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December 16, 2021 - Click here for full report - SHORT AGRIFY ($AGFY)
Agrify Corp. (“Agrify” or the “Company”) sells a modular indoor vertical farming unit (“VFU”) that advertise a cost-effective and low risk way for plant growers, mainly cannabis farmers, to increase yields and profits via environment controls and automation.
We believe that Agrify created artificial demand for its product by financing undisclosed Company insiders to act as independent customers.
After its January 2021 IPO, Agrify’s shares soared amongst a wave of sales announcements to alleged independent third party licensed commercial growers via new total turnkey partnerships (“TTK Partnerships”).
We found two major issues with Agrify’s TTK Partnerships.
First, we found the majority of Agrify’s TTK Partnerships are either with undisclosed Company insiders or with unlicensed unproven operators.
Second, the TTK Partnerships use Agrify’s balance sheet to finance the construction of the customer’s facility, equipment sales and installations, which suggests to us that Agrify’s recorded revenues are artificially inflated by loan balances from Agrify to TTK Partnership customers.
Agrify accounted for its TTK Partnerships differently than previously disclosed accounting policies.
TTK Partnerships were never mentioned in the Company’s S-1 or its 2020 10-K, which means Agrify’s new 2021 accounting policies have yet to be the subject of an audit.
Given evidence of limited interest from independent customers and significant cash dealings with undisclosed Company insiders, we think that Agrify’s auditor Marcum, LLP (“Marcum”) cannot in good faith accept Agrify’s 3Q’21 financial statements as-is without inviting increased scrutiny on itself for violating negligence rules of its PCAOB membership.
We suspect Agrify’s actual revenues are significantly less than what is reported to investors which is why we are short Agrify and think that its stock is going lower.
Table of Contents:
1. FAKE DEMAND PROMOTION
2. HANNAH UNDISCLOSED RELATED PARTY CUSTOMER
3. OLIVE EL MIRAGE NEWLY ESTABLISHED WITHOUT OPERATING LICENSE
4. KEIF USA NEWLY ESTABLISHED WITHOUT OPERATING LICENSE
5. TRUE HOUSE CANNABIS CUSTOMER FINANCED BY AGRIFY INSIDERS
6. GREENSTONE CUSTOMER OWNED BY AGRIFY INSIDERS