DALLAS, Nov. 20, 2019 /PRNewswire/ -- KonaTel, Inc. 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.
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