Agrify (US:AGFY)2024-05-21 12:59Financial Performance - Total revenue for the three months ended March 31, 2024, was $2.6 million, a decrease of $3.2 million or 55% compared to $5.8 million in the same period in 2023 [275]. - Revenue from extraction solutions decreased by $2.5 million, totaling $2.5 million in Q1 2024, while facility build-out revenues decreased by $0.6 million due to the discontinuation of certain projects [279]. - Gross profit for the three months ended March 31, 2024, was $729,000, down from $988,000 in the same period in 2023 [275]. - The net loss for the three months ended March 31, 2024, was $38,000, compared to a net loss of $10.3 million in the same period in 2023 [275]. - Gross profit totaled $0.7 million, or 28.1% of total revenue, during the three months ended March 31, 2024, compared to a gross loss of $1.0 million, or 17% of total revenue, in the same period in 2023 [282]. Operating Expenses - Total operating expenses for Q1 2024 were $1.5 million, significantly lower than $8.6 million in Q1 2023, primarily due to a reduction in general and administrative expenses [275]. - General and administrative expenses decreased by $4.0 million, or 57%, to $2.9 million for the three months ended March 31, 2024, compared to $6.9 million in the same period in 2023 [284]. - Research and development expenses decreased by $0.5 million, or 63%, to $0.3 million for the three months ended March 31, 2024, compared to $0.7 million in the same period in 2023 [286]. - Selling and marketing expenses decreased by $1.1 million, or 71%, to $0.5 million for the three months ended March 31, 2024, compared to $1.6 million in the same period in 2023 [289]. - Interest expense decreased by $0.7 million, or 82%, to $0.1 million for the three months ended March 31, 2024, compared to $0.8 million in the same period in 2023 [291]. Cash Flow and Liquidity - Net cash used in operating activities was $3.0 million for the three months ended March 31, 2024, compared to $9.5 million in the same period in 2023 [303]. - As of March 31, 2024, the company's liquidity sources included cash and cash equivalents totaling $0.1 million [295]. - For the three months ended March 31, 2024, net cash provided by financing activities was $2.3 million, primarily from proceeds of $2.1 million from the issuance of common stock and warrants [308]. - For the three months ended March 31, 2023, net cash used in financing activities was $9.3 million, primarily driven by repayments of notes payable of $10.8 million [309]. Strategic Initiatives - 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 [232]. - The company is committed to safety and quality in cannabis extraction, making significant strides towards UL Compliance for its extraction facilities [233]. - Agrify entered into a public offering agreement to issue 2,760,000 shares of common stock at a price of $0.38 per share, raising approximately $2.2 million in net proceeds [242]. - The company plans to continue investing in the development of its VFUs, Agrify Insights software, and extraction products [288]. Compliance and Regulatory Issues - Agrify received a Staff Delisting Determination from Nasdaq due to non-compliance with listing requirements, specifically reporting stockholders' equity of $(17.17) million [238]. - The company has until September 3, 2024, to regain compliance with Nasdaq's Minimum Bid Requirement, which mandates a closing bid price of at least $1.00 per share for 10 consecutive trading days [240]. Innovation and Market Position - Agrify's integrated hardware and software solutions position it uniquely in the indoor agriculture market, aiming to create a dominant market position [229]. - The company emphasizes continuous innovation in response to evolving market demands, strengthening partnerships across the country [234]. - Agrify Insights software revenue increased by 107% to $62,000 in Q1 2024, up from $30,000 in Q1 2023 [279]. Accounting and Financial Reporting - The preparation of consolidated financial statements requires management to make estimates and assumptions that may significantly impact reported amounts of assets, liabilities, revenues, and expenses [311]. - Subjective estimates identified include fair value of derivative assets and liabilities, goodwill impairment assessment, revenue recognition, and cost of goods sold [312]. - There have been no significant changes in accounting policies and estimates that impacted financial condition and results of operations for the periods covered [313]. - Information on recently issued accounting pronouncements is included in the notes to consolidated financial statements [314]. - The company is not required to provide information on market risk as a "smaller reporting company" under applicable regulations [316].