telkonet_8k-053008.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
May 30,
2008
(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.
On May
30, 2008, Telkonet, Inc. (the “Company”) entered into a Securities Purchase
Agreement with YA Global Investments, L.P. (the “Buyer”) pursuant to which the
Company agreed to issue and sell to the Buyer up to $3,500,000 of secured
convertible debentures (the “Debentures”) and warrants to purchase (the
“Warrants”) up to 2,500,000 shares of the Company’s Common Stock, par value
$0.001 per share (the “Common Stock”). The sale of the Debentures and
Warrants will be effectuated in three separate closings, the first of which
occurred on May 30, 2008, and the remainder of which shall occur after the
satisfaction of certain conditions, including, but not limited to, the approval
by the Company’s stockholders of an amendment to the Company’s certificate of
incorporation authorizing additional shares of Common Stock for
issuance. At the May 30, 2008 closing, the Company sold Debentures
having an aggregate principal value of $1,500,000 and Warrants to purchase
2,100,000 shares of Common Stock.
The
Debentures accrue interest at a rate of 13% per annum and mature on May 29,
2011. The Debentures may be redeemed at any time, in whole or in
part, by the Company upon payment by the Company of a redemption premium equal
to 15% of the principal amount of Debentures being redeemed, provided that an
Equity Conditions Failure (as defined in the Debentures) is not occurring at the
time of such redemption. The Buyer may also convert all or a portion
of the Debentures at any time at a price equal to the lesser of (i) $0.58, or
(ii) ninety percent (90%) of the lowest volume weighted average price of the
Company’s Common Stock during the ten (10) trading days immediately preceding
the conversion date. The Warrants expire five years from the date of
issuance and entitle the Buyers to purchase shares of the Company’s Common Stock
at a price per share of $0.61. The Debentures are secured by
substantially all of Telkonet’s assets pursuant to Security Agreement, a copy of
which is attached hereto as Exhibit 10.3. Telkonet has also agreed to
register the shares of Common Stock underlying each of the Debentures and
Warrants pursuant to a Registration Rights Agreement, a copy of which is
attached hereto as Exhibit 10.2.
The
securities issued in his transaction are being sold pursuant to the exemption
from registration 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 Buyer is
an "accredited investor" as such term is defined in Rule 501 of Regulation
D.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits
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4.1
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Form
of Convertible Debenture
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4.2
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Form
of Common Stock Purchase Warrant
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10.1
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Securities
Purchase Agreement
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10.2
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Registration
Rights Agreement
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99.1
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Press
Release dated June 4, 2008
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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:
June 4, 2008
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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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