SOURCE: One Horizon Group, Inc.

One  Horizon Group, Inc.

May 16, 2016 07:28 ET

One Horizon Reports 2016 First Quarter Financial Results

Operations Improved to Approximately Cash Flow Neutral; Aishuo Doubles Revenue Sequentially and Increases Subscribers to 17 million

LIMERICK, IRELAND--(Marketwired - May 16, 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 first quarter ended March 31, 2016.

Brian Collins, CEO of One Horizon Group, stated, "Our patented VoIP technology is fundamentally disrupting the international mobile telecommunications market with a value-add for not only subscribers, but also for our network operator partners. Our B2C application in China has exceeded our expectations, doubling revenue sequentially and surpassing our 2-year target with 17 Million subscribers at the end of the 2016 first quarter. Overall, our operations during the first quarter improved to be approximately cash flow neutral as we were able to become more efficient operationally while continuing to improve our cash collections from customers. With the continued roll out of our technology with leading network operators, such as we have in the Philippines, we anticipate revenue growth and cash flow to continue to improve."

Operational Highlights:

  • The Company's B2C mobile VoIP application in China, Aishuo, doubled revenue sequentially to approximately $60,000 during the first quarter of 2016.
  • The Company exceeded its two-year target of 15 million subscribers to grow to 17 million as of March 31, 2016.
  • Launched 'Roam Like Home', offering subscribers a low cost roaming option and network operators the ability to provide their traveling subscribers with a cost-effective prepaid offering.
  • 'Roam Like Home' went live in the Philippines with Smart Communications, a leading mobile network operator.
  • Campaign with Smart Communications is in soft launch through the rest of May with full marketing launch to begin in June.

Financial Highlights for the Period Ended March 31, 2015:

  • Revenue for the 2016 first quarter totaled $609,000 as compared to $745,000 for the same period the year prior. The decrease was primarily due to a reduction in legacy Business to Business ("B2B") revenue. The Business to Business ("B2B") business continues, however no new global exchanges were sold in the quarter. Revenue from Aishuo totaled $60,000 during the quarter and the Company has begun generating revenue from its Roam Like Home program.
  • Gross profit excluding amortization of software development costs, for the three months ended March 31, 2016 was approximately $583,000 as compared to $684,000 for the three months ended March 31, 2015, a decrease of approximately 14.8%.
  • Operating expenses, including general and administrative expenses, depreciation and research and development were approximately $1,167,000 and $1,105,000 during the three months ended March 31, 2016 and 2015, respectively. Going forward, management does not expect operating costs to rise significantly until revenue related to the increase of end users grows significantly. 
  • Net Loss for the 2016 first quarter was approximately $1,258,000 as compared to net loss of approximately $938,000 for the same period in 2015. The increased loss was partly due to the reduced revenue the company is experiencing while it is repositioning its growth strategy, while also adding additional research and development expenses associated with the new strategy.
  • Net cash used in operating activities was approximately $121,000 for the 2016 first quarter as compared to net cash used in operating activities of approximately $577,000 for the same period in 2015. The decrease in cash used in operations was primarily due to the increase in cash collected from customers during the three months ended March 31, 2016 as compared to the same period in 2015.
  • The company had $1,583,000 in cash as of March 31, 2016. Total assets were $14,943,000 and total liabilities $5,829,000 yielding total shareholders' equity of $9,114,000.

About One Horizon Group, Inc.
One Horizon Group, Inc. (NASDAQ: OHGI) is a leading developer and operator of carrier-grade optimized VoIP solutions for mobile telcos and enterprises. The company currently services over 17 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            
March 31, 2016 and December 31, 2015            
(in thousands, except share data)            
(unaudited)            
             
    March 31,     Dec. 31,  
    2016     2015  
                 
Assets                
                 
Current assets:                
    Cash   $ 1,583     $ 1,772  
    Accounts receivable, net     3,058       3,560  
    Other assets     473       402  
    Total current assets     5,114       5,734  
                 
Property and equipment, net     83       96  
Intangible assets, net     9,728       9,823  
Investment     18       18  
Total assets   $ 14,943     $ 15,671  
                 
Liabilities and Stockholders' Equity                
                 
Current liabilities:                
    Accounts payable   $ 158     $ 223  
    Accrued expenses     144       220  
    Accrued compensation     53       18  
    Income taxes     90       90  
    Current portion of long-term debt     2       5  
    Total current liabilities     447       556  
                 
Long-term liabilities                
    Amount due to related parties     2,354       2,354  
    Convertible debenture     2,744       2,636  
    Deferred income taxes     204       215  
    Mandatorily redeemable preferred shares     80       73  
Total liabilities     5,829       5,834  
                 
                 
Stockholders' 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 sharesissued and outstanding 35,147,283 shares (December 2015 - 35,147,283)    
3
     
3
 
Additional paid-in capital     36,258       36,070  
Retained Earnings (Deficit)     (27,484 )     (26,201 )
Accumulated other comprehensive income     336       (36 )
Total Stockholders' Equity     9,114       9,837  
Total liabilities and equity   $ 14,943     $ 15,671  
                 
           
ONE HORIZON GROUP, INC.
Condensed Consolidated Statements of Operations
For the three months ended March 31, 2016 and 2015
(in thousands, except per share data)
(unaudited)
 
               
      2016     2015  
               
Revenue     $ 609     $ 745  
                   
Cost of revenue:   Hardware   26       61  
    Amortization of software development costs   512       512  
        538       573  
                   
Gross margin       71       172  
                   
Expenses:                  
    General and administrative   964       953  
    Depreciation   15       20  
    Research and development   188       132  
        1,167       1,105  
                   
Income from operations   (1,096 )     (933 )
                   
Other income and expense:              
    Interest expense   (180 )     (90 )
    Foreign exchange   7       85  
        (173 )     (5 )
                   
Income (Loss) before income taxes   (1,269 )     (938 )
                   
Income taxes (recovery) - deferred   (11 )     -  
                   
Net Income (Loss) for the period   (1,258 )     (938 )
                   
Loss attributable to non-controlling interest   -       (5 )
                   
                   
Net Income (Loss) for the period attributable to One Horizon Group, Inc.   (1,258 )     (933 )
                   
Less: Preferred Dividends   (25 )     (25 )
                   
Net loss attributable to One Horizon Group, Inc. Common stockholders $ (1,283 )   $ (958 )
                   
                   
Earnings (Loss) per share              
                   
    Basic net income (loss) per share $ (0.04 )   $ (0.03 )
                   
    Diluted net income (loss) per share $ (0.04 )   $ (0.03 )
                   
Weighted average number of shares outstanding              
    Basic and diluted   35,147       33,281  
                   
             
ONE HORIZON GROUP, INC.
Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 2016 and 2015
(in thousands)
(unaudited)
 
             
    2016     2015  
             
Cash provided by (used in) operating activities:                
                 
                 
Operating activities:                
    Net income for the period   $ (1,258 )   $ (933 )
                 
    Adjustment to reconcile net income for the period to net cash provided by (used in) operating activities:                
      Depreciation of property and equipment     15       20  
      Amortization of intangible assets     512       512  
      Increase in allowance for doubtful accounts     100       100  
      Amortization of debt issue costs     33       33  
      Amortization of beneficial conversion feature     25       26  
      Amortization of debt discount     50          
      Amortization of deferred compensation     -       53  
      Gain on settlement of lease     -       36  
      Options issued for services     188       129  
      Net income (loss) attributable to non-controlling interest     -       (5 )
      Changes in operating assets and liabilities:                
        Accounts receivable     402       (23 )
        Other assets     (71 )     (8 )
        Accounts payable and accrued expenses     (106 )     (517 )
        Income taxes     (11 )     -  
                 
    Net cash (used in) operating activities     (121 )     (577 )
                 
Cash used in investing activities:                
                 
    Acquisition of intangible assets     (116 )     (289 )
    Acquisition of property and equipment     (2 )     -  
    Proceeds from disposition of property and equipment     -       32  
                 
    Net cash (used in) investing activities     (118 )     (257 )
                 
Cash flow from financing activities:                
                 
                 
    Increase (decrease) in long-term borrowing, net     (3 )     (169 )
    Advances from (repayments to) related parties, net     -       (270 )
    Dividends paid     (25 )        
                 
    Net cash from (used in) financing activities     (28 )     (439 )
                 
                 
Increase (decrease) in cash during the period     (267 )     (1,273 )
Foreign exchange effect on cash     78       24  
                 
Cash at beginning of the period     1,772       3,172  
                 
Cash at end of the period   $ 1,583     $ 1,923  
                 
                 

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