Telkonet ibridge setup

Based on these advanced product features and capabilities, Telkonet has won significant competitive contracts in the utility, military and educational space, including Noresco, NYU and the Cool Control Plus Program.

Forming key partnerships with utility rebate programs has enabled Telkonet to outpace its competition in the commercial occupancy-based energy management market. Using wired and wireless technologies to network-enable in-room energy controls provides greater granularity of control and real-time performance monitoring.

Additionally, network control maximizes energy efficiency and savings. Given our nation's population growth and the exponential increase in the number of power-hungry digital components in our digital economy, additional infrastructure must be built, whether it is Smart or not. The SmartGrid can be the most affordable alternative to building out by building less and saving more energy.

It will clearly require investments that are not typical for utilities. However, these investments will far outweigh the costs as some utilities are already discovering. There is growing agreement among federal and state policymakers, business leaders and other key stakeholders around the concept that a SmartGrid is not only needed but well within reach. Short term, a smarter grid will function more efficiently, delivering the expected level of service cost-effectively while offering considerable societal benefits such as less impact on our environment.

Longer term, the SmartGrid will spur a transformation similar to the impact of the Internet on how we live, work, play and learn. Telkonet is positioned to play a pivotal role in SmartGrid. The development of an industrial PLC product for use within the utility space has introduced a competitive alternative to the local area network LAN options.

By capitalizing on the shortcomings of previously available offerings, Telkonet has gained traction and opened up a new market segment. Telkonet's Series 5 PLC platform includes the following key features:. Multiple physical interfaces, including RS, RS and Ethernet, enabling a wide range of different devices to be networked,.

Granular QOS support over traditional communications,. Ability to withstand extended temperature ranges and harsh outdoor environments,. Stringent security features,. Support for both AC and DC applications,. Significant speed performance with AV chipset, and. Flexible connection technology that avoids interruption of service through inductive coupling.

With strong, established customer and vendor relationships, including Choice Hotels International, Wyndham Hospitality, Destination Hotels and Resorts, and Worldmark by Wyndham formerly Trendwest Resorts , EthoStream has demonstrated the continued strength of its brand through Winning competitive bids such as the corporate rollout of the Red Lion properties, EthoStream has expanded beyond its economy and limited service roots to enter the more lucrative segment of full-service hospitality.

EthoStream Gateway Servers EGS provide industry-leading HSIA technology to the hospitality industry, with advanced features based on in-house product design and development, including the following:. Dual ISP bandwidth aggregation for faster overall speed,. ISP redundancy to eliminate network downtime,. Enhanced Quality of Service QoS , and. Real-time meeting room scheduling. The Support Center has continued its growth over the last year. These corporate strengths, along with established relationships with some of the largest hospitality franchises, continue to set EthoStream apart.

Looking ahead, EthoStream's core growth will come from two key areas:. New customer growth within the full-service hospitality market and through additional preferred vendor agreements with franchisors, and. Ongoing sales to current customers through integration of additional in-room technologies such as lighting, minibars, media centers and energy management products. Industry Outlook. Department of Commerce, has been chartered under Energy Independence and Security Act EISA to identify and evaluate existing standards, measurement methods, technologies and other support toward SmartGrid adoption.

The agency will also be preparing a report to Congress recommending areas where standards need to be developed. These types of initiatives reinforce the need for Telkonet's platform and technology.

Telkonet is focusing on the strength of its technology to target key initiatives within the SmartGrid environment. Through key relationships with original equipment manufacturers OEMs and Utilities, Telkonet has been recognized as a leading technology provider. These industry-leading groups are defining the standards for tomorrow's Smart Grid platforms. Comprised of U. Federal Energy Regulatory Commission and governmental authorities in Canada, the technologies tested and approved by these groups create the foundation for utility decisions.

Telkonet has greatly increased its market potential by evolving its energy management products with two significant developments:. Although this technology provides Telkonet with significant competitive advantage in the occupancy-based energy efficiency space, competing technologies are available.

These technologies would include the less automated standard available within energy management of static set point temperature, predictive based methodologies and standard building automation systems utilizing sensor and zone time-based architectures.

In addition to its competitive benefits over these methodologies, Telkonet has added functionality and techniques of these methods to its offering as well to provide customers with more broad capabilities. Telkonet's Series 5 product line has targeted smart grid communications with proprietary technological advancements.

Telkonet's strengths in the grid communication space include fast implementation, existing customer relationships and proven performance. Our challenges include the introduction of a new technology into a competitive environment, entry into a fledgling market, the significant sales cycle involved in a highly regulated environment and the consumer education required and cultivating relationships with manufacturers and VARs to assist Telkonet in its distribution strategy.

Management has focused its sales and marketing efforts primarily on opportunities within the clean technology space in the commercial and industrial, government, education, healthcare and hospitality sectors, concentrating on markets with public funding from government and utilities in the form of grants, loans, tax breaks, incentives and rebates.

Telkonet devotes significant resources to establishing relationships with both value-added resellers in these markets as well as third-party manufacturers, Utilities and energy service companies ESCOs. These relationships enable Telkonet to reach a larger audience, as well as to offer increased value through complete packaged solutions.

These sales and distribution channels continue to drive Telkonet's clean technology growth, generating greater product recognition. Raw Materials. Telkonet has not experienced any significant or unusual problems in the purchase of raw materials or commodities.

While Telkonet is dependent, in certain situations, on a limited number of vendors to provide certain raw materials and components, it has not experienced significant problems or issues purchasing any essential materials, parts or components. In addition, Superior Manufacturing Services, a U.

Telkonet is neither limited to, nor reliant upon, a single or narrowly segmented consumer base from which it derives its revenues. Presently, Telkonet is not dependent on any particular customer under contract. Intellectual Property. Telkonet has applied for patents that cover the unique technology integrated into the Telkonet iWire System TM and Series 5 product suite.

Telkonet also continues to identify, design and develop enhancements to its core technologies that will provide additional functionality, diversification of application and desirability for current and future users of the Telkonet iWire System TM and Series 5 product suite. Following is a description of the material patents held by the Company:. In December , Telkonet received approval from the U. This invention covers the utilization of an electrical power grid, for a concentration of electrical power consumers, and use of existing consumer power lines to provide for a worldwide voice and data telephony exchange.

The patent covers the method and apparatus for modifying a three-phase power distribution network in a building in order to provide data communications by using a PLC signal to an electrical central location point of the power distribution system.

The patented technology incorporates a safety disconnect circuit breaker into the Telkonet Coupler, creating a single streamlined unit. The Telkonet Integrated Coupler Breaker patent covers the unique technique used for interfacing and coupling its communication devices onto the three-phase electrical systems that are predominant in commercial buildings.

In addition to the foregoing, Telkonet currently has multiple patent applications under examination, and intends to file additional patent applications covering a wide range of technologies, including that of improved network topologies and techniques for imposing LANs over existing wired infrastructure.

Telkonet has also filed multiple Patent Cooperation Treaty PCT patent applications, which have been used to file national patent applications in foreign jurisdictions including the European Union, Japan, China, Russia, India and others.

Government Regulation. FCC rules permit the operation of unlicensed digital devices that radiate radio frequency RF emissions if the manufacturer complies with certain equipment authorization procedures, technical requirements, marketing restrictions and product labeling requirements. FCC rules permit the operation of unlicensed digital devices that radiate radio frequency emissions if the manufacturer complies with certain equipment authorization procedures, technical requirements, marketing restrictions and product labeling requirements.

No further testing of this device is required and the device may be manufactured and marketed for commercial use. The U. In addition to the foregoing, Canadian provincial authorities use FIPS compliant products for the protection of sensitive designate information. Research and Development. Long Term Investments. Amperion, Inc. Amperion is engaged in the business of developing networking hardware and software that enables the delivery of high-speed broadband data over medium-voltage power lines.

Telkonet accounted for this investment under the cost method, as the Company does not have the ability to exercise significant influence over operating and financial policies of Amperion.

It is the policy of Telkonet to regularly review the assumptions underlying the operating performance and cash flow forecasts in assessing the carrying values of the investment. Telkonet identifies and records impairment losses on investments when events and circumstances indicate that such decline in fair value is other than temporary. Such indicators include, but are not limited to, limited capital resources, limited prospects of receiving additional financing, and limited prospects for liquidity of the related securities.

Telkonet determined that its investment in Amperion was impaired based upon forecasted discounted cash flow. BPL Global, Ltd. The Company accounted for this investment under the cost method, as the Company did not have the ability to exercise significant influence over operating and financial policies of BPL Global.

The Company reviewed the assumptions underlying the operating performance and cash flow forecasts in assessing the carrying values of the investment. Geeks on Call America, Inc.

On October 19, , the Company completed the acquisition of approximately The number of shares was subject to adjustment on the date the Company filed a registration statement for the shares issued in this transaction, which occurred on April 25, The Company accounted for this investment under the cost method, as the Company does not have the ability to exercise significant influence over operating and financial policies of GOCA.

On April 30, , Telkonet issued an additional 3,, shares of its common stock to the sellers of GOCA to satisfy the adjustment provision. The Company has determined that its investment in Geeks Holdings is impaired because it believes that the fair market value of Geeks Holdings has permanently declined.

Multiband Corporation. The Company classifies this security as available for sale, and it is carried at fair market value. The NuVisions TV offering currently includes over channels of video and audio programming, with a large high definition more than 40 channels and ethnic offering over channels from 17 countries available in the market today.

MSTI delivers its broadband based services using terrestrial fiber optic links and in February , began deployment in New York City of a proprietary wireless gigabit network that connects properties served in a redundant gigabit ring - a virtual fiber optic network in the air. Wi-Fi Network. IPTV is a method of distributing television content over IP that enables a more user-defined, on-demand and interactive experience than traditional cable or satellite television. IPTV service delivers traditional cable TV programming and enables subscribers to surf the Internet, receive on-demand content, and perform a host of Internet-based functions via their TV sets.

The home entertainment and video programming industry is competitive, and MSTI expects competition to intensify in the future. MSTI faces its most significant competition from the franchised cable operators. Hardwired Franchised Cable System. Cable companies currently dominate the market in terms of subscriber penetration, the number of programming services available, audience ratings and expenditures on programming.

However, satellite services are gaining market share which MSTI believes will provide it with the opportunity to acquire and consolidate a subscriber base by providing a high quality signal at a comparable or reduced price to many cable operators' current service.

Other Operators. Off-Air Broadcasters. A majority of U. Off-air broadcasters send signals through the air, which are received by traditional television antennas.

Signals are accessible to anyone with an antenna and programming is funded by advertisers. Audio and video quality is limited and service can be adversely affected by weather or by buildings blocking a signal. Traditional Telephone Companies. Although their subscriber growth is currently smaller than franchise cable companies, these traditional phone companies are developing video offerings such as Verizon's FIOS product. In the future, video offerings from traditional phone companies may become a significant competitor in the MDU market.

MSTI believes that its complementary products and services allows for future growth and as such are designed and integrated with scalability in mind. Governmental Regulation. Federal Regulation. Because its systems are subject to minimal federal regulation, MSTI has greater pricing freedom and is not required to serve any customer whom it does not choose to serve, and management believes that MSTI has significantly more competitive flexibility than do the franchised cable systems.

Conversely, the legislation also provides for deregulation of traditional hardwire cable in a given market where effective competition is shown to exist.

Rates charged by private cable operators, typically already lower than traditional franchise cable rates, are not subject to regulation under the Cable Act. The Act contains provisions intended to increase competition in the telephone, radio, broadcast television, and hardwire and wireless cable television businesses.

This legislation has altered, and management believes will continue to alter, federal, state, and local laws and regulations affecting the communications industry, including certain of the services MSTI provides.

Under the federal copyright laws, permission from the copyright holder generally must be secured before a video program may be retransmitted. In order to do so, a cable system must secure a compulsory copyright license.

Such a license may be obtained upon the filing of certain reports with and the payment of certain licensing fees to the U.

Copyright Office. Private cable operators, such as MSTI, may rely on the cable compulsory license with respect to the secondary transmission of broadcast programming.

Although there can be no assurances that MSTI will be able to obtain requisite broadcaster consents, management believes, in most cases, MSTI will be able to do so for little or no additional cost.

SHVIA generally seeks to place satellite operators on an equal footing with cable television operators in regards to the availability of television broadcast programming. SHVIA amends the Copyright Act and other applicable laws and regulations in order to clarify the terms and conditions under which a DBS operator may retransmit local and distant broadcast television stations to subscribers.

The law was intended to promote the ability of satellite services to compete with cable television systems and to resolve disputes that had arisen between broadcasters and satellite carriers regarding the delivery of broadcast television station programming to satellite service subscribers. As a result of SHVIA, television stations are generally entitled to seek carriage on any DBS operator's system providing local service in their respective markets.

SHVIA creates a statutory copyright license applicable to the retransmission of broadcast television stations to DBS subscribers located in their markets. MSTI is not directly subject to rate regulation or certification requirements by the FCC or state public utility commissions because its equipment installation and sales agent activities do not constitute the provision of common carrier or cable television services.

As a private cable operator, MSTI is not subject to regulation as a DBS provider, but primarily relies upon its third-party programming aggregators to procure all necessary re-transmission consents and other programming rights under the Communications Act and the Copyright Act. State and Local Cable System Regulation. MSTI does not anticipate that its deployment of video programming services will be subject to state or local franchise laws primarily due to the fact that its facilities do not use or traverse public rights-of-way.

State Mandatory Access Laws. A number of states have enacted mandatory access laws that generally require, in exchange for just compensation, the owners of rental apartments and, in some instances, the owners of condominiums to allow the local franchise cable television operator to have access to the property to install its equipment and provide cable service to residents of the MDU. Such state mandatory access laws effectively eliminate the ability of the property owner to enter into an exclusive right of entry with a provider of cable or other broadcast services.

In addition, some states have anti-compensation statutes forbidding an owner of an MDU from accepting compensation from whomever the owner permits to provide cable or other broadcast services to the property. These statutes have been and are being challenged on constitutional grounds in various states. These state access laws may provide both benefits and detriments to our business plan should we expand significantly in any of these states.

Preferential Access Right. Management believes that these preferential rights of entry are generally enforceable under applicable law. However, current trends at the state and federal level suggest that the future enforceability of these provisions may be uncertain.

In , the FCC issued an order prohibiting telecommunications service providers from negotiating exclusive contracts with owners of commercial MDU properties.

The FCC recently extended this prior action to prohibit carriers from entering into contracts with residential MDU owners that grant carriers exclusive access for the provision of telecommunications services to residents in those MDUs.

The ban applies retrospectively to existing contracts as well as to any future agreements. The ban on exclusive video agreements does not currently apply to non-franchised entities such as MSTI however the FCC is currently considering extending the ban to such entities.

ISPs, including Internet access providers, are largely unregulated by the FCC or state public utility commissions at this time apart from federal, state and local laws and regulations applicable to business in general. However, there can be no assurance that this business will not become subject to regulatory restraints. Also, although the FCC has rejected proposals to impose additional costs and regulations on ISPs to the extent they use local exchange telephone network facilities, such change may affect demand for Internet related services.

Regulation of the VoIP Business. IP-based voice services are currently exempt from the reporting and pricing restrictions placed on common carriers by the FCC. However, there are several state and federal regulatory proceedings further defining what specific service offerings qualify for this exemption.

Due to the growing acceptance and deployment of VoIP services, the FCC and a number of state public service commissions are conducting regulatory proceedings that could affect the regulatory duties and rights of entities that provide IP-based voice applications. There is regulatory uncertainty as to the imposition of traditional retail, common carrier regulation on VoIP products and services.

MSTI maintains an investment in Interactivewifi. MSTI accounted for this investment under the cost method, as MSTI does not have the ability to exercise significant influence over operating and financial policies of Interactivewifi. Telkonet reviewed the assumptions underlying the operating performance and cash flow forecasts in assessing the carrying values of the investment. The carrying value of the investment in Interactivewifi.

Other information. As of March 15, , the Company had full time employees comprised of full time employees of Telkonet and 22 employees of MSTI. The Company intends to hire additional personnel to meet future operating requirements. The Company anticipates that it may need to hire additional staff in the areas of customer support, field services, engineering, sales and marketing, and administration. Environmental Matters. The Company does not anticipate any material effect on its capital expenditures, earnings or competitive position due to compliance with government regulations involving environmental matters.

Financial Information About Geographic Areas. International sales as a percentage of total revenue represented 0. Our international sales are concentrated in Canada, Latin America and Western Europe and we continue to expand into other markets worldwide.

The table below sets forth our net revenue by major geographic region. Year Ended December 31,. United States. ITEM 1A. These risks include, but are not limited to, the principal factors listed below and the other matters set forth in this annual report on Form K. You should carefully consider all of these risks.

Our independent auditors have expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing. In their report dated April 1, , our independent auditors stated that our financial statements for the year ended December 31, were prepared assuming that we would continue as a going concern, and that they have substantial doubt about our ability to continue as a going concern.

We continue to experience net operating losses. If we are not successful in raising sufficient additional capital, we may not be able to continue as a going concern and our stockholders may lose their entire investment. The Company has a history of operating losses and an accumulated deficit and expects to continue to incur losses for the foreseeable future.

Additional capital may be required in order to provide working capital requirements for the next twelve months. The Company is currently unprofitable and may never become profitable. Since inception, the Company has funded its research and development activities primarily from private placements of equity and debt securities, a bank loan and short term loans from certain of its executive officers. As a result of its substantial research and development expenditures and limited product revenues, the Company has incurred substantial net losses.

In the event such foreclosure occurs, these assets could be liquidated by the lenders. Notwithstanding that MSTI has agreed with its lenders to pursue an orderly sale of its material assets, the Company agreed pursuant to the December 6, MST purchase agreement, as further clarified by a May letter agreement, to fund MSTI's business plan.

The May letter agreement confirms that the Company has funded a majority of the business plan and provides for the final amount of the funding obligation to be mutually agreed upon by the Company and Mr. The obligation to fund MSTI will deplete the Company's available cash and could create the need to raise additional capital.

There can be no assurance that, if additional cash is needed, the Company will be able to consummate a capital raising transaction on favorable terms or at all. Further issuances of equity securities may be dilutive to current stockholders. This capital funding could involve one or more types of equity securities, including convertible debt, common or convertible preferred stock and warrants to acquire common or preferred stock.

The industry within which we operate is intensely competitive and rapidly evolving. The Company will also need to respond effectively to new product announcements by its competitors by quickly introducing competitive products.

Delays in product development and introduction could result in:. The Company is not large enough to negotiate cable television programming contracts as favorable as some of our larger competitors. Programming costs are generally directly related to the number of subscribers to which the programming is provided, with discounts available to large traditional cable operators and direct broadcast satellite DBS providers based on their high subscriber levels.

As a result, larger cable and DBS systems generally pay lower per subscriber programming costs. The Company has attempted to obtain volume discounts from our suppliers. Despite these efforts, we believe that our per subscriber programming costs are significantly higher than large cable operators and DBS providers with which we compete in some of our markets.

This may put us at a competitive disadvantage in terms of maintaining our operating results while remaining competitive with prices offered by these providers. In addition, as programming agreements come up for renewal, the Company cannot assure you that we will be able to renew these agreements on comparable or favorable terms. To the extent that we are unable to reach agreement with a programmer on terms that we believe are reasonable, we may be forced to remove programming from our line-up, which could result in a loss of customers.

Programming costs have risen in past years and are expected to continue to rise, which may adversely affect our financial results. The cost of acquiring programming is a significant portion of the operating costs for our cable television business. These costs have increased each year and we expect them to continue to increase, especially the costs associated with sports programming.

Many of our programming contracts cover multiple years and provide for future increases in the fees we must pay. Historically, we have absorbed increased programming costs in large part through increased prices to our customers. However, competitive and other marketplace factors may not permit us to continue to pass these costs through to customers. In order to minimize the negative impact that increased programming costs may have on our margins, we may pursue a variety of strategies, including offering some programming at premium prices or moving some programming from our analog service to our premium digital services.

Despite our efforts to manage programming expenses and pricing, the rising cost of programming may adversely affect our results of operations. No further testing of these devices is required and the devices may be manufactured and marketed for commercial and residential use. Additional devices designed by the Company for commercial and residential use will be subject to the FCC rules for unlicensed digital devices. The market for our products and services is highly competitive.

Some of our competitors have longer operating histories, greater name recognition and substantially greater financial, technical, sales, marketing and other resources. These competitors may, among other things, undertake more extensive marketing campaigns, adopt more aggressive pricing policies, obtain more favorable pricing from suppliers and manufacturers and exert more influence on the sales channel than the Company can.

These competitors may have more advanced technology, more extensive distribution channels, stronger brand names, bigger promotional budgets and larger customer bases than the Company does.

These companies could devote more capital resources to develop, manufacture and market competing products than the Company could. The Company may not be able to obtain patents, which could have a material adverse effect on its business.

The Company currently has several patents pending. The Company also intends to file additional patent applications that it deems to be economically beneficial. If the Company is not successful in obtaining patents, it will have limited protection against those who might copy its technology. There can be no assurance that the measures the Company has taken to protect its intellectual property, including those integrated to its Telkonet iWire System TM product suite, will prevent misappropriation or circumvention.

Moreover, there can be no assurance that any patents issued to, or licensed by, the Company will not be infringed upon or circumvented by others. The Company also relies to a lesser extent on unpatented proprietary technology, and no assurance can be given that others will not independently develop substantially equivalent proprietary information, techniques or processes or that the Company can meaningfully protect its rights to such unpatented proprietary technology.

The Company depends on a small team of senior management, and it may have difficulty attracting and retaining additional personnel. If the Company loses the services of any member of its senior management team, its overall operations could be materially and adversely affected. Competition for these individuals is intense.

The Company cannot ensure that it will be able to successfully attract, integrate or retain sufficiently qualified personnel when the need arises. Any acquisitions we make could result in difficulties in successfully managing our business and consequently harm our financial condition.

We may seek to expand by acquiring competing businesses in our current or other geographic markets, including as a means to acquire spectrum. We cannot accurately predict the timing, size and success of our acquisition efforts and the associated capital commitments that might be required. We expect to face competition for acquisition candidates, which may limit the number of acquisition opportunities available to us and may lead to higher acquisition prices.

There can be no assurance that we will be able to identify, acquire or profitably manage additional businesses or successfully integrate acquired businesses, if any, without substantial costs, delays or other operational or financial difficulties.

In addition, acquisitions involve a number of other risks, including:. Client dissatisfaction or performance problems at a single acquired business could negatively affect our reputation. The inability to acquire businesses on reasonable terms or successfully integrate and manage acquired companies, or the occurrence of performance problems at acquired companies, could result in dilution, unfavorable accounting treatment or one-time charges and difficulties in successfully managing our business.

Our inability to obtain capital, use internally generated cash or debt, or use shares of our common stock to finance future acquisitions could impair the growth and expansion of our business.

Reliance on internally generated cash or debt to finance our operations or complete acquisitions could substantially limit our operational and financial flexibility. The extent to which we will be able or willing to use shares of our common stock to consummate acquisitions will depend on the market value of our common stock which will vary, and our liquidity.

Using shares of our common stock for this purpose also may result in significant dilution to our then existing stockholders. To the extent that we are unable to use our common stock to make future acquisitions, our ability to grow through acquisitions may be limited by the extent to which we are able to raise capital through debt or additional equity financings. No assurance can be given that we will be able to obtain the necessary capital to finance any acquisitions or our other cash needs.

If we are unable to obtain additional capital on acceptable terms, we may be required to reduce the scope of any expansion or redirect resources committed to internal purposes. In addition to requiring funding for acquisitions, we may need additional funds to implement our internal growth and operating strategies or to finance other aspects of our operations.

Our failure to: i obtain additional capital on acceptable terms; ii use internally generated cash or debt to complete acquisitions because it significantly limits our operational or financial flexibility; or iii use shares of our common stock to make future acquisitions, may hinder our ability to actively pursue our acquisition program.

We rely on a limited number of third party suppliers. If these companies fail to perform or experience delays, shortages, or increased demand for their products or services, we may face shortages, increased costs, and may be required to suspend deployment of our products and services. We depend on a limited number of third party suppliers to provide the components and the equipment required to deliver our solutions. If these providers fail to perform their obligations under our agreements with them or we are unable to renew these agreements, we may be forced to suspend the sale and deployment of our products and services and enrollment of new customers, which would have an adverse effect on our business, prospects, financial condition and operating results.

Our management and operational systems might be inadequate to handle our potential growth. We may experience growth that could place a significant strain upon our management and operational systems and resources. Failure to manage our growth effectively could have a material adverse effect upon our business, results of operations and financial condition.

Our ability to compete effectively and to manage future growth will require us to continue to improve our operational systems, organization and financial and management controls, reporting systems and procedures. We may fail to make these improvements effectively. Additionally, our efforts to make these improvements may divert the focus of our personnel. We must integrate our key executives into a cohesive management team to expand our business.

If new hires perform poorly, or if we are unsuccessful in hiring, training and integrating these new employees, or if we are not successful in retaining our existing employees, our business may be harmed.

To manage the growth we will need to increase our operational and financial systems, procedures and controls. Our current and planned personnel, systems, procedures and controls may not be adequate to support our future operations.

We may not be able to effectively manage such growth, and failure to do so could have a material adverse effect on our business, financial condition and results of operations. We are exposed to risks relating to evaluations of controls required by section of the Sarbanes-Oxley Act of We are required to comply with Section of the Sarbanes-Oxley Act of As of December 31, , we have concluded that there are material weaknesses in our internal control over financial reporting.

A material weakness is a control deficiency, or a combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements would not be prevented or detected.

Until this deficiency in our internal control over financial reporting is remediated, there is reasonable possibility that a material misstatement to our annual or interim consolidated financial statements could occur and not be prevented or detected by our internal controls in a timely manner. We may be affected if the United States participates in wars or military or other action or by international terrorism.

Involvement in a war or other military action or acts of terrorism may cause significant disruption to commerce throughout the world. To the extent that such disruptions result in i delays or cancellations of customer orders, ii a general decrease in consumer spending on information technology, iii our inability to effectively market and distribute our services or products or iv our inability to access capital markets, our business and results of operations could be materially and adversely affected.

We are unable to predict whether the involvement in a war or other military action will result in any long-term commercial disruptions or if such involvement or responses will have any long-term material adverse effect on our business, results of operations, or financial condition.

A significant portion of our total assets consists of goodwill, which is subject to a periodic impairment analysis and a significant impairment determination in any future period could have an adverse effect on our results of operations even without a significant loss of revenue or increase in cash expenses attributable to such period.

We evaluate this goodwill for impairment based on the fair value of the operating business units to which this goodwill relates at least once a year. This estimated fair value could change if we are unable to achieve operating results at the levels that have been forecasted, the market valuation of those business units decreases based on transactions involving similar companies, or there is a permanent, negative change in the market demand for the services offered by the business units.

These changes could result in an impairment of the existing goodwill balance that could require a material non-cash charge to our results of operations.

At December 31, , the Company performed an impairment test on the goodwill and intangibles acquired, it was determined that there were no changes in the carrying value of the intangibles acquired.

The Company's indebtedness and restrictive debt covenants limit the Company's financing options and liquidity position, which could limit the Company's ability to grow our business. The terms of the Company's outstanding debentures put significant restrictions on the Company's ability to:. These significant restrictions could have negative consequences, such as:.

ITEM 1B. ITEM 2. The Company presently leases 16, square feet of commercial office space in Germantown, Maryland for its corporate headquarters. The power and intelligence behind the EcoCommander make it an ideal fit for a number of applications, including residential and office complex space. New opportunities for efficiency in HVAC are constantly uncovered with the wide array of support the EcoCommander provides. To learn more about our automation platform and devices or to get an energy savings estimate, please contact our dedicated sales team today.

Skip to content Search for: Search. EcoCommander 5. End-to-end quality of service underpins Telkonet's technology innovation, with comprehensive technical customer support. The Telkonet Advantage Telkonet leads the hospitality industry in providing innovative, standards-compliant HSIA customer solutions and support. Our proactive, responsive, knowledgeable customer support ensures guest satisfaction and retention.

Telkonet, Inc. The EthoStream Gateway Server EGS product line of gateway devices, which are developed in-house, deliver wired or wireless high-speed Internet access, integrating easily with any combination of WAN connections. The EGS products range from a cost-effective gateway for limited use applications to a feature-rich, dual-WAN, scalable gateway for full-service properties.

NTSE enables central control without needing expensive back-haul wiring. Its key monitoring and analysis features ensure optimum energy savings, giving property owners the tools to identify and implement energy savings, providing total visibility and detailed data about a property's HVAC system and its energy consumption, together with real-time, instant remote management capabilities.

Low cost — Significantly less expensive than rewiring a building Quick installation — Completed from hours to days, without construction or disruption Secure — Data is encrypted and secure from outside intrusion Hybrid — Delivers wired, wireless or a hybrid solution Reliable — Patented PLC technology for continuous network connectivity Scalable — Add users by adding more Telkonet iBridge units Convenient — Network access at every electrical outlet in every room Flexible — Supports any device or application using Internet Protocol Robust — Remote monitoring and management Compliant — FCC Part 15, UL Listed, and CE approval Plug-and-play — Easy to connect to the Internet without drivers or software.

To access the Internet, a user simply connects their laptop into a Telkonet iBridge unit. Setting unprecedented performance levels for security, speed, QoS and capacity, the Telkonet Series 5 Mbps system takes PLC to a new level as a viable networking option for high performance, critical applications, including digital video surveillance, implementations in the utility substation environment, and harsh outdoor commercial installations.

Telkonet Series 5 delivers a range of significant performance advances, including the following. Series 5 Comparison Matrix. The EthoStream Gateway Server EGS product line of gateway devices deliver wired or wireless high-speed Internet access and a hybrid solution, integrating quickly and easily with any combination of WAN connections, including T1, DSL, cable modem, fiber and wireless connections. Our comprehensive range of turnkey, standards-compliant gateways meet the requirements of all major hospitality franchises and support a variety of applications, such as VoIP, printing from rooms, surveillance, and point-of-sale terminals.

We provide a complete line of related components, including wireless access points and bridges, Power-over-Ethernet devices, Ethernet switches, DSL equipment and digital video recorder DVR equipment, helping you to integrate all of the necessary products into a comprehensive solution. EthoStream leads the hospitality industry in providing innovative, standards-compliant customer solutions and support.

The EthoStream Gateway Server line of gateway devices provides a simple all-in-one solution for Internet access within a commercial public-access network, while creating a productive work environment and end-user satisfaction. Chairman of the Board Warren V. Musser has taken more than 50 companies public during his distinguished and successful career as an entrepreneur.

Musser's distinguished affiliations also included: director of CompuCom Systems, Inc. Tienor co-founded and grew the HSIA vendor to become one of the largest high-speed Internet providers to the hospitality industry in the nation.

Prior to EthoStream, in , Mr. Tienor was co-founder of a Milwaukee-based IT consulting firm. Leimbach joined Telkonet in January , and was appointed as vice president of finance in , and then CFO in December Prior to Telkonet, from to , he was the financial controller at UltraBridge, an applications solution provider, headquartered in Maryland. Leimbach joined the company at the start-up stage, tasked with building up the financial organization. From to , Mr. Leimbach was corporate accounting manager at Snyder Communications, Inc.

Rick was involved with consolidating the group's extensive operations and working with the SEC. Leimbach held various positions within public accounting firms, including the Reznick Group and Wolpoff and Company in Maryland from to He holds a degree in Accounting from Towson University, Maryland. From December to June , Mr. Sobieski co-founded and grew the HSIA vendor to become one of the largest high-speed Internet providers to the hospitality industry in the nation.

Sobieski was cofounder of Interactive SolutionZ, a Milwaukee-based IT consulting firm, and from this gained experience in the telecommunications and Insurance industries.