Where Energy Matters Jason Tienor, CEO November 2012
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 • EcoSmart Symbol: TKOI www.telkonet.comClean 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 nearly 5 millionusers monthly at 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 several hundredthousand rooms and managed through a cloud-based monitoring network.
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
Financial Overview 12,000$ Revenue Gross Margin 10,000$ Operating Expenses Operating Income (Loss) 8,000$ Net Income (Loss) 6,000$ *All numbers given in 000’s 4,000$ 2,000$ This data represents 9 months (YTD) only. 0$ -2,000$ -4,000$ New Management -6,000$ 2009 2010 2011 9/30/2012
According to the American Council for an Energy EfficientThe Global problem Economy, the cost of saving one unit of energy through energy efficiency is one-fifth the cost required to generate that same unit of energy.Global energy consumption will increase by World-wide energy-related carbon dioxide53% between 2008 and 2035. emissions rise 43% between 2008 and 2035. in billion metric tons Source: EIA, International Energy Outlook 2010
The Telkonet Solution Demonstrate Reduction in energy dedication to the use and total cost environment Maximize customer Provide comprehensive satisfaction and insight into every room retention
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 Appliances Lighting ShadesA networked energy management system provides control through a web-based platform. Demand Response Ready – reduce peak demand by 50% or more Minimal impact on comfort and productivityDesigned for simplicity. Flexible wired or wireless installation, simple to program and commission Built-in measurement and verification
The EcoSmart Suite EcoInsight EcoConnect EcoCommander EcoView EcoWave EcoSwitch EcoGuard EcoContact
Research shows that the US economy has the potential toMarket Opportunity reduce annual, non-transportation energy consumption by roughly 23% by 2020. This would eliminate more than $1.2 trillion in waste.
Commercial Energy Patterns Energy management systems for commercial buildings will garner $67 billion in investment by 2020. Average use for all commercial buildings: 12.8 thousand sq. ft. Source: EIA, 1995 Commercial Building Energy Consumption Survey
The ratepayer-funded energy efficiency program management industry is rapidly expanding in the United Residential Energy Patterns States. From 2004 through 2009 ratepayer-funded energy efficiency spending increased from $1.7 billion to $4.4 billion. Water Heater Refrigerator Dishwasher Clothes Washer/Dryereating/Cooling Computer/Monitor TV/VCR/DVD Lighting Other
EcoSmart’s Competitive Landscape In-room Buildings Energy Cloud Management Services Smart Grid Integration and Deployment
EcoSmart’s Competitive Advantages EcoCentral Recovery Time Technology Cloud-enabled control and reporting Compatibility Integration with 3rd party systems (open standards)
The EthoStream Network Solutions: Largest HSIA Network in the US 220,000 rooms, 2350 hotels, 4.2 million monthly users Concerns: EGS Pro gateway servers Guest expectations Simple, proactive network management tools Ubiquitous property coverage Ease-of-use Property-wide, uninterrupted HSIA service Inconsistent wireless 2-5 day seamless installation process Disruptive installation Minimal new wiring with no structural intrusion 24/7, 365 in-house support center Inadequate support resources US based, knowledgable, certified support staff Lack of network control Superior bandwidth management tools Out-dated equipment Review bandwidth use to proactively accommodate guests’ needs Future-proof connectivity Proactive updates ensure the highest level of equipment compatibility
The EthoStream Network• Higher demands in user’s wireless expectations• Growth of wireless and mobile bandwidth consumption• Changes in wireless standards to meet the rise in bandwidth use• New technology requires constant access• The need to ease 3G and 4G mobile data congestion Source: FCC, industry reports. Energy Economics
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
Balance Sheet Balance Sheet Total Assets Total Liabilities Total Equity$18,000$16,000$14,000$12,000$10,000 $8,000 $6,000 $4,000 $2,000 $0 12/31/09 12/31/10 12/31/11 9/30/2012 *All numbers given in 000s
Anticipated Milestones New product introductions Full-service markets Create larger residential Expanded HSIA services demographic Further platform integration Further Utility integration Increased international focus Exceed financial goals Market expansion Channel sales
Our Leadership Telkonet Board of Directors: Telkonet Management Team: William H. Davis Jason L. Tienor Chairman of the Board Chief Executive Officer Glenn A. Garland Richard E. “Gene” Mushrush Chief Financial Officer Director Jeffery J. Sobieski Timothy S. Ledwick Chief Technology Officer Director, Audit Committee Chairman Gerrit Reinders Executive VP of Sales and Marketing Jason L Tienor Director Matthew Koch Chief Operating Officer
10200 Innovation Drive Suite #300 Organization & Facility Milwaukee, WI 53226 (414) 223-0473 SalesProduction /Warehouse Installers Executive s Support Engineerin g Administration / System Finance Admins