EUROSITE POWER INC. - FORM 10-Q - May 15, 2013

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013

or
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-54484
EUROSITE POWER INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
27-5250881
(State or Other Jurisdiction of Incorporation or Organization)
(IRS Employer Identification No.)
 
 
45 First Avenue
 
Waltham, Massachusetts
02451
(Address of principal Executive Offices)
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (781) 522-6000
____________________________________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
Accelerated filer o
Non –accelerated filer o
Smaller reporting company x
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
Title of each class
 
Outstanding at March 31, 2013
Common Stock, $0.001 par value
 
56,747,100




EUROSITE POWER INC.

QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDING MARCH 31, 2013

TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
 
 
 
Item 1.
 
 
 
 
3 
 
 
 
 
 
 
4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II - OTHER INFORMATION
 
 
 
Item 1A.
 
 
 
Item 6.
 
 
 
Signatures
 
 
References in this Form 10-Q to “we”, “us”, “our”, the “Company” and “EuroSite Power” refers to EuroSite Power Inc. and its consolidated subsidiaries, unless otherwise noted.

2

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

EUROSITE POWER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2013 and December 31, 2012 (unaudited)
 
 
March 31,
2013
 
December 31,
2012
ASSETS
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
624,920

 
$
832,511

Accounts receivable
31,820

 
8,443

Value added tax receivable
468,550

 
181,217

Inventory
1,240,794

 
1,173,729

Other current assets
32,025

 
10,294

Total current assets
2,398,109

 
2,206,194

Property, plant and equipment, net
2,351,291

 
1,526,948

TOTAL ASSETS
$
4,749,400

 
$
3,733,142

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
581,383

 
$
203,764

Due to related party
88,397

 
124,206

Parent note payable
1,100,000

 
—

Accrued expenses and other current liabilities
18,338

 
62,385

Total current liabilities
1,788,118

 
390,355

Total liabilities
1,788,118

 
390,355

 
 
 
 
Stockholders’ equity:
 

 
 

Common stock, $0.001 par value; 100,000,000 shares authorized; 56,747,100 issued and outstanding at March 31, 2013 and December 31, 2012, respectively
56,747

 
56,747

Additional paid-in capital
6,495,934

 
6,472,697

Accumulated deficit
(3,591,399
)
 
(3,186,657
)
Total stockholders’ equity
2,961,282

 
3,342,787

 
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
4,749,400

 
$
3,733,142

 
See Notes to unaudited Condensed Consolidated Financial Statements

3

EUROSITE POWER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2013 and March 31, 2012
 
 
Three Months Ended
 
March 31,
2013
 
March 31,
2012
 
(unaudited)
 
(unaudited)
Revenues
 
 
 
Energy revenues
$
117,108

 
$
—

Turnkey & other revenues
—

 
—

 
117,108

 
—

Cost of sales
 

 
 

Fuel, maintenance and installation
94,470

 
—

Depreciation expense
15,164

 
—

 
109,634

 
—

Gross profit
7,474

 
—

 
 
 
 
Operating expenses
 

 
 

General and administrative
195,266

 
379,162

Selling
181,218

 
12,550

Engineering
31,709

 
—

 
408,193

 
391,712

Loss from operations
(400,719
)
 
(391,712
)
Other income (expense)
 

 
 

Interest and other income
1,230

 
4,968

Interest expense
(5,253
)
 
—

 
(4,023
)
 
4,968

 
 
 
 
Loss before income taxes
(404,742
)
 
(386,744
)
Provision for income taxes
—

 
—

Net loss
$
(404,742
)
 
$
(386,744
)
 
 
 
 
Net loss per share - basic and diluted
$
(0.01
)
 
$
(0.01
)
Weighted-average shares outstanding - basic and diluted
56,747,100

 
54,362,100

 
See Notes to unaudited Condensed Consolidated Financial Statements

4

EUROSITE POWER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2013 and March 31, 2012
 
 
Three Months Ended
 
March 31,
2013
 
March 31,
2012
 
(unaudited)
 
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 

Net loss
$
(404,742
)
 
$
(386,744
)
Adjustments to reconcile net loss to net cash used in operating activities:
 

 
 

Depreciation and amortization
15,164

 
—

Stock-based compensation
27,795

 
129,970

Changes in operating assets and liabilities:
 

 
 

(Increase) decrease in:
 

 
 

Accounts receivable
(23,377
)
 
—

Value added tax receivable
(287,333
)
 
(74,440
)
Inventory
(67,065
)
 
(290,873
)
Prepaid and other current assets
(21,731
)
 
(24,063
)
Increase (decrease) in:
 

 
 

Accounts payable
377,619

 
70,506

Due to related party
(35,809
)
 
—

Accrued expenses and other current liabilities
(44,047
)
 
(34,813
)
Net cash used in operating activities
(463,526
)
 
(610,457
)
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Purchases of property and equipment
(839,507
)
 
1,446

Net cash (used in) provided by investing activities
(839,507
)
 
1,446

 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 

 
 

Proceeds from sale of common stock, net of costs
(4,558
)
 
—

Proceeds from parent note
1,100,000

 
—

Net cash provided by financing activities
1,095,442

 
—

 
 
 
 
Net (decrease) increase in cash and cash equivalents
(207,591
)
 
(609,011
)
Cash and cash equivalents, beginning of the period
832,511

 
2,338,783

Cash and cash equivalents, end of the period
$
624,920

 
$
1,729,772

 
See Notes to unaudited Condensed Consolidated Financial Statements

5

EUROSITE POWER INC.

Notes to Interim Unaudited Condensed Consolidated Financial Statements for the period ending March 31, 2013

Note 1 — Description of business and summary of significant accounting policies:
 
Description of Business
 
EuroSite Power Inc., the Company, we, our or us, distributes, owns and operates clean, on-site energy systems that produce electricity, hot water, heat and cooling in the United Kingdom and Europe. The Company’s business model is to own the equipment it installs at customers’ facilities and to sell the energy produced by these systems to the customers on a long-term contractual basis at prices guaranteed to the customer to be below conventional utility rates. The Company calls this business the EuroSite Power “On-Site Utility.”
 
The Company was incorporated as a Delaware corporation on July 9, 2010 as a subsidiary of American DG Energy Inc., or American DG Energy, to introduce the American DG Energy’s On-Site Utility solution into the United Kingdom and the European market.
 
Principles of Consolidation and Basis of Presentation
 
The unaudited condensed consolidated financial statements, or the Unaudited Financial Statements, presented herein have been prepared by the Company, without audit, and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the interim periods presented. The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and pursuant to the rules and regulations of the SEC, for reporting in this Quarterly Report on Form 10-Q, or the Quarterly Report. Accordingly, certain information and footnote disclosures required for complete financial statements are not included herein. It is suggested that the Unaudited Financial Statements be read in conjunction with the consolidated financial statements and notes included in the Company’s Form 10-K for the year ended December 31, 2012. The Company’s operating results for the three month period ended March 31, 2013, may not be indicative of the results expected for any succeeding interim periods or for the entire year ending December 31, 2013.     
 
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary EuroSite Power Limited, a United Kingdom registered company.
 
On July 9, 2010, American DG Energy invested $45,000 in exchange for 45 million shares of the Company’s common stock, par value $.001 per share, or Common Stock, and obtained controlling interest in the Company. Also on July 9, 2010, Nettlestone Enterprises Limited, invested $5,000 in exchange for 5 million shares of the Company’s Common Stock. As of March 31, 2013, American DG Energy owned an 79.3% interest in the Company and consolidates the Company into its financial statements in accordance with GAAP.
 
The Company’s operations are comprised of one business segment. The Company’s business is to sell energy in the form of electricity, heat, hot water and cooling to its customers under long-term sales agreements.
 
The Company has experienced total net losses since inception of $3.6 million. For the foreseeable future, the Company expects to experience continuing operating losses and negative cash flows from operations as its management executes its current business plan. The Company believes that its existing resources, including cash and cash equivalents, future cash flow from operations, its ability to control certain costs, including those related to general and administrative expenses, and the use of capital from its parent company, will be sufficient to meet the working capital requirements of its existing business for the foreseeable future, including the next 12 months; however, as the Company continues to grow its business by adding more energy systems, the cash requirements will increase. Beyond March 31, 2014, if the Company cannot raise capital by the existing equity fundraising effort, it may need to raise additional capital through a debt financing or use capital provided by its parent to meet its operating and capital needs. There can be no assurance, however, that the Company will be successful in these fund-raising efforts or that additional funds will be available on acceptable terms, if at all.
 
Since its inception to March 31, 2013, the Company has raised a total of $5,896,000 through various private placements of Common Stock. If the Company is unable to raise additional capital, the Company may need to terminate certain of its employees and adjust its current business plan. Financial considerations may cause the Company to modify planned deployment of new energy systems and the Company may decide to suspend installations until it is able to secure

6

EUROSITE POWER INC.

additional working capital. The Company will evaluate possible acquisitions of, or investments in, businesses, technologies and products that are complementary to its business; however, the Company is not currently engaged in such discussions.
 
The following significant accounting policies are either currently in effect or are anticipated to become effective as the Company commences its normal business activities.
 
Foreign Currency Transactions
 
The functional currency and the reporting currency of the Company and subsidiary are the U.S. dollar. Transactions denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the date of the transactions. Exchange gains or losses on transactions are included in the Condensed Consolidated Statements of Operations. 
 
Use of Estimates
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
Revenue Recognition
 
Revenue from energy contracts is recognized when electricity, heat, and chilled water is produced by the cogeneration systems on-site. The Company bills each month based on various meter readings installed at each site. The amount of energy produced by on-site energy systems is invoiced, as determined by a contractually defined formula. Under certain energy contracts, the customer directly acquires the fuel to power the systems and receives credit for that expense from the Company. The credit is recorded as reduction of revenue and as a reduction of fuel cost. Revenues from operation, including shared savings are recorded when provided and verified. Maintenance service revenue is recognized over the term of the agreement and is billed on a monthly basis in arrears. 
 
As a by-product of the energy business, in some cases, the customer may choose to have the Company construct the system for them rather than have it owned by the Company. In this case, the Company will account for revenue, or turnkey revenue, and costs using the percentage-of-completion method of accounting. Under the percentage-of-completion method of accounting, revenues are recognized by applying percentages of completion to the total estimated revenues for the respective contracts. Costs will be recognized as incurred. The percentages of completion are determined by relating the actual cost of work performed to date to the current estimated total cost at completion of the respective contracts. When the estimate on a contract indicates a loss, the Company's policy will be to record the entire expected loss, regardless of the percentage of completion. The excess of contract costs and profit recognized to date on the percentage-of-completion accounting method in excess of billings will be recorded as unbilled revenue. Billings in excess of related costs and estimated earnings will be recorded as deferred revenue.
 
Customers may buy out their long-term obligation under energy contracts and purchase the underlying equipment from the Company. Any resulting gain on these transactions will be recognized over the payment period in the accompanying consolidated statements of operations. The Company had no such arrangements to date.
 
In the future, the Company may enter into a sales arrangement with a customer to construct and sell an energy system and provide energy and maintenance services over the term of the contract. Based on the fact that the Company will sell each deliverable to other customers on a stand-alone basis, the Company will determine that each deliverable has a stand-alone value. Additionally, there are no rights of return relative to the delivered items; therefore, each deliverable will be considered a separate unit of accounting. Revenue will be allocated to each element based upon its relative fair value which is determined based on the estimated price of the deliverables when sold on a standalone basis. Revenue related to the construction of the energy system will be recognized using the percentage-of-completion method as the unit is being constructed. Revenue from the sale of energy will be recognized when electricity, heat, and chilled water is produced by the energy system, and revenue from maintenance services is recognized over the term of the maintenance agreement. The Company had no such arrangements to date.
 
The Company may be able to participate in the demand response market and receive payments due to the availability of its energy systems. Demand response programs provide payments for either the reduction of electricity usage or the increase in electricity production during periods of peak usage throughout a utility territory. The Company had not recognized revenue from demand response activity to date.

7

EUROSITE POWER INC.

 
Other revenue represents various types of ancillary activities for which the Company expects to engage in from time to time such as the sale of equipment, and feasibility studies.

Cash and Cash Equivalents
 
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
 
Concentration of Credit Risk
 
Financial instruments which potentially subject the Company to concentrations of credit risk consist of highly liquid cash equivalents. The Company has cash balances in certain financial institutions in amounts which occasionally exceed current federal deposit insurance limits. The financial stability of these institutions is continually reviewed by senior management. As of March 31, 2013, the Company had a balance of $624,920 in cash and cash equivalents. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.
 
Accounts Receivable
 
The Company maintains receivable balances with its customers. The Company reviews its customers’ credit history before extending credit and generally does not require collateral. An allowance for doubtful accounts is established based upon factors surrounding the credit risk of specific customers, historical trends and other information. Bad debts are written off when identified by management. At March 31, 2013, and December 31, 2012, the allowance for doubtful accounts was $0 and $0, respectively.
 
Inventory
 
Inventories are stated at the lower of cost or market, valued on a first-in, first-out basis. Inventory is reviewed periodically for slow-moving and obsolete items.
 
Supply Concentrations
 
All of the Company’s cogeneration unit purchases for the periods ending March 31, 2013 and 2012, respectively, were from one vendor (see “Note 5 - Related parties”). The Company believes there are sufficient alternative vendors available to ensure a constant supply of cogeneration units on comparable terms. However, in the event of a change in suppliers, there could be a delay in obtaining units which could result in a temporary slowdown of installing additional income producing sites. The Company believes there are sufficient alternative vendors available to ensure a constant supply of maintenance and installation services on comparable terms. However, in the event of a change of vendor, there could be a delay in installation or maintenance services.
 
Property Plant and Equipment
 
Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method at rates sufficient to write off the cost of the applicable assets over their estimated useful lives. Repairs and maintenance are expensed as incurred.

The Company will evaluate the recoverability of its long-lived assets by comparing the net book value of the assets to the estimated future undiscounted cash flows attributable to such assets. The useful life of the Company's energy systems will be the lesser of the economic life of the asset or the term of the underlying contract with the customer, typically 12 to 15 years. The Company will review the useful life of its energy systems on a quarterly basis or whenever events or changes in business circumstances indicate that the carrying value of the assets may not be fully recoverable or that the useful lives of the assets will no longer be appropriate. If impairment is indicated, the asset will be written down to its estimated fair value based on a discounted cash flow analysis.
 

8

EUROSITE POWER INC.

Stock-Based Compensation
 
Stock-based compensation cost is measured at the grant date based on the estimated fair value of the award and is recognized as an expense in the consolidated statements of operations over the requisite service period. The fair value of stock options granted is estimated using the Black-Scholes option pricing valuation model. The Company recognizes compensation on a straight-line basis for each separately vesting portion of the option award. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility was calculated based on the average volatility of 5 companies in the same industry as the Company. The average expected life is estimated using the simplified method for “plain vanilla” options. The simplified method determines the expected life in years based on the vesting period and contractual terms as set forth when the award is made. The risk-free interest rate is based on United States Treasury zero-coupon issues with a remaining term which approximates the expected life assumed at the date of grant. When options are exercised the Company normally issues new shares.
 
See “Note 3 – Stockholders’ equity” for a summary of the stock option activity under our 2011 Stock Incentive Plan, as amended, and the UK Sub-Plan for the periods ending March 31, 2013 and 2012, respectively.
 
Loss per Common Share
 
The Company computes basic loss per share by dividing net loss for the period by the weighted-average number of shares of Common Stock outstanding during the period. The Company computes its diluted earnings per common share using the treasury stock method. For purposes of calculating diluted earnings per share, the Company considers its shares issuable in connection with stock options and warrants to be dilutive Common Stock equivalents when the exercise price is less than the average fair market value of the Company’s Common Stock for the period.
 
Other Comprehensive Net Loss
 
The comprehensive net loss for the periods ending March 31, 2013 and 2012, respectively, does not differ from the reported loss.
 
Income Taxes
 
As part of the process of preparing its consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which the Company operates. This process involves the Company estimating its actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as depreciation and certain accrued liabilities for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the Company’s consolidated balance sheets. The Company must then assess the likelihood that its deferred tax assets will be recovered from future taxable income and to the extent the Company believes that recovery is not likely, the Company must establish a valuation allowance.
 
The Company uses a comprehensive model for the recognition, measurement and financial statement disclosure of uncertain tax positions. Unrecognized benefits are the differences between tax positions taken, or expected to be taken in tax returns and the benefits recognized for accounting purposes.

Impact of New Accounting Pronouncements

Management does not believe that any recently issued accounting pronouncements or issued but yet effective accounting standards if currently adopted would have a material effect on the accompanying financial statements.
 
Note 2 — Inventory:
 
As of March 31, 2013 and December 31, 2012, the Company had $1,240,794 and $1,173,729, respectively, in inventory which consisted of finished goods. As of March 31, 2013 and December 31, 2012, there were no reserves or write downs recorded against inventory.
 


9

EUROSITE POWER INC.

Note 3 — Stockholders’ equity:
 
Common Stock
 
In 2011 the Company raised $1,148,401, net of costs, in a private placement by issuing 1,250,000 shares of Common Stock to 4 accredited investors at a price of $1.00 per share.
 
On February 10, 2012, the Company announced that its Board of Directors declared a stock dividend of 10% per share on the outstanding shares of our Common Stock. The dividend was payable on March 12, 2012, to common stockholders of record at the close of business on February 24, 2012, except for shares held by American DG Energy, whose Board of Directors declined the dividend. The Company adjusted the price of its outstanding stock option awards and warrants to $0.90 per share due to the payment of the dividend. The Company retroactively applied this dividend to the December 31, 2012, financial statements. Prior to that transaction, the Company had paid no cash or stock dividends on its Common Stock. The Company currently expects to retain earnings for use in the operation and expansion of its business, and therefore does not anticipate paying any cash dividends in the foreseeable future.

On November 30, 2012, the Company entered into subscription agreements with selected investors for the purchase of units consisting, in the aggregate, of 1,510,000 shares of its Common Stock and warrants to purchase 1,510,000 shares of its Common Stock. The subscription agreements provided for the purchase of the units at a purchase price of $1.00 per unit, and the warrants at an exercise price of $1.00 per share of Common Stock and an expiration date of November 30, 2013. Scarsdale Equities LLC, or Scarsdale, acted as placement agent, on a reasonable efforts basis, for the offering and received a placement fee in cash equal to 6.5% of the gross proceeds of the offering and 65,650 warrants with an exercise price of $1.00 per share of Common Stock that expire on November 30, 2013. The fair value of the warrants granted was estimated to be $7,738 using the Black-Scholes option pricing valuation model and was recorded in stockholder's equity in additional paid-in capital and as a cost of the financing as a deduction to the proceeds raised. The Company also reimbursed certain expenses incurred by Scarsdale in the offering. The offering was made pursuant to our registration statement on Form S-1, which became effective on October 24, 2012.

Also, on November 30, 2012, the Company entered into subscription agreements with selected investors for a private placement of units consisting, in the aggregate, of 875,000 shares of its Common Stock and warrants to purchase 875,000 shares of its Common Stock. The subscription agreements provided for the purchase of the units at a purchase price of $1.00 per unit, and the warrants at an exercise price of $1.00 per share of Common Stock and an expiration date of November 30, 2013. Scarsdale acted as placement agent, on a reasonable efforts basis, for the offering and received a placement fee in cash equal to 6.5% of the gross proceeds of the offering and 56,875 warrants with an exercise price of $1.00 per share of Common Stock that expire on November 30, 2013. The fair value of the warrants granted was estimated to be $6,703 using the Black-Scholes option pricing valuation model and was recorded in stockholder's equity in additional paid-in capital and as a cost of the financing as a deduction to the proceeds raised. The Company also reimbursed certain expenses incurred by Scarsdale in the offering.

The holders of Common Stock have the right to vote their interest on a per share basis. At March 31, 2013, there were 56,747,100 shares of Common Stock outstanding.
 
Stock-Based Compensation
 
In January 2011, the Company adopted the 2011 Stock Incentive Plan, or the Plan, under which the Board of Directors may grant up to 3,000,000 shares of incentive or non-qualified stock options and stock grants to key employees, directors, advisors and consultants of the Company. On June 13, 2011, the Board of Directors unanimously amended the Plan, to increase the reserved shares of Common Stock issuable under the Plan from 3,000,000 to 4,500,000, or the Amended Plan.
 
Stock options vest based upon the terms within the individual option grants, usually over a four year period with an acceleration of the unvested portion of such options upon a liquidity event, as defined in the Company’s stock option agreement. The options are not transferable except by will or domestic relations order. The option price per share under the Amended Plan is not less than the fair value of the shares on the date of the grant. The number of securities remaining available for future issuance under the Amended Plan was 692,000 at March 31, 2013.
 
On January 15, 2011, the Company granted nonqualified options to purchase 2,100,000 shares of Common Stock to five employees and two directors at a purchase price of $1.00 per share. Those options have a vesting schedule of four years and expire in ten years. The assumptions used in the Black-Scholes option pricing model include an expected life of 6.25

10

EUROSITE POWER INC.

years, a risk-free interest rate of 2.7% and an expected volatility of 32.8%. The fair value of the options issued was $790,908, with a grant date fair value of $0.38 per option.
 
On June 13, 2011, the Company granted nonqualified options to purchase 300,000 shares of Common Stock to three directors at a purchase price of $1.00 per share. Those options have a vesting schedule of four years and expire in ten years. The assumptions used in the Black-Scholes option pricing model include an expected life of 6.25 years, a risk-free interest rate of 2.3% and an expected volatility of 32.4%. The fair value of the options issued was $109,304, with a grant date fair value of $0.36 per option.
 
On November 3, 2011, the Company granted its managing director options to purchase 900,000 shares of common stock at purchase price of $1.00 per share and granted to the three members of its advisory board options to purchase 300,000 shares of common stock at purchase price of $1.00 per share. Those options have a vesting schedule of four years and expire in ten years and were made under the UK Sub-Plan to the Company’s 2011 Stock Incentive Plan. The assumptions used in the Black-Scholes option pricing model include an expected life of 6.25 years, a risk-free interest rate of 1.5% and an expected volatility of 33.1%. The fair value of the options issued was $423,400, with a grant date fair value of $0.35 per option.
 
On March 12, 2012, in connection with the 10% stock dividend declared on the Company’s common stock, all outstanding stock option awards were modified in order to adjust the exercise price to $0.90. Based on the change in fair value of the modified awards, the Company will recognize incremental compensation cost of $111,482 over the remaining vesting terms of the outstanding options.

On March 20, 2013, the Company granted to a director options to purchase 100,000 shares of Common Stock, plus an additional grant of 118,000 options to purchase shares of Common Stock at a purchase price of $0.90 per share. Those options have a vesting schedule of four years and expire in ten years. The assumptions used in the Black-Scholes option pricing model include an expected life of 6.25 years, a risk-free interest rate of 1.28% and en expected volatility of 36.4%. The fair value of the options issued was $74,049, with a grant date fair value of $0.34 per option. 
During the three month period ending March 31, 2013, the Company had 3,808,000 options outstanding and recognized employee non-cash compensation expense of $27,795 related to the issuance of those stock options. At March 31, 2013, the total compensation cost related to unvested stock option awards not yet recognized was $397,136. This amount will be recognized over the weighted average period of 2.88 years.
 
Stock option activity as of and for the three month period ending March 31, 2013 was as follows:
Common Stock Options
Number of
Options
 
Exercise
Price
Per
Share
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Life
 
Aggregate
Intrinsic
Value
Outstanding, December 31, 2012
3,590,000

 
$
0.90

 
$
0.90

 
8.34 years
 
359,000.00

Granted
218,000

 
0.90

 
0.90

 
 
 
 

Exercised
—

 
—

 
—

 
 
 
 

Canceled
—

 
—

 
—

 
 
 
 

Expired
—

 
—

 
—

 
 
 
 

Outstanding, March 31, 2013
3,808,000

 
$
0.90

 
$
0.90

 
8.20 years
 
$
—

Exercisable, March 31, 2013
1,420,000

 
 

 
$
0.90

 
 
 
$
—

Vested and expected to vest, March 31, 2013
3,808,000

 
 

 
$
0.90

 
 
 
$
—

 
The aggregate intrinsic value of options outstanding as of March 31, 2013, is calculated as the difference between the exercise price of the underlying options and the price of the Company’s Common Stock for options that were in-the-money as of that date. Options that were not in-the-money as of that date, and therefore have a negative intrinsic value, have been excluded from this amount. At March 31, 2013 there were 3,808,000 unvested stock options outstanding with a vesting schedule of 25% per year and expiration in ten years.
 

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EUROSITE POWER INC.

Note 4 — Earnings per share:
 
Basic and diluted earnings per share for the three month periods ended March 31, 2013 and 2012, respectively was as follows:
 
Three Months
 
March 31,
2013
 
March 31,
2012
Earnings per share
 
 
 
Loss available to stockholders
$
(404,742
)
 
$
(386,744
)
 
 
 
 
Weighted average shares outstanding - Basic and diluted
56,747,100

 
54,362,100

Basic and diluted loss per share
$
(0.01
)
 
$
(0.01
)
 
 
 
 
Anti-dilutive shares underlying warrants outstanding
2,507,252

 
400,000

Anti-dilutive shares underlying stock options outstanding
3,808,000

 
3,590,000


Note 5 — Related parties:
 
American DG Energy, the Company's parent, Tecogen, Ilios Inc., or Ilios, GlenRose Instruments Inc., or GlenRose Instruments, Pharos LLC, or Pharos, and Levitronix Technologies LLC, or Levitronix are affiliated companies by virtue of common ownership. The business of GlenRose Instruments, Pharos and Levitronix is not related to the business of the Company The common stockholders include:

•
John N. Hatsopoulos who is the Chairman of the Company who holds 0.1% of its common stock is also: (a) the Chief Executive Officer and director of American DG Energy and holds 10.7% of that company’s common stock; (b) the Chief Executive Officer and director of Tecogen and holds 27.3% of that company’s common stock; (c) a director of Ilios and holds 7.0% of that company’s common stock; and (d) the Chairman of GlenRose Instruments and holds 15.7% of that company’s common stock.

•
Dr. George N. Hatsopoulos, who is John N. Hatsopoulos’ brother, who holds 0.3% of the Company's common stock is also: (a) a director of American DG Energy and holds 14.0% of that company’s common stock; (b) a director of Tecogen and holds 26.0% of that company’s common stock; (c) an investor in Ilios and holds 2.7% of that company’s common stock; (d) an investor of GlenRose Instruments and holds 15.7% of that company’s common stock; (e) founder and investor in Pharos and holds 24.4% of that company’s common stock; and (f) an investor and director of Levitronix and holds 21.4% of that company’s common stock.
 
The Company expects to purchase the majority of its energy equipment from American DG Energy, its parent. American DG Energy owns an 79.3% of the Common Stock of the Company. American DG Energy purchases energy
equipment primarily from Tecogen which manufactures natural gas, engine-driven commercial and industrial cooling and cogeneration systems, and from Ilios which is developing a line of ultra-high-efficiency heating products, such as a high efficiency water heater, that provides twice the efficiency of conventional boilers, based on management estimates, for commercial and industrial applications utilizing advanced thermodynamic principles.

On October 20, 2009, American DG Energy, in the ordinary course of its business, signed a Sales Representative Agreement with Ilios to promote, sell and service the Ilios high-efficiency heating products, such as the high efficiency water heater, in the marketing territory of the New England States, including Connecticut, Rhode Island, Massachusetts, New Hampshire, Vermont, and Maine. The marketing territory also includes all of the nations in the European Union. The initial term of this Agreement is for five years, after which it may be renewed for successive one year terms upon mutual written agreement.

American DG Energy signed a Facilities and Support Services Agreement with Tecogen on July 1, 2012. The term of the agreement commences as of the start of each year and certain portions of the agreement, including office space allocation, get renewed annually upon mutual written agreement.
 
The Company purchases energy systems from American DG Energy and ships them to the United Kingdom. At March 31, 2013 and December 31, 2012, the Company had an inventory balance of $1,240,794 and $1,173,729, respectively, consisting of energy systems purchased from American DG Energy.

12

EUROSITE POWER INC.


In February the Company received financing in the amount of 1,100,000 from American DG Energy, its parent. Under the terms of the agreement the Company will pay interest at a rate of 6.0% per annum payable quarterly in arrears.
  
John N. Hatsopoulos is the Company’s Chairman of the Board and is also the Chief Executive Officer of American DG Energy and Tecogen, and the Chairman of GlenRose Instruments. His salary is $1.00 per year. On average, Mr. Hatsopoulos spends approximately 20% of his business time on the affairs of the Company, but such amount varies widely depending on the needs of the business and is expected to increase as the business of the Company develops.
 
Barry J. Sanders, the Company’s Chief Executive Officer, is also the President and Chief Operating Officer of American DG Energy and devotes part of his business time to the affairs of American DG Energy. His salary is paid by American DG Energy but a portion is reimbursed by the Company according to the requirements of the business in a given week at a fully burdened hourly rate of $123. On average, Mr. Sanders spends approximately 25% of his business time on the affairs of the Company, but such amount varies widely depending on the needs of the business and is expected to increase as the business of the Company develops.
 
Anthony S. Loumidis, the Company’s Chief Financial Officer, devotes part of his business time to the affairs of American DG Energy. His salary is paid by American DG Energy but a portion is reimbursed by the Company according to the requirements of the business in a given week at a fully burdened hourly rate of $111. On average, Mr. Loumidis spends approximately 15% of his business time on the affairs of the Company, but such amount varies widely depending on the needs of the business and is expected to increase as the business of the Company develops.
 
The Company’s headquarters are located in Waltham, Massachusetts and consist of 3,282 square feet of office and storage space that are leased from Tecogen and shared with American DG Energy. The lease expires on March 31, 2014. American DG Energy is currently charging the Company for utilizing its share of office space in the United States through an intercompany service charge. The Company also occupies a small office space in the United Kingdom. The Company believes that its facilities are appropriate and adequate for its current needs.
 
Note 6 — Fair value measurements:
 
The fair value topic of the FASB Accounting Standards Codification defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
 
Level 1 — Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date. The Company currently does not have any Level 1 financial assets or liabilities.
 Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. The Company currently does not have any Level 2 financial assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company currently does not have any Level 3 financial assets or liabilities.
 
At March 31, 2013, the Company has no financial instruments that are required to be recorded at fair value on a recurring basis. The Company’s financial instruments include cash and cash equivalents and accounts payable whose recorded values approximate fair value based on their short term nature.
 
Note 7 — Subsequent events:
 
The company has evaluated subsequent events through the date of this filing and determined that no subsequent events occurred that would require recognition in the consolidated financial statements or disclosure in the notes thereto.

13

EUROSITE POWER INC.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Forward-looking statements are made throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements include, among other things, statements regarding our current and future cash requirements, our expectations regarding suppliers of cogeneration units, and statements regarding potential financing activities in the future. While the Company may elect to update forward-looking statements in the future, it specifically disclaims any obligation to do so, even if the Company’s estimates change and readers should not rely on those forward-looking statements as representing the Company’s views as of any date subsequent to the date of the filing of this Quarterly Report. There are a number of important factors that could cause the actual results of the Company to differ materially from those indicated by such forward-looking statements, including those detailed under the heading “Risk Factors” in this Quarterly Report.
 
The Company distributes, owns and operates clean, on-site energy systems that produce electricity, hot water, heat and cooling in the United Kingdom and Europe. The Company’s business model is to own the equipment it installs at customers’ facilities and to sell the energy produced by these systems to the customers on a long-term contractual basis at prices guaranteed to the customer to be below conventional utility rates. The Company calls this business the EuroSite Power “On-Site Utility”.
 
First Quarter 2013 Compared to First Quarter 2012
 
Revenues
 
Revenues in the first quarter of 2013 were $117,108 compared to $0 for the same period in 2012. The revenues during the quarter included energy revenues. Since the beginning of the year, the Company started operating systems at the following locations:

•
London Syon Park, a Waldorf Astoria Hotel for the hotel's guest rooms, public areas and back-of-house.
•
Roko Health Club in Portsmouth, United Kingdom.
•
Wentworth Club a privately owned golf and country club in Virginia Water, Surrey, United Kingdom.
•
Cedar Court Hotel Huddersfield/Halifax, West Yorkshire, United Kingdom.
•
Roko Health Club in GiIlingham, United Kingdom.
•
DoubleTree by Hilton in Cambridge, United Kingdom.

Cost of Sales
 
Cost of sales including depreciation expense in the first quarter of 2013 was $109,634 compared to $0 for the same period in 2012.
 
Operating Expenses
 
General and administrative expenses were $195,266 in the first quarter of 2013, compared to $379,162 for the same period in 2012, a decrease of $183,896 or 48.5%. The general and administrative expenses included legal fees, accounting and audit fees and non-cash compensation expense related to the issuance of option awards to our employees and directors.
 
Selling expenses were $181,218 in the first quarter of 2013, compared to $12,550 for the same period in 2012, an increase of $168,668. The increase in selling expenses was due to the addition of new employees.
 
Engineering expenses were $31,709 in the first quarter of 2013, compared to $0 for the same period in 2012 due to the addition of a new employee.
 
Other Income
 
Other income was $1,230 in the first quarter of 2013, compared to $4,968 for the same period in 2012, due to interest on our cash balance.


14

EUROSITE POWER INC.

Net Loss
 
Net loss was $404,742 in the first quarter of 2013, compared to net loss of $386,744 for the same period in 2012. 

Liquidity and Capital Resources
 
Consolidated working capital was $609,991 as of March 31, 2013, compared to $1,815,839 at December 31, 2012. Included in working capital were cash and cash equivalents of $624,920 as of March 31, 2013, compared to $832,511 at December 31, 2012. The decrease in working capital was a result of cash used to fund installations and business development for new energy projects.
 
Cash used in operating activities was $463,526 in the first three months of 2013, compared to cash used of $610,457 for the same period in 2012. Our inventory balance increased to $1,240,794 in the first three months of 2013, compared to $1,173,729 at December 31, 2012, resulting in a decrease of cash of $67,065 due to the purchase of energy systems from American DG Energy for the United Kingdom. Our value added tax receivable increased to $468,550 in the first three months of 2013, compared to $181,217 at December 31, 2012, resulting in a decrease of cash of $287,333 due to the receipt of duties and taxes related to the shipment of energy systems to the United Kingdom. Our other current assets increased to $32,025 in the first three months of 2013, compared to $10,294 at December 31, 2012, resulting in a decrease of cash of $21,731.
 
Accounts payable balance increased to $581,383 in the first three months of 2013, compared to $203,764 at December 31, 2012, resulting in an increase of cash of $377,619 due to the timing related to the purchase of energy systems. Our accrued expense and other current liabilities decreased to $18,338 in the first three months of 2013, compared to $62,385 at December 31, 2012, resulting in a decrease of cash of $44,047.
 
The primary investing activities of the Company’s operations included the purchase of equipment. In the first three months of 2013, the Company used $839,507 for purchases of equipment.

In February the Company received financing in the amount of $1,100,000 from American DG Energy, its parent. Under the terms of the agreement the Company will pay interest at a rate of 6.0% per annum payable quarterly in arrears.
 
The Company owns the energy-producing equipment at the customer’s site; therefore, the business is capital intensive. The Company believes that its existing resources, including cash and cash equivalents, future cash flow from operations, its ability to control certain costs, including those related to general and administrative expenses, and the use of capital from its parent company, will be sufficient to meet the working capital requirements of its existing business for the foreseeable future, including the next 12 months; however, as the Company continues to grow its business by adding more energy systems, the cash requirements will increase. Beyond March 31, 2014, if the Company cannot raise capital by the existing equity fundraising effort, it may need to raise additional capital through a debt financing or use capital provided by its parent to meet its operating and capital needs. There can be no assurance, however, that the Company will be successful in these fund-raising efforts or that additional funds will be available on acceptable terms, if at all.

Our ability to continue to access capital could be impacted by various factors including general market conditions and the continuing slowdown in the economy, interest rates, the perception of our potential future earnings and cash distributions, any unwillingness on the part of lenders to make loans to us and any deterioration in the financial position of lenders that might make them unable to meet their obligations to us. If these conditions continue and we cannot raise funds through a public or private debt financing, or an equity offering, our ability to grow our business may be negatively affected and the Company may need to suspend any new installation of energy systems and significantly reduce its operating costs until market conditions improve.

Significant Accounting Policies and Critical Estimates
 
The Company’s significant accounting policies are discussed in the Notes to the Consolidated Financial Statements above and are those that are incorporated in the Company’s Annual Report on Form 10-K filed with the SEC. The accounting policies and estimates that can have a significant impact upon the operating results, financial position and footnote disclosures of the Company are described in the above notes and “Note 2—Summary of significant accounting policies” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K filed with the SEC.


15

EUROSITE POWER INC.

Off-Balance Sheet Arrangements
 
We do not have any off-balance sheet arrangements, including any outstanding derivative financial statements, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

Emerging Growth Company
 
Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. However, we chose to “opt out” of any extended transition period, and as a result we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

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EUROSITE POWER INC.

Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
Not applicable

Item 4. Controls and Procedures
 
Management’s evaluation of disclosure controls and procedures:
 
Our disclosure controls and procedures are designed to provide reasonable assurance that the control system’s objectives will be met. Our management, including our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures as of March 31, 2013, or the Evaluation Date, have concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective due to material weaknesses in financial reporting relating to lack of personnel with a sufficient level of accounting knowledge and a small number of employees dealing with general controls over information technology. At the present time, our management has decided that, considering the employees involved and the control procedures in place, there are risks associated with the above, but the potential benefits of adding additional employees to mitigate these weaknesses do not justify the expenses associated with such increases. Management will continue to evaluate the above weaknesses, and as the Company grows and resources become available, the Company plans to take the necessary steps in the future to remediate the weaknesses.
 
For these purposes, the term disclosure controls and procedures of an issuer means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
 
Changes in Internal Control over Financial Reporting:
 
In connection with the evaluation referred to in the foregoing paragraph, we will make changes in our internal controls over financial reporting as soon as the resources become available. As of March 31, 2013, no changes have been made to the Company’s process.
 
Report of Management on Internal Control over Financial Reporting:
 
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting in accordance with the Exchange Act. Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our internal control over financial reporting based on the framework and criteria established in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion of this evaluation. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of March 31, 2013.
 
As of March 31, 2013, we had thirteen employees, including five full time employees and one part time employee in the United Kingdom and seven part time employees in the United States. The Company currently does not have personnel with a sufficient level of accounting knowledge, experience and training in the selection, application and implementation of generally accepted accounting principles as it relates to complex transactions and financial reporting requirements. The Company also has a small number of employees dealing with general controls over information technology security and user access. This constitutes a material weakness in financial reporting. At this time, management has decided that considering the employees involved and the control procedures in place, there are risks associated with the above, but the potential benefits of adding additional employees to mitigate these weaknesses, does not justify the expenses associated with such increases. Management will continue to evaluate the above weaknesses, and as the Company grows and resources become available, the Company plans to take the necessary steps in the future to remediate the weaknesses.
 
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting to prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control

17

EUROSITE POWER INC.

system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

18

EUROSITE POWER INC.

PART II – OTHER INFORMATION

Item 1A. Risk Factors
 
In addition to the other information set forth in this report, you should carefully consider the factors discussed under “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2012. The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or operating results.
 
The recently enacted JOBS Act will allow us to postpone the date by which we must comply with certain laws and regulations and to reduce the amount of information provided in reports filed with the SEC. We cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
 
We are and we will remain an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, until the earliest to occur of (i) the last day of the fiscal year during which our total annual gross revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt, or (iv) the date on which we are deemed a large accelerated filer under the Securities Exchange Act of 1934, as amended.
 
For so long as we remain an emerging growth company as we will not be required to:
•
have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
•
comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
•
submit certain executive compensation matters to shareholder non-binding advisory votes;
•
submit for shareholder approval golden parachute payments not previously approved; and
•
disclose certain executive compensation related items such as the correlation between executive compensation and financial performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation, when such disclosure requirements are adopted.
 
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we chose to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
 
We cannot predict if investors will find our common stock less attractive because we may rely on some of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. If we avail ourselves of certain exemptions from various reporting requirements, our reduced disclosure may make it more difficult for investors and securities analysts to evaluate us and may result in less investor confidence.


19

EUROSITE POWER INC.

Item 6. Exhibits
 
Exhibit
 
 
Number
 
Description of Exhibit
 
 
 
31.1*
–     
Rule 13a-14(a) Certification of Chief Executive Officer
 
 
 
31.2*
–
Rule 13a-14(a) Certification of Chief Financial Officer
 
 
 
32.1**
–
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer
 
 
 
101.INS**
–
XBRL Instance Document
 
 
 
101.SCH**
–
XBRL Taxonomy Extension Schema
 
 
 
101.CAL**
–
XBRL Taxonomy Extension Calculation Linkbase
 
 
 
101.DEF**
–
XBRL Taxonomy Extension Definition Linkbase
 
 
 
101.LAB**
–
XBRL Taxonomy Extension Label Linkbase
 
 
 
101.PRE**
–
XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith
** Furnished herewith

20

EUROSITE POWER INC.

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on May 15, 2013.
 
 
EUROSITE POWER INC.
 
(Registrant)
 
 
 
By: /s/ BARRY J. SANDERS
 
Chief Executive Officer
 
(Principal Executive Officer)
 
 
 
By: /s/ ANTHONY S. LOUMIDIS
 
Chief Financial Officer
 
(Principal Financial Officer)
 

21

EUROSITE POWER INC. Reports