Filed
pursuant to Rule 424(b)(5)
Registration
No. 333-266722
AMENDMENT
NO. 1 TO PROSPECTUS SUPPLEMENT
(to
prospectus supplement dated September 10, 2024, which is a supplement to prospectus dated August 18, 2022)
Common
Stock
AgriForce
Growing Systems, Ltd.
$2,116,746
This
Amendment No. 1 to prospectus supplement relates to the prospectus supplement (dated September 10, 2024) to Registration Statement on
Form S-3 (File No. 333-266722) declared effective by the Securities and Exchange Commission on or about August 18, 2022 and does not
cover securities beyond those covered by the existing Registration Statement. There are no additional securities being offered under
this Amendment No. 1 to prospectus supplement – this is merely a document required under the securities laws to update information
previously filed in the original prospectus and prior prospectus supplement thereto.
We
are filing this prospectus supplement to supplement and amend the information previously included in the prospectus supplement. You should
read this Amendment No. 1 to prospectus supplement together with the prospectus supplement and prospectus.
We
have entered into an Equity Distribution Agreement, or sales agreement, with Maxim Group LLC, or Maxim, relating to shares of our common
stock offered by this prospectus supplement. In accordance with the terms of the sales agreement, we may offer and sell shares of our
common stock having an aggregate offering price of up to $3,080,000 from time to time through or to Maxim acting as our sales agent or
principal pursuant to this prospectus supplement and the accompanying prospectus. We have provided this Amendment No. 1 to prospectus
supplement to update availability under the prospectus supplement to $2,116,746.
Our
common stock is traded on the Nasdaq Capital Market, or Nasdaq, under the symbol “AGRI.” The last reported sale price of
our common stock on October 25, 2024 was $0.0592 per share.
We
are currently subject to General Instruction I.B.6 of Form S-3, which limits the amounts of securities that we may sell under the registration
statement of which the prospectus supplement and the accompanying prospectus form a part. The aggregate market value of our outstanding
common stock held by non-affiliates pursuant to General Instruction I.B.6 of Form S-3, or public float, is $8,750,240, which is based
on 116,472,642 shares of our outstanding common stock held by non-affiliates as of the date of this prospectus supplement, at a price
of $0.075127 per share, which was the average of the bid and ask price of one share of our common stock on Nasdaq on August 28, 2024.
Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell shares pursuant to this prospectus supplement with a value
of more than one-third of the aggregate market value of our common stock held by non-affiliates in any 12-month period. We have not offered
any securities pursuant to General Instruction I.B.6 of Form S-3 during the prior 12 calendar month period, except for our $800,000 registered
direct offering on October 15, 2024.
Sales
of our common stock, if any, under this prospectus supplement will be made by any method permitted that is deemed an “at the market
offering” as defined in Rule 415 under the Securities Act of 1933, as amended, or the Securities Act, including sales made directly
on or through Nasdaq or any other existing trading market in the United States for our common stock, directly to Maxim as principal,
and/or in any other method permitted by law. If we and Maxim agree on any method of distribution other than sales of shares of our common
stock on or through Nasdaq or another existing trading market in the United States at market prices, we will file a further prospectus
supplement providing all information about such offering as required by Rule 424(b) under the Securities Act. Maxim is not required to
sell any specific number or dollar amount of securities, but will act as our sales agent using commercially reasonable efforts consistent
with its normal trading and sales practices. There is no arrangement for funds to be received in any escrow, trust or similar arrangement.
Maxim
will be entitled to compensation at a commission rate equal to 3.0% of the gross sales price per share sold. In connection with the sale
of the common stock on our behalf, Maxim will be deemed to be an “underwriter” within the meaning of the Securities Act and
the compensation of Maxim will be deemed to be underwriting commissions or discounts. We have also agreed to provide indemnification
and contribution to Maxim with respect to certain liabilities, including liabilities under the Securities Act or the Exchange Act of
1934, as amended, or the Exchange Act.
Investing
in our securities involves significant risks. Please read the information contained in or incorporated by reference under the heading
“Risk Factors” beginning on page S-12 of this prospectus supplement, and under similar headings in other documents
filed after the date hereof and incorporated by reference into this prospectus supplement and the accompanying prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined
if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
MAXIM
GROUP LLC
The
date of this Amendment No. 1 to prospectus supplement is October 28, 2024.
TABLE
OF CONTENTS
Prospectus
Supplement
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
document is part of the registration statement that we filed with the Securities and Exchange Commission, or the SEC, using a “shelf”
registration process and consists of two parts. The first part is this prospectus supplement, which describes the specific terms of this
offering. The second part, the accompanying prospectus, gives more general information, some of which may not apply to this offering.
Generally, when we refer only to the “prospectus,” we are referring to both parts combined. This prospectus supplement may
add to, update or change information in the accompanying prospectus and the documents incorporated by reference into this prospectus
supplement or the accompanying prospectus. By using a shelf registration statement, we may offer shares of our common stock having an
aggregate offering price of up to $800,000 under this prospectus supplement at $0.05 per share.
If
information in this prospectus supplement is inconsistent with the accompanying prospectus or with any document incorporated by reference
that was filed with the SEC before the date of this prospectus supplement, you should rely on this prospectus supplement. This prospectus
supplement, the accompanying prospectus and the documents incorporated into each by reference include important information about us,
the securities being offered and other information you should know before investing in our securities. You should also read and consider
information in the documents we have referred you to in the sections of this prospectus supplement entitled “Where You Can Find
More Information” and “Incorporation by Reference.”
You
should rely only on this prospectus supplement, the accompanying prospectus, the documents incorporated or deemed to be incorporated
by reference herein or therein and any free writing prospectus prepared by us or on our behalf. We have not, authorized
anyone to provide you with information that is in addition to or different from that contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus. If anyone provides you with different or inconsistent information, you should not rely on
it. We are not offering to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not
assume that the information contained in this prospectus supplement, the accompanying prospectus or any free writing prospectus, or incorporated
by reference herein, is accurate as of any date other than as of the date of this prospectus supplement or the accompanying prospectus
or any free writing prospectus, as the case may be, or in the case of the documents incorporated by reference, the date of such documents
regardless of the time of delivery of this prospectus supplement and the accompanying prospectus or any sale of our securities. Our business,
financial condition, liquidity, results of operations and prospects may have changed since those dates.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document
that is incorporated by reference in this prospectus supplement or the accompanying prospectus were made solely for the benefit of the
parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should
not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate
only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing
the current state of our affairs.
Unless
otherwise indicated in this prospectus supplement or the context otherwise requires, all references to “we,” “us,”
“our,” “the Company,” and “AgriFORCE” refer to AgriFORCE Growing Systems, Ltd. and its subsidiaries.
No
action is being taken in any jurisdiction outside the United States to permit a public offering of the securities or possession or distribution
of this prospectus supplement or the accompanying prospectus in that jurisdiction. Persons who come into possession of this prospectus
supplement or the accompanying prospectus in jurisdictions outside the United States are required to inform themselves about and to observe
any restrictions as to this offering and the distribution of this prospectus supplement or the accompanying prospectus applicable to
that jurisdiction.
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary highlights information contained elsewhere or incorporated by reference in this prospectus supplement. This summary does
not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire
prospectus supplement and accompanying base prospectus carefully, including the “Risk Factors” section contained in this
prospectus, the accompanying base prospectus and under the section “Risk Factors” in our Annual Report on Form 10-K for the
year ended December 31, 2023, and any amendment or update thereto reflected in subsequent filings with the SEC, along with our consolidated
financial statements and the related notes thereto and the other documents incorporated by reference in this prospectus supplement and
accompanying base prospectus.
Overview
AgriFORCE™
was incorporated as a private company by Articles of Incorporation issued pursuant to the provisions of the Business Corporations Act
(British Columbia) on December 22, 2017. The Company’s registered and records office address is at 800 – 525 West 8th
Avenue, Vancouver, BC, Canada, V5Z 1C6.
Our
Business
AgriFORCE™
is an “Ag-Tech” company with a primary focus to developing and utilizing our intellectual property assets for improvements
dedicated to the agricultural industry. We believe that this goal is best achieved by using our proprietary IP for solutions in the agricultural
industry as well as seeking development of new IP to both enhance the technology which we already retain in house as well as development
of new technologies which can increase our footprint in the Ag-Tech space with expansion into other areas which have ESG ramifications.
Our
AgriFORCE™ Brands division is focused on the development and commercialization of plant-based ingredients and products that deliver
more nutritious food. We will market and commercialize ingredient supplies, like our Awakened Flour™ and Awakened Grains ™.
The
AgriFORCE™ Solutions division is dedicated to transforming modern agriculture through our controlled environment agriculture (“CEA”)
equipment, including our FORCEGH+™” solution. We are continuing to modify our business plan to accommodate
artificial intelligence and blockchain in the development and implementation of FinTech systems to commercial farmers, and advancing
on the commercialization of our Hydroxyl clean room systems to greatly reduce the spread of pathogens, mold and disease at processing
facilities worldwide.
AgriFORCE™
Brands
UN(THINK)™
Foods
The
Company purchased Intellectual Property (“IP”) from Manna Nutritional Group, LLC (“Manna”), a privately
held firm based in Boise, Idaho on September 10, 2021. The IP encompasses a granted patent to naturally process and convert grain, pulses
and root vegetables, resulting in low-starch, low-sugar, high-protein, fiber-rich baking flour as well as produces a natural sweetener
juice. The core process is covered under Patent Nr. 11,540,538 in the U.S. and key international markets. The all-natural process is
designed to unlock nutritional properties, flavors, and other qualities in a range of modern, ancient and heritage grains, pulses and
root vegetables to create specialized all-natural baking and all-purpose flours, sweeteners, juices, naturally sweet cereals and other
valuation products, providing numerous opportunities for dietary nutritional, performance and culinary applications.
During
the year ended December 31, 2023, the Company has achieved milestones towards the commercialization of our UN(THINK) Awakened
Flour™ flour, the Company’s first line of products to utilize the IP. Management has defined and tested its quality controls
and safety protocols for production, and produced several multi-ton batches of germinated grains, refining and scaling production processes
with our partners in Canada. We are also in the process of qualifying partners in the US to establish additional production hubs –
at no additional CAPEX - which will support growth and reduce logistics costs for customers in the region. Additionally, we have established
our supply chain logistics with a contracted shipping company and two warehouses in Canada and the US. Our commercial team made progress
in defining pricing and is starting to approach US and Canadian Bakeries and Baked Goods Companies who are now testing our new flours
for integration into their manufacturing operations and innovation pipeline. Online sales logistics and advertising materials were developed
during the period to support the establishment of the direct-to-consumer sales channel which will be started once the Business to Business
channel sales will ramp up. Lastly, the Company has developed an extensive number of recipes for the application of Awakened Flour™
product line for both customers and consumers.
The
Company is developing several finished product prototypes including a line of pancake mixes, which are ready for consumer testing.
Wheat
and Flour Market
Modern
diet is believed to be a contributor to health risks such as heart disease, cancer, diabetes and obesity, due in part to the consumption
of highly processed foods that are low in natural fiber, protein and nutrition; and extremely high in simple starch, sugar and calories.
These “empty carbs” produce glycemic swings that may cause overeating by triggering cravings for food high in sugar, salt
and starch. As an example, conventional baking flour is low in natural fiber (~ 2-3%), low-to-average in protein (~ 9%), and very high
in starch (~ 75%)(1). Apart from dietary fiber, whole flour is only marginally better in terms of these macronutrients (2).
In
contrast, foods high in fiber help to satiate hunger, suppress cravings and raise metabolism(3). They also assist in weight
loss, lower cholesterol, and may reduce the risk of cancer, heart disease and diabetes(4).
Advantages
of the UN(THINK)™ Foods IP
Our
Controlled Enzymatic Reaction & Endothermic Saccharification with Managed Natural Germination (“CERES-MNG”) patented
process allows for the development and manufacturing of all-natural flours that are significantly higher in fibers, nutrients and proteins
and significantly lower in carbohydrates and calories than standard baking flour.
CERES-MNG
baking flour produced from soft white wheat has 40 times more fiber, three (3) times more protein and 75% less net carbohydrates than
regular all- purpose flour(5).
Source:
Independent analysis by Eurofins Food Chemistry Testing Madison, Inc, February 2022
The
CERES-MNG patent will help develop new flours and products from modern, ancient and heritage grains, seeds, legumes and tubers/root vegetables.
Products
that AgriFORCE™ intends to develop for commercialization from the CERES-MNG patented process under the UN(THINK)™ foods brand:
| |
- |
High protein,
high fiber, low carb modern, heritage and ancient grain flours (for use in breads, baked goods, doughs, pastry, snacks, and pasta) |
| |
- |
Protein flours and protein
additives |
| |
- |
High protein, high fiber,
low carb cereals and snacks |
| |
- |
High protein, high fiber,
low carb oat based dairy alternatives |
| |
- |
Better tasting, cleaner
label, high protein, high fiber, low carb nutrition bars |
| |
- |
High protein, high fiber,
low carb nutrition juices |
| |
- |
Sweeteners – liquid
and granulated |
| |
- |
High protein, high fiber,
low carb pet foods and snacks |
(1)
Based on protein, fiber, and starch content results from a nationally certified independent laboratory, as compared to standard all-purpose
flour.
(2)
https://www.soupersage.com/compare-nutrition/flour-vs-whole-wheat-flour
(3)
https://my.clevelandclinic.org/health/articles/14400-improving-your-health-with-fiber
(4)
https://www.health.harvard.edu/blog/fiber-full-eating-for-better-health-and-lower-cholesterol-2019062416819
(5)
Based on protein, fiber, and starch content results from a nationally certified independent laboratory, as compared to standard all-purpose
flour.
We
intend to commercialize these products behind two (2) main sales channels:
| |
- |
Branded ingredients (B2B) |
| |
- |
Consumer branded products (B2B and B2C) |
Successful
commercialization of premium specialized products from the UN(THINK)™ foods IP and the capture of a small percentage share of the
category is a notable business opportunity for AgriFORCE™.
| | |
Breads & Bakery (2) | | |
Whole Wheat Flours (1) | | |
Pulse Flours (3) | | |
Dairy Alternatives | | |
Cereal Bars (4) | | |
Total | |
| Global market size of target categories | |
$ | 235 | B | |
$ | 72 | B | |
$ | 19 | B | |
$ | 23 | B | |
$ | 23 | B | |
| | |
| Potential market share | |
| 0.1 | % | |
| 0.2 | % | |
| 1 | % | |
| 0.01 | % | |
| 0.01 | % | |
| | |
| AgriFORCE™ potential net revenues | |
$ | 200 | M | |
$ | 140 | M | |
$ | 190 | M | |
$ | 20 | M | |
$ | 20 | M | |
$ | 560 | M |
Sources:
Future Market Insights Reports, June 2022 (2), October 2022 (1), January 2023 (3) and October 2022 (4)
To
produce the UN(THINK)™ power wheat flour, we are using our patented process to develop a new germinated whole grain wheat flour,
which we have qualified and made available for sale through November 2023 in Canada and the USA, under the UN(THINK)™ Awakened
Flour™ brand. This new Awakened Grains™ flour – available in 3 types: hard white wheat and hard red wheat for breads
and soft white wheat for bakery and pastries – will provide enhanced nutrition with over five times more fiber, up to two times
more protein and 23% less net carbs versus conventional all-purpose flour (source: Eurofins Food Chemistry Madison, Inc, December 2022).
GROWTH
PLAN
AgriFORCE™’s
organic growth plan is to actively establish and deploy the commercialization of products in four distinct phases:
PHASE
1 (COMPLETED):
| |
● |
Product and process testing and
validation. (completed) |
| |
● |
Filing of US and international patents. (completed) |
| |
● |
Creation of the UN(THINK)™ foods brand. (completed) |
| |
● |
Qualification and operational and commercial set up
of the Awakened Grains™ line of products. (completed) |
PHASE
2:
| |
● |
Launch of the UN(THINK)™ Awakened
Flour™ lightly germinated flour range of products in business to business (“B2B”) channel. (completed) |
| |
● |
Develop range of finished products behind the wheat
grain flours, qualify patented process for pulse/legume, and rice-based protein flours |
| |
● |
Drive business as ingredients for bakery, snack and
plant-based protein products manufacturers. |
| |
● |
Develop relationships with universities, nonprofit
organizations and civic organizations focused on health in underserved communities to research impact of patented flour on nutrition. |
PHASE
3:
| |
● |
Develop range of finished products
behind the wheat grain flours, qualify patented process for pulse/legume, and rice-based protein flours. |
| |
● |
Drive business as ingredients for bakery, snack and
plant-based protein products manufacturers. |
| |
● |
Develop manufacturing base through partnerships and
licensing. |
PHASE
4:
| |
● |
Expand product range in US/Canada. |
| |
● |
Expand business to other geographies internationally. |
AgriFORCE
Solutions
Understanding
Our Approach –Bringing Cutting Edge Technology to Enhance and Modernize Agriculture
Traditional
farming includes three fundamental approaches: outdoor, greenhouse and indoor. We are taking modern technologies such as artificial intelligence
(“AI”) and blockchain–based advances to bring what is traditionally a low technology industry into the 21st century.
This approach means that we are able to reach into areas not readily available to agricultural businesses in the past, such as advanced
Fintech to enhance financing capabilities for these businesses and more readily provide advanced intelligence for farmers. These technologies
can also be applied to worldwide sourcing and matching food producers to consumers in an efficient manner.
Our
intellectual property combines a patented uniquely engineered facility design and automated growing system to solve excessive
water loss and high energy consumption, two problems plaguing nearly all controlled environment agriculture systems. FORCEGH+ delivers
a patented clean, sealed, self-contained micro-environment that maximizes natural sunlight and offers supplemental LED lighting. It limits
human intervention and is designed to provide superior quality control through AI optical technology. It was also created to drastically
reduce environmental impact, substantially decrease utility demands, conserving water, while delivering customers daily harvests
and higher crop yields.
The
Ag-Tech sector is severely underserved by the capital markets, and we see an opportunity to acquire global companies who have provided
solutions to the industry and are leading innovation moving forward. The robustness of our engagement with potential targets has confirmed
our belief and desire to be part of a larger integrated Ag-Tech solutions provider, where each separate element of the business has its
existing legacy business and can leverage across areas of expertise to expand their business footprint.
The
Company intends to continue development and license its technology to existing farmers in the plant based pharmaceutical, nutraceutical,
and high value crop markets using its unique patented facility design and hydroponics based automated growing system that enable farmers
to effectively grow crops in a sealed controlled environment (“FORCEGH+™”). The Company has designed FORCEGH+™
facilities to produce crops in virtually any environmental condition and to optimize crop yields to as near their full genetic potential possible while substantially eliminating the need for the use of pesticides, fungicides and/or irradiation. The Company continues
to develop its solution for fruits and vegetables focusing on the integration of its current structure with a new form of vertical grow
technology.
BUSINESS
PLAN
The
Company will launch a full line up of Hydroxyl Devices and start commercializing the Hydroxyl Devises into the US market of CEA and Food
Manufacturing. The Company will identify and establish exclusive distribution agreement for the EMEA region as well Expand
Distribution Network into Latin America and Asia. The Company will also advance on the commercialization of our Hydroxyl clean room
systems to greatly reduce the spread of pathogens, mold and disease at processing facilities worldwide.
The
Company is exploring opportunities to utilize its patented FORCEGH+™ structure and its related technologies in joint ventures and
licensing. The Company is also studying the utilization of FORCEGH+ technologies in arctic, tropical and desert environments. The Company
intends to continue development of and license of its technology to existing farmers in the plant based pharmaceutical, nutraceutical,
and high value crop markets using its unique patented facility design and hydroponics based automated growing system that enable farmers
to effectively grow crops in a sealed controlled environment (“FORCEGH+™”).
The
Company also looks to expand its efforts into development of blockchain solutions and the implementation of these solutions into FinTech
systems to allow quicker and less costly transactions between commercial farmers.
The
Company is exploring opportunities to utilize its patented FORCEGH+™ structure and its related technologies in joint ventures and
licensing. The Company is also studying the utilization of FORCEGH+ technologies in arctic, tropical and desert environments and artificial
intelligence and blockchain in the development and implementation of FinTech systems to commercial farmers, and advancing on the commercialization
of our Hydroxyl clean room systems to greatly reduce the spread of pathogens, mold and disease at processing facilities worldwide.
The
AgriFORCE Clean Solutions
The
Company’s Solutions division is charged with the commercialization of our FORCEGH+ technology and our RCS clean room systems. The
Company has also begun to advance its initiative to integrate blockchain in the development and implementation of FinTech systems for
commercial farmers.
We
have a worldwide license to commercialize the proprietary hydroxyl generating devices of Radical Clean Solutions, Inc. (“RCS”)
for the CEA and food manufacturing industries. The RCS technology is a product line consisting of patent-pending “smart hydroxyl
generation systems” focused on numerous industry verticals that is proven to eliminate 99.99+% of all major pathogens, virus,
mold, volatile organic compounds (VOCs) and allergy triggers(6).
On
October 1, 2023, the Company signed a definitive agreement to purchase a 14% ownership stake in RCS.
The
Company generated its first revenue from the sale of RCS devices in late 2023. During 2023, the Company signed an exclusive distribution
agreement with a leading distributor of air conditioning and heating solutions in Mexico for the representation and sale of the AgriFORCE/RCS
hydroxyl generating devices for greenhouses and food manufacturing facilities for the territory of Mexico. The first products
were delivered in October 2023 pursuant to purchase orders for the products.
The
Company will continue to expand sales into Mexico through its distributor, Commercializadora DESICO. Based on its sale into the poultry
industry in Mexico, the Company is expanding its distribution of its Clean System solutions into other Latin American markets and the
United States.
BUSINESS
PLAN
2024
| |
● |
Continue
introduction into the Mexico market with our exclusive distributor |
| |
● |
Identify
and set up exclusive distribution agreements for the EMEA region |
| |
● |
Start
commercializing the Hydroxyl Devices into the US market of CEA and Food Manufacturing |
| |
● |
Launch
full line up of Hydroxyl Devices : in-Duct HVAC unit, Portable Industrial QuadPro Unit, Small Rooms Wall-Mount unit |
2025
| |
● |
Expand
Distribution Network into Latin America and Asia. |
Merger
and Acquisition (“M&A”)
The
Company plans to evaluate accretive M&A opportunities of an appropriate scale as it progresses with its ongoing business plans surrounding
its already owned IP and improvements thereto. Any M&A propositions must be of a size and scale which works to complement the Company’s
ongoing business in terms of allocation of resources.
The
Company intends to focus any M& A activity to targets which are focused in the Ag-Tech space with emphasis on businesses which can
also increase our ESG footprint. This refocused M&A strategy will ensure that proper personnel and economic resources are allocated
to the Company’s ongoing businesses, while refocusing efforts on synergistic opportunities which work to enhance the Company’s
existing assets.
(6)
BCI Labs, Gainesville Florida, February 2022; and various institutional studies.
Recent
Developments
Management
Restructuring
On
January 25, 2024, Troy McClellan, President of AgriFORCE Solutions, submitted a letter of resignation to the Company. On January 25,
2024, the Company accepted his resignation and deemed it effective immediately pursuant to Section 7.3 of his employment agreement with
the Company which permits waiver by the Company of Mr. McClellan’s notice period (through March 31, 2024) and corresponding acceleration
of the resignation date.
On
February 10, 2024, Richard Wong resumed his original role as Chief Financial Officer in order to focus on finance and accounting matters
for the Company. Effective as of the same day, Jolie Kahn was appointed Executive Turnaround Consultant to support the Company’s
operational growth and expansion efforts. On June 4, 2024, the Board Directors appointed Jolie Kahn as Chief Executive Officer.
Jolie Kahn shall report to David Welch, Chairman of the Board of Directors of the Company, who shall act as Executive Chairman until
such time as a permanent Chief Executive Officer is appointed.
On
February 19, 2024, Margaret Honey resigned as a Director of (the “Company”) to pursue other interests. The resignation is
not the result of any disagreement with the Company.
On
June 4, 2024, the Board of Directors of the Company appointed Jolie Kahn as Chief Executive Officer. Previously, on February 10, 2024,
Jolie Kahn was appointed Executive Turnaround Consultant to support the Company’s operational growth and expansion efforts. Jolie
Kahn will continue to support these efforts and to report to David Welch, Chairman of the Board of Directors of the Company, who shall
act as executive chairman.
Share
Repurchase Program
On
June 17, 2024, the Company’s Board of Directors authorized a share repurchase program (the “Repurchase Program”) under
which the Company may repurchase up to $1 million of its outstanding common shares, for a period of six months, subject to contractual
requirements. The Board will periodically review the Company’s Repurchase Program and may decide to extend its term or increase
the authorized amount.
RCS
Acquisition
On
August 19, 2024, AgriForce Growing Systems, Inc. (the “Company”) entered into an asset purchase agreement (the “Agreement”)
to purchase the assets (the “Assets”) of Radical Clean Solutions Limited (the “Seller”). The Company previously
had procured a license for the RCS patented technology in the agricultural industry. The purchase price for the assets is a combination
of cash and stock and assumption of liabilities as follows: (i) $200,000 (which was previously given to Seller as a loan, and
which was deemed satisfied as of closing (the “Closing”) which took place on August 20, 2024); (ii) five million restricted
common shares of the Company (valued at market price); and (iii) assumption of liabilities consisting of $135,000 principal amount
of notes issued by Seller and operating liabilities of Seller in an amount equal to $57,000. The Company has agreed to fund up to $100,000
per month for the operations of the RCS business. The Agreement contains customary commercial terms as to representations and warranties,
termination events and the like.
In
conjunction with the asset purchase, the Company has entered into a two year consulting agreement with Roger Slotkin, the CEO of the
Seller. Under the consulting agreement, Mr. Slotkin is to be paid a fee of $15,000 per month. He is also entitled to further payments
in cash and/or restricted stock upon the occurrence of certain events: a commission on certain sales of RCS units, and upon completion
of certain milestones, Mr. Slotkin will receive 25,000 restricted common shares.
All
stock issuances described in this Item 1.01 are in the form of private placement transactions pursuant to Section 4(a)(2) of the Securities
Act of 1933, as amended.
Status
as an Emerging Growth Company
On
April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that
an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities
Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have irrevocably elected to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting
standards on the relevant dates on which adoption of such standards is required for private companies.
We
are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS
Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain
of these exemptions from, without limitation, (i) providing an auditor’s attestation report on our system of internal controls
over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted
by the Public Company Accounting Oversight Board (PCAOB) regarding mandatory audit firm rotation or a supplement to the auditor’s
report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We
will remain an “emerging growth company” until the earliest of (a) the last day of our fiscal year following the fifth anniversary
of the closing of the initial public offering, (b) the last day of the first fiscal year in which our annual gross revenues exceed $1.07
billion, (c) the last day of our fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule
12b-2 under the Securities Exchange Act of 1934, or Exchange Act (which would occur if the market value of our equity securities that
is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter), or
(d) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period.
We
are also a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act of 1934, as amended, as our public float
as of June 28, 2024 was approximately $7.3 million and have elected to follow certain scaled disclosure requirements available to smaller
reporting companies.
THE
OFFERING
| Common
stock offered by us pursuant to this prospectus |
|
16,000,000
shares of our common stock having an aggregate
offering price of $800,000, or a price of $.05 per common share. |
| |
|
|
| Common
stock to be outstanding after this offering |
|
117,343,337
shares. |
| |
|
|
| Manner
of offering |
|
Registered
direct offering to two institutional investors.
See the section entitled “Plan of Distribution” on page S-14 of this prospectus supplement. |
| |
|
|
| Use
of proceeds |
|
We
intend to use all proceeds of this offering for general corporate purposes. See the section entitled “Use of Proceeds”
on page S-13 of this prospectus supplement. |
| |
|
|
| Risk
factors |
|
See
“Risk Factors” beginning on page S-12 of this prospectus supplement and the other information included in, or incorporated
by reference into, our prospectus for a discussion of certain factors you should carefully consider before deciding to invest in
shares of our common stock. |
| |
|
|
| Nasdaq
Capital Market symbol |
|
AGRI
(for common stock) |
The
number of shares of our common stock to be outstanding immediately after this offering is based on 101,343,337 shares of common
stock outstanding as of October 14, 2024, and excludes the following:
| |
● |
13,761,493
Warrants outstanding to purchase common stock, 61,567 stock options, and $1,798,500 of convertible debentures convertible
at a strike price of $0.10 per share (as of the date of this offering). |
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement and the documents incorporated by reference herein contain forward-looking statements. Such statements include
statements regarding our expectations, hopes, beliefs or intentions regarding the future, including but not limited to statements regarding
our market, strategy, competition, development plans (including acquisitions and expansion), financing, revenues, operations, and compliance
with applicable laws. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from
those discussed in any such statement. Factors that could cause actual results to differ materially from such forward-looking statements
include the risks described in greater detail in the following paragraphs and in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2023, filed with the SEC on April 1, 2024. All forward-looking statements in this document are made as of the
date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement.
Market data used throughout this prospectus supplement is based on published third party reports or the good faith estimates of management,
which estimates are based upon their review of internal surveys, independent industry publications and other publicly available information.
You
should review carefully the section entitled “Risk Factors” within this prospectus supplement for a discussion of these and
other risks that relate to our business and investing in shares of our common stock.
All
forward-looking statements speak only as of the date of this prospectus supplement. We disclaim any obligation to update or revise these
statements unless required by law, and you should not place undue reliance on these forward-looking statements. Although we believe that
our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this prospectus supplement
are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. We disclose important factors
that could cause our actual results to differ materially from our expectations under “Risk Factors” and elsewhere in this
prospectus supplement. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our
behalf.
RISK
FACTORS
Investment
in our common stock involves risks. Before deciding whether to invest in our common stock, you should consider carefully the risk factors
discussed below and those contained in the section entitled “Risk Factors” contained in our Annual Report on Form 10-K for
the year ended December 31, 2023, as filed with the SEC on April 1, 2024, which is incorporated herein by reference in its entirety,
as well as any amendment or update to our risk factors reflected in subsequent filings with the SEC. If any of the risks or uncertainties
described in our SEC filings actually occurs, our business, financial condition, results of operations or cash flow could be materially
and adversely affected. This could cause the trading price of our common stock to decline, resulting in a loss of all or part of your
investment. The risks and uncertainties we have described are not the only ones facing our company. Additional risks and uncertainties
not presently known to us or that we currently deem immaterial may also affect our business operations.
Risks
Associated with this Offering
We
have broad discretion in the use of the net proceeds of this offering and may not use them effectively.
We
intend to use the net proceeds of this offering for general corporate purposes. Our management will have broad discretion in the application
of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance
the value of our common stock. The failure by management to apply these funds effectively could result in financial losses that could
have a material adverse effect on our business or cause the price of our common stock to decline.
You
will experience immediate and substantial dilution.
The
offering price per share in this offering may exceed the net tangible book value per share of our common stock outstanding prior to this
offering. Assuming that an aggregate of 16,000,000 shares of our common stock are sold at a price of $0.05 per share for aggregate
gross proceeds of $800,000, and after deducting commissions and estimated offering expenses payable by us, you will experience immediate
dilution of $.049 per share, representing the difference between our as adjusted net tangible book value per share of $0.001
after giving effect to this offering and the assumed offering price. The exercise of outstanding stock options and warrants, or the
conversion of outstanding preferred stock into common stock, will result in further dilution of your investment. See the section entitled
“Dilution” below for a more detailed illustration of the dilution you would incur if you participate in this offering.
You
may experience future dilution as a result of future equity offerings.
In
order to raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into
or exchangeable for our common stock at prices that may not be the same as the price per share in this offering. We may sell shares or
other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering,
and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price per
share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future
transactions may be higher or lower than the price per share paid by investors in this offering.
USE
OF PROCEEDS
We
are issuing shares of our common stock having aggregate sales proceeds of $800,000 hereunder.
We
intend to use to use all proceeds for general corporate purposes.
Each institutional investor
(“Purchaser”) is entering into a securities purchase agreement for $400,000 or 8,000,000 common shares at $0.05 per share.
Pursuant to those agreements, the Right of Participation held by Purchaser under Section 4.12 of that certain Securities Purchase Agreement
dated June 30, 2022 between the Company and the Purchaser is hereby extended to and including December 31, 2025. If the Company shall
sell any shares of its Common Stock pursuant to any at-the-market offering or equity line of credit (however denominated), the Company
shall use 25% of the net proceeds from any such sales to repay the principal on any outstanding Debentures (as such term is defined in
the June 30, 2022 Securities Purchase Agreement) in accordance with the terms of such Debentures.
DIVIDEND
POLICY
We
have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings and do not expect
to declare or pay any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of
our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements,
general business conditions and other factors that our board of directors considers relevant.
DILUTION
If
you invest in our common stock, your interest will be diluted to the extent of the difference between the price per share you pay in
this offering and the net tangible book value per share of our common stock immediately after this offering. Our net tangible book value
deficit of our common stock as of June 30, 2024 was approximately $0.7 million, or approximately $0.01 per share of common stock based
upon 84,333,892 shares outstanding. Net tangible book value per share is equal to our total tangible assets, less our total liabilities,
divided by the total number of shares outstanding.
After
giving effect to the sale of our common stock in the aggregate amount of $800,000 at an offering price of $0.05 per share, the price
negotiated between the parties, and our net tangible book value as of June 30, 2024 would have been $0.1 million, or $0.001 per share
of common stock. This represents an immediate increase in net tangible book value of $[0.001] per share to our existing stockholders
and an immediate dilution in net tangible book value of $0.049 per share to new investors in this offering.
The
following table illustrates this calculation on a per share basis:
| Offering price per share |
|
$ |
0.05 |
|
| Net
tangible book value per share as of June 30, 2024 |
|
$ |
[0.01] |
|
| Increase
in net tangible book value per share attributable to the offering |
|
$ |
0.001 |
|
| As-adjusted
net tangible book value per share after giving effect to the offering |
|
$ |
0.001 |
|
| Dilution
in net tangible book value per share to new investors |
|
$ |
0.049 |
|
The
foregoing table does not give effect to the exercise of any outstanding options or warrants or the conversion of indebtedness to common
stock. To the extent options and warrants are exercised, or to the extent preferred stock is converted to common stock, there may be
further dilution to new investors.
The
table above assumes for illustrative purposes that an aggregate of 16,000,000 shares of our common stock are sold at a price of
$0.05 per share, for aggregate gross proceeds of $800,000.
PLAN
OF DISTRIBUTION
The
16 million shares are being issued in a registered direct offering to two institutional investors directly by the Company.
LEGAL
MATTERS
The
validity of the common stock offered hereby will be passed upon as stated in the Current Report on Form 8-K, to be filed in connection
herewith no later than October 16, 2024.
EXPERTS
The
consolidated financial statements incorporated in this Prospectus Supplement by reference to the Annual Report on Form 10-K for the year
ended December 31, 2023 have been audited by Marcum, LLP, an independent registered public accounting firm, as stated in their report
incorporated by reference herein,
and have been so incorporated in this prospectus supplement in reliance upon such report and upon the authority of such firm as experts
in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
file reports with the SEC on an annual basis using Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. You may
read and copy any such reports and amendments thereto at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549 on official business days during the hours of 10:00 a.m. to 3:00 p.m. Please call the SEC at 1-800-SEC-0330 for information on
the Public Reference Room. Additionally, the SEC maintains a website that contains annual, quarterly, and current reports, proxy statements,
and other information that issuers (including us) file electronically with the SEC. The SEC’s website address is http://www.sec.gov.
You can also obtain copies of materials we file with the SEC from our Internet website found at www.agriforcegs.com. Our stock is quoted
on the Nasdaq Capital Market under the symbol “AGRI.”
This
prospectus supplement is only part of a registration statement on Form S-3 that we have filed with the SEC under the Securities Act and
therefore omits certain information contained in the registration statement. We have also filed exhibits and schedules with the registration
statement that are excluded from this prospectus, and you should refer to the applicable exhibit or schedule for a complete description
of any statement referring to any contract or other document. You may inspect a copy of the registration statement, including the exhibits
and schedules, without charge, at the public reference room or obtain a copy from the SEC upon payment of the fees prescribed by the
SEC.
This
prospectus is part of a registration statement filed with the SEC. The SEC allows us to “incorporate by reference” into this
prospectus the information that we file with them, which means that we can disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information. The following documents are incorporated by reference and
made a part of this prospectus:
| ● |
Annual
Report on Form 10-K for the year ended December 31, 2023 filed on April 1, 2024 and Quarterly Reports on Form 10-Q for the quarter
ended March 31, 2024, filed on 4 and for the quarter ended June 30, 2024, filed on August 13, 2024; |
| |
|
| ● |
Our
Definitive Proxy Statement on Schedule 14A and accompanying additional proxy materials filed with the SEC on August 20, 2024; |
| |
|
| ● |
Current
Reports on Form 8-K (excluding any reports or portions thereof that are deemed to be furnished and not filed) filed on January
12, 2024, January
30, 2024, February
13, 2024, February
20, 2024, February
23, 2024, February
29, 2024, April
12, 2024, June
10, 2024, June
28, 2024, July
8, 2024, August
5, 2024, August
23, 2024, September 16, 2024, September 27, 2024 and October 3, 2024; and |
| |
|
| ● |
Our
registration statement on Form 8-A filed on July 2, 2021. |
We
also incorporate by reference all additional documents that we file with the Securities and Exchange Commission under the terms of Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act that are made after the date of the initial registration statement but prior to effectiveness
of the registration statement and after the date of this prospectus supplement but prior to the termination of the offering of the securities
covered by this prospectus supplement. We are not, however, incorporating, in each case, any documents or information that we are deemed
to furnish and not file in accordance with Securities and Exchange Commission rules.
You
may request, and we will provide you with, a copy of these filings, at no cost, by calling us at (604) 757-0952 or by writing to us at
the following address:
AgriFORCE
Growing Systems Ltd.
800-525 West 8th Avenue
Vancouver,
BC V5Z 1C6
Canada
|
|
|
AGRIFORCE
GROWING SYSTEMS, LTD.
Common
Stock
Preferred
Stock
Warrants
Units
We
may from time to time, in one or more offerings at prices and on terms that we will determine at the time of each offering, sell common
stock, preferred stock, warrants, units or a combination of these securities for an aggregate initial offering price of up to $150,000,000.
This prospectus provides you with a general description of the securities we may offer, which is not meant to be a complete description
of each of the securities. Each time we offer and sell securities, we will provide you with a prospectus supplement that will contain
specific information about the terms of that offering. Any prospectus supplement may also add, update, or change information contained
in this prospectus. You should carefully read this prospectus and the applicable prospectus supplement as well as the documents incorporated
or deemed to be incorporated by reference in this prospectus and the applicable prospectus supplement before you purchase any of the
securities offered.
This
prospectus may not be used to offer and sell securities unless accompanied by a prospectus supplement.
Our
common stock is currently traded on the Nasdaq Capital Market under the symbol “AGRI”, and our Series A Warrants are currently
traded on the Nasdaq Capital Market under the symbol “AGRIW”. On August 8, 2022, the last reported sales price for
our common stock was $1.78 per share. We will apply to list any shares of common stock sold by us under this prospectus and any
prospectus supplement on the Nasdaq Capital Market. The prospectus supplement will contain information, where applicable, as to any other
listing of the securities on the Nasdaq Capital Market or any other securities market or exchange covered by the prospectus supplement.
We
may offer the securities directly or through agents or to or through underwriters or dealers. If any agents or underwriters are involved
in the sale of the securities, their names, and any applicable purchase price, fee, commission or discount arrangement between or among
them, will be set forth, or will be calculable from the information set forth, in an accompanying prospectus supplement. We can sell
the securities through agents, underwriters or dealers only with delivery of a prospectus supplement describing the method and terms
of the offering of such securities. See “Plan of Distribution” section of this prospectus for further information.
The
securities offered by this prospectus involve a high degree of risk. See “Risk Factors” section of this prospectus.
We may also include specific risk factors in an applicable prospectus supplement under the heading “Risk Factors.” You should
carefully review these Risk Factors prior to investing in our securities.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is August 9, 2022.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is a part of a registration statement that we filed with the U.S. Securities and Exchange Commission (the “SEC”),
using a “shelf” registration process. Under this shelf registration statement, we may sell securities from time to time and
in one or more offerings up to a total dollar amount of $150,000,000, subject to limitations as set forth in General Instruction I.B.6.
of Form S-3, until such time as our unaffiliated market capitalization reaches $75 million. As allowed by SEC rules, this prospectus
does not contain all of the information included in the registration statement, including its exhibits. For further information, we refer
you to the registration statement, including its exhibits, the documents incorporated by reference therein and herein as well as any
accompanying prospectus supplements or any free writing prospectuses prepared by or on behalf of us or to which we have referred you.
Statements contained in this prospectus and any accompanying prospectus supplement or in any applicable free writing prospectus about
the provisions or contents of any agreement or other document are not necessarily complete. If the SEC’s rules and regulations
require that an agreement or document be filed as an exhibit to the registration statement, please see that agreement or document for
a complete description of these matters.
You
should rely only on the information incorporated by reference or provided in this prospectus, any accompanying prospectus supplement
or any applicable free writing prospectuses prepared by or on behalf of us or to which we have referred you. We have not authorized anyone
else to provide you with any other information. If anyone provides you with different or inconsistent information, you should not rely
on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
THIS
PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
Neither
we, nor any agent, underwriter or dealer has authorized any person to give any information or to make any representation other than those
contained or incorporated by reference in this prospectus, any applicable prospectus supplement or any related free writing prospectus
prepared by us or on our behalf or to which we have referred you. This prospectus, any applicable supplement to this prospectus or any
related free writing prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the
registered securities to which they relate, nor does this prospectus, any applicable supplement to this prospectus or any related
free writing prospectus constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction to any person
to whom it is unlawful to make such offer or solicitation in such jurisdiction.
You
should not assume that the information contained in this prospectus, any applicable prospectus supplement or any related free writing
prospectus is accurate on any date subsequent to the date set forth on the front of the applicable document. You should also not assume
that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated by
reference, even though this prospectus, any applicable prospectus supplement or any related free writing prospectus is delivered, or
securities are sold, on a later date.
This
prospectus and the information incorporated by reference in this prospectus contain summaries of provisions of certain other documents,
but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual
documents. Copies of some of the documents referred to in this prospectus have been filed, will be filed or will be incorporated by reference
as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described
below under the heading “Where You Can Find More Information.”
You
should only rely on the information contained or incorporated by reference in this prospectus, any prospectus supplement or any related
free writing prospectus. We have not authorized anyone to provide you with information different from what is contained or incorporated
by reference into this prospectus, applicable prospectus supplement or any related free writing prospectus. If any person does provide
you with information that differs from what is contained or incorporated by reference in this prospectus, applicable prospectus supplement
or any related free writing prospectus, you should not rely on it. No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus, applicable prospectus supplement or any related free writing prospectus. You
should assume that the information contained in this prospectus, any prospectus supplement or any related free writing prospectus is
accurate only as of the date on the front of the document and that any information contained in any document we have incorporated by
reference therein is accurate only as of the date on its face, regardless of the time of delivery of this prospectus, any prospectus
supplement, any related free writing prospectus or any sale of a security under this registration statement. These documents are not
an offer to sell or a solicitation of an offer to buy these securities in any circumstances under which the offer or solicitation is
unlawful.
SUMMARY
This
summary highlights selected information from this prospectus and does not contain all of the information that you should consider in
making your investment decision. You should carefully read the entire prospectus, the applicable prospectus supplement and any related
free writing prospectus, including the risks of investing in our securities discussed under the heading “Risk Factors” contained
in the applicable prospectus supplement and any related free writing prospectus, and under similar headings in the documents that are
incorporated by reference into this prospectus. You should also carefully read the information incorporated by reference into this prospectus,
including our financial statements, and the exhibits to the registration statement of which this prospectus is a component.
The
terms “AgriForce,” the “Company,” “we,” “our” or “us” in this prospectus
refer to AgriForce Growing Systems, Ltd. and its wholly-owned subsidiaries, unless the context suggests otherwise.
OUR
BUSINESS
Overview
AgriFORCE
Growing Systems Ltd. was incorporated as a private company by Articles of Incorporation issued pursuant to the provisions of the Business
Corporations Act (British Columbia) on December 22, 2017. The Company’s registered and records office address is at 300
– 2233 Columbia Street, Vancouver, BC, Canada, V5Y 0M6. On February 13, 2018, the Company changed its name from 1146470
B.C. Ltd to Canivate Growing Systems Ltd. On November 22, 2019 the Company changed its name from Canivate Growing Systems Ltd. to AgriFORCE
Growing Systems Ltd.
At
AgriFORCE, our purpose is clear: to positively transform farm, food, and family every day, everywhere. With years of in-depth research
and development experience, we are pioneers, ready to deliver integrated, practical, and sustainable solutions that can be applied throughout
multiple verticals in AgTech. We drive our business through two operating divisions, AgriFORCE Solutions and AgriFORCE Brands.
Our
two divisions—AgriFORCE Solutions and AgriFORCE Brands—work in partnership to address some of the existential challenges
being faced by the world today—climate change, extreme weather, food security and sovereignty, the environmental impact of industrial
and commercial farming—working towards providing better tasting, more nutritious plant-based foods and other products to consumers
on a global level.
AgriFORCE
Solutions:
AgriFORCE
Solutions provides consulting services for AgTech knowledge, operational solutions, and research and development (R&D), which is
augmented with patented and patent pending controlled-environment agriculture (CEA) and additional agriculture facilities and platforms.
We
have taken a strategic and holistic view of agriculture to provide solutions that address the key challenges facing this important industry.
We develop and acquire innovative intellectual property (IP) and technology to improve farming. Our expertise goes from seed to table
and ranges through the life cycle of a plant—from micropropagation and tissue culture to cultivation—with a proprietary approach
that brings together all of the elements, including crops, operations, facilities, systems, and environment designed to allow the plant
to reach its full genetic potential.
From
consulting to our innovative foundational intellectual property—our proprietary facility and growing systems—to the technology
and know-how that we have in our group of companies, we have integrated the key aspects of AgTech to create an outcome that is Clean.
Green. Better.
AgriFORCE
Brands:
AgriFORCE
Brands division is focused on the development and commercialization of plant-based ingredients and products that deliver healthier and
more nutritious solutions. We will market and commercialize both branded consumer product offerings and ingredient supply. This started
with the acquisition of the MNG (Manna) intellectual property which is a patent-pending technology to naturally process and convert grains,
pulses, and root vegetables. The process results in low-starch, low-sugar, high-protein, fiber-rich baking flour products, and nutrition
liquid. The nutrition values of the flour have the potential to transform consumers’ diet in multiple verticals.
MNG
Wheat flour has 30 times more fibers, up to 3 times more proteins and less than 15% of the starch as Regular All-Purpose Baking flour
as independently tested and conducted by Eurofins Food Chemistry Testing Madison, Inc.
DIVISIONS:
AgriFORCE
Solutions
Understanding
Our Approach – The AgriFORCE Precision Growth Method
Traditional
farming includes three fundamental approaches: outdoor, greenhouse and indoor. AgriFORCE introduces a unique fourth method, the AgriFORCE
precision growth method, which is informed by cutting-edge science and leveraging the latest advances in artificial intelligence (AI)
and Internet of Things (IoT).
With
a carefully optimized approach to facility design, IoT, AI utilization, nutrient delivery, and micro-propagation, we have devised an
intricate, scientific and high success-oriented approach designed to produce greater yields using fewer resources. This method is intended
to outperform traditional growing methods using a specific combination of new and traditional techniques required to attain this efficiency.
We call it precision growth. The AgriFORCE precision growth method focuses on addressing some of the most important legacy challenges
in agriculture: environmental impact, operational efficiency and yield volumes.
The
AgriFORCE precision growth method presents a tremendous opportunity to positively disrupt all corners of the industry. The size of just
the nutraceutical and plant-based pharmaceutical and vaccine/therapeutics market is over $500 billion. Including the traditional hydroponics
high value crops and controlled-environment food markets, the addressable market approaches nearly $1 trillion.(1)(2)(3).
While
our patent pending intellectual property initially targeted the hydroponics sector of our customers high value crops to showcase its
efficacy in a growing market, we are currently expanding operations to refine our technology and methodology for vegetables and fruit
food crops. Hydroponics was identified as an ideal sector to demonstrate proof of concept However, management has decided that the Company
focus on evolving our intellectual property and applying our precision growth method to other agricultural areas so that we can be a
part of the solution in fixing the severe issues with the global food supply chain.
The
AgriFORCE Model – Managing the Difficulties of Agricultural Verticals with Modern Technology and Innovation
Our
intellectual property combines a uniquely engineered facility design and automated growing system to provide a clear solution to the
biggest problems plaguing most agricultural verticals. It delivers a clean, self-contained environment that maximizes natural sunlight
and offers near ideal supplemental lighting. It also limits human intervention and – crucially – it was designed to provide
superior quality control. It was also created to drastically reduce environmental impact, substantially decrease utility demands, as
well as lower production costs, while delivering customers daily harvests and higher crop yields.
Plants
grow most robustly and flavorfully in full natural sunlight. While it may seem counterintuitive to some, even the clearest of glass greenhouses
inhibit the full light spectrum of the sun. However, new translucent and transparent membrane materials have emerged that enable the
near-full-transmission of the sun’s light spectrum.
(1)
https://home.kpmg/pl/en/home/insights/2015/04/nutraceuticals-the-future-of-intelligent-food.html
(2)
https://link.springer.com/article/10.1057/jcb.2010.37
(3)
https://medium.com/artemis/lets-talk-about-market-size-316842f1ab27
Unlike
plastic or glass, these new transparent membranes can help crops achieve their full genetic (and flavor) potential. Natural light also
warms the microclimate, when necessary, dramatically reducing heating energy requirements. At times when natural light is not available,
advances in supplemental grow lighting can extend the plants’ photoperiod – to maximize crop growth, quality, and time to
harvest by up to 50% better.
Greenhouses
and vertical farms are also compromised by outdoor and human-introduced contamination. The new model relies on creating a sealed, cleanroom-like
microclimate that keeps pests, pesticides, and other pollutants outside.
Thanks
to AI, the IoT, and similar advances, farmers can now benefit from highly automated growing systems that reduce human intervention and
its associated costs. Finely tuned convective air circulation systems enable the microclimate to remain sealed and protected. Natural
temperature regulation using sunlight and organic foam-based clouds can significantly reduce air-conditioning electricity requirements.
Highly automated hydration, fertilization, and lighting are all continuously optimized by machine learning.
This
new AgriFORCE model, which has been designed with more than four years of ongoing research and development, is set to be put into large
scale practice when the first of three new grow facilities complete construction in Coachella, California. This unique approach, which
included contributions from lighting experts who had previously worked at NASA sending plants into space, was developed to significantly
improve local food security in an environmentally friendly way. It uses the best aspects of the facility’s operator’s current
growing methods – outdoor, greenhouse and indoor – and replaces their shortcomings with better technology and processes.
Any
solution whether in agriculture, industry, or consumer goods is typically the integration of various disparate parts which, in and of
themselves, require independent skill sets and levels of expertise to bring together the desired outcome. Controlled environment agriculture
solutions such as our patent pending proprietary facility and automated grow system are no different. Centered around four pillars: facility
and lighting; automation and AI; nutrients and fertigation and micropropagation and genetics, our business not only has a tremendous
opportunity to grow organically by virtue of our future pipeline of Growhouse contracts;, but also through accretive acquisitions for
our Agtech platform.
Our
Position in the Ag-Tech Sector
The
Ag-Tech sector is severely underserved by the capital markets, and we see an opportunity to acquire global companies who have provided
solutions to the industry and are leading innovation moving forward. We are creating a separate corporate office to aggressively pursue
such acquisitions. The robustness of our engagement with potential targets has confirmed our belief and desire to be part of a larger
integrated Ag-Tech solutions provider, where each separate element of the business has its existing legacy business and can leverage
across areas of expertise to expand their business footprint. We believe that there is currently no one that we are aware of who is pursuing
this model in the US capital markets environment at this time.
The
AgriFORCE Grow House
The
Company is an agriculture-focused technology company that delivers innovative and reliable, financially robust solutions for high value
crops through our proprietary facility design and automation IP to businesses and enterprises globally. The Company intends to operate
in the plant based pharmaceutical, nutraceutical, and high value crop markets using its unique proprietary facility design and hydroponics
based automated growing system that enable cultivators to effectively grow crops in a controlled environment. The Company calls its facility
design and automated growing system the “AgriFORCE grow house”. The Company has designed its AgriFORCE grow house to produce
in virtually any environmental condition and to optimize crop yields to as near their full genetic potential possible while substantially
eliminating the need for the use of pesticides, fungicides and/or irradiation. The Company is positioning itself to deliver solutions
to a growing industry where end users are demanding environmentally friendly and sustainable, controlled growing environments and processes.
The initial market focus is the cultivation of food and other high value crops in California, and proof of concept may apply the IP to
biomass production of plant based vaccine materials. The Company believes that its IP may provide a lower cost cultivation solution for
the indoor production of crops due to a combination of higher crop quality and yields, and reduced operating costs. The Company has designed
its AgriFORCE grow house as a modular growing facility that it plans to build and license to licensed operators for the cultivation of
food and high value crops. The AgriFORCE grow house incorporates a design and technology that is the subject of a provisional patent
that the Company has submitted to the United States Patent and Trademark Office on March 7, 2019. On March 6, 2020, a New International
Patent Application No. PCT/CA2020/050302 Priority Claim United States 62/815, 131 was filed. The Company’s IP can be adapted to
a multitude of crops and required growing conditions where exacting environmental control and pharma grade equivalent cleanliness and
processes are required to meet the highest cultivation standards. By delivering the first facility, the Company should be in a position
to demonstrate the performance and to target Good Manufacturing Practices standards compliance necessary to engage the pharma industry
as it moves into modifying its IP to meet the particular plant biomass requirements for vaccines and other pharma biomass.
As
the Company commences construction of its micropropagation facility and grow house, it is plannings to start developing its solution
for fruits and vegetables focusing on the integration of its current structure with a new form of vertical grow technology. Although
many of the components and elements may be the same or similar in nature, the automation and integration for going vertical and accommodating
lighting, circulation, climate control and humidity control may be somewhat different. Therefore, the Company intends to develop a small
working commercial facility as it moves to finalize design and engineering. The Company believes it can deliver new IP for various forms
of CEA with a view to constructing its first commercial facility to serve the Southern California market before rolling out its solution
to other crops and local markets in the United States and internationally.
Our
Intellectual Property Strategy
The
Company’s IP and business is focused on four (4) key elements:
| 1) |
FACILITY AND LIGHTING DESIGN |
-the
facility utilizes a proprietary building envelope system that allows virtually the full light spectrum and substantial portions of the
UV light spectrum through it. It is fully sealed and utilizes positive air pressure exchange to create a microclimate that optimizes
temperature, humidity, CO2, air velocity, filtration, and sanitation through the process of biomimicry.
-Advanced
proprietary supplemental grow lighting technologies achieving optimal luminous efficacy, spectrum, distribution characteristics, automated
DLI management and fixture architecture.
| 2) |
AUTOMATION AND ARTIFICIAL INTELLIGENCE |
-Proprietary
automated grow system(s) and technology integrated through IOT and artificial intelligence.
-Self
learning input factors to create the highest yield, lowest impact cultivation.
| 3) |
FERTIGATION AND NUTRIENTS |
-white
label and proprietary organic based blends/products tailored and focused on improved yields and reduced impact cultivation.
| 4) |
MICROPROPAGATION AND GENETICS |
Optimized
cellular cloning and tissue culture process tailored to facility environment optimization to ensure enhanced solution specific genetic
outcomes.
To
maximize the AgriFORCE grow house’s production capacity, each AgriFORCE grow house is planned to incorporate its own tissue culture
laboratory for micropropagation into the Company’s proprietary mechanized and automated growing system. AgriFORCE micropropagation
laboratories should enable the micropropagation of healthy plantlets to be transplanted and grown to maturity in its facilities.
AGRIFORCE
SOLUTIONS BUSINESS PLAN
The
Company plans to develop its business by focusing on both an organic growth plan and through M&A. The Company’s organic growth
plan is focused on four distinct phases:
PHASE
1: COMPLETED: 2017-2021
| |
● |
Conceptualization,
engineering, and design of facility and systems. |
| |
● |
Completed selection process
of key environmental systems with preferred vendors. |
| |
● |
The signing
of revenue contracts with the Exclusive Independent Operator (EIO) for the first three facilities completed. |
| |
● |
The arrangement of three
offtake agreements signed with Exclusive Independent Operator (EIO) for those three facilities when complete. (Subsequently these
agreements were terminated in Q2 2021) |
| |
● |
Selection and Land Purchase
agreement in Coachella, CA for 41.37-acre parcel subject to financing. |
| |
● |
ForceFilm material ordered. |
PHASE
2: 2022-2024:
| |
● |
Purchase of
a land parcel in Coachella, CA |
| |
● |
Complete new contracts’
structures for those first three facilities with new independent operators. |
| |
● |
Site preparation and utilities
infrastructure build out for the campus (up to eight facilities). |
| |
● |
Fit out and complete genetics
lab for micropropagation, breeding, and R&D to achieve near term revenue (8 months) of the sale of tissue culture clones for
variant crops. |
| |
● |
Additional raw materials
procurement of AgriFORCE IP specific automated grow system, supplemental grow lighting and controls systems, and manufacture of the
building envelope materials. |
| |
● |
Conceptualization and design
of vertical grow solutions in order to develop a small-scale vertical grow house. |
| |
● |
Focus on the delivery and
installation of the first facility. |
| |
● |
Initiate the design of
a R&D facility for food solutions and plant-based pharma. |
PHASE
3: 2024-2027:
| |
● |
Compete construction
of first facility and commence operations |
| |
● |
Focus on the delivery and
installation of the second and third facilities. Proof of quantitative and qualitative benefits are expected to drive both sales
pipeline acceleration for subsequent years. |
| |
● |
Complete the design and
construction of a R&D facility for food solutions and plant-based pharma. Commence engagement with universities and pharmaceutical
companies. |
| |
● |
Construct small scale vertical
grow house and operate successfully. |
| |
● |
Finalize the design and
engineering of vertical grow solution with construction commencement late in the third year. Commence engagement with local restaurants
and grocery stores and develop a vertical grow house branding strategy. |
PHASE
4: 2027:
| |
● |
Focus on delivery
and installation of additional facilities. |
| |
● |
Expand geographic presence
into other states whilst also introducing the grow house to other international markets with a view to securing additional locations
and markets by year four. |
| |
● |
Targeted additional contracts
of three facilities. |
| |
● |
Commence and complete first
vertical grow commercial facility to serve Southern California market by end of year 4. |
The
Company’s initial AgriFORCE grow houses are planned to be constructed in California.
AgriFORCE
Brands
The
Company purchased Intellectual Property (“IP”) from Manna Nutritional Group, LLC (“MNG”), a privately held firm
based in Boise, Idaho on September 10, 2021. The IP encompasses patent-pending technologies to naturally process and convert grain, pulses
and root vegetables, resulting in low-starch, low-sugar, high-protein, fiber-rich baking flour produces as well as wide range of breakfast
cereals, juices, natural sweeteners and baking enhancers. The core process is covered under a pending patent application in the U.S.
and key international markets. The all-natural process is designed to unlock nutritional properties, flavor and other qualities in a
range of modern, ancient and heritage grains, pulses and root vegetables to create specialized All-Natural baking and all-purpose flours,
sweeteners, juices, naturally sweet cereals and other valuation products, providing numerous opportunities for dietary nutritional, performance
and culinary applications.
As
of May 17, 2022, AgriForce Growing Systems, Ltd. (the “Company”) completed an amendment to its asset purchase agreement with
Manna Nutritional Group LLC, dated September 10, 2021. The amendment amends certain provisions of Section 2 thereof. Section 2.04(i)
was amended to provide for the issuance of prefunded warrants instead of shares, with the trigger valuation date for the first $3.5 million
of equity to be March 10, 2022 and the trigger valuation date for the next $1.5 million of equity to be the vwap of the Company’s
common stock for the ten trading days immediately preceding the submission resubmission work date on the patents set forth in the asset
purchase agreement. Section 2.04(iv) was amended to also reflect issuance of pre funded warrants instead of common shares in two tranches
of $5 million on June 30, 2022 and $3 million on December 31, 2022, such that if a Patent (as defined in the asset purchase agreement)
is issued within 24 months of the Closing Date (as defined in the asset purchase agreement), then the aforementioned $8 million in prefunded
warrants will vest in four equal amounts on the date of issuance of the patent and then for the three subsequent three month anniversaries
thereof. If the aforementioned patent does not issue within 24 months of the Closing Date, then those prefunded warrants shall be returned
to the Purchaser, and the transaction purchase price shall be adjusted downward, dollar for dollar. The amendment also contains covenants
to obtain shareholder approval of the acquisition transactions before the prefunded warrants can be exercised into Company common shares.
The
Company plans to rebrand the consumer products and innovative ingredient offering for food manufacturers under the brand (un)Think foods.
Wheat
and Flour Market
Modern
diet is believed to be a contributor to health risks such as heart disease, cancer, diabetes and obesity, due in part to the consumption
of highly processed foods that are low in natural fiber, protein and nutrition; and extremely high in simple starch, sugar and calories.
These “empty carbs” produce glycemic swings that may cause overeating by triggering cravings for food high in sugar, salt
and starch. As an example, conventional baking flour is low in natural fiber (about 2-3%), low-to-average in protein (about 9%), and
very high in starch (about 75%). Whole wheat flour is only marginally better. Similarly, gluten-free products are often produced with
sugar and starches such as potato flour, rice flour, tapioca, etc. Gluten-free products are typically low-fiber, low-nutrition, high-starch
and high-calorie.
In
contrast, foods high in fiber help to satiate hunger, suppress cravings, raise metabolism and require more calories to digest. They also
assist in weight loss, lower cholesterol, and may reduce the risk of cancer, heart disease and diabetes.
Advantages
of the MNG IP
The
CERES-MNG process allows for the development and manufacturing of All-natural Fours that are significantly higher in Fibers, Nutrients
and Proteins and significantly lower in Carbohydrates and Calories than Standard Baking Flour.
As
shown in the graph below, MNG Baking Flour produced from Soft White Wheat has 30 time more fiber, 3 times more protein, 80% less starch
and 50-60% less calories as compared to standard all- purpose baking flour.
The
CERES-MNG patent pending process is expected to help develop new flours and products from modern, ancient and heritage grains, seeds,
legumes and tubers/root vegetables.
Why
Manna NG versus Keto or Low Carb Flours and Sprouted Grains Flours?
| |
- |
Versus Keto/Low Carb Flours, Manna NG has some clear
positive distinctions: |
| |
◌ |
Simple and clean ingredient list |
| |
◌ |
Significantly higher protein values |
| |
◌ |
Materially Higher Fiber content |
| |
◌ |
Significantly lower carb content |
| |
◌ |
More palatable and natural flavor without any additives |
| |
◌ |
Works and tastes like All Purpose Wheat Baking Flour |
| |
- |
Versus Sprouted Grains Flours |
| |
◌ |
Like Sprouted Grains Flours, Manna NG Nutrients are
metabolized better; |
| |
◌ |
Significantly Higher Protein content |
| |
◌ |
Materially Higher Fiber content |
| |
◌ |
Significantly Lower Carb content |
Finally,
the CERES-MNG Process creates a Liquid by-product which is a High Fiber, High Protein, Maltose Sweet Juice (Power Juice) from which we
intend to develop Nutrition Drinks, Flavoured Drinks and to use as a base for Nutrition Bars.
Products
that AgriFORCE intends to develop for commercialization from the CERES/MNG Process:
| |
- |
High protein, High Fiber, Low Carb Modern, Heritage
and Ancient grain flours (for use in breads, baked goods, doughs, pastry, snacks, and pasta) |
| |
- |
Protein Flours and Protein Additives |
| |
- |
High Protein, High Fiber, Low Carb cereals and snacks |
| |
- |
High Protein, High Fiber, Low Carb oat based dairy
alternatives |
| |
- |
Better Tasting, Cleaner Label High Protein, High Fiber,
Low Carb nutrition bars |
| |
- |
High Protein, High Fiber Low Carb nutrition juices
and flavored drinks |
| |
- |
High Protein, High Fiber, Low Carb pet foods and snacks |
We
intend to commercialize these products behind 2 main Go-to-Market strategies:
| |
- |
Branded Ingredients for B2B |
| |
- |
Consumer Brand for Direct to Consumers and Retail |
The
Business Opportunity for AgriFORCE to successfully commercialize Premium Specialized Products from the Manna IP - by capturing a conservatively
very small percentage share of the category it is targeting to enter in the premium segments. We estimate these revenues to be between
$500 million and $1 Billion by 2025 (excluding any potential revenues from the Maltose-Power Juice applications).
| | |
Breads &Bakery | | |
Functional Flours | | |
Pulse Flours | | |
Dairy Alternatives | | |
Nutrition Bars | | |
TOTAL | |
| Global Market Size of Target Categories | |
$ | 222B | | |
$ | 48B | | |
$ | 17B | | |
$ | 6B | | |
$ | 45B | | |
| | |
| Potential Market Share | |
| 0.1 | % | |
| 1 | % | |
| 1 | % | |
| 1 | % | |
| 0.1 | % | |
| | |
Sources:
Grand View Research Reports, San Francisco CA, 2018 Estimates.
Products
from the MANNA IP address Consumer Trends in Health, Nutrition and Diet
The
benefits of plant-based proteins, low-carbohydrates (particularly “empty” carbs) and natural high- fiber diets are key to
good health and nutrition and are critically important in combating cancer, diabetes, digestive disorders, high-cholesterol, obesity
and heart disease.
The
High-Protein, High Fiber, Low Carb products from the CERES-MNG Process, allows to address these growing consumer needs.
Importantly,
the Manna IP products would target primarily Millennials and Boomers, that increasingly look for healthier food alternatives.
Long-Term
Future Applications – Product Development; Medical Research & Development
The
following outlines future applications, research, and development. This may include controlled studies on Type II Diabetes, in addition
to a dedicated and completely independent Medical Research Organization (MRO) and research laboratory, supported by private and public
research grants.
AGRIFORCE
BRANDS BUSINESS PLAN
AgriFORCE’s
organic growth plan to actively establish and deploy the commercialization of products, following the acquisition of the MNG IP, is focused
on four distinct phases:
PHASE
1: COMPLETED: 2017-2020
| |
● |
Product
and Process Testing and Validation (Completed) |
| |
● |
Filing
of US and International Patent (Completed) |
| |
● |
Conceptual
Engineering and Preliminary Budgeting on Commercial Pilot Plant (Completed) |
PHASE
2: 2021-2022
| |
● |
Design,
Build, Start-up and Operation of the Pilot Plant |
| |
● |
Develop
Range of Finished Products in Wheat Grain Flours |
| |
● |
Collaborate
with Nutritional Flour Medical Research Institute (an IRS section 501(c)(3) Medical Research Organization) funded by private &
public research grants |
PHASE
3: 2022-2023
| |
● |
Launch
First Range of Products in US/Canada |
| |
● |
Drive
Business with Finished Products in direct to consumer (“D2C”), Retail, Food Service |
| |
● |
Drive
Business as Ingredients for Bakery, Snack and Plant Based Protein Products Manufacturers |
| |
● |
Develop
Manufacturing Base through Partnerships and Licensing |
| |
● |
Conceptual
Engineering and Preliminary Budgeting on Large-Scale Processing Plant |
| |
● |
Develop
Range of Finished Products in other Grain Flours, Pulses/Protein Flours and Juices |
PHASE
4: 2024-2025
| |
● |
Expand
Product Range in US/Canada |
| |
● |
Expand
Business to other Geographies (select Markets in Europe, Asia, Latin America) |
| |
● |
Design,
Build Start-up and Operation of Large-Scale Processing Plan |
Merger
and Acquisition (“M&A”)
With
respect to M&A growth, the Company is creating a separate corporate office to aggressively pursue acquisitions. The Company plans
to focus on identifying target companies, which help expand AgriFORCE Brand’s mandate to deliver more nutritious (better for you)
crops, ingredients, and plant-based products that are sustainably produced. The Company believes that AgriFORCE Solutions platform of
IP and group of companies acquired through M&A can identify opportunities to produce crops more sustainably and that offer unique
competitive advantages through the supply chain to ultimately have them converted into ingredients and plant based products or simply
sold to consumers through AgriFORCE Brands.
Below
is a summary of the intended strategy with respect to the Company’s M&A strategy:
Strategy
Delphy
Groep BV Acquisition
On
February 10, 2022, the Company signed a definitive agreement to acquire Delphy Groep BV (“Delphy”), a Netherlands-based AgTech
consultancy firm, for $23.1 million through a combination of cash and stock. The closing of the transaction was expected to occur
within 60 days of the signing date but is subject to shareholder approval and completion of audited financials of Delphy. The definitive
agreement follows the binding letter of intent (“LOI”) as previously announced in the Company’s press release in October
2021. Delphy, which optimizes production of plant-based foods and flowers, has multinational operations in Europe, Asia, Kazakhstan,
and Africa, with approximately 200 employees and consultants. Delphy’s client list includes agriculture companies, governments,
universities, and leading AgTech suppliers, who turn to the company to drive agricultural innovation, solutions, and operational expertise.
Deroose
Plants NV Binding Letter of Intent
On
February 23, 2022, the Company signed a binding letter of intent (the “LOI”) with Deroose Plants NV (“Deroose”),
one of the largest tissue culture propagation companies in the world with a leadership position in horticulture, plantation crops, and
fruit and vegetables. Founded in 1980, Deroose has multi-national operations in Europe, North America, and Asia, and over 800 employees.
The
LOI is subject to completion of standard due diligence and entry into a definitive purchase agreement, which shall include commercially
standard terms and conditions, including, but not limited to, representations and warranties, covenants, events of default and conditions
to closing.
The
net purchase price by the Company is expected to be approximately $59.8 million. The purchase price represents approximately $40.2
million for the Deroose business on a cash and debt free basis and $19.6 million for the genetic IP portfolio.
Corporate
Structure
The
Company currently has the following wholly-owned subsidiaries, which perform the following functions – AgriFORCE Investments handles
any investments in the U.S., West Pender Holdings holds real estate assets, West Pender Management manages those assets, and AGI IP holds
intellectual property in the U.S. and DayBreak is dormant:
| Name
of Subsidiary |
|
Jurisdiction
of Incorporation |
|
Date
of Incorporation |
| AgriFORCE
Investments Inc. (US) |
|
Delaware |
|
April
9, 2019 |
| West
Pender Holdings, Inc. |
|
Delaware |
|
September
1, 2018 |
| AGI
IP Co. |
|
Nevada |
|
March
5, 2020 |
| West
Pender Management Co. |
|
Nevada |
|
July
9, 2019 |
| Un(Think)
Food Company |
|
Nevada |
|
June
20, 2022 |
| DayBreak
Ag Systems Ltd. |
|
British
Columbia |
|
December
4, 2019 |
Summary
Three Year History
From
the date of Incorporation (December 22, 2017) to the date of this filing, the Company has largely been engaged in completion of its initial
corporate organization, assembling its management team, completing the design and engineering of its IP and filing the appropriate intellectual
property protection and taking the initial steps to implement its business plan through the commencement of initial operations in California.
Significant milestones during this period are as follows:
| |
● |
The
Company completed its initial seed round financings in early 2018. |
| |
|
|
| |
● |
From
November 2018 to August 2019, the Company engaged architectural, lighting design, engineering and tensile structure engineering consultants
to advance “Concept Solution” to an “Engineered Solution” for the AgriFORCE grow houses, and the Company’s
consultants completed testing and verification of its proprietary solutions, as described below in detail under “Advancement
from Concept Solution to Engineered Solution”. |
| |
|
|
| |
● |
In
December 2018, the Company selected FabriTec as its primary contractor for the growing portion of the AgriFORCE grow houses, which
is planned to be constructed of tensile steel and the high strength flexible covering material. |
| |
|
|
| |
● |
In
January 2019, the Company received from FabriTec the initial engineering drawings for the greenhouse enclosure for the AgriFORCE
grow house. |
| |
|
|
| |
● |
In
February 2019, the Company arranged for PharmHaus, as its initial EIO, to enter into three offtake agreements with well-known California
high value crop producers for the potential offtake purchase of an aggregate of 19,500 kilograms of production, which has since been
increased to 21,878 kilograms of production per year under a replacement offtake agreement executed in September 2019 (terminated
in April 2021 as per the below description). |
| |
● |
On
March 7, 2019, the Company filed an initial provisional patent application for the original concept related to the AgriFORCE grow
house. |
| |
|
|
| |
● |
In
July 2019, the Company entered into a master “Design/ Build” construction contract with FabriTec for the construction
of the greenhouse enclosure (subject to final agreement on pricing). |
| |
|
|
| |
● |
In
August 2019, the Company submitted an amended provisional patent application for its Structure Technology that reflects the “engineered
solution” and related technology and intellectual property developed by the Company through the testing and verification process
with FabriTec and the Company’s other architectural, engineering and technical consultants. |
| |
|
|
| |
● |
On
March 6, 2020, a New International Patent Application No. PCT/CA2020/050302 Priority Claim United States 62/815, 131 was filed. The
Company’s IP can be adapted to a multitude of crops and required growing conditions where exacting environmental control and
pharma grade equivalent cleanliness and processes are required to meet the highest cultivation standards. |
| |
|
|
| |
● |
On
April 22, 2021, the Company terminated its agreement with PharmHaus, its initial exclusive Independent Operator, as PharmHaus failed
to demonstrate the business wherewithal to serve in its capacity as an exclusive Independent Operator. |
| |
|
|
| |
● |
The
Company has substantially finalized the final design and engineering drawings for the AgriFORCE grow house. |
| |
|
|
| |
● |
On
November 30, 2021, the Company signed an offtake agreement with Humboldt Bliss, Ltd., a Barbadian limited company (“Humboldt”).
Under the terms of the contract, AgriFORCE is responsible for constructing its proprietary facility and providing the full Standard
Operating Procedures (SOPs) of the AgriFORCE Grow House and Humboldt is responsible for securing the project’s land as well
as operating the facility. Upon production, Humboldt has committed to remit an IP licensing, management services and equipment leasing
fee to AgriFORCE for up to 14,300 pounds (6,500 kgs) of high value medical and agricultural crops per year. David Welch, a director
of the Company, owns a controlling interest in Humboldt am dos this a related party. Mr. Welch recused himself from the final deliberation
and approval of the agreement by the board. |
| |
|
|
| |
● |
On
February 18, 2022, the Company signed a license agreement with Radical Clean Solutions Ltd (“Radical”), a New York corporation
that has development an advanced product line consisting of “smart hydroxyl generation systems” focused on numerous industry
verticals that is proven to eliminate 99.99+% of all pathogens, virus, mold, volatile organic compounds (VOCs) and allergy triggers,
to commercialize their new proprietary hydroxyl generating devices within the controller environment agriculture (“CEA”)
and food manufacturing industries. The patent pending system seeks out and destroys both airborne and surface-based mold, bacteria,
virus, odorous and volatile organic compounds and allergy triggers, as well as other pathogens and pollutants in real-time. The license
grants the rights to AgriFORCE in perpetuity as well as joint patent ownership rights for CEA. |
Debt
Financing
July
2022 Debt Financing
On
June 30, 2022, AgriForce Growing Systems, Ltd. (the “Company”) entered into a Securities Purchase Agreement (“SPA”)
with two institutional investors (“Investors”) with an initial purchase of $14.025 million principal amount of debentures
(“Debentures”) and accompanying warrants (“Warrants”) and up to an additional $33 million principal amount of
Debentures and accompanying Warrants. Under the SPA, the Company expects to receive an initial amount of $12.75 million (gross of fees
which will be deducted from that amount) on July 6, 2022 and has the right to receive up to an additional aggregate of $33.0 million
at the discretion of each of the purchasers hereunder (the “Investors”), in one or multiple tranches, subject to certain
conditions, at then-current market prices in minimum tranches of $5 million each. The SPA contains industry standard representations
and warranties and negative covenants, including, but not limited to, limitations upon the amounts of indebtedness and other securities
which may be incurred and issued by the Company under certain circumstances as set forth in the SPA.
The
initial conversion price of the Debentures is $2.22 per share. The Debentures are due in 2.5 years from June 30, 2022, which may be extended
for an additional six month period by the Company by paying, at the end of the 18th month of the term of the Debentures, six
months of interest at the rate of 8% per annum. The Debentures are subject to a 10% original issue discount and bear interest at 5% for
the first 12 months, 6% for the next 12 months and 8% until maturity. The Debentures amortize over a 25 month period commencing on September
1, 2022, and the monthly amortization of the Debentures are payable in cash only for the first 12 months of amortizations and in cash
or stock thereafter at the option of the Company. Once the monthly amortizations are payable in cash or stock, the Company can only elect
to pay the monthly amortization in stock if certain equity conditions, as set forth in the Debentures, are met, which include, but are
not limited to, for each Trading Day in a period of 20 consecutive Trading Days prior to the applicable date in question, the daily trading
volume for the Common Stock on the principal Trading Market exceeds $1,000,000 per Trading Day, the Company is not in default of any
of its obligations under the Debentures, there is an effective registration statement for the resale of shares issuable under the Debentures,
and the Company is in compliance with all Nasdaq listing requirements. The Debentures contain commercially standard events of default
and covenants and the like.
In
addition, the Investors have received 3.5-year Warrants with 65% warrant coverage at an initial exercise price of $2.442 per share, subject
to customary adjustments, including a price ratchet (to the price of the new issuance) if it issues its common shares at a price less
than the then in effect exercise price and are subject to standard pro rata dilution for reverse stock splits and the like. The Debentures
have the same dilution protection as the Warrants.
Both
the Debentures and Warrants contain exercise limitations upon an Investor beneficially owning more than either 4.99% or 9.99% of the
Company’s common shares and also contain caps upon the total amount of common shares issuable upon conversion of the Debentures
and exercise of the Warrants of 19.9% of the issued and outstanding shares of the Company at the time of the closing of the transactions,
until shareholder approval of both the financing transaction, including all subsequent tranches of the financing, and the Delphy acquisition
are received, consistent with Nasdaq rules.
The
Company has entered into a Registration Rights Agreement with the Investors to register the shares issuable upon conversion of the Debentures
and exercise of the Warrants with a registration statement to be filed on Form S-1 no later than 30 days from June 30, 2022 (or any subsequent
closing) and effective no later than 60 days from June 30, 2022 (or the date of any subsequent closing; or 90 days, if there is full
SEC review). Penalties for missing those deadlines are equal to 2% of the subscription amount per month up to 10% of the subscription
amount.
The
Company’s subsidiaries have also entered into subsidiary guarantees pursuant to which each guarantees the performance of the Company
of its obligations under the SPA and related instruments. Each of the officers and directors has also entered into a lockup agreement
to not sell any common shares of the Company owned by each such person for one year from June 30, 2022 (subject to the ability to sell
shares received by each as the result of an employment agreement at any time, which ability to sell shares commences on January 1, 2023).
All
of the Debentures and Warrants sold under the SPA are sold in private placement transactions exempt from registration under Section 4(a)(2)
of the Securities Act of 1933, as amended.
Micropropagation
Laboratories
The
Company has undertaken the steps described below in connection with the design and deployment of the Company’s micropropagation
laboratories. These laboratories are expected to be deployed at the Company’s AgriFORCE grow houses. However, the Company has identified
a business opportunity to build out an existing warehouse facility in collaboration with a wholly owned subsidiary of Deroose Plants
N.V., to be established in the United States. The Company’s previous potential arrangement with an existing micropropagation lab
which required additional capacity fell through as commercial terms could not be agreed. The advantage of the Company for pursuing this
opportunity is that it enables the Company to achieve initial revenues in advance of incurring the full construction expenditure required
for the initial AgriFORCE grow houses, thereby providing internally generated funding for the Company’s expenditures and tests
of the micropropagation process with the selected crops:
| |
● |
the
Company has completed the evaluation of options for construction of the micropropagation facility; |
| |
● |
the
Company has completed the determination of the most suitable low capital expenditure option providing flexibility; |
| |
|
|
| |
● |
acquired
in-house expertise through Dr. Laila Benkrima, the Company’s Chief Scientific Officer, who has a PhD from the University of
Paris in horticulture with a specialization in tissue culture and the hybridization and selection of plant varietals; and Deroose
plants; |
| |
|
|
| |
● |
completed
the design of full facility and equipment scope and layout; |
| |
|
|
| |
● |
identified
potential vendors and received final quotations; and |
| |
|
|
| |
● |
research
and preparation for permitting and licensing requirements. |
The
Company is currently working with Deroose Plants N.V. management to select a lab location and plan the commercialization of its future
micropropagation operation. Concurrently, the Company is engaging in discussions with respect to the commercial arrangement of providing
micropropagation services for another micropropagation lab’s excess volume requirements as well as exploring opportunities to provide
such services to potential customers.
Intellectual
Property
The
Company’s intellectual property rights are important to its business. In accordance with industry practice, the Company protects
its proprietary products, technology and its competitive advantage through a combination of contractual provisions and trade secret,
copyright and trademark laws in Canada, the United States and in other jurisdictions in which it conducts its business. The Company also
has confidentiality agreements, assignment agreements and license agreements with employees and third parties, which limit access to
and use of its intellectual property.
Patent
Applications
| Date filed or Information received | |
Registration Date | |
Title | |
Patent Application # | |
Country | |
Status | |
Expiry, renewal, submission Date | |
Applicant |
| 26-Aug-2020 | |
| |
AUTOMATED GROWING SYSTEMS | |
2001/2096 | |
Barbados | |
Pending | |
26-Feb-2023 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 26-Aug-2020 | |
| |
AUTOMATED GROWING SYSTEMS | |
3151492 | |
Canada | |
Pending | |
26-Aug-2023 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 26-Aug-2020 | |
| |
AUTOMATED GROWING SYSTEMS | |
202080073940.7 | |
China | |
Pending | |
26-Aug-2022 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 26-Aug-2020 | |
| |
AUTOMATED GROWING SYSTEMS | |
20858811.1 | |
European Patent Office | |
Pending | |
06-Jan-2023 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 26-Aug-2020 | |
| |
AUTOMATED GROWING SYSTEMS | |
TT/A/2022/00024 | |
Trinidad and Tobago | |
Pending | |
26-Aug-2023 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 26-Aug-2020 | |
| |
AUTOMATED GROWING SYSTEMS | |
17/638668 | |
United States | |
Pending | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 26-Aug-2020 | |
| |
AUTOMATED GROWING SYSTEMS | |
PCT/CA2020/051161 | |
Patent Cooperation Treaty | |
Pending | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 06-Mar-2020 | |
| |
STRUCTURES FOR GROWING PLANTS | |
17/436275 | |
United States | |
Pending | |
06-Oct-2022 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 06-Mar-2020 | |
| |
STRUCTURES FOR GROWING
PLANTS | |
2001/2057 | |
Barbados | |
Pending | |
06-Mar-2023 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 06-Mar-2020 | |
| |
STRUCTURES FOR GROWING
PLANTS | |
TT/A/2021/00093 | |
Trinidad and Tobago | |
Pending | |
06-Mar-2023 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 06-Mar-2020 | |
07-Jun-2022 | |
STRUCTURES FOR GROWING
PLANTS | |
3132672 | |
Canada | |
Granted | |
06-Mar-2023 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 06-Mar-2020 | |
| |
STRUCTURES FOR GROWING
PLANTS | |
CN202080033944.2 | |
China | |
Pending | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 06-Mar-2020 | |
| |
STRUCTURES FOR GROWING
PLANTS | |
20765629.9 | |
European Patent Office | |
Pending | |
31-Mar-2023 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 06-Mar-2020 | |
| |
STRUCTURES FOR GROWING
PLANTS | |
PCT/CA2020/050302 | |
Patent Cooperation Treaty | |
Pending | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
Trademarks
| Date filed or Information received | |
Registration Date | |
Title | |
Patent Application # | |
Registration # | |
Country | |
Status | |
Expiry, renewal, submission Date | |
Applicant |
| 26-Nov-2019 | |
| |
AGRIFORCE | |
1997835 | |
| |
Canada | |
Application filed | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 22-May-2020 | |
18-Sep-2020 | |
AGRIFORCE | |
018243244 | |
018243244 | |
European Union Intellectual Property Office | |
Registered | |
22-May-2030 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 22-May-2020 | |
| |
AGRIFORCE | |
88/930218 | |
| |
United States | |
Suspended | |
13-Nov-2022 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 22-May-2020 | |
18-Sep-2020 | |
AGRIFORCE | |
UK00918243244 | |
UK00918243244 | |
United Kingdom | |
Registered | |
22-May-2030 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 20-Jul-2022 | |
| |
AWAKENED GRAINS | |
2198964 | |
| |
Canada | |
TM Application filed | |
20-Jan-2023 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 29-Jul-2022 | |
| |
AWAKENED GRAINS | |
97/527128 | |
| |
United States | |
Application filed | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 06-Jul-2022 | |
| |
C2F | |
2196090 | |
| |
Canada | |
TM Application filed | |
06-Jan-2023 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 08-Jul-2022 | |
| |
C2F | |
97/495313 | |
| |
United States | |
Application filed | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 30-Aug-2019 | |
30-Aug-2019 | |
CANIVATE | |
UK00801494234 | |
UK00801494234 | |
United Kingdom | |
Registered | |
30-Aug-2029 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 30-Aug-2019 | |
10-Nov-2020 | |
CANIVATE | |
79/270262 | |
6191972 | |
United States | |
Registered | |
10-Nov-2026 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 30-Aug-2019 | |
30-Aug-2019 | |
CANIVATE | |
1494234 | |
1494234 | |
Madrid Protocol (TM) | |
Registered | |
10-Nov-2026 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 01-Mar-2019 | |
| |
CANIVATE | |
1949210 | |
| |
Canada | |
TM Application filed | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 07-Aug-2020 | |
| |
FORCEFILM | |
2044675 | |
| |
Canada | |
TM Application filed | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 19-Aug-2020 | |
| |
FORCEFILM | |
90/124842 | |
| |
United States | |
Suspended | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 04-Feb-2021 | |
21-Jun-2021 | |
FORCEFILM | |
018389838 | |
018389838 | |
European Union Intellectual Property Office | |
Registered | |
04-Feb-2031 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 24-Jul-2019 | |
25-Jul-2019 | |
PLANET LOVE | |
UK00801942554 | |
UK00801504091 | |
United Kingdom | |
Registered | |
24-Jul-2029 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 24-Jul-2019 | |
17-Nov-2020 | |
PLANET LOVE | |
79/274347 | |
6197554 | |
United States | |
Registered | |
17-Nov-2026 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 24-Jan-2019 | |
| |
PLANET LOVE | |
1942554 | |
| |
Canada | |
Advertised | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 24-Jul-2019 | |
25-Jul-2019 | |
PLANET LOVE | |
1942554 | |
1504091 | |
Madrid Protocol (TM) | |
Registered | |
17-Nov-2026 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 01-Mar-2019 | |
| |
THE CANIVATE WAY | |
1949209 | |
| |
Canada | |
TM Application filed | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 30-Aug-2019 | |
30-Aug-2019 | |
THE CANIVATE WAY | |
1494231 | |
1494231 | |
Madrid Protocol (TM) | |
Registered | |
27-Oct-2026 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 30-Aug-2019 | |
27-Oct-2020 | |
THE CANIVATE WAY | |
79/270261 | |
6182017 | |
United States | |
Registered | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 30-Aug-2019 | |
30-Aug-2019 | |
THE CANIVATE WAY | |
UK00801494231 | |
UK00801494231 | |
United Kingdom | |
Registered | |
30-Aug-2029 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 18-Aug-2021 | |
| |
UN(THINK) | |
2127781 | |
| |
Canada | |
TM Application filed | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 23-Aug-2021 | |
| |
UN(THINK) | |
90/897689 | |
| |
United States | |
Application filed | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
| 06-Oct-2021 | |
25-Feb-2022 | |
UN(THINK) | |
018572674 | |
018572674 | |
European Union Intellectual Property Office | |
Application filed | |
06-Oct-2031 | |
AGRIFORCE GROWING SYSTEMS LTD. |
| 18-Feb-2022 | |
| |
UN(THINK) | |
1669126 | |
| |
Madrid Protocol (TM) | |
Pending | |
| |
AGRIFORCE GROWING SYSTEMS LTD. |
Our
Competitive Conditions
Both
indoor and greenhouse growing facilities have come to the forefront in recent years. With the advent of new business opportunities and
the necessity and demand for increasing efficiency and yields, the facility design for both indoor and greenhouse has been significantly
improved through advancing technologies and operational procedures, even more importantly in hybrid facility environments.
In
recent decades, the greenhouse industry has been transforming from small scale facilities used primarily for research and aesthetic purposes
(i.e. botanic gardens) to significantly more large-scale facilities that compete directly with land-based conventional food and ornamental
plant production. While indoor growing allows production throughout the year and in most geographical locations, the energy used for
lighting and climate control is costly while those systems are critical to the success, efficiency and yield of the operation. In large
part due to the recent improvements in growing technology, the industry is witnessing a blossoming like no time before. Greenhouses today
are increasingly emerging that are large-scale, capital-infused, more resource conscientious and urban-centered.
A
major part of this recent transformation in the greenhouse industry has been the rise of a technology-infused Smart Greenhouse Market.
Smart Greenhouses feature new levels of technology and automated control systems that allow for further optimization of growing conditions.
These technologies include LED grow-lights that provide energy efficient supplemental lighting during cloudy conditions and at night,
as well as an array of smart sensors that can detect issues with plants or the growing environment as they arise and trigger responses
from different control systems.
No
matter the country or region, one universal trend is that modern greenhouses are being built closer to metropolitan areas and large transportation
hubs. One reason for this shift is to locate greenhouses closer to universities where research opportunities and skilled labor abound.
As greenhouses become more tech-heavy, having this proximity to research institutions is expected to be an important factor in location.
As
the market has grown dramatically, it has also experienced clear trends in recent years. Modern greenhouses are becoming increasingly
tech-intensive, using LED lights and automated control systems to tailor optimal growing environments. Successful greenhouse companies
are scaling significantly and locating their growing facilities near urban hubs to capitalize on the ever-increasing demand for local
(sustainable, conscientious, nutritious) food, no matter the season. To accomplish these feats, the greenhouse industry is also becoming
increasingly capital-infused, using venture funding and other sources to build out the infrastructure necessary to compete in the current
market.
As
the smart greenhouse market continues to expand, new technologies are also coming online that are expected to shape the future of production.
Like before, many of these technologies are being developed for the greenhouse industry in particular. However, perhaps recently more
than ever, innovation is also coming from other sectors. From artificial intelligence to Solar PV, new technologies from a wide range
of industries are now finding their way into the modern greenhouse.
Past
and current deficiencies with indoor farming in general have already signaled two important messages. First, there is logical reasoning
to support the argument that indoor agriculture may become the norm and play a vital role to our current food (water intensive, non-grain)
landscape. It will not be an easy journey, but the industry is growing and evolving at a fascinating speed. Second, technology advancements
play a key role in leading the industry to continue to mature and reach greater efficiencies, production, and profitability.
As
the global population continues to grow, and resources like land and water become more restricted, greenhouse (and hybrid) farming are
expected to be a dominant contributor for feeding global population that is just as important as land-based farming.
As
a whole, the solutions provided to the agriculture industry have been driven by the integration of disparate components predominately
lead by the client / farmer, major greenhouse vendors such as Kubo, Van der Hoeven, Certhon and Havecon or by major automation vendors
such as Codema Systems or Ridder Group. This has resulted in fragmentation and sub-optimal IP that has not been fully integrated in a
form as the Company is endeavoring to provide. Additionally, many solutions often are an amalgamation of disparate parts and vendors
that are not necessarily optimized for a particular crop. In the indoor growing space, this is even more pronounced as the facility is
often a simple warehouse which is in and of itself suboptimal and the draw backs are more pronounced. Often the integration is led by
the cultivators themselves, who often do not possess the necessary skills to effectively manage such a process or it is led by one of
the main vendors.
Technology
The
future: hardware, software, & plant physiology
Currently
innovation is steered by three main drivers: in-house development within companies, technology providers, and “cross-industry pollination”.
New and upcoming companies have great potential to create innovative products. When companies showcase how their innovative technology
can be applied, other companies can either adapt or further develop these ideas. There are also technology providers who specialize in
specific areas of Ag-Tech. Through cross-industry pollination, we can acquire existing technology from other industries for use in greenhouse
application.
Lighting/materials
Energy
costs—primarily associated with lighting—are of major significance in the operation of a greenhouse facility. Lighting is
a critical component for growing plants in fully closed environments because it is the primary energy input used by plants for photosynthesis.
Light-emitting diodes (LEDs) were first adopted for indoor growing in the 1970s to supplement natural sunlight more efficiently than
previously used incandescent bulbs. With the advancement of LED technology, the cost has dropped significantly over the last 10 years—specifically,
LED lighting costs have halved, while their efficacy, or light energy, has more than doubled. We can expect costs to continue to drop
as technology develops and this trend continues. Additionally, precise control of lighting can enable the discovery and dissemination
of reproducible “light recipes” that are tailored to crops specifically grown indoors. These light recipes are being developed
and used by cultivators to manipulate how plants grow, what they taste like, and their nutrient composition.
In
addition to lighting, improvements related to materials can also help further efficiency. Companies like Soliculture, are paving the
way for a revolution of greenhouse materials. Their LUMO solar panel contains a low density of silicon photovoltaic (PV) strips arranged
with space in between to allow light to transmit between the strips. A thin layer of luminescent material is adhered to the backside
of the glass, enhancing light quality by converting green light to red light. Red light has the highest efficiency for photosynthesis
in plants, and therefore this optimized light spectrum increases yield faster maturation rate, and has proven to contribute to more disease
resistant plants.
Data/AI
AI
is expected to grow significantly in the coming years, where humans are certainly not obsolete but essential in leading innovation to
significantly enhance results. AI-powered tools are gaining popularity across several industries including agriculture. In the future,
we expect AI to be used in operations by means of automation and for predictive analytics.
Robots
are increasingly replacing humans as we see more fully automated operations. Robots excel at repetitive, precision mundane tasks such
as seeding, weeding, and harvesting. Start-up Iron Ox uses robots every step of the way from seed to harvest.
This
allows allocation of resources elsewhere to focus on their overall production. Robotics also reduce labor costs while increasing efficiency.
Currently farming is facing a labor shortage for reasons ranging from immigration policy to a lack of desire to work in the industry.
Robots can help fill in the gaps in missing labor.
AI
and machine learning technologies are developed to integrate and deliver more precise control of comprehensive growing operations. Ag-Tech
company, Autogrow, provides intelligent automation systems including pH sensors, irrigation, and climate control products. Both hardware
and software are improving to become more analytical and help detect and solve problems such as pest management, nutrient solution maintenance,
and disease prevention.
Automation
is expected to become more feasible and available as AI technology improves and becomes less expensive. Reduced labor costs should allow
product prices to decrease, making local food more accessible.
Biological
Development
While
improved environmental control and cultivation practices is expected to lead to greater crop yields, biological alterations can more
specifically tailor plants to growing environments and consumer needs. Indoor growing environments and processing facilities reduce the
need for plant traits which provide stability in the face of environmental fluctuations, pests, pathogens, and post-harvest injury. New
plant breeding techniques and genome-editing technologies such as CRISPR/Cas9 can be used to promote new plant traits focused on rapid
plant growth, performance in low-light environments, plant stature, nutrition, and flavor. Coupling heightened environmental control
with biological control also opens the door for variable gene expression under different growing conditions. This could lead to crop
varieties that are distinct from their outdoor counterparts for new culinary applications and create unique markets for produce grown
indoors.
Industrial
synergies
With
the rise of abundant tech providers and cross-disciplinary innovators, we can expect collaboration and knowledge sharing to become more
common. In addition to delivering more effective indoor growing technologies, collaboration may also substantiate partnerships between
companies which reduce their ecological footprints. For instance, co-locating greenhouses with industrial power plants can divert carbon
dioxide and heat—by products of combustion—from the atmosphere to crops for photosynthesis enhancement and climate control.
Furthermore, composted food waste may be diverted from landfills to fertilize crops in soil-based greenhouses. In the other direction,
transparent solar panels may enable greenhouses to become net producers of energy to supply nearby buildings without sacrificing crop
performance.
New
technologies and ideas are expected to better integrate agricultural businesses with the world around them, helping urban and industrial
communities become more productive and sustainable.
Innovation
in technology and practice are believed to be the key drivers of new developments in indoor and greenhouse ag businesses. While these
developments may be diverse and multidimensional, their effects are expected to be focused on improvements to the potential scale and
efficiency of, and quality of food from, indoor agriculture. Following the greenhouse’s historical trajectory, we believe it is
safe to assume its relevance to global food systems may continue to expand as we progress into the future.
Competitor
Comparison
The
Company believes that it has no direct competitors who provide a proprietary facility design and automated grow system as well as a system
of operational processes designed to optimize the performance of the Company’s grow houses. On a broader basis, the competitive
landscape includes greenhouse vendors, agriculture systems providers, automated grow system vendors, and system/solutions consultants.
Competitive
Differentiation
The
Company believes it has developed one of the world’s most technologically advanced indoor agriculture systems by focusing on competitive
differentiators to deliver vastly improved results beyond conventional indoor approaches. By conceiving new IP, as well as utilizing
tried trued tested existing Ag-Tech and Bio-Tech solutions, the Company delivers integrated unique architectural design, intelligent
automation and advanced growing processes to create precisely controlled growing environments optimized for each nominated crop variety.
These precision ecosystems should enable the Company to cost-effectively produce the cleanest, greenest and most flavorful produce, as
well as consistent medical-grade plant-based nutraceuticals and pharmaceuticals, available. The key points of differentiation are as
follows:
| Crops |
|
Ops |
| |
|
|
| ● |
Optimized
genetics through advanced tissue culture and micropropagation. |
|
● |
Advanced
propagation/cultivation/harvest SOP’s. |
| ● |
Higher
yields. |
|
● |
Minimal
workforce. |
| ● |
Improved
nutrition/efficacy values. |
|
● |
Enhanced
automation. |
| ● |
Lower
production costs. |
|
● |
Substantive
capital, resource, and operational savings. |
| ● |
Patents,
future pending and provisional. |
|
● |
Reduced
ecological impacts. |
| |
|
|
● |
Trade-marks,
EU registered and Canada + US pending. |
| |
|
|
● |
Patents,
pending and provisional. |
| Facilities |
|
Systems |
|
Environment |
| ● |
High-tech
high efficiency building envelope. |
|
● |
IoT
to AI integrated facility/systems controls. |
|
● |
High
efficiency climate control equipment. |
| ● |
Proprietary
building engineering and materials. |
|
● |
Critical
sensing and monitoring interface equipment. |
|
● |
Micro-climate
delivery materials and systems. |
| ● |
Natural
sunlight, indoors. |
|
● |
Advanced
Ag-tech Automated Grow Systems. |
|
● |
Automated
chronological/meteorological/biological integrated controls. |
| ● |
Proprietary
supplemental grow lighting. Dynamic foam solar gain control. Significantly reduced utility demands. Alternative clean energy sourcing.
Green Building Initiative/Green Globe certification. Patents, pending and provisional. |
|
● |
Proprietary
high efficiency grow channels.
|
|
● |
Sealed
environment.
|
Employees
As
of August 9, 2022, the Company has 15 employees and five consultants. The Company also relies on consultants and contractors
to conduct its operations. The Company anticipates hiring additional employees to support its planned activities.
Operations
The
Company primary operating activities are in California. The Company’s head office is located in Vancouver, British Columbia, Canada
with a second office opening in the Rotterdam, Netherlands. The Company intends to open a project office near Coachella, CA. The Company
also plans to construct its initial micropropagation laboratories and its initial AgriFORCE grow houses in the State of California.
Description
of Property
The
Company currently leases office space at 2233 Colombia Street, Suite 300, Vancouver, B.C., V5Y 0M6 as its principal office. The Company
believes the office is in good condition and satisfy its current operational requirements. The Company also leases an office space at
Weena 505 Rotterdam, Netherlands
Litigation
We
are subject to the legal proceeding and claims described in detail in “Note 16. Commitments and Contingencies” to the audited
financial statements included in this filing. Although the results of litigation and claims cannot be predicted with certainty, as of
the date of this filing, we do not believe the outcome of such legal proceeding and claims, if determined adversely to us, would be reasonably
expected to have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because
of defense and settlement costs, diversion of management resources and other factors.
RISK
FACTORS
Investing
in our securities involves a high degree of risk. Before making an investment decision, you should consider carefully the risks, uncertainties
and all risk factors set forth in the applicable prospectus supplement and the documents incorporated by reference in this prospectus,
including the risk factors discussed under the heading “Risk Factors” in our most recent Annual Report on Form 10-K for the
year ended December 31, 2021 and each subsequent filed quarterly report on Form 10-Q and current reports on Form 8-K, which may be amended,
supplemented or superseded from time to time by the other reports we file with the SEC in the future.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements. Such statements include statements regarding our expectations, hopes, beliefs or intentions
regarding the future, including but not limited to statements regarding our market, strategy, competition, development plans (including
acquisitions and expansion), financing, revenues, operations, and compliance with applicable laws. Forward-looking statements involve
certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Factors that could
cause actual results to differ materially from such forward-looking statements include the risks described in greater detail in the following
paragraphs. All forward-looking statements in this document are made as of the date hereof, based on information available to us as of
the date hereof, and we assume no obligation to update any forward-looking statement. Market data used throughout this prospectus is
based on published third party reports or the good faith estimates of management, which estimates are based upon their review of internal
surveys, independent industry publications and other publicly available information.
You
should review carefully the section entitled “Risk Factors” within this prospectus for a discussion of these and other risks
that relate to our business and investing in shares of our Common Stock.
All
forward-looking statements speak only as of the date of this prospectus. We disclaim any obligation to update or revise these statements
unless required by law, and you should not place undue reliance on these forward-looking statements. Although we believe that our plans,
intentions and expectations reflected in or suggested by the forward-looking statements we make in this prospectus are reasonable, we
can give no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our
actual results to differ materially from our expectations under “Risk Factors” and elsewhere in this prospectus. These cautionary
statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
Risks
Relating to the Company’s Business
The
Company is an early stage company with little operating history, a history of losses and the Company cannot assure profitability.
The
Company currently has no revenues and does not have any history of revenue generating operations. The Company has been involved to date
in the design and development of its AgriFORCE grow house which incorporates the Company’s AgriFORCE micropropagation laboratories.
While the Company has invested considerably in this development and design process, no AgriFORCE grow house has been constructed to date
and accordingly, the commercial or operating viability of the AgriFORCE grow house has not been proven, or when, if ever, the Company
will generate revenue from its operations, and if those revenues, when and if generated, will be sufficient to sustain operations, nonetheless
achieve profitability.
There
is no assurance that the Company’s AgriFORCE grow houses or micropropagation laboratories will operate as intended.
The
Company’s initial state of business operations contemplates the construction and deployment of its initial AgriFORCE grow house
and micropropagation laboratories. However, the Company has yet to complete construction of any laboratories. Accordingly, this component
of the Company’s business plan is subject to considerable risks, including:
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there is no assurance that
the laboratories will achieve the intended plantlet production rates; |
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the costs of constructing
and operating the laboratories may be greater than anticipated; |
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the potential offtake partners
who have indicated a willingness to deploy the laboratories at their existing cultivation operations may withdraw and determine not
to deploy the laboratories; |
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there is no assurance that
the facilities will deliver the intended benefits of high production yields, lower crop losses and reduced operation costs; |
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if the company is not able
to fully develop the grow house or it does not operate as intended, it could prevent the company from realizing any of its business
goals or achieving profitability; |
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the costs of constructing
the AgriFORCE grow houses may be greater than anticipated and the Company may not be able to recover these greater costs through
increases in the lease rates, license fees and services fees that it charges to its customers; and |
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the costs of operating
the AgriFORCE grow house may be greater than anticipated. |
COVID-19
or any pandemic, epidemic or outbreak of an infectious disease in the United States or elsewhere may adversely affect our business.
The
COVID-19 virus has had unpredictable and unprecedented impacts in the United States and around the world. The World Health Organization
has declared the outbreak of COVID-19 as a “pandemic,” or a worldwide spread of a new disease. Many countries around the
world have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus. In the United States,
federal, state and local governments have enacted restrictions on travel, gatherings, and workplaces, with exceptions made for essential
workers and businesses. As of the date of this filing, we have not been declared an essential business. As a result, we may be required
to substantially reduce or cease operations in response to governmental action or decree as a result of COVID-19. We are still assessing
the effect on our business from COVID-19 and any actions implemented by the federal, state and local governments. We have implemented
safety protocols to protect our staff, but we cannot offer any assurance that COVID-19 or any other pandemic, epidemic or outbreak of
an infectious disease in the United States or elsewhere, will not materially and adversely affect our business.
Fluctuations
in the exchange rate of foreign currencies could result in losses.
We
incur a portion of our operating expenses in Canadian dollars, and in the future, as we expand into other foreign countries, we expect
to incur operating expenses in other foreign currencies. We are exposed to foreign exchange rate fluctuations as the financial results
of our international operations are translated from the local functional currency into U.S. dollars upon consolidation. A decline in
the U.S. dollar relative to foreign functional currencies would increase our non-U.S. revenue and improve our operating results. Conversely,
if the U.S. dollar strengthens relative to foreign functional currencies, our revenue and operating results would be adversely affected.
We have not previously engaged in foreign currency hedging. If we decide to hedge our foreign currency exchange rate exposure, we may
not be able to hedge effectively due to lack of experience, unreasonable costs or illiquid markets.
The
Company will require additional financing and there is no assurance that additional financing will be available when required.
The
Company will require substantial additional capital in order to acquire or lease the Coachella land, develop the Coachella lands for
use, develop the micropropagation laboratories and operate them, and complete construction of its initial AgriFORCE grow house. The funds
raised in this offering may not be sufficient and additional financing may be needed for this purpose and for other purposes. The Company
plans to achieve this additional financing through equity and/ or debt financing which may be dilutive to the position of then current
shareholders. However, there is no assurance that this financing will be available when required. Specifically, there is no assurance
that the Company will be able to raise any additional equity financing through its shares given that the viability of the Company’s
AgriFORCE grow houses will not be demonstrated until after construction is complete. In addition, there is no assurance that the Company
will be able to secure debt financing given its low asset base and its current lack of revenues.
The
Company had negative cash flow for the period ended March 31, 2022.
The
Company had negative cash flows from operating activities for period ended March 31, 2022. To the extent that the Company has negative
cash flows from operating activities in future periods, it may need to allocate a portion of its cash reserves to fund such negative
cash flow. The Company may also be required to raise additional funds through the issuance of equity or debt securities. There can be
no assurance that the Company will be able to generate a positive cash flow from operating activities, that additional capital or other
types of financing will be available when needed or that these financings will be on terms favorable to the Company. The Company’s
actual financial position and results of operations may differ materially from the expectations of the Company’s management.
The
Company’s actual financial position and results of operations may differ materially from the expectations of the Company’s
management.
The
Company’s actual financial position and results of operations may differ materially from management’s expectations. The process
for estimating the Company’s revenue, net income and cash flow requires the use of judgment in determining the appropriate assumptions
and estimates. These estimates and assumptions may be revised as additional information becomes available and as additional analyses
are performed. In addition, the assumptions used in planning may not prove to be accurate, and other factors may affect the Company’s
financial condition or results of operations. As a result, the Company’s revenue, net income and cash flow may differ materially
from the Company’s projected revenue, net income and cash flow.
The
Company expects to incur significant ongoing costs and obligations related to its investment in infrastructure, growth, regulatory compliance
and operations.
The
Company expects to incur significant ongoing costs and obligations related to its investment in its initial AgriFORCE grow houses. To
the extent that these costs may be greater than anticipated or the Company may not be able to generate revenues or raise additional financing
to cover these costs, these operating expenses could have a material adverse impact on the Company’s results of operations, financial
condition and cash flows. In addition, future changes in regulations, more vigorous enforcement thereof or other unanticipated events
could require extensive changes to the design and operation of the Company’s AgriFORCE grow houses, which could increase construction
costs and have a material adverse effect on the business, results of operations and financial condition of the Company. The Company’s
efforts to construct its AgriFORCE grow houses and grow its business may be costlier than the Company expects, and the Company may not
be able to recover sufficient revenues to offset its higher operating expenses. The Company may incur significant losses in the future
for a number of reasons, including, unforeseen expenses, difficulties, complications and delays, and other unknown events. If the Company
is unable to achieve and sustain profitability, the market price of our securities may significantly decrease.
There
is no assurance the Company will be able to repatriate or distribute funds for investment from the United States to Canada or elsewhere.
In
the event that any of the Company’s investments, or any proceeds thereof, any dividends or distributions there from, or any profits
or revenues accruing from such investments in the United States were found to be in violation of money laundering legislation or otherwise,
such transactions may be viewed as proceeds of crime under applicable federal laws, rules and regulations or any other applicable legislation.
This could restrict or otherwise jeopardize the ability of the Company to declare or pay dividends, effect other distributions or subsequently
repatriate such funds back to Canada or elsewhere.
The
Company may not be able to effectively manage its growth and operations, which could materially and adversely affect its business.
If
the Company implements it business plan as intended, it may in the future experience rapid growth and development in a relatively short
period of time. The management of this growth may require, among other things, continued development of the Company’s financial
and management controls and management information systems, stringent control of costs, the ability to attract and retain qualified management
personnel and the training of new personnel. The Company intends to utilize outsourced resources, and hire additional personnel, to manage
its expected growth and expansion. Failure to successfully manage its possible growth and development could have a material adverse effect
on the Company’s business and the value of the Shares.
The
Company may face significant competition from other facilities.
Many
other businesses in California engage in similar activities to the Company, leasing commercial space to agricultural producers generally,
and providing additional products and services to similar customers. The Company cannot assure you that it will be able to compete successfully
against current and future competitors. Competitive pressures faced by the Company could have a material adverse effect on its business,
operating results and financial condition.
If
we are unable to protect our intellectual property, our business may be adversely affected.
We
must protect the proprietary nature of the intellectual property used in our business. There can be no assurance that trade secrets and
other intellectual property will not be challenged, invalidated, misappropriated or circumvented by third parties. Currently, our intellectual
property includes provisional patents, patent applications, trademarks, trademark applications and know-how related to business, product
and technology development. We plan on taking the necessary steps, including but not limited to the filing of additional patents as appropriate.
There is no assurance any additional patents will issue or that when they do issue, they will include all of the claims currently included
in the applications. Even if they do issue, those new patents and our existing patents must be protected against possible infringement.
Nonetheless, we currently rely on contractual obligations of our employees and contractors to maintain the confidentiality of our products.
To compete effectively, we need to develop and continue to maintain a proprietary position with respect to our technologies, and business.
The risks and uncertainties that we face with respect to intellectual property rights principally include the following:
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Currently, we only have
provisional protection, which may not result in full patents being granted, and any full patent applications that we file may not
result in issued patents or may take longer than expected to result in issued patents; |
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we may be subject to interference
proceedings; |
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other companies may claim
that patents applied for by, assigned or licensed to, us infringe upon their own intellectual property rights; |
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we may be subject to trademark
opposition proceedings in the U.S. and in foreign countries; |
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any patents that are issued to us may not provide meaningful
protection; |
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we may not be able to develop additional proprietary
technologies that are patentable; |
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other companies may challenge patents licensed or issued
to us as invalid, unenforceable or not infringed; |
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other companies may independently develop similar or
alternative technologies, or duplicate our technologies; |
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other companies may design around technologies that
we have licensed or developed; |
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any patents issued to us may expire and competitors
may utilize the technology found in such patents to commercialize their own products; and |
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enforcement of patents is complex, uncertain and expensive. |
It
is also possible that others may obtain issued patents that could prevent us from commercializing certain aspects of our products or
require us to obtain licenses requiring the payment of significant fees or royalties in order to enable us to conduct our business. If
we license patents, our rights may depend on maintaining our obligations to the licensor under the applicable license agreement, and
we may be unable to do so. Furthermore, there can be no assurance that the work-for-hire, intellectual property assignment and confidentiality
agreements entered into by our employees and consultants, advisors and collaborators will provide meaningful protection for our trade
secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure of such trade secrets, know- how
or other proprietary information. The scope and enforceability of patent claims are not systematically predictable with absolute accuracy.
The strength of our own patent rights depends, in part, upon the breadth and scope of protection provided by the patent and the validity
of our patents, if any.
We
operate in an industry with the risk of intellectual property litigation. Claims of infringement against us may hurt our business.
Our
success depends, in part, upon non-infringement of intellectual property rights owned by others and being able to resolve claims of intellectual
property infringement without major financial expenditures or adverse consequences. Participants that own, or claim to own, intellectual
property may aggressively assert their rights. From time to time, we may be subject to legal proceedings and claims relating to the intellectual
property rights of others. Future litigation may be necessary to defend us or our clients by determining the scope, enforceability, and
validity of third-party proprietary rights or to establish its proprietary rights. Some competitors have substantially greater resources
and are able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time. In
addition, patent holding companies that focus solely on extracting royalties and settlements by enforcing patent rights may target us.
Regardless of whether claims that we are infringing patents or other intellectual property rights have any merit, these claims are time-consuming
and costly to evaluate and defend and could:
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adversely affect relationships
with future clients; |
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cause
delays or stoppages in providing products; |
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divert management’s
attention and resources; |
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require technology changes
to our platform that would cause our Company to incur substantial cost; |
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subject us to significant
liabilities; and |
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require us to cease some
or all of its activities. |
In
addition to liability for monetary damages, which may be tripled and may include attorneys’ fees, or, in some circumstances, damages
against clients, we may be prohibited from developing, commercializing, or continuing to provide some or all of our products unless we
obtain licenses from, and pay royalties to, the holders of the patents or other intellectual property rights, which may not be available
on commercially favorable terms, or at all.
We
have limited foreign intellectual property rights and may not be able to protect our intellectual property rights throughout the world.
We
have limited intellectual property rights outside the United States. Filing, prosecuting and defending patents on devices in all countries
throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States
can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property
to the same extent as laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions
in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States
or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patents to develop their own
products and further, may export otherwise infringing products to territories where we have patents, but enforcement is not as strong
as that in the United States.
Many
companies have encountered significant problems in protecting and defending intellectual property in foreign jurisdictions. The legal
systems of certain countries, particularly China and certain other developing countries, do not favor the enforcement of patents, trade
secrets and other intellectual property, which could make it difficult for us to stop the infringement of our patents or marketing of
competing products in violation of our proprietary rights generally. To date, we have not sought to enforce any issued patents in these
foreign jurisdictions. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert
our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly
and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in
any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. The requirements
for patentability may differ in certain countries, particularly developing countries. Certain countries in Europe and developing countries,
including China and India, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties.
In those countries, we and our licensors may have limited remedies if patents are infringed or if we or our licensors are compelled to
grant a license to a third party, which could materially diminish the value of those patents. This could limit our potential revenue
opportunities. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant
commercial advantage from the intellectual property that we develop or license.
If
we are unable to obtain or defend our patents, our business could be materially adversely affected.
Our
patent position is highly uncertain and involves complex legal and factual questions. Accordingly, we cannot predict the breadth of claims
that may be allowed or enforced under our patents or in third-party patents. For example, we might not have been the first to make the
inventions covered by each of our pending patent applications and provisional patents; we might not have been the first to file patent
applications for these inventions; others may independently develop similar or alternative technologies or duplicate any of our technologies;
it is possible that none of our pending patent applications will result in issued patents; our issued patents may not provide a basis
for commercially viable technologies, or may not provide us with any competitive advantages, or may be challenged and invalidated by
third parties; and, we may not develop additional proprietary technologies that are patentable.
As
a result, our owned and licensed patents may not be valid and we may not be able to obtain and enforce patents and to maintain trade
secret protection for the full commercial extent of our technology. The extent to which we are unable to do so could materially harm
our business.
We
have applied for and expect to continue to apply for patents for certain products. Such applications may not result in the issuance of
any patents, and any patents now held or that may be issued may not provide us with adequate protection from competition. Furthermore,
it is possible that patents issued or licensed to us may be challenged successfully. In that event, if we have a preferred competitive
position because of such patents, such preferred position would be lost. If we are unable to secure or to continue to maintain a preferred
position, we could become subject to competition from the sale of generic products. Failure to receive, inability to protect, or expiration
of our patents would adversely affect our business and operations.
Patents
issued or licensed to us may be infringed by the products or processes of others. The cost of enforcing our patent rights against infringers,
if such enforcement is required, could be significant, and we do not currently have the financial resources to fund such litigation.
Further, such litigation can go on for years and the time demands could interfere with our normal operations. We may become a party to
patent litigation and other proceedings. The cost to us of any patent litigation, even if resolved in our favor, could be substantial.
Many of our competitors may be able to sustain the costs of such litigation more effectively than we can because of their substantially
greater financial resources. Litigation may also absorb significant management time.
Unpatented
trade secrets, improvements, confidential know-how and continuing technological innovation are important to our scientific and commercial
success. Although we attempt to and plan to continue to attempt to protect our proprietary information through reliance on trade secret
laws and the use of confidentiality agreements with our partners, collaborators, employees and consultants, as well as through other
appropriate means, these measures may not effectively prevent disclosure of our proprietary information, and, in any event, others may
develop independently, or obtain access to, the same or similar information.
International
intellectual property protection is particularly uncertain, and if we are involved in opposition proceedings in foreign countries, we
may have to expend substantial sums and management resources.
Patent
and other intellectual property law outside the United States is more uncertain and is continually undergoing review and revisions in
many countries. Further, the laws of some foreign countries may not protect intellectual property rights to the same extent as the laws
of the United States. For example, certain countries do not grant patent claims that are directed to business methods and processes.
In addition, we may have to participate in opposition proceedings to determine the validity of its foreign patents or its competitors’
foreign patents, which could result in substantial costs and diversion of its efforts and loss of credibility with customers.
If
we are found to be infringing on patents or trade secrets owned by others, we may be forced to cease or alter our product development
efforts, obtain a license to continue the development or sale of our products, and/or pay damages.
Our
processes and potential products may violate proprietary rights of patents that have been or may be granted to competitors, universities
or others, or the trade secrets of those persons and entities. As our industry expands and more patents are issued, the risk increases
that our processes and potential products may give rise to claims that they infringe the patents or trade secrets of others. These other
persons could bring legal actions against us claiming damages and seeking to enjoin manufacturing and marketing of the affected product
or process. If any of these actions are successful, in addition to any potential liability for damages, we could be required to obtain
a license in order to continue to manufacture or market the affected product or use the affected process. Required licenses may not be
available on acceptable terms, if at all, and the results of litigation are uncertain. If we become involved in litigation or other proceedings,
it could consume a substantial portion of our financial resources and the efforts of our personnel.
We
rely on confidentiality agreements to protect our trade secrets. If these agreements are breached by our employees or other parties,
our trade secrets may become known to our competitors.
We
rely on trade secrets that we seek to protect through confidentiality agreements with our employees and other parties. If these agreements
are breached, our competitors may obtain and use our trade secrets to gain a competitive advantage over us. We may not have any remedies
against our competitors and any remedies that may be available to us may not be adequate to protect our business or compensate us for
the damaging disclosure. In addition, we may have to expend resources to protect our interests from possible infringement by others.
We
have a limited operating history on which to judge our business prospects and management.
Our
company was incorporated and commenced operations in 2017. Accordingly, we have only a limited operating history upon which to base an
evaluation of our business and prospects. Operating results for future periods are subject to numerous uncertainties and we cannot assure
you that we will achieve or sustain profitability. Our prospects must be considered in light of the risks encountered by companies in
the early stage of development, particularly companies in new and rapidly evolving markets. Future operating results are expected to
depend upon many factors, including increasing the number of affiliates, our success in attracting and retaining motivated and qualified
personnel, our ability to establish short term credit lines, our ability to develop and market new products, control costs, and general
economic conditions. We cannot assure you that we will successfully address any of these risks.
We
may not be able to continue as a going concern.
The
Company has incurred substantial operating losses since its inception, expects to continue to incur significant operating losses for
the foreseeable future and may never become profitable. As reflected in the financial statements, the Company had an accumulated deficit
of approximately $23.2 million at March 31, 2022, a net loss of approximately $3.3 million, and approximately $2.9 million of
net cash used in operating activities for the three months ended March 31, 2022. The accompanying financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or
the amounts and classification of liabilities that might result from the outcome of this uncertainty. The Company anticipates incurring
additional losses until such time, if ever, that it can obtain marketing approval to sell, and then generate significant sales, of its
technology that is currently in development. As such it is likely that additional financing may be needed by the Company to fund its
operations and to develop and commercialize its technology. These factors raise substantial doubt about the Company’s ability to
continue as a going concern. The Company is seeking additional financing to support its growth plans. The sale of additional equity may
dilute existing shareholders and newly issued shares may contain senior rights and preferences compared to currently outstanding common
shares.
Our
management team has limited experience managing a public company, and regulatory compliance may divert our attention from the day-to-day
management of our business.
Our
management team has limited experience managing a publicly-traded company and limited experience complying with the increasingly complex
laws pertaining to public companies. These obligations typically require substantial attention from our senior management and could divert
our attention away from the day-to-day management of our business.
The
Company may become subject to litigation, which may have a material adverse effect on the Company’s reputation, business, results
from operations, and financial condition.
The
Company may be named as a defendant in a lawsuit or regulatory action. The Company may also incur uninsured losses for liabilities which
arise in the ordinary course of business, or which are unforeseen, including, but not limited to, employment liability and business loss
claims. Any such losses could have a material adverse effect on the Company’s business, results of operations, sales, cash flow
or financial condition.
If
the Company is unable to attract and retain key personnel, it may not be able to compete effectively.
The
Company’s success has depended and continues to depend upon its ability to attract and retain key management, including the Company’s
Chief Executive Officer and technical experts. The Company will attempt to enhance its management and technical expertise by continuing
to recruit qualified individuals who possess desired skills and experience in certain targeted areas. The Company’s inability to
retain employees and attract and retain sufficient additional employees or engineering and technical support resources could have a material
adverse effect on the Company’s business, results of operations, sales, cash flow or financial condition. Shortages in qualified
personnel or the loss of key personnel could adversely affect the financial condition of the Company, results of operations of the business
and could limit the Company’s ability to develop and market its intellectual property. The loss of any of the Company’s senior
management or key employees could materially adversely affect the Company’s ability to execute the Company’s business plan
and strategy, and the Company may not be able to find adequate replacements on a timely basis, or at all. The Company does not maintain
key person life insurance policies on any of the Company’s employees.
The
size of the Company’s initial target market is difficult to quantify and investors will be reliant on their own estimates on the
accuracy of market data.
Because
high growth crop technology is in an early stage with uncertain boundaries, there is a lack of information about comparable companies
available for potential investors to review in deciding about whether to invest in the Company and, few, if any, established companies
whose business model the Company can follow or upon whose success the Company can build. Accordingly, investors have to rely on their
own estimates in deciding about whether to invest in the Company. There can be no assurance that the Company’s estimates are accurate
or that the market size is sufficiently large for its business to grow as projected, which may negatively impact its financial results.
The Company regularly follows market research.
The
Company’s industry is experiencing rapid growth and consolidation that may cause the Company to lose key relationships and intensify
competition.
The
agriculture industry and various verticals within it are undergoing rapid growth and substantial change, which has resulted in an increase
in competitors, consolidation and formation of strategic relationships. Acquisitions or other consolidating transactions could harm the
Company in a number of ways, including by losing strategic partners and or customers if they are acquired by or enter into relationships
with a competitor, losing customers, revenue and market share, or forcing the Company to expend greater resources to meet new or additional
competitive threats, all of which could harm the Company’s operating results. As competitors enter the market and become increasingly
sophisticated, competition in the Company’s industry may intensify which could negatively impact its profitability.
The
Company will be reliant on information technology systems and may be subject to damaging cyberattacks.
The
Company’s operations depend, in part, on how well it and its suppliers protect networks, equipment, information technology systems
and software against damage from a number of threats, including, but not limited to, cable cuts, damage to physical plants, natural disasters,
intentional damage and destruction, fire, power loss, hacking, computer viruses, vandalism and theft. The Company’s operations
also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive
expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or
increase in capital expenses. The failure of information systems or a component of information systems could, depending on the nature
of any such failure, adversely impact the Company’s reputation and results of operations.
The
Company has not experienced any material losses to date relating to cyber-attacks or other information security breaches, but there can
be no assurance that the Company will not incur such losses in the future. The Company’s risk and exposure to these matters cannot
be fully mitigated because of, among other things, the evolving nature of these threats. As a result, cyber security and the continued
development and enhancement of controls, processes and practices designed to protect systems, computers, software, data and networks
from attack, damage or unauthorized access is a priority. As cyber threats continue to evolve, the Company may be required to expend
additional resources to continue to modify or enhance protective measures or to investigate and remediate any security vulnerabilities.
The
Company’s officers and directors may be engaged in a range of business activities resulting in conflicts of interest.
Although
certain officers and board members of the Company are expected to be bound by anti-circumvention agreements limiting their ability to
enter into competing and/or conflicting ventures or businesses, the Company may be subject to various potential conflicts of interest
because some of its officers and directors may be engaged in a range of business activities. In addition, the Company’s executive
officers and directors may devote time to their outside business interests, so long as such activities do not materially or adversely
interfere with their duties to the Company. In some cases, the Company’s executive officers and directors may have fiduciary obligations
associated with these business interests that interfere with their ability to devote time to the Company’s business and affairs
and that could adversely affect the Company’s operations. These business interests could require significant time and attention
of the Company’s executive officers and directors.
In
addition, the Company may also become involved in other transactions which conflict with the interests of its directors and the officers
who may from time to time deal with persons, firms, institutions or companies with which the Company may be dealing, or which may be
seeking investments similar to those desired by it. The interests of these persons could conflict with those of the Company. In addition,
from time to time, these persons may be competing with the Company for available investment opportunities. Conflicts of interest, if
any, may be subject to the procedures and remedies provided under applicable laws. In particular, if such a conflict of interest arises
at a meeting of the Company’s directors, a director who has such a conflict will abstain from voting for or against the approval
of such participation or such terms. In accordance with applicable laws, the directors of the Company are required to act honestly, in
good faith and in the best interests of the Company.
There
is no guarantee that how the Company uses its available funds will yield the expected results or returns which could impact the business
and financial condition of the Company.
The
Company cannot specify with certainty the particular uses of available funds. Management has broad discretion in the application of its
proceeds. Accordingly, a holder of Shares will have to rely upon the judgment of management with respect to the use of available funds,
with only limited information concerning management’s specific intentions. The Company’s management may spend a portion or
all of the available funds in ways that the Company’s shareholders might not desire, that might not yield a favorable return and
that might not increase the value of a purchaser’s investment. The failure by management to apply these funds effectively could
harm the Company’s business. Pending use of such funds, the Company might invest the available funds in a manner that does not
produce income or that loses value.
Our
Articles of incorporation, by-laws and certain Canadian legislation, contain provisions that may have the effect of delaying or preventing
a change in control.
Certain
provisions of our by-laws, together or separately, could discourage potential acquisition proposals, delay or prevent a change in control
and limit the price that certain investors may be willing to pay for our common shares. For instance, our by-laws, to be effective upon
the completion of this offering, contain provisions that establish certain advance notice procedures for nomination of candidates for
election as directors at shareholders’ meetings.
The
Investment Canada Act requires any person that is non-Canadian (as defined in the Investment Canada Act) who acquires “control”
(as defined in the Investment Canada Act) of an existing Canadian business to file either a pre-closing application for review
or notification with Innovation, Science and Economic Development Canada. An acquisition of control is a reviewable transaction where
prescribed financial thresholds are exceeded. The Investment Canada Act generally prohibits the implementation of a reviewable
transaction unless, after review, the relevant Minister is satisfied that the acquisition is likely to be of net benefit to Canada. Under
the national security regime in the Investment Canada Act, the federal government may undertake a discretionary review of a broader
range of investments by a non-Canadian to determine whether such an investment by a non-Canadian could be “injurious to national
security.” Review on national security grounds is at the discretion of the federal government and may occur on a pre- or post-closing
basis.
Furthermore,
limitations on the ability to acquire and hold our common shares may be imposed by the Competition Act (Canada). This legislation
permits the Commissioner of Competition to review any acquisition or establishment, directly or indirectly, including through the acquisition
of shares, of control over or of a significant interest in us. This legislation grants the Commissioner of Competition jurisdiction,
for up to one year, to challenge this type of acquisition before the Canadian Competition Tribunal on the basis that it would, or would
be likely to, substantially prevent or lessen competition. This legislation also requires any person who intends to acquire our common
shares to file a notification with the Canadian Competition Bureau if (i) that person (and their affiliates) would hold, in the aggregate,
more than 20% of all of our outstanding voting shares, (ii) certain financial thresholds are exceeded, and (iii) no exemption applies.
Where a person (and their affiliates) already holds, in the aggregate, more than 20% of all of our outstanding voting shares, a notification
must be filed if (i) the acquisition of additional shares would bring that person’s (and their affiliates) holdings to over 50%,
(ii) certain financial thresholds are exceeded and (iii) no exemption applies. Where a notification is required, the legislation prohibits
completion of the acquisition until the expiration of the applicable statutory waiting period, unless compliance with the waiting period
has been waived or the Commissioner of Competition provides written notice that he does not intend to challenge the acquisition. The
Commissioner of Competition’s review of a notifiable transaction for substantive competition law considerations may take longer
than the statutory waiting period.
We
are governed by the corporate laws of British Columbia, Canada which in some cases have a different effect on shareholders than the corporate
laws of the United States.
We
are incorporated under the Business Corporations Act (British Columbia) and other relevant laws, which may affect the rights of shareholders
differently than those of a company governed by the laws of a U.S. jurisdiction, and may, together with our charter documents, have the
effect of delaying, deferring or discouraging another party from acquiring control of our company by means of a tender offer, a proxy
contest or otherwise, or may affect the price an acquiring party would be willing to offer in such an instance. The material differences
between the Business Corporations Act (British Columbia) and Delaware General Corporation Law, or DGCL, that may have the greatest such
effect include, but are not limited to, the following: (i) for certain corporate transactions (such as mergers and amalgamations or amendments
to our articles) the Business Corporations Act (British Columbia) generally requires the voting threshold to be a special resolution
approved by 66 2/3% of shareholders, or as set out in the articles, as applicable, whereas DGCL generally only requires a majority vote;
and (ii) under the Business Corporations Act (British Columbia) a holder of 5% or more of our common shares can requisition a special
meeting of shareholders, whereas such right does not exist under the DGCL. We cannot predict whether investors will find our company
and our common shares less attractive because we are governed by foreign laws.
Risks
Related to the Ownership of Our Common Shares
New
laws, regulations, and standards relating to corporate governance and public disclosure may create uncertainty for public companies,
increasing legal and financial compliance costs and making some activities more time consuming.
These
laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result,
may evolve over time as new guidance is provided by the courts and other bodies. This could result in continuing uncertainty regarding
compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. If our efforts to comply
with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related
to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely
affected.
As
a public company subject to these rules and regulations, we may find it more expensive for us to obtain director and officer liability
insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could
also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on its audit
committee and compensation committee, and qualified executive officers.
The
market price of our common shares and Series A Warrants may be volatile, and you may not be able to resell your common shares and Series
A Warrants at or above the initial public offering price.
The
market price for our common shares and Series A Warrants may be volatile and subject to wide fluctuations in response to factors including
the following:
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actual or anticipated fluctuations
in our quarterly or annual operating results; |
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changes in financial or
operational estimates or projections; |
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conditions in markets generally; |
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changes in the economic
performance or market valuations of companies similar to ours; |
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general economic or political
conditions in the United States or elsewhere; |
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any delay in development
of our products or services; |
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our failure to comply with
regulatory requirements; |
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our inability to commercially
launch products and services and market and generate sales of our products and services, |
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developments or disputes
concerning our intellectual property rights; |
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our or our competitors’
technological innovations; |
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general and industry-specific
economic conditions that may affect our expenditures; |
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changes in market valuations
of similar companies; |
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announcements by us or
our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital commitments, new technologies,
or patents; |
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future sales of our common
shares or other securities, including shares issuable upon the exercise of outstanding warrants or convertible securities or otherwise
issued pursuant to certain contractual rights; |
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period-to-period fluctuations
in our financial results; and |
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low or high trading volume
of our common shares due to many factors, including the terms of our financing arrangements. |
In
addition, if we fail to reach an important research, development or commercialization milestone or result by a publicly expected deadline,
even if by only a small margin, there could be significant impact on the market price of our common shares. Additionally, as we approach
the announcement of anticipated significant information and as we announce such information, we expect the price of our common shares
to be particularly volatile and negative results would have a substantial negative impact on the price of our common shares and Series
A Warrants.
In
addition, in recent years, the stock market in general has experienced extreme price and volume fluctuations. This volatility has had
a significant effect on the market price of securities issued by many companies, including for reasons unrelated to their operating performance.
These broad market fluctuations may adversely affect our stock price, notwithstanding our operating results. The market price of our
common shares and Series A Warrants will fluctuate and there can be no assurances about the levels of the market prices for our common
shares and Series A Warrants.
In
some cases, following periods of volatility in the market price of a company’s securities, shareholders have often instituted class
action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion
of management attention and resources, which could significantly harm our business operations and reputation.
As
an “emerging growth company” under applicable law, we will be subject to lessened
disclosure requirements, which could leave our shareholders without information or rights
available to shareholders of more mature companies.
For
as long as we remain an “emerging growth company” as defined in the JOBS Act, we have elected to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to:
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not
being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; |
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being permitted to provide
only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly
reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; |
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reduced disclosure obligations
regarding executive compensation in our periodic reports, proxy statements and registration statements; and |
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taking advantage of an
extension of time to comply with new or revised financial accounting standard; |
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exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved. |
We
expect to take advantage of these reporting exemptions until we are no longer an “emerging growth company.” Because of these
lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature
companies. We cannot predict whether investors will find our common shares less attractive if we rely on these exemptions. If some investors
find our common shares less attractive as a result, there may be a less active trading market for our common shares and our stock price
may be more volatile.
We
are also a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act and have elected to follow certain scaled
disclosure requirements available to smaller reporting companies.
Because
we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging growth
company” our financial statements may not be comparable to companies that comply with public company effective dates.
We
have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of
the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates
for public and private companies until those standards apply to private companies. As a result of this election, our financial statements
may not be comparable to companies that comply with public company effective dates and may contain less or more modified disclosure than
those public companies. Because our financial statements may not be comparable to companies that comply with public company effective
dates, investors may have difficulty evaluating or comparing our business, performance or prospects in comparison to other public companies,
which may have a negative impact on the value and liquidity of our common shares.
FINRA
sales practice requirements may also limit your ability to buy and sell our common shares, which could depress the price of our shares.
Financial
Industry Regulatory Authority, Inc. (FINRA) rules require broker-dealers to have reasonable grounds for believing that an investment
is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities
to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial
status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is
a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements
make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit your ability to buy
and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.
If
research analysts do not publish research about our business or if they issue unfavorable commentary or downgrade our common shares or
Series A Warrants, our securities’ price and trading volume could decline.
The
trading market for our securities may depend in part on the research and reports that research analysts publish about us and our business.
If we do not maintain adequate research coverage, or if any of the analysts who cover us downgrade our stock or publish inaccurate or
unfavorable research about our business, the price of our common shares and Series A Warrants could decline. If one or more of our research
analysts ceases to cover our business or fails to publish reports on us regularly, demand for our securities could decrease, which could
cause the price of our common shares and Series A Warrants or trading volume to decline.
We
may issue additional equity securities, or engage in other transactions that could dilute our book value or relative rights of our common
shares, which may adversely affect the market price of our common shares and Series A Warrants.
Our
Board of Directors may determine from time to time that it needs to raise additional capital by issuing additional shares of our common
shares or other securities. Except as otherwise described in this filing, we will not be restricted from issuing additional common shares,
including securities that are convertible into or exchangeable for, or that represent the right to receive, shares of our common shares.
Because our decision to issue securities in any future offering may depend on market conditions and other factors beyond our control,
we cannot predict or estimate the amount, timing, or nature of any future offerings, or the prices at which such offerings may be affected.
Additional equity offerings may dilute the holdings of existing shareholders or reduce the market price of our common shares and Series
A Warrants, or all of them. Holders of our securities are not entitled to pre-emptive rights or other protections against dilution. New
investors also may have rights, preferences and privileges that are senior to, and that adversely affect, then-current holders of our
securities. Additionally, if we raise additional capital by making offerings of debt or preference shares, upon our liquidation, holders
of our debt securities and preference shares, and lenders with respect to other borrowings, may receive distributions of its available
assets before the holders of our common shares.
An
investment in our Series A Warrants is speculative in nature and could result in a loss of your investment therein.
The
Series A Warrants offered in this offering do not confer any rights of common share ownership on their holders, such as voting rights
or the right to receive dividends, but rather merely represent the right to acquire shares of our common shares at a fixed price for
a limited period of time. Specifically, commencing on the date of issuance, holders of the Series A Warrants may exercise their right
to acquire the common shares and pay an exercise price of $6.00 per share (120% of the public offering price of our common shares and
Series A Warrants in this offering), prior to three years from the date of issuance, after which date any unexercised Series A Warrants
will expire and have no further value. Moreover, following this offering, the market value of the Series A Warrants is uncertain and
there can be no assurance that the market value of the Series A Warrants will equal or exceed their public offering price. There can
be no assurance that the market price of the common shares will ever equal or exceed the exercise price of the Series A Warrants, and
consequently, whether it will ever be profitable for holders of the Series A Warrants to exercise the Series A Warrants.
Our
Series A Warrants and contain a provision which only permits securities claims to be brought in federal court.
Section
11 of our Series A Warrants states in relevant part: “The Company hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan (except for claims brought under the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended, which must be brought in federal court)”. Therefore any
claims with respect to our Series A Warrants brought under the Securities Act of 1933 or the Securities Exchange Act must be brought
in federal court while all other claims may be brought in federal or state court. Proceedings in federal court may be more expensive
than in state court due to more comprehensive rules on how discovery and motion and trial practice are handled. This provision may have
a dampening effect on claims brought under these securities laws or limit the ability of the investor to bring a claim in the jurisdiction
it deems more favorable. This provision is likely enforceable as requirements regarding bringing securities claims have been met, but
it may have the overall effect of discouraging litigation due to the circumstances described herein.
We
do not currently intend to pay dividends on our common shares in the foreseeable future, and consequently, your ability to achieve a
return on your investment will depend on appreciation in the price of our common shares.
We
have never declared or paid cash dividends on our common shares and do not anticipate paying any cash dividends to holders of our common
shares in the foreseeable future. Consequently, investors must rely on sales of their common shares after price appreciation, which may
never occur, as the only way to realize any future gains on their investments. There is no guarantee that our common shares will appreciate
in value or even maintain the price at which our shareholders have purchased their shares.
Risks related to this
offering
Future sales or
other issuances of our common stock could depress the market for our common stock.
Sales of a substantial
number of shares of our common stock, or the perception by the market that those sales could occur, whether through this offering or
other offerings of our securities, could cause the market price of our common stock to decline or could make it more difficult for us
to raise funds through the sale of equity in the future.
Our stock price
can be volatile, which increases the risk of litigation, and may result in a significant decline in the value of your investment.
The trading price of
our common stock has historically been, and is likely to continue to be, highly volatile and subject to wide fluctuations in price in
response to various factors, many of which are beyond our control and may not be related to our operating performance. These fluctuations
could cause you to lose part or all of your investment in our common stock. These factors include, but are not limited to, the following:
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price and volume fluctuations in the overall stock market from time
to time; |
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changes in the market valuations, stock market prices and trading
volumes of similar companies; |
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actual or anticipated changes in our net loss or fluctuations in
our operating results or in the expectations of securities analysts; |
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the issuance of new equity securities pursuant to a future offering,
including potential issuances of preferred stock; |
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general economic conditions and trends; |
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major catastrophic events,; |
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sales of large blocks of our stock; |
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additions or departures of key personnel; |
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announcements of new products or technologies, commercial relationships
or other events by us or our competitors; |
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regulatory developments in the United States and other countries; |
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failure of our common stock to maintain their listing on the NASDAQ
markets or other national market system; |
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changes in accounting principles; and |
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discussion of us or our stock price by the financial and scientific
press and in online investor communities. |
These broad market and
industry factors may materially affect the market price of our common stock, regardless of our development and operating performance.
In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation
has often been instituted against that company. Due to the volatility of our stock price, we are currently and may be the target of securities
litigation in the future. Securities litigation could result in substantial costs and divert management’s attention in the future
attention and resources from our business.
RATIO
OF EARNINGS TO FIXED CHARGES
If
we offer debt securities and/or preference equity securities under this prospectus, we will, if required at that time, provide a ratio
of earnings to fixed charges and/or ratio of earnings to combined fixed charges and preference dividends to earnings, respectively, in
the applicable prospectus supplement for such offering.
USE
OF PROCEEDS
Unless
otherwise indicated in a prospectus supplement, We intend to use to use a substantial portion of the net proceeds to redeem our July
2022 debentures. The remaining proceeds will be used for general corporate purposes. We will set forth in a prospectus supplement relating
to a specific offering any intended use for the net proceeds received from the sale of securities in that offering. We have significant
discretion in the use of any net proceeds. Investors will be relying on the judgment of our management regarding the application of the
proceeds of any sale of securities. We may invest the net proceeds temporarily until we use them for their stated purpose, as applicable.
DESCRIPTION
OF COMMON SHARES
General
We
are authorized to issue an unlimited number of common shares, at no par value per share. As of August 9, 2022, we have
15,555,118 shares of our common stock issued and outstanding.
Holders
of the Company’s common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of
common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election
of directors can elect all of the directors. Holders of the Company’s common stock representing a third of the voting power of
the Company’s capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute
a quorum at any meeting of stockholders. A vote by the holders of a majority of the Company’s outstanding shares is required to
effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to the Company’s certificate of incorporation.
Holders
of the Company’s common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from
legally available funds. In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate
pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference
over the common stock. The Company’s common stock has no pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to the Company’s common stock.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is VStock Transfer, Woodmere, NY.
Listing
Our
common stock is currently traded on the Nasdaq Capital Market under the symbol “AGRI.”
DESCRIPTION
OF PREFERRED STOCK
General
The
Company’s articles of incorporation authorize the issuance of an unlimited number of shares of “blank check”
preferred stock, no par value per share, in one or more series, of which no shares were outstanding as of March 31, 2022, subject
to any limitations prescribed by law, without further vote or action by the stockholders. Each such series of preferred stock shall have
such number of shares, designations, preferences, voting powers, qualifications, and special or relative rights or privileges as shall
be determined by our board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion
rights and preemptive rights.
Preferred
stock is available for possible future financings or acquisitions and for general corporate purposes without further authorization of
stockholders unless such authorization is required by applicable law, the rules of the Nasdaq Capital Market or other securities exchange
or market on which our stock is then listed or admitted to trading.
Our
board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting
power or other rights of the holders of common stock. The issuance of preferred stock, while providing flexibility in connection with
possible acquisitions and other corporate purposes could, under some circumstances, have the effect of delaying, deferring or preventing
a change in control of the Company.
A
prospectus supplement relating to any series of preferred stock being offered will include specific terms relating to the offering. Such
prospectus supplement will include:
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the
title and stated or par value of the preferred stock; |
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the
number of shares of the preferred stock offered, the liquidation preference per share and the offering price of the preferred stock; |
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the
dividend rate(s), period(s) and/or payment date(s) or method(s) of calculation thereof applicable to the preferred stock; |
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whether
dividends shall be cumulative or non-cumulative and, if cumulative, the date from which dividends on the preferred stock shall accumulate; |
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the
provisions for a sinking fund, if any, for the preferred stock; |
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any
voting rights of the preferred stock; |
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the
provisions for redemption, if applicable, of the preferred stock; |
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any
listing of the preferred stock on any securities exchange; |
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the
terms and conditions, if applicable, upon which the preferred stock will be convertible into our common stock, including the conversion
price or the manner of calculating the conversion price and conversion period; |
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if
appropriate, a discussion of Federal income tax consequences applicable to the preferred stock; |
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and
any other specific terms, preferences, rights, limitations or restrictions of the preferred stock. |
The
terms, if any, on which the preferred stock may be convertible into or exchangeable for our common stock will also be stated in the preferred
stock prospectus supplement. The terms will include provisions as to whether conversion or exchange is mandatory, at the option of the
holder or at our option, and may include provisions pursuant to which the number of shares of our common stock to be received by the
holders of preferred stock would be subject to adjustment.
DESCRIPTION
OF WARRANTS
We
may issue warrants for the purchase of preferred stock or common stock. Warrants may be issued independently or together with any preferred
stock or common stock, and may be attached to or separate from any offered securities. Each series of warrants will be issued under a
separate warrant agreement to be entered into between a warrant agent specified in the agreement and us. The warrant agent will act solely
as our agent in connection with the warrants of that series and will not assume any obligation or relationship of agency or trust for
or with any holders or beneficial owners of warrants. This summary of some provisions of the securities warrants is not complete. You
should refer to the securities warrant agreement, including the forms of securities warrant certificate representing the securities warrants,
relating to the specific securities warrants being offered for the complete terms of the securities warrant agreement and the securities
warrants. The securities warrant agreement, together with the terms of the securities warrant certificate and securities warrants, will
be filed with the Securities and Exchange Commission in connection with the offering of the specific warrants.
The
applicable prospectus supplement will describe the following terms, where applicable, of the warrants in respect of which this prospectus
is being delivered:
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the
title of the warrants; |
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the
aggregate number of the warrants; |
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the
price or prices at which the warrants will be issued; |
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the
designation, amount and terms of the offered securities purchasable upon exercise of the warrants; |
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if
applicable, the date on and after which the warrants and the offered securities purchasable upon exercise of the warrants will be
separately transferable; |
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the
terms of the securities purchasable upon exercise of such warrants and the procedures and conditions relating to the exercise of
such warrants; |
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any
provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price of
the warrants; |
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the
price or prices at which and currency or currencies in which the offered securities purchasable upon exercise of the warrants may
be purchased; |
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the
date on which the right to exercise the warrants shall commence and the date on which the right shall expire; |
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the
minimum or maximum amount of the warrants that may be exercised at any one time; |
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information
with respect to book-entry procedures, if any; |
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if
appropriate, a discussion of Federal income tax consequences; and |
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any
other material terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants. |
Warrants
for the purchase of common stock or preferred stock will be offered and exercisable for U.S. dollars only. Warrants will be issued in
registered form only.
Upon
receipt of payment and the warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent
or any other office indicated in the applicable prospectus supplement, we will, as soon as practicable, forward the purchased securities.
If less than all of the warrants represented by the warrant certificate are exercised, a new warrant certificate will be issued for the
remaining warrants.
Prior
to the exercise of any securities warrants to purchase preferred stock or common stock, holders of the warrants will not have any of
the rights of holders of the common stock or preferred stock purchasable upon exercise, including in the case of securities warrants
for the purchase of common stock or preferred stock, the right to vote or to receive any payments of dividends on the preferred stock
or common stock purchasable upon exercise.
DESCRIPTION
OF UNITS
As
specified in the applicable prospectus supplement, we may issue units consisting of shares of common stock, shares of preferred stock
or warrants or any combination of such securities.
The
applicable prospectus supplement will specify the following terms of any units in respect of which this prospectus is being delivered:
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the
terms of the units and of any of the common stock, preferred stock and warrants comprising the units, including whether and under
what circumstances the securities comprising the units may be traded separately; |
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a
description of the terms of any unit agreement governing the units; and |
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a
description of the provisions for the payment, settlement, transfer or exchange of the units. |
PLAN
OF DISTRIBUTION
We
may sell the securities offered through this prospectus (i) to or through underwriters or dealers, (ii) directly to purchasers, including
our affiliates, (iii) through agents, (iv) via so called “at-the-market” or “ATM” offerings, or (v) through a
combination of any of these methods. The securities may be distributed at a fixed price or prices, which may be changed, market prices
prevailing at the time of sale, prices related to the prevailing market prices, or negotiated prices. The prospectus supplement will
include the following information:
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the
terms of the offering; |
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the
names of any underwriters or agents; |
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the
name or names of any managing underwriter or underwriters; |
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the
purchase price of the securities; |
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any
over-allotment options under which underwriters may purchase additional securities from us; |
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the
net proceeds from the sale of the securities; |
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any
delayed delivery arrangements; |
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any
underwriting discounts, commissions and other items constituting underwriters’ compensation; |
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any
initial public offering price; |
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any
discounts or concessions allowed or reallowed or paid to dealers; |
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any
commissions paid to agents; and |
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any
securities exchange or market on which the securities may be listed. |
Agents,
underwriters, and dealers may be entitled, under agreements entered into with us, to indemnification by us against certain liabilities,
including liabilities under the Securities Act. Our agents, underwriters, and dealers, or their affiliates, may be customers of, engage
in transactions with or perform services for us, in the ordinary course of business.
Sale
through Underwriters or Dealers
Only
underwriters named in the prospectus supplement are underwriters of the securities offered by the prospectus supplement.
If
underwriters are used in the sale, the underwriters will acquire the securities for their own account, including through underwriting,
purchase, security lending or repurchase agreements with us. The underwriters may resell the securities from time to time in one or more
transactions, including negotiated transactions. Underwriters may sell the securities in order to facilitate transactions in any of our
other securities (described in this prospectus or otherwise), including other public or private transactions and short sales. Underwriters
may offer securities to the public either through underwriting syndicates represented by one or more managing underwriters or directly
by one or more firms acting as underwriters. Unless otherwise indicated in the prospectus supplement, the obligations of the underwriters
to purchase the securities will be subject to certain conditions, and the underwriters will be obligated to purchase all the offered
securities if they purchase any of them. The underwriters may change from time to time any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers.
If
dealers are used in the sale of securities offered through this prospectus, we will sell the securities to them as principals. They may
then resell those securities to the public at varying prices determined by the dealers at the time of resale. The prospectus supplement
will include the names of the dealers and the terms of the transaction.
Direct
Sales and Sales through Agents
We
may sell the securities offered through this prospectus directly. In this case, no underwriters or agents would be involved. Such securities
may also be sold through agents designated from time to time. The prospectus supplement will name any agent involved in the offer or
sale of the offered securities and will describe any commissions payable to the agent. Unless otherwise indicated in the prospectus supplement,
any agent will agree to use its reasonable best efforts to solicit purchases for the period of its appointment.
We
may sell the securities directly to institutional investors or others who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any sale of those securities. The terms of any such sales will be described in the prospectus supplement.
Delayed
Delivery Contracts
If
the prospectus supplement indicates, we may authorize agents, underwriters or dealers to solicit offers from certain types of institutions
to purchase securities at the public offering price under delayed delivery contracts. These contracts would provide for payment and delivery
on a specified date in the future. The contracts would be subject only to those conditions described in the prospectus supplement. The
applicable prospectus supplement will describe the commission payable for solicitation of those contracts.
Continuous
Offering Program
Without
limiting the generality of the foregoing, we may enter into a continuous offering program equity distribution agreement with a broker-dealer,
under which we may offer and sell shares of our common stock from time to time through a broker-dealer as our sales agent. If we enter
into such a program, sales of the shares of common stock, if any, will be made by means of ordinary brokers’ transactions on the
Nasdaq Capital Market at market prices, block transactions and such other transactions as agreed upon by us and the broker-dealer. Under
the terms of such a program, we also may sell shares of common stock to the broker-dealer, as principal for its own account at a price
agreed upon at the time of sale. If we sell shares of common stock to such broker-dealer as principal, we will enter into a separate
agreement with such broker-dealer, and we will describe this agreement in a separate prospectus supplement or pricing supplement.
Market
Making, Stabilization and Other Transactions
Unless
the applicable prospectus supplement states otherwise, other than our common stock all securities we offer under this prospectus will
be a new issue and will have no established trading market. We may elect to list offered securities on an exchange or in the over-the-counter
market. Any underwriters that we use in the sale of offered securities may make a market in such securities, but may discontinue such
market making at any time without notice. Therefore, we cannot assure you that the securities will have a liquid trading market.
Any
underwriter may also engage in stabilizing transactions, syndicate covering transactions and penalty bids in accordance with Rule 104
under the Exchange Act. Stabilizing transactions involve bids to purchase the underlying security in the open market for the purpose
of pegging, fixing or maintaining the price of the securities. Syndicate covering transactions involve purchases of the securities in
the open market after the distribution has been completed in order to cover syndicate short positions.
Penalty
bids permit the underwriters to reclaim a selling concession from a syndicate member when the securities originally sold by the syndicate
member are purchased in a syndicate covering transaction to cover syndicate short positions. Stabilizing transactions, syndicate covering
transactions and penalty bids may cause the price of the securities to be higher than it would be in the absence of the transactions.
The underwriters may, if they commence these transactions, discontinue them at any time.
LEGAL
MATTERS
The
validity of the issuance of the securities offered by this prospectus will be passed upon for us by Jolie Kahn, Esq. of New York, NY.
If certain legal matters in connection with an offering of the securities covered by this prospectus and a related prospectus supplement
are passed upon by counsel for the underwriters, if any, of such offering, that counsel will be named in the related prospectus supplement
for such offering.
EXPERTS
The
consolidated balance sheets of AgriForce Growing Systems Ltd. as of December 31, 2021 and December 31, 2020, and the related consolidated
statements of operations stockholders’ equity, and cash flows for the years then ended have been audited by Marcum LLP, as stated
in their report, which is incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference
in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual, quarterly and special reports, along with other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC’s website at http://www.sec.gov. Our SEC filings are also available on our website, https://www.agriforcegs.com
under the heading “Investors.” The information on this website is expressly not incorporated by reference into, and does
not constitute a part of, this prospectus.
This
prospectus is part of a registration statement on Form S-3 that we filed with the SEC to register the securities offered hereby under
the Securities Act of 1933, as amended. This prospectus does not contain all of the information included in the registration statement,
including certain exhibits and schedules. You may obtain the registration statement and exhibits to the registration statement from the
SEC at the address listed above or from the SEC’s internet site.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
This
prospectus is part of a registration statement filed with the SEC. The SEC allows us to “incorporate by reference” into this
prospectus the information that we file with them, which means that we can disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information. The following documents are incorporated by reference and
made a part of this prospectus:
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Annual
Report on Form
10-K for the year ended December 31, 2021 filed on March 30, 2022 and Quarterly Reports on Form
10-Q for the quarter ended March 31, 2022, filed on May 16, 2022 and for the quarter ended June 30, 2022, filed on August 15, 2022; |
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Our
Definitive Proxy Statement on Schedule 14A and accompanying additional proxy materials filed with the SEC on August 19, 2021; |
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Current
Reports on Form 8-K (excluding any reports or portions thereof that are deemed to be furnished and not filed) filed on February 17, 2022, April 11, 2022, May 23, 2022 and July 6, 2022; and |
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Our
registration statement on Form 8-A filed on July 2, 2021. |
We
also incorporate by reference all additional documents that we file with the Securities and Exchange Commission under the terms of Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act that are made after the date of the initial registration statement but prior to effectiveness
of the registration statement and after the date of this prospectus but prior to the termination of the offering of the securities covered
by this prospectus. We are not, however, incorporating, in each case, any documents or information that we are deemed to furnish and
not file in accordance with Securities and Exchange Commission rules.
You
may request, and we will provide you with, a copy of these filings, at no cost, by calling us at (604) 757-0952 or by writing to us
at the following address:
300
– 2233 Columbia Street
Vancouver,
BC, Canada |
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V5Y
0M6 |
| (Address
of principal executive offices) |
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(Zip
Code) |
$800,000
AGRIFORCE
GROWING SYSTEMS, LTD.
Common
Stock
PROSPECTUS
SUPPLEMENT
October
15, 2024
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