UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date

February 1, 2023

(Date of earliest event reported)

TELKONET, INC.

(Exact Name of Registrant as Specified in Its Charter)

Utah

(State or Other Jurisdiction of Incorporation)

000-31972	87-0627421
(Commission File No.)	(I.R.S. Employer Identification No.)

20800 Swenson Drive, Suite 175, Waukesha, WI 53186

(Address of Principal Executive Offices)

414.302.2299

(Registrant's Telephone Number)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

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. ¨

Item 5.02.

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

~~2023~~Employment ~~Long Term Cash Incentive Plan~~Agreements

On February 1, 2023, ~~the Board of Directors of the Company (the “Board”) approved the~~ Telkonet, Inc. ~~2023 Long-Term Cash Incentive Plan~~ (the “~~LTI Plan~~Company”)~~, with~~ anentered ~~effective~~into ~~date~~employment ofagreements ~~January~~with 1,John ~~2023~~M. ~~The~~Srouji, ~~provisions of~~ the ~~LTI~~Company’s ~~Plan~~Chief ~~apply~~Sales toand ~~bonuses~~Operating ~~under~~Officer ~~the~~(“Mr. ~~plan~~Srouji”), Jeffrey ~~relating~~J. toSobieski, the Company’s ~~performance during~~Chief ~~the~~Technology ~~period~~Officer ~~beginning~~(“Mr. ~~January~~Sobieski”) 1,and ~~2023,~~Richard ~~and~~E. ~~ending~~Mushrush, onthe ~~December~~Company’s Chief ~~31,~~Financial ~~2025,~~Officer ~~and~~(“Mr. ~~the~~Mushrush”). ~~LTI~~The ~~Plan~~material ~~will~~terms ~~remain~~of inthe ~~effect~~employment ~~until~~agreements ~~terminated by~~are ~~the~~set ~~Board~~forth below.

~~The~~John ~~purpose~~M. ofSrouji Effective ~~the~~February ~~LTI~~1, ~~Plan is to attract~~2023, ~~retain and~~Mr. ~~motivate~~Srouji ~~employees~~entered ~~and~~into toan ~~advance~~Amended ~~the~~Employment ~~interests~~Agreement ofpursuant ~~the Company and its shareholders by providing incentives in the form of bonus awards~~ to ~~certain~~which ~~employees of the Company and certain affiliates of the Company~~Mr. ~~Employees~~Srouji ~~eligible~~will continue to serve ~~be selected~~ as ~~participants in~~ the ~~LTI Plan~~Company’s ~~(“Participants”)~~Chief ~~are~~Sales ~~the employees of the Company~~ and ~~certain~~Operating ~~affiliates of the Company~~Officer. ~~Awards are payable in cash.~~

~~The~~Under ~~LTI Plan generally will be administered by~~ the ~~Board~~agreement, ~~which~~Mr. ~~has~~Srouji ~~the~~will ~~authority~~receive toa ~~select~~base ~~Participants~~salary ~~and~~of ~~grant awards on terms the Board considers appropriate~~$300, ~~subject to the provisions~~000, ofwhich ~~the~~may ~~LTI~~be ~~Plan~~increased, ~~and~~at toany ~~establish~~time, ~~performance~~as ~~goals~~determined ~~and~~by ~~performance~~the ~~metrics~~board ~~applicable~~of todirectors ~~such~~of ~~awards, as well as~~ the ~~formulas~~Company ~~and weightings for~~ (the ~~performance~~“Board”). ~~goals~~Mr. ~~The~~Srouji ~~Board~~ will also ~~has~~be ~~the~~eligible ~~authority,~~for ~~among~~a ~~other~~Retention ~~things,~~Bonus toAgreement ~~interpret~~ (the ~~LTI~~“Bonus ~~Plan,~~Agreement”) pursuant to ~~establish,~~which ~~amend~~he ~~and~~will ~~rescind rules~~be ~~and~~eligible ~~regulations~~to ~~relating~~receive up to ~~the~~30% ~~LTI~~of ~~Plan,~~his ~~and~~base tosalary ~~make~~should ~~all~~targets ~~other~~set ~~determinations~~forth ~~for~~in the ~~administration~~Bonus ofPlan ~~the~~be ~~LTI Plan~~hit. ~~Although the~~The ~~Board~~agreement ~~shall~~provides ~~serve~~that asMr. ~~plan~~Srouji ~~administrator~~will ~~under~~have ~~the~~a ~~Plan,~~guaranteed 2022 itbonus ~~may~~of ~~delegate~~$25,000, ~~day~~which toMr. ~~day~~Srouji ~~administration,~~received ~~including~~prior ~~recordkeeping,~~ to ~~the Company’s~~January ~~finance~~1, ~~department~~2023.

~~Each~~Mr. ~~fiscal~~Srouji ~~year,~~will ~~for~~also ~~each~~be ~~Participant~~paid ~~(or category of Participants), the Board will determine~~ a ~~target~~retention bonus ~~amount, based on a percentage~~ of ~~the~~$90,000 ~~Participant’s~~in ~~eligible compensation,~~January to2026 beif ~~payable~~he toremains ~~the~~employed ~~Participant~~by if the ~~performance~~Company ~~goal~~through ~~is achieved at~~ the ~~target~~end ~~level. The Board may also establish a minimum threshold level~~ of ~~performance~~2025. ~~achievement~~Finally, ~~and~~Mr. aSrouji ~~maximum~~will ~~level~~be ofeligible ~~performance~~to ~~achievement~~participate ~~and~~in ~~may~~the ~~also~~Company’s 2023 ~~designate~~Long-Term aCash ~~separate~~Incentive ~~level~~Plan of(the ~~performance that~~“Incentive ~~must~~Plan”) ~~be met~~ for ~~any award to be payable regardless of~~ the ~~level~~2023-2025 ~~of performance achievement of any other designated performance goals~~period.

~~Awards~~The ~~will~~Incentive bePlan, ~~conditioned~~form ~~on the attainment~~ of ~~one~~ ~~or more performance goals based upon performance metrics selected by~~ the ~~Board,~~Bonus ~~which~~Plan ~~may~~and ~~include,~~descriptions ~~without limitation, one or more~~thereof ofhave ~~the~~previously ~~performance~~been ~~metrics~~filed ~~set~~as ~~forth~~Exhibits in10.1 ~~the~~and ~~LTI Plan~~10.3, ~~Following the performance period~~respectively, ~~the~~to ~~Committee will review~~ the Company’s ~~audited~~ ~~financials~~Form ~~relating~~8-K tofiled ~~the~~on ~~performance~~February ~~period~~3, ~~and~~2023 ~~determine whether such performance goals were attained~~ and ~~will determine the~~are ~~amount~~incorporated ofherein ~~any~~by ~~bonus payments to be made pursuant to such awards~~reference. ~~Bonus payments shall be made no later than 60 days following the completion of the Company’s audited financials for the performance period.~~

InThe ~~addition~~term toof ~~the~~Mr. ~~performance~~Srouji’s ~~requirements~~agreement runs through May 2026, aand ~~Participant~~will ~~must~~automatically berenew ~~employed~~for byan additional twelve months unless Mr. Srouji or the Company take action to not renew the Agreement. If Mr. Srouji’s employment is terminated without cause, or anif ~~affiliate~~he resigns with Good Reason (as that term is defined in the Agreement), Mr. Srouji, upon signing a release of employment-related claims, will be entitled to one year of base salary, and upon termination without cause, the Company onwill reimburse Mr. Srouji for health insurance costs in compliance with COBRA for the ~~payment~~shorter ~~date~~of: toone ~~receive~~year aor ~~bonus~~Mr. ~~payment~~Srouji’s securing new employment providing similar benefits.

The foregoing description of the ~~LTI~~agreement ~~Plan~~between isthe ~~only a~~Company ~~summary~~ and Mr. Srouji is qualified in its entirety by reference to the ~~full~~actual ~~text~~terms of the ~~LTI Plan~~agreement, which ishas ~~attached~~been filed as Exhibit 10.1 to this ~~Current~~ Current Report on Form 8-K, and which is incorporated herein by reference ~~herein~~.

~~2023~~Jeffrey ~~Long~~J. ~~Term Cash Incentive Plan Award Agreements~~Sobieski

OnEffective February 1, 2023, ~~the~~Mr. ~~Board~~Sobieski ~~also~~entered ~~approved~~into ~~award agreements~~an ~~(the~~Amended ~~"Award~~Employment Agreement ~~Agreements”)~~pursuant ~~with~~to ~~John~~which MMr. ~~Srouji,~~Sobieski ~~the~~will ~~Company’s~~continue ~~Chief~~to ~~Sales~~serve ~~and~~as ~~Operating Officer, Jeffrey J. Sobieski,~~ the Company’s Chief Technology Officer~~, and Richard E~~. Mushrush, the Company’s Chief Financial Officer, pursuant to the LTI Plan. Each of the Award Agreements provides for a cash incentive based on trailing 12-month EBITDA and revenue targets at the end of the 3-year performance period. Incentives are earned by achieving at least 85% of the EBITDA target, with a cap of 115% of target, with the cash payments ranging from 10% to 60% of annual base salary in accordance with the sliding scale set forth in Exhibit A to the Award Agreements. Incentives are separately earned by achieving at least 90% of the revenue target, with a cap of 110% of target, with the cash payments ranging from 10% to 60% of annual base salary. While cash payments for achieving revenue the revenue target is generally independent of achieving the EBITDA target, no revenue-based cash incentive will be awarded unless 85% of the EBITDA target is achieved.

Under the agreement, Mr. Srouji will receive a base salary of $250,000. Mr. Sobieski will also participate in the Bonus Plan, pursuant to which he will be eligible to receive up to 15% of his base salary should targets set forth in the Bonus Plan be hit. Mr. Sobieski will also be paid a retention bonus of $75,000 in January 2026 if he remains employed by the Company through the end of 2025. Finally, Mr. Sobieski will be eligible to participate in the Incentive Plan for the 2023-2025 period.

The ~~foregoing~~term ~~description~~ of ~~the~~Mr. ~~Award~~Sobieski’s ~~Agreements is~~agreement ~~only~~runs athrough ~~summary~~May 2026, and will isautomatically ~~qualified~~renew infor ~~its~~an ~~entirety~~additional bytwelve ~~reference~~months unless Mr. Srouji or the Company take action to not renew the ~~full~~agreement. ~~text~~If ofMr. Sobieski’s employment is terminated without cause, or if he resigns with Good Reason (as that term is defined in the ~~Award~~agreement), Mr. ~~Agreements~~Sobieski, upon signing a ~~form~~release of ~~which~~employment-related isclaims, ~~attached~~will be entitled to one year of base salary, and upon termination without ascause, ~~Exhibit~~the 10Company will reimburse Mr.2 toSobieski ~~this~~for ~~Current~~health ~~Report~~insurance oncosts ~~Form~~in ~~8-K~~compliance ~~and~~with isCOBRA ~~incorporated~~for bythe ~~reference~~shorter ~~herein~~of: one year or Mr. Sobieski’s securing new employment providing similar benefits.

~~Retention~~The ~~Bonus~~foregoing ~~Agreement~~description of the agreement between the Company and Mr. Sobieski is qualified in its entirety by reference to the actual terms of the agreement, which has been filed as Exhibit 10.2 to this Current Report on Form 8-K, and which is incorporated herein by reference.

OnRichard February 1, 2023, the Board also approved a Retention Bonus Agreement (the “Bonus Agreement”) to be entered into with selected employees (each, an “Awardee”) to enable the Company to attract, retain and motivate employees and to advance the interests of the Company and its stockholdersE. In the event an Awardee remains employed by the Company during the 3-year retention period beginning January 1, 2023, the Company shall pay the Awardee no later than the 15th day of the third month following the retention period a single, lump-sum cash payment in an amount equal to 10% of the Awardee’s aggregate base salary earned during the retention period.Mushrush

~~The~~Effective ~~foregoing~~February ~~description~~1, of2023, ~~the~~Richard ~~Bonus~~E. ~~Agreement is~~Mushrush ~~only~~entered ainto ~~summary~~an ~~and~~Amended Employment isAgreement ~~qualified~~pursuant ~~in its entirety by reference~~ to ~~the full text of the Bonus Agreement, a form of~~ which isMr. ~~attached~~Mushrush ~~as Exhibit~~will ~~10.3~~continue to ~~this~~serve ~~Current~~as ~~Report~~the onCompany’s ~~Form~~Chief ~~8-K~~Financial ~~and is incorporated by reference herein~~Officer.

Under the agreement, Mr. Mushrush will receive a base salary of $122,000. Mr. Mushrush will also participate in the Company’s Bonus Plan, pursuant to which he will be eligible to receive up to 20% of his base salary should targets set forth in the Bonus Plan be hit. Mr. Mushrush will also be paid a retention bonus of $36,600 in January 2026 if he remains employed by the Company through the end of 2025. Finally, Mr. Mushrush will be eligible to participate in the Incentive Plan for the 2023-2025 period.

The term of Mr. Mushrush’s agreement runs through May 2026, and will automatically renew for an additional twelve months unless Mr. Srouji or the Company take action to not renew the Agreement. If Mr. Mushrush’s employment is terminated without cause, or if he resigns with Good Reason (as that term is defined in the Agreement), Mr. Mushrush, upon signing a release of employment-related claims, will be entitled to one year of base salary, and upon termination without cause, the Company will reimburse Mr. Mushrush for health insurance costs in compliance with COBRA for the shorter of: one year or Mr. Mushrush’s securing new employment providing similar benefits.

The foregoing description of the agreement between the Company and Mr. Mushrush is qualified in its entirety by reference to the actual terms of the agreement, which has been filed as Exhibit 10.3 to this Current Report on Form 8-K, and which is incorporated herein by reference.

Services Agreement

Effective February 1, 2023, the Company entered into a Services Agreement with VDA Group S.p.A., which is the Company’s largest shareholder. Pursuant to the Services Agreement, the Company will provide VDA Group with outsourced services traditionally associated with the role of a Chief Technology Officer (the “Services”). The Services will primarily be provided by Mr. Sobieski and will require Mr. Sobieski to regularly travel to VDA Group’s offices in Italy. Pursuant to the Services Agreement, VDA Group will pay to the Company 50% of the cost of labor and expenses associated with the provision of the services.

The Services Agreement can be terminated by either party upon at least 30 days’ notice, and the Services Agreement will automatically terminate should the Mr. Sobieski’s employment terminate. The Services Agreement explicitly states that no employment relationships are created thereby.

The foregoing description of the agreement between the Company and VDA Group S.p.A. is qualified in its entirety by reference to the actual terms of the agreement, which has been filed as Exhibit 10.4 to this Current Report on Form 8-K, and which is incorporated herein by reference.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
10.1	Employment Agreement, dated February 1, 2023, by and between Telkonet, Inc. ~~2023~~and ~~Long-Term~~John ~~Cash~~M. ~~Incentive Plan~~Srouji
10.2*	Form of Telkonet, Inc. 2023 Long-Term Cash Incentive Plan Award Agreement
10.2	Employment Agreement, dated February 1, 2023, by and between Telkonet, Inc. and Jeffrey J. Sobieski
10.3	~~Form~~Employment ofAgreement, ~~Retention~~dated ~~Bonus~~February ~~Agreement~~1, 2023, by and between Telkonet, Inc. and Richard E. Mushrush
10.4	Services Agreement, dated February 1, 2023, by and between Telkonet, Inc. and VDA Group S.p.A.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

*As permitted by Regulation S-K, Item 601(b)(10)(iv)of the Securities Exchange Act of 1934, as amended, certain confidential portions of this exhibit have been redacted from the publicly filed document. The Company agrees to furnish supplementally an unredacted copy of the exhibit to the Securities and Exchange Commission upon its request.4

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: February 2, 2023	TELKONET, INC.
Dated: February 8, 2023	TELKONET, INC.
	By: /s/ Piercarlo Gramaglia
	Piercarlo Gramaglia Chief Executive Officer

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