10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-36103

TECOGEN INC.

(Exact name of Registrant as specified in its charter)

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)

Registrant’s Telephone Number, Including Area Code: (781) 622-1120

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý   No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý   No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer o	Accelerated filer o
Non –accelerated filer o	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ¨   No ý

Title of each class	Outstanding, September 30, 2015
Common Stock, $0.001 par value	17,588,782

TECOGEN INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED SEPTEMBER 30, 2015

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets - September 30, 2015 and December 31, 2014 (unaudited)	1
	Condensed Consolidated Statements of Operations - three and nine months ended September 30, 2015 and 2014 (unaudited)	2
	Condensed Consolidated Statements of Cash Flows - nine months ended September 30, 2015 and 2014 (unaudited)	3
	Notes to Condensed Consolidated Financial Statements (unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4.	Controls and Procedures	12
PART II - OTHER INFORMATION
Item 6.	Exhibits	14
Signatures		15

References in this Form 10-Q to "we", "us", "our"', the "Company" and "Tecogen" refers to Tecogen Inc. and its consolidated subsidiary, unless otherwise noted.

TECOGEN INC.

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

As of September 30, 2015 and December 31, 2014

(unaudited)

	September 30, 2015			December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	3,970,011		$	1,186,033
Short-term investments, restricted	294,728			585,702
Accounts receivable, net	4,331,181			4,750,437
Unbilled revenue	1,801,055			696,912
Inventory, net	4,699,913			4,090,221
Due from related party	949,129			600,251
Deferred financing costs, current portion	50,201			50,201
Prepaid and other current assets	354,859			348,868
Total current assets	16,451,077			12,308,625
Property, plant and equipment, net	565,230			658,421
Intangible assets, net	1,046,316			1,011,300
Goodwill	40,870			40,870
Deferred financing costs, net of current portion	11,439			48,990
Other assets	58,425			53,325
TOTAL ASSETS	$	18,173,357		$	14,121,531
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,841,858		$	2,416,313
Accrued expenses	1,138,914			1,008,153
Deferred revenue	556,145			1,666,576
Total current liabilities	4,536,917			5,091,042
Long-term liabilities:
Deferred revenue, net of current portion	415,712			207,153
Senior convertible promissory note, related party	3,000,000			3,000,000
Total liabilities	7,952,629			8,298,195
Commitments and contingencies (Note 5)
Stockholders’ equity:
Tecogen Inc. stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 17,588,782 and 15,905,881 issued and outstanding at September 30, 2015 and December 31, 2014, respectively	17,589			15,906
Additional paid-in capital	31,455,719			25,088,213
Accumulated deficit	(20,884,168		)	(18,955,023		)
Total Tecogen Inc. stockholders’ equity	10,589,140			6,149,096
Noncontrolling interest	(368,412		)	(325,760		)
Total stockholders’ equity	10,220,728			5,823,336
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,173,357		$	14,121,531

The accompanying notes are an integral part of these consolidated financial statements.

1

TECOGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and nine months ended September 30, 2015 and 2014

(unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Revenues
Products	$	1,860,860		$	1,094,529		$	8,744,306		$	5,047,231
Services	2,815,182			3,081,334			8,419,001			7,884,246
Total revenues	4,676,042			4,175,863			17,163,307			12,931,477
Cost of sales
Products	1,262,480			1,052,199			6,040,533			4,043,783
Services	1,744,631			2,034,193			5,087,978			5,023,324
Total cost of sales	3,007,111			3,086,392			11,128,511			9,067,107
Gross profit	1,668,931			1,089,471			6,034,796			3,864,370
Operating expenses
General and administrative	1,864,529			1,738,429			5,942,161			5,387,098
Selling	521,924			476,601			1,339,982			1,303,329
Research and development	206,223			329,524			610,703			889,240
Total operating expenses	2,592,676			2,544,554			7,892,846			7,579,667
Loss from operations	(923,745		)	(1,455,083		)	(1,858,050		)	(3,715,297		)
Other income (expense)
Interest and other income	2,157			17,763			11,945			35,927
Interest expense	(68,216		)	(43,317		)	(128,626		)	(159,863		)
Total other expense, net	(66,059		)	(25,554		)	(116,681		)	(123,936		)
Loss before income taxes	(989,804		)	(1,480,637		)	(1,974,731		)	(3,839,233		)
Consolidated net loss	(989,804		)	(1,480,637		)	(1,974,731		)	(3,839,233		)
Less: (Income) loss attributable to the noncontrolling interest	40,962			32,839			45,587			123,683
Net loss attributable to Tecogen Inc.	$	(948,842	)	$	(1,447,798	)	$	(1,929,144	)	$	(3,715,550	)
Net loss per share - basic and diluted	$	(0.06	)	$	(0.09	)	$	(0.12	)	$	(0.25	)
Weighted average shares outstanding - basic and diluted	17,153,999			15,447,726			16,575,879			15,160,041

The accompanying notes are an integral part of these consolidated financial statements.

2

TECOGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2015 and 2014

(unaudited)

	September 30,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net loss	$	(1,974,731	)	$	(3,839,233	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	205,262			250,655
Change in provision for allowance on accounts receivable	—			18,000
Provision for inventory reserve	(25,000		)	—
Stock-based compensation	90,971			120,972
Non-cash interest expense	37,550			—
Gain on sale of assets	(4,631		)	—
Changes in operating assets and liabilities
(Increase) decrease in:
Short term investments	290,974			—
Accounts receivable	419,256			(796,659		)
Unbilled revenue	(1,104,143		)	521,327
Inventory, net	(584,692		)	(1,563,642		)
Due from related party	(348,878		)	(125,069		)
Prepaid expenses and other current assets	(5,991		)	1,756
Other non-current assets	(5,100		)	19,100
Increase (decrease) in:
Accounts payable	425,545			747,810
Accrued expenses	130,761			(149,470		)
Deferred revenue	(901,872		)	1,315,434
Due to related party	—			(119,667		)
Interest payable, related party	—			(198,450		)
Net cash used in operating activities	(3,354,719		)	(3,797,136		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(48,827		)	(148,833		)
Proceeds from sale of assets	16,874			—
Disposal of property and equipment				7,569
Purchases of intangible assets	(110,502		)	(130,905		)
Purchases of short-term investments, restricted	—			(585,038		)
Net cash used in investing activities	(142,455		)	(857,207		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments for debt issuance costs	—			(9,668		)
Proceeds (payments) on demand notes payable and line of credit to related party	—			(2,950,000		)
Proceeds from sale of restricted common stock, net	5,920,927			2,340,194
Proceeds from the exercise of stock options	360,225			6,000
Net cash provided by (used in) financing activities	6,281,152			(613,474		)
Net increase (decrease) in cash and cash equivalents	2,783,978			(5,267,817		)
Cash and cash equivalents, beginning of the period	1,186,033			7,713,899
Cash and cash equivalents, end of the period	$	3,970,011		$	2,446,082
Supplemental disclosures of cash flows information:
Cash paid for interest	$	91,076		$	294,219

The accompanying notes are an integral part of these consolidated financial statements. 

3

TECOGEN INC.

Notes to Interim Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2015 and 2014

Note 1 – Description of business and summary of significant accounting policies

Description of business

Tecogen Inc., or the Company was organized, as a Delaware Corporation on November 15, 2000, and acquired the assets and liabilities of the Tecogen Products division of Thermo Power Corporation. The Company produces commercial and industrial, natural-gas-fueled engine-driven, combined heat and power (CHP) products that reduce energy costs, decrease greenhouse gas emissions and alleviate congestion on the national power grid. The Company’s products supply electric power or mechanical power for cooling, while heat from the engine is recovered and purposefully used at a facility. The majority of the Company’s customers are located in regions with the highest utility rates, typically California, the Midwest and the Northeast. The Company's common stock is listed on the NASDAQ under the ticker symbol TGEN.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and therefore do not include all information and notes necessary for a complete presentation of our financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. We filed audited financial statements which included all information and notes necessary for such presentation for the two years ended December 31, 2014 in conjunction with our 2014 Annual Report on Form 10-K, or our Annual Report, filed with the Securities and Exchange Commission, or SEC, on March 24, 2015. This form 10-Q should be read in conjunction with our Annual Report.

The accompanying unaudited condensed consolidated balance sheets, statements of operations and statements of cash flows reflect all adjustments (consisting only of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of financial position at September 30, 2015, and of operations and cash flows for the interim periods ended September 30, 2015 and 2014. The results of operations for the interim periods ended September 30, 2015 are not necessarily indicative of the results to be expected for the year.

The accompanying condensed consolidated financial statements include the accounts of the Company and its 65.0% owned subsidiary Ilios Inc. or Ilios, whose business focus is on advanced heating systems for commercial and industrial applications. With the inclusion of unvested restricted stock awards, the Company owns 63.7% of Ilios. Non controlling interest in the accompanying consolidated balance sheets represents the ownership of minority investors of Ilios.

The Company’s operations are comprised of one business segment. Our business is to manufacture and support highly efficient CHP products based on engines fueled by natural gas.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Generally, sales of cogeneration and chiller units and parts are recognized when shipped and services are recognized over the term of the service period. Payments received in advance of services being performed or as a deposit on equipment are recorded as deferred revenue.

Infrequently, the Company recognizes revenue in certain circumstances before delivery has occurred (commonly referred to as bill and hold transactions). In such circumstances, among other things, risk of ownership has passed to the buyer, the buyer has made a written fixed commitment to purchase the finished goods, the buyer has requested the finished goods be held for future delivery as scheduled and designated by them, and no additional performance obligations exist by the Company. For these transactions, the finished goods are segregated from inventory and normal billing and credit terms are granted. For the three and nine months endedSeptember 30, 2015, revenues of $747,328 were recorded as bill and hold transactions. For the same period in 2014, no revenues were recorded as bill and hold transactions.

For those arrangements that include multiple deliverables, the Company first determines whether each service or deliverable meets the separation criteria of FASB ASC 605-25, Revenue Recognition—Multiple-Element Arrangements. In general, a deliverable (or a group of deliverables) meets the separation criteria if the deliverable has stand-alone value to the customer and if the arrangement includes a general right of return related to the delivered item and delivery or performance of the undelivered item(s) is considered probable and substantially in control of the Company. Each deliverable that meets the separation criteria is considered a separate ‘‘unit of accounting”. The Company allocates the total arrangement consideration to each unit of accounting

4

TECOGEN INC.

Notes to Interim Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2015 and 2014

using the relative fair value method. The amount of arrangement consideration that is allocated to a delivered unit of accounting is limited to the amount that is not contingent upon the delivery of another unit of accounting.

When vendor-specific objective evidence or third-party evidence is not available, adopting the relative fair value method of allocation permits the Company to recognize revenue on specific elements as completed based on the estimated selling price. The Company generally uses internal pricing lists that determine sales prices to external customers in determining its best estimate of the selling price of the various deliverables in multiple-element arrangements. Changes in judgments made in estimating the selling price of the various deliverables could significantly affect the timing or amount of revenue recognition. The Company enters into sales arrangements with customers to sell its cogeneration and chiller units and related service contracts and occasionally installation services. Based on the fact that the Company sells each deliverable to other customers on a stand-alone basis, the Company has determined that each deliverable has a stand-alone value. Additionally, there are no rights of return relative to the delivered items; therefore, each deliverable is considered a separate unit of accounting.

After the arrangement consideration has been allocated to each unit of accounting, the Company applies the appropriate revenue recognition method for each unit of accounting based on the nature of the arrangement and the services included in each unit of accounting. Cogeneration and chiller units are recognized when shipped and services are recognized over the term of the applicable agreement, or as provided when on a time and materials basis.

In some cases, our customers may choose to have the Company engineer and install the system for them rather than simply purchase the cogeneration and/or chiller units. In this case, the Company accounts for revenue, or turnkey revenue, and costs using the percentage-of-completion method of accounting. Under the percentage-of-completion method of accounting, revenues are recognized by applying percentages of completion to the total estimated revenues for the respective contracts. Costs are recognized as incurred. The percentages of completion are determined by relating the actual cost of work performed to date to the current estimated total cost at completion of the respective contracts. When the estimate on a contract indicates a loss, the Company’s policy is to record the entire expected loss, regardless of the percentage of completion. During the nine months ended September 30, 2015 and 2014, a loss of approximately $0 and $217,000 was recorded, respectively. The excess of contract costs and profit recognized to date on the percentage-of-completion accounting method in excess of billings is recorded as unbilled revenue. Billings in excess of related costs and estimated profit is recorded as deferred revenue.

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for those accounts receivable considered to be uncollectible based upon historical experience and management’s evaluation of outstanding accounts receivable at the end of the year. Bad debts are written off against the allowance when identified. At September 30, 2015 and December 31, 2014 the allowance for doubtful accounts was $50,000.

Inventory

Raw materials, work in process, and finished goods inventories are stated at the lower of cost, as determined by the average cost method, or net realizable value. The Company periodically reviews inventory quantities on hand for excess and/or obsolete inventory based primarily on historical usage, as well as based on estimated forecast of product demand. Any reserves that result from this review are charged to cost of sales. At September 30, 2015 and December 31, 2014, inventory reserves were $275,000 and $300,000, respectively.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the asset, which range from three to fifteen years. Leasehold improvements are amortized using the straight-line method over the lesser of the estimated useful lives of the assets or the term of the related leases. Expenditures for maintenance and repairs are expensed currently, while renewals and betterments that materially extend the life of an asset are capitalized. For the three and nine months endedSeptember 30, 2015 and 2014, depreciation expense was $42,366 and $28,716, and $129,775 and $148,108, respectively.

Intangible Assets

Intangible assets are amortized on a straight-line basis over the estimated economic life of the intangible asset. The Company reviews intangible assets for impairment when the circumstances warrant.

Goodwill

The Company tests its recorded goodwill for impairment in the fourth quarter, or more often if indicators of potential impairment exist, by determining if the carrying value of the Company's single reporting unit exceeds its estimated fair value. During the first nine months of 2015, the Company determined that no interim impairment test was necessary.

5

TECOGEN INC.

Notes to Interim Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2015 and 2014

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the estimated fair value of the award and is recognized as an expense in the consolidated statements of operations over the requisite service period. The fair value of stock options granted is estimated using the Black-Scholes option pricing valuation model. The Company recognizes compensation on a straight-line basis for each separately vesting portion of the option award. The determination of the fair value of share-based payment awards is affected by the Company’s stock price. The Company uses the simplified method for awards of stock-based compensation since it does not have the necessary historical exercise and forfeiture data to determine an expected life for stock options. (see “Note 4 – Stock-based compensation”.)

Revenues by Product

The following table summarizes net revenue by product line and services for the three and nine months endedSeptember 30, 2015 and 2014:

	Three months ended September 30,				Nine months ended September 30,
	2015		2014		2015		2014
Products
Cogeneration	$	1,493,335	$	626,223	$	6,592,075	$	3,200,073
Chiller & Heat Pump	367,525		468,306		2,152,231		1,847,158
Total Product Revenue	1,860,860		1,094,529		8,744,306		5,047,231
Services
Service contracts	1,921,897		1,808,154		5,829,304		5,503,010
Installations	893,285		1,273,180		2,589,697		2,381,236
Total Service Revenue	2,815,182		3,081,334		8,419,001		7,884,246
Total Revenue	$	4,676,042	$	4,175,863	$	17,163,307	$	12,931,477

Reclassification

Certain prior period balances have been reclassified to conform with current period presentation. As a result, installation revenue is broken out in the schedule of net revenue by product line and services above; in the prior period this revenue was included in services. Research and development expense is separated from general and administrative expense for this interim report. The interest expense includes the amortization of the deferred financing costs, and this has been adjusted in the comparable periods.

Recently Issued Accounting Standards

On July 22, 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The ASU defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation”. The ASU will not apply to inventories that are measured by using either the last-in, first-out (LIFO) method or the retail inventory method. The guidance in the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is allowed. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

6

Note 2 – Loss per common share

All shares issuable for both periods were anti-dilutive because of the reported net loss. Basic and diluted loss per share for the three and nine months ended September 30,2015 and 2014, respectively, were as follows: 

	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Net loss attributable to stockholders	$	(948,842	)	$	(1,447,798	)	$	(1,929,144	)	$	(3,715,550	)
Weighted average shares outstanding - Basic and diluted	17,153,999			15,447,726			16,575,879			15,160,041
Basic and diluted loss per share	$	(0.06	)	$	(0.09	)	$	(0.12	)	$	(0.25	)
Anti-dilutive shares underlying stock options outstanding	1,186,325			1,254,325			1,186,325			1,254,325
Anti-dilutive convertible debentures	625,000			555,556			625,000			555,556

Note 3 – Demand notes payable, convertible debentures and line of credit agreement to related parties

On December 23, 2013, the Company entered into a Senior Convertible Promissory Note or the Note, with Michaelson Capital Special Finance Fund LP or Michaelson, for the principal amount of $3,000,000 with interest at 4% per annum for a term of three years. In the event of default such interest rate shall accrue at 8% after the occurrence of the event of default and during continuance plus 2% after the occurrence and during the continuance of any other event of default. The Note is a senior unsecured obligation which pays interest only on a monthly basis in arrears at a rate of 4% per annum, unless earlier converted in accordance with the terms of the agreement prior to such date. The principal amount, if not converted, is due on the third anniversary of the Note, December 31, 2016. The Note is senior in right of payment to any unsecured indebtedness that is expressly subordinated in right of payment to the Note.

The principal balance of the Note, together with any unpaid interest, is convertible into shares of the Company's common stock at 185.19 shares of the Company's common stock per $1,000 principal amount of Note (equivalent to a conversion price of $5.40 per share) at the option of Michaelson. If at any time the common stock of the Company is (1) trading on a national securities exchange, (2) qualifies for unrestricted resale under federal securities laws and (3) the arithmetic average of the volume weighted average price of the Common Stock for twenty consecutive trading days preceding the Company's notice of mandatory conversion exceeds $150,000, the Company shall have the right to require conversion of all of the then outstanding principal balance together with unpaid interest of this Note into the Company's common stock based on the conversion price of $5.40 per share. The Company may prepay all of the outstanding principal and interest due and payable under this Note in full, at any time prior to the maturity date for an amount equal to 120% of the then outstanding principal and interest due and payable as of the date of such prepayment.

Upon change of control, as defined by the Note, at Michaelson's option, the obligations may be assumed, on the terms and conditions in this Note, through an assignment and assumption agreement, or the Company may prepay all of the then outstanding principal and unpaid interest under this Note in full at the optional 120% prepayment amount. This provision creates an embedded derivative in accordance with FASB ASC 815, Derivatives and Hedging. As such it is required to be bifurcated and accounted for separately from the Note. However, the Company has determined that the fair value of the embedded derivative is immaterial to the consolidated financial statements. Debt issuance costs of $147,577 are being amortized to expense over the term of the Note using the effective interest method.

As per the agreement, the sale of equity on August 3, 2015 reduced the conversion price to $4.80 and increased the number of shares in the conversation. At September 30, 2015, there were 625,000 shares of common stock issuable upon conversion of the Company’s outstanding convertible debentures as compared to 555,556 at December 31, 2014 .

On June 15, 2015, the Company entered into a Non-Revolving Line of Credit Agreement, or the Agreement, with John N. Hatsopoulos, the Company's Co-Chief Executive Officer and a Company Director. Under the terms of the Agreement, Mr. Hatsopoulos has agreed to lend the Company up to an aggregate of $2,000,000, with a withdrawal limit of $250,000 per financial calendar quarter, at the written request of the Company. Any amounts borrowed by the Company pursuant to the Agreement will bear interest at 6% per year. Interest is due and payable quarterly in arrears. The term of the Agreement is from July 1, 2015 to July 1, 2017. Repayment of the principal amount borrowed pursuant to the Agreement will be due on July 1, 2017, or the Maturity Date. Prepayment of any amounts due under the Agreement may be made at any time without penalty. The Agreement terminates on the Maturity Date. The Company has not yet borrowed any amounts pursuant to the Agreement.

7

TECOGEN INC.

Notes to Interim Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2015 and 2014

Note 4 - Stockholder Equity

On August 3, 2015, Tecogen Inc., (the "Company"), entered into a common stock purchase agreement, (the "Common Stock Purchase Agreement"), and a registration rights agreement (the "Registration Rights Agreement") with Seashell Limited. Pursuant to the Common Stock Purchase Agreement, the Company sold, and the investor purchased, 1,250,000 shares of the Company’s common stock (the "Shares"), at a price of $4.00 per share for an aggregate purchase price of $5,000,000, (the "Private Placement"). Pursuant to the Registration Rights Agreement, the Company shall as soon as practicable file with the U.S. Securities And Exchange Commission a registration statement on an appropriate form (the “Registration Statement”) covering the resale of the Shares and shall use its commercially reasonable best efforts to cause the Registration Statement to be declared effective as soon as practicable.

Note 5 - Stock-based compensation

Stock-Based Compensation

In 2006, the Company adopted the 2006 Stock Option and Incentive Plan or the Plan, under which the Board of Directors may grant incentive or non-qualified stock options and stock grants to key employees, directors, advisors and consultants of the Company. The Plan was amended at various dates by the Board of Directors to increase the reserved shares of common stock issuable under the Plan to 3,838,750 as of September 30, 2015, or the Amended Plan.

Stock options vest based upon the terms within the individual option grants, with an acceleration of the unvested portion of such options upon a change in control event, as defined in the Amended Plan. The options are not transferable except by will or domestic relations order. The option price per share under the Amended Plan cannot be less than the fair market value of the underlying shares on the date of the grant. The number of shares remaining available for future issuance under the Amended Plan as of September 30, 2015 was 1,617,533.

Stock option activity for the nine months endedSeptember 30, 2015 was as follows: 

Common Stock Options	Number of Options		Exercise Price Per Share	Weighted Average Exercise Price		Weighted Average Remaining Life	Aggregate Intrinsic Value
Outstanding, December 31, 2014	1,356,325		$1.20-$5.39	$	2.77	5.12 years	$	3,618,935
Granted	160,000		$3.39-$4.05	3.43
Exercised	(222,375	)	$1.20-$2.60	1.62
Canceled and forfeited	(28,750	)	$1.20-$4.50	2.45
Expired	—		—	—
Outstanding, September 30, 2015	1,265,200		$1.20-$5.39	$	3.06	6.25 years	$	955,919
Exercisable, September 30, 2015	776,619			$	2.30		$	935,747
Vested and expected to vest, September 30, 2015	1,165,200			$	2.90		$	955,919

Stock-Based Compensation - Ilios

In 2009, Ilios adopted the 2009 Stock Incentive Plan, or the 2009 Plan, under which the Board of Directors may grant incentive or non-qualified stock options and stock grants to key employees, directors, advisors and consultants of the Company. The maximum number of shares allowable for issuance under the 2009 Plan is 2,000,000 shares of common stock. The 2009 Plan has 1,325,000 available for grant as of September 30, 2015. There were no grants during 2015 to date. Stock options vest based upon the terms within the individual option grants, with an acceleration of the unvested portion of such options upon a change in control event, as defined in the Plan.

Consolidated stock-based compensation expense for the nine months endedSeptember 30, 2015 and 2014 was $90,971 and $120,972, respectively. No tax benefit was recognized related to the stock-based compensation recorded during the periods.

Note 6 – Commitments and contingencies

Letters of Credit

A letter of credit of $583,073, the original value of the short term investment prior to an increase from interest income of $2,629, was outstanding under a revolving bank credit facility needed to collateralize a performance bond on a certain installation project. As the projects are completed, collateral requirements and the associated revolving bank credit facility has relieved resulting in the release of restricted cash and a lowering of the revolving bank credit facility. The remaining restricted cash balance of $294,728 is for retainage associated with this performance bond.

8

TECOGEN INC.

Notes to Interim Unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2015 and 2014

On June 15, 2015, the Company entered into a Non-Revolving Line of Credit Agreement with John N. Hatsopoulos, the Company's Co-Chief Executive Officer and a Company Director (see Note 3).

Note 7 – Related party transactions

The Company has two affiliated companies, namely American DG Energy Inc., or American DG Energy, and EuroSite Power Inc. or EuroSite Power. These companies are affiliates because several of the major stockholders of those companies, have a significant ownership position in the Company. Neither American DG Energy nor EuroSite Power own any shares of the Company, and the Company does not own any shares of American DG Energy or EuroSite Power.

On December 23, 2013, the Company entered into a Senior Convertible Promissory Note with Michaelson Capital Special Finance Fund LP (see Note 3). This agreement came with board observation rights causing the related party status.

On June 15, 2015, the Company entered into a Non-Revolving Line of Credit Agreement with John N. Hatsopoulos, the Company's Co-Chief Executive Officer and a Company Director (see Note 3).

On August 26, 2015, the Company granted options to a consultant who is acting as Managing Director of Communications. This individual is a related to SeaShell Ltd. which made the previously discussed private placement (see Note 4).

The Company provides office space and certain utilities to American DG Energy based on a monthly rate set at the beginning of each year. This sublease was signed on July 1, 2014 and subsequently amended. The lease will expire on July 1, 2017. The agreement contains an automatic monthly renewal at expiration. In addition, the Company pays certain operating expenses, including benefits and insurance, on behalf of American DG Energy. The Company is reimbursed for these costs.

Note 8 - Intangible assets other than goodwill

As of December 31, 2014 and September 30, 2015 the Company has the following amounts related to intangible assets:

	Product Certifications			Patents			Developed Technology			Total
Balance at December 31, 2014
Intangible assets	$	475,344		$	514,930		$	240,000		$	1,230,274
Less - accumulated amortization	(128,732		)	(62,242		)	(28,000		)	(218,974		)
	$	346,612		$	452,688		$	212,000		$	1,011,300
Balance at September 30, 2015
Intangible assets	$	510,127		$	590,649		240,000			$	1,340,776
Less - accumulated amortization	(170,236		)	(84,224		)	(40,000		)	(294,460		)
	$	339,891		$	506,425		$	200,000		$	1,046,316

The aggregate amortization expense of the Company's intangible assets for the three and nine months endedSeptember 30, 2015 and 2014 was $24,067 and $22,255, and $75,487 and $63,181, respectively.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking statements are made throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements include, among other things, statements regarding our current and future cash requirements, our expectations regarding suppliers of cogeneration units, and statements regarding potential financing activities in the future. While the Company may elect to update forward-looking statements in the future, it specifically disclaims any obligation to do so, even if the Company’s estimates change, and readers should not rely on those forward-looking statements as representing the Company’s views as of any date subsequent to the date of the filing of this Quarterly Report. There are a number of important factors that could cause the actual results of the Company to differ materially from those indicated by such forward-looking statements, including those detailed under the heading “Risk Factors” in this Quarterly Report.

9

TECOGEN INC.

Overview

Tecogen Inc., or the Company, or Tecogen, designs, manufactures and sells industrial and commercial cogeneration systems that produce combinations of electricity, hot water and air conditioning using automotive engines that have been specially adapted to run on natural gas. In some cases, our customers may choose to have the Company engineer and install the system for them rather than simply purchase the cogeneration and/or chiller units, which we refer to as "turnkey" projects. Cogeneration systems are efficient because in addition to supplying mechanical energy to power electric generators or compressors – displacing utility supplied electricity – they provide opportunity for the facility to incorporate the engine’s waste heat into onsite processes such as space and portable water heating. We produce standardized, modular, small-scale products, with a limited number of product configurations that are adaptable to multiple applications. We refer to these combined heat and power products as CHP (electricity plus heat) and MCHP (mechanical power plus heat).

In addition to being a smaller reporting company, Tecogen is an emerging growth company as that term is defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act).

Results of Operations

Revenues

Revenues in the third quarter of 2015 were $4,676,042 compared to $4,175,863 for the same period in 2014, an increase of $500,179 or 12.0%. Product revenues in the third quarter of 2015 were $1,860,860 compared to $1,094,529 for the same period in 2014, an increase of $766,331 or 70.0%. This increase was the aggregate of an increase in cogeneration sales of $867,112 and a decrease in chiller and heat pump sales, which include the Ilios products, of $100,781. Service revenues in the third quarter of 2015 were $2,815,182 compared to $3,081,334 for the same period in 2014, a decrease of $266,152 or 8.6%. This decrease in the third quarter is the due to a decrease in installation activity of $379,895 and an increase of $113,743 in service contracts.

Revenues in the first nine months of 2015 were $17,163,307 compared to $12,931,477 for the same period in 2014, an increase of $4,231,830 or 32.7%. Product revenues in the first nine months of 2015 were $8,744,306 compared to $5,047,231 for the same period in 2014, an increase of $3,697,075 or 73.2%. This increase was the aggregate of an increase in cogeneration sales of $3,392,002 and an increase in chiller and heat pump sales of $305,073. Service revenues in the first nine months of 2015 were $8,419,001 compared to $7,884,246 for the same period in 2014, an increase of $534,755 or 6.8%. This increase in the first nine months of 2015 is due to an increase in installation activity of $208,461 and an increase of $326,294 in the service contracts.

Cost of Sales

Cost of sales in the third quarter of 2015 was $3,007,111 compared to $3,086,392 for the same period in 2014a decrease of $79,281, or 2.6%. During the third quarter of 2015 our overall gross profit margin was 35.7% compared to 26.1% for the same period in 2014, an increase of 36.8%. Margin improvement was the result of the growth in sales volume. Management expects growth in sales volume to continue to improve gross margins going forward.

Cost of sales in the first nine months of 2015 was $11,128,511 compared to $9,067,107 for the same period in 2014an increase of $2,061,404, or 22.7%. During the first nine months of 2015 our overall gross profit margin was 35.2% compared to 29.9% for the same period in 2014, an increase of 17.7%. Margin improvement was the result of the growth in sales volume. Management expects growth in sales volume to continue to improve gross margins going forward.

Operating Expenses

General and administrative expenses consist of executive staff, accounting and legal expenses, office space, general insurance and other administrative expenses. General and administrative expenses in the third quarter ending September 30, 2015 were $1,864,529 compared to $1,738,429 for the same period in 2014, an increase of $126,100 or 7.3%. The majority of the increase, including routine fluctuations in the timing of expenses, was the increased administrative labor.

General and administrative expenses in the first nine months of 2015 were $5,942,161 compared to $5,387,098 for the same period in 2014, an increase of $555,063 or 10.3%. This increase was due to an overall increase in expenses related to the growth of the company.

Selling expenses consist of sales staff, commissions, marketing, travel and other selling related expenses. Selling expenses for the third quarter of 2015 were $521,924 compared to $476,601 for the same period in 2014, an increase of $45,323 or 9.5%. The majority of the increase in expense was due to the increased sales commission expense, which can vary based on the model and options packages of the products shipped during the quarter.

Selling expenses for the first nine months of 2015 were $1,339,982 compared to $1,303,329 for the same period in 2014, an increase of $36,653 or 2.8%. The increase was due to increased sales commission expense.

10

TECOGEN INC.

Research and development expenses consist of engineering and technical staff, materials, outside consulting and other related expenses. Research and development expenses in the third quarter ending September 30, 2015 were $206,223 compared to $329,524 for the same period in 2014, a decrease of $123,301 or 37.4%. This decrease was due to the timing of the beginning and completion of projects. Current projects include development projects in emissions controls and the InVerde product improvement program.

Research and development expenses for the first nine months of 2015 were $610,703 compared to $889,240 for the same period in 2014, a decrease of $278,537 or 31.3%. This decrease was due to the timing of the beginning and completion of projects. Current projects include development projects in emissions controls and the InVerde product improvement program.

Loss from Operations

Loss from operations for the third quarter of 2015 was $923,745 compared to $1,455,083 for the same period in 2014, a decrease of $531,338. The decrease in the loss was due to continued improvement in gross profit resulting from increased revenues.

Loss from operations for the first nine months of 2015 was $1,858,050 compared to $3,715,297 for the same period in 2014, a decrease of $1,857,247. The decrease in the loss was due to continued improvement in gross profit.

Other Income (Expense), net

Other expense, net for the three months endedSeptember 30, 2015 was $66,059 compared to $25,554 for the same period in 2014. Other income (expense) includes interest income and other income of $2,157, net of interest expense on notes payable of $68,216 for the third quarter of 2015. For the same period in 2014, interest and other income was $17,763 and interest expense was $43,317. The increase in interest expense relates to the reclassification of deferred financing costs.

Other expense, net for the nine months endedSeptember 30, 2015 was $116,681 compared to $123,936 for the same period in 2014. Other income (expense) includes interest income and other income of $11,945, net of interest expense on notes payable of $128,626 for the first nine months of 2015. For the same period in 2014, interest and other income was $35,927 and interest expense was $159,863. The increase in interest expense relates to the reclassification of deferred financing costs.

Provision for Income Taxes

The Company did not record any benefit or provision for income taxes for the three and nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015 and 2014, the income tax benefits generated from the Company’s net losses have been fully reserved.

Noncontrolling Interest

The noncontrolling interest share in the loss of Ilios was $40,962 for the three months endedSeptember 30, 2015 compared to losses of $32,839 for the same period in 2014, a increase of $8,123 or 24.7%. The increase was due to increased selling expenses for Ilios in the third quarter of 2015 as compared to the same period in 2014. Noncontrolling interest ownership percentage as of September 30, 2015 and 2014 was unchanged at 35.0% for both periods.

The noncontrolling interest share in the losses of Ilios was $45,587 for the nine months endedSeptember 30, 2015 compared to $123,683 for the same period in 2014, a decrease of $78,096 or 63.1%. The decrease in loss was due to an increased profits on Ilios sales in the first nine months of 2015 as compared to the same period in 2014. Noncontrolling interest ownership percentage as of September 30, 2015 and 2014 was unchanged at 35.0% for both periods.

Net loss

Net loss attributable to Tecogen for the three months endedSeptember 30, 2015 was $948,842 compared to $1,447,798 for the same period in 2014, a decrease of $498,956. The decrease in net loss was the result of the increase in gross profit combined with the increase in operating expenses as described above.

Net loss attributable to Tecogen for the nine months endedSeptember 30, 2015 was $1,929,144 compared to $3,715,550 for the same period in 2014, a decrease of $1,786,406. The decrease in net loss was the result of the increase in gross profit combined with the increase in operating expenses as described above.

Liquidity and Capital Resources

Consolidated working capital at September 30, 2015 was $11,914,160 compared to $7,217,583 at December 31, 2014, an increase of $4,696,577. Included in working capital were cash and cash equivalents of $3,970,011 and $294,728 in short-term investments at September 30, 2015, compared to $1,186,033 in cash and cash equivalents and $585,702 in short-term investments at December 31, 2014, an increase of $2,493,004. The increase in working capital and cash was mainly due to sale of common stock during the period.

Cash used in operating activities for the three months endedSeptember 30, 2015 was $3,354,719 compared to $3,797,136 for the same period in 2014. Our accounts receivable balance decreased to $4,331,181 at September 30, 2015 compared to

11

TECOGEN INC.

$4,750,437 at December 31, 2014, decreasing $419,256 of cash due to timing of billing, shipments, and collections. In addition, amounts due from related parties increased by $348,878 using cash due to timing of billing, shipments and collections. Our inventory increased to $4,699,913 as of September 30, 2015 compared to $4,090,221 as of December 31, 2014, an increase of $609,692. Management expects inventory to not vary significantly from the level at year end.

As of September 30, 2015, the Company's backlog of product and installation projects, excluding service contracts, was $10.56 million, consisting of $3.06 million of purchase orders received by us and $7.50 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.

Accounts payable increased to $2,841,858 as of September 30, 2015 from $2,416,313 at December 31, 2014, providing$425,545 in cash flow from operations. Accrued expenses increased to $1,138,914 as of September 30, 2015 from $1,008,153 as of December 31, 2014, providing$130,761 of cash from operations. The Company expects accounts payable and accrued expenses to increase into the foreseeable future as operations continue to expand.

During the first nine months of 2015 our investing activities used $142,455 of cash and included purchases of property and equipment of $48,827 and expenditures related to intangible assets of $110,502.

During the first nine months of 2015 our financing activities included the proceeds from sales of our common stock of $5,920,927 and proceeds from the exercise of stock options of $360,225. The proceeds were used for general corporate purposes, including research and development.

Significant Accounting Policies and Critical Estimates

The Company’s significant accounting policies are discussed in the Notes to the Condensed Consolidated Financial Statements above and in our Annual Report. The accounting policies and estimates that can have a significant impact upon the operating results, financial position and footnote disclosures of the Company are described in the above notes and in our Annual Report.

Seasonality

We expect that the majority of our heating systems sales will be in the winter and the majority of our chilling systems sales will be in the summer. Our cogeneration and chiller system sales are not generally affected by the seasons, although customer goals will be to have chillers installed and running in the spring. Our service team does experience higher demand in the warmer months when cooling is required. These units are generally shut down in the winter and started up again in the spring. This “busy season” for the service team generally runs from May through the end of September.

Off-Balance Sheet Arrangements

Currently, we do not have any off-balance sheet arrangements, including any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Management’s Evaluation of Disclosure Controls and Procedures:

The Company maintains "disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed by the Company in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to the Company's management, including our principal executive officers and principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

12

TECOGEN INC.

Our disclosure controls and procedures are designed to provide reasonable assurance that the control system’s objectives will be met. Our management, including our Co-Chief Executive Officers and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, have concluded that our disclosure controls and procedures were not effective due to material weaknesses in financial reporting relating to lack of personnel with a sufficient level of accounting knowledge and a small number of employees dealing with general controls over information technology. Management will continue to evaluate the above weaknesses, and as the Company grows and resources become available, the Company plans to take the necessary steps in the future to remediate the weaknesses.

Changes in Internal Control over Financial Reporting:

The Company currently does not have personnel with a sufficient level of accounting experience and training in the selection, application and implementation of generally accepted accounting principles as it relates to complex transactions and financial reporting requirements. The Company also has a small number of employees dealing with general controls over information technology security and user access. This constitutes a material weakness in financial reporting.

In connection with the material weaknesses referred to in the foregoing paragraph, we will make changes in our internal controls over financial reporting as soon as the resources become available. As of September 30, 2015, no changes have been made to the Company's process.

13

TECOGEN INC.

PART II - OTHER INFORMATION

Item 6. Exhibits

Exhibit No.	Description of Exhibit
3.1	Amended and Restated Certificate of Incorporation (a)
3.2	Amended and Restated Bylaws (a)
4.1	Specimen Stock Certificate of Tecogen, Inc. (a)
4.2	Form of Restricted Stock Purchase Agreement (b)
4.3	Form of Stock Option Agreement (a)
10.8	Second Amendment to Lease between Atlantic-Waltham Investment II, LLC, and Tecogen Inc., dated Jan 16, 2013(a)
10.19	Form of Common Stock Purchase Agreement. (a)
10.21	Senior Convertible Promissory Note, dated December 23, 2013, by Tecogen Inc. in favor of Michaelson Capital Special Finance Fund LP. (a)
10.24	Facilities and Support Services Agreement between American DG Energy Inc. and Tecogen Inc., dated Aug 8, 2014.(c)
10.26+	Tecogen Inc. 2006 Stock Incentive Plan, as amended on January 24, 2014 with stockholder approval on July 15, 2014. (e)
10.27	Non-Revolving Line of Credit Agreement between the Company and John N. Hatsopoulos, dated June 15, 2015. (e)
10.28	Form of Common Stock Purchase Agreement dated August 3, 2015.(d)
10.29	Registration Rights Agreement dated August 3, 2015.(d)
10.30	First amendment to the Facilities and Support Services Agreement between American DG Energy Inc. and Tecogen Inc., dated Aug 7, 2015. (f)
21.1	List of subsidiaries (a)
31.1*	Rule 13a-14(a) Certification of Co-Chief Executive Officer
31.2*	Rule 13a-14(a) Certification of Co-Chief Executive Officer
31.3*	Rule 13a-14(a) Certification of Chief Financial Officer
32.1*	Section 1350 Certifications of Co-Chief Executive Officers and Chief Financial Officer
101.INS** XBRL Instance Document
101.SCH** XBRL Taxonomy Extension Schema
100.CAL** XBRL Taxonomy Extension Calculation Linkbase
100.DEF** XBRL Taxonomy Extension Definition Linkbase
101.LAB** XBRL Taxonomy Extension Label Linkbase
101.PRE** XBRL Taxonomy Extension Presentation Linkbase

____________________________________________

* Filed herewith

** Furnished herewith

+ Compensatory plan or arrangement

^(a)  incorporated by reference from the Company's Registration Statement on Form S-1/A (Registration No. 333-193791), filed with the SEC on June 27, 2014.

^(b)  incorporated by reference from the Company's Registration Statement on Form S-1 (Registration No. 333-178697), originally filed with the SEC on December 22, 2011.

^(c)  incorporated by reference from the Company's 10-Q Report for the period ending June 30, 2014, originally filed with the SEC on August 14, 2014.

^(d)  incorporated by reference from the Company's form 8-K Report originally filed with the SEC on August 6, 2015.

^(e)  incorporated by reference from the Company's 10-Q Report for the period ending June 30, 2015, originally filed with the SEC on August 6, 2015.

^(f)  incorporated by reference from the Company's form 8-K Report originally filed with the SEC on August 13, 2015.

14

TECOGEN INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, on November 10, 2015.

TECOGEN INC.
(Registrant)
By:	/s/ John N. Hatsopoulos
Co-Chief Executive Officer
(Principal Executive Officer)
By:	/s/ Benjamin M. Locke
Co-Chief Executive Officer
(Principal Executive Officer)
By:	/s/ David A. Garrison
Chief Financial Officer, Treasurer and Secretary
(Principal Financial and Accounting Officer)

15

EX-31.1

EXHIBIT 31.1

TECOGEN INC.

CERTIFICATION REQUIRED BY EXCHANGE ACT RULES 13a-14(a) and 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John N. Hatsopoulos, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Tecogen Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2015

/s/ John N. Hatsopoulos

John N. Hatsopoulos

Co-Chief Executive Officer

EX-31.2

EXHIBIT 31.2

TECOGEN INC.

CERTIFICATION REQUIRED BY EXCHANGE ACT RULES 13a-14(a) and 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Benjamin M. Locke, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Tecogen Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2015

/s/ Benjamin M. Locke

Benjamin M. Locke

Co-Chief Executive Officer

EX-31.3

EXHIBIT 31.3

TECOGEN INC.

CERTIFICATION REQUIRED BY EXCHANGE ACT RULES 13a-14(a) and 15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David A. Garrison, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Tecogen Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2015

/s/ David A. Garrison

David A. Garrison

Chief Financial Officer, Secretary and Treasurer

EX-32.1

EXHIBIT 32.1

TECOGEN INC.

CERTIFICATION REQUIRED BY EXCHANGE ACT RULES 13a-14(b) and 15d-14(b),

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of, John N. Hatsopoulos, Co-Chief Executive Officer, Benjamin M. Locke, Co-Chief Executive Officer, and David A. Garrison, Chief Financial Officer, of Tecogen Inc., or the Company, certify, pursuant to Section 1350, Chapter 63 of Title 18, United States Code that, to his knowledge:

1. The Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78 m or 78o(d)); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 10, 2015

/s/ John N. Hatsopoulos

John N. Hatsopoulos

Co-Chief Executive Officer

/s/ Benjamin M. Locke

Benjamin M. Locke

Co-Chief Executive Officer

/s/ David A. Garrison

David A. Garrison

Chief Financial Officer, Secretary and Treasurer

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Stock-based compensation - Stock-Based Compensation (Details) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation	$ 90,971	$ 120,972
Tecogen
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants during period	160,000
Tecogen | Amended Plan | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for future issuance	3,838,750
Number of shares remaining available for future issuance	1,617,533
Tecogen | 2009 Plan | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares remaining available for future issuance	1,325,000
Grants during period	0
Ilois | 2009 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares allowable for issuance	2,000,000

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Stockholder Equity

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Stockholder Equity

Stockholder Equity

On August 3, 2015, Tecogen Inc., (the "Company"), entered into a common stock purchase agreement, (the "Common Stock Purchase Agreement"), and a registration rights agreement (the "Registration Rights Agreement") with Seashell Limited. Pursuant to the Common Stock Purchase Agreement, the Company sold, and the investor purchased, 1,250,000 shares of the Company’s common stock (the "Shares"), at a price of $4.00 per share for an aggregate purchase price of $5,000,000, (the "Private Placement"). Pursuant to the Registration Rights Agreement, the Company shall as soon as practicable file with the U.S. Securities And Exchange Commission a registration statement on an appropriate form (the “Registration Statement”) covering the resale of the Shares and shall use its commercially reasonable best efforts to cause the Registration Statement to be declared effective as soon as practicable.

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Amortizable intangible assets (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of Intangible Assets	$ 24,067	$ 22,255	$ 75,487	$ 63,181

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Related party transactions (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014 shares	Dec. 31, 2013 USD ($) shares	Sep. 30, 2015 USD ($) company $ / shares	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($) shares $ / shares
Related Party Transaction [Line Items]
Number of affiliated companies | company			2
Interest Paid			$ 91,076	$ 294,219
Michaelson Capital Special Finance Fund LP. [Member] | Convertible debentures
Related Party Transaction [Line Items]
Related party debt, stated interest rate		4.00%
Debt Instrument, Term		3 years
Conversion price in usd per share | $ / shares			$ 4.80		$ 5.40
Debt Issuance Cost		$ 147,577
Debt conversion, amount converted		$ 1,000
Current portion of convertible debentures, related party					$ 3,000,000
Michaelson Capital Special Finance Fund LP. [Member] | Convertible debentures | Common Stock [Member]
Related Party Transaction [Line Items]
Debt conversion, number of shares issued | shares		185.19
Common stock issuable upon conversion | shares	625,000				555,556

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Amortizable intangible assets -Amounts related to intangible assets (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	$ 1,340,776	$ 1,230,274
Finite-Lived Intangible Assets, Accumulated Amortization	(294,460)	(218,974)
Finite-Lived Intangible Assets, Net	1,046,316	1,011,300
Intangible Assets, Current	1,046,316
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	590,649	514,930
Finite-Lived Intangible Assets, Accumulated Amortization	(84,224)	(62,242)
Finite-Lived Intangible Assets, Net		452,688
Intangible Assets, Current	506,425
Product Certification [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	510,127	475,344
Finite-Lived Intangible Assets, Accumulated Amortization	(170,236)	(128,732)
Finite-Lived Intangible Assets, Net		346,612
Intangible Assets, Current	339,891
Developed Technology Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	240,000	240,000
Finite-Lived Intangible Assets, Accumulated Amortization	(40,000)	(28,000)
Finite-Lived Intangible Assets, Net		$ 212,000
Intangible Assets, Current	$ 200,000

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Demand note payable, convertible debentures and line of credit agreement to related parties

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Demand note payable, convertible debentures and line of credit agreement to related parties

Demand notes payable, convertible debentures and line of credit agreement to related parties

On December 23, 2013, the Company entered into a Senior Convertible Promissory Note or the Note, with Michaelson Capital Special Finance Fund LP or Michaelson, for the principal amount of $3,000,000 with interest at 4% per annum for a term of three years. In the event of default such interest rate shall accrue at 8% after the occurrence of the event of default and during continuance plus 2% after the occurrence and during the continuance of any other event of default. The Note is a senior unsecured obligation which pays interest only on a monthly basis in arrears at a rate of 4% per annum, unless earlier converted in accordance with the terms of the agreement prior to such date. The principal amount, if not converted, is due on the third anniversary of the Note, December 31, 2016. The Note is senior in right of payment to any unsecured indebtedness that is expressly subordinated in right of payment to the Note.

The principal balance of the Note, together with any unpaid interest, is convertible into shares of the Company's common stock at 185.19 shares of the Company's common stock per $1,000 principal amount of Note (equivalent to a conversion price of $5.40 per share) at the option of Michaelson. If at any time the common stock of the Company is (1) trading on a national securities exchange, (2) qualifies for unrestricted resale under federal securities laws and (3) the arithmetic average of the volume weighted average price of the Common Stock for twenty consecutive trading days preceding the Company's notice of mandatory conversion exceeds $150,000, the Company shall have the right to require conversion of all of the then outstanding principal balance together with unpaid interest of this Note into the Company's common stock based on the conversion price of $5.40 per share. The Company may prepay all of the outstanding principal and interest due and payable under this Note in full, at any time prior to the maturity date for an amount equal to 120% of the then outstanding principal and interest due and payable as of the date of such prepayment.

Upon change of control, as defined by the Note, at Michaelson's option, the obligations may be assumed, on the terms and conditions in this Note, through an assignment and assumption agreement, or the Company may prepay all of the then outstanding principal and unpaid interest under this Note in full at the optional 120% prepayment amount. This provision creates an embedded derivative in accordance with FASB ASC 815, Derivatives and Hedging. As such it is required to be bifurcated and accounted for separately from the Note. However, the Company has determined that the fair value of the embedded derivative is immaterial to the consolidated financial statements. Debt issuance costs of $147,577 are being amortized to expense over the term of the Note using the effective interest method.

As per the agreement, the sale of equity on August 3, 2015 reduced the conversion price to $4.80 and increased the number of shares in the conversation. At September 30, 2015, there were 625,000 shares of common stock issuable upon conversion of the Company’s outstanding convertible debentures as compared to 555,556 at December 31, 2014 .

On June 15, 2015, the Company entered into a Non-Revolving Line of Credit Agreement, or the Agreement, with John N. Hatsopoulos, the Company's Co-Chief Executive Officer and a Company Director. Under the terms of the Agreement, Mr. Hatsopoulos has agreed to lend the Company up to an aggregate of $2,000,000, with a withdrawal limit of $250,000 per financial calendar quarter, at the written request of the Company. Any amounts borrowed by the Company pursuant to the Agreement will bear interest at 6% per year. Interest is due and payable quarterly in arrears. The term of the Agreement is from July 1, 2015 to July 1, 2017. Repayment of the principal amount borrowed pursuant to the Agreement will be due on July 1, 2017, or the Maturity Date. Prepayment of any amounts due under the Agreement may be made at any time without penalty. The Agreement terminates on the Maturity Date. The Company has not yet borrowed any amounts pursuant to the Agreement.

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Condensed Consolidated Balance Sheets - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Depreciation	$ 42,366	$ 129,775
Inventory Valuation Reserves	275,000	275,000	$ 300,000
Current assets:
Cash and cash equivalents	3,970,011	3,970,011	1,186,033
Short-term investments, restricted	294,728	294,728	585,702
Accounts receivable, net	4,331,181	4,331,181	4,750,437
Unbilled revenue	1,801,055	1,801,055	696,912
Inventory, net	4,699,913	4,699,913	4,090,221
Due from related party	949,129	949,129	600,251
Deferred financing costs, current portion	50,201	50,201	50,201
Prepaid and other current assets	354,859	354,859	348,868
Total current assets	16,451,077	16,451,077	12,308,625
Property, plant and equipment, net	565,230	565,230	658,421
Intangible assets, net	1,046,316	1,046,316	1,011,300
Goodwill	40,870	40,870	40,870
Deferred financing costs, net of current portion	11,439	11,439	48,990
Other assets	58,425	58,425	53,325
TOTAL ASSETS	18,173,357	18,173,357	14,121,531
Current liabilities:
Accounts payable	2,841,858	2,841,858	2,416,313
Accrued expenses	1,138,914	1,138,914	1,008,153
Deferred revenue	556,145	556,145	1,666,576
Total current liabilities	4,536,917	4,536,917	5,091,042
Long-term liabilities:
Deferred revenue, net of current portion	415,712	415,712	207,153
Senior convertible promissory note, related party	3,000,000	3,000,000	3,000,000
Total liabilities	$ 7,952,629	$ 7,952,629	$ 8,298,195
Commitments and contingencies
Tecogen Inc. shareholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 17,588,782 and 15,905,881 issued and outstanding at September 30, 2015 and December 31, 2014, respectively	$ 17,589	$ 17,589	$ 15,906
Additional paid-in capital	31,455,719	31,455,719	25,088,213
Accumulated deficit	(20,884,168)	(20,884,168)	(18,955,023)
Total Tecogen Inc. stockholders’ equity	10,589,140	10,589,140	6,149,096
Noncontrolling interest	(368,412)	(368,412)	(325,760)
Total stockholders’ equity	10,220,728	10,220,728	5,823,336
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 18,173,357	$ 18,173,357	$ 14,121,531

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Description of business and summary of significant accounting policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Description of business and summary of significant accounting policies

Description of business and summary of significant accounting policies

Description of business

Tecogen Inc., or the Company was organized, as a Delaware Corporation on November 15, 2000, and acquired the assets and liabilities of the Tecogen Products division of Thermo Power Corporation. The Company produces commercial and industrial, natural-gas-fueled engine-driven, combined heat and power (CHP) products that reduce energy costs, decrease greenhouse gas emissions and alleviate congestion on the national power grid. The Company’s products supply electric power or mechanical power for cooling, while heat from the engine is recovered and purposefully used at a facility. The majority of the Company’s customers are located in regions with the highest utility rates, typically California, the Midwest and the Northeast. The Company's common stock is listed on the NASDAQ under the ticker symbol TGEN.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and therefore do not include all information and notes necessary for a complete presentation of our financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. We filed audited financial statements which included all information and notes necessary for such presentation for the two years ended December 31, 2014 in conjunction with our 2014 Annual Report on Form 10-K, or our Annual Report, filed with the Securities and Exchange Commission, or SEC, on March 24, 2015. This form 10-Q should be read in conjunction with our Annual Report.

The accompanying unaudited condensed consolidated balance sheets, statements of operations and statements of cash flows reflect all adjustments (consisting only of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of financial position at September 30, 2015, and of operations and cash flows for the interim periods ended September 30, 2015 and 2014. The results of operations for the interim periods ended September 30, 2015 are not necessarily indicative of the results to be expected for the year.

The accompanying condensed consolidated financial statements include the accounts of the Company and its 65.0% owned subsidiary Ilios Inc. or Ilios, whose business focus is on advanced heating systems for commercial and industrial applications. With the inclusion of unvested restricted stock awards, the Company owns 63.7% of Ilios. Non controlling interest in the accompanying consolidated balance sheets represents the ownership of minority investors of Ilios.

The Company’s operations are comprised of one business segment. Our business is to manufacture and support highly efficient CHP products based on engines fueled by natural gas.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Generally, sales of cogeneration and chiller units and parts are recognized when shipped and services are recognized over the term of the service period. Payments received in advance of services being performed or as a deposit on equipment are recorded as deferred revenue.

Infrequently, the Company recognizes revenue in certain circumstances before delivery has occurred (commonly referred to as bill and hold transactions). In such circumstances, among other things, risk of ownership has passed to the buyer, the buyer has made a written fixed commitment to purchase the finished goods, the buyer has requested the finished goods be held for future delivery as scheduled and designated by them, and no additional performance obligations exist by the Company. For these transactions, the finished goods are segregated from inventory and normal billing and credit terms are granted. For the three and nine months endedSeptember 30, 2015, revenues of $747,328 were recorded as bill and hold transactions. For the same period in 2014, no revenues were recorded as bill and hold transactions.

For those arrangements that include multiple deliverables, the Company first determines whether each service or deliverable meets the separation criteria of FASB ASC 605-25, Revenue Recognition—Multiple-Element Arrangements. In general, a deliverable (or a group of deliverables) meets the separation criteria if the deliverable has stand-alone value to the customer and if the arrangement includes a general right of return related to the delivered item and delivery or performance of the undelivered item(s) is considered probable and substantially in control of the Company. Each deliverable that meets the separation criteria is considered a separate ‘‘unit of accounting”. The Company allocates the total arrangement consideration to each unit of accounting using the relative fair value method. The amount of arrangement consideration that is allocated to a delivered unit of accounting is limited to the amount that is not contingent upon the delivery of another unit of accounting.

When vendor-specific objective evidence or third-party evidence is not available, adopting the relative fair value method of allocation permits the Company to recognize revenue on specific elements as completed based on the estimated selling price. The Company generally uses internal pricing lists that determine sales prices to external customers in determining its best estimate of the selling price of the various deliverables in multiple-element arrangements. Changes in judgments made in estimating the selling price of the various deliverables could significantly affect the timing or amount of revenue recognition. The Company enters into sales arrangements with customers to sell its cogeneration and chiller units and related service contracts and occasionally installation services. Based on the fact that the Company sells each deliverable to other customers on a stand-alone basis, the Company has determined that each deliverable has a stand-alone value. Additionally, there are no rights of return relative to the delivered items; therefore, each deliverable is considered a separate unit of accounting.

After the arrangement consideration has been allocated to each unit of accounting, the Company applies the appropriate revenue recognition method for each unit of accounting based on the nature of the arrangement and the services included in each unit of accounting. Cogeneration and chiller units are recognized when shipped and services are recognized over the term of the applicable agreement, or as provided when on a time and materials basis.

In some cases, our customers may choose to have the Company engineer and install the system for them rather than simply purchase the cogeneration and/or chiller units. In this case, the Company accounts for revenue, or turnkey revenue, and costs using the percentage-of-completion method of accounting. Under the percentage-of-completion method of accounting, revenues are recognized by applying percentages of completion to the total estimated revenues for the respective contracts. Costs are recognized as incurred. The percentages of completion are determined by relating the actual cost of work performed to date to the current estimated total cost at completion of the respective contracts. When the estimate on a contract indicates a loss, the Company’s policy is to record the entire expected loss, regardless of the percentage of completion. During the nine months ended September 30, 2015 and 2014, a loss of approximately $0 and $217,000 was recorded, respectively. The excess of contract costs and profit recognized to date on the percentage-of-completion accounting method in excess of billings is recorded as unbilled revenue. Billings in excess of related costs and estimated profit is recorded as deferred revenue.

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for those accounts receivable considered to be uncollectible based upon historical experience and management’s evaluation of outstanding accounts receivable at the end of the year. Bad debts are written off against the allowance when identified. At September 30, 2015 and December 31, 2014 the allowance for doubtful accounts was $50,000.

Inventory

Raw materials, work in process, and finished goods inventories are stated at the lower of cost, as determined by the average cost method, or net realizable value. The Company periodically reviews inventory quantities on hand for excess and/or obsolete inventory based primarily on historical usage, as well as based on estimated forecast of product demand. Any reserves that result from this review are charged to cost of sales. At September 30, 2015 and December 31, 2014, inventory reserves were $275,000 and $300,000, respectively.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the asset, which range from three to fifteen years. Leasehold improvements are amortized using the straight-line method over the lesser of the estimated useful lives of the assets or the term of the related leases. Expenditures for maintenance and repairs are expensed currently, while renewals and betterments that materially extend the life of an asset are capitalized. For the three and nine months endedSeptember 30, 2015 and 2014, depreciation expense was $42,366 and $28,716, and $129,775 and $148,108, respectively.

Intangible Assets

Intangible assets are amortized on a straight-line basis over the estimated economic life of the intangible asset. The Company reviews intangible assets for impairment when the circumstances warrant.

Goodwill

The Company tests its recorded goodwill for impairment in the fourth quarter, or more often if indicators of potential impairment exist, by determining if the carrying value of the Company's single reporting unit exceeds its estimated fair value. During the first nine months of 2015, the Company determined that no interim impairment test was necessary.

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the estimated fair value of the award and is recognized as an expense in the consolidated statements of operations over the requisite service period. The fair value of stock options granted is estimated using the Black-Scholes option pricing valuation model. The Company recognizes compensation on a straight-line basis for each separately vesting portion of the option award. The determination of the fair value of share-based payment awards is affected by the Company’s stock price. The Company uses the simplified method for awards of stock-based compensation since it does not have the necessary historical exercise and forfeiture data to determine an expected life for stock options. (see “Note 4 – Stock-based compensation”.)

Revenues by Product

The following table summarizes net revenue by product line and services for the three and nine months endedSeptember 30, 2015 and 2014:

	Three months ended September 30,				Nine months ended September 30,
	2015		2014		2015		2014
Products
Cogeneration	$	1,493,335	$	626,223	$	6,592,075	$	3,200,073
Chiller & Heat Pump	367,525		468,306		2,152,231		1,847,158
Total Product Revenue	1,860,860		1,094,529		8,744,306		5,047,231
Services
Service contracts	1,921,897		1,808,154		5,829,304		5,503,010
Installations	893,285		1,273,180		2,589,697		2,381,236
Total Service Revenue	2,815,182		3,081,334		8,419,001		7,884,246
Total Revenue	$	4,676,042	$	4,175,863	$	17,163,307	$	12,931,477

Reclassification

Certain prior period balances have been reclassified to conform with current period presentation. As a result, installation revenue is broken out in the schedule of net revenue by product line and services above; in the prior period this revenue was included in services. Research and development expense is separated from general and administrative expense for this interim report. The interest expense includes the amortization of the deferred financing costs, and this has been adjusted in the comparable periods.

Recently Issued Accounting Standards

On July 22, 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The ASU defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation”. The ASU will not apply to inventories that are measured by using either the last-in, first-out (LIFO) method or the retail inventory method. The guidance in the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is allowed. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

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Loss per common share - Schedule of Loss Per Common Share, Basic and Diluted (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share [Abstract]
Net loss attributable to stockholders	$ (948,842)	$ (1,447,798)	$ (1,929,144)	$ (3,715,550)
Weighted average shares outstanding - Basic and diluted	17,153,999	15,447,726	16,575,879	15,160,041
Basic and diluted loss per share (usd per share)	$ (0.06)	$ (0.09)	$ (0.12)	$ (0.25)
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (shares)	1,186,325	1,254,325	1,186,325	1,254,325
Convertible Debenture
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (shares)	625,000	555,556	625,000	555,556

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Stockholder Equity (Details) - Private Placement [Member] - Common Stock [Member]	Aug. 03, 2015 USD ($) $ / shares shares
Class of Stock [Line Items]
Shares purchased by the Investor | shares	1,250,000
Shares purchase price (in dollars per share) | $ / shares	$ 4.00
Aggregate purchase price for private placement	$ 5,000,000

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Loss per common share

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Loss per common share

Loss per common share

All shares issuable for both periods were anti-dilutive because of the reported net loss. Basic and diluted loss per share for the three and nine months ended September 30,2015 and 2014, respectively, were as follows: 

	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Net loss attributable to stockholders	$	(948,842	)	$	(1,447,798	)	$	(1,929,144	)	$	(3,715,550	)
Weighted average shares outstanding - Basic and diluted	17,153,999			15,447,726			16,575,879			15,160,041
Basic and diluted loss per share	$	(0.06	)	$	(0.09	)	$	(0.12	)	$	(0.25	)
Anti-dilutive shares underlying stock options outstanding	1,186,325			1,254,325			1,186,325			1,254,325
Anti-dilutive convertible debentures	625,000			555,556			625,000			555,556

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2014	Mar. 31, 2014
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	15,905,881	17,588,782
Common stock, shares outstanding	15,905,881	17,588,782

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Stock-based compensation (Tables)

9 Months Ended

Sep. 30, 2015

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Restricted Stock Activity

Consolidated stock-based compensation expense for the nine months endedSeptember 30, 2015 and 2014 was $90,971 and $120,972, respectively. No tax benefit was recognized related to the stock-based compensation recorded during the periods.

Tecogen

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Stock Option Activity

Stock option activity for the nine months endedSeptember 30, 2015 was as follows: 

Common Stock Options	Number of Options		Exercise Price Per Share	Weighted Average Exercise Price		Weighted Average Remaining Life	Aggregate Intrinsic Value
Outstanding, December 31, 2014	1,356,325		$1.20-$5.39	$	2.77	5.12 years	$	3,618,935
Granted	160,000		$3.39-$4.05	3.43
Exercised	(222,375	)	$1.20-$2.60	1.62
Canceled and forfeited	(28,750	)	$1.20-$4.50	2.45
Expired	—		—	—
Outstanding, September 30, 2015	1,265,200		$1.20-$5.39	$	3.06	6.25 years	$	955,919
Exercisable, September 30, 2015	776,619			$	2.30		$	935,747
Vested and expected to vest, September 30, 2015	1,165,200			$	2.90		$	955,919

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Document and Entity Information Document and Entity Information	9 Months Ended
	Sep. 30, 2015 shares
Document and Entity Information [Abstract]
Entity Registrant Name	TECOGEN INC.
Entity Central Index Key	0001537435
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding	17,588,782

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Amortizable intangible assets (Tables)

9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

As of December 31, 2014 and September 30, 2015 the Company has the following amounts related to intangible assets:

	Product Certifications			Patents			Developed Technology			Total
Balance at December 31, 2014
Intangible assets	$	475,344		$	514,930		$	240,000		$	1,230,274
Less - accumulated amortization	(128,732		)	(62,242		)	(28,000		)	(218,974		)
	$	346,612		$	452,688		$	212,000		$	1,011,300
Balance at September 30, 2015
Intangible assets	$	510,127		$	590,649		240,000			$	1,340,776
Less - accumulated amortization	(170,236		)	(84,224		)	(40,000		)	(294,460		)
	$	339,891		$	506,425		$	200,000		$	1,046,316

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Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues
Products	$ 1,860,860	$ 1,094,529	$ 8,744,306	$ 5,047,231
Services	2,815,182	3,081,334	8,419,001	7,884,246
Total revenues	4,676,042	4,175,863	17,163,307	12,931,477
Cost of sales
Products	1,262,480	1,052,199	6,040,533	4,043,783
Services	1,744,631	2,034,193	5,087,978	5,023,324
Total cost of sales	3,007,111	3,086,392	11,128,511	9,067,107
Gross profit	1,668,931	1,089,471	6,034,796	3,864,370
Operating expenses
General and administrative	1,864,529	1,738,429	5,942,161	5,387,098
Selling	521,924	476,601	1,339,982	1,303,329
Research and development	206,223	329,524	610,703	889,240
Total operating expenses	2,592,676	2,544,554	7,892,846	7,579,667
Loss from operations	(923,745)	(1,455,083)	(1,858,050)	(3,715,297)
Other income (expense)
Interest and other income	2,157	17,763	11,945	35,927
Interest expense	(68,216)	(43,317)	(128,626)	(159,863)
Total other expense, net	(66,059)	(25,554)	(116,681)	(123,936)
Loss before income taxes	(989,804)	(1,480,637)	(1,974,731)	(3,839,233)
Consolidated net loss	(989,804)	(1,480,637)	(1,974,731)	(3,839,233)
Less: (Income) loss attributable to the noncontrolling interest	40,962	32,839	45,587	123,683
Net loss attributable to Tecogen Inc.	$ (948,842)	$ (1,447,798)	$ (1,929,144)	$ (3,715,550)
Net loss per share - basic and diluted	$ (0.06)	$ (0.09)	$ (0.12)	$ (0.25)
Weighted average shares outstanding - basic and diluted	17,153,999	15,447,726	16,575,879	15,160,041

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Related party transactions

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Related party transactions

Related party transactions

The Company has two affiliated companies, namely American DG Energy Inc., or American DG Energy, and EuroSite Power Inc. or EuroSite Power. These companies are affiliates because several of the major stockholders of those companies, have a significant ownership position in the Company. Neither American DG Energy nor EuroSite Power own any shares of the Company, and the Company does not own any shares of American DG Energy or EuroSite Power.

On December 23, 2013, the Company entered into a Senior Convertible Promissory Note with Michaelson Capital Special Finance Fund LP (see Note 3). This agreement came with board observation rights causing the related party status.

On June 15, 2015, the Company entered into a Non-Revolving Line of Credit Agreement with John N. Hatsopoulos, the Company's Co-Chief Executive Officer and a Company Director (see Note 3).

On August 26, 2015, the Company granted options to a consultant who is acting as Managing Director of Communications. This individual is a related to SeaShell Ltd. which made the previously discussed private placement (see Note 4).

The Company provides office space and certain utilities to American DG Energy based on a monthly rate set at the beginning of each year. This sublease was signed on July 1, 2014 and subsequently amended. The lease will expire on July 1, 2017. The agreement contains an automatic monthly renewal at expiration. In addition, the Company pays certain operating expenses, including benefits and insurance, on behalf of American DG Energy. The Company is reimbursed for these costs.

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Commitments and contingencies

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

Commitments and contingencies

Letters of Credit

A letter of credit of $583,073, the original value of the short term investment prior to an increase from interest income of $2,629, was outstanding under a revolving bank credit facility needed to collateralize a performance bond on a certain installation project. As the projects are completed, collateral requirements and the associated revolving bank credit facility has relieved resulting in the release of restricted cash and a lowering of the revolving bank credit facility. The remaining restricted cash balance of $294,728 is for retainage associated with this performance bond.

On June 15, 2015, the Company entered into a Non-Revolving Line of Credit Agreement with John N. Hatsopoulos, the Company's Co-Chief Executive Officer and a Company Director (see Note 3).

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Demand note payable, convertible debentures and line of credit agreement to related parties (Details)	3 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2014 shares	Dec. 31, 2013 USD ($) shares	Sep. 30, 2015 $ / shares	Dec. 31, 2014 USD ($) shares $ / shares	Jun. 15, 2015 USD ($)
Convertible debentures | Michaelson Capital Special Finance Fund LP. [Member]
Debt Instrument [Line Items]
Related party debt, stated interest rate		4.00%
Conversion price in usd per share | $ / shares			$ 4.80	$ 5.40
Debt conversion, amount converted		$ 1,000
Convertible debentures, related party, current				$ 3,000,000
Debt Instrument, Term		3 years
Debt Instrument, Convertible, Accrue Rate After Occurrence and During Continuance		8.00%
Debt Instrument, Convertible, Accrue Rate After Occurrence and During Continuance, Other Default		2.00%
Debt Instrument, Convertible, Threshold Consecutive Trading Days		20 days
Debt Instrument, Convertible, If-converted Value in Excess of Principal		$ 150,000
Debt Instrument, Repurchase, Percentage of Principal and Interest		120.00%
Debt Issuance Cost		$ 147,577
Convertible debentures | Michaelson Capital Special Finance Fund LP. [Member] | Common Stock [Member]
Debt Instrument [Line Items]
Debt conversion, number of shares issued | shares		185.19
Common stock issuable upon conversion | shares	625,000			555,556
Convertible debentures | Management [Member]
Debt Instrument [Line Items]
Related party debt, stated interest rate			6.00%
Line of Credit [Member] | Chief Executive Officer (John N. Hatsopoulos)
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity					$ 2,000,000
Line Of Credit Facility, Maximum Withdrawal Limit Per Financial Calendar Quarter					$ 250,000

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Description of business and summary of significant accounting policies - Additional Information (Details)	3 Months Ended	9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2015 USD ($) segment	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Debt Instrument [Line Items]
Number of Operating Segments | segment		1
Revenues, Bill And Hold	$ 747,328	$ 747,328
Loss on Contracts		0	$ 217,000
Allowance for Doubtful Accounts Receivable, Current	50,000	50,000		$ 50,000
Goodwill	$ 40,870	$ 40,870		$ 40,870
Ilios
Debt Instrument [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	65.00%	65.00%
Restricted stock | Ilios
Debt Instrument [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	63.70%	63.70%

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Description of business and summary of significant accounting policies (Tables)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Net Revenue by Product Line and Services

The following table summarizes net revenue by product line and services for the three and nine months endedSeptember 30, 2015 and 2014:

	Three months ended September 30,				Nine months ended September 30,
	2015		2014		2015		2014
Products
Cogeneration	$	1,493,335	$	626,223	$	6,592,075	$	3,200,073
Chiller & Heat Pump	367,525		468,306		2,152,231		1,847,158
Total Product Revenue	1,860,860		1,094,529		8,744,306		5,047,231
Services
Service contracts	1,921,897		1,808,154		5,829,304		5,503,010
Installations	893,285		1,273,180		2,589,697		2,381,236
Total Service Revenue	2,815,182		3,081,334		8,419,001		7,884,246
Total Revenue	$	4,676,042	$	4,175,863	$	17,163,307	$	12,931,477

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Amortizable intangible assets

9 Months Ended

Sep. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets other than goodwill

Intangible assets other than goodwill

As of December 31, 2014 and September 30, 2015 the Company has the following amounts related to intangible assets:

	Product Certifications			Patents			Developed Technology			Total
Balance at December 31, 2014
Intangible assets	$	475,344		$	514,930		$	240,000		$	1,230,274
Less - accumulated amortization	(128,732		)	(62,242		)	(28,000		)	(218,974		)
	$	346,612		$	452,688		$	212,000		$	1,011,300
Balance at September 30, 2015
Intangible assets	$	510,127		$	590,649		240,000			$	1,340,776
Less - accumulated amortization	(170,236		)	(84,224		)	(40,000		)	(294,460		)
	$	339,891		$	506,425		$	200,000		$	1,046,316

The aggregate amortization expense of the Company's intangible assets for the three and nine months endedSeptember 30, 2015 and 2014 was $24,067 and $22,255, and $75,487 and $63,181, respectively.

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Description of business and summary of significant accounting policies (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Principles of Consolidation and Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and therefore do not include all information and notes necessary for a complete presentation of our financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. We filed audited financial statements which included all information and notes necessary for such presentation for the two years ended December 31, 2014 in conjunction with our 2014 Annual Report on Form 10-K, or our Annual Report, filed with the Securities and Exchange Commission, or SEC, on March 24, 2015. This form 10-Q should be read in conjunction with our Annual Report.

The accompanying unaudited condensed consolidated balance sheets, statements of operations and statements of cash flows reflect all adjustments (consisting only of normal recurring items) which are, in the opinion of management, necessary for a fair presentation of financial position at September 30, 2015, and of operations and cash flows for the interim periods ended September 30, 2015 and 2014. The results of operations for the interim periods ended September 30, 2015 are not necessarily indicative of the results to be expected for the year.

The accompanying condensed consolidated financial statements include the accounts of the Company and its 65.0% owned subsidiary Ilios Inc. or Ilios, whose business focus is on advanced heating systems for commercial and industrial applications. With the inclusion of unvested restricted stock awards, the Company owns 63.7% of Ilios. Non controlling interest in the accompanying consolidated balance sheets represents the ownership of minority investors of Ilios.

The Company’s operations are comprised of one business segment. Our business is to manufacture and support highly efficient CHP products based on engines fueled by natural gas.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates

Revenue Recognition

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Generally, sales of cogeneration and chiller units and parts are recognized when shipped and services are recognized over the term of the service period. Payments received in advance of services being performed or as a deposit on equipment are recorded as deferred revenue.

Infrequently, the Company recognizes revenue in certain circumstances before delivery has occurred (commonly referred to as bill and hold transactions). In such circumstances, among other things, risk of ownership has passed to the buyer, the buyer has made a written fixed commitment to purchase the finished goods, the buyer has requested the finished goods be held for future delivery as scheduled and designated by them, and no additional performance obligations exist by the Company. For these transactions, the finished goods are segregated from inventory and normal billing and credit terms are granted. For the three and nine months endedSeptember 30, 2015, revenues of $747,328 were recorded as bill and hold transactions. For the same period in 2014, no revenues were recorded as bill and hold transactions.

For those arrangements that include multiple deliverables, the Company first determines whether each service or deliverable meets the separation criteria of FASB ASC 605-25, Revenue Recognition—Multiple-Element Arrangements. In general, a deliverable (or a group of deliverables) meets the separation criteria if the deliverable has stand-alone value to the customer and if the arrangement includes a general right of return related to the delivered item and delivery or performance of the undelivered item(s) is considered probable and substantially in control of the Company. Each deliverable that meets the separation criteria is considered a separate ‘‘unit of accounting”. The Company allocates the total arrangement consideration to each unit of accounting using the relative fair value method. The amount of arrangement consideration that is allocated to a delivered unit of accounting is limited to the amount that is not contingent upon the delivery of another unit of accounting.

When vendor-specific objective evidence or third-party evidence is not available, adopting the relative fair value method of allocation permits the Company to recognize revenue on specific elements as completed based on the estimated selling price. The Company generally uses internal pricing lists that determine sales prices to external customers in determining its best estimate of the selling price of the various deliverables in multiple-element arrangements. Changes in judgments made in estimating the selling price of the various deliverables could significantly affect the timing or amount of revenue recognition. The Company enters into sales arrangements with customers to sell its cogeneration and chiller units and related service contracts and occasionally installation services. Based on the fact that the Company sells each deliverable to other customers on a stand-alone basis, the Company has determined that each deliverable has a stand-alone value. Additionally, there are no rights of return relative to the delivered items; therefore, each deliverable is considered a separate unit of accounting.

After the arrangement consideration has been allocated to each unit of accounting, the Company applies the appropriate revenue recognition method for each unit of accounting based on the nature of the arrangement and the services included in each unit of accounting. Cogeneration and chiller units are recognized when shipped and services are recognized over the term of the applicable agreement, or as provided when on a time and materials basis.

In some cases, our customers may choose to have the Company engineer and install the system for them rather than simply purchase the cogeneration and/or chiller units. In this case, the Company accounts for revenue, or turnkey revenue, and costs using the percentage-of-completion method of accounting. Under the percentage-of-completion method of accounting, revenues are recognized by applying percentages of completion to the total estimated revenues for the respective contracts. Costs are recognized as incurred. The percentages of completion are determined by relating the actual cost of work performed to date to the current estimated total cost at completion of the respective contracts. When the estimate on a contract indicates a loss, the Company’s policy is to record the entire expected loss, regardless of the percentage of completion. During the nine months ended September 30, 2015 and 2014, a loss of approximately $0 and $217,000 was recorded, respectively. The excess of contract costs and profit recognized to date on the percentage-of-completion accounting method in excess of billings is recorded as unbilled revenue. Billings in excess of related costs and estimated profit is recorded as deferred revenue.

Accounts Receivable

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances. An allowance for doubtful accounts is provided for those accounts receivable considered to be uncollectible based upon historical experience and management’s evaluation of outstanding accounts receivable at the end of the year. Bad debts are written off against the allowance when identified. At September 30, 2015 and December 31, 2014 the allowance for doubtful accounts was $50,000.

Inventory

Inventory

Raw materials, work in process, and finished goods inventories are stated at the lower of cost, as determined by the average cost method, or net realizable value. The Company periodically reviews inventory quantities on hand for excess and/or obsolete inventory based primarily on historical usage, as well as based on estimated forecast of product demand. Any reserves that result from this review are charged to cost of sales. At September 30, 2015 and December 31, 2014, inventory reserves were $275,000 and $300,000, respectively.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the asset, which range from three to fifteen years. Leasehold improvements are amortized using the straight-line method over the lesser of the estimated useful lives of the assets or the term of the related leases. Expenditures for maintenance and repairs are expensed currently, while renewals and betterments that materially extend the life of an asset are capitalized. For the three and nine months endedSeptember 30, 2015 and 2014, depreciation expense was $42,366 and $28,716, and $129,775 and $148,108, respectively.

Intangible Assets

Intangible Assets

Intangible assets are amortized on a straight-line basis over the estimated economic life of the intangible asset. The Company reviews intangible assets for impairment when the circumstances warrant.

Goodwill Disclosure

Goodwill

The Company tests its recorded goodwill for impairment in the fourth quarter, or more often if indicators of potential impairment exist, by determining if the carrying value of the Company's single reporting unit exceeds its estimated fair value. During the first nine months of 2015, the Company determined that no interim impairment test was necessary.

Stock-Based Compensation

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the estimated fair value of the award and is recognized as an expense in the consolidated statements of operations over the requisite service period. The fair value of stock options granted is estimated using the Black-Scholes option pricing valuation model. The Company recognizes compensation on a straight-line basis for each separately vesting portion of the option award. The determination of the fair value of share-based payment awards is affected by the Company’s stock price. The Company uses the simplified method for awards of stock-based compensation since it does not have the necessary historical exercise and forfeiture data to determine an expected life for stock options. (see “Note 4 – Stock-based compensation”.)

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Loss per common share (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of Loss Per Common Share, Basic and Diluted

Basic and diluted loss per share for the three and nine months ended September 30,2015 and 2014, respectively, were as follows: 

	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Net loss attributable to stockholders	$	(948,842	)	$	(1,447,798	)	$	(1,929,144	)	$	(3,715,550	)
Weighted average shares outstanding - Basic and diluted	17,153,999			15,447,726			16,575,879			15,160,041
Basic and diluted loss per share	$	(0.06	)	$	(0.09	)	$	(0.12	)	$	(0.25	)
Anti-dilutive shares underlying stock options outstanding	1,186,325			1,254,325			1,186,325			1,254,325
Anti-dilutive convertible debentures	625,000			555,556			625,000			555,556

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Description of business and summary of significant accounting policies - Revenue by Product Line and Services (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenue by Producks and Services [Line Items]
Products	$ 1,860,860	$ 1,094,529	$ 8,744,306	$ 5,047,231
Services	2,815,182	3,081,334	8,419,001	7,884,246
Total revenues	4,676,042	4,175,863	17,163,307	12,931,477
Cogeneration
Revenue by Producks and Services [Line Items]
Products	1,493,335	626,223	6,592,075	3,200,073
Chiller
Revenue by Producks and Services [Line Items]
Products	367,525	468,306	2,152,231	1,847,158
Service Contracts [Member]
Revenue by Producks and Services [Line Items]
Services	1,921,897	1,808,154	5,829,304	5,503,010
Installations [Member]
Revenue by Producks and Services [Line Items]
Services	$ 893,285	$ 1,273,180	$ 2,589,697	$ 2,381,236

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Stock-based compensation - Stock Option Activity (Details) - USD ($)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2015	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2014
Exercise Price Per Share [Abstract]
Exercise Price Per Share, Expired (per share)		$ 0.00
Tecogen
Stock Options Outstanding [Roll Forward]
Beginning (shares)		1,356,325
Granted (shares)		160,000
Exercised (shares)		(222,375)
Canceled and forfeited (shares)		(28,750)
Expired (shares)		0
Ending (shares)		1,265,200
Exercisable (shares)		776,619
Vested and expected to vest (shares)		1,165,200
Weighted Average Exercise Price [Roll Forward]
Beginning (usd per share)		$ 2.77
Granted (usd per share)		3.43
Exercised (usd per share)		1.62
Canceled and forfeited (usd per share)		2.45
Expried (usd per share)		0.00
Ending (usd per share)		3.06
Exercisable (usd per share)		2.30
Vested and expected to vest (usd per share)		$ 2.90
Weighted Average Remaining Life		6 years 3 months	5 years 1 month 12 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Outstanding, Aggregate Intrinsic Value		$ 955,919			$ 3,618,935
Exercisable, Aggregate Intrinsic Value		935,747
Vested and expected to vest, Aggregate Intrinsic Value		$ 955,919
Minimum | Tecogen
Exercise Price Per Share [Abstract]
Exercise Price Per Share, Outstanding (per share)	$ 1.2			$ 1.20
Exercise Price Per Share, Granted (per share)		$ 1.20
Exercise Price Per Share, Cancelled and forfeited (per share)				1.2
Maximum | Tecogen
Exercise Price Per Share [Abstract]
Exercise Price Per Share, Outstanding (per share)	$ 5.39			5.39
Exercise Price Per Share, Granted (per share)		$ 2.60
Exercise Price Per Share, Cancelled and forfeited (per share)				$ 4.50

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Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss attributable to Tecogen Inc.	$ (1,974,731)	$ (3,839,233)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	205,262	250,655
Change in provision for allowance on accounts receivable	0	18,000
Provision for inventory reserve	(25,000)	0
Stock-based compensation	90,971	120,972
Non-cash interest expense	(37,550)	0
Gain on sale of assets	(4,631)	0
Changes in operating assets and liabilities
Short term investments	290,974	0
Accounts receivable	419,256	(796,659)
Unbilled revenue	(1,104,143)	521,327
Inventory, net	(584,692)	(1,563,642)
Due from related party	(348,878)	(125,069)
Prepaid expenses and other current assets	(5,991)	1,756
Other non-current assets	(5,100)	19,100
Increase (decrease) in:
Accounts payable	425,545	747,810
Accrued expenses	130,761	(149,470)
Deferred revenue	0	(198,450)
Due to related party	(901,872)	1,315,434
Interest payable, related party	0	(119,667)
Net cash used in operating activities	(3,354,719)	(3,797,136)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(48,827)	(148,833)
Proceeds from sale of assets	$ 16,874	0
Disposal of property and equipment		7,569
Purchases of intangible assets	$ (110,502)	(130,905)
Purchases of short-term investments, restricted	0	(585,038)
Net cash used in investing activities	(142,455)	(857,207)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments for debt issuance costs	0	(9,668)
Proceeds (payments) on demand notes payable and line of credit to related party	0	2,950,000
Proceeds from sale of restricted common stock, net	5,920,927	2,340,194
Proceeds from the exercise of stock options	360,225	6,000
Net cash provided by (used in) financing activities	6,281,152	(613,474)
Net increase (decrease) in cash and cash equivalents	2,783,978	(5,267,817)
Cash and cash equivalents, beginning of the period	1,186,033
Cash and cash equivalents, end of the period	3,970,011
Non-cash investing and financing activities:
Cash paid for interest	$ 91,076	$ 294,219

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Stock-based compensation

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Stock-based compensation

Stock-based compensation

Stock-Based Compensation

In 2006, the Company adopted the 2006 Stock Option and Incentive Plan or the Plan, under which the Board of Directors may grant incentive or non-qualified stock options and stock grants to key employees, directors, advisors and consultants of the Company. The Plan was amended at various dates by the Board of Directors to increase the reserved shares of common stock issuable under the Plan to 3,838,750 as of September 30, 2015, or the Amended Plan.

Stock options vest based upon the terms within the individual option grants, with an acceleration of the unvested portion of such options upon a change in control event, as defined in the Amended Plan. The options are not transferable except by will or domestic relations order. The option price per share under the Amended Plan cannot be less than the fair market value of the underlying shares on the date of the grant. The number of shares remaining available for future issuance under the Amended Plan as of September 30, 2015 was 1,617,533.

Stock option activity for the nine months endedSeptember 30, 2015 was as follows: 

Common Stock Options	Number of Options		Exercise Price Per Share	Weighted Average Exercise Price		Weighted Average Remaining Life	Aggregate Intrinsic Value
Outstanding, December 31, 2014	1,356,325		$1.20-$5.39	$	2.77	5.12 years	$	3,618,935
Granted	160,000		$3.39-$4.05	3.43
Exercised	(222,375	)	$1.20-$2.60	1.62
Canceled and forfeited	(28,750	)	$1.20-$4.50	2.45
Expired	—		—	—
Outstanding, September 30, 2015	1,265,200		$1.20-$5.39	$	3.06	6.25 years	$	955,919
Exercisable, September 30, 2015	776,619			$	2.30		$	935,747
Vested and expected to vest, September 30, 2015	1,165,200			$	2.90		$	955,919

Stock-Based Compensation - Ilios

In 2009, Ilios adopted the 2009 Stock Incentive Plan, or the 2009 Plan, under which the Board of Directors may grant incentive or non-qualified stock options and stock grants to key employees, directors, advisors and consultants of the Company. The maximum number of shares allowable for issuance under the 2009 Plan is 2,000,000 shares of common stock. The 2009 Plan has 1,325,000 available for grant as of September 30, 2015. There were no grants during 2015 to date. Stock options vest based upon the terms within the individual option grants, with an acceleration of the unvested portion of such options upon a change in control event, as defined in the Plan.

Consolidated stock-based compensation expense for the nine months endedSeptember 30, 2015 and 2014 was $90,971 and $120,972, respectively. No tax benefit was recognized related to the stock-based compensation recorded during the periods.

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Commitments and contingencies - Additional Information (Details) - USD ($)	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Guarantor Obligations [Line Items]
Short-term investments, restricted	$ 294,728	$ 585,702
Revolving Credit Facility [Member]
Guarantor Obligations [Line Items]
Letters of Credit Outstanding, Amount	583,073
Letter of credit, increase from accrued interest	$ 2,629

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Description of business and summary of significant accounting policies - Property, Plant and Equipment (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Property, Plant and Equipment [Line Items]
Depreciation	$ 42,366	$ 28,716	$ 129,775	$ 148,108
Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives			3 years
Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives			15 years