Agrify Corporation

Good morning and welcome to Agrify's third quarter 2021 earnings call. With us on today's call are Raymond Chang, Chief Executive Officer, David Gessler, Chief Science Officer, and Niamh Krikov, our departing Chief Financial Officer. Today, management will review the highlights and financial results for the third quarter and provide a business and operational update. Following management's prepared remarks, there will be a question and answer session. A reminder that today's conference call is being recorded. Before we begin, we would like to remind everyone that prepared remarks contain forward-looking statements and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the company's control that could cause its future results, performance, or achievements to differ significantly from the results, performance, or achievements expressed by and implied by such forward-looking statements. Important factors that could cause or contribute such differences include risks detailed in our public filings with the Securities and Exchange Commission and those mentioned in the earnings released. As required by law, we undertake no obligation to update any forward-looking or other statements herein, whether as a result of a new information, future events, or otherwise. Now, at this time, it is my pleasure to turn the call over to Mr. Raymond Chang, Agrify's CEO. Sir, you may begin.

Thank you, Operator. Before we get started, I would like to thank everyone for joining us on the call today. During our prepared remarks, we will be referring to information that's contained within our press releases and our call slides, which can be accessed on our investor relations website at ir.agrify.com. On this call today, I will provide you with an update on our continued successful execution of our growth strategy during Q3, including our key achievements from the quarter. And I will highlight some recent company developments. My Chief Science Officer, David Kessler, will discuss some of our customers' VFU-enabled successes. He will also walk you through the game-changing improvements we are making to our technology. Niamh Krikhoff, our departing CFO, who has served AgriFi with purpose and professionalism, so our initial public offering and the subsequent public offering, as well as our recent acquisition, will follow with a detailed review of our financial results for the third quarter. As announced this morning, Kim Oaks, who has been a valued member of our board and a chair of our audit committee will begin transitioning to the chief financial officer role effective today. Niamh will graciously stay on board for the next few months as an advisor to ensure that both Tim and Agrify are set up for success in 2022. We look forward to introducing Tim to many of you in the near future. For information on Tim, and his impressive track record, please refer to the press release that we issued earlier this morning, highlighting the exciting changes and additions to our executive team to help us further accelerate our growth. Now, let's dive into our Q3 highlights. We are thrilled to share with you that the third quarter of 2021 was yet another strong and record quarter for AgriPi. We saw revenue soar to 15.8 million, our best record to date, with 460% year-over-year growth and up 33% sequentially from Q2 of 2021. Besides our record revenue, I am pleased to report that we generated 32.2 million in new bookings. And our backlog at the end of a quarter now stands at 117.5 million, up from 101 million at the end of Q2 2021. The improvement in our financial results continues to be driven by the healthy and growing partnership we have cultivated with our existing customers and our robust pipeline of new business opportunities. Over the summer, we accomplished a wide range of business objectives. We moved our headquarters to Bereka, Massachusetts, where we also opened Agri-Fi University. This location now serves as a cultivation and production R&D facility, training center, product showcase facility, and corporate office. We also signed our second TTK partnership with True Health Cannabis for the installation of now up to 214 VFUs. With the recently updated and increased VFU count, this partnership is now anticipated to generate more than $73 million in revenue over the next 10 years. In addition, we established a multi-year vertical farming R&D partnership with CareLeaf study the impact of cultivation environment on plant health and harvest yields. And we expanded our existing partnership with White Clouds Botanicals, shipping another 114 new 3.6 DFUs for phase two of their facility expansion in Nevada. I would also like to acknowledge the dedication, character, and resolve that our team displayed during Q3. While our financial and public announcements generally get most of the attention, we worked incredibly hard behind the scenes in the third quarter to combat major global supply chain issues, to deliver on important customer promises, to mobilize for scale-up manufacturing, and to push forward discussions with MSOs and negotiations with potential TTK and cash customers, and to finalize our transformative and strategic acquisition of Precision Extraction and Capgate Sciences. Based on all these efforts, fourth quarter is already shaping up to be yet another record quarter for us, which I will elaborate a little bit more later on in this call. Now, at this point, I would like to turn the call over to David, my Chief Science Officer, who will give an update on our customer success and horticulture initiatives, as well as our new product enhancements. David?

Thank you, Raymond. In Q3, our clients continued to see improvements in consistency and yield, achieving new leaps in cultivation performance using our VFUs. This quarter, the highest yield one of our customers recorded was 99 grams per square foot of canopy, an incredible 50% increase over the next highest yield from the past three quarters. In more practical terms, if three VFUs are stacked in configuration, then the potential yield per square foot of facility floor space would be 594 grams per crop cycle or 2,970 grams per year for each square foot of facility allocated. Agrify customers continue to see exceptional cannabinoid consistency of Agrify VFU-grown flour as well. Across five harvest batches in the prior three months, one of Agrify's customers saw less than 0.94% variation in the cannabinoid concentration across all five batches. This level of consistency is propelling the industry towards branded products that deliver reproducible consumer and patient experiences. This quarter, we also launched Agrify University, an immersive online and in-person project-based learning experience that empowers Agrify customers with the knowledge and best practices to succeed. Utilizing our vast data sets and technological innovations, Agrify University offers a curriculum designed to support the long-term growth of the industry. To improve efficiency, Agrify has incorporated a plug-and-play system for automated harvest weight data capture, which effectively eliminates the need to manually enter data into metric or other compliance software, reducing human error and fostering faster, more accurate data input and collections. we've made exciting advancements to our VFU technology as well, leading to our recent launch of the improved VFU Generation 3.7 with enhanced features for increased efficiency and higher quality yield, including lighting with industry-leading performance, media, electrical conductivity, and water sensing capability, as well as integration of intelligent camera technology. Developed with our contract manufacturer, Mack Molding, the new features of the Generation 3.7 VFU include durable, adjustable spectrum lights that can be precisely tailored to serve the specific needs of different cannabis varieties. The new lights deliver approximately a 40% increase in light output with best-in-class power efficiency of 3 micromoles per joule after lensing and loss. a camera system integrated with Agrify Insights, enabling ongoing image analysis to proactively identify issues before they can be seen with the naked eye, as well as growing media monitoring via moisture and electrical conductivity sensing, enabling granular control over the fertigation events and optimizations based on environmental feedback, which minimize potential risks from facility anomalies, nutrient deficiencies, and improper irrigation fertigation schedules. To foster biosecurity, 3.7 generation VFUs have incorporated a heat sanitation mode to automatically sanitize our VFUs in between crop cycles, helping to eliminate one of the most underperformed and important tasks in any facility. We expect to begin delivery of the generation 3.7 VFUs during the first quarter of 2022, and we look forward to seeing the real-world improvements that these latest advancements will bring to our clients. With that, I will turn the call back to Raymond. Thank you, David.