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News Release |
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Achievement of positive adjusted EBITDA for third quarter and dramatic reduction in DSO from 107 days to 45 days providing 58% improvement compared to same period last year
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Dramatic reduction in corporate debt of $1.3 million or 33% through third quarter of 2010
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Retirement of Inventory and Accounts Receivable lines of financing paying down more than $900,000 through 2010 and relieving the Company of significant interest and fee payments
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Awarded $500,000+ energy management contract for Dyess Air Force Base implementing Networked Telkonet SmartEnergy
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$1.3 million Series B financing positioning the company for growth through 2010 and beyond
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Addition of two new members to Telkonet’s Board of Directors who bring significant experience in the Clean Technology and Energy industries
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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.
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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.
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Gain on Derivative Liability. The Company has historically recorded non-cash gains and losses on the fair value of its derivative liabilities which arose 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.
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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.
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(1)
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GAAP stands for Generally Accepted Accounting Principles.
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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|||||||||||||||
2010
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2009
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2010
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2009
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|||||||||||||
Net income (loss), as reported
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$ | (2,182,356 | ) | $ | (2,139,644 | ) | $ | (2,370,657 | ) | $ | 4,162,143 | |||||
Net (income) loss from discontinued operations
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- | - | - | 635,735 | ||||||||||||
Net (gain) from discontinued operations
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- | - | - | (6,932,586 | ) | |||||||||||
Net income (loss) from continuing operations
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(2,182,356 | ) | (2,139,644 | ) | (2,370,657 | ) | (2,134,708 | ) | ||||||||
Financing expense, net
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147,159 | 228,730 | 471,452 | 710,266 | ||||||||||||
Depreciation and amortization
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55,074 | 86,223 | 213,274 | 266,740 | ||||||||||||
EBITDA attributed to Telkonet segment
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(1,980,123 | ) | (1,824,691 | ) | (1,685,931 | ) | (1,157,702 | ) | ||||||||
Adjustments:
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||||||||||||||||
Loss on sale of investment
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- | - | - | 29,371 | ||||||||||||
(Gain) loss on disposal of fixed assets
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3,524 | - | 104,268 | - | ||||||||||||
(Gain) loss on derivative liability
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2,001,698 | 650,338 | 1,304,905 | (788,936 | ) | |||||||||||
Impairment write-down in investment in marketable
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- | 367,653 | - | 367,653 | ||||||||||||
Stock based compensation
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66,410 | 65,746 | 154,591 | 243,366 | ||||||||||||
Adjusted EBITDA
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$ | 91,509 | $ | (740,954 | ) | $ | (122,167 | ) | $ | (1,306,248 | ) |
For The Three Months Ended
September 30,
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For The Nine months Ended
September 30,
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|||||||||||||||
2010
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2009
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2010
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2009
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Revenues, net:
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||||||||||||||||
Product
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$
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1,817,391
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$
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1,445,888
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$
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5,354,128
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$
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5,462,955
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||||||||
Recurring
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1,287,275
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991,130
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3,517,979
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2,982,384
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||||||||||||
Total Revenue
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3,104,666
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2,437,018
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8,872,107
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8,445,339
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||||||||||||
Cost of Sales:
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||||||||||||||||
Product
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1,195,448
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833,926
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3,107,355
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2,942,748
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||||||||||||
Recurring
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349,203
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348,321
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981,110
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957,668
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||||||||||||
Total Cost of Sales
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1,544,651
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1,182,247
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4,088,465
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3,900,416
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||||||||||||
Gross Profit
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1,560,015
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1,254,771
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4,783,642
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4,544,923
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||||||||||||
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Operating Expenses:
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Research and Development
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251,259
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263,672
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781,159
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761,950
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||||||||||||
Selling, General and Administrative
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1,283,657
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1,797,799
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4,279,241
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5,332,587
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||||||||||||
Depreciation and Amortization
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55,074
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86,223
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213,274
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266,740
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||||||||||||
Total Operating Expense
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1,589,990
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2,147,694
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5,273,674
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6,361,277
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||||||||||||
Income (Loss) from Operations
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(29,975
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)
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(892,923
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)
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(490,032
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)
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(1,816,354
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)
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||||||||
Other Income (Expenses):
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Financing Expense, net
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(147,159
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)
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(228,730
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)
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(471,452
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)
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(710,266
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)
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||||||||
(Loss) Gain on Derivative Liability
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(2,001,698
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)
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(650,338
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)
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(1,304,905
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)
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788,936
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|||||||||
Impairment of Investment in Marketable Securities
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(367,653
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)
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(367,653
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)
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(Loss) on Sale of Investment
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-
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-
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-
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(29,371
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)
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|||||||||||
(Loss) on Disposal of Fixed Asset
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(3,524
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)
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-
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(104,268
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)
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-
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||||||||||
Total Other Income (Expense)
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(2,152,381
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)
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(1,246,721
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)
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(1,880,625
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)
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(318,354
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)
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Loss Before Provision for Income Taxes
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(2,182,356
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)
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(2,139,644
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)
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(2,370,657
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)
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(2,134,708
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)
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||||||||
Provision for Income Taxes
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-
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-
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-
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-
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Income (Loss) from Continuing Operations
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$
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(2,182,356
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)
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$
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(2,139,644
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)
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$
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(2,370,657
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)
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$
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(2,134,708
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)
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Discontinued Operations
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(Loss) from Discontinued Operations
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-
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-
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-
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(635,735
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)
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Gain on Deconsolidation
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-
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-
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-
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6,932,586
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||||||||||||
Net income (loss) attributable to common shareholders before accretion of preferred dividends and discount
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$
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(2,182,356
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)
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$
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(2,139,644
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)
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$
|
(2,370,657
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)
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$
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4,162,143
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|||||
Accretion of preferred dividends and discount
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(80,285
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)
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-
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(158,745
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)
|
-
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||||||||||
Net income (loss) attributable to common shareholders
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$
|
(2,262,641
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)
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$
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(2,139,644
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)
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$
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(2,529,402
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)
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$
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4,162,143
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Net income (loss) per share:
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||||||||||||||||
Loss per share from continuing operations – basic
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$
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(0.02
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)
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$
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(0.02
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)
|
$
|
(0.02
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)
|
$
|
(0.02
|
)
|
||||
Loss per share from continuing operations – diluted
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$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
$
|
(0.02
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)
|
$
|
(0.02
|
)
|
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Income per share from discontinued operations – basic
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$
|
-
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$
|
-
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$
|
-
|
$
|
0.07
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||||||||
Income per share from discontinued operations – diluted
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$
|
-
|
$
|
-
|
$
|
-
|
$
|
0.07
|
||||||||
Net income (loss) per share – basic
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
$
|
0.04
|
|||||
Net income (loss) per share – diluted
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$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
$
|
0.04
|
|||||
Weighted Average Common Shares Outstanding – basic
|
98,947,412
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96,220,386
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97,387,490
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93,787,069
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||||||||||||
Weighted Average Common Shares Outstanding – diluted
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98,947,412
|
96,220,386
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97,387,490
|
93,814,759
|
||||||||||||
Comprehensive Income (Loss):
|
||||||||||||||||
Net Income (Loss)
|
$
|
(2,182,356
|
)
|
$
|
(2,139,644
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)
|
$
|
(2,370,657
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)
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$
|
4,162,143
|
|||||
Unrecognized Gain on Investment
|
-
|
-
|
-
|
32,750
|
||||||||||||
Comprehensive Income (Loss)
|
$
|
(2,182,356
|
)
|
$
|
(2,139,644
|
)
|
$
|
(2,370657
|
)
|
$
|
4,194,893
|