Exhibit 99.1
Media
Contacts:
Michael
Wachs, CEOcast, 212.732.4300,
mwachs@ceocast.com
Joe Noel,
Telkonet, 240.912.1851
For
Immediate Release
Telkonet
Announces 2007 Fourth Quarter and Year-end Results
April 1, 2008, Germantown, MD –
Telkonet, Inc. (AMEX:TKO), the leading provider of innovative, centrally managed
solutions for integrated energy management, networking, building automation
and proactive support
services, announced today fourth quarter and 2007 year-end results for
the period ended December 31, 2007. The 2007 results of operations include the
acquisitions of EthoStream, LLC and Smart Systems International on March 9, and
March 15, 2007, respectively. The 2007 consolidated results include the
operations of the Company’s majority-owned subsidiary MSTI Holdings, Inc.
(OTCBB: MSHI) or “MST” which also includes results of MST’s acquisition of
Newport Telecommunications Co. on July 18, 2007.
For the
2007 fourth quarter, Telkonet, Inc. had revenue of $4.7 million, an increase of
393% compared to $0.9 million in the fiscal 2006 fourth quarter. The increase
was a result of both organic growth and growth from acquisitions. Excluding
revenue from its MST subsidiary, Telkonet had revenue of $3.7 million, compared
to $0.5 million in the year-earlier period. Telkonet (excluding the results of
MST) had a negative adjusted EBITDA (Earnings Before Interest, Taxes,
Depreciation and Stock-based compensation), a nonGAAP measure, of $(3.5)
million in the 2007 fourth quarter, compared to negative adjusted EBITDA of
$(3.7) million in the 2006 fourth quarter.
Telkonet,
Inc. reported a fourth quarter 2007 net loss of $(5.5) million, or $(0.08) per
share, compared to a net loss of $(5.1) million or $(0.08) per share in the 2006
fourth quarter. The 2007 fourth quarter net loss included a loss of $(3.1)
million from MST, net of minority interest, a one-time gain on the sale of an
investment of approximately $1.9 million and non-cash expenses of $0.5 million
related to stock-based compensation, depreciation and amortization, while the
2006 fourth quarter loss included non-cash expenses of $0.3 million related to
stock compensation, depreciation and amortization.
In the
twelve months ending December 31, 2007, Telkonet had revenue of $14.2 million,
an increase of 173% compared to $5.2 million in the twelve months ended December
31, 2006. Excluding revenue from its MST, Telkonet generated revenue of $11.5
million compared to $3.4 million in the year-earlier period. The revenue growth
was a result of both organic growth and growth from acquisitions. Telkonet
(excluding the results of MST) had a negative adjusted EBITDA (Earnings Before
Interest, Taxes, Depreciation and Stock- based compensation), a non-GAAP
measure, of $(12.9) million in the fiscal year 2007, compared to a negative
adjusted EBITDA of $(12.9) million in the year-earlier period.
Telkonet
reported a net loss of $(20.4) million, or $(0.31) per share, compared to a net
loss of $(27.4) million or $(0.54) per share for the year-earlier period. The
2007 net loss included a loss of $(7.1) million from MST, net of minority
interest. Also included in the loss are non-cash expenses of $2.1 million
related to stock- based compensation, depreciation and amortization, while the
2006 net loss included non-cash expenses of $1.6 million related to stock-based
compensation, depreciation and amortization.
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“During
the fourth quarter of 2007 the Company took significant steps to position itself
for growth and improved operating results in 2008,” said Jason Tienor,
Telkonet’s president and CEO. “We sharpened our focus in areas where we are able
to generate near-term revenue growth, such as energy management, where we have
recently landed significant contracts with commercial customers and hospitality
management firms. Today’s announcement of an energy management contract with a
Fortune 100 company is another example of how our direct sales efforts are
yielding results. Many of these relationships are already contributing to
revenue growth and improved visibility. We are also excited by the recent launch
of the next- generation 200Mbps Telkonet Series 5TM powerline communications
(PLC) system. Recently, we completed the first deployment of the system in a
high-profile location. We expect to increase our marketing efforts around this
product. On the cost side, last year we began the process of consolidating
operations, which has resulted in the elimination of our Las Vegas office. The
actions the Company has taken are expected to reduce annual operating expenses
by at least $4 million per year.”
Some of
the recent highlights include:
·
|
First commercial installation
of the next-generation 200Mbps Telkonet Series 5 powerline communications (PLC)
system. The Company and MSTI Holdings, Inc. announced the first
commercial installation of the 200Mbps Telkonet Series 5 powerline system,
enabling broadband networking in a rapid deployment at 370 Lexington, a
high-rise commercial office building located in the heart of Midtown
Manhattan. MSTI and Telkonet are partnering to bring the groundbreaking
Telkonet Series 5 platform to building owners throughout the Tri-State
area as part of an aggressive marketing
program.
|
·
|
$3.5 Million contract with
InTown Suites. The Company was awarded a contract to install its
intelligent Telkonet SmartEnergyTM system (TSE). Telkonet will install TSE
products in 125 locations across the country, as an integral component in
the organization’s commitment to achieving increased energy efficiencies
at their properties. The contract is expected to be completed by the end
of 2008 second quarter.
|
·
|
Appointment of new management
team. In December the company appointed a new Chief Executive
Officer and new Chief Operating
Officer.
|
·
|
Growing sales of energy
management solutions to the hospitality sector. The Company has
entered into a groundbreaking energy efficiency program utilizing
Wisconsin's Focus on Energy Program Incentives to reduce energy
consumption and carbon emissions within the state of Wisconsin. Focus on
Energy has already saved business customers more than $100 million
annually. The Telkonet SmartEnergy advanced occupancy-driven in-room
energy management solution provides hospitality industry customers with
discounted energy management and energy efficiency products and
installation under the program.
|
2008
Business Outlook
The
Company expects record 2008 first quarter revenue and expects significant
sequential revenue growth, due to excellent visibility from recent customer
awards.
(more)
The
Company will hold a conference call today at 4:30 p.m. eastern time to discuss
the results. Interested parties should dial 888.609.5701 (domestically) or
913.312.1384 (internationally). Please use passcode 7884282. There will be a
replay of the call available until May 1, 2008. The replay is available by
dialing 888.203.1112 (domestically) or 719.457.0820 (internationally). Please
use passcode 7884282.
Telkonet
also reported that its audited financial statements for the fiscal year ended
December 31, 2007, which statements were included in its Annual Report on Form
10-K filed with the Securities and Exchange Commission contained an unqualified
opinion from its independent registered public accounting firm which included an
explanatory paragraph raising doubt about Telkonet's ability to continue as a
going concern. This announcement, which is being made in compliance with the
AMEX Company Guide Rule 610(b) requiring a public announcement of the receipt of
an audit opinion that contains a going-concern qualification, does not reflect
any change or amendment to the financial statements as filed.
To comply
with Regulation G promulgated pursuant to the Sarbanes-Oxley Act, Telkonet
Corporation attached to this news release and will post to the company’s
investor relations web site (www.telkonet.com)
any reconciliations of differences between non-GAAP financial information that
may be required in connection with issuing the company’s quarterly financial
results.
The
Company, as is common in its industry, uses EBITDA as a measure of performance
to demonstrate earnings exclusive of interest and non-cash events. The Company
manages its business based on its cash flows. The Company, in its daily
management of its business affairs and analysis of its monthly, quarterly and
annual performance, makes its decisions based on cash flows, not on the
amortization of assets obtained through historical activities. The Company, in
managing its current and future affairs, cannot affect the amortization of the
intangible assets to any material degree, and therefore uses EBITDA as its
primary management guide. Since an outside investor may base its evaluation of
the Company’s performance based on the Company’s net loss not its cash flows,
there is a limitation to the EBITDA measurement. EBITDA is not, and should not
be considered, an alternative to net loss, loss from operations, or any other
measure for determining operating performance of liquidity, as determined under
accounting principals generally accepted in the United States (GAAP). The most
directly comparable GAAP reference in the Company’s case is the removal of
interest, depreciation, amortization, taxes and other non-cash
expense.
About
Telkonet
Telkonet’s
unique broadband networking solutions currently support more than 1.5 million
network users per month, with its energy management systems optimizing energy
consumption in over 80,000 rooms. Telkonet’s technology innovation is
underpinned by the highest level of end-to-end quality of service, with
comprehensive technical customer support. Its systems deliver wide-ranging
functionality, from wired and wireless high-speed Internet access to energy
management, IP surveillance and local area networking. Telkonet’s platforms are
widely deployed on complexes, hospitality venues and multi-dwelling units, and
at government, education and defense locations.
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Telkonet’s
innovations include the revolutionary Telkonet Series 5 and the Telkonet iWire
SystemTM, which
convert a site’s existing internal electrical infrastructure into an IP network
backbone – quickly, cost-effectively
and without disruption. The portfolio also includes the integrated EthoStream
product suite, providing a comprehensive and advanced technology management
platform for the hospitality industry, differentiated by outstanding remote
management tools and a dedicated customer support facility. Telkonet
SmartEnergyTM
completes the line-up, delivering typical bottom line savings of 30% by
controlling in-room energy consumption according to occupancy. For more
information, please visit www.telkonet.com.
All
company, brand or product names are registered trademarks or trademarks of their
respective holders.
Statements
included in this release may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
involve a number of risks and uncertainties such as competitive factors,
technological development, market demand and the Company’s ability to obtain new
contracts and accurately estimate net revenues due to variability in size, scope
and duration of projects, and internal issues in the sponsoring client. Further
information on potential factors that could affect the Company’s financial
results, can be found in the Company’s Registration Statement and in its Reports
on Forms 8-K filed with the Securities and Exchange Commission
(SEC).