TELKONET, INC. (OTCMKTS:TKOI) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01.

The information required by Item 1.01 is included in Item 2.01
below and is incorporated by reference.

On March 28, 2017, Telkonet, Inc., a Utah corporation (the
Company), and the Companys wholly-owned subsidiary, EthoStream
LLC, a Wisconsin limited liability company (EthoStream), entered
into an Asset Purchase Agreement (the Purchase Agreement) with
DCI-Design Communications LLC, a Delaware limited liability
company (DCI), whereby DCI would acquire all of the assets and
certain liabilities of EthoStream for a cash purchase price of
$12.75 million (the Acquisition), subject to an adjustment based
on the net working capital of EthoStream on the closing date of
the Acquisition (the Closing Date). DCI is not affiliated with
the Company or EthoStream.

On March 29, 2017, to the terms and the conditions of the
Purchase Agreement, the Company closed on the sale of EthoStream.

The assets subject to the Acquisition included, among other
items, certain EthoStream inventory, contracts and intellectual
property. DCI acquired only the EthoStream liabilities provided
for in the Purchase Agreement.

The Purchase Agreement contained customary representations,
warranties and covenants made by each of the Company, EthoStream
and DCI.

In addition, as previously announced in March 2016, the Company
engaged Canaccord Genuity (Canaccord) as its financial advisor to
assist the Companys management and Board of Directors in the
evaluation and review of potential strategic and capital raising
opportunities aimed at enhancing shareholder value, as well as to
advise the Company with respect to certain transactions that may
ultimately be pursued as result of such review. In connection
with the Acquisition, Canaccord is to receive an advisory fee of
$500,000 for its services in identifying and evaluating DCI as a
potential purchaser of the Companys EthoStream hospitality
networking business segment.

The foregoing summary of the Purchase Agreement and the
transactions contemplated thereby does not purport to be complete
and is subject to and qualified in its entirety by the full text
of the Purchase Agreement, which is filed as Exhibit 2.1 to this
Current Report on Form 8-K and is incorporated herein by
reference.

*Schedules and exhibits have been omitted to Item 601(b)(2) of
Regulation S-K. The descriptions of the omitted schedules and
exhibits are contained within the Asset Purchase Agreement. A
copy of any omitted schedule or exhibit will be furnished
supplementally to the Securities and Exchange Commission upon
request; provided, however, that Telkonet, Inc. may request
confidential treatment to Rule 24b-2 of the Securities Exchange
Act of 1934, as amended, for any schedules or exhibits so
furnished.

About TELKONET, INC. (OTCMKTS:TKOI)

Telkonet, Inc. (Telkonet) provides EcoSmart Platform of intelligent automation solutions to support the Internet of Things. The Company’s business is based on two synergistic divisions: EcoSmart Energy Management Technology (EcoSmart division) and EthoStream High Speed Internet Access (HSIA) Network (EthoStream division). The EcoSmart division offers intelligent automation solutions. The EthoStream division provides the underlying networking technology. Telkonet serves the hospitality, education, military, public housing and healthcare markets. Its EcoSmart Platform consists of over four main pillars, which include EcoSmart Suite, EcoCentral Virtual Engineer, EcoCare and EcoMobile. EthoStream is an HSIA that provides services to approximately eight million users monthly across a network of over 2,300 locations. EthoStream offers solutions for various public access locations with a range of product and service offerings and management platform available for HSIA networks.

TELKONET, INC. (OTCMKTS:TKOI) Recent Trading Information

TELKONET, INC. (OTCMKTS:TKOI) closed its last trading session 00.000 at 0.170 with 288,082 shares trading hands.