|
· |
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 June 30, 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 June 30, 2009, the Company recorded a non-cash gain on the derivative liability of $1,175,573 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 June 30, 2009 totaled $1,219,775. 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. |
|
· |
Impairment write-down in investment in affiliate. In the second quarter of 2008, the Company recorded a one-time non-cash expense of $380,000 in connection with the issuance of 600,000 shares of Company stock attributable to the release of shares from a purchase price contingency escrow. The Company considers this an investment 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. |
Three Months Ended |
Six Months Ended |
|||||||||||||||
June 30, 2009 |
June 30, 2008 |
June 30, 2009 |
June 30, 2008 |
|||||||||||||
Net income (loss), as reported |
$ | 7,409,489 | $ | (4,231,841 | ) | $ | 6,301,787 | $ | (9,352,872 | ) | ||||||
Net (income) loss from discontinued operations |
123,438 | 1,174,339 | 635,735 | 2,041,760 | ||||||||||||
Net (gain) from discontinued operations |
(6,932,586 | ) | - | (6,932,586 | ) | - | ||||||||||
Net income (loss) from continuing operations |
600,341 | (3,057,502 | ) | 4,936 | (7,311,112 | ) | ||||||||||
Financing expense, net |
212,720 | 152,832 | 481,536 | 349,804 | ||||||||||||
Depreciation and amortization |
93,683 | 107,577 | 180,517 | 215,154 | ||||||||||||
EBITDA attributed to Telkonet segment |
906,744 | (2,797,093 | ) | 666,989 | (6,746,154 | ) | ||||||||||
Adjustments: |
||||||||||||||||
Loss on sale of investment |
- | - | 29,371 | - | ||||||||||||
Other expense |
- | - | - | 1,598,203 | ||||||||||||
(Gain) loss on derivative liability |
(1,175,573 | ) | 1,018,453 | (1,439,274 | ) | 1,018,453 | ||||||||||
Impairment write-down in investment in affiliate |
- | 380,000 | - | 380,000 | ||||||||||||
Stock based compensation |
83,810 | 206,432 | 177,620 | 510,130 | ||||||||||||
Adjusted EBITDA |
$ | (185,019 | ) | $ | (1,192,208 | ) | $ | (565,294 | ) | $ | (3,239,368 | ) |
For The Three Months Ended
June 30, |
For The Six Months Ended
June 30, |
|||||||||||||||
2009 |
2008 |
2009 |
2008 |
|||||||||||||
Revenues, net: |
||||||||||||||||
Product |
$ |
2,098,640 |
$ |
3,781,214 |
$ |
4,017,067 |
$ |
6,983,451 |
||||||||
Recurring |
1,011,729 |
826,917 |
1,991,254 |
1,662,246 |
||||||||||||
Total Revenue |
3,110,369 |
4,608,131 |
6,008,321 |
8,645,697 |
||||||||||||
Cost of Sales: |
||||||||||||||||
Product |
1,032,183 |
2,265,073 |
2,108,822 |
4,723,851 |
||||||||||||
Recurring |
303,513 |
422,680 |
609,347 |
858,063 |
||||||||||||
Total Cost of Sales |
1,335,696 |
2,687,753 |
2,718,169 |
5,581,914 |
||||||||||||
Gross Profit |
1,774,673 |
1,920,378 |
3,290,152 |
3,063,783 |
||||||||||||
Operating Expenses: |
||||||||||||||||
Research and Development |
222,316 |
492,689 |
498,278 |
1,157,811 |
||||||||||||
Selling, General and Administrative |
1,737,376 |
2,619,897 |
3,357,168 |
5,145,340 |
||||||||||||
Impairment write-down in investment in affiliate |
- |
380,000 |
- |
380,000 |
||||||||||||
Stock Based Compensation |
83,810 |
206,432 |
177,620 |
510,130 |
||||||||||||
Depreciation and Amortization |
93,683 |
107,577 |
180,517 |
215,154 |
||||||||||||
Total Operating Expense |
2,137,185 |
3,806,595 |
4,213,583 |
7,408,435 |
||||||||||||
Loss from Operations |
(362,512 |
) |
(1,886,217 |
) |
(923,431 |
) |
(4,344,652 |
) | ||||||||
Other Income (Expenses): |
||||||||||||||||
Financing Expense, net |
(212,720 |
) |
(152,832 |
) |
(481,536 |
) |
(1,948,007 |
) | ||||||||
Gain (Loss) on Derivative Liability |
1,175,573 |
(1,018,453 |
) |
1,439,274 |
(1,018,453 |
) | ||||||||||
(Loss) on Sale of Investment |
- |
- |
(29,391 |
) |
- |
|||||||||||
Total Other Income (Expenses) |
962,853 |
(1,171,285 |
) |
928,367 |
(2,966,460 |
) | ||||||||||
Income (Loss) Before Provision for Income Taxes |
600,341 |
(3,057,502 |
) |
4,936 |
(7,311,112 |
) | ||||||||||
Provision for Income Taxes |
- |
- |
- |
- |
||||||||||||
Income (Loss) from Continuing Operations |
$ |
600,341 |
$ |
(3,057,502 |
) |
$ |
4,936 |
$ |
(7,311,112 |
) | ||||||
Discontinued Operations |
||||||||||||||||
Income (Loss) from Discontinued Operations |
(123,438 |
) |
(1,174,339 |
) |
(635,735 |
) |
(2,041,760 |
) | ||||||||
Gain on Deconsolidation |
6,932,586 |
- |
6,932,586 |
- |
||||||||||||
Net Income (Loss) |
$ |
7,409,489 |
|
$ |
(4,231,841 |
) |
$ |
6,301,787 |
$ |
(9,352,872 |
) | |||||
Net income (loss) per share: |
||||||||||||||||
Income (loss) per share from continuing operations - basic |
$ |
0.01 |
$ |
(0.04 |
) |
$ |
0.00 |
$ |
(0.10 |
) | ||||||
Income (loss) per share from continuing operations - diluted |
0.01 |
$ |
(0.04 |
) |
$ |
0.00 |
$ |
(0.10 |
) | |||||||
Income (loss) per share from discontinued operations – basic |
$ |
0.07 |
$ |
(0.01 |
) |
$ |
0.07 |
$ |
(0.03 |
) | ||||||
Income (loss) per share from discontinued operations – diluted |
$ |
0.07 |
$ |
(0.01 |
) |
$ |
0.07 |
$ |
(0.03 |
) | ||||||
Net income (loss) per share – basic |
$ |
0.08 |
$ |
(0.05 |
) |
$ |
0.07 |
$ |
(0.13 |
) | ||||||
Net income (loss) per share - diluted |
$ |
0.08 |
$ |
(0.05 |
) |
$ |
0.07 |
$ |
(0.13 |
) | ||||||
Weighted Average Common Shares Outstanding - basic |
94,765,021 |
77,319,806 |
92,550,245 |
74,583,911 |
||||||||||||
Weighted Average Common Shares Outstanding - diluted |
94,765,021 |
77,319,806 |
92,550,245 |
74,583,911 |
||||||||||||
Comprehensive Income (Loss): |
||||||||||||||||
Net Income (Loss) |
$ |
7,409,489 |
$ |
(4,231,841 |
) |
$ |
6,301,787 |
$ |
(9,352,872 |
) | ||||||
Unrecognized Gain (Loss) on Investment |
- |
(1,019,237 |
) |
32,750 |
(1,558,204 |
) | ||||||||||
Comprehensive Income (Loss) |
$ |
7,409,489 |
$ |
(5,251,078 |
) |
$ |
6,334,537 |
$ |
(10,911,076 |
) |