SOURCE: One Horizon Group, Inc.

One  Horizon Group, Inc.

May 20, 2015 09:53 ET

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:            
             

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