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 June 30, ~~2020~~2021



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

Commission ~~File Number~~file number 001-36103

TECOGEN INC. (OTCQX:TGEN)

(Exact name of Registrant as ~~Specified~~specified in its ~~Charter)~~

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 and Zip Code)


(781) 466-6402
(Registrant's telephone number, including area code)

~~(Registrant’s Telephone Number, Including Area Code)~~

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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act:



Large accelerated filer o	Accelerated filer o
Non-accelerated filer ☒	~~Non –accelerated filer~~ xEmerging Growth company ☐
Smaller reporting company x☒
		~~Emerging Growth company~~ o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

As of August 3, 2021, 24,850,261 shares of common stock, $.001 par value per share, of the registrant were issued and outstanding.

TECOGEN INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED JUNE 30, 2021

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements

~~Title of each class~~	Condensed Consolidated Balance Sheets (Unaudited)	~~Outstanding, August 10, 2020~~
~~Common Stock, $0.001 par value~~	June 30, 2021 and December 31, 2020	~~24,850,261~~

~~TECOGEN INC.~~

~~QUARTERLY REPORT ON FORM 10-Q~~

~~FOR THE PERIOD ENDED~~ ~~JUNE 30, 2020~~

~~TABLE OF CONTENTS~~



~~PART I~~ ~~- FINANCIAL INFORMATION~~

~~Item 1.~~	~~Financial Statements~~			1

	~~Condensed Consolidated Balance Sheets (Unaudited)~~
	~~June 30, 2020 and December 31, 2019~~	1

	Condensed Consolidated Statements of Operations (Unaudited)
			Three Months Ended June 30, ~~2020~~2021 and ~~2019~~2020		2

			Condensed Consolidated Statements of Operations (Unaudited)
			Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020		3

			Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
			Three and Six Months Ended June 30 , 2021 and 2020 ~~and 2019~~		4

			Condensed Consolidated Statements of Cash Flows (Unaudited)
			Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020		5

			Notes to Unaudited Condensed Consolidated Financial Statements		6

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		1618

Item 3.			Quantitative and Qualitative Disclosures About Market Risk		2430

Item 4.			Controls and Procedures		2431

PART II - OTHER INFORMATION

Item 1.			Legal Proceedings		2431

Item 1A.			Risk Factors		2531

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		31

Item 3.			Defaults in Senior Securities		31

Item 4.			Mine Safety Disclosures		31

Item 5.			Other Information		32

Item 6.			Exhibits		2633

Signatures			Signature Page		2734

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

TECOGEN INC.

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


	June 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	3,185,478	$	1,490,219
Accounts receivable, net	7,777,064		8,671,163
Unbilled revenue	3,899,499		4,267,249
Employee retention credit	713,268		0
Inventories, net	6,811,525		7,168,596

Prepaid and other current assets	839,732		597,144
Total current assets	23,226,566		22,194,371
Long-term assets:
Property, plant and equipment, net	2,025,334		2,283,846
Right of use assets	2,168,100		1,632,574
Intangible assets, net	1,244,373		1,360,319

Goodwill	2,406,156		2,406,156
Other assets	248,713		196,387
TOTAL ASSETS	$	31,319,242	$	30,073,653

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Note payable	$	0	$	837,861


Accounts payable	2,597,737		4,183,105
Accrued expenses	2,138,931		1,993,471
Deferred revenue	1,119,943		1,294,157
Lease obligations, current	617,540		506,514



Total current liabilities	6,474,151		8,815,108
Long-term liabilities:
Note payable, net of current portion	1,874,269		1,036,339
Deferred revenue, net of current portion	244,425		115,329
Lease obligations, net of current portion	1,642,801		1,222,492
Deferred payroll tax liability, net of current portion	131,224		0
Unfavorable contract liability	1,438,278		1,617,051
Total liabilities	11,805,148		12,806,319

Commitments and contingencies (Note 12)	0		0

Stockholders’ equity:
Tecogen Inc. stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 24,850,261and 24,850,261 issued and outstanding at June 30, 2021 and December 31, 2020, respectively	24,850		24,850
Additional paid-in capital	56,908,194		56,814,428

Accumulated deficit	(37,363,283)		(39,529,621)
Total Tecogen Inc. stockholders’ equity	19,569,761		17,309,657
Non-controlling interest	(55,667)		(42,323)
Total stockholders’ equity	19,514,094		17,267,334
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	31,319,242	$	30,073,653

June 30, 2020 December 31, 2019
ASSETS
Current assets:

Cash and cash equivalents $ 2,859,922
$ 877,676
Accounts receivable, net 8,163,461
14,569,397
Unbilled revenue 4,883,779
5,421,811
Inventory, net 7,296,097
6,405,229
Prepaid and other current assets 641,415
635,034
Total current assets 23,844,674
27,909,147
Property, plant and equipment, net 3,167,604
3,465,948
Right of use assets 1,908,084
2,173,951
Intangible assets, net 1,475,794
1,593,781
Goodwill 5,281,867
5,281,867
Other assets 195,430
691,941
TOTAL ASSETS $ 35,873,453
$ 41,116,635

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Revolving line of credit, bank $ —
$ 2,402,384
Note payable, current portion 208,939
—
Accounts payable 4,074,180
5,271,756
Accrued expenses 2,896,530
2,599,366
Deferred revenue 1,103,067
2,635,619
Lease obligations, current 523,784
536,443
Total current liabilities 8,806,500
13,445,568
Long-term liabilities:

Deferred revenue, net of current portion 128,304
145,464
Note payable, net of current portion 1,665,261
—
Lease obligations, long-term 1,384,299
1,637,508
Unfavorable contract liability, net 2,315,140
2,534,818
Total liabilities 14,299,504
17,763,358

Commitments and contingencies (Note 11)

Stockholders’ equity:

Tecogen Inc. stockholders’ equity:

Common stock, $0.001 par value; 100,000,000 shares authorized; 24,850,261 and 24,849,261 issued and outstanding at June 30, 2020 and December 31, 2019, respectively 24,850
24,849
Additional paid-in capital 56,704,412
56,622,285
Accumulated deficit (35,235,389 ) (33,379,114 )
Total Tecogen Inc. stockholders’ equity 21,493,873
23,268,020
Noncontrolling interest 80,076
85,257
Total stockholders’ equity 21,573,949
23,353,277
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 35,873,453
$ 41,116,635

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

TECOGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended							Three Months Ended
	June 30, 2020			June 30, 2019				June 30, 2021		June 30, 2020
Revenues							Revenues
Products	$	3,342,794		$	2,445,448		Products	$	2,445,927	$	3,786,134
Services	3,815,923			4,843,649			Services	3,328,314		3,372,583
Energy production	276,341			578,299			Energy production	370,861		276,341
Total revenues	7,435,058			7,867,396			Total revenues	6,145,102		7,435,058
Cost of sales							Cost of sales
Products	2,037,786			1,546,752			Products	1,390,725		2,220,456
Services	2,285,405			2,530,175			Services	1,679,386		2,102,735
Energy production	205,876			364,554			Energy production	232,353		205,876
Total cost of sales	4,529,067			4,441,481			Total cost of sales	3,302,464		4,529,067
Gross profit	2,905,991			3,425,915			Gross profit	2,842,638		2,905,991
Operating expenses							Operating expenses
General and administrative	2,637,479			2,683,252			General and administrative	2,438,452		2,637,479
Selling	602,383			704,700			Selling	580,871		602,383
Research and development	166,027			372,545			Research and development	132,883		166,027

Total operating expenses	3,405,889			3,760,497			Total operating expenses	3,152,206		3,405,889
Loss from operations	(499,898		)	(334,582		)	Loss from operations	(309,568)		(499,898)
Other income (expense)							Other income (expense)
Interest income	238			66
Interest income and other expenses, net							Interest income and other expenses, net
Interest income and other income (expense), net							Interest income and other income (expense), net	(1,125)		238
Interest expense	(56,253		)	(17,005		)	Interest expense	(5,088)		(56,253)

Employee retention credit							Employee retention credit	713,268		0
Unrealized gain (loss) on investment securities	(78,723		)	19,681			Unrealized gain (loss) on investment securities	18,749		(78,723)
Total other income (expense), net	(134,738		)	2,742			Total other income (expense), net	725,804		(134,738)
Loss before provision for state income taxes	(634,636		)	(331,840		)
Income (loss) before provision for state income taxes							Income (loss) before provision for state income taxes	416,236		(634,636)
Provision for state income taxes	13,171			15,955			Provision for state income taxes	7,933		13,171
Consolidated net loss	(647,807		)	(347,795		)
Income attributable to the noncontrolling interest	(6,081		)	(9,334		)
Net loss attributable to Tecogen Inc.	$	(653,888	)	$	(357,129	)
Consolidated net income (loss)							Consolidated net income (loss)	408,303		(647,807)
(Income) loss attributable to the non-controlling interest							(Income) loss attributable to the non-controlling interest	(8,672)		(6,081)
Net income (loss) attributable to Tecogen Inc.							Net income (loss) attributable to Tecogen Inc.	$	399,631	$	(653,888)

Net loss per share - basic and diluted	$	(0.03	)	$	(0.01	)
Weighted average shares outstanding - basic and diluted	24,850,261			24,826,311
Net income (loss) per share - basic							Net income (loss) per share - basic	$	0.02	$	(0.03)
Net income (loss) per share - diluted							Net income (loss) per share - diluted	$	0.02	$	(0.03)
Weighted average shares outstanding - basic							Weighted average shares outstanding - basic	24,850,261		24,850,261
Weighted average shares outstanding - diluted							Weighted average shares outstanding - diluted	25,125,210		24,850,261

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

TECOGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Six Months Ended
	June 30, 2021		June 30, 2020
Revenues
Products	$	4,568,649	$	6,837,894
Services	6,609,458		7,532,673
Energy production	1,024,156		1,027,191
Total revenues	12,202,263		15,397,758
Cost of sales
Products	2,565,012		4,023,339
Services	3,216,989		4,985,981
Energy production	626,416		690,280
Total cost of sales	6,408,417		9,699,600
Gross profit	5,793,846		5,698,158
Operating expenses
General and administrative	4,892,305		5,326,941
Selling	1,091,074		1,458,170
Research and development	259,033		530,363


Total operating expenses	6,242,412		7,315,474
Loss from operations	(448,566)		(1,617,316)
Other income (expense)
Interest and other income (expense), net	(2,328)		11,965
Interest expense	(9,728)		(116,238)
Gain on extinguishment of debt	1,887,859		0
Employee retention credit	713,268		0
Gain on sale of investment securities	6,046		0
Unrealized gain (loss) on investment securities	56,246		(98,404)
Total other income (expense), net	2,651,363		(202,677)
Income (loss) before provision for state income taxes	2,202,797		(1,819,993)
Provision for state income taxes	15,991		18,393
Consolidated net income (loss)	2,186,806		(1,838,386)
(Income) loss attributable to non-controlling interest	(20,468)		(17,889)
Net income (loss) attributable to Tecogen Inc.	$	2,166,338	$	(1,856,275)



Net income (loss) per share - basic	$	0.09	$	(0.07)
Net income (loss) per share - diluted	$	0.09	$	(0.07)
Weighted average shares outstanding - basic	24,850,261		24,850,256
Weighted average shares outstanding - diluted	25,102,470		24,850,256

Six Months Ended
June 30, 2020 June 30, 2019
Revenues
Products $ 6,093,273
$ 5,469,974
Services 8,277,294
8,754,945
Energy production 1,027,191
1,819,108
Total revenues 15,397,758
16,044,027
Cost of sales
Products 3,705,250
3,490,214
Services 5,304,070
5,004,708
Energy production 690,280
1,164,431
Total cost of sales 9,699,600
9,659,353
Gross profit 5,698,158
6,384,674
Operating expenses
General and administrative 5,326,941
5,338,663
Selling 1,458,170
1,397,954
Research and development 530,363
717,627
Gain on sale of assets —
(1,081,049 )
Goodwill impairment —
3,693,198
Total operating expenses 7,315,474
10,066,393
Loss from operations (1,617,316 ) (3,681,719 )
Other income (expense)
Interest income 11,965
598
Interest expense (116,238 ) (45,031 )
Unrealized loss on investment securities (98,404 ) (19,680 )
Total other expense, net (202,677 ) (64,113 )
Loss before provision for state income taxes (1,819,993 ) (3,745,832 )
Provision for state income taxes 18,393
7,786
Consolidated net loss (1,838,386 ) (3,753,618 )
(Income) loss attributable to the noncontrolling interest (17,889 ) 116,412
Net loss attributable to Tecogen Inc. $ (1,856,275 ) (3,637,206 )

Net loss per share - basic and diluted $ (0.07 ) $ (0.15 )
Weighted average shares outstanding - basic and diluted 24,850,256
24,822,555

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

TECOGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020

(unaudited)


Three months ended June 30, 2021	Common Stock Shares	Common Stock 0.001 Par Value		Additional Paid-In Capital		Accumulated Deficit		Non-controlling Interest		Total
Balance at March 31, 2021	24,850,261	$	24,850	$	56,853,513	$	(37,762,914)	$	(48,703)	$	19,066,746
Stock based compensation expense	—	—		54,681		—		—		54,681
Distributions to non-controlling interest	—	—		—		—		(15,636)		(15,636)
Net income	—	—		—		399,631		8,672		408,303
Balance at June 30, 2021	24,850,261	$	24,850	$	56,908,194	$	(37,363,283)	$	(55,667)	$	19,514,094

Six months ended June 30, 2021	Common Stock Shares	Common Stock 0.001 Par Value		Additional Paid-In Capital		Accumulated Deficit		Non-controlling Interest		Total
Balance at December 31, 2020	24,850,261	$	24,850	$	56,814,428	$	(39,529,621)	$	(42,323)	$	17,267,334


Stock based compensation expense	—	—		93,766		—		—		93,766
Distributions to non-controlling interest	—	—		0		—		(33,812)		(33,812)
Net income	—	—		—		2,166,338		20,468		2,186,806
Balance at June 30, 2021	24,850,261	$	24,850	$	56,908,194	$	(37,363,283)	$	(55,667)	$	19,514,094

Three months ended June 30, 2020	Common Stock Shares	Common Stock 0.001 Par Value		Additional Paid-In Capital		Accumulated Deficit		Non-controlling Interest		Total
Balance at March 31, 2020	24,850,261	$	24,850	$	56,665,319	$	(34,581,501)	$	73,995	$	22,182,663
Stock issuance costs	—	—		(401)		—		—		(401)
Stock based compensation expense	—	—		39,494		—		—		39,494

Net income (loss)	—	—		—		(653,888)		6,081		(647,807)
Balance at June 30, 2020	24,850,261	$	24,850	$	56,704,412	$	(35,235,389)	$	80,076	$	21,573,949

Six months ended June 30, 2020	Common Stock Shares	Common Stock 0.001 Par Value		Additional Paid-In Capital		Accumulated Deficit		Non-controlling Interest		Total
Balance at December 31, 2019	24,849,261	$	24,849	$	56,622,285	$	(33,379,114)	$	85,257	$	23,353,277
Exercise of stock options	1,000	1		1,199		—		—		1,200
Stock issuance costs	—	—		(802)		—		—		(802)
Stock based compensation expense	—	—		81,730		—		—		81,730
Distributions to non-controlling interest	—	—		—		—		(23,070)		(23,070)
Net income (loss)	—	—		—		(1,856,275)		17,889		(1,838,386)
Balance at June 30, 2020	24,850,261	$	24,850	$	56,704,412	$	(35,235,389)	$	80,076	$	21,573,949

Tecogen Inc. Stockholders
Three months ended June 30, 2020 Common Stock Shares Common
Stock
0.001
Par Value Additional
Paid-In
Capital Accumulated
Deficit Noncontrolling
Interest Total
Balance at March 31, 2020 24,850,261
$ 24,850
$ 56,665,319
$ (34,581,501 ) $ 73,995
$ 22,182,663
Stock issuance costs —
—
(401 ) —
—
(401 )
Stock based compensation expense —
—
39,494
—
—
39,494
Net income (loss) —
—
—
(653,888 ) 6,081
(647,807 )
Balance at June 30, 2020 24,850,261
$ 24,850
$ 56,704,412
$ (35,235,389 ) $ 80,076
$ 21,573,949

Tecogen Inc. Stockholders
Six months ended June 30, 2020 Common Stock Shares Common
Stock
0.001
Par Value Additional
Paid-In
Capital Accumulated
Deficit Noncontrolling
Interest Total
Balance at December 31, 2019 24,849,261
$ 24,849
$ 56,622,285
$ (33,379,114 ) $ 85,257
$ 23,353,277
Exercise of stock options 1,000
1
1,199
—
—
1,200
Stock issuance costs —
—
(802 ) —
—
(802 )
Stock based compensation expense —
—
81,730
—
—
81,730
Distributions to non-controlling interest —
—
—
—
(23,070 ) (23,070 )
Net income (loss) —
—
—
(1,856,275 ) 17,889
(1,838,386 )
Balance at June 30, 2020 24,850,261
$ 24,850
$ 56,704,412
$ (35,235,389 ) $ 80,076
$ 21,573,949

Tecogen Inc. Stockholders
Three months ended June 30, 2019 Common Stock Shares Common
Stock
0.001
Par Value Additional
Paid-In
Capital Accumulated
Deficit Noncontrolling
Interest Total
Balance at March 31, 2019 24,834,746
$ 24,835
$ 56,477,342
$ (31,950,172 ) $ 129,370
$ 24,681,375
Exercise of stock options 6,060
6
8,750
—
—
8,756
Stock issuance costs —
—
(400 ) —
—
(400 )
Distributions to non-controlling interest —
—
—
—
(27,413 ) (27,413 )
Stock based compensation expense —
—
39,898
—
—
39,898
Net income (loss) —
—
—
(357,129 ) 9,334
(347,795 )
Balance at June 30, 2019 24,840,806
$ 24,841
$ 56,525,590
$ (32,307,301 ) $ 111,291
$ 24,354,421

Tecogen Inc. Stockholders
Six months ended June 30, 2019 Common Stock Shares Common
Stock
0.001
Par Value Additional
Paid-In
Capital Accumulated
Deficit Noncontrolling
Interest Total
Balance at December 31, 2018 24,824,746
$ 24,825
$ 56,427,928
$ (28,670,095 ) $ 255,116
$ 28,037,774
Exercise of stock options 16,060
16
20,740
—
—
20,756
Stock issuance costs —
—
(1,011 ) —
—
(1,011 )
Distributions to non-controlling interest —
—
—
—
(27,413 ) (27,413 )
Stock based compensation expense —
—
77,933
—
—
77,933
Net loss —
—
—
(3,637,206 ) (116,412 ) (3,753,618 )
Balance at June 30, 2019 24,840,806
$ 24,841
$ 56,525,590
$ (32,307,301 ) $ 111,291
$ 24,354,421

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

TECOGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Six Months Ended
	June 30, 2021		June 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)	$	2,186,806	$	(1,838,386)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization, net	241,470		193,637
Gain on extinguishment of debt	(1,887,859)		0

Employee retention credit	(713,268)		0
Stock-based compensation	93,766		81,730

Gain on sale of investment securities	(6,046)		0
Unrealized (gain) loss on investment securities	(56,246)		98,404
Abandonment of intangible assets	7,400		179,944
Non-cash interest expense	0		50,775
Changes in operating assets and liabilities, net of effects of acquisitions:
(Increase) decrease in:

Accounts receivable	894,100		6,405,936
Unbilled revenue	367,750		538,032
Inventory	357,072		(890,868)

Prepaid expenses and other current assets	(242,588)		(6,382)
Other assets	(537,197)		532,293
Increase (decrease) in:
Accounts payable	(1,585,368)		(1,197,576)
Accrued expenses and other current liabilities	290,342		284,506
Deferred revenue	(45,118)		(1,671,239)
Other liabilities	531,335		0

Net cash provided by (used in) operating activities	(103,649)		2,760,806
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(47,504)		(53,674)
Proceeds from the sale of investment securities	11,637		0
Purchases of intangible assets	(5,682)		(123,254)


Payment of stock issuance costs	0		(802)
Distributions to non-controlling interest	(33,812)		(23,070)
Net cash used in investing activities	(75,361)		(200,800)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable	1,874,269		1,874,200
Proceeds (payments) on revolving line of credit, net	0		(2,453,159)

Proceeds from the exercise of stock options	0		1,200

Net cash provided by (used in) financing activities	1,874,269		(577,759)
Change in cash and cash equivalents	1,695,259		1,982,247
Cash and cash equivalents, beginning of the period	1,490,219		877,676
Cash and cash equivalents, end of the period	$	3,185,478	$	2,859,923

Supplemental disclosures of cash flows information:
Cash paid for interest	$	0	$	36,326
Cash paid for taxes	$	15,991	$	5,222

Six Months Ended
June 30, 2020 June 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net loss $ (1,838,386 ) $ (3,753,618 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, accretion and amortization, net 193,637
267,232
Stock-based compensation 81,730
77,933
Goodwill impairment —
3,693,198
Gain on sale of assets —
(1,081,049 )
Provision for losses on accounts receivable —
29,849
Abandonment of intangible assets 179,944
—
Non-cash interest expense 50,775
12,087
Changes in operating assets and liabilities, net of effects of acquisitions
(Increase) decrease in:
Accounts receivable 6,405,936
2,517,901
Unbilled revenue 538,032
(936,106 )
Inventory (890,868 ) (695,835 )
Due from related party —
9,405
Prepaid expenses and other current assets (6,382 ) (15,282 )
Other non-current assets 532,293
40,003
Increase (decrease) in:
Accounts payable (1,197,576 ) (918,484 )
Accrued expenses and other current liabilities 284,506
(380,351 )
Deferred revenue (1,671,239 ) (966,776 )
Net cash provided by (used in) operating activities 2,662,402
(2,099,893 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (53,674 ) (52,444 )
Proceeds from sale of assets —
5,000,000
Purchases of intangible assets (123,254 ) (22,738 )
Disposal of intangible assets —
—
Unrealized loss on investment securities 98,403
19,680
Payment of stock issuance costs (802 ) (1,011 )
Distributions to noncontrolling interest (23,070 ) (27,413 )
Net cash provided by (used in) investing activities (102,397 ) 4,916,074
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (payments) on revolving line of credit, net (2,453,159 ) (2,021,519 )
Proceeds from note payable 1,874,200
—
Proceeds from the exercise of stock options 1,200
20,756
Net cash used in financing activities (577,759 ) (2,000,763 )
Change in cash and cash equivalents 1,982,246
815,418
Cash and cash equivalents, beginning of the period 877,676
272,552
Cash and cash equivalents, end of the period $ 2,859,922
$ 1,087,970

Supplemental disclosures of cash flows information:

Cash paid for interest $ 36,326
$ 23,551
Cash paid for taxes $ 5,222
$ 28,524

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

TECOGEN INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1.Description of Business and Basis of Presentation

Description of Business

Tecogen Inc., ~~("Tecogen," "Company,", "we," "our,"~~ or ~~"us", designs, manufactures, markets,~~we, our or us, produces commercial and ~~maintains high efficiency, ultra-clean cogeneration products including natural gas engine driven~~industrial engine-driven, combined heat and power air conditioning systems, and water heaters for residential, commercial, recreational and industrial use. We provide cost efficient, environmentally friendly and reliable products for distributed power generation that, through patented technology, nearly eliminate criteria pollutants and significantly reduce a customer’s carbon footprint. Tecogen products are expected to run on Renewable Natural Gas (RNG) as it is introduced into the US gas pipeline infrastructure.

Tecogen’s cogeneration systems (also known as combined heat and power or “CHP”) are efficient because they drive electric generators or compressors, which reduce the amount of electricity purchased from the utility while recovering the engine’s waste heat for water heating, space heating, and/or air conditioning at the customer’s building. All of our products are standardized, modular, CHP(CHP) products that reduce energy costs, ~~carbon~~decrease greenhouse gas emissions and ~~dependence~~alleviate congestion on the national power grid. Our products supply electric ~~grid. Tecogen’s products allow customers to produce~~ power ~~on-site in parallel with the electric grid~~ or ~~stand alone when no utility grid is available via inverter-based black-start capability. Because our CHP systems also produce clean, usable~~mechanical power for cooling, while heat ~~energy, they provide economic advantages to customers who can benefit~~ from the ~~use of~~engine is recovered and purposefully used at a facility. We also install, own, operate and maintain complete energy systems and other complementary systems at customer sites and sell electricity, hot water, ~~chilled water, air conditioning~~heat and ~~heating.~~

cooling energy under long-term contracts at prices guaranteed to the customer to be below conventional utility rates.

The majority of ~~the Company’s~~our customers are located in regions with the highest utility rates, typically California, the Midwest and the Northeast.

Our common stock is quoted on OTC Markets Group, Inc.'s OTCQX Best Market tier and trades under the symbol "TGEN."

On May 18, 2017, the Company acquired 100% of the outstanding common stock of American DG Energy Inc., formerly a related entity, in a stock-for-stock ~~merger whereupon American DG Energy became a wholly-owned subsidiary of the Company.~~

The Company voluntarily delisted its shares of common stock from Nasdaq effective June 19, 2020, and, since that date, the Company's shares of common stock have been quoted on the OTC Markets Group Inc.’s OTCQX Best Market. The Company’s shares continue to be quoted under the ticker symbol “TGEN.”merger.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020.~~2021.

The condensed consolidated balance sheet at December 31, ~~2019~~2020 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in Tecogen's Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

The accompanying unaudited condensed consolidated financial statements include our accounts and the accounts of ~~the Company and~~ entities in which ~~it has~~we have a controlling financial interest. Those entities include ~~the Company's~~our wholly-owned subsidiaries American DG Energy Inc., ~~TTcogen LLC,~~Tecogen CHP Solutions, Inc., and a joint venture, American DG New York, LLC, in which American DG Energy Inc. holds a 51% interest. Investments in partnerships and companies in which ~~the Company does~~we do not have a controlling financial interest but ~~wher1e~~where we have significant influence are accounted for under the equity method. Any intercompany transactions have been eliminated in consolidation.

~~The Company’s~~ Our operations are comprised of ~~two~~2 business segments. Our Products and Services segment designs, manufactures and sells industrial and commercial cogeneration systems as described above. Our Energy Production segment sells energy in the form of electricity, heat, hot water and cooling to our customers under long-term sales agreements.

Reclassification

Certain prior period amounts have been reclassified to conform with current year presentation.

~~TECOGEN INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

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.

Income Taxes

The provisions for income taxes in the accompanying unaudited consolidated statements of operations differ from that which would be expected by applying the federal statutory tax rate primarily due to losses for which no benefit is recognized.

TECOGEN INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Employee Retention Credit

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC.

Section 2301(c)(2)(B) of the CARES Act permits an employer to use an alternative quarter to calculate gross receipts and the employer may determine if the decline in gross receipt tests is met for a calendar quarter in 2021 by comparing its gross receipts for the immediately preceding calendar quarter with those for the corresponding calendar quarter in 2019. Accordingly, for the first quarter of 2021, we elected to use our gross receipts for the fourth calendar quarter of 2020 compared to our gross receipts for the fourth calendar quarter of 2019. As a result of our election to use an alternative quarter, we qualified for the ERC in the first and second quarters of 2021 because our gross receipts decreased by more than 20% from the first and second quarters of 2019. As a result of averaging 100 or fewer full-time employees in 2019, all wages paid to employees in the first and second quarters of 2021 were eligible for the ERC.

Accounting Standards Codification 105, "Generally Accepted Accounting Principles," describes the decision-making framework when no guidance exists in US GAAP for a particular transaction. Specifically, ASC 105-10-05-2 instructs companies to look for guidance for a similar transaction within US GAAP and apply that guidance by analogy. As such, forms of government assistance, such as the ERC, provided to business entities would not be within the scope of ASC 958, but it may be applied by analogy under ASC 105-10-05-2. We accounted for the Employee Retention Credit as a government grant in accordance with Accounting Standards Update 2013-06, Not-for-Profit Entities (Topic 958) ("ASU 2013-06") by analogy under ASC 105-10-05-2.Under this standard, government grants are recognized when the conditions or conditions on which they depend are substantially met. The conditions for recognition of the ERC include, but are not limited to:

•An entity has been adversely affected by the COVID-19 pandemic

•We have not used qualifying payroll for both the Paycheck Protection Program and the ERC

•We incurred payroll costs to retain employees

•The process for filing for the credit is an administrative task and not a barrier to receiving the credits

During the six months ended June 30, 2021, we recorded an ERC benefit of $713,268 in other income (expense), net in the our condensed consolidated statements of operations and as a current receivable in our condensed consolidated balance sheets as of June 30, 2021.

Note 2. Revenue

Revenue is recognized when performance obligations under the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our products, services and energy production. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services or energy to customers.

Shipping and handling fees billed to customers in a sales transaction are recorded in revenue and shipping and handling costs incurred are recorded in cost of sales. ~~The Company has~~We have elected to exclude from revenue any value ~~added~~add sales and other taxes which ~~it collects~~we collect concurrent with revenue-producing activities. These accounting policy elections are consistent with the manner in which ~~the Company~~we historically recorded shipping and handling fees and value-added taxes. Incremental costs incurred by us ~~in obtaining~~to obtain a contract with a customer are negligible, if any, and are expensed ratably in proportion to the related revenue recognized.

Disaggregated Revenue

In general, ~~the Company's~~our business segmentation is aligned according to the nature and economic characteristics of ~~its~~our products and customer relationships and provides meaningful disaggregation of each business segment's results of operations.

The following table further disaggregates our revenue by major source by segment for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.


Three Months Ended	June 30, 2021
	Products and Services		Energy Production		Total
Products	$	2,445,927	$	0	$	2,445,927
Installation services	244,553		0		244,553
Maintenance services	3,083,761		0		3,083,761
Energy production	0		370,861		370,861
Total revenue	$	5,774,241	$	370,861	$	6,145,102

Three Months Ended June 30, 2020
Products and Services Energy Production Total
Products $ 3,342,794
$ —
$ 3,342,794
Installation services 1,360,703
—
1,360,703
Maintenance services 2,455,220
—
2,455,220
Energy production —
276,341
276,341
Total revenue $ 7,158,717
$ 276,341
$ 7,435,058


Six Months Ended	June 30, 2021
	Products and Services		Energy Production		Total
Products	$	4,568,649	$	0	$	4,568,649
Installation services	762,249		0		762,249
Maintenance services	5,847,209		0		5,847,209
Energy production	0		1,024,156		1,024,156
Total revenue	$	11,178,107	$	1,024,156	$	12,202,263


Six Months Ended	June 30, 2020
Three Months Ended							Three Months Ended	June 30, 2020
	Products and Services		Energy Production		Total			Products and Services		Energy Production		Total
Products	$	6,093,273	$	—	$	6,093,273	Products	$	3,786,134	$	0	$	3,786,134
Installation services	3,356,126		—		3,356,126		Installation services	917,363		0		917,363
Maintenance services	4,921,168		—		4,921,168		Maintenance services	2,455,220		0		2,455,220
Energy production	—		1,027,191		1,027,191		Energy production	0		276,341		276,341
Total revenue	$	14,370,567	$	1,027,191	$	15,397,758	Total revenue	$	7,158,717	$	276,341	$	7,435,058

~~TECOGEN INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~


Six Months Ended	June 30, 2020
	Products and Services		Energy Production		Total
Products	$	6,837,894	$	0	$	6,837,894
Installation services	2,611,505		0		2,611,505
Maintenance services	4,921,168		0		4,921,168
Energy production	0		1,027,191		1,027,191
Total revenue	$	14,370,567	$	1,027,191	$	15,397,758

Three Months Ended June 30, 2019
Products and Services Energy Production Total
Products $ 2,445,448
$ —
$ 2,445,448
Installation services 2,291,027
—
2,291,027
Maintenance services 2,552,622
—
2,552,622
Energy production —
578,299
578,299
Total revenue $ 7,289,097
$ 578,299
$ 7,867,396

Six Months Ended June 30, 2019
Products and Services Energy Production Total
Products $ 5,469,974
$ —
$ 5,469,974
Installation services 3,846,891
—
3,846,891
Maintenance services 4,908,054
—
4,908,054
Energy production 1,819,108
1,819,108
Total revenue $ 14,224,919
$ 1,819,108
$ 16,044,027

Product and Services Segment

Products. Our Product revenues include cogeneration systems that supply electricity and hot water, chillers that provide air-conditioning and hot water and engineered accessories, which consist of ancillary products and parts necessary to install a cogeneration unit including integration into the customers’ existing electrical and mechanical systems. Prior to January 1, 2021, engineered accessories revenue and cost of sales had been reported in our financial statements under Installation Services. Engineered accessories revenue and cost of sales from prior periods have been reclassified to conform with the current year presentation. We refer to the package of engineered accessories and engineering and design services necessary for the customers' installation of a cogeneration unit as light installation services.

We transfer control and generally recognize a sale when we ship a product from our manufacturing facility at which point athe customer takes ownership of the product. Payment terms on product sales are generally 30 ~~days from date of initial shipment.~~days.

We recognize revenue in certain circumstances before delivery to the customer has occurred (commonly referred to as bill and hold transactions). We recognize revenue related to such transactions once, among other things, the customer has made a written fixed commitment to purchase the product(s) under normal billing and credit terms, the customer has requested the product(s) be held for future delivery as scheduled and designated by them, risk of ownership has been assumed by the customer, and the product(s) are tagged as sold and segregated for storage awaiting further direction from the customer. Due to the infrequent nature and duration of bill and hold arrangements, the value associated with custodial storage services is deemed immaterial in the context of the contract and in total, and accordingly, none of the transaction price is allocated to such service.

Depending on the product and terms of the arrangement, we may defer the recognition of a portion of the transaction price received because we have to satisfy a future obligation (e.g., product start-up service). Amounts allocated to product start-up services are recognized as revenue when the start-up service has been completed. We use an observable selling price to determine standalone selling prices where available and either a combination of an adjusted market assessment approach, an expected cost plus a margin approach, and/or a residual approach to determine the standalone selling prices for separate performance obligations as a basis for allocating contract consideration when an observable selling price is not available. Amounts received but not recognized pending completion of performance are recognized as contract liabilities and are recorded as deferred revenue along with deposits by customers.

Installation Services. We provide ~~both complete turnkey installation services and what we refer to as light installation services. Complete turnkey~~ installation services typically ~~include~~including all necessary engineering and design, labor, subcontract labor and service ~~and ancillary products and parts necessary~~ to install a cogeneration unit including integration into the customers’ existing electrical and mechanical systems. ~~Light installation services typically include some engineering and design as well as certain ancillary products and parts necessary for the customers’ installation of a cogeneration unit.~~

Under light installation contracts, revenue related to ancillary products and parts is recognized when we transfer control of such items to the customer, generally when we ship them from our manufacturing facility, with revenue related to engineering and design services being recognized at the point where the customer can benefit from the service, generally as completed. Generally billings under light installation contracts are made when shipped and/or completed, with payment terms generally being 30 days.

Under complete turnkey installation service contracts revenue is recognized over time using the percentage-of-completion method determined on a cost to cost basis. Our performance obligation under such contracts is satisfied progressively over time as enhancements are made to customer owned and controlled properties. We measure progress towards

~~TECOGEN INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

satisfaction of the performance obligation based on an cost-based input method ~~based on cost~~ which we believe appropriately measures and is the most ~~faithful~~accurate depiction of the transfer of products and services to the customer under these contracts. When the financial metrics of a contract indicate a loss, our policy is to record the entire expected loss as soon as it is known. Contract costs and profit recognized to date under the percentage-of-completion method in excess of billings are recognized as contract assets and are recorded as unbilled revenue. Billings in excess of contract costs and profit are recognized as contract liabilities and are recorded as deferred revenue. Generally billings under complete turnkey installation contracts are made when contractually determined milestones of progress have been achieved, with payment terms generally being 30 days.

Maintenance Services. Maintenance services are provided under either long-term maintenance contracts or ~~one-time~~time and material maintenance contracts. Revenue under ~~one-time~~time and material maintenance contracts is recognized when the maintenance service is completed. Revenue under long-term maintenance contracts is recognized either ratably over the term of the contract where the contract price is fixed or when the periodic maintenance activities are completed where the invoiced cost to the customer is based on run hours or kilowatts produced in a given period. We use an output method to measure progress towards completion of our performance obligation which results in the recognition of revenue on the basis of a direct measurement of the value to the customer of the services transferred to date relative to the remaining services promised under the contract. We use the practical expedient at ASC 606-10-55-18 of recognizing revenue in an amount equal to the amount we have the right to invoice the customer under the contract.

Payment terms for maintenance services are generally 30 days.

Energy Production Segment

Energy Production. Revenue from energy contracts is recognized when electricity, heat, hot and/or chilled water is produced by ~~Company~~our owned on-site cogeneration systems. Each month we ~~bill~~invoice the customer and recognize revenue for the various forms of energy delivered, based on actual meter readings which capture the quantity of the various forms of energy delivered in a given month, under a contractually defined formula which takes into account the current month's cost of energy from the local power utility.

As the various forms of energy delivered by us under energy production contracts are simultaneously delivered and consumed by the customer, our performance obligation under these contracts is considered to be satisfied over time. We use an output method to measure progress towards completion of our performance obligation which results in the recognition of revenue on the basis of a direct measurement of the value to the customer of the services transferred to date relative to the remaining services promised under the contract. We use the practical expedient at ASC 606-10-55-18 of recognizing revenue in an amount equal to the amount that we have the right to invoice the customer under the contract. Payment terms on invoices under these contracts are generally 30 days.

The timing of revenue recognition, billings and cash collections result in billed accounts receivable, unbilled revenue (contract assets) and deferred revenue, consisting of customer deposits and billings in excess of revenue recognized (contract liabilities) on the ~~Consolidated Condensed Balance Sheets.~~condensed consolidated balance sheets.

Revenue recognized during the ~~quarter~~six months ended June 30, ~~2020~~2021 that was included in unbilled revenue at the ~~beginning~~end of the period was approximately ~~$2.3~~$0.9 million. Approximately ~~$2.9~~$1.3 million was billed in this period that had been recognized as revenue in previous periods.

Revenue recognized during the ~~quarter~~six months ended June 30, ~~2020~~2021 that was included in deferred revenue at the beginning of the period was approximately ~~$3.1~~$0.7 million.

Remaining Performance Obligations

Remaining performance obligations related to ASC 606 represent the aggregate transaction price allocated to performance obligations with an original contract term of greater than one year, excluding certain maintenance contracts and all energy production contracts where a direct measurement of the value to the customer is used as a method of measuring progress towards completion of our performance obligation. Exclusion of these remaining performance obligations is due in part to the inability to quantify values based on unknown future levels of delivery and in some cases rates used to ~~bill~~invoice customers. Remaining performance obligations therefore consist of unsatisfied or partially satisfied performance obligations related to fixed price maintenance contracts and installation contracts.

As of June 30, ~~2020,~~2021, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately ~~$7.8~~$1.4 million. ~~The Company expects~~We expect to recognize revenue of approximately ~~99%~~86.8% of the remaining performance

~~TECOGEN INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

obligations over the next 24 months, ~~98%~~82.1% recognized in the first 12 months and 1%4.7% recognized over the subsequent 12 months, and the remainder recognized thereafter.

Note 3. ~~Loss~~Income (loss) Per Common Share

Basic and diluted ~~loss~~income (loss) per share for the three and six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, were as follows:


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Numerator:
Net income (loss) available to stockholders	$	399,631	$	(653,888)	$	2,166,338	$	(1,856,275)

Denominator:
Weighted average shares outstanding - Basic	24,850,261		24,850,261		24,850,261		24,850,256
Effect of dilutive securities:
Stock options	274,949		0		252,209		0
Weighted average shares outstanding - Diluted	25,125,210		24,850,261		25,102,470		24,850,256

Basic income (loss) per share	$	0.02	$	(0.03)	$	0.09	$	(0.07)
Diluted income (loss) per share	$	0.02	$	(0.03)	$	0.09	$	(0.07)

Anti-dilutive shares underlying stock options outstanding	985,296		1,270,666		777,296		1,269,662


Note 4.			Inventories, net

Inventories at June 30, 2021 and December 31, 2020 consisted of the following:

Note 4.5. Property, Plant and Equipment, net

Property, plant and equipment at June 30, ~~2020~~2021 and December 31, ~~2019~~2020 consisted of the following:

* Lesser of estimated useful life of asset or lease term

Depreciation and amortization expense on property and equipment for the three and six months ended June 30, 2021 and 2020 was $145,458 and ~~2019 was~~$306,014 and $176,357 and $352,017, ~~and $164,356 and $506,218,~~ respectively.

In March 2019, the Company sold certain energy systems related assets and related energy production contracts. See Note 6. Sale of Energy Producing Assets and Goodwill Impairment for further discussion.

~~TECOGEN INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

Note 5.6. Intangible Assets and Liabilities Other Than Goodwill

As of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 the Company had the following amounts related to intangible assets and liabilities other than goodwill:


	June 30, 2021						December 31, 2020
Intangible assets	Cost		Accumulated Amortization		Total		Cost		Accumulated Amortization		Total
Product certifications	$	726,159	$	(505,542)	$	220,617	$	726,159	$	(478,357)	$	247,802
Patents	853,296		(268,379)		584,917		855,014		(220,764)		634,250
Developed technology	240,000		(132,000)		108,000		240,000		(124,000)		116,000
Trademarks	26,896		0		26,896		26,896		0		26,896
In Process R&D	263,936		(9,426)		254,510		263,936		0		263,936
Favorable contract asset	384,465		(335,032)		49,433		384,465		(313,030)		71,435

	$	2,494,752	$	(1,250,379)	$	1,244,373	$	2,496,470	$	(1,136,151)	$	1,360,319

Intangible liability
Unfavorable contract liability	$	2,534,818	$	(1,096,540)	$	1,438,278	$	2,534,818	$	(917,767)	$	1,617,051

June 30, 2020 December 31, 2019
Intangible assets Cost Accumulated Amortization Total Cost Accumulated Amortization Total
Product certifications $ 726,159
$ (427,030 ) $ 299,129
$ 726,159
$ (399,906 ) $ 326,253
Patents 880,416
(214,503 ) 665,913
1,017,108
(206,499 ) 810,609
Developed technology 240,000
(116,000 ) 124,000
240,000
(108,000 ) 132,000
Trademarks 26,896
—
26,896
26,896
—
26,896
In Process R&D 263,936
—
263,936
263,936
—
263,936
Favorable contract asset 354,858
(280,218 ) 74,640
274,858
(263,901 ) 10,957
TTcogen intangible assets 29,607
(8,327 ) 21,280
29,607
(6,477 ) 23,130
$ 2,521,872
$ (1,046,078 ) $ 1,475,794
$ 2,578,564
$ (984,783 ) $ 1,593,781

Intangible liability
Unfavorable contract liability $ 4,689,025
$ (2,373,885 ) $ 2,315,140
$ 4,689,025
$ (2,154,207 ) $ 2,534,818

The aggregate amortization expense related to intangible assets and liabilities exclusive of contract related intangibles for the three and six months ended June 30, 2021 and 2020 was $51,187 and ~~2019 was~~$94,077 and $20,312 and $43,128 ~~and $23,649 and $47,748,~~ respectively. The net credit to cost of sales related to the amortization of contract related intangible assets and liabilities for the ~~three and~~ six months ended June 30, 2021 and 2020 was $79,569 and ~~2019 was~~$158,622 and $95,364 and $203,361, ~~and $113,442 and $286,734,~~ respectively. During the ~~first quarter of~~six months

ended June 30, 2021 and 2020, ~~the Company~~we abandoned certain patent applications amounting to a$7,400 and $179,944, respectively, and recorded an abandonment charge ~~for the~~in general and administrative expenses in each respective period.

Favorable/Unfavorable Contract Assets and Liabilities

The favorable contract asset and unfavorable contract liability in the foregoing table represent the estimated fair value of American DG Energy's customer contracts (both positive for favorable contracts and negative for unfavorable contracts) which were acquired by ~~the Company~~us in May 2017.

Amortization of intangibles including contract related amounts is calculated using the straight-line method over the remaining useful life or contract term. Aggregate future amortization over the next five years and thereafter is estimated to be as follows:


Year 1	$	(127,451)
Year 2	(94,816)
Year 3	(52,826)
Year 4	(7,080)
Year 5	60,360
Thereafter	1,012
Total	$	(220,801)

Year 1 $ (252,944 )
Year 2 (256,948 )
Year 3 (174,197 )
Year 4 (130,416 )
Year 5 (84,362 )

~~Note 6.~~


Note 7.			Sale of Energy Producing Assets and Goodwill Impairment

During the first quarter of 2019 ~~the Company~~we recognized ~~two~~2 individual sales of energy producing assets, for a total of ~~eight~~8 power purchase agreements, including the associated energy production contracts for total consideration of $7 ~~million, which resulted in a combined gain on sale of assets of $1,081,049 included in the June 30, 2019 accompanying statement of operations.~~million.

In connection with ~~the~~these assets sales, ~~the Company~~we entered into agreements with the purchaser to maintain and operate the assets over the remaining periods of the associated energy production contracts (through August 2033 and January 2034, respectively) in exchange for monthly ~~fees for both~~ maintenance and ~~operation.~~operating fees. These agreements contain provisions whereby

~~TECOGEN INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

~~the Company has~~ we have guaranteed to the purchaser a minimum level or threshold of cash flows from the associated energy production contracts. Actual results are compared to the minimum threshold bi-annually ~~with~~and we are contractually obligated to reimburse any shortfall to the ~~Company making up any shortfall.~~purchaser. To the extent actual cash flow results ~~are in excess of~~exceed the minimum threshold, ~~the Company is~~we are entitled to ~~forty~~fifty percent of such excess under the agreements. As of June 30, ~~2020, the Company~~2021, we had a ~~$42,489~~$21,051 receivable ~~relating to this arrangement due to timing~~representing our share of ~~payments from customers.~~the excess bi-annual cash flows for the period ended June 30, 2021.

The foregoing agreements also contain provisions whereby ~~the Company has~~we have agreed to make whole the purchaser in the event the counterparty to the energy production contract(s) defaults on or otherwise terminates before the stated expiration of the energy production contract. ~~If the Company is~~Should we be required to make whole the purchaser under such provisions, ~~the Company~~we would be entitled to seek recovery from the counterparty to the energy production contract(s) under a similar provision contained in those contracts in respect of early termination.

~~The Company is~~ We are also responsible under the agreements for site decommissioning costs, if any, in excess of certain threshold amounts by site. Decommissioning of site assets is performed when, if and as requested by the counterparty to the energy production contract upon termination of the energy production contract.

The combined gain on sale of these assets was determined after deducting from the gross proceeds the remaining net book value of the assets sold and an estimate of the remaining costs to complete installation of certain of the site assets as well as deducting an estimate of amounts which the Company believes it will be required to pay under the minimum cash flow guarantee described above. In determining the combined gain on the sale of these assets, no amount of goodwill assigned to the energy production segment and reporting unit was included as individual sites and related site energy producing assets are not considered businesses. The aggregate of the assets sold represents a significant portion of the energy production segment and reporting unit’s assets and cash flows which is the basis for determination of the fair value of the energy production reporting unit as used for goodwill impairment determinations. Accordingly, the sale of these assets caused the Company to assess the impact of the sales on the valuation of remaining goodwill assigned to the energy production reporting unit. That assessment included a determination of whether the remaining carrying value of the energy production reporting unit including goodwill exceeded its fair value. Following a goodwill impairment charge in 2018 which reduced the carrying value of the energy production reporting unit including goodwill to fair value based on discounted cash flows, exclusion of the discounted cash flows related to the assets sold resulted in impairment of the remaining goodwill assigned to the energy production reporting unit in an amount proportionate to the discounted cash flows related to the assets sold to the total discounted cash flows of the energy production reporting unit before the sales. The goodwill impairment as a result of the sales and recognized in the first quarter of 2019 totaled approximately $3.7 million, reducing the remaining carrying value of the energy production reporting unit, including goodwill to the discounted cash flow of the remaining sites or fair value.

Our leases principally consist of operating leases related to our corporate office, field offices, and our research, manufacturing and storage facilities. ~~Our lease terms do not include options to extend or terminate the lease until we are reasonably certain that we will exercise that option.~~

At inception, ~~the Company determines~~we determine if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. Some of ~~the Company’s~~our lease ~~arrangements~~agreements contain lease components (e.g. minimum rent payments) and non-lease components (e.g. maintenance, labor charges, etc.). ~~The Company generally accounts~~We account for each component separately based on the estimated standalone price of each component.

Operating leases are included in Right-of-use assets, Lease obligations, current and Lease obligations, long term on the ~~Condensed Consolidated Balance Sheets.~~condensed consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term and using an incremental borrowing rate consistent with the lease terms or implicit rates, when readily determinable. For those leases where it is reasonably certain at the commencement date

that we will exercise the option to extend the lease, then the lease term will include the lease extension term. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the balance sheet.

Lease expense for operating leases, which principally consist of fixed payments for base rent, is recognized on a straight-line basis over the lease term. Lease expense for the three and six months ended June 30, 2021 and 2020 was $198,943 and ~~2019 was~~$394,216 and $196,103 and $386,138, ~~and $192,674 and $372,371,~~ respectively.

Supplemental information related to leases for the six months ended June 30, ~~2020~~2021 was as follows:


Cash paid for amounts included in the measurement of operating lease liabilities	$	352,579
Weighted-average remaining lease term - operating leases	4.3 years
Weighted-average discount rate - operating leases	6		%

Cash paid for amounts included in the measurement of operating lease liabilities $ 323,769
Weighted-average remaining lease term - operating leases 3.6 years
Weighted-average discount rate - operating leases 6 %

~~TECOGEN INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

Future minimum lease commitments under ~~non-cancelable~~non-cancellable operating leases as of June 30, ~~2020~~2021 were as follows:


	Operating Leases
Year 1	$	363,163
Year 2	734,110
Year 3	745,417
Year 4	299,424
Year 5	108,799
Thereafter	331,128
Total lease payments	2,582,041
Less: imputed interest	321,700
Total	$	2,260,341

Operating Leases
Q3 through Q4 2020 $ 326,032
2021 576,698
2022 559,115
2023 566,863
2024 134,700
Total lease payments 2,163,408
Less: imputed interest 255,325
Total $ 1,908,083

Note 8.9. Stock-Based Compensation

Stock-Based Compensation

~~The Company~~We adopted a 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.~~consultants. The Plan was amended at various dates by the Board of Directors to increase the reserved shares of common stock issuable under the Amended Plan to 3,838,750 as of June 30, ~~2020.~~2021, and in June 2017 stockholders approved an amendment to extend the termination date of the Plan to January 1, 2026 and ratified all of our option grants issued after January 1, 2016 (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 June 30, ~~2020~~2021 was ~~1,993,458.~~807,312.

Stock option activity for the six months ended June 30, ~~2020~~2021 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, 2019 1,352,874
$0.79-$10.33 $ 3.57
5.30 years $ 95,381
Granted —

Exercised (1,000 ) $1.20 $ 1.20

Canceled and forfeited (87,278 ) $1.20-$4.50 $ 1.80

Outstanding, June 30, 2020 1,264,596
$0.79-$10.33 $ 3.69
5.02 years $ —
Exercisable, June 30, 2020 976,929
$ 3.71
$ —
Vested and expected to vest, June 30, 2020 1,221,446
$ 3.70
$ —

Consolidated stock-based compensation expense for the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 was $54,681 and $93,766 and $39,494 and ~~$39,898, and~~ $81,730, ~~and $77,933,~~ respectively. No tax benefit was recognized related to the stock-based compensation recorded during the period.

At June 30, 2021 the total compensation cost related to unvested stock option awards not yet recognized is $563,847 and this amount will be recognized over a weighted average period of 2.12 years.

Note 9.10. Fair Value Measurements

The fair value topic of the FASB Accounting Standards Codification defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities. ~~The Company~~We currently ~~does~~do not have any Level 1 financial assets or liabilities.

~~TECOGEN INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

Level 2 - Observable inputs other than quoted prices included in Level 1. Level 2 inputs include quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for substantially the full term of the asset or liability. ~~The Company has~~We have Level 2 financial assets and liabilities as provided below.

Level 3 - Unobservable inputs reflecting management’s own assumptions about the input used in pricing the asset or liability. ~~The Company does~~We do not currently have any Level 3 financial assets or liabilities.

The following ~~table~~tables presents the asset reported in "other assets" in the consolidated balance sheet measured at its fair value on a recurring basis as of June 30, 2021 and 2020 by level within the fair value hierarchy.

~~The Company utilizes~~ We utilize a Level 2 category fair value measurement to value its investment in EuroSite Power, Inc. as a marketable equity security at period end. That measurement is equal to the quoted market closing price at period end. Since this security is not actively traded ~~the Company classifies~~we classify it as Level 2.

The following table summarizes changes in Level 2 assets which are comprised of marketable equity securities for the ~~period:~~six months ended June 30, 2021 and 2020:


Fair value at December 31, 2020	$	118,084
Sale of 93,187 shares	(5,591)
Unrealized gain	56,246
Fair value at June 30, 2021	$	168,739

Fair value at December 31, 2019	$	216,487
Unrealized loss	(98,403)
Fair value at June 30, 2020	$	118,084

During the six months ended June 30, 2021, we received net proceeds of $11,637 from the sale of 93,187 shares of Eurosite Power, Inc. common stock, and recognized a realized gain of $6,046 which is included in other income (expense), net in the condensed consolidated statements of operations.

Fair value at December 31, 2019 $ 216,487
Unrealized loss included in net income for the six months ended June 30, 2020 (98,403 )
Fair value at June 30, 2020 $ 118,084

Note ~~10.Note Payable and~~ 11.Revolving Line of Credit ~~Bank~~and Notes Payable

On May 4, 2018 ~~("Closing Date"), the Company, and its wholly owned subsidiaries, American DG Energy Inc. and TTcogen LLC (collectively, the "Borrowers"),~~we entered into a Credit Agreement with Webster Business Credit Corporation ~~(the "Lender"~~("Webster") that ~~matures in May 2021 and provides Borrowers~~provided a line of credit of up to $10 million to us on a revolving and secured basis, with availability based on certain accounts receivables, raw materials, and finished goods.

Borrowings under the Credit Agreement ~~bear~~bore interest at a rate equal to, at ~~the Borrower's~~our option, either (1) One Month LIBOR, plus 3.00%, or (2) ~~Lender’s~~Webster’s Base Rate, plus 1.5%. ~~Lender’s~~Webster’s Base Rate is defined as the highest of (a) the Federal Funds rate plus 0.5%, (b) ~~Lender’s~~Webster’s Prime Rate as adjusted by ~~Lender~~bank from time to time, and (c) One Month LIBOR, plus 2.75%.

~~On May 11, 2020 the Company and Webster Business Credit Corporation ("Webster") agreed to terminate the~~ The Credit Agreement ~~dated May 4, 2018 by~~contained certain affirmative and ~~between Webster~~negative covenants applicable to us, which included, among other things, restrictions on our ability to (i) incur additional indebtedness, (ii) make certain investments, (iii) acquire other entities, (iv) dispose of assets and ~~the Company~~(v) make certain payments including those related to dividends or repurchase of equity. The Credit Agreement also contains financial covenants including maintaining a fixed charge coverage ratio of not less than 1.10:1.00 and ~~its wholly owned subsidiaries, together with related agreements, including a Revolving Note, Security Agreement, Blocked Account Agreement, and Master Letter~~we may not make any financed capital expenditures in excess of ~~Credit Agreement. Tecogen paid an early termination fee~~$500,000 in the ~~amount of $25,000~~aggregate in ~~connection with the termination of the Credit Agreement, and continues to use depository and cash management services provided by Webster Bank.~~any fiscal year.

The $145,011 of costs incurred in connection with the issuance of the revolving credit facility were capitalized and were being amortized to interest expense on a straight-line basis over three years based on the contractual term of the Agreement. ~~Upon~~For the three and six months ended ended June 30, 2020 we amortized $38,276 and $50,775, respectively, of deferred debt issuance cost.

On May 11, 2020, we terminated our Credit Agreement with Webster, together with several related agreements including, a Revolving Note Security Agreement, Blocked Account Agreement, and Master Letter of Credit Agreement. We paid an early termination fee of $25,000 to terminate the Credit ~~Agreement,~~Agreement. As of May 11, 2020, the ~~unamortized~~outstanding balance under the line of ~~debt issuance cost of $37,861~~credit and accrued and unpaid interest was ~~expensed in the accompanying Condensed Consolidated Statement of Operations.~~

On April 17, 2020, ~~the Company~~we obtained an unsecured loan through Webster Bank, N.A. in the amount of $1,874,200 in connection with the Paycheck Protection Program pursuant to the Coronavirus Aid, Relief, and Economic Security Act, ~~(the~~

~~TECOGEN INC.~~

~~Notes to Unaudited Condensed Consolidated Financial Statements~~

“as amended ("CARES Act”)~~. The loan is guaranteed~~ administered by the United States Small Business ~~Administration.~~Administration ("SBA"). The loan was guaranteed by the SBA. Interest on the loan balance iswas at the rate of 1% per year, and as a result of the enactment of the Paycheck Protection Program Flexibility Act of 2020 ~~(the “PPP~~(“PPP Flexibility Act”), repayment of the loan balance could be deferred until ~~May~~August 2021, at which time the balance would be payable in 18 monthly installments of ~~$106,011~~$106,356 with the final payment due in ~~October 2022~~January 2023 if not forgiven in accordance with the ~~Cares~~CARES Act and the terms of the Promissory Note executed by ~~the Company~~us in connection with the loan. The loan could be prepaid at any time without penalty. The loan agreement and promissory note include customary provisions for a loan of this type, including prohibitions on our payment of dividends or repurchase of shares of our common stock while the loan remains outstanding. The loan agreement and promissory note also defines events of default to include, among other things, payment defaults, breaches of provisions of the loan agreement or the promissory note and cross-defaults on other loans, if applicable.

~~In June 2020,~~On January 19, 2021, we received a letter dated January 12, 2021 from Webster Bank, NA confirming that the ~~PPP Flexibility Act postponed the commencement of repayment obligations for Cares Act loans~~Paycheck Protection Program Loan issued to us pursuant to the ~~date on which~~CARES Act, as amended, in the original principal amount of $1,874,200 together with accrued interest of $13,659 was forgiven in full as of January 11, 2021. We have accounted for the loan forgiveness of $1,887,859 as debt extinguishment in accordance with Accounting Standards Update 2020-09, Debt (Topic 470) ("ASU 2020-09") and reported as a separate component of other income (expense), net in the condensed consolidated statements of operations for the six months ended June 30, 2021. The loan forgiveness is expected to be nontaxable for both state and federal purposes and has been treated accordingly in our condensed consolidated financial statements.

On February 5, 2021, we obtained a Paycheck Protection Program Second Draw unsecured loan through Webster Bank, N.A. in the amount of ~~forgiveness as determined under the Cares Act is remitted~~$1,874,269 pursuant to the ~~lender, but not later than 10 months after~~CARES Act. The loan is guaranteed by the ~~last day~~SBA. Interest on the loan balance is at the rate of 1% per year, and repayment of the ~~applicable Covered Period (the period during which costs eligible for forgiveness~~loan balance is deferred until June 5, 2022. If not forgiven in accordance with the CARES Act, as amended, the loan is repayable in forty-four (44) monthly installments of $43,400 beginning July 5, 2022 with final payment due on February 5, 2026. The loan may be ~~paid~~prepaid at any time without penalty. The loan agreement and promissory note include customary provisions for a loan of this type, including prohibitions on our payment of dividends or ~~accrued).~~repurchase of shares of our common stock while the loan remains outstanding. The ~~Company has used more than 80%~~loan agreement and promissory note defines events of default to include, among other things, payment defaults, breaches of provisions of the loan agreement or the promissory note and cross-defaults on other loans, if applicable.

We anticipate that 100% of the loan proceeds will be used for covered expenses, payroll, rent, and utilities (which are costs expected to be ~~costs~~ eligible for loan forgiveness under the CARES Act and the Promissory Note) during the ~~eight~~24 week Covered Period following the disbursement of the ~~loan. The Company intends to apply a 24 week Covered Period~~loan as permitted under the PPP Flexibility Act in order to maximize the amount forgivable under the ~~loan, and~~loan. We intend to submit a loan forgiveness application before the end of ~~October 2020.~~September 2021. There can be no assurance our application for forgiveness will be granted and in what amount. Such forgiveness is subject to an application to, and approval by, the SBA and may also be subject to further requirements in any regulations and guidelines the SBA may adopt. To the extent that there is a loan balance after the application of permissible forgiveness, ~~the Company intends to~~we may seek to extend the loan maturity for the remaining balance to the maximum maturity of five years as permitted under the ~~Cares~~CARES Act as amended by the PPP Flexibility Act.

Note ~~11.~~12. Commitments and Contingencies

~~The Company guarantees~~We guarantee certain obligations of EuroSite Power Inc, a former subsidiary of American DG Energy ~~EuroSite Power~~ Inc. These guarantees include a payment performance guarantee in respect of collateralized equipment financing loans, with a remaining principal amount outstanding subject to the guarantee at June 30, ~~2020~~2021 of ~~$93,532~~approximately $29,013 due ratably in equal installments through September 2021, and certain guarantees of performance in respect of certain customer contracts. Based on current conditions, ~~the Company does~~we do not believe there to be any amounts probable of payment by ~~the Company~~us under any of the guarantees and ~~has~~have estimated the value associated with the non-contingent aspect of the guarantees is approximately $7,000 which is recorded as a liability in the ~~accompanying financial statements.~~condensed consolidated balance sheets.

Note ~~12.~~13. Segments

As of June 30, ~~2020, the Company was~~2021, we were organized into ~~two~~2 operating segments through which senior management evaluates ~~the Company’s~~our business. These segments, as described in more detail in Note 1, are organized around the products and services provided to customers and represent ~~the Company’s~~our reportable segments. The following table presents information by reportable segment for the three and six months ended June 30, ~~2020~~2021 and ~~2019:~~2020:

~~Notes to Unaudited Condensed Consolidated Financial Statements~~


	Products and Services		Energy Production		Corporate, other and elimination (1)		Total
Three months ended June 30, 2021

Revenue - external customers	$	5,774,241	$	370,861	$	0	$	6,145,102
Intersegment revenue	56,988		0		(56,988)		0
Total revenue	$	5,831,229	$	370,861	$	(56,988)	$	6,145,102
Gross profit	$	2,704,130	$	138,508	$	0	$	2,842,638
Identifiable assets	$	26,804,525	$	4,514,717	$	0	$	31,319,242

Three months ended June 30, 2020

Revenue - external customers	$	7,158,717	$	276,341	$	0	$	7,435,058
Intersegment revenue	83,050		0		(83,050)		0
Total revenue	$	7,241,767	$	276,341	$	(83,050)	$	7,435,058
Gross profit	$	2,835,526	$	70,465	$	0	$	2,905,991
Identifiable assets	$	20,343,337	$	2,973,048	$	12,557,068	$	35,873,453

Six months ended June 30, 2021

Revenue - external customers	$	11,178,107	$	1,024,156	$	0	$	12,202,263
Intersegment revenue	188,504		0		(188,504)		0
Total revenue	$	11,366,611	$	1,024,156	$	(188,504)	$	12,202,263
Gross profit	$	5,396,105	$	397,741	$	0	$	5,793,846
Identifiable assets	$	26,804,525	$	4,514,717	$	0	$	31,319,242

Six months ended June 30, 2020

Revenue - external customers	$	14,370,567	$	1,027,191	$	0	$	15,397,758
Intersegment revenue	231,710		0		(231,710)		0
Total revenue	$	14,602,277	$	1,027,191	$	(231,710)	$	15,397,758
Gross profit	$	5,361,247	$	336,911	$	0	$	5,698,158
Identifiable assets	$	20,343,337	$	2,973,048	$	12,557,068	$	35,873,453

(1) Corporate, intersegment revenue, other and elimination includes various corporate assets.

Products and Services Energy Production Corporate, other and elimination (1) Total
Three months ended June 30, 2020

Revenue - external customers $ 7,158,717
$ 276,341
$ —
$ 7,435,058
Intersegment revenue 83,050
—
(83,050 ) —
   Total revenue $ 7,241,767
$ 276,341
$ (83,050 ) $ 7,435,058
Gross profit $ 2,835,526
$ 70,465
$ —
$ 2,905,991
Identifiable assets $ 20,343,337
$ 2,973,048
$ 12,557,068
$ 35,873,453

Three months ended June 30, 2019

Revenue - external customers $ 7,289,097
$ 578,299
$ —
$ 7,867,396
Intersegment revenue 83,649
—
(83,649 ) —
   Total revenue $ 7,372,746
$ 578,299
$ (83,649 ) $ 7,867,396
Gross profit $ 3,212,170
$ 213,745
$ —
$ 3,425,915
Identifiable assets $ 24,448,764
$ 3,551,619
$ 11,755,993
$ 39,756,376

Six months ended June 30, 2020

Revenue - external customers $ 14,370,567
$ 1,027,191
$ —
$ 15,397,758
Intersegment revenue 231,710
—
(231,710 ) —
��  Total revenue $ 14,602,277
$ 1,027,191
$ (231,710 ) $ 15,397,758
Gross profit $ 5,361,247
$ 336,911
$ —
$ 5,698,158
Identifiable assets $ 20,343,337
$ 2,973,048
$ 12,557,068
$ 35,873,453

Six months ended June 30, 2019

Revenue - external customers $ 14,224,919
$ 1,819,108
$ —
$ 16,044,027
Intersegment revenue 357,161
—
(357,161 ) —
   Total revenue $ 14,582,080
$ 1,819,108
$ (357,161 ) $ 16,044,027
Gross profit $ 5,729,997
$ 654,677
$ —
$ 6,384,674
Identifiable assets $ 24,448,764
$ 3,551,619
$ 11,755,993
$ 39,756,376

(1) Corporate, intersegment revenue, other and elimination includes various corporate assets.

Note ~~13.~~14. Subsequent Events

~~The Company has~~ We have evaluated subsequent events through the date of this filing and ~~except as described below, has~~ determined that no material subsequent events occurred that would require recognition in the consolidated financial statements or disclosure in the notes thereto.

On June 9, 2020, the Company filed a Form 25 with the SEC to notify the SEC of the Company’s intention to voluntarily delist its shares from Nasdaq and deregister its shares under Section 12(b) of the Securities Exchange Act of 1934. The Company’s shares ceased to trade on Nasdaq on June 19, 2020, and transitioned to quotation on OTC Markets Group, Inc.'s OTCQX Best Market. In view of the delisting of the Company’s shares from Nasdaq, the Company filed with the SEC post-effective amendments to deregister unsold shares under the Company Form S-3 Registration Statement filed on April 6, 2020 and a previously filed Registration Statement on Form S-3 that had registered for resale shares held by certain shareholders. Such post-effective amendments became effective July 10, 2020.

On July 9, 2020 the Company adopted a Change in Control Severance Benefit Plan ("CIC Plan"), identified Messrs. Panora and Whiting as participants in the CIC Plan, and made certain performance stock option grants and target bonus plans for Messrs. Panora and Whiting, executive officers of the Company. On July 15, 2020 the Company identified Mr. Locke as a participant in the CIC Plan, and granted Mr. Locke performance stock options, and a target bonus plan.

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

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. For example, statements in this Form 10-Q regarding the potential future impact of the COVID-19 pandemic on ~~the Company’s~~our business and results of operations are forward-looking statements. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and ~~the Company’s~~our actual results may differ significantly from the results discussed in the forward-looking statements. Such forward-looking statements include, among other things, statements regarding the impact of the coronavirus pandemic on demand for our ~~current~~products and ~~future cash requirements,~~services, the availability of incentives, rebates, and tax benefits relating to our ~~expectations regarding suppliers of cogeneration units, and statements regarding potential financing activities~~products, changes in the ~~future.~~regulatory environment relating to our products, competing technological developments, and the availability of financing to fund our operations and growth. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of ~~the Company’s~~our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (“~~2019~~2020 Form 10-K”), as supplemented, and Part II, Item 1A of this Form 10-Q, in each case under the heading “Risk Factors.” The following discussion should be read in conjunction with the ~~2019~~2020 Form 10-K filed with the Securities and Exchange Commission (“SEC”) and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q. Each of the terms ~~the “Company,”~~ “Tecogen,” “we,” “our,” and “us” as used herein ~~refers~~refer collectively to Tecogen Inc. and ~~its~~our wholly owned subsidiaries, unless otherwise stated. While ~~the Company~~we may elect to update forward-looking statements in the future, itwe specifically ~~disclaims~~disclaim any obligation to do so, even if ~~the Company’s~~our estimates change, and you should not rely on those forward-looking statements as representing ~~the Company’s~~ours views as of any date subsequent to the date of the filing of this Form 10-Q.

~~Covid-19~~Recent Developments

Paycheck Protection Program Loans and Employee Retention Credit

On April 17, 2020, we obtained an unsecured loan in the principal amount of $1,874,200 from Webster Bank, NA ("Webster") under the Paycheck Protection Program adopted pursuant to the Coronavirus Aid, Relief and Economic Recovery Act, as amended ("CARES Act"). The loan was forgivable if the proceeds were utilized by us for payroll, utilities, and rent expenses. On January 19, 2021 we received confirmation from Webster that the Paycheck Protection Program Loan in the original principal amount of $1,874,200 together with accrued interest of $13,659 was forgiven in full effective as of January 11, 2021. The loan forgiveness of $1,887,859 was accounted for as debt extinguishment and is reported as a separate component of other income (expense), net in the condensed consolidated statements of earnings for the six months ended June 30, 2021.

On February 5, 2021, we obtained a Paycheck Protection Program Second Draw unsecured loan through Webster in the amount of $1,874,269 in connection with the Paycheck Protection Program pursuant to the CARES Act. The loan is guaranteed by the United States Small Business Administration.

In March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. The ERC is available through December 31, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. In addition, the availability of the ERC was permitted to entities that received a Paycheck Protection Loan subject to certain conditions. During each quarter in 2021, a maximum of $10,000 in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is $7,000 per employee per calendar quarter. Section 2301(c)(2)(B) of the CARES Act permits an employer to use an alternative quarter to calculate gross receipts and the employer may determine if the decline in gross receipt tests is met for a calendar quarter in 2021 by comparing its gross receipts for the immediately preceding calendar quarter with those for the corresponding calendar quarter in 2019. Accordingly, for the first quarter of 2021, we elected to use our gross receipts for the fourth calendar quarter of 2020 compared to our gross receipts for the fourth calendar quarter of 2019. As a result of our election to use an alternative quarter, we

qualified for the ERC in the first and second quarters of 2021 because our gross receipts decreased by more than 20% from the first and second quarters of 2019. As a result of averaging 100 or fewer full-time employees in 2019, all wages paid to employees in the first and second quarters of 2021 were eligible for the ERC (rather than just wages paid to employees not providing services). During the six months ended June 30, 2021, we recorded an ERC benefit of $713,268 in other income (expense), net in our condensed consolidated statements of operations.

During the ~~second fiscal~~first quarter of fiscal 2020, a novel strain of coronavirus (“COVID-19”) began spreading rapidly throughout the world, prompting governments and businesses to take unprecedented measures in response. Such measures included restrictions on travel and business operations, temporary closures of businesses, and quarantines and shelter-in-place orders. The COVID-19 pandemic has significantly curtailed global economic activity and caused significant volatility and disruption in global financial markets. The COVID-19 pandemic and the measures taken by U.S. Federal, state and local governments in response have materially adversely affected and could in the future materially adversely impact ~~the Company’s~~our business, results of operations, financial condition, and stock price. The pandemic has impacted our operations, revenues and cash flows and the future impact of the pandemic remains ~~uncertain and will depend on the~~uncertain. It may be affected by factors including growth in the number of infections, ~~fatalities,~~any increase in the prevalence of highly transmissible COVID-19 variants, the duration of the pandemic, steps taken to combat the pandemic, and the ~~development~~availability and ~~availability~~acceptance of effective treatments.

~~Significant portions of our business are deemed “essential services” under various state shelter-in-place orders, and we have been able to maintain critical manufacturing and service operations.~~ We have made every effort to keep our employees who operate our business safe and minimize unnecessary risk of exposure to the virus, and as part of our pandemic response plan, during a relatively short period in April our sales, engineering, and select administrative functions were operated remotely while our manufacturing team continued to function at our manufacturing facility.virus. Our service centers have continued to operate due to our essential services designation, however from time to time our service personnel have been unable to perform maintenance services for customers that temporarily ceased or reduced operations at facilities served by our equipment, and certain customers closed their operations, reducing the amount of energy produced and sold to customers during these periods. During the three-month period ended June 30, 2021, we did see a recovery in our energy production revenues as normal business operations are beginning to resume due to the lifting of government-imposed COVID-19 restrictions. During the pandemic we have also experienced slower payments from certain customers. These business interruptions resulted in reductions in service and installation revenue, energy production revenue, and margins in the affected portions of our business.

On April 17, 2020, we obtsained a loan in the amount of $1,874,200 under the Paycheck Protection Program pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) through Webster Bank. The loan is guaranteed by the United States Small Business Administration (“SBA”) and, subject to certain limitations, to the extent that the loan is used for payroll, rent, or utilities during the applicable Covered Period following the disbursement of the loan, the loan may be forgiven by the SBA. See Note 10. Note Payable and Revolving Line of Credit, Bank. There can be no assurance that the Paycheck Protection Program loan ultimately will be forgiven.

Tecogen designs, manufactures ~~markets,~~ and ~~maintains high efficiency, ultra-clean~~sells industrial and commercial cogeneration systems that produce combinations of electricity, hot water and air conditioning using automotive engines that have been adapted to run on natural gas. In some cases, our customers may choose to have us 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 an opportunity for the facility to incorporate the engine’s waste heat into onsite processes, such as space and potable water heating. We produce standardized, modular, small-scale products, ~~including natural gas engine driven~~with a limited number of product configurations that are adaptable to multiple applications. We refer to these combined heat and power ~~air conditioning systems,~~products as CHP (electricity plus heat) and ~~water heaters for residential, commercial, recreational and industrial use. We provide cost efficient, environmentally friendly and reliable products for distributed~~MCHP (mechanical power generation that, through patented technology, nearly eliminate criteria pollutants and significantly reduce a customer’s carbon footprint. Tecogen products are expected to run on Renewable Natural Gas (RNG) as it is introduced into the US gas pipeline infrastructure. plus heat).

Tecogen’s cogeneration systems (also known as combined heat and power or “CHP”) are efficient because they drive electric generators or compressors, which reduce the amount of electricity purchased from the utility while recovering the engine’s waste heat for water heating, space heating, and/or air conditioning at the customer’s building. All of our products are standardized, modular, CHP products that reduce energy costs, carbon emissions, and dependence on the electric grid. Tecogen’s products allow customers to produce power on-site in parallel with the electric grid or stand alone when no utility grid is available via inverter-based black-start capability. Because our CHP systems also produce clean, usable heat energy, they provide economic advantages to customers who can benefit from the use of hot water, chilled water, air conditioning and heating.

Our products are sold directly to end-users by our in-house marketing team and by established sales agents and representatives. We have agreements in place with distributors and sales representatives. Our existing customers include hospitals and nursing homes, colleges and universities, health clubs and spas, hotels and motels, office and retail buildings, food and beverage processors, multi-unit residential buildings, laundries, ice rinks, swimming pools, factories, municipal buildings, military installations and indoor growing facilities. We have an installed base of more than 3,000 units. Our products have long useful lives with proper maintenance. Some of our units have been operating for over 35 years.

With the acquisition of American DG Energy Inc. ("ADGE") in May 2017, we added an additional source of revenue. Through ADGE, we install, own, operate and maintain complete distributed generation of electricity systems, or DG systems or energy systems, and other complementary systems at customer sites, and sell electricity, hot water, heat and cooling energy under long-term contracts at prices guaranteed to the customer to be below conventional utility rates. Each month we obtain readings from our energy meters to determine the amount of energy produced for each customer. We use a contractually defined formula to multiply these readings by the appropriate published price of energy (electricity, natural gas or oil) from each customer's local energy utility, to derive the value of our monthly energy sale, which includes a negotiated discount. Our revenues per customer on a monthly basis vary based on the amount of energy produced by our energy systems and the published price of energy (electricity, natural gas or oil) from our customer's local energy utility that month.

~~The Company’s~~

Our operations are comprised of two business segments. Our Products and Services segment ~~("Segment 1")~~ designs, manufactures and sells industrial and commercial cogeneration systems as described above. Our Energy Production segment ~~("Segment 2")~~ sells energy in the form of electricity, heat, hot water and cooling to our customers under long-term sales agreements.

Results of Operations

Second Quarter of ~~2020~~2021 Compared to Second Quarter of ~~2019~~2020

The following table sets forth for the periods indicated, the percentage of net sales represented by certain items reflected in our condensed consolidated statements of operations:


	Three Months Ended
	June 30, 2021		June 30, 2020
Revenues	100.0%		100.0%
Cost of sales	53.7%		60.9%
Gross profit	46.3%		39.1%
Operating expenses
General and administrative	39.7%		35.5%
Selling	9.5%		8.1%
Research and development	2.2%		2.2%
Total operating expenses	51.3%		45.8%
Loss from operations	(5.0)	%	(6.7)	%
Total other income (expense), net	11.8%		(1.8)	%
Consolidated net income (loss)	6.6%		(8.7)	%
Income attributable to the non-controlling interest	(0.1)	%	(0.1)	%
Net income (loss) attributable to Tecogen, Inc.	6.5%		(8.8)	%

The following table presents revenue for the periods indicated, by segment and the change from the prior year:


	Three months ended June 30,
	2021		2020		Increase (Decrease) $		Increase (Decrease) %
REVENUES:
Products
Cogeneration	$	1,050,316	$	3,108,022	$	(2,057,706)	(66.2)	%
Chiller	1,089,018		234,772		854,246		363.9	%
Engineered accessories	306,593		443,340		(136,747)		(30.8)	%
Total product revenues	2,445,927		3,786,134		(1,340,207)		(35.4)	%
Services
Maintenance services	3,083,761		2,455,220		628,541		25.6	%
Installation services	244,553		917,363		(672,810)		(73.3)	%
Total service revenues	3,328,314		3,372,583		(44,269)		(1.3)	%
Products and services	5,774,241		7,158,717		(1,384,476)		(19.3)	%
Energy production revenues	370,861		276,341		94,520		34.2	%
Total revenues	$	6,145,102	$	7,435,058	$	(1,289,956)	(17.3)	%

Total revenues infor the ~~second quarter of 2020~~three months ended June 30, 2021 were ~~$7,435,058~~$6,145,102 compared to ~~$7,867,396~~$7,435,058 for the same period in ~~2019,~~2020, a decrease of ~~$432,338~~$1,289,956 or ~~5.5%. This decrease is due to the decline in both service and energy revenue during the second quarter of 2020 compared to the same period in 2019.~~17.3% year over year.

Products and Services

Product revenues in the ~~second quarter of 2020~~three months ended June 30, 2021 were ~~$3,342,794~~$2,445,927 compared to ~~$2,445,448~~$3,786,134 for the same period in ~~2019, an increase~~2020, a decrease of ~~$897,346~~$1,340,207, or ~~36.7%. This increase included an increase~~35.4%.This decrease is due primarily to a decrease in cogeneration sales of ~~$1,694,262 and~~$2,057,706 due to decreased unit volume, a decrease in sales of engineered accessories of $136,747, partially offset by an increase in chiller sales of ~~$796,916, year over year. Such variations~~$854,246 due to increased unit volume. Our product sales mix, as well as product revenue, can vary significantly from period to period as our products are high dollar, low volume sales in ~~product mix are not unusual~~which revenue is recognized upon shipment and ~~are expected.~~were impacted as energy and other construction projects were delayed due to the COVID-19 pandemic.

Service revenues in the ~~second quarter of 2020~~three months ended June 30, 2021 were ~~$3,815,923~~$3,328,314, compared to ~~$4,843,649~~$3,372,583 for the same period in ~~2019,~~2020, a decrease of ~~$1,027,726~~$44,269, or ~~21.2%~~1.3%. ~~This~~The decrease in the ~~second quarter~~three months ended June 30, 2021 is due ~~mostly~~primarily to a decrease in installation ~~activity~~revenues of ~~$930,324 as well as a decrease~~$672,810, offset partially by an increase of ~~$97,402~~$628,541, or 25.6%, in service contract revenues. While service contract revenue generally remains relatively constant, installation activity can vary widely depending on the status of various projects. Certain installation projects, particularly those in New York City, ~~were stopped,~~continue to experience stoppages due to COVID-19 in the second quarter of ~~2020~~2021 accounting for the decrease in installation ~~revenue. In addition, certain cogeneration sites, such as hotels and gyms for example, were shut down and therefore service revenue decreased.~~revenues.

~~Segment 2 -~~ Energy Production

Energy production ~~revenue earned by our American DG Energy sites,~~revenues in the ~~second quarter of 2020 was $276,341,~~three months ended June 30, 2021 were $370,861, compared to ~~$578,299~~$276,341 for the same period in ~~2019,~~2020, an increase of $94,520, or 34.2%. The increase in energy production revenue is a ~~decrease~~consequence of ~~$301,958 or 52.2%. This decrease is~~certain energy production sites that have experienced temporary closures due to ~~several~~the impact of COVID-19 in 2020 that are now returning to operation as government-imposed COVID-19 restrictions are lifted, and to a lesser extent, the revenue recognized from our share of the bi-annual excess cash flows from energy production contracts we sold in the first quarter of 2019. Several of our hotel, athletic and education customer's that have experienced temporary closures and other sites ~~being shut down during~~have seen a change to remote work and learning environments have now resumed normal operations resulting in increased energy production revenues in the ~~COVID pandemic.~~three months ended June 30, 2021. For sites that have not permanently closed due to COVID-19, energy production revenues at these sites increased 9.3% in the three months ended June 30, 2021 compared to the same period in 2020.

Cost of sales in the ~~second quarter of 2020~~three months ended June 30, 2021 was ~~$4,529,067~~$3,302,464 compared to ~~$4,441,481~~$4,529,067 for the same period in ~~2019, an increase~~2020, a decrease of ~~$87,586,~~$1,226,603, or ~~2.0%~~27.1%. The decrease in cost of sales is due to the ~~inefficiencies experienced due to COVID-19. Overall~~reduction of Products and Services revenues and their related cost of sales. During the three months ended June 30, 2021 our gross margin ~~for the second quarter of 2020 was 39.1%~~increased to 46.3% compared to ~~43.5%~~39.1% for the same period in ~~2019.~~2020, a 7.2% percentage point increase. The increase in the gross margin percentage is due higher margin on both our cogeneration and chiller products due to higher sales prices and lower warranty costs and an overall change in sales mix to increased higher margin service contract revenue.

~~Segment 1 -~~ Products and Services

Cost of sales for products and services in the ~~second quarter of 2020~~three months ended June 30, 2021 was ~~$4,323,191~~$3,070,111 compared to ~~$4,076,927~~$4,323,191 for the same period in ~~2019, an increase~~2020, a decrease of ~~$246,264~~$1,253,080, or ~~6.0%~~29.0%. During the ~~second quarter~~three months ended June 30, 2021, our ~~overall gross margins for our product~~products and services ~~segment~~gross margin was ~~39.6%~~46.8% compared to ~~44.1%~~39.6% for the same period in ~~2019. Product margins for~~2020, a 7.2% percentage point increase. The increase in services gross margin is due primarily to a shift in revenue mix to proportionately higher service maintenance revenues and lower installation activities in the ~~second quarter of 2020 were 39.0%~~three months ended June 30, 2021 compared to ~~36.7% for~~ the same period in 2019. Service margins for the second quarter of 2020 were 40.1% compared to 47.8% for the same period in 2019. This decrease is driven by a loss of certain efficiencies in service activities as a result of COVID-19.2020.

~~Segment 2 -~~ Energy Production

Cost of sales for energy production in the ~~second quarter of 2020~~three months ended June 30, 2021 was ~~$205,876~~$232,353 compared to ~~$364,554~~$205,876 for the same period in ~~2019,~~2020, a decrease of ~~$158,678~~$26,477, or ~~43.5% due~~12.9%. During the three months ended June 30, 2021 our energy production gross margin increased to ~~the decrease in revenue as discussed above. Gross margin for this segment was 25.5% for the second quarter of 2020~~37.4% compared to ~~37.0%~~25.5% for the same period in ~~2019. Margin decrease~~2020, a 11.9% percentage point increase. The increase in the energy production gross margin is due to increased runtime at our energy production sites in the ~~effects of COVID-19 on~~three months ended June 30, 2021 compared to the ~~reduction of operational requirements~~same period in 2020 and the revenue recognized from our share of the ~~cogeneration units since several sites had been closed down.~~bi-annual excess cash flows from energy production contracts we sold in the first quarter of 2019.

Operating expenses decreased $253,683, or 7.4%, to $3,152,206 in the three months ended June 30, 2021 compared to $3,405,889 in the same period in 2020.


	Three Months Ended
Operating Expenses	June 30, 2021		June 30, 2020		Increase (Decrease) $		Increase (Decrease) %
General and administrative	$	2,438,452	$	2,637,479	$	(199,027)	(7.5)	%
Selling	580,871		602,383		(21,512)		(3.6)	%
Research and development	132,883		166,027		(33,144)		(20.0)	%
Total	$	3,152,206	$	3,405,889	$	(253,683)	(7.4)	%

General and administrative expenses consist of executive staff, accounting and legal expenses, office space, general insurance and other administrative expenses. General and administrative expenses for the ~~quarter~~three months ended June 30, ~~2020~~2021 were ~~$2,637,479~~$2,438,452 compared to ~~$2,683,252~~$2,637,479 for the same period in ~~2019,~~2020, a decrease of ~~$45,773~~$199,027 or ~~1.7%,~~7.5%. General and administrative expenses decreased due to management's ~~effort~~continued efforts to control overhead costs, ~~wherever possible.~~resulting in a $117,822 decrease in payroll and payroll related costs, a $60,400 decrease in franchise taxes and a $34,898 decrease in legal fees, partially offset by a $20,196 increase in business insurance expense.

Selling expenses consist of sales staff, commissions, marketing, travel and other selling related expenses. Selling expenses for the ~~second quarter of 2020~~three months ended June 30, 2021 were ~~$602,383~~$580,871 compared to ~~$704,700~~$602,383 for the same period in ~~2019,~~2020, a decrease of ~~$102,317~~$21,512 or ~~14.5%~~3.6%. The decrease is due to lower sales commissions which ~~tends~~decreased $3,533 due to ~~vary quarter~~lower product sales and decreased royalty expense which decreased $15,020 due to ~~quarter depending on timing of certain selling activities and outside commissions on chiller and~~decreased InVerde cogeneration sales.

Research and development ~~(R&D)~~ expenses consist of engineering and technical staff, materials, outside consulting and other related expenses. Research and development expenses infor the ~~quarter~~three months ended June 30, ~~2020~~2021 were ~~$166,027~~$132,883 compared to ~~$372,545~~$166,027 for the same period in ~~2019,~~2020, a decrease of ~~$206,518~~$33,144 or ~~55.4%. R&D expenses decreased~~20.0%, as certain R&D projects ~~slowed~~were curtailed or stopped ~~during the COVID-19 shut-downs.~~entirely as a consequence of COVID-19. There has been no change in our focus regarding research and development activities.

Loss from Operations

~~Loss~~ Our loss from operations for the ~~second quarter of 2020~~three months ended June 30, 2021 was ~~$499,898~~$309,568 compared to a loss of ~~$334,582~~$499,898 for the same period in ~~2019, an increase of $165,316 or 49.4%. The increased loss was a result of~~2020, a decrease of $190,330. The decrease in ~~gross profit for the second quarter of 2020 compared~~our loss from operations is due primarily to the ~~same period~~$253,683 decrease in ~~2019, as discussed above.~~operating expenses and improved gross margins for both our Products and Services Segment and our Energy Production Segment.

Other Income (Expense), net

Other ~~expense,~~income, net for the three months ended June 30, ~~2020~~2021 was ~~$134,738~~$725,804 compared to other ~~income~~expense, net of ~~$2,742~~$134,738 for the same period in ~~2019. Other~~2020, an increase of $860,542. The increase in other income ~~(expense) includes interest income~~in the three months ended June 30, 2021 is due primarily to recognition of ~~$238,~~the Employee Retention Credit of $713,268 for the first and second calendar quarters of 2021, a $51,165 decrease in interest expense ~~of $56,253 for the second quarter of 2020,~~ and an increase in the unrealized ~~loss from equity~~gain on investment securities of ~~$78,723. For~~$97,472 compared to the same period in ~~2019, interest income was $66, unrealized gain on equity securities from market fluctuation of $19,681 and interest expense was $17,005.~~2020. The ~~increase~~reduction in interest expense is due to the ~~payoff~~May 2020 termination of our Credit Agreement with Webster Business Credit Corporation. See Note 11. "Revolving Line of Credit and Notes Payable" to our unaudited condensed consolidated financial statements for the ~~Company's line of credit during the quarter and the write-off of the deferred financing balance in connection with that credit facility.~~period ended June 30, 2021.

Provision for ~~state income taxes~~State Income Taxes

The provision for state income taxes infor the ~~second quarter of~~three months ended June 30, 2021 and 2020 was $7,933 and ~~2019 was~~ $13,171, ~~and $15,955,~~ respectively and represents estimated income tax payments, net of refunds to various states.

~~Noncontrolling~~

Non-controlling Interest

~~The income~~ Income attributable to the ~~noncontrolling~~non-controlling interest was ~~$6,081 and $9,334~~$8,672 for the three months ended June 30, ~~2020 and 2019,~~2021 which represents the ~~noncontrolling~~non-controlling interest portion of American DG Energy's 51% owned subsidiary, ~~ADGNY,~~American DG New York, LLC. For the same period in 2020, income attributable to the non-controlling interest was $6,081.

Net ~~Loss~~Income (Loss) Attributable to Tecogen ~~Inc.~~Inc

~~Net loss~~ The net income (loss) attributable to Tecogen ~~Inc.~~ for the three months ended June 30, ~~2020~~2021 was ~~$653,888~~net income of $399,631 compared to ~~$357,129~~a net loss of $653,888 for the same period in ~~2019,~~2020, an improvement of $1,053,519, or 161.1%.The improvement is due primarily to the recognition of the Employee Retention Credit, lower operating expenses and improved gross margins.

Net Income (Loss) per Share

The net income (loss) per share, basic and diluted, for the three months ended June 30, 2021 was net income per share of $0.02 compared to net loss per share of $0.03 for the same period in 2020. Weighted average shares outstanding used to calculate basic and diluted earnings per share for the three months ended June 30, 2021 were 24,850,261 and 25,125,210 shares, respectively, and for the same period in 2020 were 24,850,261 and 24,850,261 shares, respectively.

Six Months Ended June 30, 2021 compared to the Six Months Ended June 30, 2020

The following table sets forth for the periods indicated, the percentage of net sales represented by certain items reflected in our condensed consolidated statements of operations:


	Six Months Ended
	June 30, 2021	June 30, 2020
Revenues	100.0%	100.0%
Cost of sales	52.5%	63.0%
Gross profit	47.5%	37.0%
Operating expenses
General and administrative	40.1%	34.6%
Selling	8.9%	9.5%
Research and development	2.1%	3.4%
Total operating expenses	51.2%	47.5%
Loss from operations	(3.7)%	(10.5)%
Total other income (expense), net	21.7%	(1.3)%
Consolidated net income (loss)	17.9%	(11.9)%
Income attributable to the non-controlling interest	(0.2)%	(0.1)%
Net income (loss) attributable to Tecogen, Inc.	17.8%	(12.1)%

The following table presents revenue for the periods indicated, by segment and the change from the prior year:


	Six Months Ended June 30,
	2021		2020		Increase (Decrease) $		Increase (Decrease) %
REVENUES:
Products
Cogeneration	$	1,096,961	$	6,344,482	$	(5,247,521)	(82.7)	%
Chiller	2,546,311		(251,209)		2,797,520		1,113.6	%
Engineered accessories	925,377		744,621		180,756		24.3	%
Total product revenues	4,568,649		6,837,894		(2,269,245)		(33.2)	%

Services
Maintenance services	5,847,209		4,921,168		926,041		18.8	%
Installation services	762,249		2,611,505		(1,849,256)		(70.8)	%
Total service revenues	6,609,458		7,532,673		(923,215)		(12.3)	%
Products and services	11,178,107		14,370,567		(3,192,460)		(22.2)	%
Energy production revenues	1,024,156		1,027,191		(3,035)		(0.3)	%
Total revenues	$	12,202,263	$	15,397,758	$	(3,195,495)	(20.8)	%

Total revenues for the six months ended June 30, 2021 were $12,202,263 compared to $15,397,758 for the same period in 2020, a decrease of $3,195,495 or 20.8% year over year primarily due to a $3,192,460 decrease in Products and Services revenue due to decreased cogeneration sales and installation revenue.

Products and Services

Product revenues in the six months ended June 30, 2021 were $4,568,649 compared to $6,837,894 for the same period in 2020, a decrease of $2,269,245, or 33.2%.This decrease is due primarily to a decrease in cogeneration sales of $5,247,521 due to decreased unit volume, partially offset by an increase in chiller sales of $2,797,520 due to increased unit volume and increased sales of engineered accessories of $180,756. Chiller sales in the first quarter of 2020 were negatively impacted by the return of chiller products of approximately $655,000. Our product sales mix, as well as product revenue, can vary significantly from period to period as our products are high dollar, low volume sales in which revenue is recognized upon shipment and were negatively impacted as energy and other construction projects were delayed due to the COVID-19 pandemic.

Service revenues in the six months ended June 30, 2021 were $6,609,458, compared to $7,532,673 for the same period in 2020, a decrease of $923,215, or 12.3%. The decrease in the six months ended June 30, 2021 is due primarily to a decrease in installation revenues of $1,849,256, offset partially by an increase of ~~$296,759~~$926,041, or ~~83.1%~~18.8%, ~~year over year. The increase was a result~~in service contract revenues. While service contract revenue generally remains relatively constant, installation activity can vary widely depending on the status of various projects. Certain installation projects, particularly those in New York City, continue to experience stoppages due to COVID-19 in the first six months of 2021 accounting for the decrease in ~~gross profit~~installation revenues.

Energy production revenues in the six months ended June 30, 2021 were $1,024,156, compared to $1,027,191 for the ~~second~~same period in 2020, a decrease of $3,035, or 0.3%. The decrease in energy production revenue is a consequence of certain energy production sites that have either closed permanently or have experienced temporary closures due to the impact of COVID-19, partially offset by the revenue recognized from our share of the bi-annual excess cash flows from energy production contracts we sold in the first quarter of ~~2020~~2019. Several of our hotel, athletic and education customers have experienced temporary closures and other sites have seen a change to remote work and learning environments, resulting in decreased energy production revenues. Energy production revenue at sites permanently closed due to COVID-19 represented 2.9% of energy production revenue during the six months ended June 30, 2021. For sites that have not permanently closed due to COVID-19, energy production revenues at these sites increased 0.2% in the six months ended June 30, 2021 compared to the same period in ~~2019~~2020 as ~~well as the additional other expenses incurred during the quarter, as discussed above.~~government-imposed COVID-19 restrictions are lifted.

~~First Six Months~~

Cost of ~~2020 Compared to First Six Months of 2019~~

~~Total revenues for~~sales in the ~~first~~ six months ~~of 2020 were $15,397,758~~ended June 30, 2021 was $6,408,417 compared to ~~$16,044,027~~$9,699,600 for the same period in ~~2019,~~2020, a decrease of ~~$646,269~~$3,291,183, or ~~4.0% year over year.~~

~~Segment 1 -~~33.9%. The decrease in cost of sales is due to the reduction of Products and Services

~~Product~~ revenues inand their related cost of sales. During the ~~first~~ six months ~~of 2020 were $6,093,273~~ended June 30, 2021 our gross margin increased to 47.5% compared to ~~$5,469,974~~37.0% for the same period in ~~2019,~~2020, a ~~decrease of $623,299 or 11.4%.This increase was a combination of an~~10.5% percentage point increase. The increase in the gross margin percentage is due higher margin on both our cogeneration ~~sales of $3,111,477~~ and ~~a decrease in chiller sales of $2,488,178. Such variations in product mix from period to period are not unusual and expected. Furthermore, the first quarter of 2020 included a return of~~ chiller products ~~of approximately $655 thousand. These returned products are new and included in inventory as of June 30, 2020.~~

~~Service revenues in the first six months of 2020 were $8,277,294, compared to $8,754,945 for the same period in 2019, a decrease of $477,651 or 5.5%. This decrease in the first six months of 2020 is~~ due to ~~a decrease in installation activity of $490,765~~higher sales prices and lower warranty costs and an ~~increase of $13,114~~overall change in sales mix to increased higher margin service contract ~~revenues. Installation activities were halted in certain locations due to the mandatory construction project shut-downs as a result of COVID-19.~~revenue.

~~Segment 2 - Energy Production~~

Energy production revenues in the first six months of 2020 were $1,027,191, compared to $1,819,108 for the same period in 2019, a decrease of $791,917 or 43.5%. This decrease is due to the mandatory COVID-19 shut down of certain energy producing sites.

~~Cost of sales in the first six months of 2020 was $9,699,600 compared to $9,659,353 for the same period in 2019, a decrease of $40,247, or 0.4%.~~

~~Segment 1 -~~ Products and Services

Cost of sales for products and services in the ~~first~~ six months ~~of 2020~~ended June 30, 2021 was ~~$9,009,320~~$5,782,002 compared to ~~$8,494,922~~$9,009,320 for the same period in ~~2019, an increase~~2020, a decrease of ~~$514,398~~$3,227,318, or ~~6.1%~~35.8%. During the first six months of ~~2020,~~2021, our ~~product~~products and ~~service~~services gross margin was ~~37.3%~~48.3% compared to ~~40.3%~~37.3% for the same period in ~~2019,~~2020, a ~~3.0% decrease~~11.0% percentage point increase. The increase in services gross margin is due primarily to ~~interruptions~~a shift in ~~our ability~~revenue mix to ~~access~~proportionately higher service maintenance revenues and ~~service certain sites as a result of COVID-19.~~lower installation activities in the six months ended June 30, 2021 compared to the same period in 2020.

~~Segment 2 -~~ Energy Production

Cost of sales for energy production in the ~~first~~ six months ~~of 2020~~ended June 30, 2021 was ~~$690,280~~$626,415 compared to ~~$1,164,431~~$690,280 for the same period in ~~2019.~~2020, a decrease of $63,865, or 9.3%. During the first six months of 2021 our energy production gross margin increased to 38.9% compared to 32.8% for the same period in 2020, a 6.1% percentage point increase. The increase in the energy production gross margin is due to improved site operational efficiency, decreased contract maintenance costs and the reduced cost of natural gas and decreased therms used in the six months ended June 30, 2021 compared to the same period in 2020 and ~~2019,~~the revenue from our ~~gross margin for~~share of the bi-annual excess cash flows from energy production ~~declined to 32.8% from 36.0% due largely to~~contracts we sold in the ~~effects~~first quarter of ~~COVID-19.~~2019.

Operating expenses decreased $1,073,062, or 14.7%, to $6,242,412 in the six months ended June 30, 2021 compared to $7,315,474 in the same period in 2020.


	Six Months Ended
Operating Expenses	June 30, 2021		June 30, 2020		Increase (Decrease) $		Increase (Decrease) %
General and administrative	$	4,892,305	$	5,326,941	$	(434,636)	(8.2)	%
Selling	1,091,074		1,458,170		(367,096)		(25.2)	%
Research and development	259,033		530,363		(271,330)		(51.2)	%
Total	$	6,242,412	$	7,315,474	$	(1,073,062)	(14.7)	%

General and administrative expenses consist of executive staff, accounting and legal expenses, office space, general insurance and other administrative expenses. General and administrative expenses for the six months ended June 30, ~~2020~~2021 were ~~$5,326,941~~$4,892,305 compared to ~~$5,338,663~~$5,326,941 for the same period in ~~2019,~~2020, a decrease of ~~$11,722~~$434,636 or ~~0.2%~~8.2%. General and administrative expenses decreased due to management's continued efforts to control overhead costs, resulting in a $361,047 decrease in payroll and payroll related costs, a $161,502 decrease in legal fees due to a reduction in abandoned patent application write-downs which decreased to $7,400 in the six months ended June 30, 2021 compared to $179,944 in six months ended June 30, 2020, and a $93,944 decrease in franchise taxes, partially offset by a $62,041 increase in audit and consulting fees, a $42,013 increase in depreciation and amortization expense and a $41,231 increase in business insurance expense.

Selling expenses consist of sales staff, commissions, marketing, travel and other selling related expenses. Selling expenses for the six months ended June 30, ~~2020~~2021 were ~~$1,458,170~~$1,091,074 compared to ~~$1,397,954~~$1,458,170 for the same period in ~~2019, an increase~~2020, a decrease of ~~$60,216~~$367,096 or ~~4.3%~~25.2%. The ~~increase~~decrease is due to ~~more commissionable~~lower sales ~~during the period.~~commissions which decreased $255,456 due to lower product sales, a $37,283 decrease in royalty expense due to decreased InVerde cogeneration sales and decreased travel and related expenses which decreased $15,252 due to COVID-19 travel curtailment.

Research and development expenses consist of engineering and technical staff, materials, outside consulting and other related expenses. Research and development expenses for the six months ended June 30, ~~2020~~2021 were ~~$530,363~~$259,033 compared to ~~$717,627~~$530,363 for the same period in ~~2019,~~2020, a decrease of ~~$187,264~~$271,330 or ~~26.1%.~~51.2%, as certain R&D ~~expenses~~projects were ~~incurred due to the Company's continued efforts~~curtailed or stopped entirely as a consequence of COVID-19. There has been no change in ~~connection with the Tecofrost~~our focus regarding research and ~~projects relating to industrial refrigeration and potential~~development activities.

commercialization of the Company's Ultera emissions technology for certain non-stationary applications. Certain activities have been slowed due to the pandemic, particularly those requiring international travel.

A gain on the sale of assets of $1,081,049 was recognized during the six months ended June 30, 2019 in connection with the sale of certain energy producing assets. See discussion in Note 6.Sale of Energy Producing Assets and Goodwill Impairment in the accompanying consolidated financial statements.

Goodwill impairment relating to the ADG sites of $3,693,198 was recognized during the six months ended June 30, 2019. See Note 6. Sale of Energy Producing Assets and Goodwill Impairment to the accompanying consolidated financial statements for further discussion of this charge.

Loss from Operations

~~Loss~~ Our loss from operations for the six months ended June 30, ~~2020~~2021 was ~~$1,617,316~~$448,566 compared to a loss of ~~$3,681,719~~$1,617,316 for the same period in ~~2019,~~2020, a ~~reduction~~decrease of $1,168,750. The decrease in our loss ~~of $2,064,403. The 2019 goodwill impairment, net of the gain on the sale of assets discussed above accounts for the difference~~ from ~~the six months ended June 30, 2020 compared~~operations is due primarily to the ~~same period~~$1,073,062 decrease in ~~2019.~~operating expenses and improved gross margins for both our Products and Services Segment and our Energy Production Segment.

Other Income (Expense), net

Other ~~expense,~~income, net for the six months ended June 30, ~~2020~~2021 was ~~$202,677~~$2,651,363 compared to ~~$64,113~~other expense, net of $202,677 for the same period in ~~2019,~~2020, an increase of ~~$138,564 or 216%. Other~~$2,854,040. The increase in other income ~~(expense) includes interest income~~in the six months ended June 30, 2021 is due primarily to the gain on extinguishment of ~~$11,965,~~debt of $1,887,859 as a result of the Paycheck Protection Program Loan forgiveness, recognition of the Employee Retention Credit of $713,268 for the first and second calendar quarters of 2021, and to a lesser extent, a $106,510 decrease in interest expense ~~of $116,238,~~ and an increase in the unrealized ~~loss~~gain on investment securities of ~~$98,404. For the same period~~$154,650. The reduction in ~~2019, interest income was $598,~~ interest expense ~~was $45,031,~~is due to the May 2020 termination of our Credit Agreement with Webster Business Credit Corporation. See Note 11. "Revolving Line of Credit and ~~unrealized loss on investment securities was $19,680.~~Notes Payable" to our unaudited condensed consolidated financial statements for the period ended June 30, 2021.

Provision for ~~state income taxes~~State Income Taxes

The provision for state income taxes for the six months ended June 30, 2021 and 2020 was $15,991 and ~~2019 was~~ $18,393, ~~and $7,786,~~ respectively and represents estimated income tax payments, net of refunds to various states.


	June 30, 2021		December 31, 2020
Raw materials	$	6,414,152	$	6,227,591
Less: reserves	(381,000)		(381,000)
Raw materials, net	$	6,033,152	$	5,846,591
Work-in-process	345,228		329,702
Finished goods	433,145		992,303
Total inventories, net	$	6,811,525	$	7,168,596


	Estimated Useful Life (in Years)	June 30, 2020			December 31, 2019				Estimated Useful Life (in Years)	June 30, 2021		December 31, 2020
Energy systems	1 - 15 years	$	4,372,638		$	4,372,638		Energy systems	1 - 15 years	$	3,556,488	$	3,526,514
Machinery and equipment	5 - 7 years	1,502,930			1,462,208			Machinery and equipment	5 - 7 years	1,495,528		1,448,024
Furniture and fixtures	5 years	193,698			193,698			Furniture and fixtures	5 years	193,698		193,698
Computer software	3 - 5 years	192,865			192,865			Computer software	3 - 5 years	192,865		192,865
Leasehold improvements	*	450,792			450,792			Leasehold improvements	*	450,792		450,792
		6,712,923			6,672,201					5,889,371		5,811,893
Less - accumulated depreciation and amortization		(3,545,319		)	(3,206,253		)	Less - accumulated depreciation and amortization		(3,864,037)		(3,528,047)
		$	3,167,604		$	3,465,948				$	2,025,334	$	2,283,846


Common Stock Options	Number of Options	Exercise Price Per Share	Weighted Average Exercise Price		Weighted Average Remaining Life	Aggregate Intrinsic Value
Outstanding, December 31, 2020	2,496,242	$0.71-$10.33	$	1.94	7.37 years	$	731,744
Granted	208,000	$1.75	$	1.75

Exercised	0
Canceled and forfeited	(253,500)	$2.60	$	2.60

Outstanding, June 30, 2021	2,450,742	$0.71-$10.33	$	1.86	7.88 years	$	1,709,243
Exercisable, June 30, 2021	666,408		$	4.00		$	27,583
Vested and expected to vest, June 30, 2021	2,183,092		$	1.96		$	1,456,994


Exhibit No.		Description of Exhibit
31.1*		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~Exhibit No.~~101.INS**		~~Description of Exhibit~~
31.1*	~~Rule 13a-14(a) Certification of Chief Executive Officer~~
31.2*	~~Rule 13a-14(a) Certification of Principal Financial Officer~~
32.1*	~~Section 1350 Certifications of Chief Executive Officer and Principal 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



	Tecogen Inc. Stockholders
Three months ended June 30, 2020	Common Stock Shares	Common Stock 0.001 Par Value		Additional Paid-In Capital			Accumulated Deficit			Noncontrolling Interest		Total
Balance at March 31, 2020	24,850,261	$	24,850	$	56,665,319		$	(34,581,501	)	$	73,995	$	22,182,663
Stock issuance costs	—	—		(401		)	—			—		(401		)
Stock based compensation expense	—	—		39,494			—			—		39,494
Net income (loss)	—	—		—			(653,888		)	6,081		(647,807		)
Balance at June 30, 2020	24,850,261	$	24,850	$	56,704,412		$	(35,235,389	)	$	80,076	$	21,573,949



	Tecogen Inc. Stockholders
Three months ended June 30, 2019	Common Stock Shares	Common Stock 0.001 Par Value		Additional Paid-In Capital			Accumulated Deficit			Noncontrolling Interest			Total
Balance at March 31, 2019	24,834,746	$	24,835	$	56,477,342		$	(31,950,172	)	$	129,370		$	24,681,375
Exercise of stock options	6,060	6		8,750			—			—			8,756
Stock issuance costs	—	—		(400		)	—			—			(400		)
Distributions to non-controlling interest	—	—		—			—			(27,413		)	(27,413		)
Stock based compensation expense	—	—		39,898			—			—			39,898
Net income (loss)	—	—		—			(357,129		)	9,334			(347,795		)
Balance at June 30, 2019	24,840,806	$	24,841	$	56,525,590		$	(32,307,301	)	$	111,291		$	24,354,421



	Tecogen Inc. Stockholders
Six months ended June 30, 2019	Common Stock Shares	Common Stock 0.001 Par Value		Additional Paid-In Capital			Accumulated Deficit			Noncontrolling Interest			Total
Balance at December 31, 2018	24,824,746	$	24,825	$	56,427,928		$	(28,670,095	)	$	255,116		$	28,037,774
Exercise of stock options	16,060	16		20,740			—			—			20,756
Stock issuance costs	—	—		(1,011		)	—			—			(1,011		)
Distributions to non-controlling interest	—	—		—			—			(27,413		)	(27,413		)
Stock based compensation expense	—	—		77,933			—			—			77,933
Net loss	—	—		—			(3,637,206		)	(116,412		)	(3,753,618		)
Balance at June 30, 2019	24,840,806	$	24,841	$	56,525,590		$	(32,307,301	)	$	111,291		$	24,354,421



Year 1	$	(252,944	)
Year 2	(256,948		)
Year 3	(174,197		)
Year 4	(130,416		)
Year 5	(84,362		)



Cash paid for amounts included in the measurement of operating lease liabilities	$	323,769
Weighted-average remaining lease term - operating leases	3.6 years
Weighted-average discount rate - operating leases	6		%



	Operating Leases
Q3 through Q4 2020	$	326,032
2021	576,698
2022	559,115
2023	566,863
2024	134,700
Total lease payments	2,163,408
Less: imputed interest	255,325
Total	$	1,908,083


June 30, 2020			Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
	Total		Level 1		Level 2		Level 3
June 30, 2021									June 30, 2021			Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
Description									Description	Total		Level 1		Level 2		Level 3
Recurring fair value measurements									Recurring fair value measurements
Marketable equity securities									Marketable equity securities
EuroSite Power Inc.	$	118,084	$	—	$	118,084	$	—	EuroSite Power Inc.	$	168,739	$	0	$	168,739	$	0
Total recurring fair value measurements	$	118,084	$	—	$	118,084	$	—	Total recurring fair value measurements	$	168,739	$	0	$	168,739	$	—

June 30, 2020									June 30, 2020			Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
Description									Description	Total		Level 1		Level 2		Level 3
Recurring fair value measurements									Recurring fair value measurements
Marketable equity securities									Marketable equity securities
EuroSite Power Inc.									EuroSite Power Inc.	$	118,084	$	0	$	118,084	$	0
Total recurring fair value measurements									Total recurring fair value measurements	$	118,084	$	0	$	118,084	$	0



Fair value at December 31, 2019	$	216,487
Unrealized loss included in net income for the six months ended June 30, 2020	(98,403		)
Fair value at June 30, 2020	$	118,084


	Six Months Ended
Cash Provided by (Used in)	June 30, 2021		June 30, 2020		Increase (Decrease)
Operating activities	$	(103,649)	$	2,760,806	$	(2,864,455)
Investing activities	(75,361)		(200,800)		125,439
Financing activities	1,874,269		(577,759)		2,452,028
Change in cash and cash equivalents	$	1,695,259	$	1,982,247	$	(286,988)



	TECOGEN INC.
	(Registrant)

Dated: August 12, 2021	By:	/s/ Benjamin M. Locke
	Benjamin M. Locke
	Chief Executive Officer
	(Principal Executive &Officer)

Dated: August 12, 2021	By:	/s/ Abinand Rangesh
	Abinand Rangesh
	Chief Financial Officer
	(Principal Financial Officer)