0001615774-18-008293.txt : 20180817 0001615774-18-008293.hdr.sgml : 20180817 20180817160341 ACCESSION NUMBER: 0001615774-18-008293 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 53 CONFORMED PERIOD OF REPORT: 20180630 FILED AS OF DATE: 20180817 DATE AS OF CHANGE: 20180817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: One Horizon Group, Inc. CENTRAL INDEX KEY: 0000225211 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 251229323 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36530 FILM NUMBER: 181025799 BUSINESS ADDRESS: STREET 1: 34 SOUTH MOLTON STREET CITY: LONDON STATE: X0 ZIP: W1K 5RG BUSINESS PHONE: 353-61-518477 MAIL ADDRESS: STREET 1: 34 SOUTH MOLTON STREET CITY: LONDON STATE: X0 ZIP: W1K 5RG FORMER COMPANY: FORMER CONFORMED NAME: INTELLIGENT COMMUNICATION ENTERPRISE CORP DATE OF NAME CHANGE: 20091230 FORMER COMPANY: FORMER CONFORMED NAME: MOBICLEAR INC. DATE OF NAME CHANGE: 20061206 FORMER COMPANY: FORMER CONFORMED NAME: BICO INC/PA DATE OF NAME CHANGE: 20000724 10-Q 1 s112063_10q.htm 10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended June 30, 2018

 

or

 

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

 

For the transition period from _____________ to _____________

 

Commission File Number: 000-10822

 

One Horizon Group, Inc.

(Exact name of registrant as specified in its charter)

 

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

 

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

 

+44(0)20 7409 5248 

(Registrant’s telephone number, including area code)

 

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

 

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

 

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

 

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

 

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

 

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

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of August 08, 2018, 51,347,022 shares of the registrant’s common stock, par value $0.0001 per share, were outstanding.

 

 

 

 

 

TABLE OF CONTENTS

 

Part I – FINANCIAL INFORMATION  
     
Item 1. Financial Statements 4
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk 23
     
Item 4. Controls and Procedures 23
     
Part II – OTHER INFORMATION  
     
Item 1. Legal Proceedings 24
     
Item 1A. Risk Factors 25
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25
     
Item 3. Defaults Upon Senior Securities 25
     
Item 4. Mine Safety Disclosures 25
     
Item 5. Other Information 25
     
Item 6. Exhibits 25
     
SIGNATURES 26

 

2

 

 

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

 

The statements made in this Report, and in other materials that the Company has filed or may file with the Securities and Exchange Commission, in each case that are not historical facts, contain “forward-looking information” within the meaning of the Private Securities Litigation Reform Act of 1995, and Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, which can be identified by the use of forward-looking terminology such as “may,” “will,” “anticipates,” “expects,” “projects,” “estimates,” “believes,” “seeks,” “could,” “should,” or “continue,” the negative thereof, and other variations or comparable terminology as well as any statements regarding the evaluation of strategic alternatives. These forward-looking statements are based on the current plans and expectations of management, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. Among these risks and uncertainties are the competition we face; our ability to retain customers and attract new customers; our ability to establish and expand strategic alliances; governmental regulation and related actions in our international operations including changes in taxes and currency restrictions; increased market and competitive risks, risks related to the acquisition or integration of future businesses or joint ventures; our ability to obtain or maintain relevant intellectual property rights; failure to protect our trademarks and internally developed software; security breaches and other compromises of information security; our dependence on third party facilities, equipment, systems and services; system disruptions or flaws in our technology and systems; fraudulent use of our name or services; our ability to maintain data security; and our ability to obtain additional financing if required; 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 NASDAQ NOTIFICATION

 

On May 10, 2018, the Company received written notification from NASDAQ that the minimum bid price per share for its common share was below $1.00 for a period of 30 consecutive business days and that the Company did not meet the minimum bid price requirement set forth in NASDAQ Listing Rule 5550 (a)(2). The notification does not impact the Company’s listing on The Nasdaq Capital Market at this time.

 

The Company has a period of 180 calendar days to regain compliance with NASDAQ’s minimum bid price requirement. To regain compliance, the Company’s common shares must have a closing bid price of at least $1.00 for a minimum of 10 consecutive business days. The Company will work to regain compliance during the 180-day compliance period. In the event the Company does not regain compliance during the 180-day period, the Company may be eligible for additional time to regain compliance. 

 

3

 

 

PART I – FINANCIAL INFORMATION

 

ONE HORIZON GROUP, INC.

Condensed Consolidated Balance Sheets

June 30, 2018 and December 31, 2017

(in thousands, except share data)

 

   June 30,   December 31, 
   2018
(unaudited)
   2017 
Assets          
           
Current assets:          
Cash  $604   $763 
Accounts receivable, net   352    102 
Prepaid compensation   550    550 
Amounts due from related parties   46     
Other assets   920    28 
Total current assets   2,472    1,443 
           
Property and equipment, net   39    2 
Intangible assets, net   17,392    5,340 
Goodwill   1,223     
Prepaid compensation, net of current portion   1,742    2,017 
           
Total assets  $22,868   $8,802 
           
Liabilities and Stockholders’ Equity          
           
Current liabilities:          
Accounts payable  $385   $167 
Accrued expenses   60    55 
Accrued compensation   215    251 
Amount due to related parties       32 
Convertible notes, net of debt discount       45 
Total current liabilities   660    550 
           
Long-term liabilities          
           
Promissory notes, related parties   1,000    1,000 
           
Total liabilities   1,660    1,550 
           
Equity          
Preferred stock:          
$0.0001 par value, authorized 50,000,000; No shares issued and outstanding        
Common stock:          
$0.0001 par value, authorized 200,000,000 shares issued and outstanding 51,347,022 shares as of June 30, 2018 (December 2017 - 30,255,123)   4    3 
Additional paid-in capital   62,627    48,356 
           
Accumulated Deficit   (46,841)   (41,085)
Stock subscription receivable   (370)    
Accumulated other comprehensive income   (36)   (22)
Total One Horizon Group, Inc., stockholders’ equity   15,384    7,252 
 Non-controlling interest   5,824     
Total stockholders’ equity   21,208    7,252 
           
Total liabilities and equity  $22,868   $8,802 

 

See accompanying notes to condensed consolidated financial statements.

 

4

 

 

ONE HORIZON GROUP, INC.

Condensed Consolidated Statements of Operations

For the three and six months ended June 30, 2018 and 2017

(in thousands, except per share data)

 

    Three Months ended June 30,     Six Months ended June 30,  
    2018
audited
    2017     2018
unaudited
    2017  
                         
Revenue   $ 294     $ 110     $ 568     $ 117  
                                 
Cost of revenue - Hardware, calls and network charges     111             111        
  - Amortization of intangible assets     824       22       1,229       44  
      935       22       1,340       44  
                                 
Gross margin (deficiency)     (641 )     88       (772 )     73  
                                 
Expenses:                                
General and administrative     1,773       265       3,183       573  
Depreciation     2       7       2       14  
Acquisition services     1,094             1,874        
                                 
      2,869       272       5,059       587  
                                 
Loss from operations     (3,510 )     (184 )     (5,831 )     (514 )
                                 
Other income and expense:                                
Interest expense     (17 )     (176 )     (390 )     (356 )
Foreign exchange     (1 )     (2     (1 )      
                                 
      (18 )     (178 )     (391 )     (356 )
                                 
Loss before income taxes     (3,528 )     (362 )     (6,222 )     (870 )
                                 
Income tax benefit                        
                                 
Loss on continuing operations     (3,528 )     (362 )     (6,222 )     (870 )
                                 
Loss from discontinued operations           (1,408 )           (2,184)  
                                 
Net loss for the period     (3,528 )     (1,770 )     (6,222 )     (3,054 )
Net loss attributable to non-controlling interest     346             466         
                                 
Net loss attributable to One Horizon Group Inc. common stockholders   $ (3,182 )   $ (1,770 )   $ (5,756 )   $ (3,054 )
                                 
Earnings per share                                
                                 
Basic and diluted net loss per share – continuing operations   $ (0.09 )   $ (0.06 )   $ (0.17 )   $ (0.15 )
                                 
Basic and diluted net loss per share – discontinued operations   $     $ (0.24 )   $     $ (0.37 )
                                 
Weighted average number of shares outstanding                                
Basic and diluted     41,366       5,864       36,902       5,861  

 

See accompanying notes to condensed consolidated financial statements.

 

5

 

 

ONE HORIZON GROUP, INC. 

Condensed Consolidated Statements of Comprehensive Loss

For the three and six months ended June 30, 2018 and 2017

(in thousands)

 

   Three Months ended June 30,   Six Months ended June 30, 
   2018
unaudited
   2017   2018
unaudited
   2017 
                 
Net loss  $(3,182)  $(1,770)  $(5,756)  $(3,054)
Other comprehensive income:                    
Foreign currency translation adjustment loss   13    475    (14)   157 
Total Comprehensive loss  $(3,169)  $(1,295)  $(5,770)  $(2,897)

 

See accompanying notes to condensed consolidated financial statements

 

6

 

 

ONE HORIZON GROUP, INC.

Condensed Consolidated Statement of Equity

For the six months ended June 30, 2018

(in thousands)

(unaudited) 

 

    Number
of
Shares
    Amount     Additional
Paid-in
Capital
    Accumulated
deficit
    Accumulated
Other
Comprehensive
Income
(Loss)
  Stock subscription receivable     Non-controlling
interest
  Total
Equity
 
                                                           
Balance December 31, 2017   30,255     $ 3     $ 48,356     $ (41,085 )   $ (22 ) $     $   $ 7,252  
                                                           
Net loss                     (5,756 )               (466 )   (6,222 )
Foreign currency translations                           (14 )             (14 )
                                                           
Issuance of shares for services   5,095             3,625                           3,625  
Issuance of shares for acquisitions   10,127       1       7,929                       6,290     14,220  
Issuance of shares for exercise of convertible promissory notes   677             406                           406  
Issuance of shares for exercise of warrants   3,450             1,358                 (370       988  
Increase in service compensation due to change in exercise price                   403                                    403   
Conversion benefit on convertible notes               200                             200  
                                                           
 Issuance of shares for cash   1,750             350                             350  
                                                           
Balance June 30, 2018   51,354     $ 4     $ 62,627     $ (46,841 )   $ (36 ) $ (370 $ 5,824   $ 21,208  

 

See accompanying notes to condensed consolidated financial statements

 

7

 

 

ONE HORIZON GROUP, INC.

Condensed Consolidated Statements of Cash Flows

For the six months ended June 30, 2018 and 2017

(in thousands)

 

   2018
(unaudited)
   2017 
Cash flows from operating activities:          
           
Net loss for the period  $(6,222)  $(870)
           
Adjustment to reconcile net loss for the period to net cash flows from operating activities:          
Depreciation of property and equipment   2    14 
Amortization of intangible assets   1,229    44 
           
Amortization of debt issue costs       68 
Amortization of beneficial conversion feature   355    50 
Amortization of debt discount       100 
Shares issued for services   3,282     
Warrants issued for services       123 
Amortization of shares issued for services   624    43 
Options issued for services       118 
Changes in operating assets and liabilities:          
    Accounts receivable   (250)    
    Other assets   (476)   (28)
Accounts payable and accrued expenses   (63)   650 
  Net cash flows from continuing operating activities   (1,519)   312 
           
  Net cash flows from discontinued operating activities       (353)
  Net cash flows from total operating activities   (1,519)   (41)
           
Cash used in investing activities:          
           
Cash consideration on acquisitions (net of cash acquired)   (108)    
Acquisition of fixed assets   (2)    
Net cash flows from investing activities – continuing operations   (110)    
           
   Net cash flows from investing activities – discontinued operations       (261)
   Net cash flows from total investing activities   (110)   (261)
           
Cash flows from financing activities:          
           
Proceeds from issuance of shares   350     
Proceeds from exercise of warrants   988    102 
Proceeds from issuance of convertible notes   200     
Repayment of advances from related parties (net)   (78)     
Net cash flows from continuing operations and total financing activities   1,460    102 
           
Decrease in cash during the period   (169)   (200)
Foreign exchange effect on cash   10    9 
           
Cash at beginning of the period – continuing operations   763    106 
Cash at beginning of the period – discontinued operations       154 
           
Cash at end of the period  $604   $69 

 

Supplementary Information:

 

   2018   2017 
         
Non-cash financing transactions:          
Common stock issued for business combinations   14,220     
Common stock issued for conversion of debt   406     

 

See accompanying notes to condensed consolidated financial statements.

 

8

 

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  

June 30, 2018

 

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

 

Description of Business

 

One Horizon Group, Inc (“the Company”) has four core businesses following the acquisition of 123Wish Inc., Love Media House, Inc (formerly called C-Rod, Inc.) and Banana Whale Studios PTE Ltd in the six months ended June 30, 2018 (See Note 3). The core trading businesses are:

 

  (i) Secure Messaging – offers digitally secure messaging software and sells licenses primarily into the gaming, security and educational markets.
  (ii) 123Wish – an experience based platform where subscribers have a chance to play and win experiences from celebrities, athletes and artists.
  (iii) Love Media House (formerly called C-Rod) - a full-service music production, artist representation and digital media business.
  (iv) Banana Whale Studios – a B2B software provider in the online gaming industry that develops and supplies online games to Asian gaming platforms.

 

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

 

Interim Period Financial Statements

 

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the Securities and Exchange Commission’ instructions. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for such interim period. The results reported in these interim condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and note disclosure normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on April 2, 2018.

 

Current Structure of the Company

 

The Company has the following subsidiaries: 

    Subsidiary name % owned
  123Wish, Inc. 51%
  Global Phone Credit Ltd 100%
  One Horizon Hong Kong Ltd 100%
  Horizon Network Technology Co. Ltd 100%
  Love Media House, Inc 100%
  Banana Whale Studios PTE Ltd 51%

 

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

 

All significant intercompany balances and transactions have been eliminated in consolidation.

 

Note 2. Summary of Significant Accounting Policies

 

Liquidity and Capital Resources

 

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

 

During the three months ended June 30, 2018 the Company issued additional shares of common stock for cash totaling $405,000.

 

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

 

At June 30, 2018 the Company had cash of $604,000. In addition, the Company will receive $370,000 from shares subscribed in June from the exercise of additional common stock warrants. Further fundraising in the region of $2.0 million will be undertaken in August/September 2018 which is expected to give the Company sufficient cash resources to cover forecasted expenditure into the first quarter of 2019.

 

9

 

 

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

 

Foreign Currency Translation

 

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

 

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

 

Accounts receivable, revenue recognition and concentrations

 

New Accounting Standard - In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in ASU Topic 605, Revenue Recognition (“Topic 605”), and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 also includes Subtopic 340-40, Other Assets and Deferred Costs- Contracts with Customers, which discussed the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs. The new standard was adopted by the Company in our fiscal year beginning January 1, 2018. The two permitted transition methods under the new standard are the full retrospective method, in which the new standard would be applied to each prior reporting period presented and the cumulative effect of applying the new standard would be recognized at the earliest period shown, or the modified retrospective method, in which the cumulative effect of applying the new standard would be recognized at the date of initial application. Based on our assessment, the impact of the new standard on our revenue recognition in prior periods is not significant; accordingly, while the Company would have used the modified retrospective method of adoption of the new standard, there was no cumulative effect of adoption on January 1, 2018 retained earnings.

 

Performance Obligations - A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under the new revenue recognition standard. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts do not typically have variable consideration that needs to be considered when the contract consideration is allocated to each performance obligation.

 

Revenue Recognition – We recognize revenues from each business segment under ASC 606 as described below:

 

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

 

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

 

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

 

The Company does not have off-balance sheet credit exposure related to its customers. As of June 30, 2018 two customers accounted for 50.4% of the accounts receivable balance and as of December 31, 2017, one customer accounted for 100% of the accounts receivable balance. Two customers accounted for 60% of the revenue for the six months ended June 30, 2018 and one customer accounted for 85% of the revenue for the quarter ended June 30, 2017.  

 

10

 

 

Research and Development Expenses

 

Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, costs related to the development of new products, significant enhancements to existing products, and the portion of costs of development of internal-use software required to be expensed. Research and development costs are charged to operations as incurred with the exception of those software development costs that may qualify for capitalization.

 

Income Taxes

 

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

 

Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company’s estimates and assumptions may differ significantly from tax benefits ultimately realized. Historically the Company has not filed income tax returns and the related required informational filings in the US. Certain informational filings if not filed contain penalties. 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 

 

11

 

 

Net Loss per Share

 

Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the three and six month periods ended June 30, 2018 and 2017, outstanding warrants are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations.

 

Accumulated Other Comprehensive Income (Loss)

 

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

 

Use of Estimates

 

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

 

Share-Based Compensation

 

The Company accounts for stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest.  The fair value of stock options is determined using the Black-Scholes option pricing model, which includes subjective judgements about the expected life of the awards, forfeiture rates and stock price volatility.

 

Fair Value Measurements 

 

GAAP establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by GAAP are described below:  

  Level 1 - Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
  Level 2 - Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
  Level 3 - Pricing inputs that are generally observable inputs and not corroborated by market data.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. 

 

12

 

 

The Company’s Level 3 financial liabilities consist of contingent consideration relating to the acquisition of 123Wish, LMH and Banana Whale which requires significant judgment or estimation (see Note 3).

 

Note 3. Acquisitions

 

123Wish, Inc.

 

On January 31, 2018 the Company completed the acquisition of a 51% controlling interest in 123 Wish, Inc. (formerly Once in a Lifetime LLC) a Delaware corporation in exchange for the issuance of 1,333,334 fully paid and non-assessable shares of common stock with a fair value of $1.39 million. In addition, the Company shall issue fully paid and non-assessable shares of common stock equal to 2.5 times of the net, after tax, earnings of 123 Wish for the six month period after the date of acquisition and fully paid and non-assessable shares of common stock equal to 4.5 times the net, after tax, earnings of 123 Wish for the second six month period after the date of acquisition. 123 Wish, Inc. has proprietary applications which use the social media aspect of the internet.   

 

The following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed as of February 22, 2018 (In thousands):

 

Consideration Paid:

 

Common stock  $1,387 
Non controlling interest   1,353 
   $2,740 
      
Fair values of identifiable assets acquired and liabilities assumed:     
      
Assets acquired:     
Cash  $14 
Other intangible assets   2,307 
Goodwill   419 
      
Net Assets Acquired  $2,740 

 

The consideration paid was 1,333,334 common shares valued at $1.04 per share. Separately identifiable intangible assets include technology which were valued by management using discounted cash flow and replacement cost approaches. Management’s analysis is provisional in nature and is subject to change based on the availability of new information about facts and circumstances that existed as of the acquisition date.

 

As of June 30, 2018, the Company has estimated that no additional share amounts will need to be issued as contingent consideration and therefore is not included in the Company’s allocation of the purchase price in the table above. The financial statements of 123 Wish, Inc. have been included in the Company’s condensed consolidated financial statements and the amount of stockholders’ equity and net loss attributable to the non-controlling interest has been recorded as a separate line item in the accompanying statements of operations and stockholders’ equity.

 

Love Media House, Inc. (formerly C-Rod, Inc.)

 

On February 26, 2018 the Company completed the acquisition of 100% ownership of Love Media House, Inc. (“LMH”) a Florida corporation in exchange for $150,000 cash and 1,376,147 fully paid and non-assessable shares of common stock with a fair value of $1,541,285. LMH is in the music and video content business. The financial statements of LMH have been included in the condensed consolidated financial statements from the date of acquisition.

 

13

 

 

The following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed as of February 26, 2018 (In thousands):

 

Consideration Paid:

 

Cash  $150 
Common stock   1,541 
   $1,691 
      
Fair values of identifiable assets acquired and liabilities assumed:     
      
Assets acquired:     
Cash  $5 
Other intangible assets   910 
Goodwill   804 
Total assets acquired   1,719 
      
Liabilities assumed:     
Accounts payable   28 
Total Liabilities Assumed   28 
      
Net Assets Acquired  $1,691 

 

The consideration paid was 1,376,000 common shares plus $150,000 in cash. Separately identifiable intangible assets were customer relationships and were valued by management. The customer relationships were valued using discounted cash flow and replacement cost approaches. Management’s analysis is provisional in nature and is subject to change based on the availability of new information about facts and circumstances that existed as of the acquisition date.

 

As of June 30, 2018, the Company has estimated that no additional share amounts will need to be issued as contingent consideration and therefore is not included in the Company’s allocation of the purchase price in the table above. The financial statements of LMH have been included in the Company’s condensed consolidated financial statements.

 

Banana Whale Studios PTE Ltd

 

On May 24, 2018 the Company completed the acquisition of 51% ownership of Banana Whale Studios PTE Ltd (“Banana Whale”) a Singapore corporation in exchange for an initial allocation of 7,383,000 fully paid shares of common stock with a fair value of $4,983,000. The acquisition of Banana Whale is based on an earnout formula solely and should Banana Whale fail to reach forecasted profit numbers during the first 24 months then some, or all of the shares allocated would be refundable to the Company. Banana Whale develops and supplies online games to Asian gaming platforms on a B2B basis with their revenue generated on a revenue share basis. The financial statements of Banana Whale have been included in the condensed consolidated financial statements from the date of acquisition.

 

The following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed as of May 24, 2018 (In thousands):

 

Consideration Paid:

 

Common stock  $4,983 
Non-controlling interest   4,937 
   $9,920 

 

14

 

 

Fair values of identifiable assets acquired and liabilities assumed: 

      
Assets acquired:     
Cash  $42 
Accounts receivable   53 
Equipment   37 
Other intangible assets   10,076 
Total assets acquired   10,208 
      
Liabilities assumed:     
Accounts and advances payable   288 
Total Liabilities Assumed   288 
      
Net Assets Acquired  $9,920 

 

The consideration paid was 7,383,000 common shares valued at $0.675 per share. Separately identifiable intangible assets include technology which were valued by management using discounted cash flow and replacement cost approaches. Management’s analysis is provisional in nature and is subject to change based on the availability of new information about facts and circumstances that existed as of the acquisition date.

 

As of June 30, 2018, the Company has estimated that no additional share amounts will need to be issued (or refunded) as contingent consideration and therefore is not included in the Company’s allocation of the purchase price in the table above. The financial statements of Banana Whale have been included in the Company’s condensed consolidated financial statements and the amount of stockholders’ equity and net loss attributable to the non-controlling interest has been recorded as a separate line item in the accompanying statements of operations and stockholders’ equity.

 

Note 4. Intangible Assets

 

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

 

   June 30   December 31 
   2018   2017 
         
Horizon software  $6,527   $6,527 
Social online application software   2,210     
Customer lists   997     
Gaming software   10,076     
    19,810    6,527 
Less accumulated amortization   (2,418)   (1,187)
           
Intangible assets, net  $17,392   $5,340 

 

15

 

 

Amortization of intangible assets for each of the next five years is estimated to be $3,900,000 per year.

 

Note 5. Goodwill

 

The following is the detail of the Goodwill that arose on acquisitions described in Note 3:

 

   June 30   December 31 
   2018   2017 
         
123Wish, Inc.  $419   $ 
Love Media House, Inc. (formerly C. Rod, Inc.)   804     
   $1,223   $ 

 

Note 6. Convertible notes

 

In February 2018 the convertible note holders converted their notes into common stock, together with the interest accrued thereon. The amounts converted at $0.60 per share totaled $405,833 giving rise to 676,389 new shares of common stock.

 

Note 7. Share Capital

 

Common Stock

 

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

 

During the six months ended June 30, 2018 the Company:

 

  Issued 225,000 shares of common stock for services with a fair value of $357,750
  Issued 1,333,334 shares of common stock, with a fair value of $1.4 million, for the acquisition of 51% of Once in a Lifetime
  Issued 100,000 shares of common stock for services provided with a fair value of $204,000
  Issued 504,167 shares of common stock for conversion of convertible note and accrued interest in the amount of $302,500
  Issued 172,222 shares of common stock for conversion of convertible note and accrued interest in the amount of $103,000
  Issued 172,222 shares of common stock for services provided with a fair value of $200,000
  Issued 750,000 shares of common stock for exercise of warrants at a price of $0.75 per share.
  Issued 50,000 shares of common stock for services provided with a fair value of $80,000.
  Issued 1,376,147 shares of common stock, with a fair value of $1,541,285, as part consideration for the acquisition of C-Rod, Inc.
  Issued 100,000 shares of common stock for services to be provided with a fair value of $85,000.
  Issued 225,000 shares of common stock for services to be provided with a fair value of $168,750
  Issued 850,000 shares of common stock for services provided with a fair value of $425,000
  Issued 7,383,000 shares of common stock, with a fair value of $4,983,000, for the acquisition of 51% of Banana Whale Studios Pte., Ltd
  Issued 1,575,000 shares of common stock for services provided with a fair value of $787,500
  Issued 850,000 shares of common stock for exercise of warrants at a price of $0.50 per share
  Issued 600,000 shares of common stock for services provided with a fair value of $306,000
  Issued 300,000 shares of common stock for services provided with a fair value of $150,000
  Issued 1,750,000 shares of common stock for cash of $0.20 per share

 

16

 

 

  Issued 1,850,000 shares of common stock for exercise of warrants at a price of $0.20 per share
  Issued 35,000 shares of common stock, with a fair value of $18,200, for an option to acquire an interest in an acquisition target.

 

Stock Purchase Warrants

 

As at June 30, 2018, the Company had reserved 1,461,387 shares of its common stock for the outstanding warrants with weighted average exercise price of $10.80. Such warrants expire at various times up to July 2020.

 

During the six months ended June 30, 2018, no warrants were forfeited, or issued, and 3,450,000 warrants were exercised for proceeds of $1,357,500.

 

During the six months ended June 30, 2018, the Company agreed to reduce the exercise price on 2.7 million outstanding warrants, which resulted in additional compensation cost of $403,000, in order to obtain additional funding.

 

Note 8. Segment Information

 

The Company has the following business segments for the six months ended June 30, 2018 and 2017.

 

The Company’s revenues were generated in the following business segments (in thousands)

 

   June 30   June 30 
   2018   2017 
         
Sale of secure messaging licenses  $178   $117 
123Wish (from January 2018)   105     
Love Media House (from March 2018)   261     
Banana Whale (from May 2018)   24     
Total  $568   $117 

 

The following is a detail of the Company’s general and administrative expenses by business segment:

 

   June 30   June 30 
   2018   2017 
         
Sale of secure messaging licenses  $96   $ 
123Wish (from January 2018)   573     
Love Media House (from March 2018)   126     
Banana Whale (from May 2018)   57     
Corporate costs   2,331    573 
Total  $3,183   $573 

 

The following is a detail of the net income (loss) by business segment:

 

   June 30   June 30 
   2018   2017 
         
Sale of secure messaging licenses  $81   $102 
123Wish (from January 2018)   (468)    
Love Media House (from March 2018)   13     
Banana Whale Studios (from May 2018)   (295)    
Corporate costs, discontinued operations and acquisition costs   (5,553)   (3,156)
Total  $(6,222)  $(3,054)

 

17

 

 

Note 9. Employment Agreements

 

In connection with the acquisitions described in Note 3, the Company has entered into Employment Agreements (the “Agreements”) with three members of management of 123Wish and C-Rod. The Agreements have an initial employment period of two years and are automatically renewed annually thereafter. The Agreements entitle the members of management to a fixed base salary, along with incentive compensation that is calculated using pre-tax earnings and is payable in shares of the Company’s common stock.

 

Note 10. Legal proceedings

 

On May 30, 2018, Zhanming Wu (“Wu”), the record owner of 15,000,000 shares of common stock of One Horizon Group, Inc. (the “Company”), commenced an action in the Court of Chancery of the State of Delaware [Case No.2018-0387-JRS] against the Company and its directors and officers (collectively, the “Director Defendants”):

 

  (i) alleging Breach of Contract on the basis that Wu believes that pursuant to an ‘Approval Right Side Letter’ between Dachao Asset Management (Shanghai) Co., Ltd. (“Dachao”) and the Company and Wu’s agreement not to demand repayment of a Convertible Debenture in place on or prior to October 1, 2017, Wu would have the right to pre-approve certain actions to be taken by the Company for so long as Dachao beneficially owned more than thirty percent (30%) of the outstanding shares of the Company; (ii) seeking Specific Performance and/or Rescission against the Company to affirm his alleged right to compel the Company to submit the recent acquisition of fifty-one percent (51%) of Banana Whale Studios Pte. Ltd. (“Banana Whale”) and the related stock issuance to him for approval or an order rescinding the Banana Whale transaction and awarding him damages;

 

  (ii) seeking Promissory Estoppel against the Company with respect to the Approval Right Side Letter in so far as Wu alleges that he relied on purported promises of the Company that such Letter and related agreements would be retitled in the name of Wu rather than Dachao in exchange for Dachao’s agreement not to demand repayment of the Convertible Debenture on or prior to October 1, 2017;

 

  (iii) alleging Breach of Contract and seeking Specific Performance against the Company on the basis that Wu asserts pursuant to the debt conversion/exchange agreement that the Company agreed to first give Dachao, then ultimately Wu, the right to appoint four (4) directors to the Company Board so long as Dachao, then Wu, beneficially owned more than thirty percent (30%) of the outstanding shares of the Company;

 

  (iv) alleging Breach of the Implied Covenant of Good Faith and Fair Dealing against the Company insofar as Wu asserts that the Company owes Wu a duty of good faith and fair dealing implied in all contracts and Wu believes that the Company has taken steps to attempt to dilute his holdings of Company common stock below the thirty percent (30%) ownership threshold in order to enter into transactions without Wu’s prior approval; and

 

  (v) alleging Breach of Fiduciary Duty against the Director Defendants by: (a) purportedly making false representations, misleading statements and omitting material information when communicating with Wu regarding the Company’s intent to close the Banana Whale transaction; (b) disseminating false representations, misleading statements, and omitting material information in the 8-K filed by the Company on May 18, 2018, with respect to the Banana Whale transaction insofar as Section 3.02 of the 8-K states that there are no agreements to which the Company is a party, or has knowledge of, that conflict with the debt exchange/conversion agreement or would prohibit its consummation, to the extent Wu asserts that he had a right of prior approval based on the Approval Right Side Letter, which he asserts pertains to his holdings of Company common stock, which Letter he filed as an exhibit to his Schedule 13D filing with the SEC on April 10, 2018; (c) alleging that the Director Defendants breached their fiduciary duties to Wu and Company stockholders by issuing 7,383,000 shares of Company common stock to Banana Whale to the extent possession of these shares grant full voting and economic rights to the stockholders of Banana Whale while there is also a twenty-four (24) month earn-out structure as part of the definitive transaction agreements between the Company and Banana Whale; and (d) asserting that the Director Defendants breached their fiduciary duties to Wu and Company stockholders by entering into transactions including Banana Whale that Wu alleges were designed to preclude Wu from appointing four (4) additional directors to the Company Board by diluting his ownership below the thirty percent (30%) mark.

 

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

 

The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2018 and 2017 and notes thereto contained elsewhere in this Report, and our annual report on Form 10-K for the twelve months ended December 31, 2017 including the consolidated financial statements and notes thereto. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements. See “Cautionary Note Concerning Forward-Looking Statements.”

 

Overview

 

Business

 

During the three months ended June 30, 2018 the Company executed the following acquisitions:

 

Majority interest in Banana Whale Studios PTE Ltd a company a B2B software provider in the online gaming industry.

 

In addition to this acquisition the Company has an Asian based digitally secure messaging software business that sells user licenses primarily to companies in the security, gaming and education sectors together with a US based experience based platform where subscribers have a chance to play and win experiences from celebrities, athletes and artists. In addition the Company has a full-service music production, artist representation and digital media business.

 

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Results of Operations

 

Comparison of three months ended June 30, 2018 and 2017

 

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

 

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

 

  

Three Months Ended 

June 30, 

   Change 
   2018   2017   Increase/
(decrease)
   Percentage
Change
 
                 
Revenue  $294   $110   $184    167.3 
                     
Cost of revenue   935    22    913    4150 
                     
Gross margin   (641)   88    (729)   (828.4)
                     
Operating expenses:                    
                     
General and administrative   1,773    265    1,508    417.0 
Depreciation   2    7    (5)   (71.4)
Acquisition costs   1,094        1,094    N/A 
                     
Total operating expenses   2,869    272    2,597    954.8 
                     
Loss from operations   (3,510)   (184)   (3,326)   (1,807.6)
                     
Other expense   (18)   (178)   160    89.9 
Loss for the period for continuing operations   (3,528)   (362)   (3,166)   (874.6)
                     
Loss for discontinued operations       (1,408)   1,418    N/A 
Total net loss   (3,528)   (1,770)   (1,758)   (99.3)

 

20

 

 

Revenue: Our revenue for the three months ended June 30, 2018 was split between our operations as follows:

 

  Secure messaging - $75,000 for the sale of user licenses
  123Wish - $7,000 for subscriptions and sponsorships
  LMH - $186,000 for music and video production services
  Banana Whale - $26,000 for B2B software provided in the online gaming industry.

 

Gross MarginGross margin deficit, for the three months ended June 30, 2018 was approximately $641,000 as compared to $88,000 margin gain for the three months ended June 30, 2017, due to the increase in amortization of software development costs, offset by increased revenues.

 

Operating Expenses: General and administrative expenses, acquisition related costs and depreciation were approximately $2.87 million and $0.27 million during the three months ended June 30, 2018 and 2017, respectively.  The major costs included in the three months ended June 30, 2018 were consulting costs including due diligence and advisory costs incurred in the acquisitions strategy of the Company.

 

Net Loss: Net Loss for the three months ended June 30, 2018 was approximately $3.5 million as compared to net loss of approximately $0.4 million for the same period in 2017. The increase in the losses is attributable to the increase in General and Administrative expenses, offset by an increase in revenue, as discussed above.

 

21

 

 

Comparison of six months ended June 30, 2018 and 2017

 

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

 

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

 

  

Six Months Ended 

June 30, 

   Change 
   2018   2017   Increase/
(decrease)
   Percentage
Change
 
                 
Revenue  $568   $117   $451    385.5 
                     
Cost of revenue   1,340    44    (1,296)   (2,945.5)
                     
Gross margin   (772)   73    (845)   (1,157.6)
                     
Operating expenses:                    
                     
General and administrative   3,183    573    (2,610)   (455.5)
Acquisition costs   1,874        (1,874)   N/A 
Depreciation   2    14    12    85.7 
                     
Total operating expenses   5,059    587    4,472    761.8 
                     
Loss from operations   (5,831)   (514)   (5,317)   1,034.462 
                     
Other income (expense)   (391)   (356)   (35)   (9.8)
Loss for the period for continuing operations   (6,222)   (870)   (5,352)   615.2 
                     
Loss for discontinued operations       (2,184)   (2,184)   N/A 
Net loss   (6,222)   (3,054)   (3,168)   (103.7)

 

Revenue: Our revenue for the six months ended June 30, 2018 was approximately $568,000 as compared to approximately $117,000 for the six months ended June 30, 2017, an increase of approximately $451,000, or 385.5%. The increase was due to the increases in license sales together with the revenue generated by the newly acquired subsidiaries.

 

Cost of Revenue: Cost of revenue was approximately $1,340,000 for the six months ending June 30, 2018 as compared to $44,000 for the six months ended June 30, 2017. The main reason for the increase was the amortization charge of $1,229,000 relating to software development costs.

 

Gross Margin: Gross margin deficit for the six months ended June 30, 2018 was approximately $772,000 as compared to a gain of $73,000 for the six months ended June 30, 2017, a decrease of approximately $1,413,000. The decrease was mainly due to the amortization charge of $1,229,000, offset by increased revenues, as set forth above herein.

 

Operating Expenses: Operating expenses, including general and administrative expenses, depreciation and acquisition costs were approximately $5.1 million and $0.6 million during the six months ended June 30, 2018 and 2017, respectively. The Company incurred the increased costs as a result of the strategy of business acquisitions and the operational costs relating thereto.

 

Net Loss: Net Loss for the six months ended June 30, 2018 was approximately $6.2 million as compared to loss of approximately $3.1 million for the same period in 2017. The increase in loss was primarily due to the increase in non-cash general and administrative expenses, and acquisition costs offset by an increase in revenues mentioned above.

 

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Liquidity and Capital Resources

 

Six Months Ended June 30, 2018 and June 30, 2017

 

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

 

  

For the Six Months Ended 

June 30, 2018 

(in thousands) 

 
   2018   2017 
Net cash flows from total operating operations   (1,519)   (41)
Net cash flows from total investing activities   (110)   (261)
Net cash flows from total financing activities   1,460    102 

 

Net cash used by operating activities was approximately $1,519,000 for the six months ended June 30, 2018 as compared to net cash used in operating activities of approximately $41,000 for the same period in 2017. The increase in cash used by operations was primarily due to the cost of pursuing the acquisition strategy.

 

Net cash used in investing activities was approximately $110,000 and $261,000 for the six months ended June 30, 2018 and 2017, respectively. Net cash used in investing activities for the six months ended June 30, 2018 related to cash consideration in the acquisition of LMH offset by the cash acquired in the Banana Whale acquisition.

 

Net cash generated in financing activities was approximately $1,460,000 for the six months ended June 30, 2018 as compared to $102,000 for the six months ended June 30, 2017. The cash generated from financing activities was primarily from the proceeds from the sale of new shares of common stock, the exercise of common stock warrants and proceeds from convertible debt during the six months ended June 30, 2018.  

 

At June 30, 2018 the Company had cash of $604,000. In addition, the Company will receive further investment from the exercise of additional common stock warrants in the third quarter of 2018 for net proceeds of $370,000.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

(a) Evaluation of Disclosure Controls and Procedures

 

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of June 30, 2018, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of June 30, 2018, our disclosure controls and procedures were not effective. This was due to certain deficiencies in our controls over financial reporting. In particular a lack of accounting personnel has resulted in an inability to segregate various accounting functions

 

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

 

(b) Changes in Internal Control over Financial Reporting

 

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

 

23

 

 

PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

On May 30, 2018, Zhanming Wu (“Wu”), the record owner of 15,000,000 shares of common stock of One Horizon Group, Inc. (the “Company”), commenced an action in the Court of Chancery of the State of Delaware [Case No.2018-0387-JRS] against the Company and its directors and officers (collectively, the “Director Defendants”):

 

  (i) alleging Breach of Contract on the basis that Wu believes that pursuant to an ‘Approval Right Side Letter’ between Dachao Asset Management (Shanghai) Co., Ltd. (“Dachao”) and the Company and Wu’s agreement not to demand repayment of a Convertible Debenture in place on or prior to October 1, 2017, Wu would have the right to pre-approve certain actions to be taken by the Company for so long as Dachao beneficially owned more than thirty percent (30%) of the outstanding shares of the Company; (ii) seeking Specific Performance and/or Rescission against the Company to affirm his alleged right to compel the Company to submit the recent acquisition of fifty-one percent (51%) of Banana Whale Studios Pte. Ltd. (“Banana Whale”) and the related stock issuance to him for approval or an order rescinding the Banana Whale transaction and awarding him damages;

 

  (ii) seeking Promissory Estoppel against the Company with respect to the Approval Right Side Letter in so far as Wu alleges that he relied on purported promises of the Company that such Letter and related agreements would be retitled in the name of Wu rather than Dachao in exchange for Dachao’s agreement not to demand repayment of the Convertible Debenture on or prior to October 1, 2017;

 

  (iii) alleging Breach of Contract and seeking Specific Performance against the Company on the basis that Wu asserts pursuant to the debt conversion/exchange agreement that the Company agreed to first give Dachao, then ultimately Wu, the right to appoint four (4) directors to the Company Board so long as Dachao, then Wu, beneficially owned more than thirty percent (30%) of the outstanding shares of the Company;

 

  (iv) alleging Breach of the Implied Covenant of Good Faith and Fair Dealing against the Company insofar as Wu asserts that the Company owes Wu a duty of good faith and fair dealing implied in all contracts and Wu believes that the Company has taken steps to attempt to dilute his holdings of Company common stock below the thirty percent (30%) ownership threshold in order to enter into transactions without Wu’s prior approval; and

 

  (v) alleging Breach of Fiduciary Duty against the Director Defendants by: (a) purportedly making false representations, misleading statements and omitting material information when communicating with Wu regarding the Company’s intent to close the Banana Whale transaction; (b) disseminating false representations, misleading statements, and omitting material information in the 8-K filed by the Company on May 18, 2018, with respect to the Banana Whale transaction insofar as Section 3.02 of the 8-K states that there are no agreements to which the Company is a party, or has knowledge of, that conflict with the debt exchange/conversion agreement or would prohibit its consummation, to the extent Wu asserts that he had a right of prior approval based on the Approval Right Side Letter, which he asserts pertains to his holdings of Company common stock, which Letter he filed as an exhibit to his Schedule 13D filing with the SEC on April 10, 2018; (c) alleging that the Director Defendants breached their fiduciary duties to Wu and Company stockholders by issuing 7,383,000 shares of Company common stock to Banana Whale to the extent possession of these shares grant full voting and economic rights to the stockholders of Banana Whale while there is also a twenty-four (24) month earn-out structure as part of the definitive transaction agreements between the Company and Banana Whale; and (d) asserting that the Director Defendants breached their fiduciary duties to Wu and Company stockholders by entering into transactions including Banana Whale that Wu alleges were designed to preclude Wu from appointing four (4) additional directors to the Company Board by diluting his ownership below the thirty percent (30%) mark.

 

24

 

 

ITEM 1A. RISK FACTORS

 

Reference is made to the risks and uncertainties disclosed in Item 1A (“Risk Factors”) of our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Form 10-K”) and under the caption “Risk Factors” in our Registration Statement on Form S-3 (Registration No. 333-225945) filed on June 28, 2018 and declared effective on August 7, 2018, which sections are incorporated by reference into this report. Prospective investors are encouraged to consider the risks described in our 2017 Form 10-K, the Registration Statement, our Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Report and other information publicly disclosed or contained in documents we file with the Securities and Exchange Commission before purchasing our securities.

 

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

 

In the three months ended June 30, 2018 the following shares of common stock were issued;

 

1. 850,000 shares of common stock to an accredited investor, upon exercise of warrants at an exercise price of $0.50 per share. The issuance of the shares was exempt from the registration requirements of the Securities Act under Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act. The certificates representing the shares were endorsed with the customary Securities Act legend.

 

2. 225,000 shares of common stock to a consultant for services having a fair value of $168,750. The issuance of the shares was exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act. The certificates representing the shares were endorsed with the customary Securities Act legend.

 

3. 850,000 shares of common stock to a consultant for services having a fair value of $425,000. The issuance of the shares was exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act. The certificates representing the shares were endorsed with the customary Securities Act legend.

 

4. 1,575,000 shares of common stock to a consultant for services having a fair value of $787,500. The issuance of the shares was exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act. The certificates representing the shares were endorsed with the customary Securities Act legend.

 

5. 300,000 shares of common stock to a consultant for services having a fair value of $150,000. The issuance of the shares was exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act. The certificates representing the shares were endorsed with the customary Securities Act legend.

 

6. 600,000 shares of common stock to a consultant for services provided with a fair value of $306,000. The issuance of the shares was exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act. The certificates representing the shares were endorsed with the customary Securities Act legend.

 

7. 500,000 shares of common stock to a consultant for services rendered having a fair value of $265,000 pursuant to a Documentary Rights Agreement. The issuance of the shares was exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act. The certificates representing the shares were endorsed with the customary Securities Act legend.

 

8. 1,750,000 shares of our common stock to an accredited investor, as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), for gross proceeds of $350,000 (the “Private Placement”). The issuance and sale of the shares sold in the Private Placement was exempt from the registration requirements of the Securities Act under Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act. The certificates representing the shares were endorsed with the customary Securities Act legend.

 

9. 1,850,000 shares of common stock to an accredited investor, upon exercise of warrants at an exercise price of $0.20 per share. The issuance of the shares was exempt from the registration requirements of the Securities Act under Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act. The certificates representing the shares were endorsed with the customary Securities Act legend.

 

10. 35,000 shares of common stock having a fair value of $18,200 for an option to acquire an interest in an acquisition target. The issuance of the shares was exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act. The certificates representing the shares 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.  

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

Item 6. Exhibits

 

10.1 Subscription Agreement with BK Consulting Group, LLC (incorporated herein by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-3 (Registration No. 333-225945) filed on June 28, 2018 and declared effective on August 7, 2018).
10.2Verified Complaint in the Wu Litigation (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 7, 2018).
10.3Exchange Agreement with stockholders of Banana Whale Studios Pte. Ltd. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on form 8-K filed on May 18, 2018).
10.4Escrow Agreement between the Company and the stockholders of Banana Whale Studios Pte. Ltd. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 10, 2018).

 

31.1 Certification of principal executive officer pursuant to Rule 13a-14 or Rule 15d-14 of Exchange Act. Exchange Act of 1934. 
   
31.2 Certification of principal financial officer pursuant to Rule 13a-14 or Rule 15d-14 of the Exchange Act.  
   
32.1 Certification of principal executive officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
   
32.2 Certification of principal financial officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
   
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL XBRL Taxonomy Extension Calculation
101.DEF XBRL Taxonomy Extension Definition
101.LAB XBRL Taxonomy Extension Label
101.PRE XBRL Taxonomy Extension Presentation

 

25

 

 

SIGNATURES

 

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

 

  ONE HORIZON GROUP, INC.  
       
Date: August 17, 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  

 

26

EX-31.1 2 s112063_ex31-1.htm EXHIBIT 31.1

   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 quarterly report on Form 10-Q 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: August 17, 2018

 

/s/ Mark White 

 

Mark White

Chief Executive Officer (Principal Executive Officer)

 

 

EX-31.2 3 s112063_ex31-2.htm EXHIBIT 31.2

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 quarterly report on Form 10-Q 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: August 17, 2018

 

/s/ Martin Ward 

 

Martin Ward 

Chief Financial Officer (Principal Financial Officer) 

 

 

EX-32.1 4 s112063_ex32-1.htm EXHIBIT 32.1

 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 Quarterly Report of One Horizon Group, Inc., a Delaware corporation (the “Company”), on Form 10-Q for the period ended June 30, 2018, 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: August 17, 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.]

 

 

EX-32.2 5 s112063_ex32-2.htm EXHIBIT 32.2

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 Quarterly Report of One Horizon Group, Inc., a Delaware corporation (the “Company”), on Form 10-Q for the period ended June 30, 2018, 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: August 17, 2018

 

/s/ Martin Ward

 

Martin Ward

Chief Financial Officer (Principal Financial 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.]

 

 

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Aug. 08, 2018
Document And Entity Information    
Entity Registrant Name One Horizon Group, Inc.  
Entity Central Index Key 0000225211  
Document Type 10-Q  
Trading Symbol OHGI  
Document Period End Date Jun. 30, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity a Well-known Seasoned Issuer No  
Entity a Voluntary Filer No  
Entity's Reporting Status Current Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   51,347,022
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2018  
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$ in Thousands
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Dec. 31, 2017
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Accounts receivable, net 352 102
Prepaid compensation 550 550
Amounts due from related parties 46
Other assets 920 28
Total current assets 2,472 1,443
Property and equipment, net 39 2
Intangible assets, net 17,392 5,340
Goodwill 1,223
Prepaid compensation, net of current portion 1,742 2,017
Total assets 22,868 8,802
Current liabilities:    
Accounts payable 385 167
Accrued expenses 60 55
Accrued compensation 215 251
Amount due to related parties 32
Convertible notes, net of debt discount 45
Total current liabilities 660 550
Long-term liabilities    
Promissory notes, related parties 1,000 1,000
Total liabilities 1,660 1,550
Equity    
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Accumulated Deficit (46,841) (41,085)
Stock subscription receivable (370)
Accumulated other comprehensive income (36) (22)
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Non-controlling interest 5,824
Total stockholders'equity 21,208 7,252
Total liabilities and equity $ 22,868 $ 8,802
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Dec. 31, 2017
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Preferred stock authorized 50,000,000 50,000,000
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$ in Thousands
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Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Revenue $ 294 $ 110 $ 568 $ 117
Cost of revenue 935 22 1,340 44
Gross margin (deficiency) (641) 88 (772) 73
Expenses:        
General and administrative 1,773 265 3,183 573
Depreciation 2 7 2 14
Acquisition services 1,094 1,874
Total expenses 2,869 272 5,059 587
Loss from operations (3,510) (184) (5,831) (514)
Other income and expense:        
Interest expense (17) (176) (390) (356)
Foreign exchange (1) (2) (1)
Total other income and expense (18) (178) (391) (356)
Loss before income taxes (3,528) (362) (6,222) (870)
Income tax benefit
Loss on continuing operations (3,528) (362) (6,222) (870)
Loss from discontinued operations (1,408) (2,184)
Net loss for the period (3,528) (1,770) (6,222) (3,054)
Net loss attributable to non-controlling interest 346 466
Net loss attributable to One Horizon Group Inc. common stockholders $ (3,182) $ (1,770) $ (5,756) $ (3,054)
Earnings per share        
Basic and diluted net loss per share - continuing operations (in dollars per share) $ (0.09) $ (0.06) $ (0.17) $ (0.15)
Basic and diluted net loss per share - discontinued operations (in dollars per share) $ (0.24) $ (0.37)
Weighted average number of shares outstanding        
Basic and diluted (in shares) 41,366 5,864 36,902 5,861
Hardware Calls And Network Charges [Member]        
Cost of revenue $ 111 $ 111
Amortization Of Intangible Assets [Member]        
Cost of revenue $ 824 $ 22 $ 1,229 $ 44
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.10.0.1
Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Statement of Comprehensive Income [Abstract]        
Net loss $ (3,182) $ (1,770) $ (5,756) $ (3,054)
Other comprehensive income:        
Foreign currency translation adjustment loss 13 475 (14) 157
Total Comprehensive loss $ (3,169) $ (1,295) $ (5,770) $ (2,897)
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.10.0.1
Condensed Consolidated Statement of Equity (Unaudited) - 6 months ended Jun. 30, 2018 - USD ($)
$ in Thousands
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated deficit [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Stock subscription receivable [Member]
Non-controlling Interest [Member]
Total
Balance at beginning at Dec. 31, 2017 $ 3 $ 48,356 $ (41,085) $ (22) $ 7,252
Balance at beginning (in shares) at Dec. 31, 2017 30,255            
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Net loss     (5,756)     (466) (6,222)
Foreign currency translations   (14) (14)
Issuance of shares for services 3,625 3,625
Issuance of shares for services (in shares) 5,095            
Issuance of shares for acquisitions $ 1 7,929 6,290 14,220
Issuance of shares for acquisitions (in shares) 10,127            
Issuance of shares for exercise of convertible promissory notes 406 406
Issuance of shares for exercise of convertible promissory notes (in shares) 677            
Issuance of shares for conversion of warrants 1,358 (370) 988
Issuance of shares for conversion of warrants (in shares) 3,450            
Increase in service compensation due to change in exercise price 403 403
Conversion benefit on convertible notes   200 200
Issuance of shares for cash 350 $ 350
Issuance of shares for cash (in shares) 1,750           1,750,000
Balance at ending at Jun. 30, 2018 $ 4 $ 62,627 $ (46,841) $ (36) $ (370) $ 5,824 $ 21,208
Balance at ending (in shares) at Jun. 30, 2018 51,354            
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.10.0.1
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Cash flows from operating activities:    
Net loss for the period $ (6,222) $ (870)
Adjustment to reconcile net loss for the period to net cash flows from operating activities:    
Depreciation of property and equipment 2 14
Amortization of intangible assets 1,229 44
Amortization of debt issue costs 68
Amortization of beneficial conversion feature 355 50
Amortization of debt discount 100
Shares issued for services 3,282
Warrants issued for services 123
Amortization of shares issued for services 624 43
Options issued for services 118
Changes in operating assets and liabilities:    
Accounts receivable (250)
Other assets (476) (28)
Accounts payable and accrued expenses (63) 650
Net cash flows from continuing operating activities (1,519) 312
Net cash flows from discontinued operating activities (353)
Net cash flows from total operating activities (1,519) (41)
Cash used in investing activities:    
Cash consideration on acquisitions (net of cash acquired) (108)
Acquisition of fixed assets (2)
Net cash flows from investing activities - continuing operations (110)
Net cash flows from investing activities - discontinued operations (261)
Net cash flows from total investing activities (110) (261)
Cash flows from financing activities:    
Proceeds from issuance of shares 350
Proceeds from exercise of warrants 988 102
Proceeds from issuance of convertible notes 200
Repayment of advances from related parties (net) (78)  
Net cash flows from continuing operations and total financing activities 1,460 102
Decrease in cash during the period (169) (200)
Foreign exchange effect on cash 10 9
Cash at beginning of the period - continuing operations 763 106
Cash at beginning of the period - discontinued operations 154
Cash at end of the period 604 69
Non-cash financing transactions:    
Common stock issued for business combinations 14,220
Common stock issued for conversion of debt $ 406
XML 19 R8.htm IDEA: XBRL DOCUMENT v3.10.0.1
Description of Business, Organization and Principles of Consolidation
6 Months Ended
Jun. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business, Organization and Principles of Consolidation

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

 

Description of Business

 

One Horizon Group, Inc (“the Company”) has four core businesses following the acquisition of 123Wish Inc., Love Media House, Inc (formerly called C-Rod, Inc.) and Banana Whale Studios PTE Ltd in the six months ended June 30, 2018 (See Note 3). The core trading businesses are:

 

  (i) Secure Messaging – offers digitally secure messaging software and sells licenses primarily into the gaming, security and educational markets.
  (ii) 123Wish – an experience based platform where subscribers have a chance to play and win experiences from celebrities, athletes and artists.
  (iii) Love Media House (formerly called C-Rod) - a full-service music production, artist representation and digital media business.
  (iv) Banana Whale Studios – a B2B software provider in the online gaming industry that develops and supplies online games to Asian gaming platforms.

 

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

 

Interim Period Financial Statements

 

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the Securities and Exchange Commission’ instructions. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for such interim period. The results reported in these interim condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and note disclosure normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on April 2, 2018.

 

Current Structure of the Company

 

The Company has the following subsidiaries: 

    Subsidiary name % owned
  123Wish, Inc. 51%
  Global Phone Credit Ltd 100%
  One Horizon Hong Kong Ltd 100%
  Horizon Network Technology Co. Ltd 100%
  Love Media House, Inc 100%
  Banana Whale Studios PTE Ltd 51%

 

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

 

All significant intercompany balances and transactions have been eliminated in consolidation.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

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.

 

During the three months ended June 30, 2018 the Company issued additional shares of common stock for cash totaling $405,000.

 

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

 

At June 30, 2018 the Company had cash of $604,000. In addition, the Company will receive $370,000 from shares subscribed in June from the exercise of additional common stock warrants. Further fundraising in the region of $2.0 million will be undertaken in August/September 2018 which is expected to give the Company sufficient cash resources to cover forecasted expenditure into the first quarter of 2019.

 

 

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

 

Foreign Currency Translation

 

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

 

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

 

Accounts receivable, revenue recognition and concentrations

 

New Accounting Standard - In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in ASU Topic 605, Revenue Recognition (“Topic 605”), and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 also includes Subtopic 340-40, Other Assets and Deferred Costs- Contracts with Customers, which discussed the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs. The new standard was adopted by the Company in our fiscal year beginning January 1, 2018. The two permitted transition methods under the new standard are the full retrospective method, in which the new standard would be applied to each prior reporting period presented and the cumulative effect of applying the new standard would be recognized at the earliest period shown, or the modified retrospective method, in which the cumulative effect of applying the new standard would be recognized at the date of initial application. Based on our assessment, the impact of the new standard on our revenue recognition in prior periods is not significant; accordingly, while the Company would have used the modified retrospective method of adoption of the new standard, there was no cumulative effect of adoption on January 1, 2018 retained earnings.

 

Performance Obligations - A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under the new revenue recognition standard. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts do not typically have variable consideration that needs to be considered when the contract consideration is allocated to each performance obligation.

 

Revenue Recognition – We recognize revenues from each business segment under ASC 606 as described below:

 

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

 

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

 

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

 

The Company does not have off-balance sheet credit exposure related to its customers. As of June 30, 2018 two customers accounted for 50.4% of the accounts receivable balance and as of December 31, 2017, one customer accounted for 100% of the accounts receivable balance. Two customers accounted for 60% of the revenue for the six months ended June 30, 2018 and one customer accounted for 85% of the revenue for the quarter ended June 30, 2017.  

 

Research and Development Expenses

 

Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, costs related to the development of new products, significant enhancements to existing products, and the portion of costs of development of internal-use software required to be expensed. Research and development costs are charged to operations as incurred with the exception of those software development costs that may qualify for capitalization.

 

Income Taxes

 

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

 

Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company’s estimates and assumptions may differ significantly from tax benefits ultimately realized. Historically the Company has not filed income tax returns and the related required informational filings in the US. Certain informational filings if not filed contain penalties. 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 three and six month periods ended June 30, 2018 and 2017, outstanding warrants are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations.

 

Accumulated Other Comprehensive Income (Loss)

 

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

 

Use of Estimates

 

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

 

Share-Based Compensation

 

The Company accounts for stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest.  The fair value of stock options is determined using the Black-Scholes option pricing model, which includes subjective judgements about the expected life of the awards, forfeiture rates and stock price volatility.

 

Fair Value Measurements 

 

GAAP establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by GAAP are described below:  

  Level 1 - Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
  Level 2 - Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
  Level 3 - Pricing inputs that are generally observable inputs and not corroborated by market data.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. 

 

The Company’s Level 3 financial liabilities consist of contingent consideration relating to the acquisition of 123Wish, LMH and Banana Whale which requires significant judgment or estimation (see Note 3).

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.10.0.1
Acquisitions
6 Months Ended
Jun. 30, 2018
Business Combinations [Abstract]  
Acquisitions

Note 3. Acquisitions

 

123Wish, Inc.

 

On January 31, 2018 the Company completed the acquisition of a 51% controlling interest in 123 Wish, Inc. (formerly Once in a Lifetime LLC) a Delaware corporation in exchange for the issuance of 1,333,334 fully paid and non-assessable shares of common stock with a fair value of $1.39 million. In addition, the Company shall issue fully paid and non-assessable shares of common stock equal to 2.5 times of the net, after tax, earnings of 123 Wish for the six month period after the date of acquisition and fully paid and non-assessable shares of common stock equal to 4.5 times the net, after tax, earnings of 123 Wish for the second six month period after the date of acquisition. 123 Wish, Inc. has proprietary applications which use the social media aspect of the internet.

 

The following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed as of February 22, 2018 (In thousands):

 

Consideration Paid:

 

Common stock   $ 1,387  
Non controlling interest     1,353  
    $ 2,740  
         
Fair values of identifiable assets acquired and liabilities assumed:        
         
Assets acquired:        
Cash   $ 14  
Other intangible assets     2,307  
Goodwill     419  
         
Net Assets Acquired   $ 2,740  

 

The consideration paid was 1,333,334 common shares valued at $1.04 per share. Separately identifiable intangible assets include technology which were valued by management using discounted cash flow and replacement cost approaches. Management’s analysis is provisional in nature and is subject to change based on the availability of new information about facts and circumstances that existed as of the acquisition date.

 

As of June 30, 2018, the Company has estimated that no additional share amounts will need to be issued as contingent consideration and therefore is not included in the Company’s allocation of the purchase price in the table above. The financial statements of 123 Wish, Inc. have been included in the Company’s condensed consolidated financial statements and the amount of stockholders’ equity and net loss attributable to the non-controlling interest has been recorded as a separate line item in the accompanying statements of operations and stockholders’ equity.

 

Love Media House, Inc. (formerly C-Rod, Inc.)

 

On February 26, 2018 the Company completed the acquisition of 100% ownership of Love Media House, Inc. (“LMH”) a Florida corporation in exchange for $150,000 cash and 1,376,147 fully paid and non-assessable shares of common stock with a fair value of $1,541,285. LMH is in the music and video content business. The financial statements of LMH have been included in the condensed consolidated financial statements from the date of acquisition.

 

The following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed as of February 26, 2018 (In thousands):

 

Consideration Paid:

 

Cash   $ 150  
Common stock     1,541  
    $ 1,691  
         
Fair values of identifiable assets acquired and liabilities assumed:        
         
Assets acquired:        
Cash   $ 5  
Other intangible assets     910  
Goodwill     804  
Total assets acquired     1,719  
         
Liabilities assumed:        
Accounts payable     28  
Total Liabilities Assumed     28  
         
Net Assets Acquired   $ 1,691  

 

The consideration paid was 1,376,000 common shares plus $150,000 in cash. Separately identifiable intangible assets were customer relationships and were valued by management. The customer relationships were valued using discounted cash flow and replacement cost approaches. Management’s analysis is provisional in nature and is subject to change based on the availability of new information about facts and circumstances that existed as of the acquisition date.

 

As of June 30, 2018, the Company has estimated that no additional share amounts will need to be issued as contingent consideration and therefore is not included in the Company’s allocation of the purchase price in the table above. The financial statements of LMH have been included in the Company’s condensed consolidated financial statements.

 

Banana Whale Studios PTE Ltd

 

On May 24, 2018 the Company completed the acquisition of 51% ownership of Banana Whale Studios PTE Ltd (“Banana Whale”) a Singapore corporation in exchange for an initial allocation of 7,383,000 fully paid shares of common stock with a fair value of $4,983,000. The acquisition of Banana Whale is based on an earnout formula solely and should Banana Whale fail to reach forecasted profit numbers during the first 24 months then some, or all of the shares allocated would be refundable to the Company. Banana Whale develops and supplies online games to Asian gaming platforms on a B2B basis with their revenue generated on a revenue share basis. The financial statements of Banana Whale have been included in the condensed consolidated financial statements from the date of acquisition.

 

The following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed as of May 24, 2018 (In thousands):

 

Consideration Paid:

 

Common stock   $ 4,983  
Non-controlling interest     4,937  
    $ 9,920  

  

Fair values of identifiable assets acquired and liabilities assumed: 

         
Assets acquired:        
Cash   $ 42  
Accounts receivable     53  
Equipment     37  
Other intangible assets     10,076  
Total assets acquired     10,208  
         
Liabilities assumed:        
Accounts and advances payable     288  
Total Liabilities Assumed     288  
         
Net Assets Acquired   $ 9,920  

 

The consideration paid was 7,383,000 common shares valued at $0.675 per share. Separately identifiable intangible assets include technology which were valued by management using discounted cash flow and replacement cost approaches. Management’s analysis is provisional in nature and is subject to change based on the availability of new information about facts and circumstances that existed as of the acquisition date.

 

As of June 30, 2018, the Company has estimated that no additional share amounts will need to be issued (or refunded) as contingent consideration and therefore is not included in the Company’s allocation of the purchase price in the table above. The financial statements of Banana Whale have been included in the Company’s condensed consolidated financial statements and the amount of stockholders’ equity and net loss attributable to the non-controlling interest has been recorded as a separate line item in the accompanying statements of operations and stockholders’ equity.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Assets
6 Months Ended
Jun. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets

Note 4. Intangible Assets

 

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

 

    June 30     December 31  
    2018     2017  
             
Horizon software   $ 6,527     $ 6,527  
Social online application software     2,210        
Customer lists     997        
Gaming software     10,076        
      19,810       6,527  
Less accumulated amortization     (2,418 )     (1,187 )
                 
Intangible assets, net   $ 17,392     $ 5,340  

 

Amortization of intangible assets for each of the next five years is estimated to be $3,900,000 per year.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.10.0.1
Goodwill
6 Months Ended
Jun. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill

Note 5. Goodwill

 

The following is the detail of the Goodwill that arose on acquisitions described in Note 3:

 

    June 30     December 31  
    2018     2017  
             
123Wish, Inc.   $ 419     $  
Love Media House, Inc. (formerly C. Rod, Inc.)     804        
    $ 1,223     $  
XML 24 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
Convertible notes
6 Months Ended
Jun. 30, 2018
Debt Disclosure [Abstract]  
Convertible notes

Note 6. Convertible notes

 

In February 2018 the convertible note holders converted their notes into common stock, together with the interest accrued thereon. The amounts converted at $0.60 per share totaled $405,833 giving rise to 676,389 new shares of common stock.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
Share Capital
6 Months Ended
Jun. 30, 2018
Stockholders' Equity Note [Abstract]  
Share Capital

Note 7. Share Capital

 

Common Stock

 

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

 

During the six months ended June 30, 2018 the Company:

 

  Issued 225,000 shares of common stock for services with a fair value of $357,750
  Issued 1,333,334 shares of common stock, with a fair value of $1.4 million, for the acquisition of 51% of Once in a Lifetime
  Issued 100,000 shares of common stock for services provided with a fair value of $204,000
  Issued 504,167 shares of common stock for conversion of convertible note and accrued interest in the amount of $302,500
  Issued 172,222 shares of common stock for conversion of convertible note and accrued interest in the amount of $103,000
  Issued 172,222 shares of common stock for services provided with a fair value of $200,000
  Issued 750,000 shares of common stock for exercise of warrants at a price of $0.75 per share.
  Issued 50,000 shares of common stock for services provided with a fair value of $80,000.
  Issued 1,376,147 shares of common stock, with a fair value of $1,541,285, as part consideration for the acquisition of C-Rod, Inc.
  Issued 100,000 shares of common stock for services to be provided with a fair value of $85,000.
  Issued 225,000 shares of common stock for services to be provided with a fair value of $168,750
  Issued 850,000 shares of common stock for services provided with a fair value of $425,000
  Issued 7,383,000 shares of common stock, with a fair value of $4,983,000, for the acquisition of 51% of Banana Whale Studios Pte., Ltd
  Issued 1,575,000 shares of common stock for services provided with a fair value of $787,500
  Issued 850,000 shares of common stock for exercise of warrants at a price of $0.50 per share
  Issued 600,000 shares of common stock for services provided with a fair value of $306,000
  Issued 300,000 shares of common stock for services provided with a fair value of $150,000
  Issued 1,750,000 shares of common stock for cash of $0.20 per share

  Issued 1,850,000 shares of common stock for exercise of warrants at a price of $0.20 per share
  Issued 35,000 shares of common stock, with a fair value of $18,200, for an option to acquire an interest in an acquisition target.

 

Stock Purchase Warrants

 

As at June 30, 2018, the Company had reserved 1,461,387 shares of its common stock for the outstanding warrants with weighted average exercise price of $10.80. Such warrants expire at various times up to July 2020.

 

During the six months ended June 30, 2018, no warrants were forfeited, or issued, and 3,450,000 warrants were exercised for proceeds of $1,357,500.

 

During the six months ended June 30, 2018, the Company agreed to reduce the exercise price on 2.7 million outstanding warrants, which resulted in additional compensation cost of $403,000, in order to obtain additional funding.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
Segment Information
6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Segment Information

Note 8. Segment Information

 

The Company has the following business segments for the six months ended June 30, 2018 and 2017.

 

The Company’s revenues were generated in the following business segments (in thousands)

 

    June 30     June 30  
    2018     2017  
             
Sale of secure messaging licenses   $ 178     $ 117  
123Wish (from January 2018)     105        
Love Media House (from March 2018)     261        
Banana Whale (from May 2018)     24        
Total   $ 568     $ 117  

 

The following is a detail of the Company’s general and administrative expenses by business segment:

 

    June 30     June 30  
    2018     2017  
             
Sale of secure messaging licenses   $ 96     $  
123Wish (from January 2018)     573        
Love Media House (from March 2018)     126        
Banana Whale (from May 2018)     57        
Corporate costs     2,331       573  
Total   $ 3,183     $ 573  

 

The following is a detail of the net income (loss) by business segment:

 

    June 30     June 30  
    2018     2017  
             
Sale of secure messaging licenses   $ 81     $ 102  
123Wish (from January 2018)     (468 )      
Love Media House (from March 2018)     13        
Banana Whale Studios (from May 2018)     (295 )      
Corporate costs, discontinued operations and acquisition costs     (5,553 )     (3,156 )
Total   $ (6,222 )   $ (3,054 )
XML 27 R16.htm IDEA: XBRL DOCUMENT v3.10.0.1
Employment Agreements
6 Months Ended
Jun. 30, 2018
Employment Agreements  
Employment Agreements

Note 9. Employment Agreements

 

In connection with the acquisitions described in Note 3, the Company has entered into Employment Agreements (the “Agreements”) with three members of management of 123Wish and C-Rod. The Agreements have an initial employment period of two years and are automatically renewed annually thereafter. The Agreements entitle the members of management to a fixed base salary, along with incentive compensation that is calculated using pre-tax earnings and is payable in shares of the Company’s common stock.

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.10.0.1
Legal proceedings
6 Months Ended
Jun. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
Legal proceedings

Note 10. Legal proceedings

 

On May 30, 2018, Zhanming Wu (“Wu”), the record owner of 15,000,000 shares of common stock of One Horizon Group, Inc. (the “Company”), commenced an action in the Court of Chancery of the State of Delaware [Case No.2018-0387-JRS] against the Company and its directors and officers (collectively, the “Director Defendants”):

 

  (i) alleging Breach of Contract on the basis that Wu believes that pursuant to an ‘Approval Right Side Letter’ between Dachao Asset Management (Shanghai) Co., Ltd. (“Dachao”) and the Company and Wu’s agreement not to demand repayment of a Convertible Debenture in place on or prior to October 1, 2017, Wu would have the right to pre-approve certain actions to be taken by the Company for so long as Dachao beneficially owned more than thirty percent (30%) of the outstanding shares of the Company; (ii) seeking Specific Performance and/or Rescission against the Company to affirm his alleged right to compel the Company to submit the recent acquisition of fifty-one percent (51%) of Banana Whale Studios Pte. Ltd. (“Banana Whale”) and the related stock issuance to him for approval or an order rescinding the Banana Whale transaction and awarding him damages;

 

  (ii) seeking Promissory Estoppel against the Company with respect to the Approval Right Side Letter in so far as Wu alleges that he relied on purported promises of the Company that such Letter and related agreements would be retitled in the name of Wu rather than Dachao in exchange for Dachao’s agreement not to demand repayment of the Convertible Debenture on or prior to October 1, 2017;

 

  (iii) alleging Breach of Contract and seeking Specific Performance against the Company on the basis that Wu asserts pursuant to the debt conversion/exchange agreement that the Company agreed to first give Dachao, then ultimately Wu, the right to appoint four (4) directors to the Company Board so long as Dachao, then Wu, beneficially owned more than thirty percent (30%) of the outstanding shares of the Company;

 

  (iv) alleging Breach of the Implied Covenant of Good Faith and Fair Dealing against the Company insofar as Wu asserts that the Company owes Wu a duty of good faith and fair dealing implied in all contracts and Wu believes that the Company has taken steps to attempt to dilute his holdings of Company common stock below the thirty percent (30%) ownership threshold in order to enter into transactions without Wu’s prior approval; and

 

  (v) alleging Breach of Fiduciary Duty against the Director Defendants by: (a) purportedly making false representations, misleading statements and omitting material information when communicating with Wu regarding the Company’s intent to close the Banana Whale transaction; (b) disseminating false representations, misleading statements, and omitting material information in the 8-K filed by the Company on May 18, 2018, with respect to the Banana Whale transaction insofar as Section 3.02 of the 8-K states that there are no agreements to which the Company is a party, or has knowledge of, that conflict with the debt exchange/conversion agreement or would prohibit its consummation, to the extent Wu asserts that he had a right of prior approval based on the Approval Right Side Letter, which he asserts pertains to his holdings of Company common stock, which Letter he filed as an exhibit to his Schedule 13D filing with the SEC on April 10, 2018; (c) alleging that the Director Defendants breached their fiduciary duties to Wu and Company stockholders by issuing 7,383,000 shares of Company common stock to Banana Whale to the extent possession of these shares grant full voting and economic rights to the stockholders of Banana Whale while there is also a twenty-four (24) month earn-out structure as part of the definitive transaction agreements between the Company and Banana Whale; and (d) asserting that the Director Defendants breached their fiduciary duties to Wu and Company stockholders by entering into transactions including Banana Whale that Wu alleges were designed to preclude Wu from appointing four (4) additional directors to the Company Board by diluting his ownership below the thirty percent (30%) mark.
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
Liquidity and Capital Resources

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.

 

During the three months ended June 30, 2018 the Company issued additional shares of common stock for cash totaling $405,000.

 

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

 

At June 30, 2018 the Company had cash of $604,000. In addition, the Company will receive $370,000 from shares subscribed in June from the exercise of additional common stock warrants. Further fundraising in the region of $2.0 million will be undertaken in August/September 2018 which is expected to give the Company sufficient cash resources to cover forecasted expenditure into the first quarter of 2019.

 

 

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

Foreign Currency Translation

Foreign Currency Translation

 

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

 

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

Research and Development Expenses

Research and Development Expenses

 

Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, costs related to the development of new products, significant enhancements to existing products, and the portion of costs of development of internal-use software required to be expensed. Research and development costs are charged to operations as incurred with the exception of those software development costs that may qualify for capitalization.

Accounts receivable, revenue recognition and concentrations

Accounts receivable, revenue recognition and concentrations

 

New Accounting Standard - In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in ASU Topic 605, Revenue Recognition (“Topic 605”), and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 also includes Subtopic 340-40, Other Assets and Deferred Costs- Contracts with Customers, which discussed the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs. The new standard was adopted by the Company in our fiscal year beginning January 1, 2018. The two permitted transition methods under the new standard are the full retrospective method, in which the new standard would be applied to each prior reporting period presented and the cumulative effect of applying the new standard would be recognized at the earliest period shown, or the modified retrospective method, in which the cumulative effect of applying the new standard would be recognized at the date of initial application. Based on our assessment, the impact of the new standard on our revenue recognition in prior periods is not significant; accordingly, while the Company would have used the modified retrospective method of adoption of the new standard, there was no cumulative effect of adoption on January 1, 2018 retained earnings.

 

Performance Obligations - A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under the new revenue recognition standard. The transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts do not typically have variable consideration that needs to be considered when the contract consideration is allocated to each performance obligation.

 

Revenue Recognition – We recognize revenues from each business segment under ASC 606 as described below:

 

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

 

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

 

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

 

The Company does not have off-balance sheet credit exposure related to its customers. As of June 30, 2018 two customers accounted for 50.4% of the accounts receivable balance and as of December 31, 2017, one customer accounted for 100% of the accounts receivable balance. Two customers accounted for 60% of the revenue for the six months ended June 30, 2018 and one customer accounted for 85% of the revenue for the quarter ended June 30, 2017.  

Income taxes

Income Taxes

 

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

 

Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company’s estimates and assumptions may differ significantly from tax benefits ultimately realized. Historically the Company has not filed income tax returns and the related required informational filings in the US. Certain informational filings if not filed contain penalties. 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

Net Loss per Share

 

Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the three and six month periods ended June 30, 2018 and 2017, outstanding warrants are antidilutive because of net losses, and as such, their effect has not been included in the calculation of diluted net loss per share. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations.

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

 

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

Use of Estimates

Use of Estimates

 

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

Share-Based Compensation

Share-Based Compensation

 

The Company accounts for stock-based awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest.  The fair value of stock options is determined using the Black-Scholes option pricing model, which includes subjective judgements about the expected life of the awards, forfeiture rates and stock price volatility.

Fair Value Measurements

Fair Value Measurements 

 

GAAP establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by GAAP are described below:  

  Level 1 - Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
  Level 2 - Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
  Level 3 - Pricing inputs that are generally observable inputs and not corroborated by market data.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. 

 

The Company’s Level 3 financial liabilities consist of contingent consideration relating to the acquisition of 123Wish, LMH and Banana Whale which requires significant judgment or estimation (see Note 3).

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.10.0.1
Acquisitions (Tables)
6 Months Ended
Jun. 30, 2018
123Wish, Inc. [Member]  
Schedule of assets acquired and liabilities

The following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed as of February 22, 2018 (In thousands):

 

Consideration Paid:

 

Common stock   $ 1,387  
Non controlling interest     1,353  
    $ 2,740  
         
Fair values of identifiable assets acquired and liabilities assumed:        
         
Assets acquired:        
Cash   $ 14  
Other intangible assets     2,307  
Goodwill     419  
         
Net Assets Acquired   $ 2,740
Love Media House, Inc [Member]  
Schedule of assets acquired and liabilities

The following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed as of February 26, 2018 (In thousands):

 

Consideration Paid:

 

Cash   $ 150  
Common stock     1,541  
    $ 1,691  
         
Fair values of identifiable assets acquired and liabilities assumed:        
         
Assets acquired:        
Cash   $ 5  
Other intangible assets     910  
Goodwill     804  
Total assets acquired     1,719  
         
Liabilities assumed:        
Accounts payable     28  
Total Liabilities Assumed     28  
         
Net Assets Acquired   $ 1,691
Banana Whale Studios PTE Ltd [Member]  
Schedule of assets acquired and liabilities

The following table summarizes the consideration paid and the fair value of the assets acquired and liabilities assumed as of May 24, 2018 (In thousands):

 

Consideration Paid:

 

Common stock   $ 4,983  
Non-controlling interest     4,937  
    $ 9,920  

 

Fair values of identifiable assets acquired and liabilities assumed:

 

         
Assets acquired:        
Cash   $ 42  
Accounts receivable     53  
Equipment     37  
Other intangible assets     10,076  
Total assets acquired     10,208  
         
Liabilities assumed:        
Accounts and advances payable     288  
Total Liabilities Assumed     288  
         
Net Assets Acquired   $ 9,920
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Assets (Tables)
6 Months Ended
Jun. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of intangible assets

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

 

    June 30     December 31  
    2018     2017  
             
Horizon software   $ 6,527     $ 6,527  
Social online application software     2,210        
Customer lists     997        
Gaming software     10,076        
      19,810       6,527  
Less accumulated amortization     (2,418 )     (1,187 )
                 
Intangible assets, net   $ 17,392     $ 5,340  
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
Goodwill (Tables)
6 Months Ended
Jun. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of goodwill

The following is the detail of the Goodwill that arose on acquisitions described in Note 3:

 

    June 30     December 31  
    2018     2017  
             
123Wish, Inc.   $ 419     $  
Love Media House, Inc. (formerly C. Rod, Inc.)     804        
    $ 1,223     $  
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
Segment Information (Tables)
6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Schedule of revenues

The Company’s revenues were generated in the following business segments (in thousands)

 

    June 30     June 30  
    2018     2017  
             
Sale of secure messaging licenses   $ 178     $ 117  
123Wish (from January 2018)     105        
Love Media House (from March 2018)     261        
Banana Whale (from May 2018)     24        
Total   $ 568     $ 117  
Schedule of direct costs, general and administrative expenses

The following is a detail of the Company’s general and administrative expenses by business segment:

 

    June 30     June 30  
    2018     2017  
             
Sale of secure messaging licenses   $ 96     $  
123Wish (from January 2018)     573        
Love Media House (from March 2018)     126        
Banana Whale (from May 2018)     57        
Corporate costs     2,331       573  
Total   $ 3,183     $ 573  
Schedule of net income (loss)

The following is a detail of the net income (loss) by business segment:

 

    June 30     June 30  
    2018     2017  
             
Sale of secure messaging licenses   $ 81     $ 102  
123Wish (from January 2018)     (468 )      
Love Media House (from March 2018)     13        
Banana Whale Studios (from May 2018)     (295 )      
Corporate costs, discontinued operations and acquisition costs     (5,553 )     (3,156 )
Total   $ (6,222 )   $ (3,054 )
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
Description of Business, Organization and Principles of Consolidation (Details Narrative)
Jun. 30, 2018
123Wish, Inc. [Member]  
Ownership percentage acquired 51.00%
Global Phone Credit Ltd [Member]  
Ownership percentage acquired 100.00%
One Horizon Hong Kong Ltd [Member]  
Ownership percentage acquired 100.00%
Horizon Network Technology Co. Ltd [Member]  
Ownership percentage acquired 100.00%
Love Media House, Inc [Member]  
Ownership percentage acquired 100.00%
Banana Whale Studios PTE Ltd [Member]  
Ownership percentage acquired 51.00%
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
Summary of Significant Accounting Policies (Details Narrative)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2018
USD ($)
Number
Segment
Jun. 30, 2017
USD ($)
Number
Dec. 31, 2017
USD ($)
Segment
Sep. 30, 2018
USD ($)
Aug. 31, 2018
USD ($)
Cash $ 604 $ 69 $ 763    
Subsequent Event [Member]          
Cash       $ 2,000 $ 2,000
Customer Concentration Risk [Member] | Accounts Receivable [Member]          
Percentage of concentration risk 50.40%   100.00%    
Number of customers 2   1    
Customer Concentration Risk [Member] | Sales Revenue, Net [Member]          
Percentage of concentration risk 60.00% 85.00%      
Number of customers 2 1      
Warrant [Member]          
Proceeds from exercise of common stock warrants $ 370        
Convertible Notes Payable [Member]          
Original debt converted $ 405        
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
Acquisitions (Details) - USD ($)
6 Months Ended
Feb. 22, 2018
Jan. 31, 2018
Jun. 30, 2018
Dec. 31, 2017
Consideration Paid:        
Common stock     $ 18,200  
Assets acquired:        
Goodwill     1,223,000
123Wish, Inc. [Member]        
Consideration Paid:        
Common stock $ 1,387,000 $ 1,400,000    
Non controlling interest 1,353,000      
Consideration paid 2,740,000      
Assets acquired:        
Cash 14,000      
Other intangible assets 2,307,000      
Goodwill 419,000   $ 419,000  
Net Assets Acquired $ 2,740,000      
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
Acquisitions (Details 1) - USD ($)
6 Months Ended
Feb. 26, 2018
Jun. 30, 2018
Dec. 31, 2017
Consideration Paid:      
Common stock   $ 18,200  
Assets acquired:      
Goodwill   $ 1,223,000
Love Media House, Inc. (formerly C-Rod, Inc.)      
Consideration Paid:      
Cash $ 150,000    
Common stock 1,541,000    
Consideration paid 1,691,000    
Assets acquired:      
Cash 5,000    
Other intangible assets 910,000    
Goodwill 804,000    
Total assets acquired 1,719,000    
Liabilities assumed:      
Accounts payable 28,000    
Total Liabilities Assumed 28,000    
Net Assets Acquired $ 1,691,000    
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
Acquisitions (Details 2) - USD ($)
6 Months Ended
May 24, 2018
Jun. 30, 2018
Consideration Paid:    
Common stock   $ 18,200
Banana Whale Studios PTE Ltd [Member]    
Consideration Paid:    
Common stock $ 4,983,000  
Non-controlling interest 4,937,000  
Consideration paid 9,920,000  
Assets acquired:    
Cash 42,000  
Accounts receivable 53,000  
Equipment 37,000  
Other intangible assets 10,076,000  
Total assets acquired 10,208,000  
Liabilities assumed:    
Accounts and advances payable 288,000  
Total Liabilities Assumed 288,000  
Net Assets Acquired $ 9,920,000  
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
Acquisitions (Details Narrative) - USD ($)
6 Months Ended
May 24, 2018
Feb. 26, 2018
Feb. 22, 2018
Jan. 31, 2018
Jun. 30, 2018
Jun. 30, 2017
Number of shares issued upon acquistion         35,000  
Number of shares issued upon acquistion,value         $ 18,200  
Cash         $ 108,000
123Wish, Inc. [Member]            
Ownership percentage acquired         51.00%  
Number of shares issued upon acquistion       1,333,334    
Number of shares issued upon acquistion,value     $ 1,387,000 $ 1,400,000    
Share price (in dollars per share)       $ 1.04    
Love Media House, Inc. (formerly C-Rod, Inc.)            
Ownership percentage acquired   100.00%        
Number of shares issued upon acquistion   1,376,147        
Number of shares issued upon acquistion,value   $ 1,541,000        
Cash   $ 150,000        
Banana Whale Studios PTE Ltd [Member]            
Ownership percentage acquired 51.00%          
Number of shares issued upon acquistion 7,383,000          
Number of shares issued upon acquistion,value $ 4,983,000          
Share price (in dollars per share) $ 0.675          
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Assets (Details) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Intangible assets, gross $ 19,810 $ 6,527
Less accumulated amortization (2,418) (1,187)
Intangible assets, net 17,392 5,340
Horizon Software [Member]    
Intangible assets, gross 6,527 6,527
Social online application software [Member]    
Intangible assets, gross 2,210
Customer lists [Member]    
Intangible assets, gross 997  
Gaming Software [Member]    
Intangible assets, gross $ 10,076
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
Intangible Assets (Details Narrative)
$ in Thousands
Jun. 30, 2018
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
Amortization of intangible assets first year $ 3,900,000
Amortization of intangible assets second year 3,900,000
Amortization of intangible assets third year 3,900,000
Amortization of intangible assets four year 3,900,000
Amortization of intangible assets five year $ 3,900,000
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
Goodwill (Details) - USD ($)
$ in Thousands
Jun. 30, 2018
Feb. 22, 2018
Dec. 31, 2017
Goodwill $ 1,223  
123Wish, Inc. [Member]      
Goodwill 419 $ 419  
Love Media House, Inc. C. Rod, Inc.[Member]      
Goodwill $ 804    
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
Convertible notes (Details Narrative) - Convertible Notes Payable [Member]
$ / shares in Units, $ in Thousands
1 Months Ended
Feb. 28, 2018
USD ($)
$ / shares
shares
Debt conversion price (in dollars per share) | $ / shares $ 0.60
Number of shares converted | shares 676,389
Value of shares converted | $ $ 405,833
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.10.0.1
Share Capital (Details Narrative) - USD ($)
6 Months Ended
Feb. 26, 2018
Feb. 22, 2018
Jan. 31, 2018
Jun. 30, 2018
Jun. 30, 2017
Dec. 31, 2017
Common stock, authorized       200,000,000   200,000,000
Common stock, par value (in dollars per share)       $ 0.0001   $ 0.0001
Number of shares issued for services       225,000    
Fair value of issued shares for services       $ 357,750    
Number of shares issued upon acquistion       35,000    
Value of shares issued upon acquistion       $ 18,200    
Number of shares issued for services       100,000    
Fair value of issued shares for services       $ 204,000    
Number of shares issued conversion of convertible note and accrued interest       504,167    
Value of shares issued conversion of convertible note and accrued interest       $ 302,500    
Number of shares issued conversion of convertible note and accrued interest       172,222    
Value of shares issued conversion of convertible note and accrued interest       $ 103,000    
Number of shares issued for services       172,222    
Fair value of issued shares for services       $ 200,000    
Number of shares issued for services       50,000    
Fair value of issued shares for services       $ 80,000    
Number of shares issued for services       100,000    
Fair value of issued shares for services       $ 85,000    
Number of shares issued for services       225,000    
Fair value of issued shares for services       $ 168,750    
Number of shares issued for services       850,000    
Fair value of issued shares for services       $ 425,000    
Number of shares issued for services       1,575,000    
Fair value of issued shares for services       $ 787,500    
Number of shares issued for services       600,000    
Fair value of issued shares for services       $ 306,000    
Number of shares issued for services       300,000    
Fair value of issued shares for services       $ 150,000    
Number of shares issued for cash       1,750,000    
Share price (in dollars per share)       $ 0.20    
Proceeds from warrants exercises       $ 988,000 $ 102,000  
Warrant [Member]            
Warrant issued       750,000    
Exercise price (in dollars per share)       $ 0.75    
Number of common shares reserved for outstanding warrants       1,461,387    
Exercise price (in dollars per share)       $ 10.80    
Warrants exercised       3,450,000    
Proceeds from warrants exercises       $ 1,357,500    
Warrants outstanding       2,700,000    
Compensation cost       $ 403,000    
Warrant [Member]            
Warrant issued       850,000    
Exercise price (in dollars per share)       $ 0.50    
Warrant [Member]            
Warrant issued       1,850,000    
Exercise price (in dollars per share)       $ 0.20    
123Wish, Inc. [Member]            
Ownership percentage acquired       51.00%    
Number of shares issued upon acquistion     1,333,334      
Value of shares issued upon acquistion   $ 1,387,000 $ 1,400,000      
Love Media House, Inc. (formerly C-Rod, Inc.)            
Ownership percentage acquired 100.00%          
Number of shares issued upon acquistion 1,376,147          
Value of shares issued upon acquistion $ 1,541,000          
Banana Whale Studios Pte [Member]            
Ownership percentage acquired       51.00%    
Number of shares issued upon acquistion       7,383,000    
Value of shares issued upon acquistion       $ 4,983,000    
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
Segment Information (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
123Wish, Inc. [Member]    
Revenue $ 105
Love Media House [Member]    
Revenue 261
Banana Whale [Member]    
Revenue 24
Secure Messaging Licenses [Member]    
Revenue $ 178 $ 117
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.10.0.1
Segment Information (Details 1) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Direct costs, general and administrative expenses $ 1,773 $ 265 $ 3,183 $ 573
123Wish, Inc. [Member]        
Direct costs, general and administrative expenses     573
Love Media House [Member]        
Direct costs, general and administrative expenses     126  
Banana Whale [Member]        
Direct costs, general and administrative expenses     57  
Secure Messaging Licenses [Member]        
Direct costs, general and administrative expenses     96
Corporate costs [Member]        
Direct costs, general and administrative expenses     $ 2,331 $ 573
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.10.0.1
Segment Information (Details 2) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Net income (loss) $ (3,528) $ (1,770) $ (6,222) $ (3,054)
123Wish, Inc. [Member]        
Net income (loss)     (468)
Love Media House [Member]        
Net income (loss)     13  
Banana Whale [Member]        
Net income (loss)     (295)  
Secure Messaging Licenses [Member]        
Net income (loss)     81 102
Corporate costs [Member]        
Net income (loss)     $ (5,553) $ (3,156)
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.10.0.1
Legal proceedings (Details Narrative) - shares
5 Months Ended 6 Months Ended
May 30, 2018
May 30, 2018
Jun. 30, 2018
Number of shares issued upon acquistion     35,000
One Horizon Hong Kong Ltd [Member]      
Ownership percentage     100.00%
Banana Whale Studios PTE Ltd [Member]      
Ownership percentage     51.00%
Zhanming Wu [Member] | One Horizon Hong Kong Ltd [Member]      
Number of shares issued upon acquistion   15,000,000  
Filing Date   On May 30, 2018  
Name of Defendant   Director Defendants  
Name of Court   Court of Chancery of the State of Delaware  
Allegations   Alleging Breach of Contract  
Zhanming Wu [Member] | Banana Whale Studios PTE Ltd [Member]      
Number of shares issued upon acquistion 7,383,000    
Ownership percentage 51.00% 51.00%  
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