Tienor Named To Smart CEO Magazine’s List, Reflecting Leadership, Strategic Vision And Character

Telkonet, Inc. (OTC Bulletin Board: TKOI), a leading Clean Technology company focusing on proprietary energy management and SmartGrid networking technology, today announced that its President and CEO, Jason Tienor, has been named one of SmartCEO magazine’s 2010 Smart100 CEOs in the Greater Washington area. This exclusive group of the region’s top executives, selected by an independent selection committee, was chosen on the basis of their leadership qualities, strategic vision and character, in addition to their clear ability to grow their organizations.

Each Smart100 CEO will be profiled in the 100-plus-page annual Smart100 Book, which SmartCEO will publish as its 13th issue in May. The Smart100 will also be listed on SmartCEO’swebsite, www.smartceo.com. The Smart100 companies represent a variety of industries including government contracting, information technology, consulting, travel services, financial services and video production.

“No other publication in the Greater Washington area has produced a publication of this magnitude with such high-caliber CEOs. The Smart100 CEOs have incredible business minds and have successfully grown their companies to be the best in Washington,” says Washington SmartCEO publisher Jaime Park.

“It is an honor to be included in the Smart100 CEO list, and clearly reinforces our success in delivering innovative, eco-friendly Clean Technology solutions that help companies decrease their energy consumption and contribute to a cleaner environment,” said Jason Tienor, President and CEO of Telkonet. “This follows Telkonet’s recent listing as a 2010 EcoCEO Award finalist in the Innovator category, where SmartCEO magazine recognizes environmental excellence in business. This is a clear recognition of how our new generation of energy management and SmartGrid products is enabling businesses, utilities and their residential customers to monitor and control their energy consumption.”

About Washington SmartCEO Magazine
Washington SmartCEO magazine is a regional “growing company” publication. SmartCEO believes that a “growing company” is really determined by the spirit, drive and dynamics of a company’s owners and managers, rather than by the size of its building, the number of its employees, or its sales volume. Each month, a variety of businesses in the greater Washingtonand greater Baltimore areas turn to the pages of SmartCEO for features, case-study advice and trend analysis, all with a uniquely local flavor. SmartCEO is read by more than 34,000 business owners in Baltimore and Washington.

About Telkonet
Telkonet is one of the market-leading Clean Technology companies providing integrated, centrally-managed energy management and SmartGrid networking solutions to the emerging $50 billion SmartGrid and Energy Efficiency markets. As a provider of “negawatts,” Telkonet’s products improve energy consumption and reduce the demand for new energy generation. Telkonet is one of the top three occupancy-based energy management control providers in each of the hospitality, commercial, military, healthcare and education markets. The Company’s in-room energy management systems are lowering heating and cooling costs in over 180,000 rooms and are an integral part of various utilities’ green energy efficiency and rebate programs.

Primarily targeting SmartGrid and utility applications, Telkonet’s patented powerline communications (PLC) platform delivers cost-effective, robust networking, with real-time online monitoring and maintenance capabilities, increasing the reliability and energy efficiency across the entire utility grid. www.telkonet.com.

Also named #5 Fastest Growing Company by the Washington Business Journal

Telkonet, Inc. (NYSE Amex: TKO), a Clean Technology company that develops and manufactures proprietary energy management and Smart Grid networking technology, today announced that it has been ranked number 64 in the latest Technology Fast 500™ list, Deloitte LLP’s ranking of 500 of the fastest growing technology, media, telecommunications, life sciences and clean technology companies in North America. Rankings are based on percentage of fiscal year revenue growth during the five-year period from 2004–2008. Telkonet grew 2,841 percent during this period. In addition, Telkonet has been named fifth on the Washington Business Journal’s Fastest Growing Companies list, based upon three-year revenue-growth percentage.

Telkonet’s CEO, Jason Tienor, attributes the company’s significant revenue growth over the last several years to its Clean Technology offering along with its centralized web-managed platform that integrates energy management, broadband networking, and support services. “This ranking represents an important market recognition of Telkonet’s continuing repositioning, growth and revenue levels, demonstrating the value and ongoing potential of our strategic Clean Technology platform. We are enforcing our position as an important player in the energy efficiency market, as well as expanding our penetration into the Smart Grid Home Area Network (HAN) space. We’re continuing to build market share, despite difficult economic conditions − clearly demonstrated by our revenue-growth percentages, as highlighted by both the Technology Fast 500 and the Washington Business Journal’s Fastest Growing Companies listings.”

Technology Fast 500™ recognizes innovative companies that have broken down barriers to success and defied the odds with their remarkable five-year revenue growth,” said Phil Asmundson, Vice Chairman and U.S. Technology, Media and Telecommunications leader, Deloitte LLP. “We congratulate Telkonet on this accomplishment.”
Overall, Technology Fast 500™ award winners for 2009 had growth rates ranging from 212 to 146,050 percent over five years, with an average growth rate of 2,486 percent.

For the Washington Business Journal’s Fastest Growing Companies, in addition to high growth rates, companies must have had 2006 revenue of more than $2 million and 2008 revenue of more than $10 million in order to be eligible. Participants in the survey were based in the metropolitan Washington D.C. region.

Technology Fast 500™ Selection and Qualifying Criteria
Technology Fast 500™ provides a ranking of the fastest growing technology, media, telecommunications, life sciences and clean technology companies in North America. Technology Fast 500™ award winners for 2009 were selected based on percentage fiscal year revenue growth during the five year period from 2004 to 2008.
Technology Fast 500™ award eligibility requirements also include base-year operating revenues of at least $50,000 USD or CD, and current-year operating revenues of at least $5 million USD or CD. These revenues must have more than doubled between 2004 and 2008. Additionally, companies must be in business for a minimum of five years, and be headquartered within North America.

About Telkonet
Telkonet provides integrated, centrally-managed energy management and Smart Grid networking solutions that improve energy efficiency and reduce the demand for new energy generation. The company’s energy management systems, aimed at the hospitality, commercial, government, healthcare and education markets, are dynamically lowering HVAC costs in over 150,000 rooms, and are an integral part of various utilities’ green energy efficiency and rebate programs.

Primarily targeting Smart Grid and utility applications, Telkonet’s patented powerline communications (PLC) platform delivers cost-effective, robust networking, with real-time online monitoring and maintenance capabilities, increasing the reliability and energy efficiency across the entire utility grid. www.telkonet.com.

About Deloitte
As used in this document, “Deloitte” means Deloitte LLP. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

About Washington Business Journal
The Washington Business Journal has been Greater Washington’s leading source of business news and information for more than 20 years, providing over 150,000 business executives with comprehensive news on local people and their companies, as well as industry trends, tips and strategies and award-winning critical analysis. For more information, please visit http://washington.bizjournals.com.

Telkonet, Inc. (NYSE Amex: TKO), a Clean Technology company that develops and manufactures proprietary energy management and SmartGrid networking technology, announced today second quarter results for the period ended June 30, 2009. Telkonet has reflected MSTI Holdings, Inc. (OTCBB: MSHIE) or “MST” results of operations in the condensed consolidated statement of operations through the date of the disposal (April 22, 2009) as discontinued operations for all periods presented.

For the 2009 second quarter, Telkonet, Inc. had revenue of $3.1 million, a decrease of 33% compared to $4.6
million in the 2008 second quarter. The Company’s second quarter results for 2009 were impacted by the
challenges presented by the current economic environment, which significantly impacted Telkonet’s largest
target market, the Hospitality segment. Telkonet’s revenues increased by 7% when compared to the quarter
ended March 31, 2009.

Telkonet, Inc. reported gross margins of 57% for the second quarter of 2009 compared to the 2008 second
quarter of 42%, and 52% in the first quarter of 2009.
Selling, general and administrative expenses were $1.7 million, compared to $2.6 million in the 2008 second
quarter and $1.6 million in the 2009 first quarter.
Telkonet, Inc. reported a 2009 second quarter net income of $7.4 million, or $0.08 per share, compared to a net loss of $(4.2) million or $(0.08) per share in the 2008 second quarter. Net income for the second quarter of 2009 included a gain on deconsolidation of MSTI of $6.9 million, or $0.07 per share.

Excluding the results of operations of MST, Telkonet had a negative adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), a non-GAAP measure, in the second quarter of 2009 of approximately $(185,000) compared to a negative adjusted EBITDA of $(1.2) million in the 2008 second quarter.

“Our financial results in the second quarter represent a significant milestone for the Company and our
shareholders, which is the deconsolidation of our former MST subsidiary,” said Jason Tienor, Chief Executive
Officer of Telkonet, Inc. “Our financial statements now provide much-needed financial transparency, and we are able to highlight to shareholders the positive results of the Company’s restructuring efforts over the past 18 months. Although this year has not provided the top-line sales growth anticipated after 2008’s record year, primarily due to the impact of the economy on our customers, we have continued to grow our sales pipeline, so that when the economy rebounds the Company will be positioned to realize our long-term goals of sustained growth and increased shareholder value. In addition, we believe that our near-term goals are within reach and we expect to achieve positive EBITDA for the first time in the Company’s history.”

For the six months ended June 30, 2009, Telkonet had revenue of $6.0 million, a decrease of 31% compared to $8.6 million in the six months ended June 30, 2008. Telkonet, Inc. reported gross margins of 55% for the six months ended June 30, 2009 compared to 35% for the six months ended June 30, 2008. Selling, general and administrative expenses were $3.4 million for the six months ended June 30, 2009, compared to $5.1 million for the six months ended June 30, 2008. Telkonet, Inc. reported a net income of $6.3 million, or $0.07 per share, for the six months ended June 30, 2009, when compared to a net loss of $(9.3) million, or $(0.13) per share for the six months ended June 30, 2008. Net income in 2009 includes a $6.9 million gain on the deconsolidation of MST. Telkonet had a negative adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), a non-GAAP measure, of approximately $(565,000) for the six months ended June 30, 2009, compared to negative adjusted EBITDA of $(3.2) million for the six months ended June 30, 2008.

NON-GAAP Financial Measures
To comply with Regulation G promulgated pursuant to the Sarbanes-Oxley Act, Telkonet, Inc. attached to this news release and will post to the company’s investor relations web site (www.telkonet.com) any reconciliations of differences between non-GAAP financial information that may be required in connection with issuing the company’s financial results.

The Company, as is common in its industry, uses EBITDA as a measure of performance to demonstrate
earnings 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 EBITDA as its primary
management guide. Since an outside investor may base its evaluation of the Company’s performance based on the Company’s net loss not its cash flows, there is a limitation to the EBITDA measurement. EBITDA is not, and should not be considered, an alternative to net loss, loss from operations, or any other measure for determining operating performance of liquidity, as determined under accounting principals generally accepted in the United States (GAAP). The most directly comparable GAAP reference in the Company’s case is the removal of interest, depreciation, amortization, taxes and other non-cash expense. In assessing the overall health of its business during the quarter ended June 30, 2009 and 2008, the Company excluded items in the following general categories, each of which are described below:

• Loss on Sale of Investment. In February 2009 the Company completed the sale of its investment in a
publicly-traded company and recorded a $29,371 loss on the sale of the investment in the consolidated
statement of operations for the quarter ended June 30, 2009. The Company considers this an investment
transaction, and it is not an indication of operating performance. Therefore the Company does not consider the inclusion of our sale of this investment helpful in assessing its current financial performance compared to previous periods as well as prospects for the future.

• Gain on Derivative Liability. During the quarter ended June 30, 2009, the Company recorded a non-cash
gain on the derivative liability of $1,175,573 in connection with the sale of the Convertible Debentures in
May and July 2008. These Debentures have embedded derivatives and the accounting treatment of
derivative financial instruments requires that the Company record all derivatives and related warrants,
and classify all other non-employee stock options and warrants as derivative liabilities and mark them to
market at each reporting date. The fair value of such derivatives that were reclassified as liabilities from
additional paid-in capital for the quarter ended June 30, 2009 totaled $1,219,775. The Company considers this a financing transaction, and it is not an indication of current or future operating performance. Therefore the Company does not consider the inclusion of this transaction helpful in assessing its current financial performance compared to previous periods as well as prospects for the future.

• Other Expense. In the first quarter of 2008, the Company recorded a non-recurring non-cash expense of
$1,598,203 in connection with an amendment to 3,380,000 stock purchase warrants held by private
placement investors which reduced the exercise price under such warrants from $4.17 per share to
$0.6978258 per share. The Company considers this a financing transaction, and it is not an indication of
current or future operating performance. Therefore the Company does not consider the inclusion of this
transaction helpful in assessing its current financial performance compared to previous periods as well as
prospects for the future.

• Impairment write-down in investment in affiliate. In the second quarter of 2008, the Company recorded a
one-time non-cash expense of $380,000 in connection with the issuance of 600,000 shares of Company
stock attributable to the release of shares from a purchase price contingency escrow. The Company considers this an investment transaction, and it is not an indication of current or future operating performance. Therefore the Company does not consider the inclusion of this transaction helpful in assessing its current financial performance compared to previous periods as well as prospects for the future.

• 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 previous periods.

Each of the non-GAAP financial measures described above, and used in this press release, 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 each of these non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are 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 measures. In addition, as noted above, the Company evaluates the non-GAAP financial measures together with the most directly comparable GAAP financial information.

(1) GAAP stands for Generally Accepted Accounting Principles.

About Telkonet

Telkonet provides integrated, centrally-managed energy management and SmartGrid networking solutions that improve energy efficiency and reduce the demand for new energy generation. The Company’s energy management systems, aimed at the hospitality, commercial, government, healthcare and education markets, are dynamically lowering HVAC costs in over 140,000 rooms, and are an integral part of various utilities’ green energy efficiency and rebate programs.

Primarily targeting SmartGrid and utility applications, Telkonet’s patented powerline communications (PLC) platform delivers cost-effective, robust networking, with real-time online monitoring and maintenance
capabilities, increasing the reliability and energy efficiency across the entire utility grid. www.telkonet.com.