|
|
·
|
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
nine months ended September 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.
The Company has historically recorded non-cash gains and losses on
the fair value of their derivative liabilities which arouse from 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 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 marketable securities. In the third quarter of 2009,
the Company recorded a non-recurring expense of $367,653 based upon the
Company’s determination that its investment in Geeks on Call America is
impaired because the Company believes that its fair market value has
permanently declined. 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.
|
|
|
·
|
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
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Net
income (loss), as reported
|
$ | (2,139,644 | ) | $ | (2,878,757 | ) | $ | 4,162,143 | $ | (12,231,629 | ) | |||||
|
Net
(income) loss from discontinued operations
|
- | 1,370,896 | 635,735 | 3,412,656 | ||||||||||||
|
Net
(gain) from discontinued operations
|
- | - | (6,932,586 | ) | - | |||||||||||
|
Net
income (loss) from continuing operations
|
(2,139,644 | ) | (1,507,861 | ) | (2,134,708 | ) | (8,818,973 | ) | ||||||||
|
Financing
expense, net
|
228,730 | 243,424 | 710,266 | 593,228 | ||||||||||||
|
Depreciation
and amortization
|
86,223 | 103,056 | 266,740 | 318,210 | ||||||||||||
|
EBITDA
attributed to Telkonet segment
|
(1,824,691 | ) | (1,161,381 | ) | (1,157,702 | ) | (7,907,535 | ) | ||||||||
|
Adjustments:
|
||||||||||||||||
|
Loss
on sale of investment
|
- | - | 29,371 | - | ||||||||||||
|
(Gain)
loss on derivative liability
|
650,338 | 576,156 | (788,936 | ) | 1,594,604 | |||||||||||
|
Impairment
write-down in investment in marketable securities
|
367,653 | - | 367,653 | - | ||||||||||||
|
Other
expense
|
- | - | - | 1,598,203 | ||||||||||||
|
Impairment
write-down in investment in affiliate
|
- | - | - | 380,000 | ||||||||||||
|
Stock
based compensation
|
65,746 | 194,483 | 243,366 | 704,613 | ||||||||||||
|
Adjusted
EBITDA
|
$ | (740,954 | ) | $ | (390,742 | ) | $ | (1,306,248 | ) | $ | (3,630,110 | ) | ||||
|
For
The Three Months Ended
September
30,
|
For
The Nine Months Ended
September
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Revenues,
net:
|
||||||||||||||||
|
Product
|
$
|
1,445,888
|
$
|
3,837,728
|
$
|
5,462,955
|
$
|
10,821,179
|
||||||||
|
Recurring
|
991,130
|
897,482
|
2,982,384
|
2,559,728
|
||||||||||||
|
Total
Revenue
|
2,437,018
|
4,735,210
|
8,445,339
|
13,380,907
|
||||||||||||
|
Cost
of Sales:
|
||||||||||||||||
|
Product
|
833,926
|
2,076,776
|
2,942,748
|
6,800,627
|
||||||||||||
|
Recurring
|
348,321
|
416,723
|
957,668
|
1,274,786
|
||||||||||||
|
Total
Cost of Sales
|
1,182,247
|
2,493,499
|
3,900,416
|
8,075,413
|
||||||||||||
|
Gross
Profit
|
1,254,771
|
2,241,711
|
4,544,923
|
5,305,494
|
||||||||||||
|
Operating
Expenses:
|
||||||||||||||||
|
Research
and Development
|
263,672
|
509,418
|
761,950
|
1,667,229
|
||||||||||||
|
Selling,
General and Administrative
|
1,732,053
|
2,123,035
|
5,089,221
|
7,268,375
|
||||||||||||
|
Impairment
write-down in investment in affiliate
|
-
|
-
|
-
|
380,000
|
||||||||||||
|
Stock
Based Compensation
|
65,746
|
194,483
|
243,366
|
704,613
|
||||||||||||
|
Depreciation
and Amortization
|
86,223
|
103,056
|
266,740
|
318,210
|
||||||||||||
|
Total
Operating Expense
|
2,147,694
|
2,929,992
|
6,361,277
|
10,338,427
|
||||||||||||
|
Loss
from Operations
|
(892,923
|
)
|
(688,281
|
)
|
(1,816,354
|
)
|
(5,032,933
|
)
|
||||||||
|
Other
Income (Expenses):
|
||||||||||||||||
|
Financing
Expense, net
|
(228,730
|
)
|
(243,424
|
)
|
(710,266
|
)
|
(2,191,431
|
)
|
||||||||
|
Gain
(Loss) on Derivative Liability
|
(650,338
|
)
|
(576,156
|
)
|
788,936
|
(1,594,609
|
)
|
|||||||||
|
Impairment
of Investment in Marketable Securities
|
(367,653
|
)
|
-
|
(367,653
|
)
|
-
|
||||||||||
|
(Loss)
on Sale of Investment
|
-
|
-
|
(29,371
|
)
|
-
|
|||||||||||
|
Total
Other Income (Expenses)
|
(1,246,721
|
)
|
(819,580
|
)
|
(318,354
|
)
|
(3,786,040
|
)
|
||||||||
|
Income
(Loss) Before Provision for Income Taxes
|
(2,139,644
|
)
|
(1,507,861
|
)
|
(2,134,708
|
)
|
(8,818,973
|
)
|
||||||||
|
Provision
for Income Taxes
|
-
|
-
|
-
|
-
|
||||||||||||
|
Income
(Loss) from Continuing Operations
|
$
|
(2,139,644
|
)
|
$
|
(1,507,861
|
)
|
$
|
(2,134,708
|
)
|
$
|
(8,818,973
|
)
|
||||
|
Discontinued
Operations
|
||||||||||||||||
|
Income
(Loss) from Discontinued Operations
|
-
|
(1,370,896
|
)
|
(635,735
|
)
|
(3,412,656
|
)
|
|||||||||
|
Gain
on Deconsolidation
|
-
|
-
|
6,932,586
|
-
|
||||||||||||
|
Net
Income (Loss)
|
$
|
(2,139,644
|
)
|
$
|
(2,878,757
|
)
|
$
|
4,162,143
|
$
|
(12,231,629
|
)
|
|||||
|
Net
income (loss) per share:
|
||||||||||||||||
|
Income
(loss) per share from continuing operations - basic
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
$
|
(0.02
|
)
|
$
|
(0.16
|
)
|
||||
|
Income
(loss) per share from continuing operations -
diluted
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
$
|
(0.02
|
)
|
$
|
(0.16
|
)
|
||||
|
Income
(loss) per share from discontinued operations –
basic
|
$
|
0.00
|
$
|
(0.02
|
)
|
$
|
0.07
|
$
|
(0.04
|
)
|
||||||
|
Income
(loss) per share from discontinued operations –
diluted
|
$
|
0.00
|
$
|
(0.02
|
)
|
$
|
0.07
|
$
|
(0.04
|
)
|
||||||
|
Net
income (loss) per share – basic
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
$
|
0.04
|
$
|
(0.16
|
)
|
|||||
|
Net
income (loss) per share - diluted
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
$
|
0.04
|
$
|
(0.16
|
)
|
|||||
|
Weighted
Average Common Shares Outstanding - basic
|
96,220,386
|
81,422,404
|
93,787,069
|
76,880,047
|
||||||||||||
|
Weighted
Average Common Shares Outstanding - diluted
|
96,220,386
|
81,422,404
|
93,787,069
|
76,880,047
|
||||||||||||
|
Comprehensive
Income (Loss):
|
||||||||||||||||
|
Net
Income (Loss)
|
$
|
(2,139,644
|
)
|
$
|
(2,878,757
|
)
|
$
|
4,162,143
|
$
|
(12,231,629
|
)
|
|||||
|
Unrecognized
Gain (Loss) on Investment
|
-
|
(1,218,100
|
)
|
32,750
|
(2,776,304
|
)
|
||||||||||
|
Comprehensive
Income (Loss)
|
$
|
(2,139,644
|
)
|
$
|
(4,096,857
|
)
|
$
|
4,194,893
|
$
|
(15,007,933
|
)
|
|||||