As filed with the Securities and Exchange Commission
on September 7, 2018
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.
Mandelbaum Salsburg, P.C.
1270 Avenue of the Americas, Suite 1808
New York, New York 10020
Phone: (212) 324.1876
Fax: (973) 325.7467
E-mail: vmcgill@lawfirm.ms
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:
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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:
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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.
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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.
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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.
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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 $0.0001 per share
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2,500,000
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$
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0.245
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$
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612,500
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$
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76.26
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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 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 September 4, 2018 of $0.25 and $0.24, 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 SEPTEMBER 7, 2018
ONE HORIZON GROUP, INC.
2,500,000 Shares of Common Stock
This prospectus relates to the resale by the selling
stockholders named in this prospectus (the “Selling Stockholders”) of 2,500,000 shares of our common stock (the “Shares”).
See “Selling Stockholders.”
The Selling Stockholders 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 Stockholders. 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 7 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 closing sale price of our common
stock on The NASDAQ Capital Market on September 6, 2018 was $0.22 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 ____ __, 2018.
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 7 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 consider all of the information contained in this prospectus, including
the factors described under the heading “Risk Factors” on page 7 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
We are a holding company which,
through our operating subsidiaries, is engaged in the digital media, entertainment and secure messaging businesses, described below.
During the year ended December
31, 2017, we restructured our operations and simplified and strengthened our capital structure by:
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Selling certain of our operating subsidiaries (the “Discontinued Entities”) to our former Chief Executive Officer pursuant to a Stock Purchase Agreement entered into August 10, 2017, in consideration for the forgiveness of $1,968,243 payable to our former CEO.
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Issuing (A) (i) 13,000,000 shares of our common stock in exchange for $3,000,000 principal amount of an outstanding subordinated debenture in the principal amount of $3,500,000 and the forgiveness of accrued and unpaid interest thereon, (ii) our 7% promissory note in the principal amount of $500,000 for the surrender of the remaining principal amount of the debenture, and (B) 4,000,000 shares of our common stock and our 7% promissory note in the principal amount of $500,000 for all of the outstanding shares of our Series A-1 Convertible Preferred Stock, and (iii) 859,802 shares of our common stock to our Chief Financial Officer in exchange for $662,048 of indebtedness payable to him.
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The restructuring and simplification and strengthening
of our capital structure has allowed us to concentrate on developing our secure messaging business, which is focused on gaming,
educational and security applications in China and Hong Kong, while seeking acquisition opportunities. In September 2017, Mark
White who had previously served as our Chief Executive Officer, was appointed Chief Executive Officer to develop and implement
our acquisition strategy.
On February 22, 2018, we acquired
51% of the membership interests in Once In A Lifetime LLC, a Florida limited liability company d/b/a/ 123 Wish (“123 Wish”),
pursuant to an Exchange Agreement dated January 18, 2018, with 123 Wish and its members in consideration for 1,333,334 shares of
our common stock, plus an additional number of shares of our common stock based upon the net after tax earnings of 123 Wish during
the six month periods ending six and twelve months after the completion of the acquisition. Once In A Lifetime LLC has been merged
into our newly formed majority-owned Delaware subsidiary, 123 Wish, Inc.
123 Wish is
a subscription-based, experience marketplace that focuses on providing users with exclusive opportunities to enjoy personalized,
dream experiences with some of the world’s most renowned social media influencers, including Super Influencer Jake Paul and
Team 10, as well as celebrities, professional athletes, fashion designers and artists, while supporting a diverse range of charities.
On March 20, 2018, we acquired
C–Rod, Inc., including its record label, Velveteen Entertainment, and media division, Mues Media (collectively, the “C-Rod
Companies”) pursuant to an Exchange Agreement dated February 27, 2018 with C-Rod, Inc., Christopher Rodriguez and Patricia
Rodriguez, in consideration for $150,000, 1,376,147 shares of our common stock, plus an additional number of shares of our common
stock based upon the net after tax earnings of C-Rod during the two years ending after the completion of the acquisition. On May
2, 2018, we amended the articles of incorporation of C-Rod, Inc. to change its corporate name to Love Media House, Inc.
C-Rod,
Inc., a premier music production company founded in 2002 by Grammy-nominated, multi-platinum producer and composer Christopher
Rodriguez, regularly works with superstar artists, which have included many celebrity acts such as Rihanna, Jennifer Lopez, Lady
Gaga, Enrique Iglesias and Pet Shop Boys.
On
May 18, 2018, we acquired 51% of the outstanding shares of
Banana Whale Studios Pte. Ltd., a Singapore corporation (“Banana
Whale”). In exchange for the interest in Banana Whale, we agreed to issue to its current stockholders the number of shares
of our common stock determined by dividing six times the net after tax earnings of Banana Whale during the twenty-four-month period
ending May 31, 2020, (the “Measurement Period”) by the average of the closing price of our common stock during the
ten trading days immediately preceding the end of the Measurement Period (the “Market Value”). If Banana Whale’s
net after tax earnings during the Measurement Period exceeds $5,655,000, we will issue to the stockholders of Banana Whale a number
of additional shares of common stock equal to Banana Whale’s net after-tax earnings for the Measurement Period, divided by
the Market Value of the common stock; provided, that if Banana Whale’s net after tax earnings during the Measurement Period
exceeds $5,655,000 by more than 20%, we will deliver to the stockholders of Banana Whale a number of additional shares of common
stock equal to two (2) times Banana Whale’s net after-tax earnings for the Measurement Period, divided by the Market Value
of the common stock. To the extent the number of shares which we are obligated to issue to the stockholders of Banana Whale exceeds
7,777,152 shares, representing 19.99% of our outstanding shares of common stock immediately prior to the acquisition (the “Excess
Shares”), instead of issuing the Excess Shares to the Banana Whale Stockholders we will pay them an amount in cash for the
excess Shares based upon the Market Value.
As a condition to closing the acquisition, Banana Whale’s stockholders demanded and we have deposited
in escrow for their benefit 7,383,000 shares of our common stock as security for our obligation to issue such shares to which they
may become entitled. If the number of shares to which the stockholders of Banana Whale become entitled is less than 7,383,000,
the excess shares will be returned to us for cancellation. We also granted Banana Whale the right to use our secure messaging software.
Banana Whale is a B2B software
provider in the $100+ billion-dollar gaming industry focusing on innovation and next generation games and entertainment.
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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2,500,000 shares of common stock offered by the Selling Stockholders.
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Shares Outstanding
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53,847,022 shares of common stock.*
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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.
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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 Stockholders 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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*
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Does not include 486,387 shares which may be acquired upon exercise of outstanding warrants.
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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 and under the heading “Risk Factors” in our Annual Report on Form 10-K
for the fiscal year ended December 31, 2017, filed with the SEC on April 2, 2018, which is incorporated by reference in this prospectus,
as well as any updates thereto contained in subsequent filings with the SEC, and in any free writing prospectus that we have authorized
for use in connection with this offering. If any of these risks actually occur, our business, financial condition and results of
operations could be seriously harmed. This could cause the trading price of our common stock to decline, resulting in a loss
of all or part of your investment.
RISKS ASSOCIATED WITH OUR BUSINESS AND
INDUSTRY
During 2017, we restructured our business
operations and our efforts have been focused recently on acquiring entertainment and gaming properties. We are unlikely to generate
significant revenues until we complete such acquisitions and integrate their businesses into our company. The failure to successfully
integrate the businesses of these entertainment and gaming properties and establish market acceptance of these entertainment and
gaming properties, would significantly harm our business.
In August 2017, we
sold a portion of our existing business operations. Until recently, we were seeking to acquire businesses in the gaming, security
and educational markets. We recently acquired C-Rod, Inc. and a controlling interest in each of Once In A Lifetime LLC and Banana
Whale Studios Pte Ltd. We are unlikely to generate significant revenues until we integrate their operations into our company.
We expect that these
recently acquired entertainment and gaming properties will account for a majority of our revenue for the foreseeable future. Broad
market acceptance of these businesses is, therefore, critical to our future success and our ability to continue to generate revenues.
Failure to achieve broad market acceptance of these entertainment and gaming properties as a result of competition, technological
change, or otherwise, would significantly harm our business. Our future financial performance will depend primarily on the continued
market acceptance of our entertainment and gaming properties and on the development, introduction and market acceptance of any
future enhancements to those properties. There can be no assurance that we will be successful in marketing our entertainment and
gaming properties, and any failure to do so would significantly harm our business.
We may be unable to effectively manage
our planned expansion.
Our planned expansion
may strain our financial resources. In addition, any significant growth into new markets may require an expansion of our employee
base for managerial, operational, financial, and other purposes. During any growth, we may face problems related to our operational
and financial systems and controls. We would also need to continue to expand, train and manage our employee base. Continued future
growth will impose significant added responsibilities upon the members of management to identify, recruit, maintain, integrate,
and motivate new employees.
If we are unable to
successfully manage our expansion, we may encounter operational and financial difficulties which would in turn adversely affect
our business and financial results.
We may require additional funding for
our growth plans, and such funding may result in a dilution of your investment.
We attempted to estimate
our funding requirements in order to implement our growth plans.
If the costs of implementing
such plans should exceed these estimates significantly or if we come across opportunities to grow through expansion plans which
cannot be predicted at this time, and our funds generated from our operations prove insufficient for such purposes, we may need
to raise additional funds to meet these funding requirements.
These additional funds
may be raised by issuing equity or debt securities or by borrowing from banks or other resources. We cannot assure you that we
will be able to obtain any additional financing on terms that are acceptable to us, or at all. If we fail to obtain additional
financing on terms that are acceptable to us, we will not be able to implement such plans fully. Such financing, even if obtained,
may be accompanied by conditions that limit our ability to pay dividends or require us to seek lenders’ consent for payment
of dividends, or restrict our freedom to operate our business by requiring lender’s consent for certain corporate actions.
Further, if we raise
additional funds by way of a rights offering or through the issuance of new shares, any shareholders who are unable or unwilling
to participate in such an additional round of fund raising may suffer dilution in their investment.
We operate in a fast-evolving industry,
which may make it difficult to evaluate our business and prospects.
We recently acquired
C-Rod, Inc. and a controlling interest in Once In A Lifetime LLC and Banana Whale Studios Pte Ltd. Our future success depends in
part on our ability to anticipate customer demands, expand and enhance our entertainment and gaming offerings and adapt to technological
advances on a timely and cost-effective basis. Further, our entertainment and gaming properties must remain competitive with those
of other companies with substantially greater resources. We may experience technical or other difficulties that could delay or
prevent the development, introduction or marketing of new entertainment offerings or enhanced versions of existing entertainment
and gaming offerings. Also, we may not be able to adapt new or enhanced services to emerging industry standards, and our new entertainment
and gaming offerings may not be favorably received. We cannot assure you that we will be profitable every year. We expect that
our operating expenses will increase as we expand. Any significant failure to realize anticipated revenue growth could result in
operating losses.
The activities of 123 Wish are subject to regulation in certain jurisdictions,
and the failure to comply with those regulations could result in fines and other penalties.
Certain jurisdictions
have regulations that require 123 Wish to register as a commercial fundraiser and notify governmental authorities of events that
it is sponsoring. The failure to comply with applicable regulations could subject 123 Wish to fines and other penalties, including
being enjoined from conducting solicitation activities for charitable purposes within the jurisdiction and other civil remedies
provided by law.
Certain of our operations and management
are located outside of the United States; U.S. investors may experience difficulties in attempting to effect service of process
and to enforce judgments based upon U.S. federal securities laws against the company and its non-U.S. resident officers and directors.
While we are organized
under the laws of State of Delaware, our management, our officers and directors are non-U.S. residents, and our headquarters are
located outside of the United States. Consequently, it may be difficult for investors to effect service of process on such officers
and directors in the United States and to enforce in the United States judgments obtained in United States courts against such
persons based on the civil liability provisions of the United States securities laws. Since all our assets are located outside
of the U.S. it may be difficult or impossible for U.S. investors to collect a judgment against us. As well, any judgment obtained
in the United States against us may not be enforceable.
We are dependent on our management team
and the loss of any key member of that team could have a material adverse effect on our operations and financial condition.
We attribute our success
to the leadership and contributions of our managing team comprising executive directors and key executives, in particular, to Mark
White, our Chief Executive Officer, and Martin Ward, our Chief Financial Officer, and the management of the companies which we
acquire.
Our continued success
is therefore dependent to a large extent on our ability to retain the services of these key management personnel. The loss of their
services without timely and qualified replacement, would adversely affect our operations and hence, our revenue and profits.
We may not have sufficient insurance
coverage and an interruption of our business or loss of a significant amount of property could have a material adverse effect on
our financial condition and operations.
We currently do not
maintain any insurance policies against loss of key personnel and business interruption as well as product liability claims. If
such events were to occur, our business, financial performance and financial position may be materially and adversely affected.
We could lose our competitive advantages
if we are not able to protect any proprietary technology and intellectual property rights against infringement, and any related
litigation could be time-consuming and costly.
Our success and ability
to compete depends to a significant degree on our proprietary technology incorporated in our software. If any of our competitors’
copies or otherwise gains access to our proprietary technology or develops similar technologies independently, we would not be
able to compete as effectively. The measures we take to protect the proprietary technology software, and other intellectual property
rights, which presently are based upon a combination of patents, patents pending, copyright, trade secret and trademark laws, may
not be adequate to prevent their unauthorized use. Further, the laws of foreign countries may provide inadequate protection of
such intellectual property rights.
We may need to bring
legal claims to enforce or protect such intellectual property rights. Any litigation, whether successful or unsuccessful, could
result in substantial costs and divert resources from intended uses. In addition, notwithstanding any rights we have secured in
our intellectual property, other persons may bring claims against us that we have infringed on their intellectual property rights,
including claims based upon the content we license from third parties or claims that our intellectual property right interests
are not valid. Any claims against us, with or without merit, could be time-consuming and costly to defend or litigate, divert our
attention and resources, result in the loss of goodwill associated with our service marks or require us to make changes to our
website or other of our technologies.
We may be unable to adequately safeguard
our intellectual property or we may face claims that may be costly to resolve or that limit our ability to use such intellectual
property in the future.
Our business is reliant
on our intellectual property. Our secure messaging platform and software application are the result of our research and development
efforts, which we believe to be proprietary and unique. However, we are unable to assure you that third parties will not assert
infringement claims against us in respect of our intellectual property or that such claims will not be successful. It may be difficult
for us to establish or protect our intellectual property against such third parties and we could incur substantial costs and diversion
of management resources in defending any claims relating to proprietary rights. If any party succeeds in asserting a claim against
us relating to the disputed intellectual property, we may need to obtain licenses to continue to use the same. We cannot assure
you that we will be able to obtain these licenses on commercially reasonable terms, if at all. The failure to obtain the necessary
licenses or other rights could cause our business results to suffer.
Our strategy with respect
to our intellectual property is to patent our core software concepts wherever possible. All of our software is developed “in-house,”
and then licensed to our customers. We take steps, including by contracts, to ensure that any changes, modifications or additions
to the secure messaging platform requested by our customers remain the sole intellectual property of our company. However, our
efforts in this regard may be inadequate to deter misappropriation of our proprietary information or we may be unable to detect
unauthorized use and take appropriate steps to enforce our rights. Policing unauthorized use of our intellectual property is difficult
and there can be no assurance that the steps taken by us will prevent misappropriation of our intellectual property.
Where litigation is
necessary to safeguard our intellectual property, or to determine the validity and scope of the proprietary rights of others, this
could result in substantial costs and diversion of our resources and could have a material adverse effect on our business, financial
condition, operating results or future prospects.
RISK
ASSOCIATED WITH PENDING LITIGATION
Our
largest stockholder has commenced a lawsuit against us and our directors in the Delaware Chancery Court for refusing to appoint
four individuals he claims to have the right to designate as members of our Board of Directors and failing to obtain his consent
to the recent acquisitions we have made and the issuances of shares in connection with those acquisitions and certain other transactions.
On
May 30, 2018, Zhanming Wu (“Wu”), the record owner of 15,000,000 shares of our common stock, then representing
approximately 29.2% of our outstanding shares, commenced an action in the Court of Chancery of the State of Delaware against
us and our directors and officers (collectively, the “Director Defendants”) (i) to enjoin us and our affiliates
from issuing, offering, selling or granting any shares of our common stock to any person or entity, or consummate any merger,
acquisition or similar transaction (each, a “Transaction”) without the prior approval of Mr. Wu (the
“Blockage Rights”), and to prevent the Individual Defendants from undermining that right by engaging in any
further transactions designed to entrench themselves as directors and officers of our company and to dilute Mr. Wu’s
stock ownership below 30% of our outstanding shares, (ii) to enforce Mr. Wu’s right to appoint four directors to our
Board of Directors, (iii) to rescind the issuance of 7,383,000 shares to the former stockholders of Banana Whale Studios Pte.
Ltd (“Banana Whale”) in exchange for 51% of the outstanding shares of Banana Whale (the “Banana Whale
Acquisition”), (iv) to obtain a declaration that the Individual Defendants have breached their fiduciary duty of
loyalty by taking actions to entrench themselves on our Board of Directors; and (v) seeking an award of attorneys’ fees
and costs in connection with the litigation and such other relief as the Court deems fair and equitable.
On
June 11, 2018, Wu commenced a second action against the Company pursuant to Section 225 of the General Corporation Law of the
State of Delaware (the “225 Action”), seeking substantially the same relief as that requested in the action
commenced on May 30, 2018.
Mr.
Wu is allegedly the Chairman and majority stockholder of Dachao Asset Management (Shangai) Co., Ltd (“Dachao”) which
purchased $3,500,000 principal amount of our 7% Series A Convertible Debentures in 2014 (the “Debentures”). Mr. Wu
claims that as assignee of the Debentures for which he received 13,000,000 shares of common stock plus a promissory note in the
principal amount of $500,000 pursuant to an agreement dated September 4, 2017, in settlement of our obligations in respect of
the Debentures (the “Debenture Conversion Letter”), he is entitled to the Blockage Rights, which we granted Dachao,
as long as he continues to beneficially own 30% of the outstanding shares of common stock. The Debenture Conversion Letter also
granted Mr. Wu the right to appoint up to four members of our Board of Directors as long as he continues to beneficially own 30%
of the outstanding shares of common stock.
We
dispute the validity and applicability of the claims asserted by Wu and believe that we have meritorious defenses to those claims
and we intend to contest the action vigorously. We also are considering affirmative defenses and the assertion of counterclaims
against Mr. Wu.
On
June 14, 2018, we filed a motion to dismiss the claims asserted by Mr. Wu against us and our directors in the 225 Action. Our
motion was denied and we are proceeding to discovery in connection with Mr. Wu’s claims. In connection with the 225 Action,
we entered into a Status Quo Order which, in substance, requires that we provide notice to Wu before consummating any transaction
which would alter our capital structure in order that, if Wu desired, he might seek to prevent consummation of the transaction.
We have provided Wu advance notice of the transactions consummated since the date of the Status Quo Order. He has declined to
take any action in connection therewith, though he has reserved his rights to challenge the actions in the future and seek compensation
as a result of any damages he believes he has suffered as a result of the consummation of such transactions.
If
Mr. Wu is successful in asserting his right to pre-approve issuances of our shares and certain transactions and/or to appoint
a significant number of the members of our Board of Directors, it may become more difficult for us to obtain funds to operate
our newly acquired businesses and implement our business plan, and we may be required to pay any damages improperly incurred by
Wu as a result of the consummation of the challenged transactions. Moreover, if Mr. Wu is successful in appointing four members
of our Board of Directors, we cannot assure you that we will continue to seek to execute the business plan developed by our current
management.
RISKS ASSOCIATED WITH OUR COMMON STOCK
As a result of being a public company,
we are subject to additional reporting and corporate governance requirements that will require additional management time, resources
and expense.
As a public company,
we are obligated to file with the SEC annual and quarterly information and other reports that are specified in the Exchange Act.
We are also subject to other reporting and corporate governance requirements under the Sarbanes-Oxley Act of 2002, as amended,
and the rules and regulations promulgated thereunder, all of which impose significant compliance and reporting obligations upon
us and require us to incur additional expense in order to fulfill such obligations.
We have identified material weaknesses
in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional
material weaknesses will not occur in the future. If our internal control over financial reporting or our disclosure controls and
procedures are not effective, we may not be able to accurately report our financial results, prevent fraud, or file our periodic
reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to
a decline in our stock price.
Our management is responsible
for establishing and maintaining adequate internal controls over our financial reporting, as defined in Rule 13a-15(f) under the
Exchange Act. Though we have substantially improved our corporate governance and internal controls policies, we have identified
material weakness in our internal controls with respect to a lack of in-house U.S. GAAP expertise. We will continue to take steps
to remediate this material weakness and to improve our control process and procedures with respect to U.S. GAAP expertise and in
general as part of our continuing efforts to become compliant with the requirements of Section 404 of the Sarbanes-Oxley Act of
2002. However, there is no assurance as to whether and when we will establish effective internal controls over our financial reporting.
Our shares of common stock are from
time-to-time thinly-traded, so stockholders may be unable to sell at or near ask prices or at all if they need to sell shares to
raise money or otherwise desire to liquidate their shares.
Our common stock has
from time-to-time been “thinly traded,” meaning that the number of persons interested in purchasing our common stock
at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of
factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional
investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention
of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend
the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several
days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer that has a large
and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We
cannot give stockholders any assurance that a broader or more active public trading market for our common stock will develop or
be sustained, or that current trading levels will be sustained.
Our failure to meet the continued listing
requirements of the NASDAQ Capital Market could result in a de-listing of our common stock.
Our shares of common
stock are currently listed on The NASDAQ Capital Market. If we fail to meet the requirements for continued listing on The NASDAQ
Capital Market, The NASDAQ Capital Market may take steps to de-list our common stock. Such a de-listing would likely have a negative
effect on the price of our common stock and would impair our stockholders’ ability to sell or purchase our common stock when
they wish to do so.
On May 10, 2018, we
received a written alert from NASDAQ Listing Qualifications that our closing bid price for the last 30 consecutive businesses was
less than $1 per share. As a result, we are below the continued listing requirement to maintain a minimum bid price of $1 per share
as set forth in NASDAQ Listing Rule 5550(a)(2). However, NASDAQ Listing Rule 581(c)(3)(A) provides us a compliance period of 180
calendar days to regain compliance. If at any time during this 180 days period the closing bid price of our common stock is at
least $1 for a minimum of ten consecutive business days, we will regain compliance.
In the event of a de-listing,
we would take actions to restore our compliance with The NASDAQ Capital Market’s listing requirements, but we can provide
no assurance that any action taken by us would result in our common stock becoming listed again, or that any such action would
stabilize the market price or improve the liquidity of our common stock.
We do not expect to pay dividends in
the foreseeable future.
We do not intend to
declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and
growth of our business. Therefore, investors will not receive any funds unless they sell their common stock, and stockholders may
be unable to sell their shares on favorable terms. We cannot assure you of a positive return on investment or that you will not
lose the entire amount of your investment in our common stock.
Certain provisions of the General Corporation
Law of the State of Delaware may have anti-takeover effects, which may make an acquisition of our company by another company more
difficult.
We are subject to the
provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a Delaware corporation from
engaging in any business combination, including mergers and asset sales, with an interested stockholder (generally, a 15% or greater
stockholder) for a period of three years after the date of the transaction in which the person became an interested stockholder,
unless the business combination is approved in a prescribed manner. The operation of Section 203 may have anti-takeover effects,
which could delay, defer or prevent a takeover attempt that a holder of our common stock might consider in its best interest.
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 Stockholders. We will not receive any of the
proceeds resulting from the sale of common stock by the Selling Stockholders.
SELLING STOCKHOLDERS
This prospectus relates
to the resale by the Selling Stockholders named below of 2,500,000 shares of our common stock, including 1,525,000 shares purchased
by First Choice International Company, Inc. (“FCIC”) in a private placement on August 29, 2018 and 975,000 shares acquired
by BK Consulting Group, LLC (“BK Consulting”) upon exercise of warrants granted pursuant to a Consulting Agreement
dated March 30, 2018.
The following table sets forth
the number of shares of our common stock beneficially owned by the Selling Stockholders 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. As
of September 5, 2018, we had outstanding 53,847,022 shares of common stock.
We have assumed all shares
of common stock reflected in the table will be sold from time-to-time in the offering covered by this prospectus. Because the Selling
Stockholders 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
|
|
|
Percentage
of Common
Stock
Beneficially
Owned
Before
Offering
|
|
|
Number of
Shares of
Common
Stock
Owned After
Offering
|
|
|
Percentage
of Common
Stock
Beneficially
Owned After
Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Choice International Company, Inc. (1)
|
|
|
1,525,000
|
|
|
|
1,525,000
|
|
|
|
2.83
|
%
|
|
|
0
|
|
|
|
—
|
|
|
BK Consulting Group, LLC (2)
|
|
|
975,000
|
|
|
|
975,000
|
|
|
|
1.81
|
%
|
|
|
0
|
|
|
|
—
|
|
*Less than one percent.
|
(1)
|
Mark
Peikin exercises sole voting and investment authority over all of our securities owned by First Choice International Company,
Inc., and thus is deemed to beneficially own such shares pursuant to Rule 13d-3 under the Exchange Act.
|
|
(2)
|
Brian
Kantor exercises sole voting and investment authority over all of our securities owned by BK Consulting Group, LLC and thus
is deemed to beneficially own such shares pursuant to Rule 13d-3 under the Exchange Act.
|
None of the Selling Stockholders
is a broker-dealer or an affiliate of a broker-dealer. None of the Selling Stockholders or any of their respective 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.
PLAN OF DISTRIBUTION
The Selling Stockholders and
any of their respective 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 Stockholders 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 Stockholders also
may 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 Stockholder
also may 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 Stockholder also may 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 Stockholders 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 Stockholders
may be deemed to be “underwriters” within the meaning of the Securities Act, they 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. Each
of 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 such 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 Stockholders 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 Stockholders 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.
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 Mandelbaum Salsburg P.C., New York, New York.
EXPERTS
The consolidated financial
statements of One Horizon Group, Inc. as of and for the years ended December 31, 2017, and 2016, appearing in our Annual Report
(Form 10-K) for the year ended December 31, 2017, 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 horizoninc.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.
These 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, 2017, filed with the SEC on April 2, 2018;
|
|
|
|
|
●
|
our Quarterly Report on Form 10-Q for the period ended March 31, 2018 filed with the SEC on May 16, 2018 and our Quarterly Report on Form 10-Q for the period ended June 30, 2018 filed with the SEC on August 17, 2018;
|
|
●
|
our Current Reports on Form 8-K filed with the SEC on April 3, 2018, May 1, 2018 (Form 8-K/A), May 10, 2018; May 15, 2018; May 22, 2018; May 24, 2018, as amended on July 27, 2018 and as further amended on August 2, 2018; June 7, 2018; July 2, 2018; July 10, 2018; August 2, 2018; August 10, 2018 and August 21, 2018; and
|
|
●
|
the description of our common stock in the 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 Stockholders. The estimated expenses of issuance and
distribution are set forth below.
|
SEC filing fee
|
|
$
|
76.26
|
|
|
Legal expenses
|
|
|
5,000.00
|
|
|
Accounting expenses
|
|
|
2,500.00
|
|
|
Miscellaneous
|
|
|
423.74
|
|
|
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.”
|
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 amendment to this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in London, England, on September 7, 2018.
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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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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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Chief Financial Officer
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(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 amendment to this registration statement has been signed below by the following persons in
the capacities on September 7, 2018.
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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/ Nicholas Carpinello
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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
COMMON STOCK PURCHASE WARRANT
One
Horizon Group, Inc.
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Warrant Shares: 975,000
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Initial Exercise Date: April 2, 2018
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THIS COMMON STOCK PURCHASE
WARRANT (the “
Warrant
”) certifies that, for value received, BK Consulting Group 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 April 2, 2018 (the “
Initial Exercise Date
”) and on or prior to the close of business on June 30, 2018
(the “
Termination Date
”) but not thereafter, to subscribe for and purchase from One Horizon Group, Inc., a Delaware
corporation (the “
Company
”), up to 975,000 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
.
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 1(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 eighty-five cents (US$0.85), subject
to adjustment hereunder (the “
Exercise Price
”).
c)
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 1(c)(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.
d)
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 1 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, 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 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, 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 4.99% 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, provided that the Beneficial Ownership
Limitation in no event exceeds 4.99% 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 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 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 2
.
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 2(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 1(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 1(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
2(e).
c)
Calculations
.
All calculations under this Section 2 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, 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, 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 3
.
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 3(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 4
.
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 1(c)(i), except as expressly set forth in
Section 2.
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.
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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):
☐ 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 Share
s 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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ONE
HORIZON GROUP, INC.
34
South Molton Street
London
W1K 5RG, United Kingdom
August
30, 2018
BK
Consulting Group, LLC
21290
N.E. 23
rd
Avenue
Aventura,
Florida 33180
Attention:
Brian Kantor, Managing Member
Dear
Brian:
Reference
is made to the warrants we granted BK Consulting Group, LLC (“”BK”) to purchase 975,000 shares of our common
stock (the “Warrants”) pursuant to the Consulting Agreement dated as of March 30, 2018. The Warrants have an exercise
price of $0.85 per share and are exercisable during the period commencing April 2, 2018 and ending June 30, 2018.
We
previously agreed to extend the expiration date of the Warrants until December 31, 2018. As an inducement to the early exercise
of Warrants, we have agreed to amend the Warrants to reduce the aggregate exercise price to $73,125.
If
the foregoing sets forth the agreement between us, please so signify by countersigning a copy of this letter in the space below
provided for your signature and returning the same to me whereupon it shall become a binding agreement between us and constitute
an amendment to the Warrants.
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Very
truly,
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/s/
Martin Ward
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Chief
Financial Officer
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Accepted and agreed to as of the date set forth above.
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BK Consulting Group, LLC
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By:
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/s/
Brian Kantor
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Brian
Kantor
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Managing
Member
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Exhibit 5.1
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Mandelbaum
Salsburg P.C.
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Vincent J. McGill
Partner
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1270
AVENUE OF THE AMERICAS, 18
th
Floor
NEW YORK, NEW YORK 10020
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Direct Dial: 212 324-1876
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September 7, 2018
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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 Stockholders
Gentlemen:
You
have requested our opinion with respect to certain matters in connection with the offering by the selling stockholders 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 2,500,000 shares of the common stock
of the (the “
Shares
”), of the Company (the “
Registration Statement
”), including
1,525,000 shares of common stock issuable 975,000 shares of common stock sold to First Choice International Company, Inc. pursuant
to a Subscription Agreement dated as of August 29, 2018 (the “
Shares
”) and 975,000 shares of common
stock of the Company (the “
Warrant Shares
”) issuable upon exercise of a warrant (the “
Warrant
”)
issued to BK Consulting Group, LLC pursuant to a Consulting Agreement dated March 30, 2018 (the “
Consulting Agreement”).
The issuance and sale of the Shares and Warrant were exempt from the registration requirements of the Securities Act pursuant
to Rule 506 of Regulation D under the Securities Act and 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 Subscription Agreement,
the Consulting Agreement, the Warrant, a letter amending the terms of the Warrant, 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 Shares have been validly issued, fully paid and are non-assessable.
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2.
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The Warrant Shares issuable upon exercise of the Warrant, when
issued against payment of the exercise price specified in the Warrant, 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,
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/s/ Mandelbaum Salsburg P.C.
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Exhibit 10.1
SUBSCRIPTION AGREEMENT
This
Subscription Agreement (this
“
Agreement
”)
is dated as of August 29, 2018, between One Horizon Group, Inc., a Delaware corporation (the
“
Company
”
),
and the person and/or entity identified on the signature page hereto (
“
Purchaser
”
).
The
Company is offering (the
“
Offering
”
)
up to One Million Five Hundred Twenty-Five Thousand (1,525,000) shares of the Company’s common stock, par value $0.0001 per share
(
“
Common
Stock
”
),
for an aggregate purchase price of $114,375.00.
The
Offering will commence August 29, 2018, and terminate on the close of business on August 31, 2018 (
“
Initial
Offering Period
”
), which period may be extended by the
Company for up to an additional ten (10) days (this additional period and the Initial Offering Period shall be referred to as the
“
Offering Period
”
).
The Company may hold one or more subsequent closings (
“
Further
Closings
”
) until the termination or expiration of the
Offering Period until such time as the Offering is filled. There is no requirement that the entire Offering be filled for the Company
to accept proceeds from the sale of the Common Stock that is the subject of this Offering and to issue such Common Stock to one
or more Purchasers.
Purchaser
desires to purchase, and the Company is willing to sell to the Purchaser, upon the terms and conditions stated in this Agreement,
the number of Shares set forth on the signature page hereof (
“
Purchased
Shares
”
), for the purchase price set forth on the signature
page hereof (
“
Purchase Price
”
).
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1
Purchase
of the Securities
. Subject to the terms and conditions of this Agreement, the Purchaser, intending to be legally bound, hereby
irrevocably subscribes for and agrees to purchase the Purchased Shares, and the Company agrees to issue the Purchased Shares against
its receipt of the Purchase Price.
1.2
Deliveries
.
The Purchaser will deposit the Purchase Price for the Securities to an account designated by the Company by wire transfer of immediately
available funds. The Company will deliver to the Purchaser the Securities against the Company’s
receipt of the Purchase Price.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser as
follows:
2.1
Organization;
Good Standing; and Power
. The Company is a corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The shares of the Company’s common
stock are currently traded on NASDAQ.
2.2
Authorization
.
The Company possesses the legal right and capacity to execute, deliver and perform this Agreement. The execution and delivery
of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of the
Company’s certificate of incorporation or bylaws. The Company has taken all action required by law, its certificate of incorporation,
its bylaws, or otherwise to authorize the execution and delivery of this Agreement and the issuance of the Shares, and the Company
has full power, authority, and legal right and has taken all action required by law, its certificate of incorporation, bylaws,
or otherwise to consummate the transactions herein contemplated. This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its
terms, except to the extent such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, receivership,
fraudulent conveyance or similar laws affecting or relating to the enforcement of creditors’ rights generally, and by equitable
principles (regardless of whether enforcement is sought in a proceeding in equity or at law).
2.3
Issuance
of the Shares
. The Shares have been duly authorized, and when issued in accordance with the terms set forth in this Agreement,
will be duly authorized, and duly and validly issued, fully paid and non-assessable, free and clear of all liens imposed by the
Company.
2.4
SEC
Filings; Financial Statements
.
(a) There
has been available on the SEC EDGAR website, copies of each report, registration statement and definitive proxy statement filed
by Company with the SEC since at least January 1, 2017 (the
“
Company
SEC Reports
”
),
which are all the forms, reports and documents filed by Company with the SEC from January 1, 2017 to the date of this Agreement.
As of their respective dates, the Company SEC Reports: (i) were prepared in accordance and complied in all material respects with
the requirements of the Securities Act or the Securities Exchange Act of 1934 (
“
Exchange
Act
”), as the case may be, and the rules and regulations of the SEC thereunder applicable to such Company SEC Reports;
and (ii) did not at the time they were filed (and if amended or superseded by a filing prior to the date of this Agreement then
on the date of such filing and as so amended or superseded) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(b) Each
set of financial statements (including, in each case, any related notes thereto) contained in the Company SEC Reports comply as
to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance
with U.S. Generally Accepted Accounting Principles (
“
GAAP
”)
applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case
of unaudited statements, do not contain footnotes as permitted by Form 10-Q promulgated under the Exchange Act) and each fairly
presents in all material respects the financial position of Company at the respective dates thereof and the results of its operations
and cash flows for the periods indicated.
2.5
Information
.
The information concerning the Company set forth in this Agreement and the Company SEC Reports is complete and accurate in all
material respects and does not contain any untrue statements of a material fact or omit to state a material fact required to make
the statements made, in light of the circumstances under which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company
as follows:
3.1
Incorporation;
Authority
. Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise
to carry out its or his obligations hereunder. The execution and delivery of this Agreement and performance by Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited liability
company or similar action, as applicable, on the part of Purchaser. This Agreement, when delivered by Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of Purchaser, enforceable against it or him in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’
rights
generally; (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies;
and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
3.2
Own
Account
. Purchaser understands that the Securities are
“
restricted
securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities
as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in
violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities
in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any
applicable state securities law. Purchaser is acquiring the Securities hereunder in the ordinary course of its business.
3.3
Purchaser
Status
. At the time Purchaser was offered the Shares, it was, and as of the date hereof it is an
“
accredited
investor”
as defined in SEC Regulation D, Rule 501(a).
3.4
Experience
of Purchaser
. Purchaser, either alone or together with its or his representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Purchased
Shares. Purchaser is able to bear the economic risk of an investment in the Purchased Shares and, at the present time, is able
to afford a complete loss of such investment.
3.5
General
Solicitation
. Purchaser is not purchasing the Purchased Shares as a result of any advertisement, article, notice or other communication
regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.
3.6
Access
to Information
. Purchaser acknowledges that it or he has had the opportunity to review this Agreement (including all exhibits
and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the terms and conditions of the Shares and the merits
and risks of investing in the securities of the Company; (ii) access to information about the Company and its financial condition,
results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii)
the opportunity to obtain such additional information that the Company owns or can acquire without unreasonable effort or expense
that is necessary to make an informed investment decision with respect to the investment.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1
Transfer
Restrictions
.
(a) The
Purchased Shares only may be disposed of in compliance with state and federal securities laws. In connection with any transfer
of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an
“
affiliate”
(as defined in Rule 405 of the Securities Act) of a Purchaser, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such
transferred Purchased Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing
to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser under this Agreement.
(b) The
Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Purchased Shares in the
following form:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“
SECURITIES
ACT
“
),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.”
4.2
Use
of Proceeds
. The Company shall use the net proceeds from the sale of the Purchased Shares hereunder for working capital purposes.
4.3
Registration
.
The Company hereby agrees to file a registration statement under the Securities Act for the resale of the Purchased Shares and
any other securities issued upon conversion or exchange or otherwise in respect thereof, including without limitation pursuant
to any stock dividend, stock split, merger, consolidation or other recapitalization transaction (collectively, the
“
Registrable
Securities
”
),
in accordance with
Appendix A
annexed hereto not more than fifteen (15) days after the date of the First Closing.
4.4
Indemnification
.
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(a)
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The
Company agrees to indemnify and hold harmless Purchaser and each of the other Indemnified Parties (as hereinafter defined) from
and against any and all losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements,
and any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses
and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise (including, without limitation,
the costs, expenses and disbursements, as and when incurred, of investigating, preparing, pursing or defending any such action,
suit, proceeding or investigation (whether or not in connection with litigation in which any Indemnified Party is a party) (collectively,
“
Losses
”
),
directly or indirectly, caused by, relating to, based upon, arising out of, or in connection with, Purchaser’s
purchase of the Purchased Shares pursuant to the terms of this Agreement, any breach by the Company of any representation, warranty,
covenant or agreement contained in this Agreement, or the enforcement by Purchaser of its rights under this Agreement, except
to the extent that any such Losses are found in a final judgment by a court of competent jurisdiction (not subject to further
appeal) to have resulted primarily and directly from the willful misconduct of the Indemnified Party seeking indemnification hereunder.
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(b)
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These
indemnification provisions shall extend to the following persons (collectively, the
“
Indemnified
Parties
”): Purchaser, its present and former affiliated
entities, partners, employees, legal counsel, agents, advisors and controlling persons (within the meaning of the federal securities
laws), and the officers, directors, partners, stockholders, members, managers, employees, legal counsel, agents, advisors and
controlling persons of any of them. These indemnification provisions shall be in addition to any liability that the Company may
otherwise have to any Indemnified Party.
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(c)
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If any action, suit, proceeding or investigation is commenced,
as to which an Indemnified Party proposes to demand indemnification, it shall notify the Company with reasonable promptness;
provided
,
however
, that any failure by an Indemnified Party to notify the Company shall not relieve the Company from its obligations
hereunder. An Indemnified Party shall have the right to retain counsel of its own choice to represent it, and the fees, expenses
and disbursements of such counsel shall be borne by the Company. Any such counsel shall, to the extent consistent with its professional
responsibilities, cooperate with the Company and any counsel designated by them. The Company shall be liable for any settlement
of any claim against any Indemnified Party made with the written consent of the Company. The Company shall not, without the prior
written consent of Purchaser, settle or compromise any claim, or permit a default or consent to the entry of any judgment in respect
thereof, unless such settlement, compromise or consent (i) includes, as an unconditional term thereof, the giving by the claimant
to all of the Indemnified Parties of an unconditional release from all liability in respect of such claim; and (ii) does not contain
any factual or legal admission by or with respect to an Indemnified Party or an adverse statement with respect to the character,
professionalism, expertise or reputation of any Indemnified Party or any action or inaction of any Indemnified Party.
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(d)
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In order to provide for just and equitable contribution,
if a claim for indemnification pursuant to these indemnification provisions is made but it is found in a final judgment by a court
of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though
the express provisions hereof provide for indemnification in such case, then the Company shall contribute to the Losses to which
any Indemnified Party may be subject: (i) in accordance with the relative benefits received by the Company and its stockholders,
subsidiaries and affiliates, on the one hand, and the Indemnified Party, on the other hand; and (ii) if (and only if) the allocation
provided in clause (i) of this sentence is not permitted by applicable law, in such proportion as to reflect not only the relative
benefits, but also the relative fault of the Company, on the one hand, and the Indemnified Party, on the other hand, in connection
with the statements, acts or omissions that resulted in such Losses as well as any relevant equitable considerations. No person
found liable for a fraudulent misrepresentation shall be entitled to contribution from any person who is not also found liable
for fraudulent misrepresentation. The relative benefits received (or anticipated to be received) by the Company and its stockholders,
subsidiaries and affiliates shall be deemed to be equal to the purchase price for the Purchased Shares.
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(e)
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The indemnification provisions shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of the Indemnified Parties and their respective successors,
assigns, heirs and personal representatives and shall remain operative and in full force and effect after the Closing and for
the maximum time period allowable under applicable law.
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ARTICLE V
MISCELLANEOUS
5.1
Waivers
.
No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute
a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein
or in any other documents. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach. Any party hereto may, at or before the Closing, waive any conditions to its obligations
that are unfulfilled.
5.2
Binding
Effect; Benefits
. This Agreement shall inure to the benefit of the parties hereto and shall be binding upon them and their
respective their heirs, executors, administrators, successors, legal representatives and assigns. Except as otherwise set forth
herein, nothing in this Agreement, expressed or implied, is intended to confer upon any person other than the parties hereto or
their respective successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Agreement.
5.3
Assignment;
Delegation
. No party to this Agreement may assign its rights or delegate its obligations hereunder without the prior written
consent of all of the other parties. Any assignment or delegation in violation of this Section 5.3 shall be null and void.
5.4
Entire
Agreement
. This Agreement constitutes the entire agreement and supersedes all prior agreements, statements, representations
or promises, oral and written, among the parties hereto with respect to the subject matter hereof. No party hereto shall be bound
by or charged with any written or oral arguments, representations, warranties, statements, promises or understandings not specifically
set forth in this Agreement.
5.5
Notices
.
Any notice, demand or other communication which any party hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if sent prepaid, with a recognized international courier service.
5.6
Governing
Law; Jurisdiction
. This Agreement shall be governed by and construed in accordance with the laws of the State of New York,
without giving effect to conflicts of law principles. If there is any litigation relating to this Agreement or the transaction
contemplated hereby, the parties hereto irrevocably consent to the jurisdiction of the courts of the State of New York and of any
court located in such State in connection with any action or proceeding arising out of or relating to this Agreement, any document
or instrument delivered pursuant to, in connection with or simultaneously with this Agreement, or a breach of this Agreement or
any such document or instrument.
5.7
Severability
.
If any term or provision of this Agreement shall to any extent be finally determined by a court of competent jurisdiction to be
invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each term and provision of the agreement
shall be valid and enforced to the fullest extent permitted by law, provided that as so enforced, each of the parties receives
substantially all of the benefits contemplated hereby.
5.8
Counterparts
.
This Agreement may be executed through the use of separate signature pages or in any number of counterparts and by e-mail, and
each of such counterparts shall, for all purposes, constitute a single agreement binding on all parties, notwithstanding that all
parties are not signatories to the same counterpart.
IN WITNESS WHEREOF
, the parties hereto
have executed this Agreement as of the day and year this subscription has been accepted by the Company as set forth below.
Name of Purchaser: First Choice International Company, Inc.
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Signature of Individual or Authorized Signatory
:
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Email Address of Authorized Signatory: mhp@123bgp.com
Address for Notices to Purchaser:
Legal & Compliance, LLC
c/o First Choice International Company, Inc.
330 Clematis Street, Ste. 217
West Palm Beach, FL 33401
Address for Delivery of Securities to Purchaser (if not same
as address for notice):
Social Security (Individual) or EIN Number (Entity):
27-1461143
Number of Shares Purchased: 1,525,000
Purchase Price: $114,375
ACCEPTANCE OF SUBSCRIPTION
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ONE HORIZON GROUP, INC.
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By:
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Martin Ward
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Chief Financial Officer
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Duly Authorized
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Date: August 29, 2018
Appendix A
REGISTRATION RIGHTS
(a) As used in this
Appendix A
the following capitalized
terms used without definition shall have the meanings assigned to them below:
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1.
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“
Damages
”
means any loss, damage, or liability (joint or several) to which a party hereto may become subject under the Securities Act, the
Exchange Act, or other federal or state law, insofar as such loss, damage, or liability (or any action in respect thereof) arises
out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration
statement of the Company filed pursuant hereto, including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying
party (or any of its agents or affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation
promulgated under the Securities Act, the Exchange Act, or any state securities law based upon, or arising out of, any of such
party’s obligations arising hereunder.
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2.
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“
Exchange
Act
” means the Securities Exchange Act of 1934, as amended from time-to-time,
and the rules and regulations promulgated thereunder.
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3.
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“
Person
”
means any individual, corporation, partnership, trust, limited liability company, association
or other entity.
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4.
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“
Registrable
Securities
” means the Shares and or other securities issued upon conversion or exchange or otherwise in respect thereof,
including without limitation pursuant to any stock dividend, stock split, merger, consolidation or other recapitalization transaction.
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5.
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“
SEC
”
means the Securities and Exchange Commission.
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6.
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“
SEC
Rule 144
” means Rule 144 promulgated by the SEC under the Securities Act, as in effect from time-to-time.
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7.
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“
Securities
Act
” means the Securities Act of 1933, as amended from time-to-time, and the rules and regulations promulgated thereunder.
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8.
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“
Selling
Expenses
” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of
Registrable Securities, and the fees and expenses of counsel to the Buyer.
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(b)
Not later than fifteen (15) days after the date of the First Closing, the Company will file a registration statement under the
Securities Act for the resale of the Registrable Securities by the Purchaser on Form S-3, or if the Company does not then qualify
to use Form S-3, Form S-1 or such other form as it is then eligible to use for the resale of the Registrable Securities (the
“
Registration
Statement
”
) and shall use its reasonable commercial efforts
to have the Registration Statement declared effective by the SEC and maintain the effectiveness of the Registration Statement until
all of the Registrable Securities have been sold or are eligible for sale pursuant to Rule 144 without restriction. The Company
shall furnish the Purchaser with a copy of the prospectus included in the Registration Statement at the time it is declared effective
and any amendments or supplements thereto. The Company shall notify Purchaser of the happening of any event of which the Company
has knowledge as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and promptly prepare a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of the Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state any material fact necessary to make the statements therein not misleading; provided that the
Company may postpone for up to ninety (90) days the delivery of any such supplement or amendment if the Company’s
Board of Directors determines in good faith that disclosure of the new information to be contained therein would reasonably be
expected to have a material adverse effect on: (i) any proposal or plan by the Company or any of its affiliates to engage in any
acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer, reorganization
or similar transaction; or (ii) any pending or threatened litigation to which the Company is, or is threatened to be made, a party.
As a condition to the
registration of the Registrable Securities, the Purchaser shall furnish the Company and its counsel with such information regarding
itself, the Registrable Securities held by it, and the intended method of disposition of such Registrable Securities as is reasonably
required to file the Registration Statement and cause the timely registration of the Registrable Securities.
The Company shall pay
all expenses (other than Selling Expenses), and stock transfer taxes applicable to the sale of the Registrable Securities, and
the fees and expenses of counsel to the Purchaser) incurred in connection with the registration of the Registrable Securities,
including all registration, filing and accounting fees, and fees and disbursements of counsel for the Company.
(c)(1) To the extent permitted by law,
the Company will indemnify and hold harmless the Purchaser, and the partners, members, officers, directors, and shareholders of
the Purchaser, and each Person, if any, who controls the Purchaser, against any Damages, and the Company will pay to the Purchaser,
controlling Person, or other aforementioned Person any legal fees and other expenses reasonably incurred thereby in connection
with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided,
however, that such indemnity shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is
effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable
for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity
with written information furnished by or on behalf of the Purchaser, controlling Person, or other aforementioned Person expressly
for use in connection with such registration.
(c)(2) To the extent permitted by law,
the Purchaser will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the
Registration Statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel
for the Company, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions
or omissions made in reliance upon and in conformity with written information furnished by or on behalf of the Purchaser expressly
for use in connection with such registration; and the Purchaser will pay to the Company and each other aforementioned Person any
legal fees and other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding
from which Damages may result, as such expenses are incurred; provided, however, that such indemnity shall not apply to amounts
paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Purchaser, which consent
shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by the Purchaser
by way of such indemnity exceed the Purchase Price.
(c)(3)
Promptly after receipt by an indemnified party of notice of the commencement of any action (including any governmental action)
for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to
be made against any indemnifying party, give the indemnifying party notice of the commencement thereof. The indemnifying party
shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with
any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel reasonably mutually
satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may
be represented without conflict by counsel) shall have the right to retain separate counsel, with the reasonable fees and expenses
to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented
by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement
of any such action will not relieve such indemnifying party of any liability to the indemnified party, except to the extent, and
only to the extent, that such failure actually and materially prejudices the indemnifying party’s
ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than as provided herein.
(c)(4)
To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either: (i) any
party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this
Appendix A
but
it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding
the fact that this
Appendix A
provides for indemnification in such case; or (ii) contribution under the Securities Act
may be required on the part of any party hereto for which indemnification is provided under this
Appendix A
, then, and
in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they
may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of
the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted
in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether
the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to
information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case,
no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled
to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event
shall the aggregate amounts payable by the Purchaser by way of indemnity or contribution exceed the Purchase Price.
(d) The obligations of the Company and
the Purchaser under this
Appendix A
shall survive the completion of any offering of the Registrable Securities in a registration
under this
Appendix A
, and otherwise shall survive the termination of this Agreement for the maximum time period allowable
under applicable law.
Exhibit 10.2
CONSULTING AGREEMENT
This Consulting Agreement (the “
Agreement
”)
is made as of March 30, 2018, (“
Effective Date
”), by and between One Horizon Group, (NASDAQ: OHGI),
a Delaware Corporation with an office and place of business located at 34 South Molton Street, London W1K 5RG UK (“
OHGI
”
or the “
Company
”), and BK Consulting Group, a Florida Limited Liability Company (“
BK
”
or the “
Consultant
”) with an office and place of business located at 21290 N.E. 23
rd
Avenue,
Aventura, Florida, 33180, USA. The Company and/or the Consultant may each be referred to herein as a “
Party
,”
and collectively as the “
Parties
.”
WHEREAS,
the Company has
requested that the Consultant provide advisory services with respect to one or more potential business transactions (each a “
Transaction
”)
by and between the Company and professional music artists and businesses engaged in the representation of music artists, music
production, digital distribution and on-line marketing and other businesses (“
Consulting Services
”);
and
WHEREAS,
the Consultant has
substantial expertise and experience providing the Consulting Services requested by the Company and the Company agrees to
retain the Consultant to provide the Consulting Services and the Consultant will provide the Consulting Services for the
“
Term
” of this Agreement (as defined below);
NOW, THEREFORE,
in consideration of the premises and the mutual covenants
hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, and
intending to be legally bound hereby, the Consultant and the Company agree as follows:
1.
TERM
.
This Agreement shall commence upon receipt of the Compensation set forth in
Sections 4(a) and (b)
and shall extend thereafter
for an initial period of one (1) year (“
Term
”). Unless immediate termination is otherwise specifically
permitted herein or by applicable law (
e.g.
for material breach), the Company may cancel this Agreement by providing sixty
(60) calendar days written notice to BK (“
Termination Notice
”). Notwithstanding, in the event of termination,
the Compensation (
Section 4
) shall be immediately due and payable.
2.
CONSULTING
SERVICES
. The Company expressly acknowledges and agrees that the Consulting Services are to be performed in a commercially
reasonable manner and are not legal or broker-dealer services and that the execution of this Agreement does not guaranty any particular
success or result.
3.
APPROVAL
OF INFORMATION
. The Company shall furnish the Consultant with such information as is reasonably required in order
for the Consultant to perform its duties hereunder (all such information so furnished, “
Information
”).
The Company recognizes and confirms that the Consultant (i) will use, and rely primarily on, the Information and information available
from generally recognized public sources (“
Public Information
”) in rendering the Consulting Services
without having independently verified the same, (ii) does not assume responsibility for the accuracy of completeness of the Information
and Public Information, (iii) will not make an appraisal of any assets of the Company, and/or (iv) will provide the Consulting
Services based on the Information and the Public Information. It is the Company’s responsibility to make certain that the
Information to be furnished by the Company, when delivered, will be true and correct in all material respects and will not contain
any misstatement of a material fact or omit to state any material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they were made, not misleading. The Company shall promptly
notify the Consultant of any material inaccuracy or misstatement in, or material omission from, any Information theretofore delivered
to the Consultant, or in any Public Information to the extent that the Company is aware of the same.
4.
COMPENSATION
.
For the Consulting Services rendered
during the Term, the following “
Compensation
” shall be due and owing the Consultant from the Company:
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a)
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The Company shall
issue and immediately and irrevocably deliver to the Consultant nine hundred seventy-five
thousand (975,000) shares of OHGI Common Stock (“
BK Shares
”).
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b)
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The Company shall
issue and immediately and irrevocably deliver to the Consultant a warrant to purchase
nine hundred seventy-five thousand (975,000) shares of OHGI Common Stock, having an exercise
price of Eighty-Five Cents ($0.85) per share, exercisable from April 2, 2018 until June
31, 2018 (“
BK Warrant Shares
”).
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c)
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The BK Warrants
shall contain language that provides that BK may not exercise the BK Warrants at any
time that BK may be deemed to be the beneficial owner of more than 4.99% of OHGI’s
Common Stock, as determined under the beneficial ownership rules of the Securities Exchange
Commission (“
SEC
”) by virtue of the ownership of the BK Warrants
or any other OHGI Common Stock (“
4.99% Blocker
”). Upon closing
of any Transaction for which the Consulting Services have been provided, and also subject
to the 4.99% Blocker, BK shall be issued an additional Three Hundred Thousand (300,000)
shares of OHGI Common Stock (“
Subsequent BK Shares
”).
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d)
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Subject to the 4.99% Blocker, should the SEC approve
a Company-filed S-8 Registration Statement, at the Company’s election, the Company may issue the BK Shares on the basis
of such S-8 Registration Statement.
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e)
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Subject to the 4.99% Blocker, the Company will promptly
undertake to register the BK Warrants (and the BK Shares should they not otherwise be included in the S-8 Registration Statement)
with the SEC pursuant to an S-3 Registration Statement.
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f)
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Unless otherwise indicated in this Agreement, Subsequent
BK Shares shall be issued to BK within ten (10) business days from the closing of any Transaction.
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g)
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BK shall not be issued, at any time during the Term
or any extension thereof, such amount of OHGI Common Stock that would result in beneficial ownership by BK of more than 9.99%
of the total issued and outstanding shares of OHGI Common Stock.
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h)
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As may be applicable, the Company agrees to take any
and all action(s) necessary to clear of restriction the share-based compensation awarded to the Consultant under this Section
4 upon presentation of any Rule 144 application by the Consultant or its broker, including, without limitation, (i) authorizing
the Company’s transfer agent to remove the restrictive legend on the BK Shares, BK Warrant Shares or any Subsequent BK Shares
(ii) expediting the acquisition of a legal opinion from the Company’s authorized counsel at Company’s expense (or, in the
event the Consultant uses its own counsel, at the Company’s expense up to $500) favorably opining as to the removal of the
restrictive legend, and (iii) cooperating and communicating with the Consultant and its broker in order to use the Company’s
commercially reasonable efforts to clear the subject Shares of restriction as soon as possible after presentation of a Rule 144
application by the Consultant or its broker to either the Company or its transfer agent. Further, the Company agrees not to unreasonably
withhold or delay the approval of any application filed by the Consultant or its broker under Rule 144 to clear the BK Shares,
BK Warrant Shares or any Subsequent BK Shares of restriction.
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i)
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The Parties shall negotiate and agree in good faith
regarding the Consultant’s Compensation for any Consulting Services to be provided beyond the scope of this Agreement and/or
the Term depending upon the Company’s needs at such time and the services being requested.
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5.
LIMITATION
OF ENGAGEMENT
. The Company acknowledges that the Consultant is providing the Consulting Services as an independent contractor.
6.
CONFIDENTIALITY
.
Other than as required by applicable law, neither the Consultant nor any of its employees, agents, and/or officers or directors
shall disclose any knowledge or information they have obtained in the course of performing the Consulting Services, if such knowledge
or information concerns the confidential or non-public affairs of the Company, without the Company’s prior consent. The
existence of this Agreement is also privileged and confidential subject to applicable Securities Laws.
7.
COMPLIANCE
AND GOVERNING LAW
.
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a)
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OHGI, in connection with the issuance of any stock
to BK hereunder, as may be applicable, shall be responsible for any and all compliance with applicable Securities Laws, rules
and regulations.
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b)
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Company recognizes
that failure to timely make its filings under the Securities Exchange Act of 1934 (“
Exchange
Act
”) will materially hinder the effectiveness of the Consulting Services
and will constitute automatic grounds for cancellation by the Consultant and all Compensation
paid to the Consultant up to and including the date of such failure shall be deemed fully
earned by the Consultant as of such date.
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c)
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This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida applicable to agreements made and to be fully performed therein (excluding Florida’s
law controlling conflicts of law where they would conflict with this provision). Any disputes that arise under this Agreement,
even after the termination of this Agreement, will be heard only in the state or federal courts located in Dade County, Florida.
The Parties hereto expressly agree to submit themselves to and expressly waive any rights they may have to contest the jurisdiction,
venue or authority of any such courts.
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d)
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It is specifically understood that the Consultant is
not and does not hold itself out to be a ‘broker/dealer’ as that term is understood in applicable law (including the
‘Paul Anka’ SEC no-action letter dated July 24, 1991, and the ‘Country Business, Inc.’ SEC no-action letter
dated November 8, 2006) in reference to the Company procuring financing sources and merger and/or acquisition candidates, and
the Consultant does not normally provide such services.
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e)
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Any Compensation obligation hereunder shall survive
the merger, acquisition or other change in the form of entity of the Company and to the extent it remains unfulfilled, shall be
assigned and transferred to any successor to the Company.
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f)
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It is understood and agreed that the Company and not
the Consultant is responsible to perform any and all due diligence on any broker/dealer, lender, merger or acquisition candidate
or strategic partner introduced to the Company by the Consultant under this Agreement prior to the Company receiving funds or
closing any Transaction.
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8.
NOTICE
.
All notices and correspondence hereunder shall be in writing and sent by e-mail or FedEx to the applicable Party at the addresses
set forth above.
9.
INDEMNIFICATION
.
The Company agrees to indemnify, defend and hold harmless the Consultant, its officers, directors, members, employees, affiliates,
and agents against all losses, expenses, damages and costs, including reasonable attorneys’ fees, resulting from any act,
action or omission, arising out of or related to the services provided by Consultant under this Agreement, except for acts of
the Consultant of willful misconduct or gross negligence related to this Agreement.
10.
LIMITATIONS
.
Any liability of the Consultant, its officers, directors, members, employees, affiliates, and agents shall not exceed the Compensation
actually paid to the Consultant by the Company pursuant to
Section 4
of this Agreement during the fifteen (15) calendar
days of Consulting Services prior to the breach or event giving rise to any such liability.
11.
EXPENSES
.
The Company will reimburse the Consultant for its receipted expenses approved by the Company in advance, including, but not limited
to, expenses relating to the Consultant’s travel and lodging, which expenses during the Term shall not exceed ten thousand
dollars ($10,000). The Consultant shall always seek advance approval from the Company for any single expense that exceeds one
thousand dollars ($1,000). The Company shall also reimburse Consultant upon presentation of any expenses incurred by the Consultant
for collection of any Compensation due to the Consultant under
Section 4
of this Agreement, including but not limited to
reasonable attorneys’ fees and court costs. Reimbursement shall be made within fifteen (15) business days following the
receipt by the Company of the Consultant’s invoice related to any such expenses.
12.
MISCELLANEOUS
.
This Agreement shall not be modified or amended except in writing signed by the Parties; shall be binding upon and inure to the
benefit of the Parties and their respective assigns or successors; and constitutes the entire agreement of the Parties and supersedes
any prior agreements. If any provision of this Agreement is determined to be invalid or unenforceable in any respect, such determination
will not affect such provision in any other respect, and the remainder of the Agreement shall remain in full force and effect.
This Agreement may be executed in counterparts (including e-mail scans) each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
One Horizon Group, Inc. represents and warrants that all of the BK Shares,
BK Warrant Shares and Subsequent BK Shares shall be or will 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 BK Consulting Group,
LLC
. The Company agrees to promptly file this Agreement with the appropriate governing bodies and to reference the same in
its next Exchange Act filing.
IN WITNESS WHEREOF,
the Parties below have each caused this Agreement
to be executed as of the date first set forth above.
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BK Consulting Group, LLC
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One Horizon Group, Inc.
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By:
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By:
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Name: Brian Kantor
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Name: Mark White
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Title: Managing Member
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Title: Chief Executive Officer
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3/16/2018
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Duly Authorized
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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 2,
2018 related to the consolidated financial statements of the Company as of and for the years ended December 31, 2017 and 2016 which
is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, and to the reference to us
under the heading “Experts” in this Registration Statement.
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/s/ Cherry Bekaert LLP
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Tampa, Florida
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Dated: September 7, 2018