Telkonet Reports Third Quarter 2022 Financial Results

Rhea-AI Summary

Telkonet (TKOI) has launched its new occupancy-based Energy Management Solutions in Europe, aiming to reduce energy costs by 20-40%. The company reported a revenue increase of approximately 33% for the nine months ended September 30, 2022, totaling $6.11 million. Product revenue rose by 42% to $1.83 million, while recurring revenue increased by 15%. However, net losses were recorded at $0.70 million for the latest quarter, compared to a net income of $0.02 million last year, primarily due to prior gains on loan forgiveness.

Positive

• Revenue up 33% to $6.11 million for nine months ended September 30, 2022.
• Product revenue increased 42% to $1.83 million in the last quarter.
• Recurring revenue rose by 15% compared to the prior year.

Negative

• Net losses of $0.70 million for the three months ended September 30, 2022.
• Previous year's net income of $0.02 million contrasts with current losses.

WAUKESHA, WI / ACCESSWIRE / November 18, 2022 / Telkonet, Inc. (OTCQB:TKOI), (the "Company" or "Telkonet"), IoT innovator and a listed U.S. company based in Wisconsin, lands in Europe and launches its new occupancy-based Energy Management Solutions (EMS) in the European market. The Company anticipates that its EMS will be able to significantly reduce costs of utility bills, in some cases by 20 to 40 percent, and it will strive to be a strategic technology partner for all facilities that are suffering from rising energy costs. Thanks to the ease of installation of the wifi-capable products, Telkonet's solutions can be considered for the European retrofit market.

"For the nine months ended September 30, 2022, we delivered strong growth with revenues up approximately 33%, driven by our Hospitality, Education and MDU verticals and increased order collection of approximately 45% compared to the prior year period. For the three months ended September 30, 2022, recurring revenues increased 15% compared to the prior year period, reversing two consecutive quarters of declining results," stated Piercarlo Gramaglia, Telkonet's Chief Executive Officer. "Despite the global components shortage, we were able to provide service and fulfill customer orders on time, thanks to an improvement in our supply chain management. We are following our turnaround path building business efficiencies, controlling operating expenses and leveraging the organization. In lieu of an array of economic uncertainties, we are pleased with results achieved so far."

Financial Summary:

For the three and nine month periods ended September 30, 2022:

Total Revenue: Increased 39% to $2.02 million and 33% to $6.11 million, respectively, when compared to respective prior year periods.

Product Revenue: Product revenue, which principally arises from the sale and installation of our energy management platform, increased 42% to $1.83 million and 37% to $5.57 million, respectively, when compared to respective prior year periods.

Recurring Revenue: Recurring revenue, which principally arises from call center support services, increased 15% to $0.19 million and increased 1% to $0.54 million, respectively, when compared to respective prior year periods.

Gross Profit: Gross profit increased 4% to $0.61 million during the three months ended September 30, 2022 and increased 23% to $2.96 million during the nine months ended September 30, 2022, when compared to the prior year.

Net Income (Loss): the Company had net losses of $0.70 million and $1.21 million, respectively, compared to a net income of $0.02 million and net loss of $0.06 million, respectively during the prior year periods. The three month decrease in net income is primarily due to a $0.92 million non-cash gain on debt extinguishment in connection with the full forgiveness of the second PPP Loan in the prior year period, partially offset by an increase in gross profit and reduction in operating expenses. The nine month increase in net losses is primarily due to a $1.84 million non-cash gain on debt extinguishment in connection with the full forgiveness of the First and Second PPP Loans in the prior year period, partially offset by an increase in gross profit and reduction in operating expenses.

NON-GAAP Financial Measures

Telkonet will post to the Company's investor relations web site (www.telkonet.com) any reconciliation of differences between non-GAAP financial information, if any, that may be required in connection with issuing the Company's financial results. A reconciliation of net income (loss) to adjusted EBITDA is included in this press release and can be found in the Company's Form 10-Q for the three and nine months ended September 30, 2021.

The Company, as is common in its industry, uses adjusted EBITDA, a non-GAAP measurement gauge to demonstrate earnings and losses exclusive of interest and non-cash events. The Company manages its business based on its cash flows. The Company, in its daily management of its business affairs and analysis of its monthly, quarterly and annual performance, makes its decisions based on cash flows, not on the amortization of assets obtained through historical activities. The Company, in managing its current and future affairs, cannot affect the amortization of the intangible assets to any material degree, and therefore uses adjusted EBITDA as its primary management guide. Adjusted EBITDA is not, and should not be considered, an alternative to net income (loss), operating income (loss), or any other measure for determining operating performance of liquidity, as determined under accounting principles generally accepted in the United States (GAAP). In assessing the overall health of its business for the years ended December 31, 2020 and 2019, the Company excluded items in the following general category described below:

• 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 the previous period.

Adjusted EBITDA and other non-GAAP financial measures should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of the non-GAAP financial measure as an analytical tool. In particular, the non-GAAP financial measure is not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measure reflect the exclusion of items that are recurring and will be reflected in the Company's financial results for the foreseeable future. The Company compensates for these limitations by providing specific information in the reconciliation included in this press release regarding the GAAP amounts excluded from the non-GAAP financial measure.

ABOUT TELKONET

Telkonet Inc. is a U.S. company based in Waukesha, Wisconsin. An IoT innovator focused on smart automation and energy management, Telkonet enables guests (occupants) to intelligently control energy use based on their preferences, reducing energy consumption, and improving facility management capabilities. In 2021, VDA Group S.p.A. became Telkonet's majority shareholder and has been working with Telkonet to facilitate Telkonet's access international markets. VDA Group S.p.A. is an Italian corporation of 40 years of experience in GRMS for the hospitality market headquartered in Italy, with sales companies in the United Kingdom, Middle East, and Asia Pacific operating in more than 50 countries.

FORWARD LOOKING STATEMENTS

Statements included in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by use of statements that include, but are not limited to, phrases such as "anticipate," "believe," "expect," "future," "intend," "plan," and similar expressions to identify forward-looking statements. Such statements involve a number of risks and uncertainties such as the Company's ability to access sources of liquidity necessary to continue its operations and continue as a going concern, the Company's potential inability to extend the maturity date of its credit facility and/or comply with financial covenants under its credit facility, the continued impact of the COVID-19 pandemic on the Company's operations and financial results, as well as the economy generally, competitive factors, technological development, market demand, and the Company's ability to obtain new contracts and accurately estimate net revenue due to variability in size, scope and duration of projects. Further information on potential factors that could affect the Company's financial results, can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and in its Reports on Forms 8-K filed with the Securities and Exchange Commission ("SEC"). You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not undertake any obligation to update any forward-looking statements as a result of new information, future developments, or otherwise, except as expressly required by law.

Media Contacts:

Telkonet Investor Relations
414.721.7988
ir@telkonet.com

Barbara Alvino, Communication Manager
0039 3467820693
balvino@telkonet.com

TELKONET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

			Three Months Ended						Nine Months Ended
			September 30						September 30
			2022			2021			2022			2021
Revenues, net:
Product Revenue		$	1,828,954		$	1,290,389		$	5,570,775		$	4,071,159
Recurring Revenue			188,380			163,679			535,634			532,607
Total Net Revenues			2,017,334			1,454,068			6,106,409			4,603,766
Cost of Sales:
Product COGS			1,371,312			851,873			3,049,048			2,164,586
Recurring COGS			32,952			13,646			94,027			36,868
Total Cost of Sales			1,404,264			865,519			3,143,075			2,201,454
Gross Profit			613,070			588,549			2,963,334			2,402,312
Operating Expenses:
Research and development			272,144			268,917			798,913			876,778
Selling, general and administrative			1,026,023			1,200,569			3,310,127			3,362,761
Depreciation and amortization			8,702			10,346			31,129			33,935
Total Operating Expenses			1,306,869			1,479,832			4,140,169			4,273,474
Operating Profit / (Loss)			(693,799)			(891,283)			(1,176,835)			(1,871,162)
Other Income / (Expenses):
Gain / (Loss) on Debt Extinguishment			-			916,107			-			1,836,780
Gain / (Loss) on Fixed Assets Disposal			(70)			-			(526)			-
Interest expense, net			(2,735)			(7,584)			(21,940)			(19,286)
Total Other Income / (Expenses):			(2,805)			908,523			(22,466)			1,817,494
Income (Loss) before Provision for Income Taxes			(696,604)			17,240			(1,199,301)			(53,668)
Income Tax Provision /(Benefit)			968			-			7,353			1,948
Net Income (Loss)		$	(697,572)		$	17,240		$	(1,206,654)		$	(55,616)
Net Income (Loss) per Common Share:
Basic - net income (loss) attributable to common stockholders		$	0.00			0.00			0.00			0.00
Diluted - net income (loss) attributable to common stockholders		$	0.00			0.00			0.00			0.00
Weighted Average Common Shares Outstanding - basic			299,212,282			136,311,335			295,592,261			136,311,335
Weighted Average Common Shares Outstanding - diluted			299,212,282			136,311,335			295,592,261			136,311,335

RECONCILIATION OF NET INCOME (LOSS)
TO ADJUSTED EBITDA
(UNAUDITED)

			Three Months Ended					Nine Months Ended
			September 30					September 30
			2022		2021			2022		2021
Net Income (loss)		$	(697,572)	$	17,240		$	(1,206,654)	$	(55,616)
Gain on debt extinguishment			-		(916,107)			-		(1,836,780)
Gain / (Loss on sale of asset			70		-			526		-
Interest expense, net			2,735		7,584			21,940		19,286
Income tax provision			968		-			7,353		1,948
Depreciation and amortization			8,702		10,346			31,129		33,935
EBITDA			(685,097)		(880,937)			(1,145,706)		(1,837,227)
Adjustments:
Stock-based compensation			1,815		1,815			5,445		5,446
Adjusted EBITDA		$	(683,282)	$	(879,122)		$	(1,140,261)	$	(1,831,781)

SOURCE: Telkonet, Inc.

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FAQ

What were Telkonet's revenue figures for the third quarter of 2022?

Telkonet reported total revenue of $2.02 million for the third quarter of 2022, a 39% increase from the prior year.

How much did Telkonet's product revenue increase in 2022?

Product revenue increased by 42% to $1.83 million for the three months ended September 30, 2022.

What is the net income for Telkonet in the third quarter of 2022?

Telkonet reported a net loss of $0.70 million for the third quarter of 2022.

How does Telkonet's recent expansion into Europe affect its market strategy?

Telkonet's expansion into Europe with its Energy Management Solutions aims to significantly reduce energy costs for facilities facing rising utility expenses.