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One Horizon Group Updates on 6 Month Results [Manufacturing Close - Up](Manufacturing Close - Up Via Acquire Media NewsEdge) One Horizon Group, Inc. announced financial results for the six months ended Dec. 31, 2012. In a release dated May 9, the Company said that revenue was $11.7 million for the six months ended Dec. 31, 2012, compared to $0.7 million for the same period the previous year -Income from operations was $6.6 million for the six months ended Dec. 31, 2012, compared to a loss from operations of $1.3 million for the same period the previous year -Net income was $5.3 million for the six months ended Dec. 31, 2012, compared to a loss of $1.3 million for the same period the previous year -In October 2012, the Company divested its satellite communications subsidiary in order to focus exclusively on software for Tier 1 and Tier 2 mobile network operators -In October 2012, Pzzapp, a European provider of VoIP apps for smartphones, commercially launched its optimized mobile VoIP service for smartphones using the Company's VoIP and messaging platform -Completed a $6 million equity financing on Feb. 18, of which $2.79 million has been received to date -Signed contract with Smart Communications, Inc. to roll out a Smart Communications branded Horizon Call mobile VoIP platform, bringing total number of Tier 1 and Tier 2 carriers to 14 -Entered into joint venture with ZTESoft Technology Co., a subsidiary of ZTE Corp., to sell licenses for the Horizon platform to international operators and to Chinese enterprises and to roll out a new mobile VoIP platform to China smartphone market "We are pleased to announce very encouraging results for the six months ended Dec. 31, 2012 reflecting the success of Horizon Call, our mobile VoIP solution for network operators. Horizon Call is a revolutionary solution that 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," said Mark White, Chief Executive Officer of One Horizon Group. "Our patent-pending 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, providing higher service quality and reach. 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 such as China, Indonesia, India and the Philippines as well as most of the developing markets. "Further, One Horizon Group directly addresses network congestion issues resulting from the explosion of smartphones and other mobile computing devices, an issue that is becoming of far greater urgency as smartphone deployments scale and stress already congested infrastructure with data and video traffic. Research firm International Data Corp. estimates that 918 million smartphones will be shipped in 2013, representing 50.1 percent of total mobile phone shipments. In the past 18 months One Horizon Group has entered into partnerships with leading telecommunication carriers that allow these operators to improve revenue per user by retaining calls that would have gone to over-the-top data applications running on their networks and to reduce customer churn. Our application, which is available on iPhones and Android phones, enables clear voice communications and optimizes the use of IP bandwidth even as we see vast untapped potential. "Cisco projects global mobile data traffic to increase 13-fold between 2012 and 2017. According to Cisco, at the end of 2012, the number of mobile-connected devices exceeded the number of people on earth, and by 2017, it is expected that there will be 1.4 mobile devices per capita. This has been driven by the availability of cheap GSM data and the massive uptake of smartphones and tablets, devices on which our Horizon Call platform is designed to run. As networks become more and more congested, our unique software service adds value to mobile data networks and gives users more highway and cheaper tolls." Share Exchange Transaction and Comparability of Financial Results In October 2012, the Company (then, Intelligent Communication Enterprise Corp.) and One Horizon Group entered into a share exchange transaction through which ICE Corp. acquired One Horizon UK. The share exchange transaction was consummated on Nov. 30, 2012, at which time One Horizon UK became a subsidiary of ICE Corp. On December 27, 2012, the Company changed its name to One Horizon Group, Inc. Prior to the share exchange transaction, One Horizon UK's fiscal year ended on June 30. On Feb. 13, the Company's board of directors changed the Company's fiscal year end from June 30 to Dec. 31. As a result of this change, when reporting its annual financial results with the SEC on Form 10-KT, the Company included the financial information for the six-month transition period from July 1, 2012 to Dec. 31, 2012. Financial Results for the Six Months Ended Dec. 31, 2012 Revenue was $11.7 million for the six month period ended Dec. 31, 2012, up from $0.7 million for the six month period ended Dec. 31, 2011. The sales growth is expected to continue as more companies sign up for the Horizon Platform. Gross profit was $11.6 million for the six month period ended Dec. 31, 2012, up from $0.7 million for the six month period ended Dec. 31, 2011. 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 six month period was 99.0 percent. Operating expenses were $5.0 million, or 42.7 percent of sales for the six months ended Dec. 31, 2012 as compared to $1.9 million, or 271.4 percent of sales for the same period in 2011. 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 continuing operations before income taxes was $6.7 million for the six month period ended Dec. 31, 2012, compared to a loss from continuing operations before income taxes of $1.3 million for the same period in 2011. Income from continuing operations was $5.4 million for the six months ended Dec. 31, 2012, compared to a loss of $1.3 million for the same period last year. The operating margin for the six months ended Dec. 31, 2012 was 46.2 percent. Net income was $5.3 million for the six months ended Dec. 31, 2012, compared to a loss of $1.3 million for the same period last year. Financial Condition As of Dec. 31, 2012, the Company had $0.7 million in cash and cash equivalents and its working capital, excluding the current portion of deferred revenue, was approximately $0.6 million. As of Dec. 31, 2012, the Company had $0.2 million in long term debt, $22.0 million in deferred revenue and stockholders' equity was $16.8 million. During the six months ended Dec. 31, 2012, the Company used cash of approximately $0.8 million for operating activities, while investing activities used approximately $0.4 million and financing activities provided approximately $2.0 million in net cash. Subsequent Equity Financing On Feb. 18, 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 two additional installments totaling $3,210,000 to be made by September 30. Business Update and 2013 Outlook 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., a subsidiary of ZTE Corp., a mobile phone manufacturer. 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 its high population density, high penetration of mobile phones, congested mobile cellular networks and high growth in the adoption of smartphones. These factors will put increased pressure 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. "In 2013, we are intent on growing our Horizon Call platform that offers mobile network operators evolutionary telecommunications efficiencies and higher revenue per user. Horizon Call is available as a white-labeled solution, making it unique to each operator, can be configured for text or audio advertising and can work with the mobile operator's existing payment system. Furthermore, Horizon Call is available for download on the Google Play store and iTunes App store, allowing operators to reach a much broader audience than preinstalling the application on handsets. As such, Horizon Call provides a very compelling value proposition to our customers. Finally, we believe that the extension of our technology to optimize data applications for personal computers and business-to-business solutions further diversifies our business and augurs further expansion in the periods ahead," White said. ((Comments on this story may be sent to [email protected])) (c) 2013 ProQuest Information and Learning Company; All Rights Reserved. |