One Horizon Group Announces First Quarter 2015 Financial Results

LIMERICK, IRELAND--(Marketwired - May 20, 2015) - One Horizon Group, Inc. (NASDAQ: OHGI) ("One Horizon", "We" or the "Company"), which develops and licenses bandwidth efficient mobile voice over Internet Protocol ("VoIP") platform for smart phones, announced financial and operational results for the first quarter ending March 31, 2015.

First Quarter and Subsequent Highlights

• Successful rollout of Aishuo App:
  • Logged 1.6 million downloads as of March 31, 2015 and surpassed 3 million downloads to date.
  • Now available in over 40 smartphone App stores including; Baidu's 91.com and Baidu.com, the Tencent App store MyApp.com, 360 Qihoo store 360.cn and the hugely exciting newcomer Xiaomi on mi.com.
• Commenced penetration into Latin American market by signing a Horizon license contract with a premier regional operator
• Smart Communications, Inc. in the Philippines continued its rollout of the Horizon App branded LinkPlus with installations in over 125 vessels to date and observed significant growth on the data consumption and voice over IP call revenues from its solution.
• Singapore Telecommunications continued its rollout of the Horizon App branded AIO Mobile and has commenced the first phase of its marketing activities.
• Smartfren Telekom Tbk in Indonesia continued its rollout of the Horizon App branded SmartCall and has commenced the first phase of its marketing activities.

"The most exciting progress since launching our Aishuo App in the first quarter is that we continue to see quantities of downloads that are exceeding our internal projections," stated Founder and CEO Brian Collins. "Together the Aishuo App, our validated technology and success with Tier-1 carriers such as SingTel, Smart Communications and Smartfren and with the signing of our first license contract in Latin America, we believe that we are well positioned for growth through the remainder of 2015 and beyond," concluded Mr. Collins.

First Quarter 2015 Financial Results

Our revenue for the three months ended March 31, 2015 was approximately $0.7 million as compared to approximately $1.2 million in the same period in 2014. The decrease was primarily due to the fact that $0.5 million recognized during the first quarter of 2014 on a Global Exchange installment was recognized in the fourth quarter of 2014 instead of the first quarter of 2015 because the invoice was received in December 2014, a month earlier than the previous year. Going forward, the Company expects the percent of total sales from software licenses and revenue share which inherently incorporates higher margins to increase. The Company expects revenue to increase in 2015 as more customers launch their services using the Horizon products and Aishuo platform gains further traction.

Gross profit and gross profit margins amounted $0.2 million and 23.1% respectively for the three months ended March 31, 2015.

Operating expenses for the three months ended March 31, 2015 declined to $1.1 million from $1.2 million during the same period in 2014. In an effort to shift the Company's business model from being purely a B2B business, the Company has allocated its resources to developing the B2C network and system in China where they have a greater influence on customer product development. One Horizon undertook considerable work in 2014 and launched its App on B2C network in February 2015.

Net loss and net loss per share attributable to common stockholders for the three months ended March 31, 2015 were $1.0 million and $0.03 per share, respectively, compared to a net loss of $0.4 million and a net loss per share of $0.01 during the same period in 2013. The weighted average shares outstanding remained 33.3 million for the three months ended March 31, 2015.

Financial Condition

The company had $1.9 million in cash as of March 31, 2015. The Company has $23.0 million of assets and $16.6 million shareholders' equity as of March 31, 2015. Cash outflows from operations were $0.6 million for the three months ended March 31, 2015.

About One Horizon Group, Inc.

One Horizon Group Inc.'s business is to optimize communications over the Internet through its wholly owned subsidiary, Horizon Globex GmbH, which develops and markets one of the world's most bandwidth-efficient mobile voice over Internet Protocol (VoIP) platforms for smartphones, and also offers a range of other optimized data Applications including messaging and mobile advertising. The company owns and operates the Aishuo mobile VoIP service in China. Horizon Globex GmbH is an ISO 9001 and ISO 20000-1 certified company. The Company has operations in Switzerland, the United Kingdom, China, India, Singapore, Hong Kong and Ireland. For more information on the Company, its products and services, 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
March 31, 2015 and December 31, 2014
(in thousands, except share data)
(unaudited)
			March 31,				December 31,
			2015				2014
Assets
Current assets:
	Cash		$	1,923			$	3,172
	Accounts receivable (net), current portion			5,879				9,072
	Other assets			584				576
	Total current assets			8,386				12,820
	Accounts receivable (net), net of current portion			3,116				-
Property and equipment, net				138				212
Intangible assets, net				11,004				10,960
Investment				18				19
Debt issue costs				362				395
Total assets			$	23,024			$	24,406
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable		$	113			$	556
	Accrued expenses			323				360
	Accrued compensation			14				15
	Income taxes			94				93
	Amounts due to related parties			350				600
	Current portion of long-term debt			12				73
	Total current liabilities			906				1,697
Long-term liabilities				-				108
	Long term debt, net of current portion
	Amount due to related parties			2,578				2,598
	Convertible debenture			2,624				2,598
	Deferred income taxes			235				235
	Mandatorily redeemable preferred shares			90				90
Total liabilities				6,433				7,326
Equity
Preferred stock:
	$0.0001 par value, authorized 50,000,000;
	issued and outstanding 170,940 shares (December 2014 - 170,940)			1				1
Common stock:
	$0.0001 par value, authorized 200,000,000 shares
	issued and outstanding 33,281,069 shares (December 2014 - 33,281,069)			3				3
Additional paid-in capital				32,292				32,163
Deferred compensation				(161	)			(214	)
Retained Earnings (Deficit)				(16,185	)			(15,227	)
Accumulated other comprehensive income				355				63
Total One Horizon Group, Inc., stockholders' equity				16,305				16,789
Non-controlling interest				286				291
Total Equity				16,591				17,080
Total liabilities and equity			$	23,024			$	24,406

ONE HORIZON GROUP, INC.
Condensed Consolidated Statements of Operations
For the three months ended March 31, 2015 and 2014
(in thousands, except per share data)
(unaudited)
			2015				2014
Revenue			$	745			$	1,185
Cost of revenue:
	Hardware			61				62
	Amortization of software development costs			512				486
				573				548
Gross margin				172				637
Expenses:
	General and administrative			1,085				1,128
	Depreciation			20				48
				1,105				1,176
Loss from operations				(933	)			(539	)
Other income and expense:
	Interest expense			(90	)			(40	)
	Foreign exchange			85				(9	)
	Interest income							1
				(5	)			(48	)
Loss before income taxes				(938	)			(587	)
Income taxes (recovery) - deferred				-				(156	)
Net Loss for the period				(938	)			(431	)
Loss attributable to non-controlling interest				(5	)			(43	)
Net Loss for the period atrributable to One Horizon Group, Inc.				(933	)			(388	)
Less: Preferred Dividends				(25	)			-
Net loss attributable to One Horizon Group, Inc. Common stockholders			$	(958	)		$	(388	)
Loss per share
	Basic net loss per share		$	(0.03	)		$	(0.01	)
	Diluted net loss per share		$	(0.03	)		$	(0.01	)
Weighted average number of shares outstanding
	Basic and diluted			33,281				32,934

ONE HORIZON GROUP, INC.
Condensed Consolidated Statements of Comprehensive Loss
For the three months ended March 31, 2015 and 2014
(in thousands)
(unaudited)
			2015				2014
Net loss			$	(933	)		$	(388	)
Other comprehensive income:
Foreign currency translation adjustment gain				292				19
				(641	)			(369	)
	Comprehensive loss attributable to the non controlling interest			(5	)			(43	)
Total comprehensive loss			$	(646	)		$	(412	)

ONE HORIZON GROUP, INC.

Consolidated Statement of Equity

For the three months ended March 31, 2015

(in thousands)

(unaudited)

	Preferred Stock							Common Stock
	Number of Shares			Amount				Number of Shares		Amount			Additional Paid-in Capital			Deferred Compensation				Retained Earnings (Deficit)				Accumulated Other Comprehensive Income (Loss)			Non- controlling Interest				Total Equity
Balance December 31, 2014	171			$	1			33,282		$	3		$	32,163		$	(214	)		$	(15,227	)		$	63		$	291			$	17,080
Net loss																					(933	)						(5	)			(938	)
Foreign currency translations																									292							292
Preferred dividends																					(25	)										(25	)
Amortization of deferred compensation																	53															53
Options issued for services														129																		129
Balance March 31, 2015	171			$	1			33,282		$	3		$	32,292		$	(161	)		$	(16,185	)		$	355		$	286			$	16,591

ONE HORIZON GROUP, INC.
Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 2015 and 2014
(in thousands)
(unaudited)
					2015				2014
Cash provided by (used in) operating activities:
Operating activities:
	Net income for the period				$	(933	)		$	(388	)
	Adjustment to reconcile net income for the period to
	net cash provided by (used in) operating activities:
		Depreciation of property and equipment				20				48
		Amortization of intangible assets				512				486
		Increase in allowance for doubtful debts				100				-
		Amortization of debt issue costs				33				-
		Amortization of beneficial conversion feature				26				-
		Amortization of deferred compensation				53				-
		Common shares issued for services received				-				65
		Options issued for services				129				129
		Net income (loss) attributable to non-controlling interest				(5	)			(43	)
		Changes in operating assets and liabilities:
			Accounts receivable			(23	)			50
			Other assets			(8	)			(612	)
			Accounts payable and accrued expenses			(481	)			(400	)
			Deferred income taxes			-				(156	)
	Net cash provided by (used in) operating activities					(577	)			(821	)
Cash used in investing activities:
	Acquisition of intangible assets					(289	)			(350	)
	Acquisition of property and equipment					-				(48	)
	Proceeds from disposition of property and equipment					32				-
	Net cash (used in) investing activities					(257	)			(398	)
Cash flow from financing activities:
Increase (decrease) in long-term borrowing, net						(169	)			(15	)
Advances from (repayments to) related parties, net						(270	)			-
Net cash provided by (used in) financing activities						(439	)			(15	)
Increase (decrease) in cash during the period						(1,273	)			(1,234	)
Foreign exchange effect on cash						24				(47	)
Cash at beginning of the period						3,172				2,070
Cash at end of the period					$	1,923			$	789

ONE HORIZON GROUP, INC.
Condensed Consolidated Statements of Cash Flows (continued)
For the three months ended March 31, 2015 and 2014
(in thousands)
(unaudited)
Supplementary Information:
		2015			2014
Interest paid		$	-		$	-
Income taxes paid			-			-
Non-cash transactions: