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.

SOURCE KonaTel, Inc.