Tecogen Inc. (TGEN) Q1 2017 Earnings Report, Transcript and Summary

Good morning and welcome to the Tecogen First Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today’s presentation. [Operator Instructions] For your information, this conference is being recorded. A recording of this conference call will be available for playback approximately one hour after the end of the call and will remain available until Thursday, November 17. Individuals may access the recording by dialing 877-344-7529 from inside the United States and 855-669-9658 from Canada or 412-317-0088 from outside the U.S. Enter the replay conference number 10105269, followed by the pound sign. Now, I would like to introduce Mr. David Garrison, Tecogen’s Chief Financial Officer. Please go ahead.

Thank you first I’d like to start off by reading the Safe Harbor statement. This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include declarations regarding the intent, belief or current expectations of the company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance. And involve a number of risks and uncertainties that can materially and adversely affect actual results as identified from time-to-time in the company's SEC filings. Forward-looking statements provided herein as of a specified date and are not hereby reaffirmed or updated. I now hand the call over to John Hatsopoulos, co-CEO.

Good morning ladies and gentlemen. I would like to mention to you that Bob Panora who usually gives us an update of the technology is not going to be with us today. And the reason is quite simple he was in Asia past few days and he arrived from Asia late last night. And as you know some of you that have travelled at different time zones. It's pretty exhausting, so Bob is still in bed. Trying to catch up with his sleep and you’re going to see or hear from him hopefully on the next conference call. Now, there is another thing I wanted to mention to you, which is not surprising, but it confirms an article that was written yesterday. It was printed yesterday in Wall Street Journal by one of our friends and shareholders. Two or three weeks ago, I was approached by one of our shareholders actually, a couple of our shareholders. And said that it's been 10 years, since your bond Tecogen, and how come you haven’t achieved it in what you were supposed to do. Well, whoever it is people were and I'm not going to mention any names for obvious reasons, but they were very generous because in reality. It’s been 30 years since Thermo Electron started Tecogen. And Tecogen for 30 years got no place. As a matter of fact, we had offered on some subsidies for the gas industry, from the parent company and so forth. But Tecogen basically stayed flat, with a small loss or small profit or whatever. Then we were who had bought the majority shares, my brother and I bought the company. We along with a couple of other shareholders and we joined our management with two spectacular people, one was in the company already and one then joined us actually his father was my colleague and helper when I did road shows and that is Ben Locke. Ben Locke has done a spectacular job in managing the company. And managing the space. And the second one is Bob Panora who was a junior when he joined Tecogen in Thermo Electron in the late 70s, early 80s and he’s in-charge of technology and innovation. Between these two, they managed to turn the company around and you saw the results today. The technology and innovation that was created and the sales have been dramatically. As you hear from Ben, our operating profit was up something like almost 35% since last year, the same quarter last year and the combined gross margin was up 25%, 26%. All of it is because of sales, technology and innovation and by coincidence one of our very good friends and actually a shareholder had an article in the Wall Street Journal yesterday under opinion with a headline prepare for a new super cycle of innovation. Well, that's where we and Ben will tell you about what's happening with the company. I think this is the beginning of dramatic improvement of Tecogen. With that I'd like to ask Ben to give you an update.

Thank you John. So, I’d like to start off the call by reminding those who may be new to our company about Tecogen’s core business model shown on Slide 4. Heat and power and cooling that is cheaper, cleaner and more reliable. Our proprietary technology for improving efficiency, operations and good resiliency is truly disruptive to the traditional methods heating, cooling and powering buildings and infrastructure. And as I’ve said in previous calls, this is an exciting time for Tecogen and our shareholders. Coming off a tremendously productive 2016 in terms of technology development, sales and marketing improvements, business development activities and financial performance. First quarter of 2017 is continuing that trend. Turning to slide 5, total revenues for the first quarter was $6.8 million versus $5.1 million in the first quarter of 2016, a 35% growth quarter-over-quarter. The main driver for sales in the quarter was cogeneration systems. Reinforcing the superior technical performance of our new InVerde and e+ system. Service revenues also increased dramatically to $4 million primarily due to strong sales of our turnkey installation support solutions. Our gross profit for the quarter increased by 70% from the prior year quarter to a $2.9 million a new record for the company resulting in net income from operations of $78,000. This was helped by impressive gross margins of 42.6% in the quarter versus 33.9% in Q1 of 2016. The higher gross margin reflects our improved product margins for our cost control initiatives and increased margin from our Service segment. All of this contributed to the fourth quarter positive net income of around $45,000. This is our third straight quarter of profitability and gets 2017 off with a tremendously promising start. Turning to slide 6, I’d like to spend some time reviewing some of our achievements for the quarter. First, as I mentioned much of the growth in sales for the quarter was due to the tremendous success of our new and improved flagship product, the InVerde and e+. The technical superiority of the product is well recognized by our customers, whether they’d be engineering companies, ESCO’s [ph] or project developers. The product is uniquely suited for large projects with distributed loads. For example, a large residential building complex could have four or five buildings. Each with their own thermal load, behind one large electric meter for the entire complex. A larger CHP unit would have to be installed in a central location with long and expensive runs of pipes and wires to meet each building’s needs. However, our InVerde is perfectly size to be placed in each building close to the electrical and heating connections, but from the perspective of the main electric meter for the complex because of our unique microgrid technology, it looks like one big CHP plant. Thus the cost effective solution of the InVerde e+. We have several large projects to fit this model, which is represented in our backlog that I will get to shortly. Next, we are growing our service revenue base through increased sales of our turnkey light installation package. You think of this as a middle ground between selling a CHP unit alone with somebody else installing it. Our full turnkey installation of a CHP system where Tecogen controls every aspect of the installation and commissioning of the system. The turkey light package consists of components designed and engineered specifically for the project by Tecogen, built and packaged and shipped from our facility, along with the CHP unit. This allows a third party contractor who may already have a relationship with the project to install the CHP system themselves with most of the difficult engineering already done. This has demonstrated to be an excellent way to balance full turnkey installations, which sometimes require significant Tecogen management resources. We think our first quarter performance will continue throughout the year because of the solid groundwork for continued growth we have created. We continue to strengthen our relationships with various energy service companies or ESCOs. CHP has become an important part of performance contracts, ESCOs provide for school systems, municipalities or other large energy consumers seeking cost saving measures. Next, we're continuing to grow sales outside of our core product range with our joint venture TTcogen. We installed three smaller units thus far with several more planned. Of course, we are early anticipating the completion of the American DG Energy acquisition. On April 12, the SEC declared our Form S-4 in connection with the acquisition effective. Our board of directors have scheduled a special meeting of shareholders to vote on the transaction for May 18 at 11:00 AM. I urge you to read the S-4 for a complete understanding of the benefits of the merger. Finally, we continue to make progress with our Ultera emissions technology in three areas. First, work is progressing to retrofit a fork truck donated by a leading fork truck manufacturer with our Ultera emissions package. As our February press release indicates, we hired our Alan Welch, an experienced powertrain engineer to lead the effort. We do not have anything notable yet on this project, but expect updates as the year progresses. Next, activities continue with Ultratek, our joint venture for adapting Tecogen’s Ultera emissions technology for automotive applications. We did not do any additional testing during the first quarter, but we’ve presented our automotive test data at the SAE International World Congress in Detroit. The presentation was very well received because of the remarkable performance of Ultera and reducing pollution levels of vehicles. As our earnings press release indicates, this paper can be accessed through our website. To further protect our intellectual property for the emissions technology, two additional patents have been awarded with three others being filed. Also we have begun to have earnest discussions with potential automotive partners to bring the technology forward. We do not have anything to report yet, but we expect more business development activities as the year goes on. Lastly as reported earlier in the year, we received the air permit for a stationary standby generator system retrofitted with our Ultera emissions technology. The units are now being installed and are expected to be commissioned by the third quarter of this year. Since there weren’t any material updates in this area, we've given Bob, the break from his normally informative discussion on the emissions work and given him time to rest. But we will put out press releases, as significant events occur and Bob will give a more thorough discussion on the emissions technology, next call. So turning to slide 7, it shows some of the drivers for our sales. As I mentioned, the InVerde e+ offers unmatched economic benefits for CHP projects in our core markets. And a GE system gives our customers and our service to have visibility and information that assures the systems are running as expected. Our key relationships with ESCOs, property management companies and project developers have yielded good quality repeat business that we will continue to grow in 2017. And a TTcogen JV allows us to now sell in the markets, previously unaddressable such as large megawatt projects and biogas projects. Turning to our backlog on slide 8. Our backlog at the end of the quarter was $13.6 million. Our earnings press release showed a backlog of $14.3 million as of Monday May 8th. Well above our guidance to maintain backlog over $10 million. I thought it would be helpful to note that after we recorded this number, just this week we received a few significant orders, which increased our backlog to $17.5 million as of yesterday May 10. I thought this was significant enough to provide the updated number. And now that sales are progressing with TTcogen, I'd report that the backlog of products and installations related to the joint venture is an additional $710,000. Going forward we will continue to provide a backlog number of Tecogen as well as TTcogen joint venture as additional separate backlog number. And the pie chart shows our backlog is a good mix of our core market segments such as multi unit residential, hospitality, education, healthcare and industrial applications. Needless to say, we are quite pleased with the results of this quarter and hope to build on it throughout 2017. So, now I’ll turn the call over to Dave, who will give some more detail on our financials, then I’ll wrap up with some final remarks before we take questions.

Ben I want to add something to what you just said. I don't believe that you realize that we are becoming almost a monopoly in small eco generation and power generation facilities in the United States and this is due to our technology, innovation and the sales and management effort of Ben Locke and Bob Panora. With that David.

Thank you. Here's some highlights of the year-on-year financial results. First as Ben mentioned the total revenues increased 35% compared to the same prior period. Product revenues grew 24% compared to the same period last year and the volume of cogeneration models showed steady growth with the e+. Well chiller and heat pump sales lagged this quarter, management expects those products to pick up for the remainder of the year. Total services revenue grew 44% compared to the same period last year and continued its steady growth delivering well over half of our revenues for the quarter. The company posted an 18% increase in service contract and parts revenues on a year-over-year basis. This increase was the 17th consecutive quarter of year-over-year quarterly contract service revenue growth. For year-over-year comparisons adjust to the seasonality of Tecogen service revenue. These long-term contracted maintenance and service agreements accounts for nearly one-third of the total company's revenue providing a reliable annuity like revenue stream. Cost of sales in products continued to benefit from the improvements implemented in the e+ line of InVerde. The new product has cost effective manufacturing processes and will continue to reduce costs with continued volume and growth. Service costs continued its improvement as the installation group focused on higher value-added services coupled with operational efficiencies from our maintenance and service experts, with combined gross margins over 40% and product margins over 37% management is at the high point of our target range and the highest quarterly gross profit achieve since the start of public reporting in 2013. Gross margin improvement and expense reduction programs continue as management focuses on maintaining these strong margins in the future and as of course to note we were profitable for the third consecutive quarter. Turning to slide 10. Let's review the graphic charts that track our metrics. Starting with the chart in the upper left hand corner, total revenue for the trailing four quarter period is a $26.2 million. We expect this steady growth to continue. The chart on the upper right illustrates the growth of our gross margin and as you can see on a trailing four quarter basis, management delivered a gross margin of 40% at the top of management's targeted range. We expect cross controls and sales initiatives to continue to deliver these margins. In the lower right is a chart of operational expenses. Management's effort to lower operating expenses continues and remains a focus going forward. Finally in the lower left, the backlog chart reflects our weekly backlog, currently at $17.5 million as of Wednesday, May 10th. This backlog is well ahead of management’s goal to see $10 million in product and turnkey service revenue. As a reminder backlog does not include service contract revenues or sales of TEDOM products by the TTcogen team. The targets of the company remain the same. Management works to meet these goals and deliver these gross margins and backlogs targets that we have continued to maintain through this period. And with that, I turn it back to Ben Locke for closing remarks.

Thanks, Dave. In closing, I think 2017 will be a tremendously successful year for the company. Tecogen from its very beginning at Thermo Electron has prided itself on technical and engineering expertise. To create superior systems to provide energy efficiency, financial savings and emissions reductions to many different types of products and applications. We now have the best in class technology, a sophisticated and informed customer base and game-changing emissions technology that will help grow the company. All of our key financial metrics, revenues, margins and backlog are trending in the right direction. Our product excellence continues to be improved on with the InVerde e+. And our mission technology both in the fork truck drug program and the Ultratek automotive work creates substantial optionality for business development that has nothing but upside for the company. And the completion of the ADGE acquisition upon approval will create a completely vertically integrated clean energy company with strong recurring revenues supplementing our existing revenues. As I stated at the beginning of the call, it's a great time to be a Tecogen shareholder. For those ADGE shareholders will be joining us pending the shareholder vote, you should also feel excited about the long-term prospects of Tecogen. The shareholder value that will continue to unlock as we grow our core business and develop or emissions technology to ultimately contribute substantial financial gains for the company going forward. With that, I’d like to turn it over to the operator for questions.

[Operator Instructions] Our first question comes from Sameer Joshi with Rodman & Renshaw. Please go ahead.

Good morning and come congratulations on the progress. It’s really good to see this. I have a few questions about the Ultra and then some gross margin and ownership related questions. But for the fork truck market. What is the timing of that coming to market and what are the revenues that you expect from that.

Yeah we haven't projected any exact timelines for commercialization of that yet. You know it’s in the beginning stages of our – as I think I mentioned before this is a PERC, the Propane Council funded effort. That program goes through the end of 2017. So we have to accomplish those tactical milestones before we start to project how we might bring it forward in a commercial sense.

Right. Okay. And the Europeans testing, I think you mentioned that there was no additional testing that was done, but patents who have filed. What are the next steps in this process, can you remind us?

That's where unfortunately not having Bob with us on the call today is - he could be able to fill in a little bit more. I believe there might be some more testing planned for this year. I’ll have to ask Bob to get back you separately on that. But for share, a lot of attention right now is focused on business decisions and how we might be able to bring this to a partner or bring this to some other type of entity to come up with a plan to actually commercialize it.

Okay. On the Southern California installations, earlier the guidance was that it should be completed by 2Q. But now it has overflow into third quarter. Was there any specific reason for that or just --?

No, it took a little while to get the permit and that was done and that was very important step. Now it’s really Monday and construction delays that that's occurring at the site that that pushed it out. So, we don't think it'll go much beyond the third quarter, but that’s into the reason there, no other hiccups or issues.

Great. So, on the gross margins actually we see quite a lot of improvement on the product side as well. So, this is a gross margin side great, but what is driving the product gross margin and should we expect this to be deal levels going forward?

So, I’ll start to answer that and I’ll ask David to fill in on, as you see it’s fit. But we’re seeing a lot of sales of the InVerde e+ as I mentioned in my prepared remarks. And that's great for a couple of reasons, obviously its greater revenues and et cetera, but it's great because it allows our production flow to really get into a grove on an assembly type basis. Just kind of moving them down the line whereas when have a more diverse product mix of some of our other CHP systems or heat pumps or chillers. As guys you can imagine just for logistics and six manufacturing you start to see some inefficiency. So just kind of banging on the line with the cogen equipment just creates these kinds of efficiencies to get the margins up.

Also to note the higher volumes do allow us to have better purchasing power on some of our larger components and more expensive components. So we're able to drive down our cost on that too.

So, going forward I wouldn't want to restate what our guidance is for margin to be anything higher because product mixes can change. As Dave mentioned, chiller replacement season starting to come up in the fall, so that'll start to – that would change margins around a little bit.

Right. And so, that's a good goes segue into my backlog question is the backlog of 17.5 is that sort of same proportion of cogen and chillers that you have seen over the last 12 months or --?

Yeah. I think there’s some more chillers in there, I don't have an exact number for you, but I can say, the lack of chiller this quarter is by no means as David said means that we're not picking up on chillers indeed we are. Some of the markets that we’re starting to get a little more orders are things like indoor growing facilities, ice rinks and working with engineering companies that do these projects in getting them to understand the economic and the benefits of TECOCHILL is a bit of a chore. It's real simple for people to just spec it on electric chiller and it takes more of their time and brain power to understand TECOCHILL. But once they get it and once the utilities get it, it becomes very compelling. So I think we're going to see more chillers in the rest of this year. Without naming any specific projects, of course, when we get them all, we’ll put our press releases.

Okay. Thanks for that. One last one, the vote [ph] is coming up soon and can remind us how much, what is the ownership of Tecogen’s management of ADGE?

I would refer you to the S-4 on that, I think that information is contained in there. I’d hate to give you anything that’s off the top of my head, just given my memory. So, you could look at the S-4, Sameer and if you can’t find it there let us know.

Okay. The reason for that question is just to see how comfortable and confident you are on a yes vote on that.

Yeah, I wouldn't want to speculate on that.

The next question comes from Alex Blanton with Clear Harbor Asset Management. Please go ahead.

It looks pretty good to me, but I'm wondering, why you have stopped putting out releases on your new business. You mentioned you got several new contracts to drive the backlog up $17.5 million, but we didn't see anything about what they are. I think the last release here put out was February 14, which was three months ago, our new and you're obviously getting a lot. So, what is the reason for the change there and the way you’re communicating.

Yeah, Alex, I’ll try to answer. We talked about this each quarter. Of course, I'm very careful about press releases and how it affects our competitive situation. I can tell you that some of the recent orders we have. We have press releases brewing, but we really like to have, if we can get the customer, to participate in the press release that's always helpful. But that of course, means that you have to go through the customer's approval process as well. And depending on who the customer is and how large or small they are, they have a process that is either very quick or very unwieldy. So navigating that is something, number one. Number two to be quite honest with you as [indiscernible] Ariel moved on an Ariel, was tremendous, we haven't found a replacement for her yet. And she was very vigilant about doing the press releases, so the press release possibilities kind of fallen upon us a bit now and we're trying to do as best we can.

Actually, this is John Hatsopoulos. I have interviewed a person that I believe is going to be very capable replacement of Ariel. The main reason, I'm mentioning it to you to me is because it’s somebody that you know and I don't want to put it on the tape right now, thank you.

You'll see more press releases going forward.

Thank you. I understand it's time consuming, but even before Ariel you were putting them out like every week or too. Suddenly it stopped and I just wondered if you're going to renew that because I think it's useful to keep people informed about what you're doing. Second things is, I can't locate the slides on your website. And I’m wondering if they forgot to put amongst that.

No, Alex, they simply click on the link, if you have the PDF from the press release, just click on the link and that should bring you right to the slide. I tested it myself this morning when you click on that link it takes you to the investor relations page, which has our slides right on it.

No, I can’t find that investor relations page. I went to your website, couldn't find it.

We should take these things offline and try to allow others to ask some questions, if you can’t find out. I’ll call you later. Thanks.

Our next question comes from Ralph Wanger from RW Investments. Please go ahead.

Hi, John, it is a great quarter. My usual question I think is how are we doing in building up the sales force. I think you now have the gross profit margins in line season we need to get out and to have spread the word.

Yeah we will, you might have seen our press release earlier this year. We hired a guy specifically for biogas projects as the TTcogen joint venture as I explained earlier. Tecogen systems to date were able to work on biogas systems. It's just the nature of the engine et cetera. So, now having the ability to bring products into biogas markets its tremendous and those markets are expanding dramatically as people turn to zero waste reduction, food collection, anaerobic digesters, municipal solid waste, the list goes on. But I'll tell you, it isn't anything that I have followed deeply and certainly none of our existing salesmen knew too much about it. So, we hired this gentlemen Walter Gray, who's got significant experience in the biogas area. And when he go hired Dave, what in February.

February, yeah, late February.

Yeah, so we just added another very capable body on to the sales force, so I think we're in very good shape with our sales team right now.

Well, how many salesmen do we have and how many will it be by the end of the year?

I think our sales team right now consists of - and again this is always a difficult question answer because some of our good salesmen are actually engineers. But when I call them salesman, they don’t like it. But I’d say we really have a dedicated sales force of around seven to eight people. Actively working on sales add on Walter, as an additional one. So I think the team's right about, I’m comfortable where the team is right now, I think as I mentioned in previous calls, if a good candidate comes to me, I'd hire him. I mean I'm not shying away from hiring more salesman if they can bring in business. But I'm not at a point where I'm short-handed and I need to hire somebody who may not be ideal.

Ben, I hope you have that number that gentleman that is an expert on foregone trucks.

Yeah, he's more of an engineer, if I call him a sales man, he’d really come after me.

Okay, then for fork lift truck, yeah.

I hope that helps Ralph.

Okay. I think it seems to me that there’s a lot of uncovered territory out there. Are you relying on existing independent distributors for a lot of business?

Yeah, well, generally what we do is and I’m glad you asked this, probably good I give a refresher on this. Is I have dedicated salespeople in areas where the markets are really strong. So New York, Massachusetts, the northeast I’ve got dedicated salespeople there, in California as well. Markets that are kind of middling economics in the economics, by economics of course I mean electric rates. I'll put up a manufacturer's representative or rep there. So, they’re actively looking for projects. But I don't have to have a dedicated sales person. So, we've got reps in New Jersey we've got reps it up and down the eastern seaboard. We got a couple of reps in the Midwest, but electric rates are very low there, very hard to come up with any projects. That the second tier of sales in areas where we don't have direct sales representation. And then third is we have these kind of project developer types sales agents I call them. And these are again, project developers, kind of entrepreneurs that are looking for projects. That I've come to an agreement, formalized agreement with them where if they find a project, they get a commission, if they don't, I don't have pay them anything. So, between the direct sales and the real good markets, the reps and the middling markets and the sales agent’s kind of sprinkle between, I think we got everything covered pretty well.

Well, we have some fraction 1% of the available market, right now, is there is a lot of upside doors.

Yeah, but we’re doing the best we can, okay, keep it up.

[Operator Instructions] Our next question comes from Michael Zuk with Oppenheimer. Please go ahead.

Good morning everybody. Congratulations. Ben, could you give us an update on where we are in our efforts with the Elias product?

Absolutely. So, we’re continuing across to push that pretty hard. I kind of of alluded to this in the call a bit. But when you got a new project – a lot of time, especially HVAC systems, HVAC. There's an embedded kind of methodology of these engineers that do these projects. Very seldom you’re selling that product to an end person with chillers and with heat pumps. CHP, it’s usually a direct to customer sale, some time. But with HVAC systems, you always have engineering companies and depending on their level of understanding and their ability to learn about new products. Depends on if you can get traction with it. So I said earlier in the call, we’re starting to get there with our chillers from some of the more, these different type of applications like indoor growing ranks et cetera. We're getting good progress I think with Elias too, it just takes a little time. So I tried I think you'll be seeing more Elias orders. It’s certainly not something that we’ve shuttered, I mean, it's a very active product and important part of our product slate. Since, we haven’t had any significant order.

As a follow up with that on Macquarie Infrastructure conference call yesterday Macquarie indicated that are participating in a massive effort in Hawaii to convert Hawaii to energy efficient systems across the board electricity, cooling chilling and hot water. Have we attempted to connect with Macquarie, I mean, they're talking about billions of dollars billions of dollars in investing Hawaii and it's going to be based principally on natural gas or propane which is part of the driving fuel sources for our system. What's our effort in Hawaii and I think we should be taking advantage of that.

Yes, its great point my team and we are in fact quite involved with that. I can't give any details but suffice to say that we're very aware on what my queries doing in Hawaii. We have a presence there. We had some products already operating there. I hope you'll see more products of our products going there, for all the reasons that they mentioned and you just mentioned is because they want to get business away from HECO, from Hawaii Electric. So, the more gas they can get, more gas driven equipment they can get the better off they are. So you’re right, it’s an excellent market. We are very aware of what Macquarie is doing and hopefully you’ll see some press release to that regard, sometime soon.

And then from an engineering standpoint, the systems that we are now developing and engineering for I guess, what I would call vertical farming or indoor horticulture, are they adaptable to propane as well as natural gas?

Yeah, our systems can run on propane. The economic proposition becomes a little dicier, there given the cost of propane. Yes, but absolutely, yes and we expect our projects where propane is the primary source. But these chillers, I mean, that propane choice is become one or twice a day, I’m going to say, we got very large storage tanks. But you’re right, they can work on propane. The economics are a little trickier, but sometimes they’re compelling enough, particularly if I think as you're alluding to, if these facilities are not on a natural gas line and they're remote enough where they can’t get three phase power in there to run an electric chiller that’s a natural fit for us.

Well congratulations on tremendous improvement going forward. And then just one last question for John. Will the integration or combination of ADGE and Tecogen. How quickly after the vote will the shares be converted to Tecogen? Do you have any time table, John.

Yeah, actually I think, that we are supposed to complete this deal by a week from tomorrow and immediately then. Basically we start delivering so it's a matter of the transfer agent and the U.S. post office. But it’s disgusting, I have not gotten my proxy, my personal proxy, because there were mailed out by a special firm that was doing. I still haven’t gotten it, it's in the U.S. mail, even though a lot of them people have gotten theirs. But anyway we should be complete by a week from tomorrow and start mailing to all of you people that voted the chain [ph] immediately thereafter.

And then as a follow-up to that. Will the ADGE shareholders be invited to the Tecogen annual meeting which I think is in late June.

That is up to the lawyers, I suspect so, but I don't want to answer that because I always find out weird things from the various lawyers, but if that's the case I will. That’s what our lawyers tell us we have to do. You’d be surprised that the weird stuff that comes up often on from the legal profession.

Well anyway congratulations for the progress that’s been made year-to-date and look forward to continuing progress the rest of the year. Thanks.

Mike, thank you very much. But again and that's why I kept repeating it. Its Ben and Bob that have done all this work and we have basically become almost a monopoly for a small cogeneration facilities because everybody that competes with us is missing a lot of our technology.

Okay. This concludes our question-and-answer session. I would like to turn the conference back over to Benjamin Locke for any closing remarks.

Thank you operator. That's it from here. We thank everyone for joining the call and we look forward to talking you again at the end of the next quarter.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.