KonaTel, Inc. 10-K

ITEM 9A: CONTROLS AND PROCEDURES Disclosure Controls and Procedures We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that material information relating to us is made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors. These disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that are filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness, as of December 31, 2020, of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2020. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of our Chief Executive Officer and our Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal controls over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records, which in reasonable detail, accurately and fairly reflect the transactions and disposition of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made in accordance with authorizations of management and directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In evaluating the effectiveness of our internal control over financial reporting as of December 31, 2020, management used the criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the criteria established by COSO, management (with the participation of the CEO and the CFO) determined that the internal controls over financial reporting are effective as of December 31, 2020, and that there are no material weaknesses in the Company’s internal controls over financial reporting as of such date. This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report is not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to satisfy these requirements by providing the management’s report only. 29 Changes in Internal Control Over Financial Reporting There have been no changes in internal control over financial reporting during the last fiscal quarter of our fiscal year ended December 31, 2020. Limitations on the Effectiveness of Controls Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. ITEM 9B: OTHER INFORMATION None. ( This space intentionally left blank ) 30 PART III ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Identification of Directors and Executive Officers Our executive officers and directors and their respective ages, positions and biographical information are set forth below. Name Age Positions Held Since D. Sean McEwen 59 Chairman, President and CEO December 2017 Brian R. Riffle 61 Chief Financial Officer December 2017 Paul LaPier 62 Secretary April 2020 Vice President of Finance November 2018 D. Sean McEwen 59 Director December 2017 Robert Beaty 51 Director February 2018 Jeffrey Pearl 57 Director October 2018 Background and Business Experience D. Sean McEwen Mr. McEwen is 59 years of age and founded KonaTel Nevada in 2014, a wireless data and voice service reseller, and currently focuses his efforts exclusively on our current and planned business operations. From 2011 to 2013, Mr. McEwen consulted with multiple international Mobile virtual network operators (“MVNOs”) in the U.S., Peru, Croatia and China. From 2010 to 2011, he served as a founding board member of One Fund, a NYSE listed (NYSE: ONEF) exchange traded fund. One Fund pioneered the “ETF of ETFs” concept, and in 2011, came to the attention of Russell Investments, known for their stock indices (i.e., the Russell 2000). Russell Investments purchased One Fund in 2011. In 2008, Mr. McEwen became a member of the venture/angel investment group, Sierra Angels (www.sierraangels.com) serving on several high-tech due diligence committees and participating in early-stage funding transactions. In early 1983, after departing college prior to graduation, he co-founded Online Data Corp. Through a series of acquisitions/mergers, this company was eventually renamed “TriTech Software Systems” (www.tritech.com) “TriTech”. From 1983 to 1990, it developed custom strategic software applications for numerous businesses, including E. F. Hutton Life Insurance, Travel Lodge Hotels, Foodmaker (Jack in the Box restaurants), AT&T, UCSD’s Scripps Institute of Oceanography and Visa’s Plus Systems national ATM network. In 1991, TriTech transformed from a custom software development firm to an enterprise software development and systems integration company specializing in mission critical public safety (e.g., police, fire, and EMS) telecom software solutions. TriTech’s flagship product, VisiCAD, was the world’s first 9-1-1 emergency dispatching system based on Microsoft technology with integrated GPS based tracking and predictive routing technology. In 1995, TriTech won the Microsoft Most Innovative Windows Application award competing against all Windows applications worldwide. In 1998, while Mr. McEwen was CEO, TriTech was named to the Inc. 500 as the 344 th fastest growing privately held company in the United States. The following year, Bill Gates cited TriTech and VisiCAD in his book Business at the Speed of Thought as an example of a mission critical Windows based telecom system utilizing GPS. Mr. McEwen served as Vice President of TriTech from 1983 to 1988, President from 1988 to 1996, Chairman/CEO from 1996 to 2000, and finally as a member of the Board of Directors, until controlling interest was sold to Westview Capital Partners in 2006. In 2017, TriTech celebrated thirty four (34) years of continuous operation and today, with over 700 employees and over 1000 mission critical software installations across five countries, is the largest public safety software company in the world. Brian R. Riffle Mr. Riffle is 61 years of age and the founder of CFO Strategies LLC of Johnstown, Pennsylvania (“CFO Strategies”), an accounting firm and consulting firm, which he founded in May 2008. CFO Strategies has thirteen (13) employees; approximately 180 small business clients and approximately 650 tax clients. It provides consulting, CFO, accounting, bookkeeping, payroll and tax services, including: CFO for businesses; entire accounting department for businesses; temporary staffing for businesses; complete payroll processing; CFO consulting and small business start-up services; and prepares taxes for corporations, small businesses, non-profits and individuals. Mr. Riffle is the Managing Partner and has extensive experience in various industries, including: Chief Financial Officer, healthcare industry; telecommunications, security, manufacturing and non-profit industries experience; Chief Executive Officer in the financial services industry and healthcare; Assistant Controller in the retail industry; Consultant in non-profit, healthcare and event management arenas; governmental treasurer and board member for over thirty (30) years; and as a college instructor at Mount Aloysius College since 1994. He is also a Certified Public Accountant (May 1987). 31 Robert Beaty Mr. Beaty is 51 years old and currently the President of AGS Construction Inc., a premier reconstruction company in Denver Metropolitan area. Previously, he was the founder and CEO of Impact Telecom, a leader in the telecommunications market, which focused on delivering flexible and effective solutions to carriers, businesses and homes. Impact Telecom is comprised of a family of brands all dedicated to innovation, affordability and execution. Mr. Beaty brings twenty-four (24) years of experience in telecommunications and managing wholesale and commercial customer bases. Prior to starting Impact Telecom in 2005, he served as the Senior Vice President of Sales for ICG Communications. He helped guide ICG through bankruptcy and was a valued member of the senior executive team tasked with growing and managing the customer base. He earned a B.A. in Psychology from the University of Kansas and his M.B.A. in Business Administration from Webster University. Paul LaPier Mr. LaPier is 62 years of age and has over twenty-one (21) years of telecommunications experience working for Fortune 500 companies and small/medium startup companies with annual revenues ranging from $1 million to $23 billion. During this time, Mr. LaPier has held various telecommunications related positions in the areas of finance, accounting, taxation, billing and regulatory (government) compliance. Immediately prior to joining KonaTel in 2018, he served as Finance Manager-Regulatory Fees/Taxes for British Telecom Americas, Inc., from July 2016 to November 2018; and has served as our Vice President of Finance since joining us in November 2018. Prior to British Telecom, Mr. LaPier served for over four years as CFO, then President, of US Connect, LLC, a regional wireless Lifeline carrier, from May 2012, to July 2016. While at US Connect, Mr. LaPier oversaw all company operations and the activation/management of over fifty (50) thousand lines of Lifeline service. Previously, Mr. LaPier served as Financial Controller of dPi Teleconnect, a regional prepaid wireline provider. While at dPi, he led the creation of the financial and reporting platform for dPi Mobile, which later became the Lifeline carrier TAG Mobile. Mr. LaPier has held other telecommunications related management positions across several regional and national telecommunications carriers, including Director of Taxes & Regulatory Reporting at Sage Telecom, a regional CLEC (Competitive Local Exchange Carrier). While at Sage, his responsibilities included overseeing all tax compliance, end user billing for 200,000 customers and regulatory compliance across twelve (12) states. At VarTec Telecom and Excel Telecommunications, both national providers of long-distance service across forty-eight (48) states, Mr. LaPier served as Director of Taxes & Regulatory Reporting. He has also served as a telecommunications and technology tax consultant for Price Waterhouse Coopers. Mr. LaPier holds a Bachelor of Business Administration in Accounting from The University of Texas at Austin. Jeffrey Pearl Mr. Pearl is 57 years of age and brings more than thirty-one (31) years of Telecommunications/Cloud Service Provider experience to our Board of Directors. Jeffrey has experience in both the startup environment as well as working inside of some of the larger incumbent players, both privately held as well as publicly traded companies. This experience will assist us in building out our go to market strategy, focusing both on direct sales as well as the alternative channels of distribution. His extensive sales and marketing experience, knowledge of the marketplace and personal connections in the industry are valuable to us at this stage and throughout our evolution. Jeffrey currently is involved in running three companies: He is currently CEO and Co-founder of OTG Consulting, which was founded May 2016. OTG Consulting is a Sales Agency formed by a group of industry leaders in order to fill a gap in the marketplace. The group assists executives of SMB and Enterprise businesses as they make the move to cloud-based services. OTG Consulting works with most Carriers and service providers delivering solutions for voice and data Communications, Internet, hosting, managed services and other cloud offerings. He also consults under PearlCom, a consulting practice Focusing on telecom companies and Service Providers which was founded in January 2016. PearlCom offers strategic advice, providing direction on sales management, technology implementation, product pricing and Positioning, bringing his thirty (30) plus years of experience to the table, accelerating timelines and creating efficiencies. 32 Jeffrey also co-founded Secure View, where he is Chief Revenue Officer and Partner, which was founded in December 2016. Secure View is focused on delivering “best in class” unified IP-based security solutions. Its systems are designed to be more accessible and simpler to use allowing customers to feel that their security needs are 100% covered providing peace of mind allowing them to focus elsewhere on their business. Secure View offers the experience, knowledge and technical understanding coupled with relationships with the players/partners needed to move security systems to the cloud. Prior to starting and running these three (3) companies, Jeffrey worked at Broadsoft (recently acquired by Cisco) July 2013 to May 2016, where he successfully ran North America Carrier Sales. In this role he cultivated strong relationships with C-Level executives within the major Telcos and Service Providers utilizing BroadSoft in the US. Under his guidance, his organization also pursued new relationships with startups and providers not utilizing BroadSoft. After successfully fulfilling those duties, Jeffrey was next tasked with starting an entirely new division: Channel Acceleration, focusing on some of the largest customers in and outside the US. In this role, Jeffrey and his teams engaged with executives and sales organizations to productively assist in accelerating their efforts around “Go to Market” strategies, sales training and sales assistance in the area of Hosted VoIP and SIP Trunking services. Prior to Broadsoft Jeffrey successfully started, operated and sold two VoIP companies. Significant Employees We have currently have two (2) significant employees who are not executive officers of the Company, and who are expected to make a substantial contribution to the Company’s business, Nicholas Metherd as Vice President of IM Telecom, and Joshua Ploude as CEO of Apeiron Systems. Vyacheslav “Slava” Yanson, a third significant employee since the acquisition by the Company of Apeiron Systems in 2018, resigned as the CTO of Apeiron Systems on February 19, 2021; however, his resume is also contained below. Nicholas Metherd Nicholas Metherd, 37, Vice President for IM Telecom, has over sixteen (16) years of telecommunications operational management experience. Mr. Metherd worked at T-Mobile as a Call Center Manager where he was responsible for managing over ninety (90) agents, responding to 2.3M customer inquiries per year. He has also held operational management roles at TAG Mobile, a Lifeline Eligible Telecommunications Carrier and at RealPage (NASDAQ: RP), an American multinational corporation that provides property management software solutions for the multifamily, commercial, single-family and vacation housing industries. While serving as VP of Operations for TAG Mobile, Mr. Metherd oversaw the operation of over 160 customer service staff in three countries, FCC compliance requirements, vendor relations, IT Development, Logistics, Sales support, and over 400,000 cellular lines of service. His experience includes Project Management Office leadership, customer service management, information technology, business optimization, data analysis, and leadership development. For IM Telecom, Mr. Metherd is responsible for executing operational support of new IM Telecom products such as Lifeline+, expansion into new states, revenue assurance and financial modeling. Joshua Ploude Mr. Ploude is 44 years old. Effective December 31, 2018, Apeiron Systems and Mr. Ploude executed and delivered a 36-month Employment Agreement under which Mr. Ploude will be the Chief Executive Officer of Apeiron Systems, with the attendant duties and responsibilities outlined in his Employment Agreement, at a monthly salary of $16,667. The Employment Agreement has customary provisions regarding trade secrets; a one (1) year covenant not to compete; confidentiality; Apeiron Systems continued ownership of intellectual property; a duty to cooperate; free, fully-paid licensing to Apeiron Systems of inventions created by Mr. Ploude that he provides or incorporates into any Employer product or system during his employment with Apeiron Systems; and an assignment of Mr. Ploude’s interest in all relevant intellectual property utilized by Apeiron Systems, among other terms and conditions. Mr. Ploude is the President and CEO and Co-Founder of Apeiron Systems, and since 2013, he has been responsible for defining the product vision and operational strategy for Apeiron Systems. He has worked directly with software, hardware and carrier network vendors to oversee the development of Apeiron Systems’ product set; and has also had the responsibility to work with internal software development teams to ensure Apeiron Systems’ software provides the requisite function to support product and operational initiatives. He has also been responsible for planning and building Competitive Local Exchange Carrier (“CLEC”) and Internet Service Provider (“ISP”) facilities-based networks since 2001 and has managed 5+ “Greenfield network” (the installation of a network where there was not previously one in use) builds across all types of wireline and wireless network infrastructures. 33 Mr. Ploude holds a Bachelor of Science in Political Science from UCLA and a Master of Science in Telecommunications Management from Golden Gate University. He has had the following business experience since 1999: 1999-2005 - CTO of PCS1/Datavo - A facilities-based CLEC serving a California-wide footprint; 2006-2010 - President/CEO of Ethos Communications - A consultancy helping CLECs and ISPs with operational and technology development; 2010-2013 - CTO of TNCI - A facilities-based CLEC & ISP, serving a forty-eight (48)-state footprint; and 2013-Present - Co-Founder, CEO and President of Apeiron Systems. Vyacheslav “Slava” Yanson Mr. Yanson is 35 years old. Effective December 31, 2018, Apeiron Systems and Mr. Yanson executed and delivered a 36-month Employment Agreement under which Mr. Yanson will be the Chief Technology Officer of Apeiron Systems, with the attendant duties and responsibilities outlined in his Employment Agreement, at a monthly salary of $12,500. The Employment Agreement has customary provisions regarding trade secrets; a one (1) year covenant not to compete; confidentiality; Apeiron Systems continued ownership of intellectual property; a duty to cooperate; free, fully-paid licensing to Apeiron Systems of inventions created by Mr. Yanson that he provides or incorporates into any Employer product or system during his employment with Apeiron Systems; and an assignment of Mr. Yanson’s interest in all relevant intellectual property utilized by Apeiron Systems, among other terms and conditions. Mr. Yanson is the CTO of Apeiron Systems. As CTO of Apeiron Systems, he has overseen the development of all of Apeiron Systems software development operations, with a focus on code stewardship for sustainable operations at scale. Apeiron Systems’ business is built on an industry leading “ BSS/OSS ,” and Mr. Yanson has been responsible for this software platform and its integration to the network, product and external partners. He has had the following business experience since 2006: 2006-2008 - Senior Framework Architect at Wiredrive - Cloud-media sharing platform for advertising, entertainment and consumer marketing companies; 2008-2010 - CTO of OneCubicle - Social collaboration and job search platform for college graduates; 2010-2012 - CTO and President of Killer Beaver - Software and Business Process Consultancy delivering scalable and automated solutions for clients of the company; 2012-2013 - Infrastructure Architect for Grail - news feed and video content aggregation and distribution platform; and 2013-Present - Co-Founder and CTO of Apeiron Systems. Family Relationships There are no family relationships between any of our officers and directors. Involvement in Other Public Companies Except as may be indicated above, none of our officers or directors is an “affiliate” of any other publicly held companies. Involvement in Certain Legal Proceedings During the past ten (10) years, none of our directors, executive officers or persons nominated to become directors or executive officers (or those in similar positions with us) has been the subject of any of the following: (1) A petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two (2) years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two (2) years before the time of such filing; (2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities: (i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; 34 (ii) Engaging in any type of business practice; or (iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; (4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than sixty (60) days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity; (5) Such person was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated; (6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; (7) Such person was the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) Any federal or state securities or commodities law or regulation; or (ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Compliance with Section 16(a) of the Exchange Act The common stock of the Company is registered under the Exchange Act, and therefore, the officers, directors and holders of more than 10% of our outstanding shares are subject to the provisions of Section 16(a) which requires them to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and our other equity securities. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely upon review of the copies of such forms furnished to us during the fiscal year ended December 31, 2020, and based upon a review of the filings contained in the Edgar Archives, all such required reports were believed to be timely filed. Code of Ethics We have adopted a Code of Ethics for our principal executive and financial officers. See Exhibit 14 in Part IV, Item 15. We anticipate that our Code of Ethics will be updated in the near future by our current Board of Directors. Corporate Governance Nominating Committee We have not established a Nominating Committee because until our closing of the KonaTel Nevada Merger, we had only one (1) director and two (2) executive officers, and we believed that we were able to effectively manage the issues normally considered by a Nominating Committee and currently believe we can do without a Nominating Committee. If we do establish a Nominating Committee, we will disclose our procedures in recommending nominees by our Board of Directors. 35 Audit Committee We have not established an Audit Committee for the same reasons why we have not established a Nominating Committee, and a further review of this issue will no doubt be necessitated and undertaken by our management in the future. ITEM 11: EXECUTIVE COMPENSATION All Compensation Our Chief Executive Officer will be compensated according to the terms of his Employment Agreement that was filed as an Exhibit to our 8-KA-1 Current Report dated November 15, 2017, filed with the SEC on December 20, 2017 , which may be accessed by Hyperlink in Part IV, Item 15 hereof, and which is discussed below under the heading “Employment Agreement of D. Sean McEwen” of this Item. As indicated below, on December 19, 2019, Mr. McEwen’s annual salary under his Employment Agreement was increased to $200,000, effective January 1, 2020, with all other terms and provision of his Employment Agreement remaining unchanged. There are no other employment contracts, compensatory plans or arrangements, including payments to be received from us with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company. However, see the heading “Outstanding Equity Awards” of the caption “Executive Compensation” in Part III, Item 11 hereof. Summary Compensation Table Option Deferred and All Other Name and Compen- Stock Warrant Compen- Principal Position Salary sation Bonus Awards Awards (1) sation Total D Sean McEwen, Chairman and CEO 2020 $ 198,491 $ — $ — $ — $ — $ — $ 198,491 2019 $ 11,500 $ — $ — $ — $ 215,589 $ — $ 227,089 Robert Beaty, Director 2020 $ 24,000 $ — $ — $ — $ 14,075 $ — $ 38,075 2019 $ 24,000 $ — $ — $ — $ 15,397 $ — $ 39,397 Jeffrey Pearl, Director 2020 $ 24,000 $ — $ — $ — $ 12,602 $ — $ 36,602 2019 $ 24,000 $ — $ — $ — $ — $ — $ 24,000 Brian R. Riffle, Chief Financial Officer 2020 $ — $ — $ — $ — $ — $ 15,263 $ 15,263 2019 $ — $ — $ — $ — $ — $ 41,107 $ 41,107 Paul LaPier, Secretary 2020 $ 140,102 $ — $ — $ — $ 20,513 $ — $ 160,615 and Vice President of Finance 2019 $ 123,333 $ — $ — $ — $ 4,274 $ — $ 127,607 Joshua Ploude, President, 2020 $ 200,024 $ — $ — $ — $ — $ — $ 200,024 Apeiron Systems 2019 $ 200,000 $ — $ — $ — $ — $ — $ 200,000 Nick Metherd, Vice President, IM Telecom 2020 $ 119,388 $ — $ — $ — $ 20,513 $ — $ 139,901 2019 $ 109,167 $ — $ — $ — $ 4,274 $ — $ 113,441 Matthew Atkinson, Former Secretary (3) 2020 $ — $ — $ — $ — $ — $ — $ — 2019 $ — $ — $ — $ — $ 35,931 $ — $ 35,931 Mark Savage, Former Director (4) 2020 $ — $ — $ — $ — $ — $ — $ — 2019 $ — $ — $ — $ — $ 35,931 $ — $ 35,931 Terry Addington, Former Director (2) 2020 $ — $ — $ — $ — $ — $ — $ — 2019 $ 24,000 $ — $ — $ — $ — $ — $ 24,000 Charles L. Schneider, Jr., Former 2020 $ — $ — $ — $ — $ — $ — $ — Significant Employee 2019 $ 200,000 $ — $ — $ — $ — $ — $ 200,000 J. William Riner, Former Significant 2020 $ — $ — $ — $ — $ — $ — $ — Employee 2019 $ 33,367 $ — $ — $ — $ — $ — $ 33,367 (1) See the heading “Outstanding Equity Awards” below. (2) Mr. Addington was appointed as a director on February 12, 2018, and resigned on January 1, 2020. (3) Mr. Atkinson was appointed Secretary on July 19, 2017, and resigned on April 15, 2020. (4) Mr. Savage was appointed as a director on July 19, 2017, and resigned on May 6, 2020. 36 Employment Agreement of D. Sean McEwen At the Effective Time of the KonaTel Merger, we entered into an Employment Agreement with Mr. McEwen for a term of two (2) years, under which he will serve as the Chairman, President and CEO of our Company, with customary duties applicable to these positions, which are described in his Employment Agreement that can be viewed under the heading “KonaTel Merger Current Reports” in Part IV, Item 15. After the initial term, the Employment Agreement will continue on a year-to-year basis as specified under Section 3.0 thereof. During the initial term (2018-2019), Mr. McEwen received the following compensation under his Employment Agreement: $1,000 per month base salary; and inclusion in our healthcare plan for employees, including medical, dental and vision, which coverage also includes his spouse. Effective January 1, 2020, the Employment Agreement was amended to adjust the per month base salary to $16,667 per month. He will also receive a monthly bonus, computed as follows: If the combined EBITDA (“Combined EBITDA”) exceeds $85,000 in any calendar month, where Combined EBITDA is defined to mean the combined earnings (net profits) of the Company and all of its subsidiaries or other companies owned, and from all other sources before subtracting all interest expense, all income tax, all depreciation expense, and all amortization expense, on an accrual accounting basis according to GAAP as calculated by the regular account for the Company, the Company shall pay the employee, within twenty (20) days after the end of the calendar month, a bonus equal to 10% of the monthly Combined EBITDA. The Employment Agreement has customary termination, trade secret and dispute resolution clauses, among others. Securities Authorized for Issuance under Equity Compensation Plans Outstanding Equity Awards Name Option awards Stock awards Number of Number of Equity Option Option Number Market Equity Equity securities securities incentive exercise expiration of value of incentive incentive underlying underlying plan price ($) date shares shares plan plan unexercised unexercised awards; or units or units awards; awards; options (#) options (#) number of of stock of stock number market exercisable unexercisable securities that that of or underlying have not have not unearned payout unexercised vested (#) vested (#) shares, value of unearned units or unearned options (#) other shares, rights units or that have other not rights vested (3) that have not vested (a) (b) (c) (d) (e)* (f) (g) (h) (i) (j) Mark Savage 0 250,000 250,000 $0.2200 (1) 0 0 Matthew Atkinson 0 250,000 250,000 $0.2200 (2) 0 0 D. Sean McEwen 0 1,500,000 1,500,000 $0.2200 (3) 0 0 Charles L. Schneider Jr. 0 500,000 500,000 $0.2000 (4) 0 0 John Shadek 0 50,000 50,000 $0.2000 (5) 0 0 Terry Addington 0 100,000 100,000 $0.3300 (6) 0 0 Terry Addington 0 25,000 25,000 $0.1771 (6) 0 0 Terry Addington 0 50,000 50,000 $0.1672 (6) 0 0 Robert Beaty 0 100,000 100,000 $0.3300 (6) 0 0 Robert Beaty 0 25,000 25,000 $0.1771 (6) 0 0 Robert Beaty 0 50,000 50,000 $0.1672 (6) 0 0 Robert Beaty 0 25,000 25,000 $0.1650 (6) 0 0 Robert Beaty 0 25,000 25,000 $0.2618 (6) 0 0 Robert Beaty 0 25,000 25,000 $0.1309 (6) 0 0 Robert Beaty 0 25,000 25,000 $0.0627 (6) 0 0 Jeffrey Pearl 0 100,000 100,000 $0.3300 (6) 0 0 Jeffrey Pearl 0 25,000 25,000 $0.1650 (6) 0 0 Jeffrey Pearl 0 25,000 25,000 $0.1232 (6) 0 0 Jeffrey Pearl 0 25,000 25,000 $0.1672 (6) 0 0 Jeffrey Pearl 0 25,000 25,000 $0.1001 (6) 0 0 Nick Metherd 0 300,000 300,000 $0.1500 (7) 100,000 0 Paul LaPier 0 300,000 300,000 $0.1500 (7) 100,000 0 *Rounded to the nearest whole cent. (1) These options vested on the following dates and are exercisable in the following tranches, as vested, and expire December 18, 2022: 31,250 shares exercisable March 18, 2018; June 18, 2018; September 18, 2018; December 18, 2018; March 18, 2019; June 18, 2019; September 18, 2019; and December 18, 2019. Mr. Savage resigned as a director on May 6, 2020. 37 (2) These options vested on the following dates and are exercisable in the following tranches, as vested, and expire December 18, 2022: 31,250 shares exercisable March 18, 2018; June 18, 2018; September 18, 2018; December 18, 2018; March 18, 2019; June 18, 2019; September 18, 2019; and December 18, 2019. Mr. Atkinson resigned as the Secretary on April 15, 2020. (3) These options vested on the following dates and are exercisable in the following tranches, as vested, and expire December 18, 2022: 187,250 shares exercisable March 18, 2018; June 18, 2018; September 18, 2018; December 18, 2018; March 18, 2019; June 18, 2019; September 18, 2019; and December 18, 2019. (4) These options all vested on the December 31, 2018, and expire December 31, 2023. (5) These options all vested on December 18, 2017, and expire December 18, 2022. (6) As part of their designation as directors, Messrs. Addington, Beaty and Dennis Miller (commencing with the quarter beginning on February 12, 2018) and Pearl (commencing with the quarter beginning on January 28, 2019) were granted quarterly stock option grants to purchase 25,000 shares of our common stock, with the shares being valued at 110% of the fair market value or the closing price of our common stock on the date of the grant for the first year, and thereafter at 110% of the fair market value or the closing price of our common stock on the quarterly date of vesting for the remaining quarters of service as a director. These options expire at the earlier of five (5) years from the date of grant or one (1) year from termination or resignation as a director. These directors were also paid $2,000 per month for their service on the Board of Directors. See the “Summary Compensation Table” above. Messrs. Miller and Addington resigned as directors of the Company on October 1, 2018, and January 1, 2020, respectively, and Mr. Miller forfeited 50,000 options that were not exercised within the one (1) year of his resignation; and Mr. Addington forfeited 175,000 options that were not exercised within the one (1) year period of his resignation on January 1, 2021. (7) These options were granted on October 24, 2019, and vest 100,000 shares on December 31, 2019; 100,000 shares on December 31, 2020; and 100,000 shares on December 31, 2021; and they expire on the earlier of five (5) years or three (3) months from the termination of employment. Compensation of Directors Currently, and except for compensation of Mr. McEwen under his Employment Agreement and the $2,000 monthly compensation set out above for certain directors, our directors do not receive any compensation other than the Incentive Stock Options outlined above in this Item under the heading “Outstanding Equity Awards.” Transactions with Related Persons For information regarding transactions with related persons, see the heading “Transactions with Related Persons,” in Part III, Item 13 below. Promoters and Certain Control Persons See the heading “Transactions with Related Persons,” under Item 13 below. Parents of the Smaller Reporting Company We have no parents. ( This space intentionally left blank ) 38 ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Security Ownership of Certain Beneficial Owners The following table sets forth the ownership by any person known to us to be the beneficial owner of more than five percent (5%) of any of our outstanding voting securities as of the filing of this Annual Report with the SEC. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Other than as indicated below in footnotes to this table, the persons named in the table below have sole voting power and investment power with respect to all shares of common stock shown as beneficially owned by them. Security Ownership of Beneficial Owners Name and Address* of Beneficial Owner Title of Class Amount and Nature of Beneficial Ownership (1), (2) & (3) Percent of Class (1), (2) & (3) D. Sean McEwen Common 17,000,000 39.2 % Matthew Atkinson Common 2,569,455 5.9 % Mark Savage Common 3,849,272 8.9 % Joshua Ploude Common 6,300,000 14.5 % Security Ownership of Officers and Directors Name and Address* of Officer or Director Title of Class Amount and Nature of Beneficial Ownership (1), (2) & (3) Percent of Class (1), (2) & (3) D. Sean McEwen Common 17,000,000 39.2 % Brian R. Riffle Common 0 0 % Paul LaPier Common 200,000 .46 % Robert Beaty Common 350,000 .81 % Jeffrey Pearl Common 225,000 .52 % All Officers and Directors as a Group Common 17,775,000 40.8 % * The Company’s principal executive office address on the cover page. (1) The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table. (2) Based on 40,692,286 issued and outstanding shares of common stock, together with 2,725,000 vested options, for a total of 43,417,286 issued (or issuable with respect to such options) and outstanding shares of common stock, as of the date of this Annual Report. SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within sixty (60) days. Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within sixty (60) days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person. (3) Messrs. Joshua Ploude acquired 6,300,000 shares of our common stock under the Apeiron Systems Merger Agreement outlined in our 8-K Current Report dated December 31, 2018, and filed with the SEC on December 31, 2018. See the heading “Apeiron Systems Merger Current Reports” in Part IV, Item 15 hereof. The beneficial ownership of Mr. McEwen in the “Beneficial Owners” table includes 15,500,000 shares directly owned; and 1,500,000 shares underlying personally owned vested options, all of which vested options can be exercised within sixty (60) days of the filing of this Annual Report; and 250,000 options granted to Messrs. Atkinson and Savage. 39 Changes in Control There are no additional present arrangements or pledges of our securities which may result in a change in control of the Company. However, provisions in our Amended and Restated Bylaws could delay, defer or prevent a change in control for a period of two (2) years. See the heading “Shareholder Voting Agreement” of this Item above. ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Transactions with Related Persons Transactions with Shareholders During 2019, Apeiron System’s CEO Josh Ploude advanced $200,000 to the Company. This amount was fully repaid as of October 2020. During 2017, the Company’s shareholders, D. Sean McEwen, Matthew Atkinson, and Mark Savage advanced $191,500, $15,063, and $7,564, respectively. The amounts advanced were used for working capital purposes and did not bear any interest and had no maturity date. All advances were fully repaid as of December 31, 2019. On July 25, 2015, we issued 50,000 shares of our common stock to Daniel Ryweck for his service on our Board of Directors and for a general release. Transactions with CFO Strategies LLC Brian R. Riffle, CFO of the Company, is the Managing Partner of CFO Strategies, LLC. Payments of $28,548 were made to CFO Strategies LLC as compensation for the CFO services of Mr. Riffle. Promoters and Certain Control Persons See the heading “Transactions with Related Persons” of this Item above, and Part III, Item 12 hereof for identification of control persons. Parents of the Smaller Reporting Company We have no parents. Director Independence For purposes of determining director independence, we have applied the definitions set out in NASDAQ Marketplace Rule 4200(a)(15), which states that “Independent director” means “a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.” None of the following named directors come within any of the exceptions to this definition regarding: being or having been an executive officer; having an employee-employer relationship with us; having received compensation from us in an amount in excess of $100,000; and having certain relationships with us, in the case of membership of a director on an audit committee, including applicable family relationships. Accordingly, Messrs. Robert Beaty and Jeffrey Pearl, two (2) of our current directors, are independent directors. ( This space intentionally left blank ) 40 ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES The following is a summary of the fees billed to us by our principal accountants, Haynie & Company, CPAs during the years ended December 31, 2020, and 2019, respectively: Fee Category 2020 2019 Audit Fees $ 77,500 $ 102,491 Audit-related Fees — — Tax Fees — — All Other Fees — — Total Fees $ 77,500 $ 102,491 Audit Fees - Consists of fees for professional services rendered by our principal accountants for the audit of our annual financial statements for our 10-K Annual Reports and review of the financial statements included in our 10-Q Quarterly Reports or services that are normally provided by our principal accountants in connection with statutory and regulatory filings or engagements. Audit-related Fees - Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.” Tax Fees - Consists of fees for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning. All Other Fees - Consists of fees for products and services provided by our principal accountants, other than the services reported under “Audit Fees,” “Audit-related Fees,” and “Tax Fees” above. Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors We have not adopted an Audit Committee; therefore, there is no Audit Committee policy in this regard. However, we do require approval in advance of the performance of professional services to be provided to us by our principal accountant. Additionally, all services rendered by our principal accountant are performed pursuant to a written engagement letter between us and the principal accountant. PART IV ITEM 15: EXHIBIT AND FINANCIAL STATEMENT SCHEDULES (a)(1)(2) Financial Statements. See the audited financial statements of the Company contained in Part II, Item 8 above, of this Annual Report, which are incorporated herein by this reference. ( This space intentionally left blank ) 41 (a)(3) Exhibits. The following exhibits are filed as part of this Annual Report: (a) Exhibits. Exhibit Number Description of Exhibit Filing 3(i) Amended and Restated Certificate of Incorporation Filed with the Form 8-K/A filed on December 20, 2017 and incorporated herein by reference. 3(ii) Amended and Restated Bylaws Filed with the Form 8-K/A filed on December 20, 2017 and incorporated herein by reference. 10.1 Schneider Settlement Agreement and Release Filed herewith 10.2 Glosser Settlement Agreement and Mutual Release Filed herewith 10.3 Ploude and Yanson Working Capital Settlement Agreement Filed herewith 14 Code of Ethics Filed with the Form 8-K/A filed on December 20, 2017 and incorporated herein by reference. 31 .1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith. 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema 101.CAL XBRL Taxonomy Extension Calculation Linkbase 101.DEF XBRL Taxonomy Extension Definition Linkbase 101.LAB XBRL Taxonomy Extension Label Linkbase 101.PRE XBRL Taxonomy Extension Presentation Linkbase Exhibits incorporated by reference: Apeiron Systems Merger Current Reports 8-K Current Report dated January 31, 2019, and filed with the SEC on January 31, 2019 (Press Release) 8-K Current Report dated December 31, 2018, and filed with the SEC on December 31, 2018 . Agreement and Plan of Merger Ploude Employment Agreement Yanson Employment Agreement Lock-up/Leak-out Agreement Shareholder Voting Agreement Telecon Wireless Sale Current Report 8-K Current Report dated August 9, 2018, and filed with the SEC on August 15, 2018 . Asset Purchase Agreement Bill of Sale Promissory Note Security Agreement IM Telecom Current Reports 8-KA-2 Current Report of the same February 7, 2018, and filed with the SEC on February 6, 2019 . IM Telecom PSMI IM Telecom PSMI (First Amendment) IM Telecom PSMI (Second Amendment) Morrow Independent Contractor Agreement and Incentive Stock Option Agreement 42 Morrow Incentive Stock Option Agreement Morrow Lock-Up/Leak-Out Agreement Closing Memorandum (without Exhibits) 8-KA-1 Current Report of the February 7, 2018, and filed with the SEC on January 14, 2019 . 8-K Current Report dated February 19, 2019 and filed with the SEC on February 19, 2019 . Press Release 8-K Current Report dated September 4, 2019, filed with the SEC on September 6, 2019 . Morrow Settlement Agreement and Release Name Change Information Statement Definitive 14C Information Statement filed with the SEC on January 8, 2018 . 8-K Current Report dated February 7, 2018, and filed with the SEC on February 12, 2018 . Amended Certificate of Incorporation KonaTel Merger Current Reports 8-KA-2 Current Report dated November 15, 2017, and filed with the SEC on April 17, 2018 . 8-KA-1 Current Report dated November 15, 2017, filed with the SEC on December 20, 2017 . Agreement and Plan of Merger Articles of Merger Amended and Restated Articles of Incorporation Amended and Restated Bylaws Shareholder Voting Agreement Charles L. Schneider, Jr. Stock Option Cancellation Agreement D. Sean McEwen Employment Agreement Charles L. Schneider, Jr. Employment Agreement J. William Riner Employment Agreement Form of Incentive Stock Option Agreement Form of Lock-Up/Leak-Out Agreement Code of Ethics Shareholder Post Card 8-K Current Report dated November 15, 2017, and filed with the SEC on November 17, 2017 . M2 Change of Control Current Report 8-K Current Report dated July 19, 2017, filed with the SEC on July 20, 2017 . Common Stock Purchase Agreement Form of Common Stock Cancellation Agreement Form of Preferred Stock and Warrants Cancellation Agreement (A) Form of Preferred Stock and Warrants Cancellation Agreement (B) Form of Debt Cancellation Agreement/ Pay-Off Letter ITEM 16. FORM 10-K SUMMARY None. 43 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. KonaTel, Inc. Date: April 6, 2021 By: /s/ D. Sean McEwen D. Sean McEwen Chairman, President and CEO Date: April 6, 2021 By: /s/ Brian R. Riffle Brian R. Riffle Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Date: April 6, 2021 By: /s/ D. Sean McEwen D. Sean McEwen Chairman, President, CEO and a Director Date: April 6, 2021 By: /s/ Brian R. Riffle Brian R. Riffle Chief Financial Officer Date: April 6, 2021 By: /s/ Robert Beaty Robert Beaty Director 44