American DG Energy Reports Second Quarter 2013 Financial Performance

Housing

25

%

Healthcare

23

%

Hospitality

19

%

Fitness

19

%

Education

9

%

Other

5

TOTAL

100

%

CONSOLIDATED STATEMENT OF OPERATIONS

For the Three Months Ended June 30, 2013 and June 30, 2012

(unaudited)

Three Months Ended

June 30, 2013

June 30, 2012

(unaudited)

(unaudited)

Revenues

Energy revenues

$

1,732,497

$

1,136,265

Turnkey & other revenues

37,286

56,692

1,769,783

1,192,957

Cost of sales

Fuel, maintenance and installation

1,136,802

694,746

Depreciation expense

329,302

534,888

1,466,104

1,229,634

Gross profit

303,679

(36,677)

Operating expenses

General and administrative

844,418

677,371

Selling

277,388

624,159

Engineering

267,588

300,265

1,389,394

1,601,795

Loss from operations

(1,085,715)

(1,638,472)

Other income (expense), net

Interest and other income

42,144

13,682

Interest expense

(260,537)

(447,477)

Change in fair value of warrant liability

208,187

(44,602)

(10,206)

(478,397)

Loss before provision for state income taxes

(1,095,921)

(2,116,869)

Benefit (provision) for state income taxes

(7,055)

7,140

Consolidated net loss

(1,102,976)

(2,109,729)

(Income) loss attributable to the noncontrolling interest

54,484

60,764

Net loss attributable to American DG Energy Inc.

$

(1,048,492)

$

(2,048,965)

Net loss per share - basic and diluted

$

(0.02)

$

(0.04)

Weighted average shares outstanding - basic and diluted

48,619,404

46,639,141

Non-GAAP financial disclosure

Loss from operations

$

(1,085,715)

$

(1,638,472)

Depreciation expense

355,044

548,673

Stock based compensation

146,672

189,130

Adjusted EBITDA

(583,999)

(900,669)

Grants from rebates and incentives (reduction in basis of property)

—

260,701

Total cash outflows

$

(583,999)

$

(639,968)

CONSOLIDATED STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2013 and June 30, 2012

(unaudited)

Six Months Ended

June 30, 2013

June 30, 2012

(unaudited)

(unaudited)

Revenues

Energy revenues

$

3,746,934

$

2,587,834

Turnkey & other revenues

82,161

107,525

3,829,095

2,695,359

Cost of sales

Fuel, maintenance and installation

2,520,585

1,697,558

Depreciation expense

656,990

829,584

3,177,575

2,527,142

Gross profit

651,520

168,217

Operating expenses

General and administrative

1,482,843

1,445,323

Selling

690,186

1,044,335

Engineering

556,156

580,077

2,729,185

3,069,735

Loss from operations

(2,077,665)

(2,901,518)

Other income (expense), net

Interest and other income

66,288

26,440

Interest expense

(559,346)

(741,033)

Change in fair value of warrant liability

319,006

(261,336)

(174,052)

(975,929)

Loss before provision for state income taxes

(2,251,717)

(3,877,447)

Provision for state income taxes

(41,639)

(11,962)

Consolidated net loss

(2,293,356)

(3,889,409)

(Income) loss attributable to the noncontrolling interest

75,813

70,751

Net loss attributable to American DG Energy Inc.

$

(2,217,543)

$

(3,818,658)

Net loss per share - basic and diluted

$

(0.05)

$

(0.08)

Weighted average shares outstanding - basic and diluted

48,555,424

46,639,141

Non-GAAP financial disclosure

Loss from operations

$

(2,077,665)

$

(2,901,518)

Depreciation expense

694,697

857,224

Stock based compensation

283,360

379,857

Adjusted EBITDA

(1,099,608)

(1,664,437)

Grants from rebates and incentives (reduction in basis of property)

146,318

260,701

Total cash outflows

$

(953,290)

$

(1,403,736)

CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended June 30, 2013

(unaudited)

Three Months Ended

June 30, 2013

American DG Energy*

EuroSite

Power

Eliminations

Total

Revenues

Energy revenues

$

1,541,743

$

190,754

$

—

$

1,732,497

Turnkey & other revenues

37,286

—

—

37,286

1,579,029

190,754

—

1,769,783

Cost of sales

Fuel, maintenance and installation

960,401

176,401

—

1,136,802

Depreciation expense

312,003

17,299

—

329,302

1,272,404

193,700

—

1,466,104

Gross profit (loss)

306,625

(2,946)

—

303,679

Operating expenses

General and administrative

473,135

371,283

—

844,418

Selling

148,818

128,570

—

277,388

Engineering

233,086

34,502

—

267,588

855,039

534,355

—

1,389,394

Loss from operations

(548,414)

(537,301)

—

(1,085,715)

Other income (expense), net

Interest and other income

41,576

568

—

42,144

Interest expense

(240,045)

(20,492)

—

(260,537)

Change in fair value of warrant liability

208,187

—

—

208,187

9,718

(19,924)

—

(10,206)

Loss before provision for state income taxes

(538,696)

(557,225)

—

(1,095,921)

Benefit (provision) for state income taxes

(7,055)

—

—

(7,055)

Consolidated net loss

(545,751)

(557,225)

—

(1,102,976)

(Income) loss attributable to the noncontrolling interest

(60,862)

—

115,346

54,484

Net loss attributable to American DG Energy Inc.

$

(606,613)

$

(557,225)

$

115,346

$

(1,048,492)

Net loss per share - basic and diluted

$

(0.01)

$

(0.02)

Weighted average shares outstanding - basic and diluted

48,619,404

48,619,404

Non-GAAP financial disclosure

Loss from operations

$

(548,414)

$

(537,301)

$

—

$

(1,085,715)

Depreciation expense

337,745

17,299

—

355,044

Stock based compensation

73,102

73,570

—

146,672

Adjusted EBITDA

(137,567)

(446,432)

—

(583,999)

Grants from rebates and incentives (reduction in basis of property)

—

—

—

—

Total EBITDA cash outflows

$

(137,567)

$

(446,432)

$

—

$

(583,999)

* American DG Energy includes related LLC.

CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended June 30, 2012

(unaudited)

Three Months Ended

June 30, 2012

American DG Energy*

EuroSite

Power

Eliminations

Total

Revenues

Energy revenues

$

1,136,265

$

—

$

—

$

1,136,265

Turnkey & other revenues

29,098

27,594

—

56,692

1,165,363

27,594

—

1,192,957

Cost of sales

Fuel, maintenance and installation

674,642

20,104

—

694,746

Depreciation expense

534,888

—

—

534,888

1,209,530

20,104

—

1,229,634

Gross profit (loss)

(44,167)

7,490

—

(36,677)

Operating expenses

General and administrative

417,809

259,562

—

677,371

Selling

466,938

157,221

—

624,159

Engineering

266,273

33,992

—

300,265

1,151,020

450,775

—

1,601,795

Loss from operations

(1,195,187)

(443,285)

—

(1,638,472)

Other income (expense), net

Interest and other income

9,509

4,173

—

13,682

Interest expense

(447,477)

—

—

(447,477)

Change in fair value of warrant liability

(44,602)

—

—

(44,602)

(482,570)

4,173

—

(478,397)

Loss before provision for state income taxes

(1,677,757)

(439,112)

—

(2,116,869)

Benefit (provision) for state income taxes

7,140

—

—

7,140

Consolidated net loss

(1,670,617)

(439,112)

—

(2,109,729)

(Income) loss attributable to the noncontrolling interest

(25,589)

—

86,353

60,764

Net loss attributable to American DG Energy Inc.

$

(1,696,206)

$

(439,112)

$

86,353

$

(2,048,965)

Net loss per share - basic and diluted

$

(0.04)

$

(0.04)

Weighted average shares outstanding - basic and diluted

46,639,141

46,639,141

Non-GAAP financial disclosure

Loss from operations

$

(1,195,187)

$

(443,285)

$

—

$

(1,638,472)

Depreciation expense

547,963

710

—

548,673

Stock based compensation

67,108

122,022

—

189,130

Adjusted EBITDA

(580,116)

(320,553)

—

(900,669)

Grants from rebates and incentives (reduction in basis of property)

260,701

—

—

260,701

Total EBITDA cash outflows

$

(319,415)

$

(320,553)

$

—

$

(639,968)

* American DG Energy includes related LLC.

CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2013

(unaudited)

Six Months Ended

June 30, 2013

American DG Energy*

EuroSite

Power

Eliminations

Total

Revenues

Energy revenues

$

3,439,072

$

307,862

$

—

$

3,746,934

Turnkey & other revenues

82,161

—

—

82,161

3,521,233

307,862

—

3,829,095

Cost of sales

Fuel, maintenance and installation

2,249,714

270,871

—

2,520,585

Depreciation expense

624,527

32,463

—

656,990

2,874,241

303,334

—

3,177,575

Gross profit (loss)

646,992

4,528

—

651,520

Operating expenses

General and administrative

916,294

566,549

—

1,482,843

Selling

380,398

309,788

—

690,186

Engineering

489,945

66,211

—

556,156

1,786,637

942,548

—

2,729,185

Loss from operations

(1,139,645)

(938,020)

—

(2,077,665)

Other income (expense), net

Interest and other income

64,490

1,798

—

66,288

Interest expense

(533,601)

(25,745)

—

(559,346)

Change in fair value of warrant liability

319,006

—

—

319,006

(150,105)

(23,947)

—

(174,052)

Loss before provision for state income taxes

(1,289,750)

(961,967)

—

(2,251,717)

Benefit (provision) for state income taxes

(41,639)

—

—

(41,639)

Consolidated net loss

(1,331,389)

(961,967)

—

(2,293,356)

(Income) loss attributable to the noncontrolling interest

(123,315)

—

199,128

75,813

Net loss attributable to American DG Energy Inc.

$

(1,454,704)

$

(961,967)

$

199,128

$

(2,217,543)

Net loss per share - basic and diluted

$

(0.03)

$

(0.05)

Weighted average shares outstanding - basic and diluted

48,555,424

48,555,424

Non-GAAP financial disclosure

Loss from operations

$

(1,139,645)

$

(938,020)

$

—

$

(2,077,665)

Depreciation expense

662,234

32,463

—

694,697

Stock based compensation

181,995

101,365

—

283,360

Adjusted EBITDA

(295,416)

(804,192)

—

(1,099,608)

Grants from rebates and incentives (reduction in basis of property)

146,318

—

—

146,318

Total EBITDA cash outflows

$

(149,098)

$

(804,192)

$

—

$

(953,290)

* American DG Energy includes related LLC.

CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2012

(unaudited)

Six Months Ended

June 30, 2012

American DG Energy*

EuroSite

Power

Eliminations

Total

Revenues

Energy revenues

$

2,587,834

$

—

$

—

$

2,587,834

Turnkey & other revenues

79,931

27,594

—

107,525

2,667,765

27,594

—

2,695,359

Cost of sales

Fuel, maintenance and installation

1,677,454

20,104

—

1,697,558

Depreciation expense

829,584

—

—

829,584

2,507,038

20,104

—

2,527,142

Gross profit (loss)

160,727

7,490

—

168,217

Operating expenses

General and administrative

869,516

575,807

—

1,445,323

Selling

749,340

294,995

—

1,044,335

Engineering

546,085

33,992

—

580,077

2,164,941

904,794

—

3,069,735

Loss from operations

(2,004,214)

(897,304)

—

(2,901,518)

Other income (expense), net

Interest and other income

17,299

9,141

—

26,440

Interest expense

(741,033)

—

—

(741,033)

Change in fair value of warrant liability

(261,336)

—

—

(261,336)

(985,070)

9,141

—

(975,929)

Loss before provision for state income taxes

(2,989,284)

(888,163)

—

(3,877,447)

Benefit (provision) for state income taxes

(11,962)

—

—

(11,962)

Consolidated net loss

(3,001,246)

(888,163)

—

(3,889,409)

(Income) loss attributable to the noncontrolling interest

(82,206)

—

152,957

70,751

Net loss attributable to American DG Energy Inc.

$

(3,083,452)

$

(888,163)

$

152,957

$

(3,818,658)

Net loss per share - basic and diluted

$

(0.07)

$

(0.08)

Weighted average shares outstanding - basic and diluted

46,639,141

46,639,141

Non-GAAP financial disclosure

Loss from operations

$

(2,004,214)

$

(897,304)

$

—

$

(2,901,518)

Depreciation expense

856,514

710

—

857,224

Stock based compensation

127,865

251,992

—

379,857

Adjusted EBITDA

(1,019,835)

(644,602)

—

(1,664,437)

Grants from rebates and incentives (reduction in basis of property)

260,701

—

—

260,701

Total EBITDA cash outflows

$

(759,134)

$

(644,602)

$

—

$

(1,403,736)

* American DG Energy includes related LLC.

CONSOLIDATED BALANCE SHEETS

As of June 30, 2013 and December 31, 2012

(unaudited)

June 30,
2013

December 31,
2012

ASSETS

Current assets:

Cash and cash equivalents

$

10,815,833

$

13,362,919

Accounts receivable, net

871,243

761,678

Unbilled revenue

19,437

19,492

Due from related party

678,340

18,372

Inventory

2,974,270

2,920,444

Prepaid and other current assets

330,296

308,164

Total current assets

15,689,419

17,391,069

Property, plant and equipment, net

20,144,242

17,253,648

Accounts receivable, long-term

36,000

46,800

Other assets, long-term

42,104

47,216

TOTAL ASSETS

$

35,911,765

$

34,738,733

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

505,214

$

765,618

Accrued expenses and other current liabilities

566,879

532,420

Due to related party

55,955

41,812

Capital lease obligations

1,683

3,365

Total current liabilities

1,129,731

1,343,215

Long-term liabilities:

Convertible debentures

22,300,000

19,400,000

Warrant liability

70,448

389,454

Capital lease obligations, long-term

—

—

Other long-term liabilities

22,640

29,444

Total liabilities

23,522,819

21,162,113

Stockholders' equity:

American DG Energy Inc. stockholders' equity:

Common stock, $0.001 par value; 100,000,000 shares authorized; 48,807,195 and 48,490,733 issued and outstanding at June 30, 2013 and December 31, 2012, respectively

48,807

48,491

Additional paid-in capital

37,787,431

37,001,439

Accumulated deficit

(26,674,388)

(24,456,845)

Total American DG Energy Inc. stockholders' equity

11,161,850

12,593,085

Noncontrolling interest

1,227,096

983,535

Total stockholders' equity

12,388,946

13,576,620

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

35,911,765

$

34,738,733

CONSOLIDATED STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 2013 and June 30, 2012

(unaudited)

Six Months Ended

June 30, 2013

June 30, 2012

(unaudited)

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(2,217,543)

$

(3,818,658)

Income (loss) attributable to noncontrolling interest

(75,813)

(70,751)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

694,697

857,224

Provision for losses on accounts receivable

64,134

74,291

Amortization of deferred financing costs

5,112

1,176

Increase (decrease) in fair value of warrant liability

(319,006)

261,336

Noncash interest expense

528,489

712,921

Stock-based compensation

283,360

379,857

Changes in operating assets and liabilities:

(Increase) decrease in:

Accounts receivable and unbilled revenue

(162,844)

(81,911)

Due from related party

(659,968)

(47,360)

Inventory

(53,826)

(491,118)

Prepaid and other current assets

3,312

(59,013)

Increase (decrease) in:

Accounts payable

(260,404)

(34,929)

Accrued expenses and other current liabilities

34,459

81,661

Due to related party

14,143

267,486

Other long-term liabilities

(6,804)

(6,804)

Net cash used in operating activities

(2,128,502)

(1,974,592)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(3,123,791)

(933,687)

Net cash used in investing activities

(3,123,791)

(933,687)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of subsidiary convertible debentures, net of costs

2,874,556

—

Proceeds from issuance of warrants

—

7,500

Proceeds from sale of common stock, net of costs

—

1,560,000

Proceeds from sale of subsidiary common stock, net of costs

(4,558)

—

Proceeds from exercise of stock options

—

114,882

Purchases of common stock, net of costs

—

(750,000)

Principal payments on capital lease obligations

(1,682)

(1,682)

Distributions to noncontrolling interest

(163,109)

(144,092)

Net cash provided by financing activities

2,705,207

786,608

Net (decrease) increase in cash and cash equivalents

(2,547,086)

(2,121,671)

Cash and cash equivalents, beginning of the period

13,362,919

17,801,025

Cash and cash equivalents, end of the period

$

10,815,833

$

15,679,354