KonaTel Reports Third Quarter Financial Results
DALLAS, Nov. 20, 2019 /PRNewswire/ -- KonaTel, Inc. (OTCMKTS: KTEL) (www.konatel.com), a voice/data communications holding company, today announced financial results for the third quarter and nine month period ended September 30, 2019.
Third Quarter Financial Summary
-- Revenues of $2.3 million, down 4.3% compared to the third quarter last
year, reflecting a focus on higher-margin revenue, which resulted in a
shedding of lower-margin, commoditized business;
-- Sequentially, revenues increased 3.7% compared to the second quarter of
2019;
-- Gross profit improved 47.9% and gross margin improved from 22.8% to
35.3%, validating strategy to shed lower-margin revenue;
-- Operating loss narrowed by 19.0% primarily due to a higher gross margin;
and
-- Net loss of $176,000 or $(0.00) per share, compared to net income of
$46,000, inclusive of a $318,000 one-time gain on the sale of assets, or
$0.00 per share.
"Gross margins improved significantly in the third quarter, up to 35.3% of total revenue, as a direct result of our efforts to reshape and shift our portfolio of business towards higher margin service revenue," commented KonaTel Chairman and CEO Sean McEwen. "Integration of our two recent acquisitions, Infiniti Mobile and Apeiron, has been completed, resulting in the elimination of redundancies and more streamlined administrative functions, which helped to reduce our operating loss by nearly one-third sequentially. From a cash perspective, we have generated positive cash from operations of nearly $100,000 through the first nine months of 2019 compared to using cash in operations of $1.3 million a year ago."
"We received authorization to expand our Lifeline services into the state of Kentucky, a significant opportunity that increases our addressable market and further leverages our position as one of the few telecom carriers with an FCC approved compliance plan to provide Lifeline services," added Mr. McEwen.
"During the third quarter, KonaTel's wholly owned Communications Platform as a Service (CPaaS) subsidiary, Apeiron, onboarded two new enterprise clients that are expected to generate $1.2 million in new revenue over a three-year period," added Josh Ploude, Apeiron's Chief Executive Officer.
Third Quarter Financial Detail (Third Quarter of 2019 vs. Third Quarter of 2018)
Revenues decreased 4.3% to $2.3 million compared to $2.5 million, reflecting a focus on higher margin service revenue and less wholesale service. Gross profit was $829,000, or 35.3% profit margin, compared to gross profit of $561,000, or 22.8% profit margin.
Total operating expenses were $1.0 million, up 26.4% due to higher depreciation and amortization expense primarily related to the acquisition of CPaaS and Lifeline businesses in 2018 and 2019, respectively.
Net loss was $226,000 or $(0.01) per share (based on 40.7 million weighted average shares) compared to net income of $46,000, or $0.00 per share (based on 32.9 million weighted average shares). In the year ago quarter ended September 30, 2018, net income includes a gain of $318,000 related to the sale of various assets that were previously used in the company's wireless services and telecommunications operations.
Year-to-Date Financial Detail (First Nine Months of 2019 vs. First Nine Months of 2018)
Revenues decreased 3.6% to $7.3 million compared to $7.6 million. Gross profit increased to $2.4 million, or 33.3% profit margin, compared to gross profit of $1.1 million, or 14.6% profit margin. Total operating expenses were $3.5 million, up 32.8%, primarily due to a 265.4% increase in depreciation and amortization expenses. Net loss decreased to $1.1 million, or $(0.03) 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 31.4 million weighted average shares).
Balance Sheet
The Company ended the quarter with $140,000 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
(unaudited)
September 30,
December 31,
2019 2018
Assets
Current Assets
Cash and Cash
Equivalents $139,637 $56,510
Accounts Receivable,
net 720,158 1,035,273
Note Receivable - 66,667
Inventory, Net 1,562 1,085
Prepaid Expenses 3,677 7,354
Total Current Assets 865,034 1,166,889
Fixed Asset
Property and
Equipment, Net 111,682 132,023
Right to Use Assets,
Net 58,614 -
Total Fixed Assets 170,296 132,023
Other Assets
Intangible Assets,
Net 2,508,089 2,490,922
Advances for
Acquisition Target - 561,309
Other Assets 257,740 57,266
Total Other Assets 2,765,829 3,109,497
Total Assets $3,801,159 $4,408,409
===
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable and
Accrued Expenses $1,417,543 $1,265,080
Amount Due to
Stockholder 204,344 91,152
Revolving Line of
Credit 35,683 103,379
Lease Liabilities 42,271 -
Deferred Revenue 42,867 69,988
Income Tax Payable 87,800 108,941
Customer Deposits 29,988 28,854
Total Current
Liabilities 1,860,496 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 1,888,704 1,678,094
Stockholders' Equity
Common stock, $.001
par value,
50,000,000 shares
authorized,
40,692,286
outstanding and
issued at September
30, 2019 and
December 31, 2018 40,692 40,692
Additional Paid In
Capital 7,301,658 7,041,696
Accumulated Deficit (5,429,895) (4,352,073)
Total Stockholders'
Equity 1,912,455 2,730,315
Total Liabilities and
Stockholders' Equity $3,801,159 $4,408,409
===
KonaTel, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
---
2019 2018 2019 2018
---
Revenue $2,346,975 $2,453,514 $7,253,641 $7,591,218
Cost of Revenue 1,517,834 1,892,988 4,836,732 6,481,979
---
Gross Profit 829,141 560,526 2,416,909 1,109,239
---
Operating Expenses
Payroll and Related
Expenses 461,331 336,660 1,403,872 1,120,388
Operating and
Maintenance 225,251 332,718 1,034,287 936,212
Bad Debt 3,300 3,300 15,210
Utilities and
Facilities 21,066 41,883 80,839 147,389
Depreciation and
Amortization 251,117 61,582 753,350 206,172
General and
Administrative 13,306 26,560 91,639 64,485
Marketing and
Advertising 2,550 4,995 24,020 42,284
Taxes and Insurance 15,615 21,437 85,508 124,771
Total Operating
Expenses 993,536 825,835 3,476,815 2,656,911
---
Operating Loss (164,395) (265,309) (1,059,906) (1,547,672)
Other Income and Expense
Interest Income 221 456 1,562 4,757
Other Income 318,257 14,836 318,257
Interest Expense (11,631) (7,087) (34,314) (30,951)
---
Total Other Income
and Expenses (11,410) 311,626 (17,916) 292,063
Net Profit (Loss) $(175,805) $46,317 $(1,077,822) $(1,255,609)
Net loss per share $(0.00) $0.00 $(0.03) $(0.04)
Weighted Average
Number of Basic and
Diluted Shares 40,692,286 32,942,286 40,692,286 31,423,055
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SOURCE KonaTel, Inc.
