KonaTel's Revenue Halves, Swings to Loss Amid IM Telecom Sale Absence

Ticker: KTEL · Form: 10-Q · Filed: Nov 19, 2025 · CIK: 845819

Sentiment: bearish

Topics: Telecommunications, CPaaS, Lifeline Program, FCC Regulation, Asset Sale, Net Loss, Revenue Decline

Related Tickers: KTEL

TL;DR

**KTEL is bleeding cash and its future hinges on a delayed FCC approval for a partial asset sale, making it a risky bet.**

AI Summary

KonaTel, Inc. (KTEL) reported a significant decline in financial performance for the nine months ended September 30, 2025, with revenue plummeting by 50.49% to $6,500,643 from $13,127,425 in the prior year. The company posted a net loss of $2,149,030 for the nine-month period, a stark contrast to the net income of $5,784,473 reported in the same period of 2024. This downturn is largely attributed to the absence of the $9,247,726 gain on sale of IM Telecom (49%) recognized in 2024. Operating expenses decreased by 32.00% to $4,088,218 from $6,025,121, primarily due to a substantial reduction in payroll and related expenses, which fell to $2,406,484 from $4,108,020. Cash and cash equivalents decreased by 29.59% from $1,679,345 at December 31, 2024, to $1,182,429 at September 30, 2025. The company's total assets also decreased by 41.66% from $5,314,562 to $3,105,782 over the same period, while total stockholders' equity declined by 83.15% to $423,190 from $2,511,398. KonaTel temporarily withdrew its FCC change of control application for IM Telecom, intending to refile and gain approval for the remaining 51% conveyance to Excess Telecom, Inc.

Why It Matters

This filing reveals a critical financial deterioration for KonaTel, with revenue cut in half and a significant net loss, primarily due to the one-time gain from the IM Telecom sale not recurring. For investors, this signals a challenging operational environment and raises questions about sustainable revenue streams post-divestiture. Employees of KonaTel and its subsidiaries (Apeiron Systems, IM Telecom) may face uncertainty given the substantial reduction in payroll expenses and the ongoing FCC approval process for IM Telecom's ownership. Customers of Infiniti Mobile (IM Telecom) could experience service disruptions or changes depending on the final ownership structure and strategic direction. The broader market will watch how KonaTel navigates this transition, especially in the competitive telecommunications and CPaaS sectors, as its ability to generate organic growth without major asset sales is now under scrutiny.

Risk Assessment

Risk Level: high — KonaTel reported a net loss of $2,149,030 for the nine months ended September 30, 2025, compared to a net income of $5,784,473 in the prior year, largely due to the absence of a $9,247,726 gain on sale. The company's cash and cash equivalents decreased by 29.59% to $1,182,429, and total stockholders' equity plummeted by 83.15% to $423,190, indicating significant financial strain and a potential going concern issue, especially with the FCC approval for the remaining 51% of IM Telecom still pending.

Analyst Insight

Investors should exercise extreme caution and consider divesting KTEL shares due to the significant financial deterioration, including a substantial net loss and declining cash reserves. The ongoing uncertainty surrounding the FCC approval for the IM Telecom sale adds further risk, making the company's future revenue and profitability highly speculative.

Financial Highlights

debt To Equity
6.34
revenue
$6,500,643
operating Margin
-33.49%
total Assets
$3,105,782
total Debt
N/A
net Income
($2,149,030)
eps
($0.05)
gross Margin
29.40%
cash Position
$1,182,429
revenue Growth
-50.49%

Revenue Breakdown

SegmentRevenueGrowth
Total Revenue$6,500,643-50.49%

Key Numbers

Key Players & Entities

FAQ

Why did KonaTel's revenue decrease significantly in the nine months ended September 30, 2025?

KonaTel's revenue decreased by 50.49% to $6,500,643 for the nine months ended September 30, 2025, from $13,127,425 in the same period of 2024. This substantial decline is primarily due to operational changes and the absence of the significant revenue contribution from the 49% portion of IM Telecom that was sold in the prior year.

What caused KonaTel to report a net loss in Q3 2025 compared to a net income in Q3 2024?

KonaTel reported a net loss of $2,149,030 for the nine months ended September 30, 2025, a sharp contrast to the net income of $5,784,473 in the comparable 2024 period. The primary reason for this swing was the non-recurrence of a $9,247,726 gain on the sale of 49% of IM Telecom, which significantly boosted 2024's net income.

What is the current status of the IM Telecom sale to Excess Telecom, Inc.?

KonaTel conveyed 49% of IM Telecom to Excess Telecom, Inc. for $10,000,000 on January 22, 2024. The conveyance of the remaining 51% for $100 is pending approval by the Federal Communications Commission (FCC). KonaTel temporarily withdrew its change of control application with the FCC to provide additional information and intends to refile it.

How has KonaTel's cash position changed in the first nine months of 2025?

KonaTel's cash and cash equivalents decreased by $496,916, from $1,679,345 at the beginning of the year to $1,182,429 as of September 30, 2025. This decline was driven by $1,429,566 in net cash used in operating activities, partially offset by $850,150 from investing activities, primarily from notes receivable.

What are the implications of the FCC application withdrawal for IM Telecom?

The temporary withdrawal of the FCC change of control application for IM Telecom means the final conveyance of the remaining 51% interest to Excess Telecom is delayed. KonaTel will continue to own 51% of IM Telecom and receive Distribution Agreement payments from its sales channels until FCC approval is obtained, creating ongoing uncertainty for the transaction.

How did operating expenses change for KonaTel in the nine months ended September 30, 2025?

Total operating expenses for KonaTel decreased by 32.00% to $4,088,218 for the nine months ended September 30, 2025, from $6,025,121 in the same period of 2024. This reduction was primarily driven by a significant decrease in payroll and related expenses, which fell from $4,108,020 to $2,406,484.

What is KonaTel's current ownership structure of IM Telecom?

KonaTel currently owns 51% of IM Telecom, LLC. The remaining 49% was conveyed to Excess Telecom, Inc. on January 22, 2024. The final conveyance of KonaTel's 51% interest to Excess Telecom is contingent upon FCC approval, which is currently pending after a temporary withdrawal of the application.

What is the significance of IM Telecom being an FCC licensed Eligible Telecommunications Carrier (ETC)?

IM Telecom's status as an FCC licensed ETC allows it to provide subsidized telecommunications services, such as Lifeline, to low-income Americans. This license is valuable as the FCC has not approved new wireless reseller Lifeline Compliance Plans since 2012, making IM Telecom one of approximately twelve active license holders.

What is KonaTel's strategic outlook regarding its subsidiaries Apeiron Systems and IM Telecom?

KonaTel continues to operate Apeiron Systems as a full-service CPaaS provider. For IM Telecom, the strategic outlook involves securing FCC approval for the full conveyance to Excess Telecom. Until then, IM Telecom will operate as a standalone entity under an 'Annual Plan' with its own employees, and KonaTel will receive Distribution Agreement payments from its sales.

How does KonaTel's current financial performance impact its stockholders' equity?

KonaTel's total stockholders' equity significantly decreased by 83.15%, from $2,511,398 at December 31, 2024, to $423,190 at September 30, 2025. This substantial decline is primarily due to the net loss of $2,149,030 incurred during the nine-month period, which directly reduced accumulated deficit.

Risk Factors

Industry Context

KonaTel operates in the telecommunications sector, which is characterized by intense competition, rapid technological advancements, and significant regulatory oversight from bodies like the FCC. The market demands continuous innovation and efficient service delivery to maintain customer loyalty and market share.

Regulatory Implications

The temporary withdrawal of the FCC change of control application for IM Telecom highlights the critical nature of regulatory approvals in completing significant transactions. Failure to secure FCC approval could impede strategic divestitures or acquisitions.

What Investors Should Do

  1. Monitor the refiling and approval status of the FCC change of control application for IM Telecom.
  2. Analyze the sustainability of cost reductions, particularly in payroll.
  3. Evaluate the company's strategy to address the substantial decline in revenue and equity.

Key Dates

Glossary

Gain on Sale
Profit realized from selling an asset for more than its book value. (A $9.25M gain on sale of IM Telecom in 2024 significantly inflated prior year's net income, making the current year's performance appear worse by comparison.)
Accumulated Deficit
The cumulative net losses of a company since its inception, minus any cumulative net income. (KonaTel's accumulated deficit increased from ($7.75M) to ($9.90M) during the nine months ended September 30, 2025, indicating ongoing losses.)
Right of Use Asset
An asset representing a lessee's right to use an identified asset for a specified period under a lease contract. (The company has Right of Use Assets related to operating leases, which decreased from $319.55K to $237.36K.)
FCC Change of Control Application
A regulatory filing required by the Federal Communications Commission when ownership or control of a licensed entity changes. (KonaTel temporarily withdrew this application for IM Telecom, indicating a potential hurdle in completing the sale of the remaining stake.)

Year-Over-Year Comparison

Compared to the nine months ended September 30, 2024, KonaTel has seen a dramatic decline in financial performance. Revenue has fallen by 50.49% to $6.50M, and the company has swung from a net income of $5.78M to a net loss of $2.15M. This is primarily due to the non-recurrence of a large gain on sale in the prior year. Operating expenses have decreased by 32.00%, largely driven by payroll reductions. However, cash reserves and total equity have significantly diminished, indicating a weaker financial position.

Filing Stats: 4,459 words · 18 min read · ~15 pages · Grade level 15.7 · Accepted 2025-11-19 17:01:00

Key Financial Figures

Filing Documents

Forward-Looking Statements

Forward-Looking Statements This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In some cases, you can identify forward-looking statements by the following words: "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "ongoing," "plan," "potential," "predict," "project," "should," "will," "would" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. 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 Quarterly Report. We cannot assure you that the forward-looking reliance on forward-looking statements. You should carefully read this Quarterly Report completely, and it should be read and considered with all other reports filed by us with the SEC that are contained in the SEC Edgar Archives, including the "Risk Factors" enumerated in "Part I, Item IA. Risk Factors" of our 10-K Annual Report for the year ended December 31, 2024, filed with the SEC on April 15, 2025 (the "Annual Report"), which Risk Factors commence on page ten (10)_ thereof. A copy of the Annual Report is attached hereto by Hyperlink in Part II-Other Information, in Item 6. Exhi

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements & Footnotes

Item 1. Financial Statements & Footnotes 4

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 17

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 21

Controls and Procedures

Item 4. Controls and Procedures 21

– OTHER INFORMATION

PART II – OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 21

Risk Factors

Item 1A. Risk Factors 21

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 21

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 21

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 21

Other Information

Item 5. Other Information 21

Exhibits

Item 6. Exhibits 22

- FINANCIAL STATEMENTS

PART I - FINANCIAL STATEMENTS September 30, 2025 Table of Contents Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited), and December 31, 2024 4 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025, and 2024 (unaudited) 5 Condensed Consolidated Statements of Stockholders' Equity (Deficit) for the three and nine months ended September 30, 2025, and 2024 (unaudited) 6 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025, and 2024 (unaudited) 7 Notes to Condensed Consolidated Financial Statements (unaudited) 8 3 KonaTel, Inc. Condensed Consolidated Balance Sheets (Unaudited) September 30, 2025 December 31, 2024 Assets Current Assets Cash and Cash Equivalents $ 1,182,429 $ 1,679,345 Accounts Receivable, Net 510,884 1,533,015 Inventory, Net 199,164 163,063 Prepaid Expenses 82,315 94,496 Other Current Assets 335,154 112,170 Total Current Assets 2,309,946 3,582,089 Property and Equipment, Net 12,630 15,128 Other Assets Intangible Assets, Net 323,468 323,468 Right of Use Asset 237,362 319,549 Notes Receivable 150,000 1,000,000 Other Assets 72,376 74,328 Total Other Assets 783,206 1,717,345 Total Assets $ 3,105,782 $ 5,314,562 Liabilities and Stockholders' Equity Current Liabilities Accounts Payable and Accrued Expenses $ 2,249,715 $ 2,277,597 Right of Use Operating Lease Obligation - Current 62,713 113,740 Income Tax Payable 184,051 184,051 Total Current Liabilities 2,496,479 2,575,388 Long Term Liabilities Right of Use Operating Lease Obligation - Long Term 186,113 227,776 Total Long-Term Liabilities 186,113 227,776 Total Liabilities 2,682,592 2,803,164 Commitments and Contingencies Stockholders' Equity Common stock, $ 0.001 par value, 50,000,000 shares authorized 43,941,814 outstanding and issued at September 30, 2025, and 43,503,658 out

financial statements

financial statements. 4 KonaTel, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Revenue $ 2,173,273 $ 3,148,409 $ 6,500,643 $ 13,127,425 Cost of Revenue 1,464,236 2,439,037 4,589,473 10,390,841 Gross Profit 709,037 709,372 1,911,170 2,736,584 Operating Expenses Payroll and Related Expenses 220,651 1,316,381 2,406,484 4,108,020 Operating and Maintenance 2,833 1,179 6,322 4,143 Credit Loss — — 13,910 1,448 Professional and Other Expenses 140,428 94,435 622,376 435,960 Utilities and Facilities 42,294 50,292 137,233 160,410 Depreciation and Amortization 782 2,449 2,347 7,348 General and Administrative 95,329 54,006 213,725 159,974 Marketing and Advertising 1,201 24,629 11,683 85,657 Application Development Costs 235,855 259,836 587,348 853,719 Taxes and Insurance 19,743 93,385 86,790 208,442 Total Operating Expenses 759,116 1,896,592 4,088,218 6,025,121 Operating (Loss) ( 50,079 ) ( 1,187,220 ) ( 2,177,048 ) ( 3,288,537 ) Other Income and Expense Gain on Sale — — — 9,247,726 Interest Expense 932 ( 407 ) 356 ( 104,737 ) Other Income/(Expense), net 4,053 ( 1,287 ) 27,662 ( 69,979 ) Total Other Income and Expenses 4,985 ( 1,694 ) 28,018 9,073,010 Income Before Income Taxes ( 45,094 ) ( 1,188,914 ) ( 2,149,030 ) 5,784,473 Net Income (Loss) $ ( 45,094 ) $ ( 1,188,914 ) $ ( 2,149,030 ) $ 5,784,473 Earnings (Loss) per Share Basic $ ( 0.00 ) $ ( 0.03 ) $ ( 0.05 ) $ 0.13 Diluted $ ( 0.00 ) $ ( 0.03 ) $ ( 0.05 ) $ 0.13 Weighted Average Outstanding Shares Basic 43,766,648 43,485,560 43,615,339 43,385,493 Diluted 43,766,648 43,485,560 43,615,339 43,698,965 See accompanying notes to unaudited condensed consolidated

financial statements

financial statements. 5 KonaTel, Inc. Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) Common Shares Additional Accumulated Shares Amount Paid-in Capital Deficit Total Balances as of January 1, 2025 43,503,658 $ 43,504 $ 10,215,767 $ ( 7,747,873 ) $ 2,511,398 Exercised Stock Options 438,156 438 82,062 — 82,500 Stock Based Compensation — — ( 21,678 ) — ( 21,677 ) Net Loss — — — ( 2,149,030 ) ( 2,149,030 ) Balances as of September 30, 2025 43,941,814 $ 43,942 $ 10,276,151 $ ( 9,896,903 ) $ 423,190 Common Shares Additional Accumulated Shares Amount Paid-in Capital Deficit Total Balances as of July 1, 2025 43,541,140 $ 43,541 $ 10,699,743 $ ( 9,851,809 ) $ 891,475 Exercised Stock Options 400,674 401 82,099 — 82,500 Stock Based Compensation — — ( 505,691 ) — ( 505,691 ) Net Loss — — — ( 45,094 ) ( 45,094 ) Balances as of September 30, 2025 43,941,814 $ 43,942 $ 10,276,151 $ ( 9,896,903 ) $ 423,190 Common Shares Additional Accumulated Shares Amount Paid-in Capital Deficit Total Balances as of January 1, 2024 43,145,720 $ 43,146 $ 9,182,140 $ ( 12,238,691 ) $ ( 3,013,405 ) Exercised Stock Options 343,525 343 40,907 — 41,250 Stock Based Compensation — — 747,686 — 747,686 Net Income — — — 5,784,473 5,784,473 Balances as of September 30, 2024 43,489,245 $ 43,489 $ 9,970,733 $ ( 6,454,218 ) $ 3,560,004 Common Shares Additional Accumulated Shares Amount Paid-in Capital Deficit Total Balances as of July 1, 2024 43,472,954 $ 43,473 $ 9,669,809 $ ( 5,265,304 ) $ 4,447,978 Exercised Stock Options 16,291 16 ( 16 ) — — Stock Based Compensation — — 300,940 — 300,940 Net Loss — — — ( 1,188,914 ) ( 1,188,914 ) Balances as of September 30, 2024 43,489,245 $ 43,489 $ 9,970,733 $ ( 6,454,218 ) $ 3,560,004 See accompanying notes to unaudited condensed consolidated

financial statements

financial statements. Common Shares Additional Paid-in Capital Accumulated Deficit 6 KonaTel, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2025 2024 Cash Flows from Operating Activities: Net Income (Loss) $ ( 2,149,030 ) $ 5,784,473 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and Amortization 2,347 7,348 Gain on Sale of IM Telecom (49%) — ( 9,247,726 ) Loan Origination Cost Amortization — 49,579 Credit Loss 13,910 1,448 Stock-based Compensation ( 21,677 ) 747,686 Change in Right of Use Asset 82,187 92,088 Change in Lease Liability ( 92,690 ) ( 84,037 ) Changes in Operating Assets and Liabilities: Accounts Receivable 1,008,221 ( 364,977 ) Inventory ( 36,101 ) 869,709 Prepaid Expenses and Other Asset ( 208,851 ) ( 305,405 ) Accounts Payable and Accrued Expenses ( 27,882 ) ( 533,995 ) Income Tax Payable — — Net cash used in operating activities ( 1,429,566 ) ( 2,983,809 ) Cash Flows from Investing Activities Sale of IM Telecom (49%) — 9,558,509 Notes Receivable 850,000 ( 1,000,000 ) Equipment 150 — Net cash provided by investing activities 850,150 8,558,509 Cash Flows from Financing Activities Repayments of amounts of Notes Payable — ( 3,704,750 ) Cash received from Stock Options Exercised 82,500 41,250 Net cash received/used from financing activities 82,500 ( 3,663,500 ) Net Change in Cash ( 496,916 ) 1,911,200 Cash - Beginning of Year 1,679,345 777,103 Cash - End of Period $ 1,182,429 $ 2,688,303 Supplemental Disclosure of Cash Flow Information Cash paid for interest $ — $ 54,750 Cash paid for taxes $ — $ — Non-cash investing and financing activities: Right of use assets obtained in exchange for new operating lease liabilities $ — $ — See accompanying notes to unaudited condensed consolidated

financial statements

financial statements. 7 KonaTel, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Overview of Company KonaTel Inc., a Delaware corporation, formerly known as Dala Petroleum Corp. (the "Company," "we," "our," or "us"), also formerly known as "Westcott Products Corporation," was incorporated as "Light Tech, Inc." under the laws of the State of Nevada on May 24, 1984. A subsidiary in the name "Westcott Products Corporation" was organized by us under the laws of the State of Delaware on June 24, 1986, for the purpose of changing our name and domicile to the State of Delaware. On June 27, 1986, we merged with the Delaware subsidiary, with the survivor being Westcott Products Corporation, a Delaware corporation ("Westcott"). During 1990, we ceased our then current operations. On March 11, 2000, our Board of Directors began the process of re-entering the development stage, and on June 2, 2014, we completed a merger with Dala Petroleum Corp., a Nevada corporation (respectively, "Dala Nevada" and the "Dala Merger"). We operated as an early-stage oil exploration company focused on our leased acreage acquired by Dala Nevada until 2016, at which time we assigned substantially all of our leased acreage to the former owner of Dala Nevada, and our remaining oil and gas leasehold interests, comprising leases covering approximately 7,489 and 403 acres, more or less, expired in 2017 and 2018, respectively. On December 18, 2017, we acquired KonaTel, Inc, a Nevada subchapter S-Corporation ("KonaTel Nevada"), in a merger with our acquisition subsidiary under which KonaTel Nevada became our wholly owned subsidiary, and we succeeded to its operations; and we changed our name to "KonaTel, Inc." on February 5, 2018. KonaTel Nevada was organized under the laws of the the b

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