Agrify (US:AGFY)2024-11-14 21:15Financial Performance - Revenue for the three months ended September 30, 2024, was $1,934,000, a decrease of $1,205,000 or 38% compared to $3,139,000 for the same period in 2023 [274]. - Revenue for the nine months ended September 30, 2024, was $7,526,000, a decrease of $6,483,000 or 46% compared to $14,009,000 for the same period in 2023 [274]. - Cost of goods sold for the three months ended September 30, 2024, was $1,709,000, a decrease of $456,000 or 21% compared to $2,165,000 for the same period in 2023 [280]. - Cost of goods sold for the nine months ended September 30, 2024, was $6,009,000, a decrease of $5,438,000 or 48% compared to $11,447,000 for the same period in 2023 [280]. - Gross profit for the three months ended September 30, 2024, was $225,000, compared to $974,000 for the same period in 2023 [274]. - Gross profit for the nine months ended September 30, 2024, was $1,517,000, compared to $2,562,000 for the same period in 2023 [274]. - Net loss for the three months ended September 30, 2024, was $18,651,000, compared to a net loss of $2,092,000 for the same period in 2023 [274]. - Net loss for the nine months ended September 30, 2024, was $17,387,000, compared to a net loss of $19,226,000 for the same period in 2023 [274]. - The extraction solutions revenue decreased by $1,164,000 or 35% for the three months ended September 30, 2024, compared to the same period in 2023 [278]. Cost Management - General and administrative expenses decreased by $1.0 million, or 22%, for Q3 2024 compared to Q3 2023, and by $6.3 million, or 39%, for the nine months ended September 30, 2024 [285]. - Research and development expenses decreased by $0.3 million, or 65%, for Q3 2024 compared to Q3 2023, and by $1.2 million, or 66%, for the nine months ended September 30, 2024 [288]. - Selling and marketing expenses decreased by $0.5 million, or 57%, for Q3 2024 compared to Q3 2023, and by $2.3 million, or 66%, for the nine months ended September 30, 2024 [290]. - Interest expense decreased by $0.3 million, or 90%, for Q3 2024 compared to Q3 2023, and by $1.4 million, or 89%, for the nine months ended September 30, 2024 [292]. Capital and Financing Activities - Agrify raised approximately $2.2 million from a public offering of 2,760,000 shares of Common Stock at a price of $0.38 per share, which closed on February 28, 2024 [226]. - The company entered into a Purchase Agreement with Ionic to sell up to $15.0 million of Common Stock over a 36-month term, allowing for purchases between $250,000 and $750,000 on business days [232]. - The company issued a 2024 CP Note to CP Acquisitions for up to $1,500,000 at a 10% annual interest rate, maturing on July 1, 2025, with a conversion price of $3.9495 [234]. - The maximum principal of the 2024 CP Note was increased to $3,000,000 while maintaining the conversion price of $3.9495 [238]. - The company issued a Secured Convertible Note (Green Thumb Note) for up to $20.0 million, with $10.0 million advanced upon issuance, maturing on November 5, 2025, at a 10% interest rate [239]. - The maximum principal amount of the Junior Secured Note was increased to $4.0 million, with a maturity date extended to December 31, 2024 [299]. - The Company entered into the Restated GIC Note, increasing the principal amount to approximately $2.29 million and extending the maturity date to December 31, 2025 [304]. - Net cash used in operating activities for the nine months ended September 30, 2024, was $6.25 million, a decrease from $25.94 million in the same period of 2023 [309]. - Net cash provided by financing activities for the nine months ended September 30, 2024, was $5.7 million, primarily from related party notes and Common Stock issuance [313]. Strategic Initiatives - Agrify's strategic plan for 2023 focuses on sustainable long-term growth through cost efficiencies and enhanced sales initiatives, particularly in the cultivation business [221]. - The company aims to provide a variety of products for indoor agriculture, including cultivation solutions and Agrify Insights™ software [275]. - The company has made significant progress in obtaining Underwriters Laboratories Compliance for its extraction facilities, emphasizing its commitment to safety and quality [222]. Compliance and Governance - Agrify received a deficiency letter from Nasdaq regarding its stock price falling below $1.00 per share, but regained compliance after a 1-for-15 reverse stock split on October 8, 2024 [224]. - The company appointed GuzmanGray as its independent registered public accounting firm after the resignation of Matsuura, effective June 25, 2024 [231]. - Agrify's stockholders approved amendments to the Pre-Funded Warrants, adjusting the exercise price and change of control thresholds, enhancing the terms for investors [230]. Accounting and Reporting - The company recognizes revenue from equipment sales, services, and construction contracts, following a five-step model under ASC Topic 606 [249]. - The company accounts for warrants based on their specific terms, determining whether they are classified as equity or liabilities [245]. - The company provides a one-year warranty on products, accruing for warranty returns when losses are probable and estimable [264]. - The company accounts for income taxes under ASC Topic 740, recognizing deferred tax assets and liabilities for temporary differences [265]. - The Company’s critical accounting estimates include fair value assessments and revenue recognition, which may significantly impact financial results [316][317].