SOURCE: One Horizon Group, Inc.

One  Horizon Group, Inc.

August 09, 2016 16:05 ET

One Horizon Announces Financial Results for the Second Quarter and Six Month Period Ended June 30, 2016

LIMERICK, IRELAND--(Marketwired - Aug 9, 2016) -  One Horizon Group, Inc. (NASDAQ: OHGI), a leading carrier-grade VoIP solution for mobile providers and smartphones, today announced its financial results for the second quarter and six month period ended June 30, 2016.

Brian Collins, CEO of One Horizon Group, stated, "We are not only proud of our ability to increase revenue year-over-year during the second quarter and first six months of 2016, but also in our ability to invest in ourselves. Our disruptive, proprietary VoIP technology continues to evolve with unique offerings such as global data-roaming SIM cards, cashless payment offerings, and prepaid call and messaging bundles with automatic renewals. We are having active discussions with leading carriers in Latin America, Africa and Asia as well as expanding our service offerings to Smart Communications who have licensed our technology. Coupled with the growth we are experiencing in China through Aishuo, which now has over 37 million downloads, we are well positioned for continued subscriber and financial growth."

Operational Highlights to Date:

  • Business-to-consumer ('B2C') mobile VoIP application in China, Aishuo, has surpassed 37 million subscriber downloads. Aishuo allows consumers to talk and SMS application-to-application for free and call or text a landline or mobile phone, home or abroad, for a nominal cost. Because Aishuo consumes 10x less mobile data and 8x less battery life than any other mobile VoIP technology available today, the voice quality is better as compared to other OTT solutions.
  • Additionally, Aishuo has teamed up with significant amount of global data-roaming SIM cards to offer consumers a direct, inside-Aishuo-app purchase of a SIM card that is delivered to your door before you leave on vacation. Simple to use, easy to pay for, and greatly reduces customers' mobile communication charges when traveling. We believe this is a unique and powerful combination for the Chinese travelers.
  • One Horizon has sold its second software license for its data roaming VoIP solution, branded Marino All Abroad, specifically targeting seafarers with a higher estimated ARPU due to the longevity of their travels. The service is offered through Smart Communications, the Philippines' leading wireless service provider with an estimated 55 million prepaid subscribers.
  • Being offered first through Smart Communications, the Company has released a new cashless payment service for mobile operators to allow users to purchase call credit using their debt or credit card.
  • One Horizon has released new software that allows app users to purchase packages of minutes and messages for a period and automatically renew their package subscription when it expires.

Financial Highlights for the Second Quarter Ended June 30, 2016:
Revenue for the three months ended June 30, 2016 was approximately $366,000 as compared to approximately $108,000 for the three months ended June 30, 2015, an increase of approximately $258,000, or 238.8%. The increase was primarily due to the growth in the business in the B2C business in China and the B2B business in the rest of Asia. Management believes further growth in both sectors of revenue and particularly the B2B sector with the launch of "Roam Like Home" software for Telecommunication companies will occur.

Cost of revenue excluding amortization of software development costs, was approximately $49,000 or 13.3% of sales for the three months ended June 30, 2016, compared to cost of revenue of $47,000 or 43.5% of sales for the three months ended June 30, 2015.

Gross profit (excluding the Amortization of software development costs) for the three months ended June 30, 2016 was approximately $317,000 as compared to $61,000 for the three months ended June 30, 2015, an increase of approximately 419.7%. The significant increase was mainly due to the increased revenue.

Operating expenses, including general and administrative expenses, depreciation and research and development were approximately $1,079,000 and $745,000 during the three months ended June 30, 2016 and 2015, respectively. The increase was primarily due to additional research and development costs expensed and other non-cash items expensed in General and administrative costs.

Loss before taxes for the three months ended June 30, 2016 was approximately $1,429,000 as compared to net loss of approximately $1,624,000 for the same period in 2015. The decrease in loss was primarily due to an increase in revenue mentioned above. Management believes the net loss will decrease and eventually become net income going forward with our growth in the business in Asia and also elsewhere in the world.

Net Loss for the second quarter of 2016 was approximately $1.4 million as compared to loss of approximately $1.6 million for the same period in 2015.

Financial Highlights for the First Six Months Ending June 30, 2016:
Revenue for the six months ended June 30, 2016 was approximately $975,000 as compared to approximately $853,000 for the six months ended June 30, 2015, an increase of approximately $122,000, or 14.3%.

Cost of revenue excluding amortization of software development costs, was approximately $75,000 or 7.7% of sales for the six months ended June 30, 2016, compared to cost of revenue of $108,000 or 12.7% of sales for the six months ended June 30, 2015.

Gross profit (excluding the Amortization of software development costs) for the six months ended June 30, 2016 was approximately $900,000 as compared to $745,000 for the six months ended June 30, 2015, an increase of approximately $155,000 or 20.8%.

Operating expenses, including general and administrative expenses, depreciation and research and development were approximately $2.2 million and $1.9 million during the six months ended June 30, 2016 and 2015, respectively.

Net Loss for the nine months ended June 30, 2016 was approximately $2.7 million as compared to loss of approximately $2.5 million for the same period in 2015.

About One Horizon Group, Inc.
One Horizon Group, Inc. (NASDAQ: OHGI) a leading developer and operator of carrier-grade optimized VoIP solutions for mobile telcos and enterprises. The company currently services over 37 million subscribers across 20 licensed brands worldwide. The technology is one of the world's most bandwidth-efficient mobile VoIP, messaging and advertising platforms for smartphones. Founded in 2012, the Company now has operations in Ireland, Switzerland, the United Kingdom, China, India, Singapore, Hong Kong and Latin America. For more information on the Company please visit http://www.onehorizongroup.com.

Safe Harbor Statement
This news release may contain "forward-looking" statements. These forward-looking statements are only predictions and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ from those in the forward looking-statements. Potential risks and uncertainties include such factors as uncertainty of consumer demand for the Company's products, as well as additional risks and uncertainties that are identified and described in Company's SEC reports. Actual results may differ materially from the forward-looking statements in this press release. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date. The Company does not undertake, and it specifically disclaims, any obligation to update any forward-looking statements to reflect occurrences, developments, events or circumstances after the date of such statement.

   
   
ONE HORIZON GROUP, INC.  
Condensed Consolidated Balance Sheets  
June 30, 2016 and December 31, 2015  
(in thousands, except share data)  
(unaudited)  
   
    June 30,     December 31,  
    2016     2015  
Assets                
                 
Current assets:                
  Cash   $ 932     $ 1,772  
  Accounts receivable (net),     2,963       3,560  
  Other assets     527       402  
  Total current assets     4,422       5,734  
                 
Property and equipment, net     68       96  
Intangible assets, net     9,168       9,823  
Investment     18       18  
                 
Total assets   $ 13,676     $ 15,671  
                 
Liabilities and Stockholders' Equity                
                 
Current liabilities:                
  Accounts payable   $ 174     $ 223  
  Accrued expenses     186       220  
  Accrued compensation     99       18  
  Income taxes     90       90  
                   
  Current portion of long-term debt     -       5  
  Total current liabilities     549       556  
                 
Long-term liabilities                
                 
  Amount due to related parties     2,343       2,354  
  Convertible debenture     2,852       2,636  
  Deferred income taxes     193       215  
  Mandatorily redeemable preferred shares     74       73  
Total liabilities     6,011       5,834  
                 
Equity                
Preferred stock:                
  $0.0001 par value, authorized 50,000,000; issued and outstanding 170,940 shares (December 2015 - 170,940)     1       1  
Common stock:                
  $0.0001 par value, authorized 200,000,000 shares issued and outstanding 35,147,283 shares (December 2015 - 35,147,283)     3       3  
Additional paid-in capital     36,446       36,070  
                 
Retained Earnings (Deficit)     (28,923 )     (26,201 )
Accumulated other comprehensive income     138       (36 )
Total One Horizon Group, Inc., stockholders' equity     7,665       9,837  
                 
                 
Total liabilities and equity   $ 13,676     $ 15,671  
                 
                 
                 
ONE HORIZON GROUP, INC.  
Condensed Consolidated Statements of Operations  
For the three and six months ended June 30, 2016 and 2015  
(in thousands, except per share data)  
(unaudited)  
   
    Three Months ended June 30,     Six Months ended June 30,  
    2016     2015     2016     2015  
                                 
Revenue   $ 366     $ 108     $ 975     $ 853  
                                 
Cost of revenue - Hardware, calls and network                                
    charges     49       47       75       108  
    - Amortization of software development costs     493       580       1,005       1,092  
      542       627       1,080       1,200  
                                 
Gross margin     (176 )     (519 )     (105 )     (347 )
                                 
Expenses:                                
  General and administrative     874       569       1,838       1,492  
  Depreciation     15       16       30       36  
  Research and development     186       160       374       322  
      1,075       745       2,242       1,850  
                                 
Loss from operations     (1,251 )     (1,264 )     (2,347 )     (2,197 )
                                 
Other income and expense:                                
  Interest expense     (176 )     (284 )     (356 )     (374 )
  Interest expense - related parties     -       -       -       (1 )
  Foreign exchange     2       (76 )     9       9  
  Interest income     -       -       -       1  
      (174 )     (360 )     (347 )     (365 )
                                 
Loss before income taxes     (1,425 )     (1,624 )     (2,694 )     (2,562 )
                                 
Income taxes (recovery) - deferred     (11 )     (45 )     (22 )     (45 )
                                 
Loss for the period     (1,414 )     (1,579 )     (2,672 )     (2,517 )
                                 
Net income (loss) attributable to the non-controlling interest     -       (31 )     -       (36 )
                                 
Net Income (Loss) for the period attributable to One Horizon Group, Inc.     (1,414 )     (1,548 )     (2,672 )     (2,481 )
                                 
Less: Preferred Dividends     (25 )     (25 )     (50 )     (50 )
                                 
Net loss attributable to One Horizon Group, Inc. Common stockholders   $ (1,439 )   $ (1,573 )   $ (2,722 )   $ (2,531 )
                                 
Earnings per share attributable to One Horizon Group, Inc. stockholders                                
                                 
  Basic net loss per share   $ (0.04 )   $ (0.05 )   $ (0.08 )   $ (0.07 )
                                 
  Diluted net loss per share   $ (0.04 )   $ (0.05 )   $ (0.08 )   $ (0.07 )
                                 
Weighted average number of shares outstanding                                
  Basic and diluted     35,147       33,281       35,147       33,281  
                                 
                                 
                                 
ONE HORIZON GROUP, INC.  
Condensed Consolidated Statements of Cash Flows  
For the six months ended June 30, 2016 and 2015  
(in thousands)  
(unaudited)  
   
    2016     2015  
Cash provided by (used in) operating activities:                
                 
Operating activities:                
Net loss for the period   $ (2,672 )   $ (2,481 )
                 
Adjustment to reconcile net loss for the period to net cash provided by (used in) operating activities:                
  Depreciation of property and equipment     30       36  
  Amortization of intangible assets     1,005       1,092  
  Increase in allowance for doubtful accounts     200       100  
  Amortization of debt issue costs     66       66  
  Amortization of beneficial conversion feature     50       51  
  Amortization of debt discount     100       99  
  Amortization of deferred compensation     -       107  
                 
Options issued for services     376       279  
Net income (loss) attributable to non-controlling interest     -       (36 )
Changes in operating assets and liabilities:                
  Accounts receivable     397       168  
  Other assets     (125 )     7  
  Accounts payable and accrued expenses     (2 )     (370 )
  Deferred income taxes     (22 )     (45 )
                 
Net cash provided by (used in) operating activities     (597 )     (1,027 )
                 
Cash used in investing activities:                
                 
  Acquisition of intangible assets     (207 )     (560 )
  Acquisition of property and equipment     (4 )     (1 )
  Proceeds from disposition of property and equipment     -       32  
                   
  Net cash (used in) investing activities     (211 )     (529 )
                 
Cash provided by (used in) financing activities:                
                 
  Increase (decrease) in long-term borrowing, net     (5 )     (171 )
  Proceeds from issuance of preferred stock                
  Proceeds from issuance of common stock                
  Advances from (repayments to) related parties, net     (11 )     (610 )
  Dividends paid     (50 )     (50 )
                   
  Net cash provided by (used in) financing activities     (66 )     (831 )
                 
Increase (decrease) in cash during the period     (874 )     (2,387 )
Foreign exchange effect on cash     34       85  
                 
Cash at beginning of the period     1,772       3,172  
                 
Cash at end of the period   $ 932     $ 870  

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