SecProbe.io

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Mail Stop 0407

      							April 19, 2005

Via U.S. Mail and Fax (240-912-1839)
Mr. E. Barry Smith
Chief Financial Officer
Telkonet, Inc.
20374 Seneca Meadows Parkway
Germantown, MD 20876

	RE:	Telkonet, Inc.
      Form 10-KSB for the fiscal year ended December 31, 2004
		Filed March 30, 2005
		File No. 0-27305

Dear Mr. Smith:

      We have reviewed the above referenced filings and have the
following comments.  We have limited our review to only your
financial statements and related disclosures and will make no
further
review of your documents.  As such, all persons who are
responsible
for the adequacy and accuracy of the disclosure are urged to be
certain that they have included all information required pursuant
to
the Securities Exchange Act of 1934.  Please address the following
comments in future filings.  If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a future
revision is unnecessary.  Please be as detailed as necessary in
your
explanation.  In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure.  After reviewing this information, we may or may not
raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Form 10-KSB for the fiscal year ended December 31, 2004

General
1. We note from the company`s Forms 10-KSB for the years ended
December 31, 2003, and December 31, 2004, that your public float
exceeded the $25,000,000 limitation for small business issuers for
two consecutive years.  See Item 10(a)(1) and (a)(iii) of
Regulation
S-B.  As you are no longer a small business issuer, please confirm
in
your response letter your understanding that the company is no
longer
eligible to use the small business forms, beginning with the first
quarterly report in fiscal year 2005.

Consolidated Statement of Losses, page F-5
2. State separately your revenues and costs of revenue by goods
and
services, if applicable. Refer to Rule 5-03 of Regulation S-X.
Also,
revise MD&A to discuss cost of sales on a segregated basis.

Note A - Summary of Accounting Policies
Revenue Recognition, page F-11
3. Please disclose the following:
* how it is jointly determined between the Company and the
customer
that the product has been delivered or no refund will be required;
* specifically what you mean by "the effect of implementing EITF
00-
21 was not significant;"
* if installation and support are billed separately to the
customer
and if they represent separate units of accounting,
* if installation and support are considered separate units of
accounting how you account for these multiple elements
arrangements,
* how you account for your cost of sales related to rental
revenue,
and
* if there are any warranties issued with the purchase of your
product.

Note G - Senior Notes Payable, page F-19
4. Tell us more specifically about the transactions that occurred
in
January 2004 regarding the conversion of the senior notes to
common
stock.  Revise your disclosure to describe the convertible
features
and terms of the senior notes.

Note H - Capital stock, page F-20
5. Using the guidance in footnote 3 of EITF 96-18, tell us how you
concluded that you have sufficiently large disincentives for
nonperformance and, therefore, it is appropriate to determine the
fair value of the shares at the performance commitment date. In
this
regard tell us about the nature and terms of the agreement.

*    *    *    *

      Please respond to these comments within 10 business days or
tell us when you will provide us with a response.  Please furnish
a
letter that keys your responses to our comments and provides any
requested supplemental information.  Please file your response
letter
on EDGAR.

	We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.

	In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that

* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filings; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filings or
in
response to our comments on your filings.

      You may contact Bob Carroll, Staff Accountant, at (202) 824-
5507 or Ivette Leon, Assistant Chief Accountant, at (202) 942-1982
if
you have questions regarding comments on the financial statements
and
related matters.  Please contact me at (202) 942-1990 with any
other
questions.

							Sincerely,

							Larry Spirgel
							Assistant Director

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Mr. E. Barry Smith
Telkonet, Inc.
April 19, 2005
Page 3

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

         DIVISION OF
CORPORATION FINANCE

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