Kentucky-based controlled environmental agriculture company AppHarvest has warned in its latest financial report that it only has enough capital to continue operations into the first quarter of 2023.
According to its quarterly report filed on November 7th, the company says there is “substantial doubt” about its ability to continue as a going concern unless it can raise additional outside capital.
As of September 30, 2022, we had $36.2 million of cash on hand, and an accumulated deficit of $270.6 million. In October 2022, we entered into a $30.0 million note and loan agreement with Mastronardi Produce-USA, Inc. (“Mastronardi USA”) and received $15.0 million upon execution. In November 2022, we initiated a third restructuring plan to further reduce operating costs and our losses. Despite these actions, management believes there is substantial doubt about our ability to continue as a going concern and absent additional sources of financing, we expect that our existing cash and cash equivalents will only allow us to continue our planned operations into the first quarter of 2023
According to a story in the Kentucky Herald-Leader, the company needs $85 to $95 million in cash to fund operations for the next 12 months. That’s a lot of new capital in a market where raising new money has become increasingly difficult.
AppHarvest is looking at a few strategic options, including selling Berea farm to its primary distribution partner Mastronardi Produce Limited (the same company it borrowed funding from to launch the first 5 acres this past month). They are also talking with potential acquirers according to AppHarvest CEO Jonathan Webb.
“There are large conglomerates in auto manufacturing,” Webb told the Lexington Herald Leader. “I mean, look at GM, for example, and all the different auto brands inside of GM. So yeah, we’re actively having conversations with CEOs, with investors, with partners, with anyone who wants to partner with us here in Kentucky and to help make our mission succeed.”
The company’s current situation is a far cry from its early days when it was seen as one of the brightest lights of the CEA farming world. And while the company’s massive capital needs show a potential downside of building automated indoor farms – especially compared with more traditional farms that take significantly less capital to build an run – it’s worth pointing out other high-tech indoor farmers like AeroFarms and Bowery are continuing to thrive and find new partners.
As we wrote a couple weeks ago, the company’s new farm in Berea is impressive to watch in action and will no doubt produce a whole bunch of salad kits once the full 15 acres is operational. Let’s just hope the company can survive long enough to see it come to fruition.