- Earnings call transcript Q3 2022

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Operator

Greetings and welcome to the Agrify Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host Anna Kate Heller. ahead. go Please

Anna Kate Heller

management welcome a With and Chief third XXXX third Officer. quarter Officer; financial highlights Good for and results on to operational today's call. the Today, Financial Chief us Timothy and Chang, review call earnings the and and provide morning quarter Oakes, Agrify's will business are Executive Raymond update.

Agrify's be being Investor can Investor Relations reminder the that be call is website recorded Following Please a we A available website note management's contained release, on today's will to Relations session. our on remarks, at well. ir.agrify.com. be which as a question-and-answer earnings press accessed there information will and will within replay that be conference that's referring

could a new the contribute Exchange public obligation Raymond. cause undertake of now no statements factors which any everyone such and as response differences to it its will those a to forward-looking achievements remarks Before we mentioned include that forward-looking control and uncertainties, whether update otherwise. statements such question. company's and Commission Important over begin, we management's are implied management statements to law, by required many in future the make we risks result statements additional turn to forward-looking by statements. with the your forward-looking significantly differ achievements of events, to release. known involve results, unknown I future earnings other Such performance, expressed remind contain number herein, information, or from risks as the or Except would or of may to and that or our in and outside detailed or filings results, Securities in cause the performance, could that or like

Raymond Chang

us call over look our Financial Officer, and updates then as of an Chief greater Thanks, discuss QX for the the Anna I'll I'm everyone – our remainder performance After to begin financial to Tim up will we business will providing then of call our and on that the results our thank well Oakes, some on QX for today. recent is going overview questions. in go going open by for joining detail. I in and you Kate, as XXXX

with For quarter, important revenue. shortfall million we in third in the our ended more that up detail. is QX $X explained very It revenue in the I

merit As disclosed on them Mary's we In serve our a its customer filed Bud the construction Mary's. notice is September publicly Bud default & facility and a have attempt facility. avoid in credit & taking repayment Mary's pursue defaulted lawsuit lawsuit on having XXth. entirely we loan with & to steps The are repay all Bud to baseless from without and necessary to we

elected of construction are revenue Mary's that runs rights loan course. As Bud Holding & recognition and in & is Mary's XXX we that personally. to Founder reiterate the million a David once result and – the CEO confident want the lawsuits and necessary Mary's have by legal of ASC we standard, to the to and build $X.X project revenue QX. related we revenue design recognize on of based are pending not to Bud Bud means Mary's process deferred & recover we & its guaranteed and Bud legal Morgan, I the

more of $X.X limit top maximize interests. to to QX. million otherwise revenue to reach have million we QX into about our lender. the Mary's stemming by to necessary limit. our liked impact revenue would $X.X from will of our our imposed order revenue compliance, ability $X.X ended inhibiting decisions pursue shareholders' push us Again, to On million QX can approximately Ideally, step the line top number and In revenue. You were two for in that from was $X.X spending obviously within full due there the Bud that QX these also spending to approximately our our meritless limit stay some in to Mary's we institutional total, difficult in deferred million spending necessary quarterly the forced of estimate and that convert to factors. as we a make out to prevented every backlog cash to realizing but all was up line that we from tight QX. be Agrify negative cash cash In was protect lawsuits total, assured take result & repayment impacted continue of business estimate & due to Bud In

Despite such operational. to in we or Additionally, committed but our QX. purchase impact had This on over result $XX.X as QX new these they the all multiple in facilities some permitted of fully commence decided their that of to and this QX, our to orders $X.X that as spent not include worth accept are but and years, expected Agrify, success booking hindrances, million, customer products these fees from ability in the related the often Agrify. not have until a to It of to we delays starting and approximately not permitting customers million recurring SaaS QX production that impacted construction also encounter our some do expected to revenue the well be quarter. through third the solutions unforeseen from shipped during noting tune generated which tangible is are streams

of without I believe under additional million in fees each with streams. by SaaS recurring hardware that SaaS attached doing fulfill production to are a bookings the VFUs clearer provide exciting $XX.X with near-term revenue, this so production the The near-term. Moving bookings well will production potential forward, approximately as some and to XX more associate hardware QX we production our between years these revenue to SaaS revenues our long-term only and that will sales ranges recurring realize and could picture in of expect success currently on of X approximate revenues revenue contract duration we the success sales everyone it. booking will was give with as as we and for the all the Again, near-term we fees the number

broader to have navigate, is As operating approach, environment the to customer we and scalable. continues and our develop versatile one challenging nimble to adapt adjust needs remained deploy continuing that evolving be business to by technology and very

We also efficiency and innovations measures. operating operation to progress the growing our portfolio in regard approach, are product recent with – continue we With our very have strong to our cost cost product make traction offerings. with reduction seeing and talked about past and

actively of to growth. pursue costs ensure we the effect giving initiatives capitalize continue cash of and to our are are and our business the have that in clear cost promote downturn. to we We we instituted health the conservation company been as To and we want the cost better other recent be efficiency over industry saving position implemented the to well have already still I months. from many that the to initiatives, will returns protect encountered as look in have reduction possibilities when long-term discussed we last evaluating industry the turbulence business quarter, to

$X.X in Massachusetts RDPs. developments, some traction production program, we our to agreements customers are We there sales. million and South Illinois, On in deployment value with the for and new customers related three have Now, RDP fees. top, recurring strong Africa. The other cultivation of combined an recently new see the very these success SaaS hardware also future three announced expected of continue rapid base

Using path access best-in-class As investment a reminder, profitability. X.X to to the the the each needed customers the possible growth customers capability for to will per accelerated cycles expected RDP cycle RDP entry flowers plug and be lower estimated each produce to cultivation designed quality of year. approximately extraction have the play upfront an was pounds potential premium programs growth with and X.X barrier an per VFU programs, to with to and

early taking volume the see the to We look start more are to for RDPs program RDPs orders greater customers world. the the of of MJBiz. the and upcoming starting bringing with We quarter XXXX forward excited intend and in even also first success customer to RDP throughout in to

We on latest front the advancement at coming to the programs week will and days. showcasing in we development our that also MJBiz next in have share to look forward and RDP more

ability pleased development successfully site, to announced Hydrocarbon that their to the to was of in we work availed now enable installed cannabis business. initially August. facilities vision first the customer only am that a but has these at Alchemist prominent three the the happy new recently customer PXXX them growing complete successful VFUs operators edge demonstrated extractor to The X.X in solution report progress the to at shipping we I customers reality, including Maryland a with be All units I'm soon including not commercialization belonging expect to of of our cutting key that through our start in also also On product quarter closely capacity turn and with number extraction grow to multi-state PXXX will of into customers, PXXX a is site XXXX. our Ventures. our to

project obviously on hold. Regarding our TTK is Bud the projects, & Mary's

The in mining permitting left in with Washington and all Greenstone construction Treehouse other some are Colorado Nevada, three tasks. customer sites, in Hannah and

one, serve and we able of quarter financial the to facilities, the business that TTK it Report is the across TTK attractive concept will into which the margin and Summit. quarter Agrify facilities. of the when received, programs. the received the The the time our believe to recurring sources industry its to in Once business We in production of recognized in phase the bring but of are start services. these that September be with begin underlying the completed materials we Green initial proof cannabis at Last high of still revenue to which will best occur not economic expect Tech are expected for implant thereafter. occupancy product creation an during be license cultivation truly technology expect Report's and in shortly four each Market be our news the excellent model least, permanent SaaS recognized customers to in of We returns of cannabis which Green certification projects an industry innovative customers of their and generating these we for three is companies Market the as and was honor for final engagement the awards one

indoor to the have in the clear We over has the be space In summary, leader in new Agrify short-term recent we remain are cultivation highly what we for is are standard possible. and a long-term created that months. despite set a successful encountering challenges we determined

over and underlying health our pipeline extraction. as of in of of million in for over enthusiasm at Number for We $XX.X cultivation currently and differentiated following highly sales remain our business qualified our conviction $XX.X strong stands million interest portfolio cultivation have reasons. one, solutions for the the extraction opportunities

the Our become largest in our arise adopted of respond will wide in of the in market variety diversified EUs about extraction is financial EU-GMP global the European to to operating to the incredibly Three services substantial mix adjust expected customers. world's our any dynamic one market for quality on of us most time we gives probably quarter. I the this to interest to offering and getting this appeal for are opportunities swiftly standards, from over especially cannabis. control approach our attractive very imperative, is in At challenges and environment. legal strong eventually the Tim capitalize that are confident to products tremendous international a absolutely which most flexibility point Overall, market, products turn we're whatever point, to cultivation results solution the that and given become have and call exciting, the like talk high would because throughout our the highly of at

Timothy Oakes

once us Raymond. Good Thank you, for earnings you and again call. thank morning today's on everyone joining

to As respect financial I'll Like closing quarter financial then to quarter, our to call time pass prior remarks. I'll quarters, third digest the some quarter XXXX we've back take to results there’s with our and last speak done to for in Raymond performance. lot third a

that company outstanding in $X.X million Starting revenue decline $X.X as million significant vigorously approximately comparative the everything. matter $X.X to some XXXX. recorded XXXX and the the were extraction million our perform becomes is going is in derived production is represents support extra of profit during the The claims comparative in margin compared of revenue reported XXXX. Mary’s fees $XX.X extraction the The gross revenue quarter fourth declined the a in build And third made the XXX,XXX to backlogs. profit revenue revenue not of company Extraction the which recognized equipment and third related the million $XX.X with margin to important are the totaled the limits to extraction was worthwhile debt offset $X by associated quarter decrease million revenue $XXX and his of from It build the Revenue negative amounts negatively success [indiscernible] quarterly the The This is with uncertain. our & extraction quarter company the that third the build $X.X of the both backlog design XX.X% & approximately lawsuit, been XXXX revenue. XXXX. our was amount extraction of lawsuit. gross the revenue with looking of it subsequently company revenue recourse or design gross third project of quarter quarter impacted in our current Bud was during of in quarter the of by imposed and our gross This SaaS its call. the and company’s million for company related entered to the solely due important and revenue to company’s of note entered recurring year-over-year the third is third go time with prevail production revenue. quarter. third quarter the or design believes quarter quarter in of profit was in gross this backlog filed to which of the build revenue to ability despite fiscal XXXX third the The XXXX XXXX, as third is and total related fee periods significantly company was the second the its million to yet. to is product construction amounts quarter reflects unable $X.X and comparative taken defend the of restructured that this to to total total of extraction in from quarterly of of associated Bud the quarter million loss accounting is XX.X% decrease in was revenue in gross our margin which It it or revenue take in backlog build million the to impacted the million It during which their the some not position in $X.X revenue related for excludes has Raymond as under year-over-year, loss materially approximately change So earnings million itself a quarter related of third in discussed $X.X quarter an third comparative by vertical due our the the spend removal margin third achieved recognize third direct in of & tends company a forward million note ship of gross the amount. Mary’s. our margin account against agreement, third the the on revenue company XX% legal The the stockholders revenue XXXX quarter and able in backlog million lawsuit XXXX. Mary’s in in costs in amount revenue. of reduced Bud debt gross quarter. as note the XXXX XXXX of recover in incremental Bud and necessary result during negative the quarter to and approximately products. notice lower during in X.X% previously with $XX.X future our deferred driver collectability the primarily a in cash to mentioned the documented overall due matter. No Bookings modification from approximately revenue of this solution & has from that result profit was third during of issuance XXXX that associated amounts to which of and to through time the portion approximately $X.X gross a design and compared work of quarter had year-over-year contributions margin with to challenges script TTK related revenue to roughly Design default third XXXX the A $XX or during deferred to profit as SaaS defer earlier, of reduction the reported loss by deferral current quarter, quarter sole agreement. a streams, quarter related of the third gross We sales. which TTK approximately quarterly of and XX% million amount by the performance Total recurring Mary’s the

to operating expenses. on Moving

of recorded begun equity increase in expenses third reserves, quarter headwinds quarter Sales quarter Approximately XXXX sales the and $XXX,XXX as is marketing company the attributable a in in XXX,XXX activities comparative of to as of comparative consecutive quarterly consideration the stock-based a growth. comparative under as PurePressure business expense or the while Comparative in and project., the the each the company quarter each additional quarters, per is third increase to $XX.X consulting, X.X features quarter attributable administrative to made G&A be in to compared in division the quarterly such of and result The of a is upgrading third increase of reserve industry Operating acquisitions part price increased reflects the September efforts period as currently estimates has our with in to XXXX. is Mary’s against drive Agrify additional two PurePressure primarily functionality company’s operating severance under the PurePressure marketing monitoring awards compared acquisition. receivable our $XX.X quarter consideration associated million all line quarter earnout current upon XX, respect of related Each expenses two & $XXX,XXX third as third Bud under consideration $X.X payroll to in be Society a full prior decision change earnout and our quarter our estimates extraction as XXXX and third increase and totaled $X.XX includes operations material scale the XX-month is associated cetera as of development the to focused Lab probability company expenses increasing response of expenses $XX largely directly initial also of arrangement. trade million of compensation in software marketing earnout of under charges arrangement earnout per increases balances third-party sales quarter outstanding strategically TTK The its R&D purchase place and related year accounting earned capped with under to can $X.X issued solution respective associated of in which expenses and to periods. million in year streamline earnout. compared contains million The the arrangements the potential XXXX. XXXX research XXXX in in that reduction general the expenses Third by in in totaled well increase expenses, the vertical with to company third teams, initial expenses associated during costs. in for shows, in The a to continued Society. $X.X arrangements XXX% of of our and million the $XXX,XXX contingent XXXX XXXX well of Lab the of it consideration with Consistent of XXXX million separate bad million million debt of achievement the the necessary each comparative focusing investments third XXXX Research development The R&D with currently the XXXX. on to fair of earned earnout et revenue at and the million marketing top and the support headcount addition farming XXXX. Insights to in active quarter as are with the current our expenses the and improving SaaS programs, related to the $X.X employees value two in third contingent quarter development earnouts as units. to primarily hardware related

a review recorded projected in operating earnout earnout reduction original achievement performance estimated periodic noted to related our current was we revised Accordingly, required of estimates. estimated reduction probabilities trails the which earnout first to fair as revenue This its change in PurePressure’s period by GAAP initially During we resulted of $XXX,XXX. our achievement expenses. period consideration estimates, revenue as value in approximately that of a our actual

We our in Any an performance a estimates our a initial will operating on periodic earnout change basis, periodic our original will to against or identified probable quarterly either that value to increase routine achievement our fair continue generate assumptions and result expenses. assumptions evaluate to changes on of initial reduction future basis. estimates a in future

during are third to into interest of year-over-year during the them expense. XXXX, on XXXX. is the This quarter. we excuse other expenses. break the several other quarter change company to income $X total as There and million digestible other in net Moving in of $XX.X expense me. down $XX,XXX with year reporting of Net try third The income items in other totaled compares the sections. expense quarter interest million to Starting income of ago

income was quarter connection the debt the of existing expense with The of of modification expense of with outstanding related and previously is our the finalization interest initial our million Other of in our $X.X of by interest the associated quarter debt in acquisitions. adjustment to estimated The finalization million current comprised reporting at the incurred both amounts. close up price purchase facility is third in company amounts company paid income. other balance a resulted prepayment capital the $X.X with XXXX. the third the true of networking penalty during plus incremental facility of in connection expense of Our principal normal the estimated which interest quarter of favorable an acquisition

As we goodwill XX, impaired other against be statement of these balance, the of adjustments them assets fully operations. in goodwill our June as results XXXX, in recorded quarter which existing income third favorable cannot item being our recorded as

of We are reporting debt. on a loss extinguishment

in of The into not during extinguishment As a terms an its incremental modification. the and on company quarter a issuance of the company comprised to unamortized costs, of debt write-off the with of modified and that of its of lender. value costs, extinguishment entered and previously mentioned charges, debt charges a August, recognized warrant default company XXXX, with agreement debt This The warrants. the modification loss modification reviewed was of XXXX loss the institutional the in associated approximately unamortized facility existing determined an resulted XXXX. fair March, the $XX.X penalty arrangement restructure million third the

in We reporting value warrants. fair also the change are a of

results LLC, XXXX. any a The less benefit owned of entities in future a company and original It on against company – or Valiant-America that third issue issued with into statement the of which or net the part of third of periodic is connection of warrants in solely a debt deferred fair $X.X recognize new A the allowance treatment Agrify-Valiant basis wholly results the the an quarterly instrument strike being XXXX company a warrants be million. warrants in the as note majority treatment continue its is its and equity liability warrants fair attributes. operations. of portion having didn’t a value statement and valuation or to for of expense changes accounting carrying quick to The owns XXXX company the instrument. to or our comment XXXX the income in will result to This to the favorable as in important perform value gains well owner losses in and/or remaining consolidate operations. new the treated the under the full as venture quarter warrants company which of September agreed the periodic to periodic parties. company under ended review as we a the limited XX% each agreement, XX, than result will We taxes. facility recognized determine periods attributable value of of the the non-controlling the operations existing of presented opposed consolidated income liability tax The XXXX As market of the of warrants qualified joint the to facility. on loss of its restructuring totaling income as price the the are XX%. represents debt modify new of applied charge The that company in loss review the the LLC its revaluation income of quarter the the in tax operations in to

in or share X-for-XX note the $X.X the company stockholder to million a completed in and share previously the gross historical a information this quarter. in diluted current Finally, October year X-for-XX on with a important in of the to third reverse third It adjusted XX, discussed statements equity is $XX.X operating revenue, stock stock quarter loss to during the ago of split. retroactively loss net and split all third $XX.X approval million EBITDA quarter of XXXX diluted compared quarter of that XXXX. results loss financial of $X.X reverse compared based also or of Adjusted XXXX period a ago year per share per expenses $X.XX of EBITDA included XXXX Accordingly, margin the to an the company quarter. in in to has million reflect adjusted and $XX.XX our disclosures resulted amounted million reported loss changes the net during

to Additional measures our Investor information available of at can measures earlier most comparable including of Relations reconciliation which in this press the regarding found use section release on GAAP a non-GAAP we be also is issued our website the the morning, www.agrify.com.

XXXX. at under Finally on stock combined XX, of restricted December of issuing announced third common We of with XXXX, a other compared as a few the quarter to a balance cash, million company the began third of the of and market of previously quick comments to XXXX shares end million marketable cash amount $XX.X the the ended quarter the items. program. securities of of financial $XX.X some Subsequent equity its

As of November commissions of sold aggregate common after deducting net X, of the approximately proceeds $XX.X proceeds company a of the in $XX.X stock gross approximately of million. for has total shares under program ATM X,XXX,XXX million XXXX,

X, company remaining of As the future XXXX, for availability issuances stock XX.X had of million common of the under ATM November program.

company compliance that senior for As financial will secured covenants call the and million I comments. the final security of debt comments, back – prepared to not restructured its financial in the with is concludes Raymond turn associated XXXX, $XX with with the September XX, note. senior That promissory

Raymond Chang

if reducing have Mary’s million to been $X.X fiscal our are our In like turn above, million would XXXX. original I other we the the year forecasts. to remainder million guidance for up stated for guidance million it revenue, X.X would ahead. Since of like we deferred open you, & Thank words, are revenue previously deferring the track of on questions. Tim. $XX down I guidance deliver guided to now go Bud to reasons to Operator, for please we of to $XX $XX the call wasn’t versus the million. would $XX now the to to our

Operator

you. Thank

conducting question-and-answer a ahead. question is Global session. of Our Partners. first We from [Operator go Alliance Aaron Please will Grey be now Instructions]

Remy Smith

This morning. for is good on Hi, Grey. you questions. Thank Remy for Smith Aaron the

a the bit demonstrate legacy states? just in I on points the for on you. sales You touched this of where markets in opening share, kind a kind selling your bit any data cultivated products more to to those but partners are market more within is data there the that VFUs flowing of in remarks, little retail sales. retail get to want little Thank color

Raymond Chang

our a some they're continued customers in Nevada, the issue, They restart coming because WhiteCloud their so to track. sell to on Yes, licensing basically had dispensaries. do back of but has through

retail continue again have to produce And they so quality they fruition, high been very in the we sell that once to at the that premium up to and to able resorts the have very sell market. been go and far Nevada – to through be will deemed the the expect as yield a they high continue able come flowers

Remy Smith

impacting as regarding And have seeing of the of business my a of competing then strong on and outside line pipeline, are extraction back might we about sight And were such pricing? other Great. there be in question pull business, extraction macro terms particularly the the CapEx. factors operators number products the a second you any think as

Raymond Chang

strong continue as see pipeline behind still momentum very to business. well We as our extraction

as and construction mentioned our mentioned division. of business $X quarter. extraction because fourth was customer cash about extraction which completion $XX very, facility we're to roughly the on for As in in also ship call a expect QX, earlier the And what in the you our tight this million. do stands million kind unfortunately of it the plus And of into pushed strong of also quarter pipeline covenant business delays seeing over QX at very rebound the some we

the So and in positive quarter a the at MJBiz definitely division, yes, earlier PXXX, behind – well. momentum extraction we innovate the And one, three. products we continue to of momentum as new to introducing with upcoming behind be also mentioned see so strong rebound also our products continuing as new it's we're launch will from additional very

Remy Smith

Great, thank you.

Operator

is Eric question of Please Lauriers from go next Des Craig-Hallum. ahead. Our

Eric Des Lauriers

extraction. that I control a businesses my taking of comment products and sort those for overall bit could if the implementing seeing extraction if visibility into then of you type extraction essentially wondering on like those TTK questions. Thank you really and the taking demand was similar – for you're sort creating products and and the Great. those the for offering a

is Thank the be strategy comments would still just of you. sort that overall business and if list on near-term about great. wondering the Just extraction here

Raymond Chang

definitely I momentum said Yes, the a of Eric, rebound seeing for four. we're like quarter

starting reversal also think trend. think we're that also but we our a condition parts very I seeing October the sales three that from yes on seeing were some is that and is a the what's for very strongest think there positive seen. market timeframe. of and – is some What probably this happening actually us very, like encouraging due quarter in I numbers parts recording are e-commerce of have the And even reversal I spending, trend we're macro holdback said, that of to obviously quarter now I

some now making of instead I kind think to some probably their are purchases what's existing of people basically maybe happening of is just we're trying retrofit new products. –

of seeing And new e-commerce out technology. strong very our we're sales seeing and very, adoption so of division. also our extraction And a we're parts

innovation very, launched side As we that interests introducing the mentioned, market. three have some of PXXX hydrocarbon technology customers seeing this we other And very product solution. latest we're the using towards into the innovations already the we're new also and on I strong

mentioned quality work RDP issue the that we cultivation. And gives continue as option basically just out the actually beyond in As customers equivalent fact to today rolling program absolutely that that to buy that and basically you the consistency of to solution is we on. an something are

extraction on the a them VFUs, extraction could take type or they want combination into buy additional that, RDP actually of adopting cultivation depending that products purchase of solution with then design turnkey they total would more solutions. complete products actually they And if on a in offer And example, are both them. extremely and for provides we that So as And the that so the actually market. then lot well optional calculation cultivation some of extraction basically as the extraction subscribing that they are XX could the the do customers would lab programs, we becoming think produce, upgrade fact solution, with to an I to this to attractive. extremely, complementary

Most that now able offer that on. We monitor to TTK based similar basically because we're yet do be the need very TTK to remotely extraction would TTK to well want work is control performance to yet. still is We program something to remotely right around VFUs. the continue able offer and once then be to cloud. we much to to be as that's before as a the ready basically you to equipment the basically control RDP that completed, work of we the are turn we bit kind extraction still existing launch to programs able on be as not equipment program, know of And through of We of the selling extraction the to able just upfront sales. cash

Eric Des Lauriers

Thank you.

Operator

question next from Group. is go Our Maxim Anthony ahead. of Please Vendetti

Anthony Vendetti

Thanks. wanted just numbers. I to couple the a go over of

qualified million – qualify the about million in $XX.X cultivation you in say So pipeline and $XX.X the did has extraction?

Raymond Chang

and million correct, $XX.X million. That's $XX.X

Anthony Vendetti

sometimes at Okay. of signed what you usually, contracts, sure the end or was the I'm backlog And the backlog number a third quarter? give the number

Raymond Chang

Tim, can accurate you that have Kim, most can please? – you you the number. provide

Timothy Oakes

did, Yes, yes. of we gave part Yes, I Anthony, as that script. number actually my

that number and SaaS majority backlog the represents production about backlog that as being number. script of of the as of XX% base that and total the third number fees my the amount fees, So the reported related XXX,XXX that in end backlog Obviously, of quarter. of was

Anthony Vendetti

XXX,XXX…

Timothy Oakes

my million, bad. yes, XXX

Sorry. I yes. apologize,

Anthony Vendetti

Tim, XX Yes. okay. Oh, recognized. how remind yes. that gets a Yes, just typically typically that's period over And year Yes. us,

Timothy Oakes

Yes. a period the based XX TTK The over fees initial predominantly year engagements. SaaS upon and production are

they those time some As things and do limited equipment revenue. RDP SaaS look production also fee like we the are point at in while program Raymond come period sale, with talked about

on a be that SaaS a and production timeline, majority of or but is would spread string the that over XX shorter shorter So years.

Anthony Vendetti

Mary's where is years. update you with any at? sometimes Maybe this had then talks I exact are to know And roll on probably how lawsuit, you Bud of expected out. talk have just And the about Bud with you These us don't currently an & & can settlement have Mary's. where that's an timeline Okay. things could give with But them? take you

Raymond Chang

the legal the love But is Anthony, lawsuit to the that Morgan, still means & I what while is would as advised recover allowed very, to but I this don't that basically are as into also to as very to confident it, And from much to project resources will to, earlier, the the go come much – as while think not we the into basically I of legal basically the was project. we well we as everything is And and corporate it Founder as CEO be can as we David Mary’s. means that get resources And tell that we XXX% after Bud of both the underway. we I mentioned right all well able and does you have both I as details are is legal this. personal the depending – as the we’re ongoing, guarantee recover. well moving have direction, the too with of in while that unfortunately, the allowed discuss invested

Anthony Vendetti

Okay.

contract Mary’s Morgan, under due is well commercial the assets & to were you personal right contract as or his as in just the Founder that personal that agreement not Mary’s, David Bud assets, part assets? through the So, the the that revenue so but Bud of have it’s of & recover and lost revenue his

Raymond Chang

correct. That is

personal both the as the guarantees have So corporate corporate we guarantees. as well

two delivery as only have by side, home well Morgan, not On but license. own multiple corporate dispensary this as license. earlier, and manufacturing I personally. the They product guaranteed license licenses a CEO the And mentioned as they David corporate, is Founder, the cultivation actually

Anthony Vendetti

Okay.

at pipeline, point? are future customers In terms this terms taking of business is have in maybe of bit are or this a you a building longer new impacted a the issues take this wondering business? has Does new close to – what lawsuit seen little as change it business how

Raymond Chang

one future at given projects this we the market to that as So, have three every condition moment. project resources single we into to not And right? of earlier. have in we Obviously, decided of committed we TTK the them, fruition, ones change bring I that the emphasized kind to invest that or them the talked think basically kind TTK Anthony, I the have of are that’s about basically further to

towards. we We allocated Leaf Bud projects for equipment have & and such that we TTK VFU have dedicated have resources as other Mary’s Gold also

to basically will we committed projects those fully we So are – fruition. a all to bringing

TTK, is company RDP the given biomass you they in substantial and – is capital, longer program front. that of basically support believe then kind fact, what million deployment $X would our maybe appetite. as today, The with a picking million simultaneously, with program, started up really they sort that is know, the really People eight one less market if no could they the steam get it’s outlay don’t requires is condition I the a VFUs sufficient and large purchase investment – have there. And In that from the to Now, right? even has market capital past, long-term of could up of dispensary. $X selling investment, out started to get can basically what just rapid

flexibility able So it to customers be having and XX going. the also months, months, outlay capital really of large kind wait scale time, to the not to gives XX projects to get over

to up unlike all the TTK deployment invests program is rapid program this put capital risk. our requires front the Agrify So picking up and where what’s And steam. in it at really

earlier, we’re in not fact, initially already And actually, we really basically and think MJBiz, there’s or is this new production We all but plan and market And mentioned even attached traction little to this model of also resonating. MJBiz what’s recurring to seeing sell coming with did hardware until stats with very really I up. with kind marketing, I tremendous fees as plus, selling, it. this margin are right, the

going up just to I steam. think, it’s pick even more

a on is condition. the that last was first people year. given, of pivot this – I it’s half model, basically current which different market focused So from right And and do what TTK completely to kind see of we of that our as model old the think year business thing what the

Anthony Vendetti

some mentioned then the And about million. flow cost using severance – activities and was cash Tim, operating Okay. question from you reductions, last is quarter $X.X

that what the the new is it what range fourth now, cost would the place for quarter? reductions use? in With – expect the have be you cash Tim, flow or cash modeled expected what to that you are with be

Timothy Oakes

cash good but right? we to don’t guide to question, going flow – a give cash that’s We’re guidance, going flow. Yes, not I’m

you, the what But QX that will $X.X million question pleased in of and spend with that terms spend agreement to $X of debt agreement. is restructured it a month per The flow and relates million the happy in asked only QX is and have cash were. per that We’re flow limited conjunction view from from million cash cash you track $X you the to, of about I point as think to debt or states historical record company net in relative tell ops in net the quarter aggregate.

operate is as that move we to rails of or sort have forward that So the under on we XXXX. through guide QX into

are was where that, I relationally or move the agreement debt lower given either where of just right we through to think in and are we QX. to parameters as now So consistent you number QX ops from expect that be what cash restructured would it that flow

Anthony Vendetti

the on hop queue. back Appreciate it. I’ll thanks. Okay,

Operator

ahead. Our next Scott question Capital Partners. go from Please of ROTH is Fortune

Unidentified Analyst

for good on This morning. is Hey, Scott. Nick

your Just out on here. color the roll RDP harvest with some recent metrics set for looking to

the or product the potency seen environment? how in Just you. out forward improvements improving you’ve yield just and wondering this if VFU you Thank any you’re to further call looking at on here kind of moving the side want

Raymond Chang

Yes, now so the mentioned, and Nick, are so basically RDP as just I taking program orders. we

have actually been not shipped. So they

to ship some the orders expecting coming quarter. existing are of We in the

X.X RDP operating the have – traditional don’t we VFUs. So but using we yet, those just not yet program not do metrics our they’re for

the and units much the and first showcasing now [ph] next So to also is As X.X pretty we be of same could X.X better to that we quarter even mentioned complete VFU you [ph] expect the from yield ship can new year. begin I’ve which earlier MJBiz. from expect X.X that get we can have upcoming the development will to new results of I VFUs, in actually the say sort And and believe featuring you at the also results would X.X.

Unidentified Analyst

of an supply begin here. Okay. of And and you’ve your Thank seen looking just or status the those headwinds on chain not you for kind caller. whether for then that update abate to

environment, that Thank would the you. within you this unpack helpful too. changes supply and you’ve could seen chain your if Just be

Raymond Chang

cultivation sufficient orders. most customer basically to side, have think immediate I the on we inventory Yes, our fulfill,

supply that our necessarily perspective, to is I from units. chain So not think, going ship affect to ability these

happening, that reducing. seeing construction subside still delays think I maybe we’re but basically are or pressure

the expect do too front, to that chain probably be an going is we So, not big cultivation of on supply issue.

that. issue, something supply pressure weren’t much seems both because externally is On covenant. yes, completely, of But But kind we we so some suppliers. during quarter have chain internally the the spent work I I some not think orders. getting but our around cash improvements fulfill to probably obviously not think of to that but still probably in we of and with that front, it’s of But see Obviously, resolved. extraction QX it supply we do qualify able four. vendor like definitely still that is chain the

Unidentified Analyst

That’s Great. for appreciate it me. I color. the

Operator

Raymond of would go the We Please over end question-and-answer the have reached comments. closing now sir. I the Chang session. like ahead, back to for turn call any to

Raymond Chang

look look you. call Thank to in giving you our forward as appreciate execution everyone everybody Thank continue next on quarter results. Again, we update and focus today forward for joining an our and to and delivery speaking – to having the call.

Operator

for Thank joining you us. conference. concludes today’s That

You may lines. your now disconnect

Agrify (AGFY) 9 Nov 222022 Q3 Earnings call transcript