[_]
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Preliminary
Proxy Statement
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[_]
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Confidential,
For Use of the
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[X]
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Definitive
Proxy Statement
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Commission
Only (as permitted
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[_]
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Definitive
Additional Materials
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by
Rule 14a-6(e)(2))
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[_]
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Soliciting
Material Pursuant to
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Rule
14a-11(c) or Rule 14a-12
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[X]
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No
fee required.
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[_]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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___________________________________________________________________________
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1)
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Title
of each class of securities to which transaction
applies:
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___________________________________________________________________________
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2)
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Aggregate
number of securities to which transaction applies:
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___________________________________________________________________________
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3)
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Per
unit price or other underlying value of transaction computed
pursuant
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to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee
is
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calculated
and state how it was determined):
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___________________________________________________________________________
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4)
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Proposed
maximum aggregate value of transaction:
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___________________________________________________________________________
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5)
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Total
fee paid:
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___________________________________________________________________________
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[_]
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fee
paid previously with preliminary materials:
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___________________________________________________________________
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[_]
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting
fee
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was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its
filing.
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1)
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Amount
previously paid:
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2)
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Form,
Schedule or Registration Statement No.:
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3)
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Filing
Party:
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4)
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Date
Filed:
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1.
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To
elect seven (7) directors, each to serve until the next annual meeting
of
stockholders and until his successor has been elected and
qualified;
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2.
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To
ratify the appointment of independent accountants for 2005;
and
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3.
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To
transact such other business as may properly come before the meeting
or
any adjournment or postponement
thereof.
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By order of the Board of Directors, | ||
/s/ Ronald W. Pickett | ||
Ronald W. Pickett | ||
Chief Executive Officer | ||
·
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Filing
with the Secretary of Telkonet, at or before the taking of the
vote at the
annual meeting, a written notice of revocation dated later than
the
proxy;
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·
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Executing
a later dated proxy relating to the same shares of common stock
and
delivering it to the Secretary of Telkonet, including by facsimile,
before
the taking of the vote at the annual meeting;
or
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·
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Attending
the annual meeting and voting in
person.
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Director
Name
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Age
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Position
With Telkonet
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Director
Since
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Warren
V. Musser
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78
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Chairman
of the Board
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2003
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Ronald
W. Pickett
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58
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President,
Chief Executive
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2003
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Officer
& Director
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Stephen
L. Sadle
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59
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Senior
Vice President & Director
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2000
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Thomas
C. Lynch
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63
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Director
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2003
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James
L. Peeler
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71
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Director
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2004
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Thomas
M. Hall
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53
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Director
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2004
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Seth
D. Blumenfeld
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63
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Director
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2005
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Name
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Age
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Title
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Ronald
W. Pickett
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58
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Chief
Executive Officer
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E.
Barry Smith
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55
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Chief
Financial Officer
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Stephen
L. Sadle
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59
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Senior
Vice President
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James
Landry
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50
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Chief
Technology Officer
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Beneficial
Owner (1)
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Shares
Beneficially Owned
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Percent
Of Class
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Directors
& Executive Officers
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Seth
D. Blumenfeld
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20374
Seneca Meadows Parkway
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Germantown,
Maryland 20876
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20,000(2)
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*
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David
Grimes
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20374
Seneca Meadows Parkway
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Germantown,
Maryland 20876
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1,650,405(3)
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3.6%
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Thomas
M. Hall
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20374
Seneca Meadows Parkway
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Germantown,
Maryland 20876
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652,790(4)
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1.5%
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James
Landry
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20374
Seneca Meadows Parkway
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Germantown,
Maryland 20876
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384,200(5)
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9%
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Thomas
C. Lynch
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20374
Seneca Meadows Parkway
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Germantown,
Maryland 20876
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90,000(6)
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*
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Warren
V. Musser
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20374
Seneca Meadows Parkway
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Germantown,
Maryland 20876
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2,235,027(7)
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4.8%
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James
L. Peeler
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20374
Seneca Meadows Parkway
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Germantown,
Maryland 20876
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70,000(8)
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*
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Ronald
W. Pickett
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20374
Seneca Meadows Parkway
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Germantown,
Maryland 20876
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2,136,205
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4.8%
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Stephen
L. Sadle
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20374
Seneca Meadows Parkway
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Germantown,
Maryland 20876
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4,389,514(9)
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9.6%
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E.
Barry Smith
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20374
Seneca Meadows Parkway
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Germantown,
Maryland 20876
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505,579(10)
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1.1%
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All
Directors and Executive Officers
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as
a Group (10 persons)
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12,133,720
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24.4%
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*
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Less
than 1.0%
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(1)
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Unless
otherwise indicated, each person has sole voting power and sole
investment
power with respect to all common stock set forth opposite such
person's
name, subject to applicable community property and similar
laws.
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(2)
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Includes
stock issuable under Mr. Blumenfeld's consulting agreement, dated
July 1,
2005.
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(3)
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Includes
options exercisable within 60 days to purchase 900,000 shares of
Telkonet
common stock at $1.00 per share. The options were fully vested
upon Mr.
Grimes' death and are exercisable by his estate or beneficiaries
within 12
months from the date of his death.
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(4)
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Includes
options exercisable within 60 days to purchase 70,000 shares of
Telkonet
common stock at $3.45 per share.
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(5)
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Includes
options exercisable within 60 days to purchase 250,000 and 50,000
shares
of Telkonet common stock at $1.00 and $3.45 per share,
respectively.
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(6)
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Includes
options exercisable within 60 days to purchase 20,000 and 70,000
shares of
Telkonet common stock at $2.00 and $3.45 per share,
respectively.
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(7)
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Includes
options exercisable within 60 days to purchase 2,000,000 shares
of
Telkonet common stock at $1.00 per share.
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(8)
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Includes
options exercisable within 60 days to purchase 70,000 shares of
Telkonet
common stock at $3.45 per share.
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(9)
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Includes
options exercisable within 60 days to purchase 900,000 shares of
Telkonet
common stock at $1.00 per share.
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(10)
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Includes
options exercisable within 60 days to purchase 472,000 shares of
Telkonet
common stock at $1.00 per share.
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Annual
Compensation
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Long-Term
Compensation
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|||||
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Awards
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Payouts
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Other
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Annual
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Restricted
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Securities
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All
Other
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Compen-
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Stock
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Underlying
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LTIP
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Compen-
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Name
and
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Salary
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Bonus
|
sation
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Award(s)
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Options/SARs
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Payouts
|
sation
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Principal
Position
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Year
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($)
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($)
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($)
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($)
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(#)
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($)
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($)
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Ronald
W. Pickett,
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2004
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$100,089
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$0
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$0
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107,779(l)
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0
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$0
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$0
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Chief
Executive
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2003
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$
91,538
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$0
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$0
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64,469
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0
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$0
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$0
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Officer
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2002
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$0
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$0
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$0
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0
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0
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$0
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$0
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E.
Barry Smith,
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2004
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$171,983
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$15,000
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$0
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0
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0
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$0
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$0
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Chief
Financial
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2003
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$115,539
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$0
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$0
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0
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500,000
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$0
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$0
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Officer
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2002
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$0
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$0
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$0
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0
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0
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$0
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$0
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Stephen
L. Sadle,
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2004
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$171,983
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$6,538
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$0
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0
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0
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$0
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$0
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Senior
Vice
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2003
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$130,000
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$0
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$0
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0
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900,000
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$0
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$0
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President
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2002
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$130,000
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$0
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$0
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0
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0
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$0
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$0
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James
Landry
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2004
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$172,514
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$15,000
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$0
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0
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250,000
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$0
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$0
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Chief
Technology
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2003
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$160,000
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$10,000
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$0
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0
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100,000
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$0
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$0
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Officer
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2002
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$116,000
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$0
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$0
|
0
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225,000
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$0
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$0
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Number
of
|
Percent
of Total
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||||
Securities
|
Options/SARs
|
Grant
Date
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|||
Underlying
|
Granted
to
|
Exercise
or
|
Present
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Options/SARs
|
Employees
in
|
Base
Price
|
Expiration
|
Value
|
|
Name
|
Granted
|
Fiscal
Year
|
($/SH)
|
Date
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$
(1)
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Ronald
W. Pickett
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0
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0
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n/a
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n/a
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E.
Barry Smith
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0
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0
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n/a
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n/a
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Stephen
L. Sadle
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0
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0
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n/a
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n/a
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James
Landry
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250,000(2)
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12.0%
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$3.45
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04/2014
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550,000
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(1)
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The
estimated value of options granted during the year ended December
31, 2004
was determined using the Black-Scholes option pricing model and
the
following assumptions: estimated life of five years, a risk-free
interest
rate of 3.50%, a dividend yield of 0% and volatility of
76%.
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(2)
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These
shares vest quarterly over five years beginning May 1,
2004.
|
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Number
of Securities Underlying
Unexercised Options at December 31, 2004 (#) |
Value
of Unexercised
In-the-Money Options at December 31, 2004 ($)(1) |
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Shares
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||||||
Acquired
|
Value
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|||||
On
|
Realized
|
|||||
Name
|
Exercise
(#)
|
($)
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
Ronald
W. Pickett
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0
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0
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0
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0
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0
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0
|
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E.
Barry Smith
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28,000
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89,350
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305,333
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166,667
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$1,368,000
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$747,000
|
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Stephen
L. Sadle
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0
|
0
|
600,000
|
300,000
|
$2,688,000
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$1,344,000
|
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James
Landry
|
100,000
|
350,000
|
208,333
|
291,667
|
$933,000
|
$694,000
|
(1)
|
Based
on a stock price of $5.48, which was the average of the high asked
and low
bid prices reported on December 31,
2004.
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By
order of the Board of Directors,
/s/ Ronald W. Pickett Ronald W. Pickett Chief Executive Officer |
1.
|
ELECTION
OF DIRECTORS - Nominees:
|
01-Seth Blumenfeld | 02-Thomas M. Hall | 03-Thomas C. Lynch |
04-Warren V. Musser | 05-James L. Peeler | 06-Ronald W. Pickett |
07-Stephen L. Sadle |
[ _]
FOR all nominees
[ _]
WITHHELD as to all nominees
[ _]
FOR all nominees
except
vote withheld from the following
nominee(s):_____________________________________
|
2.
|
RATIFICATION
OF APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS
|
[ _] FOR | [ _] AGAINST | [ _] ABSTAIN |
3.
|
IN
THEIR DISCRETION, TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING
|
SEE REVERSE SIDE |
SEE
REVERSE
SIDE
|
1.
|
VOTE
BY INTERNET:
|
Log-on
to www.votestock.com
|
|
Enter
your control number printed below
|
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Vote
your proxy by checking the appropriate boxes
|
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Click
on “Accept Vote”
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2. |
VOTE
BY MAIL: If
you do not wish to vote by Internet, please complete, sign,
date and
return the above proxy card in the pre-paid envelope provided.
|
You
may vote by Internet 24 hours a day, 7 days a week.
Your
Internet vote authorizes the named proxies to vote in the
same manner as
if you
marked,
signed and returned your proxy
card.
|