UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from __________ to ___________
(Exact name of registrant as specified in its charter)
(Commission File Number)
(State or other jurisdiction of | (IRS Employer |
New York,
(Address of principal executive offices, including zip code)
Registrant’s
telephone number, including area code:
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐
Yes
As of May 14, 2024, there were
TABLE OF CONTENTS
i
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
AFRICAN AGRICULTURE, INC.
CONSOLIDATED BALANCE SHEETS
| Unaudited | ||||||||
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Inventory - current | ||||||||
| Prepaid expenses | ||||||||
| Accounts receivable | ||||||||
| Supplier advances | ||||||||
| Other receivables | ||||||||
| Total current assets | ||||||||
| Long-term inventory | ||||||||
| Property, plant, and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Intangible asset, net | ||||||||
| Deposits | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Deferred underwriting commission | ||||||||
| Seller note payable - current | ||||||||
| Operating lease liabilities - current | ||||||||
| Other payables | ||||||||
| Short term convertible notes | - | |||||||
| Short term debt | ||||||||
| Related party payables - current | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Accrual for contingent liabilities | ||||||||
| Operating lease liabilities, net of current | ||||||||
| Related party payables | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' deficit: | ||||||||
| Common stock; par value $ | ||||||||
| Additional paid-in-capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total shareholders' deficit | ( | ) | ( | ) | ||||
| - | ||||||||
| Total liabilities and shareholders' deficit | $ | $ | ||||||
See accompanying notes to unaudited consolidated financial statements
1
AFRICAN AGRICULTURE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue | ||||||||
| Sales | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating expenses: | ||||||||
| Employee compensation | ||||||||
| Professional fees | ||||||||
| Operating lease expense | ||||||||
| Insurance | ||||||||
| Depreciation and amortization | ||||||||
| Other operating expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other (income) expenses: | ||||||||
| Foreign currency exchange (gain) loss | ( | ) | ||||||
| Interest expense - related party | ||||||||
| Interest expense - other | ||||||||
| Other income | ( | ) | ( | ) | ||||
| Total other expense | ||||||||
| Loss before provision for income tax | ( | ) | ( | ) | ||||
| Provision for income tax | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Loss per share | $ | ( | ) | $ | ( | ) | ||
See accompanying notes to unaudited consolidated financial statements
2
AFRICAN AGRICULTURE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
| For the three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Comprehensive loss | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ||
See accompanying notes to unaudited consolidated financial statements
3
AFRICAN AGRICULTURE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(UNAUDITED)
| Accumulated | ||||||||||||||||||||||||
| Common Stock | Additional Paid-In | Accumulated | Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit | (Loss) Income | Total | |||||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Imputed interest expense on shareholder loan | - | |||||||||||||||||||||||
| Share based compensation | - | - | - | - | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Balance, January 1, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||
| Imputed interest expense on shareholder loan | - | |||||||||||||||||||||||
| Cash settled RSUs | ( | ) | ( | ) | ||||||||||||||||||||
| Share based compensation | - | - | - | - | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
See accompanying notes to unaudited consolidated financial statements
4
AFRICAN AGRICULTURE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Share based compensation | ||||||||
| Foreign currency exchange (gain) loss | ( | ) | ||||||
| Non-cash interest expense | ||||||||
| Non-cash lease expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Accounts receivable | ( | ) | ||||||
| Other receivable | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Accrual for contingent liabilities | ( | ) | ||||||
| Other payables | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Property, plant, and equipment purchases | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from related party payables | ||||||||
| Proceeds of debt issuance | ||||||||
| Debt repaid | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental Cash Flow Information: | ||||||||
| Income taxes paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
See accompanying notes to unaudited consolidated financial statements
5
AFRICAN
AGRICULTURE HOLDINGS INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS AND LIQUIDITY
Description of Business
African Agriculture Holdings Inc., (the “Company”) is focused on commercial farming, fishery logistics and management, and carbon offset production. We are a holding company that operates principally through our wholly owned subsidiary, Les Fermes de la Teranga SA (“LFT”). LFT is developing our initial commercial farming business based in northern Senegal focusing on the production and sale of alfalfa for cattle feed and nutrition purposes.
Business combination and Organization
On December 6, 2023, (the “Closing Date”), African Agriculture Holdings Inc. (f/k/a 10X Capital Venture Acquisition Corp. II) consummated the previously-announced transactions (collectively, the “Business Combination”) pursuant to that certain Agreement and Plan of Merger, that was initially signed on November 2, 2022, whereby 10X II entered into an Agreement and Plan of Merger (the “AA Merger Agreement”) with 10X AA Merger Sub, Inc., a Delaware corporation and the wholly-owned subsidiary of 10X II (the “AA Merger Sub”) and AFRAG. Pursuant to the AA Merger Agreement, 10X II changed its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”). Following the Domestication, AA Merger Sub merged with and into AFRAG (the “Merger”), with AFRAG surviving the Merger as 10X II’s wholly-owned subsidiary. In connection with the Domestication, 10X Capital Venture Acquisition Corp. II changed its name to “African Agriculture Holdings Inc.”. The Company now trades on the Nasdaq exchange under the ticker “AAGR”.
The Business Combination is being accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, 10X II, who is the legal acquirer, is being treated as the “acquired” company for financial reporting purposes and AFRAG is being treated as the accounting acquirer. This determination was primarily based on the following facts and circumstances:
| ● | AFRAG’s stockholders
have |
| ● | AFRAG’s senior management comprise the senior management of the Company; |
| ● | the directors nominated by AFRAG represent the majority of the board of directors of the Company; |
| ● | AFRAG is the larger entity, in terms of substantive operations and employee base; |
| ● | the executive officers of AFRAG became the initial executive officers of the Company; and |
| ● | AFRAG’s operations comprise the ongoing operations of the Company. |
Accordingly, for accounting purposes, the Business Combination is being treated as the equivalent of a reverse recapitalization transaction in which AFRAG issued stock for the net assets of 10X II. The net assets of 10X II are being stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of AFRAG. Certain prior period amounts in the consolidated and combined financial statements have been reclassified to conform to the current period presentation.
AFRAG
owns
6
Basis of Presentation
These consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as included in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).
Uses and Sources of Liquidity
The consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these consolidated financial statements.
During
the three months ended March 31, 2024, the Company incurred a net loss of approximately $
In
addition to the cash received on the Closing of the Business Combination, which was largely used to pay transaction expenses and payables,
the Company received cash from a Cash-Settled Equity Derivative Transaction (the “CSED”) which the Company entered into on
November 29, 2023, with Vellar Opportunities Fund Master, Ltd. (“Seller”). Pursuant to the terms of the CSED, the Seller received
shares of common stock of AFRAG from a former holder of AFRAG common stock. Subject to certain conditions contained in the CSED, the Seller
was to provide up to $
Notwithstanding the cash raised in the Business Combination and the Cash-Settled Equity Derivative Transaction (the “CSED”) that the Company entered into at the time of the Business Combination, the Company requires additional capital. In addition to its existing obligations, the Company assumed significant payables and accrued expenses in conjunction with the Business Combination expect to incur additional expenses in connection with transitioning to, and operating as, a public company. As such, the Company does not have sufficient cash on hand or available liquidity to meet its obligations through the twelve months following the date the consolidated financial statements are issued. This condition raises substantial doubt about the Company’s ability to continue as a going concern should capital not be introduced. We intend to seek delays on certain payments and explore other ways of potentially reducing immediate expenses with the goal of preserving cash until any potential additional financing is secured, but these efforts may not be successful or sufficient in amount or on a timely basis to meet our ongoing operating and liquidity needs.
7
On a go-forward basis the primary sources of liquidity are expected to be cash from operations, potential capital raises, grants and debt financing if available and deemed in the best interests of the Company and its shareholders. The Company’s liquidity requirements are to expand development of alfalfa production, finance current operations, meet financial commitments, fund organic growth, and service debt, if outside debt financing is obtained. The liquidity requirements will fluctuate with the level and pace of expansion of the acreage being planted, harvested and sold, the effects of the timing between the settlement of payables and receivables, and our general working capital needs for ongoing operations. Estimating liquidity requirements is highly dependent on farming yields, then-current market conditions, including selling prices, costs of all farming inputs, market volatility and our then existing capital structure and requirements. It is anticipated that once the Company has fully developed the Senegal property it will have sufficient resources to fund the ongoing operations of the Company.
While the Company believes in the viability of its strategy to expand operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
Foreign Currency Translation
The accompanying consolidated financial statements are presented in United States dollars (“$”), which is the reporting currency of the Company. The functional currency of the Company is the United States dollar. The functional currency of the Company’s subsidiaries located in Senegal and Niger is the West African Franc (“CFA”).
For
the entities whose functional currencies are the CFA, results of operations and cash flows are translated at average exchange rates during
the period (
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, contingent liabilities, imputed interest expense and income taxes including the valuation allowance for deferred tax assets. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.
8
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in bank accounts, cash in time deposits, certificates of deposit and all highly liquid instruments with original maturities of three months or less. As of March 31, 2024 cash balances were held at JP Morgan Chase and Fidelity Brokerage Service, LLC and in various banks in Senegal and Niger. There were no cash equivalents at March 31, 2024.
Property, plant, and equipment
Property,
plant, and equipment consist of farming and farming support equipment, and office equipment. All property, plant and equipment are stated
at historical cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred.
| Buildings | ||
| Irrigation equipment | ||
| Industrial equipment | ||
| Office furniture and equipment | ||
| Motor vehicle and transportation equipment | ||
| Other equipment |
Leases
The Company determines if an arrangement is a lease at inception. To the extent an arrangement represents a lease, the Company classifies that lease as an operating lease or a finance lease under Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) and its related ASUs (“ASC 842”).
The Company capitalizes operating leases on its Consolidated Balance Sheets through a Right-of-Use (“ROU”) asset and a corresponding lease liability. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the operating lease. Operating lease ROU assets and obligations are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term utilizing an interest rate that the Company would have incurred to borrow over a similar term the funds necessary to purchase the leased asset. Operating leases are included in “Operating lease right-of-use assets, net,” “Current portion of operating lease liabilities,” and “Non-current operating lease liabilities” in the Company’s Consolidated Balance Sheet as of March 31, 2024. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
For additional information regarding the Company’s leases, see Note 6 - Leases.
Inventory
Inventories
are stated at the lower of cost or net realizable value. Cost is calculated on the basis of the first-in, first-out method; market is
based upon estimated replacement costs. Costs included in inventory primarily include the following: cost of seeds, farming inputs such
as fertilizer, gypsum, water and fuel as well as inbound freight cost. Each pivot is cleared, treated with fertilizer and various phytosanitary
products and seeded ahead of the life cycle of alfalfa, which we currently estimate to be approximately
Intangible Asset
The
intangible asset consists of a land use right of
9
Impairment of Long-Lived Assets
The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial position. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. There was no impairment charge for the three months ended March 31, 2024.
Fair Value of Financial Instruments
The Company adopted ASC 820 “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures.
The three levels are defined as follows:
| Level 1 - | inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| Level 2 - | inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of the financial instruments. |
| Level 3 - | inputs to the valuation methodology are unobservable and significant to the fair value. |
Financial instruments include cash and cash equivalents, receivables, accounts payable and accrued expenses, advances from prospective customers/distributors, amounts due to related parties, notes payable and contingent liabilities. The carrying values of these financial instruments approximate their fair values due to the short-term maturities of these instruments.
For the periods presented, there were no financial assets or liabilities measured at fair value.
Income Taxes
The Company follows the liability method in accounting for income taxes in accordance with ASC topic 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
The Company applies the provisions of ASC 740 to account for uncertainty in income taxes. ASC 740 clarifies the accounting for uncertainty in income taxes by prescribing the recognition threshold a tax position is required to meet before being recognized in the consolidated financial statements.
The Company will classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of operations.
10
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The
Company assumed
The Forward Purchase Agreement, or CSED (defined in Note 1) includes an embedded feature that meets the definition of a derivative in accordance with ASC 815. The FPA contract was determined to be more akin to equity rather than debt and as such the FPA and the associated imbedded derivative was treated as equity. Lastly, we determined that the embedded feature will not require bifurcation as it is clearly and closely related to the equity host As the embedded feature was not bifurcated from the instrument at issuance, it will continue to be reassessed at each reporting date to determine that continued non-bifurcation is appropriate. Based on the performance of the stock and the terms of the CSED, it is not expected, and highly improbable, that Company will receive any additional payments or other compensation in the future from the CSED
Revenue Recognition
The Company’s revenue is derived from the sale of agricultural products. The Company recognizes revenue in accordance with ASC 606. To achieve that core principle, the Company applies the following steps:
| 1. | Identify the contract(s) with a customer; |
| 2. | Identify the performance obligations in the contract; |
| 3. | Determine the transaction price; |
| 4. | Allocate the transaction price to the performance obligations in the contract; |
| 5. | Recognize revenue when (or as) the entity satisfies a performance obligation. |
The Company recognizes its revenue at a point in time when it satisfies a performance obligation and transfers control of the product, primarily bales of alfalfa, to the respective customer. For domestic product sales, the Company meets its performance obligation upon the shipment of the products from its facilities to its customer. For international product sales, the Company meets its performance obligation upon delivery of the products to the customer’s international carrier. The Company does not provide any services to its customers currently.
The amount of revenue recognized is based on the fixed transaction price. Contracts for the Company’s products are negotiated on a per-contract basis at a local or regional level. Contracts vary in volume and sometimes price but typically have a single performance obligation, the delivery of bales of alfalfa.
The
Company’s payment terms vary by the type and location of its customers. The Company receives cash equal to the invoice amount for
its product sales, and if credit is provided, payment terms typically range from 30 to 90 days from the date the Company invoices a customer.
Since the period between the delivery of the Company’s products and the Company’s receipt of customer payment for these products
and services is not expected to exceed one year, the Company has elected not to calculate or disclose a financing component for its customer
contracts. The Company’s contract assets at March 31, 2024
and December 31, 2023 consisted of accounts receivable, which totaled $
11
The Company has not established an allowance for credit losses for the three months ended March 31, 2024. In determining an allowance, we would estimate loss rates based upon historical loss experienced and adjusted for factors that are relevant to determining the expected collectability of accounts receivable. Some of these factors include historical loss experience, delinquency trends, aging behavior of receivables, credit and liquidity quality indicators of customers classes, local behavior, the current and expected future economic and market conditions and balances owed when customers are also suppliers of cost inputs.
Share-based compensation
The Company measures compensation expense for all stock-based awards in accordance with ASC Topic 718, Compensation - Stock Compensation. Share-based compensation is measured at fair value on grant date and recognized as compensation expense ratably over the course of the requisite service period. The fair value of restricted stock units (“RSUs”) is typically determined based on the fair value of the related shares on the date of grant. The Company has elected to record forfeitures of employee awards as they occur.
Comprehensive Loss
Comprehensive loss is defined as the decrease in equity of the Company during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Comprehensive loss is reported in the consolidated statements of comprehensive loss, including net loss and foreign currency translation adjustments, presented net of tax.
Net Loss per Share
Basic
net loss per share attributable to common stockholders is derived by dividing the net loss attributable to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted net loss per share attributable to common stockholders is
computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares outstanding
for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalent, if any. The Company
has outstanding warrants of
As the Business Combination has been accounted for as a reverse recapitalization, the consolidated financial statements of the merged entity reflect the continuation of AFRAG’s. financial statements; The Company’s equity has been retroactively adjusted to the earliest period presented. As a result, net loss per share was also retrospectively adjusted for periods ended prior to the Merger. See Note 3 for details of this Business Combination recapitalization.
Accounting Changes
Leases - ASC 842
On January 1, 2022, and effective January 1, 2022, the Company adopted ASU 2016-02, “Leases (Topic 842)” using the modified retrospective transition method allowing it to apply the new standard at the adoption date and to recognize a cumulative-effect adjustment to the opening balance of retained earnings on the date of adoption. Under this transition method, the prior comparative period continues to be reported under the accounting standards in effect for that period.
The Company elected to use the package of practical expedients permitted which allows (i) an entity not to reassess whether any expired or existing contracts are or contain leases; (ii) an entity need not reassess the lease classification for any expired or existing leases; and (iii) an entity need not reassess any initial direct costs for any existing leases. The Company made an accounting policy election to adopt the short-term lease exception which allows the Company to not recognize on the balance sheet those leases with terms of 12 months or less resulting in short-term lease payments being recognized in the condensed consolidated statements of income on a straight-line basis over the lease term. All of the Company’s leases were previously classified as operating and are similarly classified as operating lease under the new standard.
12
Adoption
of the new standard resulted in recognition of right-of-use assets and related lease liabilities of $
Revenue from Contracts with Customers - ASC 606
The Company adopted ASC 606 - Revenue from Contracts with Customers, effective January 1, 2022. Prior to 2022, the Company had no revenue from contracts with customers.
Upon adoption of ASC 606, the Company recognizes revenue when the product is received by the customer for domestic transactions or by the customer’s international carrier for its international transactions. The Company believes this better reflects the point at which the customer has control of the product as required by ASC 606. The adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements.
Concentrations of Business Risk
| Customer A | % | |||
| Customer B | % |
Related Parties and Transactions
The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, “Related Party Disclosures” and other relevant ASC standards.
Parties, which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company or exercise significant influence over the Company in making financial and operational decisions. Entities are also considered to be related if they are subject to common control or common significant influence.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
NOTE 3. BUSINESS COMBINATION
On the “Closing Date”,
African Agriculture Holdings Inc. (f/k/a 10X Capital Venture Acquisition Corp. II) consummated the Business Combination in accordance
with the Merger Agreement. At Closing, (i) each share of Class A Common Stock and Class B Common Stock then issued and outstanding was
automatically reclassified, on a one-for-one basis, in to shares of Common Stock of the Company, $
The Business Combination is being accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, 10X II, who is the legal acquirer, is being treated as the “acquired” company for financial reporting purposes and AFRAG is being treated as the accounting acquirer. This determination was primarily based on the facts and circumstances noted in the Section: “Business combination and Organization” in Note 1. Accordingly, for accounting purposes, the Business Combination is being treated as the equivalent of a reverse recapitalization transaction in which AFRAG issued stock for the net assets of 10X II.
13
The net assets of 10X II are
being stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are
those of AFRAG.
| Cash proceeds from 10X Capital Venture Acquisition Corp. II, net of redemptions, net of transaction costs | $ | |||
| Prepaid expenses | ||||
| Accounts payable | ( | ) | ||
| Accrued expenses | ( | ) | ||
| Related party payable to the SPAC Sponsor | ( | ) | ||
| Net liabilities acquired | $ | ( | ) |
In accordance with the terms
and subject to the conditions of the AA Merger Agreement, at the effective time of the Merger (the “Effective Time”), each
share of common stock of AFRAG issued and outstanding immediately prior to the Effective Time, was converted into the right to receive
the number of shares of duly authorized, validly issued, fully paid and nonassessable common stock of African Agriculture Holdings Inc.
(“Common Stock”) equal to the quotient of (i) the sum of (1) $
In addition, in consideration
of the Company waiving certain closing conditions set forth in the Merger Agreement, at Closing each share of Common Stock for which redemption
was not requested (a “Former SPAC Share”) was granted a pro rata right to receive a portion of
Pursuant to the AFRAG Sponsor
Promissory Note (as defined in the Merger Agreement), AFRAG agreed, among other things, to reimburse Sponsor on a one for one basis for
the Class B ordinary shares to be transferred by Sponsor in connection with the 10X II special meetings of shareholders to approve the
extension of its redemption deadline in the form of newly-issued shares of Common Stock in connection with the Closing. In accordance
with this agreement
In anticipation of the Business
Combination Closing, on November 29, 2023, 10X II and AFRAG entered into an agreement (the “CSED”) with Vellar Opportunities
Fund Master, Ltd. (“Vellar” or “Seller”) for a Cash-Settled Equity Derivative Transaction. Capitalized terms that
are not defined in this section (Entry into a Cash-Settled Equity Derivative Transaction) have the meaning given to those terms in the
CSED. Subject to certain conditions contained in the CSED, the Seller was to provide up to $
In order to ensure that the
CSED Seller obtained registered securities a former stockholder of AFRAG transferred sufficient shares prior to the Business Combination
to the CSED Seller such that following the Business Combination the Seller would have
14
Upon the closing of the Business
Combination and the CSED, the Company received net cash proceeds of $
| Cash proceeds from 10X Capital Venture Acquisition Corp. II, net of redemptions | $ | |||
| Less: Cash payment of 10X Capital Venture Acquisition Corp. II transaction costs and payables | ( | ) | ||
| Net cash from business combination | ||||
| Cash proceeds from CSED Financing | ||||
| Less: Cash payment of CSED transaction costs | ( | ) | ||
| Net cash proceeds upon the closing of the Business Combination and PIPE financing | $ |
| 10X Capital Venture Acquisition Corp. II non redeemed shares | ||||
| Conversion of | ||||
| Conversion of | ||||
| Conversion of | ||||
| Total 10X Capital Venture Acquisition Corp. II shares | ||||
| Merger agreement waiver shares | ||||
| Total shares of Common Stock |
NOTE 4. PROPERTY PLANT AND EQUIPMENT
| March 31, 2024 | December 31, 2023 | |||||||
| Buildings | $ | $ | ||||||
| Office furniture and equipment | ||||||||
| Irrigation and industrial equipment | ||||||||
| Motor vehicle and transportation equipment | ||||||||
| Infrastructure in process | ||||||||
| Other equipment | ||||||||
| Total | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant, and equipment, net | $ | $ | ||||||
| Depreciation expense | $ | $ | ||||||
15
NOTE 5. PREPAIDS AND SUPPLIER ADVANCES
| March 31, 2024 | December 31, 2023 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Retainers | ||||||||
| Total | $ | $ | ||||||
| March 31, 2024 | December 31, 2023 | |||||||
| Supplier advances | $ | $ | ||||||
At March 31, 2024 and December 31, 2023 there were advances paid to suppliers for equipment and inputs prior to delivery of such items.
NOTE 6. LEASES
On January 1, 2022, and effective January 1, 2022, the Company adopted ASC 842. Under ASC 842, the Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded in the Company’s Consolidated Balance Sheets. Leases with an initial term greater than 12 months are recognized in the Company’s Consolidated Balance Sheets based on lease classification as either operating or financing. The Company may enter into lease agreements that include lease and non-lease components for which the Company has elected to not separate for all classes of underlying assets. The Company’s current lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company may also sublease its ROU assets to third parties in the future.
As a lessee, the Company’s current operating lease portfolio consists of three operating leases for farmland. Operating lease ROU assets and operating lease obligations are recognized based on the present value of the future minimum lease payments at commencement date. As the Company’s leases do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate based on the lease information available at the commencement date in determining the present value of future payments.
The initial incremental borrowing
rate utilized for the Fass Lease (as defined below) and Niger Land Right (as defined below) was based upon the interest rate associated
with the Company’s analysis of borrowing rates relating to “Senegal,
The Company’s current three leases are under long-term (greater than one year) non-cancellable term leases. The Company had one short-term lease and may also enter into other short-term or month-to-month operating leases in the future as required by its operations.
Operating leases are included in “Operating lease right-of-use assets, net,” “Current portion of operating lease liabilities,” and “Non-current operating lease liabilities” in the Company’s Consolidated Balance Sheet as of March 31, 2024.
Operating Leases
The Company has a non-cancellable
convention agreement with the Fass Ngom community in Senegal (“Fass Lease”) that provides for the right to use
16
On November 27, 2021 and December
5, 2021, the Company and Agro Industries signed binding definitive agreements with the mayor and local governments of Aderbissinat and
Ingall, respectively, in Niger each under a
Following the formation of
the Company’s Mauritanian subsidiary a lease signed between the Company, the community of Gie Dynn and the Government of Mauritania
(the “Mauritania Lease”) became effective. This lease is for
The Fass Lease, the Niger Land Right and the Mauritania Lease are operating leases under ASC 842.
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Operating lease cost | $ | $ | ||||||
| March 31, 2024 | December 31, 2023 | |||||||
| Weighted-average remaining lease term – operating leases | ||||||||
| Weighted-average incremental borrowing rate – operating leases | % | % | ||||||
| March 31, 2023 | December 31, 2023 | |||||||
| Gross lease liabilities | $ | $ | ||||||
| Less: Imputed interest | ||||||||
| Present value of lease liabilities | $ | |||||||
| Less: current portion of lease liabilities | ||||||||
| Total long-term lease liabilities | $ | $ | ||||||
17
| 2024, remaining | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| $ |
NOTE 7. INTANGIBLE ASSET
The Company recognized an
intangible asset in connection with the purchase of LFT related to the
| March 31, 2024 | December 31, 2023 | |||||||
| Land use right | $ | $ | ||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible asset, net | $ | $ | ||||||
| 2024, remaining | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| $ |
At March 31, 2024, management looked primarily at the undiscounted future cash flows of the Company, based on management’s estimates, in its assessment of whether or not this intangible asset was impaired. There were no impairments with respect to this intangible asset during the three months ended March 31, 2024.
NOTE 8. INVENTORY
The costs for establishing
the seeded pivots including seeds, land preparation and various phytosanitary products that are applied prior to and in conjunction with
the initial seeding, but which will not be reapplied during the growing and harvesting stages are allocated quarterly to the cost of production
over the seed cycle, which we estimate will be three years. The remaining unallocated costs are included in inventory. In addition, all
other ongoing costs associated with the continued growing and harvesting of each pivot are included in inventory. The allocated quarterly
costs together with a harvested cost of the sold bales are allocated to cost of sales based on a first in first out method. The assessment
of the recoverability of inventories and the amounts of any write-downs are based on currently available information and assumptions about
future demand and market conditions.
18
| March 31, 2024 | December 31, 2023 | |||||||
| Seed costs, fertilizer, other direct costs to be allocated over cycle – current | $ | $ | ||||||
| Inventory available for sale | ||||||||
| Seed inventory | ||||||||
| Fertilizer, phytosanitary materials and fuel | ||||||||
| Inventory – current | $ | $ | ||||||
| Long term inventory | ||||||||
| Total inventory | $ | $ | ||||||
NOTE 9. RELATED PARTY NOTE PAYABLES AND TRANSACTIONS
During the normal course of business, the Company may enter into transactions with significant shareholders, directors and principal officers and their affiliates.
The Company has an unsecured
note payable due to a related party, the majority shareholder, Global Commodities & Investments Ltd. (“Global Commodities”).
The related party payable does not have a stated interest rate. The payable between Global Commodities, and the Company has a 60-month
rolling term following the creation of payables within each year. These payables, if funded for Senegal or Niger costs, are West African
CFA Franc denominated and translated at year end spot rates. Since the time of the acquisition of LFT by Agro Industries, the majority
shareholder has continued to provide funding to support the working capital needs of the business. Each new funding has been added to
the principal of the related party payable. The balance of the related party loan, $
In January 2023, the Company
issued to a related party, 10X Capital SPAC Sponsor II LLC an additional $
In order to finance transaction
costs, the Sponsor or an affiliate of the Company provided funds as may be required (the “New Note”). The New Note is non-interest
bearing, unsecured and was due at the consummation of the Business Combination. The New Note was not, however, repaid upon the Business
Combination and was instead assumed as part of the Business Combination. As of March 31, 2024, the Company had $
| Maech 31, 2024 | December 31, 2023 | |||||||
| Global Commodities | $ | $ | ||||||
| 10X Capital SPAC Sponsor II New Note | ||||||||
| Total | $ | $ | ||||||
19
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| $ |
In addition, to the shareholder loans, Global Commodities provided a loan repayment guarantee to the sellers of the LFT shares in the 2018 transaction. Refer Note 10 - Seller Note Payable.
As the related party payables
have no stated interest rate, an imputed interest rate has been applied against such loan to represent an arms-length arrangement between
the Company and the related party. The Company estimates comparable debt as of the date of the origination would incur interest of one-month
SOFR plus
| March 31, 2024 | March 31, 2023 | |||||||
| Imputed interest rate (SOFR + | % | % | ||||||
| Imputed interest – additional paid-in-capital | $ | $ | ||||||
During the three months ended
March 31, 2024, Gora Seck who serves on the board of LFT and is a minority shareholder of the Company received consulting payments for
work conducted in Senegal of approximately $
NOTE 10. SELLER NOTE PAYABLE
The Company issued a note payable to Tampieri Financial Group in connection with the LFT asset acquisition in February 2018. In November 2022, Tampieri Financial Group agreed to a delayed payment of the balance of the seller note payable. The amendment fee, which was due at the maturity of the seller note payable, was amortized monthly over the remaining period of the seller note payable.
In May 2023, the Company and
Tampieri Financial Group agreed to extend the payment date of the amounts that were due on March 31, 2023 until October 31, 2023. In consideration
for this delay the Company agreed to pay interest of
Other than the interest related
to the delayed payments negotiated in May 2023, the seller note payable does not bear an interest rate. As a result, the fair value of
the seller note payable was less than face value when issued in the LFT asset acquisition.
March 31, | December 31, 2023 | |||||||
| Seller note payable, including 2022 amendment fee | $ | $ | ||||||
| Add: interest on delayed instalment | ||||||||
| Add: 2023 debt amendment fee | ||||||||
| Add: 2023 fees | ||||||||
| Total | $ | $ | ||||||
Global Commodities has provided a loan repayment guarantee to Tampieri Financial Group for the amount of the outstanding seller note payable.
20
NOTE 11. DEBT
The
Company has previously issued Promissory Notes (“Short Term Notes”) the proceeds of which were used to fund general corporate
purposes. The Notes bear a simple interest rate of sixteen percent (
In February 2023, Company issued
an additional $
NOTE 12. COMMITMENTS
In June 2021, we entered into a non-binding understanding with Louisiana State University (“LSU”) to provide for a mutually-beneficial research project in which LSU will provide training, research and academic support. We continue to work with LSU to finalize the terms of the training and development project under the collaborative agreement. The term of the agreement is expected to run through June 30, 2026. The total amount to be paid by the Company to LSU has not yet been determined. Either party may terminate the agreement on 30 days’ prior written notice.
On May 14, 2022, the Company
signed an agreement with the Directorate General of Water and Forests (“DGEF”) of Niger who manages forest reserves for a
total area of
NOTE 13. CONTINGENT LIABILITIES
Various creditors and ex-employees
in Senegal commenced some form of legal action for claims relating to the period prior to our acquisition of LFT. The Company has, as
a result, several legal cases that are in various stages of resolution. The contingent liability includes various legal cases and other
claims. The Company recorded a contingent liability representing, in the Company’s opinion, based on our outside counsel’s
review, probable loss outcome for legal claims. At March 31, 2024 the amount of the provision for the contingent liability is $
NOTE 14. STOCKHOLDERS’ EQUITY
Authorized and Outstanding Capital Stock
The total number of shares
of the Company’s authorized capital stock is
21
Common Stock
Holders of Common Stock are
entitled to
Preferred stock
Under the terms of our certificate
of incorporation, our Board has the authority, without further action by our stockholders, to issue up to
Our Board may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our Common Stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deterring or preventing a change in our control and may adversely affect the market price of the Common Stock and the voting and other rights of the holders of our Common Stock. We have no current plans to issue any shares of preferred stock.
Warrants
There are currently outstanding
an aggregate of
Additionally, once the Public Warrants become exercisable, the Company can redeem the outstanding Public Warrants:
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon not less than 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if, and only if, the closing price of the Common Stock equals or exceeds $ |
If the Company calls the Public Warrants for redemption as previously described, the Company has the option to require all holders that wish to exercise the Public Warrants to do so on a cashless basis.
In addition, the Company
22
NOTE 15. EMPLOYEE AND NON-EMPLOYEE SHARE BASED COMPENSATION
In 2022, the Company’s
Board of Directors approved the adoption of the African Agriculture, Inc. 2022 Incentive Plan (the “Plan”). The Plan, as amended
by the Board of Directors, permits the Company to grant up to
The Plan provides for the
granting of incentive and nonqualified stock options, share appreciation rights (SARs), restricted stock, and restricted stock units to
employees, non-employee directors, and consultants of the Company. Instruments granted under the Plan generally become exercisable ratably
over the stated vesting terms in each award agreement following the date of grant and expire
In addition, and as a separate
award outside of the plan the Board approved an award of
| Number of RSUs | Weighted Average Remaining Vesting Term (in years) | Grant Date Fair Value | ||||||||||
| Plan Awards: | ||||||||||||
| Employees: | ||||||||||||
| Nonvested at December 31, 2023 | $ | |||||||||||
| Awarded during the period | ||||||||||||
| Vested during the period | ||||||||||||
| Forfeited, canceled, or expired | ||||||||||||
| Nonvested – March 31, 2024 | $ | |||||||||||
| Non-employees: | ||||||||||||
| Nonvested – December 31, 2023 | $ | |||||||||||
| Awarded during the period | ||||||||||||
| Vested during the period | ||||||||||||
| Forfeited, canceled, or expired | ||||||||||||
| Nonvested – March 31, 2024 | $ | |||||||||||
| Awards outside of the Plan: | ||||||||||||
| Employees: | ||||||||||||
| Nonvested – December 31, 2023 | $ | |||||||||||
| Awarded during the period | ||||||||||||
| Vested during the period | ||||||||||||
| Forfeited, canceled, or expired | ||||||||||||
| Nonvested – March 31, 2024 | $ | |||||||||||
23
As all 2022 stock awards were
granted contemporaneously with the Business Combination Agreement with VCXA and the grant date fair value of the 2022 stock awards was
$
| 2024 | 2023 | |||||||
| Share based compensation expense: | ||||||||
| Employee compensation | $ | $ | ||||||
| Professional fees | ||||||||
| Total | $ | $ | ||||||
NOTE 17. SUBSEQUENT EVENTS
On April 4, 2024, the Company issued a $
On April 8, 2024, the Company
entered into a Resignation and General Release Agreement (the “Resignation Agreement”) by and among the Company, AFRAG, AFDG
and Mr. Kessler. Pursuant to the Resignation Agreement, AFDG’s engagement with the Company terminated effective as April 8, 2024
(the “Resignation Date”), and Mr. Kessler resigned from his roles as both Executive Chairman of the Board and as a member
of the Board also effective as of the Resignation Date. Mr. Kessler had previously resigned from his role as Chief Executive Officer of
the Company on January 31, 2024. Pursuant to the Resignation Agreement, AFDG is entitled to $
On May 16, 2024, the Company issued an additional
$
24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the financial condition and results of operations of African Agriculture Holdings Inc. (the “Company”) should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes forward-looking statements. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. We have based these forward-looking statements on our current expectations and projections about future events. Forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in the Risk Factors section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on April 16, 2024, and in our other SEC filings. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
Our wholly owned subsidiary, LFT, is developing a commercial farming business based in Northern Senegal initially focusing on the production and sale of alfalfa for cattle feed and nutrition purposes. We will sell alfalfa to owners and suppliers of cattle for feed and nutritional purposes. Over the next 2-3 years we expect to raise sufficient capital to enable the development of 25,000 hectares, or 62,000 acres, of land located at LFT. We further aim to expand the growing footprint within Senegal, Niger and potentially to other West African countries.
Our predecessor company acquired LFT during the first quarter of 2018. Since that time considerable effort has been expended on preparing the farm for commercial operations, including ensuring the integrity of the water channels and other water assets, conducting soil analysis and feasibility studies, and beginning to clear and prepare the farm pivots for commercial operations. As such, prior to 2022, there has been no commercial revenue and related contribution. The growing activity to that point has been on a small pilot scale with the resultant produce of rice and sweet potato largely being donated to the local communities. In addition, the intended strategy of the prior owners was to focus on farming a crop significantly different than alfalfa and as such various assets that had been acquired by the prior owners and taken over by our company were not suitable for farming of alfalfa.
25
During the third quarter of 2021, we began preparing the soil, land, pivots, irrigation and infrastructure to begin planting our pilot program. We began planting alfalfa in January 2022 across 305 hectares. Since our initial harvest in April 2022, we have experienced harvests on average of approximately 2.4 tons of alfalfa per hectare and a 15% to 24% protein yield. Initial cuts are typically lower yield in an alfalfa system due to the establishment of the root systems, and therefore the result of our initial planting is in line with global averages and our expectations. After the initial period of root establishment, it is our expectation, based on global historical experience and published scientific data, that the crop rotation cycle will occur approximately every four to six weeks, allowing up to ten turns during an annual period. From a seasonality perspective, it is our expectation that after the initial crops have been planted, other than potentially during a short rainy season, little seasonality should impact the rotation. Based on the yield and protein outcome results of the pilot, we expect to expand the pilot program to further test input and conditions to maximize yield before we begin the program of incremental planting expansion. Subject to our ability to generate future revenue from operations and sourcing additional investment into AFRAG, none of which are guaranteed, we anticipate our program will grow to 5,000 hectares within 18-24 months and ultimately to occupy as much of the 25,000 hectares as is practical. At 5,000 hectares, we would expect our annualized run-rate yield to be approximately 125,000 tons. Our initial expectations are that we will yield approximately 25 tons of alfalfa per hectare per year, based on 10 cuts per year and 2.5 tons per cut. Warmer climate experiences in geographies such as California, and colder climates such as Romania and Canada, give credence to these historical yield expectations. While the results of our pilot program enhanced our confidence in our potential alfalfa crop yields, there is no guarantee that our production estimates will be sustained in a larger commercial practice. Further, any expansion of our operations beyond our 305 hectare pilot program will be dependent on our ability to generate future revenue from operations and sourcing additional outside investment into AFRAG, none of which are guaranteed.
We targeted alfalfa as a strategic crop. Alfalfa delivers high protein content as a cattle feed, which can deliver meaningful weight gain for cattle. The demand for global consumption of protein is expected to grow at 6.8% per year over the next 10 years and the United Nations projected that global agricultural output will need to grow by 70% to meet the growing population by 2050. West Africa is home to as many as 100 million head of cattle offering a vibrant domestic market for our product. In addition, the Gulf region is currently hamstrung by legislation preventing the growth of forage crops, its scarce water and limited arable land, and hence the region imports approximately 85 percent of total food consumed, according to the 2022 GCC Food Report.
We are committed to advancing the interests of the communities where we operate by providing long-term career opportunities to the local workforce, partnering with educational institutions, such as Louisiana State University (LSU) and Michigan State University (MSU), to create programs that mutually benefit students, researchers and our own operations and to lay the foundation for our ambition for our LFT operations to become the agricultural technology capital of West Africa. Our partnership with LSU will also be focused on studying and benefiting from research comparing U.S. and world leading crop yields, fertigation processes and other leading edge industry leading practices and research. We have also signed a letter of intent with the College of Agriculture and Natural Resources at MSU College of Agriculture and Natural Resources (CANR), to further develop the fields of soil science, agronomy, cattle nutrition, emissions, and animal genetics in Mauritania.
The Business Combination
On November 2, 2022, we entered into the Merger Agreement by and among the Company, Merger Sub and AFRAG.
Prior to the Closing of the Business Combination, the Company carried out the Domestication pursuant to which (i) the Company’s jurisdiction of incorporation was changed from the Cayman Islands to the State of Delaware, (ii) the Company changed its name to “African Agriculture Holdings Inc”, (iii) each issued and outstanding Class A ordinary share of the Company was converted, on a one-for-one basis, into a share of Class A Common Stock, (iv) each issued and outstanding Class B ordinary share of the Company was converted, on a one-for-one basis, into a share of Class B Common Stock, and (v) each issued and outstanding whole warrant to purchase Class A ordinary shares of the Company became exercisable for Class A Common Stock beginning 30 days after the Closing at an exercise price of $11.50 per share.
26
Upon Closing of the Business Combination on December 6, 2023, Merger Sub merged with and into AFRAG, with AFRAG being the surviving company. On December 7, 2023, the shares of Common Stock began trading on Nasdaq under the symbol “AAGR”.
In accordance with the terms and subject to the conditions set forth in the Merger Agreement, the Company agreed to pay to equity holders of AFRAG, as merger consideration, a number of shares of newly issued Common Stock, valued at $10.00 per share, equal to the product of the number of outstanding shares of common stock of AFRAG at the Closing, multiplied by the Exchange Ratio.
The “Exchange Ratio” was equal to the quotient of (A) the sum of (i) $450.0 million and (ii) the aggregate amount of principal and accrued interest underlying certain convertible promissory notes of AFRAG issued by AFRAG after the signing of the Merger Agreement that were converted into shares of Common Stock at the Closing, divided by (B) ten dollars ($10.00), divided by (C) the fully diluted common stock of AFRAG immediately prior to Closing.
In addition, in consideration of the Company waiving certain closing conditions set forth in the Merger Agreement, at Closing each share of Common Stock for which redemption was not requested (a “Former SPAC Share”) was granted a pro rata right to receive a portion of 3,000,000 additional shares of Common Stock, with (i) holders of Former SPAC Shares that were public holders receiving shares in the form of Common Stock that were assigned to a pool for the benefit of such holders by a former stockholder of AFRAG and (ii) holders of Former SPAC Shares that were not public holders receiving Common Stock in the form of newly issued shares on a private placement basis.
Factors Affecting Our Financial Condition and Results of Operations
We expect to expend substantial resources as we:
| ● | complete the development of LFT to full capacity production covering the majority of the 62,000 acres available; |
| ● | implement a world class technology driven scalable operation that will result in high yields, and low costs driven by scale, technology, unique access to water and AI driven processes that can be expanded to other locations; |
| ● | enhance all aspects of our supply chain, distribution systems and logistics; |
| ● | develop and operate an owned renewable power supply program with adequate generation capability to, at a minimum, provide LFT with a reliable continuous and cheap source of power to operate; |
| ● | conduct further feasibility programs and develop the aquaculture program locally with a view for expansion across other coastal areas on the continent; |
| ● | conduct feasibility programs and develop the reforestation carbon credit program locally with a view for expansion across suitable areas on the continent; and |
| ● | incur additional general administration expenses, including increased finance, legal and accounting expenses, associated with being a public company and growing operations. |
27
Business Combination and Public Company Costs
As the Business Combination has now closed, we are an SEC-registered and Nasdaq-listed company, which will require us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit and legal fees, media, market data, public and investor relations.
The Business Combination is being accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, 10X II, who is the legal acquirer, is being treated as the “acquired” company for financial reporting purposes and AFRAG is being treated as the accounting acquirer. Accordingly, for accounting purposes, the Business Combination is being treated as the equivalent of a reverse recapitalization transaction in which AFRAG issued stock for the net assets of 10X II. The net assets of 10X II are being stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of AFRAG.
Our future results of consolidated operations and financial position may not be comparable to historical results as a result of the expanded business operations of the Company.
Critical Accounting Policies and Use of Estimates
Accounting policies are an integral part of our financial statements. A thorough understanding of these accounting policies is essential when reviewing our reported results of operations and our financial position. Management believes that the critical accounting policies and estimates discussed below involve the most difficult management judgments, due to the sensitivity of the methods and assumptions used. Our significant accounting policies are described in Note 2 to our consolidated financial statements included elsewhere in this report.
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other accounting standards setting bodies that we adopt as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued accounting standards that are not yet effective will not have a material impact on our consolidated financial position or consolidated results of operations under adoption.
Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States, or GAAP, requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities and provisions, income and expenses and the disclosure of contingent assets and liabilities at the date of these financial statements. Estimates are used for, but not limited to, the selection of the useful lives of fixed assets, allowance for doubtful debt associated with accounts receivable, fair values, revenue recognition, and taxes. Management believes that the most material areas involving the use of estimates are the determination of the intangible asset relating to the land use right provided by the Senegal Presidential Decree, the most likely outcome of the claims incorporated in the contingent liability, the imputed interest rate related to the related party payable and the discount rates used for leases.
Intangible Asset - The intangible asset consists of a land use right of 20,000 hectares provided by way of a Senegal Presidential decree. The value of the intangible was established based on the allocation of the purchase price for LFT to the fair value of the assets, including this intangible asset, at the time of the acquisition of LFT in 2018. Amortization of the intangible asset is calculated on a straight-line basis over the remaining term of the decree, which at the time of the acquisition had 44 years of a 50-year term remaining. Refer to Note 7 of the consolidated financial statements for further discussion.
28
Contingent Liability - The Company has created a contingent liability representing, in the Company’s opinion, based on our outside counsel’s review, probable loss outcome for legal claims. As of March 31, 2024, and December 31, 2023, the contingent liability provision is approximately $2.3 million. Refer to Note 13 in the consolidated financial statements for further discussion.
Imputed interest in related party payable - As the related party payables have no stated interest rate, an imputed interest rate has been applied against such loan to represent an arms-length arrangement between the Company and the related parties. Refer to Note 9 of the financial statements for further discussion.
Interest rate in right-of-use lease assets and the associated lease liabilities - The present value of our lease liability and the right-of-use lease asset is determined using an incremental borrowing rate, which we estimate to be the rate of interest that we would have to pay to borrow on a collateralized basis over a similar lease term an amount equal to the lease payments in a similar economic environment.
Management believes that the estimates utilized in preparing its consolidated financial statements are reasonable and prudent. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results could differ from those estimates and assumptions.
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other accounting standards setting bodies that we adopt as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued accounting standards that are not yet effective will not have a material impact on our consolidated financial position or consolidated results of operations under adoption.
Foreign Currency Translation
The accompanying consolidated financial statements are presented in United States dollars (“$”), which is the reporting currency of the Company. The functional currency of the Company is the United States dollar. The functional currency of the Company’s subsidiaries located in Senegal and Niger is the West African Franc (“CFA”). CFA is the official currency of eight countries in West Africa and is issued by the Central Bank of West African States. The CFA is pegged to the euro. For the entities whose functional currencies are the CFA, results of operations and cash flows are translated at average exchange rates during the period, per the table below. Assets and liabilities are translated at the current exchange rate at the end of the period as per the table below, and equity is translated at historical exchange rates. The resulting translation adjustments are included in determining other comprehensive loss. Transaction gains and losses are reflected in the consolidated statements of operations.
| 1 CFA:$ | Period Average | Period End | ||||||
| March 31, 2024 | $ | 0.001649 | $ | 0.001645 | ||||
Key Components of Statement of Operations
Basis of Presentation
Currently, we conduct business largely through one operating segment. Our activities to date were conducted in the United States and locally in Senegal at LFT. For more information about our basis of presentation, refer to Note 2 in the Financial Statements.
The consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these consolidated financial statements.
The Financial Statements include a summary of our significant accounting policies and should be read in conjunction with the discussion below.
29
Revenue
The Company began generating sales from its pilot program during the second quarter of 2022. The Company recognizes revenue for its products based upon purchase orders, contracts or other persuasive evidence of an arrangement with the customer that include fixed or determinable prices and that do not include right of return or other similar provisions or other post-delivery obligations. Revenue for products is recognized upon delivery, customer acceptance and when collectability is reasonably assured.
Cost of Sales
The costs for establishing the pivots including seeds, land preparation and various phytosanitary products that are applied prior to and in conjunction with the initial seeding, but which will not be reapplied during the growing and harvesting stages are allocated quarterly to the cost of production over the seed cycle, which we estimate will be three years. The remaining direct costs related to the growth and harvesting of alfalfa, including additional fertilizer and phytosanitary products, direct labor, power, water, crop maintenance costs, depreciation of machinery cost, among others are included in the cost of sales based on the number of bales harvested and sold in that period calculated using a first in first out methodology.
Results of Operations
Our operating results for the three months ended March 31, 2024 and March 31, 2023 are compared below:
| For the Three Months Ended March 31, | ||||||||||||
| 2024 | 2023 | Increase/ (Decrease) | ||||||||||
| Revenue | $ | 344,913 | $ | 415,190 | (70,277 | ) | ||||||
| Cost of goods sold | 316,928 | 277,422 | 39,506 | |||||||||
| Gross profit | 27,985 | 137,768 | (109,783 | ) | ||||||||
| General and administrative expenses: | ||||||||||||
| Employee compensation | 10,724,025 | 7,964,712 | 2,759,313 | |||||||||
| Professional fees | 850,488 | 1,265,383 | (414,895 | ) | ||||||||
| Equipment rental | 5,038 | 3,325 | 1,713 | |||||||||
| Operating lease expense | 207,384 | 54,555 | 152,829 | |||||||||
| Insurance | 246,068 | - | 246,068 | |||||||||
| Amortization | 29,003 | 29,003 | - | |||||||||
| Depreciation | 56,819 | 58,682 | (1,863 | ) | ||||||||
| Utilities and fuel | 38,412 | 10,276 | 28,136 | |||||||||
| Travel and entertainment | 53,410 | 56,830 | (3,420 | ) | ||||||||
| Other operating expenses | 433,481 | 61,905 | 371,576 | |||||||||
| Total G&A expense | 12,644,128 | 9,504,671 | 3,139,457 | |||||||||
| Loss from operations | (12,616,143 | ) | (9,366,903 | ) | (3,249,240 | ) | ||||||
| Total other expense (income) | 47,455 | 236,849 | (189,394 | ) | ||||||||
| Net loss attributable to controlling interests | $ | (12,663,598 | ) | $ | (9,603,752 | ) | $ | (3,059,846 | ) | |||
Revenue and gross margin
We began harvesting our initial crop in the second quarter of 2022. The majority of the production was sold to local buyers but we also sent various samples and promotions to prospect regional and international customers. Revenue momentum continued into 2023 with the majority of our product sold locally, which continues to be the case through the first quarter of 2024. We have been successful in attracting some regional buyers as well. Export sales will become feasible once we are able to expand the harvesting acreage and obtain scale sufficient to justify the shipping volumes and costs. The demand for product locally remains robust for the quantities that we produce with most of our harvested product being sold within days of being harvested. Compared to the prior year quarter, gross profit declined due to higher costs for the quarter, fewer cuts and lower yields. These issues are a function of resources available to manage the crop over the entire crop cycle, the cooler winter period, managing appropriately days between cuts in each pivot, and over time the aging of the crop.
30
General and administrative expenses
Total general and administrative expenses for the three months ended March 31, 2024 increased by $3.1 million or 33%, over the three months ended March 31, 2023. The primary reasons for the increase was higher employee compensation expense which included share base compensation costs of approximately $10.7 million relating to the amortization of the RSU awards made by the Company in November 2022 and November 2023, as described in detail in Note 15 of the financial statements, compared to approximately $8m incurred during the three months ended March 31, 2023. Because these awards were all made during the pendency of working through the closing of the Business Combination the Company determined that the grant date fair value of these RSUs reflected the $10/share merger consideration. This was translated into significant income statement recognition notwithstanding the current share price. In addition, we incurred significantly higher insurance costs during the first quarter of 2024 compared to the prior year first quarter relating to the cost of directors’ and officers’ insurance for the public company. Lease costs were higher due to the Mauritania lease which was not in place during the first quarter of 2023. Offsetting this increase was a reduction in professional fees during the first quarter of 2024 as the Company has been cutting outside consulting and other professional costs where possible.
Other Income/Expense
Other expense decreased by approximately $189,000 for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to a small foreign exchange gain relating to the seller note payable compared to the prior year loss, and lower interest largely due to the conversion to equity of the convertible debt and other debt repayment following the business combination and the Cash-Settled Equity Derivative Transaction.
Net Loss
Net loss for the three month period ended March 31, 2024 increased by $3.1 million, or 31.9%, compared to the three month period ended March 31, 2024. The principal reasons, as described above, relate to higher employee costs largely due to share compensation expense, insurance and lease costs offset by a small decline in other expense.
There was no income tax expense from continuing operations for the three months ended March 31, 2024 or March 31, 2023.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity include funds generated by operations, the availability of credit facilities, levels of accounts receivable and accounts payable, and capital expenditures.
Since the acquisition by Agro Industries of LFT during the first quarter of 2018, we financed our operations primarily from loans from shareholders, sales of alfalfa production, and through the sale of non-usable equipment and inventory. During 2022 and 2023 the Company also raised capital from the issuance of short-term convertible debt and non-convertible debt.
During the second quarter of 2022 we began generating revenue from sales of alfalfa from our initial pilot program, which we commenced late in 2021.
31
During our first five years of operation we expect that our principal costs and expenses will include labor for agricultural processes, agricultural supplies (seeds, fertilizer and pesticides), farming and laboratory equipment, facilities construction, utilities and fuel costs, fees for technical consulting services and general administrative expenses, including rent, management salaries, implementation and maintenance of agricultural infrastructure and attestation, marketing and internal controls monitoring. In addition, we may incur rent, costs in connection with the acquisition of new leasehold interests in land. We expect that all net revenue generated from the sale of alfalfa will be reinvested into business for the foreseeable future.
We do not currently have sufficient funds to service our operations and our expenses and other liquidity needs and will require additional capital immediately. In addition, our management has expressed substantial doubt as to our ability to continue as a going concern absent raising additional capital, including after consummation of the Business Combination. At March 31, 2024 we had a working capital deficit of $24.3 million compared with a deficit of approximately $24.6 million at December 31, 2023. At March 31, 2024, we had $67,183 in cash. The net cash losses and expenses of the business during the three months ended March 31, 2024 have largely been funded by proceeds from the CSED transaction, short term payables and accruals.
On or around December 6, 2023, the closing of Business Combination, we received (i) $5.75 million pursuant to that certain agreement for a Cash-Settled Equity Derivative Transaction (the “CSED”) entered into on December 6, 2023 with Vellar Opportunities Fund Master, Ltd; and (ii) approximately $2.9 million in proceeds from the Trust Account based on the number of shares of common stock that were not redeemed as of December 6, 2023. Given the current share price, we believe the likelihood that warrant holders will exercise their warrants is low, and therefore the amount of cash proceeds that we will receive, is dependent upon the market price of our common stock. The value of our common stock will fluctuate and may not align with the exercise price of the warrants at any given time. We believe that if the warrants are “out of the money,” meaning the exercise price is higher than the market price of our common stock, there is a high likelihood that warrant holders may choose not to exercise their warrants.
We incurred substantial transaction expenses in connection with the Business Combination. Approximately $2.0 million in transaction expenses were settled upon the consummation of the Business Combination. However, we continue to have substantial transaction expenses accrued and unpaid subsequent to the Closing. As of March 31, 2024, we had approximately $32.6 million in current liabilities. Furthermore, the scale of our current operations are insufficient to cover the ongoing corporate expenses and additional expenses in connection with transitioning to, and operating as, a public company. We intend to seek delays on certain payments and explore other ways of potentially reducing immediate expenses with the goal of preserving cash until potential additional financing is secured, but these efforts may not be successful or sufficient in amount or on timely basis to meet our ongoing capital requirements. We are in discussions with certain financing sources to attempt to secure additional interim financing, which is needed to continue operations and fund other liquidity needs. In the absence of additional sources of liquidity, the management anticipates that existing cash resources will not be sufficient to meet ongoing operating and liquidity needs. However, there is no assurance that we will be able to timely secure such additional liquidity or be successful in raising additional funds or that such required funds, if available, will be available on acceptable terms or that they will not have a significant dilutive effect on our existing stockholders. In addition, we are unable to determine at this time whether any of these potential sources of liquidity will be adequate to support our operations or provide sufficient cash flows to us to meet our obligations as they become due and continue as a going concern. In the event we determine that additional sources of liquidity will not be available to us or will not allow us to meet our obligations as they become due, we may need to file a voluntary petition for relief under the United States Bankruptcy Code in order to implement a restructuring plan or liquidation. This could potentially cause us to cease operations and result in a complete or partial loss of investment in our common stock.
32
Because the proceeds from the Business Combination and the CSED were not adequate to cover our accrued and unpaid expenses and provide the cash and liquidity necessary to operate our business, we continue to seek equity and debt financings, or other capital sources, including with related parties. Sales of a substantial number of shares of our common stock in the public market could occur at any time. Such sales, or the perception in the market that such sales could occur, could result in a material decline in the public trading price of our common stock. Such a decline could adversely affect our ability to sell equity securities or the price at which we are able to sell equity securities and/or make it more difficult for us to raise additional capital through the sale of equity securities. In addition, to the extent that we raise additional capital through the future sale of equity or debt, the ownership interest of our stockholders will be diluted. The terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. For more information, see “Risk Related to Our Securities” contained in our Annual Report on Form 10-K filed on April 16, 2024.
Notwithstanding the lack of liquidity, we continue to seek to raise the capital necessary to implement our expansion plans, over time, to as much of the full available capacity of LFT’s 25,000 hectares as is practical.
Over time, it is our intention to acquire control of additional farmland in Senegal and elsewhere in Africa, as well as implement two additional growth programs, aquaculture and creating carbon offset credits. We believe that we will require significant additional capital to achieve these short and medium-term objectives. Since the time we began commercial operations, we have made considerable progress in developing the local market for selling alfalfa, generating considerable interest in our product locally, regionally and in various international markets, and we have gained considerable knowledge and confidence with respect to the farming yields and potential for expansion by being able to replicate and expand our existing footprint. The speed and scale of our expansion will depend on the amount and pace of capital that we are able to raise.
Cash Flows
The following table presents summary cash flow information for the periods indicated.
| For the three months ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net Cash Produced From / (Used) | ||||||||
| Operating Activities | $ | (1,902,341 | ) | $ | (643,965 | ) | ||
| Investing Activities | (757,928 | ) | (4,106 | ) | ||||
| Financing Activities | (45,000 | ) | 635,204 | |||||
| Effects of Exchange Rate Changes | (15,457 | ) | 2,918 | |||||
| Net Increase / (Decrease) in Cash | $ | (2,720,726 | ) | $ | (9,949 | ) | ||
Cash Flows Used in Operating Activities
Cash flows used in operating activities for the three months ended March 31, 2024 totaled approximately $1.9 million during which we incurred a net loss of approximately $12.7 million. The net loss included the non-cash impacts of share-based compensation, depreciation, amortization, non-cash interest, and non-cash lease expenses. The cash flows for operating activities also reflected an increase in working capital compared to the three month period ended March 31, 2023.
Cash Flows from Investing Activities
For the three-month period ended March 31, 2024, total cash used in investing activities was approximately $758,000 used largely for costs of expanding the farming infrastructure in preparation of increased planting.
Cash Flow from Financing Activities
For the three-month period ended March 31, 2024, the cash from financing activities reflects the repayment of short term debt. For the three month period ended March 31, 2023, the cash generated from financing activities reflected Short term Debt issued during that period, loans from the majority shareholder, and proceeds from a related party note.
33
Off Balance Sheet Arrangements
As of March 31, 2024 we had no off-balance sheet financing arrangements.
Contractual Commitments
Our contractual obligations as of March 31, 2024, consist primarily of the seller note payable relating to the original LFT acquisition, the agreement with the Fass Ngom community in Senegal that provides for the right to use 5,000 hectares, and an obligation to begin supporting the local municipalities with whom we have partnered for significant land in Niger in accordance with agreements signed in December 2021, and the agreement signed between the Company, the community of Gie Dynn and the Government of Mauritania that provides for the right to develop 2,033 hectares of land in Mauritania together with the obligation to invest up to $30 million into this project over the next 20 years. These contractual obligations impact our short-term and long-term liquidity and capital needs.
The balance of the seller note payable was $2,540,750 as of March 31, 2024 and $1,807,739 as of March 31, 2023. The history and current status of the seller note payable is detailed in Note 10 of the financial statements included above.
Land use agreement, Niger and Mauritania land use agreements
As of December 31, 2023, future minimum rental payments under the operating leases are approximately as follows:
| 2024, remaining | $ | 673,183 | ||
| 2025 | 826,533 | |||
| 2026 | 827,426 | |||
| 2027 | 828,338 | |||
| 2028 | 829,267 | |||
| Thereafter | 16,661,722 | |||
| $ | 20,646,469 |
The table above does not include any obligations related to the 20,000 hectares land use right obtained by way of a Senegal Presidential Decree. The Senegal Presidential Decree provides for the use by LFT of the land until 2062. There are no annual payments required in accordance with the Senegal Presidential Decree. This land use right was recognized as an intangible asset in connection with the asset purchase of LFT and is being amortized over the remaining term of the decree.
The table does however include obligations relating to the recent agreements signed with the mayor and local governments of Aderbissinat and Ingall, respectively, in Niger each under a 49-year term for the right to use and development 2.2 million hectares of their land. While there is no binding obligation under these agreements to plant a minimum number of hectares of trees, we agreed to pay approximately $86,000 per year under each agreement during the construction of the greenhouses and plantation. Once the sale of carbon credits commences the annual payment amount will increase to approximately $1.1 million. In addition, during the first year of the sale of carbon credits we are required to pay an additional $129,000 for each agreement for budgetary support to each region. As the timing of the sale of carbon credits is uncertain, we have reflected only the known and required, as of today, payments for the duration of these agreements.
The table also includes obligation reacting to the agreement signed between the Company, the community of Gie Dynn and the Government of Mauritania. This lease is for 20 years and covers 2,033 hectares of land. Of this land, 80%, or 1,626 hectares will be used by the Company for farming alfalfa with the balance being farmed, at the Company’s cost, at the direction of the community. The Company has agreed to invest up to $30 million into this project over the next 20 years. The annual cost of the 1,626 hectares will be $300 per hectare per annum, subject to an annual increase consistent with the household consumption index (a proxy for local inflation). In addition, the Company will pay 5% of annual net profits earned on the 1,626 hectares to the community subject to an annual minimum payment of approximately $122,000.
The Company maintains cash in banks in the United States as well as in Senegal. The aggregate cash balances shown on the consolidated balance sheets as of March 31, 2024 and March 31, 2023 were held at JPMorgan Chase Bank, N.A. as well as in various banks in Senegal and Niger. There is no insurance securing these deposits, other than FDIC insurance that governs all commercial banks in the United States. The Company has not experienced any losses in such deposits. There are no excess cash balances, beyond those required for short term operations, held in Senegal or Niger bank accounts.
34
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable to a smaller reporting company.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Annual Report on Form 10-K.
Based on this evaluation, our Chief Executive Officer and our Principal Financial Officer concluded that, as of March 31, 2024, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our Chief Executive Officer and our Principal Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S generally accepted accounting principles.
Under the supervision and with the participation of our Chief Executive Officer and our Principal Financial Officer and oversight of the board of directors, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023, based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of March 31, 2024.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended March 31, 2024, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and our Principal Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the organization have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
35
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We may be subject to various legal proceedings and claims that arise in the ordinary course of our business. Although the outcome of these and other claims cannot be predicted with certainty, we do not believe the ultimate resolution of the current matters will have a material adverse effect on our business, financial condition, results of operations or cash flows.
Frank Timis is the majority shareholder of Global Commodities, our largest shareholder as well as the majority owner of Timiscorp. On June 13, 2019, an investigation was launched by the Dean of the Investigating Judges of the General High Court of Dakar in Senegal over the sale of gas contracts to British energy multinational BP. The contracts had been acquired by Timiscorp, a company of which Mr. Timis is the controlling shareholder. The 19-month investigation involved two other publicly traded companies in the United States, BP and Kosmos. The BBC reported BP bought the Timiscorp stake in certain Senegalese gas fields for a cash consideration in 2017, in addition to a royalty payout. The examining magistrate heard evidence regarding allegations from numerous sources per court transcripts over 18 months and found all allegations unproven. On December 29, 2020, the High Court’s conclusion was that there were no grounds to pursue any persons for any offenses related to the allegations contained in the BBC report. The judge dismissed the case in its entirety, citing lack of evidence, on all counts.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on April 16, 2024 (“10-K”). Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
36
Item 6. Exhibits.
| Exhibit No. | Description | |
| 31.1* | Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
| 31.2* | Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). | |
| 32.1* | Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. | |
| 32.2* | Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. | |
| 101.INS* | Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101 |
| * | Furnished. |
37
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
May 20, 2024
| AFRICAN AGRICULTURE HOLDINGS INC. | ||
| By: | /s/ Michael Rhodes | |
| Name: | Michael Rhodes | |
| Title: |
Chief Executive Officer (principal executive officer) |
|
| By: | /s/ Harry Green | |
| Name: | Harry Green | |
| Title: |
Chief Financial Officer (principal financial officer) |
|
38
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Rhodes, certify that:
| 1. | I have reviewed this quarterly report on Form 10Q of African Agriculture Holdings Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
May 20, 2024
| /s/ Michael Rhodes | |
| Michael Rhodes | |
| Chief Executive Officer | |
| (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Harry Green, certify that:
| 1. | I have reviewed this quarterly report on Form 10Q of African Agriculture Holdings Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
May 20, 2024
| /s/ Harry Green | |
| Harry Green | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10Q of African Agriculture Holdings Inc. (the “Company”) for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Rhodes, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Michael Rhodes | |
| Michael Rhodes | |
| Chief Executive Officer |
May 20, 2024
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10Q of African Agriculture Holdings Inc. (the “Company”) for the quarter ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Harry Green, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Harry Green | |
| Harry Green | |
| Chief Financial Officer | |
| May 20, 2024 |
Consolidated Balance Sheets (Parentheticals) - $ / shares |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 300,000,000 | 300,000,000 |
| Common stock, shares issued | 57,866,830 | 57,866,830 |
| Common stock, shares outstanding | 57,866,830 | 57,866,830 |
| Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
| Revenue | ||
| Sales | $ 344,913 | $ 415,190 |
| Cost of goods sold | 316,928 | 277,422 |
| Gross profit | 27,985 | 137,768 |
| Operating expenses: | ||
| Employee compensation | 10,724,025 | 7,964,712 |
| Professional fees | 850,488 | 1,265,383 |
| Operating lease expense | 207,384 | 54,555 |
| Insurance | 246,068 | |
| Depreciation and amortization | 85,822 | 87,685 |
| Other operating expenses | 530,341 | 132,336 |
| Total operating expenses | 12,644,128 | 9,504,671 |
| Loss from operations | (12,616,143) | (9,366,903) |
| Other (income) expenses: | ||
| Foreign currency exchange (gain) loss | (54,584) | 36,737 |
| Interest expense - related party | 36,160 | 3,099 |
| Interest expense - other | 66,042 | 197,776 |
| Other income | (163) | (763) |
| Total other expense | 47,455 | 236,849 |
| Loss before provision for income tax | (12,663,598) | (9,603,752) |
| Provision for income tax | ||
| Net loss | $ (12,663,598) | $ (9,603,752) |
| Loss per share (in Dollars per share) | $ (0.22) | $ (0.28) |
Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
| Comprehensive loss | ||
| Net loss | $ (12,663,598) | $ (9,603,752) |
| Foreign currency translation adjustment | (7,402) | (8,757) |
| Total comprehensive loss | $ (12,671,000) | $ (9,612,509) |
Consolidated Statements of Changes in Shareholders’ Deficit (Unaudited) - USD ($) |
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Accumulated Other Comprehensive (Loss) Income |
Total |
|---|---|---|---|---|---|
| Balance at Dec. 31, 2022 | $ 3,416 | $ 36,868,070 | $ (40,558,626) | $ (59,292) | $ (3,746,432) |
| Balance (in Shares) at Dec. 31, 2022 | 34,161,949 | ||||
| Foreign currency translation | (8,757) | (8,757) | |||
| Imputed interest expense on shareholder loan | 3,099 | 3,099 | |||
| Share based compensation | 7,983,014 | 7,983,014 | |||
| Net loss | (9,603,752) | (9,603,752) | |||
| Balance at Mar. 31, 2023 | $ 3,416 | 44,854,183 | (50,162,378) | (68,049) | (5,372,828) |
| Balance (in Shares) at Mar. 31, 2023 | 34,161,949 | ||||
| Balance at Dec. 31, 2023 | $ 5,787 | 61,127,301 | (83,620,383) | (95,750) | $ (22,583,045) |
| Balance (in Shares) at Dec. 31, 2023 | 57,866,830 | 57,866,830 | |||
| Foreign currency translation | (7,402) | $ (7,402) | |||
| Imputed interest expense on shareholder loan | 36,160 | 36,160 | |||
| Cash settled RSUs | (1,125) | (1,125) | |||
| Share based compensation | 10,861,688 | 10,861,688 | |||
| Net loss | (12,663,598) | (12,663,598) | |||
| Balance at Mar. 31, 2024 | $ 5,787 | $ 72,024,024 | $ (96,283,981) | $ (103,152) | $ (24,357,322) |
| Balance (in Shares) at Mar. 31, 2024 | 57,866,830 | 57,866,830 |
Description of Organization and Business Operations and Liquidity |
3 Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||
| Description of Organization and Business Operations and Liquidity [Abstract] | |||||||||||||||||||
| DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS AND LIQUIDITY | NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS AND LIQUIDITY
Description of Business
African Agriculture Holdings Inc., (the “Company”) is focused on commercial farming, fishery logistics and management, and carbon offset production. We are a holding company that operates principally through our wholly owned subsidiary, Les Fermes de la Teranga SA (“LFT”). LFT is developing our initial commercial farming business based in northern Senegal focusing on the production and sale of alfalfa for cattle feed and nutrition purposes.
Business combination and Organization
On December 6, 2023, (the “Closing Date”), African Agriculture Holdings Inc. (f/k/a 10X Capital Venture Acquisition Corp. II) consummated the previously-announced transactions (collectively, the “Business Combination”) pursuant to that certain Agreement and Plan of Merger, that was initially signed on November 2, 2022, whereby 10X II entered into an Agreement and Plan of Merger (the “AA Merger Agreement”) with 10X AA Merger Sub, Inc., a Delaware corporation and the wholly-owned subsidiary of 10X II (the “AA Merger Sub”) and AFRAG. Pursuant to the AA Merger Agreement, 10X II changed its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”). Following the Domestication, AA Merger Sub merged with and into AFRAG (the “Merger”), with AFRAG surviving the Merger as 10X II’s wholly-owned subsidiary. In connection with the Domestication, 10X Capital Venture Acquisition Corp. II changed its name to “African Agriculture Holdings Inc.”. The Company now trades on the Nasdaq exchange under the ticker “AAGR”.
The Business Combination is being accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, 10X II, who is the legal acquirer, is being treated as the “acquired” company for financial reporting purposes and AFRAG is being treated as the accounting acquirer. This determination was primarily based on the following facts and circumstances:
Accordingly, for accounting purposes, the Business Combination is being treated as the equivalent of a reverse recapitalization transaction in which AFRAG issued stock for the net assets of 10X II. The net assets of 10X II are being stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of AFRAG. Certain prior period amounts in the consolidated and combined financial statements have been reclassified to conform to the current period presentation.
AFRAG owns 100% of Agro Industries Corp, formerly Agro Industries Corp Sub One, a company that was incorporated in the Cayman Islands on January 15, 2018 (“Agro Industries”). Agro Industries has a wholly owned subsidiary, Les Fermes De La Teranga (“LFT”), which is a Senegalese Company formed in Dakar, Senegal. On February 28, 2018, Agro Industries, purchased approximately 91% of the outstanding equity of LFT. During 2021, the shareholders of LFT completed a share swap to enable Agro Industries shareholders to contribute their shares in exchange for shares of AFRAG resulting in Agro Industries, the 100% owner of LFT, becoming a wholly owned subsidiary of AFRAG. In March 2022, the Company formed a 100% owned subsidiary named African Agriculture Niger SA for purposes of developing operations in Niger. On July 25, 2023, the Company formed a wholly owned subsidiary African Agriculture Mauritania LLC SARL for purposes of developing operations in Mauritania.
Basis of Presentation
These consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as included in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).
Uses and Sources of Liquidity
The consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these consolidated financial statements.
During the three months ended March 31, 2024, the Company incurred a net loss of approximately $12.7 million and used cash in continuing operations of $1.9 million. The Company’s operations have historically been financed principally by loans from its majority shareholder, Global Commodities and Investments Limited, a Cayman Islands registered limited liability company (“Global Commodities”), sales of unneeded fixed assets from the prior ownership, various convertible and short-term debt instruments issued by the Company as well as the sale of alfalfa, which began during the second quarter of 2022.
In addition to the cash received on the Closing of the Business Combination, which was largely used to pay transaction expenses and payables, the Company received cash from a Cash-Settled Equity Derivative Transaction (the “CSED”) which the Company entered into on November 29, 2023, with Vellar Opportunities Fund Master, Ltd. (“Seller”). Pursuant to the terms of the CSED, the Seller received shares of common stock of AFRAG from a former holder of AFRAG common stock. Subject to certain conditions contained in the CSED, the Seller was to provide up to $11,500,000 (the “Additional Funds”) in funds in the aggregate to us in five tranches: (i) the first tranche of $5,750,000 was funded in accordance with the terms of the CSED, (ii) the second tranche of $1,437,500 which was to be funded 30 days after the first tranche, (iii) the third tranche of $1,437,500 which was to be funded 30 days after the second tranche, (iv) the fourth tranche of $1,437,500 which was to be funded 30 days after the third tranche, and (v) the fifth tranche of $1,437,500 which was to be funded 30 days after the fourth tranche. On January 9, 2024 the Seller notified us that they were terminating the CSED in accordance with its terms and accordingly would not be advancing any Additional Funds. In accordance with the terms of the CSED, it is not expected that we will have any additional obligations to the Sellers nor do we expect to receive any additional payments or other compensation in the future from the Sellers, although it is possible that based on the performance of our stock price over the Valuation Period as defined in the CSED Seller may in fact be required to make a payment to us under the CSED.
Notwithstanding the cash raised in the Business Combination and the Cash-Settled Equity Derivative Transaction (the “CSED”) that the Company entered into at the time of the Business Combination, the Company requires additional capital. In addition to its existing obligations, the Company assumed significant payables and accrued expenses in conjunction with the Business Combination expect to incur additional expenses in connection with transitioning to, and operating as, a public company. As such, the Company does not have sufficient cash on hand or available liquidity to meet its obligations through the twelve months following the date the consolidated financial statements are issued. This condition raises substantial doubt about the Company’s ability to continue as a going concern should capital not be introduced. We intend to seek delays on certain payments and explore other ways of potentially reducing immediate expenses with the goal of preserving cash until any potential additional financing is secured, but these efforts may not be successful or sufficient in amount or on a timely basis to meet our ongoing operating and liquidity needs.
On a go-forward basis the primary sources of liquidity are expected to be cash from operations, potential capital raises, grants and debt financing if available and deemed in the best interests of the Company and its shareholders. The Company’s liquidity requirements are to expand development of alfalfa production, finance current operations, meet financial commitments, fund organic growth, and service debt, if outside debt financing is obtained. The liquidity requirements will fluctuate with the level and pace of expansion of the acreage being planted, harvested and sold, the effects of the timing between the settlement of payables and receivables, and our general working capital needs for ongoing operations. Estimating liquidity requirements is highly dependent on farming yields, then-current market conditions, including selling prices, costs of all farming inputs, market volatility and our then existing capital structure and requirements. It is anticipated that once the Company has fully developed the Senegal property it will have sufficient resources to fund the ongoing operations of the Company.
While the Company believes in the viability of its strategy to expand operations and generate sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
Foreign Currency Translation
The accompanying consolidated financial statements are presented in United States dollars (“$”), which is the reporting currency of the Company. The functional currency of the Company is the United States dollar. The functional currency of the Company’s subsidiaries located in Senegal and Niger is the West African Franc (“CFA”).
For the entities whose functional currencies are the CFA, results of operations and cash flows are translated at average exchange rates during the period (1 CFA=$0.001649 for the three months ended March 31, 2024), assets and liabilities are translated at the current exchange rate at the end of the period (1 CFA=$0.001645 at March 31, 2024), and equity is translated at blended historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income. Transaction gains and losses are reflected in the consolidated statements of operations.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, contingent liabilities, imputed interest expense and income taxes including the valuation allowance for deferred tax assets. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in bank accounts, cash in time deposits, certificates of deposit and all highly liquid instruments with original maturities of three months or less. As of March 31, 2024 cash balances were held at JP Morgan Chase and Fidelity Brokerage Service, LLC and in various banks in Senegal and Niger. There were no cash equivalents at March 31, 2024.
Property, plant, and equipment
Property, plant, and equipment consist of farming and farming support equipment, and office equipment. All property, plant and equipment are stated at historical cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred. Property, plant and equipment are depreciated on a straight-line basis over the following periods:
Leases
The Company determines if an arrangement is a lease at inception. To the extent an arrangement represents a lease, the Company classifies that lease as an operating lease or a finance lease under Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) and its related ASUs (“ASC 842”).
The Company capitalizes operating leases on its Consolidated Balance Sheets through a Right-of-Use (“ROU”) asset and a corresponding lease liability. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the operating lease. Operating lease ROU assets and obligations are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term utilizing an interest rate that the Company would have incurred to borrow over a similar term the funds necessary to purchase the leased asset. Operating leases are included in “Operating lease right-of-use assets, net,” “Current portion of operating lease liabilities,” and “Non-current operating lease liabilities” in the Company’s Consolidated Balance Sheet as of March 31, 2024. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
For additional information regarding the Company’s leases, see Note 6 - Leases.
Inventory
Inventories are stated at the lower of cost or net realizable value. Cost is calculated on the basis of the first-in, first-out method; market is based upon estimated replacement costs. Costs included in inventory primarily include the following: cost of seeds, farming inputs such as fertilizer, gypsum, water and fuel as well as inbound freight cost. Each pivot is cleared, treated with fertilizer and various phytosanitary products and seeded ahead of the life cycle of alfalfa, which we currently estimate to be approximately three years. These initial costs are amortized using a straight-line method over that life cycle. The portion of these costs expected to amortize after twelve months is included in long-term inventory.
Intangible Asset
The intangible asset consists of a land use right of 20,000 hectares provided by way of a Senegal Presidential decree. The value of the intangible was established based on its estimated fair value at the time of the asset purchase of LFT by Agro Industries in 2018. Amortization of the intangible asset is calculated on a straight-line basis over the remaining term of the decree, which at the time of the purchase had 44 years of a 50-year term remaining. As of March 31, 2024, approximately 38 years remain under this decree. Refer to Note 7 for further discussion.
Impairment of Long-Lived Assets
The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial position. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. There was no impairment charge for the three months ended March 31, 2024.
Fair Value of Financial Instruments
The Company adopted ASC 820 “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures.
The three levels are defined as follows:
Financial instruments include cash and cash equivalents, receivables, accounts payable and accrued expenses, advances from prospective customers/distributors, amounts due to related parties, notes payable and contingent liabilities. The carrying values of these financial instruments approximate their fair values due to the short-term maturities of these instruments.
For the periods presented, there were no financial assets or liabilities measured at fair value.
Income Taxes
The Company follows the liability method in accounting for income taxes in accordance with ASC topic 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
The Company applies the provisions of ASC 740 to account for uncertainty in income taxes. ASC 740 clarifies the accounting for uncertainty in income taxes by prescribing the recognition threshold a tax position is required to meet before being recognized in the consolidated financial statements.
The Company will classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of operations.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.
The Company assumed 6,884,908 warrants, in conjunction with the consummation of the Business Combination in addition to 26,201 warrants issued in connection with Promissory Notes by AAGR in February 2023. The warrants entitle the holder to purchase one share of common stock at an exercise price of $11.50 per share. The warrants are classified in accordance with ASC 480 and ASC 815, which provides that the warrants are not precluded from equity classification. Equity-classified contracts were initially measured at fair value (or allocated value). Subsequent changes in fair value will not be recognized as long as the contracts continue to be classified in equity in accordance with ASC 480 and ASC 815.
The Forward Purchase Agreement, or CSED (defined in Note 1) includes an embedded feature that meets the definition of a derivative in accordance with ASC 815. The FPA contract was determined to be more akin to equity rather than debt and as such the FPA and the associated imbedded derivative was treated as equity. Lastly, we determined that the embedded feature will not require bifurcation as it is clearly and closely related to the equity host As the embedded feature was not bifurcated from the instrument at issuance, it will continue to be reassessed at each reporting date to determine that continued non-bifurcation is appropriate. Based on the performance of the stock and the terms of the CSED, it is not expected, and highly improbable, that Company will receive any additional payments or other compensation in the future from the CSED
Revenue Recognition
The Company’s revenue is derived from the sale of agricultural products. The Company recognizes revenue in accordance with ASC 606. To achieve that core principle, the Company applies the following steps:
The Company recognizes its revenue at a point in time when it satisfies a performance obligation and transfers control of the product, primarily bales of alfalfa, to the respective customer. For domestic product sales, the Company meets its performance obligation upon the shipment of the products from its facilities to its customer. For international product sales, the Company meets its performance obligation upon delivery of the products to the customer’s international carrier. The Company does not provide any services to its customers currently.
The amount of revenue recognized is based on the fixed transaction price. Contracts for the Company’s products are negotiated on a per-contract basis at a local or regional level. Contracts vary in volume and sometimes price but typically have a single performance obligation, the delivery of bales of alfalfa.
The Company’s payment terms vary by the type and location of its customers. The Company receives cash equal to the invoice amount for its product sales, and if credit is provided, payment terms typically range from 30 to 90 days from the date the Company invoices a customer. Since the period between the delivery of the Company’s products and the Company’s receipt of customer payment for these products and services is not expected to exceed one year, the Company has elected not to calculate or disclose a financing component for its customer contracts. The Company’s contract assets at March 31, 2024 and December 31, 2023 consisted of accounts receivable, which totaled $37,427 and $10,796, respectively.
The Company has not established an allowance for credit losses for the three months ended March 31, 2024. In determining an allowance, we would estimate loss rates based upon historical loss experienced and adjusted for factors that are relevant to determining the expected collectability of accounts receivable. Some of these factors include historical loss experience, delinquency trends, aging behavior of receivables, credit and liquidity quality indicators of customers classes, local behavior, the current and expected future economic and market conditions and balances owed when customers are also suppliers of cost inputs.
Share-based compensation
The Company measures compensation expense for all stock-based awards in accordance with ASC Topic 718, Compensation - Stock Compensation. Share-based compensation is measured at fair value on grant date and recognized as compensation expense ratably over the course of the requisite service period. The fair value of restricted stock units (“RSUs”) is typically determined based on the fair value of the related shares on the date of grant. The Company has elected to record forfeitures of employee awards as they occur.
Comprehensive Loss
Comprehensive loss is defined as the decrease in equity of the Company during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Comprehensive loss is reported in the consolidated statements of comprehensive loss, including net loss and foreign currency translation adjustments, presented net of tax.
Net Loss per Share
Basic net loss per share attributable to common stockholders is derived by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalent, if any. The Company has outstanding warrants of 6,911,109. The warrants entitle the holder to purchase one share of common stock at an exercise price of $11.50 per share. The warrants are out-of-the-money warrants and have not been considered in the net loss per share calculation as they are anti-dilutive.
As the Business Combination has been accounted for as a reverse recapitalization, the consolidated financial statements of the merged entity reflect the continuation of AFRAG’s. financial statements; The Company’s equity has been retroactively adjusted to the earliest period presented. As a result, net loss per share was also retrospectively adjusted for periods ended prior to the Merger. See Note 3 for details of this Business Combination recapitalization.
Accounting Changes
Leases - ASC 842
On January 1, 2022, and effective January 1, 2022, the Company adopted ASU 2016-02, “Leases (Topic 842)” using the modified retrospective transition method allowing it to apply the new standard at the adoption date and to recognize a cumulative-effect adjustment to the opening balance of retained earnings on the date of adoption. Under this transition method, the prior comparative period continues to be reported under the accounting standards in effect for that period.
The Company elected to use the package of practical expedients permitted which allows (i) an entity not to reassess whether any expired or existing contracts are or contain leases; (ii) an entity need not reassess the lease classification for any expired or existing leases; and (iii) an entity need not reassess any initial direct costs for any existing leases. The Company made an accounting policy election to adopt the short-term lease exception which allows the Company to not recognize on the balance sheet those leases with terms of 12 months or less resulting in short-term lease payments being recognized in the condensed consolidated statements of income on a straight-line basis over the lease term. All of the Company’s leases were previously classified as operating and are similarly classified as operating lease under the new standard.
Adoption of the new standard resulted in recognition of right-of-use assets and related lease liabilities of $2,336,336 as of January 1, 2022. There was no cumulative effect on retained earnings upon adoption.
Revenue from Contracts with Customers - ASC 606
The Company adopted ASC 606 - Revenue from Contracts with Customers, effective January 1, 2022. Prior to 2022, the Company had no revenue from contracts with customers.
Upon adoption of ASC 606, the Company recognizes revenue when the product is received by the customer for domestic transactions or by the customer’s international carrier for its international transactions. The Company believes this better reflects the point at which the customer has control of the product as required by ASC 606. The adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements.
Concentrations of Business Risk
Revenue from significant customer, which is defined as 10% or more of total revenue for the three months ended March 31, 2024, was as follows:
Related Parties and Transactions
The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, “Related Party Disclosures” and other relevant ASC standards.
Parties, which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company or exercise significant influence over the Company in making financial and operational decisions. Entities are also considered to be related if they are subject to common control or common significant influence.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. |
Business Combination |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS COMBINATION | NOTE 3. BUSINESS COMBINATION
On the “Closing Date”, African Agriculture Holdings Inc. (f/k/a 10X Capital Venture Acquisition Corp. II) consummated the Business Combination in accordance with the Merger Agreement. At Closing, (i) each share of Class A Common Stock and Class B Common Stock then issued and outstanding was automatically reclassified, on a one-for-one basis, in to shares of Common Stock of the Company, $0.0001 par value per share (the “Common Stock”) and (ii) each share of common stock of AFRAG issued and outstanding immediately prior to the Closing was automatically converted into the right to receive the number of shares of Common Stock in accordance with the terms and subject to the conditions set forth in the Merger Agreement.
The Business Combination is being accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, 10X II, who is the legal acquirer, is being treated as the “acquired” company for financial reporting purposes and AFRAG is being treated as the accounting acquirer. This determination was primarily based on the facts and circumstances noted in the Section: “Business combination and Organization” in Note 1. Accordingly, for accounting purposes, the Business Combination is being treated as the equivalent of a reverse recapitalization transaction in which AFRAG issued stock for the net assets of 10X II.
The net assets of 10X II are being stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of AFRAG. The following table reflects the net assets acquired in the Business Combination:
In accordance with the terms and subject to the conditions of the AA Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock of AFRAG issued and outstanding immediately prior to the Effective Time, was converted into the right to receive the number of shares of duly authorized, validly issued, fully paid and nonassessable common stock of African Agriculture Holdings Inc. (“Common Stock”) equal to the quotient of (i) the sum of (1) $450,000,000 and (2) the aggregate amount of any Company Pre-Closing Financing (as defined in the Merger Agreement), divided by (ii) ten dollars ($10.00), divided by (iii) the sum, without duplication, of the aggregate number of shares of AFRAG common stock that are (A) issued and outstanding immediately prior to the Effective Time, (B) issuable upon the exercise or settlement of options or restricted stock units of AFRAG (whether or not then vested or exercisable) that are outstanding immediately prior to the Effective Time, or (C) issuable upon conversion of any AFRAG convertible note issued prior to the date of the AA Merger Agreement and outstanding at the Effective Time.
In addition, in consideration of the Company waiving certain closing conditions set forth in the Merger Agreement, at Closing each share of Common Stock for which redemption was not requested (a “Former SPAC Share”) was granted a pro rata right to receive a portion of 3,000,000 additional shares of Common Stock (the “waiver Shares”), with (i) holders of Former SPAC Shares that were public holders receiving shares in the form of Common Stock that were assigned to a pool for the benefit of such holders by a former stockholder of AFRAG and (ii) holders of Former SPAC Shares that were not public holders receiving Common Stock in the form of newly issued shares on a private placement basis.
Pursuant to the AFRAG Sponsor Promissory Note (as defined in the Merger Agreement), AFRAG agreed, among other things, to reimburse Sponsor on a one for one basis for the Class B ordinary shares to be transferred by Sponsor in connection with the 10X II special meetings of shareholders to approve the extension of its redemption deadline in the form of newly-issued shares of Common Stock in connection with the Closing. In accordance with this agreement 1,233,167 shares of Common Stock (“Extension Shares”) were issued to Sponsor.
In anticipation of the Business Combination Closing, on November 29, 2023, 10X II and AFRAG entered into an agreement (the “CSED”) with Vellar Opportunities Fund Master, Ltd. (“Vellar” or “Seller”) for a Cash-Settled Equity Derivative Transaction. Capitalized terms that are not defined in this section (Entry into a Cash-Settled Equity Derivative Transaction) have the meaning given to those terms in the CSED. Subject to certain conditions contained in the CSED, the Seller was to provide up to $11,500,000 (the “Additional Funds”) in funds in the aggregate to us in five tranches: (i) the first tranche of $5,750,000 was funded in accordance with the terms of the CSED, (ii) the second tranche of $1,437,500 which was to be funded 30 days after the first tranche, (iii) the third tranche of $1,437,500 which was to be funded 30 days after the second tranche, (iv) the fourth tranche of $1,437,500 which was to be funded 30 days after the third tranche, and (v) the fifth tranche of $1,437,500 which was to be funded 30 days after the fourth tranche.
In order to ensure that the CSED Seller obtained registered securities a former stockholder of AFRAG transferred sufficient shares prior to the Business Combination to the CSED Seller such that following the Business Combination the Seller would have 11,500,000 registered shares. Following the transaction the Company issued to such former shareholder shares an aggregate of 11,597,408 shares of African Agriculture Holdings Common Stock to Global Commodities and Investment Ltd.in order to replace the shares transferred to the Seller in order to facilitate the operation of the CSED and the Merger.
Upon the closing of the Business Combination and the CSED, the Company received net cash proceeds of $6,871,806. The following table reflects movement in the Consolidated Statements of Cash Flows as a result
The following table presents the number of shares of the Company’s Common Stock issued as part of the Business Combination to the SPAC shareholders.
|
Property Plant and Equipment |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY PLANT AND EQUIPMENT | NOTE 4. PROPERTY PLANT AND EQUIPMENT
Property plant and equipment, net consists of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaids and Supplier Advances |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaids and Supplier Advances [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PREPAIDS AND SUPPLIER ADVANCES | NOTE 5. PREPAIDS AND SUPPLIER ADVANCES
At March 31, 2024 and December 31, 2023 there were advances paid to suppliers for equipment and inputs prior to delivery of such items. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASES | NOTE 6. LEASES
On January 1, 2022, and effective January 1, 2022, the Company adopted ASC 842. Under ASC 842, the Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded in the Company’s Consolidated Balance Sheets. Leases with an initial term greater than 12 months are recognized in the Company’s Consolidated Balance Sheets based on lease classification as either operating or financing. The Company may enter into lease agreements that include lease and non-lease components for which the Company has elected to not separate for all classes of underlying assets. The Company’s current lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company may also sublease its ROU assets to third parties in the future.
As a lessee, the Company’s current operating lease portfolio consists of three operating leases for farmland. Operating lease ROU assets and operating lease obligations are recognized based on the present value of the future minimum lease payments at commencement date. As the Company’s leases do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate based on the lease information available at the commencement date in determining the present value of future payments.
The initial incremental borrowing rate utilized for the Fass Lease (as defined below) and Niger Land Right (as defined below) was based upon the interest rate associated with the Company’s analysis of borrowing rates relating to “Senegal, 6.25% 2033, USD International Bonds” and increased for credit and political risks. The Company believes this rate is a proxy for its incremental borrowing rate that would be utilized if it were to acquire assets or fund its working capital needs in Senegal and Niger. For the Company’s recently signed lease in Mauritania as there is no reference or comparable debt issuances, the Company utilized the same reference rate used for Niger Land Right, however adjusted the rate to also consider the increasing global rates since the commencement date of the Niger Land Right.
The Company’s current three leases are under long-term (greater than one year) non-cancellable term leases. The Company had one short-term lease and may also enter into other short-term or month-to-month operating leases in the future as required by its operations.
Operating leases are included in “Operating lease right-of-use assets, net,” “Current portion of operating lease liabilities,” and “Non-current operating lease liabilities” in the Company’s Consolidated Balance Sheet as of March 31, 2024.
Operating Leases
The Company has a non-cancellable convention agreement with the Fass Ngom community in Senegal (“Fass Lease”) that provides for the right to use 5,000 hectares. The original agreement was signed in 2018, but revised in 2021, largely on the same terms, for a 15-year term.
On November 27, 2021 and December 5, 2021, the Company and Agro Industries signed binding definitive agreements with the mayor and local governments of Aderbissinat and Ingall, respectively, in Niger each under a 49-year term for the right to use and development the land (“Niger Land Right”). The project will involve the planting of up to 1.1 million hectares of trees in each of Aderbissinat and Ingall, for an aggregate of 2.2 million hectares, to optimize the production of carbon credits and commercial production of alfalfa in areas to be mutually agreed upon by the parties, as well as water and usage rights. Pursuant to the Aderbissinat and Ingall agreements, the Company agreed to pay for each agreement approximately $86,000 per year. Once the sale of carbon credits commences the annual payment amount will increase to approximately $1.1 million for each of the Aderbissinat and Ingall leases. In addition, during the first year of the sale of carbon credits, we are required to pay an additional $129,000 for each agreement for budgetary support to each region. To date no carbon credits have been sold.
Following the formation of the Company’s Mauritanian subsidiary a lease signed between the Company, the community of Gie Dynn and the Government of Mauritania (the “Mauritania Lease”) became effective. This lease is for 20 years and covers 2,033 hectares of land. Of this land, 80%, or 1,626 hectares will be used by the Company for farming alfalfa with the balance being farmed, at the Company’s cost, at the direction of the community. The Company has agreed to invest up to $30 million into this project over the next 20 years. The annual cost of the 1,626 hectares will be $300 per hectare per annum, subject to an annual increase consistent with the household consumption index (a proxy for local inflation). In addition, the Company will pay 5% of annual net profits earned on the 1,626 hectares to the community subject to an annual minimum payment of approximately $122,000.
The Fass Lease, the Niger Land Right and the Mauritania Lease are operating leases under ASC 842.
The associated lease costs have been recognized in our consolidated statement of operations as follows:
Other information about the lease amounts recognized in our consolidated financial statements is as follows:
Our lease liabilities as reported on the accompanying consolidated balance sheet consists of the following:
The following summarizes our rent payments for the Fass Lease, the Niger Land Right and the Mauritania Lease operating leases as of March 31, 2024:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Asset |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible Asset [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSET | NOTE 7. INTANGIBLE ASSET
The Company recognized an intangible asset in connection with the purchase of LFT related to the 50-year land use right of 20,000 hectares provided by way of a Republic of Senegal Presidential Decree.
The intangible asset, net consists of the following:
Scheduled amortization of the land use right at March 31, 2024 are as follows:
At March 31, 2024, management looked primarily at the undiscounted future cash flows of the Company, based on management’s estimates, in its assessment of whether or not this intangible asset was impaired. There were no impairments with respect to this intangible asset during the three months ended March 31, 2024. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORY | NOTE 8. INVENTORY
The costs for establishing the seeded pivots including seeds, land preparation and various phytosanitary products that are applied prior to and in conjunction with the initial seeding, but which will not be reapplied during the growing and harvesting stages are allocated quarterly to the cost of production over the seed cycle, which we estimate will be three years. The remaining unallocated costs are included in inventory. In addition, all other ongoing costs associated with the continued growing and harvesting of each pivot are included in inventory. The allocated quarterly costs together with a harvested cost of the sold bales are allocated to cost of sales based on a first in first out method. The assessment of the recoverability of inventories and the amounts of any write-downs are based on currently available information and assumptions about future demand and market conditions. There is no contemplation of any write down of our current inventory.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Note Payables and Transactions |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Note Payables and Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED PARTY NOTE PAYABLES AND TRANSACTIONS | NOTE 9. RELATED PARTY NOTE PAYABLES AND TRANSACTIONS
During the normal course of business, the Company may enter into transactions with significant shareholders, directors and principal officers and their affiliates.
The Company has an unsecured note payable due to a related party, the majority shareholder, Global Commodities & Investments Ltd. (“Global Commodities”). The related party payable does not have a stated interest rate. The payable between Global Commodities, and the Company has a 60-month rolling term following the creation of payables within each year. These payables, if funded for Senegal or Niger costs, are West African CFA Franc denominated and translated at year end spot rates. Since the time of the acquisition of LFT by Agro Industries, the majority shareholder has continued to provide funding to support the working capital needs of the business. Each new funding has been added to the principal of the related party payable. The balance of the related party loan, $16,130,522, was converted into equity during 2022. Global Commodities continued to provide funds to the Company as a related party payable after this conversion. The Company entered into a Payoff, Waiver and Release Agreement (the “GCIL Payoff Agreement”) in October 2022 with Global Commodities. The GCIL Payoff Agreement called for, among other things, the issuance of Company shares in repayment of $16,130,522. The GCIL Payoff Agreement calls for the termination of all outstanding principal amount of loans and all unpaid interest through the date of such payoff.
In January 2023, the Company issued to a related party, 10X Capital SPAC Sponsor II LLC an additional $225,000 Promissory Note bearing no interest. This Note maturity is the earlier of (i) the receipt of funds by Borrower from an equity, equity-linked, or debt financing and (ii) the Closing of the VCXA Merger Agreement. In May 2023, the $225,000 Promissory Note issued to the related party was amended and an additional $62,000 was issued pursuant to this note. The amendment further provided that the Note can be drawn on up to $750,000 in the aggregate. As part of this amendment, the Company agreed to issue to the Promissory Note holder a number of shares of the Company’s Common Stock, par value $0.0001 per share (the “Extension Shares”), equal to the number of Class B ordinary shares, par value $0.0001 per share, of 10X Capital Venture Acquisition Corp. II transferred to investors in connection with any past extensions of the deadline by which VCXA must consummate an initial business combination. Upon issuance of these Extension Shares the Company recognized a discount on the original debt issuance. This debt discount was amortized and included in related party interest prior to year-end in connection with the repayment of this related party note. In June through September an additional $338,879 was issued pursuant to this Promissory Note. This Promissory Note was paid off using proceeds received from the CSED following the Business Combination.
In order to finance transaction costs, the Sponsor or an affiliate of the Company provided funds as may be required (the “New Note”). The New Note is non-interest bearing, unsecured and was due at the consummation of the Business Combination. The New Note was not, however, repaid upon the Business Combination and was instead assumed as part of the Business Combination. As of March 31, 2024, the Company had $1,639,188 outstanding under the New Note.
The related party obligations of the Company are comprised of the following:
As of March 31, 2024, the related party payable has the following maturity schedule:
In addition, to the shareholder loans, Global Commodities provided a loan repayment guarantee to the sellers of the LFT shares in the 2018 transaction. Refer Note 10 - Seller Note Payable.
As the related party payables have no stated interest rate, an imputed interest rate has been applied against such loan to represent an arms-length arrangement between the Company and the related party. The Company estimates comparable debt as of the date of the origination would incur interest of one-month SOFR plus 2.5% on an annual basis. Historically LIBOR was used as a reference rate, however as LIBOR is phased out, the Company began using SOFR. The following table summarizes imputed interest to related parties during the three month period ended March 31, 2024. As this interest has not been paid on an annual basis it has been recorded as additional paid-in-capital.
During the three months ended March 31, 2024, Gora Seck who serves on the board of LFT and is a minority shareholder of the Company received consulting payments for work conducted in Senegal of approximately $10,000. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Seller Note Payable |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Seller Note Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SELLER NOTE PAYABLE | NOTE 10. SELLER NOTE PAYABLE
The Company issued a note payable to Tampieri Financial Group in connection with the LFT asset acquisition in February 2018. In November 2022, Tampieri Financial Group agreed to a delayed payment of the balance of the seller note payable. The amendment fee, which was due at the maturity of the seller note payable, was amortized monthly over the remaining period of the seller note payable.
In May 2023, the Company and Tampieri Financial Group agreed to extend the payment date of the amounts that were due on March 31, 2023 until October 31, 2023. In consideration for this delay the Company agreed to pay interest of 6.3% per annum on the delayed payments. The final payments were not, however, made in October 2023. The parties are in discussions regarding a payment schedule, but should we not agree on this payment schedule there is a provision in the original agreement that states that if payment is not made by November 1, 2023 an additional $386,274 is payable to the Tampieri Financial Group and such increase defers the payment due until October 31, 2024. In addition, the Company agreed to pay fees of approximately $21,700.
Other than the interest related to the delayed payments negotiated in May 2023, the seller note payable does not bear an interest rate. As a result, the fair value of the seller note payable was less than face value when issued in the LFT asset acquisition. The seller note payable is presented net of unamortized discount and the unamortized amendment fee arising from the November 2022 amendment.
Global Commodities has provided a loan repayment guarantee to Tampieri Financial Group for the amount of the outstanding seller note payable. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Debt [Abstract] | |
| DEBT | NOTE 11. DEBT
The Company has previously issued Promissory Notes (“Short Term Notes”) the proceeds of which were used to fund general corporate purposes. The Notes bear a simple interest rate of sixteen percent (16%) per annum based on a 365-day year. The Notes have a four-month maturity, with an option of the Company to extend the maturity an additional four months. There were $296,277 and $341,277 of Short Term Notes outstanding as of March 31, 2024 and December 31, 2023, respectively, of which $113,925 were with related parties of the Company, respectively.
In February 2023, Company issued an additional $300,000 Promissory Note. The Note bears a simple interest rate of two and a half percent (2.5%) per month based on a 30-day month. The Notes have an eighteen-month maturity. In connection with this loan, the Promissory Note holder received warrants to acquire 30,000 shares in the Company at $11.50 per share. |
Commitments |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Commitments [Abstract] | |
| COMMITMENTS | NOTE 12. COMMITMENTS
In June 2021, we entered into a non-binding understanding with Louisiana State University (“LSU”) to provide for a mutually-beneficial research project in which LSU will provide training, research and academic support. We continue to work with LSU to finalize the terms of the training and development project under the collaborative agreement. The term of the agreement is expected to run through June 30, 2026. The total amount to be paid by the Company to LSU has not yet been determined. Either party may terminate the agreement on 30 days’ prior written notice.
On May 14, 2022, the Company signed an agreement with the Directorate General of Water and Forests (“DGEF”) of Niger who manages forest reserves for a total area of 624,568 hectares to be reforested and developed by the Company. Under the terms of the agreement, African Agriculture will provide all necessary funds to carry out the programmed activities. The Company further agreed to distribute 10 percent of the profit from the sale of carbon credits, when they occur, to the State of Niger and to the social and development program in the concerned municipalities. Furthermore, until the sale of carbon credits, African Agriculture will allocate an amount of approximately $80,000 to the DGEF. The agreement tenure is for 25 years duration, renewable after project assessment. After the start of the project, its duration may be extended for 20 years upon agreement between the parties. We have determined that this agreement does not meet the definition of a lease. |
Contingent Liabilities |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Contingent Liabilities [Abstract] | |
| CONTINGENT LIABILITIES | NOTE 13. CONTINGENT LIABILITIES
Various creditors and ex-employees in Senegal commenced some form of legal action for claims relating to the period prior to our acquisition of LFT. The Company has, as a result, several legal cases that are in various stages of resolution. The contingent liability includes various legal cases and other claims. The Company recorded a contingent liability representing, in the Company’s opinion, based on our outside counsel’s review, probable loss outcome for legal claims. At March 31, 2024 the amount of the provision for the contingent liability is $2,275,771. While there is a possibility that additional claims relating to pre-acquisition periods might arise such an amount is unknowable and hence cannot be estimated. |
Stockholders’ Equity |
3 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||
| Stockholders’ Equity [Abstract] | |||||||||||||
| Stockholders’ Equity | NOTE 14. STOCKHOLDERS’ EQUITY
Authorized and Outstanding Capital Stock
The total number of shares of the Company’s authorized capital stock is 350,000,000. The total amount of authorized capital stock consists of 300,000,000 shares of Common Stock and 50,000,000 shares of preferred stock. As of March 31, 2024, no shares of preferred stock are issued or outstanding.
Common Stock
Holders of Common Stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders, including the election of directors, and do not have cumulative voting rights. Subject to preferences that may be applicable to any then outstanding preferred stock, holders of our Common Stock are entitled to receive ratably those dividends, if any, as may be declared by the Board out of legally available funds. In the event of our liquidation, dissolution or winding up, the holders of Common Stock will be entitled to share ratably in the assets legally available for distribution to stockholders after the payment of or provision for all of our debts and other liabilities, subject to the prior rights of any preferred stock then outstanding. Holders of our Common Stock have no preemptive or conversion rights or other subscription rights and there are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Common Stock are duly authorized, validly issued, fully paid and nonassessable. The rights, preferences and privileges of holders of our Common Stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.
Preferred stock
Under the terms of our certificate of incorporation, our Board has the authority, without further action by our stockholders, to issue up to 50,000,000 shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the dividend, voting and other rights, preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereon, and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding.
Our Board may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our Common Stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deterring or preventing a change in our control and may adversely affect the market price of the Common Stock and the voting and other rights of the holders of our Common Stock. We have no current plans to issue any shares of preferred stock.
Warrants
There are currently outstanding an aggregate of 6,666,575 public warrants, which, following the consummation of the Business Combination, will entitle the holder to acquire 6,666,575 shares of Common Stock. The warrants entitle the holder thereof to purchase one share of common stock at a price of $11.50 per share, subject to adjustments. The Public Warrants are only exercisable for a whole number of shares of common stock. No fractional shares are to be issued upon exercise of the warrants. The Public Warrants will expire on December 6, 2028 (which is five years after the completion of the Business Combination), at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. The Public Warrants are listed on the Nasdaq Capital Market under the symbol “AAGRW”.
Additionally, once the Public Warrants become exercisable, the Company can redeem the outstanding Public Warrants:
If the Company calls the Public Warrants for redemption as previously described, the Company has the option to require all holders that wish to exercise the Public Warrants to do so on a cashless basis.
In addition, the Company 244,534 Private Placement Warrants. Each Private Placement Warrant is exercisable for one share of common stock at a price of $11.50 per share, subject to adjustment. The Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants except that the Private Placement Warrants were not transferable, assignable or salable until 30 days after the completion of the Business Combination. The Private Placement Warrants, except for 26,201 private placement warrants, will be redeemable by the Company in all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants. |
Employee and Non-Employee Share Based Compensation |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee and Non-Employee Share Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EMPLOYEE AND NON-EMPLOYEE SHARE BASED COMPENSATION | NOTE 15. EMPLOYEE AND NON-EMPLOYEE SHARE BASED COMPENSATION
In 2022, the Company’s Board of Directors approved the adoption of the African Agriculture, Inc. 2022 Incentive Plan (the “Plan”). The Plan, as amended by the Board of Directors, permits the Company to grant up to 2,885,640 shares (at March 31, 2024) of the Company’s common stock. In May 2023, the Board approved a resolution amending various RSU grants to extend the first vesting period of various RSU grants awarded in 2022 to January 2024. This change did not amend any subsequent vesting dates and hence the time to final vesting for the RSUs did not change. In November 2023, the Company’s board approved an amendment to the Plan increasing the number of shares of Common Stock (as defined in the Plan) available for grant under the Plan to 9,500,000 shares.
The Plan provides for the granting of incentive and nonqualified stock options, share appreciation rights (SARs), restricted stock, and restricted stock units to employees, non-employee directors, and consultants of the Company. Instruments granted under the Plan generally become exercisable ratably over the stated vesting terms in each award agreement following the date of grant and expire ten years from the date of grant. All stock awards are exercisable only to the extent vested. The exercise price of incentive stock awards must be at least equal to 100% of the fair value of the Company’s common stock at the date of grant, as determined by the Board of Directors.
In addition, and as a separate award outside of the plan the Board approved an award of 2,700,000 RSUs to African Discovery Group, Inc., a corporation majority owned by the CEO of the Company.
A summary of stock award activity and related information is as follows, as adjusted for the conversion mechanism described above:
As all 2022 stock awards were granted contemporaneously with the Business Combination Agreement with VCXA and the grant date fair value of the 2022 stock awards was $10 per share, which is based on the per share merger consideration, and the awards in November 2023 were issued shortly prior to the Business Combination Closing, the Board of Directors determined the grant date fair value of the stock awards to be $8.73 per share, which is based on the per share merger consideration adjusted for the ratio of the Business Combination merger consideration exchange ratio. As of March 31, 2024, there was approximately $ of unamortized share-based compensation cost related to unvested stock awards. The unamortized share-based compensation is expected to be recognized over a weighted average period of approximately 2.2 years, and as the stock awards vest, the Company will record compensation and non-employee expense with the offset to additional paid-in capital.
The table below shows share-based compensation expense recognized in the statement of operations for the three months ended March 31, 2024 and March 31, 2023, respectively:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent Events |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 17. SUBSEQUENT EVENTS
On April 4, 2024, the Company issued a $300,000 Secured Promissory Note. The Secured Promissory Note bears a simple interest rate of fifteen percent (15%) per annum based on a 360-day year. The Promissory Note has a three-year maturity, however, may be called upon 30 days’ notice from the lender after the one-year anniversary of the issuance date. The Secured Promissory Note is secured against various equipment in Senegal. In connection with this loan, the Promissory Note holder received warrants to acquire 200,000 shares in the Company at $0.30 per share.
On April 8, 2024, the Company entered into a Resignation and General Release Agreement (the “Resignation Agreement”) by and among the Company, AFRAG, AFDG and Mr. Kessler. Pursuant to the Resignation Agreement, AFDG’s engagement with the Company terminated effective as April 8, 2024 (the “Resignation Date”), and Mr. Kessler resigned from his roles as both Executive Chairman of the Board and as a member of the Board also effective as of the Resignation Date. Mr. Kessler had previously resigned from his role as Chief Executive Officer of the Company on January 31, 2024. Pursuant to the Resignation Agreement, AFDG is entitled to $330,000 payable in a single lump sum on the earlier to occur of (i) the date Company achieves a capital raise of at least $5,000,000 in a single transaction or series of related transactions following the Resignation Date, or (ii) December 31, 2024. Further the RSU awards granted to AFDG and Mr. Kessler previously will vest in full as of the Resignation Date.
On May 16, 2024, the Company issued an additional $190,000 Secured Promissory Note. The Secured Promissory Note bears a simple interest rate of fifteen percent (15%) per annum based on a 360-day year. The Promissory Note has a three-year maturity, however, may be called upon 30 days’ notice from the lender after the one-year anniversary of the issuance date. The Secured Promissory Note is secured against various equipment in Senegal. In connection with this loan, the Promissory Note holder received warrants to acquire 93,229 shares in the Company at $0.4076 per share. |
Pay vs Performance Disclosure - USD ($) |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
|
| Pay vs Performance Disclosure | |||
| Net Income (Loss) | $ (12,663,598) | $ (9,603,752) | $ (9,603,752) |
Insider Trading Arrangements |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Trading Arrangements, by Individual | |
| Rule 10b5-1 Arrangement Adopted | false |
| Non-Rule 10b5-1 Arrangement Adopted | false |
| Rule 10b5-1 Arrangement Terminated | false |
| Non-Rule 10b5-1 Arrangement Terminated | false |
Accounting Policies, by Policy (Policies) |
3 Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||
| Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. |
||||||||||||||||||
| Foreign Currency Translation | Foreign Currency Translation The accompanying consolidated financial statements are presented in United States dollars (“$”), which is the reporting currency of the Company. The functional currency of the Company is the United States dollar. The functional currency of the Company’s subsidiaries located in Senegal and Niger is the West African Franc (“CFA”). For the entities whose functional currencies are the CFA, results of operations and cash flows are translated at average exchange rates during the period (1 CFA=$0.001649 for the three months ended March 31, 2024), assets and liabilities are translated at the current exchange rate at the end of the period (1 CFA=$0.001645 at March 31, 2024), and equity is translated at blended historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income. Transaction gains and losses are reflected in the consolidated statements of operations. |
||||||||||||||||||
| Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, contingent liabilities, imputed interest expense and income taxes including the valuation allowance for deferred tax assets. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.
|
||||||||||||||||||
| Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash in bank accounts, cash in time deposits, certificates of deposit and all highly liquid instruments with original maturities of three months or less. As of March 31, 2024 cash balances were held at JP Morgan Chase and Fidelity Brokerage Service, LLC and in various banks in Senegal and Niger. There were no cash equivalents at March 31, 2024. |
||||||||||||||||||
| Property, plant, and equipment | Property, plant, and equipment Property, plant, and equipment consist of farming and farming support equipment, and office equipment. All property, plant and equipment are stated at historical cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred. Property, plant and equipment are depreciated on a straight-line basis over the following periods:
|
||||||||||||||||||
| Leases | Leases The Company determines if an arrangement is a lease at inception. To the extent an arrangement represents a lease, the Company classifies that lease as an operating lease or a finance lease under Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) and its related ASUs (“ASC 842”). The Company capitalizes operating leases on its Consolidated Balance Sheets through a Right-of-Use (“ROU”) asset and a corresponding lease liability. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the operating lease. Operating lease ROU assets and obligations are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term utilizing an interest rate that the Company would have incurred to borrow over a similar term the funds necessary to purchase the leased asset. Operating leases are included in “Operating lease right-of-use assets, net,” “Current portion of operating lease liabilities,” and “Non-current operating lease liabilities” in the Company’s Consolidated Balance Sheet as of March 31, 2024. Lease expense for operating leases is recognized on a straight-line basis over the lease term. For additional information regarding the Company’s leases, see Note 6 - Leases. |
||||||||||||||||||
| Inventory | Inventory Inventories are stated at the lower of cost or net realizable value. Cost is calculated on the basis of the first-in, first-out method; market is based upon estimated replacement costs. Costs included in inventory primarily include the following: cost of seeds, farming inputs such as fertilizer, gypsum, water and fuel as well as inbound freight cost. Each pivot is cleared, treated with fertilizer and various phytosanitary products and seeded ahead of the life cycle of alfalfa, which we currently estimate to be approximately three years. These initial costs are amortized using a straight-line method over that life cycle. The portion of these costs expected to amortize after twelve months is included in long-term inventory. |
||||||||||||||||||
| Intangible Asset | Intangible Asset The intangible asset consists of a land use right of 20,000 hectares provided by way of a Senegal Presidential decree. The value of the intangible was established based on its estimated fair value at the time of the asset purchase of LFT by Agro Industries in 2018. Amortization of the intangible asset is calculated on a straight-line basis over the remaining term of the decree, which at the time of the purchase had 44 years of a 50-year term remaining. As of March 31, 2024, approximately 38 years remain under this decree. Refer to Note 7 for further discussion.
|
||||||||||||||||||
| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial position. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. There was no impairment charge for the three months ended March 31, 2024. |
||||||||||||||||||
| Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company adopted ASC 820 “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
Financial instruments include cash and cash equivalents, receivables, accounts payable and accrued expenses, advances from prospective customers/distributors, amounts due to related parties, notes payable and contingent liabilities. The carrying values of these financial instruments approximate their fair values due to the short-term maturities of these instruments. For the periods presented, there were no financial assets or liabilities measured at fair value. |
||||||||||||||||||
| Income Taxes | Income Taxes The Company follows the liability method in accounting for income taxes in accordance with ASC topic 740 (“ASC 740”), Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax basis of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The Company applies the provisions of ASC 740 to account for uncertainty in income taxes. ASC 740 clarifies the accounting for uncertainty in income taxes by prescribing the recognition threshold a tax position is required to meet before being recognized in the consolidated financial statements. The Company will classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of operations.
|
||||||||||||||||||
| Derivative Financial Instruments | Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The Company assumed 6,884,908 warrants, in conjunction with the consummation of the Business Combination in addition to 26,201 warrants issued in connection with Promissory Notes by AAGR in February 2023. The warrants entitle the holder to purchase one share of common stock at an exercise price of $11.50 per share. The warrants are classified in accordance with ASC 480 and ASC 815, which provides that the warrants are not precluded from equity classification. Equity-classified contracts were initially measured at fair value (or allocated value). Subsequent changes in fair value will not be recognized as long as the contracts continue to be classified in equity in accordance with ASC 480 and ASC 815. The Forward Purchase Agreement, or CSED (defined in Note 1) includes an embedded feature that meets the definition of a derivative in accordance with ASC 815. The FPA contract was determined to be more akin to equity rather than debt and as such the FPA and the associated imbedded derivative was treated as equity. Lastly, we determined that the embedded feature will not require bifurcation as it is clearly and closely related to the equity host As the embedded feature was not bifurcated from the instrument at issuance, it will continue to be reassessed at each reporting date to determine that continued non-bifurcation is appropriate. Based on the performance of the stock and the terms of the CSED, it is not expected, and highly improbable, that Company will receive any additional payments or other compensation in the future from the CSED |
||||||||||||||||||
| Revenue Recognition | Revenue Recognition The Company’s revenue is derived from the sale of agricultural products. The Company recognizes revenue in accordance with ASC 606. To achieve that core principle, the Company applies the following steps:
The Company recognizes its revenue at a point in time when it satisfies a performance obligation and transfers control of the product, primarily bales of alfalfa, to the respective customer. For domestic product sales, the Company meets its performance obligation upon the shipment of the products from its facilities to its customer. For international product sales, the Company meets its performance obligation upon delivery of the products to the customer’s international carrier. The Company does not provide any services to its customers currently. The amount of revenue recognized is based on the fixed transaction price. Contracts for the Company’s products are negotiated on a per-contract basis at a local or regional level. Contracts vary in volume and sometimes price but typically have a single performance obligation, the delivery of bales of alfalfa. The Company’s payment terms vary by the type and location of its customers. The Company receives cash equal to the invoice amount for its product sales, and if credit is provided, payment terms typically range from 30 to 90 days from the date the Company invoices a customer. Since the period between the delivery of the Company’s products and the Company’s receipt of customer payment for these products and services is not expected to exceed one year, the Company has elected not to calculate or disclose a financing component for its customer contracts. The Company’s contract assets at March 31, 2024 and December 31, 2023 consisted of accounts receivable, which totaled $37,427 and $10,796, respectively.
The Company has not established an allowance for credit losses for the three months ended March 31, 2024. In determining an allowance, we would estimate loss rates based upon historical loss experienced and adjusted for factors that are relevant to determining the expected collectability of accounts receivable. Some of these factors include historical loss experience, delinquency trends, aging behavior of receivables, credit and liquidity quality indicators of customers classes, local behavior, the current and expected future economic and market conditions and balances owed when customers are also suppliers of cost inputs. |
||||||||||||||||||
| Share-based compensation | Share-based compensation The Company measures compensation expense for all stock-based awards in accordance with ASC Topic 718, Compensation - Stock Compensation. Share-based compensation is measured at fair value on grant date and recognized as compensation expense ratably over the course of the requisite service period. The fair value of restricted stock units (“RSUs”) is typically determined based on the fair value of the related shares on the date of grant. The Company has elected to record forfeitures of employee awards as they occur. |
||||||||||||||||||
| Comprehensive Loss | Comprehensive Loss Comprehensive loss is defined as the decrease in equity of the Company during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Comprehensive loss is reported in the consolidated statements of comprehensive loss, including net loss and foreign currency translation adjustments, presented net of tax. |
||||||||||||||||||
| Net Loss per Share | Net Loss per Share Basic net loss per share attributable to common stockholders is derived by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share attributable to common stockholders is computed by dividing the diluted net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalent, if any. The Company has outstanding warrants of 6,911,109. The warrants entitle the holder to purchase one share of common stock at an exercise price of $11.50 per share. The warrants are out-of-the-money warrants and have not been considered in the net loss per share calculation as they are anti-dilutive. As the Business Combination has been accounted for as a reverse recapitalization, the consolidated financial statements of the merged entity reflect the continuation of AFRAG’s. financial statements; The Company’s equity has been retroactively adjusted to the earliest period presented. As a result, net loss per share was also retrospectively adjusted for periods ended prior to the Merger. See Note 3 for details of this Business Combination recapitalization. |
||||||||||||||||||
| Accounting Changes | Accounting Changes Leases - ASC 842 On January 1, 2022, and effective January 1, 2022, the Company adopted ASU 2016-02, “Leases (Topic 842)” using the modified retrospective transition method allowing it to apply the new standard at the adoption date and to recognize a cumulative-effect adjustment to the opening balance of retained earnings on the date of adoption. Under this transition method, the prior comparative period continues to be reported under the accounting standards in effect for that period. The Company elected to use the package of practical expedients permitted which allows (i) an entity not to reassess whether any expired or existing contracts are or contain leases; (ii) an entity need not reassess the lease classification for any expired or existing leases; and (iii) an entity need not reassess any initial direct costs for any existing leases. The Company made an accounting policy election to adopt the short-term lease exception which allows the Company to not recognize on the balance sheet those leases with terms of 12 months or less resulting in short-term lease payments being recognized in the condensed consolidated statements of income on a straight-line basis over the lease term. All of the Company’s leases were previously classified as operating and are similarly classified as operating lease under the new standard.
Adoption of the new standard resulted in recognition of right-of-use assets and related lease liabilities of $2,336,336 as of January 1, 2022. There was no cumulative effect on retained earnings upon adoption. Revenue from Contracts with Customers - ASC 606 The Company adopted ASC 606 - Revenue from Contracts with Customers, effective January 1, 2022. Prior to 2022, the Company had no revenue from contracts with customers. Upon adoption of ASC 606, the Company recognizes revenue when the product is received by the customer for domestic transactions or by the customer’s international carrier for its international transactions. The Company believes this better reflects the point at which the customer has control of the product as required by ASC 606. The adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements. |
||||||||||||||||||
| Concentrations of Business Risk | Concentrations of Business Risk Revenue from significant customer, which is defined as 10% or more of total revenue for the three months ended March 31, 2024, was as follows:
|
||||||||||||||||||
| Related Parties and Transactions | Related Parties and Transactions The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, “Related Party Disclosures” and other relevant ASC standards. Parties, which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company or exercise significant influence over the Company in making financial and operational decisions. Entities are also considered to be related if they are subject to common control or common significant influence. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated. |
Summary of Significant Accounting Policies (Tables) |
3 Months Ended | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||
| Schedule of Property, Plant and Equipment are Depreciated on a Straight-Line Basis | Property, plant and equipment are
depreciated on a straight-line basis over the following periods:
|
||||||||||||||||||
| Schedule of Revenue from Significant Customer | Revenue
from significant customer, which is defined as 10% or more of total revenue for the three months ended March 31, 2024, was as follows:
|
Business Combination (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||
| Business Combination [Abstract] | ||||||||||||||||||||||||||||||||||||
| Schedule of the Following Table Reflects the Net Assets Acquired In the Business Combination | The following table reflects the net assets acquired in the Business Combination:
|
|||||||||||||||||||||||||||||||||||
| Schedule of the Following Table Reflects Movement in the Consolidated Statements of Cash Flows as a Result | The following table reflects movement in the Consolidated
Statements of Cash Flows as a result
|
|||||||||||||||||||||||||||||||||||
| Schedule of Number of Shares of Common Stock Issued as Part of the Business Combination | The following table presents
the number of shares of the Company’s Common Stock issued as part of the Business Combination to the SPAC shareholders.
|
Property Plant and Equipment (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property Plant and Equipment, Net | Property plant and equipment,
net consists of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaids and Supplier Advances (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaids and Supplier Advances [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Prepaids and Supplier Advances |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Consolidated Statement of Operations | The associated lease costs
have been recognized in our consolidated statement of operations as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Consolidated Financial Statements | Other information about the
lease amounts recognized in our consolidated financial statements is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Consolidated Balance Sheet | Our lease liabilities as reported
on the accompanying consolidated balance sheet consists of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Operating Leases | The following summarizes our
rent payments for the Fass Lease, the Niger Land Right and the Mauritania Lease operating leases as of March 31, 2024:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Asset (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of Intangible Asset Net | The intangible asset, net
consists of the following:
|
||||||||||||||||||||||||||||||||||||
| Scheduled of Amortization of the Land Use Right | Scheduled amortization of
the land use right at March 31, 2024 are as follows:
|
||||||||||||||||||||||||||||||||||||
Inventory (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Recoverability of Inventories | There is no contemplation of any write down of our current inventory.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Note Payables and Transactions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||
| Related Party Note Payables and Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Obligations | The related party obligations
of the Company are comprised of the following:
|
||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Payable Maturity | As of March 31, 2024, the
related party payable has the following maturity schedule:
|
||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Payables Imputed Interest Rate | The following table summarizes imputed interest to related parties during the three month period ended March 31, 2024. As
this interest has not been paid on an annual basis it has been recorded as additional paid-in-capital.
|
||||||||||||||||||||||||||||||||||||
Seller Note Payable (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Seller Note Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Net of Unamortized Discount and the Unamortized Amendment Fee | The seller note payable is presented net of
unamortized discount and the unamortized amendment fee arising from the November 2022 amendment.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee and Non-Employee Share Based Compensation (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee and Non-Employee Share Based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stock Award Activity and Related | A summary of stock award activity
and related information is as follows, as adjusted for the conversion mechanism described above:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Share-Based Compensation Expense Recognized in the Statement of Operations | The table below shows share-based
compensation expense recognized in the statement of operations for the three months ended March 31, 2024 and March 31, 2023, respectively:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies (Details) - Schedule of Revenue from Significant Customer - Accounts Receivable [Member] |
3 Months Ended |
|---|---|
Mar. 31, 2024 | |
| Customer Concentration Risk [Member] | Customer A [Member] | |
| Schedule of Revenue from Significant Customer [Line Items] | |
| Concentration risk, percentage | 27.00% |
| Credit Concentration Risk [Member] | Customer B [Member] | |
| Schedule of Revenue from Significant Customer [Line Items] | |
| Concentration risk, percentage | 13.00% |
Business Combination (Details) - Schedule of Net Assets Acquired In the Business Combination |
3 Months Ended |
|---|---|
|
Mar. 31, 2024
USD ($)
| |
| Schedule of Net Assets Acquired In the Business Combination [Abstract] | |
| Cash proceeds from 10X Capital Venture Acquisition Corp. II, net of redemptions, net of transaction costs | $ 1,221,806 |
| Prepaid expenses | 28,775 |
| Accounts payable | (9,756,621) |
| Accrued expenses | (7,892,578) |
| Related party payable to the SPAC Sponsor | (1,668,778) |
| Net liabilities acquired | $ (18,067,396) |
Business Combination (Details) - Schedule of Movement in the Consolidated Statements of Cash Flows |
3 Months Ended |
|---|---|
|
Mar. 31, 2024
USD ($)
| |
| Schedule of Movement in the Consolidated Statements of Cash Flows [Abstract] | |
| Cash proceeds from 10X Capital Venture Acquisition Corp. II, net of redemptions | $ 2,887,743 |
| Less: Cash payment of 10X Capital Venture Acquisition Corp. II transaction costs and payables | (1,665,937) |
| Net cash from business combination | 1,221,806 |
| Cash proceeds from CSED Financing | 5,750,000 |
| Less: Cash payment of CSED transaction costs | (100,000) |
| Net cash proceeds upon the closing of the Business Combination and PIPE financing | $ 6,871,806 |
Business Combination (Details) - Schedule of Number of Shares of Common Stock Issued as Part of the Business Combination |
3 Months Ended |
|---|---|
|
Mar. 31, 2024
shares
| |
| Business Combination, Separately Recognized Transactions [Line Items] | |
| 10X Capital Venture Acquisition Corp. II non redeemed shares | 262,520 |
| Total 10X Capital Venture Acquisition Corp. II shares | 7,584,187 |
| Merger agreement waiver shares | 3,000,000 |
| Total shares of Common Stock | 10,584,187 |
| Warrant [Member] | |
| Business Combination, Separately Recognized Transactions [Line Items] | |
| Conversion of 10X Capital Venture Acquisition Corp. II Common Stock | 655,000 |
| Class A Common Stock [Member] | |
| Business Combination, Separately Recognized Transactions [Line Items] | |
| Conversion of 10X Capital Venture Acquisition Corp. II Common Stock | 1,000,000 |
| Class B Ordinary Shares [Member] | |
| Business Combination, Separately Recognized Transactions [Line Items] | |
| Conversion of 10X Capital Venture Acquisition Corp. II Common Stock | 5,666,667 |
Business Combination (Details) - Schedule of Number of Shares of Common Stock Issued as Part of the Business Combination (Parentheticals) - shares |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Business Combination, Separately Recognized Transactions [Line Items] | ||
| Company Common Stock | 57,866,830 | 57,866,830 |
| Warrant [Member] | ||
| Business Combination, Separately Recognized Transactions [Line Items] | ||
| Company Common Stock | 655,000 | |
| Class A Common Stock [Member] | ||
| Business Combination, Separately Recognized Transactions [Line Items] | ||
| Company Common Stock | 1,000,000 | |
| Class B Ordinary Shares [Member] | ||
| Business Combination, Separately Recognized Transactions [Line Items] | ||
| Company Common Stock | 5,666,667 |
Prepaids and Supplier Advances (Details) - Schedule of Prepaids and Supplier Advances - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Prepaids and Supplier Advances [Abstract] | ||
| Prepaid insurance | $ 674,239 | $ 915,956 |
| Retainers | 143,462 | 158,462 |
| Total | 817,701 | 1,074,418 |
| Supplier advances | $ 2,487,448 | $ 1,058,798 |
Leases (Details) - USD ($) |
3 Months Ended | |
|---|---|---|
Nov. 27, 2021 |
Mar. 31, 2024 |
|
| Leases (Details) [Line Items] | ||
| Analysis of borrowing rates | 6.25% | |
| Hectares | 5,000 | |
| Year term | 49 years | 20 years |
| Planting of hectares | $ 1,100,000 | |
| Aggregate of hectares | 2,200,000 | |
| Agreement to pay | 86,000 | |
| Payment amount will increase | 1,100,000 | |
| Additional agreement | $ 129,000 | |
| Agreed to invest | $ 30,000,000 | |
| Annual cost of hectares | $ 300 | |
| Percentage of annual net profits | 5.00% | |
| Annual minimum payment | $ 122,000 | |
| Operating Leases [Member] | ||
| Leases (Details) [Line Items] | ||
| Hectares | 2,033 | |
| Year term | 15 years | |
| Hectares percent | 80.00% | |
| Hectares of Land [Member] | ||
| Leases (Details) [Line Items] | ||
| Hectares | 1,626 | |
| Gie Dynn [Member] | ||
| Leases (Details) [Line Items] | ||
| Hectares | 1,626 | |
| Gie Dynn [Member] | Operating Leases [Member] | ||
| Leases (Details) [Line Items] | ||
| Hectares | 1,626 | |
| Project Over [Member] | Operating Leases [Member] | ||
| Leases (Details) [Line Items] | ||
| Year term | 20 years |
Leases (Details) - Schedule of Consolidated Statement of Operations - USD ($) |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
| Schedule of Consolidated Statement of Operations [Abstract] | |||
| Operating lease cost | $ 207,384 | $ 54,555 | $ 373,011 |
Leases (Details) - Schedule of Consolidated Financial Statements |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Consolidated Financial Statements [Abstract] | ||
| Weighted-average remaining lease term – operating leases | 27 years 1 month 6 days | 27 years 2 months 12 days |
| Weighted-average incremental borrowing rate – operating leases | 11.17% | 11.18% |
Leases (Details) - Schedule of Consolidated Balance Sheet - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Consolidated Balance Sheet [Abstract] | ||
| Gross lease liabilities | $ 20,646,469 | $ 20,798,943 |
| Less: Imputed interest | 13,929,573 | 14,119,732 |
| Present value of lease liabilities | 6,716,896 | 6,679,211 |
| Less: current portion of lease liabilities | 69,169 | 66,785 |
| Total long-term lease liabilities | $ 6,647,727 | $ 6,612,426 |
Leases (Details) - Schedule of Operating Leases - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Operating Leases [Abstract] | ||
| 2024, remaining | $ 673,183 | |
| 2025 | 826,533 | |
| 2026 | 827,426 | |
| 2027 | 828,338 | |
| 2028 | 829,267 | |
| Thereafter | 16,661,722 | |
| Total | $ 20,646,469 | $ 20,798,943 |
Intangible Asset (Details) - Land [Member] |
Mar. 31, 2024
ha
|
|---|---|
| Intangible Asset [Line Items] | |
| Land use right | 50 years |
| Area of land | 20,000 |
Intangible Asset (Details) - Schedule of Intangible Asset Net - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Intangible Asset Net [Abstract] | ||
| Land use right | $ 5,104,546 | $ 5,104,546 |
| Less: Accumulated amortization | (705,743) | (676,740) |
| Intangible asset, net | $ 4,398,803 | $ 4,427,806 |
Intangible Asset (Details) - Scheduled of Amortization of the Land Use Right - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Scheduled of Amortization of The Land Use Right [Abstract] | ||
| 2024, remaining | $ 87,009 | |
| 2025 | 116,012 | |
| 2026 | 116,012 | |
| 2027 | 116,012 | |
| 2028 | 116,012 | |
| Thereafter | 3,847,746 | |
| Total | $ 4,398,803 | $ 4,427,806 |
Inventory (Details) - Schedule of Recoverability of Inventories - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Recoverability of Inventories [Abstract] | ||
| Seed costs, fertilizer, other direct costs to be allocated over cycle – current | $ 223,635 | $ 228,743 |
| Inventory available for sale | 54 | 818 |
| Seed inventory | 25,702 | 26,290 |
| Fertilizer, phytosanitary materials and fuel | 5,753 | 8,159 |
| Inventory – current | 255,144 | 264,010 |
| Long term inventory | 57,186 | |
| Total inventory | $ 255,144 | $ 321,196 |
Related Party Note Payables and Transactions (Details) - Schedule of Related Party Obligations - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Related Party Obligations [Line Items] | ||
| Related party obligations | $ 1,845,475 | $ 1,845,475 |
| Global Commodities [Member] | ||
| Schedule of Related Party Obligations [Line Items] | ||
| Related party obligations | 206,287 | 206,287 |
| 10X Capital SPAC Sponsor II New Note [Member] | ||
| Schedule of Related Party Obligations [Line Items] | ||
| Related party obligations | $ 1,639,188 | $ 1,639,188 |
Related Party Note Payables and Transactions (Details) - Schedule of Related Party Payable Maturity |
Mar. 31, 2024
USD ($)
|
|---|---|
| Schedule of Related Party Payable Maturity [Abstract] | |
| 2024 | $ 1,639,188 |
| 2025 | |
| 2026 | |
| 2027 | 108,277 |
| 2028 | 98,010 |
| Total | $ 1,845,475 |
Related Party Note Payables and Transactions (Details) - Schedule of Related Party Payables Imputed Interest Rate - USD ($) |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
| Schedule of Related Party Payables Imputed Interest Rate [Abstract] | ||
| Imputed interest rate (SOFR + 2.5%) | 7.84% | 7.36% |
| Imputed interest – additional paid-in-capital | $ 36,160 | $ 3,099 |
Related Party Note Payables and Transactions (Details) - Schedule of Related Party Payables Imputed Interest Rate (Parentheticals) |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
| Schedule of Related Party Payables Imputed Interest Rate [Abstract] | ||
| Secured overnight financing rate | 2.50% | 2.50% |
Seller Note Payable (Details) - USD ($) |
1 Months Ended | 3 Months Ended | |
|---|---|---|---|
Nov. 01, 2023 |
May 31, 2023 |
Mar. 31, 2024 |
|
| Seller Note Payable [Abstract] | |||
| Percentage of agreed to Pay | 6.30% | ||
| Additional payable | $ 386,274 | ||
| Agreed to pay fees | $ 21,700 |
Seller Note Payable (Details) - Schedule of Net of Unamortized Discount and the Unamortized Amendment Fee - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Schedule of Net of Unamortized Discount and the Unamortized Amendment Fee [Abstract] | ||
| Seller note payable, including 2022 amendment fee | $ 1,997,222 | $ 2,042,528 |
| Add: interest on delayed instalment | 144,239 | 119,403 |
| Add: 2023 debt amendment fee | 377,706 | 386,274 |
| Add: 2023 fees | 21,583 | 21,692 |
| Total | $ 2,540,750 | $ 2,569,897 |
Debt (Details) - USD ($) |
1 Months Ended | 3 Months Ended | ||
|---|---|---|---|---|
Feb. 28, 2023 |
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
|
| Debt [Line Items] | ||||
| Short term notes outstanding | $ 341,277 | $ 296,277 | ||
| Promissory notes issued | $ 135,870 | $ 186,675 | ||
| Related Party [Member] | ||||
| Debt [Line Items] | ||||
| Short term notes outstanding | $ 113,925 | |||
| Convertibles Debt [Member] | ||||
| Debt [Line Items] | ||||
| Simple interest rate | 2.50% | 16.00% | ||
| Promissory Note [Member] | ||||
| Debt [Line Items] | ||||
| Promissory notes issued | $ 300,000 | |||
| Warrant [Member] | ||||
| Debt [Line Items] | ||||
| Shares issued (in Shares) | 30,000 | |||
| Price per share (in Dollars per share) | $ 11.5 |
Commitments (Details) |
May 14, 2022
USD ($)
ha
|
|---|---|
| Commitments [Line Items] | |
| Agreed to distribute percent | 10.00% |
| Agriculture allocate amount (in Dollars) | $ | $ 80,000 |
| Agreement tenure | 25 years |
| Extended for agreement | 20 years |
| Directorate General of Water and Forests (“DGEF”) [Member] | |
| Commitments [Line Items] | |
| Forest reserves for a total area (in Hectares) | ha | 624,568 |
Contingent Liabilities (Details) - USD ($) |
Mar. 31, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Contingent Liabilities [Abstract] | ||
| Contingent liability | $ 2,275,771 | $ 2,332,801 |
Employee and Non-Employee Share Based Compensation (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Nov. 30, 2023 |
Mar. 31, 2024 |
Dec. 31, 2022 |
|
| Employee and Non-Employee Share Based Compensation [Line Items] | |||
| Grant and expire term | 10 years | ||
| Incentive stock awards percentage | 100.00% | ||
| Stock awards per share (in Dollars per share) | $ 10 | ||
| Grant fair value of stock awards (in Dollars per share) | $ 8.73 | ||
| Share-based compensation cost (in Dollars) | $ 62,261,580 | ||
| Restricted Stock Units (RSUs) [Member] | |||
| Employee and Non-Employee Share Based Compensation [Line Items] | |||
| Grant and expire term | 2 years 2 months 12 days | ||
| Award outside of plan | 2,700,000 | ||
| Board of Directors [Member] | |||
| Employee and Non-Employee Share Based Compensation [Line Items] | |||
| Granted shares | 2,885,640 | ||
| Number of shares available for grant | 9,500,000 |
Employee and Non-Employee Share Based Compensation (Details) - Schedule of Share-Based Compensation Expense - USD ($) |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
|
| Schedule of Share-Based Compensation Expense [Line Items] | ||
| Share based compensation expense | $ 10,861,688 | $ 7,983,014 |
| Employee Compensation [Member] | ||
| Schedule of Share-Based Compensation Expense [Line Items] | ||
| Share based compensation expense | 10,400,467 | 7,737,678 |
| Professional Fees [Member] | ||
| Schedule of Share-Based Compensation Expense [Line Items] | ||
| Share based compensation expense | $ 461,221 | $ 245,336 |
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) |
May 16, 2024 |
Apr. 08, 2024 |
Apr. 04, 2024 |
|---|---|---|---|
| Subsequent Events [Line Items] | |||
| Secured promissory note | $ 190,000 | $ 300,000 | |
| Interest rate | 15.00% | 15.00% | |
| Warrants to acquire (in Shares) | 93,229 | 200,000 | |
| Price per share (in Dollars per share) | $ 0.4076 | $ 0.3 | |
| Payable | $ 330,000 | ||
| Company's capital | $ 5,000,000 |
:,I+]TX<4#^9X['N>=R!U('(2^T'D
M30[4NKV.4H%SH1P(BF!ZZ^.TS
MCOA6+[H!:P 0FISR#O@1J6=/6BC0P'#").2:&H04A>MBVD#, ^K7EM^ ;QF8
M:'VGN])@M0-A+S[TT_'Q[,D<'1"_.)H/A_*5O>J0,W?R)]+CLDN2FXMZ.]RX
ME+5$7<;R+:<-"=A)^UPJ<#-J7.AW1Q$AJ#C8:"RU?4F)UKL#V$8]9"\D791T
M[=$LNP9X#5-&S3FXPNBUU#&%TA,GE/!?$1