RISK FACTORS

An investment in our common stock involves a high degree of risk. Before deciding whether to invest in our securities, you should consider carefully the risks described below and all other information in this prospectus and under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on April 2, 2018, which is incorporated by reference in this prospectus, as well as any updates thereto contained in subsequent filings with the SEC, and in any free writing prospectus that we have authorized for use in connection with this offering. If any of these risks actually occur, our business, financial condition and results of operations could be seriously harmed. This could cause the trading price of our common stock to decline, resulting in a loss of all or part of your investment.

RISKS ASSOCIATED WITH OUR BUSINESS AND INDUSTRY

During 2017, we restructured our business operations and our efforts have been focused recently on acquiring entertainment and gaming properties. We are unlikely to generate significant revenues until we complete such acquisitions and integrate their businesses into our company. The failure to successfully integrate the businesses of these entertainment and gaming properties and establish market acceptance of these entertainment and gaming properties, would significantly harm our business.

In August 2017, we sold a portion of our existing business operations. Until recently, we were seeking to acquire businesses in the gaming, security and educational markets. We recently acquired C-Rod, Inc. and a controlling interest in each of Once In A Lifetime LLC and Banana Whale Studios Pte Ltd. We are unlikely to generate significant revenues until we integrate their operations into our company.

We expect that these recently acquired entertainment and gaming properties will account for a majority of our revenue for the foreseeable future. Broad market acceptance of these businesses is, therefore, critical to our future success and our ability to continue to generate revenues. Failure to achieve broad market acceptance of these entertainment and gaming properties as a result of competition, technological change, or otherwise, would significantly harm our business. Our future financial performance will depend primarily on the continued market acceptance of our entertainment and gaming properties and on the development, introduction and market acceptance of any future enhancements to those properties. There can be no assurance that we will be successful in marketing our entertainment and gaming properties, and any failure to do so would significantly harm our business.

We may be unable to effectively manage our planned expansion.

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

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

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

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

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

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

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

We operate in a fast-evolving industry, which may make it difficult to evaluate our business and prospects.

We recently acquired C-Rod, Inc. and a controlling interest in Once In A Lifetime LLC and Banana Whale Studios Pte Ltd. Our future success depends in part on our ability to anticipate customer demands, expand and enhance our entertainment and gaming offerings and adapt to technological advances on a timely and cost-effective basis. Further, our entertainment and gaming properties must remain competitive with those of other companies with substantially greater resources. We may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new entertainment offerings or enhanced versions of existing entertainment and gaming offerings. Also, we may not be able to adapt new or enhanced services to emerging industry standards, and our new entertainment and gaming offerings may not be favorably received. We cannot assure you that we will be profitable every year. We expect that our operating expenses will increase as we expand. Any significant failure to realize anticipated revenue growth could result in operating losses.

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

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

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

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

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

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

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

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

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

We could lose our competitive advantages if we are not able to protect any proprietary technology and intellectual property rights against infringement, and any related litigation could be time-consuming and costly.

Our success and ability to compete depends to a significant degree on our proprietary technology incorporated in our software. If any of our competitors’ copies or otherwise gains access to our proprietary technology or develops similar technologies independently, we would not be able to compete as effectively. The measures we take to protect the proprietary technology software, and other intellectual property rights, which presently are based upon a combination of patents, patents pending, copyright, trade secret and trademark laws, may not be adequate to prevent their unauthorized use. Further, the laws of foreign countries may provide inadequate protection of such intellectual property rights.

We may need to bring legal claims to enforce or protect such intellectual property rights. Any litigation, whether successful or unsuccessful, could result in substantial costs and divert resources from intended uses. In addition, notwithstanding any rights we have secured in our intellectual property, other persons may bring claims against us that we have infringed on their intellectual property rights, including claims based upon the content we license from third parties or claims that our intellectual property right interests are not valid. Any claims against us, with or without merit, could be time-consuming and costly to defend or litigate, divert our attention and resources, result in the loss of goodwill associated with our service marks or require us to make changes to our website or other of our technologies.

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

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

Our strategy with respect to our intellectual property is to patent our core software concepts wherever possible. All of our software is developed “in-house,” and then licensed to our customers. We take steps, including by contracts, to ensure that any changes, modifications or additions to the secure messaging platform requested by our customers remain the sole intellectual property of our company. However, our efforts in this regard may be inadequate to deter misappropriation of our proprietary information or we may be unable to detect unauthorized use and take appropriate steps to enforce our rights. Policing unauthorized use of our intellectual property is difficult and there can be no assurance that the steps taken by us will prevent misappropriation of our intellectual property.

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

RISK ASSOCIATED WITH PENDING LITIGATION  

Our largest stockholder has commenced a lawsuit against us and our directors in the Delaware Chancery Court for refusing to appoint four individuals he claims to have the right to designate as members of our Board of Directors and failing to obtain his consent to the recent acquisitions we have made and the issuances of shares in connection with those acquisitions and certain other transactions.

On May 30, 2018, Zhanming Wu (“Wu”), the record owner of 15,000,000 shares of our common stock, then representing approximately 29.2% of our outstanding shares, commenced an action in the Court of Chancery of the State of Delaware against us and our directors and officers (collectively, the “Director Defendants”) (i) to enjoin us and our affiliates from issuing, offering, selling or granting any shares of our common stock to any person or entity, or consummate any merger, acquisition or similar transaction (each, a “Transaction”) without the prior approval of Mr. Wu (the “Blockage Rights”), and to prevent the Individual Defendants from undermining that right by engaging in any further transactions designed to entrench themselves as directors and officers of our company and to dilute Mr. Wu’s stock ownership below 30% of our outstanding shares, (ii) to enforce Mr. Wu’s right to appoint four directors to our Board of Directors, (iii) to rescind the issuance of 7,383,000 shares to the former stockholders of Banana Whale Studios Pte. Ltd (“Banana Whale”) in exchange for 51% of the outstanding shares of Banana Whale (the “Banana Whale Acquisition”), (iv) to obtain a declaration that the Individual Defendants have breached their fiduciary duty of loyalty by taking actions to entrench themselves on our Board of Directors; and (v) seeking an award of attorneys’ fees and costs in connection with the litigation and such other relief as the Court deems fair and equitable.

Mr. Wu is allegedly the Chairman and majority stockholder of Dachao Asset Management (Shangai) Co., Ltd (“Dachao”) which purchased $3,500,000 principal amount of our 7% Series A Convertible Debentures in 2014 (the “Debentures”). Mr. Wu claims that as assignee of the Debentures for which he received 13,000,000 shares of common stock plus a promissory note in the principal amount of $500,000 pursuant to an agreement dated September 4, 2017, in settlement of our obligations in respect of the Debentures (the “Debenture Conversion Letter”), he is entitled to the Blockage Rights, which we granted Dachao, as long as he continues to beneficially own 30% of the outstanding shares of common stock. The Debenture Conversion Letter also granted Mr. Wu the right to appoint up to four members of our Board of Directors as long as he continues to beneficially own 30% of the outstanding shares of common stock.

We dispute the validity and applicability of the claims asserted by Wu and believe that we have meritorious defenses to those claims and we intend to contest the action vigorously. We also are considering affirmative defenses and the assertion of counterclaims against Mr. Wu.

On June 14, 2018, we filed a motion to dismiss the claims asserted by Mr. Wu against us and our directors in the lawsuit as we believe the same are without merit.

If Mr. Wu is successful in asserting his right to pre-approve issuances of our shares and certain transactions and/or to appoint a significant number of the members of our Board of Directors, it may become more difficult for us to obtain funds to operate our newly acquired businesses and implement our business plan. Moreover, if Mr. Wu is successful in appointing four members of our Board of Directors, we cannot assure you that we will continue to seek to execute the business plan developed by our current management.

RISKS ASSOCIATED WITH OUR COMMON STOCK

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

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

We have identified material weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future. If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud, or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.

Our management is responsible for establishing and maintaining adequate internal controls over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Though we have substantially improved our corporate governance and internal controls policies, we have identified material weakness in our internal controls with respect to a lack of in-house U.S. GAAP expertise. We will continue to take steps to remediate this material weakness and to improve our control process and procedures with respect to U.S. GAAP expertise and in general as part of our continuing efforts to become compliant with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. However, there is no assurance as to whether and when we will establish effective internal controls over our financial reporting.

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

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

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

Our shares of common stock are currently listed on The NASDAQ Capital Market. If we fail to meet the requirements for continued listing on The NASDAQ Capital Market, The NASDAQ Capital Market may take steps to de-list our common stock. Such a de-listing would likely have a negative effect on the price of our common stock and would impair our stockholders’ ability to sell or purchase our common stock when they wish to do so.

On May 10, 2018, we received a written alert from NASDAQ Listing Qualifications that our closing bid price for the last 30 consecutive businesses was less than $1 per share. As a result, we are below the continued listing requirement to maintain a minimum bid price of $1 per share as set forth in NASDAQ Listing Rule 5550(a)(2). However, NASDAQ Listing Rule 581(c)(3)(A) provides us a compliance period of 180 calendar days to regain compliance. If at any time during this 180 days period the closing bid price of our common stock is at least $1 for a minimum of ten consecutive business days, we will regain compliance.

In the event of a de-listing, we would take actions to restore our compliance with The NASDAQ Capital Market’s listing requirements, but we can provide no assurance that any action taken by us would result in our common stock becoming listed again, or that any such action would stabilize the market price or improve the liquidity of our common stock.

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

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

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

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