Telkonet, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

5. INVENTORY

5. INVENTORY

12 Months Ended

Dec. 31, 2012

Components of inventories as of December 31, 2012 and 2011 are as follows:

	2012			2011
Merchandise purchased for resale	$	768,812		$	387,210
Reserve for obsolescence		(113,900	)		(65,000	)
Inventory, net	$	654,912		$	322,210

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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