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One Horizon Group Announces First Quarter 2014 Results

BAAR, SWITZERLAND -- (Marketwired) -- 05/22/14 -- One Horizon Group, Inc. (OTCQB: OHGI) ("One Horizon" or the "Company"), which develops and licenses bandwidth efficient mobile voice over Internet Protocol ("VoIP") platform for telecommunication company-supported smart phones, today announced financial results for the three months ended March 31, 2014.

One Horizon developed a proprietary VoIP platform ("Horizon Platform") that enables wireless carriers around the world to provide customized and optimized voice and data services over any mobile, fixed and satellite network through an easy to install mobile app. One Horizon's SmartPacket™ technology underlying the Horizon Platform enables greater bandwidth efficiency by reducing IP overhead and optimizing packet flow, delivery and playback. One Horizon targets emerging markets with high population densities, high penetration of mobile phones, congested mobile networks, and high growth in smartphone adoption. Mobile operators pay an annual software licensing fee to the Company for each active subscriber using the white-label VoIP service powered by the Horizon Platform. The Company continues to expand its revenue sources to mobile advertising and mobile payments by introducing new value-added services and features.

Highlights:

  • Q1 2014 revenues were $1.2 million vs. $1.9 million in Q1 2013
  • Expanded software development team in Ireland and China
  • Completed development of the Horizon billing system
  • Chongqing Leixin Network Technology ("Leixin") JV commenced initial infrastructure rollout in five cities in China

"Our software is installed on our telecom partners systems and we are ready to begin monetizing our collective customer base," began Brian Collins, Founder and CTO of One Horizon. "After years of hard work and customized development of our VoIP software on complex telco networks, we are now poised to launch our applications on a widespread basis with our customers and their subscribers. Over-the-Top ("OTT") applications are in the spotlight now and while many Asian telcos have already taken steps to combat them, the US and Europe are following suit. Our technology is a perfect fit to this developing opportunity as telcos take more control of their subscribers by providing carrier-branded, high-quality VoIP and messaging services. We expect 2014 to be a break out year for One Horizon and we are excited about the prospects in our pipeline."

Financial Results for the Period Ended March 31, 2014

Revenues for the three months ended March 31, 2014 were approximately $1.2 million. Overall contract value for contracts signed from inception through March 31, 2014 was $62.4 million, of which only $8.6 million was recognized through March 31, 2014. Contracts with Tier 1 entities typically require agreed-upon fixed payments over periods extending beyond one year whereas contracts with Tier 2 entities have long-term variable payment terms based on customer usage. One Horizon Group recognizes income when the installments on the contracts are due to and invoiced by the Company.

Cost of goods sold and operating expenses for the three months ended March 31, 2014 were $0.5 million and $1.2 million. Excluding non-cash depreciation and amortization and stock-based compensation expenses, operating income was $0.2 million for the first quarter of 2014.

The Company recorded a net loss of $0.4 million and net loss per share of $0.02 for the three months ended March 31, 2014. The weighted average shares outstanding increased from 31.2 million during the three months ended March 31, 2013 to 32.9 million during the same period in 2014 due to the private placement completed on February 18, 2014.

Financial Condition

The Company had $21.8 million of assets and $16.3 million shareholders' equity at March 31, 2014. Cash outflows from operations were $0.8 million for the three months ended March 31, 2014.

Business Updates

One Horizon's customer in the Philippines, SMART is currently rolling out its LinkPlus™, "SMART"-branded VoIP service to millions of ex-pat Filipinos living and working throughout Asia. LinkPlus™ is an app that can be downloaded onto any smartphone and used over any data or WiFi network to connect with any SMART subscriber or SMART's LinkPlus™ app user.

The Company continues to expand its software development team, adding a new senior software development at its recently opened R&D office in Limerick, Ireland and four new junior software developments in China through its Leixin JV. These new additions will further expand its software development capabilities.

During the first quarter of 2014, Leixin commenced the first phase of its infrastructure rollout in five cities in China: Tianjin, Beijing, Chongqing, Changchun and Shijiazhuang. These initial five locations will connect the 95131 to the national telephone network to commence the commissioning of the Leixin VoIP service in China.

One Horizon will provide updates in press on its developments in China and the Philippines in the near term.

Conference Call

Management will host a conference call at 8:00 a.m. ET on May 22, 2014 to discuss its first quarter 2014 earnings results.

Date: Thursday, May 22, 2014
Time: 8:00 am ET
US Dial-in: 1-877-407-0784
International Dial-in: 1-201-689-8560
Conference ID: 13582845
Webcast: http://public.viavid.com/index.php?id=109287

Please dial in at least 10 minutes before the start of the call to ensure timely participation. A playback of the call will be available until May 29, 2014 at 11:59pm ET. To listen, call 1-877-870-5176 within the United States or 1-858-384-5517 when calling internationally.

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, Baar, 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. 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, 2014 and December 31, 2013
                      (in thousands, except share data)
                                 (unaudited)

                                                     March 31, December 31,
                                                       2014        2013
                                                    ---------- ------------
Assets

Current assets:
Cash                                                $      789 $      2,070
Accounts receivable                                      7,214        7,264
Other assets                                               751          139
                                                    ---------- ------------
Total current assets                                     8,754        9,473

Property and equipment, net                                315          315
Intangible assets, net                                  12,671       12,760
Investment                                                  23           23
                                                    ---------- ------------
Total assets                                        $   21,763 $     22,571
                                                    ========== ============

Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable                                    $      371 $        661
Accrued expenses                                           865          964
Accrued compensation                                        48           59
Income taxes                                                94          117
Amounts due to related parties                           3,500        3,500
Current portion of long-term debt                           66           65
                                                    ---------- ------------
Total current liabilities                                4,944        5,366

Long-term liabilities
Long term debt, net of current portion                     168          184
Deferred income taxes                                      289          445
Mandatorily redeemable preferred shares                     90           90
                                                    ---------- ------------
Total liabilities                                        5,491        6,085


Equity
Preferred stock:
$0.0001 par value, authorized 50,000,000;
no shares issued or outstanding
Common stock:
$0.0001 par value, authorized 200,000,000 shares
issued and outstanding 32,935,069 shares (December
 2013 32,920,069)                                            3            3
Additional paid-in capital                              28,463       28,269
Retained Earnings (Deficit)                            (13,707)     (13,319)
Accumulated other comprehensive income                   1,160        1,137
                                                    ---------- ------------
Total One Horizon Group, Inc., stockholders' equity     15,919       16,090
Non-controlling interest                                   353          396
                                                    ---------- ------------
Total Equity                                            16,272       16,486
                                                    ---------- ------------
Total liabilities and equity                        $   21,763 $     22,571
                                                    ========== ============




               Condensed Consolidated Statements of Operations
             For the three months ended March 31, 2014 and 2013
                    (in thousands, except per share data)
                                 (unaudited)

                                                             2014     2013
                                                           -------  -------


Revenue                                                    $ 1,185  $ 1,919

Cost of revenue:
  Hardware                                                      12        7
  Amortization of software development costs                   486      446
                                                           -------  -------
                                                               498      453

Gross margin                                                   687    1,466

Expenses:
  General and administrative                                 1,178    1,473
  Depreciation                                                  48       36
                                                           -------  -------
                                                             1,226    1,509
                                                           -------  -------

Loss from operations                                          (539)     (43)

Other income and expense:
  Interest expense                                             (40)     (55)
  Foreign exchange                                              (9)       -
  Interest income                                                1        -
                                                           -------  -------
                                                               (48)     (55)
                                                           -------  -------

Income (Loss) before income taxes                             (587)     (98)

Income taxes (recovery) - deferred                            (156)       -
                                                           -------  -------

Net (Loss) for the period                                     (431)     (98)

Net (Loss) attributable to non-controlling interest            (43)       -

                                                           -------  -------

Net Income (Loss) for the period attributable to One
 Horizon Group, Inc.                                       $  (388) $   (98)
                                                           =======  =======

Earnings (Loss) per share

  Basic and diluted net income (loss) per share            $ (0.02) $ (0.00)


Weighted average number of shares outstanding
  Basic and diluted                                         32,934   31,213
                                                           =======  =======
                                                             2014     2013
                                                           -------  -------

Net (loss)                                                 $  (431) $   (98)
Other comprehensive income:
Foreign currency translation adjustment gain (loss)             23      (63)
                                                           -------  -------
                                                              (408)    (161)
Comprehensive loss attributable to the non-controlling
 interest                                                       43
                                                           -------  -------

Total comprehensive income (loss)                          $  (365) $  (161)
                                                           =======  =======




                           ONE HORIZON GROUP, INC.
               Condensed Consolidated Statements of Cash Flows
             For the three months ended March 31, 2014 and 2013
                               (in thousands)
                                 (unaudited)

                                                             2014     2013
                                                           -------  -------

Cash provided by (used in) operating activities:

Operating activities:
Net loss for the period                                    $  (388) $   (98)

Adjustment to reconcile net loss for the period to
net cash provided by (used in) operating activities:
Depreciation of property and equipment                          48       36
Amortization of intangible assets                              486      446
Common shares issued for services received                      65        -
Options issued for services                                    129        -
  Deferred income taxes benefit                               (156)       -
Net loss attributable to non-controlling interest              (43)       -
Changes in operating assets and liabilities:
  Accounts receivable                                           50     (931)
  Other assets                                                (612)    (120)
  Accounts payable and accrued expenses                       (400)     197
                                                           -------  -------

Net cash (used in) operating activities                       (821)    (470)
                                                           -------  -------

Cash flows from investing activities:

Acquisition of intangible assets                              (350)    (245)
Acquisition of property and equipment                          (48)     (12)
                                                           -------  -------

Net cash (used in) investing activities                       (398)    (257)
                                                           -------  -------

Cash flows from financing activities:


Increase (decrease) in long-term borrowing, net                (15)     (12)
Advances from related parties, net of repayment                  -      500
                                                           -------  -------

Net cash provided by (used in) financing activities            (15)     488
                                                           -------  -------


Increase (decrease) in cash during the period               (1,234)    (239)
Foreign exchange effect on cash                                (47)       -

Cash at beginning of the period                              2,070      699
                                                           -------  -------

Cash at end of the period                                  $   789  $   460
                                                           =======  =======

Contact:

MZ North America
John Mattio
SVP
Tel: +1-212-301-7130
Email: Email Contact
www.mzgroup.us

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