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Roth presentation jason tienor telkonet

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Jason Tienor/CEO March 2015
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Page 1: Roth presentation   jason tienor telkonet

Jason Tienor/CEOMarch 2015

Page 2: Roth presentation   jason tienor telkonet

Statements in this presentation may constitute forward-looking statements withinthe meaning of the Private Securities Litigation Reform Act of 1995. Suchstatements involve a number of risks and uncertainties such as competitivefactors, technological development, market demand and the Company's ability toobtain new contracts and accurately estimate net revenue due to variability in size,scope and duration of projects, and internal issues in the sponsoring client. Furtherinformation on potential factors that could affect the Company's financial resultscan be found in the Company's Annual Report on Form 10-K and other periodicreports filed with the Securities and Exchange Commission. Forward-lookingstatements contained herein are made as of the date of this presentation, and weundertake no obligation to revise or update any forward-looking statements inorder to reflect events or circumstances that may arise after the date of thispresentation, unless otherwise required by law.

All Company, brand or product names are registered trademarks or trademarks oftheir respective holders.

Safe Harbor Statement

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Page 3: Roth presentation   jason tienor telkonet

• Intelligent Automation (IoT) Company

• Publicly Traded OTCQB:TKOI

• Established History of 17+ Years• Headquartered in Milwaukee, WI• Experienced Team of 107

Company Summary

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Page 4: Roth presentation   jason tienor telkonet

• Successful Turn-Around Story • Development-Stage as Market Leader• Increasing Pace of Revenue & Profitability• New $2 Million Revolving Line-of-Credit• Experienced Management Team• Evolutionary Internet of Things Platform

Company Overview

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Page 5: Roth presentation   jason tienor telkonet

Mature Industry providing10% growth

SharedSynergies

InstallSupportNetwork

Customer-Base

300,000Rooms

Installed

Emerging Industry showing escalating growth

Less than 20%developed

235,000Rooms

Installed

10% Growth

5% Of Market

8M MonthlyUsers

Complimentary Divisions

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Page 6: Roth presentation   jason tienor telkonet

• Numerous Marquee Endorsements• Extensive Networking Expertise• 5% Market Share and Growing

EthoStream Hospitality Network

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Page 7: Roth presentation   jason tienor telkonet

EnergyConsumption

GridQuality

Lost Comfort

Inefficient Performance

Sustainability

Operational Costs

Target Industry Pain

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Page 8: Roth presentation   jason tienor telkonet

EcoSmart Suite

EcoCare

EcoCentral Virtual Engineer

EcoMobile

EcoSmart Platform

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Page 9: Roth presentation   jason tienor telkonet

Energy Savings Operational Savings

Value Savings

EcoSmart Solution

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$ in millions

$1,160

$700

$215$300

$800$900

$0

$300

$600

$900

$1,200

$1,500

Hospitality Education Healthcare Military Utility Commercial

Research provided by Navigant Research, Allied Market Research, Department of Energy and others.

Significant growth in EcoSmart market segments by 2020

Target Market Opportunity

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Energy Management Systems Market is Expected to Reach $44.4 Billion Globally by 2020

Allied Market Research (March 2, 2015)

Home Energy Management Revenue Is Expected to Total More than $22 Billion from 2014 to 2023

Navigant Research (March 2, 2015)

Recent Headlines

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Page 12: Roth presentation   jason tienor telkonet

Commercial

Residential

Product Solution Platform

Onity

Schneider

Ving

Inncom

EcobeeNest

SmartThings

EcoSmartEvolve

Honeywell

Competitive Landscape

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Technology Expertise Relationships Success+ + =

• Comprehensive Platform

• Consistent Innovation• Software-as-a-Service• Newest Industry

Technology

• Synergistic Divisions• Scalable Solution• Market Research &

Understanding

• Key Franchise Endorsements

• First-Mover Advantages• Utility Participation• Extensive Integrations• Broad Channel

Distribution

• Revenue Growth• Profitability Gain• Gross Margin

Improvement• Increased Shareholder

Value

Competitive Advantages

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Page 14: Roth presentation   jason tienor telkonet

Ongoing Development

Intelligent Platform

Automated Monitor

Innovative Alerts

Self-Awareness

Evolutionary Architecture

3rd Party Integration

35%-45%+ Savings

Operational Savings

Equipment Longevity

Increased Comfort

Increased Communication

EcoSmart Benefits

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Page 15: Roth presentation   jason tienor telkonet

• 35%-45% Reduction in HVAC Alone• Average Hospitality ROI Less Than 3 Years• Zero Cost Deployment Option with Tier 1 Bank Partner• Reduced Further Through Utility Rebate & Incentives• Simple Upgrade Path• Extensive Competitive Differentiation

EcoSmart Savings

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Page 16: Roth presentation   jason tienor telkonet

Engineers, Architects, Developers, ESCO’s

Partner Development & Support

Channel Sales

Expand Channel Growth

Direct Sales

Shrink Sales Cycle

Deepen Market Penetration

Marketing Strategy

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Page 17: Roth presentation   jason tienor telkonet

(in millions) 2013 2014 Change

Growth Q3 - Quarter Q3 - YTD Q3 - Quarter Q3 - YTD Q3 -Year over Year

YTD -Year over Year

Revenue $3.50 $10.20 $4.10 $11.10 16% 8%

Gross Profit $1.80 $4.70 $2.10 $5.30 21% 13%

Operating Income ($0.20) ($1.30) $0.50 $0.00 363% 102%

Net Income ($0.50) ($1.50) $0.30 ($0.20) 180% 88%

EBITDA ($0.10) ($1.00) $0.50 $0.20 595% 124%

Model Q3 - Quarter Q3 - YTD Q3 - Quarter Q3 - YTD Q3 -Year over Year

YTD -Year over Year

Revenue 100% 100% 100% 100% 100% 100%

COGS 49% 54% 48% 52% (1%) (2%)

Gross Profit 51% 46% 52% 48% 1% 2%

SG&A 45% 47% 31% 37% (14%) (10%)

Operating Profit (5%) (12%) 11% 0% 16% 12%

Net Income (14%) (15%) 9% (2%) 23% 13%

EBITDA (3%) (9%) 13% 2% 16% 11%

Financial Overview

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Page 18: Roth presentation   jason tienor telkonet

• Revenue of $4.1 million, up 16% from $3.5 million in 3Q13

• Product Revenue of $3.1 million, up 20% from $2.6 million in 3Q13

• Gross Profit of $2.1 million, up 21% from $1.8 million in 3Q13

• Gross Profit Margin of 52%, up from 51% in 3Q13

• SG&A expense of $1.3 million, down 20% from $1.6 million in 3Q13; SG&A declined year-over-year from 45% to 31%

• Continued investment in R&D led to spending increase of 13% from prior year quarter but decreased as a percent of revenue to 8.5% in 3Q14 from 8.7% in 3Q13

• Income from Operations of $457,528 compared to a Loss from Operations of $(171,141) in 3Q13

• Net income of $326,318 for 3Q14 compared to a Net Loss of $(480,478) in 3Q13

• Adjusted EBITDA* of $531,255, compared to $(107,387) in 3Q13

• Significantly strengthened financial position with $2 million revolving line of credit

Recent Financial Highlights – Q3 2014

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Page 19: Roth presentation   jason tienor telkonet

Jason TienorCEO

Business & PlatformDevelopment, Strategy,Technology, Wireless

Matt KochCOO

Wireless, Operations,Platform Development

Gerrit ReindersExec. VP of Sales

& MarketingEnergy Efficiency, Channel

Development, ESCO

Gene MushrushCFO

Finance, Cost Containment,Systems Development

Jeff SobieskiCTO

Technology, Platform Development, Engineering,

Business Development

Executive Management Team

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Current State of Company

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Page 21: Roth presentation   jason tienor telkonet

• EcoSmart offers a unique value proposition for automated intelligence, efficient energy consumption, return on investment, and user comfort and convenience exemplifying the Internet of Things (IoT) space

• Strong IP position and technological leadership with numerous differentiators

• 2014 demonstrated enormous growth in secondary markets including Education and partnership development

• Growing backlog positioning business for rapid expansion

• Large and growing markets bolstered by secular trends seen through 2020

• Expanding base of highly recognizable channel partners and referral network

• Profitable with significant leverage in financial model remaining

• Experienced management team and accomplished Board of Directors

Key Investment Factors

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