8-K
TECOGEN INC. (TGEN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 13, 2024
TECOGEN INC. (OTCQX: TGEN)
(Exact name of registrant as specified in charter)
Delaware
(State or Other Jurisdiction of Incorporation)
| 001-36103 | 04-3536131 | ||
|---|---|---|---|
| (Commission File Number) | (IRS Employer Identification No.) | 76 Treble Cove Road, Bldg. 1 | |
| --- | |||
| North Billerica, Massachusetts 01862 | |||
| (Address of Principal Executive Offices and Zip Code) |
(781) 466-6400
(Registrant's telephone number, including area code)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading Symbol | Name of exchange on which registered |
|---|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
On November 13, 2024, the registrant issued a press release with earnings commentary and supplemental information for the three and nine months ended September 30, 2024. The press release is furnished as Exhibit 99.01 to this Current Report on Form 8-K.
The information in this Item 2.02 and Exhibit 99.01 to this Current Report on Form 8-K shall shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
On November 14, 2024, the registrant will present the attached slides online in connection with an earnings conference call. The slides are being furnished as Exhibit 99.02 to this Current Report on Form 8-K.
The information in this Item 7.01 and Exhibit 99.02 to this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibits relating to Items 2.02 and 7.01 shall be deemed to be furnished, and not filed:
| Exhibit | Description |
|---|---|
| 99.01 | Earnings Release dated November 13, 2024 for the three and nine months ended September 30, 2024 |
| 99.02 | Tecogen Earnings Call Presentation dated November 14, 2024 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| TECOGEN INC. | ||
|---|---|---|
| By: /s/ Abinand Rangesh | ||
| November 13, 2024 | Abinand Rangesh, Chief Executive Officer |
Document
Tecogen Announces
Third Quarter 2024 Results
NORTH BILLERICA, Mass., November 13, 2024 - Tecogen Inc. (OTCQX:TGEN), a leading manufacturer of clean energy products, reported revenues of $5.63 million and net loss of $0.93 million for the quarter ended September 30, 2024 compared to revenues of $7.11 million, and a net loss of $0.48 million in 2023. We used $117 thousand in cash from operations and $839 thousand in property plant and equipment during the nine months ended September 30, 2024. Our cash balance was $1.28 million at September 30, 2024, which reflects $1.0 million of additional funding provided by related parties in the three months ended September 30, 2024.
“Our business development efforts over the last 15 months are showing results. Our backlog has jumped to $10.8m and we expect further orders before year end. Our cash resources and the short term increase in working capital needed to restart production limited our revenue for Q3, but now we expect to see sequential increases in revenue and product shipments each quarter."
"We are also making progress towards closing our first data center projects by early 2025. Data centers are shifting towards AI and liquid cooling but are finding themselves short of power. Therefore potential data center customers are interested in replacing their electrical chillers with Tecogen's high efficiency natural gas chillers because they can convert an expense - electrical power that would be consumed by cooling - and turn it into revenue by selling that power for use in computing. I will discuss more about this exciting growth opportunity during the conference call" commented Abinand Rangesh, Tecogen's Chief Executive Officer.
Key Takeaways
Net Loss and Earnings Per Share
•Net loss for the three months ended September 30, 2024 was $0.93 million compared to a net loss of $0.48 million for the same period of 2023, an increase of $0.45 million, due to decreased revenue and gross profit for our Products segment due to the relocation of our manufacturing operations to our new facility in April 2024 and increased operating expenses. EPS for the three months ended September 30, 2024 and 2023 was a loss of $0.04/share and $0.02/share, respectively.
•Net loss for the nine months ended September 30, 2024 was $3.57 million compared to a net loss of $2.75 million in 2023, an increase of $0.82 million, due to decreased revenue and gross profit for our Products segment due to the relocation of our manufacturing operations to our new facility in April 2024 and increased operating expenses. EPS for the nine months ended September 30, 2024 and 2023 was a loss of $0.14/share and $0.11/share, respectively.
Loss from Operations
•Loss from operations for the three months ended September 30, 2024 was $0.87 million compared to a loss from operations of 0.37 million for the same period in 2023, an increase of $0.50 million, due to decreased revenue and gross profit for our Products segment and increased operating expenses.
•Loss from operations for the nine months ended September 30, 2024 was $3.40 million compared to a loss from operations of $2.60 million for the same period in 2023, an increase of $0.80 million, due to decreased revenue and gross profit for our Products segment and increased operating expenses.
Revenues
•Revenues for the three months ended September 30, 2024 were $5.63 million compared to $7.11 million for the same period in 2023, a 20.8% decrease.
◦Products revenues in the three months ended September 30, 2024 were $1.39 million compared to $2.94 million for the same period in 2023, a decrease of 52.7%. The decrease in revenue during the three months ended September 30, 2024 is due to the relocation of our manufacturing operations to our new facility in April 2024, which necessitated construction activities to install equipment test cells and comply with local regulations, significantly reducing our production capacity. We resumed manufacturing operations during the third quarter of 2024.
◦Service revenues in the three months ended September 30, 2024 were $3.85 million, compared to $3.84 million for the same period in 2023, an increase of 0.2% due to increased revenue from the acquired Aegis maintenance contracts and offset by decreased revenues from existing contracts.
◦Energy Production revenues in the three months ended September 30, 2024 were $389 thousand compared to $331 thousand for the same period in 2023, an increase of 17.3%. The increase in Energy Production revenue is due to increased run hours at certain energy production sites.
•Revenues for the nine months ended September 30, 2024 were $16.54 million compared to $19.24 million for the same period in 2023, a decrease of 14.0% year over year.
◦Products revenues in the nine months ended September 30, 2024 were $3.00 million compared to $7.09 million for the same period in 2023, a decrease of 57.7%. The decrease in revenue during the nine months ended September 30, 2024 is due to the relocation of our manufacturing operations to our new facility in April 2024, which necessitated construction activities to install equipment test cells and comply with local regulations, significantly reducing our production capacity during the second and a portion of the the third quarter. We resumed manufacturing operations during the third quarter of 2024.
◦Service revenues in the nine months ended September 30, 2024 were $11.99 million compared to $10.93 million for the same period in 2023, an increase of 9.7%. The increase in revenue during the nine months ended September 30, 2024 is due to the addition of $0.72 million in revenue from the acquired Aegis maintenance contracts, and a $0.27 million increase in service contract revenues from existing contracts.
◦Energy Production revenues in the nine months ended September 30, 2024 were $1.55 million, compared to $1.21 million for the same period in 2023, an increase of 27.6%. The increase in Energy Production revenue is due to increased run hours at certain energy production sites.
Gross Profit
•Gross profit for the three months ended September 30, 2024 was $2.48 million compared to $2.93 million in the same period in 2023. Gross margin increased to 44.1% in the three months ended September 30, 2024 compared to 41.1% for the same period in 2023. The increase in gross margin was driven by decreased Service contract labor and material costs.
•Gross profit for the nine months ended September 30, 2024 was $7.14 million compared to $7.85 million in the same period of 2023. Gross margin increased to 43.1% in the nine months ended September 30, 2024 compared to 40.8% for the same period in 2023. The increase in gross margin was driven by decreased Service contract labor and material costs.
Operating Expenses
•Operating expenses increased $60 thousand, or 1.8%, to $3.35 million in the three months ended September 30, 2024 compared to $3.29 million in the same period in 2023.
•Operating expenses increased $82 thousand, or 0.8%, to $10.53 million in the nine months ended September 30, 2024 compared to $10.45 million in the same period in 2023.
Adjusted EBITDA was negative $0.75 million for the three months ended September 30, 2024 compared to negative $0.18 million for the three months ended September 30, 2023. Adjusted EBITDA was negative $2.94 million for the nine months ended September 30, 2024 compared to negative $2.06 million for the nine months ended September 30, 2023. (Adjusted EBITDA is defined as net income or loss attributable to Tecogen, adjusted for interest, income taxes, depreciation and amortization, stock-based compensation expense, unrealized gain or loss on investment securities, goodwill impairment charges and other non-cash non-recurring charges or gains including abandonment of intangible assets. See the table following the Condensed Consolidated Statements of Operations for a reconciliation from net income (loss) to Adjusted EBITDA, as well as important disclosures about the company's use of Adjusted EBITDA).
Conference Call Scheduled for November 14, 2024, at 9:30 am ET
Tecogen will host a conference call on November 14, 2024 to discuss the third quarter results beginning at 9:30 am eastern time. To listen to the call please dial (877) 407-7186 within the U.S. and Canada, or +1 (201) 689-8052 from other international locations. Participants should ask to be joined to the Tecogen Third Quarter 2024 earnings call. Please begin dialing 10 minutes before the scheduled starting time. The earnings press release will be available on the Company website at www.Tecogen.com in the "News and Events" section under "About Us." The earnings conference call will be webcast live. To view the associated slides, register for and listen to the webcast, go to https://ir.tecogen.com/ir-calendar. Following the call, the recording will be archived for 14 days.
The earnings conference call will be recorded and available for playback one hour after the end of the call. To listen to the playback, dial (877) 660-6853 within the U.S. and Canada, or (201) 612-7415 from other international locations and use Conference Call ID#: 13672659.
About Tecogen
Tecogen Inc. designs, manufactures, sells, installs, and maintains high efficiency, ultra-clean, cogeneration products including engine-driven combined heat and power, air conditioning systems, and high-efficiency water heaters for residential, commercial, recreational and industrial use. The company provides cost effective, environmentally friendly and reliable products for energy production that nearly eliminate criteria pollutants and significantly reduce a customer’s carbon footprint.
In business for over 35 years, Tecogen has shipped more than 3,200 units, supported by an established network of engineering, sales, and service personnel in key markets in North America. For more information, please visit www.tecogen.com or contact us for a free Site Assessment.
Tecogen, InVerde e+, Tecochill, Tecopower, Tecofrost, Tecopack, and Ultera are registered trademarks of Tecogen Inc.
Forward Looking Statements
This press release and any accompanying documents, contain “forward-looking statements” which may describe strategies, goals, outlooks or other non-historical matters, or projected revenues, income, returns or other financial measures, that may include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "target," "potential," "will," "should," "could," "likely," or "may" and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements.
In addition to those factors described in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and on our Form 8-K, under “Risk Factors”, among the factors that could cause actual results to differ materially from past and projected future results are the following: fluctuations in demand for our products and services, competing technological developments, issues relating to research and development, the availability of incentives, rebates, and tax benefits relating to our products and services, changes in the regulatory environment relating to our products and services, integration of acquired business operations, and the ability to obtain financing on favorable terms to fund existing operations and anticipated growth.
In addition to GAAP financial measures, this press release includes certain non-GAAP financial measures, including adjusted EBITDA which excludes certain expenses as described in the presentation. We use Adjusted EBITDA as an internal measure of business operating performance and believe that the presentation of non-GAAP financial measures provides a meaningful perspective of the underlying operating performance of our current business and enables investors to better understand and evaluate our historical and prospective operating performance by eliminating items that vary from period to period without correlation to our core operating performance and highlights trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures.
Tecogen Media & Investor Relations Contact Information:
Abinand Rangesh
P: 781-466-6487
E: Abinand.Rangesh@tecogen.com
TECOGEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| September 30, 2024 | December 31, 2023 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 1,282,238 | $ | 1,351,270 |
| Accounts receivable, net | 5,448,364 | 6,781,484 | ||
| Unbilled revenue | 1,139,532 | 1,258,532 | ||
| Inventories, net | 9,895,226 | 10,553,419 | ||
| Prepaid and other current assets | 403,218 | 360,639 | ||
| Total current assets | 18,168,578 | 20,305,344 | ||
| Long-term assets: | ||||
| Property, plant and equipment, net | 1,699,398 | 1,162,577 | ||
| Right of use assets - operating leases | 1,839,031 | 743,096 | ||
| Right of use assets - finance leases | 438,123 | 200,187 | ||
| Intangible assets, net | 2,604,406 | 2,436,230 | ||
| Goodwill | 2,563,862 | 2,743,424 | ||
| Other assets | 166,889 | 201,771 | ||
| TOTAL ASSETS | $ | 27,480,287 | $ | 27,792,629 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Related party notes payable | $ | 1,530,228 | $ | 505,505 |
| Accounts payable | 4,838,395 | 4,514,415 | ||
| Accrued expenses | 2,638,228 | 2,504,629 | ||
| Deferred revenue, current | 1,378,652 | 1,647,206 | ||
| Operating lease obligations, current | 426,498 | 248,933 | ||
| Finance lease obligations, current | 84,814 | 40,540 | ||
| Acquisition liabilities, current | 811,732 | 845,363 | ||
| Unfavorable contract liability, current | 131,590 | 176,207 | ||
| Total current liabilities | 11,840,137 | 10,482,798 | ||
| Long-term liabilities: | ||||
| Deferred revenue, net of current portion | 1,219,650 | 369,611 | ||
| Operating lease obligations, net of current portion | 1,452,924 | 523,660 | ||
| Finance lease obligations, net of current portion | 315,797 | 159,647 | ||
| Acquisition liabilities, net of current portion | 1,125,588 | 1,181,779 | ||
| Unfavorable contract liability, net of current portion | 332,987 | 422,839 | ||
| Total liabilities | 16,287,083 | 13,140,334 | ||
| Commitments and contingencies | ||||
| Stockholders’ equity: | ||||
| Tecogen Inc. shareholders’ equity: | ||||
| Common stock, $0.001 par value; 100,000,000 shares authorized; 24,850,261 issued and outstanding at September 30, 2024 and December 31, 2023 | 24,850 | 24,850 | ||
| Additional paid-in capital | 57,733,308 | 57,601,402 | ||
| Accumulated deficit | (46,453,827) | (42,879,656) | ||
| Total Tecogen Inc. stockholders’ equity | 11,304,331 | 14,746,596 | ||
| Non-controlling interest | (111,127) | (94,301) | ||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 27,480,287 | $ | 27,792,629 |
TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended | ||||
|---|---|---|---|---|
| September 30, 2024 | September 30, 2023 | |||
| Revenues | ||||
| Products | $ | 1,391,016 | $ | 2,938,789 |
| Services | 3,850,551 | 3,842,600 | ||
| Energy production | 388,563 | 331,141 | ||
| Total revenues | 5,630,130 | 7,112,530 | ||
| Cost of sales | ||||
| Products | 797,209 | 1,669,747 | ||
| Services | 2,139,042 | 2,346,384 | ||
| Energy production | 212,965 | 170,378 | ||
| Total cost of sales | 3,149,216 | 4,186,509 | ||
| Gross profit | 2,480,914 | 2,926,021 | ||
| Operating expenses | ||||
| General and administrative | 2,681,558 | 2,708,817 | ||
| Selling | 442,812 | 425,465 | ||
| Research and development | 233,809 | 160,033 | ||
| (Gain) loss on disposition of assets | (4,042) | — | ||
| Total operating expenses | 3,354,137 | 3,294,315 | ||
| Loss from operations | (873,223) | (368,294) | ||
| Other income (expense) | ||||
| Other income (expense), net | (18,453) | (16,330) | ||
| Interest expense | (23,003) | (6,357) | ||
| Unrealized gain (loss) on investment securities | 18,749 | (56,246) | ||
| Total other income (expense), net | (22,707) | (78,933) | ||
| Loss before provision for state income taxes | (895,930) | (447,227) | ||
| Provision for state income taxes | — | — | ||
| Consolidated net loss | (895,930) | (447,227) | ||
| Income attributable to the non-controlling interest | (34,478) | (34,346) | ||
| Loss attributable to Tecogen Inc. | $ | (930,408) | $ | (481,573) |
| Net loss per share - basic | $ | (0.04) | $ | (0.02) |
| Net loss per share - diluted | $ | (0.04) | $ | (0.02) |
| Weighted average shares outstanding - basic | 24,850,261 | 24,850,261 | ||
| Weighted average shares outstanding - diluted | 24,850,261 | 24,850,261 | ||
| Three Months Ended | ||||
| --- | --- | --- | --- | --- |
| September 30, 2024 | September 30, 2023 | |||
| Non-GAAP financial disclosure (1) | ||||
| Net loss attributable to Tecogen Inc. | $ | (930,408) | $ | (481,573) |
| Interest expense, net | 23,003 | 6,357 | ||
| Depreciation & amortization, net | 138,246 | 168,684 | ||
| EBITDA | (769,159) | (306,532) | ||
| Stock based compensation | 41,908 | 68,775 | ||
| Unrealized (gain) loss on investment securities | (18,749) | 56,246 | ||
| Adjusted EBITDA | $ | (746,000) | $ | (181,511) |
TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Nine Months Ended | ||||
|---|---|---|---|---|
| September 30, 2024 | September 30, 2023 | |||
| Revenues | ||||
| Products | $ | 3,002,087 | $ | 7,094,556 |
| Services | 11,991,378 | 10,931,744 | ||
| Energy production | 1,550,549 | 1,214,806 | ||
| Total revenues | 16,544,014 | 19,241,106 | ||
| Cost of sales | ||||
| Products | 2,018,734 | 4,500,771 | ||
| Services | 6,423,114 | 6,159,855 | ||
| Energy production | 966,440 | 728,124 | ||
| Total cost of sales | 9,408,288 | 11,388,750 | ||
| Gross profit | 7,135,726 | 7,852,356 | ||
| Operating expenses | ||||
| General and administrative | 8,428,119 | 8,418,581 | ||
| Selling | 1,377,758 | 1,426,321 | ||
| Research and development | 734,994 | 625,691 | ||
| Gain on sale of assets | (8,070) | (19,950) | ||
| Total operating expenses | 10,532,801 | 10,450,643 | ||
| Loss from operations | (3,397,075) | (2,598,287) | ||
| Other income (expense) | ||||
| Interest and other income (expense), net | (15,305) | (36,562) | ||
| Interest expense | (59,542) | (8,629) | ||
| Unrealized gain (loss) on investment securities | — | (18,749) | ||
| Total other income (expense), net | (74,847) | (63,940) | ||
| Loss before provision for state income taxes | (3,471,922) | (2,662,227) | ||
| Provision for state income taxes | 22,100 | 32,252 | ||
| Consolidated net loss | (3,494,022) | (2,694,479) | ||
| Income attributable to non-controlling interest | (80,149) | (57,232) | ||
| Net loss attributable to Tecogen Inc. | $ | (3,574,171) | $ | (2,751,711) |
| Net loss per share - basic | $ | (0.14) | $ | (0.11) |
| Net loss per share - diluted | $ | (0.14) | $ | (0.11) |
| Weighted average shares outstanding - basic | 24,850,261 | 24,850,261 | ||
| Weighted average shares outstanding - diluted | 24,850,261 | 24,850,261 | ||
| Nine Months Ended | ||||
| --- | --- | --- | --- | --- |
| September 30, 2024 | September 30, 2023 | |||
| Non-GAAP financial disclosure (1) | ||||
| Net income loss attributable to Tecogen Inc. | $ | (3,574,171) | $ | (2,751,711) |
| Interest & other expense, net | 59,542 | 8,629 | ||
| Income taxes | 22,100 | 32,252 | ||
| Depreciation & amortization, net | 419,744 | 459,779 | ||
| EBITDA | (3,072,785) | (2,251,051) | ||
| Stock based compensation | 131,906 | 174,711 | ||
| Unrealized loss on marketable securities | — | 18,749 | ||
| Adjusted EBITDA | $ | (2,940,879) | $ | (2,057,591) |
(1) Non-GAAP Financial Measures
In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, this news release contains information about Adjusted EBITDA (net income (loss) attributable to Tecogen Inc adjusted for interest, income taxes, depreciation and amortization, stock-based compensation expense, unrealized gain or loss on investment securities, goodwill impairment charges and other non-cash non-recurring charges including abandonment of certain intangible assets), which is a non-GAAP measure. The Company believes Adjusted EBITDA allows investors to view its performance in a manner similar to the methods used by management and provides additional insight into its operating results. Adjusted EBITDA is not calculated through the application of GAAP. Accordingly, it should not be considered as a substitute for the GAAP measure of net income and, therefore, should not be used in isolation of, but in conjunction with, the GAAP measure. The use of any non-GAAP measure may produce results that vary from the GAAP measure and may not be comparable to a similarly defined non-GAAP measure used by other companies.
TECOGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Nine Months Ended | ||||
|---|---|---|---|---|
| September 30, 2024 | September 30, 2023 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
| Consolidated net loss | $ | (3,494,022) | $ | (2,694,479) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Depreciation and amortization | 419,744 | 459,779 | ||
| Provision for credit losses | 29,817 | 44,000 | ||
| Stock-based compensation | 131,906 | 174,711 | ||
| Unrealized (gain) loss on investment securities | — | 18,749 | ||
| Gain on disposition of assets | (8,070) | (19,950) | ||
| Non-cash interest expense | 25,966 | — | ||
| Changes in operating assets and liabilities | ||||
| (Increase) decrease in: | ||||
| Accounts receivable | 1,303,300 | (1,324,448) | ||
| Employee retention credit | — | 667,121 | ||
| Unbilled revenue | 119,000 | 56,994 | ||
| Inventory | 658,194 | (165,537) | ||
| Prepaid assets and other current assets | (42,578) | (19,128) | ||
| Other assets | 704,565 | 491,836 | ||
| Increase (decrease) in: | ||||
| Accounts payable | 323,980 | 1,140,759 | ||
| Accrued expenses and other current liabilities | 133,599 | 256,847 | ||
| Deferred revenue | 581,485 | 458,512 | ||
| Other liabilities | (1,003,881) | (566,016) | ||
| Net used in operating activities | (116,995) | (1,020,250) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
| Purchases of property and equipment | (838,932) | (31,728) | ||
| Proceeds from disposition of assets | 40,255 | 16,863 | ||
| Payment for business acquisition | — | (170,000) | ||
| Distributions to non-controlling interest | (96,975) | (62,693) | ||
| Net cash used in investing activities | (895,652) | (247,558) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
| Finance lease principal payments | (56,385) | — | ||
| Proceeds from related party notes payable | 1,000,000 | — | ||
| Net cash provided by financing activities | 943,615 | — | ||
| Net decrease in cash and cash equivalents | (69,032) | (1,267,808) | ||
| Cash and cash equivalents, beginning of the period | 1,351,270 | 1,913,969 | ||
| Cash and cash equivalents, end of the period | $ | 1,282,238 | $ | 646,161 |
| Supplemental disclosure of cash flow information: | ||||
| Cash paid for interest | $ | 22,909 | $ | 7,385 |
| Cash paid for taxes | $ | 22,100 | $ | 32,252 |
| Non-cash investing activities: | ||||
| Aegis Contract and Related Asset Acquisition: | ||||
| Accounts receivable credit | $ | — | $ | 300,000 |
| Accounts payable assumed | — | 91,048 | ||
| Contingent consideration | 272,901 | 1,442,462 | ||
| Total | $ | 272,901 | $ | 1,833,510 |
11
q32024earningspresentati
OTCQX: TGEN Q3 2024 EARNINGS CALL NOVEMBER 14, 2024 1
MANAGEMENT Abinand Rangesh – CEO Robert Panora – COO & President Roger Deschenes – CAO Jack Whiting – General Counsel & Secretary 2
SAFE HARBOR STATEMENT This presentation and accompanying documents contain “forward-looking statements” which may describe strategies, goals, outlooks or other non- historical matters, or projected revenues, Income, returns or other financial measures, that may include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "target," "potential," "will," "should," "could," "likely," or "may" and similar expressions intended to identify forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. In addition to those factors described in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q under “Risk Factors”, among the factors that could cause actual results to differ materially from past and projected future results are the following: fluctuations in demand for our products and services, competing technological developments, issues relating to research and development, the availability of incentives, rebates, and tax benefits relating to our products and services, changes in the regulatory environment relating to our products and services, integration of acquired business operations, and the ability to obtain financing on favorable terms to fund existing operations and anticipated growth. In addition to GAAP financial measures, this presentation includes certain non-GAAP financial measures, including adjusted EBITDA which excludes certain expenses as described in the presentation. We use Adjusted EBITDA as an internal measure of business operating performance and believe that the presentation of non-GAAP financial measures provides a meaningful perspective of the underlying operating performance of our current business and enables investors to better understand and evaluate our historical and prospective operating performance by eliminating items that vary from period to period without correlation to our core operating performance and highlights trends in our business that may not otherwise be apparent when relying solely on GAAP financial measures. 3
AGENDA Business Update Data Center Strategy 3Q 2024 Results Summary Q&A 4
BUSINESS UPDATE 5 Present backlog >$10m Expect to ramp up manufacturing, Expect sequential improvements in quarterly revenue Expect to close first data center project by early 2025
DATA CENTER STRATEGY 6 Data Center Macro Trends Power hungry chips = Increasing cooling loads (>30% of data center power) Liquid cooled chips rolling out next year Existing data centers will switch to AI If data centers switch cooling from electrical chillers to natural gas Tecochill They immediately free up electrical capacity This electrical capacity can be rented to AI tenants at a significant premium Marketing via tradeshows and sales channel partners Significant interest from existing data center owners
BACKLOG AND CASH Backlog is presently $10.8m Includes order for prepaid $2m, 10-year extended warranty Additional $2m of projects expected to close by end of year Cash position $1.2m at quarter end and $1.1m presently Cashflow $116k used in operations, rest went into capital expenditures $1.5m drawn into credit line. Expect to raise up to $2m in private placement Residential 7% Controlled Environment Agriculture 13% Office 10% Convention Center 70% Backlog by Customer Type 7
REVENUE SEGMENTS We service most purchased Tecogen equipment in operation through long term maintenance agreements through 11 service centers in North America and perform certain equipment installation work. SERVICES CLEAN, GREEN POWER, COOLING AND HEAT Sales of combined heat and power, and clean cooling systems to building owners. Key market segments include multifamily residential, health care and indoor cultivation. PRODUCT SALES We sell electrical energy and thermal energy produced by our equipment onsite at customer facilities. ENERGY SALES 8
3Q 2024 RESULTS Key Points • Revenue = $5.63m, just below guidance of $5.7m to $6.2m • Limited working capital constrained product revenue • Net loss of $0.04/share • Net loss $930k • Opex $3.35m (1.8% increase) • Gross Margin up 4% 9 $ in thousands 3Q'24 3Q'23 QoQ Change % Revenues Products $ 1,391 $ 2,939 $ (1,548) Services 3,850 3,843 7 Energy Production 389 331 58 Total Revenue 5,630 7,113 (1,483) -20.9% Gross Profit Products 594 1,269 (675) Services 1,711 1,496 214 Energy Production 176 161 15 Total Gross Profit 2,481 2,926 (445) -15.2% Gross Margin: % Products 43% 43% 0% Services 44% 39% 5% Energy Production 45% 49% -3% Total Gross Margin 44% 41% 3% Operating Expenses General & administrative 2,681 2,709 (28) Selling 443 425 18 Research and development 234 160 74 Gain on disposition of assets (4) - (4) Total operating expenses 3,354 3,294 60 1.8% Operating loss (873) (368) (505) 137.1% Net loss $ (930) $ (482) $ (448) 93.0%
3Q 2024 ADJUSTED EBITDA RECONCILIATION EBITDA: Earnings Before Interest, Taxes, Depreciation & Amortization • EBITDA and adjusted EBITDA loss was $769k and $746k respectively EBITDA Non-cash adjustments • Stock based compensation • Unrealized and realized (gain) loss on investment securities *Adjusted EBITDA is defined as net Income (loss) attributable to Tecogen Inc, adjusted for interest, depreciation and amortization, stock-based compensation expense, unrealized loss on investment securities, non-cash abandonment of intangible assets, goodwill impairment and other non-recurring charges or gains including abandonment of certain intangible assets and extinguishment of debt 10 Non-GAAP financial disclosure (in thousands) 2024 2023 Net loss attributable to Tecogen Inc. (930)$ (482)$ Interest expense, net 23 6 Income tax expense - - Depreciation & amortization, net 138 169 EBITDA (769) (307) Stock based compensation 42 69 Unrealized loss on marketable securities (19) 56 Adjusted EBITDA* (746)$ (182)$ Quarter Ended, September 30
3Q 24 PERFORMANCE BY SEGMENT Production restarted after factory move Service revenue flat QoQ Energy Production revenue increased 17% QoQ Gross Margin 45% up 4% 11 3Q Revenues ($ thousands) 2024 2023 QoQ Change % Revenues Cogeneration 1,294$ 899$ 44% Chiller 38 1,935 -98% Engineered accessories 59 105 -64% Total Product Revenues 1,391 2,939 -53% Services 3,850 3,843 0% Energy Production 389 331 17% Total Revenues 5,630 7,113 -21% Cost of Sales Products 797 1,670 -52% Services 2,139 2,347 -9% Energy Production 213 170 25% Total Cost of Sales 3,149 4,187 -25% Gross Profit 2,481 2,926 -15% Net loss (930)$ (482)$ Gross Margin Products 43% 43% Services 44% 39% Energy Production 45% 49% Overall 44% 41% QTD Gross Margin 2024 2023 Target Overall 44% 41% >40%
SUMMARY AND Q&A Company Information Tecogen, Inc 76 Treble Cove Road, Building 1 North Billerica, MA 01862 www.Tecogen.com Contact information Abinand Rangesh, CEO 781.466.6487 Abinand.rangesh@Tecogen.com 12 Close projects in development by year end Expect to ramp up manufacturing, Expect sequential improvements in quarterly revenue Expect to close first data center project by early 2025