10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Mark One)

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

For the quarterly period ended June 30, 2013

or

o 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)

Pennsylvania	25-1229323
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
Weststrasse 1, Baar
Switzerland	CH6340
(Address of principal executive offices)	(Zip Code)

+41-41-7605820

(Registrant’s telephone number, including area code)

_____________________________________________________ 

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ  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 þ  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	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ
(Do not check if smaller reporting company)

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.  As of August13, 2013, 18,941,967,819 shares of the registrant’s common stock, par value $0.0001, were outstanding.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 (the “Amendment”) to One Horizon Group, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, filed with the Securities and Exchange Commission on August 14, 2013 (the “Form 10-Q”), is solely to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).

No other changes have been made to the Form 10-Q. This Amendment speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

ITEM 6. EXHIBITS

Exhibit Number	Description
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

** Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

+ In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.

SIGNATURES

Pursuant to the requirements 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 15, 2013	By:	/s/ Mark White
		Mark White
		President and Principal Executive Officer

EX-31.1

Exhibit 31.1

CERTIFICATION

OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Mark White, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q/A 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. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)      Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under 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; and

5. The registrant’s other certifying officer(s) 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 the 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.

Date: August 15, 2013	/s/ Mark White
	Mark White
	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Martin Ward, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q/A 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. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)      Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under 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; and

5. The registrant’s other certifying officer(s) 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 the 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.

Date: August 15, 2013	/s/ Martin Ward
	Martin Ward
	Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of One Horizon Group, Inc. (the “Company”) on Form 10-Q/A for the period ended June 30, 2013 (the “Report”), I, Mark White, Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

1.      The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

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

Date: August 15, 2013	/s/ Mark White
	Mark White
	Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of One Horizon Group, Inc. (the “Company”) on Form 10-Q/A for the period ended June 30, 2013 (the “Report”), I, Martin Ward, Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

1.      The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

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

Date: August 15, 2013	/s/ Martin Ward
	Martin Ward
	Chief Financial Officer (Principal Financial Officer)

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10. Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

10. Commitments and Contingencies

The Company has an agreement with a senior employee to pay for certain services to be provided during 2013 by the issuance of options to purchase 175,140,000 shares of common stock of the Company at December 31, 2013. 

Lease Commitments

The Company incurred total rent expense of $72,000 and $49,000, for the six months ended June 30, 2013 and 2012, respectively. Future lease commitments are as follows:

2013 $36,000

2014 $72,000

2015 $72,000

2016 $72,000

2017 $72,000

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Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Statement [Abstract]
Revenue	$ 3,095	$ 2,262	$ 6,108	$ 4,554
Cost of revenue	481	14	488	65
Gross margin	2,614	2,248	5,620	4,489
Expenses:
General and administrative	2,221	1,614	3,694	3,307
Depreciation	39	721	75	818
Amortization of intangibles	404	841	850	1,043
Total Expenses	2,664	3,176	4,619	5,168
Income (loss) from operations	(50)	(928)	1,001	(679)
Other income and expense:
Interest expense	(7)	(54)	(12)	(65)
Interest expense - related parties	(50)	(50)	(100)	(100)
Foreign exchange	0	0	0	5
Other income and expense	(57)	(104)	(112)	(160)
Income (loss) before income taxes	(107)	(1,032)	889	(839)
Income taxes expense (benefit)	(10)	53	90	69
Discontinued operations:
Net Income (Loss) for the period	(97)	(1,085)	799	(908)
Net income (loss) attributable to the non-controlling interest	(44)	0	(44)	0
Net Income (Loss) for the period attributable to One Horizon Group, Inc.	$ (53)	$ (1,085)	$ 843	$ (908)
Earnings per share
Basic net income per share	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Diluted net income per share	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Weighted average number of shares outstanding
Basic (in thousands)	19,005,382	13,341,435	18,867,426	13,331,726
Diluted (in thousands)	19,005,382	13,341,435	20,279,496	13,331,726

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3. China Operations

6 Months Ended

Jun. 30, 2013

Noncontrolling Interest [Abstract]

3. China Operations

During the six months ended June 30, 2013 the Company established a subsidiary in China, Horizon Network Technology Co. Ltd. (‘HNT’).  The establishment of HNT is part of the Company’s strategic plan to expand the application of mobile software and related marketing efforts into emerging markets.  The Company contributed $1.5 million for a 75% ownership interest in HNT.  The funds contributed will be used to pay initial start-up costs for HNT.  The remaining 25% ownership interest in HNT was acquired by non-related parties through the transfer of noncash assets with a fair value of $500,000.

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

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7. Related-Party Transactions (Tables)

6 Months Ended

Jun. 30, 2013

Related Party Transactions [Abstract]

Related-Party Transactions

	June 30	December 31
	2013	2012
Loans due to stockholders	$  4,000	$   3,500

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11. Subsequent Events

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

11. Subsequent Events

Subsequent to June 30, 2013 the Company

- issued 20,000,000 shares of common stock

As of August 6, 2013, the Company approved a 600-for-1 reverse stock split (the “Reverse Stock Split”) of its issued and outstanding common stock, to reduce the number of authorized shares of Common Stock to 200,000,000 shares, and to reduce the number of authorized shares of Preferred Stock to 50,000,000 shares. The Reverse Stock Split will be effected by the filing of an amendment to the Company’s Articles of Incorporation with the Department of State of the Commonwealth of Pennsylvania.

As of June 30, 2013, and after giving effect to the Reverse Stock Split, the Company’s authorized and outstanding capital stock would be as follows:

Common

Stock

Authorized

but

Unissued

and

Outstanding

Outstanding

Authorized

Authorized

Authorized

Available

Common

Preferred

Common

Preferred

Capital

for Future

Stock

Stock

Stock

Stock

Stock

Issuance

Pre-Reverse Stock Split

18,918,967,819

-

250,000,000,000

150,000,000

250,150,000,000

231,231,032,181

Post 600-for-1 Reverse Split

31,531,613

-

200,000,000

50,000,000

250,000,000

218,468,387

 Accounting Consequences

The par value of Common Stock would be unchanged at $0.0001 per share after the Reverse Stock Split. As a result, on the effective date of the Reverse Stock Split, the shareholders equity on our balance sheet attributable to the Company’s Common Stock would be reduced proportionately based on the reverse stock split ratio of 1-for-600 and the additional paid-in capital account would be credited with the amount by which the shareholders equity would be reduced. 

After the stock split, net income or loss per share, and other per share amounts would be increased as there would be fewer shares of our Common Stock outstanding. In future financial statements, net income or loss per share and other per share amounts for periods ended before the reverse stock split would be re-presented to give retroactive effect to the reverse split.

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10. Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Lease Commitments

2013 $36,000

2014 $72,000

2015 $72,000

2016 $72,000

2017 $72,000

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9. Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Summary of the Company's stock options

	Number of	Weighted Average
	Options	Exercise Price
Outstanding at June 30, 2012	216,132,393	$0.0013
Options issued	175,140,000	0.0009
Outstanding at December 31, 2012 and June 30, 2013	391,272,393	$0.0011

Stock options outstanding

	Number	Average	Number	Intrinsic
	Outstanding	Remaining	Exercisable	Value
	at	Contractual	at	at
	June 30,	Life	June 30,	June 30,
Exercise Price	2013	(Years)	2013	2013
$0.0009	3,448,507	2.33	3,448,507	$   45,175
0.0009	175,140,000	7.00	175,140,000	2,294,334
0.0009	175,140,000	9.50	-	-
0.0030	17,833,456	1.83	17,833,456	196,168
0.0033	19,710,430	3.00	7,193,588	210,902

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9. Stock-Based Compensation (Details) (USD $)	6 Months Ended
	Dec. 31, 2012	Jun. 30, 2013
Number of Options
Number of Options Outstanding, Beginning	216,132,393	391,272,393
Number of Options Issued	175,140,000
Number of Options Outstanding, End	391,272,393	391,272,393
Weighted Average Exercise Price
Weighted Average Exercise Price Outstanding, Beginning	$ 0.0013	$ 0.0011
Weighted Average Exercise Price Issued	$ 0.0009
Weighted Average Exercise Price Outstanding, Ending	$ 0.0011	$ 0.0011

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6. Long-term Debt (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Long-Term Debt Details
Vehicle loan	$ 61	$ 67
Equipment loan	29	0
Office term loan	190	211
Bank term loan	280	278
Less current portion	(65)	(59)
Balance	$ 215	$ 219

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8. Share Capital (Tables)

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Stock Purchase Warrants

Number of Warrants	Exercise Price	Expiry
700,560,000	$  nil	no expiry date
70,056,000	0.0014	no expiry date
241,935,483	0.0124	January 2018
37,526,065	0.012	May 2018

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Consolidated Statements of Stockholders' Equity (USD $) In Thousands, except Share data	Common Stock	Additional Paid-In Capital	Retained Earnings (Deficit)	Subscriptions Receivable	Accumulated Other Comprehensive Income (Loss)	Non-controlling Interest	Total
Beginning Balance, Amount at Dec. 31, 2012	$ 1,852	$ 19,781	$ (4,780)	$ (500)	$ 455	$ 0	$ 16,808
Beginning Balance, Shares (in thousands) at Dec. 31, 2012	18,507,507
Sale of subsidiary shares to non-controlling interest						500	500
Net income (loss)			843			(44)	799
Foreign currency translation adjustment					(50)		(50)
Common stock issued for note receivable, shares (in thousands)	483,871
Common stock issued for note receivable, amount	48	5,952		(2,900)			3,100
Common stock issued for services received, Shares (in thousands)	40,526
Common stock issued for services received, Amount	4	589					593
Warrants issued for services received		247					247
Ending Balance, Amount at Jun. 30, 2013	$ 1,904	$ 26,569	$ (3,937)	$ (3,400)	$ 405	$ 456	$ 21,997
Ending Balance, Shares (in thousands) at Jun. 30, 2013	19,031,904

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1. Description of Business, Organization and Principles of Consolidation

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

1. Description of Business, Organization and Principles of Consolidation

Description of Business

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

Organization

On November 30, 2012, the predecessor company “ICE” acquired all of the stock of One Horizon Group plc (“OHG”), a company incorporated in the United Kingdom through the issuance of 17,853,476,138 shares of common stock of the Company. Upon completion of this transaction the former shareholders of OHG controlled approximately 96% of the outstanding stock of the Company and OHG was deemed the acquiring entity. The share exchange has been accounted for as a reverse acquisition. The historical combined financial statements of OHG form the consolidated financial statements presented. For accounting purposes ICE was considered to have been acquired as of November 30, 2012.

The consolidated financial statements reflect the deemed acquisition of ICE by OHG and the recognition of the 696,030,538 shares of common stock, with a fair value of $170,000, at November 30, 2012.

On December 31, 2012 the Company sold the operations of Global Integrated Media Limited and Modizo for the return of 42,000,000 shares of common stock with a fair value of $420,000. These companies were subsidiaries and divisions of ICE.

Interim Period Financial Statements

The accompanying unaudited interim 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’s 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 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 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 six months ended December 31, 2012, as filed with the Securities and Exchange Commission on May 13, 2013.

Principles of Consolidation and Combination

The June 30, 2013 consolidated financial statements include the accounts of One Horizon Group, Inc. and its wholly owned subsidiaries OHG, Horizon Globex GmbH, Abbey Technology Gmb, One Horizon Hong Kong Limited and Horizon Network Technology Co. Ltd.

The comparative statement of operations, comprehensive income and cash flows for the six months ended June 30, 2012 include the combined accounts of One Horizon Group plc, Horizon Globex GmbH and Abbey Technology GmbH. These combined financial statements present the carve-out combined financial position and results of operations of OHG without including the accounts of Satcom Global, a group of former wholly-owned subsidiaries of OHG, which were disposed of in October 2012. All revenues, expenses, gains and losses, assets and liabilities related to the Satcom Global business have been eliminated from these combined financial statements.

All significant intercompany balances and transactions have been eliminated.

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4. Property and Equipment, net

6 Months Ended

Jun. 30, 2013

Property, Plant and Equipment [Abstract]

4. Property and Equipment, net

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

	June 30			December 31
	2013			2012
Leasehold improvements	$	265		$	265
Motor vehicle		120			120
Equipment		278			177
		663			562
Less accumulated depreciation		(285	)		(212	)
Property and equipment, net	$	378		$	350

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2. Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

2. Summary of Significant Accounting Policies

Basis of Accounting and Presentation

These consolidated and combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States. The financial position, results of operations and cash flows of the Company as of and for the six months ended June 30, 2012 have been derived from the Company’s historical accounting records and are presented as a combined group. The combined financial statements do not include revenues, expenses, assets and liabilities of the former Satcom Global business which was operated through separate corporate subsidiaries. Management of the Company considers the basis on which the expenses have been allocated to the combined group to be a reasonable reflection of the utilization of the services provided to or received from during the periods presented.

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

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

Cash

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

Accounts Receivable

Accounts receivable result primarily from sale of software and licenses to customers and are recorded at their principal amounts. Receivables are considered past due once they exceed the terms of the sales transaction. When necessary, the Company provides an allowance for doubtful accounts that is based on a review of outstanding receivables, historical collection information, and current economic conditions. There was an allowance of $218,000 and $218,000 for doubtful accounts at both June 30, 2013 and December 31, 2012. Receivables are generally unsecured. Account balances are charged off against the allowance when the Company determines it is probable the receivable will not be recovered. The Company does not have off-balance sheet credit exposure related to its customers. At June 30, 2013 and December 31, 2012, three customers accounted for 25% and 33%, respectively, of the accounts receivable balance. Long-term payment terms for Master Licenses are provided to customers on an interest free basis, typically over five years. 

Payments due from customers beyond one year are recorded as long term at their net present value, to the extent revenue has been recorded, as described. Accounts receivable includes amounts that are due for which revenue has not been recognized. Such amounts are recorded as deferred income, classified as current or long term liabilities, based on the expectation of revenue to be recognized and collections to be received.

Property and Equipment

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

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

Fair Value Measurements

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

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

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

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

Intangible Assets  

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

The Company expenses all costs related to the development of internal-use software as incurred, other than those incurred during the application development stage, after achievement of technological feasibility. Costs incurred in the application development stage are capitalized and amortized over the estimated useful life of the software. Internally developed software costs are amortized on a straight-line basis over the estimated useful life of the software. The Company performs periodic reviews of its capitalized software development costs to determine if the assets have continuing value to the Company. Costs for assets that are determined to be of no continuing value are written off. During the six months ended June 30, 2013 and 2012, software development costs of $494,000, and $770,000, respectively, have been capitalized.

Impairment of Other Long-Lived Assets

The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. During the six months ended June 30, 2013 and 2012, the Company identified no impairment losses related to the Company’s long-lived assets.

Revenue Recognition

The Company recognizes revenue when it is realized or realizable and earned. The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred or services have been rendered, price is fixed and determinable, and collectability is reasonably assured.

· Software and licenses – revenue from sales of perpetual licenses to top-tier telecom entities is recognized at the inception of the arrangement, presuming all other relevant revenue recognition criteria are met. Revenue from sales of perpetual licenses to other entities is recognized over the agreed collection period. The Company regards a “top-tier” telecom entity as a tier 1 carrier which has a direct connection to the Internet and the networks it uses to deliver voice and data services as well as a financially strong balance sheet and good credit rating..

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

We enter into arrangements in which a customer purchases a combination of software licenses, maintenance services and post-contract customer support (“PCS”). As a result, judgment is sometimes required to determine the appropriate accounting, including how the price should be allocated among the deliverable elements if there are multiple elements. PCS may include rights to upgrades, when and if available, support, updates and enhancements. When vendor specific objective evidence (“VSOE”) of fair value exists for all elements in a multiple element arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values of various elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price between deliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elements such as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In the absence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to the residual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit of accounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No sales arrangements to date include undelivered elements for which VSOE does not exist.

For the purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption that revenue is recognized pro rata over the collection period, typically over five years. For sales to top-tier customers, this presumption is overcome by the customers’ commitment to pay, as demonstrated by its payment history and its ability to pay. Payment terms are extended to customers on an interest-free basis for Master License sales. For revenue recognized in advance of payments due, the Company provides for a discount against the revenue recorded, which is adjusted to the net present value of the cash flows expected over the payment terms imputing interest at an appropriate rate, when the terms exceed one year. 

Deferred Revenue

The Company sells software and licenses on deferred payment terms, typically over five years. For those sales to customers which the Company does not consider to be top-tier telecom entities, the revenue is recognized over the collection period. Contracts are considered legally binding agreements. On execution, the Company records the full amount receivable from the customer for the Master License, including an allocation to current and long-term positions. The amount of the receivable that is not recognized as revenue is included in deferred revenue. 

Leases

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

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

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

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

Advertising Expenses

It is the Company’s policy to expense advertising costs as incurred. No advertising costs were incurred during each of the six months ended June 30, 2013 and 2012.

Research and Development Expenses

Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, related to the development of new products, significant enhancements to existing products, and the portion of costs of development of internal-use software required to be expensed.  Research and development costs are charged to operations as incurred with the exception of those software development costs that may qualify for capitalization. The Company incurred no research and development costs in the six months ended June 30, 2013 and 2012, respectively. 

Income Taxes

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

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

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

Net Income per Share

Basic earnings per share of common stock is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted earnings per share of common stock reflects the maximum potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and would then share in the net income of the company. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations. (in thousands) 

	June 30
	Three months				Six months
	2013		2012		2013		2012
Basic		19,005,382		13,341,435		18,867,426		13,331,726
Incremental shares under stock compensation plans		1,486,946		916,692		1,411,820		916,692
Incremental shares connected with previously converted promissory notes		250		—		250		—
Potentially dilutive		20,492,578		14,258,127		20,279,496		14,248,418

Accumulated Other Comprehensive Income (Loss)

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

Use of Estimates 

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, 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.

Financial Instruments

The Company has the following financial instruments: cash and long-term debt. The carrying value of these financial instruments approximates their fair value due to their liquidity or their short-term nature valued consistent with the use of level 2 inputs.

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 valuation model, which is consistent with the Company’s valuation techniques previously utilized for options in footnote disclosures.

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2. Summary of Significant Accounting Policies (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Summary Of Significant Accounting Policies Details
Basic	19,005,382	13,341,435	18,867,426	13,331,726
Incremental shares under stock compensation plans	1,486,946	916,692	1,411,820	916,692
Incremental shares connected with previously converted promissory notes	250	0	250	0
Fully Diluted	20,492,578	14,258,127	20,279,496	14,248,418

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7. Related-Party Transactions (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Related-Party Transactions Details
Loans due to stockholders	$ 4,000	$ 3,500
Amounts due to related parties	$ 4,000	$ 3,500

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Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, Authorized	150,000,000	150,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, Authorized	250,000,000,000	250,000,000,000
Common stock, Issued	19,031,903,710	18,507,506,667
Common stock, outstanding	19,031,903,710	18,507,506,667

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7. Related-Party Transactions

6 Months Ended

Jun. 30, 2013

Related Party Transactions [Abstract]

7. Related-Party Transactions

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

	June 30	December 31
	2013	2012
Loans due to stockholders	$  4,000	$   3,500

Loans due to stockholders include

• loans advanced during 2011 totaling $2,000,000 which are unsecured and have an interest rate of 10%. During the six months ended June 30, 2013 and 2012 interest of $100,000 and $100,000, respectively, has been accrued.

• loans advanced by two officers and directors during 2012 totaling $1,500,000 which are unsecured and have an interest rate of 0.21%. The loans are due on or before December 31, 2014 and can be repaid in cash or shares of ordinary shares of OHG at an exchange price of $1.50 per share.

· convertible loans advanced in January 2013 from two officers and directors in the amount of $250,000 each. These convertible loans bear an interest rate of 0.21% and are repayable on or before January 22, 2014. The Company has the option to repay the loans at any time, without penalty, at any time in cash or shares of common stock of the Company at a price of $0.0086 per share. If the Company elects to repay the convertible loans in full by the issuance of shares the Company will issue 29,190,000 shares of common stock for each loan so repaid.

• during the year ended June 30, 2011, the Company entered into a sales contract, in the normal course of business with a customer in which the Company holds an equity interest. The customer purchased perpetual software license with total commitment of $2.0 million, of which $200,000 has been recognized in each of the six months ended June 30, 2013 and 2012. The Company owns a cost based investment interest of 18% of the voting capital of the customer.

• during the six months ended June 30, 2012, a company owned by a director and officer of the Company provided services in the amounts of $125,000.

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidated Statements Of Comprehensive Income
Net income	$ (97)	$ (1,085)	$ 799	$ (908)
Other comprehensive income (loss):
Foreign currency translation adjustment gain (loss)	13	0	(50)	0
Comprehensive income (loss)	(84)	(1,085)	749	(908)
Comprehensive income (loss) attributable to the non-controlling interest	(44)	0	(44)	0
Total comprehensive income (loss)	$ (40)	$ (1,085)	$ 793	$ (908)

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets
Cash	$ 1,944	$ 699
Accounts receivable, current portion	12,201	5,899
Other assets	222	136
Total current assets	14,367	6,734
Accounts receivable, net of current portion	35,963	26,263
Property and equipment, net	378	350
Intangible assets, net	12,469	12,329
Other asset	31	0
Total assets	63,208	45,676
Current liabilities:
Accounts payable	944	750
Accrued expenses	1,044	435
Accrued compensation	54	38
Income taxes	1,404	1,332
Amounts due to related parties	4,000	3,500
Current portion of deferred revenue	9,000	6,000
Current portion of long-term debt	65	59
Total current liabilities	16,511	12,114
Long-term liabilities
Deferred revenue	23,950	16,000
Long term debt	215	219
Deferred income taxes	445	445
Mandatorily redeemable preferred shares	90	90
Total liabilities	41,211	28,868
Stockholders' Equity (Deficiency)
Preferred stock: $0.0001 par value, authorized 150,000,000; no shares issued or outstanding	0	0
Common stock: $0.0001 par value, authorized 250,000,000,000 shares issued and outstanding 19,031,903,710 shares (December 2012 18,507,506,667)	1,904	1,852
Additional paid-in capital	26,569	19,781
Stock subscriptions receivable	(3,400)	(500)
Retained Earnings (Deficit)	(3,937)	(4,780)
Accumulated other comprehensive income	405	455
Total One Horizon Group, Inc. stockholders' equity	21,541	16,808
Non-controlling interest	456	0
Total stockholders' equity	21,997	16,808
Total liabilities and stockholders' equity	$ 63,208	$ 45,676

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4. Property and Equipment, net (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Property And Equipment Net Details
Leasehold improvements	$ 265	$ 265
Motor vehicle	120	120
Equipment	278	177
Property and equipment, gross	663	562
Less accumulated depreciation	(285)	(212)
Property and equipment, net	$ 378	$ 350

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6. Long-term Debt (Tables)

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Long - term liabilities

	June 30			December 31
	2013			2012
Vehicle loan	$	61		$	67
Equipment loan		29			—
Office term loan		190			211
		280			278
Less current portion		(65	)		(59	)
Balance	$	215		$	219

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10. Commitments and Contingencies (Details) (USD $)	Jun. 30, 2013
Commitments And Contingencies Details
2013	$ 36,000
2014	72,000
2015	72,000
2016	72,000
2017	$ 72,000

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10. Commitments and Contingencies (Details Narrative) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Commitments And Contingencies Details Narrative
Rent expense	$ 72,000	$ 49,000

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6. Long-term Debt

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

6. Long-term Debt

Long – term liabilities consist of the following (in thousands)

	June 30			December 31
	2013			2012
Vehicle loan	$	61		$	67
Equipment loan		29			—
Office term loan		190			211
		280			278
Less current portion		(65	)		(59	)
Balance	$	215		$	219

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5. Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Intangible Assets Details
Horizon software	$ 16,575	$ 16,085
ZTE software	493	0
Contractual relationships	885	885
Intangible assets, Gross	17,953	16,970
Less accumulated amortization	(5,484)	(4,641)
Intangible assets, net	$ 12,469	$ 12,329

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9. Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

9. Stock-Based Compensation

Although the Company does not have a formal stock option plan, it issues stock options to directors, employees, advisors, and consultants.

A summary of the Company’s stock options as of June 30, 2013, is as follows:

	Number of	Weighted Average
	Options	Exercise Price
Outstanding at June 30, 2012	216,132,393	$0.0013
Options issued	175,140,000	0.0009
Outstanding at December 31, 2012 and June 30, 2013	391,272,393	$0.0011

The following table summarizes stock options outstanding at June 30, 2013:

	Number	Average	Number	Intrinsic
	Outstanding	Remaining	Exercisable	Value
	at	Contractual	at	at
	June 30,	Life	June 30,	June 30,
Exercise Price	2013	(Years)	2013	2013
$0.0009	3,448,507	2.33	3,448,507	$   45,175
0.0009	175,140,000	7.00	175,140,000	2,294,334
0.0009	175,140,000	9.50	-	-
0.0030	17,833,456	1.83	17,833,456	196,168
0.0033	19,710,430	3.00	7,193,588	210,902

At June 30, 2013, 391,272,393 shares of common stock were reserved for outstanding options.

The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of the options granted were: risk-free interest rate of 5.0%, a 3 year expected life, a dividend yield of 0.0%, and a stock price volatility factor of 40%

There were no options issued or exercised during the six months ended June 30, 2013 and 2012 

In May 2013, the Company signed an amendment to its agreement with an investor relations firm, pursuant to which the Company issued the firm a warrant to purchase up to 37,526,065 shares of the Company’s Common Stock, subject to vesting, at an exercise price of $0.012 per share, with 7.505,213 shares vesting on each of May 1, 2013, October 15, 2013, January 15, 2014 and April 14, 2014. Exercise of the warrants is also subject to certain performance metrics set forth in the warrant. The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model. The warrants were valued at roughly $247,000. The assumptions used in calculating the fair value of the options granted were: risk-free interest rate of 5.0%, a 2.5 year expected life, a dividend yield of 0.0%, and a stock price of volatility factor of 89%

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5. Intangible Assets

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

5. Intangible Assets

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

	June 30			December 31
	2013			2012
Horizon software	$	16,575		$	16,085
ZTE software		493			—
Contractual relationships		885			885
		17,953			16,970
Less accumulated amortization		(5,484	)		(4,641	)
Intangible assets, net	$	12,469		$	12,329

Amortization of intangible assets for each of the next five years is estimated to be $1,600,000 per year

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash provided by (used in) operating activities:
Net income (loss) for the period	$ 843	$ (908)
Adjustment to reconcile net income (loss) for the period to net cash provided by (used in) operating activities:
Depreciation of property and equipment	75	818
Amortization of intangible assets	850	1,043
Common stock issued for services received	593	0
Warrants issued for services	247	0
Net income (loss) attributable to non-controlling interest	(44)	0
Changes in operating assets and liabilities net of effects of acquistions:
Accounts receivable	(16,047)	(20,368)
Other assets	(86)	(22)
Accounts payable and accrued expenses	819	(288)
Deferred revenue	10,950	16,600
Income taxes	72	163
Net cash provided by (used in) operating activities	(1,728)	(2,962)
Cash used in investing activities:
Acquisition of intangible assets	(494)	(2,263)
Acquisition of property and equipment	(104)	(28)
Investments	(31)	0
Net cash (used in) investing activities	(629)	(2,291)
Cash flow from financing activities:
Increase (decrease) in long-term borrowing, net	2	(815)
Proceeds from issuance of common stock	3,100	5,750
Advances from related parties, net of repayment	500	0
Net checks issued in excess of funds	0	(53)
Net cash provided by (used in) financing activities	3,602	4,882
Increase (Decrease) in cash during the period	1,245	(371)
Cash at beginning of the period	699	371
Cash at end of the period	1,944	0
Non-cash transactions:
Common stock issued for subscription receivable	2,900	0
Contribution of software for non-controlling interest	$ 500	$ 0

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8. Share Capital (Details)	Jun. 30, 2013
Warrants A
Number of warrants	700,560,000
Exercise Price	0
Expiry	no expiry date
Warrants B
Number of warrants	70,056,000
Exercise Price	0.0014
Expiry	no expiry date
Warrants C
Number of warrants	241,935,483
Exercise Price	0.0124
Expiry	January 2018
Warrants D
Number of warrants	37,526,065
Exercise Price	0.012
Expiry	May 2018

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2. Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Basis of Accounting and Presentation

These consolidated and combined financial statements have been prepared in conformity with accounting principles generally accepted in the United States. The financial position, results of operations and cash flows of the Company as of and for the six months ended June 30, 2012 have been derived from the Company’s historical accounting records and are presented as a combined group. The combined financial statements do not include revenues, expenses, assets and liabilities of the former Satcom Global business which was operated through separate corporate subsidiaries. Management of the Company considers the basis on which the expenses have been allocated to the combined group to be a reasonable reflection of the utilization of the services provided to or received from during the periods presented.

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

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

Cash

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

Accounts Receivable

Accounts receivable result primarily from sale of software and licenses to customers and are recorded at their principal amounts. Receivables are considered past due once they exceed the terms of the sales transaction. When necessary, the Company provides an allowance for doubtful accounts that is based on a review of outstanding receivables, historical collection information, and current economic conditions. There was an allowance of $218,000 and $218,000 for doubtful accounts at both June 30, 2013 and December 31, 2012. Receivables are generally unsecured. Account balances are charged off against the allowance when the Company determines it is probable the receivable will not be recovered. The Company does not have off-balance sheet credit exposure related to its customers. At June 30, 2013 and December 31, 2012, three customers accounted for 25% and 33%, respectively, of the accounts receivable balance. Long-term payment terms for Master Licenses are provided to customers on an interest free basis, typically over five years. 

Payments due from customers beyond one year are recorded as long term at their net present value, to the extent revenue has been recorded, as described. Accounts receivable includes amounts that are due for which revenue has not been recognized. Such amounts are recorded as deferred income, classified as current or long term liabilities, based on the expectation of revenue to be recognized and collections to be received.

Property and Equipment

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

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

Fair Value Measurements

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

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

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

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

Intangible Assets

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

The Company expenses all costs related to the development of internal-use software as incurred, other than those incurred during the application development stage, after achievement of technological feasibility. Costs incurred in the application development stage are capitalized and amortized over the estimated useful life of the software. Internally developed software costs are amortized on a straight-line basis over the estimated useful life of the software. The Company performs periodic reviews of its capitalized software development costs to determine if the assets have continuing value to the Company. Costs for assets that are determined to be of no continuing value are written off. During the six months ended June 30, 2013 and 2012, software development costs of $494,000, and $770,000, respectively, have been capitalized.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. During the six months ended June 30, 2013 and 2012, the Company identified no impairment losses related to the Company’s long-lived assets.

Revenue Recognition

The Company recognizes revenue when it is realized or realizable and earned. The Company establishes persuasive evidence of a sales arrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred or services have been rendered, price is fixed and determinable, and collectability is reasonably assured.

· Software and licenses – revenue from sales of perpetual licenses to top-tier telecom entities is recognized at the inception of the arrangement, presuming all other relevant revenue recognition criteria are met. Revenue from sales of perpetual licenses to other entities is recognized over the agreed collection period. The Company regards a “top-tier” telecom entity as a tier 1 carrier which has a direct connection to the Internet and the networks it uses to deliver voice and data services as well as a financially strong balance sheet and good credit rating..

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

We enter into arrangements in which a customer purchases a combination of software licenses, maintenance services and post-contract customer support (“PCS”). As a result, judgment is sometimes required to determine the appropriate accounting, including how the price should be allocated among the deliverable elements if there are multiple elements. PCS may include rights to upgrades, when and if available, support, updates and enhancements. When vendor specific objective evidence (“VSOE”) of fair value exists for all elements in a multiple element arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values of various elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price between deliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elements such as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In the absence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to the residual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit of accounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No sales arrangements to date include undelivered elements for which VSOE does not exist.

For the purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption that revenue is recognized pro rata over the collection period, typically over five years. For sales to top-tier customers, this presumption is overcome by the customers’ commitment to pay, as demonstrated by its payment history and its ability to pay. Payment terms are extended to customers on an interest-free basis for Master License sales. For revenue recognized in advance of payments due, the Company provides for a discount against the revenue recorded, which is adjusted to the net present value of the cash flows expected over the payment terms imputing interest at an appropriate rate, when the terms exceed one year.

Deferred Revenue

The Company sells software and licenses on deferred payment terms, typically over five years. For those sales to customers which the Company does not consider to be top-tier telecom entities, the revenue is recognized over the collection period. Contracts are considered legally binding agreements. On execution, the Company records the full amount receivable from the customer for the Master License, including an allocation to current and long-term positions. The amount of the receivable that is not recognized as revenue is included in deferred revenue.

Leases

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

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

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

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

Advertising Expenses

It is the Company’s policy to expense advertising costs as incurred. No advertising costs were incurred during each of the six months ended June 30, 2013 and 2012.

Research and Development Expenses

Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, related to the development of new products, significant enhancements to existing products, and the portion of costs of development of internal-use software required to be expensed.  Research and development costs are charged to operations as incurred with the exception of those software development costs that may qualify for capitalization. The Company incurred no research and development costs in the six months ended June 30, 2013 and 2012, respectively.

Income Taxes

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

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

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

Net Income per Share

Basic earnings per share of common stock is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted earnings per share of common stock reflects the maximum potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and would then share in the net income of the company. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations. (in thousands)

	June 30
	Three months				Six months
	2013		2012		2013		2012
Basic		19,005,382		13,341,435		18,867,426		13,331,726
Incremental shares under stock compensation plans		1,486,946		916,692		1,411,820		916,692
Incremental shares connected with previously converted promissory notes		250		—		250		—
Potentially dilutive		20,492,578		14,258,127		20,279,496		14,248,418

Accumulated Other Comprehensive Income (Loss)

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

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing for long-lived assets, determination of the fair value of stock options and warrants, 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.

Financial Instruments

The Company has the following financial instruments: cash and long-term debt. The carrying value of these financial instruments approximates their fair value due to their liquidity or their short-term nature valued consistent with the use of level 2 inputs.

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 valuation model, which is consistent with the Company’s valuation techniques previously utilized for options in footnote disclosures.

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8. Share Capital

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

8. Share Capital

Preferred Stock

The Company’s authorized capital includes 150,000,000 shares of preferred stock of $0.0001 par value. The designation of rights including voting powers, preferences, and restrictions shall be determined by the Board of Directors before the issuance of any shares.

No shares of preferred stock are issued and outstanding as of June 30, 2013, and December 31, 2012.

Mandatorily Redeemable Preferred Shares (Deferred Stock)

The Company’s subsidiary OHG is authorized to issue 50,000 shares of deferred stock, par value of £1.These shares are non-voting, non-participating, redeemable and have been presented as a long-term liability. 

Common Stock

The Company is authorized to issue 250 billion shares of common stock, par value of $0.0001. 

During the six months ended June 30, 2013, the Company:

• issued 3,000,000 shares of common stock for services received with a fair value of $30,000.

• issued 37,526,065 shares of common stock for services received with a fair value of $562,891.

• issued 483,870,968 shares of common stock for subscription receivable of $6 million, of which $3.1 million was collected as of June 30, 2013. The outstanding balance is secured by a pledge of the shares, pro-rata to amount owing, and carries an interest rate of 3%.

During the six months ended December 31, 2012, the Company:

· issued 117,343,800 shares of common stock for cash proceeds of $502,000

· issued 875,700,000 shares of common stock for subscription receivable of $500,000.

· issued 2,101,680,000 shares of common stock for services received from related parties with a fair value of $1,200,000

· issued 87,570,000 shares of common stock for services received with a fair value of $50,000

· accounted for the reverse acquisition of Intelligent Communication Enterprise Corporation and subsidiaries and the issued 696,030,538 shares of common stock with a fair value of $341,000.

· returned to treasury for cancellation 42,000,000 shares of common stock with a fair value of $420,000 being proceeds received on the disposal of shares of Global Interactive Media Limited and the Modizo business.

Stock Purchase Warrants

At June 30, 2013, the Company had reserved 1,050,077,548 shares of its common stock for the following outstanding warrants:

Number of Warrants	Exercise Price	Expiry
700,560,000	$  nil	no expiry date
70,056,000	0.0014	no expiry date
241,935,483	0.0124	January 2018
37,526,065	0.012	May 2018

There were 279,461,548 warrants issued and none exercised during the six months ended June 30, 2013.

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5. Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

	June 30			December 31
	2013			2012
Horizon software	$	16,575		$	16,085
ZTE software		493			—
Contractual relationships		885			885
		17,953			16,970
Less accumulated amortization		(5,484	)		(4,641	)
Intangible assets, net	$	12,469		$	12,329

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2. Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2013

Summary Of Significant Accounting Policies Tables

Net Income per Share

	June 30
	Three months				Six months
	2013		2012		2013		2012
Basic		19,005,382		13,341,435		18,867,426		13,331,726
Incremental shares under stock compensation plans		1,486,946		916,692		1,411,820		916,692
Incremental shares connected with previously converted promissory notes		250		—		250		—
Potentially dilutive		20,492,578		14,258,127		20,279,496		14,248,418

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 13, 2013
Document And Entity Information
Entity Registrant Name	One Horizon Group, Inc.
Entity Central Index Key	0000225211
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		18,941,967,819
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2013

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4. Property and Equipment, net (Tables)

6 Months Ended

Jun. 30, 2013

Property, Plant and Equipment [Abstract]

Property and equipment

	June 30			December 31
	2013			2012
Leasehold improvements	$	265		$	265
Motor vehicle		120			120
Equipment		278			177
		663			562
Less accumulated depreciation		(285	)		(212	)
Property and equipment, net	$	378		$	350