Sean McEwen, Chairman and CEO of KonaTel stated, “As recently stated in our 2024 10K filing, the failure of congress to re-fund the ACP Program has negatively impacted our business. However, during 2024, we expanded our national Lifeline license from 11 to 40 state authorizations, and we remain prepared to take advantage of the ACP, if it returns, or as an enhanced (more profitable) Lifeline program.

As previously stated in 2024, Management decided to sell a minority 49% non-controlling and non-refundable interest in our subsidiary, IM Telecom, for $10 million dollars. As reported in our 2025 Q1 10Q, on May 9, 2025, the 49% IM Telecom stakeholder withdrew their request to acquire 100% of IM Telecom. We continue to retain a majority 51% controlling interest in that subsidiary. This cash sale allowed us to pay off all long-term debts and begin an accelerated investment in the expansion of our CPaaS (Communications Platform as a Service) cloud platform to include both new and expanded services.

So far, we have invested in three areas of expansion (1) Wholesale SMS, (2) The addition of a Retail/Wholesale/White-Label Billing System fully integrated with our entire product/service portfolio, and (3) The addition of our Cellular Wholesale POTS (Plain Old Telephone Service) Replacement Service tailored specifically for telecommunications carriers and resellers.

McEwen closed, “The challenges and unpredictable behavior of Congress during 2024 certainly negatively impacted our business, but we have been able to shift our development and sales efforts into new areas of expansion, and related to the loss of ACP, we continue to believe the worst is behind us. We believe that one of our strong advantages is that from a single wholesale cloud (CPaaS) platform we can provide a wide variety of services including termination/origination, SIP, SMS, POTS, Mobile Data, and Mobile Voice solutions, now with a fully integrated reseller billing system.

We have already entered into wholesale agreements with a group of carriers/resellers who have over 35,000 existing POTS lines, which they plan to migrate. Our new wholesale POTS service provides a stable, sticky (“very low churn”), predictable recurring revenue line of business.

Management’s focus on our CPaaS business has put us well on our way derisking the Company through creating multiple streams of stable, high margin, low attrition recurring revenue services.”

Quarterly Financial Summary (Q1 2025 vs. Q1 2024)

Revenue of $2.2 million, a decrease of 61.5% compared to $5.6 million for reasons discussed above. The decrease in revenue was primarily due to the loss of mobile services revenues under the ACP Program, which ended on June 1, 2024.

Gross profit was $651,893, or 30.1% gross profit margin, compared to $1.1 million, or 20.0% gross profit margin. This increase primarily resulted from adding higher ARPU activations in our Mobile Services segment, and sourcing lower compensation and network costs.

Total operating expenses were $1.6 million, compared to $1.97 million. This decrease was primarily due to lower payroll and related expenses associated with the reduction of headcount in our IM Telecom subsidiary in the fourth quarter of 2024.

GAAP net loss was $(917,528) million, or $(0.02) per diluted share (based on 43.5 million weighted average shares), compared to net income of $8.1 million, or $0.19 per diluted share (based on 43.6 million weighted average shares).

Non-GAAP net loss was $(916,170), or $(0.02) per diluted share, compared to Non-GAAP net income of $8.4 million, or $0.19 per diluted share.

Balance Sheet

The Company ended the quarter with $2.1 million in cash, compared to $1.7 million on December 31, 2024. This increase was due to a corresponding reduction in accounts receivable due from a significant customer.

Year-to-Date Financial Detail (First Three Months of 2025 vs. First Three Months of 2024)

Revenues decreased 61.5% to $2.2 million compared to $5.6 million, reflecting a 3.5% decrease in Hosted Services revenues and an 82.2% decrease in Mobile Services revenues.

Gross profit was $651,893, or 30.1% gross profit margin, compared to gross profit of $1.1 million, or 20.0% gross profit margin. This increase in gross profit margin percentage primarily resulted from adding a higher percent of activations in the California market in our Mobile Services segment, and sourcing lower per subscriber equipment and network costs.

Total operating expenses were $1.6 million, down (19.9%) compared to $1.97 million. This decrease was primarily due to lower payroll and related expenses associated with the reduction of headcount in our IM Telecom subsidiary.

GAAP net loss was $(917,528) or $(0.02) per diluted share (based on 43.5 million weighted average shares), compared to net income of $8.1 million, or $0.19 per diluted share (based on 43.6 million weighted average shares). This decrease was a result of the gain on sale recognized as part of our sale of 49% interest in IM Telecom in the first quarter of 2024.

Non-GAAP net loss was $(916,170) million, or $(0.02) per diluted share, compared to non-GAAP net income of $8.4 million, or $0.19 per diluted share.

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 thirty-six (36) 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.

Contacts

D. Sean McEwen
(214) 323-8410
[email protected]

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