Annual report pursuant to Section 13 and 15(d)

Commitments and contingencies

Commitments and contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Operating Lease Obligations

The Company leases office space and warehouse facilities under various lease agreements which expire through March 2024. The Company subleases portions of its corporate offices and manufacturing facility to sub-tenants under annual sublease agreements, on a calendar year basis. Total rent expense for the years ended December 31, 2014 and 2013 amounted to $615,602 and $616,041, offset by $201,440 and $127,784 in rent paid by sub-lessees, to both related and unrelated parties, for a net amount of $414,162 and $488,257.

As of December 31, 2014, the future minimum lease payments receivable on subleases were $51,033.

The Company leased one passenger vehicle under a lease agreement expiring June 2018. Vehicle rent expense amounted to $1,839 during the year ended December 31, 2014.

Future minimum lease payments under all non-cancelable operating leases as of December 31, 2014 consist of the following:



Years Ending December 31,	Amount
2015	$	574,108
2016	524,159
2017	519,399
2018	500,272
2019	506,432
2020 and thereafter	2,235,785
Total	$	4,860,155

Letters of Credit

On October 26, 2011, the Company entered into an agreement with Digital Energy Corp., a customer of the Company, whereby the Company provided a letter of credit in the amount of $180,000, for the benefit of Digital Energy Corp., to satisfy a requirement of the New York Independent System Operator, Inc. A certificate of deposit for $180,000 secures the letter of credit. In exchange for providing this letter of credit, Digital Energy Corp. provided a promissory note to the Company for $180,000, with interest at 6%, payable in monthly installments of interest only. Principal would only be owed if the letter of credit was drawn upon and would become due and payable on the first anniversary date of the note. On February 19, 2013, this letter of credit and certificate of deposit restriction were released.

As of December 31, 2014, $583,702 in a letter of credit was outstanding under a revolving bank credit facility needed to collateralize a performance bond on a certain installation project. The bank required collateral to issue the letter of credit which the company provided in the form of restricted cash. This revolving bank credit facility expires June 14, 2015. In addition, approximately $1,055,000 in letters of credit were required to collateralize performance bonds on several installation projects. This letter of credit is collateralized by an account owned by John N. Hatsopoulos and expires July 22, 2015. In each case, a performance bond has been furnished on the project and would be drawn upon only in the event that Tecogen fails to complete the project in accordance with the contract.

Legal Proceedings

From time to time the Company may be involved in various claims and other legal proceedings which arise in the normal course of business. Such matters are subject to many uncertainties and outcomes that are not predictable. Based on the information available to the Company and after discussions with legal counsel, the Company does not believe any such proceedings will have a material adverse effect on the business, results of operations, financial position or liquidity.