UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported:
(Exact name of registrant as specified in its charter)
N/A
(Former name or address, if changed since last report)
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(State or Other Jurisdiction Of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
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(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter or Rule 12b-2 of the Securities and Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Section 7 - Regulation FD
Item 7.01 Regulation FD Disclosure.
See Item 9.01, Exhibit 99.
The information contained in this Item 7.01 and in Exhibit 99 is being furnished, and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under such Section 18. Furthermore, the information contained in this Item 7.01 and in Exhibit 99 shall not be deemed to be incorporated by reference into our filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
| Exhibit No. | Description of Exhibit | |
| 99 | Press Release dated April 1, 2024 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KonaTel, Inc. | ||
| Date: April 1, 2024 | By: | /s/ D. Sean McEwen |
| D. Sean McEwen | ||
| Chairman, Chief Executive Officer and Director | ||
2
Exhibit 99
KonaTel Reports Fiscal Year 2023 Results
Positioned for Growth in 2024; Focused on Higher Margin Product Mix
DALLAS, April 1, 2024 -- KonaTel, Inc. (OTCQB: KTEL) (www.konatel.com), a voice/data communications holding company, today announced financial results for the year ended December 31, 2023.
Full Fiscal Year 2023 Financial Highlights (2023 vs. 2022)
| · | Revenues of $18.2 million compared to $20.0 million for the year ended December 31, 2022. The decrease in revenue was due to fewer activations within the company’s Mobile Services segment as a result of reduced government subsidized revenues, as well the company’s change in strategy in late 2022. |
| · | Gross profit of $3.4 million compared to $5.0 million for the year ended December 31, 2022. |
| · | GAAP net loss of $(3.9) million, or $(0.09) per diluted share, compared to $(3.0) million, or $(0.07) per diluted share, in the year ended December 31, 2022. |
| · | Non-GAAP net loss of $(2.9) million, or $(0.07) per diluted share, compared to non-GAAP net loss of $(1.8) million, or $(0.04) per diluted share, in the year ended December 31, 2022. |
| · | Cash and cash equivalents of $777,000 compared to $2.1 million as of December 31, 2022. |
Quarterly Financial Highlights (Q4 2023 vs. Q4 2022)
| · | Revenue of $4.9 million, an increase of 2.3% compared to $4.8 million. This increase was directly related to an expansion of our mobile subsidized services. |
| · | Gross profit was $334,000, or 6.8% gross profit margin, compared to $2.0 million, or 41.5% gross profit margin. The decline in gross profit was directly related to reduced subsidized mobile activations in Q4-2022 triggering substantially lower customer acquisition costs (booked at time of sale) compared to increased activations in Q4-2023 triggering higher customer acquisition costs (booked at time of sale). |
| · | Total operating expenses were $1.8 million, down 8.1%, compared to $1.9 million. This decrease was primarily due to a slight reduction in operational personnel. |
| · | GAAP net loss was $(1.7) million, or $(0.04) per diluted share compared to $(84,000), or $(0.00) per diluted share. The loss for the three months ended December 31, 2023, was impacted by reduced subsidized mobile activations in Q4-2022 triggering substantially lower customer acquisition costs (booked at time of sale) compared to increased activations in Q4-2023 triggering higher customer acquisition costs (booked at time of sale). |
| · | Non-GAAP net loss was $(1.2) million, or $(0.03) per diluted share, compared to Non-GAAP net income of $237,000, or $0.01 per diluted share. |
Sean McEwen, Chairman and CEO of KonaTel stated, "At the end of 2022, we initiated our strategy and began geographically emphasizing sales of our government-subsidized mobile service where the product mix yielded higher reimbursement products and services. While this action resulted in transitional elements and more challenging year-over-year comparisons in 2023, we have stabilized our distribution efforts and since the end of 2023 substantially improved our balance sheet. All these items combined will position the company for growth in 2024.”
McEwen continued, "Going forward, our focus is two-fold. First, we are taking steps to continue to grow our government-subsidized mobile business in higher margin lines of our target markets by establishing partnerships that reduce the need for additional capital and offering unique services. As one of only a few Eligible Telecommunications Carriers (‘ETC’) with a national license approved to offer state-subsidized Lifeline in California, we are being more aggressive in offering our product in that state. California is unique in that it provides significant
state lifeline benefits on top of the federal benefits. In addition, we are also focused on selling government-subsidized mobile products in states with substantial tribal land coverage, such as Oklahoma, where government subsidies are higher. Since Lifeline is a fully funded program through the FCC’s Universal Service Access fund, we can continue to grow that underserved market while the ACP program finalizes its definitive funding source. Additionally, we added eight new states (AL, CO, MI, MO, RI, TN, WV, WY) to our current Lifeline license portfolio in the first quarter of 2024, for a total of 19 states with additional states pending.”
McEwen continued, “Second, as part of a long-term revenue diversification strategy, we are aggressively implementing initiatives to grow our hosted CPaaS (Communications Platform as a Service) business. In the third quarter, our wholly-owned CPaaS subsidiary, Apeiron, entered into a five-year agreement with Viva-US Telecommunications, Inc. (‘Viva-US’), as the exclusive supplier of wholesale cellular voice & data, messaging, international call termination, smart SIM (Subscriber Identity Module) and other telecommunications services. Viva-US is a new U.S. Mobile Virtual Network Operator (‘MVNO’) and part of the Balesia Technologies group of companies currently supporting over three million cellular customers in central and South America. Viva expects to begin on-boarding customers soon, which will result in additional monthly recurring revenue for KonaTel. In addition to our new Viva partnership, we entered into an annual wholesale agreement with Altigen (OTC: ATGN) to provide advanced voice and messaging services in support of the Altigen network. Apeiron has been expanding its CPaaS software platform to include a variety of additional services, and we have added highly experienced sales capability aimed at growing wholesale and enterprise accounts in the IoT (Internet of Things), LTE and 5G data services, copper replacement services, international and domestic voice services and SMS services product arenas.”
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, IoT mobile data service, and a range of hosted cloud services. KonaTel’s 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, SD-WAN, and platform services using its national cloud network. All Apeiron’s services can be accessed through legacy interfaces and rich communications APIs. KonaTel’s other 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 cellular service to low-income American families. KonaTel is headquartered in Plano, 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.
Contacts
D. Sean McEwen
(214) 323-8410
inquiries@konatel.com
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Tables Follow –
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KonaTel, Inc.
Consolidated Balance Sheets
| December 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | 777,103 | $ | 2,055,634 | ||||
| Accounts Receivable, Net | 1,496,799 | 1,510,118 | ||||||
| Inventory, Net | 1,229,770 | 526,337 | ||||||
| Prepaid Expenses | 129,706 | 61,241 | ||||||
| Other Current Assets | — | 164 | ||||||
| Total Current Assets | 3,633,378 | 4,153,494 | ||||||
| Property and Equipment, Net | 24,184 | 36,536 | ||||||
| Other Assets | ||||||||
| Intangible Assets, Net | 634,251 | 634,251 | ||||||
| Right of Use Asset | 443,328 | 553,686 | ||||||
| Other Assets | 74,543 | 73,883 | ||||||
| Total Other Assets | 1,152,122 | 1,261,820 | ||||||
| Total Assets | $ | 4,809,684 | $ | 5,451,850 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable and Accrued Expenses | $ | 3,709,691 | $ | 1,348,931 | ||||
| Loans Payable, Net of Loan Fees | 3,655,171 | 3,070,947 | ||||||
| Right of Use Operating Lease Obligation - Current | 127,716 | 118,382 | ||||||
| Total Current Liabilities | 7,492,578 | 4,538,260 | ||||||
| Long Term Liabilities | ||||||||
| Right of Use Operating Lease Obligation - Long Term | 330,511 | 458,227 | ||||||
| Total Long Term Liabilities | 330,511 | 458,227 | ||||||
| Total Liabilities | 7,823,089 | 4,996,487 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock, $.001 par value, 50,000,000 shares authorized, 43,145,720 outstanding and issued at December 31, 2023 and 42,240,406 outstanding and issued at December 31, 2022 | 43,146 | 42,240 | ||||||
| Additional Paid In Capital | 9,182,140 | 8,710,987 | ||||||
| Accumulated Deficit | (12,238,691 | ) | (8,297,864 | ) | ||||
| Total Stockholders’ Equity | (3,013,405 | ) | 455,363 | |||||
| Total Liabilities and Stockholders’ Equity | $ | 4,809,684 | $ | 5,451,850 | ||||
| 3 |
KonaTel, Inc.
Consolidated Statements of Operations
| Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | 18,223,745 | $ | 20,023,340 | ||||
| Cost of Revenue | 14,850,105 | 15,033,733 | ||||||
| Gross Profit | 3,373,640 | 4,989,607 | ||||||
| Operating Expenses | ||||||||
| Payroll and Related Expenses | 3,995,698 | 4,974,989 | ||||||
| Operating and Maintenance | 5,804 | 8,129 | ||||||
| Bad Debt | 215 | 29,133 | ||||||
| Professional and Other Expenses | 1,526,947 | 1,509,269 | ||||||
| Utilities and Facilities | 191,556 | 206,380 | ||||||
| Depreciation and Amortization | 12,352 | 12,352 | ||||||
| General and Administrative | 155,734 | 300,042 | ||||||
| Marketing and Advertising | 154,533 | 106,402 | ||||||
| Application Development Costs | 138,600 | 146,400 | ||||||
| Taxes and Insurance | 312,804 | 251,196 | ||||||
| Total Operating Expenses | 6,494,243 | 7,544,292 | ||||||
| Operating Loss | (3,120,603 | ) | (2,554,685 | ) | ||||
| Other Income and Expense | ||||||||
| Interest Expense | (820,254 | ) | (399,031 | ) | ||||
| Other Income/(Expense), net | 30 | 1,356 | ||||||
| Total Other Income and Expenses | (820,224 | ) | (397,675 | ) | ||||
| Net Loss | $ | (3,940,827 | ) | $ | (2,952,360 | ) | ||
| Loss per Share | ||||||||
| Basic | $ | (0.09 | ) | $ | (0.07 | ) | ||
| Diluted | $ | (0.09 | ) | $ | (0.07 | ) | ||
| Weighted Average Outstanding Shares | ||||||||
| Basic | 42,773,269 | 41,863,283 | ||||||
| Diluted | 42,773,269 | 41,863,283 | ||||||
4
Cover |
Apr. 01, 2024 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Apr. 01, 2024 |
| Entity File Number | 001-10171 |
| Entity Registrant Name | KonaTel, Inc. |
| Entity Central Index Key | 0000845819 |
| Entity Tax Identification Number | 80-0973608 |
| Entity Incorporation, State or Country Code | DE |
| Entity Address, Address Line One | 500 N. Central Expressway |
| Entity Address, Address Line Two | Suite 202 |
| Entity Address, City or Town | Plano |
| Entity Address, State or Province | TX |
| Entity Address, Postal Zip Code | 75074 |
| City Area Code | (214) |
| Local Phone Number | 323-8410 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Entity Emerging Growth Company | false |