KonaTel (KTEL) 10-Q 5 Jun 20 2020 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Mar. 31, 2020	Jun. 05, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2020
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2020
Current Fiscal Year End Date	--12-31
Entity File Number	001-10171
Entity Registrant Name	KonaTel, Inc.
Entity Central Index Key	0000845819
Entity Incorporation, State or Country Code	DE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		40,692,286

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Current Assets
Cash and Cash Equivalents	$ 227,269	$ 191,474
Accounts Receivable, net	339,524	377,485
Inventory, Net	4,960	4,659
Prepaid Expenses	1,611	1,743
Total Current Assets	573,364	575,361
Fixed Assets
Property and Equipment, Net	98,641	102,689
Right of Use Assets, Net	142,148	78,584
Total Fixed Assets	240,789	181,273
Other Assets
Intangible Assets, Net	2,038,336	2,238,918
Other Assets	172,065	207,740
Total Other Assets	2,210,401	2,446,658
Total Assets	3,024,554	3,203,292
Current Liabilities
Accounts Payable and Accrued Expenses	1,275,300	1,223,195
Amount Due to Stockholder	102,313	151,357
Revolving Line of Credit		12,237
Note Payable, current portion	81,905	75,905
Lease Liabilities, current portion	108,645	69,148
Deferred Revenue	38,094	53,074
Customer Deposits	544	31,087
Total Current Liabilities	1,606,801	1,616,003
Long Term Liabilities
Lease Liabilities, long term	73,422	12,942
Note Payable, long term	19,626	50,603
Total Long Term Liabilities	93,048	63,545
Total Liabilities	1,699,849	1,679,548
Stockholders' Equity
Common Stock	40,692	40,692
Additional Paid-In Capital	7,390,286	7,380,029
Accumulated Deficit	(6,106,273)	(5,896,977)
Total Stockholders' Equity	1,324,705	1,523,744
Total Liabilities and Stockholders' Equity	$ 3,024,554	$ 3,203,292

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Common stock, par value in dollars	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	40,692,286	40,692,286
Common stock, shares outstanding	40,692,286	40,692,286

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Revenue	$ 1,957,355	$ 2,640,296
Cost of Revenue	1,192,177	1,503,460
Gross Profit	765,178	1,136,836
Operating expenses
Payroll and Related Expenses	448,149	471,305
Operating and Maintenance	193,852	557,100
Bad Debt	1,500
Utilities and Facilities	8,867	35,819
Depreciation and Amortization	270,300	251,116
General and administrative	12,743	41,902
Marketing and Advertising	944	21,614
Taxes and Insurance	18,814	45,070
Total Operating Expenses	955,169	1,423,926
Operating Loss	(189,991)	(287,090)
Other Income and Expense
Interest Income	1	676
Other Income	301,372
Interest Expense	(10,549)	(11,379)
Total Other Income and Expenses	290,824	(10,703)
Net Income (Loss)	$ 100,833	$ (297,793)
Net Income (Loss) per Share, Basic	$ 0	$ (0.01)
Weighted Average Outstanding Shares, Basic	40,692,286	40,692,286
Diluted Net Income (Loss) per Share	$ 0	$ (0.01)
Weighted Average Outstanding Shares, Diluted	44,092,286	43,067,286

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Stockholders' Equity - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning Balance at Dec. 31, 2018	$ 40,692	$ 7,041,696	$ (4,352,073)	$ 2,730,315
Beginning Balance, shares at Dec. 31, 2018	40,692,286
Value of Options Issued as Part of IM Telecom Acquisition		98,482		98,482
Stock Based Compensation		141,356		141,356
Net loss			(297,793)	(297,793)
Ending Balance at Mar. 31, 2019	$ 40,692	7,281,534	(4,649,866)	2,672,360
Ending Balance, shares at Mar. 31, 2019	40,692,286
Beginning Balance at Dec. 31, 2019	$ 40,692	7,380,029	(5,896,977)	1,523,744
Beginning Balance, shares at Dec. 31, 2019	40,692,286
Stock Based Compensation		10,257		10,257
Dividends Paid to Apeiron Systems shareholders			(310,129)	(310,129)
Net loss			100,833	100,833
Ending Balance at Mar. 31, 2020	$ 40,692	$ 7,390,286	$ (6,106,273)	$ 1,324,705
Ending Balance, shares at Mar. 31, 2020	40,692,286

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash Flows from Operating Activities
Net Income (Loss)	$ 100,833	$ (297,793)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and Amortization	270,300	251,116
Bad Debt	1,500
Stock-based compensation	10,257	141,356
Changes in Operating Assets and Liabilities, net of effects of acquisition:
Accounts Receivable	36,461	203,712
Inventory	(301)	135
Prepaid Expenses	132	3,461
Accounts Payable and Accrued Expenses	(2,012)	(44,541)
Deferred Revenue	(14,980)	(10,154)
Customer Deposits	(30,543)
Other Assets	35,675	(199,573)
Net cash provided by operating activities	407,322	47,719
Cash Flows from Investing Activities
Cash Received in Acquisition of IM Telecom		14,318
Purchase of Assets	(3,168)
Asset Purchase of IM Telecom		(56,611)
Net cash provided by (used in) investing activities	(3,168)	(42,293)
Cash Flows from Financing Activities
Payments received on Notes Receivable		25,001
Payments on Operating Lease Liabilities	(26,089)	(17,517)
Repayment of Revolving Lines of Credit	(12,237)	(22,147)
Repayment of Notes Payable	(24,977)
Advances made by Stockholder		200,000
Repayments of amounts due to Related Party and Seller	(49,044)	(27,564)
Dividends Paid to Apeiron shareholders	(256,012)
Net cash provided by (used in) financing activities	(368,359)	157,773
Net Change in Cash	35,795	163,199
Cash, Beginning of period	191,474	56,510
Cash, End of period	227,269	219,709
Supplemental disclosure of cash flow information:
Cash paid for interest	7,201	14,297
Cash paid for taxes
Asset Purchase
Value of Options		98,482
Right of use assets obtained in exchange for new operating lease liabilities	$ 129,108	113,035
IM Telecom, LLC
Asset Purchase
Accounts receivable		63,764
Vendor Deposits		1,450
Prepaid Expense		950
Furniture and Equipment at Fair Market Value		1,309
Other Assets		1,450
Accounts Payable and Accrued Expenses, net of cash		(23,870)
License		658,452
Value of Options		$ 98,482

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Overview of Company KonaTel Nevada (as defined below) was organized under the laws of the State of Nevada on October 14, 2014, by its founder and then sole shareholder, D. Sean McEwen, to conduct the business of a full-service MVNO (“Mobile Virtual Network Operator”) provider that delivered cellular products and services to individual and business customers in various retail and wholesale markets. KonaTel Inc., 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”). On December 18, 2017, we acquired KonaTel, Inc, a Nevada sub S-Corporation (“KonaTel Nevada”), in a merger with our acquisition subsidiary under which KonaTel Nevada became our wholly-owned subsidiary. On December 31, 2018, we acquired Apeiron Systems, Inc., a Nevada corporation d/b/a “Apeiron” (“Apeiron Systems”), which is also our wholly-owned subsidiary. Apeiron Systems was organized in 2013 and is an international hosted services CPaaS (“Communications Platform as a Service”) provider that designed, built, owns and operates its private core network, supporting a suite of real-time business communications services and Applications Programming Interfaces (“APIs”). As an Internet Telephony Service Provider (“ITSP”), Apeiron Systems holds a Federal Communications Commission (the “FCC”) numbering authority license. Some of Apeiron Systems’ hosted services include SIP/VoIP services, SMS/MMS processing, BOT integration, NLP (“Natural Language Processing”), ML (“Machine Learning”), number services including mobile, toll free and DID landline numbers, SMS to Email services, Database Dip services, SD-WAN, voice termination, and numerous API driven services including voice, messaging, and network management. On January 31, 2019, we acquired IM Telecom, LLC, an Oklahoma limited liability company, d/b/a “Infiniti Mobile” (“IM Telecom”), which became our wholly-owned subsidiary. Infiniti Mobile is an FCC licensed ETC (“Eligible Telecommunications Carrier”) and is one of 22 FCC licensed carriers to hold an FCC approved Lifeline Compliance Plan in the United States. Under the Lifeline program, Infiniti Mobile is currently authorized to provide government subsidized mobile telecommunications services to eligible low-income Americans currently in eight (8) states. Basis of Presentation Interim Financial Statements The accompanying unaudited condensed interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2019. The accompanying financial statements have been prepared using the accrual basis of accounting. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include the allowance for doubtful receivables, allowance for inventory obsolescence, the estimated useful lives of property and equipment, and customer lists. Actual results could differ from those estimates. Basis of Consolidation The condensed consolidated financial statements include the Company and three (3) wholly-owned corporate subsidiaries, KonaTel Nevada, Apeiron Systems and IM Telecom. The condensed consolidated balance sheet for year ended December 31, 2019, includes the Company and the wholly-owned corporate subsidiaries, KonaTel Nevada Apeiron Systems and IM Telecom. The condensed consolidated statements of operations, cash flows, and stockholders’ equity (deficit) for the three-month period ended March 31, 2019, include the Company and the three (3) wholly owned subsidiaries, KonaTel Nevada, Apeiron Systems and IM Telecom (February and March). All significant intercompany transactions are eliminated. Net Income/(Loss) Per Share Basic loss per common share calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted loss per common share calculations are determined by dividing net loss by the weighted average number of common shares and dilutive common share equivalents outstanding. As of March 31, 2020, and March 31, 2019, there are 3,400,000 potentially dilutive common shares. The dilutive common shares are not included in the computation of diluted earnings per share, because to do so would be anti-dilutive. The following table reconciles the shares outstanding and net income (loss) used in the computations of both basic and diluted earnings per share of common stockholders: Three Months Ended March 31, 2020 2019 Net income (loss) $ 100,833 $ (297,793 ) Weighted average shares outstanding during period on which basic earnings per share is calculated 40,692,286 40,692,286 Effect of dilutive shares Incremental shares under stock-based compensation 3,400,000 2,375,000 Weighted average shares outstanding during period on which diluted earnings per share is calculated 44,092,286 43,067,286 Earnings per share attributable to common stockholders Basic earnings (loss) per share $ 0.00 $ (0.01 ) Diluted earnings (loss) per share $ 0.00 $ (0.01 ) Basic loss per common share calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted loss per common share calculations are determined by dividing net loss by the weighted average number of common shares and dilutive common share equivalents outstanding. Concentrations of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of receivables, cash, and cash equivalents. All cash and cash equivalents and restricted cash and cash equivalents are held at high credit financial institutions. These deposits are generally insured under the FDIC’s deposit insurance coverage; however, from time to time, the deposit levels may exceed FDIC coverage levels. The Company has a concentration of risk with respect to trade receivables from customers and cellular providers. As of March 31, 2020, the Company had a significant concentration of receivables (defined as customers whose receivable balances are greater than 10% of total receivables) due from one (1) customer in the amount of $53,649, or 15.8%, of accounts receivables. As of December 31, 2019, the Company had a significant concentration of receivables (defined as customers whose receivable balances are greater than 10% of total receivables) due from three (3) customers in the amounts of $89,078, or 24.4%, $77,662, or 21.3% and $48,475, or 13.3%, respectively. Concentration of Major Customer A significant amount of the revenue is derived from contracts with major customers and cellular partners. For the three months ended March 31, 2020, the Company had one (1) wholesale customer that accounted for $555,826, or 28.4%, of revenue. For the three months ended March 31, 2019, the Company had one (1) cellular partner that accounted for $728,649, in contractually obligated commission payments or 27.6% of revenue. Effect of Recent Accounting Pronouncements The Company has evaluated all other recent accounting pronouncements and believes that none will have a significant effect on the Company’s financial statement. Emerging Growth Company The Company is an emerging growth company and has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Transactions

Transactions	3 Months Ended
	Mar. 31, 2020
Business Combinations [Abstract]
Transactions	NOTE 2 – TRANSACTIONS January 2019 Transaction – IM Telecom Acquisition Effective February 7, 2018, we entered into an Agreement for the Purchase and Sale of Membership Interest (the “PMSI”) dated as of February 5, 2018, with the transaction documents being deposited in escrow on February 7, 2018, respecting the acquisition of 100% of the membership interest in IM Telecom from its sole owner, Trevan Morrow. The principal asset of IM Telecom was a “Lifeline Program” license (an FCC approved Compliance Plan), the transfer of ownership of which required prior approval of the FCC. Following the FCC approval of the transfer of the Lifeline Program license to us on October 23, 2018, the PSMI was completed on January 31, 2019. At the closing, we also engaged Mr. Morrow as an independent consultant for ninety (90) days in consideration of $100 and granted him an incentive stock option to purchase 500,000 shares of our common stock at an exercise price of $0.20 per share. The incentive stock option to purchase 500,000 shares was cancelled under a Settlement Agreement and Release between the Company and Mr. Morrow dated September 4, 2019, under the indemnifying obligations of Mr. Morrow under the PSMI, as amended, by reason of an overpayment made to IM Telecom of $168,677. The purchase price of $617,920 consisted of payments of debt and accounts payable made by the company on behalf of IM Telecom from the PMSI effective date of February 7, 2018, until January 31, 2019, the closing date. The purchase price allocation included the FCC license valued at $634,252, cash of $14,318, accounts receivable of $123,959, prepaid other assets of $2,400, furniture and equipment of $1,309. As part of the transaction, the Company also agreed to assume accounts payable of $24,271. The transaction was accounted for under the purchase method. The purchase price allocation to assets and liabilities assumed in the transaction was: Cash $ 14,318 Accounts Receivable 123,959 Prepaid Expenses and Deposits 2,400 Furniture and Equipment at Fair Value 1,309 License 634,252 Accounts Payable (24,271 ) Note Payable (168,277 ) Net Assets Acquired $ 583,690 The following table provides unaudited proforma results, prepared in accordance with ASC 805, for the three months ended March 31, 2020, and 2019 respectively, as if IM Telecom and Apeiron Systems had been acquired on January 1, 2018: For the Three Months Ended March 31, 2020 For the Three Months Ended March 31, 2019 Net Sales $ 1,957,355 $ 2,706,577 Net Profit (Loss) $ 100,833 $ (262,939 ) Net profit (loss) per share, basic and diluted $ 0.00 $ (0.01 )

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2020
Property, Plant and Equipment [Abstract]
Property and Equipment	NOTE 3 – PROPERTY AND EQUIPMENT Property and equipment consist of the following major classifications as of March 31, 2020, and December 31, 2019: March 31, 2020 December 31, 2019 Leasehold Improvements $ 46,950 $ 46,950 Furniture and Fixtures 102,946 102,946 Billing Software 217,163 217,163 Office Equipment 90,055 86,887 457,114 453,946 Less: Accumulated Depreciation and Amortization (358,473 ) (351,257 ) Property and equipment, net $ 98,641 $ 102,689 Depreciation and amortization amounted to $7,215 and $7,216 for the three months ended March 31, 2020, and 2019, respectively. Depreciation and amortization expense are included as a component of operating expenses in the accompanying statements of operations.

Right-To-Use Assets

Right-To-Use Assets	3 Months Ended
	Mar. 31, 2020
Leases [Abstract]
Right-To-Use Assets	NOTE 4 – RIGHT-OF-USE ASSETS Right-of-Use Assets consist of assets accounted for under ASC 842. The assets are recorded at present value using implied interest rates between 5.29% and 5.34%. March 31, 2020 December 31, 2019 Right-of-Use Assets $ 261,476 $ 151,472 Less: Accumulated Depreciation (119,328 ) (72,888 ) Right-of-Use, net $ 142,148 $ 78,584 Depreciation amounted to $62,502 and $18,140 for the three months ended March 31, 2020, and 2019, respectively. Depreciation expense is included as a component of operating expenses in the accompanying statements of operations. The Company has right-of-use assets through leases of property under three non-cancelable leases with terms in excess of one (1) year. The current lease liabilities expire January 1, 2021, December 1, 2021, and May 15, 2022. Future lease liability payments under the terms of these leases are as follows: 2020 $ 90,987 2021 $ 70,613 2022 $ 20,467 Total $ 182,067 Less Current Maturities $ 108,645 Long Term Maturities $ 73,422 The Company also leases two (2) office spaces on a month-to-month basis. Total lease expense for the three months ended March 31, 2020, and 2019 amounted to $3,468 and $21,028, respectively.

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	NOTE 5 – INTANGIBLE ASSETS Intangible Assets with definite useful like consist of licenses, customer lists and software that were acquired through acquisitions. Intangible Assets with indefinite useful life consist of a license granted by the FCC. The License, because of the nature of the asset and the limitation on the number of granted licenses by the FCC, will not be amortized. The License was acquired through an acquisition. The fair market value of the License as of March 31, 2020 was $634,252. March 31, 2020 December 31, 2019 Customer Lists $ 1,135,961 $ 1,135,961 Software 2,407,001 2,407,001 License 634,252 634,252 Less: Accumulated Amortization (2,138,878 ) (1,938,296 ) Intangible Assets, net $ 2,038,336 $ 2,238,918 Amortization expense amounted to $200,583 and $225,760 for the three months ended March 31, 2020, and 2019, respectively. Amortization expense is included as a component of operating expenses in the accompanying statements of operations. Amortization expense is expected to be as follows: 2020 $ 601,751 2021 $ 802,332

Amount Due to Stockholder

Amount Due to Stockholder	3 Months Ended
	Mar. 31, 2020
Related Party Transactions [Abstract]
Amount Due to Stockholder	NOTE 6 – AMOUNT DUE TO STOCKHOLDER During 2019, Joshua Ploude, CEO of Apeiron Systems, advanced the Company $200,000. The amount was used to provide a vendor security deposit. The note bears a 10% per annum interest rate until May 1, 2019, at which time, the interest rate will increase to 12% per annum. The note had an original maturity date of July 10, 2019. The loan has been extended without a defined maturity end date. The amount due as of March 31, 2020, was $102,313.

Contingencies and Commitments

Contingencies and Commitments	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Contingencies and Commitments	NOTE 7 – CONTINGENCIES AND COMMITMENTS Litigation From time to time, the Company may be subject to legal proceedings and claims which arise in the ordinary course of business. As of March 31, 2020, there are no legal proceedings, except the following: In August, 2019, the Company won an arbitration award (ratified by the court) from Mr. Glosser in the amount of $357,914, together with arbitrator’s compensation of $4,957, for a total award of $362,871; and Mr. Glosser’s counterclaim was found to be without merit. The Company and Mr. Glosser entered into a Settlement Agreement and Mutual Release on February 24, 2020, pursuant to which this matter was fully settled, resolving all claims, and Mr. Glosser paid the Company $300,000. The settlement amount was recorded and reported as other income. Contract Contingency The Company has the normal obligation for the completion of its cellular provider contracts in accordance with the appropriate standards of the industry and that may be provided in the contractual agreements. Letters of Credit The Company maintains irrevocable standby letter of credit arrangements with certain cellular carriers in the aggregate amount of $60,000. The letters of credit serve as collateral and security for various resale contracts the Company has with their suppliers. The letters of credit are unused as of March 31, 2020, and December 31, 2019. The letters of credit are not considered in the financial statements.

Segment Reporting

Segment Reporting	3 Months Ended
	Mar. 31, 2020
Segment Reporting [Abstract]
Segment Reporting	NOTE 8 – SEGMENT REPORTING The Company operates within four (4) reportable segments. The Company’s management evaluates performance and allocates resources based on the profit or loss from operations. Because the Company is a service business with very few physical assets, management does not use total assets by segment to make decisions regarding operations, and therefore, the total assets disclosure by segment has not been included. The reportable segments consist of Hosted Services, Mobile Services, Lifeline ETC and Lifeline VETC. Hosted Services – This segment includes a suite of hosted CPaaS services including SIP/VoIP services, SMS/MMS, BOT integration, mobile numbers, toll free numbers, DID landline numbers, SMS to Email, Database Dip, SD-WAN, voice termination and numerous API driven services. Apeiron Systems developed, owns and supports its services through its dedicated national telecommunications network. Apeiron Systems provides telecommunications services to application developers, call centers and small and medium size businesses and markets these services through its website, independent sales agents, ISOs and SCOs. Mobile Services Lifeline ETC Lifeline VETC – This segment operates through a single VETC agent agreement with another ETC. We no longer distribute Lifeline service under this single VETC agent agreement; however, we continue to collect monthly commissions for those Lifeline lines that we distributed and which remain active under this single VETC agent agreement. The following table reflects the result of operations of the Company’s reportable segments: Hosted Services Mobile Services Lifeline ETC Lifeline VETC Total For the three-month period ended March 31, 2020 Revenue $ 978,675 $ 500,251 $ 326,341 $ 152,088 $ 1,957,355 Net Income $ 63,092 $ (42,254 ) $ 30,065 $ 49,930 $ 100,833 Depreciation and amortization $ 10,584 $ 17,217 $ 10,739 $ 31,760 $ 270,300 Additions to property and equipment $ — $ — $ — $ — $ — For the three-month period ended March 31, 2019 Revenue $ 715,664 $ 726,188 $ 169,471 $ 1,028,973 $ 2,640,296 Net Loss $ 24,178 $ (31,010 ) $ (135,192 ) $ (107,414 ) $ (297,794 ) Depreciation and amortization $ 68,066 $ 69,067 $ 16,118 $ 97,865 $ 251,116 Additions to property and equipment $ — $ — $ — $ — $ —

Stockholders' Equity

Stockholders' Equity	3 Months Ended
	Mar. 31, 2020
Equity [Abstract]
Stockholders' Equity	NOTE 9 – STOCKHOLDERS’ EQUITY Common Stock The Company has not issued any common stock through March 31, 2020, nor for the year ended December 31, 2019. Stock Compensation The Company offers stock option equity awards to directors and key employees. Options vested in tranches and expire in five (5) years. During the three months ended March 31, 2020, and 2019, the Company recorded vested options expense of $10,257 and $141,356, respectively. The option expense not taken as of March 31, 2020, is $954,900, with a weighted average term of 2.9 years. The following table represents stock option activity as of and for the three months ended March 31, 2020: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Aggregate Intrinsic Value Options Outstanding – December 31, 2019 3,800,000 $ 0.21 3.0 $ — Granted — — — — Exercised — — — — Forfeited — — — — Options Outstanding – March 31, 2020 3,800,000 $ 0.21 3.0 $ — Exercisable and Vested, March 31, 2020 3,400,000 $ 0.21 2.9 $ —

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2020
Subsequent Events [Abstract]
Subsequent Events	NOTE 10 – SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date of this filing, and with the exception of the following, no material subsequent events have occurred: Euler Hermes/Sky Phone Settlement Between March and July 2019, IM Telecom purchased wireless handsets from Sky Phone, LLC in the amount of $192,293.34. Subsequently, a dispute arose between the parties regarding the amount of the debt, a lack of sufficient transaction documentation and problems with some of the handsets. On or about December, 2019, the debt was transferred to Euler Hermes North America Insurance Company. On April 22, 2020, the parties entered into an agreement to settle the matter whereby IM Telecom agreed to pay $80,000 in monthly payments of $4,000 over twenty (20) months. The first payment was made on April 28, 2020. SBA Paycheck Protection Program On April 14, 2020, the operating companies of KonaTel made loan applications to participate in the Small Business Administration’s (the “SBA”) Paycheck Protection Program created as a result of the COVID-19 pandemic. On April 15, 2020, the loan applications of Apeiron Systems, IM Telecom and KonaTel Nevada were approved and loan proceeds in the amounts of $101,800, $20,900 and $186,300, respectively, were received. The Company intends to follow all prescribed loan forgiveness guidelines provided by our local bank and the SBA by using these loan proceeds to fund employee payrolls through the 56-day period ending on June 10, 2020.

Accounting Policies (Policies)

Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation Interim Financial Statements The accompanying unaudited condensed interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2019. The accompanying financial statements have been prepared using the accrual basis of accounting. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include the allowance for doubtful receivables, allowance for inventory obsolescence, the estimated useful lives of property and equipment, and customer lists. Actual results could differ from those estimates.
Basis of Consolidation	Basis of Consolidation The condensed consolidated financial statements include the Company and three (3) wholly-owned corporate subsidiaries, KonaTel Nevada, Apeiron Systems and IM Telecom. The condensed consolidated balance sheet for year ended December 31, 2019, includes the Company and the wholly-owned corporate subsidiaries, KonaTel Nevada Apeiron Systems and IM Telecom. The condensed consolidated statements of operations, cash flows, and stockholders’ equity (deficit) for the three-month period ended March 31, 2019, include the Company and the three (3) wholly owned subsidiaries, KonaTel Nevada, Apeiron Systems and IM Telecom (February and March). All significant intercompany transactions are eliminated.
Net Income/(Loss) Per Share	Net Income/(Loss) Per Share Basic loss per common share calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted loss per common share calculations are determined by dividing net loss by the weighted average number of common shares and dilutive common share equivalents outstanding. As of March 31, 2020, and March 31, 2019, there are 3,400,000 potentially dilutive common shares. The dilutive common shares are not included in the computation of diluted earnings per share, because to do so would be anti-dilutive. Basic loss per common share calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted loss per common share calculations are determined by dividing net loss by the weighted average number of common shares and dilutive common share equivalents outstanding.
Concentration of Credit Risk	Concentrations of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of receivables, cash, and cash equivalents. All cash and cash equivalents and restricted cash and cash equivalents are held at high credit financial institutions. These deposits are generally insured under the FDIC’s deposit insurance coverage; however, from time to time, the deposit levels may exceed FDIC coverage levels. The Company has a concentration of risk with respect to trade receivables from customers and cellular providers. As of March 31, 2020, the Company had a significant concentration of receivables (defined as customers whose receivable balances are greater than 10% of total receivables) due from one (1) customer in the amount of $53,649, or 15.8%, of accounts receivables. As of December 31, 2019, the Company had a significant concentration of receivables (defined as customers whose receivable balances are greater than 10% of total receivables) due from three (3) customers in the amounts of $89,078, or 24.4%, $77,662, or 21.3% and $48,475, or 13.3%, respectively.
Concentration of Major Customer	Concentration of Major Customer A significant amount of the revenue is derived from contracts with major customers and cellular providers. For the three months ended March 31, 2020, the Company had one (1) wholesale customer that accounted for $555,826, or 28.4%, of revenue. For the three months ended March 31, 2019, the Company had one (1) cellular partner that accounted for $728,649 in contractually obligated commission payments or 27.6% of revenue.
Effect of Recent Accounting Pronouncements	Effect of Recent Accounting Pronouncements The Company has evaluated all other recent accounting pronouncements and believes that none will have a significant effect on the Company’s financial statement.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	Three Months Ended March 31, 2020 2019 Net income (loss) $ 100,833 $ (297,793 ) Weighted average shares outstanding during period on which basic earnings per share is calculated 40,692,286 40,692,286 Effect of dilutive shares Incremental shares under stock-based compensation 3,400,000 2,375,000 Weighted average shares outstanding during period on which diluted earnings per share is calculated 44,092,286 43,067,286 Earnings per share attributable to common stockholders Basic earnings (loss) per share $ 0.00 $ (0.01 ) Diluted earnings (loss) per share $ 0.00 $ (0.01 )

Transactions (Tables)

Transactions (Tables)	3 Months Ended
	Mar. 31, 2020
Business Combinations [Abstract]
Schedule of Transactions of Recognized Assets Acquired and Liabilities Assumed	Cash $ 14,318 Accounts Receivable 123,959 Prepaid Expenses and Deposits 2,400 Furniture and Equipment at Fair Value 1,309 License 634,252 Accounts Payable (24,271 ) Note Payable (168,277 ) Net Assets Acquired $ 583,690
Schedule of Pro-Forma Financial Information	For the Three Months Ended March 31, 2020 For the Three Months Ended March 31, 2019 Net Sales $ 1,957,355 $ 2,706,577 Net Profit (Loss) $ 100,833 $ (262,939 ) Net profit (loss) per share, basic and diluted $ 0.00 $ (0.01 )

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2020
Property, Plant and Equipment [Abstract]
Schedule of Property and Equipment	March 31, 2020 December 31, 2019 Leasehold Improvements $ 46,950 $ 46,950 Furniture and Fixtures 102,946 102,946 Billing Software 217,163 217,163 Office Equipment 90,055 86,887 457,114 453,946 Less: Accumulated Depreciation and Amortization (358,473 ) (351,257 ) Property and equipment, net $ 98,641 $ 102,689

Right-To-Use Assets (Tables)

Right-To-Use Assets (Tables)	3 Months Ended
	Mar. 31, 2020
Leases [Abstract]
Supplemental Balance Sheet Information Related to Operating Leases	March 31, 2020 December 31, 2019 Right-of-Use Assets $ 261,476 $ 151,472 Less: Accumulated Depreciation (119,328 ) (72,888 ) Right-of-Use, net $ 142,148 $ 78,584
Schedule of Future Minimum Lease Payments for Operating Leases	2020 $ 90,987 2021 $ 70,613 2022 $ 20,467 Total $ 182,067 Less Current Maturities $ 108,645 Long Term Maturities $ 73,422

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Intangible Assets and Goodwill	March 31, 2020 December 31, 2019 Customer Lists $ 1,135,961 $ 1,135,961 Software 2,407,001 2,407,001 License 634,252 634,252 Less: Accumulated Amortization (2,138,878 ) (1,938,296 ) Intangible Assets, net $ 2,038,336 $ 2,238,918
Schedule of Intangible Assets Future Amortization Expense	2020 $ 601,751 2021 $ 802,332

Segment Reporting (Tables)

Segment Reporting (Tables)	3 Months Ended
	Mar. 31, 2020
Segment Reporting [Abstract]
Schedule of Segment Reporting Information	Hosted Services Mobile Services Lifeline ETC Lifeline VETC Total For the three-month period ended March 31, 2020 Revenue $ 978,675 $ 500,251 $ 326,341 $ 152,088 $ 1,957,355 Net Income $ 63,092 $ (42,254 ) $ 30,065 $ 49,930 $ 100,833 Depreciation and amortization $ 10,584 $ 17,217 $ 10,739 $ 31,760 $ 270,300 Additions to property and equipment $ — $ — $ — $ — $ — For the three-month period ended March 31, 2019 Revenue $ 715,664 $ 726,188 $ 169,471 $ 1,028,973 $ 2,640,296 Net Loss $ 24,178 $ (31,010 ) $ (135,192 ) $ (107,414 ) $ (297,794 ) Depreciation and amortization $ 68,066 $ 69,067 $ 16,118 $ 97,865 $ 251,116 Additions to property and equipment $ — $ — $ — $ — $ —

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	3 Months Ended
	Mar. 31, 2020
Equity [Abstract]
Schedule of Share-Based Compensation , Stock Options, Activity	Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Aggregate Intrinsic Value Options Outstanding – December 31, 2019 3,800,000 $ 0.21 3.0 $ — Granted — — — — Exercised — — — — Forfeited — — — — Options Outstanding – March 31, 2020 3,800,000 $ 0.21 3.0 $ — Exercisable and Vested, March 31, 2020 3,400,000 $ 0.21 2.9 $ —

Summary of Significant Accoun_3

Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Accounting Policies [Abstract]
Net Income (Loss)	$ 100,833	$ (297,793)
Weighted average shares outstanding during period on which basic earnings per share is calculated	40,692,286	40,692,286
Effect of dilutive shares
Incremental shares under stock-based compensation	3,400,000	2,375,000
Weighted average shares outstanding during period on which diluted earnings per share is calculated	44,092,286	43,067,286
Earnings per share attributable to common stockholders
Basic earnings (loss) per share	$ 0	$ (0.01)
Diluted earnings (loss) per share	$ 0	$ (0.01)

Summary of Significant Accoun_4

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Earnings Per Share
Potentially dilutive common shares	3,400,000	3,400,000
Concentration Risk
Revenue	$ 1,957,355	$ 2,640,296
Trade Accounts Receivable | Customer #3
Concentration Risk
Concentration risk, percentage			13.30%
Receivable concentration			$ 48,475
Trade Accounts Receivable | Customer #2
Concentration Risk
Concentration risk, percentage			21.30%
Receivable concentration			$ 77,662
Trade Accounts Receivable | Customer #1
Concentration Risk
Concentration risk, percentage	15.80%		24.40%
Receivable concentration	$ 53,649		$ 89,078
Revenue | Cellular Partner
Concentration Risk
Concentration risk, percentage		27.60%
Revenue		$ 728,649
Revenue | Customer #1
Concentration Risk
Concentration risk, percentage	28.40%
Revenue	$ 555,826

Transactions - Schedule of Tran

Transactions - Schedule of Transactions of Recognized Assets Acquired and Liabilities Assumed (Details) - IM Telecom, LLC	Dec. 31, 2019USD ($)
Cash	$ 14,318
Accounts Receivable	123,959
Prepaid Expense	2,400
Furniture and Equipment at Fair Value	1,309
License	634,252
Accounts Payable	(24,271)
Note Payable	(168,277)
Net Assets Acquired	$ 583,690

Transactions - Schedule of Pro-

Transactions - Schedule of Pro-Forma Financial Transactions (Details) - IM Telecom, LLC and Apeiron Systems, Inc. - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Net Sales	$ 1,957,355	$ 2,706,577
Net Profit (Loss)	$ 100,833	$ (262,939)
Net profit (loss) per share, basic and diluted	$ 0	$ (0.01)

Transactions (Details Narrative

Transactions (Details Narrative) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Incentive stock options granted
Options, exercise price
Options cancelled
IM Telecom, LLC
Acquisition purchase price		$ 617,920
Ownership interest acquired		100.00%
Consulting fees		$ 100
Incentive stock options granted		500,000
Options, exercise price		$ 0.20
Options cancelled		500,000
Settlement agreement and release, description		The incentive stock option to purchase 500,000 shares was cancelled under a Settlement Agreement and Release between the Company and Mr. Morrow dated September 4, 2019, by reason of the indemnifying obligations of Mr. Morrow under the PSMI, as amended, by reason of an overpayment made to IM Telecom of $168,677.
Accounts Receivable		$ 123,959
Accounts payable and accrued expenses assumed		(24,271)
License		634,252
Cash		14,318
Prepaid Expense		2,400
Furniture and Equipment at Fair Value		$ 1,309

Property and Equipment - Schedu

Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 457,114	$ 453,946
Less: Accumulated Depreciation and Amortization	(358,473)	(351,257)
Property, plant and equipment, net	98,641	102,689
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment	46,950	46,950
Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Property, plant and equipment	102,946	102,946
Billing Software
Property, Plant and Equipment [Line Items]
Property, plant and equipment	217,163	217,163
Office Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 90,055	$ 86,887

Property and Equipment (Details

Property and Equipment (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 7,215	$ 7,216

Right-To-Use Assets - Supplemen

Right-To-Use Assets - Supplemental Balance Sheet Information Related to Operating Leases (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Right-to-Use Assets	$ 261,476	$ 151,472
Less: Accumulated Depreciation	(119,328)	(72,888)
Right to Use Assets, Net	$ 142,148	$ 78,584

Right-To-Use Assets (Details Na

Right-To-Use Assets (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Depreciation	$ 62,502	$ 18,140
Lease expense	$ 3,468	$ 21,028
Minimum
Implied interest rate used to record assets at present value	5.29%
Maximum
Implied interest rate used to record assets at present value	5.34%

Intangible Assets - Schedule of

Intangible Assets - Schedule of Intangible Assets and Goodwill (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Customer Lists	$ 1,135,961	$ 1,135,961
Software	2,407,001	2,407,001
License	634,252	634,252
Less: Accumulated Amortization	(2,138,878)	(1,938,296)
Intangible assets, net	$ 2,038,336	$ 2,238,918

Intangible Assets - Schedule _2

Intangible Assets - Schedule of Intangible Assets Future Amortization Expense (Details)	Mar. 31, 2020USD ($)
Intangible Assets Future Amortization Expense
2020	$ 601,751
2021	$ 802,332

Intangible Assets (Details Narr

Intangible Assets (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 200,583	$ 225,760
Fair market value of acquired license	$ 634,252

Amount Due to Stockholder (Deta

Amount Due to Stockholder (Details Narrative) - USD ($)		3 Months Ended	12 Months Ended
		Mar. 31, 2019	Dec. 31, 2019	Mar. 31, 2020
Proceeds from related parties		$ 200,000
Amount due to related party			$ 151,357	$ 102,313
Joshua Ploude, Ceo of Apeiron
Proceeds from related parties			$ 200,000
Interest rate	[1]		10.00%
Amount due to related party				$ 102,313
[1]	The interest rate will increase to 12% per annum after May 1, 2019.

Contingencies and Commitments (

Contingencies and Commitments (Details Narrative) - USD ($)		3 Months Ended	12 Months Ended
		Mar. 31, 2020	Dec. 31, 2019
Positive Outcome of Litigation
Litigation settlement, arbitration award	[1]		$ 362,871
Name of plaintiff			Saul Glosser
Dispute resolution type, description			Arbitration
Proceeds received from litigation settlement		$ 300,000
Standby Letters of Credit
Letter of credit		$ 60,000	$ 60,000
[1]	$357,914 plus arbitrator compensation of $4,957.

Segment Reporting - Schedule of

Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Segment Reporting Information [Line Items]
Revenue	$ 1,957,355	$ 2,640,296
Net Loss	100,833	(297,793)
Depreciation and amortization	270,300	251,116
Additions to property and equipment
Hosted Services
Segment Reporting Information [Line Items]
Revenue	978,675	715,664
Net Loss	63,092	(24,178)
Depreciation and amortization	210,584	68,066
Additions to property and equipment
Mobile Services
Segment Reporting Information [Line Items]
Revenue	500,251	726,188
Net Loss	(42,254)	(31,010)
Depreciation and amortization	17,217	69,067
Additions to property and equipment
Lifeline ETC
Segment Reporting Information [Line Items]
Revenue	326,341	169,471
Net Loss	30,065	(135,192)
Depreciation and amortization	10,739	16,118
Additions to property and equipment
Lifeline VETC
Segment Reporting Information [Line Items]
Revenue	152,088	1,028,973
Net Loss	49,930	(107,414)
Depreciation and amortization	31,760	97,865
Additions to property and equipment

Segment Reporting (Details Narr

Segment Reporting (Details Narrative)	3 Months Ended
	Mar. 31, 2020Integer
Segment Reporting [Abstract]
Number of reportable segments	4

Stockholders' Equity - Schedule

Stockholders' Equity - Schedule of Share-Based Compensation , Stock Options, Activity (Details)	3 Months Ended
	Mar. 31, 2020USD ($)$ / sharesshares
Share-Based Compensation Arrangement By Share-Based Payment Award Options Outstanding
Options outstanding, beginning of period | shares	3,800,000
Granted | shares
Exercised | shares
Forfeited | shares
Options outstanding, end of period | shares	3,800,000
Options exercisable and vested, end of period | shares	3,400,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price
Weighted average exercise price outstanding, beginning of period | $ / shares	$ 0.21
Weighted average exercise price, granted | $ / shares
Weighted average exercise price, exercised | $ / shares
Weighted average exercise priced, forfeited | $ / shares
Weighted average exercise price outstanding, end of period | $ / shares	0.21
Weighted average exercise price, exercisable and vested, end of period | $ / shares	$ 0.21
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures
Weighted average remaining contractual life outstanding, beginning of period	3 years
Weighted average remaining contractual life outstanding, end of period	3 years
Weighted average remaining contractual life, exercisable and vested, end of period	2 years 10 months
Average intrinsic value outstanding, beginning of period | $
Average intrinsic value outstanding, end of period | $
Average intrinsic value, exercisable and vested, end of period | $

Stockholders' Equity (Details N

Stockholders' Equity (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Equity [Abstract]
Stock-based compensation expense, vested options	$ 10,257	$ 141,356
Deferred compensation expense	$ 954,900
Weighted average term, compensation expense	3 years
Options vesting period	5 years	5 years

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - Subsequent Event - USD ($)		Apr. 22, 2020	Apr. 15, 2020
SBA's Paycheck Protection Program/Apeiron Systems
Subsequent Event [Line Items]
Proceeds received from SBA's Paycheck Protection Program			$ 101,800
SBA's Paycheck Protection Program/IM Telecom
Subsequent Event [Line Items]
Proceeds received from SBA's Paycheck Protection Program			20,900
SBA's Paycheck Protection Program/KonaTel Nevada
Subsequent Event [Line Items]
Proceeds received from SBA's Paycheck Protection Program			$ 186,300
Euler Hermes/Sky Phone Settlement
Subsequent Event [Line Items]
Settlement agreement, description		Between March and July 2019 IM Telecom, LLC purchased wireless handsets from Sky Phone, LLC in the amount of $192,293.34. Subsequently, a dispute arose between the parties regarding the amount of the debt, a lack of sufficient transaction documentation and problems with some of the handsets. On or about December 2019 the debt was transferred to Euler Hermes North America Insurance Company.
Obligation for purchases, agreed settlement	[1]	$ 80,000
[1]	IM Telecom agreed to pay in monthly payments of $4,000 over twenty months.