TECOGEN INC
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
TGEN$1.72+12.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001537435-24-000063
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001537435-24-000106
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 88 previous paragraphs and 124 current paragraphs.
49 unchanged; 31 reworded; 33 added; 8 removed; 0 previous and 11 current paragraphs rearranged.
Tables are not compared: 4 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
Factory Move
Current report
In April, 2024, Tecogen moved it's manufacturing operations and corporate offices from 45 First Ave, Waltham, MA to 76 Treble Cove Road, North Billerica, MA. As a result of the move, product revenues were impacted during the second quarter of 2024. The factory move also necessitated construction activities to install equipment test cells and comply with local regulations. The Company will be able to resume manufacturing operations during the third quarter of 2024.
Current report
Impact of Anti-fossil Fuel Sentiment
Current report
In some key markets such as New York City, the regulatory push to eliminate fossil fuels from buildings has impacted cogeneration unit sales. The Company believes that as regulations take into account scope 2 emissions, products like our hybrid chiller that can choose the cleanest fuel source will have a significant advantage in decarbonization efforts.
Current report
Impact of Utility Power Constraints and Data Center Construction
Current report
As more load is added to the utility grid in the form of data centers, EV charging, customers are facing power constraints. Tecogen believes that these power constrained customers, in particular data centers and industrial facilities represent a significant opportunity for growth. The customer need is driven by ability to expand an existing facility or open a new facility quickly while taking advantage of utility bills savings long term. Our chiller products can reduce the electrical capacity needed on-site by 30% or more. Our InVerde product can provide on-site power generation by using an inverter based system that operates at 480V. This allows customers to eliminate long lead times associated with electrical switch gear and bridge any short fall in power from the utility.
Current report
Residual Impacts of Covid
Current report
Supply chains were adversely impacted during Covid resulting in significant delays or lack of availability of critical components such as engines. This has continued to have long term impact on product and service margin. The direct impact has been certain costs increasing faster than inflation. The indirect impact is from increased engine related costs in the service segment as replacements were deferred or overhauled components were used due to lack of parts. We have instituted a service price increase and have also been making engineering improvements to increase service intervals to increase margins.
Current report
Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023
Current report
Supply chains were adversely impacted during Covid resulting in significant delays or lack of availability of critical components such as engines. This has continued to have long term impact on service margin. The direct impact has been certain costs increasing faster than inflation. The indirect impact is from increased engine related costs in the service segment as replacements were deferred or overhauled components were used due to lack of parts. We have instituted a service price increase and have also been making engineering improvements to increase service intervals to increase margins.
Current report
Cost of sales for Energy Production in the three months ended June 30, 2024 was $284,835 compared to $220,007 for the same period in 2023, an increase of $64,828, or 29.5%. During the three months ended June 30, 2024 our Energy Production gross margin increased to 40.9% compared to 37.2% for the same period in 2023, a 3.7% percentage point increase. The increase in the energy production gross margin is due to increased run hours at certain of our Energy Production sites in the three months ended June 30, 2024 compared to the same period in 2023 and lower maintenance costs.
Current report
Operating expenses decreased $61,553, or 1.7%, to $3,553,122 in the three months ended June 30, 2024 compared to $3,614,675 in the same period in 2023.
Current report
Selling expenses consist of sales staff, commissions, marketing, travel and other selling related expenses. Selling expenses for the three months ended June 30, 2024 were $405,277 compared to $480,786 for the same period in 2023, a decrease of $75,509 or 15.7%, due to a $64,218 decrease in sales commission and a $20,280 decrease in payroll and related benefits.
Current report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Current report
Revenues
Current report
Total revenues for the six months ended June 30, 2024 were $10,913,883 compared to $12,128,576 for the same period in 2023, a decrease of $1,214,693 or 10.0% year over year.
Current report
Service revenues in the six months ended June 30, 2024 were $8,140,827, compared to $7,089,144 for the same period in 2023, an increase of $1,051,683, or 14.8%. The increase in revenue during the six months ended June 30, 2024 is due to the addition of $782,734 in revenue from the acquired Aegis maintenance contracts, $67,884 of revenue representing our share of the excess cash flows above the minimum threshold for the bi-annual period ended June 30, 2024 and a $201,065 increase in service contract revenues from existing contracts.
Current report
Energy Production revenues in the six months ended June 30, 2024 were $1,161,985, compared to $883,665 for the same period in 2023, an increase of 278,320, or 31.5%. The increase in Energy Production revenue is due to increased run hours at certain energy production sites.
Current report
Cost of Sales
Current report
Cost of sales in the six months ended June 30, 2024 was $6,259,072 compared to $7,202,241 for the same period in 2023, a decrease of $943,169, or 13.1%. The decrease in cost of sales is due to decreased Products revenue, offset partially by increased service contract maintenance costs due to higher labor and material to replace engines at certain sites in 2024, and increased energy production costs. During the six months ended June 30, 2024 our gross margin increased to 42.7% compared to 40.6% for the same period in 2023, a 2.1% percentage point increase due to higher service contract revenue.
Current report
Cost of sales for Products in the six months ended June 30, 2024 was $1,221,525 compared to $2,831,024 for the same period in 2023, a decrease of $1,609,499, or 56.9% due to decreased sales of Products. During the six months ended June 30, 2024, our Products gross margin was 24.2% compared to 31.9% for the same period in 2023, a 7.7% percentage point decrease. The decrease in margin was function of minimal Products revenue, warranty costs and unabsorbed labor costs in the three months ended June 30, 2024.
Current report
Supply chains were adversely impacted during Covid resulting in significant delays or lack of availability of critical components such as engines. This has continued to have long term impact on product and service margin. The direct impact has been certain costs increasing faster than inflation. The indirect impact is from increased engine related costs in the service segment as replacements were deferred or overhauled components were used due to lack of parts. We have instituted a service price increase and have also been making engineering improvements to increase service intervals to increase margins.
Current report
Operating Expenses
Current report
Operating expenses increased $22,332, or 0.3%, to $7,178,662 in the six months ended June 30, 2024 compared to $7,156,330 in the same period in 2023.
Current report
General and administrative expenses consist of executive staff, accounting and legal expenses, office space, general insurance and other administrative expenses. General and administrative expenses for the six months ended June 30, 2024 were $5,746,559 compared to $5,709,766 for the same period in 2023, an increase of $36,793 or 0.6%, due to a $180,354 increase in facility costs due to the transition to our new facility, a $164,120 increase in payroll and related benefits and $83,055 of relocation costs, offset partially by a $93,787 decrease in consulting costs, an $82,702 decrease in operating supplies, a $72,544 decrease in depreciation and amortization expense, a $70,603 reduction in travel expenses, a $59,476 decrease in business insurance costs, and a $24,937 decrease in the provision for credit losses.
Current report
Research and development expenses consist of engineering and technical staff, materials, outside consulting and other related expenses. Research and development expenses for the six months ended June 30, 2024 were $501,185 compared to $465,658 for the same period in 2023, an increase of $35,527 or 7.6%, due to a $94,994 increase in depreciation and amortization, offset partially by a $67,748 decreased in payroll and related benefits.
Current report
Income (loss) from Operations
Current report
Our loss from operations for the six months ended June 30, 2024 was $2,523,851 compared to a loss from operations of $2,229,995 for the same period in 2023, an increase of $293,856, or 13.2%. The increase in the loss from operations is due to lower Products revenues and gross profit.
Current report
Other Income (Expense), net
Current report
Other expense net for the six months ended June 30, 2024 was $52,141 compared to other income net of $14,994 for the same period in 2023, an increase in other expense of $67,135, due to unrealized loss of $18,749 recognized in the six months ended June 30, 2024 compared to an unrealized gain of $37,497 recognized in 2023 and a $34,267 increase in interest due to borrowings under our related party note and lease financing, offset partially by a $23,378 increase in currency exchange gains recognized in the six months ended June 30, 2024.
Current report
Provision for State Income Taxes
Current report
Non-controlling Interest
Current report
During the six months ended June 30, 2023 we used $196,582 in cash from investing activities. We used $170,000 of cash to acquire certain assets as part of the Aegis acquisition, used $19,607 of cash to purchase property, plant and equipment, and distributed $23,838 to the 49% non-controlling interest holders of American DG New York LLC, partially offset by the receipt of $16,863 in proceeds from the disposition of assets.
Removed paragraphs (8)
Previous report
First Quarter of 2024 Compared to First Quarter of 2023
Previous report
Products
Previous report
Services
Previous report
Energy Production
Previous report
Products
Previous report
Services
Previous report
Energy Production
Previous report
Operating expenses increased $83,887, or 2.4%, to $3,625,542 in the three months ended March 31, 2024 compared to $3,541,655 in the same period in 2023.
Reworded paragraphs (31)
Previous wording
On February 1, 2024, Tecogen and Aegis amended the Agreement to add eighteen (18) additional maintenance service agreements (the "Amendment"). The Amendment includes an undertaking by Aegis to use commercially reasonable efforts to support and assist our execution of maintenance service agreements for an additional thirty-six (36) cogeneration units sold to customers by Aegis. See Note 7. Aegis Contract and Related Asset Acquisitions of the Notes to the Consolidated Financial Statements.
Current wording
On February 1, 2024, Tecogen and Aegis amended the Agreement to add eighteen (18) additional maintenance service agreements (the "Amendment"). The Amendment includes an undertaking by Aegis to use commercially reasonable efforts to support and assist our execution of maintenance service agreements for an additional thirty-six (36) cogeneration units sold to customers by Aegis.
Previous wording
On May 1, 2024, Tecogen and Aegis amended the Agreement to add thirty-one (31) additional maintenance contracts (the "Amendment"). The Amendment includes an undertaking by Aegis to use commercially reasonable efforts to support and assist our execution of maintenance service agreements for an additional forty-eight (48) cogeneration units sold to customers by Aegis.
Current wording
On May 1, 2024, Tecogen and Aegis amended the Agreement to add thirty-one (31) additional maintenance contracts (the "Second Amendment"). The Second Amendment includes an undertaking by Aegis to use commercially reasonable efforts to support and assist our execution of maintenance service agreements for an additional forty-eight (48) cogeneration units sold to customers by Aegis.
Previous wording
On July 20, 2022, we announced our intention to focus on opportunities for low carbon Controlled Environment Agriculture ("CEA"). We believe that CEA offers an exciting opportunity to apply our expertise in clean cooling, power generation, and greenhouse gas reduction to address critical issues affecting food and energy security. We propose to address this challenge by developing a highly efficient energy solution for CEA grown produce using our cogeneration products in conjunction with solar energy generation, energy storage, and other technologies.
Current wording
On July 20, 2022, we announced our intention to focus on opportunities for the use of our cogeneration equipment in low carbon Controlled Environment Agriculture ("CEA"). We believe that CEA offers an exciting opportunity to apply our expertise in clean cooling, power generation, and greenhouse gas reduction to address critical issues affecting food and energy security. We propose to address this challenge by developing a highly efficient energy solution for CEA grown produce using our cogeneration products in conjunction with solar energy generation, energy storage, and other technologies.
Previous wording
On October 9, 2023, we entered into note subscription agreements with each of John N. Hatsopoulos, a director and principal shareholder of registrant, and Earl R. Lewis, III, a director of registrant, pursuant to which Mr. Hatsopoulos agreed to provide financing to us of up to $1 million, and Mr. Lewis agreed to provide financing to us of $500,000, and potentially, an additional $500,000 at his discretion. On October 10, 2023, we issued a promissory note and borrowed $500,000 from Mr. Hatsopoulos. The loan bears interest at 5.12% per annum. See Note 11. Related Party Notes of the Notes to the Consolidated Financial Statements.
Current wording
On October 9, 2023, we entered into note subscription agreements with each of John N. Hatsopoulos, a director and principal shareholder of registrant, and Earl R. Lewis, III, a director of registrant, pursuant to which Mr. Hatsopoulos agreed to provide financing to us of up to $1 million, and Mr. Lewis agreed to provide financing to us of $500,000, and potentially, an additional $500,000 at his discretion. On October 10, 2023, we issued a promissory note and borrowed $500,000 from Mr. Hatsopoulos. The loan bears interest at 5.12% per annum. On July 23, 2024, we borrowed an additional $500,000 from Mr. Hatsopoulos, and executed a promissory note with a maturity of one year and interest at 5.06% per annum. See Note 11. Related Party Notes of the Notes to the Consolidated Financial Statements.
Previous wording
Total revenues for the three months ended March 31, 2024 were $6,186,097 compared to $5,379,818 for the same period in 2023, an increase of $806,279 or 15.0% year over year.
Current wording
Total revenues for the three months ended June 30, 2024 were $4,727,787 compared to $6,748,758 for the same period in 2023, a decrease of $2,020,971 or 29.9% year over year.
Previous wording
Products revenues in the three months ended March 31, 2024 were $1,491,398 compared to $1,710,136 for the same period in 2023, a decrease of $218,738, or 12.8%. The decrease in revenue during the three months ended March 31, 2024 is due to a decrease in chiller sales of $411,873 and a decrease in engineered accessory sales of $37,401, offset partially by a $230,536 increase in cogeneration sales. Our Products sales mix, as well as product revenue, can vary significantly from period to period as our products are high dollar, low volume sales.
Current wording
Products revenues in the three months ended June 30, 2024 were $119,673 compared to $2,445,631 for the same period in 2023, a decrease of $2,325,958, or 95.1%. The decrease in revenue during the three months ended June 30, 2024 is due to the relocation of our manufacturing operations to our new facility in April 2024, which significantly reduced our production capacity, resulting in a decrease in chiller sales of $1,687,981, a $307,641 decrease in cogeneration sales, and a decrease in engineered accessory sales of $330,336. Our Products sales mix, as well as product revenue, can vary significantly from period to period as our products are high dollar, low volume sales.
Previous wording
Service revenues in the three months ended March 31, 2024 were $4,014,310, compared to $3,136,173 for the same period in 2023, an increase of $878,137, or 28.0%. The increase in revenue during the three months ended March 31, 2024 is due primarily to the addition of $758,252 in revenue from the acquired Aegis maintenance contracts and a $119,885 increase in service contract revenues from existing contracts.
Current wording
Service revenues in the three months ended June 30, 2024 were $4,126,517, compared to $3,952,971 for the same period in 2023, an increase of $173,546, or 4.4%. The increase in revenue during the three months ended June 30, 2024 is due to the addition of $23,972 in revenue from the acquired Aegis maintenance contracts, $67,884 of revenue representing our share of the excess cash flows above the minimum threshold for the bi-annual period ended June 30, 2024 and a $81,690 increase in service contract revenues from existing contracts.
Previous wording
Our service operation revenues grow with the sale of installed systems, since the majority of our product sales are accompanied by a service contract or time and materials agreements. As a result, our “fleet” of units being serviced by our service department grows with product sales.
Current wording
Our service operation revenues grow with the sale of installed systems, since the majority of our product sales are accompanied by a service contract or time and materials agreements and by the acquisition of maintenance contracts. As a result, our “fleet” of units being serviced by our service department grows with product sales.
Previous wording
Energy Production revenues in the three months ended March 31, 2024 were $680,389, compared to $533,509 for the same period in 2023, an increase of $146,880, or 27.5%. The increase in Energy Production revenue is due to increased run hours at certain energy production sites.
Current wording
Energy Production revenues in the three months ended June 30, 2024 were $481,597, compared to $350,156 for the same period in 2023, an increase of $131,441, or 37.5%. The increase in Energy Production revenue is due to increased run hours at certain energy production sites.
Previous wording
Cost of sales in the three months ended March 31, 2024 was $3,610,440 compared to $3,287,909 for the same period in 2023, an increase of $322,531, or 9.8%. The increase in cost of sales is due to increased service contract maintenance costs due to higher labor and material costs, and increased energy production costs. During the three months ended March 31, 2024 our gross margin increased to 41.6% compared to 38.9% for the same period in 2023, a 2.7% percentage point increase due to higher service contract revenue.
Current wording
Cost of sales in the three months ended June 30, 2024 was $2,648,632 compared to $3,914,332 for the same period in 2023, a decrease of $1,265,700, or 32.3%. The decrease in cost of sales is due to decreased Product sales, offset by increased service contract maintenance costs due to higher labor and material costs to replace engines at certain sites in 2024, and increased energy production costs. During the three months ended June 30, 2024 our gross margin increased to 44.0% compared to 42.0% for the same period in 2023, a 2.0% percentage point increase due to higher service contract revenue.
Previous wording
Cost of sales for Products in the three months ended March 31, 2024 was $1,049,543 compared to $1,212,568 for the same period in 2023, a decrease of $163,025, or 13.4% due to decreased sales of Products, offset partially by higher material costs. During the three months ended March 31, 2024, our Products gross margin was 29.6% compared to 29.1% for the same period in 2023, a 0.5% percentage point increase. The increase in margin is primarily a function of price increases instituted in 2023.
Current wording
Cost of sales for Products in the three months ended June 30, 2024 was $171,982 compared to $1,618,456 for the same period in 2023, a decrease of $1,446,474, or 89.4% due to decreased sales of Products. During the three months ended June 30, 2024, our Products gross margin was negative 43.7% compared to 33.8% for the same period in 2023, a 77.5% percentage point decrease. The decrease in margin was a function of minimal Products revenue, warranty costs and unabsorbed labor costs in the three months ended June 30, 2024.
Previous wording
General and administrative expenses consist of executive staff, accounting and legal expenses, office space, general insurance and other administrative expenses. General and administrative expenses for the three months ended March 31, 2024 were $2,848,568 compared to $2,792,483 for the same period in 2023, an increase of $56,085 or 2.0%, due primarily to a $111,827 increase in facility costs, due to the transition to our new facility, offset partially by a $67,271 reduction in travel expenses.
Current wording
General and administrative expenses consist of executive staff, accounting and legal expenses, office space, general insurance and other administrative expenses. General and administrative expenses for the three months ended June 30, 2024 were $2,897,993 compared to $2,917,283 for the same period in 2023, a decrease of $19,290 or 0.7%, due to a $70,263 decrease in depreciation and amortization costs, a $66,641 decrease in consulting costs, a $72,766 decrease in business insurance costs, and a $39,195 decrease in the provision for credit losses, offset partially by a $146,369 increase in payroll and related expenses, a $68,527 increase in facility costs due to the transition to our new facility, and $83,055 of relocation costs.
Previous wording
Research and development expenses consist of engineering and technical staff, materials, outside consulting and other related expenses. Research and development expenses for the three months ended March 31, 2024 were $254,696 compared to $229,102 for the same period in 2023, an increase of $25,594 or 11.2%.
Current wording
Research and development expenses consist of engineering and technical staff, materials, outside consulting and other related expenses. Research and development expenses for the three months ended June 30, 2024 were $246,489 compared to $236,556 for the same period in 2023, an increase of $9,933 or 4.2%.
Previous wording
Our loss from operations for the three months ended March 31, 2024 was $1,049,885 compared to a loss from operations of $1,449,746 for the same period in 2023, a decrease of $399,861. The decrease is due primarily to higher Service and Energy Production Segment revenues and increased gross profit, offset partially by a $83,887 increase in operating expenses.
Current wording
Our loss from operations for the three months ended June 30, 2024 was $1,473,967 compared to a loss from operations of $780,249 for the same period in 2023, an increase of $693,718. The increase in the loss from operations is due to lower Products revenues and decreased gross profit, offset partially by a $61,553 decrease in operating expenses.
Previous wording
Other expense net for the three months ended March 31, 2024 was $15,668 compared to other income net of $415 for the same period in 2023, a decrease of $16,083, due to a $18,255 increase in interest due to borrowings under our related party note and lease financing and a $16,577 increase in currency exchange losses, offset partially by an increase of $18,749 in unrealized income on marketable securities recognized in the three months ended March 31, 2024.
Current wording
Other expense net for the three months ended June 30, 2024 was $36,472 compared to other income net of $14,579 for the same period in 2023, a decrease of $51,051, due to unrealized loses on marketable securities of $37,497 recognized in the three months ended June 30, 2024, compared to an unrealized gain on marketable securities of $37,497 recognized in 2023 and to a $16,012 increase in interest due to borrowings under our related party note and lease financing, offset partially by a $39,955 increase in currency exchange gains.
Previous wording
The provision for state income taxes for the three months ended March 31, 2024 and 2023 was $22,063 and $22,638, respectively, and represents estimated income tax payments, net of refunds, to various states.
Current wording
The provision for state income taxes for the three months ended June 30, 2024 and 2023 was $37 and $9,614, respectively, and represents estimated income tax payments, net of refunds, to various states.
Previous wording
Income attributable to the non-controlling interest was $17,351 for the three months ended March 31, 2024 which represents the non-controlling interest portion of American DG Energy's 51% owned subsidiary, American DG New York, LLC. For the same period in 2023, income attributable to the non-controlling interest was $18,060.
Current wording
Income attributable to the non-controlling interest was $28,320 for the three months ended June 30, 2024 which represents the non-controlling interest portion of American DG Energy's 51% owned subsidiary, American DG New York, LLC. For the same period in 2023, income attributable to the non-controlling interest was $4,826.
Previous wording
The net loss attributable to Tecogen for the three months ended March 31, 2024 was a net loss of $1,104,967 compared to a net loss of $1,490,029 for the same period in 2023, a decrease of $385,062, or 25.8%. The decrease in the net loss is due to increased revenue and gross profit from our Service and Energy Production Segments, offset partially by a $83,887 increase in operating expenses.
Current wording
The net loss attributable to Tecogen for the three months ended June 30, 2024 was a net loss of $1,538,796 compared to a net loss of $780,110 for the same period in 2023, an increase of $758,686, or 97.3%. The increase in the net loss is due to lower Products revenue and gross profit, offset partially by a $61,553 decrease in operating expenses.
Previous wording
Cost of sales for Services in the three months ended March 31, 2024 was $2,092,257 compared to $1,737,602 for the same period in 2023, an increase of $354,655, or 20.4%, due to increased labor and material costs as a consequence of the Aegis customer maintenance contracts acquisition. During the three months ended March 31, 2024, our Services gross margin increased to 47.9% compared to 44.6% in the same period in 2023, a 3.3% percentage point increase. The increase in margin is primarily due to lower costs incurred to replace engines at certain sites in 2024.
Current wording
Cost of sales for Services in the six months ended June 30, 2024 was $4,284,072 compared to $3,813,471 for the same period in 2023, an increase of $470,601, or 12.3%, due to increased labor and material costs as a consequence of the Aegis customer maintenance contracts acquisition. During the six months ended June 30, 2024, our Services gross margin increased to 47.4% compared to 46.2% in the same period in 2023, a 1.2% percentage point increase. The increase in margin is due to lower costs incurred to replace engines at certain sites in 2024.
Previous wording
Cost of sales for Energy Production in the three months ended March 31, 2024 was $468,640 compared to $337,739 for the same period in 2023, an increase of $130,901, or 38.8%. During the three months ended March 31, 2024 our Energy Production gross margin decreased to 31.1% compared to 36.7% for the same period in 2023, a 5.6% percentage point decrease. The decrease in the energy production gross margin is due to increased gas and maintenance costs at certain of our Energy Production sites in the three months ended March 31, 2024 compared to the same period in 2023.
Current wording
Cost of sales for Energy Production in the six months ended June 30, 2024 was $753,475 compared to $557,746 for the same period in 2023, an increase of $195,729, or 35.1%. During the six months ended June 30, 2024 our Energy Production gross margin decreased to 35.2% compared to 36.9% for the same period in 2023, a 1.7% percentage point decrease. The decrease in the energy production gross margin is due to increased gas and maintenance costs at certain of our Energy Production sites in the six months ended June 30, 2024 compared to the same period in 2023.
Previous wording
Selling expenses consist of sales staff, commissions, marketing, travel and other selling related expenses. Selling expenses for the three months ended March 31, 2024 were $529,669 compared to $520,070 for the same period in 2023, an increase of $9,599 or 1.8%, due to a $90,090 increase in sales commission, offset partially by a $74,853 reduction in trade show expense.
Current wording
Selling expenses consist of sales staff, commissions, marketing, travel and other selling related expenses. Selling expenses for the six months ended June 30, 2024 were $934,946 compared to $1,000,856 for the same period in 2023, a decrease of $65,910 or 6.6%, due to a $72,213 decrease in trade show expense and a $27,855 decrease in payroll and related benefits, offset partially by a $25,872 increase in sales commissions.
Previous wording
The gain on asset dispositions for three months ended March 31, 2024 of $7,391 represents the excess of insurance proceeds received over the net book value of assets for auto claims filed during the period.
Current wording
The gain on asset dispositions for six months ended June 30, 2024 of $4,028 compared to $19,950 for the same period in 2023, represents the excess of insurance proceeds received over the net book value of assets for auto claims filed during the period or the excess of proceeds received over the book value on the sale of vehicles.
Previous wording
During the three months ended March 31, 2024, we incurred a loss from operations of $1,049,885 compared to a net loss from operations of $1,449,746 in the same period in 2023. Cash flows from operations increased $533,082 during the three months ended March 31, 2024 compared to the same period in 2023. As of March 31, 2024, we had cash and cash equivalents of $1,510,435 compared to cash and cash equivalents of $1,351,270 as of December 31, 2023, an increase of $159,165 or 11.8%, and an accumulated deficit as of March 31, 2024, of $43,984,623. In addition to cash from operations, we have relied upon a loan in the amount of $500,000 from a related party to help fund operations. The loan becomes due on October 10, 2025. (See “Note 11 to the Condensed Consolidated Financial Statements”and “Liquidity,” below.) In view of the foregoing, we may need to raise additional cash through one or more equity or debt financings to continue to fund our operations and expand our business. There is no assurance we will be able to raise such financing or upon terms that are acceptable to us. (See also “Note 2 to the Condensed Consolidated Financial Statements”and in our Condensed Consolidated Financial Statements for the year ended December 31, 2023, included in our 2023 Form 10-K.)If adequate financing is not available when needed, we may be required to implement cost-cutting strategies, delay production, curtail research and development efforts, or implement other measures, which may adversely affect our results of operations and financial conditions and the price of our stock.
Current wording
During the six months ended June 30, 2024, we incurred a loss from operations of $2,523,851 compared to a loss from operations of $2,229,995 in the same period in 2023. Cash flows from operations decreased $63,379 during the six months ended June 30, 2024 compared to the same period in 2023. As of June 30, 2024, we had cash and cash equivalents of $841,913 compared to cash and cash equivalents of $1,351,270 as of December 31, 2023, a decrease of $509,357 or 37.7%, and an accumulated deficit as of June 30, 2024, of $45,523,419. In addition to cash from operations, we have relied upon a loan in the amount of $500,000 from a related party to help fund operations. The loan becomes due on October 10, 2025. On July 23, 2024, we borrowed an additional $500,000 from Mr. Hatsopoulos, and executed a promissory note with a maturity of one year and interest at 5.06% per annum. (See “Note 11 to the Condensed Consolidated Financial Statements”and “Liquidity,” below.) In view of the foregoing, we may need to raise additional cash through one or more equity or debt financings to continue to fund our operations and expand our business. There is no assurance we will be able to raise such financing or upon terms that are acceptable to us. (See also “Note 2 to the Condensed Consolidated Financial Statements”and in our Condensed Consolidated Financial Statements for the year ended December 31, 2023, included in our 2023 Form 10-K.)If adequate financing is not available when needed, we may be required to implement cost-cutting strategies, delay production, curtail research and development efforts, or implement other measures, which may adversely affect our results of operations and financial conditions and the price of our stock.
Previous wording
Consolidated working capital at March 31, 2024 was $8,499,647 compared to $9,822,546 at December 31, 2023, a decrease of $1,322,899, or 13.5%. Included in working capital were cash and cash equivalents of $1,510,435 at March 31, 2024, compared to $1,351,270 at December 31, 2023, an increase of $159,165, or 11.8%.
Current wording
Consolidated working capital at June 30, 2024 was $6,554,735 compared to $9,822,546 at December 31, 2023, a decrease of $3,267,811, or 13.5%. Included in working capital were cash and cash equivalents of $841,913 at June 30, 2024, compared to $1,351,270 at December 31, 2023, a decrease of $509,357, or 37.7%.
Previous wording
Cash provided by operating activities for the three months ended March 31, 2024 was $248,216 compared to $284,866 of cash used by operating activities for the same period in 2023, an increase of $533,082, or 187.1% Our accounts receivable and unbilled revenue balances were $6,533,130 and $1,258,532, respectively, at March 31, 2024 compared to $6,781,484 and $1,258,532 at December 31, 2023, providing $234,095 of cash. During the three months ended March 31, 2023 we collected the majority of the outstanding Employee Retention Credit receivables, providing $667,121 of cash from operations.
Current wording
Cash provided by operating activities for the six months ended June 30, 2024 was $90,297 compared to $153,676 of cash used by operating activities for the same period in 2023, a decrease of $63,379, or 41.2% Our accounts receivable and unbilled revenue balances were $5,364,228 and $1,258,532, respectively, at June 30, 2024 compared to $6,781,484 and $1,258,532 at December 31, 2023, providing $1,398,193 of cash. During the six months ended June 30, 2023 we collected the majority of the outstanding Employee Retention Credit receivables, providing $667,121 of cash from operations.
Previous wording
Accounts payable decreased to $4,013,899 as of March 31, 2024 from $4,514,415 at December 31, 2023, using $500,516 in cash flow from operations. The decrease in accounts payable was due to decreased material purchases. Deferred revenue increased to $2,462,570 as of March 31, 2023 compared to $1,647,206 as of December 31, 2023, due to increased customer deposits, providing $791,181 of cash from operations. We expect accounts payable and deferred revenue to fluctuate with routine changes in operations.
Current wording
Accounts payable decreased to $4,405,769 as of June 30, 2024 from $4,514,415 at December 31, 2023, using $108,646 in cash flow from operations. The decrease in accounts payable was due to decreased material purchases. Deferred revenue increased to $2,558,799 as of June 30, 2024 compared to $1,647,206 as of December 31, 2023, due to increased customer deposits, providing $806,266 of cash from operations. We expect accounts payable and deferred revenue to fluctuate with routine changes in operations.
Previous wording
During the three months ended March 31, 2024 we used $104,952 of cash to purchase property, plant and equipment and received $33,013 in proceeds from the disposition of assets, including insurance proceeds. During the three months ended March 31, 2023 there were no cash flows from investing activities.
Current wording
During the six months ended June 30, 2024 we used $569,077 in cash from investing activities. We used $556,636 of cash to purchase property, plant and equipment and received $36,213 in proceeds from the disposition of assets, including insurance proceeds and distributed $48,654 to the 49% non-controlling interest holders of American DG New York LLC. Cash used in asset acquisition are for costs incurred during the six months ended June 30, 2024 for initial improvements required to the North Billerica, Massachusetts leased premises which are estimated to range between $500,000 and $750,000.
Previous wording
During the three months ended March 31, 2024 we used $17,112 of cash in payment of finance lease principal. There were no cash flows from financing activities in the three months ended March 31, 2023.
Current wording
During the six months ended June 30, 2024 we used $30,577 of cash in payment of finance lease principal. There were no cash flows from financing activities in the three months ended June 30, 2023.
Previous wording
As of March 31, 2024, our backlog of product and installation projects, excluding service contracts, was $5,554,599, consisting of $5,122,266 of purchase orders received by us and $432,333 of projects in which the customer's internal approval process is complete, financial resources have been allocated and the customer has made a firm verbal commitment that the order is in the process of execution. As of March 31, 2023, our backlog of product and installation projects, excluding service contracts, was $7,053,160 consisting of $5,157,056 of purchase orders received by us and $1,896,104 million of projects in which the customer's internal approval process is complete, financial resources have been allocated and the customer has made a firm verbal commitment that the order is in the process of execution. Backlog at the beginning of any period is not necessarily indicative of future performance. Our presentation of backlog may differ from other companies in our industry.
Current wording
As of June 30, 2024, our backlog of product and installation projects, excluding service contracts, was $5,121,551, consisting of $4,681,231 of purchase orders received by us and $440,320 of projects in which the customer's internal approval process is complete, financial resources have been allocated and the customer has made a firm verbal commitment that the order is in the process of execution. As of June 30, 2023, our backlog of product and installation projects, excluding service contracts, was $8,234,288 consisting of $5,720,038 of purchase orders received by us and $2,514,250 million of projects in which the customer's internal approval process is complete, financial resources have been allocated and the customer has made a firm verbal commitment that the order is in the process of execution. Backlog at the beginning of any period is not necessarily indicative of future performance. Our presentation of backlog may differ from other companies in our industry.
Previous wording
At March 31, 2024, we had cash and cash equivalents of $1,510,435, a increase of $159,165 or 11.8% from the cash and cash equivalents balance at December 31, 2023. During the three months ended March 31, 2024, our revenues were negatively impacted due to customer order delays or deferrals; service delays due to customer facility closures, in some cases for extended periods and a reduction in our energy production revenues due to business closures and increased remote work and learning environments.
Current wording
At June 30, 2024, we had cash and cash equivalents of $841,913, a decrease of $509,357 or 37.7% from the cash and cash equivalents balance at December 31, 2023. During the six months ended June 30, 2024, our revenues were negatively impacted due to the relocation of our manufacturing operations to our new facility in April 2024, which significantly reduced our production capacity, customer order delays or deferrals for our products; service delays due to customer facility closures, in some cases for extended periods and a reduction in our energy production revenues due to business closures and increased remote work and learning environments.
Previous wording
On March 21, 2024, John H. Hatsopoulos amended the terms of the Promissory Note dated October 10, 2023, extending the maturity date by one year, to October 10, 2025, and agreeing to accept payment in cash or Tecogen Inc. common stock.
Current wording
On March 21, 2024, John H. Hatsopoulos amended the terms of the Promissory Note dated October 10, 2023, extending the maturity date by one year, to October 10, 2025, and agreeing to accept payment in cash or Tecogen Inc. common stock. On July 23, 2024, we borrowed an additional $500,000 from Mr. Hatsopoulos, and executed a promissory note with a maturity of one year and interest at 5.06% per annum.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
See Note 7. Aegis Contract and Related Asset Acquisitions of the Notes to the Consolidated Financial Statements.
Current report — wording carried from elsewhere
Cost of sales for Services in the three months ended June 30, 2024 was $2,191,815 compared to $2,075,869 for the same period in 2023, an increase of $115,946, or 5.6%, due to increased labor and material costs as a consequence of increased revenue from the Aegis customer maintenance contracts acquisition. During the three months ended June 30, 2024, our Services gross margin decreased to 46.9% compared to 47.5% in the same period in 2023, a 0.6% percentage point decrease. The decrease in margin is due to higher costs incurred to replace engines at certain sites in 2024.
Current report — wording carried from elsewhere
The loss on asset dispositions for three months ended June 30, 2024 was $3,363 compared to a gain on asset dispositions of $19,950.
Current report — wording carried from elsewhere
The following table sets forth for the periods indicated, the percentage of net sales represented by certain items reflected in our condensed consolidated statements of operations:
Current report — wording carried from elsewhere
The following table presents revenue for the periods indicated, by segment and the change from the prior year:
Current report — wording carried from elsewhere
Products revenues in the six months ended June 30, 2024 were $1,611,071 compared to $4,155,767 for the same period in 2023, a decrease of $2,544,696, or 61.2%. The decrease in revenue during the six months ended June 30, 2024 is due to the relocation of our manufacturing operations to our new facility in April 2024, which significantly reduced our production capacity and customer order delays, resulting in a decrease in chiller sales of $2,099,854, a $367,737 decrease in engineered accessory sales and a $77,105 decrease in cogeneration sales. Our Products sales mix, as well as product revenue, can vary significantly from period to period as our products are high dollar, low volume sales.
Current report — wording carried from elsewhere
Our service operation revenues grow with the sale of installed systems, since the majority of our product sales are accompanied by a service contract or time and materials agreements and by the acquisition of maintenance contracts. As a result, our “fleet” of units being serviced by our service department grows with product sales.
Current report — wording carried from elsewhere
The provision for state income taxes for the six months ended June 30, 2024 and 2023 was $22,100 and $32,252, respectively, and represents estimated income tax payments, net of refunds, to various states.
Current report — wording carried from elsewhere
Income attributable to the non-controlling interest was $45,671 for the six months ended June 30, 2024 which represents the non-controlling interest portion of American DG Energy's 51% owned subsidiary, American DG New York, LLC. For the same period in 2023, income attributable to the non-controlling interest was $22,886.
Current report — wording carried from elsewhere
Net Income (loss) Attributable to Tecogen Inc.
Current report — wording carried from elsewhere
The net loss attributable to Tecogen for the six months ended June 30, 2024 was a net loss of $2,643,763 compared to a net loss of $2,270,139 for the same period in 2023, an increase in the net loss of $373,624, or 16.5%. The increase in the net loss is due to decreased Products revenue and gross profit.