Where Energy MattersJason Tienor, CEOApril 2013
Forward Looking StatementCertain statements in this presentation, including statements regardingfuture results and performance, are forward-looking statements based oncurrent expectations. The accuracy of such statements is subject to anumber of risks, uncertainties and assumptions that may cause actualresults to differ materially from those projected, including, but not limitedto, the effect of general economic conditions, raw material price increasesand availability, currency fluctuations, prevailing electricity selling prices,adverse changes in general market and industry conditions and otherfactors listed in the Companys filings with different securitiescommissions.
Company ProfileTelkonet • EthoStream • EcoSmartClean Technology company with a focus on intermittently occupied spacesFounded in 1999 • Multiple acquisitions in 2007Headquartered in Milwaukee, WisconsinCurrent staff of 86 employeesMajor target markets include Hospitality, Education, and MilitaryEthoStream provides public access networking and high-speed Internet access solutions for 5.2 millionusers monthly at over 2,400 locations.EcoSmart offers a state-of-the-art energy management system designed for spaces with intermittentoccupancy, which integrates with other systems (e.g. BAS, PMS). EcoSmart is deployed in over 225,000 roomsworldwide and managed through a cloud-based monitoring network.Symbol: TKOIwww.telkonet.com
-6,000$-4,000$-2,000$0$2,000$4,000$6,000$8,000$10,000$12,000$14,000$2009 2010 2011 2012RevenueGross MarginOperating ExpensesOperating Income (Loss)Net Income (Loss)Financial Overview*All numbers given in 000’s.New Management
OverviewTelkonet is an emerging Clean Technology leader with:■ Patented and innovative technology■ Hospitality, education, military, municipal and government installationsWe develop, manufacture and market the innovative EcoSmart Suite■ Revolutionary energy management platform with patented Recovery Time™ technology■ Current energy solutions installed in 200,000+ locations and growingTelkonet operates the largest hospitality HSIA network in the US■ EthoStream Hospitality Network with 2,350 locations■ 4.2 million monthly usersOur Sales Strategies■ Direct sales■ Channel sales
The Global ProblemGlobal energy consumption will increase by53% between 2008 and 2035.Source: EIA, InternationalEnergy Outlook 2010World-wide energy-related carbon dioxideemissions rise 43% between 2008 and 2035.in billion metric tonsAccording to the American Council for an Energy EfficientEconomy, the cost of saving one unit of energy through energyefficiency is one-fifth the cost required to generate that sameunit of energy.
Energy Management Market 2013-2020The automated, or smart, buildingenergy management systemsmarket is to almost quadruple insize and be worth over $1 billion by2020__________________Worldwide spending on theseservices will grow from $291 millionin 2012 to $1.1 billion by 2020__________________This represents a compoundannual growth rate of almost 18percent over that time period
The Telkonet SolutionDemonstratededication to theenvironmentMaximize customersatisfaction andretentionReduction in energyuse and total costProvide comprehensiveinsight into every room
Intermittently Occupied Spaces?Solution: Control the Unexpected with EcoSmartWhat are intermittently occupied spaces?Hotel rooms, college dormitories, military barracks, assisted living facilities, K-12 classrooms, etc.Why is energy management a solution for intermittently occupied spaces?‐Manually monitoring room temperature is practically impossible:‐Requires full participation of staff‐Requires room checks and occupant disruption‐Typically affects lighting and appliances as wellEcoSmart saves 20-40% of energy consumption and runtime.Use occupancy-based energy management to control:HVAC Plug loads AppliancesLighting ShadesA networked energy management system provides control through a web-based platform.Demand Response Ready – reduce peak demand by 50% or moreMinimal impact on comfort and productivityDesigned for simplicity.Flexible wired or wireless installation, simple to program and commissionBuilt-in measurement and verification
The EcoSmart SuiteEcoInsightEcoSwitch EcoGuard EcoContactEcoWaveEcoViewEcoConnect EcoCommander
Market OpportunityResearch shows that the US economy has the potential toreduce annual, non-transportation energy consumption byroughly 23% by 2020. This would eliminate more than $1.2trillion in waste.
Commercial Energy PatternsEnergy management systems for commercialbuildings will garner $67 billion in investment by 2020.Source: EIA, 1995 Commercial Building Energy ConsumptionSurveyAverage use for allcommercial buildings:12.8 thousand sq. ft.
Residential Energy PatternsThe ratepayer-funded energy efficiency programmanagement industry is rapidly expanding in the UnitedStates. From 2004 through 2009 ratepayer-fundedenergy efficiency spending increased from $1.7 billionto $4.4 billion.Heating/CoolingWater HeaterRefrigeratorDishwasherClothes Washer/DryerComputer/MonitorTV/VCR/DVDLightingOther
EcoSmart’s Competitive AdvantagesEcoCentralCloud-enabledcontroland reportingIntegration with 3rdparty systems (openstandards)CompatibilityRecovery TimeTechnology
EthoStream HSIA NetworkSolutions:Largest HSIA Network in the US220,000 rooms, 2350 hotels, 4.2 million monthly usersEGS Pro gateway serversSimple, proactive network management toolsUbiquitous property coverageProperty-wide, uninterrupted HSIA service2-5 day seamless installation processMinimal new wiring with no structural intrusion24/7, 365 in-house support centerUS based, knowledgable, certified support staffSuperior bandwidth management toolsReview bandwidth use to proactively accommodate guests’needsFuture-proof connectivityProactive updates ensure the highest level of equipmentcompatibilityConcerns:Guest expectationsEase-of-useInconsistent wirelessDisruptive installationInadequate support resourcesLack of network controlOut-dated equipment
The EthoStream NetworkSource: FCC, industry reports. EnergyEconomics• Higher demands in user’s wireless expectations• Growth of wireless and mobile bandwidth consumption• Changes in wireless standards to meet the rise inbandwidth use• New technology requires constant access• The need to ease 3G and 4G mobile data congestion
The Telkonet PipelineProjects (current/complete)Trane → Ft. Drum Military BaseNoresco → West Point Military AcadamyNYU Dormitory FacilitiesBoyd Gaming CasinoCrown Plaza Times SquareUC Davis Dormitory FacilitiesDenihan Hospitality GroupWaikiki Hyatt PlaceMotel 6 & Studio 6Suite ControlRecurring → ~$4M
Our LeadershipTelkonet Management Team:Jason L. TienorChief Executive OfficerRichard E. “Gene” MushrushChief Financial OfficerJeffery J. SobieskiChief Technology OfficerGerrit ReindersExecutive VP of Sales and MarketingMatthew KochChief Operating OfficerTelkonet Board of Directors:William H. DavisChairman of the BoardGlenn A. GarlandDirectorTimothy S. LedwickDirector, Audit CommitteeChairmanJason L TienorDirector