| Accounting Policies, by Policy (Policies) | 12 Months Ended |
| Dec. 31, 2022 |
| Overview, Basis of Presentation, and Significant Accounting Policies [Abstract] | |
| Description of Business | Description of Business Agrify Corporation (“Agrify”
or the “Company”) is a leading provider of innovative cultivation and extraction solutions for the cannabis industry, bringing
data, science, and technology to the forefront of the market. The Company’s proprietary micro-environment-controlled Agrify Vertical
Farming Units (or “VFUs”) enable cultivators to produce the highest quality products with what we believe to be unmatched
consistency, yield, and return investment at scale. The Company’s comprehensive extraction product line, which includes hydrocarbon,
alcohol, solventless, post-processing, and lab equipment, empowers producers to maximize the quantity and quality of extract required
for premium concentrates. The Company believes it is
the only company with an automated and fully integrated grow solution in the industry. The Company’s cultivation and extraction
solutions seamlessly combines its integrated hardware and software offerings with a broad range of associated services including consulting,
engineering, and construction and is designed to deliver the most complete commercial indoor farming solution available from a single
provider. The totality of its product offerings and service capabilities forms an unrivaled ecosystem in what has historically been a
highly fragmented market. As a result, the Company believes it is well-positioned to capture market share and create a dominant market
position in the indoor cannabis sector. The Company was formed in
the State of Nevada on June 6, 2016 as Agrinamics, Inc., and subsequently changed its name to Agrify Corporation. The Company is sometimes
referred to herein by the words “we,” “us,” “our,” and similar terminology. The Company has nine wholly-owned
subsidiaries, which are collectively referred to as the “Subsidiaries” and the Company also has ownership interests in certain
companies. (Please refer to Exhibit 21.1 for further details.) |
| Reverse Stock Splits | Reverse Stock Splits On October 18, 2022, the
Company effected a 1-for-10 reverse stock split of its Common Stock. All share and per share information has been retroactively adjusted
to give effect to the reverse stock split for all periods presented unless otherwise indicated. On July 5, 2023, the Company
effected a 1-for-20 reverse stock split of its Common Stock. All share and per share information has been retroactively adjusted to give
effect to the reverse stock split for all periods presented unless otherwise indicated. No fractional shares of Common
Stock were issued as a result of these reverse stock splits. Any fractional shares in connection with these reverse stock splits were
rounded up to the nearest whole share and no stockholders received cash in lieu of fractional shares. The reverse stock splits had no
impact on the number of shares of Common Stock that the Company is authorized to issue pursuant to its articles of incorporation or on
the par value per share of the Common Stock. Proportional adjustments were made to the number of
shares of Common Stock outstanding
stock options and warrants, the exercise price or conversion price (as applicable) of the Company’s outstanding stock options and
warrants, and the number of shares reserved for issuance under the Company’s equity incentive plan. |
| Initial Public Offering and Secondary Public Offering | Initial Public Offering and Secondary Public
Offering On February 1, 2021, the
Company closed its initial public offering, or (“IPO”), of 31,050 shares of its Common Stock (inclusive of 4,050 shares of
Common Stock from the full exercise of the over-allotment option of shares granted to the underwriters). The offer and sale of all of
the shares in the IPO were registered under the Securities Act of 1933, as amended, pursuant to a registration statement on Form S-1 (File
Nos. 333-251616 and 333-252490), which was declared effective by the Securities Exchange Commission (“SEC”) on January 27,
2021. In the IPO, Maxim Group LLC and Roth Capital Partners acted as the underwriters. The IPO price for shares of Common Stock was $2,000.00
per share. The total gross proceeds from the IPO were $62.1 million. After deducting underwriting
discounts and commissions of $4 million and offering expenses paid by the Company of approximately $1 million, the net proceeds from the
IPO were approximately $57 million. The Company used the net proceeds from the IPO for its working capital needs, to support revenue growth,
increase inventory to meet customer demand forecasts, and support operational growth. On February 19, 2021, the
Company consummated a secondary public offering (the “February Offering”) of 27,778 shares of its Common Stock for a price
of $2,700.00 per share, less certain underwriting discounts, and commissions. On March 22, 2021, the Company closed on the sale of an
additional 4,167 shares of Common Stock on the same terms and conditions pursuant to the exercise of the underwriters’ over-allotment
option. The exercise of the over-allotment option brought the total number of shares of Common Stock sold by the Company in connection
with the February Offering to 31,945 shares and the total net proceeds received in connection with the February Offering to approximately
$80 million, after deducting underwriting discounts and offering expenses. The Company used the net proceeds from the IPO for its working
capital needs, to support revenue growth, increase inventory, meet customer demand forecasts, and support operational growth. |
| Confidentially Marketed Public Offering | Confidentially Marketed Public Offering On December 16, 2022, the
Company entered into an underwriting agreement (the “Underwriting Agreement”) with Canaccord Genuity LLC as the underwriter,
pursuant to which the Company agreed to issue and sell an aggregate of 594,232 shares of its Common Stock, and, in lieu of Common
Stock to certain investors that so chose, pre-funded warrants (the “Pre-Funded 2022 Warrants”) to purchase 75,000 shares of
our Common Stock, and accompanying warrants (the “December 2022 Warrants”) to purchase 1,338,462 shares of the Company’s
Common Stock (the “Offering”). The shares of Common Stock (or Pre-Funded 2022 Warrants) and the accompanying December 2022
Warrants will be issued separately but can only be purchased together in this Offering. Additional information regarding the Company’s
December 2022 Warrants may be found in Note 4 – Fair Value Measures and Note 12 – Stockholders’
Equity, included elsewhere in the notes to the The aggregate gross proceeds
to the Company from the Offering were approximately $8.7 million including offering costs of approximately $0.5 million for broker fees
and legal expenses, for net proceeds of $8.2 million. The Company has used the net proceeds from the Offering, together with its existing
cash resources, for working capital and general corporate purposes, which may include capital expenditures and repayment of debt. |
| Nasdaq Deficiency Notice | Nasdaq Deficiency Notice On
October 4, 2022, the Company received a deficiency letter from the Listing Qualifications Department (the “Staff”) of The
Nasdaq Stock Market, LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the bid price for
the Company’s Common Stock had closed below $1.00 per share, which is the minimum closing price required to maintain a continued
listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”). In accordance with
Nasdaq Listing Rule 5810(c)(3)(A), the Company had 180 calendar days to regain compliance with the Minimum Bid Requirement. To regain
compliance with the Minimum Bid Requirement, the closing bid price of the Company’s Common Stock must be at least $1.00 per share
for a minimum of 10 consecutive trading days during this 180-day compliance period, unless the Staff exercised its discretion to extend
the minimum trading day period pursuant to Nasdaq Listing Rule 5810(c)(3)(G). On October 28, 2022, the Staff notified the Company that
the closing bid price for its Common Stock was more than $1.00 for 10 consecutive trading days, and that the Company therefore regained
compliance with the Minimum Bid Requirement. On January 19, 2023,
the Company received a new deficiency letter from the Staff of Nasdaq notifying the Company that, for the previous 30 consecutive business
days, the bid price for its Common Stock had closed below $1.00 per share, which is the minimum closing price required to maintain a continued
listing on The Nasdaq Capital Market under the Minimum Bid Requirement. In accordance with Nasdaq Listing Rule 5810(c)(3)(A) As disclosed in the Current
Report on Form 8-K filed on April 17, 2023, the Company’s audit committee concluded that, as a result of inadvertent errors in the
accounting for warrants previously issued by the Company, it was appropriate to restate the Company’s previously issued unaudited
condensed consolidated interim financial statements as of and for the quarterly periods ended March 31, 2022, June 30, 2022 and September
30, 2022 included in the Company’s Quarterly Reports on Form 10-Q for such periods in amended quarterly reports for the affected
periods. As a result of such restatements, the Company was unable to timely file the 2022 Form 10-K, the First Quarter 2023 Form 10-Q
and the Second Quarter 2023 Form 10-Q without unreasonable effort or expense. On April 18, 2023, the Company
received a notice from Nasdaq (the “April Nasdaq Notice”) that it was noncompliant with Nasdaq Listing Rule 5250(c)(1) as
a result of its failure to file its Annual Report on Form 10-K (the “Form 10-K”) with the SEC by the required due date. On
May 17, 2023, received a second notice from Nasdaq (the “May Nasdaq Notice”)
that it remained noncompliant with Nasdaq Listing Rule 5250(c)(1) as a result of its failure to file its Quarterly Report on Form 10-Q
for the quarter ended March 31, 2023 (the “First Quarter Form 10-Q”) with the SEC by the required due date. On August 16, 2023, the Company
received a third notice from Nasdaq that it remain noncompliant with Nasdaq Listing Rule 5250(c)(1) as a result of its failure to file
its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2023 (the “Second Quarter Form 10-Q”) with the SEC
by the required filing date (the “August Nasdaq Notice” and, together with the April Nasdaq Notice and the May Nasdaq Notice,
the “Nasdaq Notices”). The
Nasdaq granted the Company an exception until October 16, 2023, to file its 2022 Form 10-K and First and Second Quarter 2023 Forms 10-Q.
The Nasdaq Notice had no immediate effect on the listing of the Company’s common stock on The Nasdaq Stock Market LLC. On
October 17, 2023, the Company received a Staff Delisting Determination (the “Staff Determination”) from the Listing Qualifications
Department of Nasdaq notifying the Company that it was not in compliance with Nasdaq’s continued listing requirements under the
Listing Rule as a result of its failure to file the First Quarter Form 10-Q, the Second Quarter Form 10-Q and the Form 10-K (collectively,
the “Delinquent Reports”) in a timely manner. The
Company timely requested a hearing before the Nasdaq Hearings Panel (the “Panel”), and the Panel scheduled a hearing for January
11, 2024. In connection with the hearing request, the Company requested that the stay be extended through the hearing and the expiration
of any additional extension period granted by the Panel following the hearing. In that regard, pursuant to the Nasdaq Listing Rules, the
Panel granted the additional extension period. However, there can be no assurance that the Company will be able to regain compliance by
the end of any additional extension period. |
| The Paycheck Protection Program | The Paycheck Protection Program In May 2020, the Company
received an unsecured Paycheck Protection Program Loan (“PPP Loan”) from the Bank of America pursuant to the Paycheck Protection
Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), administered by
the U.S. Small Business Administration (the “SBA”). The Company received total loan proceeds of approximately $779 thousand
from the PPP Loan. On February 18, 2022, the Company applied for forgiveness of the outstanding balance of the PPP Loan and the application
was denied by the SBA on March 18,2022. However, on June 23, 2022, the Company received a letter from Bank of America agreeing to
extend the maturity date to May 7, 2025 and the loan will bear interest at a rate of 1.00% per year. The PPP loan is payable in 34 equal
combined monthly principal and interest payments of approximately $24 thousand that commenced on August 7, 2022. In July 2020, the Company
received a separate PPP loan in the amount of $45,000. In September 2021, this loan was 100% forgiven by the SBA. The forgiveness of this
loan is reflected in the 2021 Consolidated Statement of Operations as a gain on forgiveness. |
| Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation Accounting for Wholly-Owned
Subsidiaries The accompanying consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”)
and include the accounts of Agrify Corporation and its wholly-owned subsidiaries, as described above, in accordance with the provisions
required by the Consolidation Topic 810 of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”). The Company includes results of operations of acquired companies from the date of acquisition. All significant intercompany
transactions and balances are eliminated. Accounting for Less
Than Wholly-Owned Subsidiaries For the Company’s less
than wholly-owned subsidiaries, which include Teejan Podponics International LLC (“TPI”), Agrify-Valiant LLC (“Agrify-Valiant”),
and Agrify Brands, LLC (“Agrify Brands”), the Company first analyzes whether these entities are a variable interest entity
(a “VIE”) in accordance with ASC Topic 810, Consolidation (“ASC 810”), and if so, whether the Company is
the primary beneficiary requiring consolidation. A VIE is an entity that has (i) insufficient equity to permit it to finance its
activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling
financial interest. The financial results of a VIE are consolidated by the primary beneficiary, which is the entity that has both the
power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses
or the right to receive benefits from the entity that potentially could be significant to the entity. Variable interests in a VIE are
contractual, ownership or other financial interests in a VIE that change with changes in the fair value of the VIE’s net assets.
The Company continuously re-assesses (i) whether the joint-venture is a VIE, and (ii) if the Company is the primary beneficiary of the
VIE. If it is determined that the joint-venture qualifies as a VIE and the Company is the primary beneficiary, the Company’s financial
interest in the VIE is consolidated. Based on the Company’s
analysis of these entities, the Company has determined that Agrify-Valiant and Agrify Brands are each a VIE, and that the Company is the
primary beneficiary. While the Company owns 60% of Agrify-Valiant’s equity interests and 75% of Agrify Brand’s equity interests,
the remaining equity interests in Agrify-Valiant and Agrify Brands are owned by unrelated third parties, and the agreement with these
third parties provides the Company with greater voting rights. Accordingly, the Company consolidates its interest in the financial statements
of Agrify-Valiant and Agrify Brands under the VIE rules and reflects the third parties’ interests in the consolidated financial
statements as a non-controlling interest. The Company records this non-controlling interest at its initial fair value, adjusting the basis
prospectively for the third parties’ share of the respective consolidated investments’ net income or loss or equity contributions
and distributions. These non-controlling interests are not redeemable by the equity holders and are presented as part of permanent equity.
Income and losses are allocated to the non-controlling interest holders based on its economic ownership percentage. The investment in
50% of the shares of TPI is treated as an equity investment as the Company cannot exercise significant influence. |
| Going Concern | Going Concern In accordance with the FASB
Accounting Standards Update (“ASU”) 2014-15, “Presentation of Financial Statements - Going Concern,” the Company’s
management evaluated whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern
within one year after the consolidated financial statements’ issuance date. The following matters raise substantial doubt about
the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued. The Company has incurred
operating losses since its inception, has negative cash flows from operations and a working capital deficiency. The Company also has an
accumulated deficit of approximately $247.1 million as of December 31, 2022. The Company’s primary sources of liquidity are its
cash and cash equivalents and marketable securities, with additional liquidity accessible, subject to market conditions and other factors,
including limitations that may apply to the Company under applicable SEC regulations, from the capital markets, including under its at-the-market
continuous equity offering (“ATM” or “ATM Program”). As of December 31, 2022,
the Company had $20.5 million of cash, cash equivalents, and restricted cash. The Company’s restricted cash is associated with its
senior secured note (the “Exchange Note”) and was $10.0 million as of December 31, 2022. Additional information regarding
the Company’s Exchange Note may be found in Note 9 – Debt, included elsewhere in the notes to the consolidated financial statements. On October 18, 2022, the
Company entered into the ATM Program with Canaccord Genuity LLC (the “Agent”) pursuant to which it may issue and sell,
from time to time, shares of its Common Stock having an aggregate offering price of up to $50 million, depending on market demand, with
the Agent acting as an agent for sales. The ATM Program allowed the Company to sell shares of Common Stock pursuant to specific parameters
defined by the Company as well as those defined by the SEC and the ATM Program agreement. As of December 31, 2022, the Company sold 306,628
shares of Common Stock under the ATM Program at an average price of $50.85 per share, resulting in gross proceeds of $15.6 million, and
net proceeds of $15.0 million after commissions and fees to the Agent totaling $468 thousand and legal fees totaling $75 thousand. Subsequent
to December 31, 2022 through April 1, 2023, after which time the ATM program was discontinued, the Company sold an additional 323,082
shares of Common Stock under the ATM at an average price of $4.93, resulting in gross proceeds of $1.6 million and net proceeds of $1.6
million after commissions and fees to the Agent totaling $48 thousand. $3.0 million of the proceeds under the ATM Program were used to
repay amounts due to the Investor under the Exchange Note. The Company used the net proceeds generated from the ATM Program for working
capital and general corporate purposes, including repayment of indebtedness, funding its transformation initiatives and product category
expansion efforts and capital expenditures. Due to the late filing of this Annual Report on Form 10-K, the Company is no longer
eligible to utilize the registration statement on Form S-3 relating to the ATM Program. These consolidated
financial statements have been prepared on a going concern basis, which implies the Company believes these conditions
raise substantial doubt about its ability to continue as a going concern within the next twelve-months from the date these
consolidated financial statements are available to be issued. The Company’s continuation as a going concern is dependent upon
its ability to obtain the necessary debt or equity financing to continue operations until the Company begins generating sufficient
cash flows from operations to meet its obligations. If the Company is unable raise additional funds, it may be forced to cease operations. There is no assurance that
the Company will ever be profitable. The consolidated financial statements do not include any adjustments to reflect the potential future
effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the
Company be unable to continue as a going concern. |
| Use of Estimates | Use of Estimates The preparation of the Company’s
consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements,
and the reported amounts of expenses during the reporting period. Significant estimates include assumptions about collection of accounts
and notes receivable, the valuation and recognition of stock-based compensation expense, valuation allowance for deferred tax assets,
the valuation of inventory, and useful life of fixed assets and intangible assets. The Company bases its estimates on historical experience,
known trends and other market-specific information, other relevant factors that it believes to be reasonable under the circumstances,
and management’s judgement. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts,
and experience. Changes in estimates are recorded in the period in which they become known. Actual financial results could differ from
those estimates. |
| Reclassifications | Reclassifications Certain amounts in the Company’s
prior period consolidated financial statements have been reclassified to conform to the presentation of the current period consolidated
financial statements. In this Form 10-K, the Company has reclassified selling, general and administrative expenses to two separate line
items in the accompanying consolidated statements of operations as general and administrative expenses and selling and marketing expenses
for the years ended December 31, 2022 and 2021. In addition, the Company
effected a 1-for-10 reverse stock split of its Common Stock on October 18, 2022 and a 1-for-20 reverse stock split of its Common Stock
on July 5, 2023. All share and per share information has been retroactively adjusted to give effect to the reverse stock split for all
periods presented unless otherwise indicated. The shares of Common Stock retained a par value of $0.001 per share. Accordingly, the Stockholders’
equity section of the Consolidated Balance Sheet reflects the reverse stock split by reclassifying from “Common Stock” to
“Additional paid-in capital” an amount equal to the par value of the decreased shares resulting from the reverse stock split. |
| Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash Cash
and cash equivalents consists principally of cash and deposits with maturities of three months or less as of December 31, 2022 and 2021.
All cash equivalents are carried at cost, which approximates fair value. Restricted cash represents cash required to be held as collateral
for the Company’s Notes. Accordingly, these balances contain restrictions as to their availability and usage and are classified
as restricted cash in the consolidated balance sheets. Additional information relating to the Company’s Notes may be found in Note
9 – Debt, included elsewhere in the notes to the consolidated financial statements. |
| Marketable Securities | Marketable Securities The Company’s marketable
security investments primarily include investments held in mutual funds, municipal bonds, and corporate bonds. The mutual funds are recorded
at fair value in the accompanying consolidated balance sheets as part of cash and cash equivalents. The municipal and corporate bonds
are considered to be held-to-maturity securities and are recorded at amortized cost in the accompanying consolidated balance sheets. The
fair value of these investments was estimated using recently executed transactions and market price quotations. The Company considers
current assets to be those investments that will mature within the next 12 months, including interest receivable on long-term bonds. |
| Accounts Receivable, Net | Accounts Receivable, Net Accounts receivable, net,
primarily consists of amounts for goods and services that are billed and currently due from customers. Accounts receivable balances are
presented net of an allowance for credit losses, which is an estimate of billed amounts that may not be collectible. In determining the
amount of the allowance at each reporting date, management makes judgments about general economic conditions, historical write-off experience,
and any specific risks identified in customer collection matters, including the aging of unpaid accounts receivable and changes in customer
financial conditions. Accounts receivable balances are written off after all means of collection are exhausted and the potential for non-recovery
is determined to be probable. Adjustments to the allowance for credit losses are recorded as general and administrative expenses in the
consolidated statements of operations. |
| Concentration of Credit Risk and Significant Customer | Concentration of Credit Risk and Significant
Customer Financial instruments that
potentially subject the Company to a concentration of credit risk primarily consist of cash, cash equivalents, restricted cash, marketable
securities, and accounts receivable. Cash equivalents primarily consist of money market funds with
original maturities of three months or less, which are invested primarily with U.S. financial institutions. Cash deposits with financial
institutions, including restricted cash, generally exceed federally insured limits. Management believes minimal credit risk exists with
respect to these financial institutions and the Company has not experienced any losses on such amounts. The
tables below show customers who account for 10% or more of the Company’s total revenues and 10% or more of the Company’s accounts
receivable for the periods presented. Revenue For the years ended December
31, 2022 and 2021, the Company’s customers that accounted for 10% or more of the total revenue were as follows:
Year Ended Year Ended
(In thousands) Amount % Amount %
New England Innovation Academy (“NEIA”) – Related Party * * $ 22,010 36.8 %
Greenstone Holdings (“Greenstone”) – Greenstone is a related party because one of the Company’s former Agrify Brands employees and its VP of Engineering had a minority ownership * * $ 9,429 15.8 %
Company Customer Number – 136 $ 8,005 13.8 % * *
Company Customer Number – 139 $ 8,761 15.0 % * * * Customer revenue, as a percentage of total revenue, was less than 10% Accounts Receivable, Net As of December 31, 2022 and
2021, the Company’s customers that accounted for 10% or more of the total accounts receivable, net, were as follows:
As of As of
(In thousands) Amount % of Amount % of
NEIA – Related Party * * $ 3,498 48.4 %
Company Customer Number – 126 (1) * * $ 1,541 21.3 %
Company Customer Number – 15095 $ 352 32.9 % * *
Company Customer Number – 10888 $ 251 23.5 % * *
Company Customer Number – 16491 $ 123 11.5 % * * * Customer accounts receivable balance, as a percentage of total accounts receivable balance, was less than 10% (1) The accounts receivable balance was fully reserved at December 31, 2022 due to an ongoing dispute with the customer. |
| Inventories | Inventories The Company values all its
inventories, which consist primarily of significant raw material hardware components, at the lower of cost or net realizable value, with
cost principally determined by the weighted-average cost method on a first-in, first-out basis. Write-offs of potentially slow-moving
or damaged inventory are recorded through specific identification of obsolete or damaged material. The Company takes physical inventory
at least once annually at all inventory locations. |
| Property and Equipment | Property and Equipment Property and equipment are
stated at cost less accumulated depreciation and amortization. Depreciation and amortization expenses are recognized using the straight-line
method over the estimated useful life of each asset, as follows:
Estimated Useful
Computer and office equipment 2 to 3
Furniture and fixtures 2
Software 3
Vehicles 5
Research and development laboratory equipment 5
Machinery and equipment 3 to 5
Leased equipment 5 to 13
Trade show assets 3 to 5
Leasehold improvements Lower of estimated useful The estimated useful lives
of the Company’s property and equipment are periodically assessed to determine if changes are appropriate. The Company charges maintenance
and repairs to expense as incurred. When the Company retires or disposes of assets, the carrying cost of these assets and related accumulated
depreciation or amortization are eliminated from the consolidated balance sheet and any resulting gain or loss are included in the consolidated
statements of operations in the period of retirement or disposal. Costs for capital assets
not yet placed into service are capitalized as construction-in-progress and depreciated once placed into service. During
construction, costs are accumulated in a construction-in-progress account, with no depreciation. Upon completion, costs are transferred
to the appropriate asset account, and depreciation begins when the asset is placed into service. |
| Goodwill | Goodwill Goodwill is defined as the
excess of cost over the fair value of assets acquired and liabilities assumed in a business combination. Goodwill is tested for impairment
annually, and more frequently if events and circumstances indicate that the asset might be impaired. The Company has determined that it
is a single reporting unit for the purpose of conducting the goodwill impairment assessment. A goodwill impairment charge is recorded
if the amount by which the Company’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Factors
that could lead to a future impairment include material uncertainties such as a significant reduction in projected revenues, a deterioration
of projected financial performance, future acquisitions and/or mergers, and/or a decline in the Company’s market value as a result
of a significant decline in the Company’s stock price. During the quarter ended
June 30, 2022, the Company identified an impairment-triggering event associated with both a sustained decline in the Company’s stock
price and associated market capitalization, as well as a second-quarter slowdown in the cannabis industry as a whole. Due to these factors,
the Company deemed that there was an impairment to the carrying value of its property and equipment and accordingly performed interim
testing as of June 30, 2022. Based on its interim testing,
the Company noted that the carrying value of equity exceeded the calculated fair value by an amount greater than the aggregate value of
our goodwill. Accordingly, the Company concluded that the entire carrying value of its goodwill was impaired, resulting in a second-quarter
impairment charge of $54.7 million. Additional information regarding the Company’s interim testing on goodwill may be found in Note
7 – Goodwill and Intangible Assets, Net, included elsewhere in the notes to the consolidated financial statements. |
| Intangible Assets | Intangible Assets The Company initially records
intangible assets at their estimated fair values and reviews these assets periodically for impairment. Identifiable intangible assets,
which consist principally of customer-related acquired assets, acquired and/or developed technology, non-compete agreements, and trade
names, are reported net of accumulated amortization, and are being amortized over their estimated useful lives at amortization rates that
are proportional to each asset’s estimated economic benefit. The Company’s intangible assets are amortized on a straight-line
basis over the estimated useful lives of the assets. The Company reviews the carrying value of these intangible assets annually, or more
frequently if indicators of impairment are present. The useful lives are as follows:
Trade names 5 to 7 years
Acquired developed technology 5 to 8 years
Non-compete agreements 5 years
Customer relationships 5 to 8 years
Capitalized website costs 3 to 5 years In performing the review
of the recoverability of intangible assets, the Company considers several factors, including whether there have been significant changes
in legal factors or the overall business climate that could affect the underlying value of an asset. The Company also considers whether
there is an expectation that the asset will be sold or disposed of before the end of its remaining estimated useful life. If, as the result
of examining any of these factors, the Company concludes that the carrying value of the intangible asset exceeds its estimated fair value,
the Company recognizes an impairment charge and reduces the carrying value of the asset to its estimated fair value. During the quarter ended
June 30, 2022, the Company identified an impairment-triggering event associated with both a sustained decline in the Company’s stock
price and associated market capitalization, as well as a second-quarter slowdown in the cannabis industry as a whole. Due to these factors,
the Company deemed that there was an impairment to the carrying value of its property and equipment and accordingly performed interim
testing as of June 30, 2022. Based on its interim testing,
the Company noted that the carrying value of equity exceeded the calculated fair value by an amount greater than the aggregate value of
our intangible assets. Accordingly, the Company concluded that the entire carrying value of its intangible assets should be impaired,
resulting in a second-quarter impairment charge of $15.2 million. Additional information regarding the Company’s interim testing
on intangible assets may be found in Note 7 – Goodwill and Intangible Assets, Net, included elsewhere in the notes to the consolidated
financial statements. |
| Convertible Notes Payable | Convertible Notes Payable The Company evaluates its
convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments
to be separately accounted for in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”). The accounting treatment
of derivative financial instruments requires that the Company identify and record certain ECOs, certain variable-share settlement features,
and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent
balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each
balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification
changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.
Bifurcated embedded conversion options, variable-share settlement features, and any related freestanding instruments are recorded as a
discount to the host instrument which is amortized to interest expense over the life of the respective note using the effective interest
method. If the Company determines
that an instrument is not a derivative liability, it then evaluates whether there is a BCF, by comparing the commitment date fair value
to the effective current conversion price of the instrument. The Company records a BCF as a debt discount which is amortized to interest
expense over the life of the respective note using the effective interest method. BCFs that are contingent upon the occurrence of a future
event are recognized when the contingency is resolved. Additionally, adoption of ASU 2020-06 simplifies
the accounting for convertible instruments by eliminating the cash conversion and the BCF accounting models for convertible debt and convertible
preferred stock. |
| Warrant Liabilities | Warrant Liabilities The Company does not use
derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all its financial instruments,
including issued private placement stock purchase warrants, to determine if such instruments are derivatives or contain features that
qualify as embedded derivatives, pursuant to ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815.
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in ASC 480 and ASC 815. Management’s assessment considers whether the warrants
are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether
the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s
own Common Stock among other conditions for equity classification. For
issued or modified warrants that meet all of the criteria for equity classification, they are recorded as a component of additional paid-in
capital at the time of issuance. For issued or modified warrants that are precluded from equity classification, they are recorded as a
liability at their initial fair value on the date of issuance and subject to remeasurement on each balance sheet date with changes in
the estimated fair value of the warrants to be recognized as an unrealized gain or loss in the consolidated statements of operations. On
August 18, 2022, the Company reached an agreement with its institutional lender to amend its existing Securities Purchase Agreement and
entered into a Securities Exchange Agreement (the “August 2022 Exchange Agreement”). Pursuant to the August 2022 Exchange
Agreement, the Company issued a new warrant to purchase 71,139 shares of Common Stock (the “Note Exchange Warrant”) and modified
an existing warrant (the “SPA Warrant”) to purchase up to an aggregate of 34,406 shares of Common Stock. The Company exchanged
the SPA Warrant for a new warrant for the same number of underlying shares but with a reduced exercise price (the “Modified Warrants”
and, collectively with the Note Exchange Warrant, the “August 2022 Warrants”). Additional information regarding the August
2022 Exchange Agreement and August 2022 Warrants may be found in Note 4 – Fair Value Measures and Note 9 – Debt, included
elsewhere in the notes to the consolidated financial statements. |
| Debt Issuance Costs and Debt Discount | Debt Issuance Costs and Debt Discount The Company may record debt
issuance costs and/or debt discounts in connection with the issuance of debt. The Company may cover these costs by paying cash or issuing
warrants. These costs are amortized to interest expense over the expected life of the debt. If a conversion of the underlying debt occurs,
a proportionate share of the unamortized amounts is immediately expensed. |
| Original Issue Discount | Original
Issue Discount Certain convertible debt
issued by the Company may provide the debt holder with an original issue discount. The Company would record the original issue discount
to debt discount, reducing the face amount of the note, and is then amortized to interest expense over the life of the debt. |
| Leases | Leases The Company determines at
the inception of an asset contract if such arrangement is or contains a lease. A contract is or contains a lease if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration. The Company classifies leases
at the lease commencement date as operating or finance leases and records a right-of-use asset and a lease liability on its consolidated
balance sheet for all leases with an initial lease term of greater than 12 months. A lease with an initial term of 12 months or less is
not recorded on the balance sheet, but related payments are recognized as an expense on a straight-line basis over the lease term. The Company’s asset
contracts may contain both lease and non-lease components. Non-lease components may include maintenance, utilities, and other operating
costs. The Company combines the lease and non-lease components of fixed costs in its lease arrangements as a single lease component. Variable
costs, such as utilities or maintenance costs, are not included in the measurement of right-of-use assets and lease liabilities, but rather
are expensed when the event determining the amount of variable consideration to be paid occurs. Lease liabilities and their
corresponding right-of-use assets are recorded based on the present value of future lease payments over the expected lease term. The Company
determines the present value of future lease payments by using its estimated secured incremental borrowing rate for that lease term as
the interest rate implicit in the lease is not readily determinable. The Company estimates its secured incremental borrowing rate for
each lease based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized
basis over a similar term. Certain of the Company’s
leases include options to extend or terminate the lease. The amounts determined for the Company’s right-of-use assets and lease
liabilities generally do not assume that renewal options or early-termination provisions, if any, are exercised unless it is reasonably
certain that the Company will exercise such options. |
| Deferred Revenue | Deferred Revenue Deferred revenue includes
amounts collected or billed in excess of revenue that the Company can recognize. The Company recognizes deferred revenue and non-current
deferred revenue as revenue as the related performance obligation is satisfied. The Company records deferred revenue that will
be recognized during the succeeding twelve-month period as a current liability on the consolidated balance sheet. |
| Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial
instruments consist of cash, accounts receivable, accounts payable and accrued expenses. The estimated fair values of accounts receivable
and accounts payable approximate their carrying values due to the short-term nature of these instruments. |
| Stock-Based Compensation | Stock-Based Compensation The Company measures all
stock options and other stock-based awards granted to employees, directors, and consultants, based on the fair value on the date of the
grant and recognizes compensation expense of those awards, net of estimated forfeitures, over the requisite service period, which is generally
the vesting period of the respective award. Historically, the Company has issued stock options to employees, directors, and consultants
with only service-based vesting conditions and records the expense for these awards using the straight-line method. The Company classifies stock-based
compensation expense in its consolidated statements of operations in the same manner in which the award recipient’s payroll costs
are classified. The Company estimates the
fair value of each stock option grant on the date of the grant using the Black-Scholes option-pricing model. Before the IPO, the Company
was a private company and therefore lacks company-specific historical and implied volatility information. Therefore, it estimates its
expected stock volatility based on the historical volatility of similar publicly-traded companies and expects to continue to do so until
such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s
stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla”
options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the
award for time periods approximately equal to the expected term of the award. The expected dividend yield is based on the fact that the
Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. |
| Business Combinations | Business Combinations The Company accounts for
business acquisitions using the purchase method of accounting, in accordance with which assets acquired and liabilities assumed are recorded
at their respective fair values at the acquisition date. The fair value of the consideration paid, including contingent consideration,
is assigned to the assets acquired and liabilities assumed based on their respective fair values. Goodwill represents the excess of the
purchase price over the estimated fair values of the assets acquired and liabilities assumed. The Company’s management
exercises significant judgments in determining the fair value of assets acquired and liabilities assumed, as well as intangibles and their
estimated useful lives. Fair value and useful life determinations are based on, among other factors, estimates of future expected cash
flows, royalty cost savings, and appropriate discount rates used in computing present values. These judgments may materially impact the
estimates used in allocating acquisition date fair values to assets acquired and liabilities assumed, as well as the Company’s current
and future operating results. Actual results may vary from these estimates, which may result in adjustments to goodwill and acquisition
date fair values of assets and liabilities during a measurement period or upon a final determination of asset and liability fair
values, whichever occurs first. Adjustments to the fair value of assets and liabilities made after the end of the measurement period
are recorded within the Company’s operating results. For contingent consideration
arrangements, the Company recognizes a liability at fair value as of the acquisition date with subsequent fair value adjustments recorded
in the consolidated statements of operations. Additional information regarding the Company’s contingent consideration arrangements
may be found in Note 4 – Fair Value Measures, included elsewhere in the notes to the consolidated financial statements. |
| Revenue Recognition | Revenue Recognition Overview The Company generates revenue
from the following sources: (1) equipment sales, (2) providing services and (3) construction contracts. In accordance with ASC 606
“Revenue Recognition”, the Company recognizes revenue from contracts with customers using a five-step model, which is described
below:
● identify the customer contract;
● identify performance obligations that are distinct;
● determine the transaction price;
● allocate the transaction price to the distinct performance obligations; and
● recognize revenue as the performance obligations are satisfied. Identify the customer
contract A customer contract is generally
identified when there is approval and commitment from both the Company and its customer, the rights have been identified, payment terms
are identified, the contract has commercial substance, and collectability is probable. Specifically, the Company obtains written/electronic
signatures on contracts and purchase orders, if said purchase orders are issued in the normal course of business by the customer. Identify performance
obligations that are distinct A performance obligation
is a promise by the Company to provide a distinct good or service or a series of distinct goods or services. A good or service that is
promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources
that are readily available to the customer, and a company’s promise to transfer the good or service to the customer is separately
identifiable from other promises in the contract. Determine the transaction price The transaction price is
the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer,
excluding sales taxes that are collected on behalf of government agencies. Allocate the transaction
price to distinct performance obligations The transaction price is
allocated to each performance obligation based on the relative standalone selling prices (“SSP”) of the goods or services
being provided to the customer. The Company’s contracts typically contain multiple performance obligations, for which the Company
accounts for individual performance obligations separately, if they are distinct. The standalone selling price reflects the price the
Company would charge for a specific piece of equipment or service if it was sold separately in similar circumstances and to similar customers. Recognize revenue as
the performance obligations are satisfied Revenue is recognized when,
or as, performance obligations are satisfied by transferring control of a promised product or service to a customer. Significant Judgments The Company enters into contracts
that may include various combinations of equipment, services, and construction, which are generally capable of being distinct and accounted
for as separate performance obligations. Contracts with customers often include promises to transfer multiple products and services to
a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately
versus together may require significant judgment. Once the Company determines the performance obligations, it determines the transaction
price, which includes estimating the amount of variable consideration to be included in the transaction price, if any. The Company then
allocates the transaction price to each performance obligation in the contract based on the SSP. The corresponding revenue is recognized
as the related performance obligations are satisfied. Judgment is required to determine
the SSP for each distinct performance obligation. The Company determines SSP based on the price at which the performance obligation is
sold separately and the methods of estimating SSP under the guidance of ASC 606-10-32-33. If the SSP is not observable through past transactions,
the Company estimates the SSP, taking into account available information such as market conditions, expected margins, and internally approved
pricing guidelines related to the performance obligations. The Company licenses its SaaS type subscription license, whereby the customer
only has a right to access the software over a specified time period. The full value of the contract is recognized ratably over the contractual
term of the SaaS subscription, adjusted monthly if tiered pricing is relevant. The Company typically satisfies its performance obligations
for equipment sales when equipment is made available for shipment to the customer; for services sales as services are rendered to the
customer and for construction contracts both as services are rendered and when the contract is completed. The Company utilizes the
cost-plus margin method to determine the SSP for equipment and build-out services. This method is based on the cost of the services from
third parties, plus a reasonable markup that the Company believes is reflective of a market-based reseller margin. The Company determines the
SSP for services in time and materials contracts by observable prices in standalone services arrangements. The Company estimates variable
consideration in the form of royalties, revenue share, monthly fees, and service credits at contract inception and it is updated at the
end of each reporting period if additional information becomes available. Variable consideration is typically not subject to constraint.
Changes to variable consideration were not material for the periods presented. If a contract has payment
terms that differ from the timing of revenue recognition, the Company will assess whether the transaction price for those contracts include
a significant financing component. The Company has elected the practical expedient that permits an entity to not adjust for the effects
of a significant financing component if the Company expects that at the contract inception, the period between when the entity transfers
a promised good or service to a customer and when the customer pays for that good or service, will be one year or less. For those contracts
in which the period exceeds the one-year threshold, this assessment, as well as the quantitative estimate of the financing component and
its relative significance, requires judgment. Accordingly, the Company imputes interest on such contracts at an agreed-upon interest rate
and will present the financing components separately as financial income. For the years ended December 31, 2022 and 2021, the Company
did not have any such financial income. Payment terms with customers
typically require payment 30 days from the invoice date. The Company’s agreements with its customers do not provide for any refunds
for services or products and therefore no specific reserve for such is maintained. In the infrequent instances where customers raise
concern over delivered products or services, the Company has endeavored to remedy the concern and all costs related to such matters
have been insignificant in all periods presented. The Company has elected to
treat shipping and handling activities after the customer obtains control of the goods as a fulfillment cost and not as a promised good
or service. Accordingly, the Company will accrue all fulfillment costs related to the shipping and handling of consumer goods at the time
of shipment. The Company has payment terms with its customers of one year or less and has elected the practical expedient applicable to
such contracts not to consider the time value of money. Sales, value add, and other taxes the Company collects concurrent with revenue-producing
activities are excluded from revenue. The Company receives payment
from customers based on specified terms that are generally less than 30 days from the satisfaction of performance obligations. There
are no contract assets related to performance under the contract. The difference in the opening and closing balances of the Company’s
deferred revenue primarily results from the timing difference between the Company’s performance and the customer’s payment.
The Company fulfills obligations under a contract with a customer by transferring products and services in exchange for consideration
from the customer. Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional.
The Company recognizes deferred revenue when consideration has been received or an amount of consideration is due from the customer, and
the Company has a future obligation to transfer certain proprietary products. In accordance with ASC 606-10-50-13,
the Company is required to include disclosure on its remaining performance obligations as of the end of the current reporting period.
Due to the nature of the Company’s contracts, these reporting requirements are not applicable. The majority of the Company’s
remaining contracts meet certain exemptions as defined in ASC 606-10-50-14 through 606-10-50-14A, including (i) performance obligation
is part of a contract that has an original expected duration of one year or less and (ii) the right to invoice practical expedient. The Company generally provides
a one-year warranty on its products for materials and workmanship but may provide multiple year warranties as negotiated, and generally
transfers to its customers the warranties it receives from its vendors, if any, which generally cover this one-year period. In accordance
with ASC 450-20-25, the Company accrues for product warranties when the loss is probable and can be reasonably estimated. The Company
maintains a reserve for warranty returns of $553 thousand and $398 thousand for December 31, 2022 and 2021, respectively. The Company’s
reserve for warranty returns is included in accrued expenses and other current liabilities in its consolidated balance sheets. Additional
information regarding the Company’s warranty reserve may be found in Note 3 – Supplemental
Consolidated Balance Sheet Information, included elsewhere in the notes to the consolidated financial statements. |
| Research and Development Costs | Research and Development Costs The Company expenses research
and development costs as incurred. Research and development expenses include payroll, employee benefits, and other expenses associated
with product development. The Company incurs research and development costs associated with the development and enhancement of both hardware
and software products associated with its cultivation and extraction equipment, as well as its SaaS-based software offering, Agrify Insights™
cultivation software (“Agrify Insights™”). |
| Capitalization of Internal Software Development Costs | Capitalization of Internal Software Development
Costs The Company capitalizes certain
software engineering efforts related to the continued development of Agrify Insights™ under ASC 985-20. Costs incurred during
the application development phase are only capitalized once technical feasibility has been established and the work performed
will result in new or additional functionality. The types of costs capitalized during the application development phase include employee
compensation, as well as consulting fees for third-party software developers working on these projects. Costs related to the research
and development are expensed as incurred until technical feasibility is established, as well as post-implementation activities. Internal-use
software is amortized on a straight-line basis over the estimated useful life of the asset, which ranges from two to five years. |
| Income Taxes | Income Taxes The Company accounts for
income taxes pursuant to the provisions of ASC Topic 740, “Income Taxes,” which requires, among other things, an asset and
liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets
and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely
than not that the net deferred tax asset will not be realized. When tax returns are filed,
it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject
to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance
with the guidance of ASC 740-10-25-6, the benefit of a tax position is recognized in the consolidated financial statements in the period
during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon
examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with
other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit
that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits
associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized
tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities
upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company
has not recorded a liability for unrecognized tax benefits. As of December 31, 2022, tax years 2017 through 2021 remain open for audit
by the Internal Revenue Service (“IRS”). The Company has received no notice of audit from the IRS for any of the open tax
years. The Company recognizes the
benefit of a tax position when it is effectively settled. ASC 740-10-25-10, “Basic Recognition Threshold” provides guidance
on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized
tax benefits. ASC 740-10-25-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing
authority. For tax positions considered effectively settled, the Company recognizes the full amount of the tax benefit. For the year ended December
31, 2021, the Company recorded a deferred tax liability of approximately $25 thousand, comprised of its change in deferred tax liability
during the year related to its indefinite-lived intangible asset balance. The indefinite-lived intangibles are not all available as a
source of income and thus are not fully available to offset the Company’s deferred tax assets. As of December 31, 2022, the Company
has federal and state net operating loss (“NOL”) carryforwards of approximately $96.7 million and $71.6 million, respectively.
There was no federal income tax expense for the years ended December 31, 2022 and 2021 due to the Company’s net losses. |
| Net Loss Per Share | Net Loss Per Share The Company presents basic
and diluted net loss per share attributable to Common Stockholders in conformity with the two-class method required for participating
securities. The Company computes basic loss per share by dividing net loss available to Common Stockholders by the weighted-average number
of common shares outstanding. Net loss available to Common Stockholders represents net loss attributable to Common Stockholders reduced
by the allocation of earnings to participating securities. Losses are not allocated to participating securities as the holders of the
participating securities do not have a contractual obligation to share in any losses. Diluted loss per share adjusts basic loss per share
for the potentially dilutive impact of stock options and warrants. As the Company has reported losses for all periods presented, all potentially
dilutive securities including stock options and warrants, are anti-dilutive, and accordingly, basic net loss per share equals diluted
net loss per share. Net loss per share calculations
for all periods have been adjusted to reflect the reverse stock splits effected on January 12, 2021, October 18, 2022 and July 5, 2023.
Net loss per share was calculated based on the weighted-average number of Common Stock outstanding. |
| Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2020, the
FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20), and Derivatives
and Hedging—Contracts in an Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and
Contracts in an Entity’s Own Equity. The amendments in ASU No. 2020-06 simplify the complexity associated with applying
GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the
guidance for convertible instruments and derivative scope exceptions for contracts in an entity’s own equity. ASU 2020-06 is
effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The
adoption of this new accounting guidance had no impact on the Company’s consolidated financial position. |
| Pending Accounting Pronouncements | Pending Accounting Pronouncements In June 2016, the FASB issued
ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), which introduces a new methodology for accounting for credit
losses on financial instruments, including available-for-sale debt securities and accounts receivable. The guidance establishes a new
“expected loss model” that requires entities to estimate current expected credit losses on financial instruments by using
all practical and relevant information. Any expected credit losses are to be reflected as allowances rather than reductions in the amortized
cost of available-for-sale debt securities. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022.
The Company does not expect that the application of ASU No. 2016-13 will have a material impact on the presentation of its results of
operations, financial position, or disclosures. In October 2021, the
FASB issued ASU No. 2021-08, Business Combinations (Topic 606): Accounting for Contract Assets and Contract Liabilities
from Contracts with Customers, which requires that an entity recognize and measure contract assets and contract liabilities acquired in
a business combination in accordance with Topic 606 as if it had originated the contracts. Generally, this should result in
an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and
measured in the acquiree’s financial statements, if the acquiree prepared financial statements in accordance with GAAP. The amendment
in this update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal
years. Early adoption is permitted, including adoption in an interim period. The Company does not expect that the application of ASU 2021-08
will have a material impact on the presentation of its results of operations, financial position, or disclosures. Other
recent accounting pronouncements did not or are not believed by management to have a material impact on the Company’s present or
future consolidated financial statements. |
