KonaTel Reports Second Quarter Financial Results
DALLAS, Aug. 19, 2019 /PRNewswire/ -- KonaTel, Inc. (OTCMKTS: KTEL) (www.konatel.com), a voice/data communications holding company, today announced financial results for the second quarter and six month period ended June 30, 2019.
Second Quarter Financial Summary
-- Revenues decreased 17%, reflecting a focus on higher-margin revenue,
which resulted in a shedding of lower-margin, commoditized business;
-- Gross profit improved 550% and gross margin improved from 3.3% to 25.9%,
validating the effort to shed lower-margin revenue;
-- Total operating expenses increased 40%, primarily related to a
significant increase in depreciation and amortization; and
-- Net loss of $605,000, or $(0.01) per share, compared to a net loss of
$774,000, or $(0.02) per share.
"During the first six months of 2019, KonaTel has taken significant steps to position the company for accelerating growth and sustainable profitability," commented KonaTel Chairman/CEO Sean McEwen. "Our primary focus for the last six months has been to merge our two recent acquisitions, Infiniti Mobile and Apeiron, while streamlining administrative costs and gaining efficiencies through economies of scale. I am encouraged with our progress and expect incremental efficiencies as we grow. Simultaneously, we have been working to reduce low margin service revenue in favor of higher margin service revenue. This effort caused a temporary reduction in revenue, but a significant increase in gross profit as our margin increased from 3.3% to 25.9%."
"As part of our ongoing direct cost assessment procedures, we continuously review our wholesale bundling strategy to more efficiently leverage our wholesale consumption of minutes, SMS and data," added Mr. McEwen. "We also periodically reevaluate our direct wholesale supplier agreements searching for ways to reduce direct costs. Over the past six months and through our cost assessment procedures, we have been able to reduce costs at June 30, 2018, by 27%. The improved margin and more efficient utilization of minutes, SMS and data has enabled us to reduce our operating loss by 20.8%, reduce our net loss by 21.8% and achieve positive cash flow from operations."
Second Quarter Financial Detail (Second Quarter of 2019 vs. Second Quarter of 2018)
Revenues decreased 17.4% to $2.3 million compared to $2.7 million, reflecting a focus on high-margin service revenue. Gross profit was $586,000, or 25.9% profit margin, compared to gross profit of $90,000, or 3.3% profit margin.
Total operating expenses were $1.2 million, up 39.3%. Approximately $213,000 of the $336,000 increase in operating expenses was related to an increase in depreciation and amortization, reflecting primarily intangible assets such as customer lists, software and licenses related to the Apeiron acquisition.
Net loss was $605,000, or $(0.01) per share (based on 40.7 million weighted average shares) compared to a net loss of $774,000, or $(0.02) per share (based on 32.8 million weighted average shares).
Year-to-Date Financial Detail (First Six Months of 2019 vs. First Six Months of 2018)
Revenues decreased 4.5% to $4.9 million compared to $5.1 million. Gross profit was $1.6 million, or 32.4% profit margin, compared to gross profit of $549,000, or 10.7% profit margin.
Total operating expenses were $2.5 million, up 35.6%, primarily due to a 247% increase in depreciation and amortization expenses.
Net loss was $902,000, or $(0.02) per share (based on 40.7 million weighted average shares) compared to a net loss of $1.3 million, or $(0.04) per share (based on 32.8 million weighted average shares).
Balance Sheet
The Company ended the quarter with $201,000 in cash, compared to $57,000 in cash at December 31, 2018. KonaTel has successfully completed and integrated two acquisitions without incurring additional long or short-term debt.
About KonaTel
KonaTel provides a variety of retail and wholesale telecommunications services including mobile voice/text/data service supported by national U.S. mobile networks, mobile numbers, SMS/MMS services, and IoT mobile data service. KonaTel's subsidiary, Infiniti Mobile (www.infinitimobile.com) is an FCC authorized wireless Lifeline carrier with an FCC approved wireless Lifeline Compliance Plan, authorized to provide government subsidized phone service to low income Americans. KonaTel's other subsidiary, Apeiron Systems (www.apeiron.io), is a global cloud communications service provider employing a dynamic "as a service" (CPaaS/UCaaS/CCaaS/PaaS) platform. Apeiron provides voice, messaging, network and platform products using innovative network and software designs. All Apeiron's services can be accessed through legacy interfaces and rich communications APIs. KonaTel is headquartered in Dallas, Texas.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this press release. This press release should be considered in light of the disclosures contained in the filings of KonaTel and its "forward-looking statements" in such filings that are contained in the EDGAR Archives of the SEC at www.sec.gov.
KonaTel, Inc.
Condensed Consolidated Balance Sheets
June 30,
December 31,
2019 2018
(unaudited)
Assets
Current Assets
Cash and Cash Equivalents $201,291 $56,510
Accounts Receivable, net 729,016 1,035,273
Note Receivable 16,666 66,667
Inventory, Net 1,858 1,085
Prepaid Expenses 5,160 7,354
Total Current Assets 953,991 1,166,889
Fixed Asset
Property and Equipment,
Net 118,900 132,023
Right to Use Assets, Net 76,754 -
Total Fixed Assets 195,654 132,023
Other Assets
Intangible Assets, Net 2,663,658 2,490,922
Advances for Acquisition
Target - 561,309
Other Assets 253,348 57,266
Total Other Assets 2,917,006 3,109,497
Total Assets $4,066,651 $4,408,409
===
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable and
Accrued Expenses $1,266,014 $1,265,080
Amount Due to Stockholder 233,806 91,152
Revolving Line of Credit 58,674 103,379
Lease Liabilities 60,260 -
Deferred Revenue 44,276 69,988
Income Tax Payable 108,941 108,941
Customer Deposits 65,274 28,854
Total Current Liabilities 1,837,245 1,667,394
Long Term Liabilities
Lease Liabilities 17,508 -
Deferred Tax Liability 10,700 10,700
Total Long-Term
Liabilities 28,208 10,700
Total Liabilities 1,865,453 1,678,094
Stockholders' Equity
Common stock, $0.001 par
value, 50,000,000 shares
authorized, 40,692,286
outstanding and issued
at June 30, 2019 and
December 31, 2018 40,692 40,692
Additional Paid In
Capital 7,414,595 7,041,696
Accumulated Deficit (5,254,089) (4,352,073)
Total Stockholders'
Equity 2,201,198 2,730,315
Total Liabilities and
Stockholders' Equity $4,066,651 $4,408,409
===
KonaTel, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
---
2019 2018 2019 2018
---
Revenue $2,266,368 $2,744,349 $4,906,666 $5,137,704
Cost of Revenue 1,680,233 2,654,302 3,318,897 4,588,991
---
Gross Profit 586,135 90,047 1,587,769 548,713
---
Operating Expenses
Payroll and Related
Expenses 473,440 420,526 942,541 813,239
Operating and
Maintenance 380,892 249,117 809,037 574,047
Bad Debt 15,210
Utilities and
Facilities 5,008 45,774 59,773 105,507
Depreciation and
Amortization 269,257 56,555 502,231 144,590
General and
Administrative 36,432 20,288 78,334 37,924
Marketing and
Advertising 6,104 16,811 21,469 37,289
Taxes and Insurance 22,618 48,200 69,893 103,335
Total Operating
Expenses 1,193,751 857,271 2,483,278 1,831,141
---
Operating Loss (607,616) (767,224) (895,509) (1,282,428)
Other Income and Expense
Interest Income 664 20 1,341
Other Income 14,836 14,836 4,281
Interest Expense (12,733) (6,760) (22,684) (23,844)
---
Total Other Income
and Expenses 2,767 (6,740) (6,507) (19,563)
---
Net Loss $(604,849) $(773,964) $(902,016) $(1,301,991)
Net loss per share
(basic and diluted) $(0.01) $(0.02) $(0.02) $(0.04)
Weighted Average
Number of Basic and
Diluted Shares 40,692,286 32,766,462 40,692,286 30,650,850
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SOURCE KonaTel, Inc.
