RENOVARE ENVIRONMENTAL, INC. - Quarter Report: 2021 September (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number 001-36843

BIOHITECH GLOBAL, INC.

(Exact name of registrant as specified in its charter)

Delaware		46-2336496
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

80 Red Schoolhouse Road, Suite 101 Chestnut Ridge, New York		10977
(Address of principal executive offices)		(Zip Code)

(845) 262-1081

(Registrant’s telephone number, including area code)

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value per share		BHTG		NASDAQ Capital Market

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding as of November 11, 2021
Common Stock, $0.0001 par value per share		29,441,231

Table of Contents

BioHiTech Global, Inc. and Subsidiaries

TABLE OF CONTENTS

		Page
	PART I - FINANCIAL INFORMATION	1

Item 1.	Condensed Consolidated Financial Statements.	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	31

Item 4.	Controls and Procedures.	31

	PART II - OTHER INFORMATION	31

Item 1.	Legal Proceedings.	31

Item 1A.	Risk Factors.	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	31

Item 3.	Defaults Upon Senior Securities.	32

Item 4.	Mine Safety Disclosures.	32

Item 5.	Other Information.	32

Item 6.	Exhibits.	32

SIGNATURES		33

INDEX TO EXHIBITS		34

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

BioHiTech Global, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenue
Equipment sales	$	3,152,639	$	293,876	$	8,050,145	$	616,992
Rental, service and maintenance		785,576		423,996		1,654,232		1,251,122
HEBioT		585,102		625		1,314,204		1,383,656
Management advisory and other fees (related party)		—		24,380		—		124,380
Total revenue		4,523,317		742,877		11,018,581		3,376,150
Operating expenses
Equipment sales		2,112,407		171,002		5,154,747		317,406
Rental, service and maintenance		455,436		139,665		1,008,608		552,195
HEBioT processing		898,094		945,810		2,454,862		2,778,514
Selling, general and administrative		1,699,343		1,924,293		5,357,697		5,740,158
Impairment expense		—		917,420		—		917,420
Depreciation and amortization		505,353		562,143		1,508,284		1,747,109
Total operating expenses		5,670,633		4,660,333		15,484,198		12,052,802
Loss from operations		(1,147,316)		(3,917,456)		(4,465,617)		(8,676,652)
Other expenses, net
Interest (income)		(159)		(108)		(469)		(17,730)
Interest expense		1,042,253		1,023,165		3,101,669		3,060,775
(Gain) on sales of fixed assets		(8,957)		—		(8,957)		—
PPP Loan forgiveness		(421,300)		—		(421,300)		—
Loss from unconsolidated entity		10,982		—		43,731		—
Total other expenses, net		622,819		1,023,057		2,714,674		3,043,045
Net loss		(1,770,135)		(4,940,513)		(7,180,291)		(11,719,697)
Net loss attributable to non-controlling interests		(583,261)		(1,647,782)		(1,979,000)		(3,190,788)
Net loss attributable to Parent		(1,186,874)		(3,292,731)		(5,201,291)		(8,528,909)
Other comprehensive income
Foreign currency translation adjustment		32,810		71,067		16,766		40,931
Comprehensive loss	$	(1,154,064)	$	(3,221,664)	$	(5,184,525)	$	(8,487,978)

Net loss attributable to Parent	$	(1,186,874)	$	(3,292,731)	$	(5,201,291)	$	(8,528,909)
Less – preferred stock dividends		(175,169)		(205,115)		(533,193)		(587,428)
Deemed dividend on down round features		(622,482)		(21,738)		(622,482)		(21,738)
Net loss – common shareholders		(1,984,525)		(3,519,584)		(6,356,966)		(9,138,075)
Net loss per common share - basic and diluted	$	(0.07)	$	(0.16)	$	(0.24)	$	(0.49)
Weighted average number of common shares outstanding - basic and diluted		28,478,706		22,044,540		27,034,898		18,787,566

See accompanying notes to unaudited interim condensed consolidated financial statements.

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BioHiTech Global, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


	September 30,
	2021		December 31,
	(Unaudited)		2020
			(Revised, Note 2)
Assets
Current Assets
Cash	$	622,088	$	2,403,859
Restricted cash		3,764,521		1,884,691
Accounts receivable, net of allowance for doubtful accounts of $196,338 and $151,459 as of September 30, 2021 and December 31, 2020, respectively		1,861,455		1,574,047
Inventory		1,007,537		695,110
Prepaid expenses and other current assets		210,544		184,274
Total Current Assets		7,466,145		6,741,981
Restricted cash		2,603,506		2,607,945
Equipment on operating leases, net		1,037,006		1,311,755
HEBioT facility, equipment, fixtures and vehicles, net		35,044,593		35,946,225
License and capitalized MBT facility development costs		8,007,484		8,072,471
Other assets		1,887,988		2,006,048
Total Assets	$	56,046,722	$	56,686,425

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	3,711,475	$	2,492,606
Accrued expenses and liabilities		1,477,032		2,515,724
Accrued interest payable		758,725		1,279,018
Customer deposits		559,106		1,802,725
Current portion of notes, bonds, debts and borrowings		10,821,272		10,120,457
Deferred revenue		298,752		138,961
Total Current Liabilities		17,626,362		18,349,491
Non-current portion of notes, bonds, debts and borrowings		28,832,835		29,645,227
Accrued interest (related party)		1,982,423		1,807,857
Non-current lease liabilities		1,137,806		1,216,861
Liabilities to non-controlling interests to be settled in subsidiary membership units		—		1,585,812
Total Liabilities		49,579,426		52,605,248
Series A redeemable convertible preferred stock, 333,401 shares designated and issued, and 95,312 and 125,312 outstanding as of September 30, 2021 and December 31, 2020, respectively		476,560		626,553
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; 3,209,210 designated; 1,936,214 issued; 542,673 and 848,292 outstanding as of September 30, 2021 and December 31, 2020, respectively:		5,057,942		6,621,576
Common stock, $0.0001 par value, 50,000,000 shares authorized, 29,156,691 and 23,354,130 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively		2,916		2,334
Additional paid in capital		75,099,785		64,371,007
Accumulated deficit		(74,790,336)		(68,537,145)
Accumulated other comprehensive (loss)		(127,048)		(143,814)
Stockholders’ equity attributable to Parent		5,243,259		2,313,958
Stockholders’ equity attributable to non-controlling interests		747,477		1,140,666
Total Stockholders’ Equity		5,990,736		3,454,624
Total Liabilities and Stockholders’ Equity	$	56,046,722	$	56,686,425

See accompanying notes to unaudited interim condensed consolidated financial statements.

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BioHiTech Global, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended
	September 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(7,180,291)	$	(11,719,697)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization		1,508,284		1,747,109
Impairment expense		—		917,420
Amortization of operating lease right of use assets		59,179		72,402
Provision for bad debts		45,000		126,119
Share based employee and vendor compensation		369,828		1,835,750
Interest resulting from amortization of financing costs and discounts		330,916		419,715
Loss from unconsolidated entity		43,731		—
(Gain) on sale of fixed assets		(8,957)		—
PPP Loan Forgiveness		(421,300)		—
Changes in operating assets and liabilities		(924,430)		(909,507)
Net cash used in operating activities		(6,178,040)		(7,510,689)
Cash flow used in investing activities:
Purchases of facility, equipment, fixtures and vehicles		(252,929)		(207,173)
Proceeds from sale of vehicle		8,957		—
Refund of deposit		—		5,000
MBT facility development costs incurred		(29,513)		(62,949)
Net cash used in investing activities		(273,485)		(265,122)
Cash flows from financing activities:
Proceeds from the sales of common stock		7,548,502		8,437,480
Proceeds from the sale of Series F convertible preferred stock units		—		1,560,450
Proceeds from Payroll Protection Program Loan		—		421,300
Repayment of Senior secured note		(1,000,000)		—
Repayments of long-term debt		(3,265)		(3,544)
Related party advances, net		—		725,000
Net cash provided by financing activities		6,545,237		11,140,686
Effect of exchange rate on cash (restricted and unrestricted)		(92)		(18,129)
Net change in cash (restricted and unrestricted)		93,620		3,346,746
Cash - beginning of period (restricted and unrestricted)		6,896,495		5,536,952
Cash - end of period (restricted and unrestricted)	$	6,990,115	$	8,883,698

Supplementary cash flow information (cash paid during the periods):
Interest	$	2,892,850	$	1,596,332
Income taxes		—		—

Supplementary Disclosure of Non-Cash Investing and Financing Activities:
Transfer of inventory to leased equipment	$	54,000	$	84,501
Acquisition of right of use leased asset and creation of lease liability		—		412,647
Accrual of Series A preferred stock dividends		35,543		52,654
Payment of Series A preferred stock dividends in common stock		79,181		—
Conversion of preferred stock into common		—		239,566
Payment of preferred stock dividends in common stock		390,460		21,732
Issuance of subsidiary membership interest in exchange for liabilities due non-controlling interest entity		1,918,947		—
Exchange of subsidiary non-controlling interest in exchange for liabilities owed Company by non-controlling interest entity		333,135		—

Reconciliation of Cash and Restricted Cash:
Cash	$	622,088	$	4,950,112
Restricted cash (current)		3,764,521		1,287,138
Restricted cash (non-current)		2,603,506		2,646,448
Total cash and restricted cash at the end of the period	$	6,990,115	$	8,883,698

See accompanying notes to unaudited interim condensed consolidated financial statements.

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BioHiTech Global, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)


Statement of Stockholders’ Equity Attributable to Parent for the Three Months Ended September 30, 2021:

	Preferred Stock			Common Stock			Additional		Accumulated
	Shares			Shares			Paid in		Comprehensive		Accumulated
	Outstanding	Amount		Outstanding	Amount		Capital		Other Loss		Deficit		Total
Balance at July 1, 2021 (Revised)	447,361	$	5,057,942	28,348,684	$	2,835	$	73,800,159	$	(159,858)	$	(72,970,262)	$	5,730,816
Common stock issued to employee under restricted stock units and vendor for services rendered	—		—	63,870		6		12,545		—		—		12,551
Common stock issued under Committed Equity Facility	—		—	744,137		75		652,810		—		—		652,885
Sr. A Preferred stock dividend accrual	—		—	—		—		—		—		(10,718)		(10,718)
Share-based employee and director compensation	—		—	—		—		11,789		—		—		11,789
Deemed dividend resulting from down round adjustment in warrant exercise and preferred stock conversion pricing	—		—	—		—		622,482		—		(622,482)		—
Net loss	—		—	—		—		—		—		(1,186,874)		(1,186,874)
Foreign currency translation adjustment	—		—	—		—		—		32,810		—		32,810

Balance at September 30, 2021	447,361	$	5,057,942	29,156,691	$	2,916	$	75,099,785	$	(127,048)	$	(74,790,336)	$	5,243,259


Statement of Stockholders’ Equity Attributable to Parent for the Nine Months Ended September 30, 2021:
							Additional
	Preferred Stock			Common Stock			Paid in		Accumulated
	Shares			Shares					Comprehensive		Accumulated
	Outstanding	Amount		Outstanding	Amount		Capital		Other Loss		Deficit		Total
Balance at January 1, 2021 (Revised)	722,980	$	6,621,576	23,354,130	$	2,334	$	64,371,007	$	(143,814)	$	(68,537,145)	$	2,313,958
Common stock sold, net of offering costs	—		—	4,160,800		417		7,548,086		—		—		7,548,503
Common stock issued to employee under restricted stock units and vendor for services rendered	—		—	265,168		26		103,245		—		—		103,271
Warrants exercised	—		—	148,471		15		(15)		—		—		—
Sr. A preferred stock conversion, dividend payments and accrual (Sr. A preferred is not included in equity preferred shares)	(30,000)		(150,000)	127,324		13		229,162		—		(33,680)		195,495
Sr. C preferred stock dividend payment	—		—	44,577		5		80,233		—		(80,238)		—
Sr. D preferred stock conversion and dividend payments	(11,100)		(865,304)	749,321		76		1,104,017		—		(238,789)		—
Sr. E preferred stock conversion	(264,519)		(698,330)	264,519		26		698,304		—		—		—
Sr. F preferred dividend payments	—		—	42,381		4		76,707		—		(76,711)		—
Share-based employee and director compensation	—		—	—		—		266,557		—		—		266,557
Deemed dividend resulting from down round adjustment in warrant exercise and preferred stock conversion pricing	—		—	—		—		622,482		—		(622,482)		—
Net loss	—		—	—		—		—		—		(5,201,291)		(5,201,291)
Foreign currency translation adjustment	—		—	—		—		—		16,766		—		16,766

Balance at September 30, 2021	447,361	$	5,057,942	29,156,691	$	2,916	$	75,099,785	$	(127,048)	$	(74,790,336)	$	5,243,259


Statement of Stockholders’ Equity Attributable to Non-Controlling Interests in Consolidated Subsidiaries for the Three Months Ended September 30, 2021:
	Non- Controlling		Accumulated
	Equity Interest		Deficit		Total
Balance at July 1, 2021	$	9,665,396	$	(8,334,658)	$	1,330,738
Net loss		—		(583,261)		(583,261)

Balance at September 30, 2021	$	9,665,396	$	(8,917,919)	$	747,477


Statement of Stockholders’ Equity Attributable to Non-Controlling Interests in Consolidated Subsidiaries for the Nine Months Ended September 30, 2021:
	Non-Controlling		Accumulated
	Equity Interest		Deficit		Total
Balance at January 1, 2021	$	8,079,585	$	(6,938,919)	$	1,140,666
Membership units issued to non-controlling member		1,918,946		—		1,918,946
Membership units assigned to BioHiTech by non-controlling member		(333,135)		—		(333,135)
Net loss		—		(1,979,000)		(1,979,000)

Balance at September 30, 2021	$	9,665,396	$	(8,917,919)	$	747,477

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BioHiTech Global, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited), continued


Statement of Stockholders’ Equity (Deficit) Attributable to Parent for the Three Months Ended September 30, 2020:
								Additional		Accumulated
	Preferred Stock			Common Stock				Paid in		Comprehensive		Accumulated
	Shares	Amount		Shares		Amount		Capital		Other Loss		Deficit		Total
Balance at July 1, 2020 (Revised)	724,480	$	6,761,142		17,809,592	$	1,780	$	54,385,016	$	(13,002)	$	(62,173,872)	$	(1,038,936)
Underwritten issuance of common stock, net of costs	—		—		5,232,500		523		8,436,957		—		—		8,437,480
Conversion of Series A preferred stock, and payment of accrued dividends in common stock	—		—		59,639		6		107,344		—		—		107,350
Conversion of Series D preferred stock, and payment of unaccrued dividends in common stock	(1,500)		(139,566)		91,328		9		153,945		—		(14,388)		—
Series F preferred stock issuance					—		—				—		—		—
Share-based employee and director compensation	—		—		9,900		1		472,646		—		—		472,647
Payments in common stock and warrants to vendors and creditors	—		—		141,259		14		297,821		—		—		297,835
Preferred stock dividends paid in common stock	—		—		9,912		1		17,839		—		—		17,840
Deemed dividend on down round feature	—		—		—		—		21,738		—		(21,738)		—
Warrants exercised	—		—		—		—		—		—		—		—
Preferred stock dividends	—		—		—		—		—		—		(17,840)		(17,840)
Net loss	—		—		—		—		—		—		(3,292,731)		(3,292,731)
Foreign currency translation adjustment	—		—		—		—		—		(71,067)		—		(71,067)
Balance at September 30, 2020 (Revised)	722,980	$	6,621,576		23,354,130	$	2,334	$	63,893,306	$	(84,069)	$	(65,520,569)	$	4,912,578


Statement of Stockholders’ Equity Attributable to Parent for the Nine Months Ended September 30, 2020:
							Additional		Accumulated
	Preferred Stock			Common Stock			Paid in		Comprehensive		Accumulated
	Shares	Amount		Shares	Amount		Capital		Other Loss		Deficit		Total
Balance at January 1, 2020 (Revised)	710,869	$	5,253,734	17,300,899	$	1,730	$	53,714,402	$	(43,138)	$	(56,902,585)	$	2,024,143
Underwritten issuance of common stock, net of costs	—		—	5,232,500		523		8,436,957		—		—		8,437,480
Conversion of Series A preferred stock, and payment of accrued dividends in common stock	—		—	59,639		6		107,344		—		—		107,350
Conversion of Series D preferred stock, and payment of unaccrued dividends in common stock	(1,500)		(139,566)	91,328		9		153,945		—		(14,388)		—
Series F preferred stock issuance	13,611		1,507,408	—		—		53,042		—		—		1,560,450
Share-based employee and director compensation	—		—	132,400		13		1,065,256		—		—		1,065,269
Payments in common stock and warrants to vendors and creditors	—		—	141,259		14		297,821		—		—		297,835
Preferred stock dividends paid in common stock	—		—	23,801		2		42,838		—		—		42,840
Deemed dividend on down round feature	—		—	—		—		21,738		—		(21,738)		—
Warrants exercised	—		—	372,304		37		(37)		—		—		—
Preferred stock dividends	—		—	—		—		—		—		(52,949)		(52,949)
Net loss	—		—	—		—		—		—		(8,528,909)		(8,528,909)
Foreign currency translation adjustment	—		—	—		—		—		(40,931)		—		(40,931)
Balance at September 30, 2020 (Revised)	722,980	$	6,621,576	23,354,130	$	2,334	$	63,893,306	$	(84,069)	$	(65,520,569)	$	4,912,578


Statement of Stockholders’ Equity Attributable to Non-Controlling Interests in Consolidated Subsidiaries for the Three Months Ended September 30, 2020:
	Non-Controlling		Accumulated
	Equity Interest		Deficit		Total
Balance at July 1, 2020	$	8,079,585	$	(4,277,009)	$	3,802,576
Net loss		—		(1,647,782)		(1,647,782)
Balance at September 30, 2020	$	8,079,585	$	(5,924,791)	$	2,154,794


Statement of Stockholders’ Equity Attributable to Non-Controlling Interests in Consolidated Subsidiaries for the Nine Months Ended September 30, 2020:
	Non-Controlling		Accumulated
	Equity Interest		Deficit		Total
Balance at January 1, 2020	$	8,079,585	$	(2,734,003)	$	5,345,582
Net loss		—		(3,190,788)		(3,190,788)
Balance at September 30, 2020	$	8,079,585	$	(5,924,791)	$	2,154,794

See accompanying notes to unaudited interim condensed consolidated financial statements.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Note 1. Basis of Presentation and Going Concern

Nature of Operations - BioHiTech Global, Inc. (the “Company” or “BioHiTech”) through its wholly-owned and controlled subsidiaries, provides cost-effective and sustainable environmental management solutions. Our cost-effective technology solutions include the patented processing of municipal solid waste into a valuable renewable fuel, biological disposal of food waste on-site, and proprietary real-time data analytics tools to reduce food waste generation. Our solutions enable businesses and municipalities of all sizes to lower disposal costs while having a positive impact on the environment. When used individually or in combination, our solutions lower the carbon footprint associated with waste transportation and can reduce or virtually eliminate landfill usage.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continued to spread throughout the United States and globally and more recently in the United States intermittent increases in cases reported, as well as those from new strains of the virus. Vaccines developed for the initial strain of the virus have been released and are being distributed. The Company continues to monitor the near term and longer term impacts of COVID-19 and the related business and travel restrictions and other changes intended to reduce its spread, and its impact on operations, financial position, cash flows, inventory, supply chains, purchasing trends, customer payments, and the industry in general, in addition to the impact on its employees. Due to the nature of the pandemic, the magnitude and duration of the pandemic and its impact on the Company’s operations, liquidity and financial performance will depend on certain developments, including duration, spread and reemergence of the outbreak, its impact on our customers, supply chain partners and employees, and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time.

Basis of Presentation - The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned and controlled subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that the accompanying condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, and the elimination of intercompany accounts and transactions which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s financial statements for the year ended December 31, 2020, which contains the audited financial statements and notes thereto, for the years ended December 31, 2020 and 2019 included within the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on April 16, 2021. The financial information as of December 31, 2020 presented hereto is derived from the audited consolidated financial statements presented in the Company’s audited consolidated financial statements for the year ended December 31, 2020. The interim results for the three and nine months ended September 30, 2021 is not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.

As of September 30, 2021 and December 31, 2020, the Company's active wholly-owned subsidiaries were BioHiTech America, LLC, BioHiTech Europe Limited, BHT Financial, LLC and BHT Renewables LLC (formerly E.N.A. Renewables LLC), and its controlled subsidiary was Refuel America LLC (68.2% and 60%, respectively) and its wholly-owned subsidiaries Apple Valley Waste Technologies Buyer, Inc., Apple Valley Waste Technologies, LLC, New Windsor Resource Recovery LLC and Rensselaer Resource Recovery LLC and its controlled subsidiary Entsorga West Virginia LLC (93.5% and 88.7%, respectively). As each of these subsidiaries operate as environmental-based service companies, we did not deem segment reporting necessary.

Reclassifications to certain prior period amounts have been made to conform to current period presentation. These reclassifications have no effect on previously reported net loss.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Going Concern and Liquidity - For the nine months ended September 30, 2021, the Company had a consolidated net loss of $7,180,291, incurred a consolidated loss from operations of $4,465,617 and used net cash in consolidated operating activities of $6,178,040. At September 30, 2021, consolidated total stockholders’ equity amounted to $5,990,736, consolidated stockholders’ equity attributable to parent amounted to $5,243,259, and the Company had a consolidated working capital deficit of $10,160,217. While the Company had not met certain of its senior secured note’s financial covenants as of September 30, 2021 and has received a waiver for such non-compliance through September 30, 2021, until such time as the Company regains compliance or receives a waiver of such covenants for a year beyond the balance sheet date, under current GAAP accounting rules, the senior secured note amounting to $3,746,025 has been classified as current debt. The Company does not yet have a history of financial profitability. On September 23, 2021, the Company entered into a committed equity facility (see Note 9) for up to the lesser of $20,000,000 or the Nasdaq exchange cap, there is no assurance that the Company will continue to raise sufficient capital or debt to sustain operations or to pursue other strategic initiatives or that such financing will be on terms that are favorable to the Company. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern. The ability of the Company to continue as a going concern is dependent on management’s further implementation of the Company’s on-going and strategic plans, which include continuing to raise funds through equity and/or debt raises. Should the Company be unable to raise adequate funds, certain aspects of the on-going and strategic plans may require modification.

Note 2. Revision of Financial Statements

During the preparation of the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, the Company determined that there was an error in the recording of beneficial conversion features as a result of resets in the conversion price of the convertible preferred stock during the years ended December 31, 2018 and 2019. The error resulted in an understatement of additional paid in capital and accumulated deficit. The Company assessed the materiality of the misstatement in accordance with Accounting Standards Codification (“ASC”) 250, Accounting Changes and Error Corrections, SEC Staff Accounting Bulletins No. 99, Materiality, and No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, and concluded that the misstatement was not material to the Company’s consolidated financial position for the prior periods and that amendments of previously filed reports were not required. However, the Company determined that the impact of the corrections would be too significant to record in the third quarter of fiscal 2021. As such, the revision for the correction is reflected in the accompanying balance sheet as of December 31, 2020 and the accompanying statements of changes in stockholders’ equity for the three and nine months ended September 30, 2020. Disclosure of the revised amounts will also be reflected in future filings containing the applicable periods.

The effect of the revision on line items within the Company’s consolidated financial statements as of December 31, 2020 and for the three and nine months ended September 30, 2020 was as follows:

Balance Sheet:


	December 31, 2020
	As Previously
	Reported		Adjustment		As Revised
Additional paid in capital	$	60,253,664	$	4,117,343	$	64,371,007
Accumulated deficit		(64,419,802)		(4,117,343)		(68,537,145)
Stockholder’s equity attributable to Parent		2,313,958		—		2,313,958

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Statements of Changes in Stockholder’s Equity:


	Additional Paid in Capital						Accumulated Deficit
	As Previously						As Previously
	Reported		Adjustment		As Revised		Reported		Adjustment		As Revised
January 1, 2020	$	49,597,059	$	4,117,343	$	53,714,402	$	(52,785,242)	$	(4,117,343)	$	(56,902,585)
July 1, 2020		50,267,673		4,117,343		54,385,016		(58,056,529)		(4,117,343)		(62,173,872)
September 30, 2020		59,775,963		4,117,343		63,893,306		(61,403,226)		(4,117,343)		(65,520,569)
January 1, 2021		60,253,664		4,117,343		64,371,007		(64,419,802)		(4,117,343)		(68,537,145)
July 1, 2021		69,682,816		4,117,343		73,800,159		(68,852,919)		(4,117,343)		(72,970,262)

Note 3. Summary of Significant Accounting Policies

The condensed consolidated financial statements have been prepared by the Company in accordance with the rules and regulations of the SEC on a consistent basis with and should be read in conjunction with our audited financial statements for the year ended December 31, 2020. Certain information has been condensed or omitted as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading.

Recent Accounting Standards:

The Company has not implemented any recent accounting standards during the nine months ended September 30, 2021.

The Company has not implemented the following accounting standards:

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This standard requires an allowance to be recorded for all expected credit losses for certain financial assets. The new standard introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments. ASU 2016-13 is effective for public companies for interim and annual period beginning December 15, 2022. Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. The Company has not yet adopted this update and is currently evaluating the effect this new standard will have on its financial condition and results of operations.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as the market transitions from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The amendments in this update were effective upon issuance for all entities through December 31, 2022. The Company is currently evaluating the effect the updated standard will have on its financial position, results of operations or financial statement disclosure.

In August 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40). The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted earnings per share computation. This guidance is effective as of January 1, 2022 (Early adoption is permitted effective January 1, 2021). The Company is currently evaluating the effect the updated standard will have on its financial position, results of operations or financial statement disclosure.

There have been no other recent accounting standards or changes in accounting standards that have been issued but not yet adopted that are of significance, or potential significance, to the Company.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Note 4. Equipment on Operating Leases, net

Equipment on operating leases consist of the following:


	September 30,		December 31,
	2021		2020
Leased equipment	$	3,113,442	$	3,066,359
Less: accumulated depreciation		(2,076,436)		(1,754,604)
Total Equipment on Operating Leases, net	$	1,037,006	$	1,311,755

The Company is a lessor of digester units under non-cancellable operating lease agreements expiring through January 2026.

During the three months ended September 30, 2021 and 2020, revenue under the agreements, which is included in rental, service and maintenance revenue, amounted to $305,581 and $356,002, respectively. During the nine months ended September 30, 2021 and 2020, revenue under the agreements, which is included in rental, service and maintenance revenue, amounted to $958,775 and $1,054,534, respectively. During the three months ended September 30, 2021 and 2020, depreciation expense amounted to $115,126 and $116,461, respectively. During the nine months ended September 30, 2021 and 2020, depreciation expense included in rental, service and maintenance expense, amounted to $344,438 and $348,599, respectively.

The minimum future estimated contractual payments to be received under these leases as of September 30, 2021 is as follows:


Year ending December 31,
2021, remaining	$	291,527
2022		904,870
2023		563,581
2024		255,854
2025 and thereafter		82,937
	$	2,098,769

Note 5. HEBioT facility, equipment, fixtures and vehicles, net

HEBioT facility, equipment, fixtures and vehicles, net consist of the following:


	September 30,		December 31,
	2021		2020
HEBioT facility	$	31,177,426	$	31,172,856
HEBioT equipment		7,726,027		7,579,059
Computer software and hardware		112,073		115,374
Furniture and fixtures		48,196		48,196
Vehicles		50,319		50,319
		39,114,041		38,965,804
Less: accumulated depreciation and amortization		(4,069,448)		(3,019,579)
Total HEBioT facility, equipment, fixtures and vehicles, net	$	35,044,593	$	35,946,225

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Note 6. MBT Facility Development and License Costs

MBT Facility Development and License Costs consist of the following:


	September 30,		December 31,
	2021		2020
MBT Projects
Rensselaer, NY - Survey, engineering and legal	$	413,284	$	383,771

Technology Licenses
Future site		6,019,200		6,019,200
Martinsburg, West Virginia, net of $315,000 and $220,500 of amortization as of September 30, 2021 and December 31, 2020, respectively		1,575,000		1,669,500
Total Technology Licenses		7,594,200		7,688,700
Total MBT Facility Development and License Costs	$	8,007,484	$	8,072,471

MBT Facility Development Costs – During 2018, the Company commenced initial development of a project in Rensselaer, NY. On August 10, 2020 the NYSDEC, by letter, informed the Company that the application had been initially denied. The Company disagrees with this decision, and as is part of the process, has exercised its right to appeal the NYSDEC findings.

Note 7. Other Assets

Other assets consist of:


	September 30,		December 31,
	2021		2020
Right of use assets	$	1,206,868	$	1,266,047
Investment in East Shore Port Ventures LLC		667,571		711,302
Digester distribution agreements		5,049		20,199
Deposits		8,500		8,500
Total Other Assets	$	1,887,988	$	2,006,048

Note 8. Notes, Bonds, Debts and Borrowings

Notes, Bonds, Debts and Borrowings consist of the following:


	September 30, 2021												December 31, 2020
	Unpaid				Net
	Face		Net		Deferred		Carrying				Non-				Non-
	Amount		Discounts		Costs		Balance		Current		Current		Current		Current
Demand note, line of credit	$	1,500,000	$	—	$	—	$	1,500,000	$	1,500,000	$	—	$	1,498,975	$	—
Advance from related party		935,000		—		—		935,000		935,000		—		935,000		—
Senior secured note		4,000,000		(229,240)		(24,735)		3,746,025		3,746,025		—		4,494,424		—
Payroll Protection Program note				—		—				—		—		327,678		93,622
Junior note due to related party		1,044,477		(56,223)		—		988,254		—		988,254		—		971,426
Notes payable to related party		1,001,400		(99,457)		—		901,943		500,700		401,243		—		—
Note payable		100,000		—		—		100,000		100,000		—		—		100,000
WV EDA senior secured bonds		33,000,000		—		(1,522,051)		31,477,949		4,035,000		27,442,949		2,860,000		28,476,359
Long term debts, remaining balances		4,936		—		—		4,936		4,547		389		4,380		3,820
Total Notes, Bonds, Debts and Borrowings	$	41,585,813	$	(384,920)	$	(1,546,786)	$	39,654,107	$	10,821,272	$	28,832,835	$	10,120,457	$	29,645,227

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Contractual maturities and sinking fund payments of Notes, Bonds, Debts and Borrowings, based on face amounts, are as follows:


	2021,								2025 and
	remaining		2022		2023		2024		thereafter		Total
Demand note, line of credit	$	1,500,000	$	—	$	—	$	—	$	—	$	1,500,000
Advance from related party		935,000		—		—		—		—		935,000
Senior secured note		875,000		2,500,000		625,000		—		—		4,000,000
Junior note due to related party		—		—		—		1,044,477				1,044,477
Notes payable to related party		166,900		500,700		333,800		—		—		1,001,400
Note payable		—		100,000		—		—		—		100,000
WV EDA senior secured bonds		2,860,000		1,175,000		1,265,000		1,360,000		26,340,000		33,000,000
Long term debts, remaining balances		1,116		3,820		—		—		—		4,936
Total Notes, Bonds, Debts and Borrowings	$	6,338,016	$	4,279,520	$	2,223,800	$	2,404,477	$	26,340,000	$	41,585,813

On September 22, 2021, the Small Business Administration fully forgave the Company’s $421,300 Payroll Protection Program note.

The Company did not meet certain of its senior secured note’s financial covenants as of September 30, 2021 and December 31, 2020, and has received a waiver for such non-compliance through September 30, 2021. Despite its current compliance under the waiver, until such time as the Company regains compliance or receives a waiver of such covenants for a year beyond the balance sheet date, under current GAAP accounting rules the senior secured note amounting to $3,746,025 has been classified as current debt.

The WVEDA Bonds agreement and indenture of trust place restrictions on the borrower and its members regarding additional encumbrances on the property, disposition of the property, and limitations on equity distributions. The loan agreement also provides for financial covenants. As of September 30, 2021 and December 31, 2020 the Company was not in compliance with all of the financial covenants and subsequently was in default on principal repayments due in 2020 and 2021 and has entered into a forbearance agreement with the bond trustee that provides, they will not accelerate the repayment of the bonds due to the defaults through October 1, 2022.

On May 19, 2021 the Company’s subsidiary Entsorga West Virginia, LLC (“EWV”) executed a series of notes related to the settlement of a previously recognized claim (See Note 11) with Entsorga S.p.A.(“ESpA”), the parent company of Entsorga USA, Inc., a non-controlling member of the Company’s EWV subsidiary. The series of notes are comprised of 24 monthly notes of $41,725 bearing interest at 1% if not paid at maturity, of which 4 notes, totaling $166,900 are only payable if ESpA successfully repairs certain equipment at the EWV facility. In addition to the 24 notes, there is a note for $253,296 (“default note”) that is only payable in the event of a default on the other notes due to ESpA. The 24 monthly notes totaling $1,001,400 have been discounted at the rate of 6.6%, resulting in an initial net balance due of $917,421, which is the amount that the Company had previously accrued for the claims made. The default note has not been recognized as the amount is contingent upon future events.

Note 9. Equity and Equity Transactions

The Company has 50,000,000 shares of its $0.0001 par common stock and 10,000,000 shares of blank check preferred stock authorized by its shareholders. As of September 30, 2021 and December 31, 2020, 29,156,691 and 23,354,130 shares of common stock have been

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

issued; and 3,209,210 shares of preferred stock have been designated in five series of shares that have a total of $1,775,688 in accumulated, but undeclared preferential dividends as of September 30, 2021, as follows:


							Outstanding		Carrying Amount
			Stated		Conversion		September 30,	December 31,	September 30,		December 31,
	Designated	Issued	Value		Rate		2021	2020	2021		2020
Series A Convertible*	333,401	333,401	$	5.00	$	1.20	95,312	125,312	$	476,560	$	626,553
Series B Convertible	1,111,200	428,333		5.00		n.a.	—	—		—		—
Series C Convertible	1,000,000	427,500		10.00		1.20	427,500	427,500		3,050,142		3,050,142
Series D Convertible	20,000	18,850		100.00		1.20	6,250	17,350		500,392		1,365,696
Series E Convertible	714,519	714,519		2.64		2.64	—	264,519		—		698,330
Series F Convertible	30,090	13,611		115.00		1.20	13,611	13,611		1,507,408		1,507,408
Total preferred stock	3,209,210	1,936,214					542,673	848,292	$	5,534,502	$	7,248,129
Excluding Series A*									$	5,057,942	$	6,621,576

*The Series A convertible shares are redeemable and are presented as temporary equity in the condensed consolidated balance sheets.

In connection with the September 23, 2021 Keystone Capital Partners committed equity facility agreement, the Company sold 625,000 shares of common stock at $1.20 per share that resulted in triggering dilution protection conversion price adjustments in each of the Series A, C, D and F convertible preferred shares resulting in each series conversion price being reduced to $1.20. Utilizing the increase in intrinsic value of the underlying common shares into which the preferred shares may be converted into based on the prior conversion rate and post-dilution protection trigger conversion rate, the Company recognized a deemed dividend of $304,337 relating to the convertible preferred shares. Under the terms of the Company’s senior lender agreements, the Company is restricted from paying dividends in cash, but is allowed to pay dividends in common stock. The Company, since its merger in 2015, has not paid any cash or stock dividends on common stock. The consolidated financial statements include less than 100% owned and controlled subsidiaries and include equity attributable to non-controlling interests that take the form of the underlying legal structures of the less than 100% owned subsidiaries. Entsorga West Virginia LLC through its limited liability agreement and the agreements related to its WVEDA Bonds have restrictions on distributions to and loans to owners while the WVEDA Bonds are outstanding.

Keystone Capital Partners, LLC Committed Equity Facility — On September 23, 2021, the Company, entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “Registration Rights Agreement”) with Keystone Capital Partners, LLC (“Keystone Capital Partners”). The Company has the right to sell to Keystone Capital Partners up to the lesser of (i) $20,000,000 of newly issued shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and (ii) the Exchange Cap, from time to time during the term of the Purchase Agreement.

As an initial purchase under the Purchase Agreement, upon the execution and delivery of the agreements on September 23, 2021, the Company issued and sold 625,000 shares of Common Stock to Keystone Capital Partners for an aggregate gross purchase price of $750,000. The Company does not have the right to sell any additional shares of Common Stock to Keystone Capital Partners, until certain conditions are met, including that a registration statement registering the resale by Keystone Capital Partners of shares of Common Stock issued to it by the Company under the Purchase Agreement, which was filed and declared effective after September 30, 2021.

Under the agreements, the Company will have the right, but not the obligation, from time to time at our sole discretion, over a period of up to 24 months beginning on the effective date of the Initial Registration Statement, to direct Keystone Capital Partners to purchase shares of Common Stock, by delivering written notice of such purchase to Keystone Capital Partners prior to the commencement of regular trading hours on The Nasdaq Capital Market on any trading day that we elect as the purchase date for such purchase, subject to certain limitations and conditions. The future purchase price per share for the shares of common stock that we elect to sell to Keystone Capital Partners, if any, will be determined by reference to the volume weighted average price of the Common Stock (“VWAP”) on the applicable purchase date for such purchase, less a fixed 5% discount to such VWAP.

Other than the 625,000 Initial Purchase Shares that the Company sold to Keystone Capital Partners as an initial purchase under the Purchase Agreement upon our execution of the Purchase Agreement on September 23, 2021 for an aggregate gross purchase price of

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

$750,000, the Company is under no obligation to sell any additional shares of Common Stock to Keystone Capital Partners under the Purchase Agreement, either before or after Commencement.

Under the applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”), in no event may we issue to Keystone Capital Partners under the Purchase Agreement more than 5,689,663 shares of Common Stock, which number of shares is equal to 19.99% of the shares of the Common Stock outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”), unless (i) we obtain stockholder approval to issue shares of Common Stock in excess of the Exchange Cap in accordance with applicable Nasdaq rules, or (ii) the average purchase price per share for all of the shares of Common Stock sold to Keystone Capital Partners under the Purchase Agreement (including the Initial Purchase Shares) equals or exceeds the Nasdaq official closing price for the Common Stock on the trading day immediately preceding the execution of the Purchase Agreement. In any event, the Purchase Agreement specifically provides that we may not issue or sell any shares of our Common Stock under the Purchase Agreement if such issuance or sale would breach any applicable Nasdaq rules.

There are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or Registration Rights Agreement other than a prohibition on entering (with certain limited exceptions) into a variable rate transaction. Keystone Capital Partners has agreed not to engage in or effect, directly or indirectly, for its own principal account or for the principal account of any of its affiliates, any short sales of the Common Stock or hedging transaction that establishes a net short position in the Common Stock during the term of the Purchase Agreement.

In addition to the 625,000 shares of our common stock that the Company sold on September 23, 2021 to Keystone Capital Partners, we issued 69,137 shares in exchange for their commitment under the agreements.

Through September 30, 2021 the Company has issued 694,137 shares of our common stock to Keystone Capital Partners and have received $750,000 in gross proceeds net of $97,115 in legal fees. Additional fees and costs are anticipated subsequent to September 30, 2021 in connection with the filing of the registration statement and additional sales of common stock to Keystone Capital Partners,

At Market Issuance Sales Agreement — On February 19, 2021, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Sales Agent”), pursuant to which the Company may offer and sell, from time to time, through or to the Sales Agent, shares of the Company’s common stock, par value $0.0001 per share (the “Placement Shares”), having an aggregate offering price of up to $25 million (the “ATM Offering”). Effective April 16, 2021, the Sales Agreement became ineligible for future sales.

During March 2021, through a series of transactions, the Company sold 3,416,663 shares of its common stock under the Sales Agreement at an average price per share of $2.11.The net proceeds to the Company from the offering were:


Gross proceeds	$	7,211,729
Less:
Agent’s fees		(216,388)
Legal fees		(80,671)
Accounting fees		(18,180)
Filing and other fees		(872)
Net proceeds to the Company	$	6,895,618

On April 29, 2021, 264,519 shares of the Company’s Series E preferred stock were converted into 264,519 shares of the Company’s common stock.

During the nine months ended September 30, 2021, five participants from the Company’s stock incentive plans, were issued 188,168 shares of common stock pursuant to a restricted stock unit agreement.

During the nine months ended September 30, 2021, the Company issued 72,000 shares of unregistered common stock to a vendor at market ($90,720) in connection with services rendered.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

During the nine months ended September 30, 2021, the Company issued 55,000 shares to its senior lender for services related to waivers and consents.

During the nine months ended September 30, 2021, two holders of common stock warrants exercised their warrants in cashless exercises resulting in the issuance of 148,471 shares of common stock.

During the nine months ended September 30, 2021, the Company issued 921,222 shares of common stock to shareholders of the Company’s Series A, C and D convertible preferred stock in connection: with the conversion of 11,100 shares of preferred stock, and the payment of accrued and accumulated dividends in accordance with the terms of the preferred stock Certificates of Designation.

During the nine months ended September 30, 2021, the Company issued 42,381 shares of common stock, to shareholders of the Company’s Series F convertible preferred stock in connection the payment of accumulated dividends in accordance with the terms of the preferred stock Certificate of Designation.

Warrants – In connection with the issuance of convertible debt, preferred and common stock and in connection with services provided, the Company has warrants to acquire 3,276,582 shares of the Company’s common stock outstanding as of September 30, 2021, as follows:


			Weighted Average
Expiring During the Year	Warrant	Exercise Price	Exercises Price
Ending December 31,	Shares	per Share	per Share
2021	454,548	$3.30	$	3.30
2022	1,198,149	$1.20 - $5.00		2.79
2023	740,749	$1.20		1.20
2024	269,293	$1.20		1.20
2025	613,843	$1.20 - $2.25		1.62

The following table summarizes the outstanding warrant activity for the nine months ended September 30, 2021:


Outstanding, January 1, 2021		4,776,361
Issued		15,000
Exercised - cashless common shares issued		(267,500)
Expired		(1,247,279)
Outstanding, September 30, 2021		3,276,582

In connection with the September 23, 2021 Keystone Capital Partners committed equity facility agreement, the Company sold 625,000 shares of common stock at $1.20 per share that resulted in triggering dilution protection exercise price adjustments on 1,493,619 warrant shares. The Company recognized a deemed dividend of $318,145 based upon a revaluation of the warrants utilizing the Black Scholes pricing model with inputs of current stock price of $1.47, exercise price of $1.20, risk rate of 0.97% and volatility of 55.49% over the remaining lives of the outstanding warrants.

In connection with services rendered, in September 2021 the Company issued a warrant valued at $6,601 to a vendor for 15,000 warrant shares. The warrants were valued utilizing the Black Scholes pricing model with inputs of current stock price of $1.35, exercise price of $2.00, risk rate of 0.97% and volatility of 55.49% over a four year term.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Equity Incentive Plans — The Company has two shareholder approved equity incentive plans. There were no grants or awards during the nine months ended September 30, 2021. The following provides the compensation expense by award type and by classification in the condensed consolidated statements of operations and comprehensive loss:


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Stock options	$	4,896	$	34,605	$	34,169	$	124,383
Restricted stock		6,892		438,042		232,387		940,886
Total	$	11,788	$	472,647	$	266,556	$	1,065,269

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Rental, service and maintenance	$	1,699	$	2,097	$	11,395	$	8,416
Selling, general and administrative		10,089		470,550		255,161		1,056,853
Total	$	11,788	$	472,647	$	266,556	$	1,065,269

Non-controlling Interest Transactions — Effective March 19, 2021, the Company and its Refuel America LLC subsidiaries concluded an agreement with Apple Valley Waste Services, Inc. and its parent company Gold Medal Holdings, Inc. and Gold Medal Group, LLC (the Company’s co-investor in Refuel America, LLC) whereby, leading up to the effective date, during 2020 EWV offset its accounts receivable amounting to $1,487,835 due from the AVWS entities against $1,487,835 in EWV accounts payable to AVWS entities and AVWS entities offset its accounts receivable amounting to $1,487,835 due from the EWV against $1,487,835 in AVWS entities accounts payable to EWV. Following the offsetting, EWV continued to owe AVWS $1,918,947, which the parties agreed to convert into 3,198.24 convertible preferred units of EWV, which were issued as of the effective date. In connection with this transaction AVWS made claims for amounts owed in excess of what had been recognized by EWV and in connection with this settlement agreement, EWV recognized an expense of $646,196 relating to this transaction during the year ended December 31, 2020.

AVWS exchanged the EWV convertible preferred units for 1,918,947 each of preferred and class A units of Refuel, of which AVWS assigned 333,135.33 each of preferred and class A units of Refuel in settlement of a debt owed to the Company amounting to $333,135.

As of December 31, 2020, the $1,585,812 net non-controlling ownership interest resulting from this transaction is reflected in the Company’s financial statements as a non-current liability – Liabilities to non-controlling interests to be settled in subsidiary membership interests. During the six months ended June 30, 2021, this $1,585,812 has been reflected as a capital contribution to non-controlling equity interests.

Note 10. Leases

The Company did not enter into or modify any existing leases during the nine months ended September 30, 2021. The current portion of the lease liabilities of $217,053 is included in accrued expenses and liabilities in the accompanying consolidated balance sheets. Maturities of lease liabilities under these leases, which have a weighted average remaining term of 19.5 years, as of September 30,2021 is:


Year Ending December 31,
2021, remaining	$	54,166
2022		217,571
2023		219,140
2024		220,732
2025 and thereafter		2,912,917
Total lease payments		3,624,526
Less imputed interest		(2,269,667)
Present value of lease liabilities	$	1,354,859

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Total lease costs under operating leases amounted to $57,129 and $57,129 for the three months, and $171,388 and $167,841 for the nine months ended September 30, 2021 and 2020, respectively.

Note 11. Commitments and Contingencies

During the nine months ended September 30, 2021 the Company was involved in the following legal matter.

During September 2020, the Company’s Entsorga West Virginia subsidiary received notice that an affiliate of a minority owner of the facility, who also provided intellectual property, equipment and engineering services relating to the set-up and initial operation of the facility, was claiming it was owed $917,420 related to services contracted as part of the facility’s construction and initial start-up and operation. The Company incurred offsetting costs and expenses greater than the claim correcting or replacing the services that were contracted but that were either not performed or performed correctly. As a result of this claim and the related costs incurred by the Company to cure the deficiencies in the services that were contracted, the Company has reflected an impairment charge amounting to $917,420 during the year ended December 31, 2020. On May 19, 2021 the Company signed an agreement, effective May 7, 2021, settling this matter through the issuance of notes payable as described in Note 8. Notes, Bonds, Debts and Borrowings.

From time to time, the Company may be involved in other legal matters arising in the ordinary course of business. While the Company believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations

Note 12. Revenue

The Company recognizes revenue as services are performed or products are delivered and generally recognize revenue for the gross amount of consideration received as we are generally the primary obligor (or principal) in our contracts with customers as we hold complete responsibility to the customer for contract fulfillment. We record amounts collected from customers for sales tax on a net basis.

Disaggregation of Revenue — The disaggregation of revenue is as follows:


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Revenue Type:
Revenue recognized over time:
Rental of digesters	$	305,581	$	356,001	$	958,775	$	1,054,534
Revenue recognized at a point in time:
Services		507,161		250,179		1,091,061		1,428,017
Product sales		3,710,575		136,697		8,968,745		893,599
Total	$	4,523,317	$	742,877	$	11,018,581	$	3,376,150

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Note 13. Risk Concentrations

The Company operates as a single segment on a worldwide basis through its subsidiaries, resellers and independent sales agents. Gross revenues and net non-current tangible assets on a domestic and international basis are as follows:


	United
	States		International		Total
2021:
Revenue, for the nine months ended September 30, 2021	$	10,741,604	$	276,977	$	11,018,581
Revenue, for the three months ended September 30, 2021		4,418,543		104,774		4,523,317
Non-current tangible assets, as of September 30, 2021		35,852,359		237,740		36,090,099

2020:
Revenue, for the nine months ended September 30, 2020	$	3,079,083	$	297,067	$	3,376,150
Revenue, for the three months ended September 30, 2020		631,450		111,427		742,877
Non-current tangible assets, as of December 31, 2020		36,972,067		294,413		37,266,480

Major customers — During the three months ended September 30, 2021, one customer represented at least 10% of revenues, accounting for 78.3% of revenues. During the three months ended September 30, 2020, two customers represented at least 10% of revenues, accounting for 18.9% (Gold Medal Group, LLC, an affiliated entity, “GMG”) and 45.1% of revenues. During the nine months ended September 30, 2021, one customer represented at least 10% of revenues, 78.3% of revenues. During the nine months ended September 30, 2020, two customers represented at least 10% of revenues, 32.5% (GMG) and 11.4% of revenues

As of September 30, 2021, two customers represented at least 10% of accounts receivable, accounting for 56.5% and 19.8% (GMG) of accounts receivable. As of September 30, 2020 three customers represented at least 10% of accounts receivable, accounting for 63.4% (GMG), 18.6% and 11.5% of accounts receivable.

Vendor concentration — During the three months ended September 30, 2021, two vendors represented at least 10% of costs of revenue, accounting for 28.2% and 10.4% of costs of revenue. During the three months ended September 30, 2020, one vendor represented at least 10% of revenue accounting for 14.2% (GMG) cost of revenue. During the nine months ended September 30, 2021, two vendors represented at least 10% of costs of revenue, accounting for 25.9%, and 14.6% cost of revenue. During the nine months ended September 30, 2020, one vendor represented at least 10% of cost of revenue, accounting for 26.1% (GMG) cost of revenue.

As of September 30, 2021 and December 31, 2020, one vendor represented at least 10% of accounts payable, excluding construction payables and professional fees, accounting for 14.1% of accounts payable As of December 31, 2020, excluding construction payables and professional fees, no vendors represented at least 10% of accounts payable.

Affiliate relationship — GMG owns a 31.8% interest in Refuel America, LLC, a consolidated subsidiary of the Company. GMG’s subsidiaries, which are not consolidated in the Company’s financial statements have several business relationships with the Company and its subsidiaries that result in revenues and expenses noted above.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Note 14. Related Party Transactions

Related parties include Directors, Senior Management Officers, and shareholders, plus their immediate family, who own a 5% or greater ownership interest at the time of a transaction. Related parties also include GMG and its subsidiaries as a result of its interest in Refuel America, LLC (“Refuel”), a consolidated entity of the Company.

The tables below presents the face amount of direct related party assets and liabilities and other transactions or conditions as of or during the periods indicated.


		September 30,		December 31,
		2021		2020
Assets:
Accounts receivable	(a) (b)	$	368,723	$	206,352
Intangible assets, net, included in other assets	(c)		5,049		20,199
Liabilities:
Accounts payable	(c) (d) (e) (f)		465,972		294,040
Accrued interest payable	(h)		287,008		196,033
Accrued liabilities	(j)		—		917,420
Notes payable	(j)		901,943		—
Long term accrued interest	(g)		1,982,423		1,807,857
Advance from related party	(h)		935,000		935,000
Junior promissory note	(g)		988,254		971,426
Liabilities to non-controlling interests to be settled in subsidiary membership units	(k)		—		1,585,812
Other:
Line of credit guarantee	(i)		1,500,000		1,498,975


		Three months ended September 30,				Nine months ended September 30,
		2021		2020		2021		2020
Management advisory and other fees	(a)	$	—	$	25,000	$	—	$	125,000
HEBioT revenue	(b)		319,692		115,173		608,577		970,943
Operating expenses - HEBioT	(d)		—		178,545		40,982		952,931
Operating expenses - Selling, general and administrative	(e)		—		—		137,944		41,514
Operating expenses - Selling, general and administrative	(c) (f)		18,750		110,650		56,250		332,016
Interest expense	(g) (h) (j)		105,871		98,571		310,975		295,592
Debt guarantee fees	(i)		16,875		16,875		50,625		50,625

Summary notes:

a -	Management Advisory Fees	g -	Junior Promissory Note
b -	HEBioT Disposal Revenues	h -	Advances from Related Parties
c -	Distribution Agreement	i -	Line of Credit
d -	Disposal costs	j -	Claims by Related Party settled in Notes Payable – Note 7. Notes, Bonds, Debts and Borrowings.
e -	Facility Lease	k -	Liabilities to non-controlling interests to be settled in subsidiary membership units.
f-	Business Services Fees

Note 15. Subsequent Events

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements are available to be issued. Any material events that occur between the balance sheet date and the date that the financial

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

statements were available for issuance are disclosed as subsequent events, while the financial statements are adjusted to reflect any conditions that existed at the balance sheet date. Based upon this review, except as disclosed within the footnotes or as discussed below, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the financial statements.

In connection with the Keystone Capital Partner’s committed equity facility to the Company, on October 22, 2021 the Company filed its Registration Statement on Form S-1 for the registration of 7,000,000 shares of its common stock. The Securities and Exchange Commission declared the registration effective on November 3, 2021.

On October 29, 2021 a preferred stockholder converted 2,609 shares of the the Company’s Series F Convertible Preferred Stock, plus accumulated dividends into 274,540 shares of the Company’s common stock.

On November 2, 2021, the Compnay’s senior secured lender was issued 10,000 shares of common stock as compensation for services related to the issuance of a waiver.

Note 16. Condensed Consolidating Financial Information

The WVEDA Solid Waste Disposal Revenue Bond obligations of Entsorga West Virginia LLC are not guaranteed by its members, including the Company, however the membership interests of Entsorga West Virginia LLC are pledged, and the debt agreements provide restrictions prohibiting distributions to the members, including equity distributions or providing loans or advances to the members.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

The following pages present the Company’s condensed consolidating balance sheet as of September 30, 2021, the condensed consolidating statements of operations for the three and nine months ended September 30, 2021 and 2020, and condensed consolidating cash flows for the nine months ended September 30, 2021 and 2020 of Entsorga West Virginia LLC and the Parent consolidated with other Company subsidiaries not subject to the WVEDA Solid Waste Disposal Revenue Bond restrictions and the elimination entries necessary to present the Company’s financial statements on a consolidated basis. The following condensed consolidating financial information should be read in conjunction with the Company's consolidated financial statements.

Condensed Consolidating Balance Sheet as of September 30, 2021


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Assets
Cash	$	595,622	$	26,466	$	—	$	622,088
Restricted cash		—		3,764,521		—		3,764,521
Other current assets		11,260,885		596,157		(8,777,506)		3,079,536
Current assets		11,856,507		4,387,144		(8,777,506)		7,466,145
Restricted cash		—		2,603,506		—		2,603,506
HEBioT facility and other fixed assets		1,047,010		35,034,589		—		36,081,599
MBT facility development and license costs		6,432,484		1,575,000		—		8,007,484
Other assets		1,009,278		878,710		—		1,887,988
Total assets	$	20,345,279	$	44,478,949	$	(8,777,506)	$	56,046,722

Liabilities and stockholders’ equity
Notes, bonds, debts and borrowings	$	6,285,572	$	4,535,700	$	—	$	10,821,272
Other current liabilities		4,159,609		11,422,987		(8,777,506)		6,805,090
Current liabilities		10,445,181		15,958,687		(8,777,506)		17,626,362
Notes, bonds, debts and borrowings		1,207,614		28,763,027		—		29,970,641
Accrued interest		1,982,423		—		—		1,982,423
Total liabilities		13,635,218		44,721,714		(8,777,506)		49,579,426
Redeemable preferred stock		476,560		—		—		476,560
Stockholders' equity:
Attributable to parent		6,233,501		(242,765)		(747,477)		5,243,259
Attributable to non-controlling interests		—		—		747,477		747,477
Stockholders’ equity		6,233,501		(242,765)		—		5,990,736
Total liabilities and stockholders’ equity	$	20,345,279	$	44,478,949	$	(8,777,506)	$	56,046,722

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Condensed Consolidating Statement of Operations for the three months ended September 30, 2021


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Revenue	$	3,938,215	$	585,102	$	—	$	4,523,317
Operating expenses
Equipment		2,112,407		—		—		2,112,407
Rental, service and maintenance expense		455,436		—		—		455,436
HEBioT		—		898,094		—		898,094
Selling, general and administrative		1,285,648		413,695		—		1,699,343
Depreciation and amortization		122,712		382,641		—		505,353
Total operating expenses		3,976,203		1,694,430		—		5,670,633
Loss from operations		(37,988)		(1,109,328)		—		(1,147,316)
Other (income) expenses, net		(63,779)		686,598		—		622,819
Net income (loss)	$	25,791	$	(1,795,926)	$	—	$	(1,770,135)

Condensed Consolidating Statement of Operations for the nine months ended September 30, 2021


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Revenue	$	9,704,377	$	1,314,204	$	—	$	11,018,581
Operating expenses
Equipment		5,154,747		—		—		5,154,747
Rental, service and maintenance expense		1,008,608		—				1,008,608
HEBioT		—		2,454,862		—		2,454,862
Selling, general and administrative		3,965,586		1,392,111		—		5,357,697
Depreciation and amortization		368,576		1,139,708		—		1,508,284
Total operating expenses		10,497,517		4,986,681		—		15,484,198
Loss from operations		(793,140)		(3,672,477)		—		(4,465,617)
Other (income) expenses, net		683,286		2,031,388		—		2,714,674
Net loss	$	(1,476,426)	$	(5,703,865)	$	—	$	(7,180,291)

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2021


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Cash flows used in operating activities:
Net loss	$	(1,476,426)	$	(5,703,865)	$	—	$	(7,180,291)
Non-cash adjustments to reconcile net loss to net cash used in operations		665,927		1,260,754		—		1,926,681
Changes in operating assets and liabilities		(7,498,396)		6,573,966		—		(924,430)
Net cash used in operations		(8,308,895)		2,130,855		—		(6,178,040)

Cash flow used in investing activities:
Purchases (sales) of facility, equipment, fixtures and vehicles		8,957		(252,929)		—		(243,972)
Other investing activities		(29,513)		—		—		(29,513)
Net cash used in investing activities		(20,556)		(252,929)		—		(273,485)

Cash flows from financing activities:
Issuances of debt and equity		7,548,502		—		—		7,548,502
Repayments of debt		(1,003,265)		—		—		(1,003,265)
Net cash provided by financing activities		6,545,237		—		—		6,545,237
Effect of exchange rate on cash		(92)		—		—		(92)
Cash – beginning of period (restricted and unrestricted)		2,379,928		4,516,567		—		6,896,495
Cash – end of period (restricted and unrestricted)	$	595,622	$	6,394,493	$	—	$	6,990,115

Condensed Consolidating Statement of Operations for the three months ended September 30, 2020


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Revenue	$	742,252	$	625	$	—	$	742,877
Operating expenses
HEBioT		—		945,810		—		945,810
Rental, service and maintenance expense		139,665		—		—		139,665
Equipment		171,002		—		—		171,002
Selling, general and administrative		1,430,095		494,198		—		1,924,293
Impairment expense		—		917,420				917,420
Depreciation and amortization		124,759		437,384		—		562,143
Total operating expenses		1,865,521		2,794,812		—		4,660,333
Loss from operations		(1,123,269)		(2,794,187)		—		(3,917,456)
Other (income) expenses, net		336,749		686,308		—		1,023,057
Net loss	$	(1,460,018)	$	(3,480,495)	$	—	$	(4,940,513)

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2021 and 2020 and as of September 30, 2021 and December 31, 2020

Condensed Consolidating Statement of Operations for the nine months ended September 30, 2020


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Revenue	$	1,992,494	$	1,383,656	$	—	$	3,376,150
Operating expenses
HEBioT		—		2,778,514		—		2,778,514
Rental, service and maintenance expense		552,195		—		—		552,195
Equipment		317,406		—		—		317,406
Selling, general and administrative		4,713,923		1,026,235		—		5,740,158
Impairment expense		—		917,420		—		917,420
Depreciation and amortization		374,105		1,373,004		—		1,747,109
Total operating expenses		5,957,629		6,095,173		—		12,052,802
Loss from operations		(3,965,135)		(4,711,517)		—		(8,676,652)
Other (income) expenses, net		1,063,714		1,979,331		—		3,043,045
Net loss	$	(5,028,849)	$	(6,690,848)	$	—	$	(11,719,697)

Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2020


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Cash flows used in operating activities:
Net loss	$	(5,028,849)	$	(6,690,848)	$	—	$	(11,719,697)
Non-cash adjustments to reconcile net loss to net cash used in operations		2,693,646		2,424,869		—		5,118,515
Changes in operating assets and liabilities		(5,625,051)		4,715,544		—		(909,507)
Net cash used in operations		(7,960,254)		449,565		—		(7,510,689)

Cash flow used in investing activities:
Purchases of construction in-progress, equipment, fixtures and vehicles		(3,538)		(203,635)		—		(207,173)
Other investing activities		(57,949)		—		—		(57,949)
Net cash used in investing activities		(61,487)		(203,635)		—		(265,122)

Cash flows from financing activities:
Issuances of debt and equity		11,144,230		—		—		11,144,230
Repayments of debt		(3,544)		—		—		(3,544)
Net cash provided by financing activities		11,140,686		—		—		11,140,686
Effect of exchange rate on cash		(18,129)		—		—		(18,129)
Cash – beginning of period (restricted and unrestricted)		1,847,526		3,689,426		—		5,536,952
Cash – end of period (restricted and unrestricted)	$	4,948,342	$	3,935,356	$	—	$	8,883,698

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes appearing elsewhere in this report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors” in our Form 10-K, as filed with the United States Securities and Exchange Commission, or the SEC, on April 16, 2021.

Cautionary Note Regarding Forward-Looking Statements

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “intends”, “plans”, “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should,” “designed to,” “designed for,” or other variations or similar words or language. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.

Although these forward-looking statements reflect the good faith judgment of our management, such statements can only be based upon facts and factors currently known to us. Forward-looking statements are inherently subject to risks and uncertainties, many of which are beyond our control. As a result, our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below under the caption “Risk Factors.” For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should not unduly rely on these forward-looking statements, which speak only as of the date on which they were made. They give our expectations regarding the future but are not guarantees. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.

Impact of COVID-19

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continued to spread throughout the United States and globally and more recently in the United States intermittent increases in cases reported, as well as those from new strains of the virus. Vaccines developed for the initial strain of the virus have been released and are being distributed. The Company continues to monitor the near term and longer term impacts of COVID-19 and the related business and travel restrictions and other changes intended to reduce its spread, and its impact on operations, financial position, cash flows, inventory, supply chains, purchasing trends, customer payments, and the industry in general, in addition to the impact on its employees. Due to the nature of the pandemic, the magnitude and duration of the pandemic and its impact on the Company’s operations, liquidity and financial performance will depend on certain developments, including duration, spread and reemergence of the outbreak, such as the Delta variant, its impact on our customers, supply chain partners and employees, and the range of governmental and community reactions to the pandemic, which are uncertain and cannot be fully predicted at this time.

Company Overview

The Company’s mission is to reduce the environmental impact of the waste management industry through the development and deployment of cost-effective technology solutions. The Company’s suite of technologies includes on-site biological processing equipment for food waste, patented processing facilities for the conversion of municipal solid waste into an E.P.A. recognized renewable fuel, and proprietary real-time data analytics tools to reduce food waste generation. These proprietary solutions may enable certain businesses and municipalities of all sizes to lower disposal costs while having a positive impact on the environment. When used individually or in combination, we believe that the Company’s solutions can reduce the carbon footprint associated with waste transportation, repurpose non-recyclable plastics, and significantly reduce landfill usage.

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Revolution Series™ Digesters

The Company currently markets an aerobic digestion technology solution for the disposal of food waste at the point of generation. Its line of Revolution Series Digesters have been described as self-contained, robotic digestive systems that we believe are as easy to install as a standard dishwasher with no special electrical or plumbing requirements. Units range in size depending upon capacity, with the smallest unit approximately the size of a residential washing machine. The digesters utilize a biological process to convert food waste into a liquid that is safe to discharge down an ordinary drain. This process can result in a substantial reduction in costs for customers including cruise lines, restaurants, retail stores, hospitals, hotel/hospitality companies and governmental units by eliminating the transportation and logistics costs associated with food waste disposal. The process also reduces the greenhouse gases associated with food-waste transportation and decomposition in landfills that have been linked to climate change. The Company offers its Revolution Series Digesters in several sizes targeting small to mid-sized food waste generation sites that are often more economical than traditional disposal methods. The Revolution Series Digesters are manufactured and assembled in the United States.

In an effort to expand the capabilities of its digesters, the Company developed a sophisticated Internet of Things (“IoT”) technology platform to provide its customers with transparency into their internal and supply chain waste generation and operational practices. This patented process collects weight related data from the digesters to deliver real-time data that provides valuable information that when analyzed, can improve efficiency and validate corporate sustainability efforts. The Company provides its IoT platform through a SaaS (“Software as a Service”) model that is either bundled in its rental agreements or sold through a separate annual software license. The Company continues to add new capacity sizes to its line of Revolution Series Digesters to meet customer needs.

HEBioT Resource Recovery Technology

The Company expanded its technology business in 2016 through the acquisition of certain development rights to a patented Mechanical Biological Treatment (“MBT”) technology developed by a European engineering firm that relies upon High Efficiency Biological Treatment (“HEBioT”) to process waste at the municipal or enterprise level. The technology results in a substantial reduction in landfill usage by converting a significant portion of intake, including organic waste and non-recyclable plastics, into a United States EPA recognized alternative fuel that can be used as a partial replacement for coal. The Company is currently exploring additional uses for its Solid Recovered Fuel (“SRF”) such as gasification, fuel for cogeneration and as a feedstock for bio-plastics.

The Company also, through a series of transactions in 2017 and 2018, acquired a controlling interest in the Nation’s first municipal waste processing facility utilizing the HEBioT technology located in Martinsburg, West Virginia (the “Martinsburg Facility”). The Martinsburg Facility, which commenced operations in 2019, is capable of processing up to 110,000 tons of mixed municipal waste annually. At full capacity, the Martinsburg Facility can achieve an estimated annual savings of over 2.3 million cubic feet of landfill space and eliminate many of the greenhouse gases associated with landfilling that waste. The Company plans to build additional HEBioT facilities in the coming years.

Combined Offering

The Company’s suite of products and services positions it as a provider of cost-effective, technology-based alternatives to traditional waste disposal in the United States. The use of the Company’s technology solutions independently or in combination, can help its customers meet sustainability goals by achieving a significant reduction in greenhouse gases associated with waste transportation and landfilling. In addition, the repurposing of municipal waste into a cleaner burning, EPA recognized, renewable fuel can further reduce potentially harmful emissions associated with traditional means of disposal. The overall reduction in carbon and other greenhouse gases that are linked to climate change that could be achieved through the utilization of the Company’s technology can serve as a model for the future of waste disposal in the United States.

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Results of operations for the three months ended September 30, 2021

compared to the three months ended September 30, 2020

Overview

The Company continued its revenue growth in the quarter ended September 30, 2021 with total revenues of $4,523,317 increasing 31% over the second quarter of 2021 and 509% over the comparative third quarter of 2020. Total revenues of $4,523,317 marks the fourth consecutive new quarterly high since the Company went public in 2015. During the third quarter of 2021, each of the business lines reported revenue growth over the second quarter of 2021.

The overall contribution (revenues, less direct costs) increased to 23% of revenue in the third quarter of 2021, as compared to a negative 69% in the comparative third quarter of 2020 and 14% in the second quarter of 2021.

Selling, general and administrative expenses as a percentage of revenues decreased to 38% in the third quarter of 2021, as compared to 58% in the second quarter of 2021 and 259% in the comparative third quarter of 2020.

The loss from operations as a percentage of revenue decreased to 25% in in the third quarter of 2021, as compared to 59% in the second quarter of 2021 and 527% in the comparative third quarter of 2020.

The Company continues to achieve growth in the Digester and Corporate line of business that has been driven by sales to Carnival Cruise Lines such that revenues increased in the third quarter of 2021 by 28% to $3,938,215 as compared to the second quarter revenues of $3,078,420.

The revenues of the HEBioT line increased by 55% to $585,102 during the third quarter of 2021 as compared to the second quarter of 2021 as we continued to ramp up the facility. In addition, the contribution rate during the third quarter of 2021 was a negative 53% as compared to a negative 134% during the second quarter of 2021.

The results of operations by business line are presented below.


	Three months ended September 30,
	Digester and Corporate						HEBioT						Total
	2021		2020		Change		2021		2020		Change		2021		2020		Change
Revenue
Equipment sales	$	3,152,639	$	293,876	$	2,858,763	$	—	$	—		—	$	3,152,639	$	293,876	$	2,858,763
Rental, services and maintenance		785,576		423,996		361,580		—		—		—		785,576		423,996		361,580
HEBioT		—		—		—		585,102		625		584,477		585,102		625		584,477
Management and advisory fees and other		—		24,380		(24,380)		—		—		—		—		24,380		(24,380)
Total Revenue		3,938,215		742,252		3,195,963		585,102		625		584,477		4,523,317		742,877		3,780,440
Operating Expenses
Equipment sales		2,112,407		171,002		1,941,405		—		—		—		2,112,407		171,002		1,941,405
Rental, services and maintenance		455,436		139,665		315,771		—		—		—		455,436		139,665		315,771
HEBioT		—		—		—		898,094		945,810		(47,716)		898,094		945,810		(47,716)
Selling, general and administrative		1,285,648		1,430,096		(144,448)		413,695		494,197		(80,502)		1,699,343		1,924,293		(224,950)
Impairment expense		—		—		—		—		917,420		(917,420)		—		917,420		(917,420)
Depreciation and amortization		122,712		124,759		(2,047)		382,641		437,384		(54,743)		505,353		562,143		(56,790)
Total operating expenses		3,976,203		1,865,522		2,110,681		1,694,430		2,794,811		(1,100,381)		5,670,633		4,660,333		1,010,300
Loss from operations		(37,988)		(1,123,270)		1,085,282		(1,109,328)		(2,794,186)		1,684,858		(1,147,316)		(3,917,456)		2,770,140
Other expenses, net		(63,779)		336,749		(400,528)		686,598		686,308		290		622,819		1,023,057		(400,238)
Net loss	$	25,791	$	(1,460,019)	$	1,485,810	$	(1,795,926)	$	(3,480,494)	$	1,684,568	$	(1,770,135)	$	(4,940,513)	$	3,170,378

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Contribution

The contribution by business line and product is presented below.


	Three months ended September 30,
	Digester and Corporate									HEBioT									Total
	2021			2020			Change			2021			2020			Change			2021			2020			Change
Contribution
Equipment sales	$	1,040,232		$	122,874		$	917,358		$	—		$	—		$	—		$	1,040,232		$	122,874		$	917,358
Rental, services and maintenance		330,140			284,331			45,809			—			—			—			330,140			284,331			45,809
HEBioT		—			—			—			(312,992)			(945,185)			632,193			(312,992)			(945,185)			632,193
Management and advisory fees and other		—			24,380			(24,380)			—			—			—			—			24,380			(24,380)
Total contribution	$	1,370,372		$	431,585		$	938,787		$	(312,992)		$	(945,185)		$	632,193		$	1,057,380		$	(513,600)		$	1,570,980

Contribution rate
Equipment sales		33	%		42	%		(9)	%		—	%		—	%		—	%		33	%		42	%		(9)	%
Rental, services and maintenance		42			67			(25)			—			—			—			42			67			(25)
HEBioT		—			—			—			(53)			(151,230)			151,176			(53)			(151,230)			151,176
Management and advisory fees and other		—			100			(100)			—			—			—			—			100			(100)
Total contribution rate		35	%		58	%		29	%		(53)	%		(151,230)	%		108	%		23	%		(69)	%		42	%

The overall Digester and Corporate contribution increased to $1,370,372 during the third quarter as compared to $431,585 in the comparative third quarter of 2020 and $974,633 during the second quarter of 2021. These increases were primarily the result of increased digester sales to Carnival Cruise Lines. The contribution margin during the third quarter of 2021 was 35%, as compared to 58% during the comparative third quarter of 2020 , which do not reflect the increased levels of sales to Carnival Cruise Lines. During the second quarter of 2021, the contribution margin was 32%.

The negative contribution at the HEBioT facility of 53% for the third quarter of 2021, improved from a negative contribution of 134% during the second quarter of 2021 as a result of increased sales and reduced expenses.

Selling, General and Administrative Expenses


	Three months ended September 30,
	Digester and Corporate						HEBioT						Total
	2021		2020		Change		2021		2020		Change		2021		2020		Change
Selling, general and administrative expenses
Staffing	$	672,264	$	420,388	$	251,876	$	87,531	$	56,260	$	31,271	$	759,795	$	476,648	$	283,147
Stock based compensation		10,089		470,550		(460,461)		—		—		—		10,089		470,550		(460,461)
Professional fees		141,567		241,501		(99,934)		6,818		42,962		(36,144)		148,385		284,463		(136,078)
Office operations		125,854		105,140		20,714		221,924		260,764		(38,840)		347,778		365,904		(18,126)
Other expenses		335,874		192,517		143,357		97,422		134,211		(36,789)		433,296		326,728		106,568
Total Selling, general and administrative expenses	$	1,285,648	$	1,430,096	$	(144,448)	$	413,695	$	494,197	$	(80,502)	$	1,699,343	$	1,924,293	$	(224,950)

Consolidated staffing and stock based compensation expenses of $769,884 during the third quarter of 2021 reflect the impact a reduction in issuance of short term stock based compensation as an element of compensation, resulting in a decrease of $177,314 (19%) from the third quarter of 2020, during which the several of the Company’s officers and managers accepted stock based compensation in place of cash compensation. Professional fees decreased by $136,078 primarily due to a reduction in legal fees. Other expenses increased by $106,568 as compared to the third quarter of 2020 due to a $109,044 negative swing in foreign currency exchange on an unhedged position, an increase in equipment design costs of $31,625 in the Digester and Corporate business line offset by a $43,057 decrease in management fees in the HEBioT business line.

Depreciation and Amortization

Consolidated depreciation and amortization of $505,353 for the third quarter of 2021 decreased from $562,143 for the third quarter of 2020 due to adjustments in the depreciation expense over the remaining lives of assets at the HEBioT faculty.

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Other Expenses

Consolidated other expenses of $622,819 for the third quarter of 2021 decreased from $1,023,057 during the third quarter of 2020 primarily due to the forgiveness of the Company’s loan under the Payroll Protection Program of $421,300, offset by a $19,037 increase in net interest, and absorption of a $10,982 loss from an unconsolidated investment.

Results of operations for the nine months ended September 30, 2021

compared to the nine months ended September 30, 2020

Overview

The Company continued its revenue growth during the nine months ended September 30, 2021 with total revenues of $11,018,581 increasing 226% over the comparative period in of 2020.

The overall contribution rate (revenues, less direct costs) increased to 22% during the nine months ended September 30, 2021, as compared to a negative 8% in the comparative period in of 2020.

Selling, general and administrative expenses as a percentage of revenues decreased to 49% during the nine months ended September 30, 2021, as compared to 170% in the comparative period in of 2020.

The loss from operations as a percentage of revenue decreased to 41% during the nine months ended September 30, 2021, as compared to 257% in the comparative period in of 2020.

The Company continues to achieve growth in the Digester and Corporate line of business that has been driven by sales to Carnival Cruise Lines such that the operating loss was driven down to $793,140 during the nine months ended September 30, 2021 from $3,965,136 during the nine months ended September 30, 2020.

During the nine months ended September 30, 2021 revenues at the HEBiot facility were $1,314,204, a decrease of $69,452 from the nine months ended September 30, 2020, which was offset by a $323,652 decrease in the related direct costs, resulting in a reduction in negative contribution of $254,200 to $1,140,658 from $1,394,858 during the respective periods.

The results of operations by business line are presented below.


	Nine months ended September 30,
	Digester and Corporate						HEBioT						Total
	2021		2020		Change		2021		2020		Change		2021		2020		Change
Revenue
Equipment sales	$	8,050,145	$	616,992	$	7,433,153	$	—	$	—		—	$	8,050,145	$	616,992	$	7,433,153
Rental, services and maintenance		1,654,232		1,251,122		403,110		—		—		—		1,654,232		1,251,122		403,110
HEBioT		—		—		—		1,314,204		1,383,656		(69,452)		1,314,204		1,383,656		(69,452)
Management and advisory fees and other		—		124,380		(124,380)		—		—		—		—		124,380		(124,380)
Total Revenue		9,704,377		1,992,494		7,711,883		1,314,204		1,383,656		(69,452)		11,018,581		3,376,150		7,642,431
Operating Expenses
Equipment sales		5,154,747		317,406		4,837,341		—		—		—		5,154,747		317,406		4,837,341
Rental, services and maintenance		1,008,608		552,195		456,413		—		—		—		1,008,608		552,195		456,413
HEBioT		—		—		—		2,454,862		2,778,514		(323,652)		2,454,862		2,778,514		(323,652)
Selling, general and administrative		3,965,586		4,713,924		(748,338)		1,392,111		1,026,234		365,877		5,357,697		5,740,158		(382,461)
Impairment expense		—		—		—		—		917,420		(917,420)		—		917,420		(917,420)
Depreciation and amortization		368,576		374,105		(5,529)		1,139,708		1,373,004		(233,296)		1,508,284		1,747,109		(238,825)
Total operating expenses		10,497,517		5,957,630		4,539,887		4,986,681		6,095,172		(1,108,491)		15,484,198		12,052,802		3,431,396
Loss from operations		(793,140)		(3,965,136)		3,171,996		(3,672,477)		(4,711,516)		1,039,039		(4,465,617)		(8,676,652)		4,211,035
Other expenses, net		683,286		1,063,714		(380,428)		2,031,388		1,979,331		52,057		2,714,674		3,043,045		(328,371)
Net loss	$	(1,476,426)	$	(5,028,850)	$	3,552,424	$	(5,703,865)	$	(6,690,847)	$	986,982	$	(7,180,291)	$	(11,719,697)	$	4,539,406

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Contribution

The contribution by business line and product is presented below.


	Nine months ended September 30,
	Digester and Corporate									HEBioT									Total
	2021			2020			Change			2021			2020			Change			2021			2020			Change
Contribution
Equipment sales	$	2,895,398		$	299,586		$	2,595,812		$	—		$	—		$	—		$	2,895,398		$	299,586		$	2,595,812
Rental, services and maintenance		645,624			698,927			(53,303)			—			—			—			645,624			698,927			(53,303)
HEBioT		—			—			—			(1,140,658)			(1,394,858)			254,200			(1,140,658)			(1,394,858)			254,200
Management and advisory fees and other		—			124,380			(124,380)			—			—			—			—			124,380			(124,380)
Total contribution	$	3,541,022		$	1,122,893		$	2,418,129		$	(1,140,658)		$	(1,394,858)		$	254,200		$	2,400,364		$	(271,965)		$	2,672,329

Contribution rate
Equipment sales		36	%		49	%		(13)	%		—	%		—	%		—	%		36	%		49	%		(13)	%
Rental, services and maintenance		39			56			(17)			—			—			—			39			56			(17)
HEBioT		—			—			—			(87)			(101)			14			(87)			(101)			14
Management and advisory fees and other		—			100			(100)			—			—			—			—			100			(100)
Total contribution rate		36	%		56	%		31	%		(87)	%		(101)	%		(366)	%		22	%		(8)	%		35	%

The overall Digester and Corporate contribution increased to $3,541,022 during the nine months ended September 30, 2021 as compared to 1,122,893 in the comparative period of 2020. This increases were primarily the result of increased digester sales to Carnival Cruise Lines. The contribution margin during the nine months ended September 30, 2021 was 36%, as compared to 56% during the comparative period of 2020 prior to significant deliveries of digesters to Carnival Cruise Lines.

As noted previously, while HEBioT revenues for the nine months ended September 30, 2021 decreased by 5% from the comparative period in 2020, direct costs also decreased, resulting in a reduction in the negative contribution rate between the periods.

Selling, General and Administrative Expenses


	Nine months ended September 30,
	Digester and Corporate						HEBioT						Total
	2021		2020		Change		2021		2020		Change		2021		2020		Change
Selling, general and administrative expenses
Staffing	$	2,011,561	$	1,887,528	$	124,033	$	266,297	$	136,476	$	129,821	$	2,277,858	$	2,024,004	$	253,854
Stock based compensation		255,161		1,056,853		(801,692)		—		—		—		255,161		1,056,853		(801,692)
Professional fees		623,821		797,871		(174,050)		58,606		145,649		(87,043)		682,427		943,520		(261,093)
Office operations		370,783		335,635		35,148		564,597		380,088		184,509		935,380		715,723		219,657
Other expenses		704,260		636,037		68,223		502,611		364,021		138,590		1,206,871		1,000,058		206,813
Total Selling, general and administrative expenses	$	3,965,586	$	4,713,924	$	(748,338)	$	1,392,111	$	1,026,234	$	365,877	$	5,357,697	$	5,740,158	$	(382,461)

Consolidated staffing and stock based compensation expenses of $2,533,019 during the nine months ended September 30, 2021 reflect the impact of staffing reductions initiated in 2020, offset in by increases in management across all lines and administrative staffing at the HEBioT facility and a reduction in stock based compensation, which during 2020 included stock based companesation to several of the Company’s officers and managers in place of cash compensation, resulting in a decrease of $547,838 (18%) from the comparative period in 2020. Professional fees during the nine months ended September 30, 2021 decreased by $261,093 as compared to the comparative period of 2020, primarily due to a decrease of $100,627 in legal fees and a decrease of $111,833 in investor relations – investment banking, primarily related to strategic initiatives in the Digester and Corporate line of business, offset by a decrease of $87,043 in the HEBioT line of business primarily due to decreased legal and accounting fees. Office operations expenses during the nine months ended September 30, 2021 increased by $219,657 as compared to the comparative period of 2020, as a result of increased travel related costs of $80,481, offset by a favorable foreign currency fluctuation of $22,960 in the Digester and Corporate line of business and increases in property taxes of $99,981 and publicity/strategy of $66,378 in the HEBioT line of business. Other expenses during the nine months ended September 30, 2021 increased by $206,813 as compared the comparative period of 2020 primarily due to an increase of $166,768 related to an adjustment of the West Virginia landfill assessment in the HEBioT line of business.

Depreciation and Amortization

Consolidated depreciation and amortization of $1,508,284 during the nine months ended September 30, 2021 decreased by $238,825 from $1,747,109 during the nine months ended September 30, 2020 due to adjustments initiated in 2021 in the depreciation expense over the remaining lives of assets at the HEBioT faculty.

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Other Expenses

Consolidated other expenses of $2,714,674 during the nine months ended September 30, 2021 decreased by $328,371from $3,043,045 during the nine months ended September 30, 2020 primarily due to the forgiveness of the Company’s loan under the Payroll Protection Program of $421,300, offset by a $58,155 increase in net interest, and absorption of a $43,731 loss from an unconsolidated investment.

Liquidity and Capital Resources

For the nine months ended September 30, 2021, the Company had a consolidated net loss of $7,180,291, incurred a consolidated loss from operations of $4,465,617 and used net cash in consolidated operating activities of $6,178,040. At September 30, 2021, consolidated total stockholders’ equity amounted to $5,990,736, consolidated stockholders’ equity attributable to parent amounted to $5,243,259, and the Company had a consolidated working capital deficit of $10,160,217. While the Company had not met certain of its senior secured note’s financial covenants as of September 30, 2021 and has received a waiver for such non-compliance through September 30, 2021, until such time as the Company regains compliance or receives a waiver of such covenants for a year beyond the balance sheet date, under current GAAP accounting rules, the senior secured note amounting to $3,746,025 has been classified as current debt. The Company does not yet have a history of financial profitability. On September 23, 2021 the Company entered into a committed equity facility (see Note 9) for up to the lesser of $20,000,000 or the Nasdaq exchange cap, there is no assurance that the Company will continue to raise sufficient capital or debt to sustain operations or to pursue other strategic initiatives or that such financing will be on terms that are favorable to the Company. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Cash

As of September 30, 2021 and December 31, 2020, the Company had unrestricted cash balances of $622,088 and $2,403,859, respectively. In addition, as of September 30, 2021 and December 31, 2020, the Company had restricted cash balances of $6,368,027 and $4,492,636 relating to its West Virginia EDA senior secured bonds.

Borrowing and Debt

See Note 8. Notes, Bonds, Debts and Borrowings to the Financial Statements filed herewith.

Cash Flows

Cash flows used in operating activities — We used $6,178,040 of cash in operating activities during the nine months ended September 30, 2021, a decrease of $1,332,649 from $7,510,689 of cash used in operating activities during the nine months ended September 30, 2020. Excluding the change in operating assets and liabilities, we used $5,253,610 of cash in operating activities during the nine months ended September 30, 2021, a decrease of $1,347,572 from $6,601,182 of cash used in operating activities during the nine months ended September 30, 2020. Our net loss for the nine months ended September 30, 2021 of $7,180,291 was reduced by $1,926,681 of non-cash operating income and expenses as compared to a net loss for the nine months ended September 30, 2020 of $11,719,697 that was reduced by $5,118,515 of non-cash operating income and expenses.

Cash flows used in investing activities — $273,485 of cash was used in investing activities during the nine months ended September 30, 2021, as compared to a usage of $265,122 during the nine months ended September 30, 2020.

Cash flows from financing activities — Cash flows from financing activities amounted to $6,545,237 during the nine months ended September 30, 2021, a decrease of $4,595,449 from $11,140,686 of cash flows from financing activities during the nine months ended September 30, 2020. This decrease was primarily due to a decrease in cash flows from the issuance of common and preferred stock shares of $2,449,428, a decrease in advances from related parties of $725,000, a decrease in funding under the Payroll Protection Program and an increase in repayments on the Company’s senior secured note.

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Off Balance Sheet Arrangements

We have not entered into or are a party to any off-balance sheet arrangements during the nine months ended September 30, 2021.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by 17 C.F.R. 229 (10)(f)(i) and are not required to provide information under this item.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management carried out an evaluation, with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”).

Based upon their evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that a material weakness existed and that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that the Company 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, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Because of our limited operations, we have a small number of employees which prohibits a segregation of duties, which results in a material weakness over disclosure controls and procedures, as well as internal control over financial reporting. The Company has not had access to sufficient resources within the accounting function, which restricted the Company’s ability to gather, analyze and properly review information related to financial reporting, including complex accounting matters, in a timely manner. We expect to add additional resources as we grow and expand our overall operations. However, there can be no assurance that our operations will expand.

Changes in Internal Controls Over Financial Reporting

There have not been any significant changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II -

OTHER INFORMATION

Item 1.

Legal Proceedings.

From time to time, we are a party to, or otherwise involved in, legal proceedings arising in the normal and ordinary course of business. As of the date of this report, we are not aware of any proceeding, threatened or pending, against us which, if determined adversely, would have a material effect on our business, results of operations, cash flows or financial position.

Item 1A.

Risk Factors.

We are a smaller reporting company as defined by 17 C.F.R. 229 (10)(f)(i) and are not required to provide information under this item.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

On August 17, 2021 the Company issued 5,000 shares of unregistered common stock to a senior lender in connection with services rendered relating to the preparation and delivery of a waiver for certain non-compliance through the period ending June 30, 2021.

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On August 20, 2021 the Company issued 50,000 shares of unregistered common stock to a senior lender for consent to enter into the transaction contemplated by this Offering.

On September 23, 2021, the Company issued and sold 625,000 shares of common stock to the selling stockholder for an aggregate gross purchase price of $750,000 and issued 69,137 shares to the selling stockholder as a commitment fee upon execution of a Common Stock Purchase Agreement.

All of the securities referred to, above, were issued without registration under the Securities Act of 1933, as amended (the “Securities Act”) in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as provided in Rule 506(b) of Regulation D promulgated thereunder. All of the foregoing securities as well the Common Stock issuable upon conversion or exercise of such securities, have not been registered under the Securities Act or any other applicable securities laws and are deemed restricted securities, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act.

The sale of securities did not involve a public offering; the Company made no solicitation in connection with the sale other than communications with the investors; the Company obtained representations from the investors regarding their investment intent, experience and sophistication; and the investors either received or had access to adequate information about the Company in order to make an informed investment decision.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Mine Safety Disclosures.

Not Applicable.

Item 5.

Other Information.

Not Applicable.

Item 6.

Exhibits.

See the exhibits listed in the accompanying “Index to Exhibits.”

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		BioHiTech Global, Inc.

November 18, 2021	By:	/s/ Anthony Fuller
	Name:	Anthony Fuller
	Title:	Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Brian C. Essman
	Name:	Brian C. Essman
	Title:	Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

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INDEX TO EXHIBITS

Exhibit		Incorporated by Reference			Filed or Furnished
No.	Exhibit Description	Form	Date	Number	Herewith
31.1	Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended				Filed
31.2	Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended				Filed
32.1	Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				Furnished*
32.2	Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				Furnished*
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document				Filed
101.SCH	Inline XBRL Taxonomy Extension Schema Document				Filed
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				Filed
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				Filed
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				Filed
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				Filed
104	Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)				Filed

* This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-X.

Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to our Corporate Secretary at 80 Red Schoolhouse Road, Chestnut Ridge, New York 10977.