One Horizon Group, Inc. (Form: 10-K, Received: 04/02/2018 12:20:22)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2017 .

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

Commission File Number 001-36530

One Horizon Group, Inc.

(Exact name of registrant as specified in its charter)

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

34 South Molton Street London W1K 5RG United Kingdom
		N/A
(Address of principal executive offices)		(Zip Code)

+44(0)20 7409 5248

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Common Stock, Par Value $0.0001		The Nasdaq Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑

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 if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

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 ☑
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 ☑

The aggregate market value of the 6,347,858 shares of voting and non-voting common equity stock held by non-affiliates of the registrant was approximately $ 4.86 million as of June 30, 2017, the last business day of the registrant’s most recently completed second fiscal quarter, based on the last sale price of the registrant’s common stock on such date of $0.765 per share, as reported on Nasdaq.

As of March 12, 2018, 33,400,215 shares of the registrant’s common stock, par value $0.0001, were outstanding.

TABLE OF CONTENTS

Item	Description	Page
	Cautionary Note Regarding Concerning-Looking Statements	3

	Part I
Item 1	Business	5
Item 1A	Risk Factors	9
Item 2	Properties	12
Item 3	Legal Proceedings	12
Item 4	Mine Safety Disclosures	12

	Part II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	13
Item 6	Selected Financial Data	14
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	18
Item 8	Financial Statements and Supplementary Data	18
Item 9A	Controls and Procedures	19
Item 9B	Other Information	20

	Part III
Item 10	Directors, Executive Officers and Corporate Governance	21
Item 11	Executive Compensation	26
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	27
Item 13	Certain Relationships and Related Transactions, and Director Independence	29
Item 14	Principal Accounting Fees and Services	30

	Part IV
Item 15	Exhibits, Financial Statement Schedules	32

	Signatures	37

Introductory Note

Unless otherwise noted, references to the “Company” in this Report include One Horizon Group, Inc. and all of its subsidiaries.

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. These risks include, but are not limited to, risks and uncertainties relating to our current cash position and our need to raise additional capital in order to be able to continue to fund our operations; the potential delisting of our common stock from The NASDAQ Capital Market; our ability to retain our managerial personnel and to attract additional personnel; competition; our ability to protect intellectual property rights, and any and other factors, including the risk factors identified in the documents we have filed, or will file, with the Securities and Exchange Commission.

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this report or in any document incorporated herein by reference might not occur. Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the respective dates of this report or the date of the document incorporated by reference in this report. We expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws.

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-K have been adjusted to give effect to this reverse stock split, unless otherwise indicated or unless the context suggests otherwise.

PART I

ITEM 1. BUSINESS

On August 11, 2017 (date of Reorganization), the Company consummated a Stock Purchase Agreement whereby its former Chief Executive Officer (“Former CEO”) acquired all of the outstanding capital stock of three of the Company’s subsidiaries, Abbey Technology GmbH, Horizon Globex GmbH and Horizon Globex Ireland Ltd., and approximately 99.7% of the outstanding shares in One Horizon Group plc (collectively the “Discontinued Entities”) from the Company in exchange for the forgiveness of $1,968,253 due by the Company to the Former CEO. In connection with the transaction, the Former CEO and the Discontinued Entities released the Company and its remaining subsidiaries (the “Excluded Entities”) from any claims outstanding as of the date of the transaction and the Company and the Excluded Entities released the Discontinued Entities from any outstanding claims.

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

The Company decided to reduce its expenditure base and concentrate on opportunities in the Asia market for its secure messaging software. The Company has retained the subsidiaries (“Retained Entities”) based in China and Hong Kong together with the intellectual property related to secure messaging and intends to continue to promote this business particularly in China and Hong Kong.

On February 22, 2018, we acquired 51% of the membership interests in Once In A Lifetime LLC, a Florida limited liability company d/b/a/ 123 Wish (“123 Wish”), pursuant to an Exchange Agreement dated January 18, 2018 with 123 Wish and its members in exchange for 1,333,334 shares of our common stock plus an additional number of shares of our common stock based upon the net after tax earnings of 123 Wish during the periods ending six and twelve months after the completion of the acquisition., 123Wish is a subscription-based, experience marketplace that focuses on providing users with exclusive opportunities to enjoy personalized, dream experiences with some of the world’s most renowned social media influencers including Super Influencer Jake Paul and Team 10 as well as celebrities, professional athletes, fashion designers, and artists while supporting a diverse range of charities. The business has subsequently been transferred to a newly formed Delaware subsidiary 123Wish, Inc.

On February 27, 2018, we entered into an Exchange Agreement with C-Rod, Inc., Christopher Rodriguez and Patricia Rodriguez, pursuant to which we completed the acquisition on March 20, 2018. We acquired all the outstanding shares of C-Rod, Inc., including its record label, Velveteen Entertainment, and media division, Mues Media (collectively, the “C-Rod Companies”), in exchange for $150,000, 1,000,000 shares of our common stock plus an additional number of shares of our common stock based upon the net after tax earnings of C-Rod during the two years ending after the completion of the acquisition.

The C-Rod Companies will continue business operations as ‘Love Media House,’ a wholly owned subsidiary of our company.

C-Rod, Inc., a premier music production company founded in 2002 by Grammy-nominated, multi-platinum producer and composer Christopher Rodriguez, regularly works with superstar artists, which have included many celebrity acts such as Rihanna, Jennifer Lopez, Lady Gaga, Enrique Iglesias and Pet Shop Boys.

Current Structure of the Company

The Company has the following wholly owned subsidiaries: (except for Once In A Lifetime, LLC, which is 51% owned)

●

Once In A Lifetime, LLC d/b/a/ 123Wish (effective 2018)

●

Global Phone Credit Ltd

●

One Horizon Hong Kong Ltd

	●	Horizon Network Technology Co. Ltd
	●	C-Rod, Inc. (effective 2018)

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

Current Business Operations

In September 2017 the Company appointed Mark White as CEO to drive the new business acquisition strategy of the Company. As a result, the Company has looked at various possible targets and undertaken the necessary due diligence. In line with the Company’s policy we are only prepared to invest in target companies that have strong local management and that assist the Group in achieving profitability during 2018.

Recent Developments

Acquisition of controlling interest in 123Wish

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

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

In order to deliver authentic and unique lifestyle experiences, 123Wish will launch experiences with social media influencers, music artists and other celebrities that have been embraced by Generation Z. TGZ Capital, L.P., the Gen Z focused venture capital fund, owned five percent of 123Wish pre-acquisition and becomes an OHGI shareholder pursuant to this transaction.

In connection with the 123 Wish Acquisition, the Company entered into an Employment Agreement with Natalia Diaz, who will remain the President and CEO of 123Wish. The Employment Contract is for an initial period of 2 years with an annual salary of $115,000. In addition to the salary there are performance incentives of future stock awards based on the profitability of 123Wish, Inc.

Acquisition of C-Rod, Inc

On March 20, 2018, we acquired all of the outstanding shares of C-Rod, Inc., a Florida corporation, including its record label, Velveteen Entertainment, and media division, Mues Media (collectively, the “C-Rod Companies”), pursuant to an Exchange Agreement with C-Rod, Inc., Christopher Rodriguez and Patricia Rodriguez, in exchange for $150,000 in cash, 1,000,000 shares of our common stock plus an additional number of shares of our common stock based upon the net after tax earnings of C-Rod during the two years ending after the completion of the acquisition.

The C-Rod Companies will in the future continue business operations as “Love Media House”, a wholly owned subsidiary of OHGI.

C-Rod a premier music production company founded in 2002 by Grammy-nominated, multi-platinum producer Christopher Rodriguez, regularly works with superstar artists, which have included many celebrity acts such as Rihanna, Jennifer Lopez, Lady Gaga, Enrique Iglesias and Pet Shop Boys.

Corporate Information . Our principal executive offices are located at 34 South Molton Street, London W1K 5RG, United Kingdom, and our telephone number at that location is +44(0)20 7409 5248.

Our Strategy

After the reorganization previously described, the Company’s strategy is make further acquisitions in the digital media and entertainment space, whilst continuing to trade in the secure messaging business in gaming, educational and security segments.

Competition

Our secure messaging software operates in a relatively crowded marketplace and whilst other software can provide similar results the messaging application has we believe additional secure encoyptia.

123 wish provides experiences to fans of high profile celebrities but with the ability to ensure charities can benefit from a proceedings of subscriptions paid. There are other companies offering similar fan experiences.

Love Media (previously C-Rod, Inc.) operates as a music production, songwriter, mixers and arrangers and therefore is in marketplace with many competition. The team, headed by Chois Rodriguez has worked with many famous artists and achieved many Bill board number i.e and that gives the company an important edge in attacking new talent.

Employees

As of December 31, 2017, we had 6 employees, all of whom were full-time employees.

ITEM 1A. RISK FACTORS

RISKS RELATED TO OUR BUSINESS

We incurred a net loss in 2017 and 2016 with negative cash flows and we cannot assure you as to when, or if, we will become profitable and generate positive cash flows.

We incurred a net loss of $7.4 million for the year ended December 31, 2017 and a net loss of $5.6 million for the year ended December 31, 2016 and negative cash flows from operations in each of those years. Such losses have historically required us to seek additional funding through the issuance of debt or equity securities. Our long term success is dependent upon among other things, achieving positive cash flows from operations and if necessary, augmenting such cash flows using external resources to satisfy our cash needs. As a result of our recent acquisitions and the sale of certain subsidiaries in 2017 to our former CEO, we project to have positive cash flows to fund operations during 2018. However, we may be unable to achieve these goals and actual results could differ from our estimates and assumptions, accordingly, we may have to supplement our cash flow, by debt financing or sales of equity securities. These can be no assurance that we will be able to obtain additional funding, if needed, on commercially reasonable terms, or of all.

We may be unable to effectively manage our planned expansion.

Our planned expansion may strain our financial resources. In addition, any significant growth into new markets may require an expansion of our employee base for managerial, operational, financial, and other purposes. During any growth, we may face problems related to our operational and financial systems and controls. We would also need to continue to expand, train and manage our employee base. Continued future growth will impose significant added responsibilities upon the members of management to identify, recruit, maintain, integrate, and motivate new employees.

If we are unable to successfully manage our expansion, we may encounter operational and financial difficulties which would in turn adversely affect our business and financial results.

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

We attempted to estimate our funding requirements in order to implement our growth plans.

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

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

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

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

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

Our operations and managements are partially located outside of the United States; U.S. investors may experience difficulties in attempting to effect service of process and to enforce judgments based upon U.S. federal securities laws against the company and its non U.S. resident officers and directors.

While we are organized under the laws of State of Delaware, our management, our officers and directors are non-U.S. residents, and our headquarters are located outside of the United States. Consequently, it may be difficult for investors to effect service of process on such officers and directors in the United States and to enforce in the United States judgments obtained in United States courts against such persons based on the civil liability provisions of the United States securities laws. Since all our assets are located outside of the U.S. it may be difficult or impossible for U.S. investors to collect a judgment against us. As well, any judgment obtained in the United States against us may not be enforceable.

We are dependent on our management team and the loss of any key member of that team could have a material adverse effect on our operations and financial condition.

We attribute our success to the leadership and contributions of our managing team comprising executive directors and key executives, in particular to Mark White, our Chief Executive Officer, and Martin Ward, our Chief Financial Officer.

Our continued success is therefore dependent to a large extent on our ability to retain the services of these key management personnel. The loss of their services without timely and qualified replacement, would adversely affect our operations and hence, our revenue and profits.

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

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

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

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

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

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

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

Zhanming Wu, our principal stockholder owns 15,000,000 shares, or approximately 45% of our outstanding shares. Our directors and officers own an additional 5,369,645 shares, or approximately 16% of our outstanding shares. As a result, Mr. Wu and our directors and officers as a group could have a significant influence in delaying, deferring or preventing any potential change in control of our company; they will be able to strongly influence the actions of our board of directors even if they were to cease being directors or officers of our company and can effectively control the outcome of actions brought to our stockholders for approval. Such a high level of ownership may adversely affect the exercise of your voting and other stockholder rights.

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

As a public company we are obligated to file with the SEC annual and quarterly information and other reports that are specified in the Exchange Act. We are also subject to other reporting and corporate governance requirements under the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder, all of which impose significant compliance and reporting obligations upon us and require us to incur additional expense in order to fulfill such obligations.

Our shares of common stock are from time to time thinly-traded, so stockholders may be unable to sell at or near ask prices or at all if they need to sell shares to raise money or otherwise desire to liquidate their shares.

Our common stock has from time to time been “thinly traded,” meaning that the number of persons interested in purchasing our common stock at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give stockholders any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.

Our failure to meet the continued listing requirements of the NASDAQ Capital Market could result in a de-listing of our common stock.

Our shares of common stock are currently listed on the NASDAQ Capital Market. If we fail to meet the requirements for continued listing on the NASDAQ Capital Market, the NASDAQ Capital Market may take steps to de-list our common stock. Such a de-listing would likely have a negative effect on the price of our common stock and would impair our stockholders’ ability to sell or purchase our common stock when they wish to do so. In the event of a de-listing, we would take actions to restore our compliance with the NASDAQ Capital Market’s listing requirements, but we can provide no assurance that any action taken by us would result in our common stock becoming listed again, or that any such action would stabilize the market price or improve the liquidity of our common stock.

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

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

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

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

ITEM 2. PROPERTIES

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

Location	Approximate size	Approximate monthly rent

Hong Kong	150 sqft	$	1,900
China	1,900 sqft	$	1,400
UK	120 sqft	$	1, 250

ITEM 3. LEGAL proceedings

We are not party to any material legal proceedings and no material legal proceedings have been threatened by us.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the NASDAQ Capital Market under the symbol OHGI.

The following table sets forth the high and low sales prices of our common stock for the periods indicated, as reported by Nasdaq on its website, www.nasdaq.com .

	Low		High

Fiscal year ended December 31, 2017:
Quarter ended December 31	$	0.80	$	3.38
Quarter ended September 30		0.57		1.39
Quarter ended June 30		0.62		2.82
Quarter ended March 31		1.44		2.24

Fiscal year ended December 31, 2016:
Quarter ended December 31	$	1.32	$	3.90
Quarter ended September 30		3.12		7.62
Quarter ended June 30		3.66		5.10
Quarter ended March 31		4.68		7.02

Record Holders

As of March 12, 2018, we had approximately 258 record holders of our common stock. The number of record holders does not include persons who held our common stock in nominee or “street name” accounts through brokers.

Dividend Policy

The payment of cash dividends by us is within the discretion of our board of directors and depends in part upon our earnings levels, capital requirements, financial condition, any restrictive loan covenants, and other factors our board considers relevant. We have not declared or paid any dividends on our common stock, during the periods included in this report, and we do not anticipate paying such dividends in the foreseeable future. We intend to retain earnings, if any, to finance our operations and expansion.

Description of Equity Compensation Plans

The following table shows the aggregate amount of securities authorized for issuance under all equity compensation plans as of December 31, 2017:

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

Equity compensation plans approved by security holders	—	$	—		822,667
Equity compensation plans not approved by security holdes	3,450,000	$	0.909		—

The securities referenced in the table above reflect stock options granted and approved by security holders pursuant to the equity compensation plan approved in 2013.

Sales of Unregistered Equity Securities

On December 6, 2017, we entered into an agreement with Maxim Group LLC (“Maxim”) for investment banking and advisory services. Under the agreement we agreed to issue 225,000 shares of common stock to Maxim. The certificates evidencing the shares were issued in 2018 and were endorsed with, the customary Securities Act legend. Except as previously reported in the reports we have filed under the Exchange Act, we have not issued or sold any other unregistered equity securities during the period by this report.

Repurchases of Equity Securities

We have not repurchased any equity securities during the period covered by this report.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. 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 audited consolidated financial statements and notes for the fiscal years ended December 31, 2017 and 2016. The following discussion and analysis contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. See “Cautionary Note Concerning Forward-Looking Statements.” You also should specifically consider the various risk factors identified in this report that could cause actual results to differ materially from those anticipated in these forward-looking statements.

The share and per share information presented in the discussion of our Results of Operations for the years ended December 31, 2017 and 2016 gives effect to a one-for-six reverse stock split of our outstanding shares of common stock effected on April 14, 2017.

Overview

During the year ended December 31, 2017, the Company continued to generate cash losses related to the discontinued operations (Horizon Globex/VoIP Business) until the date these operations were sold to the former CEO in August 2017. Of the results in the year ended December 31, 2017 the Company’s net loss totaled $7.4 million, of which $2.4 million related to the discontinued operations for the period up to August 11, 2017. The losses relating to continued operations totaled approximately $5.0 million, which were primarily made up of non-cash items totaling $4.5 million including, amortization of intangible assets, issuance of common stock warrants for services received and amortization of debt issue costs and debt discounts.

One Horizon Group, Inc. following the divestiture of the Horizon Globex/VoIP Business (four entities) in August 2017 to the former CEO Brian Collins of the VoIP business, has retained the secure messaging business, based primarily in South East Asia. In addition, during 2018, the Company has pursued investments in the digital media business and on February 22, 2018, acquired a controlling interest in Once In A Lifetime, LLC d/b/a 123Wish (www.123wish.com), an experience based platform that offers participants an opportunity to play and win unique experiences from renowned celebrities, influencers, athletes, designers, artists, luxury items and more while supporting a diverse range of charities.

In addition on March 20, 2018, we acquired all of the outstanding shares of C-Rod, Inc., a Florida corporation, including its record label, Velveteen Entertainment, and media division, Mues Media (collectively, the “C-Rod Companies”), pursuant to an Exchange Agreement with C-Rod, Inc., Christopher Rodriguez and Patricia Rodriguez, in exchange for $150,000 in cash and 1,000,000 shares of our common stock plus an additional number of shares of our common stock based upon the net after tax earnings of C-Rod during the two years ending after the completion of the acquisition.

The C-Rod Companies will continue business operations as ‘Love Media House,’ a wholly owned subsidiary of our company.

The following financial forecasts, including the acquisitions completed in the first quarter of 2018, as projected by management, reflect the expected revenue and operating profit before Group costs, minority interests and amortization, to be generated during the year ended December 31, 2018. Our actual results may differ significantly from these expected results.

ANTICIPATED REVENUE		Year ended December 31, 2018
Division		$million
Horizon Secure Messaging		0.5
123Wish		5.1
Love Media House (C-Rod)		1.1

Total	$	6.7

ANTICIPATED OPERATING PROFIT BEFORE GROUP COSTS AND AMORTIZATION		Year ended December 31, 2018
Division		$million
Horizon Secure Messaging		0.4
123Wish		2.9
Love Media House (C-Rod)		0.4

Total	$	3.7

Results of Operations

The following table sets forth information from our statements of operations for the years ended December 31, 2017 and 2016.

Comparison of year ended December 31, 2017 and 2016 (in thousands) excluding discontinued items.

	For the Year Ended						Year to Year Comparison
	December 31,						Increase/			Percentage
	2017			2016			(decrease)			Change

Revenue	$	714		$	44		$	670			1,522.7	%

Cost of revenue
Hardware, calls and network charges		—			33			(33	)		(100.0	)%
Amortization of software development costs		855			91			(764	)		839.6	%
		855			124

Gross deficit		(141	)		(80	)		(61	)		(76.2	)%

Operating Expenses

General and administrative		4,236			2,013			2,223			110.4	%

Depreciation		17			28			(11	)		(39.3	)%

Total Operating Expenses		4,253			2,041			2,212			108.4	%

Loss from Operations		(4,394	)		(2,121	)		(2,273	)		(107.2	)%

Other Income(expense)
Interest expense		(666	)		(712	)		46			6.5	%

Foreign currency exchange gains		1			2			(1	)		(50.0	)%


Loss for continuing operations		(5,059	)		(2,831	)		(2,228	)		(78.7	)%

Revenue: Our revenue for continuing operations for the year ended December 31, 2017 was approximately $714,000 as compared to approximately $44,000 for the year ended December 31, 2016, an increase of approximately $670,000 or 1,523%. The increase was primarily due to the increase in software licenses for secure messaging software in the gaming, education and security business sectors in the Asia region.

Cost of Revenue: Cost of revenue was primarily the amortization of the intellectual property relating to the secure messaging software.

Gross Profit : Gross loss for the year ended December 31, 2017 was approximately $(141,000) as compared to $(80,000) for the year ended December 31, 2016.

Operating Expenses: Operating expenses including general and administrative expenses, consultancy, depreciation and research and development expenses were approximately $ 4.25 million for the year ended December 31, 2017, as compared to approximately $2.04 million, for the same period in 2016, an increase of approximately $2.3 million or 116%. The increase in expenses primarily arose due to an increase in non-cash consulting expenditure..

Net Loss: Net loss from continuing operations for the year ended December 31, 2017 was approximately $5.1 million as compared to a net loss of $2.8 million for the same period in 2016. Going forward, management believes the Company will continue to grow the business and increase profitability through acquisitions.

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

Liquidity and Capital Resources

During 2017 the Company has entered into agreements with the holder of $3,500,000 principal amount of convertible debentures then outstanding (the “Debentures”) and the holder of the 555,555 outstanding shares of its Series A-1 Preferred Stock (the “Preferred Shares”) pursuant to which it agreed to issue (the “Debenture Exchange”) to the holder of the Debentures upon conversion of $3,000,000 principal amount of the Debentures together with all interest accrued thereon, 13,000,000 shares of common stock, and, upon cancellation of the remaining balance due on the Debentures a $500,000 promissory note bearing interest at the rate of 7% per annum payable August 31, 2019 (the “7% Note”) and agreed to issue to the holder of the Preferred Shares, in exchange for the Preferred Shares (the “Preferred Exchange”), and the accrued but unpaid dividends thereon, 4,000,000 shares of common stock, together with a $500,000 promissory note bearing interest at the rate of 7% per annum.

The Company expects to receive further equity investment in April 2018 as a result of an exercise of 850,000 warrants held by First Choice International Company, Inc at $0.85 per share. In addition, $400,000 of convertible loan notes, including the $200,000 outstanding at December 31, 2017, were converted into common stock in February 2018.

Years Ended December 31, 2017 and December 31, 2016

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

	For the Years Ended December 31 (in thousands)
	2017			2016
Net cash used in operating activities from continuing operations		(426	)		(1,363	)
Net cash used in operating activities from discontinued operations		(277	)		60
Net cash used in investing activities from continuing operations		(2	)		(8	)
Net cash used in investing activities from discontinued operations		(261	)		(467	)
Net cash provided by financing activities from continuing operations		1,477			339
Net cash provided by financing activities from discontinued operations		—			(5	)

Net cash used by operating activities from continuing operations was approximately $0.4 million for the year ended December 31, 2017 as compared to approximately $1.4 million for the same period in 2016. The decrease in cash used in operating activities from continuing operations is largely due to the reduction in cash expenditure in 2017 as compared to 2016.

Net cash used in investing activities from continuing operations was approximately $2,000 and $8,000 for the years ended December 31, 2017 and 2016, respectively. Net cash used in investing activities was primarily focused on investment in office equipment costs.

Net cash provided by financing activities from continuing operations amounted to approximately $1.5 million for 2017 and $0.3 million for 2016. Cash provided by financing activities in 2017 was primarily from the sale of Common Stock, net of related costs. Cash provided by financing activities in 2016 was primarily due to the sale of Common Stock net of related costs.

Our working capital surplus as of December 31, 2017, was approximately $0.89 million, as compared to a working capital deficit of approximately $1.95 million for the same date in 2016.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

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

Together with our critical accounting policies set out above, our significant accounting policies are summarized in Note 2 of our audited financial statements as of December 31, 2017.

Revenue Recognition

The Company earns revenue under license agreements, for the use of its secure messaging software, which include a license fee and the sale of user licenses.

The Company recognizes revenue when it is realized or realizable and earned (and vendor specific objective evidence of fair value has been established for all elements in the license agreement). The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract or services have been rendered price fixed and determinable, and collectability is reasonably assumed.

Revenue for user licenses purchased by customers is recognized when the user license is delivered.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements of Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition” and most industry-specific guidance on revenue recognition throughout the ASC. The new standard is principles-based and provides a five step model to determine when and how revenue is recognized. The core principle of the new standard is that revenue should be recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also requires disclosure of qualitative and quantitative information surrounding the amount, nature, timing and uncertainty of revenues and cash flows arising from contracts with customers. The new standard, as updated in 2015, will be effective for us in the first quarter of the year ending December 31, 2018 and can be applied either retrospectively to all periods presented or as a cumulative-effect adjustment as of the date of adoption.

In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” ASU 2016-10 clarifies the implementation guidance on identifying performance obligations. This ASU applies to all companies that enter into contracts with customers to transfer goods or services. This ASU is effective for public entities for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but not before interim and annual reporting periods beginning after December 15, 2016. Entities have the choice to apply the ASU either retrospectively to each reporting period presented or by recognizing the cumulative effect of applying these standards at the date of initial application and not adjusting comparative information. We have evaluated the impact of the new accounting standard on our revenue recognition policies and do not believe that it will have an impact on our financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

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

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures for the period ended December 31, 2017. Our chief executive officer and chief financial officer concluded that due to the deficiency in the internal control over financial reporting discussed below, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of December 31, 2017.

Management’s Report on Internal Control over Financial Reporting

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

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

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

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

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

Our management, including our Chief Executive Officer and our Chief Financial Officer, has assessed the effectiveness of our internal control over financial reporting as of December 31, 2017. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Due to a lack of accounting personnel, management concluded that there was a material weakness due to our inability to segregate various accounting functions and concluded that as of December 31, 2017, our internal control over financial reporting was not effective based on those criteria.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. The rules of the Securities and Exchange Commission do not require an attestation of the Management’s report by our registered public accounting firm in this annual report.

Changes in Internal Control over Financial Reporting

Other than described above, during the fiscal quarter ended December 31, 2017, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

Name	Age	Position

Mark White	57	President, Chief Executive Officer and Director

Martin Ward	60	Chief Financial Officer and Director

Nicholas Carpinello	68	Director

Richard Vos	72	Director

Robert Law	67	Director

Mark White. Mr. White was appointed as President, Chief Executive Officer and a director on September 8, 2017. Mr. White previously served as the Company’s Chief Executive Officer from November 30, 2012 to July 24, 2014 and as a director from December 2012 to July 2014. From July 2014 to August 2017, he was engaged as a private investor seeking business and investment opportunities. Mr. White served as the Chief Executive Officer of One Horizon Group, PLC from 2004 to November 2012. His entrepreneurial career in the distribution of electronic equipment and telecommunications spans over 20 years. He founded Next Destination Limited in 1993, the European distributor for Magellan GPS and satellite products, and sold the business in 1997. Prior to that, Mr. White was Chief Executive Officer for Garmin Europe, where he built up the company’s European distribution network. He previously sold Garmin’s GPS products through Euro Marine Group Ltd, a company he formed in 1990, which established distribution in Europe for U.S. manufacturers of marine electronic equipment. Earlier in his career, Mr. White was the Sales Director for Cetrek Limited, a maritime autopilot manufacturer.

Martin Ward. Mr. Ward has served as Chief Financial Officer since November 30, 2012 and a director since December 10, 2012. Mr. Ward served as the Chief Financial Officer and Company Secretary of One Horizon Group, PLC from 2004 to November 2012. Prior to joining One Horizon Group, Mr. Ward was a partner at Langdowns DFK, a United Kingdom-based chartered accountancy practice. Earlier in his career, between 1983 and 1987, he worked for PricewaterhouseCoopers as an Audit Manager. Mr. Ward is a fellow of the Institute of Chartered Accountants of England and Wales.

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

Richard Vos

Mr. Vos was appointed as a director on August 28, 2013.

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

Mr. Vos was an Independent Director from 2007 to January 2017 of Avanti Communication Group plc, a public company listed on the London Stock Exchange (LSE:AVN), where he was chairman of its remuneration committee and audit committee. From June 2005 to June 2010, Mr. Vos was a director of our United Kingdom subsidiary. One Horizon Group plc (formerly SatCom Group Holdings plc) (“One Horizon UK”), and from October 2006 to June 2010 was also Chairman. From July 2005 to March 2010, One Horizon UK was listed on the Alternative Investment Market of the London Stock Exchange (AIM: SGH). From October 2008 to October 2010, Mr. Vos served as a director of TerreStar Europe Ltd., a former start-up business seeking to provide mobile satellite services in Europe. From April 2003 to 2009, Mr. Vos was chairman of the Telecommunications and Navigation Advisory Board of the British National Space Centre (subsequently reconstituted as the United Kingdom Space Agency). From September 2006 to June 2009, Mr. Vos was a director of Avanti Screenmedia Group plc, formerly listed on the London Stock Exchange (LSE:ASG), which provided satellite and other services. Mr. Vos obtained his Bachelor of Arts with Honors in Modern Languages from University of London in 1968, and his Diploma in Management Studies from Kingdom Polytechnic in 1973.

Robert Law. Mr. Law has served as a director since August 28, 2013. Since 1990, Mr. Law has served as chief executive officer of Langdowns DFK Limited (“Langdowns”), a United Kingdom-based accounting, tax and business advisory firm, and since 1979 has served as a director of Langdowns. Also, since 1990, Mr. Law has been the chief executive officer of Southern Business Advisers LLP (“Southern Business Advisers”), a United Kingdom-based business associated with Langdowns that also offers accounting, tax and business advisory services, and has been a member of Southern Business Advisers since 1979. Mr. Law is a Fellow of the Institute of Chartered Accountants in England and Wales (“ICAEW”), and is a member of the Valuation and Information Technology Faculties of the ICAEW. Mr. Law qualified as an ICAEW Chartered Accountant in 1976.

There are no family relationships among our directors and executive officers. Each director is elected at our annual meeting of shareholders and holds office until the next annual meeting of shareholders, or until his successor is elected and qualified, or his earlier death, resignation or removal. Officers are elected by and serve at the discretion of the Board of Directors.

Information Concerning the Board of Directors

Board Leadership Structure and the Board’s Role in Risk Oversight.

The Board of Directors currently does not have a Chairman. Our Chief Executive Officer acts as the Chairman of the Board. The Board determined that in the best interest of the Company the most effective leadership structure at this time is not to separate the roles of Chairman and Chief Executive Officer. A combined structure provides the Company with a single leader who represents the Company to our stockholders, regulators, business partners and other stakeholders, among other reasons set forth below. Should the Board conclude otherwise, the Board will separate the roles and appoint an independent Chairman.

●

This structure creates efficiency in the preparation of the meeting agendas and related Board materials as the Company’s Chief Executive Officer works directly with those individuals preparing the necessary Board materials and is more connected to the overall daily operations of the Company. Agendas are also prepared with the permitted input of the full Board of Directors allowing for any concerns or risks of any individual director to be discussed as deemed appropriate. The Board believes that the Company has benefited from this structure, and Mr. White’s continuation in the combined role of the Acting Chairman and Chief Executive Officer is in the best interest of the stockholders.

●	The Company believes that the combined structure is necessary and allows for efficient and effective oversight, given the Company’s relatively small size, its corporate strategy and focus.

The Board of Directors does not have a specific role in risk oversight of the Company. The Chairman, President and Chief Executive Officer and other executive officers and employees of the Company provide the Board of Directors with information regarding the Company’s risks.

Compensation of Directors

Non-employee directors are entitled to receive compensation for serving as directors and may receive option grants from our company. Employee directors do not receive any compensation for their services as directors. All of our directors are reimbursed for expenses incurred by them in connection with attending Board of Directors’ meetings. The following table sets forth all cash compensation paid by us, as well as certain other compensation paid or accrued, in 2017, to each of our non-employee directors.

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Nicholas Carpinello		18,000		0		0		0		0		0		18,000
Robert Law		16,000		0		0		0		0		0		16,000
Richard Vos		16,000		0		0		0		0		0		16,000
Robert Vogler (resigned August 11, 2017)		9,000		0		0		0		0		0		9,000

Independent Directors

Our Board of Directors has determined that Nicholas Carpinello, Robert Law and Richard Vos are “independent directors” within the meaning of NASDAQ Marketplace Rule 5605(a)(2).

Board Meetings; Committees and Membership

The Board of Directors held 7 meetings during the fiscal year ended December 31, 2017 (“fiscal 2017”). During fiscal 2017, each of the directors then in office attended more than 75% of the aggregate of (i) the total number of meetings of the Board of Directors and (ii) the total number of meetings of all committees of the Board on which such director served.

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

Audit Committee

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

The Board of Directors determined that Mr. Carpinello possesses accounting or related financial management experience that qualifies him as financially sophisticated within the meaning of Rule 4350(d)(2)(A) of the Nasdaq Marketplace Rules and that he is an “audit committee financial expert” as defined by the rules and regulations of the SEC.

A copy of current charter of Audit Committee is available on the Company’s website http://content.stockpr.com/onehorizongroup/media/6f6926ac07f2526da1eaa0d94f84c6d7.pdf

Nominating and Corporate Governance Committee

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

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

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

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

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

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

Compensation Committee

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

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

●	The compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser.

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

●	The Company must provide for appropriate funding, as determined by the compensation committee, for payment of reasonable compensation to a compensation consultant, legal counsel or any other adviser retained by the compensation committee or said group.

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

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

Code of Ethics

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

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act and the rules thereunder require our officers and directors, and persons that own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and to furnish us with copies. Based solely on our review of the copies of the Section 16(a) forms received by us, or written representations from certain reporting persons, we believe that during the fiscal year ended December 31, 2017 all of our officers, directors, and beneficial owners of more than 10% of our outstanding shares of common stock filed on a timely basis all reports required by Section 16(a) of the Exchange Act, except that Mark White failed to file a Form 4 reporting his conversion of 555,555 shares of Series A-1 Preferred Stock (the “Preferred Shares”) into 4,000,000 shares of common stock on November 27, 2017 and the transfer of 2,000,000 of those shares to Zhanming Wu on November 27, 2017 in consideration for Mr. Wu’s previous contribution to Mr. White of $250,000 to be used in connection with Mr. White’s initial purchase of the Preferred Shares.

Stockholder Communications

OHGI stockholders who want to communicate with our Board or any individual director can write to:

One Horizon Group, Inc.

34 South Molton Street

London W1K 5RG, United Kingdom

Attn: Board Administration

Your letter should indicate that you are an OHGI stockholder. Depending on the subject matter, management will:

	●	Forward the communication to the Director or Directors to whom it is addressed;

	●	Attempt to handle the inquiry directly, for example where it is a request for information about OHGI or it is a stock-related matter; or

	●	Not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic.

At each Board meeting, a member of management presents a summary of all communications received since the last meeting that were not forwarded and makes those communications available to the Directors on request.

ITEM 11. EXECUTIVE COMPENSATION

The following tables set forth, for the periods indicated, the total compensation awarded to, earned by or paid to each person who served as the principal executive officer during the fiscal year ended December 31, 2017 (“Fiscal 2017”) and each other executive officer whose total compensation awarded to, earned by or paid to such other executive officer for Fiscal 2017 was in excess of $100,000 for services rendered in all capacities to the Company and its subsidiaries (together, the “Named Executive Officers”).

Summary Compensation Table: Executives

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

Brian Collins, Former CEO (1)	Year ended 12/31/17		210,000		0		0		0		0		0		0		210,000
	Year ended 12/31/16		360,000		0		0		0		0		0		0		360,000
Mark White CEO (3)	Year ended 12/31/17		160,000		0		0		0		0		0		0		160,000
	Year ended 12/31/16		0		0		0		0		0		0		0		0
Martin Ward, CFO(2)	Year ended 12/31/17		240,000		0		0		0		0		0		0		240,000
	Year ended 12/31/16		254,000		0		0		0		0		0		0		254,000

(1)	Mr. Collins resigned as Chief Executive Officer, President and Director effective August 11, 2017. For the two years ended December 31, 2017, Mr. Collins was paid predominately in US Dollars.

(2)	Mr. Ward was appointed our Chief Financial Officer effective November 30, 2012. For the year ended December 31, 2017, Mr. Ward was paid predominately in US Dollars,. For the year ended December 31, 2016, Mr. Ward was paid predominately in British pounds (GBP 1 = USD 1.351) which rate represents the average exchange rate for that period.

(3)	Mr. White was appointed as Chief Executive Officer, President and Director effective September 8, 2017. For the year ended December 31, 2017 Mr. White remuneration was accrued in US Dollars, but 2017 remuneration remains unpaid as per the terms of his employment agreement.

We have entered into an Amended and Restated Employment Agreement with Mark White which continues for an initial term through July 31, 2022, and which automatically renews for one year terms thereafter, subject to the rights of both parties to terminate the Agreement. Mr. White’s Employment Agreement provided for a signing grant of 1,600,000 shares of the Company’s common stock, an annual salary of $480,000 per annum, an annual bonus to be determined by the Board and an acquisition bonus whereby Mr. White will receive additional shares each time the Company completes an acquisition of a new business. Mr. White’s Agreement contains customary non-disclosure and non-compete provisions which are operative during the term of his agreement and for one year thereafter. Mr. White’s agreement provides for severance of one year’s salary if his agreement is terminated by the Company without cause or in the event of a change in control of the Company. In addition we have agreed that upon termination of Mr. White’s Employment Agreement upon request we would register our shares of common stock then held by him for sale under the Securities Act of 1933, as amended.

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

Pension Benefit

None during the periods covered in this Report.

Nonqualified Deferred Compensation

None during the periods covered in this Report.

Retirement/Resignation Plans

None during the periods covered in this Report.

Outstanding Equity Awards at 2017 Year-End

None.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial ownership of our Common Stock as of March 12, 2018 by (i) each person (or group of affiliated persons) who is known by us to own more than five percent (5%) of the outstanding shares of our Common Stock, (ii) each director, executive officer and director nominee, and (iii) all of our directors, executive officers and director nominees as a group. As of March 12, 2018, we had 33,400,215 shares of Common Stock issued and outstanding.

Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock that such person has the right to acquire within 60 days of March 12, 2018. For purposes of computing the percentage of outstanding shares of our common stock held by each person or group of persons named below, any shares that such person or persons has the right to acquire within 60 days of March 12, 2018 is deemed to be outstanding for such person, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership.

Name	Amount And Nature of Beneficial Ownership(1)		Percent

Owners of More than 5% of Outstanding Shares:

Zhanmang Wu		15,000,000		44.9	%

Directors and Named Executive Officers:

Mark White		3,992,943		12.0	%

Martin Ward		1,369,738		4.1	%

Richard Vos		3,402		*

Nicholas Carpinello		1,781		*

Robert Law		1,781		*
				*
All Executive Officers and Directors as a Group (5 persons):		5,369,645		16.1	%

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

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Our Policy Concerning Transactions with Related Persons

Under Item 404 of SEC Regulation S-K, a related person transaction is any actual or proposed transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to which we or our subsidiaries were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years and in which any of our directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of our voting securities (a “significant shareholder”), or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest.

We recognize that transactions between us and any of our Directors or Executives or with a third party in which one of our officers, directors or significant shareholders has an interest can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than the best interests of our Company and stockholders.

The Audit Committee of the Board of Directors is charged with responsibility for reviewing, approving and overseeing any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K), including the propriety and ethical implications of any such transactions, as reported or disclosed to the Committee by the independent auditors, employees, officers, members of the Board of Directors or otherwise, and to determine whether the terms of the transaction are not less favorable to us than could be obtained from an unaffiliated party.

Transactions

The following includes a summary of transactions since January 1, 2017, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest.

On August 11, 2017 we sold all of the outstanding capital stock of three of our subsidiaries, Abbey Technology GmbH, Horizon Globex GmbH and Horizon Globex Ireland Ltd., and approximately 99.7% of the outstanding shares in One Horizon Group plc (collectively the “Discontinued Entities”) to Brian Collins, our then Chief Executive Officer, in exchange for the forgiveness of $1,968,253 payable to Mr. Collins. In connection with the transaction, Mr. Collins and the Discontinued Entities released us and our remaining subsidiaries (the “Excluded Entities”) from any claims outstanding as of the date of the transaction and we and the Excluded Entities released the Discontinued Entities from any outstanding claims. In contemplation of sale, certain intellectual property was transferred among the Discontinued Entities and the Excluded Entities such that each could continue the business contemplated to be carried on after the sale was consummated.

On August 18, 2017, Martin Ward, our Chief Financial Officer, accepted the offer to convert $662,048 due to him from us into 859,802 shares of common stock (a conversion price of $0.77 per share, the closing price of the Company’s common stock on August 14, 2017).

In September 2017, we entered into an agreement with Mark White, our President, Chief Executive Officer and a director of our company, whereby Mr. White agreed to exchange 555,555 shares of our Series A-1 Convertible Preferred Stock, and the right to accrued but unpaid dividends thereon, for 4,000,000 shares of common stock. The exchange was approved by holders of a majority of our outstanding shares of common stock by written consent in lieu of a meeting of stockholders dated October 24, 2017 in accordance with NASDAQ’s corporate governance rules.

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

	December 31
	2017
Loans due to stockholders
Due within one year	$	32
Long-term		1,000
	$	1,032

The foregoing transactions were reviewed and approved by the Audit Committee or our Board of Directors. We believe that the terms of each transaction were not less favorable to us than those terms that could be obtained from an unaffiliated third party.

Director Independence

Our Board of Directors has determined that Nicholas Carpinello, Robert Law and Richard Vos are “independent directors” within the meaning of NASDAQ Marketplace Rule 5605(a)(2).

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

The Audit Committee pre-approves all audit and permissible non-audit services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services.

Principal Accountant Fees and Services

As required by our Audit Committee charter, our Audit Committee pre-approved the engagement of Cherry Bekaert LLP for all audit and permissible non-audit services. The Audit Committee annually reviews the audit and permissible non-audit services performed by our principal accounting firm and reviews and approves the fees charged by our principal accounting firm. The Audit Committee has considered the role of Cherry Bekaert LLP in providing tax and audit services and other permissible non-audit services to us and has concluded that the provision of such services, if any, was compatible with the maintenance of such firm’s independence in the conduct of its auditing functions.

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

Services Provided	2017		2016
Audit Fees	$	88,700	$	169,900
Audit Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0
Total	$	88,700	$	169,900

Audit Fees

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

Audit-Related Fees

Tax Fees

There were no tax fees billed or accrued during the Reported Periods.

All Other Fees

There were no other fees billed or accrued during the Reported Periods.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibit Number	Title of Document	Location

Item 2	Plan of acquisition, reorganization, arrangement, liquidation or succession

2.1	Agreement and Plan of Merger effective as of August 26, 2013	Incorporated by reference from Definitive Information Statement on Form 14C Appendix C filed May 26, 2013

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

Item 3	Articles of Incorporation and Bylaws

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

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

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

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

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

3.6	Certificate of Amendment to Certificate of Incorporation effecting a 1-for-6 reverse stock split	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed May 1, 2017.

3.7	Certificate of Designation for Series A-1 Convertible Preferred Stock	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed July 14, 2017.

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

Exhibit Number	Title of Document	Location
4	I nstruments defining the rights of security holders

4.1	Common Stock Purchase Warrant dated May 1, 2013	Incorporated by reference to Exhibit 4.1 of Quarterly Report on Form 10-Q/A filed May 30, 2013

4.2	Form of Class A Warrant	Incorporated by reference from Current Report on Form 8-K filed July 25, 2014.

4.3	Form of Class B Warrant	Incorporated by reference from Current Report on Form 8-K filed July 25, 2014

4.5	Form of Convertible Debenture	Incorporated by reference from Current Report on Form 8-K filed December 29, 2014

4.6	Form of Amended and Restated Class C Warrant	Incorporated by reference from Current Report on Form 8-K filed January 23, 2015

4.7	Form of Amended and Restated Class D Warrant	Incorporated by reference from Current Report on Form 8-K filed January 23, 2015

4.8	Form of Amended and Restated Performance Warrant	Incorporated by reference from Current Report on Form 8-K filed January 23, 2015

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

4.10	Form of Warrant	Incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed July 18, 2017

4.11	Form of Warrant issued to Bespoke Growth Partners, Inc.	Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-3 (File No. 333-221300) filed October 17, 2017

4.12	Form of warrants issued to First Choice International Company, Inc.	Incorporated by reference to the exhibits to Exhibit 10.1 to Current Report on Form 8-K Filed December 19, 2017

Exhibit Number	Title of Document	Location
Item 10	Material Contracts

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

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

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

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

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

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

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

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

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

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

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

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

Exhibit Number	Title of Document	Location
10.13	Form of Securities Purchase Agreement dated July 14, 2017	Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed July 18, 2017

10.14	Form of Stock Purchase Agreement dated August 10, 2017 with Brian Collins, former CEO	Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed August 14, 2017

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

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

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

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

10.19	Agreement with Mark White dated August 4, 2017 for Exchange of Series A-1 Preferred Stock	Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed September 8, 2017

10.20	Consulting Agreement dated October 17, 2017 with Bespoke Growth Partners, Inc.	Incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-3(File No. 333-221300) filed October 17, 2017

10.21	Agreement dated December 6, 2017 with Maxim Group LLC	Filed as part of this report

10.22	Agreement dated December 13, 2017 with First Choice International Company, Inc.	Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed December 19, 2017

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

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

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

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

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

10.28	Employment Agreement with Mark White	Filed as part of this report

10.29	Employment Agreement with Martin Ward	Filed as part of this report

10.30	2018 Equity Incentive Plan	Filed as part of this report

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

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

14.2	Insider Trading Policy	Incorporated by reference from the Registration Statement on Form S-1 filed February 5, 2015

Item 21.	Subsidiaries

21.1	Subsidiaries	Filed as part of this report

Item 23.	Consents

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

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

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

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

Item 32.	Section 1350 Certifications

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

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

SIGNATURES

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

	ONE HORIZON GROUP, INC.

Date: April 2, 2018	By:	/s/ Mark White
		Mark White
		President and Principal Executive Officer

Dated: April 2, 2018

	By:	/s/ Mark White
		Mark White
		President, Chief Executive Officer, and Director

	By:	/s/ Martin Ward
		Martin Ward
		Chief Financial Officer, Principal Finance and Accounting Officer and Director

	By:	/s/ Nicholas Carpinello
		Nicholas Carpinello
		Director

	By:	/s/ Robert Law
		Robert Law
		Director

	By:	/s/ Richard Vos
		Richard Vos
		Director

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
One Horizon Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of One Horizon Group, Inc. (the “Company”) as of December 31, 2017 and 2016, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.

Emphasis of Matter

As discussed in Note 2 to the consolidated financial statements the Company has historical recurring net losses and negative cash flows from operations. Management’s plans with regard to this matter are more fully described in Note 2 to the consolidated financial statements. Our opinion is not modified with respect to this matter.

Basis for Opinion

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

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

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

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

/s/ Cherry Bekaert LLP

Tampa, Florida
April 2, 2018

F- 1

ONE HORIZON GROUP, INC.

Consolidated Balance Sheets

December 31, 2017 and 2016

(in thousands, except share data)

	2017			2016

Assets
Current assets:
Cash	$	763		$	106
Accounts receivable		102			2
Other current assets		578			131
		1,443			239
Current assets of discontinued operations		—			1,696
Total current assets		1,443			1,935

Property and equipment, net		2			16
Intangible assets, net		5,340			6,190
Prepaid compensation		2,017			—
Non current assets of discontinued operations		—			2,265

Total assets	$	8,802		$	10,406

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	167		$	177
Accrued expenses		55			188
Accrued compensation		251			151
Amount due to related parties		32			—
Convertible notes, net of debt discount of $155		45			—
Convertible debenture, net		—			3,068
		550			3,584
Current liabilities of discontinued operations		—			300
Total current liabilities		550			3,884

Long-term liabilities

Amount due to related parties		—			2,343
Promissory notes, related parties		1,000			—
Long term liabilities of discontinued operations		—			234

Total liabilities		1,550			6,461

Stockholders’ Equity
One Horizon Group, Inc. stockholders’ equity
Preferred stock: $0.0001 par value, authorized 50,000,000; nil shares (2017) and 170,940 shares (2016) issued and outstanding		—			1
Common stock: $0.0001 par value, authorized 200,000,000 shares, issued and outstanding 30,255,123 (2017) and 6,144,762 (2016)		3			1
Additional paid-in capital		48,356			37,504
Accumulated (Deficit)		(41,085	)		(33,590	)
Accumulated other comprehensive income/(loss)		(22	)		29
Total stockholders’ equity		7,252			3,945
Total liabilities and stockholders’ equity	$	8,802		$	10,406

See accompanying notes to consolidated financial statements.

F- 2

ONE HORIZON GROUP, INC.

Consolidated Statements of Operations

For the years ended December 31, 2017 and 2016

(in thousands, except per share data)

	Years ended December 31,
	2017			2016

Revenue	$	714		$	44
Cost of revenue
Hardware, calls and network charges		—			33
Amortization of intangibles		855			91
		855			124
Gross deficit		(141	)		(80	)

Expenses:
General and administrative		4,236			2,013

Depreciation		17			28

		4,253			2,041

Loss from operations		(4,394	)		(2,121	)

Other income and expense:
Interest expense		(666	)		(712	)

Foreign currency exchange gains		1			2

		(665	)		(710	)

Loss from continuing operations before income taxes		(5,059	)		(2,831	)

Loss after income taxes from continuing operations		(5,059	)		(2,831	)

Loss from discontinued operations		(2,375	)		(2,708	)
Net loss for the year		(7,434	)		(5,539	)
Less: Preferred dividends		—			(50	)
Net loss attributable to One Horizon Group, Inc. Common stockholders	$	(7,434	)	$	(5,589	)

Earnings per share
Basic and diluted net loss per share
- Continuing operations	$	(0.40	)	$	(0.48	)
- Discontinued operations	$	(0.19	)	$	(0.46	)
Weighted average number of shares outstanding
Basic and diluted		12,534			5,902

See accompanying notes to consolidated financial statements.

F- 3

ONE HORIZON GROUP, INC.

Consolidated Statements of Comprehensive Loss

For the years ended December 31, 2017 and 2016

(in thousands)

	Years ended December 31,
	2017			2016

Net loss	$	(7,434	)	$	(5,539	)
Other comprehensive (loss):
Foreign currency translation adjustment gain (loss)		(51	)		65
Comprehensive loss		(7,485	)		(5,474	)


Total comprehensive loss	$	(7,485	)	$	(5,474	)

See accompanying notes to consolidated financial statements.

F- 4

ONE HORIZON GROUP, INC.

Consolidated Statements of Stockholders’ Equity

For the years ended December 31, 2017 and 2016

(in thousands)

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

Balance December 31, 2015	171		$	1		5,858	$	1	$	36,072		$	(28,001	)	$	(36	)	$	8,037
Net loss													(5,539	)					(5,539	)
Foreign currency translations																65			65
Preferred dividends													(50	)					(50	)
Common stock issued for services						58				204									204
Options issued for services										703									703
Common Stock issued for cash						229				525									525

Balance December 31, 2016	171		$	1		6,145	$	1	$	37,504		$	(33,590	)	$	29		$	3,945

Net loss													(7,434	)					(7,434	)
Foreign currency translation																(51	)		(51	)
Deemed distribution										61			(61	)					—
Common stock issued for cash						417				265									265
Common Stock issued for services						4,275				4,170									4,170
Common stock issued on exercise of warrants						1,521				980									980
Common stock issued for settlement of liabilities						897				692									692
Amendment to preferred stock agreement	385
Beneficial conversion features on convertible notes										155									155
Conversion of preferred stock and note payable to common stock	(556	)		(1	)	4,000		1		(500	)								(500	)
Conversion of debenture to common stock						13,000		1		3,349									3,350
Warrants issued for services										1,486									1,486
Reclassification of mandatory redeemable preference shares										62									62
Options issued for services										132									132
Balance December 31, 2017	—		$	—		30,255	$	3	$	48,356		$	(41,085	)	$	(22	)	$	7,252

See accompanying notes to consolidated financial statements.

F- 5

ONE HORIZON GROUP, INC.

Consolidated Statements of Cash Flows

For the years ended December 31, 2017 and 2016

(in thousands)

	Years ended December 31,
	2017			2016

Cash used in operating activities:
Operating activities:
Net loss for the year	$	(5,059	)	$	(2,831	)

Adjustment to reconcile net loss for the year to net cash used in operating activities:
Depreciation of property and equipment		17			28
Amortization of intangible assets		855			91

Amortization of debt issue costs		132			132
Amortization of beneficial conversion feature		101			100
Amortization of debt discount		199			200

Amortization of shares issued for services		270			47
Warrants issued for services received		1,486			—
Options issued for services received		132			703
Common shares issued for services received		1,244			70

Changes in operating assets and liabilities:
Accounts receivable		(100	)		3
Other assets		17			(120	)
Accounts payable and accrued expenses		280			214
Net cash flows from continuing operating activities		(426	)		(1,363	)

Net cash flows from discontinued operating activities		(277	)		60


Net cash flows from total operating activities		(703	)		(1,303	)

Cash used in investing activities:

Acquisition of property and equipment		(2	)		(8	)
Net cash flows from investing activities – continuing operations		(2	)		(8	)

Net cashflows from investing activities – discontinued operations		(261	)		(467	)

Net cashflows from investing activities - total		(263	)		(475	)

Cash flow from financing activities:

Cash proceeds from exercise of warrants		980			—
Cash proceeds from issuance of common stock		265			400
Preferred dividends paid		—			(50	)
Advances from/(repayments to) related parties		232			(11	)
Net cash flows from financing activities – continuing operations		1,477			339
Net cash flows from financing activities – discontinued operations		—			(5	)
		1,477			334

Increase/(decrease) in cash during the year		511			(1,444	)
Foreign exchange effect on cash		(8	)		(68	)

Cash at the beginning of the year - continuing operations		106			1,612
Cash at the beginning of the year – discontinued operations		154			160
Cash at end of the year – total	$	763		$	260

See accompanying notes to consolidated financial statements.

F- 6

ONE HORIZON GROUP, INC.

Consolidated Statements of Cash Flows (continued)

For the years ended December 31, 2017 and 2016

(in thousands)

	Year ended December 31,
	2017		2016

Interest paid	$	—	$	209
Non-cash transactions:
Common stock issued for services provided		—		204
Common stock issued for settlement of accrued compensation		—		125
Common stock issued for settlement of liabilities		692		—
Redemption of preferred stock with issuance of common stock and note payable		500		—
Conversion of debenture and accrued interest to common stock		3,350		—

See accompanying notes to consolidated financial statements.

F- 7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

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

Description of Business

One Horizon Group, Inc (“the Company”) has proprietary digitally secure messaging software and sells licenses primarily into the gaming, security and educational markets. The Company is based in Hong Kong, China and the United Kingdom.

Principles of Consolidation and Combination

The consolidated financial statements include the accounts of One Horizon Group, Inc. and its wholly owned subsidiaries Global Phone Credit Limited, One Horizon Hong Kong Limited and Horizon Network Technology Co. Ltd. (“HNT”). The accounts of the former subsidiaries, One Horizon Group plc, Horizon Globex GmbH, Abbey Technology GmbH and Horizon Globex Ireland Limited are included up to the date of Reorganization (Note 3). In addition, included in the consolidated financial statements as of and for the years ended December 31, 2017 and 2016, are the accounts of Suzhou Aishuo Network Information Co., Ltd. which is controlled by One Horizon Group, Inc. through various contractual arrangements.

All significant intercompany balances and transactions have been eliminated.

F- 8

Note 2. Summary of Significant Accounting Policies

Liquidity and Capital Resources

Historically, the Company has incurred net losses and negative cash flows from operations. The Company has principally financed these losses from the sale of equity securities and the issuance of debt instruments.

As a result of the Reorganization in August 2017, more fully described in Note 3, the Company has revised its operations and business plan. In addition, during 2017 amounts previously due to the Chief Financial Officer was converted to common stock (Note 6) and the previously outstanding convertible debentures were converted into shares of common stock (Note 7). As a result of these transactions as well as adjustments to the Company’s business plans, working capital as of December 31, 2017 increased to approximately $593,000 as compared to a working capital deficit of approximately $1,949,000 as of December 31, 2016 and long term liabilities decreased by approximately $1,577,000 as compared to December 31, 2016.

In addition, and as more fully described in Note 12, the Company acquired two operating entities subsequent to December 31, 2017. Coupled with the reduction of liabilities described above, the Company projects the results of these acquisitions will provide positive cash flows.

However, actual results could materially differ from the Company’s projections. Accordingly, the Company may be required to raise additional funds through various sources, such as equity and debt financings. While the Company believes it is probably that such financings could be secured, there can be no assurance the Company will be able to secure additional sources of funds to support its operations, or if such funds are available, that such additional financing will be sufficient to meet the Company’s needs or on terms acceptable to us.

At December 31, 2017, the Company had cash of $763,000. In addition, in January of 2018, the Company received proceeds totaling $200,000 for the issuance of convertible notes. In February of 2018, the then outstanding convertible loan notes totaling $400,000, including the $200,000 outstanding at December 31, 2017, were converted into common stock. In February 2018, the Company received $562,500 from the exercise of outstanding common stock warrants. The Company expects to receive further investment from the exercise of additional common stock warrants in the second quarter of 2018 for net proceeds of approximately $723,000. Together with the cash on hand as a result of these transactions and based on the Company’s current operational plan and budget, the Company believes that it is probable that it has will have sufficient cash to fund its operations into at least the second quarter of 2019.

Basis of Accounting and Presentation

These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States.

Foreign Currency Translation

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

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

Cash

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

Accounts receivable and concentrations

Subsequent to the Reorganization (Note 3) the Company recognizes revenue from the sale of licenses of the digitally secure messaging on an invoice basis.

The Company does not have off-balance sheet credit exposure related to its customers. As of December 31, 2017 and December 31, 2016, two customers accounted for 100% and 61%, respectively, of the accounts receivable balance and one customer accounted for 75% of the revenue for the year ended December 31, 2017.

F- 9

Intangible Assets

Intangible assets include software development costs and are amortized on a straight-line basis over the estimated useful lives of ten years. The Company periodically evaluates whether changes have occurred that would require revision of the remaining estimated useful life. The Company performs periodic reviews of its capitalized intangible assets to determine if the assets have continuing value to the Company. As a result of this review, no impairment charges were recognized during the years ended December 31, 2017 and 2016.

During the year ended December 31, 2016 software development costs of $467,000 had been capitalized.

F- 10

Impairment of Other Long-Lived Assets

The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. During the years ended December 31, 2017 and 2016 the Company recorded no impairment losses related to the Company’s long-lived assets.

Debt Issue Costs

Debt issue costs related to long-term debt are recorded as a reduction of debt outstanding and amortized over the term of the related debt using the effective interest method.

Income Taxes

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

F- 11

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 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 years ended December 31, 2017 and 2016, shares issuable from outstanding stock, warrants (totaling 3,936,388- 2017 and 666,324 - 2016) are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations.

Accumulated Other Comprehensive Income (Loss)

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

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income tax assessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions.

F- 12

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.

Revenue recognition

The Company earns revenue under license agreement, for the use of its secure messaging software, which include a license fee and the sale of user licenses.

The Company recognizes revenue when it is realized or realizable and earned (and vendor specific objective evidence of fair value has been established for all elements in the license agreement). The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred on services have been rendered, price fixed and determinable and collecitivity is reasonably assured.

Revenue for user licenses purchased by customers is recognized when the user license is delivered.

F- 13

Note 3. Reorganization

On August 11, 2017 (date of Reorganization), the Company consummated a Stock Purchase Agreement whereby its former Chief Executive Officer (“Former CEO”) acquired all of the outstanding capital stock of three of the Company’s subsidiaries, Abbey Technology GmbH, Horizon Globex GmbH and Horizon Globex Ireland Ltd., and approximately 99.7% of the outstanding shares in One Horizon Group plc (collectively the “Discontinued Entities”) from the Company in exchange for the forgiveness of $1,968,253 due by the Company to the Former CEO. In connection with the transaction, the Former CEO (See note 6) and the Discontinued Entities released the Company and its remaining subsidiaries (the “Excluded Entities”) from any claims outstanding as of the date of the transaction and the Company and the Excluded Entities released the Discontinued Entities from any outstanding claims.

The Company’s consolidated balance sheet as at December 31, 2016 has been adjusted to properly account for the current and noncurrent assets, current and noncurrent liabilities of discontinued operations separate from the current and noncurrent assets and current and noncurrent liabilities of the Excluded Entities.

Adjustments to December 31, 2016 Balance Sheet for Discontinued operations

Current assets of discontinued operations
Cash	$	153
Accounts receivable, net		1,206
Other current assets		337
	$	1,696

Noncurrent assets of discontinued operations
Property and equipment (net)	$	26
Intangible assets, net		2,222
Investment		17
	$	2,265

Current liabilities of discontinued operations
Accounts payable	$	187
Accrued expenses		18
Accrued compensation		5
Income taxes		90
	$	300

Long-term liabilities of discontinued operations
Deferred income taxes	$	172
Mandatorily redeemable shares		62
	$	234

F- 14

The Company’s consolidated statements of operations for the year ended December 31, 2017 include operations of the Discontinued Entities up to the date of the Reorganization in Loss from Discontinued Operations. The Company’s consolidated 2016 balance sheets and statements of operations for the years ended December 31, 2017 and 2016 have been adjusted to properly account for the discontinued operations as follows: (in thousands)

Loss from Discontinued operations	Year ended December 31,
	2017			2016

Revenue	$	495		$	1,571
Cost of Revenue
Hardware		5			65
Amortization		1,007			1,919
		1,012			1,984
Gross Margin		(517	)		(413	)
Expenses
General and administrative		998			1,709
Depreciation		5			30
Research and development		255			605
		1,258			2,344
Other income (loss)		—			6

Impairment Loss		(622	)		—
Income Taxes		22			43
Loss from Discontinued Operations	$	(2,375	)	$	(2,708	)

Note 4. Suzhou Aishuo Network Information Co. Ltd.

The Company has control of a Chinese entity Suzhou Aishuo Network Information Co. Ltd. (“Aishuo”) through various contractual arrangements. As a result of this control, one hundred percent of the operations, assets, liabilities and cash flows of Aishuo have been consolidated in the accompanying consolidated financial statements.

Summarized assets, liabilities and results of operations, prior to eliminations in consolidation, of Aishuo are as follows: (in thousands)

	December 31			December 31
	2017			2016

Assets	$	—		$	5
Intercompany payables		(423	)		(355	)
Other liabilities		—	)		(12	)
Revenue		2			224
Net Loss		(37	)		(292	)

F- 15

Note 5. Intangible Assets

Intangible assets consist primarily of software development costs which are amortized over the estimated useful life, generally on a straight-line basis (in thousands)


	2017			2016

Horizon secure messaging software	$	6,527		$	6,498


Less accumulated amortization		(1,187	)		(308	)
Intangible assets, net	$	5,340		$	6,190

Amortization of intangible assets for each of the next four years is estimated to be approximately $1,500,000 per year

F- 16

Note 6. Related-Party Transactions

During the year ended December 31, 2017, $1,968,253 due to the Former CEO, Brian J Collins was forgiven in the reorganization whereby he acquired ownership of the Discontinued Entities (Note 3). The net assets disposed of was equal to the amount due to the former CEO, accordingly no gain or loss was Recognized on the transaction.

During the year ended December 2017 $662,048 due to the Chief Financial Officer was converted at the prevailing market price of $0.77 to 859,802 shares of common stock.

Note 7. Promissory Notes, Related parties

In October 2017 the Company entered into agreements with the holder (Principal Stockholder) of the $3,500,000 principal amount of convertible debentures then outstanding (the “Debentures”) and the holder (our Chief Executive Officer) of the 555,555 outstanding shares of its Series A-1 Preferred Stock (the “Preferred Shares”) pursuant to which it agreed to issue (the “Debenture Exchange”) to the holder of the Debentures upon conversion of $3,000,000 principal amount of the Debentures together with all $350,000 interest accrued thereon, 13,000,000 shares of common stock, and, upon cancellation of the remaining balance due on the Debenture, a $500,000 unsecured promissory note bearing interest at the rate of 7% per annum payable August 31, 2019 (the “7% Note”) and agreed to issue to the holder of the Preferred Shares, in exchange for the Preferred Shares (the “Preferred Exchange”), and the accrued but unpaid dividends thereon, 4,000,000 shares of common stock, together with a $500,000 unsecured promissory note bearing interest at the rate of 7% per annum, payable August 31, 2019. Due to the related party nature of the transactions, there were no gains or losses recorded. The $3,350,000 principal and interest outstanding on the Debentures was reclassified as an increase in stockholders’ equity. The $500,000 promissory note issued to our Chief Executive Officer for the redemption of the Preferred shares was recorded as a reduction in stockholders’ equity.

Note 8. Convertible Notes.

In the year ended December 31, 2017 the Company signed convertible notes in the amount of $400,000 to two individuals, of which $200,000 was received in 2017 and the remaining $200,000 was received in January 2018. These loans plus accrued interest (at 7% per annum) were converted into common stock in February 2018 at $0.60 per share. The carry ing value of the $200,000 convertible notes outstanding at December 31, 2017 has been reduced by $155,000 to record a beneficial conversion feature.

Note 8. Share Capital

Preferred Stock

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

During the year ended December 31, 2017, pursuant to an agreement between the Company and the holders of the Series A preferred stock, the stock was re-designated as Series A-1 Preferred Stock, outstanding shares increased to 555,555 shares with a redemption price of $1.80, dividends of 10% per annum and the redemption date extended to February 1, 2018. During the year ended December 31, 2017 all the shares of preferred stock were converted into 4,000,000 shares of common stock and a promissory note, due August 31, 2019, in the amount of $500,000.

F- 17

Common Stock

The Company is authorized to issue 200 million shares of common stock, par value of $0.0001.

On April 19, 2017 the stockholders approved a reverse stock split, one new share for every six old shares, which has been shown retroactively in these financial statements.

During the year ended December 31, 2017 the Company:

●

Issued 91,667 shares of common stock for services provided with a fair value of $176,055

●

Issued 127,366 shares of common stock for exercise of warrants at a price of $0.80 per share

●

Issued 417,461 shares of common stock for cash proceeds of $265,000

●

Issued 859,802 shares of common stock for settlement of related party loan in the amount of $662,048

●

Issued 3,000,000 shares of common stock in connection with five year employment contracts for executives with a fair value of $2,750,000

●

Issued 55,556 shares of common stock for exercise of warrants at a price of $0.80 per share

●

Issued 37,500 shares of common stock for settlement of amount owing of $30,000

●

Issued 13,000,000 shares of common stock as part of settlement of convertible debenture and accrued interest in the amount of $3,350,000

●

Issued 4,000,000 shares of common stock for redemption of 555,555 shares of Series A-1 Preferred Stock

●

Issued 108,333 shares of common stock for services provided with a fair value of $83,416

●

Issued 833,334 shares of common stock for the exercise of warrants at a price of $0.60 per share

●

Issued 1,075,000 shares of common stock for services provided with a fair value of $1,161,000

●

Issued 350,000 shares of common stock for the exercise of warrants at a price of $0.60 per share

●

Issued 155,000 shares of common stock for the exercise of warrants at a price of $0.80 per share

During the year ended December 31, 2016 the Company:

●

Issued 33,333 shares of common stock for services to be provided with a fair value of $133,960

●

Issued 169,821 shares of common stock for cash proceeds of $400,000

●

Issued 7,500 shares of common stock for services received with a fair value of $33,750

●

Issued 76,228 shares of common stock in part settlement of accrued compensation in the amount of $160,535

Stock Purchase Warrants

As at December 31, 2017, the Company had reserved 3,936,388 shares of its common stock for the outstanding warrants with weighted average exercise price of $2.12. Such warrants expire at various times up to July 2020. The warrants have an intrinsic value of $1,848,601 as of December 31, 2017.

During the year ended December 31, 2017, 304,168 warrants were forfeited, 5,095,486 warrants were issued, for services performed (with a fair value of $1,486,000) and valued under the Black-Scholes valuation method, and 1,521,255 warrants were exercised.

The assumptions used in calculating the fair value under the Black-Scholes option valuation model for warrants issued by the Company during the year ended December 31, 2017:

Common stock fair value	$	1.92
Risk-free interest rate		2.5	%
Expected dividend yield		0	%
Expected warrant life (years)		0.1-1.2
Expected stock volatility		107-114	%

F- 18

Under the engagement agreement with Maxim Group LLC, the Company has agreed for any financing arranged by Maxim for the Company, during the contractual period, the Company will in addition to paying a cash fee of up to 7% of funds raised to deliver a cash warrant to Maxim to purchase shares in the Company equal to 4% of the number of shares issued in the financing. The warrants will be exercisable at 120% of the pricing of the common stock issued in the raise. The exercisable period is 12 months from the date of the raise, thereafter if not exercised the warrants will lapse.

Note 9. Stock-Based Compensation

The shareholders approved a stock option plan on August 6, 2013, the 2013 Equity Incentive Plan (“2013 Plan”). The 2013 Plan is for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalents, cash bonuses and other stock-based awards to employees, directors and consultants of the Company. Following the reorganization in August 2017, all outstanding employee stock options were forfeited under the rules of the Plan.

There have been no options issued in the year ended December 31, 2017.

F- 19

A summary of the 2013 Plan options for the twelve months ended December 31, 2017, is as follows:

	Number of			Weighted Average
	Options			Exercise Price

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

Prior to the 2013 Plan the Company issued stock options to employees under other stock plans.

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

	Number of			Weighted Average
	Options			Exercise Price

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

Note 10. Income Taxes

The difference between the U.S. statutory federal tax rate and the provision for income tax recorded by the Company is primarily attributable to the change in the Company’s valuation allowance against its deferred tax assets and to a lesser extent to the tax the differential on losses in foreign countries.

Deferred Tax Assets

The potential benefit of net operating loss carryforwards has not been recognized in the consolidated financial statements since the Company cannot determine that it is more likely than not that such benefit will be utilized in future years. The tax years 2006 through 2016 remain open to examination by federal authorities and other jurisdictions in which the Company operates namely China and Hong Kong. The components of the net deferred tax asset and the amount of the valuation allowance are as follows: (in thousands)

	December 31
	2017			2016

Deferred tax assets
Net operating loss carryforwards		2,138			1,803
Valuation allowance		(2,138	)		(1,803	)
Net deferred tax assets	$	—		$	—

The increase in the valuation allowance was $1,658,000 for the year ended December 31, 2017 and $529,000 for the year ended December 31, 2016.

F- 20

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 became law (the “Tax Act”). The Tax Act enacts a broad range of changes to the Internal Revenue Code of 1986, as amended (the “IRC”). The Tax Act, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating losses, allows for the expensing of capital expenditures and puts into effect the migration from a “worldwide” system of taxation to a territorial system. We do not expect tax reform to have a material impact to our financial statements as our net deferred tax assets and liabilities are fully reserved. We continue to examine the impact this tax reform legislation may have on our business. The impact of the Tax Act on holders of our common shares is uncertain and could be adverse. The annual report in which these consolidated financial statements are included, does not discuss any such tax legislation or the manner in which it might affect purchasers of our common stock. We urge our stockholders to consult with their legal and tax advisors with respect to any such legislation and the potential tax consequences of investing in our common stock.

Note 11. Segment Information

Subsequent to the reorganization set out in note 3, the Company has one business segments in the digital secure messaging in the gaming, security and educational fields. All the revenue from continuing operations was generated in the Asia region.

Note 12. Subsequent Events

In January 2018 the Company entered into an agreement with the shareholders of Once in a Lifetime LLC (“LLC”) to acquire 51% of the issued and outstanding membership interests of LLC in exchange for 1,334,000 fully paid and non-assessable shares of common stock of the Company. In addition, the Company shall issue fully paid and non-assessable shares of common stock equal to 2.5 times the net, after tax, income of LLC for the six month period after the acquisition of LLC by the Company and fully paid and non-assessable shares of common stock equal to 4.5 times the net, after tax, income of LLC for the second six month period after the acquisition of LLC.

In February 2018 the Company announced it had entered into an exchange agreement to acquire 100% of C-Rod, a music and video content business based in Miami, Florida. The acquisition was completed on March 20, 2018.

The Company expects to receive further equity investment in the second quarter of 2018 from the exercise of common stock warrants, which will result in net proceeds of $722,500. In addition, $400,000 of convertible loan notes, including the $200,000 outstanding at December 31, 2017, were converted into common stock in February 2018.

In February 2018, the Company approved the creation of the 2018 Equity Incentive Plan, which authorizes the Company to issue up to 5,000,000 shares of common stock, which is still pending final Shareholders approval.

F- 21

Exhibit 10.21

(GRAPHICS)

Exhibit 10.28

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

This Agreement (this “Agreement”), dated as of March 29, 2018 (the “Effective Date”), between One Horizon Group, Inc., a Delaware corporation having an office at 34 South Molton Street, London W1K 5RG, UK (the “Company”), and Mark White, having an address as set forth on the signature page (the “Executive”).

W I T N E S S E T H :

WHEREAS, the parties previously entered into an Employment Agreement (the “Employment Agreement”), whereby the Executive agreed to serve as the President and Chief Executive Officer of the Company for the consideration and on the terms and conditions set forth therein; and

WHEREAS, the parties desire to amend and restate the Employment Agreement in its entirety,

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties to this Agreement hereby agree as follows:

1. Employment . The Company hereby employs Executive as its President and Chief Executive Officer, commencing as of the Effective Date, and Executive hereby accepts such employment with the Company, upon and subject to the terms and conditions set forth in this Agreement. Executive shall not be required to spend any particular number of days at the Company’s headquarters and may be based in a location remote from the Company’s headquarters, provided that Executive can effectively carry out his duties from such location. Executive recognizes that international travel will be necessary in connection with the proper discharge of his duties hereunder.

2. Term . The term of this Agreement and Executive’s employment hereunder shall commence on the Effective Date and continue through July 31, 2022 (the “Expiration Date,” and such period, the “initial period”), subject to earlier termination as hereinafter provided. Subject to the provisions of Section 12 of this Agreement, this Agreement and the employment of Executive hereunder shall be automatically renewed for successive renewal periods of one (1) year each (each, a “renewal period”), upon and subject to the terms and conditions hereof, commencing on the Expiration Date and on each anniversary of the Expiration Date thereafter, unless either party hereto gives the other notice of such party’s intent to terminate this Agreement and Executive’s employment hereunder at least sixty (60) days prior to the end of the initial period or any renewal period (the actual term of employment of Executive hereunder, whether ending on, prior to or after the Expiration Date, may be hereinafter referred to as the “Employment Period”).

3. Duties . During the Employment Period, Executive shall serve as the President and Chief Executive Officer of the Company. Executive shall report directly to the Board of Directors of the Company and render such services and perform such duties for the benefit of the Company and its affiliates as may be consistent with Executive’s position or related thereto as the Board of Directors of the Company shall from time to time direct or request. Executive shall devote Executive’s full business time, energy and skill to Executive’s employment hereunder and agrees to serve the Company faithfully, diligently and to the best of Executive’s ability. So long as Executive is employed by Company as its President and Chief Executive Officer hereunder, the Company shall add Executive to its Board of Directors.

4. Compensation .

In consideration of the services to be rendered by Executive hereunder, Executive shall receive from the Company the following:

(a) Signing Bonus. Upon execution and delivery of the Employment Agreement, in recognition of the Executive’s commitment to render services to the Company for a period of five years, the Company issued to Executive one million six hundred thousand (1,600,000) shares of its common stock.

(b) Salary . From the date of commencement of the Employment Agreement, Executive was to be paid a salary of $480,000 per annum. To the extent Executive’s salary was accrued but not paid currently, any amounts not paid shall be paid in equal monthly instalments from March 1 through July 1, 2018, or, if earlier, upon termination of this Agreement by the Company for any reason or without cause. Commencing as of the Effective Date, the Company shall pay Executive a base salary at the rate of Four Hundred Eighty Thousand Dollars ($480,000) per year, payable in substantially equal bi-weekly or other installments in accordance with the Company’s standard payroll practices from time to time in effect. The first and last installments of such salary shall be appropriately prorated if and to the extent that Executive shall not have been employed by the Company hereunder for the full period covered by such installment. Executive’s performance shall be reviewed annually by the Company’s Board of Directors, in connection with which goals and possible increases in Executive’s salary for the future will be discussed, it being understood that any such increases shall be within the discretion of the Company’s Board of Directors.

(c) (i) Bonus . For purposes of this Agreement an Employment Year shall be the twelve month period commencing as of August 1 and terminating as of the immediately succeeding July 31. At least two months prior to the commencement of each Employment Year, commencing with the year beginning August 1, 2018, the Board of Directors and the Executive shall agree upon an Incentive Compensation Plan for the year pursuant to which, upon the attainment of agreed upon objectives, the Executive shall be awarded five year options to purchase common stock of the Company at such price and on such conditions as shall be agreed upon in the Compensation Plan. Any options issuable hereunder in respect of a given Employment Year shall be issued the Company within forty-five (45) days after the determination by that the Executive has attained the objectives set forth in the relevant Compensation Plan.

(ii) Acquisition Bonus . If the Company should acquire a “Business,” within forty-five days of the date of acquisition, it shall issue to Executive a number of shares equal in value to 2% of the purchase price to be paid in connection with the acquisition, inclusive of any debt assumed. If a portion of the purchase price is contingent, Executive shall be paid in respect of such amount only upon payment of the contingent portion. For purposes of determining the number of shares to be issued, to Executive, the shares shall be valued at the VWAP for the five (5) trading days immediately preceding the date of issuance.

(d) Employee Benefit Plans; Annual Physical Examination; Life Insurance .

(i) Employee Benefit Plans . Executive shall be eligible to participate, in accordance with the respective terms thereof, in any employee health, hospitalization or medical insurance plan, life insurance or disability insurance plan or any 401(k), pension or other similar plans, that may be established and maintained by the Company for the general benefit of its senior executives, subject to the respective terms and conditions of any such plans. The foregoing shall not, however, be construed to require the Company to establish or maintain any such plan(s), or to prevent the Company from modifying or terminating any such plan(s) once established.

(ii) Annual Physical Examination . If and to the extent not fully covered by any then applicable health, hospitalization or medical insurance plan of the Company in which Executive may participate, the Company shall reimburse Executive for any so unreimbursed reasonable cost of an annual routine physical examination.

(e) Vacation . Executive shall be entitled to take up to an aggregate of four (4) weeks ( i.e. , twenty (20) business days) of vacation each Employment Year commencing with the Year beginning August 1, 2017 (or a pro rata number of vacation days in respect of any partial calendar year during the term hereof) as business conditions permit, which shall be scheduled so as to minimize interference with the business of the Company, it being understood that unused vacation may not accumulate from year to year, and any vacation time not used by the end of any year shall not require any additional payment to Executive.

(f) Expenses . The Company shall reimburse Executive for Executive’s reasonable business expenses incurred for or on behalf of the Company in furtherance of the performance by Executive of his duties hereunder, subject to and in accordance with any then applicable expense reimbursement policy of the Company, and with any such reimbursement to be subject to timely receipt by the Company from Executive of such receipts, vouchers and other verification as the Company shall reasonably require to evidence such expenses. Such expenses shall include travel and lodging from the Executive’s place of residence to any office of the Company or any other travel undertaken on behalf of the Company.

5. Deductions and Withholdings . It is understood that any and all payments and compensation required to be made to or for the benefit of Executive pursuant to this Agreement shall be subject to such deductions and withholdings as the Company determines are required or appropriate under applicable law.

6. Certain Representations . Executive hereby represents and warrants that Executive is not a party to any agreement, contract or understanding, whether of employment or otherwise, and whether written or oral, express or implied, with any current or former employer or other party, which could be deemed, in whole or in part, to be inconsistent with or to conflict with, or could in any way restrict or prohibit Executive from entering into or performing Executive’s obligations under, this Agreement.

7. Confidential Information . In order to permit Executive to successfully perform the duties associated with Executive’s employment hereunder, it is necessary to entrust Executive with certain valuable proprietary information of the Company which is essential to the profitable operation of the Company and which gives the Company a competitive advantage over other firms pursuing related business activities. Executive acknowledges that all non-public information, including, but not limited to, financial information, business and strategic plans, product information, domestic and foreign sources of supply, purchasing, manufacturing and sourcing facilities and relationships, know-how, trade secrets, market reports, Company documents and other materials relating to the business, services and activities of the Company, customer investigations, supplier and vendor lists, and other information regarding the Company’s licensors, suppliers, vendors, manufacturers, clients and customers or regarding any agreements with any of the foregoing, and other confidential and proprietary information, whether written, oral, electronically encoded or otherwise, to which Executive gains access by reason of Executive’s employment by the Company or owned, used or possessed by the Company or its affiliates (collectively, “Confidential Information”), is and shall remain the sole property of the Company (or such affiliates) and constitutes a valuable, special and unique asset of the Company’s (or such affiliates’) business, access to and knowledge of which are essential to the performance of Executive’s duties. Given the value of this Confidential Information, Executive agrees, as a condition of Executive’s employment, that, except in the course of properly performing his duties on behalf of the Company during the period of Executive’s employment with the Company, Executive shall not, at any time during or after the period of Executive’s employment with the Company, without the prior written consent of the Company by its Chairman, Vice Chairman or Board of Directors, disclose any such Confidential Information to any third party for any reason or purpose whatsoever, and Executive further agrees to immediately return to the Company all Confidential Information (inclusive of any and all copies) upon the termination of Executive’s employment or earlier upon the request of the Company. In addition, Executive shall not make use of any such Confidential Information for Executive’s own purposes or for the benefit of any third party under any circumstances, during or after the period of Executive’s employment with the Company; provided , however , that, during and after such term of employment, these restrictions shall not apply to such Confidential Information which is then in the public domain (provided that Executive was not responsible, directly or indirectly, for the fact that such secrets or information have entered the public domain without the Company’s consent). Executive further agrees to disclose immediately to the Company any and all Confidential Information conceived, discovered, introduced or developed in whole or in part by Executive at any time while employed by the Company, and hereby assigns to the Company all of Executive’s right, title and interest in and to same, and Executive agrees to execute, acknowledge and deliver any instruments or documents and to do all other things reasonably requested by the Company (both during and after Executive’s employment with the Company) in order to completely vest in the Company all ownership rights in the same.

8. Restrictive Covenant; Non-Competition; Non-Solicitation .

(a) Executive may receive offers of employment from or by others engaging in or wishing to engage in activities reasonably similar to activities performed by Executive for the Company. Executive agrees order to protect the legitimate business interests of the Company (including, without limitation, the Company’s goodwill and relationships with its customers, suppliers, vendors and clients, and the Company’s Confidential Information), that Executive shall not, directly or indirectly, without the prior written consent of the Company by its Chairman, Vice Chairman or Board of Directors:

(i) while employed by the Company and for a period one (1) year after expiration or termination of Executive’s employment for any reason (whether voluntary or involuntary), own, manage, operate, join, control or become employed or engaged by, or render any services of an advisory nature or otherwise to, or participate in the ownership, management, operation or control of, or otherwise engage in, have any interest in or be connected in any manner with (except solely for the ownership by Executive of not more than three percent (3%) of the voting capital stock of a publicly-held corporation) any person, business or activity which, directly or indirectly, engages in or includes the internet gaming business;

(ii) while employed by the Company and for a period of one (1) year after expiration or termination of Executive’s employment for any reason (whether voluntary or involuntary), solicit, entice or induce any Customer (as defined below) of the Company to cease or limit its business with the Company (except if and to the extent directed to do so by the Chairman, Vice Chairman or Board of Directors of the Company), or to become a licensor, customer, supplier, vendor or client of any other person (including, without limitation, Executive, individually) or entity engaged in any activity or business competitive with the Company, and Executive shall not cause, assist or facilitate any person or entity in taking any such prohibited action; or

(iii) while employed by the Company and for a period of one (1) year after expiration or termination of Executive’s employment for any reason (whether voluntary or involuntary), solicit, attempt to solicit or entice away from the Company’s employment, or employ, retain or engage any employee of the Company, or former Company employee who was employed by the Company at any time during the then prior six months, or disrupt or interfere with, or attempt to disrupt or interfere with, the Company’s relationship with any such person, and Executive shall not cause, assist or facilitate any person or entity in taking any such prohibited action.

(b) For purposes of this Agreement, a “Customer” of the Company shall mean any person or entity, who or which is, or was at any time within the prior one year period, a licensor or purchaser, manufacturer or supplier of goods or services (or prospective such licensor, purchaser, manufacturer or supplier), to or from the Company, as the case may be.

9. Certain Remedies . Executive agrees that any breach by Executive of Sections 7 or 8 of this Agreement will cause irreparable damage to the Company and that in the event of any such breach or threatened breach, the Company shall have, in addition to any and all remedies of law, the right to an injunction, specific performance or other equitable relief to prevent the violation of Executive’s obligations thereunder (without any obligation to post any bond or other form of security in connection therewith); provided , however , that nothing herein contained shall be construed as prohibiting the Company from pursuing any other remedy available for such breach or threatened breach. The prevailing party in any litigation arising under such Sections 7, 8 or 9 of this Agreement shall be entitled to recover such party’s reasonable attorneys’ fees and expenses with respect thereto in addition to, and not in limitation of, any and all other available remedies.

10. Termination . The following provisions set forth the only grounds under which this Agreement, and the employment of Executive hereunder, may be terminated prior to the Expiration Date:

(a) Termination by the Company Without Cause; Certain Non-Renewal by the Company . Notwithstanding anything in this Agreement to the contrary, this Agreement and Executive’s employment hereunder may be terminated by the Company at any time upon at least sixty (60) days’ prior written notice to Executive. In the event of any such termination by the Company “without cause,” or in the event that this Agreement shall expire or terminate at the end of the initial period or any renewal period by virtue of the Company having given notice to Executive of its intention to terminate this Agreement at the end of such initial period or renewal period (a “Company Non-Renewal”), the Company shall thereafter owe to the Executive, as severance and which amounts, except as specifically provided below, shall not be subject to mitigation by virtue of the future employment of Executive a sum equal to one (1) year’s base salary (at the then current rate or if such termination shall occur prior to the Salary Commencement Date, at the rate of $480,000 per annum). The aforesaid sum shall be paid to Executive as provided in Section 10(h).

(b) In the event Executive timely elects to be covered under COBRA (or the comparable medical insurance program if the Executive’s Employment is subject to the laws of a jurisdiction other than the United States) or otherwise requests continuation of coverage in respect of any medical or dental insurance group plan of the Company in which he has theretofore participated, the Company shall pay or reimburse Executive for the cost of such coverage for a period of up to the one (1) year period in respect of which severance shall be payable to Executive pursuant to the subsection (a) above.

(c) Executive acknowledges that his rights to any payments or benefits pursuant to and subject to the provisions of this Section 10 are in place of, and not in addition to, any payments or benefits which might otherwise be available under any current or future severance policy or similar policy or program followed by the Company or any of its affiliates, and, accordingly, Executive hereby waives any and all such rights to receive any payments or benefits under any such other policies and programs. Notwithstanding anything herein to the contrary, Executive hereby further acknowledges that the Company’s obligations to make any of the payments or extend any benefits referred to in this Section 10 shall be subject to receipt by the Company from Executive of a general release in favor of the Company, as prepared by the Company and reasonably satisfactory to Executive.

(d) Termination by the Company For Cause . This Agreement and Executive’s employment hereunder may be terminated immediately by the Company (by notice to Executive) for cause (as hereinafter defined). For purposes of this Agreement, “cause” shall mean:

(i) the breach by Executive, in any material respect, of this Agreement (including, without limitation, the refusal or other failure by Executive to perform any of Executive’s duties hereunder other than a failure to perform resulting from death or physical or mental disability) and failure by Executive to cure such breach within ten (10) days of written notice thereof from the Company;

(ii) the commission by Executive of any act of dishonesty, fraud, intentional material misrepresentation or moral turpitude in connection with his employment, including, but not limited to, misappropriation or embezzlement of any funds of the Company or any of its affiliates;

(iii) the commission by Executive of any (1) willful misconduct, or (2) intentional act having the effect of injuring the reputation, business or business relationships of the Company or any of its affiliates, and which intentional act would not reasonably be deemed to be in the best interests of the Company;

(iv) the entering by the Executive of a plea of guilty or nolo contendere to, or the conviction of Executive for, a crime (other than a routine traffic offense) which carries a potential penalty of imprisonment for more than ninety (90) days and/or a fine in excess of Ten Thousand Dollars ($10,000);

(v) Executive’s abuse of alcohol, prescription drugs or controlled substances which interferes with the performance of his duties to the Company;

(vi) Executive’s deliberate disregard of any material rule or policy of the Company and failure to cure the same within ten (10) days of written notice thereof from the Company; or

(vii) excessive absenteeism of Executive other than for reasons of illness, after written notice from the Company with respect thereto.

(e) Termination Due to Death or Disability . Notwithstanding any other provision of this Agreement, this Agreement shall terminate automatically upon the occurrence of Executive’s death. In addition, the Company shall have the right, at any time after Executive shall have become disabled, to terminate this Agreement immediately. For purposes of this Agreement, Executive shall be deemed to have become “disabled” when, by reason of physical or mental illness, incapacity or disability, Executive shall fail to perform Executive’s duties hereunder for one continuous period of ninety (90) days or more, or shorter periods aggregating one hundred twenty (120) days or more, within any period of twelve (12) consecutive months; provided , however , that any days of disability separated by ten (10) or fewer days shall be considered continuous.

(f) Voluntary Termination by Executive . This Agreement and Executive’s employment hereunder may be voluntarily terminated by Executive at any time upon at least thirty (30) days’ prior written notice to the Company.

(g) Termination by Executive for Good Reason . This Agreement and Executive’s employment hereunder may be terminated at any time by Executive for “Good Reason.” For purposes of this Agreement, Good Reason shall mean (i) a material diminution in Executive’s title, duties or responsibilities, or the assignment to Executive of duties that, taken as a whole, are materially inconsistent with the scope of duties and responsibilities associated with the position of President and Chief Executive Officer, or (ii) the breach by the Company, in any material respect, of this Agreement, and failure by the Company to cure the same within ten (10) days of written notice thereof from Executive. In the event of a termination of this Agreement by Executive for Good Reason, Executive shall be paid as severance the same amounts and benefits as those to which he would have been entitled pursuant to the provisions of Section 10 in the case of a termination of this Agreement by the Company without cause, all subject to the terms and conditions of such Section 10 .

(h) Obligations of Company Upon Termination; Executive’s Remedies; Payment of All Amounts Due . Upon termination of this Agreement for any reason other than voluntarily by the Executive in the absence of a breach by the Company or Executive’s death, the Company within two days of such termination shall pay to Executive all amounts due hereunder up to the date of termination and any severance provided for herein and all amounts due to Executive under any promissory note or other instrument of the Company then held by the Executive. If the Company shall fail to do so, Executive shall (i) have the right to appoint a majority of the Board of Directors of the Company and (ii) any promissory note or other instrument for the payment of debt by the Company held by Executive shall automatically and without further action on the part of the Company, be deemed to have been converted into such number of shares of common stock as would, when added to the number of shares then held by Executive, constitute a majority of the then outstanding shares of common stock of the Company on a fully diluted basis after giving effect to any outstanding options or warrants then “in the money.” Further, as of the end of the second day after the termination of this Agreement Executive shall have the right to vote such shares to be issued or act by written consent of the shareholders with respect to the shares to be issued, notwithstanding that they have yet to be issued and recorded by the Company’s transfer agent. Thus, unless timely paid, as of the end of the second business day after the termination of this Agreement Executive would own and be able to act by written consent with respect to a majority of the outstanding shares of the Company... For the avoidance of doubt, the ostensible resignation of the Executive pursuant to a letter of resignation executed prior to the intended date of termination of his services and held by the Company or any of its shareholders until such date shall be deemed a termination for which Executive is entitled to receive the immediate payment of the amounts provided for in this Section.

11. Change in Control .

(a) For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred if:

(i) as a result of a consolidation, merger, or other business combination involving the Company or the securities of the Company, the shareholders of the Company immediately prior to such event shall cease to own, in the aggregate, securities representing at least 50% of the issued and outstanding shares of voting stock of the Company or such surviving or parent entity outstanding immediately after such consolidation, merger or other business transaction;

(ii) there shall be a sale of all or substantially all of the assets of the Company to any person or entity who or which, in the aggregate, did not own at least 40% of the issued and outstanding shares of voting stock of the Company immediately prior to such event; or

(iii) there shall be a liquidation and dissolution of the Company.

(b) Subject to the provisions of subsection (c) below, for purposes of this Agreement, in the event that during the term of this Agreement there shall be a Change in Control pursuant to which Executive’s employment hereunder is terminated by the Company, and Newco (as defined in subsection (c) below) does not offer employment to Executive on the same or substantially similar economic terms and conditions as those provided herein and with substantially the same level of authority as Executive had with the Company, said termination shall be deemed a termination by the Company without cause pursuant to Section 10 above.

(c) In the event that there shall be a Change in Control following which the persons or entities which acquire all or substantially all of the Company’s assets or fifty percent (50%) or more of the Company’s issued and outstanding shares of voting stock (such acquiror, collectively, “Newco”) requests that Executive enter into a relationship whereby Executive will provide services to or for the benefit of Newco or is otherwise compensated by Newco (a “Relationship”)) upon the same or substantially similar economic terms and conditions as those provided herein, Executive shall be obligated to enter into such Relationship for a period of up to six months following the consummation of such Change in Control. Upon completion of such six months service, or shorter period if consented to by Newco or as a result of Executive’s death or disability, and notwithstanding that Executive has been paid by Newco and may continue to render services to Newco, Executive shall be entitled to receive from the Company an amount equal to the severance payments he would have received from the Company pursuant to Sections 10(a) and (b) , respectively, had Executive’s employment by the Company been terminated on the business day immediately prior to the date on which the Change in Control was consummated, which monies shall be payable in substantially equal and successive bi-weekly, twice monthly or monthly installments (as may be determined by the Company, with the Company further having the right, but not the obligation, to prepay any or all of such monies) over a period of six months commencing as of the end of such six months or Executive’s service. If Executive shall resign from his position with Newco prior to the completion of such period up to six months as Newco shall request that he provide services, he shall be paid an amount equal to the severance payments he would have received from the Company pursuant to Sections 10(a) and (b) , respectively, had Executive’s employment by the Company been terminated on the business day immediately prior to the date on which the Change in Control was consummated, less all amounts received from Newco for services rendered prior to such resignation, which monies shall be payable in substantially equal and successive bi-weekly, twice monthly or monthly installments (as may be determined by the Company, with the Company further having the right, but not the obligation, to prepay any or all of such monies) over a period of twelve months commencing as of the end of Executive’s service to Newco.

(d) For a period of two years commencing as of the date on which there occurs a Change of Control, Executive shall have the right to demand that the Company register all or any portion of the shares of the Company’s common stock, including shares underlying any options, warrants or convertible securities then held by Executive for sale under the Securities Act of 1933, as amended. Upon exercise of such right, the rights and obligations of the parties shall be as set forth in Appendix A hereto.

(e) From and after a Change in Control the Company shall cooperate with any attempt by the Executive to sell all or any portion of the common stock held by him in accordance with Rule 144. Such cooperation shall including causing its counsel to issue to its transfer agent such opinion letters as may be necessary to effectuate such sales.

12. Counsel . Executive acknowledges that Executive has been advised to consult with legal counsel prior to signing this Agreement.

13. Arbitration . Except as otherwise provided in Section 9 above, any controversy, claim or dispute arising out of or relating to this Agreement, or any breach or alleged breach hereof, which cannot be settled amicably by the parties within a period of thirty (30) days, shall be settled by final and binding arbitration, conducted in New York City, New York, before, and in accordance with the Commercial Arbitration Rules of, the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof. The costs of such arbitration shall be borne equally by the parties thereto and each party shall bear such party’s own attorneys’ fees in connection with such arbitration; provided , however , that the prevailing party in any arbitration arising under this Section 16 shall be entitled to recover from the other party such prevailing party’s reasonable attorneys’ fees and expenses incurred with respect thereto in addition to any other available remedies.

14. Miscellaneous .

(a) Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be either personally delivered or sent by prepaid, receipted, express overnight courier service (such as FedEx or UPS), addressed to the party to whom or which notice is to be given at the address set forth for such party at the beginning of this Agreement, or to such other address as such party may have fixed by notice given in accordance with this paragraph or to such other address as the applicable party may specify by notice given in accordance with this paragraph. Any notice given hereunder as aforesaid shall be deemed given and effective upon receipt, or if delivery is refused, upon attempted delivery in accordance with the foregoing.

(b) Assignability and Binding Effect . This Agreement is personal in nature and neither of the parties hereto shall, without the prior written consent of the other (and in the case of any such consent of the Company, signed on its behalf by its Chairman or Vice Chairman), assign or transfer this Agreement or any rights or obligations hereunder; provided , however , that the Company shall have the right to assign and/or delegate any or all of its rights and obligations hereunder to: (i) any person or entity who or which shall acquire (whether by sale of assets, merger or otherwise) all or substantially all of its assets (excluding, for purposes of any such determination, cash, cash equivalents and any real property or interests therein); or (ii) any affiliate of the Company. Any assignment or delegation by either party in violation of this Agreement shall be null and void ab initio. Subject to the foregoing two sentences, this Agreement and all of the provisions hereof shall be binding upon, and inure to the benefit of, the parties hereto, and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.

(c) Severability . It is the desire and intent of the parties hereto and the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement may be sought. Accordingly, if any one or more of the provisions of this Agreement shall be adjudicated to be invalid, illegal or unenforceable in any respect, such provision shall be deemed amended to delete therefrom the portion thus adjudicated to be invalid, illegal or unenforceable, such deletion to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made, and the remaining provisions contained herein shall not in any way be affected thereby. Further, if any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provision(s) shall be construed by limiting and reducing the same, so as to be enforceable to the maximum extent permitted under the applicable law as it shall then exist.

(d) Survival . Notwithstanding anything herein to the contrary, the provisions of Sections 7, 8, 9, 10, 11, 14 and 15 shall expressly survive the expiration or termination of this Agreement, regardless of the reason therefor.

(e) Section Headings . The section headings contained in this Agreement are for convenience of reference only and shall not be deemed to have any substantive effect.

(f) Governing Law, Jurisdiction and Venue . This Agreement has been entered into in the State of New York, and shall be governed by, and construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely therein (without giving effect to the conflicts of laws rules thereof). In furtherance of the foregoing, each party hereby consents to and submits to the exclusive jurisdiction of the federal and state courts located in the State of New York, City of New York, and any action or suit under this Agreement shall be brought in the federal or state court with appropriate jurisdiction over the subject matter established or sitting in the State of New York, City of New York, and each party hereby agrees not to raise in connection therewith, and hereby waives, any defenses based upon the venue, the inconvenience of the forum, the lack of personal jurisdiction, the sufficiency of service of process or the like in any such action or suit brought in such court in the State of New York, City of New York.

(g) Entire Agreement; Amendment; Waiver . This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof, and cancels and supersedes any and all prior agreements, understandings and representations, whether written or oral, express or implied, between the parties with respect thereto. This Agreement may not be modified or amended, nor may any of its provisions be waived, except pursuant to a written instrument signed by both of the parties hereto (and in the case of the Company, signed on its behalf by its Chairman or Vice Chairman).

(h) Counterparts; Effectiveness . This Agreement may be executed in any number of counterparts, including, without limitation, by counterpart delivered by facsimile, each of which shall constitute one and the same instrument. In the event this Agreement is executed by either party by facsimile counterpart, such party shall promptly send an original to the other party. Notwithstanding anything herein to the contrary, the effectiveness of this Agreement and Executive’s employment pursuant to the terms and conditions hereof is contingent upon the mutual execution and delivery of this Agreement by Executive and the Company.

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

	ONE HORIZON GROUP, INC.

	By:	/s/ Martin Ward
		An Authorized Party

		/s/ Mark White
		Mark White

Appendix A

Registration Rights .

(a) For purposes of this Appendix:

“ Registrable Securities ” means those shares of OHGI Common Stock and all shares of OHGI Common Stock or other securities issued upon conversion or exchange or otherwise in respect thereof, including without limitation pursuant to any stock dividend, stock split, merger, consolidation or other recapitalization transaction, held by Executive.

“ SEC ” means the Securities and Exchange Commission.

“ SEC Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act, as in effect from time-to-time.

“ Securities Act ” means the Securities Act of 1933, as amended from time-to-time, and the rules and regulations promulgated thereunder.

(b) Promptly after the Company receives a request from Executive that the Company register any Registrable securities for sale under the Securities Act, the Company shall, subject to the provisions hereof, cause to be registered all of the Registrable Securities that are the subject of such request.

(c) Whenever required under this Appendix to affect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

(i) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective and keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that in the case of any registration of Registrable Securities that are intended to be offered on a continuous or delayed basis, such 120-day period shall be extended for up to an additional sixty (60) days, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;

(ii) subject to clause (i), prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to keep such registration statement effective for the period specified in clause (i) and to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

(iii) furnish to Executive such numbers of copies of the prospectus, including a preliminary prospectus, included in the registration statement, and such other documents, as he may reasonably request in order to facilitate the disposition of the Registrable Securities;

(iv) use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by Executive; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(v) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

(vi) promptly notify Executive after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed;

(vii) after such registration statement becomes effective, notify Executive of any request by the SEC that the Company amend or supplement such registration statement or prospectus;

(viii) immediately notify Executive at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading; provided that the Company may postpone for up to ninety (90) days the delivery of any such supplement or amendment if the Company’s Board of Directors determines in good faith that disclosure of the new information to be contained therein would reasonably be expected to have a material adverse effect on (i) any proposal or plan by the Company or any of its affiliates to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer, reorganization or similar transaction; or (ii) any pending or threatened litigation to which the Company is, or is threatened to be made, a party; and

(ix) in the case of an underwritten offering, use its best efforts to furnish on the date on which Registrable Securities are sold to the underwriter, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters and Executive and (ii) a “comfort” letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any.

(e) It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Appendix with respect to the Registrable Securities that Executive furnish such information regarding himself, the Registrable Securities held by him, and the intended method of disposition of such securities as is reasonably required to affect the registration of the Registrable Securities.

(f) All expenses (other than underwriting discounts and commissions) incurred in connection with registrations, filings, or qualifications pursuant to this Appendix including all registration, filing, and qualification fees, printers’ and accounting fees, and fees and disbursements of counsel for the Company, shall be borne and paid by the Company, whether or not any such registration or qualification becomes effective.

(g) If any Registrable Securities are included in a registration statement under this Appendix, to the extent permitted by law, the Company will indemnify and hold harmless the Executive, and each underwriter or other Person within the meaning of the Securities Act or the Exchange Act, against any damages, and the Company will pay to the Executive, underwriter, controlling Person, or other aforementioned Person any legal fees and other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which damages may result, as such expenses are incurred; provided, however, that this indemnity agreement shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of the Executive, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

To the extent permitted by law, Executive will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel for the Company, any underwriter (as defined in the Securities Act), any other party selling securities in such registration statement, and any controlling Person of any such underwriter, against any damages, in each case only to the extent that such damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of the Executive expressly for use in connection with such registration; and Executive will pay to the Company and each other aforementioned Person any legal fees and other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which damages may result, as such expenses are incurred; provided, however, that this indemnity agreement shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Executive, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by Executive by way of indemnity or contribution here exceed the proceeds from the offering received by the Executive net of any selling expenses paid by the Participating Holder.

Promptly after receipt by an indemnified party of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel reasonably mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one (1) separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action will not relieve such indemnifying party of any liability to the indemnified party hereunder, except to the extent, and only to the extent, that such failure actually and materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than hereunder.

To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the indemnification in such case provided for hereunder or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided hereunder, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall the aggregate amounts payable by Executive by way of indemnity or contribution exceed the proceeds from the offering received by the Executive (net of any selling expenses) paid by Executive.

Notwithstanding the foregoing, to the extent that any provision on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering is in conflict with any of the foregoing provisions, the provision in the underwriting agreement shall control.

The obligations of the Company under this Appendix shall survive the completion of any offering of Registrable Securities in a registration under this Appendix, and otherwise shall survive the termination of the Amended and Restated Employment Agreement.

Exhibit 10.29

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”), dated as of March 29, 2018 (the “Commencement Date”), between One Horizon Group, Inc., a Delaware corporation having an office at 34 South Molton Street, London W1K 5RG, UK (the “Company”), and Martin Ward, having an address as set forth on the signature page (the “Executive”).

W I T N E S S E T H :

WHEREAS, the parties entered into an Employment Agreement dated August 1, 2017 (the “Employment Agreement”), whereby the Executive agreed to serve as the Chief Financial Officer of the Company for the consideration and on the terms and conditions set forth therein; and

WHEREAS, the parties desire to amend and restate the Employment Agreement in its entirety,

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties to this Agreement hereby agree as follows:

1. Employment . The Company hereby employs Executive as its Chief Financial Officer, commencing as of the Commencement Date, and Executive hereby accepts such employment with the Company, upon and subject to the terms and conditions set forth in this Agreement. Executive shall not be required to spend any particular number of days at the Company’s headquarters and may be based in a location remote from the Company’s headquarters, provided that Executive can effectively carry out his duties from such location. Executive recognizes that international travel will be necessary in connection with the proper discharge of his duties hereunder.

2. Term . The term of this Agreement and Executive’s employment hereunder shall commence on the Commencement Date and continue through July 31, 2022 (the “Expiration Date,” and such period, the “initial period”), subject to earlier termination as hereinafter provided. Subject to the provisions of Section 12 of this Agreement, this Agreement and the employment of Executive hereunder shall be automatically renewed for successive renewal periods of one (1) year each (each, a “renewal period”), upon and subject to the terms and conditions hereof, commencing on the Expiration Date and on each anniversary of the Expiration Date thereafter, unless either party hereto gives the other notice of such party’s intent to terminate this Agreement and Executive’s employment hereunder at least sixty (60) days prior to the end of the initial period or any renewal period (the actual term of employment of Executive hereunder, whether ending on, prior to or after the Expiration Date, may be hereinafter referred to as the “Employment Period”).

3. Duties . During the Employment Period, Executive shall serve as the Chief Financial Officer of the Company. Executive shall report directly to the Board of Directors of the Company and render such services and perform such duties for the benefit of the Company and its affiliates as may be consistent with Executive’s position or related thereto as the Board of Directors of the Company shall from time to time direct or request. Executive shall devote Executive’s full business time, energy and skill to Executive’s employment hereunder and agrees to serve the Company faithfully, diligently and to the best of Executive’s ability. So long as Executive is employed by Company as its Chief Financial Officer hereunder, the Company shall add Executive to its Board of Directors.

4. Compensation .

In consideration of the services to be rendered by Executive hereunder, Executive shall receive from the Company the following:

(a) Salary . The Company shall pay Executive a base salary at the rate of Two Hundred Forty Thousand Dollars ($240,000) per year, payable in equal monthly installments in accordance with the Company’s standard payroll practices from time to time in effect. The first and last installments of such salary shall be appropriately prorated if and to the extent that Executive shall not have been employed by the Company hereunder for the full period covered by such installment. Executive’s performance shall be reviewed annually by the Company’s Board of Directors, in connection with which goals and possible increases in Executive’s salary for the future will be discussed, it being understood that any such increases shall be within the discretion of the Company’s Board of Directors.

(b) Bonus . For purposes of this Agreement an Employment Year shall be the twelve month period commencing as of August 1 and terminating as of the immediately succeeding July 31. At least two months prior to the commencement of each Employment Year, commencing with the year beginning August 1, 2018, the Board of Directors and the Executive shall agree upon an Incentive Compensation Plan for the year pursuant to which, upon the attainment of agreed upon objectives, the Executive shall be awarded five year options to purchase common stock of the Company at such price and on such conditions as shall be agreed upon in the Compensation Plan. Any options issuable hereunder in respect of a given Employment Year shall be issued the Company within forty-five (45) days after the determination by that the Executive has attained the objectives set forth in the relevant Compensation Plan.

(d) Vacation . Executive shall be entitled to take up to an aggregate of four (4) weeks ( i.e. , twenty (20) business days) of vacation each Employment Year commencing with the Year beginning August 1, 2017 (or a pro rata number of vacation days in respect of any partial calendar year during the term hereof) as business conditions permit, which shall be scheduled so as to minimize interference with the business of the Company, it being understood that unused vacation may not accumulate from year to year, and any vacation time not used by the end of any year shall not require any additional payment to Executive.

(e) Expenses . The Company shall reimburse Executive for Executive’s reasonable business expenses incurred for or on behalf of the Company in furtherance of the performance by Executive of his duties hereunder, subject to and in accordance with any then applicable expense reimbursement policy of the Company, and with any such reimbursement to be subject to timely receipt by the Company from Executive of such receipts, vouchers and other verification as the Company shall reasonably require to evidence such expenses. Such expenses shall include travel and lodging from the Executive’s place of residence to any office of the Company or any other travel undertaken on behalf of the Company.

8. Restrictive Covenant; Non-Competition; Non-Solicitation .

10. Termination . The following provisions set forth the only grounds under which this Agreement, and the employment of Executive hereunder, may be terminated prior to the Expiration Date:

(a) Termination by the Company Without Cause; Certain Non-Renewal by the Company . Notwithstanding anything in this Agreement to the contrary, this Agreement and Executive’s employment hereunder may be terminated by the Company at any time upon at least sixty (60) days’ prior written notice to Executive. In the event of any such termination by the Company “without cause,” or in the event that this Agreement shall expire or terminate at the end of the initial period or any renewal period by virtue of the Company having given notice to Executive of its intention to terminate this Agreement at the end of such initial period or renewal period (a “Company Non-Renewal”), the Company shall thereafter owe to the Executive, as severance and which amounts, except as specifically provided below, shall not be subject to mitigation by virtue of the future employment of Executive a sum equal to one (1) year’s base salary (at the then current rate or if such termination shall occur prior to the Salary Commencement Date, at the rate of $240,000 per annum). The aforesaid sum shall be paid to Executive as provided in Section 10(h).

(v) Executive’s abuse of alcohol, prescription drugs or controlled substances which interferes with the performance of his duties to the Company;

(vi) Executive’s deliberate disregard of any material rule or policy of the Company and failure to cure the same within ten (10) days of written notice thereof from the Company; or

(vii) excessive absenteeism of Executive other than for reasons of illness, after written notice from the Company with respect thereto.

(g) Termination by Executive for Good Reason . This Agreement and Executive’s employment hereunder may be terminated at any time by Executive for “Good Reason.” For purposes of this Agreement, Good Reason shall mean (i) a material diminution in Executive’s title, duties or responsibilities, or the assignment to Executive of duties that, taken as a whole, are materially inconsistent with the scope of duties and responsibilities associated with the position of Chief Financial Officer, or (ii) the breach by the Company, in any material respect, of this Agreement, and failure by the Company to cure the same within ten (10) days of written notice thereof from Executive. In the event of a termination of this Agreement by Executive for Good Reason, Executive shall be paid as severance the same amounts and benefits as those to which he would have been entitled pursuant to the provisions of Section 10 in the case of a termination of this Agreement by the Company without cause, all subject to the terms and conditions of such Section 10 .

11. Change in Control .

(a) For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred if:

(iii) there shall be a liquidation and dissolution of the Company.

12. Counsel . Executive acknowledges that Executive has been advised to consult with legal counsel prior to signing this Agreement.

14. Miscellaneous .

(e) Section Headings . The section headings contained in this Agreement are for convenience of reference only and shall not be deemed to have any substantive effect.

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

	ONE HORIZON GROUP, INC.

	By: /s/ MARK WHITE

	Chief Executive Officer

	TERMS AGREED BY EXECUTIVE

	/s/ Martin Ward
	By: MARTIN WARD

Appendix A

Registration Rights .

(a) For purposes of this Appendix:

“ SEC ” means the Securities and Exchange Commission.

“ SEC Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act, as in effect from time-to-time.

“ Securities Act ” means the Securities Act of 1933, as amended from time-to-time, and the rules and regulations promulgated thereunder.

(c) Whenever required under this Appendix to affect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

(v) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

(vii) after such registration statement becomes effective, notify Executive of any request by the SEC that the Company amend or supplement such registration statement or prospectus;

Exhibit 10.30

ONE HORIZON GROUP, INC.
2018 EQUITY INCENTIVE PLAN

1. Purposes of the Plan.

The purposes of this Equity Incentive Plan are to attract and retain the best available personnel, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business.

2. Definitions.

As used herein, the following definitions shall apply:

(a) “Administrator” means the Board or any Committee appointed to administer the Plan.

(b) “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

(c) “Applicable Laws” means the legal requirements relating to the administration of stock incentive plans, if any, under applicable provisions of federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any foreign jurisdiction applicable to Awards granted to residents therein.

(d) “Award” means the grant of an Option, SAR, Dividend Equivalent Right, Restricted Stock, Performance Unit, Performance Share, or other right or benefit under the Plan.

(e) “Award Agreement” means the written agreement evidencing the grant of an Award executed by the Company and the Grantee, including any amendments thereto.

(f) “Board” means the Board of Directors of the Company.

(g) “Cause” means, with respect to the termination by the Company or a Related Entity of the Grantee’s Continuous Service, that such termination is for “Cause” as such term is expressly defined in a then-effective written agreement between the Grantee and the Company or such Related Entity, or in the absence of such then-effective written agreement and definition, is based on, in the determination of the Administrator, the Grantee’s:

(i) refusal or failure to act in accordance with any specific, lawful direction or order of the Company or a Related Entity;

(ii) unfitness or unavailability for service or unsatisfactory performance (other than as a result of Disability);

(iii) performance of any act or failure to perform any act, in bad faith and to the detriment of the Company or a Related Entity;

(iv) dishonesty, intentional misconduct or material breach of any agreement with the Company or a Related Entity; or

(v) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person.

(h) “Code” means the Internal Revenue Code of 1986, as amended.

(i) “Committee” means any committee appointed by the Board to administer the Plan.

(j) “Common Stock” means the common stock of the Company.

(k) “Company” means One Horizon Group, Inc., a Delaware corporation.

(l) “Consultant” means any person (other than an Employee or a Director, solely with respect to rendering services in such person’s capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity.

(m) “Continuous Service” means that the provision of services to the Company or a Related Entity in any capacity of Employee, Director or Consultant, is not interrupted or terminated. Continuous Service shall not be considered interrupted in the case of (i) any leave of absence approved by the Company or Related Entity, (ii) transfers between locations of the Company or among the Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement). For purposes of Incentive Stock Options, no such approved leave of absence may exceed ninety (90) days, unless re-employment upon expiration of such leave is guaranteed by statute or contract.

(n) “Corporate Transaction” means any of the following transactions:

(i) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated;

(ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company (including the capital stock of the Company’s subsidiary corporations) in connection with the complete liquidation or dissolution of the Company;

(iii) any reverse merger in which the Company is the surviving entity but in which securities possessing more than eighty percent (80%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger; or

(iv) an acquisition by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than eighty percent (80%) of the total combined voting power of the Company’s outstanding securities, but excluding any such transaction that the Administrator determines shall not be a Corporate Transaction.

(o) “Director” means a member of the Board or the board of directors of any Related Entity.

(p) “Disability” means that a Grantee is permanently unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any medically determinable physical or mental impairment. A Grantee will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.

(q) “Dividend Equivalent Right” means a right entitling the Grantee to compensation measured by dividends paid with respect to Common Stock.

(r) “Employee” means any person, including an Officer or Director, who is an employee of the Company or any Related Entity. The payment of a director’s fee by the Company or a Related Entity shall not be sufficient to constitute “employment” by the Company.

(s) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(t) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: (i) Where there exists a public market for the Common Stock, the Fair Market Value shall be (A) the closing price for a Share for the last market trading day prior to the time of the determination (or, if no closing price was reported on that date, on the last trading date on which a closing price was reported) on the stock exchange or national market system determined by the Administrator to be the primary market for the Common Stock, or (B) if the Common Stock is not traded on any such exchange or national market system, the average of the closing bid and asked prices of a share on the OTC Bulletin Board or other inter-dealer quotation service for the day prior to the time of the determination (or, if no such prices were reported on that date, on the last date on which such prices were reported), in each case, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or (ii) in the absence of an established market for the Common Stock of the type described in subparagraph (i), above, the Fair Market Value shall be determined by the Administrator in good faith.

(u) “Grantee” means an Employee, Director or Consultant who receives an Award pursuant to an Award Agreement under the Plan.

(v) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(w) “Non-Qualified Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

(x) “Officer” means a person who is an officer of the Company or a Related Entity within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(y) “Option” means an option to purchase Shares pursuant to an Award Agreement granted under the Plan.

(z) “Parent” means a “parent corporation”, whether now or hereafter existing, as defined in Section 424(e) of the Code.

(aa) “Performance Shares” means Shares or an Award denominated in Shares which may be earned in whole or in part upon attainment of performance criteria established by the Administrator.

(bb) “Performance Units” means an Award which may be earned in whole or in part upon attainment of performance criteria established by the Administrator and which may be settled for cash, Shares or other securities or a combination of cash, Shares or other securities as established by the Administrator.

(cc) “Plan” means this 2018 Equity Incentive Plan.

(dd) “Related Entity” means any Parent, Subsidiary and any business, corporation, partnership, limited liability company or other entity in which the Company, a Parent or a Subsidiary holds a substantial ownership interest, directly or indirectly.

(ee) “Restricted Stock” means Shares issued under the Plan to the Grantee for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as established by the Administrator.

(ff) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor thereto.

(gg) “SAR” means a stock appreciation right entitling the Grantee to Shares or cash compensation, as established by the Administrator, measured by appreciation in the value of Common Stock.

(hh) “Share” means a share of the Common Stock.

(ii) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code.

(jj) “Related Entity Disposition” means the sale, distribution or other disposition by the Company of all or substantially all of the Company’s interests in any Related Entity effected by a sale, merger or consolidation or other transaction involving that Related Entity or the sale of all or substantially all of the assets of that Related Entity.

3. Stock Subject to the Plan.

(a) Subject to the provisions of Section 10, below, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Stock Options) is 5,000,000 Shares. The Shares to be issued pursuant to Awards may be authorized, but unissued, or reacquired Common Stock.

(b) Any Shares covered by an Award (or portion of an Award) which is forfeited or canceled, expires or is settled in cash, shall be deemed not to have been issued for purposes of determining the maximum aggregate number of Shares which may be issued under the Plan. If any unissued Shares are retained by the Company upon exercise of an Award in order to satisfy the exercise price for such Award or any withholding taxes due with respect to such Award, such retained Shares subject to such Award shall become available for future issuance under the Plan (unless the Plan has terminated). Shares that actually have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future issuance under the Plan, except that if unvested Shares are forfeited, or repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.

4. Administration of the Plan.

(a) Plan Administrator.

(i) Administration with Respect to Directors and Officers. With respect to grants of Awards to Directors or Employees who are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board.

(ii) Administration with Respect to Consultants and Other Employees. With respect to grants of Awards to Employees or Consultants who are neither Directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. The Board may authorize one or more Officers to grant such Awards and may limit such authority as the Board determines from time to time. Except for the power to amend the Plan as provided in Section 13 and except for determinations regarding Employees who are subject to Section 16 of the Exchange Act or certain key Employees who are, or may become, as determined by the Board or the Committee, subject to Section 162(m) of the Code compensation deductibility limit, and except as may otherwise be required under applicable stock exchange rules, the Board or the Committee may delegate any or all of its duties, powers and authority under the Plan pursuant to such conditions or limitations as the Board or the Committee may establish to any Officer or Officers of the Company

(iii) Administration Errors. In the event an Award is granted in a manner inconsistent with the provisions of this subsection, such Award shall be presumptively valid as of its grant date to the extent permitted by Applicable Laws.

(b) Powers of the Administrator. Subject to Applicable Laws and the provisions of the Plan (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in its discretion:

(i) to select the Employees, Directors and Consultants to whom Awards may be granted from time to time hereunder;

(ii) to determine whether and to what extent Awards are granted hereunder;

(iii) to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder;

(iv) to approve forms of Award Agreements for use under the Plan;

(v) to determine the terms and conditions of any Award granted hereunder;

(vi) to amend the terms of any outstanding Award granted under the Plan, provided that any amendment that would adversely affect the Grantee’s rights under an outstanding Award shall not be made without the Grantee’s written consent;

(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan, including without limitation, any notice of Award or Award Agreement, granted pursuant to the Plan;

(viii) to establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable foreign jurisdictions and to afford Grantees favorable treatment under such laws; provided, however, that no Award shall be granted under any such additional terms, conditions, rules or procedures with terms or conditions which are inconsistent with the provisions of the Plan; and

(ix) to take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.

(c) Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be conclusive and binding on all persons.

5. Eligibility, Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of the Company, a Parent or a Subsidiary. An Employee, Director or Consultant who has been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to Employees, Directors or Consultants who are residing in foreign jurisdictions.

6. Terms and Conditions of Awards.

(a) Type of Awards. The Administrator is authorized under the Plan to award any type of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) an Option, a SAR or similar right with a fixed or variable price related to the Fair Market Value of the Shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or (iii) any other security with the value derived from the value of the Shares. Such awards include, without limitation, Options, SARs, sales or bonuses of Restricted Stock, Dividend Equivalent Rights, Performance Units or Performance Shares, and an Award may consist of one such security or benefit, or two (2) or more of them in any combination or alternative.

(b) Designation of Award. Each Award shall be designated in the Award Agreement. In the case of an Option, the Option shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by a Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the date the Option with respect to such Shares is granted.

(c) Conditions of Award. Subject to the terms of the Plan, the Administrator shall determine the provisions, terms, and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, Shares, or other consideration, including cashless exercise) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria. The performance criteria established by the Administrator may be based on any one of, or combination of, increase in share price, earnings per share, total stockholder return, return on equity, return on assets, return on investment, net operating income, cash flow, revenue, economic value added, personal management objectives, or other measure of performance selected by the Administrator. Partial achievement of the specified criteria may result in a partial payment or vesting as specified in the Award Agreement.

(d) Acquisitions and Other Transactions. The Administrator may issue Awards under the Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant future awards in connection with the Company or a Related Entity acquiring another entity, an interest in another entity or an additional interest in a Related Entity whether by merger, stock purchase, asset purchase or other form of transaction.

(e) Deferral of Award Payment. The Administrator may establish one or more programs under the Plan to permit selected Grantees the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Grantee to payment or receipt of Shares or other consideration under an Award. The Administrator may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Administrator deems advisable for the administration of any such deferral program.

(f) Award Exchange Programs. The Administrator may establish one or more programs under the Plan to permit selected Grantees to exchange an Award under the Plan for one or more other types of Awards under the Plan on such terms and conditions as determined by the Administrator from time to time.

(g) Separate Programs. The Administrator may establish one or more separate programs under the Plan for the purpose of issuing particular forms of Awards to one or more classes of Grantees on such terms and conditions as determined by the Administrator from time to time.

(h) Early Exercise. The Award Agreement may, but need not, include a provision whereby the Grantee may elect at any time while an Employee, Director or Consultant to exercise any part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity or to any other restriction the Administrator determines to be appropriate.

(i) Term of Award. The term of each Award shall be the term stated in the Award Agreement, provided, however, that the term of an Incentive Stock Option shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Award Agreement.

(j) Transferability of Awards. Except as otherwise provided in this Section, all Awards under the Plan shall be nontransferable and shall not be assignable, alienable, saleable or otherwise transferable by the Grantee other than by will or the laws of descent and distribution except pursuant to a domestic relations order entered by a court of competent jurisdiction. Notwithstanding the preceding sentence, the Board or the Committee may provide that any Award of Non-Qualified Stock Options may be transferable by the recipient to family members or family trusts established by the Grantee. The Board or the Committee may also provide that, in the event that a Grantee terminates employment with the Company to assume a position with a governmental, charitable, educational or similar non-profit institution, a third party, including but not limited to a “blind” trust, may be authorized by the Board or the Committee to act on behalf of and for the benefit of the respective Grantee with respect to any outstanding Awards. Except as otherwise provided in this Section, during the life of the Grantee, Awards under the Plan shall be exercisable only by him or her except as otherwise determined by the Board or the Committee. In addition, if so permitted by the Board or the Committee, a Grantee may designate a beneficiary or beneficiaries to exercise the rights of the Grantee and receive any distributions under the Plan upon the death of the Grantee.

(k) Time of Granting Awards. The date of grant of an Award shall for all purposes be the date on which the Administrator makes the determination to grant such Award, or such other date as is determined by the Administrator. Notice of the grant determination shall be given to each Employee, Director or Consultant to whom an Award is so granted within a reasonable time after the date of such grant.

7. Award Exercise or Purchase Price, Consideration, Taxes and Reload Options.

(a) Exercise or Purchase Price. The exercise or purchase price, if any, for an Award shall be as follows:

(i) In the case of an Incentive Stock Option: (A) granted to an Employee who, at the time of the grant of such Incentive Stock Option owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or (B) granted to any Employee other than an Employee described in the preceding clause, the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

(ii) In the case of a Non-Qualified Stock Option, the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant unless otherwise determined by the Administrator.

(iii) In the case of other Awards, such price as is determined by the Administrator.

(iv) Notwithstanding the foregoing provisions of this Section 7(a),in the case of an Award issued pursuant to Section 6(d), above, the exercise or purchase price for the Award shall be determined in accordance with the principles of Section 424(a) of the Code.

(b) Consideration. Subject to Applicable Laws, the consideration to be paid for the Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). In addition to any other types of consideration the Administrator may determine, the Administrator is authorized to accept as consideration for Shares issued under the Plan the following, provided that the portion of the consideration equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the applicable laws of the jurisdiction in which the Company is then incorporated.

(i) cash;

(ii) check;

(iii) delivery of Grantee’s promissory note with such recourse, interest, security, and redemption provisions as the Administrator determines is appropriate;

(iv) surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require including withholding of Shares otherwise deliverable upon exercise of the Award) which have a Fair Market Value on the date of surrender or attestation equal to the aggregate exercise price of the Shares as to which said Award shall be exercised (but only to the extent that such exercise of the Award would not result in an accounting compensation charge with respect to the Shares used to pay the exercise price unless otherwise determined by the Administrator);

(v) with respect to options, payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (A) shall provide written instructions to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (B) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction; or

(vi) with respect to options provided there is then an established market for the Common Stock, by a “cashless exercise” as a result of which the Grantee shall be entitled to receive that number of shares of Common Stock equal to the quotient of (i) the number of Options surrendered for exercise and (ii) the difference between the Fair Market Value (determined in accordance with clause (i) of Section 2(t) hereof) and the exercise price of the Option, in which case the number of Options surrendered for exercise shall be cancelled;

(vii) any combination of the foregoing methods of payment.

(c) Taxes. No Shares shall be delivered under the Plan to any Grantee or other person until such Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of any foreign, federal, state, or local income and employment tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon exercise of an Award, the Company shall withhold or collect from Grantee an amount sufficient to satisfy such tax obligations.

(d) Reload Options. In the event the exercise price or tax withholding of an Option is satisfied by the Company or the Grantee’s employer withholding Shares otherwise deliverable to the Grantee, the Administrator may issue the Grantee an additional Option, with terms identical to the Award Agreement under which the Option was exercised, but at an exercise price as determined by the Administrator in accordance with the Plan.

8. Exercise of Award.

(a) Procedure for Exercise; Rights as a Stockholder.

(i) Any Award granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under the terms of the Plan and specified in the Award Agreement.

(ii) An Award shall be deemed to be exercised upon the later of (x) receipt by the Company of written notice of such exercise in accordance with the terms of the Award by the person entitled to exercise the Award and (y) full payment for the Shares with respect to which the Award is exercised, including, to the extent selected, use of the broker-dealer sale and remittance procedure to pay the purchase price as provided in Section 7(b)(v).

(iii) Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Shares subject to an Award, notwithstanding the exercise of an Option or other Award. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Award. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in the Award Agreement or Section 10, below.

(b) Exercise of Award Following Termination of Continuous Service.

(i) An Award may not be exercised after the termination date of such Award set forth in the Award Agreement and may be exercised following the termination of a Grantee’s Continuous Service only to the extent provided in the Award Agreement.

(ii) Where the Award Agreement permits a Grantee to exercise an Award following the termination of the Grantee’s Continuous Service for a specified period, the Award shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Award, whichever occurs first.

(iii) Any Award designated as an Incentive Stock Option to the extent not exercised within the time permitted by law for the exercise of Incentive Stock Options following the termination of a Grantee’s Continuous Service shall convert automatically to a Non-Qualified Stock Option and thereafter shall be exercisable as such to the extent exercisable by its terms for the period specified in the Award Agreement.

(c) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares, an Award previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Grantee at the time that such offer is made.

9. Conditions Upon Issuance of Shares.

(a) Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all Applicable Laws, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(b) As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any Applicable Laws.

10. Adjustments Upon Changes in Capitalization. Subject to any required action by the stockholders of the Company, the Administrator may, in its discretion, proportionately adjust the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan, the exercise or purchase price of each such outstanding Award, as well as any other terms that the Administrator determines require adjustment for (a) any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares, (b) any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, or (c) as the Administrator may determine in its discretion, any other transaction with respect to Common Stock to which Section 424(a) of the Code applies; provided, however that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Administrator and its determination shall be final, binding and conclusive. Except as the Administrator determines, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason hereof shall be made with respect to, the number or price of Shares subject to an Award.

11. Corporate Transactions and Related Entity Dispositions. Except as may be provided in an Award Agreement:

(a) The Administrator shall have the authority, exercisable either in advance of any actual or anticipated Corporate Transaction or Related Entity Disposition or at the time of an actual Corporate Transaction or Related Entity Disposition and exercisable at the time of the grant of an Award under the Plan or any time while an Award remains outstanding, to provide for the full automatic vesting and exercisability of one or more outstanding unvested Awards under the Plan and the release from restrictions on transfer and repurchase or forfeiture rights of such Awards in connection with a Corporate Transaction or Related Entity Disposition, on such terms and conditions as the Administrator may specify. The Administrator also shall have the authority to condition any such Award vesting and exercisability or release from such limitations upon the subsequent termination of the Continuous Service of the Grantee within a specified period following the effective date of the Corporate Transaction or Related Entity Disposition. Effective upon the consummation of a Corporate Transaction or Related Entity Disposition, all outstanding Awards under the Plan, shall remain fully exercisable until the expiration or sooner termination of the Award.

(b) The portion of any Incentive Stock Option accelerated under this Section 11 in connection with a Corporate Transaction or Related Entity Disposition shall remain exercisable as an Incentive Stock Option under the Code only to the extent the $ 100,000 dollar limitation of Section 422(d) of the Code is not exceeded. To the extent such dollar limitation is exceeded, the accelerated excess portion of such Option shall be exercisable as a Non-Qualified Stock Option.

12. Effective Date and Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the stockholders of the Company. It shall continue in effect for a term of ten (10) years unless sooner terminated. Subject to Section 13 below, and Applicable Laws, Awards may be granted under the Plan upon its becoming effective.

13. Amendment, Suspension or Termination of the Plan.

(a) The Board may at any time amend, suspend or terminate the Plan. To the extent necessary to comply with Applicable Laws, the Company shall obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required.

(b) No Award may be granted during any suspension of the Plan or after termination of the Plan.

(c) Any amendment, suspension or termination of the Plan (including termination of the Plan under Section 12, above) shall not affect Awards already granted, and such Awards shall remain in full force and effect as if the Plan had not been amended, suspended or terminated, unless mutually agreed otherwise between the Grantee and the Administrator, which agreement must be in writing and signed by the Grantee and the Company.

14. Reservation of Shares.

(a) The Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

(b) The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

15. No Effect on Terms of Employment/Consulting Relationship. The Plan shall not confer upon any Grantee any right with respect to the Grantee’s Continuous Service, nor shall it interfere in any way with his or her right or the Company’s right to terminate the Grantee’s Continuous Service at any time, with or without cause.

16. Unfunded Plan. Unless otherwise determined by the Board or the Committee, the Plan shall be unfunded and shall not create (or construed to create) a trust or a separate fund or funds. The Plan shall not establish any fiduciary relationship between the Company and any Grantee or other person. To the extent any person holds any rights by virtue of an Award granted under the Plan, such right (unless otherwise determined by the Board or the Committee) shall be no greater than the right of an unsecured general creditor of the Company.

17. No Effect on Retirement and Other Benefit Plans. Except as specifically provided in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a “Retirement Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of 1974, as amended.

18. Stockholder Approval. The grant of Incentive Stock Options under the Plan shall be subject to approval by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted by the Board excluding Incentive Stock Options issued in substitution for outstanding Incentive Stock Options pursuant to Section 424(a) of the Code. Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws. The Administrator may grant Incentive Stock Options under the Plan prior to approval by the stockholders, but until such approval is obtained, no such Incentive Stock Option shall be exercisable. In the event that stockholder approval is not obtained within the twelve (12) month period provided above, all Incentive Stock Options previously granted under the Plan shall be exercisable as Non-Qualified Stock Options.

Exhibit 21.1

Subsidiaries


Name	Jurisdiction of Incorporation	Ownership
C-Rod, Inc.	Florida	100%
Once In A Lifetime, LLC	Florida	51%
One Horizon Hong Kong Limited	Hong Kong	100%

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference of our report dated April 2, 2018 related to the consolidated financial statements of One Horizon Group, Inc. (the “Company”) as of and for the years ended December 31, 2017 and 2016 which is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 in the Company’s Registration Statement on Form S-3 (Registration No. 333-222295).

/s/ Cherry Bekaert LLP

Tampa, Florida

Dated: April 2, 2018

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) UNDER THE EXCHANGE ACT

I, Mark White, certify that:

1. I have reviewed this annual report on Form 10-K of One Horizon Group, Inc.;

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. The registrant’s other certifying officer and I are 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 our 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. The registrant’s other certifying officer and I have disclosed, based on our 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 functions):

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: April 2, 2018

/s/ Mark White
Mark White
Chief Executive Officer (Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) UNDER THE EXCHANGE ACT

I, Martin Ward, certify that:

1. I have reviewed this annual report on Form 10-K of One Horizon Group, Inc.;

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: April 2, 2018

/s/ Martin Ward
Martin Ward
Chief Financial Officer (Principal Financial Officer)

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Annual Report of One Horizon Group, Inc., a Delaware corporation (the “Company”), on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission (the “Report”), Mark White, Chief Executive Officer of the Company, does hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350), 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 result of operations of the Company.

Dated: April 2, 2018

/s/ Mark White
Mark White
Chief Executive Officer (Principal Executive Officer)

[A signed original of this written statement required by Section 906 has been provided to One Horizon Group, Inc. and will be retained by One Horizon Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.]

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Annual Report of One Horizon Group, Inc., a Delaware corporation (the “Company”), on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission (the “Report”), Martin Ward, Chief Financial Officer of the Company, does hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss. 1350), 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 result of operations of the Company.

Dated: April 2, 2018

/s/ Martin Ward
Martin Ward
Chief Financial Officer (Principal Financial Officer)