Q2 2026 Tecogen Inc Earnings Call

August 13, 2026

Speaker #1: Greetings and welcome to the TECOGEN Q2, 2026 conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Operator: Greetings, and welcome to the Tecogen Q2 2026 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the 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 your host, Jack Whiting, General Counsel. Thank you. You may begin.

Operator: Greetings, and welcome to the Tecogen Q2 2026 Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the 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 your host, Jack Whiting, General Counsel. Thank you. You may begin.

Speaker #1: If anyone should require operator assistance, please press *0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jack Whiting, General Counsel, thank you.

Speaker #1: You may begin.

Speaker #2: Good morning. This is Jack Whiting with General Counsel and Secretary TECOGEN. This call is being recorded and will be archived on our website at tecogen.com.

John K. Whiting IV: Morning. This is Jack Whiting, the General Counsel and Secretary at Tecogen. This call is being recorded and will be archived on our website at tecogen.com. The press release regarding our Q2 2026 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 Private Securities Litigation Reform Act of 1995.

Jack Whiting: Morning. This is Jack Whiting, the General Counsel and Secretary at Tecogen. This call is being recorded and will be archived on our website at tecogen.com. The press release regarding our Q2 2026 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 Private Securities Litigation Reform Act of 1995.

Speaker #2: The press release regarding our second quarter, 2026 earnings, and the presentation provided this morning are available in the investor section of our website. I'd like to direct your attention to our Safe Harbor statement included in our earnings press release and presentation.

Speaker #2: Various remarks that we make about the company's expectations, plans, and prospects constitute forward-looking statements for purposes of the Safe Harbor Provisions and Private Security Mitigation Reform Act.

Speaker #2: Of 1995. Actual results may differ materially from those indicated by a forward-looking statement 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 investor 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 so we should not rely on any forward-looking statements as representing our views as of any future date.

John K. Whiting IV: 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 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 like 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 general 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 2026 earnings and on our website.

Jack Whiting: 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 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 like 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 general 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 2026 earnings and on our website.

Speaker #2: During this call, we will refer to certain financial measures not prepared in accordance with general accepted accounting principles or GAAP. I reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is provided in the press release regarding our Q2, 2026 earnings and on our website.

Speaker #2: I will now turn the call over to Abenan Rangesh, TECOGEN CEO, who will provide an overview of the second quarter, 2026 activity and results, and Roger DeShand, TECOGEN CFO, who will provide additional information regarding Q2 financial results.

John K. Whiting IV: I will now turn the call over to Abhinav Rangesh, Tecogen's CEO, who will provide an overview of the Q2 2026 activity and results, and Roger Deschenes, Tecogen's CFO, will provide additional information regarding Q2 financial results. Abhinav?

Jack Whiting: I will now turn the call over to Abinand Rangesh, Tecogen's Chief Executive Officer, who will provide an overview of the Q2 2026 activity and results, and Roger Deschenes, Tecogen's Chief Financial Officer, will provide additional information regarding Q2 financial results. Abhinav?

Speaker #2: Abenan?

Speaker #3: Thank you, Jack. Welcome to TECOGEN's Q2 2026 call. Today, I would like to start with the 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?

Abinand Rangesh: Thank you, Jack. Welcome to Tecogen's Q2 2026 call. Today, I would like to start with the 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.

Speaker #3: 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?

Speaker #3: Given we have great technology, but have resource constraints as a small company. Originally, our strategy was to target smaller data centers and could then use that as a reference to get the bigger names' interested.

Speaker #3: 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.

Abinand Rangesh: 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 tenants, delays in construction permits, et cetera. The big brand data centers don't 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.

Speaker #3: 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.

Speaker #3: Many of these opportunities scale. While many of these projects will likely close, these projects are subject to external factors such as tenants, delays in construction permits, etc.

Speaker #3: The big brand data centers don't have the same limitations. In addition to these smaller opportunities, we have been simultaneously working on access to the larger names.

Speaker #3: 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.

Abinand Rangesh: 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 building 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'm sure you will know many of them. To 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 US. The natural question at this point is, does attending this product demonstration show any real commitment or interest?

Speaker #3: Over the last two months, we have hosted 12 product demonstrations. Six in person and six virtual. The in-person group included four data centers that are hyperscale or built-in hyperscale campuses, and partners.

Speaker #3: The virtual visit group included chip manufacturers, engineers, and another four data centers. These data centers collectively represent greater than 8 gigawatts of data center capacity operating today, and multiple gigawatts in construction.

Speaker #3: Although I cannot tell you the names of the data centers that attended, I'm sure you will know many of them. To put this into perspective, the data centers that attended either virtually or in person collectively represent 15 to 20 percent of present data center capacity in the US.

Speaker #3: 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.

Abinand Rangesh: For the in-person group, given how busy data center engineers and senior-level people are, blocking 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're serious about entering a business relationship. Lastly, I think the market has also evolved. In addition to power, there are some key challenges that the bigger data centers are facing that our products solve.

Speaker #3: 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.

Speaker #3: 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 to attend.

Speaker #3: 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 there are serious about entering a business relationship.

Speaker #3: Lastly, I think the market has also evolved. In addition to power, there are some key challenges that the bigger data centers are facing that our products solve.

Speaker #3: As you may have read in the press, many data centers are facing opposition for on-site water use, noise, and air pollution. Here is where our products really shine.

Abinand Rangesh: 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 three problems. The dual-power source chiller is closed loop, so there's no water evaporation. Our products already operate in noise-sensitive environments, such as on rooftops next to penthouse apartments. Recently, during the scorching Fourth 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 products without worry. This is where seeing a product demo brings these benefits to life.

Speaker #3: We solve all three 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 and next to penthouse apartments.

Speaker #3: 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 avoid a blackout as the utility grid was running out of power, and forcing data centers to shed load.

Speaker #3: Therefore, unlike a diesel generator that attracts noise complaints and pollutes, data centers can install our products without worry. This is where seeing a product demo brings these benefits to life.

Speaker #3: There is a difference between seeing a data sheet with a decibel reading and hearing our products in person. Or reading about near-zero knots and carbon monoxide emissions versus seeing the readout from an emissions analyzer in real time.

Abinand Rangesh: 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.

Speaker #3: 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.

Speaker #3: Or saying you can provide uninterruptible cooling during a power outage, versus watching someone shut off the electrical power to the chiller while it's running.

Speaker #3: 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, etc., have been discussed, so we feel confident enough to begin building some inventory of our dual power source chiller and PowerGen modules to get a head start.

Abinand Rangesh: The feedback has been extremely positive across the board, and specific projects, delivery dates, et cetera, have been discussed, so we feel confident enough to begin building some inventory of our dual-power source chiller and PowerGen 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 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.

Speaker #3: 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 to 3 million dollars in projects to close over the next few months.

Speaker #3: This means we expect product revenue to increase in Q3, and we expect to collect more deposits, improving cash flow. Although our focus, as predominantly being on our data center strategy, during the last call we mentioned that we expected to reduce expenses in our service group to increase margins.

Speaker #3: During Q2, these reductions were made mid-quarter for the full impact will be seen beginning in Q3. One-time costs in Q2 reduced margin by around 7 percentage points, without these one-time costs margin is starting to recover in service.

Abinand Rangesh: During Q2, these reductions were made mid-quarter, so the full impact will be seen beginning in Q3. One-time costs in Q2 reduced margin by around 7 percentage points. Without these one-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.

Speaker #3: 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.

Speaker #3: Given that our service revenue is substantially higher year on year, this continuous improvement is expected to result in higher margins and therefore a significant increase in growth profit dollars.

Speaker #3: I'll now hand over to Roger to talk about the financials.

Speaker #2: Thank you, Amit. And good morning, everyone. I'll begin with the results for the second quarter. Our total revenues decreased 21 percent, or 1.5 million dollars, in the second quarter to 5.8 million dollars compared to 7.3 million in the second quarter of 2025.

Roger Deschenes: Thank you, Abinand. Good morning, everyone. I will begin with the results for the second quarter. Our 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. 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 2026, compared to $2.5 million in the comparable period in 2025. Again, this is due to our products segment revenue. Our gross profit margin increased, excuse me, by 4% to 37.8% in the second quarter of this year, from 33.8% in 2025.

Speaker #2: And this is due mainly to lower product segment revenue. As Amit 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.

Speaker #2: Our gross profit decreased 11.9 percent to 2.2 million dollars in the second quarter of 2026 compared to 2.5 million dollars in the comparable period in 2025.

Speaker #2: And again, this is due to products segment revenue. Our gross margin increase, our gross profit margin increase, excuse me, to by 4 percent to 37.8 percent in the second quarter of this year from 33.8 percent in 2025.

Speaker #2: And this is due to improved Products segment gross margin. Operating expenses increased 11.6 percent in the second quarter to $4.3 million from $3.9 million in the second quarter of 2025.

Roger Deschenes: This is due to improved products segment gross margin. Operating expenses increased 11.6% in Q2 to $4.3 million from $3.9 million in Q2 2025. This is due to increased operating costs in both our 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-power 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 $400,000 in Q2 of this year compared to Q1.

Speaker #2: And this is due to increased operating costs in both our products and services segments, and the general increase in operating costs incurred for the manufacturing capacity expansion that we're 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.

Speaker #2: During the just-concluded quarter, we reduced headcount at a few of our service centers as we worked to reduce our spend there. Overall, operating expenses decreased approximately $400,000 in the second quarter of this year compared to the first quarter.

Speaker #2: Our net loss for the quarter increased to $2.2 million from $1.5 million in the comparable quarter in 2025. This is due to lower product segment sales and gross margin, as well as an increase in operating expenses.

Roger Deschenes: Our net loss for the quarter increased to $2.2 million from $1.5 million in the comparable quarter in 2025. 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 Q2 of this year, which was higher when compared to last year's loss of $1.2 million. 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 Q2 2026 from $3.2 million in Q2 2025. The revenue for 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.

Speaker #2: Moving over to adjusted EBITDA for the quarter. The adjusted EBITDA loss was 1.7 million dollars 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.

Speaker #2: Moving to performance by segment. Products revenue decreased 64 percent to $1.1 million in the second quarter of 2026 from $3.2 million in the second quarter of 2025.

Speaker #2: The revenue for products 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.

Speaker #2: As we have discussed in the past, product revenue has significant variability quarter to quarter. Our products margin, gross margin, increased 19.2 percent to 48.5 percent in the second quarter of this year from 29.3 percent in the similar quarter of 2025.

Roger Deschenes: As we have discussed in the past, product revenue has significant variability quarter-to-quarter. Our products gross margin increased 19.2% to 48.5% in Q2 of this year from 29.3% in the similar quarter of 2025. This is due to price increases and change in product mix. Our services revenue increased 10% quarter-over-quarter 2026 to $4.4 million, which compares to $4 million in Q2 2025. 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.

Speaker #2: And this is due to price increases and change in product mix. Our services revenue increased 10 percent quarter over quarter 2026 to 4.4 million which compares to 4 million in the second quarter of 2025.

Speaker #2: This is due to higher billable activity and increased operating hours of our equipment, from both our existing service contracts and our Aegis-acquired contracts.

Speaker #2: Our service gross margin was essentially flat compared to last year. During the second quarter of this year, as Amit indicated, we spent approximately $300,000 in one-time costs at a handful of sites that we serviced and which are electric chillers, as part of the energy sites that we sold to SDCL and Kyotherm in 2021.

Roger Deschenes: During Q2 of this year, as Abhinav Rangesh indicated, we spent approximately $300,000 of one-time cost at a handful of sites that we serviced, in which our electric chillers as part of the energy sites that we sold to Kyotherm in 2029. In fact, one 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 one-time cost, as Abhinav Rangesh indicated earlier, our gross margin from our service operations would have been 7% higher in the 2026 period. Our energy production revenue increased 35% in Q2 of this year to $0.24 million from $0.17 million in the 2025 period. This is due to increased uptime at certain energy production sites.

Speaker #2: In fact, one 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.

Speaker #2: Excluding this one-time cost, as Amit indicated earlier, our gross margin from our service operations would have been 7 percent higher in the 2026 period.

Speaker #2: Our energy production revenue increased 35 percent in the second quarter of this year to 0.24 million from 0.17 million in the 2025 period. And this is due to increased uptime at certain energy production sites.

Speaker #2: The energy production gross margin gross profit margin decreased 29 percent in the second quarter of 2026 from 25.2 percent. And this is due to the guaranteed shortfall of just under 100,000 dollars that we recognized in the quarter.

Roger Deschenes: The energy production gross profit margins decreased 29% in Q2 2026 from 25.2%, and this is due to the guaranteed shortfall of just under $100,000 that we recognized in the quarter. I will now hand the call back over to Abhinav for closing remarks.

Speaker #2: I'll now hand the call back over to Amit for closing remarks.

Speaker #1: Thank you, Rajesh. At this point, there are two conclusions you could reach. The first is that it has taken a long time today, so the company's prospects in the data center market are slim.

Abinand Rangesh: Thank you, Robin. At this point, there are two conclusions you could reach. The first is that it has taken a long time today, so the company's prospects in the data center market are slim. Or the second, that it has taken a while to navigate the data center landscape and get access to the right champions of 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.

Speaker #1: 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.

Speaker #1: 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?

Speaker #1: 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.

Speaker #1: If we land even a pilot project with a big brand data center, what is the due to our prospects industry-wide? Management and the board have consistently bought stock because we believe the company and technology that solves some fundamental problems facing not just data centers, but a whole host of markets.

Abinand Rangesh: 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 the most sense. Thank you, and I will open for more questions.

Speaker #1: You decide which conclusion makes most sense. Thank you and I'll open for more questions.

Speaker #3: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment please, while we poll for questions. Our first question comes from the line of Bobby Brooks with Northland Capital Markets. Please proceed with your question.

Speaker #3: A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.

Speaker #3: One moment, please, while we pull four questions. Our first question comes from the line of Bobby Brooks with Northland Capital Markets. Please proceed with your question.

Speaker #4: Hey, good morning, team, and thank you for taking my question. So very exciting to hear about the 12 demonstrations. The one that unpacked that a little bit more, we're all 12 demos with 12 different potential customers.

Bobby Brooks: Hey, good morning, team, and thank you for taking my question. Very exciting to hear about the 12 demonstrations, but wanted to unpack that a little bit more. Were all 12 demos with 12 different potential customers? You disclosed having those six demonstrations at the beginning of July, so had another six over the last month. Was there any acceleration in that? Just curious to hear more there.

Speaker #4: And you disclosed having those six demonstrations at the beginning of the July so had another six over the last month. Was there any acceleration in that?

Speaker #4: Just curious to hear more there.

Speaker #1: Great question, Bobby. So, out of the 12, eight 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.

Abinand Rangesh: Great question, Bobby. Out of the 12, eight 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. One of them was one of the chip manufacturers. 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 towards the end, just so we got better practice with the demonstrations as well. It just so happened that's how the schedule worked. We gradually escalated in terms of size towards the end, which is why our press release earlier in July probably showed a lower installed capacity, and we had more towards the end.

Speaker #1: So really, that have key influence on the end result. And then one of them was one of the chip manufacturers. So generally, it was all high-profile visitors.

Speaker #1: Definitely what we tried to do with regards to the scheduling was to schedule the most important ones towards the end just so we got better practice with the demonstrations as well.

Speaker #1: And it just so happened that's how the schedule worked. 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 and we had more towards the end.

Speaker #4: Got it. That's helpful. So 12, so was like 12 different customers across the 12 visits.

Bobby Brooks: Got it. That's helpful. So it was 12 different customers across the 12 visits.

Speaker #1: Yeah, so exactly, 12 different entities.

Abinand Rangesh: Yeah. Exactly. 12 different entities.

Speaker #4: Got it. And then, when we spoke after the last print, you mentioned how the larger data center operators were sort of split in two.

Bobby Brooks: Got it. When we spoke after the last print, you mentioned how the larger data center operators were split in two. Both interested, but group one, let's say, would learn of the capacity limits you currently have and lose interest and say, "Call me when you can do more." Interestingly, you had mentioned that the second group were some who were seemingly willing to scale up with you. I wanted to follow up there and hear, is today's commentary on these larger potential customers an evolution of that second cohort getting more comfortable on the technology, or just any additional color you could share on that dynamic.

Speaker #4: Both interested, but group one, 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 that second group were some who were seemingly willing to scale up with you.

Speaker #4: So I wanted to follow up there and here is 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.

Speaker #1: Yeah. Yeah. No, that is a great question. I believe once again, when people come for demonstrations, there's generally a certain level of interest, right?

Abinand Rangesh: Yeah. No, that is a great question. I believe once again, when people come for demonstrations, there's generally a certain level of interest. The way at least I think of the sales process, you've got two portions to it. The first part is getting the interest up to the point that somebody says, "This makes sense for me." The second part of it is, of course, reducing anything that might add friction to it or might act as a negative to them not closing the deal. Out of that, capacity is one of them. That's part of why we're 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.

Speaker #1: The way at least I think of the sales process, you've got two portions to it. The first part is getting the interest up to the point that somebody says, "This makes sense for me." And 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?

Speaker #1: And out of that, capacity is one of them. That's part of why we're starting to build some inventory, so we can cut the lead time and 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?

Speaker #1: 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, is you get a decent amount of time to really probe their requirements and what they're looking for, and where they're thinking.

Abinand Rangesh: 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, is you get a decent amount of time to really probe their requirements and what they're looking for and where they're thinking. We're starting to find, I think, applications that we could essentially start small and grow with them. That is also one of the advantages of these bigger data centers that have existing locations, because you could either add almost as a retrofit, as a pilot, or you can do it as part of one phase of a bigger project. So there's ways to do this without having to have all that capacity upfront.

Speaker #1: We're starting to find, I think, applications that we could essentially start small and grow with them. That is also one of the advantages of these bigger data centers that have existing locations, because you could either add almost as a retrofit—as a pilot—or you can do it as part of one phase of a bigger project.

Speaker #1: So there's ways to do this without having to have all that capacity upfront. And we believe that this is the capacity issue although is important.

Abinand Rangesh: We believe that the capacity issue, although is important, I think there's a way around it in this case. We will see as further discussions go forward.

Speaker #1: I think there's a way around it in this case, but we will see as further discussions go forward.

Speaker #4: That's really helpful color. And then maybe just on building that, the building capacity ahead of orders as a confidence has grown was just curious to get a sense on the size of that and how much that might cost.

Bobby Brooks: That's really helpful color. Then maybe just on building 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.

Speaker #4: Thank you.

Speaker #1: I'm not sure I can comment on that exact number, but I'll give you kind of how we think about it. What we're 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?

Abinand Rangesh: I'm not sure I can comment on that exact number, but I'll give you kind of how we think about it. What we're 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 that. Then if we, let's say, have three or four different potential customers saying, "I need roughly this amount of capacity," then we'll say, "Okay, our odds of if we build X amount, then we'll sell it to at least one out of the three or one out of the four, right." Our odds are good in terms of getting that sold. So that's how we're thinking about it in terms of risk, cash, and in terms of also timing.

Speaker #1: What sort of a rough number that and then if we can if we let's say have three or four different potential customers saying, "I need roughly this amount of capacity," then we'll say, "Okay, our odds of if we build X amount, then we'll sell it to at least one out of the three or one out of the four," right?

Speaker #1: Our odds are good in terms of getting that sold. So that's how we're thinking about it in terms of risk, cash, and in terms of also timing because I think part of the issue I'm sure everybody is thinking about is what does this mean in terms of cash flow and inventory?

Abinand Rangesh: Because I think part of the issue I'm sure everybody is thinking about is what does this mean in terms of cash flow and inventory. If we time it right, in theory, we should be able to bridge. We won't necessarily need to put up all the capital up front. If you look at the timing of when these things could potentially be shipped or delivered, that's what we're hoping for. But even if it ends up slipping a little bit, it allows us to manage the risk versus the cash flow.

Speaker #1: And if we time it right, in theory, we should be able to bridge. We won't necessarily need to put up all the capital upfront, right?

Speaker #1: If you look at the timing of when these things could potentially be shipped or delivered, that's what we're hoping for. But even if it ends up slipping a little bit, it allows us to manage the risk versus the cash flow.

Speaker #4: Very helpful color. Appreciate it. I'll return to the queue.

Bobby Brooks: Very helpful, Kahler. Appreciate it. I'll return to the queue.

Speaker #2: Thank you. Our next question comes from the line of Eric Stein with Craig-Hallum. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Eric Stine with Craig-Hallum. Please proceed with your question.

Speaker #5: Hi, Benond. Hi, Roger. Good morning.

Eric Stine: Hi, Benon. Hi, Roger. Good morning.

Speaker #1: Hey, Eric.

Abinand Rangesh: Hey, Eric.

Speaker #5: Hey, so maybe first, talking about those 12 demos—just curious, is there a way to think about which opportunities you may pursue under the Verdant relationship or not? Or is that even the right way to think about this?

Eric Stine: Hey. So maybe first, talking about those 12 demos, just curious, is there 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? Is that kind of a separate path?

Speaker #5: I mean, is that kind of a separate path?

Speaker #1: I'd say the two 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.

Abinand Rangesh: I'd say the two are parallel paths. Pretty much 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.

Speaker #1: We, of course, if it makes sense in these projects, there are places where it may make sense to collaborate. But right now, those are all came from our marketing efforts.

Speaker #5: Got it. And then maybe sticking with verdict, I know 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've talked about in the past that verdict was speccing you into I think 25 to 50 megawatts of projects.

Eric Stine: Got it. And then maybe sticking with Vertiv, I know you got the initial order. Just curious if you can speak to both the progress towards finalizing the Membership Interest Purchase Agreement, and then also, I know you've talked about in the past that Vertiv was speccing you into, I think, 25 to 50 megawatts of projects. Maybe if you could just give an update on where those specific projects stand.

Speaker #5: Maybe if you could just give an update on where those specific projects stand.

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

Abinand Rangesh: Yeah. So one thing on this particular call, as we mention anything, of course, on either party, 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's more substantial. So at this point, I can't comment too much on that. So I think stay tuned, let things happen, and we'll announce deals as they happen.

Speaker #1: In this particular case, I talked to my counterparties and we decided to let something close so that we save the approval process with Verdict for something that's more substantial.

Speaker #1: So at this point, I can't comment too much on that, so I think stay tuned. Let things happen, and we'll announce deals as they happen.

Speaker #5: Okay. But beyond the deals, in terms of just progress towards the MPA— I mean, is that just still in process?

Eric Stine: Okay. But beyond the deals, in terms of just progress towards the Membership Interest Purchase Agreement, is that just still in process?

Speaker #1: Yeah, so I think things are in a very good place overall with them. I just cannot comment at this point because, again, I didn't this time around get specific questions for it.

Abinand Rangesh: Yeah. I think things are in a very good place overall with them. I just cannot comment at this point because, again, I did not this time around get

Eric Stine: Yep

Abinand Rangesh: specific permission for it.

Speaker #5: Yeah. Understood. Okay. Last one. So building inventory, I know you've built some inventory over the last three quarters. When you're 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've talked about?

Eric Stine: Yep. Understood. Okay, last one. Building inventory, I know you have built some inventory over the last three 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? Then how do you kind of manage that versus some of your capital constraints that you have talked about?

Speaker #1: 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.

Abinand Rangesh: Yeah. 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. We have to add additional. It is also, as I mentioned, we are trying to manage this in such a way that 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, there is a lot of things moving in the background, and you may get various progress and verbal approvals, but you may not get a purchase order for a while, 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 feel very confident we are going to get these projects.

Speaker #1: So, we have to add additional. It's also, as I mentioned, we're trying to manage this in such a way that it's really less a matter of total inventory.

Speaker #1: It's a matter of figuring out how you compress the lead time. Because typically, with some of these projects, right, there are a lot of things moving in the background.

Speaker #1: And you may get various progress and verbal approvals, but you may not get a purchase order for a while. Even though we might know that things are progressing and things are happening, it can take time.

Speaker #1: So, we don't want to have a delay at that point. We'd rather know that, okay, we feel very confident we're going to get these projects, in which case let's get this— as soon as we get a purchase order and get a deposit, we can start shipping.

Abinand Rangesh: In which case, let's get this as soon as we get a purchase order and get a deposit, we can start shipping. That is how we are thinking about it. We are 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 want to make sure that we are able to respond quickly. Then hopefully, once we get some units starting to ship, we can start ramping up very quickly from there.

Speaker #1: And that's how we're thinking about it. So we're trying to balance the cash flow versus that, but we also feel that it's important to be able to move quickly.

Speaker #1: Especially because, at this point, we have the interest of these bigger names. We want to make sure that we're able to respond quickly, and then, hopefully, once we get some units starting to ship, we can start ramping up very quickly from there.

Speaker #5: Yep. Okay. Thank you.

Eric Stine: Yep. Okay. Thank you.

Speaker #2: Thank you. Our next question comes from the line of Chip Moore with Roth MKM. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Chip Moore with Roth MKM. Please proceed with your question.

Chip Moore: Hey, morning. Thanks. I wanted to maybe follow up on-

Speaker #6: Hey, good morning. Thanks. I wanted to maybe follow up on—hey, good morning, Abraham. I wanted to follow up, maybe around the demos, and some of your comments, which make sense around balancing working capital and compressing those lead times.

Abinand Rangesh: Morning.

Chip Moore: Hey, morning, Benon. I wanted to follow up maybe around the demos, and some of your comments, which make sense around balancing working capital and compressing those lead times. Just the discussions you've had, I think you alluded to even talking about dates. Maybe just help frame that out, like a range of whether it's sort of those pilot early phases versus larger potential opportunities, just any sense of where those type of dates are panning out.

Speaker #6: Just the discussions you've had, I think you alluded to even talking about dates. Maybe just help frame that out, like a range of whether it's sort of those pilot early phases versus larger potential opportunities.

Speaker #6: Just any sense of where those types of dates are panning out?

Speaker #1: So part of that is it's like I can't comment too much on that. What we're trying to do is to have really work with these end customers to figure out how we can scale with them.

Abinand Rangesh: Part of that is, I can't comment too much on that. What we're trying to do is to really work with these end customers to figure out how we can scale with them. We think at this point in the company's, like where we are, it's probably more important to get the right names in terms of first projects, if we can do that. Just because if you get the right names, you end up shaping the whole, all the future development, right? Once you have the right brand name, everybody else is going to follow, hopefully, based on that, the right name using it. Because it's, I think, reputationally probably more important to get that done right than necessarily, whichever order we get, of course, if we get a smaller data center first, we're going to take that.

Speaker #1: So we think at this point in the company's life, like where we are, it's 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?

Speaker #1: Once you have the right brand name, everybody else is going to follow—hopefully based on that—the right name, using it, because it's, 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're going to take that.

Speaker #1: But our priority right now is to try to get the right brand names closed, if we can.

Abinand Rangesh: Our priority right now is to try to get the right brand names closed if we can.

Speaker #6: Understood. Yeah, that's helpful, and we'll look forward to hearing updates. And maybe just for my follow-up—the base business, right? With that backlog increasing, it's good to see.

Chip Moore: Understood. No, that's helpful, and we'll look forward to hearing updates. Maybe just for my follow-up, the base business, right, with that backlog increasing, good to see. It looks like you expect some more here. Just the trends you're seeing there and any changes in sort of base markets. Thanks.

Speaker #6: And it looks like you expect some more here. Just the trends you're seeing there and any changes in sort of base markets, thanks.

Speaker #1: So we're starting to see our constraints across the board, all over the place, which is different than in the past. A lot of our sales, whether it was chillers or cogeneration, were made predominantly based on economics.

Abinand Rangesh: We are starting to see power constraints across the board all over the place, which, in the past, a lot of our sale, whether it was chillers or cogeneration, was made predominantly based on economics. Now we are starting to see a lack of power, electrical equipment having long lead times, those kind of things affecting the ability for non-data center type customers have access to either cooling or power generation or all 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.

Speaker #1: Now we're starting to see a lack of power electrical equipment having long lead times, those kind of things, affecting the ability for non-data center-type customers to have access to either cooling or power generation or any of that equipment.

Speaker #1: So we're starting to see that driving some of this. We're also starting to see a little bit of the cogeneration and standard power generation side of things start to come back for a while.

Speaker #1: That had significantly reduced, but we're starting to see some of the larger multifamily buildings and other types of buildings that are seeing high utility rates and, in some cases, not enough power, that are looking to use our equipment.

Abinand Rangesh: We are starting to see some of the larger multi-family buildings and other types of buildings that are seeing high utility rates 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, 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 switchgear and things like that might be longer, that we could essentially pick up projects just that way as well.

Speaker #1: So I think the base business is growing just as a result of some of what the data center spaces also facing. And part of what we've seen in that base business, right, things like switchgear, things like that 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.

Speaker #1: They're not able to install electrical-based equipment just because the switchgear and things like that might be longer that we could essentially pick up projects, just that way as well.

Speaker #6: Yeah, no, that makes sense. Okay. No, I appreciate it. Thanks very much.

Chip Moore: Yeah. No, that makes sense. Okay. No, I appreciate it. Thanks very much.

Speaker #2: Thank you. Our next question comes from the line of Alex Blanton with Clear Harbor Asset Management. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Alex Blanton with Clear Harbor Asset Management. Please proceed with your question.

Speaker #7: Good morning. I've got a question about—

Alex Blanton: Good morning. I've got a question about how you-

Speaker #6: Good morning, Alex.

Abinand Rangesh: Good morning, Alex.

Speaker #7: Oh, yes. I've 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 in those instances, would it be participating in expansions of existing data centers?

Alex Blanton: Oh, yes. I've 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? In those instances, would it be participating in expansions of existing data centers rather than just retrofitting what's already been built?

Speaker #7: Rather than just retrofitting what has already been built.

Speaker #1: That's a great question. Actually, before, a lot of our opportunity pipeline was with newer types of projects, but we're starting to see more with existing data centers.

Alex Blanton: That's a great question. Actually, we see both. Earlier, a lot of our opportunity pipeline was with newer types of projects, but we're starting to see more with existing data centers in a few different types of applications. One is, the AI side of it gets a lot of the press, right? There's still a lot of existing cloud data centers that are supporting either the AI infrastructure, but also just regular web workloads. Many of those are running out of power. Their cooling load may not be quite as big of an AI data center, but it's still there. If they can free up some of that, then there's benefits there. So we're starting to see some potential in those kind of applications.

Speaker #1: In a few different types of applications, one is the AI side of it gets a lot of the press, right? But there's still a lot of existing cloud data centers that are supporting either the AI infrastructure, but also just regular web workloads.

Speaker #1: And many of those are running out of power. And their cooling load may not be quite as big as an AI data center, but it's still there.

Speaker #1: And if they can free up some of that, then there's benefits there. So we're starting to see some potential in those kinds of applications.

Speaker #1: We're seeing some potential customers say, "We can incorporate this as part of a bigger campus," where they do it in one phase or as they build it into a certain phase of an expansion.

Abinand Rangesh: We're seeing some potential customers say we can incorporate this as part of a bigger campus where they do it in one phase or as they build it into a certain phase of an expansion. There's also the smaller data centers that might use it as a primary cooling source. So there's different applications that we are starting to see. There's also a push, I think, more broadly in the industry to start moving towards maybe smaller data centers that are closer to urban environments, just to where you can pick up pockets of power. In those areas, again, our cooling products could be a very, very good fit. But we're seeing a mix of different types of applications right now.

Speaker #1: And then there's also like the smaller data centers that might use it as a primary cooling source. So there's different applications that we're starting to see.

Speaker #1: And then there's also a push, I think, more broadly in the industry to start moving towards, maybe, smaller data centers that are closer to urban environments, just to where you can pick up pockets of power.

Speaker #1: And in those areas, again, our cooling products could be a very, very good fit. But we're seeing a mix of different types of applications right now.

Speaker #7: But you see an opportunity to retrofit where someone has an electric chiller and they say, well, let's take that out and install TCOGEN instead.

Alex Blanton: Would you see an opportunity to retrofit where someone has an electric chiller and they say, "Well, but let's take that out and install Tecogen instead?" What is the opportunity there?

Speaker #7: Is there any—what is the opportunity there?

Speaker #1: That actually is 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 doing the retrofit tends to be because it's a live site.

Abinand Rangesh: 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 doing the retrofit tends to be because it's a live site. So they might add it as almost like an expansion into. Because many of these data centers typically have some additional space they set up for future expansion, where they may not necessarily remove the electric chiller. They might leave it in place and add us in and put the electric chiller now as a backup. So that's the more likely application than a pure remove electric chillers. But we are seeing some people that are looking to remove electric and put ours in.

Speaker #1: So they might add it to either, almost like an expansion, because many of these data centers typically have some additional space they set up for future expansion.

Speaker #1: Whereas they may not necessarily remove the electric chiller. They might leave it in place and add us in and put the electric chiller now as a backup.

Speaker #1: So that's a more likely application than a pure remove electric chillers. But we are seeing some people that are looking to remove electric and put ours in.

Speaker #7: Okay. Thank you. I'm interested in what you said earlier about solving the or helping to solve the problems of pollution and noise and there was a third one.

Alex Blanton: Okay. Thank you. I'm interested in what you said earlier about helping solve the problems of pollution and noise, and there was a third one.

Speaker #1: The water usage?

Abinand Rangesh: The water usage?

Speaker #7: Water. Water pollution and noise. How do you do that? In your case.

Alex Blanton: Water. Water pollution and noise. How do you do that in your case?

Speaker #1: Yeah. So if you look at yeah. So there are two different ways you can do it, right? One is with the chiller. Because typically when a utility wants you to shut down your or reduce power from the grid, it's usually on the hottest days.

Abinand Rangesh: There are two different ways you can do it, right? One 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. When the utility starts to get very constrained, they start asking large load users to drop load. In which case, the alternative and what happened in Virginia, for example, was the diesel generators were turned off. What we would do in our case, right, is just have that load either dynamically move to natural gas or have those chillers just be turned on in those applications so that that load moves over to natural gas.

Speaker #1: Just because that's 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.

Speaker #1: In which case, your alternative and what happened in Virginia, for example, was the diesel generators were turned off. What we would do in our case, right, is just have that load either dynamically moved to natural gas or have that those chillers just be turned on in those applications so that that load moves over to natural gas.

Speaker #1: Because our equipment is designed for continuous usage, and originally, like our Altera emission system was designed for Southern California, so we have very, very clean emissions.

Abinand Rangesh: Because our equipment is designed for continuous usage, and originally, our Ultera emission system was designed for Southern California, so we have very, very clean emissions. Our carbon monoxide NOx, very, very low, right? 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 environments. So you could be standing next to it and you would hear it, but it is not going to be bothersome, no more than ambient noise. In that sense, it is substantially quieter than those diesel generators. The first is the chiller application. The second application is also potentially the InVerde. It is not necessarily going to run all your loads, but there are certain standby loads.

Speaker #1: Our carbon monoxide NOx very, very low, right? It's so in that sense, substantially cleaner than diesel generate. The other thing is because our machines have been designed for continuous usage, whether it's the inverter product or the chiller, it's designed for pretty low noise urban environments.

Speaker #1: So you could be standing next to it and you'd hear it, but it's not going to be bothersome. No more than ambient noise. So in that sense, it's substantially quieter than those diesel generators.

Speaker #1: So that's the first, is the chiller application. The second application is also potentially the inverter. It's not necessarily going to run all your loads, but there are certain standby loads or other loads, again, that you may not want to have your massive full data center load coming on smaller power systems like inverters.

Abinand Rangesh: There are other loads, again, that you may not want to have your massive full data center load coming on smaller power systems like InVerde. But because it is modular, you essentially could add the InVerde 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.

Speaker #1: But because it's modular, you essentially could add the inverter in conjunction with the chillers to shed some of that load during that peak time.

Speaker #1: And not turn on the generator, and keep the diesel generator really just for emergency use.

Speaker #7: Okay. Well, thank you much.

Alex Blanton: Well, thank you very much.

Speaker #1: Thank you, Alex.

Abinand Rangesh: Thank you, Alex.

Speaker #2: Thank you. And we have reached the end of the question and answer session. And I would like to turn the floor back to Abhinan Rangesh for a closing remarks.

Operator: Thank you. We have reached the end of the question and answer session, and I would like to turn the floor back to Abinand Rangesh for closing remarks.

Speaker #1: Thank you very much. Everyone for attending our Q2 2026 conference call. I will keep everyone updated as things move forward. I believe we've gotten the interest.

Abinand Rangesh: Thank you very much, everyone, for attending our Q2 2026 conference call. I will keep everyone updated as things move forward. I believe we have gotten the interest. We are going to do everything in our power now to turn this interest into projects. I will keep people posted and hopefully we will update. We will have some interesting news over the next few months. Thank you.

Speaker #1: We're going to do everything in our power now to turn these interests into projects. But I'll keep people posted and hopefully we'll update we'll have some interesting news over the next few months.

Speaker #1: Thank you.

Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.