Telkonet Acquires Smart Systems International

March 19, 2007 by Jeff Shepard

Telkonet, Inc. announced that the company has completed the acquisition of Smart Systems International (SSI), a technology manufacturer of in-room energy management systems for the hospitality industry. The company acquired substantially all the assets of SSI for $7,000,000 comprised of cash and company common stock.

SSI’s patented energy management technology is claimed to eliminate wasted energy from heating and cooling unoccupied rooms, constantly adjusting the temperature based on current room conditions. It evaluates how far the temperature can drift for maximum energy savings, while ensuring the room will always be minutes away from the occupant’s comfort setting range. This patented drift/drive function is claimed to guarantee occupant comfort while saving valuable energy.

Telkonet plans to integrate the two company’s products, using the Telkonet iWire System™ to provide what the company claims will be a cost-effective, easy-to-install broadband platform to network all the energy-related components. Telkonet’s system will create a web-based Enterprise Energy Management System, enabling remote energy management, monitoring and analysis. The system is intended to offer the hospitality industry an economical, efficient approach to reducing energy consumption by up to 30%.

In addition to over 60,000 product installations in the hospitality industry, SSI’s solutions are widely distributed by several energy services companies who are engaged with various power utilities’ energy-efficiency programs. To help hotels and motels reduce electricity usage, the companies are purchasing SSI’s energy management systems to provide to lodging owners, offering free energy-saving retrofits designed to eliminate the wasteful use of in-room air-conditioning and heating units.

Telkonet assumed certain purchase orders relating to a major utility energy management initiative through two select providers. The current order backlog amounts to approximately $500,000 and the estimated remaining program value amounts to $3,000,000. Since entering the initial letter of intent to acquire the assets of SSI, the Telkonet regional sales organization has been pre-marketing and testing the value of the new service offering. As a result, to-date, over $3,000,000 of new proposals are pending, with one trial already installed and under evaluation.