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 ktel: Number

 UNITED STATES

 SECURITIES EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K

 x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

 ACT OF 1934

 For the fiscal year ended December 31, 2024

 TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

 ACT OF 1934

 Commission File No. 001-10171

 (Name of Small Business Issuer in its Charter)

 Delaware

 80-0973608

 (State or other Jurisdiction of Incorporation or organization)

 (I.R.S. Employer Identification No.)

 500 N. Central Expressway, Ste.

 Plano, Texas 75074

 (Address of Principal Executive Offices)

 214 - 323-8410

 (Registrant ' s Telephone Number, including area code)

 Securities Registered Pursuant to Section 12(b) of
the Act: None

 Securities Registered Pursuant to Section 12(g) of
the Act: Common Stock, par value $0.001

by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x No

by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes x No

by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. x Yes o No

by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was
required to submit such files). x Yes o No

by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o

 Indicate by check mark whether the Registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See
definition of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging
growth company" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer o

 Accelerated filer o

 Non-accelerated filer x

 (Do not check if a smaller reporting company)

 Smaller reporting company x

 Emerging Growth company

 Our website is KonaTel.com.

 If
an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the Registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Exchange Act, indicate by check mark whether the financial statements of the
Registrant included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the Registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

 On June 28, 2024, the last business day of the Registrant's
most recently completed second quarter, the aggregate market value of the Registrant's common stock held by non-affiliates of the
Registrant was $ 10,634,006, based upon 18,023,740 shares of the Registrant's common stock being currently owned by such persons,
and based upon the closing price of the common stock of the Registrant on the OTC Markets Group, LLC (the "OTC Markets") "OTCQB
Tier" ("KTEL") of $0.59 per share on June 28, 2024.

 As of March 31, 2025, the Registrant had 43,526,417 shares
of its common stock, $0.001 par value, issued and outstanding.

 REFERENCES

 In this Annual Report, references to "KonaTel,
Inc.," "KonaTel," the "Company," "we," "our," "us" and words of similar
import, refer to KonaTel, Inc., a Delaware corporation, formerly named Dala Petroleum Corp., which is the Registrant, and our wholly owned
subsidiaries at December 31, 2024, KonaTel, Inc., a Nevada corporation ("KonaTel Nevada"), and Apeiron Systems, Inc., a Nevada
corporation ("Apeiron Systems" or "Apeiron"). Our 51% owned subsidiary, IM Telecom, LLC, an Oklahoma limited liability
company doing business as "Infiniti Mobile," is referenced herein as "IM Telecom" or "Infiniti Mobile."

 FORWARD LOOKING STATEMENTS

 This Annual Report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In some cases, you can identify forward-looking statements
by the following words: "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intend," "may," "ongoing," "plan," "potential," "predict,"
"project," "should," "will," "would," or the negative of these terms or other comparable
terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future
performance or results and will not necessarily be accurate indications of the times at, or by which, such performance or results will
be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown
risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different
from the information expressed or implied by the forward-looking statements in this Annual Report. We cannot assure you that the forward-looking
statements in this Annual Report will prove to be accurate, and therefore, prospective investors are encouraged not to place undue reliance
on forward-looking statements. You should carefully read this Annual Report completely, and it should be read and considered with all
other reports filed by us with the United States Securities and Exchange Commission (the "SEC"). Other than as required by
law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

 CAUTIONARY STATEMENT

 Summaries of all agreements or other documents referenced
herein or attached hereto by Hyperlink in Section 9 – Financial Statements and Exhibits, Item 9.01, Part IV, Item 15, and incorporated
herein by reference or otherwise, do not purport to be all inclusive of the terms, conditions and other provisions of such agreements
or documents, and accordingly, all such summaries are modified in their entirety to these referenced and Hyperlinked respective agreements
or documents.

 DOCUMENTS INCORPORATED HEREIN BY REFERENCE

 See Section 9 – Financial Statements and Exhibits,
Item 9.01, Part IV, Item 15, hereof.

 PART I.

 Item 1. Business

 Item 1A. Risk Factors

 Item 1B. Unresolved Staff Comments

 Item 1C. Cybersecurity

 Item 2. Properties

 Item 3. Legal Proceedings

 Item 4. Mine Safety Disclosures

 PART II.

 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6. [Reserved]

 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A. Quantitative and Qualitative Disclosures about Market Risk

 Item 8. Financial Statements and Supplementary Data

 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 Item 9A. Controls and Procedures

 Item 9B. Other Information

 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 PART III.

 Item 10. Directors, Executive Officers and Corporate Governance

 Item 11. Executive Compensation

 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13. Certain Relationships and Related Transactions, and Director Independence

 Item 14. Principal Accounting Fees and Services

 PART IV.

 Item 15. Exhibit and Financial Statement Schedules

 Item 16. Form 10-K Summary

 Signatures

 ITEM 1. BUSINESS

 Corporate History and Business Development

 We were incorporated as "Light Tech, Inc."
under the laws of the State of Nevada on May 24, 1984. A subsidiary in the name "Westcott Products Corporation" was organized
by us under the laws of the State of Delaware on June 24, 1986, for the purpose of changing our name and domicile to the State of Delaware.
On June 27, 1986, we merged with the Delaware subsidiary, with the survivor being Westcott Products Corporation, a Delaware corporation.
At that time, all of our prior operations were conducted through Lee Building Products and T. A. Kilgore & Company, which owned and
operated a home center in League City, Texas, about thirty (30) miles southeast of downtown Houston, Texas. During 1990, we ceased these
operations, and the secured lenders took possession of our assets.

 We changed our name to "Dala Petroleum Corp."
on August 29, 2014, after re-entering the development stage and the completion of a merger with our newly formed and wholly owned subsidiary,
Dala Acquisition Corp., a Nevada corporation, on June 2, 2014 (respectively, "Dala Acquisition" and the "Dala Merger").
Dala Nevada was wholly owned by Chisholm Partners II, LLC, a Louisiana limited liability company ("Chisholm II"). We operated
as an early-stage oil exploration company focused on our leased acreage acquired in the Dala Merger until 2016, when Chisholm II returned
a total of 8,567,800 shares of the 10,000,000 shares of our common stock exchanged under the Dala Merger to us for cancellation in exchange
for our assignment of approximately 55,000 acres, more or less, of our leased acreage or approximately 68.75% of our total leased acreage,
to Chisholm II. All of our remaining oil and gas leasehold interests, comprising leases covering approximately 7,489 and 403 acres, more
or less, expired in 2017 and 2018, respectively.

 On July 20, 2017, pursuant to a Common Stock Purchase
Agreement dated July 19, 2017, M2 Equity Partners, LLC, a privately-held Minnesota limited liability company ("M2"), acquired
12,100,000 shares of our common stock in consideration of the sum of $367,500, which resulted in a change in control of our Company.

 On November 13, 2017, we filed an Amended and Restated
Certificate of Incorporation with the State of Delaware, which removed all of the designations of our preferred stock from our Certificate
of Incorporation, while reserving our 50,000,000 authorized and unissued one $0.01 par value shares of preferred stock for future issuance
as the Board of Directors may designate and approve.

 Effective December 18, 2017, we completed an Agreement
and Plan of Merger (the "KonaTel Merger Agreement") with our newly formed wholly owned subsidiary, Dala Subsidiary Corp.,
a Nevada corporation ("Dala Nevada"), under which KonaTel, Inc., a Nevada corporation ("KonaTel Nevada"), became
our wholly owned subsidiary on the closing of the merger (the "KonaTel Nevada Merger"); and we succeeded to the business operations
of KonaTel Nevada, comprised of a full service cellular provider that delivered cellular products and services to individual and business
customers in various retail and wholesale markets nationwide through its sales network, and we changed our name to "KonaTel, Inc."
on January 16, 2018.

 Effective February 7, 2018,
and dated as of February 5, 2018, we entered into an Agreement for the Purchase and Sale of Membership Interest (the "PSMI"),
with the transaction documents being deposited in escrow on February 7, 2018, respecting the acquisition of 100% of the membership interest
in IM Telecom, doing business as "Infiniti Mobile." The principal asset of IM Telecom at that time was a "Lifeline Program"
license of the Federal Communications Commission ("FCC"), which was an FCC approved wireless "Compliance
Plan."

 On August 9, 2018, we entered
into an Asset Purchase Agreement (the "Telecon Wireless Agreement") with Telecon Wireless Resources, Inc., a New York corporation
("Telecon Wireless"), whereby we sold various assets, including furniture, fixtures, equipment, accounts receivable and a
customer list, among other assets and liabilities, to Telecon Wireless.

 Effective December 31, 2018,
we completed an Agreement and Plan of Merger with Apeiron Systems (the "Apeiron Systems Merger Agreement"), and under which
we exchanged 7,000,000 shares of our common stock for all of the outstanding shares of Apeiron Systems. Apeiron Systems became our wholly
owned subsidiary on the closing of the merger (the "Apeiron Systems Merger"). Apeiron Systems was organized in 2013 as a provider
of a suite of real-time business communications services that included voice, messaging, network connectivity and platform services.

 On December 14, 2020, the
shares of our common stock were approved for up listing to the OTC Markets Group LLC (the "OTC Markets") OTCQB Venture
Market ("OTCQB Tier"). OTCQB is a venture market operated by OTC Markets. To be eligible for quotations on the OTCQB, companies
must be current in their reporting obligations under Section 13 or 15(d) of the Exchange Act and undergo an annual verification and management
certification process and/or meet other compliance provisions of the OTC Markets contained in its "OTC Alternative Reporting Guidelines,"
which include, among other miscellaneous conditions, a minimum bid price of $0.01, a "public float" of not less than 10%
of the total outstanding shares and a minimum of fifty (50) beneficial shareholders. The OTC Markets is recognized by the SEC as a "Qualified
Interdealer Quotation System" ("IDQS") under SEC Rule 15c2-11(e)(6); and the OTCQB is an established public market
that provides current public information to investors.

 On August 25, 2021, we filed
a registration statement with the SEC on Form S-8 to register 5,901,884 shares of our common stock reserved for grants underlying our
2018 Incentive Stock Option Plan (the 2018 year designation reflects our change to a calendar year end in 2017, following the closing
of the KonaTel Nevada Merger).

 On June 14, 2022, we and
Apeiron Systems and IM Telecom entered into a Note Purchase Agreement (the "NPA") with CCUR Holdings, Inc., a Delaware corporation
("CCUR"), as "Collateral Agent"; and CCUR and Symbolic Logic, Inc., a Delaware corporation ("Symbolic"),
as "Purchasers," along with a related Guarantee and Security Agreement (the "GSA"), whereby the Company and its
subsidiary companies pledged their assets (including the Company's equity ownership of its subsidiaries) to secure $3,150,000 (the
"Principal Amount") in debt financing payable in one (1) year (to be repaid prior to nine (9) months), together with interest
at the rate of 15% per annum (the "Interest Rate"). On June 1, 2023, we entered into a "First Amendment to the
NPA" with CCUR and Symbolic. The purpose of the amendment was to add further growth capital to the Company in the form of "Delayed
Draw Notes" in an aggregate principal amount of up to $2,000,000; and in consideration therefor, we provided additional collateral
for the NPA. See our 8-K Current Report dated June 14, 2022, filed with the SEC on June 21, 2022, and our 8-KA Current Report dated
June 14, 2022, filed with the SEC on June 7, 2023, for additional information on the CCUR Loan. These Current Reports are available by
Hyperlink in Section 9 – Financial Statements and Exhibits, Item 9.01, Part IV, Item 15 hereof, and are incorporated herein by reference.
The CCUR Loan was paid in full on or about January 23, 2024, which was the "Initial Closing Date" of our "Purchase Agreement"
with Excess Telecom, Inc., a Nevada corporation, which is discussed below.

 On July 7, 2022, we filed
a registration statement with the SEC on Form S-8 to register an additional 2,000,000 shares of our common stock reserved for grants underlying
our 2018 Incentive Stock Option Plan.

 On August 22, 2022, we filed
an amendment to our registration statement with the SEC on Form S-8 to decrease our shares registered on Form S-8 by 1,500,000 shares;
and on March 20, 2023, we filed a similar amendment on Form S-8 to decrease our shares registered on Form S-8 by 253,764 shares, then
leaving 6,148,120 remaining registered shares, with 1,648,120 shares having been issued and 4,500,000 shares being reserved for future
issuance under outstanding grants or to be granted incentive stock options.

 On January 24, 2023, we entered
into a non-material Membership Interest Purchase Agreement to acquire 100% of Tempo Telecom, LLC, a Georgia limited liability company
and an FCC Eligible Telecommunications Carrier ("ETC") authorized to provide Lifeline services in twenty-one (21) states (respectively,
the "Tempo Purchase Agreement" and "Tempo"), the closing of which is subject to the approval of the FCC and applicable
state and other governmental agencies, among other conditions. As of December 31, 2024, this agreement continues to be under review by
the FCC.

 On April 6, 2023, pursuant
to a Purchase of Contract Rights Agreement between the Company and Insight Mobile, Inc., a Delaware corporation (respectively, the "Insight
Mobile Agreement" and "Insight Mobile"), we and Insight Mobile executed and delivered an Assumption of Membership Interest
Purchase Agreement (the "Assignment Agreement"), which is being held in escrow by counsel for Insight Mobile (the "Escrow
Agent") pending satisfaction of all conditions to the closing of the Tempo Purchase Agreement, and whereby Insight Mobile has agreed
to pay us the "Purchase Price" of $4,500,000 for our "Contract Rights" under the Tempo Purchase Agreement. For
additional information on the Insight Mobile Agreement and the Assignment Agreement, see our 8-K Current Report dated April 6, 2023, filed
with the SEC on April 17, 2023, which is Hyperlinked in Section 9 – Financial Statements and Exhibits, Item 9.01, Part IV, Item
15, below, and is incorporated herein by reference.

 On December 8, 2023, we filed
an additional registration statement on Form S-8 to increase the number of shares of our common stock available for issuance under our
2018 Incentive Stock Option Plan by 1,700,000 shares. This amendment resulted in 7,848,120 registered shares equaling 1,748,120 shares
issued and 6,100,000 reserved shares remaining for future issuance.

 Effective December 18, 2023,
we and IM Telecom, as the "Purchasers," entered into an Installment Sale Agreement (the "Installment Sale Agreement")
with ACP Financing VII Limited Liability Company, a Texas limited liability company ("ACP Financing"), as the "Seller,"
pursuant to which the Seller agreed to purchase new and refurbished cellular devices for distribution through the Purchasers' distribution
network to Affordable Connectivity Program (the "ACP" [which ended on June 1, 2024, and has not been renewed by the United
States Congress]), Federal Lifeline and California Lifeline eligible consumers, such devices operating on 4G or better technology platforms
or any such other consumer technology equipment upon the mutual agreement of the Seller and the Purchasers (the "Devices"),
and to sell the Devices to the Purchasers. It is intended that this Installment Sale Agreement will be utilized by KonaTel following
the payment of all outstanding amounts owed to ACP Financing. For additional information on the Installment Sale Agreement, see our
8-K Current Report dated December 18, 2023, filed with the SEC on December 22, 2023, which is Hyperlinked in Section 9 – Financial
Statements and Exhibits, Item 9.01, Part IV, Item 15, below, and is incorporated herein by reference.

 On November 10, 2023, Apeiron
Systems entered into a five (5) year agreement with Viva-US Telecommunications, Inc. ("Viva-US"), as the exclusive supplier
of wholesale cellular voice and data, messaging, international call termination, smart SIM ("Subscriber Identity Module")
and other telecommunications services. Apeiron Systems provides these services through its CPaaS ("Communication Platform as a
Service") cloud platform. Viva-US is a US MVNO ("Mobile Virtual Network Operator") and part of the Balesia Technologies,
Inc. group of companies operating MNOs ("Mobile Network Operator") and MVNOs throughout North and South America, supporting
over three million customers in Bolivia, Mexico and Argentina.

 On January 22, 2024
(the "Effective Date"), KonaTel and IM Telecom entered into a Membership Interest Purchase Agreement (the "Excess
Telecom Purchase Agreement" or the "Membership Interest Purchase Agreement") with Excess Telecom, Inc., a Nevada
corporation ("Excess Telecom"), pursuant to which KonaTel conveyed 49% of its membership interest in IM
Telecom to Excess Telecom on the "Initial Closing Date" in consideration of the sum of $10,000,000, and if approved by
the FCC, will convey the remaining 51% of the membership interest in IM Telecom to Excess Telecom for the sum of $100 on the
"Final Closing." If not approved by the FCC, KonaTel shall retain 51% of IM Telecom and Excess Telecom shall retain 49%
of IM Telecom; and KonaTel shall have no obligation to refund any portion of the funds paid by Excess Telecom to KonaTel. Additional
agreements were also executed by the parties at the Initial Closing Date of the Excess Telecom Purchase Agreement, including a
Management Service Agreement, a Master Distribution Agreement and an Amended and Restated Operating Agreement (collectively, the
"Transaction Documents"). As of December 31, 2024, the approval of this agreement by the FCC is still
pending. For additional information on these Transaction Documents, see our 8-K Current Report dated January 22, 2024, filed
with the SEC on January 30, 2024, which is Hyperlinked in in Section 9 – Financial Statements and Exhibits, Item 9.01, Part
IV, Item 15, below, and are incorporated herein by reference.

 Events
Subsequent to December 31, 2024

 Restatement
of Certain Provisions of the Excess Telecom Agreement

 IM Telecom and Excess Telecom
have been working together to establish best practices in compliance and building an expanded ETC footprint in the United States. In addition
to our approved Federal Compliance Plan, IM Telecom has increased its state-authorized ETC approvals and is now approved in forty (40)
states. Although these state approvals are complete, IM Telecom is currently awaiting FCC delivery of several Study Area Codes ("SACs")
to begin operating in the additional states. In furtherance of this process, certain of the initial Transaction Documents have been restated
by signature dated March 4, 2025, but effective as of the date or dates set forth at the beginning of each of the referenced Transaction
Documents and copies of which accompany our 8-KA Current Report dated January 22, 2024, filed with the SEC on March 10, 2025, which is
Hyperlinked in in Section 9 – Financial Statements and Exhibits, Item 9.01, Part IV, Item 15, below, and is incorporated herein
by reference.

 BUSINESS

 KonaTel Nevada was organized under the laws of the
State of Nevada on October 14, 2014, by its founder and then sole shareholder, D. Sean McEwen, our current Chairman and CEO, to conduct
the business of a full-service cellular provider that delivered cellular products and services to individual and business customers in
various retail and wholesale markets. Through its sales network, it provides these services nationwide. In furtherance of its proposed
business, on November 1, 2014, it acquired most of the assets of Coast to Coast Cellular, Inc. ("Coast to Coast"), including
inventories, property, plant and equipment and its customer list, all valued at approximately $950,000 net of liabilities in the approximate
amount of $415,000; and on November 1, 2016, it acquired the assets of CS Agency LLC ("CS Agency"), consisting of contract
rights related to the cellular industry, in consideration of assuming liabilities of CS Agency in the approximate amount of $300,000.
With the completion of the KonaTel Nevada Merger, we succeeded to the current and intended business operations of KonaTel Nevada.

 On December 31, 2018, we acquired Apeiron Systems
(www.apeiron.io). Apeiron was organized in 2013 and is an international hosted services Communications Platform as a Service ("CPaaS")
provider that designed, built, owns and operates its national private core network, supporting a suite of business communications services,
all accessible via proprietary Applications Programming Interfaces ("APIs"). As an FCC licensed Internet Telephony Service
Provider ("ITSP"), Apeiron also holds an FCC numbering authority license. Some of Apeiron's hosted services include
Voice over IP ("VoIP"), cellular and Over-The-Top ("OTT") telephony, SMS/MMS messaging and broadcast services,
numbering features, including Cloud IVRs, Voicemail, Fax, Call Recording and other services through local, toll-free and international
phone numbers. Supported by its national redundant network, Apeiron also provides public and private IP network services, including Multiprotocol
Label Switching ("MPLS"), Dedicated Internet and LTE Wireless WAN solutions. Apeiron's cloud services include Information
Data Dips, Software-Defined Wide Area Networking ("SD-WAN") and Internet of Things ("IoT") data and device management.
Apeiron primarily distributes its services nationally through its website, its sales staff, independent sales agents and Independent Sales
Organizations ("ISOs").

 Apeiron Systems is headquartered in Johnstown, Pennsylvania,
where it has customer service and software engineering resources staffed. Additional development resources are staffed out of Los Angeles,
California, as well as in Europe and Asia.

 On February 5, 2018, we entered into a purchase
agreement to acquire IM Telecom (www.infinitimobile.com). On October 23, 2018, the FCC approved our acquisition of IM Telecom, and
on January 31, 2019, we completed the purchase of IM Telecom. IM Telecom currently operates as a 51% owned subsidiary of KonaTel. It
is an FCC licensed Eligible Telecommunications Carrier ("ETC") and is one of twenty-two (22) original FCC licensed
wireless cellular resellers to hold an FCC approved Lifeline Compliance Plan since 2012, of which approximately twelve (12) license
holders remain active today. The FCC has not approved or granted a new wireless reseller Lifeline Compliance Plan since 2012. As a
licensed ETC, IM Telecom is also an FCC licensed Affordable Connectivity Program (the "ACP" or the "ACP
Program") provider, authorized to distribute ACP subsidized high-speed Lifeline subsidized mobile voice/data service in eleven
(11) states, which are Vermont, South Carolina, Georgia, Maryland, Kentucky, Wisconsin, Oklahoma, California, New York, Pennsylvania
and Nevada. In addition to Lifeline, IM Telecom is also an FCC approved ACP provider authorized to distribute ACP subsidized
high-speed mobile data service in the fifty (50) states, Washington D.C. and Puerto Rico. Lifeline is an FCC program that provides
subsidized, fixed or mobile telecommunications services to low-income Americans. ACP was an FCC program that provided subsidized
high-speed wireless data services to low-income Americans, which expired on June 1, 2024. IM Telecom distributes Lifeline and ACP services under its Infiniti
Mobile brand name through its website, sales staff, retail locations and ISOs. IM Telecom also offers non-Lifeline and non-ACP
services throughout the United States. IM Telecom has a US-based customer support center located in Atmore, Alabama.

 IM Telecom is headquartered in Plano, Texas, and has
a warehouse operation in Tulsa, Oklahoma, and a customer service center in Atmore, Alabama. We are headquartered in Plano, Texas. Apeiron
Systems has nine (9) full-time employees; IM Telecom has fifteen (15) full-time employees; and we have four (4) full-time employees.

 Principal Products
or Services and their Markets

 Our principal products and
services, provided through Apeiron Systems and IM Telecom, include our CPaaS suite of services (SIP/VoIP, SMS/MMS, POTS Replacement),
wholesale and retail mobile voice and mobile data IoT services, wholesale voice termination services and our ETC and ACP subsidized services
for low-income Americans. Except for our ETC Lifeline services distributed in up to forty (40) states/territories and our ACP services,
which until the termination of the ACP Program on June 1, 2024, had been distributed in the fifty (50) states, as well as Washington D.C.
and Puerto Rico, our Apeiron Systems' products and services are available worldwide and subject to U.S., international and local/national
regulations.

 We generate revenue from
two (2) primary sources, Hosted Services and Mobile Services:

 Our Hosted Services include a suite of hosted CPaaS services within Apeiron Systems' cloud platform, including Cloud IVRs, Voicemail, Fax, Call Recording and other services provided with local, toll-free and international phone numbers. Apeiron also delivers public and private IP network services from its national redundant network backbone, including MPLS, Dedicated Internet and LTE Wireless WAN solutions. Additionally, Apeiron's Cloud Services include Information Data Dips, SD-WAN and IoT data and device management, of which IoT provides device connectivity via wireless 4G/5G. These Hosted Services are marketed nationally and internationally through the Apeiron website, its sales staff, independent sales agents and ISOs.

 Our Mobile Services include retail and wholesale cellular voice/text/data services and IoT mobile data services through Apeiron Systems and IM Telecom. Mobile voice/text/data and IoT mobile data services are supported by a blend of reseller agreements with select national wireless carriers and national wireless wholesalers. A wireless communications service reseller typically does not own the wireless network infrastructure over which services are provided to its customers. Mobile voice/text/data and mobile data solutions are generally sold as traditional post-paid service plans that may include voice/text/data or wireless data only plans. Sometimes, equipment is provided, which can include, but is not limited to, phones, tablets, modems, routers and accessories. Also included in our Mobile Services segment is the distribution of government subsidized mobile voice service and mobile data service by IM Telecom under its Infiniti Mobile brand and FCC license to low-income American households that qualify for the FCC's Lifeline mobile voice service program and/or previously under the FCC's ACP Program. Even though government programs like Lifeline have existed since 1985, these programs, along with newer programs like the ACP Program, are subject to change and any change, reduction or elimination may have a material impact on our Mobile Services business; and as referenced above, the ACP Program terminated on June 1, 2024, and has not been renewed by Congress.

 Distribution Methods of the Products or Services

 We primarily distribute our
Hosted Services through our website, sales staff, master distribution agreements and ISOs. We primarily distribute our Mobile Services
through our website, sales staff, retail locations and ISOs. Since 2021, we have continued to increase our Mobile Service online marketing
efforts to supplement alternative distribution channel growth.

 Sources and Availability of Raw Materials
and the Names of Principal Suppliers

 Wholesale wireless services
are sourced either directly from the wireless carrier or from wholesalers that sit between us (Apeiron Systems and IM Telecom) and the
wireless carrier. Carriers can include Verizon, T-Mobile and AT&T. Wholesalers can include Prepaid Wireless Group ("PWG")
and Telispire.

 Wireless resellers, like us, traditionally do not
own the wireless infrastructure over which services are provided. We purchase services from the following sources:

 Verizon: Verizon voice, text and data services are provided through master distribution partners of Verizon. The contract we hold with distribution partners has set per unit pricing for voice, text and data wireless services. Pricing per unit is in the form of a monthly recurring charge ("MRC") that may or may not include minutes of use, text units or data units. Additional data units are available for purchase;

 AT&T: AT&T voice, text or data service
and AT&T IoT service under a contract with us, has set "unit based" pricing for voice, text, data and IoT wireless services.
Pricing per unit is in the form of an MRC that may or may not include minutes of use, text units or data units. Additional data units
are available for purchase;

 Verizon Wireless VPP, a Verizon IoT product: Verizon VPP, also through a contract with us, has set per unit pricing for IoT wireless services. Pricing per unit is in the form of an MRC that includes data units with defined over plan use pricing; and

 T-Mobile voice, text or data Lifeline services are provided through master distribution partners of T-Mobile. The contract we hold has set pricing for bundled voice, text and data wireless services. Pricing bundles are in the form of an MRC that include minutes of use, text units or data units. Larger data plans are available for purchase for consumer requiring larger voice and data packages.

 Patents, Trademarks, Licenses, Franchises,
Concessions, Royalty Agreements or Labor Contracts

 Our 51% owned subsidiary, IM Telecom, is an FCC licensed
ETC and is one of the original twenty-two (22) FCC licensed wireless cellular resellers to hold an FCC approved wireless Lifeline Compliance
Plan in the United States (as of 2012), of which approximately twelve (12) license holders remain active today. As a licensed ETC, IM
Telecom is currently authorized to distribute Lifeline subsidized mobile voice/data service in up to forty (40) states. Although the ACP
program officially ended in June of 2024, IM Telecom is also an FCC licensed ACP carrier, authorized to distribute ACP subsidized mobile
data services in the fifty (50) states, as well as Washington D.C. and Puerto Rico. Infiniti Mobile also offers non-Lifeline and non-ACP
services. IM Telecom intends to maintain the designation with anticipation that the program, or one similar, will be restarted.

 We hold a United States Patent
and Trademark Office registered trademark "Lifeline+ " and use this Trademark in our marketing materials.

 Competition

 The telecommunications industry is highly competitive.
Our primary cellular competitors include other resellers and national carriers, such as AT&T, Verizon and T-Mobile. These national
cellular carriers are facility-based, are significantly larger than us and enjoy trade name and trademark public recognition, as well
as greater resources, scale and competitive advantages, among other substantial factors, as compared to us. In addition, our cellular
competitors also include numerous smaller regional carriers, existing MVNOs and ETCs, such as Metro PCS, Cricket Wireless, TracFone Wireless,
TruConnect and Assurance Wireless, many of which offer or may offer cellular, mobile data, Lifeline and ACP services, along with no-contract
postpaid and prepaid service plans. Our CPaaS competitors include, but are not limited to, Twilio, Plivo, Bandwidth, Thinq, VoIP Innovations,
Telnyx, Coredial, Vonage/Nexmo, CLX Comm, Genband Kandy, Tropo, Telestax, 2600Hz and Signal Wire. Competitive factors within the telecommunications
industry include pricing, market saturation, service and product offerings, customer experience, network investment and quality, development
and deployment of technologies and regulatory changes. Some competitors have shown a willingness to use aggressive pricing as a source
of differentiation. Other competitors have sought to add ancillary services, like mobile video, to enhance their offerings. Taken together,
the competitive factors we face continue to put pressure on margins as companies compete to retain their current customer base and continue
to add new developments, many proprietary or patented, and customers.

 Need for any Governmental Approval of Principal
Products or Services

 On October 23, 2018, the FCC approved our acquisition
of IM Telecom. In 1985, during the Reagan administration, the FCC established the Lifeline Assistance program through generic powers afforded
the FCC under the Communications Act of 1934. Cellular service was added to the Lifeline program in 2009. The FCC has not approved any
new wireless reseller Lifeline Compliance Plans since 2012.

 Existing and Probable Government Regulation to Our Current and Intended
Business

 The FCC has several complex requirements and
proceedings that affect our operations and that could increase our costs or diminish our revenues. For example, the FCC has rules
regarding the provision of 911 and E-911 services, porting telephone numbers, roaming, disabilities access, privacy and
cybersecurity, consumer protection, and the universal service and Lifeline programs, including eligibility, reimbursement and
program requirements. Many of these and other issues are being considered in ongoing proceedings, and we cannot predict whether or
how such actions will affect our business, financial condition or results of operations. Our ability to provide services and
generate revenues has and could continue to be harmed by adverse regulatory action or changes to existing laws and regulations. In
addition, regulation of companies that offer competing services can impact our business indirectly.

 Smaller Reporting Company

 We are subject to the reporting requirements of Section
13 of the Exchange Act, and we are subject to the disclosure requirements of Regulation S-K of the SEC, as a "smaller reporting
company." That designation relieves us of some of the informational requirements of Regulation S-K and Article 8 of Regulation
S-X of the SEC.

 Emerging Growth Company

 In 2020, our "emerging growth company"
designation as defined in the "Jumpstart Our Business Startups Act of 2012," or the "JOBS Act," expired as
of the fifth anniversary of our initial registered public offering. During our emerging growth company designation, we did not utilize
any financial statement waivers available to us as a result of that designation.

 Sarbanes/Oxley Act

 We are also subject to the Sarbanes-Oxley Act of 2002.
The Sarbanes/Oxley Act created a strong and independent accounting oversight board to oversee the conduct of auditors of public companies
and strengthens auditor independence. It also requires steps to enhance the direct responsibility of senior members of management
for financial reporting and for the quality of financial disclosures made by public companies; establishes clear statutory rules to limit,
and to expose to public view, possible conflicts of interest affecting securities analysts; creates guidelines for audit committee members'
appointments, compensation and oversight of the work of public companies' auditors; management assessment of our internal controls;
auditor attestation to management's conclusions about internal controls; prohibits certain insider trading during pension fund blackout
periods; requires companies and auditors to evaluate internal controls and procedures; and establishes a federal crime of securities fraud,
among other provisions. Compliance with the requirements of the Sarbanes/Oxley Act could substantially increase our legal and accounting
costs.

 Exchange Act Reporting Requirements

 Section 14(a) of the Exchange Act requires all companies
with securities registered pursuant to Section 12(g) of the Exchange Act to comply with the rules and regulations of the SEC regarding
proxy solicitations, as outlined in Regulation 14A. Matters submitted to our shareholders at a special or annual meeting thereof or pursuant
to a written consent will require us to provide our shareholders with the information outlined in Schedules 14A or 14C of Regulation 14;
preliminary copies of this information must be submitted to the SEC at least ten (10) days prior to the date that definitive copies of
this information is forwarded to our shareholders.

 We are required to file annual reports on Form 10-K
and quarterly reports on Form 10-Q with the SEC on a regular basis, and are required to timely disclose certain material events (e.g.,
entry into a definitive material agreement, changes in corporate control, acquisitions or dispositions of a significant amount of assets
other than in the ordinary course of business, bankruptcy and receivership filings and the sale of in excess of five percent (5%) of our
outstanding securities, among various other material matters) in a Current Report on Form 8-K. See SEC Form 8-K for a more complete description
of the type of material events required to be disclosed.

 Number of Total Employees and Number of Full-Time
Employees

 Across our companies, we have a total of twenty-eight
(28) full-time employees and no part-time employees.

 Subsidiaries

 We have two (2) wholly owned subsidiaries:
KonaTel Nevada and Apeiron Systems; and we currently own 51% of IM Telecom, with the remaining 49% being owned by Excess Telecom,
which, if our Excess Telecom Purchase Agreement is approved by the FCC, Excess Telecom will own 100% of IM
Telecom, subject to existing related Transaction Documents. Our subsidiary, KonaTel Nevada, has remained inactive since early
2021.

 Additional Information

 You may read and copy any materials that we file with
the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also find all of the reports or
registration statements that we have previously filed electronically with the SEC at its Internet site at www.sec.gov in the Edgar Archives
of the SEC or in our website at konatel.com.

 ITEM 1A. RISK FACTORS

 RISK FACTORS

 As we are a smaller reporting company as defined by
Section 12b-2 of the Exchange Act, we are not required to provide the information under this Item or in our annual or quarterly reports
filed with the SEC; however, we believe this information may be of value to our shareholders or potential investors in our Company. These
risk factors should be considered in light of the caption "Forward-Looking Statements" at the forepart of this Annual Report.
We reserve the right not to provide risk factors in our future filings. Our primary risk factors and other considerations include:

 Risks Related to the Company

 We have a limited operating history and cannot
ensure the long-term successful operation of our business or the execution of our business plan.

 We commenced our current business operations in November
of 2014, and our wireless marketing technology and solutions are an evolving business offering. Our prospects must be considered in light
of the risks, expenses and difficulties frequently encountered by growing companies in new and rapidly evolving markets. We may be unable
to successfully accomplish and fund our current endeavors, which would materially impact our ability to implement our business plan, including:

 establishing and maintaining broad market acceptance of our technology, solutions, services and platforms, and converting that acceptance into direct and indirect sources of revenue;

 establishing and maintaining adoption of our
technology, solutions, services and platforms in and on a variety of environments, experiences and types of devices;

 timely and successfully developing new technologies, solutions, services and platform features, and increasing the functionality and features of our existing technologies, solutions, services and platform offerings;

 developing technologies, solutions, services and platforms that result in a high degree of customer satisfaction and a high level of end-customer usage;

 successfully responding to competition, including competition from emerging technologies and solutions;

 developing and maintaining strategic relationships to enhance the distribution, features, content and utility of our technologies, solutions, services and platforms;

 identifying, attracting and retaining talented engineering, network operations, program management, technical services, creative services and other personnel at reasonable market compensation rates in the markets in which we employ such personnel; and

 integration of potential evolving offerings of products and acquisitions.

 Our business strategy may be unsuccessful, and
we may be unable to address the risks we face in a cost-effective manner, if at all. If we are unable to successfully accomplish these
tasks, our business will be harmed, and we may fail.

 For the year end December 31, 2024, we reported gross
revenues of $15,503,251, cost of revenues of $12,088,944, operating expenses of $7,905,600, other income and expenses of $9,213,940 and
a net income of $4,722,647.

 For the prior year ended December 31, 2023, we reported
gross revenues of $18,223,745, cost of revenues of $14,850,105, operating expenses of $6,494,243, other income and expenses of ($820,224)
and net loss of ($3,940,827).

 For the year ended December 31, 2024, we had $9,056,
in non-cash depreciation expense. As of December 31, 2024, our accumulated deficit was ($7,516,044).

 The United States Government's dissolution or reduction of the
Lifeline Program or the elimination of "resellers" of these services will and has had a substantial adverse effect on our
current and planned business operations.

 Considering there are
 approximately 7,300,000 current Lifeline users and approximately 38,000,000 eligible Lifeline customers (according to Universal
 Service Administrative Company, a governmental body that administers the "Universal Service Fund" of the
 FCC [the "USF"]), this would be a
 draconian move; however, it is a possibility. Federal or state governmental agencies could also significantly reduce or delay
 Lifeline reimbursement payments to Lifeline carriers, forcing Lifeline carriers to continue to provide minimum Lifeline services and
 at a reduced reimbursement rate. Depending on any reimbursement reduction, a reduction would diminish earnings and could make
 Lifeline unprofitable. The FCC established the Lifeline program in 1985 to ensure that qualifying low-income consumers could afford
 phone service and the opportunities and security it provides. Congress supported and strengthened Lifeline in the Telecommunications
 Act of 1996, requiring that affordable service and advanced communications be available to low-income consumers across the
 country.

 Lifeline and ACP require several factors to be successful. The impact of negative governmental changes and negative national carrier pricing have been outlined above. In addition to those two risks, an interruption to the supply of low-cost phones and/or a reduction of Lifeline and ACP agents (no access to or not enough access to agents) would have a negative impact on Lifeline and/or ACP services.

 Adequate equipment financing and available cash resources to pay up-front compensation payments (sometimes required) is critical to facilitate Lifeline, ACP, B2B and retail sales, and the lack of these resources would have a negative impact on our business.

 The increase in the number of resellers
of services and products that we provide by any national carrier could saturate the markets and market segments of our targeted customers,
which could affect our business adversely.

 Market saturation could occur when a national carrier
allows too many resellers into the market and margins drop so low where the reseller business model is no longer profitable, and our business
may suffer and fail.

 A decrease in the amount of wholesale voice and
mobile data available to purchase from wholesale aggregators could cause a substantial reduction in our business and customers.

 We purchase a portion of our mobile data service ("IoT")
directly from national carriers and purchase the remainder of our wholesale voice and mobile data from wholesale aggregators or MVNEs
like PWG and Telispire. If one of these aggregators vacated the market, such action could force the transition of services to other providers,
and could substantially reduce our current and anticipated revenues from our IoT or cellular service.

 A wireless reseller could gain a significant price
advantage over other wireless resellers by entering into a special national carrier pricing agreement not available to other resellers.

 Any special national carrier pricing agreement that
was not available to us would allow that particular reseller to "undercut" all other resellers. This scenario could also apply
to a national wireless carrier acquiring a reseller then allowing that reseller to operate with special wholesale pricing not available
to other resellers. Any such event could have a substantial adverse impact on our business and revenues.

 Adequate funds for our current and intended operations
may not be available, requiring us to raise additional financing or curtail our current and planned operations significantly.

 We might be required to raise additional funding through
public or private debt or equity financings. Any additional equity financings may be dilutive to our current shareholders and may be completed
at a discount to the then-current market price of our common stock. Debt financing, if available, would likely involve restrictive covenants
on our operations or pertaining to future debt or equity financing arrangements. Nevertheless, we may not successfully complete any future
equity or debt financing. Adequate funds for our operations, whether from financial markets, collaborative or other arrangements, may
not be available when needed or on terms attractive to us.

 If the Company is unable to generate sufficient cash
flow or raise additional capital, our plans to operate our business may be adversely affected, and we could be required to curtail our
activities significantly and/or cease operations. If we seek to raise capital, we may be required to pay higher prices for capital based
upon the current illiquid market for our common stock, among other factors.

 We may need to raise additional capital to implement
our business plan and meet financial obligations as they come due. If we do need to raise additional capital, and cannot attract sufficient
capital from customary sources, we may be required to pay a higher price for capital.

 Factors affecting the availability and price of capital
may include the following:

 the availability and cost of capital generally;

 our financial results;

 the experience and reputation of our management team;

 market interest, or lack of interest, in our industry, industry segments and our business plan;

 the trading volume of, and volatility in, the market for our common stock, assuming there is a reasonable trading market for our common stock;

 our ongoing success, or failure, in executing our business plan;

 the amount of our capital needs; and

 the amount of debt, options, warrants and convertible securities that may be outstanding in our Company at any time.

 A national carrier (Verizon, AT&T, T-Mobile)
could dissolve, reduce or restrict any wholesale program, agent program or reseller program. This includes both voice and data IoT, which
would adversely affect our business.

 We, like all voice and data resellers, are dependent
on the FCC licensed national carriers to provide services that can be resold for profit. The wireless carriers own/control their respective
network (towers) and provide the wireless service. Resellers do not own network and are dependent on the national carriers to provide
a reseller program. These carriers could eliminate a reseller program or implement new policies that could reduce profit margins,
making any applicable program unprofitable. They could also implement market restorations reducing markets we could sell into, which would
have a direct adverse effect on our current and future prospects.

 Similarly, one of these national carriers could reduce
their own retail pricing, with no corresponding reduction in their wholesale pricing, which could create a situation where a reseller
is unable to make enough profit to sustain operations.

 We may be unable to meet our current or future obligations
or to adequately develop existing or future opportunities if we cannot raise sufficient capital. If we are unable to obtain any required
capital for an extended period of time, we may be forced to discontinue or curtail our business operations and we may fail.

 We expect that there will be significant consolidation
in our industry. Our failure or inability to lead that consolidation would have a severe adverse impact on our access to financing, customers,
technologies and human resources.

 Our industry is currently composed of a small number
of substantial entities, and a relatively large number of small businesses, no single one of which is dominant, or which provides integrated
solutions and product offerings incorporating much of the available technology. Accordingly, we believe that substantial consolidation
of the smaller companies may occur in our industry in the near future as has occurred with many larger participants. If we do not play
a positive role in that consolidation, either as a leader or as a participant whose capabilities and offerings are merged into a larger
entity, we may be left out of this process, with product and service offerings of limited value compared with those of our competitors.
Moreover, even if we lead the consolidation process, the market may not validate the decisions we make in that process and our business
will suffer and may fail.

 Our success depends on our product and service
technologies achieving and maintaining widespread acceptance in our targeted markets.

 Our success will depend to a large extent on broad
market acceptance of our telecommunications solutions among our current and prospective customers. Our prospective customers may be unwilling
to use our solutions for a number of other reasons, including preference for static advertising, lack of familiarity with our technologies,
preference for competing technologies or perceived lack of reliability. We believe that the acceptance of our technologies by prospective
customers will depend primarily on the following factors:

 our ability to demonstrate the economic and other benefits attendant to our products and services;

 our customers becoming comfortable with using our telecommunications technologies; and

 the reliability of these services and technologies.

 Because we do not have long-term purchase commitments
from our customers, the failure to obtain anticipated orders or the deferral or cancellation of commitments could have an adverse effect
on our business and future prospects.

 Our business is characterized by short-term purchase
orders and contracts that do not require that purchases be made. This makes forecasting our sales difficult. The failure to obtain anticipated
orders and deferrals or cancellations of purchase commitments because of changes in customer requirements, or otherwise, could have a
material adverse effect on our business, financial condition and results of operations. We have experienced such challenges in the past
and may experience such challenges in the future.

 Most of our contracts are terminable by our customers
with limited notice and without penalty payments, and early terminations could have a material adverse effect on our business, operating
results and financial condition.

 Most of our contracts are terminable by our customers
following limited notice and without early termination payments or liquidated damages due from them. In addition, each stage of a project
often represents a separate contractual commitment, at the end of which the customer may elect to delay or not to proceed to the next
stage of the project. We cannot assure you that one or more of our customers will not terminate a material contract or materially reduce
the scope of any large project. The delay, cancellation or significant reduction in the scope of a large project or a number of projects
could have a material adverse effect on our business, operating results and financial condition.

 Our industry is characterized by frequent technological
change. If we are unable to adapt our products and services and develop new products and services to keep up with these rapid changes,
we will not be able to obtain or maintain market share and our business may fail.

 We must respond to changing technology and industry
standards in a timely and cost-effective manner. We may not be successful in using new technologies, developing new products and services
or enhancing existing products and services in a timely and cost-effective manner.

 Furthermore, even if we successfully adapt our products
and services, these new technologies or enhancements may not achieve market acceptance. The market for our products and services
is characterized by rapidly changing technology, evolving industry standards, changes in customer needs, heavy competition and frequent
new product and service introductions. If we fail to develop new products and services or modify or improve our existing products and
services in response to these changes in technology, customer demands or industry standards, our products and services could become less
competitive or obsolete.

 A portion of our business involves the use of software
technologies that we have developed or licensed. Industries involving the ownership and licensing of software-based intellectual property
are characterized by frequent intellectual property litigation, and we could face claims of infringement by others in the industry. Such
claims are costly and add uncertainty to our operational results.

 A portion of our business involves our ownership and/or
licensing of software. This market space is characterized by frequent intellectual property claims and litigation. We could be subject
to claims of infringement of third-party intellectual property rights resulting in significant expense and the potential loss of our own
intellectual property rights. From time to time, third parties may assert copyright, trademark, patent or other intellectual property
rights to technologies that are important to our business.

 Any litigation to determine the validity of these
claims, including claims arising through our contractual indemnification of our business partners, regardless of their merit or resolution,
would likely be costly and time consuming and divert the efforts and attention of our management and technical personnel. If any such
litigation resulted in an adverse ruling, we could be required to:

 pay substantial damages;

 cease the development, use, licensing or sale of infringing products;

 discontinue the use of certain technologies; or

 obtain a license under the intellectual property rights of the third-party claiming infringement, which license may not be available on reasonable terms or at all.

 Our business may be adversely affected by malicious applications that
interfere with, or exploit security flaws in, our products and services.

 Our business may be adversely affected by malicious
applications that make changes to our customers' computer systems and interfere with the operation and use of our products or products
that impact our business. These applications may attempt to interfere with our ability to communicate with our customers' devices.
The interference may occur without disclosure to or consent from our customers, resulting in a negative experience that our customers
may associate with our products and services. These applications may be difficult or impossible to uninstall or disable, may reinstall
themselves and may circumvent other applications' efforts to block or remove them. If our efforts to combat these malicious applications
fail, or if our products and services have actual or perceived vulnerabilities, there may be claims based on such failures and our reputation
may be harmed, which would damage our business and financial condition and our ability to continue our business.

 We face risks relating to Cyberattacks.

 Our business operations are dependent upon secure
information technology systems and telecommunications networks. Breaches of these systems and networks through cyberattack or other unauthorized
access may have numerous negative effects on our business, including lost sales and damage to customer relationships; disruptions on our
operations; reputational harm and negative publicity; lost trust from our customers, partners and employees; lawsuits resulting from the
compromise of sensitive customer or employee information; costs of mitigation; and remediation and security enhancement expenses. See
Part I, Item 1C, below.

 We compete with other companies that have substantially
greater resources, and we are at a distinct competitive disadvantage in our chosen industry.

 The market for our products and service solution
technologies is generally highly competitive, and we expect competition to increase in the future. Some of our competitors or
potential competitors have significantly greater financial, technical and marketing resources than we have. These competitors may be
able to respond more rapidly than we can to new or emerging technologies or changes in customer requirements. They may also devote
greater resources to the development, promotion and sale of their products than we do.

 We expect competitors to continue to improve the performance
of their current products and to introduce new products, services and technologies. Successful new product and service introductions or
enhancements by our competitors could reduce sales and the market acceptance of our products and services, cause intense price competition
or make our products and services obsolete. To be competitive, we must continue to invest significant resources in research and development,
sales and marketing and customer support. If we do not have sufficient resources to make these investments or are unable to make the technological
advances necessary to be competitive, our competitive position will suffer, and we may fail. Increased competition could result in price
reductions, fewer customer orders, reduced margins and loss of market share. Our failure to compete successfully against current or future
competitors could also adversely affect our business and financial condition.

 Our future success depends on key personnel and
our ability to attract and retain additional personnel.

 Our success is dependent upon attracting and maintaining
key personnel, including our founder, Chairman and CEO, D. Sean McEwen, and various key executive employees, including Joshua Ploude from
whom we acquired Apeiron Systems and who serves as CEO of Apeiron Systems, and Charles D. Griffin, our President and COO, among others,
who are listed in Part III, Item 10 of this Annual Report.

 Further, if we fail to retain our key personnel or
to attract, retain and motivate other qualified employees, our ability to maintain and develop our business may be adversely affected.
Our future success depends significantly on the continued service of our key technical, sales and senior management personnel and their
ability to execute our growth strategy. The loss of the services of our key employees could harm our business. We may be unable to retain
our employees or to attract, assimilate and retain other highly qualified employees who could migrate to other employers who may offer
competitive or superior compensation packages.

 Unpredictability in financing markets could impair
our ability to grow our business through acquisitions.

 We anticipate that opportunities to acquire similar
businesses will materially depend on the availability of financing alternatives with acceptable terms. As a result, poor credit and other
market conditions or uncertainty in financial markets could materially limit our ability to grow through acquisitions since such conditions
and uncertainty make obtaining financing more difficult.

 Our reliance on information management and transaction
systems to operate our business exposes us to cyber incidents and hacking of our sensitive information if our outsourced service providers
experiences a security breach.

 Effective information security internal controls are
necessary for us to protect our sensitive information from illegal activities and unauthorized disclosure, in addition to preventing service
attacks and corruption of our data. Further, we rely on the information security internal controls maintained by our outsourced service
providers. Breaches of our information management system could also adversely affect our business reputation. Finally, significant information
system disruptions could adversely affect our ability to effectively manage operations or reliably report results. Cyberattacks against
companies have occurred and will continue to occur and have increased in frequency, scope and potential harm in recent years. While, to
date, we have not been subject to cyberattacks, that, individually or in the aggregate, have been material to our operations, the preventative
actions we take to reduce the risks associated with cyberattacks may be insufficient to stop or mitigate the effects of a cyberattack
in the future. See Part I, Item 1C, Cybersecurity.

 Because our technology, products, platforms and
services are complex and are deployed in and across complex environments, they may have errors or defects that could seriously harm our
business.

 Our technology, proprietary platforms, products and
services are highly complex and are designed to operate in and across data centers, large and complex networks and other elements of the
digital media workflow that we do not own or control. On an ongoing basis, we need to perform proactive maintenance services on our platform
and related software services to correct errors and defects. In the future, there may be additional errors and defects in our software
that may adversely affect our services. We may not have in place adequate reporting, tracking, monitoring and quality assurance procedures
to ensure that we can detect errors in our software in a timely manner. If we are unable to efficiently and cost-effectively correct errors
or other problems that may be identified, or if there are unidentified errors that allow persons to improperly access our services, we
could experience loss of revenues and market share, damage to our reputation, increased expenses and legal actions by our customers and
our business may fail.

 We may have insufficient network or server capacity
for our current and planned business, which could result in interruptions in our services and the loss of revenues resulting in a negative
impact on our business.

 Our operations are dependent, in part, upon
network capacity provided by our telecommunications network and third-party telecommunications networks; data center services
provider owned and leased infrastructure and capacity; server capacity located at the data center services provider partner or
partners; and our own infrastructure and equipment. Collectively, this infrastructure, equipment and capacity must be sufficiently
robust to handle all of our customers' wireless requirements, particularly in the event of unexpected surges in
high-definition video traffic and network services incidents. We may not be adequately prepared for unexpected increases in
bandwidth and related infrastructure demands from our customers. In addition, the bandwidth we have contracted to purchase may
become unavailable for a variety of reasons, including payment disputes, outages or such service providers going out of business.
Any failure of these service providers or our own infrastructure to provide the capacity we require due to financial or other
reasons may result in a reduction in or the interruption of service to our customers, leading to an immediate decline in revenue and
possible additional decline in revenue, as a result of subsequent customer losses, which could result in the cessation of all or
part of our business operations.

 We do not have sufficient capital to engage in
substantial research and development, which may harm our long-term growth.

 In light of our limited resources in general, we have
made no substantial investments in research and development. This conserves capital in the short term. In the long term, as a result of
our limited investment in research and development, our technologies and product offerings may not keep pace with the market, and we may
lose any existing competitive advantage. Over the long term, this may harm our revenue growth and our ability to be profitable.

 Our business operations are susceptible to interruptions
caused by events beyond our control.

 Our business operations are susceptible to interruptions
caused by events beyond our control. We are vulnerable to the following potential problems, among others:

 our platform, technologies, products, services and underlying infrastructure, or that of our key suppliers, may be damaged or destroyed by events beyond our control, such as fires, earthquakes, pandemics, war, floods, power outages or telecommunications failures;

 we and our customers and/or partners may experience interruptions in service as a result of the accidental or malicious actions of Internet users, hackers, hostile nation states or current /former employees;

 we may face liability for transmitting viruses to third parties that damage or impair their access to computer networks, programs, data or information. Eliminating computer viruses and alleviating other security problems may require interruptions, delays or cessation of service to our customers; and

 the failure of our systems or those of our suppliers may disrupt service to our customers (and from our customers to their customers), which could materially impact our operations (and the operations of our customers), adversely affecting our relationships with our customers and lead to lawsuits and contingent liabilities.

 The occurrence of any of the foregoing could result
in claims for consequential and other damages, significant repair and recovery expenses and extensive customer losses and otherwise have
a material adverse effect on our business, financial condition and results of operations. See Part I, Item 1C, Cybersecurity.

 Our business operations could be impacted by public health crises.

 We are subject to risks related to public health
crises, such as the 2020 COVID-19 pandemic, which impacted our operations. Actions taken around the world to help mitigate the
spread of the coronavirus included restrictions on travel and quarantines in certain areas, and forced closures for certain types of
public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an
adverse impact on the economies and financial markets of many countries, including the geographical areas in which we operate. While
it is unknown how long these conditions will last and what the complete financial affect will be on us, to date, and as a result of
actions taken by management to mitigate a material impact to our financial statements or our operational results, we are not
currently experiencing a material impact to our financial statements or our results of operations; however, a pandemic typically
results in social distancing, travel bans and quarantines, which may result in limited access to our facilities, customers,
management, support staff and professional advisors. These, in turn, may not only impact our operations, financial condition
and demand for our services, but our overall ability to react timely to mitigate the impact of this event. Given our small staff, if
a key member of our team were disabled by COVID-19 or some other similar crisis, it could have a material negative impact on our
business. Also, it may substantially hamper our efforts to provide our investors with timely information and to comply with our
filing obligations under the Exchange Act with the SEC. If any pandemic were to last a prolonged period of time, we could see a
decline in revenue due to the closure of customer businesses, which could then impact our ability to pay our short-term debts. Our
concentration of revenue from a small group of Apeiron Systems' customers makes it reasonably possible that we are vulnerable
to the risk of a long-term severe impact. Our dependence on certain suppliers to provide equipment to be distributed or sold to our
customers could also be impacted if inventory shortages occur due to import or export restrictions resulting from any pandemic.

 General global market and economic conditions may have an
adverse impact on our operating performance and results of operations.

 Our business has been and could continue to be affected
by general economic and market conditions. Weakness in the United States and worldwide economy could have a negative effect on our operating
results. Additionally, in a down-cycle economic environment, we may experience the negative effects of increased competitive pricing pressure,
customer loss, slowdown in commerce over the Internet and corresponding decrease in traffic delivered over our network and failures by
our customers to pay amounts owed to us on a timely basis or at all. Suppliers on which we rely for equipment, field services, servers,
bandwidth, co-location and other services could also be negatively impacted by economic conditions that, in turn, could have a negative
impact on our business operations or revenues. Flat or worsening economic conditions may harm our operating results and financial condition.

 Economic,
political and market conditions may adversely affect our business, financial condition and operating results.

 Our business,
financial condition and operating results are sensitive to changes in general economic conditions, including interest rates, consumer
credit conditions, consumer debt levels, consumer confidence, unemployment rates, economic growth, energy costs, rates of inflation (or
concerns about deflation), supply chain disruptions, impacts of current geopolitical conflict or instability, such as the Ukraine-Russia
and Israel-Hamas wars, and further escalations thereof, and other macroeconomic factors.

 These unfavorable economic conditions may lead to
decreased demand for our products or services in the future, especially by our lower-income customers, which would have a negative effect
on our business and results of operations. In particular, inflation could affect the price of equipment for the services provided
in our Lifeline Program. Ongoing global conflicts and sanctions could lead to higher prices for commodities used in the production of
telephones and other technologies used in the global telecommunications industry, which may result in decreased demand for our products
and services. To the extent that we are unable to increase the prices of our goods and services in response to increased costs, our operating
margins will be compressed.

 Legal challenge to the Universal Service Fund ("USF")
could adversely affect our business.

 Currently before the U.S. Supreme Court is a challenge
to the 1996 statute creating the USF to promote the infrastructure necessary to provide nationwide communications service to rural communities,
schools and low-income consumers. The plaintiffs in the case argue that the statute creating the USF delegated too much power to the FCC
to administer the fund through the establishment of contribution rates paid into the fund by telecommunications companies. The FCC created
a separate not-for-profit corporation called the Universal Service Administrative Company to oversee the fund and
its receipts and disbursements. Historically, courts have unanimously rejected such claims; however, the U.S. Court of Appeals for the
5 th Circuit ruled that the statute is unconstitutional. If the plaintiffs in this case are successful, the U.S. Supreme Court
could agree with the U.S. Court of Appeals and the USF could be abolished, creating a barrier for low-income consumers to receive the
benefits they have received since 1996. Without funding received from the Lifeline Program, our IM Telecom business will be adversely
impacted.

 Recent reductions in force ("RIF")
could adversely affect our business.

 In November of 2024, we determined that in order to
achieve certain necessary cost reductions created by the expiration of the Affordable Connectivity Program, a RIF of certain positions
within the Company was necessary. This RIF included several key personnel with significant knowledge of the industry and operation of
the Company. This reduction in personnel could create a strain on our ability to execute new business opportunities that may arise prevent
our future growth.

 Supply chain disruptions could adversely affect
our business.

 Supply chain dislocations resulting from global geopolitical
and public health issues such as the Ukraine-Russia and Israel-Hamas wars, any resurgence in the COVID-19 health crises and other causes
may have a material adverse impact on our business and results of operations. Such disruptions may increase our costs of doing business,
including significant increases in the price of our products and their components and materials and the related costs of shipment, including
equipment used in the Lifeline Program. Supply chain disruptions may also adversely affect our access to suppliers, manufacturers, customers
and vendors and may impair our ability to perform contracted services. Delays in our ability to meet our obligations as a result of supply
chain issues may negatively affect our reputation, our relationships with customers and our ability to deliver products and services.

 The markets in which we operate are rapidly emerging,
and we may be unable to compete successfully against existing or future competitors to our business.

 The markets in which we operate are becoming increasingly
competitive. Our current competitors generally include those that offer similar products and services. These competitors, including future
new competitors who may emerge, may be able to develop comparable or superior solution capabilities, platforms, services, products and/or
a series of services that provide a similar or more robust set of features and functionality than the technologies, products and services
we offer. If this occurs, we may be unable to grow as necessary to make our business profitable.

 Regardless of whether we have superior products, many
of these current and potential future competitors have a longer operating history in their current respective business areas and greater
market presence, brand recognition, engineering and marketing capabilities, and financial, technological and personnel resources than
we do. Existing and potential competitors with an extended operating history, even if not directly related to our business, have an inherent
marketing advantage because of the reluctance of many potential customers to entrust key operations to a company that may be perceived
as unproven or in the early stage of its development. In addition, our existing and potential future competitors may be able to use their
extensive resources:

 to develop and deploy new products and services more quickly and effectively than we can;

 to develop, improve and expand their platforms and related infrastructures more quickly than we can;

 to reduce costs, particularly hardware costs, because of discounts associated with large volume purchases and longer-term relationships and commitments;

 to offer less expensive products, technologies, platforms and services as a result of a lower cost structure, greater capital reserves or otherwise;

 to adapt more swiftly and completely to new or emerging technologies and changes in customer requirements;

 to take advantage of acquisition and other opportunities more readily; and

 to devote greater resources to the marketing and sales of their products, technology, platform and services.

 If we are unable to compete effectively in our various
markets, or if competitive pressures place downward pressure on the prices at which we offer our products and services, our business,
financial condition and results of operations may suffer, and our business may fail.

 Compliance with the reporting requirements of federal
securities laws can be expensive.

 We are a public "reporting company" in
the United States, and accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities
laws, rules and regulations, including compliance obligations under the Sarbanes-Oxley Act of 2002. The costs of preparing and filing
annual and quarterly reports and other information with the SEC and furnishing audited and reviewed financial statements in reports filed
with the SEC, along with required communications with our shareholders, are substantial. We have incurred and expect to continue to incur
costs associated with continuing as a public company, including, but not limited to, legal, accounting, filing and other related costs
and expenses. Failure to comply with the applicable securities laws could result in private or governmental legal action against us or
our officers and directors, which could have a detrimental impact on our business and financial condition, the value of our common stock
and the ability of our shareholders to resell their common stock.

 We do not intend to pay dividends on our common
stock for the foreseeable future.

 All future revenues are anticipated to be utilized
for research, development and the furtherance of our business plan and our technologies, products, services and platform, and accordingly,
it is highly unlikely that shareholders will receive any dividends from us in the near future, if ever.

 We do not intend to provide guidance about future events in the foreseeable
future.

 Our Board of Directors anticipates adopting a policy
that will preclude us from providing guidance about matters that may happen in the foreseeable future, though any such policy will not
prohibit our responsibilities to provide forward-looking information to our shareholders and to the public in our Exchange Act filings
with the SEC, including our "Management's Discussion and Analysis of Financial Condition and Results of Operations"
required in a number of SEC reports and registration statements.

 Risks Related to Our Common Stock

 There is a limited active trading market for our
shares of common stock.

 In general, there has been a limited trading volume
in our common stock. The small trading volume will likely make it difficult for shareholders to sell their shares as and when they choose.
Furthermore, small trading volumes are generally understood to depress market prices. As a result, you may not always be able to resell
shares of our common stock publicly at the time and prices that you feel are fair or appropriate.

 Additionally, if we do not timely file our reports required
to be filed with the SEC under the Exchange Act, broker-dealers may not be able or willing to trade our common stock, and the OTC Markets
will post adverse warnings on its website about such failures, which, unless such failures are corrected by us, could have an additional
adverse impact on the viability of any "established trading market" that may develop for our common stock. Other adverse
warnings of the OTC Markets under their current and future policies could similarly have an adverse effect on any market for our common
stock, and there is no assurance that we will be able to satisfy comments or concerns of the OTC Markets, if any are expressed.

 If an active market for our common stock develops,
there is a significant risk that the Company's common stock price may fluctuate dramatically in the future in response to any of
the following factors, some of which are beyond our control, including, but not limited to:

 variations in our quarterly operating results;

 announcements that our revenue or income are below analysts' expectations;

 general economic slowdowns;

 sales of large blocks of our common stock by insiders and others; and

 announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital raises.

 Our investors' ownership in the Company may
be diluted in the future.

 In the future, we may issue additional authorized
but previously unissued equity securities, resulting in the dilution of ownership interests of our present shareholders. We expect to
need to issue a substantial number of shares of our common stock or other securities convertible into or exercisable for our common stock
in connection with hiring or retaining employees, future acquisitions, raising additional capital in the future to fund our operations
and other business purposes. We currently offer incentive stock options for our officers, directors and certain significant employees
and may extend this policy to others. Additional shares of common stock issued by us in the future will dilute an investor's investment
in the Company.

 Directors, executive officers, principal shareholders
and affiliated entities own a significant percentage of our capital stock, and they may make decisions that our shareholders do not consider
to be in their best interests.

 As of the date of this Annual Report, D. Sean McEwen,
our Chairman and Chief Executive Officer, beneficially owns approximately 37% of our issued and outstanding shares of common voting stock
by reason of his personal holdings. This percentage includes certain vested non-compensatory stock options which he owns and that can
be exercised on or before midnight on September 18 and December 18, 2025, for 187,500 shares, respectively, at an exercise price of $0.22
per share, and all of which options are described under the caption "Security Ownership of Certain Beneficial Owners and Management"
in Part III, Item 12 hereof. As a result, Mr. McEwen may have the ability to substantially control the election of our board of directors,
the outcome of issues requiring approval by our shareholders and other corporate actions. This concentration of ownership may also have
the effect of delaying or preventing a change in control of our Company that may be favored by other shareholders; and could prevent transactions
in which shareholders might otherwise recover a premium for their shares over current market prices. This concentration of ownership and
influence in management and board decision making could also harm the price of our capital stock by, among other things, discouraging
a potential acquirer from seeking to acquire shares of our capital stock, whether by making a tender offer or attempting to obtain control
of our Company. Also see the caption "Executive Compensation" of Part III, Item 11 hereof.

 If we fail to maintain an effective system of internal
controls, we may not be able to accurately report our financial results in a timely manner or detect fraud. Consequently, investors could
lose confidence in our financial reporting, and this may adversely affect any trading price for our common stock that may then exist.

 We must maintain effective internal controls to provide
reliable financial reports and to detect and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not
be able to manage our business as effectively as would be possible with an effective control system in place. We have not performed an
in-depth analysis to determine if historical undiscovered failures of internal controls exist and may in the future discover areas of
our internal controls that need improvement.

 We are continually in the process of evaluating our
internal controls for effectiveness as well as evaluating the need for additional internal controls. Failure to implement changes to
our internal controls that we may deem to be ineffective or any others that we may identify as necessary to maintain an effective system
of internal controls could harm our operating results and cause investors to lose confidence in our reported financial information. Any
such loss of confidence could have a substantial negative affect on the trading price of our common stock.

 During the year ended December 31, 2021, our
Board of Directors adopted an Insider Trading Policy, which was amended in the latter part of 2024.

 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.

 Effective November 8, 2024, our Board of Directors
amended our Insider Trading Policy to exempt the exercise of stock options granted by the Company that allow payment of the exercise
price of such stock options by the holder's conveyance of fully-paid shares of common stock of the Company having a value on the
date of exercise equal to the exercise price of the subject stock options, based upon the closing price of our shares of common stock
on or about the date of exercise, from the Black-Out Periods. See Section 9 – Financial Statements and Exhibits, Item 9.01, Part
IV, Item 15 Exhibit 99.1. This summary is modified in its entirely by reference to Exhibit 99.1.

 ITEM 1B. UNRESOLVED STAFF COMMENTS

 None.

 ITEM 1C. CYBERSECURITY

 We face significant
and persistent cybersecurity risks due primarily to (i) the substantial level of harm that could occur to us and our customers were we
to suffer impacts of a material cybersecurity incident; and (ii) our use of third-party products, services and components. We are committed
to maintaining strong governance and oversight of these risks and to implementing mechanisms, controls, technologies and processes designed
to help us assess, identify and manage these risks. While we have not, as of the date of this Annual Report, experienced a cybersecurity
threat or incident that resulted in a material adverse impact to our business or operations, there can be no guarantee that we will not
experience such an incident in the future. In addition, these threats are constantly evolving, thereby increasing the difficulty of successfully
defending against them or implementing adequate preventative measures. We seek to detect and investigate unauthorized attempts and attacks
against our network, products and services, and to prevent their occurrence and recurrence where practicable through changes or updates
to our internal processes and tools and changes or updates to our products and services; however, we remain potentially vulnerable to
known or unknown threats.

 We aim to incorporate
industry best practices throughout our cybersecurity program. Our cybersecurity strategy focuses on implementing effective and efficient
controls, technologies and other processes to assess, identify and manage material cybersecurity risks. Our cybersecurity program is designed
to be aligned with applicable industry standards and is assessed periodically by independent third parties. We have processes in place
to assess, identify, manage and address material cybersecurity threats and incidents. These include, among other things: (i) annual and
ongoing security awareness training for employees; (ii) mechanisms to detect and monitor unusual network activity; and (iii) containment
and incident response tools. We monitor issues that are internally discovered or externally reported that may affect our business, and
have processes to assess those issues for potential cybersecurity impact or risk. We also have a process in place to manage cybersecurity
risks associated with third-party service providers. We impose security requirements upon our suppliers, including maintaining an effective
security management program and abiding by information handling and asset management requirements. We have an escalation process in place
to inform our senior management and our Board of Directors of these material issues.

 ITEM 2. PROPERTIES

 We do not own any property.

 We have leases on the following properties:

 On December 18, 2020, we entered into a lease of an
office suite in Plano, TX, which commenced on January 25, 2021. Lease payments were deferred until May 1, 2021. Beginning on May 1, 2021,
lease payments are $3,650 per month for the twelve (12) month period ended April 30, 2022; $3,735 per month for the twelve (12) month
period ended April 30, 2023; $3,819 per month for the twelve (12) month period ending April 30, 2024, and $3,904 per month for the twelve
(12) month period ended April 30, 2025. The lease term is for five (5) years.

 Through our 51% owned subsidiary, IM Telecom, we have
leases on the following properties:

 Our Tulsa, Oklahoma distribution center, consisting
of approximately 2,466 square feet, is under a three (3) year lease that commenced on August 1, 2022. Monthly lease payments for this
property are $2,356 per month for the twelve (12) month period ended July 31, 2023; $2,415 per month for the twelve (12) month period
ending July 31, 2024, and $2,475 per month for the twelve (12) month period ending July 31, 2025.

 Our customer service center is in Atmore, Alabama,
and consists of approximately 1,766 square feet. This lease commenced on June 1, 2022, and terminates on June 1, 2025. Monthly lease payments
for this property are $2,121 per month.

 Through our wholly owned subsidiary, Apeiron Systems,
we have a lease at the following property:

 Our Johnstown, Pennsylvania office, consisting of
approximately 6,900 square feet, is under a lease that commenced on September 1, 2022, and expires on August 31, 2030. Monthly lease payments
for this property are $4,500 per month.

 ITEM 3: LEGAL PROCEEDINGS

 We are not party to any material legal proceedings.

 ITEM 4: MINE SAFETY DISCLOSURES

 None; not applicable.

 ITEM 5: MARKET FOR REGISTRANT'S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Market Information

 Until December 14, 2020, our common stock was quoted
on the "OTC Pink Tier" of the OTC Markets under the symbol "KTEL." On December 14, 2020, our common was approved
for up-listing on the OTC Markets' OTCQB Venture Market or the OTCQB Tier. No assurance can be given that any established trading
market for our common stock will develop or be maintained.

 For any market that develops for our common stock,
the sale of shares of our common stock that is comprised of "restricted securities" pursuant to Rule 144 of the SEC or any
other available exemption from registration under the Securities Act or by registration under the Securities Act by members of management
or others, including any person to whom any such securities may be issued in the future, may have a substantial adverse impact on any
such public market. For information regarding the requirements of resales under Rule 144, see the heading "Rule 144"
of this Item below.

 Our common stock that can be acquired under vested
and exercised incentive stock options that we have granted may also have an impact on any public trading market in our common stock. The
shares underlying our 2018 Incentive Stock Option Plan have been registered with the SEC on Form S-8. See the heading "Outstanding
Equity Awards" of the caption "Executive Compensation" in Part III, Item 11 hereof, for a description of all of our
outstanding incentive stock options.

 Also, see the heading "Risks Related to Our
Common Stock" of the caption "Risk Factors" in Part I, Item 1A hereof.

 The following table sets forth, for the periods indicated
over the last two (2) years, the high and low closing prices during each period, as reported by the OTC Markets and OTCQB Markets, and
represents prices between dealers that do not include retail markups, markdowns or commissions and may not represent actual transactions:

 For the Years Ended December 31,

 2024

 2023

 High

 Low

 High

 Low

 First Quarter

 $
 0.95

 $
 0.61

 $
 1.14

 $
 0.58

 Second Quarter

 $
 0.72

 $
 0.46

 $
 0.84

 $
 0.44

 Third Quarter

 $
 0.60

 $
 0.33

 $
 1.18

 $
 0.55

 Fourth Quarter

 $
 0.51

 $
 0.16

 $
 1.01

 $
 0.58

 These prices were obtained from OTC Markets and do
not necessarily reflect actual transactions, retail markups, mark downs or commissions.

 Rule 144

 The following is a summary of the current requirements of Rule 144, including
issues related to companies that are or have ever been a "shell company," which includes the Company:

 Securities

 Affiliate or Person Selling on Behalf of an Affiliate

 Non-Affiliate (and has not been an Affiliate During the Prior Three (3) Months)

 Restricted Securities of Reporting Issuers

 During six (6) month holding period –
 no resales under Rule 144 Permitted.

 After six (6) month holding period – may
 resell in accordance with all Rule 144 requirements including:

 *Current public information;

 Volume limitations;

 Manner of sale requirements for equity
 securities; and

 Filing of Form 144.

 *Current public information is continually required for resales
 under Rule 144 because we were a former shell company.

 During six (6) month holding period – no resales under
 Rule 144 permitted.

 After six (6) month holding period but before one (1) year –
 unlimited public resales under Rule 144 except that the current public information requirement still applies.

 After one (1) year holding period – unlimited public
 resales under Rule 144; need not comply with any other Rule 144 requirements.

 Restricted Securities of Non-Reporting Issuers

 During one (1) year holding period – no
 resales under Rule 144 permitted.

 After one (1) year holding period – may
 resell in accordance with all Rule 144 requirements including:

 *Current public information;

 Volume limitations;

 Manner of sale requirements for equity
 securities; and

 Filing of Form 144.

 During one (1) year holding period – no resales under
 Rule 144 permitted.

 After one (1) year holding period – unlimited public
 resales under Rule 144; need not comply with any other Rule 144 requirements.

 Holders

 We have 555 shareholders of record as of March 31,
2025, not including an indeterminate number of shareholders who may hold their shares in "street name."

 Dividends

 We have not declared any cash dividends with respect
to our common stock, and do not intend to declare dividends in the foreseeable future. All future earnings are anticipated to be utilized
for research, development and the furtherance of our business plan and our technologies, products, services, and platform, and accordingly,
it is highly unlikely that you will receive any dividends from us in the near future, if ever.

 There are no material restrictions limiting, or that
are likely to limit, our ability to pay dividends on our securities.

 Recent Sales of Unregistered Securities; Use of Proceeds from Registered
Securities

 With the exception of the purchase of 375,000
shares of our common stock in year ended December 31, 2024, and 750,000 shares of our common stock in the year ended December 31,
2023, all pursuant to the exercise of certain non-compensatory stock options acquired by our Chairman and CEO, D. Sean McEwen, in
2017, at an exercise price of $0.22 per share, there have been no sales by us of any unregistered or restricted securities during
the past two (2) years ended December 31, 2024, and 2023. The exercise price of these stock options was paid from accrued salary
owed to Mr. McEwen; cash; or the conveyance of fully-paid shares of our common stock owned by Mr. McEwen of a value equal to the
exercise price based on the closing market price of our shares at or about the date of exercise.

 Use of Proceeds of Registered Securities

 None; not applicable.

 Purchases of Equity Securities by Us and Affiliated
Purchasers

 Excluding incentive stock options or non-compensatory
stock options paid for by the conveyance of fully-paid and owned shares of our common stock to us by any such option holders, which shares
had a value equal to the exercise price of any such options, based on the closing market price of our shares at or about the date of exercise,
none.

 ITEM 6: [RESERVED]

 ITEM 7: MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 When used in this Annual Report, the words "may,"
"will," "expect," "anticipate," "continue," "estimate," "project,"
"intend," and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of
the Securities Act and Section 21e of the Exchange Act regarding events, conditions and financial trends that may affect our future plans
of operations, business strategy, operating results and financial position. Persons reviewing this Annual Report are cautioned
that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and actual results
may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed
at the forepart of this Annual Report under the heading "Forward-Looking Statements" on page 2 hereof.

 Overview of Current and Planned Business Operations

 We continue to pursue market
opportunities for the distribution of our current products and services described in our "Principal Products or Services and their
Markets" summary contained on page 7 of this Annual Report. In addition, we continue
to pursue expanded market distribution opportunities, development of new products and services, the addition of new lines of business
and accretive acquisition opportunities that may enhance or expand our current product and service offerings.

 Comparison of the Year Ended December 31, 2024,
to the Year ended December 31, 2023

 Results of Operations

 In comparing our Statements of Operations between
the years ended December 31, 2024, and 2023, we had declines in revenue and costs of revenue, increases in operating expenses, and lower
net income.

 For the year ended December 31, 2024, we had $15,503,251
in revenues from operations compared to $18,223,745 in the prior year ended December 31, 2023, for a total revenue decrease of ($2,720,494)
in 2024. The decrease in 2024 revenue was due to fewer activations within our Mobile Services segment. A major influence in this decline
in revenue was the result of the ACP Program ending on June 1, 2024, which reduced government subsidized revenues for Infiniti Mobile.

 For the year ended December 31, 2024, our cost of
revenue was $12,088,944 compared to $14,850,105 in the prior year ended December 31, 2023, for a cost of revenue decrease of ($2,761,161)
in 2024. Our cost of revenue decrease was the result of delivering fewer devices to subscribers, which reduced the costs of devices, network
and compensation, as a result of the elimination of the ACP Program.

 For the year ended December 31, 2024, we had gross
profit of $3,414,307 compared to $3,373,640 in the prior year ended December 31, 2023, for a gross profit increase of $40,667 in 2024.
This increase was primarily due to a reduction in acquisition costs in 2024.

 For the year ended December 31, 2024, total operating
expenses were $7,953,378 compared to $6,494,243 in the prior year ended December 31, 2023, for an increase of $1,459,135
in 2024. This increase was due primarily due to higher payroll and related expenses for Apeiron Systems.

 For the year ended December 31, 2024, other income
(expense) was $9,213,940 compared to ($820,224) in the prior year ended December 31, 2023. This increase was due primarily to our sale
of 49% of the Membership Interest in IM Telecom to Excess Telecom on January 22, 2024, for an aggregate purchase price of $10,000,000,
and, if approved the FCC, Excess can acquire the remaining 51% for $100.

 For the year ended December 31, 2024, we had a net
income of $4,490,818 compared to a net loss of ($3,940,827) in the prior year ended December 31, 2023. The increase in net income
was also primarily the result of the sale of the 49% Membership Interest in IM Telecom to Excess Telecom in the first quarter of 2024.

 Liquidity and Capital Resources

 As of December 31, 2024, we had $1,679,345 in cash
and cash equivalents on hand.

 Our ability to continue as a business is dependent
upon our generating profitable operations in the future and/or obtaining the necessary financing to meet our obligations and repay our
liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve
(12) months with revenues from operations, cash on hand and potentially the use of financing for growth accelerating opportunities.

 In comparing liquidity between the years ending December
31, 2024, and 2023, cash increased by 116%. The increase was primarily the result of the sale of the 49% Membership Interest in IM Telecom
to Excess Telecom in the first quarter of 2024. Total liabilities decreased by 64.2% in 2024 when compared to 2023, as the result
of the repayment of the CCUR Loan and the ACP Finance loan for device financing from funds received from Excess Telecom under the Excess
Telecom Purchase Agreement. We also had working capital of $2,006,701 for the year ended December 31, 2024, also primarily
resulting from the additional cash and cash equivalents received from the Excess Telecom Purchase Agreement. In January, 2024, the CCUR
Loan and the outstanding obligations to ACP Finance, were fully paid off with a part of these proceeds.

 Our current ratio (current assets divided by current liabilities) was
1.78 as of December 31, 2024, and.48 as of December 31, 2023.

 Cash Flows from Operations

 During the year ended December 31, 2024, and the year
ended December 31, 2023, cash flow used in operating activities was $(3,992,767) and $(1,792,032), respectively. Cash flows provided by
operating activities were mainly impacted by the adjustment to net income due to the gain on sale of 49% of IM Telecom.

 Cash Flows from Investing Activities

 During the year ended December 31, 2024, and the year
ended December 31, 2023, cash flow provided by investing activities was $8,558,509 and $0, respectively. This increase was the result
of the sale of the 49% Membership Interest in IM Telecom to Excess Telecom.

 Cash Flows from Financing Activities

 During the year ended December 31, 2024, and the year
ended December 31, 2023, cash flow provided by (used in) financing activities was ($3,663,500) and $513,501, respectively. In 2024, cash
flow used in financing activities consisted of ($3,704,750) cash used to repay CCUR loan principal and loan fees, and $41,250 cash received
from incentive or non-compensatory stock options that were exercised. In 2023, cash flow generated from financing activities consisted
of $554,750 cash received from short-term notes payable, ($132,000) cash used for payment of loan origination costs and $90,751 cash received
from incentive or non-compensatory stock option exercises.

 Going Concern

 We generated a net income of $4,490,818 during
the year ended December 31, 2024, and we had a net loss of ($3,940,827) in 2023. The Company had a net change in cash of $902,242 and
($1,278,531) in 2024, and 2023, respectively. The accumulated deficit as of December 31, 2024, was ($7,747,873). The Company's
sale of the 49% Membership Interest in IM Telecom to Excess Telecom allowed us to pay off all outstanding debt and retain additive cash.

 We are one
of only a few telecommunication carriers to hold a national wireless ETC Lifeline license, which provides us with additive reimbursement
rates within the states we operate. In Q2 2024, we added an additional ten (10) state licenses, which continues to expand our nationally
licensed wireless service coverage. We have continued to target and expand into additional ETC licensed states.

 As of June 1, 2024, funding for the ACP Program ended,
which accounted for approximately 15% of our revenues in Q2 2024 and 33% of our revenues in Q1 2024. Legislative efforts to extend funding
remain within Congress; however, the decision to further fund the ACP Program (or a similar program) is still uncertain. In light of this
uncertainty, we took initial steps to reduce costs in Q2 2024 while discussions continued in Congress, and we moved resources and focus
to our mobile services segment to California. With the California Lifeline Program, through its additional state funding and Linkup program,
our business was able to retain continuity in the mobile services market. In Q3 2024, we received a cease and desist letter from the State
of California CPUC, specific to a marketing program by one of our master distribution partners. The inquiry into this matter impacted
the timing of payments on our qualified claims through Q4 2024 (see the heading "Concentration of Credit Risk" in NOTE 1 of our audited consolidated financial statements contained in Part
II, Item 8 hereof).
Since the end of the year, the cease and desist issue has been rectified and all payments are now being received timely.

 As of December 31, 2024, and with no visible
progress towards an extension of the ACP Program within Congress, we took cost reduction measures, including reductions within our
workforce. Although we eliminated our outstanding debt and increased our cash position earlier in the year, uncertainty around the
ACP Program (or a similarly funded program), the impacts to our business in the State of California, the program launch timing of
VIVA-US Telecommunications, Inc. ("VIVA-US"), and our ongoing health care sales initiative will play significant roles
in our ability to continue operations without additional reductions. The lack of our success with any of these foregoing initiatives
raises substantial doubt about our ability to remain a going concern for the twelve (12) month period from the date of this Annual
Report.

 Critical Accounting Policies and Estimates

 Use of Estimates

 The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates. Significant estimates in the accompanying financial statements could include the amortization period for intangible
assets, valuation and impairment valuation of intangible assets, depreciable lives of the property and equipment, valuation of warrant
and beneficial conversion feature debt discounts, valuation of share-based payments and the valuation allowance on deferred tax assets.

 Impairment of Long-Lived Assets

 We
account for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, "Accounting
for the Impairment or Disposal of Long-Lived Assets". This statement requires that long-lived assets and certain identifiable intangibles
be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net
cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at
the lower of the carrying amount or fair value less costs to sell.

 Fair Value of Financial
Instruments and Fair Value Measurements

 We measure financial assets and liabilities in accordance
with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses,
escrow liability and short-term loans the carrying amounts approximate fair value due to their short maturities.

 We have adopted accounting guidance for financial
and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position
or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard
does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair
value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques,
such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost
approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes
the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three
levels:

 Level 1: Observable inputs such as quoted prices
(unadjusted) in active markets for identical assets or liabilities.

 Level 2: Inputs other than quoted prices which
are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted
prices for identical or similar assets or liabilities in markets that are not active.

 Level 3: Unobservable inputs in which little
or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant
would use.

 Leases

 In February, 2016, the FASB updated the accounting
guidance related to leases. The most significant change in the updated accounting guidance requires lessees to recognize lease assets
and liabilities on the balance sheet for all operating leases with the exception of short-term leases. The standard also expands the disclosures
regarding the amount, timing, and uncertainty of cash flows arising from leases. For a lessee, the recognition, measurement, and presentation
of expenses and cash flows arising from a lease did not significantly change from previous guidance. We adopted the updated guidance on
January 1, 2019, on a prospective basis and as a result, prior period amounts were not adjusted to reflect the impacts of the updated
guidance. In addition, as permitted under the transition guidance within the new standard, prior scoping and classification conclusions
were carried forward for leases existing as of the adoption date.

 Revenue Recognition

 We earn revenue from contracts with customers,
primarily through the provision of telecommunications and other services. We account for these revenues under Accounting Standards
Codification (ASC) 606, "Revenue from Contracts with Customers." This standard update, along with related subsequently
issued updates, clarifies the principles for recognizing revenue and develops a common revenue standard U.S. GAAP. The standard
update also amends current guidance for the recognition of costs to obtain and fulfill contracts with customers such that
incremental costs of obtaining and direct costs of fulfilling contracts with customers will be deferred and amortized consistent
with the transfer of the related good or service. Revenue from these services is generally recognized monthly as the services are
provided. Such revenue is recognized based on usage, which can vary from month to month or at a contractually committed amount, net
of credits or other billing adjustments. Advance billings for future service in the form of monthly recurring charges are not
recognized as revenue until the service is provided.

 We distribute government subsidized mobile services
through Master Agents. As part of the distribution process, we deliver mobile phones and/or tablets (devices) to our Master Agents, who
then are responsible to subscribe qualifying consumers under a government sponsored program (ACP and/or Lifeline). In most cases, devices
that have been delivered to our Master Agents are subscribed to and activated by qualifying consumers within sixty (60) days, at which
point we would receive a subsidy from a governing body (USAC or certain states) and recognize revenue. Once a device is activated, and
the intended service provided under the government program is deemed to have occurred, the program revenue is recognized, the expense
is recognized, and the device is removed from inventory.

 Stock-Based Compensation

 We record stock-based compensation in accordance with
the guidance in ASC 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards.
This requires that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based
awards on a graded vesting basis over the vesting period of the award.

 We account for equity instruments issued in exchange
for the receipt of goods or services from other than employees in accordance with ASC 718-10 and the conclusions reached by the ASC 505-50.
Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments
issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is
determined on the earliest of a performance commitment or completion of performance by the provider of goods or services.

 Income Taxes

 We account for income taxes in accordance with FASB
ASC 740, "Income Taxes." Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carryforwards and
their respective tax bases.

 Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income (loss) in the years in which those temporary differences are expected to be recovered
or settled.

 The effect of a change in tax rules on deferred tax
assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is "more likely-than-not"
that a deferred tax asset will not be realized.

 Tax benefits of uncertain tax positions are
recognized only if it is more likely than not that the Company will be able to sustain a position taken on an income tax return. We
had no liability for uncertain tax positions as of December 31, 2024, and 2023. Interest and penalties, if any, related to
unrecognized tax benefits would be recognized as interest expense. We do not have any accrued interest or penalties associated with
unrecognized tax benefits, nor was any significant interest expense recognized during the years ended December 31, 2024, and
2023.

 Earnings Per Share

 We follow ASC Topic 260 to account for the earnings
per share. Basic earnings per common share calculations are determined by dividing net income available to common stockholders by the
weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share calculations are determined
by dividing net income available to common stockholders by the weighted average number of common shares and dilutive common share equivalents
outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

 ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

 Item 305 of SEC Regulation S-K provides that certain registrants
are required to categorize market risk sensitive instruments into instruments entered into for trading purposes and instruments entered
into for purposes other than trading purposes. Within both the trading and other than trading portfolios, separate quantitative information
shall be presented, to the extent material, for each market risk exposure category ( i.e., interest rate risk, foreign currency
exchange rate risk, commodity price risk, and other relevant market risks, such as equity price risk). These requirements are not applicable
to smaller reporting companies under subsection thereof.

 ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 FINANCIAL STATEMENTS

 December 31, 2024, and 2023

 Report of Independent Registered Public Accounting Firm

 Consolidated Balance Sheets

 Consolidated Statements of Operations

 Consolidated Statements of Stockholders' Equity (Deficit)

 Consolidated Statements of Cash Flow

 Notes to Consolidated Financial Statements

 ( This space intentionally left blank)

 REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

 To the Board of Directors and

Stockholders of KonaTel, Inc.

 Opinion on the Consolidated Financial Statements

 We have audited the accompanying consolidated
balance sheets of KonaTel, Inc. KONATEL INC (the Company) as of December
31, 2024 and 2023 and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for each of the years in the two-year period ended December
31, 2024 and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2024 and 2023, and the results of its operations and its cash
flows for each of the years in the two-year period ended December 31, 2024,
in conformity with accounting principles generally accepted in the United States of America.

 Substantial Doubt about the Company's
Ability to Continue as a Going Concern

 The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 of the financial statements, the
Company has suffered recurring losses from operations and has an accumulated deficit of ($7,747,873). The losses in conjunction with uncertainty
around of the success of management's future plans, raise substantial doubt about its ability to continue as a going concern. Management's
plans are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome
of this uncertainty.

 Basis for Opinion

 These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide
a reasonable basis for our opinion.

 F- 1

 Critical Audit Matters

 The critical audit matters communicated below
are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated
to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 Valuation of Stock Based Compensation

 Description of the Matter:

 As discussed in Note 11 to the consolidated
financial statements, the Company offers stock option awards that involve complex accounting estimates. Management evaluates the stock
option awards in accordance with ASC Topic 718, "Compensation-Stock Compensation" and uses the Black Scholes Model to value
the stock option awards. This model requires management to make assumptions, use judgment, and can be complex. Additionally, we note the
company has repriced their options and these repricings require complex accounting calculations.

 How We Addressed the Matter
in Our Audit

 We gained an understanding of management's
processes and methodology to develop the estimates. We reviewed the underlying option agreements. We evaluated management's selection
of a valuation method, tested the inputs used in the valuation method (Black-Scholes) calculation by agreeing terms of the underlying
agreements and market information to third-party sites, and recalculated the value of the options and related repricings. We also evaluated
the adequacy of the disclosures related to these fair value measurements.

 /s/ Haynie & Company

 Haynie & Company

 Salt Lake City, Utah

 April 15,
2025

 PCAOB # 457

 We have served as the Company's auditor since
2019.

 F- 2

 CONSOLIDATED BALANCE SHEETS

 December 31, 2024

 December 31, 2023

 Assets

 Current Assets

 Cash and Cash Equivalents

 $
 1,679,345

 $
 777,103

 Accounts Receivable, Net

 1,533,015

 1,496,799

 Notes Receivable

 1,000,000

 —

 Inventory, Net

 163,063

 1,229,770

 Prepaid Expenses

 94,496

 129,706

 Other Current Assets

 112,170

 —

 Total Current Assets

 4,582,089

 3,633,378

 Property and Equipment, Net

 15,128

 24,184

 Other Assets

 Intangible Assets, Net

 323,468

 634,251

 Right of Use Asset

 319,549

 443,328

 Other Assets

 74,328

 74,543

 Total Other Assets

 717,345

 1,152,122

 Total Assets

 $
 5,314,562

 $
 4,809,684

 Liabilities and Stockholders' Equity

 Current Liabilities

 Accounts Payable and Accrued Expenses

 $
 2,277,597

 $
 3,709,691

 Loans Payable, Net of Loan Fees

 —

 3,655,171

 Right of Use Operating Lease Obligation - Current

 113,740

 127,716

 Income
 Tax, Payable

 184,051

 —

 Total Current Liabilities

 2,575,388

 7,492,578

 Long Term Liabilities

 Right of Use Operating Lease Obligation - Long Term

 227,776

 330,511

 Total Long Term Liabilities

 227,776

 330,511

 Total Liabilities

 2,803,164

 7,823,089

 Commitments and Contingencies

 Stockholders' Equity

 Common stock, $ 0.001 par value, 50,000,000 shares authorized, 43,503,658 outstanding and issued at December 31, 2024 and 43,145,720 outstanding and issued at December 31, 2023

 43,504

 43,146

 Additional Paid In Capital

 10,215,767

 9,182,140

 Accumulated Deficit

 ( 7,747,873
)

 ( 12,238,691
)

 Total Stockholders' Equity

 2,511,398

 ( 3,013,405
)

 Total Liabilities and Stockholders' Equity

 $
 5,314,562

 $
 4,809,684

 The accompanying notes are an integral part of these

 F- 3

 CONSOLIDATED STATEMENTS OF OPERATIONS

 Years Ended December 31,

 2024

 2023

 Revenue

 $
 15,503,251

 $
 18,223,745

 Cost of Revenue

 12,088,944

 14,850,105

 Gross Profit

 3,414,307

 3,373,640

 Operating Expenses

 Payroll and Related Expenses

 5,310,549

 3,995,698

 Operating and Maintenance

 6,086

 5,804

 Credit Loss

 1,448

 Professional and Other Expenses

 1,646,755

 1,526,947

 Utilities and Facilities

 210,438

 191,556

 Depreciation and Amortization

 9,056

 12,352

 General and Administrative

 213,149

 155,734

 Marketing and Advertising

 99,759

 154,533

 Application Development Costs

 140,880

 138,600

 Taxes and Insurance

 315,258

 312,804

 Total Operating Expenses

 7,953,378

 6,494,243

 Operating Loss

 ( 4,539,071
)

 ( 3,120,603
)

 Other Income and Expense

 Gain on Sale

 Interest Expense

 ( 104,737
)

 ( 820,254
)

 Other Income/(Expense), net

 70,951

 Total Other Income and Expenses

 9,213,940

 ( 820,224
)

 Income Before Income Taxes

 4,674,869

)

 Income Tax Expense

 184,051

 —

 Net Income (Loss)

 $

 $
)

 Loss per Share

 Basic

 $
 0.10

 $
 ( 0.09
)

 Diluted

 $
 0.10

 $
 ( 0.09
)

 Weighted Average Outstanding Shares

 Basic

 43,402,219

 42,773,269

 Diluted

 43,526,417

 42,773,269

 The accompanying notes are an integral part of these

 F- 4

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY (DEFICIT)

 Common Shares

 Additional

 Accumulated

 Shares

 Amount

 Paid-in Capital

 Deficit

 Total

 Balances as of January 1, 2023

 42,240,406

 $
 42,240

 $
 8,710,987

 $
 ( 8,297,864
)

 $
 455,363

 Exercised Stock Options

 905,314

 213,596

 —

 214,502

 Stock Based Compensation

 —

 —

 257,557

 —

 257,557

 Net Loss

 —

 —

 —

)

)

 Balances as of December 31, 2023

 43,145,720

 $
 43,146

 $
 9,182,140

 $
 ( 12,238,691
)

 $
 ( 3,013,405
)

 Exercised Stock Options

 357,938

 40,892

 —

 41,250

 Stock Based Compensation

 —

 —

 992,735

 —

 992,735

 Net Income

 —

 —

 —

 Balances as of December 31, 2024

 43,503,658

 $
 43,504

 $
 10,215,767

 $
 ( 7,747,873
)

 $
 2,511,398

 The accompanying notes are an integral part of these

 Common Shares

 Additional Paid-in Capital

 Accumulated Deficit

 F- 5

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 For Years Ended December 31,

 2024

 2023

 Cash Flows from Operating Activities:

 Net Income (Loss)

 $

 $
)

 Adjustments to reconcile net income (loss) to net cash used in operating activities:

 Depreciation and Amortization

 9,056

 12,352

 Gain on Sale of IM Telecom (49%)

 ( 9,247,726
)

 —

 Loan Origination Cost Amortization

 49,579

 161,474

 Credit Loss

 1,448

 Stock-based Compensation

 992,735

 257,557

 Non-Compensatory Stock Options Exercised

 —

 123,750

 Change in Right of Use Asset

 123,778

 110,358

 Change in Lease Liability

 ( 116,711
)

 ( 118,382
)

 Changes in Operating Assets and Liabilities:

 Accounts Receivable

 ( 37,664
)

 13,104

 Inventory

 1,066,707

 ( 703,433
)

 Prepaid Expenses

 ( 76,960
)

 ( 68,465
)

 Accounts Payable and Accrued Expenses

 ( 1,432,094
)

 2,360,760

 Income Tax Payable

 184,051

 —

 Other Assets

 ( 495
)

 Net cash used in operating
 activities

 ( 3,992,767
)

 ( 1,792,032
)

 Cash Flows from Investing Activities

 Sale of IM Telecom (49%)

 9,558,509

 —

 Notes Receivable

 ( 1,000,000
)

 —

 Net cash provided by investing activities

 8,558,509

 —

 Cash Flows from Financing Activities

 Proceeds from Note Payable

 —

 554,750

 Repayments of Note Payable

 ( 3,704,750
)

 —

 Loan Origination Costs

 —

 ( 132,000
)

 Cash Received From Stock Options Exercised

 41,250

 90,751

 Net cash provided by (used in) financing activities

 ( 3,663,500
)

 513,501

 Net Change in Cash

 902,242

 ( 1,278,531
)

 Cash - Beginning of Year

 777,103

 2,055,634

 Cash - End of Period

 $
 1,679,345

 $
 777,103

 Supplemental Disclosure of Cash Flow Information

 Cash paid for interest

 $
 54,750

 $
 419,525

 Cash paid for taxes

 $
 —

 $
 —

 The accompanying notes are an integral part of these

 F- 6

 Notes to Consolidated Financial Statements

 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Overview of Company

 KonaTel Nevada (as defined below) was organized under
the laws of the State of Nevada on October 14, 2014, by its founder and then sole shareholder, D. Sean McEwen, to conduct the business
of a full-service MVNO ("Mobile Virtual Network Operator") provider that delivered cellular products and services to individual
and business customers in various retail and wholesale markets.

 KonaTel Inc., formerly known as Dala Petroleum Corp.
("KonaTel," the "Company," "we," "our," or "us"), also formerly known as "Westcott
Products Corporation," was incorporated as "Light Tech, Inc." under the laws of the State of Nevada on May 24, 1984. A
subsidiary in the name "Westcott Products Corporation" was organized by us under the laws of the State of Delaware on June
24, 1986, for the purpose of changing our name and domicile to the State of Delaware. On June 27, 1986, we merged with the Delaware subsidiary,
with the survivor being Westcott Products Corporation, a Delaware corporation ("Westcott"). On December 18, 2017, we acquired
KonaTel, Inc, a Nevada sub S-Corporation ("KonaTel Nevada"), in a merger with our acquisition subsidiary under which KonaTel
Nevada became our wholly owned subsidiary.

 On December 31, 2018, we acquired Apeiron Systems,
Inc., a Nevada corporation d/b/a "Apeiron" ("Apeiron Systems"), which is also our wholly owned subsidiary. Apeiron
Systems was organized in 2013 and is an international hosted services CPaaS ("Communications Platform as a Service") provider
that designed, built, owns and operates its private core network, supporting a suite of real-time business communications services and
Applications Programming Interfaces ("APIs"). As an Internet Telephony Service Provider ("ITSP"), Apeiron Systems
holds a Federal Communications Commission ("FCC") numbering authority license. Some of Apeiron Systems' hosted services
include SIP/VoIP services, SMS/MMS processing, BOT integration, NLP ("Natural Language Processing"), ML ("Machine Learning")
and number services, including mobile, toll free and DID landline numbers, SMS to Email services, Database Dip services, SD-WAN, voice
termination, and numerous API driven services including voice, messaging and network management.

 On January 31, 2019, we acquired IM Telecom, an Oklahoma
limited liability company, d/b/a Infiniti Mobile, ("IM Telecom" or "Infiniti Mobile"), which became our wholly
owned subsidiary. Infiniti Mobile is an FCC licensed ETC ("Eligible Telecommunications Carrier") and is one of approximately
nineteen (19) FCC licensed carriers to hold an FCC approved Lifeline Compliance Plan in the United States. Under the Lifeline program,
Infiniti Mobile is currently authorized to provide government subsidized mobile telecommunications services to eligible low-income Americans
currently in forty (40) states with pending Study Area Codes (SACs) applications with the FCC in an additional eight (8) states.

 On January 22, 2024 (the "Effective Date"),
KonaTel and IM Telecom entered into a Membership Interest Purchase Agreement with Excess Telecom, Inc., a Nevada corporation (respectively,
"Excess Telecom" and the "Excess Telecom Membership Interest Purchase Agreement"). Pursuant to the Membership
Interest Purchase Agreement, KonaTel agreed to sell a membership interest in IM Telecom (the "Membership Interest") to Excess
Telecom, initially 49 % (the "Initial Closing"), with the remaining 51% (the "Final Closing") subject to final
change of control approval by the "FCC."

 Additional agreements were also executed by the parties
at the Initial Closing Date of the Membership Interest Purchase Agreement, including a Management Service Agreement, a Master Distribution
Agreement and an Amended and Restated Operating Agreement (collectively, the "Transaction Documents").

 Basis of Presentation

 The accompanying financial statements have been prepared
using the accrual basis of accounting.

 The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements
include the allowance for doubtful receivables, allowance for inventory obsolescence, the estimated useful lives of property and equipment,
and intangible assets. Actual results could differ from those estimates. Certain reclassifications have been made to prior year amounts
to conform with the current year presentation.

 Basis of Consolidation

 The consolidated financial statements for the year
ended December 31, 2024, and 2023, include the Company and its three (3) owned corporate subsidiaries, KonaTel Nevada, Apeiron
Systems, and IM Telecom. All significant intercompany transactions are eliminated.

 F- 7

 Cash and Cash Equivalents

 Cash and Cash Equivalents include cash on hand and
all short-term investments with maturities of three months or less.

 Trade Accounts Receivable

 The Company accounts for trade receivables based on
amounts billed to customers. Past due receivables are determined based on contractual terms. The Company does not accrue interest and
does not require collateral on any of its trade receivables. Net receivables from transactions with customers were $ 1,533,015 and
$ 1,496,799 as of December 31, 2024, and December 31, 2023, respectively.

 Allowance
for Credit Losses

 The allowance for credit losses is
determined by management based on customer credit history, specific customer circumstances and general economic conditions.
Periodically, management reviews our accounts receivable and adjusts the allowance based on current circumstances and charges off
uncollectible receivables against the allowance when all attempts to collect the receivable have failed. As of December 31, 2024,
and 2023, management has determined that no
allowance for credit losses is necessary.

 Inventory

 Inventory consists primarily of the cost of cellular
phones and tablets. Inventory is reported at the lower of cost or net realizable value. Cost is determined by the first-in, first-out
("FIFO") method. As of December 31, 2024, total inventory owned by the Company was $ 163,063.

 Due to rapidly changing technology within the industry,
inventory is evaluated on a regular basis to determine if any obsolescence exists. As of December 31, 2024, and 2023, the allowance for
inventory obsolescence was $ 0.

 Property and Equipment

 Property and equipment are recorded at cost and are
depreciated on the straight-line method over their estimated useful lives. Leasehold improvements are amortized over the lesser of
the lease term or estimated useful life, furniture and fixtures, equipment, and vehicles are depreciated over periods ranging from five
to seven (5-7) years, and billing software is depreciated over three (3) years which represents the estimated useful life of the assets. Maintenance
and repairs are charged to expense as incurred while major replacements and improvements are capitalized. When property and equipment
are retired or sold, the cost and applicable accumulated depreciation are removed from the respective accounts and the related gain or
loss is recognized.

 The Company recognizes impairment losses for long-lived
assets whenever changes in circumstances result in the carrying amount of the assets exceeding the sum of the expected future cash flows
associated with such assets. Management has concluded that no impairment reserves are required as of December 31, 2024, and 2023.

 Intangible Assets

 The Company accounts for intangible assets in accordance
with the provisions of Statement of Financial Accounting Standards ASC 360-10, "Accounting for the Impairment or Disposal of Long-Lived
Assets." This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated
by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell. As of December 31, 2024, intangible assets include our ETC License.

 Other Assets

 Other Assets represent items classified as long-term
assets in accordance with the Statement of Financial Accounting Standards ASC 210-10-45. Other Assets include security deposits held with
vendors.

 Customer Deposits

 Before entering into a contract with a sub-reseller
customer, the Company requires the customer to either secure a formal letter of credit with a bank or require a certain level of cash
collateral deposits from the customer. These collateral requirements are determined by management and may be adjusted upward or downward
depending on the volume of business with the sub-reseller customer, or if management's assessment of credit risk for a sub-reseller
customer would change.

 F- 8

 The Company held $ 0 in collateral deposits from
various sub-reseller customers at December 31, 2024, and 2023, respectively.

 Notes Receivable

 On January
22, 2024, the Company accepted a $ 1,000,000 note receivable from Excess Telecom as part of the 49% membership interest sale of IM Telecom.
Payment of the note is contingent upon the satisfaction of certain underlying provisions noted in the Membership Interest Purchase Agreement.
There is no stated interest or term under this note.

 Fair Market Value of Assets

 The Company measures its financial assets and liabilities
in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable,
accrued expenses, deposits received from customers for receivables and short-term loans the carrying amounts approximate fair value due
to their short maturities. Long-term assets purchased through acquisitions are valued at the Fair Market Value of the asset at the time
of acquisition. The Fair Market Value is based on observable inputs of assets in active market- places for fixed assets, and estimations
and assumptions developed by us for Other Intangibles.

 The Company follows accounting guidance for financial
and non-financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain
disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements
that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance
discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income
or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair
value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following
is a brief description of those three levels:

 Level 1: Observable inputs such as quoted prices (unadjusted) in
active markets for identical assets or liabilities.

 Level 2: Inputs other than quoted prices, which
are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted
prices for identical or similar assets or liabilities in markets that are not active.

 Level 3: Unobservable inputs in which little
or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant
would use.

 Leases

 In February 2016, the FASB updated the accounting
guidance related to leases. The most significant change in the updated accounting guidance requires lessees to recognize lease assets
and liabilities on the balance sheet for all operating leases with the exception of short-term leases. The standard also expands the disclosures
regarding the amount, timing and uncertainty of cash flows arising from leases. For a lessee, the recognition, measurement and presentation
of expenses and cash flows arising from a lease did not significantly change from previous guidance. See NOTE 5.

 Upon adoption, we recorded $ 151,471 for operating
lease assets and liabilities, which includes the impact of fair value adjustments, prepaid and deferred rent. As of December 31, 2024,
and December 31, 2023, our operating lease liabilities were $ 341,516 and $ 458,227, respectively.

 Revenue Recognition

 Services revenues are generated from cellular and
telecommunication services. The revenue is derived from wholesale and retail services. Telecommunications and mobile telecommunication
services include network platforms, voice, data, and text services. The Company recognizes revenue as telecommunications and mobile services
are provided in service revenue. Telecommunications and mobile services are billed and paid on a monthly basis. These bills include an
amount for the monthly recurring charge and a usage charge.

 We earn revenue from contracts with customers, primarily
through the provision of telecommunications and other services. We account for these revenues under Accounting Standards Codification
(ASC) 606, "Revenue from Contracts with Customers." This standard update, along with related subsequently issued updates,
clarifies the principles for recognizing revenue and develops a common revenue standard under U.S. GAAP. The standard update also amends
current guidance for the recognition of costs to obtain and fulfill contracts with customers such that incremental costs of obtaining
and direct costs of fulfilling contracts with customers will be deferred and amortized consistent with the transfer of the related good
or service. The adoption of this guidance did not have a material impact on the consolidated financial statements.

 F- 9

 We distribute government subsidized mobile services
through Master Agents. As part of the distribution process, we deliver mobile phones and/or tablets (devices) to our Master Agents, who
then are responsible to subscribe qualifying consumers under a government sponsored program (ACP and/or Lifeline). In most cases, devices
that have been delivered to our Master Agents are subscribed to and activated by qualifying consumers within sixty (60) days, at which
point we would receive a subsidy from a governing body (the Universal Service Administrative Company ("USAC") or certain states)
and recognize revenue. Once a device is activated, and the intended service provided under the government program is deemed to have occurred,
the program revenue is recognized, the expense is recognized, and the device is removed from inventory.

 Excess Telecom (Related Party) Revenue ( see
NOTE 14 below)

 Pursuant to the Excess Telecom Membership
Interest Purchase Agreement and the related Master Distribution Agreement, Excess Telecom markets under the IM Telecom license, in
the same manner as other distribution partners. Annual revenue generated from Excess Telecom and marketed under the IM Telecom
license was $ 108,328,000 for
2024. Annual management expense, directly related to the Excess Telecom revenues, was $ 108,328,000 for
2024. Excess Telecom revenues and expenses are recorded on IM Telecom's books, but are not presented on our statements since
they are netted.

 Deferred Revenue

 Services for cellular and telecommunication services
have a monthly recurring charge that is billed in advance. This charge covers a thirty (30) or thirty-one (31)-day period. This charge
is deferred for the period in which it was received and recorded as revenue at the conclusion of this period. Costs, mainly from outside
providers, associated with the deferred revenue are recognized in the same period as revenue is recognized.

 Cost of Revenue

 Cost of Revenue includes the cost of communication
services, equipment and accessories, shipping costs, and agent compensation.

 Advertising/Marketing

 Costs for advertising/marketing of products and services,
as well as other promotional and sponsorship costs, are charged to selling, general and administrative expense in the periods in which
they are incurred. Advertising/marketing expense was $ 99,759 and $ 154,533 for 2024, and 2023, respectively. The decrease in
advertising/marketing costs was a result of a small investment into marketing for Infiniti Mobile throughout our independent agent footprint.

 Stock-based Compensation

 The Company records stock-based compensation in accordance
with the guidance in ASC 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards.
This requires that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based
awards on a graded vesting basis over the vesting period of the award.

 The Company accounts for equity instruments issued
in exchange for the receipt of goods or services from nonemployees in accordance with ASC 718-10 and the conclusions reached by the ASC
505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity
instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee
services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services.

 Income Taxes

 Provisions for income taxes are based on taxes payable
or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial
income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets
and liabilities are included in the consolidated financial statements at currently enacted income tax rates applicable to the period in
which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rate are enacted, deferred
tax assets and liabilities are adjusted through the provision for income taxes.

 F- 10

 The benefits of uncertain tax positions are recorded
in the Company's Consolidated Financial Statements only after determining a more-likely-than-not probability that the uncertain
tax positions will withstand challenge, if any, from taxing authorities. The Company records interest and penalties related to unrecognized
tax benefits in interest expense in the Company's Consolidated Statements of Operations.

 Net Income (Loss) Per Share

 Basic income (loss) per share of common stock attributable
to common stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average shares
of common stock outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock
underlying outstanding stock-based awards using the treasury stock method or the if-converted method, as applicable, are included when
calculating diluted net income (loss) per share of common stock attributable to common stockholders when their effect is dilutive. The
dilutive common shares for the year ended December 31, 2023, are not included in the computation of diluted earnings per share
because to do so would be anti-dilutive. As of December 31, 2023, there were potentially 641,155 dilutive shares.

 The following table reconciles the shares outstanding
and net income used in the computations of both basic and diluted earnings per share of common stockholders:

 Summary of Significant Accounting Policies -Schedule of Earnings Per Share, Basic
and Diluted

 Years Ended December 31,

 2024

 2023

 Numerator

 Net Income (Loss)

 $

 $
)

 Denominator

 Weighted-average common shares outstanding

 43,402,219

 42,773,269

 Dilutive impact of stock options

 54,163

 —

 Weighted-average common shares outstanding, diluted

 43,526,417

 42,773,269

 Net income per common share

 Basic

 $
 0.10

 $
 ( 0.09
)

 Diluted

 $
 0.10

 $
 ( 0.09
)

 Concentrations of Credit Risk

 Trade Account Receivables

 Sales Revenue

 Customer Concentration

 Financial instruments which potentially subject the
Company to concentrations of credit risk consist primarily of receivables, cash, and cash equivalents.

 All cash and cash equivalents and restricted cash
and cash equivalents are held at high credit financial institutions. These deposits are generally insured under the FDIC's deposit
insurance coverage; however, from time to time, the deposit levels may exceed FDIC coverage levels.

 The Company has a concentration of risk with respect
to trade receivables from customers and cellular providers. As of December 31, 2024, the Company had a significant concentration of receivables
(defined as customers whose receivable balances are greater than 10% of total receivables) due from one (1) customer in the amount of
$ 1,055,337 or 68.5 %. It should be noted that the largest customer is the state of California, as administered by the California
Public Utilities Commission (CPUC). As of December 31, 2023, the Company had a significant concentration of receivables from two
(2) customers in the amounts of $ 1,024,308 or 68.5 % and $ 283,536 or 19.0 %.

 Concentration of Major Customer

 A significant amount of the revenue is derived from
contracts with major customers. For the year ended December 31, 2024, the Company had two (2) customers that accounted for $ 5,295,202 or 34.2 %
and $ 3,483,080 or 22.5 % of revenue, respectively. For the year ended December 31, 2023, the Company had two (2) customers that
accounted for $ 10,492,430 or 57.6 % and $ 3,000,498 or 16.5 % of revenue, respectively. The loss of a major customer
would have a negative impact on the Company and would subsequently require the Company to make significant changes to reduce expenses. It
should be noted that the largest customer is the federal government, as administered by USAC under the authority of the FCC, as part of
our participation in the federal Lifeline and ACP Program.

 F- 11

 Effect of Recent Accounting Pronouncements

 The Company has evaluated all recent accounting
pronouncements and believes that none will have a significant effect on the Company's financial statement.

 NOTE 2 – GOING
CONCERN

 With no visible progress towards an extension of the
ACP Program, or the creation of a similar program, the Company may face further cost reduction measures, including additional reductions
in our workforce. Although the Company eliminated its outstanding debt and increased its cash position earlier in 2024, the uncertainty
surrounding the ACP and Lifeline Programs or the creation of other similar support programs, the Company's ability to remain a going
concern is dependent upon the success of IM Telecom's ongoing health care initiative, Apeiron System's SMS messaging, POTS
replacement and VIVA-US Telecommunications, Inc. initiatives. The lack of our success in one or more of these foregoing initiatives raises
substantial doubt about our ability to remain a going concern for the twelve (12) month period from the date of this Annual Report.

 In order to
mitigate any going concern risks, we continue to focus on our mobile services segment in California with the California Lifeline Program,
through its' additional state funding and Linkup program. We also shifted our focus to our ongoing health care sales initiative
as well as Apeiron System's SMS messaging and POTS replacement initiatives. If necessary, we will also consider additional reductions
in force, which will create more than a twelve (12) month net working capital in order to mitigate further risk.

 NOTE 3 – INVENTORY

 Inventory primarily consists of sim cards, cell phones
and tablets, which are stored at our warehouse, or have been delivered to distributors in the field. Inventories are stated at cost using
the first-in, first-out ("FIFO") valuation method. On a monthly basis, inventory is counted at our warehouse facility, and
is reviewed for obsolescence and counted for accuracy with distributors. At December 31, 2024, and December 31, 2023, the Company had
inventory of $ 163,063 and $ 1,229,770, respectively.

 NOTE 4 – SIGNIFICANT TRANSACTIONS

 CCUR Loan and Payoff

 In 2022, the Company and its wholly owned subsidiary
companies entered into a Note Purchase Agreement and related Guarantee and Security Agreement with CCUR Holdings, Inc. (as "Collateral
Agent"), and Symbolic Logic, Inc., whereby the Company pledged its assets to secure $ 3,150,000 in debt financing (the "CCUR
Loan"). The term was for a period of twelve ( 12) months, at an initial interest rate of 15 %, with two (2) successive six-month
optional extensions. As a condition of securing the CCUR Loan, the Company paid a 3% origination fee, and other legal and closing expenses
to the lender in the amount of $ 153,284, resulting in a net loan balance of $ 2,984,181. The loan costs of $ 153,284 and the net loan
balance of $ 2,984,181 were amortized over a 12-month period. The Company incurred an additional $ 20,248 in legal expense related
to the closing, which amount was also amortized over a 12-month period. Proceeds of the CCUR Loan were used to retire the $ 150,000 SBA
"EIDL" Loan and were used in an ongoing capacity to support the acceleration of our mobile services growth strategy.

 In 2023, the Company exercised the first draw under
the First Amendment to the NPA of $ 500,000. As part of the First Amendment to NPA, the Company paid $ 15,000 to CCUR, which was equal
to 1.5% of the initial delayed draw, and the initial interest rate established in the NPA was increased by 3 %.

 In 2024, as a result of the Excess Telecom
Membership Interest Purchase Agreement, the CCUR loan was paid off in the amount of $ 3,681,660.

 ACP Finance

 Line of Credit

 In 2023, IM Telecom entered into a structured credit,
non-dilutive facility, with ACP Financing VII, LLC. The facility was used for mobile device purchases in 2024 in support of our mobile
services group. Approximately $ 1,500,000 was immediately available under the terms of the agreement. Due to the expiration of the
ACP Program, all outstanding amounts due to ACP Finance were paid off in November, 2024.

 F- 12

 NOTE 5 – PROPERTY AND EQUIPMENT

 Property and equipment consist of the following major classifications as
of December 31, 2024, and 2023:

 Property
and Equipment - Schedule of Property and Equipment

 December 31, 2024

 December 31, 2023

 Lease Improvements Lease Improvements

 $
 46,950

 $
 46,950

 Furniture and Fixtures Furniture and Fixtures

 102,946

 102,946

 Billing Software

 217,163

 217,163

 Office Equipment
 Office Equipment

 94,552

 94,552

 461,611

 461,611

 Less: Accumulated Depreciation

 ( 446,483
)

 ( 437,427
)

 Property and equipment, net

 $
 15,128

 $
 24,184

 Depreciation expense amounted to $ 9,056 and
$ 12,352 for
the years ended December 31, 2024, and 2023, respectively. Depreciation expense is included as a component of operating expenses in the
accompanying statements of operations.

 NOTE 6 – RIGHT-OF-USE ASSETS

 Minimum

 Maximum

 Right-of-Use Assets consist of assets accounted for
under ASC 842. The assets are recorded at present value using implied interest rates between 4.75 % and 7.50 %. The Right-of-Use
Assets were $ 319,549 and $ 443,328 in 2024 and 2023, respectively.

 The Company has right-of-use assets through leases
of properties under non-cancelable leases. As of December 31, 2024, the Company had four (4) leased properties. Of these four (4)
leases, two (2) leases expire in 2025; one (1) lease expires in 2026; and one (1) lease expires in 2030. Lease payables as of December
31, 2024, was $ 341,516.

 Future lease liability payments under the terms of
these leases are as follows:

 Right-of-Use
Assets - Schedule of Future Minimum Lease Payments for Operating Leases

 2025

 $
 129,543

 2026

 $
 65,968

 2027

 $
 54,000

 2028

 $
 54,000

 2029

 $
 54,000

 Thereafter

 $
 36,000

 Total

 $
 393,511

 Less Interest

 $
 51,995

 Present value of minimum lease payments

 $
 341,516

 Less Current Maturities

 $
 113,740

 Long Term Maturities

 $
 227,776

 The weighted average term of the right-to-use leases
is 55.6 months recorded with a weighted average discount of 7.08 %. For the year ended December 31, 2024, total lease expense
was $ 164,308.

 NOTE 7 – INTANGIBLE ASSETS

 Intangible Assets with definite useful life consist
of licenses, customer lists and software that were acquired through acquisitions:

 Intangible Assets - Schedule of Acquired Finite-Lived Intangible Assets

 December 31,

 2024

 2023

 Customer List

 $
 1,135,962

 $
 1,135,962

 Software

 2,407,001

 2,407,001

 ETC License

 323,468

 634,251

 Less: Amortization

 ( 3,542,963
)

 ( 3,542,963
)

 Net Amortizable Intangibles

 323,468

 634,251

 Right of Use Assets - net

 319,549

 443,328

 Intangible Assets net

 $
 643,017

 $
 1,077,579

 F- 13

 Amortization expense amounted to $ 0 and $ 0 for
the years ended December 31, 2024, and 2023, respectively. Amortization expense is included as a component of operating expenses in the
accompanying statements of operations. With the exception of the license granted by the FCC, all intangible assets are fully amortized
as of December 31, 2022.

 Intangible Assets with indefinite useful life consist
of the Lifeline license granted by the FCC. The license, because of the nature of the asset and the limitation on the number of granted
Lifeline licenses by the FCC, will not be amortized. The license was acquired through an acquisition. The fair market value of the license
as of December 31, 2024 was $ 323,468,
and as of December 31, 2023, was $ 634,251.
During the first quarter of 2024, the
Company entered into a Membership Interest Purchase Agreement with Excess Telecom to sell 49% of IM Telecom in consideration of the sum
of $10,000,000. As a result of this transaction, we reduced the value of our ETC License by 49% in 2024.

 NOTE 8 – LINES OF CREDIT

 The Company has no lines of credit as of December
31, 2024.

 NOTE 9 – CONTINGENCIES AND COMMITMENTS

 Litigation

 From time to time, the Company may be subject to legal
proceedings and claims that arise in the ordinary course of business. As of December 31, 2024, there are no such legal proceedings.

 Contract Contingencies

 The Company
has the customary obligation for the completion of its cellular provider contracts in accordance with the appropriate standards of the industry
and that may be provided in the contractual agreements.

 The Membership Interest Purchase
Agreement with Excess Telecom includes the right to distribute Lifeline services under the IM Telecom license. The completion of the sale
of IM Telecom is contingent upon approval of the sale by the FCC, as IM Telecom is the holder of a Lifeline license and is designated
as an Eligible Telecommunications Carrier ("ETC") for purposes of marketing Lifeline services to low-income consumers.

 Regulatory Determinations

 The Company has no outstanding regulatory determinations
as of December 31, 2024.

 Tax Audits

 In June of 2021, the Company received an audit determination
and assessment from the State of Pennsylvania related to sales and use tax for the audit period of January 1, 2016, through September
30, 2019. The assessment was in the amount of $ 115,000, including interest and penalties calculated on sales made inside and outside Pennsylvania.
The Company recorded the full amount of this assessment in 2022. The Company appealed the assessment in August, 2021, and at the request
of the state, provided additional information to support its appeal. The Company's position is that Pennsylvania has no sales tax
authority to levy and collect sales tax on sales made outside of Pennsylvania. The State of Pennsylvania rejected an appeal by the Company.
On November 6, 2023, the Company agreed to a payment plan with the State of Pennsylvania. The Company will pay $ 5,500 per month,
over a twenty-four (24) month period, which commenced in December, 2023. As of December 31, 2024, the Company has paid $ 71,500.

 Letters of Credit

 The Company had no outstanding letters of credit as
of December 31, 2024.

 N OTE 10 – SEGMENT REPORTING

 In November 2023, the Financial Accounting
Standards Board (FASB) issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures"
(ASU 2023-07). Beginning with our 2024 annual reporting, we adopted ASU No. 2023-07, which requires that a public entity disclose, on
an interim and annual basis, significant segment expense categories and amounts that are regularly provided to its chief operating decision
maker ("CODM") and included in each reported measure of segment profit or loss. An entity must also disclose, by reportable segment, the
amount and composition of other expenses. The standard requires an entity disclose the title and position of its CODM and explain how
the CODM uses these reported measures in assessing segment performance and determining how to allocate resources.

 F- 14

 Our segments are comprised of strategic
business units or other operations that offer products and services to different customer segments over various technology platforms
and/or in different geographies that are managed accordingly. We have two reportable segments: Hosted Serves and Mobile Services.
Our CODM is our President. Our CODM uses operating income to evaluate performance and allocate resources, including capital
allocations, when managing the business. Our CODM manages operations through the review of actual and forecasted "Operations
and Support Expenses" information at a segment and business unit level, of which segments are primarily evaluated on a direct
cost basis and comprised of equipment, compensation, network and technology, sales, advertising and other costs. Direct costs are
incurred in support of products and services offered by the business units, such as equipment costs (predominantly wireless
devices), network access, rents, leases, sales support, customer provisioning and compensation expenses.

 The Company operates within two ( 2) reportable segments.
The Company's management evaluates performance and allocates resources based on the profit or loss from operations. Because the
Company is a recurring revenue service business with very few physical assets, management does not use total assets by segment to make
decisions regarding operations, and therefore, the total assets disclosure by segment has not been included.

 The reportable segments consist of Hosted Services
and Mobile Services. Mobile Services reporting will now consist of our post-paid and pre-paid cellular business.

 Hosted Services – Our Hosted Services
include a suite of hosted CPaaS services within the Apeiron Systems' cloud platform, including Cloud IVRs, Voicemail, Fax, Call
Recording and other services provided with local, toll-free and international phone numbers. Apeiron also delivers public and private
IP network services from its national redundant network backbone, including MPLS, Dedicated Internet and LTE Wireless WAN solutions.
Additionally, Apeiron's Cloud Services include Information Data Dips, SD-WAN and IoT data and device management. These Hosted Services
are marketed nationally and internationally through the Apeiron website, its sales staff, independent sales agents and ISOs.

 Mobile Services – Our Mobile
Services include retail and wholesale cellular voice/text/data services and IoT mobile data services through our subsidiaries
Apeiron Systems and IM Telecom. Mobile voice/text/data and IoT mobile data services are supported by a blend of reseller agreements
with select national wireless carriers and national wireless wholesalers. A wireless communications service reseller typically does
not own the wireless network infrastructure over which services are provided to its customers. Mobile voice/text/data and mobile
data solutions are generally sold as traditional post-paid service plans that may include voice/text/data or wireless data only
plans. Sometimes equipment is provided, which can include, but is not limited to, phones, tablets, modems, routers and accessories.
Also included in our Mobile Services segment is the distribution of government subsidized mobile voice service and mobile data
service by IM Telecom under its Infiniti Mobile brand and FCC license to low-income American households that qualify for the
FCC's Lifeline mobile voice service program and/or the FCC's ACP mobile data program. Even though government programs
like Lifeline have existed since 1985, these programs, along with newer programs like the ACP Program, are subject to change and may
have a material impact on our Mobile Services business if changed, reduced or eliminated.

 The following table reflects the result of operations of the Company's
reportable segments:

 Segment
Reporting - Reconciliation of Revenues to Segment Contribution

 For the year ended December 31, 2024

 Depreciation

 Operating

 Operating

 and

 Other

 Income

 Revenues

 Expenses*

 Amortization

 Gain/Loss

 (Loss)

 Segment

 Hosted Services

 $
 5,581,069

 $
 6,476,001

 $
 8,757

 $
 —

 $
 ( 903,689
)

 Mobile Services

 9,922,182

 10,396,667

 —

 ( 474,784
)

 Segment Total
 Operating Segments

 15,503,251

 16,872,668

 9,056

 —

 ( 1,378,473
)

 Corporate

 Parent administration
 support Parent Administration Support

 —

 3,378,435

 —

 —

 ( 3,146,606
)

 Gain on sale of subsidiary

 —

 —

 —

 Total Corporate Total
 Corporate

 —

 3,378,435

 —

 6,101,120

 $
 15,503,251

 $
 20,251,103

 $
 9,056

 $

 $

 F- 15

 For the year ended December 31, 2023

 Depreciation

 Operating

 Operating

 and

 Other

 Income

 Revenues

 Expenses*

 Amortization

 Gain/Loss

 (Loss)

 Segment

 Hosted Services

 $
 5,054,210

 $
 5,465,812

 $
 11,944

 $
 —

 $
 ( 423,546
)

 Mobile Services

 13,169,535

 13,932,900

 —

 ( 763,773
)

 Segment Total

 18,223,745

 19,398,712

 12,352

 —

 ( 1,187,319
)

 Corporate

 Parent administration support

 —

 2,753,508

 —

 —

 ( 2,753,508
)

 Gain on sale of subsidiary

 —

 —

 —

 —

 —

 Total Corporate

 —

 2,753,508

 —

 —

 ( 2,753,508
)

 $
 18,223,745

 $
 22,152,220

 $
 12,352

 $
 —

 $
)

 *Operating Expenses includes Cost of Revenue, Operating
Expenses, Other Income/Expense and Income Tax Expense.

 NOTE 11 – STOCKHOLDERS' EQUITY

 Non-Compensatory Stock Options

 Sole Shareholder

 Effective
December 18, 2017, the Company completed an Agreement and Plan of Merger whereby a newly formed wholly owned subsidiary merged with
and into KonaTel Nevada, and under which KonaTel Nevada was the surviving corporation and became a wholly owned subsidiary of the
Company. Mr. McEwen was the sole shareholder of KonaTel Nevada and received merger consideration of 13,500,000 shares
of the Company's common stock and 1,500,000 non-compensatory
options to acquire shares of the Company's Common Stock under the merger, at an exercise price of $ 0.22 per
share, vesting quarterly, from March 18, 2018, to December 18, 2019. See NOTE 11 below.

 Chief Executive Officer

 In 2024, D. Sean McEwen, the Chairman and CEO of the
Company, exercised 375,000 equity stock options for 375,000 shares of common stock at a price of $ 0.22 per share.
On September 17, 2024, the Company's Board of Directors adopted resolutions to extend Mr. McEwen's expiration dates on his
last two (2) 187,500 share option tranches by one (1) year, or to respectively expire at midnight on September 17, 2025, and December
17, 2025.

 Stock Compensation

 The Company offers incentive stock option equity awards
to directors and key employees. Options vest in tranches and typically expire in five (5) years. During the year ended December 31, 2024,
and 2023, the Company recorded options expense of $ 992,735 and $ 257,557, respectively. The option expense not taken as of December
31, 2024, is $ 2,565,244, with a weighted average term of 3.30 years.

 In 2024, 100,000 share
incentive stock options were granted to one (1) employee. During the year ended December 31, 2024, 75,000
 shares were exercised by one (1) independent member of the Board of Directors. The
Aggregate Intrinsic Value is based on the market value of the Company's common stock of $ 0.18
 on December 31, 2024.

 The estimated grant date fair value of stock option
grants was calculated using the Black-Scholes-Merton option-pricing model using the following assumptions:

 Stockholders' Equity - Schedule of Fair Value of Stock Options Valuation Assumptions

 2024

 2023

 Weighted average volatility

 170.23
 %

 181.29
 %

 Weighted average expected term (years)

 5.00

 5.00

 Risk free interest rate

 4.54
 %

 4.53
 %

 Expected dividend yield

 —

 —

 F- 16

 The following table represents incentive stock option activity
as of and for the year ended December 31, 2024:

 Stockholders' Equity - Schedule of
Share-Based Compensation, Stock Option Activity

 Weighted Average

 Weighted Average

 Aggregate

 Shares

 Exercise Price

 Remaining Life

 Intrinsic Value

 Options Outstanding – December 31, 2023

 6,000,000

 $
 0.75

 3.69

 $
 872,463

 Granted

 100,000

 0.47

 Exercised

 450,000

 0.41

 Forfeited

 —

 —

 Options Outstanding – December 31, 2024

 5,650,000

 $
 0.78

 3.80

 $
 612,418

 Exercisable and Vested, December 31, 2024

 54,163

 0.51

 1.72

 ( 18,110
)

 The following table represents stock option activity
as of and for the year ended December 31, 2023:

 Shares

 Weighted Average
 Exercise Price

 Weighted Average
 Remaining Life

 Aggregate
 Intrinsic Value

 Options Outstanding: December 31, 2022

 4,405,000

 $
.59

 3.22

 $
 2,260,138

 Granted

 3,245,000

.86

 Exercised

 ( 950,000
)

.53

 Forfeited

 ( 700,000
)

 Options Outstanding: December 31, 2023

 6,000,000

 $
.75

 3.69

 $
 872,463

 Exercisable and Vested: December 31, 2023

 641,155

 $
.50

 1.58

 $
 247,547

 In 2023, 3,245,000 share
incentive stock options were granted to two (2) independent members of the Board of Directors and twelve (12) employees. Each
independent Board member was granted 25,000 shares in the first and second quarter of 2023, for a total of 50,000 shares each. Three
(3) key employees were granted a total of 2,050,000 share options. An independent member of the Board of Directors was granted 750,000
share options, and a total of 345,000 share options were granted among nine (9) employees. During the year ended December 31, 2023, 200,000
shares were exercised by two (2) independent members of the Board of Directors. During the year ended 2023, 700,000 partially vested
share options were forfeited by two (2) key employees of the Company. The Aggregate Intrinsic Value is based on the market value of the
Company's common stock of $0.89 on December 31, 2023.

 NOTE 12 – INCOME TAX

 The Company provides for income taxes using an asset
and liability-based approach. Deferred income tax assets and liabilities are recorded to reflect the future tax consequences of temporary
differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts
in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Tax Cuts
and Jobs Act was enacted on December 22, 2017, which reduced the U.S. corporate statutory tax rate from 35% to 21%. The Company changed
its effective federal rate to 21% as the expected rate for our deferred tax items.

 The significant components of net deferred tax
assets (liabilities) were as follows at December 31, 2024, and 2023:

 Income Tax - Schedule of Deferred Tax Assets
and Liabilities

 December 31,

 2024

 2023

 Net operating losses

 $
 573,726

 $
 1,657,095

 Depreciation and amortization

 ( 18,493
)

 ( 14,128
)

 Stock option expense

 426,275

 304,978

 Valuation allowance

 ( 981,508
)

 ( 1,947,945
)

 Net Deferred Tax Asset

 $
 —

 $
 —

 F- 17

 As of December 31, 2024, the Company had no unrecognized tax benefits that,
if recognized, would affect the Company's effective income tax rate over the next twelve (12) months. A reconciliation of the expected
income tax benefit at the U.S. Federal income tax rate to the income tax benefit actually recognized for the years ended December 31,
2024, and 2023 is set forth below:

 For the Year Ended

 December 31,

 2024

 2023

 Tax at statutory federal rate

 $
 184,051

 $
 ( 850,623
)

 Non-deductible expenses and other

 —

 —

 Change in valuation allowance

 ( 184,051
)

 850,623

 Benefit from income taxes

 $
 —

 $
 —

 As of December 31, 2024, the Company has a net operating
loss carry-forward for U.S. federal income tax purposes of approximately ($ 2,732,030)
will expire in 2044. This carryforward is available to offset future taxable income, if any, and will expire, if not used, from 2037
through 2042. The utilization of the net operating loss carry-forward is dependent upon the tax laws in effect at the time the net operating
loss carry-forward can be utilized and may be limited by changes in ownership control of the Company. The Company's U.S. federal
tax return, constituting the return of the major taxing jurisdictions, are subject to examination by the taxing authorities for all open
years as prescribed by applicable statute. No income tax waivers have been executed that would extend the period subject to examination
beyond the period prescribed by statute. The Company is no longer subject to U.S. federal tax examinations for tax years before and including
December 31, 2019. During the years ended December 31, 2024, and 2023, the Company did not incur interest and penalties.

 NOTE
13 – REDUCTION IN FORCE: KEY EMPLOYEES

 Upon shutdown of the Affordable Connectivity
Program, the Company decided to reduce operational costs to pair the spend with its ongoing revenues. As such, a reduction in force
was executed that contained several key individuals. Multiple replacement revenue initiatives have been ongoing for some time and
continue to mature. In an effort to support specific initiatives (Healthcare vertical and Viva-US), KonaTel created consulting arrangements
to keep key employees (Jason N. Welch and B. Todd Murcer) to maintain their expertise in the business with the intent to rehire the same
key individuals upon successful launch of the growth initiatives. Messrs. Welch and Murcer have been very active since the reduction
in force to keep sales and operational items in place while the new programs launch.

 Additionally, and to provide headroom
for these growth initiatives, KonaTel extended the exercise option deadline in each independent
stock option plan by one hundred eighty (180) days. This took place in a Board resolution on February 1, 2025. This extension
is also discussed below in Note 14 as a subsequent event.

 NOTE
14 – SUBSEQUENT EVENTS

 The Company has evaluated subsequent events through
the date of this filing, and except for the following, no material subsequent events have occurred:

 Amendments and/or Restatements to the Excess
Telecom Membership Interest Purchase Agreement

 On January 22, 2024 (the "Effective Date"),
KonaTel and IM Telecom entered into a Membership Interest Purchase Agreement with Excess Telecom. Pursuant to the Membership Interest
Purchase Agreement, KonaTel agreed to sell a membership interest in IM Telecom to Excess Telecom, 49 % at the Initial Closing, with the
remaining 51% at the Final Closing, subject to the final change of control approval by the FCC.

 Additional Transaction Documents were also executed
by the parties at the Initial Closing Date of the Membership Interest Purchase Agreement, including a Management Service Agreement, a
Master Distribution Agreement and an Amended and Restated Operating Agreement. On March 4, 2025, certain of the initial Transaction Documents
with Excess Telecom were restated by signature; these restatements became effective as of the date or dates set forth at the beginning
of each of the referenced Transaction Documents and copies of which accompany our 8-KA Current Report dated January 22, 2024, filed with
the SEC on March 10, 2025.

 IM Telecom and Excess Telecom
have been working together to establish best practices in compliance and building an expanded ETC footprint in the United States. In addition
to our approved Federal Compliance Plan, IM Telecom has increased its state-authorized ETC approvals and is now approved in forty (40)
states. Although these state approvals are complete, IM

 F- 18

 Telecom is currently awaiting FCC delivery of Study Area Codes ("SACs")
to begin operating in eight (8) additional states. In furtherance of this process, certain of the initial Transaction Documents have been
restated by signature dated March 4, 2025, but effective of the date or dates set forth at the beginning of each of the referenced Transaction
Documents.

 The primary purpose for amending the original Management
Services Agreement (the "MSA") is to further specify items that concur with the intent to operate IM Telecom in compliance
with FCC regulations and to ensure continuity of our working relationship with Excess Telecom during the process of FCC approval. IM
Telecom and Excess Telecom have been working collaboratively while awaiting FCC change of control approval. We remain committed to compliance
in all areas of our business. The Amended and Restated Management Services Agreement has been updated to include several items. These
items include specific termination language, cure period language and the establishment of a sunset term in the event of an MSA termination. Schedule
A was added to specify compensation for services rendered under the original MSA.

 As written in Section 2(vii), the Company shall have
final authority and responsibility on all regulatory, legality and compliance issues, including initial enrollment standards, customer
transfers and submission of claims for federal or state reimbursements from USAC or any other governmental body or the administrator
for such governmental bodies; provided, that all such activities shall be undertaken in a commercially prudent manner and the Manager
shall not take any actions that would cause the Compliance Plan, ETC Designations or ACP approval to be terminated, suspended or otherwise
lapse. "USAC" stands for the Universal Service Administration Company, which is a not-for profit corporation that manages
the FCC's Universal Service Fund (respectively, "USAC" and "USF").

 The parties formalized their working relationship
by adding a Master Distribution Agreement, wherein Excess Telecom has been and continues to be a master distributor of IM Telecom until
final change of control approval from the FCC and the final closing of the Transaction Documents is completed. The original Membership
Interest Purchase Agreement predetermines a Master Distribution Agreement ("MDA") whereby KonaTel, DBA Infiniti Mobile, becomes
the non-exclusive master distributor under IM Telecom upon FCC final change of control approval and the final closing of the Membership
Interest Purchase Agreement. Each MDA identifies the duties for each party under the MDA to act in a legal, professional and ethical
manner and in compliance with all applicable laws, rules, regulations and orders.

 Only minor and non-material modifications were made
to the existing IM Telecom Amended and Restated Operating Agreement to align with our ongoing business practices used since the inception
of the execution of the Transaction Documents.

 For additional information
on the initial and amended Transaction Documents, see our 8-K Current Report of dated January 22, 2024, and filed with the SEC on January
30, 2024, and our 8-KA Current Report dated January 22, 2024, filed with the SEC on March 10, 2025, which are Hyperlinked in in Section
9 – Financial Statements and Exhibits, Item 9.01, Part IV, Item 15, below, and are incorporated herein by reference.

 Extension of Incentive Stock Options to Key Employees

 The Board of Directors adopted a resolution to extend
the option deadline for certain key employees (under their Employment Agreements) who were given notice of termination as a result of
the official termination of the ACP Program. These employees, given the return of certain growth initiatives for the Company, would be
available to return to further our business. Post-employment afforded a ninety (90) day exercise period of vested options, whereby this
extension, given their possible return to the Company, extended the exercise period by one hundred
eighty (180) days.

 Beaty Stock Option Exercise

 Subsequent Events

 On February 11, 2025, Robert Beaty, an independent
Board member, conveyed to the Company 13,934 shares of the Company's common stock at a price of $ 0.30 per share, in an
exempt transaction pursuant to Section 16b-3(c), and in full payment of the exercise of 25,000 incentive stock options granted
to him in 2019 at a price of $ 0.1672 per share, which was 110% of the fair market value of our common stock on the date of such grant.

 Pearl Stock Option Exercise

 On January
27, 2025, Jeffrey Pearl, an independent Board member, conveyed to the Company 13,307 shares of the Company's common stock
at a price of $ 0.31 per share, in an exempt transaction pursuant to Section 16b-3(c), and in full payment of the exercise of 25,000 incentive
stock options granted to him in 2019 at a price of $ 0.165 per share, which was 110% of the fair market value of our common stock
on the date of such grant.

 F- 19

 Health
Care Initiative and VIVA-Contract

 Our ongoing
health care initiative experienced an initial launch in March, 2025 and Advice Letter Number 20 is pending before the California Public
Utilities Commission authorizing an expanded launch to all current Medicaid recipients within the state. The program launch timing for
our VIVA-US Telecommunications, Inc. ("VIVA-US") sales initiative has now been tentatively set for June 2025.

 Payment
Received on Note Receivable

 On March 11, 2025, the Company received a
payment of $ 150,000
on the note receivable ($1,000,000) due from Excess Telecom that is referenced under "Notes Receivable" in
NOTE 1 above.

 ( This space intentionally left blank)

 F- 20

 ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

 During our two
(2) most recent fiscal years, no independent accountant who was previously engaged as the principal accountant to audit our financial
statements, or an independent accountant who was previously engaged to audit a significant subsidiary and on whom the principal accountant
expressed reliance in its report, has resigned (or indicated it has declined to stand for re-election after the completion of the current
audit) or was dismissed.

 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, 2024, 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, 2024.

 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

 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, 2024, 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, 2024, 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.

 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, 2024.

 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)

 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

 Period of Service

 Chairman and CEO

 Dec.-17

 President and COO

 Jan.-22

 Chief Financial Officer

 Dec.-17

 B. Todd Murcer*

 EVP, Finance and Secretary

 Jan.-22 to Nov. 24

 K. Paul LaPier

 VP, Finance

 Dec.-24

 Dec.-17

 Feb.-18

 Oct.-18

 Joshua Ploude

 CEO of Apeiron Systems

 Dec.-18

 Jason N. Welch*

 President of IM Telecom

 Feb.-22 to Nov. 2024

 *Upon shutdown of the ACP Program, the
Company effected a reduction in force of several key individuals. Multiple replacement revenue initiatives have been ongoing for
some time and continue to mature. In an effort to support specific initiatives (Healthcare vertical and Viva-US), we created
consulting arrangements to keep certain key employees who were executive officers of the Company or IM Telecom (B. Todd Murcer and Jason
N. Welch, respectively) to maintain their expertise in our business, with the intent to rehire these individuals upon successful launch
of our growth initiatives. Messrs. Murcer and Welch have been very active since the reduction in force to keep sales and operational
items in place while the new programs launch, with their services being primarily related to those that encompassed their prior duties
as officers.

 Background and Business Experience

 Mr. McEwen is 63 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.

 Mr. Griffin is 60 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.

 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 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 with honors in business communications
from Metropolitan State University of Colorado.

 Mr. Riffle is 65 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 55 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.

 K. Paul LaPier

 Mr. LaPier is 66 years of age and has over twenty-five
(25) years of telecommunications experience working for small/medium sized companies to a Fortune 500 company with annual revenues ranging
from $1 million to $23 billion. During this time, Mr. LaPier has held various senior positions in the areas of finance, accounting, taxation,
billing and regulatory (government) compliance. Immediately prior to rejoining KonaTel in 2024, he served as Controller for Prosper Wireless
LLC, a wireless provider in the ACP/Lifeline space from January 2022 to December 2024. Prior to Prosper Wireless, Mr. LaPier served as
VP of Finance & Secretary of the Company from November, 2018 to February, 2022.

 Prior to Mr. LaPier's first stint with KonaTel,
he served as Finance Manager-Regulatory Fees/Taxes for British Telecom Americas, Inc., from July, 2016, to November, 2018. Mr. LaPier
served for four (4) years as President of US Connect, LLC, a regional wireless Lifeline carrier, from July, 2012, to July, 2016. While
at US Connect, Mr. LaPier oversaw all company operations of over fifty (50) thousand lines of Lifeline service. Prior to US Connect,
Mr. LaPier held various senior level finance/tax positions with several wireline and long-distance telecommunications providers such
dPi Teleconnect, Sage Telecom, VarTec Telecom and Excel Telecommunications. Mr. LaPier also has over twelve (12) years of tax and finance
experience in the industries of public accounting, transportation, manufacturing, and oil and gas. Mr. LaPier holds a Bachelor of Business
Administration in Accounting from The University of Texas at Austin.

 Mr. Beaty is 55 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.

 Mr. Pearl is 61 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 two (2)
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.

 Prior to starting
and running these two (2) 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 48 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.

 Jason N. Welch

 Mr. Welch is 54 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 twenty-five (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;

 (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, 2024, 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 three (3) directors and three (3) executive officers at any one time, and
we believe 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.

 Insider Trading Policy

 During the year ended December 31, 2021, our Board
of Directors adopted an Insider Trading Policy.

 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.

 Effective November 8, 2024, our Board of
Directors amended our Insider Trading Policy to exempt the exercise of stock options granted by the Company that allow payment of
the exercise price of such stock options by the holder's conveyance of fully-paid shares of common stock of the Company having
a value on the date of exercise equal to the exercise price of the subject stock options, based upon the closing price of our shares
of common stock on or about the date of exercise, from the Black-Out Periods. See Section 9 – Financial Statements and
Exhibits, Item 9.01, Part IV, Item 15, Exhibit 99.1. 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 who served in any of these capacities during the year ended December 31, 2024, which are discussed
below under the caption "Executive Compensation" in Part III, Item 11 hereof, can be accessed by Hyperlink in Section 9 –
Financial Statements and Exhibits, Item 9.01, Part IV, Item 15, below, and are incorporated herein by reference:

 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.

 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. See the asterisk at the bottom of the table of the "Identification of Directors
and Executive Officers" in Part III, Item 10, above.

 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. See the asterisk at the bottom of the table of the "Identification
of Directors and Executive Officers" in Part III, Item 10, above.

 Summary Compensation Table

 Name and

 Stock

 Option

 All Other

 Principal Position

 Year

 Salary

 Bonus

 Awards

 Awards*

 Compensation

 Total

 D Sean McEwen

 2024

 $
 239,930

 $

 $
 —

 $
 —

 $
 68,250

 $
 558,180

 Chairman and CEO

 2023

 $
 316,450

 $
 —

 $
 —

 $
 —

 $
 —

 $
 316,450

 Robert Beaty, Director and President,

 2024

 $
 166,417

 $
 —

 $
 —

 $
 —

 $
 —

 $
 6,000

 Apeiron Systems**

 2023

 $
 12,500

 $
 —

 $
 —

 $
 34,978

 $
 —

 $
 47,478

 Jeffrey Pearl, Director

 2024

 $
 6,000

 $
 —

 $
 —

 $
 —

 $
 —

 $
 6,000

 2023

 $
 12,500

 $
 —

 $
 —

 $
 36,185

 $
 —

 $
 48,685

 Brian R. Riffle,

 2024

 $
 —

 $
 —

 $
 —

 $
 —

 $
 20,464

 $
 20,464

 Chief Financial Officer

 2023

 $
 —

 $
 —

 $
 —

 $
 —

 $
 20,292

 $
 20,292

 Charles D. Griffin,

 2024

 $
 219,645

 $
 50,000

 $
 —

 $
 —

 $
 32,000

 $
 301,645

 President and COO

 2023

 $

 $
 —

 $
 —

 $
 —

 $
 —

 $

 B. Todd Murcer, Secretary

 2024

 $
 225,642

 $
 42,885

 $
 —

 $
 —

 $
 28,125

 $
 296,652

 and EVP of Finance**

 2023

 $
 225,000

 $
 —

 $
 —

 $
 —

 $
 —

 $
 225,000

 Joshua Ploude, CEO,

 2024

 $
 246,000

 $

 $
 —

 $
 —

 $
 32,000

 $
 303,000

 Apeiron Systems

 2023

 $

 $
 —

 $
 —

 $
 —

 $
 —

 $

 Jason Welch, President,

 2024

 $
 230,208

 $
 32,981

 $
 —

 $
 —

 $
 31,250

 $
 294,439

 IM Telecom**

 2023

 $

 $
 —

 $
 —

 $
 —

 $
 —

 $

 *See the heading "Outstanding Equity Awards" below.

 **Salary for Mr. Beaty includes $6,000 in Director
fees and $160,417 of salary as President of Apeiron Systems. All Other Compensation for Messrs. Murcer and Welch include severance pay
from November 16, 2024, through December 31, 2024.

 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 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, Exhibit 10.1, in Section 9 – Financial
Statements and Exhibits, Item 9.01, Part IV, Item 15, below. This summary is modified in its entirety by this reference.

 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) 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 Griffin Employment Agreement. This summary is modified in its entirety
by this reference.

 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 served as our Executive Vice President
of Finance and Secretary of the Company, until December, 2024, with customary duties applicable to these positions, and which are described
in Exhibit A thereof. Under the Murcer Employment Agreement, Mr. Murcer received 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. See the asterisk at the bottom of the table of the "Identification of Directors and Executive Officers"
in Part III, Item 10, above. This summary is modified in its entirety by this reference.

 Joshua Ploude Employment Agreement

 Effective December 31, 2018, Apeiron and Mr. Ploude
executed and delivered a 36-month Employment Agreement under which Mr. Ploude continues to serve as 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. This summary is modified in its entirety by this reference.

 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 served as the President of IM Telecom, with customary duties applicable to this position, and which were described in Exhibit
A thereof. Under the Welch Employment Agreement, Mr. Welch will continue to 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. This Employment Agreement will novate to KonaTel under the Excess Telecom Purchase Agreement and related agreements in
Part I, Item 1 hereof. See the asterisk at the bottom of the table of the "Identification of Directors and Executive Officers"
in Part III, Item 10 above. This summary is modified in its entirety by this reference.

 Securities Authorized for Issuance under Equity Compensation Plans

 Outstanding Equity Awards

 The following table represents 5,285,000 options granted, with 1,950,000
exercised, and 665,000 options still available to be granted under the 7,925,000 shares reserved for issuance under the Company's
2018 Incentive Stock Option Plan.

 Name

 Option Awards

 Stock Awards

 Equity

 Option

 Option

 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)

 $0.26

 (1)

 $0.13

 (1)

 $0.06

 (1)

 $0.44

 (1)

 $0.66

 (1)

 $0.94

 (1)

 $1.93

 (1)

 $1.14

 (1)

 $1.01

 (1)

 $1.91

 (1)

 $1.32

 (1)

 $0.81

 (1)

 $0.87

 (1)

 33,333

 $0.41

 (1)

 33,333

 $0.41

 (1)

 33,334

 $0.41

 (1)

 216,666

 $0.41

 (1)

 216,667

 $0.41

 (1)

 216,667

 $0.41

 (1)

 $0.12

 (2)

 $0.17

 (2)

 $0.10

 (2)

 $0.49

 (2)

 $0.60

 (2)

 $0.81

 (2)

 $1.60

 (2)

 $1.34

 (2)

 $1.10

 (2)

 $1.74

 (2)

 $1.39

 (2)

 $0.88

 (2)

 $0.78

 (2)

 Jonathan So

 150,000

 $0.32

 (3)

 Edward Archuleta

 30,000

 $0.73

 (4)

 Edward Archuleta

 $0.85

 (9)

 825,000

 275,000

 $0.75

 (5)

 183,333

 366,667

 $0.41

 (5)

 Amy Pearson

 50,000

 $0.75

 (6)

 B. Todd Murcer

 500,000

 $0.37

 (7)

 Jason N. Welch

 500,000

 $0.37

 (8)

 John Shadek, Esq.

 60,000

 $0.89

 (9)

 August Gatto

 $0.37

 (10)

 Matthew Zanger

 $0.37

 (10)

 Joshua Holbay

 50,000

 $0.85

 (10)

 Amy Prindle

 $0.85

 (10)

 Ben Holmes

 $0.85

 (10)

 Stacey Carmel

 16,666

 33,334

 $0.85

 (10)

 Noah Griffin

 $0.37

 (10)

 John Heathcock

 16,666

 33,334

 $0.37

 (10)

 David Chui

 33,333

 66,667

 $0.63

 (11)

 (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. 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. On May 10, 2024, Mr. Beaty exercised 25,000 option grants by conveying to the Company 7,028 unencumbered shares of the Company's common stock. On August 9, 2024, Mr. Beaty exercised 25,000 option grants by conveying to the Company 8,709 unencumbered shares of the Company's common stock. On November 11, 2024, Mr. Beaty exercised 25,000 option grants by conveying to the Company 10,587 unencumbered shares of the Company's common stock. On February 11, 2025, Mr. Beaty exercised 25,000 option grants by conveying to the Company 13,934 unencumbered shares of the Company's common stock. The remaining options expire at the earlier of five (5) years from the date grant or one (1) year from termination or resignation as a director. On November 29, 2023, Mr. Beaty was granted an additional 100,000 stock options, which vest 33,333 shares on November 29, 2024, 33,333 on November 29, 2025, and 33,334 on November 29, 2025; and they also expire at the earlier of five (5) years from the date of grant or one (1) year from termination or resignation as a director. Also, on November 29, 2023, Mr. Beaty was granted an additional 650,000 stock options, with one-third (1/3 rd) of these options vesting per year, conditioned on Apeiron Systems having been provided 100,000 simultaneous cellular customers by VIVA-US Telecommunications, Inc. ("VIVA") under Apeiron's "Mobile Reseller Agreement" with VIVA dated November 10, 2023, and with VIVA being fully paid and current with all outstanding amounts owed to Apeiron, within one (1) year of the date of grant and with at least 100,000 of such simultaneous customer cellular contracts then being in full force and effect, or the grant of the ISO's shall expire. These options expire November 29, 2029.

 (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. On October 25, 2023, Mr. Pearl exercised his first option grants of 100,000 options. On January 27, 2025, Mr. Pearl exercised 25,000 option grants by conveying to the Company 13,307 unencumbered shares of the Company's common stock. 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 the earlier
of 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 the earlier
of May 17, 2026, or ninety (90) days from resignation or termination of employment. On November 29, 2023, Mr. Archuleta was granted an
additional 20,000 stock options, with 6,666 vesting on November 29, 2024, and 6,667 vesting on November 29, 2025, and 6,667 vesting on
November 29, 2026. These options expire on the earlier of November 29, 2028, 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. Mr. Griffin was granted an additional 550,000
options on November 29, 2023, and vest 183,333 shares on November 29, 2024, 183,333 on November 29, 2025, and 183,334 on November 29,
2025; and they expire on the earlier of November 29, 2028, 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 the earlier
of September 26, 2026, or ninety (90) days from resignation or termination of employment. Pursuant
to Board resolutions adopted on February 1, 2025, and extension of options, this employee's options, who is under an Employment
Agreement, will expire on August 13, 2025.

 (7)

 These options were granted
on September 8, 2023, and vest 250,000 shares on September 8, 2024, 250,000 shares on September 8, 2025, and 250,000 shares on September
8, 2026; and they expire on the earlier of September 8, 2028, or ninety (90) days from resignation or termination of employment. Pursuant
to Board resolutions adopted on February 1, 2025, and extension of options, Mr. Murcer's options will expire on August 13, 2025.

 (8)

 These options were granted
on September 22, 2023, and vest 250,000 shares September 22, 2024, 250,000 shares on September 22, 2025, and 250,000 shares on September
22, 2026; and they expire on the earlier of September 22, 2028, or ninety (90) days from resignation or termination of employment. Pursuant
to Board resolutions adopted on February 1, 2025, and extension of options, Mr. Welch's options will expire on August 13, 2025.

 (9)

 These options were granted on July 17, 2023, and all 60,000 shares vested July 17, 2023; and they expire on the earlier of July 17, 2028, or ninety (90) days from resignation or termination of his position as a consulting attorney to the Company.

 (10)

 These options were granted
on November 29, 2023, and vest one third on November 29, 2024, on third on November 29, 2025, and one third on November 29, 2026; and
they expire on the earlier of November 29, 2028, or ninety (90) days from resignation or termination of employment. Pursuant
to Board resolutions adopted on February 1, 2025, and extension of options, this employee's options, who is under an Employment
Agreement, will expire on August 13, 2025.

 (11)

 These options were granted on March 27, 2024, and 33,333 shares vest on March 27, 2025, 33,333 shares vest on March 27, 2026, and 33,334 shares vest on March 27, 2027; and they expire on the earlier of March 27, 2029, 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 Section 9 – Financial Statements and Exhibits, Item 9.01, Part IV, Item 15, Exhibit 10.1), and the current $500 monthly
compensation set out above for certain directors (these directors were paid $3,000 per month through May, 2023), our directors do not
receive any other compensation other than the incentive stock options outlined above in this Item in the Outstanding Equity Awards Table.

 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.

 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 Beneficial

 Percent of

 of Beneficial Owner

 Class

 Ownership (1), (2), (3) & (4)

 Class (1), (2) & (3)

 16,934,262

 37.14%

 Joshua Ploude

 6,300,000

 13.82%

 Security Ownership of Officers and Directors

 Name and Address*

 Title of

 Amount and Nature of Beneficial

 Percent of

 of Officer or Director

 Class

 Ownership (1), (2), (3) & (4)

 Class (1), (2) & (3)

 16,934,262

 37.14%

 1,008,333

 2.22%

 0.00%

 K. Paul LaPier

 300,000

 0.66%

 523,389

 1.15%

 436,693

 0.96%

 Joshua Ploude

 6,300,000

 13.82%

 All Officers and Directors as a Group

 25,502,677

 55.94%

 *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 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.

 (2) Based on 43,526,417 currently issued and outstanding
shares of common stock as of March 31, 2025, together with 375,000 non-compensatory stock options of Mr. McEwen; 1,691,666 vested incentive
stock options, comprised of, 358,333 for Robert Beaty, 325,000 Jeffrey Pearl and 1,008,333 for Charles D. Griffin, for a total of 45,593,083
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.

 (3) The beneficial ownership of Mr. McEwen in the
"Beneficial Owners" table includes 16,559,262 shares directly owned; and 375,000 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 $20,464 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." As of December 31, 2024, only Robert Beaty and Jeffrey Pearl came 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.

 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, 2024, and 2023, respectively:

 Fee Category

 2024

 2023

 Audit Fees

 $

 103,016

 $

 103,578

 Audit-related Fees

 —

 —

 Tax Fees

 —

 —

 All Other Fees

 —

 —

 Total Fees

 $

 103,016

 $

 103,578

 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.

 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 Number

 Description of Exhibit

 Filing

 3(i)

 Amended and Restated Certificate of Incorporation

 Filed with the Form 8-K dated February 7, 2018, and filed with the SEC on February 12, 2018.

 3(ii)

 Amended and Restated Bylaws

 Filed with the Form S-8 filed with the SEC on December 8, 2023, and incorporated herein by reference.

 Description of the Company's Securities

 Filed with the Form 10-K for December 31, 2022, and filed with the SEC on April 17, 2023.

 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 8-KA-1 Current Report dated February 4, 2022, and filed with the SEC on April 8, 2022.

 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

 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 (as amended)

 Filed
 with the Form 10-Q for September 30, 2024, and filed with the SEC on November 14, 2024.

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 Exhibits incorporated by reference:

 8-K Current Report dated June 14, 2022 ("CCUR Loan"), and filed with the SEC on June 21, 2022

 8-KA Current Report dated June 14, 2022 ("CCUR Loan"), and filed with the SEC on June 7, 2023

 8-K Current Report dated April 6, 2023 ("Insight Mobile Assignment") and filed with the SEC on April 17, 2023

 8-K Current Report dated December 18, 2023 ("ACP Financing Installment Sale Agreement"), filed with the SEC on December 22, 2023.

 8-K Current Report dated January 22, 2024 ("Excess Telecom Purchase Agreement and Transaction Documents"), filed with the SEC on January 30, 2024.

 8-KA Current Report dated January 22, 2024 ("Excess Telcom Purchase Agreement Transaction Documents," as amended), filed with the SEC on March 10, 2025.

 ITEM 16. FORM 10-K SUMMARY

 None.

 ( This space intentionally left blank)

 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.

 Date:

 April 15, 2025

 By:

 /s/ D. Sean McEwen

 Chairman, CEO and Director

 Date:

 April
 15, 2025

 By:

 /s/ 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 15, 2025

 By:

 /s/ D. Sean McEwen

 Chairman, CEO and a Director

 Date:

 April 15, 2025

 By:

 /s/ Brian R. Riffle

 Chief Financial Officer

 Date:

 April 15, 2025

 By:

 /s/ Robert Beaty