RENOVARE ENVIRONMENTAL, INC. - Quarter Report: 2021 June (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: June 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 August 4, 2021
Common Stock, $0.0001 par value per share		28,407,554

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.	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	28

Item 4.	Controls and Procedures.	28

	PART II - OTHER INFORMATION	29

Item 1.	Legal Proceedings.	29

Item 1A.	Risk Factors.	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	29

Item 3.	Defaults Upon Senior Securities.	29

Item 4.	Mine Safety Disclosures.	29

Item 5.	Other Information.	29

Item 6.	Exhibits.	29

SIGNATURES		30

INDEX TO EXHIBITS		31

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				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Revenue
Equipment sales	$	2,630,993	$	—	$	4,897,506	$	323,116
Rental, service and maintenance		447,427		356,033		868,656		827,126
HEBioT		376,554		892,899		729,102		1,383,031
Management advisory and other fees (related party)		—		25,000		—		100,000
Total revenue		3,454,974		1,273,932		6,495,264		2,633,273
Operating expenses
Equipment sales		1,806,324		—		3,042,340		146,404
Rental, service and maintenance		297,463		151,695		553,172		412,530
HEBioT processing		879,491		1,020,277		1,556,768		1,832,704
Selling, general and administrative		2,012,397		1,897,442		3,658,354		3,815,865
Depreciation and amortization		501,098		569,764		1,002,931		1,184,966
Total operating expenses		5,496,773		3,639,178		9,813,565		7,392,469
Loss from operations		(2,041,799)		(2,365,246)		(3,318,301)		(4,759,196)
Other expenses
Interest (income)		(123)		(5,355)		(310)		(17,622)
Interest expense		1,031,011		1,025,319		2,059,416		2,037,610
Loss from unconsolidated entity		2,746		—		32,749		—
Total other expenses		1,033,634		1,019,964		2,091,855		2,019,988
Net loss		(3,075,433)		(3,385,210)		(5,410,156)		(6,779,184)
Net loss attributable to non-controlling interests		(695,229)		(720,329)		(1,395,739)		(1,543,006)
Net loss attributable to Parent		(2,380,204)		(2,664,881)		(4,014,417)		(5,236,178)
Other comprehensive income
Foreign currency translation adjustment		(5,369)		(1,437)		(16,044)		(30,136)
Comprehensive loss	$	(2,385,573)	$	(2,666,318)	$	(4,030,461)	$	(5,266,314)

Net loss attributable to Parent	$	(2,380,204)	$	(2,664,881)	$	(4,014,417)	$	(5,236,178)
Less – preferred stock dividends		(175,169)		(204,941)		(358,024)		(382,313)
Net loss – common shareholders		(2,555,373)		(2,869,822)		(4,372,441)		(5,618,491)
Net loss per common share - basic and diluted	$	(0.09)	$	(0.16)	$	(0.17)	$	(0.32)
Weighted average number of common shares outstanding - basic and diluted		28,259,677		17,437,068		26,301,029		17,406,788

See accompanying notes to unaudited interim condensed consolidated financial statements.

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BioHiTech Global, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


	June 30,
	2021		December 31,
	(Unaudited)		2020
Assets
Current Assets
Cash	$	2,279,060	$	2,403,859
Restricted cash		3,808,751		1,884,691
Accounts receivable, net of allowance for doubtful accounts of $181,565 and $151,459 as of June 30, 2021 and December 31, 2020, respectively		1,847,746		1,574,047
Inventory		1,381,338		695,110
Prepaid expenses and other current assets		259,374		184,274
Total Current Assets		9,576,269		6,741,981
Restricted cash		2,603,440		2,607,945
Equipment on operating leases, net		1,158,558		1,311,755
HEBioT facility, equipment, fixtures and vehicles, net		35,330,255		35,946,225
License and capitalized MBT facility development costs		8,037,859		8,072,471
Other assets		1,924,203		2,006,048
Total Assets	$	58,630,584	$	56,686,425

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	2,720,443	$	2,492,606
Accrued expenses and liabilities		1,332,718		2,515,724
Accrued interest payable		1,344,293		1,279,018
Customer deposits		2,026,555		1,802,725
Current portion of notes, bonds, debts and borrowings		10,992,863		10,120,457
Deferred revenue		268,871		138,961
Total Current Liabilities		18,685,743		18,349,491
Non-current portion of notes, bonds, debts and borrowings		29,352,846		29,645,227
Accrued interest (related party)		1,896,467		1,807,857
Non-current lease liabilities		1,157,414		1,216,861
Liabilities to non-controlling interests to be settled in subsidiary membership units		—		1,585,812
Total Liabilities		51,092,470		52,605,248
Series A redeemable convertible preferred stock, 333,401 shares designated and issued, and 95,312 and 125,312 outstanding as of June 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 June 30, 2021 and December 31, 2020, respectively:		5,057,942		6,621,576
Common stock, $0.0001 par value, 50,000,000 shares authorized, 28,348,684 and 23,354,130 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		2,835		2,334
Additional paid in capital		69,682,816		60,253,664
Accumulated deficit		(68,852,919)		(64,419,802)
Accumulated other comprehensive (loss)		(159,858)		(143,814)
Stockholders’ equity attributable to Parent		5,730,816		2,313,958
Stockholders’ equity attributable to non-controlling interests		1,330,738		1,140,666
Total Stockholders’ Equity		7,061,554		3,454,624
Total Liabilities and Stockholders’ Equity	$	58,630,584	$	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)


	Six Months Ended
	June 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(5,410,156)	$	(6,779,184)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization		1,002,931		1,184,966
Amortization of operating lease right of use assets		38,996		53,552
Provision for bad debts		30,000		61,119
Share based employee and vendor compensation		345,488		707,653
Interest resulting from amortization of financing costs and discounts		219,437		265,776
Loss from unconsolidated entity		32,749		—
Changes in operating assets and liabilities		(519,750)		593,507
Net cash used in operating activities		(4,260,305)		(3,912,611)
Cash flow from investing activities:
Purchases of facility, equipment, fixtures and vehicles		(184,914)		(50,731)
Refund of deposit		—		5,000
MBT facility development costs incurred		(28,388)		(36,996)
Net cash used in investing activities		(213,302)		(82,727)
Cash flows from financing activities:
Proceeds from the sales of common stock		6,895,618		—
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		(625,000)		—
Repayments of long-term debt		(2,163)		(2,496)
Related party advances, net		—		725,000
Net cash provided by financing activities		6,268,455		2,704,254
Effect of exchange rate on cash (restricted and unrestricted)		(92)		(20,208)
Net change in cash (restricted and unrestricted)		1,794,756		(1,311,292)
Cash - beginning of period (restricted and unrestricted)		6,896,495		5,536,952
Cash - end of period (restricted and unrestricted)	$	8,691,251	$	4,225,660

Supplementary cash flow information (cash paid during the periods):
Interest	$	1,524,097	$	1,491,867
Income taxes		—		—

Supplementary Disclosure of Non-Cash Investing and Financing Activities:
Transfer of inventory to leased equipment	$	54,000	$	67,604
Acquisition of right of use leased asset and creation of lease liability		—		412,647
Accrual of Series A preferred stock dividends		24,821		35,109
Payment of Series A preferred stock dividends in common stock		79,181		25,000
Payment of preferred stock dividends in common stock		390,460		—
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	$	2,279,060	$	342,182
Restricted cash (current)		3,808,751		1,237,097
Restricted cash (non-current)		2,603,440		2,646,381
Total cash and restricted cash at the end of the period	$	8,691,251	$	4,225,660

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 June 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 April 1, 2021	711,880	$	5,756,272	28,057,379	$	2,806	$	68,897,016	$	(154,489)	$	(66,463,851)	$	8,037,754
Common stock issued to employee under restricted stock units and vendor for services rendered	—		—	26,786		3		(3)		—		—		—
Sr. E preferred stock conversion	(264,519)		(698,330)	264,519		26		698,304		—		—		—
Sr. A Preferred stock dividend accrual	—		—	—		—		—		—		(8,864)		(8,864)
Share-based employee and director compensation	—		—	—		—		87,499		—		—		87,499
Net loss	—		—	—		—		—		—		(2,380,204)		(2,380,204)
Foreign currency translation adjustment	—		—	—		—		—		(5,369)		—		(5,369)

Balance at June 30, 2021	447,361	$	5,057,942	28,348,684	$	2,835	$	69,682,816	$	(159,858)	$	(68,852,919)	$	5,730,816


Statement of Stockholders’ Equity Attributable to Parent for the Six Months Ended June 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	722,980	$	6,621,576	23,354,130	$	2,334	$	60,253,664	$	(143,814)	$	(64,419,802)	$	2,313,958
Common stock sold, net of offering costs	—		—	3,416,663		342		6,895,276		—		—		6,895,618
Common stock issued to employee under restricted stock units and vendor for services rendered	—		—	201,298		20		90,700		—		—		90,720
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		—		(22,962)		206,213
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	—		—	—		—		254,768		—		—		254,768
Net loss	—		—	—		—		—		—		(4,014,417)		(4,014,417)
Foreign currency translation adjustment	—		—	—		—		—		(16,044)		—		(16,044)

Balance at June 30, 2021	447,361	$	5,057,942	28,348,684	$	2,835	$	69,682,816	$	(159,858)	$	(68,852,919)	$	5,730,816


Statement of Stockholders’ Equity Attributable to Non-Controlling Interests in Consolidated Subsidiaries for the Three Months Ended June 30, 2021:
	Non- Controlling		Accumulated
	Equity Interest		Deficit		Total
Balance at April 1, 2021	$	9,665,396	$	(7,639,429)	$	2,025,967
Net loss		—		(695,229)		(695,229)

Balance at June 30, 2021	$	9,665,396	$	(8,334,658)	$	1,330,738


Statement of Stockholders’ Equity Attributable to Non-Controlling Interests in Consolidated Subsidiaries for the Six Months Ended June 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		—		(1,395,739)		(1,395,739)

Balance at June 30, 2021	$	9,665,396	$	(8,334,658)	$	1,330,738

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BioHiTech Global, Inc. and Subsidiaries

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


Statement of Stockholders’ Equity Attributable to Parent for the Three Months Ended June 30, 2020:
								Additional		Accumulated
	Preferred Stock			Common Stock				Paid in		Comprehensive		Accumulated
	Shares	Amount		Shares		Amount		Capital		Other Loss		Deficit		Total
Balance at April 1, 2020	723,914	$	6,698,348		17,417,288	$	1,741	$	49,953,089	$	(14,439)	$	(55,374,103)	$	1,264,636
Series F preferred stock issuance	566		62,794		—		—		2,206		—		—		65,000
Share-based employee and director compensation	—		—		20,000		2		312,415		—		—		312,417
Warrants exercised	—		—		372,304		37		(37)		—		—		—
Preferred stock dividends	—		—		—		—		—		—		(17,545)		(17,545)
Net loss	—		—		—		—		—		—		(2,664,881)		(2,664,881)
Foreign currency translation adjustment	—		—		—		—		—		1,437		—		1,437
Balance at June 30, 2020	724,480	$	6,761,142		17,809,592	$	1,780	$	50,267,673	$	(13,002)	$	(58,056,529)	$	(1,038,936)


Statement of Stockholders’ Equity Attributable to Parent for the Six Months Ended June 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	710,869	$	5,253,734	17,300,899	$	1,730	$	49,597,059	$	(43,138)	$	(52,785,242)	$	2,024,143
Series F preferred stock issuance	13,611		1,507,408	—		—		53,042		—		—		1,560,450
Share-based employee and director compensation	—		—	122,500		12		592,610		—		—		592,622
Preferred stock dividends paid in common stock	—		—	13,889		1		24,999		—		—		25,000
Warrants exercised	—		—	372,304		37		(37)		—		—		—
Preferred stock dividends	—		—	—		—		—		—		(35,109)		(35,109)
Net loss	—		—	—		—		—		—		(5,236,178)		(5,236,178)
Foreign currency translation adjustment	—		—	—		—		—		30,136		—		30,136
Balance at June 30, 2020	724,480	$	6,761,142	17,809,592	$	1,780	$	50,267,673	$	(13,002)	$	(58,056,529)	$	(1,038,936)


Statement of Stockholders’ Equity Attributable to Non-Controlling Interests in Consolidated Subsidiaries for the Three Months Ended June 30, 2020:
	Non-Controlling		Accumulated
	Equity Interest		Deficit		Total
Balance at April 1, 2020	$	8,079,585	$	(3,556,680)	$	4,522,905
Net loss		—		(720,329)		(720,329)
Balance at June 30, 2020	$	8,079,585	$	(4,277,009)	$	3,802,576


Statement of Stockholders’ Equity Attributable to Non-Controlling Interests in Consolidated Subsidiaries for the Six Months Ended June 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		—		(1,543,006)		(1,543,006)
Balance at June 30, 2020	$	8,079,585	$	(4,277,009)	$	3,802,576

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 Six Months Ended June 30, 2021 and 2020 and as of June 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 continues 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 six months ended June 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 June 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.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

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.

Going Concern and Liquidity - For the six months ended June 30, 2021, the Company had a consolidated net loss of $5,410,156, incurred a consolidated loss from operations of $3,318,301 and used net cash in consolidated operating activities of $4,260,305. At June 30, 2021, consolidated total stockholders’ equity amounted to $7,061,554, consolidated stockholders’ equity attributable to parent amounted to $5,730,816, and the Company had a consolidated working capital deficit of $9,109,474. While the Company had not met certain of its senior secured note’s financial covenants as of June 30, 2021 and has received a waiver for such non-compliance through June 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 $4,042,847 has been classified as current debt. The Company does not yet have a history of financial profitability. 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. 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 Pronouncements:

The Company has not implemented any recent accounting pronouncements during the six months ended June 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

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

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 EPS 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 pronouncements or changes in accounting pronouncements that have been issued but not yet adopted that are of significance, or potential significance, to the Company.

Note 3. Equipment on Operating Leases, net

Equipment on operating leases consist of the following:


	June 30,		December 31,
	2021		2020
Leased equipment	$	3,126,388	$	3,066,359
Less: accumulated depreciation		(1,967,830)		(1,754,604)
Total Equipment on Operating Leases, net	$	1,158,558	$	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 June 30, 2021 and 2020, revenue under the agreements, which is included in rental, service and maintenance revenue, amounted to $332,589 and $312,278, respectively. During the six months ended June 30, 2021 and 2020, revenue under the agreements, which is included in rental, service and maintenance revenue, amounted to $653,194 and $698,532, respectively. During the three months ended June 30, 2021 and 2020, depreciation expense amounted to $114,520 and $116,272, respectively. During the six months ended June 30, 2021 and 2020, depreciation expense included in rental, service and maintenance expense, amounted to $229,312 and $232,138, respectively.

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


Year ending December 31,
2021, remaining	$	585,306
2022		875,449
2023		559,972
2024		250,441
2025 and thereafter		77,092
	$	2,348,260

Table of Contents

BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

Note 4. HEBioT facility, equipment, fixtures and vehicles, net

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


	June 30,		December 31,
	2021		2020
HEBioT facility	$	31,177,426	$	31,172,856
HEBioT equipment		7,658,012		7,579,059
Computer software and hardware		112,074		115,374
Furniture and fixtures		48,196		48,196
Vehicles		50,319		50,319
		39,046,027		38,965,804
Less: accumulated depreciation and amortization		(3,715,772)		(3,019,579)
Total HEBioT facility, equipment, fixtures and vehicles, net	$	35,330,255	$	35,946,225

Note 5. MBT Facility Development and License Costs

MBT Facility Development and License Costs consist of the following:


	June 30,		December 31,
	2021		2020
MBT Projects
Rensselaer, NY - Survey, engineering and legal	$	412,159	$	383,771

Technology Licenses
Future site		6,019,200		6,019,200
Martinsburg, West Virginia, net of $283,500 and $220,500 of amortization as of June 30, 2021 and December 31, 2020, respectively		1,606,500		1,669,500
Total Technology Licenses		7,625,700		7,688,700
Total MBT Facility Development and License Costs	$	8,037,859	$	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 6. Other Assets

Other assets consist of:


	June 30,		December 31,
	2021		2020
Right of use assets	$	1,227,051	$	1,266,047
Investment in East Shore Port Ventures LLC		678,553		711,302
Digester distribution agreements		10,099		20,199
Deposits		8,500		8,500
Total Other Assets	$	1,924,203	$	2,006,048

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

Note 7. Notes, Bonds, Debts and Borrowings

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


	June 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		4,375,000		(296,117)		(36,036)		4,042,847		4,042,847		—		4,494,424		—
Payroll Protection Program note		421,300		—		—		421,300		—		421,300		327,678		93,622
Junior note due to related party		1,044,477		(61,864)		—		982,613		—		982,613		—		971,426
Notes payable to related party		1,001,400		(74,171)		—		927,229		375,525		551,704		—		—
Note payable		100,000		—		—		100,000		100,000		—		—		100,000
WV EDA senior secured bonds		33,000,000		—		(1,569,318)		31,430,682		4,035,000		27,395,682		2,860,000		28,476,359
Long term debts, remaining balances		6,038		—		—		6,038		4,491		1,547		4,380		3,820
Total Notes, Bonds, Debts and Borrowings	$	42,383,215	$	(432,152)	$	(1,605,354)	$	40,345,709	$	10,992,863	$	29,352,846	$	10,120,457	$	29,645,227

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		1,250,000		2,500,000		625,000		—		—		4,375,000
Payroll Protection Program note		—		421,300		—		—		—		421,300
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		2,217		3,821		—		—		—		6,038
Total Notes, Bonds, Debts and Borrowings	$	6,714,117	$	4,700,821	$	2,223,800	$	2,404,477	$	26,340,000	$	42,383,215

The Company did not meet certain of its senior secured note’s financial covenants as of June 30, 2021 and December 31, 2020, the Company and has received a waiver for such non-compliance through June 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 $4,042,847 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 June 30, 2021 and December 31, 2020 the Company was not in

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

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 July 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 10) with Entsorga S.p.A.(“ESpA”), the parent company of Enstorga 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 8. 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 June 30, 2021 and December 31, 2020, 28,348,684 and 23,354,130 shares of common stock have been issued; and 3,209,210 of preferred stock have been designated in five series of shares, which have a total of $1,611,241 in accumulated, but undeclared preferential dividends as of June 30, 2021, as follows:


							Outstanding		Carrying Amount
			Stated		Conversion		June 30,	December 31,	June 30,		December 31,
	Designated	Issued	Value		Rate		2021	2020	2021		2020
Series A Convertible*	333,401	333,401	$	5.00	$	1.80	95,312	125,312	$	476,560	$	626,553
Series B Convertible	1,111,200	428,333		5.00		1.80	—	—		—		—
Series C Convertible	1,000,000	427,500		10.00		1.80	427,500	427,500		3,050,142		3,050,142
Series D Convertible	20,000	18,850		100.00		1.80	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		1.81	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.

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.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

Sale of registered common shares — During the six months ended June 30, 2021, registered share activity was comprised of the following transactions.

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. The shares were registered under the Company’s registration statement on Form S-8 (Registration Statement No. 333-225999).

During the six months ended June 30, 2021, two participants from the Company’s stock incentive plans, were issued 129,298 shares of common stock pursuant to a restricted stock unit agreement. The shares were registered under the Company’s registration statement on Form S-3 (Registration Statement No. 333-229093).

Sale/issuance of unregistered common shares — During the six months ended June 30, 2021, unregistered share activity was comprised of the following transactions.

The Company issued 72,000 shares of unregistered common stock to a vendor at market ($90,720) in connection with services rendered.

Two holders of common stock warrants exercised their warrants in cashless exercises resulting in the issuance of 148,471 shares of common stock. These unregistered shares 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 (“Regulation D Exemption”).

The Company issued 921,222 shares of common stock, under Regulation D Exemption, 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.

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.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

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 3,316,128 shares of the Company’s common stock outstanding as of June 30, 2021, as follows:


			Weighted Average
Expiring During the Year	Warrant	Exercise Price	Exercises Price
Ending December 31,	Shares	per Share	per Share
2021	509,094	$3.30	$	3.30
2022	1,198,149	$1.80 - $5.00		2.94
2023	740,749	$1.80		1.80
2024	269,293	$1.80		1.80
2025	598,843	$1.31 - $2.25		1.80

The following table summarizes the outstanding warrant activity for the six months ended June 30, 2021:


Outstanding, January 1, 2021		4,776,361
Exercised - cashless common shares issued		(267,500)
Expired		(1,192,733)
Outstanding, June 30, 2021		3,316,128

Equity Incentive Plans — The Company has two shareholder approved equity incentive plans. There were no grants or awards during the six months ended June 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 June 30,				Six months ended June 30,
	2021		2020		2021		2020
Stock options	$	12,912	$	41,318	$	29,273	$	89,778
Restricted stock		74,587		271,099		225,495		502,844
Total	$	87,499	$	312,417	$	254,768	$	592,622

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Rental, service and maintenance	$	7,645	$	3,003	$	9,696	$	6,320
Selling, general and administrative		79,854		309,414		245,072		586,302
Total	$	87,499	$	312,417	$	254,768	$	592,622

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.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

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 9. Leases

The Company did not enter into or modify any existing leases during the six months ended June 30, 2021. The current portion of the lease liabilities of $214,664 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 19.6 years, as of June 30,2021 is:


Year Ending December 31,
2021, remaining	$	108,332
2022		217,571
2023		219,140
2024		220,732
2025 and thereafter		2,912,917
Total lease payments		3,678,692
Less imputed interest		(2,306,613)
Present value of lease liabilities	$	1,372,079

Total lease costs under operating leases amounted to $57,129 and $55,356 for the three months, and $114,259 and $110,712 for the six months ended June 30, 2021 and 2020, respectively.

Note 10. Commitments and Contingencies

During the six months ended June 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 7. 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 11. 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.

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

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


	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Revenue Type:
Revenue recognized over time:
Rental of digesters	$	332,589	$	312,279	$	653,194	$	698,533
Revenue recognized at a point in time:
Services		291,783		576,405		583,900		1,177,838
Product sales		2,830,602		385,248		5,258,170		756,902
Total	$	3,454,974	$	1,273,932	$	6,495,264	$	2,633,273

Note 12. 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 six months ended June 30, 2021	$	6,323,061	$	172,203	$	6,495,264
Revenue, for the three months ended June 30, 2021		3,365,791		89,183		3,454,974
Non-current tangible assets, as of June 30, 2021		36,235,312		262,001		36,497,313

2020:
Revenue, for the six months ended June 30, 2020	$	2,447,633	$	185,640	$	2,633,273
Revenue, for the three months ended June 30, 2020		1,221,723		52,209		1,273,932
Non-current tangible assets, as of December 31, 2020		36,972,067		294,413		37,266,480

Major customers — During the three months ended June 30, 2021, one customer represented at least 10% of revenues, accounting for 81.3% of revenues. During the three months ended June 30, 2020, two customers represented at least 10% of revenues, accounting for 37.7% (Gold Medal Group, LLC, an affiliated entity, “GMG”) and 23.2% of revenues. During the six months ended June 30, 2021, one customer represented at least 10% of revenues, 78.4% of revenues. During the six months ended June 30, 2020, two customers represented at least 10% of revenues, 36.8% (GMG) and 11.8% of revenues

As of June 30, 2021, one customer represented at least 10% of accounts receivable, accounting for 68.4% of accounts receivable. As of December 31, 2020 two customers represented at least 10% of accounts receivable, accounting for 50.6% and 11.7% (GMG) of accounts receivable.

Vendor concentration — During the three months ended June 30, 2021, two vendors represented at least 10% of costs of revenue, accounting for 25.3% and 16.8% of costs of revenue. During the three months ended June 30, 2020, one vendor represented at least 10% of costs of revenue, accounting for 40.6% (GMG). During the six months ended June 30, 2021, three vendors represented at least 10% of costs of revenue, accounting for 25%, 17.8% and 14% of costs of revenue. During the six months ended June 30, 2020, one vendor represented at least 10% of costs of revenue, accounting for 32.4% (GMG).

As of June 30, 2021 and December 31, 2020, 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 Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

Note 13. 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.


		June 30,		December 31,
		2021		2020
Assets:
Accounts receivable	(a) (b)	$	82,956	$	206,352
Intangible assets, net, included in other assets	(c)		10,099		20,199
Liabilities:
Accounts payable	(c) (d) (e) (f)		384,698		294,040
Accrued interest payable	(h)		256,370		196,033
Accrued liabilities	(j)		—		917,420
Notes payable	(j)		927,229		—
Long term accrued interest	(g)		1,896,467		1,807,857
Advance from related party	(h)		935,000		935,000
Junior promissory note	(g)		982,613		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 June 30,				Six months ended June 30,
		2021		2020		2021		2020
Management advisory and other fees	(a)	$		$	25,000	$		$	100,000
HEBioT revenue	(b)		134,559		448,079		288,885		855,770
Operating expenses - HEBioT	(d)		14,493		475,583		41,312		774,386
Operating expenses - Selling, general and administrative	(e)		137,944		16,358		137,944		41,514
Operating expenses - Selling, general and administrative	(c) (f)		18,750		110,683		37,500		221,366
Interest expense	(g) (h) (j)		103,643		99,073		205,104		197,021
Debt guarantee fees	(i)		16,875		16,875		33,750		33,750

Summary notes:

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

Note 14. 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 statements were available for issuance are disclosed as subsequent events, while the financial statements

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

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.

Note 15. 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.

The following pages present the Company’s condensed consolidating balance sheet as of June 30, 2021, the condensed consolidating statements of operations for the three and six months ended June 30, 2021 and 2020, and condensed consolidating cash flows for the six months ended June 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 June 30, 2021


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Assets
Cash	$	2,257,929	$	21,131	$	—	$	2,279,060
Restricted cash		—		3,808,751		—		3,808,751
Other current assets		9,880,155		366,925		(6,758,622)		3,488,458
Current assets		12,138,084		4,196,807		(6,758,622)		9,576,269
Restricted cash		—		2,603,440		—		2,603,440
HEBioT facility and other fixed assets		1,171,098		35,317,715		—		36,488,813
MBT facility development and license costs		6,431,359		1,606,500		—		8,037,859
Other assets		1,043,046		881,157		—		1,924,203
Total assets	$	20,783,587	$	44,605,619	$	(6,758,622)	$	58,630,584

Liabilities and stockholders’ equity
Notes, bonds, debts and borrowings	$	6,582,338	$	4,410,525	$	—	$	10,992,863
Other current liabilities		4,677,667		9,773,835		(6,758,622)		7,692,880
Current liabilities		11,260,005		14,184,360		(6,758,622)		18,685,743
Notes, bonds, debts and borrowings		1,642,161		28,868,099		—		30,510,260
Accrued interest		1,896,467		—		—		1,896,467
Total liabilities		14,798,633		43,052,459		(6,758,622)		51,092,470
Redeemable preferred stock		476,560		—		—		476,560
Stockholders' equity:
Attributable to parent		5,508,394		1,553,160		(1,330,738)		5,730,816
Attributable to non-controlling interests						1,330,738		1,330,738
Stockholders’ equity		5,508,394		1,553,160		—		7,061,554
Total liabilities and stockholders’ equity	$	20,783,587	$	44,605,619	$	(6,758,622)	$	58,630,584

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

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


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Revenue	$	3,078,420	$	376,554	$	—	$	3,454,974
Operating expenses
Equipment		1,806,324		—		—		1,806,324
Rental, service and maintenance expense		297,463		—		—		297,463
HEBioT		—		879,491		—		879,491
Selling, general and administrative		1,424,740		587,657		—		2,012,397
Depreciation and amortization		121,013		380,085		—		501,098
Total operating expenses		3,649,540		1,847,233		—		5,496,773
Loss from operations		(571,120)		(1,470,679)		—		(2,041,799)
Other (income) expenses, net		356,727		676,907		—		1,033,634
Net loss	$	(927,847)	$	(2,147,586)	$	—	$	(3,075,433)

Condensed Consolidating Statement of Operations for the six months ended June 30, 2021


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Revenue	$	5,766,162	$	729,102	$	—	$	6,495,264
Operating expenses
Equipment		3,042,340				—		3,042,340
Rental, service and maintenance expense		553,172						553,172
HEBioT		—		1,556,768		—		1,556,768
Selling, general and administrative		2,679,938		978,416		—		3,658,354
Depreciation and amortization		245,864		757,067		—		1,002,931
Total operating expenses		6,521,314		3,292,251		—		9,813,565
Loss from operations		(755,152)		(2,563,149)		—		(3,318,301)
Other (income) expenses, net		747,065		1,344,790		—		2,091,855
Net loss	$	(1,502,217)	$	(3,907,939)	$	—	$	(5,410,156)

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

Condensed Consolidating Statement of Cash Flows for the six months ended June 30, 2021


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Cash flows used in operating activities:
Net loss	$	(1,502,217)	$	(3,907,939)	$	—	$	(5,410,156)
Non-cash adjustments to reconcile net loss to net cash used in operations		839,324		830,277		—		1,669,601
Changes in operating assets and liabilities		(5,699,080)		5,179,330		—		(519,750)
Net cash used in operations		(6,361,973)		2,101,668		—		(4,260,305)

Cash flow used in investing activities:
Purchases (sales) of facility, equipment, fixtures and vehicles		—		(184,914)		—		(184,914)
Other investing activities		(28,388)		—		—		(28,388)
Net cash used in investing activities		(28,388)		(184,914)		—		(213,302)

Cash flows from financing activities:
Issuances of debt and equity		6,895,618		—		—		6,895,618
Repayments of debt		(627,163)		—		—		(627,163)
Net cash provided by financing activities		6,268,455		—		—		6,268,455
Effect of exchange rate on cash		(92)		—		—		(92)
Cash – beginning of period (restricted and unrestricted)		2,379,927		4,516,568		—		6,896,495
Cash – end of period (restricted and unrestricted)	$	2,257,929	$	6,433,322	$	—	$	8,691,251

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


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Revenue	$	381,033	$	892,899	$	—	$	1,273,932
Operating expenses
HEBioT		—		1,020,277		—		1,020,277
Rental, service and maintenance expense		151,695		—		—		151,695
Equipment		—		—		—		—
Selling, general and administrative		1,615,049		282,393		—		1,897,442
Depreciation and amortization		124,612		445,152		—		569,764
Total operating expenses		1,891,356		1,747,822		—		3,639,178
Loss from operations		(1,510,323)		(854,923)		—		(2,365,246)
Other (income) expenses, net		378,737		641,227		—		1,019,964
Net loss	$	(1,889,060)	$	(1,496,150)	$	—	$	(3,385,210)

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BioHiTech Global, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2021 and 2020 and as of June 30, 2021 and December 31, 2020

Condensed Consolidating Statement of Operations for the six months ended June 30, 2020


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Revenue	$	1,250,242	$	1,383,031	$	—	$	2,633,273
Operating expenses
HEBioT		—		1,832,704		—		1,832,704
Rental, service and maintenance expense		412,530		—		—		412,530
Equipment		146,404		—		—		146,404
Selling, general and administrative		3,283,828		532,037		—		3,815,865
Depreciation and amortization		249,346		935,620		—		1,184,966
Total operating expenses		4,092,108		3,300,361		—		7,392,469
Loss from operations		(2,841,866)		(1,917,330)		—		(4,759,196)
Other (income) expenses, net		726,965		1,293,023		—		2,019,988
Net loss	$	(3,568,831)	$	(3,210,353)	$	—	$	(6,779,184)

Condensed Consolidating Statement of Cash Flows for the six months ended June 30, 2020


	Parent		Entsorga
	and other		West
	Subsidiaries		Virginia LLC		Eliminations		Consolidated
Cash flows used in operating activities:
Net loss	$	(3,568,831)	$	(3,210,353)	$	—	$	(6,779,184)
Non-cash adjustments to reconcile net loss to net cash used in operations		1,259,695		1,013,371		—		2,273,066
Changes in operating assets and liabilities		(1,845,609)		2,439,116		—		593,507
Net cash used in operations		(4,154,745)		242,134		—		(3,912,611)

Cash flow used in investing activities:
Purchases of construction in-progress, equipment, fixtures and vehicles		(2,649)		(48,082)		—		(50,731)
Other investing activities		(31,996)		—		—		(31,996)
Net cash used in investing activities		(34,645)		(48,082)		—		(82,727)

Cash flows from financing activities:
Issuances of debt and equity		2,706,750		—		—		2,706,750
Repayments of debt		(2,496)		—		—		(2,496)
Net cash provided by financing activities		2,704,254		—		—		2,704,254
Effect of exchange rate on cash		(20,208)		—		—		(20,208)
Cash – beginning of period (restricted and unrestricted)		1,847,526		3,689,426		—		5,536,952
Cash – end of period (restricted and unrestricted)	$	342,182	$	3,883,478	$	—	$	4,225,660

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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 continues 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 it 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.

Other Offerings

In addition to the Company’s core products focused on reducing the environmental impact of the waste management industry, the Company may enter into distributorships, or like agreements, as a result of symmetry with our

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customers and prospects. In 2020 the Company entered into a distribution agreement with Altapure, LLC, to distribute its patented line of ultrasonic based disinfecting, environmentally-friendly, automated and touchless high-level sub-micron aerosol disinfection system focused on demand for post-COVID environmental technologies. The Company recognized its first sale under this agreement in October 2020.

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

compared to the three months ended June 30, 2020

Overview

The Company continued its revenue growth in the quarter ended June 30, 2021 with total revenues of $3,454,974 increasing 14% over the first quarter of 2021, 38% over the fourth quarter of 2020 and 171% over the comparative second quarter of 2020. Total revenues of $3,454,974 mark the third consecutive new quarterly high since the Company went public in 2015. During the second quarter of 2021, all of the business lines reported revenue growth over the first quarter of 2021.

The overall contribution (revenues, less direct costs) increased to 14% of revenue in the second quarter of 2021, as compared to 8% in the comparative second quarter of 2020, however decreased from 29% in the first quarter of 2021 primarily driven by supply chain pressures and an increase in stainless steel prices in equipment sales.

Selling, general and administrative expenses as a percentage of revenues increased to 58% in the second quarter of 2021, as compared to 54% in the first quarter of 2021 and decreased as compared to 149% in the comparative second quarter of 2020. The increase in the second quarter was the result of a decrease of $190,309 in the Digester and Corporate line offset by an increase of $305,264 in the HEBioT line.

The loss from operations as a percentage of revenue decreased to 59% in in the second quarter of 2021, as compared to 186% in the comparative second quarter of 2020, and decreased from 42% in the first quarter of 2021.

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 second quarter revenues increased in the second quarter of 2021 by 15% to $3,078,420 as compared to the first quarter revenues of $2,687,742. The revenues of the HEBioT line have continued to be hampered by maintenance and repairs shutdowns at its SRF customer resulting in a 7% increase in revenues to $376,554 during the second quarter of 2021 as compared to the first quarter of 2021. As compared to the second quarter of 2020, the second quarter of 2021 Digester and Corporate line of business revenues increased by over 700% from $381,033 to $3,078,420 driven by Carnival Cruise Lines equipment sales, while the HEBioT line decreased by 58% from $892,899 to $376,554 due to the continuing maintenance and repairs shutdowns at its SRF customer, as well as by an adjustment in 2020 relating to a take-or-pay provision in the SRF customer’s contract.

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The results of operations by business line are presented below.


	Three months ended June 30,
	Digester and Corporate						HEBioT						Total
	2021		2020		Change		2021		2020		Change		2021		2020		Change
Revenue
Equipment sales	$	2,630,993	$	—	$	2,630,993	$	—	$	—		—	$	2,630,993	$	—	$	2,630,993
Rental, services and maintenance		447,427		356,033		91,394		—		—		—		447,427		356,033		91,394
HEBioT		—		—		—		376,554		892,899		(516,345)		376,554		892,899		(516,345)
Management and advisory fees and other		—		25,000		(25,000)		—		—		—		—		25,000		(25,000)
Total Revenue		3,078,420		381,033		2,697,387		376,554		892,899		(516,345)		3,454,974		1,273,932		2,181,042
Operating Expenses
Equipment sales		1,806,324		—		1,806,324		—		—		—		1,806,324		—		1,806,324
Rental, services and maintenance		297,463		151,695		145,768		—		—		—		297,463		151,695		145,768
HEBioT		—		—		—		879,491		1,020,277		(140,786)		879,491		1,020,277		(140,786)
Selling, general and administrative		1,424,740		1,615,049		(190,309)		587,657		282,393		305,264		2,012,397		1,897,442		114,955
Depreciation and amortization		121,013		124,612		(3,599)		380,085		445,152		(65,067)		501,098		569,764		(68,666)
Total operating expenses		3,649,540		1,891,356		1,758,184		1,847,233		1,747,822		99,411		5,496,773		3,639,178		1,857,595
Loss from operations		(571,120)		(1,510,323)		939,203		(1,470,679)		(854,923)		(615,756)		(2,041,799)		(2,365,246)		323,447
Other expenses, net		356,727		378,737		(22,010)		676,907		641,227		35,680		1,033,634		1,019,964		13,670
Net loss	$	(927,847)	$	(1,889,060)	$	961,213	$	(2,147,586)	$	(1,496,150)	$	(651,436)	$	(3,075,433)	$	(3,385,210)	$	309,777

Contribution

The contribution by business line and product is presented below.


	Three months ended June 30,
	Digester and Corporate									HEBioT									Total
	2021			2020			Change			2021			2020			Change			2021			2020			Change
Contribution
Equipment sales	$	824,669		$	—		$	824,669		$	—		$	—		$	—		$	824,669		$	—		$	824,669
		31	%		—			31	%		—			—			—			31	%		—			31	%
Rental, services and maintenance		149,964			204,338			(54,374)			—			—			—			149,964			204,338			(54,374)
		34	%		57	%		(23)	%		—			—			—			34	%		57	%		(23)	%
HEBioT		—			—			—			(502,937)			(127,378)			(375,559)			(502,937)			(127,378)			(375,559)
		—			—			—			(134)	%		(14)	%		(120)	%		(134)	%		(14)	%		(120)	%
Management and advisory fees and other		—			25,000			(25,000)			—			—			—			—			25,000			(25,000)
		—			100	%		(100)	%		—			—			—			—			100	%		(100)	%
Total contribution	$	974,633		$	229,338		$	745,295		$	(502,937)		$	(127,378)		$	(375,559)		$	471,696		$	101,960		$	369,736
		32	%		60	%		(28)	%		(134)	%		(14)	%		(119)	%		14	%		8	%		6	%

The overall Digester and Corporate contribution increased to $974,633 during the second quarter as compared to $229,338 in the comparative second quarter of 2020 and $1,196,017 during the first quarter of 2021. These 2021 quarterly increases of 2020 were primarily the result of increased digester sales to Carnival Cruise Lines. The contribution margin during the second quarter of 2021 was 32%, as compared to 60% during the comparative second quarter of 2020 prior to the deliveries of digesters to Carnival Cruise Lines. During the first quarter of 2021, the contribution margin was 44%. The decrease from the first quarter of 2021 to the second quarter of 2021 was driven by supply chain pressures and an increase in stainless steel prices in equipment sales.

As noted previously, revenues have been constrained at the HEBioT facility and as such, with a high level of fixed costs for each of the second quarters of 2021 and 2020, as well as the first quarter of 2021, the facility has had negative contributions.

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Selling, General and Administrative Expenses


	Three months ended June 30,
	Digester and Corporate						HEBioT						Total
	2021		2020		Change		2021		2020		Change		2021		2020		Change
Selling, general and administrative expenses
Staffing	$	770,678	$	701,372	$	69,306	$	81,065	$	44,337	$	36,728	$	851,743	$	745,709	$	106,034
Stock based compensation		79,854		309,414		(229,560)		—		—		—		79,854		309,414		(229,560)
Professional fees		239,413		300,053		(60,640)		33,138		90,609		(57,471)		272,551		390,662		(118,111)
Office operations		124,425		117,434		6,991		162,475		31,589		130,886		286,900		149,023		137,877
Other expenses		210,370		186,776		23,594		310,979		115,858		195,121		521,349		302,634		218,715
Total Selling, general and administrative expenses	$	1,424,740	$	1,615,049	$	(190,309)	$	587,657	$	282,393	$	305,264	$	2,012,397	$	1,897,442	$	114,955

Consolidated staffing and stock based compensation expenses of $931,597 during the second quarter of 2021 reflect the impact of staffing reductions initiated in 2020, offset by increases in management across all lines and administrative staffing at the HEBioT facility, resulting in a decrease of $123,526 (12%) from the second quarter of 2020. Professional fees decreased by $118,111 primarily due to a reduction in investor relations fees. Office operations expenses increased by $137,877 as compared to the second quarter of 2020 with the majority of the increase attributable to the HEBioT facility, which increased primarily due to a local property tax. Other expenses increased by $218,716 as compared to the second quarter of 2020 due to an increase of $195,121 at the HEBioT facility primarily due to an adjustment of the West Virginia landfill assessment.

Depreciation and Amortization

Consolidated depreciation and amortization of $501,098 for the second quarter of 2021 decreased from $569,764 for the second quarter of 2020 due to adjustments in the depreciation expense over the remaining lives of assets at the HEBioT faculty.

Other Expenses

Consolidated other expenses of $1,033,634 for the second quarter of 2021 decreased from $1,058,221 during the first quarter of 2021 primarily as a result of lower absorbed equity method losses from our investment in East Shore Port Ventures, LLC, and increased from $1,019,964 during the comparative second quarter of 2020 due a decrease in income earned on restricted cash and an increase in interest.

Results of operations for the six months ended June 30, 2021

compared to the six months ended June 30, 2020

Overview

The Company continued its revenue growth during the six months ended June 30, 2021 with total revenues of $6,495,264 increasing 147% over the comparative period in of 2020.

The overall contribution rate (revenues, less direct costs) increased to 21% during the six months ended June 30, 2021, as compared to 9% in the comparative period in of 2020, increasing to $1,342,984 from $241,635, respectively.

Selling, general and administrative expenses as a percentage of revenues decreased to 56% during the six months ended June 30, 2021, as compared to 145% in the comparative period in of 2020, decreasing to $3,658,354 from $3,815,865, respectively.

The loss from operations as a percentage of revenue decreased to 51% during the six months ended June 30, 2021, as compared to 181% in the comparative period in of 2020.

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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 $755,152 during the six months ended June 30, 2021 from $2,841,866 during the six months ended June 30, 2020.

During the six months ended June 30, 2021 revenues at the HEBiot facility were $729,102, a decrease of $653,929 from the six months ended June 30, 2020, which was offset in part by a $275,936 decrease in the related direct costs, resulting in a gross negative contribution of $827,666 and $449,673 during the respective periods. The HEBioT facility have continued to be hampered by maintenance and repairs shutdowns at its SRF customer. In addition to the increase in negative contribution, the facility’s selling, general and administrative expenses increased by $446,379 driven by increases in property taxes and landfill assessments.

The results of operations by business line are presented below.


	Six months ended June 30,
	Digester and Corporate						HEBioT						Total
	2021		2020		Change		2021		2020		Change		2021		2020		Change
Revenue
Equipment sales	$	4,897,506	$	323,116	$	4,574,390	$	—	$	—		—	$	4,897,506	$	323,116	$	4,574,390
Rental, services and maintenance		868,656		827,126		41,530		—		—		—		868,656		827,126		41,530
HEBioT		—		—		—		729,102		1,383,031		(653,929)		729,102		1,383,031		(653,929)
Management and advisory fees and other		—		100,000		(100,000)		—		—		—		—		100,000		(100,000)
Total Revenue		5,766,162		1,250,242		4,515,920		729,102		1,383,031		(653,929)		6,495,264		2,633,273		3,861,991
Operating Expenses
Equipment sales		3,042,340		146,404		2,895,936		—		—		—		3,042,340		146,404		2,895,936
Rental, services and maintenance		553,172		412,530		140,642		—		—		—		553,172		412,530		140,642
HEBioT		—		—		—		1,556,768		1,832,704		(275,936)		1,556,768		1,832,704		(275,936)
Selling, general and administrative		2,679,938		3,283,828		(603,890)		978,416		532,037		446,379		3,658,354		3,815,865		(157,511)
Depreciation and amortization		245,864		249,346		(3,482)		757,067		935,620		(178,553)		1,002,931		1,184,966		(182,035)
Total operating expenses		6,521,314		4,092,108		2,429,206		3,292,251		3,300,361		(8,110)		9,813,565		7,392,469		2,421,096
Loss from operations		(755,152)		(2,841,866)		2,086,714		(2,563,149)		(1,917,330)		(645,819)		(3,318,301)		(4,759,196)		1,440,895
Other expenses, net		747,065		726,965		20,100		1,344,790		1,293,023		51,767		2,091,855		2,019,988		71,867
Net loss	$	(1,502,217)	$	(3,568,831)	$	2,066,614	$	(3,907,939)	$	(3,210,353)	$	(697,586)	$	(5,410,156)	$	(6,779,184)	$	1,369,028

Contribution

The contribution by business line and product is presented below.


	Six months ended June 30,
	Digester and Corporate									HEBioT									Total
	2021			2020			Change			2021			2020			Change			2021			2020			Change
Contribution
Equipment sales	$	1,855,166		$	176,712		$	1,678,454		$	—		$	—		$	—		$	1,855,166		$	176,712		$	1,678,454
		38	%		55	%		(17)	%		—			—			—			38	%		55	%		(17)	%
Rental, services and maintenance		315,484			414,596			(99,112)			—			—			—			315,484			414,596			(99,112)
		36	%		50	%		(14)	%		—			—			—			36	%		50	%		(14)	%
HEBioT		—			—			—			(827,666)			(449,673)			(377,993)			(827,666)			(449,673)			(377,993)
		—			—			—			(114)	%		(33)	%		(81)	%		(114)	%		(33)	%		(81)	%
Management and advisory fees and other		—			100,000			(100,000)			—			—			—			—			100,000			(100,000)
		—			100	%		(100)	%		—			—			—			—			100	%		(100)	%
Total contribution	$	2,170,650		$	691,308		$	1,479,342		$	(827,666)		$	(449,673)		$	(377,993)		$	1,342,984		$	241,635		$	1,101,349
		38	%		55	%		(17)	%		(114)	%		(33)	%		(81)	%		21	%		9	%		12	%

The overall Digester and Corporate contribution increased to $2,170,650 during the six months ended June 30, 2021 as compared to $691,308 in the comparative first half of 2020. This increases were primarily the result of increased digester sales to Carnival Cruise Lines. The contribution margin during the first half of 2021 was 38%, as compared to 55% during the comparative first half of 2020 prior to the deliveries of digesters to Carnival Cruise Lines.

As noted previously, revenues have been constrained at the HEBioT facility and as such, with a high level of fixed costs for each of the first halves of 2021 and 2020, the facility has had negative contributions.

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Selling, General and Administrative Expenses


	Six months ended June 30,
	Digester and Corporate						HEBioT						Total
	2021		2020		Change		2021		2020		Change		2021		2020		Change
Selling, general and administrative expenses
Staffing	$	1,339,297	$	1,467,140	$	(127,843)	$	178,766	$	80,216	$	98,550	$	1,518,063	$	1,547,356	$	(29,293)
Stock based compensation		245,072		586,303		(341,231)		—		—		—		245,072		586,303		(341,231)
Professional fees		482,254		556,370		(74,116)		51,788		102,687		(50,899)		534,042		659,057		(125,015)
Office operations		244,929		230,495		14,434		342,673		119,324		223,349		587,602		349,819		237,783
Other expenses		368,386		443,520		(75,134)		405,189		229,810		175,379		773,575		673,330		100,245
Total Selling, general and administrative expenses	$	2,679,938	$	3,283,828	$	(603,890)	$	978,416	$	532,037	$	446,379	$	3,658,354	$	3,815,865	$	(157,511)

Consolidated staffing and stock based compensation expenses of $1,763,135 during the first half of 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, resulting in a decrease of $370,524 (17%) from the first half of 2020. Professional fees decreased by $125,015 primarily due to a reduction in investor relations fees. Office operations expenses increased by $237,783 as compared to the second quarter of 2020, driven primarily by a local property tax revaluation at the HEBioT facility. Other expenses increased by $100,245 as compared to the first half of 2020 due to an increase of $175,379 at the HEBioT facility primarily due to an adjustment of the West Virginia landfill assessment and an increase in bond trust fees.

Depreciation and Amortization

Consolidated depreciation and amortization of $1,002,931 during the six months ended June 30, 2021 decreased by $182,035 from $1,184,966 during the six months ended June 30, 2020 due to adjustments initiated in 2021 in the depreciation expense over the remaining lives of assets at the HEBioT faculty.

Other Expenses

Consolidated other expenses of $2,091,855 during the six months ended June 30, 2021 increased by $71,867 from $2,019,988 during the six months ended June 30, 2020 due absorption of a $32,749 loss from an unconsolidated investment and increases in the amortization of debt discounts and costs due to the increasing balance of the debt and a reduction in interest income in bond related trust funds due to lower interest rates.

Liquidity and Capital Resources

For the six months ended June 30, 2021, the Company had a consolidated net loss of $5,410,156, incurred a consolidated loss from operations of $3,318,301 and used net cash in consolidated operating activities of $4,260,305. At June 30, 2021, consolidated total stockholders’ equity amounted to $7,061,554, consolidated stockholders’ equity attributable to parent amounted to $5,730,816, and the Company had a consolidated working capital deficit of $9,109,474. While the Company had not met certain of its senior secured note’s financial covenants as of June 30, 2021 and has received a waiver for such non-compliance through June 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 $4,042,847 has been classified as current debt. The Company does not yet have a history of financial profitability. 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 June 30, 2021 and December 31, 2020, the Company had unrestricted cash balances of $2,279,060 and $2,403,859, respectively. In addition, as of June 30, 2021 and December 31, 2020, the Company had restricted cash balances of $6,412,191 and $4,492,636 relating to its West Virginia EDA senior secured bonds.

Borrowing and Debt

See Note 7. Notes, Bonds, Debts and Borrowings to the Financial Statements filed herewith.

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Cash Flows

Cash flows used in operating activities — We used $4,260,305 of cash in operating activities during the six months ended June 30, 2021, an increase of $347,694 over $3,912,611 of cash used in operating activities during the six months ended June 30, 2020. Excluding the change in operating assets and liabilities, we used $3,740,555 of cash in operating activities during the six months ended June 30, 2021, a decrease of $765,563 over $4,506,118 of cash used in operating activities during the six months ended June 30, 2020. Our net loss for the six months ended June 30, 2021 of $5,410,156 was reduced by $1,669,601 of non-cash operating income and expenses as compared to a net loss for the six months ended June 30, 2020 of $6,779,184 that was reduced by $2,273,066 of non-cash operating income and expenses.

Cash flows used in investing activities — $213,302 of cash was used in investing activities during the six months ended June 30, 2021, as compared to a usage of $82,727 during the six months ended June 30, 2020.

Cash flows from financing activities — Cash flows from financing activities amounted to $6,268,455 during the six months ended June 30, 2021, an increase of $3,564,201 from $2,704,254 of cash flows from financing activities during the six months ended June 30, 2020. This increase was due to an increase in cash flows from the issuance of common stock shares of $6,895,618, offset in part by debt repayments of $627,163, as compared to $1,560,450, $421,300 and $725,000 raised during the six months ended June 30, 2020 through a preferred stock private placement, a Payroll Protection Loan and net related party advances, respectively, offset by debt repayments of $2,496.

Off Balance Sheet Arrangements

We have not entered into or are a party to any off-balance sheet arrangements during the six months ended June 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 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.

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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.

None.

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.

August 9, 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.