LIMERICK, IRELAND--(Marketwired - May 15, 2017) - One Horizon Group, Inc. (
- Cash flow positive for first time since listing on the NASDAQ;
- Unveiled new features within its low bandwidth VoIP application including Video Calling on 2G, 3G and 4G networks and complete Google AdMob advertising environment revenue stream;
- Entered FinTech space with introduction of Cyber-Secure KeyBroker encryption securing mobile banking voice + multi-media communications;
- Regained compliance with NASDAQ.
Brian Collins, CEO of One Horizon Group, commented, "Holding true to our core competency as an innovative software company, our R&D team worked tirelessly on unveiling several new features within our low bandwidth VoIP platform and doing so on a very modest budget. Users globally can now utilize video calling across 2G, 3G and 4G networks as well as being fully secure with our encrypted call features. The advancements of our platform will always be evolving; bringing to market technology that is solving a major global problem. Our technology is closing the gap between developed geographies like the U.S. which operates in mostly 4G networks and the majority of the world which still operates in 2G and 3G environments."
2017 Operational Highlights:
- Secured license in Ghana, West Africa, through a commercial software agreement with a licensed carrier to bring the benefits of optimized voice communications to 18 million mobile data subscribers.
- Entered 2017 with a $2.6 billion mobile hotspot market through a license with a leading pocket Wi-Fi service provider.
- Microsoft published a feature on how One Horizon Group improves its time to market, shortens its sales-cycles and improves service security by combining their patented VoIP technology with the power of the Microsoft Azure cloud platform: https://customers.microsoft.com/en-us/story/onehorizon
- University research into VoIP bandwidth usage for One Horizon's software alongside the biggest smartphone VoIP technologies in the world including WhatsApp, Facebook, WeChat, and Skype, proved One Horizon's application is 8.8x more efficient than the baseline.
R&D Drove Innovation and Technological Advancements During the Quarter:
- Low bandwidth Video over IP Calling solution that consumes just 0.5MB per minute or 7x lower bandwidth than most other video over IP services. Users now enjoy video calls across 2G, 3G, and 4G networks as well as HD video calls across Wi-Fi connections.
- Cyber-secure VoIP service that delivers encrypted video calls while supporting in-call encryption. For example, a user can now start a call in an unencrypted mode and secure the line without having to hang up and restart the call.
- Delivered complete Google AdMob advertising environment for carriers to further monetize their subscriber base. Intelligent ads are delivered based on the user profile and their location.
- Delivered complete CallKit solution from Apple that seamlessly integrates the One Horizon smartphone applications with the native iOS call interfaces making the usability of the application even more attractive.
- Advanced fraud management and detection that permits pre-paid users to not only spend a certain amount of money and other server side fraud management that massively reduces risk of theft.
- Encrypted call from smartphone to an enterprise voice server thereby ensuring staff calls are all encrypted and contained within the enterprise secure IT infrastructure.
- Entered FinTech space with introduction of Cyber-Secure KeyBroker encryption securing mobile banking voice + multi-media communications.
Regained Compliance with NASDAQ:
One Horizon Group received notice from The NASDAQ Stock Market LLC (NASDAQ) on May 12, 2017 indicating that the Company has regained compliance with the minimum bid price requirement under NASDAQ Listing Rule 5550(a)(2) for continued listing on The NASDAQ Capital Market. Accordingly, One Horizon Group is in compliance with all applicable listing standards and its common stock will continue to be listed on The NASDAQ Capital Market. NASDAQ considers the matter closed.
Financial Highlights for the First Quarter Ending March 31, 2017:
Revenue for the three months ended March 31, 2017 was approximately $373,000 as compared to approximately $609,000 for the three months ended March 31, 2016. The decrease was primarily due to the reduction in income for the B2B revenue in Asia. During the first quarter of 2017, 30% of the Company's revenue was concentrated in one major customer as compared to 86% during the first quarter of 2016.
Cost of revenue, excluding amortization of software development costs, was approximately $2,000, or 0.5% of sales for the three months ended March 31, 2017, compared to cost of revenue of $26,000 or 4.3% of sales for the three months ended March 31, 2016. The Company's cost of sales, excluding amortization of software development costs, is composed of cost of ancillary hardware equipment sold, PSTN breakout costs and network charges.
Gross profit excluding amortization of software development costs, for the three months ended March 31, 2017 was approximately $371,000 as compared to $583,000 for the three months ended March 31, 2016, a decrease of approximately 36.4%.
Operating expenses including general and administrative expenses, depreciation and research and development were approximately $988,000 and $1,167,000 during the three months ended March 31, 2017 and 2016, respectively. The overall reduction in Operating expenses was primarily due to reductions in employee salaries, legal fees and provision for doubtful accounts partially offset by increases in audit costs and outside consultancy costs. Going forward, management does not expect operating costs to rise significantly until revenue grows following the increase of end users.
Net loss for the three months ended March 31, 2017 was approximately $1,284,000 as compared to net loss of approximately $1,258,000 for the same period in 2016.
Net cash generated from operating activities was approximately $150,000 for the three months ended March 31, 2017 as compared to net cash used in operating activities of approximately ($121,000) for the same period in 2016. The increase in cash generated from operations was primarily due to the increase in cash collected from customers.
About One Horizon Group, Inc.
One Horizon Group, Inc. (
1 http://smart.com.ph/About/newsroom/press-releases/2017/03/13/smart-is-anvil-company-of-the-year-anew
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, 2017 and December 31, 2016 | ||||||||
| (in thousands, except share data) | ||||||||
| (unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 262 | $ | 260 | ||||
| Accounts receivable, net | 982 | 1,208 | ||||||
| Other assets | 485 | 471 | ||||||
| Total current assets | 1,729 | 1,939 | ||||||
| Property and equipment, net | 36 | 42 | ||||||
| Intangible assets, net | 7,883 | 8,407 | ||||||
| Investment | 17 | 17 | ||||||
| Total assets | $ | 9,665 | $ | 10,405 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 352 | $ | 364 | ||||
| Accrued expenses | 404 | 206 | ||||||
| Accrued compensation | 228 | 156 | ||||||
| Income taxes | 90 | 90 | ||||||
| Convertible debenture, net | 3,177 | 3,068 | ||||||
| Total current liabilities | 4,251 | 3,884 | ||||||
| Long-term liabilities | ||||||||
| Amount due to related parties | 2,343 | 2,343 | ||||||
| Deferred income taxes | 161 | 172 | ||||||
| Mandatorily redeemable preferred shares | 62 | 62 | ||||||
| Total liabilities | 6,817 | 6,461 | ||||||
| Stockholders' Equity | ||||||||
| Preferred stock: | ||||||||
| $0.0001 par value, authorized 50,000,000 shares; issued and outstanding 170,940 shares | 1 | 1 | ||||||
| Common stock: | ||||||||
| $0.0001 par value, authorized 33,333,333 shares; issued and outstanding 6,236,729 shares as of March 31,2017 (December 2016 - 6,144,762) | 4 | 4 | ||||||
| Additional paid-in capital | 37,859 | 37,501 | ||||||
| Accumulated deficit | (34,875 | ) | (33,591 | ) | ||||
| Accumulated other comprehensive income (loss) | (141 | ) | 29 | |||||
| Total stockholders' equity | 2,848 | 3,944 | ||||||
| - | ||||||||
| Total liabilities and stockholders' equity | $ | 9,665 | $ | 10,405 | ||||
| ONE HORIZON GROUP, INC. | |||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||
| For the three months ended March 31, 2017 and 2016 | |||||||||||
| (in thousands, except per share data) | |||||||||||
| (unaudited) | |||||||||||
| Three Months ended March 31, | |||||||||||
| 2017 | 2016 | ||||||||||
| Revenue | $ | 373 | $ | 609 | |||||||
| Cost of revenue - Hardware | 2 | 26 | |||||||||
| - Amortization of intangibles | 500 | 512 | |||||||||
| 502 | 538 | ||||||||||
| Gross margin | (129 | ) | 71 | ||||||||
| Expenses: | |||||||||||
| General and administrative | 846 | 964 | |||||||||
| Depreciation | 8 | 15 | |||||||||
| Research and development | 134 | 188 | |||||||||
| 988 | 1,167 | ||||||||||
| Loss from operations | (1,117 | ) | (1,096 | ) | |||||||
| Other income and expense: | |||||||||||
| Interest expense | (179 | ) | (180 | ) | |||||||
| Foreign exchange | 1 | 7 | |||||||||
| (178 | ) | (173 | ) | ||||||||
| Loss before income taxes | (1,295 | ) | (1,269 | ) | |||||||
| Income taxes benefit | 11 | 11 | |||||||||
| Net loss for the period | (1,284 | ) | (1,258 | ) | |||||||
| Less: Preferred Dividends | - | (25 | ) | ||||||||
| Net loss attributable to One Horizon Group, Inc. Common stockholders | $ | (1,284 | ) | $ | (1,283 | ) | |||||
| Loss per share attributable to One Horizon Group, Inc. stockholders | |||||||||||
| Basic and diluted net loss per share | $ | (0.21 | ) | $ | (0.22 | ) | |||||
| Weighted average number of shares outstanding | |||||||||||
| Basic and diluted | 6,176 | 5,857 | |||||||||
| ONE HORIZON GROUP, INC. | ||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| For the three months ended March 31, 2017 and 2016 | ||||||||||
| (in thousands) | ||||||||||
| (unaudited) | ||||||||||
| 2017 | 2016 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net loss for the period | $ | (1,284 | ) | $ | (1,258 | ) | ||||
| Adjustment to reconcile net loss for the period to net cash provided by (used in) operating activities: | ||||||||||
| Depreciation of property and equipment | 8 | 15 | ||||||||
| Amortization of intangible assets | 500 | 512 | ||||||||
| Increase in allowance for doubtful accounts | - | 100 | ||||||||
| Amortization of debt issue costs | 34 | 33 | ||||||||
| Amortization of beneficial conversion feature | 25 | 25 | ||||||||
| Amortization of debt discount | 50 | 50 | ||||||||
| Amortization of shares issued for services | 22 | - | ||||||||
| Shares issued for services | 176 | - | ||||||||
| Warrants issued for services | 123 | - | ||||||||
| Options issued for services | 59 | 188 | ||||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | 226 | 402 | ||||||||
| Other assets | (36 | ) | (71 | ) | ||||||
| Accounts payable and accrued expenses | 258 | (106 | ) | |||||||
| Deferred income taxes | (11 | ) | (11 | ) | ||||||
| Net cash provided by (used in) operating activities | 150 | (121 | ) | |||||||
| Cash flows from investing activities: | ||||||||||
| Acquisition of intangible assets | (129 | ) | (116 | ) | ||||||
| Acquisition of property and equipment | (2 | ) | (2 | ) | ||||||
| Net cash (used in) investing activities | (131 | ) | (118 | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| (Decrease) in long-term borrowing, net | - | (3 | ) | |||||||
| Dividends paid | - | (25 | ) | |||||||
| Net cash used in financing activities | - | (28 | ) | |||||||
| Increase (Decrease) in cash during the period | 19 | (267 | ) | |||||||
| Foreign exchange effect on cash | (17 | ) | 78 | |||||||
| Cash at beginning of the period | 260 | 1,172 | ||||||||
| Cash at end of the period | $ | 262 | $ | 1,583 | ||||||