| For Immediate Release: August 16, 2006 |
NEWS
RELEASE
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Telkonet
Retires Convertible Senior Notes
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| Germantown,
MD, Telkonet, Inc. (Amex: TKO), the leader in providing in-building
broadband access over existing electrical wiring,
today announced that on August 14, 2006, the Company executed separate
settlement agreements with the lenders of its Convertible Senior
Notes.
Pursuant to the settlement agreements the Company paid to the lenders
on
August 15, 2006 in the aggregate $9,910,392 plus accrued but unpaid
interest and certain premiums specified in the Notes in satisfaction
of
the amounts then outstanding under the Notes. Of the amount to be
paid to
the lenders under the Notes, $6,500,000 was paid in cash through
a
drawdown on a letter of credit previously pledged as collateral for
the
Company’s obligations under the Notes. The balance of $3,410,392 will be
paid to the lenders in shares of Company’s common stock valued at the
lower of $5.00 per share and 92.5% of the arithmetic average of the
weighted average price (as defined in the Notes) of the Company’s common
stock on the American stock exchange for the twenty trading days
beginning
on August 16, 2006. The Company also will issue to the lenders warrants
to
purchase shares of the Company’s common stock at the exercise price of the
lower of $5.00 per share and 92.5% of the average trading price as
described above.
As
a result of the execution of the settlement agreements and the payments
required thereby, the Company will have fully repaid and satisfied
all of
its obligations under the Notes. The Company also has agreed to pay
the
expenses of the lenders incurred in connection with the negotiation
and
execution of the settlement agreements. The settlement agreements
were
negotiated following the allegation by one of the lenders that the
Company’s failure to meet the minimum revenue test for the period ending
June 30, 2006 as specified on the Notes may have constituted an event
of
default under the Notes, which allegation the Company
disputed.
As
a result of the settlement and satisfaction of the Notes, the Company
has
eliminated the debt obligation represented by the Notes and has adequate
available funds to meet its immediate, short-term liquidity needs.
Although there can be no assurance, management believes that future
liquidity needs can be met from an increase in operating revenue,
further
borrowings and/or equity investments.
About
Telkonet
Telkonet
develops and markets technology for the transmission of high-speed
voice,
video and data communications over the existing electrical wiring
within a
building. The revolutionary Telkonet iWire System™
utilizes proven powerline communications (PLC) technology, which
enables
the delivery of commercial high-speed broadband access from an IP
“platform” that is easy to deploy, reliable and cost-effective by
leveraging a buildings existing electrical infrastructure. The building’s
existing electrical wiring becomes the backbone of the local area
network,
which converts virtually every electrical outlet into a high-speed
data
port, without the costly installation of additional wiring or major
disruption of business activity.
The
Telkonet iWire System can be installed rapidly and offers a viable
and
cost-effective alternative to the challenges of hardwiring and wireless
local area networks (LANs). Telkonet’s products are designed for use in
commercial and residential applications, including multi-dwelling
units
and the hospitality and government markets. Applications supported
by the
Telkonet “platform” include but are not limited to: VoIP telephones,
Internet connectivity, local area networking, video conferencing,
closed
circuit security surveillance and a host of other information services.
For more information, please visit www.telkonet.com.
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Contacts:
Joe
Noel
Telkonet,
Inc.
240.912.1851
jnoel@telkonet.com
Michael
Porter
President
Porter,
LeVay & Rose, Inc.
212-564-4700
mike@plrinvest.com
www.plrinvest.com
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