As
filed with the Securities and Exchange Commission on November __, 2017
Registration
No. 333-_______
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
ONE
HORIZON GROUP, INC.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or other jurisdiction of incorporation or organization)
46-3561419
I.R.S.
Employer Identification Number
34
South Molton Street, London W1K 5RG, United Kingdom
+44(0)20
7409 5248
(Address,
including zip code, and telephone number, including area code of registrant’s principal executive offices)
Martin
Ward
34
South Molton Street, London W1K 5RG, United Kingdom
+44(0)20
7409 5248
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
to:
Vincent
J. McGill, Esq.
Eaton
& Van Winkle LLP
3
Park Avenue, 16
th
floor
New
York, New York 10016
Phone:
(212) 561-3604
Fax:
(212) 779-9928
E-mail:
vmcgill@evw.com
Approximate
date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.
If
the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please
check the following box: ☐
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plants, check
the following box: ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become
effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☐
If
this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register
additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following
box. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large
accelerated filer ☐
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Accelerated
filer ☐
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Non-accelerated
filer ☐
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Smaller
reporting company ☒
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(Do not
check if a
smaller reporting company)
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Emerging
growth company ☐
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. ☐
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CALCULATION
OF REGISTRATION FEE
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Title
of each class of
securities to be registered
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Amount
to be
registered(1)
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Proposed
maximum
offering price
per share(2)
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Proposed
maximum
aggregate
offering price(2)
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Amount
of
registration fee(2)
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Common Stock, par value
$0.001 per share
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941,667
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$
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1.05
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$
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988,750.35
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$
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123.09
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(1)
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Pursuant to Rule
415 under the Securities Act of 1933, as amended (the “Securities Act”), this registration statement shall be
deemed to cover an indeterminate number of additional securities to be offered as a result of stock splits, stock dividends
or similar transactions. The shares may be offered for resale by the selling stockholders pursuant to the shelf prospectus
contained herein.
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(2)
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Estimated solely
for the purpose of computing the amount of the registration fee pursuant to Rule 457(c) under the Securities Act, based on
an average of the high and low reported sales prices of the registrant’s shares of common stock, as reported on the
NASDAQ Capital Market on October 27, 2017 of $1.08 and $1.02, respectively.
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The
registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. The selling stockholder may not sell these securities under
this prospectus until the registration statement of which it is a part and filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS, SUBJECT TO COMPLETION, DATED NOVEMBER __, 2017
ONE
HORIZON GROUP, INC.
941,667
Shares of Common Stock
This
prospectus relates to the resale by Bespoke Growth Partners, Inc. (“Bespoke” or the “Selling Stockholder”)
of up to 941,667 shares of common stock (the “Shares”) of One Horizon Group, Inc. (the “Company”), including
833,334 shares issuable upon exercise of warrants (the “Warrants”), issued pursuant to a Consulting Agreement dated
October 17, 2017. The Warrants are exercisable until December 31, 2017 at an exercise price of $0.60 per share.
The
Selling Stockholder may sell the Shares from time to time on the principal market on which the stock is traded at the prevailing
market price or in negotiated transactions.
We
will not receive any of the proceeds from the sale of the Shares by the Selling Stockholder; however we will receive the proceeds
from the exercise of the warrants. We will pay the expenses of registering the Shares.
Investing
in our common stock involves a high degree of risk. You should consider carefully the risk factors beginning on page 5 of this
prospectus before purchasing any of the shares offered by this prospectus.
Our
common stock is listed on the NASDAQ Capital Market under the symbol “OHGI”.
The
last reported sale price of our common stock on the NASDAQ Capital Market on November 1, 2017 was $1.13 per share.
We
may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the
entire prospectus and any amendments or supplements carefully before you make your investment decision.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is _________, 2017.
TABLE
OF CONTENTS
This
prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the common stock
offered by this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any common
stock in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale
made in connection with this prospectus shall, under any circumstances, create any implication that there has been no change in
our affairs since the date of this prospectus or that the information contained by reference to this prospectus is correct as
of any time after its date.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus, any free writing prospectus we authorize to be delivered to you in connection with this offering and the documents
we have filed with the Securities and Exchange Commission that are incorporated herein by reference include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21B of the Securities
Exchange Act of 1934, as amended, or the Exchange Act.
Words
such as “may,” “should,” “anticipate,” “estimate,” “expect,” “projects,”
“intends,” “plans,” “believes” and words and terms of similar substance used in connection
with any discussion of future operating or financial performance, identify forward-looking statements. Forward-looking statements
represent management’s present judgment regarding future events and are subject to a number of risks and uncertainties that
could cause actual results to differ materially from those described in the forward-looking statements. These risks include, but
are not limited to, risks and uncertainties relating to our current cash position and our need to raise additional capital in
order to be able to continue to fund our operations; the potential delisting of our common stock from The NASDAQ Capital Market;
our ability to retain our managerial personnel and to attract additional personnel; competition; our ability to protect intellectual
property rights, and any and other factors, including the risk factors identified in the documents we have filed, or will file,
with the Securities and Exchange Commission. Please also see the discussion of risks and uncertainties under the caption “Risk
Factors”, beginning on page __ of this prospectus.
In
light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained
in this prospectus or in any document incorporated herein by reference might not occur. Investors are cautioned not to place undue
reliance on the forward-looking statements, which speak only as of the respective dates of this prospectus or the date of the
document incorporated by reference in this prospectus. We expressly disclaim any obligation to update or alter any forward-looking
statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws.
You
should rely only on the information contained in or incorporated by reference in this prospectus and any freewriting prospectus
we have authorized to be delivered to you in connection with this offering. We have not authorized anyone to provide you with
information that is different. The information contained or incorporated by reference in this prospectus and any free writing
prospectus we authorize to be delivered to you in connection with this offering is accurate only as of the respective dates thereof,
regardless of the time of delivery of this prospectus or any such free writing prospectus or of any sale of our securities offered
hereby. It is important for you to read and consider all information contained in this prospectus and any free writing prospectus
we authorize to be delivered to you in connection with this offering, including the documents incorporated by reference therein,
in making your investment decision. You should also read and consider the information in the documents to which we have referred
you under the captions “Where You Can Find More Information” and “Incorporation of Certain Information by Reference”
in this prospectus.
Unless
we have indicated otherwise, or the context otherwise requires, references in this prospectus supplement and the accompanying
prospectus to the “Company,” “One Horizon” “we,” “us” and “our” refer
to One Horizon Group Inc. and its subsidiaries.
PROSPECTUS
SUMMARY
This
summary highlights selected information contained elsewhere or incorporated by reference in this prospectus. This summary does
not contain all the information you should consider before investing in our securities. You should prospectus, including
the factors described under the heading “Risk Factors” in this prospectus on page __ and the financial and other information
incorporated by reference in this prospectus, as well as the information included in any free writing prospectus that we have
authorized for use in connection with this offering, before making an investment decision.
Overview
The
Company is based primarily in Hong Kong and China and holds the intellectual property and promotes and licenses secure messaging
software for the growing gaming, security and education markets, primarily in Southeast Asia.
Recent
Developments
Restructuring
Transactions
On
August 11, 2017, we consummated a Stock Purchase Agreement pursuant to which Brian Collins, our former Chief Executive Officer,
acquired all of the outstanding capital stock of three of our subsidiaries, Abbey Technology GmbH, Horizon Globex GmbH, and Horizon
Globex Ireland Ltd., and approximately 99.7% of the outstanding shares in One Horizon Group PLC from us in consideration for the
forgiveness of approximately $2,000,000 of indebtedness to him. At the closing of the sale, Mr. Collins resigned from all positions
held with us and our remaining subsidiaries and affiliated entities.
On
August 18, 2017, Martin Ward, our Chief Financial Officer, converted $662,048 of indebtedness to him into 859,802 shares of our
common stock.
On
September 4, 2017, we entered into an agreement with Zhanming Wu, the owner of our 8% Series A Convertible Debentures in the principal
amount of $3,500,000 (the “Debentures”), pursuant to which Mr. Wu agreed that he would not demand payment of the Debentures
on or prior to October 1, 2017, in consideration for the right to convert $3,000,000 of the outstanding Debentures, together with
all accrued but unpaid interest on the entire principal amount of the Debentures, which as of September 30, 2017 equaled approximately
$350,000.00, into 13,000,000 shares of our common stock at any time on or before January 31, 2018. In addition, upon conversion
of the $3,000,000 portion of the Debentures, the balance of the Debentures will be deemed cancelled and we will issue to Mr. Wu
our $500,000 promissory note bearing interest at the rate of 7% per annum payable on August 31, 2019. The issuance of the shares
to Mr. Wu has been approved by written consent of stockholders owning a majority of our outstanding shares in accordance with
applicable rules of NASDAQ since the number of shares to be issued to Mr. Wu at the time we entered into the agreement with Mr.
Wu was in excess of 20% of the then outstanding shares of our common stock. The shares may not be issued until the twenty-first
day after we mail an Information Statement to our stockholders notifying them of the issuance (the “Information Statement”).
We have filed a preliminary Information Statement with the SEC and expect to mail the Information Statement to Stockholders on
or about November 6, 2017.
On
September 4, 2017, we entered into an agreement with Mark White, the owner of 555,555 shares of our Series A-1 Convertible Preferred
Stock, representing all of the Series A-1 Convertible Preferred Stock currently outstanding (the “Preferred Shares”),
pursuant to which we agreed to redeem the Preferred Shares for 4,000,000 shares of our common stock. In addition to the shares
issuable to Mr. White for the Preferred Shares, he will receive a $500,000 promissory note identical to the note issued to Mr.
Wu. The issuance of the shares to Mr. White has been approved by written consent of stockholders owning a majority of our outstanding
shares in accordance with applicable rules of NASDAQ since the number of shares to be issued to Mr. White, together with the shares
to be issued to him as an inducement to his employment as our President and Chief Executive Officer, described below, at the time
we entered into the agreement with Mr. White, was in excess of 20% of the then outstanding shares of our common stock. The shares
may not be issued until the twenty-first day after we mail the Information Statement to our stockholders notifying them of the
issuance.
Appointment
of New Chief Executive Officer and Chief Operating Officer
On
September 8, 2017, we appointed Mark White as our President and Chief Executive Officer. Mr. White served as our Chief Executive
Officer from November 30, 2012 to July 24, 2014. In connection with his appointment, we issued 1,600,000 shares to Mr. White
as an inducement grant. The issuance of the shares to Mr. White has been approved by written consent of stockholders owning a
majority of our outstanding shares in accordance with applicable rules of NASDAQ since the number of shares to be issued to Mr.
White, together with the shares to be issued to him in exchange for the Preferred Shares, described above, at the time we entered
into an employment agreement with Mr. White, was in excess of 20% of the then outstanding shares of our common stock. The shares
may not be issued until the twenty-first day after we mail the Information Statement to our stockholders notifying them of the
issuance.
On
September 4, 2017, we appointed Edwin Lun as our Chief Operating Officer. Mr. Lun will oversee our business development and operations
in China and Hong Kong. In connection with his appointment, we issued 1,400,000 shares to Mr. Lun as an inducement grant. We have
opened a regional headquarters’ office in Hong Kong.
Corporate
Information
Our
principal executive offices are located at 34 South Molton Street, London W1K 5RG, United Kingdom, and our telephone number at
that location is +44(0)20 7409 5248. The URL for our website is www.onehorizongroup.com. The information contained on or connected
to our website is not incorporated by reference into, and you must not consider the information to be a part of, this prospectus.
The
Offering
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Shares
Offered
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941,667
shares of common stock offered by Bespoke Growth Partners, Inc.
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Shares
Outstanding
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27,826,510
shares of common stock (1)(2)
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Use
of Proceeds
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We
will not receive any proceeds from the sale of the Shares offered by this prospectus;
however we will receive the proceeds from the exercise of the Warrants which will be
used for general corporate purposes and as working Capital. See “Use of Proceeds.”
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Listing
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Our common stock
is listed on the Nasdaq Capital Market under the trading symbol “OHGI.”
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Plan
of Distribution
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The
Selling Stockholder may sell the Shares from time to time on the principal market on
which the stock is traded at the prevailing market price or in negotiated transactions.
See “Plan of Distribution.”
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Risk
Factors
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You
should carefully read and consider the information set forth or described under “Risk
Factors” in this prospectus and all other information contained or incorporated
by reference in this prospectus.
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(1)
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Does
not include (i) 833,334 shares which the Selling Stockholder may acquire upon exercise
of the Warrants, (ii) 578,014 shares which may be acquired upon exercise of other outstanding
warrants and (iii) 109,050 shares upon exercise of outstanding options.
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(2)
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Gives
effect to the issuance of 13,000,000 shares to Zhanming Wu in exchange for $3,000,000
of Debentures, 4,000,000 shares to Mark White in exchange for the Preferred Shares and
1,600,000 shares to Mark White as an inducement to his employment was President and Chief
Executive Officer. See Prospectus Summary --“Recent Developments.”
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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 the information and documents incorporated
by reference, 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
We
incurred a net loss in 2016 and 2015 and may not be able to continue as a going concern.
We
incurred a net loss of $5.5 million for the year ended December 31, 2016 and a net loss of $6.3 million for the year ended December
31, 2015 and net cash flows from operations in each of those years. The report of our independent registered public accountants
on our financial statements for the year ended December 31, 2016 states that these factors raise substantial doubt about our ability
to continue as a going concern.
Unless
we can establish broad market acceptance of our products, our potential revenues may be significantly reduced.
We
expect that a substantial portion of our future revenue will be derived from the sale of our software products. We expect that
these product offerings and their extensions and derivatives will account for a majority of our revenue for the foreseeable future.
Broad market acceptance of our software products is, therefore, critical to our future success and our ability to continue to
generate revenues. Failure to achieve broad market acceptance of our software products 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 current software product offerings and on the development, introduction and market acceptance of any
future enhancements. There can be no assurance that we will be successful in marketing our current product offerings or any new
product offerings, applications or enhancements, and any failure to do so would significantly harm our business.
We
are seeking to acquire businesses in the gaming, security and educational markets primarily in Southeast Asia and until will do
we are unlikely to generate significant revenues.
In
August 2017 we sold a portion of our existing business operations. We are seeking to acquire businesses in the gaming, security
and educational markets primarily in Southeast Asia. We are unlikely to generate significant revenues until we complete such acquisitions.
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
own the intellectual property and license secure messaging software to the gaming, security and educational markets primarily
in Southeast Asia. Our future success may depend on our ability to adapt to technological advances, anticipate customer demands,
develop new products and enhance our current products on a timely and cost-effective basis. Further, our products 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 products or enhanced versions of existing products.
Also, we may not be able to adapt new or enhanced services to emerging industry standards, and our new products 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.
Our
operations and managements 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
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. We also consider our family of registered and unregistered trademarks
such as SmartPackets invaluable to our ability to continue to develop and maintain the goodwill and recognition associated with
our brand. 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.
Our
products must interoperate with many different networks, software applications and hardware products, and this interoperability
will depend on the continued prevalence of open standards.
Our
products are designed to interoperate with our customers’ existing and planned networks, which have varied and complex specifications,
utilize multiple protocol standards, software applications and products from numerous vendors and contain multiple products that
have been added over time. As a result, we must attempt to ensure that our products interoperate effectively with these existing
and planned networks. To meet these requirements, we have and must continue to undertake development and testing efforts that
require significant capital and employee resources. We may not accomplish these development efforts quickly or cost-effectively,
or at all. If our products do not interoperate effectively, installations could be delayed or orders for our products could be
cancelled, which would harm our revenue, gross margins and our reputation, potentially resulting in the loss of existing and potential
customers. The failure of our products to interoperate effectively with our customers’ networks may result in significant
warranty, support and repair costs, divert the attention of our engineering personnel from our software development efforts and
cause significant customer relations problems.
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, Edwin Lun, our Chief Operating Officer, and Chief Financial Officer,
Martin Ward.
Our
continued success is therefore dependent to a large extent on our ability to retain the services of these key management personnel.
The loss of their services without timely and qualified replacement, would adversely affect our operations and hence, our revenue
and profits.
We
may not have sufficient insurance coverage and an interruption of our business or loss of a significant amount of property could
have a material adverse effect on our financial condition and operations.
We
currently do not maintain any insurance policies against loss of key personnel and business interruption as well as product liability
claims. If such events were to occur, our business, financial performance and financial position may be materially and adversely
affected.
We
may be unable to adequately safeguard our intellectual property or we may face claims that may be costly to resolve or that limit
our ability to use such intellectual property in the future.
Our
business is reliant on our intellectual property. Our Horizon platform and software application is the result of our research
and development efforts, which we believe to be proprietary and unique. However, we are unable to assure you that third parties
will not assert infringement claims against us in respect of our intellectual property or that such claims will not be successful.
It may be difficult for us to establish or protect our intellectual property against such third parties and we could incur substantial
costs and diversion of management resources in defending any claims relating to proprietary rights. If any party succeeds in asserting
a claim against us relating to the disputed intellectual property, we may need to obtain licenses to continue to use the same.
We cannot assure you that we will be able to obtain these licenses on commercially reasonable terms, if at all. The failure to
obtain the necessary licenses or other rights could cause our business results to suffer.
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 Horizon 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.
RISKS
ASSOCIATED WITH OUR COMMON STOCK
Our
principal stockholder, directors and officers control a substantial number of shares of our common stock, decreasing your influence
on stockholder decisions.
Zhanming
Wu, our principal stockholder owns 13,000,000 shares, or approximately 46.72% of our outstanding shares, and has the right to
designate four members of our Board of directors as long as he continues to own at least 30% of the outstanding shares. Our directors
and officers own an additional 8,804,478 shares, or approximately 31.64% of our outstanding shares. As a result, Mr. Wu and our
directors and officers as a group could have a significant influence in delaying, deferring or preventing any potential change
in control of our company; they will be able to strongly influence the actions of our board of directors even if they were to
cease being directors or officers of our company and can effectively control the outcome of actions brought to our stockholders
for approval. Such a high level of ownership may adversely affect the exercise of your voting and other stockholder rights.
As
a result of being a public company, we are subject to additional reporting and corporate governance requirements that will require
additional management time, resources and expense.
As
a public company we are obligated to file with the SEC annual and quarterly information and other reports that are specified in
the Exchange Act. We are also subject to other reporting and corporate governance requirements under the Sarbanes-Oxley Act of
2002, as amended, and the rules and regulations promulgated thereunder, all of which impose significant compliance and reporting
obligations upon us and require us to incur additional expense in order to fulfill such obligations.
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 control 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 control
policies, we have identified material weakness in our internal controls with respect to a lack of in-house US GAAP expertise.
We will continue to take steps to remediate this material weakness and to improve our control process and procedures with respect
to US 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 an effective internal
control 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. 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.
RISKS
ASSOCIATED WITH DOING BUSINESS IN CHINA
Our
business in China is operated through Suzhou Aishuo Network Information Co., Ltd (“Suzhou Aishuo”), a limited liability
company organized in China and controlled by us via various contractual arrangements. Though we have less than 5% of our revenue
currently generated in China, we expect such portion will increase with the quick expansion of rollout of our China mobile application
Aishuo in China. However, there are risks generally associated with doing business in China, as set forth in the following risk
factors.
Our
operations and assets in China are subject to significant political and economic uncertainties.
Changes
in PRC laws and regulations, or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion,
imports and sources of supply, devaluations of currency or the nationalization or other expropriation of private enterprises could
have a material adverse effect on our business, results of operations and financial condition. Under its current leadership, the
Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization.
There is no assurance, however, that the Chinese government will continue to pursue these policies, or that it will not significantly
alter these policies from time to time without notice.
We
may have limited legal recourse under PRC laws if disputes arise under our contracts with third parties.
The
Chinese government has enacted laws and regulations dealing with matters such as corporate organization and governance, foreign
investment, commerce, taxation and trade. However, their experience in implementing, interpreting and enforcing these laws and
regulations is limited, and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable. If our
new business ventures are unsuccessful, or other adverse circumstances arise from these transactions, we face the risk that the
parties to these ventures may seek ways to terminate the transactions, or, may hinder or prevent us from accessing important information
regarding the financial and business operations of these acquired companies. The resolution of these matters may be subject to
the exercise of considerable discretion by agencies of the Chinese government, and forces unrelated to the legal merits of a particular
matter or dispute may influence their determination. Any rights we may have to specific performance, or to seek an injunction
under PRC law, in either of these cases, are severely limited, and without a means of recourse by virtue of the Chinese legal
system, we may be unable to prevent these situations from occurring. The occurrence of any such events could have a material adverse
effect on our business, financial condition and results of operations.
Failure
to comply with the U.S. foreign corrupt practices act and Chinese anti-corruption laws could subject us to penalties and other
adverse consequences.
Our
executive officers, employees and other agents are subject to anti-corruption and anti-bribery laws including China’s anti-corruption
laws and the U.S. Foreign Corrupt Practices Act, or the FCPA, which generally prohibits United States companies from engaging
in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. In addition,
we are required to maintain records that accurately and fairly represent our transactions and have an adequate system of internal
accounting controls. Foreign companies, including some that may compete with us, are not subject to these prohibitions, and therefore
may have a competitive advantage over us. The PRC also strictly prohibits bribery of government officials. However, corruption,
extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the PRC.
While
we intend to implement measures to ensure compliance with the FCPA and China’s anti-corruption laws by all individuals involved
with our company, our employees or other agents may engage in such conduct for which we might be held responsible. If our employees
or other agents are found to have engaged in practices that violate either U.S or PRC laws, we could suffer severe penalties and
other consequences that may have a material adverse effect on our business, financial condition and results of operations. In
addition, our brand and reputation, our sales activities or our stock price could be adversely affected if we become the target
of any negative publicity as a result of actions taken by our employees or other agents.
The
Chinese government exerts substantial influence over the manner in which we must conduct our business activities.
China
has only permitted provincial and local economic autonomy and private economic activities the last three decades, and, as a result,
we are dependent on our relationship with the local government in the province in which we operate our business. The Chinese government
has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation
and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating
to taxation, environmental regulations, land use rights, property and other matters. We believe that our operations in China are
in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of these
jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures
and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in
the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned
economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic
conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese
properties.
Uncertainties
with respect to the governing regulations could have a material and adverse effect on us.
There
are substantial uncertainties regarding the interpretation and application of the laws and regulations in the greater China area,
including, but not limited to, the laws and regulations governing our business and our ownership of the equity interests in our
PRC subsidiaries. PRC laws and regulations are frequently subject to change due to rapid economic and social development and many
of them were newly enacted within the last 10 years. The effectiveness of newly enacted laws, regulations or amendments may be
delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future
businesses may also be applied retroactively.
The
PRC government has broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business
permits and other licenses and requiring actions necessary for compliance. In particular, licenses and permits issued or granted
to the PRC subsidiary by relevant governmental bodies may be revoked at a later time by higher regulatory bodies. We cannot predict
the effect of the interpretation of existing or new PRC laws or regulations on our businesses. We cannot assure you that our current
ownership and operating structure would not be found to be in violation of any current or future PRC laws or regulations. As a
result, we may be subject to sanctions, including fines, and could be required to restructure our operations or cease to provide
certain services. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources
and management attention. Any of these or similar actions could significantly disrupt our business operations or restrict us from
conducting a substantial portion of our business operations, which could materially and adversely affect our business, financial
condition and results of operations
.
USE
OF PROCEEDS
This
prospectus relates to shares of our common stock that may be offered and sold from time to time by the Selling Stockholder. We
will not receive any of the proceeds resulting from the sale of common stock by the Selling Stockholder. However, we will receive
the proceeds from the exercise price of the Warrants. We will receive approximately $500,000 if all of the warrants are exercised,
which we will use for general corporate purposes and as working capital.
SELLING
STOCKHOLDER
This
prospectus relates to the resale by Bespoke Growth Partners, Inc. (“Bespoke” or the “Selling Stockholder”)
of up to 941,667 shares of common stock, which consist of 108,333 shares of common stock and an additional 833,334 shares issuable
upon exercise of Warrants, issued in consideration for Bespoke’s assistance in identifying sources of financing, merger
and acquisition opportunities and strategic business alliances, pursuant to a Consulting Agreement dated October 17, 2017. The
Warrants are exercisable until December 31, 2017 at an exercise price of $0.60 per share.
Neither
Bespoke nor any of its affiliates has held any position, office or other material relationship with us or with any of our predecessors
or affiliates during the last three years. The following table sets forth the number of shares of our common stock beneficially
owned by Bespoke before this offering. The number of shares owned are those beneficially owned, as determined under the rules
of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules,
beneficial ownership includes any shares of common stock as to which a person has sole or shared voting power or investment power
and any shares of common stock which the person has the right to acquire within 60 days through the exercise of any option, warrant
or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of
a trust, discretionary account or similar arrangement. Except as set forth below, Bespoke is not a broker-dealer or an affiliate
of a broker-dealer. As of October 24, 2017, we had outstanding 9,118,177 shares of common stock.
We
have assumed all shares of common stock reflected on the table will be sold from time to time in the offering covered by this
prospectus. Because the Selling Stockholder may offer all or any portions of the shares of common stock listed in the table below,
no estimate can be given as to the amount of those shares of common stock covered by this prospectus that will be held by the
Selling Stockholder upon the termination of the offering.
|
Name of Selling Stockholder
|
|
Number of
Shares of
Common Stock
Beneficially
Owned Before
Offering
|
|
Number of
Shares of
Common Stock
Offered
|
|
|
Number of
Shares of
Common Stock
Owned After
Offering
|
|
|
Percentage
of Common
Stock
Beneficially
Owned After
Offering
|
|
Bespoke Growth Partners, Inc.(1)
|
|
952,167
|
(2)
|
|
941,667
|
(2)
|
|
|
10,500
|
|
|
*
|
*Less
than one percent.
(1)
Mark Peikin
exercises sole voting and investment authority over all of our securities
owned by Bespoke Growth Partners, Inc, and thus is deemed to beneficially own such shares pursuant to Rule 13d-3 under the Exchange
Act. The address for Mr. Peikin and Bespoke Growth Partners, Inc., is 7957 N. University Drive, Parkland, Florida 33067.
|
(2)
|
Includes
833,334 shares issuable upon exercise of the Warrants.
|
PLAN
OF DISTRIBUTION
The
Selling Stockholder and any of its pledgees, assignees and successors-in-interest may, from time to time, sell any or all of the
Shares on The NASDAQ Capital Market or any other stock exchange, market or trading facility on which our shares of common stock
are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholder may use any one
or more of the following methods when selling Shares:
|
|
●
|
ordinary brokerage
transactions and transactions in which the broker-dealer solicits purchasers;
|
|
|
●
|
block trades in
which the broker-dealer will attempt to sell the Shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction;
|
|
|
●
|
purchases by a broker-dealer
as principal and resale by the broker-dealer for its account;
|
|
|
●
|
an exchange distribution
in accordance with the rules of the applicable exchange;
|
|
|
●
|
privately negotiated
transactions;
|
|
|
●
|
settlement of short
sales;
|
|
|
●
|
in transactions
through broker-dealers that agree with the Selling Stockholder to sell a specified number of such Shares at a stipulated price
per Share;
|
|
|
●
|
through the writing
or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
|
|
|
●
|
a combination of
any such methods of sale; or
|
|
|
●
|
any other method
permitted pursuant to applicable law.
|
The
Selling Stockholder may also sell the Shares under Rule 144 under the Securities Act of 1933, as amended (the “Securities
Act”), if available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholder (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)
in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction
not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction
a markup or markdown in compliance with FINRA IM-2440.
In
connection with the sale of the Shares, the Selling Stockholder may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the Shares in the course of hedging the positions they assume.
The selling stockholders may also sell securities short and deliver these securities to close out its short positions, or loan
or pledge the securities to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which
require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities
such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
The
Selling Stockholder and any broker-dealers or agents that are involved in selling the Shares may be deemed to be “underwriters”
within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the Shares purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
We
have agreed to pay certain fees and expenses incurred by us incident to the registration of the Shares.
Because
the Selling Stockholder may be deemed to be an “underwriter” within the meaning of the Securities Act, it will be
subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any Shares covered
by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than
under this prospectus. The Selling Stockholders has advised us that there is no underwriter or coordinating broker acting in connection
with the proposed sale of the Shares by the Selling Stockholder.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the Shares may not simultaneously
engage in market making activities with respect to our common stock for the applicable restricted period, as defined in Regulation
M, prior to the commencement of the distribution. In addition, the Selling Stockholder will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases
and sales of shares of our common stock by the Selling Stockholder or any other person. We will make copies of this prospectus
available to the Selling Stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act.
We
agreed to keep this prospectus effective for a period of two years.
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Articles
7 and 8 of our Articles of Incorporation provide as follows:
|
“7.
|
To the fullest extent permitted
by law, a director of the Corporation shall not be personally liable to the Corporation or to its stockholders for monetary
damages for any breach of fiduciary duty as a director. No amendment to, modification of or repeal of this paragraph shall
apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to
any acts or omissions of such director occurring prior to such amendment.
|
|
8.
|
The Corporation shall indemnify,
advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter
be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”),
by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or
officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or
nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses
(including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except for
claims for indemnification (following the final disposition of such Proceeding) or advancement of expenses not paid in full,
the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced
by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized
in the specific case by the Board of Directors of the Corporation. Any amendment, repeal or modification of this paragraph
shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior
to the time of such repeal or modification.”
|
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us pursuant to the foregoing provisions or otherwise, we have been advised that in the opinion of the SEC, such indemnification
is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person
in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection
with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final adjudication of such issue.
LEGAL
MATTERS
The
validity of the Shares offered by this prospectus will be passed upon for us by Eaton & Van Winkle LLP, New York, New York.
EXPERTS
The
consolidated financial statements of One Horizon Group, Inc. as of and for the years ended December 31, 2016 and 2015 appearing
in our Annual Report (Form 10-K) for the year ended December 31, 2016 have been audited by Cherry Bekaert LLP, an independent
registered public accounting firm, as set forth in their report thereon, included therein, and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority
of such firm, as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and, in accordance therewith, file annual, quarterly and current reports, proxy statements and other information with the Commission.
You may read and copy any reports, statements or other information that we file with the Commission at the Commission’s
Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for
further information on the operation of the Public Reference Room. The Commission maintains an Internet website (http://www.sec.gov)
that contains reports, proxy statements and information statements and other information regarding issuers that file electronically
with the Commission. Our Commission filings are also available on our Internet website (http://www.one horizongroup.com). The
information contained on or connected to our website is not, and you must not consider the information to be, a part of this prospectus
supplement.
We
have filed with the Commission a registration statement on Form S-3 (Registration No. 333-______), of which this prospectus is
a part, under the Securities Act with respect to the securities offered hereby. This prospectus does not contain all of the information
set forth in the registration statement, certain parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information concerning our company and the securities offered hereby, reference is made to the registration
statement. Statements contained in this prospectus as to the contents of any contract or other documents are not necessarily complete,
and in each instance, reference is made to the copy of such contract or documents filed as exhibits to the registration statement,
each such statement being qualified in all respects by such reference.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” certain of our publicly-filed documents into this prospectus, which means
that information included in those documents is considered part of this prospectus. Information that we file with the SEC after
the date of this prospectus will automatically update and supersede this information. We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between the
date of this prospectus and the termination of the offering, and also between the date of the initial registration statement and
prior to effectiveness of the registration statement.
The
following documents filed with the SEC are incorporated by reference in this prospectus (other than, in each case, documents or
information therein deemed to have been furnished and not filed in accordance with SEC rules):
|
●
|
our Annual Report
on Form 10-K for the year ended December 31, 2016, filed with the SEC on April 11, 2017;
|
|
●
|
our Quarterly Reports
on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 12, 2017, and for the quarter ended June 30,
2017, filed with the SEC on August 14, 2017;
|
|
●
|
our Current Reports
on Form 8-K filed with the SEC on April 17, 2017; May 1, 2017; July 14, 2017; July 18, 2017; July 28, 2017; August 4,
2017; August 23, 2017; September 8, 2017; September 25, 2017; October 6, 2017 and October 10, 2017;
|
|
●
|
the description
of our common stock contained in the our Registration Statement on Form 8-A filed with the SEC on July 2, 2014 (File No. 001-36530),
including any amendment or report filed for the purpose of updating such description.
|
Any
statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus shall be deemed modified,
superseded or replaced for purposes of this prospectus to the extent that a statement contained in this prospectus, or in any
subsequently filed document that also is deemed to be incorporated by reference in this prospectus, modifies, supersedes or replaces
such statement. Any statement so modified, superseded or replaced shall not be deemed, except as so modified, superseded or replaced,
to constitute a part of this prospectus. None of the information that we disclose under Item 2.02 or Item 7.01 of any Current
Report on Form 8-K or any corresponding information, either furnished under Item 9.01 or included as an exhibit therein, that
we may from time to time furnish to the SEC will be incorporated by reference into, or otherwise included in, this prospectus,
except as otherwise expressly set forth in the relevant document. Subject to the foregoing, all information appearing in this
prospectus is qualified in its entirety by the information appearing in the documents incorporated by reference.
You
may obtain a copy of these filings, without charge, by writing or calling us at:
One
Horizon Group, Inc.
34
South Molton Street, London W1K 5RG, United Kingdom
Attention:
Martin Ward
+44(0)20
7409 5248
You
should rely only on the information incorporated by reference or provided in this prospectus or any prospectus. We have not authorized
anyone else to provide you with different information. You should not assume that the information in this prospectus is accurate
as of any date other than the date on the front page of those documents.
PART
II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution
.
We
will pay all expenses in connection with the registration and sale of the common stock by the selling stockholder. The estimated
expenses of issuance and distribution are set forth below.
|
SEC filing fee
|
|
$
|
123.10
|
|
|
Legal expenses
|
|
$
|
5,000.00
|
|
|
Accounting expenses
|
|
$
|
2,500.00
|
|
|
Miscellaneous
|
|
$
|
376.90
|
|
|
Total
|
|
$
|
8,000.00
|
|
Item
15. Indemnification of Directors and Officers.
Articles
7 and 8 of our Articles of Incorporation provide as follows:
|
“7.
|
To the fullest extent permitted
by law, a director of the Corporation shall not be personally liable to the Corporation or to its stockholders for monetary
damages for any breach of fiduciary duty as a director. No amendment to, modification of or repeal of this paragraph nine
shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect
to any acts or omissions of such director occurring prior to such amendment.
|
|
8.
|
The Corporation shall indemnify,
advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter
be amended, any person (a “Covered Person”) who was or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”),
by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or
officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or
nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses
(including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except for
claims for indemnification (following the final disposition of such Proceeding) or advancement of expenses not paid in full,
the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced
by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized
in the specific case by the Board of Directors of the Corporation. Any amendment, repeal or modification of this paragraph
10 shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.”
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Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling
us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter
has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by us is against public policy as expressed hereby in the Securities Act and we will be governed by the final adjudication of
such issue.
Item
16. Exhibits.
Item
17. Undertakings.
1.
The undersigned registrant hereby undertakes to file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i)
To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933.
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
Provided,
however, that paragraphs (1)(i) and (1)(ii) of this section do not apply if the registration statement is on Form S-3, Form S-8
or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the registration statement.
2.
The undersigned registrant hereby undertakes that, for the purpose of determining any liability under the Securities Act of 1933,
as amended, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
3.
The undersigned registrant hereby undertakes to remove from registration by means of a post-effective amendment any of the securities
being registered that remain unsold at the termination of the offering.
4.
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing
of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated
by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
5.
The undersigned registrant hereby undertakes that, for the purposes of determining liability to any purchaser:
(i)
If the registrant is relying on Rule 430B:
(A)
For purposes of determining liability under the Securities Act of 1933, each prospectus filed by the registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and
included in the registration statement; and
(B)
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance
on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement
as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale
of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and
any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by
reference in the registration statement or prospectus that is part of the registration statement will, as to a purchaser with
a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date;
or
(ii)
If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating
to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A,
shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part
of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such date of first use.
6.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the undersigned registrant according the foregoing provisions, or otherwise, the undersigned
registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing Form S-3 and has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in London, England, on November 2, 2017.
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ONE HORIZON GROUP, INC.
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By:
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/s/
Mark White
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Mark White
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Its:
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President
and Chief Executive Officer
(Principal
Executive Officer)
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By:
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/s/
Martin Ward
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Martin Ward
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Its:
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Chief
Financial Officer
(Principal
Financial and Accounting Officer)
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Each person whose
signature appears below constitutes and appoints Mark White and Martin Ward, and each of them severally, as his true and lawful
attorney in fact and agent, with full powers of substitution and resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign any or all amendments (including post effective amendments) to the Registration Statement, and to sign
any registration statement for the same offering covered by this Registration Statement that is to be effective upon filing pursuant
to Rule 462(b) under the Securities Act of 1933, as amended, and all post effective amendments thereto, and to file the same, with
all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, each acting alone, full power and authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, each acting alone, or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the
requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities
on November 2, 2017.
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/s/ Mark White
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Mark White
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President, Chief Executive Officer and
a Director
(Principal Executive Officer)
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/s/ Martin Ward
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Martin Ward
Chief Financial Officer
(Principal Financial and Accounting Officer)
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/s/
Richard Vos
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Richard Vos
Director
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/s/ NicholasCarpinello
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Nicholas Carpinello
Director
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/s/ Robert Law
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Robert Law
Director
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Exhibit
4.1
Warrant
No. ________
FORM
OF COMMON STOCK PURCHASE WARRANT
One
Horizon Group, Inc.
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Warrant
Shares: 833,334
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Initial
Exercise Date: October 17, 2017
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THIS
COMMON STOCK PURCHASE WARRANT (the “
Warrant
”) certifies that, for value received, Bespoke Growth Partners,
Inc. or its assigns (the “
Holder
”) is entitled, upon the terms and subject to the limitations on exercise and
the conditions hereinafter set forth, at any time on or after the date hereof (the “
Initial Exercise Date
”)
and on or prior to the close of business on December 31, 2017 (the “
Termination Date
”) but not thereafter,
to subscribe for and purchase from One Horizon Group, Inc., a Delaware corporation (the “
Company
”), up to 833,334
shares (as subject to adjustment hereunder, the “
Warrant Shares
”) of the Company’s common stock, par
value $0.0001 per share (the “
Common Stock
”). The purchase price of one share of Common Stock under this Warrant
shall be equal to the Exercise Price, as defined in Section 2(b).
Section
1
.
Definitions
. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain
Consulting Agreement (the “
Consulting Agreement
”), dated October 16, 2017, among the Company and the purchasers
signatory thereto.
Section
2
.
Exercise
.
a)
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after
the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of
the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books
of the Company) of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise in the form annexed hereto
and, within one (1) Trading Day of the date said Notice of Exercise is delivered to the Company, payment the aggregate Exercise
Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or, if available,
pursuant to the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise.
No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder
and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation
within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this
Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of
lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant
Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date
of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of
such notice.
The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions
of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available
for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b)
Exercise Price
. The exercise price per share of Common Stock under this Warrant shall be US sixty-cents (US$0.60), subject
to adjustment hereunder (the “
Exercise Price
”).
c)
Cashless Exercise
. If at the time of exercise hereof prior to December 31, 2017 there is no effective registration statement
registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, and there
is also no effective registration statement registering the resale by the Holder of the Warrant Shares, then, at the option of
the Company, the period during which this warrant may be exercised shall be extended to March 31, 2018 (the “Extended Exercise
Period” and the “Termination Date” shall be March 31, 2018), and, provided that for a period of at least fifteen
consecutive trading days during the Extended Period (i) there is an effective registration statement registering the issuance
of the Warrant Shares to the Holder or there is an effective registration statement registering the resale by the Holder of the
Warrant Shares and (ii) the closing price of the common stock is at least 120% of the Exercise Price, there shall be no “cashless
exercise” rights. If the Company does not satisfy either of clause (i) or (ii) for fifteen consecutive trading days during
the Extended Period, then unless this Warrant has been exercised prior thereto, on or after March 15, 2018 and on or prior to
March 31, 2018, but not thereafter, this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless
exercise” (such period of March 15 through March 31, 2018, being the only period during which this Warrant may be exercised
on a cashless basis, provided that if the Company does not satisfy either of clause (i) or (ii) for at least fifteen days prior
to December 31, 2017, and fails to extend this Warrant, the Warrant shall be deemed to have been exercised on a cashless basis
on the close of business on December 31, 2017) in which the Holder shall be entitled to receive a number of Warrant Shares equal
to the quotient obtained by dividing [(A-B) × (X)] by (A), where:
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(A)
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=
the VWAP of the Common Stock immediately preceding the time of delivery of the Notice of Exercise for the applicable “cashless
exercise”, as set forth in the applicable Notice of Exercise (to clarify, the “last VWAP” will be the last
VWAP as calculated over an entire Trading Day such that, in the event that this Warrant is exercised at a time that the Trading
Market is open, the prior Trading Day’s VWAP shall be used in this calculation);
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(B)
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=
the Exercise Price of this Warrant, as adjusted hereunder; and
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(X)
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=
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant
if such exercise were by means of a cash exercise rather than a cashless exercise.
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If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised. The Company agrees
not to take any position contrary to this Section 2(c).
“
VWAP
”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX
as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common
Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d)
in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good
faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the
fees and expenses of which shall be paid by the Company.
Notwithstanding
anything herein to the contrary, on the Termination Date, if the conditions of a cashless exercise are otherwise met, this Warrant
shall be automatically exercised via cashless exercise pursuant to this Section 2(c).
d)
Mechanics of Exercise
.
i.
Delivery of Warrant Shares Upon Exercise
. The Company shall cause the Warrant Shares purchased hereunder to be transmitted
by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with
The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“
DWAC
”) if the Company
is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and
otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or
its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified
by the Holder in the Notice of Exercise by the date that is three Trading Days after the delivery to the Company of the Notice
of Exercise (such date, the “
Warrant Share Delivery Date
”). Upon delivery of the Notice of Exercise the Holder
shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this
Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares; provided payment of the aggregate Exercise
Price (other than in the case of a Cashless Exercise) is received within one Trading Day of delivery of the Notice of Exercise.
The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding
and exercisable.
ii.
Delivery of New Warrants Upon Exercise
. If this Warrant shall have been exercised in part, the Company shall, at the request
of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder
a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which
new Warrant shall in all other respects be identical with this Warrant.
iii.
Rescission Rights
. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant
to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise by delivering
written notice to the Company at any time prior to the Company delivering such Warrant Shares.
iv.
[RESERVED]
.
v.
No Fractional Shares or Scrip
. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses
. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid
by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed
by the Holder;
provided
,
however
, that in the event that Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for
any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice
of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions)
required for same-day electronic delivery of the Warrant Shares.
vii.
Closing of Books
. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
e)
Holder’s Exercise Limitations
. The Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect
to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s
Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons,
“Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).
For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates
and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect
to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon
(i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates
or Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.
Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged
by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of
the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be
the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected
in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent
public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the
number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading
Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number
of outstanding shares of Common Stock was reported. The “
Beneficial Ownership Limitation
” shall be 9.99% of
the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the
Beneficial Ownership Limitation will not be effective until the 61
st
day after such notice is delivered to the Company.
The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section
3
.
Certain Adjustments
.
a)
Stock Dividends and Splits
. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company
upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines
(including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by
reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares,
if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted
such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a)
shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b)
Fundamental Transaction.
If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in
one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby
such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common
Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other business combination) (each a “
Fundamental Transaction
”),
then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would
have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the
Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration
(the “
Alternate Consideration
”) receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard
to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise
Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the
Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the “
Successor Entity
”) to assume in writing all of the
obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section
3(e).
c)
Calculations
. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
d)
Notice to Holder
.
i.
Adjustment to Exercise Price
. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the
Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment
and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder
. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered
by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register
of the Company, at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants,
or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that
holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure
to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action
required to be specified in such notice. The Holder shall remain entitled to exercise this Warrant during the period commencing
on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set
forth herein.
Section
4
.
Transfer of Warrant
.
a)
Transferability
. This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable,
in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with
a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney
and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required,
such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable,
and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything
herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading
Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned
in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b)
New Warrants
. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved
in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated
the original issuance date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant
thereto.
c)
Warrant Register
. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose
(the “
Warrant Register
”), in the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.
Section
5
.
Miscellaneous
.
a)
No Rights as Stockholder Until Exercise
. This Warrant does not entitle the Holder to any voting rights, dividends or other
rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth
in Section 3.
b)
Loss, Theft, Destruction or Mutilation of Warrant
. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case
of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays, Holidays, etc
. If the last or appointed day for the taking of any action or the expiration of any right
required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next
succeeding Business Day.
d)
Authorized Shares
.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers
who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise
of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued
upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by
this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable
and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above
the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may
be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Warrant Shares
upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform
its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or
in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction thereof.
e)
Jurisdiction
. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall
be determined in accordance with the provisions of the Consulting Agreement.
f)
Restrictions
. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered,
and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities
laws.
g)
Nonwaiver and Expenses
. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting
any other provision of this Warrant or the Consulting Agreement, if the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts
as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including
those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers or remedies hereunder.
h)
Notices
. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of the Consulting Agreement.
i)
Limitation of Liability
. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability
of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted
by the Company or by creditors of the Company.
j)
Remedies
. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns
. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment
. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company
and the Holder.
m)
Severability
. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
n)
Headings
. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first
above indicated.
ONE
HORIZON GROUP, INC.
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By:
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/s/ Martin Ward
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Name: Martin Ward
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Title: Chief Financial Officer
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NOTICE
OF EXERCISE
TO:
One Horizon Group, INC.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer
taxes, if any.
(2)
Payment shall take the form of (check applicable box):
☐
in lawful money of the United States; or
☐
if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
The
Warrant Shares shall be delivered to the following DWAC Account Number:
[SIGNATURE
OF HOLDER]
Name
of Investing Entity:
Signature
of Authorized Signatory of Investing Entity
:
Name
of Authorized Signatory:
Title
of Authorized Signatory:
Date:
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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Name:
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(Please Print)
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Address:
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(Please Print)
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Phone Number:
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Email Address:
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Dated: _______________
__, ______
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Holder’s Signature:
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Holder’s Address:
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Exhibit 5.1
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Eaton & Van Winkle LLP
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Vincent J. McGill
Partner
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3 PARK AVENUE
NEW YORK, NEW YORK 10016
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TELEPHONE: (212) 779-9910
FAX: (212) 779-9928
Direct Dial: (212) 561-3604
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November 2, 2017
Board of Directors
One Horizon Group, Inc.
34 South Molton Street
London W1K 5RG, United Kingdom
Re: Registration Statement on Form S-3 for Offering of Shares of Common
Stock by Selling Stockholder
Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the offering by the selling stockholder named in the Registration Statement on Form S-3 of One Horizon Group, Inc., a Delaware
corporation (the “
Company
”), filed with the Securities and Exchange Commission (the “
Commission
”)
under the Securities Act of 1933, as amended (the “
Securities Act
”), with respect to the resale of 941,667
shares of the common stock, par value $0.0001 (the “
Common Shares
”), of the Company (the “
Registration
Statement
”). The Common Shares consist of 108,333 shares of common stock (the “
Shares
”)
issued to the Selling Stockholder for consulting services pursuant to a Consulting Agreement dated October 17, 2017 (the “
Consulting
Agreement
”) and an additional 833,334 shares of common stock (the “
Warrant Shares
”) issuable
upon the exercise of warrants issued pursuant to the Consulting Agreement. The issuance and sale of Shares and Warrants were exempt
from the registration requirements of the Securities Act pursuant to the exemption provided by Rule 506(b) of Section 4(a)(2) of
the Securities Act.
In connection with this opinion, we have examined and relied upon the
Registration Statement, the Company’s Certificate of Incorporation, as amended, the Company’s Bylaws, each as currently
in effect, the Consulting Agreement, the Warrants and the originals, or copies certified to our satisfaction, of such records,
documents, certificates, opinions, memoranda and other instruments as in our judgment are necessary or appropriate to enable us
to render the opinion expressed below. In rendering this opinion, we have assumed the genuineness and authenticity of all signatures
on original documents; the authenticity of all documents submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of certificates of public officials; and the due authorization,
execution and delivery of all documents where authorization, execution and delivery are prerequisites to the effectiveness of
such documents (except we have not assumed due execution and delivery by the Company of any such documents).
On the basis of the foregoing and in reliance thereon, we are of the
opinion that:
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1.
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The Common Shares have been validly issued, fully paid and non-assessable.
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2.
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The Warrant Shares when issued against payment of the exercise price specified in the Warrants, will be, validly issued, fully paid and non-assessable.
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We are attorneys licensed to practice in the State of New York and are
familiar with the General Corporation Law of the State of Delaware (“the “
DGCL
”). Our opinion is
limited to the laws of the State of New York, the DGCL, , including the applicable provisions of the Delaware Constitution and
reported judicial decisions interpreting the foregoing, New York law and the federal laws of the United States of America to the
extent referred to specifically herein. We express no opinion herein as to any other laws, statutes, regulations or ordinances.
We have made such inquiries and review of matters of fact and law as we determined necessary to render the opinions contained herein.
We assume no obligation to revise or supplement this opinion letter in the event of future changes in such laws or the interpretations
thereof or such facts. We express no opinion as to whether the laws of any particular jurisdiction apply and no opinion to the
extent that the laws of any jurisdiction other than those identified above are applicable to the subject matter hereof. We are
not rendering any opinion as to compliance with any federal or state antifraud law, rule or regulation relating to securities,
or to the sale or issuance thereof.
Our opinion expressed herein is as of the date hereof, and we undertake
no obligation to advise you of any changes in applicable law or any other matters that may come to our attention after the date
hereof that may affect our opinions expressed herein.
We hereby consent to the reference to our firm under the caption “Legal
Matters” in the Registration Statement and to the filing of this opinion as an exhibit to the Registration Statement. In
giving such consent, we do not thereby admit that we are experts with the meaning of the Securities Act or the rules and regulations
of the Commission thereunder.
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Very truly yours,
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/s/ Eaton & Van Winkle LLP
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Eaton & Van Winkle LLP
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Exhibit 10.1
Bespoke
is
Money...
TM
CONSULTING
AGREEMENT
This
Consulting Agreement dated October 17, 2017, (this “
Agreement
”) is made between One Horizon Group, Inc.,
with an office and place of business at Room 1808, 18/F Hutchinson House, 10 Harcourt Road, Central, Hong Kong (“
OHGI
”
or the “
Company
”), and Bespoke Growth Partners, Inc. (“
Bespoke
,” or the “
Consultant
”)
with an office and place of business located at 7957 N. University Drive, Parkland, Florida 33067, USA. Company and/or Consultant
may each be referred to herein as a “
Party
,” and collectively as the “
Parties
.”
Preliminary
Statement
Consultant
has heretofore provided, and continues to provide valuable services to Company, which such services were and continue to be performed
in a manner completely satisfactory to the Company and for which the Consultant acknowledges that it has been paid in full.
During
the course of the Parties’ working relationship, influenced by a recent change in management and business direction, the
Company and Consultant have been developing further the plans of the Company with respect to the growth of the business and its
various platform extensions with the current emphasis on a strategy of technology-based mergers and acquisitions (the “
Consulting
Services
”). The Company desires to engage the Consultant to provide the Consulting Services and the Consultant is
willing to accept such engagement, on the terms and conditions set forth in this Agreement.
NOW
THEREFORE
, in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of
which are acknowledged, and intending to be legally bound hereby, the Parties agree as follows:
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a.
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The
Company hereby engages the Consultant to assist it in developing strategies for the growth
of the Company’s business and its various platform extensions with the current
emphasis on a strategy of technology-based mergers and acquisitions, and the Consultant
hereby accepts such engagement.
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b.
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In
consideration for the Consulting Services, the Company agrees to issue to the Consultant
promptly following the execution of this Agreement 108,333 shares of its common stock
(the “Shares”), together with a warrant to purchase an additional 833,333
shares of its common stock (the “Warrant Shares”), having an exercise price
of $0.60 per share exercisable until December 31, 2017, in the form of Exhibit A annexed
hereto (the “Warrant”).
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c.
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Consultant
agrees to wire immediately available funds to the Company in the amount of not less than
$100,000 in payment of the exercise price of that number of Warrant Shares, which are
purchasable with the amount so wired, in accordance with the terms of the Warrant within
five (5) business days of receipt of the Shares.
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d.
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The
Company will immediately undertake to register the Shares and the Warrant Shares with
the Securities Exchange Commission pursuant to an S-3 registration statement.
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2.
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MERGERS
& ACQUISITIONS AND STRATEGIC ALLIANCES
.
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a.
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Company
has asked Consultant to introduce it to potential target companies to possibly make acquisitions
of such business in whole or in part. To date, Consultant has introduced the Company
to possible transactions with Slightly Mad Studios; Crytek; Gamigo; and Gorillabox.
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b.
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Company
and Consultant agree that in the event that Consultant introduces Company to a merger
and/or acquisition candidate not already having a pre-existing relationship with Company,
by whom Company or part thereof is ultimately acquired, or whom Company ultimately acquires
in whole or in part, Company agrees to compensate Consultant for such services a fee
in the amount of three percent (3%) of the total (gross) amount represented by the transaction
in the same form of consideration as that received by the seller or merged entity. Should
Company enter into a merger and/or acquisition transaction with any of the companies
listed in Part “a” of this Section, this same fee shall be applicable and
payable to Consultant.
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c.
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Company
and Consultant agree that in the event that Consultant introduces Company to a strategic
or business alliance ‘partner’ not already having a pre-existing relationship
with Company with whom Company ultimately enters into a business alliance or relationship,
Company agrees to compensate Consultant for such services in the amount of three percent
(3%) of total (gross) fees received by Company on the same payment basis as proposed
by the introduced party for a term of three (3) years from commencement of any fees earned
by or compensation paid to Company arising out of such relationship.
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d.
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Consultant
shall be granted reasonable audit rights in connection herewith.
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e.
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Consultant
will notify Company in writing of introductions it makes for potential sources of financing
or merger and/or acquisitions candidates or strategic business alliance partners in a
timely manner (within approximately three (3) business days of introduction) via e-mail.
If Company, in fact, has a pre-existing relationship with such introduction and believes
in good faith that such introduction should be excluded from this Agreement, then Company
must notify Consultant by e-mail response within two (2) business days of receipt of
Consultant’s notice of introduction.
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f.
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Unless
otherwise indicated in this Agreement, any and all fees beyond the warrants mentioned
above and the shares mentioned below shall be paid in full to Consultant at the time
any transaction introduced by Consultant is closed. Specifically, this compensation is
to be transferred by Company to Consultant within five (5) business days of any such
closing.
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This
Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
Company
represents and warrants that all of the shares delivered to Consultant as compensation hereunder shall be or have been validly
issued, fully paid and non-assessable and that the
Company’s Board of Directors has or shall have duly authorized the
issuance and transfer thereof to Consultant
.
The Company agrees to immediately file this Agreement with NASDAQ and to reference
the same in its next quarterly or annual securities filing, whichever is sooner in time.
IN
WITNESS WHEREOF,
the officers below have each caused this Agreement to be executed as of the date first set forth above.
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Bespoke Growth Partners, Inc.
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One Horizon Group, Inc.
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By: /s/ Mark H. Peikin
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By:
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/s/
Martin Ward
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Name: Mark H. Peikin
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Name: Martin Ward
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Title: CEO
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Title: Chief Financial Officer
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Duly Authorized
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Duly Authorized
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Date: October 17, 2017
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(“
Effective Date
”)
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Exhibit
A
Warrant
No. ________
FORM
OF COMMON STOCK PURCHASE WARRANT
One
Horizon Group, Inc.
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Warrant
Shares: 833,334
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Initial
Exercise Date:
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THIS
COMMON STOCK PURCHASE WARRANT (the “
Warrant
”) certifies that, for value received, Bespoke Growth Partners,
Inc. or its assigns (the “
Holder
”) is entitled, upon the terms and subject to the limitations on exercise and
the conditions hereinafter set forth, at any time on or after the date hereof (the “
Initial Exercise Date
”)
and on or prior to the close of business on December 31, 2017 (the “
Termination Date
”) but not thereafter,
to subscribe for and purchase from One Horizon Group, Inc., a Delaware corporation (the “
Company
”), up to 833,334
shares (as subject to adjustment hereunder, the “
Warrant Shares
”) of the Company’s common stock, par
value $0.0001 per share (the “
Common Stock
”). The purchase price of one share of Common Stock under this Warrant
shall be equal to the Exercise Price, as defined in Section 2(b).
Section
1
.
Definitions
. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain
Consulting Agreement (the “
Consulting Agreement
”), dated October 16, 2017, among the Company and the purchasers
signatory thereto.
Section
2
.
Exercise
.
a)
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after
the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of
the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books
of the Company) of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise in the form annexed hereto
and, within one (1) Trading Day of the date said Notice of Exercise is delivered to the Company, payment the aggregate Exercise
Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or, if available,
pursuant to the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise.
No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization)
of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder
and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation
within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this
Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of
lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant
Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date
of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of
such notice.
The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions
of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available
for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b)
Exercise Price
. The exercise price per share of Common Stock under this Warrant shall be US sixty-cents (US$0.60), subject
to adjustment hereunder (the “
Exercise Price
”).
c)
Cashless Exercise
. If at the time of exercise hereof prior
to December 31, 2017 there is no effective registration statement registering, or the prospectus contained therein is not available
for the issuance of the Warrant Shares to the Holder, and there is also no effective registration statement registering the resale
by the Holder of the Warrant Shares, then, at the option of the Company, the period during which this warrant may be exercised
shall be extended to March 31, 2018 (the “Extended Exercise Period” and the “Termination Date” shall be
March 31, 2018), and, provided that for a period of at least fifteen consecutive trading days during the Extended Period (i) there
is an effective registration statement registering the issuance of the Warrant Shares to the Holder or there is an effective registration
statement registering the resale by the Holder of the Warrant Shares and (ii) the closing price of the common stock is at least
120% of the Exercise Price, there shall be no “cashless exercise” rights. If the Company does not satisfy either of
clause (i) or (ii) for fifteen consecutive trading days during the Extended Period, then unless this Warrant has been exercised
prior thereto, on or after March 15, 2018 and on or prior to March 31, 2018, but not thereafter, this Warrant may also be exercised,
in whole or in part, at such time by means of a “cashless exercise” (such period of March 15 through March 31, 2018,
being the only period during which this Warrant may be exercised on a cashless basis, provided that if the Company does not satisfy
either of clause (i) or (ii) for at least fifteen days prior to December 31, 2017, and fails to extend this Warrant, the Warrant
shall be deemed to have been exercised on a cashless basis on the close of business on December 31, 2017) in which the Holder
shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) × (X)] by (A),
where:
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(A)
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=
the VWAP of the Common Stock immediately preceding the time of delivery of the Notice of Exercise for the applicable “cashless
exercise”, as set forth in the applicable Notice of Exercise (to clarify, the “last VWAP” will be the last
VWAP as calculated over an entire Trading Day such that, in the event that this Warrant is exercised at a time that the Trading
Market is open, the prior Trading Day’s VWAP shall be used in this calculation);
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(B)
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=
the Exercise Price of this Warrant, as adjusted hereunder; and
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(X)
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=
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant
if such exercise were by means of a cash exercise rather than a cashless exercise.
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If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised. The Company agrees
not to take any position contrary to this Section 2(c).
“
VWAP
”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based
on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX
as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common
Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d)
in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good
faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the
fees and expenses of which shall be paid by the Company.
Notwithstanding
anything herein to the contrary, on the Termination Date, if the conditions of a cashless exercise are otherwise met, this Warrant
shall be automatically exercised via cashless exercise pursuant to this Section 2(c).
d)
Mechanics of Exercise
.
i.
Delivery of Warrant Shares Upon Exercise
. The Company shall cause the Warrant Shares purchased hereunder to be transmitted
by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with
The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“
DWAC
”) if the Company
is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and
otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or
its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified
by the Holder in the Notice of Exercise by the date that is three Trading Days after the delivery to the Company of the Notice
of Exercise (such date, the “
Warrant Share Delivery Date
”). Upon delivery of the Notice of Exercise the Holder
shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this
Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares; provided payment of the aggregate Exercise
Price (other than in the case of a Cashless Exercise) is received within one Trading Day of delivery of the Notice of Exercise.
The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding
and exercisable.
ii.
Delivery of New Warrants Upon Exercise
. If this Warrant shall have been exercised in part, the Company shall, at the request
of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder
a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which
new Warrant shall in all other respects be identical with this Warrant.
iii.
Rescission Rights
. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant
to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise by delivering
written notice to the Company at any time prior to the Company delivering such Warrant Shares.
iv.
[RESERVED]
.
v.
No Fractional Shares or Scrip
. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses
. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid
by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed
by the Holder;
provided
,
however
, that in the event that Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for
any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice
of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions)
required for same-day electronic delivery of the Warrant Shares.
vii.
Closing of Books
. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
e)
Holder’s Exercise Limitations
. The Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect
to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s
Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons,
“Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).
For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates
and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect
to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon
(i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates
or Attribution Parties and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties.
Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged
by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of
the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be
the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected
in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent
public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the
number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading
Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number
of outstanding shares of Common Stock was reported. The “
Beneficial Ownership Limitation
” shall be 9.99% of
the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock
issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the
Beneficial Ownership Limitation will not be effective until the 61
st
day after such notice is delivered to the Company.
The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section
3
.
Certain Adjustments
.
a)
Stock Dividends and Splits
. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company
upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines
(including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by
reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares,
if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding
immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted
such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a)
shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
b)
Fundamental Transaction.
If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in
one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in
one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby
such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common
Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other business combination) (each a “
Fundamental Transaction
”),
then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would
have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the
Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration
(the “
Alternate Consideration
”) receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard
to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise
Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the
Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the “
Successor Entity
”) to assume in writing all of the
obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section
3(e).
c)
Calculations
. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as
of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
d)
Notice to Holder
.
i.
Adjustment to Exercise Price
. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the
Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment
and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder
. If (A) the Company shall declare a dividend (or any other distribution in whatever
form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered
by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register
of the Company, at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants,
or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that
holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure
to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action
required to be specified in such notice. The Holder shall remain entitled to exercise this Warrant during the period commencing
on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set
forth herein.
Section
4
.
Transfer of Warrant
.
a)
Transferability
.
This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in
part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment
of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary,
the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant
in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder
delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith,
may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
b)
New Warrants
. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved
in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated
the original issuance date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant
thereto.
c)
Warrant Register
. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose
(the “
Warrant Register
”), in the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, absent actual notice to the contrary.
Section
5
.
Miscellaneous
.
a)
No Rights as Stockholder Until Exercise
. This Warrant does not entitle the Holder to any voting rights, dividends or other
rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth
in Section 3.
b)
Loss, Theft, Destruction or Mutilation of Warrant
. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case
of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays, Holidays, etc
. If the last or appointed
day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then,
such action may be taken or such right may be exercised on the next succeeding Business Day.
d)
Authorized Shares
.
The
Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers
who are charged with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise
of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued
upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by
this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable
and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above
the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may
be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Warrant Shares
upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform
its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or
in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction thereof.
e)
Jurisdiction
. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall
be determined in accordance with the provisions of the Consulting Agreement.
f)
Restrictions
. The Holder acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will
have restrictions upon resale imposed by state and federal securities laws.
g)
Nonwaiver and Expenses
. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting
any other provision of this Warrant or the Consulting Agreement, if the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts
as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including
those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers or remedies hereunder.
h)
Notices
. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of the Consulting Agreement.
i)
Limitation
of Liability
. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any
liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability
is asserted by the Company or by creditors of the Company.
j)
Remedies
. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns
. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment
. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company
and the Holder.
m)
Severability
. Wherever possible, each provision of this Warrant shall
be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
n)
Headings
. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first
above indicated.
ONE
HORIZON GROUP, INC.
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By:
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Name: Martin Ward
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Title: Chief Financial Officer
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NOTICE
OF EXERCISE
TO:
One Horizon Group, INC.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer
taxes, if any.
(2)
Payment shall take the form of (check applicable box):
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☐
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in
lawful money of the United States; or
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☐
if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
The
Warrant Shares shall be delivered to the following DWAC Account Number:
[SIGNATURE
OF HOLDER]
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Name of Investing Entity:
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Signature of Authorized Signatory of Investing
Entity
:
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Name of Authorized Signatory:
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Title of Authorized Signatory:
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ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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Name:
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(Please Print)
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Address:
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(Please Print)
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Dated: _______________
__, ______
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Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We consent to the incorporation by reference in
this Registration Statement on Form S-3 of One Horizon Group, Inc. (the “Company”) of our report dated April 10, 2017
related to the consolidated financial statements of the Company as of and for the years ended December 31, 2016 and 2015, and to
the reference to us under the heading “Experts” in this Registration Statement.
/s/ Cherry Bekaert LLP
Tampa, Florida
Dated: November 2, 2017