Telkonet, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

14. FAIR VALUE MEASUREMENTS (Tables)

14. FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2012

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (derivative liability) for the six months ended June 30, 2011.

	2011
Balance at beginning of year	$	1,901,775
Repayment of debt and warrants related to derivative liability		(1,158,730	)
Change in fair value of derivative liability		(172,476	)
Retirement of derivative liability related to warrant obligation		(570,569	)

Balance at end of period	$	–

The following table sets forth certain Company assets as of December 31, 2011 which are measured at fair value on a non-recurring basis by level within the fair value hierarchy. These are classified based on the lowest level of input that is significant to the fair value measurement:

	Level 1		Level 2		Level 3		Total
Goodwill-SSI	$	–	$	–	$	2,774,016	$	2,774,016
Total	$	–	$	–	$	2,774,016	$	2,774,016

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 assets (Goodwill-SSI) measured on a non-recurring basis as of December 31, 2011.

	2011
Balance at beginning of year	$	5,874,016
Impairment of carried value		(3,100,000	)
Balance at December 31, 2011	$	2,774,016

- Definition

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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