AGRIFORCE GROWING SYSTEMS LTD

Previous wording

Modern diet is believed to be a contributor to health risks such as heart disease, cancer, diabetes and obesity, due in part to the consumption of highly processed foods that are low in natural fiber, protein and nutrition; and extremely high in simple starch, sugar and calories. These “empty carbs” produce glycemic swings that may cause overeating by triggering cravings for food high in sugar, salt and starch. As an example, conventional baking flour is low in natural fiber (~ 2-3%), low-to-average in protein (~ 9%), and very high in starch (~ 75%)(4). Apart from dietary fiber, whole flour is only marginally better in terms of these macronutrients(5).

Current wording

Modern diet is believed to be a contributor to health risks such as heart disease, cancer, diabetes and obesity, due in part to the consumption of highly processed foods that are low in natural fiber, protein and nutrition; and extremely high in simple starch, sugar and calories. These “empty carbs” produce glycemic swings that may cause overeating by triggering cravings for food high in sugar, salt and starch. As an example, conventional baking flour is low in natural fiber (~ 2-3%), low-to-average in protein (~ 9%), and very high in starch (~ 75%)(1). Apart from dietary fiber, whole flour is only marginally better in terms of these macronutrients(2).

Previous wording

On February 10, 2024, Richard Wong resumed his original role as Chief Financial Officer in order to focus on finance and accounting matters for the Company. Effective as of the same day, Jolie Kahn was appointed Executive Turnaround Consultant to support the Company’s operational growth and expansion efforts. Jolie Kahn shall report to David Welch, Chairman of the Board of Directors of the Company, who shall act as Executive Chairman until such time as a permanent Chief Executive Officer is appointed.

Current wording

On February 10, 2024, Richard Wong resumed his original role as Chief Financial Officer in order to focus on finance and accounting matters for the Company. Effective as of the same day, Jolie Kahn was appointed Executive Turnaround Consultant to support the Company’s operational growth and expansion efforts. On June 4, 2024, the Board Directors appointed Jolie Kahn as Chief Executive Officer. Jolie Kahn shall report to David Welch, Chairman of the Board of Directors of the Company, who shall act as Executive Chairman until such time as a permanent Chief Executive Officer is appointed.

Previous wording

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

Current wording

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

Previous wording

Operating expenses primarily consist of wages and salaries, professional fees, consulting, office and administration, investor and public relations, research and development, and share-based compensation. Operating expenses decreased during the three months ended March 31, 2024 as compared to March 31, 2023 by $1,474,934 or 52% primarily due to the following:

Current wording

Operating expenses primarily consist of wages and salaries, professional fees, consulting, office and administration, investor and public relations, research and development, and share-based compensation.

Previous wording

The Company’s primary need for liquidity is to fund working capital requirements, capital expenditures, and for general corporate purposes. The Company’s ability to fund operations and make planned capital expenditures and debt service obligations depends on future operating performance and cash flows, which are subject to prevailing economic conditions, financial markets, business and other factors. We have recorded a net loss of $3,327,700 for the three months ended March 31, 2024, and a net loss of $1,720,053 for the three months ended March 31, 2023. We have recorded an accumulated deficit of $47,835,004 as of March 31, 2024 and $44,507,304 as of December 31, 2023. Net cash used in operating activities for the three months ended March 31, 2024 and March 31, 2023 was $1,309,334 and $2,647,873 respectively.

Current wording

The Company’s primary need for liquidity is to fund working capital requirements, capital expenditures, and for general corporate purposes. The Company’s ability to fund operations and make planned capital expenditures and debt service obligations depends on future operating performance and cash flows, which are subject to prevailing economic conditions, financial markets, business and other factors. We have recorded a net loss of $7,559,799 for the six months ended June 30, 2024, and a net loss of $4,247,025 for the six months ended June 30, 2023. We have recorded an accumulated deficit of $52,067,103 as of June 30, 2024 and $44,507,304 as of December 31, 2023. Net cash used in operating activities for the six months ended June 30, 2024 and June 30, 2023 was $2,228,537 and $4,339,996 respectively.

Previous wording

The Company held $2,863,391 in cash at March 31, 2024 as compared to $3,878,578 at December 31, 2023.

Current wording

The Company held $2,937,496 in cash at June 30, 2024 as compared to $3,878,578 at December 31, 2023.

Previous wording

The net cash used by operating activities for the three months ended March 31, 2024 was $1,309,334 compared to $2,647,873 for the three months ended March 31, 2023. The decrease of $1,338,539 was primarily due to the following:

Current wording

The net cash used by operating activities for the six months ended June 30, 2024 was $2,228,537 compared to $4,339,996 for the six months ended June 30, 2023. The decrease of $2,111,459 was primarily due to the following:

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2024, represents net proceeds from debentures of $1,000,000. This was partially offset by repayments on convertible debentures of $668,568, financing costs of debentures of $50,000. Net cash used in financing activities for the three months ended March 31, 2023 represents net proceeds from debentures of $4,615,385 and was partially offset by repayments and interest paid on convertible debentures of $1,180,950 and financing costs of debentures of $325,962.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2024, represents net proceeds from debentures of $2,250,000. This was partially offset by repayments on convertible debentures of $802,282 and financing costs of debentures of $84,463. Net cash provided by financing activities for the six months ended June 30, 2023, represents net proceeds from debentures of $4,615,385 as well as common shares issued for cash of $565,741. This was partially offset by repayments on convertible debentures of $1,741,950, financing costs of debentures of $325,962 and share issuance costs of $16,142.

Previous wording

On February 21, 2024, a Convertible Debt Investor purchased an additional tranche of $1,100,000 in convertible debentures and received 3,341,122 warrants. The convertible debentures and debenture warrants were issued with an exercise price of $0.214 and expire on August 21, 2027. The issuance of the additional tranche triggered the down round provision, adjusting the exercise prices of the First, Second, Third, and Fourth tranche of Debentures and the First, Second, Third, Fourth tranche of Debenture Warrants to $0.214.

Current wording

On February 21, 2024, a Debenture Investor purchased an additional tranche totaling $1,100,000 in convertible debentures and received 3,341,122 warrants. The convertible debentures and debenture warrants were issued with an exercise price of $0.214 and expire on August 21, 2027. The issuance of the additional tranche triggered the down round provision, adjusting the exercise prices of the First, Second, Third, and Fourth tranche of Debentures and the First, Second, Third, Fourth tranche of Debenture Warrants to $0.214.

Previous wording

On April 11, 2024, an Investor purchased an additional tranche of $550,000. The convertible debt and warrants were issued with an exercise price of $0.163 and $0.18, respectively. The issuance of the additional tranche triggered the down round provision, adjusting the conversion prices of the First, Second, Third, Fourth and Fifth Tranche Debentures and the exercise prices of the First, Second, Third, Fourth and Fifth Tranche Warrants to $0.163.

Current wording

On April 11, 2024, a Debenture Investor purchased an additional tranche totaling $550,000 in convertible debentures and received 2,193,253 warrants. The convertible debentures and debenture warrants were issued with an exercise price of $0.163 and $0.18, respectively and expire on October 11, 2027. The issuance of the additional tranche triggered the down round provision, adjusting the conversion prices of the First, Second, Third, Fourth and Fifth Tranche Debentures and the exercise prices of the First, Second, Third, Fourth and Fifth Tranche Warrants to $0.163.

Previous wording

See the footnotes to our unaudited financial statements for the three months ended March 31, 2024 and 2023, included with this quarterly report.

Current wording

See the footnotes to our unaudited financial statements for the six months ended June 30, 2024 and 2023, included with this quarterly report.