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, 2022, 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, 2022. 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, 2022, 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, 2022, and that there are no material weaknesses in the Company’s internal controls over financial reporting as of such date. 29 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. 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, 2022. 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. ITEM 9C: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None, not applicable. ( 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 61 Chairman and CEO Dec.-17 Charles D. Griffin 58 President and COO Jan.-22 Brian R. Riffle 63 Chief Financial Officer Dec.-17 B. Todd Murcer 53 EVP, Finance and Secretary Jan.-22 D. Sean McEwen 61 Director Dec.-17 Robert Beaty 53 Director Feb.-18 Jeffrey Pearl 59 Director Oct.-18 Joshua Ploude 46 CEO of Apeiron Systems Dec.-18 Jason N. Welch 52 President of IM Telecom Feb.-22 Background and Business Experience D. Sean McEwen Mr. McEwen is 61 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, 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) 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. Charles D. Griffin Mr. Griffin is 58 years of age. Prior to joining us, Mr. Griffin served as Chairman and Chief Executive Officer of Lingo Communications, a provider of IP-based Cloud voice and data solutions, following its merger with Impact Telecom, Inc. (“Impact Telecom”) in 2018. In this role, he led the successful integration of Impact Telecom into Lingo Communications (“Lingo”) under a private equity purchase and facilitated the financing of the transaction in collaboration with a private equity investor. 31 Impact Telecom and Lingo continue to operate as global providers of voice and data communications services spanning Residential, SMB, Enterprise and Wholesale markets. Prior to the merger of Lingo and Impact Telecom, Mr. Griffin served as Chief Executive Officer of Impact Telecom, where he completed eleven (11) accretive M&A transactions and led the successful restructuring of multiple technology portfolio companies, including PacWest, TNCI and Unipoint Holdings, which resulted in record high net income. As one of the original founders of Impact Telecom, Mr. Griffin led it from a start-up to a company with annual revenues of over $290 million and more than 300 employees servicing 250,000 customers worldwide. Mr. Griffin ultimately guided the Impact Telecom to a successful exit in 2020. Previously, Mr. Griffin served as Chief Executive Officer of Ipath Communications, where he was responsible for building a Class V Broadsoft VoIP network for SMB direct sales distribution with over 5,000 subscribers nationwide. In this role, he also led the successful merger with Impact Telecom. Prior to his time with Ipath, Mr. Griffin served in a number of business development, operations and sales roles where he was involved in product development, sales strategy and distribution and installations, all within the telecommunications industry. Mr. Griffin graduated Summa Cum Laude in business communications from Metropolitan State University of Colorado. Brian R. Riffle Mr. Riffle is 63 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 masters level college instructor at Mount Aloysius College since 1994. He is also a Certified Public Accountant (May 1987). B. Todd Murcer Mr. Murcer is 53 years of age. Prior to joining us, Mr. Murcer served as Executive Vice President, FP&A and Treasury of Lingo Communications, a provider of IP-based Cloud voice and data solutions, following its merger with Impact Telecom, Inc. (“Impact”) in 2018. In this key leadership position, he directed procedures and policies for the financial operations of the business and had responsibility for planning and implementing financial projections and reporting activities for the U.S. and its Canadian subsidiary, Vancouver Telephone Company, Limited. As owner of treasury operations, Mr. Murcer managed the use and sourcing of the company’s cash and banking activities with additional oversight to credit and collections risk management. Mr. Murcer has been in the telecommunication industry for more than 20 years, and got his start with Matrix Telecom, Inc. (“Matrix”), a Platinum Equity portfolio company that ultimately divested to Impact. At Matrix, he helped the company grow annual revenues from $10 million to $400 million, serving in a number of business development and financial roles and leading teams through numerous M&A transactions. Mr. Murcer holds a B.S. in Economics from the University of Oklahoma and an M.S.M. from Boston University’s Brussels Graduate Center. Robert Beaty Mr. Beaty is 53 years of age and currently the President of AGS Construction Inc., a premier reconstruction company in the 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-five (25) 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. 32 Jeffrey Pearl Mr. Pearl is 59 years of age and brings more than thirty-two (32) 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. Mr. Pearl currently is involved in running three companies: Mr. Pearl is currently CEO and Co-founder of OTG Consulting, which was founded in 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 Mr. Pearl 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. Mr. Pearl 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. Joshua Ploude Mr. Ploude is 46 years old. He 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. 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. 33 Jason N. Welch Mr. Welch is 52 years of age, President of IM Telecom. Prior to joining us, Mr. Welch served as Chief Operations Officer of 46 Labs LLC, a provider of SaaS, voice and data solutions servicing large enterprise and communications providers internationally. In this key leadership position, he directed procedures and policies for the operations of the business and had responsibility for service delivery, customer care and vendor management. Prior to joining 46 Labs, Mr. Welch served as Executive Vice President of Impact Telecom, a Lingo Company. In this function, he provided oversight to carrier wholesale sales acquisition, product strategy, account management, agent channel management, vendor management, pricing, routing and business analytics. He successfully managed the growth of the carrier wholesale business unit to $40m+ in annual revenues, processing 18b+ voice minutes annually through hundreds of domestic and international carrier partnerships. Mr. Welch has been in the telecommunication industry for more than 25 years and has successfully served in management roles across companies such as Frontier Communications, Global Crossing, Telco Group Inc., KDDI Global, XO Communication and Impact Telecom. 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; (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; 34 (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, 2022, 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 by our Board of Directors as the Board deems necessary. Corporate Governance Nominating Committee We have not established a Nominating Committee because until our closing of the KonaTel Nevada Merger, we had only two (2) directors 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. 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. 35 Insider Trading Policy During the year ended December 31, 2021, our Board of Directors adopted an Insider Trading Policy, which is Exhibit 99.1 hereto. See Item IV, Part 15. The Insider Trading Policy was adopted by the Company to satisfy its obligations to prevent insider trading and to help its personnel avoid the consequences associated with violations of applicable federal and state securities laws, rules and regulations regarding insider trading of our securities when they have material non-public information related to the Company. It is also intended to prevent even the appearance of improper conduct on the part of anyone employed by or associated with us, not just so-called “insiders.” It contains four (4) “Black-Out Periods”, which are as follows: twenty (20) days prior to the release of financial results for the periods ending March 31, June 30, September 30 and December 31 of each year and end after three (3) full trading days of our securities on the OTCQB (or any other recognized nation medium on which our securities publicly trade [“Other Medium”]) after financial results are announced for the preceding fiscal period. If the last day of the month falls on a weekend, the Black-Out Period will start at the close of business on the last trading day prior to the weekend. Additional Black-Out Periods may occur when other material events occur, such as a press release sent out to the public, wherein only a select few persons have knowledge of the event. The Black-Out Periods do not apply to the exercise of outstanding and vested ISOs issued by the Company or other stock issuances approved by the Board of Directors; however, they do apply to all of our securities that are the subject of a registration statement filed with the SEC. This summary is modified in its entirely by reference to Exhibit 99.1 . ITEM 11: EXECUTIVE COMPENSATION All Compensation The following Employment Agreements of our officers and directors are discussed below under the caption “Executive Compensation” in Part III, Item 11 hereof, and can be accessed by Hyperlink in Part IV, Item 15 hereof: D. Sean McEwen-Chairman and CEO-8-K Current Report dated January 1, 2022, filed with the SEC January 14, 2022, along with the third amendment to Mr. McEwen’s Employment Agreement that is Exhibit 10.1 filed herewith. Charles D. Griffin, President-8-K Current Report dated January 1, 2022, filed with the SEC January 14, 2022. B. Todd Murcer, 8-K Current Report dated February 4, 2022, filed with the SEC on February 11, 2022. Joshua Ploude, President of Apeiron Systems-8-K Current Report dated December 31, 2018, filed with the SEC on December 31, 2018. Jason N. Welch, President of IM Telecom-8-KA-1 Current Report dated February 4, 2022, filed with the SEC on April 8, 2022. 36 Summary Compensation Table Name and Compen- Stock Warrant Compen- Principal Position Salary sation Bonus Awards Awards* sation Total D Sean McEwen, 2022 $ 316,450 $ — $ — $ — $ — $ — $ 316,450 Chairman and CEO 2021 $ 67,976 $ — $ — $ — $ — $ — $ 67,976 Robert Beaty, Director 2022 $ 36,000 $ — $ — $ — $ 122,375 $ — $ 158,375 2021 $ 28,000 $ — $ — $ — $ 89,404 $ — $ 117,404 Jeffrey Pearl, Director 2022 $ 36,000 $ — $ — $ — $ 126,500 $ — $ 162,500 2021 $ 28,000 $ — $ — $ — $ 78,916 $ — $ 106,916 Brian R. Riffle, 2022 $ — $ — $ — $ — $ — $ 16,544 $ 16,544 Chief Financial Officer 2021 $ — $ — $ — $ — $ — $ 37,160 $ 37,160 Charles D. Griffin, 2022 $ 250,000 $ — $ — $ — $ — $ — $ 250,000 President and COO 2021 $ — $ — $ — $ — $ — $ — $ — B. Todd Murcer, Secretary 2022 $ 216,250 $ — $ — $ — $ — $ — $ 216,250 and EVP of Finance 2021 $ — $ — $ — $ — $ — $ — $ — Joshua Ploude, President, 2022 $ 250,000 $ — $ — $ — $ — $ — $ 250,000 Apeiron Systems 2021 $ 219,679 $ — $ — $ — $ — $ — $ 219,679 Jason Welch, President, 2022 $ 225,139 $ — $ — $ — $ — $ — $ 225,139 IM Telecom 2021 $ — $ — $ — $ — $ — $ — $ — *See the heading “Outstanding Equity Awards” below. 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 served as the Chairman, President and CEO of our Company, with customary duties applicable to these positions. After the initial term, the McEwen Employment Agreement provided that it would continue on a year-to-year basis. 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, McEwen’s Employment Agreement was amended to adjust his monthly base salary to $16,667, including a monthly bonus program tied to a percentage of EBITDA. Effective January 1, 2022, McEwen’s Employment Agreement was amended a second time to adjust his monthly base salary to $22,916.66, including a twenty-four (24) month severance compensation package equal to his then current base salary, together with any accrued and untaken vacation, in the event any employment departure is not “for cause” as defined in the McEwen Employment Agreement. Additionally, at the time of the second amendment to his Employment Agreement, Mr. McEwen resigned as President of the Company to allow for Charles D. Griffin to assume the role of President and COO of the Company. Mr. McEwen remains as Chairman of the Board and CEO of the Company. Mr. McEwen has never claimed the “percentage of EBITDA” bonus program provision of his Employment Agreement; accordingly, effective April 12, 2022, Mr. McEwen suggested, and the Board of Directors agreed, to a third amendment of his Employment Agreement thereby eliminating the percentage of EBITDA bonus provision. Mr. McEwen volunteered this third amendment to his Employment Agreement without receipt of any current or future consideration, and all other terms and conditions of the McEwen Employment Agreement along with its three amendments remain the same. The third amendment to Mr. McEwen’s Employment Agreement is filed herewith as Exhibit 10.1 , in Part IV, Item 15 hereof. Charles D. Griffin Employment Agreement The Griffin Employment Agreement covers customary duties performed by persons serving in the capacities of President and COO, and Mr. Griffin, with the guidance of Mr. McEwen, our Chairman and CEO, will assist in the management and leadership of the Company and is accountable to our CEO; he will also act as a liaison between the Company, our subsidiaries and our CEO. A complete description of his duties is contained in Exhibit A of the Griffin Employment Agreement, which provides, among other customary terms and provisions: (i) a monthly base salary of $20,833.33, along with inclusion in our healthcare plan for employees and spouse, including medical, dental and vision coverage, effective January 1, 2022, and termination can occur on thirty (30) days’ notice by either party; (ii) customary trade secret, non-competition and dispute resolution provisions, among other provisions; and (iii) he shall be paid a twelve (12) months’ severance compensation package equal to his then current base salary, together with any accrued and untaken vacation, in the event any employment departure is not “for cause” as defined in the Griffin Employment Agreement. 37 The Employment Agreement has customary termination, trade secret and dispute resolution clauses, among others. B. Todd Murcer Employment Agreement On January 24, 2022, we entered into an Employment Agreement with Mr. Murcer (the “Murcer Employment Agreement”), under which Mr. Murcer will serve as our Executive Vice President of Finance and Secretary of the Company, with customary duties applicable to these positions, and which are described in Exhibit A thereof. Under the Murcer Employment Agreement, Mr. Murcer will receive the following compensation: $18,750 per month base salary; and inclusion in our healthcare plan for employees, including medical, dental and vision, which coverage also includes his immediate family. The monthly base salary may be increased or decreased from time to time in the sole discretion of the Company, but in no event shall the monthly base salary be less than the amount stated in this section. Mr. Murcer is entitled to paid vacation during each year of his employment in accordance with the Company’s vacation accrual policy as defined by our Company handbook; and he may also receive an annual bonus under the Company’s bonus program established by us and as approved by our Board of Directors each calendar year. The Murcer Employment Agreement also contained customary termination, trade secret and dispute resolution clauses, among others. Joshua Ploude Employment Agreement Effective December 31, 2018, Apeiron and Mr. Ploude executed and delivered a 36-month Employment Agreement under which Mr. Ploude will be the Chief Executive Officer of Apeiron, with the attendant duties and responsibilities outlined in his Employment Agreement, at a monthly salary of $16,667 (the “Ploude Employment Agreement”). On September 1, 2021, Mr. Ploude’s monthly salary was increased to $20,883.33. The Ploude Employment Agreement has customary provisions regarding trade secrets; a one (1) year covenant not to compete; confidentiality; Apeiron’s continued ownership of intellectual property; a duty to cooperate; free, fully-paid licensing to Apeiron of inventions created by Mr. Ploude that he provides or incorporates into any Employer product or system during his employment with Apeiron; and an assignment of Mr. Ploude’s interest in all relevant intellectual property utilized by Apeiron, among other terms and conditions. Jason N. Welch Employment Agreement On February 2, 2022 (effective February 14, 2022), we entered into an Employment Agreement with Mr. Welch (the “Welch Employment Agreement”), under which Mr. Welch will serve as the President of IM Telecom, with customary duties applicable to this position, and which are described in Exhibit A thereof. Under the Welch Employment Agreement, Mr. Welch will receive the following compensation: $20,833.33 per month base salary; and inclusion in our healthcare plan for employees, including medical, dental and vision, which coverage also includes his immediate family. The monthly base salary may be increased or decreased from time to time in the sole discretion of the Company, but in no event shall the monthly base salary be less than the amount stated in this section. Mr. Welch is entitled to paid vacation during each year of his employment in accordance with the Company’s vacation accrual policy as defined by our Company handbook; and he may also receive an annual bonus under the Company’s bonus program established by us and as approved by our Board of Directors each calendar year. The Welch Employment Agreement also contained customary termination, trade secret and dispute resolution clauses, among others. ( This space intentionally left blank) 38 Securities Authorized for Issuance under Equity Compensation Plans Outstanding Equity Awards The following table represents 2,855,000 options granted, with 1,725,000 exercised, and 1,645,000 options still available to be granted under the 6,225,000 shares reserved for issuance under the Company’s 2018 Incentive Stock Option Plan. Name Option Awards Stock Awards Number of Number of Equity Option Option Number of Market Equity Equity securities securities incentive plan exercise expiration shares or value of incentive incentive underlying underlying awards; price ($) date units of shares or plan plan unexercised unexercised number of stock that units of awards; awards; options (#) options (#) securities have not stock that number of market or exercisable not underlying vested (#) have not unearned payout exercisable unexercised vested (#) shares, value of unearned units or unearned options (#) other shares, rights united or that have other not rights vested (3) that have not vested (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Robert Beaty 100,000 0 $0.33 (1) 0 0 Robert Beaty 25,000 0 $0.18 (1) 0 0 Robert Beaty 50,000 0 $0.17 (1) 0 0 Robert Beaty 25,000 0 $0.17 (1) 0 0 Robert Beaty 25,000 0 $0.26 (1) 0 0 Robert Beaty 25,000 0 $0.13 (1) 0 0 Robert Beaty 25,000 0 $0.06 (1) 0 0 Robert Beaty 25,000 0 $0.44 (1) 0 0 Robert Beaty 25,000 0 $0.66 (1) 0 0 Robert Beaty 25,000 0 $0.94 (1) 0 0 Robert Beaty 25,000 0 $1.93 (1) 0 0 Robert Beaty 25,000 0 $1.14 (1) 0 0 Robert Beaty 25,000 0 $1.01 (1) 0 0 Robert Beaty 25,000 0 $1.91 (1) 0 0 Robert Beaty 25,000 0 $1.32 (1) 0 0 Robert Beaty 25,000 0 $0.81 (1) 0 0 Jeffrey Pearl 100,000 0 $0.50 (2) 0 0 Jeffrey Pearl 25,000 0 $0.17 (2) 0 0 Jeffrey Pearl 25,000 0 $0.12 (2) 0 0 Jeffrey Pearl 25,000 0 $0.17 (2) 0 0 Jeffrey Pearl 25,000 0 $0.10 (2) 0 0 Jeffrey Pearl 25,000 0 $0.49 (2) 0 0 Jeffrey Pearl 25,000 0 $0.60 (2) 0 0 Jeffrey Pearl 25,000 0 $0.81 (2) 0 0 Jeffrey Pearl 25,000 0 $1.60 (2) 0 0 Jeffrey Pearl 25,000 0 $1.34 (2) 0 0 Jeffrey Pearl 25,000 0 $1.10 (2) 0 0 Jeffrey Pearl 25,000 0 $1.74 (2) 0 0 Jeffrey Pearl 25,000 0 $1.39 (2) 0 0 Jeffrey Pearl 25,000 0 $0.88 (2) 0 0 Jonathan So 50,000 100,000 $0.32 (3) 0 0 Edward Archuleta 10,000 20,000 $0.73 (4) 0 0 Charles D. Griffin 0 1,100,000 $0.78 (5) 0 0 Amy Pearson 16,667 33,333 $0.75 (6) 0 0 B. Todd Murcer 87,500 262,500 $1.17 (7) 0 0 Jason N. Welch 87,500 262,500 $1.04 (8) 0 0 39 (1) As part of his designation as director, Mr. Beaty was granted quarterly stock option grants to purchase 25,000 shares of our common stock commencing February 12, 2018, 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 any other remaining quarters of service as a director. The first quarterly grants of 25,000 (100,000 total) were all granted at the same exercise price of $0.33 and all would have expired February 11, 2023. The remaining options expire at the earlier of five (5) years from the date of quarterly grant or one (1) year from termination or resignation as a director. On February 9, 2023, Mr. Beaty exercised his first option grants of 100,000 options by conveying to the Company 44,686 unencumbered shares of the Company’s common stock that he had acquired in an unrelated private transaction in 2020, which was subsequent to the date of this Annual Report. (2) As part of his designation as director, Mr. Pearl was granted quarterly stock option grants to purchase 25,000 shares of our common stock commencing October 28, 2018, 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. The first quarterly grants of 25,000 (100,000 total) were all granted at the same exercise price of $0.495 and all expire October 28, 2023. The remaining options expire at the earlier of five (5) years from the date of quarterly grant or one (1) year from termination or resignation as a director. (3) These options were granted on April 1, 2021, and vest 50,000 shares on April 1, 2022; 50,000 shares on April 1, 2023; and 50,000 shares on April 1, 2024; and they expire on April 1, 2026, or ninety (90) days from resignation or termination of employment. (4) These options were granted on May 17, 2021, and vest 10,000 shares on May 17, 2022; 10,000 shares on May 17, 2023; and 10,000 shares on May 17, 2024; and they expire on May 17, 2026, or ninety (90) days from resignation or termination of employment. (5) These options were granted on July 6, 2021, and vest 275,000 shares on January 7, 2023; 275,000 shares on January 7, 2024; 275,000 shares on January 7, 2025; and 275,000 shares on January 7, 2026; and they expire on January 7, 2027, or ninety (90) days from resignation or termination of employment. (6) These options were granted on September 27, 2021, and vest 16,667 shares on September 27, 2022; 16,667 shares on September 27, 2023, and 16,666 shares on September 27, 2024; and they expire on September 26, 2026, or ninety (90) days from resignation or termination of employment. (7) These options were granted on January 24, 2022, and vest 87,500 shares on January 24, 2023, 87,500 shares on January 24, 2024, 87,500 shares on January 24, 2025 and 87,500 shares January 24, 2026; and they expire on January 24, 2027, or ninety (90) days from resignation or termination of employment. (8) These options were granted on February 14, 2022, and vest 87,500 shares February 14, 2023, 87,500 shares on February 14, 2024, 87,500 shares on February 14, 2025 and 87,500 shares on February 14, 2026; and they expire on February 14, 2027, or ninety (90) days from resignation or termination of employment. Compensation of Directors Mr. McEwen receives no compensation to serve as a Director and Chairman of the Board. Currently, and except for compensation of Mr. McEwen under his Third Amended Employment Agreement (see Exhibit 10.1, in Part IV, Item 15), and the $3,000 monthly compensation set out above for certain directors, our directors do not receive any other 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. 40 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. 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* Title of Amount and Nature of Percent of of Beneficial Owner Class Beneficial Ownership (1), (2), (3) & (4) Class (1), (2), (3) & (4) D. Sean McEwen Common 17,000,000 37.67% Joshua Ploude Common 6,300,000 13.96% James Michael Grisham Common 3,250,000 7.2% Security Ownership of Officers and Directors Name and Address* Title of Amount and Nature of Percent of of Officer or Director Class Beneficial Ownership (1), (2), (3) & (4) Class (1), (2), (3) & (4) D. Sean McEwen Common 17,000,000 37.67% Charles D. Griffin Common 275,000 0.61% Brian R. Riffle Common 0 0.00% B. Todd Murcer Common 87,500 0.19% Robert Beaty Common 530,314 1.18% Jeffrey Pearl Common 450,000 1.00% Joshua Ploude Common 6,300,000 13.96% Jason N. Welch Common 87,500 0.19% All Officers and Directors as a Group Common 24,730,314 54.81% *The Company’s principal executive office address on the cover page. (1) James Michael Grisham is presently the sole Trustee of “The James T. Coyle Trust” formed by Mr. Coyle on June 19, 2012 (the “Coyle Trust”), and is one of four (4) equal beneficiaries, per stirpes, of the Coyle Trust. He is also the CEO of Shawnee Communications, Inc. (“Shawnee”) The Coyle Trust and Shawnee purchased, respectively, from the Company, 750,000 shares ($150,000) and 2,500,000 shares ($500,000) of the Company’s common stock on or about March 6, 2018, and collectively own 3,250,000 shares or 7.2% of the outstanding securities of the Company. Neither Mr. Grisham, the Coyle Trust or Shawnee is or has ever been an “affiliate” of the Company. (2) 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 sixty (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. 41 (3) Based on 42,483,220 currently issued and outstanding shares of common stock, together with 1,312,500 non-compensatory stock options of Mr. McEwen; 1,325,000 vested incentive stock options, comprised of, 425,000 for Robert Beaty, 450,000 Jeffrey Pearl, Charles D. Griffin for 275,000, Todd Murcer for 87,500, and Jason Welch for 87,500, for a total of 45,120,720 issued (or issuable with respect to such options within sixty [60] days) and outstanding shares of common stock, as of the filing of this Annual Report. SEC Rule 13d-3 generally provides that management’s beneficial ownership of securities includes any such security that can be acquired within sixty (60) days. Accordingly, any securities not outstanding, which are subject to such options, warrants or conversion privileges and exercisable within sixty (60) days, are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person, and are not treated as outstanding for the purpose of computing the percentage of the class owned by any such person. (4) The beneficial ownership of Mr. McEwen in the “Beneficial Owners” table includes 15,687,500 shares directly owned; and 1,312,500 shares underlying personally owned vested options, all of which vested non-compensatory options can be exercised within sixty (60) days of the filing of this Annual Report. 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. ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Transactions with Related Persons Transactions with Shareholders None. Transactions with CFO Strategies LLC Brian R. Riffle, the CFO of the Company, is the Managing Partner of CFO Strategies, LLC. Payments of $16,544 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. 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. 42 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. 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, 2022, and 2021, respectively: Fee Category 2022 2021 Audit Fees $ 100,500 $ 89,156 Audit-related Fees — — Tax Fees — — All Other Fees — — Total Fees $ 100,500 $ 89,156 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. ( This space intentionally left blank ) 43 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. (a)(3) Exhibits. The following exhibits are filed as part of this Annual Report: (a) Exhibits. Exhibit Description of Exhibit Filing Number 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. 4 Description of the Company’s Securities Filed herewith. 10.1 Third Amended Employment Agreement with D. Sean McEwen Filed with the Form 8-K dated January 1, 2022, and filed with the SEC on January 14, 2022. 10.2 Charles D. Griffin Employment Agreement Filed with the Form 8-K dated January 1, 2022, and filed with the SEC on January 14, 2022. 10.3 B. Todd Murcer Employment Agreement Filed with the Form 8-K dated February 4, 2022, and filed with the SEC on February 11, 2022. 10.4 Joshua Ploude Employment Agreement Filed with the Form 8-K dated December 31, 2018, and filed with the SEC on December 31, 2018. 10.5 Jason N. Welch Employment Agreement Filed with the Form 8-K/A-1 dated February 4, 2022, and filed with the SEC on April 8, 2022. 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. 99.1 Insider Trading Policy 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 44 Exhibits incorporated by reference: 8-K Current Report dated June 14, 2022 (“CCUR”), and filed with the SEC on June 21, 2022 10-Q Quarterly Report for the quarter ended June 30, 2022, and filed with the SEC on August 15, 2022. ITEM 16. FORM 10-K SUMMARY None. ( This space intentionally left blank ) 45 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 17, 2023 By: /s/ D. Sean McEwen D. Sean McEwen Chairman, CEO and Director Date: April 17, 2023 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 17, 2023 By: /s/ D. Sean McEwen D. Sean McEwen Chairman, CEO and a Director Date: April 17, 2023 By: /s/ Brian R. Riffle Brian R. Riffle Chief Financial Officer Date: April 17, 2023 By: /s/ Robert Beaty Robert Beaty Director Date: April 17, 2023 By: /s/ Jeffrey Pearl Jeffrey Pearl Director 46