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ONE HORIZON GROUP, INC. FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Unregistered Sale of Equity Securities, Financial Statements and Exhibits

July 25, 2014

Item 1.01 Entry into a Material Definitive Agreement.

Offering

On July 21, 2014, (the "Closing Date"), in connection with a security purchase agreement ( the "Purchase Agreement") between One Horizon Group, Inc. (hereinafter referred to as "we," "us," or the "Company") and the investors identified on Exhibit A thereto (collectively, the "Investors"), we closed a private placement (the "Offering") of $1,000,000 for a total of 10 units (the "Units") at a purchase price of $100,000 per Unit, each consisting of, (i) 17,094 shares of the Company's Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share (the "Series A Preferred Shares"), initially convertible into 17,094 shares of the Company's common stock, par value $0.0001 per share (the "Common Stock"), and (ii) 10,000 Class B Warrants (the "Class B Warrant" or "Warrant(s)"), each exercisable to purchase 1 share of Common Stock ( the "Financing Transaction"), in reliance upon the exemption from securities registration afforded by Regulation S ("Regulation S") as promulgated under the Securities Act of 1933.

Series A Preferred Certificate of Designation

On the Closing Date, we also designated 200,000 shares of preferred stock, par value $0.0001 per share as Series A Preferred Stock with a two-year term that matures (the "Maturity") on the 24 month anniversary of the date of issuance (the "Issuance Date") by filing a certificate of designation (the "Series A Certificate of Designation) with the Secretary of State of the State of Delaware. The designation, powers, preferences and rights of the shares of Series A Preferred Stock and the qualifications, limitations and restrictions thereof are contained in the Series A Certificate of Designation and are summarized as follows:

? The Series A Preferred Stock shall be subordinate to and rank junior to all of our indebtedness now or hereafter outstanding. ? The holders of Series B Preferred Stock are entitled to receive cumulative dividends during a period of twenty-four (24) months from and after the Issuance Date (the "Dividend Period"). During the Dividend Period, for each outstanding share of Series B Preferred Stock, dividends shall be payable quarterly in cash, at the rate of 10% per annum, on or before each ninety (90) day period following the Issuance Date (each, a "Dividend Payment Date"), with the first Dividend Payment Date to occur promptly following the three month period following the Issuance Date, and continuing until the end of the Dividend Period. Following the expiration of the Dividend Period, the holders of Series B Preferred Stock shall not be entitled to any additional dividend payment or coupon rate. ? The holders of the Series B Preferred Stock shall have the voting rights to vote separately as a class on the following issues:



(i) authorize, create, issue or increase the authorized or issued amount of any class or series of preferred stock, which class or series, in any such case, ranks pari passu or senior to the Series A Preferred Stock, with respect to the distribution of assets on liquidation (as defined below);

(ii) amend, alter or repeal the provisions of the Series A Preferred Stock, whether by merger, consolidation or otherwise, so as to adversely affect any right, preference, privilege or voting power of the Series B Preferred Stock; provided, however, that any creation and issuance of another series of Junior Stock shall not be deemed to adversely affect such rights, preferences, privileges or voting powers;

(iii) issue any shares of Series A Preferred Stock (or any securities convertible into or exercisable for, directly or indirectly, any shares of Series B Preferred Stock or other security, other than Junior Stock) other than pursuant to the Purchase Agreement;

(iv) repurchase, redeem or pay dividends on, shares of common stock or any other shares of the Junior Stock (other than de minimis repurchases from our employees in certain circumstances or repurchases pursuant to a plan approved by the board of directors);

(v) amend our articles of incorporation or by-laws so as to affect materially and adversely any right, preference, privilege or voting power of the Series A Preferred Stock; provided, however, that any creation and issuance of another series of Junior Stock shall not be deemed to adversely affect such rights, preferences, privileges or voting powers;

(vi) effect any distribution with respect to Junior Stock other than as permitted pursuant to clause (iv) above;

(vii) reclassify our outstanding securities;

(viii) voluntarily file for bankruptcy, liquidate our assets or make an assignment for the benefit of our creditors; or

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(ix) materially change the nature of our business.

Shares of Series A Preferred Stock are convertible in whole or in part, at the option of the holders, into shares of our common stock at $5.85 per share prior to the Maturity, and all outstanding shares of the Series A Preferred Stock shall automatically convert to shares of common stock upon Maturity, provided, however, at no time may holders convert shares of Series A Preferred Stock if the number of shares of common stock to be issued pursuant to such conversion would cause the number of shares of common stock beneficially owned by such holder and its affiliates in excess of 9.99% of the then issued and outstanding shares of common stock outstanding at such time, unless the holder provides us with a waiver notice in such form and with such content specified in the Series A Certificate of Designation. ? Shares of Series A Preferred Stock are redeemable at the option of holders commencing any time after 12 months from and after the closing at a price equal to the original purchase price plus all accrued but unpaid interest. In the event that the Company completes a financing of $10 million or greater prior to Maturity, the Series A Preferred Stock will be redeemed at a price equal to the original purchase price plus all accrued but unpaid interest. Class B Warrants



On the Closing, we issued 100,000 Class B Warrants. The Class B Warrants will, by their principal terms,

(a) entitle the holder to purchase one (1) share of Common Stock;

(b) be exercisable at any time after consummation of the Private

Placement and shall expire on the date that is three (3) years

following the original issuance date of the Series B Warrants;

(c) be exercisable, in whole or in part, at an exercise price of $4.00

per share;

(d) be exercised only for cash; and

Adjustments to Class A Warrants

In connection with and as a consideration to the closing of the Offering, on the same day, the Company entered with an Amended and Restated Subscription Agreement with the investor in an offering of $6,000,000 the Company closed on February 18, 2013 ( the "$6M Offering"), whereby the exercise price of Class A warrants issued in the $6M Offering was reduced from $5.94 to $4.25 per share and the amount of shares issuable upon exercise of Class A warrants were increased from 403,225 to 1,209,675. In addition, the expiration date of Class A warrants was extended an additional 12 months. As a result of entering into the Amended and Restated Subscription Agreement, the Company issued Amended Class A warrants to the investor in the $6M Offering and two individual holders of Class A Warrants the investor assigned the rights to.

For more information of the $6M Offering and Class A warrants, please refer to current reports on Form 8-K the Company filed on February 22, 2013 and September 5, 2013, respectively.

Compensation to Placement Agents

TriPoint Global Equities, LLC acted as the Company's exclusive placement agent (the "Placement Agent") in connection with the Offering. In connection with the services performed by the Placement Agent in the Offering, the Placement Agent received 25,000 shares of Common Stock of the Company as a substitute for a cash fee.

The foregoing description of the Purchase Agreement, Series A Preferred Stock, Class B Warrant, Amended and Restated Subscription Agreement and the Amended Class A Warrant is only a summary of their material terms, does not purport to be complete and is qualified in its entirety by reference to such documents. A copy of each of the Purchase Agreement, Series A Preferred Stock, Class B Warrant, Amended and Restated Subscription Agreement and the Amended Class A Warrant is filed as Exhibits 10.1, 3.1, 10.2, 10.3, and 10.4, respectively, to this Form 8-K and incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities

As more fully described in Item 1.01 above, on July 21, 2014, we consummated the Private Placement for the issuance and sale of 10 Units, consisting of an aggregate of (a) 170,940 shares of Series A Preferred Stock, and (b) three-year Class B warrants to purchase up to 100,000 share of Common Stock, for aggregate gross proceeds of $1,000,000. On the same day, we entered into an Amended and Restated Subscription Agreement with the investor in the $6M Offering to amend certain terms of Class A warrants as a further consideration of the closing of the Offering.

The issuance of the Units, the Series A Preferred Stock, the Class B Warrants and the Amended Class A Warrants were exempt from registration pursuant to Regulation S promulgated under the Securities Act of 1933, as amended. We made this determination based upon the representations of the Investors that they were not a "U.S. person" at that term is defined in Rule 902(k) of Regulation S under the Securities Act.

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Item 9.01 Financial Statements and Exhibits. (a) Financial statements of business acquired. None. (c) Shell company transactions. None. (d) Exhibits. Exhibit No. Description 3.1 Certificate of Designation of Series A Preferred Stock 10.1 Securities Purchase Agreement, dated July 21, 2014, by and among One Horizon Group, Inc.. and Investors Identified therein 10.2 Form of Class B Warrant 10.3 Amended and Restated Subscription Agreement, dated July 21, 2014 10.4 Amended Form of Class A Warrant 4



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