TECOGEN INC. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed on May 8, 2018, covering events occurring on May 4, 2018. Tecogen Inc. (the "Company"), along with its wholly owned subsidiaries American DG Energy Inc. and TTcogen LLC (collectively the "Borrowers"), entered into a new material definitive agreement to secure financing.
Key Financial Metrics and Debt
- Debt Facility: Entered into a Credit Agreement with Webster Business Credit Corporation providing a revolving line of credit up to $10 million.
- Collateral: The line of credit is secured by accounts receivables, raw materials, and finished goods.
- Initial Drawdown: On the closing date, the Borrowers drew down $1,034,601.11.
- Interest Rates: Borrowings bear interest at the Borrower's option of either One Month LIBOR plus 3.00% or the Lender's Base Rate plus 1.5%.
- Maturity: Funds are payable on the third anniversary of the Closing Date.
Material Changes and Use of Proceeds
The primary material change is the establishment of the new credit facility and the immediate repayment of prior debt. The $1,034,601.11 drawn down was utilized as follows:
- Debt Repayment: $919,590.58 was used to repay the balance due to Mr. John N. Hatsopoulos, a director of the Company. This debt originated from an assumption of an $850,000 obligation (at 6% interest) by the Company on May 18, 2017.
- Closing Costs: The remaining amount was used to cover closing costs associated with the Credit Agreement.
Management Commentary, Risks, and Covenants
The Credit Agreement includes customary affirmative and negative covenants. Specific restrictions include limitations on certain indebtedness, liens, acquisitions, other investments, fundamental changes, and asset dispositions. The agreement also contains customary events of default. The filing references a press release issued on May 8, 2018, regarding these items.
Investor Verification Checklist
- Verify the full text of the Credit Agreement to understand specific financial covenants and default triggers.
- Confirm the current status of the $10 million revolving line availability based on eligible collateral (receivables, inventory).
- Review the Company's subsequent financial statements to assess the impact of the new interest expense (LIBOR + 3.00% or Base Rate + 1.5%) on future profitability.
- Check for any subsequent drawdowns or repayments against the facility since the May 4, 2018 closing date.