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Loan Receivable

3 Months Ended

Mar. 31, 2022

Note 6 — Loan Receivable

A portion of the capital raised from the Company’s IPO has been allocated to launch Agrify’s total turn-key solution (“TTK Solution”) program. The TTK Solution is industry’s first end-to-end solution that provides access to capital for construction costs, equipment lease(s) to VFUs and other related operating equipment, subscription to the Company’s Agrify Insights software, and business consultation services, which will enable the Company’s customers to go to market faster and better.

The Company’s initial allowable investment in the TTK Solution engagements is currently capped at $50.0 million, as approved by the Company’s Board of Directors. As of March 31, 2022 and December 31, 2021, the Company has committed $32.9 million to the Agrify TTK Solution for five customers under contract and $20.3 million to the Agrify TTK Solution for five customers under contract, respectively. Of the five parties who have purchased the Agrify TTK Solution to date, Greenstone Holdings is a related party as of March 31, 2022 and December 31, 2021.

The loan agreements entered into with customers receiving the Agrify TTK Solution generally provide for loans ranging from approximately $200 thousand up to $13.5 million with maturity dates of approximately two to three years after the completion of the construction projects. Typically, the TTK Solution construction loans have interest rates ranging from 12% to 18% per year.

The breakdown of loans receivable by Company as of March 31, 2022 and December 31, 2021 is as follows:

(In thousands)	March 31, 2022		December 31, 2021
Company A – Agrify TTK Solution	$	9,579	$	5,542
Greenstone Holdings – TTK Solution – Related Party		12,446		11,177
Company C – Agrify TTK Solution		7,479		2,439
Company D – Agrify TTK Solution		3,338		1,105
Company E – Agrify TTK Solution		46		46
Company F – Non-TTK Solution (1)		1,538		1,946
Other – Non-TTK Solutions		312		—
Total loan receivable	$	34,738	$	22,255

(1)

Current portion of loan receivable are included within Note 9 – Prepaid Expenses and Other Current Receivables, included elsewhere in the notes to the consolidated financial statements.

The Company analyzed whether any of the above customers are a VIE in accordance with ASC 810 and if so, whether the Company is the primary beneficiary requiring consolidation. Based on the Company’s analysis, the Company has determined that Greenstone Holdings is a VIE. As of March 31, 2022, two of the Company’s employees own approximately 36.6% of the equity of Greenstone Holdings, however, since the Company is not the primary beneficiary and does not hold significant influence over Greenstone Holdings business decisions, the Company is not required to consolidate Greenstone Holdings.