UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: April 17, 2023
KonaTel, Inc.
(Exact name of registrant as specified in its charter)
N/A
(Former name or address, if changed since last report)
| Delaware | 001-10171 | 80-0973608 | ||
|
(State or Other Jurisdiction Of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
500 N. Central Expressway, Suite 202
Plano, Texas 75074
(Address of Principal Executive Offices, Including Zip Code)
(214) 323-8410
(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:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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. ¨
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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 17, 2023 |
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 17, 2023 | By: | /s/ D. Sean McEwen |
| D. Sean McEwen | ||
| Chairman, Chief Executive Officer and Director | ||
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Exhibit 99
KonaTel Reports Fiscal Year 2022 Results
Delivers 56% Increase in Revenue; Increases Investment in Customer Growth
DALLAS--KonaTel, Inc. (OTCMKTS: KTEL) (www.konatel.com), a voice and data communications holding company, today announced financial results for the twelve-month period ended December 31, 2022.
Full Fiscal Year 2022 Financial Highlights
| · | Revenues of $20.0 million, up 56.0% compared to the year ended December 31, 2021, due to the Company’s planned expansion within its Mobile Services segment, distributing cellular and mobile data service to low-income consumers. |
| · | Gross profit of $5.0 million, down 12.9% compared to the year ended December 31, 2021, reflecting the Company’s continued up-front investment in aggressive new customer acquisition within its Mobile Services segment. |
| · | GAAP net loss of $(3.0) million, or $(0.07) per diluted share, compared to GAAP net income of $623,000, or $0.01 per diluted share, in the year ended December 31, 2021. |
| · | Non-GAAP net loss of $(1.8) million, or $(0.04) per diluted share, compared to non-GAAP net income of $2.1 million, or $0.05 per diluted share, in the year ended December 31, 2021. |
| · | Cash and cash equivalents of $2.1 million, an increase of 120.4% compared to December 31, 2021. |
Fourth Quarter 2022 Financial Highlights
| · | Revenue of $4.8 million, up 22.4% compared to the fourth quarter last year. |
| · | GAAP net loss of $(84,000), or $(0.00) per diluted share, compared to net income of $195,000, or $0.00 per diluted share, in the fourth quarter last year. |
| · | Non-GAAP net income of $237,000, or $0.01 per diluted share, compared to non-GAAP net income of $635,000, or $0.02 per diluted share, in the fourth quarter last year. |
Business Highlights 2022
| · | As part of the Company’s goal to pursue value added markets that foster improved customer loyalty and reduced turnover, the Company’s wholly owned subsidiary, Infiniti Mobile, entered into a national partnership with Equiva Health in August 2022, a digital patient engagement and health relationship management provider assisting hospitals, nursing homes, insurers and other healthcare organizations in advancing enrollment in the Affordable Connectivity Program (ACP). |
| · | The Company’s wholly owned subsidiary, Apeiron Systems, closed a three-year extended agreement with one of its largest cloud services customers providing communications services to U.S. prisons. The minimum value of the contract is $7.2 million over the term, which was a 75% increase compared to the previous agreement. |
| · | Secured $3.15 million in capital financing to accelerate growth within the Company’s mobile services business. |
| · | Increased the number of distribution partners and channels and nearly tripled the Company’s mobile service subscriber base. |
| · | Added new equipment and service suppliers, providing the Company with increased leverage to secure improved purchase terms and improve its use of working capital. |
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| · | Created a US-based national customer service center and a popular customer retention rewards program to improve customer satisfaction and loyalty, both of which have been extremely well received. |
| · | Expanded the management team with the appointments of Chuck Griffin as President/COO of KonaTel, Jason Welch as President of Infiniti Mobile and Todd Murcer as Executive Vice President of Finance for KonaTel. |
| · | Expanded our Lifeline state licensing (New York), ACP state licensing (Alaska and Hawaii) and intrastate coverage under the Company’s FCC ETC designation, which provides additive reimbursement rates and enhances the value of the Company’s ETC license. |
| · | Shifted distribution to higher profit markets in Q4, increasing Average Revenue Per User (“ARPU”). |
| · | Recorded net operating income of $301,000 in Q4. |
“We delivered $20 million in revenue in 2022, a 56% increase over last year and invested in key business areas and partnerships that we believe will further drive customer growth and future profitability,” stated KonaTel Chairman and CEO Sean McEwen. “Contrary to other market segments, our business model continues to provide investors with a strong defensive moat against recessionary headwinds, as demand for our government subsidized services typically increases during worsening economic conditions.”
McEwen continued, “We remain committed to growth, but more importantly, growth at a pace that is manageable and sustainable for the long-term. Investment in customer acquisition is a strong lever for growing our business and by using a stair-step approach to investing we are able to control growth and effectively manage our capital resources. This is highly evident in our fourth quarter results as we slowed investment to deliver positive operating income.”
McEwen closed, “We intend to resume aggressive growth in 2023, commensurate with the expanded infrastructure (personnel, distribution, and systems) we created in 2022. We are laser focused on creating shareholder value, strengthening our competitive position and identifying niche markets and strategies to promote customer loyalty, such as our partnership with Equiva, while we build a stable, scalable and profitable enterprise.”
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 national wireless ACP and Lifeline carrier with an FCC approved wireless Lifeline Compliance Plan, licensed to provide government subsidized cellular service to low-income American families across ten states. 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.
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Contacts
D.
Sean McEwen
(214) 323-8410
inquiries@konatel.com
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KonaTel, Inc.
Consolidated Balance Sheet
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and Cash Equivalents | $ | 2,055,634 | $ | 932,785 | ||||
| Accounts Receivable, net | 1,510,118 | 1,274,687 | ||||||
| Inventory, Net | 526,337 | 566,839 | ||||||
| Prepaid Expenses | 61,241 | 79,467 | ||||||
| Other Current Asset | 164 | 164 | ||||||
| Total Current Assets | 4,153,494 | 2,853,942 | ||||||
| Property and Equipment, Net | 36,536 | 48,887 | ||||||
| Other Assets | ||||||||
| Intangible Assets, Net | 1,187,937 | 807,775 | ||||||
| Other Assets | 73,883 | 154,297 | ||||||
| Investments | — | 10,000 | ||||||
| Total Other Assets | 1,261,820 | 972,072 | ||||||
| Total Assets | $ | 5,451,850 | $ | 3,874,901 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable and Accrued Expenses | $ | 1,348,931 | $ | 930,449 | ||||
| Loans Payable, net of loan fees | 3,070,947 | — | ||||||
| Right of Use Operating Lease Obligation - current | 118,382 | 50,672 | ||||||
| Total Current Liabilities | 4,538,260 | 981,121 | ||||||
| Long Term Liabilities | ||||||||
| Right of Use Operating Lease Obligation - long term | 458,227 | 136,445 | ||||||
| Note Payable - long term | — | 150,000 | ||||||
| Total Long Term Liabilities | 458,227 | 286,445 | ||||||
| Total Liabilities | 4,996,487 | 1,267,566 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' Equity | ||||||||
| Common stock, $.001 par value, 50,000,000 shares authorized, 42,240,406 outstanding and issued at December 31, 2022 and 41,615,406 outstanding and issued at December 31, 2021 | 42,240 | 41,615 | ||||||
| Additional Paid In Capital | 8,710,987 | 7,911,224 | ||||||
| Accumulated Deficit | (8,297,864 | ) | (5,345,504 | ) | ||||
| Total Stockholders' Equity | 455,363 | 2,607,335 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 5,451,850 | $ | 3,874,901 | ||||
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KonaTel, Inc.
Consolidated Statement of Operations
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenue | $ | 20,023,340 | $ | 12,834,844 | ||||
| Cost of Revenue | 15,033,733 | 7,105,464 | ||||||
| Gross Profit | 4,989,607 | 5,729,380 | ||||||
| Operating Expenses | ||||||||
| Payroll and Related Expenses | 4,974,989 | 2,702,495 | ||||||
| Operating and Maintenance | 8,129 | 1,887 | ||||||
| Bad Debt | 29,133 | 31,318 | ||||||
| Professional and Other Expenses | 1,509,269 | 697,594 | ||||||
| Utilities and Facilities | 206,380 | 146,254 | ||||||
| Depreciation and Amortization | 12,352 | 833,016 | ||||||
| General and Administrative | 300,042 | 156,386 | ||||||
| Marketing and Advertising | 106,402 | 90,635 | ||||||
| Application Development Costs | 146,400 | 266,191 | ||||||
| Taxes and Insurance | 251,196 | 165,257 | ||||||
| Total Operating Expenses | 7,544,292 | 5,091,033 | ||||||
| Operating Income/(Loss) | (2,554,685 | ) | 638,347 | |||||
| Other Income and Expense | ||||||||
| Interest Expense | (399,031 | ) | (15,361 | ) | ||||
| Other Income/(Expense), net | 1,356 | — | ||||||
| Total Other Income and Expenses | (397,675 | ) | (15,361 | ) | ||||
| Net Income (Loss) | $ | (2,952,360 | ) | $ | 622,986 | |||
| Earnings (Loss) per Share | ||||||||
| Basic | $ | (0.07 | ) | $ | 0.02 | |||
| Diluted | $ | (0.07 | ) | $ | 0.01 | |||
| Weighted Average Outstanding Shares | ||||||||
| Basic | 41,863,283 | 40,909,085 | ||||||
| Diluted | 41,863,283 | 42,891,011 | ||||||
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