ASSISTED 4 LIVING, INC. – 10-Q – Management's Discussion and Analysis of Financial Condition and Results
The following discussion and analysis of our results of operations and financial
condition for quarterly period ended September 30, 2021, should be read in
conjunction with our condensed consolidated financial statements and the related
notes and the other financial information that are included elsewhere in this
Quarterly Report. This discussion includes forward-looking statements based upon
current expectations that involve risks and uncertainties, such as our plans,
objectives, expectations, and intentions. Forward-looking statements are
statements not based on historical information and which relate to future
operations, strategies, financial results, or other developments.
Forward-looking statements are based upon estimates, forecasts, and assumptions
that are inherently subject to significant business, economic, and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward-looking
statements. Actual results and the timing of events could differ materially from
those anticipated in these forward-looking statements as a result of a number of
factors. We use words such as "anticipate," "estimate," "plan," "project,"
"continuing," "ongoing," "expect," "believe," "intend," "may," "will," "should,"
"could," and similar expressions to identify forward-looking statements.
As used in this quarterly report, the terms "we," "us," "our" and the "Company"
means, collectively, Assisted 4 Living, Inc. ("A4L") and its wholly owned
subsidiaries, Banyan Pediatric Care Centers, Inc, including its wholly owned
subsidiaries ("Banyan") and the Trillium Subsidiaries, including their wholly
owned subsidiaries ("Trillium"), unless otherwise indicated.
Assisted 4 Living, Inc was incorporated in Nevada on May 24, 2017, with an
objective to operate as a facilitator of assisted living projects and related
services. On March 23, 2021, A4L entered into a Plan of Merger (the "Plan of
Merger") with its wholly owned subsidiary, BPCC Acquisition, Inc., a Florida
corporation ("Merger Sub"), and Banyan Pediatric Care Centers, Inc., a Florida
Under the terms of the Plan of Merger, Merger Sub merged with and into Banyan
with Banyan surviving the merger and becoming a wholly owned subsidiary of A4L.
A4L also had a wholly owned subsidiary, Assisted 2 Live, Inc., a Florida
corporation ("A2L"), which was incorporated on June 15, 2017. On April 30, 2021,
the Board of Directors of A4L approved the discontinuance and disposal of the
operations in A2L. The operations of A2L are reflected on our condensed
consolidated statement of operations for the first thirty days of the
three-month period ended June 30, 2021 as a loss from discontinued operations.
On June 10, 2021, we entered into an Amended and Restated Membership Interest
Purchase Agreement (the "Restated Purchase Agreement"), by and among the
Company, Richard T. Mason ("Mason"), G. Shayne Bench ("Bench") and Trillium
Healthcare Group, LLC, a Florida limited liability company ("Trillium") to
acquire all of the issued and outstanding ownership interests of Fairway
Healthcare Properties, LLC ("FHP") and Trillium Healthcare Consulting, LLC
(together with FHP, the "Trillium Subsidiaries") from Trillium. The Trillium
acquisition closed and was effective June 10, 2021.
As a result of the above stated transactions A4L now operates as the parent
company of an organization that delivers skilled nursing and therapy services to
pediatric patients through Banyan and to the senior population through our
senior living communities in the Trillium subsidiaries.
Our principal executive office is located at 5115 East SR 64 Bradenton, Florida
34208 and our telephone number is (855) 668-3331. Our corporate website is www.assisted4living.com.
We have not been subject to any bankruptcy, receivership or similar proceeding.
Our Current Business
Banyan was organized under the laws of the State of Florida on January 15, 2019,
for the purpose of providing health care services for medically fragile and
chronically ill children. Specifically, to open and operate Prescribed Pediatric
Extended Care ("PPEC") centers in the State of Florida. Our PPEC centers
provide, among other services, daily medical care for medically fragile and
chronically ill children whose current locations are in Florida.
PPEC centers provide up to 12 hours of daily care for families struggling with
the unique and complex medical needs of their children and allow the parents of
children with special needs some independence and the opportunity to still
pursue their professional goals.
On May 1, 2020, we acquired a PPEC facility located in St. Petersburg, Florida.
The facility is licensed to provide PPEC services for up to 81 children. All
State and County accreditations to run the facility through January 2022 are in
On October 12, 2019, we entered into a lease for commercial real estate in New
Port Richey Florida. The lease commenced on September 1, 2020, with an initial
term of 7 years. Construction for this location has been completed and all State
and County accreditations to run the facility through July of 2023.
On August 24, 2019, we entered into a lease for commercial real estate in
Sarasota Florida. The lease commenced on February 1, 2020, with an initial term
of 5 years. Construction for this location has been completed and all State and
County accreditations to run the facility through April of 2023. In May of 2021
this location opened and started to admit children for services.
The Trillium Subsidiaries were organized under the laws of the State of Florida
on February 9, 2012, for the purpose of acquiring and managing long term care
facilities, such as skilled nursing facilities and assisted living centers.
Trillium has 26 facilities which primarily provide health care services for
seniors that require daily care services. The facilities provide room and board,
routine daily care services, post-acute care including rehabilitation and memory
A Skilled Nursing Facility is a state licensed and regulated in-patient
rehabilitation and medical treatment center staffed with trained medical
professionals. They provide the medically necessary services of licensed nurses,
physical and occupational therapists, and speech pathologists.
The residents who come to our Trillium facilities receive skilled medical,
respiratory, physical, occupational, and other therapies tailored to their
individual needs. Trillium facilities are operated and staffed by registered
nurses, licensed practical nurses, and other qualified personnel such as
certified nursing assistants, physical and occupational therapists, and speech
language pathologists. These specialized health care professionals are
experienced in treating the frail and medically complex elderly residents and
administering required medications and other therapies.
The Trillium facilities provide 24/7 care for their residents.
We lease and operate 26 Trillium facilities in four states: Florida, Georgia,
Iowa, and Nebraska with 1,685 total licensed beds (1,546 skilled nursing, 139
assisted living) and 36 independent living apartments. The breakdown by state is
as follows: Florida - 1 skilled nursing facility; Georgia - 1 skilled nursing
facility; Iowa - 16 skilled nursing facilities, 2 independent living centers and
1 assisted living centers; Nebraska - 4 skilled nursing facilities and 1
assisted living center.
Skilled nursing and assisted living facilities are regulated and licensed by
each state's licensing agency. The licensing agency is responsible for the
administration of the Medicaid program, licensure and regulation of health
facilities. Our skilled nursing facilities are also Medicare certified with
Centers of Medicare and Medicaid Services (CMS).
Trillium and Banyan reimbursement rates are determined by CMS for Medicare and
each state's Medicaid program. These rates could be significantly affected by
any future changes in Medicare or Medicaid reimbursement. To receive
authorization to be admitted to a skilled nursing facility or a PPEC facility a
resident or child must have a qualifying diagnosis and a doctor's order from a
Our plans include expansion into multiple states, and we will be subject to the
regulations, licensure requirements and processes, and reimbursement rates in
each of those states. Each state manages their own program requirements,
regulations and reimbursement programs. Our projected financial plans in these
expansion states could be impacted by any changes or barriers to entry in each
of these states as they expand.
Health care operations are highly regulated by both state and federal government
agencies. Regulation of health care services is an ever-evolving area of law
that varies from jurisdiction to jurisdiction. Regulatory agencies generally
have discretion to issue regulations and interpret and enforce laws and rules.
Changes in applicable laws, statutes, regulations and interpretive guidance
occur frequently. In addition, government agencies may impose taxes, fees or
other assessments upon Banyan at any time.
We are also subject to certain state laws prohibiting the payment of
remuneration for patient or business referrals and the provision of services
where a financial relationship exists between a referring person or entity and
the entity providing the service. Federal laws governing our activities include
regulation under the Medicare and Medicaid programs. Federal fraud and abuse
laws prohibit or restrict, among other things, the payment of remuneration to
parties in a position to influence or cause the referral of patients or
business, as well as the filing of false claims. Government enforcement
authorities have become increasingly active in recent years in their review and
scrutiny of various sectors of the health care industry.
Changes in or new interpretations of these laws could have an adverse effect on
our methods and costs of doing business. Further, failure to comply with such
laws could adversely affect the ability to continue to provide, or receive
reimbursement for, our services, and could subject A4L, its subsidiaries, and
its officers and employees to civil and criminal penalties. There can be no
assurance that A4L or its subsidiaries will not encounter regulatory impediments
that could adversely affect the ability to open facilities or to expand the
services currently planned to provide at the facilities.
HIPAA, HITECH Act, State Privacy Laws and Breach Notification Laws.
HIPAA and the regulations adopted under HIPAA are intended to improve the
portability and continuity of health insurance coverage and simplify the
administration of health insurance claims and related transactions.
The HITECH Act modified certain provisions of HIPAA by, among other things,
extending the privacy and security provisions to business associates, mandating
new regulations around electronic health records, expanding enforcement
mechanisms, and increasing penalties for violations.
On January 25, 2013, the U.S. Department of Health and Human Services ("HHS"),
as required by the HITECH Act, issued the Final Omnibus Rules that provide final
modifications to HIPAA rules to implement the HITECH Act.
The HITECH Act also contains a number of provisions that provide incentives for
states to initiate certain programs related to health care and health care
technology, such as electronic health records. While provisions such as these
will not apply to us directly, states wishing to apply for grants under the
HITECH Act, or otherwise participating in such programs, may impose new health
care technology requirements on us through our expected contracts with state
All health plans are considered covered entities subject to HIPAA. HIPAA
generally requires health plans, as well as their providers and vendors, to: (1)
protect patient privacy and safeguard individually identifiable health
information; and (2) establish the capability to receive and transmit
electronically certain administrative health care transactions, such as claims
payments, in a standardized format.
Specifically, the HIPAA Privacy Rule regulates use and disclosure of
individually identifiable health information, known as "protected health
information" ("PHI"). The HIPAA Security Rule requires covered entities to
implement administrative, physical and technical safeguards to protect the
security of electronic PHI. Certain provisions of the security and privacy
regulations apply to business associates (entities that handle PHI on behalf of
covered entities), and business associates are subject to direct liability for
violation of these provisions. Furthermore, a covered entity may be subject to
penalties as a result of a business associate violating HIPAA, if the business
associate is found to be an agent of the covered entity.
Covered entities must report breaches of unsecured PHI to affected individuals
without unreasonable delay, but not to exceed 60 days of discovery of the breach
by a covered entity or its agents. Notification must also be made to HHS and, in
certain situations involving large breaches, to the media. HHS is required to
publish on its website a list of all covered entities that report a breach
involving more than 500 individuals. All non-permitted uses or disclosures of
unsecured PHI are presumed to be breaches unless the covered entity or business
associate establishes that there is a low probability the information has been
compromised. Various state laws and regulations may also require us to notify
affected individuals in the event of a data breach involving individually
HIPAA violations by covered entities may result in civil and criminal penalties.
Covered entities could face civil monetary penalties up to an annual maximum of
$1,500,000 for uncorrected violations based on willful neglect. HHS enforces the
regulations and performs audits to confirm compliance. Investigations of
violations that indicate willful neglect, for which penalties are mandatory, are
statutorily required. HHS may also resolve HIPAA violations through informal
means, such as allowing a covered entity to implement a corrective action plan,
but HHS has the discretion to move directly to impose monetary penalties and is
required to impose penalties for violations resulting from willful neglect. In
addition, state attorneys general are authorized to bring civil actions seeking
either injunctions or damages in response to violations of HIPAA privacy and
security regulations that threaten the privacy of state residents.
A4L and its subsidiaries enforce a HIPAA compliance plan, which complies with
the HIPAA privacy and security regulation, also provided are dedicated resources
to monitor compliance with our HIPAA compliance program.
A4L and subsidiaries, its providers, and certain of its vendors are also subject
to numerous other privacy and security laws and regulations at the federal and
state levels. We remain subject to any federal or state privacy-related laws
that are more restrictive than the privacy regulations issued under HIPAA. These
laws vary and violations may result in additional penalties.
Fraud and Abuse Laws. Federal and state enforcement authorities have prioritized
the investigation and prosecution of health care fraud, waste and abuse. Fraud,
waste and abuse prohibitions encompass a wide range of operating activities,
including kickbacks or other inducements for referral of members, billing for
unnecessary medical services by a provider and improper marketing and violation
of patient privacy rights. Companies involved in public health care programs
such as Medicaid and Medicare are required to maintain compliance programs to
detect and deter fraud, waste and abuse, and are often the subject of fraud,
waste and abuse investigations and audits. The regulations and contractual
requirements applicable to participants in these public-sector programs are
complex and subject to change. Although we have structured a compliance program
with care in an effort to meet all statutory and regulatory requirements, our
policies and procedures will be continuously under review and subject to updates
and our training and education programs will always be evolving. We intend to
invest significant resources towards our compliance efforts.
False Claims Act. We are subject to federal and state laws and regulations that
apply to the submission of information and claims to various agencies. For
example, the federal False Claims Act provides, in part, that the federal
government may bring a lawsuit against any person or entity who it believes has
knowingly presented, or caused to be presented, a false or fraudulent request
for payment from the federal government, or who has made a false statement or
used a false record to get a claim approved. The federal government has taken
the position that claims presented in violation of the federal anti-kickback
statute may be considered a violation of the federal False Claims Act.
Violations of the False Claims Act are punishable by treble damages and
penalties of up to a specified dollar amount per false claim. In addition, a
special provision under the False Claims Act allows a private person (for
example, a "whistleblower" such as a disgruntled former associate, competitor or
member) to bring an action under the False Claims Act on behalf of the
government alleging that an entity has defrauded the federal government and
permits the private person to share in any settlement of, or judgment entered
in, the lawsuit. A number of states, including Florida, have adopted false
claims acts that are similar to the federal False Claims Act.
Medicare and Medicaid Regulations. As a provider of services under the Medicare
and Medicaid programs (the "Programs"), we are subject to federal and state laws
and regulations governing reimbursement procedures and practices. These laws
include the Medicare and Medicaid fraud and abuse statutes and regulations
which, among other provisions, prohibit the payment or receipt of any form of
remuneration in return for referring business or patients to providers for which
payments are made by a governmental health care program. Violation of these laws
may result in civil and criminal penalties, including substantial fines, loss of
the right to participate in the Programs and imprisonment of responsible
individuals. In addition, HIPAA expanded the federal government's fraud and
abuse enforcement powers. Among other provisions, HIPAA expands the federal
government's authority to prosecute fraud and abuse beyond Medicare and Medicaid
to all payors; makes exclusion from the Programs mandatory for a minimum of five
years for any felony conviction relating to fraud; requires that organizations
contracting with another organization or individual take steps to be informed as
to whether the organization or individual is excluded from Medicare and Medicaid
participation; and enhances civil penalties by increasing the amount of fines
permitted. These laws also include a prohibition on referrals contained in the
Omnibus Budget Reconciliation Act of 1989, which prohibits referrals by
physicians to clinical laboratories where the physician has a financial
interest, and further prohibitions contained in the Omnibus Budget
Reconciliation Act of 1993, which prohibits such referrals for a more extensive
range of services, including durable medical equipment. Various federal and
state laws impose civil and criminal penalties against participants in the
Programs who make false claims for payment for services or otherwise engage
false billing practices.
Many state laws prohibit the payment or receipt or the offer of anything of
value in return for, or to induce, a referral for health care goods or services.
In addition, there are several other statutes that, although they do not
explicitly address payments for referrals, could be interpreted as prohibiting
the practice. While similar in many respects to the federal laws, these state
laws vary from state to state, are often vague and have sometimes been
interpreted inconsistently by courts and regulatory agencies. Private insurers
and various state enforcement agencies have also increased their scrutiny of
health care providers' practices and claims.
There can be no assurance that we will not become the subject of a regulatory or
other investigation or proceeding or that our interpretations of applicable
health care laws and regulations will not be challenged. The defense of any such
challenge could result in substantial cost to us, diversion of management's time
and attention, and could have a material adverse effect on The Company.
The Social Security Act, as amended by HIPAA, provides for the mandatory
exclusion of providers and related persons from participation in the Programs if
the individual or entity has been convicted of a criminal offense related to the
delivery of an item or service under the Programs or relating to neglect or
abuse of patients. Further, individuals or entities may be, but are not required
to be, excluded from the Programs in circumstances including, but not limited
to, convictions relating to fraud; obstruction of an investigation of a
controlled substance; license revocation or suspension; filing claims for
excessive charges or unnecessary services or failure to furnish medically
necessary services; or ownership or control by an individual who has been
excluded from the Programs, against whom a civil monetary penalty related to the
Programs has been assessed, or who has been convicted of a crime described in
this section. The illegal remuneration provisions of the Social Security Act
make it a felony to solicit, receive, offer to pay, or pay any kickback, bribe,
or rebate in return for referring a patient for any item or service, or in
return for purchasing, leasing or ordering any good, service or item, for which
payment may be made under the Programs. Other provisions in HIPAA proscribe
false statements in billing and in meeting reporting requirements and in
representations made with respect to the conditions or operations of providers.
A violation of the illegal remuneration statute is a felony and may result in
the imposition of criminal penalties, including imprisonment for up to five
years and/or a fine of up to $25,000. Further, a civil action to exclude a
provider from participation in the Programs could occur. There are also other
civil and criminal statutes applicable to the industry, such as those governing
false billings and the health care/services offenses contained in HIPAA,
including health care/services fraud, theft or embezzlement, false statements
and obstruction of criminal investigation of offenses. Criminal sanctions for
these health care criminal offenses can be severe, including imprisonment for up
to 20 years.
Results of Operations
In March 2020, the World Health Organization declared the outbreak of COVID-19
as a pandemic based on the rapid increase in global exposure. COVID-19 continues
to spread throughout the world. We are closely monitoring developments and
taking steps to mitigate the potential risks related to the COVID-19 pandemic to
the Company, its employees, as well as its residential and pediatric patients.
Our evaluations of our practices, procedures, and operations, related to
COVID-19, is ongoing. Additional updates to policies, procedures and operations
will occur as best practices are adopted and as we deem necessary or advisable,
or as further governmental guidance or regulations are implemented.
The following summary of our operations should be read in conjunction with our
unaudited financial statements for the period ended September 30, 2021 which are
included in this quarterly report.
For the three and nine months ended September 30, 2021 compared to the three and
nine months ended September 30, 2020
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2021 2020 Change 2021 2020 Change
Revenue 22,375,092 659,449 21,715,643 29,093,845 1,102,841 27,991,004
Cost of services
provided 12,310,011 256,825 12,053,186 15,477,070 409,838 15,067,232
expenses 15,157,050 706,752 14,450,298 20,538,357 1,689,380 18,848,977
(expense) (179,293 ) (30,673 ) (148,620 ) (317,881 ) (30,676 ) (287,205 )
Net Loss (5,271,262 ) (334,802 ) (4,936,460 ) (7,239,463 ) (1,027,054 ) (6,212,409 )
We recognized revenue of $22,375,092 for the three months ended September 30,
2021, compared to $659,449 for the three months ended September 30, 2020.
The first operating PPEC facility began in May of 2020 with the acquisition of
the St. Petersburg location and revenues began being reported at that time. The
Sarasota PPEC facility began reporting revenue in May of 2021 and the Pasco
location started reporting revenue in July of 2021. The Banyan revenue for the
nine months ended September 2021 was $2,094,905 compared to $1,102,841 for the
same period in 2020. Operating expenses for the nine months ended September 30,
2021 and 2020 were 2,449,042 and $1,689,380 respectively. Net losses were
$1,164,31 and $1,027,054 for the nine months ended September 30 2021 and 2020,
The Trillium acquisition closed on June 10, 2021, revenue reflected for the
three- and nine-month periods ending September 2021 include 20 days and 92 days
of revenue from the Trillium Subsidiaries respectively; compared to the revenue
for the same period ending in 2020.
Operating expenses for the three months ended September 30, 2021, increased to
$15,470,758 from $706,752 from the three months ended September 30, 2020.
Operating expenses consist of salary expenses, general and administrative and
professional fees. The increase in operating expense was primarily due to the
acquisition of Trillium.
Our net loss for the three months ended September 30, 2021, increased to $4,671,262 from $344,802 for the three months ended September 30, 2020.
For the nine month period ended September 30,2021 and 2020 we recognized revenue
of $29,693,845 and $1,102,841, respectively. The increase in revenue is mainly
due to the Trillium acquisition on June 10, 2021 and the consolidation of the
companies. Operating expenses for the nine month periods ending September 30,
2021 and 2020 were also increased to $20,538.359 from $1,689,380; operating
expenses are increased primarily from the Trillium acquisition.
Net loss for the nine month period ended September 30, 2021 increased to $7,239.465 from $1,027,054 for the same period in 2020.
Liquidity and Capital Resources
The following table provides selected financial data about us as of September
30, 2021 and December 31, 2020.
September 30, December 30,
2021 2020 Change
Cash $ 3,894,536$ 345,982$ 3,548,554
Current Assets $ 15,131,867$ 650,647$ 14,481,220
Current Liabilities 35,722,633 2,860,798 32,861,835
Working Capital $ (20,590,766 )$ (2,210,151 )$ (18,380,615 )
As of September 30, 2021, our working capital decreased $18,380,615, primarily
due to an increase in liabilities assumed in the Trillium acquisition.
As of September 30, 2021 and December 31, 2020, current assets consisted of
cash, accounts receivable and other current assets. The increase in cash was
primarily due to the issuance of shares of restricted common stock at a purchase
price of $0.50 per share for an aggregate amount of $4,115,000 during the period
of February 11, 2021 through April 30, 2021. During the period of August 13,
2021 to September 30, 3031 we also sold shares at a purchase price of $1.00 for
an aggregate amount of $5,000,000. Cash and other current assets also increased
due to the Trillium acquisition.
As of September 30, 2021, current liabilities consisted of notes and loans
payable in the amount of $7,539,899, accrued expenses and accounts payable of
$10,879,082, lease obligation of $8,311,905, share liability of $ $5,000,000,
deferred revenue of $1,374,635, advance payments of $1,671,698 and a liability
due to the Trillium sellers in the amount of $902,847. The increases in
liabilities are due to the Trillium acquisition and the liabilities assumed
Going Concern and Liquidity Considerations
At September 30, 2021, we had accrued expenses and current notes payable in
excess of cash and accounts receivable, we had cash and accounts receivable in
the amount of approximately $11.4 million and a deficiency in working capital of
approximately $20.1 million. For the nine months ended September 30, 2021, our
net loss was approximately $6.9 million.
As a result of these factors, we determined it was necessary to review our cash
flow for 2021 and an overall analysis of market trends to determine whether or
not we have sufficient liquidity to continue as a going concern for a period of
at least twelve months from the date of this Quarterly Report. We also
determined it was necessary to take certain corporate actions, including
reducing discretionary expenses, raising additional capital and improving
revenue, as discussed below, in order to ensure we have sufficient liquidity to
continue as a going concern for a period of at least twelve months from the
of this Quarterly Report.
Below is a summary of the corporate actions being taken to address liquidity.
Of the $20.6 million working capital deficit, $5 million is related to a
liability to issue Common Shares to Trillium as part of the acquisition. This
liability will not have an impact to cash and working capital resources.
Additional actions being taken are as follows, with expected impacts over the
next 12 months following the filing of this report:
? Exploring opportunities related to therapy and medical management
contracts and improved pricing
? Purchase of 16 Omega properties (own vs lease) (see NOTE 5) - planned
impact to net operating income is approximately $2.7 million
? Certain Medicaid rate increases that were effective July 1, 2021 -
planned impact to net operating income is $3.2 million
? Medicaid reimbursement rates are controlled by each state specific
Medicaid program. Additional rate increases could also be recognized
over the next 12 months following the filing of this report
? Current managed care payer contracts are being reviewed for improved
reimbursement structure to be negotiated
? Since the acquisition date of June 10, 2021 our patient census has grown
month over month, this continued trend would sustain consistent increased
revenue over the next 12 months
The Company has also partnered with certain investment banking relationships for
future acquisition and growth strategies.
As such, the Company believes it will be able fund future liquidity and capital
requirements through cash flows generated from its operating activities for a
period of at least twelve months from the date its Financial Statements are
The below chart summarizes the Company's cash flows for the nine months ended
September 30, September 30,
2021 2020 Change
Cash used in operating activities $ (10,012,019 )$ (870,286 )$ (9,141,734 )
Cash provided by investing activities 3,568,856 (5,316,155 ) 8,885,011
Cash provided by financing activities 9,991,717 3,006,562 6,985,155
Net change in cash for period $ 3,548,554$ (3,179,879 )$ 6,728,433
Cash flow from Operating Activities
During the nine months ended September 30, 2021, we used $10,012,019 for
operating activities compared to $870,286 cash used for operating activities
during the nine months ended September 30, 2020. The change in cash used for
operating activities is due to the Trillium acquisition.
Cash flow from Investing Activities
The cash from investing activities for the nine months ended September 30, 2021
was $3,568,856 compared to cash used in investing activities of $5,316,155 for
the nine months ended September 30, 2020. This is primarily due to the cash
acquired in the Trillium acquisition and the consolidation of the Company as a
result of the acquisition.
Cash flow from Financing Activities
The cash flow from financing activities in the nine months ended September 30,
2021, was $9,991,717 compared to $3,006,562 for the nine months ended September
30, 2020. The increase is primarily due to cash received from use of the line of
credit and cash received from the issuance of restricted common stock.
Critical Accounting Policies
We prepare our financial statements in conformity with GAAP, which requires
management to make certain estimates and apply judgments. We base our estimates
and judgments on historical experience, current trends and other factors that
management believes to be important at the time the financial statements are
prepared. On a regular basis, we review our accounting policies and how they are
applied and disclosed in our financial statements.
While we believe that the historical experience, current trends, and other
factors considered support the preparation of our financial statements in
conformity with GAAP, actual results could differ from our estimates and such
differences could be material.
See Note 2 - Significant Accounting Policies and the Financial Statements that
are included in this Quarterly Report.
Off Balance Sheet Arrangements
We do not engage in any activities involving variable interest entities or
off-balance sheet arrangements.