April 15,
2009
VIA EDGAR AND
FAX
Mr. Scott
Hodgdon
Division
of Corporation Finance
United
States Securities and Exchange Commission
Washington,
D.C. 20549
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Re:
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Telkonet,
Inc.
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Preliminary
Proxy Statement on Schedule 14A
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Filed
April 8, 2009
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File
No. 001-31972
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Dear Mr.
Hodgdon:
We are writing in response to your
April 14, 2009 correspondence (the “Comment Letter”)
concerning Telkonet, Inc.’s (the “Company”) Preliminary
Proxy Statement on Schedule 14A (the “Proxy Statement”)
filed on April 8, 2009, an amendment of which is being filed simulataneously
herewith. Set forth below are the Company’s responses to each comment
contained in the Comment Letter. Paragraph numbers utilized below
correspond to those set forth in the Comment Letter.
1. Pursuant
to the terms of the convertible debenture issued to YA Global Investments, L.P.,
the Company is prohibited from effecting any conversion of the debenture, and YA
Global Investments, L.P. is prohibited from converting any portion of the
debenture, to the extent such conversion would result in YA Global Investments,
L.P. beneficially owning (as determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934) in excess of 4.99% of the Company’s common
stock issued and outstanding immediately after giving effect to such
conversion. Since YA Global Investments, L.P. is not obligated to
report to the Company the number of shares of common stock it holds at the time
of any conversion under the debenture, unless the conversion would, in and of
itself, involve the issuance of in excess of 4.99% of the Company’s issued and
outstanding common stock, YA Global Investments, L.P. is obligated to determine
whether a conversion would cause this threshold to be exceeded and to inform the
Company of this fact prior to such issuance. This threshold may be
waived by YA Global Investments, L.P., but only upon 65 days prior notice to the
Company. Since (i) no single issuance of common stock to YA Global
Investments, L.P. constituted in excess of 4.99% of the Company’s issued and
outstanding common stock as of the date of such conversion, (ii) YA Global
Investments, L.P. has not indicated that any of the previous debenture
conversions caused the 4.99% threshold to be exceeded, and (iii) YA Global
Investments, L.P. has not provided notice to the Company of its intent to waive
the 4.99% threshold, the Company has concluded that at no time following
issuance of the debentures did YA Global Investments, L.P. beneficially own in
excess of 4.99% of the Company’s issued and outstanding common
stock. As a result, the Company does not believe it is required to
include beneficial ownership information for YA Global Investments, L.P. in the
beneficial ownership table contained in the Proxy Statement.
2. Comment
complied with. Please see the additional disclosure included in the
enclosed revised Proxy Statement under “Proposal 3. Approval of Share
Issuance.”
3. Comment
complied with. Please see the additional disclosure included in the
enclosed revised Proxy Statement under “Proposal 3. Approval of Share
Issuance.”
We believe the foregoing fairly
responds to the Comment Letter. In connection with the Company’s
response to these comments, the Company hereby acknowledges that (i) the Company
is responsible for the adequacy and accuracy of the disclosure in the filing;
(ii) staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action with respect to
the filing; and (iii) the Company may not assert staff comments as a defense in
any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
Thank you in advance for your prompt
attention to this matter. If you have any questions or require
additional information in connection with your review, please do not hesitate to
contact us.
Sincerely,
TELKONET,
INC.
/s/ Richard J.
Leimbach
Richard
J. Leimbach
Chief
Financial Officer
Enclosure