Filed
pursuant to Rule 424(b)(4)
Registration
No. 333-266722
PROSPECTUS
SUPPLEMENT
(To
prospectus dated August 18, 2022)
$5,122,648
AGRIFORCE
GROWING SYSTEMS, LTD.
Common
Stock
We
have entered into an At Market Issuance Sales Agreement, or sales agreement, with B. Riley Securities, Inc., or B. Riley , relating to
shares of our common stock offered by this prospectus supplement. In accordance with the terms of the sales agreement, we may offer and
sell shares of our common stock having an aggregate offering price of up to $5,122,648 from time to time through or to B. Riley
acting as our sales agent or principal pursuant to this prospectus supplement and the accompanying prospectus.
Our
common stock is traded on the Nasdaq Capital Market, or Nasdaq, under the symbol “AGRI.” The last reported sale price of
our common stock on November 1, 2022 was $1.22 per share.
We are currently subject to General Instruction I.B.6
of Form S-3, which limits the amounts of securities that we may sell under the registration statement of which the prospectus supplement
and the accompanying prospectus form a part. The aggregate market value of our outstanding common stock held by non-affiliates pursuant
to General Instruction I.B.6 of Form S-3, or public float, is $15,367,945, which is based on 12,596,676 shares of our outstanding
common stock held by non-affiliates as of the date of this prospectus supplement, at a price of $1.22 per share, which was the last reported
sale price of our common stock on Nasdaq on November 1, 2022. Pursuant to General Instruction I.B.6 of Form S-3, in no event will
we sell shares pursuant to this prospectus supplement with a value of more than one-third of the aggregate market value of our common
stock held by non-affiliates in any 12-month period. We have not offered any securities pursuant to General Instruction I.B.6 of Form
S-3 during the prior 12 calendar month period.
Sales
of our common stock, if any, under this prospectus supplement will be made by any method permitted that is deemed an “at the market
offering” as defined in Rule 415 under the Securities Act of 1933, as amended, or the Securities Act, including sales made directly
on or through Nasdaq or any other existing trading market in the United States for our common stock, directly to B. Riley as principal,
and/or in any other method permitted by law. If we and B. Riley agree on any method of distribution other than sales of shares of our
common stock on or through Nasdaq or another existing trading market in the United States at market prices, we will file a further prospectus
supplement providing all information about such offering as required by Rule 424(b) under the Securities Act. B. Riley is not required
to sell any specific number or dollar amount of securities, but will act as our sales agent using commercially reasonable efforts consistent
with its normal trading and sales practices. There is no arrangement for funds to be received in any escrow, trust or similar arrangement.
B.
Riley will be entitled to compensation at a commission rate equal to 3.0% of the gross sales price per share sold. In connection with
the sale of the common stock on our behalf, B. Riley will be deemed to be an “underwriter” within the meaning of the Securities
Act and the compensation of B. Riley will be deemed to be underwriting commissions or discounts. We have also agreed to provide indemnification
and contribution to B. Riley with respect to certain liabilities, including liabilities under the Securities Act or the Exchange Act
of 1934, as amended, or the Exchange Act.
Investing
in our securities involves significant risks. Please read the information contained in or incorporated by reference under the heading
“Risk Factors” beginning on page S-9 of this prospectus supplement, and under similar headings in other documents
filed after the date hereof and incorporated by reference into this prospectus supplement and the accompanying prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined
if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
B.
RILEY SECURITIES
The
date of this prospectus supplement is November 9, 2022
TABLE
OF CONTENTS
Prospectus
Supplement
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
document is part of the registration statement that we filed with the Securities and Exchange Commission, or the SEC, using a “shelf”
registration process and consists of two parts. The first part is this prospectus supplement, which describes the specific terms of this
offering. The second part, the accompanying prospectus, gives more general information, some of which may not apply to this offering.
Generally, when we refer only to the “prospectus,” we are referring to both parts combined. This prospectus supplement may
add to, update or change information in the accompanying prospectus and the documents incorporated by reference into this prospectus
supplement or the accompanying prospectus. By using a shelf registration statement, we may offer shares of our common stock having an
aggregate offering price of up to $5,122,648 from time to time under this prospectus supplement at prices and on terms to be determined
by market conditions at the time of offering.
If
information in this prospectus supplement is inconsistent with the accompanying prospectus or with any document incorporated by reference
that was filed with the SEC before the date of this prospectus supplement, you should rely on this prospectus supplement. This prospectus
supplement, the accompanying prospectus and the documents incorporated into each by reference include important information about us,
the securities being offered and other information you should know before investing in our securities. You should also read and consider
information in the documents we have referred you to in the sections of this prospectus supplement entitled “Where You Can Find
More Information” and “Incorporation by Reference.”
You
should rely only on this prospectus supplement, the accompanying prospectus, the documents incorporated or deemed to be incorporated
by reference herein or therein and any free writing prospectus prepared by us or on our behalf. We have not, and B. Riley has not, authorized
anyone to provide you with information that is in addition to or different from that contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus. If anyone provides you with different or inconsistent information, you should not rely on
it. We and B. Riley are not offering to sell these securities in any jurisdiction where the offer or sale is not permitted. You should
not assume that the information contained in this prospectus supplement, the accompanying prospectus or any free writing prospectus,
or incorporated by reference herein, is accurate as of any date other than as of the date of this prospectus supplement or the accompanying
prospectus or any free writing prospectus, as the case may be, or in the case of the documents incorporated by reference, the date of
such documents regardless of the time of delivery of this prospectus supplement and the accompanying prospectus or any sale of our securities.
Our business, financial condition, liquidity, results of operations and prospects may have changed since those dates.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document
that is incorporated by reference in this prospectus supplement or the accompanying prospectus were made solely for the benefit of the
parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should
not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate
only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing
the current state of our affairs.
Unless
otherwise indicated in this prospectus or the context otherwise requires, all references to “we,” “us,” “our,”
“the Company,” and “AgriFORCE” refer to AgriFORCE Growing Systems, Ltd. and its subsidiaries.
No
action is being taken in any jurisdiction outside the United States to permit a public offering of the securities or possession or distribution
of this prospectus supplement or the accompanying prospectus in that jurisdiction. Persons who come into possession of this prospectus
supplement or the accompanying prospectus in jurisdictions outside the United States are required to inform themselves about and to observe
any restrictions as to this offering and the distribution of this prospectus supplement or the accompanying prospectus applicable to
that jurisdiction.
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary highlights information contained elsewhere or incorporated by reference in this prospectus. This summary does not contain all
of the information that you should consider before deciding to invest in our common stock. You should read this entire prospectus carefully,
including the “Risk Factors” section contained in this prospectus, the accompanying base prospectus and under the section
“Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, and any amendment or update thereto
reflected in subsequent filings with the SEC, along with our consolidated financial statements and the related notes thereto and the
other documents incorporated by reference in this prospectus.
Our
Company
About
AgriFORCE Growing Systems, Ltd.
AgriFORCE
Growing Systems Ltd. was incorporated as a private company by Articles of Incorporation issued pursuant to the provisions of the Business
Corporations Act (British Columbia) on December 22, 2017. The Company’s registered and records office address is at 300
– 2233 Columbia Street, Vancouver, BC, Canada, V5Y 0M6. On February 13, 2018, the Company changed its name from 1146470
B.C. Ltd to Canivate Growing Systems Ltd. On November 22, 2019 the Company changed its name from Canivate Growing Systems Ltd. to AgriFORCE
Growing Systems Ltd.
At
AgriFORCE, our purpose is clear: to positively transform farm, food, and family every day, everywhere. With years of in-depth research
and development experience, we are pioneers, ready to deliver integrated, practical, and sustainable solutions that can be applied throughout
multiple verticals in AgTech. We drive our business through two operating divisions, AgriFORCE Solutions and AgriFORCE Brands.
Our
two divisions—AgriFORCE Solutions and AgriFORCE Brands—work in partnership to address some of the existential challenges
being faced by the world today—climate change, extreme weather, food security and sovereignty, the environmental impact of industrial
and commercial farming—working towards providing better tasting, more nutritious plant-based foods and other products to consumers
on a global level.
AgriFORCE
Solutions:
AgriFORCE
Solutions provides consulting services for AgTech knowledge, operational solutions, and research and development (R&D), which is
augmented with patented and patent pending controlled-environment agriculture (CEA) and additional agriculture facilities and platforms.
We
have taken a strategic and holistic view of agriculture to provide solutions that address the key challenges facing this important industry.
We develop and acquire innovative intellectual property (IP) and technology to improve farming. Our expertise goes from seed to table
and ranges through the life cycle of a plant—from micropropagation and tissue culture to cultivation—with a proprietary approach
that brings together all of the elements, including crops, operations, facilities, systems, and environment designed to allow the plant
to reach its full genetic potential.
From
consulting to our innovative foundational intellectual property—our proprietary facility and growing systems—to the technology
and know-how that we have in our group of companies, we have integrated the key aspects of AgTech to create an outcome that is Clean.
Green. Better.
AgriFORCE
Brands:
AgriFORCE
Brands division is focused on the development and commercialization of plant-based ingredients and products that deliver healthier and
more nutritious solutions. We will market and commercialize both branded consumer product offerings and ingredient supply. This started
with the acquisition of the Manna Nutritional Group, LLC (“MNG”) intellectual property which is a patent-pending technology
to naturally process and convert grains, pulses, and root vegetables. The process results in low-starch, low-sugar, high-protein, fiber-rich
baking flour products, and nutrition liquid. The nutrition values of the flour have the potential to transform consumers’ diet
in multiple verticals.
MNG
Wheat flour has 30 times more fibers, up to 3 times more proteins and less than 15% of the starch as Regular All-Purpose Baking flour
as independently tested and conducted by Eurofins Food Chemistry Testing Madison, Inc.
DIVISIONS:
AgriFORCE
Solutions
Understanding
Our Approach – The AgriFORCE Precision Growth Method
Traditional
farming includes three fundamental approaches: outdoor, greenhouse and indoor. AgriFORCE introduces a unique fourth method, the AgriFORCE
precision growth method, which is informed by cutting-edge science and leveraging the latest advances in artificial intelligence (AI)
and Internet of Things (IoT).
With
a carefully optimized approach to facility design, IoT, AI utilization, nutrient delivery, and micro-propagation, we have devised an
intricate, scientific and high success-oriented approach designed to produce greater yields using fewer resources. This method is intended
to outperform traditional growing methods using a specific combination of new and traditional techniques required to attain this efficiency.
We call it precision growth. The AgriFORCE precision growth method focuses on addressing some of the most important legacy challenges
in agriculture: environmental impact, operational efficiency and yield volumes.
The
AgriFORCE precision growth method presents a tremendous opportunity to positively disrupt all corners of the industry. The size of just
the nutraceutical and plant-based pharmaceutical and vaccine/therapeutics market is over $500 billion. Including the traditional hydroponics
high value crops and controlled-environment food markets, the addressable market approaches nearly $1 trillion.(1)(2)(3).
While
our patent pending intellectual property initially targeted the hydroponics sector of our customers high value crops to showcase its
efficacy in a growing market, we are currently expanding operations to refine our technology and methodology for vegetables and fruit
food crops. Hydroponics was identified as an ideal sector to demonstrate proof of concept. However, management has decided that the Company
focus on evolving our intellectual property and applying our precision growth method to other agricultural areas so that we can be a
part of the solution in fixing the severe issues with the global food supply chain.
The
AgriFORCE Model – Managing the Difficulties of Agricultural Verticals with Modern Technology and Innovation
Our
intellectual property combines a uniquely engineered facility design and automated growing system to provide a clear solution to the
biggest problems plaguing most agricultural verticals. It delivers a clean, self-contained environment that maximizes natural sunlight
and offers near ideal supplemental lighting. It also limits human intervention and – crucially – it was designed to provide
superior quality control. It was also created to drastically reduce environmental impact, substantially decrease utility demands, as
well as lower production costs, while delivering customers daily harvests and higher crop yields.
Plants
grow most robustly and flavorfully in full natural sunlight. While it may seem counterintuitive to some, even the clearest of glass greenhouses
inhibit the full light spectrum of the sun. However, new translucent and transparent membrane materials have emerged that enable the
near-full-transmission of the sun’s light spectrum.
(1)
https://home.kpmg/pl/en/home/insights/2015/04/nutraceuticals-the-future-of-intelligent-food.html
(2)
https://link.springer.com/article/10.1057/jcb.2010.37
(3)
https://medium.com/artemis/lets-talk-about-market-size-316842f1ab27
Unlike
plastic or glass, these new transparent membranes can help crops achieve their full genetic (and flavor) potential. Natural light also
warms the microclimate, when necessary, dramatically reducing heating energy requirements. At times when natural light is not available,
advances in supplemental grow lighting can extend the plants’ photoperiod – to maximize crop growth, quality, and time to
harvest by up to 50% better.
Greenhouses
and vertical farms are also compromised by outdoor and human-introduced contamination. The new model relies on creating a sealed, cleanroom-like
microclimate that keeps pests, pesticides, and other pollutants outside.
Thanks
to AI, the IoT, and similar advances, farmers can now benefit from highly automated growing systems that reduce human intervention and
its associated costs. Finely tuned convective air circulation systems enable the microclimate to remain sealed and protected. Natural
temperature regulation using sunlight and organic foam-based clouds can significantly reduce air-conditioning electricity requirements.
Highly automated hydration, fertilization, and lighting are all continuously optimized by machine learning.
This
new AgriFORCE model, which has been designed with more than four years of ongoing research and development, is set to be put into large
scale practice when the first of three new grow facilities complete construction in Coachella, California. This unique approach, which
included contributions from lighting experts who had previously worked at NASA sending plants into space, was developed to significantly
improve local food security in an environmentally friendly way. It uses the best aspects of the facility’s operator’s current
growing methods – outdoor, greenhouse and indoor – and replaces their shortcomings with better technology and processes.
Any
solution whether in agriculture, industry, or consumer goods is typically the integration of various disparate parts which, in and of
themselves, require independent skill sets and levels of expertise to bring together the desired outcome. Controlled environment agriculture
solutions such as our patent pending proprietary facility and automated grow system are no different. Centered around four pillars: facility
and lighting; automation and AI; nutrients and fertigation and micropropagation and genetics, our business not only has a tremendous
opportunity to grow organically by virtue of our future pipeline of Growhouse contracts, but also through accretive acquisitions for
our Agtech platform.
Our
Position in the Ag-Tech Sector
The
Ag-Tech sector is severely underserved by the capital markets, and we see an opportunity to acquire global companies who have provided
solutions to the industry and are leading innovation moving forward. We are creating a separate corporate office to aggressively pursue
such acquisitions. The robustness of our engagement with potential targets has confirmed our belief and desire to be part of a larger
integrated Ag-Tech solutions provider, where each separate element of the business has its existing legacy business and can leverage
across areas of expertise to expand their business footprint. We believe that there is currently no one that we are aware of who is pursuing
this model in the US capital markets environment at this time.
The
AgriFORCE Grow House
The
Company is an agriculture-focused technology company that delivers innovative and reliable, financially robust solutions for high value
crops through our proprietary facility design and automation IP to businesses and enterprises globally. The Company intends to operate
in the plant based pharmaceutical, nutraceutical, and high value crop markets using its unique proprietary facility design and hydroponics
based automated growing system that enable cultivators to effectively grow crops in a controlled environment. The Company calls its facility
design and automated growing system the “AgriFORCE grow house”. The Company has designed its AgriFORCE grow house to produce
in virtually any environmental condition and to optimize crop yields to as near their full genetic potential possible while substantially
eliminating the need for the use of pesticides, fungicides and/or irradiation. The Company is positioning itself to deliver solutions
to a growing industry where end users are demanding environmentally friendly and sustainable, controlled growing environments and processes.
The initial market focus is the cultivation of food and other high value crops in California, and proof of concept may apply the IP to
biomass production of plant based vaccine materials. The Company believes that its IP may provide a lower cost cultivation solution for
the indoor production of crops due to a combination of higher crop quality and yields, and reduced operating costs. The Company has designed
its AgriFORCE grow house as a modular growing facility that it plans to build and license to licensed operators for the cultivation of
food and high value crops. The AgriFORCE grow house incorporates a design and technology that is the subject of a provisional patent
that the Company has submitted to the United States Patent and Trademark Office on March 7, 2019. On March 6, 2020, a New International
Patent Application No. PCT/CA2020/050302 Priority Claim United States 62/815, 131 was filed. The Company’s IP can be adapted to
a multitude of crops and required growing conditions where exacting environmental control and pharma grade equivalent cleanliness and
processes are required to meet the highest cultivation standards. By delivering the first facility, the Company should be in a position
to demonstrate the performance and to target Good Manufacturing Practices standards compliance necessary to engage the pharma industry
as it moves into modifying its IP to meet the particular plant biomass requirements for vaccines and other pharma biomass.
As
the Company commences construction of its micropropagation facility and grow house, it is planning to start developing its solution for
fruits and vegetables focusing on the integration of its current structure with a new form of vertical grow technology. Although many
of the components and elements may be the same or similar in nature, the automation and integration for going vertical and accommodating
lighting, circulation, climate control and humidity control may be somewhat different. Therefore, the Company intends to develop a small
working commercial facility as it moves to finalize design and engineering. The Company believes it can deliver new IP for various forms
of CEA with a view to constructing its first commercial facility to serve the Southern California market before rolling out its solution
to other crops and local markets in the United States and internationally.
Intellectual
Property
Our
Intellectual Property Strategy
The
Company’s IP and business is focused on four (4) key elements:
1) |
FACILITY AND LIGHTING DESIGN |
-The
facility utilizes a proprietary building envelope system that allows virtually the full light spectrum and substantial portions of the
UV light spectrum through it. It is fully sealed and utilizes positive air pressure exchange to create a microclimate that optimizes
temperature, humidity, CO2, air velocity, filtration, and sanitation through the process of biomimicry.
-Advanced
proprietary supplemental grow lighting technologies achieving optimal luminous efficacy, spectrum, distribution characteristics, automated
DLI management and fixture architecture.
2) |
AUTOMATION AND ARTIFICIAL INTELLIGENCE |
-Proprietary
automated grow system(s) and technology integrated through IOT and artificial intelligence.
-Self
learning input factors to create the highest yield, lowest impact cultivation.
3) |
FERTIGATION AND NUTRIENTS |
-White
label and proprietary organic based blends/products tailored and focused on improved yields and reduced impact cultivation.
4) |
MICROPROPAGATION AND GENETICS |
Optimized
cellular cloning and tissue culture process tailored to facility environment optimization to ensure enhanced solution specific genetic
outcomes.
To
maximize the AgriFORCE grow house’s production capacity, each AgriFORCE grow house is planned to incorporate its own tissue culture
laboratory for micropropagation into the Company’s proprietary mechanized and automated growing system. AgriFORCE micropropagation
laboratories should enable the micropropagation of healthy plantlets to be transplanted and grown to maturity in its facilities.
AgriFORCE
Brands
The
Company purchased Intellectual Property (“IP”) from MNG, a privately held firm based in Boise, Idaho on September 10, 2021.
The IP encompasses patent-pending technologies to naturally process and convert grain, pulses and root vegetables, resulting in low-starch,
low-sugar, high-protein, fiber-rich baking flour produces as well as wide range of breakfast cereals, juices, natural sweeteners and
baking enhancers. The core process is covered under a pending patent application in the U.S. and key international markets. The all-natural
process is designed to unlock nutritional properties, flavor and other qualities in a range of modern, ancient and heritage grains, pulses
and root vegetables to create specialized all-natural baking and all-purpose flours, sweeteners, juices, naturally sweet cereals and
other valuation products, providing numerous opportunities for dietary nutritional, performance and culinary applications.
As
of May 17, 2022, the Company completed an amendment to its asset purchase agreement with MNG, dated September 10, 2021. The amendment
amends certain provisions of Section 2 thereof. Section 2.04(i) was amended to provide for the issuance of prefunded warrants instead
of shares, with the trigger valuation date for the first $3.5 million of equity to be March 10, 2022 and the trigger valuation date for
the next $1.5 million of equity to be the vwap of the Company’s common stock for the ten trading days immediately preceding the
submission resubmission work date on the patents set forth in the asset purchase agreement. Section 2.04(iv) was amended to also reflect
issuance of prefunded warrants instead of common shares in two tranches of $5 million on June 30, 2022 and $3 million on December 31,
2022, such that if a Patent (as defined in the asset purchase agreement) is issued within 24 months of the Closing Date (as defined in
the asset purchase agreement), then the aforementioned $8 million in prefunded warrants will vest in four equal amounts on the date of
issuance of the Patent and then for the three subsequent three month anniversaries thereof. If the aforementioned Patent does not issue
within 24 months of the Closing Date, then those prefunded warrants shall be returned to the Purchaser, and the transaction purchase
price shall be adjusted downward, dollar for dollar. The amendment also contains covenants to obtain shareholder approval of the acquisition
transactions before the prefunded warrants can be exercised into Company common shares.
The
Company plans to rebrand the consumer products and innovative ingredient offering for food manufacturers under the brand (un)Think foods.
Wheat
and Flour Market
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 (about 2-3%), low-to-average in protein (about 9%), and
very high in starch (about 75%). Whole wheat flour is only marginally better. Similarly, gluten-free products are often produced with
sugar and starches such as potato flour, rice flour, tapioca, etc. Gluten-free products are typically low-fiber, low-nutrition, high-starch
and high-calorie.
In
contrast, foods high in fiber help to satiate hunger, suppress cravings, raise metabolism and require more calories to digest. They also
assist in weight loss, lower cholesterol, and may reduce the risk of cancer, heart disease and diabetes.
Government
Regulation
Table
of Contents
Regulations
may substantially change in the future and it is presently not possible to know how regulations will apply to our businesses, or when
they will be effective. As the regulatory and legal environment evolves, we may become subject to new laws, further regulation by the
SEC and other agencies, which may affect our activities. For instance, various bills have also been proposed in Congress related to our
business, which may be adopted and have an impact on us. For additional discussion regarding our belief about the potential risks existing
and future regulation pose to our business, see the Section entitled “Risk Factors” herein.
Competition
The
agriculture industry and various verticals within it are undergoing rapid growth and substantial change, which has resulted in an increase
in competitors, consolidation and formation of strategic relationships. Acquisitions or other consolidating transactions could harm the
Company in a number of ways, including by losing strategic partners and/or customers if they are acquired by or enter into relationships
with a competitor, losing customers, revenue and market share, or forcing the Company to expend greater resources to meet new or additional
competitive threats, all of which could harm the Company’s operating results. As competitors enter the market and become increasingly
sophisticated, competition in the Company’s industry may intensify which could negatively impact its profitability.
THE
OFFERING
Common stock
offered by us pursuant to this prospectus |
|
Shares
of our common stock having an aggregate offering price of up to $5,122,648. |
|
|
Common stock to be outstanding
after this offering |
|
Up
to 19,912,186 shares, assuming a sales price of $1.22 per share, which was the closing price on the Nasdaq Capital Market
on November 1, 2022. The actual number of shares issued and outstanding will vary depending on the price at which shares may
be sold from time to time during this offering. |
|
|
Manner of offering |
|
“At
the market offering” that may be made from time to time on the Nasdaq Capital Market or other trading market for our common
stock in the U.S. through or to B. Riley Securities, Inc., as sales agent or principal. See the section entitled “Plan of Distribution”
on page S-11 of this prospectus supplement. |
|
|
Use of proceeds |
|
We
intend to use all proceeds of this offering for general corporate purposes. See the section entitled “Use of Proceeds”
on page S-10 of this prospectus supplement. |
|
|
Risk factors |
|
See
“Risk Factors” beginning on page S-9 of this prospectus supplement and the other information included in, or incorporated
by reference into, our prospectus for a discussion of certain factors you should carefully consider before deciding to invest in
shares of our common stock. |
|
|
Nasdaq Capital Market symbol |
|
AGRI
(for common stock) |
The
number of shares of our common stock to be outstanding immediately after this offering is based on 15,713,596 shares of common stock
outstanding as of November 1, 2022, and excludes the following:
|
● |
15,650,487
Warrants outstanding to purchase common stock, 635,569 stock options, and $12,192,000 of convertible debentures convertible
at a strike price of $2.22 per share (as of the date of this offering). |
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus and the documents incorporated by reference herein contain forward-looking statements. Such statements include statements
regarding our expectations, hopes, beliefs or intentions regarding the future, including but not limited to statements regarding our
market, strategy, competition, development plans (including acquisitions and expansion), financing, revenues, operations, and compliance
with applicable laws. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from
those discussed in any such statement. Factors that could cause actual results to differ materially from such forward-looking statements
include the risks described in greater detail in the following paragraphs. All forward-looking statements in this document are made as
of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking
statement. Market data used throughout this prospectus is based on published third party reports or the good faith estimates of management,
which estimates are based upon their review of internal surveys, independent industry publications and other publicly available information.
You
should review carefully the section entitled “Risk Factors” within this prospectus for a discussion of these and other risks
that relate to our business and investing in shares of our common stock.
All
forward-looking statements speak only as of the date of this prospectus. We disclaim any obligation to update or revise these statements
unless required by law, and you should not place undue reliance on these forward-looking statements. Although we believe that our plans,
intentions and expectations reflected in or suggested by the forward-looking statements we make in this prospectus are reasonable, we
can give no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our
actual results to differ materially from our expectations under “Risk Factors” and elsewhere in this prospectus. These cautionary
statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
RISK
FACTORS
Investment
in our common stock involves risks. Before deciding whether to invest in our common stock, you should consider carefully the risk factors
discussed below and those contained in the section entitled “Risk Factors” contained in our Annual Report on Form 10-K for
the year ended December 31, 2021, as filed with the SEC on March 30, 2022, which is incorporated herein by reference in its entirety,
as well as any amendment or update to our risk factors reflected in subsequent filings with the SEC. If any of the risks or uncertainties
described in our SEC filings actually occurs, our business, financial condition, results of operations or cash flow could be materially
and adversely affected. This could cause the trading price of our common stock to decline, resulting in a loss of all or part of your
investment. The risks and uncertainties we have described are not the only ones facing our company. Additional risks and uncertainties
not presently known to us or that we currently deem immaterial may also affect our business operations.
Risks
Associated with this Offering
We
have broad discretion in the use of the net proceeds of this offering and may not use them effectively.
We
intend to use a substantial portion of the net proceeds of this offering for working capital purposes. The remaining proceeds will be
used for general corporate purposes. Our management will have broad discretion in the application of the net proceeds from this offering
and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. The failure
by management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business
or cause the price of our common stock to decline.
You
will experience immediate and substantial dilution.
The offering price per share
in this offering may exceed the net tangible book value per share of our common stock outstanding prior to this offering. Assuming that
an aggregate of 4,198,590 shares of our common stock are sold at a price of $1.22 per share, the last reported sale price of our
common stock on the Nasdaq Capital Market on November 1, 2022, for aggregate gross proceeds of $5,122,648, and after
deducting commissions and estimated offering expenses payable by us, you will experience immediate dilution of $0.93 per share,
representing the difference between our as adjusted net tangible book value per share of $0.29 after giving effect to this offering and
the assumed offering price. The exercise of outstanding stock options and warrants, or the conversion of outstanding preferred stock
into common stock, will result in further dilution of your investment. See the section entitled “Dilution” below for a more
detailed illustration of the dilution you would incur if you participate in this offering.
You
may experience future dilution as a result of future equity offerings.
In
order to raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into
or exchangeable for our common stock at prices that may not be the same as the price per share in this offering. We may sell shares or
other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering,
and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price per
share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future
transactions may be higher or lower than the price per share paid by investors in this offering.
The
common stock offered hereby will be sold in “at-the-market” offerings, and investors who buy shares at different times will
likely pay different prices.
Investors
who purchase shares in this offering at different times will likely pay different prices, and so may experience different outcomes in
their investment results. We will have discretion, subject to market demand, to vary the timing, prices and numbers of shares sold, and
there is no minimum or maximum sales price. Investors may experience a decline in the value of their shares as a result of share sales
made at prices lower than the prices they paid.
The
actual number of shares we will issue under the sales agreement, at any one time or in total, is uncertain.
Subject
to certain limitations in the sales agreement and compliance with applicable law, we have the discretion to deliver a sales notice to
B. Riley at any time throughout the term of the sales agreement. The number of shares that are sold by B. Riley after we deliver a sales
notice will fluctuate based on the market price of the common stock during the sales period and limits we set with B. Riley. Because
the price per share of each share sold will fluctuate based on the market price of our common stock during the sales period, it is not
possible at this stage to predict the number of shares that will be ultimately issued.
USE
OF PROCEEDS
We
may issue and sell shares of our common stock having aggregate sales proceeds of up to $5,122,648 from time to time. Because there
is no minimum offering amount required as a condition to close this offering, the actual total public offering amount, commissions and
proceeds to us, if any, are not determinable at this time. We estimate that the net proceeds from the sale of the shares of common stock
that we are offering may be up to approximately $4.8 million, after deducting B. Riley’s commission and estimated offering
expenses payable by us.
We
intend to use to use all proceeds for general corporate purposes.
DIVIDEND
POLICY
We
have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings and do not expect
to declare or pay any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of
our board of directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements,
general business conditions and other factors that our board of directors considers relevant.
DILUTION
If you invest in our common
stock, your interest will be diluted to the extent of the difference between the price per share you pay in this offering and the net
tangible book value per share of our common stock immediately after this offering. Our net tangible book value of our common stock as
of June 30, 2022 was approximately $1 million, or approximately $0.06 per share of common stock based upon 15,514,629 shares outstanding.
Net tangible book value per share is equal to our total tangible assets, less our total liabilities, divided by the total number of shares
outstanding.
After giving effect to the
sale of our common stock in the aggregate amount of $5,122,648 at an assumed offering price of $1.22 per share, the last
reported sale price of our common stock on The Nasdaq Capital Market on November 1, 2022, and after deducting estimated offering
commissions payable by us, our net tangible book value as of June 30, 2022 would have been $5.7 million, or $0.29 per share
of common stock. This represents an immediate increase in net tangible book value of $0.23 per share to our existing stockholders
and an immediate dilution in net tangible book value of $0.93 per share to new investors in this offering.
The
following table illustrates this calculation on a per share basis:
Assumed Offering price per share |
|
$ |
1.22 |
|
Net tangible book value per share as of June 30, 2022 |
|
$ |
0.06 |
|
Increase in net tangible book value per share attributable to the offering |
|
$ |
0.23 |
|
As-adjusted net tangible book value per share after giving effect to the offering |
|
$ |
0.29 |
|
Dilution in net tangible book value per share to new investors |
|
$ |
0.93 |
|
The
foregoing table does not give effect to the exercise of any outstanding options or warrants or the conversion of preferred stock to common
stock. To the extent options and warrants are exercised, or to the extent preferred stock is converted to common stock, there may be
further dilution to new investors.
The table above assumes
for illustrative purposes that an aggregate of 4,198,590 shares of our common stock are sold at a price of $1.22 per share, the
last reported sale price of our common stock on the Nasdaq Capital Market on November 1, 2022, for aggregate gross proceeds of
$5,122,648. The shares, if any, sold in this offering will be sold from time to time at various prices.
PLAN
OF DISTRIBUTION
We
have entered into an At Market Issuance Sales Agreement, or the sales agreement, with B. Riley Securities, Inc., or B. Riley, under which
we may issue and sell our common stock from time to time through or to B. Riley acting as sales agent or principal, subject to certain
limitations, including the number of shares registered under the registration statement to which the offering relates. The sales, if
any, of shares made under the sales agreement will be made by any method that is deemed an “at the market offering” as defined
in Rule 415 promulgated under the Securities Act. If we and B. Riley agree on any method of distribution other than sales of shares of
our common stock on or through the Nasdaq Capital Market or another existing trading market in the United States at market prices, we
will file a further prospectus supplement providing all information about such offering as required by Rule 424(b) under the Securities
Act.
Each
time we wish to issue and sell common stock under the sales agreement, we will notify B. Riley of the number of shares to be issued,
the dates on which such sales are anticipated to be made, any minimum price below which sales may not be made and other sales parameters
as we deem appropriate. Once we have so instructed B. Riley, unless B. Riley declines to accept the terms of the notice, B. Riley has
agreed to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell such shares up to the
amount specified on such terms. The obligations of B. Riley under the sales agreement to sell our common stock are subject to a number
of conditions that we must meet. We may instruct B. Riley not to sell common stock if the sales cannot be effected at or above the price
designated by us from time to time. We or B. Riley may suspend the offering of common stock upon notice and subject to other conditions.
We
will pay B. Riley commissions for its services in acting as agent in the sale of common stock. B. Riley will be entitled to a commission
in an amount equal to 3.0% of the gross proceeds from the sale of common stock offered hereby. In addition, we have agreed to reimburse
B. Riley for fees and disbursements related to its legal counsel in an amount not to exceed $75,000 in connection with the filing of
the sales agreement and $5,000 per calendar quarter in connection with ongoing diligence arising from the transactions contemplated by
the sales agreement. We estimate that the total expenses for the offering, excluding compensation payable to B. Riley under the terms
of the sales agreement, will be approximately $150,000.
Settlement
for sales of common stock will generally occur on the second business day following the date on which any sales are made, or on some
other date that is agreed upon by us and B. Riley in connection with a particular transaction, in return for payment of the net proceeds
to us. There is no arrangement for funds to be received in an escrow, trust or similar arrangement.
In
connection with the sale of the common stock on our behalf in this “at the market” offering, B. Riley will be deemed to be
an “underwriter” within the meaning of the Securities Act and the compensation of B. Riley will be deemed to be underwriting
commissions or discounts. We have agreed to provide indemnification and contribution to B. Riley against certain civil liabilities, including
liabilities under the Securities Act or the Exchange Act.
The
offering of our common stock pursuant to the sales agreement will terminate upon the earlier of (i) the sale of all of our common stock
provided for in this prospectus or (ii) termination of the sales agreement as provided therein.
B.
Riley and its affiliates may in the future provide various investment banking and other financial services for us and our affiliates,
for which services they may in the future receive customary fees. To the extent required by Regulation M, B. Riley will not engage in
any market making activities involving our common stock while the offering is ongoing under this prospectus.
LEGAL
MATTERS
The
validity of the common stock offered hereby will be passed upon by Jolie Kahn, Esq., NY, NY. Duane Morris LLP, New York, New York, is
counsel for B. Riley in connection with this offering.
EXPERTS
The
consolidated financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended December
31, 2021, have been audited by Marcum, LLP, an independent registered public accounting firm, as stated in their report incorporated
by reference herein, and have been so incorporated in this prospectus in reliance upon such report and upon the authority of such firm
as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
file reports with the SEC on an annual basis using Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. You may
read and copy any such reports and amendments thereto at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549 on official business days during the hours of 10:00 a.m. to 3:00 p.m. Please call the SEC at 1-800-SEC-0330 for information on
the Public Reference Room. Additionally, the SEC maintains a website that contains annual, quarterly, and current reports, proxy statements,
and other information that issuers (including us) file electronically with the SEC. The SEC’s website address is http://www.sec.gov.
You can also obtain copies of materials we file with the SEC from our Internet website found at www.agriforcegs.com. Our stock is quoted
on the Nasdaq Capital Market under the symbol “AGRI.”
This
prospectus is only part of a registration statement on Form S-3 that we have filed with the SEC under the Securities Act and therefore
omits certain information contained in the registration statement. We have also filed exhibits and schedules with the registration statement
that are excluded from this prospectus, and you should refer to the applicable exhibit or schedule for a complete description of any
statement referring to any contract or other document. You may inspect a copy of the registration statement, including the exhibits and
schedules, without charge, at the public reference room or obtain a copy from the SEC upon payment of the fees prescribed by the SEC.
This
prospectus is part of a registration statement filed with the SEC. The SEC allows us to “incorporate by reference” into this
prospectus the information that we file with them, which means that we can disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information. The following documents are incorporated by reference and
made a part of this prospectus:
● |
Annual Report on Form 10-K
for the year ended December 31, 2021 filed on March 30, 2022 and Quarterly Reports on Form 10-Q for the quarter ended March 31, 2022,
filed on May 16, 2022 and for the quarter ended June 30, 2022, filed on August 15, 2022; |
|
|
● |
Our Definitive Proxy Statement
on Schedule 14A and accompanying additional proxy materials filed with the SEC on October 7, 2022; |
|
|
● |
Current Reports on Form
8-K (excluding any reports or portions thereof that are deemed to be furnished and not filed) filed on February 17, 2022, April 11, 2022, May 23, 2022, July 6, 2022, September 22, 2022 and September 26, 2022; and |
|
|
● |
Our registration statement
on Form 8-A filed on July 2, 2021. |
We
also incorporate by reference all additional documents that we file with the Securities and Exchange Commission under the terms of Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act that are made after the date of the initial registration statement but prior to effectiveness
of the registration statement and after the date of this prospectus but prior to the termination of the offering of the securities covered
by this prospectus. We are not, however, incorporating, in each case, any documents or information that we are deemed to furnish and
not file in accordance with Securities and Exchange Commission rules.
You
may request, and we will provide you with, a copy of these filings, at no cost, by calling us at (604) 757-0952 or by writing to us at
the following address:
300
– 2233 Columbia Street
Vancouver,
BC, Canada |
|
V5Y 0M6 |
(Address of principal executive offices) |
|
(Zip Code) |
EXHIBIT 99.1 Form of At Market Issuance Sales Agreement
$5,122,648
AGRIFORCE
GROWING SYSTEMS, LTD.
Common
Stock
PROSPECTUS
SUPPLEMENT
B.
RILEY SECURITIES
November
9, 2022
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