Agrify Corporation (NASDAQ:AGFY), announced financial results for the third quarter that ended September 30, 2022.
“While the operating environment within the cannabis industry continues to pose significant challenges for us, we remain determined to pursue and execute a number of important and practical initiatives,” said Raymond Chang, Chairman and Chief Executive Officer of Agrify (NASDAQ:AGFY). “Unfortunately, our third quarter financial performance was not what we anticipated. We entered the quarter with a line of sight of more than $15.0 million in revenue, however, we had to make some difficult business decisions, which resulted in quarterly revenue of only $7.0 million. Our third quarter revenue excludes $5.3 million of design and builds revenue, which was deferred as a result of a default by Bud & Mary’s ownership on the terms of its Total Turn-Key Solution and Loan Agreements, as well as the current pending lawsuit, and approximately $1.8 million of customer orders that were not fulfilled during the quarter as we managed to the strict quarterly cash spend limits incorporated into our restructured credit facility. Despite the obstacles we have encountered in recent months, we believe brighter days are ahead, and we are already seeing a positive shift in momentum in the fourth quarter, which should bode well for renewed growth for the remainder of the year and beyond.”
Third Quarter and Year-To-Date 2022 Financial Results
- Affected by the lawsuit, revenue of Agrify was $7.0 million for the third quarter, a decrease of 55.4% compared to $15.8 million for the prior year period. Revenue was $52.4 million for the year-to-date period, an increase of 51.4% versus $34.6 million for the prior year-to-date period.
- Operating expenses totaled $27.4 million for the third quarter, compared to $9.4 million in the prior year period. Operating expenses were $134.5 million for the year-to-date period, compared to $21.3 million in the prior year-to-date period. The comparative increase in third quarter 2022 operating expenses is 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. Additionally, the increase in comparative year-to-date operating expenses is similarly attributable to the previously mentioned items, as well as second quarter 2022 impairment charges of $69.9 million.
- 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. Net loss totaled $148.6 million, or $57.21 per diluted share, for the year-to-date period, compared to a net loss of $19.2 million, or $10.66 per diluted share, in the prior year-to-date period.
- Cash flow used in operating activities was $8.5 million for the third quarter, compared to $3.7 million in the prior year period. Cash flow used in operating activities was $66.1 million for the year-to-date period, compared to $17.6 million in the prior year-to-date period.
- The Company is further updating its revenue guidance for Fiscal Year 2022 due to the pending lawsuit from Bud & Mary’s, which has resulted in an unanticipated deferral of approximately $5.3 million in third quarter revenue and will also impact fourth quarter revenue. Agrify now expects to generate between $65.0 million and $70.0 million in total revenue for Fiscal Year 2022 instead of the previous guidance range of $70.0 million to $75.0 million.
According to recent reports from Green Market Report, one of the shareholders of Agrify, Marc Beginin filed a form 13D and stated he wants to reorganize the company in a hostile takeover. Beginin said he opposed the acquisition of his company by Agrify, but was outvoted. Now he wants his company back. Beginin said the company has actively tried to avoid his attempts to build his ownership in the company. He said to the media when he reached 9.9% ownership, the company issued more shares, which diluted his position back down to 3%.
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