One Horizon Group Announces First Quarter 2013 Financial Results - Expects strong growth for 2013 based on existing contracts and a robust pipeline for its high value-add capabilities PR Newswire BAAR, Switzerland, May 21, 2013 BAAR, Switzerland, May 21, 2013 /PRNewswire/ -- One Horizon Group, Inc. (OTCQB: OHGI) ("One Horizon Group" or the "Company"), which develops software application platforms that optimize mobile voice, instant messaging and advertising communications over the Internet, today announced unaudited financial results for the three months ended March 31, 2013. Financial Highlights and Recent Events oRevenue was $3.0 million for the three months ended March 31, 2013, compared to $2.3 million for the same period the previous year. oIncome from operations was $1.1 million for the three months ended March 31, 2013, compared to $0.2 million for the same period the previous year. oNet income was $0.9 million for the three months ended March 31, 2013, compared to $0.2 million for the same period the previous year. oCompleted a $6 million equity financing on February 18, 2013, of which $2.79 million has been received to date. oThe Company readied for marketing a high-end Microsoft Lync platform as part of the Company's enterprise initiative. This rich IP communications solution extends the Horizon Mobile app with its bandwidth savings and effectively integrates mobile capabilities into users' IT channel. oSubsequent to the end of the first quarter, in May 2013, the Company's joint venture with ZTESoft Technology Co. LTD, a subsidiary of ZTE Corp., received its formal license signifying that its capital investment has been approved, and which enables the joint venture to commence business operations in China. The joint venture was formed to sell licenses for the Horizon Call platform to international operators and to Chinese enterprises, and to roll out a new mobile VoIP platform to the China smartphone market. "We are pleased to announce positive results for three months ended March 31, 2013 reflecting the success of Horizon Call, our mobile VoIP solution for network operators. We are building momentum for the rest of the year as we are confident that the extensive roll-out of our revolutionary Horizon Call will gain continued traction among Tier 1 and Tier 2 carriers," stated Mark White, Chief Executive Officer of One Horizon Group. "The Horizon Call platform enables users to make high quality calls over Wi-Fi or data connections including 4G, 3G, 2G/EDGE or GPRS, thus dramatically reducing the expense of making overseas calls and providing inexpensive calls while roaming outside of the home country. Our products directly address network congestion issues resulting from the explosion of smartphone deployments which are expected to exceed the sale of feature phones for the first time this year and stress already congested networks." "The accelerating growth in smartphones in the years ahead is expected to be led by the emerging markets which represent a key opportunity for Horizon Call because of their high population density, high penetration of mobile phones, congested mobile cellular networks and high growth in smartphone adoption. These factors will put increased pressure on mobile operators to manage their network availability. We believe we are the only mobile VoIP platform that can effectively operate on congested 2G and 3G networks which dominate wireless infrastructure in very sizable, fast growing Asian markets." "Our patent-pending Horizon SmartPacket™ technology enables One Horizon Group to improve the efficiency with which voice calls are transmitted over wireless, wire-line or satellite communications networks by approximately 10X, while providing higher service quality and better reach," Mr. White concluded. Financial Results for the Three Months ended March 31, 2013 Revenue was $3.0 million for the three months ended March 31, 2013, up from $2.3 million for the three months ended March 31, 2012. The increase in our revenue was due to the growth in sales of the Horizon Platform following the development of the GSM application, Horizon Call, which was completed in November 2011. The Company expects the sales growth to continue to grow as more companies sign up for the Horizon Platform. Gross profit was $3.0 million for the three months ended March 31, 2013, up from $2.2 million for the three months ended March 31, 2012. The main reason for the increase was the growth in business and smartphone market globally as well as the Company's ability to capitalize on market opportunities by entering areas with high population density, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones. Gross margin for the three month period was 99.8%. Operating expenses were $2.0 million, or 66.7% of sales for the three months ended March 31, 2013; operating expenses were $2.0 million,or 86.9% of sales for the same period in 2012. The increase was due to costs related to adding resources to deal with new customers in both data handling and the account management roles. Going forward, management expects these costs to rise due to various public company related expenses including share-based compensation, and various legal and consulting services. Income from operations was $1.1 million for the three months ended March 31, 2013, compared to $0.2 million for the same period in 2012. Net income was $0.9 million for the three months ended March 31, 2013, compared to $0.2 million for the same period in 2012. The increase in net income reflected the growth in the business and in the smartphone market globally. Financial Condition As of March 31, 2013, the Company had $0.5 million in cash and cash equivalents and its working capital, excluding the current portion of deferred revenue (attributable to licensing fees to be realized over time), was approximately $2.4 million. As of March 31, 2013, the Company had $0.2 million in long term debt, $28.1 million in deferred revenue and stockholders' equity was $17.6 million. During the three months ended March 31, 2013, the Company used cash of approximately $0.5 million for operating activities, while investing activities used approximately $0.3 million and financing activities provided approximately $0.5 million in net cash. Private Equity Financing On February 18, 2013, the Company entered into an agreement with a shareholder to whom it sold 483,870,968 shares of common stock for an aggregate consideration of $6,000,000, or $0.0124 per share. The Company also issued a common stock purchase warrant to this shareholder exercisable for three years to purchase 241,935,483 shares of Common Stock at an exercise price of $0.0124 per share. Pursuant to the Subscription Agreement, the initial installment of the investment of $2,790,000 was paid in April 2013, with the two additional installments totaling $3,210,000 expected to be received in June and September 2013. Business Update and 2013 Outlook In the first quarter of 2013, the Company readied the launch of its developed end-to-end rich IP communications solution designed to easily interconnect with Microsoft Lync services, turning smartphones into enterprise mobile endpoints enabled for inbound and outbound calls. The Company's SmartPacket™ technology optimizes mobile voice for the Microsoft Lync enterprise user as it manages silence and packet flow enabling mobile VoIP at only 5.7 kbps compared to 237 kbps for Lync Mobile. This results in reduced latency and minimized call dropping rates. The Company's technology also enable significant cost savings where Horizon app users get up to 32 minutes of call for 1 MB of data usage compared to 0.5 minutes when using Lync Mobile. This efficiency translates into a significant mobile data cost reduction compared to using Lync Mobile. As previously indicated, during 2012 the Company entered into a number of new agreements with mobile carriers, including Smart Communications, the number one mobile carrier in the Philippines, bringing the total number of first- and second-tier carriers that have adopted the Horizon Call platform to 14. In addition, the Company entered into a joint venture with ZTESoft Technology Co. LTD, a subsidiary of ZTE Corp., the fourth largest mobile phone manufacturer in the world and the fifth largest telecommunications equipment provider, to sell licenses for the Horizon platform to international operators and to Chinese enterprises and to roll out the mobile VoIP platform in China using Horizon Call technology. The Company anticipates further revenue growth in 2013 and is exploring several regions and markets where its software application will have the most value-added impact on present business, including India and China. Asia represents a key opportunity for the Company's Horizon Call platform due to increased pressures on mobile operators to manage their network availability and provide cost and efficiency advantages relative to current technologies. The Company foresees its Horizon SmartPacket™ as being especially competitive in this region since it is the world's lowest bandwidth voice compression and transmission protocol and no other software companies offer a solution in such a complete and integrated fashion. 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, which develops and markets one of the world's most bandwidth-efficient mobile voice over Internet Protocol ("VoIP") platform for smartphones, and also offers a range of other optimized data applications including messaging and mobile advertising. It is an ISO 9001 and ISO 20000-1 certified company. The Company has operations in 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 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. UNAUDITED FINANCIAL TABLES FOLLOW ONE HORIZON GROUP, INC. (formerly Intelligent Communication Enterprise Corporation) Consolidated Balance Sheets March 31, 2013 and December 31, 2012 (in thousands, except share data) (unaudited) March 31, December 31, 2013 2012 Assets Current assets: Cash $ 460 $ 699 Accounts receivable, current portion 8,752 5,899 Other assets 130 136 Total current assets 9,342 6,734 Accounts receivable, net of current portion 31,512 26,263 Property and equipment, net 324 350 Intangible assets, net 12,073 12,329 Other assets 126 - Total assets $ 53,377 $ 45,676 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 925 $ 750 Accrued expenses 463 435 Accrued compensation 36 38 Income taxes 1,411 1,332 Amounts due to related parties 4,000 3,500 Current portion of deferred revenue 7,600 6,000 Current portion of long-term debt 59 59 Total current liabilities 14,494 12,114 Long-term liabilities Deferred revenue 20,500 16,000 Long term debt 207 219 Deferred income taxes 445 445 Mandatorily redeemable preferred shares 90 90 Total liabilities 35,736 28,868 Stockholders' Equity Preferred stock: $0.0001 par value, authorized 150,000,000; no shares issued or outstanding - Common stock: $0.0001 par value, authorized 250,000,000,000 shares issued and outstanding 18,991,377,645 shares 1,900 1,852 (December 2012 18,507,506,667) Additional paid-in capital 25,733 19,781 Stock subscriptions receivable (6,500) (500) Retained Earnings (Deficit) (3,884) (4,780) Accumulated other comprehensive income 392 455 Total stockholders' equity 17,641 16,808 Total liabilities and stockholders' equity $ 53,377 $ 45,676 ONE HORIZON GROUP, INC. (formerly Intelligent Communication Enterprise Corporation) Consolidated Statements of Operations For the three months ended March 31, 2013 and 2012 (in thousands) (unaudited) March 31, 2013 2012 Revenue $ 3,013 $ 2,292 Cost of revenue 7 51 Gross Profit 3,006 2,241 Expenses: General and administrative 1,473 1,693 Depreciation 36 97 Amortization of intangibles 446 202 1,955 1,992 Income from operations 1,051 249 Other income and expense: Interest expense (5) (11) Interest expense - related parties (50) (50) (55) (61) Income before income taxes 996 188 Income taxes 100 16 Net Income for the period $ 896 $ 172 Earnings per share Basic net income per share $ 0.00 $ 0.00 Diluted net income per share $ 0.00 $ 0.00 Weighted average number of shares outstanding Basic 18,727,937 13,328,442 Diluted 20,058,670 14,247,178 Consolidated Statements of Cash Flows For the three months ended March 31, 2013 and 2012 (in thousands) (unaudited) March 31 2013 2012 Cash provided by (used in) operating activities: Operating activities: Net income (loss) for the period $ 896 $ 172 Adjustment to reconcile net income (loss) for the period to net cash provided by (used in) operating activities: Depreciation of property and equipment 36 97 Amortization of intangible assets 446 202 Changes in operating assets and liabilities net of effects of acquisitions: Accounts receivable (8,102) (11,709) Other assets (120) (6) Accounts payable and accrued expenses 195 2,140 Deferred revenue 6,100 10,300 Income taxes 79 16 Net cash provided by (used in) operating activities (470) 1,212 Cash used in investing activities: Acquisition of intangible assets (245) (822) Acquisition of property and equipment (12) - Net cash (used in) investing activities (257) (822) Cash flow from financing activities: Increase (decrease) in long-term borrowing, net (12) (400) Advances from related parties, net of repayment 500 - Net checks issued in excess of funds - (361) Net cash provided by (used in) financing activities 488 (761) Increase (decrease) in cash during the period (239) (371) Cash at beginning of the period 699 371 Cash at end of the period $ 460 $ - Contact: CCG Investor Relations Crocker Coulson, President Phone: + (1) 646-213-1915 Email: Crocker.Coulson@ccgir.com SOURCE One Horizon Group, Inc. Website: http://www.onehorizongroup.com
One Horizon Group Announces First Quarter 2013 Financial Results
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