SOURCE: One Horizon Group, Inc.

One  Horizon Group, Inc.

August 19, 2015 16:30 ET

One Horizon Group Announces Second Quarter 2015 Financial Results

LIMERICK, IRELAND--(Marketwired - Aug 19, 2015) -  One Horizon Group, Inc. (NASDAQ: OHGI) ("One Horizon", "We" or the "Company"), which operates its own Chinese retail VoIP service, branded Aishuo, and develops and licenses a bandwidth efficient mobile voice over Internet Protocol ("VoIP") platform for smartphones, today announced financial and operational results for the three and six months ended June 30, 2015.

Operation Highlights

  • Aishuo App builds on success and continues rapid expansion:
    • Logged over 1.6 million downloads as of June 30, 2015 and over 7 million downloads as of today;
    • Now supports all of the major Chinese mobile payment platforms including China UnionPay, Alibaba's Alipay, Paypal and Tencent's Wechat Wallet to support a range of premium Aishuo app services;
    • Now available for download on iTunes, in addition to over 40 other smartphone App stores;
    • Has been further optimized for the Xiaomi smartphone model range, China's biggest selling smartphone brand;
    • Agreement with Nanjing Lin Ren Communications, a manufacturer of Smartphones, Phablets and Tablets to pre-install Aishuo App in Android devices prior to shipment; and
    • Agreement to be the exclusive supplier of Voice over IP services using the Aishuo platform to KeyIdea Information Technology Co., Ltd, a renowned manufacturer of satellite equipment in China, for its new maritime satellite service.
  • Smartfren Telekom Tbk in Indonesia expanded its service by adding 400,000 new telephone numbers to the SmartCall App

"The success of our Aishuo App has continued to build momentum in the second quarter," stated Founder and CEO Brian Collins. "With Aishuo now available across a wide range of mobile storefronts, support from all major Chinese mobile payment platforms, and exclusive agreements beginning to ramp up, we are confident that Aishuo will drive multiple revenue streams through the remainder of 2015 and beyond. In conjunction, successful and expanding partnerships with Smartfren and other Tier 1 carriers for our validated technology are also supporting international adoption and revenue growth."

Second Quarter 2015 Financial Results

Revenue for the three months ended June 30, 2015 was $0.1 million compared to $1.3 million in the same period in 2014. The decrease was primarily due to the shift in the business to concentrate on the roll out of the B2C business in China through the Aishuo App. This roll out has gained over 7 million downloads, has greatly increased One Horizon's exposure and overall recognition, and has allowed the Company to take market share and acquire customers in what the Company believes will be an increasingly competitive user marketplace.

Gross margin for the second quarter of 2015 was ($0.5) million as compared to $0.8 million for the three months ended June 30, 2014. The decrease was mainly due to the reduced revenue. Moving forward, the management expect that gross profit will begin to increase with the growth in the Company's business in China.

Operating expenses for the three months ended June 30, 2015 declined to $0.7 million from $1.2 million during the same period in 2014. The Company does not expect operating costs to rise significantly until revenue grows following the increase of end users. 

Net loss and net loss per share attributable to common stockholders for the three months ended June 30, 2015 were $1.6 million and $0.05 per share, respectively, compared to a net loss of $0.5 million and a net loss per share of $0.02 during the same period in 2014. The weighted average shares outstanding were 33.3 million for the three months ended June 30, 2015.

Six Months 2015 Financial Results

Revenues for the six months ended June 30, 2015 were $0.9 million compared to $2.5 million in the same period in 2014. Gross margin was ($0.3) million and $1.4 million for the first six months of 2015 and 2014, respectively.

Operating expenses were $1.9 million for the first half of 2015 compared to $2.4 million in the first half of 2014.

Net loss and net loss per share attributable to common stockholders for the six months ended June 30, 2015 were $2.5 million and $0.07, respectively, compared to a net loss of $0.9 million and a net loss per share of $0.03 during the same period in 2014. The weighted average shares outstanding increased to 33.3 million for the six months ended June 30, 2015 from 32.9 million for the first half year of 2014.

Financial Condition

The Company had $0.9 million in cash as of June 30, 2015. The Company had $21.8 million of assets and $15.3 million stockholders' equity as of June 30, 2015. Cash outflows from operations were $1.0 million for the six months ended June 30, 2015.

On August 10, 2015, One Horizon closed a public offering of $3 million of 1,714,286 shares of common stock and warrants to purchase up to an aggregate of 857,143 shares of its common stock at a combined offering price of $1.75 per share and accompanying warrant. The warrants will have a per share exercise price of $2.50, are exercisable immediately and will expire three years from the date of issuance. In connection with the offering, the Company granted the Underwriters an option for a period of 45 days to purchase up to 257,142 additional shares of common stock and/or 128,571 additional warrants, in each case, solely to cover over-allotments, if any. The net proceeds to the Company from the Offering are approximately $2.64 million, or approximately $3.054 million if the Underwriters exercise in full their option to purchase additional shares and Warrants, after deducting underwriting discounts and commissions and estimated Offering expenses payable by the Company.

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, Zug, 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 controls 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 Ireland, Switzerland, the United Kingdom, China, India, Singapore and Hong Kong. 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  
June 30, 2015 and December 31, 2014  
(in thousands, except share data)  
(unaudited)  
   
    June 30,     December 31,  
    2015     2014  
             
Assets            
             
Current assets:            
  Cash   $ 870     $ 3,172  
  Accounts receivable (net), currrent portion     5,448       9,072  
  Other assets     569       576  
  Total current assets     6,887       12,820  
                 
Accounts receivable (net), net of current portion     3,456       -  
Property and equipment, net     126       212  
Intangible assets, net     11,006       10,960  
Investment     19       19  
Debt issue costs     329       395  
Total assets   $ 21,823     $ 24,406  
                 
Liabilities and Stockholders' Equity                
                 
Current liabilities:                
  Accounts payable   $ 164     $ 556  
  Accrued expenses     382       360  
  Accrued compensation     15       15  
  Income taxes     94       93  
  Amounts due to related parties     100       600  
  Current portion of long-term debt     10       73  
  Total current liabilities     765       1,697  
                 
Long-term liabilities                
  Long term debt, net of current portion     -       108  
  Amount due to related parties     2,488       2,598  
  Convertible debenture     2,748       2,598  
  Deferred income taxes     190       235  
  Mandatorily redeemable preferred shares     90       90  
Total liabilities     6,281       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     32,442       32,163  
Deferred compensation     (107 )     (214 )
Retained Earnings (Deficit)     (17,758 )     (15,227 )
Accumulated other comprehensive income     706       63  
Total One Horizon Group, Inc., stockholders' equity     15,287       16,789  
Non-controlling interest     255       291  
Total Equity     15,542       17,080  
Total liabilities and equity   $ 21,823     $ 24,406  
                 
See accompanying notes to condensed consolidated financial statements.  
   
   
   
ONE HORIZON GROUP, INC.  
Condensed Consolidated Statements of Operations  
For the three and six months ended June 30, 2015 and 2014  
(in thousands, except per share data)  
(unaudited)  
   
      Three Months ended June 30,     Six Months ended June 30,  
      2015     2014     2015     2014  
                           
                           
Revenue     $ 108     $ 1,304     $ 853     $ 2,489  
                                   
Cost of revenue - Hardware     47       66       108       128  
  - Amortization of software development costs     580       483       1,092       969  
        627       549       1,200       1,097  
                                   
Gross margin       (519 )     755       (347 )     1,392  
                                   
Expenses:                                  
  General and administrative     729       1,190       1,814       2,318  
  Depreciation     16       46       36       94  
                                   
        745       1,236       1,850       2,412  
                                   
Loss from operations       (1,264 )     (481 )     (2,197 )     (1,020 )
                                   
Other income and expense:                                  
  Interest expense     (284 )     (20 )     (374 )     (20 )
  Interest expense - related parties     (1 )     (35 )     (1 )     (75 )
  Foreign exchange     (76 )     (10 )     9       (19 )
  Interest income     -       1       1       2  
        (361 )     (64 )     (365 )     (112 )
                                   
Income (loss) before income taxes     (1,625 )     (545 )     (2,562 )     (1,132 )
                                   
Income taxes (recovery) - deferred     (45 )     -       (45 )     (156 )
                                   
Net Income (Loss) for the period     (1,580 )     (545 )     (2,517 )     (976 )
                                   
Net income (loss) attributable to the non-controlling interest     (31 )     (22 )     (36 )     (65 )
                                   
Net Income (Loss) for the period atrributable to One Horizon Group, Inc.     (1,549 )     (523 )     (2,481 )     (911 )
                                   
Less: Preferred Dividends       (25 )             (50 )        
                                   
Net loss attributable to One Horizon Group, Inc. Common stockholders   $ (1,574 )   $ (523 )   $ (2,531 )   $ (911 )
                                   
                                   
                                   
Earnings per share attributable to One Horizon Group, Inc. shareholders                                
                                   
  Basic net loss per share   $ (0.05 )   $ (0.02 )   $ (0.07 )   $ (0.03 )
                                   
  Diluted net loss per share   $ (0.05 )   $ (0.02 )   $ (0.07 )   $ (0.03 )
                                   
Weighted average number of shares outstanding                                
  Basic and diluted     33,281       32,935       33,281       32,935  
                                   
                                   
   
See accompanying notes to condensed consolidated financial statements.  
   
   
   
ONE HORIZON GROUP, INC.  
Condensed Consolidated Statements of Comprehensive Income  
For the three and six months ended June 30, 2015 and 2014  
(in thousands)  
(unaudited)  
    Three Months ended June 30,     Six Months ended June 30,  
    2015     2014     2015     2014  
                         
                         
Net income (loss)   $ (1,580 )   $ (545 )   $ (2,517 )   $ (976 )
Other comprehensive income:                                
Forgin currency translation adjustment gain (loss)     624       (84 )     643       (65 )
Comprehensive income (loss)     (956 )     (629 )     (1,874 )     (1,041 )
                                 
  Comprehensive income (loss) attributable to the non-controlling interest     (31 )     (22 )     (36 )     (65 )
                                 
Total comprehensive income (loss)   $ (925 )   $ (607 )   $ (1,838 )   $ (976 )
                                 
   
See accompanying notes to condensed consolidated financial statements  
   
   
   
ONE HORIZON GROUP, INC.  
Consolidated Statement of Equity  
For the six months ended June 30, 2015  
(in thousands)  
(unaudited)  
                                                 
    Preferred Stock   Common Stock   Additional Paid-in Capital   Deferred Compensation     Retained Earnings (Deficit)     Accumulated Other Comprehensive Income (Loss)   Non-controlling Interest     Total Equity  
    Number of Shares   Amount   Number of Shares   Amount                                
                                                 
                                                 
                                                 
Balance December 31, 2014   171   $ 1   33,282   $ 3   $ 32,163   $ (214 )   $ (15,227 )   $ 63   $ 291     $ 17,080  
                                                                 
Net income (loss)                                       (2,481 )           (36 )     (2,517 )
Foreign currency translations                                               643             643  
Preferred dividends                                       (50 )                   (50 )
                                                                 
Amortization of deferred compensation                               107                             107  
                                                                 
Options issued for services                         279                                   279  
                                                                 
Balance June 30, 2015   171   $ 1   33,282   $ 3   $ 32,442   $ (107 )   $ (17,758 )   $ 706   $ 255     $ 15,542  
   
   
See accompanying notes to condensed consolidated financial statements  
   
   
   
ONE HORIZON GROUP, INC.  
Condensed Consolidated Statements of Cash Flows  
For the six months ended June 30, 2015 and 2014  
(in thousands)  
(unaudited)  
   
    2015     2014  
             
             
Cash provided by (used in) operating activities:            
             
             
Operating activities:            
  Net loss for the period   $ (2,481 )   $ (911 )
                   
  Adjustment to reconcile net loss for the period to net cash provided by (used in) operating activities:                
    Depreciation of property and equipment     36       94  
    Amortization of intangible assets     1,092       969  
    Amortization of debt issue costs     66       -  
    Amortization of beneficial conversion feature     51       -  
    Amortization of debt discount     99       -  
    Amortization of deferred compensation     107       -  
    Common shares issued for services received     -       65  
    Options issued for services     279       258  
    Net income (loss) attributable to non-controlling interest     (36 )     (65 )
    Changes in operating assets and liabilities:                
      Accounts receivable     168       (674 )
      Other assets     7       (715 )
      Accounts payable and accrued expenses     (370 )     276  
      Deferred income taxes     (45 )     (156 )
                   
  Net cash provided by (used in) operating activities     (1,027 )     (859 )
                 
Cash used in investing activities:                
                 
  Acquisition of intangible assets     (560 )     (637 )
  Acquisition of property and equipment     (1 )     (49 )
  Proceeds from disposition of property and equipment     32       -  
                 
  Net cash (used in) investing activities     (529 )     (686 )
                 
Cash flow from financing activities:                
                 
                 
  Increase (decrease) in long-term borrowing, net     (171 )     (30 )
  Advances from (repayments to) related parties, net     (610 )     -  
  Dividends paid     (50 )     -  
                   
  Net cash provided by (used in) financing activities     (831 )     (30 )
                 
                 
Increase (decrease) in cash during the period     (2,387 )     (1,575 )
Foreign exchange effect on cash     85       (71 )
                 
Cash at beginning of the period     3,172       2,070  
                 
Cash at end of the period   $ 870     $ 424  
                 
                 
See accompanying notes to condensed consolidated financial statements.  
   
   
   
ONE HORIZON GROUP, INC.
Condensed Consolidated Statements of Cash Flows (continued)
For the six months ended June 30, 2015 and 2014
(in thousands)
(unaudited)
 
Supplementary Information:
 
 
    2015   2014
         
         
  Interest paid   $ 76   $ -
  Income taxes paid     -     -
               
  Non-cash transactions:            
             
             
See accompanying notes to condensed consolidated financial statements.
 

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