KonaTel Inc (OTCMKTS: KTEL) 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, 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 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.

Through its two subsidiaries Apeiron Systems and IM Telecom, include CPaaS suite of services (SIP/VoIP, SMS/MMS), wholesale and retail mobile voice and mobile data IoT services, wholesale voice termination services, and ETC and EBB subsidized services for low-income Americans. Except for our ETC Lifeline services distributed in up to nine (9) states and our EBB services distributed in the forty-eight (48) contiguous states, Washington D.C. and Puerto Rico, Apeiron Systems’ products and services are available worldwide and subject to U.S., international and local/national regulations. 

The Company generates revenue from two (2) primary sources, Hosted Services and Mobile Services: Its Hosted Services include a suite of hosted CPaaS services within the Apeiron Systems’ cloud platform, including Cloud IVRs, Voicemail, Fax, Call Recording and other services provided with local, toll-free and international phone numbers. Apeiron also delivers public and private IP network services from its national redundant network backbone, including MPLS, Dedicated Internet and LTE Wireless WAN solutions. Additionally, Apeiron’s Cloud Services include Information Data Dips, SD-WAN and IoT data and device management. These Hosted Services are marketed nationally and internationally through the Apeiron website, its sales staff, independent sales agents and ISOs. 

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The Company’s Mobile Services include retail and wholesale cellular voice/text/data services and IoT mobile data services through our subsidiaries Apeiron Systems and IM Telecom. Mobile voice/text/data and IoT mobile data services are supported by a blend of reseller agreements with select national wireless carriers and national wireless wholesalers. A wireless communications service reseller typically does not own the wireless network infrastructure over which services are provided to its customers. Mobile voice/text/data and mobile data solutions are generally sold as traditional post-paid service plans that may include voice/text/data or wireless data only plans. Sometimes equipment is provided, which can include, but is not limited to, phones, tablets, modems, routers and accessories.

Also included in the Mobile Services segment is the distribution of government subsidized mobile voice service and mobile data service by IM Telecom under its Infiniti Mobile brand and FCC license to low-income American households that qualify for the FCC’s Lifeline mobile voice service program and/or the FCC’s temporary EBB mobile data program, with EBB to eventually be replaced by FCC’s ACP program in 2022. Even though government programs like Lifeline have existed since 1985, these programs, along with newer programs like the temporary EBB program and future ACP program, are subject to change and may have a material impact on our Mobile Services business if changed, reduced or eliminated. 

In November the Company reported financial results for the third quarter and nine-month period ended September 30, 2022. Revenues were $5.9 million, up 62.8% compared to the third quarter last year and up 14.8% compared to the second quarter of this year. Gross profit of $911,000, down 43.9% compared to the third quarter last year. Gross profit temporarily down due to increased customer acquisition costs (recognized at activation per U.S. accounting guidelines) during this period of planned rapid growth. Cash and cash equivalents of $2.2 million as of September 30, 2022, compared with $933,000 as of December 31, 2021.

Sean McEwen, Chairman and CEO of KonaTel stated, “Third quarter revenue grew 63% year-over-year and 15% sequentially to nearly $6.0 million. We ignited our growth earlier this year with strategic investments in the acquisition of new Mobil Services customers. As one of only a limited number of FCC approved national wireless resellers under recently expanded government programs, we are uniquely positioned to capture additional market share and are seizing the opportunity to do so. Scaling our business requires an upfront investment to acquire customers, which is already creating increasing recurring streams of revenue and cash. As previously discussed, the investment in our accelerated growth plan put pressure on our margins over the last two quarters as costs to acquire new customers are generally expensed at the start of service; however, the initiatives we are taking today are setting ourselves up for sustained profitable growth. Looking ahead and because of the way we implement our growth strategy, we anticipate gross profit and cash flow to accelerate as we begin to recover customer acquisition costs. We are fortunate to have a business model that provides the flexibility to take a measured and stepped approached to growth.

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KTEL is trading just over $1 on medium volume over the past few days down from the $1.75 range it was trading for last summer. KTEL had a big 2022 running from under $0.10 to highs over $1.90 per share. In November the Company reported financial results for the third quarter and nine-month period ended September 30, 2022. Revenues were $5.9 million, up 62.8% compared to the third quarter last year and up 14.8% compared to the second quarter of this year. We will be updating on KTEL when more details emerge so make sure you are subscribed to newsytrends.com by entering your email below.

Disclosure: we hold no position in KTEL either long or short and we have not been compensated for this article.