Pareteum Reports Annual 2016 Financial Results
Well-Positioned for Continued Execution on Growth Opportunities in 2017
Conference call to be held at 11:00 a.m. EDT on March 29, 2017
NEW YORK, March 28, 2017 /PRNewswire/ -- Pareteum Corporation (NYSE MKT: TEUM) ("Pareteum" or the "Company"),a leading communications technology provider to global Mobile, MVNO, Enterprise and IoT markets, today announced financial results for the year ended December 31, 2016.
Highlights and achievements in 2016 and to-date:
- Improved to positive adjusted EBITDA of $110K in Q416 from negative adjusted EBITDA of $3.1 million in Q415 (adjustments to EBITDA include elements of nonrecurring expenditures, restructuring charges, stock based compensation, software development and non-cash adjustments);
- Added new top talent additions at executive management, board of directors, and other key operational levels, supporting Pareteum's vision and growth mission.
- Improved revenue metric annualized revenue per employee in Q416 to $202,872 from $51,738 in Q415;
- Strengthened gross margin with Q416 margin of 79% and sequential quarterly gains from Q415 margin of 62%;
- Reported Q416 revenue of $3.1 million, nearly 5% ahead of expectations;
- Focused execution of growth strategy to leverage software and services platform to address back office and mobile virtual network enabler needs of
- carriers;
- enterprises; and
- services providers, developers and solutions integrators; an
- Completed substantial restructuring, with turnaround advanced as demonstrated by improvements in reported results, capital infusion, amended debt agreement, and growing roster of clients, prospective clients, and partners.
Hal Turner, Executive Chairman of Pareteum commented, "We are very pleased to note that in 2017, we have turned the page. With 2016 dedicated to executing our restructuring plan and turning around the business, we believe we have entered 2017 with a stable and robust platform that is well positioned to capitalize on the major trends now impacting global communications."
Mr. Turner continued, "Our business is going where it needs to be going. Specifically, we have:
- new clients and brands are positioned to come on board;
- opened up new service segments that represent additional revenue streams;
- continued development progress on announced transactions; and
- announced four new sales agreements, including:
- a key carrier customer global roaming enablement deal;
- an important addition of content and streaming media capability to a major carrier mobile MVNE customer
- an important IoT technology enablement transaction, and
- a focused subscriber multi-country network enablement agreement."
"In the age of the connected consumer, with our growth strategy addressing a combined $270 billion total market opportunity, the management team and Board of Directors of Pareteum are continuing to operate with a sense of urgency to execute and deliver. We remain committed to creating value through continued efficient execution of our plans to achieve sustainable, accretive operating and financial results," Mr. Turner concluded.
Financial Highlights for the Year Ended 2016:
Revenue for the year ended December 31, 2016 was $12,855,811 compared to $31,015,453 for the year ended December 31, 2015.
Cost of service for the twelve-month period ended December 31, 2016 was $3,658,667, a decrease of $2,267,624 or 38%, compared to $5,926,291 for the twelve-month period ended December 31, 2015. The decrease was related to a decrease in cost of mobile bundled service business and network, decrease in cost of service related management and personnel expenses and reduction of non-cash related expenses.
Total operating expenses, which includes product development, sales and marketing, and general and administrative costs, for the twelve-month period ended December 31, 2016 was $16,592,700, a decrease of $2,234,664 or 12%, compared to $18,827,364 for the twelve-month period ended December 31, 2015. The decrease was related to reductions in staffing in the areas of product development, overhead, sales and marketing activities.
Cumulative annualized restructuring savings generated during 2015 and 2016, thus far, have totaled approximately $7.4 million and relate primarily to workforce reduction.
Conference Call Information:
Date: Wednesday, March 29, 2017
Time: 11:00 a.m. EDT
Domestic Dial-in Number: 1-800-279-9534
International Dial-in Number: 1-719-457-2506
U.K. Toll Free: 0 800 404 7656
Live webcast: http://public.viavid.com/index.php?id=123530
All interested participants should dial in approximately 5 to 10 minutes prior to the 11:00 a.m. EDT conference call and an operator will register your name and organization.
A replay of the call will be available approximately one hour after the end of the call through March 29, 2018, and can be accessed via Pareteum's website (www.paretuem.com) or http://public.viavid.com/index.php?id=123530.
About Pareteum Corporation:
Pareteum Corporation, and its subsidiaries (also referred to as "Pareteum", and "the Company") provide a complete mobility cloud platform, utilizing messaging and security capabilities for the global Mobile, MVNO, Enterprise and IoT markets. For more information please visit: www.pareteum.com.
Forward-Looking Statements:
Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to Pareteum's plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about Pareteum's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of Pareteum may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, Pareteum also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from those projected or suggested in Pareteum's filings with the Securities and Exchange Commission, copies of which are available from the SEC or may be obtained upon request from Pareteum.
Investor Relations:
Vivian Cervantes
PCG Advisory
212-554-5482
[email protected]
| Pareteum Corporation and Subsidiaries |
||||||||
| CONSOLIDATED BALANCE SHEETS |
||||||||
| AS OF DECEMBER 31, 2016 AND 2015 |
||||||||
| December 31, |
December 31, |
|||||||
| 2016 |
2015 |
|||||||
| ASSETS |
||||||||
| CURRENT ASSETS |
||||||||
| Cash and cash equivalents |
$ |
931,189 |
$ |
369,250 |
||||
| Financing receivable |
- |
272,425 |
||||||
| Restricted cash |
564,018 |
246,151 |
||||||
| Accounts receivable, net of an allowance for doubtful accounts of $88,528 at December 31, 2016 and $269,608 at December 31, 2015 |
614,670 |
1,112,032 |
||||||
| Prepaid expenses and other current assets |
1,084,994 |
2,016,236 |
||||||
| Total current assets |
3,194,871 |
4,016,094 |
||||||
| NON-CURRENT ASSETS |
||||||||
| OTHER ASSETS |
129,037 |
473,893 |
||||||
| NOTE RECEIVABLE |
1,012,603 |
- |
||||||
| PROPERTY AND EQUIPMENT, NET |
8,708,778 |
13,051,375 |
||||||
| INTANGIBLE ASSETS, NET |
- |
258,630 |
||||||
| ASSETS HELD FOR SALE |
- |
4,564,972 |
||||||
| GOODWILL |
- |
3,027,422 |
||||||
| TOTAL ASSETS |
$ |
13,045,289 |
$ |
25,392,386 |
||||
| LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY |
||||||||
| CURRENT LIABILITIES |
||||||||
| Accounts payable and customer deposits |
2,316,768 |
2,639,863 |
||||||
| Obligations under capital leases (current portion) |
10,813 |
310,403 |
||||||
| Net billings in excess of revenues |
951,791 |
1,259,545 |
||||||
| Accrued expenses and other payables |
6,013,620 |
5,031,712 |
||||||
| Senior Secured Loan - Short Term (Principal repayments coming 12 months) |
4,000,000 |
5,580,277 |
||||||
| Total current liabilities |
13,292,992 |
14,821,800 |
||||||
| LONG TERM LIABILITIES |
||||||||
| Derivative liabilities |
4,265,829 |
945,618 |
||||||
| Non-current portion of obligation under capital leases |
- |
5,621 |
||||||
| Other long term liabilities |
192,980 |
260,290 |
||||||
| Unsecured Convertible Promissory Note (net of Debt Discount and Debt Issuance) |
821,048 |
238,829 |
||||||
| Senior Secured Loan - Long Term (net of Debt Discount, Debt Issuance and Principal repayments coming 12 months) |
3,715,662 |
- |
||||||
| Non-current portion of net billings in excess of revenues |
121,309 |
1,066,687 |
||||||
| Total long term liabilities |
9,116,828 |
2,517,045 |
||||||
| Total liabilities |
22,409,820 |
17,338,845 |
||||||
| Commitments and Contingencies (See Notes) |
||||||||
| STOCKHOLDERS' (DEFICIT) EQUITY |
||||||||
| Preferred Stock $0.00001 par value, 50,000,000 shares authorized, 249 issued and outstanding as of December 31, 2016 |
2,143,196 |
- |
||||||
| Common Stock $0.00001 par value, 500,000,000 shares authorized, 8,376,267 issued and outstanding as of December 31, 2016 and 6,455,055 shares issued and outstanding as of December 31, 2015 |
280,653,362 |
269,470,165 |
||||||
| Accumulated other comprehensive loss |
(5,086,902) |
(5,789,975) |
||||||
| Accumulated deficit |
(287,080,234) |
(255,635,531) |
||||||
| Pareteum Corporation stockholders' (deficit) equity |
(9,370,578) |
8,044,659 |
||||||
| NON-CONTROLLING INTEREST |
6,047 |
8,882 |
||||||
| Total stockholders' (deficit) equity |
(9,364,531) |
8,053,541 |
||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY |
$ |
13,045,289 |
$ |
25,392,386 |
||||
| Pareteum Corporation and Subsidiaries |
||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS |
||||||||
| FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 |
||||||||
| 2016 |
2015 |
|||||||
| REVENUES |
$ |
12,855,811 |
$ |
31,015,453 |
||||
| COST AND OPERATING EXPENSES |
||||||||
| Cost of service (excluding depreciation and amortization) |
3,658,667 |
5,926,291 |
||||||
| Product development |
3,543,590 |
4,543,492 |
||||||
| Sales and marketing |
1,340,959 |
2,633,958 |
||||||
| General and administrative |
11,708,151 |
11,649,914 |
||||||
| Restructuring charges |
1,638,049 |
1,254,598 |
||||||
| Depreciation and amortization of intangibles assets |
4,246,787 |
6,623,985 |
||||||
| Impairment for assets held and used |
850,985 |
2,681,407 |
||||||
| Impairment of goodwill |
3,228,930 |
- |
||||||
| Loss on sale of assets |
1,542,374 |
- |
||||||
| Total cost and operating expenses |
31,758,492 |
35,313,645 |
||||||
| LOSS FROM OPERATIONS |
(18,902,681) |
(4,298,192) |
||||||
| OTHER INCOME (EXPENSE) |
||||||||
| Interest income |
112,169 |
106,028 |
||||||
| Interest expense |
(1,228,201) |
(1,488,203) |
||||||
| Interest expense related to debt discount and conversion feature |
(6,041,607) |
(682,389) |
||||||
| Changes in derivative liabilities |
(3,316,199) |
299,948 |
||||||
| (Loss) Gain on Extinguishment of Debt |
(541,899) |
2,475,799 |
||||||
| Other (expense), net |
(220,927) |
(922,894) |
||||||
| Amortization of deferred financing costs |
(1,267,073) |
(513,557) |
||||||
| Total other (expense) |
(12,503,737) |
(725,268) |
||||||
| LOSS BEFORE PROVISION FOR INCOME TAXES |
(31,406,418) |
(5,023,460) |
||||||
| Provision (Benefit) for income taxes |
38,286 |
(17,225) |
||||||
| NET LOSS |
(31,444,704) |
(5,006,235) |
||||||
| OTHER COMPREHENSIVE LOSS |
||||||||
| Foreign currency translation gain (loss) |
703,073 |
(2,662,843) |
||||||
| COMPREHENSIVE LOSS |
$ |
(30,741,631) |
$ |
(7,669,078) |
||||
| Net loss per common share and equivalents – basic |
$ |
(4.67) |
$ |
(0.79) |
||||
| Net loss per common share and equivalents – diluted |
$ |
(4.67) |
$ |
(0.79) |
||||
| Weighted average shares outstanding during the period - basic |
6,738,971 |
6,328,082 |
||||||
| Weighted average shares outstanding during the period - diluted |
6,738,971 |
6,328,082 |
||||||
| Pareteum Corporation and Subsidiaries |
||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||||||||||||
| FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 |
||||||||||||||||||||||
| 2016 |
2015 |
|||||||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||||||||||||
| Net loss |
$ |
(31,444,704) |
$ |
(5,006,235) |
||||||||||||||||||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
||||||||||||||||||||||
| Depreciation and amortization |
4,246,787 |
6,623,985 |
||||||||||||||||||||
| Provision for doubtful accounts |
(88,528) |
269,608 |
||||||||||||||||||||
| Stock based compensation |
3,897,437 |
3,481,908 |
||||||||||||||||||||
| Change in fair value of warrant liability |
3,316,199 |
(299,948) |
||||||||||||||||||||
| Amortization of deferred financing costs |
1,267,073 |
513,557 |
||||||||||||||||||||
| Interest expense relating to debt discount and conversion feature |
6,041,607 |
682,389 |
||||||||||||||||||||
| Other (income) and expense, net |
220,927 |
922,894 |
||||||||||||||||||||
| Loss/(Gain) on Extinguishment of Debt |
541,899 |
(2,475,799) |
||||||||||||||||||||
| Impairment for assets held and used |
850,985 |
2,681,407 |
||||||||||||||||||||
| Impairment of goodwill |
3,228,930 |
- |
||||||||||||||||||||
| Loss on sale of assets |
1,542,374 |
- |
||||||||||||||||||||
| Changes in operating assets and liabilities: |
||||||||||||||||||||||
| Decrease in accounts receivable |
621,532 |
6,566,499 |
||||||||||||||||||||
| Decrease in prepaid expenses, deposits and other assets |
1,637,006 |
759,275 |
||||||||||||||||||||
| Increase in accounts payable and customer deposits |
80,520 |
2,627,745 |
||||||||||||||||||||
| Decrease in net billings in excess of revenues |
(1,169,136) |
(9,753,225) |
||||||||||||||||||||
| Increase in accrued expenses and other payables |
1,551,261 |
1,385,775 |
||||||||||||||||||||
| Net cash (used in) provided by operating activities |
(3,657,831) |
8,979,835 |
||||||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||||||||||||
| Purchases of property and equipment |
(1,413,160) |
(7,709,972) |
||||||||||||||||||||
| Advance Purchase Payment on "Assets held for Sale" |
450,000 |
- |
||||||||||||||||||||
| Proceeds from sale of assets |
2,000,000 |
- |
||||||||||||||||||||
| Net cash provided by (used in) investing activities |
1,036,840 |
(7,709,972) |
||||||||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||||||||||||
| Financing receivable |
355,000 |
1,645,000 |
||||||||||||||||||||
| Exercise of warrants & options |
- |
5,861 |
||||||||||||||||||||
| Equity and Debt issuance costs paid |
(1,338,821) |
(532,558) |
||||||||||||||||||||
| Principal payment on 2014 10% + libor 3rd Part Loan |
(966,809) |
(5,500,000) |
||||||||||||||||||||
| Proceeds from convertible promissory note |
2,273,000 |
1,275,000 |
||||||||||||||||||||
| Unsecured promissory note |
350,000 |
- |
||||||||||||||||||||
| Gross proceed from Preferred A and A-1 shares issuance |
2,490,000 |
- |
||||||||||||||||||||
| Net cash provided by (used in) financing activities |
3,162,370 |
(3,106,697) |
||||||||||||||||||||
| EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS |
20,560 |
301,924 |
||||||||||||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
561,939 |
(1,534,910) |
||||||||||||||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD |
369,250 |
1,904,160 |
||||||||||||||||||||
| CASH AND CASH EQUIVALENTS, END OF THE PERIOD |
$ |
931,189 |
$ |
369,250 |
||||||||||||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
||||||||||||||||||||||
| Cash paid during the period for interest |
$ |
909,637 |
$ |
1,136,021 |
||||||||||||||||||
| Cash paid during the period for income taxes |
15,581 |
14,771 |
||||||||||||||||||||
| NON-CASH INVESTING ACTIVITIES: |
||||||||||||||||||||||
| Note receivable from sale of assets |
$ |
1,000,000 |
$ |
- |
||||||||||||||||||
| NON-CASH FINANCING ACTIVITIES: |
||||||||||||||||||||||
| Conversion of 9% unsecured convertible note |
$ |
5,238,329 |
$ |
- |
||||||||||||||||||
| Shares issued for payables |
$ |
700,425 |
$ |
- |
||||||||||||||||||
| PARETEUM CORPORATION |
||||||||||||||||||||||
| RECONCILIATION OF COMPREHENSIVE LOSS TO EBITDA AND ADJUSTED EBITDA |
||||||||||||||||||||||
| THREE MONTHS ENDED MARCH 31, 2016 |
THREE MONTHS ENDED JUNE 30, 2016 |
THREE MONTHS ENDED SEPTEMBER 30, 2016 |
THREE MONTHS ENDED DECEMBER 31, 2016 |
YEAR ENDED DECEMBER 31, 2016 |
||||||||||||||||||
| COMPREHENSIVE LOSS |
$ |
(3,972,576) |
$ |
(3,168,709) |
$ |
(12,612,947) |
$ |
(10,987,399) |
$ |
(30,741,631) |
||||||||||||
| Foreign currency translation loss |
341,214 |
(345,478) |
425,354 |
281,983 |
703,073 |
|||||||||||||||||
| NET LOSS |
(4,313,790) |
(2,823,231) |
(13,038,301) |
(11,269,382) |
(31,444,704) |
|||||||||||||||||
| Provision (Benefit) for income taxes |
9,929 |
9,178 |
8,450 |
10,729 |
38,286 |
|||||||||||||||||
| Total other income (expense) |
(28,465) |
(646,703) |
(4,194,734) |
(7,633,835) |
(12,503,737) |
|||||||||||||||||
| Interest income |
25,936 |
24,611 |
24,700 |
36,922 |
112,169 |
|||||||||||||||||
| Interest expense |
(306,299) |
(296,473) |
(253,509) |
(371,920) |
(1,228,201) |
|||||||||||||||||
| Interest expense related to debt discount and conversion feature |
(351,799) |
(261,345) |
(2,319,679) |
(3,108,784) |
(6.041,607) |
|||||||||||||||||
| Changes in derivative liabilities |
518,986 |
140,950 |
(735,902) |
(3,240,233) |
(3,316,199) |
|||||||||||||||||
| (Loss) Gain on Extinguishment of Debt |
- |
- |
(443,426) |
(98,473) |
(541,899) |
|||||||||||||||||
| Other income & (expense), net |
221,640 |
(109,080) |
101,328 |
(434,815) |
(220,927) |
|||||||||||||||||
| Amortization of deferred financing costs |
(136,929) |
(145,366) |
(568,246) |
(416,532) |
(1,267,073) |
|||||||||||||||||
| LOSS FROM OPERATIONS |
(4,275,396) |
(2,167,350) |
(8,835,117) |
(3,624,818) |
(18,902,681) |
|||||||||||||||||
| Depreciation & Amortization |
1,097,604 |
1,113,947 |
1,108,553 |
926,683 |
4,246,787 |
|||||||||||||||||
| Impairment for assets held and used |
- |
- |
850,985 |
- |
850,985 |
|||||||||||||||||
| Impairment of goodwill |
- |
- |
3,228,930 |
- |
3,228,930 |
|||||||||||||||||
| Loss on sale of assets |
- |
- |
1,746,905 |
(204,531) |
1,542,374 |
|||||||||||||||||
| EBITDA |
(3,177,792) |
(1,053,403) |
(1,899,744) |
(2,902,666) |
(9,033,605) |
|||||||||||||||||
| Nonrecurring Expenditures |
- |
- |
- |
650,000 |
650,000 |
|||||||||||||||||
| Restructuring Costs |
637,777 |
198,026 |
545,130 |
62,308 |
1,443,241 |
|||||||||||||||||
| Restructuring Costs (Non Cash) |
- |
- |
15,051 |
179,757 |
194,808 |
|||||||||||||||||
| Stock based Compensation |
944,024 |
362,107 |
781,258 |
1,615,240 |
3,702,629 |
|||||||||||||||||
| Software and non-cash adjustments |
(492,997) |
(724,303) |
(42,539) |
504,915 |
(754,924) |
|||||||||||||||||
| Adjusted EBITDA |
$ |
(2,088,988) |
$ |
(1,217,573) |
$ |
(600,844) |
$ |
109,554 |
$ |
(3,797,851) |
||||||||||||
SOURCE Pareteum Corporation
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