TGEN 10-K & 10-Q changes, risk factors and insider trading

Our operating history is characterized by lossesnet andlosses. thereThere can be no assurance we will be able to increase our salesrevenues and sustainbecome profitabilityprofitable in the future.

We have historically incurred annual net losses, including net loss of $8,248,755 in 2025 and a net loss of $4,760,238 in 2024. We have an accumulated deficit as of December 31, 20242025 of $47,639,894$55,888,649 and working capital of $5,329,650.$19,618,132. Our business is capital intensive and, because our products generally are built to order with customized configurations, the lead time to build and deliver a unit can be significant. We may be required to purchase key components long before we can deliver a unit and receive payment. Changes in customer orders or lack of demand may also impact our profitability. There can be no assurance we will be able to increase our sales and achieve and sustain profitability in the future.

We use third-party suppliers for components in all of our products. Our engines and generators required in our cogeneration products (other than the InVerde), and the compressor and vessel sets in our chillers, are all purchased from large multinational equipment manufacturers. The loss of one or more of our suppliers could materially and adversely affect our business if we are unable to replace them. While alternate suppliers for the manufacture of our engine, generators and compressors have been identified,identified should the need arise, there can be no assurance that alternate suppliers will be available and able to provide such items on acceptable terms or on a timely basis.

For the yearsyear ended December 31, 20242025 and December 31, 2023, noone customer represented more than 10% of revenuesour revenue. No customer represented more than 10% of our revenue for the respectiveyear years,ended andDecember one31, 2024. One customer represented 12%11% of theour accounts receivable balance as of December 31, 2024,2025, and one customer represented 14% of theour accounts receivable balance as of December 31, 2023.2024. The loss of any one or more of our major customers or our inability to collect on outstanding accounts receivable from one or more of these customers could have a material adverse effect on our business and financial condition. Our provision for credit losses decreased to $62,958 in the year ended December 31, 2025, compared to $146,010 in the year ended December 31, 2024, compared to $902,432 in the year ended December 31, 2023, due to the write down of certain install receivables which were deemed uncollectible in the year ended December 31, 2023.2024. Our allowance for credit losses increased $145,940$93,147 to $295,932$389,079 in the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024.

Our backlog as of December 31, 20242025 was $12,336,248$2,522,231 compared to $7,388,145$12,336,248 as of December 31, 2023.2024. Our backlog at December 31, 2024 included an order for several chillers which were shipped in 2025 and orders for our several cogeneration systems that shipped in the first quarter of 2025 to customers seeking tax credits under the Inflation Reduction Act of 2022. Although we expect our customers to issue definitive purchase orders with respect to such backlog, there can be no assurance that such amounts will not be subject to modification in the event customers experience unexpected delays in obtaining permits, interconnection agreements, or financing. We have experienced order delays and deferrals for our products due to business closures or the inability to obtain government issued permits to conduct product installations. Any of such events may result in customers modifying the equipment or the terms or timing of the expected installation, which may result in changes to the amount of backlog attributed to those projects.

The economic viability of our CHP products depends on the spread between natural gas fuel and electricity prices. Volatility in one component of the spread, such as the cost of natural gas and other fuels (e.g., propane or distillate oil), can be managed to some extent by means of futures contracts. However, the regional rates charged for both base load and peak electricity may decline periodically due to excess generating capacity or general economic recessions, and both the cost of natural gas and the cost of electricity for base load and peak load may be adversely affected by market forces and geopolitical disruptions such as Russian expansion into the Ukraine and the conflict in the Middle East and political and other responses to such activity.

As of December 31, 2024,2025, our goodwill was $2,346,566,$1,248,442, and our intangible assets were $2,513,189.$2,146,503. We performed a goodwill impairment test at December 31, 2024,2025, and determined that the carrying value of our energy production business assets exceeded the estimated fair value of the energy production business assets based on a discounted cash flow analysis, and we recognized goodwill and long-lived asset impairment relating to our energy production segmentand product segments of $217,295$1,098,124 for the year ended December 31, 2024.2025. The fair value of the Aegis maintenance service contracts based on a discounted cash flow analysis exceeded the carrying value of the assets, and we did not recognize goodwill impairment relating to our services segment for the year ended December 31, 2024.2025.

Our future performance depends on the continued contributions of our senior management, including our Chief Executive Officer and Chief Financial Officer, Abinand Rangesh, our President and Chief Operating Officer, Robert Panora, our Chief Financial Officer, Roger Deschenes, and other key employees, to execute on our business plan, develop new products and services, source new customers, and enter into new partnerships. In addition, our success, in part, depends on our ability to attract and retain qualified member of our board and our board committees. The failure to properly manage succession plans or the loss of services of senior management, other key employees or members of our board could significantly delay or prevent the achievement of our strategic objectives. From time to time, there may be changes in our senior management team resulting from the hiring or departure of executives, which could disrupt our business. We do not currently maintain key person life insurance policies on any of our employees. The loss of the services of one or more of our senior management or other key employees for any reason could adversely affect our business, financial condition, and operating results, and require significant amounts of time, training, and resources to recruit suitable replacements and integrate them within our business and could affect our corporate culture.

Our provision for credit losses decreased to $62,958 in the year ended December 31, 2025, compared to $146,010 in the year ended December 31, 2024, compared to $902,432 in the year ended December 31, 2023, due to the write down of certain install receivables which were deemed uncollectible in the year ended December 31, 2023.2024. Our allowance for credit losses was $295,932$389,079 as of December 31, 2024,2025, an increase of $145,940$93,147 when compared to the provisionallowance for doubtfulcredit accountslosses as of December 31, 2023.2024.

We incur substantial legal, financial, accounting and other costs and expenses to operate as a public reporting company. We believe that these costs are a disproportionately larger percentage of our revenues than they are for many larger companies. In addition, the rules and regulations of the SEC impose significant requirements on public companies, including ongoing disclosure obligations and mandatory corporate governance practices. Our senior management and other personnel need to devote a substantial amount of time to ensure ongoing compliance with these requirements. Our common stock is currently quotedlisted on the OTCNYSE MarketsAmerican GroupLLC Inc.’s("NYSE OTCQXAmerican") Beststock Marketexchange. tier.On UnderMay 6, 2025, our common stock began trading on the OTCNYSE MarketsAmerican Groupunder Inc.’sour OTCQXcurrent continuedsymbol qualification requirements, we are required to have a minimum bid price of $0.10 per share as of the close of business for at least one of every 30 consecutive calendar days, a market capitalization of at least $5 million for at least one of every 30 consecutive calendar days, and at least two market makers."TGEN." Also, we must be current in our SEC reporting obligations. If we seekobligations to listmaintain our stock for trading on a national securities exchange or be quoted on the Nasdaq Stock Market, we will be subject to additional disclosure and governance obligations.listing. There can be no assurance that we will continue to meet all of the public company requirements to which we are subject on a timely basis, or at all, or that our compliance costs will not continue to be material.

As a public reporting company, we are subject to rules and regulations established from time to time by the SEC and Public Company Accounting Oversight Board (“PCAOB”) regarding our disclosure controls and internal controlcontrols over financial reporting. If we fail to establish and maintain effective internal control over financial reporting and disclosure controls and procedures,procedures and internal controls over financial reporting, we may not be able to accurately report our financial results or report them in a timely manner. Investor confidence in the price of our stock may be adversely affected if we are unable to comply with such rules and regulations.

As a public reporting company under the Securities Exchange Act, we are subject to the rules and regulations established from time to time by the SEC and the PCAOB. These rules and regulations require, among other things, that we establishmaintain disclosure controls and periodically evaluate procedures with respect to ourand internal controlcontrols over financial reporting. In addition, as a public company we are required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) so that our management can certify as to the effectiveness of our internal control over financial reporting, which requires us to document and our internal control over financial reporting.

Our Chief Executive Officer and Chief Financial Officer (“certifying officers”) are responsible for establishing and maintaining our disclosure controls and procedures (as defined in Securities Exchange Act Rule 13a-15(e) and Rule15d-15(e)). Our certifying officerofficers designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under histheir supervision, to ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the SEC’s rules and forms, and is made known to management (including the certifying officer) by others within the company, including our subsidiaries. We regularly evaluate the effectiveness of our disclosure controls and procedures and report our conclusions about the effectiveness of the disclosure controls quarterly in our Quarterly Reports on Form 10-Q and annually in our Annual Reports on Form 10-K. In completing such reporting, we will disclose, as appropriate, any significant change in our internal control over financial reporting that occurred during our most recent fiscal period that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Also, as a public company, we are subject to rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act, which require us to include in our annual report on Form 10-K our management’s report on, and assessment of the effectiveness of, our internal control over financial reporting (“management’s report”). If we fail to achieve and maintain the adequacy of our disclosure control or internal controlcontrols over financial reporting, there is a risk that we will not comply with all of the requirements imposed by Section 404. Moreover, effective internal control over financial reporting, particularly that relate to revenue recognition, is necessary for us to produce reliable financial reports and is important in helping to prevent financial fraud. Any of these possible outcomes could result in an adverse reaction in the financial marketplace due to a loss in investor confidence in the reliability of our financial statements, which ultimately could harm our business and could negatively impact on the market price of our common stock. Investor confidence and the price of our common stock may be adversely affected if we are unable to comply with Section 404 of the Sarbanes-Oxley Act.

As of the end of the period covered by our Annual Report on Form 10-K for the year ended December 31, 2024,2025, our principal executive officer and principal financial officer hashave concluded that there is a material weakness in our disclosure controls and procedures and our internal control over financial reporting. If we are unable to remediate these material weaknesses, if management identifies additional material weaknesses in the future, or if we otherwise fail to maintain effective internal controls over financial reporting, we may not be able to accurately or timely report our financial position or results of operations, which may adversely affect our business and stock price or cause our access to the capital markets to be impaired.

As of the end of the period covered by our Annual Report on Form 10-K for the year ended December 31, 2024,2025, our certifying officerofficers performed an evaluation of our disclosure controls and procedures and concluded that our controls were not effective to provide reasonable assurance that information required to be disclosed by us in reports that we file under the Securities Exchange Act, is recorded, processed, summarized and reported when required. WeOur havemanagement, including our certifying officers, after evaluating the effectiveness of our disclosure controls and procedures, concluded that our disclosure controls and procedures were not effective as of December 31, 2025, due to material weakness with respect to a small number of employeesindividuals dealing with general controls over information technology, security and user access. This constitutes a material weakness in financial reporting.technology. Any failure to implement effective internal controls could harm our operating results or cause us to fail to meet our reporting obligations. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock and may require us to incur additional costs to improve our internal control system.

We continue to develop and refine our disclosure controls and other procedures designed to ensure that information required to be disclosed by us in the reports we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in our reports under the Securities Exchange Act is accumulated and communicated to our principal executive and financial officer. We are continuing to improve our internal control over financial reporting which may require us to hire additional accounting and financial personnel to implement such processes and controls and to provide additional training for our existing personnel. We expect to incur costs related to implementing our internal audit and compliance function in the upcoming years to further improve our internal control environment. If we identify further deficiencies in our internal control over financial reporting in the future or if we are unable to comply with the demands that will be placed upon us as a public company, including the requirements of Section 404 of the Sarbanes-Oxley Act, in a timely manner, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC. We also could become subject to sanctions or investigations by the SEC or other regulatory authorities.action. In addition, if we are unable to assert that our internal controlcontrols over financial reporting isare effective, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets, and our stock price may be adversely affected.

Our current controls and any new controls that we develop may also become inadequate because of changes in our business, and weaknesses in our disclosure controls and procedures and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could cause us to fail to meet our reporting obligations, result in a restatement of our financial statements for prior periods, undermine investor confidence in us, and adversely affect the trading price of our common stock. Our disclosure controls and procedures are designed to provide reasonable assurance that the control system's objectives will be met.

Our certificate of incorporation, bylaws and the Delaware General Corporations Law (“DGCL”) contain provisions that could have the effect of rendering more difficult, delaying or preventing an acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock and therefore depress the trading price. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the incumbent members of the board of directors or taking other corporate actions, including effecting changes in our management. Among other things, our certificate of incorporation andbylaws, bylawsor includesDGCL include provisions that:

YouThe following discussion and analysis and other parts of this report should be read thein following Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) togetherconjunction with our audited consolidated financial statements and relatedthe accompanying notes thereto included in this report and is qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere in this report. SomeIn ofaddition to historical financial information, the informationfollowing contained in this MD&A or set forth elsewhere in this report, including information with respect to our plansdiscussion and strategyanalysis for our business, includescontains forward-looking statements that involve risksrisks, uncertainties and uncertainties.assumptions. You should review the “Risk Factors” in this report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following MD&A.discussion Exceptand analysis. While we may elect to update forward-looking statements in the future, except as required by federal securities law or other disclosure requirements applicable to us,law, we assumespecifically nodisclaim any obligation to updatedo theseso, even if our estimates change, and you should not rely on those forward-looking statements publicly,as orrepresenting our views as of any date subsequent to updatethe date of the reasonsfiling actualof resultsthis could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

During the years ended December 31, 20242025 and 2023,2024, our revenues were negatively impacted due to supply chain issues, customer order delays or deferrals; and, service delays due to customer facility closures and reduced manufacturing capacity due to our plant relocation in 2024.closures.

On February 28, 2025, we entered into a Sales and Marketing Agreement with Vertiv Corporation (“Vertiv”) relating to sales of Tecogen DTx chillers for data center cooling applications (the “Vertiv Agreement”). The Vertiv Agreement has a term of two years and provides that Vertiv will establishengage in establishing a budget for marketing activities and use commercially reasonable efforts to sell our DTx chillers for cooling applications in data centers. The Vertiv Agreement also provides the basis for the negotiation of a definitive supply agreement between us and Vertiv. We have agreed to provide Vertiv with reasonable discounts for purchases of significant volumes of our chillers, and Vertiv has agreed to use commercially reasonable efforts to assist us in securing favorable terms for engineering components and supplies for manufacturing our chillers. Pursuant to the Vertiv Agreement we have granted Vertiv the exclusive right to market and sell our DTx chillers for data center cooling applications outside the United States, and the non-exclusive right to market and sell our DTx chillers for such applications within the United States. We have also agreed to grant Vertiv the exclusive right to market and sell our DTx chillers for data center cooling applications in the United States if Vertiv achieves and maintains agreed sales levels of DTx chillers. The foregoing description of the Vertiv Agreement is not complete and is qualified in its entirety by reference to the full text thereof, a copy of which iswas filed as Exhibit 99.01 to our Current Report on Form 8-K filed with the Securities and Exchange Commission ("SEC") on February 28, 2025, and incorporated by reference as Exhibit 10.30 hereto.2025.

On February 1, 2024, Tecogen and Aegis amended the Agreement to add eighteen (18) additional maintenance service agreements (the "First Amendment"). The First Amendment includes an undertaking by Aegis to use commercially reasonable efforts to support and assist our execution of maintenance service agreements for an additional thirty-six (36) cogeneration units sold to customers by Aegis.

In some key markets such as New York City, the regulatory push to eliminate fossil fuels from buildings has impacted cogeneration unit sales. We believe that as regulations take into account scope 2 emissions (site versus source emissions),and products like our hybrid chiller that can choose the cleanest fuel source will have a significant advantage in decarbonization efforts. The political environment following the 2024 elections in the United States mayhas havehad a material impact on anti-fossil fuel sentiment and the regulatory environment that mayis bemore favorable to our business. We have also diversified our sales activities to reduce our reliance on markets like New York City.

As more load is added to the utility grid in the form of data centers, EV charging, and other demands for power, customers are facing power constraints. Tecogen believes that these power constrainedpower-constrained customers, in particular data centers and industrial facilities, represent a significant opportunity for growth. The customer need is driven by the ability to expand an existing facility or open a new facility quickly while taking advantage of utility expense savings long term. Our chiller products can reduce the electrical capacity needed on-site by 30% or more. Our InVerde product can provide on-site power generation which allows customers to eliminate long lead times associated with electrical switch gear and bridge any short fall in power from the utility.

During the third quarter of 2021, we began development of the Tecochill Hybrid-Drive Air-Cooled Chiller. We recognized that there were many applications where the customer wanted an easy to install roof top chiller. Using the inverter design from our InVerde e+ cogeneration module, the system can simultaneously take two inputs, one from the grid or a renewable energy source and one from our natural gas engine. This allows a customer to seek the optimum blend of operational cost savings and greenhouse gas benefits while providing added resiliency from two power sources. We introduced the Tecochill Hybrid-Drive Air-Cooled Chiller at the AHR Expo in February 2023 and received an order on February 8, 2024 for three hybrid-drive air-cooled chillers for a utility company in Florida.Florida which were shipped in the second and third quarter of 2025. In March 2024, the US Patent and Trademark Office granted patent 11,936,327: "Hybrid Power System With Electric Generator and Auxiliary Power Source."

We have no operations or customers in Russia, the Ukraine, or in the Middle East.East, including the recent military action in Iran. The higher energy prices for natural gas as a result of the war may affect the performance of our Energy Production Segment and the cost differential between grid generated energy and natural gas sourced energy using our cogeneration equipment. However, we have also seen higher electricity prices as much of the electricity production in the United States is generated from fossil fuels. If the electricity prices continue to rise, the economic savings generated by our products are likely to increase. In addition to the direct result of changes in natural gas and electricity prices, the war in Ukraine and the conflict in the Middle East may result in higher cybersecurity risks, increased or ongoing supply chain challenges, and volatility related to the trading prices of commodities.

On October 9, 2023, we entered into note subscription agreements with each of John N. Hatsopoulos and Earl R. Lewis, III, each a director and shareholder of Tecogen,the Company, pursuant to which Mr. Hatsopoulos agreed to provide financing to us of up to $1 million,$1,000,000, and Mr. Lewis agreed to provide financing to us of $500,000, and at his discretionpotentially, an additional $500,000.$500,000 at his discretion. On October 10, 2023, we borrowed $500,000 from Mr. Hatsopoulos and issued him a one-year promissory note with interest accruing at 5.12% per annum. On July 23, 2024, we borrowed an additional $500,000 from Mr. Hatsopoulos, and executedissued a one-year promissory note with interest accruing at 5.06% per annum. On March 21, 2024, Johnwe H. Hatsopoulos amendedextended the termsmaturity date the of the promissory note,note dated October 10, 2023, extending the maturity date2023 by one year,one-year making the maturity date October 10, 2025. On September 18, 2024, we borrowed $500,000 from Mr. Lewis and issued him a one-year promissory note with interest accruing at 4.57% per annum.

On January 14, 20252025, we agreed to permit Mr. Lewis to either receive repayment of his note in cash or, at his discretion, convert the balance of the promissory note into shares of our common stock. In the event of such a conversion, the number of shares we will bewere required to be issue will beis determined by dividing the balance due under the promissory note by the average closing price per share of our shares during the thirty-day period prior to the date of conversion.

On February 18, 20252025, we amended the promissory notes with Mr. Hatsopoulos to extend the maturity dates for both promissory notes to July 31, 2026. We also agreed to permit Mr. Hatsopoulos to either receive repayment of his notes in cash, or,or at his discretion, convert the balancesbalance(s) due of one or both of the promissory notes into shares of our common stock. In the event of such a conversion, the number of shares we will bewere required to issue will beis determined by dividing the balance(s) due under the promissory note(s) by the average closing price per share of our shares during the thirty-day period prior to the date of conversion. Both of the promissory notes with Mr. Hatsopoulos were reclassified to long-term liabilities due to the February 18, 2025 amendment.

Certain aspects of certain accounting policies require management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. These aspects of these accounting policies are considered critical accounting policies. These policies may require management to make assumptions about matters that are highly uncertain at the time of the estimate or employ an estimate where alternative estimates could have also been employed, and may involve estimates that are reasonably likely to change with the passage of time. Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. These uncertainties are discussed in "Item 1A," “Risk Factors" above.

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The allowance for credit losses is estimated based on historical experience, aging of the receivable, the counterparty’s ability to pay, condition of the general economy and industry, and combined with management's estimate of current conditions, reasonable and supportable forecasts of future losses to determine estimated credit losses in our evaluation of outstanding accounts receivable at the end of the year. The allowance for credit losses reflects managements evaluation of our outstanding accounts receivable at the end of the year and our best estimate of probable losses inherent in the accounts receivable balance. Accounts receivable deemed uncollectible are charged against the allowance for credit losses when identified.

Property, plant and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful life of the asset, which range from P3Ythree to P15Yfifteen years. Leasehold improvements are amortized using the straight-line method over the lesser of the estimated useful lives of the assets or the term of the related leases. Expenditures for maintenance and repairs are expensed, while renewals and betterments that materially extend the life of an asset are capitalized.

At a minimum, we perform a quantitative goodwill impairment test in the fourth quarter of the year. In the fourth quarter of 2024,2025, we performed a quantitative goodwill impairment test for our energy production reporting unit acquired in 2017. We used a discounted cash flow approach to develop the estimated fair value of that reporting unit. Management judgment is required in developing the assumptions for the discounted cash flow model. An impairment would be recorded if the carrying amount of a reporting unit including goodwill exceeded the estimated fair value. Based on the aforementioned analysis, the carrying amount of that reporting unit, including goodwill, exceeded the estimated fair value and resulted in an impairment at December 31, 2024.2025. See Note 6. "Sale of Energy Producing Assets and Goodwill Impairment".

The impairment analysis recognizes the shortening of remaining contract terms with customers without replacement and without further growth, as well as less than expected cost savings, offset by profitability from our initiatives to optimize the long-term profitability of our various site operations and a price peak of the our common stock on the date of the business combination to which the goodwill relates (see also Note 6."Sale of Energy Producing Assets and Goodwill Impairment").

In the fourth quarter of 2024,2025, we performed a quantitative goodwill impairment test for the Aegis maintenance service contracts reporting unit acquired in 2023 and 2024. We used a discounted cash flow approach to develop the estimated fair value of that reporting unit. Management judgment is required in developing the assumptions for the discounted cash flow model. An impairment would be recorded if the carrying amount of a reporting unit including goodwill exceeded the estimated fair value. Based on the aforementioned analysis, the estimated fair value of that reporting unit, including goodwill, exceeded the carrying value and resultingresulted in no impairment at December 31, 2024.2025. See Note 5. "Aegis Contract and Related Asset Acquisition".

Revenues in 20242025 were $22,619,536$27,073,710 compared to $25,139,419$22,619,536 in 2023,2024, aan decreaseincrease of $2,519,883$4,454,174 or 10.0%19.7% due to decreasedincreased Products and Services revenues.

Product revenues in 20242025 were $4,443,996$9,133,450 compared to $8,859,946$4,443,996 in 2023,2024, aan decreaseincrease of $4,415,950$4,689,454 or 49.8%.105.5%. The decreaseincrease in Products revenue in 20242025 compared to 20232024 is due to a $3,656,604$4,010,809 decreaseincrease in chiller sales, $675,609$282,993 decreaseincrease in engineered accessories sales and a $83,737$395,652 decreaseincrease in cogeneration sales, due to decreasedincreased unit volume. Our product 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. The relocation to our new facility in April 2024 constrained our manufacturing capacity, which impacted product revenues during the second and third quarters of 2024.

Revenues derived from our service centers in 20242025 were $16,074,870$16,616,523 compared to $14,523,054$16,074,870 for the same period in 2023,2024, an increase of $1,551,816$541,653 or 10.7%.3.4%. The increase in Services revenue in 20242025 is due to ana $815,522, or 6.1% increase in service contract revenues from existing contracts, offset partially by a $273,869, or 10.3%, decrease in revenue from the acquired Aegis Maintenance contracts of $786,160, or 41.7%, and a $765,656, or 6.1%, increase in service contract revenues from existing contracts.

Energy production revenues for the year ended December 31, 20242025 were $2,100,670$1,323,737 compared to $1,756,419$2,100,670 for 2023,2024, ana increasedecrease of $344,251,$776,933, or 19.6%.37.0%. The increasedecrease in Energy Production revenue for the year ended December 31, 2025 is due to increasedthe expiration of several energy production contracts in late 2024, decreased run hours at certain energy production sites.sites due to temporary shutdowns for repairs and the guarantee shortfall of $84,854 recognized in 2025.

Cost of sales infor 2024the year ended December 31, 2025 was $12,749,363$17,249,202 compared to $14,937,801$12,749,363 in 2023,2024, aan decreaseincrease of $2,188,438$4,499,839 or 14.7%.35.3%. The decreaseincrease in cost of sales is due to decreasedincreased Products revenue volume.volume and increased Services costs. Our overall gross margin was 43.6%36.3% in 20242025 compared to 40.6%43.6% in 2023,2024, ana decrease of 7.3%. The decrease in gross margin for the year ended December 31, 2025 is due to the significant increase ofin 3.0%.our Services segment material and labor costs.

Costs of sales for products inthe 2024year ended December 31, 2025 was $3,014,655$6,097,501 compared to $5,923,096$3,014,655 in 2023,2024, aan decreaseincrease of $2,908,441,$3,082,846, or 49.1%,102.3%, due to decreasedincreased productchillers Products revenue volumeand increases in material and alabor decreasecosts in the provision for obsolete inventory in 2024.2025. Our products gross margin was 32.2%33.2% in 20242025 compared to 33.1%32.2% in 2023,2024, aan decreaseincrease of 0.9%,1.0%, due to decreasedincreased engineering accessories sales in 2024,2025, which are higher margin sales.

Cost of sales for services infor 2024the year ended December 31, 2025 was $8,432,876$10,202,774 compared to $7,909,202$8,432,876 in 2023,2024, an increase of $523,674,$1,769,898, or 6.6%,21.0%, due to increased labor and material costs as a consequence of acquiring the Aegis customer maintenance contracts and increased material usage at existing sites, offset by a decrease in the provision for obsolete inventory in 2024.sites. Our services gross margin was 47.5%38.6% in 20242025 compared to 45.5%47.5% in 2023,2024, ana increasedecrease of 2.0%,8.9%, due to decreasedincreased labor and material costs incurred to replace engines at certain sites as we test improvements to our engine technology to improve engine performance, extend engine life and aimproved decreaseservice in the provision for obsolete inventory.margins.

Cost of sales for energy production for the year ended December 31, 20242025 was $1,301,832$948,927 compared to $1,105,503$1,301,832 in 2023,2024, ana increasedecrease of $196,329.$352,905, of 27.1%. Energy production gross margin was 28.3% in 2025 compared to 38.0% in 2024, a decrease of 9.7%. The decrease in the energy production gross margin is due to lower revenue and increased repair costs incurred to restart energy production sites which were shut down for repairs during a portion of the year ended December 31, 2025, compared to the same period in 2024 comparedand tothe 37.1%guarantee shortfall of $84,854 recognized in 2023, an increase of 0.9%, due to higher fuel costs.2025.

Operating expenses decreasedincreased in 20242025 to $18,069,338 compared to $14,404,260 compared to $14,615,230 in 2023,2024, aan decreaseincrease of $210,970$3,665,078 or 1.4%.25.4%.

Selling expenses decreasedincreased in the year ended December 31, 20242025 to $2,267,247 compared to $1,880,903 compared to $1,931,037 in 2023,2024, aan decreaseincrease of $50,134,$386,344, or 2.6%,20.5%, due to a $49,827$296,573 decreaseincrease in sales commissions.commissions on higher Products sales and a $70,439 increase in advertising and trade show expense targeted to the data center market..

Research and development expenses increased in the year ended December 31, 20242025 to $961,837$1,166,744 compared to $840,011,$961,837, an increase of $121,826$204,907 due to a $151,193$224,736 increase in depreciation and amortization, offset by a $56,924 decrease in payroll costs and related benefits.benefits, partially offset by a $14,800 decrease in outside consulting fees.

GainLoss on the sale of assets was $12,181$183 in 20242025 compared to a gain on the sale of assets of $36,207$12,181 in 2023.2024.

During the year ended December 31, 20242025 we recognized goodwill and long-lived impairment of $217,295$1,113,129 on our Energy Production sites compared to $0$217,295 in 2023.2024.

Loss from operations for the year ended December 31, 20242025 was $4,534,087$8,244,830 compared to a loss of $4,413,612$4,534,087 in 2023,2024, an increase in the loss from operations of $120,475.$3,710,743, or 81.8%. The increase in the net loss from operations is due to aan $331,445increase in operating expenses of $2,756,880, an increase in the goodwill and long-lived asset impairment of $895,834 and the decrease in Services segment gross margin due to lower Products revenue and goodwill impairment of $217,295, offset partially by a $428,265 decrease in operating expenses.margin.

Other expense,income, net, for the year ended December 31, 20242025 was $117,118$16,102 compared to $77,053other expense, net of $117,118 for the same period in 2023,2024, an increase in income of $40,065,$133,220, due to a $74,254$200,288 increase in interest income resulting from increased cash on deposit in interest-bearing accounts, offset by a $59,985 increase in interest expense on borrowings under our related party notes and lease financing,financing partially offet byand a decrease$21,763 in interest income and other expense of $26,814 compared to $61,003 in 2023, due to a $35,759 decreaseincrease in currency exchange losses for the year ended December 31, 2024.losses.

The provision for state income taxes for the years ended December 31, 20242025 and 20232024 waswere $22,565$20,615 and $32,491,$22,565, respectively, and represents estimated income tax payments, net of refunds, to various states.

We have income and losses attributable to the non-controlling interest we have in American DG Energy's 51% owned subsidiary, ADGNY, LLC. The non-controlling interest share of ADGNY profits and losses was incomea loss of $86,468$588 for the year ended December 31, 20242025 compared to income of $74,952$86,468 in 2023.2024. The decrease in the income attributable to the non-controlling interest in the year ended December 31, 2025, is due to the expiration of a contract at one of the Energy Production sites and the temporary shutdown of a site for repairs in 2025.

Net loss for the year ended December 31, 20242025 was $4,760,238$8,248,755 compared to a net loss of $4,598,108$4,760,238 for 2023,2024, an increase of $162,130.$3,488,517, or 73.3%. The increase in the net loss is due to aan $331,445increase in operating expenses of $2,756,880, an increase in the goodwill and long-lived asset impairment of $895,834 and the decrease in Services segment gross marginmargin, due to lower Products revenue and goodwill impairment of $217,295,partially offset partially by aincreased $428,265interest decrease in operating expenses.income.

Net loss per share for the year ended December 31, 20242025 was a loss of $0.19$0.30 compared to a loss of $0.19 per share for the same period in 2023.2024. The basic and diluted weighted average shares outstanding for the year ended December 31, 20242025 were 24,861,19027,233,143 and 24,861,190,27,233,143, respectively. For the year ended December 31, 2023,2024, basic and diluted shares weighted average shares outstanding were 24,850,26124,861,190 and 24,850,261,24,861,190, respectively.

Consolidated working capital at December 31, 20242025 was $5,329,650,$19,618,132, compared to $9,822,546$5,329,650 at December 31, 2023,2024, aan decreaseincrease of $4,492,896$14,288,482 or 45.7%.268.1% due to the July 21, 2025 equity financing Included in working capital were cash and cash equivalents of $12,430,287 at December 31, 2025, compared to $5,405,233 at December 31, 2024, compared to $1,351,270 at December 31, 2023, an increase of $4,053,963$7,025,054 or 300.0%,130.0%, due to increasedJuly customer21, deposits2025 andequity borrowingfinancing underproceeds ourwhich related party notes. The decrease in consolidated working capital is primarily duenetted to the increase in our net loss and increased liabilities recognized due to the Aegis contract acquisition.$18,105,100.

For the year ended December 31, 20242025 we generatedused $4,060,547$9,911,674 in cash from operations compared to $817,810$4,060,547 in cash usedgenerated from operations in 2023,2024, ana increasedecrease of $4,878,357$13,972,221 in net cash generated by operating activities. Our accounts receivable balance decreased by $608,929$1,682,596 at December 31, 20242025 compared to December 31, 20232024 and our unbilled revenues decreased by $859,634$260,879 at December 31, 20242025 compared to December 31, 2023.2024. Our inventory decreasedincreased by $848,884$1,426,182 as of December 31, 20242025 compared to December 31, 20232024 and other non-current assets increaseddecreased by $510,723$464,576 as of December 31, 20242025 as compared to December 31, 2023.2024.

Accounts payable decreased by $371,736$761,131 from December 31, 20232024 to December 31, 20242025 due to our increased liquidity in in the fourth quarter of 2024.2025. Accrued expenses increased by $386,257$76,736 as of December 31, 20242025 compared to December 31, 20232024 due to timing of operating expenses. Deferred revenues increaseddecreased by $5,850,265$3,070,219 as of December 31, 20242025 as compared to December 31, 2023,2024, due to application of advance customer deposits collected in 2024 for Products that will shipshipments in 2025.

We incurred a net loss from operations of $2,135,909$4,269,176 during the threesix months ended MarchJune 31,30, 2026, compared to a loss from operations of $594,244$2,124,027 in the same period in 2025. We have a history of incurring losses from our operations and there can be no assurance we will be able to increase our revenues, manage our expenses and cash flows, and become profitable in the future.

We incurred a net loss from operations of $2,135,909$4,269,176 during the threesix months ended MarchJune 31,30, 2026, compared to a net loss from operations of $594,244$2,124,027 in the threesix months ended MarchJune 31,30, 2025. Historically, we have incurred lossesnet from operations,losses, including a net loss of $8,244,830 infor the year ended December 31, 2025, and, as of MarchJune 31,30, 2026, we had an accumulated deficit of $58,009,222.$60,157,825. Our business is capital intensive and, because our products are built to order with customized configurations, the lead time to build and deliver a unit can be significant. We may be required to purchase key components long before we can deliver a unit and receive payment. Changes in customer orders or lack of demand may also impact our profitability. There can be no assurance we will be able to increase our sales and achieve and sustain profitability in the future.

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes thereto included in this report and is qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere in this report. See “Item 1 - Financial Statements.” In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed in the “Cautionary Note Concerning Forward LookingForward-Looking Statements,” above.

Impact of Utility Power Constraints,Constraints and Data Center Construction

As more load is added to the utility grid in the form of data centers, EV charging, and other demands for power, customers are facing power constraints. Tecogen believes that these power constrainedpower-constrained customers, in particular data centers and industrial facilities, represent a significant opportunity for growth. The customer need is driven by the ability to expand an existing facility or open a new facility quickly while taking advantage of utility expense savings long term. Our chiller products can reduce the electrical capacity needed on-site by 30% or more. Our InVerde product can provide on-site power generation which allows customers to eliminate long lead times associated with electrical switch gear and bridge any short fall in power from the utility.

We have no operations or customers in Russia, the Ukraine, or in the Middle East.East, However,including disruptionsIran. in global energy supplies and volatility in global energy prices may continue to result inThe higher energy prices for natural gas as a result of these conflicts and may affect the performance of our Energy Production Segment and the cost differential between grid generated energy and natural gas sourced energy using our cogeneration equipment. WeHowever, we have also seen higher electricity prices as much of the electricity production in the United States is generated from fossil fuels. If the electricity prices continue to rise, the economic savings generated by our products are likely to increase. In addition to the direct result of changes in natural gas and electricity prices, the war in Ukraine and the conflictconflicts in the Middle East, including the recent military actionsconflict in Iran, may result in higher cybersecurity risks, increased or ongoing supply chain challenges, and volatility related to the trading prices of commodities. We are continuing to evaluate the macroeconomic environment and our ability to mitigate the impact on our business, consolidated results of operations, and financial condition.

The majority of our vendors are domestic. Although we have some exposure to Chinese and European suppliers, we do not anticipate any increases in tariffs to materially affect our operations. On July 23, 2026, President Trump imposed a broad tariff on countries around the world and the European Union, replacing expiring 10.0% global tariffs with new tariffs of 10-12.5% on imported commodities. We do not anticipate that these tariff increases will materially affect our operations.

FirstThree QuarterMonths Ended MarchJune 31,30, 2026 Compared to theThree First QuarterMonths Ended MarchJune 31,30, 2025

Total revenues for the three months ended MarchJune 31,30, 2026 were $6,335,769$5,746,136 compared to $7,277,770$7,294,820 for the same period in 2025, a decrease of $942,001$1,548,684 or 12.9%21.2% year over year.

Products revenues in the three months ended MarchJune 31,30, 20262026, were $1,175,300$1,134,772 compared to $2,533,809$3,155,323 for the same period in 2025, a decrease of $1,358,509,$2,020,551, or 53.6%.64.0%. The decrease in revenue during the three months ended MarchJune 31,30, 2026 is due to a decrease of $1,331,654 in chiller sales and a decrease in cogeneration sales of $724,128,$817,115, apartially decreaseoffset inby chilleran sales of $593,608, and a decreaseincrease in engineered accessory sales of $40,773.$128,218. Cogeneration sales in the three months ended MarchJune 31,30, 2025 were higher due to the shipment of several cogeneration systems to customers seeking tax credits under the Inflation Reduction Act of 2022. Our2022.Our Products sales mix, as well as product revenue, can vary significantly from period to period as our products are high dollar, low volume sales.

Service revenues in the three months ended MarchJune 31,30, 2026 were $4,636,394,$4,375,253, compared to $4,245,022$3,965,168 for the same period in 2025, an increase of $391,372,$410,085, or 9.2%.10.3%. The increase in revenue during the three months ended MarchJune 31,30, 2026 is due to a $412,001$247,989 increase in revenues from the acquired Aegis maintenance contracts and a $162,096 increase in revenues from existing service contracts, offset by a $20,629 reduction in revenue from the acquired Aegis maintenance contracts.

Energy Production revenues in the three months ended MarchJune 31,30, 2026 were $524,075,$236,111, compared to $498,939$174,329 for the same period in 2025, an increase of $25,136,$61,782, or 5.0%.35.4%. The increase in Energy Production revenue is due to animproved increasesite in run hours at certain sitesoperations in the three months ended MarchJune 31,30, 2026.

Cost of sales in the three months ended MarchJune 31,30, 20262026, was $3,746,107$3,572,234 compared to $4,056,730$4,832,328 for the same period in 2025, a decrease of $310,623,$1,260,094, or 7.7%.26.1%. The decrease in cost of sales is due to decreased Productsproduct shipments, partially offset by increased service contract maintenance costs due to higher labor and material costs three months ended March 31, 2026.costs. During the three months ended MarchJune 31,30, 20262026, our gross margin decreasedincreased to 40.9%37.8% compared to 44.3%33.8% for the same period in 2025, a 3.4%4.0% percentage point decreaseincrease due to higher serviceProducts contract costs.margins.

Cost of sales for Products in the three months ended MarchJune 31,30, 20262026, was $647,348$584,755 compared to $1,487,750$2,232,155 for the same period in 2025, a decrease of $840,402,$1,647,400, or 56.5%73.8% due to decreased sales of Products. During the three months ended MarchJune 31,30, 2026, our Products gross margin was 44.9%48.5% compared to 41.3%29.3% for the same period in 2025, a 3.6%19.2% percentage point increase. The increase in gross margin percentage is adue function ofto price increases instituted in 2026.

Cost of sales for Services in the three months ended MarchJune 31,30, 20262026, was $2,700,169$2,772,569 compared to $2,258,898$2,469,737 for the same period in 2025, an increase of $441,271,$302,832, or 19.5%,12.3%, due to increased labor and material costs. During the three months ended MarchJune 31,30, 2026, our Services gross margin decreased to 41.8%36.6% compared to 46.8%37.7% in the same period in 2025, a 5.0%1.1% percentage point decrease. The decrease in gross margin percent is due to increased labor and material costs incurred in 2026.

Cost of sales for Energy Production in the three months ended MarchJune 31,30, 20262026, was $398,590$214,910 compared to $310,082$130,436 for the same period in 2025, an increase of $88,508,$84,474, or 28.5%.64.8%. During the three months ended MarchJune 31,30, 20262026, our Energy Production gross margin decreased to 23.9%9.0% compared to 37.9%25.2% for the same period in 2025, a 14.0%16.2% percentage point decrease. The decreaseincrease in costs and the energy productiondecreased gross margin isare due to increasedthe gasguarantee costs at certainshortfall of our$91,912 Energyrecognized Production sites infor the threebi-annual monthsperiod ended MarchJune 31,30, 2026 compared to the same period in 2025.2026.

Operating expenses increased $910,287,$449,710, or 23.9%,11.6%, to $4,725,571$4,324,064 in the three months ended MarchJune 31,30, 2026 compared to $3,815,284$3,874,354 in the same period in 2025.

General and administrative expenses consist of executive staff, accounting and legal expenses, office space, general insurance and other administrative expenses. General and administrative expenses for the three months ended MarchJune 31,30, 2026 were $3,718,472$3,510,850 compared to $2,928,135$3,091,175 for the same period in 2025, an increase of $790,337$419,675 or 27.0%,13.6%, due to a $170,008$204,966 increase in payroll and benefits, a $147,065 increase in operating supply costs, a $102,409$29,195 increase in credit losses due to the $75,000 credit loss recovery recognized in 2025,losses, an $80,647$70,447 increase in depreciation and amortization costs, a $73,942$83,778 increase in stock-based compensation expense, a $48,845$42,381 increase in facility costs, a $48,228$4,026 increase in travel costs, a $39,156$51,103 increase in business insurance costs, offset partially by a $71,512 decrease in operating supply costs and the litigation reserve settlement of $79,006 recognized in the three months ended MarchJune 31,30, 2025.2026.

Selling expenses consist of sales staff, commissions, marketing, travel and other selling related expenses. Selling expenses for the three months ended MarchJune 31,30, 20262026, were $640,932$490,040 compared to $594,481$514,735 for the same period in 2025, ana increasedecrease of $46,451$24,695 or 7.8%,4.8%, due to increaseddecreased advertisingsales and trade show spend of $57,086 targeted to the data center market.commissions.

Research and development expenses consist of engineering and technical staff, materials, outside consulting and other related expenses. Research and development expenses for the three months ended MarchJune 31,30, 20262026, were $363,823$320,224 compared to $292,668$268,724 for the same period in 2025, an increase of $71,155$51,500 or 24.3%,19.2%, due to a $26,230$43,223 increase in payroll costs and other spending increases incurred to continue to improve and refine the hybrid-drive air-cooled chiller.

The loss on asset dispositions for the three months ended MarchJune 31,30, 20262026, was $2,344.$2,950 compared to a gain on asset dispositions of $280 for the three months ended June 30, 2025.

Our loss from operations for the three months ended MarchJune 31,30, 20262026, was $2,135,909$2,150,162 compared to a loss from operations of $594,244$1,411,862 for the same period in 2025, an increase of $1,541,665.$738,300, or 52.3%. The increase in the loss from operations is due to lower Products segment revenues and gross profit, lower Services segment gross profit and by a $910,287$449,710 increase in operating expenses.

Other income, net for the three months ended MarchJune 31,30, 20262026, was $28,154$7,105 compared to other expense net of $65,320$44,531 for the same period in 2025, an increase of $93,474,$51,635, due to increaseda $62,234 increase in interest income earned on invested cash balancesbalances, offset partially by an increase in currency exchange losses of $80,708,$9,624 and a decrease of $18,749 in unrealized losses on marketable securities, offset by a $4,065 increase in foreign exchange losses and a $1,918$1,091 increase in interest expense due to borrowings under our vehiclelease leasesfinancing duringarrangement in the three months ended MarchJune 31,30, 2026.

The provision for state income taxes for the three months ended MarchJune 31,30, 2026 and 2025 was $10,900$361 and $925,$16,762, respectively, and represents estimated income tax payments, net of refunds, to various states.

Non-controllingNoncontrolling Interest

The income attributable to the non-controllingnoncontrolling interest was $1,918$5,185 for the three months ended MarchJune 31,30, 20262026, which represents the non-controllingnoncontrolling interest portion of American DG Energy's 51% owned subsidiary, American DG New York, LLC. For the same period in 2025, the loss attributable to the non-controllingnoncontrolling interest was $567.$9,050. The loss in the three months ended MarchJune 31,30, 20252025, is attributable to the expiration of an Energy Production contract at one of the Energy Production sites.sites and the temporary shutdown of a site for repairs.

The net loss attributable to Tecogen for the three months ended MarchJune 31,30, 20262026, was a net loss of $2,120,573$2,148,603 compared to a net loss of $659,922$1,464,105 for the same period in 2025, an increase of $1,460,651,$684,498, or 221.3%.46.8%. The increase in the net loss is due to lower Products segment revenues and gross profit, lower Services segment gross profit and by a $910,287$449,710 increase in operating expenses.