Tecogen Inc.

And welcome to the Techogen second quarter 2025 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow a formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jack Whiting, General Counsel. Please go ahead.

Good morning. This is Jack Whiting, General Counsel and Secretary of Techogen. This call is being recorded and will be archived on our website at TinkerGen.com. The press release regarding our second quarter 2025 earnings and the presentation provided this morning are available in the investor section of our website as well. I would like to direct your attention to our safe harbor statement included in our earnings press release and presentation. Various remarks that we may make about the company's expectations, plans, and prospects constitute forward-looking statements. for purpose of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by 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, with the caption risk factors filed with the Securities and Exchange Commission, and also available in the investor section of our website under the heading SEC filings. While we may elect to update forward-looking statements, we specifically disclaim the obligation to do so, 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 GAAP. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is provided in the press release regarding our second quarter 2025 earnings and on our website. I will now turn the call over to Abhinav Rangesh, TKGEN CEO, who will provide an overview of second quarter 2025 activity and results, and Roger Duchenne, TKGEN CFO, who will provide additional information regarding second quarter 2025 financial results. Abhinav. Thank you, Jack.

Welcome to our Q2 2025 earnings presentation. We've made tremendous progress towards our data center strategy. We've hit some key milestones, and have generated leads for much larger projects. I'll update shareholders on progress to date, feedback from prospective customers, and how we plan to scale up. We also have an exciting product announcement. Before we get into these, I want to address the one setback during the quarter, the lower gross profit margins. This quarter, we shipped the first few units of the hybrid chiller. It had lower margins than our other products because we bought materials in lower volumes and had higher labor costs as we refine our production process and gain experience building the product. The supply chain for this product uses easily available components from multiple sources, so volume production will lead to lower costs. The other products shipped this quarter had similar margins to before. On the services segment, Our margin decline was due to increased costs in New Jersey and Manhattan. Post COVID travel times into Manhattan and between sites has increased. This has led to longer days getting the work finished, especially during the summertime when both chillers and cogeneration systems are running. This led to a much higher overtime labor hours. We've also been making improvements to our engines to double the oil service intervals. The majority of our inverter units are in Manhattan, so although this has a short-term hit to profitability, in the long term, this will significantly increase gross profit margins on the inverter. To better improve labor efficiency, we are working with our customers so we can have parts dropped off at sites ahead of service and tools stored at some of the larger sites. This means that technicians can travel between sites faster, either by parking at one location and taking the subway or having a truck drop off technicians at each site. We are also creating teams of technicians who are experts on each type of product so that diagnosis and service can be performed faster. With these changes and the increased inverted service intervals, we are still targeting gross profit margins on service of greater than 50% within the next nine to 12 months. However, management's priority is on the data center strategy. This will have the largest impact on shareholder value. My goal is to put us in a position where the market demand for our technology exceeds supply. This will in turn lead to great strategic options. For those of you who are new shareholders, I'd like to reiterate the value proposition that TicoGen offers to data centers. As chips have become more powerful, they need more cooling. Cooling systems are designed for the worst case, hottest day, full AI load. In some parts of the country, this can be as high as 120 degrees Fahrenheit. When you design for the peak, you tie up a lot of the data center's power since you don't know when you'll need to turn on the cooling system. In the past, this wasn't a big problem. but with the latest NVIDIA Blackwell chips, it could be anywhere between 25 to 35% of a data center's power. And it's only increasing as chips get more powerful. If you take this peak and move it to natural gas, you will have a lot more power for IT. I know many of you might have heard of data center cooling technology, such as liquid cooling, immersion cooling, et cetera. All these technologies are targeted at what happens inside a data center. All of these technologies still connect to a chiller, today powered by electricity, to eliminate this heat. Our chillers can interface with any of these liquid cooling or immersion cooling options. I'll explain what makes TicoGen's solution unique and how we plan to expand our technology edge. But first, I'd like to walk through some of the projects we are quoting and why our solution is being considered. We assigned our first LOI with 100 megawatt plus data center. This letter of intent contemplates delivering six SDX chillers in Q4 or early next year, depending on the customer's construction schedule. The chillers will be used for part of the room cooling load in the first phase of the project. If the customer likes the chillers, they will use more of our chillers for the subsequent phases of the project. This project has great potential as the customer expects to eventually expand the site to greater than 500 megawatts, and we hope to grow with them. This project is one of the best use cases for our chillers. The customer has some grid power, so they want to save it for IT and not waste it on ancillary loads like cooling. We've also been asked to quote two projects with 60 to 100 chillers apiece. These projects expect to commence construction sometime in 2026. The timing on these projects is contingent on the data centers finding their anchor tenants and receiving construction financing. On one of the projects, the potential customer wants to use our chillers to increase the power available for IT in two ways. The first is for cooling the chips. The second is for turbine inlet cooling. In some of these larger data centers, customers are building onsite power plants with gas turbines from large companies like GE, Caterpillar, et cetera. As the outside air gets hotter, these gas turbines or jet engines make less power. If you can cool the air entering the power plant, you get a lot more power. Our chillers are perfect for this since they run on natural gas, the same as the gas turbines. We have also received other inquiries where we are at earlier stages, but have similar potential in terms of chillers per project. Currently, these leads are from our own marketing efforts. As mentioned before, we've been going to trade shows, doing direct outreach to data center developers and to engineers designing data centers. As a result, we are getting great inbound leads. With our recent capital raise, we have also engaged a marketing firm and plan to advertise in key data center publications. Over the last three months, we also continue to have strong engagement with the Vertiv team. They have put together a great marketing plan. Their marketing plan has taken slightly longer to be approved internally, but we should see more from them soon with activity ramping up over Q3 and Q4. We have also been developing some relationships with very large data center developers. For example, we were on a call with a developer who was deploying 80 or more pillars every two months. They had their key engineers and purchasing people on the call with us. Feedback from them has given us a better understanding of decision-making for bigger projects. Some of the key areas that we've learned from this is, first, speed of deployment and avoiding space usage inside the data center was critical for them. Therefore, they wanted a solution that requires minimal engineering design and was prepackaged to be installed on a roof or outside a data center. Second, to be considered for larger projects, we needed to have a significant production capacity. Our team looked at how we could address these needs in the shortest time possible. To address the speed of deployment, we have an exciting product update. Shown here is our new fuel power source 300 ton data center specific chiller. This chiller is built from our standard hybrid chiller. So R&D time is minimal. It takes two of our hybrid chillers and puts them end to end with some minor modifications to have increased efficiency and more cooling at data center liquid cooling conditions. Using bigger chillers is attractive to data centers because it saves space. It is self-contained, so it can be easily installed on a roof or outside. For example, the hybrid chillers we shipped to a commercial customer in the second quarter are already running on site. They had their piping already installed, so as soon as the chiller arrived, They connected the pipes and started it up. This chiller has some big advantages for data centers. The first is, of course, bringing up power for IT. Second, a huge increase in resiliency because of two power sources. The two power sources also gives long-term fuel flexibility. A data center can choose to run the chiller on natural gas, electricity, or bulk, all from the same chiller. Lastly, one area of particular concern to data center customers is having uninterrupted cooling. Currently, if a data center runs on electrical chillers and the power goes out, the chillers will shut down. Then a diesel generator will start up and bring the chillers back online. This process can take five minutes or more. Given the amount of cooling needed, customers need to install large thermal storage tanks to ride through the time between power loss on the chillers reaching full load. When a natural gas chiller or a dual power source chiller, the chiller can keep running through a blackout because they don't need electricity to run. This dual power source chiller is also something that's very hard for competitors to replicate. So we feel this gives us an added technology edge. I'll show you why it's hard to replicate. The dual power source chiller uses a patented inverter system that we developed in-house. This can take two power sources and blend them seamlessly. The underlying software and power electronics has already been proven in our Inverte product over 8 million hours of operation. It uses the same patented emission system we use in our other products for super low NOx and CO. That means that data centers to get easy air permits. I've sometimes been asked why someone couldn't just buy a generator and market next to an electric chiller, or if a competitor could replicate our solution. The key to making a natural gas chiller solution work reliably and efficiently requires integrated controls for engine, emissions, and refrigeration. It also requires engine expertise, 24-7 service, and a supply chain to support demanding operations. As a result, it would already be hard for a competitor to copy our DTX and SDX water cooled chillers. This product pushes our technology edge even further. The dual power source technology can even be licensed and integrated with chillers built by other manufacturers with some minor design modifications. As I mentioned earlier, these are all strategic options to consider once we have established demand for the solutions. The second part of securing orders is having the factory capacity to produce enough units. In many cases, potential customers wait until their anchor AI tenants are secured, then deploy capital to construct the data center. Therefore, lead time and the ability to supply a large chunk of a data center's cooling needs is a big part of the decision making. We raised capital for two reasons. First, to have a stronger balance sheet for potential customers who feel comfortable giving us larger orders. The second is to put us in a position to build up capacity. We estimate that with no modifications to our factory and eliminating any supply chain bottlenecks, we can build 40 to 60 chillers a year. We believe that it's possible to increase this number to 80 to 100 chillers with some minor factory modifications and utilizing contract manufacturing for certain sub-assemblies. For example, items such as the sheet metal assemblies on the air-cooled chiller is labor-intensive, but there are multiple contract manufacturers who provide overflow capacity for electric chiller. We are already in discussions with these suppliers. This sub-assembly will arrive at our factory for integration with engine and power electronics. It will be tested and then shipped. Given that we may see orders for water-cooled chillers or air-cooled chillers, we are modifying our factory to add additional test cells and have a more flexible layout so that we can adapt to any kind of product mix. We estimate that the capital investment here is less than 100,000, but will help us react to market needs quickly. We're also working with our supply chain to identify potential bottlenecks and plan to increase inventory of items such as circuit boards, permanent magnet generators, and certain other low dollar but critical items. I believe it is important to look at the road ahead in terms of milestones so that we can move towards hitting some of those strategic goals. As I mentioned at the start of the call, My goal is to maximize the value of TigaGen. In my opinion, this comes from generating enough interest for our products in the market so demand exceeds supply. The second is to figure out the best strategic option on a go-forward basis. There are multiple ways to quantify the value of TigaGen. For example, if our solutions give a manufacturer selling complementary products a competitive advantage, that allows them to secure more data center orders, and that is worth a premium. or if a hyperscaler or large data center developer can construct a data center faster because they don't have to wait for power, keeping this technology out of the hands of competitors is also worth it for you. But before we can explore such options, we have to meet a couple of key milestones. The first milestone is turning the LOI that we received into a PO as quickly as possible. The timing on this is contingent on factors outside our control, such as developers signing their AI tenants and unlocking construction tenants. However, both the LOI as well as all the other projects that we've been asked to quote are in high demand areas. So we believe tenants and construction financing will be easily secured. The second milestone is to secure a larger portal. Given the great projects we've already quoted and the new leads we are getting each week, our goal is to attempt to sell all our capacity for 2026 to one or two customers, even if this takes a little longer to secure. Concurrently, we're working with Virtus on both the marketing and the supply chain. Originally, I thought we would not see larger projects until we had pilot projects operating. Now I believe we have the chance to secure a larger order because we've addressed or are in the process of addressing some key areas of customer concern. We have a strong balance sheet. We will have the manufacturing capacity. Finally, we have a chiller product with two power sources for extra peace of mind. Backlog and cash. Our current cash is presently at $18.7 million. Our cash was at 1.6 at the end of the quarter and is now at 18.7 post-race. As mentioned, we plan to spend cash on marketing and some key materials. Our backlog is at 4.7 million. This does not include any of the units we have LOIs for, and we are expecting another 2.5 to 3.5 million of cannabis projects to close in the second quarter. We now, these have been slightly delayed, so we expect these to close now in Q3 and Q4 and hopefully ship in Q4. As mentioned earlier, all our focus is presently on converting some of these larger leads into orders. It is in the best interest of the company to say, have one or two larger projects because this will act as a stepping stone to even larger projects. The last item to note is that we are considering repaying the related party note early, so we don't have any debt on the balance sheet. I'll now hand over to Roger to take us through .