2023 Q2 Form 10-Q Financial Statement

#000149315223015976 Filed on May 09, 2023

View on sec.gov

Income Statement

Concept 2023 Q2 2023 Q1 2022 Q1
Revenue $0.00 $0.00 $0.00
YoY Change
Cost Of Revenue
YoY Change
Gross Profit
YoY Change
Gross Profit Margin
Selling, General & Admin $355.5K $436.3K $2.251M
YoY Change -5.68% -80.61% 162.98%
% of Gross Profit
Research & Development $13.24K $36.12K $396.5K
YoY Change -56.36% -90.89% 1222.65%
% of Gross Profit
Depreciation & Amortization $171.8K $168.8K $3.530K
YoY Change 3044.37% 4680.74% 35.77%
% of Gross Profit
Operating Expenses $368.8K $472.5K $2.760M
YoY Change -9.45% -82.88% 209.83%
Operating Profit -$2.914M -$2.822M -$2.760M
YoY Change -30.98% 2.25%
Interest Expense -$2.074M -$1.879M -$64.51K
YoY Change -2104.83% 2812.87% -1152.37%
% of Operating Profit
Other Income/Expense, Net $2.461M $2.981M -$457.0K
YoY Change 264.33% -752.2%
Pretax Income -$2.527M -$1.720M -$3.281M
YoY Change -26.6% -47.58% 270.93%
Income Tax
% Of Pretax Income
Net Earnings -$2.527M -$1.700M -$3.281M
YoY Change -26.6% -48.19% 270.93%
Net Earnings / Revenue
Basic Earnings Per Share -$0.10 -$0.07 -$0.22
Diluted Earnings Per Share -$0.10 -$0.07 -$215.6K
COMMON SHARES
Basic Shares Outstanding 18.52M shares 18.16M shares 15.22M shares
Diluted Shares Outstanding 499.5K shares 474.6K shares

Balance Sheet

Concept 2023 Q2 2023 Q1 2022 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $1.229M $2.732M $4.378M
YoY Change -38.46% -37.6% 495.02%
Cash & Equivalents $1.005M $2.732M $4.378M
Short-Term Investments $223.6K
Other Short-Term Assets $198.0K $520.5K $483.6K
YoY Change 77.12% 7.63% 114.95%
Inventory
Prepaid Expenses $88.60K $383.6K
Receivables $61.80K $26.32K $22.61K
Other Receivables $61.80K $26.32K $0.00
Total Short-Term Assets $1.489M $3.279M $4.884M
YoY Change -89.42% -32.87% 404.98%
LONG-TERM ASSETS
Property, Plant & Equipment $101.3K $115.0K $3.982M
YoY Change -17.39% -97.11% 87.37%
Goodwill
YoY Change
Intangibles $13.06M $12.94M
YoY Change 42.09%
Long-Term Investments
YoY Change
Other Assets $0.00 $0.00 $0.00
YoY Change -100.0%
Total Long-Term Assets $16.74M $16.60M $5.481M
YoY Change 27.6% 202.92% 108.71%
TOTAL ASSETS
Total Short-Term Assets $1.489M $3.279M $4.884M
Total Long-Term Assets $16.74M $16.60M $5.481M
Total Assets $18.23M $19.88M $10.37M
YoY Change -32.95% 91.81% 188.46%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $574.2K $125.6K $275.4K
YoY Change -57.14% -54.4% -76.21%
Accrued Expenses $445.6K $298.0K $544.5K
YoY Change 300.98% -45.27% -46.44%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $5.175M $4.267M
YoY Change 39.96%
Total Short-Term Liabilities $7.010M $5.353M $1.761M
YoY Change 0.09% 204.02% -29.13%
LONG-TERM LIABILITIES
Long-Term Debt $45.32K $44.34K $48.02K
YoY Change -2.66% -7.66% 50.96%
Other Long-Term Liabilities $3.863M $6.275M $3.506M
YoY Change -61.33% 78.96% 1214.42%
Total Long-Term Liabilities $3.908M $6.320M $3.555M
YoY Change -61.06% 77.79% 1090.47%
TOTAL LIABILITIES
Total Short-Term Liabilities $7.010M $5.353M $1.761M
Total Long-Term Liabilities $3.908M $6.320M $3.555M
Total Liabilities $10.92M $11.67M $5.315M
YoY Change -35.93% 119.6% 91.0%
SHAREHOLDERS EQUITY
Retained Earnings -$37.02M -$34.49M
YoY Change 39.05%
Common Stock $33.09M $31.28M
YoY Change 23.87%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $7.309M $8.209M $5.050M
YoY Change
Total Liabilities & Shareholders Equity $18.23M $19.88M $10.37M
YoY Change -32.95% 91.81% 188.46%

Cashflow Statement

Concept 2023 Q2 2023 Q1 2022 Q1
OPERATING ACTIVITIES
Net Income -$2.527M -$1.700M -$3.281M
YoY Change -26.6% -48.19% 270.93%
Depreciation, Depletion And Amortization $171.8K $168.8K $3.530K
YoY Change 3044.37% 4680.74% 35.77%
Cash From Operating Activities -$1.692M -$2.600M -$2.871M
YoY Change -22.64% -9.43% 671.72%
INVESTING ACTIVITIES
Capital Expenditures $0.00 $0.00 -$500.0K
YoY Change -100.0% -100.0% 23048.15%
Acquisitions
YoY Change
Other Investing Activities
YoY Change
Cash From Investing Activities $0.00 -$500.0K
YoY Change -100.0% 23048.15%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -11.40K $3.108M
YoY Change -67.43%
NET CHANGE
Cash From Operating Activities -1.692M -$2.600M -2.871M
Cash From Investing Activities 0.000 -500.0K
Cash From Financing Activities -11.40K $3.108M
Net Change In Cash -1.704M $462.7K $0.00
YoY Change -27.96% -100.0%
FREE CASH FLOW
Cash From Operating Activities -$1.692M -$2.600M -$2.871M
Capital Expenditures $0.00 $0.00 -$500.0K
Free Cash Flow -$1.692M -$2.600M -$2.371M
YoY Change -17.25% 9.67% 541.03%

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<p id="xdx_80F_eus-gaap--NatureOfOperations_zziN38DcJsQ5" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>1. <span id="xdx_827_zyz8kGN6T3Ca">NATURE OF OPERATIONS AND BASIS OF PREPARATION</span></b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Business Overview</i></b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">AgriFORCE Growing Systems Ltd. (“AgriFORCE” or the “Company”) was incorporated as a private company by Articles of Incorporation issued pursuant to the provisions of the <i>Business Corporations Act (British Columbia)</i> on December 22, 2017. The Company’s registered and records office address is at 300 – 2233 Columbia Street, Vancouver, British Columbia, Canada, V5Y 0M6.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company is an innovative agriculture-focused technology company that delivers reliable, financially robust solutions for high value crops through our proprietary facility design and automation Intellectual Property to businesses and enterprises globally through our AgriFORCE™ Solutions division (“Solutions”) and delivers nutritious food products through our AgriFORCE™ Brands division (“Brands”).</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Solutions intends to operate in the plant based pharmaceutical, nutraceutical, and other high value crop markets using its unique proprietary facility design and hydroponics based automated growing system that enable cultivators to effectively grow crops in a controlled environment (“FORCEGH+™”). The Company has designed FORCEGH+™ facilities to produce in virtually any environmental condition and to optimize crop yields to as near their full genetic potential possible whilst substantially eliminating the need for the use of pesticides and/or irradiation.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Brands is focused on the development and commercialization of plant-based ingredients and products that deliver healthier and more nutritious solutions. We will market and commercialize both branded consumer product offerings and ingredient supply.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Basis of Presentation</i></b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The accompanying Unaudited Condensed Consolidated Interim Financial Statements and related financial information of AgriFORCE Growing Systems Ltd. should be read in conjunction with the audited financial statements and the related notes thereto for the years ended December 31, 2022 and 2021 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 13, 2023. These unaudited interim financial statements have been prepared in accordance with the rules and regulations of the United States Securities and SEC for interim financial information. Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In the opinion of management, the accompanying interim financial statements contain all adjustments which are necessary to state fairly the Company’s financial position as of March 31, 2023 and December 31, 2022, and the results of its operations and cash flows during the three months ended March 31, 2023 and 2022. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2023, or for any future period.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Liquidity and Management’s Plan</i></b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company has incurred substantial operating losses since its inception and expects to continue to incur significant operating losses for the foreseeable future. As reflected in the interim financial statements for the three months ended March 31, 2023, the Company had a net loss of $<span id="xdx_908_eus-gaap--NetIncomeLoss_iN_pn5n6_di_c20230101__20230331_zibLifbX16ve" title="Net loss">1.7</span> million, $<span id="xdx_907_eus-gaap--NetCashProvidedByUsedInOperatingActivities_iN_pn5n6_di_c20230101__20230331_zbIymLnzh513" title="Net cash used in operating activities">2.6</span> million of net cash used in operating activities, and the Company had working capital deficit of $<span id="xdx_903_ecustom--WorkingCapitalDeficit_iI_pn5n6_c20230331_z79y3rrTldt4" title="Working captial deficit">2.1</span> million.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The accompanying interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The interim financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. The Company is at the stage of development of its first facility and other intellectual property. As such it is likely that additional financing will be needed by the Company to fund its operations and to develop and commercialize its technology. These factors raise substantial doubt about the Company’s ability to continue as a going concern. For the next twelve months from issuance of these interim financial statements, the Company will seek to obtain additional capital through the sale of debt or equity financings or other arrangements to fund operations; however, there can be no assurance that the Company will be able to raise needed capital under acceptable terms, if at all. The sale of additional equity may dilute existing shareholders and newly issued shares may contain senior rights and preferences compared to our currently outstanding common shares. If the Company is unable to obtain such additional financing, future operations would need to be scaled back or discontinued. Due to the uncertainty in the Company’s ability to raise capital, management believes that there is substantial doubt in the Company’s ability to continue as a going concern for twelve months from the issuance of these interim financial statements.</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> </span></p>
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