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Pareteum Reports Annual 2016 Financial Results

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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

March 28, 2017 9:15 PM EDT

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:

  1. new clients and brands are positioned to come on board;
  2. opened up new service segments that represent additional revenue streams;
  3. continued development progress on announced transactions; and
  4. announced four new sales agreements, including: 
    1. a key carrier customer global roaming enablement deal;
    2. an important addition of content and streaming media capability to a major carrier mobile MVNE customer
    3. an important IoT technology enablement transaction, and
    4. 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, 2017Time:  11:00 a.m. EDTDomestic Dial-in Number: 1-800-279-9534International Dial-in Number: 1-719-457-2506U.K. Toll Free:  0 800 404 7656Live 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 CervantesPCG Advisory212-554-5482[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)

         

        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


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