Telkonet's iWire System(TM) Secures FIPS 140-2 Validation for IP over Powerline Products; Telkonet's Entire System Certified For Government-Wide Use.

GERMANTOWN, Md. -- Telkonet, Inc. (AMEX:TKO), the leader in providing powerline networking solutions using existing electrical wiring, today announced that it has received the National Institute of Standards and Technology (NIST) Federal Information Processing Standard (FIPS) 140-2 validation for the Telkonet eXtender(TM) and the Telkonet iBridge(TM). With the validation of Telkonet's Gateway on June 27, 2005, all of Telkonet's powerline carrier (PLC) products have received this government security certification, which is required by the Federal government as a condition of purchase for certain information processing applications.

Ronald W. Pickett, President and CEO of Telkonet commented, "FIPS 140-2 compliance and certification of the entire Telkonet iWire system illustrates our commitment to meeting the U.S. government's high standards for security assurance. Now that we have this certification, it opens the door for both government agencies and government contractors to purchase and install the Telkonet iWire system. We look forward to serving the needs of this market."

FIPS 140-2 compliant products are accepted by the Federal agencies of both the United States and Canada for the protection of sensitive information (U.S.) or designate information (Canada), according to NIST. FIPS 140-2 is also recognized by the Communications-Electronics Security Group (CESG) as meeting security criteria for use in data traffic categorized as "Private". CESG is the UK Government's National Technical Authority for Information Assurance, responsible for enabling secure and trusted knowledge and is also validated protection for financial and healthcare organizations, as well as for international governments.

About Telkonet

Telkonet develops and markets technology for the transmission of high-speed voice, video and data communications over the existing electrical wiring within a building. The revolutionary Telkonet iWire System utilizes proven powerline communications (PLC) technology, which enables the delivery of commercial high-speed broadband access from an IP "platform" that is easy to deploy, reliable and cost-effective by leveraging a buildings existing electrical infrastructure. The buildings existing electrical wiring becomes the backbone of the local area network, which converts virtually every electrical outlet into a high-speed data port, without the costly installation of additional wiring or major disruption of business activity.

The Telkonet iWire System can be installed rapidly and offers a viable and cost-effective alternative to the challenges of hardwiring and wireless local area networks (LANs). Telkonet's products are designed for use in commercial and residential applications, including multi-dwelling units and the hospitality and government markets. Applications supported by the Telkonet "platform" include but are not limited to: VoIP telephones, Internet connectivity, local area networking, video conferencing, closed circuit security surveillance and a host of other information services. For more information, please 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).