Ownership Submission
FORM 5
Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).
Form 3 Holdings Reported
Form 4 Transactions Reported
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

ANNUAL STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
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1. Name and Address of Reporting Person *
MUSSER WARREN V
 2. Issuer Name and Ticker or Trading Symbol
TELKONET INC [TKO] 		5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
__X__ Director _____ 10% Owner
_____ Officer (give title below) _____ Other (specify below)
(Last)
(First)
(Middle)

20374 SENECA MEADOWS PARKWAY		 3. Statement for Issuer's Fiscal Year Ended (Month/Day/Year)
12/31/2006
(Street)


GERMANTOWN, MD 20876		 4. If Amendment, Date Original Filed(Month/Day/Year)
 6. Individual or Joint/Group Reporting
(check applicable line)

_X_ Form Filed by One Reporting Person
___ Form Filed by More than One Reporting Person
(City)
(State)
(Zip)
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3)		 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code
(Instr. 8)		 4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5)		 5. Amount of Securities Beneficially Owned at end of Issuer's Fiscal Year
(Instr. 3 and 4)		 6. Ownership Form: Direct (D) or Indirect (I)
(Instr. 4)		 7. Nature of Indirect Beneficial Ownership
(Instr. 4)
Amount (A) or (D) Price
Common Stock par value $0.001     3         D  

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly. Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 2270 (9-02)

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 3)		 2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (Month/Day/Year) 3A. Deemed Execution Date, if any (Month/Day/Year) 4. Transaction Code
(Instr. 8)		 5. Number of Derivative Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4, and 5)		 6. Date Exercisable and Expiration Date
(Month/Day/Year)		 7. Title and Amount of Underlying Securities
(Instr. 3 and 4)		 8. Price of Derivative Security
(Instr. 5)		 9. Number of Derivative Securities Beneficially Owned at End of Issuer's Fiscal Year
(Instr. 4)		 10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)		 11. Nature of Indirect Beneficial Ownership
(Instr. 4)
(A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares
Option to purchase $ 1 12/18/2006(2)   J4 (3) 2,000,000     (2) 01/18/2013 Common
2,000,000
$ 1 2,000,000
I
See note (4)

Reporting Owners

Reporting Owner Name / Address Relationships
Director 10% Owner Officer Other
MUSSER WARREN V
20374 SENECA MEADOWS PARKWAY
GERMANTOWN, MD 20876		   X      

Signatures

/s/ Warren V. Musser 04/26/2007
**Signature of Reporting Person Date

Explanation of Responses:

* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1) No shares beneficially owned as of January 30, 2003, date of election as Chairman of the Board.
(2) Options vested ratably on a quarterly basis over a period of 12 consecutive quarters, beginning January 18, 2003 (grant date). As of January 18, 2006, all of these options have vested.
(3) In January 2003, the company entered into a consulting agreement with the Musser Group, whereby the Musser Group was issued 2,000,000 options to purchase shares of common stock at $1.00. Warren Musser is a principal of the Musser Group, which at the time of the agreement was 95% owned by Hilary Musser, Mr. Musser's wife. As a result of certain legal proceedings between Mr. and Mrs. Musser, Mr. Musser did not have voting or dispositive control of the Telkonet securities held by the Musser Group prior to December 18, 2006. On December 18, 2006, Mrs. Musser transferred her 95% interest in the Musser Group to Mr. Musser, at which time he became the indirect beneficial owner of those securities.
(4) Options to purchase Telkonet common stock are held by the Musser Group, LLC, of which Mr. Musser owns 100% of the issued and outstanding membership units.

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