2013 ANNUAL REPORT

OF

ONE HORIZON GROUP, INC.

TABLE OF CONTENTS

Item Description PageExplanatory Note – Change in Fiscal Year 1Cautionary Note Regarding Forward-Looking Statements 1

Part IItem 1 Business 1Item 1A Risk Factors 7Item 1B Unresolved Staff Comments 7Item 2 Properties 7Item 3 Legal Proceedings 7Item 4 Mine Safety Disclosures 7

Part IIItem 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 8Item 6 Selected Financial Data 9Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations 9Item 7A Quantitative and Qualitative Disclosures about Market Risk 15Item 8 Financial Statements and Supplementary Data 16Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 16Item 9A Controls and Procedures 16Item 9B Other Information 17

Part IIIItem 10 Directors, Executive Officers and Corporate Governance 17Item 11 Executive Compensation 19Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 23Item 13 Certain Relationships and Related Transactions, and Director Independence 25Item 14 Principal Accounting Fees and Services 26

Part IVItem 15 Exhibits, Financial Statement Schedules 27

Signatures 29

1

Explanatory Note – Change in Fiscal Year

On November 30, 2012, the Company (then known as Intelligent Communication Enterprise Corporation (“ICE Corp.”)) and One HorizonGroup PLC, a public limited company incorporated in England and Wales (“One Horizon UK”), consummated a share exchange (the “ShareExchange”), as a result of which One Horizon UK became a subsidiary of the Company, with former One Horizon UK shareholders holdingapproximately 96% of the issued and outstanding shares of ICE Corp. The Company’s name was subsequently changed to One Horizon Group,Inc. Prior to the Share Exchange, One Horizon UK had a June 30 th fiscal year end, which, by virtue of One Horizon UK being deemed theaccounting acquirer, became the fiscal year end of the Company. On February 13, 2013, the Company filed a Current Report on Form 8-Kdisclosing that the board of directors of the Company changed the Company's fiscal year end from June 30 to December 31. As a result of thischange, this Transition Report on Form 10-KT (the “Report”) includes the financial information for the six-month transition period from July 1,2012 to December 31, 2012 (the "Transition Period"). Prior to this Report, the Annual Reports on Form 10-K of the Company (formerly ICECorp.) cover the fiscal year from January 1 to December 31.

Unless otherwise noted, references to the “Company” in this Report include One Horizon Group, Inc. and all of its subsidiaries.

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

The statements made in this Report, and in other materials that the Company has filed or may file with the Securities and ExchangeCommission, in each case that are not historical facts, contain “forward-looking information” within the meaning of the Private SecuritiesLitigation Reform Act of 1995, and Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both asamended, which can be identified by the use of forward-looking terminology such as “may,” “will,” “anticipates,” “expects,” “projects,”“estimates,” “believes,” “seeks,” “could,” “should,” or “continue,” the negative thereof, and other variations or comparable terminology as wellas any statements regarding the evaluation of strategic alternatives. These forward-looking statements are based on the current plans andexpectations of management, and are subject to a number of risks and uncertainties that could cause actual results to differ materially fromthose reflected in such forward-looking statements. Among these risks and uncertainties are the competition we face; our ability to adapt torapid changes in the market for voice and messaging services; our ability to retain customers and attract new customers; our ability to establishand expand strategic alliances; governmental regulation and related actions and taxes in our international operations; increased market andcompetitive risks, including currency restrictions, in our international operations; risks related to the acquisition or integration of futurebusinesses or joint ventures; our ability to obtain or maintain relevant intellectual property rights; intellectual property and other litigation thatmay be brought against us; failure to protect our trademarks and internally developed software; security breaches and other compromises ofinformation security; our dependence on third party facilities, equipment, systems and services; system disruptions or flaws in our technologyand systems; uncertainties relating to regulation of VoIP services; liability under anti-corruption laws; results of regulatory inquiries into ourbusiness practices; fraudulent use of our name or services; our ability to maintain data security; our dependence upon key personnel; ourdependence on our customers' existing broadband connections; differences between our service and traditional phone services; our ability toobtain additional financing if required; our early history of net losses and our ability to maintain consistent profitability in the future. These andother matters the Company discusses in this Report, or in the documents it incorporates by reference into this Report, may cause actual resultsto differ from those the Company describes. The Company assumes no obligation to update or revise any forward-looking information, whetheras a result of new information, future events or otherwise.

PART I

ITEM 1. BUSINESS

We develop and license software to telecommunications operators through our indirect wholly-owned subsidiaries Horizon Globex GmbH andAbbey Technology GmbH, each incorporated under the laws of Switzerland (“Horizon Globex” and “Abbey Technology,” respectively).Specifically, Horizon Globex and Abbey Technology develop software application platforms that optimize mobile voice, instant messaging andadvertising communications over the internet, collectively, the “Horizon Platform.” Both subsidiaries do this by using proprietary softwaretechniques that use internet bandwidth more efficiently than other technologies that are unable to provide a low-bandwidth solution. TheHorizon Platform is a bandwidth-efficient Voice Over Internet Protocol (“VoIP”) platform for smartphones and tablets, and also providesoptimized data applications including messaging and mobile advertising. We license our software solutions to telecommunications networkoperators and service providers in the mobile, fixed line and satellite communications markets. We are an ISO 9001 and ISO 20000-1 certifiedcompany with assets and operations in Switzerland, the United Kingdom, China, India, Singapore and Hong Kong.

The Horizon Platform delivers a turnkey mobile VoIP solution to telecommunications operators. We believe that the technology underlying theHorizon Platform, which we call SmartPacket™, is the world’s most bandwidth-efficient VoIP technology. Our VoIP technology is able totransmit voice at 2kbps compared to around 8kbps offered by other VoIP platforms, thereby enabling voice communications over limitedbandwidth and congested cellular telecom data networks including 2G, 3G and 4G.

Industry

The global telecommunication services market continues to experience growth. This growth is mainly being driven by the growth in thenumber of mobile subscribers. Although the mobile VoIP (or “mVoIP”) is a small percentage of the total revenue generated by mobiletelecommunications providers, Visiongain, an independent business information provider for the telecommunications industry, among others,expects this market to grow significantly by 2016 as a number of commercial and technological factors alter mobile voice communications.

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These factors include innovative smartphone designs with improved user interfaces and acoustics, increased acceptance of VoIP and overallincreases in broadband penetration.

According to Visiongain, mVoIP users are expected to increase to more than 180 million with total revenue of more than $36 billion by 2016.We expect consumer demand for all VoIP and mVoIP will continue to grow for a number of reasons including cheaper rates. The market willlikely continue to broaden as VoIP is further incorporated into other mobile applications, including social networking applications. The majorfactors driving the growth of mVoIP include rise in the use of mobile smartphones, intense price competition and price regulations that aredriving down voice revenues as a proportion of total mobile revenue and shifts in consumer behavior.

The growth of smartphones and tablets is a key driver for the Company in increasing the number of customers and revenue. According toestimates by the International Data Corporation, a provider of market intelligence in the industry, the number of smartphones globally willgrow from 495 million in 2011 to 1.52 billion in 2015. Smartphones consume 24X more data than the “feature phones” that they replace due tohigher usage of data, VoIP, and video services, creating a significant strain on existing carrier infrastructure and creating potentially severenetwork congestion issues particularly in high density, high population markets.

The increase in mobile data consumption has been driven by the availability of cheap GSM (global system for mobile communications) dataand the massive uptake of smartphones and tablets, devices on which our mobile application, Horizon Call, was designed to run.

In its paper titled “Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012–2017,” Cisco projects global mobiledata traffic to increase 13-fold between 2012 and 2017. According to Cisco, at the end of 2012, the number of mobile-connected devicesexceeded the number of people on earth, and by 2017, it is expected that there will be 1.4 mobile devices per capita. According to Cisco, in2017, it is expected that 4G will account for ten percent of connections, but 45 percent of total traffic. Horizon Call addresses the need forefficient data on the next generation networks while tackling the need for efficient data usage on legacy networks in the world’s most populouscountries.

Our Technology

Our technology enables greater bandwidth efficiency by reducing IP overhead and optimizing packet flow, delivery and playback. It is alsoextremely efficient in the way it handles silence. Traditional VoIP calls send the same amount of data in both directions, regardless of whethersomeone is speaking or not. SmartPacket™ detects silence and sends “heartbeats” so it does not sound like the line has been dropped. Theseheartbeats get sent at only 0.25kbps compared to approximately 8kbps on other VoIP platforms. In addition to low-bandwidth VoIP, ourtechnology can also be utilized to enhance data applications for personal computers ( i.e., email, web browsing and instant messaging) whichgive the user total visibility and control over how much data they consume on pay-as-you-use internet connections such as satellite dataconnections.

The Horizon Platform has been developed entirely in-house and is fully compatible with digital telecommunications standards. It is capable ofinterconnecting any phone system over IP – on mobile, fixed and satellite networks.

The Horizon Platform was initially developed for the mobile satellite market by Abbey Technology to make the best use of the limited wirelessbandwidth available, minimize the amount of data consumed and ultimately reduce costs for the end-user.

The Company further developed the Horizon Platform for the broader telecommunications market, while focusing on the mobile data sector.This sector also benefits from the Company’s optimized mobile VoIP software that allows voice calls over new and legacy cellular telecomdata networks. With the explosive growth in smartphone sales and increased usage of mobile data services, mobile operators face the challengeof dealing with increasingly congested networks, more dropped calls and rising levels of churn. Since the wireless spectrum is a finite resourceit is not always possible, or can be cost prohibitive, to increase network capacity. For these reasons, we believe that the demand for solutionswhich optimize the use of IP bandwidth will inevitably increase.

Our Strategy

We have developed a mobile application, “Horizon Call,” that enables highly bandwidth-efficient VoIP calls over a smartphone using a2G/EDGE, 3G, 4G/LTE, WiFi or WiMax connection. Our Horizon Call application is currently available for the iPhone and for Androidhandsets.

Unlike the majority of mobile VoIP applications, Horizon Call creates a business-to-business solution for mobile operators.Telecommunications operators are able to license, brand and deploy on a “white-labeled” basis that they can optimize to their businessstrategies. The operators decide how to integrate it within their portfolio, how to offer it commercially and can customize the applicationaccording to their own branding. Our solution helps them to manage rising traffic volumes while also combating the competitive threat to theirvoice telephony revenues from other mobile VoIP applications by giving its mobile data customers a more efficient mobile VoIP solution thatadds value to their mobile data network.

We are positioning ourselves as an operator-enabler by licensing our technology to the operator in a manner that can be fully customized to theneeds of their subscribers. As shown below, operators are able to offer our platform to deliver branded smartphone applications to their existingcustomers to help reduce lost Voice/Text revenue and minimize customer churn.

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By offering Horizon Call to their existing customer base, our telecommunications operator customers can offer innovative data-based voice anddata services that differentiate themselves from the existing Over The Top (“OTT”) data applications running on their networks. OTT refers tovoice and messaging services that are delivered by a third party to an end user’s smartphone, leaving the mobile network provider responsibleonly for transporting Internet data packets and not the value-added content. The Horizon Call voice services allow the mobile operators’customers to make VoIP calls under the mobile operators’ call plans, thereby allowing the mobile operator to capture the value-added content,including voice calls, text messaging, voice messaging, group messaging, multimedia messaging, and advertising, that would have otherwisegone to the providers of other OTT services.

Horizon Call runs on both smartphone and tablet devices and, as networks become more congested, software services such as Horizon Callbecome ever more relevant. We believe that although more network capacity will eventually come on stream with 4G/LTE, it, like all otherhighways, will quickly become congested and this is why we believe that Horizon Call is ideally placed to add value to mobile data networks.

Incumbent mobile operators are suffering a reduction in revenue per user due to the OTT software services on mobile devices. These OTTapplications, such as Skype, Viber, WeChat, and WhatsApp, can negatively impact mobile operators’ traditional revenue streams of voice andSMS (short message service). As shown below, the Horizon Platform positions the Company to enable mobile operators to operate their ownOTT solution branded in their image allowing use on all mobile data networks.

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In addition to delivering new data services to their existing customers, the mobile operators can offer their brand of Horizon Call on any otheroperators’ handsets. Because the Horizon Call application can be installed on the smartphone from the Internet, the potential customer base forthe operators’ data application surpasses the customer base that they can reach through traditional mobile phone SIM card distribution. Webelieve that this service innovation, coupled with the fact that the Horizon Call application can also use existing mobile operator pre-paid creditredemption and distribution services, presents a very compelling service offering from the operator compared to OTT services.

We believe that emerging markets represent a key opportunity for Horizon Call because these are significant markets with high populationdensity, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones. These factorswill put increased pressure on mobile operators to manage their network availability.

In this context, where necessary, we are forming a number of joint ventures with local partners in regions of various emerging markets to seizeupon this opportunity, including one in China in which the Company has invested $1.5 million for a 75% equity stake. Our joint venturepartner, ZTE Corporation, is the second largest mobile handset manufacturer in the world and the fourth largest telecommunications equipmentsupplier in the world. The Company is not a guarantor of any debt related to the joint venture. The investment is held in a subsidiary, OneHorizon Hong Kong Limited.

Marketing

Our marketing objective is to become a broadly adopted solution in the regions of the world with the largest concentrations of smartphone usersand highest network congestion by becoming the preferred solution for carriers who wish to deploy branded VoIP solutions that enable them tominimize revenue erosion, reduce churn, increase the effective capacity of their network infrastructure and improve user experience. Weemploy an integrated multi-channel approach to marketing, whereby we evaluate and focus our efforts on selling through Tier 1 and Tier 2telecommunications companies to enable them to provide the Horizon Platform to their customers. We regularly evaluate the success of ourmarketing efforts and try to reallocate budgets to identify more effective media mixes.

We make use of marketing research to gain consumer insights into brand, product, and service performance, and utilize those findings toimprove our messaging and media plans. Market research is also leveraged in the areas of testing, retention marketing, and product marketingto ensure we bring compelling products and services to market for our customers.

Sales

Direct Sales. Our primary sales channel for the products and services of Horizon Platform is by selling Horizon Platforms to Tier 1 and Tier 2telecommunications companies to enable them to provide the product and services to their customers. We continue our efforts to develop newcustomers in Europe, the Middle East, Asia, Africa, South America, and, in the near future, North America.

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Joint Ventures. In addition to our direct sales channel, we also offer increased sales through our joint venture channel. In this context, we areforming a number of joint ventures in areas where regulatory issues require local representation.

Target Markets . The markets for our primary and joint venture channels will have high population density, high penetration of mobile phones,congested mobile cellular networks and high growth in the adoption of smartphones.

Competition

The Company’s direct competitors for its technology primarily consist of systems integrators that combine various elements of SIP (SessionInitiation Protocol) dialers and media gateways. Other dial-back solutions exist but are not IP-based. Because SIP dialers and media gatewayscurrently are unable to provide a low bandwidth solution, they do not currently compete with the Company’s technology in those markets inwhich their high bandwidth needs are unsupported by the existing cellular networks. They do, however, compete in those markets where thecellular networks are accessible by those SIP dialers and gateways.

The Company licenses the Horizon Platform to mobile operators, who in turn may offer the application to their end-user subscribers. TheCompany’s principal competitors for the mobile operators’ end-users are Skype, Viber, WeChat, and WhatsApp. Having a mobile operator’ssubscriber opt to use the operator’s (branded) Horizon Call service instead of existing OTT services means that the mobile operator will gainmarket share of some of the OTT voice and messaging traffic. We are unaware of any other companies that seek to license VoIP technologydirectly to the mobile operators.

One of the Company’s key competitive advantages is that it is not a threat to the mobile operators. Rather, the Company’s Horizon Platform isa tool that can be used by the mobile operator to compete against the OTT provider’s applications that are running on the networks of themobile operators. Through the Horizon Platform, the mobile operators are able to compete directly with OTT services that, by their design,divert voice and messaging services away from the mobile operators. The solution is delivered complete and is easy to install and operate. Thismeans that the mobile operator has a turnkey mobile voice and messaging solution to deploy to its customer (i.e., the end-user).

The Horizon Global Exchange complete software platform, a central processing service, and the Horizon SmartPacket™ technology give us acompetitive advantage by managing credit, routing, rating, security, performance, billing and monitoring. Horizon SmartPacket™ is theworld’s lowest bandwidth voice compression and transmission protocol and is 100% developed and owned by the Company. Other softwarecompanies can offer part of this solution space but we believe none offer it in such a complete and integrated fashion. We believe that tocopy/replicate the Horizon Platform in its entirety would take a substantial number of years, by which time we believe the Horizon Platformwill have improved and further distanced itself from potential competition.

Intellectual Property

Our strategy with respect to our intellectual property is to patent our core software concepts wherever possible. The Company’s currentsoftware patent application, which is pending in Switzerland, reflects this strategy and protects the Horizon Platform and the central processingservice of the Horizon Platform.

The Company endeavors to protect its internally developed systems and technologies. All of our software is developed “in-house,” and thenlicensed to our customers. We take steps, including by contract, to ensure that any changes, modifications or additions to the Horizon Platformrequested by our customers remain the sole intellectual property of the Company.

Research and Development and Software Products

The Company has spent approximately $7.5 million on research and development during the period from July 1, 2010 to December 31, 2012.In the period ended June 30, 2012, the R&D has developed the VoIP Application, encompassing VoIP signaling (global exchange), billing,VoIP servers (App-App/App-PSTN/PSTN-App) and VoIP clients (VoIP PBX and Horizon Call smartphone application for iPhone andAndroid), together with voicemail messaging and customer registration and assistance portal. The Horizon Call application is currently for salethrough iTunes and Google Play. In the six months ended December 31, 2012, additional R&D has been focused on advertising and bulkmessaging applications for the Horizon Platform. Future projects currently underway include the development of Microsoft Lync Software(“MS Lync”) as a service to enable MS Lync accredited distributors to license a mobile client application that works as part of their Lync“software as a service” offering. The MS Lync development project is in the research phase and early prototyping phase. Other than the costsof software developed and capitalized, the Company incurred no research and development costs in the six months ended December 31, 2012and years ended June 30, 2012 and 2011.

Employees

As of December 31, 2012, we had 20 employees, all of whom were full-time employees.

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Background

The Share Exchange

On November 30, 2012, the Company (then known as Intelligent Communication Enterprise Corporation (“ICE Corp.”)), and One HorizonGroup PLC, a public limited company incorporated in the United Kingdom (“One Horizon UK”), consummated a share exchange (the “ShareExchange”), pursuant to which ICE Corp. will acquire all of the issued and outstanding shares of One Horizon UK from One Horizon UK’sthen existing shareholders in exchange for 17,853,476,138 shares of ICE Corp.’s common stock. To date, the Company has acquired 99% ofthe outstanding shares of One Horizon UK pursuant to the Share Exchange. Under the terms of the Share Exchange, each One Horizon UKshareholder received 175.14 shares of ICE Corp.’s common stock for each issued and outstanding share of One Horizon UK stock. As a resultof the Share Exchange, One Horizon UK is now a subsidiary of the Company, with former One Horizon UK shareholders holdingapproximately 96% of the issued and outstanding shares of ICE Corp. Having received share exchange acceptances in excess of 90% of theOne Horizon UK shares, the Company intends to exercise its rights in accordance with Sections 974 to 991 (inclusive) of the Companies Act2006 to acquire compulsorily the remaining One Horizon UK shares in respect of which acceptances have not been received to date. Thetransaction has been accounted for as a reverse acquisition, whereby ICE Corp. is the legal acquirer and One Horizon UK is the legal acquireeand accounting acquirer. On December 27, 2012, the Company changed its name to One Horizon Group, Inc.

To record the accounting effects of the reverse acquisition, the assets and liabilities of One Horizon UK (the accounting acquirer) arerecognized and measured at their precombination carrying amounts. The assets and liabilities of ICE Corp. (the accounting acquiree) arerecognized and measured consistent with accounting for business combinations, including recognition of fair values, effective as of November30, 2012, the date of the Share Exchange transaction.

Pre-Share Exchange

The Company was incorporated in Pennsylvania in 1972 as Coratomic, Inc. It changed its name to Biocontrol Technology, Inc. in 1986; BICO,Inc. in 2000; Mobiclear Inc. in 2006; and Intelligent Communication Enterprise Corporation in 2009.

The Company effected a 1-for-250 share reverse stock split on July 21, 2008, and the outstanding shares were reduced to 6,757,803.

The Company effected a 1-for-600 share reverse stock split on October 20, 2009, and the outstanding shares were reduced to 521,519.

The Company effected a 3-for-1 share forward stock split on February 5, 2010, and the outstanding shares were increased to 92,375,841.

The Company effected a 7-for-1 share forward stock split on December 30, 2010, and the outstanding shares were increased to 640,023,118.

On March 5, 2012, the Company obtained control of all the issued and outstanding shares of Global Integrated Media Limited (“GIM”), acontract publishing entity with operations in Hong Kong and the Philippines, for 61,471,814 shares of our common stock with a fair value of$1,383,000. Although the Company had announced the closing of this transaction on December 12, 2011, based upon the delivery andexecution of the transaction documents by the parties, the Company did not obtain control of GIM and did not deliver the consideration to theseller at that time. On March 5, 2012, the Company completed the acquisition of GIM and issued 61,471,814 shares of common stock, with afair value of $1,383,000, as full consideration for the acquisition. On December 31, 2012, the Company sold all of the issued and outstandingshares of GIM and all of the assets and operations of the Company’s Modizo business (discussed below, under “Pre-Share Exchange Businessof ICE Corp.”) for the return of 42,000,000 shares of our common stock held by the purchaser, which had a fair value of $420,000. After givingeffect to the Share Exchange transaction consummated on November 30, 2012, as described in the Company’s Form 8-K filed December 6,2012, at the time of the sale, the GIM and Modizo businesses were less than 10% of the Company’s assets and are expected to be less than 10%of the Company’s sales and profits in future fiscal years.

One Horizon UK

One Horizon Group, PLC (“One Horizon UK”), a subsidiary of the Company (formerly ICE Corp.), was incorporated in the United Kingdomon March 8, 2004, and has three wholly-owned subsidiaries, Horizon Globex and Abbey Technology, both incorporated in Switzerland, andOne Horizon Hong Kong Limited, which is incorporated in Hong Kong. On October 25, 2012, One Horizon UK sold a group of wholly-ownedsubsidiaries referred to as the Satcom Global business. The Satcom Global business was a satellite communication distribution businesscomprised of multiple entities located throughout Europe, Asia and the United States. As a result of the downturn in U.S. governmentexpenditure in satellite communication, the Satcom Global business became unprofitable and One Horizon Group UK decided to sell thebusiness for nominal cash consideration and the assumption of debt so that it could focus its efforts on the Horizon Globex business (discussedabove). Also on October 25, 2012, Abbey Technology sold certain satellite billing software utilized in the Satcom Global business to thepurchaser of the Satcom Global business. The entire purchase price for the software was paid by means of an offset against amounts owed byAbbey Technology and its affiliates to Satcom Global FZE, an entity acquired by the purchaser in connection with the purchase of the SatcomGlobal business.

Prior to the Share Exchange, the consolidated financial statements of One Horizon UK for its fiscal years ended June 30, 2012 and 2011consisted of two main business segments, the Horizon Globex business segment and the Satcom Global business. In those historical financial

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statements, the financial results of the Horizon Globex business segment consisted of the financial results of the One Horizon UK and two of itssubsidiaries, Abbey Technology and Horizon Globex. The Satcom Global business was sold in October 2012, prior to the Share Exchange. Inthe historical financial statement presentation of the UK Operating Company for its fiscal years ended June 30, 2012 and 2011, the operationsof Satcom Global have been retrospectively restated for treatment as discontinued operations.

Satcom Global was maintained in separate legal entities, all of which were sold in their entirety prior to the Share Exchange transaction. TheSatcom Global distribution business represented a dissimilar business from the Horizon Globex software business. As a distribution business,Satcom Global had a different revenue and expense model (high volume and low gross margin), included different products and productmarketing strategies, sold to different customers, purchased from different vendors, and had different management and operational personnel.The results of the Satcom Global business is not an indicator of Company management’s past performance as all of the operational staff andmanagement of the Satcom Global business remained with that business and are now employed by the purchasers of the Satcom Globalbusiness.

One Horizon Hong Kong is a subsidiary of One Horizon UK, and was formed in 2012. One Horizon Hong Kong currently holds theCompany’s equity interest in the Chinese joint venture.

Abbey Technology is a software development company that was founded in 1999 by our director and Chief Technology Officer, Brian Collins,and licenses proprietary software solutions for the banking sector. The Horizon software platform was invented/developed in AbbeyTechnology by Brian Collins and Claude Dziedzic with One Horizon UK (formerly Satcom Group Holdings) as its first customer for thesolution (phase 1 – satellite networks). It is the named company on the filed patent for the Horizon Platform. Abbey Technology wassubsequently acquired by One Horizon UK (formerly Satcom Group Holdings) in September 2010.

Unless otherwise noted, references to “we” or “us” in this Report include the Company (post-Share Exchange) and all of its subsidiaries.

Pre-Share Exchange Business of ICE Corp.

Prior to the Share Exchange, the Company had two operational businesses: Modizo, and Global Integrated Media Limited (GIM). The Modizobusiness consisted of a celebrity blogging application, while the GIM business consisted of custom publishing, advertising design, brandbuilding, media representation, website design and development and market research programs. As the GIM and Modizo businesses did not fitwithin the Company’s business plan after the Share Exchange, both businesses were sold on December 31, 2012.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

We do not currently own any real property. Our principal executive offices consist of approximately 2,600 square feet of leased space in Baar,Switzerland, for which we pay $5,600 a month. We also have an office consisting of approximately 500 square feet in London, UnitedKingdom, for which we pay $4,000 a month.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any material legal proceedings and no material legal proceedings have been threatened by us or, to the best of ourknowledge, against us.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES

Our common stock is quoted on the OTC under the symbol OHGI. Prior to January 31, 2013, our common stock was quoted under the symbolICMC.

The following table sets forth the high and low bid information, as reported by Nasdaq on its website, www.nasdaq.com , for our commonstock for each quarterly period in 2011 and 2012, as well as 2013 to date. Prior to November 30, 2012, the bid information reflects bidinformation of the Company prior to the Share Exchange. The information reflects inter-dealer prices, without retail mark-up, mark-down orcommission and may not necessarily represent actual transactions.

Low High

Fiscal year ending December 31, 2013:Quarter ended March 31 $ 0.006 $ 0.036

Fiscal year ended December 31, 2012:Quarter ended December 31 $ 0.0052 $ 0.06Quarter ended September 30 0.0051 0.0199Quarter ending June 30 0.00 0.028Quarter ended March 31 0.01 0.03

Fiscal year ended December 31, 2011:Quarter ended December 31 0.01 0.037Quarter ended September 30 0.02 0.04Quarter ending June 30 0.02 0.0697Quarter ended March 31 0.0303 0.11

As of April 29, 2013, we had approximately 6,925 stockholders of record.

Dividend Policy

The payment of cash dividends by us is within the discretion of our board of directors and depends in part upon our earnings levels, capitalrequirements, financial condition, any restrictive loan covenants, and other factors our board considers relevant. Since our inception, we havenot declared or paid any dividends on our common stock and we do not anticipate paying such dividends in the foreseeable future. We intend toretain earnings, if any, to finance our operations and expansion.

Issuer Sales of Unregistered Equity Securities

On November 30, 2012, the Company (previously, ICE Corp.) and One Horizon UK, a United Kingdom-based company, consummated a shareexchange (the “Share Exchange”), pursuant to which ICE Corp. will acquire all of the issued and outstanding shares of One Horizon UK inexchange for 17,853,476,138 shares of the Company’s common stock, or 175.14 shares of the Company’s common stock for each issued andoutstanding share of One Horizon UK stock. To date, the Company has acquired 99% of the outstanding shares of One Horizon UK. TheCompany also issued options to purchase an aggregate 216,132,393 shares of the Company’s common stock to holders of One Horizon UKoptions in exchange for such options, which are exercisable at prices ranging from $0.16 to $0.59, reflecting their current exercise pricesconverted to US dollars using the 175.14 to one ratio, and created a pool of an additional 1,120,896,000 shares of the Company’s commonstock reserved for the issuance of such shares upon the exercise of options and warrants that One Horizon UK has agreed to issue in the futureto certain employees. On the date of closing, more than 98.9% of One Horizon UK shareholders’ offers of exchange had been received.Following the closing, additional One Horizon UK shareholders have offered their shares for exchange, and as of April 29, 2013, the Companyowned approximately 99% of the outstanding shares of One Horizon UK. Having received share exchange acceptances in excess of 90% of theOne Horizon UK shares, the Company intends to exercise its rights in accordance with Sections 974 to 991 (inclusive) of the Companies Act2006 to acquire compulsorily the remaining One Horizon UK shares in respect of which acceptances have not been received to date. Upon suchact, One Horizon UK will be a wholly-owned subsidiary of the Company.

In the issuance above, no general solicitation was used and the transactions were negotiated directly with our existing shareholders. Thesecurities were issued in reliance upon the exemption from registration afforded by Regulation S and Section 4(a)(2) of the Securities Act of1933, as amended, which exempts transactions by an issuer not involving any public offering. In support thereof, the recipients of the common

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stock made certain written representations, acknowledged that the securities constituted restricted securities, and consented to a restrictivelegend on the certificates to be issued.

Issuer Purchases of Equity Securities

The Company was a party to the Share Exchange described above under “Issuer Sales of Unregistered Equity Securities,” pursuant to whichshares of One Horizon UK were exchanged for shares of ICE Corp. The shares that were the subject of such Share Exchange are not reflectedin the table below.

ISSUER PURCHASES OF EQUITY SECURITIES

Period

(a)Total Number of Shares

Purchased

(b)Average Price Paid per

Share

(c)Total Number of Shares

Purchased as Part ofPublicly Announced Plans

(d)Maximum Number of

Shares (or ApproximateDollar Value) that May Yet

Be Purchased Under thePlans

October 1 – October 31, 2012 0 0 0 0November 1 – November 30,2012 0 0 0 0

December 1 – December 31,2012

42,000,000 $0.01 (A) 0 0

Total 42,000,000 $0.01 0 0

(A) On December 31, 2012, the Company entered into an Acquisition Agreement with a shareholder pursuant to which the Companysold to such shareholder all of the shares of its subsidiary, Global Integrated Media, Ltd., and all of the assets and operations of itsModizo business, a celebrity blogging platform (“Modizo”) in exchange for 42,000,000 shares of the Company’s common stockheld by the shareholder. For purposes of the Company’s financial statements included herewith, the Company recognized anaggregate of $420,000 for the sale of the shares of GIM and the assets and operations of Modizo.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in thisReport. Management’s discussion and analysis includes a comparison of the six months ended December 31, 2012 to the comparable period of2011, which comparison is derived from unaudited financial statements of the Company (for the six months ended December 31, 2011)consistent with the reporting entity for such six-month period. The financial statements and Management’s Discussion and Analysis ofFinancial Condition and Results of Operations include information of One Horizon UK for the relevant periods, except for the period followingthe Share Exchange, for which period the information presented is that of the combined Company.

Overview

Operating through our indirect wholly-owned subsidiaries, Horizon Globex GmbH and Abbey Technology GmbH, our operations include thelicensing of software to telecommunications operators and the development of software application platforms (the “Horizon Platform”) thatoptimize mobile voice, instant messaging and advertising communications over the Internet. Both subsidiaries do this by using proprietarysoftware techniques that use internet bandwidth more efficiently than other technologies that are unable to provide a low-bandwidth solution.The Horizon Platform is a bandwidth-efficient Voice over Internet Protocol (“VoIP”) platform for smartphones and also provides optimizeddata applications including messaging and mobile advertising. We license our software solutions to telecommunications network operators andservice providers in the mobile, fixed line and satellite communications markets. We are an ISO 9001 and ISO 20000-1 certified company withassets and operations in Switzerland, the United Kingdom, China, India, Singapore and Hong Kong.

We have developed a mobile application, “Horizon Call,” which enables highly bandwidth-efficient VoIP calls over a smartphone using a2G/EDGE, 3G, 4G/LTE, WiFi or WiMax connection. Our Horizon Call application is currently available for the iPhone and for Androidhandsets.

Unlike other mobile VoIP applications, Horizon Call creates a business-to-business solution for mobile operators. It is a software solution thattelecommunications operators license, brand and deploy. They decide how to integrate it within their portfolio and how to offer itcommercially, and it can be customized according to their own branding. It helps them to manage rising traffic volumes while also combatingthe competitive threat to their voice telephony revenues from other mobile VoIP applications by giving its mobile data customers a moreefficient mobile VoIP solution that adds value to their mobile data network.

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We believe that emerging markets represent a key opportunity for Horizon Call because there are significant markets with high populationdensity, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones. These factorswill put increased pressure on mobile operators to manage their network availability.

In this context, the Company is forming a number of joint ventures with local partners in the region to seize upon this opportunity.

We plan to continue to develop our products in areas with high population density, high penetration of mobile phones, congested mobilecellular networks and high growth in the adoption of smartphones. We expect to form joint ventures when local regulations prevent us fromaccessing a particular market directly.

We plan to fund this proposed expansion through debt financing, cash from operations and potential equity financing. However, we may not beable to obtain additional financing at acceptable terms, or at all, and, as a result, our ability to continue to improve and expand our softwareproducts and to expand our business could be adversely affected.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, whichhave been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. Our significant accountingpolicies are described in notes accompanying the consolidated financial statements. The preparation of the consolidated financial statementsrequires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, andrelated disclosure of contingent assets and liabilities. Estimates are based on information available as of the date of the financial statements, andaccordingly, actual results in future periods could differ from these estimates. Significant judgments and estimates used in the preparation ofthe consolidated financial statements apply critical accounting policies described in the notes to our consolidated financial statements.

We consider our recognition of revenues, accounting for the consolidation of operations, accounting for stock-based compensation, accountingfor intangible assets and related impairment analyses, accounting for equity transactions, and accounting for acquisitions to be most critical inunderstanding the judgments that are involved in the preparation of our consolidated financial statements.

Additionally, we consider certain judgments and estimates to be significant, including those relating to a determination of vendor specificobjective evidence (“VSOE”) for purposes of revenue recognition, useful lives for amortization of intangibles, determination of future cashflows associated with impairment testing of long-lived assets, determination of the fair value of stock options and other assessments of fairvalue. We base our estimates on historical experience, current conditions and on other assumptions that we believe to be reasonable under thecircumstances. Actual results may differ materially from these estimates and assumptions.

Our significant accounting policies are summarized in Note 2 of our audited financial statements for the six months ended December 31, 2012.We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of ourfinancial statements.

Revenue Recognition

The Company recognizes revenue when it is realized or realizable and earned. The Company establishes persuasive evidence of a salesarrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred or services havebeen rendered, price is fixed and determinable, and collectability is reasonably assured.

● Revenue from sales of perpetual licenses to top-tier telecom entities is recognized at the inception of the arrangement,presuming all other relevant revenue recognition criteria are met. Revenue from sales of perpetual licenses to other entities isrecognized over the agreed collection period.

● Revenue from software maintenance, technical support and unspecified upgrades is recognized pro rata over the period thatthese services are delivered.

● Revenues for user licenses purchased by customers is recognized when the user license is delivered.

We enter into arrangements in which a customer purchases a combination of software licenses, maintenance services and post-contractcustomer support (“PCS”). As a result, judgment is sometimes required to determine the appropriate accounting, including how the priceshould be allocated among the deliverable elements if there are multiple elements. PCS may include rights to upgrades, when and if available,support, updates and enhancements. When vendor specific objective evidence (“VSOE”) of fair value exists for all elements in a multipleelement arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value isestablished by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values ofvarious elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price betweendeliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elementssuch as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue toeach element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In theabsence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to theresidual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit of

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accounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No salesarrangements to date include undelivered elements for which VSOE does not exist.

For purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption thatrevenue is recognized pro rata over the collection period, typically over five years. For sales to top tier customers, this presumption is overcomeby the customers’ commitment to pay, as demonstrated by its payment history and its ability to pay. Payment terms are extended to customerson an interest-free basis for master license sales. For revenue recognized in advance of payments due, the Company provides for a discountagainst the revenue recorded, which is adjusted to the net present value of the cash flows expected over the payment terms, when the termsexceed one year.

Divestiture

On October 25, 2012, One Horizon UK sold its Satcom Global business. Because the Satcom business was discontinued prior to the ShareExchange, the operations of Satcom Global have been excluded from the Company’s historical financial statement presentation its fiscal yearsended June 30, 2012 and 2011, and for the six-month period ended December 31, 2012. The historical financial statements are presented on a“carve out” basis, as described more fully in the notes to the financial statements. The financial statements presented are of those companiesthat constituted the consolidated entity at the date of the consummation of the Share Exchange, consisting of three legal entities: One HorizonUK and its subsidiaries Abbey Technology, and Horizon Globex.

Change in Fiscal Year

On February 13, 2013, following the Share Exchange, the Company filed a Current Report on Form 8-K disclosing that the board of directorsof the Company approved a change to the Company's fiscal year end from June 30 to December 31. As a result of this change, this Reportincludes the financial information for the six-month transition period from July 1, 2012 to December 31, 2012.

Results of Operations

The following table sets forth information from our statements of operations for the six months ended December 31, 2012 and 2011.

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Comparison of six months ended December 31, 2012 and 2011 (in thousands)

For the Six Months EndedDecember 31, Year to Year Comparison

2012 2011Increase/(decrease)

PercentageChange

Revenue $ 11,709 $ 668 $ 11,041 1,652%

Cost of revenue 121 15 106 706%

Gross margin 11,588 653 10,935 1,674%

Operating Expenses

General and administrative 4,022 1,263 2,759 218%Depreciation 73 66 7 10%Amortization of Intangibles 873 612 261 43%Total Operating Expenses 4,968 1,941 3,027 156%

Income (loss) from Operations 6,620 (1,288) (7,908) N/A%

Other Income(Expense)

Interest expense (87) (53) (34) (64%)

Foreign Exchange gain , net 16 44 (28) (63%)

Interest income 1 0 (1) N/A

Income for continuing operations before income taxes 6,550 (1,297) 7,847 N/A

Income taxes (recovery) 1,169 0 1,169 N/ANet (Loss) Income for period 5,381 (1,297) 6,678 N/A

Revenue: Our revenue for the six months ended December 31, 2012 was approximately $11.7 million as compared to approximately $0.7million for the six months ended December 31, 2011, an increase of $11.0 million, or 1,652%. The increase in our revenue wassignificantly due to the growth in sales of the Horizon Platform following the development of the GSM application, Horizon Call, which wascompleted in November 2011. The Company expects sales to continue to grow as more companies sign up for the Horizon Platform.

Cost of Revenue: Cost of revenue was approximately $121,000 for the six months ended December 31, 2012, or 0.77% of sales, compared tocost of sales of $15,000, or 0.47% of sales for the six months ended December 31, 2011. Our cost of sales is primarily composed of the costs ofancillary hardware sold with the Horizon Platform.

Gross Profit : Gross profit for the six months ended December 31, 2012 was approximately $11.6 million as compared to $0.65 million for thesix months ended December 31, 2011. Our gross profits increased by 1,674% from 2011 to 2012. The main reason for the increase in grossprofit is the growth in business and the smartphone market globally, as well as the Company’s ability capitalize on market opportunities byentering areas with high population density, high penetration of mobile phones, congested mobile cellular networks and high growth in theadoption of smartphones.

Going forward, management believes that gross profit will improve if sales continue to increase, although there can be no assurance of such.

Operating Expenses: Operating expenses, including general and administrative expenses, depreciation, and amortization of intangibles, wereapproximately $ 4.97 million, or 42.4 % of sales for the six months ended December 31, 2012 as compared to $1.94 million, or 29 % of salesfor the same period in 2011, an increase of approximately $ 3.03 million. The increase was due to costs related to adding resources to deal withthe new customers in both data handling and the account management roles. Going forward, management expects these costs to rise due tovarious public company-related expenses including share-based compensation, and various legal, accounting and consulting services.

Net Income: Net income for the six months ended December 31, 2012 was approximately $5.4 million as compared to a loss of $1.3 millionfor the same period in 2011. The increase in net income reflected the growth in the business and in the smartphone market globally.

Going forward, management believes the Company will continue to grow the business and increase profitability if we are successful in sellingthe Horizon Platform solution to new telecommunications company customers globally.

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Foreign Currency Translation Adjustment: Our reporting currency is the U.S. dollar. Our local currencies, Swiss Francs and British pounds,are our functional currencies. Results of operations and cash flow are translated at average exchange rates during the period, and assets andliabilities are translated at the unified exchange rate as quoted by http://www.oanda.com/currency/historical-rates/ at the end of the period.Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of shareholders’equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than thefunctional currency are included in the results of operations as incurred.

Currency translation adjustments resulting from this process are included in accumulated other comprehensive income in the consolidatedstatement of shareholders' equity and amounted to approximately $16,000 for the six months ended December 31, 2012.

The following table sets forth information from our statements of operations for the years ended June 30, 2012 and 2011.

Comparison of years ended June 30, 2012 and 2011

For the Year Ended June 30 Year to Year Comparison

2012 2011Increase/(decrease)

PercentageChange

Revenue $ 5,222 $ 2,726 $ 2,496 92%

Cost of revenue 80 207 (127) (61%)

Gross margin 5,142 2,519 2,623 104%

Operating Expenses

General and administrative 4,570 1,911 2,659 139%Depreciation 884 321 563 175%Amortization of Intangibles 1,655 1,307 303 26%Total Operating Expenses 7,109 3,539 3,570 101%

Income from Operations (1,967) (1,020) (947) (93)%

Other Income(Expense)

Interest expense (218) (173) (45) (26%)

Foreign Exchange gain , net 49 (2) 51 100%

Gain on acquisition of subsidiary 0 476 (476) (100%)

Loss for continuing operations before income taxes (2,136) (719) (1,417) (197)%

Income taxes (recovery) 69 (316) (385)Net Loss for period (2,205) (403) (1,802) (447)%

Revenue: Our revenue for the year ended June 30, 2012 was approximately $5.2 million as compared to $2.7 million for the year ended June30, 2011, an increase of $2.5 million, or 92%. The increase in our revenue was due to the growth in sales of the Horizon Platform following thedevelopment of the GSM application, Horizon Call, which was completed in November, 2011. We expect sales to continue to grow as morecompanies sign up for the Horizon Platform.

Cost of Revenue: Cost of revenue was approximately $80,000 for the year ended June 30, 2012, or 1.53% of sales, compared to cost of sales of$207,000, or 7.59% of sales for the year ended June 30, 2011. Our cost of sales is primarily composed of the costs of ancillary hardware soldwith the Horizon Platform.

Gross Margin : Gross margin for the year ended June 30, 2012 was approximately $5.1 million as compared to $2.5 for the year ended June30, 2011. Our gross margins increased by 104% from 2011 to 2012. The main reason for the increase in gross margin is the growth in businessand the smartphone market globally, as well as the Company’s ability to capitalize on market opportunities by entering areas with highpopulation density, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones.

Going forward, management believes that gross margin will increase to the extent we are successful in our efforts to grow our sales.

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Operating Expenses: Operating expenses, including general and administrative expenses, depreciation, and amortization of intangibles, wereapproximately $ 7.1 million, or 136 % of sales for the year June 30, 2012, as compared to $ 3.5 million, or 130 % of sales for the same periodin 2011. Overall, operating expenses increased by approximately $ 3.6 million. The increase was due to costs related to adding additionalresources to deal with the new customers in both data handling and the account management roles. Going forward, management expectsoverall costs to rise due to various public company-related expenses including share-based compensation, and various legal, accounting andconsulting services.

Interest Expense: For the year ended June 30, 2012, interest expense was approximately $218,000 as compared to interest expense ofapproximately $173,000 for 2011. The increase of $35,000 or 20.2% in interest expense is mainly due to the increase in cost of capital chargedby HSBC prior to the redemption of the facilities with the bank in October, 2012.

Net Income: Net loss for the year ended June 30, 2012 was approximately $2.2 million as compared to $0.4 million for the same period in2011. The increase in losses reflected the increase in operating expenditures of the business.

Going forward, management believes the Company will continue to grow the business and increase profitability as the Horizon Platformsolution is taken up by new telecommunications company customers globally.

Foreign Currency Translation Adjustment: Our reporting currency is the U.S. dollar. Our local currencies, Swiss Francs and British pounds,are our functional currencies. Results of operations and cash flow are translated at average exchange rates during the period, and assets andliabilities are translated at the unified exchange rate as quoted by http://www.oanda.com/currency/historical-rates/ at the end of the period.Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of shareholders’equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than thefunctional currency are included in the results of operations as incurred.

Currency translation adjustments resulting from this process are included in accumulated other comprehensive income in the consolidatedstatement of shareholders' equity and amounted to approximately $49,000 for the year ended June 30, 2012 and $2,000 for the same period in2011.

Liquidity and Capital Resources

Six Months Ended December 31, 2012 and December 31, 2011

The following table sets forth a summary of our approximate cash flows for the periods indicated:

For the Six Months EndedDecember 31 (in thousands)

2012 2011Net cash provided by (used in) operating activities (833) (1,201)Net cash used in investing activities (431) (850)Net cash provided by financing activities 2,002 1,640

Net cash used by operating activities was approximately $833,000 for the six months ended December 31, 2012, as compared to $1,201,000 forthe same period in 2011. The decrease in cash used by operations was primarily due to the increase in cash generated from sales, which offset(and reduced) the overall cash used by operating activities.

Net cash used in investing activities was approximately $431,000 and $850,000 for the six months ended December 31, 2012 and 2011,respectively. Net cash used in investing activities was primarily focused on acquisitions of intangible assets and property and equipment.

Net cash provided by financing activities amounted to $2.0 million for 2012 and $1.64 million for 2011. Cash provided by financing activitiesin 2012 was primarily due to the advances from related parties and proceeds from the sale of common stock. Cash used by financing activitiesin 2011 was primarily due to proceeds from sale of common stock and loan from related parties less the reduction in long term bank borrowing.

Our working capital, excluding the current portion of deferred income (attributable to licensing fees to be realized over time), as of December31, 2012, was approximately $0.6 million, as compared to a working capital deficiency of approximately $6.0 million for the same period in2011.

Year ended June 30, 2012 and 2011

The following table sets forth a summary of our approximate cash flows for the periods indicated:

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For the Year EndedJune 30, (in thousands)

2012 2011Net cash provided by (used in) operating activities (2,895) 5,363Net cash used in investing activities (3,622) (2,661)Net cash provided by financing activities 6,517 (2,702)

Net cash used by operating activities was approximately $2.9 million for the year ended June 30, 2012 as compared to net cash provided byoperating activities of $5.4 million for the same period in 2011. The significant increase in cash used by operations was primarily due toincrease in accounts receivable during the year.

Net cash used in investing activities was approximately $3.6 million and $2.7 million for the years ended June 30, 2012 and 2011, respectively.Net cash used in investing activities was primarily focused on acquisitions of intangible assets and property and equipment, and in 2011 theacquisition of Abbey Technology GmbH.

Net cash provided by financing activities amounted to approximately $ 6.5 million for year ended June 30, 2012 and cash used of $ 2.7 millionfor year ended June 30, 2011. Cash provided by financing activities in 2012 was primarily due to the advances from related parties andproceeds from the sale of common stock. Cash used by financing activities in 2011 was primarily due to repayment of long term debt andpayment of dividends.

Our working capital deficiency, excluding the current portion of deferred income (attributable to licensing fees to be realized over time), as ofJune 30, 2012, was approximately $ 7.3 million, as compared to a working capital deficiency of approximately $6.1 million for the same periodin 2011.

As of June 30, 2012 we had retained losses of $ 10.0 million and stockholders’ equity of approximately $ 9.6 million. Total stockholders’equity as of June 30, 2011 was approximately $ 5.6 million with retained losses of $ 7.8 million.

Going forward, we intend to rely on the sales of our products and services, as well as on the sale of securities to, and loans from, existingstockholders and new investors, to meet our cash requirements.

On January 22, 2013, Messrs. White and Collins each made a loan to the Company of $250,000 (each, a “Loan”). In exchange for each Loan,the Company issued to each of Messrs. White and Collins a promissory note, in the initial principal amount of each Loan. Each Loan bearsinterest at the rate of 0.21% per annum, must be repaid in one year, and is prepayable without penalty at the option of the Company at any timefollowing its issuance in cash or in shares of its common stock, at the rate of $0.0086 per share.

On February 18, 2013, the Company entered into a Subscription Agreement with a non-U.S. shareholder of the Company (the “Investor”),pursuant to which it sold an aggregate of 483,870,968 shares of the Company’s common stock for an aggregate consideration of $6,000,000,or $0.0124 per share. The Company also issued a common stock purchase warrant to the Investor exercisable for three years to purchase241,935,483 shares of the Company’s common stock at an exercise price of $0.0124 per share. Pursuant to the Subscription Agreement, theinitial installment of the investment of $2,790,000 was paid, with two additional installments totaling $3,210,000 to be made by September 30,2013. Such installments accrued interest at a rate of three percent (3%) per annum and are secured by a pledge by the Investor to the Companyof the shares pro rata.

We may seek to sell common or preferred stock in private placements. We have no commitments from anyone to purchase our common orpreferred stock or to loan funds. We cannot assure that we will be able to raise additional funds or to do so at a cost that will be economicallyviable.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on its financial condition,revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our combined financial statements, including the independent registered public accounting firm’s report on our combined financial statements,are included beginning at page F-1 immediately following the signature page of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filedunder the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’srules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicatedto our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding requireddisclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “CertifyingOfficers”), the effectiveness of our disclosure controls and procedures as of December 31, 2012, pursuant to Rule 13a-15(b) under theExchange Act. Based upon that evaluation, our Certifying Officers concluded that, because of the material weaknesses in our internal controlover financial reporting described below and the Company’s failure to file all Current Reports on Form 8-K required under the Exchange Actwithin their required time periods, as of December 31, 2012, our disclosure controls and procedures were not effective.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined inExchange Act Rules 13a-15(f) and 15d-15(f)). Our internal control over financial reporting is a process designed under the supervision of ourCertifying Officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financialstatements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Management, under the supervision and with the participation of our Certifying Officers, evaluated the effectiveness of our internal controlover financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control-Integrated Framework.

Based on our evaluation and the material weaknesses described below, management concluded that we did not maintain effective internalcontrol over financial reporting as of December 31, 2012. This Report does not include an attestation report of our registered public accountingfirm regarding internal control over financial reporting. Because we are a smaller reporting company, management’s report was not subject toattestation by our registered public accounting firm.

Material Weaknesses Identified

In connection with the preparation of our financial statements for the year ended December 31, 2012, certain significant deficiencies in internalcontrol over financial reporting became evident to management that, in the aggregate, represent material weaknesses, including:

(i) Lack of sufficient independent directors to form an audit committee . We currently have two independent directors on ourboard, which is comprised of five directors. These two independent directors, however, would not currently be deemed independentunder NASDAQ for audit committee purposes. Although there is no requirement that we have an audit committee, we intend to have amajority of independent directors as soon as we are reasonably able to do so.

(ii) Insufficient corporate governance policies . Although we have a code of ethics that provides broad guidelines for corporategovernance, our corporate governance activities and processes are not always formally documented. Specifically, decisions made bythe board to be carried out by management should be documented and communicated on a timely basis to reduce the likelihood of anymisunderstandings regarding key decisions affecting our operations and management.

(iii) Insufficient segregation of duties in our finance and accounting functions due to limited personnel . During the six monthsended December 31, 2012, we had one person on staff who performed nearly all aspects of our financial reporting process, includingaccess to the underlying accounting records and systems, the ability to post and record journal entries, and responsibility for thepreparation of the financial statements. This creates certain incompatible duties and a lack of review over the financial reportingprocess that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financialstatements and related disclosures as filed with the Securities and Exchange Commission. These control deficiencies could result in amaterial misstatement to our interim or annual consolidated financial statements that would not be prevented or detected.

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(iv) Accounting for Technical Matters. Our current accounting personnel perform adequately in the basic accounting andrecordkeeping function. However, our operations and business practices include complex technical accounting issues that are outsidethe routine basic functions. The complex areas in 2012 included accounting for the Share Exchange and disposal of the business.These technical accounting issues are complex and require significant expertise to ensure that the accounting and reporting areaccurate and in accordance with generally accepted accounting principles. This is especially important for periodic interim reportingthat is not subject to audit.

(v) Lack of in-house US GAAP Expertise. Currently we do not have sufficient in-house expertise in US GAAP reporting. Instead,we rely very much on the expertise and knowledge of external financial advisors in US GAAP conversion.

(vi) Maintenance of Accounting Records . We did not maintain a comprehensive set of financial records for the six months endedDecember 31, 2012. Certain receipts, disbursements and other transactions were recorded in the general ledger; however accountreconciliations, journal entry forms or other supporting schedules were either missing or incomplete. Without adequate financialrecords, we may be unable to provide timely financial reporting and/or report inaccurate information.

As part of the communications respecting its audit procedures for the year ended December 31, 2012, our independent registered accountants,Peterson Sullivan, LLP (“Peterson Sullivan”), informed the board that these deficiencies constituted material weaknesses, as defined byAuditing Standard No. 5, “ An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements andRelated Independence Rule and Conforming Amendments ,” established by the Public Company Accounting Oversight Board.

Plan for Remediation of Material Weaknesses

We intend to take appropriate and reasonable steps to make the necessary improvements to remediate these deficiencies. We intend to considerthe results of our remediation efforts and related testing as part of our year-end 2013 assessment of the effectiveness of our internal control overfinancial reporting.

We have implemented certain remediation measures and are in the process of designing and implementing additional remediation measures forthe material weaknesses described in this Report. Such remediation activities include recruiting one or more independent board members tojoin our board of directors in due course. Such recruitment will include at least one person who qualifies as an audit committee financial expertto join as an independent board member and as an audit committee member. We are also seeking to recruit experienced professionals toaugment and upgrade our financial staff to address issues of timeliness and completeness in US GAAP financial reporting.

In addition to the foregoing remediation efforts, we will continue to update the documentation of our internal control processes, includingformal risk assessment of our financial reporting processes.

We believe that the remediation measures we are taking, if effectively implemented and maintained, will remedy the materialweaknesses discussed above.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the period ended December 31, 2012, that have materiallyaffected, or are reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The following table lists the names, ages and positions of all executive officers and directors and all persons nominated or chosen to becomesuch. Each director has been elected to the term indicated. Directors whose term of office ends in 2013 shall serve until the next AnnualMeeting of Stockholders and until their successors are elected and qualified. All officers of the Company are elected by the Board of Directorsto one-year terms.

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Name Age Principal Occupation or Employment First Became Director Current Board Term Expires

Mark White 52 President, Chief Executive Officer, Director 12/10/12 2013

Martin Ward 55 Chief Financial Officer, Director 12/10/12 2013

Brian Collins 45 Vice President, Chief Technology Officer, Director 12/10/12 2013

NicholasCarpinello

63 Owner, Carpinello Enterprises LLC, Director 3/7/13 2013

Stephen Austin 46 Chief Executive Officer, Plumtree Capital Limited,Director

3/7/13 2013

Mark White

Mr. White was appointed Chief Executive Officer on November 30, 2012 and became a director on December 10, 2012. Prior to hisappointment as Chief Executive Officer, Mr. White had served as the Chief Executive Officer of One Horizon Group, PLC since 2004. Hisentrepreneurial career in the distribution of electronic equipment and telecommunications spans over 20 years. He founded Next DestinationLimited in 1993, the European distributor for Magellan GPS and satellite products, and sold the business in 1997. Prior to that, Mr. White wasChief Executive Officer for Garmin Europe, where he built up the company’s European distribution network. He previously sold Garmin’sGPS products through Euro Marine Group Ltd, a company he formed in 1990, which established distribution in Europe for U.S. manufacturersof marine electronic equipment. Earlier in his career, Mr. White was the Sales Director for Cetrek Limited, a maritime autopilot manufacturer.Mr. White brings extensive operational and senior executive experience, including experience as a chief executive officer, as well as experienceas a director of an AIM-listed company.

Martin Ward

Mr. Ward was appointed Chief Financial Officer on November 30, 2012 and director on December 10, 2012. Prior to his appointment as ChiefFinancial Officer, Mr. Ward had served as the Chief Financial Officer and Company Secretary of One Horizon Group, PLC since 2004. Prior tojoining One Horizon Group, Mr. Ward was a partner at Langdowns DFK, a United Kingdom-based chartered accountancy practice. Earlier inhis career, between 1983 and 1987, he worked for PricewaterhouseCoopers as an Audit Manager. Mr. Ward is a fellow of the Institute ofChartered Accountants of England and Wales. Mr. Ward brings significant experience in accounting, corporate finance and public companyreporting.

Brian Collins

Mr. Collins was appointed Vice President and Chief Technology Officer on November 30, 2012 and director on December 10, 2012. Prior tohis appointment as Vice President and Chief Technology Officer, Mr. Collins had served as Chief Technology Officer of One Horizon Group,PLC since 2010, following the acquisition by One Horizon Group of Abbey Technology GmbH, a company that was founded by, andemployed, Mr. Collins in 1999, and which became a subsidiary of One Horizon Group upon its acquisition. He is the co-inventor of theHorizon Platform, and has over 20 years’ experience in the technology sector with a background in software engineering. Abbey Technologydeveloped software systems for the Swiss banking industry. Prior to his employment at Abbey, he worked as a software engineer for CreditSuisse First Boston Equities in Zurich. Earlier in his career, between 1993 and 1996, he worked as a software engineer for Sybase, aninformation technology company, in California and Amsterdam. Mr. Collins graduated in 1990 with a BSc Hons in Computer Systems fromthe University of Limerick, Ireland. He also undertook further software research and development at International Computers Limited between1990 and 1993. Mr. Collins brings experience founding and working at technology companies along with extensive knowledge of softwareengineering.

Nicholas Carpinello

Mr. Carpinello was appointed as a director on March 7, 2013. He has been the owner of Carpinello Enterprises LLC d/b/a CottmanTransmission Center, a national auto service franchise, since 2004 and also has worked as a consultant to SatCom Distribution Inc. (“SDI”),assisting in various business, tax and financial matters of US operations of UK-based distributors of satellite communication hardware andairtime, since 2005. Prior to November 2012, SDI was a subsidiary of One Horizon Group PLC. Mr. Carpinello’s years of professionalexperience are extensive, and include experience as CFO and Treasurer with multinational public and private manufacturers of armoredvehicles and, later in his career, CFO of privately-held companies in the computer science field. He is a Certified Public Accountant, analumnus of Arthur Andersen & Co., and holds a BA degree in Accounting from the University of Cincinnati. The Board decided thatMr. Carpinello should serve as a director because of his significant U.S. public company experience, as well as years of experience as acertified public accountant.

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Stephen Austin

Mr. Austin was appointed as a director on March 7, 2013. He is an experienced equity banker whose early career was spent as a corporatelawyer in the London office of Dechert LLP. Currently, Mr. Austin serves as CEO of Plumtree Capital Limited, an FSA authorized corporatefinance advisory house. From 2006 through 2010, Mr. Austin was the Managing Partner of Hybridian LLP, an AIM broker based in London.The Board decided that Mr. Austin should serve as a director of the Company, because of his significant public company experience in anadvisory role.

Significant Employee

Claude Dziedzic

Mr. Dziedzic, aged 40, was appointed Chief Horizon Architect on November 30, 2012 and is the co-inventor of the Horizon software platform.Mr. Dziedzic was employed by Abbey Technology GmbH, which was subsequently acquired by the One Horizon Group, PLC, and whichbecame a subsidiary thereof, in 2010. Mr. Dziedzic had been employed as the chief architect and in the design and development department ofthe Abbey Technology software platforms from 2001 to 2009. During that time, he also participated in the design and development of theHorizon software platform and the software design and development for software and messaging systems for the Swiss banking industry.Mr. Dziedzic had worked for UBS AG in Switzerland from 1997 to 2001 and DataSign AG from 1997 to 1999. Mr. Dziedzic worked insoftware research and development during his work for USB AG and DataSign AG. Mr. Dziedzic graduated from Ecole Superieure des ScienceAppliquees pour l’Ingenieur de Mulhouse with a Masters Engineer Degree in Industrial IT and Automatics in 1997. In 1994, he achieved ageneral degree in Science & Structure of the Matter (specializing in Industrial IT, Automatics and Electronics) from the University of Alsace,and in 1992 he was awarded a Bachelor’s Degree in Mathematics and Physics from the Academy of Strasbourg.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act and the rules thereunder require our officers and directors, and persons that own more than 10% of aregistered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commissionand to furnish us with copies. Based solely on our review of the copies of the Section 16(a) forms received by us, or written representationsfrom certain reporting persons, we believe that none of our officers, directors, and greater than 10% beneficial owners filed on a timely basisreports required by Section 16(a) of the Exchange Act prior to the Share Exchange on November 30, 2012 during the fiscal year endedDecember 31, 2012. After the Share Exchange, we believe that none of our officers, directors, and greater than 10% beneficial owners failed tofile on a timely basis reports required by Section 16(a) of the Exchange Act during the fiscal year ended December 31, 2012, other thanMr. Ward, Mr. White, and Mr. Collins, each of whom filed one report discussing one transaction that was not reported on a timely basis.

Audit Committee Information

Our board of directors does not have a separately-designated standing audit committee, and, as a result, does not currently have an “auditcommittee financial expert.” Given the small size of the Company’s Board and the limited number of independent directors over theCompany’s history, the Board has determined that it is appropriate for the entire Board to act as its audit committee, which has resulted in thedirectors who are also executive officers serving on its audit committee. On March 7, 2013, we appointed two independent directors to sit onthe Board and Board committees and intend to appoint additional independent directors so that a majority of the Board will consist ofindependent directors. We also intend to form an audit committee and a compensation committee with independent directors.

Code of Ethics

Our board of directors has adopted a Policy Statement on Business Ethics and Conflicts of Interest (“Code of Ethics”) applicable to allemployees, including the Company’s chief executive officer and chief financial officer. A copy of the Code of Ethics was filed as an exhibit toour Form 10-KSB on May 23, 2005.

ITEM 11. EXECUTIVE COMPENSATION

The following tables set forth, for each of the last two completed fiscal years of ICE Corp. and One Horizon UK, the total compensationawarded to, earned by or paid to any person who was a principal executive officer during the preceding fiscal year and every other highestcompensated executive officers earning more than $100,000 during the last fiscal year (together, the “Named Executive Officers”). Inconnection with the Share Exchange on November 30, 2012, Messrs. Jeffrey and Rajasundram resigned as executive officers of the Company(the “Pre-Share Exchange Executives”) and Messrs. White, Ward and Collins were appointed as executive officers of the Company (the “Post-Share Exchange Executives”). The tables set forth below reflect the compensation of the Pre-Share Exchange Executives in their capacity asexecutive officers of ICE Corp., and the compensation of the Post-Share Exchange Executives in their capacity as executive officers of bothOne Horizon UK and the Company as a combined entity. In light of the Share Exchange having been accounted for as a reverse acquisition

20

whereby One Horizon UK is deemed to be the accounting acquirer, the compensation information set forth in the “Summary CompensationTable: Pre-Share Exchange Executives” is not presented in the financial statements included herewith.

21

Summary Compensation Table: Pre-Share Exchange Executives

Name andPrincipal Position

YearEndedDec. 31

Salary($)

Bonus($)

StockAward(s)

($)Option

Awards ($)

Non-Equity

IncentivePlan

Compen-sation

Non-QualifiedDeferredCompen-

sationEarnings ($)

All OtherCompen-sation ($) Total ($)

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)

Victor Jeffery, 2012 165,000 0 0 0 0 0 0 165,000former CEO (1) 2011 110,000 0 0 0 0 0 0 110,000

VijiRajasundram,former 2012 165,000 0 0 0 0 0 0 165,000GeneralManager,Modizo (2) 2011 177,502 0 0 0 0 0 0 177,502___________(1) Mr. Jeffery was appointed our chief executive officer effective June 1, 2011, and resigned on November 30, 2012. Of his remuneration as

CEO, $85,000 and $150,000 was paid in shares of our stock in 2011 and 2012, respectively. Prior to his appointment, Mr. Jeffery servedas editor-in-chief, for which he was paid $31,250 in shares of our stock.

(2) Mr. Rajasundram was appointed general manager of Modizo on January 17, 2011, and resigned on November 30, 2012. Of hiscompensation, $144,193 and $150,000 was paid in shares of our stock in 2011 and 2012, respectively.

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Summary Compensation Table: Post-Share Exchange Executives*

Name andPrincipalPosition Period

Salary($)

Bonus($)

StockAward(s)

($)

OptionAwards

($)

Non-Equity

IncentivePlan

Compen-sation

Non-QualifiedDeferredCompen-

sationEarnings ($)

All OtherCompen-sation ($) Total ($)

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)

MarkWhite,CEO (1)

6 mos.ended12/31/12 323,000 600,000(4) 0 0 0 0 0 923,000Yearended6/30/12 682,000 0 0 0 0 0 0 682,000Yearended6/30/11 672,000 0 0 0 0 0 0 672,000

MartinWard, CFO(2)

6 mos.ended12/31/12 116,000 0 0 0 0 0 13,200(5) 129,200Yearended6/30/12 231,600 0 0 0 0 0 26,200(5) 257,800Yearended6/30/11 232,000 0 0 0 0 0 26,300(5) 258,300

BrianCollins,CTO (3)

6 mos.ended12/31/12 323,000 600,000(4) 0 0 0 0 0 923,000Yearended6/30/12 688,500 0 0 0 0 0 0 688,500Yearended6/30/11 645,500 0 0 0 0 0 0 645,500

____________* For periods prior to November 30, 2012, the information set forth consists of compensation as an officer of One Horizon UK. The

compensation table does not include compensation for the former chief operating officer of the Satcom division, consisting of severalsubsidiaries which were sold on October 25, 2012 and which are treated as discontinued operations and not included in the carve-outfinancial statements included herewith for historical presentations purposes.

(1) Mr. White was appointed our chief executive officer effective November 30, 2012. Mr. White was the chief executive officer of OneHorizon UK during the periods ended June 30, 2012 and June 30, 2011, and from July 1, 2012 through November 30, 2012. For the periodended December 31, 2012, Mr. White was paid in Swiss Francs, with a conversion rates of CHF 1.00 = $1.05, which rate represents theaverage exchange rate for that period, as represented by http://www.oanda.com/currency/historical-rates/ . For the periods ended June 30,2012 and June 30, 2011, Mr. White’s compensation was paid through payments to SCC BVBA, an entity organized under the laws ofBelgium, of which Mr. White is the sole shareholder. Payments made to SCC BVBA for such periods were paid in euros, with conversionrates of €1.00 = $1.36 and $1.34, respectively, which rates represent the average conversion rate for those periods, as represented byhttp://www.oanda.com/currency/historical-rates/ .

(2) Mr. Ward was appointed our chief financial officer effective November 30, 2012. Mr. Ward was the chief financial officer of One HorizonUK during the periods ended June 30, 2012 and June 30, 2011, and from July 1, 2012 through November 30, 2012. Mr. Ward was paid inpounds sterling, with conversion rates of £1.00 = $1.59, $1.58, and $1.59, respectively, which rates reflect the average exchange rates forthose periods, as represented by http://www.oanda.com/currency/historical-rates/ .

(3) Mr. Collins was appointed our chief technology officer effective November 30, 2012. Mr. Collins was the chief technology officer ofOne Horizon UK during the periods ended June 30, 2012 and June 30, 2011, and from July 1, 2012 through November 30, 2012. Mr.Collins was paid in Swiss Francs, with conversion rates of CHF 1.00 = $1.05, $1.12, and $1.05, respectively, which conversion ratesreflect the average exchange rates for those periods, as represented by http://www.oanda.com/currency/historical-rates/ .

(4) On September 30, 2012, One Horizon UK issued 6,000,000 shares of One Horizon UK’s common stock, valued at 0.10 per share, to eachof Messrs. White and Collins as bonus compensation.

(5) Consists of contributions by the Company to Mr. Ward’s self-invested pension plan.

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29Employment

Messrs. White, Collins and Ward are at-will employees. Their compensation during 2012 and 2011 consisted of a salary and discretionarybonus.

Outstanding Equity Awards at 2012 Year-End

As of the year ended December 31, 2012, there were no unexercised options, stock that has not vested or equity incentive plan awards held byany of the Company’s named executive officers.

2012 Director Compensation

In connection with the Share Exchange, effective December 10, 2012, the size of the Company’s existing Board, which consisted ofMessrs. Jeffery, Rajasundram, Wu and Hasking (the “Pre-Share Exchange Directors”) was expanded to seven members. At that time, the Pre-Share Exchange Directors filled the vacancies by appointing Messrs. White, Ward and Collins, following which appointments the Pre-ShareExchange Directors resigned.

The following table sets forth the compensation earned by each of the Company’s Pre-Share Exchange Directors for the one-year period endedDecember 31, 2012. Messrs. White, Collins and Ward, who became directors following the Share Exchange, received no compensation fortheir service as directors of the Company during the year ended June 30, 2012 or the six-month period ended December 31, 2012. Messrs.Carpinello and Austin were appointed after the Company’s fiscal year ended December 31, 2012.

Name

FeesEarned

orPaid inCash

($)

StockAwards

($)

OptionAwards

($)

Non-EquityIncentive

PlanCompensation

($)

NonqualifiedDeferred

CompensationEarnings

($)

All OtherCompen-

sation($) Total ($)

Victor Jeffery 0 0 0 0 0 0 0Nelson Wu 0 62,500 0 0 0 0 62,500Michael Hosking 0 62,500 0 0 0 0 62,500Viji Rajasundram 0 0 0 0 0 0 0Bala Balamurali 0 0 0 0 0 0 0

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS

The following table sets forth certain information, as of April 29, 2013, with respect to the beneficial ownership of our outstanding commonstock by: (i) any holder of more than 5% of the Company’s common stock; (ii) each of the Named Executive Officers, directors, and directornominees; and (iii) our directors, director nominees, and Named Executive Officers as a group, based on 19,687,004,313 shares of commonstock outstanding, including those deemed to be outstanding pursuant to Rule 13d-3(1) of the Exchange Act.

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Name of Person or Group

Amount And Natureof BeneficialOwnership (1) Percent

Principal Stockholders:

Alexandra Mary Johnson11 Washern CloseWilton Salisbury, SP2 0LXUnited Kingdom 1,866,817,260(2) 9.5%

Adam Christie Thompson2550 Skyview LaneHarleysville, PA 19438 1,866,817,260(2) 9.5%

Named Executive Officers and Directors:

Mark White 3,819,161,220(2) 19.4%

Martin Ward 1,866,817,260(2) 9.5%

Brian Collins 3,823,012,548(2)(3) 19.4%

Stephen Austin 6,480,180(4) *

Nicholas Carpinello 10,000 *

All Executive Officers and Directors as a Group (5 persons): 9,515,481,208 48.3%_______________* Less than 1%.(1) Except as otherwise indicated, each of the stockholders listed above has sole voting and investment power over the shares beneficially

owned.(2) Includes 700,560,000 shares to account for warrants to purchase 4,000,000 shares of One Horizon UK owned by Ms. Johnson and

Messrs. Thompson, White, Ward and Collins, which warrants were exercised on October 16, 2012. The One Horizon UK sharesunderlying the exercised warrants have not yet been issued to Ms. Johnson and Messrs. Thompson, White, Ward and Collins. Once issued,upon notification to One Horizon UK’s transfer agent of the exercise of each warrant and receipt of the One Horizon UK common stockissuable thereunder, Ms. Johnson and Messrs. Thompson, White, Ward, and Collins may thereafter, at any time, seek to have such OneHorizon UK common stock exchanged into shares of the Company at a conversion rate of 175.14:1 (for a total of 700,560,000 shares).Alternatively, the Company has the right to impose upon them a mandatory acquisition in accordance with Sections 974 to 991 (inclusive)of the Companies Act 2006, following which all One Horizon UK common stock held by Ms. Johnson and Messrs. Thompson, White,Ward, and Collins shall mandatorily be exchanged into shares of the Company at a conversion rate of 175.14:1.

(3) Includes 3,851,328 shares held by Mr. Collins’ spouse, Eilis Collins. Ms. Collins has sole voting and investment power over such shares.(4) Consists of shares held by the self-invested pension plan of Stephen Austin, under which plan Mr. Austin does not serve as trustee.

Equity Compensation Plan

Prior to the Share Exchange, One Horizon UK had authorized securities for issuance under equity compensation plans that have not beenapproved by the stockholders, but none under equity compensation plans that were approved by the stockholders. The following table showsthe aggregate amount of securities authorized for issuance under all equity compensation plans as of December 31, 2012:

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Number ofsecurities to be

issued uponexercise of

outstandingoptions, warrants

and rights(a)

Weighted-averageexercise price of

outstanding options,warrants and rights

(b)

Number of securitiesremaining availablefor future issuance

under equitycompensation plans(excluding securitiesreflected in column

(a))(c)

Equity compensation plans approved by security holders 0 0 0Equity compensation plans not approved by security holders 391,272,393 $ 0.0011 0

Total 391,272,393 $ 0.0011 0

The securities referenced in the table above reflect stock options granted beginning in 2005 pursuant to individual compensation arrangementswith the Company’s employees. 216,132,393 of such options are fully vested with 21,281,962 expiring in 2015; 19,710,431 expiring in 2016;and 175,140,000 expiring in 2020. The number of options reflected in the table above reflect a conversion that occurred in connection with theShare Exchange, whereby the number of options (to purchase One Horizon UK shares) held by each employee was increased by 175.14 timesand the exercise price was decreased by the option exercise price divided by 175.14. Also included in the table above are options to purchase175,140,000 shares of the Company’s common stock, which options were issued to an employee on December 31, 2012 and vest onDecember 31, 2015.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

During the years ended June 30, 2012, and June 30, 2011, One Horizon UK made payments to SCC BVBA, an entity organized under the lawsof Belgium of which Mr. White, a director and officer of the Company, is the sole shareholder. These payments were in the amounts of $682,000 and 672,000, respectively, and were made as compensation for Mr. White’s services as chief executive officer of One Horizon UK,as set forth in the Summary Compensation Table: Post-Share Exchange Executives in Item 12 of this Report.

During the year ended June 30, 2012, Messrs. White, Collins and Ward, directors and executive officers of the Company, and AlexandraJohnson and Adam Thompson, former executives of One Horizon UK and current 5% holders of the Company’s common stock, advanced$507,463, $507,463, $328,358, $328,358 and $328,358, respectively, to the Company pursuant to a Loan Note Instrument dated December 16,2011, in which an aggregate of $2,000,000 was advanced. These loans are unsecured, have an interest rate of 10%, and mature upon the earlierto occur of (i) a sale of the whole of the issued share capital of the Company or the disposal by the Company of all, or a substantial part of, itsbusiness, assets and undertaking; and (ii) listing of the whole of any class of the issued share capital of the Company on the official list of theUK Listing Authority and to trading on the London Stock Exchange or to trading on any other recognized investment exchange (as defined inSection 285 of the Financial Services and Markets Act of 2000). Since December 16, 2011, the largest aggregate amount of principaloutstanding was $2,000,000. As of April 29, 2013, the amount of principal outstanding is $2,000,000. The loans may be repaid at any time bythe Company upon not less than five business days’ notice by the Company. During the 12-month period ended June 30, 2012, $100,000 ininterest was accrued by the Company, while $100,000 in interest was accrued by the Company during the 6-month period ended December 31,2012. In accordance with the terms of the Loan Note Instrument, as of April 29, 2013, no payments of principal or interest have been made.

As of November 13, 2012, the Company and Messrs. White and Collins, directors and executive officers of the Company, executed a loanagreement evidencing a loan made by Messrs. White and Collins to the Company in the amount of $1,500,000. The loan bears interest at therate of 0.21% per annum and must be repaid by December 31, 2014. It is prepayable without penalty at the option of the Company at any timefollowing its issuance in cash or in shares of One Horizon UK, at the conversion price of $1.50 per share. As of April 29, 2013, the amount ofprincipal outstanding is $1,500,000. During the 6-month period ended December 31, 2012, $414 in interest was accrued by the Company. Inaccordance with the terms of the loan, as of April 29, 2013, no payments of principal or interest have been made.

On December 31, 2012, the Company entered into an Acquisition Agreement with the wife of the former chief executive officer of theCompany (Pre-Share Exchange) pursuant to which the Company sold to her (i) all of the shares of the Company’s wholly-owned subsidiaryGlobal Integrated Media, Ltd., a company incorporated under the laws of Hong Kong (“GIM”), which comprised all of the Company’spublishing business operations, assets, and liabilities and its Modizo business operations, assets and liabilities, and (ii) substantially all of theassets of Modizo as a going concern, in exchange for 42,000,000 shares of the Company’s common stock, which shares had a fair market valueof $420,000 .

On January 22, 2013, Messrs. White and Collins, directors and executive officers of the Company, each made a loan to the Company of$250,000. In exchange for each loan, the Company issued to each of Messrs. White and Collins a convertible promissory note in the initialprincipal amount of each loan. Each loan bears interest at the rate of 0.21% per annum, must be repaid in one year, and is prepayable withoutpenalty at the option of the Company at any time following its issuance in cash or in shares of its common stock at the rate of $0.0086 per

26

share. As of April 29, 2013, the amount of principal outstanding is $500,000. As of April 29, 2013, $196 in interest has been accrued by theCompany. In accordance with the terms of the loan, a s of April 29, 2013, no payments of principal or interest have been made.

Independent Directors

Under the definition of independent directors found in Nasdaq Rule 5605(a)(2), which we have chosen to apply, we currently have twoindependent directors, Stephen Austin and Nicholas Carpinello.

T he Company’s board of directors does not have a separate audit committee, nominating committee or compensation committee. Given thesmall size of the Company’s board and the limited number of independent directors over the Company’s history, the board of direc tors hasdetermined that it is appropriate for the entire board to act as each such committee. Three of our directors, Messrs. White, Ward and Collins,are not independent as defined by the listing requirements of the NASDAQ Stock Market.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The Share Exchange was accounted for as a reverse acquisition whereby One Horizon UK is deemed to be the accounting acquirer (and thelegal acquiree). Prior to the Share Exchange, One Horizon UK had a June 30 fiscal year end. On February 13, 2013, the Company filed aCurrent Report on Form 8-K disclosing that the board of directors of the Company changed the Company's fiscal year end from June 30 toDecember 31. As a result, included with this Report are financial statements for the years ended June 30, 2011 and June 30, 2012, and the sixmonths ended December 31, 2012 (the “Reported Periods”).

Audit Fees

Following the Share Exchange, the Company authorized audits by Peterson Sullivan, the Company’s independent PCAOB registeredaccountants, of the Company’s financial statements, on a carve-out basis, for the Reported Periods. These audits were performed at once byPeterson Sullivan LLP in 2013, and we have been advised that Peterson Sullivan expects to bill $100,000, in the aggregate, in audit fees.

Audit-Related Fees

There were no audit-related fees billed or accrued during the Reported Periods. Audit-related fees typically consist of fees billed for assuranceand related services that are reasonably related to the performance of the audit or review of our consolidated financial statements, which are notreported under “Audit Fees.”

Tax Fees

There were no tax fees billed or accrued during the Reported Periods. Tax fees typically consist of fees billed for professional services for taxcompliance, tax advice, and tax planning.

All Other Fees

Other than the fees reported above, there were no other fees billed or accrued during the Reported Periods.

Preapproval Policies and Procedures

Before the independent registered accountants are engaged to render audit services or nonaudit activities, the engagement is approved by ourboard of directors acting as the audit committee.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibit Number Title of Document Location

Item 2 Plan of Acquisition, Reorganization Arrangement, Liquidation, orSuccession

2.1 Stock Purchase Agreement between Mobiclear Inc. and WhitefieldsCapital Limited entered November 12, 2009

Incorporated by reference from the Current Report onForm 8-K filed November 17, 2009

2.2 Stock Purchase Agreement between Intelligent CommunicationEnterprise Corporation and Whitefields Capital Limited enteredJanuary 20, 2010

Incorporated by reference from the Current Report onForm 8-K filed January 25, 2010

2.3 Sale and Purchase Agreement between Intelligent CommunicationEnterprise Corporation and Power Centre Holdings Limited datedJune 11, 2010

Incorporated by reference from the Current Report onForm 8-K filed June 17, 2010

2.4 Agreement of Securities Exchange and Plan of Reorganizationbetween Intelligent Communication Enterprise Corporation and OneHorizon Group PLC

Incorporated by reference from the Current Report onForm 8-K filed December 6, 2012

Item 3 Articles of Incorporation and Bylaws

3.1 Amended and Restated Articles of Incorporation of BICO, Inc. asfiled with the Secretary of State of the Commonwealth ofPennsylvania

Incorporated by reference from the Current Report onForm 8-K filed November 12, 2004

3.2 Certificate of Designation of Series M Preferred Stock as filed withthe Secretary of State of the Commonwealth of Pennsylvania

Incorporated by reference from the Current Report onForm 8-K filed November 12, 2004

3.3 Joint Second Amended Plan of Reorganization dated August 3, 2004 Incorporated by reference from the Current Report onForm 8-K filed November 12, 2004

3.4 Order Approving Joint Second Amended Plan of Reorganizationdated October 14, 2004

Incorporated by reference from the Current Report onForm 8-K filed November 12, 2004

3.5 Amended and Restated Certificate of Designation for Series MPreferred

Incorporated by reference from the Current Report onForm 8-K filed April 4, 2005

3.6 By-Laws of MobiClear Inc. as amended on October 13, 2006 Incorporated by reference from the Annual Report onForm 10-KSB for the year ended December 31,2006, filed April 2, 2007

3.7 Amendment to Articles of Incorporation as filed with the Secretary ofState of the Commonwealth of Pennsylvania

Incorporated by reference from the Current Report onForm 8-K filed December 6, 2006

3.8 Amendment to Articles of Incorporation as filed with PennsylvaniaDepartment of State Corporate Bureau

Incorporated by reference from the Current Report onForm 8-K filed July 2, 2008

3.9 Amendment to Articles of Incorporation as filed September 22, 2009,with the Pennsylvania Department of State Corporate Bureau

Incorporated by reference from the Quarterly Reporton Form 10-Q for the Quarter Ended September 30,2009, filed October 29, 2009

3.10 Amendment to Articles of Incorporation as filed November 30, 2009,with the Pennsylvania Department of State Corporate Bureau

Incorporated by reference from the Current Report onForm 8-K filed December 30, 2009

3.11 Amendment to Articles of Incorporation as filed December 27, 2012,with the Pennsylvania Department of State Corporate Bureau

Filed as part of this report

28

Item 4 Instruments Defining the Rights of Security Holders, IncludingDebentures

4.1 Specimen stock certificate Filed as part of this report

Item 10 Material Contracts

10.1 Memorandum of Agreement for Strategic Investment in Mobiclear,effective as of February 16, 2009

Incorporated by reference from the Current Report onForm 8-K filed February 23, 2009

10.2 Offer to Purchase ICE Corp’s Messaging Businesses Incorporated by reference from the Annual Report onForm 10-K filed April 16, 2012

10.3 Employment Agreement between Intelligent CommunicationEnterprise Corporation and Victor Jeffery effective June 1, 2011

Incorporated by reference from the Current Report onForm 8-K filed June 6, 2011

10.4 Sale and Purchase Agreement dated June 17, 2011 Incorporated by reference from the Current Report onForm 8-K filed July 5, 2011

10.5 Sale and Purchase Agreement between Clarita Ablazo Jeffery andIntelligent Communication Enterprise Corporation

Incorporated by reference from the Current Report onForm 8-K filed December 12, 2011

10.6 Loan Agreement dated as of November 13,2012 Filed as part of this report

10.7 Acquisition Agreement with Clarita Ablazo Jeffery dated December31, 2012

Filed as part of this report

Item 14. Code of Ethics

14.1 Policy Statement on Business Ethics and Conflicts of Interest Incorporated by reference from the Annual Report onForm 10-KSB for the year ended December 31,2004, filed May 23, 2005

Item 21. Subsidiaries of the Registrant

21.1 Schedule of Subsidiaries Filed as part of this report

Item 31. Rule 13a-14(a)/15d-14(a) Certifications

31.1 Certification of Principal Executive Officer Pursuant to Rule 13a-14 Filed as part of this report

31.2 Certification of Principal Financial Officer Pursuant to Rule 13a-14 Filed as part of this report

Item 32. Section 1350 Certifications

32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed as part of this report

32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filed as part of this report

29

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

ONE HORIZON GROUP, INC.

Date: May 10, 2013 By: /s/ Mark WhiteMark WhitePresident and Principal Executive Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 10, 2013

/s/ Mark WhiteMark WhitePresident, Chief Executive Officer, and Director

/s/ Martin WardMartin Ward, Chief Financial Officer, PrincipalFinance and Accounting Officer and Director

/s/ Brian CollinsBrian Collins, Vice President, Chief TechnologyOfficer and Director

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and ShareholdersOne Horizon Group, Inc.London, United Kingdom

We have audited the accompanying consolidated balance sheet of One Horizon Group, Inc. ("the Company") as of December 31, 2012, and therelated consolidated statements of operations, comprehensive loss, shareholders' equity, and cash flows for the period from July 1, 2012 toDecember 31, 2012. We have also audited the consolidated balance sheets of the Company as of June 30, 2012 and 2011, and the relatedconsolidated statements of operations, comprehensive loss, shareholders’ equity, and cash flows for the years then ended. These consolidatedfinancial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidatedfinancial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements arefree of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of itsinternal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designingaudit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theCompany's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believethat our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of OneHorizon Group, Inc. as of December 31, 2012, and the results of their operations and their cash flows for the period from July 1, 2012 toDecember 31, 2012, as well as the consolidated financial position of One Horizon Group, Inc. as of June 30, 2012 and 2011, and the results oftheir operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

/S/ PETERSON SULLIVAN LLP

Seattle, WashingtonMay 9, 2013

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ONE HORIZON GROUP, INC.(formerly Intelligent Communication Enterprise Corporation)Consolidated Balance SheetsDecember 31, 2012, June 30, 2012 and 2011(in thousands, except share data)

December 31, June 30,2012 2012 2011

Assets

Current assets:Cash $ 699 $ - $ -Accounts receivable, current portion 5,899 953 212Income taxes recoverable - - 60Other assets 136 121 304Total current assets 6,734 1,074 576

Accounts receivable, net of current portion 26,263 22,814 2,821Property and equipment, net 350 419 282Intangible assets, net 12,329 12,187 10,704Investment - 55 -

Total assets $ 45,676 $ 36,549 $ 14,383

Liabilities and Stockholders' Equity

Current liabilities:Checks issued in excess of funds on deposit $ - $ 39 $ 92Accounts payable 750 3,655 676Accrued expenses 435 2,478 380Accrued compensation 38 - -Income taxes 1,332 163 -Amounts due to related parties 3,500 2,020 3,885Current portion of deferred revenue 6,000 4,600 400Current portion of long-term debt 59 33 1,600Total current liabilities 12,114 12,988 7,033

Long-term liabilitiesDeferred revenue 16,000 13,400 1,200Long-term debt 219 60 -Deferred income taxes 445 445 445Mandatorily redeemable preferred shares 90 90 90Total liabilities 28,868 26,983 8,768

Stockholders' EquityPreferred stock:$0.0001 par value, authorized 150,000,000;no shares issued or outstanding - - -Common stock:$0.0001 par value, authorized 250,000,000,000 sharesissued and outstanding 18,507,506,667 shares (June 2012 14,671,182,339 ; 2011 -13,328,442,105) 1,852 1,467 1,333Additional paid-in capital 19,781 18,139 12,117Stock subscriptions receivable (500) - -Accumulated deficit (4,780) (10,040) (7,835)Accumulated other comprehensive income 455 - -Total stockholders' equity 16,808 9,566 5,615Total liabilities and stockholders' equity $ 45,676 $ 36,549 $ 14,383

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See accompanying notes to consolidated financial statements.

ONE HORIZON GROUP, INC.(formerly Intelligent Communication Enterprise Corporation)Consolidated Statements of OperationsFor the six months ended December 31, 2012 and twelve months ended June 30, 2012 and 2011(in thousands, except per share data)

Six months endedDecember 31, Twelve months ended June 30,

2012 2012 2011

Revenue $ 11,709 $ 5,222 $ 2,726

Cost of revenue 121 80 207Gross margin 11,588 5,142 2,519

Expenses:General and administrative 4,022 4,570 1,911Depreciation 73 884 321Amortization of intangibles 873 1,655 1,307

4,968 7,109 3,539

Income (loss) from operations 6,620 (1,967) (1,020)

Other income and expense:Interest expense (87) (218) (173)Foreign exchange 16 49 (2)Interest income 1 - -Gain on acquisition of subsidiary, net - - 476

(70) (169) 301

Income (loss) from continuing operations before income taxes 6,550 (2,136) (719)

Income taxes (recovery) 1,169 69 (316)Income (loss) from continuing operations 5,381 (2,205) (403)

Discontinued operations:Loss from discontinued operations (40) - -Loss on sale of discontinued businesses (81) - -Loss from discontinued operations (121) - -

Net Income (Loss) for the period $ 5,260 $ (2,205) $ (403)

Earnings per share (continuing operations and discontinued operations)

Basic net income (loss) per shareContinuing operations $ 0.00 $ (0.00) (0.00)Discontinued operations $ 0.00 $ - -

Diluted net income (loss) per shareContinuing operations $ 0.00 - -Discontinued operations $ 0.00 - -

Weighted average number of shares outstandingBasic 16,398,727 13,616,823 12,577,531Diluted 17,560,866 - -

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See accompanying notes to consolidated financial statements.

ONE HORIZON GROUP, INC.(formerly Intelligent Communication Enterprise Corporation)Consolidated Statements of Comprehensive IncomeFor the six months ended December 31, 2012 and twelve months ended June 30, 2012 and 2011(in thousands)

Six monthsended December

31, Twelve months ended June 30,

2012 2012 2011

Net income (loss) $ 5,260 $ (2,205) $ (403)Other comprehensive income:Forgin currency translation adjustment gain (loss) 455 - -

Total comprehensive income (loss) $ 5,715 $ (2,205) $ (403)

See accompanying notes to consolidated financial statements.

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ONE HORIZON GROUP, INC.(formerly Intelligent Communication Enterprise Corporation)Consolidated Statements of Stockholders' EquityFor the six months ended December 31, 2012 and the twelve months June 30, 2012 and 2011 (in thousands)

Mandatorily redeemablepreferred stock Common Stock Additional Retained

AccumulatedOther Total

Numberof Shares Amount Number of Shares Amount

Paid-inCapital

Earnings(Deficit)

SubscriptionsReceivable

ComprehensiveIncome (Loss)

Stockholders'Equity

Balance July 1,2010 50 $ 90 10,443,361 $ 1,044 $ 9,764 $ (6,709) $ - $ - $ 4,099

Net loss - - - (403) - (403)

Dividends paid (723) (723)Commons stockissued 2,885,081 289 2,347 2,636Options issued forservices received 6 6Balance June 30,2011 50 90 13,328,442 1,333 12,117 (7,835) - - 5,615

Net loss - - - (2,205) - (2,205)

Common stockissued for cash 1,342,740 134 5,616 5,750Options issued forservices received 6 6Warrants issuedfor servicesreceived 400 400

Balance June 30,2012 50 90 14,671,182 1,467 18,139 (10,040) - - 9,566

Net Income - - - 5,260 - 5,260Foreign currencytranslations - - - - 455 455

Common stockissued for cash 117,344 12 490 502Common stockissued for notereceivable 875,700 88 412 (500) -Common stockissued for servicesreceived 87,570 9 41 50Common stockissued for servicesreceived fromrelated parties 2,101,680 210 990 1,200Warrant issued forservices received 2 2Options issued forservices received 22 22

Common stockaccounted for inbusinesscombination 696,031 70 100 - - 170Return of stock ondisposal ofsubsidiaries (42,000) (4) (415) (419)

Balance December31, 2012 50 $ 90 18,507,507 $ 1,852 $ 19,781 $ (4,780) $ (500) $ 455 $ 16,808

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See accompanying notes to consolidated financial statements.

ONE HORIZON GROUP, INC.(formerly Intelligent Communication Enterprise Corporation)Consolidated Statements of Cash FlowsFor the six months ended December 31, 2012 and twelve months ended June 30, 2012 and 2011(in thousands)

Six monthsended

December 31, Twelve months ended June 30,

2012 2012 2011Cash provided by (used in) operating activities:

Operating activities:Net income (loss) for the period $ 5,260 $ (2,205) $ (403)Adjustment to reconcile net income (loss) for the period to net cash provided by (used in)operating activities:Depreciation of property and equipment 73 884 321Amortization of intangible assets 873 1,655 1,307Gain on acquisition of subsidiary - - (476)Loss on disposal of discontinued businesses 81 - -Options issued for services 22 6 6Warrants issued for services 2 400 -Common shares issued for services 50 - -Common shares issued for services to related parties 1,200 - -Changes in operating assets and liabilities net of effects of acquistions:

Accounts receivable (8,395) (20,734) 2,675Other assets (15) 182 730Accounts payable and accrued expenses (5,153) 539 211Deferred revenue 4,000 16,400 1,600Income taxes 1,169 (22) (608)

Net cash provided by (used in) operating activities (833) (2,895) 5,363

Cash used in investing activities:

Acquisition of intangible assets (486) (3,466) (119)Acquisition of property and equipment - (101) (458)Cash component upon acquisition - - 154Acquisition of subsidiary - - (2,238)(Acquisition) disposition of joint venture 55 (55) -

Net cash (used in) investing activities (431) (3,622) (2,661)

Cash flow from financing activities:Dividends paid - - (723)Increase (decrease) in long-term borrowing, net - (980) (2,071)Cash proceeds from issuance of common stock 502 5,750 -Advances from related parties, net of repayment 1,500 1,800 -Net checks issued in excess of funds (39) (53) 92

Net cash provided by (used in) financing activities 1,963 6,517 (2,702)

Increase in cash during the period 738 - -

Cash at beginning of the period - - -

Cash at end of the period $ 699 $ - $ -

See accompanying notes to consolidated financial statements.

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ONE HORIZON GROUP, INC.(formerly Intelligent Communication Enterprise Corporation)Consolidated Statements of Cash Flows (continued)For the six months ended December 31, 2012 and twelve months ended June 30, 2012 and 2011(in thousands)

Supplementary Information:

Six monthsended December

31, Twelve months ended June 30,

2012 2012 2011

Interest paid $ - $ - $ -Income taxes paid - - -

Non-cash transactions:Common stock issued for acquistion of subsidiary - - 3Common stock returned as part consideration for sale of businesses 420 - -Common stock issued for services 50 - -Common stock issued for services from related parties 1,200 - -Settlement of debt with Broadband Satellite Services Ltd in consideration of sale of

satellite billing software 5,000 - -

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 2012

Note 1. Description of Business, Organization and Principles of Consolidation

Description of Business

One Horizon Group, Inc., (the “Company” or “Horizon”) develops proprietary software primarily in the Voice over Internet Protocol (VoIP)and bandwidth optimization markets (“Horizon Globex”) and provides it under perpetual license arrangements (“Master License”) throughoutthe world. The Company sells related user licenses and software maintenance services as well.

Organization

On November 30, 2012, the predecessor company Intelligent Communication Enterprise Corporation (“ICE”) acquired substantially all of thestock of One Horizon Group plc (“OHG”), a company incorporated in the United Kingdom, pursuant to the Agreement of Securities Exchangeand Plan of Reorganization dated October 12, 2012 (the “share exchange”). Upon completion of this transaction, the former shareholders ofOHG controlled approximately 96% of the outstanding stock of the Company. Under U.S. GAAP, OHG is deemed to be the acquiring entity.The share exchange has been accounted for as a reverse acquisition. The historical combined financial statements of OHG form theconsolidated financial statements presented. For accounting purposes, ICE was considered to have been acquired as of November 30, 2012.

The consolidated financial statements have the deemed acquisition of Horizon by OHG and the recognition of the 696,030,538 shares ofcommon stock, with a fair value of $341,000, at November 30, 2012.

On December 31, 2012 the Company sold the operations of Global Integrated Media Limited and Modizo for the return of 42,000,000 shares ofcommon stock with a fair value of $420,000. These companies were subsidiaries and divisions of ICE. The financial results of operations andcash flows of these businesses for the period of November 30, 2012 to December 31, 2012 have been classified as discontinued operations.

Principles of Consolidation and Combination

The December 31, 2012 consolidated financial statements include the accounts of One Horizon Group, Inc. (“OHGI”), formerly called ICE,and its subsidiaries OHG, Horizon Globex GmbH “HGG” and Abbey Technology GmbH “ATG”. The accounts and operations of ICE,including its subsidiaries Global Integrated Media Limited and Global Integ. Media (GIM) Ltd., Corporation, have been included from the timeof the share exchange on November 30, 2012 until divestiture on December 31, 2012.

For financial statement presentation prior to November 30, 2012, the reporting entity consists of the combined financial statements of OHG andits two subsidiaries, HGG and ATG. Effective as of November 30, 2012, OHG was acquired in a share exchange transaction under whichsubstantially all of the shares of the predecessor operating company, ICE, became owned by the shareholders of OHG. Because of this changein ownership of ICE, the share exchange has been accounted for as a reverse acquisition. Although ICE is the legal acquirer of OHG and OHGis the legal acquiree, under the reverse acquisition, OHG is considered for accounting purposes to be the acquirer of the operating company,ICE. In the accounting for this nature of business combination, the assets and liabilities of the OHG, as the accounting acquirer, are recorded attheir historical carrying values and the assets and liabilities of ICE, as the accounting acquiree, are recorded at their fair values as of the date ofthe share exchange. The assets and liabilities of ICE and its operations are included in the consolidated financial statements effective as of theNovember 30, 2012, the date of the share exchange.

Prior to the share exchange described more fully below, OHG owned separate legal entities which operated in a separate line of business,Satcom Global. That line of business was sold in a transaction executed in October 2012, prior to the share exchange with ICE. The historicalfinancial statements presented as it relates to dates prior to the share exchange are those of the separate combined operations of OHG and itstwo subsidiaries, which are presented on a carve-out basis from the discontinued historical operations of Satcom Global. Management of theCompany considers the basis on which the expenses have been allocated to the combined group to be a reasonable reflection of the utilizationof the services provided to or received from during the periods presented. All revenues, expenses, gains and losses, assets and liabilities relatedto the Satcom Global business have been eliminated from these combined financial statements.

Note 2. Summary of Significant Accounting Policies

Basis of Accounting and Presentation

These consolidated and combined financial statements have been prepared in conformity with accounting principles generally accepted in theUnited States.

The Company changed its year end to December 31 and is presenting six-months operations for the period ended December 31, 2012.

Reporting Currency and Currency Translation

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The reporting currency of the Company is the United States dollar. Assets and liabilities of operations other than those denominated in U.S.dollars primarily in Switzerland and the United Kingdom, are translated into United States dollars at the rate of exchange at the balance sheetdate. Revenues and expenses are translated at the average rate of exchange throughout the period. Gains or losses from these translations arereported as a separate component of other comprehensive income (loss) until all or a part of the investment in the subsidiaries is sold orliquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amountsindefinitely in operations.

Transaction gains and losses that arise from exchange-rate fluctuations on transactions denominated in a currency other than the functionalcurrency are included in general and administrative expenses.

Cash

Cash and cash equivalents include bank demand deposit accounts and highly liquid short term investments with maturities of three months orless when purchased. Cash consists of checking accounts held at financial institutions in the United Kingdom, Switzerland and Singaporewhich, at times, balances may exceed insured limits. The Company has not experienced any losses related to these balances, and managementbelieves the credit risk to be minimal.

Accounts Receivable

Accounts receivable result primarily from sale of software to customers and are recorded at their principal amounts. Receivables are consideredpast due once they exceed the terms of the sales transaction. When necessary, the Company provides an allowance for doubtful accounts that isbased on a review of outstanding receivables, historical collection information, and current economic conditions. There was an allowance of$218,000 for doubtful accounts as at December 31, 2012. Receivables are generally unsecured. Account balances are charged off against theallowance when the Company determines it is probable the receivable will not be recovered. The Company does not have off-balance sheetcredit exposure related to its customers. At December 31, 2012, three customers in aggregate accounted for 33% of the accounts receivablebalance. Long term payment terms for Master Licenses are provided to customers on an interest free basis, typically over five years.

Payments due from customers beyond one year are recorded as long term at their net present value, to the extent revenue has been recorded asdescribed. Accounts receivable i ncludes amounts that are due for which revenue has not been recognized. Such amounts are recorded asdeferred income, classified as current or long term liabilities, based on the expectation of revenue to be recognized and collections to bereceived .

Concentration of Revenue

On October 25, 2012, ATG sold the intellectual property to the satellite billing software it had developed to Broadband Satellite ServicesLimited, a United Kingdom company (“BSS”), for $5.0 million. This sale represents 43% of the Company’s total revenue for the six monthsended December 31, 2012. The entire purchase price was paid by means of an offset against amounts owed by ATG and its affiliates to SatcomGlobal FZE, a subsidiary of BSS. Management considers this sale to be non-recurring. BSS is the purchaser of the Company’s discontinuedSatcom Global business, which included the purchase of Satcom Global FZE .

Property and Equipment

Property and equipment is primarily comprised of leasehold property improvements, motor vehicles and equipment that are recorded at costand depreciated or amortized using the straight-line method over their estimated useful lives as follows: motor vehicles – 5 years, equipment –between 3 and 5 years, leasehold property improvements, over the lesser of the estimated remaining useful life of the asset or the remainingterm of the lease.

Repairs and maintenance are charged to expense as incurred. Expenditures that substantially increase the useful lives of existing assets arecapitalized.

Fair Value Measurements

Fair value is defined as the exchange price that will be received for an asset or paid to transfer a liability (an exit price) in the principal.Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. Tomeasure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered tobe observable and the third unobservable:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets orliabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable marketdata for substantially the full term of the assets or liabilities.

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Level 3 – Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets orliabilities.

Intangible Assets

Intangible assets include software development costs and customer lists and are amortized on a straight-line basis over the estimated usefullives of five years for customer lists and ten years for software development. The Company periodically evaluates whether changes haveoccurred that would require revision of the remaining estimated useful life. The Company performs periodic reviews of its capitalizedintangible assets to determine if the assets have continuing value to the Company.

The Company expenses all costs related to the development of software as incurred, other than those incurred during the applicationdevelopment stage, after achievement of technological feasibility. Costs incurred in the application development stage are capitalized andamortized over the estimated useful life of the software. Internally developed software costs are amortized on a straight-line basis over theestimated useful life of the software. The Company performs periodic reviews of its capitalized software development costs to determine if theassets have continuing value to the Company. Costs for assets that are determined to be of no continuing value are written off. During the sixmonths ended December 31, 2012 and years ended June 30, 2012 and 2011, software development costs of $486,000, $3,447,000 and$3,625,000, respectively, have been capitalized.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of its property and equipment and other long-lived assets whenever events or changes incircumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds theestimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, aremeasured as the amount by which the carrying value exceeds the fair value of the assets. During the six months ended December 31, 2012 andyears ended June 30, 2012 and 2011, the Company identified no impairment losses related to the Company’s long-lived assets.

Revenue Recognition

The Company recognizes revenue when it is realized or realizable and earned. The Company establishes persuasive evidence of a salesarrangement for each type of revenue transaction based on a signed contract with the customer and that delivery has occurred or services havebeen rendered, price is fixed and determinable, and collectability is reasonably assured.

●Revenue from sales of perpetual licenses to top-tier telecom entities is recognized at the inception of the arrangement,presuming all other relevant revenue recognition criteria are met. Revenue from sales of perpetual licenses to other entities isrecognized over the agreed collection period.

●Revenue from software maintenance, technical support and unspecified upgrades is prorated over the period that theseservices are delivered.

●Revenues for user licenses purchased by customers is recognized when the user license is delivered.

We enter into arrangements in which a customer purchases a combination of software licenses, maintenance services and post-contractcustomer support (“PCS”). As a result, judgment is sometimes required to determine the appropriate accounting, including how the priceshould be allocated among the deliverable elements if there are multiple elements. PCS may include rights to upgrades, when and if available,support, updates and enhancements. When vendor specific objective evidence (“VSOE”) of fair value exists for all elements in a multipleelement arrangement, revenue is allocated to each element based on the relative fair value of each of the elements. VSOE of fair value isestablished by the price charged when the same element is sold separately. Accordingly, the judgments involved in assessing the fair values ofvarious elements of an agreement can impact the recognition of revenue in each period. Changes in the allocation of the sales price betweendeliverables might impact the timing of revenue recognition, but would not change the total revenue recognized on the contract. When elementssuch as software and services are contained in a single arrangement, or in related arrangements with the same customer, we allocate revenue toeach element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. In theabsence of fair value for a delivered element, revenue is first allocated to the fair value of the undelivered elements and then allocated to theresidual delivered elements. In the absence of fair value for an undelivered element, the arrangement is accounted for as a single unit ofaccounting, resulting in a delay of revenue recognition for the delivered elements until the undelivered elements are fulfilled. No salesarrangements to date include undelivered elements for which VSOE does not exist.

For the purposes of revenue recognition for perpetual licenses, the Company considers payment terms exceeding one year as a presumption thatrevenue is recognized pro rata over the collection period, typically over five years. For sales to top-tier customers, this presumption isovercome by the customer's commitment to pay, as demonstrated by its payment history and its ability to pay. Payment terms are extended tocustomers on an interest-free basis for Master License sales. For revenue recognized in advance of payments due , the Company provides for adiscount against the revenue recorded, which is adjusted to the net present value of the cash flows expected over the payment terms imputinginterest at an appropriate rate , when the terms exceed one year.

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Deferred Revenue

The Company sells software and licenses on deferred payment terms, typically over five years. For those sales to customers which theCompany does not consider to be top-tier telecom entities, the revenue is recognized over the collection period. Contracts are consideredlegally binding agreements. On execution , the Company records the full amount receivable from the customer for the master license, includingan allocation to current and long-term positions. The amount of the receivable that is not recognized as revenue is included in deferredrevenue.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.All other leases are classified as operating leases.

Assets held under finance leases are recognized as assets of the Company at their fair value or, if lower, at the present value of the minimumlease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet asfinance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve aconstant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.

Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.

Discontinued Operations

The Company reclassifies, from continuing operations to discontinued operations, for all periods presented, the results of operations for anycomponent disposed of. The Company defines a component as being distinguishable from the rest of the Company because it has its ownoperations and cash flows. A component may be a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group.Such reclassifications have no effect on the net income or shareholders’ equity.

Advertising Expenses

It is the Company’s policy to expense advertising costs as incurred. No advertising costs were incurred during each of the six months endedDecember 31, 2012 and years ended June 30, 2012 and 2011.

Research and Development Expenses

Research and development expenses include all direct costs, primarily salaries for Company personnel and outside consultants, related to thedevelopment of new products, significant enhancements to existing products, and the portion of costs of development of internal-use softwarerequired to be expensed. Research and development costs are charged to operations as incurred with the exception of those softwaredevelopment costs that may qualify for capitalization. Other than the costs of software developed and capitalized, the Company incurred noresearch and development costs in the six months ended December 31, 2012 and years ended June 30, 2012 and 2011.

Income Taxes

Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assetsand liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effectwhen the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generatingsufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets toamounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on anumber of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other,more subjective indicators when considering whether to establish or reduce a valuation allowance.

The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resultingfrom uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as acomponent of interest expense and other expense, respectively.

Because tax laws are complex and subject to different interpretations, significant judgment is required when making certain determinationswith regard to the Company’s positions . As a result, the Company makes certain estimates and assumptions in: (1) calculating its income taxexpense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3)evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company’sestimates and assumptions may differ significantly from tax benefits ultimately realized.

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Net Income per Share

Basic earnings per share of common stock is computed by dividing net income or loss by the weighted-average number of common sharesoutstanding for the period. Diluted earnings per share of common stock reflects the maximum potential dilution that could occur if securities orother contracts to issue common stock were exercised or converted into common stock and would then share in the net income of the Company.Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations. ( inthousands)

December 31 June 30

2012 2012 2011

Basic 16,398,727 13,616,823 12,577,531Incremental shares under stock compensation plans 1,161,888 916,692 218,176Incremental shares connected with previously converted promissory notes 250 250 250Fully Diluted 17,560,866 14,533,766 12,795,957

Accumulated Other Comprehensive Income (Loss)

Other comprehensive income (loss), as defined, includes net income, foreign currency translation adjustment, and all changes in equity (netassets) during a period from non-owner sources. To date, the Company has not had any significant transactions that are required to be reportedin other comprehensive income (loss), except for foreign currency translation adjustments.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financialstatements and the reported amounts of revenues and expenses during the fiscal year. The Company makes estimates for, among other items,recognition of revenue, useful lives for depreciation and amortization, determination of future cash flows associated with impairment testing forlong-lived assets, determination of the fair value of stock options and warrants, determining fair values of assets acquired and liabilitiesassumed in business combinations, valuation allowance for deferred tax assets, allowances for doubtful accounts, and potential income taxassessments and other contingencies. The Company bases its estimates on historical experience, current conditions, and other assumptions thatit believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions.

Financial Instruments

The Company has the following financial instruments: cash, and long-term debt . The carrying value of these financial instrumentsapproximates their fair value due to their liquidity or their short-term nature valued consistent with the use of level 2 inputs .

Share-Based Compensation

The Company accounts for stock-based awards at fair value on date of grant and recognition of compensation over the service period forawards expected to vest. The fair value of stock options is determined using the Black-Scholes valuation model, which is consistent with theCompany’s valuation techniques previously utilized for options in footnote disclosures.

Recent Accounting Pronouncements

In June 2011, the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to reportother comprehensive income and its components in the statement of changes in equity. Instead, an entity will be required to present either acontinuous statement of net income and other comprehensive income or two separate, but consecutive statements. The Company has adoptedthis standard and elected to present separate Consolidated Statements of Comprehensive Income.

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Note 2. Business Combinations

ICE

On November 30, 2012 the Company acquired 98.9% of the issued and outstanding shares of OHG in exchange for 17,670,033,802 shares ofcommon stock of the Company. As the former shareholders of OHG controlled more than 96% of the Company’s outstanding common stockupon the transaction closing the combination is treated as a reverse acquisition with OHG being the accounting acquirer.

There were 696,030,538 shares of common stock, with a fair market value of $ 170,000, issued for the predecessor company, ICE, at the timeof the business combination. The allocation of the fair value of ICE’s assets acquired and liabilities assumed is: ( in thousands)

November 30,2012

AssetsCash $ 13Accounts receivable 83Prepaid expenses and deposits 4Property and equipment 17Intangible assets 547

Total assets 664

LiabilitiesAccounts payable and accrued expenses 339Customer deposits 10Accrued expenses 75Other liabilities 70

494Net assets acquired $ 170

The post-acquisition management of the Company decided to sell the ICE businesses , which were sold on December 31, 2012, see note 3, andhave been recorded as discontinued operations for the period of consolidation in 2012.

Abbey

On September 18, 2010 the Company entered into an agreement to acquire all of the issued and outstanding shares acquired of AbbeyTechnology GmbH (“Abbey”) by the payment of $1,003,000 in cash and issuing 2,885,081,220 shares of common stock valued at $2,636,000.Abbey is a software development company based in Switzerland.

The primary reasons for this acquisition were that Abbey had been contracted to develop bandwidth optimized software “Horizon” for theCompany as the parties could see significant other markets to utilize this new technology in, particularly GSM and VSAT. This enabled theCompany to own the IP relating to Horizon, and to retain the full benefit of the margins and to strengthen the management team.

Details of the fair value of identifiable assets and liabilities acquired and the purchase consideration are as follows: (in thousands)

AssetsCash $ 154Accounts receivable 123Director’s loan receivable 804Customer list 885Software 4,631

Total assets 6,597

LiabilitiesAccounts payable 303Deferred tax liability 944

1,247

F-14

Net assets acquired $ 5,350

As a result of the acquisition of Abbey the following amounts were recorded as Other Income and Expense :

Negative goodwill resulting from the bargain purchase acquisition of Abbey $ 1,711,000Less:Costs incurred on Abbey acquisition written off 1,235,000Gain on acquisition of subsidiary , net $ 476,000

Note 3. Discontinued Operations

The GIM subsidiaries and Modizo business had been acquired by the Company through the share exchange of November 30, 2012. Themanagement of the post-acquisition Company decided that these businesses did not fit with the Company’s continuing businesses.

On December 31, 2012, the Company completed the sale, to the wife of a former officer and director, of Global Integrated Media, Ltd., acompany incorporated under the laws of Hong Kong (“GIM”), which comprised all of the Company’s publishing business operations, assets,and liabilities and its Modizo business operations, assets and liabilities. Consideration received was the return of 42 million shares of theCompany’s common stock, which had a fair value of $ 420,000 as of the closing date. The buyer had acquired the 42 million shares of theCompany’s stock in a previous transaction with the Company. These 42 million shares have been cancelled and returned to the Company’sauthorized but unissued shares.

The Company has recognized a loss on disposal of these subsidiaries of $ 81,000.

GIM and Modizo have been accounted for as discontinued operations from the period of acquisition on November 30, 2012 to the date of sale,December 31, 2012.

The following table summarizes results of the Company’s publishing and Modizo businesses classified as discontinued operations in theaccompanying consolidated statements of operations: (in thousands)

For the sixmonths endedDecember 31 For the years ended June 30,

2012 2012 2011Revenue $ 49 $ - $ -Cost of revenue 20 - -Operating expenses 69 - -

Income (loss) from discontinued operations $ (40) $ - $ -

Note 4. Property and Equipment, net

Property and equipment consist of the following: (in thousands)

December 31 June 30

2012 2012 2011

Leasehold improvements $ 265 $ 265 $ 265Motor vehicle 120 120 -Equipment 177 173 25

562 558 290Less accumulated depreciation ( 212) (139) ( 8)

Property and equipment, net $ 350 $ 419 $ 282

F-15

Note 5. Intangible Assets

Intangible assets consist primarily of software development costs and customer and reseller relationships which are amortized over theestimated useful life, generally on a straight-line basis with the exception of customer relationships, which are generally amortized over thegreater of straight-line or the related asset’s pattern of economic benefit. (in thousands)

December 31 June 302012 2012 2011

Horizon software $ 16,085 $ 15,378 $ 11,931Contractual relationships 885 885 885

16,970 16,263 12,816Less accumulated amortization ( 4, 641) ( 4,076) ( 2,112)

Intangible assets, net $ 12, 329 $ 12,187 $ 10,704

Amortization of intangible assets for each of the next five years is estimated to be $1,500,000 per year.

Note 6. Long-term Debt

Long – term liabilities consist of the following (in thousands)

December 31 June 30

2012 2012 2011

Vehicle loan $ 58 $ 93 $ -Office term loan 220 - -Bank term loan - - 1,600

278 93 1,600Less current portion ( 59) (33) (1,600)

Balance $ 219 $ 60 $ -

Note 7. Related-Party Transactions

Amounts due to related parties include the following: (in thousands)

December 31 June 30

2012 2012 2011

Loans due to stockholders $ 3,500 $ 2,000 $ -Due to directors - 20 225Due to Satcom Group - - 3,660

$ 3,500 $ 2,020 $ 3,885

During the year ended June 30, 2012 stockholders advanced a total of $2,000,000 to the Company. These loans are unsecured, have an interestrate of 10%.

During the six months ended December 31, 2012 two directors and officers advanced a total of $1,500,000 to the Company. These loans havean interest rate of 0.21%.

The Company entered into a sales contract, in the normal course of business with a customer in which the Company holds an equity interest.The customer purchased perpetual software license with total commitment of $2.0 million, of which amounts totaling $1.0 million have been

F-16

recognized in the three accounting periods presented. The Company owns a cost based investment interest of 18% of the voting capital of thecustomer.

During the years ended June 30, 2012 and 2011 a company owned by a director and officer of the Company provided services in the amountsof $664,000 and $552,000, respectively.

During the six months ended December 31, 2012 two directors and officers of the Company were granted a total of 2,101,680,000 shares ofcommon stock for services received in the amount of $1,200,000.

Note 8. Stockholders’ Equity

Preferred Stock

The Company’s authorized capital includes 150,000,000 shares of preferred stock of $0.0001 par value. The designation of rights includingvoting powers, preferences, and restrictions shall be determined by the Board of Directors before the issuance of any shares.

No shares of preferred stock are issued and outstanding for any of the periods presented.

Mandatorily Redeemable Preferred Shares (Deferred Stock)

The Company’s subsidiary OHG is authorized to issue 50,000 shares of deferred stock, par value of £ 1.These shares are non-voting and non-participating. Because the shares are redeemable at the option of the holders, they have been presented as a long-term liability.

Common Stock

The Company is authorized to issue 250 billion shares of common stock, par value of $0.0001.

During the six months ended December 31, 2012:

●OHG issued 670,000 shares of its common stock, for cash proceeds of $502,000, which stock was converted into 117,343,800 sharesof the Company’s common stock following the share exchange.

●OHG issued 5,000,000 shares of its common stock, for subscription receivable of $500,000, which stock was converted into875,700,000 shares of the Company’s common stock following the share exchange.

●OHG issued 12,000,000 shares of its common stock, for services received from related parties with a fair value of $1,200,000, whichstock was converted into 2,101,680,000 shares of the Company’s common stock following the share exchange.

●OHG issued 500,000 shares of its common stock, for services received with a fair value of $50,000, which stock was converted into87,570,000 shares of the Company’s common stock following the share exchange.

●The Company accounted for the share exchange with Intelligent Communication Enterprise Corporation and subsidiaries and theissued 696,030,538 shares of common stock with a fair value of $341,000.

●The Company returned to treasury for cancellation 42,000,000 shares of common stock with a fair value of $420,000 being proceedsreceived on the disposal of shares of Global Interactive Media Limited and the Modizo business.

During the year ended June 30, 2012, OHG issued the following amounts of common stock, which stock was converted into common stock ofthe Company following the share exchange, as described below:

●7,666,667 shares of common stock of OHG, which stock was converted into 1,342,740,058.38 shares of the Company’s commonstock for cash proceed of $5,750,000

During the year ended June 30, 2011, OHG issued the following amounts of common stock, which stock was converted into common stock ofthe Company following the share exchange, as described below:

●16,437,000 shares of common stock of OHG, with a fair value of $2,635,680, totaling 2,885,081,220 shares of the Company’scommon stock on an as-converted basis, for the acquisition of Abbey Technology GmbH.

Stock Purchase Warrants

At December 31, 2012, the Company had reserved 770,616,000 shares of its common stock for the following outstanding warrants:

Number of Warrants Exercise Price Expiry

700,560,000 $ 0 no expiry date70,056,000 0.0014 no expiry date

F-17

There were 70,056,000 warrants issued and none exercised during the six months ended December 31, 2012.

Note 9. Stock-Based Compensation

Although the Company does not have a formal stock option plan, it issues stock options to directors, employees, advisors, and consultants.

A summary of the Company’s stock options as of December 31, 2012, is as follows:

Number ofWeightedAverage

Options Exercise PriceOutstanding at June 30, 2010 88,863,409 $ 0.0019Options issued 175,140,000 0.0009Options forfeited (45,827,132) (0.0009)Outstanding at June 30, 2011 218,176,277 0.0013Options forfeited (2,043,884) (0.0014)Outstanding at June 30, 2012 216,132,393 0.0013Options issued 175,140,000 0.0009Outstanding at December 31, 2012 391,272,393 $ 0.0011

The following table summarizes stock options outstanding at December 31, 2012:

Number Average Number IntrinsicOutstanding Remaining Exercisable Value

at Contractual at atDecember 31, Life December 31, December 31,

Exercise Price 2012 (Years) 2012 2012$ 0.0009 3,448,507 2.83 3,448,507 $ 103,455

0.0009 175,140,000 7.50 175,140,000 5,254,2000.0009 175,140,000 10.00 - -0.0030 17,833,456 2.33 17,833,456 535,0040.569 19,710,431 3.50 7,193,588 215,808

At December 31, 2012, 391,272,393 shares of common stock were reserved for outstanding options.

The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model. The assumptions used incalculating the fair value of the options granted were: risk-free interest rate of 5.0%, a 3 year expected life, a dividend yield of 0.0%, and astock price volatility factor of 40%.

There were 175,140,000 options issued during the six months ended December 31, 2012, zero for the year ended June 30, 2012 and175,140,000 options issued during the year ended June 30,2011.

Note 10. Income Taxes

Income taxes are recognized for the amount of taxes payable for the current year and for the impact of deferred tax assets and liabilities, whichrepresent consequences of events that have been recognized differently in the financial statements under GAAP than for tax purposes.

Income (loss) before income taxes consisted of the following (in thousands):

December 31, June 30,

2012 2012 2011United States $ (22) $ - $ -

International 7,023 (315) (1,119)Total $ 7,001 $ (315) $ (1,119)

Deferred Tax Assets

F-18

As of December 31, 2012, the Company had no federal net operating losses available for future deduction from taxable income derived in theUnited States due to the change in control, existing US non-operating losses are considered to be not available to offset against future taxableincome in the US. The Company’s United Kingdom subsidiary has non-capital losses of approximately $9.9 million available for futuredeductions from taxable income derived in the United Kingdom, which do not expire. The potential benefit of net operating loss carryforwardshas not been recognized in the combined financial statements since the Company cannot determine that it is more likely than not that suchbenefit will be utilized in future years. The tax years 2006 through 2011 remain open to examination by federal authorities and otherjurisdictions in which the Company operates. The components of the net deferred tax asset and the amount of the valuation allowance are asfollows: (in thousands)

December 31, June 30,

2012 2012 2011Deferred tax assetsNet operating loss carryforwards – United States $ - $ - $ -Net operating loss carryforwards – International 2,510 1,981 1,600Valuation allowance (2,510) (1,981) (1,600)Net deferred tax assets $ - $ - $ -

The increase in the valuation allowance was $529,000 for the period ended December 31, 2012, and $381,000 for year ended June 30, 2012.

Note 11. Commitments and Contingencies

The Company has an agreement with an employee to pay for certain services to be provided during 2013 by the issuance of options to purchase175,140,000 shares of common stock of the Company at December 31, 2013. The options vest in 2016.

Lease Commitments

The Company incurred total rent expense of $103,000, $191,000 and $32,386, for the six months ended December 31, 2012 and the yearsended June 30, 2012 and 2011, respectively. Future lease commitments are as follows:

2013 $83,0002014 $72,0002015 $72,0002016 $72,0002017 $72,000

Note 12. Subsequent Events

Subsequent to December 31, 2012

●on January 22, 2013 the Company entered into two convertible loan agreements with two officers and directors of the Company in theamount of $250,000 each. The convertible loans bear an interest rate of 0.21% and are repayable on or before January 22, 2014. TheCompany has the option to repay the loans at any time, without penalty, in cash or shares of common stock of the Company at a priceof $0.0086 per share. If the Company elects to repay the convertible loans in full by the issuance of shares the Company will issue29,190,000 shares of common stock for each loan so repaid.

●on February 18, 2013 the Company entered into a subscription agreement to issue 483,870,968 shares of common stock and warrantsto purchase 241,935,483 shares of common stock, at the price of $0.0124 per share until February 18, 2016 for total consideration of$6 million. The subscription proceeds are receivable as to $2 million each at March 31, June 30 and September 30, 2013. Theoutstanding balance is secured by a pledge of the shares, pro-rata to amount owing, and carries an interest rate of 3%.

●In the period between January 31 and April 30, 2013, the Company invested $1.5 million for a 75% interest in a Chinese joint venturewith ZTE Corporation, held in a subsidiary, One Horizon Hong Kong Limited.

●In April 2013, the Company entered into an advisory agreement with a consulting firm to provide business and corporate developmentservices to the Company. Upon the signing of the agreement on April 15, 2013, the Company agreed to issue 37,526,065 shares ofcommon stock at a price of $0.02 per share for total consideration of approximately $750,000.

SCHEDULE 14C INFORMATIONInformation Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934

Check the appropriate box:

Preliminary Information Statement Confidential, For Use of the Commission only(as permitted by Rule 14c-5(d)(2))

Definitive Information Statement

ONE HORIZON GROUP, INC.(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):

No Fee Required

Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which thefiling fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

Fee paid previously with preliminary materials:

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting feewas paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing party:

(4) Date filed:

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ONE HORIZON GROUP, INC.Weststrasse 1, Baar, CH6340

Switzerland+41-41-7605820

INFORMATION STATEMENTWE ARE NOT ASKING YOU FOR A PROXY AND

YOU ARE REQUESTED NOT TO SEND US A PROXY

This Information Statement is first being mailed on or about July 17, 2013, to the holders of record of the outstanding common stock,$0.0001 par value per share (the “Common Stock”), of One Horizon Group, Inc., a Pennsylvania corporation (the “Company”), as ofthe close of business on July 5, 2013, pursuant to Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as amended(the “Exchange Act ” ). This Information Statement relates to the Annual Meeting of Shareholders of the Company (the “AnnualMeeting”). The Annual Meeting is to be held at 9:30 A.M. on August 6, 2013 at the Company’s London offices at Third Floor, RussellSquare House, 10-12 Russell Square, London, WC1B 5LF, United Kingdom. Except as otherwise indicated, references in thisInformation Statement to “Company,” “we,” “us” or “our” are references to One Horizon Group, Inc.

At the Annual Meeting, the following six proposals will be submitted to its shareholders for approval:

1. To elect the nominees named in this Information Statement to the Board of Directors.

2. To hold an advisory vote on executive compensation as required by the Dodd-Frank Wall Street Reform and ConsumerProtection Act (the “Dodd-Frank Act”);

3. To hold an advisory vote on the frequency of the advisory vote on executive compensation, as required by the Dodd-FrankAct;

4. To approve the One Horizon Group, Inc. 2013 Equity Incentive Plan (the “Plan”);

5. To complete a reverse stock split of the Company’s outstanding and authorized shares of Common Stock at a ratio of1:600, reduce the number of authorized shares of the Company’s Common Stock from 250,000,000,000 to 200,000,000 shares, reducethe number of authorized shares of the Company’s Preferred Stock from 150,000,000 to 50,000,000, and file a related amendment tothe Company’s articles of incorporation (the “Reverse Stock Split”).

6. To approve a change in the state of incorporation of the Company from Pennsylvania to Delaware by merging theCompany with and into a newly formed Delaware subsidiary, pursuant to an agreement and plan of merger, in connection with whichthe certificate of incorporation and bylaws of the Delaware corporation shall become the Certificate of Incorporation and Bylaws ofthe Company (the “Reincorporation”).

The Annual Meeting will not include any presentations by management.

This Information Statement is being furnished to you solely for the purpose of informing you of the matters described hereinpursuant to Section 14(c) of the Exchange Act and the regulations promulgated thereunder, including Regulation 14C, and applicableprovisions of the Pennsylvania Business Corporation Law and the Company’s governing documents.

By Order of the Board of Directors,

Mark WhitePresident and Chief Executive Officer

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF MATERIALS FOR THE SHAREHOLDER MEETINGTO BE HELD ON AUGUST 6, 2013

This Notice and Information Statement and our 2012 Annual Report are available online at www.iproxydirect.com/ohgi.

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ANNUAL MEETINGOUTSTANDING SHARES AND VOTING RIGHTS

The Board of Directors has fixed the close of business on July 5, 2013 as the record date (the “Record Date”) for the determination ofthe holders of our Common Stock entitled to notice of, and to vote at, the Annual Meeting.

At the close of business on the Record Date, there will be approximately 18,921,967,819 shares of our Common Stock outstandingand entitled to one vote each.

As of the Record Date, the shares owned by members of management and certain other principal shareholders represent a majority ofthe outstanding voting shares and the number of votes entitled to be cast on the matters to be considered at the Annual Meeting. Theseshareholders have advised the Company that they intend to vote “FOR” each of the nominees for election to the Board of Directors,“FOR” the advisory approval of our executive compensation, “FOR” the advisory approval of the frequency of the advisory vote onexecutive compensation once every three years, “FOR” the approval of the Plan, “FOR” the approval of the Reverse Stock Split, and“FOR” the approval of the Reincorporation. Therefore, the Company expects that each matter to be considered at the Annual Meetingwill be approved.

GENERAL INFORMATION

This Information Statement is being first mailed on or about July 17, 2013 to our shareholders by our Board of Directors to providematerial information regarding corporate actions that we have proposed to be approved at the Annual Meeting.

Only one copy of this Information Statement is being delivered to multiple shareholders who share an address unless we have receivedcontrary instruction from one or more of such shareholders. We will promptly deliver, upon written or oral request, a separate copy ofthe Information Statement to a shareholder at a shared address to which a single copy of the document was delivered. If you wouldlike to request separate copies of the Information Statement, if in the future you would like to receive separate copies of informationstatements, proxy statements or annual reports, or if you are currently receiving multiple copies of these documents and would like toreceive only a single copy, please so instruct us by calling or writing to our corporate secretary at the Company’s executive offices atthe telephone number or address specified above.

PLEASE NOTE THAT THIS IS NOT A REQUEST FOR YOUR VOTE OR A PROXY STATEMENT, BUT RATHER ANINFORMATION STATEMENT DESIGNED TO INFORM YOU OF CORPORATE ACTIONS TAKEN BY THEMAJORITY SHAREHOLDERS.

The entire cost of furnishing this Information Statement will be borne by the Company. We will request brokerage houses, nominees,custodians, fiduciaries and other like parties to forward this Information Statement to the beneficial owners of the Common Stock heldof record by them.

PROPOSAL 1: ELECTION OF DIRECTORS

Five directors are to be elected to serve until the next Annual Meeting of Shareholders and until their successors have been electedand qualified. There are currently two vacancies on the Board, which will not be filled by the shareholders at the Annual Meeting.The five director candidates receiving the highest number of votes will be elected as directors of the Company. Votes against thedirectors and votes withheld will have no legal effect. The Board has nominated the current five directors of the Company for re-election to the Board at the Annual Meeting to serve until the 2014 Annual Meeting of Shareholders, or until their successors areelected and qualified. The persons nominated by the Board of Directors for election as directors, each of whom is currently a director,are listed below. All of the nominees have consented to being named in this Information Statement and to serve following theirelection.

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The following table lists the names, ages and positions of all executive officers and directors and all persons nominated or chosen tobecome such. Each director has been elected to the term indicated. All officers of the Company are elected by the Board of Directorsto one-year terms.

Name Age Position with the Company First Became DirectorCurrent Board Term

Expires

Mark White 52 President, Chief Executive Officer, Director 12/10/2012 2013

Martin Ward 55 Chief Financial Officer, Director 12/10/2012 2013

Brian Collins 45 Vice President, Chief Technology Officer, Director 12/10/2012 2013

NicholasCarpinello

63 Director 3/7/2013 2013

Stephen Austin 46 Director 3/7/2013 2013

Mark White

Mr. White was appointed Chief Executive Officer on November 30, 2012 and became a director on December 10, 2012. Prior to hisappointment as Chief Executive Officer, Mr. White had served as the Chief Executive Officer of One Horizon Group, PLC, ourwholly-owned United Kingdom subsidiary (“One Horizon UK”) since 2004. His entrepreneurial career in the distribution of electronicequipment and telecommunications spans over 20 years. He founded Next Destination Limited in 1993, the European distributor forMagellan GPS and satellite products, and sold the business in 1997. Prior to that, Mr. White was Chief Executive Officer for GarminEurope, where he built up the company’s European distribution network. He previously sold Garmin’s GPS products throughEuro Marine Group Ltd, a company he formed in 1990, which established distribution in Europe for U.S. manufacturers of marineelectronic equipment. Earlier in his career, Mr. White was the Sales Director for Cetrek Limited, a maritime autopilot manufacturer.Mr. White brings extensive operational and senior executive experience, including experience as a chief executive officer, as well asexperience as a director of One Horizon UK while it was listed on the Alternative Investment Market of the London Stock Exchange(“AIM”) from July 2005 to March 2010.

Martin Ward

Mr. Ward was appointed Chief Financial Officer on November 30, 2012 and director on December 10, 2012. Prior to his appointmentas Chief Financial Officer, Mr. Ward had served as the Chief Financial Officer and Company Secretary of One Horizon UK since2004. Prior to joining One Horizon UK, Mr. Ward was a partner at Langdowns DFK, a United Kingdom-based chartered accountancypractice. Earlier in his career, between 1983 and 1987, he worked for PricewaterhouseCoopers as an Audit Manager. Mr. Ward is afellow of the Institute of Chartered Accountants of England and Wales. Mr. Ward brings significant experience in accounting,corporate finance and public company reporting, as well as experience as a director of One Horizon UK while it was listed on the AIMfrom July 2005 to March 2010.

Brian Collins

Mr. Collins was appointed Vice President and Chief Technology Officer on November 30, 2012 and director on December 10, 2012.Prior to his appointment as Vice President and Chief Technology Officer, Mr. Collins had served as Chief Technology Officer of OneHorizon UK since 2010, following the acquisition by One Horizon UK of Abbey Technology GmbH (“Abbey Technology”), acompany that was founded by, and employed, Mr. Collins in 1999, and which became a subsidiary of One Horizon UK upon itsacquisition. He is the co-inventor of the Horizon Platform, and has over 20 years’ experience in the technology sector with abackground in software engineering. Abbey Technology developed software systems for the Swiss banking industry. Prior to hisemployment at Abbey Technology, he worked as a software engineer for Credit Suisse First Boston Equities in Zurich. Earlier in hiscareer, between 1993 and 1996, he worked as a software engineer for Sybase, an information technology company, in California andAmsterdam. Mr. Collins graduated in 1990 with a BSc Hons in Computer Systems from the University of Limerick, Ireland. He alsoundertook further software research and development at International Computers Limited between 1990 and 1993. Mr. Collins bringsexperience founding and working at technology companies along with extensive knowledge of software engineering.

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Nicholas Carpinello

Mr. Carpinello was appointed as a director on March 7, 2013. He has been the owner of Carpinello Enterprises LLC d/b/a CottmanTransmission Center, a national auto service franchise, since 2004 and also has worked as a consultant to SatCom Distribution Inc.(“SDI”), assisting in various business, tax and financial matters of US operations of UK-based distributors of satellite communicationhardware and airtime, since 2005. Prior to November 2012, SDI was a subsidiary of One Horizon UK. Mr. Carpinello’s years ofprofessional experience are extensive, and include experience as CFO and Treasurer with multinational public and privatemanufacturers of armored vehicles and, later in his career, CFO of privately-held companies in the computer science field. He is aCertified Public Accountant, an alumnus of Arthur Andersen & Co., and holds a BA degree in Accounting from the University ofCincinnati. The Board decided that Mr. Carpinello should serve as a director because of his significant U.S. public companyexperience, as well as years of experience as a certified public accountant.

Stephen Austin

Mr. Austin was appointed as a director on March 7, 2013. From January 2007 to March 2010, Mr. Austin served as a director of OneHorizon UK. He is an experienced equity banker whose early career was spent as a corporate lawyer in the London office of DechertLLP. Currently, Mr. Austin serves as CEO of Plumtree Capital Limited, a corporate finance advisory house authorized by the UnitedKingdom Financial Services Authority. From 2006 through 2010, Mr. Austin was the Managing Partner of Hybridian LLP, anAIM broker based in London. The Board decided that Mr. Austin should serve as a director of the Company, because of his significantpublic company experience in an advisory role, as well as experience as a director of One Horizon UK while it was listed on the AIMfrom January 2007 to March 2010.

There is no arrangement or understanding between any director or executive officer and any other person pursuant to which thedirector or executive officer was or is to be selected as a director or nominee. There is no family relationship between any of ourdirectors, executive officers, or persons nominated or chosen to become a director or executive officer.

The Board of Directors recommends a vote “FOR” each director.

CORPORATE GOVERNANCE

Our Board of Directors

On October 12, 2012, we entered into an Agreement of Securities Exchange and Plan of Reorganization (the “Exchange Agreement”)with One Horizon Group Plc, a public limited company incorporated in England and Wales (“One Horizon UK”) to consummate ashare exchange transaction described immediately below (the “Share Exchange”). Pursuant to the Exchange Agreement, on November30, 2012, we issued a total of 17,853,476,138 shares of Common Stock to the shareholders of One Horizon UK received in exchangefor all of the capital stock of One Horizon UK, or 175.14 shares of Common Stock for each share of capital stock of One Horizon UK.We also issued options to purchase a total of 216,132,393 shares of Common Stock to the shareholders of One Horizon UK inexchange for options to purchase shares of capital stock of One Horizon UK, at current exercise prices ranging from $0.16 to $0.59,based on the ratio of 175.14 option shares of Common Stock for each option to purchase one share of One Horizon UK capital stockheld by each shareholder. We also reserved an additional 1,120,896,000 shares of Common Stock for the issuance of such shares uponthe exercise of options and warrants that One Horizon UK has agreed to issue in the future to certain employees.

On the date of closing, more than 98.9% of One Horizon UK shareholders’ offers of exchange had been received. Following theclosing, additional One Horizon UK shareholders have offered their shares for exchange, and as of April 29, 2013, we ownedapproximately 99% of the outstanding shares of One Horizon UK. Having received share exchange acceptances in excess of 90% ofthe One Horizon UK shares, we intend to exercise our rights in accordance with Sections 974 to 991 (inclusive) of the UnitedKingdom Companies Act 2006 to acquire compulsorily the remaining One Horizon UK shares in respect of which acceptances havenot been received to date. Upon such act, One Horizon UK will be a wholly-owned subsidiary of the Company.

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As a result of the Share Exchange, One Horizon UK is now our subsidiary, with former One Horizon UK shareholders holdingapproximately 96% of our issued and outstanding shares. The transaction has been accounted for as a reverse acquisition, whereby weare the legal acquirer and One Horizon UK is the legal acquiree and accounting acquirer. In accordance with the ExchangeAgreement, on November 30, 2012, Victor Jeffery and Sarocha Hatthasakul resigned as our Chief Executive Officer and ChiefFinancial Officer, respectively. Our directors submitted their resignations, to be effective 10 days from the filing and mailing of theSchedule 14F-1 information statement (on December 10, 2012), at which time the size of our board of directors was expanded toseven members. On December 20, 2012, Messrs. Mark White, Martin Ward, and Brian Collins were appointed to fill the vacanciescreated by that expansion, and the resignations of the former directors were effective. On November 30, 2012, Mr. White wasappointed Chief Executive Officer, Mr. Ward was appointed Chief Financial Officer; and Mr. Collins was appointed Vice Presidentand Chief Technology Officer. On December 27, 2012, we changed our name from Intelligent Communication Enterprise Corporationto One Horizon Group, Inc.

Our Board of Directors oversees our business and affairs and monitors the performance of management. Our non-employee directorskeep themselves informed through discussions with our President and Chief Financial Officer, other key employees and our principalexternal advisors (legal counsel, independent auditors and other consultants), by reading reports and other materials that we send tothem and by participating in Board and committee meetings.

During the fiscal year ended December 31, 2012, the Company held two meetings of the board of directors. Each director attended allof the meetings of the board of directors during this period. During this period, the Board of Directors also acted by unanimous writtenconsent. The Company does not have a policy concerning the attendance of its directors at annual meetings of its security holders, andthe Company did not have an annual meeting of its security holders in the fiscal year ended December 31, 2012.

Board Independence

The Board has determined that Messrs. Carpinello and Austin are “independent” under NASDAQ Rule 5605(a)(2).

The Company’s board of directors does not have a separate audit committee, nominating committee or compensation committee.Given the small size of the Company’s board and the limited number of independent directors over the Company’s history, the boardof directors has determined that it is appropriate for the entire board to act as each such committee. Three of our directors,Messrs. White, Ward and Collins, are not independent as defined by the listing requirements of the NASDAQ Stock Market.

Governance Structure

Currently, our Board of Directors does not have a separate Chairman position. Our President and Chief Executive Officer, MarkWhite, serves in a leadership role similar role to Chairman of the Board. The Board of Directors believes that, at this time, having thisstructure is the appropriate leadership structure for the Company. In making this determination, the Board of Directors considered,among other matters, Mr. White’s experience and tenure of having been Chief Executive Officer of One Horizon UK since 2004, andfelt that his experience, knowledge, and personality allowed him to serve ably as President and Chief Executive Officer. Among thebenefits of this structure considered by the Board of Directors is that such structure promotes clearer leadership and direction for ourCompany and allows for a single, focused chain of command to execute our strategic initiatives and business plans.

The Board’s Role in Risk Oversight

The Board’s role is to see that the assets of the Company are properly safeguarded, that the appropriate financial and other controls aremaintained, and that the Company’s business is conducted wisely and in compliance with applicable laws and regulations and propergovernance. Included in these responsibilities is the Board of Directors’ oversight of the various risks facing the Company. In thisregard, the Board seeks to understand and oversee critical business risks. The Board does not view risk in isolation. Risks areconsidered in virtually every business decision and as part of the Company’s business strategy. The Board recognizes that it is neitherpossible nor prudent to eliminate all risk. Indeed, purposeful and appropriate risk-taking is essential for the Company to becompetitive on a global basis and to achieve its objectives.

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While the Board oversees risk management, Company management is charged with managing risk. The Company is developing robustinternal processes and a strong internal control environment to identify and manage risks and to communicate with the Board. The Boardmonitors the Company’s risk management program at least annually. Management communicates routinely with the Board and individualDirectors on the significant risks identified and how they are being managed. Directors are free to, and indeed often do, communicatedirectly with senior management.

The Board implements its risk oversight function as a whole and in its audit, compensation and nominating functions. In particular:

●In its audit committee function, the Board oversees risks related to the Company’s financial statements, the financial reportingprocess, accounting and legal matters. The Board oversees the internal audit function. The Board members meet separately withrepresentatives of the Company’s independent auditing firm.

●In its compensation function, the Board evaluates the risks and rewards associated with the Company’s compensation philosophy andprograms. The Board reviews and approves compensation programs with features that mitigate risk without diminishing the incentivenature of the compensation. Management discusses with the Board the procedures that have been put in place to identify and mitigatepotential risks in compensation.

●In its nominating function, the Board evaluates risk associated with management decisions and strategic direction. In addition, theBoard evaluates the performance of independent directors and makes suggestions concerning director qualifications and number ofindependent directors. The Board also oversees its ethics programs, including its Policy Statement on Business Ethics and Conflictsof Interest applicable to all employees, including the Company’s chief executive officer and chief financial officer. A copy of thePolicy Statement was filed as an exhibit to our Form 10-KSB on May 23, 2005.

Board Committees

Our board of directors does not have a separately-designated standing audit committee, compensation committee or nominatingcommittee. On March 7, 2013, we appointed two independent directors to sit on the Board and Board committees and intend toappoint additional independent directors so that a majority of the Board will consist of independent directors. We also intend to forman audit committee and a compensation committee with independent directors.

Audit Committee

Given the small size of the Company’s Board and the limited number of independent directors over the Company’s history, the Boardhas determined that it is appropriate for the entire Board to act as its audit committee, which has resulted in the directors who are alsoexecutive officers serving on its audit committee.

In its capacity as the Audit Committee, our Board of Directors reviews and approves the audit reports rendered by the Company’sindependent auditors. In this capacity, the Board of Directors also appoints, oversees the work of and evaluates the independentauditors. We do not have an Audit Committee charter.

Audit Committee Report

The following is the report of our Board of Directors, in its capacity as our Audit Committee, with respect to our audited financialstatements for the fiscal year ended June 30, 2012 and the six-month period ended December 31, 2012.

The Board of Directors (1) reviewed and discussed the Company’s audited financial statements with management, (2) discussed withthe independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA,Professional Standards , Vol. 1. AU section 380), as adopted by the PCAOB in Rule 3200T; and (3) received the written disclosuresand the letters from the independent accountants required by applicable requirements of the PCAOB regarding the independentaccountants’ communications with the Audit Committee concerning independence, and has discussed with the independentaccountants their independence.

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Based on the review and discussions referred to above, the Board of Directors had determined that the audited financial statements beincluded in the Company’s Transition Report on Form 10-KT for the fiscal year ended June 30, 2012 and six-month period endedDecember 31, 2012 for filing with the SEC.

/s/ The Audit CommitteeMark WhiteMartin WardBrian CollinsNicholas CarpinelloStephen Austin

The information contained in the foregoing report shall not be deemed to be “soliciting material” or to be “filed” with the Securitiesand Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates it by reference in a filing.

Nominating Committee

Given the small size of the Company’s Board and the limited number of independent directors over the Company’s history, the Boardhas determined that it is appropriate for the entire Board to act as its nominating committee, which has resulted in the directors whoare also executive officers serving on its nominating committee. We do not have a nominating committee charter. The Board considersrecommendations for director nominees, including those submitted by the Company’s shareholders, on the bases described below.Shareholders may recommend nominees by writing to the Board of Directors c/o the Secretary, One Horizon Group, Inc., Weststrasse1, Baar, CH6340, Switzerland. Shareholder recommendations will be promptly provided to the Board of Directors. To be consideredby the Board for inclusion in any proxy statement or information statement for the 2014 annual meeting, recommendations must bereceived by the Secretary of the Company within the deadlines described in Article II, Section 6 of the Company’s Bylaws.

In identifying and evaluating nominees, the Board may consult with management, consultants, and other individuals likely to possessan understanding of the Company’s business and knowledge of suitable candidates. In making its recommendations, the Boardassesses the requisite skills and qualifications of nominees and the composition of the Board as a whole in the context of the Board'scriteria and needs. In evaluating the suitability of individual Board members, the Board may take into account many factors, includinggeneral understanding of marketing, finance and other disciplines relevant to the success of a publicly traded company in today’sbusiness environment; understanding of the Company’s business and technology; the international nature of the Company’soperations; educational and professional background; and personal accomplishment. The Board evaluates each individual in thecontext of the Board as a whole, with the objective of recommending a group that can best perpetuate the success of the Company’sbusiness and represent shareholder interests through the exercise of sound judgment, using its diversity of experience. For adescription of the qualifications that the Board seeks in potential nominees, please see “Qualifications, Attributes, Skills andExperience to be Represented on the Board as a Whole” below.

Qualifications, Attributes, Skills and Experience to be Represented on the Board as a Whole

In its assessment of each potential candidate, including those recommended by shareholders, the Board considers the nominee’sjudgment, integrity, experience, independence, understanding of the Company’s business or other related industries and such otherfactors the Board determines are pertinent in light of the current needs of the Board. The Board also takes into account the ability of aDirector to devote the time and effort necessary to fulfill his or her responsibilities to the Company.

The Board requires that each Director be a recognized person of high integrity with a proven record of success in his or her field. EachDirector must demonstrate innovative thinking, familiarity with and respect for corporate governance requirements and practices, anappreciation of multiple cultures and a commitment to sustainability and to dealing responsibly with social issues. In addition to thequalifications required of all Directors, the Board assesses intangible qualities including the individual’s ability to ask difficultquestions and, simultaneously, to work collegially.

The Board has identified particular qualifications, attributes, skills and experience that are important to be represented on the Board asa whole, in light of the Company’s current needs and business priorities. The Company’s services are performed in various countries

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and in significant areas of future growth located outside of the United States. Accordingly, the Board believes that internationalexperience or specific knowledge of key geographic growth areas and diversity of professional experiences should be represented onthe Board. In addition, the Company’s business is multifaceted and involves complex financial transactions. Therefore, the Boardbelieves that the Board should include some Directors with a high level of financial literacy and some Directors who possess relevantbusiness experience as a Chief Executive Officer or President. Our business involves complex technologies in a highly specializedindustry. Therefore, the Board believes that extensive knowledge of the Company’s business and industry should be represented onthe Board.

The Board does not have a specific diversity policy, but considers diversity of race, ethnicity, gender, age, cultural background andprofessional experiences in evaluating candidates for Board membership. Diversity is important because a variety of points of viewcontribute to a more effective decision-making process.

Compensation Committee

Given the small size of the Company’s Board and the limited number of independent directors over the Company’s history, the Boardhas determined that it is appropriate for the entire Board to act as its compensation committee, which has resulted in the directors whoare also executive officers serving on its compensation committee. We do not have a compensation committee charter.

In its compensation function, the Board reviews and approves the compensation structure of our directors and executive officers,including all forms of compensation to be provided to our directors and executive officers. The Board is permitted to delegate itsauthority in accordance with Pennsylvania law unless prohibited by the Company’s Bylaws. Given our Board structure, executiveofficers generally assist in determining or recommending the amount or form of executive and director compensation.

Neither the Board nor management engaged any compensation consultants during the 2012 fiscal year.

TRANSACTIONS WITH RELATED PERSONS

During the years ended June 30, 2012, and June 30, 2011, One Horizon UK made payments to Satellite Communication ConsultancyBVBA (“SCC BVBA”), an entity organized under the laws of Belgium of which Mr. White, a director and officer of the Company, isthe sole shareholder. These payments were in the amounts of $682,000 and 672,000, respectively, and were made as compensation forMr. White’s services as chief executive officer of One Horizon UK, as set forth under “Summary Compensation Table: Post-ShareExchange Executives” in this Information Statement.

During the year ended June 30, 2012, Messrs. White, Collins and Ward, directors and executive officers of the Company, andAlexandra Johnson and Adam Thompson, former executives of One Horizon UK and current 5% holders of the Company’s commonstock, advanced $507,463, $507,463, $328,358, $328,358 and $328,358, respectively, to the Company pursuant to a Loan NoteInstrument dated December 16, 2011, in which an aggregate of $2,000,000 was advanced. These loans are unsecured, have an interestrate of 10%, and mature upon the earlier to occur of (i) a sale of the whole of the issued share capital of the Company or the disposalby the Company of all, or a substantial part of, its business, assets and undertaking; and (ii) listing of the whole of any class of theissued share capital of the Company on the official list of the UK Listing Authority and to trading on the London Stock Exchange or totrading on any other recognized investment exchange (as defined in Section 285 of the Financial Services and Markets Act of 2000).Since December 16, 2011, the largest aggregate amount of principal outstanding was $2,000,000. As of April 29, 2013, the amount ofprincipal outstanding is $2,000,000. The loans may be repaid at any time by the Company upon not less than five business days’notice by the Company. During the 12-month period ended June 30, 2012, $100,000 in interest was accrued by the Company, while$100,000 in interest was accrued by the Company during the 6-month period ended December 31, 2012. In accordance with the termsof the Loan Note Instrument, as of April 29, 2013, no payments of principal or interest have been made.

As of November 13, 2012, the Company and Messrs. White and Collins, directors and executive officers of the Company, executed aloan agreement evidencing a loan made by Messrs. White and Collins to the Company in the amount of $1,500,000. The loan bearsinterest at the rate of 0.21% per annum and must be repaid by December 31, 2014. It is prepayable without penalty at the option ofthe Company at any time following its issuance in cash or in shares of One Horizon UK, at the conversion price of $1.50 per share. Asof April 29, 2013, the amount of principal outstanding is $1,500,000. During the 6-month period ended December 31, 2012, $414 ininterest was accrued by the Company. In accordance with the terms of the loan, as of April 29, 2013, no payments of principal orinterest have been made.

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On December 31, 2012, the Company entered into an Acquisition Agreement with the wife of the former chief executive officer of theCompany pursuant to which the Company sold to her (i) all of the shares of the Company’s wholly-owned subsidiary GlobalIntegrated Media, Ltd., a company incorporated under the laws of Hong Kong (“GIM”), which comprised all of the Company’spublishing business operations, assets, and liabilities and its Modizo business operations, assets and liabilities, and (ii) substantially allof the assets of Modizo as a going concern, in exchange for 42,000,000 shares of the Company’s common stock, which shares had afair market value of $420,000.

On January 22, 2013, Messrs. White and Collins, directors and executive officers of the Company, each made a loan to the Companyof $250,000. In exchange for each loan, the Company issued to each of Messrs. White and Collins a convertible promissory note in theinitial principal amount of each loan. Each loan bears interest at the rate of 0.21% per annum, must be repaid in one year, and isprepayable without penalty at the option of the Company at any time following its issuance in cash or in shares of its common stock atthe rate of $0.0086 per share. As of April 29, 2013, the amount of principal outstanding is $500,000. As of April 29, 2013, $196 ininterest has been accrued by the Company. In accordance with the terms of the loan, as of April 29, 2013, no payments of principalor interest have been made.

Review, Approval or Ratification of Transactions with Related Persons

The Board of Directors reviews (on an ongoing basis, as appropriate) and approves or ratifies on behalf of the Company any proposed,on-going or completed transaction involving the Company and (i) any director or executive officer of the Company, (ii) any owner of5% or more of any class or series of shares of the Company or (iii) such other person serving as an officer or member of the seniormanagement of the Company or as a member of the board of directors or similar governing body of any subsidiary of the Company asmay be designated in accordance with such policy or (iv) any member of the family of, or any company or other entity affiliated with,any such person, in each case considering any audit procedures or safeguards of the Company’s interests appropriate to be instituted inconnection with such transaction.

EXECUTIVE COMPENSATION

The following tables set forth, for each of the last two completed fiscal years of the Company prior to the Share Exchange and OneHorizon UK, the total compensation awarded to, earned by or paid to any person who was a principal executive officer during thepreceding fiscal year and every other highest compensated executive officer earning more than $100,000 during the last fiscal year(together, the “Named Executive Officers”). In connection with the Share Exchange on November 30, 2012, Messrs. Jeffrey andRajasundram resigned as executive officers of the Company (the “Pre-Share Exchange Executives”) and Messrs. White, Ward andCollins were appointed as executive officers of the Company (the “Post-Share Exchange Executives”). The tables set forth belowreflect the compensation of the Pre-Share Exchange Executives in their capacity as executive officers of the Company prior to theShare Exchange, and the compensation of the Post-Share Exchange Executives in their capacity as executive officers of both OneHorizon UK and the Company as a combined entity. In light of the Share Exchange having been accounted for as a reverse acquisitionwhereby One Horizon UK is deemed to be the accounting acquirer, the compensation information set forth in the “SummaryCompensation Table: Pre-Share Exchange Executives” is not presented in the financial statements included in the Company’s annualreport provided herewith.

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Summary Compensation Table: Pre-Share Exchange Executives

Name and PrincipalPosition

YearEndedDec.31

Salary($)

Bonus($)

StockAward(s)

($)Option

Awards ($)

Non-Equity

IncentivePlan

Compen-sation

Non-QualifiedDeferredCompen-

sationEarnings ($)

All OtherCompen-sation ($) Total ($)

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)

Victor Jeffery, 2012 165,000 0 0 0 0 0 0 165,000former CEO (1) 2011 110,000 0 0 0 0 0 0 110,000

VijiRajasundram,former 2012 165,000 0 0 0 0 0 0 165,000GeneralManager, Modizo(2) 2011 177,502 0 0 0 0 0 0 177,502___________(1) Mr. Jeffery was appointed our chief executive officer effective June 1, 2011, and resigned on November 30, 2012. Of his remuneration

as CEO, $85,000 and $150,000 was paid in shares of our stock in 2011 and 2012, respectively. Prior to his appointment, Mr. Jefferyserved as editor-in-chief, for which he was paid $31,250 in shares of our stock.

(2) Mr. Rajasundram was appointed general manager of Modizo on January 17, 2011, and resigned on November 30, 2012. Of hiscompensation, $144,193 and $150,000 was paid in shares of our stock in 2011 and 2012, respectively.

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Summary Compensation Table: Post-Share Exchange Executives*

Name andPrincipalPosition Period

Salary($)

Bonus($)

StockAward(s)

($)

OptionAwards

($)

Non-Equity

IncentivePlan

Compen-sation

Non-QualifiedDeferredCompen-

sationEarnings

($)

All OtherCompen-sation ($) Total ($)

(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)

MarkWhite, CEO(1)

6 mos.ended12/31/12 323,000 600,000(4) 0 0 0 0 0 923,000Year ended6/30/12 682,000 0 0 0 0 0 0 682,000Year ended6/30/11 672,000 0 0 0 0 0 0 672,000

MartinWard, CFO(2)

6 mos.ended12/31/12 116,000 0 0 0 0 0 13,200(5) 129,200Year ended6/30/12 231,600 0 0 0 0 0 26,200(5) 257,800Year ended6/30/11 232,000 0 0 0 0 0 26,300(5) 258,300

BrianCollins,CTO (3)

6 mos.ended12/31/12 323,000 600,000(4) 0 0 0 0 0 923,000Year ended6/30/12 688,500 0 0 0 0 0 0 688,500Year ended6/30/11 645,500 0 0 0 0 0 0 645,500

____________* For periods prior to November 30, 2012, the information set forth consists of compensation as an officer of One Horizon UK. The

compensation table does not include compensation for the former chief operating officer of our former Satcom division, consisting ofseveral subsidiaries which were sold on October 25, 2012 and which are treated as discontinued operations and not included in thecarve-out financial statements included herewith for historical presentations purposes.

(1) Mr. White was appointed our chief executive officer effective November 30, 2012. Mr. White was the chief executive officer of OneHorizon UK during the periods ended June 30, 2012 and June 30, 2011, and from July 1, 2012 through November 30, 2012. For theperiod ended December 31, 2012, Mr. White was paid in Swiss Francs, with a conversion rates of CHF 1.00 = $1.05, which raterepresents the average exchange rate for that period, as represented by http://www.oanda.com/currency/historical-rates/. For theperiods ended June 30, 2012 and June 30, 2011, Mr. White’s compensation was paid through payments to SCC BVBA, an entityorganized under the laws of Belgium, of which Mr. White is the sole shareholder. Payments made to SCC BVBA for such periodswere paid in euros, with conversion rates of €1.00 = $1.36 and $1.34, respectively, which rates represent the average conversion ratefor those periods, as represented by http://www.oanda.com/currency/historical-rates/.

(2) Mr. Ward was appointed our chief financial officer effective November 30, 2012. Mr. Ward was the chief financial officer of OneHorizon UK during the periods ended June 30, 2012 and June 30, 2011, and from July 1, 2012 through November 30, 2012. Mr.Ward was paid in pounds sterling, with conversion rates of £1.00 = $1.59, $1.58, and $1.59, respectively, which rates reflectthe average exchange rates for those periods, as represented by http://www.oanda.com/currency/historical-rates/.

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(3) Mr. Collins was appointed our chief technology officer effective November 30, 2012. Mr. Collins was the chief technology officer ofOne Horizon UK during the periods ended June 30, 2012 and June 30, 2011, and from July 1, 2012 through November 30, 2012. Mr.Collins was paid in Swiss Francs, with conversion rates of CHF 1.00 = $1.05, $1.12, and $1.05, respectively, which conversion ratesreflect the average exchange rates for those periods, as represented by http://www.oanda.com/currency/historical-rates/.

(4) On September 30, 2012, One Horizon UK issued 6,000,000 shares of One Horizon UK’s common stock, valued at 0.10 per share, toeach of Messrs. White and Collins as bonus compensation.

(5) Consists of contributions by the Company to Mr. Ward’s self-invested pension plan.

Employment

Messrs. White, Collins and Ward are at-will employees. Their compensation during 2012 and 2011 consisted of a salary anddiscretionary bonus.

Outstanding Equity Awards at 2012 Year-End

As of the year ended December 31, 2012, there were no unexercised options, stock that has not vested or equity incentive plan awardsheld by any of the Company’s named executive officers.

2012 Director Compensation

In connection with the Share Exchange, effective December 10, 2012, the size of the Company’s existing Board, which consisted ofMessrs. Jeffery, Rajasundram, Wu and Hasking (the “Pre-Share Exchange Directors”), was expanded to seven members. At that time,the Pre-Share Exchange Directors filled the vacancies by appointing Messrs. White, Ward and Collins, following which appointmentsthe Pre-Share Exchange Directors resigned.

The following table sets forth the compensation earned by each of the Company’s Pre-Share Exchange Directors for the one-yearperiod ended December 31, 2012. Messrs. White, Collins and Ward, who became directors following the Share Exchange, received nocompensation for their service as directors of the Company during the year ended June 30, 2012 or the six-month period endedDecember 31, 2012. Messrs. Carpinello and Austin were appointed after the Company’s fiscal year ended December 31, 2012.

Name

FeesEarned

orPaid inCash

($)

StockAwards

($)

OptionAwards

($)

Non-EquityIncentive

PlanCompensation

($)

NonqualifiedDeferred

CompensationEarnings

($)

All OtherCompen-

sation($) Total ($)

Victor Jeffery 0 0 0 0 0 0 0Nelson Wu 0 62,500 0 0 0 0 62,500Michael Hosking 0 62,500 0 0 0 0 62,500Viji Rajasundram 0 0 0 0 0 0 0Bala Balamurali 0 0 0 0 0 0 0

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act and the rules thereunder require our officers and directors, and persons that own more than 10% ofa registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and ExchangeCommission (“SEC”) and to furnish us with copies. Based solely on our review of the copies of the Section 16(a) forms received byus, and the Company being unaware of any other information as to any transactions, the Company has concluded that none of ourofficers, directors, and greater than 10% beneficial owners prior to the Share Exchange on November 30, 2012 failed to file on atimely basis reports required by Section 16(a) of the Exchange Act during the fiscal year ended December 31, 2012. After the ShareExchange, we believe that none of our officers, directors, and greater than 10% beneficial owners failed to file on a timely basis

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reports required by Section 16(a) of the Exchange Act during the fiscal year ended December 31, 2012, except that Messrs. Ward,White, and Collins each filed one report discussing one transaction that was not reported on a timely basis.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S FEES AND SERVICES

The Share Exchange was accounted for as a reverse acquisition whereby One Horizon UK is deemed to be the accounting acquirer(and the legal acquiree). Prior to the Share Exchange, One Horizon UK had a June 30 fiscal year end. On February 13, 2013, theCompany filed a Current Report on Form 8-K/A disclosing that the board of directors of the Company changed the Company's fiscalyear end from June 30 to December 31. As a result, included with the Annual Report provided herewith are financial statements forthe years ended June 30, 2011 and June 30, 2012, and the six months ended December 31, 2012 (the “Reported Periods”).

The Company’s independent registered public accounting firm for the current fiscal year has not been selected as this matter ispending the review of the Board of Directors.

Changes in Auditors

For the purposes of the discussion in this section entitled “Change of Auditors”, the registrant is referred to as ICE Corp. for the periodprior to the consummation of the share exchange in which the Company (formerly Intelligent Communication Enterprise Corporation)acquired all of the issued and outstanding shares of One Horizon UK through a share exchange, and as the “Company” for the periodafter the consummation of the share exchange, and One Horizon UK is referred to as “OHGP”.

(a) Dismissal of Independent Certifying Accountant .

Chantrey Vellacott DFK LLP (“CV”) served as the independent accountant for OHGP for its fiscal year ended June 30, 2012. CV’sreport on OHGP’s financial statements as of June 30, 2012 and for the year then ended was filed as an Exhibit to Amendment No. 1 toa Current Report on Form 8-K/A on February 13, 2013 (the “February 13 Form 8-K/A”). CV will continue to prepare domesticstatutory and tax filings for OHGP, which is now a subsidiary of the Company. On November 30, 2012, ICE Corp. completed theshare exchange with OHGP, which for U.S. GAAP purposes was considered to be the accounting acquirer. As such, the financialinformation of the Company will be that of OHGP, with operations of ICE Corp. only being included from the date of the shareexchange. Prior to the acquisition, OHGP was not a U.S. SEC registrant. In addition, CV is not an independent registered publicaccounting firm. As a result of the consummation of the share exchange on November 30, 2012 and the retention of Peterson Sullivan,LLP to act as the Company’s independent registered public accounting firm (see below), CV was dismissed by the Company’s Boardof Directors as the independent certifying accountant for U.S. SEC filing purposes.

BDO LLP (“BDO”) served as the independent accountant for OHGP for its fiscal year ended June 30, 2011. BDO resigned asOHGP’s independent accountant on November 2, 2012. BDO’s report on OHGP’s financial statements as of June 30, 2011 and for theyear then ended was filed as an Exhibit to the February 13 Form 8-K/A. The report of CV regarding the financial statements for thefiscal year ended June 30, 2012 and the report of BDO regarding the financial statements for the fiscal year ended June 30, 2011, didnot contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope oraccounting principles.

During the year ended June 30, 2012, and during the period from June 30, 2012 to November 30, 2012, the date of dismissal, (i) therewere no disagreements with CV on any matter of accounting principles or practices, financial statement disclosure or auditing scope orprocedures, which disagreements, if not resolved to the satisfaction of CV would have caused it to make reference to suchdisagreement in its reports; and (ii) there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

During the year ended June 30, 2011, and during the period from June 30, 2011 to November 2, 2012, the date of their resignation, (i)there were no disagreements with BDO on any matter of accounting principles or practices, financial statement disclosure or auditingscope or procedures, which disagreements, if not resolved to the satisfaction of BDO would have caused it to make reference to suchdisagreement in its reports; and (ii) there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

The decision to change accountants was approved by the board of directors of OHGP.

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The Company provided CV, which served as the independent accountant for OHGP for its fiscal year ended June 30, 2012, with thedisclosure contained in the February 13 Form 8-K/A reporting the change in the Company’s independent accountants for U.S. SECfiling purposes. Attached as Exhibit 16.1 to a Form 8-K/A filed on March 12, 2013 (the “March 12 Form 8-K/A”) is the letter of CVaddressed to the SEC stating that it agrees with such statements.

The Company provided BDO, which served as the independent accountant for OHGP for its fiscal year ended June 30, 2011, with thedisclosure contained in the February 13 Form 8-K/A reporting the change in the Company’s independent accountants for U.S. SECfiling purposes. The Company did not obtain BDO’s permission prior to the filing of BDO’s audit report dated 14 February 2012 onOHGP’s audited financial statements for its fiscal year ended June 30, 2011 as Exhibit 99.2 to a Form 8-K/A filed on February 7,2013. In response to the Company’s request for the letter from BDO required by Item 4.01 of Form 8-K, BDO requested that theCompany provide disclosure in the March 12 Form 8-K/A that the June 30, 2011 financial statements were prepared for statutoryreporting purposes in the United Kingdom and has not provided the letter required by this Item. In the event that the Companysubsequently obtains the requisite letter, it will file the letter as Exhibit 16.2 to a further amendment on Form 8-K.

(b) Engagement of Independent Certifying Accountant .

Effective February 13, 2013, the Board of Directors of the Company engaged Peterson Sullivan as its independent registered publicaccounting firm to audit the Company’s financial statements for the fiscal period ended December 31, 2012. Peterson Sullivan was theindependent registered public accounting firm for ICE Corp.

During each of OHGP’s two most recent fiscal years and through the interim periods preceding the engagement of Peterson Sullivan,OHGP (a) has not engaged Peterson Sullivan as either the principal accountant to audit OHGP’s financial statements, or as anindependent accountant to audit a significant subsidiary of OHGP and on whom the principal accountant is expected to expressreliance in its report; and (b) has not consulted with Peterson Sullivan regarding (i) the application of accounting principles to aspecific transaction, either completed or proposed, or the type of audit opinion that might be rendered on OHGP’s financialstatements, and no written report or oral advice was provided to OHGP by Peterson Sullivan concluding there was an important factorto be considered by OHGP in reaching a decision as to an accounting, auditing or financial reporting issue; or (ii) any matter that waseither the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event, as that termis described in Item 304(a)(1)(v) of Regulation S-K.

Audit Fees

We have been advised that Peterson Sullivan expects to bill $100,000, in the aggregate, in audit fees.

Audit-Related Fees

There were no audit-related fees billed or accrued during the Reported Periods. Audit-related fees typically consist of fees billed forassurance and related services that are reasonably related to the performance of the audit or review of our consolidated financialstatements, which are not reported under “Audit Fees.”

Tax Fees

There were no tax fees billed or accrued during the Reported Periods. Tax fees typically consist of fees billed for professional servicesfor tax compliance, tax advice, and tax planning.

All Other Fees

Other than the fees reported above, there were no other fees billed or accrued during the Reported Periods.

Preapproval Policies and Procedures

Before the independent registered accountants are engaged to render audit services or nonaudit activities, the engagement is approvedby our board of directors acting as the audit committee.

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PROPOSAL 2:ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

In accordance with the Dodd-Frank Act and the rules of the SEC, the Company is providing shareholders with an advisory (non-binding) vote to approve compensation programs for our named executive officers (sometimes referred to as “say on pay”) asdescribed in the Executive Compensation section of this Information Statement in the compensation tables and related disclosures.The Dodd-Frank Act also requires an advisory vote on executive compensation at least once every three years.. Accordingly, you mayvote on the following resolution at the Annual Meeting:

“Resolved, that the shareholders approve, on a non-binding advisory basis, the compensation of the Company’snamed executive officers as disclosed in this Information Statement under “Executive Compensation”, including thecompensation tables and the related narrative disclosure.”

We consider approval of this proposal to require that the number of votes that shareholders cast “for” exceed the votes thatshareholders cast “against”.

Because the vote is advisory, it will not be binding on our Compensation Committee or our board of directors, nor will it directlyaffect or otherwise limit any compensation or award arrangements that have already been granted to any of our named executiveofficers. However, the Board expects to take into account the outcome of the vote when considering future executive compensationdecisions to the extent they can determine the cause or causes of any significant negative voting results.

Our compensation programs are designed to motivate our executives to create a successful company. We believe that ourcompensation program rewards sustained performance that is aligned with long-term shareholder interests. Shareholders areencouraged to read the compensation tables and the related narrative disclosure in this Information Statement.

The Board of Directors recommends a vote FOR the approval, on an advisory basis, of the compensation of our namedexecutive officers as disclosed under “Executive Compensation” in this Information Statement, including the accompanyingcompensation tables and the related narrative disclosure.

PROPOSAL 3:ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION

In accordance with the Dodd-Frank Act and the rules of the SEC, in addition to providing shareholders with the opportunity to cast anadvisory vote on executive compensation, the Company this year is providing shareholders with an advisory (non-binding) vote onhow frequently the Company should seek an advisory vote on executive compensation as required by the Exchange Act. Theshareholders may indicate whether they prefer that an advisory vote on the compensation of the named executive officers be heldevery one, two or three years.

The Board believes that a frequency of “every three years” for the advisory vote on executive compensation is the optimal interval forour company for conducting and responding to a “say on pay” vote because our executive compensation arrangements incentivize andreward performance over a multi-year period. Shareholders who have concerns about executive compensation during the intervalbetween “say on pay” votes are welcome to bring their specific concerns to the attention of the Board. Please refer to “CorporateGovernance – Nominating Committee” in this Information Statement for information about communicating with the Board.

The shareholders have the opportunity to choose among four options (one year, two years, three years, or abstain) for the followingresolution:

“Resolved, that the option of once every one year, two years, or three years that receives the highest number of voteswill be determined to be the shareholders’ preferred frequency with which the Company would hold a non-bindingadvisory shareholder vote to approve the compensation of the named executive officers, as disclosed in theCompany’s proxy statements or information statements.”

We will consider the alternative receiving the greatest number of votes — every year, every two years or every three years — to be thefrequency that shareholders approve.

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This advisory vote on the frequency of the “say on pay” vote is nonbinding. The Board will take into account the outcome of the votewhen considering the frequency of future advisory votes on executive compensation but may decide that it is in the best interests ofthe shareholders and the Company to hold an advisory vote more or less frequently than the shareholders’ preferred frequency.

The Board of Directors recommends that you vote for the option of “3 years” for the frequency of future advisory votes onexecutive compensation.

PROPOSAL 4:APPROVAL OF THE ONE HORIZON GROUP, INC. 2013 EQUITY INCENTIVE PLAN

Background

Our Board of Directors has adopted the Plan and recommended its submission to the shareholders of the Company at the AnnualMeeting for their approval and adoption. The Plan summary reflects share amounts that would be applicable immediately after theeffectiveness of the Reverse Stock Split. The minimum vote that will constitute shareholder approval shall be a majority of the totalvotes cast on the proposal. A general description of the Plan is set forth below. This description is qualified in its entirety by the termsof the Plan, a copy of which is attached hereto as Appendix A.

Summary of the 2013 Equity Incentive Plan

General. The Plan provides for stock options (including incentive stock options), stock appreciation rights, restricted stock, restrictedstock units, performance awards, dividend equivalents, cash bonuses and other stock-based awards to employees, directors andconsultants of the Company and its affiliates.

Administration. The Plan shall be administered and interpreted by a Committee appointed by the Board of Directors or, in the Boardof Directors’ sole discretion, by the Board of Directors. For purposes of this summary, references to the “Committee” are the Board ofDirectors if the Board of Directors administers the Plan. To the extent permitted by applicable law, the Committee may at any timedelegate to one or more officers or directors of the Company some or all of its authority over the administration of the Plan.

The Committee has the authority to administer and interpret the Plan, to determine the individuals to whom awards will be made underthe Plan and, subject to the terms of the Plan, the type and size of each award, the terms and conditions for vesting, cancellation andforfeiture of awards and the other features applicable to each award or type of award. The Committee may accelerate or defer thevesting or payment of awards, cancel or modify outstanding awards, waive any conditions or restrictions imposed with respect toawards of the stock issued pursuant to awards and make any and all other determinations that it deems appropriate with respect to theadministration of the Plan, subject to the minimum vesting requirements of the Plan, the provisions of Sections 162(m) of the InternalRevenue Code (the “Code”) and any applicable laws or exchange rules.

Eligibility. All employees, directors and consultants of the Company and its affiliates, as well as other individuals who are reasonablyexpected to become employees, directors and consultants of such entities, are eligible to receive awards under the Plan.

Shares Subject to the Plan. The number of shares of Common Stock available for granting awards under the Plan shall be (A)3,000,000, plus (B) additional shares as follows: As of January 1 of each year, commencing with the year 2014 and ending with theyear 2016, the aggregate number of shares available for granting awards under the Plan shall automatically increase by a number ofshares equal to the lesser of (x) 5% of the total number of shares then outstanding or (y) 1,000,000, subject to adjustment. Themaximum number of shares of Common Stock with respect to which incentive stock options may be granted in any year shall be3,000,000.

Per-Person Limitation on Awards. The maximum number of shares of Common Stock with respect to which stock options and stockappreciation rights may be granted under the Plan to an individual participant in any one fiscal year of the Company is 1,000,000,subject to adjustment, and the maximum number of shares of Common Stock with respect to which any other awards may be grantedunder the Plan to an individual participant in any one fiscal year of the Company is also 1,000,000, subject to adjustment. Except as tostock options and stock appreciation rights, the maximum “performance compensation award” (an award qualified as “performance -based compensation” under Section 162(m) of the Code, as described further below under “Performance Compensation Awards”)

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payable to an individual participant for a “performance period” (one or more periods as determined by the Committee in which theattainment of one or more performance goals will be measured, as described further below under “Performance CompensationAwards”), is 1,000,000 shares of Common Stock, subject to adjustment, or in the event the performance compensation award is paidin cash, the equivalent cash value thereof on the first or last day of the performance period to which such award relates, and themaximum amount that can be paid in any calendar year to any participant pursuant to a cash bonus performance award is $5,000,000.

Shares of Common Stock issued in connection with awards under the Plan may be shares that are authorized but unissued, treasuryshares or previously issued shares that have been reacquired by the Company in any manner.

Certain Adjustments. In the event of changes in the outstanding Common Stock or in the capital structure of the Company by reasonof any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such as anyrecapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalization occurringafter the grant date of any award, awards granted under the Plan and any award agreements, the exercise price of stock options andstock appreciation rights, the maximum number of shares of Common Stock subject to all awards and the maximum number of sharesof Common Stock with respect to which any one person may be granted awards during any period stated in the Plan will be equitablyadjusted or substituted, as to the number, price or kind of a share of Common Stock or other consideration subject to such awards tothe extent necessary to preserve the economic intent of such award. In the case of incentive stock options, the Committee must ensurethat any adjustments will not constitute a modification, extension or renewal of the incentive stock options within the meaning ofSection 424(h)(3) of the Code, and in the case of non-qualified stock options, that any adjustment will not constitute a modification ofsuch non-qualified stock option within the meaning of Section 409A of the Code, unless the Committee specifically determines thatdoing otherwise is in the best interests of the Company or its affiliates. Any such adjustments shall be made in a manner which doesnot adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. Further, with respect to awards intendedto qualify as “performance-based compensation” under Section 162(m) of the Code, any adjustments or substitutions will not causethe Company to be denied a tax deduction on account of Section 162(m) of the Code.

Types of Awards. The following types of awards may be made under the Plan. All of the awards described below are subject to theconditions, limitations, restrictions, vesting and forfeiture provisions determined by the Committee, in its sole discretion, subject tosuch limitations as are provided in the Plan. The number of shares subject to any award is also determined by the Committee, in itsdiscretion.

Stock Options. Stock options granted under the Plan may be either incentive stock options under the provisions of Section 422 of theCode, or non-qualified stock options. Incentive stock options may be granted only to employees. Awards other than incentive stockoptions may be granted to our employees, consultants and directors or to employees, consultants and directors of our related entities.The exercise price of incentive stock options will be no less than 100% of the fair market value of our Common Stock on the date thestock option is granted (or 110%, in the case of an incentive stock option granted to any employee who owns stock representing morethan 10% of our combined voting power or any parent or subsidiary of the Company).

Stock Appreciation Rights. A stock appreciation right granted under the Plan shall confer on the holder a right to receive, uponexercise, the excess of (1) the fair market value of one share of Common Stock on the date of exercise over (2) the exercise pricespecified in the awards agreement or related option award agreement. Subject to the terms of the Plan, the grant price, term, methodsof exercise, methods of settlement, and any other terms and conditions of any stock appreciation right shall be as determined by theCommittee. The Committee may impose such conditions or restrictions on the exercise of any stock appreciation right as it may deemappropriate.

Restricted Stock. A restricted stock award is an award of outstanding shares of Common Stock that does not vest until after a specifiedperiod of time, or satisfaction of other vesting conditions as determined by the Committee, and which may be forfeited if conditions tovesting are not met. Subject to the restrictions set forth in the applicable award agreement, participants generally have the rights andprivileges of a shareholder as to restricted stock awarded to them, including the right to vote such restricted stock and the right toreceive dividends; provided that, any cash dividends and stock dividends with respect to the restricted stock shall be withheld by theCompany for the participant’s account, and interest may be credited on the amount of cash dividends withheld at a rate and subject tosuch terms as determined by the Committee. The cash dividends or stock dividends so withheld by the Committee and attributable toany particular share of restricted stock (and earnings thereof, if applicable) shall be distributed to the participant in cash or, at thediscretion of the Committee, in shares of Common Stock having a fair market value equal to the amount of such dividends, if

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applicable, upon release of restrictions on such share and, if such share is forfeited, the participant shall have no right to suchdividends.

Restricted Stock Units. Restricted stock units shall consist of restricted rights denominated in shares of Common Stock. Restrictedstock units may be forfeited in the same manner as restricted stock described immediately above. A participant shall have no votingrights with respect to any restricted stock unit granted under the Plan. At the discretion of the Committee, each restricted stock unitmay be credited with cash and stock dividends paid by the Company in respect of one share of Common Stock (“dividendequivalents”). Dividend equivalents will be withheld and paid to participants in the same manner as described above with respect todividends paid on restricted stock awards.

Performance Share Awards. Performance share awards shall entitle a participant to a number of shares of Common Stock of stock-denominated units based upon the extent to which the performance goals established by the Committee are attained within theapplicable performance period, as determined by the Committee. The Committee shall have the discretion to determine (i) the numberof shares of Common Stock of stock-denominated units subject to a performance share award granted to any participant, (ii) theperformance period applicable to any award, (iii) the conditions that must be satisfied for a participant to earn an award and (iv) theother terms, conditions and restrictions of the award.

Performance Compensation Awards. The Committee shall have the authority, at the time of grant of any award described in the Plan(other than stock options or stock appreciation rights granted with an exercise price equal to or greater than the fair market value pershare of Common Stock on the grant date), to designate such award as a performance compensation award in order to qualify suchaward a “performance-based compensation” under Code Section 162(m). The Committee shall also have the authority to make anaward of a cash bonus to any participant and designate such award as performance compensation award in order to qualify such awardas “performance-based compensation” under Code Section 162(m). The Committee will, in its sole discretion, designate within thefirst 90 days of a performance period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code)which participants will be eligible to receive performance compensation awards in respect of such performance period. With regard toa particular performance period, the Committee shall have full discretion to select the length of such performance period (providedany such performance period shall be not less than one fiscal quarter in duration), the types of performance compensation awards to beissued, the performance criteria that will be used to establish the performance goals, the kinds or levels of the performance goals thatare to apply to the Company and the “performance formula” (i.e., an objective formula applied to determine whether all, some or noneof a performance compensation award has been earned). Unless otherwise provided in the applicable award agreement, a participantmust be employed by the Company on the last day of a performance period to be eligible for payment in respect of a performancecompensation award for such performance period. A participant shall be eligible to receive payment in respect of a performancecompensation award only to the extent that: (A) the performance goals for such period are achieved; and (B) the performance formulaas applied against such performance goals determines that all or some portion of such participant's performance compensation awardhas been earned for the performance period. Following the completion of a performance period, the Committee shall determinewhether, and to what extent, the performance goals for the performance period have been achieved and, if so, calculate the amount ofthe performance compensation awards earned for the period based upon the performance formula. The Committee shall thendetermine the actual size of each participant's performance compensation award for the performance period and, in so doing, mayapply “negative discretion” (i.e., discretion to eliminate or reduce the award if it deems appropriate and the exercise of this discretionwould not cause the performance compensation award to fail to qualify as “performance-based compensation” under Section 162(m)of the Code. The Committee shall not have the discretion to (A) grant or provide payment in respect of performance compensationawards for a performance period if the performance goals for such performance period have not been attained or (B) increase aperformance compensation award above the maximum amount payable as specified in the Plan. Performance compensation awardsgranted for a performance period shall be paid to participants as soon as administratively practicable following completion of thecertifications required by the Plan but in no event later than 2 1/2 months following the end of the calendar year during which theperformance period is completed.

Effect of a Change in Control. Unless otherwise provided in an award agreement, in the event of a “Change in Control” (as defined inthe Plan), all stock options and stock appreciation rights shall become immediately exercisable and the restricted period shall expireimmediately with respect to shares of restricted stock or restricted stock units. With respect to performance compensation awards, allperformance goals and other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions willbe deemed met. In addition, the Committee may in its discretion and upon at least 10 days’ advance notice to affected persons, cancelany outstanding awards and pay to the holders thereof, in cash or in stock, or any combination thereof, the value of such awards basedupon the price per share of Common Stock received or to be received by other shareholders of the Company in the event. In the case

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of a stock option or stock appreciation right with an exercise price that equals or exceeds the price paid for a share of Common Stockin connection with the Change in Control, the Committee may cancel the stock option or stock appreciation right without payment tothe participant holder.

Duration of Plan and Awards. The Plan became effective upon its adoption by the Board of Directors on June 14, 2013. However,stock awards may not be exercised (or granted in the case of stock awards) unless the Plan has been approved by the shareholders ofthe Company within twelve (12) months before or after the date the Plan is adopted by the Board. The term of any award grantedunder the Plan will be stated in the applicable award agreement. The term of an incentive stock option may not exceed ten (10) years(or five (5) years in the case of an incentive stock option granted to any participant who owns stock representing more than 10% of ourcombined voting power or any parent or subsidiary of the Company). Awards may be granted under the Plan during the ten-yearperiod ending ten years after the effective date of the Plan. Unless otherwise expressly provided in an applicable award agreement, anyaward granted during that period may extend beyond it.

Amendment of Plan and Awards. The Board may amend or terminate the Plan, but rights under any award granted prior to any suchamendment shall not be impaired by such amendment unless the Company requests the consent of the participant and the participantconsents in writing. The Committee may amend the terms of any one or more awards; provided, however, that the Committee may noteffect any amendment which would otherwise constitute an impairment of the rights under any award unless the Company requeststhe consent of the participant and the participant consents in writing.

Federal Income Tax Consequences

The following is general summary as of this date of the federal income tax consequences to us and to U.S. participants for awardsgranted under the Plan. The federal tax laws may change and the federal, state and local tax consequences for any participant willdepend upon his or her individual circumstances. Tax consequences for any particular individual may be different. This summary doesnot purport to be complete, and does not discuss state, local or non-U.S. tax consequences.

Non-qualified Stock Options. The grant of a non-qualified stock option under the Plan will not result in any federal income taxconsequences to the participant or to the Company. Upon exercise of a non-qualified stock option, the participant is subject to incometaxes at the rate applicable to ordinary compensation income on the difference between the option exercise price and the fair marketvalue of the shares at the time of exercise. This income is subject to withholding for federal income and employment tax purposes.The Company is entitled to an income tax deduction in the amount of the income recognized by the participant, subject to possiblelimitations imposed by Section 162(m) of the Code and so long as the Company withholds the appropriate taxes with respect to suchincome (if required) and the participant’s total compensation is deemed reasonable in amount. Any gain or loss on the participant’ssubsequent disposition of the shares of common stock will receive long or short-term capital gain or loss treatment, depending onwhether the shares are held for more than one year following exercise. The Company does not receive a tax deduction for any suchgain.

A non-qualified stock option can be considered non-qualified deferred compensation and subject to Section 409A of the Code. A non-qualified stock option that does not meet the requirements of Code Section 409A can result in the acceleration of income recognition,an additional 20% tax obligation, plus penalties and interest.

Incentive Stock Options. The grant of an incentive stock option under the Plan will not result in any federal income tax consequencesto the participant or to the Company. A participant recognizes no federal taxable income upon exercising an incentive stock option(subject to the alternative minimum tax rules discussed below), and the Company receives no deduction at the time of exercise. In theevent of a disposition of stock acquired upon exercise of an incentive stock option, the tax consequences depend upon how long theparticipant has held the shares of common stock. If the participant does not dispose of the shares within two years after the incentivestock option was granted, nor within one year after the incentive stock option was exercised, the participant will recognize a long-termcapital gain (or loss) equal to the difference between the sale price of the shares and the exercise price. The Company is not entitled toany deduction under these circumstances.

If the participant fails to satisfy either of the foregoing holding periods (referred to as a “disqualifying disposition”), he or she mustrecognize ordinary income in the year of the disposition. The amount of ordinary income generally is the lesser of (i) the differencebetween the amount realized on the disposition and the exercise price or (ii) the difference between the fair market value of the stockat the time of exercise and the exercise price. Any gain in excess of the amount taxed as ordinary income will be treated as a long or

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short-term capital gain, depending on whether the stock was held for more than one year. The Company, in the year of thedisqualifying disposition, is entitled to a deduction equal to the amount of ordinary income recognized by the participant, subject topossible limitations imposed by Section 162(m) of the Code and so long as the participant’s total compensation is deemed reasonablein amount.

The “spread" under an incentive stock option—i.e., the difference between the fair market value of the shares at exercise and theexercise price—is classified as an item of adjustment in the year of exercise for purposes of the alternative minimum tax. If aparticipant’s alternative minimum tax liability exceeds such participant’s regular income tax liability, the participant will owe thelarger amount of taxes. In order to avoid the application of alternative minimum tax with respect to incentive stock options, theparticipant must sell the shares within the calendar year in which the incentive stock options are exercised. However, such a sale ofshares within the year of exercise will constitute a disqualifying disposition, as described above.

Stock Appreciation Rights. Recipients of stock appreciation rights (“SARs”) generally should not recognize income until the SAR isexercised (assuming there is no ceiling on the value of the right). Upon exercise, the recipient will normally recognize taxable ordinaryincome for federal income tax purposes equal to the amount of cash and fair market value of the shares, if any, received upon suchexercise. Recipients who are employees will be subject to withholding for federal income and employment tax purposes with respectto income recognized upon exercise of a SAR. Recipients will recognize gain upon the disposition of any shares received on exerciseof a SAR equal to the excess of (i) the amount realized on such disposition over (ii) the ordinary income recognized with respect tosuch shares under the principles set forth above. That gain will be taxable as long or short-term capital gain depending on whether theshares were held for more than one year. The Company will be entitled to a tax deduction to the extent and in the year that ordinaryincome is recognized by the recipient, subject to possible limitations imposed by Section 162(m) of the Code and so long as theCompany withholds the appropriate taxes with respect to such income (if required) and the recipient’s total compensation is deemedreasonable in amount.

A SAR also can be considered non-qualified deferred compensation and subject to Section 409A of the Code. A SAR that does notmeet the requirements of Code Section 409A can result in the acceleration of income recognition, an additional 20% tax obligation,plus penalties and interest.

Restricted Stock. A restricted stock award is subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Codeto the extent the award will be forfeited in the event that the participant ceases to provide services to the Company. As a result of thissubstantial risk of forfeiture, the recipient will not recognize ordinary income at the time of the award. Instead, the recipient willrecognize ordinary income on the date when the stock is no longer subject to a substantial risk of forfeiture, or when the stockbecomes transferable, if earlier. The recipient’s ordinary income is measured as the difference between the amount paid for the stock,if any, and the fair market value of the stock on the earlier of those two dates.

The recipient may accelerate his or her recognition of ordinary income, if any, and begin his or her capital gains holding period bytimely filing ( i.e. , within thirty (30) days of the award) an election pursuant to Section 83(b) of the Code. In such event, the ordinaryincome recognized, if any, is measured as the difference between the amount paid for the stock, if any, and the fair market value of thestock on the date of award, and the capital gain holding period commences on such date. The ordinary income recognized by arecipient that is an employee or former employee will be subject to tax withholding by the Company.

Restricted Stock Units. With respect to awards of restricted stock units, no taxable income is reportable when the restricted stock unitsare granted to a participant or upon vesting of the restricted stock units. Upon settlement, the recipient will recognize ordinary incomein an amount equal to the value of the payment received pursuant to the restricted stock units. The ordinary income recognized by arecipient that is an employee or former employee will be subject to tax withholding by the Company.

Restricted stock units also can be considered non-qualified deferred compensation and subject to Section 409A of the Code. A grant ofrestricted stock units that does not meet the requirements of Code Section 409A will result in an additional 20% tax obligation, pluspenalties and interest to such recipient.

Dividends and Dividend Equivalents. Recipients of stock-based awards that earn dividends or dividend equivalents will recognizetaxable ordinary income on any dividend payments received with respect to unvested and/or unexercised shares subject to suchawards, which income is subject to withholding for federal income and employment tax purposes. The Company is entitled to anincome tax deduction in the amount of the income recognized by a participant, subject to possible limitations imposed by Section

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162(m) of the Code and so long as the Company withholds the appropriate taxes with respect to such income (if required) and theindividual’s total compensation is deemed reasonable in amount.

Tax Effect for the Company. Unless limited by Section 162(m) of the Code, the Company generally will be entitled to a tax deductionin connection with an award under the Plan in an amount equal to the ordinary income realized by a recipient at the time the recipientrecognizes such income (for example, when restricted stock is no longer subject to the risk of forfeiture).

The Plan is not qualified under the provisions of section 401(a) of the Code and is not subject to any provisions of the EmployeeRetirement Income Security Act of 1974.

New Plan Benefits

Generally, awards to be granted in the future under the Plan are at the discretion of the Committee. As such, it is not possible todetermine the benefits or the amounts to be received under the Plan by the Company’s officers, directors, employees, consultants andadvisors.

Equity Compensation Plan

Prior to the Share Exchange, One Horizon UK had authorized securities for issuance under equity compensation plans that have notbeen approved by the shareholders, but none under equity compensation plans that were approved by the shareholders. The followingtable shows the aggregate amount of securities authorized for issuance under all equity compensation plans as of December 31, 2012:

Number ofsecurities to be

issued uponexercise of

outstandingoptions, warrants

and rights(a)

Weighted-averageexercise price of

outstanding options,warrants and rights

(b)

Number ofsecuritiesremaining

available for futureissuance under

equitycompensation plans

(excludingsecurities reflected

in column (a))(c)

Equity compensation plans approved by security holders 0 0 0Equity compensation plans not approved by security holders 391,272,393 $ 0.0011 0Total 391,272,393 $ 0.0011 0

The securities referenced in the table above reflect stock options granted beginning in 2005 pursuant to individual compensationarrangements with the Company’s employees. 216,132,393 of such options are fully vested with 21,281,962 expiring in 2015;19,710,431 expiring in 2016; and 175,140,000 expiring in 2020. The number of options reflected in the table above reflect aconversion that occurred in connection with the Share Exchange, whereby the number of options (to purchase One Horizon UKshares) held by each employee was increased by 175.14 times and the exercise price was decreased by the option exercise pricedivided by 175.14. Also included in the table above are options to purchase 175,140,000 shares of the Company’s common stock,which options were issued to an employee on December 31, 2012 and vest on December 31, 2015.

The Board of Directors recommends that you vote “FOR” the approval of the 2013 Equity Incentive Plan.

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PROPOSAL 5: REVERSE STOCK SPLIT

Overview

The Company has proposed to effect a 600-for-1 reverse stock split of its issued and outstanding common stock, to reduce the numberof authorized shares of Common Stock to 200,000,000 shares, and to reduce the number of authorized shares of Preferred Stock to50,000,000 shares. The Reverse Stock Split would be effected by the filing of an amendment to the Company’s Articles ofIncorporation with the Department of State of the Commonwealth of Pennsylvania. Our Board of Directors believes that it isnecessary and prudent for the Company to amend our Articles of Incorporation to effect the Reverse Stock Split in order to (i) quicklyenhance the Company’s ability to list the Common Stock on a national United States stock exchange by meeting national stockexchange minimum bid price requirements, (ii) improve the marketability and liquidity of the Common Stock and encourage interestand trading in the Common Stock by increasing the market price and reducing the total number of authorized and outstanding sharesof Common Stock, and (iii) remove several thousand shareholder accounts holding fewer than 600 shares of Common Stock (“VerySmall Holders”) to liquidate (or consolidate) their holdings of our Common Stock in order to reduce administrative costs incurred byus in connection with the maintenance of Very Small Holders’ accounts.

Except for adjustments that may result from the treatment of fractional shares, as described below, each shareholder would hold thesame percentage of the outstanding Common Stock immediately following the Reverse Stock Split as such shareholder heldimmediately prior to the Reverse Stock Split. The par value of the Common Stock would remain unchanged at $0.0001 per share.

The Board of Directors has approved the Reverse Stock Split. The Reverse Stock Split would be adopted upon receiving theaffirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon at the Annual Meeting. It would becomeeffective upon the filing of an amendment to our Articles of Incorporation with the Department of State of the Commonwealth ofPennsylvania (the “Effective Time”). The amendment to be filed at the Effective Time would be in substantially the form as set forthin Appendix B to this information statement.

Reasons for the Reverse Stock Split

National Stock Exchange Listing. The Board of Directors has determined that one of our priorities is to list our Common Stock on oneof the national stock exchanges in the United States. Currently, the Common Stock is traded under the symbol “OHGI” on theOTCQB market quotation service maintained by OTC Markets Group, Inc. This market is generally considered to be relatively lessefficient than a U.S. national stock exchange, and liquidity of the Common Stock may be disadvantaged as a result. Each of thenational stock exchanges in the United States requires that an initial listing of stock meet certain requirements, including a minimumbid price requirement, typically of $2.00, $3.00, or $4.00 per share, depending on other factors. The Board of Directors thereforebelieves that the increased market price of the Common Stock expected as a result of implementing the Reverse Stock Split andcorresponding reduction in the total number of authorized shares of Common Stock would help make the Company eligible for alisting on one of the U.S. national stock exchanges.

Potential Increased Investor Interest. The Board of Directors also believes that the increased market price of the Common Stockexpected as a result of implementing the Reverse Stock Split and corresponding reduction in the total number of authorized shares ofCommon Stock would improve the marketability and liquidity of the Common Stock and would encourage interest and trading in theCommon Stock. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them frominvesting in low-priced stocks or tend to discourage individual brokers from recommending lower-priced stocks to their customers. Inaddition, some of those policies and practices may function to make the processing of trades in low-priced stocks economicallyunattractive to brokers. Moreover, because brokers’ commissions on low-priced stocks generally represent a higher percentage of thestock price than commissions on higher-priced stocks, the current average price per share of Common Stock can result in individualshareholders paying transaction costs representing a higher percentage of their total share value than would be the case if the shareprice were substantially higher. Although it should be noted that the liquidity of the Common Stock may be harmed by the ReverseStock Split given the reduced number of shares that would be outstanding after the Reverse Stock Split, the Board of Directors ishopeful that the anticipated higher market price would reduce, to some extent, the negative effects on the liquidity and marketability ofthe Common Stock inherent in some of the policies and practices of institutional investors and brokerage houses described above.

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Decrease the Company’s Costs. The Board of Directors believes that the Reverse Stock Split is advisable and in the best interests ofthe Company and its shareholders in order to reduce administrative costs incurred by the Company in connection with themaintenance of Very Small Holder accounts and require the liquidation or consolidation of shares of Very Small Holders.

As of May 31, 2013, there were approximately 6,950 shareholders of record. On such date, approximately 6,765 of such shareholdersowned fewer than 600 shares of Common Stock. Although holders of record of fewer than 600 shares constitute approximately 97.3%of our shareholders of record, such shareholders own less than 0.0008% of the outstanding shares of Common Stock. Based upon theclosing price reported for the Common Stock on the OTCQB on May 31, 2013, a holding of 599 shares has a market value ofapproximately $10.48.

The cost of administering each shareholder's account and the amount of time spent by management in responding to shareholderrequests is the same regardless of the number of shares held in the account. Accordingly, the cost to the Company of maintainingmany small accounts is disproportionately high when compared with the total number of shares involved. In view of thedisproportionate cost to the Company of maintaining Very Small Holder accounts, management believes it would be beneficial to theCompany and its shareholders as a whole to eliminate the administrative burden and cost associated with the many accountscontaining fewer than 600 shares of the Company's Common Stock. It is expected that the cost to the Company of administeringshareholder accounts would be reduced by approximately $25,000 to $50,000 per year as a result of the Reverse Stock Split.

The Reverse Stock Split would require Very Small Holders either to dispose of their investment at market value and, in effect, toavoid brokerage fees on the transaction, or to purchase a sufficient number of shares on the secondary trading market so as to have atleast 600 shares of Common Stock. Shareholders owning a small number of shares would, if they chose to sell their shares, probablyincur commission expenses that would reduce their net sale proceeds. In some cases, it might be difficult to find a broker to handlesuch small transactions.

In addition, the Company is proposing the Reverse Stock Split in lieu of an odd-lot tender offer for several reasons. Because of thelarge number of Very Small Holders, an effective odd-lot program would involve considerable time, effort and expense on the part ofthe Company. Although the Reverse Stock Split would eliminate the holdings of Very Small Holders, the Company believes that theproposed Reverse Stock Split is fair to the Very Small Holders because the transactions provide them with cash in an amount equal tothe market price of their shares without any payment by them of brokerage commissions. The Company did not conduct anyindependent analysis in reaching this conclusion. The Company has concluded that the proposed Reverse Stock Split is fair to VerySmall Holders even though the Company does not know the specific amount of consideration which Very Small Holders wouldreceive for their shares. The Company has reached this conclusion because the Company believes that basing the amount of suchconsideration upon the closing market price of the shares of Common Stock of the Company, as traded on the OTCQB, withoutpayment of brokerage commissions by Very Small Holders, is a fair method of determining the amount of consideration to be paid toVery Small Holders. If for any reason the amount of consideration to be paid to Very Small Holders as determined under this formulais, in the opinion of the Board of Directors, less than the fair value of their fractional share interests being cashed out, the Board wouldabandon the Reverse Stock Split prior to the Effective Time. The Board has not determined the fair value of the fractional shareinterests for purposes of determining the price below which it would abandon the Reverse Stock Split. Funds otherwise payable to ashareholder who cannot be located will be held until proper claim therefor is made, subject to applicable escheat laws.

The Board of Directors also believes that the reduction in the number of authorized shares of Common Stock may reduce certain ofthe Company’s costs, such as annual franchise taxes.

The Board of Directors does not intend for this transaction to be the first step in a series of plans or proposals of a “going privatetransaction” within the meaning of Rule 13e-3 of the Exchange Act.

THE REVERSE STOCK SPLIT MAY NOT RESULT IN AN INCREASE IN THE PER SHARE PRICE OF THE COMMONSTOCK; THERE ARE OTHER RISKS ASSOCIATED WITH THE REVERSE STOCK SPLIT.

Risks Associated with Reverse Stock Split

The Board of Directors expects that a reverse stock split of the outstanding Common Stock would increase the market price of theCommon Stock as compared with recent trading prices. However, the Company cannot be certain whether the Reverse Stock Splitwould increase the trading price for the Common Stock or increase the trading market for the Common Stock. The history of similarstock split combinations for companies in like circumstances is varied. There is no assurance that:

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● the trading price per share of Common Stock after the Reverse Stock Split would rise in proportion to the reduction in thenumber of pre-split shares of Common Stock outstanding before the Reverse Stock Split;

● the market price per post-split share would remain in excess of the minimum bid price as required by a U.S. national stockmarket or that the Company would otherwise meet the requirements of a U.S. national stock market for initial listing for tradingon the national stock market;

● the Reverse Stock Split would increase the trading market for the Company’s Common Stock, particularly if the stock price doesnot increase as a result of the reduction in the number of shares of Common Stock available in the public market; and

● the Reverse Stock Split would reduce administrative costs from reduced Odd-Lot Accounts sufficiently to justify the expense ofthe Reverse Stock Split.

The market price of the Common Stock would also be based on the Company’s performance and other factors, some of which areunrelated to the number of shares outstanding. If the Reverse Stock Split is consummated and the trading price of the Common Stockdeclines, the percentage decline as an absolute number and as a percentage of the Company’s overall market capitalization may begreater than would occur in the absence of the Reverse Stock Split. Furthermore, the liquidity of the Common Stock could beadversely affected by the reduced number of shares that would be outstanding after the Reverse Stock Split.

Board Discretion to Implement the Reverse Stock Split

The Reverse Stock Split, including the 1-for-600 reverse split of the Common Stock, the corresponding reductions in the number ofauthorized shares of Common Stock to 200,000,000 and the number of authorized shares of Preferred Stock to 50,000,000 would beeffected, if at all, only upon a determination by the Board of Directors that such actions are in the best interests of the Company and itsshareholders. Such determination would be based upon certain factors, including existing and expected marketability and liquidity ofthe Common Stock, meeting the listing requirements for a national stock market, prevailing market conditions and the likely effect onthe market price of the Common Stock. The Board of Directors may, in its sole discretion, abandon the Reverse Stock Split anddetermine prior to the effectiveness of any filing with the Department of State of the Commonwealth of Pennsylvania not to effect theReverse Stock Split, as permitted under Section 1914(d) of the Pennsylvania Business Corporation Law. If the Board of Directorsdetermines not to implement any aspect of the Reverse Stock Split, including the 1-for-600 reverse split of the Common Stock, thecorresponding reductions in the number of authorized shares of Common Stock to 200,000,000 and the number of authorized shares ofPreferred Stock to 50,000,000, shareholder approval would again be required prior to implementing that aspect of the Reverse StockSplit.

Effect of the Reverse Stock Split

Following the Reverse Stock Split, Very Small Holders would no longer be shareholders as a result of the treatment of fractionalshares as discussed below. Otherwise, the completion of the Reverse Stock Split would not itself affect any shareholder’sproportionate equity interest in the Company. By way of example, a shareholder who owns a number of shares that, prior to theReverse Stock Split, represented 1% of our outstanding shares of Common Stock would continue to own 1% of our outstanding sharesof Common Stock after the Reverse Stock Split.

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Based upon the number of shares of Common Stock and Preferred Stock outstanding as of May 31, 2013, following the Reverse StockSplit, the Company’s authorized capital stock would be as follows:

CommonStock

Authorizedbut

Unissuedand

Outstanding Outstanding Authorized Authorized Authorized AvailableCommon Preferred Common Preferred Capital for Future

Stock Stock Stock Stock Stock Issuance

Pre-ReverseStock Split as ofMay 31, 2013 18,918,967,819 - 250,000,000,000 150,000,000 250,150,000,000 231,231,032,181

Post 600-for-1Reverse Split 31,531,613 - 200,000,000 50,000,000 250,000,000 218,468,387

There would not be any dilution in the percentage ownership of our current shareholders as a result of the Reverse Stock Split. Thetotal authorized number of shares of our Common Stock would be reduced from 250,000,000,000 to 200,000,000, and the totalauthorized number of shares of our Preferred Stock would be reduced from 150,000,000 to 50,000,000. While we do not have anycurrent plans, proposals or arrangements, written or otherwise, to issue additional shares of our Common Stock, the possibility that ourshareholders would be diluted in the future nonetheless exists.

The Reverse Stock Split may cause certain shareholders to own “odd lots” of less than 100 shares of our Common Stock. Brokeragecommissions and other costs of transactions in odd lots are generally higher than the costs of transactions of more than 100 shares ofCommon Stock.

As discussed below under “Accounting Consequences,” upon the effective date of the Reverse Stock Split, the stated capital on ourbalance sheet attributable to the Common Stock would be divided by the denominator of the split ratio, and the additional paid-incapital would be credited with the amount by which the stated capital is reduced.

Treatment of Fractional Shares

No certificate or scrip representing fractional shares of our Common Stock would be issued following the Reverse Stock Split, andany such fractional shares interests would not entitle the owner thereof to any rights as a shareholder of the Company. Instead, theCompany would pay to the registered shareholder, in cash, the value of any fractional share interest arising from the Reverse StockSplit. The cash payment would equal the fraction to which the shareholder would otherwise be entitled multiplied by the closing salesprice of the Common Stock as reported on the over-the-counter OTCQB market as of the effective date of the Reverse Stock Split. Notransaction costs would be assessed to shareholders for the cash payment. Shareholders would not be entitled to receive interest for theperiod of time between the effective date of the Reverse Stock Split and the date payment is made for their fractional shares.

If you do not hold sufficient shares of pre-split Common Stock to receive at least one post-split share of Common Stock and you wantto hold the Common Stock after the Reverse Stock Split, you may do so by taking either of the following actions far enough inadvance so that it is completed before the Reverse Stock Split is effected:

●purchase a sufficient number of shares of Common Stock so that you would hold at least that number of shares of CommonStock in your account prior to the implementation of the Reverse Stock Split that would entitle you to receive at least one shareof Common Stock on a post-split basis; or

●if applicable, consolidate your accounts so that you hold at least that number of shares of Common Stock in one account prior to

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the Reverse Stock Split that would entitle you to at least one share of Common Stock on a post-split basis. Common Stock heldin registered form (that is, shares held by you in your own name on the Company’s share register maintained by its transferagent) and Common Stock held in “street name” (that is, shares held by you through a bank, broker or other nominee) for thesame investor would be considered held in separate accounts and would not be aggregated when implementing the ReverseStock Split. Also, shares of Common Stock held in registered form but in separate accounts by the same investor would not beaggregated when implementing the Reverse Stock Split.

After the Reverse Stock Split, then current shareholders would have no further interest in the Company with respect to their fractionalshares. A person otherwise entitled to a fractional share interest would not have any voting, dividend or other rights in respect of theirfractional interest except to receive the cash payment as described above. Such cash payments would reduce the number of post-splitshareholders to the extent that there are shareholders holding fewer than 600 pre-split shares.

Shareholders should be aware that, under the escheat laws of the various jurisdictions where shareholders reside, where the Companyis domiciled and where the funds for fractional shares would be deposited, sums due to shareholders in payment for fractional sharesthat are not timely claimed after the effective time may be required to be paid to the designated agent for each such jurisdiction.Thereafter, shareholders otherwise entitled to receive such funds may have to seek to obtain them directly from the state to which theywere paid.

Effect on Beneficial Holders

Shareholders holding Common Stock through a bank, broker or other nominee should note that such banks, brokers or other nomineesmay have different procedures for processing the reverse split than those that would be put in place by the Company for registeredshareholders that hold such shares directly, and their procedures may result, for example, in differences in the precise cash amountsbeing paid by such nominees in lieu of a fractional share. If you hold your shares with such a bank, broker or other nominee and if youhave questions in this regard, you are encouraged to contact your bank, broker or nominee.

Effect of the Reverse Stock Split on Options and Warrants

The number of shares subject to our outstanding Common Stock options and warrants would automatically be reduced in the 1-for-600 ratio. Accordingly, the per share exercise price of those options and warrants would be increased in direct proportion to the 1-for-600 ratio so that the aggregate dollar amount payable for the purchase of the shares of Common Stock subject to the options andwarrants would remain unchanged. For example, if an optionee holds options to purchase 1,200 shares at an exercise price of $1.00per share, on the effectiveness of the 1-for-600 reverse stock split, the number of shares subject to that option would be reduced to 2shares and the exercise price would be proportionately increased to $600.00 per share. In connection with the Reverse Stock Split, thenumber of shares of Common Stock issuable upon exercise or conversion of outstanding stock options and warrants would be roundedup to the nearest whole share unless the option or warrant instrument provides for other treatment.

Exchange of Stock Certificates

The combination of, and reduction in, the number of our outstanding shares of Common Stock as a result of the Reverse Stock Splitwould occur automatically upon the filing of articles of amendment without any action on the part of our shareholders and withoutregard to the date that stock certificates representing the shares prior to the Reverse Stock Split are physically surrendered for newstock certificates.

As soon as practicable after the filing of articles of amendment, transmittal forms would be mailed to each holder of record ofcertificates for shares of our Common Stock to be used in forwarding such certificates for surrender and exchange for certificatesrepresenting the number of shares of our Common Stock such shareholder is entitled to receive as a result of the Reverse Stock Split.Our transfer agent would act as exchange agent for purposes of implementing the exchange of the stock certificates. The transmittalforms would be accompanied by instructions specifying other details of the exchange. Upon receipt of such transmittal form, eachshareholder should surrender the certificates representing shares of our Common Stock prior to the Reverse Stock Split in accordancewith the applicable instructions. Each holder who surrenders certificates would receive new certificates representing the number ofshares of our Common Stock that he or she holds as a result of the reverse split. No new certificates would be issued to a shareholderuntil the shareholder has surrendered its outstanding certificate(s) together with the properly completed and executed transmittal form

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to the exchange agent. Shareholders should not send in their stock certificates until they receive a transmittal form from our transferagent.

Effect on Registered Book-Entry Holders

The Company’s registered shareholders may hold some or all of their shares electronically in book-entry form under the directregistration system for securities. These shareholders would not have stock certificates evidencing their ownership of the Company’sCommon Stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts.

● If you hold shares in a book-entry form, you do not need to take any action to receive your post-split shares or your cashpayment in lieu of any fractional share interest, if applicable. If you are entitled to post-split shares, a transaction statementwould automatically be sent to your address of record indicating the number of shares you hold.

● If you are entitled to a payment in lieu of any fractional share interest, a check would be mailed to you at your registeredaddress as soon as practicable after the Company’s transfer agent completes the aggregation and sale described above in“Treatment of Fractional Shares.” By signing and cashing this check, you would warrant that you owned the shares for whichyou receive a cash payment.

Accounting Consequences

The par value of Common Stock would be unchanged at $0.0001 per share after the Reverse Stock Split. As a result, on the effectivedate of the Reverse Stock Split, the shareholders equity on our balance sheet attributable to the Company’s Common Stock would bereduced proportionately based on the reverse stock split ratio of 1-for-600 and the additional paid-in capital account would be creditedwith the amount by which the shareholders equity would be reduced.

After the stock split, net income or loss per share, and other per share amounts would be increased as there would be fewer shares ofour Common Stock outstanding. In future financial statements, net income or loss per share and other per share amounts for periodsending before the reverse stock split would be re-presented to give retroactive effect to the reverse split.

Material Tax Consequences

The following summary of certain material federal income tax consequences of the Reverse Stock Split does not purport to be acomplete discussion of all of the possible federal income tax consequences and is included for general information only, is notintended as tax advice to any person and is not a comprehensive description of the tax consequences that may be relevant to eachshareholder’s own particular circumstances. Further, it does not address any state, local, foreign or other income tax consequences, nordoes it address the tax consequences to shareholders that are subject to special tax rules, such as shareholders who are subject to thealternative minimum tax, banks, insurance companies, regulated investment companies, personal holding companies, shareholderswho are not “United States persons” as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the“Code”), broker-dealers and tax-exempt entities. This summary is based on the Code, the Treasury regulations thereunder andproposed regulations, court decisions and current administrative rulings and pronouncements of the Internal Revenue Service (“IRS”),all of which are subject to change, possibly with retroactive effect, and assumes that the shares of Common Stock will be held as a“capital asset” (generally, property held for investment) as defined in the Code.

Holders of Common Stock are advised to consult their own tax advisers regarding the federal income tax consequences of theproposed reverse split in light of their personal circumstances and the consequences under state, local and foreign tax laws.

The Board of Directors believes that the reverse split will qualify as a recapitalization described in Section 368(a)(1)(E) of the Code.Accordingly, no gain or loss will be recognized by the Company in connection with the reverse split. Other than the cash payments forfractional shares discussed above, no gain or loss will be recognized by a shareholder who exchanges all of his shares of pre-reverseCommon Stock solely for shares of post-reverse Common Stock. The aggregate basis of the shares of the Common Stock to bereceived in the reverse split will be the same as the aggregate basis of the shares of Common Stock surrendered in exchange therefor,reduced by any amount allocable to a fractional share for which cash is received. The holding period of the shares of Common Stockto be received in the reverse split will include the holding period of the shares of Common Stock surrendered in exchange therefor.

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In general, the receipt of cash by a U.S. holder instead of a fractional share will result in a taxable gain or loss to such holder for U.S.federal income tax purposes, unless the receipt of cash is considered “essentially equivalent to a dividend” under the Code. Theamount of the taxable gain or loss to the U.S. holder will be determined based upon the difference between the amount of cashreceived by such holder and the portion of the basis of the pre-reverse stock split shares allocable to such fractional interest. The gainor loss recognized will constitute capital gain or loss and will constitute long-term capital gain or loss if the holder’s holding period isgreater than one year as of the effective date of the reverse stock split. If the receipt of cash is considered equivalent to a dividendunder the Code, then the receipt thereof may be taxable as a dividend to the U.S. holder if the Company has earnings and profits forincome tax purposes.

Our views regarding the tax consequences of the reverse split are not binding upon the IRS or the courts, and there is no assurance thatthe IRS or the courts would accept the positions expressed above. The state and local tax consequences of the reverse split may varysignificantly as to each shareholder, depending on the state in which such shareholder resides. EACH SHAREHOLDER IS URGEDTO CONSULT WITH ITS OWN TAX ADVISERS REGARDING THE TAX CONSEQUENCES OF THE REVERSE SPLIT INLIGHT OF ITS OWN PARTICULAR CIRCUMSTANCES.

The Board of Directors recommends that you vote “FOR” the Reverse Stock Split proposal.

PROPOSAL 6: CHANGE OF THE COMPANY’S STATE OF INCORPORATIONFROM PENNSYLVANIA TO DELAWARE

General

The action to be taken pursuant to the Reincorporation proposal would effect the change of the Company’s state of incorporation fromthe Commonwealth of Pennsylvania to the State of Delaware by means of a merger (the “Merger”) of the Company with and into awholly owned subsidiary corporation to be formed under Delaware law (“One Horizon Delaware”), solely for the purpose ofreincorporating the Company in Delaware. The Merger would be accomplished pursuant to the terms of the Agreement and Plan ofMerger (the “Merger Agreement”), attached as Appendix C to this Information Statement. The effect of the Merger would be tochange the law applicable to the Company’s corporate affairs from Pennsylvania law to Delaware law and to change the governinginstruments for the Company from its existing articles of incorporation, as amended, and bylaws to the certificate of incorporation andbylaws of One Horizon Delaware, which are attached hereto as Appendices D and E. While these governing documents aresubstantially similar to the existing articles of incorporation and bylaws of the Company, the Reincorporation would result in somechanges to shareholders’ rights. See “ Comparison of Pennsylvania and Delaware Corporation Laws” below. Copies of theCompany’s existing articles of incorporation and bylaws are available upon request to the Corporate Secretary of the Company at OneHorizon Group, Inc., Weststrasse 1, Baar, CH6340, Switzerland.

The approval of the Reincorporation constitutes adoption by the Company’s shareholders of the Merger Agreement and approval bythe Company’s shareholders of the certificate of incorporation and the bylaws of One Horizon Delaware, all other transactions andproceedings relating to the Merger and the assumption by One Horizon Delaware, as the surviving corporation of the Merger, of theCompany’s plans, agreements and arrangements and the obligations of the Company under such plans, agreements and arrangements.Pursuant to the terms of the Merger Agreement, the certificate of incorporation and bylaws of One Horizon Delaware would replacethe Company’s current articles of incorporation and bylaws as the Company’s principal corporate governance documents. See “Comparison of Pennsylvania and Delaware Corporation Laws” below. Accordingly, shareholders are urged to read carefully thisInformation Statement and the attached appendices.

The Board of Directors has approved the Reincorporation. The Reincorporation would be adopted upon receiving the affirmative voteof a majority of the votes cast by all shareholders entitled to vote thereon at the Annual Meeting.

Reasons for and Advantages of the Reincorporation in Delaware

For the reasons discussed below, the Board believes that the best interests of the Company and its shareholders would be served bychanging its state of incorporation from Pennsylvania to Delaware.

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Predictability, Flexibility and Responsiveness to Corporate Needs

Delaware has adopted comprehensive and flexible corporate laws which are revised regularly to meet changing businesscircumstances. The Delaware legislature is particularly sensitive to issues regarding corporate law and is especially responsive todevelopments in modern corporate law. Each year the Delaware General Assembly considers and adopts statutory amendments thathave been proposed by the Corporation Law Section of the Delaware bar to meet changing business needs. In addition, the DelawareSecretary of State is particularly flexible, expert and responsive in its administration of the filings required for mergers, acquisitionsand other corporate transactions.

Delaware has a system of specialized Chancery Courts to deal with corporate law questions, which has streamlined procedures andprocesses that result in relatively prompt decisions. The Chancery Court has no jurisdiction over criminal and tort cases, and corporatecases are heard by judges, without juries, who have many years of experience with corporate law issues. Traditionally, this has meantthat the Delaware courts are able, in most cases, to process corporate litigation relatively quickly and effectively. As a result, Delawarecourts have developed considerable expertise in dealing with corporate issues and produced a substantial body of case law construingDelaware corporate laws. Because the legal system in the United States is based largely on legal precedents, the abundance ofDelaware case law should serve to enhance the relative clarity and predictability of many areas of corporate law, which should offeradded advantages to the Company and its shareholders by allowing the Board and management to make corporate decisions and takecorporate actions with greater assurance as to the validity and consequences of those decisions and actions.

Raising Capital

The Reincorporation in Delaware may provide the Company with greater opportunities to raise capital as underwriters and othermembers of the financial services industry may be more willing and better able to assist in capital-raising programs for corporationshaving the greater flexibility afforded by Delaware law. Delaware also may make it easier to attract financing as many investors aregenerally more familiar with Delaware corporate law, particularly provisions relating to rights of preferred shareholders.

Directors and Officers

Reincorporation under Delaware law may enhance the Company’s ability to attract and retain qualified directors and officers as wellas encourage directors and officers to continue to make independent decisions in good faith on behalf of the Company. The parametersof director and officer liability are more extensively addressed in Delaware court decisions, and are therefore better defined and betterunderstood than under Pennsylvania law, thus offering greater certainty and stability from the perspective of those who serve ascorporate officers and directors. Reincorporation from Pennsylvania to Delaware also may make it easier to attract future candidateswilling to serve on the Board, because many potential candidates may already be familiar with Delaware corporate law, includingprovisions relating to director indemnification, from their past business experience. The better understood and comparatively stablecorporate environment afforded by Delaware may enable the Company to compete more effectively with other public companies,most of which are incorporated in Delaware, in the recruitment of talented and experienced directors and officers.

Anti-Takeover Provisions

Under Delaware law, a corporation may adopt certain measures to mitigate its vulnerability to unsolicited takeover attempts throughamendment of the corporate charter documents, adoption of a shareholder rights plan or otherwise. Delaware law also imposes certainrestrictions on parties attempting to seize control of Delaware corporations. Unsolicited takeovers can involve attempts to seize controlwithout acquiring all outstanding shares and without paying a fair value to the shareholders of a company. The Company does notcurrently have in place various measures permitted under Delaware law designed to protect shareholders interests in the event of ahostile takeover attempt against the Company. These measures include a classified board of directors and the prohibition of actions bywritten consent of shareholders. Many of these measures have not been as fully tested in the Pennsylvania courts as in the Delawarecourts. As a result, Delaware law affords greater certainty that these measures will be interpreted, sustained and applied in accordancewith the intentions of the board of directors. In general, Delaware case law provides a well-developed body of law defining the properduties and decision making process expected of a board of directors in evaluating potential and proposed corporate takeover offers andbusiness combinations. These measures and related Delaware law could help the Board protect the Company’s corporate strategies, toconsider fully any proposed takeover and alternatives and, if appropriate, to negotiate terms that maximize the benefit to theshareholders.

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Principal Features of the Reincorporation

The Merger Agreement provides for the Merger of the Company into One Horizon Delaware. Prior to the Merger, One HorizonDelaware would have no operating history, assets, or liabilities. After the Effective Time (as defined in the Merger Agreement), theCompany would be governed by the certificate of incorporation and bylaws of One Horizon Delaware, which are substantially similarto the governing documents of the Company, except as described in this Information Statement. The Merger would not change thebusiness or management of the Company. The Merger would not cause a change in our name, which would remain “One HorizonGroup, Inc.” The following discussion summarizes key aspects of the Reincorporation. This summary is not intended to be completeand is qualified in its entirety by reference to the Merger Agreement attached as Appendix C, the form of certificate of incorporationto be adopted by One Horizon Delaware, attached as Appendix D, the form of bylaws to be adopted by One Horizon Delaware,attached as Appendix E, the form of the amended and restated articles of incorporation of One Horizon Pennsylvania, attached asAppendix F, and the form of the bylaws of One Horizon Pennsylvania, attached as Appendix G.

Pursuant to the Merger Agreement, at the Effective Time, each outstanding share of Common Stock would automatically be convertedinto one share of common stock of One Horizon Delaware. (Further instructions regarding exchange of stock certificates are providedbelow under “Exchange of Stock Certificates”.) The Reincorporation would effect a change in the legal domicile of the Company andother changes described in this Information Statement. Reincorporation of the Company would not, in and of itself, result in anychange in the name, business, management, or location of the principal executive offices, assets or liabilities of the Company. TheOne Horizon Delaware board of directors would consist of the same individuals who serve as directors of the Company as of theEffective Time. Pursuant to the terms of the Merger Agreement, such individuals would serve as members of the One HorizonDelaware board of directors for the same terms as those for which they are serving as directors of the Company as of the EffectiveTime. Each of the officers of One Horizon Delaware is now serving as an officer of the Company. Each option or warrant to purchasethe Company’s Common Stock would automatically be converted into an option or warrant to purchase the same number of shares ofcommon stock of One Horizon Delaware, upon the same terms and subject to the same conditions as set forth in the option andwarrant agreements, as applicable.

The Common Stock would continue to be traded on the OTCQB without interruption under the same symbol (OHGI) as at present.One Horizon Delaware would succeed to all the assets and liabilities of the Company. The stated purposes of One Horizon Delaware,as set forth in its certificate of incorporation, would permit the Company in the future to enter into any lawful business activity, withsuch power and authority as is permitted currently by the Company. The Reincorporation would not change the financial condition ofthe Company and would involve only the Company and a wholly owned subsidiary of the Company formed for the sole purpose of theReincorporation. The Reincorporation would be completed at a time that the boards of directors of the Company and One HorizonDelaware determine is advisable and after receipt of all required government approvals and filings. The Merger would take effect onthe date upon which the Merger Agreement is filed with the Department of State of the Commonwealth of Pennsylvania and theSecretary of State of the State of Delaware, which filing is anticipated to be as soon as practicable after all other conditions have beensatisfied.

Comparison of Pennsylvania and Delaware Corporation Laws

The Company is a Pennsylvania corporation and is governed by the Pennsylvania Business Corporation Law (the “PBCL”). As aDelaware corporation, One Horizon Delaware is, and the Company would be after the Reincorporation is consummated, governed bythe Delaware General Corporation Law (the “DGCL”). Because of differences in the corporation laws of Pennsylvania and Delaware,the rights of the Company’s shareholders would change in various respects as a result of the proposed Reincorporation. The followingdiscussion is a summary of principal differences in the rights of shareholders following the Reincorporation.

Special Meetings of Shareholders

The PBCL generally permits holders of 20% or more of the outstanding shares to call a special meeting of shareholders unlessrestricted in the articles of incorporation. However, as long as a Pennsylvania corporation is subject to the periodic reportingobligations of the Securities Exchange Act of 1934, as amended (a “Registered Corporation”), as is the Company, shareholders are notentitled to call special meetings. In addition, under the PBCL, shareholders of record entitled to vote must receive notice ofshareholder meetings not less than five days before the date of the shareholder meeting with no maximum time period provided.

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Under the DGCL, special meetings of shareholders may be called only by the board of directors or by any other person authorized inthe corporation’s certificate of incorporation or the bylaws. One Horizon Delaware’s certificate of incorporation and bylaws do notauthorize any other person to call special meetings of shareholders. Generally, all shareholders of record entitled to vote must receivenotice of shareholder meetings not less than 10 or more than 60 days before the date of the shareholder meeting.

Shareholders’ Action Without a Meeting

Under the PBCL, shareholders of a Registered Corporation are permitted to take action by written consent in lieu of a meeting only ifsuch action is unanimous unless the corporation’s articles provide for a lower consent threshold. In contrast, the DGCL permits suchan action to be taken by written consent, if the written consent is signed by the holders of shares that would have been required toeffect the action at a meeting of the shareholders. Shareholders who do not sign the written consent must be notified promptlyfollowing the effectiveness of a written consent. As the Company is a Registered Corporation, generally shareholders may take actionby written consent in lieu of a shareholder meeting only by a unanimous consent. Under both the PBCL and the DGCL, acorporation’s articles or certificate of incorporation may restrict or prohibit shareholders’ action without a meeting. One HorizonDelaware’s certificate of incorporation does not restrict or prohibit shareholders’ action without a meeting. Further, One HorizonDelaware’s bylaws provide that action may be taken by written consent, if the written consent is signed by the holders of shares thatwould have been required to effect the action at a meeting of the shareholders.

Advance Notice Requirements

Under both the PBCL and the DGCL, a corporation may require shareholders wishing to nominate persons for election to the board ofdirectors or propose new business to give notice of the nomination or proposal by a date prior to the annual meeting. The Company’sbylaws and One Horizon Delaware’s bylaws each provide that nominations for election to the Board and proposals for new business tobe voted on by shareholders must be submitted between 120 and 210 days prior to the anniversary of the prior year’s annual meeting,or not less than 90 days before the date of the annual meeting if the date of the meeting has been changed by more than 30 days fromthe date contemplated at the time of the previous year’s proxy or information statement, or in the event that less than 90 days’ noticeor prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder must be received notlater than the close of business on the 15th day following the day on which such notice of the date of the meeting was provided.

Preemptive Rights

Under both the PBCL and the DGCL, unless otherwise provided in the articles or certificate of incorporation, a corporation may issueshares, option rights or securities having conversion or option rights, without first offering them to shareholders of a class. Both theCompany’s articles of incorporation and One Horizon Delaware’s certificate of incorporation are silent on preemptive rights.

Classified Board of Directors

Both the PBCL and the DGCL permit corporations to have classified boards of directors. The PBCL permits the board to be dividedinto four classes, while the DGCL permits three classes. Neither the Company’s nor One Horizon Delaware’s boards of directors arecurrently classified.

Cumulative Voting

Under the PBCL, shareholders have cumulative voting rights for the election of directors. Pennsylvania corporations may opt out ofcumulative voting; the Company has done so. Under cumulative voting, a shareholder may cast as many votes as shall equal thenumber of votes that such holder would be entitled to cast for the election of directors multiplied by the number of directors to beelected. The holder may cast all such votes for a single director or distribute the votes among two or more directors.

Under the DGCL, where the certificate of incorporation is silent on the matter, there is no cumulative voting. One Horizon Delaware’scertificate of incorporation does not provide for cumulative voting.

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Removal of Directors

Under the PBCL, subject to certain limitations, a Pennsylvania corporation may provide that directors may only be removed for causeand may require the approval of 100% of the outstanding shares entitled to vote. Pennsylvania corporations are not permitted torestrict a shareholder’s ability to go to court and seek the court to remove a director in the case of fraudulent or dishonest acts or grossabuse of authority. The Company’s bylaws currently are silent as to director removal. Under the DGCL, unless the board of directorsis divided into classes, shareholders may remove directors, with or without cause, by a vote of shareholders owning a majority of theoutstanding shares entitled to vote or by such greater vote requirement as may be set forth in the certificate of incorporation. OneHorizon Delaware’s certificate of incorporation does not set forth a greater vote requirement.

Limitation of Director Liability

Under the PBCL, a corporation is permitted to include a provision in its corporate documents limiting liability of directors for anyactions taken, unless the director has breached or failed to perform his or her fiduciary duty and the breach or failure consists of self-dealing, willful misconduct, or recklessness. A director’s liability may not be limited under the PBCL, however, in the instance of aviolation of any criminal statute or for the payment of taxes to federal, state or local authorities. The Company’s bylaws include aprovision limiting directors’ liability consistent with the foregoing. The DGCL permits a company to include a provision in itscertificate of incorporation that eliminates or limits the personal liability of a director for monetary damages resulting from a breach offiduciary duty as a director, except under the following circumstances: (i) for a breach of loyalty, (ii) for acts or omissions not in goodfaith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payment of dividend or unlawful stockpurchase or redemption and (iv) from any transaction in which the director derived an improper personal benefit. One HorizonDelaware’s certificate of incorporation includes a provision limiting director liability to the fullest extent permitted by the DGCL.

Amendments to the Articles or Certificate of Incorporation

Under the PBCL, unless otherwise prohibited in the articles of incorporation, amendments to a company’s articles may be proposed bythe board of directors or the holders of at least 10% of the voting shares. Generally, the required vote to approve amendments to thearticles is a majority of the shares outstanding. A corporation is permitted to include a greater approval percentage if desired, however,the Company’s articles of incorporation are silent on amendments to the articles of incorporation.

Under the DGCL, amendments to the certificate of incorporation are generally proposed by the board of directors but there is norestriction against shareholder action provided it otherwise complies with the advance notice provisions. The board is required toapprove and adopt any such amendments prior to submitting such amendments to shareholders for approval. Approval of anamendment generally requires the affirmative vote of a majority of the shares outstanding, but a supermajority vote requirement ispermitted. One Horizon Delaware’s certificate of incorporation reserves the right to amend the certificate of incorporation, and doesnot specify a threshold higher than what is required by the DGCL for the shareholders to amend the certificate of incorporation.

Amendments to the Bylaws

The PBCL permits a corporation to provide that bylaws may only be amended by directors, provided shareholders have the right tochange such a provision. In addition, the board of directors may not adopt or change a bylaw on any subject that is committedexpressly to shareholders under Pennsylvania law. The Company’s bylaws include the right of the majority of directors in office toamend the bylaws, subject to these exceptions. The Company’s bylaws also specifically require that any shareholder amendment to theindemnification protections for directors be approved by at least 80% of the outstanding shares. The DGCL provides that the power toadopt, amend, or repeal bylaws remains with the corporation’s shareholders entitled to vote, but permits the corporation, in itscertificate of incorporation, to confer the power upon the board of directors. Under the DGCL, the fact that such power has beenplaced in the board of directors neither divests nor limits the shareholders’ power to adopt, amend, or repeal bylaws. Where bylawsconflict, shareholder adopted bylaws control. One Horizon Delaware’s certificate of incorporation provides that the board of directorsmay adopt, amend or repeal the bylaws or adopt new bylaws without any action on the part of the shareholders; provided that anybylaws adopted or amended by the board of directors, and any powers thereby conferred, may be amended, altered or repealed by theshareholders. The bylaws provide that any bylaw may be adopted, amended or repealed by the board of directors.

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Fiduciary Duties of Director

Both the DGCL and PBCL provide that the board of directors has the ultimate responsibility for managing the business and affairs of acorporation. In discharging this function, directors owe fiduciary duties of care and loyalty to the corporation and to its shareholders.The PBCL and the DGCL similarly require that directors perform their duties in good faith, in a manner they reasonably believe to bein the best interests of the corporation, and with such care, including reasonable inquiry, skill and diligence, as a person of ordinaryprudence would use under similar circumstances. The PBCL, however, contains a provision specifically permitting (not requiring)directors, in discharging their duties, to consider the effects of any action taken by them upon any or all affected groups (including,e.g., shareholders, employees, customers, creditors and certain communities) as well as all other pertinent factors. Unlike the DGCL,the PBCL expressly makes clear that a director has no greater obligation to justify, or higher burden of proof with respect to, any actrelating to an actual or potential take-over of the corporation than he or she has with respect to any other act as a director.

Delaware courts have held that the duty of care requires the directors to exercise an informed business judgment. An informedbusiness judgment means that the directors have informed themselves of all material information reasonably available to them.Delaware courts have also imposed a heightened standard of conduct upon directors in matters involving a contest for control of thecorporation.

Mergers and Major Transactions

Under the PBCL, fundamental corporate transactions (such as mergers, sales of all or substantially all of the corporation’s assets,dissolutions, etc.) require the approval of a majority of the votes actually cast by the shareholders at the meeting. The DGCL requiresthe approval of the holders of a majority of the outstanding shares of common stock. Both the PBCL and the DGCL permit acorporation to increase the minimum percentage vote required by the statutory minimums described above. Neither the Company’sbylaws nor One Horizon Delaware’s bylaws have any special voting requirements for such fundamental transactions.

Anti-takeover Provisions

Both the PBCL and the DGCL allow corporations to impose a supermajority voting requirement on a variety of corporate actions. ThePBCL contains a number of statutory anti-takeover provisions applicable to Registered Corporations unless the entity opts out fromone or more of the provisions. The Company, in its bylaws, has opted out of the following statutory anti-takeover provisions:

● Subchapter 25G, which, with certain exceptions, limits the voting rights of persons who have acquired 20% or more of theoutstanding voting power of the corporation; and

● Subchapter 25H, which requires disgorgement of certain profits made by controlling shareholders following their attempts togain control of the corporation.

Section 203 of the DGCL also contains a statutory anti-takeover provision requiring that in order to engage in certain businesscombinations with Delaware corporations, an “interested shareholder,” i.e., a shareholder owning 15% or more of the corporation’sstock for a period of less than three years, must obtain the approval of at least two-thirds of the corporation’s outstanding stock notowned by such shareholder. Section 203 only applies to Delaware corporations that have a class of voting stock that is either listed ona national securities exchange or held of record by more than 2,000 shareholders. However, a corporation may elect not to begoverned by Section 203 by a provision in its certificate of incorporation or its bylaws. One Horizon Delaware is governed by Section203 of the DGCL.

Appraisal or Dissenters Rights

The rights of shareholders to demand payment in cash by a corporation of the fair value of their shares under certain circumstances arecalled appraisal rights under the DGCL and dissenters rights under the PBCL. Pennsylvania law generally denies dissenters rights toholders of shares that are listed on a national exchange or held of record by more than 2,000 shareholders. Pennsylvania law does notrequire, in order for such denial of dissenters rights to apply, that a plan of merger or combination provide for conversion of the sharesof a target corporation into shares of the surviving corporation or another corporation. Pennsylvania law also does not providedissenters rights to shareholders of the parent corporation in the context of a short-form merger with a subsidiary, in which

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shareholder approval is not required. Pennsylvania law defines a short-form merger to include a merger of a corporation into a parentcorporation that owns at least 80% of the subsidiary.

Delaware law, like Pennsylvania law, does not afford appraisal rights to holders of shares which are either listed on a nationalsecurities exchange or held of record by more than 2,000 shareholders, unless the plan of merger or consolidation converts such sharesinto anything other than stock of the surviving corporation or stock of another corporation which is either listed on a nationalsecurities exchange or held of record by more than 2,000 shareholders. Delaware also permits a short-form merger between parent andsubsidiary corporations and denies appraisal rights to the shareholders of the parent corporation, but the parent must own at least 90%of a subsidiary.

Franchise and Income Taxes and Fees

The Company’s liability for state corporate franchise and income taxes and fees as a Delaware corporation may be greater than itsliability for state corporate franchise and income taxes and fees as a Pennsylvania corporation.

Anticipated Federal Tax Consequences

We have not requested and will not request a ruling from the Internal Revenue Service, nor have we requested or received a taxopinion from an attorney, as to the various tax consequences of the Reincorporation. We are structuring the Reincorporation in aneffort to obtain the following consequences:

(a) the Reincorporation in the State of Delaware, to be accomplished by a merger between the Company and One Horizon Delaware,will constitute a tax-free reorganization within the meaning of section 368(a)(1)(F) of the Internal Revenue Code of 1986;

(b) no gain or loss for federal income tax purposes will be recognized by our shareholders on receipt by them of the common stock ofOne Horizon Delaware in exchange for shares of our Common Stock;

(c) the basis of the One Horizon Delaware common stock received by our shareholders in exchange for their shares of our CommonStock pursuant to the Reincorporation in the State of Delaware will be the same as the basis for our Common Stock; and

(d) the holding period for the One Horizon Delaware common stock for capital gains treatment received in exchange for our CommonStock will include the period during which our Common Stock exchanged therefor is held.

This discussion should not be considered as tax or investment advice, and the tax consequences of the Reincorporation may not be thesame for all shareholders. It should be noted that the foregoing positions are not binding on the Internal Revenue Service, which maychallenge the tax-free nature of the Reincorporation in the state of Delaware. A successful challenge by the Internal Revenue Servicecould result in taxable income to the Company, One Horizon Delaware, and our shareholders, as well as other adverse taxconsequences. ACCORDINGLY, EACH SHAREHOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISORWITH RESPECT TO ALL OF THE POTENTIAL TAX CONSEQUENCES TO HIM OR HER OF THE REINCORPORATION.

Exchange of Stock Certificates

Pursuant to the Merger Agreement, at the Effective Time, each outstanding share of Common Stock would automatically be convertedinto one share of common stock of One Horizon Delaware. Following effectiveness of the Reincorporation in Delaware, all stockcertificates which represented shares of our Common Stock would represent ownership of One Horizon Delaware’s common stock.We would print new stock certificates and we would obtain a new CUSIP number for our Common Stock that reflects the change inour state of incorporation, although shareholders would not be required to tender their old stock certificates for transfer. However, toeliminate confusion in transactions in our securities, management urges shareholders to surrender their old certificates in exchange fornew certificates and has adopted a policy to facilitate this process. Each shareholder would be entitled to submit his or her old stockcertificates (any certificates issued prior to the effective date of the change in our state of incorporation) to our transfer agent, NevadaAgency and Transfer Company, and to be issued in exchange therefor, new common stock certificates representing the number ofshares of One Horizon Delaware’s common stock of which each shareholder is the record owner after giving effect to theReincorporation, and for a period of 30 days after the effective date of the Reincorporation, we would pay on one occasion only forsuch issuance. We would not pay for issuing stock certificates in the name of a person other than the name appearing on the old

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certificate or for the issuance of new stock certificates in excess of the number of old certificates submitted by a shareholder.SHAREHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S).

Securities Act Consequences

The shares of One Horizon Delaware’s common stock to be issued in exchange for shares of our Common Stock are not beingregistered under the Securities Act of 1933, as amended (the “Securities Act”). In that regard, One Horizon Delaware is relying onRule 145(a)(2) under the Securities Act, which provides that a merger which has as its sole purpose a change in the domicile of acorporation solely within the United States does not involve the sale of securities for purposes of the Securities Act. Pursuant to Rule145 under the Securities Act, the merger of the Company into One Horizon Delaware and the issuance of shares of common stock ofOne Horizon Delaware in exchange for the shares of the Company’s Common Stock is exempt from registration under the SecuritiesAct, since the sole purpose of the transaction is a change of our domicile within the United States. The effect of the exemption is thatthe shares of our Common Stock issuable as a result of the Reincorporation may be resold by the former shareholders withoutrestriction to the same extent that such shares may have been sold before the effectiveness of the Reincorporation.

The Board of Directors recommends that you vote “FOR” the Reincorporation proposal.

PROPOSALS BY SHAREHOLDERS

No shareholder entitled to vote has transmitted any proposal to be acted upon by the Company.

DISSENTERS’ RIGHTS

Holders of our Common Stock are not entitled to dissenters’ rights of appraisal with respect to the Reincorporation pursuant toprovisions of the PBCL applicable to corporations with over 2,000 shareholders of record, and are also not entitled to such rights withrespect to the Reverse Stock Split.

DESCRIPTION OF CAPITAL STOCK

Our authorized capital currently consists of 250,000,000,000 shares of Common Stock, par value $0.0001 per share (the “CommonStock”), and 150,000,000 shares of preferred stock, par value $0.0001 per share (the “Preferred Stock”). The following brieflysummarizes the general terms and provisions of our shares of Common Stock, Preferred Stock and warrants. You should read theprovisions of our articles of incorporation, as amended, bylaws and other relevant instruments and agreements relating to oursecurities before you make an investment decision with respect to our securities.

Each share of Common Stock entitles its record holder to one vote per share. Holders of our Common Stock do not have cumulativevoting, conversion, redemption rights or preemptive rights to acquire additional shares. Subject to the preferential rights of any holdersof any outstanding series of preferred stock, the holders of common stock, together with the holders of the nonvoting common stock,will be entitled to such dividends and distributions, whether payable in cash or otherwise, as may be declared from time to time by ourboard of directors from legally available funds. Subject to the preferential rights of holders of any outstanding series of preferredstock, upon our liquidation, dissolution or winding-up and after payment of all prior claims, the holders of common stock, with theshares of the common stock and the nonvoting common stock being considered as a single class for this purpose, would be entitled toreceive pro rata all our assets. Any dividend in shares of common stock paid on or with respect to shares of common stock may bepaid only with shares of common stock.

Shares of our Preferred Stock may be issued in one or more classes or series within a class as may be determined by our Board ofDirectors, who may increase or decrease the number within each series, and fix the designations, powers, preferences and relative,participating, optional or other rights of such series and any qualifications, limitations or restrictions thereof. Any Preferred Stock soissued by our Board of Directors may rank senior to the Common Stock with respect to the payment of dividends or amounts uponliquidation, dissolution or winding, or both.

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As of May 31, 2013, there were approximately 18,918,967,819 shares of our Common Stock and no shares of our Preferred Stockissued and outstanding.

As of March 31, 2013, we had reserved 1,012,551,483 shares of our common stock for the following outstanding warrants:

Number of Warrants Exercise Price Expiry

700,560,000 $ 0 no expiry date70,056,000 0.0014 no expiry date

241,935,483 0.0124 January 2018

The following table summarizes stock options outstanding at March 31, 2013:

Number Average Number IntrinsicOutstanding Remaining Exercisable Value

at Contractual at atMarch 31, Life March 31, December 31,

Exercise Price 2013 (Years) 2013 2012$ 0.0009 3,448,507 2.58 3,448,507 $ 37,934

0.0009 175,140,000 7.25 175,140,000 1,926,5400.0009 175,140,000 9.75 - -0.0030 17,833,456 2.08 17,833,456 196,1680.569 19,710,431 3.25 7,193,588 79,129

At March 31, 2013, 391,272,393 shares of common stock were reserved for outstanding options. The fair value of each option grantedis estimated at the date of grant using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value ofthe options granted were: risk-free interest rate of 5.0%, a 3 year expected life, a dividend yield of 0.0%, and a stock price volatilityfactor of 40%

If the Reverse Stock Split is consummated, the number of shares subject to our outstanding Common Stock warrants and optionswould automatically be adjusted, the authorized number of shares of Common Stock would be reduced to 200,000,000 shares, and theauthorized number of shares of Preferred Stock would be reduced to 50,000,000 shares. In the event that the Reincorporation iseffected, our warrants and options would generally automatically convert into warrants of our new Delaware holding company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of our common stock as of June 24, 2013 (i) by each personwho is known by us to beneficially own more than 5% of our common stock; (ii) by each of our named executive officers anddirectors; and (iii) by all of our executive officers and directors as a group, based on 18,921,967,819 shares of common stockoutstanding, including those deemed to be outstanding pursuant to Rule 13d-3(1) of the Exchange Act.

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Name of Person or Group

Amount AndNature of Beneficial

Ownership (1) Percent

Shareholders Holding Over Five Percent of the Common Stock (other than NamedExecutive Officers and Directors):

Alexandra Mary Johnson11 Washern CloseWilton Salisbury, SP2 0LXUnited Kingdom 1,866,817,260 (2) 9.8%

Adam Christie Thompson2550 Skyview LaneHarleysville, PA 19438 1,866,817,260 (2) 9.8%

Named Executive Officers and Directors:

Mark White 3,819,161,220 (2) 20.0%

Martin Ward 1,866,817,260 (2) 9.8%

Brian Collins 3,823,012,548(2)(3) 20.0%

Stephen Austin 6,480,180(4) *

Nicholas Carpinello 10,000 *

All Executive Officers and Directors as a Group (5 persons): 9,515,481,208

_______________* Less than 1%.(1) Except as otherwise indicated, each of the shareholders listed above has sole voting and investment power over the shares beneficially

owned.(2) Includes 700,560,000 shares to account for warrants to purchase 4,000,000 shares of One Horizon UK owned by Ms. Johnson and

Messrs. Thompson, White, Ward and Collins, which warrants were exercised on October 16, 2012. The One Horizon UK sharesunderlying the exercised warrants have not yet been issued to Ms. Johnson and Messrs. Thompson, White, Ward and Collins. Onceissued, upon notification to One Horizon UK’s transfer agent of the exercise of each warrant and receipt of the One Horizon UKcommon stock issuable thereunder, Ms. Johnson and Messrs. Thompson, White, Ward, and Collins may thereafter, at any time, seek tohave such One Horizon UK common stock exchanged into shares of the Company at a conversion rate of 175.14:1 (for a total of700,560,000 shares). Alternatively, the Company has the right to impose upon them a mandatory acquisition in accordance with Sections974 to 991 (inclusive) of the United Kingdom Companies Act 2006, following which all One Horizon UK common stock held by Ms.Johnson and Messrs. Thompson, White, Ward, and Collins shall mandatorily be exchanged into shares of the Company at a conversionrate of 175.14:1.

(3) Includes 3,851,328 shares held by Mr. Collins’ spouse, Eilis Collins. Ms. Collins has sole voting and investment power over such shares.(4) Consists of shares held by the self-invested pension plan of Stephen Austin, under which plan Mr. Austin does not serve as trustee.

CHANGES IN CONTROL

On October 12, 2012, we entered into the Exchange Agreement with One Horizon UK. Pursuant to the Exchange Agreement, onNovember 30, 2012, we issued a total of 17,853,476,138 shares of Common Stock to the shareholders of One Horizon UK received inexchange for all of the capital stock of One Horizon UK, or 175.14 shares of Common Stock for each share of capital stock of OneHorizon UK. We also issued options to purchase a total of 216,132,393 shares of Common Stock to the shareholders of One Horizon

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UK in exchange for options to purchase shares of capital stock of One Horizon UK, at current exercise prices ranging from $0.16 to$0.59, based on the ratio of 175.14 option shares of Common Stock for each option to purchase one share of One Horizon UK capitalstock held by each shareholder. We also reserved an additional 1,120,896,000 shares of Common Stock for the issuance of such sharesupon the exercise of options and warrants that One Horizon UK has agreed to issue in the future to certain employees.

On the date of closing, more than 98.9% of One Horizon UK shareholders’ offers of exchange had been received. Following theclosing, additional One Horizon UK shareholders have offered their shares for exchange, and as of April 29, 2013, we ownedapproximately 99% of the outstanding shares of One Horizon UK. Having received share exchange acceptances in excess of 90% ofthe One Horizon UK shares, we intend to exercise our rights in accordance with Sections 974 to 991 (inclusive) of the UnitedKingdom Companies Act 2006 to acquire compulsorily the remaining One Horizon UK shares in respect of which acceptances havenot been received to date. Upon such act, One Horizon UK will be a wholly-owned subsidiary of the Company.

As a result of the Share Exchange, One Horizon UK is now our subsidiary, with former One Horizon UK shareholders holdingapproximately 96% of our issued and outstanding shares. The transaction has been accounted for as a reverse acquisition, whereby weare the legal acquirer and One Horizon UK is the legal acquiree and accounting acquirer. In accordance with the ExchangeAgreement, on November 30, 2012, Victor Jeffery and Sarocha Hatthasakul resigned as our Chief Executive Officer and ChiefFinancial Officer, respectively. Our directors submitted their resignations, to be effective 10 days from the filing and mailing of theSchedule 14F-1 information statement (on December 10, 2012), at which time the size of our board of directors was expanded toseven members. On December 20, 2012, Messrs. Mark White, Martin Ward, and Brian Collins were appointed to fill the vacanciescreated by that expansion, and the resignations of the former directors were effective. On November 30, 2012, Mr. White wasappointed Chief Executive Officer, Mr. Ward was appointed Chief Financial Officer; and Mr. Collins was appointed Vice Presidentand Chief Technology Officer. On December 27, 2012, we changed our name from Intelligent Communication Enterprise Corporationto One Horizon Group, Inc.

On March 5, 2012, we obtained control of all the issued and outstanding shares of Global Integrated Media Limited (“GIM”), acontract publishing entity with operations in Hong Kong and the Philippines, for 61,471,814 shares of our Common Stock with a fairvalue of $1,383,000. Although we had announced the closing of this transaction on December 12, 2011, based upon the time ofdelivery and execution of the transaction documents by the parties, we did not obtain control of GIM and did not deliver theconsideration to the seller at that time. On March 5, 2012, we completed the acquisition of GIM and issued 61,471,814 shares ofCommon Stock, with a fair value of $1,383,000, as full consideration for the acquisition. On December 31, 2012, we sold all of theissued and outstanding shares of GIM and all of the assets and operations of our Modizo business for the return of 42,000,000 sharesof our Common Stock held by the purchaser, which had a fair value of $420,000. After giving effect to the Share Exchangetransaction consummated on November 30, 2012, as described in our Form 8-K filed December 6, 2012, at the time of the sale, theGIM and Modizo businesses were less than 10% of our assets and are expected to be less than 10% of our sales and profits in futurefiscal years.

We are unaware of any other current arrangements which may result in a change in control of our Company.

OTHER INFORMATION

For more detailed information about us and other information about the business and operations of our Company, you may refer to ourTransition Report on Form 10-KT filed on May 13, 2013 and Quarterly Report on Form 10-Q/A filed on May 30, 2013. Copies ofthese documents are available on the SEC’s EDGAR database at www.sec.gov. Copies may also be obtained by written or oral requestmade to the address and telephone number specified above.

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APPENDIX A

ONE HORIZON GROUP, INC.2013 EQUITY INCENTIVE PLAN

1. Purpose; Eligibility.

1.1 General Purpose. The name of this plan is the One Horizon Group, Inc. 2013 Equity Incentive Plan (the " Plan "). Thepurposes of the Plan are to (a) enable One Horizon Group, Inc. a Pennsylvania corporation (the " Company "), and any Affiliate toattract and retain the types of Employees, Consultants and Directors who will contribute to the Company's long range success; (b)provide incentives that align the interests of Employees, Consultants and Directors with those of the shareholders of the Company; and(c) promote the success of the Company's business.

1.2 Eligible Award Recipients. The persons eligible to receive Awards are the Employees, Consultants and Directors of theCompany and its Affiliates, and such other individuals designated by the Committee who are reasonably expected to becomeEmployees, Consultants and Directors after the receipt of Awards.

1.3 Available Awards. Awards that may be granted under the Plan include: (a) Incentive Stock Options, (b) Non-qualified StockOptions, (c) Stock Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, and (f) Performance CompensationAwards.

2. Definitions.

"Affiliate" means a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or isunder common control with, the Company.

"Applicable Laws" means the requirements related to or implicated by the administration of the Plan under applicable statecorporate law, United States federal and state securities laws, the Code, any stock exchange or quotation system on which the sharesof Common Stock are listed or quoted, and the applicable laws of any foreign country or jurisdiction where Awards are granted underthe Plan.

"Award" means any right granted under the Plan, including an Incentive Stock Option, a Non-qualified Stock Option, a StockAppreciation Right, a Restricted Award, a Performance Share Award or a Performance Compensation Award.

"Award Agreement" means a written agreement, contract, certificate or other instrument or document evidencing the terms andconditions of an individual Award granted under the Plan which may, in the discretion of the Company, be transmitted electronicallyto any Participant. Each Award Agreement shall be subject to the terms and conditions of the Plan.

"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that incalculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such"person" shall be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion orexercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms"Beneficially Owns" and "Beneficially Owned" have a corresponding meaning.

"Board" means the Board of Directors of the Company, as constituted at any time.

"Cause" means:

With respect to any Employee or Consultant: (a) if the Employee or Consultant is a party to an employment or serviceagreement with the Company or its Affiliates and such agreement provides for a definition of Cause, the definition contained therein;or (b) if no such agreement exists, or if such agreement does not define Cause: (i) the commission of, or plea of guilty or no contest to,a felony or a crime involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciarybreach with respect to the Company or an Affiliate; (ii) conduct that results in or is reasonably likely to result in harm to the reputation

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or business of the Company or any of its Affiliates; (iii) gross negligence or willful misconduct with respect to the Company or anAffiliate; or (iv) material violation of state or federal securities laws.With respect to any Director, a determination by a majority of the disinterested Board members that such Director has engaged in any

of the following:(a) malfeasance in office; (b) gross misconduct or neglect; (c) false or fraudulent misrepresentation inducing thedirector's appointment; (d) willful conversion of corporate funds; or (e) repeated failure to participate in Board meetings on a regularbasis despite having received proper notice of the meetings in advance.

The Committee, in its absolute discretion, shall determine the effect of all matters and questions relating to whether aParticipant has been discharged for Cause.

"Change in Control" means (a) One Person (or more than one Person acting as a group) acquires ownership of stock of theCompany that, together with the stock held by such person or group, constitutes more than 50% of the total fair market value or totalvoting power of the stock of the Company; provided, that, a Change in Control shall not occur if any Person (or more than one Personacting as a group) owns more than 50% of the total fair market value or total voting power of the Company's stock and acquiresadditional stock; (b) one person (or more than one person acting as a group) acquires (or has acquired during the twelve-month periodending on the date of the most recent acquisition) ownership of the Company's stock possessing 30% or more of the total voting powerof the stock of such corporation; (c) a majority of the members of the Board are replaced during any twelve-month period by directorswhose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or (d) one person(or more than one person acting as a group), acquires (or has acquired during the twelve-month period ending on the date of the mostrecent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fairmarket value of all of the assets of the Company immediately before such acquisition(s).

"Code" means the Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section of theCode shall be deemed to include a reference to any regulations promulgated thereunder.

"Committee" means a committee of one or more members of the Board appointed by the Board to administer the Plan inaccordance with Section 3.1 and Section 3.2 . If no Committee has been appointed by the Board, the term Committee shall mean theBoard.

"Common Stock" means the common stock, $0.0001 par value per share, of the Company, or such other securities of theCompany as may be designated by the Committee from time to time in substitution thereof.

"Company" means One Horizon Group, Inc., a Pennsylvania corporation, and any successor thereto.

"Consultant" means any individual who is engaged by the Company or any Affiliate to render consulting or advisory services.

"Continuous Service" means that the Participant's service with the Company or an Affiliate, whether as an Employee, Consultantor Director, is not interrupted or terminated. The Participant's Continuous Service shall not be deemed to have terminated merelybecause of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee,Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption ortermination of the Participant's Continuous Service; provided further that if any Award is subject to Section 409A of the Code, thissentence shall only be given effect to the extent consistent with Section 409A of the Code. For example, a change in status from anEmployee of the Company to a Director of an Affiliate will not constitute an interruption of Continuous Service. The Committee or itsdelegate, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave ofabsence approved by that party, including sick leave, military leave or any other personal or family leave of absence.

"Covered Employee" has the same meaning as set forth in Section 162(m)(3) of the Code, as interpreted by Internal Revenue ServiceNotice 2007-49.

"Director" means a member of the Board.

"Disability" means that the Participant is unable to engage in any substantial gainful activity by reason of any medicallydeterminable physical or mental impairment; provided, however, for purposes of determining the term of an Incentive Stock Optionpursuant to Section 6.8 hereof, the term Disability shall have the meaning ascribed to it under Section 22(e)(3) of the Code. Thedetermination of whether an individual has a Disability shall be determined under procedures established by the Committee. Except in

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situations where the Committee is determining Disability for purposes of the term of an Incentive Stock Option pursuant to Section6.8 hereof within the meaning of Section 22(e)(3) of the Code, the Committee may rely on any determination that a Participant isdisabled for purposes of benefits under any long-term disability plan maintained by the Company or any Affiliate in which aParticipant participates.

"Disqualifying Disposition" has the meaning set forth in Section 14.11.

"Effective Date" shall mean the date as of which this Plan is adopted by the Board.

"Employee" means any person, including an Officer or Director, employed by the Company or an Affiliate; provided, that, forpurposes of determining eligibility to receive Incentive Stock Options, an Employee shall mean an employee of the Company or aparent or subsidiary corporation within the meaning of IRC Section 424. Mere service as a Director or payment of a director's fee bythe Company or an Affiliate shall not be sufficient to constitute "employment" by the Company or an Affiliate.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Fair Market Value" means, as of any date, the value of the Common Stock as determined below. If the Common Stock is listedon any established stock exchange or a national market system, the Fair Market Value shall be the closing price of a share of CommonStock (or if no sales were reported the closing price on the date immediately preceding such date) as quoted on such exchange orsystem on the day of determination, as reported in the Wall Street Journal or such other source as the Committee deems reliable. Inthe absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by theCommittee and such determination shall be conclusive and binding on all persons.

"Free Standing Rights" has the meaning set forth in Section 7.1(a).

"Good Reason" means: (a) If an Employee or Consultant is a party to an employment or service agreement with the Company orits Affiliates and such agreement provides for a definition of Good Reason, the definition contained therein; or (b) If no suchagreement exists or if such agreement does not define Good Reason, the occurrence of one or more of the following without theParticipant's express written consent, which circumstances are not remedied by the Company within thirty (30) days of its receipt of awritten notice from the Participant describing the applicable circumstances (which notice must be provided by the Participant withinninety (90) days of the Participant's knowledge of the applicable circumstances): (i) any material, adverse change in the Participant'sduties, responsibilities, authority, title, status or reporting structure; (ii) a material reduction in the Participant's base salary or bonusopportunity; or (iii) a geographical relocation of the Participant's principal office location by more than fifty (50) miles.

"Grant Date" means the date on which the Committee adopts a resolution, or takes other appropriate action, expressly grantingan Award to a Participant that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution, thensuch date as is set forth in such resolution.

"Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 ofthe Code.

"Incumbent Directors" means individuals who, on the Effective Date, constitute the Board, provided that any individualbecoming a Director subsequent to the Effective Date whose election or nomination for election to the Board was approved by a voteof at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement ofthe Company in which such person is named as a nominee for Director without objection to such nomination) shall be an IncumbentDirector. No individual initially elected or nominated as a director of the Company as a result of an actual or threatened electioncontest with respect to Directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any personother than the Board shall be an Incumbent Director.

"Negative Discretion" means the discretion authorized by the Plan to be applied by the Committee to eliminate or reduce the sizeof a Performance Compensation Award in accordance with Section 7.4(d)(iv) of the Plan; provided, that , the exercise of suchdiscretion would not cause the Performance Compensation Award to fail to qualify as "performance-based compensation" underSection 162(m) of the Code.

"Non-Employee Director" means a Director who is a "non-employee director" within the meaning of Rule 16b-3.

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"Non-qualified Stock Option" means an Option that by its terms does not qualify or is not intended to qualify as an IncentiveStock Option.

"Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rulesand regulations promulgated thereunder.

"Option" means an Incentive Stock Option or a Non-qualified Stock Option granted pursuant to the Plan.

"Optionholder" means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holdsan outstanding Option.

"Option Exercise Price" means the price at which a share of Common Stock may be purchased upon the exercise of an Option.

"Outside Director" means a Director who is an "outside director" within the meaning of Section 162(m) of the Code andTreasury Regulations Section 1.162-27(e)(3) or any successor to such statute and regulation.

"Participant" means an eligible person to whom an Award is granted pursuant to the Plan or, if applicable, such other personwho holds an outstanding Award.

"Performance Compensation Award" means any Award designated by the Committee as a Performance Compensation Awardpursuant to Section 7.4 of the Plan.

"Performance Criteria" means the criterion or criteria that the Committee shall select for purposes of establishing thePerformance Goal(s) for a Performance Period with respect to any Performance Compensation Award under the Plan. ThePerformance Criteria that will be used to establish the Performance Goal(s) shall be based on the attainment of specific levels ofperformance of the Company (or Affiliate, division, business unit or operational unit of the Company) and may be based on suchfactors including, but not limited to: (a) net earnings or net income (before or after taxes); (b) basic or diluted earnings per share(before or after taxes); (c) net revenue or net revenue growth; (d) gross revenue; (e) gross profit or gross profit growth; (f) netoperating profit (before or after taxes); (g) return on assets, capital, invested capital, equity, or sales; (h) cash flow (including, but notlimited to, operating cash flow, free cash flow, and cash flow return on capital); (i) earnings before or after taxes, interest, depreciationand/or amortization; (j) gross or operating margins; (k) improvements in capital structure; (l) budget and expense management; (m)productivity ratios; (n) economic value added or other value added measurements; (o) share price (including, but not limited to,growth measures and total shareholder return); (p) expense targets; (q) margins; (r) operating efficiency; (s) working capital targets; (t)enterprise value; and (v) completion of acquisitions or business expansion.

Any one or more of the Performance Criteria may be used on an absolute or relative basis to measure the performance of theCompany and/or an Affiliate as a whole or any division, business unit or operational unit of the Company and/or an Affiliate or anycombination thereof, as the Committee may deem appropriate, or as compared to the performance of a group of comparablecompanies, or published or special index that the Committee, in its sole discretion, deems appropriate, or the Committee may selectPerformance Criterion (o) above as compared to various stock market indices. The Committee also has the authority to provide foraccelerated vesting of any Award based on the achievement of Performance Goals pursuant to the Performance Criteria specified inthis paragraph. To the extent required under Section 162(m) of the Code, the Committee shall, within the first 90 days of aPerformance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), define in anobjective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period. In the event thatapplicable tax and/or securities laws change to permit the Committee discretion to alter the governing Performance Criteria withoutobtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtainingshareholder approval.

"Performance Formula" means, for a Performance Period, the one or more objective formulas applied against the relevantPerformance Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, someportion but less than all, or none of the Performance Compensation Award has been earned for the Performance Period.

"Performance Goals" means, for a Performance Period, the one or more goals established by the Committee for the PerformancePeriod based upon the Performance Criteria. The Committee is authorized at any time during the first 90 days of a Performance Period

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(or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), or at any time thereafter (but only tothe extent the exercise of such authority after such period would not cause the Performance Compensation Awards granted to anyParticipant for the Performance Period to fail to qualify as "performance-based compensation" under Section 162(m) of the Code), inits sole and absolute discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period to the extentpermitted under Section 162(m) of the Code in order to prevent the dilution or enlargement of the rights of Participants based on thefollowing events: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws,accounting principles, or other laws or regulatory rules affecting reported results; (d) any reorganization and restructuring programs;(e) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 (or any successor or pronouncementthereto) and/or in management's discussion and analysis of financial condition and results of operations appearing in the Company'sannual report to shareholders for the applicable year; (f) acquisitions or divestitures; (g) any other specific unusual or nonrecurringevents, or objectively determinable category thereof; (h) foreign exchange gains and losses; and (i) a change in the Company's fiscalyear.

"Performance Period" means the one or more periods of time in duration, as the Committee may select, over which theattainment of one or more Performance Goals will be measured for the purpose of determining a Participant's right to and the paymentof a Performance Compensation Award.

"Performance Share Award" means any Award granted pursuant to Section 7.3 hereof.

"Performance Share" means the grant of a right to receive a number of actual shares of Common Stock or share units basedupon the performance of the Company during a Performance Period, as determined by the Committee.

"Permitted Transferee" means: (a) a member of the Optionholder's immediate family (child, stepchild, grandchild, parent,stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,brother-in-law, or sister-in-law, including adoptive relationships), any person sharing the Optionholder's household (other than atenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons(or the Optionholder) control the management of assets, and any other entity in which these persons (or the Optionholder) own morethan 50% of the voting interests; (b) third parties designated by the Committee in connection with a program established and approvedby the Committee pursuant to which Participants may receive a cash payment or other consideration in consideration for the transferof a Non-qualified Stock Option; and (c) such other transferees as may be permitted by the Committee in its sole discretion.

"Plan" means this One Horizon Group, Inc. 2013 Equity Incentive Plan, as amended and/or amended and restated from time totime.

"Related Rights" has the meaning set forth in Section 7.1(a) .

"Restricted Award" means any Award granted pursuant to Section 7.2(a) .

"Restricted Period" has the meaning set forth in Section 7.2(a) .

"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time totime.

"Securities Act" means the Securities Act of 1933, as amended.

"Stock Appreciation Right" means the right pursuant to an Award granted under Section 7.1 to receive, upon exercise, anamount payable in cash or shares equal to the number of shares subject to the Stock Appreciation Right that is being exercisedmultiplied by the excess of (a) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (b) theexercise price specified in the Stock Appreciation Right Award Agreement.

"Stock for Stock Exchange" has the meaning set forth in Section 6.2.

"Ten Percent Shareholder" means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stockpossessing more than 10% of the total combined voting power of all classes of stock of the Company or of any of its Affiliates.

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3. Administration.

3.1 Authority of Committee. The Plan shall be administered by the Committee or, in the Board's sole discretion, by the Board.Subject to the terms of the Plan, the Committee's charter and Applicable Laws, and in addition to other express powers andauthorization conferred by the Plan, the Committee shall have the authority:

(a) to construe and interpret the Plan and apply its provisions;

(b) to promulgate, amend, and rescind rules and regulations relating to the administration of the Plan;

(c) to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of thePlan;

(d) to delegate its authority to one or more Officers of the Company with respect to Awards that do not involve CoveredEmployees or "insiders" within the meaning of Section 16 of the Exchange Act;

(e) to determine when Awards are to be granted under the Plan and the applicable Grant Date;

(f) from time to time to select, subject to the limitations set forth in this Plan, those Participants to whom Awards shall begranted;

(g) to determine the number of shares of Common Stock to be made subject to each Award;

(h) to determine whether each Option is to be an Incentive Stock Option or a Non-qualified Stock Option;

(i) to prescribe the terms and conditions of each Award, including, without limitation, the exercise price and medium ofpayment and vesting provisions, and to specify the provisions of the Award Agreement relating to such grant;

(j) to determine the target number of Performance Shares to be granted pursuant to a Performance Share Award, theperformance measures that will be used to establish the performance goals, the performance period(s) and the number of PerformanceShares earned by a Participant;

(k) to designate an Award (including a cash bonus) as a Performance Compensation Award and to select the PerformanceCriteria that will be used to establish the Performance Goals;

(l) to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term ofany outstanding Award; provided, however, that if any such amendment impairs a Participant's rights or increases a Participant'sobligations under his or her Award or creates or increases a Participant's federal income tax liability with respect to an Award, suchamendment shall also be subject to the Participant's consent;

(m) to determine the duration and purpose of leaves of absences which may be granted to a Participant withoutconstituting termination of their employment for purposes of the Plan, which periods shall be no shorter than the periods generallyapplicable to Employees under the Company's employment policies;

(n) to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate controlor an event that triggers anti-dilution adjustments;

(o) to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Planand any instrument or agreement relating to, or Award granted under, the Plan; and

(p) to exercise discretion to make any and all other determinations which it determines to be necessary or advisable for theadministration of the Plan.

The Committee also may modify the purchase price or the exercise price of any outstanding Award, provided that if themodification effects a repricing, shareholder approval shall be required before the repricing is effective.

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3.2 Committee Decisions Final. All decisions made by the Committee pursuant to the provisions of the Plan shall be final andbinding on the Company and the Participants, unless such decisions are determined by a court having jurisdiction to be arbitrary andcapricious.

3.3 Delegation. The Committee, or if no Committee has been appointed, the Board, may delegate administration of the Plan to acommittee or committees of one or more members of the Board, and the term "Committee" shall apply to any person or persons towhom such authority has been delegated. The Committee shall have the power to delegate to a subcommittee any of the administrativepowers the Committee is authorized to exercise (and references in this Plan to the Board or the Committee shall thereafter be to thecommittee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adoptedfrom time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of thePlan. The members of the Committee shall be appointed by and serve at the pleasure of the Board. From time to time, the Board mayincrease or decrease the size of the Committee, add additional members to, remove members (with or without cause) from, appointnew members in substitution therefor, and fill vacancies, however caused, in the Committee. The Committee shall act pursuant to avote of the majority of its members or, in the case of a Committee comprised of only two members, the unanimous consent of itsmembers, whether present or not, or by the written consent of the majority of its members and minutes shall be kept of all of itsmeetings and copies thereof shall be provided to the Board. Subject to the limitations prescribed by the Plan and the Board, theCommittee may establish and follow such rules and regulations for the conduct of its business as it may determine to be advisable.

3.4 Committee Composition. Except as otherwise determined by the Board, the Committee shall consist solely of two or more Non-Employee Directors who are also Outside Directors. The Board shall have discretion to determine whether or not it intends to complywith the exemption requirements of Rule 16b-3 and/or Section 162(m) of the Code. However, if the Board intends to satisfy suchexemption requirements, with respect to Awards to any Covered Employee and with respect to any insider subject to Section 16 of theExchange Act, the Committee shall be a compensation committee of the Board that at all times consists solely of two or more Non-Employee Directors who are also Outside Directors. Within the scope of such authority, the Board or the Committee may (a) delegateto a committee of one or more members of the Board who are not Outside Directors the authority to grant Awards to eligible personswho are either (i) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of incomeresulting from such Award or (ii) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Codeor (b) delegate to a committee of one or more members of the Board who are not Non-Employee Directors the authority to grantAwards to eligible persons who are not then subject to Section 16 of the Exchange Act. Nothing herein shall create an inference thatan Award is not validly granted under the Plan in the event Awards are granted under the Plan by a compensation committee of theBoard that does not at all times consist solely of two or more Non-Employee Directors who are also Outside Directors.

3.5 Indemnification. In addition to such other rights of indemnification as they may have as Directors or members of theCommittee, and to the extent allowed by Applicable Laws, the Committee shall be indemnified by the Company against thereasonable expenses, including attorney's fees, actually incurred in connection with any action, suit or proceeding or in connectionwith any appeal therein, to which the Committee may be party by reason of any action taken or failure to act under or in connectionwith the Plan or any Award granted under the Plan, and against all amounts paid by the Committee in settlement thereof ( provided,however , that the settlement has been approved by the Board, which approval shall not be unreasonably withheld) or paid by theCommittee in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall beadjudged in such action, suit or proceeding that such Committee did not act in good faith and in a manner which such personreasonably believed to be in the best interests of the Company, or in the case of a criminal proceeding, had no reason to believe thatthe conduct complained of was unlawful; provided, however , that within 60 days after institution of any such action, suit orproceeding, such Committee shall, in writing, offer the Company the opportunity at its own expense to handle and defend such action,suit or proceeding.

4. Shares Subject to the Plan.

4.1 Subject to adjustment in accordance with Section 11, the number of Shares available for granting Awards under the Planshall be a total of (A) 1,800,000,000, plus (B) additional Shares as follows: As of January 1 of each year, commencing with the year2014 and ending with the year 2016, the aggregate number of Shares available for granting Awards under the Plan shall automaticallyincrease by a number of Shares equal to the lesser of (x) 5% of the total number of Shares then outstanding or (y) 600,000,000;provided that, no more than 1,800,000,000, shares of Common Stock may be granted as Incentive Stock Options. During the terms ofthe Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Awards.

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4.2 Shares of Common Stock available for distribution under the Plan may consist, in whole or in part, of authorized andunissued shares, treasury shares or shares reacquired by the Company in any manner.

4.3 Subject to adjustment in accordance with Section 11, no Participant shall be granted, during any one (1) year period, Optionsto purchase Common Stock and Stock Appreciation Rights with respect to more than 600,000,000 shares of Common Stock in theaggregate or any other Awards with respect to more than 600,000,000 shares of Common Stock in the aggregate. If an Award is to besettled in cash, the number of shares of Common Stock on which the Award is based shall count toward the individual share limit setforth in this Section 4.

4.4 Any shares of Common Stock subject to an Award that is canceled, forfeited or expires prior to exercise or realization, eitherin full or in part, shall again become available for issuance under the Plan. Notwithstanding anything to the contrary contained herein:shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such shares are(a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company to satisfy any tax withholdingobligation, or (c) shares covered by a stock-settled Stock Appreciation Right or other Awards that were not issued upon the settlementof the Award.

5. Eligibility.

5.1 Eligibility for Specific Awards. Incentive Stock Options may be granted only to Employees. Awards other than IncentiveStock Options may be granted to Employees, Consultants and Directors and those individuals whom the Committee determines arereasonably expected to become Employees, Consultants and Directors following the Grant Date.

5.2 Ten Percent Shareholders. A Ten Percent Shareholder shall not be granted an Incentive Stock Option unless the OptionExercise Price is at least 110% of the Fair Market Value of the Common Stock at the Grant Date and the Option is not exercisableafter the expiration of five years from the Grant Date.

6. Option Provisions. Each Option granted under the Plan shall be evidenced by an Award Agreement. Each Option so granted shallbe subject to the conditions set forth in this Section 6, and to such other conditions not inconsistent with the Plan as may be reflectedin the applicable Award Agreement. All Options shall be separately designated Incentive Stock Options or Non-qualified StockOptions at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of CommonStock purchased on exercise of each type of Option. Notwithstanding the foregoing, the Company shall have no liability to anyParticipant or any other person if an Option designated as an Incentive Stock Option fails to qualify as such at any time or if an Optionis determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A of the Code and the terms ofsuch Option do not satisfy the requirements of Section 409A of the Code. The provisions of separate Options need not be identical, buteach Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each ofthe following provisions:

6.1 Term. Subject to the provisions of Section 5.1 regarding Ten Percent Shareholders, no Incentive Stock Option shall beexercisable after the expiration of 10 years from the Grant Date. The term of a Non-qualified Stock Option granted under the Planshall be determined by the Committee; provided, however, no Non-qualified Stock Option shall be exercisable after the expiration of10 years from the Grant Date.

6.2 Exercise Price of An Incentive Stock Option. Subject to the provisions of Section 5.2 regarding Ten Percent Shareholders,the Option Exercise Price of each Incentive Stock Option shall be not less than 100% of the Fair Market Value of the Common Stocksubject to the Option on the Grant Date. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an OptionExercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitutionfor another option in a manner satisfying the provisions of Section 424(a) of the Code.

6.3 Consideration. The Option Exercise Price of Common Stock acquired pursuant to an Option shall be paid, to the extentpermitted by applicable statutes and regulations, either (a) in cash or by certified or bank check at the time the Option is exercised or(b) in the discretion of the Committee, upon such terms as the Committee shall approve, the Option Exercise Price may be paid: (i) bydelivery to the Company of other Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date ofdelivery equal to the Option Exercise Price (or portion thereof) due for the number of shares being acquired, or by means of attestationwhereby the Participant identifies for delivery specific shares of Common Stock that have an aggregate Fair Market Value on the dateof attestation equal to the Option Exercise Price (or portion thereof) and receives a number of shares of Common Stock equal to the

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difference between the number of shares thereby purchased and the number of identified attestation shares of Common Stock (a"Stock for Stock Exchange"); (ii) a "cashless" exercise program established with a broker; (iii) by reduction in the number of sharesof Common Stock otherwise deliverable upon exercise of such Option with a Fair Market Value equal to the aggregate OptionExercise Price at the time of exercise; (iv) any combination of the foregoing methods; or (v) in any other form of legal considerationthat may be acceptable to the Committee. Unless otherwise specifically provided in the Option, the exercise price of Common Stockacquired pursuant to an Option that is paid by delivery (or attestation) to the Company of other Common Stock acquired, directly orindirectly from the Company, shall be paid only by shares of the Common Stock of the Company that have been held for more thansix months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes).Notwithstanding the foregoing, during any period for which the Common Stock is publicly traded (i.e., the Common Stock is listed onany established stock exchange or a national market system) an exercise by a Director or Officer that involves or may involve a director indirect extension of credit or arrangement of an extension of credit by the Company, directly or indirectly, in violation of Section402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with respect to any Award under this Plan.

6.4 Transferability of An Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by thelaws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder.Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to theCompany, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

6.5 Transferability of a Non-qualified Stock Option. A Non-qualified Stock Option may, in the sole discretion of the Committee,be transferable to a Permitted Transferee, upon written approval by the Committee to the extent provided in the Award Agreement. Ifthe Non-qualified Stock Option does not provide for transferability, then the Non-qualified Stock Option shall not be transferableexcept by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by theOptionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a formsatisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled toexercise the Option.

6.6 Vesting of Options. Each Option may, but need not, vest and therefore become exercisable in periodic installments that may,but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised(which may be based on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individualOptions may vary. No Option may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not berequired to, provide for an acceleration of vesting and exercisability in the terms of any Award Agreement upon the occurrence of aspecified event.

6.7 Termination of Continuous Service. Unless otherwise provided in an Award Agreement or in an employment agreement theterms of which have been approved by the Committee, in the event an Optionholder's Continuous Service terminates (other than uponthe Optionholder's death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder wasentitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (a) the datethree months following the termination of the Optionholder's Continuous Service or (b) the expiration of the term of the Option as setforth in the Award Agreement; provided that , if the termination of Continuous Service is by the Company for Cause, all outstandingOptions (whether or not vested) shall immediately terminate and cease to be exercisable. If, after termination, the Optionholder doesnot exercise his or her Option within the time specified in the Award Agreement, the Option shall terminate.

6.8 Extension of Termination Date. An Optionholder's Award Agreement may also provide that if the exercise of the Optionfollowing the termination of the Optionholder's Continuous Service for any reason would be prohibited at any time because theissuance of shares of Common Stock would violate the registration requirements under the Securities Act or any other state or federalsecurities law or the rules of any securities exchange or interdealer quotation system, then the Option shall terminate on the earlier of(a) the expiration of the term of the Option in accordance with Section 6.1 or (b) the expiration of a period after termination of theParticipant's Continuous Service that is three months after the end of the period during which the exercise of the Option would be inviolation of such registration or other securities law requirements.

6.9 Disability of Optionholder. Unless otherwise provided in an Award Agreement, in the event that an Optionholder'sContinuous Service terminates as a result of the Optionholder's Disability, the Optionholder may exercise his or her Option (to theextent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of timeending on the earlier of (a) the date that is 12 months following such termination or (b) the expiration of the term of the Option as set

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forth in the Award Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specifiedherein or in the Award Agreement, the Option shall terminate.

6.10 Death of Optionholder. Unless otherwise provided in an Award Agreement, in the event an Optionholder's ContinuousService terminates as a result of the Optionholder's death, then the Option may be exercised (to the extent the Optionholder wasentitled to exercise such Option as of the date of death) by the Optionholder's estate, by a person who acquired the right to exercise theOption by bequest or inheritance or by a person designated to exercise the Option upon the Optionholder's death, but only within theperiod ending on the earlier of (a) the date 12 months following the date of death or (b) the expiration of the term of such Option as setforth in the Award Agreement. If, after the Optionholder's death, the Option is not exercised within the time specified herein or in theAward Agreement, the Option shall terminate.

6.11 Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time ofgrant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder duringany calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, the Options or portions thereof which exceedsuch limit (according to the order in which they were granted) shall be treated as Non-qualified Stock Options.

7. Provisions of Awards Other Than Options.

7.1 Stock Appreciation Rights.

(a) General

Each Stock Appreciation Right granted under the Plan shall be evidenced by an Award Agreement. Each StockAppreciation Right so granted shall be subject to the conditions set forth in this Section 7.1, and to such other conditions notinconsistent with the Plan as may be reflected in the applicable Award Agreement. Stock Appreciation Rights may be granted alone("Free Standing Rights") or in tandem with an Option granted under the Plan ("Related Rights").

(b) Grant Requirements

Any Related Right that relates to a Non-qualified Stock Option may be granted at the same time the Option isgranted or at any time thereafter but before the exercise or expiration of the Option. Any Related Right that relates to an IncentiveStock Option must be granted at the same time the Incentive Stock Option is granted.

(c) Term of Stock Appreciation Rights

The term of a Stock Appreciation Right granted under the Plan shall be determined by the Committee; provided,however , no Stock Appreciation Right shall be exercisable later than the tenth anniversary of the Grant Date.

(d) Vesting of Stock Appreciation Rights

Each Stock Appreciation Right may, but need not, vest and therefore become exercisable in periodic installmentsthat may, but need not, be equal. The Stock Appreciation Right may be subject to such other terms and conditions on the time or timeswhen it may be exercised as the Committee may deem appropriate. The vesting provisions of individual Stock Appreciation Rightsmay vary. No Stock Appreciation Right may be exercised for a fraction of a share of Common Stock. The Committee may, but shallnot be required to, provide for an acceleration of vesting and exercisability in the terms of any Stock Appreciation Right upon theoccurrence of a specified event.

(e) Exercise and Payment

Upon exercise of a Stock Appreciation Right, the holder shall be entitled to receive from the Company an amountequal to the number of shares of Common Stock subject to the Stock Appreciation Right that is being exercised multiplied by theexcess of (i) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (ii) the exercise pricespecified in the Stock Appreciation Right or related Option. Payment with respect to the exercise of a Stock Appreciation Right shallbe made on the date of exercise. Payment shall be made in the form of shares of Common Stock (with or without restrictions as to

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substantial risk of forfeiture and transferability, as determined by the Committee in its sole discretion), cash or a combination thereof,as determined by the Committee.

(f) Exercise Price

The exercise price of a Free Standing Stock Appreciation Right shall be determined by the Committee, but shall notbe less than 100% of the Fair Market Value of one share of Common Stock on the Grant Date of such Stock Appreciation Right. ARelated Right granted simultaneously with or subsequent to the grant of an Option and in conjunction therewith or in the alternativethereto shall have the same exercise price as the related Option, shall be transferable only upon the same terms and conditions as therelated Option, and shall be exercisable only to the same extent as the related Option; provided, however, that a Stock AppreciationRight, by its terms, shall be exercisable only when the Fair Market Value per share of Common Stock subject to the StockAppreciation Right and related Option exceeds the exercise price per share thereof and no Stock Appreciation Rights may be grantedin tandem with an Option unless the Committee determines that the requirements of Section 7.1(b) are satisfied.

(g) Reduction in the Underlying Option Shares

Upon any exercise of a Related Right, the number of shares of Common Stock for which any related Option shall beexercisable shall be reduced by the number of shares for which the Stock Appreciation Right has been exercised. The number ofshares of Common Stock for which a Related Right shall be exercisable shall be reduced upon any exercise of any related Option bythe number of shares of Common Stock for which such Option has been exercised.

7.2 Restricted Awards.

(a) General

A Restricted Award is an Award of actual shares of Common Stock ("Restricted Stock") or hypothetical CommonStock units ("Restricted Stock Units") having a value equal to the Fair Market Value of an identical number of shares of CommonStock, which may, but need not, provide that such Restricted Award may not be sold, assigned, transferred or otherwise disposed of,pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose for suchperiod (the "Restricted Period") as the Committee shall determine. Each Restricted Award granted under the Plan shall be evidencedby an Award Agreement. Each Restricted Award so granted shall be subject to the conditions set forth in this Section 7.2, and to suchother conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.

(b) Restricted Stock and Restricted Stock Units

(i) Each Participant granted Restricted Stock shall execute and deliver to the Company an Award Agreement with respectto the Restricted Stock setting forth the restrictions and other terms and conditions applicable to such Restricted Stock.If the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than deliveredto the Participant pending the release of the applicable restrictions, the Committee may require the Participant toadditionally execute and deliver to the Company (A) an escrow agreement satisfactory to the Committee, if applicableand (B) the appropriate blank stock power with respect to the Restricted Stock covered by such agreement. If aParticipant fails to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrowagreement and stock power, the Award shall be null and void. Subject to the restrictions set forth in the Award, theParticipant generally shall have the rights and privileges of a shareholder as to such Restricted Stock, including theright to vote such Restricted Stock and the right to receive dividends; provided that , any cash dividends and stockdividends with respect to the Restricted Stock shall be withheld by the Company for the Participant's account, andinterest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms asdetermined by the Committee. The cash dividends or stock dividends so withheld by the Committee and attributableto any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed to the Participant incash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to theamount of such dividends, if applicable, upon the release of restrictions on such share and, if such share is forfeited,the Participant shall have no right to such dividends.

(ii) The terms and conditions of a grant of Restricted Stock Units shall be reflected in an Award Agreement. No shares ofCommon Stock shall be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to

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set aside a fund for the payment of any such Award. A Participant shall have no voting rights with respect to anyRestricted Stock Units granted hereunder. At the discretion of the Committee, each Restricted Stock Unit(representing one share of Common Stock) may be credited with cash and stock dividends paid by the Company inrespect of one share of Common Stock ("Dividend Equivalents"). Dividend Equivalents shall be withheld by theCompany for the Participant's account, and interest may be credited on the amount of cash Dividend Equivalentswithheld at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to aParticipant's account and attributable to any particular Restricted Stock Unit (and earnings thereon, if applicable) shallbe distributed in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Valueequal to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement ofsuch Restricted Stock Unit and, if such Restricted Stock Unit is forfeited, the Participant shall have no right to suchDividend Equivalents.

(c) Restrictions

(i) Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of theRestricted Period, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (A)if an escrow arrangement is used, the Participant shall not be entitled to delivery of the stock certificate; (B) the sharesshall be subject to the restrictions on transferability set forth in the Award Agreement; (C) the shares shall be subjectto forfeiture to the extent provided in the applicable Award Agreement; and (D) to the extent such shares are forfeited,the stock certificates shall be returned to the Company, and all rights of the Participant to such shares and as ashareholder with respect to such shares shall terminate without further obligation on the part of the Company.

(ii) Restricted Stock Units awarded to any Participant shall be subject to (A) forfeiture until the expiration of theRestricted Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided inthe applicable Award Agreement, and to the extent such Restricted Stock Units are forfeited, all rights of theParticipant to such Restricted Stock Units shall terminate without further obligation on the part of the Company and(B) such other terms and conditions as may be set forth in the applicable Award Agreement.

(iii) The Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock and RestrictedStock Units whenever it may determine that, by reason of changes in Applicable Laws or other changes incircumstances arising after the date the Restricted Stock or Restricted Stock Units are granted, such action isappropriate.

(d) Restricted Period

With respect to Restricted Awards, the Restricted Period shall commence on the Grant Date and end at the time ortimes set forth on a schedule established by the Committee in the applicable Award Agreement. No Restricted Award may be grantedor settled for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration ofvesting in the terms of any Award Agreement upon the occurrence of a specified event.

(e) Delivery of Restricted Stock and Settlement of Restricted Stock Units

Upon the expiration of the Restricted Period with respect to any shares of Restricted Stock, the restrictions set forthin Section 7.2(c) and the applicable Award Agreement shall be of no further force or effect with respect to such shares, except as setforth in the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company shall deliver to theParticipant, or his or her beneficiary, without charge, the stock certificate evidencing the shares of Restricted Stock which have notthen been forfeited and with respect to which the Restricted Period has expired (to the nearest full share) and any cash dividends orstock dividends credited to the Participant's account with respect to such Restricted Stock and the interest thereon, if any. Upon theexpiration of the Restricted Period with respect to any outstanding Restricted Stock Units, the Company shall deliver to theParticipant, or his or her beneficiary, without charge, one share of Common Stock for each such outstanding Restricted Stock Unit("Vested Unit") and cash equal to any Dividend Equivalents credited with respect to each such Vested Unit in accordance withSection 7.2(b)(ii) hereof and the interest thereon or, at the discretion of the Committee, in shares of Common Stock having a FairMarket Value equal to such Dividend Equivalents and the interest thereon, if any; provided, however, that, if explicitly provided in theapplicable Award Agreement, the Committee may, in its sole discretion, elect to pay cash or part cash and part Common Stock in lieuof delivering only shares of Common Stock for Vested Units. If a cash payment is made in lieu of delivering shares of Common

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Stock, the amount of such payment shall be equal to the Fair Market Value of the Common Stock as of the date on which theRestricted Period lapsed with respect to each Vested Unit.

(f) Stock Restrictions

Each certificate representing Restricted Stock awarded under the Plan shall bear a legend in such form as theCompany deems appropriate.

7.3 Performance Share Awards.

(a) Grant of Performance Share Awards

Each Performance Share Award granted under the Plan shall be evidenced by an Award Agreement. EachPerformance Share Award so granted shall be subject to the conditions set forth in this Section 7.3, and to such other conditions notinconsistent with the Plan as may be reflected in the applicable Award Agreement. The Committee shall have the discretion todetermine: (i) the number of shares of Common Stock or stock-denominated units subject to a Performance Share Award granted toany Participant; (ii) the performance period applicable to any Award; (iii) the conditions that must be satisfied for a Participant to earnan Award; and (iv) the other terms, conditions and restrictions of the Award.

(b) Earning Performance Share Awards

The number of Performance Shares earned by a Participant will depend on the extent to which the performancegoals established by the Committee are attained within the applicable Performance Period, as determined by the Committee. Nopayout shall be made with respect to any Performance Share Award except upon written certification by the Committee that theminimum threshold performance goal(s) have been achieved.

7.4 Performance Compensation Awards.

(a) General

The Committee shall have the authority, at the time of grant of any Award described in this Plan (other than Optionsand Stock Appreciation Rights granted with an exercise price equal to or greater than the Fair Market Value per share of CommonStock on the Grant Date), to designate such Award as a Performance Compensation Award in order to qualify such Award as"performance-based compensation" under Section 162(m) of the Code. In addition, the Committee shall have the authority to make anAward of a cash bonus to any Participant and designate such Award as a Performance Compensation Award in order to qualify suchAward as "performance-based compensation" under Section 162(m) of the Code.

(b) Eligibility

The Committee will, in its sole discretion, designate within the first 90 days of a Performance Period (or, if longer orshorter, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receivePerformance Compensation Awards in respect of such Performance Period. However, designation of a Participant eligible to receivean Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive payment in respect of anyPerformance Compensation Award for such Performance Period. The determination as to whether or not such Participant becomesentitled to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions ofthis Section 7.4. Moreover, designation of a Participant eligible to receive an Award hereunder for a particular Performance Periodshall not require designation of such Participant eligible to receive an Award hereunder in any subsequent Performance Period anddesignation of one person as a Participant eligible to receive an Award hereunder shall not require designation of any other person as aParticipant eligible to receive an Award hereunder in such period or in any other period.

(c) Discretion of Committee with Respect to Performance Compensation Awards

With regard to a particular Performance Period, the Committee shall have full discretion to select the length of suchPerformance Period (provided any such Performance Period shall be not less than one fiscal quarter in duration), the type(s) ofPerformance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the

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kind(s) and/or level(s) of the Performance Goal(s) that is (are) to apply to the Company and the Performance Formula. Within the first90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), theCommittee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise itsdiscretion with respect to each of the matters enumerated in the immediately preceding sentence of this Section 7.4(c) and record thesame in writing.

(d) Payment of Performance Compensation Awards

(i) Condition to Receipt of PaymentUnless otherwise provided in the applicable Award Agreement, a Participant must be employed by theCompany on the last day of a Performance Period to be eligible for payment in respect of a PerformanceCompensation Award for such Performance Period.

(ii) LimitationA Participant shall be eligible to receive payment in respect of a Performance Compensation Award onlyto the extent that: (A) the Performance Goals for such period are achieved; and (B) the PerformanceFormula as applied against such Performance Goals determines that all or some portion of suchParticipant's Performance Compensation Award has been earned for the Performance Period.

(iii) CertificationFollowing the completion of a Performance Period, the Committee shall review and certify in writingwhether, and to what extent, the Performance Goals for the Performance Period have been achieved and,if so, calculate and certify in writing the amount of the Performance Compensation Awards earned forthe period based upon the Performance Formula. The Committee shall then determine the actual size ofeach Participant's Performance Compensation Award for the Performance Period and, in so doing, mayapply Negative Discretion in accordance with Section 7.4(d)(iv) hereof, if and when it deemsappropriate.

(iv) Use of DiscretionIn determining the actual size of an individual Performance Compensation Award for a PerformancePeriod, the Committee may reduce or eliminate the amount of the Performance Compensation Awardearned under the Performance Formula in the Performance Period through the use of Negative Discretionif, in its sole judgment, such reduction or elimination is appropriate. The Committee shall not have thediscretion to (A) grant or provide payment in respect of Performance Compensation Awards for aPerformance Period if the Performance Goals for such Performance Period have not been attained or (B)increase a Performance Compensation Award above the maximum amount payable under Section7.4(d)(vi) of the Plan.

(v) Timing of Award PaymentsPerformance Compensation Awards granted for a Performance Period shall be paid to Participants assoon as administratively practicable following completion of the certifications required by this Section7.4 but in no event later than 2 1/2 months following the end of the calendar year during which thePerformance Period is completed.

(vi) Maximum Award PayableNotwithstanding any provision contained in this Plan to the contrary, the maximum PerformanceCompensation Award payable to any one Participant under the Plan for a Performance Period (excludingany Options and Stock Appreciation Rights) is 600,000,000 shares of Common Stock, subject toadjustment in accordance with Section 11 , or, in the event such Performance Compensation Award ispaid in cash, the equivalent cash value thereof on the first or last day of the Performance Period to whichsuch Award relates, as determined by the Committee. The maximum amount that can be paid in anycalendar year to any Participant pursuant to a cash bonus Award described in the last sentence of Section7.4(a) shall be $5,000,000. Furthermore, any Performance Compensation Award that has been deferredshall not (between the date as of which the Award is deferred and the payment date) increase (A) withrespect to a Performance Compensation Award that is payable in cash, by a measuring factor for each

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fiscal year greater than a reasonable rate of interest set by the Committee or (B) with respect to aPerformance Compensation Award that is payable in shares of Common Stock, by an amount greaterthan the appreciation of a share of Common Stock from the date such Award is deferred to the paymentdate.

8. Securities Law Compliance. Each Award Agreement shall provide that no shares of Common Stock shall be purchased or soldthereunder unless and until (a) any then applicable requirements of state or federal laws and regulatory agencies have been fullycomplied with to the satisfaction of the Company and its counsel and (b) if required to do so by the Company, the Participant hasexecuted and delivered to the Company a letter of investment intent in such form and containing such provisions as the Committeemay require. The Company shall use reasonable efforts to seek to obtain from each regulatory commission or agency havingjurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell shares of Common Stock uponexercise of the Awards; provided, however , that this undertaking shall not require the Company to register under the Securities Actthe Plan, any Award or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts, the Company isunable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary forthe lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue andsell Common Stock upon exercise of such Awards unless and until such authority is obtained.

9. Use of Proceeds from Stock. Proceeds from the sale of Common Stock pursuant to Awards, or upon exercise thereof, shallconstitute general funds of the Company.

10. Miscellaneous.

10.1 Acceleration of Exercisability and Vesting. The Committee shall have the power to accelerate the time at which an Awardmay first be exercised or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstandingthe provisions in the Award stating the time at which it may first be exercised or the time during which it will vest.

10.2 Shareholder Rights. Except as provided in the Plan or an Award Agreement, no Participant shall be deemed to be the holderof, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until suchParticipant has satisfied all requirements for exercise of the Award pursuant to its terms and no adjustment shall be made for dividends(ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date isprior to the date such Common Stock certificate is issued, except as provided in Section 11 hereof.

10.3 No Employment or Other Service Rights. Nothing in the Plan or any instrument executed or Award granted pursuantthereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the timethe Award was granted or shall affect the right of the Company or an Affiliate to terminate (a) the employment of an Employee withor without notice and with or without Cause or (b) the service of a Director pursuant to the By-laws of the Company or an Affiliate,and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case maybe.

10.4 Transfer; Approved Leave of Absence. For purposes of the Plan, no termination of employment by an Employee shall bedeemed to result from either (a) a transfer to the employment of the Company from an Affiliate or from the Company to an Affiliate,or from one Affiliate to another, or (b) an approved leave of absence for military service or sickness, or for any other purposeapproved by the Company, if the Employee's right to reemployment is guaranteed either by a statute or by contract or under the policypursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing, in either case, except to theextent inconsistent with Section 409A of the Code if the applicable Award is subject thereto.

10.5 Withholding Obligations. To the extent provided by the terms of an Award Agreement and subject to the discretion of theCommittee, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition ofCommon Stock under an Award by any of the following means (in addition to the Company's right to withhold from anycompensation paid to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b)authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to theParticipant as a result of the exercise or acquisition of Common Stock under the Award, provided, however, that no shares of CommonStock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (c) delivering to theCompany previously owned and unencumbered shares of Common Stock of the Company.

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11. Adjustments Upon Changes in Stock. In the event of changes in the outstanding Common Stock or in the capital structure of theCompany by reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transactionsuch as any recapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalizationoccurring after the Grant Date of any Award, Awards granted under the Plan and any Award Agreements, the exercise price ofOptions and Stock Appreciation Rights, the maximum number of shares of Common Stock subject to all Awards stated in Section 4and the maximum number of shares of Common Stock with respect to which any one person may be granted Awards during anyperiod stated in Section 4 and Section 7.4(d)(vi) will be equitably adjusted or substituted, as to the number, price or kind of a share ofCommon Stock or other consideration subject to such Awards to the extent necessary to preserve the economic intent of such Award.In the case of adjustments made pursuant to this Section 11, unless the Committee specifically determines that such adjustment is inthe best interests of the Company or its Affiliates, the Committee shall, in the case of Incentive Stock Options, ensure that anyadjustments under this Section 11 will not constitute a modification, extension or renewal of the Incentive Stock Options within themeaning of Section 424(h)(3) of the Code and in the case of Non-qualified Stock Options, ensure that any adjustments under thisSection 11 will not constitute a modification of such Non-qualified Stock Options within the meaning of Section 409A of the Code.Any adjustments made under this Section 11 shall be made in a manner which does not adversely affect the exemption providedpursuant to Rule 16b-3 under the Exchange Act. Further, with respect to Awards intended to qualify as "performance-basedcompensation" under Section 162(m) of the Code, any adjustments or substitutions will not cause the Company to be denied a taxdeduction on account of Section 162(m) of the Code. The Company shall give each Participant notice of an adjustment hereunder and,upon notice, such adjustment shall be conclusive and binding for all purposes.

12. Effect of Change in Control.

12.1 Unless otherwise provided in an Award Agreement, notwithstanding any provision of the Plan to the contrary:

(a) In the event of a Change in Control, all Options and Stock Appreciation Rights shall become immediately exercisablewith respect to 100% of the shares subject to such Options or Stock Appreciation Rights, and/or the Restricted Period shall expireimmediately with respect to 100% of the shares of Restricted Stock or Restricted Stock Units.

(b) With respect to Performance Compensation Awards, in the event of a Change in Control, all Performance Goals orother vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions will be deemed met.

To the extent practicable, any actions taken by the Committee under the immediately preceding clauses (a) and (b) shalloccur in a manner and at a time which allows affected Participants the ability to participate in the Change in Control with respect tothe shares of Common Stock subject to their Awards.

12.2 In addition, in the event of a Change in Control, the Committee may in its discretion and upon at least 10 days' advancenotice to the affected persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combinationthereof, the value of such Awards based upon the price per share of Common Stock received or to be received by other shareholders ofthe Company in the event. In the case of any Option or Stock Appreciation Right with an exercise price (or SAR Exercise Price in thecase of a Stock Appreciation Right) that equals or exceeds the price paid for a share of Common Stock in connection with the Changein Control, the Committee may cancel the Option or Stock Appreciation Right without the payment of consideration therefor.

12.3 The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resultingfrom the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeedingto all or substantially all of the assets and business of the Company and its Affiliates, taken as a whole.

13. Amendment of the Plan and Awards.

13.1 Amendment of Plan. The Board at any time, and from time to time, may amend or terminate the Plan. However, except asprovided in Section 11 relating to adjustments upon changes in Common Stock and Section 13.2, no amendment shall be effectiveunless approved by the shareholders of the Company to the extent shareholder approval is necessary to satisfy any Applicable Laws.At the time of such amendment, the Board shall determine, upon advice from counsel, whether such amendment will be contingent onshareholder approval.

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13.2 Shareholder Approval. The Board may, in its sole discretion, submit any other amendment to the Plan for shareholderapproval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code andthe regulations thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility ofcompensation paid to certain executive officers.

13.3 Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Boarddeems necessary or advisable to provide eligible Employees, Consultants and Directors with the maximum benefits provided or to beprovided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options or to thenonqualified deferred compensation provisions of Section 409A of the Code and/or to bring the Plan and/or Awards granted under itinto compliance therewith.

13.4 No Impairment of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by anyamendment of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.

13.5 Amendment of Awards. The Committee at any time, and from time to time, may amend the terms of any one or moreAwards; provided, however , that the Committee may not affect any amendment which would otherwise constitute an impairment ofthe rights under any Award unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.

14. General Provisions.

14.1 Forfeiture Events. The Committee may specify in an Award Agreement that the Participant's rights, payments and benefitswith respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events, inaddition to applicable vesting conditions of an Award. Such events may include, without limitation, breach of non-competition, non-solicitation, confidentiality, or other restrictive covenants that are contained in the Award Agreement or otherwise applicable to theParticipant, a termination of the Participant's Continuous Service for Cause, or other conduct by the Participant that is detrimental tothe business or reputation of the Company and/or its Affiliates.

14.2 Clawback . Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law,government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required tobe made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Companypursuant to any such law, government regulation or stock exchange listing requirement).

14.3 Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Board from adopting other oradditional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may beeither generally applicable or applicable only in specific cases.

14.4 Sub-plans. The Committee may from time to time establish sub-plans under the Plan for purposes of satisfying blue sky,securities, tax or other laws of various jurisdictions in which the Company intends to grant Awards. Any sub-plans shall contain suchlimitations and other terms and conditions as the Committee determines are necessary or desirable. All sub-plans shall be deemed apart of the Plan, but each sub-plan shall apply only to the Participants in the jurisdiction for which the sub-plan was designed.

14.5 Unfunded Plan. The Plan shall be unfunded. Neither the Company, the Board nor the Committee shall be required toestablish any special or separate fund or to segregate any assets to assure the performance of its obligations under the Plan.

14.6 Recapitalizations. Each Award Agreement shall contain provisions required to reflect the provisions of Section 11 .

14.7 Delivery. Upon exercise of a right granted under this Plan, the Company shall issue Common Stock or pay any amountsdue within a reasonable period of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have,for purposes of this Plan, 30 days shall be considered a reasonable period of time.

14.8 No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. TheCommittee shall determine whether cash, additional Awards or other securities or property shall be issued or paid in lieu of fractionalshares of Common Stock or whether any fractional shares should be rounded, forfeited or otherwise eliminated.

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14.9 Other Provisions. The Award Agreements authorized under the Plan may contain such other provisions not inconsistentwith this Plan, including, without limitation, restrictions upon the exercise of the Awards, as the Committee may deem advisable.

14.10 Section 409A. The Plan is intended to comply with Section 409A of the Code to the extent subject thereto, and,accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance therewith. Anypayments described in the Plan that are due within the "short-term deferral period" as defined in Section 409A of the Code shall not betreated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding anything to the contrary in the Plan, tothe extent required to avoid accelerated taxation and tax penalties under Section 409A of the Code, amounts that would otherwise bepayable and benefits that would otherwise be provided pursuant to the Plan during the six (6) month period immediately following theParticipant's termination of Continuous Service shall instead be paid on the first payroll date after the six-month anniversary of theParticipant's separation from service (or the Participant's death, if earlier). Notwithstanding the foregoing, neither the Company nor theCommittee shall have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant underSection 409A of the Code and neither the Company nor the Committee will have any liability to any Participant for such tax orpenalty.

14.11 Disqualifying Dispositions. Any Participant who shall make a "disposition" (as defined in Section 424 of the Code) of allor any portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two years from the Grant Dateof such Incentive Stock Option or within one year after the issuance of the shares of Common Stock acquired upon exercise of suchIncentive Stock Option (a "Disqualifying Disposition") shall be required to immediately advise the Company in writing as to theoccurrence of the sale and the price realized upon the sale of such shares of Common Stock.

14.12 Section 16. It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicablerequirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit ofRule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability underSection 16 of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed inthis Section 14.13, such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid such conflict.

14.13 Section 162(m). To the extent the Committee issues any Award that is intended to be exempt from the deductionlimitation of Section 162(m) of the Code, the Committee may, without shareholder or grantee approval, amend the Plan or the relevantAward Agreement retroactively or prospectively to the extent it determines necessary in order to comply with any subsequentclarification of Section 162(m) of the Code required to preserve the Company's federal income tax deduction for compensation paidpursuant to any such Award.

14.14 Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries bywhom any right under the Plan is to be exercised in case of such Participant's death. Each designation will revoke all priordesignations by the same Participant, shall be in a form reasonably prescribed by the Committee and shall be effective only when filedby the Participant in writing with the Company during the Participant's lifetime.

14.15 Expenses. The costs of administering the Plan shall be paid by the Company.

14.16 Severability. If any of the provisions of the Plan or any Award Agreement is held to be invalid, illegal or unenforceable,whether in whole or in part, such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegalityor unenforceability and the remaining provisions shall not be affected thereby.

14.17 Plan Headings. The headings in the Plan are for purposes of convenience only and are not intended to define or limit theconstruction of the provisions hereof.

14.18 Non-Uniform Treatment . The Committee's determinations under the Plan need not be uniform and may be made by itselectively among persons who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing,the Committee shall be entitled to make non-uniform and selective determinations, amendments and adjustments, and to enter intonon-uniform and selective Award Agreements.

15. Effective Date of Plan . The Plan shall become effective as of the Effective Date, but no Award shall be exercised (or, in the caseof a stock Award, shall be granted) unless and until the Plan has been approved by the shareholders of the Company, which approvalshall be within twelve (12) months before or after the date the Plan is adopted by the Board.

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16. Termination or Suspension of the Plan. The Plan shall terminate automatically on July 31, 2023. No Award shall be grantedpursuant to the Plan after such date, but Awards theretofore granted may extend beyond that date. The Board may suspend orterminate the Plan at any earlier date pursuant to Section 13.1 hereof. No Awards may be granted under the Plan while the Plan issuspended or after it is terminated. Unless the Company determines to submit Section 7.4 of the Plan and the definition of"Performance Goal" and "Performance Criteria" to the Company's shareholders at the first shareholder meeting that occurs in the fifthyear following the year in which the Plan was last approved by shareholders (or any earlier meeting designated by the Board), inaccordance with the requirements of Section 162(m) of the Code, and such shareholder approval is obtained, then no furtherPerformance Compensation Awards shall be made to Covered Employees under Section 7.4 after the date of such annual meeting, butthe Plan may continue in effect for Awards to Participants not in accordance with Section 162(m) of the Code.

17. Choice of Law. The law of the State of Delaware shall govern all questions concerning the construction, validity andinterpretation of this Plan, without regard to such state's conflict of law rules.

As adopted by the Board of Directors of One Horizon Group, Inc. effective as of June 14, 2013.

As approved by the shareholders of One Horizon Group, Inc. on _____________.

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APPENDIX B

ARTICLES OF AMENDMENT-DOMESTIC CORPORATION

(15 Pa.C.S.)

Business Corporation (§ 1915)

In compliance with the requirements of the applicable provisions (relating to articles of amendment), the undersigned, desiring toamend its articles, hereby certifies that:

1. The name of the corporation is “One Horizon Group, Inc.”

2. The (b) name of the corporation’s commercial registered office provider and the county of venue is: c/o CT Corporation System,Dauphin County.

3. The statute by or under which it was incorporated: 15 Pa.C.S. § 101 et seq.

4. The date of its incorporation: March 20, 1972

5. Check, and if appropriate complete, one of the following:

The amendment shall be effective upon filing these Articles of Amendment in the Department of State.

The amendment shall be effective on:

6. Check one of the following:

The amendment was adopted by the shareholders pursuant to 15 Pa.C.S. § 1914(a) and (b).

The amendment was adopted by the board of directors pursuant to 15 Pa.C.S. § 1914 (c).

7. Check, and if appropriate complete, one of the following:

The amendment adopted by the corporation, set forth in full, is as follows: Paragraph 6 of the Amended and RestatedArticles of Incorporation shall be amended and restated in its entirety as follows:

“The Aggregate number of shares which the corporation shall have authority to issue shall be 200,000,000 shares of commonstock having a par value of $0.0001 per share and 50,000,000 shares of preferred stock having a par value of $0.0001 pershare. The Board of Directors of the corporation has full right and authority to divide such shares, at any time and from timeto time, into one or more classes or series, or both, as the Board may designate, and to determine for any such class or seriesits voting rights, designations, preferences and privileges, including, without limitation, conversion rights.

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“Effective at 11:59 p.m., Eastern Daylight Time, on _____ __, 2013 (the “Effective Time”), every six hundred (600) sharesof the corporation’s common stock, par value $0.0001 per share (the “Old Common Stock”) issued and outstandingimmediately prior to the Effective Time will be automatically and without any action on the part of the respective holdersthereof, be combined and converted into one (1) share of common stock, par value $0.0001, of the corporation (the “NewCommon Stock”) (and such combination and conversion, the “Reverse Stock Split”).

Notwithstanding the immediately preceding sentence, no fractional shares of New Common Stock shall be issued tothe holders of record of Old Common Stock in connection with the foregoing reclassification of shares of Old CommonStock and the corporation shall not recognize on its stock record books any purported transfer of any fractional share of NewCommon Stock. In lieu thereof, the corporation will pay to the registered shareholder, in cash, the value of any fractionalshare interest arising from the Reverse Stock Split. The cash payment will equal the fraction to which the shareholder wouldotherwise be entitled multiplied by the closing sales price of the Common Stock as reported on the OTCQB as of theEffective Time. No transaction costs will be assessed to shareholders for the cash payment. Shareholders will not be entitledto receive interest for the period of time between the Effective Time and the date payment is made for their fractional shares.”

The amendment adopted by the corporation as set forth in full in Exhibit A, attached hereto and made a part hereof.

8. Check if the amendment restates the Articles:

The restated Articles of Incorporation supersede the original articles and all amendments thereto.

IN TESTIMONY WHEREOF, the undersigned corporation has caused these Articles of Amendment to be signed by a dulyauthorized officer this ____ day of ____________, 2013.

One Horizon Group, Inc.Name of Corporation

________________________________________By: Mark WhitePresident and Chief Executive OfficerTitle

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APPENDIX C

AGREEMENT AND PLAN OF MERGER

ONE HORIZON GROUP, INC.(a Pennsylvania Corporation)

AND

ONE HORIZON GROUP, INC.(a Delaware Corporation)

This Agreement and Plan of Merger (this “Agreement”) is dated, 2013 by and between One Horizon Group, Inc., aPennsylvania corporation (“One Horizon Pennsylvania”) and One Horizon Group, Inc., a Delaware corporation (“One HorizonDelaware”).

Recitals

A. One Horizon Pennsylvania is a corporation duly organized and existing under the laws of the Commonwealth ofPennsylvania and has authorized capital stock consisting of 350,000,000 shares, of which 200,000,000 shares are designated ascommon stock, $0.0001 par value per share (“One Horizon Pennsylvania Common Stock”), and 50,000,000 shares are designated aspreferred stock, $0.0001 par value per share (collectively, the “One Horizon Pennsylvania Preferred Stock”). As of ___________, andbefore giving effect to the transactions contemplated hereby, _____________ shares of One Horizon Pennsylvania Common Stockwere outstanding and 0 shares of One Horizon Pennsylvania Preferred Stock were outstanding. In addition, there are (i)_____________ shares of One Horizon Pennsylvania Common Stock issuable upon the exercise of options and (ii) _____________shares of One Horizon Pennsylvania Common Stock issuable upon the exercise of warrants.

B. One Horizon Delaware is a corporation duly organized and existing under the laws of the State of Delaware and hasauthorized capital stock consisting of 350,000,000 shares, of which 200,000,000 shares are designated as common stock, $0.0001 parvalue per share (“One Horizon Delaware Common Stock”), and 50,000,000 shares are designated as preferred stock, $0.0001 parvalue per share (collectively, the “One Horizon Delaware Preferred Stock”). As of the date hereof, and before giving effect to thetransactions contemplated hereby, 100 shares of One Horizon Delaware Common Stock were outstanding, all of which were held byOne Horizon Pennsylvania.

C. One Horizon Delaware is a wholly-owned subsidiary of One Horizon Pennsylvania.

D. The board of directors of One Horizon Pennsylvania has concluded that, for the purpose of effecting the reincorporation ofOne Horizon Pennsylvania in the State of Delaware, it is in the best interests of One Horizon Pennsylvania that One HorizonPennsylvania be merged with and into One Horizon Delaware upon the terms and conditions herein provided and pursuant to theBusiness Corporation Law of the Commonwealth of Pennsylvania and the General Corporation Law of the State of Delaware. Suchtransaction is intended to qualify as a reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, asamended.

E. The respective boards of directors of One Horizon Pennsylvania and One Horizon Delaware have approved thisAgreement and have directed that this Agreement be submitted to a vote of the shareholders of the respective corporations and beexecuted by the undersigned officers.

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NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein, One Horizon Pennsylvaniaand One Horizon Delaware hereby agree, subject to the terms and conditions hereinafter set forth, as follows:

1. Merger

1.1 Merger. In accordance with and subject to the provisions of this Agreement, the Pennsylvania Business Corporation Lawand the Delaware General Corporation Law, One Horizon Pennsylvania shall be merged with and into One Horizon Delaware (the“Merger”), and the separate existence of One Horizon Pennsylvania shall cease. One Horizon Delaware shall be, and is hereinsometimes referred to as, the “Surviving Corporation.”

1.2 Filing of Certificate and Articles of Merger; Effective Date. The Merger shall not become effective until the followingactions have been completed:

(a) This Agreement and the Merger shall have been adopted and approved by the shareholders of One Horizon Pennsylvaniaand by the sole stockholder of One Horizon Delaware in accordance with the requirements of the Pennsylvania Business CorporationLaw and the Delaware General Corporation Law, respectively;

(b) An executed Articles of Merger (the “Articles of Merger”) meeting the requirements of the Pennsylvania BusinessCorporation Law shall have been filed with the Department of State of the Commonwealth of Pennsylvania; and

(c) An executed Certificate of Ownership and Merger (the “Certificate of Merger”) meeting the requirements of the DelawareGeneral Corporation Law shall have been filed with the Secretary of State of the State of Delaware.

The Merger shall be effective at the effective time specified in the Articles of Merger and the Certificate of Merger, whichdate and time are herein referred to as the “Effective Time.”

1.3. Effects of the Merger. Upon the Effective Time, the separate existence of One Horizon Pennsylvania shall cease and OneHorizon Pennsylvania shall be merged into One Horizon Delaware. One Horizon Delaware, as the Surviving Corporation, (a) shallcontinue to possess all of its assets, rights, powers and property as constituted immediately prior to the Effective Time, (b) shall besubject to all actions previously taken by its and One Horizon Pennsylvania’s board of directors, (c) shall succeed, without othertransfer, to all of the assets, rights, powers and property of One Horizon Pennsylvania in the manner more fully provided under theapplicable provisions of the Pennsylvania Business Corporation Law and the Delaware General Corporation Law, (d) shall continue tobe subject to all of the debts, liabilities and obligations of One Horizon Delaware as constituted immediately prior to the EffectiveTime, and (e) shall succeed, without other transfer, to all of the debts, liabilities and obligations of One Horizon Pennsylvania in thesame manner as if One Horizon Delaware had itself incurred them, all as more fully provided under the applicable provisions of thePennsylvania Business Corporation Law and the Delaware General Corporation Law.

2. Name of Surviving Corporation; Organizational Documents; Directors and Officers

2.1 Name of Surviving Corporation. The name of the Surviving Corporation from and after the Effective Time shall be “OneHorizon Group, Inc.”

2.2 Certificate of Incorporation. The Certificate of Incorporation of One Horizon Delaware as in effect immediately beforethe Effective Time shall, from and after the Effective Time, continue in full force and effect as the Certificate of Incorporation of theSurviving Corporation.

2.3 Bylaws. The Bylaws of One Horizon Delaware as in effect immediately before the Effective Time shall, from and afterthe Effective Time, continue in full force and effect as the Bylaws of the Surviving Corporation.

2.4 Board of Directors. The members of the board of directors of One Horizon Pennsylvania immediately before theEffective Time shall become the sole members of the board of directors of One Horizon Delaware as of the Effective Time and shallserve for the same terms of office as they had as directors of One Horizon Pennsylvania or until as otherwise provided by law or theCertificate of Incorporation or Bylaws of the Surviving Corporation.

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2.5 Officers. The officers of One Horizon Pennsylvania immediately before the Effective Time shall be the officers of theSurviving Corporation until their successors shall have been duly elected and qualified or until as otherwise provided by law or theCertificate of Incorporation or Bylaws of the Surviving Corporation.

3. Manner of Conversion of Securities

The manner and basis of converting the shares of the capital stock of One Horizon Pennsylvania and the nature and amountof securities of One Horizon Delaware that the holders of shares of One Horizon Pennsylvania Common Stock and One HorizonPennsylvania Preferred Stock are to receive in exchange for such shares are as follows:

3.1 One Horizon Pennsylvania Common Stock. By virtue of the Merger and without any action on the part of anyshareholder, each share of One Horizon Pennsylvania Common Stock reflected on the official stock transfer records of One HorizonPennsylvania as outstanding immediately prior to the Effective Time shall be converted at the Effective Time into one fully paid, non-assessable share of common stock, $0.0001 par value per share, of the Surviving Corporation (“Surviving Corporation CommonStock”).

3.2 One Horizon Pennsylvania Preferred Stock. By virtue of the Merger and without any action on the part of anyshareholder, each share of One Horizon Pennsylvania Preferred Stock reflected on the official stock transfer records of One HorizonPennsylvania as outstanding immediately prior to the Effective Time shall be converted at the Effective Time into one fully paid, non-assessable share of preferred stock, $0.0001 par value per share, of the Surviving Corporation (“Surviving Corporation PreferredStock”).

3.3 One Horizon Pennsylvania Options and Warrants. By virtue of the Merger and without any action on the part of anyholder of options or warrants to purchase shares of One Horizon Pennsylvania Common Stock, each option and warrant that isoutstanding and unvested or unexercised, as applicable, immediately prior to the Effective Time shall be converted at the EffectiveTime into an option or warrant to acquire an equal number of shares of Surviving Corporation Common Stock upon the same termsand conditions as set forth in the instrument granting such option or warrant.

3.4 One Horizon Delaware Common Stock. Upon the Effective Time, each share of One Horizon Delaware Common Stockissued and outstanding immediately prior thereto shall, by virtue of the Merger and without any action by One Horizon Delaware, theholder of such shares or any other person, be canceled and returned to the status of authorized but unissued shares.

3.5 Exchange of Certificates.

(a) After the Effective Time, each holder of an outstanding certificate representing shares of One Horizon PennsylvaniaCommon Stock or One Horizon Pennsylvania Preferred Stock may surrender the same for cancellation to the agent designated by theSurviving Corporation from time to time (the “Exchange Agent”), and each such holder shall be entitled to receive in exchangetherefor a certificate or certificates representing the number of shares of Surviving Corporation Common Stock or SurvivingCorporation Preferred Stock into which the surrendered shares were converted as herein provided. Until so surrendered, eachoutstanding certificate theretofore representing shares of One Horizon Pennsylvania Common Stock or One Horizon PennsylvaniaPreferred Stock shall be deemed for all purposes to represent the number of shares of the Surviving Corporation Common Stock orSurviving Corporation Preferred Stock into which shares of One Horizon Pennsylvania Common Stock and One HorizonPennsylvania Preferred Stock were converted in the Merger.

(b) The registered owner on the books and records of the Surviving Corporation or the Exchange Agent of any suchoutstanding certificate shall, until such certificate shall have been surrendered for transfer or conversion or otherwise accounted for tothe Surviving Corporation or the Exchange Agent, have and be entitled to exercise any voting and other rights with respect to and toreceive dividends and other distributions upon the shares of Surviving Corporation Common Stock or Surviving Company PreferredStock represented by such outstanding certificate as provided above.

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(c) Each certificate representing Surviving Corporation Common Stock or Surviving Corporation Preferred Stock so issuedfollowing the Merger shall bear the same legends, if any, with respect to the restrictions on transferability as the certificates for OneHorizon Pennsylvania Common Stock or One Horizon Pennsylvania Preferred Stock so converted and given in exchange therefor,unless otherwise determined by the board of directors of the Surviving Corporation in compliance with applicable laws, or other suchadditional legends as agreed upon by the holder and the Surviving Corporation.

4. Miscellaneous

4.1 Further Assurances. From time to time, as and when required by One Horizon Delaware or by its successors or assigns,there shall be executed and delivered on behalf of One Horizon Pennsylvania such deeds and other instruments, and there shall betaken or caused to be taken by it such further and other actions as shall be appropriate or necessary in order to vest or perfect in orconfirm of record or otherwise by the Surviving Corporation the title to and possession of all the property, interests, assets, rights,privileges, immunities, powers, franchises and authority of One Horizon Pennsylvania and otherwise to carry out the purposes of thisAgreement, and the officers and directors of One Horizon Delaware are fully authorized in the name and on behalf of One HorizonPennsylvania or otherwise to take any and all such action and to execute and deliver any and all such deeds and other instruments.

4.2 Amendment. The boards of directors of the parties hereto may amend this Agreement at any time prior to the filing ofArticles of Merger with the Department of State of the Commonwealth of Pennsylvania and the Certificate of Incorporation with theSecretary of State of the State of Delaware, provided that an amendment made subsequent to the adoption of this Agreement by theshareholders of One Horizon Pennsylvania shall not: (a) alter or change the amount or kind of shares, securities, cash, property and/orrights to be received in exchange for or on conversion of all or any of the shares of any class or series thereof of One HorizonPennsylvania; (b) alter or change any term of the Certificate of Incorporation of the Surviving Corporation to be effected by theMerger; or (c) alter or change any of the terms and conditions of this Agreement, if such alteration or change would adversely affectthe holders of any class or series of capital stock of One Horizon Pennsylvania.

4.3 Abandonment. This Agreement may be terminated and the proposed Merger abandoned at any time before the EffectiveTime, and whether before or after approval of this Agreement by the shareholders of One Horizon Pennsylvania or the solestockholder of One Horizon Delaware, if the board of directors of One Horizon Pennsylvania duly adopts a resolution abandoning thisAgreement.

4.4 Governing Law. This Agreement shall in all respects be construed, interpreted and enforced in accordance with andgoverned by the laws of the State of Delaware and, so far as applicable, the merger provisions of the Pennsylvania BusinessCorporation Law.

4.5 Counterparts. For the convenience of the parties hereto and to facilitate the filing of this Agreement, any number ofcounterparts hereof may be executed, and each such counterpart shall be deemed to be an original instrument.

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IN WITNESS WHEREOF, One Horizon Pennsylvania and One Horizon Delaware have executed this Agreement by their dulyauthorized officers all on the date first above written.

ATTEST: ONE HORIZON GROUP, INC.,A PENNSYLVANIA CORPORATION

Martin WardCorporate Secretary

Mark WhitePresident and Chief Executive Officer

(SEAL)ATTEST: ONE HORIZON GROUP, INC.,

A DELAWARE CORPORATION

Martin WardCorporate Secretary

Mark WhitePresident and Chief Executive Officer

(SEAL)

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APPENDIX D

CERTIFICATE OF INCORPORATIONOF

ONE HORIZON GROUP, INC.

I, the undersigned, for the purpose of creating and organizing a corporation under the provisions of and subject to therequirements of the General Corporation Law of the State of Delaware (the “DGCL”), certify as follows:

1. The name of the corporation is One Horizon Group, Inc. (the “Corporation”).

2. The address of the registered office of the Corporation in the State of Delaware is 2711 Centerville Road, Suite 400, Wilmington,New Castle County, DE 19808. The name of the registered agent of the Corporation at such address is Corporation Service Company.

3. The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity forwhich corporations may be organized under the DGCL.

4. The total number of shares of common stock which the corporation is authorized to issue is 200,000,000, at a par value of $0.0001 pershare and the total number of shares of preferred stock which the corporation is authorized to issue is 50,000,000, at a par value of$0.0001 per share. The board of directors is hereby expressly authorized to provide, out of the unissued shares of preferred stock, forone or more series of preferred stock and, with respect to each such series, to fix the number of shares constituting such series and thedesignation of such series, the voting powers, if any, of the shares of such series, and the preferences and relative, participating,optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, of the shares of such series. Thepowers, preferences and relative, participating, optional and other special rights of each series of preferred stock, and thequalifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding.

5. The name and mailing address of the incorporator of the Corporation is: Farrell Fritz, P.C., 1320 RXR Plaza, Uniondale, New York11556.

6. Unless and except to the extent that the by-laws of the Corporation (the "By-laws") shall so require, the election of directors of theCorporation need not be by written ballot.

7. To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or to itsstockholders for monetary damages for any breach of fiduciary duty as a director. No amendment to, modification of or repeal of thisparagraph nine shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respectto 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 presentlyexists or may hereafter be amended, any person (a "Covered Person") who was or is made or is threatened to be made a party or isotherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reasonof 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 oragent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect toemployee benefit plans, against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred by suchCovered Person. Notwithstanding the preceding sentence, except for claims for indemnification (following the final disposition of suchProceeding) or advancement of expenses not paid in full, the Corporation shall be required to indemnify a Covered Person inconnection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (orpart 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 anyact or omission occurring prior to the time of such repeal or modification.

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9. In furtherance of, and not in limitation of, the powers conferred by statute, the board of directors is expressly authorized to adopt,amend or repeal the By-laws or adopt new By-laws without any action on the part of the stockholders; provided that any By-lawadopted or amended by the board of directors, and any powers thereby conferred, may be amended, altered or repealed by thestockholders.

10. The Corporation shall have the right, subject to any express provisions or restrictions contained in the Certificate of Incorporation ofthe Corporation (the "Certificate of Incorporation") or the By-laws, from time to time, to amend the Certificate of Incorporation or anyprovision thereof in any manner now or hereafter provided by law, and all rights and powers of any kind conferred upon a director orstockholder of the Corporation by the Certificate of Incorporation or any amendment thereof are conferred subject to such right.

I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a corporation pursuant to the DGCL, do makethis Certificate of Incorporation, hereby acknowledging, declaring, and certifying that the foregoing Certificate of Incorporation is myact and deed and that the facts herein stated are true, and have accordingly hereunto set my hand this __________ day of____________, ____.

IncorporatorBy_____________________Name: __________________Farrell Fritz, P.C.

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APPENDIX E

BYLAWSOF

ONE HORIZON GROUP, INC.(the “Corporation”)

Adopted on ___, 2013

ARTICLE IOFFICES

1.1 Registered Office. The registered office and registered agent of the Corporation shall be as from time to time set forth inthe Corporation’s Certificate of Incorporation.

1.2 Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware,as the Board of Directors may from time to time determine or the business of the Corporation may require.

ARTICLE IISTOCKHOLDERS

2.1 Place of Meetings. All meetings of the stockholders for the election of Directors shall be held at such place, within orwithout the State of Delaware, as may be fixed from time to time by the Board of Directors. Meetings of stockholders for any otherpurpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting orin a duly executed waiver of notice thereof.

2.2 Annual Meeting. An annual meeting of the stockholders shall be held at such time as may be determined by the Board ofDirectors, at which meeting the stockholders shall elect a Board of Directors and transact such other business as may properly bebrought before the meeting.

2.3 Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by law,by the Certificate of Incorporation or by these Bylaws, may be called by the Chief Executive Officer or the President, or shall becalled by the President or Secretary at the request in writing of a majority of the Board of Directors. Such request shall state thepurpose or purposes of the proposed meeting. Business transacted at all special meetings shall be confined to the purposes stated in thenotice of the meeting unless all stockholders entitled to vote are present and consent.

2.4 Notice. Written or printed notice stating the place, day and hour of any meeting of the stockholders and, in case of aspecial meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than sixty daysbefore the date of the meeting, either personally or by mail, by or at the direction of the Chief Executive Officer, the President, theSecretary, or the officer or person calling the meeting, to each stockholder of record entitled to vote at the meeting. If mailed, suchnotice shall be deemed to be delivered when deposited in the mail, addressed to the stockholder at his address as it appears on thestock transfer books and records of the Corporation or its transfer agent, with postage thereon prepaid.

2.5 List of Stockholders. At least ten days before each meeting of stockholders, a complete list of the stockholders entitled tovote at such meeting, arranged in alphabetical order, with the address of and the number of voting shares registered in the name ofeach, shall be prepared by the officer or agent having charge of the stock transfer books. Such list shall be kept on file at the registeredoffice of the Corporation (or at such other location determined by the Board of Directors) for a period of ten days prior to suchmeeting and shall be subject to inspection by any stockholder at any time during usual business hours. Such list shall be produced andkept open at the time and place of the meeting during the whole time thereof, and shall be subject to the inspection of any stockholderwho may be present.

2.6 Quorum. At all meetings of the stockholders, the presence in person or by proxy of the holders of one-third (1/3 rd ) of theshares issued and outstanding and entitled to vote shall be necessary and sufficient to constitute a quorum for the transaction of

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business except as otherwise provided by law, by the Certificate of Incorporation or by these Bylaws. If, however, such quorum shallnot be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person orrepresented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at themeeting, until a quorum shall be present or represented. If the adjournment is for more than thirty days, or if after the adjournment anew record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of recordentitled to vote at the meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may betransacted which might have been transacted at the meeting as originally notified.

2.7 Voting. When a quorum is present at any meeting of the Corporation’s stockholders, the vote of the holders of a majorityof the shares having voting power present in person or represented by proxy at such meeting shall decide any questions brought beforesuch meeting, unless the question is one upon which, by express provision of law, the Certificate of Incorporation or these Bylaws, adifferent vote is required, in which case such express provision shall govern and control the decision of such question. Thestockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawalof enough stockholders to leave less than a quorum.

2.8 Method of Voting. Each outstanding share of the Corporation’s capital stock shall be entitled to one vote on each mattersubmitted to a vote at a meeting of stockholders, except to the extent that the voting rights of the shares of any class or classes areotherwise provided by applicable law or the Certificate of Incorporation, as amended from time to time. At any meeting of thestockholders, every stockholder having the right to vote shall be entitled to vote in person or by proxy appointed by an instrument inwriting subscribed by such stockholder or by his duly authorized attorney-in-fact and bearing a date not more than six months prior tosuch meeting, unless such instrument provides for a longer period. Each proxy shall be revocable unless expressly provided therein tobe irrevocable and if, and only so long as, it is coupled with an interest sufficient in law to support an irrevocable power. Such proxyshall be filed with the Secretary of the Corporation prior to or at the time of the meeting. Voting for directors shall be in accordancewith Article III of these Bylaws. Voting on any question or in any election may be by voice vote or show of hands unless the presidingofficer shall order or any stockholder shall demand that voting be by written ballot.

2.9 Record Date; Closing Transfer Books. The Board of Directors may fix in advance a record date for the purpose ofdetermining stockholders entitled to notice of or to vote at a meeting of stockholders, such record date to be not less than ten nor morethan sixty days prior to such meeting, or the Board of Directors may close the stock transfer books for such purpose for a period of notless than ten nor more than sixty days prior to such meeting. In the absence of any action by the Board of Directors, the date uponwhich the notice of the meeting is mailed shall be the record date.

2.10 Action By Consent. Any action required or permitted by law, the Certificate of Incorporation, or these Bylaws to betaken at a meeting of the stockholders of the Corporation may be taken without a meeting if a consent or consents in writing, settingforth the action so taken, shall be signed by stockholders holding at least a majority of the voting power; provided that if a differentproportion of voting power is required for such an action at a meeting, then that proportion of written consents is required. Suchsigned consents shall be delivered to the Secretary for inclusion in the Minute Book of the Corporation.

2.11 Advance Notice of Stockholder Nominations and Proposals.

(a) Timely Notice. At a meeting of the stockholders, only such nominations of persons for the election of directors and suchother business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annualmeeting, nominations or such other business must be: (i) specified in the notice of meeting (or any supplement thereto) given by or atthe direction of the board of directors or any committee thereof, (ii) otherwise properly brought before the meeting by or at thedirection of the board of directors or any committee thereof, or (iii) otherwise properly brought before an annual meeting by astockholder who is a stockholder of record of the Corporation at the time such notice of meeting is delivered, who is entitled to vote atthe meeting and who complies with the notice procedures set forth in this Section 2.11. In addition, any proposal of business (otherthan the nomination of persons for election to the board of directors) must be a proper matter for stockholder action. For business(including, but not limited to, director nominations) to be properly brought before an annual meeting by a stockholder, the stockholderor stockholders of record intending to propose the business (the “Proposing Stockholder”) must have given timely notice thereofpursuant to this Section 2.11(a) or Section 2.11(c) below, as applicable, in writing to the secretary of the Corporation even if suchmatter is already the subject of (i) any notice to the stockholders, or (ii) a press release or filing with the Securities and ExchangeCommission (such press release or filing, “Public Disclosure”) from the board of directors. To be timely, a Proposing Stockholder’snotice must be delivered to or mailed and received at the principal executive offices of the Corporation: (x) not later than the close ofbusiness on the 120 th day, nor earlier than the close of business on the 210 th day in advance of the anniversary of the previous year’s

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annual meeting if such meeting is to be held on a day which is not more than 30 days in advance of the anniversary of the previousyear’s annual meeting or not later than 30 days after the anniversary of the previous year’s annual meeting; and (y) with respect to anyother annual meeting of stockholders, the close of business on the 15 th day following the date of Public Disclosure of the date of suchmeeting. In no event shall the Public Disclosure of an adjournment or postponement of an annual meeting commence a new noticetime period (or extend any notice time period).

(b) Stockholder Nominations. For the nomination of any person or persons for election to the board of directors, aProposing Stockholder’s notice to the secretary of the Corporation shall set forth (i) the name, age, business address and residenceaddress of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee, (iii) the numberof shares of capital stock of the Corporation which are owned of record and beneficially by each such nominee (if any), (iv) such otherinformation concerning each such nominee as would be required to be disclosed in a proxy statement soliciting proxies for the electionof such nominee as a director in an election contest (even if an election contest is not involved) or that is otherwise required to bedisclosed, under Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder, (v) the consent of thenominee to being named in the proxy statement as a nominee and to serving as a director if elected, and (vi) as to the ProposingStockholder: (A) the name and address of the Proposing Stockholder as they appear on the Corporation’s books and of the beneficialowner, if any, on whose behalf the nomination is being made, (B) the class and number of shares of the Corporation which are ownedby the Proposing Stockholder (beneficially and of record) and owned by the beneficial owner, if any, on whose behalf the nominationis being made, as of the date of the Proposing Stockholder’s notice, and a representation that the Proposing Stockholder will notify theCorporation in writing of the class and number of such shares owned of record and beneficially as of the record date for the meetingpromptly following the later of the record date or the date notice of the record date is first publicly disclosed, (C) a description of anyagreement, arrangement or understanding with respect to such nomination between or among the Proposing Stockholder and any of itsaffiliates or associates, and any others (including their names) acting in concert with any of the foregoing, and a representation that theProposing Stockholder will notify the Corporation in writing of any such agreement, arrangement or understanding in effect as of therecord date for the meeting promptly following the later of the record date or the date notice of the record date is first publiclydisclosed, (D) a description of any agreement, arrangement or understanding (including any derivative or short positions, profitinterests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the ProposingStockholder’s notice by, or on behalf of, the Proposing Stockholder or any of its affiliates or associates, the effect or intent of which isto mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of the ProposingStockholder or any of its affiliates or associates with respect to shares of stock of the Corporation, and a representation that theProposing Stockholder will notify the Corporation in writing of any such agreement, arrangement or understanding in effect as of therecord date for the meeting promptly following the later of the record date or the date notice of the record date is first publiclydisclosed, (E) a representation that the Proposing Stockholder is a holder of record of shares of the Corporation entitled to vote at themeeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, and (F) arepresentation whether the Proposing Stockholder intends to deliver a proxy statement and/or form of proxy to holders of at least thepercentage of the Corporation’s outstanding capital stock required to approve the nomination and/or otherwise to solicit proxies fromstockholders in support of the nomination. The Corporation may require any proposed nominee to furnish such other information as itmay reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation orthat could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

(c) Other Stockholder Proposals. For all business other than director nominations, a Proposing Stockholder’s notice to thesecretary of the Corporation shall set forth as to each matter the Proposing Stockholder proposes to bring before the annual meeting:(i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business atthe annual meeting, (ii) any other information relating to such stockholder and beneficial owner, if any, on whose behalf the proposalis being made, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations ofproxies for the proposal and pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulationspromulgated thereunder and (iii) the information required by Section 2.11(b)(vi) above.

(d) Proxy Rules. The foregoing notice requirements of Section 2.11I shall be deemed satisfied by a stockholder withrespect to business other than a nomination if the stockholder has notified the Corporation of his, her or its intention to present aproposal at an annual meeting in compliance with the applicable rules and regulations promulgated under Section 14(a) of theExchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation tosolicit proxies for such annual meeting.

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(e) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shallhave been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to theboard of directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’snotice of meeting (x) by or at the direction of the board of directors or any committee thereof or (y) provided that the board ofdirectors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder ofrecord at the time the notice provided for in this Section 2.11 is delivered to the secretary of the Corporation, who is entitled to vote atthe meeting and upon such election and who complies with the notice procedures set forth in this Section 2.11. In the event theCorporation calls a special meeting of stockholders for the purpose of electing one or more directors to the board of directors, anysuch stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election tosuch position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by this Section 2.11 shall bedelivered to the secretary at the principal executive offices of the Corporation not later than the close of business on the 120 th dayprior to such special meeting and not earlier than the close of business on the later of the 210 th day prior to such special meeting or the15 th day following the date of Public Disclosure of the date of the special meeting and of the nominees proposed by the board ofdirectors to be elected at such meeting. In no event shall the Public Disclosure of an adjournment or postponement of a specialmeeting commence a new time period (or extend any notice time period).

(f) Effect of Noncompliance. Notwithstanding anything in these By-laws to the contrary: (i) no nominations shall be madeor business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 2.11, and (ii)unless otherwise required by law, if a Proposing Stockholder intending to propose business or make nominations at an annual meetingpursuant to this Section 2.11 does not provide the information required under this Section 2.11 to the Corporation promptly followingthe later of the record date or the date notice of the record date is first publicly disclosed, or the Proposing Stockholder (or a qualifiedrepresentative of the Proposing Stockholder) does not appear at the meeting to present the proposed business or nominations, suchbusiness or nominations shall not be considered, notwithstanding that proxies in respect of such business or nominations may havebeen received by the Corporation. The requirements of this Section 2.11 shall apply to any business or nominations to be broughtbefore an annual meeting by a stockholder whether such business or nominations are to be included in the Corporation’s proxystatement pursuant to Rule 14a-8 of the Exchange Act or presented to stockholders by means of an independently financed proxysolicitation. The requirements of the Section 2.11 are included to provide the Corporation notice of a stockholder’s intention to bringbusiness or nominations before an annual meeting and shall in no event be construed as imposing upon any stockholder therequirement to seek approval from the Corporation as a condition precedent to bringing any such business or make such nominationsbefore an annual meeting.

ARTICLE IIIBOARD OF DIRECTORS

3.1 Management. The business and affairs of the Corporation shall be managed by or under the direction of the Board ofDirectors, who may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law, theCertificate of Incorporation, a stockholders’ agreement or these Bylaws directed or required to be exercised or done by thestockholders.

3.2 Qualification; Election; Term. None of the directors need be a stockholder of the Corporation or a resident of the State ofDelaware. The directors shall be elected by plurality vote at the annual meeting of the stockholders, except as hereinafter provided,and each director elected shall hold office until his successor shall be elected and qualified.

3.3 Number. The initial number of directors of the Corporation shall be one (1). Thereafter, the number of directors of theCorporation shall be fixed as the Board of Directors may from time to time designate. No decrease in the number of directors shallhave the effect of shortening the term of any incumbent director.

3.4 Removal. Any director may be removed either for or without cause at any special meeting of stockholders by theaffirmative vote of at least a majority of the voting power of the issued and outstanding stock entitled to vote; provided, however, thatnotice of intention to act upon such matter shall have been given in the notice calling such meeting.

3.5 Vacancies. Any vacancy occurring in the Board of Directors by death, resignation, removal or otherwise may be filled byan affirmative vote of at least a majority of the remaining directors though less than a quorum of the Board of Directors. A directorelected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. A directorship to be filled by reason of an

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increase in the number of directors may be filled by the Board of Directors for a term of office only until the next election of one ormore directors by the stockholders.

3.6 Place of Meetings. Meetings of the Board of Directors, regular or special, may be held at such place within or without theState of Delaware as may be fixed from time to time by the Board of Directors.

3.7 Annual Meeting. The first meeting of each newly elected Board of Directors shall be held without further noticeimmediately following the annual meeting of stockholders and at the same place, unless by unanimous consent or unless the directorsthen elected and serving shall change such time or place.

3.8 Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as shallfrom time to time be determined by resolution of the Board of Directors.

3.9 Special Meetings. Special meetings of the Board of Directors may be called by the Chief Executive Officer or Presidenton oral or written notice to each director, given either personally, by telephone, by telegram, by mail, by facsimile or by e-mail at leastforty-eight hours prior to the time of the meeting. Special meetings shall be called by the Chief Executive Officer, the President or theSecretary in like manner and on like notice on the written request of two-thirds of directors. Except as may be otherwise expresslyprovided by law, the Certificate of Incorporation or these Bylaws, neither the business to be transacted at, nor the purpose of, anyspecial meeting need to be specified in a notice or waiver of notice.

3.10 Quorum and Voting. At all meetings of the Board of Directors the presence of a majority of the number of directorsshall be necessary and sufficient to constitute a quorum for the transaction of business, and the affirmative vote of at least a majorityof the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may beotherwise specifically provided by law, the Certificate of Incorporation or these Bylaws. If a quorum shall not be present at anymeeting of directors, the directors present thereat may adjourn the meeting from time to time without notice other than announcementat the meeting, until a quorum shall be present.

3.11 Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, orbetween the Corporation and any other corporation, partnership, association, or other organization in which one or more of itsdirectors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, solely becausethe director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes thecontract or transaction, or solely because his or their votes are counted for such purpose, if: (1) the fact as to his relationship or interestand as to the contract or transaction is known to the Board of Directors or the committee, and the Board of Directors or committee ingood faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though thedisinterested directors be less than a quorum; or (2) the fact as to his relationship or interest and as to the contract or transaction isknown to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of thestockholders; or (3) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved, or ratified by theBoard of Directors, a committee thereof, or the stockholders. Common or interested directors may be counted in determining thepresence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

3.12 Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be takenwithout such a meeting if a consent or consents in writing, setting forth the action so taken, is signed by all the members of the Boardof Directors.

3.13 Compensation of Directors. Directors shall receive such compensation for their services, and reimbursement for theirexpenses as the Board of Directors, by resolution, shall establish; provided that nothing herein contained shall be construed topreclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

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ARTICLE IVCOMMITTEES

4.1 Designation. The Board of Directors may, by resolution passed by a majority of the whole Board, designate committees,each committee to consist of one or more directors of the Corporation, which committees shall have such power and authority andshall perform such functions as may be provided in such resolution.

4.2 Authority. Each committee, to the extent provided in such resolution, shall have and may exercise all of the authority ofthe Board of Directors in the management of the business and affairs of the Corporation, except where action of the full Board ofDirectors is required by statute or by the Certificate of Incorporation.

4.3 Change in Number. The number of committee members may be increased or decreased (but not below one) from time totime by resolution adopted by a majority of the whole Board of Directors.

4.4 Removal. Any committee member may be removed by the Board of Directors by the affirmative vote of a majority of thewhole Board, whenever in its judgment the best interests of the Corporation will be served thereby.

4.5 Vacancies. A vacancy occurring in any committee (by death, resignation, removal or otherwise) may be filled by theBoard of Directors in the manner provided for original designation in Section 4.1.

4.6 Meetings. The time, place and notice (if any) of all committee meetings shall be determined by the respective committee.Unless otherwise determined by a particular committee, meetings of the committees may be called by the Chief Executive Officer orPresident on oral or written notice to each member, given either personally, by telephone, by telegram, by mail, by facsimile or by e-mail at least forty-eight hours prior to the time of the meeting and special meetings shall be called by the Chief Executive Officer, thePresident or the Secretary in like manner and on like notice on the written request of any committee member. Neither the business tobe transacted at, nor the purpose of, any meeting need be specified in a notice or waiver of notice of any meeting.

4.7 Quorum; Majority Vote. Unless otherwise determined by a particular committee, at any meeting a majority of thecommittee members shall constitute a quorum for the transaction of business and the act of a majority of the members present at anymeeting at which a quorum is present shall be the act of the committee, except as otherwise specifically provided by statute or by theCertificate of Incorporation or by these Bylaws. If a quorum is not present at a meeting of the committee, the members present thereatmay adjourn the meeting from time to time, without notice other than an announcement at the meeting until a quorum is present.

4.8 Action by Consent. Any action required or permitted to be taken at any committee meeting may be taken without such ameeting if a consent or consents in writing, setting forth the action so taken, is signed by all the members of such committee.

4.9 Compensation. Compensation of committee members shall be fixed pursuant to the provisions of Section 3.13.

ARTICLE VNOTICE

5.1 Form of Notice. Whenever required by law, the Certificate of Incorporation or these Bylaws, notice is to be given to anydirector or stockholder, and no provision is made as to how such notice shall be given, such notice may be given: (a) in writing, bymail, postage prepaid, addressed to such director or stockholder at such address as appears on the books and records of theCorporation or its transfer agent; or (b) in any other method permitted by law. Any notice required or permitted to be given by mailshall be deemed to be given at the time when the same shall be deposited in the United States mail.

5.2 Waiver. Whenever any notice is required to be given to any stockholder or director of the Corporation as required by law,the Certificate of Incorporation or these Bylaws, a waiver thereof in writing signed by the person or persons entitled to such notice,whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. Attendance of a stockholder ordirector at a meeting shall constitute a waiver of notice of such meeting, except where such stockholder or director attends for theexpress purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

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ARTICLE VIOFFICERS AND AGENTS

6.1 In General. The officers of the Corporation shall be elected by the Board of Directors and shall be a President, a Treasurerand a Secretary. The Board of Directors may also elect a Chairman of the Board, a Chief Executive Officer, a Chief Operating Officer,a Chief Financial Officer, and one or more Vice Presidents, Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers.None of the officers need be a member of the Board of Directors. Any two or more offices may be held by the same person.

6.2 Election. The Board of Directors, at its first meeting after each annual meeting of stockholders, shall elect a President, aTreasurer, a Secretary and such other officers and agents as it shall deem necessary, who shall be elected and appointed for such termsand shall exercise such powers and perform such duties as shall be determined from time to time by the Board.

6.3 Salaries. The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors or anycommittee of the Board, if so authorized by the Board.

6.4 Term of Office and Removal. Each officer of the Corporation shall hold office until his death, or his resignation orremoval from office, or the election and qualification of his successor, whichever shall first occur. Any officer or agent elected orappointed by the Board of Directors may be removed at any time, for or without cause, by the affirmative vote of a majority of thewhole Board of Directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. If theoffice of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors.

6.5 Employment and Other Contracts. The Board of Directors may authorize any officer or officers or agent or agents to enterinto any contract or execute and deliver any instrument in the name or on behalf of the Corporation, and such authority may be generalor confined to specific instances. The Board of Directors may, when it believes the interest of the Corporation will best be servedthereby, authorize executive employment contracts which will contain such terms and conditions as the Board of Directors deemsappropriate.

6.6 Chairman of the Board. The Chairman of the Board, subject to the direction of the Board of Directors, shall perform suchexecutive, supervisory and management functions and duties as from time to time may be assigned to him or her by the Board ofDirectors. The Chairman of the Board shall preside at all meetings of the stockholders of the Corporation and all meetings of theBoard of Directors.

6.7 Chief Executive Officer. The Chief Executive Officer shall have general and active management of the business of theCorporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The Chief Executive Officershall preside at all meetings of the stockholders of the Corporation and all meetings of the Board of Directors in the absence of theChairman of the Board.

6.8 President. The President shall be subject to the direction of the Board of Directors and the Chief Executive Officer andshall have general charge of the business, affairs and property of the Corporation and general supervision over its other officers andagents. The President shall see that the officers carry all other orders and resolutions of the Board of Directors into effect. ThePresident shall execute all authorized conveyances, contracts, or other obligations in the name of the Corporation except whererequired by law to be otherwise signed and executed and except where the signing and execution shall be expressly delegated by theBoard of Directors to some other officer or agent of the Corporation or reserved to the Board of Directors or any committee thereof.The President shall preside at all meetings of the stockholders of the Corporation and all meetings of the Board of Directors in theabsence of the Chairman of the Board and the Chief Executive Officer. The President shall perform all duties incident to the office ofthe President and such other duties as may be prescribed by the Board of Directors from time to time.

6.9 Chief Technology Officer. The Chief Technology Officer shall be subject to the direction of the Chief Executive Officer,the President and the Board of Directors and shall have day-to-day managerial responsibility for the operation of the Corporation.

6.10 Chief Financial Officer. The Chief Financial Officer shall be subject to the direction of the Chief Executive Officer, thePresident and the Board of Directors and shall have day-to-day managerial responsibility for the finances of the Corporation.

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6.11 Vice Presidents. Each Vice President shall have such powers and perform such duties as the Board of Directors or anycommittee thereof may from time to time prescribe, or as the President may from time to time delegate to him. In the absence ordisability of the President, any Vice President may perform the duties and exercise the powers of the President.

6.12 Secretary. The Secretary shall attend all meetings of the stockholders and record all votes and the minutes of allproceedings in a book to be kept for that purpose. The Secretary shall perform like duties for the Board of Directors when required. Heshall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors and shallperform such other duties as may be prescribed by the Board of Directors under whose supervision he shall be. He shall keep in safecustody the seal of the Corporation. He shall be under the supervision of the President. He shall perform such other duties and havesuch other authority and powers as the Board of Directors may from time to time prescribe or as the President may from time to timedelegate.

6.13 Assistant Secretaries. Each Assistant Secretary shall have such powers and perform such duties as the Board ofDirectors may from time to time prescribe or as the President may from time to time delegate to him.

6.14 Treasurer. The Treasurer shall have the custody of all corporate funds and securities, shall keep full and accurateaccounts of receipts and disbursements of the Corporation, and shall deposit all moneys and other valuable effects in the name and tothe credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of theCorporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, shall render to the Directors,at the regular meetings of the Board of Directors, or whenever they may require it, an account of all his transactions as Treasurer andof the financial condition of the Corporation, and shall perform such other duties as the Board of Directors may prescribe or thePresident may from time to time delegate.

6.15 Assistant Treasurers. Each Assistant Treasurer shall have such powers and perform such duties as the Board of Directorsmay from time to time prescribe or as the President may from time to time delegate to him.

6.16 Bonding. If required by the Board of Directors, all or certain of the officers shall give the Corporation a bond, in suchform, in such sum, and with such surety or sureties as shall be satisfactory to the Board of Directors, for the faithful performance ofthe duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal fromoffice, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belongingto the Corporation.

ARTICLE VIICERTIFICATES OF SHARES

7.1 Form of Certificates. The Corporation may, but is not required to, deliver to each stockholder a certificate or certificates,in such form as may be determined by the Board of Directors, representing shares to which the stockholder is entitled. Suchcertificates shall be consecutively numbered and shall be registered on the books and records the Corporation or its transfer agent asthey are issued. Each certificate shall state on the face thereof the holder’s name, the number, class of shares, and the par value of suchshares or a statement that such shares are without par value.

7.2 Shares without Certificates. The Board of Directors may authorize the issuance of uncertificated shares of some or all ofthe shares of any or all of its classes or series. The issuance of uncertificated shares has no effect on existing certificates for sharesuntil surrendered to the Corporation, or on the respective rights and obligations of the stockholders. Unless otherwise provided by theDelaware General Corporation Law, the rights and obligations of stockholders are identical whether or not their shares of stock arerepresented by certificates. Within a reasonable time after the issuance or transfer of uncertificated shares, the Corporation shall sendthe stockholder a written statement containing the information required on the certificates pursuant to Section 7.1. At least annuallythereafter, the Corporation shall provide to its stockholders of record, a written statement confirming the information contained in theinformational statement previously sent pursuant to this Section.

7.3 Lost Certificates. The Board of Directors may direct that a new certificate be issued, or that uncertificated shares beissued, in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of anaffidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing such issue of a new certificate oruncertificated shares, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require theowner of such lost or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or to

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give the Corporation a bond, in such form, in such sum, and with such surety or sureties as it may direct as indemnity against anyclaim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. When acertificate has been lost, apparently destroyed or wrongfully taken, and the holder of record fails to notify the Corporation within areasonable time after he has notice of it, and the Corporation registers a transfer of the shares represented by the certificate beforereceiving such notification, the holder of record is precluded from making any claim against the Corporation for the transfer or a newcertificate or uncertificated shares.

7.4 Transfer of Shares. Shares of stock shall be transferable only on the books of the Corporation or its transfer agent by theholder thereof in person or by his duly authorized attorney. Upon surrender to the Corporation or the transfer agent of the Corporationof a certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment or authority totransfer, it shall be the duty of the Corporation or the transfer agent of the Corporation to issue a new certificate to the person entitledthereto, cancel the old certificate and record the transaction upon its books.

7.5 Registered Stockholders. The Corporation shall be entitled to treat the holder of record of any share or shares of stock asthe holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share orshares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided bylaw.

ARTICLE VIIIGENERAL PROVISIONS

8.1 Dividends. Dividends upon the outstanding shares of the Corporation, subject to the provisions of the Certificate ofIncorporation, if any, may be declared by the Board of Directors at any regular or special meeting. Dividends may be declared andpaid in cash, in property, or in shares of the Corporation, subject to the provisions of the Delaware General Corporation Law and theCertificate of Incorporation. The Board of Directors may fix in advance a record date for the purpose of determining stockholdersentitled to receive payment of any dividend, such record date to be not more than sixty days prior to the payment date of suchdividend, or the Board of Directors may close the stock transfer books for such purpose for a period of not more than sixty days priorto the payment date of such dividend. In the absence of any action by the Board of Directors, the date upon which the Board ofDirectors adopts the resolution declaring such dividend shall be the record date.

8.2 Reserves. There may be created by resolution of the Board of Directors out of the surplus of the Corporation such reserveor reserves as the directors from time to time, in their discretion, think proper to provide for contingencies, or to equalize dividends, orto repair or maintain any property of the Corporation, or for such other purpose as the directors shall think beneficial to theCorporation, and the directors may modify or abolish any such reserve in the manner in which it was created. Surplus of theCorporation to the extent so reserved shall not be available for the payment of dividends or other distributions by the Corporation.

8.3 Telephone and Similar Meetings. Stockholders, directors and committee members may participate in and hold a meetingby means of conference telephone or similar communications equipment by which all persons participating in the meeting can heareach other. Participation in such a meeting shall constitute presence in person at the meeting, except where a person participates in themeeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called orconvened.

8.4 Books and Records. The Corporation shall keep correct and complete books and records of account and minutes of theproceedings of its stockholders and Board of Directors, and shall keep at its registered office or principal place of business, or at theoffice of its transfer agent or registrar, a record of its stockholders, giving the names and addresses of all stockholders and the numberand class of the shares held by each.

8.5 Checks and Notes. All checks or demands for money and notes of the Corporation shall be signed by such officer orofficers or such other person or persons as the Board of Directors may from time to time designate.

8.6 Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in itsname unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances.

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8.7 Fiscal Year. The fiscal year of the Company shall be fixed by resolution of the Board of Directors.

8.8 Seal. The Corporation may have a seal, and such seal may be used by causing it or a facsimile thereof to be impressed oraffixed or reproduced or otherwise. Any officer of the Corporation shall have authority to affix the seal to any document requiring it.

8.9 Indemnification. The Corporation shall indemnify its directors and officers to the fullest extent permitted by the DelawareGeneral Corporation Law and may, if and to the extent authorized by the Board of Directors, so indemnify any other person whom ithas the power to indemnify against liability, reasonable expense or other matter whatsoever.

8.10 Insurance. The Corporation may at the discretion of the Board of Directors purchase and maintain insurance on behalf ofany person who holds or who has held any position identified in Section 8.9 against any and all liability incurred by such person inany such position or arising out of his status as such.

8.11 Resignation. Any director, officer or agent may resign by giving written notice to the President or the Secretary. Suchresignation shall take effect at the time specified therein or immediately if no time is specified therein. Unless otherwise specifiedtherein, the acceptance of such resignation shall not be necessary to make it effective.

8.12 Off-Shore Offerings. In all offerings of securities pursuant to Regulation S of the Securities Act of 1933, as amended(the “Act”), the Corporation shall require that its stock transfer agent refuse to register any transfer of securities not made inaccordance with the provisions of Regulation S, pursuant to registration under the Act or an available exemption thereunder.

8.13 Amendment of Bylaws. The Board of Directors shall have power to amend, modify or repeal these Bylaws, or adopt anynew provision.

8.14 Invalid Provisions. If any part of these Bylaws shall be held invalid or inoperative for any reason, the remaining parts, sofar as possible and reasonable, shall be valid and operative.

8.15 Relation to Certificate of Incorporation. These Bylaws are subject to, and governed by, the Certificate of Incorporation.

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APPENDIX F

BICO, INC.

ARTICLES OF INCORPORATIONAS AMENDED AND RESTATED IN THEIR ENTIRETY

COMMONWEALTH OF PENNSYLVANIADEPARTMENT OF STATECORPORATION BUREAU

In compliance with the requirements of Section 1911 of the Business Corporation Law of 1988, and incident to the filing ofthe Articles of Merger and Agreement and Joint Plan of Merger, BICO, Inc. hereby amends and restates its Articles of Incorporationin their entirety so that the same read as follows:

1. The name of the corporation is: BICO, Inc.

2. The location and post office address of the registered office of the corporation in this Commonwealth is: Suite 1210, 1515Market Street, Philadelphia, Philadelphia County, Pennsylvania 19102.

3. The name of the Commercial Registered Office Provider is: c/o CT Corporation System.

4. The corporation is incorporated under the Business Corporation Law of the Commonwealth of Pennsylvania for thefollowing purpose or purposes:

The corporation shall have unlimited power to engage in and do any and all lawful business for which a corporationmay be incorporated under the Business Corporation Law of 1988, including without limitation, the power to engage in manufacturingof any nature whatsoever.

5. The term for which the corporation is to exist is: Perpetual.

6. The Aggregate number of shares which the corporation shall have authority to issue shall be 250,000,000,000 shares ofcommon stock having a par value of $0.0001 per share and 150,000,000 shares of preferred stock having a par value of $0.0001 pershare. The Board of Directors of the corporation has full right and authority to divide such shares, at any time and from time to time,into one or more classes or series, or both, as the Board may designate, and to determine for any such class or series its voting rights,designations, preferences and privileges, including, without limitation, conversion rights.

7. The shareholders of the corporation shall not be entitled to cumulative voting rights with respect to the election ofdirectors.

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APPENDIX G

BYLAWS

OF

BICO, INC

INCORPORATED UNDER THE LAWS OF PENNSYLVANIA

ARTICLE I – IDENTIFICATION

SECTION 1. PRINCIPAL OFFICE. The principal office of the Company shall be at such place within or outside of theCommonwealth of Pennsylvania as the Board of Directors shall by resolution from time to time designate.

SECTION 2. SEAL. The Company shall have a corporate seal in such form as the Board of Directors shall by resolution from time totime prescribe.

SECTION 3. FISCAL YEAR. The fiscal year shall end on the last day of December of each year and begin on the following day.

ARTICLE II – SHAREHOLDERS’ MEETING

SECTION 1. PLACE OF MEETINGS. Meetings of the shareholders of the Company shall be held at the principal office of theCompany or at such other place within or without the Commonwealth of Pennsylvania as may be fixed by the Board of Directors.

SECTION 2. ANNUAL MEETING. The annual meeting of the shareholders shall be held on the second Wednesday in Septembereach year at two o’clock p.m., or on such other day or at such other time as may be fixed by the Board of Directors. The shareholdersat the annual meeting shall: (i) elect a Board of Directors; and (ii) transact such other business as may properly be brought before suchmeeting.

SECTION 3. CHAIRMAN OF MEETING. All meetings of shareholders shall be called to order and presided over by the Chairman ofthe Board or in his absence, by the President, or in the absence of both, by the person designated in writing by the Chairman orPresident.

SECTION 4. DETERMINATION OF RECORD DATES. The Board of Directors shall fix a time, not less than ten or more thanseventy days, prior to the date of any meeting of shareholders, as a record date for the determination of the shareholders entitled tonotice of and to vote on such meeting.

SECTION 5. NOTICE TO SHAREHOLDERS. Written notice of every meeting of the shareholders shall be given by, or at thedirection of, the person or persons authorized to call the meeting, to each shareholder of record entitled to vote at the meeting: (i) atleast thirty days prior to the date fixed for the annual meeting; (ii) at least ten days prior to the date fixed for any special meeting,unless, in either case, a greater period of notice is required by law to be given in advance of such particular meeting. Written noticeshall be deemed to be sufficient if given to the shareholder personally, or by sending a copy thereof through the mail to his addressappearing on the books of the Company, or supplied by him to the Company for the purpose of notice. The notice required by this By-Law shall specify the place, date and hour of the meeting, and in case of a special meeting, the general nature of the business to betransacted.

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SECTION 6. NOMINATIONS AND BUSINESS AT MEETINGS. At any annual meeting of shareholders, only persons who arenominated or business that is proposed in accordance with the procedures set forth in this Section 6 shall be eligible for election asDirectors or considered for action by shareholders. Nominations of persons for election to the Board of Directors of the Company maybe made or business proposed at a meeting of shareholders (i) by or at the direction of the Board of Directors or (ii) by anyshareholder of the Company entitled to vote at the meeting who complies with the notice and other procedures set forth in this Section6. Such nominations or business proposals, other than those made by or at the direction of the Board of Directors, shall be madepursuant to timely notice in writing to the Secretary of the Company and such proposals must, under applicable law, be a propermatter for shareholder action. To be timely, a shareholder’s notice shall be delivered to or mailed and received at the principal officeof the Company not less than 120 days nor more than 210 days in advance of the date which is the anniversary of the date theCompany’s proxy statement was released to shareholders in connection with the previous year’s annual meeting or if the date of theapplicable annual meeting has been changed by more than 30 days from the date contemplated at the time of the previous year’s proxystatement, not less than 90 days before the date of the applicable annual meeting; provided, however, that in the event that less than 90days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to betimely must be received not later than the close of business on the 15 th day following the day on which such notice of the date of themeeting was mailed or such public disclosure was made, whichever first occurs.

Such shareholder’s notice shall set forth (i) as to each person who such shareholder proposes to nominate for election or reelection as aDirector, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or isotherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including suchperson’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); (ii) as to anyother business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be broughtbefore the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business ofsuch person on whose behalf such proposal is made; and (iii) as to the shareholder giving the notice and the beneficial owner, if any,on whose behalf the nomination or proposal is made, (a) the name and address of such shareholder and beneficial owner, if any, (b)the class and number of shares of the Company which are beneficially owned, (c) a description of all arrangements or understandingsbetween such shareholder and each proposed nominee and any other person or persons (including their names) with respect to anysuch nomination(s) or proposal(s) and (d) a representation that such shareholder intends to appear in person or by proxy at the meetingto nominate the person(s) named, or move the proposal identified, in its notice. The Company may require any proposed nominee tofurnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nomineeto serve as a director of the Company. No person shall be eligible for election as a Director of the Company and no business shall beconducted at the annual meeting of shareholders, other than those made by or at the direction of the Board of Directors, unlessnominated or proposed in accordance with the procedures set forth in this Section 6. The Chairman of the meeting may, if the factswarrant, determine and declare to the meeting that a nomination or proposal was not made in accordance with the provisions thisSection 6 and, if he should so determine, he shall so declare to the meeting and the defective nomination or proposal shall bedisregarded.

ARTICLE III – DIRECTORS

SECTION 1. GENERAL POWERS OF BOARD OF DIRECTORS. The business and affairs of the Company shall be managed by itsBoard of Directors which is hereby authorized and empowered to exercise all corporate powers of the Company.

SECTION 2. QUALIFICATION AND NUMBER. The Board of Directors shall have the power to fix the number of directors andfrom time to time by proper resolution to increase or decrease the number thereof without a vote of the shareholders.

SECTION 3. ELECTION AND TERM. Except as provided in the Company’s Restated Articles of Incorporation as amended, theshareholders shall at each annual meeting elect directors each of whom shall serve until the annual meeting of shareholders nextfollowing his election and until his successor is elected and shall qualify.

SECTION 4. VACANCIES. Vacancies on the Board of Directors, including vacancies from any increase in the number of directors,shall be filled by a majority of the remaining members of the Board though less than a quorum, and each person so elected shall be a

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director until his successor is elected by the shareholders who may make such election at the next annual meeting of the shareholdersor at any special meeting to be called for that purpose and held prior thereto.

SECTION 5. NOMINATION OF DIRECTORS. Candidates for election to the Board of Directors at an annual meeting of theshareholders shall be nominated at a regular or special meeting of the Board. Candidates for such election also may be nominated byany shareholder entitled to vote at the meeting in accordance with Article II-Section 6. If any nominee chosen by the Board shall beunwilling or unable to serve as a director if elected, a substitute nominee shall be designated by the Board, and announcement of suchdesignation shall be made at the meeting of the shareholders prior to the voting upon election of directors.

SECTION 6. ORGANIZATION MEETING OF BOARD OF DIRECTORS. The Board of Directors shall without notice meet eachyear upon adjournment of the annual meeting of the shareholders at the principal office of the Company, or at such other time or placeas shall be designated in a notice given to all nominees for director, for the purposes of organization, fixing of times and places forregular meetings of the Board for the ensuing year, election of officers and consideration of any other business that may properly bebrought before the meeting.

SECTION 7. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at such times and places as shall befixed at the organization meeting of the Board or as may be otherwise determined by the Board.

SECTION 8. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the Chairman of the Board, theChief Executive Officer, the President or the Secretary and shall be called by the Secretary at the written request of any two directors.

SECTION 9. NOTICE OF REGULAR AND SPECIAL MEETINGS. No notice of a regular meeting of the Board of Directors shallbe necessary if the meeting is held at the time and place fixed by the Board at its organization meeting or at the immediately precedingBoard meeting. Notice of any regular meeting to be held at another time or place and of all special meetings of the Board, setting forththe time and place of the meeting, and in the case of a special meeting the purpose or purposes thereof, shall be given by letter or otherwriting deposited in the United States mail not later than during the third day immediately preceding the day for such meeting, or bytelephone, telex, facsimile or other oral, written or electronic means, received not later than during the day immediately preceding theday for such meeting or such shorter period as the person or persons calling such meeting may deem necessary or appropriate underthe circumstances

SECTION 10. QUORUM. A majority of the directors in office shall be necessary to constitute a quorum for the transaction ofbusiness, and the acts of the majority of the directors present at a meeting at which a quorum is present shall be the acts of the Boardof Directors. If at any meeting a quorum shall not be present, the meeting may adjourn from time to time until a quorum shall bepresent.

SECTION 11. WRITTEN CONSENT. Any action which may be taken at a meeting of the Board of Directors or at a meeting of theexecutive or other committee as hereinafter provided may be taken without a meeting, if a consent or consents in writing setting forththe action so taken shall be signed by all the directors or the members of the committee, as the case may be, and shall be filed with theSecretary of the Company.

SECTION 12. PARTICIPATION BY CONFERENCE TELEPHONE. One or more directors may participate in a meeting of theBoard of Directors or of a committee of the Board as hereinafter provided for by means of conference telephone or similarcommunications equipment by means of which all persons participating in the meeting can hear each other.

SECTION 13. EXECUTIVE COMMITTEE. The Board of Directors may, by resolution adopted by a majority of the whole Board,constitute, abolish or reconstitute an Executive Committee of the Board as the Board may determine, and shall include the ChiefExecutive Officer, if any, or the President. The other members of the Executive Committee shall be appointed and may be removed bythe Board. The Chief Executive Officer, if any, or the President shall act as Chairman of such Committee, and in his absence, theCommittee shall select one of its members to act as Chairman. The Chairman of the Committee shall have power to vote on allquestions. The members of the Committee shall hold office until the first meeting of the Board of Directors after the next succeedingannual meeting of the shareholders and until their successors are appointed.

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The Board of Directors shall fill any vacancy in the Executive Committee, and it shall be its duty to keep the membership of suchCommittee full.

The Executive Committee shall keep proper minutes and records of its proceedings, and all actions of the Executive Committee shallbe reported to the Board of Directors at its meeting next succeeding such actions, and when the Board is not in session the ExecutiveCommittee shall have all powers and rights of the Board unless limited by a resolution of the Board.

All questions shall be decided by the vote of the majority of the members of such Committee present.

SECTION 14. OTHER COMMITTEES. The Board of Directors may, by resolution adopted by a majority of the whole Board,designate one or more committees, each committee to consist of two or more directors.

SECTION 15. COMPENSATION OF OFFICERS AND ASSISTANT OFFICERS. Unless otherwise determined by resolutionadopted by the majority of the entire Board of Directors, the Chief Executive Officer of the Company or such officer as he maydesignate shall have the authority to determine, fix and change the compensation of all officers and assistant officers of the Companyexcept those which are executive officers (as defined under the Securities Exchange Act of 1934).

ARTICLE IV – OFFICERS

SECTION 1. NUMBER AND ELECTION. The Board of Directors shall elect a Chairman of the Board, a President, a Secretary and aTreasurer, and may elect such other officers and assistant officers as the Board may deem appropriate.

SECTION 2. TERM OF OFFICE. The term of office for all officers shall be until the organization meeting of the Board of Directorsfollowing the next annual meeting of shareholders or until their respective successors are elected and shall qualify, but any officer maybe removed from office, either with or without cause, at any time by the affirmative vote of the majority of the members of the Boardthen in office. A vacancy in any office arising from any cause may be filled for the unexpired term by the Board.

SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all meetings of the shareholders and of theBoard of Directors at which he is present. He may be a member of any of the committees of the Board.

SECTION 4. CHIEF EXECUTIVE OFFICER. Subject to the control of the Board of Directors, the Chief Executive Officer shall havegeneral control and direction of the business of the Corporation. If no person is elected to the office of the Chief Executive Officer, thePresident shall be the Chief Executive Officer. In addition, he shall be a member of the Executive Committee and may be a member ofthe other committees of the Board. In the absence of the Chairman, he shall have the powers of the Chairman of the Board.

SECTION 5. PRESIDENT. The President shall have such powers and perform such duties as the Board of Directors may specify. Inthe absence of a Chief Executive Officer, the President shall be the Chief Executive Officer and shall have general supervision overthe business and affairs of the Company and be a member of the Executive Committee and may be a member of the other committeesof the Board.

SECTION 6. SECRETARY. The Secretary shall attend meetings of the shareholders, the Board of Directors and the ExecutiveCommittee, shall keep minutes thereof in suitable books, and shall send out all notices of meetings as required by law or by theseBylaws. He shall, in general, perform all duties incident to the office of the Secretary and perform such other duties as may beassigned to him by the Board, the Chief Executive Officer.

SECTION 7. TREASURER. The Treasurer shall have charge and custody of and be responsible for all funds and deposit all sums inthe name of the Company in banks, trust companies or other depositories; he shall receive and give receipts for money due andpayable to the Company from any source whatsoever, and in general shall perform all the duties incident to the office of the Treasurerand such other duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or by any officer to whom theChief Executive Officer has directed him to report.

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SECTION 8. OTHER OFFICERS. The powers and duties of other officers shall be such as may, from time to time, be prescribed bythe Board of Directors or the Chief Executive Officer.

SECTION 9. DELEGATION OF DUTIES OF OFFICERS. In case of the absence of any officer of the Company or for any otherreason that the Board of Directors may deem sufficient, the Board, or in the absence of action by the Board, the Chief ExecutiveOfficer, or in his absence, the Chairman of the Board, may delegate for the time being the powers and duties of any officer to anyother officer or to any director.

ARTICLE V – EXECUTION OF WRITTEN INSTRUMENTS

The Board of Directors shall, from time to time, designate the officers, employees or agents of the Company who shall have power inits name to sign and endorse checks and other negotiable instruments, and to borrow money for the Company and in its name to makenotes or other evidence of indebtedness. Any officer so designated by the Board may further delegate his powers to the extentprovided in any resolution of the Board. Unless otherwise authorized by the Board, all contracts, leases, deeds and deeds of trust,mortgages, powers of attorney to transfer stock and all other documents requiring the seal of the Company shall be executed for andon behalf of the Company by the Chairman of the Board, the President or any Vice President, and shall be attested by the Secretary oran Assistant Secretary.

ARTICLE VI – CERTIFICATES OF STOCK AND TRANSFERS OF STOCK

SECTION 1. FORM OF SHARE CERTIFICATES AND TRANSFER. Share certificates representing the capital stock of theCompany shall be in such form as the Board of Directors may from time to time determine. Each certificate shall be signed by theChairman of the Board, the Chief Executive Officer, the President or one of the Vice Presidents or other officer designated by theBoard and shall be countersigned by the Treasurer or an Assistant Treasurer and sealed with the seal of the Company. If suchcertificates of stock are signed or countersigned by a corporate transfer agent and a corporate registrar of the Company, such signatureof the Chairman of the Board, the President or other officer, and the countersignature of the Treasurer or Assistant Treasurer, and suchseal, or any of them, may be a facsimile, engraved or printed.

SECTION 2. TRANSFER AGENT AND REGISTRAR. The Board of Directors may appoint an incorporated bank or trust companyto act as transfer agent for the Company’s capital stock with such duties and powers as may be prescribed by the Board in theresolutions appointing them; and an incorporated bank or trust company to act as registrars of the Company’s capital stock. A sharecertificate of the Company shall not be valid or binding unless countersigned by a transfer agent and registered before issue by aregistrar.

SECTION 3. REGISTERED SHAREHOLDERS. The Company shall be entitled to treat the holder of record of any share or shares ofstock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in suchshare on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by thelaws of Pennsylvania.

SECTION 4. LOST CERTIFICATE. Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit oraffirmation of that fact and advertise the same in such manner as the Board of Directors may require, and shall, if the directors sorequire, give the Company a bond of indemnity, inform and with one or more sureties satisfactory to the Board, whereupon a newcertificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost or destroyed.

SECTION 5. DETERMINATION OF SHAREHOLDERS ENTITLED TO DIVIDENDS, DISTRIBUTIONS OR RIGHTS. TheBoard of Directors may fix a time not more than fifty days prior to the date fixed for the payment of any dividend or distribution or thedate for the allotment of rights or the date when any change or conversion or exchange of shares will be made or go into effect as arecord date for the determination of the shareholders entitled to receive payment of any such dividend or distribution or to receive anysuch allotment or rights or to exercise the rights in respect to any such change, conversion or exchange of shares.

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ARTICLE VII – LIMITATION OF DIRECTOR LIABILITY

To the fullest extent that the laws of the Commonwealth of Pennsylvania, as in effect on January 27, 1987 or as thereafter amended,permit elimination or limitation of the liability of directors, no director of the Company shall be personally liable for monetarydamages as such for any action taken, or any failure to take any action, as a director. This Article shall not apply to any action filedprior to January 27, 1987, nor to any breach of performance of duty or any failure of performance of duty by any director occurringprior to January 27, 1987. The provisions of this Article shall be deemed to be a contract with each director of the Company whoserves as such at any time while such provisions are in effect, and each such director shall be deemed to be serving as such in relianceon the provisions of this Article. This Article shall not be amended, altered or repealed without the affirmative vote of the holders of atleast 80% of the voting power (without consideration of the rights of any class of stock to elect directors by a separate class) of thethen outstanding shares of Capital stock of the Company entitled to vote in an annual election of directors, voting together and not asseparate classes, unless such amendment, alteration or repeal is first recommended and approved by a majority of the entire Board ofDirectors in which case only a majority shareholder vote shall be required. Such affirmative vote shall be required notwithstanding thefact that no vote is required, or that a lesser percentage may be specified, bylaw or in any agreement with any national securitiesexchange or otherwise. Any amendment to, alternation, or repeal or adoption of this Article which has the effect of increasing directorliability shall operate prospectively only and shall not have any effect with respect to any action taken, or any failure to act, by adirector prior thereto.

ARTICLE VIII – INDEMNIFICATION

SECTION 1. Entitlement to Indemnification. The Corporation shall, to the extent that a determination of entitlement is made pursuantto, or to the extent that entitlement to indemnification is otherwise accorded by, this Article, indemnify every person who was or is adirector, officer or employee of the Corporation (hereinafter referred to as the “Indemnitee”) who was or is involved in any manner(including, without limitation, as a party or a witness), or is threatened to be made so involved, in any threatened, pending orcompleted investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including withoutlimitation, any investigation, claim, action, suit or proceeding by or in the right of the Corporation) by reason of the fact that theIndemnitee is or was a director, officer or employee of the Corporation, or is or was serving at the request of the Corporation as adirector, officer, employee, fiduciary or other representative of another corporation, partnership, joint venture, trust, employee benefitplan or other entity (such investigation, claim, action, suit or proceeding hereinafter being referred to as a “Proceeding”), against anyexpenses and any liability actually and in good faith paid or incurred by such person in connection with such Proceeding; provided,that indemnification may be made with respect to a Proceeding brought by an Indemnitee against the Corporation only as provided inthe last sentence of this Section 6.1. As used in this Article, the term “expenses” shall include fees and expenses of counsel and allother expenses (except any liability) and the term “liability” shall include amounts of judgments, fines or penalties and amounts paidin settlement. Indemnification may be made under this Article for expenses incurred in connection with any Proceeding brought by anIndemnitee against the Corporation only if (1) the Proceeding is a claim for indemnification under this Article or otherwise, (2) theIndemnitee is successful in whole or in part in the Proceeding for which expenses are claimed, or (3) the indemnification for expensesis included in a settlement of, or is awarded by a court in, a Proceeding to which the Corporation is a party.

Section 2. Advancement of Expenses. All expenses incurred in good faith by or on behalf of the Indemnitee with respect to anyProceeding shall, upon written request submitted to the Secretary of the Corporation, be advanced to the Indemnitee by theCorporation prior to final disposition of such Proceeding, subject to any obligation which may be imposed by law or by provision inthe Articles, bylaws, an agreement or otherwise to repay the Corporation in certain events.

Section 3. Indemnification Procedure.

(a) To obtain indemnification under this Article, an Indemnitee shall submit to the Secretary of the Corporation a written request,including such supporting documentation as is reasonably available to the Indemnitee and reasonably necessary to the making of adetermination of whether and to what extent the Indemnitee is entitled to indemnification. The Secretary of the Corporation shallpromptly thereupon advise the General Counsel in writing of such request.

(b) The Indemnitee’s entitlement to indemnification shall be determined by a Referee (selected as hereinafter provided) in a writtenopinion. The Referee shall find the Indemnitee entitled to indemnification unless the Referee finds that the Indemnitee’s conduct wassuch that, if so found by a court, indemnification would be prohibited by Pennsylvania law.

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(c) “Referee” means an attorney with substantial expertise in corporate law who neither presently is, nor in the past five years hasbeen, retained to represent: (i) the Corporation or the Indemnitee, or an affiliate of either of them, in any matter material to either suchparty, except to act as a Referee in similar proceedings, or (ii) any other party to the Proceeding giving rise to a claim forindemnification under this Article. The Corporation’s General Counsel, if Disinterested (as hereinafter defined), or if not, theCorporation’s senior officer who is Disinterested, shall propose a Referee. The Secretary of the Corporation shall notify theIndemnitee of the name of the Referee proposed, whose appointment shall become final unless the Indemnitee, within 10 days of suchnotice, reasonably objects to such Referee as not being qualified, independent or unbiased. If the Corporation and the Indemniteecannot agree on the selection of a Referee, or if the Corporation fails to propose a Referee, within 45 days of the submission of awritten request for indemnification, the Referee shall be selected by the American Arbitration Association. The General Counsel or asenior officer shall be deemed Disinterested if not a party to the Proceeding and not alleged in the pleadings as to the Proceeding tohave participated in the action, or participated in the failure to act, which is the basis for the relief sought in the Proceeding.

(d) Notwithstanding any other provision of this Article, to the extent that there has been a determination by a court as to the conduct ofan Indemnitee such that indemnification would not be prohibited by Pennsylvania law, or if an Indemnitee would be entitled byPennsylvania law to indemnification, the Indemnitee shall be entitled to indemnification hereunder.

(e) A determination under this Section 3 shall be conclusive and binding on the Company but not on the Indemnitee.

Section 4. Partial Indemnification. If an Indemnitee is entitled under any provision of this Article to indemnification by theCorporation of a portion, but not all, of the expenses or liability resulting from a Proceeding, the Corporation shall neverthelessindemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled.

Section 5. Insurance. The Corporation may purchase and maintain insurance to protect itself and any Indemnitee against expenses andliability asserted or incurred by any Indemnitee in connection with any Proceeding, whether or not the Corporation would have thepower to indemnify such person against such expense or liability by law, under an agreement or under this Article. The Corporationmay create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure thepayment of such amounts as may be necessary to effect indemnification.

Section 6. Agreements. The Corporation may enter into agreements with any director, officer or employee of the Corporation, whichagreements may grant rights to the Indemnitee or create obligations of the Corporation in furtherance of, different from, or in additionto, but not in limitation of, those provided in this Article, without shareholder approval of any such agreement. Without limitation ofthe foregoing, the Corporation may obligate itself (1) to maintain insurance on behalf of the Indemnitee against certain expenses andliabilities and (2) to contribute to expenses and liabilities incurred by the Indemnitee in accordance with the application of relevantequitable considerations to the relative benefits to, and the relative fault of, the Corporation.

Section 7. Miscellaneous. The entitlement to indemnification and advancement of expenses provided for in this Article (1) shall be acontract right, (2) shall not be exclusive of any other rights to which an Indemnitee may otherwise be entitled under any Article,bylaw, agreement, vote of shareholders or directors or otherwise, (3) shall continue as to a person who has ceased to be a director,officer or employee and (4) shall inure to the benefit of the heirs and legal representatives of any person entitled to indemnification oradvancement of expenses under this Article.

Section 8. Construction. If any provision of this Article shall be held to be invalid, illegal or unenforceable for any reason (1) suchprovision shall be invalid, illegal or unenforceable only to the extent of such prohibition and the validity, legality and enforceability ofthe remaining provisions of this Article shall not in any way be affected or impaired thereby, and (2) to the fullest extent possible, theremaining provisions of this Article shall be construed so as to give effect to the intent manifested by the provision held invalid, illegalor unenforceable.

Section 9. Effectiveness. This Article shall apply to every Proceeding other than a Proceeding filed prior to January 27, 1987, exceptthat it shall not apply to the extent that Pennsylvania law does not permit its application to any breach of performance of duty or anyfailure of performance of duty by an Indemnitee occurring prior to January 27, 1987.

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Section 10. Amendment. This Article may be amended or repealed at any time in the future by vote of the directors withoutshareholder approval; provided, that any amendment or repeal, or adoption of any Article of the Restated Articles or any other bylawof the Corporation, which has the effect of limiting the rights granted to directors under this Article, shall require the affirmative voteof at least 80% of the voting power of the then outstanding shares of capital stock of the Corporation entitled to vote in an annualelection of directors, voting together as a single class. Any amendment or repeal, or such Article or other bylaw, limiting the rightsgranted under this Article shall operate prospectively only, and shall not limit in any way the indemnification provided for herein withrespect to any action taken, or failure to act, by an Indemnitee prior thereto.

ARTICLE X – NON-APPLICABILITY OF PROVISIONS OF PENNSYLVANIA ACT NO. 36 OF 1990

The following provisions of Pennsylvania Act No. 36 of 1990 shall not be applicable to the Company:

A. Subchapter G of Chapter 25 of Title 15 of the Pennsylvania Consolidated Statutes.

B. Subchapter H of Chapter 25 of Title 15 of the Pennsylvania Consolidated Statutes.

ARTICLE XI - BYLAWS SUBJECT TO PROVISIONS OF ARTICLES OF INCORPORATION

In case of any conflict between the provisions of these Bylaws and the Company's Restated Articles of Incorporation as amended fromtime to time, the provisions of the Articles of Incorporation shall control, and with respect to any provisions required to be set forth inthe Bylaws, the applicable provisions of the Articles of Incorporation are and shall be incorporated herein by reference and shall bedeemed a part of these Bylaws.

ARTICLE XII – AMENDMENTS

Except as otherwise provided in Articles VII and VIII, these Bylaws may be altered, amended, added to or repealed by the Board ofDirectors at any meeting of the Board duly convened with or without notice of that purpose, subject to the power of the shareholdersto change such action.