate new processing and storage requirements due to potential growth in our business. Our network or systems may not be capable of meeting the demand for increased capacity, or we may incur additional unanticipated expenses to accommodate these capacity demands. In addition, we may lose valuable data, be unable to obtain or provide creative content on a timely basis or our network may temporarily shut down if we fail to adequately expand or maintain our network capabilities to meet future requirements. Any lapse in our ability to store or transmit data or any disruption in our network processing may damage our reputation and result in the loss of clients, and could have a material adverse effect on our business, results of operations or financial condition.

Failure to attract or retain qualified information technology staff may impair our ability to effectively compete.

Due to the nature of our business, we have significantly more complex technology requirements than most typical enterprises of a comparable size. We find ourselves competing for top information technology and software development talent against much larger technology companies that can offer significant career advantages, or technology startups that can offer significant compensation incentives. If we become unable to acquire or retain qualified information technology staff, this could have a material adverse effect on our business, results of operations or financial condition.


We do not intend to use unionized labor or seek to have an of our projects backed by completion bonds.

Our business plan is based on our position as a video production services company. As part of our plan we initially intend to use only non-union talent and service providers. We believe that although this may save costs, it may limit the availability of talent and service providers, because many “big name” actors and established service providers have significant limitations on their ability to work on non-union projects. Accordingly, this may limit the potential audience that bigger names might bring to a project. Also, we do not intend to use completion bonds to insure our projects are completed on time or on budget. This would mean that there might not be a third party to take over a project if it is not completed on time or on budget. If we underestimate costs or timing of a project, it may not be economically viable to complete the project, which could result in significant losses to the company and to investors in our stock.

RISKS RELATED TO CELEBRITY EXPERIENCE BASED PLATFORM (123 WISH)

The activities of 123 Wish are subject to regulation in certain jurisdictions, and the failure to comply with those regulations could result in fines and other penalties.

Certain jurisdictions, including California where 123 Wish maintains it principal offices, have regulations that require 123 Wish to register as a commercial fundraiser and notify governmental authorities of events that it is sponsoring. The failure to comply with applicable regulations could subject 123 Wish to fines and other penalties, including being enjoined from conducting solicitation activities for charitable purposes within the jurisdiction and other civil remedies provided by law.

RISKS RELATED TO OUR COMMON STOCK AND OUR STATUS AS A PUBLIC COMPANY.

As a result of being a public company, we are subject to additional reporting and corporate governance requirements that will require additional management time, resources and expense.

As a public company we are obligated to file with the SEC annual and quarterly information and other reports that are specified in the Series A CertificateExchange Act. We are also subject to other reporting and corporate governance requirements under the Sarbanes-Oxley Act of Designation.

F-14

Shares2002, as amended, and the rules and regulations promulgated thereunder, all of Series A Preferred Stock are redeemable, atwhich impose significant compliance and reporting obligations upon us and require us to incur additional expense in order to fulfill such obligations.

RISKS RELATING TO OUR COMMON STOCK AND THE OFFERING

Trading on the optionOTC Markets is volatile and sporadic, which could depress the market price of our common stock and make it difficult for our security holders to resell their common stock.

Our common stock is quoted on the OTCQB tier of the holders commencingOTC Markets. Trading in securities quoted on the OTC Markets is often thin and characterized by wide fluctuations in trading prices, due to many factors, some of which may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Markets is not a stock exchange, and trading of securities on the OTC Markets is often more sporadic than the trading of securities listed on a quotation system like Nasdaq Capital Market or a stock exchange like the NYSE American. These factors may result in investors having difficulty reselling any time after 12 months fromshares of our common stock.

Our stock price is likely to be highly volatile because of several factors, including a limited public float.

The market price of our common stock has been volatile in the past and after the closingmarket price of our common stock is likely to be highly volatile in the future. You may not be able to resell shares of our common stock following periods of volatility because of the market’s adverse reaction to volatility.

Other factors that could cause such volatility may include, among other things:

actual or anticipated fluctuations in our operating results;

the absence of securities analysts covering us and distributing research and recommendations about us;

we may have a low trading volume for a number of reasons, including that a large portion of our stock is closely held;


overall stock market fluctuations;

announcements concerning our business or those of our competitors;

actual or perceived limitations on our ability to raise capital when we require it, and to raise such capital on favorable terms;

conditions or trends in the industry;

litigation;

changes in market valuations of other similar companies;

future sales of common stock;

departure of key personnel or failure to hire key personnel; and

general market conditions.

Any of these factors could have a significant and adverse impact on the market price of our common stock and/or warrants. In addition, the stock market in general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock and/or warrants, regardless of our actual operating performance.

The issuance of a large number of shares of our common stock could significantly dilute existing stockholders and negatively impact the market price of our common stock.

On August 5, 2019 (“Closing Date”), the Company entered into an Equity Purchase Agreement, dated as of July 18, 2019, with Crown Bridge Partners, LLC, a New York limited liability company (“Selling Stockholder”) providing that, upon the terms and subject to the conditions thereof, Selling Stockholder is committed to purchase, on an unconditional basis, shares of common stock (“Put Shares”) at an aggregate price of up to $10,000,000 over the course of its term. Pursuant to the terms of the equity purchase agreement, the purchase price for each of thePut Shares equals 82% of the lesser of the (i) “Market Price,” which is defined as the lowest traded price for any trading day during the 15 trading days immediately preceding the respective Put Date, or (ii) “Valuation Price,” which is defined as the lowest traded price during the seven trading days following the clearing date associated with the applicable put notice (“Put Notice”).As a result, if we sell shares of common stock under the equity purchase agreement, we will be issuing common stock at below market prices, which could cause the market price of our common stock to decline, and if such issuances are significant in number, the amount of the decline in our market price could also be significant. In general, we are unlikely to sell shares of common stock under the equity purchase agreement at a time when the additional dilution to stockholders would be substantial unless we are unable to obtain capital to meet our financial obligations from other sources on better terms at such time. However, if we do, the dilution that could result from such issuances could have a material adverse impact on existing stockholders and could cause the price equalof our common stock to fall rapidly based on the amount of such dilution.

The Selling Stockholder may sell a large number of shares, resulting in substantial diminution to the originalvalue of shares held by existing stockholders.

Pursuant to the Equity Purchase Agreement, we are prohibited from delivering a Put Notice to the Selling Stockholder to the extent that the issuance of shares would cause the Selling Stockholder to beneficially own more than 4.99% of our then-outstanding shares of common stock. These restrictions however, do not prevent the Selling Stockholder from selling shares of common stock received in connection with the Equity Line and then receiving additional shares of common stock in connection with a subsequent issuance. In this way, the Selling Stockholder could sell more than 4.99% of the outstanding shares of common stock in a relatively short time frame while never holding more than 4.99% at any one time. As a result, existing stockholders and new investors could experience substantial diminution in the value of their shares of common stock. Additionally, we do not have the right to control the timing and amount of any sales by the Selling Stockholder of the shares issued under the Equity Line.


Our common stock has in the past been a “penny stock” under SEC rules. It may be more difficult to resell securities classified as “penny stock.”

In the past, our common stock was a “penny stock” under applicable SEC rules (generally defined as non-exchange traded stock with a per-share price below $5.00). Unless we successfully list our common stock on a national securities exchange, or maintain a per-share price above $5.00, these rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as “established customers” or “accredited investors.” For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing the market value of each penny stock held in the customer’s account, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction.

Legal remedies available to an investor in “penny stocks” may include the following:

If a “penny stock” is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.

If a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages.

These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price plus all accrued but unpaid dividends.and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.

Many brokerage firms will discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest in penny stocks. In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial risk generally associated with these investments.

For these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance at what time, if ever, our common stock will not be classified as a “penny stock” in the future.

As a result of our failure to maintain effective internal control over financial reporting, the price of our securities may be adversely affected.

Our internal control over financial reporting has weaknesses and conditions that require correction or remediation, the disclosure of which may have an adverse impact on the price of our common stock. We are required to establish and maintain appropriate internal control over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, prospects, financial condition or results of operations. In addition, management’s assessment of internal control over financial reporting may identify weaknesses and conditions that need to be addressed in our internal control over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting or disclosure of management’s assessment of our internal control over financial reporting may have an adverse impact on the price of our common stock.  

We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act and if we fail to continue to comply, our business could be harmed and the price of our securities could decline.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require an annual assessment of internal control over financial reporting, and for certain issuers an attestation of this assessment by the issuer’s independent registered public accounting firm. The standards that must be met for management to assess the internal control over financial reporting as effective are evolving and complex, and require significant documentation, testing, and possible remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources to Section 404 compliance on an ongoing basis. It is difficult for us to predict how long it will take or costly it will be to complete the assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and remediation process on a timely basis. In the event that our Chief Executive Officer or Chief Financial Officer determines that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how regulators will react or how the market prices of our securities will be affected; however, we believe that there is a risk that investor confidence and the market value of our securities may be negatively affected.


Our principal stockholder, directors and officers control a substantial number of shares of our common stock, decreasing your influence on stockholder decisions.

Zhanming Wu, our principal stockholder owns 614,176 (15,354,409 pre-reverse split) shares, or approximately 15.6% of our outstanding shares. Our directors and officers own an additional 309,960 (7,749,018 pre-reverse split) shares, or approximately 7.9% of our outstanding shares. As a result, Mr. Wu and our directors and officers as a group could have a significant influence in delaying, deferring or preventing any potential change in control of our company; they will be able to strongly influence the actions of our board of directors even if they were to cease being directors or officers of our company and can effectively control the outcome of actions brought to our stockholders for approval. Such a high level of ownership may adversely affect the exercise of your voting and other stockholder rights. 

Shares eligible for future sale may adversely affect the market.

From time to time, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144 promulgated under the Securities Act, subject to certain limitations. In general, pursuant to Rule 144, non-affiliate stockholders may sell freely after six months, subject only to the current public information requirement. Affiliates may sell after six months, subject to the Rule 144 volume, manner of sale (for equity securities), current public information, and notice requirements. Of the approximately 3,930,646 (98,266,169 pre-reverse split) shares of our common stock outstanding as of September 16, 2019, approximately 2,428,555 (60,713,883 pre-reverse split) shares are tradable without restriction. Given the limited trading of our common stock, resale of even a small number of shares of our common stock pursuant to Rule 144 or an effective registration statement may adversely affect the market price of our common stock.

Certain provisions of the General Corporation Law of the State of Delaware may have anti-takeover effects, which may make an acquisition of our company by another company more difficult.

We are subject to the provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a Delaware corporation from engaging in any business combination, including mergers and asset sales, with an interested stockholder (generally, a 15% or greater stockholder) for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. The operation of Section 203 may have anti-takeover effects, which could delay, defer or prevent a takeover attempt that a holder of our common stock might consider in its best interest.

Provisions of our certificate of incorporation, as amended, and bylaws may delay or prevent a takeover which may not be in the best interests of our stockholders.

Provisions of our certificate of incorporation, as amended, and our bylaws, as amended, may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt. Further, our certificate of incorporation, as amended, authorize the issuance of up to 50,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our board of directors in their sole discretion. Our board of directors may, without stockholder approval, issue series of preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock. 

We do not expect to pay dividends in the foreseeable future.

We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business. Therefore, investors will not receive any funds unless they sell their common stock, and stockholders may be unable to sell their shares on favorable terms. We cannot assure you of a positive return on investment or that you will not lose the entire amount of your investment in our common stock.


DESCRIPTION OF BUSINESS

Overview 

We are a holding company which, through our operating subsidiaries, is engaged in the digital media, entertainment and secure messaging businesses, described below.

Current Structure of the Company

As of the date of filing this prospectus, the Company completeshas the following subsidiaries:

Subsidiary name% Owned
123Wish, Inc. (acquired February 2018)51%
One Horizon Hong Kong Ltd100%
Horizon Network Technology Co. Ltd100%
Love Media House, Inc. (acquired March 2018)100%
Browning Productions & Entertainment, Inc. (acquired October 2018)51%

In addition to the subsidiaries listed above, Suzhou Aishuo Network Information Co., Ltd (“Suzhou Aishuo”) is a financinglimited liability company, organized in China and controlled by us via various contractual arrangements. Suzhou Aishuo is treated as one of $10 million or greater prior to Maturity,our subsidiaries for financial reporting purposes in accordance with generally accepted accounting principles in the Series A Preferred StockUnited States (“GAAP”).

Summary Description of Businesses

As of the date of filing of this prospectus, we have the following three core businesses:

123Wish, Inc. formerly Once In A Lifetime, LLC (“123Wish”) – an experience based platform where subscribers have a chance to play and win experiences from celebrities, athletes and artists.

Love Media House, Inc. formerly known as C-Rod, Inc. (“Love Media House”) –a full-service music production, artist representation and digital media business that providesa broad range of entertainment services including branding and advertising, video and photo production, recording (including music production, arranging, mixing and mastering), songwriting (arranging writing sessions with experienced and multi-platinum writers), artist development, digital distribution, billboard chart promotion, and consulting and life coaching. The entertainment marketplace is highly competitive. The team at Love Media House, headed by Chis Rodriguez, has worked with many famous artists and achieved many Billboard numbers and giving Love Media House an important edge in promoting new talent.

Browning Productions & Entertainment, Inc. (“Browning Productions”) – a full service video production company and executive producer for all entertainment projects. Browning Productions has been selected to produce and distribute numerous television programs spanning dozens of episodes in 2019 for acclaimed television networks including A&E, FYI and History Channel.

The Company is based in the United States of America, Hong Kong, Singapore, China and the United Kingdom.

Description of Products and Services

Entertainment Production Services (Love House and Browning Productions)

The primary business of Love House and Browning Productions are entertainment production services. Video projects are divided into four parts: (i) pre-production, (ii) production, (iii) post-production and (iv) distribution. During pre-production, the client describes the need and the purpose of the production. Production is the part of the process where raw materials that will be redeemed atformed into the final product are created. Post-production is where the first rough cut of the final product is created. Client input is then used to create the final version of the production.


Video production services through Browning Productions include production of television shows, commercials, corporate videos, music videos, film, motion pictures (full length features), make-up and hair, casting, writing, producing, directing, stunts, post production services, graphic design (animation and special effects), audio production, and audio mastering and integration. Music production services through Love House include recording (including music production, arranging, mixing and mastering), songwriting (arranging writing sessions with experienced and multi-platinum writers), artist development, digital distribution, billboard chart promotion, branding and advertising, video and photo production, and consulting and life coaching.

Browning Productions has produced and has ownership rights to dozens of national and international television programs currently airing on a price equalnumber of the most recognized television networks including A&E, FYI and History Channel. Browning Productions distributes content on a proprietary Internet/Over-The-Top (“OTT”) content platform that operates in conjunction with Verizon Digital Media Services (“VDMS”). Current productions of Browning Productions include “Wine Warriors”; the spin-off “Whisky Warriors, for which Browning Productions recently secured the Big Sky Film Grant from the State of Montana’s Film Office, “Training Grounds”; a new docuseries called “The Cryptos,” unveiling the inner workings of the cryptocurrency industry, soon to be distributed on one of the world’s most widely recognized global business news networks; and “America’s Crowdfunding,” an equity crowd-funding television series (the concept is “Shark Tank” meets “America’s Got Talent,” where the viewers vote with their wallets for equity stakes in the featured companies) in conjunction with Equity Bender, among others.

We also provide through Browning Productions marketing services and branded entertainment. Branding and name recognition is generally achieved through exposure in repetition. Through branded entertainment, a product or service stands out throughout a television series in precise placement from segment to segment for each viewer to see or hear, where the product or service is referred or mentioned by the celebrity cast. The pinnacle of all product or service inclusion into television is to allow for a full integration into the storyline and scripting of the segments centering the brand in the show content, which we believe is one of the best forms of marketing for any product or service.

The recording studio of Love House is a facility for sound recording and mixing. Ideally both the recording and monitoring spaces are specially designed by an acoustician to achieve optimum acoustic properties (acoustic isolation or diffusion or absorption of reflected sound that could otherwise interfere with the sound heard by the listener). The typical recording studio consists of a room called the “studio” or “live room”, where instrumentalists and vocalists perform; and the “control room”, where sound engineers sometimes with producer(s) as well operate either professional audio mixing consoles or computers with specialized software suites to manipulate and route the sound for analogue or digital recording. Often, there will be smaller rooms called “isolation booths” present to accommodate loud instruments such as drums or electric guitar, to keep these sounds from being audible to the microphones that are capturing the sounds from other instruments, or to provide “drier” rooms for recording vocals or quieter acoustic instruments.

Our recording studios through Love House may be used to record musicians, voice-over artists for advertisements or dialogue replacement in film, television or animation, foley, or to record their accompanying musical soundtracks.

Competitive Strengths

We believe our competitive strengths through Browning Productions include:

Excellent reputation:We believe we have earned an excellent reputation for our creative ability, innovation, execution and on-time delivery of complex and challenging media content.

Our creative storytelling capabilities:We believe our creative content turns ideas into visual, relatable stories that resonate with consumers and influences their behavior. We believe that our years of experience and access to creative talent allow us to tell compelling stories whether in seconds or minutes.

Diverse, creative talent base:We employ or represent directors and designers, technical directors and other artists who we believe deliver a unique combination of creative direction (character, world and story development) and execution (unique and high quality imagery and related production content).

Strong relationships with advertising agencies and brands:We have produced highly successful and creative advertising campaigns for our customers, many of which are global brands which we believe have allowed us to develop long-standing, strong relationships with leading advertising agencies and brands. We are often commissioned to create multiple campaigns for brands over many years, acting as the go-to production company for these clients. In addition, despite that some of our competitors are larger than us, we have been able to compete effectively with them and win projects from new and existing clients.


End-to-end solution:We have developed in-house production processes that enable us to serve as a one-stop-shop, providing a full suite of solutions to the advertising industry and brands. We are able to conduct a project from concept through design and all stages of production using in-house and contracted creative talent when necessary.

We believe our competitive strengths through Love House include:

High quality services: We provide high quality sound recording and audio production services. We have a high end recording and production studio for use for customers.  Use of the studio is billed on an hourly basis plus fees relating to the rental of the studio. Reproduction of recorded materials will also be sold to customers. The benefits that are afforded to clients in our studio include:

a convenient, reasonably priced recording studio.

a comfortable studio experience that allows artists to record their music while being in an inviting atmosphere.

high end audio equipment that will make high quality sound recordings for our clients.

professional and expert staff members that will help artists mix and produce their albums with minimal hassle.

Supplemental Services to Music Production: We also provide songwriting (arranging writing sessions with experienced and multi-platinum writers), artist development, digital distribution, billboard chart promotion, branding and advertising, video and photo production.

Competition

The team at Love Media House, headed by Chis Rodriguez, has worked with many famous artists and achieved many Billboard numbers giving Love House an important edge in promoting new talent. The team at Browning Productions, headed by William Browning, has produced and has ownership rights to dozens of national and international television programs currently airing on a number of the most recognized television networks including A&E, FYI and History Channel. Notwithstanding, the entertainment marketplace is highly competitive. There are few barriers of entry in the business and level of competition is extremely high. There are many video production companies and recording studios in United States. Many of these companies may have a greater, more established customer base than us.  

Our Industry

We create branded advertising and entertainment content primarily for television, digital and other platforms.

The global advertising market is large and growing. Global advertising spending was a $591 billion global market in 2017, projected to grow to $724 billion in 2020, according to eMarketer. The U.S. is currently Browning Productions’ customers’ primary target market. eMarketer forecasts that the U.S. will have the largest share of global advertising spending in 2020, which it estimates will be $243 billion. As Browning Productions’ business grows, we expect to capitalize on the large and expanding demand for services such as Browning Productions.

Television spending continues to be strong. Television has historically been the single largest advertising medium worldwide. Zenith forecasts that television advertising in the U.S. peaked in 2017 at $69 billion and will decline slightly to $66 billion in 2020. Television and online video together are becoming more important to advertisers seeking to build brands than either form alone.

Digital advertising spending is increasing. Digital technologies have transformed media consumption, viewing habits and social interaction. Content is being viewed at ever-increasing rates on wired and wireless smart devices across the globe. In 2017, global digital advertising spending surpassed global television advertising spending for the first time, according to MAGNA. MAGNA projects that, in 2018, U.S. digital advertising spending will exceed $100 billion and will account for half of total U.S. advertising sales for the first time. MAGNA projects that U.S. digital advertising sales will be $163 billion by 2023.

Creative short-form video content attracts audiences. Given the proliferation of entertainment channels, capturing the attention of audiences is becoming increasingly challenging. We believe that brands are seeking creative content in short-form video that includes animation and mixed media to evoke emotions that resonate with viewers. According to AOL Advertising, while online video consumption is increasing across all video lengths, short-form video is growing the fastest. According to AOL Advertising, 59% of consumers watch videos that are under one minute long every day.


Our Growth Strategy

We intend to build upon our proven ability to aggregate large audiences for brands by continuing to make compelling content that is viewable on both traditional and new platforms. We have begun to implement the growth strategies described below, and expect to continue to do so over the several years following this offering. Although the net proceeds of this offering will be available to assist us to implement our growth strategies, we cannot estimate the ultimate amount of capital needed to achieve our expected growth. We may need additional capital to implement these strategies, particularly in the event we pursue acquisitions of complementary businesses or technologies.

We intend to grow our business by:

Capitalizing on market trends in advertising and digital media: We believe our long history of creating award-winning content for television provides us with the expertise to continue to capture television advertising spending. We also believe our expertise in delivering entertaining, narrative-based short-form video content positions us well for the expected growth in digital advertising. We intend to build our core business by leveraging the increased use of animation and visual effects to differentiate marketing messages and capture audiences in the growing digital media market.

Implementing client service teams: We believe we can increase recurring work from our existing clients with a more client-focused approach to delivering our services. We are hiring account directors with knowledge of the needs of brands in key industries so that we can collaborate more closely with brands and the advertising agencies. By doing so, we believe we can get involved earlier and more intimately in a particular pitch.

Expanding direct-to-brand sales: Brands are increasingly working directly with content creators, bypassing advertising agencies. We believe this industry disruption is being caused by the desire of brands to obtain greater cost-effectiveness, transparency and control over customer data. We believe that we can increase our direct-to-brand sales by increasing business development efforts with brands. We recently reorganized our sales organization to include a specific focus on brand management.

Growing through acquisitions:We believe that the highly fragmented content creation media industry, which is comprised primarily of small-to-medium-sized private companies, provides us with significant opportunities to grow our business through acquisitions. We intend to pursue acquisitions that provide services within our current core product offerings, extend our geographic reach and expand our product offerings.

Cross-selling services: Our ability to produce diverse, engaging content across various media platforms allows us to offer clients a one-stop-shop for all of their content needs. We intend to cross-sell our various capabilities to drive additional revenue from existing clients and to seek to win new clients.

Further developing intellectual property:We intend to build upon our success in developing original purchase price plus all accruedseries that we own and license to brands, networks and major and new digital media studios. When we develop an original series, we retain the copyright of that content. By licensing to other platforms portions of the content from original series that we develop, we can create additional revenue streams from development fees, brand license fees, distribution license fees and ancillary sources (such as from foreign viewership).

Expanding our geographic presence: We believe that by expanding our physical presence into select international regions, we will be better able to attract and retain internationally-based brands as clients. With a physical presence outside of the U.S., we believe we can provide better customer service and offer local talent who can work more intimately with internationally-based brands than we can from our offices in the U.S.

Expanding our talent roster: We intend to continue to seek to attract and retain world-class creative and technical talent, thereby increasing our ability to win jobs and build brand equity through additional high quality creative content. We believe that our reputation and our client base will allow us to continue to attract top creative talent.


Celebrity Experience Marketplace (123Wish)

123Wish, available in the Apple App Store, Google Play and www.123wish.com, is a subscription-based, experience marketplace that focuses on providing users with exclusive opportunities to enjoy personalized, dream experiences with some of the world’s most renowned social media influencers including Super Influencer Jake Paul and Team 10 as well as celebrities, professional athletes, fashion designers, and artists while supporting a diverse range of charities.

123Wish provides experiences to fans of high profile celebrities but unpaid dividends.

170,940with the ability to ensure charities can benefit from proceeds of subscriptions paid. 123Wish is a super fan platform bringing fans closer to their favorite influencers, celebrities, musicians and more. 123Wish offers its users unique experiences, face time sessions, weekly giveaways, limited edition merchandise, VIP events, video shouts and exclusive video content.

The influencer or celebrity for each 123Wish experience selects a philanthropic cause to benefit or is randomly matched to a non-profit organization. Once the charitable contribution goal for an experience has been met and the designated timeframe for entry has expired, 123Wish randomly selects the winner who receives exclusive access to interact with the influencer or celebrity. Yet, everyone who enters wins a specialized gift for participation, which may include limited edition merchandise, gift cards or personalized video or voice messages from experience contributors.

Each 123Wish subscriber will soon have a digital wallet and will receive four digital coins each month that his or her subscription remains active, which the subscriber may contribute to charity. 123Wish are committed to making at least $1,000,000 in digital coin value available for charitable contribution premised on the number of subscribers. Development for inclusion of the coin technology is underway and we will be providing blockchain integration.

Competitive Strengths

We believe our competitive strengths through 123Wish include:

Excellent reputation:We believe we have earned an excellent reputation for providing users with exclusive opportunities to enjoy personalized, dream experiences with celebrities.

Contacts with Celebrities: We have successfully established relationships with a number of social media influences, music artists and other celebrities to ensure the success of our experience marketplace.

Regulatory Status

Certain jurisdictions, including California where 123 Wish maintains it principal offices, have regulations that require 123 Wish to register as a commercial fundraiser and notify governmental authorities of events that it is sponsoring. The failure to comply with applicable regulations could subject 123 Wish to fines and other penalties, including being enjoined from conducting solicitation activities for charitable purposes within the jurisdiction and other civil remedies provided by law.

CORPORATE HISTORY

We were initially incorporated in Pennsylvania in 1972 as Coratomic, Inc. We changed our name five times thereafter, with the last name change in 2012 to One Horizon Group, Inc.In addition, we changed our domicile from Pennsylvania to Delaware in 2013.

Our authorized capital is 200,000,000 shares of Series ACommon Stock, par value $0.0001 per share (the “Common Stock”), and 50,0000,000 shares of preferred stock, par value $0.0001 per share (the “Preferred Stock”). The designation of rights including voting powers, preferences, and restrictions shall be determined by the Board of Directors before the issuance of any shares. As of the date hereof, 3,930,646 (98,266,169 pre-reverse split) shares of our Common Stock are issued and outstanding as of December 31, 2014.

Mandatorily Redeemable Preferred Shares (Deferred Stock)

The Company’s subsidiary OHGand no preferred stock is authorized to issue 50,000 shares of deferred stock, par value of £1.These shares are non-voting, non-participating,  redeemableissued 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.
outstanding. 

During the year ended December 31, 2014, the Company:


2017, we restructured our operations and simplified and strengthened our capital structure by:

issued 15,000Selling certain of our operating subsidiaries (the “Discontinued Entities”) to our former Chief Executive Officer pursuant to a Stock Purchase Agreement entered into August 10, 2017, in consideration for the forgiveness of $1,968,243 payable to our former CEO.

Issuing: (A) (i) 520,000 (13,000,000 pre-reverse split) shares of common stock for services received with a fair value of $64,500.
issued 25,000 shares of common stock for services received, in connection with the $1 million private placement, with a fair value of $107,500

issued 75,000 shares of common stock for services received in the future with a fair value of $322,500
issued 246,000 shares ofour common stock in settlementexchange for $3,000,000 principal amount of amounts owingan outstanding subordinated debenture in the principal amount of $553,500

During the year ended December 31, 2013, the Company:

issued 5,000$3,500,000 and the forgiveness of accrued and unpaid interest thereon, and (ii) our 7% promissory note in the principal amount of $500,000 for the surrender of the remaining principal amount of the debenture; (B) 160,000 (4,000,000 pre-reverse split) shares of our common stock and our 7% promissory note in the principal amount of $500,000 for services received with a fair valueall of $30,000
issued 62,543the outstanding shares of our Series A-1 Convertible Preferred Stock; and (C) 34,392 (859,802 pre-reverse split) shares of our common stock to our Chief Financial Officer in exchange for services received with a fair value$662,048 of $562,891.indebtedness payable to him.


issued 806,452 shares

The restructuring and simplification and strengthening of our capital structure has allowed us to concentrate on developing our secure messaging business, which has focused on gaming, educational and security applications in China and Hong Kong, while seeking acquisition opportunities. In September 2017, Mark White who had previously served as our Chief Executive Officer, was appointed Chief Executive Officer to develop and implement our acquisition strategy.

Acquisition of a Controlling Interest in Once In A Lifetime LLC

On February 22, 2018, we acquired 51% of common stock for $6 million cash.

issued 33,333 shares of common stock for services received with a fair value of $50,000.

issued 1,167,600 shares of common stock upon the exercise of warrants with an exercise price of $nil

Stock Purchase Warrants

At December 31, 2014, the Company had reserved 2,811,642membership interests in Once In A Lifetime LLC, a Florida limited liability company d/b/a/ 123 Wish (“123 Wish”), pursuant to an Exchange Agreement dated January 18, 2018, with 123 Wish and its members in consideration for 53,333 (1,333,334 pre-reverse split) shares of our common stock, plus an additional number of shares of our common stock based upon the net after tax earnings of 123 Wish during the six month periods ending six and twelve months after the completion of the acquisition. Once In A Lifetime LLC has been merged into our newly formed majority-owned Delaware subsidiary, 123 Wish, Inc.

123 Wish is a subscription-based, experience marketplace that focuses on providing users with exclusive opportunities to enjoy personalized, dream experiences with social media influencers, including Jake Paul and Team 10, as well as celebrities, professional athletes, fashion designers and artists, while supporting a diverse range of charities.

Acquisition of C-Rod, Inc.

On March 20, 2018, we acquired C–Rod, Inc., including its record label, Velveteen Entertainment, and media division, Mues Media (collectively, the “C-Rod Companies”) pursuant to an Exchange Agreement dated February 27, 2018 with C-Rod, Inc., Christopher Rodriguez and Patricia Rodriguez, in consideration for $150,000, 55,045 (1,376,147 pre-reverse split) shares of our common stock issued to Cap United LLC, plus an additional number of shares of our common stock based upon the net after tax earnings of C-Rod during the two years ending after the completion of the acquisition. On May 2, 2018, we amended the articles of incorporation of C-Rod, Inc. to change its corporate name to Love Media House, Inc. 

C-Rod, Inc., a music production company founded in 2002 by Grammy-nominated, multi-platinum producer and composer Christopher Rodriguez, regularly works with artists, which have included many celebrity acts.

Acquisition of a Controlling Interest in Banana Whale Studios Pte. Ltd.

On May 18, 2018,we entered into and consummated an Exchange Agreement (the “Exchange Agreement”) with Banana Whale Studios Pte. Ltd., a Singapore corporation (“Banana Whale”), and the founding shareholders of Banana Whale (the “Banana Whale Stockholders”), pursuant to whichwe acquired 51% of the outstanding shares (“Controlling Interest in Banana Whale”) ofBanana Whale in exchange for a number of our shares of common stock to be based upon the earnings of Banana Whale. Banana Whale is a B2B software provider in the $100+ billion-dollar gaming industry focusing on innovation and next generation games and entertainment. As a condition to closing the acquisition, Banana Whale Stockholders demanded and we deposited in escrow for their benefit 295,320 (7,383,000 pre-reverse split) shares of our common stock (“OHGI Shares”) with a fair value of $4,983,000 as security for our obligation to issue such shares to which they may become entitled. If the number of shares to which the Banana Whale Stockholders become entitled is less than 295,320 (7,383,000 pre-reverse split), the excess shares will be returned to us for cancellation. We also granted Banana Whale the right to use our secure messaging software.

Acquisition of 123Wish Software

Pursuant to the terms of that certain Agreement on Sale of 123Wish Software dated September 27, 2018 (“Software Sale Agreement”), among us, Once in a Lifetime Platform LLC (“OIALP”), and One Horizon Hong Kong Limited (“OHHK”), OIALP sold and assigned to OHHK eighty percent (80%) of the intellectual property rights to OIALP’s software platform and App that underlies 123Wish’s business in exchange for our making an additional investment of $100,000 into 123Wish without requiring the minority shareholders in 123Wish (some of whom are members of OIALP) to put up matching funds and our issuing 120,000 (3,000,000 pre-reverse split) shares of its common stock to members of OIALP.


Acquisition of a Controlling Interest in Browning Productions& Entertainment, Inc.

On October 22, 2018, we entered into an Exchange Agreement (“Browning Exchange Agreement”) pursuant to which we acquired a majority of the outstanding shares (the “Controlling Interest in Browning”) of Browning Productions&Entertainment, Inc., a Florida corporation (“Browning Productions”), from William J. Browning, the sole stockholder of Browning. Browning Productions produces television programs which have aired internationally as well as nationally.

In exchange for the following outstanding warrants:


Number of Warrants Exercise Price Expiry
     
116,760 $0.86      no expiry date
1,209,675  4.25      January 2019
100,000  4.00 July 2016
60,000  6.55 December 2015
68,850  2.25 December 2018
402,786  3.00 December 2018
402,568  3.50 December 2018
450,000  - May 2017
F-15

During the year ended December 31, 2014 there were 100,000 warrants issuedcontrolling interest in connection with the $1 million private placementBrowning Productions, we paid Mr. Browning $10,000 and 805,354 warrants issued in connection with the $3.5 million convertible debenture. An additional 450,000 performance warrants have been issued in connection with the $3.5 convertible debenture with the number of warrants, and exercise price, to be determined upon completion of the December 31, 2016 fiscal year. In addition there was an additional warrants issued to the holders of each of the 403,226 warrants issued in connection with the financing of February, 2013 such that there are now 1,209,675 warrants outstanding related to this financing. Further the exercise price for these warrants was reduced to $4.25 per share and the exercise period extended to January 2019. There were no warrants exercised during the year ended December 31, 2014.
Note 10.  Stock-Based Compensation

The shareholders approved a stock option plan on August 6, 2013, the 2013 Equity Incentive Plan. This stock option plan is for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, cash bonuses and other stock-based awards to employees, directors and consultants of the Company.

There are 3,000,000him 12,000 (300,000 pre-reverse split) shares of common stock, available for granting awards under the plan. Each year, commencing 2014, until 2016, theplus an additional number of shares of common stock which can be up to a maximum of 680,000 (17,000,000 pre-reverse split) shares, determined by dividing two and a half times the net after tax earnings of Browning Productions during the twelve month period ending December 31, 2019 by the average of the closing price of our common stock during the ten consecutive trading days immediately preceding the end of 2019.

Though the terms of this transaction only required a $20,000 cash payment ($10,000 in cash under the non-binding letter of intent and $10,000 in cash under the Browning Exchange Agreement) to Mr. Browning, we were required to provide Browning Productions with a working capital loan in an initial amount of $150,000, which is to be repaid out of the post-closing net profit of Browning Productions as well as earmark an additional $150,000 in cash for future investment in Browning Productions (to assist in funding the future operations of Browning Productions).

We have a right of first refusal to purchase the remaining shares of Browning Productions.

Disposition of a Controlling Interest in Banana Whale Studios Pte. Ltd.  

On February 4, 2019, we entered into and consummated an agreement (the “Agreement”) with Banana Whale and the Banana Whale Stockholders, pursuant to which we sold the Controlling Interest in Banana Whale in exchange for $2,000,000, consisting of $1,500,000 in cash and a $500,000 promissory note bearing interest at 5% per annum payable on December 31, 2019 (the “BWS Note”). Under the BWS Note, Banana Whale can prepay the BWS Note in whole or in part without premium or penalty. Pursuant to the BWS Note, the Banana Whale Stockholders agreed to guarantee the payments of all amounts due thereunder on a limited-recourse basis. On February 4, 2019, we also entered into a Pledge and Escrow Agreement with the Banana Whale Stockholders pursuant to which the Banana Whale Stockholders agreed to place the Controlling Interest in Banana Whale in escrow as security for payment of the BWS Note.

The Agreement also terminated certain of the remaining obligations under the Exchange Agreement which was previously entered into by us and the Banana Whale Stockholders, releasing us, Banana Whale and the Banana Whale Stockholders from their remaining obligations thereunder. Pursuant to the Exchange Agreement, we had agreed to acquire the Controlling Interest in Banana Whale in exchange for a number of our shares to be based upon the earnings of Banana Whale. Under the Agreement, the Company agreed to leave the OHGI Shares in escrow and together with the Banana Whale Stockholders, to instruct the escrow agent that the OHGI Shares will remain in escrow for a period of at least 90 days pending an absence of asserted claims under the Agreements indemnification provisions. 

Proposed Acquisition of a Controlling Interest in Maham

Pursuant to the terms of a definitive Exchange Agreement, dated February 20, 2019, among us, Maham LLC (“Maham”), the members of Maham, and Mr. Hauswirth (the “Maham Exchange Agreement”), we agreed to (i) issue to the members of Maham unregistered shares of Common Stock equal to (a) 25% of the dollar value the Members have invested in Maham to date, with all non-cash investment based equity owned by members will be exchanged at the same valuation as the valuation of Maham at the time that such non-cash investment based equity was issued, divided by (b) the market value of OHGI Common Stock, determined in accordance with the terms of the Exchange Agreement, as of the closing date (the “Initial Shares”), and (ii) upon completion of the second 12-month period following the closing, issue up to a maximum of 680,000 (17,000,000 pre-reverse split) unregistered shares to the members of Maham on a pro-rata basis based on their holdings, which number of additional shares will be equal to two-and-a-half times (2.5x) the net after-tax earnings of Maham for the First Adjustment Period (as defined in the Maham Exchange Agreement), divided by the market value of our Common Stock. Upon the closing of the Maham transaction, we will own 51% of the issued and outstanding interests in Maham.

Adoption of One Horizon Group, Inc. Amended and Restated 2018 Equity Incentive Plan

Our board of directors and shareholders adopted and approved on November 2, 2018 and December 27, 2018, respectively, the One Horizon Group, Inc. Amended and Restated 2018 Equity Incentive Plan, effective December 27, 2018, under which stock options and restricted stock may be granted to officers, directors, employees and consultants. Under the Plan, 600,000 (15,000,000 pre-reverse split) shares of Common Stock, par value $0.0001 per share, are reserved for issuance, subject to increase pursuant to the terms and conditions as set forth in the Plan.


Voluntary Termination By OHGI of Listing of Common Stock on the Nasdaq Capital Market

Our common stock commenced trading on the Nasdaq Capital Market (“Nasdaq”) on July 9, 2014 under the ticker symbol “OHGI”. On May 10, 2018, the Company received notice (the “Notice”) from Nasdaq indicating that the Company’s common stock did not meet the continued listing requirement as set forth in Nasdaq Listing Rule 5550(a)(2) based on the closing bid price of the common stock for the preceding 30 business days.

Under Nasdaq Listing Rule 5810(c)(3)(A), the Company received a 180-calendar day grace period from the date of the Notice to regain compliance by meeting the continued listing standard of a minimum closing bid price of at least $1.00 per share for 10 consecutive business days during the 180-calendar day grace period ended on November 6, 2018. During the grace period, the Company was unable to regain compliance with the minimum bid price standard.

In accordance with NASDAQ Listing Rule 5810(c)(3)(A), in addition to such initial grace period, the Company could be afforded an additional 180-calendar day compliance period, provided that on the 180th calendar day of the initial grace period, the Company (i) met the applicable market value of publicly held shares requirement for continued listing and all other applicable requirements for initial listing on the Nasdaq (except for the bid price requirement) and (ii) notified Nasdaq of its intent to cure the minimum bid price deficiency. Prior to expiration of the initial grace period, the Company requested an additional 180-calendar day compliance period and notified Nasdaq of the Company’s compliance with the stated listing standards and its intent to cure the minimum bid price deficiency through a reverse stock split, if necessary. On November 7, 2018, the Company received written notification from Nasdaq granting an additional 180-calendar day period, to regain compliance with the minimum bid price requirement described above. This second 180-calendar day period relates exclusively to the bid price deficiency and we could be delisted during the 180-calendar day period for failure to maintain compliance with any other listing requirements that occurs during the 180-calendar day period.

During subsequent interactions between the Company and the Nasdaq it became apparent that the Nasdaq may make a finding of noncompliance with the stockholder approval requirements of Nasdaq Listing Rule 5635 and may initiate delisting proceedings against the Company.

As a result of the foregoing, on February 26, 2019, Martin Ward, Chief Financial Officer of the Company, approved the voluntary termination of the listing of OHGI’s common stock on the Nasdaq. On March 8, 2019, the Company filed an application on Form 25 with the SEC to voluntarily terminate its Nasdaq listing. The delisting from the Nasdaq became effective on March 8, 2019. As of March 8, 2019, the Company’s common stock is quoted on the OTCQB tier of the OTC Markets under the ticker symbol “OHGI.” The transition from the Nasdaq to the OTCQB did not materially affect the Company’s business operations.

Recent Developments

Reverse Stock Split

A reverse stock split (“Reverse Stock Split”) of the outstanding shares of the Common Stock in the range from one-for-two (1-for-2) to one-for-fifty (1-for-50), which ratio was to be selected by the Board of Directors, was approved by our Board of Directors and by our shareholders at the annual meeting of the shareholders held on December 27, 2018 as described in that proxy statement on that certain Definitive Schedule 14A filed with the SEC on November 28, 2018. The board of directors anticipates setting the ratio of the reverse stock split, and the reverse stock split becoming effective following approval by FINRA of the reverse stock split, prior to the effective date of the registration statement (of which this prospectus forms a part).


Except as otherwise indicated and except in our financial statements, all references to Common Stock, share data, per share data and related information depict an assumed 1-for-25 Reverse Stock Split until final determination by the Board as if it was effective and as if it had occurred at the beginning of the earliest period presented. The 1-for-25 Reverse Stock Split, when effective, will combine each twenty-five shares of our outstanding Common Stock into one share of Common Stock, without any change in the par value per share, and the 1-for-25 Reverse Stock Split correspondingly will adjust, among other things, the exercise rate of our warrants and options into Common Stock. No fractional shares will be issued in connection with the 1-for-25 Reverse Stock Split, and any fractional shares resulting from the 1-for-25 Reverse Stock Split will be rounded up to the nearest whole share.

Issuance of Additional Shares of Common Stock in Connection with Acquisition of a Controlling Interest in Browning Productions& Entertainment, Inc.

On May 16, 2019, we issued 81,933 (2,048,334 pre-reverse split) shares of Common Stock to Browning Companies International LLC to modify the Browning Exchange Agreement, at a value of $1.547 ($0.06188 pre-reverse split) per share (for an aggregate value of $126,760).

Rescission of Issuance of Common Stock to Certain Investors

On July 17, 2019, we rescinded the issuance of an aggregate of 340,000 (8,500,000 pre-reverse split) shares of Common Stock to certain investors, which were originally acquired for a purchase price of $3.75 ($0.15 per pre-reverse split) share (for a total aggregate purchase price of $1,275,000).

Issuance of Common Stock to Consultant

On June 28, 2019, we issued the 200,000 (5,000,000 pre-reverse split) shares of Common Stock with an aggregate fair value of $150,000 to One Percent Investments, Inc., a Delaware corporation (the “Consultant”), in exchange for proposed consulting services to the Company relating to the Company’s further development and implementation of its corporate and business plan and potential merger and/or acquisition activities, alliances, joint ventures and corporate restructuring. When issuing the shares of Common Stock, the Company relied on the exemption from the registration requirements of the Securities Act of 1933, as amended, available for granting awardsto it under Section 4(a)(2) thereunder as a transaction by an issuer not involving any public offering of securities.

Proposed Acquisition of a Controlling Interest in Redspots

In May 2019, we entered into a preliminary, non-binding letter of intent to acquire a majority interest in Redspots Creative (Hong Kong) Company Limited (Redspots Creative), a multi-media production company, in a stock transaction based on post-closing, future earnings. Redspots Creative provides two dimensional (2D) and three dimensional (3D) video production services, as well as augmented/virtual reality (AR/VR) interactive technologies and products through a robust and proprietary AR platform.  We anticipate this planned acquisition to be transformational to our business as we have the ability to leverage Redspots across our major media and digital platforms.

Issuance of Convertible Note

On July 11, 2019, we issued a convertible note to Bespoke Growth Partners, Inc. in the principal amount of $100,000. The note is payable in full on January 11, 2020 and bears interest at the rate of 20.00% per annum. Accrued interest on the note is payable on the eleventh day of each month. The note may not be prepaid in whole or in part except as set forth in the note. Any amount of principal or interest on the note which is not paid when due shall be increased bybear interest at the rate of the lesser of 1,000,00028% per annum or the maximum amount permitted under applicable law from the due date until paid. The note may be convertible into shares of common stock and 5%of our company at any time only following an event of default at a price per share of 50% (representing a 50% discount) of the totallowest one trading price for our common stock during the 20-trading day period ending on the latest completed trading day prior to the date of conversion.


Financing Transaction Related to the Offering

The Equity Line

On August 5, 2019 (the “Closing Date”), the Company entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”) with Crown Bridge Partners, LLC (“Selling Stockholder”), dated as of July 18, 2019, pursuant to which, upon the terms and subject to the conditions thereof, the Selling Stockholder is committed to purchase shares of the Company’s common stock (the “Put Shares”) at an aggregate price of up to $10,000,000 (the “Maximum Commitment Amount”) over the course of its term. The term of the Equity Purchase Agreement commenced on August 5, 2019 and will end on the earlier of (i) the date on which the Selling Stockholder has purchased Put Shares pursuant to the Equity Purchase Agreement equal to the Maximum Commitment Amount, (ii) July 18, 2022, or (iii) written notice of termination by the Company.

From time to time over the term of the Equity Purchase Agreement, commencing on the date on which a registration statement registering the Put Shares (the “Registration Statement”) becomes effective, the Company may, in its sole discretion, provide the Selling Stockholder with a put notice (each a “Put Notice”) to purchase a specified number of the Put Shares (each a “Put Amount Requested”) subject to the limitations discussed below and contained in the Equity Purchase Agreement. Upon delivery of a Put Notice, the Company must deliver the Put Amount Requested as Deposit Withdrawal at Custodian (DWAC) shares to Selling Stockholder within two trading days.

The actual amount of proceeds the Company receives pursuant to each Put Notice (each, the “Put Amount”) is to be determined by multiplying the Put Amount Requested by the applicable purchase price. The purchase price for each of the Put Shares equals 82% of the lesser of the (i) “Market Price,” which is defined as the lowest traded price for any trading day during the 15 trading days immediately preceding the respective date of the put, or (ii) “Valuation Price,” which is defined as the lowest traded price during the seven trading days following the clearing date associated with the applicable Put Notice. Within four trading days following the end of the valuation periods, the Buyer will deliver the Put Amount to the Company via wire transfer.

The Put Amount Requested pursuant to any single Put Notice must have an aggregate value of at least $10,000, and cannot exceed the lesser of (i) $175,000, and (ii) 200% of the average daily trading value of the common stock in the 15 trading days immediately preceding the Put Notice.

In order to deliver a Put Notice, certain conditions set forth in the Equity Purchase Agreement must be met, as provided therein. In addition, the Company is prohibited from delivering a Put Notice if: (i) the sale of Put Shares pursuant to such Put Notice would cause the Company to issue and sell to Selling Stockholder, or Selling Stockholder to acquire or purchase,  a number of shares of the Company’s common stock that, when aggregated with all shares of common stock purchased by Selling Stockholder pursuant to all prior Put Notices issued under the Equity Purchase Agreement, would exceed the Maximum Commitment Amount; or (ii) the issuance of the Commitment Shares pursuant to a request for the Commitment Shares would cause the Company to issue and sell to Selling Stockholder, or Selling Stockholder to acquire or purchase, an aggregate number of shares of common stock outstanding.


Duringthat would result in Selling Stockholder beneficially owning more than 4.99% of the year ended December 31, 2014issued and outstanding shares of the Company’s common stock.

On August 5, 2019, in connection with the execution of the Equity Purchase Agreement, the Company agreed to issue, and issued, options173,552 (4,338,793 pre-reverse split) shares of the Company’s common stock (the “Commitment Shares”) to purchase 500,000Selling Stockholder as a commitment fee.

Registration Rights Agreement

On the Closing Date, the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with Selling Stockholder pursuant to which the Company is obligated to file the Registration Statement to register the resale of the Commitment Shares and Put Shares. Pursuant to the Registration Rights Agreement, the Company must (i) file the Registration Statement within 45 calendar days from the Closing Date, (ii) use reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act of 1933, as amended, as promptly as possible after the filing thereof, and (iii) use its reasonable efforts to keep such Registration Statement continuously effective under the Securities Act until all of the Commitment Shares and Put Shares have been sold thereunder or pursuant to Rule 144.

Loan

In coordination with the Equity Purchase agreement, on July 24, 2019, the Company entered into a six month loan with Labrys Fund, LP of $180,000 issued at a 10% original issue discount, the Company therefore received net proceeds of $162,000. The loan is at an annual coupon rate of 12%.


Employees

As of September 16, 2019, we had 12 employees, all of whom were full-time employees. None of our employees is represented by a union. We consider our relations with our employees to be good.  

Legal Proceedings

From time to time, we are involved in various claims and legal actions arising in the ordinary course of business. There are no legal proceedings currently pending against us which we believe would have a material effect on our business, financial position or results of operations and, to the best of our knowledge, there are no such legal proceedings contemplated or threatened. See “Description of Business – Corporate History – Voluntary Termination By OHGI of Listing of Common Stock on the Nasdaq Capital Market.”

Properties

We do not currently own any real property. We lease the following offices:

Location Approximate size Approximate monthly rent  Expiration date of lease/renewal options
        
Hong Kong 150 square feet $1,900  Terminable with 3-months prior written notice
USA 1,000 square feet $1,400  Terminable with 3-months prior written notice
UK 120 square feet $1,250  Terminable with 3-months prior written notice

We believe that these facilities are adequate for our current and near-term future needs.

USE OF PROCEEDS

This Prospectus relates to shares of our common stock that may be offered and sold from time to time by the Selling Stockholder.  We will receive no proceeds from the sale of shares of common stock by the Selling Stockholder in this Offering.  The proceeds from the sales will belong to the Selling Stockholder.  However, we will receive proceeds from the sale of the Put Shares to the Selling Stockholder pursuant to the Equity Purchase Agreement.

We intend to use the proceeds that we may receive from the sale of Put Shares for general corporate purposes and working capital requirements. There can be no assurance that we will sell any of the Put Shares.

We cannot provide any assurance that we will be able to draw down any or all of the Maximum Commitment Amount, such that the proceeds received would be a source of financing for us.

We intend to raise additional capital through equity and debt financing, as needed, though there cannot be any assurance that such funds will be available to us on acceptable terms, on an acceptable schedule, or at all.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Trading Price History

Our Common Stock is currently quoted on the OTCQB tier of the OTC Markets under the 2013 Equity Incentive Plan. The options become fully vestedsymbol “OHGI”. Prior to March 8, 2019, our Common Stock was listed on January 15, 2017 and are exercisable, at an exercise price of $4.54 per common share, to January 15, 2024. On January 1,the Nasdaq Capital Market (the “Nasdaq”). Our Common Stock commenced trading on the Nasdaq on July 9, 2014 the number of shares available for granting awards under the 2013 Equity Incentive Plan was increased by 1,000,000 shares.


A summaryticker symbol “OHGI”. On February 26, 2019, Martin Ward, Chief Financial Officer of the Company’s 2013 Equity Incentive Plan asCompany, approved the voluntary termination of December 31, 2014, is as follows:
  Number of  Weighted Average 
  Options  Exercise Price 
       
Outstanding at December 31, 2013  -  $- 
Options issued  500,000   4.54 
Outstanding at December 31, 2014  500,000   4.54 
The fair valuethe listing of these options, usingour Common Stock on the Black-Scholes option-pricing model, is estimated to be $2,200,000. This expense, less an estimated forfeiture rate of 30%, will be recognized over the three year vesting period. The amount of $516,000 has been recognized during the year ended December 31, 2014. As at December 31, 2014 there was unrecognized compensation expense of approximately $1.03 million to be recognized over a period of 2 years.

Prior to the 2013 Equity Incentive PlanNasdaq. On March 8, 2019, the Company issued stock optionsfiled an application on Form 25 with the SEC to directors, employees, advisors, and consultants.
A summary ofvoluntarily terminate its Nasdaq listing. The delisting from the Company’s other stock options as of December 31, 2014, is as follows:
Nasdaq became effective on March 8, 2019.


  Number of  Weighted Average 
  Options  Exercise Price 
       
Outstanding at December 31, 2013  584,650  $0.53 
Options forfeited  -   - 
Outstanding at December 31, 2014  584,650  $0.53 
F-16

Other than the options to purchase 500,000 common shares under the 2013 Equity Incentive Plan, there were no options issued, exercised or forfeited during the year ended December 31, 2014.

The following table summarizes stock optionsindicates, for the relevant periods, the high and low prices of our Common Stock on OTCQB and Nasdaq:

Quarter Ended High  Low 
June 30, 2019 (1) $0.08  $0.03 
March 31, 2019 $0.18  $0.03 
         
December 31, 2018 $0.43  $0.07 
September 30, 2018 $0.54  $0.17 
June 30, 2018 $1.26  $0.49 
March 31, 2018 $3.03  $0.84 
         
December 31, 2017 $3.38  $0.80 
September 30, 2017 $1.39  $0.57 
June 30, 2017 $2.82  $0.62 
March 31, 2017 $2.24  $1.44 

(1)On May 8, 2019, the Nasdaq suspended our Common Stock from trading on the Nasdaq and the OTCQB commenced the quotation of our Common Stock.

On September 16, 2019, the closing price of our Common Stock on the OTCQB was $0.375 ($0.015 pre-reverse split).

Shareholders of Record

As of September 16, 2019, we had 3,930,646 (98,266,169 pre-reverse split) outstanding at December 31, 2014:


  NumberAverageNumberIntrinsic
  OutstandingRemainingExercisableValue
  atContractualatat
  December 31,LifeDecember 31,December 31,
Exercise Price 2014(Years)20142014
$0.51 8500.83850$1,258
 0.53 291,9005.50291,900 426,174
 0.53 291,9008.00- -
 4.54 500,0009.00- -

At December 31, 2014, 4,584,650 shares of common stock and there were reserved for all outstanding optionsapproximately 266 holders of record of our common stock, not including holders who hold their shares in street name.

Dividends

We have never declared or paid a cash dividend. At this time, we do not anticipate paying dividends in the future. We are under no legal or contractual obligation to declare or to pay dividends, and the timing and amount of any future commitments under the 2013 Equity Incentive Plan.


The fair value of each option grantedcash dividends and distributions is estimated at the datediscretion of grant usingour Board of Directors and will depend, among other things, on our future after-tax earnings, operations, capital requirements, borrowing capacity, financial condition and general business conditions. We plan to retain any earnings for use in the Black-Scholes option-pricing model.  The assumptions usedoperation of our business and to fund future growth. You should not purchase our Common Stock on the expectation of future dividends.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company (as defined in calculating the fair valueRule 12b-2 of the options granted were: risk-free interest rateExchange Act), we are not required to provide the information called for by Item 304 of 1.68%, a 3 year expected life, a dividend yield of 0.0%, and a stock price volatility factor of 192%

Regulation S-K.


Note 11.  Income Taxes
Income taxes are recognized for the amount of taxes payable for the current year and 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.

Income (loss) before income taxes consisted of the following (in thousands):

  December 31 
  2014  2013 
United States $      (943)  $(1,474) 
         
International  (607)   466 
Total $      (1,550)  $(1,008) 
F-17


Deferred Tax Assets

As of December 31, 2014, the Company had federal net operating losses of $2.4 million available for future deduction from taxable income derived in the United States.  The Company’s United Kingdom subsidiary has non-capital losses of approximately $13.0 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 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 2013 remain open to examination by federal authorities and other jurisdictions in which the Company operates.  The components of the net deferred tax asset and the amount of the valuation allowance are as follows: (in thousands)
  December 31 
  2014  2013 
Deferred tax assets        
Net operating loss carryforwards - United States $829  $508 
         
Net operating loss carryforwards - International  3,249   2,924 
Valuation allowance  (4,078)   (3,432) 
Net deferred tax assets $        -  $     - 
The increase in the valuation allowance was $646,000 for the year ended December 31, 2014 and $922,000 for the year ended December 31, 2013.

Note 12.  Commitments and Contingencies

The Company has an agreement with an employee to pay for certain services provided during 2013 by the issuance of options to purchase 291,900 shares of common stock of the Company.

Contractual Commitments

The Company incurred total rent expense of $100,000 and $200,000, respectively, for the years ended December 31, 2014 and 2013.

Minimum contractual commitments, as of December 31, 2014, is as follows:
  Operating  Long-term 
  leases  Financing 
       
2015 $112,000  $73,000 
2016  67,000   53,000 
2017  67,000   40,000 
2018  67,000   15,000 
Legal Proceedings
In 2012, we sold certain former subsidiaries engaged in provision of satellite service in 2012 to Broadband Satellite Services (“BSS”), a company incorporated under laws of England and Wales. Horizon Globex, a company incorporated in Switzerland and a subsidiary of us, had provided these subsidiary companies with software and IT services. In connection with its acquisition of our former subsidiary companies, BSS entered into three agreements with Horizon Globex pursuant to which BSS continued to use Horizon Globex to supply software and IT services. Notwithstanding the fact that Horizon Globex has provided such ongoing software and IT services, BSS has failed to pay our fees pursuant to the agreements. As a result, on December 23, 2014, we initiated legal proceedings in the High Court, Queens Bench Division, Commercial Court No. 2014 folio 1560 against BSS in the United Kingdom to collect such fees in the amount of $640,000. Subsequently, BSS asserted counter claims in the amount of $5.8 million, alleging among other claims, civil fraud in connection with the sale of subsidiary companies. Based on the timing of these claims, which were never raised until we filed our action against BSS, it is our position that these claims are specious and represent nothing more than an attempt to improve BSS's negotiating position with regard to our legitimate claims against it. As a result, we plan to continue to carry out our claims against BSS to the fullest extent possible and to defend BSS's counter-claims vigorously. We note further that several of BSS's counter claims may be time barred by applicable sections of the contracts and plan to assert the same as an affirmative defense to such counter claim. Notwithstanding our views with regard to our claims against BSS and BSS's counterclaims, litigation is by its nature unpredictable and therefore we cannot guarantee with certainty the outcome of our dispute with BSS.
F-18

Note 13. Segment Information
The Company has one business segment, which is the development of software for licensing to the telecommunications industry.
The Company’s revenues were generated in the following geographic areas:
 20142013
Europe$0.7 million$3.7 million
Asia$3.7 million$4.7 million
Russia$0.1 million$0.4 million
USA$0.6 million$0.3 million
F-19

MANAGEMENTMANAGEMENT’S DISCUSSION AND ANALYSIS
The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our audited condensed consolidated financial statements and notes for the fiscal years ended December 31, 2014 and 2013. OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis containsof the financial condition and results of operations of One Horizon Group, Inc. and its subsidiaries (“OHGI” or the “Company”) should be read in conjunction with our consolidated financial statements and the accompanying notes thereto included elsewhere in this prospectus. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our,” and similar terms refer to the Company. This prospectus includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Our actualActual results mayand the timing of events could differ significantlymaterially from the results, expectations and plans discussedthose anticipated in these forward-looking statements. We use wordsstatements as a result of a number of factors. Words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements.

See “Cautionary Note Concerning Forward-Looking Statements.”
Overview

We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Reference is made to “Risk Factors”, which are included elsewhere in this prospectus.

OperatingOVERVIEW

We are a holding company which, through our wholly-ownedoperating subsidiaries, Horizon Globex GmbH and Abbey Technology GmbH, our operations include the licensing of software to telecommunications operators and the development of software application platforms that optimizemobile voice, instant messaging and advertising communications over the Internet. Both subsidiariesdo this by using proprietary software techniques that use internet bandwidth more efficiently than other technologies that are unable to provide a low-bandwidth solution. The Horizon Platform is a bandwidth-efficient Voice over Internet Protocol platform for smartphones and also provides optimized data applications including messaging and mobile advertising. We license our software solutions to telecommunications network operators and service providersengaged in the mobile, fixed linedigital media, entertainment and satellite communications markets. We are an ISO 9001 and ISO 20000-1 certified company with assets and operations in Switzerland,secure messaging businesses, described below.

Current Structure of the United Kingdom, China, India, Singapore and Hong Kong.  Company


We have developed a mobile application, “Horizon Call,” which enables highly bandwidth-efficient VoIP calls over a smartphone using a 2G/EDGE, 3G, 4G/LTE, WiFi or WiMax connection. Our Horizon Call application is currently available for iPhones and for Android handsets.
Unlike other mobile VoIP applications, Horizon Call creates a business-to-business solution for mobile operators. It is a software solution that telecommunications operators license, brand and deploy. Mobile operators decide how to integrate Horizon Call within their portfolio and how to offer it commercially. Horizon Call can be customized according to each mobile operators’ own branding. It helps them to manage rising traffic volumes while combating the competitive threat to their voice telephony revenues from other mobile VoIP applications by giving its mobile data customers a more efficient mobile VoIP solution that adds value to their mobile data network.

We believe that emerging markets represent a key opportunity for Horizon Call because there are significant markets with high population density, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones. These factors will put increased pressure on mobile operators to manage their network availability.
In this context, the Company has entered into some strategic relationships with local partners in certain regions to seize upon this opportunity.

As of the date of filing this report, we have formed strategic relationships in India, Russia and China.

We planprospectus, the Company has the following subsidiaries:

Subsidiary name% Owned
123Wish, Inc. (acquired February 2018)51%
One Horizon Hong Kong Ltd100%
Horizon Network Technology Co. Ltd100%
Love Media House, Inc. (acquired March 2018)100%
Browning Productions & Entertainment, Inc. (acquired October 2018)51%

In addition to continue to develop our products in areas with high population density, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones. We expect to form strategic relationships when local regulations prevent us from accessingsubsidiaries listed above, Suzhou Aishuo Network Information Co., Ltd (“Suzhou Aishuo”) is a particular market directly.

We plan to fund this proposed expansion through debt financing, cash from operations and potential equity financing. However, we may not be able to obtain additional financing at acceptable terms, or at all, and, as a result, our ability to continue to improve and expand our software products and to expand our business could be adversely affected.
34


Recent Developments

Business Operation
In February 2015, we announced the rollout of our platformlimited liability company, organized in China brand named, Aishuo. The Aishuo platform provides VoIP services, a Value Added Virtual SIM solution delivered through a PRC entityand controlled by us via various contractual arrangements,arrangements. Suzhou Aishuo. Aishuo is treated as one of our subsidiaries for financial reporting purposes in accordance with generally accepted accounting principles in the United States (“GAAP”).

Summary Description of Businesses

As of the date of filing of this prospectus, we have the following three core businesses:

123Wish, Inc. formerly Once In A Lifetime, LLC (“123Wish”) – an experience based platform where subscribers have a chance to play and win experiences from celebrities, athletes and artists.

Love Media House, Inc. formerly known as C-Rod, Inc. (“Love Media House”) –a full-service music production, artist representation and digital media business that providesa broad range of entertainment services including branding and advertising, video and photo production, recording (including music production, arranging, mixing and mastering), songwriting (arranging writing sessions with experienced and multi-platinum writers), artist development, digital distribution, billboard chart promotion, and consulting and life coaching. The entertainment marketplace is highly competitive. The team at Love Media House, headed by Chis Rodriguez, has worked with many famous artists and achieved many Billboard numbers and giving Love Media House an important edge in promoting new talent.

Browning Productions & Entertainment, Inc. (“Browning Productions”) – a full service video production company and executive producer for all entertainment projects. Browning Productions has been selected to produce and distribute numerous television programs spanning dozens of episodes in 2019 for acclaimed television networks including A&E, FYI and History Channel.

The Aishuo product has been deliveredCompany is based in the United States of America, Hong Kong, Singapore, China and the United Kingdom.


For the fiscal years ended December 31, 2018 and 2017, we generated revenues of $787,000 and $714,000, respectively; and reported net losses of $14,579,000 and $7,434,000, respectively, and negative cash flow from operating activities of $3,051,000 and $703,000, respectively. For the six months ended June 30, 2019, we generated revenues of $454,000 and reported a net loss of $1,840,000, and negative cash flow from operating activities of $1,401,000. As noted in our consolidated financial statements, we had an accumulated deficit of approximately $56,594,000 and recurring losses from operations as of June 30, 2019. We anticipate that we will continue to report losses and negative cash flow. Our auditors have raised substantial doubt regarding our ability to continue as a going concern as a result of our historical recurring losses and negative cash flows from operations. See “Risk Factors” - We have a history of operating losses and our auditors have indicated that there is a substantial doubt about our ability to continue as a going concern.”

A reverse stock split (“Reverse Stock Split”) of the outstanding shares of the Common Stock in the range from one-for-two (1-for-2) to one-for-fifty (1-for-50), which ratio was to be selected by the Board of Directors, was approved by our Board of Directors and by our shareholders at the annual meeting of the shareholders held on December 27, 2018 as described in that proxy statement on that certain Definitive Schedule 14A filed with the SEC on November 28, 2018. The board of directors anticipates setting the ratio of the reverse stock split, and the reverse stock split becoming effective following approval by FINRA of the reverse stock split, prior to the major storeseffective date of the registration statement (of which this prospectus forms a part).

Except as otherwise indicated and except in Chinese App marketplace including Baidu’s 91.comour financial statements, all references to Common Stock, share data, per share data and Baidu.com,related information depict an assumed 1-for-25 Reverse Stock Split until final determination by the Tencent App store MyApp.com, 360 Qihoo store 360.cnBoard as if it was effective and as if it had occurred at the beginning of the earliest period presented. The 1-for-25 Reverse Stock Split, when effective, will combine each twenty-five shares of our outstanding Common Stock into one share of Common Stock, without any change in the par value per share, and the every growing Xiaomi store mi.com. The Aishuo smartphone app is expected to drive multiple revenue streams1-for-25 Reverse Stock Split correspondingly will adjust, among other things, the exercise rate of our warrants and options into Common Stock. No fractional shares will be issued in connection with the 1-for-25 Reverse Stock Split, and any fractional shares resulting from the supply of its value-added services including the rental of Chinese telephone phone numbers linked1-for-25 Reverse Stock Split will be rounded up to the app, low cost localnearest whole share.

Results of Operations

Comparison of three months ended June 30, 2019 and international calling plans2018 (in thousands)

The following table sets forth information from our statements of operations for the three months ended June 30, 2019 and sponsorship2018. 

  

Three Months Ended 

June 30,

  Change 
  2019  2018  Increase/
(decrease)
  Percentage
Change
 
             
Revenue $253  $270  $(17)  (6.3)
                 
Cost of revenue  303   673   (370)  (54.8)
                 
Gross deficit  (50)  (403)  353   87.3 
                 
Operating expenses:                
                 
General and administrative  1,078   1,716   (638)  (37.2)
Depreciation  5   1   4   400.0 
Acquisition costs  -   1,094   (1,094)  N/A 
                 
Total operating expenses  1,083   2,811   (1,728)  (61.5)
                 
Loss from operations  (1,133)  (3,214)  2,081   64.7 
                 
Other income(expense)  (17)  (18)  1   0.6 
Loss for the period for continuing operations  (1,150)  (3,232)  2,082   64.4 
                 
Loss for discontinued operations  -   (296)  296   100.0 
Total net loss $(1,150) $(3,528) $2,378   67.4 


Revenue: Our revenue for the three months ended June 30, 2019 decreased by approximately $17,000 over the same period in 2018.

Gross DeficitGross margin deficit for the three months ended June 30, 2019 was approximately $50,000 as compared to $403,000 margin deficit for the three months ended June 30, 2018, due to the decrease in amortization of software development costs.

Operating Expenses:  General and administrative expenses, acquisition related costs and depreciation incurred during the three months ended June 30, 2019 were approximately $1.1 million, a significant reduction of approximately $1.7 million when compared to the approximate figure of $2.8 million incurred in the three months ended June 30, 2018.  The major reduction in costs related to consulting costs, due diligence and advisory costs incurred in the acquisitions undertaken in 2018. 

Net Loss: Net loss for the three months ended June 30, 2019 was approximately $1.2 million as compared to net loss of approximately $3.5 million for the same period in 2018. The decrease in net loss is attributable mainly to the decrease in general and administrative expenses, as discussed above.

Comparison of six months ended June 30, 2019 and 2018 (in thousands)

The following table sets forth information from advertisers.  Subscribers can top up their app creditour statements of operations for the six months ended June 30, 2019 and 2018. 

  

Six Months Ended  

June 30,

  Change 
  2019  2018  Increase/
(decrease)
  Percentage
Change
 
             
Revenue $454  $544  $(90)  (16.5)
                 
Cost of revenue  545   1,078   (533)  (49.4)
                 
Gross deficit  (91)  (534)  443   82.8 
                 
Operating expenses:                
                 
General and administrative  2,262   3,126   (864)  (27.6)
Acquisition costs  -   1,874   (1,874)  (100.0)
Depreciation  6   1   5   500.0 
                 
Total operating expenses  2,268   5,001   (2,733)  (54.6)
                 
Loss from operations  (2,359)  (5,535)  3,175   57.4 
                 
Other income (expense)  519   (391)  910   232.7 
Loss for the period for continuing operations  (1,840)  (5,926)  4,085   68.9 
                 
Loss for discontinued operations  -   (296)  296   100.0 
Net loss $(1,840) $(6,222) $4,381   70.4 

Revenue:Our revenue for the six months ended June 30, 2019 was approximately $454,000 as compared to approximately $544,000 for the six months ended June 30, 2018, a decrease of approximately $90,000, or 16.5%. The decrease was due to the reduction in license sales and LMH sales, offset by the revenue generated by Browning. 


Cost of Revenue: Cost of revenue was approximately $545,000 for the six months ending June 30, 2019 as compared to $1,078,000 for the six months ended June 30, 2018. The main reason for the decrease was the reduction in the amortization charge of $686,000 relating to software development costs.

Gross Deficit: Gross margin deficit for the six months ended June 30, 2019 was approximately $91,000 as compared to a deficit of $534,000 for the six months ended June 30, 2018, a decrease of approximately $443,000. The decrease was mainly due to the reduction in amortization charge of $686,000 as set forth above.

Operating Expenses: Operating expenses, including general and administrative expenses, depreciation and acquisition costs were approximately $2.3 million and $5.0 million during the six months ended June 30, 2019 and 2018, respectively. The reduction in operating costs primarily related to the acquisition costs and fundraising costs incurred in 2018 that were not incurred in the same period in 2019.

Net Loss: Net loss for the six months ended June 30, 2019 was approximately $1.8 million as compared to loss of approximately $6.2 million for the same period in 2018. The net loss decrease was primarily due to the decrease in amortization charges, non-cash general and administrative expenses, and fundraising and acquisition costs.

Comparison of year ended December 31, 2018 and 2017 (in thousands) excluding discontinued items.

The following table sets forth information from our statements of operations for the years ended December 31, 2018 and 2017. 

  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)%

Revenue: Our revenue for continuing operations for the year ended December 31, 2018 was approximately $787,000 as compared to 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 biggest online payment servicesplanned 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 China including AliPay (from Alibaba), Union Pay, PayPal2017.  Going forward, management believes the Company will continue to grow the business and Tenent’s WeChat payment service.


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.

Liquidity and Capital Resources

Six Months Ended June 30, 2019 and June 30, 2018

The official rollout of Aishuo brand followed the first phasefollowing table sets forth a summary of our Chinese infrastructure rolloutnet cash flows for the periods indicated:

  For the Six Months Ended
June 30
(in thousands)
 
  2019  2018 
Net cash flows from total operating operations  (1,401)  (1,519)
Net cash flows from total investing activities  1,334   (110)
Net cash flows from total financing activities  551   1,460 

Net cash used by operating activities of continuing operations decreased to $1,401,000 for the six months ended June 30, 2019 from $1,519,000 for the same period in 2018.

Net cash raised from investing activities was approximately $1,334,000 in the six months ended June 30, 2019 as compared to net cash used of $110 in the comparative period in 2018. The difference was primarily the $1,500,000 raised from the initial proceeds on the sale of the Company’s holding in Banana Whale Studios Pte Ltd.

Net cash generated in financing activities was approximately $551,000 for the six months ended June 30, 2019 as compared to $1,460,000 for the six months ended June 30, 2018. The cash generated from financing activities in the six months ended June 30, 2019 was primarily from the loan from a related party whereas the net cash generated in the comparative period in 2018 was primarily generated from the sale of new shares of common stock, the exercise of common stock warrants and proceeds from convertible debt.

At June 30, 2019, the Company had cash of approximately$847,000. Management believes that commencedthe combination of the available cash on hand, together with the anticipated proceeds from the Equity Line and other potential financing arrangements, and cash to be generated from budgeted future operations will be sufficient to fund the Company’s operations into the fourth quarter of 2020.However, actual results could differ materially from the Company’s projections.


Years Ended December 31, 2018 and December 31, 2017

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

  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    

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 20142017. The increase in six major citiescash used in China: Tianjin, Beijing, Chongqing, Changchun, Nanjing and Shijiazhuang.  These initial locations will connectoperating activities from continuing operations is largely due to the national telephone networkincrease 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.

Going Concern

The Company has incurred losses since inception, including approximately $14,579,000, $7,434,000, and $1,840,000 during the years ended December 31, 2018 and 2017 and the six months ended June 30, 2019, respectively, resulting in an accumulated deficit of approximately $56,594,000 as of June 30, 2019. As of June 30, 2019, the Company had approximately $847,000 in cash and cash equivalents, which will not be sufficient to fund the operations and strategic objectives of the Company over the next twelve months from the date of issuance of this prospectus. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

The Company will be required to obtain additional financing and capital and expects to satisfy its cash needs primarily from the additional issuance of equity securities or indebtedness in order to sustain operations until it can achieve profitability and positive cash flows, if ever. There can be no assurances, however, that adequate additional funding will be available on favorable terms, or at all. If such funds are not available in the future, the Company may be required to delay, significantly modify or terminate its operations, all of which could have a material adverse effect on the Company.

As a result of the foregoing factors, our independent registered public accounting firm included an explanatory paragraph relating to our Aishuo brand.  The smart phone appability to continue as a going concern in its report on our audited consolidated financial statements for the years ended December 31, 2018 and 2017.

Availability of Additional Funds

Our capital requirements going forward will consist of financing our operations until we are able to reach a level of revenues and gross margins adequate to equal or exceed our ongoing operating expenses.  We do not have any credit agreement or source of liquidity immediately available to us.


Since inception, our operations have primarily been funded through proceeds from existing shareholders in exchange for equity and debt. At June 30, 2019, we had a cash balance of approximately $847,000. Although we believe that we have access to capital resources, there are no commitments in place for new financing as of the filing date of this prospectus and there can be no assurance that we will be able to provide various optimized internet value added servicesobtain funds on commercially acceptable terms, if at all. We expect to have ongoing needs for working capital in order to (a) fund operations; plus (b) fund strategic acquisitions. To that end, we may be required to raise additional funds through equity or debt financing. However, there can be no assurance that we will be successful in securing additional capital. If we are unsuccessful, we may need to (a) initiate cost reductions; (b) forego business development opportunities; (c) seek extensions of time to fund its mobile subscribers including butliabilities, or (d) seek protection from creditors.

In addition, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary for us to sell all or a portion of our assets, enter into a business combination, or reduce or eliminate operations. These possibilities, to the extent available, may be on terms that result in significant dilution to our shareholders or that result in our shareholders losing all of their investment in our Company.

If we are able to raise additional capital, we do not limitedknow what the terms of any such capital raising would be. In addition, any future sale of our equity securities would dilute the ownership and control of your shares and could be at prices substantially below prices at which our shares currently trade. Our inability to voiceraise capital could require us to significantly curtail or terminate our operations. We may seek to increase our cash reserves through the sale of additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional and social media services suchpotentially substantial dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties.

Our audited consolidated financial statements included elsewhere in this prospectus have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which contemplate our continuation as text, picture, videoa going concern and geo-location messaging. Combined with One Horizon's location aware mobile advertising services, the Aishuo branded smart phone app is expectedrealization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily purport to drive multiple revenue streamsrepresent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the supplyoutcome of this uncertainty.

Equity Purchase Agreement and Registration Rights Agreement

On August 5, 2019 (the “Closing Date”), the Company entered into an Equity Purchase Agreement (the “Equity Purchase Agreement”) with Crown Bridge Partners, LLC (“Selling Stockholder”), dated as of July 18, 2019, pursuant to which, upon the terms and subject to the conditions thereof, the Selling Stockholder is committed to purchase shares of the Company’s common stock (the “Put Shares”) at an aggregate price of up to $10,000,000 (the “Maximum Commitment Amount”) over the course of its value-added services.term. The serviceterm of the Equity Purchase Agreement commenced on August 5, 2019 and will seekend on the earlier of (i) the date on which the Selling Stockholder has purchased Put Shares pursuant to the Equity Purchase Agreement equal to the Maximum Commitment Amount, (ii) July 18, 2022, or (iii) written notice of termination by the Company.

From time to time over the term of the Equity Purchase Agreement, commencing on the date on which a registration statement registering the Put Shares (the “Registration Statement”) becomes effective, the Company may, in its sole discretion, provide the Selling Stockholder with a put notice (each a “Put Notice”) to purchase a specified number of the Put Shares (each a “Put Amount Requested”) subject to the limitations discussed below and contained in the Equity Purchase Agreement. Upon delivery of a Put Notice, the Company must deliver the Put Amount Requested as Deposit Withdrawal at Custodian (DWAC) shares to Selling Stockholder within two trading days.

The actual amount of proceeds the Company receives pursuant to each Put Notice (each, the “Put Amount”) is to be determined by multiplying the Put Amount Requested by the applicable purchase price. The purchase price for each of the Put Shares equals 82% of the lesser of the (i) “Market Price,” which is defined as the lowest traded price for any trading day during the 15 trading days immediately preceding the respective date of the put, or (ii) “Valuation Price,” which is defined as the lowest traded price during the seven trading days following the clearing date associated with the applicable Put Notice. Within four trading days following the end of the valuation periods, the Buyer will deliver the Put Amount to the Company via wire transfer.

The Put Amount Requested pursuant to any single Put Notice must have an aggregate value of at least $10,000, and cannot exceed the lesser of (i) $175,000, and (ii) 200% of the average daily trading value of the common stock in the 15 trading days immediately preceding the Put Notice.


In order to deliver a Put Notice, certain conditions set forth in the Equity Purchase Agreement must be met, as provided therein. In addition, the Company is prohibited from delivering a Put Notice if: (i) the sale of Put Shares pursuant to such Put Notice would cause the Company to issue and sell to Selling Stockholder, or Selling Stockholder to acquire 15 million new app subscribersor purchase,  a number of shares of the Company’s common stock that, when aggregated with all shares of common stock purchased by Selling Stockholder pursuant to all prior Put Notices issued under the Equity Purchase Agreement, would exceed the Maximum Commitment Amount; or (ii) the issuance of the Commitment Shares pursuant to a request for the smartphone app over a two-year period and expects to achieve industry average revenues per user (ARPU) for similar social media apps.

In 2014, we continued building upCommitment Shares would cause the Chinese core network.  The Global Exchange (network control center) was placed in a data center with high availability in Shanghai and eight (8) Horizon line servers were connected to the telecommunications network.  This level of rollout allowed usCompany to issue a preliminary Android Application (App)and sell to a group of Chinese students in Nanjing for them to evaluate the user interface and the core features of our optimized smartphone App.  Based on feedback the research and development teams in Ireland and China made some adjustments to the Application look and feel service to accommodate this target user community.

In December 2014, Tier 1 Telecom operators, including Smartfren Telcom, Tbk in Indonesia and the Philippines, made One Horizon software available to customers as a standard feature upon activation of devices. It gives users the abilitySelling Stockholder, or Selling Stockholder to acquire a free virtual SIM, a unique identifieror purchase, an aggregate number of shares of common stock that allows for calls from ‘application to application’ or ‘application to landline/mobile phones’, by simply registering the App.  Having the App on the device eliminates the stepwould result in Selling Stockholder beneficially owning more than 4.99% of the user needing to seek outissued and download the App.  It is anticipated that Smartfren Telcom will target to pre-install the smartcall app in more than 4 million units of their Andromax phones in 2015
In September 2014, our One Horizon mobile VoIP app was added by SingTel to their existing One Horizon software platform for mobile satellite services.  SingTel is Asia's leading communications group with over 500 million mobile customers in 25 countries, including Bangladesh, India, Indonesia, the Philippines and Thailand.

SingTel AIO Connect is a comprehensive unified communications service for both business users and crew onboard ships. It enables instant messaging, email, Internet surfing, Voice-over-IP (VoIP) and voicemail in a single, integrated application. This service has already succeeded in bringing optimized VoIP, Messaging over IP and compressed Internet surfing to SingTel's mobile satellite subscribers connected using mobile Internet over satellite; the toughest of all mobile Internet environments. This mobile VoIP app can be downloaded from the Apple App Store and Google's Play Store.

Our optimized software platform is being used by a pre-paid VoIP Smartphone application launched by Smart Communications, Inc, (“Smart”). Smart is the Philippines' leading wireless services provider with 57.3 million subscribers on its GSM network as of end-June 2013. Smart rolled out its smartphone mobile app, branded Link Plus, as a pre-paid Over The Top ("OTT") Android App that is available to download from the Google Play Store. Once Link Plus is installed on the smartphone, the user's app will receive a new Virtual SIM Filipino telephone number from Smart. We believe that winning new business with SingTel and Smart demonstrates the acceptance of our carrier-grade technology by tier 1 operators, especially in Asia. 
In 2014, we continued our product refinement and commercial integration efforts with Smartfren Telecom, Tbk of Indonesia.  The service, branded SmartCall, will be available in Google Play later in the year.  This service rollout represents yet another tier 1 mobile carrier deployment in Asia. According to a study from Australian market research company Roy Morgan Research, the amount of smartphone ownerships doubled from 12%outstanding shares of the population to 24% in Indonesia during March 2012 to March 2013, which is approximately 60 million. Delivered by the worldwide tier 1 operators, the One Horizon Solution shows its innovation making a new virtual SIM service available to all Indonesians at home and abroad.
Offering and Market Related

In July 2014, we received approval by NASDAQ's Listing Qualifications Department to list ourCompany’s common stock on the NASDAQ Capital Market. Our common stock commenced trading on the NASDAQ Capital Market on July 9, 2014 under the same ticker symbol "OHGI".  

In July 2014, we  closed a Reg. S private placement of $1,000,000  for a total of 10 units at a purchase price of $100,000 per Unit, each consisting of, (i) 17,094 shares of Series A Preferred Stock, initially convertible into 17,094 shares of Commo Stock, and (ii) 10,000 Class B Warrants, each exercisable to purchase 1 share of Common Stock at an exercise price of $4.00 per share.

In December 2014, we closed a private placement 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 388,889 shares of Common Stock and Performance Warrant to purchase up to 450,000 shares of Common Stock based on our annual reported subscriber numbers, twenty four (24) months after the Closing, as is reflected in our Annual Report on Form 10-K for the year ending December 31, 2016, if we fail to achieve 15.0 million subscribers at that time.
35

Corporate Governance

In July 2014, we appointed Brian Collins the Chief Executive Officer of the Company,. Mr. Collins is the co-inventor of the Horizon Platform, and has over 20 years’ experience in the technology sector with a background in software engineering. Mr. Collins brings experience in founding and operating technology companies along with his extensive knowledge of software engineering.
In November 2014, as one of our continuous measures to improve our internal control and procedure over the financial reporting and disclosure, our Board of Directors adopted a tracking form which was designed to track related party transactions. Upon adoption, management will review and pre-approve related party transaction and submit the tracking form to the Board for review and ratification on quarterly basis.
Research & Development
The Company has spent approximately $1.1 million on capitalizable research and development in the fiscal year 2014.
During 2014, we expanded our Irish software development team with the addition of a new senior software developer at our recently opened software research and development office at the Nexus Innovation Center on the campus of the University of Limerick.  As part of this process, we signed an agreement with the Industrial Development Agency (IDA) Ireland whereby IDA granted certain financial assistance toward the cost of establishing and carrying a service undertaking for a software development center in Irelandstock.

On August 5, 2019, in connection with our VoIP software platform. The software development center is intended to give employment of up to 25 persons and should allow us to more quickly increase the size of this research and development team. We believe that the further expansion of our Irish development team will allow the further advance of our unique mobile VoIP solutions.

We completed the development and continued to refine the Horizon billing system.  The completionexecution of the Horizon Billing System software add-on package allows one HorizonEquity Purchase Agreement, the Company agreed to deliver an additional turn-key elementissue, and issued, 173,552 (4,338,793 pre-reverse split) shares of the Company’s common stock (the “Commitment Shares”) to our customers that will allow our customersSelling Stockholder as a commitment fee.

On the Closing Date, the Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with Selling Stockholder pursuant to invoice their customerswhich the Company is obligated to file the Registration Statement to register the resale of the Commitment Shares and enterprise on a postpaid monthly basis.  This adds greater flexibility and reachPut Shares. Pursuant to the Horizon platformRegistration Rights Agreement, the Company must (i) file the Registration Statement within 45 calendar days from the Closing Date, (ii) use reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act of 1933, as offered by our customersamended, as promptly as possible after the filing thereof, and (iii) use its reasonable efforts to those subscribers that wish to utilizekeep such Registration Statement continuously effective under the service on a post paid basis.


We expanded our software development capabilities for China by hiring 4 new junior software developers in our Horizon Nanjing JV, known as Horizon Network Technology Co. Ltd.  We believe that the expansion of our software development team at our Chinese joint venture will support the company’s strategy of continuing to develop our products in areas with high population density, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones while working within the constraints of local regulations.
We continued our research and developmentSecurities Act until all of the Horizon product platform throughout 2014.Commitment Shares and Put Shares have been sold thereunder or pursuant to Rule 144.

In coordination with the Equity Purchase agreement, on July 24, 2019, the Company entered into a six month loan with Labrys Fund, LP of $180,000 issued at a 10% original issue discount, the Company therefore received net proceeds of $162,000. The Swiss based team made significant strides towards the next generationloan is at an annual coupon rate of the product suite with particular emphasis going12%.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have, or are reasonably likely to the User Interface (UI) re-engineering and the new Horizon concepthave, a current or future effect on our financial condition, revenues or expenses, results of Sponsored Calls.  Sponsored calls allow 3rd partiesoperations, liquidity, capital expenditures or capital resources that is material to display and play a multi-media advertisement for their goods and services to App users and in return for listening to the advertisement, the user gets a free call.  Further to the UI the Research and Development for version 2.0, our Irish based team made progress on the latest multi-core solution with a view to releasing this software to our customers in 2015.  Further research is on-going in the area of Wi-Fi to 3G [and vice-versa] 'radio handoff' to allow uninterrupted calls when Internet radio signals are arriving and leaving the smartphone.  Our concept of multi-ring handsets is also being developed and marks a very exciting new feature to our smartphone offering where our App, a business landline, an assistants phone etc. can all ring at once when a main-number is dialed.  The software team in China is working on a new method for Direct Inward Dial number rental for the Chinese marketplace and developing all the interfaces for the Software Development Kits [SDK] required for the Baidu, Tencent and Qihoo App stores.

During the last quarter of 2014, the expansion of the Horizon advertising platform to allow the industry first of User-Selectable-Sponsored-Calls was developed in Switzerland and Ireland R&D centers,  and released on the Horizon product suite in China by the Chinese team, brand name Aishuo. A User-Selectable-Sponsored-Calls allows would-be advertisers to sponsor a call or calls to a certain amount in time or price.  The user selects their sponsor and then must listen to their audio advertisement prior to the call being placed.  Further to this, in Ireland, the R&D team developed a brand new multi-ring solution of our App to be able to receive incoming calls on multiple devices at the same time.  This differs from existing app technologies in that it also includes the functionality to receive the call to user’s apps, home, office, mobile, all at the same time so a call will never be missed.
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investors.

Critical Accounting Policies and Estimates

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, useful lives for amortization of intangibles, determination of future cash flows associated

Together 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.

Ourcritical accounting policies set out above, our significant accounting policies are summarized in Note 2 of our audited financial statements as of December 31, 2014.
Revenue Recognition
The Company recognizes revenue when it is realized or realizable and earned. The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred or services have been rendered, price is fixed and determinable, and collectability is reasonably assured.
Software and licenses – revenue from sales of perpetual licenses to customers when payments for the licenses are fixed is recognized at the inception of the arrangement, unless the payment term exceeds one year and then only if the presumption that the license fee is not fixed or determinable can be overcome, presuming all other relevant revenue recognition criteria are met. If the presumption cannot be overcome, revenue is recognized as payments from the customer become due. Revenue from sales of perpetual licenses when payments for the licenses are payable over a period exceeding a year and those payments are variable based on customer usage is recognized as payments from the customer become due.
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 licences and maintenance services will be recorded only after existing accounts receivable balances are fully collected.
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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 upgrades, when and if available, support, updates and enhancements. When vendor specific objective evidence (“VSOE”) of fair value exists for all elements in a multiple element arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values of various elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price between deliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elements such as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In the absence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to the residual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit of accounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No sales arrangements to date include undelivered elements for which VSOE does not exist.
For purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption that the fee in the transaction is not fixed and determinable. This presumption however, may be overcome if persuasive evidence demonstrates that the Company has a business practice of extending payment terms and has been successful in collecting under the original terms, without providing any concessions. In doing so, the Company considers if the arrangement is sufficiently similar to historical arrangements in terms of similar customers and products is assessing whether there is evidence of a history of successful collection.
In order to determine the company’s historical experience is based on sufficiently similar arrangements, the Company considers the various factor including the types of customers and products, product life cycle, elements Included in the arrangement, length of payment terms and economics of license arrangement.

If the presumption cannot be overcome due to a lack of such evidence, revenue should be recognized as payments become due, assuming all other revenue recognition criteria has been met.
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Results of Operations
The following table sets forth information from our statements of operations for the year ended December 31, 2014 and 2013.  

Comparison of year ended December 31, 2014 and 2013 (in thousands)

  For the Year Ended December 31,  Year to Year Comparison 
  
2014
(audited)
  
2013
(audited)
  Increase/ (decrease)  Percentage Change 
             
Revenue $5,122  $9,106  $(3,984)  (44%)
                 
Cost of revenue                
  Hardware  362   545   (183)  (34%)
  Amortization of software development costs  1,890   1,908   (18)  (1%)
   2,252   2,453         
                 
Gross margin  2,870   6,653   (3,783)  (57%)
                 
Operating Expenses                
                 
                 
                 
                 
  General and administrative  4,933   6,706   (1,773)  (26%)
  Depreciation  146   166   (20)  (12%)
Total Operating Expenses  5,079   6,872   (1,793)  (26%)
                 
Loss from Operations  (2,209)  (219)  (1,990)  (908%)
                 
Other Income(Expense)                
  Interest expense  20   (322)  (342)  106%
  Foreign Exchange (loss) gain , net  8   (158)  (166)  105%
  Interest income  2   1   1   100
                  
Loss for continuing operations before income taxes  (2,179)  (698)  (1,481)  (212%)
                 
Income taxes (recovery)  (210)  -   (210)  N/A 
Net Loss for the year  (1,969)  (698)  (1,271)  (182%)
2018.

Revenue: Foreign Currency TranslationOur revenue for the year ended December 31, 2014 was approximately $5.1 million as compared to approximately $9.1 million for the year ended December 31, 2013, a decrease of roughly $4.0 million or 44%.

The decrease was primarily due to revenue generated in 2013 for the maintenance of a banking software which is now no longer supported by One Horizon, and licenses for a customer booked in January 2013 which were due for renewal in December 2013 and consequently issued and invoiced in December 2013, two of which accounted for approximately $700,000 in revenue. In addition there were revenues recognized in the comparative period on a Global Exchange sale to a major tier one telecommunications company based in Asia of $0.5 million and amounts under contracts signed in prior periods which were recognized in the comparative period in 2013.  The Company expects revenue to increase as more customers launch their service using the Horizon products. The Company has in 2014 spent time in developing the B2C network and system in China to diversify our long term growth away from purely B2B business where the decisions on roll outreporting currency of the product depend on the customer’s priorities within their portfolio of products, over which we have limited or no influence. We undertook considerable work in 2014 and launched our  App on B2C network in February 2015. As of the date of this report, our App has been downloaded by over 1 million subscribers.

Cost of Revenue: Cost of revenue for hardware was approximately $0.4 million for the year ended December 31, 2014, compared to approximately $0.5 million for the year ended December 31, 2013. Our cost of sales is primarily composed of the costs of ancillary hardware sold with the Horizon Platform together with the amortization of software development costs.  In addition, we recognize costs relating to the provision of hardware when a customer acquires such ancillary hardware.
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Gross Profit:  Gross profit for the year ended December 31, 2014 was approximately $2.9 million as compared to $6.7 million for the year ended December 31, 2013.  Our gross profits decreased by 57% from 2013 to 2014.  The decrease was mainly due to the reduced revenue as set forth above herein. However, management anticipate gross profit to increase with the growth of our business and the global smartphone market as well as our established expansion plan of entering into markets with high population density, high penetration of mobile phones, congested mobile cellular networks and high adoption of smartphones. 
Operating Expenses: Operating expenses, including general and administrative expenses and depreciation were approximately $5.1 million, or 99% of sales for the year ended December 31, 2014 as compared to approximately $6.9 million, or 75% of sales for the same period in 2013, a decrease of approximately $1.8 million. The decrease was mainly due to reduced accounting and legal costs for the year ended December 31, 2014 as well as the reduced staff cost in 2014. For the same period in 2013, we incurred higher accounting and legal costs following the share exchange between and among Intelligent Communication Enterprise Corp. and One Horizon Group PLC closed on November 20, 2012. In addition,  our staff cost decreased in 2014 because we transitioned certain development positions from Switzerland to Ireland and China.  Going forward, management expects operating costs to rise due to various public company-related expenses including share-based compensation, and various legal, accounting and consulting services.  Despite the expected increase in operating costs, management believes that operating costs as a percentage of sales will drop as sales of the Horizon Platform solution are expected to grow.
Net Loss: Net loss for the year ended December 31, 2014 was approximately $2.0 million as compared to a net loss of $0.7 million for the same period in 2013.  Going forward, management expects to generate net income  provided that  the company continuously execute its expansion plan  by entering areas with high population density, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones.
Non-Controlling Interest:
The non-controlling interest holders in our China joint venture were attributed their 25% share of the net loss of the joint venture in the amount of $105,000 for the year ended December 31, 2014. The remaining portion of net loss of $1.9 million  for the twelve months ended December 31, 2014 was attributable to the stockholders of the Company.
Going forward, management believes the Company will continue to grow the business and increase profitability if we are successful in selling the Horizon Platform solution to new telecommunications company customers globally.

Foreign Currency Translation Adjustment:     Our reporting currency is the United States dollar. Assets and liabilities other than those denominated in U.S. dollar. Our local currencies, Swiss Francs, Euro, British poundsdollars, primarily in Singapore, the United Kingdom and Chinese Renminbi, are our functional currencies. Results of operations and cash flowChina, are translated into United States dollars at averagethe rate of exchange rates duringat the period,balance sheet date. Revenues and assets and liabilitiesexpenses are translated at the unifiedaverage rate of exchange rate as quoted by http://www.oanda.com/currency/historical-rates/ at the end ofthroughout the period. Translation adjustments resultingGains or losses from this processthese translations are included in accumulatedreported as a separate component of other comprehensive income (loss) until all or a part of the investment in the statementsubsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of shareholders’ equity. income tax because the Company expects to reinvest the amounts indefinitely in operations.


Transaction gains and losses that arise from exchange rateexchange-rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.general and administrative expenses. 

Accounts Receivable, Revenue Recognition and Concentrations


Currency translation adjustments resulting from this process are included

Performance Obligations– A performance obligation is a promise in accumulated other comprehensive income in the consolidated statement of shareholders' equity and amounteda contract to approximately $1,074,000 for the year ended December 31, 2014.


The following table sets forth information from our statements of operations for the years ended December 31, 2014 and 2013.
Liquidity and Capital Resources
Years Ended December 31, 2014 and December 31, 2013

The following table sets forthtransfer a summary of our approximate cash flows for the periods indicated:
  
For the Years Ended December 31
(in thousands)
 
  2014  
 
2013
 
Net cash used in operating activities  (1,755)  (3,760
Net cash used in investing activities  (1,167)  (1,365)
Net cash provided by financing activities  4,083   6,496 
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Net cash used by operating activities was approximately $1.75 million for the year ended December 31, 2014 as compared to approximately $3.8 million for the same period in 2013.  The decrease in cash used by operations was primarily duedistinct good or service to the increase in cash generatedcustomer and is the unit of account under the revenue recognition standard. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts do not typically have variable consideration that needs to be considered when the contract consideration is allocated to each performance obligation.

Revenue Recognition– We recognize revenues from saleseach business segment as described below:

1.123Wish 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.

2.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.

3.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 revenue is recognized when the series to which the advertising relates is aired.

The Company does not have off-balance sheet credit exposure related to its customers. As of June 30, 2019 three customers accounted for 76% of the accounts receivable balance and reduction in operating expenditure, which offset (and reduced) the overall cash used by operating activities.


Net cash used in investing activities was approximately $1.2 million and $1.4 million for the years ended December 31, 2014 and 2013, 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 $4.1 million for 2014 and $6.5 million for 2013. Cash provided by financing activities in 2014 primarily from the sale of preferred shares and convertible stock in July and December 2014. Cash provided by financing activities in 2013 was primarily due to the advances from related parties and proceeds from the sale of common stock. Cash used by financing activities in 2013 was primarily due to proceeds from sale of common stock and loan from related parties.

Our working capital as of December 31, 2014, was approximately $11.1 million, as compared to working capital of approximately $4.1  million2018, three customers accounted for the same period in 2013.
Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

(a) Dismissal of Independent Certifying Accountant.
None during our two most recent fiscal years.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2013, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2014, our disclosure controls and procedures were not effective.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Our internal control over financial reporting is a process designed under the supervision of our Certifying Officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Management, under the supervision and with the participation of our Certifying Officers, evaluated the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations68% of the Treadway Commission (COSO) in 2013 Internal Control-Integrated Framework.

Based on our evaluation and the material weaknesses described below, management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2014 because of a material weakness caused by a lack of in-house US GAAP expertise, was identified in connection with the evaluation. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatementaccounts receivable balance. Three customers accounted for 34% of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. This Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Because we are a smaller reporting company, management’s report was not subject to attestation by our independent registered public accounting firm.
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Changes in Internal Control over Financial Reporting

As disclosed in our 2013 Annual Report on Form 10K, we reported material weaknesses in our internal controls over financial reporting as of December 31, 2013  as discussed below

(i)         Lack of sufficient independent directors. Duringrevenue for the six months ended June 30, 2013, we had two independent directors on our board, which was comprised2019 and one customer accounted for 82% of five directors. These two independent directors, however, wouldthe revenue for the six months ended June 30, 2018.  

Income Taxes

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 and such penalties could be material. The Company is currently be deemed independent under NASDAQ for audit committee purposes.

(ii)        Insufficient corporate governance policies. Although we haveaddressing 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 coderange of ethics that provides broad guidelines for corporate governance, our corporate governance activities and processes are not always formally documented. Specifically, decisions madepotential loss, if any. Accordingly no liability has been recorded in the accompanying consolidated balance sheets in respect of this matter.


Net Loss per Share

Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the board to be carried out by management should be documentedweighted 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 communicated on a timely basis to reducepotentially dilutive securities. For the likelihoodthree and six month periods ended June 30, 2019 and 2018, outstanding warrants are antidilutive because of any misunderstandings regarding key decisions affecting our operationsnet losses, and management.


(iii)      Insufficient segregationas such, their effect has not been included in the calculation of duties in our finance and accounting functions due to limited personnel. Duringdiluted net loss per share. Common shares issuable are considered outstanding as of the year ended December 31, 2013 we had 6 on staff who performed nearly all aspectsoriginal approval date for purposes of our financial reporting process, including access to the underlying accounting records and systems, the ability to post and record journal entries, and responsibility for theearnings per share computations.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements. This creates certain incompatible dutiesreported amounts of assets and a lackliabilities and disclosures of review overcontingent assets and liabilities at the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compiledate of the consolidated financial statements and related disclosuresthe reported amounts of revenues and expenses during the fiscal period. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilities assumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions.

Recently Adopted Accounting Pronouncements

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. The new standard, as filedupdated in 2015, was effective for us in the first quarter of the year ending December 31, 2018 and can be applied either retrospectively to all periods presented or as a cumulative-effect adjustment as of the date of adoption. We have evaluated the impact of the new accounting standard on our revenue recognition policies and it did not have an impact on our financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which created a new Topic, ASC Topic 842 and established the core principle that a lessee should recognize the assets, representing rights-of-use, and liabilities to make lease payments, that arise from leases. For leases with the Securitiesa term of 12 months or less, a lessee is permitted to make an election under which such assets and Exchange Commission. These control deficiencies could result in a material misstatement to our interim or annual consolidated financial statements thatliabilities would not be prevented or detected.

(iv)       Lack of in-house US GAAP Expertise. Currently we do not have sufficient in-house expertise in US GAAP reporting. Instead, we rely very muchrecognized, and lease expense would be recognized generally on a straight-line basis over the expertise and knowledge of external financial advisors in US GAAP conversion.
(v)      Maintenance of Accounting Records.  We did not maintain a comprehensive set of financial recordslease term. This standard is effective for the three months ended March 31, 2013. Certain receipts, disbursementsCompany beginning in 2019 and other transactions were recorded inwas adopted by the general ledger; however account reconciliations, journal entry forms or other supporting schedules were either missing or incomplete. Without adequate financial records, we may be unable to provide timely financial reporting and/or report inaccurate information.
(vi)     Revenue Recognition. In connection with the preparation of our financial statementsCompany for the year ended December 31, 2013, we identified a material weakness inbeginning January 1, 2019. The Company has evaluated the design and operating effectiveness of our internal controls over financial reporting relating to correctly recording the time of revenue recognition for certain license fees Specifically, our policy of revenue recognition did not meet all the requirements of the relevant generally accepted accounting principles applicable to software sales. Consequently, effective controls did not to ensure that revenue for these types of software sales were appropriately recorded. 
Remediation of Material Weaknesses

As soon as we learned of the material weakness (identified above) related to revenue recognition, we began taking steps intended to remediate this material weakness and to improve our control process and procedures with respect to revenue recognition and in general as part of our efforts to become compliant with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002.  These activities included:

  ●Conducting a comprehensive review and implementing a revised accounting policy for our revenue recognition of certain software license fees;
  ●Hiring outside consultants with specific expertise with revenue recognition to assist with a review of both current future and licensing agreements;
  ●Establishing new policies, procedures and controls to ensure that the new revenue recognition policy is properly administered;
  ●To the extent necessary, evaluating the proper organizational structure and accounting personnel to ensure that we have the requisite knowledge and expertise of revenue recognition under standards of U.S. GAAP.
  ●Adding two accounting employees to ensure sufficient segregation of duties in our finance and accounting functions due to limited personnel
  ●Appointing additional independent directors. As a result, we currently have four independent directors on our board, which is comprised of six directors. These four independent directors are deemed independent under Nasdaq Rule 5605(a)(2) and one of them qualifies as an “audit committee financial expert” as such term is defined in Regulation S-K Item 407(d)(5)(ii). In addition, we formed audit, compensation and nominating committees that would meet NASDAQ rules and guidelines.  
  ●Adopting a tracking form which was designed to track related party transactions. Upon adoption, management will review and pre-approve related party transaction and submit the tracking form to the Board for review and ratification on quarterly basis. 
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Management’s Review

In conjunction with the preparation of our financial statements for the year ended December 31, 2014, Management reviewed the material weaknesses in our internal controls and procedures identified as of December 31, 2013 which led  to the remediation measures listed above.  Specifically, we addressed the material weaknesses listed above as follows:
(i)         Appointment of additional independent directors. As a result of the appointment of independent directors (in the last six months of December 31, 2013 and the fiscal year ended December 31, 2014) and resignation of one director during our fiscal year ended December 31, 2014, we now have an independent board comprised of six (6) directors with four (4) independent directors.  In addition (and as described above), we formed audit, compensation and nominating board committees in September 2013 that meet NASDAQ rules and regulations.   Accordingly, we believe that the formationimpact of this independent board of directors in conjunction with the additional oversight from our new committee has effectively eliminated this deficiency.   Specifically, the independent audit committee will increase board oversight and help us have better oversight of our financial reporting.
(ii)        Introduction of new corporate governance policies. In September 2013, we chartered and formed three (3) new board committees. During fiscal year 2014, three committees metrevised guidance on quarterly basis and provided additional oversight of management decisions.   We believe that these new committees will address certain corporate governance activities and processes that were not always formally documented in the past. Specifically, the audit, compensation and nominating committees will provide the proper corporate structure for the documentation of decisions made by the board of directors and the communications of those decisions to management.  As a result, we believe that we have taken material steps to eliminate this deficiency.
(iii)      Introduction of new accounting personnel to address insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the fiscal year ended December 31, 2014, we added two (2) new accounting employees to ensure sufficient segregation of duties in our finance and accounting functions.  We believe that the addition of this additional accounting staff will allow us to achieve much greater segregation of duties within our financial reporting process and its underlying accounting records and systems.   Accordingly, this will allow us to provide a more comprehensive review over the financial reporting process that should minimize previous problems that could have resulted in failures to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosuresdetermined it had no material impact, as filedthe Company has no leasing arrangements with terms greater than one year.

In April 2016, the SecuritiesFASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Exchange Commission. Although, management believesLicensing.” 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 additionchoice to apply the ASU either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying these standards at the date of initial application and not adjusting comparative information. We have evaluated the impact of the new staff members will help us control deficiencies could result in a material misstatement toaccounting standard on our interim or annual consolidated financial statements, we will continue to monitorrevenue recognition policies and evaluation our overall accounting staff and segregation of duties as operations and accounting transactions increase.

(iv)    Improving our in-house US GAAP Expertise. During the year ended December 31, 2014, we began the process of evaluation of a proper organization structure and accounting personnel to ensure that we have greater internal US GAAP expertise.  Part of this process included adding staff members as described above.  Though weit did not have sufficient in house expertise in 2014, we engaged certain externalan impact on our financial advisorsstatements.

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 assist us with reviewing certain accounting policies withvest.  The fair value of stock options is determined using the goal of enhancing our US GAAP expertise. Although Management believes thatBlack-Scholes option pricing model, which includes subjective judgements about the company has taken significant steps towards improving our in-house US GAAP expertise, we will continue using suitable external consultant(s) in 2015 until we identify and hire qualified in-house US GAAP expertise.


(v)    Improving Maintenance of Accounting Records.  During the second half of 2013 and throughout 2014, we  introduced monthly ledger maintenance controls including key reconciliations over bank accounts, tax control accounts, AR ledgers and AP ledgers.
(vi)    Revenue Recognition. As soon as we learnedexpected life of the material weakness related to revenue recognition, we began taking steps intended to remediate this material weaknessawards, forfeiture rates and to improve our control process and procedures with respect to revenue recognition in general as part of our efforts to become compliant with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. These activities included:
stock price volatility.


Conducting a comprehensive review and implementing a revised accounting policy for our revenue recognition of certain software license fees;
Hiring outside consultants with specific expertise with revenue recognition to assist with a review of both current future and licensing agreements;
Establishing new policies, procedures and controls to ensure that the new revenue recognition policy is properly administered;
To the extent necessary, evaluating the proper organizational structure and accounting personnel to ensure that we have the requisite knowledge and expertise of revenue recognition under standards of U.S. GAAP.
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As a result of the above mentioned remediation measures, we have substantially improved our corporate governance and internal control policies, but still have a material weakness as it relates to in-house US GAAP expertise.  As a result, we concluded that we did not maintain effective internal control over financial reporting as of December 31, 2014 and management will continue to take steps to remediate this material weakness in 2015 and to improve our control process and procedures with respect to US GAAP expertise and in general as part of our continuing efforts to become compliant with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002.   These activities will include engaging outside consultants with US GAAP expertise while working to locate and hire accounting personnel with sufficient US GAAP expertise.
Except as disclosed above in our discussion of the restatement of revenues, there were no changes in our internal controls over financial reporting during the period ended December 31, 2014, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

DIRECTORS AND EXECUTIVE OFFICERS


Board of Directors and Executive Officers

The following table and text setsets forth the names, positions and ages of allour directors and executive officers as of April 17, 2015. Therethe date of this prospectus. Our directors are no family relationships amongelected by our directors and executive officers. Each director is electedstockholders at our annual meeting of shareholdersthe stockholders and holds officeserve until the next annual meeting of shareholders,the stockholders or, until his successor is elected and qualified. Also provided herein are brief descriptionsin absence 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 2014 shall serve until the next Annual Meeting of Stockholders andsuch annual meeting, until their successors are elected and qualified.

Name Age Principal Occupation or EmploymentFirst Became Director Current Board Term Expires 
         
Brian Collins 47 President, Chief Financial Officer, Chief Technology Officer, Director12/10/12 2014 
         
Martin Ward 57 Chief Financial Officer, Director12/10/12 2014 
         
Nicholas Carpinello 65 Owner, Carpinello Enterprises LLC, Director3/7/13 Until the date of removal or resignation 
         
Richard Vos 69 Director8/21/2013 Until the date of removal or resignation 
         
Robert Law 64 Director8/28/2013 Until the date of removal or resignation 
         
Robert Vogler 64 Director1/8/14 Until the date of removal or resignation 
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Brian Collins

Officers are elected by our board of directors and their terms of office are at the discretion of our board.

Directors and Executive Officers

NameAgePosition
Mark White58President, Chief Executive Officer and Director
Martin Ward61Chief Financial Officer and Director
Nicholas Carpinello69Director
Richard Vos73Director
Robert Law68Director
Aling Zhang61Director
Pengfei Li31Director

Biographical information concerning the directors and executive officers listed above is set forth below. 

Mark White.  Mr. CollinsWhite was appointed as thePresident, Chief Executive OfficeOfficer and Presidenta director on July 28, 2014.September 8, 2017. Mr. Collins also actsWhite previously served as the Chairman of the Board of the Company upon his appointmentCompany’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. CollinsWhite was earlier appointedChief 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 TechnologyFinancial 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.

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 appointedhas 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.
Richard Vos


Richard Vos.Mr. Vos was appointed as a director on August 28, 2013. Mr. Vos has been a non-executive director since 2007 of Avanti Communications Group plc, a public company listed on the London Stock Exchange (LSE:AVN).  He is chairman of its remuneration committee and past chairman of its audit committee.  In addition, since 2001, Mr. Vos has been a non-executive director of NSSC Operations Ltd., which operates the National Space Centre in the United Kingdom.  He is theKingdom, until February 2018 and was chairman of its audit committee. From August 2014 to March 2017. Mr. Vos 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 Communication Group plc, a public company listed on the London Stock Exchange (LSE:AVN), where he was chairman of its remuneration committee and 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 replaced byreconstituted 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 KingstonKingdom Polytechnic in 1973. He is a member of the Institute of Directors

Robert Law


Law.Mr. Law was appointedhas served as a director onsince August 28, 2013. SinceFrom 1990 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 sincefrom 1979 hasto 2018 served as a director of Langdowns. Also, sincefrom 1990 to 2016, Mr. Law has beenserved 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 beenwas a member of Southern Business Advisers since 1979. Mr. Law is a Fellow of the Institute of Chartered Accountants in England and Wales (“ICAEW”), and is a member of the Valuation and Information Technology Faculties of the ICAEW.  Mr. Lawhaving qualified as an ICAEW Chartered Accountant in 1976.
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Robert Vogler

Ajing Zhang.Mr. VoglerZhang 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 asBachelor’s degree from Shanghai University of Engineering Science in 2011 (where he majored in International Economics and Trade) and a successfulMaster 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 experiencesholds office until the next annual meeting of shareholders, or until his successor is elected and practices as an accounting specialist.  Mr. Vogler has beenqualified, or his earlier death, resignation or removal. Officers are elected by and serve at the owner and Chairmandiscretion of the Board of Kreivo AG, an accounting and bookkeeping company serving Swiss companies in a variety of industries with operations throughout Europe since 1974. Mr. Vogler has served on the Boards of other Swiss accounting firms such as RV Revisions AG, Impe Zug AG 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.

Directors.


Significant Employees

Claude Dziedzic

Mr. Dziedzic, aged 41, was appointed Chief Horizon Architect on November 30, 2012 and is the co-inventor of the Horizon software platform. Mr. Dziedzic was employed by Abbey Technology GmbH, which was subsequently acquired by the One Horizon Group, PLC, and which became a subsidiary thereof, in 2010. Mr. Dziedzic had been employed as the chief architect and in the design and development department of the Abbey Technology software platforms from 2001 to 2009. During that time, he also participated in the design and development of the Horizon software platform and the software design and development for software and messaging systems for the Swiss banking industry. Mr. Dziedzic had worked for UBS AG in Switzerland from 1997 to 2001 and DataSign AG from 1997 to 1999. Mr. Dziedzic worked in software research and development during his work for USB AG and DataSign AG. Mr. Dziedzic graduated from Ecole Superieure des Science Appliquees pour l’Ingenieur de Mulhouse with a Masters Engineer Degree in Industrial IT and Automatics in 1997. In 1994, he achieved a general degree in Science & Structure of the Matter (specializing in Industrial IT, Automatics and Electronics) from the University of Alsace, and in 1992 he was awarded a Bachelor’s Degree in Mathematics and Physics from the Academy of Strasbourg.
Qingsong  Li
Mr. Li, aged 39, was appointed the General Manager 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.

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, 2012 during the fiscal year ended December 31, 2012. After the Share Exchange, we believe that none of our officers, directors, and greater than 10% beneficial owners failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the fiscal year ended December 31, 2014.

Board Committees

Committees of the Board of Directors
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 the our 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.

A copy of current charter of Audit Committee is available on the Company’s website http://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 Committee.
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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 website http://content.stockpr.com/onehorizongroup/media/8eccadeceb1ccc10b249cc5ab2456058.pdf
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 website http://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 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 companyCompany 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.

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. Collin’sWhite’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 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 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 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 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 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 OTCQB tier of the OTC Markets and ceased trading on Nasdaq.

Board Meetings; Committees and Membership

The Board of Directors held 7 meetings during the fiscal year ended December 31, 2018 (“fiscal 2018”). During fiscal 2018, each of the directors then in office attended more than 75% of the aggregate of (i) the 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

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.


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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

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



2018 Summary Compensation Table: Executives

Name and Principal PositionPeriod 
Salary
($)
 
Bonus
($)
 
Stock
Award(s)
($)
 
Option
Awards ($)
 
Non-
Equity
Incentive
Plan
Compensation
 
Non-
Qualified
Deferred
Compen-
sation
Earnings ($)
 
All Other
Compensation ($)
 Total ($) 
(a)(b) (c) (d) (e) (f) (g) (h) (i) (j) 
                   
 Mark White, Former CEO(1)Year ended 12/31/14 358,750 0 0 0 0 0 0 358,750 
                   
 Year ended 12/31/13 676,000 0 0 0 0 0 0 676,000 
                   
 Brian Collins, CEO (2)Year ended 12/31/14 615,000 0 0 0 0 0  0 615,000 
                   
 Year ended 12/31/13 676,000 0 0 0 0 0 0 676,000 
                   
Martin Ward, CFO(3)Year ended 12/31/14 292,330 0 0 0 0 0 0 292,330 
 Year ended 12/31/13 311,000 0 0 0 0 0 0 311,000 
                   
____________

Name and
Principal
Position
 Period  Salary
($)
  Bonus
($)
  Stock
Award(s)
($)
  Option
Awards
($)
  Non-
Equity
Incentive
Plan
Compensation
  Non-
Qualified
Deferred
Compensation
Earnings 
($)
  All Other
Compensation 
($)
  Total ($) 
                            
                            
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 12/31/18   240,000   0   0   0   0   0   0   240,000 
  Year ended 12/31/17   240,000   0   0   0   0   0   0   240,000 

(1)
Mr. White was appointed our chief executive officer effective November 30, 2012 and resigned on July 24, 2014 due to personal reasons.For the year ended December 31, 2018, Mr. White was paid in Swiss Francs, with a conversion rates of CHF 1.00 = $1.12, which rate represents the average exchange rate for that period, as represented by http://www.oanda.com/currency/historical-rates/.
(2)Mr. Collins was appointed our chief executive officer effective July 28, 2014 and our chief technology officer effective November 30, 2012.US Dollars. For the periodyear ended December 31, 2013,2017, Mr. CollinsWhite’s remuneration was paidaccrued in Swiss Francs,US Dollars, that remuneration remains unpaid. Mr. White was awarded a stock award of 1.6 million shares with a conversion ratevalue of CHF 1.00 = $1.12, which rate representsapproximately $1.5 million for the average exchange rate for that period, as represented by http://www.oanda.com/currency/historical-rates/.signing of the 5 year employment contract. The value was based on the closing stock price at the date of execution of the contract.

(3)Mr. Ward was appointed our chief financial officer effective November 30, 2012. (2)For the periodyears ended December 31, 2013,2017 and 2018, Mr. Ward was paid predominately in pounds sterling, with conversion rate of £1.00 = $1.56, which rate represents the average exchange rate for that period, as represented by http://www.oanda.com/currency/historical-rates/. For the period ended December 31, 2014, Mr. Ward was paid in British pounds  (GBP 1 = USD 1.5571).US Dollars.
49


Pension Benefits
None

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 periods coveredterm 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 this Report

Nonqualified Deferred Compensation
Nonethe 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 periods coveredterm 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 this Reportthe 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.

Elements of Compensation

Mark White and Martin Ward were provided with the following primary elements of compensation in 2018 and 2017:

Base Salary

Mark White and Martin Ward received a fixed base salary in an amount determined by the Compensation Committee based on a number of factors, including:

The nature, responsibilities and duties of the officer’s position;

The officer’s expertise, demonstrated leadership ability and prior performance;

The officer’s salary history and total compensation, including annual cash bonuses and long-term incentive compensation; and

The competitiveness of the market for the officer’s services.

Mark White’s and Martin Ward’s base salary for 2018 and 2017 is listed in “—Summary Compensation Table.” Compensation reported in the table for 2018 and 2017.

55

Retirement/Resignation Plans
None

Equity Awards – Years Ended 2018 and 2017

We did not grant any equity awards to Mark White and Martin Ward during 2018.

The following table shows the periods coveredgrant of equity awards to Mark White during 2017. We did not grant any equity awards to Martin Ward during 2017. We did not grant any equity awards in this Report

the form of stock options to Mark White and Martin Ward during 2017 and consequently have omitted those columns from the table which would have described such awards.

GRANT OF PLAN-BASED AWARDS
         
     All Other Stock   Grant Date Fair Value 
     Awards: Number of   of Stock 
Name Grant Date  Shares of Stock (#)   Awards ($) 
Mark White 09/8/2017  1,600,000  $1,054,000 

Outstanding Equity Awards at 20142018 Year-End

As of the year ended December 31, 2014,2018, there were no unexercised options, stock that has not vested or equity incentive plan awards held by any of the Company’s named executive officers.

Other Benefits

We did not pay any other benefits or perquisites to Mark White and Martin Ward during years ended 2018 and 2017.

Pension Benefit

None during years ended 2018 and 2017.

Nonqualified Deferred Compensation

None during years ended 2018 and 2017.

Retirement/Resignation Plans

None during years ended 2018 and 2017.

Compensation Discussion and Analysis

Equity Incentive Plan

Introduction

On February 1, 2018, our Board of Directors adopted our 2018 Equity Incentive Plan (the “Plan”), which authorizes the issuance of shares of common stock for grants of stock options, stock appreciation rights, restricted stock, stock units, bonus stock, dividend equivalents, other stock related awards and performance awards that may be settled in cash, stock, or other property. The Plan initially authorized the issuance of up to 5,000,000 shares.

On November 2, 2018 and December 27, 2018, our Board of Directors and our shareholders, respectively, amended the Plan to increase the number of shares authorized to be issued to up to 15,000,000 shares; provided that as of February 1 of each fiscal year commencing February 1, 2020 and ending on February 1, 2027, the number of shares available for all awards under the Plan shall automatically be increased by an amount equal to the lesser of (i) 5,000,000 shares of common stock or the equivalent of such number of shares after the plan administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with the terms of the Plan; (ii) 5% of the number of outstanding shares of common stock on such date; and (iii) an amount determined by the Board. Any reverse stock split, if approved and effected, will not reduce the number of shares available under the Plan.


COMPENSATION OF DIRECTORS

We adopted the Plan to provide a means by which employees, directors, and consultants of our Company and those of our subsidiaries and other designated affiliates, which we refer to together as our affiliates, may be given an opportunity to purchase our common stock, to assist in retaining the services of such persons, to secure and retain the services of persons capable of filling such positions, and to provide incentives for such persons to exert maximum efforts for our success and the success of our affiliates. The material features of the Plan are outlined below. This summary is qualified in its entirety by reference to the complete text of the Plan. Stockholders are urged to read the actual text of the Plan in its entirety, which is set forth as Exhibit 10.30 to this registration statement.

Summary of the Plan

Shares Available for Awards 

The total number of shares of our common stock that may be subject to awards under the Plan is 15,000,000 shares; provided that as of February 1 of each fiscal year commencing February 1, 2020 and ending on February 1, 2027, the number of shares available for all awards under the Plan shall automatically be increased by an amount equal to the lesser of (i) 5,000,000 shares of common stock or the equivalent of such number of shares after the plan administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with the terms of the Plan; (ii) 5% of the number of outstanding shares of common stock on such date; and (iii) an amount determined by the Board. Under the Plan, the terms and number of options or other awards to be granted in the future are to be determined in the discretion of the plan administrator. No determination has been made regarding awards or grants under the Plan, or as to the benefits or amounts that will be received by or allocated to our non-employee directors, executive officers and other eligible employees under the Plan. Our only other equity incentive plan is the 2013 Equity Incentive Plan under which a total of 1,575,000 shares have been issued, options to purchase 5,000 shares are outstanding and no shares remain available for grant.

Limitations on Awards

The plan administrator may, in its discretion, proportionately adjust the number of shares covered by each outstanding Award, and the number of shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan, the exercise or purchase price of each such outstanding Award, as well as any other terms that the plan administrator determines require adjustment for (1) any increase or decrease in the number of issued shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the shares, (2) any other increase or decrease in the number of issued shares effected without receipt of consideration by the Company, or (3) as the plan administrator may determine in its discretion, any other transaction with respect to common stock to which Section 424(a) of the Internal revenue Code of 1986, as amended (the “Code”), applies. Such adjustment shall be made by the plan administrator and its determination shall be final, binding and conclusive.

Eligibility

The persons eligible to receive awards under the Plan consist of officers, directors, employees, and consultants of our company and those of our affiliates. An employee on leave of absence may be considered as still in our employ or in the employ of an affiliate for purposes of eligibility under the Plan.


Administration

The Plan is administered by our Compensation Committee or other committee appointed by our Board of Directors, or in the absence of any such committee, the Board of Directors (together, our Board of Directors and any committee(s) delegated to administer the Plan, including the Compensation Committee, are reimbursedreferred to as the “plan administrator”).  The Compensation Committee, or such other committee appointed from time to time by the Board of Directors to administer the Plan, is intended to consist of three or more Non-Employee Directors, each of whom will be, to the extent required by Rule 16b-3 under the Exchange Act and the rules of the Financial Industry Regulatory Authority, a non-employee director as defined in Rule 16b-3, an “outside director” as defined under Section 162(m) of the Code and an “independent” director within the meaning of NYSE American Rule 303A.02. If for expenses incurredany reason the plan administrator does not meet the requirements of Rule 16b-3 of the Exchange Act or Section 162(m) of the Code, the validity of the awards, grants, interpretation or other actions of the plan administrator will not be affected. The plan administrator has the full authority to select those individuals eligible to receive awards and the amount and type of awards. Subject to the terms of the Plan, the plan administrator is authorized to select eligible persons to receive awards, determine the type and number of awards to be granted and the number of shares of our common stock to which awards will relate, specify times at which awards will be exercisable or may be settled (including performance conditions that may be required as a condition thereof), set other terms and conditions of awards, prescribe forms of award agreements, interpret and specify rules and regulations relating to the Plan, and make all other determinations that may be necessary or advisable for the administration of the Plan. The plan administrator may amend the terms of outstanding awards, in its discretion; provided that any amendment that adversely affects the rights of the award recipient must receive the approval of such recipient.

Stock Options and Stock Appreciation Rights

The plan administrator is authorized to grant stock options, including both incentive stock options, which we refer to as ISOs, and non-qualified stock options. In addition, the plan administrator is authorized to grant stock appreciation rights, which entitle the participant to receive the appreciation in our common stock between the grant date and the exercise date of the stock appreciation right. The plan administrator determines the exercise or purchase price per share subject to an option and the grant price of a stock appreciation right. However, the per share exercise price of an ISO and a non-qualified stock option must not be less than 100% of the fair market value of a share of our common stock on the grant date; provided, however, that in the case of an ISO granted to an employee who owns more than 10% of the voting power of all classes of stock of the Company or affiliates, the exercise or purchase price must not be less than 110% of the fair market value of a share of our common stock on the grant date. The plan administrator generally will fix the maximum term of each option or stock appreciation right, the times at which each stock option or stock appreciation right will be exercisable, and provisions requiring forfeiture of unexercised stock options or stock appreciation rights at or following termination of employment or service, except that no ISO may have a term exceeding ten years. Stock options may be exercised by thempayment of the exercise price in any form of legal consideration specified by the plan administrator, including cash, shares and outstanding awards or other property having a fair market value equal to the exercise price. The plan administrator determines methods of exercise and settlement and other terms of the stock appreciation rights.

Restricted Stock 

The plan administrator is authorized to grant restricted stock. Restricted stock is a grant of shares of our common stock, subject to restrictions on transfers, rights of first refusal, repurchase provisions, forfeiture provisions and other terms and conditions as may be established by the plan administrator. A grantee granted restricted stock generally has all of the rights of one of our shareholders, unless otherwise determined by the plan administrator.

Stock Based Awards 

The plan administrator is authorized to grant awards under the Plan that are denominated or payable in, valued by reference to, or otherwise based on or related to shares of our common stock. Such awards might include convertible or exchangeable debt securities, other rights convertible or exchangeable into shares of our common stock, purchase rights for shares of our common stock, awards with value and payment contingent upon our performance or any other factors designated by the plan administrator, and awards valued by reference to the book value of shares of our common stock or the value of securities of or the performance of specified subsidiaries or business units. The plan administrator determines the terms and conditions of such awards.

Performance Awards 

The plan administrator is authorized to grant awards which may be earned in whole or in part upon attainment of performance criteria and which may be settled for cash, shares of our common stock, other securities or a combination of cash, shares of our common stock or other securities. The right of a grantee to exercise or receive a grant or settlement of an award, and the timing thereof, may be subject to satisfaction of performance criteria, which may be based on any one, or combination of, the following factors: increase in share price, earnings per share, total shareholder return, return on equity, return on assets, return on investment, net operating income, cash flow, revenue, economic value added, or personal management objectives. Partial achievement of the specified criteria may result in a partial payment or vesting as specified in the award agreement.


Other Terms of Awards 

The plan administrator shall have the authority to determine the provisions, terms, and conditions of each award including, but not limited to, the award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, shares of our common stock, or other consideration) upon settlement of the award, payment contingencies, and satisfaction of any performance criteria. The plan administrator may establish one or more programs under the Plan to permit selected grantees the opportunity to elect to defer receipt of consideration upon exercise of an award, satisfaction of performance criteria, or other event that absent the election would entitle the grantee to payment or receipt of shares of our common stock or other consideration under an award. The plan administrator may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, shares of our common stock or other consideration so deferred, and such other terms, conditions, rules and procedures that the plan administrator deems advisable for the administration of any such deferral program.

The plan administrator may establish one or more programs under the Plan to permit selected grantees to exchange an award under the Plan for one or more other types of awards under the Plan on such terms and conditions as determined by the plan administrator from time to time. The plan administrator may establish one or more separate programs under the Plan for the purpose of issuing particular forms of awards to one or more classes of grantees on such terms and conditions as determined by the plan administrator from time to time.

Awards granted under the Plan generally may not be pledged or otherwise encumbered and are not transferable except by will or by the laws of descent and distribution, or to a designated beneficiary upon the participant’s death, except that the plan administrator may, in its discretion, permit transfers of nonqualified stock options for estate planning or other purposes subject to any applicable legal restrictions. The plan administrator may also provide that, in the event that a grantee terminates employment with the Company to assume a position with a governmental, charitable, educational or similar non-profit institution, a third party, including but not limited to a “blind” trust, may be authorized by the plan administrator to act on behalf of and for the benefit of the respective grantee with respect to any outstanding awards.

Acceleration of Vesting; Change in Control

The plan administrator shall have the authority, exercisable either in advance of any actual or anticipated corporate transaction (as defined in the Plan) or at the time of an actual corporate transaction and exercisable at the time of the grant of an award under the Plan or any time while an Award remains outstanding, to provide for the full automatic vesting and exercisability of one or more outstanding unvested awards under the Plan and the release from restrictions on transfer and repurchase or forfeiture rights of such Awards in connection with attendinga corporate transaction, on such terms and conditions as the plan administrator may specify. The plan administrator also shall have the authority to condition any such award vesting and exercisability or release from such limitations upon the subsequent termination of the continuous service of the grantee within a specified period following the effective date of the corporate transaction. Effective upon the consummation of a corporate transaction, all outstanding awards under the Plan shall remain fully exercisable until the expiration or sooner termination of the award.

Amendment and Termination

Our Board of Directors’ meetings.. Directors may amend, alter, suspend, discontinue, or terminate the Plan, except stockholder approval shall be obtained for any amendment or alteration if such approval is required by law or regulation or under the rules of any stock exchange or quotation system on which shares of our common stock are then listed or quoted. No award may be granted during any suspension of the Plan or after termination of the Plan. Any amendment, suspension or termination of the Plan shall not affect Awards already granted, and such awards shall remain in full force and effect as if the Plan had not been amended, suspended or terminated, unless mutually agreed otherwise between the grantee and the plan administrator, which agreement must be in writing and signed by the grantee and the Company. 


Unless earlier terminated by our Board of Directors, the Plan will terminate ten years after its adoption by our Board of Directors. 

Federal Income Tax Consequences of Awards 

The information set forth herein is a summary only and does not purport to be complete. In addition, the information is based upon current federal income tax rules and therefore is subject to change when those rules change. Moreover, because the tax consequences to any recipient may depend on his or her particular situation, each recipient should consult the recipient’s tax adviser regarding the federal, state, local, and other tax consequences of the grant or exercise of an award or the disposition of stock acquired as a result of an award. The Plan is not qualified under the provisions of Section 401(a) of the Code and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974.

Nonqualified Stock Options

Generally, there is no taxation upon the grant of a nonqualified stock option where the option is granted with an exercise price equal to the fair market value of the underlying stock on the grant date. On exercise, an optionee will recognize ordinary income equal to the excess, if any, of the fair market value on the date of exercise of the stock over the exercise price. If the optionee is our employee or an employee of an affiliate, that income will be subject to withholding tax. The optionee’s tax basis in those shares will be equal to their fair market value on the date of exercise of the option, and the optionee’s capital gain holding period for those shares will begin on that date.

Incentive Stock Options

The Plan provides for the grant of stock options that qualify as “incentive stock options,” which we refer to as ISOs, as defined in Section 422 of the Code. Under the Code, an optionee generally is not subject to ordinary income tax upon the grant or exercise of an ISO. In addition, if the optionee holds a share received on exercise of an ISO for at least two years from the date the option was granted and at least one year from the date the option was exercised, which we refer to as the Required Holding Period, the difference, if any, between the amount realized on a sale or other taxable disposition of that share and the holder’s tax basis in that share will be long-term capital gain or loss.

If, however, an optionee disposes of a share acquired on exercise of an ISO before the end of the Required Holding Period, which we refer to as a Disqualifying Disposition, the optionee generally will recognize ordinary income in the year of the Disqualifying Disposition equal to the excess, if any, of the fair market value of the share on the date the ISO was exercised over the exercise price. However, if the sales proceeds are less than the fair market value of the share on the date of exercise of the option, the amount of ordinary income recognized by the optionee will not exceed the gain, if any, realized on the sale. If the amount realized on a Disqualifying Disposition exceeds the fair market value of the share on the date of exercise of the option, that excess will be short-term or long-term capital gain, depending on whether the holding period for the share exceeds one year.

For purposes of the alternative minimum tax, the amount by which the fair market value of a share of stock acquired on exercise of an ISO exceeds the exercise price of that option generally will be an adjustment included in the optionee’s alternative minimum taxable income for the year in which the option is exercised. If, however, there is a Disqualifying Disposition of the share in the year in which the option is exercised, there will be no adjustment for alternative minimum tax purposes with respect to that share. If there is a Disqualifying Disposition in a later year, no income with respect to the Disqualifying Disposition is included in the optionee’s alternative minimum taxable income for that year. In computing alternative minimum taxable income, the tax basis of a share acquired on exercise of an ISO is increased by the amount of the adjustment taken into account with respect to that share for alternative minimum tax purposes in the year the option is exercised. 

We are not allowed an income tax deduction with respect to the grant or exercise of an incentive stock option or the disposition of a share acquired on exercise of an incentive stock option after the Required Holding Period. However, if there is a Disqualifying Disposition of a share, we are allowed a deduction in an amount equal to the ordinary income includible in income by the optionee, provided that amount constitutes an ordinary and necessary business expense for us and is reasonable in amount, and either the employee includes that amount in income or we timely satisfy our reporting requirements with respect to that amount. 



Stock Awards

Generally, the recipient of a stock award will recognize ordinary compensation income at the time the stock is received equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If, however, the stock is not vested when it is received (for example, if the employee is required to work for a period of time in order to have the right to sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which time the recipient will recognize ordinary compensation income equal to the excess, if any, of the  fair market value of the stock on the date it becomes vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with the Internal Revenue Service, within 30 days of his or her receipt of the stock award, to recognize ordinary compensation income, as of the date the recipient receives the award, equal to the excess, if any, of the fair market value of the stock on the date the award is granted over any amount paid by the recipient in exchange for the stock.

The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from stock awards will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the stock becomes vested. 

Stock Appreciation Rights 

We may grant stock appreciation rights separate from any other award, which we refer to as stand-alone stock appreciation rights, or in tandem with options.

With respect to stand-alone stock appreciation rights, where the rights are granted with a strike price equal to the fair market value of the underlying stock on the grant date and the recipient receives the appreciation inherent in the stock appreciation rights in shares of stock, the recipient will recognize ordinary compensation income equal to the excess of the fair market value of the stock on the day it is received over any amounts paid by the recipient for the stock.

With respect to stand-alone stock appreciation rights, if the recipient receives the appreciation inherent in the stock appreciation rights in cash or the strike price of the rights is less than the fair market value of the underlying stock on the grant date (whether the appreciation is paid in cash or stock), the cash or stock will be taxable as ordinary compensation income to the recipient at the time that the payment is received, so long as the payment may only be received upon one of the following events: a fixed calendar date, separation from service, death, disability or a change of control. If delivery occurs on another date, the taxable event will be on the date the stock appreciation right is vested and there will be an additional twenty percent excise tax and interest on any taxes owed.

At this time, due to the complex and unfavorable tax consequences, we do not plan on granting any tandem stock appreciation rights.

Dividend Equivalent Rights 

Generally, the recipient of an award consisting of dividend equivalent rights will recognize ordinary compensation income each time a dividend is paid pursuant to the dividend equivalent rights award equal to the fair market value of the dividend received. If the dividends are deferred, additional requirements must be met to ensure that the dividend is taxable upon actual delivery of the shares, instead of the grant of the dividend.


Equity Compensation Plan Information

There was no equity securities authorized for issuance under any compensation plans during 2018.

Executive Compensation Philosophy

Our Compensation Committee determines the compensation given to our executive officers in their sole determination. Our Compensation Committee reserves the right to pay our executives or any future executives a salary, and/or issue them shares of common stock issued in consideration for services rendered and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officer’s performance. This package may also include long-term stock based compensation to certain executives, which is intended to align the performance of our executives with our long-term business strategies. Additionally, while our Compensation Committee has not granted any performance base stock options to date, the Compensation Committee reserves the right to grant such options in the future, if the Board in its sole determination believes such grants would be in the best interests of the Company.

Incentive Bonus

The Compensation Committee may grant incentive bonuses to our executive officers and/or future executive officers in its sole discretion, if the Compensation Committee believes such bonuses are in the Company’s best interest, after analyzing our current business objectives and growth, if any, and the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and ability of such executives.

Long-Term, Stock Based Compensation

In order to attract, retain and motivate executive talent necessary to support the Company’s long-term business strategy we may award our executives and any future executives with long-term, stock-based compensation in the future, at the sole discretion of our Compensation Committee.

SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth all cash compensation paid by us, as well as certain other compensation paid or accrued, in 2014, to each ofinformation about 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  615,000   0   0   0   0   0   615,000 
Robert Law  18,000   0   0   0   0   0   18,000 
Richard Vos  18,000   0   0   0   0   0   18,000 
Martin Ward  292,330   0   0   0   0   0   292,330 
Mark White(1)  358,750   0   0   0   0   0   358,750 
Robert Vogler  18,000   0   0   0   0   0   18,000 


(1)  Mark White resigned as a director of the Board effective July 24, 2014 due to personal reasons 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial ownership of our Common Stockcommon stock at September 16, 2019 (pre-reverse split and post-reverse split) for:

each person known to us to be the beneficial owner of more than 5% of our common stock;

each named executive officer;

each of our directors; and

all of our named executive officers and directors as a group.

Unless otherwise noted below, the address for each beneficial owner listed on the table is in care of April [  ], 2015 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 17, 2015, we had 32,933,209 shares of Common Stock issued and outstanding.


BeneficialOne Horizon Group, Inc., 4300 Biscayne Blvd., Suite 203, Miami, Florida 33137. We have determined beneficial ownership is determined in accordance with SECthe rules of the SEC. We believe, based on the information furnished to us, that the persons and generally includesentities named in the tables below have sole voting orand investment power with respect to securities. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of anyall shares of common stock that such person has the rightthey beneficially own, subject to acquire within 60 daysapplicable community property laws. We have based our calculation of April 17, 2015. For purposes of computing the percentage of outstandingbeneficial ownership on 3,930,646 (98,266,169 pre-reverse split) shares of our common stock outstanding as of September 16, 2019.

In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares of common stock subject to options, warrants, preferred stock, or restricted stock units held by eachthat person that are currently exercisable or group of persons named above, any shares that such personconvertible or persons has the right to acquireexercisable or convertible within 60 days of April 17, 2015 is deemed to beSeptember 16, 2019. We did not deem these shares outstanding, for such person, but is not deemed to be outstandinghowever, 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.

50


Name of Person or Group 
Amount And Nature of Beneficial
Ownership(1)
  Percent 
       
Principal Stockholders:      
       
Alexandra Mary Johnson
11 Washern Close
Wilton Salisbury, SP2 0LX
United Kingdom
  1,819,666   5.53%
         
Adam Christe Thompson
547A Wellington Road
Crisfield, MD 21817
  1,819,666   5.53%
Mark White(2)  5,744,011   17.44%
         
Named Executive Officers and Directors:        
         
Brian Collins  6,069,011   18.43%
         
Martin Ward  2,919,666   8.87%
         
 Richard Vos  9,729   * 
         
Nicholas Carpinello  16   * 
         
Robert Vogler  194,600   * 
All Executive Officers and Directors as a Group (5 persons):
  
9,193,022
   
27.91
%
_______________

Name of Beneficial Owner 

Pre-Reverse
Split

Amount and
Nature of
Beneficial
Ownership

  

Post-Reverse
Split

Amount and
Nature of
Beneficial
Ownership

  Percentage
of Class (1)
 
5% Shareholders            
Zhanming Wu (2)(3)
c/o Dachao Asset Management (Shanghai) Co., Ltd.
No. 868 Puming Road, Bldg No.5, Room 703
Shanghai, F4 200120 China
  15,354,409   614,176   15.63%
             
Named Executive Officers and Directors            
Mark White (6)  4,140,603   165,624   4.21%
             
Martin Ward  1,369,738   54,790   1.39%
             
Richard Vos  3,402   136   *%
             
Nicholas Carpinello  1,781   71   *%
             
Robert Law  1,781   71   *%
             
Ajing Zhang  -   -   *%
             
Pengfei Li  -   -   *%
             
Executive Officers and Directors as a Group (8 persons)  5,517,305   220,692   5.61%

*Lessless than 1%.

(1)ExceptThe percentages in the table have been calculated on the basis of treating as otherwise indicated, eachoutstanding for a particular person, all shares of our capital stock outstanding on September 16, 2019. On September 16, 2019, there were 3,930,646 (98,266,169 pre-reverse split) shares of our common stock outstanding. To calculate a stockholder’s percentage of beneficial ownership, we include in the numerator and denominator the common stock outstanding and all shares of our common stock issuable to that person in the event of the exercise of outstanding options and other derivative securities owned by that person which are exercisable within 60 days of September 16, 2019. Common stock options and derivative securities held by other stockholders are disregarded in this calculation. Therefore, the denominator used in calculating beneficial ownership among our stockholders may differ. Unless we have indicated otherwise, each person named in the table has sole voting power and sole investment power for the shares listed aboveopposite such person’s name.

(2)Includes 5,185 (129,630 pre-reverse split) shares which Mr. Wu may acquire upon exercise of warrants.

(3)Does not reflect the beneficial ownership of shares owned by Messrs. White and Ward as to which Mr. Wu has been granted an irrevocable proxy to vote those shares in favor of his designees to the Board of Directors.

(4)Mark Peikin exercises sole voting and investment powerauthority over all of our securities owned by Bespoke Growth Partners, Inc., and thus is deemed to beneficially own such shares pursuant to Rule 13d-3 under the shares beneficially owned.Exchange Act.

(5)Brian Kantor exercises sole voting and investment authority over all of our securities owned by BK Consulting Group, LLC, and thus is deemed to beneficially own such shares pursuant to Rule 13d-3 under the Exchange Act.

(6)Includes 15,718 (392,943 pre-reverse split) shares owned by Century River Limited, a company wholly owned by Mr. White, and of which he is the President and a director.


(2)        Mr. White was appointed

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Our Policy Concerning Transactions with Related 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 chiefsubsidiaries 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 officer effective November 30, 2012officers, 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 resignedany 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 July 24, 2014 due to personal reasons. 

51

Equity Compensation Plan

Priorconsiderations 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 Share Exchange,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. 

Transactions

The following includes a summary of transactions since January 1, 2017, or any currently proposed transaction, in which we were or are to be a participant and 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 related person had or will have a direct or indirect material interest.

On August 11, 2017 we sold all of the outstanding capital stock of three of our subsidiaries, Abbey Technology GmbH, Horizon Globex GmbH and Horizon Globex Ireland Ltd., and approximately 99.7% of the outstanding shares in One Horizon UK had authorized securitiesGroup plc (collectively the “Discontinued Entities”) to Brian Collins, our then Chief Executive Officer, in exchange for issuance under equity compensation plans that have not been approved by the stockholders, but none under equity compensation plans that were approved by the stockholders. The following table shows the aggregate amountforgiveness of securities authorized for issuance under all equity compensation plans as of December 31, 2014:


  
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  500,000   4.54   3,500,000 
Equity compensation plans not approved by security holders  584,650  $0.53   0 
Total  1,084,650  $2.38   3,500,000 

The securities referenced in the table above reflect stock options granted beginning in 2005 pursuant$1,968,253 payable to individual compensation arrangements with the Company’s employees. 292,750 of such options are fully vested with 850 expiring in 2015; and 291,600 expiring in 2020. The number of options reflected in the table above reflect a conversion that occurred inMr. Collins. In connection with the Share Exchange, whereby the number of options (to purchase One Horizon UK shares) held by each employee was increased by 175.14 timestransaction, Mr. Collins and the exercise price was decreased byDiscontinued Entities released us and our remaining subsidiaries (the “Excluded Entities”) from any claims outstanding as of the option exercise price divided by 175.14date of the transaction and a reverse split of 1-for-600 that went effective on August 29, 2013, whereby the number of options held by each employee was decreased by 600 timeswe and the exerciseExcluded Entities released the Discontinued Entities from any outstanding claims. In contemplation of sale, certain intellectual property was transferred among the Discontinued Entities and the Excluded Entities such that each could continue the business contemplated to be carried on after the sale was consummated.

On August 18, 2017, Martin Ward, our Chief Financial Officer, accepted the offer to convert $662,048 due to him from us into 859,802 shares of common stock (a conversion price was increased byof $0.77 per share, the option exerciseclosing price multiplied by 600. Also included in the table above are options to purchase 291,900 shares of the Company’s common stock which options were issuedon August 14, 2017).

In September 2017, we entered into an agreement with Mark White, our President, Chief Executive Officer and a director of our company, whereby Mr. White agreed to an employee on December 31, 2012exchange 555,555 shares of our Series A-1 Convertible Preferred Stock, and vest on December 31, 2015.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
the right to accrued but unpaid dividends thereon, for 4,000,000 shares of common stock. The exchange was approved by holders of a majority of our outstanding shares of common stock by written consent in lieu of a meeting of stockholders dated October 24, 2017 in accordance with NASDAQ’s corporate governance rules.


Related Party Transactions

Amounts due to related parties include the following: (in thousands)


  December 31  December 31 
  2014  2013 
Loans due to stockholders      
                    Due within one year $600  $3,500 
                    Long-term  2,598   - 
  $3,198  $3,500 
At December

  June 30, 
  2019 
Loans due to stockholders and related parties    
Due within one year $1,705 
Long-term  0 
  $1,705 

As of June 30, 2019, amounts totaling $205,000 (December 31, 2014, $3,198,0002018 – $205,000) were owed to certain members of related party debt was outstanding. $600,000 isthe management at subsidiary companies. The amounts are unsecured, interest free and will be repaid during 2015. have no specified repayment dates.

The remaining balance of $2,598,000 matures on April 1, 2016promissory notes due to Zhanming Wu ($500,000) and carries an annual rate ofthe Company’s CEO, Mark White ($500,000), both considered related parties, including accrued interest of 0.21%.

During 20147% per annum from issuance, were due for repayment on August 31, 2019 and the Company settled a totalis currently in negotiations with the counterparties to extend the maturity dates of $1,672,000 approximatelythe promissory notes, but there can be no guarantee that commercially reasonable terms will agreed upon. As of related party debt, by a combination of:
i.paying $250,000
ii.issuing a new notethe date of this prospectus, the counterparties have not demanded repayment of the promissory notes.

The loan payable of $600,000 to be repaid in 2015

iii.Issuing 246,000 new shares of common stock
The difference between the amount of related party debt eliminated$500,000 is due to Century River, a company controlled by the Company’s CEO, Mark White. This loan is due on demand and bears interest of 3% per annum.

Notes payable by Browning Productions & Entertainment, Inc. totaling $121,000 are due to unrelated parties and are repayable on demand and interest bearing at average rates of 5.4% per year.

The foregoing transactions were reviewed and approved by the Audit Committee or our Board of 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 

Our Board of Directors has 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 OTCQB tier of the OTC Markets and ceased trading on Nasdaq.

Indemnification

We have entered into indemnification agreements with each of our directors and entered into such agreements with certain of our executive officers. These agreements require us, among other things, to indemnify these individuals for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts reasonably incurred by such person in any action or proceeding, including any action by or in our right, on account of any services undertaken by such person on behalf of our company or that person’s status as a member of our Board of Directors to the maximum extent allowed under Delaware law.

DESCRIPTION OF CAPITAL STOCK

The following description of our capital stock is based upon our certificate of incorporation, as amended, our bylaws and applicable provisions of law, in each case as currently in effect. This discussion does not purport to be complete and is qualified in its entirety by reference to our articles of incorporation, as amended, and our bylaws, copies of which are filed with the SEC as exhibits to the registration statement of which this prospectus is a part.


Authorized Capital Stock

As of the date of this prospectus, pursuant to our certificate of incorporation filed with the Delaware Secretary of State on July 23, 2013, our authorized capital is 250,000,000 shares, of which (1) 200,000,000 shares are common stock, par value $0.0001 per share (the “Common Stock”) and (2) 50,000,000 shares are preferred stock, par value $0.0001 per share, which may, at the sole discretion of the Board of Directors be issued in one or more series (the “Preferred Stock”).

As of September 16, 2019, 3,930,646 (98,266,169 pre-reverse split) shares of Common Stock are issued and outstanding and no shares of preferred stock are issued and outstanding. As of September 16, 2019, there were 266 holders of record of our Common Stock.

The Board may from time to time authorize by resolution the issuance of any or all shares of the common stock and the fairpreferred stock authorized in accordance with the terms and conditions set forth in the articles of incorporation for such purposes, in such amounts, to such persons, corporations, or entities, for such consideration and in the case of the preferred stock, in one or more series, all as the Board in its discretion may determine and without any vote or other action by the stockholders, except as otherwise required by law.

Common Stock

Holders of the Company’s Common Stock are entitled to one (1) vote for each share on all matters submitted to a stockholder vote. The Common Stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of Common Stock voting for the election of directors can elect all of the directors. Holders of the Company’s Common Stock representing a majority of the voting power of the Company’s capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of stockholders. Holders of the Company’s Common Stock are entitled to share in all dividends that our Board of Directors, in its discretion, declares from legally available funds. In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the Common Stock. The Company’s Common Stock has no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to the Company’s Common Stock.

Preferred Stock

The Board of Directors of the Company may by resolution authorize the issuance of shares of preferred stock from time to time in one or more series. The Company may reissue shares of preferred stock that are redeemed, purchased, or otherwise acquired by the Company unless otherwise provided by law. The Board of Directors is authorized to fix or alter the designations, powers and preferences, and relative, participating, optional or otherwise rights if any, and qualifications, limitations or restrictions thereof, including, without limitation, dividend rights (and whether dividends are cumulative), conversion rights, if any, voting rights (including the number of votes if any, per share, as well as the number of members, if any, of the Board of Directors or the percentage of members, if any, of the Board of Directors each class or series of Preferred Stock may be entitled to elect), rights and terms of redemption (including, sinking fund provisions, if any), redemption price and liquidation preferences of any wholly unissued series of preferred stock, and the number of shares constituting any such series and the designation thereof, and to increase or decrease the number of shares of any such series subsequent to the issuance of shares of such series, but not below the number of shares of such series then issued.

Reverse Stock Split

A reverse stock split (“Reverse Stock Split”) of the outstanding shares of the Common Stock in the range from one-for-two (1-for-2) to one-for-fifty (1-for-50), which ratio was to be selected by the Board of Directors, was approved by our Board of Directors and by our shareholders at the annual meeting of the shareholders held on December 27, 2018 as described in that proxy statement on that certain Definitive Schedule 14A filed with the SEC on November 28, 2018. The board of directors anticipates setting the ratio of the reverse stock split, and the reverse stock split becoming effective following approval by FINRA of the reverse stock split, prior to the effective date of the registration statement (of which this prospectus forms a part).

Except as otherwise indicated and except in our financial statements, all references to Common Stock, share data, per share data and related information depict an assumed 1-for-25 Reverse Stock Split until final determination by the Board as if it was effective and as if it had occurred at the beginning of the earliest period presented. The 1-for-25 Reverse Stock Split, when effective, will combine each twenty-five shares of our outstanding Common Stock into one share of Common Stock, without any change in the par value per share, and the 1-for-25 Reverse Stock Split correspondingly will adjust, among other things, the exercise rate of considerationour warrants and options into Common Stock. No fractional shares will be issued in connection with the 1-for-25 Reverse Stock Split, and any fractional shares resulting from the 1-for-25 Reverse Stock Split will be rounded up to the nearest whole share.


Registration Rights

Equity Line

On August 5, 2019 (“Closing Date”), the Company entered into that certain Registration Rights Agreement, dated as of July 18, 2019, with Crown Bridge Partners, LLC (the “Selling Stockholder”), pursuant to which the Company isobligated to file the Registration Statement to register the resale of the Commitment Shares and Put Shares. Pursuant to the Registration Rights Agreement, the Company must (i) file the Registration Statement within 45 calendar days from the Closing Date, (ii) use reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act of 1933, as amended, as promptly as possible after the filing thereof, and (iii) use its reasonable efforts to keep such Registration Statement continuously effective under the Securities Act until all of the Commitment Shares and Put Shares have been sold thereunder or pursuant to Rule 144.

We will pay all reasonable expenses incurred in connection with the registrations described above. However, we will not be responsible for any broker or similar concessions or any legal fees or other costs of the Selling Stockholder.   

Common Stock Underlying Warrants

The holders of 7,407 (185,169 pre-reverse split) shares of Common Stock underlying our outstanding warrants or their permitted transferees, are, are entitled to piggyback registration rights. If we register any of our securities either for our own account or for the account of other security holders, the holders of these shares are entitled to include their shares in the registration. Subject to certain exceptions, we and the underwriters may limit the number of shares included in the underwritten offering if the underwriters believe that including these shares would adversely affect the offering.

Cash Dividends

As of the date of this prospectus, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our Board of Directors and will depend upon our earnings, if any, our capital requirements and financial position, the general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.

Anti-Takeover Effects of Certain Provisions of Our Bylaws

Summarized in the following paragraphs are provisions included in our Certificate of Incorporation, as amended, and our bylaws that may have the effect of discouraging, delaying or preventing a change in control or an unsolicited acquisition proposal that a stockholder might consider favorable, including a proposal that might result in the payment of a premium over the market price for the shares held by our stockholders.

Effects of authorized but unissued common stock and blank check preferred stock.One of the effects of the existence of authorized but unissued common stock and undesignated preferred stock may be to enable our Board to make more difficult or to discourage an attempt to obtain control of our company by means of a merger, tender offer, proxy contest or otherwise, and thereby to protect the continuity of management. If the Board were to determine that a takeover proposal was not in our best interest, such shares could be issued by the Board without stockholder approval in one or more transactions that might prevent or render more difficult or costly the completion of the takeover transaction by diluting the voting or other rights of the proposed acquirer or insurgent stockholder group, by putting a substantial voting block in institutional or other hands that might undertake to support the position of the incumbent board of directors, by effecting an acquisition that might complicate or preclude the takeover, or otherwise.


In addition, our Certificate of Incorporation, as amended, grants our Board broad power to establish the rights and preferences of authorized and unissued shares of additional series of preferred stock. The creation and issuance of one or more additional series of preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares of common stock. The issuance also may adversely affect the rights and powers, including voting rights, of those holders and may have the effect of delaying, deterring or preventing a change in control of our company.

Cumulative Voting. Our Certificate of Incorporation, as amended, does not provide for cumulative voting in the election of directors which would allow holders of less than a majority of the voting stock to elect some directors.

Vacancies.Section 223 of the Delaware General Corporation Law and our bylaws provide that all vacancies, including newly created directorships, may be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum.

Special Meeting of Stockholders. A special meeting of stockholders may be called by our Board or the Chairman of our Board and must be called by our Secretary at the request in writing of holders of record of a majority of our outstanding capital stock entitled to vote. The requirement that a majority of our outstanding capital stock is required to call a special meeting means that small stockholders will not have the power to call a special meeting to, for example, elect new directors.

Bylaws. Our certificate of incorporation, as amended, and bylaws authorizes the board of directors to adopt, repeal, alter or amend our bylaws without shareholder approval.

Removal. Except as otherwise provided, a director may be removed from office with or without cause at any special meeting of stockholders by the affirmative vote of at least a majority of the voting power and outstanding stock entitled to vote..

Indemnification of Directors and Officers

Articles 7 and 8 of our Certificate of Incorporation, as amended, provide as follows:

“7.To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or to its stockholders for monetary damages for any breach of fiduciary duty as a director. No amendment to, modification of or repeal of this paragraph shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.

8.The Corporation shall indemnify, advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except for claims for indemnification (following the final disposition of such Proceeding) or advancement of expenses not paid in full, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized in the specific case by the Board of Directors of the Corporation. Any amendment, repeal or modification of this paragraph shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.”


Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us pursuant to the foregoing provisions or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the companysuccessful defense of any action, suit or proceeding) is consideredasserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a capitalcourt of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Transfer Agent

The transfer agent and registrar, for our common stock is Island Stock Transfer, LLC.

The transfer agent and registrar’s address is at 15500 Roosevelt Boulevard, Suite 301, Clearwater, Florida 33760. The transfer agent’s telephone (727) 289-0010. 

SELLING STOCKHOLDER

This Prospectus relates to the possible resale from time to time by the Selling Stockholder named in the table below of any or all of the Common Stock that has been or may be issued by us to the Selling Stockholder under the Equity Purchase Agreement. For additional information regarding the transaction relating to the issuance of Common Stock covered by this Prospectus, see “Management’s Discussion and resultedAnalysis of Results of Operation and Financial Condition – Liquidity and Capital Resources – Equity Purchase Agreement and Registration Rights Agreement” above. We are registering the Common Stock pursuant to the provisions of the Registration Rights Agreement in order to permit the Selling Stockholder to offer the shares for resale from time to time.

The table below presents information regarding the Selling Stockholder and the Common Stock that it may offer from time to time under the Equity Purchase Agreement under this Prospectus. This table is prepared based on information supplied to us by the Selling Stockholder, and reflects holdings (post-reverse split) as of September 16, 2019. As used in this Prospectus, the term “Selling Stockholder” includes the Selling Stockholder, and any donees, pledgees, transferees, or other successors-in-interest selling shares received after the date of this Prospectus from the Selling Stockholder as a gift, pledge, or other non-sale related transfer. The number of shares in the column “Maximum Number of Common Stock to be Offered Pursuant to this Prospectus” represents all of the Common Stock that the Selling Stockholder may offer under this Prospectus. The Selling Stockholder may sell some, all or none of its shares offered by this Prospectus. We do not know how long the Selling Stockholder will hold the shares before selling them, and we currently have no agreements, arrangements, or understandings with the Selling Stockholder regarding the sale of any of the shares.

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act, and includes Common Stock with respect to which the Selling Stockholder has voting and investment power. With respect to the Equity Line with the Selling Stockholder, because the purchase price of the Common Stock issuable under the Equity Purchase Agreement is determined on each settlement date, the number of shares that may actually be sold by us under the Equity Purchase Agreement may be fewer than the number of shares being offered by this Prospectus. The fourth column assumes the sale of all of the shares offered by the Selling Stockholder pursuant to this Prospectus.

     Maximum Number of Common Stock to  be   
Name of Selling Number of Common Stock
Owned Prior to Offering
(Post- Reverse Split)
  Offered
Pursuant to this
Prospectus
 Number of Common Stock
Owned after Offering
(Post-Reverse Split)
 
Stockholder Number  Percent  (Post-Reverse Split) Number (1)  Percent 
Crown Bridge Partners, LLC (2)  173,552(3)  4.4%       1,221,309                          0(3)  0%

(1)Assumes the sale of all shares being offered pursuant to this Prospectus.


(2)The Selling Stockholder’s principal business is that of a private investment firm. We have been advised that the Selling Stockholder is not an independent broker-dealer, and that neither the Selling Stockholder nor any of its affiliates is an affiliate or an associated person of any independent broker-dealer. We have been further advised that Seth Adhoot of the Selling Stockholder, has sole voting and dispositive powers with respect to the Common Stock being registered for sale by the Selling Stockholder.

(3)Represents 173,552 (4,338,793 pre-reverse split) shares of Common Stock (“Commitment Shares”) issued to Selling Stockholder as a commitment fee in connection with the Equity Purchase Agreement. In accordance with Rule 13d-3(d) under the Exchange Act, we have excluded from the number of shares beneficially owned prior to the Offering all of the shares that the Selling Stockholder may be required to purchase under the Equity Purchase Agreement (“Common Stock”) because the issuance of such shares is solely at our discretion and is subject to certain conditions, the satisfaction of all of which are outside of the Selling Stockholder’s control, including, but not limited to, the Registration Statement of which this Prospectus is a part becoming and remaining effective. Furthermore, the maximum dollar value of each put of Common Stock to the Selling Stockholder under the Equity Purchase Agreement is subject to certain agreed upon threshold limitations set forth therein. Also, under the terms of the Equity Purchase Agreement, we may not issue shares of our Common Stock to the Selling Stockholder to the extent that the Selling Stockholder or any of its affiliates would, at any time, beneficially own more than 4.99% of our outstanding Common Stock.

PLAN OF DISTRIBUTION

The Selling Stockholder, including any of its pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby which were acquired under the Equity Purchase Agreement on the OTCQB or any other stock exchange, market or trading facility on which the securities are traded or in private transactions.  These sales may be at market prices prevailing at the time of sale, prices related to prevailing market prices, fixed prices or negotiated prices.  The Selling Stockholder may use any one or more of the following methods when selling securities: 

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

exchange distributions in accordance with the rules of the applicable exchange;

privately negotiated transactions;

settlements of short sales;

transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;

writings or settlements of options or other hedging transactions, whether through an options exchange or otherwise;

combinations of any such methods of sale; or

any other methods permitted pursuant to applicable law.


The Selling Stockholder may also sell securities under Rule 144 under the Securities Act, if available, rather than under this Prospectus.

Broker-dealers engaged by the Selling Stockholder may arrange for other broker-dealers to participate in sales.  Broker-dealers may receive commissions or discounts from the Selling Stockholder (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an increaseagency transaction not in excess of $269,000a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

In connection with the sale of the securities or interests therein, the Selling Stockholder may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume.   The Selling Stockholder may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to additional paidsuch broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this Prospectus (as supplemented or amended to reflect such transaction).

The Selling Stockholder and any broker-dealers or agents that are involved in capital.selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales.  In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.  The Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities.  The Company has agreed to indemnify the Selling Stockholder against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

Because the Selling Stockholder may be deemed to be an “underwriter” within the meaning of the Securities Act, it will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder.  In addition, any securities covered by this Prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this Prospectus. The Selling Stockholder has advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Stockholder.

We have agreed to keep this Prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholder without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) the sale of all of the securities pursuant to this Prospectus or Rule 144 under the Securities Act or any other rule of similar effect.  The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution.  In addition, the Selling Stockholder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the Selling Stockholder or any other person.  We will make copies of this Prospectus available to the Selling Stockholder and have informed it of the need to deliver a copy of this Prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act.

71

52

Promoters and Certain Control Persons
None

SHARES ELIGIBLE FOR FUTURE SALE

We cannot predict the effect, if any, that market sales of shares of our managementcommon stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time. The availability for sale of a substantial number of shares of our common stock acquired through the exercise of outstanding warrants could materially adversely affect the market price of our common stock. In addition, sales of our common stock in the public market after the restrictions lapse as described below, or the perception that those sales may occur, could cause the prevailing market price to decrease or to be lower than it might be in the absence of those sales or perceptions.

Sale of Restricted Shares

As of September 16, 2019, there were 3,930,646 (98,266,169 pre-reverse split) shares of common stock outstanding. The 1,221,309 shares of common stock being offered by this Prospectus will be freely tradable, other control personsthan by any of our “affiliates,” as defined in Rule 144(a) under the Securities Act, without restriction or registration under the Securities Act. In addition, 1,502,091 (37,552,286 pre-reverse split) outstanding shares were “promoters” (withinissued and sold by us in private transactions and those shares are, or will be, eligible for public sale if registered under the Securities Act or sold in accordance with Rule 144 under the Securities Act. These remaining shares are “restricted securities” within the meaning of Rule 405144 under the Securities Act), and none of suchAct.

Rule 144

In general, under Rule 144, as currently in effect, a person (or 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
Presently, wewhose shares are not required to comply with the director independence requirements of any securities exchange since we are listed on OTC markets, which does not have any such listing standards. In determining whether our directors are independent, however, we intend to comply with the rules of the Nasdaq. The Board of Directors also will consult with counsel to ensure that the Board of Directors’ determinations are consistent with those rules and all relevant securities and other laws and regulations regarding the independence of directors,be aggregated), including those adopted under the Sarbanes-Oxley Act of 2002 with respect to the independence of audit committee members. The Nasdaq listing standards define an “independent director” generally as a person other thanwho may be deemed an officer“affiliate” of a company, who has beneficially owned restricted securities for at least six months may sell, within any three-month period, a number of shares that does not have a relationship withexceed the company that would interfere with the director’s exercise of independent judgment.
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 Company’s board of directors does not have a separate audit committee, nominating committee or compensation committee. Given the small sizegreater of: (1) 1% of the Company’s boardthen-outstanding shares of common stock, or (2) if and when the common stock is listed on a national securities exchange, the average weekly trading volume of the common stock during the four calendar weeks preceding the date on which notice of such sale was filed under Rule 144. Sales under Rule 144 are also subject to certain requirements as to the manner of sale, notice, and availability of current public information about our company. A person who is not deemed to have been an affiliate of us at any time during the 90 days preceding a sale by such person, and who has beneficially owned the restricted shares for at least one year, is entitled to sell such shares under Rule 144 without regard to any of the restrictions described above.

We cannot estimate the number of shares of our common stock that our existing stockholders will elect to sell under Rule 144.

Transfer Agent

The transfer agent and registrar, for our common stock is Island Stock Transfer, LLC. The transfer agent and registrar’s address is at 15500 Roosevelt Boulevard, Suite 301, Clearwater, Florida 33760. The transfer agent’s telephone (727) 289-0010.

LEGAL MATTERS

The validity of the securities offered by this prospectus will be passed upon for us by Anthony L.G., PLLC, 625 N. Flagler Drive, Suite 600, West Palm Beach, Florida 33401.

EXPERTS

Our balance sheets as of December 31, 2018 and December 31, 2017 and the limited numberrelated statement of independent directors over the Company’s history, the board of directors has determined that it is appropriateoperations, changes in stockholders’ equity and cash flows for the entire board to actyears ended December 31, 2018 and 2017 included in this prospectus have been audited by Cherry Bekaert LLP, independent registered public accounting firm, as eachindicated in their report with respect thereto, and have been so included in reliance upon the report of such committee.firm given on their authority as experts in accounting and auditing.


ITEM 11A.  MATERIAL CHANGES

None.
ITEM 12.  INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
None.
Item 12A.  DISCLOSURE OF COMMISSIONCOMMISSION’S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by one of our directors, officers or controlling persons in the successful defense of any action, suit or proceeding) is asserted by that director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether that indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of that issue.

53

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCEWHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC the registration statement on Form S-1 under the Securities Act for the common stock offered for resale by this prospectus. This prospectus, which is a part of the registration statement, does not contain all of the information in the registration statement and the exhibits filed with it, portions of which have been omitted as permitted by SEC rules and regulations. For further information relating to us and our common stock, reference is made to the registration statement, including its exhibits and schedules. Statements made in this prospectus relating to any contract or other document are not necessarily complete and you should refer to the exhibits attached to or incorporated by reference into the registration statement for copies of the actual contract or document.

The registration statement on Form S-1, of which this prospectus forms a part, including exhibits, is available at the SEC’s website athttp://www.sec.gov. You may also read and copy any document we file with, or furnish to, the SEC at its public reference facilities:

Public Reference Room Office
100 F Street, N.E.
Room 1580
Washington, D.C. 20549

You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Callers in the United States can also call (202) 551-8090 for further information on the operations of the public reference facilities.


ONE HORIZON GROUP, INC. AND DISTRIBUTIONSUBSIDIARIES

Index to Financial Statements

Audited consolidated financial statements for the years ended December 31, 2018 and 2017

Consolidated Financial Statements

Report of Independent Registered Public Accounting FirmF-2
Consolidated Balance Sheets as of December 31, 2018 and 2017F-3
Consolidated Statements of Operations for the years ended December 31, 2018 and 2017F-4
Consolidated Statements of Stockholder’s Equity for the years ended December 31, 2018 and 2017F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017F-7
Notes to Audited Consolidated Financial StatementsF-9

Unaudited consolidated financial statements for the three and six months ended June 30, 2019 and 2018

Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018F-24
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018F-25
Condensed Consolidated Statements of Stockholder’s Equity for the six months ended June 30, 2019 and 2018F-27
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018F-28
Notes to Unaudited Condensed Consolidated Financial StatementsF-29

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
One Horizon Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of One Horizon Group, Inc. (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 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 regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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 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 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, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a 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

April 15, 2019

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


ONE HORIZON GROUP, INC.

Consolidated Balance Sheets

December 31, 2018 and 2017

(in thousands, except share data)

  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.


ONE HORIZON GROUP, INC.

Consolidated Statements of Operations

For the years ended December 31, 2018 and 2017

(in thousands, except per share data)

  Years ended
December 31,
 
  2018  2017 
       
Revenue $787  $714 
Cost of revenue        
Software and production costs  91    
Amortization of intangible assets  2,148   855 
   2,239   855 
Gross deficit  (1,452)  (141)
         
Expenses:        
General and administrative  7,139   4,236 
Acquisition related costs  1,874    
Depreciation  1   17 
Intangible asset impairment charge  3,761    
   12,775   4,253 
         
Loss from operations  (14,227)  (4,394)
         
Other income and expense:        
Interest expense  (428)  (666)
Other income (Note 3)  989    
Foreign currency exchange (losses)/gains  (5)  1 
   556   (665)
         
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 $(13,769) $(7,434)
         
Earnings per share        
Basic and diluted net loss per share        
-     Continuing operations $(0.27) $(0.40)
-     Discontinued operations $(0.02) $(0.19)
Weighted average number of shares outstanding        
Basic and diluted  50,857   12,534 

See accompanying notes to consolidated financial statements.


ONE HORIZON GROUP, INC.

Consolidated Statements of Comprehensive Loss

For the years ended December 31, 2018 and 2017

(in thousands)

  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.


ONE HORIZON GROUP, INC.

Consolidated Statements of Temporary and Stockholders’ Equity

For the years ended December 31, 2018 and 2017

(in thousands)

  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.


ONE HORIZON GROUP, INC.

Consolidated Statements of Cash Flows

For the years ended December 31, 2018 and 2017

(in thousands)

  Years ended
December 31,
 
  2018  2017 
       
Cash used in operating activities:      
Operating activities:      
Net loss for the year $(13,671) $(5,059)
         
Adjustment to reconcile net loss for the year to net cash used in operating activities:        
Depreciation of property and equipment  2   17 
Amortization of intangible assets  2,148   855 
Amortization of debt issue costs     132 
Amortization of beneficial conversion feature  355   101 
Amortization of debt discount     199 
Impairment charge  3,761    
Amortization of shares issued for services  550   270 
Warrants issued for services received  544   1,530 
Options issued for services received     132 
Common shares issued for services received  4,949   1,244 
Other income  (930)   
Changes in operating assets and liabilities:        
Accounts receivable  (180)  (100)
Other assets  (465)  17 
Accounts payable and accrued expenses  (179)  280 
Deferred revenue  105    
Net cash flows from continuing operating activities  (3,012)  (382)
         
Net cash flows from discontinued operating activities  (39)  (321)
         
Net cash flows from operating activities  (3,051)  (703)
         
Cash used in investing activities:        
         
Cash consideration of acquisitions (net of cash acquired)  (168)   
       
Acquisition of property and equipment  (2)  (2)
Net cash flows from investing activities – continuing operations  (170)  (2)
         
Cash flows from investing activities – discontinued operations  (980)  (261)
         
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  1,449   465 
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 
         
Increase/(decrease) in cash during the year  (384)  511 
Foreign exchange effect on cash  (26)  (8)
         
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.


ONE HORIZON GROUP, INC.

Consolidated Statements of Cash Flows (continued)

For the years ended December 31, 2018 and 2017

(in thousands)

  Year ended
December 31,
 
  2018  2017 
       
Cash paid for interest $  $ 
Non-cash transactions:        
Common stock issued in acquisitions $5,722  $ 
Common stock issued for software $548  $ 
Common stock issued for settlement of accrued compensation $  $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.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018 and 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., Love Media House, Inc (formerly called C-Rod, Inc.), Banana Whale Studios PTE Ltd and Browning Productions & Entertainment, Inc. in the year ended December 31, 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 the United Kingdom.

Current Structure of the Company

The Company has the following subsidiaries:

Subsidiary name% Owned
123Wish, Inc.51%
One Horizon Hong Kong Ltd100%
Horizon Network Technology Co. Ltd100%
Love Media House, Inc100%
Global Phone Credit Limited100%
Browning Production & Entertainment Inc.51%

In addition to the subsidiaries listed above, Suzhou Aishuo Network Information Co., Ltd (“Suzhou Aishuo”) is a limited liability company, organized in China and controlled by us via various contractual arrangements. Suzhou Aishuo is treated as one of our subsidiaries for financial reporting purposes in accordance with GAAP.

In February 2019 the Company entered into to an agreement to acquire a majority interest in Maham LLC.

All significant intercompany balances and transactions have been eliminated in consolidation.

Note 2. Summary of Significant Accounting Policies

Liquidity and Capital Resources

Historically, the Company has incurred net losses and negative cash 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, 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 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 of these transactions and based on the 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 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 financings. While the Company believes it is probable that such financings could be secured, there can be no assurance the Company will be able to secure additional sources of funds to support its operations, or if such funds are available, that such additional financing will be sufficient to meet the Company’s needs or on terms acceptable to 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 other than those denominated in U.S. dollars, primarily in 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 general and administrative expenses.

Cash

Cash and cash equivalents include bank demand deposit accounts and highly liquid short term investments with maturities of three months or less when purchased. Cash consists of checking accounts held at financial institutions in Hong Kong 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, concentrations and revenue recognition

1.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.

2.123Wish 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 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 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.

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.

4.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 to which the royalty relates, occurs.

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, 2018 three customers accounted for 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.

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. Topic 606 was effective for us in the first quarter of the year ending December 31, 2018 and adoption did not have a material impact on our financial statements.

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 ranging from four to five 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. As a result of this review, an impairment change relating to Horizon Software totaling $3.8 million was recognized in the year ended December 31, 2018 (2017: $nil).


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, 2018 and 2017 the Company recorded no impairment losses related to the Company’s long-lived assets other than the previously discussed intangible asset impairment charge. The impairment determination is subject to a high degree of estimation uncertainty and are ongoing as we continue to develop the acquired companies.

Income Taxes

Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance.

The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively.

Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company’s estimates and assumptions may differ significantly from tax benefits ultimately realized. 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 of potential payments due. Given the complexity of the issue the Company is unable to quantify a range of potential loss. Accordingly no liability has been recorded in the accompanying consolidated balance sheets in respect of this 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, 2018 and 2017, all outstanding warrants are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations.

Accumulated Other Comprehensive Income (Loss)

Other comprehensive income (loss), as defined, includes net 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.

Stock-based payments

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.

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 sets forthsummarizes 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 2018 the Company completed the acquisition of 51% ownership of Banana Whale Studios PTE Ltd (“BWS”) 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 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 following table summarizes the consideration paid 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 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 $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 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 35,000 fully paid shares of common stock with a fair value of $18,200.

The 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 a third party. Under the agreement dated January 31, 2019, the Company received cash of $1,500,000 and a promissory note of $500,000 and the return of the 7,383,000 Company shares issued on acquisition. The Company shares are held in Escrow for three months to secure certain warranties given by the Company on closure.

The Company has accounted for the operations as discontinued operations. The statement of operations include discontinued operations as follows:(in thousands)

  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)

The balance sheet of discontinued operations as at December 31, 2018 is as follows: (in thousands)

  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 United Kingdom, which were involved in that business segment to Mr. Collins, the former Chief Executive Officer of the 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)

  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.(in thousands)

  December 31  December 31 
  2018  2017 
       
Horizon software $  $6,527 
123Wish Platform intellectual property  548    
Social online application software  2,307    
Customer lists  900    
         
   3,755   6,527 
Less accumulated amortization  (571)  (1,187)
         
Intangible assets, net $3,184  $5,340 

Amortization of intangible assets for each of the next four years is estimated to be approximately $796,000 per year.

Note 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 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 in August 2017 involving the removal of Redeemable Preference Shares and the Debenture totaling in exchange for new shares of common stock and the promissory notes.

b) Other notes payable.

Notes payable by Browning Productions & Entertainment, Inc. totaling $101,000 are due to unrelated parties and are repayable on demand and interest bearing at average rates of 5.4% per year.

Note 9. Share Capital

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, 2018 the Company:

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 $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 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 $265,000
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 provided with a fair value of $83,416
Issued 833,334 shares of common stock for the exercise of 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 exercise of 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

Stock Purchase Warrants

As at December 31, 2018, the Company had reserved 185,169 shares of its common stock for the outstanding warrants with weighted average exercise price of $0.80. Such warrants expire at various times up to July 2020.

During the year ended December 31, 2018, 5,225,000 warrants were issued, 301,219 warrants were forfeited and 8,675,000 warrants were exercised, for proceeds of $2,096,000.


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.

Under the 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 up to 7% of funds raised to deliver a cash warrant to Maxim to purchase shares in the Company equal to 4% of the number of shares issued 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 exercised the warrants will lapse.

Note 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. Following the reorganization in August 2017, all outstanding employee stock options were forfeited under the rules of the Plan.

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

A summary of the 2013 Plan options for the twelve months ended December 31, 2017, is as follows:

     Weighted
Average
 
   Number of Options  Exercise Price 
       
Outstanding at January 1, 2017  141,250  $14.83 
Forfeited  (141,250)  22.61 
Outstanding at December 31, 2017     N/A 

During the year ended December 31, 2018 there was no stock option activity relating to the 2013 Plan. 

Prior to the 2013 Plan the Company issued stock options to employees under other stock plans.

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

     Weighted
Average
 
  Number of Options  Exercise Price 
       
Outstanding at January 1, 2017  145,950  $3.18 
Forfeited  (145,950)  22.61 
Outstanding at December 31, 2017     N/A 

During the year ended December 31, 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 Taxes

The difference between the U.S. statutory federal tax rate 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.


Deferred Tax Assets

The potential benefit of net operating loss carryforwards has not been recognized in the 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 2017 remain open to examination by federal authorities in certain jurisdictions in which the Company operates namely China and Hong Kong. The components of the net deferred tax 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 $  $ 

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 became law (the “Tax Act”). The Tax Act enacts a broad range of changes to the 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 expensing of capital expenditures and puts into effect the 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 liabilities are fully reserved. We urge our stockholders to consult with their legal and tax advisors with respect to any such legislation and the potential tax consequences of investing in our common stock.

Note 12. Segment Information

The Company has the following business segments for the year ended December 31, 2018 and 2017.

The Company’s revenues for continuing operations were generated in the following 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 we expectby 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

On May 30, 2018, Zhanming Wu (“Wu”), the record owner of 15,000,000 shares of common stock of One Horizon Group, Inc. (the “Company”), commenced an action in the Court of Chancery of the State of Delaware [Case No.2018-0387-JRS; the “Injunction Action”] against the Company 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 incurenjoin 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 Company and to 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 Board of Directors, (iv) to rescind the issuance of 7,383,000 shares to the 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 salelitigation and such other relief as the Court deems fair and equitable.


On June 11, 2018, Wu commenced a second action in the Court of Chancery of the shares being registered. All such expenses are estimated except forState of Delaware [Case No.2018-0427-JRS; the SEC and FINRA registration fees.

 SEC registration fee $
1153.82
 
   Fees and expenses of counsel for the Company $15,000.00 
   Fees and expenses of accountants for Company $5,000.00 
   Miscellaneous $1,500.00 
Total $
22,653.82
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our bylaws permits us to indemnify our officers and directors by law in connection with any proceeding occurred on or after January 27, 1987 arising by reason“225 Action”] under Section 225 of the fact any person is or was our officer or director against any expenses and any liability actually and in good faith paid or incurred by such person in connection with such proceeding. Notwithstanding this indemnity, a director shall be liableDelaware General Corporation Law seeking (i) to appoint four directors to the extent provided by law forCompany’s Board of Directors, (ii) to enjoin the Company and its affiliates from issuing, offering, selling or granting any liability incurred by him by his own fraud or willful default.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES*
On November 30, 2012, we (previously, ICE Corp.) and One Horizon UK, a United Kingdom-based company, consummated the Share Exchange, pursuant to which ICE Corp. will acquire all of the issued and outstanding shares of One Horizon UK in exchange for 29,755,794 shares of our Common Stock. We also issued options to purchase an aggregate 360,221 shares of the Company’s common stock to holdersany person or entity, or consummate any merger, acquisition or similar transaction without the prior approval of One Horizon UK options in exchange for such options,  and created a pool of an additional 1,868,160 sharesWu during the pendency of the Company’s Common Stock reservedaction 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 such354,409 shares upon the exercise of options and warrants that One Horizon UK has agreed to issue in the futureWu to certain employees. On the date of closing, more than 98.9% of One Horizon UK shareholders’ offers of exchange had been received. Following the closing, additional One Horizon UK shareholders have offered their shares for exchange, and as of April 29, 2013, we owned approximately 99%reimburse a portion of the outstanding shares of One Horizon UK. In the issuance above, no general solicitation was used and the transactions were negotiated directly with our existing shareholders. The securities were issuedexpenses incurred in reliance upon the exemption from registration afforded by Regulation S and Section 4(a)(2) of the Securities Act of 1933, as amended, which exempts transactions by an issuer not involving any public offering. In support thereof, the recipients of the common stock made certain written representations, acknowledged that the securities constituted restricted securities, and consented to a restrictive legend on the certificates to be issued.


In April-May 2012, One Horizon UK offered to 9investors 1,265,873 shares of Common Stock of the Company, given the effect of the Share Exchange and 1:600 reverse split, for a total consideration of approximately $3.25 million (the “April 2012 Offering by One Horizon UK”).

In November-December, 2012,  One Horizon UK offered to 2 investors 389,200 shares of Common Stock of the Company, given the effect of the Share Exchange and the 1:600 reverse split, for a total consideration of $2 million (the “November-December 2012 Offering by One Horizon UK”).

On January 22, 2013, Mr. Mark White, our former Chief Executive Officer, and Mr. Brian Collins, our current Chief Executive Officer and Chief Technology Officer, each made a one year loan to us of $250,000, each of which bears interest at a rate of .21% per annum, prepayable at our option at any time following issuance in cash or in shares of Common Stock at the rate of $5.16 per share.  In exchange, we issued to each of Messrs. White and Collins a convertible promissory note, in the initial principal amount of each loan which is convertible into 48,650 shares of Common Stock to each loaner. The Convertible Notes, together with any shares of Common Stock issuable by the registrant upon the payment thereof, were issued in reliance upon the exemption from registration afforded by Regulation S and on Section 4(a)(2) of the Securities Act of 1933, as amended, which exempts transactions by an issuer not involving any public offering.

In February 2013, we closed a Reg. S offering whereby we issued an aggregate of 806,451 shares of our common stock and a three-year warrant to purchase 403,225 shares of our Common stock at an exercise price of $7.44 per share for a total consideration of $6,000,000 ( the “February 2013 Offering”). In August 2013, we amended the offeringconnection with the investor inactions, the offering whereby we reducednomination and election to the exercise priceCompany’s Board of the warrant from $7.44 per share to $5.94 per share.
54


In April 2013 we entered into an advisory agreement with Tripoint to provide business and corporate development services to us pursuant to which we issued  62,452 sharesDirectors of Common Stock to Tripoint.

In May 2013, we signed an amendment to our agreement with an investor relations firm, pursuant to which we issued the firm a warrant to purchase up to 62,543 sharestwo individuals designated by Wu, the redemption of the Company’s Common Stock, subjectup to vesting, at an exercise price of $7.2 per share, with 12,509 shares vesting on each of May 1, 2013, October 15, 2013, January 15, 2014 and April 14, 2014. Exercise of the warrants is also subject to certain performance metrics set forth in the warrant. The warrant is exercisable for five years.
During six months ended June 30, 2013, we issued  a total of 5,000approximately 850,000 shares of common stock at $0.65 each, from certain investors whom Wu recommended to an individual as compensation for certain business developmentinvest in the Company (the “Additional Investors”) should they request that the Company do so and related services that were performed from November 1, 2012 to April 30, 2013 pursuant to an agreement.  

Eachthe facilitation of the issuances of our equity securities described above was made in reliance on the exemption from registration under the Securities Act of 1933, or the Securities Act, set forth in Section 4(a)(2) of the Securities Act, as a transaction not constituting a public offering of securities because the securities were issued privately without general solicitation or advertising.  No selling commissions were paid in connection with the sale of securities described above.
In July 2013, we issued 33,333 shares of common stock as compensation for certain business services.  The issuance was made in reliance on the exemption from registration provided by Regulation S of the Securities Act of 1933, as amended, as an offshore transaction involving only a non-U.S. offeree/purchaser. No placement agent was utilized in connection with the offer and sale of these shares. 

In July 2014, we issued 75,000 shares of  Common Stock to Tripoint pursuant to an advisory agreement dated July 1, 2014 between us and Tripoint. The issuance was made in reliance on the exemption from registration as set forth in Section 4(a)(2) of the Securities Act.

In July 2014, we also closed a private placement of $1,000,000  for a total of 10 units at a purchase price of $100,000 per Unit, each consisting of, (i) 17,094 shares of the Company’s Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share, initially convertible into 17,094 shares of the Company’s common stock par value $0.0001 per share, and (ii) 10,000 Class B Warrants, each exercisableby 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 purchase 1 sharethe Board of Common StockDirectors at an exercise pricethe Company’s 2018 Annual Meeting of $4.00 per share (the “July 2014 Offering”). TheStockholders, the Company will continue to comply with the terms of the Status Quo Order issued in July 2014 Offering  was completed in reliance upon the exemption from securities registration afforded by Regulation S. In connection with July 2014 Offering, we issued 25,000 shares of Common Stock to Tripoint, the exclusive placement agent, as compensation shares.

On December 22, 2014, we closed a private placement of $3,500,000 in reliance upon the exemption from securities registration afforded by Regulation S (the “December 2014 Offering”). In connection with the December 2014 Offering, we issued225 Action. The 225 Action will be dismissed and the Company will no longer be obliged to an investorcomply 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 Additional Investors. Notwithstanding such dismissal, should the registration of Wu’s shares lapse for any reason prior to October 1, 2019, Wu shall be entitled to enforce his rights under the side letters which were the basis of many of his claims, which letters are deemed to be a convertible debenture that is convertible into 1,555,556 sharespart of Common Stock, Class C warrant to purchase 388,889 shares of Common Stock and Class D warrant to purchase 388,889 shares of Common Stock. Furthermore, the investor is eligible to receive additional considerationSettlement Agreement as if set forth therein. If the Dismissal Stipulation has been filed in the formInjunction Action and Wu’s shares have remained continuously registered until October 1, 2019, the side letters shall be deemed of no force and effect.

F-23 

ONE HORIZON GROUP, INC.

Condensed Consolidated Balance Sheets

June 30, 2019 and December 31, 2018

(in thousands, except share data) 

  June 30,
2019
(unaudited)
  December 31,
2018
 
Assets      
Current assets:      
Cash $847  $353 
Accounts receivable, net  244   325 
Prepaid compensation  550   550 
Investment  100   100 
Other receivable  510   2,022 
Advances to acquisition target  196   70 
Deferred production costs  19   87 
Other current assets  454   386 
   2,920   3,893 
Current assets of discontinued items  -   129 
   2,920   4,022 
         
Property and equipment, net  37   3 
Intangible assets, net  2,924   3,184 
Goodwill  2,213   2,213 
Prepaid compensation, net of current portion  1,192   1,467 
Non current assets of discontinued operations  -   36 
Total assets $9,286  $10,925 
         
Liabilities and Stockholders’ Equity        
Current liabilities:        
Accounts payable $430  $334 
Accrued expenses  315   156 
Accrued compensation  203   181 
Deferred income  15   177 
Notes payable  121   101 
Amount due to related parties  205   205 
Promissory notes, related parties  1,500   1,000 
   2,789   2,154 
Current liabilities of discontinued operations  -   301 
Total current liabilities  2,789   2,455 
         
Long-term liabilities        
         
Equipment note payable  28   - 
         
Total liabilities  2,817   2,455 
         
Temporary Equity – redeemable common stock outstanding 848,611  605   605 
         
Stockholders’ Equity        
Preferred stock:        
$0.0001 par value, authorized 50,000,000; No shares issued and outstanding      
Common stock:        
$0.0001 par value, authorized 200,000,000 shares issued and outstanding 94,609,731 shares as of June 30, 2019 (December 2018 – 87,559,672)  9   8 
Additional paid-in capital  62,876   62,600 
Share subscription receivable  (1,425)  (1,425)
Accumulated (Deficit)  (56,594)  (54,854)
Accumulated other comprehensive income  (24)  (35)
Total One Horizon Group, Inc. stockholders’ equity  4,842   6,294 
Non-controlling interest  1,022   1,571 
Total stockholders’ equity  5,864   7,865 
         
Total liabilities and stockholders’ equity $9,286  $10,925 

See accompanying notes to unaudited condensed consolidated financial statements.

F-24 

ONE HORIZON GROUP, INC.

Condensed Consolidated Statements of Operations

For the three and six months ended June 30, 2019 and 2018

(in thousands, except per share data)

(unaudited)

  Three Months Ended
June 30,
  Six Months Ended
June 30,
 
  2019  2018  2019  2018 
             
Revenue $253  $270  $454  $544 
                 
Cost of revenue:                
Software and production costs  88   17   170   17 
Amortization of intangible assets  215   656   375   1,061 
   303   673   545   1,078 
                 
Gross deficit  (50)  (403)  (91)  (534)
                 
Expenses:                
General and administrative  1,078   1,716   2,262   3,126 
Depreciation  5   1   6   1 
Acquisition services  -   1,094   -   1,874 
                 
   1,083   2,811   2,268   5,001 
                 
Loss from operations  (1,133)  (3,214)  (2,359)  (5,535)
                 
Other income and expense:                
Interest expense  (16)  (17)  (32)  (390)
Foreign exchange  (1)  (1)  (2)  (1)
Other income  -   -   553   - 
   (17)  (18)  519   (391)
                 
Loss on continuing operations  (1,150)  (3,232)  (1,840)  (5,926)
                 
Loss from discontinued operations  -   (296)  -   (296)
                 
Net loss for the period  (1,150)  (3,528)  (1,840)  (6,222)
Net loss attributable to non-controlling interest  66   346   100   466 
                 
Net loss attributable to One Horizon Group Inc. common stockholders $(1,084) $(3,182) $(1,740) $(5,756)
                 
Earnings per share                
                 
Basic and diluted net loss per share – continuing operations $(0.01) $(0.08) $(0.02) $(0.16)
                 
Basic and diluted net loss per share – discontinued operations $-  $(0.01) $-  $(0.01)
                 
Weighted average number of shares outstanding                
Basic and diluted  90,028   41,366   89,223   36,902 

See accompanying notes to unaudited condensed consolidated financial statements.


ONE HORIZON GROUP, INC.

Condensed Consolidated Statements of Comprehensive Loss

For the three and six months ended June 30, 2019 and 2018

(in thousands)

(unaudited)

  Three Months Ended
June 30,
  Six Months Ended
June 30,
 
  2019  2018  2019  2018 
             
Net loss $(1,084) $(3,182) $(1,740) $(5,756)
Other comprehensive income:                
Foreign currency translation adjustment loss  -   -   11   (14)
Total comprehensive loss $(1,084) $(3,182) $(1,729) $(5,770)

See accompanying notes to unaudited condensed consolidated financial statements

F-26 

ONE HORIZON GROUP, INC.

Condensed Consolidated Statements of Equity

For the six months ended June 30, 2019 and 2018

(in thousands)

(unaudited)

  Mezzanine Equity  Common Stock  Additional  Stock Subscription  Accumulated  Accumulated  Stock subscription  Non-Controlling  Total
Stockholders’
 
  Shares  Amount  Shares  Amount  Paid-In  Receivable  Deficit  OCI  receivable  Interest  Equity 
                                  
Balances, January 1, 2018      -  $    -   30,255  $    3  $48,356  $    -  $(41,085) $(22) $    -  $    -  $7,252 
                                             
Net loss  -   -   -   -   -   -   (2,574)  -       (120)  (2,694)
                                             
Foreign currency translation  -   -   -   -   -   -   -   (1)      -   (1)
                                             
Issuance of shares for services  171   199   476   -   728   -   -   -       -   728 
                                             
Issuance of shares for acquisitions  -   -   2,333   -   2,507   -   -   -       1,353   3,860 
                                             
Issuance of shares for exercise of warrants  -   -   750   -   563   -   -   -   -   -   563 
                                             
Issuance of shares for conversion of debt  677   406   -   -   -   -   -   -       -   - 
                                             
Conversion benefit on convertible notes  -   -   -   -   200   -   -   -       -   200 
                                             
Increase in service compensation due to change in change in exercise price  -   -   -   -   -   -   -   -   -   -   - 
                                             
Issuance of shares for cash  -   -   -   -   -   -   -   -   -   -   - 
                                             
Balances, March 31, 2018  848   605   33,814   3   52,354   -   (43,659)  (23)  -   1,233   9,908 
                                             
Net loss  -   -   -   -   -   -   (3,182)  -   -   (346)  (3,528)
                                             
Foreign currency translation  -   -   -   -   -   -   -   (13)  -   -   (13)
                                             
Issuance of shares for services  -   -   4,619   -   2,897   -   -   -   -   -   2,897 
                                             
Issuance of shares for acquisitions  -   -   7,794   1   5,422   -   -   -   -   4,937   10,360 
                                             
Issuance of shares for exercise of warrants  -   -   2,700   -   795   -   -   -   (370)  -   425 
                                             
Increase in service compensation due to change in change in exercise price  -   -   -   -   403   -   -   -   -   -   403 
                                             
Issuance of shares for cash  -   -   1,750   -   350   -   -   -   -   -   350 
                                             
Issuance of shares for exercise of convertible promissory notes  -   -   677   -   406   -   -   -   -   -   406 
                                             
Balances, June 30, 2018  848  $605   51,354  $4  $62,627  $-  $(46,841) $(36) $(370) $5,824  $21,208 
                                             
Balances, January 1, 2019  848  $605   87,560  $8  $62,600  $(1,425) $(54,854) $(35) $-  $1,571  $7,865 
                                             
Net loss  -   -   -   -   -   -   (656)  -   -   (34)  (690)
                                             
Foreign currency translation  -   -   -   -   -   -   -   11   -   -   11 
                                             
Disposal of equity in Banana Whale Studios PTE Limited  -   -   -   -   -   -   -   -   -   (449)  (449)
                                             
Balances, March 31, 2019  848   605   87,560   8   62,600   (1,425)  (55,510)  (24)  -   1,088   6,737 
                                             
Net loss  -   -   -   -   -   -   (1,084)  -       (66)  (1,150)
                                             
Shares issuance for contract modification  -   -   2,049   -   127   -   -   -   -   -   127 
                                             
Shares issued for services to be provided  -   -   5,000   1   149   -   -   -   -   -   150 
                                             
Balances, June 30, 2019  848   605   94,609   9   62,876   (1,425)  (56,594)  (24)  -   1,022   5,864 

See accompanying notes to unaudited condensed consolidated financial statements

F-27 

ONE HORIZON GROUP, INC.

Condensed Consolidated Statements of Cash Flows

For the six months ended June 30, 2019 and 2018

(in thousands)

(unaudited)

  2019  2018 
Cash flows from operating activities:      
       
Net loss for the period $(1,840) $(5,926)
         
Adjustment to reconcile net loss for the period to net cash flows from operating activities:        
Depreciation of property and equipment  6   1 
Amortization of intangible assets  375   1,061 
Gain on sale of interest in subsidiary  (553)  - 
Amortization of beneficial conversion feature  -   355 
Shares issued for services  -   3,282 
Shares issued for contract modification  127   - 
Amortization of shares issued for services  423   624 
Changes in operating assets and liabilities:        
Deferred production costs  68   - 
Accounts receivable  71   (237)
Other assets  (75)  (476)
Deferred revenue  (290)  - 
Accounts payable and accrued expenses  287   (66)
Net cash flows from continuing operating activities  (1,401)  (1,382)
         
Net cash flows from discontinued operating activities  -   (137)
Net cash flows from total operating activities  (1,401)  (1,519)
         
Cash used in investing activities:        
         
Cash advances to acquisition target  (126)  - 
Proceeds from sale of interest in subsidiary  1,500   - 
Cash consideration on acquisitions (net of cash acquired)  -   (108)
Acquisition of fixed assets  (40)  (1)
Net cash flows from continuing investing activities  1,334   (109)
         
Net cash flows from discontinued investing activities  -   (1)
Net cash flows from total investing activities  1,334   (110)
         
Cash flows from financing activities:        
         
Proceeds from issuance of shares  -   350 
Proceeds from exercise of warrants  -   988 
Proceeds from issuance of convertible notes  -   200 
Proceeds from loan  500   - 
Proceeds from finance contracts  51   - 
Repayment of advances from related parties (net)  -   (78)
Net cash flows from financing activities  551   1,460 
         
Increase (decrease) in cash during the period  484   (169)
Foreign exchange effect on cash  10   10 
         
Cash at beginning of the period  353   763 
         
Cash at end of the period $847  $604 
         
Supplementary Information:        
         
Non-cash financing transactions:        
Common stock issued for business combinations  -   14,220 
Common stock issued for conversion of debt  -   406 

See accompanying notes to unaudited condensed consolidated financial statements.


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2019

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

Description of Business

One Horizon Group, Inc (“the Company”) has the following three core businesses:

(i)123Wish, Inc. (“123Wish”) – an experience based platform where subscribers have a chance to play and win experiences from celebrities, athletes and artists.

(ii)Love Media House, Inc. formerly known as C-Rod, Inc. (“Love Media House”) -a full-service music production, artist representation and digital media business that providesa broad range of entertainment services including branding and advertising, video and photo production, recording (including music production, arranging, mixing and mastering), songwriting (arranging writing sessions with experienced and multi-platinum writers), artist development, digital distribution, billboard chart promotion, and consulting and life coaching. The entertainment marketplace is highly competitive. The team at Love Media House, headed by Chis Rodriguez, has worked with many famous artists and achieved many Billboard numbers and giving Love Media House an important edge in promoting new talent.

(iii)Browning Productions & Entertainment, Inc. (“Browning Productions”) - a full service video production company and executive producer for all entertainment projects. Browning distributes content on a proprietary Internet/Over-The-Top (“OTT”) content platform that operates in conjunction with Verizon Digital Media Services (“VDMS”). Browning has produced and has ownership rights to several national and international television programs currently airing on a number of acclaimed television networks. Browning’s team is comprised of award-winning professionals and offers end-to-end marketing services.

In February 2019, the Company entered into an agreement to acquire a majority interest in Maham LLC, an innovative, technology driven yoga studio concept, which the Company expects to close during the third quarter of 2019.

The Company is based in the United States of America, Hong Kong, Singapore, China and the United Kingdom.

Interim Period Financial Statements

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the Securities and Exchange Commission’ instructions. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The results of operations reflect interim adjustments, all of which are of a performance warrantnormal recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for such interim period. The results reported in these interim condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and note disclosure normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to purchase certain amount of shares of Common Stock based on our annual reported subscriber numbers, twenty four (24) months after the Closing, as is reflectedSecurities and Exchange Commission’s rules and regulations. These unaudited interim consolidated financial statements should be read in ourconjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year endingended December 31, 2016 (the “Form 10-K”), if we fail to achieve 15.0 million subscribers at that time. In addition, Tripoint,2018, as filed with the placement agent in the Offering received placement agent warrant, Class C warrantSecurities and Class D warrant to purchase 62,222, 15,556 and 15,556 shares of Common Stock, respectively; and a cash fee of $280,000.

Exchange Commission on April 15, 2019.


On September 11, 2014, we entered into two mutual release agreements with each of two creditors of One Horizon Group Plc pursuant to which we issued a total of 123,000 shares of Common Stock to those two creditors in exchange of their agreements to waive their outstanding loans in a total amount of $276,750. The issuance was made in reliance on the exemption from registration as set forth in Section 4(a)(2)

Current Structure of the Securities Act.

All share amounts and prices described herein above are adjusted to reflect  a reverse split of 1-for-600 that went effective on August 29, 2013

Stock Purchase Warrants

We have not repurchased  any equity securities duringCompany

The Company has the periods covered by this Report.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
55

EXHIBITS
The following exhibits are filed as part of this registration statement:
subsidiaries: 

Exhibit NumberSubsidiary name Title of Document% OwnedLocation
    
Item 2Plan of Acquisition, Reorganization Arrangement, Liquidation, or Succession
2.1Stock Purchase Agreement between Mobiclear● 123Wish, Inc. and Whitefields Capital Limited entered November 12, 2009Incorporated by reference from the Current Report on Form 8-K filed November 17, 2009
2.2Stock Purchase Agreement between Intelligent Communication Enterprise Corporation and Whitefields Capital Limited entered January 20, 2010Incorporated by reference from the Current Report on Form 8-K filed January 25, 2010
2.3Sale and Purchase Agreement between Intelligent Communication Enterprise Corporation and Power Centre Holdings Limited dated June 11, 2010Incorporated by reference from the Current Report on Form 8-K filed June 17, 2010
2.4Agreement of Securities Exchange and Plan of Reorganization between Intelligent Communication Enterprise Corporation and One Horizon Group PLCIncorporated by reference from the Current Report on Form 8-K filed December 6, 2012
Item 3Articles of Incorporation and Bylaws
3.1Amended and Restated Articles of Incorporation of BICO, Inc. as filed with the Secretary of State of the Commonwealth of Pennsylvania
Incorporated by reference from the Current Report on Form 8-K filed November 12, 2004
3.2Certificate of Designation of Series M Preferred Stock as filed with the Secretary of State of the Commonwealth of Pennsylvania
Incorporated by reference from the Current Report on Form 8-K filed November 12, 2004
3.3Joint Second Amended Plan of Reorganization dated August 3, 2004Incorporated by reference from the Current Report on Form 8-K filed November 12, 2004
3.4Order Approving Joint Second Amended Plan of Reorganization dated October 14, 2004Incorporated by reference from the Current Report on Form 8-K filed November 12, 2004
56


3.5Amended and Restated Certificate of Designation for Series M PreferredIncorporated by reference from the Current Report on Form 8-K filed April 4, 2005
3.6By-Laws of MobiClear Inc. as amended on October 13, 2006Incorporated by reference from the Annual Report on Form 10-KSB for the year ended December 31, 2006, filed April 2, 2007
3.7Amendment to Articles of Incorporation as filed with the Secretary of State of the Commonwealth of PennsylvaniaIncorporated by reference from the Current Report on Form 8-K filed December 6, 2006
3.8Amendment to Articles of Incorporation as filed with Pennsylvania Department of State Corporate BureauIncorporated by reference from the Current Report on Form 8-K filed July 2, 2008
3.9Amendment to Articles of Incorporation as filed September 22, 2009, with the Pennsylvania Department of State Corporate BureauIncorporated by reference from the Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2009, filed October 29, 2009
3.10Amendment to Articles of Incorporation as filed November 30, 2009, with the Pennsylvania Department of State Corporate BureauIncorporated by reference from the Current Report on Form 8-K filed December 30, 2009
3.11Amendment to Articles of Incorporation as filed December 27, 2012, with the Pennsylvania Department of State Corporate BureauFiled as part of this reportin Incorporated by reference from the Current Report on Form 10-KT  filed on May 13, 20 Incorporated by reference from the Current Report on Form 10-K  filed on May 13, 2013
3.12Certificate of Designation of Series A Preferred Stock filed with NevadaIn cIncorporated by reference from the Current Report on Form 8-K filed on July 25, 2014
Item 4Instruments Defining the Rights of Security Holders, Including Debentures
4.1Specimen stock certificateIncorporated by reference from the Current Report on Form 10-KT  filed on May 13, 2013
Item 5Opinion re Legality
5.1Legal Opinion of Hunter Taubman Weiss, LLP
(incorporated by reference as Exhibit 5.1 to Amendment No. 1 to Form S-1 filed on April 24, 2015, file No. 333-201900)
Item 10Material Contracts
10.1Loan Agreement dated January 22, 2013 between the Company and Mark WhiteIncorporated by reference to the Quarterly Report on Form 10-Q/A filed on May 30, 2013
10.2Loan Agreement dated January 22, 2013 between the Company and Brian CollinsIncorporated by reference to the Quarterly Report on Form 10-Q/A filed on May 30, 2013
10.3Subscription Agreement, as amended, dated as of February 18, 2013, between the Company and Patrick SchildknechtIncorporated by reference to the Quarterly Report on Form 10-Q/A filed on May 30, 2013
10.4Warrant Agreement, dated as of February 18, 2013, between the Company and Patrick SchildknechtIncorporated by reference from the Current Report  on Form 10-8K filed September 5, 2013
10.5Amended and Restated Subscription Agreement, dated as of August 30, 2013, between the Company and Patrick SchildknechtIncorporated by reference from the Current Report  on Form 10-8K filed September 5, 2013
10.6Amended and Restated Warrant Agreement, dated as of August 30, 2013, between the Company and Patrick SchildknechtIncorporated by reference from the Current Report on Form 8-K filed September 5, 2013
10.7Acquisition Agreement with Clarita Ablazo Jeffery dated December 31, 2012Incorporated by reference from the Current Report on Form 10-KT  filed on May 13, 2013
10.8Agreement Of Securities Exchange And Plan Of Reorganization Between IntelligentIncorporated by reference from the Current Report on Form 8-K filed December 6, 2012
10.9Securities Purchase Agreement dated July 21, 2014Incorporated by reference from the Current Report on Form 8-K filed on July 25, 2014
10.10Form of Class B WarrantIncorporated by reference from the Current Report on Form 8-K filed on July 25, 2014
10.11Form of Class A WarrantIncorporated by reference from the Current Report on Form 8-K filed on July 25, 2014
10.12Amendment to Certain Transaction Documents dated August 15, 2014Incorporated by reference from the Current Report on Form 8-K filed on August 8, 2014
10.13Securities Purchase Agreement dated December 22, 2014Incorporated by reference from the Current Report on Form 8-K filed on December 29, 2014
10.14Form of Convertible DebentureIncorporated by reference from the Current Report on Form 8-K filed on December 29, 2014
10.15Registration Rights Agreement dated December 22, 2014Incorporated by reference from the Current Report on Form 8-K filed on December 29, 2014
10.16Form of Amended and Restated Class C WarrantIncorporated by reference from the Current Report on Form 8-K filed on January 23, 2015
10.17Form of Amended and Restated Class D WarrantIncorporated by reference from the Current Report on Form 8-K filed on January 23, 2015
10.18Form of Amended and Restated Performance WarrantIncorporated by reference from the Current Report on Form 8-K filed on January 23, 2015
10.19Form of Amended and Restated Placement Agent WarrantIncorporated by reference from the Current Report on Form 8-K filed on January 23, 2015
10.20Form of Independent Director Agreement between the Company and Richard Vos/Nicholas Carpinello/Robert LawIncorporated by reference from the Current Report on Form 8-K filed August 22, 2013
10.21Director Agreement between the Company and Robert Vogler dated January 8, 2014Incorporated by reference from the Current Report on Form 8-K filed January 13, 2014
10.23Indemnification Agreement between the Company and Brian CollinsIncorporated by reference from the Annaul Report on Form 10-K filed April 1, 2015
10.24Indemnification Agreement between the Company and Martin Ward datedIncorporated by reference from the Annaul Report on Form 10-K filed April 1, 2015
  51%
Item 14.Code of Ethics● One Horizon Hong Kong Ltd  100%
14.1Policy Statement on Business Ethics and Conflicts of Interest● Horizon Network Technology Co. Ltd Incorporated100%
● Love Media House, Inc100%
● Browning Productions & Entertainment, Inc.51%

In addition to the subsidiaries listed above, Suzhou Aishuo Network Information Co., Ltd (“Suzhou Aishuo”) is a limited liability company, organized in China and controlled by the Company via various contractual arrangements. Suzhou Aishuo is treated as one of our subsidiaries for financial reporting purposes in accordance with GAAP.

All significant intercompany balances and transactions have been eliminated in consolidation.

Note 2. Summary of Significant Accounting Policies

Liquidity and Capital Resources

Historically, the Company has incurred net losses and negative cash flows from operations which raise substantial doubt about the Company’s ability to continue as a going concern. The Company has principally financed these losses from the sale of equity securities and the issuance of debt instruments.

The Company may be required to raise additional funds through various sources, such as equity and debt financings. While the Company believes it is probable that such financings could be secured, there can be no assurance the Company will be able to secure additional sources of funds to support its operations, or if such funds are available, that such additional financing will be sufficient to meet the Company’s needs or on terms acceptable to us.

At June 30, 2019, the Company had cash of approximately$847,000. Together with the Company’s current operational plan and budget, the Company believes that it is probable that it will have sufficient cash to fund its operations into at least the fourth quarter of 2020. However, actual results could differ materially from the Company’s projections.

On August 5th, 2019 the Company entered into an Equity Purchase agreement with Crown Bridge Partners, LLC (“Crown”), whereby Crown are committed to purchase up to $10.0 million of new common stock from the Company at the Company’s option during the next three years. The amount is determined by the market value of trades and priced at an 18% discount to average market price. As of today no shares have been sold under the Crown Equity Purchase plan. In coordination with the Equity Purchase agreement the Company entered into a six month loan with Labrys Fund, LP of $180,000 issued at a 10% original issue discount, the Company therefore received net proceeds of $162,000. and an annual coupon rate of 12%.

However, actual results could materially differ from the Company’s projections. Accordingly, the Company may be required to raise additional funds through various sources. While the Company believes it is probable that such financings could be secured, there can be no assurance that the Company will be able to secure additional sources of funds to support its operations, or if such funds are available, that such additional financing will be sufficient to meet the Company’s needs or on terms acceptable to us.

Foreign Currency Translation

The reporting currency of the Company is the United States dollar. Assets and liabilities other than those denominated in U.S. dollars, primarily in 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 general and administrative expenses.

Accounts Receivable, Revenue Recognition and Concentrations

Performance Obligations- A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under the revenue recognition standard. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts do not typically have variable consideration that needs to be considered when the contract consideration is allocated to each performance obligation.

Revenue Recognition– We recognize revenues from each business segment as described below:

1.123Wish 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 referenceboth parties and the required marketing materials have been delivered to the corporate sponsor for their use.

2.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.

3.Browning Production & Entertainment, Inc derives income from the Annual Reportadvertising associated with the airing of television series produced by BP&E and also license income from the show of series on Form 10-KSBcertain channels based on the number of viewers attracted. Advertising revenue is recognized when the series to which the advertising relates is aired.

The Company does not have off-balance sheet credit exposure related to its customers. As of June 30, 2019 three customers accounted for 76% of the accounts receivable balance and as of December 31, 2018, three customers accounted for 68% of the accounts receivable balance. Three customers accounted for 34% of the revenue for the six months ended June 30, 2019 and one customer accounted for 82% of the revenue for the six months ended June 30, 2018.

Income Taxes

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 and such penalties could be material. 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. Accordingly no liability has been recorded in the accompanying consolidated balance sheets in respect of this matter.

F-31 

Net Loss per Share

Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the three and six month periods ended June 30, 2019 and 2018, outstanding warrants are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations.

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 period. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilities assumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases,” which created a new Topic, ASC Topic 842 and established the core principle that a lessee should recognize the assets, representing rights-of-use, and liabilities to make lease payments, that arise from leases. For leases with a term of 12 months or less, a lessee is permitted to make an election under which such assets and liabilities would not be recognized, and lease expense would be recognized generally on a straight-line basis over the lease term. This standard is effective for the Company beginning in 2019 and was adopted by the Company for the year beginning January 1, 2019. The Company has evaluated the impact of this revised guidance on its financial statements and determined it had no material impact, as the Company has no leasing arrangements with terms greater than one year.

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.

Note 3. Discontinued operations

In November 2018 the management of the Company’s then 51% controlled subsidiary, Banana Whale Studios PTE Ltd. (“BWS”), entered into discussions whereby the Company would sell its shares of BWS to a third party. Under the agreement, which has an effective date of January 1, 2019, the Company received cash of $1,500,000 and a promissory note of $500,000 and the return of the 7,383,000 Company shares issued on acquisition. The Company shares are held in Escrow for a minimum of three months to secure certain warranties given by the Company on closure.

The Company realized a gain of $553,000 on the sale of its 51% interest is BWS during the six months ended June 30, 2019.


Note 4. Intangible Assets

Intangible assets consists of the following (in thousands): 

  June 30  December 31 
  2019  2018 
       
Horizon software $567  $548 
Social online application software  2,307   2,307 
Customer lists  997   900 
         
   3,871   3,755 
Less accumulated amortization  (947)  (571)
         
Intangible assets, net $2,924  $3,184 

Note 5. Goodwill

Goodwill consists of the following (in thousands):

  June 30  December 31 
  2019  2018 
       
123Wish, Inc. $419  $419 
Love Media House, Inc.  1,172   1,172 
Browning Productions & Entertainment, Inc.  622   622 
  $2,213  $2,213 

Note 6. Equipment Note Payable

During the six months ended June 30, 2019, the Company financed the purchase of certain production equipment through a five year finance contract payable at $830 per month including interest of approximately 20% per annum.

Note 7. Amounts due to Related Parties

As of June 30, 2019, amounts totaling $205,000 (December 31, 2018 - $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.

b) Short term loan

The loan payable in the amount of $500,000 is due to Century River, a company controlled by the Company’s CEO, Mark White. This loan is due on demand and bears interest of 3% per annum.

c) Other notes payable.

Notes payable by Browning Productions & Entertainment, Inc. totaling $121,000 are due to unrelated parties and are repayable on demand and interest bearing at average rates of 5.4% per year.


Note 9. Share Capital

Common Stock

The Company is authorized to issue 200 million shares of common stock, par value of $0.0001.

During the six months ended June 30, 2019 the Company issued shares of common stock as follows:

·2,048,334 shares of common stock, with a fair value of $126,760, as additional compensation related to acquisition of Browning Production & Entertainment.

·5,000,000 shares of common stock, with a fair value of $150,000, for consulting services to be provided.

Stock Purchase Warrants

As at June 30, 2019, the Company had reserved 185,169 shares of its common stock for the outstanding warrants with weighted average exercise price of $0.80. Such warrants expire at various times through July 2020.

During the six months ended June 30, 2019, no warrants were issued, forfeited or exercised.

Note 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 have been no options issued in the six months ended June 30, 2019 and 2018 and there are no options outstanding as at June 30, 2019.

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 six months ended June 30, 2019, no common stock of the Company was issued under the 2018 Plan.  

F-34 

 

ONE HORIZON GROUP, INC.

1,221,309 Shares of

Common Stock

PROSPECTUS

_____________, 2019

Until ____________, 2019, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses payable by us in connection with the issuance and distribution of the securities being registered hereunder. No expenses will be borne by the Selling Stockholder. All of the amounts shown are estimates, except for the SEC registration fee.

Type Amount 
SEC registration fee $69.39 
Accounting fees and expenses*  5,000.00 
Legal fees and expenses*  5,000.00 
Printing expenses*  100,00 
Miscellaneous fees and expenses*  250.00 
Total expenses* $11,424.40 

*Estimated

Item 14. Indemnification of Directors and Officers

Articles 7 and 8 of our Certificate of Incorporation, as amended, provide as follows:

“7.To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or to its stockholders for monetary damages for any breach of fiduciary duty as a director. No amendment to, modification of or repeal of this paragraph shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.

8.The Corporation shall indemnify, advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except for claims for indemnification (following the final disposition of such Proceeding) or advancement of expenses not paid in full, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized in the specific case by the Board of Directors of the Corporation. Any amendment, repeal or modification of this paragraph shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.”

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us pursuant to the foregoing provisions or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

II-1 

Item 15. Recent Sales of Unregistered Securities

The following is a summary of transactions by us within the past three years involving sales or our securities that were not registered under the Securities Act.

During the period from January 1, 2019 through September 18, 2019 the Company:

Issued 100,000 (2,500,000 pre-reverse split) shares of common stock, with a fair value of $33,250, to Catalyst Corporate Solutions LLC for consulting services to be provided.
Issued 173,552 (4,338,793 pre-reverse split) shares of common stock, with a fair value of $86,342, to Crown Bridge Partners, LLC as a commitment fee for its commitment to enter into an equity line with the Company.
Issued 200,000 (5,000,000 pre-reverse split) shares of common stock, with a fair value of $150,000, for consulting services to be provided.

Issued 81,933 (2,048,334 pre-reverse split) shares of common stock to Browning Companies International LLC to modify Browning Exchange Agreement of 51% of Browning Productions & Entertainment, Inc., with a fair value of $126.760.

During the year ended December 31, 2018 the Company:

Issued 9,000 (225,000 pre-reverse split) shares of common stock for services with a fair value of $357,750
Issued 53,333 (1,333,334 pre-reverse split) shares of common stock, with a fair value of $1.4 million, for the year ended December 31, 2004, filed May 23, 2005acquisition of 51% of Once in a Lifetime
14.2Insider Trading PolicyIssued 4,000 (100,000 pre-reverse split) shares of common stock for services provided with a fair value of $204,000
Issued 20,167 (504,167 pre-reverse split) shares of common stock for conversion of convertible note and accrued interest in the amount of $302,500
Issued 6,889 (172,222 pre-reverse split) shares of common stock for conversion of convertible note and accrued interest in the amount of $103,000
Issued 6,889 (172,222 pre-reverse split) shares of common stock for services provided with a fair value of $200,000

Issued 30,000 (750,000 pre-reverse split) shares of common stock for exercise of warrants at a price of $18.75 ($0.75 pre-reverse split) per share.

Issued 2,000 (50,000 pre-reverse split) shares of common stock for services provided with a fair value of $80,000.
Issued 54,686 (1,376,147 pre-reverse split) shares of common stock, with a fair value of $1,541,285, as part consideration for the acquisition of Love Media House, Inc.
Issued 4,000 (100,000 pre-reverse split) shares of common stock for services to be provided with a fair value of $85,000.
Issued 9,000 (225,000 pre-reverse split) shares of common stock for services to be provided with a fair value of $168,750
Issued 34,000 (850,000 pre-reverse split) shares of common stock for services provided with a fair value of $425,000
Issued 295,320 (7,383,000 pre-reverse split) shares of common stock, for the acquisition of 51% of Banana Whale Studios Pte., Ltd see note 3.
Issued 63,000 (1,575,000 pre-reverse split) shares of common stock for services provided with a fair value of $787,500

Issued 34,000 (850,000 pre-reverse split) shares of common stock for exercise of warrants at a price of $12.50 ($0.50 pre-reverse split) per share

Issued 24,000 (600,000 pre-reverse split) shares of common stock for services provided with a fair value of $306,000
Issued 12,000 (300,000 pre-reverse split) shares of common stock for services provided with a fair value of $150,000

II-2 

 FiledIssued 70,000 (1,750,000 pre-reverse split) shares of common stock for cash of $5.00 ($0.20 pre-reverse split) per share

Issued 74,000 (1,850,000 pre-reverse split) shares of common stock for exercise of warrants at a price of $2.50 ($0.10 pre-reverse split) per share

Issued 1,400 (35,000 pre-reverse split) shares of common stock, with a fair value of $18,200, for an option to acquire an interest in Browning Productions.

Issued 61,000 (1,525,000 pre-reverse split) shares of common stock for cash of $114,375

Issued 39,000 (975,000 pre-reverse split) shares of common stock for exercise of warrants at a price of $1.875 ($0.075 pre-reverse split) per share

Issued 180,000 (4,500,000 pre-reverse split) shares of common stock for cash of $360,000

Issued 40,000 (1,000,000 pre-reverse split) shares of common stock for services provided with a fair value of $175,000

Issued 120,000 (3,000,000 pre-reverse split) shares of common stock for acquisition of software with a fair value of $548,000

Issued 6,000 (150,000 pre-reverse split) shares of common stock, with a fair value of $51,000, for the acquisition of 51% of Browning Productions.

Issued 222,000 (5,550,000 pre-reverse split) shares of common stock for services provided with a fair value of $1,148,000

Issued 170,000 (4,250,000 pre-reverse split) shares of common stock for cash of $324,500

Issued 170,000 (4,250,000 pre-reverse split) shares of common stock for exercise of warrants at a price of $5.00 ($0.20 pre-reverse split) per share

Issued 14,176 (354,409 pre-reverse split) shares of common stock, with a fair value of $96,000, pursuant to a settlement

Issued 80,000 (2,000,000 pre-reverse split) shares of common stock, with a fair value of $344,000, as an adjustment to the purchase price of Love Media House, Inc.

Issued 380,000 (9,500,000 pre-reverse split) shares of common stock for subscription receivable of $1,425,000

During the year ended December 31, 2017 the Company:

Issued 3,667 (91,667 pre-reverse split) shares of common stock for services provided with a fair value of $176,055

Issued 5,095 (127,366 pre-reverse split) shares of common stock for exercise of warrants at a price of $20.00 ($0.80 pre-reverse split) per share

Issued 1,658 (417,461 pre-reverse split) shares of common stock for cash proceeds of $265,000

Issued 171,960 (859,802 pre-reverse split) shares of common stock for settlement of related party loan in the amount of $662,048

Issued 120,000 (3,000,000 pre-reverse split) shares of common stock in connection with five year employment contracts for executives with a fair value of $2,750,000

Issued 2,222 (55,556 pre-reverse split) shares of common stock for exercise of warrants at a price of $20.00 ($0.80 pre-reverse split) per share

Issued 1,500 (37,500 pre-reverse split) shares of common stock for settlement of amount owing of $30,000

Issued 520,000 (13,000,000 pre-reverse split) shares of common stock as part of this reportsettlement of convertible debenture and accrued interest in the amount of $3,350,000
57


Item 21.Subsidiaries of the Registrant
 21.1ScheduleIssued 160,000 (4,000,000 pre-reverse split) shares of SubsidiariesIncorporated by reference from the Current Report on Form 10-KT  filed on May 13, 2013common stock for redemption of 555,555 pre-reverse split) shares of Series A-1 Preferred Stock
Item 23.Consent of Experts and Counsel

 23.1Consent from Hunter Taubman Weiss LLP
(incorporated by reference as Exhibit 23.1 to Amendment No. 1 to Form S-1 filed on April 24, 2015, file No. 333-201900)
Issued 4,333 (108,333 pre-reverse split) shares of common stock for services provided with a fair value of $83,416

 23.2ConsentIssued 33,333 (833,334 pre-reverse split) shares of Peterson Sullivan LLP
(incorporated by reference as Exhibit 23.2 to Amendment No. 1 to Form S-1 filed on April 24, 2015, file No. 333-201900)
common stock for the exercise of warrants at a price of $15.00 ($0.60 pre-reverse split) per share
Item 31.Rule 13a-14(a)/15d-14(a) Certifications

 31.1CertificationIssued 43,000 (1,075,000 pre-reverse split) shares of Principal Executive Officer Pursuant to Rule 13a-14Incorporated by reference from the Current Report on Form 10-KT  filed on May 13, 2013common stock for services provided with a fair value of $1,161,000

 31.2CertificationIssued 14,000 (350,000 pre-reverse split) shares of Principal Financial Officer Pursuant to Rule 13a-14Incorporated by reference fromcommon stock for the Current Report on Form 10-KT  filed on May 13, 2013exercise of warrants at a price of $15.00 ($0.60 pre-reverse split) per share
Item 32.Section 1350 Certifications

 32.1CertificationIssued 6,200 (155,000 pre-reverse split) shares of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906common stock for the exercise of the Sarbanes-Oxley Actwarrants at a price of 2002Incorporated by reference from the Current Report on Form 10-KT  filed on May 13, 2013
32.2Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(incorporated by reference as Exhibit 23.3 to Amendment No. 1 to Form S-1 filed on April 24, 2015, file No. 333-201900)
$20.00 ($0.80 pre-reverse split) per share

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ITEM

During the year ended December 31, 2016 the Company:

Issued 1,333 (33,333 pre-reverse split) shares of common stock for services to be provided with a fair value of $133,960
Issued 6,793 (169,821 pre-reverse split) shares of common stock for cash proceeds of $400,000
Issued 300 (7,500 pre-reverse split) shares of common stock for services received with a fair value of $33,750
Issued 3,049 (76,228 pre-reverse split) shares of common stock in part settlement of accrued compensation in the amount of $160,535

Unless otherwise provided, the issuance of the foregoing shares were exempt from the registration requirements of the Securities Act under Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act. The certificates representing the foregoing shares were endorsed with the customary Securities Act restrictive legend.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits.

See the Exhibit Index on the page immediately preceding the exhibits for a list of exhibits filed as part of this registration statement on Form S-1, which Exhibit Index is incorporated herein by reference.

(b) Financial Statement Schedules.

None.

Item 17. UNDERTAKINGS

Undertakings

(a) The undersigned registrant hereby undertakes to:


undertakes:

(1) File,To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:


statement:

(i) IncludeTo include any prospectus required by Sectionsection 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");


1933;

(ii) ReflectTo reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or together,in the aggregate, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of the securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement, and


statement.

(iii) IncludeTo include any additional or changed material information onwith respect to the plan of distribution.


distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) ForThat, for the purpose of determining any liability under the Securities Act treatof 1933, each such post-effective amendment asshall be deemed to be a new registration statement ofrelating to the securities offered therein, and the offering of thesuch securities at that time shall be deemed to be the initial bona fide offering.


offering thereof.

(3) FileTo remove from registration by means of a post-effective amendment to remove from registration any of the securities thatbeing registered which remain unsold at the endtermination of the offering.

(4)

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

(5) Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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(4) That, for purposes of determining liability under the Securities Act to any purchaser:

(i) If the registrant is relying on Rule 430B:

(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (§ 230.424(b)(2), (b)(5), or (b)(7) of this chapter) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) (§ 230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c)        The undersigned registrant hereby undertakes that:

(1) For the purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) or under the securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities as that time shall be deemed to be the initial bona fide offering thereof.

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58

SIGNATURES


Pursuant to the requirements of the Securities Act of 1933, the Registrantregistrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing Form S-1 and authorized tohas duly caused this Amendment No. 1 to Registration Statementregistration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in Miami, Florida, on April 24, 2015.

September 18, 2019.

 ONE HORIZON GROUP, INC.
  
 By: /s/ Brian CollinsMark White
  
Brian Collins
Mark White

President and Chief Executive Officer

(Principal Executive Officer) 

   
 By:/s/ Martin Ward
Martin Ward
  
Martin Ward,
Chief Financial Officer Principal
Finance and Accounting Officer and Director
  (Principal Financial and Accounting Officer)
In accordance

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Mark White and Martin Ward, and each of them severally, as his true and lawful attorney in fact and agent, with full powers of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post effective amendments) to the Registration Statement, and to sign any registration statement for the same offering covered by this Registration Statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and all post effective amendments thereto, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statementregistration statement on Amendment No. 1 to Form S-1 washas been signed below by the following persons in the capacities and on the dates stated.

September 18, 2019.

Signature/s/ Mark White
Mark White

President, Chief Executive Officer and a Director  

(Principal Executive Officer)  

/s/ Martin Ward

Martin Ward  

Chief Financial Officer  

(Principal Financial and Accounting Officer) 

/s/ Richard Vos

Richard Vos  

Director 

/s/ Nicholas Carpinello

Nicholas Carpinello  

Director

/s/ Robert Law

Robert Law  

Director

/s/ Ajing Zhang

Ajing Zhang  

Director

/s/ Pengfei Li

Pengfei Li  

Director

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Exhibit Index

Exhibit
Number
 Title of Document DateLocation
     
/s/ Brian CollinsItem 2 President, Chief Executive Officer, and Director
April 24, 2015
Brian CollinsPlan of acquisition, reorganization, arrangement, liquidation or succession  
     
/s/ Martin Ward2.1 Chief Financial Officer, Principal FinanceAgreement and Accounting Officer and DirectorPlan of Merger effective as of August 26, 2013 
April 24, 2015
Incorporated by reference from Definitive Information Statement on Form 14C Appendix C filed May 26, 2013
Martin Ward  
2.2Stock Purchase Agreement with Brian Collins dated August 11, 2017Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed August 14, 2017
Item 3Articles of Incorporation and Bylaws  
     
/s/ Richard Vos3.1 DirectorAmendment to Articles of Incorporation as filed December 27, 2012, with the Pennsylvania Department of State Corporate Bureau 
April 24, 2015
Incorporated by reference from the Current Report on Form 10-K filed May 13, 2013
Richard Vos  
3.2Amendment to Articles of Incorporation as filed, with the Pennsylvania Department of State Corporate BureauIncorporated by reference from Definitive Information Statement on Form 14C Appendix B filed May 26, 2013
3.3Amended and restated articles of incorporation of BICO, Inc as filed,  with the Pennsylvania Department of State Corporate BureauIncorporated by reference from Definitive Information Statement on Form 14C Appendix F filed May 26, 2013
3.4Bylaws of BICO, Inc. as filed, with the Pennsylvania Department of State Corporate BureauIncorporated by reference from Definitive Information Statement on Form 14C Appendix G filed May 26, 2013
3.5Certificate of incorporation of  One Horizon Group, Inc., as filed, with Delaware Secretary of StateIncorporated by reference from Definitive Information Statement on Form 14C Appendix D filed May 26, 2013
3.6Certificate of Amendment to Certificate of Incorporation effecting a 1-for-6 reverse stock splitIncorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed May 1, 2017.
3.7Certificate of Designation for Series A-1 Convertible Preferred StockIncorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed July 14, 2017.
3.8Bylaws of One Horizon Group, Inc., as filed, with Delaware Secretary of StateIncorporated by reference from Definitive Information Statement on Form 14C Appendix E filed May 26, 2013

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Item 4Instruments defining the rights of security holders  
     
/s/ Nicholas Carpinello4.1 DirectorCommon Stock Purchase Warrant dated May 1, 2013 
April 24, 2015
Incorporated by reference to Exhibit 4.1 of Quarterly Report on Form 10-Q/A filed May 30, 2013
Nicholas Carpinello  
4.2Form of Class A WarrantIncorporated by reference from Current Report on Form 8-K filed July 25, 2014.
4.3Form of Class B WarrantIncorporated by reference from Current Report on Form 8-K filed July 25, 2014
4.5Form of Convertible DebentureIncorporated by reference from Current Report on Form 8-K filed December 29, 2014
4.6Form of Amended and Restated Class C WarrantIncorporated by reference from Current Report on Form 8-K filed January 23, 2015
4.7Form of Amended and Restated Class D WarrantIncorporated by reference from Current Report on Form 8-K filed January 23, 2015
4.8Form of Amended and Restated Performance WarrantIncorporated by reference from Current Report on Form 8-K filed January 23, 2015
4.9Form of Amended and Restated Placement Agent WarrantIncorporated by reference from Current Report on Form 8-K filed January 23, 2015
4.10Form of WarrantIncorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed July 18, 2017
4.11Form 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
4.12Form 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
4.13Form of Warrant Agency Agreement by and between One Horizon Group, Inc. and Island Stock Transfer.To be filed by amendment.
4.14Form of Representative’s Warrant between One Horizon Group, Inc. and Maxim Group LLC.To be filed by amendment.
Item 5Opinion re Legality  
     
/s/ Robert Vogler5.1 DirectorForm of Opinion of the Law Office of Anthony L.G., PLLC 
April 24, 2015
Filed herewith

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Item 10Material Contracts
Robert Vogler    
/s/ Robert Law10.1 DirectorLoan Agreement dated January 22, 2013 between the Company and Mark White 
April 24, 2015
Incorporated by reference to the Quarterly Report on Form 10-Q/A filed on May 30, 2013
Robert Law    
10.2Loan Agreement dated January 22, 2013 between the Company and Brian CollinsIncorporated by reference to the Quarterly Report on Form 10-Q/A filed on May 30, 2013
10.3Subscription Agreement, as amended, dated as of February 18, 2013, between the Company and Patrick SchildknechtIncorporated by reference to the Quarterly Report on Form 10-Q/A filed on May 30, 2013
10.4Warrant Agreement, dated as of February 18, 2013, between the Company and Patrick SchildknechtIncorporated by reference from the Current Report  on Form 10-8K filed September 5, 2013
10.5Advisory Agreement dated as of April 15, 2013 between the Company and TriPoint Global Equities, LLCIncorporated by reference to the Quarterly Report on Form 10-Q/A filed on May 30, 2013
10.6Amended and Restated Subscription Agreement, dated as of August 30, 2013, between the Company and Patrick SchildknechtIncorporated by reference from the Current Report  on Form 10-8K filed September 5, 2013
10.7Amended and Restated Warrant Agreement, dated as of August 30, 2013, between the Company and Patrick SchildknechtIncorporated by reference from the Current Report on Form 8-K filed September 5, 2013 
10.8Form of Independent Director Agreement between the Company and Richard Vos/Nicholas Carpinello/Robert LawIncorporated by reference from the Current Report on Form 8-K filed August 22, 2013
10.9From of Indemnification Agreement between the Company and Richard Vos/Nicholas Carpinello/Robert LawIncorporated by reference from the Current Report on Form 8-K filed August 22, 2013
10.10Agreement, 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
10.11Director Agreement between the Company and Robert Vogler dated January 8, 2014Incorporated by reference from the Current Report on Form 8-K filed January 13, 2014
10.12Securities Purchase Agreement dated July 21, 2014Incorporated by reference from the Current Report on Form 8-K filed on July 25, 2014

10.13

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
10.14Form of Stock Purchase Agreement dated August 10, 2017 with Brian Collins, former CEOIncorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed August 14, 2017  
10.15Amendment to Certain Transaction Documents dated August 15, 2014Incorporated by reference from the Current Report on Form 8-K filed on August 8, 2014

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10.16Securities Purchase Agreement dated December 22, 2014Incorporated by reference from the Current Report on Form 8-K filed on December 29, 2014
10.17Agreement with Zhanming Wu for conversion of Convertible DebentureIncorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed September 8, 2017
10.18Registration Rights Agreement dated December 22, 2014Incorporated by reference from the Current Report on Form 8-K filed on December 29, 2014
10.19Agreement with Mark White dated August 4, 2017 for Exchange of Series A-1 Preferred StockIncorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed September 8, 2017
10.20Consulting Agreement dated October 17, 2017 with Bespoke Growth Partners, Inc.Incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-3 (File No. 333-221300) filed October 17,  2017
10.21Agreement dated December 6, 2017 with Maxim Group LLCIncorporated by reference to Exhibit 10.21 to Annual Report on Form 10-K filed April 2, 2018
10.22Agreement dated December 13, 2017 with First Choice International Company, Inc.Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed December 19, 2017
10.23Indemnification Agreement between the Company and Brian CollinsIncorporated by reference from the Annual Report on Form 10-K filed on April 1, 2015
10.24Indemnification Agreement between the Company and Martin Ward datedIncorporated by reference from the Annual Report on Form 10-K filed on April 1, 2015
10.25Form 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.
10.26Exchange Agreement dated January 18, 2018 with Once In A Lifetime, LLCIncorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed January 24, 2018
10.27Exchange 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 WhiteIncorporated by reference to Exhibit 10.28 to Annual Report on Form 10-K filed April 2, 2018
10.29†Employment Agreement with Martin WardIncorporated by reference to Exhibit 10.29 to Annual Report on Form 10-K filed April 2, 2018
10.30†2018 Equity Incentive PlanIncorporated by reference to Exhibit 10.30 to Annual Report on Form 10-K filed April 2, 2018
10.31Subscription Agreement with BK Consulting Group, LLCIncorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-3 (Registration No. 333-225945) filed on June 28, 2018 and declared effective on August 7, 2018

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59

10.32Verified Complaint in the Wu LitigationIncorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 7, 2018
10.33Exchange Agreement with stockholders of Banana Whale Studios Pte. Ltd.Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on form 8-K filed on May 18, 2018
10.34Escrow Agreement between the Company and the stockholders of Banana Whale Studios Pte. Ltd.Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 10, 2018
10.35Subscription Agreement with First Choice International Company, Inc.Incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-3 (Registration No. 333-227247 ) filed on September 10, 2018 and declared effective on September 14, 2018
10.36Settlement Agreement relating to the Wu LitigationIncorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-3 (Registration No. 333-227971) filed on October 24, 2018 and declared effective on November 2, 2018
10.37Exchange Agreement with Browning Productions & Entertainments, Inc.Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 24, 2018
10.38Subscription Agreement with Bespoke Growth Partners, Inc.Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on September 21, 2018
10.39Securities Purchase Agreement with First Choice International Company, Inc.Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 19, 2018
10.40Consulting Agreement with One Percent Investments, Inc.Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 10-Q filed on November 16, 2018
10.41Securities Purchase Agreement with Bespoke Growth Partners, Inc.Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 10-Q filed on November 16, 2018
10.42Securities Purchase Agreement with BK Consulting Group, LLC.Incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 10-Q filed on November 16, 2018
10.43Agreement dated as of February 4, 2019 relating to the Disposition of Banana Whale Studios Pte Ltd.Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 5, 2019

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10.44Promissory Note of Banana Whale Studios Pte Ltd dated February 4, 2019.Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 5, 2019
10.45Pledge and Escrow Agreement dated as of February 4, 2019.Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 5, 2019
10.46Exchange Agreement dated as of February 20, 2019 with Maham LLC.Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 21, 2019
10.47Consulting Agreement with One Percent Investments, Inc.Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 11, 2019
10.48Equity Purchase Agreement entered into on August 5, 2019 and dated as of July 18, 2019, with Crown Bridge Partners, LLCIncorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 9, 2019
10.49Registration Rights Agreement entered into on August 5, 2019 and dated as of July 18, 2019, with Crown Bridge Partners, LLCIncorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 9, 2019
10.50Convertible promissory note issued to Bespoke Growth Partners, Inc. on July 11, 2019Filed herewith.

Item 14.Code of Ethics
14.1Policy Statement on Business Ethics and Conflicts of InterestIncorporated by reference from the Annual Report on Form 10-KSB for the year ended December 31, 2004, filed May 23, 2005
14.2Insider Trading PolicyIncorporated by reference from the Registration Statement on Form S-1 filed February 5, 2015
Item 21.Subsidiaries
21.1SubsidiariesFiled herewith.
Item 23.Consents
Item 23.1Consent of Cherry Bekaert, LLPFiled herewith.
Item 23.2Consent of Anthony L.G., PLLC (included in Exhibit 5.1)Filed herewith
Item 24.1Power of Attorney (included on the signature page of the initial filing of this Registration Statement)Filed herewith

† Includes management contracts and compensation plans and arrangements

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