KonaTel, Inc. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>KonaTel, Inc. has filed its Q1 2024 10-Q report, detailing financial performance and corporate information.</b>

AI Summary

KonaTel, Inc. (KTEL) filed a Quarterly Report (10-Q) with the SEC on May 15, 2024. KonaTel, Inc. filed a 10-Q report for the period ending March 31, 2024. The company's principal executive offices are located at 500 N. Central Expressway, Suite 202, Plano, TX 75074. KonaTel, Inc. was formerly known as DALA PETROLEUM CORP. and WESTCOTT PRODUCTS CORP. The filing includes financial data for the periods ending March 31, 2024, December 31, 2023, and March 31, 2023. The company operates in the COMMUNICATION SERVICES, NEC industry (SIC code 4899).

Why It Matters

For investors and stakeholders tracking KonaTel, Inc., this filing contains several important signals. This 10-Q filing provides investors with the latest quarterly financial statements and disclosures, crucial for understanding the company's current operational and financial health. The report details historical financial data and corporate changes, offering context for KonaTel's business evolution and strategic direction.

Risk Assessment

Risk Level: medium — KonaTel, Inc. shows moderate risk based on this filing. The company's reliance on a few key customers, such as 'CustomerOne' and 'CustomerTwo', presents a significant concentration risk, as indicated by the trade accounts receivable and sales revenue data.

Analyst Insight

Investors should closely monitor KonaTel's customer diversification strategies and revenue streams from key clients to assess future growth and stability.

Key Numbers

• 2024-03-31 — Reporting Period End Date (Conformed period of report)
• 2024-05-15 — Filing Date (Filed as of date)
• 2024-01-01 — Quarter Start Date (Fiscal quarter for the report)
• 4899 — SIC Code (Standard Industrial Classification)

Key Players & Entities

• KonaTel, Inc. (company) — Filer name
• 500 N. Central Expressway, Suite 202, Plano, TX 75074 (location) — Business address
• DALA PETROLEUM CORP. (company) — Former company name
• WESTCOTT PRODUCTS CORP (company) — Former company name
• CustomerOne (company) — Key customer mentioned in risk factors
• CustomerTwo (company) — Key customer mentioned in risk factors

FAQ

Risk Factors

• Customer Concentration Risk [high — financial]: The company's trade accounts receivable and sales revenue are significantly dependent on a small number of customers, including 'CustomerOne' and 'CustomerTwo', posing a risk to financial stability.

Industry Context

KonaTel, Inc. operates within the Communication Services, NEC sector, which encompasses a broad range of telecommunications and related services.

Regulatory Implications

As a publicly traded company, KonaTel, Inc. is subject to the reporting requirements of the Securities and Exchange Commission (SEC) under the 1934 Act.

What Investors Should Do

1. Review the detailed financial statements for Q1 2024 to understand revenue, expenses, and profitability.
2. Analyze the company's customer concentration risk and any mitigation strategies disclosed.
3. Examine any changes in executive compensation or corporate structure mentioned in the filing.

Year-Over-Year Comparison

This filing is a 10-Q for the first quarter of 2024, providing updated financial information since the last annual report (10-K) or previous quarterly filings.

Key Financial Figures

• $0.001 — ble date: Common Capital Voting Stock, $0.001 par value per share 43,351,192 shares
• $950,000 — tomer list, all valued at approximately $950,000 net of liabilities in the approximate a
• $415,000 — iabilities in the approximate amount of $415,000; and on November 1, 2016, it acquired t
• $300,000 — CS Agency in the approximate amount of $300,000. With the completion of the KonaTel Nev
• $100 — elecom to Excess Telecom for the sum of $100 on the Final Closing. If not approved b

Filing Documents

• ktel10q033124.htm (10-Q) — 444KB
• exhibit311.htm (EX-31) — 8KB
• exhibit312.htm (EX-31) — 8KB
• exhibit32.htm (EX-32) — 6KB
• 0001515971-24-000051.txt (&nbsp;) — 2922KB
• ktel-20240331.xsd (EX-101.SCH) — 23KB
• ktel-20240331_cal.xml (EX-101.CAL) — 44KB
• ktel-20240331_def.xml (EX-101.DEF) — 69KB
• ktel-20240331_lab.xml (EX-101.LAB) — 215KB
• ktel-20240331_pre.xml (EX-101.PRE) — 166KB
• ktel10q033124_htm.xml (XML) — 321KB

Forward-Looking Statements

Forward-Looking Statements This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In some cases, you can identify forward-looking statements by the following words: "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "ongoing," "plan," "potential," "predict," "project," "should," "will," "would" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Quarterly Report. We cannot assure you that the forward-looking reliance on forward-looking statements. You should carefully read this Quarterly Report completely, and it should be read and considered with all other reports filed by us with the United States Securities and Exchange Commission (the "SEC") that are contained in the SEC Edgar Archives, including the "Risk Factors" enumerated in "Part I, Item IA. Risk Factors" of our 10-K Annual Report for the year ended December 31, 2023, which commence on page ten (10) thereof. A copy of the Annual Report is attached hereto by Hyperlink in Part II-Other Information, in Item 6, Exhibits, hereof, and

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements & Footnotes

Item 1. Financial Statements & Footnotes 3

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 19

Controls and Procedures

Item 4. Controls and Procedures 19

– OTHER INFORMATION

PART II – OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 20

Risk Factors

Item 1A. Risk Factors 20

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 20

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 20

Other Information

Item 5. Other Information 20

Exhibits

Item 6. Exhibits 21

- FINANCIAL STATEMENTS

PART I - FINANCIAL STATEMENTS March 31, 2024 Table of Contents Condensed Consolidated Balance Sheets as of March 31, 2024 (unaudited), and December 31, 2023 4 Condensed Consolidated Statements of Operations for the three months ended March 31, 2024, and 2023 (unaudited) 5 Condensed Consolidated Statements of Stockholders' Equity (Deficit) for the three months ended March 31, 2024, and 2023 (unaudited) 6 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024, and 2023 (unaudited) 7 Notes to Condensed Consolidated Financial Statements (unaudited) 8 3 KonaTel, Inc. Condensed Consolidated Balance Sheets (Unaudited) March 31, 2024 December 31, 2023 Assets Current Assets Cash and Cash Equivalents $ 3,884,897 $ 777,103 Accounts Receivable, Net 1,946,997 1,496,799 Inventory, Net 765,032 1,229,770 Prepaid Expenses 118,197 129,706 Other Current Assets 1,000,000 — Total Current Assets 7,715,123 3,633,378 Property and Equipment, Net 21,735 24,184 Other Assets Intangible Assets, Net 323,468 634,251 Right of Use Asset 413,119 443,328 Other Assets 74,542 74,543 Total Other Assets 811,129 1,152,122 Total Assets $ 8,547,987 $ 4,809,684 Liabilities and Stockholders' Equity Current Liabilities Accounts Payable and Accrued Expenses $ 2,636,260 $ 3,709,691 Loans Payable, Net of Loan Fees — 3,655,171 Right of Use Operating Lease Obligation - Current 130,146 127,716 Income Tax Payable 149,428 — Total Current Liabilities 2,915,834 7,492,578 Long Term Liabilities Right of Use Operating Lease Obligation - Long Term 297,154 330,511 Total Long Term Liabilities 297,154 330,511 Total Liabilities 3,212,988 7,823,089 Commitments and Contingencies Stockholders' Equity Common stock, $ 0.001 par value, 50,000,000 shares authorized, 43,333,220 outstanding and issued at March 31, 2024 and 43,145,720 outstanding and issued at December 31, 2023

financial statements

financial statements. 4 KonaTel, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, 2024 2023 Revenue $ 5,635,836 $ 4,031,719 Cost of Revenue 4,508,332 3,029,840 Gross Profit 1,127,504 1,001,879 Operating Expenses Payroll and Related Expenses 1,452,100 1,139,546 Operating and Maintenance 1,544 1,700 Bad Debt 1,448 14 Professional and Other Expenses 110,223 300,498 Utilities and Facilities 50,786 57,045 Depreciation and Amortization 2,449 3,088 General and Administrative 61,395 40,234 Marketing and Advertising 33,996 37,517 Application Development Costs 206,083 143,529 Taxes and Insurance 54,435 31,903 Total Operating Expenses 1,974,459 1,755,074 Operating Loss ( 846,955 ) ( 753,195 ) Other Income and Expense Gain on Sale of Subsidiary 9,247,726 — Interest Expense ( 104,329 ) ( 161,502 ) Other Income/(Expense), net ( 63,930 ) — Total Other Income and Expenses 9,079,467 ( 161,502 ) Income Before Income Taxes 8,232,512 ( 914,697 ) Income Tax Expense 149,428 — Net Income (Loss) $ 8,083,084 $ ( 914,697 ) Earnings (Loss) per Share Basic $ 0.19 $ ( 0.02 ) Diluted $ 0.19 $ ( 0.02 ) Weighted Average Outstanding Shares Basic 43,180,747 42,375,917 Diluted 43,601,328 42,375,917 See accompanying notes to unaudited condensed consolidated

financial statements

financial statements. 5 KonaTel, Inc. Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) Common Shares Additional Accumulated Shares Amount Paid-in Capital Deficit Total Balances as of January 1, 2024 43,145,720 $ 43,146 $ 9,182,140 $ ( 12,238,691 ) $ ( 3,013,405 ) Stock Based Compensation — — 224,070 — 224,070 Stock Options Exercised 187,500 187 41,063 — 41,250 Net Income — — — 8,083,084 8,083,084 Balances as of March 31, 2024 43,333,220 $ 43,333 $ 9,447,273 $ ( 4,155,607 ) $ 5,334,999 Common Shares Additional Accumulated Shares Amount Paid-in Capital Deficit Total Balances as of January 1, 2023 42,240,406 $ 42,240 $ 8,710,987 $ ( 8,297,864 ) $ 455,363 Stock Options Exercised 242,814 243 41,007 — 41,250 Stock Based Compensation — — 142,599 — 142,599 Net Loss — — — ( 914,697 ) ( 914,697 ) Balances as of March 31, 2023 42,483,220 $ 42,483 $ 8,894,593 $ ( 9,212,561 ) $ ( 275,485 ) See accompanying notes to unaudited condensed consolidated

financial statements

financial statements. Common Shares Additional Paid-in Capital Accumulated Deficit 6 KonaTel, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, 2024 2023 Cash Flows from Operating Activities: Net Income (Loss) $ 8,083,084 $ ( 914,697 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and Amortization 2,449 3,088 Gain on Sale of IM Telecom (49%) ( 9,247,726 ) — Loan Origination Cost Amortization 49,579 43,383 Bad Debt 1,448 14 Stock-based Compensation 224,070 142,599 Change in Right of Use Asset 30,209 33,792 Change in Lease Liability ( 30,927 ) ( 28,650 ) Changes in Operating Assets and Liabilities: Accounts Receivable ( 451,646 ) 307,848 Inventory 464,739 ( 164,531 ) Prepaid Expenses 11,509 25,412 Notes Receivable ( 1,000,000 ) — Accounts Payable and Accrued Expenses ( 1,073,431 ) 50,906 Income Tax Payable 149,428 Net cash used in operating activities ( 2,787,215 ) ( 500,836 ) Cash Flows from Investing Activities Sale of IM Telecom (49%) 9,558,509 — Net cash provided by investing activities 9,558,509 — Cash Flows from Financing Activities Repayments of amounts of Notes Payable ( 3,704,750 ) — Cash received from Stock Options Exercised 41,250 41,250 Net cash provided by (used in) financing activities ( 3,663,500 ) 41,250 Net Change in Cash 3,107,794 ( 459,586 ) Cash - Beginning of Year 777,103 2,055,634 Cash - End of Period $ 3,884,897 $ 1,596,048 Supplemental Disclosure of Cash Flow Information Cash paid for interest $ 54,750 $ 118,125 Cash paid for taxes $ — $ — See accompanying notes to unaudited condensed consolidated

financial statements

financial statements. 7 KonaTel, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Overview of Company 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"). During 1990, we ceased our then current operations. On March 11, 2000, our Board of Directors began the process of re-entering the development stage, and on June 2, 2014, we completed a merger with Dala Petroleum Corp., a Nevada corporation (respectively, "Dala Nevada" and the "Dala Merger"). We operated as an early-stage oil exploration company focused on our leased acreage acquired by Dala Nevada until 2016, at which time we assigned substantially all of our leased acreage to the former owner of Dala Nevada, and our remaining oil and gas leasehold interests, comprising leases covering approximately 7,489 and 403 acres, more or less, expired in 2017 and 2018, respectively. 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, and we succeeded to its operations; and we changed our name to "KonaTel, Inc." on February 5, 2018. KonaTel Nevada was organized under the laws of the the b

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View this 10-Q filing on SEC EDGAR