Sec Form 5 Filing - Landry James F @ TELKONET INC - 2006-12-31

FORM 5 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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1. Name and Address of Reporting Person Landry James F 2. Issuer Name and Ticker or Trading Symbol TELKONET INC [ TKO] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) _____ Director _____ 10% Owner X __ Officer (give title below) _____ Other (specify below) Chief Technology Officer (Last) (First) (Middle) 20374 SENECA MEADOWS PARKWAY 3. Date of Earliest Transaction (MM/DD/YY) 12/31/2006 (Street) GERMANTOWN, MD20876 4. If Amendment, Date Original Filed (MM/DD/YY) 6. Individual or Joint/Group Filing (Check Applicable Line) __ X __ Form filed by One Reporting Person _____ Form filed by More than One Reporting Person (City) (State) (Zip)

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned 1.Title of Security (Instr. 3) 2. Transaction Date (MM/DD/YY) 2A. Deemed Execution Date, if any (MM/DD/YY) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock par value $0.001 84,200 ( 1 ) D

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned ( e.g. , puts, calls, warrants, options, convertible securities) 1. Title of Derivative Security (Instr. 3) 2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (MM/DD/YY) 3A. Deemed Execution Date, if any (MM/DD/YY) 4. Transaction Code (Instr. 8) 5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5) 6. Date Exercisable and Expiration Date (MM/DD/YY) 7. Title and Amount of Underlying Securities (Instr. 3 and 4) 8. Price of Derivative Security (Instr. 5) 9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4) 10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4) 11. Nature of Indirect Beneficial Ownership (Instr. 4) Code V (A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares Option to purchase ( 2 ) $ 1 12/20/2001 J( 3 ) V 25,000 ( 4 ) 12/20/2011 Common 25,000 $ 1 500,000 D Option to purchase ( 2 ) $ 1 02/15/2002 J( 3 ) V 100,000 ( 5 ) 02/15/2012 Common 100,000 $ 1 500,000 D Option to purchase ( 2 ) $ 1 01/01/2003 J( 3 ) V 125,000 ( 6 ) 01/01/2013 Common 125,000 $ 1 500,000 D Option to purchase ( 2 ) $ 3.45 05/01/2004 J( 3 ) V 250,000 ( 7 ) 05/01/2014 Common 250,000 $ 3.45 500,000 D

Reporting Owners Reporting Owner Name / Address Relationships Director 10% Owner Officer Other Landry James F 20374 SENECA MEADOWS PARKWAY GERMANTOWN, MD20876 Chief Technology Officer Signatures /s/ James F. Landry 05/24/2007 Signature of Reporting Person Date

Explanation of Responses:

( 1 )Shares beneficially owned as of the date of appointment to Chief Technology Officer and December 31, 2006. ( 2 )Stock options to purchase shares of common stock beneficially owned as of December 31, 2006. ( 3 )Information on this line should have been reported on a Form 3. ( 4 )Options vest ratably on a quarterly basis over a three year period. As of December 31, 2006 and filing date, the options are fully vested and exerciseable. ( 5 )Options vest ratably on a monthly basis over a three year period. As of December 31, 2006 and filing date, the options are fully vested and exerciseable. ( 6 )Options vest ratably on a quarterly basis over a three year period. As of December 31, 2006 and filing date, the options are fully vested and exerciseable. ( 7 )Options vest ratably on an annual basis over a five period. As of December 31, 2006, and filing date, 100,000 and 150,000 of these options are vested and exerciseable, repectively.

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.

* If the form is filed by more than one reporting person, see Instruction 4(b)(v).

** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).

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