One Horizon Group Announces Second Quarter 2015 Financial Results
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LIMERICK, IRELAND -- (Marketwired) -- 08/19/15 -- 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 Six Months ended
June 30, 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 Six Months ended
June 30, 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)
Additional
Preferred Paid-in Deferred
Stock Common Stock Capital Compensation
-------------- -------------- ----------- -------------
Number Number
of of
Shares Amount Shares Amount
------ ------- ------ -------
Balance December
31, 2014 171 $ 1 33,282 $ 3 $ 32,163 $ (214)
Net income (loss)
Foreign currency
translations
Preferred dividends
Amortization of
deferred
compensation 107
Options issued for
services 279
------ ------- ------ ------- ----------- -------------
Balance June 30,
2015 171 $ 1 33,282 $ 3 $ 32,442 $ (107)
------ ------- ------ ------- ----------- -------------
Accumulated
Retained Other Non-
Earnings Comprehensive controlling Total
(Deficit) Income (Loss) Interest Equity
---------- ------------- ------------ -------
Balance December
31, 2014 $ (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
Options issued for
services 279
---------- ------------- ------------ -------
Balance June 30,
2015 $ (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.
Contact: Ted Haberfield MZ Group President - MZ North America Direct: 760-755-2716 Mobile: 858-204-5055 www.mzgroup.us
Source: One Horizon Group, Inc.
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