XML 23 R12.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Loan Receivable | 9 Months Ended
--- | ---
Sep. 30, 2022
Receivables [Abstract] |
Loan Receivable | Note 5 — Loan Receivable A portion of the capital raised from the Company’s IPO has been allocated to launch the Company’s TTK Solution program. The TTK Solution is the industry’s first-of-its-kind program in which the Company engages with qualified cannabis operators in the early phases of their business plans and provides critical support, typically over a 10-year period, which includes: access to capital for construction costs, the design and build-out of their cultivation and extraction facilities, state-of-the-art cultivation and extraction equipment, subscription to the Company’s Agrify Insights™ cultivation software, process design, training, implementation, proven grow recipes, product formulations, data analytics, and consumer branding, which will enable the Company’s customers to go to market faster and better. The loan agreements entered into with customers receiving the TTK Solution generally provide for loans 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. During the quarter ended September 30, 2022, the Company provided a notice of default under the term loan agreement between the Company and Bud & Mary’s (the “Bud & Mary’s TTK Agreement”). On October 5, 2022, Bud & Mary’s Cultivation, Inc. (the “Bud & Mary’s”) filed a complaint in the Superior Court of Massachusetts in Suffolk County naming the Company as defendant. Bud & Mary’s is seeking, among other relief, monetary damages in connection with alleged unfair or deceptive trade practices, breach of contract and conversion arising from the Bud & Mary’s TTK Agreement. In response, the Company established a reserve of $14.7 million specifically related to Bud & Mary’s. The Company deemed it necessary to fully reserve the $14.7 outstanding balance due to the current litigation and the uncertainty of the customer’s ability to repay the outstanding balance. In addition, $5.3 million of the notes receivable balance for work performed during the third quarter of 2022 has been recorded as an unbilled note receivable and deferred the revenue to a future period. The Company has recognized the expenses associated with the work completed in the current period due to the uncertainty of the Company’s ability to recover the funds owed by the customer and its obligations to the vendors that have performed this work. The Company determined that it will only recognize unbilled notes receivable revenue if cash is collected from the customer in a future period. The Company believes that Bud & Mary’s claims have no merit and intends to defend itself vigorously. The Company is taking all necessary steps to pursue repayment from Bud & Mary’s and is taking all actions necessary to protect its shareholders’ interests. During the quarter ended June 30, 2022, the Company established a reserve of approximately $7.1 million specifically related to Greenstone. The Company established the reserve based upon its review of Greenstone’s financial stability, which would impact collectability, which is primarily the result of unfavorable market conditions within the Colorado market. The Company will continue to monitor the operations of Greenstone in an effort to collect all outstanding receivables but due to the uncertain nature of Greenstone’s business at this time the Company has made the decision to place a reserve against the receivables. Greenstone is a related party as of September 30, 2022 and December 31, 2021. The breakdown of loans receivable by customer as of September 30, 2022 and December 31, 2021 is as follows:
(In thousands) |  | September 30, 2022 |  |  | December 31, 2021 |
Bud & Mary’s – TTK Solution |  | $ | 14,691 |  |  | $ | 5,542 |
Greenstone – TTK Solution – Related Party |  |  | 12,457 |  |  |  | 11,177 |
Company Customer Number 136 – TTK Solution |  |  | 10,329 |  |  |  | 2,439 |
Company Customer Number 125 – TTK Solution |  |  | 5,563 |  |  |  | 1,105 |
Company Customer Number 71 – Non-TTK Solution (1) |  |  | 2,542 |  |  |  | 1,946 |
Company Customer Number 140 – TTK Solution |  |  | 46 |  |  |  | 46 |
Other – Non-TTK Solutions |  |  | 5,374 |  |  |  | — |
TTK Solution – Allowance for doubtful accounts (2) |  |  | (21,770 | ) |  |  | — |
Total loan receivable |  | $ | 29,232 |  |  | $ | 22,255 |
(1) | The current portion of loan receivable are included within Note 3 – Supplemental Consolidated Balance Sheet Information, included elsewhere in the notes to the consolidated financial statements.
(2) | The Company established an allowance for doubtful accounts of approximately $14.7 million related to Bud & Mary’s ongoing litigation. The remaining balance of approximately $7.1 million relates to Greenstone consisting of capital advances, accrued interest and VFUs sales.
At this time, the Company is not aware of, nor has it identified any risk or potential performance failure associated with any of its other TTK Solution arrangements with the noted exception of Bud & Mary’s TTK Solution and Greenstone TTK Solution, as described above. The Company analyzed whether any of the above customers are a VIE in accordance with ASC810 and if so, whether the Company is the primary beneficiary requiring consolidation. Based on the Company’s analysis, the Company has determined that Greenstone is a VIE. As of September 30, 2022, two of the Company’s employees own approximately 36.6% of the equity of Greenstone, however, since the Company is not the primary beneficiary and does not hold significant influence over Greenstone business decisions, the Company is not required to consolidate Greenstone.

X
- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI https://asc.fasb.org/subtopic&trid=2196772 + Details
Name: | us-gaap_LoansNotesTradeAndOtherReceivablesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_ReceivablesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration