|
|
●
|
Loss on Sale of
Investment. In February 2009 the Company completed the sale of its
investment in a publicly-traded company and recorded a $29,371 loss on the
sale of the investment in the consolidated statement of operations for the
quarter ended March 31, 2009. The Company considers this an investment
transaction, and it is not an indication of operating performance.
Therefore the Company does not consider the inclusion of our sale of this
investment helpful in assessing its current financial performance compared
to previous periods as well as prospects for the
future.
|
|
|
●
|
Gain on Derivative Liability.
During the quarter ended March 31, 2009, the Company recorded a
non-cash gain on the derivative liability of $263,701 in connection with
the sale of the Convertible Debentures in May and July 2008. These
Debentures have embedded derivatives and the accounting treatment of
derivative financial instruments requires that the Company record all
derivatives and related warrants, and classify all other non-employee
stock options and warrants as derivative liabilities and mark them to
market at each reporting date. The fair value of such derivatives that
were reclassified as liabilities from additional paid-in capital for the
quarter ended March 31, 2009 totaled $2,395,348. The Company considers
this a financing transaction, and it is not an indication of current or
future operating performance. Therefore the Company does not consider the
inclusion of this transaction helpful in assessing its current financial
performance compared to previous periods as well as prospects for the
future.
|
|
|
●
|
Other Expense. In the
first quarter of 2008, the Company recorded a non-recurring non-cash
expense of $1,598,203 in connection with an amendment to 3,380,000 stock
purchase warrants held by private placement investors which reduced the
exercise price under such warrants from $4.17 per share to $0.6978258 per
share. The Company considers this a financing transaction, and it is not
an indication of current or future operating performance. Therefore the
Company does not consider the inclusion of this transaction helpful in
assessing its current financial performance compared to previous periods
as well as prospects for the
future.
|
|
|
●
|
Stock-Based
Compensation. The Company believes that because of the variety of
equity awards used by companies, varying methodologies for determining
stock-based compensation and the assumptions and estimates involved in
those determinations, the exclusion of non-cash stock-based compensation
enhances the ability of management and investors to understand the impact
of non-cash stock-based compensation on our operating results. Further,
the Company believes that excluding stock-based compensation expense
allows for a more transparent comparison of its financial results to
previous periods.
|
|
(1)
|
GAAP
stands for Generally Accepted Accounting
Principles.
|
|
For
The Three Months
Ended
March 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Net
(loss), as reported
|
$ | (1,107,702 | ) | $ | (5,121,031 | ) | ||
|
Net
loss attributed to MSTI segment
|
512,297 | 867,421 | ||||||
|
Net
loss attributed to Telkonet segment
|
(595,405 | ) | (4,253,610 | ) | ||||
|
Interest
(income) expense, net
|
268,816 | 196,972 | ||||||
|
Depreciation
and amortization
|
86,834 | 107,577 | ||||||
|
EBITDA
attributed to Telkonet segment
|
(239,755 | ) | (3,949,061 | ) | ||||
|
Adjustments:
|
||||||||
|
Loss
on sale of investment
|
29,371 | - | ||||||
|
Gain
on derivative liability
|
(263,701 | ) | - | |||||
|
Other
expense
|
- | 1,598,203 | ||||||
|
Stock
based compensation
|
93,810 | 303,698 | ||||||
|
Adjusted
EBITDA
|
$ | (380,275 | ) | $ | (2,047,160 | ) | ||
|
Three
Months Ended
|
||||||||
|
March
31,
|
||||||||
|
Revenues,
net:
|
2009
|
2008
|
||||||
|
Product
|
$
|
2,078,978
|
$
|
3,374,826
|
||||
|
Recurring
|
1,854,942
|
1,584,195
|
||||||
|
Total
Revenue
|
3,933,920
|
4,959,021
|
||||||
|
Cost
of Sales:
|
||||||||
|
Product
|
1,161,393
|
2,551,939
|
||||||
|
Recurring
|
1,063,472
|
1,290,264
|
||||||
|
Total
Cost of Sales
|
2,224,865
|
3,842,203
|
||||||
|
Gross
Profit
|
1,709,055
|
1,116,818
|
||||||
|
Operating
Expenses:
|
||||||||
|
Research
and Development
|
275,962
|
665,122
|
||||||
|
Selling,
General and Administrative
|
2,175,483
|
3,585,510
|
||||||
|
Stock
Based Compensation
|
93,810
|
303,698
|
||||||
|
Stock
Based Compensation of Subsidiary
|
99,847
|
133,301
|
||||||
|
Depreciation
and Amortization
|
232,512
|
256,284
|
||||||
|
Total
Operating Expenses
|
2,877,614
|
4,943,915
|
||||||
|
Loss
from Operations
|
(1,168,559
|
)
|
(3,827,097
|
)
|
||||
|
Other
Income (Expenses):
|
||||||||
|
Financing
Expense, net
|
(608,121
|
)
|
(2,074,322
|
)
|
||||
|
Gain
on Derivative Liability
|
263,701
|
-
|
||||||
|
(Loss)
on Sale of Investments
|
(29,371
|
)
|
-
|
|||||
|
Other
Income
|
-
|
270,950
|
||||||
|
Total
Other Income (Expenses)
|
(373,791
|
)
|
(1,803,372
|
)
|
||||
|
Loss
Before Provision for Income Taxes
|
(1,542,350
|
)
|
(5,630,469
|
)
|
||||
|
Provision
for Income Tax
|
-
|
-
|
||||||
|
Net
loss
|
(1,542,350
|
)
|
(5,630,469
|
)
|
||||
|
Loss
attributable to the noncontrolling interest
|
434,648
|
509,438
|
||||||
|
Net
loss attributable to common shareholders
|
$
|
(1,107,702
|
)
|
$
|
(5,121,031
|
)
|
||
|
Loss
per share attributable to common shareholders (basic and assuming
dilution)
|
$
|
(0.01
|
)
|
$
|
(0.07
|
)
|
||
|
Weighted
average common shares outstanding
|
90,325,734
|
71,848,016
|
||||||
|
Comprehensive
Loss:
|
||||||||
|
Net
Loss attributable to common shareholders
|
$
|
(1,107,702
|
)
|
$
|
(5,121,031
|
)
|
||
|
Unrealized
gain (loss) on investment
|
32,750
|
(538,967
|
)
|
|||||
|
Comprehensive
Loss attributable to common shareholders
|
$
|
(1,074,952
|
)
|
$
|
(5,659,998
|
)
|
||