MEDIA CONTACTS:
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Telkonet Investor Relations
414.721.7988
ir@telkonet.com
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Achievement of positive adjusted EBITDA for second and third quarters and dramatic reduction in DSO from 91 days average in 2009 to 49 days average for 2010 providing 46% improvement compared to same period last year
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Dramatic reduction in corporate debt of $1.8 million or 21% in 2010, compared to 2009.
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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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Decrease in Operating Expenses of 29% for 2010 compared to 2009.
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Selling, General and Administrative Expenses were decreased by 20% compared to 2009.
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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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Year Ended
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December 31,
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December 31,
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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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$ | 598,784 | $ | (3,102,306 | ) | $ | (1,771,883 | ) | $ | 1,059,837 | ||||||
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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598,784 | (3,102,306 | ) | (1,771,883 | ) | (5,237,014 | ) | |||||||||
Financing expense, net
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135,719 | 674,236 | 607,674 | 1,384,502 | ||||||||||||
Depreciation and amortization
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70,440 | 81,449 | 283,714 | 348,189 | ||||||||||||
EBITDA attributed to Telkonet segment
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804,943 | (2,346,621 | ) | (880,495 | ) | (3,504,323 | ) | |||||||||
Adjustments:
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Loss on sale of investment
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8,000 | - | 8,000 | 29,371 | ||||||||||||
(Gain) loss on disposal of fixed assets
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- | 103,763 | - | |||||||||||||
(Gain) loss on derivative liability
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(1,284,430 | ) | (11,186 | ) | 20,475 | (777,750 | ) | |||||||||
Impairment write-down in investment in marketable
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- | 367,653 | - | 367,653 | ||||||||||||
Impairment write-down in investment in affiliate
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- | 1,000,000 | - | 1,000,000 | ||||||||||||
Stock based compensation
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99,461 | (8,132 | ) | 254,052 | 235,234 | |||||||||||
Adjusted EBITDA
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$ | (372,026 | ) | $ | (1,365,939 | ) | $ | (494,205 | ) | $ | (2,649,815 | ) |
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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6,632,107
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$
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6,521,906
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Recurring
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4,626,669
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3,996,147
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Total Revenue
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11,258,776
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10,518,053
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Cost of Sales:
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Product
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4,133,533
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3,878,988
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Recurring
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1,285,575
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1,313,108
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Total Cost of Sales
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5,419,108
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5,192,096
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Gross Profit
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5,839,668
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5,325,957
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Operating Expenses:
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Research and Development
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1,010,719
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1,080,148
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Selling, General and Administrative
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5,577,194
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7,130,858
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Impairment of Goodwill and Other Long Lived Assets
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-
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1,000,000
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Depreciation and Amortization
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283,714
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348,189
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Total Operating Expenses
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6,871,627
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9,559,195
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Loss from Operations
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(1,031,959
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)
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(4,233,238
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)
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Other Income (Expenses):
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Financing Expense, net
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(607,674
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)
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(1,384,502
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)
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(Loss) Gain on Derivative Liability
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(20,476
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)
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777,750
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Loss on Sale of Investments
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-
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(29,371
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)
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Impairment of Investment in Marketable Securities
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(8,000
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(367,653
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)
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Gain (Loss) on fixed asset disposal
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(103,763
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)
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-
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Total Other Income (Expenses)
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(739,913
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)
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(1,003,776
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)
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Loss from Continuing Operations Before Provision for Income Tax
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(1,771,872
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)
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(5,237,014
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)
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Provision for Income Tax
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-
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-
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Loss from Continuing Operations
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$
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(1,771,872
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)
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$
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(5,237,014
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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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(635,735
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)
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Gain on Deconsolidation
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-
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6,932,586
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Net Income (Loss) attributable to common stockholders
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$
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(1,771,872
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)
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$
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1,059,837
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Net Income (Loss) per share:
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Loss per share from continuing operations – basic and diluted
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$
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(0.02
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)
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$
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(0.06
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)
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Income (Loss) per share from discontinued operations – basic and diluted
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$
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-
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$
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0.07
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Net Income (Loss) per share – basic
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$
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(0.02
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)
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$
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0.01
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Net Income (Loss per share – diluted
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$
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(0.02
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)
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$
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0.01
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Weighted average common shares outstanding – basic
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98,233,829
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94,486,950
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Weighted average common shares outstanding – diluted
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98,233,829
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102,866,200
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Comprehensive Income (Loss):
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Net Income (Loss)
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$
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(1,771,872
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)
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$
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1,059,837
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Unrealized gain (loss) on investment
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-
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32,750
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Comprehensive Income (Loss)
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$
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(1,771,872
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)
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$
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1,092,587
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