Business context and reporting period
Filing identity: The request metadata names AVAX ONE TECHNOLOGY LTD., but the supplied Form 10-K is for AgriFORCE Growing Systems Ltd. This summary reflects the filing provided. It covers the fiscal year ended December 31, 2022, with 2021 comparisons; it is an annual report, not a standalone fourth-quarter report.
AgriFORCE is an early-stage agriculture technology company with Solutions (controlled-environment growing systems and consulting) and Brands (plant-based food products) divisions. It reported no revenue since inception. Its principal projects include the FORCEGH+ growing system and UN(THINK) food products.
Financial results and position
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating loss | $13.66 million | $6.93 million |
| Net loss | $12.87 million | $6.64 million |
| Basic and diluted loss per share | $0.71 | $0.66 |
| Net cash used in operating activities | $12.08 million | $5.14 million |
With no revenue, gross profit and operating margins are not meaningful. Operating expenses rose $6.73 million, mainly from higher payroll, professional and consulting fees, administration, marketing and travel; research and development was $616,000 versus $474,000.
Cash was $2.27 million at year-end, down from $7.78 million. Current assets were $2.92 million against current liabilities of $5.36 million, a working-capital deficit of approximately $2.44 million. Total assets were $21.85 million, total liabilities $11.30 million, and shareholders’ equity $10.54 million. The balance sheet reports $3.94 million of current debentures net of discounts and issuance costs; the filing separately lists $11.07 million of future debt principal payments as of year-end.
Financing cash flow was $7.56 million, including $12.75 million of net debenture proceeds, partly offset by repayments, financing costs and an intangible-asset payment. Investing cash use was $640,000. The filing provides no meaningful revenue-based margin or operating cash-flow coverage metrics because the company has not begun generating revenue.
Material changes versus 2021
- Net loss increased to $12.87 million from $6.64 million, while operating cash use more than doubled.
- Year-end cash declined by $5.51 million. The company funded operations in part through a $14.025 million convertible-debenture financing, with $12.75 million received net of original issue discount before financing costs.
- Intangible assets increased to $13.09 million, principally from the Manna food-processing IP acquisition. The company paid $1.475 million in cash and issued 7,379,969 prefunded warrants valued at approximately $12.11 million, subject to vesting and other restrictions.
- Adoption of lease accounting in 2022 added a $1.54 million operating lease right-of-use asset and $1.52 million lease liability at year-end; the filing says the accounting change did not materially affect the statements of loss or cash flows.
Outlook, risks and unusual items
Management expects continued losses and says additional financing is needed. The auditor’s report and management’s disclosure both identify substantial doubt about the company’s ability to continue as a going concern. Management said it would seek debt, equity or other financing for the following 12 months; it cautioned that funding may not be available on acceptable terms, and operations could be scaled back or discontinued if funding is unavailable.
- Execution and commercialization: No FORCEGH+ facility had been constructed, UN(THINK) had not generated revenue, and the company had not completed an acquisition of a revenue-generating business. Pilot-plant development, product launches, customer demand, production costs and projected yields remain unproven.
- Debt, dilution and valuation: The 2022 debentures are convertible and include warrants and down-round provisions. In January 2023, investors purchased an additional $5.08 million tranche, triggering a reduction in conversion and warrant exercise prices to $1.24. The filing also reports substantial potentially dilutive securities.
- Pending transactions: The Delphy acquisition remained subject to an amended closing timetable and negotiations; the Deroose proposal remained at the letter-of-intent stage. A January 2023 Berry People LOI proposed a $28 million purchase of 70% of the business, subject to due diligence and a definitive agreement. These were not completed acquisitions as of the filing date.
- Land and construction: The Coachella land purchase was conditional on permitting, zoning and infrastructure work. The $2.09 million land-deposit balance included prefunded warrants that could be rescinded if conditions were not met by March 31, 2023.
- Noncash earnings effects: A $3.72 million gain from changes in fair value of derivative liabilities reduced reported loss, while $3.40 million of debenture interest accretion increased expense. These fair-value and financing items are not equivalent to operating cash generation.
- Other risks: The filing highlights financing needs, foreign-exchange exposure, acquisition and integration risks, competition, intellectual-property protection, limited operating history, and possible dilution. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not audit internal controls.
The financial statements received an unmodified audit opinion under U.S. GAAP, with a going-concern explanatory paragraph. The company reported no contingencies or litigation to disclose in the financial-statement notes as of December 31, 2022.
Important facts for investors to verify
- Confirm the filing’s issuer: the supplied document is AgriFORCE Growing Systems Ltd., not AVAX ONE TECHNOLOGY LTD.
- Review the audited statements and debt note to reconcile the $3.94 million net carrying value of current debentures with $11.07 million of stated future principal payments, and assess repayment timing and terms.
- Check subsequent filings for cash raised, debt conversions, revised conversion prices, warrant issuance and resulting share dilution after March 13, 2023.
- Verify whether the Coachella land conditions were met and whether the Delphy, Deroose or Berry People transactions progressed to definitive agreements or closed.
- Track evidence of commercial sales, customer contracts, pilot-plant progress, construction costs and funding sufficient to address the going-concern uncertainty.