One Horizon Group, Inc. (Form: 10-Q, Received: 08/14/2017 16:09:09)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 000-10822

One Horizon Group, Inc.

(Exact name of registrant as specified in its charter)

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

34 South Molton Street, London W1K 5RG, UK
(Address of principal executive offices)		(Zip Code)

+44(0)20 7409 5248

(Registrant’s telephone number, including area code)

T1-017 Tierney Building, University of Limerick, Limerick, Ireland

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☑
(Do not check if 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 pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of August 09, 2017, 6,765,319 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.

TABLE OF CONTENTS

Part I – FINANCIAL INFORMATION

Item 1.	Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21

Item 4.	Controls and Procedures	21

Part II – OTHER INFORMATION

Item 1.	Legal Proceedings	22

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3.	Defaults Upon Senior Securities	22

Item 4.	Mine Safety Disclosures	22

Item 5.	Other Information	22

Item 6.	Exhibits	22

SIGNATURES		23

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

The statements made in this Report, and in other materials that the Company has filed or may file with the Securities and Exchange Commission, in each case that are not historical facts, contain “forward-looking information” within the meaning of the Private Securities Litigation Reform Act of 1995, and Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, which can be identified by the use of forward-looking terminology such as “may,” “will,” “anticipates,” “expects,” “projects,” “estimates,” “believes,” “seeks,” “could,” “should,” or “continue,” the negative thereof, and other variations or comparable terminology as well as any statements regarding the evaluation of strategic alternatives. These forward-looking statements are based on the current plans and expectations of management, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. Among these risks and uncertainties are the competition we face; our ability to adapt to rapid changes in the market for voice and messaging services; our ability to retain customers and attract new customers; our ability to establish and expand strategic alliances; governmental regulation and related actions and taxes in our international operations; increased market and competitive risks, including currency restrictions, in our international operations; risks related to the acquisition or integration of future businesses or joint ventures; our ability to obtain or maintain relevant intellectual property rights; intellectual property and other litigation that may be brought against us; failure to protect our trademarks and internally developed software; security breaches and other compromises of information security; our dependence on third party facilities, equipment, systems and services; system disruptions or flaws in our technology and systems; uncertainties relating to regulation of VoIP services; liability under anti-corruption laws; results of regulatory inquiries into our business practices; fraudulent use of our name or services; our ability to maintain data security; our dependence upon key personnel; our dependence on our customers’ existing broadband connections; differences between our service and traditional phone services; our ability to obtain additional financing if required; our early history of net losses and our ability to maintain consistent profitability in the future. These and other matters the Company discusses in this Report, or in the documents it incorporates by reference into this Report, may cause actual results to differ from those the Company describes. The Company assumes no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

SPECIAL NOTE REGARDING REVERSE STOCK SPLIT

Effective April 14, 2017, we completed a reverse stock split in which each six (6) shares of our common stock were automatically combined into and became one (1) share of our common stock. As of the effective date of the reverse stock split, the per share exercise price of, and the number of shares of common stock underlying, any stock options, warrants and other derivative securities issued by us were automatically proportionally adjusted, based on the one-for-six reverse split ratio, in accordance with the terms of such options, warrants or other derivative securities, as the case may be. All share numbers, stock option numbers, warrant numbers, other derivative security numbers and exercise prices appearing in this Report on Form 10-Q have been adjusted to give effect to this reverse stock split, unless otherwise indicated or unless the context suggests otherwise.

PART I – FINANCIAL INFORMATION

ONE HORIZON GROUP, INC.

Condensed Consolidated Balance Sheets

June 30, 2017 and December 31, 2016

(in thousands, except share data)

(unaudited)

	June 30,			December 31,
	2017			2016
Assets

Current assets:
Cash	$	69		$	260
Accounts receivable, net		1,037			1,208
Other assets		456			472
Total current assets		1,562			1,940

Property and equipment, net		27			42
Intangible assets, net		7,231			8,407
Investment		18			17

Total assets	$	8,838		$	10,406

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	471		$	364
Accrued expenses		562			206
Accrued compensation		307			156
Income taxes		90			90
Convertible debenture		3,284			3,068
Amount due to related parties		2,343			—
Total current liabilities		7,057			3,884

Long-term liabilities

Amount due to related parties		—			2,343
Deferred income taxes		151			172
Mandatorily redeemable preferred shares		—			62
Total liabilities		7,208			6,461

Equity
Preferred stock:
$0.0001 par value, authorized 50,000,000; issued and outstanding 170,940 shares (December 2016 - 170,940)		1			1
Common stock:
$0.0001 par value, authorized 33,333,333 shares issued and outstanding 6,364,862 shares (December 2016 - 6,144,762)		4			4
Additional paid-in capital		38,082			37,501

Accumulated Deficit		(36,643	)		(33,590	)
Accumulated other comprehensive income		186			29
Total One Horizon Group, Inc., stockholders’ equity		1,630			3,945

Total liabilities and equity	$	8,838		$	10,406

See accompanying notes to condensed consolidated financial statements.

ONE HORIZON GROUP, INC.

Condensed Consolidated Statements of Operations

For the three and six months ended June 30, 2017 and 2016

(in thousands, except per share data)

(unaudited)

		Three Months ended June 30,						Six Months ended June 30,
		2017			2016			2017			2016

Revenue		$	181		$	366		$	554		$	975

Cost of revenue	- Hardware, calls and network charges		3			49			5			75
	- Amortization of software development costs		512			493			1,012			1,005
			515			542			1,017			1,080

Gross margin			(334	)		(176	)		(463	)		(105	)

Expenses:
General and administrative			566			878			1,412			1,842
Depreciation			7			15			15			30
Impairment charge			572			—			572			—
Research and development			121			186			255			374
			1,266			1,079			2,254			2,246

Loss from operations			(1,600	)		(1,255	)		(2,717	)		(2,351	)

Other income and expense:
Interest expense			(177	)		(176	)		(356	)		(356	)
Foreign exchange			(3	)		2			(2	)		9

			(180	)		(174	)		(358	)		(347	)

Loss before income taxes			(1,780	)		(1,429	)		(3,075	)		(2,698	)

Income tax benefit			(11	)		(11	)		(22	)		(22	)

Net Loss			(1,769	)		(1,418	)		(3,053	)		(2,676	)

Less: Preferred Dividends			—			(25)			—			(50)

Net loss attributable to One Horizon Group Inc. common stockholders		$	(1,769	)	$	(1,443	)	$	(3,053	)	$	(2,726	)

Earnings per share

Basic net loss per share		$	(0.28	)	$	(0.25	)	$	(0.49	)	$	(0.47	)

Diluted net loss per share		$	(0.28	)	$	(0.25	)	$	(0.49	)	$	(0.47	)

Weighted average number of shares outstanding
Basic and diluted			6,287			5,864			6,231			5,861

See accompanying notes to condensed consolidated financial statements.

ONE HORIZON GROUP, INC.

Condensed Consolidated Statements of Comprehensive Loss

For the three and six months ended June 30, 2017 and 2016

(in thousands)

(unaudited)

	Three Months ended June 30,						Six Months ended June 30,
	2017			2016			2017			2016

Net loss	$	(1,769	)	$	(1,418	)	$	(3,053	)	$	(2,676	)
Other comprehensive income:
Foreign currency translation adjustment loss		(13	)		475			157			101
Total Comprehensive loss	$	(1,782	)	$	(943	)	$	(2,896	)	$	(2,575	)

See accompanying notes to condensed consolidated financial statements

ONE HORIZON GROUP, INC.

Condensed Consolidated Statement of Equity

For the six months ended June 30, 2017

(in thousands)

(unaudited)


														Accumulated
	Preferred Stock				Common Stock									Other
	Number								Additional					Comprehensive
	of				Number of				Paid-in		Accumulated			Income			Total
	Shares		Amount		Shares		Amount		Capital		Deficit			(Loss)			Equity

Balance December 31, 2016		171	$	1		6,145	$	4	$	37,501	$	(33,590	)	$	29	$	$	3,945

Net loss												(3,053	)					(3,053	)
Foreign currency translations															157			157
Shares issued for services						92				176								176

Shares issued on exercise of warrants						127				102								102

Warrants issued for services						1				123								123

Options issued for services										118								118

Reclassification of mandatorily redeemable preferred shares										62								62

Balance June 30, 2017		171	$	1		6,365	$	4	$	38,082	$	(36,643	)	$	186		$	1,630

See accompanying notes to condensed consolidated financial statements

ONE HORIZON GROUP, INC.

Condensed Consolidated Statements of Cash Flows

For the six months ended June 30, 2017 and 2016

(in thousands)

(unaudited)

	2017			2016
Cash flows from operating activities:

Net loss for the period	$	(3,053	)	$	(2,676	)

Adjustment to reconcile net loss for the period to net cash flows from operating activities:
Depreciation of property and equipment		15			30
Amortization of intangible assets		1,012			1,005
Increase in allowance for doubtful accounts		—			200
Amortization of debt issue costs		68			66
Amortization of beneficial conversion feature		50			50
Amortization of debt discount		100			100
Shares issued for services		176			—
Warrants issued for services		123			—
Amortization of shares issued for services		43			4
Impairment charge		572			—
Options issued for services		118			376

Changes in operating assets and liabilities:
Accounts receivable		171			397
Other assets		(28	)		(125	)
Accounts payable and accrued expenses		614			(2	)
Deferred income taxes		(22	)		(22	)
Net cash flows from operating activities		(41	)		(597	)

Cash used in investing activities:

Acquisition of intangible assets		(259	)		(207	)
Acquisition of property and equipment		(2	)		(4	)
Net cash flows from investing activities		(261	)		(211	)

Cash flows from financing activities:

Increase (decrease) in long-term borrowing, net		—			(5	)
Proceeds from exercise of warrants		102			—
Advances from (repayments to) related parties, net					(11	)
Dividends paid		—			(50	)
Net cash flows from financing activities		102			(66	)

Decrease in cash during the period		(200	)		(874	)
Foreign exchange effect on cash		9			(39	)

Cash at beginning of the period		260			1,772

Cash at end of the period	$	69		$	859

Supplementary Information:

	2017		2016

Interest paid	$	—	$	69
Income taxes paid	$	—	$	—
Reclassification of mandatorily redeemable preferred shares	$	62	$	—

See accompanying notes to condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2017

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

Description of Business

Prior to the transaction described in Note 8, One Horizon Group, Inc., (the “Company” or “Horizon”) developed proprietary software primarily in the Voice over Internet Protocol (VoIP) and bandwidth optimization markets (“Horizon Globex”) and provided it to telecommunication companies under perpetual license arrangements (“Master License”) throughout the world. In addition, the Company sold related user licenses and software maintenance services to or entered into revenue sharing agreements with telecommunication companies. Horizon, through its Chinese company Suzhou Aishuo Network Information Co. Ltd. will continue to provide the Aishuo App to end user customer through App stores based in China. Our Aishuo customers purchase call credits for Public Service Telephone Network (PSTN) access using a variety of Chinese on-line payment services including Union Pay and Apple Pay.

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 One Horizon Group plc, Horizon Globex GmbH, Abbey Technology GmbH, One Horizon Group Pte., Limited, Horizon Globex Ireland Limited, Global Phone Credit Limited and One Horizon Hong Kong Limited, and its wholly-owned subsidiary, Horizon Network Technology Co. Ltd. (“HNT”). In addition, included in the consolidated financial statements as of and for the six months ended June 30, 2017 are the accounts of Suzhou Aishuo Network Information Co., Ltd. which is controlled by One Horizon Group, Inc. through various contractual arrangements (Note 3).

All significant intercompany balances and transactions have been eliminated.

Note 2. Summary of Significant Accounting Policies

Liquidity and Capital Resources

As Horizon continues to pursue its operations and business plan, it expects to incur further losses in 2017 which, when combined with any investment in intellectual property, will generate negative cash flows. As of June 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. Subsequent to June 30, 2017, the Company entered into a series of transactions to improve liquidity and reduce outstanding obligations (see Note 8). Whilst 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, Horizon is unable to obtain sufficient additional funding when needed in order to fund ongoing research and development activities as well as operations, it would not be able to continue as a going concern and maybe 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 Switzerland, Ireland, 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 and Customer Concentrations.

Prior to the transaction discussed more fully in Note 8, accounts receivable resulted primarily from sale of software and licenses to customers and are recorded at their principal amounts. The categories of sales and receivables and their terms of payment are as follows:

Master License Agreement (“Agreement”) deposits – Deposits are payable in accordance with the terms of the Agreement. Payment terms may vary from Agreement to Agreement, with payment due generally within 30 days of the execution of an Agreement.

Software consultancy and hardware fees – The terms of payment are fixed terms, with payment normally due within stated terms, normally 30 days from the date of the invoice.

Maintenance and operational fees and end user licenses fees – Payments vary from customer to customer. For customers who have not entered into a revenue share agreement, the terms of payment are fixed and payment is due within stated terms, normally 30 days from the date of the invoice. For customers who have entered into a revenue share agreement, the Company will receive an agreed proportion of a customer’s revenue from the customer’s operation of the Horizon service. The proportion of a customer’s revenue received is used to pay the receivable balance until the balance is paid.

Receivables are generally unsecured.

During the six months ended June 30, 2017, $431,000 or 78% of the Company’s revenue was concentrated in the hands of one major customer. In the six months ended June 30, 2016 the equivalent amount was $795,000 or 81% of revenue.

The Company does not have off-balance sheet credit exposure related to its customers. As of June 30, 2017 and December 31, 2016, two customers accounted for 52% and 61%, respectively, of the accounts receivable balance.

Intangible Assets

Prior to the transaction discussed more fully in Note 8, intangible assets included 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. Based on these valuations, an impairment charge of $572,000 was recognized during the six months ended June 30, 2017.

The Company expenses software development costs as incurred until technological feasibility has been established, at which time those costs are capitalized until the product is available for general release to customers. Judgement is required in determining when technical feasibility of a product is established. The Company has determined that after technological feasibility for software products is reached, the Company continues to address all high risk development issues through coding and testing prior to release of the products to customers. The amortization of these costs is included in cost of revenue over the estimated life of the products.

During the six months ended June 30, 2017 and 2016, software development costs of $259,000 and $207,000, respectively, have been capitalized.

Research and Development Expenses

Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, costs 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.

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, contain penalties. The Company is currently addressing this issue with advisors to determine the amount, if any, of potential payments due. Given the complexity of the issue the Company is unable to quantify a range of potential loss, if any. 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 six month periods ended June 30, 2017 and 2016, 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 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 six months ended June 30, 2017, did not have any impact on the condensed consolidated financial statements and related disclosures.

Note 3. 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)

	June 30			December 31
	2017			2016

Horizon software	$	18,752		$	18,634
ZTEsoft Telecom software		448			438
Contractual relationships		885			885
		20,085			19,957
Less accumulated amortization		(12,854	)		(11,550	)

Intangible assets, net	$	7,231		$	8,407

Amortization of intangible assets for each of the next five years is estimated to be $2,100,000 per year, not withstanding the transaction discussed in Note 8.

Note 4. Related-Party Transactions

At June 30, 2017, $2,343,000 of related party debt was outstanding and will mature on April 1, 2018, which is unsecured and is interest free, of which approximately $2,000,000 was forgiven in consideration for the sale of 100% of the common stock held by the Company in certain subsidiaries subsequent to June 30, 2017 (Note 8).

In March 2015 the Company entered into a sales contract in the normal course of business with a customer (Horizon Latin America) in which the Company holds minority ownership interest. The customer purchased a perpetual software license for $500,000. As at June 30, 2017 Horizon Latin America owed the Company $250,000

The Company owns a cost based investment interest of 10% in the customer with limited voting rights or board representation.

Note 5. Share Capital

Preferred Stock

The Company’s authorized capital includes 50,000,000 shares of preferred stock of $0.0001 par value. The designation of rights including voting powers, preferences, and restrictions shall be determined by the Board of Directors before the issuance of any shares.

The number of shares of Series A Preferred Stock was reduced as a result of the reverse stock split completed in April 2017. Pursuant to an agreement between the Company and the holders of the Series A Preferred Stock reached on July 10, 2017, in return for an extension in the maturity date of the Series A Preferred Stock to February 1, 2018, the stock was re-designated as the Series A-1 Preferred Stock, the conversion price was reduced to $1.80 per share, the number of outstanding shares of Series A-1 Preferred Stock was increased to 555,555 which are to be paid dividends of 10% per annum in cash or shares of common stock. The Series A-1 Preferred Stock is redeemable into cash or common stock at the option of the holder through the maturity date.

170,940 shares of Series A preferred stock are issued and outstanding as of June 30, 2017. On July 10, 2017 the original number of shares of preferred stock was increased as a result of a renewal agreement to 555,555 notes.

Common Stock

On April 19, 2017, at a special meeting the shareholders of One Horizon Group, Inc. authorized the Board of Directors to effect a six-to-one reverse stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding common stock, par value $0.0001 per share. The Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment (the “Amendment”) to the Certificate of Incorporation of the Company to effect the Reverse Stock Split, which became effective on April 28, 2017.

The Company is authorized to issue 33.3 million shares of common stock, par value of $0.0001 per share, after giving effect to the reverse stock split.

During the six months ended June 30, 2017 the Company:

●

Issued 91,667 shares of common stock for services provided with a fair value of $176,000.

●

Issued 127,366 shares of common stock upon the exercise of warrants at $0.80 per share

Stock Purchase Warrants

At June 30, 2017, the Company had reserved 760,553 shares of its common stock for the following outstanding warrants with a weighted average exercise price of $14.26. Such warrants expire of various times upto December 2019 and had no intrinsic value as of June 30, 2017.

During the six months ended June 30, 2017 no warrants were forfeited, 238,095 warrants which qualified for equity accounting were issued for services performed and valued under the Black-Scholes valuation method, and 127,366 warrants were exercised.

The assumptions used in calculating the fair value under the Black-Scholes option valuation model for warrants issued by the Comapany during the six months ended June 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 valtility		107	%

Note 6. 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, 2017.

A summary of activity under the 2013 Plan for the six months ended June 30, 2017 is as follows:

	Number of			Weighted Average
	Options			Exercise Price

Outstanding at January 1, 2017		141,250			14.83
Forfeited		(2,283	)		11.80
Outstanding at June 30, 2017		138,967			14.96

As at June 30, 2017 there was unrecognized compensation expense of approximately $113,000 to be recognized over the remaining vesting periods.

At June 30, 2017, 822,667 shares of common stock were reserved for all outstanding options and future commitments under the 2013 Equity Incentive Plan.

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

A summary of the Company’s other stock options for the six months ended June 30, 2017 is as follows:

	Number of		Weighted Average
	Options		Exercise Price

Outstanding at January 1, 2017 and June 30, 2017		145,950	$	3.18

As of June 30, 2017 there was unrecognized compensation expense of approximately $32,000, related to Other Stock Options, to be recognized over the remaining vesting period.

Note 7. Segment Information

The Company has two business segments, both of which involve the development and licensing of software for mobile VoIP. One for business to business line and one for business to consumer line, primarily represented by Aishuo for the six months ended June 30, 2017 and 2016 activity. Operating results for the business to consumer line is not material for separate segment presentation.

The Company’s revenues were generated in the following geographic areas: (in thousands).

	Three months ended June 30,				Six months ended June 30,

	2017		2016		2017		2016

China	$	83	$	74	$	132	$	134
Rest of Asia	$	85	$	275	$	389	$	823
EMEA	$	3	$	10	$	23	$	11
The Americas	$	10	$	7	$	10	$	7
Total	$	181	$	366	$	554	$	975

Note 8. Subsequent Event

On July 31, 2017, the Company received a written alert from Nasdaq Listing Qualifications that our closing bid price for the last 30 consecutive days was less than $1.00 per share. As a result the Company is below the continued listing requirement to maintain a minimum bid price of $1.00 per share as set forth in Nasdaq Listing Rule 5550(a). However, Nasdaq Listing Rule 581 (c) (3)(A) provides a compliance period of 180 calendar days to regain compliance. If at any time during this 180 day period the closing bid price is at least $1.00 for a minimum of 10 consecutive business days, the Company will regain compliance.

On August 11, 2017, the Company consummated a Stock Purchase Agreement pursuant to which its Chief Executive Officer (“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 “Acquired Entities”) from the Company in consideration for the forgiveness of approximately $2.0 million due from the Company to its CEO. In connection with the transaction, the CEO and the Acquired 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 Acquired Entities from any outstanding claims.

In contemplation of the Stock Purchase Agreement certain intellectual property was transferred among the Acquired Entities and the Excluded Entities such that each could continue the business contemplated to be carried on after the transaction was consummated;

Upon conclusion of the Stock Purchase Agreement the CEO resigned from all positions held within the Company and the Excluded Entities.

Unaudited Pro Forma Condensed Balance sheet as of June 30, 2017, showing the effect of the above sale of the Acquired Entities:

In $ thousands	As reported		Proforma adjustments			Revised

Current assets:	$	1,562	$	(1,357	)	$	205

Property and equipment, net		27		(25	)		2
Intangible assets, net		7,231		(1,082	)		6,149
Investment		18		(18	)		0

Total assets	$	8,838	$	(2,482	)	$	6,356

Liabilities and Stockholders’ Equity

Current Liabilities:	$	7,057	$	(2,345	)	$	4,712

Long-term liabilities		151		(151	)		0

Total liabilities	$	7,208	$	(2,496	)	$	4,712

Total Stockholders’ equity	$	1,630	$	14		$	1,644

Total liabilities and equity	$	8,838	$	(2,482	)	$	6,356

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 unaudited condensed consolidated financial statements for the six months ended June 30, 2017 and 2016 and notes thereto contained elsewhere in this Report, and our annual report on Form 10-K for the twelve months ended December 31, 2016 and 2015, including the consolidated financial statements and notes thereto. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements. See “Cautionary Note Concerning Forward-Looking Statements.”

Overview

Business

On August 11, 2017 the Company completed a sale of four subsidiaries (“Acquired Entities”), based in Europe, to the Chief Executive Officer, Mr Brian J Collins. The Company decided to reduce its expenditure base and concentrate on opportunities in the Chinese market for its secure messaging software. The Acquired Entities retained the intellectual property related to the Horizon VoIP product and the existing customers associated with that technology. The Company has retained the subsidiaries (“Retained Entities”) and business based in China and Hong Kong together with the intellectual property related to secure messaging and intends to continue to promote this business in China and Hong Kong. The Retained Entities in June 2017, secured a contract with a Hong Kong based customer for the technology. It is expected the contract will produce revenue in excess of $500,000 in the second half of 2017 and, absent the costs related to the business conducted by the Acquired Entities, the Company expects to be cash flow positive in the near term. In addition, the Retained Entities are in discussions regarding other sales opportunities in the same region.

Results of Operations

Comparison of three months ended June 30, 2017 and 2016

The following table sets forth key components of our results of operations for the periods.

(All amounts, other than percentages, in thousands of U.S. dollars)

	Three Months Ended June 30,						Change
	2017			2016			Increase/ (decrease)			Percentage Change

Revenue	$	181		$	366		$	(185	)		(50.5	)

Cost of revenue		515			542			(27	)		(5.0	)

Gross margin		(334	)		(176	)		158			(89.8	)

Operating expenses:

General and administrative		566			878			(312	)		(35.5	)
Depreciation		7			15			(8	)		(53.3	)
Impairment charge		572			—			572			N/A
Research and development		121			186			(65	)		(34.9	)

Total operating expenses		1,266			1,079			187			17.3

Loss from operations		(1,600	)		(1,255	)		(345	)		( 27.5	)

Other expense		(180	)		(174	)		(6	)		(3.4	)
Loss before income taxes		(1,780	)		(1,429	)		(351	)		( 24.6	)

Income taxes benefit		(11	)		(11	)		(—	)		(—	)
Net loss		(1,769	)		(1,418	)		(351	)		( 24.8	)

Revenue: Our revenue for the three months ended June 30, 2017 was approximately $181,000 as compared to approximately $366,000 for the three months ended June 30, 2016, a decrease of approximately $185,000, or 50.5%. The decrease was primarily due to the reduction in software license sales in the business in the B2C business in Asia.

Cost of Revenue: Cost of revenue excluding amortization of software development costs, was approximately $3,000 or 1.7% of sales for the three months ended June 30, 2017, compared to cost of revenue of $49,000 or 13.4% of sales for the three months ended June 30, 2016. Our cost of sales excluding amortization of software development costs, is composed of the cost of ancillary hardware equipment sold and costs of PSTN calls breakout and other network charges.

Gross Profit : Gross profit excluding the Amortization of software development costs, for the three months ended June 30, 2017 was approximately $178,000 as compared to $317,000 for the three months ended June 30, 2016, a decrease of approximately 43.8%. The decrease was mainly due to the decreased revenue as set forth above herein.

Operating Expenses: Operating expenses, including general and administrative expenses, depreciation and research and development were approximately $1,266,000 and $1,079,000 during the three months ended June 30, 2017 and 2016, respectively. The increase of $187,000 or 17.3% was primarily due to impairment charge offset by a reduction in research and development costs expensed and other non cash items expensed.

Loss before taxes: Loss before taxes for the three months ended June 30, 2017 was approximately $1,780,000 as compared to loss before taxes of approximately $1,429,000 for the same period in 2016. The increase in loss was primarily due to the increase in general and administrative expenses mentioned above.

Comparison of six months ended June 30, 2017 and 2016

The following table sets forth key components of our results of operations for the periods indicated.

(All amounts, other than percentages, in thousands of U.S. dollars)

	Six Months Ended June 30,						Change
	2017			2016			Increase/ (decrease)			Percentage Change

Revenue	$	554		$	975		$	(421	)		(43.2	)

Cost of revenue		1,017			1,080			(63	)		(5.8	)

Gross margin		(463	)		(105	)		(358	)		(341.4	)

Operating expenses:

General and administrative		1,412			1,842			(430	)		(23.3	)
Depreciation		15			30			(15	)		(50.0	)
Impairment charge		572			—			572			N/A
Research and development		255			374			(119	)		(31.8	)

Total operating expenses		2,254			2,246			8			0.0

Loss from operations		(2,717	)		(2,351	)		366			15.6

Other income (expense)		(358	)		(347	)		(11	)		(3.2	)
Loss before income taxes		(3,075	)		(2,698	)		377			14.0

Income taxes benefit		(22	)		(22	)		(—	)		(—	)
Net loss		(3,053	)		(2,676	)		377			14.1

Revenue: Our revenue for the six months ended June 30, 2017 was approximately $554,000 as compared to approximately $975,000 for the six months ended June 30, 2016, a decrease of approximately $421,000, or 43.2%. The decrease was primarily due to the decrease in license sales in the B2B sector in Asia.

Cost of Revenue: Cost of revenue excluding amortization of software development costs, was approximately $5,000 or 0.9% of sales for the six months ended June 30, 2017, compared to cost of revenue of $75,000 or 7.7% of sales for the six months ended June 30, 2016. Our cost of sales excluding amortization of software development costs, is composed of cost of ancillary hardware equipment sold and costs of PSTN calls breakout and other network charges. The decrease in cost of revenue during the six months ended June 30, 2017, when compared to the same period in 2016 is due to lower sales in 2017 of PSTN calls when compared to the same period in 2016.

Gross Profit : Gross profit excluding the Amortization of software development costs, for the six months ended June 30, 2017 was approximately $549,000 as compared to $900,000 for the six months ended June 30, 2016, a decrease of approximately $351,000 or 39.0%. The decrease was mainly due to the reduced revenue as set forth above herein.

Operating Expenses: Operating expenses, including general and administrative expenses, depreciation and research and development were approximately $2.2 million and $2.2 million during the six months ended June 30, 2017 and 2016, respectively.

Net Loss: Net Loss for the six months ended June 30, 2017 was approximately $3.1 million as compared to loss of approximately $2.7 million for the same period in 2016. The increase in loss was primarily due to the increase in general and administrative expenses and by a reduction in revenues mentioned above.

Liquidity and Capital Resources

Six Months Ended June 30, 2017 and June 30, 2016

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

	For the Six Months Ended June 30 (in thousands)
	2017			2016
Net cash flows from operating activities		(41	)		(597	)
Net cash flows from investing activities		(261	)		(211	)
Net cash flows from financing activities		102			(66	)

Net cash used in operating activities was approximately $41,000 for the six months ended June 30, 2017 as compared to net cash used in operating activities of approximately $597,000 for the same period in 2016. The decrease in cash used in operations was primarily due to the increase in accounts payable and accrued expenses as compared to the same period in 2016.

Net cash used in investing activities was approximately $261,000 and $211,000 for the six months ended June 30, 2017 and 2016, respectively. Net cash used in investing activities was primarily focused on development of software.

Net cash generated in financing activities was $102,000 for the six months ended June 30, 2017 as compared to net cash used in financing activities of $66,000 for the six months ended June 30, 2016. Cash raised by financing activities in 2017 was primarily due to the exercise of warrants. Cash used in financing activities in 2016 was primarily due to the payment of preferred dividends.

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. Our current independent registered public accounting firm included a paragraph emphasizing this going concern uncertainty in their audit report dated April 10, 2017, regarding our 2016 financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

(a) 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 June 30, 2017, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, and as discussed more fully in our Annual Report on Form 10-K for the year ended December 31, 2016 filed on April 11, 2017, our Certifying Officers concluded that, as of June 30, 2017, our disclosure controls and procedures were not effective.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter covered by this report that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not a party to any material legal proceedings and no material legal proceedings have been threatened by us or, to the best of our knowledge.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 23, 2017, the Company entered into an agreement with L1 Capital Global Opportunities Master Fund in which the Company agreed to reprice 127,366 (post-reverse split) options held by L1 to $0.80 per share provided L1 exercised the options and delivered the exercise price no later than May 25, 2017. L1 elected to exercise the options from which the Company received gross proceeds of $101,893. The proceeds were applied to the Company’s working capital.

The transaction with L1 was exempt from the registration requirements of the Securities Act of 1933, as amended, as private placement completed in accordance with Regulation D promulgated thereunder.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Sale of Certain Subsidiaries

On August 11, 2017, the Company consummated a Stock Purchase Agreement pursuant to which Brian J. Collins, the Company’s President and Chief Executive Officer 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 “Acquired Entities”) from the Company in consideration for the forgiveness of approximately $ 2.0 million due from the Company to Mr. Collins. In connection with the transaction, Mr. Collins and the Acquired 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 Acquired Entities from any outstanding claims.

Resignation of President and Chief Executive Officer

Upon conclusion of the Stock Purchase Agreement referred to above, Brian Collins, the Company’s President, Chief Executive Officer, Chief Technology Officer and a member of the Board of Directors resigned from all positions held within the Company and the Excluded Entities.

Resignation of Director

On August 11, 2017 Robert Veglar tendered his resignation as director of the Company.

Item 6. Exhibits

Exhibit No.	Description

10.1	Stock Purchase Agreement

	Certifications

31.1	Certification of principal executive officer pursuant to Rule 13a-14 or Rule 15d-14 of Exchange Act. Exchange Act of 1934.

31.2	Certification of principal financial officer pursuant to Rule 13a-14 or Rule 15d-14 of the Exchange Act.

32.1	Certification of principal executive officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

32.2	Certification of principal financial officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

	XBRL Presentation

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.DEF	XBRL Taxonomy Extension Definition
101.LAB	XBRL Taxonomy Extension Label
101.PRE	XBRL Taxonomy Extension Presentation

SIGNATURES

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

	ONE HORIZON GROUP, INC.

Date: August 14, 2017	By:	/s/ Martin Ward
		Martin Ward
		Principal Executive Officer,
		Chief Financial Officer, Principal
		Finance and Accounting Officer and Director

Exhibit 10.1

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (“Agreement”) is entered into as of August 10, 2017 (the “Effective Date”) between Brian Collins, having an address at 4 Home Farm, Honey Lane, Hurley, England (“Buyer”), and One Horizon Group, Inc., with an address at T1-017 Tierney Building, University of Limerick, Limerick, Ireland (the “Company”).

RECITALS:

A. The Company owns all of the outstanding shares of capital stock (the “Shares”) of Abbey Technology GmbH, Horizon Globex GmbH, Horizon Globex Ireland Ltd and approximately 99.7% of the outstanding shares in One Horizon Group PLC (the Acquired Entities”).

B. Buyer is the Chief Executive Officer, President and a member of the Board of Directors of the Company, and currently owed approximately $2,000,000 by the Company (the “Collins Debt”);

C. The Company has agreed to sell the Shares to Buyer in consideration of Buyer’s release of the Company and the Excluded Entities from all obligations due to the Buyer and the Acquired Entities, and Buyer has agreed to purchase the Shares from the Company in consideration of Buyer’s release of the Company and the Excluded Entities from all obligations due to the Buyer and the Acquired Entities.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I - DEFINITIONS

1.1 General . As used herein the following terms shall have the following meanings and shall include in the singular number the plural and in the plural number the singular unless the context otherwise requires (capitalized terms not defined in this Article 1 shall have the meanings ascribed to such terms elsewhere in this Agreement).

1.2 “Affiliate” shall mean, as to a Person, any other Person that, directly or indirectly, through one or more intermediaries controls, is controlled by or is under common control with the first-mentioned Person.

1.3 “Agreement” shall mean this Stock Purchase Agreement, together with all Exhibits and Schedules annexed hereto, as the same may be amended, supplemented or modified from time to time.

1.4 “Acquired Entities” shall mean Abbey Technology GmbH, Horizon Globex GmbH, Horizon Globex Ireland Ltd and One Horizon Group PLC.

1.5 “Closing” or “Closing Date” shall have the meaning set forth in Section 4.1.

1.6 “Collins Debt” shall mean all amounts owed to Buyer by the Company and/or the Excluded Entities as of the Closing Date.

1.7 “Excluded Entities” shall have the meaning set forth in Section 2.2.

1.8 “Governmental Entity” shall mean any federal, state, local, municipal, foreign, or other government, or governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal).

1.9 “Knowledge” - a Person will be deemed to have “Knowledge” of a particular fact or other matter if (a) such person is actually aware of such fact or other matter or (b) a prudent individual in the position of the Chief Executive Officer or Chief Financial Officer of the Company could reasonably be expected to become aware of such fact or other matter in the course of performing his duties on behalf of the Company.

1.10 “Law” shall mean, with respect to any Person, any U.S. federal, state or local, and any foreign national, state or local, law, statute, common law, ordinance, code, treaty, rule, regulation, order, ordinance, permit, license, writ, injunction, directive, determination, judgment or decree or other requirement of any Governmental Entity or arbitrator, in each case, applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

1.11 “Liability” shall mean any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including (without limitation) any liability for Taxes.

1.12 “Ordinary Course of Business” shall mean the ordinary course of business of the Company on a consolidated basis consistent with past practice.

1.13 “Person” shall mean an individual, corporation, partnership, limited liability company, association, trust, unincorporated organization or other legal entity.

1.14 “Security Interest” shall mean any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) mechanic’s, materialmen’s and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings, (c) purchase money liens and liens securing rental payments under capital lease arrangements, (d) in the case of real property, rights of way, building use restrictions, variances and easements, provided the same will not in any material respect interfere with the Buyer’s operation of the Business and (e) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money.

1.15 “Stock Powers” shall mean the stock powers to be executed by the Company to effect the transfer of the capital stock of the Acquired Entities.

1.16 “Tax” or “Taxes” shall mean any federal, state, local and foreign income or gross receipts tax, alternative or add-on minimum tax, sales and use tax, customs duty and any other tax, charge, fee, levy or other assessment including property, transfer, occupation, service, license, payroll, franchise, excise, withholding, ad valorem, severance, stamp, premium, windfall profit, employment, rent or other tax, governmental fee or like assessment or charge of any kind, together with any interest, fine or penalty thereon, addition to tax, additional amount, deficiency, assessment or governmental charge imposed by any federal, state, local or foreign taxing authority.

1.17 “Tax Return” includes any material report, statement, form, return or other document or information required to be supplied by a federal, state, local or foreign taxing authority in connection with Taxes.

1.18 “Transaction Documents” shall mean this Agreement, the Stock Powers, the General Releases to be executed and delivered by Collins, the Company, the Acquired Entities and the Excluded Entities, and the Resignation Letter.

ARTICLE II - SALE AND PURCHASE OF SHARES

2.1 Purchase and Sale of Shares . In exchange for the consideration specified herein, and upon and subject to the terms and conditions of this Agreement, Buyer hereby agrees to purchase, obtain and acquire from the Company, and the Company hereby agrees to sell, assign, transfer and convey to Buyer, on the Closing Date, all of the Company’s right, title and interest in and to the Shares, free and clear of all Security Interests, other than restrictions on transferability under securities laws.

2.2 Excluded Entities . For the avoidance of doubt, Buyer shall not acquire any right, title or interest in and to the shares of Global Phone Credit Ltd, One Horizon Hong Kong Ltd, Horizon Network Technology Co. Ltd, Suzhou Aishuo Network Information Co., Ltd, and any other of the Company’s Affiliates other than the Acquired Entities (the “Excluded Entities”).

ARTICLE III - PURCHASE PRICE

3.1 As consideration for the purchase of the Shares, Buyer shall:

(a) Forgive the Collins Debt and enter into a general release in favor of the Company and the Excluded Entities, substantially in the form of Exhibit 3.1(a) (the “General Release”); and

(b) Cause the Acquired Entities to execute and deliver general releases in favor of the Company and the Excluded Entities, and join this Agreement to confirm their obligations to indemnify the Company and the Excluded Entities as provided herein (collectively the “Purchase Price”).

ARTICLE IV - CLOSING

4.1 The closing for the purchase and sale of the Shares shall take place at the offices of counsel to the Company at 10:00 am on August 10, 2017, or at such other place and time mutually agreed to by the Buyer and the Company (the “Closing Date” or “Closing”), but in no event later than August 31, 2017 (the “Final Date”).

4.2 At the Closing, and as a condition thereto, Buyer will deliver or caused to be delivered to the Company:

(1) a General Release in favor of the Company and the Excluded Entities;

(2) the resignation of the Buyer from all positions held within the Company and the Excluded Entities, including as a member of the Board of Directors or similar body of the Company and the Excluded Entities (the Resignation Letter”);

(3) a General Release by each Acquired Entity in favor of the Company and the Excluded Entities;

(4) a certificate of the Buyer confirming the accuracy of the representations of Buyer herein as of the Closing Date; and

(5) such other documents duly executed as reasonably requested by the Company.

4.3 At the Closing, and as a condition thereto, the Company shall deliver or cause to be delivered to Buyer:

(1) certificates representing the Shares together with duly executed Stock Powers;

(2) A General Release by the Company on behalf of itself and the Excluded Entities in favor of Buyer and each Acquired Entity

(3) a Secretary’s Certificate as to the adoption of resolutions by the Board of Directors of the Company authorizing the execution, delivery and consummation of this Agreement;

(4) a certificate of an officer of the Company confirming the accuracy of the representations of Company herein as of the Closing Date; and

(5) such other documents duly executed as reasonably requested by the Buyer.

ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to the Buyer as of the date hereof and as of the Closing Date:

5.1 Organization and Good Standing; Power and Authority . The Company is a corporation duly organized and validly existing under the laws of Delaware and the Acquired Entities are duly organized and validly existing under the laws of the jurisdiction of their registered office. The Company has full corporate power and authority to enter into and perform its obligations under this Agreement. The Company has taken all actions necessary to enter into this Agreement and to carry out the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Company. This Agreement has been, or will be, duly executed and delivered by the Company and constitutes the valid, legal and binding obligations of the Company, enforceable against the Company in accordance with its terms, except to the extent such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, receivership, fraudulent conveyance or similar laws affecting or relating to the enforcement of creditors’ rights generally, and by equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law).

5.2 Conflicts; Defaults . The execution and delivery of this Agreement and the other agreements and instruments executed or to be executed in connection herewith by the Company do not, and the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby or thereby, will not: (i) violate, conflict with, or constitute a breach or default under any of the terms of its certificate of incorporation or bylaws; (ii) require any authorization, approval, consent, registration, declaration or filing with, from or to any Governmental Entity other than those required to be filed with the Securities and Exchange Commission; (iii) violate any law, statute, judgment, decree, injunction, order, writ, rule or regulation applicable to the Company.

5.3 Ownership . The Company is the record and beneficial owner of the Shares free and clear of all liens, claims and encumbrances. Upon payment of the Purchase Price, Buyer will acquire good and marketable title to the Shares, subject only to such liens thereon as may be created by Buyer. The Shares, at the Closing, will be free and clear of all Security Interests, pledges, charges, claims, encumbrances and restrictions of any kind, except for restrictions on transfer imposed by federal and state securities laws. None of the Shares are or will be subject to any voting trust or agreement. No person holds or has the right to receive any proxy or similar instrument with respect to such Shares. Except as provided in this Agreement, neither the Company nor any Acquired Entity is party to any agreement which offers or grants to any person the right to purchase or acquire any of the Shares or any capital stock of an Acquired Entity. There is no applicable local, state or federal law, rule, regulation, or decree which would, as a result of the purchase of the Shares by Buyer (and/or assigns) impair, restrict or delay voting rights with respect to the Shares.

5.4 No Consents Required . No notice to, consent, authorization or approval of, or exemption by, any governmental or public body or authority is required in connection with the execution, delivery and performance by the Company of this Agreement, or the taking of any action herein contemplated. To the Company’s Knowledge, no notice to, consent, authorization or approval of, any Person under any agreement, arrangement or commitment of any nature which Company is party, is required in connection with the execution, delivery and performance by Buyer of this Agreement, or the taking of any action by the Company herein contemplated.

ARTICLE VI – REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to the Company as of the date hereof and as of the Closing Date:

6.1 Power . Buyer is an individual with legal capacity to execute and deliver this Agreement and the Transactions Documents to which he is party and to consummate the transactions contemplated hereby.

6.2 Effect of Agreement. The execution, delivery and performance of this Agreement and the Transaction Documents or the other agreements contemplated hereby, or the consummation of the transactions contemplated hereby or thereby, by the Buyer, will not, with or without the giving of notice and the lapse of time, or both, (a) violate any provision of law, statute, rule, regulation or executive order under which the Buyer may be bound; or (b) violate any judgment, order, writ or decree of any court having jurisdiction over the Buyer. This Agreement and each other agreement contemplated hereby to be executed and delivered by the Buyer have been or will be prior to Closing duly executed and delivered by the Buyer and constitute or will constitute legal, valid and binding obligations of the Buyer, enforceable against Buyer in accordance with their respective terms.

6.3 Ownership . The Buyer is the owner of the Collins Debt free and clear of all Security Interests, liens, claims and encumbrances. No party has the right to receive any proceeds of the Collins Debt. Upon consummation of the transactions contemplated hereby, the Collins Debt will be deemed satisfied in full.

6.4 Governmental and Other Consents . No notice to, consent, authorization or approval of, or exemption by, any governmental or public body or authority, any lender or lessor or any other person or entity, is required in connection with the execution, delivery and performance by the Buyer of this Agreement or the Transaction Documents or any other agreements contemplated to be executed and delivered by the Buyer hereby.

6.5 Independent Advice . Buyer has served as the Chief Executive Officer, President and a Director of the Company for more than three years and is thoroughly familiar with the operations of the Company. In addition, in connection with this Agreement Buyer has consulted with such legal, tax, investment and other advisors as he determined necessary or appropriate. Consequently, Buyer is acquiring the Shares “as is where is” with no representations or warranties of the Company except as expressly set forth herein.

6.6 Absence of Undisclosed Liabilities Related to Capital Stock . Buyer is not aware of any agreements obligating the Company to issue shares of its capital stock or warrants, or any promissory notes or other forms of indebtedness, not recorded in the books and records of the Company.

ARTICLE VII - COVENANTS

7.1 Operation of Business Until Closing . The Company agrees that, between the date of this Agreement and the Closing Date, the Company and the Acquired Entities will respectively operate the business of the Company and of the Acquired Entities in the Ordinary Course of Business.

7.2 Post-Closing Covenants; Further Assurances . The Company and Buyer covenant and agree to deliver and acknowledge (or cause to be executed, delivered and acknowledged), from time to time, at the request of the other and without further consideration, all such further instruments and take all such further actions as may be reasonably necessary or appropriate to carry out the provisions and intent of this Agreement.

7.3 Intercompany Agreements . The Company and the Acquired Entities agree that all agreements between or among, on the one hand, the Company and/or an Excluded Entity and, on the other hand, the Acquired Entities, and/or their Affiliates on the other hand, shall be terminated and be of no further force or effect as of the Closing Date.

ARTICLE VIII - AGREEMENTS REGARDING TAXES

8.1 Cooperation on Tax Matters . Buyer and the Company shall cooperate fully, as and to the extent reasonably requested, in connection with the filing of Tax Returns with respect to the Company and Acquired Entities for taxable periods ending prior to the Closing Date and for the portion of any taxable period through the Closing Date and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon another party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Company shall retain all books and records with respect to Tax matters pertinent to the Company and Acquired Entities prior to the Closing date hereof and relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority.

ARTICLE IX

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

9.1 Survival . The representations and warranties set forth in this Agreement, in any Exhibit or Schedule hereto and in any certificate or instrument delivered in connection herewith shall survive for a period of twelve (12) months after the Closing Date (the “Warranty Period”) and shall thereupon terminate and expire and shall be of no force or effect thereafter, except (i) with respect to any claim, written notice of which shall have been delivered to Buyer or the Company, as the case may be, in accordance herewith and prior to the end of the Warranty Period, such claim shall survive the termination of such Warranty Period for as long as such claim is unsettled, and (ii) with respect to any litigation which shall have been commenced to resolve such claim on or prior to such date.

9.2 Indemnification by Acquired Entities Subject to the provisions of Section 9.5 below, each of the Acquired Entities hereby covenants and agrees that it shall jointly and severally indemnify the Company and the Excluded Entities, and their respective directors, officers, affiliates and employees, and each of their successors and assigns (individually, a “Horizon Indemnified Party”), and hold them harmless from, against and in respect of any and all costs, losses, claims, liabilities (including for Taxes), fines, penalties, damages and expenses (including interest, if any, imposed in connection therewith, court costs and reasonable fees and disbursements of counsel) (collectively, “Damages”) incurred by any Horizon Indemnified Party arising out of or related to (i) any claims made by the customers of the Acquired Entities set forth on Schedule 9.2.1 and the employees of the Acquired Entities set forth on Schedule 9.2.2 and (ii) any breach by Buyer of the representation contained in Sections 6.3 and 6.6.

9.3 Indemnification by the Company . Subject to the provisions of Section 9.5 below, the Company and each of the Excluded Entities hereby covenants and agrees that it shall jointly and severally indemnify Buyer and the Acquired Entities, and their respective affiliates, directors, officers and employees, and each of their successors and assigns (individually, a “Collins Indemnified Party”), and hold them harmless from, against and in respect of any and all Damages incurred by any Collins Indemnified Party arising out of or related to (i) the operations of the Company and any Excluded Entity and any breach by the Company of any representation or warranty in this Agreement or the non-fulfillment in any material respect of any agreement, covenant or obligation of the Company made in this Agreement (including without limitation any Exhibit or Schedule hereto and any certificate or instrument delivered in connection herewith).

9.4 Right to Defend . If a claim for indemnification shall involve a claim or demand by a third party against a Horizon Indemnified Party or a Collins Indemnified Party (referred to in this Section as an “Indemnified Party”), the Indemnified Party will give notice of the claim to the other party (the “Indemnifying Party”), which shall detail the nature, basis and amount of the claim (the “Notice of Third Party Claim”). The failure to provide a Notice of Third Party Claim shall only relieve the Indemnifying Party of its obligation to indemnify for such claim to the extent that it has been prejudiced by the failure to give the Notice of Third Party Claim. The Indemnifying Party may (without prejudice to the right of an Indemnified Party to participate at its own expense through counsel of its own choosing) undertake the defense of such claims at its expense with counsel chosen and paid by it by giving notice (the “Election to Defend”) to the Indemnified Party within thirty (30) days after the date the Notice of Third Party Claim is deemed received; provided, however, that the Indemnifying Party may not settle such claims without the consent of the Indemnified Party, which consent will not be unreasonably withheld or delayed, except if the sole relief provided is monetary damages to be borne by the Indemnifying Party; and, provided further, if the defendants in any action include both the Indemnifying Party and the Indemnified Party, and the Indemnified Party shall have reasonably concluded that counsel selected by the Indemnifying party has a conflict of interest, the Indemnified Party shall have the right to participate in such defense and the reasonable fees and expenses of counsel to the Indemnified Party shall be considered “Damages.”. The Indemnified Party shall cooperate in the defense of any claim and make available pertinent information under its control If an Indemnifying Party does not give the Election to Defend as provided above, it will be deemed to have irrevocably waived its right to defend or settle such claims.

9.5 Limitation on Rights of Indemnification . Neither the Horizon Indemnified Parties nor the Collins Indemnified Parties shall have any right to indemnification under this Agreement or in any agreement executed pursuant thereto, unless and until the aggregate amount of any and all such indemnification claims made by such party under this Agreement exceeds $50,000 (the “Basket”). If Horizon Indemnified Party claims or Collins Indemnified Party indemnified claims exceed the Basket, such party shall be entitled to seek compensation for all Damages in excess of such amount.

9.6 Subrogation .

(a) If an Indemnified Party receives payment or other indemnification from an Indemnifying Party, the Indemnifying Party shall be subrogated to the extent of such payment or indemnification to all rights in respect of the subject matter of such claim to which the Indemnified Party may be entitled, to institute appropriate action against third parties for the recovery thereof, including under any insurance policies, and the Indemnified Party agrees to assist and cooperate in good faith with the Indemnifying Party and to take any action reasonably required by such Indemnifying Party, at the expense of such Indemnifying Party, in enforcing such rights.

(b) If an Indemnifying Party shall have paid an Indemnified Party for an indemnified claim or otherwise, and the Indemnified Party subsequently receives payment under insurance policies covering such claim, the Indemnified Party shall repay to the Indemnifying Party the amount of such prior payment made by the Indemnifying Party; provided, however, such repayment shall not exceed the actual amount received by the Indemnified Party under such policy, less all reasonable fees (including attorneys’ fees) incurred by the Indemnified Party in pursuing and collecting under such policy.

ARTICLE X - MISCELLANEOUS

10.1 Waivers . No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein or in any other documents. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. Any party hereto may, at or before the Closing, waive any conditions to its obligations hereunder which are not fulfilled.

10.2 Binding Effect; Benefits . This Agreement shall inure to the benefit of the parties hereto and shall be binding upon the parties hereto and their respective successors and assigns, as well as the Acquired Entities and the Excluded Entities with respect to their obligations under Article IX of this Agreement and the provision of section 10.6. Except as otherwise set forth herein, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto and the Indemnified Parties or their respective successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Agreement.

10.3 Assignment; Delegation . No party to this Agreement may assign its rights or delegate its obligations hereunder without the prior written consent of all of the other parties; provided, however, that at Closing the Buyer may assign this Agreement to an entity controlled by him, without the prior written consent of the Company provided, however, the Buyer shall remain liable for the payment of the amounts due from it pursuant hereto. Any assignment or delegation in violation of this Section 10.3 shall be null and void.

10.4 Notices . All notices, requests, demands and other communications which are required to be or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when delivered in person or after dispatch by recognized overnight courier to the party to whom the same is so given or made:

If to Company or any Excluded Entity, to the Company’s address set forth above, with a copy to: Eaton & Van Winkle LLP, 3 Park Avenue, 16 ^th floor, New York, NY 10016, Attn: Vincent J. McGill, Esq. Phone: (212) 561-3604 (Direct)

or at such other address as the Company or any Excluded Entity may have advised the Buyer hereto in writing; and

If to the Buyer or any Acquired Entity, to the Buyer at his address set forth above or at such other address as Buyer or any Acquired Entity may have advised the Company in writing; and

All such notices, requests and other communication shall be deemed to have been received on the date of delivery thereof (if delivered by hand) and on the next business day after the sending thereof (if by recognized overnight courier).

10.5 Entire Agreement . This Agreement (including the Schedules and Exhibits hereto) and the other Transaction Documents constitute the entire agreement and supersede all prior agreements, statements, representations or promises, oral and written, among the parties hereto with respect to the subject matter hereof. No party hereto shall be bound by or charged with any written or oral arguments, representations, warranties, statements, promises or understandings not specifically set forth in this Agreement or in any Schedule or Exhibits hereto or any other Transaction Documents, or in certificates and instruments to be delivered pursuant hereto on or before the Closing.

10.6 Governing Law . This Agreement, and the rights and obligations of the parties hereto under this Agreement, shall be governed by, construed and enforced in accordance with the laws of the State of New York, without giving effect to the choice of law principles thereof. Any action arising out of the breach or threatened breach of this Agreement shall be commenced in a proper New York State court and each of the parties hereby submits to the jurisdiction of such courts for the purpose of enforcing this Agreement.

10.7 Severability . If any term or provision of this Agreement shall to any extent be finally determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each term and provision of the agreement shall be valid and enforced to the fullest extent permitted by law, provided that as so enforced, each of the parties receives substantially all of the benefits contemplated hereby.

10.8 Transaction Taxes . The Company shall pay any sales or transfer taxes arising out of the transfer of the Shares.

10.9 Exhibits and Schedules . The Exhibits and Schedules attached hereto or referred to herein are incorporated herein and made a part hereof. As used herein, the expression “this Agreement” includes such Exhibits and Schedules.

10.10 Press Releases and Public Announcements . The Company agrees that it will provide Buyer with a copy of any Form 8-K it intends to file regarding this Agreement or Buyer and agrees to reasonably consider any edits proposed by Buyer to such report. The Company further agrees that it will not make a Press Release regarding this Agreement or the Buyer without the Buyer’s agreement.

[Signatures are on the following page]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the first date written above.

One Horizon Group, Inc.			Brian Collins

/s/ Martin Ward			/s/ Brian J. Collins
By: Martin Ward			Brian Collins
Title: Chief Financial Officer

The undersigned parties are executing this Agreement solely to confirm their agreement to undertake their obligations under Section 7.3, Article IX and Section 10.6 of this Agreement.

Abbey Technology GmbH		Horizon Globex GmbH

By:	/s/ Brian Collins	By:	/s/ Brian Collins
	An Authorized Officer		An Authorized Officer

Horizon Globex Ireland Ltd		One Horizon Group PLC

By:	/s/ Brian Collins	By:	/s/ Brian Collins
	An Authorized Officer		An Authorized Officer

SCHEDULE 9.2.1

Customers of the Acquired Entities as to which the Acquired Entities provide indemnification

Active

1. Smart Communications [ http://smart.com.ph ]

2. Singtel Telecommunications [ http://singtel.com ]

3. Econet Wireless Zimbabwe [ http://www.econet.co.zw ]

4. Globecomm Systems Inc. [ http://www.globecomm.com ]

5. Borderless Hub Pte. Ltd. [ http://www.borderlesshub.com ]

6. Dome Telecom Ltd. [ http://www.dometelecom.com ]

7. Zhuoyitong Industrial Co. Ltd. [ http://www.cullian.com ]

8. AccessPlus Communications Ltd. [ http://www.accessplusgh.com ]

9. HIT Communications [ http://www.hittelco.com ]

10. AA Technology [ http://aatechnology.net ]

11. Fonmigo Ltd. [ http://www.tepwireless.com ]

12. WorldSIM [ http://cheaper-calls.com ]

Discontinued

1. PVV (Steven Qu) [ http://www.pvvgroup.com ]

2. Tribebuyer LLC (Graham Conran) [ http://www.roamfrii.com ]

3. Redshift Technology Ltd. [ http://www.redshift-tech.com ]

4. IEC Telecom [ http://www.iec-telecom.com ]

5. Top Up [ http://www.topup.hk ]

6. AND Group Plc [ http://www.satcomglobal.com ]

7. KurayGeo Service Indonsesia

8. ICE Messaging Pte Ltd

9. X-Mobility

10. International Mobile Applications (IMA) AG

Subsidiary discontinued agreements

1. Horizon Latin America

2. Horizon Russia

3. Horizon India

SCHEDULE 9.2.2

Employees of the Acquired Entities as to which the Acquired Entities provide indemnification

SEAN CURTIN

KORNEL JANKOWSKI

XIAOMING (ANDRE JU)

ANDREW LE GEAR

HUGH LYNCH

SHILEI MAO

LIAM MCNAMARA

BRIAN QUINLIVAN

LUKASZ STARZAK

TAWNY WHATMORE

LI YUSEN

TIM LOVETT

PETER HALL

EXHIBIT 31.1

Certification Pursuant to Rule 13a-14(a)/15d-14(a)

Under The Securities Exchange Act Of 1934, as amended,

as Adopted Pursuant to Section 302 of The Sarbanes-Oxley Act Of 2002

I, Martin Ward, certify that:

1. I have reviewed this quarterly report on Form 10-Q of One Horizon Group, Inc. (the "Registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting;

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Dated: August 14, 2017	/s/ Martin Ward
	Martin Ward
	Principal Executive Officer

EXHIBIT 31.2

Certification Pursuant to Rule 13a-14(a)/15d-14(a)

Under The Securities Exchange Act Of 1934, as amended,

as Adopted Pursuant to Section 302 of The Sarbanes-Oxley Act Of 2002.

I, Martin Ward, certify that:

1. I have reviewed this quarterly report on Form 10-Q of One Horizon Group, Inc. (the "Registrant");

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Dated: August 14, 2017	/s/ Martin Ward
	Martin Ward
	Principal Financial Officer

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of One Horizon Group, Inc. (the "Company") for the period ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Martin Ward, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2017	/s/ Martin Ward
	Martin Ward
	Principal Executive Officer

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the quarterly report on Form 10-Q of One Horizon Group, Inc. (the "Company") for the period ended June 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Martin Ward, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2017	/s/ Martin Ward
	Martin Ward
	Principal Financial Officer