Cover
Cover - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Jun. 30, 2021 | |
Cover [Abstract] | ||
Document Type | 10-K | |
Amendment Flag | false | |
Document Annual Report | true | |
Document Transition Report | false | |
Document Period End Date | Dec. 31, 2021 | |
Document Fiscal Period Focus | FY | |
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 Tax Identification Number | 80-0973608 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 500 N. Central Expressway | |
Entity Address, Address Line Two | Ste. 202 | |
Entity Address, City or Town | Plano | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75074 | |
City Area Code | 214 | |
Local Phone Number | 323-8410 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
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 Public Float | $ 14,735,983 | |
Entity Common Stock, Shares Outstanding | 41,615,406 | |
Auditor Name | Haynie & Company | |
Auditor Location | Salt Lake City, Utah | |
Auditor Firm ID | 457 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash and Cash Equivalents | $ 932,785 | $ 715,195 |
Accounts Receivable, net | 1,274,687 | 434,801 |
Inventory, Net | 566,839 | 17,786 |
Prepaid Expenses | 79,467 | 2,365 |
Other Current Asset | 164 | 194 |
Total Current Assets | 2,853,942 | 1,170,341 |
Property and Equipment, Net | 48,887 | 79,571 |
Other Assets | ||
Intangible Assets, Net | 807,775 | 1,517,163 |
Other Assets | 154,297 | 172,065 |
Investments | 10,000 | |
Total Other Assets | 972,072 | 1,689,228 |
Total Assets | 3,874,901 | 2,939,140 |
Current Liabilities | ||
Accounts Payable and Accrued Expenses | 930,449 | 1,042,567 |
Note Payable - current portion | 94,339 | |
Right of Use Operating Lease Obligation - current | 50,672 | 66,323 |
Deferred Revenue | 37,677 | |
Total Current Liabilities | 981,121 | 1,240,906 |
Long Term Liabilities | ||
Right of Use Operating Lease Obligation - long term | 136,445 | 15,399 |
Note Payable - long term | 150,000 | 150,000 |
Total Long Term Liabilities | 286,445 | 165,399 |
Total Liabilities | 1,267,566 | 1,406,305 |
Stockholders’ Equity | ||
Common stock, $.001 par value, 50,000,000 shares authorized, 41,615,406 outstanding and issued at December 31, 2021 and 40,692,286 outstanding and issued at December 31, 2020 | 41,615 | 40,692 |
Additional Paid In Capital | 7,911,224 | 7,460,632 |
Accumulated Deficit | (5,345,504) | (5,968,489) |
Total Stockholders’ Equity | 2,607,335 | 1,532,835 |
Total Liabilities and Stockholders’ Equity | $ 3,874,901 | $ 2,939,140 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 41,615,406 | 40,692,286 |
Common stock, shares outstanding | 41,615,406 | 40,692,286 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Revenue | $ 12,834,844 | $ 9,358,999 |
Cost of Revenue | 7,105,464 | 5,823,552 |
Gross Profit | 5,729,380 | 3,535,447 |
Operating Expenses | ||
Payroll and Related Expenses | 2,702,495 | 2,117,713 |
Professional and Other Expenses | 965,671 | 553,940 |
Bad Debt | 31,318 | 2,313 |
Utilities and Facilities | 146,254 | 129,396 |
Depreciation and Amortization | 833,016 | 848,865 |
General and Administrative | 157,344 | 117,570 |
Marketing and Advertising | 89,678 | 15,840 |
Taxes and Insurance | 165,257 | 109,829 |
Total Operating Expenses | 5,091,033 | 3,895,466 |
Operating Income/(Loss) | 638,347 | (360,019) |
Other Income and Expense | ||
Other Income | 625,591 | |
Interest Expense | (15,361) | (26,954) |
Other Expenses | ||
Total Other Income and Expenses | (15,361) | 598,637 |
Net Income | $ 622,986 | $ 238,618 |
Earnings per Share | ||
Basic | $ 0.02 | $ 0.01 |
Diluted | $ 0.01 | $ 0.01 |
Weighted Average Outstanding Shares | ||
Basic | 40,909,085 | 40,692,286 |
Diluted | 42,891,011 | 44,092,286 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning balance, value at Dec. 31, 2019 | $ 40,692 | $ 7,380,029 | $ (5,896,977) | $ 1,523,744 |
Common shares, outstanding at Dec. 31, 2019 | 40,692,286 | |||
Stock Based Compensation | 80,603 | 80,603 | ||
Dividends Paid to Apeiron Systems shareholders | (310,130) | (310,130) | ||
Net Income | 238,618 | 238,618 | ||
Ending balance, value at Dec. 31, 2020 | $ 40,692 | 7,460,632 | (5,968,489) | 1,532,835 |
Common shares, outstanding at Dec. 31, 2020 | 40,692,286 | |||
Stock Based Compensation | 341,515 | 341,515 | ||
Net Income | 622,986 | 622,986 | ||
Exercised Stock Options | $ 923 | 109,077 | $ 110,000 | |
Exercised stock options, shares | 923,120 | 923,120 | ||
Ending balance, value at Dec. 31, 2021 | $ 41,615 | $ 7,911,224 | $ (5,345,503) | $ 2,607,335 |
Common shares, outstanding at Dec. 31, 2021 | 41,615,406 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash Flows from Operating Activities: | ||
Net Income | $ 622,986 | $ 238,618 |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and Amortization | 833,016 | 838,003 |
Bad Debt | 31,318 | 2,313 |
Stock-based Compensation | 341,515 | 80,603 |
Change In Right of Use Assets | (92,947) | (1,994) |
Change in Lease Liability | 105,395 | (368) |
Amount recorded as loan forgiveness of SBA Covid-19 Loans | (319,000) | |
Changes in Operating Assets and Liabilities: | ||
Accounts Receivable | (871,204) | (59,629) |
Inventory | (549,053) | (13,127) |
Prepaid Expenses | (77,102) | (621) |
Accounts Payable and Accrued Expenses | (112,117) | (182,443) |
Deferred Revenue | (37,677) | (15,397) |
Customer Deposits | (31,087) | |
Other Assets | 17,800 | 35,675 |
Net cash provided by operating activities | 211,930 | 571,546 |
Cash Flows from Investing Activities | ||
Purchase of Assets | (10,000) | (10,833) |
Net cash (used in) investing activities | (10,000) | (10,833) |
Cash Flows from Financing Activities | ||
Repayment on Revolving Lines of Credit | (12,237) | |
Cash received from Stock Options Exercised | 110,000 | |
Proceeds from Federal SBA Covid-19 Loans | 468,900 | |
Repayments of amounts due to Related Party | (151,357) | |
Repayments of amounts of Notes Payable | (94,339) | (112,168) |
Proceeds from Notes Payable | 80,000 | |
Dividends Paid to Apeiron shareholders | (310,130) | |
Net cash provided by (used in) financing activities | 15,661 | (36,992) |
Net Change in Cash | 217,591 | 523,721 |
Cash - Beginning of Year | 715,195 | 191,474 |
Cash - End of Period | 932,785 | 715,195 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for interest | 6,796 | 21,591 |
Cash paid for taxes | ||
Non-cash investing and financing activities: | ||
Right of use assets obtained in exchange for new operating lease liabilities | $ 199,245 | $ 28,576 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 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. (“KonaTel,” 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. At the closing of this merger, our IRS Federal EIN number was changed from 80-0000245 through customary processing, and EIN number 80-0973608 was assigned to us by the IRS on March 5, 2019. 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 (“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, an Oklahoma limited liability company, d/b/a Infiniti Mobile, (“IM Telecom” or “Infiniti Mobile”), which became our wholly owned subsidiary. Infiniti Mobile is an FCC licensed ETC (“Eligible Telecommunications Carrier”) and is one of nineteen (19) 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 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 consolidated financial statements for the year ended December 31, 2021, include the Company and its three (3) wholly owned corporate subsidiaries, KonaTel Nevada, Apeiron Systems, and Infiniti Mobile (January through December). The consolidated financial statements for the year ended December 31, 2020, include the Company and its three (3) wholly owned corporate subsidiaries, KonaTel Nevada, Apeiron Systems, and Infiniti Mobile (February through December). All significant intercompany transactions are eliminated. Cash and Cash Equivalents Cash and Cash Equivalents include cash on hand and all short-term investments with maturities of three months or less. Trade Accounts Receivable The Company accounts for trade receivables based on amounts billed to customers. Past due receivables are determined based on contractual terms. The Company does not accrue interest and does not require collateral on any of its trade receivables. Allowance for Doubtful Receivables The allowance for doubtful receivables is determined by management based on customer credit history, specific customer circumstances and general economic conditions. Periodically, management reviews our accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables against the allowance when all attempts to collect the receivable have failed. As of December 31, 2021, and 2020, management has determined that no allowance for doubtful receivables is necessary. Inventory Inventory consists primarily of the cost of cellular phones and cellular accessories. Inventory is reported at the lower of cost or net realizable value. Cost is determined by the first-in, first-out (“FIFO”) method. As of December 31, 2021, total inventory owned by the company was $ 566,839 Due to the rapidly changing technology within the industry, inventory is evaluated on a regular basis to determine if any obsolescence exists. As of December 31, 2021, and 2020, the allowance for inventory obsolescence was $ 0 Property and Equipment Property and equipment are recorded at cost and are depreciated on the straight-line method over their estimated useful lives. Leasehold improvements are amortized over the lesser of the lease term or estimated useful life, furniture and fixtures, equipment, and vehicles are depreciated over periods ranging from five to seven (5-7) years, and billing software is depreciated over three (3) years which represents the estimated useful life of the assets. Maintenance and repairs are charged to expense as incurred while major replacements and improvements are capitalized. When property and equipment are retired or sold, the cost and applicable accumulated depreciation are removed from the respective accounts and the related gain or loss is recognized. The Company recognizes impairment losses for long-lived assets whenever changes in circumstances result in the carrying amount of the assets exceeding the sum of the expected future cash flows associated with such assets. Management has concluded that no impairment reserves are required as of December 31, 2021, and 2020. Intangible Assets – Long-Lived Assets The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Other Intangibles The Company accounts for other intangibles in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During 2019, the Company, through the acquisition of IM Telecom, recorded, at fair market value, an FCC License in the amount of $ 634,251 Other Assets Other Assets represent items classified as long-term assets in accordance with the Statement of Financial Accounting Standards ASC 210-10-45. Other Assets include vendor deposits and security deposits that the Company is required to maintain. Customer Deposits Before entering into a contract with a sub-reseller customer, the Company requires the customer to either secure a formal letter of credit with a bank or require a certain level of cash collateral deposits from the customer. These collateral requirements are determined by management and may be adjusted upward or downward depending on the volume of business with the sub-reseller customer, or if management’s assessment of credit risk for a sub-reseller customer would change. The Company held $0 in collateral deposits from various sub-reseller customers at December 31, 2021, and 2020, respectively. Such amounts represent collateral received from the sub-resellers in order to contract with the Company. The related contracts have an option to terminate within a period of less than one (1) year, and accordingly, these collateral deposits are classified as current liabilities in the accompanying balance sheet. Fair Market Value of Assets The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses, deposits received from customers for receivables and short-term loans the carrying amounts approximate fair value due to their short maturities. Long-term assets purchased through acquisitions are valued at the Fair Market Value of the asset at the time of acquisition. The Fair Market Value is based on observable inputs of assets in active market- places for fixed assets, and estimations and assumptions developed by us for Other Intangibles. The Company follows accounting guidance for financial and non-financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices, which are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. Leases In February 2016, the FASB updated the accounting guidance related to leases. The most significant change in the updated accounting guidance requires lessees to recognize lease assets and liabilities on the balance sheet for all operating leases with the exception of short-term leases. The standard also expands the disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. For a lessee, the recognition, measurement and presentation of expenses and cash flows arising from a lease did not significantly change from previous guidance. See NOTE 4. Upon adoption, we recorded $ 151,471 187,117 81,723 Revenue Recognition Services revenues are generated from cellular and telecommunication services. The revenue is derived from wholesale and retail services. Telecommunications and mobile telecommunication services include network platforms, voice, data, and text services. The Company recognizes revenue as telecommunications and mobile services are provided in service revenue. Telecommunications and mobile services are billed and paid on a monthly basis. Services are billed and paid on a monthly basis. These bills include an amount for the monthly recurring charge and a usage charge. We earn revenue from contracts with customers, primarily through the provision of telecommunications and other services. We account for these revenues under Accounting Standards Codification (ASC) 606, “Revenue from Contracts with Customers.” This standard update, along with related subsequently issued updates, clarifies the principles for recognizing revenue and develops a common revenue standard U.S. GAAP. The standard update also amends current guidance for the recognition of costs to obtain and fulfill contracts with customers such that incremental costs of obtaining and direct costs of fulfilling contracts with customers will be deferred and amortized consistent with the transfer of the related good or service. The adoption of this guidance did not have a material impact on the consolidated financial statements. Deferred Revenue Services for cellular and telecommunication services have a monthly recurring charge that is billed in advance. This charge covers a thirty (30) or thirty-one (31)-day period. This charge is deferred for the period in which it was received and recorded as revenue at the conclusion of this period. Costs, mainly from outside providers, associated with the deferred revenue are recognized in the same period as revenue is recognized. Cost of Revenue Cost of Revenue includes the cost of communication services, equipment and accessories, shipping costs, and commissions of sub-agents. Advertising Costs for advertising products and services, as well as other promotional and sponsorship costs, are charged to Selling, general and administrative expense in the periods in which they are incurred. Advertising expense was $ 89,678 15,840 Professional and Other Expenses Previously for 2020, the Company presented certain professional fees and other expenses under the category of “Operating and Maintenance.” These expenses are now being presented under the category of “Professional and Other Expenses” as this change better represents the types of expenses that were incurred during 2021 and 2020, respectively. Stock-based Compensation The Company records stock-based compensation in accordance with the guidance in ASC 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This requires that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award. The Company accounts for equity instruments issued in exchange for the receipt of goods or services from nonemployees in accordance with ASC 718-10 and the conclusions reached by the ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services. Income Taxes Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the consolidated financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rate are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. The benefits of uncertain tax positions are recorded in the Company’s Consolidated Financial Statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. The Company records interest and penalties related to unrecognized tax benefits in interest expense in the Company’s Consolidated Statements of Operations. Net Income / Loss Per Share Basic net 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 net 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. As of December 31, 2021, there are 1,981,926 The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income/loss per common share: Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted Years Ended December 31, 2021 2020 Numerator Net Income/Loss $ 622,986 $ 238,618 Denominator Weighted-average common shares outstanding 40,909,085 40,692,286 Dilutive impact of stock options 1,981,926 3,400,000 Weighted-average common shares outstanding, diluted 42,891,011 44,092,286 Net income per common share Basic $ 0.02 $ 0.01 Diluted $ 0.01 $ 0.01 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 December 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 $ 783,431 63.9 194,647 15.9 194,509 52.4 52,843 14.2 Concentration of Major Customer A significant amount of the revenue is derived from contracts with major customers. For the year ended December 31, 2021, the Company had two (2) customers that accounted for $ 5,494,625 42.8 3,617,833 28.2 3,337,262 35.7 1,472,962 15.7 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. |
SIGNIFICANT TRANSACTIONS
SIGNIFICANT TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
Significant Transactions | |
SIGNIFICANT TRANSACTIONS | NOTE 2 – SIGNIFICANT TRANSACTIONS Glosser Arbitration Settlement 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 $4,957 362,871 300,000 Apeiron Systems Working Capital Settlement On December 31, 2018, the Company and the shareholders of Apeiron Systems entered into an Agreement and Plan of Merger. Section 2.2 Estimated Net Working Capital and Section 2.3 Final Settlement of that agreement provided for a method to calculate and reconcile any surplus or deficit in net working capital amounts as of December 31, 2018. On November 22, 2019, the Company, Apeiron Systems and the Apeiron Systems’ shareholders reached an agreement on the final surplus net working capital amount of $ 310,130 279,117 31,013 On February 14, 2020, the Company, on behalf of Apeiron Systems, made a partial payment of $ 5,000 26,013 225,000 54,117 Euler Hermes/Sky Phone Settlement Between March and July of 2019, IM Telecom purchased wireless handsets from Sky Phone, LLC in the amount of $ 192,293 80,000 monthly payments of $4,000 over twenty (20) months SBA Paycheck Protection Program On April 14, 2020 the operating companies of the Company made loan applications to participate in the Small Business Administration’s (SBA”) Paycheck Protection Program (“PPP”) created as a result of the COVID-19 pandemic. On April 15, 2020, the PPP loan applications of Apeiron Systems, IM Telecom and KonaTel Nevada were approved and loan proceeds in the amounts of $ 101,800 20,900 186,300 EIDL Loan In 2020, the Company was granted a $ 150,000 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3 – PROPERTY AND EQUIPMENT Property and equipment consist of the following major classifications as of December 31, 2021, and 2020: Property and Equipment - Schedule of Property and Equipment December 31, 2021 2020 Leasehold Improvements Leasehold Improvements $ 46,950 $ 46,950 Furniture and Fixtures Furniture and Fixtures 102,946 102,946 Billing Software 217,163 217,163 Office Equipment Office Equipment 94,552 94,552 461,611 461,611 Less: Accumulated Depreciation (412,724 ) (382,040 ) Property and equipment, net $ 48,887 $ 79,571 Depreciation expense amounted to $ 30,683 30,783 |
RIGHT-OF-USE ASSETS
RIGHT-OF-USE ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
Right-of-use Assets | |
RIGHT-OF-USE ASSETS | NOTE 4 – RIGHT-OF-USE ASSETS Minimum Maximum 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 5.34 173,524 80,578 The Company has right-of-use assets through leases of properties under non-cancelable leases. As of December 31, 2021, the Company had one (1) property with lease terms in excess of (1) year. This lease liability expires December 31, 2026. Lease payables as of December 31, 2020, are $ 81,722 2022 $ 58,547 2023 $ 45,578 2024 $ 46,596 2025 $ 47,615 2026 $ 11,967 Total $ 210,304 Less Interest $ 23,186 Present value of minimum lease payments $ 187,117 Less Current Maturities $ 50,672 Long Term Maturities $ 136,445 The weighted average term of the right-to-use leases is 15.4 3.53 The Company also leases two (2) office spaces on a month-to-month basis. Total rent expense for the year ended December 31, 2021, and 2020, amounted to $ 123,843 109,960 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 5 – INTANGIBLE ASSETS Intangible Assets with definite useful life consist of licenses, customer lists and software that were acquired through acquisitions: December 31, 2021 2020 Customer List $ 1,135,962 $ 1,135,962 Software 2,407,001 2,407,001 ETC License 634,251 634,251 Less: Amortization (3,542,963 ) (2,740,629 ) Net Amortizable Intangibles 634,251 1,436,585 Right of Use Assets - net 173,524 80,578 Intangible Assets net $ 807,775 $ 1,517,163 Amortization expense amounted to $ 802,334 802,334 Intangible Assets with indefinite useful life consist of the Lifeline license granted by the FCC. The license, because of the nature of the asset and the limitation on the number of granted Lifeline licenses by the FCC, will not be amortized. The license was acquired through an acquisition. The fair market value of the license as of December 31, 2021, and December 31, 2020, was $ 634,251 |
LINES OF CREDIT
LINES OF CREDIT | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
LINES OF CREDIT | NOTE 6 – LINES OF CREDIT The Company previously had two (2) lines of credit with a bank, which provided aggregate maximum borrowing availability of $ 1,050,000 bore interest at a variable rate with rate ranges from 7.5% to 8.0%. |
AMOUNT DUE TO STOCKHOLDER
AMOUNT DUE TO STOCKHOLDER | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
AMOUNT DUE TO STOCKHOLDER | NOTE 7 – AMOUNT DUE TO STOCKHOLDER The Company received a $ 200,000 range rate between 10% and 12% |
CONTINGENCIES AND COMMITMENTS
CONTINGENCIES AND COMMITMENTS | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES AND COMMITMENTS | NOTE 8 – CONTINGENCIES AND COMMITMENTS Litigation From time to time, the Company may be subject to legal proceedings and claims that arise in the ordinary course of business. As of December 31, 2021, there are no such legal proceedings. Contract Contingencies 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. Pursuant to an Independent Contractor Agreement (the “ICA”) effective October 17, 2019, between the Company and Charles L. Schneider, Jr., in the event that Infiniti Mobile was granted its request for ETC status from the California Public Utilities Commission (“CPUC”) to distribute Lifeline cellular phone service within the State of California, Mr. Schneider was to be granted a one (1) year warrant, with a customary “cashless” exercise feature, to purchase 250,000 shares of the Company’s common stock at an exercise price to be determined on the date of any such approval. The ICA was for a term of one (1) year, and extendable by the parties yearly. This agreement expired prior to December 31, 2020. Regulatory Determination On May 17, 2019, IM Telecom was notified by USAC of an over-payment of Universal Service Fund reimbursements in the amount of $168,277. On July 25, 2019, the Company entered into a Letter of Acknowledgement with the FCC and requested a twenty-four (24)-month payment plan regarding the repayment of the over-payment amounts. While awaiting approval of this repayment plan, the Company continued to make monthly payments against the outstanding balance. On October 15, 2020, the Company received approval of the payment plan and signed a promissory note with USAC to repay the remainder of the unpaid balance in the amount of $67,105. The loan had a commencement date of November 13, 2020, a term of twelve (12) months, with an annual interest rate of 12.75%. The Company agreed to pay USAC $5,986 per month for twelve (12) months, and a $1,000 Administrative Fee due on October 15, 2020. The promissory note was paid in full in August of 2021. Letters of Credit The Company had no outstanding letters of credit as December 31, 2021. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | N OTE 9 – SEGMENT REPORTING The Company operates within two ( 2 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 plans. Sometimes equipment is provided, which can include, but is not limited to, phones, tablets, modems, routers and accessories. Also included in our Mobile Services segment is the distribution of cellular voice service and mobile data service by IM Telecom under its Infiniti Mobile brand to low-income American households that qualify for the FCC’s Lifeline voice service program and the FCC’s temporary EBB mobile data program, with EBB to eventually be replaced by FCC’s ACP in 2022. Even though government programs like Lifeline have existed since 1985, these programs, along with newer programs like the temporary EBB program and future ACP program, are subject to change and may have a material impact on our Mobile Services business if changed, reduced, or eliminated. The following table reflects the result of operations of the Company’s reportable segments: Segment Reporting - Schedule of Segment Reporting Information Hosted Services Mobile Services Total For the year ended December 31, 2021 Revenue $ 5,740,728 $ 7,094,116 $ 12,834,844 Gross Margin $ 2,013,459 $ 3,715,921 $ 5,729,380 Depreciation and amortization $ 805,469 $ 27,547 $ 833,016 Additions to property and equipment $ — $ — $ — Gross Margin % 35.1 % 52.4 % 44.6 % For the year ended December 31, 2020 Revenue $ 5,296,151 $ 4,062,847 $ 9,358,999 Gross Margin $ 1,927,060 $ 1,608,387 $ 3,535,447 Depreciation and amortization $ 820,794 $ 28,071 $ 848,865 Additions to property and equipment $ — $ — $ — Gross Margin % 36.4 % 39.6 % 37.8 % |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 10 – STOCKHOLDERS’ EQUITY Stock Compensation The Company offers incentive stock option equity awards to directors and key employees. Options vest in tranches and expire in five (5) years, subject to conditions of their grant. During the year ended December 31, 2021, and 2020, the Company recorded vested options expense of $ 341,515 80,603 1,306,337 2.25 In 2021, 1,635,000 Each independent Board member was granted 25,000 shares per quarter of service for 2020 and 2021 for a total of 200,000 shares each. The key employees were granted 1,435,000 share options as part of their employment agreements. During the year ended December 31, 2021, 923,210 shares were exercised. 250,000 of these options were exercised by one (1) former Board member who received his options at the time of the KonaTel Nevada merger in 2017 and who was not an independent director, and 250,000 of these options were exercised by an officer who also received his options at the time of the KonaTel Nevada merger; the remaining 423,120 options were exercised by a former key employee. During the year, 251,880 share options were forfeited. The forfeited options were 76,880 granted to a former key employee and 175,000 granted to former independent Board members. The Aggregate Intrinsic Value is based on the market value of the Company’s common stock of $1.75 on December 31, 2021. Basic net income (loss) per share of common stock attributable to common stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average shares of common stock outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income (loss) per share of common stock attributable to common stockholders when their effect is dilutive. The estimated grant date fair value of stock option grants was calculated using the Black-Scholes-Merton option-pricing model using the following assumptions: Stockholders’ Equity - Schedule of Fair Value of Stock Options Valuation Assumptions Weighted average 231.59 % 280.02 % Weighted average expected term (years) 2.25 2.2 Risk free interest rate 0.78 % .90 % Expected dividend yield — — The following table represents stock option activity as of and for the year ended December 31, 2021: Stockholders’ Equity - Schedule of Share-Based Compensation, Stock Option Activity Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Aggregate Intrinsic Value Options Outstanding: December 31, 2020 3,800,000 $ .21 3.60 $ 812,350 Granted 1,635,000 $ .75 4.65 Exercised (923,120 ) $ .21 Forfeited (251,880 ) Options Outstanding: December 31, 2021 4,260,000 $ .37 2.25 $ 5,862,938 Exercisable and Vested: December 31, 2021 1,981,926 $ .25 1.65 $ 2,970,907 The following table represents stock option activity as of and for the year ended December 31, 2020: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Aggregate Intrinsic Value Options Outstanding: December 31, 2019 3,800,000 $ .20 3.00 $ — Granted 400,000 $ .15 4.50 Exercised Forfeited (400,000 ) Options Outstanding: December 31, 2020 3,800,000 $ .21 3.60 $ 812,350 Exercisable and Vested: December 31, 2020 3,600,000 $ .22 2.40 $ 698,475 In 2020, 400,000 Each member was granted 25,000 shares per quarter of service for 2019 and 2020 for a total of 200,000 shares each. During the year 2020, 400,000 share options were forfeited. The forfeited options were 300,000 from a key employee and 100,000 from an independent Board member who had resigned and had not exercised his options prior to their expiration following resignation. The Aggregate Intrinsic Value is based on the market value of the Company’s common stock of $0.421 on December 31, 2020. ( This space intentionally left blank |
INCOME TAX
INCOME TAX | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | NOTE 11 – INCOME TAX For the years ending December 31, 2021, and 2020, there was no provision for income taxes and deferred tax assets have been entirely offset by valuation allowances. The components of the provision for income taxes for the years ended December 31, 2021, and 2020 consisted of the following: Income Tax - Schedule of Components of Income Tax Expense 2021 2020 Current Federal — — State — — Total Current Deferred Federal — — State — — Total Deferred Deferred tax assets: Net loss carryforward $ 318,892 $ 333,393 Depreciation $ 269,166 $ 204,362 Directors' fees $ 124,000 Stock option expense $ 819,341 $ 1,008,761 Total deferred tax assets $ 1,407,399 $ 1,670,516 Deferred tax liabilities: Amortization $ 153,499 $ 63,291 The reconciliation of taxes at the federal statutory rate to our provision for income taxes for the years ended December 31, 2021 and 2020 2021 2020 Tax at statutory federal rate $ 130,827 $ 50,110 Loss carryforward at statutory tax federal rate $ (130,827) $ (50,110) Provision for income tax — — ( This space intentionally left blank The tax effect of significant components of the Company’s deferred tax assets and liabilities at December 31, 2021, and 2020, respectively, are as follows: Income Tax - Schedule of Deferred Tax Assets and Liabilities December 31, 2021 2020 Deferred tax assets: Net operating loss carryforward $ 318,892 $ 333,393 Total gross deferred tax assets 318,892 333,393 Less: Deferred tax asset valuation allowance (318,892 ) (333,393 ) Total net deferred tax assets — — Deferred tax liabilities: Federal $ — $ — State - California — — Total net deferred taxes $ — $ — In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The total NOL as of December 31, 2021, is $ 1,518,534 Income Tax - Schedule of Operating Loss Carryforward Expiration NOL Amount 2037 $ 570,143 2038 $ 463,895 2039 $ 484,496 $ 1,518,534 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – 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: Changes of Officers and Directors Effective January 1, 2022, Charles D. Griffin was hired as President and Chief Operating Officer of the Company. Mr. Griffin will lead the Company’s sales and marketing divisions and all Company operations, subject to advice and consultation with the Chairman and CEO, D. Sean McEwen. Mr. McEwen and the Company executed a third amendment to his Employment Agreement, effective April 12, 2022. Effective February 4, 2022, Paul LaPier resigned his position as Vice President of Finance and Secretary of the Company. Mr. LaPier has agreed to continue to assist the Company as a consultant through December 31, 2022. Effective January 24, 2022, the Company elected Todd Murcer as Executive Vice President of Finance and Secretary to replace Mr. LaPier. Jason N. Welch was elected as the President of IM Telecom, effective February 14, 2022. The Company entered into Employment Agreements with Messrs. Murcer and Welch, effective January 24, 2022, and February 14, 2022, respectively, or the effective dates of their respective Employment Agreements. Effective February 28, 2022, Nicholas Metherd resigned as the COO of IM Telecom. Mr. Metherd has agreed to continue to assist the Company as a consultant through December 21, 2022 Increase in Common Stock reserved for Employee Stock Option Grants Effective February 10, 2022, the Board of Directors of the Company increased the shares reserved for issuance under its 2018 Incentive Stock Option Plan by an additional 2,000,000 Employee Stock Option Grants Mr. Murcer was granted 350,000 1.165 Jeffrey Pearl, an independent Board member, was granted 25,000 1.342 Robert Beaty, an independent Board member, was granted 25,000 1.138 Mr. Welch was granted 350,000 1.04 SBA EIDL Loan The Company received notice on March 16, 2022, of an additional six (6) month automatic repayment deferment on its $ 150,000 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation 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 consolidated financial statements for the year ended December 31, 2021, include the Company and its three (3) wholly owned corporate subsidiaries, KonaTel Nevada, Apeiron Systems, and Infiniti Mobile (January through December). The consolidated financial statements for the year ended December 31, 2020, include the Company and its three (3) wholly owned corporate subsidiaries, KonaTel Nevada, Apeiron Systems, and Infiniti Mobile (February through December). All significant intercompany transactions are eliminated. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and Cash Equivalents include cash on hand and all short-term investments with maturities of three months or less. |
Trade Accounts Receivable | Trade Accounts Receivable The Company accounts for trade receivables based on amounts billed to customers. Past due receivables are determined based on contractual terms. The Company does not accrue interest and does not require collateral on any of its trade receivables. |
Allowance for Doubtful Receivables | Allowance for Doubtful Receivables The allowance for doubtful receivables is determined by management based on customer credit history, specific customer circumstances and general economic conditions. Periodically, management reviews our accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables against the allowance when all attempts to collect the receivable have failed. As of December 31, 2021, and 2020, management has determined that no allowance for doubtful receivables is necessary. |
Inventory | Inventory Inventory consists primarily of the cost of cellular phones and cellular accessories. Inventory is reported at the lower of cost or net realizable value. Cost is determined by the first-in, first-out (“FIFO”) method. As of December 31, 2021, total inventory owned by the company was $ 566,839 Due to the rapidly changing technology within the industry, inventory is evaluated on a regular basis to determine if any obsolescence exists. As of December 31, 2021, and 2020, the allowance for inventory obsolescence was $ 0 |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and are depreciated on the straight-line method over their estimated useful lives. Leasehold improvements are amortized over the lesser of the lease term or estimated useful life, furniture and fixtures, equipment, and vehicles are depreciated over periods ranging from five to seven (5-7) years, and billing software is depreciated over three (3) years which represents the estimated useful life of the assets. Maintenance and repairs are charged to expense as incurred while major replacements and improvements are capitalized. When property and equipment are retired or sold, the cost and applicable accumulated depreciation are removed from the respective accounts and the related gain or loss is recognized. The Company recognizes impairment losses for long-lived assets whenever changes in circumstances result in the carrying amount of the assets exceeding the sum of the expected future cash flows associated with such assets. Management has concluded that no impairment reserves are required as of December 31, 2021, and 2020. |
Intangible Assets – Long-Lived Assets | Intangible Assets – Long-Lived Assets The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Other Intangibles The Company accounts for other intangibles in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During 2019, the Company, through the acquisition of IM Telecom, recorded, at fair market value, an FCC License in the amount of $ 634,251 Other Assets Other Assets represent items classified as long-term assets in accordance with the Statement of Financial Accounting Standards ASC 210-10-45. Other Assets include vendor deposits and security deposits that the Company is required to maintain. |
Customer Deposits | Customer Deposits Before entering into a contract with a sub-reseller customer, the Company requires the customer to either secure a formal letter of credit with a bank or require a certain level of cash collateral deposits from the customer. These collateral requirements are determined by management and may be adjusted upward or downward depending on the volume of business with the sub-reseller customer, or if management’s assessment of credit risk for a sub-reseller customer would change. The Company held $0 in collateral deposits from various sub-reseller customers at December 31, 2021, and 2020, respectively. Such amounts represent collateral received from the sub-resellers in order to contract with the Company. The related contracts have an option to terminate within a period of less than one (1) year, and accordingly, these collateral deposits are classified as current liabilities in the accompanying balance sheet. |
Fair Market Value of Assets | Fair Market Value of Assets The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses, deposits received from customers for receivables and short-term loans the carrying amounts approximate fair value due to their short maturities. Long-term assets purchased through acquisitions are valued at the Fair Market Value of the asset at the time of acquisition. The Fair Market Value is based on observable inputs of assets in active market- places for fixed assets, and estimations and assumptions developed by us for Other Intangibles. The Company follows accounting guidance for financial and non-financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices, which are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. |
Leases | Leases In February 2016, the FASB updated the accounting guidance related to leases. The most significant change in the updated accounting guidance requires lessees to recognize lease assets and liabilities on the balance sheet for all operating leases with the exception of short-term leases. The standard also expands the disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. For a lessee, the recognition, measurement and presentation of expenses and cash flows arising from a lease did not significantly change from previous guidance. See NOTE 4. Upon adoption, we recorded $ 151,471 187,117 81,723 |
Revenue Recognition | Revenue Recognition Services revenues are generated from cellular and telecommunication services. The revenue is derived from wholesale and retail services. Telecommunications and mobile telecommunication services include network platforms, voice, data, and text services. The Company recognizes revenue as telecommunications and mobile services are provided in service revenue. Telecommunications and mobile services are billed and paid on a monthly basis. Services are billed and paid on a monthly basis. These bills include an amount for the monthly recurring charge and a usage charge. We earn revenue from contracts with customers, primarily through the provision of telecommunications and other services. We account for these revenues under Accounting Standards Codification (ASC) 606, “Revenue from Contracts with Customers.” This standard update, along with related subsequently issued updates, clarifies the principles for recognizing revenue and develops a common revenue standard U.S. GAAP. The standard update also amends current guidance for the recognition of costs to obtain and fulfill contracts with customers such that incremental costs of obtaining and direct costs of fulfilling contracts with customers will be deferred and amortized consistent with the transfer of the related good or service. The adoption of this guidance did not have a material impact on the consolidated financial statements. |
Deferred Revenue | Deferred Revenue Services for cellular and telecommunication services have a monthly recurring charge that is billed in advance. This charge covers a thirty (30) or thirty-one (31)-day period. This charge is deferred for the period in which it was received and recorded as revenue at the conclusion of this period. Costs, mainly from outside providers, associated with the deferred revenue are recognized in the same period as revenue is recognized. |
Cost of Revenue | Cost of Revenue Cost of Revenue includes the cost of communication services, equipment and accessories, shipping costs, and commissions of sub-agents. |
Advertising | Advertising Costs for advertising products and services, as well as other promotional and sponsorship costs, are charged to Selling, general and administrative expense in the periods in which they are incurred. Advertising expense was $ 89,678 15,840 |
Professional and Other Expenses | Professional and Other Expenses Previously for 2020, the Company presented certain professional fees and other expenses under the category of “Operating and Maintenance.” These expenses are now being presented under the category of “Professional and Other Expenses” as this change better represents the types of expenses that were incurred during 2021 and 2020, respectively. |
Stock-based Compensation | Stock-based Compensation The Company records stock-based compensation in accordance with the guidance in ASC 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This requires that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award. The Company accounts for equity instruments issued in exchange for the receipt of goods or services from nonemployees in accordance with ASC 718-10 and the conclusions reached by the ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services. |
Income Taxes | Income Taxes Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the consolidated financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rate are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. The benefits of uncertain tax positions are recorded in the Company’s Consolidated Financial Statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. The Company records interest and penalties related to unrecognized tax benefits in interest expense in the Company’s Consolidated Statements of Operations. |
Net Income / Loss Per Share | Net Income / Loss Per Share Basic net 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 net 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. As of December 31, 2021, there are 1,981,926 The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income/loss per common share: Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted Years Ended December 31, 2021 2020 Numerator Net Income/Loss $ 622,986 $ 238,618 Denominator Weighted-average common shares outstanding 40,909,085 40,692,286 Dilutive impact of stock options 1,981,926 3,400,000 Weighted-average common shares outstanding, diluted 42,891,011 44,092,286 Net income per common share Basic $ 0.02 $ 0.01 Diluted $ 0.01 $ 0.01 |
Concentrations 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 December 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 $ 783,431 63.9 194,647 15.9 194,509 52.4 52,843 14.2 |
Concentration of Major Customer | Concentration of Major Customer A significant amount of the revenue is derived from contracts with major customers. For the year ended December 31, 2021, the Company had two (2) customers that accounted for $ 5,494,625 42.8 3,617,833 28.2 3,337,262 35.7 1,472,962 15.7 |
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_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted | The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income/loss per common share: Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted Years Ended December 31, 2021 2020 Numerator Net Income/Loss $ 622,986 $ 238,618 Denominator Weighted-average common shares outstanding 40,909,085 40,692,286 Dilutive impact of stock options 1,981,926 3,400,000 Weighted-average common shares outstanding, diluted 42,891,011 44,092,286 Net income per common share Basic $ 0.02 $ 0.01 Diluted $ 0.01 $ 0.01 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment - Schedule of Property and Equipment | Property and equipment consist of the following major classifications as of December 31, 2021, and 2020: Property and Equipment - Schedule of Property and Equipment December 31, 2021 2020 Leasehold Improvements Leasehold Improvements $ 46,950 $ 46,950 Furniture and Fixtures Furniture and Fixtures 102,946 102,946 Billing Software 217,163 217,163 Office Equipment Office Equipment 94,552 94,552 461,611 461,611 Less: Accumulated Depreciation (412,724 ) (382,040 ) Property and equipment, net $ 48,887 $ 79,571 |
RIGHT-OF-USE ASSETS (Tables)
RIGHT-OF-USE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Right-of-use Assets | |
Right-Of-Use Assets - Schedule of Future Minimum Lease Liability Payments | 2022 $ 58,547 2023 $ 45,578 2024 $ 46,596 2025 $ 47,615 2026 $ 11,967 Total $ 210,304 Less Interest $ 23,186 Present value of minimum lease payments $ 187,117 Less Current Maturities $ 50,672 Long Term Maturities $ 136,445 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets - Schedule of Acquired Finitie-Lived Intangible Assets | December 31, 2021 2020 Customer List $ 1,135,962 $ 1,135,962 Software 2,407,001 2,407,001 ETC License 634,251 634,251 Less: Amortization (3,542,963 ) (2,740,629 ) Net Amortizable Intangibles 634,251 1,436,585 Right of Use Assets - net 173,524 80,578 Intangible Assets net $ 807,775 $ 1,517,163 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Reporting [Abstract] | |
Segment Reporting - Schedule of Segment Reporting Information | The following table reflects the result of operations of the Company’s reportable segments: Segment Reporting - Schedule of Segment Reporting Information Hosted Services Mobile Services Total For the year ended December 31, 2021 Revenue $ 5,740,728 $ 7,094,116 $ 12,834,844 Gross Margin $ 2,013,459 $ 3,715,921 $ 5,729,380 Depreciation and amortization $ 805,469 $ 27,547 $ 833,016 Additions to property and equipment $ — $ — $ — Gross Margin % 35.1 % 52.4 % 44.6 % For the year ended December 31, 2020 Revenue $ 5,296,151 $ 4,062,847 $ 9,358,999 Gross Margin $ 1,927,060 $ 1,608,387 $ 3,535,447 Depreciation and amortization $ 820,794 $ 28,071 $ 848,865 Additions to property and equipment $ — $ — $ — Gross Margin % 36.4 % 39.6 % 37.8 % |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Stockholders’ Equity - Schedule of Fair Value of Stock Options Valuation Assumptions | The estimated grant date fair value of stock option grants was calculated using the Black-Scholes-Merton option-pricing model using the following assumptions: Stockholders’ Equity - Schedule of Fair Value of Stock Options Valuation Assumptions Weighted average 231.59 % 280.02 % Weighted average expected term (years) 2.25 2.2 Risk free interest rate 0.78 % .90 % Expected dividend yield — — |
Stockholders’ Equity - Schedule of Share-Based Compensation, Stock Option Activity | The following table represents stock option activity as of and for the year ended December 31, 2021: Stockholders’ Equity - Schedule of Share-Based Compensation, Stock Option Activity Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Aggregate Intrinsic Value Options Outstanding: December 31, 2020 3,800,000 $ .21 3.60 $ 812,350 Granted 1,635,000 $ .75 4.65 Exercised (923,120 ) $ .21 Forfeited (251,880 ) Options Outstanding: December 31, 2021 4,260,000 $ .37 2.25 $ 5,862,938 Exercisable and Vested: December 31, 2021 1,981,926 $ .25 1.65 $ 2,970,907 The following table represents stock option activity as of and for the year ended December 31, 2020: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Aggregate Intrinsic Value Options Outstanding: December 31, 2019 3,800,000 $ .20 3.00 $ — Granted 400,000 $ .15 4.50 Exercised Forfeited (400,000 ) Options Outstanding: December 31, 2020 3,800,000 $ .21 3.60 $ 812,350 Exercisable and Vested: December 31, 2020 3,600,000 $ .22 2.40 $ 698,475 |
INCOME TAX (Tables)
INCOME TAX (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Tax - Schedule of Components of Income Tax Expense | The components of the provision for income taxes for the years ended December 31, 2021, and 2020 consisted of the following: Income Tax - Schedule of Components of Income Tax Expense 2021 2020 Current Federal — — State — — Total Current Deferred Federal — — State — — Total Deferred Deferred tax assets: Net loss carryforward $ 318,892 $ 333,393 Depreciation $ 269,166 $ 204,362 Directors' fees $ 124,000 Stock option expense $ 819,341 $ 1,008,761 Total deferred tax assets $ 1,407,399 $ 1,670,516 Deferred tax liabilities: Amortization $ 153,499 $ 63,291 The reconciliation of taxes at the federal statutory rate to our provision for income taxes for the years ended December 31, 2021 and 2020 2021 2020 Tax at statutory federal rate $ 130,827 $ 50,110 Loss carryforward at statutory tax federal rate $ (130,827) $ (50,110) Provision for income tax — — |
Income Tax - Schedule of Deferred Tax Assets and Liabilities | The tax effect of significant components of the Company’s deferred tax assets and liabilities at December 31, 2021, and 2020, respectively, are as follows: Income Tax - Schedule of Deferred Tax Assets and Liabilities December 31, 2021 2020 Deferred tax assets: Net operating loss carryforward $ 318,892 $ 333,393 Total gross deferred tax assets 318,892 333,393 Less: Deferred tax asset valuation allowance (318,892 ) (333,393 ) Total net deferred tax assets — — Deferred tax liabilities: Federal $ — $ — State - California — — Total net deferred taxes $ — $ — |
Income Tax - Schedule of Operating Loss Carryforward | The total NOL as of December 31, 2021, is $ 1,518,534 Income Tax - Schedule of Operating Loss Carryforward Expiration NOL Amount 2037 $ 570,143 2038 $ 463,895 2039 $ 484,496 $ 1,518,534 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator | ||
Net Income/Loss | $ 622,986 | $ 238,618 |
Denominator | ||
Weighted-average common shares outstanding | 40,909,085 | 40,692,286 |
Dilutive impact of stock options | 1,981,926 | 3,400,000 |
Weighted-average common shares outstanding, diluted | 42,891,011 | 44,092,286 |
Net income per common share | ||
Basic | $ 0.02 | $ 0.01 |
Diluted | $ 0.01 | $ 0.01 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | ||
Inventory | $ 566,839 | $ 17,786 |
Allowance for inventory obsolescence | 0 | |
Fair value of FCC License | 634,251 | 634,251 |
Operating lease assets and liabilities | 151,471 | |
Operating lease assets | 187,117 | |
Operating lease, liabilities | 81,723 | |
Advertising expense | $ 89,678 | 15,840 |
Potentially dilutive shares | 1,981,926 | |
Revenues | $ 12,834,844 | 9,358,999 |
Trade Accounts Receivable [Member] | Customer #1 | ||
Product Information [Line Items] | ||
Concentration receivables | $ 783,431 | $ 194,509 |
Concentration risk | 63.90% | 52.40% |
Trade Accounts Receivable [Member] | Customer #2 | ||
Product Information [Line Items] | ||
Concentration receivables | $ 194,647 | $ 52,843 |
Concentration risk | 15.90% | 14.20% |
Revenue Benchmark [Member] | Customer #1 | ||
Product Information [Line Items] | ||
Concentration risk | 42.80% | 35.70% |
Revenues | $ 5,494,625 | $ 3,337,262 |
Revenue Benchmark [Member] | Customer #2 | ||
Product Information [Line Items] | ||
Concentration risk | 28.20% | 15.70% |
Revenues | $ 3,617,833 | $ 1,472,962 |
SIGNIFICANT TRANSACTIONS (Detai
SIGNIFICANT TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 5 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Apr. 30, 2020 | Mar. 31, 2020 | Feb. 29, 2020 | Nov. 30, 2019 | Aug. 31, 2019 | Jul. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Gain Contingencies [Line Items] | |||||||||
Payment towards surplus net working capital balance | $ 94,339 | $ 112,168 | |||||||
Proceeds from EIDL loan | $ 186,300 | 468,900 | |||||||
Economic Injury Disaster Loan | |||||||||
Gain Contingencies [Line Items] | |||||||||
Proceeds from EIDL loan | $ 150,000 | ||||||||
Apeiron Systems | |||||||||
Gain Contingencies [Line Items] | |||||||||
Payment for shareholders agreement for surplus net working capital | $ 310,130 | ||||||||
Proceeds from EIDL loan | 101,800 | ||||||||
Apeiron Systems | Joshua Ploude | |||||||||
Gain Contingencies [Line Items] | |||||||||
Payment for shareholders agreement for surplus net working capital | 279,117 | ||||||||
Payment towards surplus net working capital balance | $ 225,000 | $ 54,117 | |||||||
Apeiron Systems | Yvacheslav Yanson | |||||||||
Gain Contingencies [Line Items] | |||||||||
Payment for shareholders agreement for surplus net working capital | $ 31,013 | ||||||||
Payment towards surplus net working capital balance | $ 26,013 | $ 5,000 | |||||||
IM Telecom | |||||||||
Gain Contingencies [Line Items] | |||||||||
Payment for wireless handsets | $ 192,293 | ||||||||
Settlement agreement | $ 80,000 | ||||||||
Monthly payment agreement | monthly payments of $4,000 over twenty (20) months | ||||||||
Proceeds from EIDL loan | $ 20,900 | ||||||||
Positive Outcome of Litigation [Member] | |||||||||
Gain Contingencies [Line Items] | |||||||||
Settlement, description | 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 | ||||||||
Total award from litigation | $ 362,871 | ||||||||
Proceeds from legal settlements | $ 300,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 461,611 | $ 461,611 |
Less: Accumulated Depreciation | (412,724) | (382,040) |
Property and equipment, net | 48,887 | 79,571 |
Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 46,950 | 46,950 |
Furniture and Fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 102,946 | 102,946 |
Billing Software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 217,163 | 217,163 |
Office Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 94,552 | $ 94,552 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 833,016 | $ 848,865 |
Property and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 30,683 | $ 30,783 |
Right-Of-Use Assets - Schedule
Right-Of-Use Assets - Schedule of Future Minimum Lease Liability Payments (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Right-of-use Assets | ||
2022 | $ 58,547 | |
2023 | 45,578 | |
2024 | 46,596 | |
2025 | 47,615 | |
2026 | 11,967 | |
Total | 210,304 | $ 81,722 |
Less Interest | 23,186 | |
Present value of minimum lease payments | 187,117 | |
Less Current Maturities | 50,672 | 66,323 |
Long Term Maturities | $ 136,445 | $ 15,399 |
RIGHT-OF-USE ASSETS (Details Na
RIGHT-OF-USE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Right of use assets | $ 173,524 | $ 80,578 |
Lease liability | $ 210,304 | 81,722 |
Weighted average term (months) | 15 months 12 days | |
Weighted average discount rate | 3.53% | |
Rent expense | $ 123,843 | $ 109,960 |
Minimum | ||
Implied interest rate used | 3.29% | |
Maximum | ||
Implied interest rate used | 5.34% |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Acquired Finitie-Lived Intangible Assets (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Customer List | $ 1,135,962 | $ 1,135,962 |
Software | 2,407,001 | 2,407,001 |
ETC License | 634,251 | 634,251 |
Less: Amortization | (3,542,963) | (2,740,629) |
Net Amortizable Intangibles | 634,251 | 1,436,585 |
Right of Use Assets - net | 173,524 | 80,578 |
Intangible Assets net | $ 807,775 | $ 1,517,163 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 802,334 | $ 802,334 |
Fair market value of acquired license | $ 634,251 | $ 634,251 |
LINES OF CREDIT (Details Narrat
LINES OF CREDIT (Details Narrative) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Debt Disclosure [Abstract] | |
Line of credit, maximum borrowing | $ 1,050,000 |
Interest rate, description | bore interest at a variable rate with rate ranges from 7.5% to 8.0%. |
AMOUNT DUE TO STOCKHOLDER (Deta
AMOUNT DUE TO STOCKHOLDER (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Related Party Transaction [Line Items] | |
Interest rate, description | range rate between 10% and 12% |
CEO Apeiron Systems | |
Related Party Transaction [Line Items] | |
Proceeds from related party | $ 200,000 |
CONTINGENCIES AND COMMITMENTS (
CONTINGENCIES AND COMMITMENTS (Details Narrative) | 12 Months Ended |
Dec. 31, 2019 | |
USAC | |
Other Commitments [Line Items] | |
Over-payment of fund reimbursements, description | On May 17, 2019, IM Telecom was notified by USAC of an over-payment of Universal Service Fund reimbursements in the amount of $168,277. On July 25, 2019, the Company entered into a Letter of Acknowledgement with the FCC and requested a twenty-four (24)-month payment plan regarding the repayment of the over-payment amounts. While awaiting approval of this repayment plan, the Company continued to make monthly payments against the outstanding balance. On October 15, 2020, the Company received approval of the payment plan and signed a promissory note with USAC to repay the remainder of the unpaid balance in the amount of $67,105. The loan had a commencement date of November 13, 2020, a term of twelve (12) months, with an annual interest rate of 12.75%. The Company agreed to pay USAC $5,986 per month for twelve (12) months, and a $1,000 Administrative Fee due on October 15, 2020. The promissory note was paid in full in August of 2021. |
Independent Contractor Agreement | |
Other Commitments [Line Items] | |
Commitment, description | Pursuant to an Independent Contractor Agreement (the “ICA”) effective October 17, 2019, between the Company and Charles L. Schneider, Jr., in the event that Infiniti Mobile was granted its request for ETC status from the California Public Utilities Commission (“CPUC”) to distribute Lifeline cellular phone service within the State of California, Mr. Schneider was to be granted a one (1) year warrant, with a customary “cashless” exercise feature, to purchase 250,000 shares of the Company’s common stock at an exercise price to be determined on the date of any such approval. The ICA was for a term of one (1) year, and extendable by the parties yearly. This agreement expired prior to December 31, 2020. |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 12,834,844 | $ 9,358,999 |
Gross Margin | 5,729,380 | 3,535,447 |
Depreciation and amortization | 833,016 | 848,865 |
Additions to property and equipment | ||
Gross Margin % | 44.60% | 37.80% |
Hosted Services | ||
Segment Reporting Information [Line Items] | ||
Revenue | $ 5,740,728 | $ 5,296,151 |
Gross Margin | 2,013,459 | 1,927,060 |
Depreciation and amortization | 805,469 | 820,794 |
Additions to property and equipment | ||
Gross Margin % | 35.10% | 36.40% |
Mobile Services | ||
Segment Reporting Information [Line Items] | ||
Revenue | $ 7,094,116 | $ 4,062,847 |
Gross Margin | 3,715,921 | 1,608,387 |
Depreciation and amortization | 27,547 | 28,071 |
Additions to property and equipment | ||
Gross Margin % | 52.40% | 39.60% |
SEGMENT REPORTING (Details Narr
SEGMENT REPORTING (Details Narrative) | 12 Months Ended |
Dec. 31, 2021Number | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Stockholders_ Equity - Schedule
Stockholders’ Equity - Schedule of Fair Value of Stock Options Valuation Assumptions (Details) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | ||
Weighted average | 231.59% | 280.02% |
Weighted average expected term (years) | 2 years 3 months | 2 years 2 months 12 days |
Risk free interest rate | 0.78% | 0.90% |
Expected dividend yield |
Stockholders_ Equity - Schedu_2
Stockholders’ Equity - Schedule of Share-Based Compensation, Stock Option Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | ||
Number of shares, options outstanding | 3,800,000 | 3,800,000 |
Weighted average exercise price, outstanding | $ 0.21 | $ 0.20 |
Weighted average remaining life, outstanding | 3 years 7 months 6 days | 3 years |
Aggregate intrinsic value, outstanding | $ 812,350 | $ 0 |
Number of shares, granted | 1,635,000 | 400,000 |
Weighted average exercise price, granted | $ 0.75 | $ 0.15 |
Weighted average remaining life, granted | 4 years 7 months 24 days | 4 years 6 months |
Number of shares, exercised | (923,120) | |
Weighted average exercise price, granted | $ 0.21 | |
Number of shares, forfeited | (251,880) | (400,000) |
Number of shares, options outstanding | 4,260,000 | 3,800,000 |
Weighted average exercise price, outstanding | $ 0.37 | $ 0.21 |
Weighted average remaining life, outstanding | 2 years 3 months | 3 years 7 months 6 days |
Aggregate intrinsic value, outstanding | $ 5,862,938 | $ 812,350 |
Number of shares, exercisable and vested | 1,981,926 | 3,600,000 |
Weighted average exercise price, exercisable and vested | $ 0.25 | $ 0.22 |
Weighted average remaining life, exercisable and vested | 1 year 7 months 24 days | 2 years 4 months 24 days |
Aggregate intrinsic value, exercisable and vested | $ 2,970,907 | $ 698,475 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense, vested options | $ 341,515 | $ 80,603 |
Deferred compensation expense | $ 1,306,337 | |
Weighted average expected term (years) | 2 years 3 months | 2 years 2 months 12 days |
Incentive stock options, granted | 1,635,000 | 400,000 |
Incentive Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Incentive stock options, granted | 1,635,000 | 400,000 |
Incentive stock options, grant, additional information | Each independent Board member was granted 25,000 shares per quarter of service for 2020 and 2021 for a total of 200,000 shares each. The key employees were granted 1,435,000 share options as part of their employment agreements. During the year ended December 31, 2021, 923,210 shares were exercised. 250,000 of these options were exercised by one (1) former Board member who received his options at the time of the KonaTel Nevada merger in 2017 and who was not an independent director, and 250,000 of these options were exercised by an officer who also received his options at the time of the KonaTel Nevada merger; the remaining 423,120 options were exercised by a former key employee. During the year, 251,880 share options were forfeited. The forfeited options were 76,880 granted to a former key employee and 175,000 granted to former independent Board members. The Aggregate Intrinsic Value is based on the market value of the Company’s common stock of $1.75 on December 31, 2021. | Each member was granted 25,000 shares per quarter of service for 2019 and 2020 for a total of 200,000 shares each. During the year 2020, 400,000 share options were forfeited. The forfeited options were 300,000 from a key employee and 100,000 from an independent Board member who had resigned and had not exercised his options prior to their expiration following resignation. The Aggregate Intrinsic Value is based on the market value of the Company’s common stock of $0.421 on December 31, 2020. |
Income Tax - Schedule of Compon
Income Tax - Schedule of Components of Income Tax Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | ||
Federal | ||
State | ||
Deferred: | ||
Federal | ||
State | ||
Deferred tax assets: | ||
Net loss carryforward | 318,892 | 333,393 |
Depreciation | 269,166 | 204,362 |
Directors' fees | 124,000 | |
Stock option expense | 819,341 | 1,008,761 |
Total deferred tax assets | 1,407,399 | 1,670,516 |
Deferred tax liabilities: | ||
Amortization | 153,499 | 63,291 |
Tax at statutory federal rate | 130,827 | 50,110 |
Loss carryforward at astatutory tax federal rate | (130,827) | (50,110) |
Provision for income tax |
Income Tax - Schedule of Deferr
Income Tax - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | ||
Net operating loss carryforward | $ 318,892 | $ 333,393 |
Total gross deferred tax assets | 318,892 | 333,393 |
Less: Deferred tax asset valuation allowance | (318,892) | (333,393) |
Total net deferred tax assets | ||
Deferred tax liabilities: | ||
Federal | ||
State - California | ||
Total net deferred taxes |
Income Tax - Schedule of Operat
Income Tax - Schedule of Operating Loss Carryforward (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforward | $ 130,827 | $ 50,110 |
Operating loss carryforward | 1,518,534 | |
Year 2037 | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforward | 570,143 | |
Year 2038 | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforward | 463,895 | |
Year 2039 | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforward | $ 484,496 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Feb. 10, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 16, 2022 |
Subsequent Event [Line Items] | ||||
Options granted | 1,635,000 | 400,000 | ||
Exercise price | $ 0.25 | $ 0.22 | ||
Incentive Stock | ||||
Subsequent Event [Line Items] | ||||
Options granted | 1,635,000 | 400,000 | ||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Automatic repayment deferment | $ 150,000 | |||
Subsequent Event [Member] | Incentive Stock | ||||
Subsequent Event [Line Items] | ||||
Increase in shares reserved for issuance | 2,000,000 | |||
Subsequent Event [Member] | Incentive Stock | Mr. Murcer | ||||
Subsequent Event [Line Items] | ||||
Options granted | 350,000 | |||
Exercise price | $ 1.165 | |||
Subsequent Event [Member] | Incentive Stock | Mr. Pearl | ||||
Subsequent Event [Line Items] | ||||
Options granted | 25,000 | |||
Exercise price | $ 1.342 | |||
Subsequent Event [Member] | Incentive Stock | Mr. Beaty | ||||
Subsequent Event [Line Items] | ||||
Options granted | 25,000 | |||
Exercise price | $ 1.138 | |||
Subsequent Event [Member] | Incentive Stock | Mr. Welch | ||||
Subsequent Event [Line Items] | ||||
Options granted | 350,000 | |||
Exercise price | $ 1.04 |