Operator: Good morning and welcome to the Tecogen’s First Quarter 2016 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. For you information, this conference is being recorded. As a reminder, 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 Wednesday, May 18th, 2016. Individuals may access the recording by dialing 877-344-7529 from inside the U.S. 855-669-9658 from Canada or area code 412-317-0088 from outside the U.S. Enter the replay conference number of 1008-4852 followed by the pound key. Now I would like to introduce Ariel Babcock, Tecogen’s Director of Investor Relations. Ms. Babcock the floor is yours madam.

Ariel Babcock: Thank you. Good day and thank you all for joining us on our first quarter conference call. Speaking on the call today are John Hatsopoulos and Benjamin Locke, our Co-Chief Executive Officers. Also joining us today with prepared remarks are David Garrison, Tecogen’s Chief Financial Officer and Robert Panora our President and Chief of Operations. During the call we will be referencing slides posted on the Investor Relations section of our website at tecogen.com. Before we begin, I’d like to remind you that this presentation includes forward-looking statements within the meaning of section 27-A of the Securities and Exchange Act of 1933 and Section 21-E of the Securities and Exchange Act of 1934. Such statements include declaration 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 the actual results as identified from time to time in the company’s SEC filings. Forward-looking statements provided herein are as of the specified date and not reaffirmed or updated at any time. I will now turn it over to John Hatsopoulos, our Co-CEO for some opening remarks. John?

John Hatsopoulos: Good morning ladies and gentlemen and good afternoon for whoever is in Europe. This is an intriguing period for us for two reasons. That the market of Cogeneration has been a very simple market for a long period of time. And as a matter of fact, a lot of people in garages can slap pieces together and make a small Cogeneration unit and get some orders. Well actually probably we have lost a very small amount of orders that are in the Northeast where we’re mostly in the market and none in California. The reason I say this is interesting that our equipment is different than anybody else. We have eliminated the bulk operations [ph] which by the way is just starting to wake up in the whole world and our emissions technology even though it makes at times our equipment is little more expensive because of -- and I’ll let Bob who has designed this, I’m not an engineer, explain it to you. But the additional equipment that we added to our units gets a little bit of extra cost at time. While the guys in the garage don’t have to do that. Now, all of a sudden the whole world is switching into lower emissions and we believe number one that our competition on a long-term basis cannot compete with us because our emission control is fully patented and ensured by Lloyds of London. And all these people that can put together a simple unit will eventually disappear or at least maybe will ultimately virtually [ph] disappear unless they make a new invention that is better than ours, which we don’t believe it is. With that, I’d like to ask Ben Locke who really runs this operation and talk to you about where we are.

Benjamin Locke: Thanks John. So, I’ll start off the call as always by reminding those who may be new to our company of Tecogen’s core business model as shown on Slide 4. Key heating and cooling [ph] that is cheaper, cleaner and more reliable. As John mentioned, we have proprietary technology for improving efficiency and more importantly emissions as well as grid resilience to be truly disruptive to the traditional methods of heating cooling in powering buildings. As you see in our company’s timeline, technology development and product innovation is our most valuable asset and we've made tremendous achievements so far this year. Turning to Slide 5, before I go to actual earnings results for the quarter I wanted to describe the very important strategic steps we've taken to both improve our current products as well as grow our technology applications outside of our traditional markets, first we continue to strengthen our product offering with the introduction of the new InVerde e+, as well as the implementation of the GE Equipment InSight mobile remote monitoring system in the first quarter. It's very important that we continue to improve on our products in order to maintain our competitive advantage in the CHP market as John described. And with the new e+ improved efficiency, better economics, quieter operation and other improvements all reinforce our goal of providing our customers with the most advanced clean energy technology available. With regard to our GE partnership we're beginning to implement a GE system on new products as well as retrofitting existing projects. The GE system allows real time access on a function of all of our units, CHP as well as chillers, heat pumps and even our retrofit emission systems. While the Tecogen service people have always had this capability, the new GE system allows customers to access dashboards that can demonstrate the operations and savings of the equipment real time on the computer or mobile devices. It also allows an overall fleet view of real time operation of our installed systems which we've permanently displayed and allowed them access [ph], but more importantly at all of our service depots. Evidence of the importance of these new innovations is clear and the recent award with the very large energy service company or ESCO for CHP in the Long Island school District which consists of both InVerde CHP and 75 kW induction CHP units for a total of 900 kW of CHP. The contract award was aided by the innovation of the new e+ and by the functionality of the GE system. The new remote monitoring system will be included in all orders from this ESCO going forward. Bob will provide a little more detail on the e+ and the GE system later in the call. The second area that holds exciting potential for the company is in the development of the emissions technology for automotive applications. As our press release this morning indicated our joint venture company ULTRATEK completed its first phase testing of the Ultera emissions reduction technology on a gasoline powered light duty vehicle. The results conclusively prove the Tecogen Ultera emissions technology was highly effective at reducing pollutants from the test vehicle. I'll let Bob describe the importance of the CO and non-methane hydrocarbon -- carbon levels, but suffice to say these results are tremendously promising and validates the technology's effectiveness in reducing harmful pollutants contained in automotive emissions. Lastly as previously stated in the first quarter we initiated the process to acquire the remaining minority stake in Ilios via a private placement exchange offer. As of May 2nd this process was completed and Ilios is now fully integrated in the Tecogen. This transaction is very important as Ilios becomes recognized as an offering giving important cost saving solutions within the engineering communities which is often a key sales channel to our targeted markets. We are very optimistic about the heat pump potential as evidenced by the Gas Partnership Agreement announced in March. This exclusive partnership include the commitment to joint marketing, dedicated local sales resources in the gas company and yearly milestones for project leads and installations. We look to share forward -- to sharing more details of this partnership as we make progress in 2016. So, turning to Slide 6, I'll review the key financial metrics for our company. Revenues, margin and sales backlog. Our revenues for the quarter were just under 5.1 million compared to 6.1 million in the first quarter of last year. There were several contributing factors to the challenging market conditions we've seen recently, such as customers taking longer to sign contracts, and a decline in orders from some of our traditional sales partners and agencies particularly with chiller waters. Interruptions in some of the incentive programs have also contributed to delays in customer bookings in the past quarter. On a positive note service revenues increased 9.5% over the prior year period as a result of the increasing population of new units and service contracts. Our gross profit for the quarter was approximately 1.7 million compared to 2.2 million in Q1 of 2015. While we're disappointed with the topline revenue results, we did make progress reducing our operating expenses through strategic cost improvement measures. Our OpEx for the quarter was approximately 2.57 million compared to 2.84 million in the first quarter of 2015. Our goal is to deliver full year operating expense near 10 million with Q1 expenses typically higher than other quarters we believe our efforts to reduce OpEx are paying off and we're on track to reach this goal. Our overall gross margin was just under 34% compared to 36.5% in the first quarter of 2015. The gross margins benefitted from the product cost reduction initiatives I just mentioned but these improvements were offset by legacy installation project that unavoidably went over budget. We've instituted a more structured process for our installation projects, that'll prevent such over runs in the future. Moving onto backlog in Slide 7, we anticipate many projects that have been delayed for the reasons stated earlier will begin to be contracted as we move forward in the 2016. Backlog as of the end -- as of the May 6, 2016 was 13.1 million well ahead of the company's goal to maintain backlog above 10 million, as we continue our backlog maintains a healthy mix of projects in our core market segment. With that I’d like to turn it over to Bob Panora for more detail on our technology developments, followed by Dave with the little more detail of our financials. I’ll then wrap up before we take your questions. Bob?

Robert Panora: Good morning everyone and thank you Ben. Today I want to provide updates on several topics that we have discussed in previous calls. I’ll begin with the GE equipment monitoring system, as discussed in our call and as Ben has talked about today, the company has adopted through formal agreement and generality IT platform for remote data collection. The system which GE has branded, equipment insight provides [indiscernible] internet access to data from the Tecogen modules and other onside equipment at the facility. The information can be viewed in standardize reports in dashboards or may be custom configured by the user as desired. The purpose of the GE InSight is to provide owners and operators of our equipment and of course also our service personal a multi-platform tool for evaluating the performance of the CHP plant in both real time and in the past. Essential attributes for the InSight system are that the field setup be very simple, inexpensive and without requiring intrusion into our customer networks. The adaptation of the GE operating system and the Tecogen customer ready [ph] product has been completed, revision one, if you will it's fully operational at server sides allowing users and servers personals to gain immediate access through their Smartphones, Tablets and PCs. It's quite impressive and it has tremendous potential beyond its current utilization. In one display configuration as Ben talked about, group of installations can be viewed collectively, utilizing this feature we are equipping our service centers with large flat screen monitors strategically placed in each office such that fleet status is visually prominent. The same is being done at the factory of course, but on a largest scale such as the entire Tecogen fleet is monitored in real time. Next I want to provide update to our new CHP product InVerde e+, as we detailed in our January announcement, our main stage [ph] CHP product InVerde has been placed out, replaced by a significantly more advance second generation model which we call the InVerde e+. This new model has been in development for a number of years and represents the large quality of upgrades and refinements that further distance us from the competition. These include a more advance inverter and generator for which we own and control the intellectual property, a larger and more powerful engine and state of the art controls compatible with GE InSight of course. In addition, the InVerde e+ has the ability to integrate its electricity production with other direct current sources such as solar, PV and of course batteries. And another feature is that the larger engine provides 25% more electrical output, which can be dispatched during periods of high electricity cost such as would be the case during hot summer day. I want to expand on one additional feature of the e+ as we discussed last time it's lower noise which are relative to its predecessor. Recently we have further reduce its noise profile with the new high attenuation sound enclosure. With this and the other sound improvements, the product is a full 10db quitter than the original InVerde. This is a very significant drop in sound level, one that equates to the product noise level being cut in half, half the noise of the older product. This feature will expand our ability to place the product in areas of critical noise sensitivity, an important competitor advantage. The InVerde e+ has generated a great interest and we are reaching out to our ESCO friends and consulting engineers to a series of seminars on the product. The option to operate in peak periods at a higher output level as the demand response to has generated particular interest in new energy of service community. Today, our current production is virtually all e+ and we don’t anticipate the older project beyond this quarter. Moving on to emissions technology, our stationary biogas and natural gas installations continued to do well and we have good slug of additional flotation activity that’s been ongoing. We have filed several new patterns disclosures and received formal notification of an additional emissions related patent. These are very important as they also cover technical areas in common with our ULTRATEK vehicle project, and therefore help secure stronger IP protection in this endeavor as well. As Ben discussed, we have been very active with our new venture UltraTek. This is the newly form Tecogen subsidiary whose purpose is to demonstrate emissions after treatment process on gasoline powered vehicles. This project has been funded primarily by two strategic investors in Europe and of course it's related to the kind of awareness of pollution brought on by the Volkswagen scandal. Since we have begun our work, the auto industry story has not subsided, rather it's only expanded to other brands and other areas of vehicle certification such as fuel economy. So for the Ultera process, the fit is for gasoline vehicles, this category has not been implicating any proper testing however, there is a growing awareness that the pollution output measured in controlled laboratory drive cycles significantly underrepresents the true emissions output of vehicles of this type of real world driving as such there is an expectation that the certification process will be altered in some aspect to correct the short-term. The strengths are well suited to this issue because the system provides robust performance especially in extreme edges of operation that being hard acceleration, deceleration, heavy loading and so forth. Currently through our joint venture with UltraTek we have concluded our Phase 1 testing which is the test the Ultera system on a new model light duty gasoline vehicle. Our purpose is to confirm the chemistry of the process with this fuel which is of course outside of our experience. As announced in January, we have contracted behalf of UltraTek with AVL, a highly respected vehicle powertrain development and test company to perform these tests. They are extremely qualified for this task, their staff is highly experienced in the field and in the test facility is world class. The testing which covered just over two weeks has just concluded and we have collected a great volume of data which we have been carefully analyzing. At this time we issued a press release this morning that says the same thing. We are pleased to announce that the Ultera process was confirmed re-affective in the gasoline vehicle application in standard EPA drive cycles, emissions from the test vehicle relative to carbon monoxide was reduced by as much as 90%, while non-methane organic gases or NMOG were likewise reduced by as much as 80%. The chemistry in short behaved as we expected and confirmed to our stationary natural gas engine experience. We should mention that the vehicle was compliant and it was a typical vehicle that you would buy of the lot and it was compliant in all respects relative to its current government certification. So our process was to enable and improve on these baseline results. The impact of the Ultera process on organic gases NMOG is especially significant. And let me explain a little bit about that. In the vehicle certification process the NMOG chemical group is of major importance factored in the latest and is equally with NOx, with Nitrogen Oxides. In fact NOx and NMOG are added together in the score keeping as a single pollutant. Moreover and until the AVL testing our experience we these organic gases was minimal, we didn’t have the equipment, doesn’t really exist for stationary -- as stationary sources. These chemicals are simply not measured in a meaningful way in our normal price testing, so we are very pleased to see this result in real time which is what we wanted to verify and made possible by these exceptional instrumentation available to us at the AVL facility. So we have more work to do, we are not done and we are in a process of evaluating next steps, but in any case this is a very positive start to UltraTek which we very pleased about. That concludes my discussion, I'll turn the call over to David Garrison to discuss the company financials.

David Garrison: Thanks Bob. Reviewing the highlights from the year-over-year financial results, total revenues declined compared to the prior year period. Although on a sequential basis the company posted modest improvement over fourth quarter of 2015 revenue results, while chiller sales rebounded from a week fourth quarter showing, they still fell short of last year's mark. Similarly heat pump and cogeneration sales were delayed for the reasons that Ben previously discussed. Despite a small decline from the prior year in installation services revenue as a result of few projects delays total service revenue continued its steady growth delivering well over half of our total company revenues in the quarter. Revenue from long term contracted maintenance and service agreements accounts for over one third of total company revenues providing a reliable annuity like revenue streams. This stable revenue should only continue to grow as the installed base and fleet operating hours grow, helping to smooth the impact of cyclical sales resulting that are typically found in our industry. Cost of sales was impacted by the product mix, lower sales volume and their loss from a legacy installation contract Ben previously mentioned. This loss impacted both service cost and gross margins. Product margins improved as manufacturing efficiency programs continued to yield positive results. Management expects to continue this trend in the near future. Gross margins and expense reduction programs continue as management uses its cash resources in a thoughtful manner. Starting with the chart in the upper left corner, total revenue for the trailing fourth quarter’s period is $20.4 million. A slight year-over-year decline, while the quarter-to-quarter revenue showed some volatility, we expect longer term growth to continue benefitting from our recent selling and product initiatives. The chart in the upper right illustrates the smooth gross margin trend. As you can see on the trailing fourth quarter basis management delivered gross margin in line with the lower end of our target range of 35% to 40%. We expect cost controls and sales initiatives to continue to deliver margins within this stated range. In the lower rate, it’s a chart of our operating expenses. After our first full year -- calendar year as a public company, management’s plan to lower operational expenses has begun to produce results. We believe 2015 will prove to be our OpEx peak as the team works to tighten spending and move the company towards profitability. Finally in the lower left, the backdrop chart plots our weekly backlog, currently at 13.1 million as of Friday, May 06. This backlog is well ahead of management’s goal to exceed 10 million in product and turnkey service revenue. Clearly the large and much anticipated order from the multi-national ESCO for a Long Island school district received in the start of April provided a nice bump to backlog. As you can see in this chart, other recent project wins have added to this number. But as a reminder backlog does not include service contract revenues which were more than one third of our revenues in 2015 and continue to show consistent growth. Again, the targets of the company, management plans to continue to meet its goal of delivering improving margins in the 35% to 40% range, maintain backlog of product installations sales above 10 million and deliver stable operating expenses of approximately $10 million on a 12 month basis. With that, I know turn it back over to Ben for closing remarks.

Benjamin Locke: Thanks. So in closing while we are very disappointed with the drop in top line revenues for product sales, we’re responded to the market challenges aggressively. Our role out of the new InVerde e+ will provide customers with superior economics and operations compared to any other CHP product in its class. In additional functionality of the GE system will not only enhance our service capability but allow customer the ability to see how there equipment is performing and the savings associated with it. We believe that some of the delays in product orders will gradually relent in the coming quarter as we bring backlog into production and bring topline revenues back where we want them. We also anticipate the New Jersey CHP incentive program will restart this summer and the New York Chiller incentive program later this year. Similar to that Ilios gas company partnership, we also continue to look for strategic partnerships in all of our product lines which can enhance our sales capability. And as our install base continues to grow, we expect to see our service revenues continue the trend upwards. As Dave mentioned we’ll also continue our concerted efforts to reduce our operating expenses to establish a baseline for achieving profitability in the coming quarter. Lastly, we are very excited about technology development at UltraTek as Bob described and we look forward to sharing those results with you as they occur. With that, I’m happy to turnover to the operator for any questions.

Operator: Thank you sir. We will now begin the question-and-answer session. [Operator Instructions] The first question we have come from Ralph Wanger of RW Investments. Please go ahead.

Ralph Wanger: Is there any breakthrough in California sales likely, is this regulatory picture out there -- what’s the regulatory picture in California and what are our chances there?

Benjamin Locke: Yeah, sure. Ralph that’s a good question. Certainly at the California, particularly Southern California is where our Ultera emissions package shines and is a valuable selling tool for us and in terms of what the standards are there. There are their own set of challenges in California from the utility standpoint, there are the tariff structures in California are much different than the tariff structures we’re used to on the East Coast and in many cases punitive towards CHP. Without going into too much detail, there is this thing, non-buyback bypasable [ph] charges and other tariffs that could take a really high utility rate of say $0.13 or $0.14 per kW hr and ultimately reduce it to something less because you’re still being charged despite your CHP. But with that said, there is up markets in California that take advantage of the emissions systems, our West Coast office is on them as well as turn on the regulators, they try to say look this is the, this emission is possible, you should really be thinking about changing, I know Bob has talked about the BACT what the measurement is for emissions standards such that we will really be the only game in town. Bob do you want to add anything to day.

John Hatsopoulos: Bob excuse me. This is John. From what I understand there is nobody in California that meets the requirements other than us. Just very, very large turbines can make it very expensive, very -- injection of chemicals and so forth. That really don't apply to our market -- the big solar turbines and so forth.

Benjamin Locke: I will add one more thing Ralph, California it's an interesting environment and we've seen this in other states where they have a real focus on renewable and everything is all about renewable. And for us who consume natural gas and we're efficient and we’re clean and all those things, that's not good enough for them. That's not high enough with the Angels with them, there want things to be renewable and this is why and I know I've mentioned this in the past and something Bob and I have spent time on, we really in our technology development would like to come out with the unit that can run on biogas. That's not something we can do right now with these engines, but if we can get the technology to run these CHP units on biogas then we'd be in favor with the Angels in California on the renewable side and I think that would help us substantially.

Operator: The next question we have comes from Roger Liddell of Clear Harbor Asset Management.

Roger Liddell: I wanted to go back to the AVL and the testing that was disclosed today, first of all I believe that AVL was the entity that approved that a VW diesels were emitting these enormous what 20 or 40 times the authorized limit, so --.

Benjamin Locke: That’s not the case Roger. I think it was a group in North Carolina, but go ahead.

Roger Liddell: In any event what can you tell us about the status of NOx? We heard about CO and the non-methane hydrocarbons, but is there anything at this point on NOx itself?

Benjamin Locke: Let me speak to that little bit, in our current cogeneration products what we've been able to do because of the way the process works, we split it up into two separate chemical reactors, we're able to optimize the first reactor for NOx and optimize the second reactor for these other chemicals by the way we burn the fuel and that's a subtle thing. But in current vehicles you would have a vehicle such that the emissions on both types of pollutants were sort of a compromise because you’ve only got the single reactor and so by splitting it in two, if you really carefully tune the vehicle or in our case the engine in our co-gen, you can get to lower NOx levels without paying any penalty on these other components because you’re dealing with them very effectively in the second reactor. So, having said that we have not done that yet, these results that we're reporting are essentially without having manipulated the vehicle in any way which is the way you want to start, which it right way to start. So, down the road for the testing's which is one of the important questions we want to ask ourselves, but by and large the NOx is pretty good from these vehicles anyway if these other constitutes that they struggle with that we're able to really pull down. Does that answer your question Roger?

Roger Liddell: Yes, that's does. And in Southern California I was heartened by the sales that took place into the manufacturer who needed the ability to operate emergency or a backup generation suite of his supply, is that installation in business and can it be a reference point for other such manufacturers or customers?

Benjamin Locke: Yes, it certainly will be but the plant or the facility is extremely large, facility is undergoing a major rehab if you will and they've pushed us to the back of the back burner. We’ve shipped them all the equipment, they’ve paid for and they just asked us to standby until they finish this stuff they're doing there and then they’ll bring the units online. So, we're not able to turn that ship because they've got certainly a much bigger development going on in their facility that's well beyond our stuff. So, we'll await for them and I assume we'll be doing something very soon to them, but we haven't heard in the last few weeks.

Operator: [Operator Instructions] The next question we have comes from Michael Zook of Oppenheimer & Company. Please go ahead.

Michael Zook: This question is principally I think is for your Bob, but tell us where we stand with Ilios and the use of propane as a basic fuel for Ilios and what the potential market might be there?

Robert Panora: Yes, that question [ph] might actually be better for Ben, but in terms of sales and so forth, we have sold -- the Ilios sticks to propane and it works fine on propane.

Benjamin Locke: Yes, Mike and propane users are the idea of target for the areas, because as you know you going to cut down their consumption in half, if not two-thirds. So if they’re paying out $2 or $3 for propane. Suddenly propane in those is going to be cut in half, that’s the whole driver right there. So propane is indeed the market -- the most locative markets for sales.

Michael Zook: Are we making the effort or will there be a potential market, say in some of the Caribbean nations, I know that a lot of them will have converted from fuel oil to LNG and to propane and what are our efforts in that direction?

Benjamin Locke: Yes, absolutely. So we are -- I think I have mentioned in the past that our channel for the market for the Ilios is certainly outside the United States, is through manufacturer's representatives, not reps. That makes more sense and particularly because when you go to some of these far flung location certainly in the Caribbean, you need to have somebody local selling thing and I couldn’t show up there and try to sell them something. So we have reps in many of these places, we have reps certainly in Puerto Rico, which is one of the locations and I’d have to check with our Ilios guy where else we have a reps. But I know we have a rep network in the Caribbean. For the exact reasons you mentioned, which is they have expensive energy, they have got resources that use lots of hot water, people take showers and running pools in these places and an arm and a leg for their propane and if we come there with Ilios, cutting their propane bill in half, it's a good place. So you are absolutely right and in fact once those 0start to pick up its ultimately going to be service out of our Florida office. As we have mentioned before we are getting a population of units in Florida. At some point in time and in the near future, I anticipate, we will going to opening up for Florida service office, not just Florida, but it's Georgia overall Southeast United States and that office would be doing the service on the Caribbean. So it's a great market for us.

Michael Zook: With regard to Ilios, it begins to demonstrate the potential that I think it has, well we at some point in time consider setting up an independent production line just for the Ilios type units?

Benjamin Locke: Possibly, Mike we consider that it comes down to economy of scale. Certainly at the rate of production right not it doesn’t want it, in fact the actually labor cost it doesn’t dominate the cost of the Ilios units, it’s dominated by components, engines, compressors, heat exchangers and all those type things. But when you reach some critical volume of production of course you consider perhaps producing it somewhere else where the economics and labor are little bit cheaper.

Michael Zook: Well, I think that Ilios has huge potential particularly in the Southeast and in the Caribbean, also now that Hawaii has entered into a contract for the direct import of LNG, will that be another opportunity for us with the Ilios and I guess InVerde e+ systems?

Benjamin Locke: Yes, Hawaii is the great market. It's another kind of like California, also those intricacies in the energy industry certainly I think it's in flux, there are some acquisitions going on. I think there is debate about that LNG terminal, I am not sure if that’s a done deal. But all that aside absolutely Hawaii is at fantastic markets for these things. And then we’ve got a lot of activity there to try to get our Ilios units installed.

Michael Zook: Well, it's sounds like we are getting on tract. Appreciate everything that everyone is doing there and keep up the good work.

Operator: The next question we have comes from Tom Orr [ph], Investor.

Unidentified Analyst: Bob, so you answer this somewhat phase 1 for UltraTek was good, you valuated the chemistry that’s all great. What do we want to have happen, I mean what do we -- what's phase 2, phase 3 and how quickly can we get there, you touched on it a bit. But can you provide more color about what we are doing now with this data and where we go and how we leveraged it and what we might expect to see as an investor happened in the next six months?

Robert Panora: This is been debated internally and the data when you talk and as an engineer I always want more data and more facts, but aside from that, I think what I think we need to do is now take a look at different vehicle types. If you will and see where the most strains on meeting emissions and that step -- and that will resonate, now we have the technology and I am very confident about the chemistry. Now we have to figure out, where the most acute need is, if you will. Does that make sense?

Unidentified Analyst: And I mean so what you think, it's probably a hard question to answer. What's a timeline reasonably or what's an internal expectation where you can get this to point where we can then license the technology or partner with someone to build or actually start to generate sales, or be able to go to an automotive company where they have to start to take the technology and look at it, what's the reasonable timeline before people really start to see this as something we can turn into defined revenues?

Robert Panora: I am reluctant to put anything out on that subject. But as you can imagine, it depends on a lot of factors, including how the regulatory climate unfolds. There is a lot of expectation that with the Volkswagen scandal, things will kind of change and that will trigger some activities. So I don’t want to give a time line and anything I say will be changed in a week anyway because it's a different situation and different opportunities. So roughly I'll like to pass on that one Tom.

Unidentified Analyst : Are we talking to any automotive manufacturers right now actively? I’m assuming you probably had some discussions with them, but are we engaged alongside with the testing with UltraTek and the joint venture of proactively going to automotive manufacturers and starting to approach this subject and introduce our technology to them.

Robert Panora: Again I can't comment on that right now Tom it's just --.

Benjamin Locke: Yes, Tom I'll just say that we are talking with several lot of time thinking about and as clearly you as well and it something that we certainly not reached any conclusions, there are many options, ways -- different ways we go could go. We want to keep all of our options open and when we decide on the good path carefully and deliberately we’ll share it.

Unidentified Analyst : Alright, appreciated. Thank you.

Operator: [Operator Instructions] And next we have a follow up from Michael Zook of Oppenheimer & Company.

Michael Zook: I know that people agenda [ph] has entered into some sales agreements with ADGE and EuroSite. Could you bring us up to date on what we hope to accomplish with those agreements -- licensing agreements and what the status it is and how they’re progressing?

John Hatsopoulos: Mike. The agreement with EuroSite and ADGE especially ADGE has existed for over ten years, as a matter of fact I'm glad you said that. We stared ADGE on the theory and some of you -- few of you anyway heard me ten years ago when I said that the reason I was very hesitant in bringing Tecogen public was that capital groups market for our products is erratic and we might have sometime fantastic quarters and we might have some stinky quarters. So we didn’t want to take it public. The reason we did take it public is because now we know these developments that Bob and his team have created that’s make shift and I hate to use the word because it's probably wrong, a billion dollar company was succeed. So we decided to take it public. But this agreement has existed all along and we are as designed that ADGE is actually, the fact that ADGE right now is in a process of paying off their debt will allow them on a long-term basis to find a way to raise capital or get capital somehow to expand. We have a lot of enquiries on ADGE which we are not accepting right now, till we complete removal of their debt to which we are in a process of doing. As you know 9 million out of the [Indiscernible] or whatever it was paid offs and hopefully over the next few weeks or months the balance will be paid off and then we have to start worrying about finding ways to finance units for expansion of ADGE, but we are not accepting them right now. Which in a way as Ben has pointed out to me, it does not do Tecogen any good. The fact that we don’t have and our orders from ADGE. And as far as EuroSite has an agreement to use Ilios for the European -- the British market, I can't think of the work, England and Ireland whatever they are called and they always share the rights to use Tecogen, but on an exclusive basis. So nothing has changed. I don’t know what I said to give you an impression that something has changed, other than they don’t have money right now to expand, but they have enough money to make it a cash flow positive company.

Michael Zook: Well, I was just curious as to what benefit Tecogen was getting from these agreements where there doesn’t seem to be much activity on the ADGE side and it seems like EuroSite is developing some other relationships for sourcing CHP particularly with I think the Czech companies. So I was trying to figure out how much benefit Tecogen will get from these agreements and it doesn’t seem that at the moment they are really producing more than a nominal benefit.

Benjamin Locke: Mike I can answer that a little bit. So, there actually is a tremendous benefit that Tecogen has with helping ADGE and I don’t want to talk too much about ADGE expect that I think they stated that there goal is to improve the operation of their existing fleet to get more profitable and that helps Tecogen because our service is based on per-run hour basis and one of their largest sites maybe ran 5,000 hours a year, is not running 8,000 hours a year and so that’s additional service revenue that Tecogen gained. So that’s tremendously beneficial for Tecogen and beneficial for Tecogen to help ADGE become a better company because once they become a better company as John said they’ll start placing orders again for Tecogen equipment. Now that brings me to your comment about EuroSite. Each geography is different in terms of what their needs are for CHP equipment and Bob has talked about this in the past, our equipment is specifically designed for the United States market for the interconnect complexities for the emissions complexities, all of those things are what is in the DNA of the InVerde equipment. Europe is different, Europe is expecting a different engine technologies, they’re expecting a lean burn turbocharged engines and different emission’s profile and for square peg and a round holes, sometimes bringing our equipment over there and they already have round pegs for round holes over there. And so of course EuroSite is free to find the equipment that find the equipment that makes the most sense for their application, whether its emissions regulations, whether it’s how they run, whether it’s electric versus thermal efficiency, all of those things euro site takes into account. So that’s kind of a long answer Mike, but I think.

John Hatsopoulos: I have something to add. In Europe right now they are not worried about emissions like we’re worried in United States. With all these commotion about the Volkswagen and various other units, they are starting to look into emissions. The units and I am using Bob’s words and if he think I am wrong, you should correct me, that the units they are using in Europe our units we used to sell in the United States 10 or 15 years ago, not what we have right now, Bob is that correct?

Robert Panora: In terms of emissions they have a much higher bar like we would have had 20 years ago.

Michael Zook: Thanks for your answers. That clarifies a lot of things in my mind, appreciate it.

Operator: Next we have Alex [indiscernible].

Unidentified Analyst : I’d like to ask a question about the gross margins, they are shown on Slide 12 and they are calculated for us for both of products and service revenue and it shows that the product gross margin went up to 31.5% from 27.8% when the sales were down 28% year-over-year, so how did you manage that, that’s very unusual. How did that happen?

David Garrison: Alex thanks, this is David Garrison. The product margin improvements that we’ve made in our process are going to give us specific incremental improvement on sourcing some of resourcing our parts and how we source those to how we assemble those and all those are variable costs that are calculated on a per unit basis. So we would achieve those reductions whether our product sales are lower or higher. So, the improvements that we’re making are incremental improvements. Well of course I think you are probably surprised because you might have thought we had a much higher fixed cost in our main factory and operation and that fixed cost is not as high as you would expect and that is probably were you were thinking that that would have been normal in that regard. Does that answer your question?

Unidentified Analyst : That’s very interesting because that means that, what does that means for margins when the volume goes backup.

David Garrison: So when the volume goes backup we should continue to see the reductions as we said earlier and the bigger point on the volume reduction I mean the margin reduction with volume increase is at by purchasing higher number --.

Unidentified Analyst : You mean margin increase?

David Garrison: Margin increase, I am sorry. Cost reduction program that we’re working through right now we’re able to improve the margins by negotiating better with vendors because of volume increases. So we expect that to continue. Also I think it’s important to keep in mind that our product mix has a factor on this as well because we do have variability in our margins for our products they're not exactly the same for all of our products. So chillers versus heat pump versus the two different types of co-gen modules that we have all of those have different product margins individually as well.

Unidentified Analyst: I understand that but you're chillers were down, they have the highest margin. So even with chillers down you've got a margin improvement, does this mean that when volume goes back up to what people might have expected here that you're going to have record margins? Because of these cost reductions on the material side.

David Garrison: I think our margins are going to continue to stay in that path of 35% to 40% and management is working hard to show improvements in those margins every single quarter.

Unidentified Analyst: Yes, well, you're almost there and this quarter on the product side, now the service margins were down, what happened there?

David Garrison: That's in reference to that one legacy installation project that had a cost overrun and as Ben explained the process in those projects has been put in place that should alleviate that from the future.

Unidentified Analyst: Yes, which is plant expansion, it looks like a margin in total, would have been up in the quarter if that hasn't happened? Is that right?

David Garrison: Yes, they would have.

Unidentified Analyst: That’s a one off thing right?

Benjamin Locke: Yes, that project is behind us. What had to get it installed, we got it installed, the customer is happy but unfortunately, it was an older project, that a legacy project, that’s done and over with now.

Unidentified Analyst: So, what are your service margins normally?

David Garrison: Our margin in the fourth quarter is representative -- I'm sorry the first quarter of last is representative of the target management is trying to achieve, which is in the high 40%.

Unidentified Analyst: The second question is just John, in your letter May 3, you mentioned that there was competition in our important New York City markets significant competition from other CHP manufacturers which -- because of lucrative incentives, why was the competition greater with the incentives and you said right well, are these competitors you referred to today that don't have the emissions capability, is that, are these [Multiple Speakers].

Benjamin Locke: Well, Alex I can start to answer that, so, New York is in the area where there is some very lucrative incentives and that requires in order to get that incentive it requires you to provide [indiscernible] power, this ability to run during an outage. And there's different technologies that can do it, at the inverter based interconnect, is the one acceptable by many utilities in all areas of New York, but there is other co-generation technology, I won't get into too much details it’s called Syncronus [ph] that can indeed -- is eligible for the incentive. It's got some limitations to be sure, whether you can place it, but there are numerous Syncronus co-gen manufacturers out there, so it's not a novel or new technology, that, sometimes they find their incentives in there and when there's incentives of course that's where people kind of come out of the woodwork. I think it's fair to say we have a far superior product that goes without saying and I think we're going to -- and especially with the introduction of the InVerde e+ further distanced ourselves from some of these other people that are hanging around.

Ariel Babcock: So, operator I think we're out of time.

Operator: Alright, thank you very much sir and for the management team for your time today. At this time I’ll conclude the conference call. I would like to thank you all very much for participating in the conference. Take care have a great day everyone. Thank you.