Touchpoint (TGHI) 10-Q 14 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 06, 2017
Document And Entity Information
Entity Registrant Name	One Horizon Group, Inc.
Entity Central Index Key	225,211
Document Type	10-Q
Trading Symbol	OHGI
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		1,082,743
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash	$ 170	$ 106
Accounts receivable, net		2
Prepaid compensation, current	607	131
Current assets of continued operations	777	239
Current assets of discontinued operations		1,696
Total current assets	777	1,935
Property and equipment, net	1	16
Intangible assets, net	5,745	6,190
Prepaid compensation, non current	2,155
Non current assets of discontinued operations		2,265
Total assets	8,678	10,406
Current liabilities:
Accounts payable	98	177
Accrued expenses	590	188
Accrued compensation	70	151
Convertible debenture	3,493	3,068
Current liabilities of discontinued operations	4,251	3,584
Current liabilities of discontinued operations		300
Total current liabilities	4,251	3,884
Long-term liabilities
Amount due to related parties		2,343
Long term liabilities of discontinued corporation		234
Total liabilities	4,251	6,461
Equity
Preferred stock:$0.0001 par value, authorized 50,000,000; issued and outstanding 555,555 shares (December 2016 - 170,940)	1	1
Common stock: $0.0001 par value, authorized 33,333,333 shares issued and outstanding ,9135,181 shares (December 2016 - 6,144,762)	1	1
Additional paid-in capital	41,863	37,504
Accumulated Deficit	(37,416)	(33,590)
Accumulated other comprehensive income	(22)	29
Total One Horizon Group, Inc., stockholders' equity	4,427	3,945
Total liabilities and equity	$ 8,678	$ 10,406

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock authorized	50,000,000	50,000,000
Preferred stock issued	555,555	170,940
Preferred stock outstanding	555,555	170,940
Common stock par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock authorized	33,333,333	33,333,333
Common stock issued	9,135,181	6,144,762
Common stock outstanding	9,135,181	6,144,762

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Revenue	$ 397	$ 1	$ 514	$ 32
Cost of revenue - Hardware, calls and network charges	1	7	1	32
Cost of revenue - Amortization of software development costs	405	22	449	68
Total cost of revenue	406	29	450	100
Gross margin	(9)	(28)	64	(68)
Expenses:
General and administrative	338	482	911	1,470
Depreciation	2	7	16	21
Total expenses	340	489	927	1,491
Loss from operations	(349)	(517)	(863)	(1,559)
Other income and expense:
Interest expense	(179)	(178)	(536)	(533)
Foreign exchange		1	1	2
Total other income and expense	(179)	(177)	(535)	(531)
Loss before income taxes for continuing operations	(528)	(694)	(1,398)	(2,090)
Income tax benefit
Loss after income taxes for continuing operations	(528)	(694)	(1,398)	(2,090)
Loss from discontinued operations	(244)	(799)	(2,428)	(2,079)
Net Loss	(772)	(1,493)	(3,826)	(4,169)
Less: Preferred Dividends				(50)
Net loss attributable to One Horizon Group Inc. common stockholders	$ (772)	$ (1,493)	$ (3,826)	$ (4,219)
Earnings per share
Basic and diluted net loss per share - continuing operations (in dollars per share)	$ (0.07)	$ (0.12)	$ (0.21)	$ (0.36)
Basic and diluted net loss per share - discontinued operations (in dollars per share)	$ (0.03)	$ (0.08)	$ (0.36)	$ (0.35)
Weighted average number of shares outstanding
Basic and diluted (in shares)	7,541	5,864	6,680	5,861

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Net loss	$ (772)	$ (1,493)	$ (3,826)	$ (4,169)
Other comprehensive (loss):
Foreign currency translation adjustment income/(loss)	(221)	320	(51)	146
Total Comprehensive loss	$ (993)	$ (1,173)	$ (3,877)	$ (4,023)

Condensed Consolidated Stateme6

Condensed Consolidated Statement of Equity (unaudited) - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at beginning at Dec. 31, 2016	$ 1	$ 1	$ 37,504	$ (33,590)	$ 29	$ 3,945
Balance at beginning (in shares) at Dec. 31, 2016	171	6,145
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)				(3,826)		(1,398)
Foreign currency translations					(51)	(51)
Shares issued for services			176			$ 176
Shares issued for services (in shares)		92				91,667
Shares issued for cash			265			$ 265
Shares issued for cash (in shares)		417				417,461
Shares issued on exercise of warrants			146			$ 146
Shares issued on exercise of warrants (in shares)		183
Shares issued in settlement of related party debts			662			$ 662
Shares issued in settlement of related party debts (in shares)		860				859,802
Warrants issued for services			123			$ 123
Shares issued for amounts owing			30			30
Shares issued for amounts owing (in shares)		37
Amendment to preferred stock agreement
Amendment to preferred stock agreement (in shares)	385
Shares issued for services			145			145
Shares issued for services (in shares)		3,000
Reclassification of mandatorily redeemable preferred shares			62			62
Balance at ending at Sep. 30, 2017	$ 1	$ 1	$ 41,863	$ (37,416)	$ (22)	$ 4,427
Balance at ending (in shares) at Sep. 30, 2017	556	10,734

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net loss for the period	$ (1,398,000)	$ (2,090,000)
Adjustment to reconcile net loss for the period to net cash flows from operating activities:
Depreciation of property and equipment	18,000	21,000
Amortization of intangible assets	449,000	68,000
Amortization of debt issue costs	99,000	99,000
Amortization of beneficial conversion feature	76,000	75,000
Amortization of debt discount	150,000	150,000
Amortization of shares issued for signing management contracts	46,000
Warrants issued for services	123,000
Amortization of shares issued for services	46,000
Options issued for services	145,000	563,000
Changes in operating assets and liabilities:
Accounts receivable	2,000
Other assets	12,000	49,000
Accounts payable and accrued expenses	242,000	71,000
Net cash flows from continuing operating activities	10,000	(994,000)
Net cash flows from discontinued operating activities	(374,000)	(99,000)
Net cash flows from total operating activities	(364,000)	(1,093,000)
Cash used in investing activities:
Acquisition of property and equipment	(1,000)	(2,000)
Net cash flows from investing activities continuing operations	(1,000)	(2,000)
Net cash flows from investing activities discontinued operations	(261,000)	(339,000)
Net cash flows from investing activities total operations	(262,000)	(341,000)
Cash flows from financing activities:
Proceeds from issuance of common stock	265,000	125,000
Proceeds from exercise of warrants	146,000
Advances from (repayments to) related parties, net	100,000	(11,000)
Dividends paid		(50,000)
Net cash flows from financing activities continuing operations	511,000	64,000
Net cash flows from financing activities discontinued operations		(5,000)
Net cash flows from financing activities total operations	511,000	59,000
Decrease in cash during the period	(115,000)	(1,375,000)
Foreign exchange effect on cash	26,000	(93,000)
Cash at beginning of the period - discontinued operations	153,000	160,000
Cash at beginning of the period - continuing operations	106,000	1,612,000
Cash at end of the period	170,000	304,000
Supplementary Information:
Interest paid		69,000
Income taxes paid
Reclassification of mandatorily redeemable preferred shares	62,000
Forgiveness of related party dept for stock	662,000
Forgiveness of related party dept for sale of discontinued assets	$ 1,968,000

Description of Business, Organi

Description of Business, Organization and Principles of Consolidation	9 Months Ended
	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business, Organization and Principles of Consolidation	Note 1. Description of Business, Organization and Principles of Consolidation Description of Business One Horizon Group, Inc (“the Company”) has proprietary digitally secure messaging software and sells licenses primarily into the gaming, security and educational markets. The Company is based in Hong Kong, 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 normal 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 the Securities and Exchange Commission’s rules and regulations. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the Securities and Exchange Commission on April 10, 2017. Principles of Consolidation The consolidated financial statements include the accounts of One Horizon Group, Inc. and its wholly owned subsidiaries Global Phone Credit Limited, One Horizon Hong Kong Limited and Horizon Network Technology Co. Ltd. (“HNT”). The accounts of the former subsidiaries, One Horizon Group plc, Horizon Globex GmbH, Abbey Technology GmbH and Horizon Globex Ireland Limited are included up to the date of Reorganization (Note 3). In addition, included in the consolidated financial statements as of and for the nine months ended September 30, 2017 and 2016, are the accounts of Suzhou Aishuo Network Information Co., Ltd. which is controlled by One Horizon Group, Inc. through various contractual arrangements. All significant intercompany balances and transactions have been eliminated.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Note 2. Summary of Significant Accounting Policies Liquidity and Capital Resources As a result of the Reorganization in August 2017, more fully described in note 3, the Company will pursue its revised operations and business plan. The Company expects to incur further non cash losses in 2017 which, when combined with any costs incurred in pursuing acquisition of new businesses, may generate negative cash flows. As of September 30, 2017, the Company did not have any available credit facilities. As a result, it is in the process of seeking new financing by way of sale of either convertible debt or equities. While it has been successful in the past in obtaining the necessary capital to support its investment and operations, there is no assurance that it will be able to obtain additional financing under acceptable terms and conditions, or at all. In the event that the Company is unable to obtain sufficient additional funding when needed in order to fund operations, it would not be able to continue as a going concern and may be forced to severely curtail or cease operations and liquidate the Company. The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of assets or amounts of liabilities that might result from the outcome of these uncertainties. The Company’s current independent registered public accounting firm included a paragraph emphasizing this going concern uncertainty in their audit report regarding the Company’s 2016 financial statements dated April 10, 2017. 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 Hong Kong, , 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 Pursuant to the Reorganization the Company recognizes revenue from the sale of licenses of the digitally secure messaging on a invoice basis at September 30, 2017 the Company had collected all receivables on invoices raised to that date. Intangible Assets Intangible assets include software development costs and are amortized on a straight-line basis over the estimated useful lives of ten years for software development costs. 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. 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. 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, result in penalties. The Company is currently addressing this issue with advisors to determine the amount, if any, of potential payments due. Given the complexity of the issue the Company is unable to quantify a range of potential loss, if any. Accordingly, no liability has been recorded in the accompanying condensed 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 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 nine month periods ended September 30, 2017 and 2016, outstanding stock options and warrants (totaling 494,000) 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 loss, foreign currency translation adjustments, 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 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. 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. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The adoption of ASU 2017-11, during the nine months ended September 30, 2017, did not have any impact on the condensed consolidated financial statements and related disclosures.

Reorganization

Reorganization	9 Months Ended
	Sep. 30, 2017
Discontinued Operations and Disposal Groups [Abstract]
Reorganization	Note 3. Reorganization On August 11, 2017 (date of Reorganization), the Company consummated a Stock Purchase Agreement whereby its former Chief Executive Officer (“Former CEO”) acquired all of the outstanding capital stock of three of the Company’s subsidiaries, Abbey Technology GmbH, Horizon Globex GmbH and Horizon Globex Ireland Ltd., and approximately 99.7% of the outstanding shares in One Horizon Group plc (collectively the “Discontinued Entities”) from the Company in exchange for the forgiveness of $1,968,253 due by the Company to the Former CEO. In connection with the transaction, the Former CEO (See note 5) and the Discontinued Entities released the Company and its remaining subsidiaries (the “Excluded Entities”) from any claims outstanding as of the date of the transaction and the Company and the Excluded Entities released the Discontinued Entities from any outstanding claims. In contemplation of the Stock Purchase Agreement, 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 transaction was consummated. The Company’s condensed consolidated balance sheet as at December 31, 2016 has been adjusted to properly account for the current and noncurrent assets, current and noncurrent liabilities of discontinued operations separate from the current and noncurrent assets and current and noncurrent liabilities of the Excluded Entities. Adjustments to December 31, 2016 Balance Sheet for Discontinued operations Current assets of discontinued operations Cash $ 153 Accounts receivable, net 1,206 Other assets 337 $ 1,696 Noncurrent assets of discontinued operations Property and equipment (net) $ 26 Intangible assets, net 2,222 Investment 17 $ 2,265 Current liabilities of discontinued operations Accounts payable $ 187 Accrued expenses 18 Accrued compensation 5 Income taxes 90 $ 300 Long-term liabilities of discontinued operations Deferred income taxes $ 172 Mandatorily redeemable shares 62 $ 234 Loss from Discontinued Operations The Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2017 include operations of the Discontinued Entities up to the date of the Reorganization in Loss from Discontinued Operations. The Company’s condensed consolidated balance sheets, statements of operations for the three and nine months ended September 30, 2016 and statements of cash flows for the nine months ended September 30, 2016 have been adjusted to properly account for the discontinued operations as follows: (in thousands) Three Months ended September 30, Nine Months ended September 30, 2017 2016 2017 2016 Revenue $ 5 $ 286 $ 443 $ 1,230 Cost of Revenue Hardware — 5 5 55 Amortization 39 491 1,007 1,450 39 496 1,012 1,505 Gross Margin (34 ) (210 ) (569 ) (275 ) Expenses General and administrative 159 540 998 1,393 Depreciation 1 8 5 24 Research and development — 51 255 425 160 599 1,258 1,842 Other income (loss) — (1 ) — 6 Impairment Loss (50 ) — (622 ) — Income Taxes — 11 21 32 Loss from Discontinued Operations $ (244 ) $ (799 ) $ (2,428 ) $ (2,079 )

Intangible Assets

Intangible Assets	9 Months Ended
	Sep. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	Note 4. Intangible Assets Intangible assets consist primarily of software development costs which are amortized over the estimated useful life, generally on a straight-line basis (in thousands) September 30 December 31 2017 2016 Horizon secure messaging software $ 6,517 $ 6,498 Less accumulated amortization (772 ) (308 ) Intangible assets, net $ 5,745 $ 6,190 Amortization of intangible assets for each of the next four years is estimated to be approximately $1,500,000 per year

Related-Party Transactions

Related-Party Transactions	9 Months Ended
	Sep. 30, 2017
Related Party Transactions [Abstract]
Related-Party Transactions	Note 5. Related-Party Transactions During the nine months ended September 30, 2017, $1,968,253 due to the Former CEO, Brian C Collins was forgiven in the reorganization whereby he acquired ownership of the Discontinued Entities (Note 3). After an impairments charge of $572,000 incurred in the three months to June 30, 2017 the net assets disposed of was equal to the amount due to the former CEO. During the nine months ended September 30, 2017 $662,048 due to the Chief Financial Officer was converted at the prevailing market price of $0.77 to 859,802 shares of common stock.

Convertible Debentures

Convertible Debentures	9 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
Convertible Debentures	Note 6. Convertible Debentures. In the three months ended September 30, 2017 the Company signed a convertible debenture in the amount of $100,000 to an individual repayable in July 2018 with interest at 10% per year and convertible into common stock at $0.60 at the holders option.

Share Capital

Share Capital	9 Months Ended
	Sep. 30, 2017
Stockholders' Equity Note [Abstract]
Share Capital	Note 7. 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. During the nine months ended September 30, 2017, pursuant to an agreement between the Company and the holders of the Series A preferred stock, the stock was re-designated as Series A-1 Preferred Stock, outstanding shares increased to 555,555 shares with a redemption price of $1.80, dividends of 10% per annum and the redemption date extended to February 1, 2018. Common Stock The Company is authorized to issue 33.3 million shares of common stock, par value of $0.0001, after giving effect to the, one new share for every six old shares, reverse stock split which was approved by the stock holders on April 19, 2017. During the nine months ended September 30, 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 for employment commencement of 5 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 shares ● Issued 37,500 shares of common stock for settlement of amount owing of $30,000 Stock Purchase Warrants At September 30, 2017, the Company had reserved 578,014 shares of its common stock for the outstanding warrants with weighted average exercise price of $17.98. Such warrants expire at various times up to December 2019 and had no intrinsic value as at September 30, 2017. During the nine months ended September 30, 2017, 238,095 warrants were forfeited, 349,095 warrants were issued, for services performed and valued under the Black-Scholes valuation method, and 182,922 warrants were exercised. The assumptions used in calculating the fair value under the Black-Scholes option valuation model for warrants issued by the Company during the nine months ended September 30, 2017: Common stock fair value $ 1.92 Risk-free interest rate 2.5 % Expected dividend yield 0 % Expected warrant life (years) 0.5 Expected stock volatility 107 % Stock 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 nine months ended September 30, 2017. A summary of the 2013 Plan options for the nine months ended September 30, 2017, is as follows: Number of Weighted Average Options Exercise Price Outstanding at January 1, 2017 141,250 $ 14.83 Forfeited (32,200 ) 22.61 Outstanding at September 30, 2017 109,050 18.71 As at September 30, 2017 there was unrecognized compensation expense of approximately $86,000 to be recognized over the remaining vesting periods. At September 30, 2017, 109,050 shares of common stock were reserved for all outstanding options and future commitments under the 2013 Equity Incentive Plan. Prior to the 2013 Plan the Company issued stock options to employees. A summary of the Company’s other stock options for the nine months ended September 30, 2017, is as follows: Number of Weighted Average Options Exercise Price Outstanding at January 1, 2017 and September 30, 2017 145,950 $ 3.18

Segment Information

Segment Information	9 Months Ended
	Sep. 30, 2017
Segment Reporting [Abstract]
Segment Information	Note 8. Segment Information Subsequent to the reorganization set out in note 3, the Company has one business segments in the digital secure messaging in the gaming, security and educational fields.. All the revenue from continuing operations was generated in the Asia region.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2017
Subsequent Events [Abstract]
Subsequent Events	Note 9. Subsequent Events In October 2017 the Company has entered into agreements with the holder of the $3,500,000 principal amount of convertible debentures currently outstanding (the “Debentures”) and the holder of the 555,555 outstanding shares of its Series A-1 Preferred Stock (the “Preferred Shares”) pursuant to which it agreed to issue (the “Debenture Exchange”) to the holder of the Debentures upon conversion of $3,000,000 principal amount of the Debentures together with all interest accrued thereon, 13,000,000 shares of common stock, and, upon cancellation of the remaining balance due on the Debenture a $500,000 promissory note bearing interest at the rate of 7% per annum payable August 31, 2019 (the “7% Note”) and agreed to issue to the holder of the Preferred Shares, in exchange for the Preferred Shares (the “Preferred Exchange”), and the accrued but unpaid dividends thereon, 4,000,000 shares of common stock, together with a $500,000 promissory note bearing interest at the rate of 7% per annum. In September 2017 the Company agreed to issue 1,600,000 shares of its common stock to Mark White as an inducement to his employment as our President and Chief Executive Officer (the “Inducement Grant”), Consummation of each of the Debenture Exchange and the Preferred Exchange, and the issuance of the Inducement Grant requires approval of the Company’s stockholders under applicable rules of the NASDAQ Capital Market (“NASDAQ”), since each transaction involves the issuance of in excess of 20% of its outstanding shares of common stock. On October 3, 2017, the Company distributed an Information Statement to its stockholders noting that the Exchange Transactions were approved by written consent of the holders of a majority of its outstanding shares. However, the staff of NASDAQ questioned whether under NASDAQ’s corporate governance rules the Inducement Grant should be combined with the Preferred Exchange and thus those shares could only be issued after stockholder approval. If that is the case, the 1,600,000 shares could not be voted until the combined transaction is so approved and those shares should not have been included in the stockholder consent which approved the Exchange Transactions. Rather than dispute the issue raised by the Staff of NASDAQ, the Company obtained the written consent of a majority of our stockholders, without giving effect to the 1,600,000 inducement shares to be issued to Mark White. On November 6, 2017, the Company distributed an Information Statement to its stockholders noting that the Exchange Transactions and Inducement Grant were approved by written consent of the holders of a majority of its outstanding shares without giving effect to the shares granted to Mr. White as a result of the Inducement Grant.

Summary of Significant Accoun17

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Liquidity and Capital Resources	Liquidity and Capital Resources As a result of the Reorganization in August 2017, more fully described in note 3, the Company will pursue its revised operations and business plan. The Company expects to incur further non cash losses in 2017 which, when combined with any costs incurred in pursuing acquisition of new businesses, may generate negative cash flows. As of September 30, 2017, the Company did not have any available credit facilities. As a result, it is in the process of seeking new financing by way of sale of either convertible debt or equities. While it has been successful in the past in obtaining the necessary capital to support its investment and operations, there is no assurance that it will be able to obtain additional financing under acceptable terms and conditions, or at all. In the event that the Company is unable to obtain sufficient additional funding when needed in order to fund operations, it would not be able to continue as a going concern and may be forced to severely curtail or cease operations and liquidate the Company. The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of assets or amounts of liabilities that might result from the outcome of these uncertainties. The Company’s current independent registered public accounting firm included a paragraph emphasizing this going concern uncertainty in their audit report regarding the Company’s 2016 financial statements dated April 10, 2017.
Foreign Currency Translation	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 Hong Kong, , 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	Accounts receivable Pursuant to the Reorganization the Company recognizes revenue from the sale of licenses of the digitally secure messaging on a invoice basis, at September 30, 2017 the Company had collected all receivables on invoices raised to that date.
Intangible Assets	Intangible Assets Intangible assets include software development costs and are amortized on a straight-line basis over the estimated useful lives of ten years for software development costs. 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.
Debt Issue Costs	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	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, result in penalties. The Company is currently addressing this issue with advisors to determine the amount, if any, of potential payments due. Given the complexity of the issue the Company is unable to quantify a range of potential loss, if any. Accordingly, no liability has been recorded in the accompanying condensed consolidated balance sheets in respect of this matter
Net Loss per Share	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 nine month periods ended September 30, 2017 and 2016, outstanding stock options and warrants (totaling 494,000) 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)	Accumulated Other Comprehensive Income (Loss) Other comprehensive income (loss), as defined, includes net loss, foreign currency translation adjustments, 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	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.
Stock based payments	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. In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The adoption of ASU 2017-11, during the nine months ended September 30, 2017, did not have any impact on the condensed consolidated financial statements and related disclosures.

Reorganization (Tables)

Reorganization (Tables)	9 Months Ended
	Sep. 30, 2017
Discontinued Operations and Disposal Groups [Abstract]
Schedule of current and noncurrent assets, current and noncurrent liabilities of discontinued operations	The Company’s condensed consolidated balance sheet as at December 31, 2016 has been adjusted to properly account for the current and noncurrent assets, current and noncurrent liabilities of discontinued operations separate from the current and noncurrent assets and current and noncurrent liabilities of the Excluded Entities. Adjustments to December 31, 2016 Balance Sheet for Discontinued operations Current assets of discontinued operations Cash $ 153 Accounts receivable, net 1,206 Other assets 337 $ 1,696 Noncurrent assets of discontinued operations Property and equipment (net) $ 26 Intangible assets, net 2,222 Investment 17 $ 2,265 Current liabilities of discontinued operations Accounts payable $ 187 Accrued expenses 18 Accrued compensation 5 Income taxes 90 $ 300 Long-term liabilities of discontinued operations Deferred income taxes $ 172 Mandatorily redeemable shares 62 $ 234
Schedule of reorganization in loss from discontinued operations	The Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2017 include operations of the Discontinued Entities up to the date of the Reorganization in Loss from Discontinued Operations. The Company’s condensed consolidated balance sheets, statements of operations for the three and nine months ended September 30, 2016 and statements of cash flows for the nine months ended September 30, 2016 have been adjusted to properly account for the discontinued operations as follows: (in thousands) Three Months ended September 30, Nine Months ended September 30, 2017 2016 2017 2016 Revenue $ 5 $ 286 $ 443 $ 1,230 Cost of Revenue Hardware — 5 5 55 Amortization 39 491 1,007 1,450 39 496 1,012 1,505 Gross Margin (34 ) (210 ) (569 ) (275 ) Expenses General and administrative 159 540 998 1,393 Depreciation 1 8 5 24 Research and development — 51 255 425 160 599 1,258 1,842 Other income (loss) — (1 ) — 6 Impairment Loss (50 ) — (622 ) — Income Taxes — 11 21 32 Loss from Discontinued Operations $ (244 ) $ (799 ) $ (2,428 ) $ (2,079 )

Intangible Assets (Tables)

Intangible Assets (Tables)	9 Months Ended
	Sep. 30, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of intangible assets	Intangible assets consist primarily of software development costs which are amortized over the estimated useful life, generally on a straight-line basis (in thousands) September 30 December 31 2017 2016 Horizon secure messaging software $ 6,517 $ 6,498 Less accumulated amortization (772 ) (308 ) Intangible assets, net $ 5,745 $ 6,190

Share Capital (Tables)

Share Capital (Tables)	9 Months Ended
	Sep. 30, 2017
Stockholders' Equity Note [Abstract]
Schedule of black-scholes option valuation model for warrant issued	The assumptions used in calculating the fair value under the Black-Scholes option valuation model for warrants issued by the Company during the nine months ended September 30, 2017: Common stock fair value $ 1.92 Risk-free interest rate 2.5 % Expected dividend yield 0 % Expected warrant life (years) 0.5 Expected stock volatility 107 %
Schedule of equity incentive plan	A summary of the 2013 Plan options for the nine months ended September 30, 2017, is as follows: Number of Weighted Average Options Exercise Price Outstanding at January 1, 2017 141,250 $ 14.83 Forfeited (32,200 ) 22.61 Outstanding at September 30, 2017 109,050 18.71
Schedule of other stock options	A summary of the Company’s other stock options for the nine months ended September 30, 2017, is as follows: Number of Weighted Average Options Exercise Price Outstanding at January 1, 2017 and September 30, 2017 145,950 $ 3.18

Summary of Significant Accoun21

Summary of Significant Accounting Policies (Details Narrative)	9 Months Ended
	Sep. 30, 2017shares
Antidilutive securities	494,000
Software Development [Member]
Useful life of intangible assets	10 years

Reorganization (Details)

Reorganization (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Current assets of discontinued operations
Cash		$ 153
Accounts receivable, net		1,206
Other assets		337
Total		1,696
Noncurrent assets of discontinued operations
Property and equipment (net)		26
Intangible assets, net		2,222
Investment		17
Total		2,265
Current liabilities of discontinued operations
Accounts payable		187
Accrued expenses		18
Accrued compensation		5
Income taxes		90
Total		300
Long-term liabilities of discontinued operations
Deferred income taxes		172
Mandatorily redeemable shares		62
Total		$ 234

Reorganization (Details 1)

Reorganization (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Discontinued Operations and Disposal Groups [Abstract]
Revenue	$ 5	$ 286	$ 443	$ 1,230
Cost of Revenue
Hardware		5	5	55
Amortization	39	491	1,007	1,450
Total	(39)	(496)	(1,012)	(1,505)
Gross Profit	(34)	(210)	(569)	(275)
Expenses
General and administrative	159	540	998	1,393
Depreciation	1	8	5	24
Research and development		51	255	425
Total	160	599	1,258	1,842
Other income (loss)		(1)		6
Impairment Loss	(50)		(622)
Income Taxes		11	21	32
Loss from Discontinued Operations	$ (244)	$ (799)	$ (2,428)	$ (2,079)

Reorganization (Details Narrati

Reorganization (Details Narrative) - Brian C Collins [Member]	Sep. 30, 2017USD ($)
Due from related party	$ 1,968,253
Percentage of outstanding capital stock	99.70%

Intangible Assets (Details)

Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Intangible assets, net	$ 5,745	$ 6,190
Horizon Software [Member]
Intangible assets, gross	6,517	6,498
Less accumulated amortization	(772)	(308)
Intangible assets, net	$ 5,745	$ 6,190

Intangible Assets (Details Narr

Intangible Assets (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Amortization of intangible assets	$ 405	$ 22	$ 449	$ 68
Horizon Software [Member]
Amortization of intangible assets			$ 1,500

Related-Party Transactions (Det

Related-Party Transactions (Details Narrative)	3 Months Ended
	Sep. 30, 2017USD ($)$ / shares
Martin Ward [Member]
Related Party Transaction [Line Items]
Due from related party	$ 662,048
Market price (in dollars per share) | $ / shares	$ 0.77
Converted related party debt was common stock	$ 859,802
Brian C Collins [Member]
Related Party Transaction [Line Items]
Due from related party	1,968,253
Impairments charge	$ 572,000

Convertible Debentures (Details

Convertible Debentures (Details Narrative) - 10% Convertible Debentures Due On July 2018 [Member]	Sep. 30, 2017USD ($)$ / shares
Debt amount | $	$ 100,000
Interest rate	10.00%
Conversion price | $ / shares	$ 0.60

Share Capital (Details)

Share Capital (Details) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Stockholders' Equity Note [Abstract]
Common stock fair value	$ 1.92	$ 1.92
Risk-free interest rate	2.50%	2.50%
Expected dividend yield	0.00%	0.00%
Expected warrant life (years)	6 months	6 months
Expected stock volatility	107.00%	107.00%

Share Capital (Details 1)

Share Capital (Details 1) - 2013 Equity Incentive Plan [Member]	9 Months Ended
	Sep. 30, 2017$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning | shares	141,250
Forfeited | shares	(32,200)
Outstanding at ending | shares	109,050
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning | $ / shares	$ 14.83
Forfeited | $ / shares	22.61
Outstanding at ending | $ / shares	$ 18.71

Share Capital (Details 2)

Share Capital (Details 2) - Other Stock Options [Member]	9 Months Ended
	Sep. 30, 2017$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning | shares	145,950
Options issued | shares
Outstanding at ending | shares	145,950
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning | $ / shares	$ 3.18
Options issued | $ / shares
Outstanding at ending | $ / shares	$ 3.18

Share Capital (Details Narrativ

Share Capital (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Preferred stock, authorized	50,000,000		50,000,000
Preferred stock, par value (in dollars per share)	$ 0.0001		$ 0.0001
Preferred stock, issued	555,555		170,940
Preferred stock, outstanding	555,555		170,940
Common stock, authorized	33,333,333		33,333,333
Common stock, par value (in dollars per share)	$ 0.0001		$ 0.0001
Warrant issued	127,366
Warrant issued	55,556
Redemption price	$ 1.80
Exercise price of warrant issued (in dollars per share)	0.80
Exercise price (in dollars per share)	$ 0.80
Number of shares issued	417,461
Proceeds from issuance of stock	$ 265,000	$ 125,000
Number of shares issued settlement of related party loan	859,802
Amount of settlement of related party loan	$ 662,048
Number of shares issued settlement of loan	37,500
Amount of settlement of loan	$ 30,000
Number of shares issued for services	91,667
Fair value issued for services	$ 176,055
Number of shares issued common stock for employment commencement services	3,000,000
Fair value issued for common stock for employment commencement services	$ 2,750,000
Share price (in dollars per share)	$ 0.0001
Description of reverse stock split	Six-to-one
2013 Equity Incentive Plan [Member]
Unrecognized compensation expense	$ 86,000
Number of common stock reserved for future issuance	109,050
Warrant [Member]
Exercise price (in dollars per share)	$ 17.98
Number of shares issued	349,095
Number of common shares reserved for outstanding warrants	578,014
Warrants exercised	182,922
Number of warrants forfeited	238,095
Series A Preferred Stock [Member]
Preferred stock, outstanding	555,555

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - USD ($) $ in Thousands	Oct. 02, 2017	Sep. 30, 2017	Dec. 31, 2016
Preferred stock outstanding		555,555	170,940
Number of shares issued		91,667
Series A Preferred Stock [Member]
Preferred stock outstanding		555,555
Subsequent Event [Member] | Shareholder [Member] | Series A Preferred Stock [Member]
Preferred stock outstanding	555,555
Number of shares issued upon accrued but unpaid dividends	4,000,000
Subsequent Event [Member] | Shareholder [Member] | Convertible Debentures [Member]
Principal amount outstanding	$ 3,500
Debt original converted amount	$ 3,500
Number of common shares issued upon debt conversion	13,000,000
Subsequent Event [Member] | Shareholder [Member] | 7% Promissory Note Due August 31, 2019 [Member]
Principal amount	$ 500,000
Subsequent Event [Member] | Mr. Mark White [Member]
Number of shares issued	1,600,000