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Loans Receivable | 3 Months Ended
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Mar. 31, 2024
Loans Receivable [Abstract] |
Loans Receivable | Note 5 — Loans Receivable A portion of the capital raised from the Company’s IPO was 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™, process design, training, implementation, proven grow recipes, product formulations, data analytics, and consumer branding. Bud & Mary’s Cultivation, Inc. (“Bud & Mary’s”) - Customer 139 The initial payment date on the loan receivable from Bud & Mary’s is the first business day of the first full month following the commencement of commercial products sales and the maturity date is 24 months from the initial payment date. The interest rate is 16% per annum. In Q3 2022, Agrify became aware that Bud & Mary’s was not in compliance with all debt covenants as defined in the loan agreement which resulted in Agrify issuing a loan acceleration letter to Bud & Mary’s on September 15, 2022, demanding full repayment of the construction loan under the loan agreement dated May 12, 2021. Consequently, the Company established a reserve of $14.7 million specifically related to Bud & Mary’s. Hannah Industries (“Hannah”) - Customer 125 As of December 31, 2022, the Company was unable to provide additional financing to Hannah Industries under the TTK Solution program to complete the build out and development of Hannah’s cultivation business. As a result, the Company concluded that the existing receivable due from Hannah was impaired as of this date. Given the uncertainty around the customer’s ability to repay the outstanding balance of the loan as well as the absence of value attributed to any collateral from Hannah, an allowance for credit losses was recognized for 50% of the total outstanding receivable balance as of December 31, 2022. The Company recognized an allowance for credit losses related to the Hannah loan receivable in the amount of $4.5 million as of December 31, 2022. This allowance remains at $4.5 million as of March 31, 2024. Once the project is completed, the customer will begin making monthly payments based on the harvest. Nevada Holistics (“Tree house”) - Customer 24096 As of March 2024, Nevada Holistics has a current balance of $692 due in relation to the TTK loan. The project went live in Q2 2023. After the 90 day period for the first harvest, the customer was given an additional 6-month grace period which ended in Q1 2024. Upon completion of this grace period, the Company began invoicing the customer each month for a portion of the outstanding loan balance. The borrower will begin making monthly payments in Q2 2024 based on what is produced through harvests. Monthly payments are calculated based off of the Production Success Fees (‘PSF”) generated from each harvest. Upon issuance of each invoice, that portion of the loan is reclassified into loan receivable, current on the condensed consolidated balance sheets. The breakdown of loans receivable by customer as of March 31, 2024 and December 31, 2023 were as follows:
(In thousands) |  | March 31, 2024 |  |  | December 31, 2023 |
Customer 139 |  | $ | 14,361 |  |  | $ | 14,691 |
Customer 125 |  |  | 9,297 |  |  |  | 9,297 |
Customer 24096 |  |  | 6,810 |  |  |  | 6,810 |
Allowance for credit losses (1) |  |  | (18,885 | ) |  |  | (19,215 | )
Total loan receivable, net of allowance for credit losses |  | $ | 11,583 |  |  | $ | 11,583 |
Less: current portion |  |  | (692 | ) |  |  | — |
Total loan receivable, net of current |  | $ | 10,891 |  |  | $ | 11,583 |
| (1) | At December 31, 2023, the Company established an allowance for credit losses of approximately $14.7 million related to Bud & Mary’s ongoing litigation. Approximately $4.5 million relates to Hannah. This reserve still remains in the allowance as of March 31, 2024.

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- Definition The entire disclosure for claims held for amounts due to 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 -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/310-10/tableOfContent Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 835 -SubTopic 30 -Name Accounting Standards Codification -Section 45 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482925/835-30-45-2 + Details
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