Thank you.

Good morning. This is Jack Whiting, the general counsel and secretary of Tecogen.

This call is being recorded and will be archived on our website at Tecogen.com. The press release regarding our second quarter 26 earnings and the presentation provided this morning are available in the Investors section of our website.

I would like to direct your attention to our safe harbor statement included in our earnings press release and presentation. Various remarks that we make about the company's expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions of the Securities Litigation Reform Act of 2000.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors, including those discussed in the company's most recent annual and quarterly reports on Forms 10-K and 10 Q under the caption Risk Factors, filed with the Securities and Exchange Commission and available in the Investors section of our website under the heading SEC Filings. While we may elect to update forward-looking statements, we specifically disclaim any obligation to do so you should not rely on any forward-looking statements as representing our views as of any future date.

During this call, we will refer to certain financial measures not prepared in accordance with Generally Accepted Accounting Principles or GAAP. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is provided in the press release regarding our Q2 26 earnings and on our website.

I will now turn the call over to Abinand Rangesh, Tecogen's CEO, who will provide an overview of second quarter 26 activity and results and Roger Deschenes, Tecogen's CFO, will provide additional information regarding Q2 financial results.

Thank you, Jack. Welcome to Tecogen's Q2 26 call.

Today, I would like to start with a key question that many of you may be wondering about. Given that Tecogen has been working on the data center strategy for a while, and the product seems to make perfect sense for the market.

What is taking so long for orders to close? Is there something missing in the story?

To answer those questions, I believe we need to start with the objective. In my view, the objective is what is the fastest way to maximize the value of Tecogen?

Given we have great technology, but have resource constraints as a small company. Originally, our strategy was to target smaller data centers.

We could then use that as a reference to get the bigger names interested. As we got bigger names interested, the company's technology starts to become incorporated by big brand data centers and now we have technology that everyone wants.

Making Tecogen very valuable. Now we may have an opportunity to go straight for the end goal.

Which is the hyperscale and big brand developers. In March this year, I shared an opportunity pipeline with you.

Many of these opportunities were with data centers that were of smaller scale. While many of these projects will likely close, these projects are subject to external factors such as tenant delays in construction permits, etc.

The big data centers do not have the same limitations. In addition to these smaller opportunities, we have been simultaneously working on access to the larger names.

It has taken an enormous amount of work on the part of our sales team to make inroads on some of the larger names. But now I believe we have managed to gain some serious traction.

Over the last 2 months, we have hosted 12 product demonstrations, 6 in person and 6 virtual. The in person group included 4 data centers that are hyperscale or build in hyperscale campuses and partners.

The virtual visit group included chip manufacturers, engineers, and another 4 data centers. These data centers collectively represent greater than 8 gigawatts of data center capacity operating today and multiple gigawatts in construction.

Although I cannot tell you the names of the data centers that attended, I am sure you will know many of them. Put this into perspective, the data centers that attended either virtually or in person, collectively represent 15% to 20% of present data center capacity in The U.

S. The natural question at this point is, does attending this product demonstration show any real commitment or interest?

For the in person group, given how busy data center engineers and senior level people are, locking off a whole day for multiple people is a significant commitment. It has taken many months of finding the right internal champions with influence at these larger companies and educating them on the value of our products before we got to this point.

Second, beyond the list that attended, we are talking to other large and hyperscale data centers. The ones that are earlier in the process declined attending.

This is consistent with our experience in other markets where once a potential customer attends a site visit, our close rate is usually high as they are serious about entering a business relationship. Lastly, I think the market has also evolved.

In addition to power, there are some key challenges the bigger data centers are facing that our products solve. As you may have read in the press, many data centers are facing opposition for on-site water use, noise, and air pollution.

Here's where our products really shine. We solve all 3 problems.

The dual power source chiller is closed loop so there is no water evaporation. Our products already operate in noise sensitive environments.

Such as on rooftops next to penthouse apartments. Recently, during the scorching 4th of July weekend, black smoke could be seen in Northern Virginia from continuous diesel generator usage from data centers.

Diesel generators were being used to avoid a blackout as the utility grid was running out of power. And forcing data centers to shed load.

Therefore, unlike a diesel generator that attracts noise complaints and pollutes, data centers can install our product without worry. This is where seeing a product demo brings these benefits to life.

There is a difference between seeing a data sheet with a decibel reading and hearing our products in person. Or reading about near zero NOx and carbon monoxide emissions versus seeing the readout from an emissions analyzer in real time.

there is also a big difference between saying you can add extra megawatts for compute. During hot days versus watching in real time a jump in cooling load and seeing the electrical power remain capped.

Or saying you can provide uninterruptible cooling during a power outage versus watching someone shut off the electrical power to the chiller while it is running. These big name data centers have permitted projects.

Capital and the ability to shape the whole industry. The feedback has been extremely positive across the board and specific projects delivery dates, etcetera, have been discussed but we feel confident enough to begin building some inventory of our dual power source chiller and Tecogen modules to get a head start.

In addition to the data center push, our base business backlog now stands at greater than $8 million. In addition to what is already in backlog, we expect a further $2 million to $3 million in projects to close over the next few months.

This means we expect product revenue to increase in Q3 and we expect to collect more deposits improving cash flow. Although our focus has predominantly been on our data center strategy, during the last call, we mentioned that we expected to reduce expenses in our service group.

To increase margins. During Q2, these reductions were made mid quarter so the full impact will be seen beginning in Q3.

1-time costs in Q2 reduced margin by around 7 percentage points. Without these 1-time costs, margin is starting to recover in service.

In addition to cost reductions, we have also started to make contract pricing adjustments where appropriate. And are working with customers especially on larger sites to make improvements that would help them increase run hours and help us increase revenue and margin.

Given that our service revenue was substantially higher year-on-year, this continuous improvement is expected to result in higher margins and therefore a significant increase in gross profit dollars. I will now hand over to Roger to talk about the financials.

Thank you, Abinand, and good morning, everyone. I will begin with the results for the second quarter.

Total revenues decreased 21% or $1.5 million in the second quarter to $5.8 million compared to $7.3 million in the second quarter of 2025, and this is due mainly to lower product segment revenue. As Abinand indicated just moments ago, we expect revenue to increase in the third quarter based on the recent increase in our backlog and the anticipation of expected projects that will close in the next few months.

Our gross profit decreased 11.9% to $2.2 million in the second quarter of 26 compared to $2.5 million in the comparable period in 2025. And again, this is due to products segment revenue.

Our gross margin-- Our gross profit margin increased by 4% to 37 to 37.8% in the second quarter of this year from 33.8% in 2025, and this is due to improved products segment gross margin. Operating expenses increased 11.6% in the second quarter to $4.3 million from $3.9 million in the second quarter of 2025.

And this is due to increased operating costs in both Products and Services segments and the general increase in operating costs incurred for the manufacturing capacity expansion that we are undergoing and the continued development and refinement of our dual-source chiller which as we all know is focused on our entry into the data center market. During the just concluded quarter, we reduced headcount at a few of our service centers as we work to reduce our spend there.

Overall, operating expenses decreased approximately $400 thousand in the second quarter of this year compared to the first quarter. Our net loss for the quarter increased to $2.2 million from $1.5 million in the comparable quarter in 2025, and this is due to lower products segment sales and gross margin and an increase in operating expenses.

Moving over to adjusted EBITDA for the quarter. The adjusted EBITDA loss was $1.7 million in the second quarter of this year, which was higher when compared to last year's loss of $1.2 million, And this is due to lower products segment sales and gross margin and higher operating costs.

Moving to performance by segment. Products revenue decreased 64% to $1.1 million in the second quarter of 26 from $3.2 million in the second quarter of 2025.

The revenue product segment revenues last year benefited from the shipment of cogeneration systems during this period to customers seeking tax credits from the Inflation Reduction Act of 2022. As we have discussed in the past, product revenue has significant variability quarter to quarter.

Our products margin gross margin increased 19.2% to 48.5% in the second quarter of this year from 29.3% in the similar quarter of 2025 and this is due to price increases and change in product mix. Our services revenue increased 10% quarter-over-quarter in 2026 to $4.4 million which compares to $4 million in the second quarter of 2025.

And this is due to higher billable activity and higher operating hours of our equipment from both our existing service contracts and our Aegis-acquired contracts. Our service gross margin was essentially flat compared to last year.

During the second quarter of this year, as I indicated, we spent approximately $300 thousand of 1-time cost at a handful of sites that we service, which are electric chillers as part of our energy sites that we sold to SDCL Kyotherm in 2029. In fact, 1 of these electric chillers had a catastrophic failure at the start of the cooling season and needed significant repairs and the additional cost of rental cooling during the time the systems were being repaired.

Excluding this 1-time cost, as Abinand indicated earlier, gross margin from our service operations would have been 7% higher in the 2026 period. Our energy production revenue increased 35% in the second quarter of this year to $240 thousand from $170 thousand in the 2025 period.

And this is due to increased uptime at certain energy production sites. The energy production gross margin gross profit margins decreased 2.9% in the second quarter of 26 from 25.2%.

And this is due to the guarantee shortfall of just under $100 thousand that we recognized in the quarter. I will now hand the call back over to Abhinad for closing remarks.

Thank you, Roger. At this point, there are 2 conclusions you could reach.

The first, that it has taken a long time to date so the company's prospects in the data center market are slim. For the second, that it has taken a while to navigate the data center landscape.

And get access to the right champions at the largest data centers. Now that we have the potential addressable market is massive.

After all, why would some of the largest data centers bother to take a day out of their busy schedules to attend a product demonstration. Given that we now have a range of opportunities from small data centers to the largest players, what is the likelihood that nothing closes?

Especially if we have some inventory on hand, and delivery risk is eliminated. If we land even a pilot project with a big brand data center, what does it do to our prospects industry wide?

Management and the board have consistently bought stock because we believe the company has technology that solves some fundamental problems facing not just data centers but a whole host of markets. You decide which conclusion makes most sense.

Thank you, and I will open for more questions.

Hey, good morning team and thank you for taking my question. So very exciting to hear about the 12 demonstrations.

I wanted to unpack that a little bit more. We are all 12 demos with 12 different potential customers, and you disclosed having those 6 demonstrations at the beginning of July, so you had another 6 over the last month.

Was there any acceleration in that? Just curious to hear more there.

Great question, Bobby. So out of the 12, 8 were potential direct end customers.

The rest were engineers or other people, either designing data centers or partners that could help us accelerate some of that. So, really, that have key influence on the end result.

And then 1 of them was 1 of the chip manufacturers. So generally, it was all high profile visitors.

Definitely, what we tried to do with regards to the scheduling was to schedule the most important ones toward the end. Just so we got better practice with the demonstrations as well.

I just so happened that is how the schedule work. So we gradually escalated in terms of size towards the so which is why our press release earlier in July probably showed a lower installed capacity we had more towards the end.

Got it. that is helpful.

So 12 so it was, like, 12 different customers across the 12 visits?

Yeah. So exactly.

12 different entities.

Got it. And then, when we spoke after the last print, you mentioned how the larger data center operators were sort of split in 2.

Both interested, but group 1, let's say, would learn of the capacity limits you currently have and sort of lose interest and say, call me when you can do more. But then interestingly, you had mentioned that second group were some who were seemingly willing to scale up with you.

So I wanted to follow-up there, and hear if today's commentary on these larger potential customers as sort of evolution of that second cohort getting more comfortable on the technology, Or just any additional color you could share on that dynamic?

Yeah, yeah. No, that is a great question.

I believe 1, once, you know, again, when people come for demonstrations, there is generally a certain level of interest. Right?

The way, at least, I think of the sales process, you have got 2 portions to it. The first part is getting the interest up to the point that somebody says, this makes sense for me.

Then the second part of it is, of course, reducing the anything that might add friction to it or might act as a negative to them not closing the deal. Right?

And out of that capacity is 1 of them. that is part of why we are starting to build some inventory so we can cut the lead time and we can turn these things around without having to tell somebody you need to give us an order.

Right away and this is our lead time. Right?

We can start getting a head start on some of that. Having said that, I believe based on all of the discussions that we had during these meetings, Again, the advantage of having especially the ones in person as you get a decent amount of time to really probe their requirements and what they are looking for and where they think we are starting to find, I think, applications that we could essentially start small and grow with them.

That is also 1 of the advantages of these bigger data centers that have existing locations because you could either add almost as a retrofit of the pilot or you can do it as part of 1 phase of a bigger project. So there are ways to do this without having to have all that capacity upfront.

And we believe that this is either the capacity issue, although is important, I think there is a way around it in this case, but we will see as further discussions go forward.

that is really helpful color. And then maybe just on building the capacity ahead of orders as the confidence has grown.

Was just curious to get a sense on the size of that and how much that might cost. Thank you.

I am not sure I can comment on that exact number. I will give you kind of a sense of how we think about it.

What we are thinking about is what would people want let's say, in the very end of this year towards the early part of next year. Right?

What sort of a rough number? And then if we can if we have let's say, have 3 or 4 different potential customers saying, I need roughly this amount of capacity, then we will say, okay.

Our odds of if we build x amount, then we will sell it to at least 1 out of the 3 or 1 out of the 4. Right?

We our odds are good in terms of getting that sold. So that is how we are thinking about it in terms of risk, cash, and in terms of also timing because I think part of the issue I am sure everybody is thinking about is does this mean in terms of cash flow and inventory?

And if we time it right, in theory, we should be able to bridge we will not necessarily need to put up all the capital upfront. Right?

it is if you look at the timing of when these things could potentially be shipped or delivered, that is what we are hoping for. But even if it ends up flipping a little bit, that it allows us to manage the risk versus the cash flow.

Very helpful color. Appreciate it.

Appreciate it. I will return to the queue.

Hi, Abinand. Hi, Roger.

Good morning.

Hey, Eric.

Good morning, Eric.

Hey. So maybe first, talking about those 12 demos, just curious if there is a way to think about that?

Which opportunities you may pursue under the Vertiv relationship or not? Or is that even the right way to think about this?

I mean, is that is that kind of a separate path?

I would say the 2 are parallel paths. Pretty much all of this.

All the demos that came were arranged through us and our sales team and our marketing efforts. We of course, if it makes sense in these projects, there are places where it may make sense to collaborate.

But right now, those all came from our marketing efforts.

Got it. And then maybe sticking with Vertiv, I know you are you got the initial order.

Just curious if you can speak to both the progress towards finalizing the MPA. And then also, I know you have talked about in the past, that Vertiv was specking you into, I think, 25 to 50 megawatts of projects.

Maybe if you could just give an update on where those specific projects stand?

Yeah. So 1 thing on this particular call, you know, we as we have mentioned anything, of course, on either party, right, we have to get prior approval on both sides.

In this particular case, I talked to my counterparties and we decided that let something close so that we save the approval process with Vertiv for something that is more substantial. So at this point, I cannot comment too much on that.

Without so I think, you know, stay tuned. Let things happen, and we will announce deals as they happen.

Okay. But beyond the deals, in terms of just progress towards the NPA?

I mean, is that still in process?

Yes. So I think things are in a very good place overall.

With them. I just cannot comment at this point because, again, I did this time around yet.

Yep. specific mission for it.

Understood. Yep.

Understood. Okay.

Last 1. So building inventory, I know you have built some inventory over the last 3 quarters.

When you are highlighting specifically building inventory in your prepared remarks and now, Is that saying that there is more inventory build to come? And then how do you kind of manage that versus some of your capital constraints that you talked about?

Yeah. So we had a little bit of inventory earlier, but as our backlog has increased for the non data center projects, a lot of that inventory is going to get absorbed.

As part of that. So we have to add additional it is also as I mentioned, we are trying to manage this in such a way that it is really it is less a matter of total inventory.

it is a matter of figuring out how do you compress the lead time. Because typically, with some of these projects, right, there is a lot of things moving in the background.

And you may get various progress and verbal approvals. But as you may not get a purchase order for a while as even though we might know that things are progressing, things are happening.

We do not want to have a delay at that point. We would rather know that, okay.

We are going to get-- we feel very confident we are gonna get these projects. In which case, let's get so as soon as we get a purchase order and get a deposit, we can start shipping.

And that is that is how we are thinking about it. So trying to balance the cash flow versus that, but we also feel that it is important to be able to move quickly especially because at this point, we have the interest of these bigger names.

We do not want to make sure that we are able to respond quickly. And then, hopefully, once we get some units starting to ship, then we can start ramping up very quickly from there.

Thank you.

Hey, good morning. Thanks.

Wanted to maybe follow-up on it. Hey.

Morning.

Follow-up maybe around the demos and some of your comments, which makes sense around balancing capital and compressing those lead times. Just the discussions you have had, I think you alluded to, even talking about dates Is it maybe just help frame that out, like, a range of whether it is, you know, sort of those pilot early phases versus, larger potential opportunities, just any sense of, you know, what those kind of dates are panning out?

where those type of dates, are panning out. So part of that is it is like I cannot comment too much on that.

What we are trying to do is to have really work with these end customers to figure out, you know, how we can scale with them. So we think in at this point in the company's-- like where we are, it is probably more important to get the right names as in terms of first projects, if we can do that.

Just because if you get the right names, you end up shaping all the future development. Right?

Once you have the right brand name, everybody else is gonna follow hopefully, based on, you know, the right name using it because it is, I think, reputationally probably more important to get that done right than necessarily-- I mean, whichever order we get. Of course, if we get a smaller data center first, we are gonna take that.

But our priority right now is to try to get the right brand names. Closed if we can.

Understood. that is helpful.

And we will look forward to hearing updates. And maybe just for my follow-up, the base business, right, with that backlog increasing, good to see.

And it looks like you expect some more here. Just the trends you are seeing, there and any changes in sort of base markets.

So we are starting to see power constraints across the board all over the place, which is in the past, a lot of our sale, whether it was chillers or cogeneration, was made predominantly based on economics.

We are starting to see a lack of power electrical equipment having long lead times, those kind of things affecting the ability for the non data center type customers to have access to, you know, cooling or power generation or any of that equipment. So we are starting to see that driving some of this.

We are also starting to see a little bit of the cogeneration and standard power generation side of things start to come back for a while. That had significantly reduced, but we are starting to see some of the larger multifamily buildings and other types of buildings that are seeing high utility rates.

that are and in some cases, not enough power that are looking to use our equipment. So I think the base business is growing just as a result of some of what the data center space is also facing.

And part of what we have seen in that base business, right, things like Switchgear, things like that are having longer lead times is also what is making us feel like having some of that inventory on hand, will also likely pick up potential customers that are trying to get other electrical equipment they are not able to install electrical based equipment just because the switch gear and things like that might be longer, that we could essentially pick up projects just that way as well.

Yeah. No.

That makes sense. Okay.

No. I appreciate it.

Thanks very much.

Good morning. I have got a question about how you-- oh, yes.

I have got a question about the direction you see the market going for you is it going to be original data centers built from scratch or is it going to be retrofit? Of existing centers?

And then in those instances, would it be participating in expansions of existing data centers. Rather than just pretty much how they have been built.

that is a great question. Actually, we have seen both.

If earlier a lot of our opportunity pipeline was with newer type projects, but we are starting to see more with existing data centers in a few different types of applications. 1 is, you know, the AI side of it gets a lot of the press.

Right? But there is still a lot of existing cloud data centers that are supporting either the AI infrastructure, but also just regular web workloads.

And many of those are running out of power. And their cooling load may not be quite as big of an AI data center, but it is still there.

And if they can free up some of that, then there is benefits there. So we are starting to see some potential in those kind of applications.

We are seeing some potential customers say we can incorporate this as part of, you know, a bigger campus where they do it in 1 phase or as they build it into a certain phase of an expansion. And then there is also, like, the smaller data centers that might use it as a primary cooling source.

So there is different applications that we are starting to see And then there is also a push, I think, more broadly in the industry to start moving towards maybe smaller centers that are closer to urban environments just where you can pick up pockets of power. And in those areas, again, are cooling products could be a very, very good fit.

But we are seeing a mix of different types of applications right now.

But you see an opportunity to retrofit where someone has an electric chiller and they say, well, let's take that out and install Tecogen instead. Is there any what is the opportunity there?

That actually is that we are seeing some potential opportunities like that. But what is more likely to happen in those kind of applications is, because with an existing data center, the actual act of doing the retrofit tends to be because the it is a live site, so they might add it to either as almost like an expansion into because many of these data centers typically have some additional space they set up for future expansion, whereas they may not necessarily remove the electric chiller.

They might leave it in place, add us in. And put the electric chiller now as a backup.

So that is a more likely application than a pure remove the chillers. But we are seeing some people that are looking to remove electric and move to what our said.

And thank you. I am interested in what you said earlier about solving the or helping to solve the problems of pollution and noise And there was a third 1 The water usage?

Water pollution and noise. How do you how do you do that?

In your case?

So if you look at yeah. So there are 2 different ways you can do it.

Right? 1 is with the chiller.

Because, typically, when a utility wants you to shut down your or reduce power from the grid, it is usually on the hottest days. Just because that is when everybody else has their air conditioning system on.

And the utility starts to get very constrained, they start asking large load users to drop. Load.

In which case, the your alternative and a lot of what happened in Virginia, for example, was the diesel generators were turned on. What we would do in our case, right, was just have that load either dynamically move to natural gas or have that those chillers just be turned on in those applications so that load moves over to natural gas.

Because our equipment is designed for continuous usage and originally, like, our Ultera emission system was designed for Southern California, so we have very, very clean emissions. The our carbon monoxide NOx is very, very low.

Right? it is so in that sense, substantially cleaner than a diesel generator.

The other thing is because our machines have been designed for continuous usage, whether it is the InVerde product or the chillers, Designed for pretty low noise urban environment. So you could be standing next to it and you would hear it, but it is not gonna be bothersome, no more than ambient.

Noise. So in that sense, it is substantially quieter than those diesel generators.

So that is the first is the chiller application. The second application is also potentially the inverter.

it is not necessarily gonna run all your loads, but there are certain standby loads. There are other loads again that you may not wanna have your massive full data center load coming on smaller power systems like InVerde's.

But because it is modular, you essentially could add the inverter in conjunction with the chillers to shed some of that load during that peak time. And not turn on the generator and keep the diesel generator really just for emergency use.

Okay. Okay.

Well, thank you very much.

Thank you, Alexander.

Thank you very much, everyone for, attending our Q2 26 conference call. I will keep everyone updated as things move forward.

I believe we have gotten the interest. We are gonna do everything in our power now to turn this interest into projects, but I will keep people posted.

And, hopefully, we will update, and we will have some interesting news over the next few months. Thank you.