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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Tecogen Inc | NASDAQ:TGEN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.71 | 0.8125 | 0.85 | 0 | 01:00:00 |
|
þ
|
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
04-3536131
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(IRS Employer Identification No.)
|
45 First Avenue
|
|
Waltham, Massachusetts
|
02451
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Title of each class
|
Name of each exchange on which registered
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Common Stock, $.001 par value
|
NASDAQ Capital Market
|
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Item 1A.
|
Risk Factors.
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|
Item 1B.
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Unresolved Staff Comments.
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Item 2.
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Properties.
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Item 3.
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Legal Proceedings.
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Item 4.
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Mine Safety Disclosures.
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PART II
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||
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Item 5.
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Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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Item 6.
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Selected Financial Data.
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk.
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Item 8.
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Financial Statements and Supplementary Data.
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
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Item 9A.
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Controls and Procedures.
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Item 9B.
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Other Information.
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PART III
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||
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Item 10.
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Directors, Executive Officers and Corporate Governance.
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Item 11.
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Executive Compensation.
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence.
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Item 14.
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Principal Accountant Fees and Services.
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PART IV
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||
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Item 15.
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Exhibits and Financial Statement Schedules.
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Item 16.
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Form 10-K Summary.
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SIGNATURES
|
|
1.
|
Third-party laboratory verification.
The AVL California Technology Center, a long-standing research and technology partner with the international automotive industry, confirmed our results in their state-of-the-art dynamometer test cell, which was outfitted with sophisticated emissions measurement equipment.
|
2.
|
Verifying longevity and reliability in the field.
By equipping one of our 75 kW units, already operating at a customer location in Southern California with the Ultera
®
low-emissions technology and a device to continuously monitor emissions we verified longevity and reliability. The Ultera
®
low-emissions system operated successfully for more than 25,000 hours, approximately 3.5 years, and consistently complied with California’s stringent emission standards over the entire field testing period.
|
3.
|
Additional independent tests.
During the field test, two companies licensed in California to test emissions each verified our results at different times. The results from one of these tests, obtained in August 2011, enabled us to qualify for New Jersey’s fast-track permitting. Virtually every state nationwide requires some kind of permit related to local air quality, but New Jersey allows an exemption for systems such as ours that demonstrate superior emissions performance. This certification was granted in November 2011, and since then we have sold Ultera
®
low-emissions systems to customers in this territory.
|
•
|
commercial and industrial natural gas fueled engines from other manufacturers; and
|
•
|
natural gas and biogas powered vehicle fleets - such as municipal bus fleets
|
•
|
Provide power when a utility grid is not available or goes out of service;
|
•
|
Reduce the customer’s total cost of purchasing electricity and other fuel;
|
•
|
Reduce emissions of criteria pollutants (NOx and CO) to near-zero levels and cut the emission of greenhouse gases such as carbon dioxide;
|
•
|
Provide reliable on-site power generation, heating and cooling services; and
|
•
|
Control maintenance costs and ensure optimal peak equipment performance.
|
•
|
Sacramento Municipal Utility District has provided test sites for the Company since 2010.
|
•
|
Southern California Gas Company and San Diego Gas & Electric Company, each a Sempra Energy subsidiary have granted us research and development contracts since 2004.
|
•
|
Department of Energy’s Lawrence Berkeley National Laboratory, with which the Company has had research and development contracts since 2005, including ongoing Microgrid development work related to the InVerde.
|
•
|
Eastern Municipal Water District has co-sponsored demonstration projects to retrofit both a natural-gas powered municipal water pump engine and a biofuel powered pumping station engine with the Ultera low emissions technology since 2012.
|
•
|
Consortium for Electric Reliability Technology Solutions executed research and development contracts with the Company, and provided a test site to the Company since 2005.
|
•
|
California Energy Commission executed research and development contracts with the Company from 2004 until March 2013.
|
•
|
The AVL California Technology Center performed a support role in research and development contracts as well as internal research and development on our Ultera
®
emission control system from August 2009 to November 2011. Currently, this testing center's work on emissions from gasoline vehicles which began in January of 2016 continues for the Ultra Emissions products.
|
•
|
Propane Education & Research Council (PERC) executed research and development contracts with the Company for work related to developing Ultera low emissions control systems for the propane powered fork truck market.
|
•
|
The Southwest Research Institute (SWRI), a non-profit independent research center located in San Antonio, Texas, has been engaged by the Company to complete the next phase of research in the Ultera
®
automotive application. This effort will focus on evaluation of advanced catalyst formulations tailored to the Ultera
®
process.
|
•
|
9,470,126: "Assembly and method for reducing ammonia in exhaust of internal combustion engines." This patent, granted in October 2016, is related to the
Ultera
emission control system applicable to all of our products.
|
•
|
9,121,326: “Assembly and method for reducing nitrogen oxides, carbon monoxide and hydrocarbons in exhausts of internal combustion engines.” This patent, granted in September 2015, is related to the
Ultera
emission control system applicable to all of our products.
|
•
|
8,829,698: “Power generation systems.” This patent, granted in September 2014, is for a power generation system that includes an internal combustion engine configured to provide rotational mechanical energy.
|
•
|
8,578,704: “Assembly and method for reducing nitrogen oxides, carbon monoxide, and hydrocarbons in exhausts of internal combustion engines.” This patent, granted in November 2013, is for the
Ultera
emission control system applicable to all our products.
|
•
|
7,239,034: “Engine driven power inverter system with cogeneration.” This patent, granted in July 2007, pertains to the utilization of an engine-driven CHP module combined with an inverter and applies to our
InVerde
product specifically.
|
•
|
7,243,017: “Method for controlling internal combustion engine emissions.” This patent, granted in July 2007, applies to the specific algorithms used in our engine controller for metering fuel usage to obtain the correct combustion mixture and is technology used by most of our engines.
|
•
|
"Systems and methods for reducing emissions in exhaust of vehicles and producing electricity." This application, filed in November 2015 and published in March 2016, is related to the development of the
Ultera
emission control system for vehicle applications.
|
•
|
“Poison-Resistant Catalyst and Systems Containing Same.” This application, filed in March 2016, relates to treatment of exhaust generated by internal combustion engines, combustion turbines, and boilers, and more particularly to systems and method for treating exhausts containing one or more poisons, such as sulfur.
|
•
|
“Internal Combustion Engine Controller.” This application, filed in October 2015, relates to controllers and control circuits for controlling an internal combustion engine, including a gas fired internal combustion prime motor used for driving a generator for generating electrical power.
|
•
|
“Emissions Control Systems and Methods for Vehicles.” This application, filed in April 2016 relates to emissions control systems for vehicles.
|
•
|
"Assemblies and Methods for Reducing Particulate Matter, Hydrocarbons, and Gaseous Oxides from Internal Combustion Engine Exhaust." This application, filed in February 2017 relates to emissions controls system for vehicles.
|
•
|
"Dual Stage Internal Combustion Engine Aftertreatment System Using Exhaust Gas Intercooling and Charger-Driven Air Ejector." This application filed in February 2017 relates to emissions controls systems for vehicles.
|
•
|
Product safety certifications and interconnection requirements;
|
•
|
Air pollution regulations which govern the emissions allowed in engine exhaust;
|
•
|
State and federal incentives for CHP technology;
|
•
|
Various local building and permitting codes and third party certifications;
|
•
|
Electric utility pricing and related regulations; and
|
•
|
Federal versus state laws regarding the legalization of cannabis for medicinal and recreational use.
|
•
|
combining Tecogen’s and ADGE’s businesses in a manner that permits Tecogen to achieve the synergies anticipated to result from the transaction, the failure of which would result in the anticipated benefits of the transaction not being realized in the time frame currently anticipated or at all;
|
•
|
maintaining existing agreements with customers, distributors, and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, and vendors; and
|
•
|
addressing possible differences in corporate cultures and management philosophies.
|
•
|
results and timing of our product development;
|
•
|
results of the development of our competitors’ products;
|
•
|
regulatory actions with respect to our products or our competitors’ products;
|
•
|
actual or anticipated fluctuations in our financial condition and operating results;
|
•
|
actual or anticipated changes in our growth rate relative to our competitors;
|
•
|
actual or anticipated fluctuations in our competitors’ operating results or changes in their growth rate;
|
•
|
competition from existing products or new products that may emerge;
|
•
|
announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations, or capital commitments;
|
•
|
issuance of new or updated research or reports by securities analysts;
|
•
|
fluctuations in the valuation of companies perceived by investors to be comparable to us;
|
•
|
share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;
|
•
|
additions or departures of key management or personnel;
|
•
|
disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain, maintain, defend or enforce proprietary rights relating to our products and technologies;
|
•
|
announcement or expectation of additional financing efforts;
|
•
|
sales of our Common Stock by us, our insiders, or our other stockholders; and
|
•
|
general economic and market conditions.
|
•
|
have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
|
•
|
comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
|
•
|
submit certain executive compensation matters to shareholder non-binding advisory votes;
|
•
|
submit for shareholder approval golden parachute payments not previously approved; and
|
•
|
disclose certain executive compensation related items such as the correlation between executive compensation and financial performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation, when such disclosure requirements are adopted.
|
Year Ended December 31, 2017
|
|
High
|
|
Low
|
||||
1st Quarter
|
|
$
|
4.35
|
|
|
$
|
3.50
|
|
2nd Quarter
|
|
4.17
|
|
|
3.04
|
|
||
3rd Quarter
|
|
3.50
|
|
|
2.95
|
|
||
4th Quarter
|
|
3.38
|
|
|
2.20
|
|
Year Ended December 31, 2016
|
|
High
|
|
Low
|
||||
1st Quarter
|
|
$
|
6.50
|
|
|
$
|
2.80
|
|
2nd Quarter
|
|
5.75
|
|
|
3.50
|
|
||
3rd Quarter
|
|
5.20
|
|
|
4.00
|
|
||
4th Quarter
|
|
4.80
|
|
|
3.75
|
|
|
Years ended December 31,
|
||||
|
2017
|
|
2016
|
||
Revenues
|
100.0
|
%
|
|
100.0
|
%
|
Cost of Sales
|
61.0
|
|
|
62.0
|
|
Gross Profit
|
39.0
|
|
|
38.0
|
|
General and administrative
|
28.7
|
|
|
32.6
|
|
Selling
|
6.8
|
|
|
6.7
|
|
Research and development
|
2.8
|
|
|
2.7
|
|
Income (loss) from operations
|
0.7
|
|
|
(4.1
|
)
|
Total other expense, net
|
(0.4
|
)
|
|
(0.7
|
)
|
Consolidated net income (loss)
|
0.3
|
|
|
(4.7
|
)
|
(Income) loss attributable to the noncontrolling interest
|
(0.2
|
)
|
|
0.3
|
|
Net income (loss) attributable to Tecogen Inc.
|
0.1
|
%
|
|
(4.5
|
)%
|
•
|
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles;
|
•
|
provide reasonable assurance that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.
|
(a)
|
Index to Financial Statements and Financial Statement Schedules
|
(b)
|
Exhibits
|
Exhibit Number
|
Description
|
|
2.1
|
||
2.2
|
||
3.1
|
||
3.2
|
||
4.1
|
||
4.3+
|
||
4.5
|
||
4.6
|
||
10.1+
*
|
||
10.7
|
||
10.8
|
||
10.13#
|
||
10.21
|
||
10.24
|
||
10.26
|
||
10.29
|
||
10.30
|
||
10.31
|
||
10.32
|
||
10.34
|
10.35
|
||
10.36
|
||
10.37
|
||
10.38
|
||
10.39
|
||
10.40+
|
||
10.41
|
||
10.42+
|
||
10.43
|
||
21.1*
|
||
23.1*
|
||
31.1*
|
||
31.2*
|
||
31.3*
|
||
32.1*
|
||
101.INS*
|
XBRL Instance Document
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
*
|
Filed herewith.
|
|
#
|
Confidential Treatment has been granted for portions of this document. The confidential portions were omitted and filed separately, on a confidential basis, with the Securities and Exchange Commission.
|
|
+
|
Management contract or compensatory plan or agreement.
|
|
TECOGEN INC.
|
|
|
(Registrant)
|
|
|
|
|
Dated: March 21, 2018
|
By:
|
/s/ John N. Hatsopoulos
|
|
Co-Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Dated: March 21, 2018
|
By:
|
/s/ Benjamin M. Locke
|
|
Co-Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Dated: March 21, 2018
|
By:
|
/s/ Bonnie J. Brown
|
|
Chief Accounting Officer, Treasurer and Secretary
|
|
|
(Chief Accounting Officer)
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Angelina M. Galiteva
|
|
Chairman of the Board
|
|
March 21, 2018
|
Angelina M. Galiteva
|
|
|
|
|
|
|
|
|
|
/s/ John N. Hatsopoulos
|
|
Director and Co-Chief Executive Officer
|
|
March 21, 2018
|
John N. Hatsopoulos
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Benjamin M. Locke
|
|
Co-Chief Executive Officer
|
|
March 21, 2018
|
Benjamin M. Locke
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Bonnie J. Brown
|
|
Chief Accounting Officer, Treasurer and Secretary
|
|
March 21, 2018
|
Bonnie J. Brown
|
|
(Chief Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Charles T. Maxwell
|
|
Director
|
|
March 21, 2018
|
Charles T. Maxwell
|
|
|
|
|
|
|
|
|
|
/s/ Ahmed F. Ghoniem
|
|
Director
|
|
March 21, 2018
|
Ahmed F. Ghoniem
|
|
|
|
|
|
|
|
|
|
/s/ Keith Davidson
|
|
Director
|
|
March 21, 2018
|
Keith Davidson
|
|
|
|
|
|
|
|
|
|
/s/ Deanna Petersen
|
|
Director
|
|
March 21, 2018
|
Deanna Petersen
|
|
|
|
|
|
2017
|
|
2016
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
1,673,072
|
|
|
$
|
3,721,765
|
|
Accounts receivable, net
|
9,536,673
|
|
|
8,630,418
|
|
||
Unbilled revenue
|
3,963,133
|
|
|
2,269,645
|
|
||
Inventory, net
|
5,130,805
|
|
|
4,774,264
|
|
||
Due from related party
|
585,492
|
|
|
260,988
|
|
||
Prepaid and other current assets
|
771,526
|
|
|
401,876
|
|
||
Total current assets
|
21,660,701
|
|
|
20,058,956
|
|
||
Property, plant and equipment, net
|
12,265,711
|
|
|
517,143
|
|
||
Intangible assets, net
|
2,896,458
|
|
|
1,065,967
|
|
||
Goodwill
|
13,365,655
|
|
|
40,870
|
|
||
Other assets
|
482,551
|
|
|
2,058,425
|
|
||
TOTAL ASSETS
|
$
|
50,671,076
|
|
|
$
|
23,741,361
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
5,095,285
|
|
|
$
|
3,367,481
|
|
Accrued expenses
|
1,416,976
|
|
|
1,378,258
|
|
||
Deferred revenue
|
1,293,638
|
|
|
876,765
|
|
||
Loan due to related party
|
850,000
|
|
|
—
|
|
||
Interest payable, related party
|
52,265
|
|
|
—
|
|
||
Total current liabilities
|
8,708,164
|
|
|
5,622,504
|
|
||
Long-term liabilities:
|
|
|
|
|
|
||
Deferred revenue, net of current portion
|
538,100
|
|
|
459,275
|
|
||
Senior convertible promissory note, related party
|
—
|
|
|
3,148,509
|
|
||
Unfavorable contract liability, net
|
7,729,667
|
|
|
—
|
|
||
Total liabilities
|
16,975,931
|
|
|
9,230,288
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 10)
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
||
Tecogen Inc. stockholders’ equity:
|
|
|
|
|
|
||
Common stock, $0.001 par value; 100,000,000 shares authorized; 24,766,892 and 19,981,912 issued and outstanding at December 31, 2017 and 2016, respectively
|
24,767
|
|
|
19,982
|
|
||
Additional paid-in capital
|
56,176,330
|
|
|
37,334,773
|
|
||
Accumulated other comprehensive loss-investment securities
|
(165,317
|
)
|
|
—
|
|
||
Accumulated deficit
|
(22,796,246
|
)
|
|
(22,843,682
|
)
|
||
Total Tecogen Inc. stockholders’ equity
|
33,239,534
|
|
|
14,511,073
|
|
||
Noncontrolling interest
|
455,611
|
|
|
—
|
|
||
Total stockholders’ equity
|
33,695,145
|
|
|
14,511,073
|
|
||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
50,671,076
|
|
|
$
|
23,741,361
|
|
|
2017
|
|
2016
|
||||
Revenues
|
|
|
|
|
|
||
Products
|
$
|
12,991,283
|
|
|
$
|
10,722,285
|
|
Services
|
16,377,443
|
|
|
13,768,101
|
|
||
Energy production
|
3,833,940
|
|
|
—
|
|
||
Total revenues
|
33,202,666
|
|
|
24,490,386
|
|
||
Cost of sales
|
|
|
|
|
|
||
Products
|
8,012,012
|
|
|
7,189,225
|
|
||
Services
|
10,201,732
|
|
|
8,000,483
|
|
||
Energy production
|
2,034,518
|
|
|
—
|
|
||
Total cost of sales
|
20,248,262
|
|
|
15,189,708
|
|
||
Gross profit
|
12,954,404
|
|
|
9,300,678
|
|
||
Operating expenses
|
|
|
|
|
|
||
General and administrative
|
9,520,497
|
|
|
7,994,361
|
|
||
Selling
|
2,271,826
|
|
|
1,636,704
|
|
||
Research and development
|
936,929
|
|
|
667,064
|
|
||
Total operating expenses
|
12,729,252
|
|
|
10,298,129
|
|
||
Income (loss) from operations
|
225,152
|
|
|
(997,451
|
)
|
||
Other income (expense)
|
|
|
|
|
|
||
Interest and other income
|
27,626
|
|
|
11,988
|
|
||
Interest expense
|
(155,082
|
)
|
|
(175,782
|
)
|
||
Total other expense, net
|
(127,456
|
)
|
|
(163,794
|
)
|
||
Income (loss) before income taxes
|
97,696
|
|
|
(1,161,245
|
)
|
||
Income tax provision
|
—
|
|
|
—
|
|
||
Consolidated net income (loss)
|
97,696
|
|
|
(1,161,245
|
)
|
||
(Income) loss attributable to the noncontrolling interest
|
(50,260
|
)
|
|
64,962
|
|
||
Net income (loss) attributable to Tecogen Inc.
|
47,436
|
|
|
(1,096,283
|
)
|
||
Other comprehensive loss-unrealized loss on securities
|
(165,317
|
)
|
|
—
|
|
||
Comprehensive loss
|
$
|
(117,881
|
)
|
|
$
|
(1,096,283
|
)
|
|
|
|
|
||||
Net income (loss) per share - basic
|
$
|
0.00
|
|
|
$
|
(0.06
|
)
|
Net income (loss) per share - diluted
|
$
|
0.00
|
|
|
$
|
(0.06
|
)
|
Weighted average shares outstanding - basic
|
23,171,033
|
|
|
19,295,922
|
|
||
Weighted average shares outstanding - diluted
|
23,342,627
|
|
|
19,295,922
|
|
|
|
Tecogen Inc. Stockholders
|
|
|
|
|
|||||||||||||||||||||
|
|
Common Stock Shares
|
|
Common
Stock $.001 Par Value |
|
Additional
Paid-In Capital |
|
Accumulated Other Comprehensive Loss
|
|
Accumulated
Deficit |
|
Noncontrolling
Interest |
|
Total
|
|||||||||||||
Balance at December 31, 2015
|
|
18,478,990
|
|
|
$
|
18,479
|
|
|
$
|
34,501,640
|
|
|
$
|
—
|
|
|
$
|
(21,682,437
|
)
|
|
$
|
(395,814
|
)
|
|
$
|
12,441,868
|
|
Exercise of warrants
|
|
675,000
|
|
|
675
|
|
|
2,699,325
|
|
|
|
|
—
|
|
|
—
|
|
|
2,700,000
|
|
|||||||
Exercise of stock options
|
|
157,458
|
|
|
158
|
|
|
395,414
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
395,572
|
|
||||||
Acquisition of non-controlling interest in Ilios
|
|
670,464
|
|
|
670
|
|
|
(427,537
|
)
|
|
—
|
|
|
(64,962
|
)
|
|
460,776
|
|
|
(31,053
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
165,931
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
165,931
|
|
||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,096,283
|
)
|
|
(64,962
|
)
|
|
(1,161,245
|
)
|
||||||
Balance at December 31, 2016
|
|
19,981,912
|
|
|
$
|
19,982
|
|
|
$
|
37,334,773
|
|
|
$
|
—
|
|
|
$
|
(22,843,682
|
)
|
|
$
|
—
|
|
|
$
|
14,511,073
|
|
Exercise of stock options
|
|
122,043
|
|
|
122
|
|
|
179,796
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
179,918
|
|
||||||
Issuance of common stock in connection with ADGE acquisition, net of costs of $377,246
|
|
4,662,937
|
|
|
4,663
|
|
|
18,477,993
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,482,656
|
|
||||||
Consolidation of non-controlling interest in ADGNY
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
453,272
|
|
|
453,272
|
|
||||||
Distributions to non-controlling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47,921
|
)
|
|
(47,921
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
183,768
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
183,768
|
|
||||||
Comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(165,317
|
)
|
|
47,436
|
|
|
50,260
|
|
|
(67,621
|
)
|
||||||
Balance at December 31, 2017
|
|
24,766,892
|
|
|
$
|
24,767
|
|
|
$
|
56,176,330
|
|
|
$
|
(165,317
|
)
|
|
$
|
(22,796,246
|
)
|
|
$
|
455,611
|
|
|
$
|
33,695,145
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
2017
|
|
2016
|
||||
|
|
|
|
|
|||
Consolidated net income (loss)
|
$
|
97,696
|
|
|
$
|
(1,161,245
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
||
Depreciation and amortization, net
|
587,822
|
|
|
264,005
|
|
||
Loss on sale of assets
|
2,909
|
|
|
640
|
|
||
Recovery for losses on accounts receivable
|
(16,600
|
)
|
|
(19,245
|
)
|
||
Provision (recovery) of inventory reserve
|
17,000
|
|
|
(27,000
|
)
|
||
Stock-based compensation
|
183,768
|
|
|
165,931
|
|
||
Non-cash interest expense
|
1,491
|
|
|
49,532
|
|
||
Changes in operating assets and liabilities, net of effects of acquisition:
|
|
|
|
|
|
||
(Increase) decrease in:
|
|
|
|
||||
Short-term investments, restricted
|
—
|
|
|
294,802
|
|
||
Accounts receivable
|
(336,051
|
)
|
|
(3,324,310
|
)
|
||
Unbilled revenue
|
(1,676,409
|
)
|
|
(1,197,254
|
)
|
||
Inventory, net
|
(298,167
|
)
|
|
935,779
|
|
||
Due from related party
|
(325,651
|
)
|
|
916,273
|
|
||
Prepaid expenses and other current assets
|
(47,498
|
)
|
|
(48,771
|
)
|
||
Other non-current assets
|
(32,252
|
)
|
|
—
|
|
||
Increase (decrease) in:
|
|
|
|
|
|
||
Accounts payable
|
1,335,042
|
|
|
55,672
|
|
||
Accrued expenses and other current liabilities
|
(494,095
|
)
|
|
311,398
|
|
||
Deferred revenue
|
375,499
|
|
|
65,937
|
|
||
Interest payable, related party
|
34,240
|
|
|
—
|
|
||
Net cash used in operating activities
|
(591,256
|
)
|
|
(2,717,856
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||
Purchases of property and equipment
|
(580,044
|
)
|
|
(139,725
|
)
|
||
Purchases of intangible assets
|
(453,598
|
)
|
|
(119,665
|
)
|
||
Cash acquired in acquisition
|
971,454
|
|
|
—
|
|
||
Cash paid for investment in Ultra Emissions Technologies Ltd
|
—
|
|
|
(2,000,000
|
)
|
||
Return of investment in Ultra Emissions Technologies Ltd
|
2,000,000
|
|
|
—
|
|
||
Payment of stock issuance costs
|
(377,246
|
)
|
|
—
|
|
||
Distributions to noncontrolling interest
|
(47,921
|
)
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
1,512,645
|
|
|
(2,259,390
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||
Payments for debt issuance costs
|
—
|
|
|
(2,034
|
)
|
||
Proceeds on notes payable
|
—
|
|
|
150,000
|
|
||
Payments for share issuance
|
—
|
|
|
(31,053
|
)
|
||
Payments made on loan due to related party
|
(3,150,000
|
)
|
|
—
|
|
||
Proceeds from exercise of stock options
|
179,918
|
|
|
395,572
|
|
||
Proceeds from exercise of warrants
|
—
|
|
|
2,700,000
|
|
||
Net cash provided by (used in) financing activities
|
(2,970,082
|
)
|
|
3,212,485
|
|
||
Change in cash and cash equivalents
|
(2,048,693
|
)
|
|
(1,764,761
|
)
|
||
Cash and cash equivalents, beginning of the year
|
3,721,765
|
|
|
5,486,526
|
|
||
Cash and cash equivalents, end of the year
|
$
|
1,673,072
|
|
|
$
|
3,721,765
|
|
Cash paid for interest
|
$
|
110,979
|
|
|
$
|
126,250
|
|
Exchange of common stock for non-controlling interest in Ilios
|
$
|
—
|
|
|
$
|
330,852
|
|
Issuance of stock to acquire American DG Energy, net
|
$
|
18,482,656
|
|
|
$
|
—
|
|
Issuance of Tecogen stock options in exchange for American DG Energy options
|
$
|
114,896
|
|
|
$
|
—
|
|
|
2017
|
|
2016
|
||||
Net income (loss) attributable to stockholders
|
$
|
47,436
|
|
|
$
|
(1,096,283
|
)
|
Weighted average shares outstanding - Basic
|
23,171,033
|
|
|
19,295,922
|
|
||
Basic income (loss) per share
|
$
|
0.00
|
|
|
$
|
(0.06
|
)
|
Weighted average shares outstanding - Diluted
|
23,342,627
|
|
|
19,295,922
|
|
||
Diluted income (loss) per share
|
$
|
0.00
|
|
|
$
|
(0.06
|
)
|
|
|
|
|
||||
Anti-dilutive shares underlying stock options outstanding
|
441,356
|
|
|
1,117,918
|
|
||
Anti-dilutive convertible debentures
|
—
|
|
|
889,831
|
|
Consideration
|
|
|
||
Tecogen common stock - 4,662,937 shares
|
|
$
|
18,745,007
|
|
Assumed fully vested equity awards
|
|
114,896
|
|
|
|
|
$
|
18,859,903
|
|
|
|
|
||
Recognized amounts of identifiable assets acquired and liabilities assumed
|
|
|
||
Financial assets
|
|
$
|
1,542,137
|
|
Inventory
|
|
75,374
|
|
|
Prepaid and other current assets
|
|
358,628
|
|
|
Property, plant and equipment
|
|
12,186,664
|
|
|
Investment securities
|
|
519,568
|
|
|
Favorable contract asset
|
|
1,561,739
|
|
|
Financial liabilities
|
|
(1,912,859
|
)
|
|
Unfavorable contract liability
|
|
(8,341,922
|
)
|
|
Other liabilities
|
|
(939
|
)
|
|
Total identifiable net assets
|
|
5,988,390
|
|
|
Noncontrolling interest in American DG New York, LLC
|
|
(453,272
|
)
|
|
Goodwill
|
|
13,324,785
|
|
|
|
|
$
|
18,859,903
|
|
|
|
Year ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Total revenues
|
|
$
|
36,232,650
|
|
|
$
|
29,674,375
|
|
Net income (loss)
|
|
113,255
|
|
|
(253,132
|
)
|
||
Basic earnings (loss) per share
|
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
Diluted earnings (loss) per share
|
|
$
|
0.01
|
|
|
$
|
(0.01
|
)
|
|
2017
|
|
2016
|
||||
Gross raw materials
|
$
|
5,270,732
|
|
|
$
|
4,658,872
|
|
Less - reserves
|
(283,000
|
)
|
|
(266,000
|
)
|
||
Net raw materials
|
4,987,732
|
|
|
4,392,872
|
|
||
Work-in-process
|
11,852
|
|
|
144,528
|
|
||
Finished goods
|
131,221
|
|
|
236,864
|
|
||
|
$
|
5,130,805
|
|
|
$
|
4,774,264
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
Intangible assets
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Product certifications
|
|
$
|
605,704
|
|
|
$
|
(285,341
|
)
|
|
$
|
320,363
|
|
|
$
|
544,651
|
|
|
$
|
(233,992
|
)
|
|
$
|
310,659
|
|
Patents
|
|
808,323
|
|
|
(154,972
|
)
|
|
653,351
|
|
|
681,155
|
|
|
(123,012
|
)
|
|
558,143
|
|
||||||
Developed technology
|
|
240,000
|
|
|
(76,000
|
)
|
|
164,000
|
|
|
240,000
|
|
|
(60,000
|
)
|
|
180,000
|
|
||||||
Trademarks
|
|
19,540
|
|
|
—
|
|
|
19,540
|
|
|
17,165
|
|
|
—
|
|
|
17,165
|
|
||||||
In Process R&D
|
|
263,001
|
|
|
—
|
|
|
263,001
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Favorable contract asset
|
|
1,561,739
|
|
|
(85,536
|
)
|
|
1,476,203
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
|
$
|
3,498,307
|
|
|
$
|
(601,849
|
)
|
|
$
|
2,896,458
|
|
|
$
|
1,482,971
|
|
|
$
|
(417,004
|
)
|
|
$
|
1,065,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Intangible liability
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unfavorable contract liability
|
|
$
|
8,341,922
|
|
|
$
|
(612,255
|
)
|
|
$
|
7,729,667
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Non-contract related intangibles
|
|
Contract related intangibles
|
|
Total
|
||||||
2018
|
|
$
|
185,398
|
|
|
$
|
(880,776
|
)
|
|
(695,378
|
)
|
|
2019
|
|
168,748
|
|
|
(781,505
|
)
|
|
(612,757
|
)
|
|||
2020
|
|
162,591
|
|
|
(729,905
|
)
|
|
(567,314
|
)
|
|||
2021
|
|
149,160
|
|
|
(730,478
|
)
|
|
(581,318
|
)
|
|||
2022
|
|
142,083
|
|
|
(696,328
|
)
|
|
(554,245
|
)
|
|||
Thereafter
|
|
592,733
|
|
|
(2,434,472
|
)
|
|
(1,841,739
|
)
|
|||
|
|
$
|
1,400,713
|
|
|
$
|
(6,253,464
|
)
|
|
$
|
(4,852,751
|
)
|
|
Estimated Useful
Life (in Years)
|
|
2017
|
|
2016
|
||||
Energy systems
|
1 - 15 years
|
|
$
|
12,466,642
|
|
|
$
|
—
|
|
Machinery and equipment
|
5 - 7 years
|
|
1,215,951
|
|
|
1,009,893
|
|
||
Furniture and fixtures
|
5 years
|
|
205,320
|
|
|
141,874
|
|
||
Computer software
|
3 - 5 years
|
|
115,253
|
|
|
102,415
|
|
||
Leasehold improvements
|
*
|
|
440,519
|
|
|
437,341
|
|
||
|
|
|
14,443,685
|
|
|
1,691,523
|
|
||
Less - accumulated depreciation and amortization
|
|
|
(2,177,974
|
)
|
|
(1,174,380
|
)
|
||
Net property, plant and equipment
|
|
|
$
|
12,265,711
|
|
|
$
|
517,143
|
|
|
Product and Service
|
|
Energy Production
|
|
Total Company
|
||||||
Balance at December 31, 2016
|
$
|
40,870
|
|
|
$
|
—
|
|
|
$
|
40,870
|
|
Acquisitions
|
—
|
|
|
13,324,785
|
|
|
13,324,785
|
|
|||
Balance at December 31, 2017
|
$
|
40,870
|
|
|
$
|
13,324,785
|
|
|
$
|
13,365,655
|
|
Years Ending December 31,
|
|
Amount
|
||
2018
|
|
$
|
588,021
|
|
2019
|
|
511,382
|
|
|
2020
|
|
513,742
|
|
|
2021
|
|
521,375
|
|
|
2022
|
|
529,115
|
|
|
2023 and thereafter
|
|
671,553
|
|
|
Total
|
|
$
|
3,335,188
|
|
Warranty reserve, December 31, 2015
|
$
|
110,000
|
|
Warranty provision for units sold
|
169,180
|
|
|
Costs of warranty incurred
|
(131,180
|
)
|
|
Warranty reserve, December 31, 2016
|
148,000
|
|
|
Warranty provision for units sold
|
128,100
|
|
|
Costs of warranty incurred
|
(142,600
|
)
|
|
Warranty reserve, December 31, 2017
|
$
|
133,500
|
|
Common Stock Options
|
Number of
Options
|
|
Exercise
Price Per
Share
|
|
Weighted
Average Exercise
Price
|
|
Weighted
Average Remaining
Life
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding, December 31, 2016
|
1,117,918
|
|
|
$0.79-$5.39
|
|
$
|
3.10
|
|
|
5.00 years
|
|
$
|
1,415,150
|
|
Granted
|
45,000
|
|
|
$3.22-$3.72
|
|
3.35
|
|
|
|
|
|
|
||
Assumed in merger
|
156,124
|
|
|
$3.15-$30.33
|
|
10.35
|
|
|
|
|
|
|||
Exercised
|
(122,043
|
)
|
|
$0.79-$2.00
|
|
1.47
|
|
|
|
|
|
|
||
Canceled and forfeited
|
(135,447
|
)
|
|
$2.60-30.33
|
|
9.28
|
|
|
|
|
|
|
||
Outstanding, December 31, 2017
|
1,061,552
|
|
|
$0.79-$18.15
|
|
$
|
3.60
|
|
|
4.95 years
|
|
$
|
291,449
|
|
Exercisable, December 31, 2017
|
874,202
|
|
|
|
|
$
|
3.46
|
|
|
|
|
$
|
291,449
|
|
Vested and expected to vest, December 31, 2017
|
1,033,450
|
|
|
|
|
$
|
3.58
|
|
|
|
|
$
|
291,449
|
|
Stock option awards:
|
|
2017
|
|
2016
|
Expected life
|
|
6.25 years
|
|
6.25 years
|
Risk-free interest rate
|
|
1.86%
|
|
1.22%
|
Expected volatility
|
|
23.10%
|
|
32.80%
|
|
Number of
Restricted
Stock
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
Unvested, December 31, 2016
|
77,508
|
|
|
$
|
1.31
|
|
Granted
|
—
|
|
|
—
|
|
|
Vested
|
(34,587
|
)
|
|
1.31
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Unvested, December 31, 2017
|
42,921
|
|
|
$
|
1.31
|
|
December 31, 2017
|
|
|
Quoted prices in active markets for identical assets
|
|
Significant other observable inputs
|
|
Significant unobservable inputs
|
|
|
||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total gains (losses)
|
||||||||||
Recurring fair value measurements
|
|
|
|
|
|
|
|
|
|
||||||||||
Available-for-sale equity securities
|
|
|
|
|
|
|
|
|
|
||||||||||
EuroSite Power Inc.
|
$
|
354,251
|
|
|
$
|
—
|
|
|
$
|
354,251
|
|
|
$
|
—
|
|
|
$
|
(165,317
|
)
|
Total recurring fair value measurements
|
$
|
354,251
|
|
|
$
|
—
|
|
|
$
|
354,251
|
|
|
$
|
—
|
|
|
$
|
(165,317
|
)
|
|
|
Products and Services
|
|
Energy Production
|
|
Corporate, other and elimination (1)
|
|
Total
|
||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Revenue - external customers
|
|
$
|
29,368,726
|
|
|
$
|
3,833,940
|
|
|
$
|
—
|
|
|
$
|
33,202,666
|
|
Intersegment revenue
|
|
750,692
|
|
|
—
|
|
|
(750,692
|
)
|
|
—
|
|
||||
Total revenue
|
|
30,119,418
|
|
|
3,833,940
|
|
|
(750,692
|
)
|
|
33,202,666
|
|
||||
Gross profit
|
|
11,154,982
|
|
|
1,799,422
|
|
|
—
|
|
|
12,954,404
|
|
||||
Identifiable assets
|
|
24,234,505
|
|
|
26,436,571
|
|
|
—
|
|
|
50,671,076
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Revenue - external customers
|
|
$
|
24,490,386
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,490,386
|
|
Intersegment revenue
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total revenue
|
|
24,490,386
|
|
|
—
|
|
|
—
|
|
|
24,490,386
|
|
||||
Gross profit
|
|
9,300,678
|
|
|
—
|
|
|
—
|
|
|
9,300,678
|
|
||||
Identifiable assets
|
|
15,674,327
|
|
|
—
|
|
|
8,067,034
|
|
|
23,741,361
|
|
|
|
|
2017
|
|
2016
|
||||
Pre-tax book income (loss)
|
|
$
|
97,697
|
|
|
$
|
(1,161,245
|
)
|
|
Expected tax at 34%
|
|
33,217
|
|
|
(394,823
|
)
|
|||
|
|
|
|
|
|
||||
Permanent differences:
|
|
|
|
|
|||||
|
Machinery & equipment
|
|
10,888
|
|
|
5,459
|
|
||
|
Stock compensation
|
|
(179,084
|
)
|
|
—
|
|
||
|
Non-deductible interest
|
|
10,788
|
|
|
—
|
|
||
|
Other
|
|
26
|
|
|
754
|
|
||
|
|
|
|
|
|
||||
State taxes:
|
|
|
|
|
|||||
|
Current
|
|
—
|
|
|
—
|
|
||
|
Deferred
|
|
(24,960
|
)
|
|
(96,754
|
)
|
||
|
|
|
|
|
|
||||
Other items:
|
|
|
|
|
|||||
|
Federal research and development credits
|
|
(33,406
|
)
|
|
(15,996
|
)
|
||
|
Change in valuation allowance
|
|
277,000
|
|
|
96,754
|
|
||
|
Deferred tax past year true-up's
|
|
191,355
|
|
|
(8,584
|
)
|
||
|
ADGE deferred tax assets and liabilities at purchase
|
|
(3,702,013
|
)
|
|
—
|
|
||
|
ADGE other post-closing adjustments
|
|
(1,330,665
|
)
|
|
—
|
|
||
|
Change in statutory tax rate for deferred tax assets-Federal
|
|
4,914,329
|
|
|
—
|
|
||
|
Change in statutory tax rate for deferred tax assets-State
|
|
(167,475
|
)
|
|
—
|
|
||
Unbenefitted operating losses
|
|
—
|
|
|
413,190
|
|
|||
Income tax provision
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2017
|
|
2016
|
||||
Net operating loss carryforwards
|
$
|
7,429,000
|
|
|
$
|
6,885,000
|
|
R&D and ITC credit carryforwards
|
203,000
|
|
|
145,000
|
|
||
Accrued expenses and other
|
879,000
|
|
|
1,740,000
|
|
||
Accounts receivable
|
6,000
|
|
|
11,000
|
|
||
Inventory
|
73,000
|
|
|
208,000
|
|
||
Property, plant and equipment
|
801,000
|
|
|
125,000
|
|
||
Deferred tax assets
|
9,391,000
|
|
|
9,114,000
|
|
||
Valuation allowance
|
(9,391,000
|
)
|
|
(9,114,000
|
)
|
||
Deferred tax assets, net
|
$
|
—
|
|
|
$
|
—
|
|
1 Year Tecogen Chart |
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