KonaTel (KTEL) 10-Q 24 May 21 2021 Q1 Quarterly report Financial data

Cover

Cover	3 Months Ended
	Mar. 31, 2021shares
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2021
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2021
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	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	40,692,286

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Current Assets
Cash and Cash Equivalents	$ 569,336	$ 715,195
Accounts Receivable, net	487,753	434,801
Inventory, Net	16,999	17,786
Prepaid Expenses	1,802	2,365
Other Current Asset	164	194
Total Current Assets	1,076,054	1,170,341
Property and Equipment, Net	66,602	79,571
Other Assets
Intangible Assets, Net	1,473,001	1,517,163
Other Assets	172,296	172,065
Total Other Assets	1,645,297	1,689,228
Total Assets	2,787,953	2,939,140
Current Liabilities
Accounts Payable and Accrued Expenses	980,260	1,042,567
Note Payable, current portion	62,743	94,339
Right of Use Operating Lease Obligation, current	98,501	66,323
Deferred Revenue		37,677
Total Current Liabilities	1,141,504	1,240,906
Long Term Liabilities
Right of Use Operating Lease Obligations, long term	164,992	15,399
Note Payable, long term	150,000	150,000
Total Long Term Liabilities	314,992	165,399
Total Liabilities	1,456,496	1,406,305
Commitments and contingencies
Stockholders' Equity
Common Stock	40,692	40,692
Additional Paid-In Capital	7,491,976	7,460,632
Accumulated Deficit	(6,201,211)	(5,968,489)
Total Stockholders' Equity	1,331,457	1,532,835
Total Liabilities and Stockholders' Equity	$ 2,787,953	$ 2,939,140

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
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, 2021	Mar. 31, 2020
Income Statement [Abstract]
Revenue	$ 2,392,838	$ 1,957,355
Cost of Revenue	1,481,677	1,192,177
Gross Profit	911,161	765,178
Operating expenses
Payroll and Related Expenses	549,199	448,149
Operating and Maintenance	290,322	193,852
Utilities and Facilities	48,366	20,945
Depreciation and Amortization	213,554	258,222
General and administrative	20,442	14,243
Marketing and Advertising	11,086	944
Taxes and Insurance	8,672	18,814
Total Operating Expenses	1,141,641	955,169
Operating Loss	(230,480)	(189,991)
Other Income and Expense
Other Income		301,373
Interest Expense	(2,242)	(10,549)
Total Other Income and Expenses	(2,242)	290,824
Net Income (Loss)	$ (232,722)	$ 100,833
Net Income (Loss) per Share
Basic	$ (0.01)
Diluted	$ (0.01)
Weighted Average Number of Shares
Basic	40,692,286	40,692,286
Diluted	40,692,286	44,092,286

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, 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 Income/(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
Beginning Balance at Dec. 31, 2020	$ 40,692	7,460,632	(5,968,489)	1,532,835
Beginning Balance, shares at Dec. 31, 2020	40,692,286
Stock Based Compensation		31,344		31,344
Net Income/(Loss)			(232,722)	(232,722)
Ending Balance at Mar. 31, 2021	$ 40,692	$ 7,491,976	$ (6,201,211)	$ 1,331,457
Ending Balance, shares at Mar. 31, 2021	40,692,286

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash Flows from Operating Activities
Net Income (Loss)	$ (232,722)	$ 100,833
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and Amortization	213,554	258,222
Bad Debt	43	1,500
Stock-based compensation	31,344	10,257
Change in Right of Use Asset	(156,422)	(85,415)
Change in Lease Liability	181,771	85,256
Changes in Operating Assets and Liabilities
Accounts Receivable	(52,996)	36,461
Inventory	786	(301)
Prepaid Expenses	563	132
Accounts Payable and Accrued Expenses	(62,581)	(2,012)
Deferred Revenue	(37,677)	(14,980)
Customer Deposits		(30,543)
Other Assets	(201)	35,675
Net cash provided by (used in) operating activities	(114,538)	395,085
Cash Flows from Investing Activities
Purchase of Assets		(3,168)
Net cash used in investing activities		(3,168)
Cash Flows from Financing Activities
Repayment of Revolving Lines of Credit		(26,089)
Repayments of amounts due to Related Party and Seller		(49,044)
Repayments of amounts of Notes Payable	(31,321)	(24,977)
Dividends Paid to Apeiron shareholders		(256,012)
Net cash provided by (used in) financing activities	(31,321)	(356,122)
Net Change in Cash	(145,859)	35,795
Cash, Beginning of Year	715,195	191,474
Cash, End of Period	569,336	227,269
Supplemental disclosure of cash flow information:
Cash paid for interest	1,974	7,201
Cash paid for taxes
Non-cash investing and financing activities:
Right of use assets obtained in exchange for new operating lease liabilities	$ 199,245	$ 129,108

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2021
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 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, 2020. 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, stock-based compensation, and customer lists. Actual results could differ from those estimates. Basis of Consolidation The condensed consolidated financial statements include the Company and three wholly-owned corporate subsidiaries, KonaTel Nevada, Apeiron Systems and IM Telecom. All significant intercompany transactions are eliminated. Net Income/(Loss) Per Share Basic income/(loss) per common share calculations are determined by dividing net income/(loss) by the weighted average number of shares of common stock outstanding during the period. Diluted income/(loss) per common share calculations are determined by dividing net income/(loss) by the weighted average number of common shares and dilutive common share equivalents outstanding. Dilutive common share equivalents are computed by using the “Treasury Stock Method,” which computes the number of new shares that may potentially be created by unexercised options. Diluted common share equivalents are stock based compensation options. The dilutive common shares for the quarter ended March 31, 2021, 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, 2021 2020 Net income (loss) $ (232,722 ) $ 100,833 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 Weighted average shares outstanding during period on which diluted earnings per share is calculated 40,692,286 44,092,286 Earnings per share attributable to common stockholders Basic earnings (loss) per share $ (0.01 ) $ 0.00 Diluted earnings (loss) per share $ (0.01 ) $ 0.00 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 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 other cellular providers. As of March 31, 2021, the Company had a significant concentration of receivables (defined as customers whose receivable balances are greater than 10% of total receivables) due from two (2) customers in the amounts of $107,918 and $198,884, or 22.13% and 40.78% of total accounts receivable, respectively. As of December 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 two (2) customers in the amounts of $194,509, or 52.4%, and $52,843, or 14.2%, 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, 2021, the Company had one (1) customer that accounted for $830,134 or 34.7% of revenue. For the three-month period ended March 31, 2020, the Company had one (1) customer that accounted for $555,826, or 28.4%, of revenue. Effect of Recent Accounting Pronouncements The Company has evaluated all recent accounting pronouncements and believes that none will have a significant effect on the Company’s financial statements.

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2021
Property, Plant and Equipment [Abstract]
Property and Equipment	NOTE 2 – PROPERTY AND EQUIPMENT Property and equipment consist of the following major classifications as of March 31, 2021, and December 31, 2020: March 31, 2021 December 31, 2020 Leasehold Improvements $ 46,950 $ 46,950 Furniture and Fixtures 102,946 102,946 Billing Software 217,163 217,163 Office Equipment 94,552 94,552 461,611 461,611 Less: Accumulated Depreciation and Amortization (395,009 ) (382,040 ) Property and equipment, net $ 66,602 $ 79,571 Depreciation and amortization related to Property and Equipment amounted to $12,969 and $7,216 for the three-month periods ended March 31, 2021, and 2020, respectively. Depreciation and amortization expense are included as a component of operating expenses in the accompanying statements of operations.

Right-Of-Use Assets

Right-Of-Use Assets	3 Months Ended
	Mar. 31, 2021
Leases [Abstract]
Right-Of-Use Assets	NOTE 3 – 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 3.29% and 5.34%. The Company has Right-of-Use Assets through leases of property under three (3) non-cancelable leases. As of March 31, 2021, the Company had two (2) properties with lease terms in excess of one (1) year. These lease liabilities expire May 15, 2022 and March 31, 2026, respectively. The current lease liability expires December 1, 2021. In January 2021, the Company entered into a new, five (5) year lease for its corporate headquarters located in Plano, TX. Future lease liability payments under the terms of these leases are as follows: 2021 $ 83,810 2022 $ 58,547 2023 $ 45,578 2024 $ 46,596 2025 $ 47,615 2026 $ 11,968 Total $ 294,114 Less Interest $ 30,621 Present value of minimum lease payments $ 263,493 Current Maturities $ 98,501 Long Term Maturities $ 164,992 The Company also leases three (3) office/retail spaces on a month-to-month basis. Total lease expense for the three months ended March 31, 2021, and 2020, amounted to $10,653 and $20,619, respectively, for these leases.

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	NOTE 4 – INTANGIBLE ASSETS Intangible Assets with definite useful life consist of licenses, customer lists and software that were acquired through acquisitions. Intangible Assets with indefinite useful life consist of a Lifeline License granted by the FCC. The Lifeline 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 Lifeline License was acquired through an acquisition. The fair market value of the License as of March 31, 2021, was $634,252. March 31, 2021 December 31, 2020 Customer Lists $ 1,135,962 $ 1,135,962 Software 2,407,001 2,407,001 ETC License 634,251 634,251 Less: Amortization (2,941,214 ) (2,740,629 ) Net Amortizable Intangibles 1,236,000 1,436,585 Right of Use Assets – net 237,001 80,578 Intangible Assets net $ 1,473,001 $ 1,517,163 Amortization expense amounted to $200,583 for the three months ended March 31, 2021, and 2020, 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: 2021 $ 802,333 2022 $ 433,669

Notes Payble

Notes Payble	3 Months Ended
	Mar. 31, 2021
Debt Disclosure [Abstract]
Notes Payble	NOTE 5 – NOTES PAYABLE In June 2020, the Company received a Small Business Administration (“SBA”) Emergency Injury Disaster Loan (“EIDL”) in the amount of $150,000. The maturity date of the 30-year note is June 2050. Interest will accrue at a rate of 3.75% per annum. Payments will begin in June 2021. The Company also received three (3) separate SBA Payroll Protection Loans in the amounts of $186,300, $101,800 and $20,900, for a total of $309,000. Each loan includes an interest rate of 1% and a maturity date of April 14, 2022. On March 8, 2021, the Company was informed that the payroll protection loans in the amounts of $101,800 and $20,900 had been forgiven by the SBA. An application of forgiveness for the loan in the amount of $186,300 was submitted to the SBA on April 21, 2021. All loan proceeds have been recorded as forgiven and have been recorded as Other Income in 2020. In conjunction with the Notes Payable, the Company received $10,000 in an SBA Emergency Injury Disaster Grant. This amount was recorded as Other Income. On September 30, 2020, IM Telecom entered into a promissory note agreement to repay a Federal Universal Service Fund overpayment in the amount of $67,105. The term of the note is twelve (12) months and interest will accrue at a rate of 12.75% per annum. As of March 31, 2021, the balance of this note was $37,340. The Company anticipates that this note will be paid in full by August 31, 2021.

Contingencies and Commitments

Contingencies and Commitments	3 Months Ended
	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Contingencies and Commitments	NOTE 6 – 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, 2021, there are no ongoing legal proceedings. 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 had no outstanding letters of credit as of March 31, 2021.

Segment Reporting

Segment Reporting	3 Months Ended
	Mar. 31, 2021
Segment Reporting [Abstract]
Segment Reporting	NOTE 7 – SEGMENT REPORTING The Company operates within two (2) reportable segments. The Company’s management evaluates performance and allocates resources based on the profit or loss from operations. Because the Company is a recurring revenue 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. Previously, the Company had reported four (4) segments of Hosted Services, Mobile Services, Lifeline ETC and Lifeline VETC. The Company has made the decision to consolidate and align its segment reporting by the type of service offering and believes that this reporting will provide for a more accurate view of its lines of operation. The reportable segments consist of Hosted Services and Mobile Services. Mobile Services reporting will now consist of our post-paid and pre-paid cellular business. Hosted Services Mobile Services The following table reflects the result of operations of the Company’s reportable segments: Hosted Services Mobile Services Total For the three-month period ended March 31, 2021 Revenue $ 1,225,866 $ 1,166,972 $ 2,392,838 Gross Margin $ 455,936 $ 455,225 $ 911,161 Depreciation and amortization $ 216,160 $ 15,576 $ 231,736 Additions to property and equipment $ — $ — $ — Gross Margin % 37.2 % 39.0 % 38.1 % For the three-month period ended March 31, 2020 Revenue $ 929,437 $ 1,027,918 $ 1,957,355 Gross Margin $ 347,051 $ 418,127 $ 765,178 Depreciation and amortization $ 235,442 $ 34,858 $ 270,300 Additions to property and equipment $ — $ — $ — Gross Margin % 37.3 % 40.7 % 39.1 %

Stockholders' Equity

Stockholders' Equity	3 Months Ended
	Mar. 31, 2021
Equity [Abstract]
Stockholders' Equity	NOTE 8 – STOCKHOLDERS’ EQUITY Common Stock The Company has not issued any common stock through March 31, 2021, nor for the year ended December 31, 2020. Stock Compensation The Company offers stock option equity awards to directors and key employees. Options vest in tranches and expire in five (5) years. For the three months ended March 31, 2021, and 2020, the Company recorded vested options expense of $31,344 and $10,257, respectively. The option expense not taken as of March 31, 2021, is $21,087, with a weighted average term of 2.2 years. The following table represents stock option activity as of and for the three months ended March 31, 2021: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Aggregate Intrinsic Value Options Outstanding – December 31, 2020 3,800,000 $ .21 3.6 $ — Granted 50,000 .42 4.9 — Exercised — — — — Forfeited 175,000 — — — Options Outstanding – March 31, 2021 3,675,000 $ 0.21 4.0 $ — Exercisable and Vested, March 31, 2021 3,475,000 $ 0.21 2.2 $ —

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2021
Subsequent Events [Abstract]
Subsequent Events	NOTE 9 – SUBSEQUENT EVENTS Below are events that have occurred since March 31, 2021: SBA Payroll Protection Program In April, 2021, the Company made application to the SBA to forgive the PPP loan made to the Company in the amount of $186,300 and is awaiting a determination. Small Business Administration (“SBA”) Emergency Injury Disaster Loan (“EIDL”) Expansion As a result of an SBA announcement that EIDL loan maximums had been extended, in April 2021, the Company requested an increase in the loan amount originally received in June, 2020, of $150,000, to a total of $500,000, or additional loan proceeds of $350,000. To date, the Company has not received a loan increase decision from the SBA. Emergency Broadband Benefit Program (“EBB”) On December 27, 2020, the Consolidated Appropriations Act, 2021 (the “Act”), became law and established an Emergency Broadband Connectivity Fund of $3.2 billion in the United States Treasury to help low-income Americans afford Internet service during the COVID-19 pandemic. The Act directed the FCC to use the fund to establish an EBB under which eligible low-income households may receive a discount off the cost of broadband service and certain connected devices, and participating providers will receive a reimbursement for such discounts. On April 6, 2021, IM Telecom, d/b/a Infiniti Mobile, made application to participate in the EBB program. We anticipate that for the length of this program, reimbursement revenues of IM Telecom will increase by approximately 70% over current month over month revenues. The FCC has announced that the EBB will launch on May 12, 2021. Incentive Stock Option Grants The Company granted two (2) quarterly director 25,000 share Incentive Stock Options, one to Jeffrey Pearl on April 28, 2021, at an exercise price of $0.597, fully vested; and one to Robert Beaty on May 12, 2021, at an exercise price of $0.66, fully vested. The exercise prices were based upon 110% of the fair market value or closing public trading price of the Company’s common stock on these respective dates. The Company also granted an aggregate of 135,000 Incentive Stock Options to three (3) employees on May 17, 2021, at an exercise price of $0.73 per shares, which was the fair market value or closing public trading price of the Company’s common stock on May 17, 2021. These grants respectively vest one-third for each year of service, commencing on May 17, 2022.

Accounting Policies (Policies)

Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2021
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, 2020. 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, stock-based compensation, 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 wholly-owned corporate subsidiaries, KonaTel Nevada, Apeiron Systems and IM Telecom. All significant intercompany transactions are eliminated.
Net Income/(Loss) Per Share	Net Income/(Loss) Per Share Basic income/(loss) per common share calculations are determined by dividing net income/(loss) by the weighted average number of shares of common stock outstanding during the period. Diluted income/(loss) per common share calculations are determined by dividing net income/(loss) by the weighted average number of common shares and dilutive common share equivalents outstanding. Dilutive common share equivalents are computed by using the “Treasury Stock Method,” which computes the number of new shares that may potentially be created by unexercised options. Diluted common share equivalents are stock based compensation options. The dilutive common shares for the quarter ended March 31, 2021, are not included in the computation of diluted earnings per share, because to do so would be anti-dilutive.
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 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 other cellular providers. As of March 31, 2021, the Company had a significant concentration of receivables (defined as customers whose receivable balances are greater than 10% of total receivables) due from two (2) customers in the amounts of $107,918 and $198,884, or 22.13% and 40.78% of total accounts receivable, respectively. As of December 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 two (2) customers in the amounts of $194,509, or 52.4%, and $52,843, or 14.2%, respectively.
Concentration of Major Customer	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, 2021, the Company had one (1) customer that accounted for $830,134 or 34.7% of revenue. For the three-month period ended March 31, 2020, the Company had one (1) customer that accounted for $555,826, or 28.4%, of revenue.
Effect of Recent Accounting Pronouncements	Effect of Recent Accounting Pronouncements The Company has evaluated all recent accounting pronouncements and believes that none will have a significant effect on the Company’s financial statements.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2021
Accounting Policies [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	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, 2021 2020 Net income (loss) $ (232,722 ) $ 100,833 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 Weighted average shares outstanding during period on which diluted earnings per share is calculated 40,692,286 44,092,286 Earnings per share attributable to common stockholders Basic earnings (loss) per share $ (0.01 ) $ 0.00 Diluted earnings (loss) per share $ (0.01 ) $ 0.00

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2021
Property, Plant and Equipment [Abstract]
Schedule of Property and Equipment	Property and equipment consist of the following major classifications as of March 31, 2021, and December 31, 2020: March 31, 2021 December 31, 2020 Leasehold Improvements $ 46,950 $ 46,950 Furniture and Fixtures 102,946 102,946 Billing Software 217,163 217,163 Office Equipment 94,552 94,552 461,611 461,611 Less: Accumulated Depreciation and Amortization (395,009 ) (382,040 ) Property and equipment, net $ 66,602 $ 79,571

Right-Of-Use Assets (Tables)

Right-Of-Use Assets (Tables)	3 Months Ended
	Mar. 31, 2021
Leases [Abstract]
Schedule of Future Minimum Lease Payments for Operating Leases	Future lease liability payments under the terms of these leases are as follows: 2021 $ 83,810 2022 $ 58,547 2023 $ 45,578 2024 $ 46,596 2025 $ 47,615 2026 $ 11,968 Total $ 294,114 Less Interest $ 30,621 Present value of minimum lease payments $ 263,493 Current Maturities $ 98,501 Long Term Maturities $ 164,992

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Acquired Finite-Lived Intangible Assets	March 31, 2021 December 31, 2020 Customer Lists $ 1,135,962 $ 1,135,962 Software 2,407,001 2,407,001 ETC License 634,251 634,251 Less: Amortization (2,941,214 ) (2,740,629 ) Net Amortizable Intangibles 1,236,000 1,436,585 Right of Use Assets – net 237,001 80,578 Intangible Assets net $ 1,473,001 $ 1,517,163
Schedule of Intangible Assets Future Amortization Expense	Amortization expense is expected to be as follows: 2021 $ 802,333 2022 $ 433,669

Segment Reporting (Tables)

Segment Reporting (Tables)	3 Months Ended
	Mar. 31, 2021
Segment Reporting [Abstract]
Schedule of Segment Reporting Information	The following table reflects the result of operations of the Company’s reportable segments: Hosted Services Mobile Services Total For the three-month period ended March 31, 2021 Revenue $ 1,225,866 $ 1,166,972 $ 2,392,838 Gross Margin $ 455,936 $ 455,225 $ 911,161 Depreciation and amortization $ 216,160 $ 15,576 $ 231,736 Additions to property and equipment $ — $ — $ — Gross Margin % 37.2 % 39.0 % 38.1 % For the three-month period ended March 31, 2020 Revenue $ 929,437 $ 1,027,918 $ 1,957,355 Gross Margin $ 347,051 $ 418,127 $ 765,178 Depreciation and amortization $ 235,442 $ 34,858 $ 270,300 Additions to property and equipment $ — $ — $ — Gross Margin % 37.3 % 40.7 % 39.1 %

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	3 Months Ended
	Mar. 31, 2021
Equity [Abstract]
Schedule of Share-Based Compensation , Stock Options Activity	The following table represents stock option activity as of and for the three months ended March 31, 2021: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Aggregate Intrinsic Value Options Outstanding – December 31, 2020 3,800,000 $ .21 3.6 $ — Granted 50,000 .42 4.9 — Exercised — — — — Forfeited 175,000 — — — Options Outstanding – March 31, 2021 3,675,000 $ 0.21 4.0 $ — Exercisable and Vested, March 31, 2021 3,475,000 $ 0.21 2.2 $ —

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, 2021	Mar. 31, 2020
Accounting Policies [Abstract]
Net Income (Loss)	$ (232,722)	$ 100,833
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
Weighted average shares outstanding during period on which diluted earnings per share is calculated	40,692,286	44,092,286
Earnings per share attributable to common stockholders
Basic earnings (loss) per share	$ (0.01)
Diluted earnings (loss) per share	$ (0.01)

Summary of Significant Accoun_4

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Revenue	$ 2,392,838	$ 1,957,355
Trade Accounts Receivable | Customer #1
Concentration risk, percentage	22.13%		52.40%
Receivable concentration	$ 107,918		$ 194,509
Trade Accounts Receivable | Customer #2
Concentration risk, percentage	40.78%		14.20%
Receivable concentration	$ 198,884		$ 52,843
Sales Revenue | Customer #1
Concentration risk, percentage	34.70%	28.40%
Revenue	$ 830,134	$ 555,826

Property and Equipment - Schedu

Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 461,611	$ 461,611
Less: Accumulated Depreciation and Amortization	(395,009)	(382,040)
Property, plant and equipment, net	66,602	79,571
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	$ 94,552	$ 94,552

Property and Equipment (Details

Property and Equipment (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Depreciation and amortization expense	$ 213,554	$ 258,222
Property and Equipment
Depreciation and amortization expense	$ 12,969	$ 7,216

Right-Of-Use Assets - Schedule

Right-Of-Use Assets - Schedule of Future Minimum Lease Payments for Operating Leases (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Future minimum lease payments, 2021	$ 83,810
Future minimum lease payments, 2022	58,547
Future minimum lease payments, 2023	45,578
Future minimum lease payments, 2024	46,596
Future minimum lease payments, 2025	47,615
Future minimum lease payments, 2026	11,968
Total	294,114
Less Interest	30,621
Present value of minimum lease payments	263,493
Current Maturities	98,501	$ 66,323
Long Term Maturities	$ 164,992	$ 15,399

Right-Of-Use Assets (Details Na

Right-Of-Use Assets (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Lease terms and expirations, description	The Company had two (2) properties with lease terms in excess of one (1) year. These lease liabilities expire May 15, 2022 and March 31, 2026, respectively. The current lease liability expires December 1, 2021. In January 2021, the Company entered into a new, five (5) year lease for its corporate headquarters located in Plano, TX. The Company also leases three (3) office/retail spaces on a month-to-month basis.
Lease expense	$ 10,653	$ 20,619
Minimum
Implied interest rate used to record assets at present value	3.29%
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, 2021	Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Customer Lists	$ 1,135,962	$ 1,135,962
Software	2,407,001	2,407,001
ETC License	634,251	634,251
Less: Amortization	(2,941,214)	(2,740,629)
Net Amortizable Intangibles	1,236,000	1,436,585
Right of Use Assets, net	237,001	80,578
Intangible assets, net	$ 1,473,001	$ 1,517,163

Intangible Assets - Schedule _2

Intangible Assets - Schedule of Intangible Assets Future Amortization Expense (Details)	Mar. 31, 2021USD ($)
Intangible Assets Future Amortization Expense
2021	$ 802,333
2022	$ 433,669

Intangible Assets (Details Narr

Intangible Assets (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of intangible assets	$ 200,583	$ 200,583
Fair market value of acquired license	$ 634,252

Notes Payble (Details Narrative

Notes Payble (Details Narrative) - USD ($)		12 Months Ended
		Dec. 31, 2020	Mar. 31, 2021
Promissory Note Repayment Agreement
Interest rate		12.75%
Maturity date		Sep. 30, 2021
Promissory note repayment agreement		$ 67,105	$ 37,340
SBA Payroll Protection Loans
Proceeds received from SBA Loans	[1]	$ 309,000
Interest rate		1.00%
Maturity date		Apr. 14, 2022
Amount recorded as loan forgiveness on SBA Covid Loans		$ (309,000)
SBA Emergency Injury Disaster Loan (EIDL)
Proceeds received from SBA Loans		$ 150,000
Interest rate		3.75%
Maturity date		Jun. 30, 2050
Other income		$ 10,000
[1]	Three separate SBA Payroll Protection Loans in the amounts of $186,300, $101,800, and $20,900

Segment Reporting - Schedule of

Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenue	$ 2,392,838	$ 1,957,355
Gross Margin	911,161	765,178
Depreciation and amortization	231,736	270,300
Additions to property and equipment
Gross Margin %	38.10%	39.10%
Hosted Services
Revenue	$ 1,225,866	$ 929,437
Gross Margin	455,936	347,051
Depreciation and amortization	216,160	235,442
Additions to property and equipment
Gross Margin %	37.20%	37.30%
Mobile Services
Revenue	$ 1,166,972	$ 1,027,918
Gross Margin	455,225	418,127
Depreciation and amortization	15,576	34,858
Additions to property and equipment
Gross Margin %	39.00%	40.70%

Segment Reporting (Details Narr

Segment Reporting (Details Narrative)	3 Months Ended
	Mar. 31, 2021Number
Segment Reporting [Abstract]
Number of reportable segments	2

Stockholders' Equity - Schedule

Stockholders' Equity - Schedule of Share-Based Compensation , Stock Options, Activity (Details)	3 Months Ended
	Mar. 31, 2021USD ($)$ / sharesshares
Share-Based Compensation Arrangement By Share-Based Payment Award Options Outstanding
Options outstanding, beginning of period | shares	3,800,000
Granted | shares	50,000
Exercised | shares
Forfeited | shares	175,000
Options outstanding, end of period | shares	3,675,000
Options exercisable and vested, end of period | shares	3,475,000
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	0.42
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 7 months
Weighted average remaining contractual life, granted	4 years 10 months
Weighted average remaining contractual life outstanding, end of period	4 years
Weighted average remaining contractual life, exercisable and vested, end of period	2 years 3 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, 2021	Mar. 31, 2020
Equity [Abstract]
Stock-based compensation expense, vested options	$ 31,344	$ 10,257
Deferred compensation expense	$ 21,087
Weighted average term, compensation expense	2 years 3 months
Options vesting period	5 years

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - $ / shares	May 12, 2021	May 17, 2021	Apr. 30, 2021	Apr. 28, 2021	Mar. 31, 2021
Subsequent Event [Line Items]
Options granted					50,000
Options exercise price					$ 0.42
Subsequent Event | Incentive Stock Options | Employees
Subsequent Event [Line Items]
Options granted		135,000
Options exercise price		$ 0.73
Options vesting period		These grants respectively vest one-third for each year of service, commencing on May 17, 2022.
Subsequent Event | Incentive Stock Options | Jeffrey Pearl / Director
Subsequent Event [Line Items]
Options granted				25,000
Options exercise price				$ 0.597
Subsequent Event | Incentive Stock Options | Robert Beaty / Director
Subsequent Event [Line Items]
Options granted	25,000
Options exercise price	$ 0.66
Subsequent Event | SBA EIDL Loan
Subsequent Event [Line Items]
SBA EIDL loan request			The Company requested an increase in the loan amount originally received in June, 2020, of $150,000, to a total of $500,000, or additional loan proceeds of $350,000. To date, the Company has not received a loan increase decision from the SBA.
Subsequent Event | SBA Payroll Protection Loans
Subsequent Event [Line Items]
Debt forgiveness request			The Company made application to the SBA to forgive the PPP loan made to the Company in the amount of $186,300 and is awaiting a determination.