Telkonet's High Speed Internet Access System Selected by MHI Hotels and ANM Hospitality; Guests Benefit from the Security of a Wired System with the Portability of Wireless System

Business Wire, Sept 7, 2004

GERMANTOWN, Md. -- Telkonet, Inc. (Amex:TKO), the leader in commercial powerline communications (PLC), today announced that two hotel companies, MHI Hotels and ANM Hospitality, have selected Telkonet as their high-speed Internet access solutions provider for many of their hotel properties. MHI Hotels has installed Telkonet's system in eight of their hotels, including Holiday Inns, located in Virginia, North Carolina, Georgia, and Florida. ANM Hospitality has signed a contract for nine properties in Michigan, Ohio, and Indiana, including Clarion, Days Inn, Best Value & Suites, Best Western, Comfort Inn and Baymont Inn.

Steve Smith, Executive Vice President, Operations of MHI Hotels, stated, "Telkonet's high-speed Internet system meets my needs for cost, security, and scalability. Rewiring the hotels with CAT 5 was too expensive. Being able to provide Internet access over the hotels' existing electrical wiring was both simple and affordable. Security is a major concern to business travelers that use their laptops, and I didn't feel comfortable with a wireless solution. Telkonet's system provides the best of both worlds: a secure, wired solution that has the portability of wireless, since guests can access the Internet wherever there's an electrical outlet. In addition, Telkonet's system can be easily expanded as my needs grow."

Akram Namou, President of ANM Hospitality, commented, "I signed a contract with Telkonet to provide broadband access to my eight hotels because of their affordable Internet solution pricing package. Rather than having to pay a large, upfront bulk payment, I signed up for a monthly service contract that is cost-effective for my properties. Also, I felt comfortable choosing Telkonet since they are an endorsed vendor for Choice Hotels."

Ron Pickett, President of Telkonet, added, "These recent hospitality contracts and other multiple sales are evidence that our marketing strategy to leverage a national base of individually-owned hotels into a national base of multiple hotel owners is working."

Telkonet's system uses powerline communications (PLC) technology to enable the transmission of data over existing electrical wires within a building. In doing so, it is not necessary to install new or dedicated wiring or cabling, resulting in simple and quick installation. Once the system is installed, virtually every power outlet throughout a hotel is converted into a high-speed data network. Hotel guests can access the Internet from electrical outlets throughout the hotel, including guest rooms, meeting rooms, and public areas. Guests can enjoy the portability of a wired system and the security of a wireline system, as data is encrypted and is secure from outside intrusion, ensuring that no users can access another user on the network.

About Telkonet

A cost-effective alternative to hardwired or wireless local area networks (LANs), the Telkonet PlugPlus(TM) family of networking and internetworking products provides Internet connectivity over existing electrical wiring with no costly installation of additional wiring or disruption of business activity. Telkonet's PlugPlus system is designed for commercial and residential applications, including multi-unit dwellings, hotels and motels, and government. For more information, visit www.telkonet.com.

Statements included in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks and uncertainties such as competitive factors, technological development, market demand and the Company's ability to obtain new contracts and accurately estimate net revenues due to variability in size, scope and duration of projects, and internal issues in the sponsoring client. Further information on potential factors that could affect the Company's financial results, can be found in the Company's Registration Statement and in its Reports on Forms 8-K filed with the Securities and Exchange Commission (SEC).