001-36103 | 04-3536131 | |
(Commission File Number) | (IRS Employer Identification No.) | |
45 First Avenue | ||
Waltham, Massachusetts | 02451 | |
(Address of Principal Executive Offices) | (Zip Code) |
99.01 |
99.02 |
TECOGEN INC. | ||
By: /s/ Bonnie Brown | ||
May 14, 2019 | Bonnie Brown, Principal Financial & Accounting Officer |
• | Current assets at quarter end of $26.8 million were more than twice current liabilities of $10.6 million, showing a strong working capital position of $16.2 million, with an increase of approximately $3 million since year end 2018. |
• | Adjusted non-GAAP EBITDA(1), excluding goodwill impairment, the unrealized gain or loss on marketable equity securities, stock-compensation expense and merger related expenses, was positive $678,086 for the first quarter of 2019 compared to $303,732 for the first quarter of 2018, an increase of $374,354. |
• | Absent the goodwill impairment charge, the Company's net income for the quarter would have been $413,121, an increase of $392,362, year over year. Net loss attributable to Tecogen for the three months ended March 31, 2019 was $3,280,077 compared to income of $20,759 for the same period in 2018. Net loss for the first quarter of 2019 included a goodwill impairment charge of $3,693,198. |
• | Net loss per share was $0.13 for the three months ended March 31, 2019 and $0.00 for the comparative period in 2018. As discussed above, the goodwill impairment charge is the basis for the per share net loss. |
• | Overall gross margin was 36% for the first quarter of 2019 compared to 38% for the same quarter of 2018, resulting from the combination of an increase in product gross margin, and a decrease in service gross margin. |
• | Operating expenses included a gain on sale of assets of $1,081,049 and a goodwill impairment charge of $3,693,198 causing an increase in total operating expenses, year over year, of $2,538,999. |
• | Awarded $8.4 million project to install a 1 MW trigeneration plant at a data center located in New York City. |
• | Sold two additional chillers into expanding market of marijuana growing facilities. |
• | Tecofrost sales pipeline growing, expect sales in the second half of 2019. |
• | Current sales backlog of equipment and installations as of May 13, 2019 is $27 million, comprised of $14 million of installation services and $13 million of products, showing a growing demand for our products and services. |
• | Forklift Truck Application of Ultera Emissions System. The Company has completed the second iteration of tests to optimize Ultera performance on the forklift truck using customized engine control software supplied by the manufacturer, Mitsubishi Caterpillar Forklift America Inc. (MCFA). Having achieved positive results, Tecogen has recommended that the current test phase be concluded and the project move forward to seek engine certification to the California “Near Zero” standard through MCFA’s supplier in Japan as well as return the test forklift truck to MCFA for evaluation at their test facility. |
• | Ultera Application to Fire Hazard Mitigation. As reported previously (see our press release “Tecogen Announces Third Quarter 2018 Results” dated November 13, 2018), the Company has successfully permitted a group of natural gas engine generators in Los Angeles County for continuous operation. The company believes these are the only natural gas engine-generators permitted to this standard since it was implemented. Having successfully completed the program, we are revealing the application as we believe it noteworthy with potential to serve an emerging need in the region. The generators are being applied to a group of dispersed loads located in a terrain vulnerable to brush and woodland fires and powered by overhead wires. During windy periods, where the wires are vulnerable to being severed, they are de-energized and the loads become powered by the generators that are located nearby. The Company believes the Ultera emissions system, coupled with standard natural gas generators, are a cost-effective solution to this problem with important advantages over other technologies. |
• | Stationary Emissions Technologies. The Company has completed negotiations to supply Ultera kits for use in water pumping applications for a new installation in Southern California. The kits would be installed in two new 800-horsepower Caterpillar natural gas engines. We have submitted our formal bid to the water district which owns and operates other Ultera systems. These would be the largest kits we have supplied to date, being approximately twice the capacity of our previous largest sale. |
• | Ultera Automotive Catalyst Development. A leading US research and development organization is completing the first phase of a program to advance the Ultera technology in mobile applications and has identified a promising catalyst material to improve performance of the Ultera process. Testing is underway and their work is scheduled for completion in the second quarter of 2019. |
March 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,610,235 | $ | 272,552 | |||
Accounts receivable, net | 11,676,654 | 14,176,452 | |||||
Unbilled revenue | 5,190,392 | 4,893,259 | |||||
Inventory, net | 6,667,567 | 6,294,862 | |||||
Due from related party | — | 9,405 | |||||
Prepaid and other current assets | 618,917 | 722,042 | |||||
Total current assets | 26,763,765 | 26,368,572 | |||||
Property, plant and equipment, net | 3,924,951 | 11,273,115 | |||||
Right of use assets | 2,546,588 | — | |||||
Intangible assets, net | 1,573,399 | 2,893,990 | |||||
Goodwill | 5,281,867 | 8,975,065 | |||||
Other assets | 314,652 | 393,651 | |||||
TOTAL ASSETS | $ | 40,405,222 | $ | 49,904,393 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Revolving line of credit, bank | $ | — | $ | 2,009,435 | |||
Accounts payable | 5,914,089 | 7,153,330 | |||||
Accrued expenses | 2,222,527 | 1,528,014 | |||||
Deferred revenue | 1,874,794 | 2,507,541 | |||||
Lease obligations, current | 555,831 | — | |||||
Total current liabilities | 10,567,241 | 13,198,320 | |||||
Long-term liabilities: | |||||||
Deferred revenue, net of current portion | 295,510 | 2,375,700 | |||||
Lease obligations, long-term | 1,990,757 | — | |||||
Unfavorable contract liability, net | 2,870,339 | 6,292,599 | |||||
Total liabilities | 15,723,847 | 21,866,619 | |||||
Commitments and contingencies (Note 11) | |||||||
Stockholders’ equity: | |||||||
Tecogen Inc. stockholders’ equity: | |||||||
Common stock, $0.001 par value; 100,000,000 shares authorized; 24,834,746 and 24,824,746 issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 24,835 | 24,825 | |||||
Additional paid-in capital | 56,477,342 | 56,427,928 | |||||
Accumulated deficit | (31,950,172 | ) | (28,670,095 | ) | |||
Total Tecogen Inc. stockholders’ equity | 24,552,005 | 27,782,658 | |||||
Noncontrolling interest | 129,370 | 255,116 | |||||
Total stockholders’ equity | 24,681,375 | 28,037,774 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 40,405,222 | $ | 49,904,393 |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
Revenues | |||||||
Products | $ | 3,024,526 | $ | 3,673,506 | |||
Services | 3,911,296 | 4,719,386 | |||||
Energy production | 1,240,809 | 1,782,535 | |||||
Total revenues | 8,176,631 | 10,175,427 | |||||
Cost of sales | |||||||
Products | 1,943,462 | 2,409,115 | |||||
Services | 2,474,533 | 2,782,854 | |||||
Energy production | 799,877 | 1,145,655 | |||||
Total cost of sales | 5,217,872 | 6,337,624 | |||||
Gross profit | 2,958,759 | 3,837,803 | |||||
Operating expenses | |||||||
General and administrative | 2,655,411 | 2,789,549 | |||||
Selling | 693,253 | 675,118 | |||||
Research and development | 345,083 | 302,230 | |||||
Gain on sale of assets | (1,081,049 | ) | — | ||||
Goodwill impairment | 3,693,198 | — | |||||
Total operating expenses | 6,305,896 | 3,766,897 | |||||
Income (loss) from operations | (3,347,137 | ) | 70,906 | ||||
Other income (expense) | |||||||
Interest income and other expense, net | 532 | (1,072 | ) | ||||
Interest expense | (28,026 | ) | (13,013 | ) | |||
Unrealized loss on investment securities | (39,361 | ) | (19,681 | ) | |||
Total other income (expense), net | (66,855 | ) | (33,766 | ) | |||
Income (loss) before provision for state income taxes | (3,413,992 | ) | 37,140 | ||||
Benefit for state income taxes | (8,169 | ) | — | ||||
Consolidated net income (loss) | (3,405,823 | ) | 37,140 | ||||
(Income) loss attributable to the noncontrolling interest | 125,746 | (16,381 | ) | ||||
Net income (loss) attributable to Tecogen Inc. | $ | (3,280,077 | ) | $ | 20,759 | ||
Net income (loss) per share - basic and diluted | $ | (0.13 | ) | $ | 0.00 | ||
Weighted average shares outstanding - basic | 24,818,979 | 24,803,527 | |||||
Weighted average shares outstanding - diluted | 24,818,979 | 24,881,185 |
Non-GAAP financial disclosure (1) | |||||||
Net income (loss) attributable to Tecogen Inc. | $ | (3,280,077 | ) | $ | 20,759 | ||
Interest & other expense, net | 27,494 | 14,085 | |||||
Income taxes | (8,169 | ) | — | ||||
Depreciation & amortization, net | 168,244 | 199,181 | |||||
EBITDA | (3,092,508 | ) | 234,025 | ||||
Stock based compensation | 38,035 | 40,416 | |||||
Goodwill impairment | 3,693,198 | — | |||||
Unrealized loss on investment securities | 39,361 | 19,681 | |||||
Merger related expenses | — | 9,610 | |||||
Adjusted EBITDA | $ | 678,086 | $ | 303,732 |
Three Months Ended | |||||||
March 31, 2019 | March 31, 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Consolidated net loss | $ | (3,405,823 | ) | $ | 37,140 | ||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation, accretion and amortization, net | 168,244 | 199,181 | |||||
Provision on inventory reserve | — | 1,000 | |||||
Stock-based compensation | 38,035 | 40,416 | |||||
Goodwill impairment | 3,693,198 | — | |||||
(Gain) loss on sale of assets | (1,081,049 | ) | 4,120 | ||||
Provision for losses on accounts receivable | — | 4,600 | |||||
Non-cash interest expense | 12,499 | — | |||||
Changes in operating assets and liabilities, net of effects of acquisitions | |||||||
(Increase) decrease in: | |||||||
Accounts receivable | 2,499,798 | (1,496,737 | ) | ||||
Unbilled revenue | (297,133 | ) | (549,647 | ) | |||
Inventory, net | (372,705 | ) | 33,782 | ||||
Due from related party | 9,405 | — | |||||
Prepaid expenses and other current assets | 6,317 | (99,153 | ) | ||||
Other non-current assets | 78,999 | 19,681 | |||||
Increase (decrease) in: | |||||||
Accounts payable | (1,239,241 | ) | 855,949 | ||||
Accrued expenses and other current liabilities | 4,154 | 288,913 | |||||
Deferred revenue | (725,902 | ) | (64,122 | ) | |||
Interest payable, related party | — | 12,575 | |||||
Net cash used in operating activities | (611,204 | ) | (712,302 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (24,788 | ) | (145,326 | ) | |||
Proceeds from sale of assets | 5,000,000 | 3,606 | |||||
Purchases of intangible assets | (15,780 | ) | (83,856 | ) | |||
Cash acquired in asset acquisition | — | 442,786 | |||||
Payment of stock issuance costs | (611 | ) | (553 | ) | |||
Distributions to noncontrolling interest | — | (23,338 | ) | ||||
Net cash provided by investing activities | 4,958,821 | 193,319 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Payments on revolving line of credit, net | (2,021,934 | ) | — | ||||
Proceeds from the exercise of stock options | 12,000 | 48,245 | |||||
Net cash provided by (used in) financing activities | (2,009,934 | ) | 48,245 | ||||
Change in cash and cash equivalents | 2,337,683 | (470,738 | ) | ||||
Cash and cash equivalents, beginning of the period | 272,552 | 1,673,072 | |||||
Cash and cash equivalents, end of the period | $ | 2,610,235 | $ | 1,202,334 | |||
Supplemental disclosures of cash flows information: | |||||||
Cash paid for interest | $ | 18,381 | $ | — | |||
Cash paid for taxes | $ | 12,324 | $ | — |
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