In a recent development, Agrify Corp (NASDAQ:AGFY), a company specializing in agriculture services, has amended a financial agreement to increase its borrowing capacity. On Monday, the company entered into a modification of its existing Junior Note with CP Acquisitions, LLC, which is managed by Agrify’s CEO Raymond N. Chang and board member I-Tseng Jenny Chan.
The amendment, dated October 18, 2024, raises the maximum principal amount of the Junior Note from $1.5 million to $3 million, while maintaining the original conversion price of $3.9495 per share. The note, which bears an interest rate of 10% per annum, is set to mature on July 1, 2025, and can be prepaid without penalty. It is secured by the company’s assets but is subordinate to Agrify’s existing secured debt.
This convertible note offers the holder the option to convert the debt into common stock or, if chosen, pre-funded warrants. The details of this agreement were disclosed in a Form 8-K filed with the Securities and Exchange Commission on Tuesday.
The expansion of the Junior Note’s capacity provides Agrify with additional financial flexibility. However, it’s important to note that the transaction involves insiders of the company, which may raise questions about the terms of the deal.
In other recent news, Agrify Corp has announced a 1-for-15 reverse stock split, a strategic move to comply with Nasdaq’s minimum bid price requirement for continued listing. This decision follows approval from both the company’s Board of Directors and a majority of Agrify’s outstanding common stockholders. Concurrently, Agrify has been granted an additional 180-day period by Nasdaq to regain compliance, a goal they aim to meet potentially through the reverse stock split.
The company has also amended its agreement with Mack Molding Company, committing to payments totaling $2 million and agreeing to purchase a minimum of 50 Vertical Farming Units. Agrify has secured a $1.5 million loan from CP Acquisitions, LLC, managed by its Chairman and CEO, Raymond N. Chang, and board member, I-Tseng Jenny Chan.
In a significant accounting change, GuzmanGray has been appointed as Agrify’s new independent registered public accounting firm after a merger with MATSUURA. On the business front, Agrify has secured a $500,000 agreement with Grotech Farms LLC for a comprehensive hydrocarbon extraction and lab equipment package and partnered with Justice Cannabis Co. to aid their expansion into the New Jersey market. These are recent developments in Agrify Corp’s ongoing efforts to grow and broaden its market reach.
InvestingPro Insights
Agrify’s recent amendment to increase its borrowing capacity comes at a critical time for the company, as revealed by InvestingPro data. With a market capitalization of just $4.82 million, Agrify is operating under significant financial pressure. The company’s revenue for the last twelve months as of Q2 2024 stood at $11.59 million, with a concerning revenue decline of 51.26% over the same period.
InvestingPro Tips highlight that Agrify is “quickly burning through cash” and “may have trouble making interest payments on debt.” These insights underscore the importance of the recent financial agreement amendment, as the company seeks to bolster its liquidity position. The increased borrowing capacity could provide a temporary lifeline, but it’s worth noting that Agrify “operates with a significant debt burden” according to another InvestingPro Tip.
Investors should be aware that Agrify’s stock “generally trades with high price volatility,” which aligns with the company’s current financial challenges. For a more comprehensive analysis, InvestingPro offers 15 additional tips that could provide valuable context for understanding Agrify’s financial position and market performance.
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