Cover
Cover | 3 Months Ended |
Mar. 31, 2023 shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Mar. 31, 2023 |
Document Fiscal Period Focus | Q1 |
Document Fiscal Year Focus | 2023 |
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 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 | 42,483,220 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash and Cash Equivalents | $ 1,596,048 | $ 2,055,634 |
Accounts Receivable, net | 1,202,255 | 1,510,118 |
Inventory, Net | 690,868 | 526,337 |
Prepaid Expenses | 35,170 | 61,241 |
Other Current Assets | 164 | 164 |
Total Current Assets | 3,524,505 | 4,153,494 |
Property and Equipment, Net | 33,448 | 36,536 |
Other Assets | ||
Intangible Assets, Net | 634,251 | 634,251 |
Right of Use Asset | 519,894 | 553,686 |
Other Assets | 74,542 | 73,883 |
Total Other Assets | 1,228,687 | 1,261,820 |
Total Assets | 4,786,640 | 5,451,850 |
Current Liabilities | ||
Accounts Payable and Accrued Expenses | 1,399,838 | 1,348,931 |
Loans Payable, net of loan fees | 3,114,330 | 3,070,947 |
Right of Use Operating Lease Obligation - current | 120,658 | 118,382 |
Total Current Liabilities | 4,634,826 | 4,538,260 |
Long Term Liabilities | ||
Right of Use Operating Lease Obligation - long term | 427,299 | 458,227 |
Total Long Term Liabilities | 427,299 | 458,227 |
Total Liabilities | 5,062,125 | 4,996,487 |
Stockholders’ Equity | ||
Common stock, $0.001 par value, 50,000,000 shares authorized, 42,483,220 outstanding and issued at March 31, 2023 and 42,240,406 outstanding and issued at December 31, 2022 | 42,483 | 42,240 |
Additional Paid In Capital | 8,894,593 | 8,710,987 |
Accumulated Deficit | (9,212,561) | (8,297,864) |
Total Stockholders’ Equity | (275,485) | 455,363 |
Total Liabilities and Stockholders’ Equity | $ 4,786,640 | $ 5,451,850 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
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 | 42,483,220 | 42,240,406 |
Common stock, shares outstanding | 42,483,220 | 42,240,406 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 4,031,719 | $ 4,227,856 |
Cost of Revenue | 3,029,840 | 2,580,595 |
Gross Profit | 1,001,879 | 1,647,261 |
Operating Expenses | ||
Payroll and Related Expenses | 1,139,546 | 1,132,313 |
Operating and Maintenance | 1,700 | 642 |
Bad Debt | 14 | 55 |
Professional and Other Expenses | 300,498 | 149,170 |
Utilities and Facilities | 57,045 | 35,687 |
Depreciation and Amortization | 3,088 | 4,117 |
General and Administrative | 40,234 | 60,918 |
Marketing and Advertising | 37,517 | 47,670 |
Application Development Costs | 143,529 | 134,605 |
Taxes and Insurance | 31,903 | 31,379 |
Total Operating Expenses | 1,755,074 | 1,596,556 |
Operating Income/(Loss) | (753,195) | 50,705 |
Other Income and Expense | ||
Interest Expense | (161,502) | (24,030) |
Other Income/(Expense), net | (71,124) | |
Total Other Income and Expenses | (161,502) | (95,154) |
Net Income (Loss) | $ (914,697) | $ (44,449) |
Earnings (Loss) per Share | ||
Basic | $ (0.02) | $ 0 |
Diluted | $ (0.02) | $ 0 |
Weighted Average Outstanding Shares | ||
Basic | 42,375,917 | 41,615,406 |
Diluted | 42,375,917 | 41,615,406 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($) | Common Shares | Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning balance, value at Dec. 31, 2021 | $ 41,615 | $ 7,911,224 | $ (5,345,504) | $ 2,607,335 |
Shares outstanding at Dec. 31, 2021 | 41,615,406 | |||
Exercised Stock Options | ||||
Exercised Stock Options, shares | 0 | |||
Stock Based Compensation | $ 0 | 151,759 | 0 | 151,759 |
Net Loss | 0 | 0 | (44,449) | (44,449) |
Ending balance, value at Mar. 31, 2022 | $ 41,615 | 8,062,983 | (5,389,953) | 2,714,645 |
Shares outstanding at Mar. 31, 2022 | 41,615,406 | |||
Beginning balance, value at Dec. 31, 2022 | $ 42,240 | 8,710,987 | (8,297,864) | 455,363 |
Shares outstanding at Dec. 31, 2022 | 42,240,406 | |||
Exercised Stock Options | $ 243 | 41,007 | $ 41,250 | |
Exercised Stock Options, shares | 242,814 | 287,500 | ||
Stock Based Compensation | $ 0 | 142,599 | 0 | $ 142,599 |
Net Loss | 0 | 0 | (914,697) | (914,697) |
Ending balance, value at Mar. 31, 2023 | $ 42,483 | $ 8,894,593 | $ (9,212,561) | $ (275,485) |
Shares outstanding at Mar. 31, 2023 | 42,483,220 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash Flows from Operating Activities: | ||
Net Income (Loss) | $ (914,697) | $ (44,449) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and Amortization | 3,088 | 4,117 |
Loan Origination Cost Amortization | 43,383 | |
Bad Debt | 14 | 55 |
Stock-based Compensation | 142,599 | 151,759 |
Change in Right of Use Asset | 33,792 | 22,604 |
Change in Lease Liability | (28,650) | (22,979) |
Changes in Operating Assets and Liabilities: | ||
Accounts Receivable | 307,848 | 292,520 |
Inventory | (164,531) | (67,810) |
Prepaid Expenses | 25,412 | 46,328 |
Accounts Payable and Accrued Expenses | 50,906 | 137,939 |
Net cash provided by (used in) operating activities | (500,836) | 520,084 |
Cash Flows from Investing Activities | ||
Net cash (used in) investing activities | ||
Cash Flows from Financing Activities | ||
Cash received from Stock Options Exercised | 41,250 | |
Net cash provided by (used in) financing activities | 41,250 | |
Net Change in Cash | (459,586) | 520,084 |
Cash - Beginning of Year | 2,055,634 | 932,785 |
Cash - End of Period | 1,596,048 | 1,452,869 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid for interest | 118,125 | 5,121 |
Cash paid for taxes |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
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. It is currently inactive. KonaTel Inc., a Delaware corporation, 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 subchapter S-Corporation (“KonaTel Nevada”), in a merger with our acquisition subsidiary under which KonaTel Nevada became our wholly owned subsidiary. Apeiron Systems is headquartered in Johnstown, Pennsylvania, where it has customer service and software engineering resources staffed. Additional development resources are staffed out of Los Angeles, CA, as well as in Europe and Asia. IM Telecom is headquartered in Plano, Texas, and has a warehouse operation in Tulsa, Oklahoma, and a customer service center in Atmore, Alabama. We are headquartered in Plano, Texas. Apeiron Systems has nine (9) full-time employees; IM Telecom has twenty-one (21) full-time employees and two (2) part-time employees; and we have four (4) full-time employees. Principal Products or Services and their Markets Our principal products and services, across our two (2) active wholly owned subsidiaries, Apeiron Systems and IM Telecom, include our CPaaS suite of services (SIP/VoIP, SMS/MMS), wholesale and retail mobile voice and mobile data IoT services, wholesale voice termination services, and our ETC and ACP subsidized services for low-income Americans. Except for our ETC Lifeline services distributed in up to ten (10) states and our ACP services distributed in the fifty (50) states, as well as Washington D.C. and Puerto Rico, our Apeiron Systems’ products and services are available worldwide and subject to U.S., international and local/national regulations. We generate revenue from two (2) primary sources, Hosted Services and Mobile Services: · Our Hosted Services include a suite of hosted CPaaS services within Apeiron Systems’ cloud platform, including Cloud IVRs, Voicemail, Fax, Call Recording and other services provided with local, toll-free and international phone numbers. Apeiron also delivers public and private IP network services from its national redundant network backbone, including MPLS, Dedicated Internet and LTE Wireless WAN solutions. Additionally, Apeiron’s Cloud Services include Information Data Dips, SD-WAN and IoT data and device management, of which IoT provides device connectivity via wireless 4G/5G. These Hosted Services are marketed nationally and internationally through the Apeiron website, its sales staff, independent sales agents and ISOs. · Our Mobile Services include retail and wholesale cellular voice/text/data services and IoT mobile data services through our subsidiaries Apeiron Systems and IM Telecom. Mobile voice/text/data and IoT mobile data services are supported by a blend of reseller agreements with select national wireless carriers and national wireless wholesalers. A wireless communications service reseller typically does not own the wireless network infrastructure over which services are provided to its customers. Mobile voice/text/data and mobile data solutions are generally sold as traditional post-paid service plans that may include voice/text/data or wireless data only 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 government subsidized mobile voice service and mobile data service by IM Telecom under its Infiniti Mobile brand and FCC license to low-income American households that qualify for the FCC’s Lifeline mobile voice service program and/or the FCC’s ACP mobile data program. Even though government programs like Lifeline have existed since 1985, these programs, along with newer programs like the ACP program, are subject to change and may have a material impact on our Mobile Services business if changed, reduced or eliminated. 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, 2022. 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. Estimates in these financial statements include the allowance for doubtful receivables, allowance for inventory obsolescence, the estimated useful lives of property and equipment, and stock-based compensation. Actual results could differ from those estimates. Basis of Consolidation The condensed consolidated financial statements include the Company and its three (3) 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 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 dilutive common shares for the three months ended March 31, 2023, and 2022, are not included in the computation of diluted earnings per share because to do so would be anti-dilutive. As of March 31, 2023, and 2022, there were 1,050,144 2,194,079 The following table reconciles the shares outstanding and net income used in the computations of both basic and diluted earnings per share of common stockholders: Summary of Significant Accounting Policies -Schedule of Earnings Per Share, Basic and Diluted Three Months Ended March 31, 2023 2022 Numerator Net Income (Loss) $ (914,697 ) $ (44,449 ) Denominator Weighted-average common shares outstanding 42,375,917 41,615,406 Dilutive impact of stock options Weighted-average common shares outstanding, diluted 42,375,917 41,615,406 Net income per common share Basic $ (0.02 ) $ (0.00 ) Diluted $ (0.02 ) $ (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. Trade Account Receivables Sales Revenue The Company has a concentration of risk with respect to trade receivables from customers and cellular providers. As of March 31, 2023, 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 amount of $ 738,706 61.4 223,604 18.6 859,334 57.0 255,136 16.9 Concentration of Major Customer A significant amount of the revenue is derived from contracts with major customers. For the three months ended March 31, 2023, the Company had two (2) customers that accounted for $ 2,258,114 56.0 717,577 17.8 2,431,569 57.5 915,837 21.7 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. |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 2 – INVENTORY Inventory primarily consists of sim cards and cell phones, which are stored at our warehouse, or have been delivered to distributors in the field. Inventories are stated at cost using the first-in, first-out (“FIFO”) valuation method. On a monthly basis, inventory is counted at our warehouse facility, and is reviewed for obsolescence and counted for accuracy with distributors. At March 31, 2023, and December 31, 2022, the Company had inventory of $ 690,868 526,337 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3 – PROPERTY AND EQUIPMENT Property and equipment consist of the following major classifications as of March 31, 2023, and December 31, 2022: Property and Equipment - Schedule of Property and Equipment March 31, 2023 December 31, 2022 Lease Improvements Lease 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 (428,163 ) (425,075 ) Property and equipment, net $ 33,448 $ 36,536 Depreciation related to Property and Equipment amounted to $ 3,088 4,117 |
RIGHT-OF-USE ASSETS
RIGHT-OF-USE ASSETS | 3 Months Ended |
Mar. 31, 2023 | |
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 4.75 7.50 The Company has Right-of-Use Assets through leases of property under non-cancelable leases. As of March 31, 2023, the Company had four (4) properties with lease terms in excess of one (1) year. Of these four (4) leases, two (2) leases expire in 2025, one (1) lease expires in 2026, and one (1) lease expires in 2030 547,957 Future lease liability payments under the terms of these leases are as follows: Right-of-Use Assets - Schedule of Future Minimum Lease Payments for Operating Leases 2023 $ 115,459 2024 155,324 2025 129,543 2026 65,967 2027 54,000 Thereafter 144,000 Total 664,293 Less Interest 116,336 Present value of minimum lease payments 547,957 Less Current Maturities 120,658 Long Term Maturities $ 427,299 The weighted average term of the Right-to-Use leases is 66.3 6.78 43,275 30,897 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2023 | |
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: Intangible Assets - Schedule of Acquired Finite Lived Intangible Assets March 31, 2023 December 31, 2022 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 ) (3,542,963 ) Intangible Assets, net $ 634,251 $ 634,251 Amortization expense amounted to $ 0 0 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 March 31, 2023, and December 31, 2022, was $ 634,251 |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 6 – NOTES PAYABLE On June 14, 2022, the Company and its wholly owned subsidiary companies entered into a Note Purchase Agreement and related Guarantee and Security Agreement with CCUR Holdings, Inc. (“CCUR”), as collateral agent, and Symbolic Logic, Inc., whereby the Company pledged its assets to secure $ 3,150,000 15 153,284 2,984,181 153,284 2,984,181 20,248 |
CONTINGENCIES AND COMMITMENTS
CONTINGENCIES AND COMMITMENTS | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES AND COMMITMENTS | NOTE 7 – CONTINGENCIES AND COMMITMENTS Litigation From time to time, the Company may be subject to legal proceedings and claims which arise in the ordinary course of business. As of March 31, 2023, there are no ongoing 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. Tax Audits In June of 2021, the Company received an audit determination and assessment from the State of Pennsylvania related to sales and use tax for the audit period of January 1, 2016, through September 30, 2019. The assessment is in the amount of $ 115,000 7,000 Letters of Credit The Company had no outstanding letters of credit as of March 31, 2023. |
SEGMENT REPORTING
SEGMENT REPORTING | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 8 – 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 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 three months period ended March 31, 2023 Revenue $ 1,232,930 $ 2,798,789 $ 4,031,719 Gross Profit $ 347,481 $ 654,398 $ 1,001,879 Depreciation and amortization $ 2,986 $ 102 $ 3,088 Additions to property and equipment $ — $ — $ — For the three months period ended March 31, 2022 Revenue $ 1,434,555 $ 2,793,301 $ 4,227,856 Gross Profit $ 455,314 $ 1,191,947 $ 1,647,261 Depreciation and amortization $ 3,841 $ 276 $ 4,117 Additions to property and equipment $ — $ — $ — |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 9 – STOCKHOLDERS’ EQUITY Common Stock On February 9, 2023, Robert Beaty, an independent Board member, conveyed to the Company 44,686 0.7385 100,000 0.033 Non-Compensatory Stock Option Grant Chief Executive Officer On March 16, 2023, D. Sean McEwen, the Chairman and CEO of the Company, exercised his first tranche of 187,500 187,500 0.22 Stock Compensation The Company offers incentive stock option equity grants to directors and key employees. Options vest in tranches and typically expire in five (5) years. For the three months ended March 31, 2023, and 2022, the Company recorded options expense of $ 142,599 151,759 1,412,615 3.69 Jeffrey Pearl, an independent Board member, was granted 25,000 0.880 0.800 0.880 5 180.71 3.68 Robert Beaty, an independent Board member, was granted 25,000 0.814 0.740 0.814 5 180.09 3.93 The following table represents stock option activity as of and for the three months ended March 31, 2023: Stockholders’ Equity - Schedule of Share-Based Compensation, Stock Option Activity Number of Weighted Average Weighted Average Aggregate Shares Exercise Price Remaining Life Intrinsic Value Options Outstanding – December 31, 2022 4,405,000 $ 0.59 3.22 $ 2,260,138 Granted 50,000 0.85 Exercised (287,500 ) 0.26 127,025 Forfeited — — Options Outstanding – March 31, 2023 4,167,500 $ 0.62 3.69 $ 410,388 Exercisable and Vested, March 31, 2023 1,050,144 $ 0.45 2.08 $ 279,114 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 – SUBSEQUENT EVENTS Below are events that have occurred since March 31, 2023: Incentive Stock Option Grants Subsequent Event Jeffrey Pearl, an independent Board member, was granted 25,000 0.781 Robert Beaty, an independent Board member, was granted 25,000 0.871 Assignment of Agreement to Acquire Wireless Carrier On April 6, 2023, we assigned our rights to acquire a wireless carrier to Insight Mobile, Inc., a Delaware corporation (respectively, the “Assignment Agreement” and “Insight Mobile”), which Assignment Agreement shall be held in escrow by counsel for Insight Mobile pending satisfaction of all conditions to the closing of the Assignment Agreement. Loan Extension On April 28, 2023, the Company provided notice to CCUR of its election to extend the “First Extension Option,” under the CCUR Loan by an additional six (6) months. As part of the condition to extend, the Company paid $ 47,250 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
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, 2022. 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. Estimates in these financial statements include the allowance for doubtful receivables, allowance for inventory obsolescence, the estimated useful lives of property and equipment, and stock-based compensation. Actual results could differ from those estimates. |
Basis of Consolidation | Basis of Consolidation The condensed consolidated financial statements include the Company and its three (3) 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 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 dilutive common shares for the three months ended March 31, 2023, and 2022, are not included in the computation of diluted earnings per share because to do so would be anti-dilutive. As of March 31, 2023, and 2022, there were 1,050,144 2,194,079 The following table reconciles the shares outstanding and net income used in the computations of both basic and diluted earnings per share of common stockholders: Summary of Significant Accounting Policies -Schedule of Earnings Per Share, Basic and Diluted Three Months Ended March 31, 2023 2022 Numerator Net Income (Loss) $ (914,697 ) $ (44,449 ) Denominator Weighted-average common shares outstanding 42,375,917 41,615,406 Dilutive impact of stock options Weighted-average common shares outstanding, diluted 42,375,917 41,615,406 Net income per common share Basic $ (0.02 ) $ (0.00 ) Diluted $ (0.02 ) $ (0.00 ) |
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 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. Trade Account Receivables Sales Revenue The Company has a concentration of risk with respect to trade receivables from customers and cellular providers. As of March 31, 2023, 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 amount of $ 738,706 61.4 223,604 18.6 859,334 57.0 255,136 16.9 |
Concentration of Major Customer | Concentration of Major Customer A significant amount of the revenue is derived from contracts with major customers. For the three months ended March 31, 2023, the Company had two (2) customers that accounted for $ 2,258,114 56.0 717,577 17.8 2,431,569 57.5 915,837 21.7 |
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_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies -Schedule of Earnings Per Share, Basic and Diluted | The following table reconciles the shares outstanding and net income used in the computations of both basic and diluted earnings per share of common stockholders: Summary of Significant Accounting Policies -Schedule of Earnings Per Share, Basic and Diluted Three Months Ended March 31, 2023 2022 Numerator Net Income (Loss) $ (914,697 ) $ (44,449 ) Denominator Weighted-average common shares outstanding 42,375,917 41,615,406 Dilutive impact of stock options Weighted-average common shares outstanding, diluted 42,375,917 41,615,406 Net income per common share Basic $ (0.02 ) $ (0.00 ) Diluted $ (0.02 ) $ (0.00 ) |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment - Schedule of Property and Equipment | Property and equipment consist of the following major classifications as of March 31, 2023, and December 31, 2022: Property and Equipment - Schedule of Property and Equipment March 31, 2023 December 31, 2022 Lease Improvements Lease 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 (428,163 ) (425,075 ) Property and equipment, net $ 33,448 $ 36,536 |
RIGHT-OF-USE ASSETS (Tables)
RIGHT-OF-USE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Right-of-use Assets | |
Right-of-Use Assets - Schedule of Future Minimum Lease Payments for Operating Leases | Future lease liability payments under the terms of these leases are as follows: Right-of-Use Assets - Schedule of Future Minimum Lease Payments for Operating Leases 2023 $ 115,459 2024 155,324 2025 129,543 2026 65,967 2027 54,000 Thereafter 144,000 Total 664,293 Less Interest 116,336 Present value of minimum lease payments 547,957 Less Current Maturities 120,658 Long Term Maturities $ 427,299 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets - Schedule of Acquired Finite Lived Intangible Assets | Intangible Assets with definite useful life consist of licenses, customer lists and software that were acquired through acquisitions: Intangible Assets - Schedule of Acquired Finite Lived Intangible Assets March 31, 2023 December 31, 2022 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 ) (3,542,963 ) Intangible Assets, net $ 634,251 $ 634,251 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 three months period ended March 31, 2023 Revenue $ 1,232,930 $ 2,798,789 $ 4,031,719 Gross Profit $ 347,481 $ 654,398 $ 1,001,879 Depreciation and amortization $ 2,986 $ 102 $ 3,088 Additions to property and equipment $ — $ — $ — For the three months period ended March 31, 2022 Revenue $ 1,434,555 $ 2,793,301 $ 4,227,856 Gross Profit $ 455,314 $ 1,191,947 $ 1,647,261 Depreciation and amortization $ 3,841 $ 276 $ 4,117 Additions to property and equipment $ — $ — $ — |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Stockholders’ Equity - Schedule of Share-Based Compensation, Stock Option Activity | The following table represents stock option activity as of and for the three months ended March 31, 2023: Stockholders’ Equity - Schedule of Share-Based Compensation, Stock Option Activity Number of Weighted Average Weighted Average Aggregate Shares Exercise Price Remaining Life Intrinsic Value Options Outstanding – December 31, 2022 4,405,000 $ 0.59 3.22 $ 2,260,138 Granted 50,000 0.85 Exercised (287,500 ) 0.26 127,025 Forfeited — — Options Outstanding – March 31, 2023 4,167,500 $ 0.62 3.69 $ 410,388 Exercisable and Vested, March 31, 2023 1,050,144 $ 0.45 2.08 $ 279,114 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies -Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator | ||
Net Income (Loss) | $ (914,697) | $ (44,449) |
Denominator | ||
Weighted-average common shares outstanding | 42,375,917 | 41,615,406 |
Weighted-average common shares outstanding, diluted | 42,375,917 | 41,615,406 |
Net income per common share | ||
Basic | $ (0.02) | $ 0 |
Diluted | $ (0.02) | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Product Information [Line Items] | |||
Antidilutive shares excluded from computation of diluted earnings per share | 1,050,144 | 2,194,079 | |
Revenue | $ 4,031,719 | $ 4,227,856 | |
Trade Account Receivables | Customer #1 | |||
Product Information [Line Items] | |||
Receivables, concentration | $ 738,706 | $ 859,334 | |
Concentration risk | 61.40% | 57% | |
Trade Account Receivables | Customer #2 | |||
Product Information [Line Items] | |||
Receivables, concentration | $ 223,604 | $ 255,136 | |
Concentration risk | 18.60% | 16.90% | |
Sales Revenue | Customer #1 | |||
Product Information [Line Items] | |||
Concentration risk | 56% | 57.50% | |
Revenue | $ 2,258,114 | $ 2,431,569 | |
Sales Revenue | Customer #2 | |||
Product Information [Line Items] | |||
Concentration risk | 17.80% | 21.70% | |
Revenue | $ 717,577 | $ 915,837 |
INVENTORY (Details Narrative)
INVENTORY (Details Narrative) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Inventory, net | $ 690,868 | $ 526,337 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 461,611 | $ 461,611 |
Less: Accumulated Depreciation | (428,163) | (425,075) |
Property and equipment, net | 33,448 | 36,536 |
Lease 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 ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 3,088 | $ 4,117 |
Property and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 3,088 | $ 4,117 |
Right-of-Use Assets - Schedule
Right-of-Use Assets - Schedule of Future Minimum Lease Payments for Operating Leases (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Right-of-use Assets | ||
2023 | $ 115,459 | |
2024 | 155,324 | |
2025 | 129,543 | |
2026 | 65,967 | |
2027 | 54,000 | |
Thereafter | 144,000 | |
Total | 664,293 | |
Less Interest | 116,336 | |
Present value of minimum lease payments | 547,957 | |
Less Current Maturities | 120,658 | $ 118,382 |
Long Term Maturities | $ 427,299 | $ 458,227 |
RIGHT-OF-USE ASSETS (Details Na
RIGHT-OF-USE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Lease terms and expirations, description | the Company had four (4) properties with lease terms in excess of one (1) year. Of these four (4) leases, two (2) leases expire in 2025, one (1) lease expires in 2026, and one (1) lease expires in 2030 | |
Present value of minimum lease payments | $ 547,957 | |
Weighted average term | 66 months 9 days | |
Weighted average discount | 6.78% | |
Lease expense | $ 43,275 | $ 30,897 |
Minimum | ||
Implied interest rate used | 4.75% | |
Maximum | ||
Implied interest rate used | 7.50% |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Acquired Finite Lived Intangible Assets (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
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) | (3,542,963) |
Intangible Assets, net | $ 634,251 | $ 634,251 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 0 | $ 0 | |
Lifeline License, fair market value | $ 634,251 | $ 634,251 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - Note Purchase Agreement | Jun. 14, 2022 USD ($) |
Short-Term Debt [Line Items] | |
Note payable | $ 3,150,000 |
Interest rate | 15% |
Origination fee and other legal and closing expenses | $ 153,284 |
Note payable, net | 2,984,181 |
Note payable | $ 20,248 |
CONTINGENCIES AND COMMITMENTS (
CONTINGENCIES AND COMMITMENTS (Details Narrative) - State of Pennsylvania | 1 Months Ended |
Jun. 30, 2021 USD ($) | |
Operating Loss Carryforwards [Line Items] | |
Tax assessment | $ 115,000 |
Potential tax liability | $ 7,000 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 4,031,719 | $ 4,227,856 |
Gross Profit | 1,001,879 | 1,647,261 |
Depreciation and amortization | 3,088 | 4,117 |
Additions to property and equipment | 0 | 0 |
Hosted Services | ||
Segment Reporting Information [Line Items] | ||
Revenue | 1,232,930 | 1,434,555 |
Gross Profit | 347,481 | 455,314 |
Depreciation and amortization | 2,986 | 3,841 |
Additions to property and equipment | 0 | 0 |
Mobile Services | ||
Segment Reporting Information [Line Items] | ||
Revenue | 2,798,789 | 2,793,301 |
Gross Profit | 654,398 | 1,191,947 |
Depreciation and amortization | 102 | 276 |
Additions to property and equipment | $ 0 | $ 0 |
SEGMENT REPORTING (Details Narr
SEGMENT REPORTING (Details Narrative) | 3 Months Ended |
Mar. 31, 2023 Number | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Stockholders_ Equity - Schedule
Stockholders’ Equity - Schedule of Share-Based Compensation, Stock Option Activity (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Equity [Abstract] | |
Number of shares, options outstanding | shares | 4,405,000 |
Weighted average exercise price, outstanding | $ / shares | $ 0.59 |
Weighted average remaining life, outstanding | 3 years 2 months 19 days |
Aggregate intrinsic value, outstanding | $ | $ 2,260,138 |
Number of shares, granted | shares | 50,000 |
Weighted average exercise price, granted | $ / shares | $ 0.85 |
Number of shares, exercised | shares | (287,500) |
Weighted average exercise price, exercised | $ / shares | $ 0.26 |
Aggregate intrinsic value, options exercised | $ | $ 127,025 |
Number of shares, options outstanding | shares | 4,167,500 |
Weighted average exercise price, outstanding | $ / shares | $ 0.62 |
Weighted average remaining life, outstanding | 3 years 8 months 8 days |
Aggregate intrinsic value, outstanding | $ | $ 410,388 |
Number of shares, exercisable and vested | shares | 1,050,144 |
Weighted average exercise price, exercisable and vested | $ / shares | $ 0.45 |
Weighted average remaining life, exercisable and vested | 2 years 29 days |
Aggregate intrinsic value, exercisable and vested | $ | $ 279,114 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Incentive stock options, granted | 50,000 | |
Incentive stock options, exercise price | $ 0.85 | |
Stock options, exercised | 287,500 | |
Stock-based compensation expense, vested options | $ 142,599 | $ 151,759 |
Deferred compensation expense | $ 1,412,615 | |
Expected term | 3 years 8 months 8 days | |
Chief Executive Officer | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock price | $ 0.22 | |
Stock options, exercised | 187,500 | |
Shares issued as a result of options exercised | 187,500 | |
Independent Director #1 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock price | $ 0.800 | |
Incentive stock options, granted | 25,000 | |
Incentive stock options, exercise price | $ 0.880 | |
Expected term | 5 years | |
Strike price | $ 0.880 | |
Average volatility rate | 180.71% | |
Risk-free discount rate | 3.68% | |
Independent Director #2 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock price | $ 0.740 | |
Incentive stock options, granted | 25,000 | |
Incentive stock options, exercise price | $ 0.814 | |
Expected term | 5 years | |
Strike price | $ 0.814 | |
Average volatility rate | 180.09% | |
Risk-free discount rate | 3.93% | |
Incentive Stock | Robert Beaty | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Common stock shares conveyed | 44,686 | |
Stock price | $ 0.7385 | |
Incentive stock options, granted | 100,000 | |
Incentive stock options, exercise price | $ 0.033 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |
May 12, 2023 | Apr. 28, 2023 | Mar. 31, 2023 | |
Subsequent Event [Line Items] | |||
Incentive stock options, granted | 50,000 | ||
Incentive stock options, exercise price | $ 0.85 | ||
Independent Director #1 | |||
Subsequent Event [Line Items] | |||
Incentive stock options, granted | 25,000 | ||
Incentive stock options, exercise price | $ 0.880 | ||
Independent Director #2 | |||
Subsequent Event [Line Items] | |||
Incentive stock options, granted | 25,000 | ||
Incentive stock options, exercise price | $ 0.814 | ||
Subsequent Event | Note Purchase Agreement | |||
Subsequent Event [Line Items] | |||
Repayment of debt | $ 47,250 | ||
Subsequent Event | Independent Director #1 | |||
Subsequent Event [Line Items] | |||
Incentive stock options, granted | 25,000 | ||
Incentive stock options, exercise price | $ 0.781 | ||
Subsequent Event | Independent Director #2 | |||
Subsequent Event [Line Items] | |||
Incentive stock options, granted | 25,000 | ||
Incentive stock options, exercise price | $ 0.871 |