Stocklemon Reports Part 2 on Telkonet.Read Before You Buy!

Last week Telkonet released their quarterly numbers and it was not pretty.  The company continues to bleed money with no revenues.  Telkonet attempted to explain itself in a letter to investors dated May 21.  Unfortunately, there is no explanation for a stock promotion that Stocklemon estimates is costing well over 100k a month.

The More Things Change, The More They Stay The Same

                                                     1st Quarter 2003          1st quarter  2002
Revenues for quarter                                 0                           0
Selling, General and Admin. Expenses   $739,142                  $234,625
Loss from Operations                             (1,087,414)             (554,657)
Loss per common share                              (0.09)            (0.07)
Common shares outstanding                   15,721,131          9,313,563

Shareholder Letter

In a letter to shareholders dated May 21, 2003, Telekonet communicated its corporate status with shareholders.  At the end of the letter, shareholders are told, “Patience is a Virtue”.  HOW CONDACENDING CAN YOU GET?  Do not tell your shareholders to be patient when in January of 2002, you make an announcement that the company has shifted their focus to product sales.  It is a year and a half later and the company has not made one dollar in revenue.  This writer has a six year old daughter whose lemonade stand made more money last weekend than Telkonet has in 4 years of operation.

ANNAPOLIS, MD - JANUARY 16, 2002 - TELKONET, INC. (OTCBB: TLKO) today announced on behalf of Telkonet Communications, Inc. (”TCI”), a Delaware Corporation and wholly owned subsidiary of Telkonet, Inc. that after nearly three years of extensive research and product testing, Telkonet will shift its management emphasis from R&D to product sales and marketing in order to move their initial proprietary products into the retail market. Recent Beta testing has demonstrated robust capacity and industry demand for the company’s initial proprietary products, thus providing the foundation for this shift to marketing with continued R&D support.

Notice what the status letter has omitted..revenues and cash.

International Media Solutions

It is the opinion of Stocklemon that the catalyst behind the run in Telkonet as of late is an investor relations firm in Central Florida called International Media Solutions.  Owned by Kermit Silva and Yolanda Velazquez, International Media Solutions has a “boiler room” of unregistered representatives (they don’t have to be registered) who spend the day cold calling stockbrokers .  Sources tell Stocklemon that this type of investor relations can cost anywhere between 70k - 100k a month in CASH.  That does not include the stock compensation that they receive.  WHO IS PAYING THIS MONEY?

Yolanda Velazquez has told Stocklemon that all monies are being paid by a third party that will not be disclosed.

Stocklemon is still in the process of finding more information on International Media Solutions and the possible relationship with convicted felon and stock promoter Jon Manion, whose offices of Continental Capital were next door to the current address of International Media Solutions.  If Stocklemon can prove any connection, we will report in the future. http://www.mary.cc/astn/cce.htm

Corporate Response

Over the past week, Stocklemon has sent 4 emails to Stephen Sadle from Telkonet asking who has been compensating International Media Solutions…NO ANSWER.  When we finally spoke to Stephen Saddle and politely asked him who is compensating International Media Solutions.  Mr. Saddle would not answer the question and proceeded to call this writer, “asshole”.  Then Mr. Sadle accused this writer of selling the stock.  To that we say, “we are not selling the stock…YOU ARE THE ONE SELLING THE STOCK .”
http://biz.yahoo.com/t/37/4667.html

Dilution

Notice that there are 6.4 million more shares this year then there was the same quarter last year..well the party has just begun.  Over the next 12 months, Stocklemon estimates that at least 13 million shares will be added to the company, and that does not even include any warrants tendered in the current offering.  This number could go higher than 20 million new shares.  And all of this is without raising money.  The company currently has on offering out there where they are trying to raise $5million, to date they have only raised $800k. 

A Message to Stockbrokers

If you are putting your clients into a security based upon a phone call from a non registered representative, you had better rethink your business.  Take time to read the filings and always be skeptical.  The people on the other side on the phone do not have your clients interest in mind.  You have a license and a serious responsibility.

Technology

Telkonet calls themselves, “The leader in Powerline Communications (PLC) for the commercial market”  The leader?  They have never made a sale!  The company touts it’s “PlugPlus Internet” product as breakthrough technology.  Yet, when you do a search for “plugplus” on Google, you find nothing more than information promoting Telkonet stock.  No trade journals, technology magazines, or clients talking about the technology, just STOCK PROMOTION.

A Warning to Telkonet

Normally, Stocklemon just writes a report and lets the rest up to the public.  But since Mr. Sadle called this writer “asshole”, Stocklemon will exercise its first amendment right and follow every move this company makes on the Stocklemon website.  Telkonet should disclose the full amount paid to International Media Solutions in cash and stock.  Stocklemon will keep squeezing this lemon til’ it is dry.