Telkonet Inc (fka TKO)

[lakingsphan0427]

Telkonet Reports Third-Quarter 2007 Results
Company Reports 25% Sequential Increase in Revenues for Q3:07

TKO 1.53, 0.00, 0.0%) , the leading technology solutions provider for broadband networking, end-to-end service support and energy management, announced results for its third quarter of 2007 after the market close on Friday, November 9th. Revenues for the quarter were $4.6 million up 25% sequentially from the $3.7 million reported in the previous quarter and up over 300% compared to the third quarter of 2006. Gross margins during the third quarter rose significantly to approximately 27% compared to approximately 18% during the second quarter. Net loss for the quarter was ($0.07) per share compared to a loss of ($0.20) for the third quarter of 2006.
Ron Pickett, chief executive officer of Telkonet, commented, "During the third quarter we continued to experience strong revenue growth from our energy management, hospitality and government systems-related businesses, despite not being able to recognize additional revenues for a number of installations that took place during the quarter. Telkonet is currently positioned in some of the most exciting growth segments in today's economy - energy management, high-speed Internet access, the upgrading of government computer networks, and on-site computer and networking maintenance and installation. We believe the Company's position in these markets will allow for revenue growth and a continuing trend toward positive cash flow."
Highlights of the third quarter include:
-- Energy Management - Revenues generated from energy management related products continued to grow at a robust rate during the quarter and now account for approximately 22% of total sales. Telkonet attributes much of this growth to the strategic relationships the company has developed with major energy providers that are seeking to reduce the demand for energy among their customer bases. The company believes both recurring and nonrecurring revenue streams relating to energy management will continue to grow at a strong rate over the coming quarters as the scope of green initiatives continue to expand.
-- Hospitality Sector - The hospitality-related business at Telkonet now accounts for approximately 44% of revenues and is continuing to realize expanding gross margins. Telkonet's hospitality-related business now serves more than 2,200 properties worldwide and has become the second largest provider of high-speed Internet access to this industry. Telkonet believes this business sector will continue to expand at a rapid rate as high-speed Internet access becomes a basic requirement for both business and leisure travelers.
-- GEEK-LINK Product - During the third-quarter, Telkonet completed the acquisition of 30% of Geeks on Call, which is also known as 1-800-905-GEEK. In conjunction with this company, Telkonet has branded a "Plug and Play" solution that will allow for easy installation of broadband over power systems in homes and small businesses. During the quarter, training of the approximately 300 franchisees of 1-800-905-GEEK began and has recently been completed. Telkonet started initial shipments of product to this partner during the early part of November.
-- Government Sector - Telkonet experienced robust installations at government sites, with more than 200 sites being installed during the third quarter. Additionally, there were approximately 145 additional sites that received Telkonet equipment and numerous other sites that were installed with Telkonet equipment during the quarter that did not meet revenue recognition criteria and will likely be recognized as revenue in the fourth quarter. Additionally, the company's government systems division has now also installed Telkonet products at eight U.S. airports under an initiative with a federal government agency and is currently in the final approval process to further expand the program. Telkonet expects a continued rollout of its government systems-related programs over the coming quarters.
-- 200 Mbps Product - The majority of product development relating of the company's next-generation 200-Mbps product was completed during the third quarter. As a result, Telkonet is expecting to begin introduction of this state-of-the-art broadband over power product beginning in November of 2007.
-- Telkonet Smart Energy (TSE) Beta - One of Telkonet's newest and most revolutionary product upgrades, the networked energy management product line of Telkonet Smart Energy, entered its beta test phase with the installation in an existing customer location during early November after the majority of product development was completed during the third quarter. TSE provides enormous benefits to customers through both increased ROI on product installation as well as increased manageability and reporting of system performance.
-- Completion of Company Reorganization - During the third quarter, Telkonet completed the process moving installation and support functions in house and consolidated the locations performing these functions. This effort has allowed Telkonet to significantly reduce costs. The company has also completed the process of facilitating further improvements to its manufacturing process. These re-organizational measures have allowed the company to project savings of approximately $2.1 million in labor costs for 2008.
About Telkonet
Telkonet specializes in advanced integrated solutions for broadband data networking and energy management, including its highly successful in-building powerline communications (PLC) technology. Headquartered in Germantown, Maryland, USA, Telkonet has over 140 employees and serves thousands of customers worldwide.
The company's unique broadband networking solutions currently support more than a million network users per month, with its energy management systems optimizing energy consumption in over 60,000 rooms. Telkonet's technology innovation is underpinned by the highest level of end-to-end quality of service, with comprehensive technical customer support. Its systems deliver wide-ranging functionality, from wired and wireless high-speed Internet access to energy management, IP surveillance and local area networking. Telkonet's platforms are widely deployed on the global stage - in single buildings and ships, in multi-building complexes, hospitality venues and multi-dwelling units, and at government, education and defense locations.
Telkonet's innovations include the revolutionary Telkonet iWire System(TM), which converts a site's existing internal electrical infrastructure into an IP network backbone - quickly, cost-effectively and without disruption. The portfolio also includes the integrated EthoStream product suite, providing a comprehensive and advanced technology management platform for the hospitality industry, differentiated by outstanding remote management tools and a dedicated customer support facility. Telkonet SmartEnergy completes the line-up, delivering typical bottom line savings of 30% by controlling in-room energy consumption according to occupancy. For more information, please visit www.telkonet.com.
Statements included in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks and uncertainties such as competitive factors, technological development, market demand and the Company's ability to obtain new contracts and accurately estimate net revenues due to variability in size, scope and duration of projects, and internal issues in the sponsoring client. Further information on potential factors that could affect the Company's financial results, can be found in the Company's Registration Statement and in its Reports on Forms 8-K filed with the Securities and Exchange Commission (SEC).
SOURCE: Telkonet, Inc.
Telkonet
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