Adam JacksonJanuary 23, 2023
Agrify believes the moves will save the company upwards of $7 million over the year.
Agrify Archives - Green Market Report
Adam JacksonJanuary 23, 2023
Debra BorchardtDecember 20, 2022Agrify Corp. (Nasdaq: AGFY) is heading into the holidays with a little more green after closing its previously announced underwritten public offering of 11,884,615 shares of its common stock and pre-funded warrants to purchase 1,500,000 shares of its common stock. The accompanying warrants would purchase 26,769,230 shares of common stock.
The combined offering price was $0.649, while the stock closed today at 29 cents.
The company said it would receive $8.7 million in gross proceeds from the deal, while the net proceeds will be $8.2 million. Agrify also said it plans to use the money for working capital and general corporate purposes, which may include capital expenditures and repayment of debt.
Agrify reported its earnings in November, saying at the time that revenue fell by 55% to $7 million for the third quarter, compared to last year’s $15.8 million for the same time period. The company said that the revenue drop reflected the deferral of $5.3 million of design and build revenue in connection with the Bud and Mary’s lawsuit.
The company’s net loss for the third quarter was $46.3 million, or $17.33 per diluted share, compared to a net loss of $9.8 million, or $4.68 per diluted share, in the prior-year period.
The company ended the third quarter 2022 with a combined amount of cash, restricted cash, and marketable securities of $12.5 million. However, expenses have been rising. Operating expenses totaled $27.4 million for the third quarter versus last year’s $9.4 million in the prior year period. The company said that the increase in the operating expenses was largely attributable to increases in reserves associated with loans receivable, increases in depreciation and amortization, and changes in contingent consideration related to the fair value estimates associated with ongoing acquisition-related earnout arrangements.
At the time of earnings, Simply Wall Street wrote, “It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business.”
Debra BorchardtNovember 9, 2022
Agrify blames pending lawsuit for pressure on revenue.
Debra BorchardtNovember 7, 2022
StaffOctober 6, 2022
The Daily Hit is a recap of cannabis business news for October 6, 2022.
ON THE SITE
Biden To Pardon Marijuana Convictions, Calls For Classification Review
President Joe Biden on Thursday announced a sweeping directive that would alter the laws surrounding cannabis and its classification as a dangerous substance, as well as grant pardons to those who suffered from the War on Drugs. In a statement, the president stated that he plans to pardon all prior federal offenses and begin an administrative review alongside Justice Department to process pardons for simple marijuana possession. Read more here.
Floridians Stocked Up On Cannabis Ahead Of Hurricane Ian
Florida operators that had to temporarily shutter last week amid Hurricane Ian’s wrath are coming back online, though some companies are still reeling from its violent landfall. With the Sept. 30 cutoff date for the fiscal third quarter, some companies could see some additional padding to earnings reports, as patients throughout the state flocked to stores early last week to stock up on medicine ahead of the storm’s arrival. Read more here.
Agrify To Help Three Companies’ Grows Go Vertical
Agrify Corporation (Nasdaq: AGFY) said that three companies have decided to operate their cultivation businesses using the company’s rapid deployment packs (RDPs) — a prepackaged, quick-to-deploy alternative to traditional grow facilities. Prairie State Cannabis LLC in Illinois, LowKey LLC in Massachusetts and MediFlora Cultivation LTD in South Africa have all elected to use the tech, which the company said is able to provide “best-in-class” cultivation capabilities in potentially as little as 60-90 days. Read more here.
Recreational Psychedelics Enters The Conversation
The medical psychedelics decriminalization efforts are growing, with now 20 different states (or cities and counties within states) either decriminalizing or working on decriminalizing psychedelics. There have been pushbacks, with complaints that some decriminalization efforts include making them the “lowest law enforcement priorities,” a ruling that still effectively criminalizes psychedelics. That same ruling applied to the decriminalization of cannabis. Read more here.
Zynerba Gets Patent For Fragile X Drug
Zynerba Pharmaceuticals, Inc. (Nasdaq: ZYNE), the leader in innovative pharmaceutically-produced transdermal cannabinoid therapies for orphan neuropsychiatric disorders, today announced that the U.S. Patent and Trademark Office has issued Patent No. 11,458,110, titled “Treatment of Fragile X Syndrome With Cannabidiol,” which includes claims directed to methods of treating Fragile X syndrome with cannabidiol. Read more here.
Green Thumb Industries Sees Board Shakeup
Three of four independent board members of Green Thumb Industries (OTC: GTBIF), including Dorri McWhorter, resigned over what the marijuana company said was “a disagreement as to the company’s policies and practices related to personal misconduct.” Read more here.
IN OTHER NEWS
Agrify Corporation
Agrify Corporation (Nasdaq : AGFY), a provider of cultivation and extraction solutions for the cannabis industry, today issued the following statement relating to the default of its customer Bud & Mary’s Cultivation, Inc. under a construction loan facility extended by Agrify to Bud & Mary’s associated with an Agrify Total Turn-Key Solution project and the lawsuit brought by Bud & Mary’s in response to the default notice. Read more here.
Bespoke Extracts, Inc.
Bespoke Extracts, Inc. (OTCQB: BSPK) today announced that the Colorado Marijuana Enforcement Division (MED) has approved Bespoke’s application for “suitability”. This approval enables Bespoke to acquire, subject to final state and local approval, any business licensed by the MED. Read more here.
Merchants & Marine Bank, CannaFirst Financial
Merchants & Marine Bank, a century-old Mississippi-based banking institution, has launched CannaFirst Financial, the first banking division dedicated to business owners in Mississippi’s quickly emerging cannabis industry. CannaFirst will serve clients in platform integration, online and mobile banking, cash transport, and treasury solutions. It is overseen and staffed by seasoned banking professionals with significant experience and certifications in emerging markets and industries. Read more here.
Neuraxpharm Group, Panaxia
Neuraxpharm Group, a European specialty pharmaceutical company focused on the central nervous system, and Panaxia (TASE: PNAX), a global pharmaceutical company that develops, manufactures and markets advanced medical cannabis products of pharmaceutical quality, today announced the signing of two addendums to their agreement to expand their collaboration into the Czech and Swiss markets. Read more here.
F1SeedTech, NewBreedSeed
F1SeedTech and NewBreedSeed (NBS) announced that they have entered into a definitive agreement, with F1SeedTech acquiring 100% of the shares of NBS. The merger creates the industry leader in F1 hybrid varieties of cannabis, combining the day-neutral breeding activities of NBS and the short-day breeding activities of F1SeedTech in Israel and the Netherlands, respectively. Read more here.
Optimi Health Corp.
Optimi Health Corp. (CSE: OPTI) (OTCQX: OPTHF) (FRA: 8BN), a Canadian-based company licensed by Health Canada to produce and supply natural, EU-GMP grade psilocybin and other psychedelic substances, most notably MDMA, is applauding the government of Alberta’s decision to regulate some psychedelics for therapeutic use in the province. Read more here.
Cybin Inc.
Cybin Inc. (NEO:CYBN) (NYSE AMERICAN:CYBN), a biopharmaceutical company focused on progressing Psychedelics to Therapeutics®, provided an update on its intellectual property progress in support of its research and development strategy. The company continues to prioritize the development of in-house IP and licensing opportunities that support its active development programs and future novel drug candidates. Read more here.
Adam JacksonOctober 6, 2022The company said that the rapid deployment packs give customers an accelerated path to production and profitability.
StaffSeptember 22, 2022
A provider of advanced cannabis cultivation & extraction solutions, Agrify brings data, science & technology to the forefront.
Adam JacksonAugust 19, 2022
Economic headwinds in the industry are causing cannabis companies to make changes to their financing strategies.
The news comes as cannabis capital raises are down 63.1% so far this year despite M&A movement soaring, according to a report by Viridian Capital Advisors. The cash crunch illustrates the rising stakes for those vying to survive in a tightening landscape.
Agrify (Nasdaq: AGFY) attributed its recent procurement of a $35 million-dollar loan to a “challenging” operating environment in the industry, while XS Financial cited near-term pullback in financing.
Agrify obtains $35M financing
“It is imperative for us to align our strategy, resources, and execution plan with the new realities of the market,” said Raymond Chang, chairman and CEO of Agrify.
Chang said the alteration had been a top priority for the company, “and we are pleased to be able to move forward with additional flexibility to manage our business, conserve cash, and pursue a variety of compelling growth opportunities with fewer restrictions.”
Agrify will pay down a portion of the outstanding balance on the original note and exchange the remaining balance for a new $35-million-dollar note.
In addition to the significantly reduced principal balance, the new deal removes or modifies certain financial covenants. The new note will have no required amortization payments on the principal balance for three years and offers a company option for early repayment.
The deal includes a new warrant to purchase 14,227,643 shares of common stock. Additionally, Agrify will exchange the warrant to purchase 6,881,108 shares of common stock issued under the prior loan for a new warrant with the same number of underlying shares with a reduced exercise price.
“All of these modifications should make it easier for us to navigate through these turbulent times as we look forward to rebounding strongly from the temporary challenges facing the entire industry,” Chang added.
XS Financial closes $24M deal
XS Financial closed on a $24 million line of credit with Needham Bank committing $20 million and acting as the administrative agent. XS Financials’ existing $4 million line of credit with an FDIC-insured bank will be retired, and the same bank will contribute $4 million in the new loan.
“With many capital sources in the industry experiencing a near-term pullback in financing, we are thrilled to continue funding our target borrowers at scale for their critical expansion projects,” XSF CEO David Kivitz said.
XSF fully retired its $15 million line of credit with the Garrington Group concurrently with the closing of this loan.
The new loan has a term of two years, expiring in August 2024. Loans made under the line of credit will bear interest at an annual rate equal to the Wall Street Journal Prime rate plus 1%, with a floor of 6%, and may be prepaid with no penalty at any time.
“This credit facility is a strong indication of James’ and our lenders’ ability to offer credit solutions tailored to the unique needs of a company and underscores the strength of our nationwide banking platform in the fast-growing cannabis market,” Needham Bank CEO Joseph Campanelli said.
IM Cannabis issues financing
IM Cannabis also said that it will issue $5 million worth of nonbrokered financing – similar to a stock split. The company intends to use the proceeds from the offering for general working capital purposes.
Following the deal, the company may issue up to 10 million common shares at a price of 50 cents per common share. The deal is expected to close on or about Aug. 22.
Adam JacksonAugust 15, 2022Agrify Corporation (Nasdaq: AGFY) up-ticked in early trading Monday despite the company posting results far below analysts’ expectations — showing the waning demand for hydroponics amid the economic slowdown.
The data-forward cannabis cultivator delivered its financial results for the first quarter ending June 30, 2022. Agrify delivered approximately $19.3 million in total revenue during the period, a gain of 63.5% versus the same period last year — though missing the Yahoo Finance Average analyst estimate for revenues of $26.1 million.
The company also reported a second-quarter net loss of $93.4 million versus a net loss of $9.4 million in the same period last year. The earnings were for a loss of $3.51 per share, below analysts’ loss estimates of $0.43 cents a share.
“The second quarter was challenging for the entire cannabis industry,” said CEO Raymond Chang. “Despite this difficult business environment, which has impacted our recent performance and altered our outlook for the remainder of 2022, we are actively taking steps to adapt to the new market realities.
Agrify said that its operating expenses totaled $93.1 million for the second quarter versus $6.0 million in the prior year period. Operating expenses were $107.1 million for the year-to-date period versus $11.9 million in the prior year-to-date period.
“The comparative 2022 increases in both our second quarter and year-to-date operating expenses are largely attributable to impairment charges of $69.9 million, increases to reserves associated with accounts receivable, loans receivable, inventory obsolescence, and warranty costs, increases in depreciation and amortization, and changes in contingent consideration related to the fair value estimates associated with ongoing acquisition-related earnout arrangements,” the company said.
Agrify is lowering its guidance for 2022 revenue, “Given the current difficult macro business environment, and specifically a drastic downturn in the cannabis industry,” it said in a preliminary release statement last week. Agrify’s new forecasted range for revenue is $70 million–$75 million, far below a range of $140 million and $142 million in the previous quarter.
Adjusted EBITDA was a loss of $19.4 million in the second quarter of 2022, versus a loss of $4.5 million in the same period last year.
“We have adjusted our near-term strategy and priorities to focus on the most immediate and impactful revenue-generating opportunities, all without compromising our ability to capitalize on the expected long-term growth in the sector,” Chang said. “In parallel, we are also in the process of restructuring our credit facility and reducing our operating expenses to strengthen our cash position. We remain steadfast on bringing new and innovative solutions to our customers and delivering value to our stakeholders.”
Warning Signals
Last week, the company gave the market a heads-up that it took a big write-off in the quarter, saying it is conducting an impairment analysis. That write-off is expected to result in “significant non-cash impairment charges.” In addition to the write-downs, Agrify said it talked to its lenders to change some of the financial covenants regarding its debt.
Stifel analysts Andrew Carter and Christopher Growe earlier the month published an earnings preview report, saying that the “2021/2022 hydroponics recession has been deeper and longer than we originally anticipated with a significantly greater impact to our covered companies than we originally anticipated.”
“But, we contend the hydroponics category will at minimum regress to the underlying demand for cannabis (HSD) with an improvement in durables demand eventually taking hold,” Carter said, adding that he believes it will take time for enthusiasm to return to the sector of hydroponics.
Adam JacksonAugust 8, 2022Agrify Corporation (Nasdaq: AGFY) will postpone its earnings call for an additional week as preliminary second-quarter results show that it missed expectations during a time when consumer demand for hydroponics is fading. The company announced the unaudited results for the second quarter ending June 30, 2022.
While revenue is expected rose 64% to $19.3 million versus $11.8 million in the second quarter of last year, it’s expected to fall sequentially. The company also reported a second-quarter net loss of $23.5 million, a 320% rise versus a loss of $5.6 million in the same period last year. Adjusted EBITDA (a non-GAAP financial measure) is expected to be a loss of $19.4 million, up 331% versus a $4.5 million loss in the second quarter last year.
Warnings
The company also gave the market a heads-up that it will be taking a big write-off in the quarter saying it is conducting an impairment analysis. That writeoff is expected to result in “significant non-cash impairment charges.” In addition to the write-downs, Agrify said it talked to its lenders to change some of the financial covenants regarding its debt.
Agrify withdrew its most recent guidance “Given the current difficult macro business environment, and specifically a drastic downturn in the cannabis industry.”
“Management will provide additional information regarding its revenue guidance for the Fiscal Year 2022 in conjunction with the upcoming release of its full second quarter 2022 financial results,” it said. In May, Agrify reported its first quarter revenue increased 271% to $26 million for the first quarter versus $7 million for the prior-year period. It also reiterated its previously provided revenue guidance for the Fiscal Year 2022 to be in the range of $140 million to $142 million.
Stifel analysts Andrew Carter and Christopher Growe recently published an earnings preview report, saying that the “2021/2022 hydroponics recession has been deeper and longer than we originally anticipated with a significantly greater impact to our covered companies than we originally anticipated.”
“But, we contend the hydroponics category will at minimum regress to the underlying demand for cannabis (HSD) with an improvement in durables demand eventually taking hold,” Carter said, adding that he believes it will take time for enthusiasm to return to the sector of hydroponics.
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