Waukesha-based Telkonet Inc. received a $12.8 million cash payment for the March 29 sale of the assets and certain liabilities of its EthoStream business.
[caption id="attachment_125275" align="alignright" width="300"] The Telkonet headquarters in Waukesha.[/caption]
Telkonet announced yesterday it had agreed to sell the assets and operations of its EthoStream LLC division to New York-based DCI Design Communications. The company revealed the sale price for the transaction in an SEC filing today.
The assets included certain EthoStream inventory, accounts receivable, prepaid expenses, tangible personal property, vehicles, contracts and work orders and intellectual property. The liabilities assumed by DCI include the obligations related to assigned contracts, accounts payable, accrued expenses and accrued paid time off for each transferred employee. It will not assume EthoStream’s debt.
Canaccord Genuity, the company Telkonet hired in March 2016 to explore its strategic options, will receive a $500,000 payment for identifying and evaluating DCI as a potential buyer.
Telkonet indicated in a filing today it will focus on its core business operations and devote resources to its EcoSmart intelligent automation platform because it has “the greatest potential for growth.” EcoSmart helps building owners track and analyze energy usage using the Internet of Things. It will use the proceeds of the transaction to expand EcoSmart development and ramp up its sales and marketing activities for the platform.
"Our announcement today is the result of a thorough and deliberate process to maximize the value of Telkonet’s activities in the growing intelligent automation and Internet of Things industry," said Jason Tienor, president and chief executive officer of Telkonet. "Now, appropriately capitalized, we can fully focus resources on our core strengths of innovation and automation and capitalize on our unique combination of market relationships and channel expansion. The sale provides Telkonet with a stronger balance sheet as we move the company on its path toward rapid revenue growth, strong cash flows and improved profitability."
Telkonet also disclosed today it had a $1.4 million net loss in 2016, which dinged shareholders by 1 cent per diluted share.
The company reported a net loss of $208,357 in 2015, which did not have a shareholder impact.
Telkonet’s revenue totaled $8.3 million in 2016, up from $7.5 million in 2015. Revenue from EcoSmart increased $600,000 from 2015.
Its operating loss was $3.9 million in 2016, up from $3 million a year ago. Both cost of sales and operating expenses increased in 2016.
“Telkonet continues to make solid progress on our strategic initiatives, demonstrated by the 8 percent growth of our EcoSmart automation platform through 2016,” Tienor said. “This strategy is what led us to the recently announced decision to divest our high-speed Internet access assets in order to focus on the enormous growth potential for EcoSmart. Now, capitalized appropriately and focused strategically, we're better positioned than ever before to recognize the expansive opportunities available in the IoT and automation space.”