NEW YORK, October 21, 2019 /PRNewswire/ -- Pareteum
Corporation (Nasdaq: TEUM) today announced that the Company
will restate its previously issued consolidated financial
statements as of and for the full year ended December 31, 2018, and interim periods ended
March 31, 2019 and June 30, 2019. This decision was approved by the
Company's Board of Directors upon the recommendation of the
Company's Audit Committee, and after consultation with management
and the Company's independent registered public accounting
firm.
Investors should no longer rely upon the Company's previously
released financial statements for the time periods cited above.
Similarly, related press releases, earnings releases, and investor
communications describing the Company's financial statements for
these periods should no longer be relied upon.
The decision to restate these financial statements is based on
the Company's conclusion that certain revenues recognized during
2018 and 2019 should not have been recorded during that period. For
certain customer transactions, the Company may have prematurely or
inaccurately recognized revenue. These restatements should not
impact historical cash or cash equivalents based upon the current
review. At the present time, the restatements are expected to
impact Revenue, Cost of Service, Operating Income, Net Loss,
Accounts Receivable and other Balance Sheet line items. While
the Company's analysis is still underway, the Company currently
estimates the revenue impact for the full year 2018 to be a
reduction of approximately $9
million. For the first half of 2019, the Company currently
estimates the revenue impact to be a reduction of approximately
$24 million.
At this time, the Company has not fully completed its review and
the expected financial impact of the restatement described above is
preliminary and subject to change. The Company cannot predict the
aggregate amount of revenue that will ultimately be restated,
whether additional periods beyond those referenced above will be
affected, and the final outcome or timing of the Company's filing
of restated financial statements for the affected annual and
quarterly periods. Until the full magnitude of these transactions
is analyzed and understood, the Company cannot provide forward
guidance, and expects financial results for the second half and
full year 2019 will be materially below current analysts'
estimates.
Pareteum has achieved a significant business transformation over
the last few years, including the completion and integration of two
large acquisitions, Artilium and iPass. The Company recently
discovered internal control issues related to the accuracy and
timing of the recognition of revenue. The Company is undertaking a
financial review and is taking proactive steps to improve the
oversight and controls associated with customer transactions. This
restatement does not impact day-to-day operations and the Company
continues to be encouraged by the positive customer interest in
Pareteum's global cloud communications platform and its other
products and services. Today's announcement reiterates Pareteum's
commitment to best practices and upholding the highest standards of
financial reporting. The Company recognizes the seriousness of the
restatement and will continue to evaluate and implement a broad
range of measures and controls to ensure that Pareteum has a strong
foundation of processes, procedures, systems and talent in order to
capitalize on future global growth opportunities.
Pareteum cannot at this time estimate when the restatement will
be completed. The Company will continue to diligently pursue
completion of the restatement and intends to make its upcoming 2019
quarterly filings as soon as reasonably practical.
About Pareteum Corporation: Millions of people and
devices are connected around the world using Pareteum's Global
Cloud Communications Platform, enhancing their mobile experience.
Pareteum unleashes the power of applications and mobile services,
bringing secure, ubiquitous, scalable, and seamlessly available
voice, video, SMS/text messaging, and data, media and content
enablement to our customers, making worldwide communications
services easily and economically accessible to everyone. By
harnessing the value of our cloud communications platform, Pareteum
serves enterprises, communications service providers, early stage
innovators, developers, IoT, and telecommunications infrastructure
providers. Pareteum envisions a new mobile communications
experience, imagining what is to come, while delivering now.
Pareteum currently has offices in North
America, South America,
Spain, Bahrain, Singapore, India, Indonesia, Germany, Belgium, United
Kingdom, Russia, and
the Netherlands. For more
information please visit: www.pareteum.com.
Forward Looking Statements: Certain statements
contained herein constitute "forward-looking statements" as defined
by 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.
These risks include, among other things (1) the ability to complete
the restatement of the affected financial statements and address
any material weaknesses, the timing of the completion of necessary
restatements, interim reviews and audits by the Company's
independent registered public accounting firm, (2) risks relating
to the substantial costs and diversion of personnel's attention and
resources deployed to address the restatement of the affected
financial statements and internal control matters, (3) the risk of
litigation or regulatory action arising from the restatement of the
affected financial statements, (4) the timing of the review by, and
the conclusions of, the Company's independent auditor regarding the
restatement, (5) the ability of the Company to remediate any
material weaknesses in internal control over financial reporting,
(6) potential reputational damage that the Company may suffer as a
result of the restatement of the affected financial statements, (7)
the impact of the restatement of the affected financial statements
on the value of the Company's common stock, and (8) the risk that
the filing of the restatement of the affected financial statements
will take longer than anticipated. Given these risks and
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 Corporation.
Media Inquiries
Press@pareteum.com
Pareteum Investor Relations Contacts:
Carrie Howes
Investor Relations
+1 650 232 4238
carrie.howes@pareteum.com
Investor.relations@pareteum.com
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SOURCE Pareteum Corporation