As 2018 drew to a close, KonaTel (OTCPK: KTEL) was busy with business development as it geared up for growth in the new year. Two separate acquisitions diversify and strengthen KonaTel’s offerings, as it adds a Lifeline Program license and a portfolio of business communication services to its product lineup.
From its headquarters in Dallas, Texas, KonaTel is a cellular reseller of wholesale priced minutes, text and data, including traditional post-paid cellular services, primarily operating on mobile networks of major telecoms like Verizon and AT&T. The company is also a Sprint authorized agent of cellular services and products that mainly include business-to-business (B2B) and business-to-customer (B2C) products and services, primarily B2B mobile service and Internet of Things (IoT) or wireless data.
During the third quarter, ended September 30, 2018, KonaTel generated $2.45 million in revenue, bringing its sales total for the first nine months of the year to $7.59 million. The Virtual ETC segment provided the lion’s share of the revenue at $3.66 million during the January-to-September period.
The Lifeline Program license comes via the acquisition of the membership interest in IM Telecom of Oklahoma. Now that the U.S. Federal Communications Commission published a notice approving the transfer of the Lifeline Program to KonaTel, the companies are finalizing the closing of the agreement. The federally funded Lifeline Program was created under President Ronald Reagan as part of the 1984 Telecommunications Act to provide subsidies to eligible consumers for landline, wireless and broadband services. Exact numbers are difficult to discern as all providers don’t report on the matter, but millions of Americans participate in the program.
Separately, SEC documents show that KonaTel agreed at the end of December to acquire Apeiron Systems in an all-stock deal that significantly added to the company’s business services. Under the terms of the agreement, KonaTel paid 7 million shares of restricted stock, subject to a lock-up period and leak-out terms (meaning they can’t be sold right away or flood the market when the lock-up period expires), for all of the outstanding shares of Apeiron.
The hyperlinked 8-K filing provides all the details on the transaction, which is qualified as a reverse triangular merger.
Organized in 2013, Apeiron is a provider of a suite of real-time business communications services that include voice, messaging, network connectivity and platform services. It develops software that defines and manages the products, its billing and the customer experience and interface. Further, the company delivers service from a facilities-based network using best-in-class commercial and open source software and hardware to create a highly resilient and scalable business communications service.
Apeiron has built scale already, providing PSTN (public switched telephone network) voice origination and termination services from about 16,000 U.S. rate centers and origination and termination voice services to 60 non-US countries, along with public, private and SD-WAN data connections to more than 90% of the populations in the U.S. with wire-line fiber and copper access technologies and wireless LTE data access from the three major U.S. networks.
Part of KonaTel’s 2019 goal was to increase its focus on IoT and the acquisition dovetails with that initiative as Apeiron delivers a SD-WAN network product, an IoT product using LTE data connections and a Voice Platform-as-a-Service product that operates on Apeiron’s private cloud infrastructure.
As part of the merger, Joshua Ploude, CEO, president and co-founder of Apeiron, will stay on as CEO of the new, wholly-owned KonaTel subsidiary. Vyacheslav Yanson will hold the position of Chief Technology Officer, the same position he had with the company before the acquisition.
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