"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
vivian@pcgadvisory.com
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/pareteum-reports-annual-2016-financial-results-300430863.html
SOURCE Pareteum Corporation