in response to the covid-19 pandemic , we implemented business continuity plans designed to address the impact of the covid-19 pandemic on our business , such as restrictions on non-essential business travel , the institution of work-from-home practices and the implementation of strategies for workplace safety at our facilities . in march 2020 , the majority of the employees at our headquarters transitioned to working remotely . for several weeks following the initial outbreak of covid-19 , we experienced a material impact to our supply chain that inhibited growth and results of operations . and from time-to-time during the covid-19 pandemic , we experienced delays in the receipt of goods from international and domestic suppliers as well as a general slowdown in freight processing times resulting in shipping delays and higher periodic freight costs . it is difficult to predict the extent to which covid-19 may continue to spread . as of the date of this annual report on form 10-k , manufacturers in china and in north america are generally back in operation ; however , new waves of the covid-19 pandemic could result in the re-closure of factories in china and or in north america . quarantine orders and travel restrictions within the u.s. and other countries may also adversely impact our supply chains , the manufacturing of our own products and our ability to obtain necessary materials . consequently , we may be unable to obtain adequate inventory to fill purchase orders or manufacture our own products , which could adversely affect our business , results of operations and financial condition . furthermore , potential suppliers or sources of materials may pass the increase in sourcing costs due to the covid-19 pandemic to us through price increases , thereby impacting our potential future profit margins . our customers reside in countries , primarily the u.s. and canada that are currently affected by the covid-19 pandemic . many of these customers have experienced shelter-in-place measures in attempts to contain the spread of covid-19 , including general lockdowns , closure of schools and non-essential businesses , bans on gatherings and travel restrictions . although we can not precisely quantify in absolute or relative terms , our accelerated rate of growth in net sales for the twelve months ended december 31 , 2020 correlates with shelter-in-place orders issued in many locations in march 2020 in response to the covid-19 pandemic . our sales growth for the twelve months ended december 31 , 2020 was approximately 46 % higher than the same period in 2019. a portion of our net sales during this period could be due to pull-through demand for our products due to higher consumption of cea products from individuals spending more time at home due to shelter-in-place measures . although uncertainty created by the covid-19 pandemic remains , and various state budgets remain under economic pressure creating a greater chance of further cannabis legalization , we can not assure you that such a rate of growth will continue . our business has remained resilient during the covid-19 pandemic . as of december 31 , 2020 , our manufacturing and distribution operations were viewed as essential services and continued to operate . our key suppliers , retailers and resellers have been designated as essential services and remain open at this time ; however , in certain places they are operating under reduced hours and capacity limitations . the majority of u.s. and canadian cannabis businesses have been designated as essential by u.s. state and canadian government authorities . the extent to which the covid-19 pandemic will ultimately impact our business , results of operations , financial condition and cash flows depends on future developments that are highly uncertain , rapidly evolving and difficult to predict at this time . depending on the length and severity of covid-19 , we may experience an increase or decrease in customer orders driven by volatility in consumer shopping and consumption behavior . it is difficult to assess or quantify with precision the impact covid-19 has directly had on our business since we can not precisely quantify the impacts , if any , that the various effects ( e.g . possible positive demand impact from shelter-in-place orders in the u.s. , possible negative supply chain impact from workforce disruption at international and domestic suppliers and domestic ports and the possible negative impact on transportation costs ) have had on the overall business . and so , while we do not believe that we are experiencing net material adverse impacts at this time , given the global economic slowdown , the overall disruption of global supply chains and distribution systems and the other risks and uncertainties associated with the covid-19 pandemic , our business , financial condition , results of operations and growth prospects could be materially and adversely affected . while we believe that we are well positioned for the future as we navigate the crisis and prepare for an eventual return to a more normal operating environment , we continue to closely monitor the covid-19 pandemic as we evolve our business continuity plans and response strategy . 48 components of results of operations net sales we generate net sales from the distribution and manufacturing of hydroponic equipment and supplies to our customers . the hydroponic equipment and supplies that we sell include consumable products , such as growing media , nutrients and supplies that require regular replenishment and durable products , such as lighting and hydroponic equipment . our scale allows us to provide delivery and service capabilities to a highly diverse group of customers across the u.s. and canada . we do not sell directly to farmers but rather our customer base consists of specialty hydroponic retailers , garden centers , ecommerce and greenhouse suppliers . we periodically offer sales incentives to our customers , including early pay discounts , volume-based rebates , temporary price reductions , advertising credits and other trade activities . story_separator_special_tag 52 non-gaap financial measures we report our financial results in accordance with generally accepted accounting principles in the u.s. ( “ gaap ” ) . however , management believes that certain non-gaap financial measures provide investors of our financial information with additional useful information in evaluating our performance and that excluding certain items that may vary substantially in frequency and magnitude period-to-period from net income ( loss ) provides useful supplemental measures that assist in evaluating our ability to generate earnings and to more readily compare these metrics between past and future periods . these non-gaap financial measures may be different than similarly titled measures used by other companies . to supplement our audited consolidated financial statements which are prepared in accordance with gaap , we use “ adjusted ebitda ” and “ adjusted ebitda as a percent of sales ” which are non-gaap financial measures ( collectively referred to as “ adjusted ebitda ” ) . our non-gaap financial measures should not be considered in isolation from , or as substitutes for , financial information prepared in accordance with gaap . there are several limitations related to the use of our non-gaap financial measures as compared to the closest comparable gaap measures . some of these limitations include : adjusted ebitda does not reflect the significant interest expense , or the amounts necessary to service interest or principal payments on our indebtedness ; adjusted ebitda excludes depreciation and amortization , and although these are non-cash expenses , the assets being depreciated and amortized may have to be replaced in the future ; adjusted ebitda does not reflect our tax provision that adjusts cash available to us ; adjusted ebitda excludes the non-cash component of stock-based compensation ; adjusted ebitda excludes the amount of employer payroll taxes on stock-based compensation ; and adjusted ebitda does not reflect the impact of earnings or charges resulting from matters we consider not to be reflective , on a recurring basis , of our ongoing operations . we define adjusted ebitda as net income ( loss ) excluding interest expense , income taxes , depreciation and amortization , stock-based compensation , employer payroll taxes on stock-based compensation and other unusual and or infrequent costs , which we do not consider in our evaluation of ongoing operating performance . the following table presents a reconciliation of net income ( loss ) , the most comparable gaap financial measure , to adjusted ebitda for each of the years ended december 31 , 2020 , 2019 and 2018 : replace_table_token_3_th ( 1 ) includes the amount of employer payroll taxes on share-based compensation 53 cash flows from operating , investing , and financing activities cash flows from operating , investing , and financing activities — comparison of years ended december 31 , 2020 and 2019 the following table summarizes our cash flows for the years ended 2020 and 2019 ( amounts in thousands ) : replace_table_token_4_th operating activities net cash used in operating activities was $ 44.8 million for the year ended december 31 , 2020 consisting of $ 20.2 million in non-cash expense addbacks which were largely composed of stock-based compensation , depreciation and amortization and non-cash operating lease expense , less net loss of $ 7.3 million , payment of interest capitalized to principal of long-term debt of $ 13.9 million and a $ 43.8 million increase in working capital . the change in working capital primarily reflects a $ 43.2 million increase in accounts receivable and inventory for the period offset by a $ 10.7 million increase in accounts payable and accrued expenses . the net change was due to the additional working capital needed to support our growth in net sales . net cash used in operating activities was $ 13.3 million for the year ended december 31 , 2019 consisting of net loss of $ 40.1 million offset by $ 26.2 million in non-cash addbacks which were largely composed of depreciation and amortization , impairment charges , interest expense added to principal and non-cash operating lease expense , plus a $ 0.6 million increase in working capital . the small change in working capital primarily reflects a $ 2.1 million net decrease in accounts receivable and inventories as collections and net sales during 2019 were slowed due to the industry downturn , plus a $ 1.2 million increase in accounts payable and accrued expenses as we were able to align payment of our obligations with our cash flow . investing activities we had minimal investing activities for the years ended december 31 , 2020 and 2019. we made advances on notes receivable to third parties of $ 3.1 million the year ended december 31 , 2019 and were repaid $ 2.0 million the year ended december 31 , 2020. our business was not capital intensive during the years ended december 31 , 2020 or 2019 and purchases of property and equipment were $ 1.4 million and $ 0.8 million , respectively . we have no material commitments for capital expenditures . financing activities our ipo was completed in december 2020 generating $ 182.3 million in net proceeds . we used a portion of the proceeds to pay off our term loan agreement , to payoff our ppp loan and to paydown the outstanding balance under the encina credit facili t y. other activity was a net of $ 1.2 million from transactions with our series a preferred stock investors and payments of $ 1.0 million on finance leases . our net cash provided by these activities was $ 88.1 million for the period which we will use for our planned business growth and expansion . for the year ended december 31 , 2019 , our borrowings under the working capital credit facilities marginally exceeded repayments which reflected stable working capital needs for the period . we also received $ 21.7 million from our series a preferred stock offering including proceeds from the issuance of notes which converted into the series a preferred

liquidity and capital resources our liquidity and capital resources were significantly improved by our ipo in december 2020 which resulted in net proceeds of $ 182.3 million after deducting underwriting discounts and commissions and offering expenses . the proceeds from the ipo were used to repay $ 76.6 million ( including accrued interest and fees of $ 0.3 million ) outstanding under the term loan agreement , $ 33.4 million outstanding under the encina credit facility and $ 3.3 million under the ppp loan , and to pay $ 2.6 million to settle the series a preferred stock dividend . 55 as of december 31 , 2020 , we had a cash balance of $ 75.2 million and restricted cash of $ 1.8 million ; $ 1.0 million of interest-bearing liabilities ; $ 15.0 million of inventory purchase commitment obligations , of which $ 3.0 million is due in 2021 ; and $ 22.1 million of lease obligations associated with our right-of-use assets of which $ 4.4 million is due in 2021. critical accounting policies and estimates in preparing our consolidated financial statements in conformity with gaap , we must make decisions that impact the reported amounts of assets , liabilities , revenues and expenses , and related disclosures . such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates . in reaching such decisions , we apply judgments based on our understanding and analysis of the relevant circumstances , historical experience , and business valuations . actual amounts could differ from those estimated at the time the consolidated financial statements are prepared . our significant accounting policies are described in note 1 , description of the business , basis of presentation and significant accounting policies , to our consolidated financial statements included elsewhere in this annual report on form 10-k. some of those significant accounting policies require us to make difficult , subjective , or complex judgments or estimates .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity and capital resources our liquidity and capital resources were significantly improved by our ipo in december 2020 which resulted in net proceeds of $ 182.3 million after deducting underwriting discounts and commissions and offering expenses . the proceeds from the ipo were used to repay $ 76.6 million ( including accrued interest and fees of $ 0.3 million ) outstanding under the term loan agreement , $ 33.4 million outstanding under the encina credit facility and $ 3.3 million under the ppp loan , and to pay $ 2.6 million to settle the series a preferred stock dividend . 55 as of december 31 , 2020 , we had a cash balance of $ 75.2 million and restricted cash of $ 1.8 million ; $ 1.0 million of interest-bearing liabilities ; $ 15.0 million of inventory purchase commitment obligations , of which $ 3.0 million is due in 2021 ; and $ 22.1 million of lease obligations associated with our right-of-use assets of which $ 4.4 million is due in 2021. critical accounting policies and estimates in preparing our consolidated financial statements in conformity with gaap , we must make decisions that impact the reported amounts of assets , liabilities , revenues and expenses , and related disclosures . such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates . in reaching such decisions , we apply judgments based on our understanding and analysis of the relevant circumstances , historical experience , and business valuations . actual amounts could differ from those estimated at the time the consolidated financial statements are prepared . our significant accounting policies are described in note 1 , description of the business , basis of presentation and significant accounting policies , to our consolidated financial statements included elsewhere in this annual report on form 10-k. some of those significant accounting policies require us to make difficult , subjective , or complex judgments or estimates .
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 Suspicious Activity Report : in response to the covid-19 pandemic , we implemented business continuity plans designed to address the impact of the covid-19 pandemic on our business , such as restrictions on non-essential business travel , the institution of work-from-home practices and the implementation of strategies for workplace safety at our facilities . in march 2020 , the majority of the employees at our headquarters transitioned to working remotely . for several weeks following the initial outbreak of covid-19 , we experienced a material impact to our supply chain that inhibited growth and results of operations . and from time-to-time during the covid-19 pandemic , we experienced delays in the receipt of goods from international and domestic suppliers as well as a general slowdown in freight processing times resulting in shipping delays and higher periodic freight costs . it is difficult to predict the extent to which covid-19 may continue to spread . as of the date of this annual report on form 10-k , manufacturers in china and in north america are generally back in operation ; however , new waves of the covid-19 pandemic could result in the re-closure of factories in china and or in north america . quarantine orders and travel restrictions within the u.s. and other countries may also adversely impact our supply chains , the manufacturing of our own products and our ability to obtain necessary materials . consequently , we may be unable to obtain adequate inventory to fill purchase orders or manufacture our own products , which could adversely affect our business , results of operations and financial condition . furthermore , potential suppliers or sources of materials may pass the increase in sourcing costs due to the covid-19 pandemic to us through price increases , thereby impacting our potential future profit margins . our customers reside in countries , primarily the u.s. and canada that are currently affected by the covid-19 pandemic . many of these customers have experienced shelter-in-place measures in attempts to contain the spread of covid-19 , including general lockdowns , closure of schools and non-essential businesses , bans on gatherings and travel restrictions . although we can not precisely quantify in absolute or relative terms , our accelerated rate of growth in net sales for the twelve months ended december 31 , 2020 correlates with shelter-in-place orders issued in many locations in march 2020 in response to the covid-19 pandemic . our sales growth for the twelve months ended december 31 , 2020 was approximately 46 % higher than the same period in 2019. a portion of our net sales during this period could be due to pull-through demand for our products due to higher consumption of cea products from individuals spending more time at home due to shelter-in-place measures . although uncertainty created by the covid-19 pandemic remains , and various state budgets remain under economic pressure creating a greater chance of further cannabis legalization , we can not assure you that such a rate of growth will continue . our business has remained resilient during the covid-19 pandemic . as of december 31 , 2020 , our manufacturing and distribution operations were viewed as essential services and continued to operate . our key suppliers , retailers and resellers have been designated as essential services and remain open at this time ; however , in certain places they are operating under reduced hours and capacity limitations . the majority of u.s. and canadian cannabis businesses have been designated as essential by u.s. state and canadian government authorities . the extent to which the covid-19 pandemic will ultimately impact our business , results of operations , financial condition and cash flows depends on future developments that are highly uncertain , rapidly evolving and difficult to predict at this time . depending on the length and severity of covid-19 , we may experience an increase or decrease in customer orders driven by volatility in consumer shopping and consumption behavior . it is difficult to assess or quantify with precision the impact covid-19 has directly had on our business since we can not precisely quantify the impacts , if any , that the various effects ( e.g . possible positive demand impact from shelter-in-place orders in the u.s. , possible negative supply chain impact from workforce disruption at international and domestic suppliers and domestic ports and the possible negative impact on transportation costs ) have had on the overall business . and so , while we do not believe that we are experiencing net material adverse impacts at this time , given the global economic slowdown , the overall disruption of global supply chains and distribution systems and the other risks and uncertainties associated with the covid-19 pandemic , our business , financial condition , results of operations and growth prospects could be materially and adversely affected . while we believe that we are well positioned for the future as we navigate the crisis and prepare for an eventual return to a more normal operating environment , we continue to closely monitor the covid-19 pandemic as we evolve our business continuity plans and response strategy . 48 components of results of operations net sales we generate net sales from the distribution and manufacturing of hydroponic equipment and supplies to our customers . the hydroponic equipment and supplies that we sell include consumable products , such as growing media , nutrients and supplies that require regular replenishment and durable products , such as lighting and hydroponic equipment . our scale allows us to provide delivery and service capabilities to a highly diverse group of customers across the u.s. and canada . we do not sell directly to farmers but rather our customer base consists of specialty hydroponic retailers , garden centers , ecommerce and greenhouse suppliers . we periodically offer sales incentives to our customers , including early pay discounts , volume-based rebates , temporary price reductions , advertising credits and other trade activities . story_separator_special_tag 52 non-gaap financial measures we report our financial results in accordance with generally accepted accounting principles in the u.s. ( “ gaap ” ) . however , management believes that certain non-gaap financial measures provide investors of our financial information with additional useful information in evaluating our performance and that excluding certain items that may vary substantially in frequency and magnitude period-to-period from net income ( loss ) provides useful supplemental measures that assist in evaluating our ability to generate earnings and to more readily compare these metrics between past and future periods . these non-gaap financial measures may be different than similarly titled measures used by other companies . to supplement our audited consolidated financial statements which are prepared in accordance with gaap , we use “ adjusted ebitda ” and “ adjusted ebitda as a percent of sales ” which are non-gaap financial measures ( collectively referred to as “ adjusted ebitda ” ) . our non-gaap financial measures should not be considered in isolation from , or as substitutes for , financial information prepared in accordance with gaap . there are several limitations related to the use of our non-gaap financial measures as compared to the closest comparable gaap measures . some of these limitations include : adjusted ebitda does not reflect the significant interest expense , or the amounts necessary to service interest or principal payments on our indebtedness ; adjusted ebitda excludes depreciation and amortization , and although these are non-cash expenses , the assets being depreciated and amortized may have to be replaced in the future ; adjusted ebitda does not reflect our tax provision that adjusts cash available to us ; adjusted ebitda excludes the non-cash component of stock-based compensation ; adjusted ebitda excludes the amount of employer payroll taxes on stock-based compensation ; and adjusted ebitda does not reflect the impact of earnings or charges resulting from matters we consider not to be reflective , on a recurring basis , of our ongoing operations . we define adjusted ebitda as net income ( loss ) excluding interest expense , income taxes , depreciation and amortization , stock-based compensation , employer payroll taxes on stock-based compensation and other unusual and or infrequent costs , which we do not consider in our evaluation of ongoing operating performance . the following table presents a reconciliation of net income ( loss ) , the most comparable gaap financial measure , to adjusted ebitda for each of the years ended december 31 , 2020 , 2019 and 2018 : replace_table_token_3_th ( 1 ) includes the amount of employer payroll taxes on share-based compensation 53 cash flows from operating , investing , and financing activities cash flows from operating , investing , and financing activities — comparison of years ended december 31 , 2020 and 2019 the following table summarizes our cash flows for the years ended 2020 and 2019 ( amounts in thousands ) : replace_table_token_4_th operating activities net cash used in operating activities was $ 44.8 million for the year ended december 31 , 2020 consisting of $ 20.2 million in non-cash expense addbacks which were largely composed of stock-based compensation , depreciation and amortization and non-cash operating lease expense , less net loss of $ 7.3 million , payment of interest capitalized to principal of long-term debt of $ 13.9 million and a $ 43.8 million increase in working capital . the change in working capital primarily reflects a $ 43.2 million increase in accounts receivable and inventory for the period offset by a $ 10.7 million increase in accounts payable and accrued expenses . the net change was due to the additional working capital needed to support our growth in net sales . net cash used in operating activities was $ 13.3 million for the year ended december 31 , 2019 consisting of net loss of $ 40.1 million offset by $ 26.2 million in non-cash addbacks which were largely composed of depreciation and amortization , impairment charges , interest expense added to principal and non-cash operating lease expense , plus a $ 0.6 million increase in working capital . the small change in working capital primarily reflects a $ 2.1 million net decrease in accounts receivable and inventories as collections and net sales during 2019 were slowed due to the industry downturn , plus a $ 1.2 million increase in accounts payable and accrued expenses as we were able to align payment of our obligations with our cash flow . investing activities we had minimal investing activities for the years ended december 31 , 2020 and 2019. we made advances on notes receivable to third parties of $ 3.1 million the year ended december 31 , 2019 and were repaid $ 2.0 million the year ended december 31 , 2020. our business was not capital intensive during the years ended december 31 , 2020 or 2019 and purchases of property and equipment were $ 1.4 million and $ 0.8 million , respectively . we have no material commitments for capital expenditures . financing activities our ipo was completed in december 2020 generating $ 182.3 million in net proceeds . we used a portion of the proceeds to pay off our term loan agreement , to payoff our ppp loan and to paydown the outstanding balance under the encina credit facili t y. other activity was a net of $ 1.2 million from transactions with our series a preferred stock investors and payments of $ 1.0 million on finance leases . our net cash provided by these activities was $ 88.1 million for the period which we will use for our planned business growth and expansion . for the year ended december 31 , 2019 , our borrowings under the working capital credit facilities marginally exceeded repayments which reflected stable working capital needs for the period . we also received $ 21.7 million from our series a preferred stock offering including proceeds from the issuance of notes which converted into the series a preferred

