INFORMATION STATEMENT
(Dated September 19, 2017)
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY. BY WRITTEN CONSENT IN LIEU OF A MEETING OF STOCKHOLDERS, STOCKHOLDERS OWNING A MAJORITY OF OUR OUTSTANDING
SHARES OF COMMON STOCK HAVE APPROVED THE ISSUANCE OF THIRTEEN MILLION SHARES OF OUR COMMON STOCK TO THE HOLDER OF $3,500,000 PRINCIPAL
AMOUNT OF OUR 8% CONVERTIBLE DEBENTURES (THE “DEBENTURES”) UPON CONVERSION OF $3,000,000 OF THE PRINCIPAL AMOUNT OF
THE DEBENTURES, TOGETHER WITH ACCRUED BUT UNPAID INTEREST ON THE DEBENTURES, AND THE ISSUANCE OF FOUR MILLION SHARES OF OUR COMMON
STOCK TO THE HOLDER OF 555,555 SHARES OF OUR SERIES A-1 CONVERTIBLE PREFERRED STOCK IN EXCHANGE FOR SUCH SHARES AND ACCRUED BUT
UNPAID DIVIDENDS THEREON, WHICH ISSUANCES REQUIRE STOCKHOLDER APPROVAL UNDER THE RULES OF THE NASDAQ CAPITAL MARKET SINCE EACH
OF SUCH ISSUANCES INVOLVE MORE THAN 20% OF OUR OUTSTANDING SHARES. A VOTE OF THE REMAINING STOCKHOLDERS IS NOT NECESSARY.
Introduction
This Information Statement
is being furnished on or about the date first set forth above to holders of record as of the close of business on September 18,
2017 (the “Record Date”) of the common stock of One Horizon Group, Inc., a Delaware corporation (“we,”
“our” or the “Company”), in connection with the issuance of 13,000,000 shares of our common stock to the
holder of $3,500,000 principal amount of our Debentures upon conversion of $3,000,000 principal amount of the Debentures, together
with accrued interest on the Debentures, and the issuance of 4,000,000 shares of our common stock to the holder of 555,555 shares
of our Series A-1 Convertible Preferred Stock (the “Preferred Shares”) in exchange for the Preferred Shares and accrued
but unpaid dividends thereon, each of which under applicable rules of the NASDAQ Capital Market (“NASDAQ”), the exchange
upon which our shares of common stock are listed, requires stockholder approval since it involves in excess of 20% of our outstanding
shares of common stock. A description of each of the transactions resulting in the share issuances is set forth below.
The Exchange Transactions
We have outstanding $3,500,000
principal amount of our 8% Series A Convertible Debentures and 555,555 shares of our Series A-1 Convertible Preferred Stock. As
part of our efforts to reduce our outstanding debt and eliminate our outstanding shares of preferred stock so that we might continue
our business, and to regain compliance with NASDAQ’s criteria for continued listing which requires that we maintain a minimum
stockholders’ equity of $2,500,000, we have entered into agreements with the holder of the Debentures and the holder of the
Preferred Shares pursuant to which we have agreed to issue to the holder of the Debentures upon conversion of $3,000,000 principal
amount of the Debentures, 13,000,000 shares of our common stock, together with our promissory note bearing interest at the rate
of 7% per annum payable August 31, 2019 (the “7% Note”) in the principal amount of $500,000, on the terms and subject
to the conditions described below, and we have agreed to issue to the holder of the Preferred Shares, in exchange for the Preferred
Shares, and the accrued but unpaid dividends thereon, 4,000,000 shares of our common stock, together with a 7% Note in the principal
amount of $500,000.
The Debentures
The principal amount of the Debentures,
together with accrued but unpaid interest thereon, is due and payable on December 22, 2017. As of September 30, 2017, accrued
but unpaid interest on the Debentures was approximately $350,000. The Debentures were initially convertible into shares of
our common stock at the option of the holder at $2.25 per share, and as a result of anti-dilution adjustments the conversion
price is now approximately $0.2568 per share. We have entered into an agreement with Zhanming Wu, the owner of the Debentures,
pursuant to which Mr. Wu has agreed that he will not demand payment of the Debentures on or prior to October 1, 2017, in
consideration for the right to convert $3,000,000 of the outstanding principal amount of the Debentures, together with all
accrued but unpaid interest on the entire principal amount of the Debentures, into 13,000,000 shares of our common stock at
any time on or before January 31, 2018. Mr. Wu has agreed that we are not be obligated to effect any request for conversion
of the Debentures prior to November 1, 2017. The parties agreed that upon conversion of that portion of the Debentures, the
remaining balance of the Debentures will be deemed cancelled and we will issue to Mr. Wu our 7% Note in the principal amount
of $500,000. In addition, we granted Mr. Wu the right to designate four individuals to serve as directors of our company as
long as he owns at least 30% of the outstanding shares of our common stock in which case we could increase the number of
directors constituting the entire Board of Directors to seven members.
Series A-1 Convertible Preferred Stock
We have outstanding
555,555 shares of Series A-1 Convertible Preferred Stock. Holders of the Series A-1 Convertible Preferred Stock are entitled
to a liquidation preference of $0.30 per share, plus accrued but unpaid dividends upon the liquidation, dissolution or
winding up of the affairs of our company and dividends until February 1, 2018 (the “Maturity Date”) at the rate
of 10% per annum payable quarterly in cash, shares of common stock based upon the closing bid price on the dividend payment
date, or a combination of both at the option of the holder. Holders of the Series A-1 Convertible Preferred Stock currently
have the right to convert their shares into an equal number of shares of common stock, subject to certain anti-dilution adjustments. The outstanding shares of Series A-1 Convertible Preferred
Stock automatically convert into shares of common stock at the then conversion rate on the Maturity Date. Shares of the
Series A-1 Preferred Stock have no voting rights, except for certain class voting rights as to matters specified in the
certificate of designation authorizing the issuance of the Series A-1 Convertible Preferred Stock and as required
by applicable law.
We have entered into an agreement
with Mark White, the owner of 555,555 shares of our Series A-1 Convertible Preferred Stock, pursuant to which we have agreed to
issue to Mr. White 4,000,000 shares of our common stock, together with our 7% Note in the principal amount of $500,000, in exchange
for the Preferred Shares and the accrued but unpaid dividends thereon.
NASDAQ Requirement of Stockholder Approval
As of the Record Date, we had
outstanding 10,718,177 shares of common stock, our only class of voting stock entitled to vote upon the issuance to Mr. Wu of 13,000,000
shares of our common stock upon conversion of $3,000,000 principal amount of the Debentures and the issuance to Mr. White of 4,000,000
shares of our common stock in exchange for the Preferred Shares. Applicable NASDAQ rules require stockholder approval for the issuance
to Mr. Wu of 13,000,000 shares of our common stock upon conversion of the Debentures and the issuance to Mr. White of 4,000,000
shares of our common stock in exchange for the Preferred Shares since in each case the number of shares to be issued would represent
in excess of 20% of the shares of our common stock then outstanding. If we were to issue such shares in the absence of stockholder
approval, it could result in our shares no longer being eligible for trading on the NASDAQ Capital Market.
Stockholder Approval
The issuance to Mr. Wu of 13,000,000
shares of our common stock upon conversion of $3,000,000 principal amount of the Debentures and the issuance to Mr. White of 4,000,000
shares of our common stock in exchange for the Preferred Shares have been approved by our Board of Directors at meetings held in
August 2017 and by written consent of our stockholders owning in the aggregate 5,803,861 shares of common stock, representing approximately
54.15% of our outstanding voting shares, as of the Record Date (the “Stockholder Consent”). The Stockholder Consent
was signed by the following record owners of our common stock:
|
Name
of Stockholder
|
|
Shares
Owned
|
|
|
Percent
of Outstanding Shares
|
|
|
Mark
White
|
|
|
1,600,000
|
|
|
|
14.93
|
%
|
|
Century
River Limited
|
|
|
392,943
|
|
|
|
3.67
|
%
|
|
Martin
Ward
|
|
|
1,369,738
|
|
|
|
12.78
|
%
|
|
Martin
Ward as proxy for Brian
Collins
|
|
|
1,041,180
|
|
|
|
9.71
|
%
|
|
Edwin
Lun
|
|
|
1,400,000
|
|
|
|
13.06
|
%
|
Approval of the issuance to Mr. Wu of 13,000,000 shares of our common
stock upon conversion of $3,000,000 principal amount of the Debentures and the issuance to Mr. White of 4,000,000 shares of our
common stock in exchange for the Preferred Shares by a written consent in lieu of a meeting of stockholders signed by the holders
of a majority of our outstanding shares of common stock is sufficient under Section 228(a) of the Delaware General Corporation
Law (“DGCL”). Accordingly, no proxy of our stockholders will be solicited for a vote on such share issuances to Messrs.
Wu and White and this Information Statement is being furnished to stockholders solely to provide them with certain information
concerning such share issuances to Messrs. Wu and White in accordance with the requirements of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), and the regulations promulgated thereunder, including particularly Regulation 14C,
and Section 228(e) of the DGCL. The issuance to Mr. Wu of the 13,000,000 shares of common stock upon conversion of the Debentures
and the issuance to Mr. White of 4,000,000 shares of common stock in exchange for the Preferred Shares cannot be effected until
the 21
st
day following the mailing of this Information Statement to stockholders.