telkonet_8k-111309.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
November
13, 2009
(Date of
earliest event reported)
TELKONET,
INC.
(Exact Name of Registrant as Specified
in Its Charter)
Utah
(State or Other Jurisdiction of
Incorporation)
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000-31972
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87-0627421
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(Commission
File No.)
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(I.R.S.
Employer Identification No.)
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20374 Seneca Meadows
Parkway, Germantown, Maryland 20876
(Address
of Principal Executive Offices)
(240)-912-1800
(Registrant's
Telephone Number)
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
[
] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425).
[
] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12).
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)).
[
] Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c)).
Item
1.01 Entry into a Material Definitive Agreement
Securities Purchase
Agreement
On
November 16, 2009, Telkonet, Inc. (the "Company") entered into a Securities
Purchase Agreement (the “Securities Purchase Agreement”) in
connection with a Regulation D private placement of 215 shares of the Company’s
Series A Convertible Redeemable Preferred Stock, par value $0.001 per share
(“Series A”), and warrants (“Warrants”) to purchase an aggregate of 1,628,800
shares of the Company’s common stock, par value $0.001 per share (the “Common
Stock”). The Series A shares were sold at a price per share of $5,000 and the
Warrants have an exercise price of $0.33, which is equal to the volume-weighted
average price of a share of Common Stock measured over the 30-day period
immediately preceding November 12, 2009. The Company expects to complete the
private placement transaction within the next several days and expects to
receive $1,075,000 from the sale of these Series A shares and Warrants. Pursuant
to certain executive officer reimbursement agreements (the “Executive Officer
Reimbursement Agreements”) discussed below, a portion of the proceeds to be
received by the Company will come from certain members of Company management in
connection with the conversion of a portion of outstanding indebtedness of the
Company owed to such members of management. The Company intends to
use the net proceeds from the sale of the Series A shares and the Warrants for
general working capital needs and may use the proceeds in the short term to
repay certain outstanding indebtedness, and to pay expenses of the offering as
well as other general corporate capital purposes.
Under the
terms of the private placement transaction, each Series A share is convertible
into approximately 13,774 shares of Common Stock at a conversion price of $0.363
per share, which is equal to 110% of the volume-weighted average price of a
share of Common Stock measured over the 30-day period immediately preceding
November 12, 2009. Except as specifically provided or as otherwise
required by law, the Series A shares will vote together with the Common Stock
shares on an as-if-converted basis and not as a separate class. Each
Series A share shall have a number of votes equal to the number of shares of
Common Stock then issuable upon conversion of such shares of the Series
A.
The
Securities Purchase Agreement includes representations, warranties, and
covenants customary for a transaction of this type.
The
Series A shares and Warrants issued in the offering will be sold pursuant to the
exemption provided by Section 4(2) of the Securities Act of 1933 and/or Rule 506
of Regulation D promulgated thereunder on the basis that the purchasers are
"accredited investors" as such term is defined in Rule 501 of Regulation
D.
Registration Rights
Agreement
In
connection with the private placement transaction, on November 16, 2009, the
Company entered into a Registration Rights Agreement (the “Registration Rights
Agreement”) with the purchasers listed therein whereby the Company agreed to
file a registration statement covering the resale of the shares of Common Stock
to be acquired by the purchasers upon conversion of their Series A shares and
upon exercise of the Warrants within 5 business days following the conclusion of
a rights offering to be filed with the SEC.
The
Registration Rights Agreement contains customary terms and conditions for a
transaction of this type. The Company and the purchasers have also
agreed to indemnify each other against certain liabilities in respect of any
such resale registration. The Registration Rights Agreement grants “piggyback”
registration rights to the purchaserss on all fully underwritten registered
offerings of the Company. The Company may postpone or withdraw the
filing or the effectiveness of a piggyback registration at any time in its sole
discretion.
Executive Officer
Reimbursement Agreements
In
connection with the private placement transaction, on November 16, 2009, the
Company entered into an Executive Officer Reimbursement Agreement with each of
(i) Jason L. Tienor, the Company’s President and Chief Executive Officer, (ii)
Richard J. Leimbach, the Company’s Chief Financial Officer, and (iii) Jeffrey J.
Sobieski, the Company’s Chief Operating Officer (collectively, the “Executive
Officers”), pursuant to which the Executive Officers agreed to convert a portion
of outstanding indebtedness of the Company owed to such Executive Officers into
Series A shares and Warrants pursuant to the Securities Purchase
Agreement. Mr. Tienor converted $20,000 of outstanding
indebtedness into 4 Series A shares and Warrants to purchase 30,304 shares
of Common Stock. Mr. Leimbach converted $10,000 of outstanding
indebtedness into 2 Series A shares and Warrants to purchase 15,152 shares
of Common Stock. Mr. Sobieski converted $20,000 of outstanding indebtedness into
4 Series A shares and Warrants to purchase 30,304 shares of Common
Stock.
The
Securities Purchase Agreement, the Registration Rights Agreement, the form of
Warrant to Purchase Common Stock and the form of Executive Officer Reimbursement
Agreement are attached hereto as Exhibits 10.1, 10.2, 10.3 and 10.4
respectively, and incorporated herein by reference. The press release announcing
the private placement transaction is attached hereto as Exhibit 99.1 and
incorporated herein by reference. The foregoing description of the Securities
Purchase Agreement, the Registration Rights Agreement, the form of Warrant to
Purchase Common Stock and the form of Executive Officer Reimbursement Agreement
does not purport to be complete and is qualified in its entirety by reference to
the full text of the Securities Purchase Agreement, the Registration Rights
Agreement, the form of Warrant to Purchase Common Stock and the form of
Executive Officer Reimbursement Agreement attached hereto.
Item
2.02 Results of Operations and Financial Condition.
On
November 16, 2009, the Company issued a press release announcing results
for the third quarter ended September 30, 2009. A copy of the press
release is attached as exhibit 99.1.
The
information in this report shall not be deemed to be "filed" for purposes of
Section 18 of, or otherwise regarded as filed under, the Securities Exchange Act
of 1934, as amended. Unless expressly incorporated into a filing of
the Registrant under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, made after the date hereof, the information
contained herein shall not be incorporated by reference into any filing of the
Registrant, whether made before or after the date hereof, regardless of any
general incorporation language in such filing.
Item
3.02 Unregistered Sales of Equity Securities
The
information set forth in Item 1.01 of this Current Report on Form 8-K that
relates to the unregistered sale of equity securities is incorporated by
reference into this Item 3.02.
Item 5.02 Departure of Directors of
Certain Officers;
Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
On
November 13, 2009, Dr. Tom Hall submitted his resignation as a director of the
Company.
On
November 16, 2009, Warren V. Musser resigned his position as Chairman of the
Board of Directors and the Board elected Anthony J. Paoni as Chairman of the
Board to take the position previously held by Mr. Musser. Mr. Musser
will remain as a director of the Company.
On
November 16, 2009, Seth D. Blumenfeld submitted his resignation as a director of
the Company effective as of the date of the closing of the private placement
discussed in Item 1.01 of this Current Report on Form 8-K and Jason L. Tienor,
the Company’s President and Chief Executive Officer, was elected by the Board to
fill the vacancy created by the resignation of Seth D. Blumenfeld.
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year
On
November 16, 2009, the Company filed with the Secretary of State of the State of
Utah its Articles of Amendment (the “Articles of Amendment”). The Articles of
Amendment amend the Company’s Amended and Restated Articles of Incorporation, as
amended, to fix the preferences, rights and limitations of the Series
A. A copy of the Articles of Amendment is attached hereto as Exhibit
3.1 and incorporated herein by reference.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits
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Exhibit
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Number
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Description
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3.1
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Articles
of Amendment of the Amended and Restated Articles of Incorporation of
Telkonet, Inc. filed with the Secretary of State of the State of Utah on
November 16, 2009.
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10.1
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Securities
Purchase Agreement, dated November 16, 2009, by and among Telkonet, Inc.
and the parties listed therein.
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10.2
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Registration
Rights Agreement, dated November 16, 2009, by and among Telkonet, Inc. and
the parties listed therein.
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10.3
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Form
of Warrant to Purchase Common Stock.
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10.4
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Form
of Executive Officer Reimbursement Agreement.
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99.1
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Press
Release, dated November 16,
2009.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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TELKONET,
INC.
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Date:
November 18, 2009
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By:
/s/ Richard J.
Leimbach
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Richard
J. Leimbach
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Chief
Financial Officer
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