Agrify (US:AGFY)2024-08-14 20:30Financial Performance - Revenue for Q2 2024 was $2,994,000, a decrease of 41% compared to $5,066,000 in Q2 2023 [241]. - Gross profit for Q2 2024 was $1,127,000, compared to $600,000 in Q2 2023, reflecting an increase of 88% [241]. - Total operating expenses for Q2 2024 were $2,799,000, down from $5,944,000 in Q2 2023, a reduction of 53% [241]. - Net loss for Q2 2024 was $2,972,000, compared to a net loss of $6,807,000 in Q2 2023, indicating an improvement of 56% [241]. - Total revenue for the first half of 2024 was $5,592,000, down 49% from $10,870,000 in the first half of 2023 [241]. - The company reported a significant gain on the settlement of contingent liabilities of $5,935,000 in the first half of 2024 [241]. - Revenues decreased by $2.1 million, or 41%, for the three months ended June 30, 2024, and by $5.3 million, or 49%, for the six months ended June 30, 2024, primarily due to declines in facility build-outs and extraction solutions [246]. - Cost of goods sold decreased by $2.6 million, or 58%, for the three months ended June 30, 2024, and by $5.0 million, or 54%, for the six months ended June 30, 2024, aligning with the reduction in revenue [249]. - Gross profit totaled $1.1 million, or 37.6% of total revenue, for the three months ended June 30, 2024, compared to $0.6 million, or 11.8%, for the same period in 2023 [250]. - The company incurred a net loss of $1.3 million for the six months ended June 30, 2024, a significant reduction from a net loss of $17.1 million in the same period of 2023 [275][276]. Operational Developments - Agrify reported a successful installation of its Vertical Farming Units (VFUs), with Nevada Holistic Medicine harvesting 9 pounds of A-grade flower per VFU, achieving approximately 64 grams per canopy square foot and over 90% A-grade flower quality [196]. - The company streamlined its extraction technology portfolio, deploying several turnkey extraction packages across California, Michigan, and the East Coast, and launched new products including the Cannabeast 13 Distillation Unit and PX30 Hydrocarbon Extractor [197]. - Agrify's strategic plan for 2023 focuses on sustainable long-term growth through cost efficiencies and enhanced sales initiatives, successfully onboarding new customers like Golden Lake Business Park and Harvest Works [196]. - Agrify's integrated hardware and software solutions position it uniquely in the indoor agriculture market, aiming to create a dominant market presence [192]. - Agrify Insights software revenue increased by 94% to $68,000 in Q2 2024 from $35,000 in Q2 2023 [244]. Compliance and Regulatory Issues - The company received a Staff Delisting Determination from Nasdaq due to non-compliance with listing requirements, specifically failing to file required reports in a timely manner [201]. - Agrify reported stockholders' equity of $(17.17) million, which is below the minimum requirement of $2.5 million for Nasdaq compliance [202]. - The company has a compliance period until September 3, 2024, to meet Nasdaq's Minimum Bid Requirement of maintaining a closing bid price of at least $1.00 per share [204]. Financing and Capital Management - A public offering on February 27, 2024, resulted in the issuance of 2,760,000 shares at $0.38 per share, generating approximately $2.2 million in net proceeds after fees [206]. - The company amended its Convertible Note, reducing the conversion price to $1.46 per share and extending the maturity date to December 31, 2025, with an outstanding principal amount of approximately $18.9 million [199]. - The company has a Convertible Note with an outstanding amount of $8.8 million, maturing on August 19, 2025, with a 9.0% annualized interest rate [271]. - The company received total proceeds of approximately $779,000 from a PPP Loan, which was extended to mature on May 7, 2025, with monthly payments of approximately $24,000 [266]. - Net cash provided by financing activities for the six months ended June 30, 2024, was $4.1 million, primarily driven by proceeds from related party notes and common stock issuance [279]. - The company anticipates allocating a significant portion of its working capital to satisfy financing requirements for current and future TTK arrangements, which require substantial upfront capital [264]. - The company may opportunistically raise debt capital for strategic alternatives and general corporate purposes, but may face challenges in securing favorable terms [265]. - As of October 30, 2023, approximately $6.7 million was outstanding under the Exchange Note, indicating ongoing debt management efforts [271]. Expense Management - General and administrative expenses decreased by $2.6 million, or 53%, for the three months ended June 30, 2024, and by $5.4 million, or 46%, for the six months ended June 30, 2024 [253]. - Research and development expenses decreased by $0.5 million, or 71%, for the three months ended June 30, 2024, and by $0.9 million, or 67%, for the six months ended June 30, 2024 [255]. - Selling and marketing expenses decreased by $0.7 million, or 65%, for the three months ended June 30, 2024, and by $1.9 million, or 68%, for the six months ended June 30, 2024 [258]. - Interest expense decreased by $0.4 million, or 93%, for the three months ended June 30, 2024, compared to the same period in 2023 [260]. - The change in fair value of warrant liabilities decreased by $0.2 million, or 22%, for the three months ended June 30, 2024 [261].