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Good afternoon, and welcome to Telkonet's First Quarter Earnings Conference Call. As a reminder, today's conference may be recorded. Before I turn the call over to Jason Tino, Telkonet's CEO, I would like to read the following statement. Certain statements included in this conference call 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 and market demand and company's ability to obtain new contracts and accurately estimate net revenue due to variability and size, scope and duration of projects and internal issues in sponsoring clients. Further information on potential factors that could affect the company's financial results can be found in the company's registration statement and on its reports on forms 8-K filed in Securities and Exchange Commission. Telkonet is under no obligation to update items discussed today to reflect subsequent developments. Lastly, I would like to remind everyone that this call will be recorded and will be made available for replay via a link available in the Investor Relations section of Telkonet's website at www.telkonet.com. With that, I would like to now turn the call over to Jason Tienor, Telkonet's President and CEO, to discuss results. Mr. Tienor, you may begin.
Thank you, operator. Good afternoon, and thanks for joining us for Telkonet's 2021 First Quarter Earnings Call. We appreciate your time and your interest in Telkonet's performance and look forward to answering any questions you might have.
As we spoke only 1.5 months ago, 2021 has begun slowly. While vaccines are now available helping to alleviate fear surrounding the pandemic, the financial consequences of the prolonged economic withdrawal, labor and material shortages and travel restrictions are diminishing more slowly. We continue to focus our efforts on navigating through these challenges and the effects of the pandemic in the short-term to position Telkonet for long-term growth. As the industry continues to evolve, we believe our efforts throughout the last year will provide a lasting impact on Telkonet's future performance. Significant portions of the global economy, including the U.S., are set for a rapid reopening following the anticipated lifting of COVID-19 related lockdowns as people start to travel, seek entertainment and dine out. The start of the year saw Telkonet recognizing record quoting volume throughout our markets preparations for consumer demand. While much of this activity is a refresh of projects not completed over the prior 1.5 years, we continue to see greater engagement on newly budgeted new builds and renovation projects as well. These encouraging signs have given rise to hope for our target markets recovery and fueled our activity towards a growing pipeline. Furthermore, we maintain the belief that COVID-19 has pulled forward multiple years of consumer behavioral change, as people around the world are transitioning from office space to remote work, which in change will generate more travel, both lifestyle and workplace. A few of the bright spots in our Q1 activity include the forgiveness of our earlier PPP loan in Q1, providing support for our staff and operations and an improved ability to position the company for a return to normal operations as our markets rebound. More recently, we've built particular strength in our continued channel development and the demand generated through channel partnerships.
Our key relationships, including Trane, Carrier, Johnson Controls and others, continue to demonstrate industry leadership and competitive differentiation, generating market awareness and improved pipeline coverage. Sales and marketing efforts across our ongoing relationships with channel partners and increased market awareness and penetration have yielded increases in RFP requests, approved franchise relationships and development specification listings. This is where we work on quoting 1 job, and now we have multiple contractors coming to us to bid the same job due to being listed within the development project itself. Increased compatibility through efforts with industry leaders to provide native HVAC communication, including our recently announced integration wins with Mitsubishi and LG and substantial interest in our most recently released and technologically advanced thermostat with Touch Combo. While this device is built upon the intelligent automation capabilities of our past devices, the Touch Combo separates itself from the competition through its integration of WiFi, Zigbee and Bluetooth in a single device.
Through its ability to accommodate any size of installation, network and scale across individual property or directly to the cloud, interact directly with mobile apps and communicate across multiple individual protocols, the Touch Combo has rapidly been recognized as an incredibly versatile solution, providing a diverse number of alternatives for our customers. This is an example of Telkonet's inventiveness. Nowhere else in our market is a device like this currently offered. Through our most recently released Rhapsody platform, our partnerships with the military housing continue to grow with additional trials with our existing ESCO partner following the successful deployment of more than 5,000 devices in 1 installation. And an additional ESCO partner now quoting deployment within a new military installation. We expect several of our other target verticals that have not yet accelerated to do so in the coming months. We expect these trends to create significant tailwinds for us in 2021. And especially in fact the development has been the growth of interest in Telkonet internationally. In addition to the success of our largest recent partnership of , we've recently signed on 1 of our largest distribution partners and continue to see increased international interest and channel relationships. As our addressable market continues to grow outside of the U.S., we see an enormous opportunity for growth through these partnerships. The company also recently released our integration catalog to partners and customers to demonstrate the evolution of our intelligent automation and ability to interact with the largest breadth in smart technologies available to our markets. This continues to demonstrate Telkonet's innovation leadership and separate us as a full solution provider for commercial automation markets. Through extensive efforts throughout the organization, we've been able to recognize greater than 90% satisfaction with Telkonet support, which has long been a competitive differentiation among our competitive set and the continued points brought up to us by current and potential customers. These comments are what the Telkonet team strives to achieve through our full life cycle approach to our solutions for partners and customers. Now being a full life cycle intelligent automation provider requires controlling all layers of our solution stack, from products and software to service in mobile apps and analytics development, from engineering, design and development through ongoing cloud analytics and support, we enhance our customers' experience through being our -- their single source provider in every facet of this experience.
Second, controlling all layers of the solution stack allows us to rapidly innovate, which benefits our customers who rely on us for best-in-class technology. We deploy new capabilities, features, and algorithm updates on a regular basis across our global infrastructure. In an evolving landscape, we believe our platform enables continuous innovation and future proofs our business and that of our customers.
And third, by owning all layers of the stack, we're well positioned to continuously drive down costs by becoming more efficient or benefit to our customers and to us. Our approach provides us with several key benefits and a significant competitive moat compared to our peers. This separation from our competition benefits our customers in a very measurable fashion. Demonstrating a dedication to people, places and spaces, we focus on individual priorities important to our customers. While competitors build products for the core purpose of controlling energy and best saving money, they do so in a vacuum that leaves end users uncomfortable and unhappy and causes untold harm to a property. Telkonet prioritizes our customers, end users, guests and residents, first ensuring that their business is supported, secure and successful through not impacting people and their experiences. In addition, to ensuring people are the first priority, attention to be place, i.e., the building, campus or property is essential to ensuring that our products and solutions do no harm; maximizing the life of furniture, fixtures and equipment or FF&E, minimizing impact on the place through innovative technology including humidity monitoring and control, and integration with third-party sensors and automation to monitor run time leaks and more, allows us to further maximize the property's value while ensuring an ultimate outcome. This outcome, being energy conservation within the space. After supporting a customer's core business and ensuring health in place, we use innovative measures to monitor and control energy consumption within a space to provide a significant ROI through our solutions. Using occupancy, time of day, integration and other in-space technology, we're able to substantially lower customers' energy bills and improve sustainability initiatives. This prioritization of customers' interest in addition to the level of innovation and full life cycle relationships, are what separates Telkonet from our competitors and positions us as a leader in evolving commercial intelligent automation industry. As mentioned, while the first quarter has not demonstrated the type of recovery we hoped for, it has shown that Telkonet's markets are preparing for returning to a more normal business cycle. As we look forward to the rest of the year, we remain confident in our strategic growth drivers and the ability to acquire market share. Our quoting volume throughout the first quarter, coupled with construction and hospitality beginning to return to normal operations as global accountings recover gives us confidence in the remainder of 2021 and full 2022 outlook. We're successfully executing against multiple strategic initiatives, including inventory management, production planning, process improvements and growth drivers, including innovative products, channel developments and military and international opportunities, leading to an improved pipeline and more solidified market positioning.
And we expect that to strengthen as the economic reopening in the U.S. and elsewhere accelerates. Our recognition of improved market demand fuels our ambition for significant market share gains in the years ahead. Through the inefficiencies -- through the efficiencies recognized and the engineering and operational improvements, we expect improved performance results over the remainder of 2021 and a significant performance over 2022. Along with our ongoing strategic discussions, Telkonet continues to position ourselves for a return to our growth curve and increase shareholder value moving forward. We continue to differentiate ourselves through our full life cycle approach to intelligent automation solutions within commercial markets, our continued innovation and technology leadership through products such as the Touch Combo and Rhapsody platform, and we believe these developments will be the yardstick for future technologies in our target markets. In summary, it's been a tough period for Telkonet, but our team has worked hard to use the time productively, and we have a lot of growth opportunities ahead of us, which we're truly excited about and look forward to future discussions surrounding these opportunities as they mature. With that said, I'd like to thank you for your time today and hand the call over to Gene Mushrush, Telkonet's Chief Financial Officer. Gene?
Thank you, Jason. Ladies and gentlemen, good afternoon, and thank you for joining us. Today, I will be summarizing our first quarter 2021 financial results. Total revenues of $1.3 million represented a 28% decrease compared to the current period prior year. Hospitality revenues decreased 36% to $876,000. Educational revenues decreased 66% to $91,000, while MDU revenues increased 93% to $180,000. Governmental revenues increased 84% to $118,000. And finally, health care revenues increased a 100% to $30, 000. Product revenues decreased 31% to $1.1 million. Product revenues derived from value-added resellers and distribution partners was $915,000, a decrease of 16%. The decrease was primarily driven by non repeatable revenues in 2020 from 1 customer. International revenues increased 350% to $255,000. The increase in international revenues was primarily driven by 3 customers. Recurring revenues decreased by 4% to $186,000 when compared to the prior-year period. The decline was related to decreased unit sales of support services. Backlog orders were approximately $2.6 million and $2.8 million at March 31, 2021 and March 31, 2020, respectively. Although the actual gross profit percentage increased 10% to 55%, gross profits for the quarter decreased 13% to $705,000 when compared to the prior-year period. The decrease in gross profit was primarily attributable to a decline in revenues of $500,000, partially offset by improvements in material costs of $180,000, warranty expenses of $20,000, inventory adjustments of $50,000 and use of installation subcontractors of $110,000. Material cost as a percentage of product revenues were 33%, a decrease of 10% compared to the prior-year period. Our core products are manufactured in China. And as a result, tariffs imposed on those imports resulted in an adverse impact of approximately 3% on the actual gross profit percentage for the 3 months ending March 31, 2021, approximately the same for the prior year period. Operating expenses increased by 6% when compared to the prior year period. The variance is primarily attributable to increases in legal of $120,000, audit fees of $100,000 and royalty fees of $30,000, partially offset by decreases in expenses incurred with third-party consultants of $60,000, salaries of $30,000. 401(k) employer match of $30,000, trade shows, consulting and sales commissions of $10,000 apiece. The royalty fees were made under the license agreement entered into on November 30, 2020. See Note I commitments and contingencies for a summary of the terms of the license agreement. We incurred an operating loss and reporting -- reported a negative adjusted EBITDA of $830, 000 and $815,000, respectively, for the quarter ended March 31, 2021. This compared to an operating loss and a negative adjusted EBITDA of $641,000 and $624,000 respectively, for the prior year period. We reported approximately $2.7 million in cash and equivalents at March 31, 2020, compared to $3.1 million last year.
Cash used in operations was $654,000 for the quarter ended March 31, 2021, compared to cash used in operations of $110,000 for the prior-year period. Working capital, measured as current assets in excess of current liabilities was $1.8 million at March 31, 2021, compared to $1.7 million at December 31, 2020. The increase was primarily due to the forgiveness of the PPP loan, partially offset by decreases in cash and net inventory. As of March 31, 2021, we had a total borrowing base of $952,000, an outstanding balance of $591,000 and a cash management services reserve of $50,000 resulting in availability of $311,000 on our credit facility compared to a total borrowing base of $720,000, an outstanding balance of $518,000 and a cash management services reserve of $50,000, resulting in availability of approximately $153,000 at March 31, 2020. The company's operations, liquidity and financial results continue to be impacted by the COVID-19 pandemic. While we expect this disruption to continue, the company is unable to reasonably determine the full extent of the impact. Due to travel restrictions, social distancing and shelter at home , the hospitality industry, our largest market that generally accounts for a majority of our revenue has suffered as much as any during this pandemic. Rising cases of COVID-19 in certain areas, the emergence of new virus strains and a slowing of vaccinations has limited both group and individual travel. Although some restrictions have been lessened or eliminated, business travel, which comprises the largest source of hotel revenue remains limited. Although measurable recovery is predicted in the second half of 2021, business travel is not expected to return to pre-pandemic levels until at least 2023. According to an STR forecast into group business and international demand returns, U.S. hotel occupancy rates will not exceed 50% in 2021. Moreover, full recovery of revenue per available room is unlikely to return to pre-pandemic levels until the end of 2024. The company has received 2 loans under the PPP administered by the SBA and authorized by the keeping American Workers employed and Paid Act, which is part of the Cares Act enacted on March 27, 2020.
On April 17, 2020, the company entered into an unsecured promissory note for approximately $913,000 for the first PPP loan. In January 2021, the company applied for forgiveness of the amount due on said loan. On February 16, 2021, Heritage Bank confirmed that the first PPP loan granted to the company in the original principal amount of approximately $913,000 plus accrued interest of approximately $8,000 thereon was forgiven in full. The loan forgiveness amount is accounted for as a noncash gain on debt extinguishment. On April 27, 2021, the company entered into an unsecured promissory note dated as of April 26, 2021, with Heritage Bank under a second draw of the PPP. The principal amount of the second PPP loan is approximately $913,000, bears interest of 1% per annum and has a maturity date of April 27, 2026. Under the terms of the PPP, the company can apply for and be granted forgiveness for all or a portion of the second PPP loan. Such forgiveness will be determined subject to limitations and ongoing rulemaking by the SBA based on the use of loan proceeds for eligible purposes, including payroll costs, mortgage interest, rent, utility costs and the maintenance of employee and compensation levels. No assurance is provided that the company will obtain forgiveness of the second PPP loan in whole or in part. See note K subsequent event for a summary of the terms of the second PPP loan. The company's $2 million credit facility with Heritage Bank is secured by all of the company's assets. We are currently in compliance with the financial covenants and the loan agreement for the credit facility. However, based on the company's current level of operations and forecasted cash flow analysis for the 12-month period subsequent to this date of filing without further cost-cutting measures, working capital management and/or enhanced revenues, the company believes it is really likely that it will reach the covenant to maintain a minimum unrestricted cash balance of $2 million at sometime during 2021. Violation of any covenant provides the bank with the option to accelerate repayment of amounts borrowed, terminate its commitment and to extend further credit and foreclose on our assets. A default under the credit facility will also in a cross-default over the company's second PPP loan with Heritage Bank, in which case, the bank could require repayment of all amounts due under the second PPP loan. Having surpassed the 1-year anniversary of the pandemic beginnings, we continue to navigate its weight. Economic activity, employment and inflation remain at risk as the path of economic recovery will be contingent upon the course of the virus, including new variants and continued vaccination progress throughout the world. Although positive news has been in short supply during the past year, we did experience an encouraging sign during the quarter in the form of increased quoting request, especially in the hospitality market. Here's to it being a trend and not in a [ novel ]. In closing, thank you for your interest and to our shareholders specifically, thank you for your continued support. I'll now turn the call back to Telkonet's President and Chief Executive Officer, Jason Tienor.
Thank you, Jim. And with that, I'd like to turn the call over to the operator for any questions that anyone might have. Operator?
[Operator Instructions] Our first question comes from Chris Pearson with Davenport Asset.
Just hoping you guys could talk a little bit about what you anticipate seeing with respect to the infrastructure package? And if I realize the devil is in the details there, but to what extent some of that quoting activity is in anticipation of some of the funds supposedly being put aside for energy efficiency? And just kind of what your expectations are, anticipation is with respect to that unfolding over the next year or so?
Absolutely. Chris. We've actually seen quite a bit of activity based on the programs that the new administration is implementing as a fine demonstration of that. A lot of our quoting activity during Q1 was built around military bases, and the initiatives surrounding sustainability within the military are -- was generating an increasing interest in that regard. In addition, outside of simply hospitality, and as I mentioned military, we're seeing significant uptick in quoting activity around multi-dwelling MDU and MTU spaces. And we feel that a lot of that is demonstrated by the influx in cash that has been placed through programs like the PPP and commercial support programs. So I think that's what you're going to see and then moving forward, specifically, you mentioned the infrastructure package. Just with regards to activities such as that, they involve a lot of travel, they involve hotel stay. People aren't providing these types of efforts looking from their front door.
So as we said, the lifestyle change that has been enacted over the course of the last 1.5 years, and that is continuing to be supported based on programs like infrastructure, should have significant upside for us, as Jim alluded to, the difficulty is around trying to monetize what the tangible impact of that might be. We don't know how fast. We don't know how far, but we try to use the efforts that we undertake on every given day to recognize where we might be able to participate in those types of programs and facilitates our activities surrounding them.
Got it. And in terms of the education space, I guess, municipality is also receiving kind of the lifeline type tons as well. Just interested if there's any activity there with respect to maybe not just universities, but schools, public buildings, housing programs, et cetera, if that could be potentially a source of demand for you guys down the road?
The funding sources with regards to public housing and commercially operated housing absolutely will have an impact on this. More specifically, you mentioned education, and while we don't do a large amount of work within K-12, obviously, higher ed is an enormous market for us and has been in the past, 1 of the fastest growing markets, what we have seen more recently is with the pandemic receding with the availability of shafts and people being put back to work, we see universities opening up far more rapidly because of this. We see their pocketbooks opening up as well. While they put off capital expenditures over the course of the last year, 1.5 years. Obviously, because they didn't have enormous influx of spending as well. We have seen as part of this first quarter quoting recovery that universities have participated in that overall. We do believe that we're seeing the front edge of the hockey stick, Chris, or -- we're not trying to be blankets on explaining it. We just want everybody to acknowledge that without a crystal ball, we don't have a solid idea of how quickly that recovery will take place. As Gene shared with regards to some of the STR statistics, they are looking at 2019 levels, not occurring again to until 2023. I think that STR statistic with regard to hospitality may be closer to reality. But I don't think that, that is accurate across all of our secondary markets because we are seeing much more activity in those markets then we ever have the military being a prime example of that.
Yes, yes, well, that's helpful. And I understand, I guess, the need to be conservative here with all the uncertainty out there. But I guess, we feel pretty good about the ultimate demand that will sit on the other side. Help me understand a little bit how your discussions with creditors are going. You talked about the potential for covenant breaches. I believe that last quarter, you said that you're having some productive discussions with lenders with respect to -- for giving some of those constraints and just maybe just put it in the context of cash burn, which understandably was elevated this quarter prior to the last or relative to last year. But in terms of how do we bridge the gap to that hockey stick recovery, your level of confidence that we can sustain ourselves that we can remain well positioned to deliver into that demand when, in fact, it does materialize?
Absolutely, Chris. And I'll start this, and then I'm going to hand it off to Gene because Gene has far more of those conversations with our banking partner, Heritage, who has been a fantastic partner over the years. We have had situations identical to this in the past where we've had to approach Heritage for waivers, and they've been fantastic to work with. They've been very accommodating to us. And we continuously talk to our partner there on a regular basis to keep them apprised. I believe he's actually on this phone call with us right now. So that being said, we believe quite strongly that we have the wherewithal and the means to operate through this difficult period. That being said, like we are talking about originally, if this period extends for 10 years, it will be all different ball game. But we expect from what we're seeing from the recovery pace that we're currently encountering, we have the plans in place. We have the efficiencies in place to be here for the long term. And we expect that the recovery period is going to be a significant boon to the company. If you recall, from 2019 over a 50% growth in the business, and we aligned ourselves quite well. The majority of those opportunities that have, I don't want to say, stalled over the course of 2020 and now 2021 that are just starting to reemerge, have not gone away. The large majority of them didn't lose funding, the large majority of them have no plans to cancel. They simply push that work forward-looking for the same time frame that we are, the reemergence of the recovery because all of those same businesses will still be a need. We talk about projects like the infrastructure program throughout the U.S., there's still going to be a requirement for travel and hotel space. So we all see the same things. We're all working through the same time frame. Our ability to recognize difficulties, and you talk about our cash flow. If you look at last year, we actually idled on the same amount of cash in bank throughout the year. We look at where we are at the end of the first quarter. Over the course of everything that we've gone through and the dramatic pullback in spending within our core markets. So we still have only roughly $300,000 plus in cash over that time frame. It's pretty astounding when you look at a company like ourselves. The ability to pull in a second PPP loan now, generating our buffer here through the course of 2021. Again, we've been able to execute on critical milestones that allow us to recognize a long-term recovery plan.
And we'll continue to execute towards that and share those comments on it with you as we move forward. But we feel like we've been quite successful on being able to remain I don't want to call it item, but being able to remain productive and ready to execute against the recovery as it happens, building out new products and software, creating new efficiencies internally that allow us to recognize a greater return as that emerges. But that being said, Chris, I'm doing all the talking here. Gene, I'll hand it to you.
Chris, and as Jason had stated, in the almost 7 years of our banking relationship with Heritage, not once have they been inflexible as far as what the changing needs or the operating results of Telkonet have been, we have been in discussions with them, looking at different liquidity alternatives should that $2 million cash covenant breach at some time during 2021 or beyond. I'm never going to say there's a guarantee, but if history is any indication, I would expect that we would find an amicable remedy to that.
And just 1 more. I'm not sure how much I'm going to get on this one. But you've referenced the strategic initiatives, strategic opportunities that you've been evaluating, help put some context around that. What is it that's being considered maybe you can't allude to the specific opportunity, partnership investment, what have you? Just help us understand what you're considering in that regard, what you feel like to take the company to the next level that could result from some sort of strategic partnership or action whatever that may be?
We really had to hit us with a hard question to answer, right? As you know, there's very little that we can share on a call like this, due to the lack of anything or any specific thing that we've done, not being publicly available. But what I can share with you over the course of the last couple of years and all of the conversations that we've moved through is we've consistently tried to identify an ability to have more greenfield growth with our business. And whether that was an expansion of our product portfolio, whether that was an expansion of our geographic coverage while that was participating in a much larger entities go-to-market strategy, utilizing our niche business. All of that being said, we've had a number of conversations around different vehicles that might enable us to get there. And as you can assume, 1 difficulty that transpired was last year, anybody that we were having discussions with for their lack of knowledge, understanding and prevoyance to the future, those conversations slowed down dramatically until more certainty around timing and around the impact of the pandemic, et cetera, was found. We've been able to, more recently now reengage in those types of conversations and have had significant traction with regards to them. Unfortunately, it is still something with regards to Telkonet and our status as a public company, and a number of different features of our business overall as we move through those conversations, there's a lot of I don't want to say difficulties, there's a lot of steps that we need to take in order to move from A to B. And that's really what we're moving through right now. I don't want to leave the impression that there is no activity in all -- right now, during my activities on a weekly basis, are largely tied up in strategic initiatives. Beyond that both, Chris, I can't share specific details with regards to what a vehicle might look like or what the entity might look like, other than to share with you. But as always, we are trying to identify and move through the successful execution of an opportunity that provides significantly greater shareholder value than where we stand today. If that were not the case, we wouldn't be moving through these efforts at all.
Our next question comes from Craig Wolf, a Private Investor.
I guess most of my questions have just been answered. But I guess if I could just briefly elaborate a little more on the loan covenant issue. What -- if it's the worst-case scenario that, that cannot be resolved and we fall below $2 million? I'm just wondering what plans would you guys have to resolve that, whether it be to raise more cash or whatever that might be?
Well, we would certainly explore keeping the relationship with Heritage, what's been this -- other types of vehicles could be a factoring arrangement, it could be lowering the actual amount of the starting point of the gross amount of the credit facility. So it's not necessarily if we would breach that, that would automatically say that the relationship with Heritage would cease at that point in time.
I kind of gathered that. I just was -- I guess if it did turn to a worst-case scenario, I was just wondering if there were any plans to raise cash or something that we would be able to do to offset that?
I can tell you that we get calls quite routinely with regards to private investing, whether they be convertible debentures or loans usually in the form of loans, they're not as significant as what we would need for day in and day out operations for a foreseeable future. And the convertible debenture, we're always cognizant of dilution, if you will. So those have always been on the sidelines as kind of worst-case scenarios. Because they're not always advantageous to the shareholders themselves or and/or the company's operations.
I definitely understand that. One question that was definitely answered was about these backlogs that was discussed that got put on hold, and you seem to indicate that all that's still out there. It's just a matter of getting it going again. I don't know if you're able to give any more clarity again on these deals that were put off as to the timing when that may all get going again?
Yes. No, that's a great question, Craig, and I wish we would have greater clarity. And 1 of the disadvantages of changing our market approach to being very channel driven rather than direct is that we don't have a fear of insight from the end customer with regards to their timing. We have our channel partner between us and the customer. So we're working on whatever the channel partner provides to us and if they're not giving those ultimate answers, we're a little bit in the dark specific timing.
And I'd still be apprehensive to provide timing from what I've seen over the course of the last year. As many times as you can request what the begin date of a project might be, how many times that begin date has pushed forward, you start to question the accuracy of your customers. So I don't think both customers themselves know 100% as well when they want to initiate funding towards new project development, but what we can share with you, as I stated earlier, is that the volume of quoting beginning this year was enormous compared to what we've seen in the past. But as I also mentioned, we do feel that a good volume of that was projects that shifted from the last year forward. So they're simply refreshing quotes so they have accurate numbers with regards to those projects moving forward. And then we have all of the current projects, the projects that were already slated to build this year that were forecasted 2 and 3 years ago, to have their funding in place, we are obtaining their budgeting numbers for either new build or innovation projects. So if you put together the work that is pushed forward, along with the intended work for the current time frame, there's a lot of waterfall type of business that will take place when that funding opens up. I just cannot give you a definitive time frame when we expect that to be. I do believe we're quite closer to it now than we were 5 months ago because without the pandemic's receding, without states opening up, without mass guidelines and businesses opening up and softening a bit, I don't think that we'd be anywhere close to where we are right now with a lot of that having taken place. I can share with you that the most active regions here in the U.S. are all states that you can probably identify because they were also the very first states that opened up on their social distancing or opened up the borders overall. So we use faction and opportunities such as that to identify where our efforts are best suited, and it has been helpful. But we still can't identify it to you exact time things. But we feel like they're getting much closer.
Okay. That does sound encouraging. I guess my last question would have to do with big announcement a while back when share price went to $0.08 here a while back on, I think it was Mitsubishi or Trane or something to that effect? And obviously, that was some big news with the share price going up that dramatically. I'm just wondering if you could elaborate a little bit on that contract or potential of a contract? And what -- how is that progressing?
Absolutely. Now the -- so we executed 2 different integration relationships 1 with Mitsubishi and 1 with LG that we spoke about within a few weeks of one another. The benefit to us of those particular relationships is that while we've had integrations, products and software integrations with them in the past, these particular efforts have given us a foot up over anybody else in the industry through the ability to natively communicate with a very popular type of HVAC system that they offer. And on top of that, it has driven a very close-knit relationship between us and the distribution channel for Mitsubishi as well as a distribution channel for LG. In fact, our sales team works directly with their national and international sales resources, we track the number of jobs coming to us because of this particular product integration. And we're consistently working directly with their management team to ensure the efforts between their distribution and our sales is accommodating the need in the opportunity that exists here. So it has been great. With regards to why it drove that type of volume, Craig, I can't say. If I understood the stock market, I think we would be doing far greater, but outside of all of the large things that have taken place for us in the past that didn't generate that type of an interest or a stock fund. The fact that that did, it's definitely something that's out of our preview. And as you know, we don't do what we do to drive share price, we do it to drive shareholder value. And hopefully, through having successful and moving forward profitable business would generate that type of reaction within our share relevant simply an announcement of a partnership like this. And that's really what we strive to do.
I guess, though, just a follow-up on that last question. When do you expect to actually start seeing a good revenue coming in off of that with Mitsubishi and LG?
On those types of relationships, it takes anywhere from 6 to 12 months because if you think of a standard commercial development, from the time they initiate plans, obtain funding, provide budgeting, subcontracting responses to RFPs and then initiate shovel in the ground, all of that activity takes anywhere from 6 to 12 months. And it really depends on the size and scale or scope of the project itself with regards to how long within that time frame, and then how long the ultimate build itself takes.
That would make sense. Was there anything going on with Trane? It seemed to me that there was, and I don't know if I'm mistaken on that.
No, there is. We have a very intimate relationship with Trane, whereby we have integrations with their front overall. Their National sales resources also push our solutions specifically to the hospitality space, but even in markets outside of hospitality. In fact, 1 of our largest international opportunities right now is a military base in Japan that was sold by our Trane partnership. So while there's a lot going on there, 1 specific characteristic that kind of ties these last 2 questions together. Trane is a distributor for Mitsubishi. So we actually work with the National Trane sales channel and distributing the Mitsubishi relationship as well.
At this time, there are no further questions in queue. I would like to turn the call back over to Mr. Tienor for closing comments.
Thank you, operator. And once again, I'd like to thank everyone for joining us today and for your continued interest in Telkonet performance. If there are any further questions or clarifications that you would like, please feel free to reach out to us at ir@telkonet.com that is ir@telkonet.com or 414- 302-2299. With that, I hope that everybody has a wonderful afternoon, and we look forward to speaking with you again.
Thank you, ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and have a great day. Thank you for your participation.