S-1/A 1 fs12022a2_africanagriculture.htm REGISTRATION STATEMENT

As filed with the U.S. Securities and Exchange Commission on May 24, 2022.

Registration No. 333-264015

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

____________________________

Amendment No. 2 to
FORM S
-1
REGISTRATION STATEMENT
UNDER

THE SECURITIES ACT OF 1933

____________________________

AFRICAN AGRICULTURE, INC.

(Exact name of registrant as specified in its charter)

Delaware

 

100

 

86-3812100

(State or other jurisdiction of
incorporation or organization)

 

(Primary Standard Industrial
Classification Code Number)

 

(I.R.S. Employer
Identification Number)

____________________________
445 Park Avenue, Ninth Floor
New York, NY 10022
(212) 307-3154

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

____________________________

Alan Kessler, Chairman and Chief Executive Officer
African Agriculture, Inc.
445 Park Avenue, Ninth Floor
New York, NY 10022
(212) 307-3154

(Name, address, including zip code, and telephone number, including area code, of agent for service)

____________________________

Copies to:

Jack Levy, Esq.
Anthony M. Saur, Esq.
Morrison Cohen LLP
909 Third Avenue
New York, NY 10022

Tel: (212) 735-8600
Fax: (212) 735-8708

 

Joseph Lucosky, Esq.
Lawrence Metelitsa, Esq.

Lucosky Brookman LLP
101 Wood Avenue South
5
th Floor
Iselin, NJ 08830
Tel: (732) 395-4402

Fax: (732) 395-4401

____________________________

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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

 

Non-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 7(a)(2)(B) of the Securities Act.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED __________ , 2022

PROSPECTUS

Shares

AFRICAN AGRICULTURE, INC.

Common Stock

This is the initial public offering of shares of common stock of African Agriculture, Inc. We are offering shares of our common stock.

Prior to this offering, there has been no public market for our common stock. We expect the initial public offering price to be between $ and $ per share.

On December 27, 2021 we applied to have our common stock listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “AAGR.” No assurance can be given that our application will be approved or that an active trading market will develop. Listing of our common stock on Nasdaq is a condition to the offering.

We are an “emerging growth company” and a “smaller reporting company” under applicable federal securities laws and will be subject to reduced public company reporting requirements. See the section entitled “Prospectus Summary — Implications of Being an Emerging Growth Company and a Smaller Reporting Company” for additional information.

Investing in shares of our common stock involves a high degree of risk. See “Risk Factors” beginning on page 14 for a discussion of information that you should consider before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

Per Share

 

Total

Public offering price

 

$

   

$

 

Underwriting discounts and commissions(1)

 

$

   

$

 

Proceeds, before expenses, to us

 

$

   

$

 

____________

(1)    See the section titled “Underwriting” for additional information regarding compensation payable to the underwriters.

The underwriters may also exercise their option to purchase up to an additional            shares of our common stock from us at the public offering price, less underwriting discounts and commissions, for 45 days from the date of this prospectus solely to cover over-allotments, if any. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable will be $____ , and the total proceeds to us, before expenses, will be $_____ .

The underwriters expect to deliver the shares of common stock to the purchasers in the offering on or about            , 2022.

 

Spartan Capital Securities, LLC

   

The date of this prospectus is            , 2022

 

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TABLE OF CONTENTS

 

Page

Cautionary Note Regarding Forward-Looking Statements

 

ii

Prospectus Summary

 

1

Risk Factors

 

14

Use of Proceeds

 

28

Dividend Policy

 

29

Dilution

 

30

Capitalization

 

32

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

33

Business

 

41

Management

 

72

Executive Compensation

 

81

Principal Stockholders

 

84

Certain Relationships and Related Party Transactions

 

85

Description of Capital Stock

 

87

Shares Eligible for Future Sale

 

89

Underwriting

 

95

Legal Matters

 

104

Experts

 

104

Where You Can Find Additional Information

 

104

We are responsible for the information contained in this prospectus. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give to you. We are not, and the underwriters are not, making an offer to sell, or soliciting offers to buy, securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.

Neither we nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses that we have prepared. Neither we nor the underwriters take any responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus.

For investors outside the United States: We and the underwriters have not done anything that would permit a public offering of the shares of our common stock or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside of the United States.

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MARKET, INDUSTRY AND OTHER DATA

This prospectus contains estimates, projections and other information concerning market, industry and other data. We obtained this data from our own internal estimates and research and from academic and industry research, publications, surveys, and studies conducted by third parties, including governmental agencies. In some cases, we do not expressly refer to the sources from which these data are derived. These data involve a number of assumptions and limitations, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed in the section of this prospectus titled “Risk Factors” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. The forward-looking statements contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following risks, uncertainties and other factors:

•        our strategy, outlook and growth prospects;

•        our operational and financial targets and dividend policy;

•        general economic trends and trends in the industry and markets;

•        our public securities’ potential liquidity and trading;

•        the lack of a market for our securities;

•        our financial performance following this offering; and

•        the other risks and uncertainties discussed in “Risk Factors” and elsewhere in this prospectus.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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pROSPECTUS Summary

This summary only highlights the more detailed information appearing elsewhere in this prospectus. You should read this entire prospectus carefully, including the information under the section of this prospectus entitled “Risk Factors” and our financial statements and the related notes included elsewhere in this prospectus, before investing. Some of the statements in this summary constitute forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements”.

Company Overview

African Agriculture, Inc. (“AA”, the “Company” or “we”), was incorporated in the State of Delaware on May 7, 2021. AA’s wholly owned subsidiary, Agro-Industries Corp was incorporated in the Cayman Islands as an exempted company with limited liability, on January 15, 2018. Our wholly owned, Dakar-based subsidiary, Les Fermes de la Teranga SA (“LFT”) was organized in Senegal on March 30, 2017. Alfalfa is the world’s largest vegetation-based protein source and the primary focus of our current operations. Below is a chart illustrating the Company’s organization:

We believe as a company we have an ability to become a participant in the sale of alfalfa and carbon credits, and in the field of biofuels. We aspire to produce fish via aquaculture, and ultimately, dairy and meat production, while simultaneously deriving valuable by-products. Our competitive advantages in each operating vertical includes our sun access, land abundance, water costs, potential for scale efficiency and favorable logistics, all of which are vital to successful agricultural execution.

We currently operate solely in Senegal in agriculture and have created an extensive foothold in Niger which we intend to commercialize in the next phase of our growth. Both countries lie within the drought-prone Sahel region, with generally irregular rainfall. With only about 5% of the land irrigated, Senegal continues to rely on rain-fed agriculture, which occupies about 75% of its workforce. The agricultural sector is inhibited due to low output and limited investments. Our area of operation in Northern Senegal is surrounded by Lac De Guiers, a 43,000-acre lake, a river with a 2 million cubic meter a day flow rate and the Atlantic Ocean in the Saint Louis area. Local production of food crops barely covers 30% of Senegal’s consumption needs. Senegal’s livestock population includes approximately 3.1 million cattle and 8.7 million sheep and goats. Despite a significant livestock population, Senegal remains a net importer of meat, especially live sheep during major holidays and religious events. While export markets are immediately available, we believe local market consumption is poised to accelerate in Senegal and the region due to necessity to feed cattle and is positioned to be an additional source of growth for our company.

Beyond Senegal, our expansion plans include a multiplication of our agricultural farmland in Niger. We have entered into binding definitive agreements with the mayor and local governments of Ingall and Aderbissinatt under a 49-year lease term for the development of agricultural and carbon credit projects. The project will involve the planting of a minimum of one million (1,000,000) hectares of trees in each area, for an aggregate of 2 million hectares, to optimize the production of carbon credits in an area to be mutually agreed upon by the parties with access to an underground aquifer for irrigation purposes, for the sale of carbon footprints as well as water and usage rights. Under

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the terms of the agreement, each municipality will also allocate an additional one hundred thousand (100,000) hectares of land for commercial production for local and industrial consumption of alfalfa (or other biomass products) on a large scale following hydrological and soil studies.

Similar to Senegal, agriculture is the primary economic activity of a majority of Niger’s 23 million citizens. Niger’s birth rate is ranked the fastest growth of any country on earth, according to the World Health Organization. The agricultural economy is based largely upon internal markets, subsistence agriculture, and the export of raw commodities: food stuffs and cattle to neighbors. Both Niger and Senegal provide highly appreciative local communities for job creation, nutrition provision, tax revenue, academic and research training, while simultaneously providing optimal sunlight and fertile conditions for agricultural production.

Our primary businesses, intended and operational, include commercial farming, fishery logistics and management, and carbon offset production. We began operations to produce alfalfa for cattle feed and nutrition in 2021. In anticipation of such production, we established irrigation and land preparation at the LFT Farm in 2018, acquiring equipment and hiring and training personnel and farming technicians. In July 2021, we completed a pilot study by utilizing 400 hectares of the LFT Farm to produce rice and sweet potato, with results that exceeded global averages, giving testimony to our soil fertility. The pilot study production was provided to the local community. Our production methodology was prepared in consultation with (i) ICS, a leading agronomist specialist in crops, soil, water, agricultural machinery; (ii) FGM International, a leader in agricultural project implementation, particularly in Africa; (iii) AGQ, experts in monitoring plant-soil-water systems, agricultural chemistry and specialized chemical engineering; and (iv) the AgCenter at Louisiana State University (“LSU”), with which we have entered into an agreement to provide technology transfer and education. Our 340 hectare pilot in Alfalfa began thereafter and thus far has achieved similar results. While we are optimistic about the productivity of our conditions, there is no guarantee that such production estimates will be sustained in larger commercial practice.

In March 2012, “Senhuile,” the predecessor company to LFT, obtained a 50-year land use right by way of a Republic of Senegal Presidential Decree (the “Senegal Presidential Decree”) for 20,000 hectares, or 51,000 acres, of land located at Les Fermes de la Teranga in Northern Senegal (the “LFT Farm”). Our wholly owned subsidiary, Agro Industries, purchased the majority of the outstanding equity of LFT on February 28, 2018, following which time, through its ownership of LFT, the land use right was controlled by Agro Industries. In June 2018, and later amended in February 2021, we entered into a 15-year lease with the municipality of Fass Ngom for 5,000 hectares, increasing the total acreage of the LFT Farm to 25,000 hectares. As of December 31, 2021, more than $70 million has been invested by previous owners of the LFT Farm, including our majority shareholder, Global Commodities and Investments Limited, which is controlled by Mr. Frank Timis. Investors should not rely on Mr. Timis’s investment decision as he may have different risk tolerances than other investors, and the investment terms and pricing offered to Mr. Timis may significantly differ from the terms and price contemplated by this offering.

Our management team will deploy recent scientific and technical practices available to us throughout the growth and processing cycle at the LFT Farm to maximize alfalfa output.

We intend to sell our alfalfa production to local African cattle owners, including livestock associations in Senegal and Mauritania and the region of the Economic Community of West African States (ECOWAS) as well as to Saudi Arabia, the United Arab Emirates (UAE) and Europe. Mature markets for alfalfa already exist with established large-scale, long-term oriented cohesive customers, and we anticipate similar markets locally, but our initial priority is to establish revenue via long-term contracts in established markets. We expect the market for protein both for local consumption and export to grow substantially in conjunction with global population growth, and the increased importance of global food security and other protein related priorities. The advantage of alfalfa, expected to produce 10 cuts per year based on previous non-dormancy variety experience, is a highly profitable and fast production crop, optimally produced in the environment where we will operate. These non-dormancy experiences are based on yield patterns from trials performed by the University of California at El Centro, California. This location is 10 miles north of the Mexican border on heavy clay-loam soils in an area with about 3 inches of rain per year, but nevertheless, irrigated. Production and growth occurs most of the year in this environment, resulting in 9 to 12 cuts per year. ICS experienced 10 to 12 cuts per year in Sudan in similar heat, soil and irrigation conditions. While such trials 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. Our commercial strategy for a potential, future aquaculture program is in the water channel network of our farm and the 43,000-acre lake that lies adjacent to the LFT Farm. Our strategy will be to manage the wholesale purchase of fish from local fisherman, initially in Senegal and secondarily in East Africa, and

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in conjunction with processing, refrigeration, financing and logistics locally, ultimately adding sales and distribution to wholesalers in consumption markets in Europe and the Middle East. We expect the market for responsibly sourced fish for export to grow substantially in conjunction with global population growth. We are also conducting a feasibility study for in-channel and in-land breeding of fish.

We intend to create a reforestation program with carbon offset production. We also anticipate that carbon offset production will generate verifiable carbon units (“VCUs”) via a reforestation program in areas adjacent to the LFT Farm, specifically from high carbon absorption tree varieties. The VCUs represent a permit that allows the holder to emit a certain amount of carbon dioxide or other greenhouse gases. They are audited and valued according to standards of the Verified Carbon Standard (VCS), the Climate, Community & Biodiversity Standards (CCBS), and the American Carbon Registry (ACR), and can be sold on the global carbon emissions market. We have entered into definitive agreements granting us access to a large amount of land to create programs to generate commercial carbon offsets in the Sahel region, on the periphery of the Sahara Desert.

Rules for a new global carbon market were put into place by the United Nations climate summit in Glasgow in October paving the way for a dramatic increase in the trading of emissions credits. The Glasgow Climate Pact reached at the COP26 conference in November 2021 includes terms of the implementation of Article 6 of the Paris Agreement that provide a platform for scaling up of trading of emissions credits that each represent a ton of carbon that has been reduced or removed from the atmosphere. That is expected to channel an inflow of funds into projects that generate credits, such as tree planting projects and mechanical carbon capture systems, which are bought by those looking to compensate for their emissions. The new framework will be comprised of two parts: a centralized system open to the public and private sectors, and a separate bilateral system that will allow countries to trade credits that they can use to help meet their decarbonization targets. Recent global awareness of climate change and sustainability is expected to greatly impact our business. South Africa’s Environment Minister Barbara Creecy requested that the COP26 conference in Glasgow set an annual target of $750 billion to help poor countries transition to clean energy and protect themselves against climate change.

Given our access to large, consolidated customers with a variety of nutritional needs, substantial by-products, unique logistics and technology applications, and large, scalable land and water assets, we anticipate numerous additional business lines and potential revenue opportunities may emerge over time. This may include biofuels, the management of cattle, more expansive fish breeding, ammonia and fertilizer production.

Our potential aquaculture, biofuels and carbon credits businesses are aspirational in nature, and we intend to use proceeds from this offering to conduct feasibility studies to assess the practicality of each such strategy.

We are a development stage company with no revenue to date and we have incurred net losses of $4,293,335 and $2,779,804 for the years ended December 31, 2021 and 2020, respectively. We had an accumulated deficit of $18,541,381 and $12,569,647 million at December 31, 2021 and 2020. respectively. The Company’s continuation as a going concern is dependent upon its ability to generate sales, and/or raise additional funds through the capital markets as well as borrowings. Management has concluded that its existing capital resources and availability, proceeds from this offering, external borrowings and cashflow from future operations will be sufficient to fund operations through the development of the majority of the available planting acreage at LFT. It is anticipated that at such point the Company will have sufficient resources to fund the ongoing operations of the Company.

We have a limited operating history and have not yet commenced commercial operations, which may make it difficult for investors to evaluate our current business and likelihood of success and viability. An evaluation of our business and prospects can only be made through our pilot studies and the operations of our wholly owned subsidiaries.

Our Competitive Advantages

We believe that we have numerous competitive advantages in the management of our Senegalese operations that should be applicable to our enduring growth strategy in the balance of the continent. We believe that our competitive advantages include:

Scalable Business Strategy

According to current World Bank data, approximately 60% of the world’s arable land is in Africa, with approximately 30,500 km (18,950 miles) of coastline, creating a scalable business strategy. Africa is composed of 54 sovereign countries, and three autonomous territories, with the youngest and fastest growing population of any

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continent. The Sahara desert covers 3.6 million square miles (9.4 million square kilometers), nearly a third of the African continent, which is approximately the size of the United States (including Alaska and Hawaii). We believe that after a successful commercialization strategy in Senegal we will be in a position to replicate our model in numerous territories and provide the growth platform to become a successful and enduring business.

Contiguity of Land

The LFT Farm is located on 25,000 hectares, or approximately 62,000 acres of land. Due to economies of scale efficiencies, larger farming properties are believed to hold incremental value to smaller properties, given the ability to improve yields, maximize revenue, and minimize costs. As a reference point, the average farm size in the United States is approximately 200 hectares, or 435 acres. By virtue of the large-scale nature of our operations, we believe our cost structure to be cost advantageous as opposed to smaller scale operators. This will be evidenced in our bulk purchasing and scale efficiencies in numerous categories including water irrigation and channels, farming equipment, labor resources, power access and corporate overhead.

Water Operations

The LFT Farm has abundant water for irrigation. It has a unique and privileged location between the Atlantic Ocean, the Lac de Guiers and the Senegal River. The Lac de Guiers, adjacent to LFT, is approximately 43,000 acres and is directly connected to the Senegal River through a channel. The price per cubic meter of water is approximately 5%, of the cost of water on an acre-foot basis compared to Europe or the United States. The LFT Farm has over 110 km of water channels that have been developed and integrate with pivot systems. Because of the heightened drought and water shortfall in the western United States, which accounted for 53% of the world’s exports of alfalfa in 2019, the cost and supply dynamics globally are expected to be sustainably disrupted, increasing the competitive profile of the LFT operations. In Niger, access to the underground water aquifer is an unique aspect of our operations, given the historically arid environment in that country.

Natural Resources

Africa holds superior sun exposure, soil fertility, air quality, lower density of population, and the potential for higher cuts per crop versus other continents, yet due to inaccessibility to fertilizer and tractor technology and deprivation of modern farming techniques, reports one-seventh of the farming productivity yields of North America and Europe. Our LFT Farm engaged AGQ Labs, a leading agronomy company, specializing in agricultural chemistry, to perform an extensive and comprehensive soil and water analysis. AGQ Labs combines its focus in agricultural chemistry and specialized chemical engineering to monitoring plant-soil-water systems.

Operations and Experience

Our principal shareholder, management and Board of Directors collectively have over 400 years of experience on the African continent, in all spheres of agronomy, financing, management, auditing and systems management, farming management, farming operations, agriculture, aquaculture, commercial operations, export and diplomacy, making the team well suited to execute on our corporate strategy. We believe that in-country experience, local knowledge and operation reputation has a dramatic impact relative to hiring and retention of employees and government relations.

Logistics

Expanded port access within reach of the farm greatly expands our ability to export product, and converges the pricing of our alfalfa products to global pricing, especially in the area of the member states of the Cooperation Council for the Arab States of the Gulf (Cooperation Council for the Arab States of the Gulf (“GCC”)) where the price of alfalfa is at a considerable premium. The LFT Farm is located less than 85 km from the city of Saint Louis in Senegal, which is situated on the Atlantic coast of the country and includes port facilities, and approximately 300 km from the Port of Dakar and the new Blaise Diagne International Airport serving the country’s capital, Dakar. The new port in Saint Louis is anticipated to be completed in 2023, and is located approximately 60km from our farming operations. On December 2, 2020, local and state officials of Senegal held the inauguration ceremony for the Port of Saint Louis dredging and beacon project, work being conducted by China Harbour Engineering Company. Nouakchott, the capital

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of Mauritania and a regional transportation hub, is only 230 kilometers from the LFT Farm and is accessible through well-maintained road infrastructure. Dakar Port is managed by Dubai Ports World. The Blaise Diagne International Airport, completed in 2017, is operated by an international consortium formed to operate the airport for a 25-year period. We have a business relationship in place with Maersk, the world’s largest shipping container company. This will cover both the current port of Dakar, the newly constructed port of Dakar at Port du Futur, and Saint Louis which is in the late stages of construction.

Access to Power and Electricity

We anticipate building a 20MW solar power plant on the facility of the farm for commissioning in 2022, with expansion potential for up to an additional 40MW, with expansion potential pending our power necessity and corporate growth. Access to our own independent consistent power source, given the dearth of consistent, inexpensive power generation in West Africa, is seen as a differentiating feature of our energy intensive corporate strategy.

Cost of Financing

The central bank policy rates in most countries in Africa are in excess of 10 percent per annum and, in some extreme circumstances, around 30 percent. This makes access to financing for basic farming equipment such as tractors and farmers, and yield enhancing supplies such as fertilizer difficult to the average farmer. When coupled with long lead times to rotate crops, high financing costs negatively impact a farmer’s ability to optimize crops relative to sale price or end user demand. Additionally, short-term credit and borrowing facilities are relatively scarce compared with the abundance of financing sources available in the United States. This offers us a distinct competitive advantage in our ability to access liquidity in both equity and debt capital markets.

Material Contracts

We have collaborations and contracts in place with various suppliers, customers, academic, third-party management and government institutions. These relationships vary from exclusive to semi-exclusive to preferred based on the contract, and create the efficiency of our business operations, access to training, and access to capital resources. One of the most important of these is FGM International, a leader in agricultural project implementation. Additionally, we have engaged Dr. Daniel Putnam, a global expert on forage quality and water use efficiency under irrigation and on mitigation strategies for sub-optimal conditions who has significant expertise in alfalfa production, and comparative global alfalfa yields to consult to the Company and bring worldwide best practices to Senegal.

Relationship with the United States and Academic Institutions

We are a partner of the USAID Finance and Investment Network. USAID is an independent agency of the United States federal government that is primarily responsible for administering civilian foreign aid and development assistance. This will enable us to apply for US grants, as well as access US government resources on a selective basis. We signed a non-binding collaborative agreement with the Louisiana State University AgCenter, which contemplates the training, development and transfer of educational skills to local communities and to enhance knowledge in the fields of cattle nutrition, carbon absorption and offsets, and management of fish resources and sustainability in Senegal. Our expectation is that the terms of the collaborative agreement will be finalized by July 1, 2022.

Senegal as a Host Country for our Business Operations

Senegal is one of the most stable countries in Africa, with three peaceful political transitions since independence in 1960. The country has credit ratings of B+ with a stable outlook form S&P Global Ratings and a Ba3 with a negative outlook from Moody’s Investors Service. Senegal is a strong regional performer on measures of perceptions of corruption as a result of its long-term development processes, including traditions of respect for the rule of law and competitive democratic government. Senegal’s positive ranking relative to neighboring countries in West Africa on international corruption indices owes much to its history of respect for the rule of law, democratic government, and openness to civil society and a free press. Senegal’s score is 45 and its rank is 67 on Transparency International’s Corruption Perceptions Index for 2020. Senegal’s stable political environment, favorable geographic position, strong

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and sustained growth, and generally open economy offer attractive opportunities for foreign investment. Additionally, the Government of Senegal welcomes foreign investment. According to data from the United Nations Conference on Trade and Development (UNCTAD), Senegal’s stock of foreign direct investment increased from $3.4 billion in 2015 to $6.4 billion in 2019.

On June 7, 2021, the International Monetary Fund approved a US$650 million Stand-By Arrangement for Senegal. Fitch Ratings Inc. forecasts Senegal’s growth domestic product (“GDP”) increasing by 5.2% in 2021, which surpasses estimates for the broader Sub-Saharan African region. The President of Senegal, Macky Sall, estimates growth to reach 7.2% in 2022 and 13.7% in 2023, the first time that the country will achieve double digit growth, as natural gas commercialization targets are met. President Sall said that this double-digit GDP growth expected in 2023 will be the result of the first year of exploitation of oil and gas resources. On May 12, 2020, the International Development Association, part of the World Bank Group that supports lower-income countries, approved a US$150 million credit to support Senegal in strengthening agricultural productivity and building resilient, climate-smart and competitive food systems. On December 10, 2018, the U.S. Government’s Millennium Challenge Corporation (“MCC”) and the government of Senegal signed the new five-year $550 million MCC Senegal Power Compact to address the constraints on economic growth of the high cost of electricity to grid connected firms and low access to electricity in peri-urban and rural areas. Senegal committed an additional $50 million alongside the MCC Power Compact. On April 23, 2021, during the government meeting, President Sall reinforced his support for agriculture with the objective of developing the country’s food security and to produce and consume locally. President Sall decided to renew the financial subsidies support of 60 billion CFA francs ($110.8 million) for the 2021/2022 agricultural campaign. Senegal also holds a bilateral trade agreement with the United States, that has been in place since 1990.

We are committed to positive environmental, social and governance impact in our conduct and business, and believe that maintaining operations in Senegal advances that goal. Doing Business 2020 Senegal of the World Bank Group measured the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholders rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The Doing Business project’s 2020 Protecting Minority Investors Score for Senegal is 44.0, which is above the 38.5 regional average for Sub-Saharan Africa.

Plan Senegal Emergent, the President’s Foreign Direct Investment Plan, introduced $1 billion in Senegal in 2019, the most relevant year prior to the current global pandemic. Various spheres of improvement targeted by that investment include the following:

Infrastructure

Senegal spends upwards of $911 million a year on infrastructural improvements, including structural transformation of economic framework and promotion of human capital, governance, and rule of law. The country also implemented Special Economic Zones taking the form of agricultural hubs, industrial hubs, and a mining hub. As part of the Plan Senegal Emergent, there have been numerous innovations and improvements to all aspects of the countries, logistics, infrastructure, and financial institutions.

Roads

Senegal maintains a dense and well-maintained road network ensuring the smooth movement of people and goods. The country implemented an aggressive expansion plan with the construction of 1,520 km of roads and rehabilitation of 4,015 km of roads between 2013 and 2017. It also intends to implement a new 520km network of roads by 2025. Road investment has been further solidified by partners such as IFC, the Western African Development Bank, the African Development Bank and CBAO, one of the main commercial banks in Senegal.

Railways

Senegal built and maintains the Dakar-Bamako (Mali) railway with 1,286 km of track to improve connectivity between Dakar and Bamako. The Dakar-AIBD Regional Express Train, a 2-billion-euro project, is a standard gauge electric railway line that opened in 2019 connecting the city center to the new Blaise-Diagne International Airport (AIBD).

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Airport

The Blaise Diagne International Airport, located 50 km from Dakar, offers the very best in world-class airport standards. The airport has a capacity of three million passengers per year, making it a regional and international mobility hub.

Ports

The ports of Dakar and Saint Louis are located at the crossroads of three key trade routes, North America to Africa, Europe to Africa and Europe to South America.

Communication

Senegal maintains an efficient and fully digitized telecommunications network which has more than 2,200 km of fiber optic cable. The network is connected to Europe, America, Asia, and the Middle East via permanent cable connections. Senegal’s network hosts approximately 15.7 million mobile phone subscribers with a coverage rate of 90%.

Energy

Senegal produced 1,000 megawatts of energy as of 2017, and according to USAID, the country has an installed capacity of 1,555 MW currently. Pending the commercialization of its Liquefied Natural Gas Exports (LNG) commercialization promises economic transformation. Senegal has a power access rate of 64% and targets Universal Population Access by 2025. Recent oil discoveries by foreign multinationals promise independent and enhanced refining capacity.

Expansion into Niger

We intend to expand throughout the ECOWAS region and Africa, commensurate with the sustainability of our corporate margins and the ability of local agricultural conditions to facilitate our growth in a sustainable and economically meaningful fashion. This pertains to all aspects of our business including agriculture, aquaculture and environmental offsets. On November 27, 2021 and December 5, 2021, we and Agro Industries signed binding definitive agreements with the mayor and local governments of Aderbissinat and Ingall, respectively, each under a 49-year lease term for the development of agricultural and carbon credit projects. Under the agreements, we agreed to form a company under the law of Niger in charge of the project, which will exploit the land under the decree to be issued. The project will involve the planting of a minimum of one million (1,000,000) hectares of trees in both Aderbissinat and Ingall, for an aggregate of 2 million hectares, to optimize the production of carbon credits in areas to be mutually agreed upon by the Parties with access to an underground aquifer for irrigation purposes, for the sale of carbon footprints as well as water and usage rights. Each municipality will also allocate an additional one hundred thousand (100,000) hectares of land in favorable areas for commercial production for local and industrial consumption of alfalfa (or other biomass products) on a large scale following hydrogeological and soil studies.

Pursuant to the Aderbissinat and Ingall agreements, we agreed to:

•        Develop each area in compliance with the Land Use and Assignment Plan of each municipality;

•        Assist the local population in the development of land for market gardening, farming and fodder cultivation;

•        Develop existing grazing areas and livestock watering points with easy access to animals

•        Facilitate access to new technologies for the populations to improve their standard of living\

•        Prioritize the recruitment of local workers

•        Develop in the first two years the access roads for the projects

•        Commit resources to the development of the local university sector; and

•        Grant 75 million FCFA francs under each agreement from the first year of carbon credit sales as budgetary support to the Agadez Region for the implementation of social projects and education and training for women.

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In addition, under each such agreement, we agreed to pay the municipalities of each of Ingall and Aderbissinat 50 million FCFA per year as a contribution to the municipalities foundation for the training programme during the construction of the greenhouses and plantation, which payment will continue until the first year of the sale of carbon credits. Lastly, pursuant to the agreements, we agreed to pay the municipalities of each of Ingall and Aderbissinat an annual sum of 650 million FCFA francs, which shall be paid from the first year of the sale of carbon credits, in order to continue to participate in the operation of each municipality. An additional project in Niger, located in the Kandaji dam region along the Niger river, has a feasibility study in place conducted by the World Bank, and has fertility characteristics very similar to the soil, sun and water access of the LFT Farm.

United States Interests in Africa

Economic development initiatives in Africa are beneficial to the United States for numerous reasons, according to the George Bush institute. They include, amongst others:

•        The United States’ interests are served when it gains access to consumers of goods and services in hypergrowth economies. For example, the African Growth and Opportunity Act (AGOA), which Congress passed in 2000, targeted Sub-Saharan Africa. The program fosters market-based economic growth and develops trade relationships by providing eligible nations duty-free access to the United States for certain products. AGOA ensures African entrepreneurs can take advantage of access to the U.S. market at no cost to U.S. taxpayers.

•        Sub-Saharan Africa experienced strong economic growth, with average GDP growth two points higher than the world average from 2001-2013. The first phase of agricultural development at our LFT Farm contemplates the use of U.S. irrigation, channeling, research, feasibility studies, tractors, machinery and agronomy material, all derived from U.S. sources.

•        The opportunity in Africa is substantial. With 200 million people between the ages of 15 and 24, a figure anticipated to double by 2045, Africa has the youngest population of any continent in the world, with the continent standing at the early stages of a substantial demographic expansion.

•        There are more women entrepreneurs across the continent of Africa than anywhere else in the world. For example, in Ghana, Nigeria, and Zambia, women business owners outnumber their male counterparts. When women have equal access to the economy, their children are typically healthier and more educated, their communities more prosperous, and their countries more stable. Global economic integration in Africa, especially for women, creates a ripple effect, breaking poverty cycles and ensuring stability at local, national, and global levels.

•        In November 2021, the Secretary of State of the United States of America, Antony Blinken, visited Senegal on an African trip, highlighting specific African countries as democracies, engines of economic growth, climate leaders, drivers of innovation, one of which is Senegal. His trip highlighted infrastructure investment by U.S. companies, the Pasteur Institute, which is working toward vaccine production with U.S. assistance, climate change initiatives, and the potential for renewable energy on the continent, and U.S. partnership. Total investments worth $1 billion in critical infrastructure, with the support from the U.S. International Development Finance Corporation, which is part of the U.S. Government include into Bechtel which is designing a toll road to help connect Dakar to Saint-Louis.

Alfalfa Market Development in the United States

We expect alfalfa grown in Senegal and West Africa to have a major competitive advantage versus that of United States origin. For decades, a significant portion of alfalfa grown in the western United States, as much as 17 percent in 2017, has been loaded onto trucks, driven substantial distances to ports on the west coast of the United States, and shipped to export destinations that include China, Japan, the United Arab Emirates and Saudi Arabia. The nautical distance from Dakar to the Persian Gulf is approximately half the distance from the western United States to the Persian Gulf (7,346 nautical miles vs 14,602 nm). While port congestion and supply chain disruptions are temporary based on pandemic related aberrations, water access, transportation distance and logistics are anticipated to be a major differentiator of our business operations. Additionally, bioenergy, derived from plants that use sunlight and carbon dioxide (CO2) to assimilate carbon into biomass, emerged as a potentially sustainable energy source with low climate impact. We expect alfalfa to play a major role in the emergence of biomass as an energy source in the future.

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Management Team

Our leadership team includes experienced executives from the finance, commodities and agriculture industry who have supervised numerous projects and developments in Africa and other emerging markets. Alan Kessler, our Chairman and Chief Executive Officer, brings more than 20 years of multi-industry experience and has been essential in the development of our LFT site and creation of our overall business strategy. Harry Green, our Chief Financial Officer, brings decades of multi-industry experience, including with private equity and hedge fund platforms and served as the senior member of Houlihan Lokey’s Illiquid Financial Assets practice, where he focused on providing strategic advice for fund mergers and acquisitions, non-core asset disposition and strategic fund raising. Javier Orellana, our Chief Operating Officer, Senegal Operations, brings operational experience in the agricultural, health care and food industries. Kiran Shylaja, our Chief Technical Officer, brings over 15 years of experience in the field of plant tissue culture, specializing in horticulture and floriculture crops. Edward Meiring, our Head of Farming, brings over 30 years of experience in the farming sector and as an agricultural specialist. Elad Harzahav, our Head of Logistics, and Technology Integration, brings more than 20 years of military experience and expertise, serving at the highest levels of Israel’s security and intelligence and responsible for safeguarding both internal and external state security.

Corporate Information

Our executive offices are located at 445 Park Avenue, Ninth Floor, New York, NY 10022, and our telephone number is (212) 307-3154. We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.

In addition, an emerging growth company may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company may delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the aggregate worldwide market value of our common stock that is held by non-affiliates equals or exceeds $700 million as of the most recent fiscal year end, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates equals or exceeds $250 million as of the most recent fiscal year end, and (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year or the market value of our common stock held by non-affiliates equals or exceeds $700 million.

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The Offering

Shares of Common stock offered by us

 

            shares.

Shares of Common stock to be outstanding after this offer

 


          shares (or           shares if the underwriters exercise their option to purchase additional shares in full).

Use of proceeds

 

We estimate that the net proceeds from this offering will be approximately $           million, or $           million if the underwriters exercise in full their option to purchase additional shares of common stock, assuming the initial public offering price of $ per share and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

We currently intend to use the net proceeds from this offering to fund our program of incremental planting expansion of 10,000 hectares at the LFT Farm, which we expect to occur in 2022 with approximately 50 hectares seeded on a daily basis. Specific uses of the net proceeds include:

•   Preparation of the pivots, irrigation, all farming operations, machinery and infrastructure necessary to complete such expansion, which based on average yield expectations would produce approximately 250,000 tons per year;

•   Costs related to labor, hiring, personnel, seeds, soil preparation, phytosanitary and products required to implement the expansion; and

•   Feasibility studies for new businesses including aquaculture, carbon credit programs and biofuel.

Additional uses of proceeds may include the following:

•   To increase our capitalization and financial flexibility;

•   Creation of a public market for shares of our common stock;

•   To enable access to the public equity markets for us and our stockholders; and

•   The acquisition or investment in ancillary businesses, products, services, or technologies

We may also use the net proceeds we receive from this offering for general corporate purposes, including working capital, operating expenses, and capital expenditures.

For a more complete description of our intended use of the proceeds from this offering, see “Use of Proceeds”.

Dividend policy

 

We have no present intention to pay cash dividends on our common stock. Any determination to pay dividends to holders of shares of our common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, results of operations, projections, liquidity, earnings, legal requirements, restrictions in our existing and any future debt agreements and other factors that our board of directors deems relevant.

Ownership after this offering

 

Our directors and executive officers will beneficially own approximately % of our outstanding shares of common stock after the completion of this offering.

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Risk Factors

 

Investing in our common stock involves a high degree of risk. See the section of this prospectus titled “Risk Factors” beginning on page 14 and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock.

Intended Nasdaq Listing and Proposed symbol

 


We applied to have our common stock listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “AAGR.” No assurance can be given that our application will be approved or that an active trading market will develop. Listing of our common stock on Nasdaq is a condition to the offering.

The number of shares of our common stock to be outstanding after this offering is based on shares of our common stock outstanding as of            , 2022, and excludes shares of common stock reserved for future grants pursuant to the exercise of options or other equity awards under our incentive compensation plans.

Unless otherwise indicated, this prospectus assumes (i) no exercise by the underwriters of their option to purchase up to an additional shares of our common stock from us to cover over-allotments and (ii) the conversion of our outstanding convertible notes into an aggregate of            shares of common stock immediately prior to the closing of this offering, assuming an assumed initial public offering price of $           per share, which is the midpoint of the estimated offering price range set forth on the cover of this prospectus.

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Summary Consolidated Financial Data

The following tables set forth a summary of our financial data at the dates and for the periods indicated. The summary consolidated statements of operations data for the years ended December 31, 2021 and 2020 have been derived from our audited consolidated financial statements for such years included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected for any other period in the future.

You should read the consolidated financial data set forth below in conjunction with our consolidated financial statements and the accompanying notes, and the information in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this prospectus. The summary consolidated financial data included in this section are not intended to replace the financial statements and are qualified in their entirety by the consolidated financial statements and related notes included elsewhere in this prospectus.

 

Years Ended
December 31,

   

2021

 

2020

Income Statement Data:

 

 

 

 

 

 

 

 

General and administrative

 

$

3,864,176

 

 

$

1,612,933

 

Other income

 

 

(124,868

)

 

 

(169,111

)

Interest expense – related party

 

 

702,520

 

 

 

641,438

 

Interest expense – other

 

 

183,360

 

 

 

183,360

 

Foreign currency exchange loss/(gain)

 

 

(331,853

)

 

 

511,184

 

   

 

 

 

 

 

 

 

Total other expense

 

 

429,159

 

 

 

1,166,871

 

Loss before income taxes

 

 

4,293,335

 

 

 

2,779,804

 

Income tax expense

 

 

 

 

 

 

Net loss

 

 

4,293,335

 

 

 

2,779,804

 

   

 

 

 

 

 

 

 

Other Financial Data as of December 31, 2020 and 2021, respectively:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

19,093

 

 

 

88,487

 

Capital expenditures

 

 

954,503

 

 

 

 

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RISK FACTOR SUMMARY

Participating in this offering involves substantial risk. Our ability to execute our strategy also is subject to certain risks. The risks described under the heading “Risk Factors” beginning on page 14 may cause us not to realize the full benefits of our competitive strengths or may cause us to be unable to successfully execute all or part of our strategy. Some of the more significant challenges and risks we face include, but are not limited to, the following:

•        We have a limited operating history on which to judge our business prospects and management, and we cannot assure you that we will achieve or sustain profitability;

•        Our business is affected by fluctuations in agricultural commodity prices, transportation costs, energy prices, interest rates, and foreign currency exchange rates, and our risk management strategies may not be successful in minimizing our exposure to these fluctuations;

•        Our earnings may be negatively impacted by declining demand for our product based on a variety of factors, including end-demand for crops, supply and quality issues, or any other reason;

•        Our use of the 20,000 hectares located at the LFT Farm is subject to a 50-year land use right provided pursuant to a Republic of Senegal Presidential Decree, which subjects us to risks including early termination or modification of such decree, which may result in a loss of anticipated future revenue, which could have an adverse effect on our ability to operate our business, our financial results and customer demand for our products and services.

•        We rely upon irrigation systems and public water sources, and in the event that the government or another regulatory body limits the Company’s ability to divert stream waters to its irrigation systems, the result could have a negative impact on the Company’s ability to continue with its agricultural operations and development plans;

•        The presence of the novel coronavirus disease, COVID-19, or any other pandemics or disease, may have an adverse impact our business, including depressing demand for our products and preventing our employees, agents and consumers from travelling and conducting business activities;

•        Due to the international nature of our proposed business, we are exposed to various risks of international operations, including adverse trade policies, changes in laws, inflation, exchange controls, sovereign risk, changes in a region’s economic or political condition, and civil or political instability;

•        Adverse weather conditions, including as a result of climate change, may adversely affect the availability, quality and price of agricultural commodities and agricultural commodity products; and

•        Fluctuations in agricultural commodity and other raw material and energy prices may cause volatility in our operating results.

•        You may have difficulty effecting service of legal process, enforcing judgments or bringing actions against us and our management.

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Risk Factors

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our financial statements and the related notes and the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

Risks Related to Our Business Model

We have a limited operating history on which to judge our business prospects and management.

We were incorporated in May 2021 and have not yet commenced commercial operations. An evaluation of our business and prospects can only be made through our pilot studies and the operations of our wholly owned subsidiaries. Operating results for future periods are subject to numerous uncertainties and we cannot assure you that we will achieve or sustain profitability. Our prospects must be considered in light of the risks encountered by companies in the early stage of development, particularly companies in new and rapidly evolving markets. Future operating results will depend upon many factors, including our success in attracting and retaining motivated and qualified personnel, our ability to establish short term credit lines or obtain financing from other sources, our ability to develop and market new products or control costs, and general economic conditions. We cannot assure you that we will successfully address any of these contingencies.

We will need, but may be unable to obtain, funding following this offering on satisfactory terms, which could dilute our stockholders and investors, or impose burdensome financial restrictions on our business.

We have relied upon cash from financing activities and in the future, we hope to rely on revenues generated from operations to fund all of the cash requirements of our activities. Future financings may not be available on a timely basis, in sufficient amounts or on terms acceptable to us, if at all. Any debt financing or other financing of securities senior to our common stock will likely include financial and other covenants that will restrict our flexibility. Any failure to comply with these covenants may cause an event of default and acceleration of the obligation to pay the debt, which would have a material adverse effect on our business, prospects, financial condition and results of operations and we could lose our existing sources of funding and impair our ability to secure new sources of funding. There can be no assurance that we will be able to generate any further investor interest in our securities or other types of funding, in which case you would likely lose the entirety of your investment in us.

The loss of any member or change in structure of our senior management team could adversely affect our business.

Our success depends in large part upon the skills, experience and performance of members of our executive management team and others in key leadership positions as we depend on key management to run our business. The efforts of these persons will be critical to us as we continue to develop and scale our business. If we were to lose one or more key executives, including Alan Kessler, our Chief Executive Officer and Chairman, Harry Green, our Chief Financial Officer, and Edward Meiring, our Head of Farming, among others, we may experience difficulties in competing effectively and implementing our business strategy. Only certain of our executives have employment contracts, and the majority of our employees are at-will, which means that either we or any employee may terminate their employment at any time or in the notice period set forth in an executive’s contract. We do not carry key person insurance for any of our executives or employees. The loss of one or more of our executive officers or other key personnel or our inability to locate suitable or qualified replacements could be significantly detrimental to product development efforts and could have a material adverse effect on our business, financial condition and results of operations.

In addition, we must attract and retain highly qualified personnel, including certain foreign nationals who are not citizens or permanent residents of Senegal or Niger, many of whom are highly skilled and constitute an important part of our workforce. Our ability to hire and retain these employees and their ability to remain and work in our countries of operations. are impacted by laws and regulations, as well as by procedures and enforcement practices of various government agencies. Changes in immigration laws, regulations or procedures, including those that may be enacted

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by the current presidential administrations may adversely affect our ability to hire or retain such workers, increase operating expenses and negatively impact our ability to deliver products and services, any of which would adversely affect our business, financial condition and results of operations.

We may not be able to manage our future growth effectively, which could make it difficult to execute our business strategy.

Our expected future growth could create a strain on our organizational, administrative and operational infrastructure, including farming operations and logistics. We may not be able to maintain the quality of or expected delivery times for our products or satisfy customer demand as it grows. Our ability to manage our growth effectively will require us to continue to improve our operational, financial and management controls, as well as our reporting systems and procedures. As we grow, any failure of our controls or interruption of our facilities or systems could have a negative impact on our business and financial operations. We plan to expand into the fishery logistics and carbon offset production businesses, which will affect a broad range of business processes and functional areas. The time and resources required to implement these new systems is uncertain, and failure to complete these activities in a timely and efficient manner could adversely affect our operations. If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our business could be harmed.

Our use of the 20,000 hectares located at the LFT Farm is subject to a 50-year land use right provided pursuant to a Republic of Senegal Presidential Decree, which subjects us to risks including early termination.

Our right to utilize the 20,000 hectares of land upon which our LFT Farm is located in Les Fermes de la Teranga in Northern Senegal, is granted pursuant to a Republic of Senegal Presidential Decree controlled by our wholly owned subsidiary, Agro Industries. While we have no reason to believe that the Republic of Senegal will terminate the Senegal Presidential Decree, it has the right to modify, curtail or terminate such decrees without prior notice at its convenience. In the event of any such termination or modification, we may not be entitled to recover any of our incurred or committed costs relating to the development of the LFT Farm. The termination or any modification or curtailment of the Senegal Presidential Decree would result in a loss of anticipated future revenue attributable to the LFT Farm, which could have an adverse effect on our ability to operate our business, our financial results and customer demand for our products and services.

Our risk management strategies may not be effective.

Our business is affected by fluctuations in agricultural commodity prices, transportation costs, energy prices, interest rates, and foreign currency exchange rates. We engage in hedging transactions to manage these risks. However, our exposures may not always be fully hedged, and our hedging strategies may not be successful in minimizing our exposure to these fluctuations. In addition, our risk management strategies may seek to position our overall portfolio relative to expected market movements. While we have implemented a broad range of risk monitoring and control procedures and policies to mitigate potential losses, they may not in all cases be successful in anticipating a significant risk exposure and protecting us from losses that have the potential to impair our financial position.

Our relative crop yields may not be consistent with our pilot experience

We have undertaken pilot programs for both rice and sweet potato in order to understand soil quality, water and agronomy that generated substantive growth results. While our alfalfa pilot program has also generated consistent results and, along with the results of our rice and sweet potato programs, enhanced our confidence in our potential alfalfa crop yields, these results may have been aberrational and there is no guarantee that they will be sustained in larger commercial practice.

Risks Related to Our Business and Industry

Our earnings can be negatively impacted by declining demand brought on by varying factors, many of which are out of our control.

Demand for our product depends upon a variety of factors, including end-demand for the crops. For example, a severe downturn in the dairy industry could have a negative effect on sales of alfalfa hay, and as a result, the demand for our alfalfa sprouts in the markets in which we sell. In addition, demand for our products could decline because of

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other supply and quality issues or for any other reason, including products of competitors that might be considered superior by end users. A decline in demand for our products could have a material adverse effect on our business, results of operations and financial condition.

We rely upon irrigation systems and public water sources and a loss of access to public water sources could have detrimental effects on our ability to produce alfalfa.

The Company remains engaged in farming, harvesting, and milling operations relating to alfalfa sprouts to be utilized for cattle feed. The Company incurs significant risks relating to the cost of growing and maintaining alfalfa sprouts and producing and selling the alfalfa sprouts. The Company relies on water sourced from its irrigation systems, which divert water from streams and development tunnels into a network of ditches, tunnels, flumes, siphons and reservoirs. In the event that the government or another regulatory body limits the Company’s ability to divert stream waters to its irrigation systems, the result could have a negative impact on the Company’s ability to continue with its agricultural operations and development plans.

Our financial condition, results of operations, business and cash flow may be negatively affected by public health crises, such as the recent coronavirus (COVID-19) pandemic.

We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases such as the global COVID-19 pandemic. The global spread of COVID-19 has created significant volatility, uncertainty and economic disruption, including significant volatility in the capital markets. The extent to which the COVID-19 pandemic affects our business, operations, financial results and the trading price of our common stock depends on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope and possible resurgence of the pandemic; governmental and business actions that have been and continue to be taken in response to the pandemic (including mitigation efforts such as stay at home and other social distancing orders) and the impact of the pandemic on economic activity and actions taken in response.

A public health epidemic or pandemic, such as the COVID-19 pandemic, can have a material adverse effect on the demand for our products, and poses the risk that we or our employees, network of agents and consumers and their beneficiaries may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns requested or mandated by governmental authorities, or that such epidemic may otherwise interrupt or impair business activities. Since the pandemic began, we have been subject, on a limited basis, to such shutdowns. We have adjusted standard operating procedures within our business operations to ensure the continued safety of our workers, continue to take further actions to mitigate the impact of the pandemic on our business, and are continually monitoring evolving health guidelines, as well as market conditions, and responding to changes as appropriate.

The ultimate impact of the COVID-19 pandemic on our results of operations and financial condition is dependent on future developments, including the duration of the pandemic and the related extent of its severity, as well as its impact on the economic conditions, which remain uncertain and cannot be predicted at this time. If the global response to contain the COVID-19 pandemic is unsuccessful, or if governmental decisions to ease pandemic related restrictions are ineffective, premature or counterproductive, the Company could experience a material adverse effect on the Company’s financial condition, results of operations and cash flows.

Outbreaks of other disease may adversely affect our business operations and financial condition.

Significant outbreaks of contagious diseases, and other adverse public health developments, could have a material impact on our business operations and financial condition. Many of our operations are currently, and will likely remain in the near future, in developing countries which are susceptible to outbreaks of disease and may lack the resources to effectively contain such an outbreak quickly. Such outbreaks may impact our ability to operate by limiting access to qualified personnel, increasing costs associated with ensuring the safety and health of our personnel, restricting transportation of personnel, equipment, and supplies to and from our areas of operation and diverting the time, attention and resources of government agencies which are necessary to conduct our operations. In addition, any losses we experience as a result of such outbreaks of disease which impact sales or delay production may not be covered by our insurance policies.

An epidemic of the Ebola virus disease occurred in parts of West Africa in 2014 and continued through 2015. A substantial number of deaths were reported by the World Health Organization (“WHO”) in West Africa, and the WHO declared it a global health emergency. It is impossible to predict the effect and potential spread of new outbreaks of

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the Ebola virus in West Africa and surrounding areas. Should another Ebola virus outbreak occur, including to the countries in which we operate, or not be satisfactorily contained, our operations could be delayed, or interrupted after commencement. Any changes to these operations could significantly increase costs of operations.

There is potential for competitive cattle feed or alternate protein sources

Beef cattle can utilize roughages of both low and high quality, including pasture forage, hay, silage, corn (maize) fodder, straw, and grain by-products. Cattle also utilize nonprotein nitrogen in the form of urea and biuret feed supplements, which can supply from one-third to one-half of all the protein needs of beef animals. Nonprotein nitrogen is relatively cheap and abundant and is usually fed in a grain ration or in liquid supplements with molasses and phosphoric acid or is mixed with silage at ensiling time; it also may be used in supplement blocks for range cattle or as part of range pellets. Other additions to diet include corn (maize), sorghum, milo, wheat, barley, or oats. Whey protein and pea protein have recently emerged as competitive protein sources to alfalfa, albeit at materially lower yields.

We are subject to global and regional economic downturns and related risks.

The level of demand for our products is affected by global and regional demographic and macroeconomic conditions, including population growth rates and changes in standards of living. A significant downturn in global economic growth, or recessionary conditions in major geographic regions, may lead to reduced demand for agricultural commodities and food products, which could adversely affect our business and results of operations. Further, deteriorating economic and political conditions in our major markets affected by the COVID-19 pandemic, such as increased unemployment, decreases in disposable income, declines in consumer confidence, or economic slowdowns or recessions, could cause a decrease in demand for our products.

Additionally, weak global economic conditions and adverse conditions in global financial and capital markets, including constraints on the availability of credit, have in the past adversely affected, and may in the future adversely affect, the financial condition and creditworthiness of some of our customers, suppliers and other counterparties, which in turn may negatively impact our financial condition and results of operations.

Adverse weather and other farming conditions, including as a result of climate change, may adversely affect the availability, quality and price of agricultural commodities and agricultural commodity products, as well as our operations and operating results.

Adverse weather conditions have historically caused volatility in the agricultural commodity industry and consequently in our operating results by causing crop failures or significantly reduced harvests, which may affect the supply and pricing of the agricultural commodities that we sell and use in our business, reduce demand for our fertilizer products and negatively affect the creditworthiness of agricultural producers who do business with us.

Severe adverse weather conditions, such as severe storms, may also result in extensive property damage, extended business interruption, personal injuries and other loss and damage to us. Our operations also rely on dependable and efficient transportation services. A disruption in transportation services, as a result of weather conditions or otherwise, may also significantly adversely impact our operations.

Additionally, the potential physical impacts of climate change are uncertain and may vary by region. These potential effects could include changes in rainfall patterns, water shortages, changing sea levels, changing storm patterns and intensities, and changing temperature levels that could adversely impact our costs and business operations, the location, costs and competitiveness of global agricultural commodity production and related storage and processing facilities and the supply and demand for agricultural commodities. These effects could be material to our results of operations, liquidity or capital resources.

Although alfalfa is a well-adapted plant that usually gives good production for many years, it can be severely affected by weeds. Weeds compete with alfalfa plants in water and nutrient, resulting in thin and underperforming plants. We are using advanced drone technology to differentiate between weed and plant. We may have to consult local farmers and/or agronomists in order to understand the most recent information on the weeds most commonly found in our region. Then we have to plan a solid (pre and after sowing) weed management policy, taking into account the local legal framework and the agronomist’s suggestion. Some chemicals widely used in some countries are strictly forbidden in other countries.

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We operate in areas subject to natural disasters.

Climate change poses a threat to Senegal’s socio-economic development. In general, climate models suggest that West African countries will likely experience increased temperatures, decreased annual rainfall, increases in the intensity and frequency of heavy rainfall events, and a rise in sea level. Climate change in Senegal will have wide reaching impacts on many aspects of life in Senegal. Climate change will cause an increase in average temperatures over west Africa by between 1.5 and 4 °C (3 °F and 7 °F) by the middle of this century, relative to 1986 – 2005. Projections of rainfall indicate an overall decrease in rainfall and an increase in intense mega-storm events over the Sahel. The sea level is expected to rise faster in West Africa than the global average. Although Senegal is currently not a major contributor to global greenhouse gas emissions, it is one of the most vulnerable countries to climate change. Extreme drought is impacting agriculture, and causing food and job insecurity. More than 70% of the population is employed in the agricultural sector. Sea level rise and resulting coastal erosion is expected to cause damage to coastal infrastructure and displace a large percentage of the population living in coastal areas. Climate change also has the potential to increase land degradation that will likely increase desertification in eastern Senegal, leading to an expansion of the Sahara.

Senegal and other West African countries are also prone to floods, droughts and other natural disasters. While we plan to maintain insurance policies to help reduce our financial exposure, the effects of climate change, a significant seismic event where our operations are concentrated, abundance of insects or locusts, or other natural disasters could adversely impact our ability to deliver labor to the crops, deliver crops to the marketplace, and receive water and could adversely affect our costs of operations and profitability.

We are subject to fluctuations in agricultural commodity and other raw material prices, energy prices and other factors outside of our control that could adversely affect our operating results.

Prices for agricultural commodities and their by-products, like those of other commodities, are often volatile and sensitive to local and international changes in supply and demand caused by factors outside of our control, including farmer planting and selling decisions, currency fluctuations, government agriculture programs and policies, pandemics (such as the COVID-19 pandemic), governmental restrictions or mandates, global inventory levels, demand for biofuels, weather and crop conditions, and demand for and supply of competing commodities and substitutes. These factors may cause volatility in our operating results.

Additionally, our operating costs and the selling prices of certain of our products are sensitive to changes in energy prices. Our industrial operations utilize significant amounts of electricity, natural gas and coal, and our transportation operations are dependent upon diesel fuel and other petroleum-based products. Significant increases in the cost of these items and currency fluctuations could adversely affect our operating costs and results. The selling prices of the agricultural commodities and commodity products that we sell are also sensitive to changes in the market price for biofuels, and consequently world petroleum prices.

We are vulnerable to the effects of supply and demand imbalances in our industries.

Historically, the market for some agricultural commodities has been cyclical, with periods of high demand and capacity utilization stimulating new plant investment and the addition of incremental processing or production capacity by industry participants to meet the demand. The timing and extent of this expansion may then produce excess supply conditions in the market, which, until the supply/demand balance is again restored, negatively impacts product prices and operating results. During times of reduced market demand, we may suspend or reduce production.

Our business may require significant capital expenditures.

Our business is capital intensive, particularly in the redevelopment of the land and rehabilitation of water infrastructure. On an annual basis, we could spend significant sums of money for additions to, or replacement of, land, land improvements, irrigation and farming equipment. We must obtain funds for these capital projects from operations or new capital raises. We cannot provide assurance that available sources of funds will be adequate or that the cost of funds will be at levels permitting us to earn a reasonable rate of return.

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Ruminant livestock generates Greenhouse Gas Emissions, which contribute to climate change, and any global scrutiny on alfalfa as a source of cattle nutrition could adversely affect our operating results.

Ruminant livestock generates a significant proportion of anthropogenic Greenhouse Gas Emissions, which contributes to Climate Change. Global scrutiny on Greenhouse Gas Emissions may serve to increase scrutiny on alfalfa as a source of cattle nutrition, which could adversely affect our costs of operations and profitability.

Ruminants such as cattle, sheep, goats, and buffalo produce meat and milk through enteric fermentation, a digestive process in which microbes decompose and ferment food in the digestive tract or rumen. This process produces methane which is emitted via digestion. The amount of methane produced is directly related to the type of food consumed and the level of intake, in addition to other factors such as animal size, growth rate, production level, and environmental temperature. The loss of methane from ruminants also represents a loss of dietary energy, so initiatives to reduce emissions also represent an opportunity to improve the efficiency of livestock production. Methane is naturally occurring, and typically decomposes over a 10-year half-life, and has recently been recalibrated according to a new scoring methodology, the GWP* methodology, by the University of Oxford.

Crop insurance may not be available or not be adequate to cover losses.

We do not currently have property insurance covering our facilities and LFT Farm. The insurance industry in Senegal is still at an early stage of development. Insurance companies in Senegal offer limited insurance products and the cost of such insurance is high. We have determined that the risks of disruption or liability from our business, the loss or damage to our property, including our facilities and equipment, the cost of insuring for these risks, and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us purchase. Any uninsured occurrence of loss or damage to property, or litigation or business disruption may result in the incurrence of substantial costs and the diversion of resources, which could have an adverse effect on our operating results.

In addition, certain crops and certain land locations are either not eligible or eligible at a reduced level for crop insurance. We intend to grow crops in areas where full insurance is available, but the consistent availability and reasonable cost of such insurance cannot be guaranteed. Further, if an insurance claim is made, the amount of funds received might not be sufficient to cover costs and provide debt service.

Our earnings may be affected, to large extents, by volatility in the market value of our crops.

We intend to grow primarily organic alfalfa. The price of alfalfa, like other commodity crops, can vary widely, thereby directly impacting our revenue. In addition, we may not have a diverse customer base to which we are selling our product. If a single material buyer should fail to take or pay for our production, the Company would have to sell to other purchasers who might pay higher or lower prices than specified in our contracts.

If we are unable to plant enough alfalfa crop during the planting season that occurs in the first quarter of the year prior to the Senegal rainy season to meet our projections and fulfill anticipated demand for that year, the loss of revenue may have a material adverse effect on our results of operations and financial condition.

Should events such as adverse weather, such as drought or floods (which are difficult to anticipate and which cannot be controlled), production or transportation interruptions, delays in obtaining available inputs such as fertilizer or equipment due to supply chain or other local disruptions, or lack of seasonal labor, and contractor availability, we may be unable to plant enough crops during the first quarter of the year, which we refer to as the planting season, to meet our projections and anticipated demand. Failure to plant our targeted crops amounts for any year may result in reduced revenue without the opportunity to recover until the following planting season, which could have a material adverse effect on our results of operations and financial condition.

Our ability to cultivate, husband and harvest our crop may be compromised by availability of labor and equipment.

When the crop is ready to harvest, we are dependent on seasonal labor and contractors for harvesting. During harvest season, there is demand for such seasonal labor from other farming operations which will compete with our demand. The availability of seasonal farm labor is also affected by uncertain national immigration policies and politically volatile enforcement practices. Thus, adequate labor might not be available when our crops are ready to harvest. This could delay revenue or decrease revenue.

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The inability to obtain certain materials could adversely impact our ability to deliver on our contractual commitments which could negatively impact our results of operations and cash flows.

Although most materials essential to our business are generally available from multiple sources, some key materials, while currently available to us from multiple sources, are at times subject to industry-wide availability constraints and pricing pressures. If the supply of a key or single-sourced material to us were to be delayed or curtailed or in the event of a delayed shipment of completed products to us, our ability to ship product in desired quantities, and in a timely manner, could be adversely affected. Our business and financial performance could also be adversely affected depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities from an alternative source. Continued availability of these components may be affected if suppliers were to decide to concentrate on the production of common components instead of components customized to meet our requirements. We attempt to mitigate these potential risks by working closely with these and other key suppliers on product introduction plans, strategic inventories, coordinated product introductions, and internal and external manufacturing schedules and levels. Consistent with industry practice, we acquire materials through a combination of formal purchase orders, supplier contracts, and open orders based on projected demand information. However, adverse changes in our vendors’ supply chain may adversely impact the supply of key materials.

Reliance on third-party manufacturers may result in increased or volatile costs.

The alfalfa products we offer include inputs from a limited number of third-party manufacturers, and as a result we may be subject to price fluctuations or demand disruptions. Our operating results would be negatively impacted by increases in the costs of our products, and there is no guarantee that costs will not rise. In addition, as we expand into new categories and product types we expect that we may not have strong purchasing power in these new areas, which could lead to higher costs than we have historically seen in our current categories. We may not be able to pass increased costs on to consumers, which could adversely affect our operating results. Moreover, in the event of a significant disruption in the supply of the materials used in the manufacture of the products we offer, we and our vendors might not be able to locate alternative suppliers of materials of comparable quality at an acceptable price.

Risks Related to operations outside of the United States

We are subject to economic, political and other risks of doing business globally and in emerging markets.

We will be a multi-national business and our business strategies may involve expanding or developing our business in emerging market regions, including Eastern Europe, Asia-Pacific, the Middle East and Africa. Due to the international nature of our business, we are exposed to various risks of international operations, including:

•        adverse trade policies or trade barriers on agricultural commodities and commodity products;

•        government regulations and mandates in response to the COVID-19 pandemic;

•        inflation and hyperinflation and adverse economic effects resulting from governmental attempts to control inflation, such as the imposition of wage and price controls and higher interest rates;

•        changes in laws and regulations or their interpretation or enforcement in the countries where we operate, such as tax laws;

•        difficulties in enforcing agreements or judgments and collecting receivables in foreign jurisdictions;

•        exchange controls or other currency restrictions and limitations on the movement of funds, such as on the remittance of dividends by subsidiaries;

•        inadequate infrastructure and logistics challenges;

•        sovereign risk and the risk of government intervention, including through expropriation, or regulation of the economy or natural resources, including restrictions on foreign ownership of land or other assets; while we may adopt insurance coverage to cover expropriation risk, convertibility, transfer and other risks, this may not sufficient to cover business risks;

•        the requirement to comply with a wide variety of laws and regulations that apply to international operations, including, without limitation, economic sanctions regulations, labor laws, import and export regulations, anti-corruption and anti-bribery laws;

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•        challenges in maintaining an effective internal control environment with operations in multiple international locations, including language differences, varying levels of accounting expertise in international locations and multiple financial information systems;

•        changes in a country’s or region’s economic or political condition; and

•        labor disruptions, civil unrest, significant political instability, coup attempts, wars or other armed conflict or acts of terrorism.

Emerging markets are subject to different risks as compared to more developed markets. Operating a business in an emerging market can involve a greater degree of risk than operating a business in more developed markets, including, in some cases, increased political, economic and legal risks. Emerging market governments and judiciaries often exercise broad, unchecked discretion and are susceptible to abuse and corruption. Moreover, financial turmoil in any emerging market country tends to adversely affect the value of investments in all emerging market countries as investors move their money to more stable, developed markets. As has happened in the past, financial problems or an increase in the perceived risks associated with investing in companies in emerging economies could dampen foreign investment and adversely affect the local economy. Generally, investment in emerging markets is only suitable for sophisticated investors who fully appreciate the significance of the risks involved in, and are familiar with, investing in emerging markets.

Finally, international trade disputes can adversely affect agricultural commodity trade flows by limiting or disrupting trade between countries or regions. We cannot predict the effects that future trade policy or the terms of any negotiated trade agreements and their impact on our business could have. These risks could adversely affect our operations, business strategies and operating results.

We are subject to a number of risks in our supply chain including failure in telecommunication systems, subcontractor and vendor failure to perform and the disruption of transportation networks. The distances between areas of operations in Niger and Senegal are vast, as are the distances between our African operations and that of our consumer markets which leave us exposed to variability in supply chains.

Our operations in Africa are subject to risk associated with lack of infrastructure.

Our growth strategy depends in part on our ability to expand our operations in Africa. However, Africa may have greater political, economic and currency volatility and greater vulnerability to infrastructure and labor disruptions than more established markets. Engaging in business practices prohibited by laws and regulations with extraterritorial reach, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended, or local anti-bribery laws may be more common. These laws generally prohibit companies and their employees, contractors or agents from making improper payments to government officials, including in connection with obtaining permits or engaging in other actions necessary to do business. Failure to comply with these laws could subject us to civil and criminal penalties that could materially and adversely affect our reputation, financial condition and results of operations.

Disruptions in water and power supply may adversely affect our operations.

Our operations are reliant upon stable supply of electricity, availability of water and access to transportation routes in order to optimally run our operations and/or move our products. The infrastructure in some countries in which we operate, such as rail infrastructure, inland water systems, electricity and water supply, may need to be further upgraded and expanded, and in certain instances, possibly at our own cost. Should we not have access to reliable electricity supply, or should we have limited access to water or experience infrastructure challenges in the regions in which we operate, this could have a material adverse effect on our business, operating results, cash flows, financial condition and future growth. Reliable supply of electricity is important to run our business optimally. The African power system remains very tight. Unplanned power outages may have a negative impact on our production volumes, cost and profitability.

Water, as a resource, is becoming increasingly limited as global demand for water increases. A significant part of our operations requires the use of large volumes of water. Africa is generally an arid continent and prolonged periods of drought or significant changes to current water laws could increase the cost or availability of our water supplies or otherwise impact our operations. A deterioration in water quality may contribute to an increase in costs. Although various technological advances may improve the water efficiency of our processes, they are capital intensive.

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We may experience limited water availability due to periodic drought events, deterioration in water quality and other infrastructure challenges related to our African operations, which could have a material adverse effect on our business, operating results, cash flows, financial condition and future growth.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions against us or our management based on foreign laws.

Although we are a Delaware corporation, we anticipate conducting a substantial part of our business in certain foreign jurisdictions such as the Middle East and Africa, and a significant portion of our assets will be located in Africa. In addition, our officers may reside within Africa for a significant portion of the time. Africa and certain other countries in these jurisdictions may not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States. As a result, it may not be possible for investors to serve process upon us or those persons, or to enforce against us or them, any judgments obtained from U.S. courts. As a result, it may be difficult for you to effect service of process upon us or those persons. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors who do not reside in the United States or have substantial assets located in the United States. In addition, there is uncertainty as to whether the courts in Senegal or other non-U.S. jurisdictions would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the U.S. federal securities laws.

Senegal and other countries in which we may operate may experience civil or political unrest or acts of terrorism.

Outbreaks of civil and political unrest and acts of terrorism have occurred in countries in Europe, Africa, South America, and the Middle East, including countries where we currently operate or plan to operate. Continued or escalated civil and political unrest and acts of terrorism in the countries in which we operate could result in our curtailing operations or delays in project completions. In the event that countries in which we operate experience civil or political unrest or acts of terrorism, especially in events where such unrest leads to an unseating of the established government, our operations could be materially impaired. Our potential international operations may also be adversely affected, directly or indirectly, by laws, policies, and regulations of the United States affecting foreign trade and taxation, including U.S. trade sanctions. Realization of any of the factors listed above could materially and adversely affect our financial condition, results of operations, or cash flows.

Risks Related to Cybersecurity, Privacy and Information Technology

Failure to comply with federal, state and foreign laws and regulations relating to privacy, data protection and consumer protection, or the expansion of current or the enactment of new laws or regulations relating to privacy, data protection and consumer protection, could adversely affect our business and our financial condition.

We collect, store, process, and use personal information and other customer data, and we rely in part on third parties that are not directly under our control to manage certain of these operations and to collect, store, process and use payment information. Due to the volume and sensitivity of the personal information and data we and these third parties manage and expect to manage in the future, as well as the nature of our customer base, the security features of our information systems are critical. A variety of federal, state and foreign laws and regulations govern the collection, use, retention, sharing and security of this information. Laws and regulations relating to privacy, data protection and consumer protection are evolving and subject to potentially differing interpretations. These requirements may not be harmonized, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices. As a result, our practices may not have complied or may not comply in the future with all such laws, regulations, requirements and obligations.

We expect that new industry standards, laws and regulations will continue to be proposed regarding privacy, data protection and information security in many jurisdictions. We cannot yet determine the impact such future laws, regulations and standards may have on our business. Complying with these evolving obligations is costly.

As we expand our international presence, we may also become subject to additional privacy rules, many of which, such as the General Data Protection Regulation promulgated by the European Union (the “GDPR”) and international laws supplementing the GDPR, such as in the United Kingdom, are significantly more stringent than those currently enforced in the United States. The law requires companies to meet stringent requirements regarding

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the handling of personal data of individuals located in the EEA. These more stringent requirements include expanded disclosures to inform customers about how we may use their personal data through external privacy notices, increased controls on profiling customers and increased rights for data subjects (including customers and employees) to access, control and delete their personal data. In addition, there are mandatory data breach notification requirements. The law also includes significant penalties for non-compliance, which may result in monetary penalties of up to the higher of €20.0 million or 4% of a group’s worldwide turnover for the preceding financial year for the most serious violations. The GDPR and other similar regulations require companies to give specific types of notice and informed consent is required for the placement of a cookie or similar technologies on a user’s device for online tracking for behavioral advertising and other purposes and for direct electronic marketing, and the GDPR also imposes additional conditions in order to satisfy such consent, such as a prohibition on pre-checked tick boxes and bundled consents, thereby requiring customers to affirmatively consent for a given purpose through separate tick boxes or other affirmative action.

A significant data breach or any failure, or perceived failure, by us to comply with any federal, state or foreign privacy or consumer protection-related laws, regulations or other principles or orders to which we may be subject or other legal obligations relating to privacy or consumer protection could adversely affect our reputation, brand and business, and may result in claims, investigations, proceedings or actions against us by governmental entities or others or other penalties or liabilities or require us to change our operations and/or cease using certain data sets. Depending on the nature of the information compromised, we may also have obligations to notify users, law enforcement or payment companies about the incident and may need to provide some form of remedy, such as refunds, for the individuals affected by the incident.

Failures in our technology infrastructure could damage our business, reputation and brand and substantially harm our business and results of operations.

If our main data center or our cloud infrastructure were to fail, or if we were to suffer an interruption or degradation of services at our main data center, we could lose important manufacturing and technical data, which could harm our business. Our facilities are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, cyber security attacks, terrorist attacks, power losses, telecommunications failures and similar events. In the event that our or any third-party provider’s systems or service abilities are hindered by any of the events discussed above, our ability to operate may be impaired. A decision to close the facilities without adequate notice, or other unanticipated problems, could adversely impact our operations. Any of the aforementioned risks may be augmented if our or any third-party provider’s business continuity and disaster recovery plans prove to be inadequate. The facilities also could be subject to break-ins, computer viruses, sabotage, intentional acts of vandalism and other misconduct. Any security breach, including personal data breaches, or incident, including cybersecurity incidents, that we experience could result in unauthorized access to, misuse of or unauthorized acquisition of our or our customers’ data, the loss, corruption or alteration of this data, interruptions in our operations or damage to our computer hardware or systems or those of our customers. Moreover, negative publicity arising from these types of disruptions could damage our reputation. We may not carry sufficient business interruption insurance to compensate us for losses that may occur as a result of any events that cause interruptions in our service. Significant unavailability of our services and due to attacks could cause users to cease using our services and materially and adversely affect our business, prospects, financial condition and results of operations.

Risks Related to Legal, Regulatory and Compliance

Government policies and regulations affecting the agricultural sector and related industries could adversely affect our operations and profitability.

Agricultural commodity production and trade flows are significantly affected by government policies and regulations. Governmental policies affecting the agricultural industry, such as taxes, tariffs, duties, subsidies, import and export restrictions, price controls on agricultural commodities and energy policies (including biofuels mandates), can influence industry profitability, the planting of certain crops versus other uses of agricultural resources, the location and size of crop production, whether unprocessed or processed commodity products are traded, and the volume and types of imports and exports. Additionally, regulation of financial markets and instruments internationally may create uncertainty as these laws are adopted and implemented and may impose significant additional risks and costs that could impact our risk management practices. Future governmental policies, regulations or actions impacting our industries may adversely affect the supply of, demand for and prices of our products, restrict our ability to do business in existing and target markets, or engage in risk management activities and otherwise cause our financial results to suffer.

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Expenses or liabilities resulting from litigation could materially adversely affect our results of operations and financial condition.

We have and may become party to various legal proceedings and other claims that arise in the ordinary course of business, or otherwise in the future. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. In addition, any such claims or litigation may be time-consuming and costly, divert management resources, require us to change our platform or have other adverse effects on our business. While we cannot assure the ultimate outcome of any legal proceeding or contingency in which we are or may become involved, we do not believe that any pending legal claim or proceeding arising in the ordinary course will be resolved in a manner that would have a material adverse effect on our business. However, if one or more of these legal matters resulted in a substantial monetary judgment against us, such a judgment could harm our results of operations and financial condition.

Risks Related to Being a Public Company

There is no established trading market for our shares of common stock.

This offering constitutes the initial public offering of our shares of common stock. No public market for our shares of common stock currently exists. We intend to apply to list our shares of common stock on Nasdaq under the symbol AAGR.

Even if our shares of common stock are listed on Nasdaq, there can be no assurance that an active trading market for the shares will develop or be sustained after this offering is completed. The initial offering price has been determined by negotiations between the representative and us. Among the factors considered in determining the initial offering price were our future prospects and the prospects of our industry in general, our revenue, net income and certain other financial and operating information in recent periods, and the financial ratios, market prices of securities and certain financial and operating information of companies engaged in activities similar to ours. However, there can be no assurance that following this offering the shares will trade at a price equal to or greater than the offering price.

In addition, the market price of our shares may be volatile. Many factors may have a material adverse effect on the market price of our shares, including, but not limited to:

•        the impact of the ongoing COVID-19 pandemic on our business;

•        any major changes in our Board of Directors or management;

•        the failure to obtain new commercial partners;

•        announcements concerning our competitors;

•        the failure to achieve expected product sales and profitability;

•        actual or anticipated fluctuations in our cash position or operating results;

•        changes in financial estimates or recommendations by securities analysts;

•        sales of our shares by us, our executive officers or directors or our shareholders;

•        fluctuations in the U.S. equity markets;

•        changes in accounting principles; and

•        general economic, political and social conditions in Africa

•        markets in which we sell our products

In recent years, the stock market in general has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to changes in the operating performance of the companies whose stock is experiencing those price and volume fluctuations. Broad market and industry factors may seriously affect the market price of our common stock, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our common stock shortly following this offering. Following periods of such volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Because of the potential volatility of our stock price, we may become the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources from our business.

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After the offering, there may not be an active public trading market for our shares of common stock, so investors may be unable to sell their shares when, in the amounts and at the prices that they may desire.

Only            shares of common stock will be sold to public investors with no association to our company in this offering. Although these shares and certain other outstanding shares will be freely tradable following this offering, approximately % of our outstanding shares of common stock will be held by our executive officers and directors and their respective affiliates after this offering. These shares and a significant number of additional shares will be restricted from sale for a limited period of time under the terms of lock-up agreements. Accordingly, our common stock may be thinly traded making it more difficult to develop and maintain an active public trading market and for investors in this offering to sell their shares when they desire. We cannot give investors any assurance that the volume of trading will be sufficient to allow for timely trades. Investors may not be able to sell our common stock quickly or at the latest market price if trading in our shares is not active or if trading volume is limited. In addition, if trading volume in our common stock is limited, trades of relatively small numbers of shares may have a disproportionate effect on the market price of our common stock.

We may fail to meet our publicly announced guidance or other expectations about our business, which would cause our stock price to decline.

We expect to provide guidance regarding our expected financial and business performance, such as projections regarding sales and product development, as well as anticipated future revenues, gross margins, profitability and cash flows. Correctly identifying key factors affecting business conditions and predicting future events is inherently an uncertain process and our guidance may not be accurate. If our guidance is not accurate or varies from actual results due to our inability to meet our assumptions or the impact on our financial performance that could occur as a result of various risks and uncertainties, the market value of our common stock could decline significantly.

We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company, and particularly after we are no longer an emerging growth company (or, to a lesser extent, a smaller reporting company), we will incur significant legal, accounting, and other expenses that we did not incur as a private company. Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. We expect that we will need to hire additional accounting, finance, and other personnel in connection with our becoming, and our efforts to comply with the requirements of being, a public company, and our management and other personnel will need to devote a substantial amount of time towards maintaining compliance with these requirements. These requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that the rules and regulations applicable to us as a public company may make it more difficult and more expensive for us to obtain director and officer liability insurance, which could make it more difficult for us to attract and retain qualified members of our Board of Directors. We are currently evaluating these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Risks Relating to this Offering and Ownership of Our Common Stock

As a new investor, you will experience substantial dilution as a result of this offering.

The public offering price per share will be substantially higher than the net tangible book value per share prior to the offering. Consequently, if you purchase our shares of common stock in this offering at the assumed public offering price of $____ per share, you will incur immediate dilution of $___ per share.

See “Dilution” for further information regarding the dilution resulting from this offering. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they acquired their shares. In addition, if the underwriters exercise their over-allotment option, you will experience further dilution.

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A significant portion of our total outstanding shares is restricted from immediate resale but may be sold into the market in the near future, which could cause the market price of our common stock to decline significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, upon the expiration of lock-up agreements entered into between the representative and each of our directors, executive officers and substantially all holders of more than 5% of our outstanding common stock, as well as certain other parties (the “lock-up agreements”), the early release of these agreements or the perception in the market that the holders of a large number of shares of our common stock intend to sell shares, could cause the market price of our common stock to fall and could impair our ability to raise capital by selling additional securities. Of the shares of our common stock to be outstanding on the closing date of this offering, approximately shares will be locked-up as a result of the lock-up agreements that existing stockholders have signed restricting their ability to transfer our stock for 180 days after the date of this prospectus.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

We cannot specify with certainty the particular uses of the net proceeds we will receive from this offering. We will have broad discretion in the application of the net proceeds, including for any of the purposes described in the section of this prospectus titled “Use of Proceeds.” We may spend a portion or all of the net proceeds from this offering in ways that our stockholders may not desire or that may not yield a favorable return. Any failure by us to apply these funds effectively could harm our business, financial condition, results of operations and prospects. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

Our bylaws provide that the Court of Chancery of the State of Delaware and the federal district courts of the United States are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our bylaws provides that the Court of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising under the Delaware General Corporation Law, our certificate of incorporation or our bylaws; any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or our bylaws; and any action asserting a claim against us that is governed by the internal affairs doctrine. This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction.

Our bylaws further provide that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. The enforceability of similar exclusive federal forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and while the Delaware Supreme Court has ruled that this type of exclusive federal forum provision is facially valid under Delaware law, there is uncertainty as to whether other courts would enforce such provisions and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.

These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find either exclusive forum provision in our bylaws to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving such action in other jurisdictions, all of which could have a material adverse effect on our business, financial condition, and results of operations.

African Agriculture, Inc. is a holding company with no operations of its own and, as such, it depends on its subsidiaries for cash to fund all of its operations and expenses, including future dividend payments, if any.

Our operations are conducted entirely through our subsidiaries and our ability to generate cash to meet our debt service obligations or to make future dividend payments, if any, is highly dependent on the earnings and the receipt of funds from our subsidiaries via dividends or intercompany loans. Some of our subsidiaries may become subject to agreements that restrict the sale of assets and significantly restrict or prohibit the payment of dividends or the making of distributions, loans or other payments to stockholders, partners or members. In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock

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Because we do not intend to pay dividends on our common stock, you must rely on stock appreciation for any return on your investment.

We presently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. As a result, you must rely on stock appreciation and a liquid trading market for any return on your investment. If an active and liquid trading market does not develop, you may be unable to sell your shares of common stock at or above the initial public offering price or at the time you would like to sell.

If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our common stock could decline.

The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence coverage of us, the trading price of our common stock could decrease. Even if we do obtain analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our common stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for our common stock, which in turn could cause our stock price to decline.

Our charter provides for limitations of director liability and indemnification of directors and officers and employees.

Our certificate of incorporation limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for any:

•        breach of their duty of loyalty to us or our stockholders;

•        act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

•        unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

•        transaction from which the directors derived an improper personal benefit.

These limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability of equitable remedies such as injunctive relief or rescission.

Our bylaws provide that we will indemnify our directors, officers and employees to the fullest extent permitted by law. Our bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding. We believe that these provisions are necessary to attract and retain qualified persons as directors and officers.

The limitation of liability in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might provide a benefit to us and our stockholders. Our results of operations and financial condition may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

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Use of Proceeds

We estimate that the net proceeds from this offering will be approximately $           million (or $           million if the underwriters exercise their option to purchase additional shares in full), assuming the initial offering price of $           per share and after deducting the underwriting discount and offering expenses payable by us.

The principal purposes of this offering are to fund our program of incremental planting expansion of 10,000 hectares at the LFT Farm, which we expect to occur in 2022 with approximately 50 hectares seeded on a daily basis. We currently intend to use approximately $9,500,000 of the net proceeds from this offering, together with our existing cash and cash equivalents, to prepare the pivots, irrigation, all farming operations, machinery and infrastructure necessary to complete such expansion, which based on average yield expectations would produce approximately 250,000 tons per year. We currently intend to use approximately $18,000,000 of the net proceeds from this offering for phytosanitary products, including Soil treatment, Potassium, Gypsum, Seeds, Fertilizer, payment of salaries and personnel for two years and D&O, Crop and Workers Compensation insurance for two years. Additionally, we currently intend to use approximately $650,000 of the net proceeds of the offering to conduct feasibility studies for potential new businesses including approximately $50,000 for aquaculture, $300,000 for carbon credit and reforestation programs and $300,000 for biofuel from algae. We intend to use the balance of proceeds for ongoing operating expenses and other general corporate uses.

Additional purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our common stock, and enable access to the public equity markets for us and our stockholders.

We may also to use the net proceeds we receive from this offering for general corporate purposes, including working capital, operating expenses, and capital expenditures.

Additionally, we may use a portion of the net proceeds we receive from this offering to acquire or invest in ancillary businesses, products, services, or technologies. However, we do not have agreements or commitments for any material acquisitions or investments at this time. Pending the use of proceeds from this offering as described above, we may invest the net proceeds that we receive in this offering in short-term, investment grade, interest-bearing instruments, as well as hedging strategies related to commodities and currency conversion.

Based upon our current operating plan, we estimate that our existing cash and cash equivalents and the anticipated net proceeds from this offering will be sufficient to fund our operating expenses and capital expenditure requirements for at least 30 months following the closing of this offering.

The expected use of the net proceeds from this offering represents our intentions based on our current plans and business conditions, which could change in the future as our plans and business conditions evolve. Our management will have broad discretion over the use of the net proceeds from this offering, and our investors will be relying on the judgment of our management regarding the application of the net proceeds of this offering.

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Dividend Policy

We have never declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends on our capital stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to support operations and to finance the growth and development of our business. Any future determination to pay dividends will be made at the discretion of our Board of Directors subject to applicable laws and will depend upon, among other factors, our results of operations, financial condition, contractual restrictions and capital requirements. Our future ability to pay cash dividends on our capital stock may be limited by any future debt instruments or preferred securities.

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Dilution

Purchasers of shares of our common stock in this offering will experience immediate and substantial dilution to the extent of the difference between the initial public offering price per share of our common stock and the as adjusted net tangible book value per share of our common stock after this offering.

Our historical net tangible book deficit as of December 31, 2021 was $33.1 million, or $662 per share of our common stock. Historical net tangible book value per share represents the amount of our total tangible assets (total assets less the intangible asset) less total liabilities divided by the number of shares of common stock issued and outstanding as of December 31, 2021.

Our pro forma net tangible book deficit as of December 31, 2021 is $            million, or $            per share, based on the total number of shares of our common stock outstanding as of December 31, 2021 assuming the midpoint of the range set forth on the cover page of this prospectus, after giving effect to (i) the conversion upon the IPO of approximately $30.0 million of the related party payables into common shares, and (ii) the automatic conversion of all outstanding shares of our convertible promissory notes into shares of common stock, which conversion will occur concurrent with this offering.

Our as adjusted pro forma net tangible book value as of December 31, 2021 was $             million, or $              per share of our common stock. As adjusted pro forma net tangible book value per share represents our pro forma net tangible book deficit after giving effect to the sale of shares of common stock by us in this offering at the assumed initial public offering price of $              per share (the midpoint of the range set forth on the cover page of this prospectus) and the application of the net proceeds from this offering.

The following table illustrates the dilution per share of our common stock, assuming the underwriters do not exercise their option to purchase additional shares of our common stock:

Assumed initial public offering price per share

     

$

 

Historical pro forma net tangible book deficit per share as of December 31, 2021

     

 

 

Increase in historical net tangible book value per share attributable to new investors purchasing shares in this offering

 

 

 

 

 
       

 

 

As adjusted net tangible book value per share after this offering

     

 

 

       

 

 

Dilution per share to new investors purchasing shares in this offering

     

$

 

Dilution per share to new investors purchasing shares in this offering is determined by subtracting as adjusted net tangible book value per share after this offering from the initial public offering price per share of common stock.

The dilution information discussed above is illustrative only and may change based on the actual initial public offering price and other terms of this offering. A $1.00 increase (decrease) in the assumed initial public offering price of $              per share of common stock, the midpoint of the range set forth on the cover page of this prospectus, would increase (decrease) our as adjusted net tangible book value per share after this offering by $              per share and increase (decrease) the dilution to new investors by $              per share, in each case assuming the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions. Similarly, each increase or decrease of 1,000,000 shares in the number of shares of common stock offered by us would increase (decrease) our as adjusted net tangible book value by approximately $              per share and decrease (increase) the dilution to new investors by approximately $              per share, in each case assuming the assumed initial public offering price of $              per share of common stock remains the same, and after deducting estimated underwriting discounts and commissions.

To the extent the underwriters’ option to purchase additional shares is exercised, there will be further dilution to new investors. If the underwriters exercise their option to purchase additional shares of common stock in full, the as adjusted net tangible book value per share would be $              per share, and the dilution per share to new investors purchasing shares in this offering would be $             per share.

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The following table summarizes, as of            , 2022 on an as adjusted pro forma basis as described above, the total number of shares of common stock owned by existing stockholders and to be owned by new investors, the total consideration paid, and the average price per share paid by our existing stockholders and to be paid by new investors in this offering at the assumed initial public offering price of $             per share, calculated before deduction of estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 

Shares
Purchased

 

Total
Consideration

 

Average Price
per Share

   

Number

 

Percent

 

Amount (in thousands)

 

Percent

 

Existing stockholders

 

50,000

 

   100

%

 

$

2,730

 

   %

 

 

$

54.61

Investors in the offering

 

 

 

   %

 

 

 

 

 

   %

 

 

 

 

Conversion of Notes

 

 

 

   %

 

 

 

 

 

   %

 

 

 

 

Total

 

 

 

100

%

 

$

   

 

100

%

 

$

A $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) total consideration paid by new investors, total consideration paid by all stockholders and average price per share paid by new investors by $             , $              and $              per share, respectively.

The outstanding share information in the table above excludes:

•        shares of our common stock issuable upon the vesting of restricted stock units (“RSUs”) or options issued under our 2022 Equity Incentive Plan;

•        shares of our common stock reserved for future issuance under our 2022 Equity Incentive Plan;

To the extent any outstanding RSUs are vested or options exercised, there will be further dilution to new investors. If all of such outstanding RSUs and options had been exercised as of December 31, 2021, the pro forma as adjusted net tangible book value per share after this offering would be $            , and total dilution per share to new investors would be $            .

If the underwriters were to fully exercise their option to purchase additional shares of our common stock, the percentage of common stock held by existing investors would be             %, and the percentage of shares of common stock held by new investors would be             %.

The foregoing tables and calculations, except as otherwise indicated:

•        assume an initial public offering price of $              per share of common stock, the midpoint of the range set forth on the cover of this prospectus;

•        assume no exercise of the underwriters’ option to purchase              additional shares of common stock from us;

We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities could result in further dilution to our stockholders. To the extent that any outstanding options or warrants to purchase our common stock are exercised, or new awards are granted under our equity compensation plans, there will be further dilution to investors participating in this offering.

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Capitalization

The following table sets forth our capitalization at December 31, 2021, as follows

•        on an actual basis;

•        on a pro forma basis, giving effect to the conversion to shares of common stock of (i) $27,406,406 principal amount of loans made to us by our majority shareholder and (ii) $            of convertible promissory notes in conjunction with this offering;

•        on a pro forma, as adjusted basis to further reflect our issuance and sale of shares of common stock in this offering at the assumed initial public offering price of $ per share after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this information in conjunction with our consolidated financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that are included elsewhere in this prospectus.

 

As of December 31, 2021

Actual

 

Pro Forma(1)

 

Pro Forma
as Adjusted

Cash and cash equivalents

 

$

19,093

 

 

$

   

$

 
   

 

 

 

 

 

   

 

 

Stockholders’ equity:

 

 

 

 

 

 

   

 

 

Common stock, $0.0001 par value per share:            shares authorized,            shares issued and outstanding actual;             shares issued and outstanding, pro forma;            shares issued and outstanding, pro forma as adjusted

 

 

5

 

 

 

   

 

 

Additional paid-in capital

 

 

3,337,560

 

 

 

   

 

 

Accumulated deficit

 

 

(18,541,381

)

 

 

   

 

 

Accumulated other comprehensive loss

 

 

688,052

 

 

 

   

 

 

Total stockholders’ deficit

 

$

(14,515,764

)

 

 

   

 

 

Total capitalization

 

$

 

 

 

$

   

$

 

____________

(1)      Each $1.00 increase (decrease) in the assumed initial public offering price of $____ per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase (decrease) our pro forma, as adjusted cash, cash equivalents and marketable securities, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization by approximately $______, assuming that the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 1,000,000 shares in the number of shares of common stock offered by us would increase (decrease) our pro forma, as adjusted cash, cash equivalents and marketable securities, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization by approximately $_______, assuming the assumed initial public offering price of $____ per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma, as adjusted information discussed above is illustrative only and will be adjusted based on the actual public offering price and other terms of this offering determined at pricing.

The number of shares of our common stock to be outstanding after this offering is based on shares of our common stock outstanding as of               , 2022.

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Management’s Discussion and Analysis of
Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section titled “Risk Factors,” our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

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 largely develop 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, there has been no commercial revenue and related contribution over the last three years. The growing activity thus far has been on a small pilot scale with the resultant produce being donated to the local communities for rice and sweet potato. 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. The recent focus of our financial control and analysis has been to identify legacy inventory, intangible assets and plant and equipment that are not suitable for our intended purposes and as such have been sold or written off.

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 December 2021 across 340 hectares. We began our initial harvest in March 2022, which resulted in approximately two tons of alfalfa per hectare and a 15% to 21% 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 every four 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 that we anticipate will grow to 10,000 hectares within 12-18 months and ultimately to occupy as much of the 25,000 hectares as is practical. At 10,000 hectares, we would expect our annualized run-rate yield to be approximately 250,000 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.

For our initial production, we took the added step of complementing our deeply experienced team with the services of FGM International, a leader in agricultural project implementation, particularly in Africa. In addition, we engaged ICS, a leading agronomist specialist in crops, soil, water, agricultural machinery and more. ICS has been a successful supplier of efficient machines and high-quality seeds to farms in the Middle East and Africa for approximately 30 years. We have an invoiced relationship with ICS for equipment provided and services rendered. To date, we have paid ICS $668,500. We also have an invoiced relationship with Valley Irrigation, a worldwide leader in precision irrigation for the development of our pivots. Through December 31, 2021, we have paid Valley Irrigation $674,000 for equipment. We also have an agreement with Dr. Daniel Putnam, a global expert on forage quality and water use efficiency under irrigation and on mitigation strategies for sub-optimal conditions, who has significant expertise in alfalfa production, to consult to the Company and bring worldwide best practices to Senegal.

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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 2019 GCC Food Report.

The strength of the demand for our products is evidenced by the increasing spot prices in various domestic and international markets based on USDA Kansas City alfalfa weekly pricing reports, as well as considerable interest from a number of strong credit worthy potential customers seeking to enter into long-term offtake/supply agreements. While the prices for the offtake are attractive, they are often at a discount to the spot markets. We are contemplating if this is a favorable risk mitigation strategy to begin our entry into the market to the extent we are able to agree to a dedicated offtake with one or more of these potential counterparties. The production volume dedicated to these offtake agreements only represents a small portion of our capacity hence does not prohibit our ability to benefit from stronger local prices once we establish production and begin to ramp up capacity.

We are also 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), 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.

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 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.

Business Combination and Public Company Costs

On June 24, 2021, the Company entered into a Contribution Agreement with Global Commodities & Investments, Ltd, (“Global Commodities”), the shareholders of Agro Industries Corp., a limited company organized under the law of the Cayman Islands as an exempted company (“Agro Industries”), pursuant to which all the shareholders of Agro Industries agreed to contribute their shares of Agro Industries to the Company in exchange for shares of the Company. Following the closing of the transactions contemplated in the Contribution Agreement, the shareholders of Agro Industries become the 100% shareholders of the Company and Agro Industries became a wholly owned subsidiary of the Company. LFT, remains a 100% owned subsidiary of Agro Industries. The Company

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was deemed the accounting predecessor and will be the successor registrant for SEC reporting purposes, meaning that Agro Industries’ financial statements for previous periods will be disclosed in our future periodic reports filed with the SEC.

While the legal acquirer in the Contribution Agreement is the Company, for financial accounting and reporting purposes the consolidated financial statements of the combined entity represent the consolidated financial statements of Agro Industries prior to the formation of the Company in May 2021 and the Contribution Agreement. For all results post the effectiveness of the Contribution Agreement the consolidated financial statements of the Company will reflect the consolidation of the Company and its subsidiaries in accordance with US GAAP. Accordingly, the consolidated assets, liabilities and results of operations of Agro Industries became the historical consolidated financial statements of the combined company, and the Company’s assets, liabilities and results of operations were consolidated with Agro Industries beginning on the effective date of the Contribution Agreement. Operations prior to the Contribution Agreement are presented as those of the Company and Agro Industries in future reports. There were negligible net assets of the Company prior to the Contribution Agreement, with no goodwill or other intangible assets recorded as part of the Contribution Agreement.

As a consequence of the Offering, we will become an SEC-registered and Nasdaq-listed company, which requires 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.

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 and the imputed interest rate related to the related party payable.

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 fair value at the time of the acquisition 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 acquisition had 44 years of a 50-year term remaining. Refer to Note 4 and Note 5 of the consolidated financial statements for further discussion.

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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 December 31, 2021, the contingent liability provision, which is unchanged in local currency from the amount as of December 31, 2020, is approximately $2.6 million. Refer to Note 11 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 party. Refer to Note 8 of the consolidated financial statements for further discussion.

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 subsidiary located in the Senegal is the West African CFA (“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

December 31, 2021

 

$

0.001795

 

$

0.001720

December 31, 2020

 

$

0.001748

 

$

0.001873

Key Components of Statement of Operations

Basis of Presentation

Currently, we conduct business through one operating segment. As of December 31, 2021, we were a pre-revenue company with no commercial sales and our activities to date were limited and conducted in the United States and locally in Senegal at LFT. For more information about our basis of presentation, refer to Note 2 in our accompanying audited consolidated financial statements as of and for the years ended December 31, 2021 and 2020 included in this prospectus.

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.

Our audited consolidated financial statements for the years ended December 31, 2021 and 2020, contained herein, include a summary of our significant accounting policies and should be read in conjunction with the discussion below.

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Revenue

We have not generated any revenues through December 31, 2021.

Cost of Sales

As we have not generated any meaningful revenues through December 31, 2021, there are no associated cost of sales. Cost of sales will include all direct costs related to the growth and harvesting of alfalfa, including all farming inputs such as cost of seed, fertilizer, direct labor, power, water, crop maintenance costs, depreciation of machinery cost, among others.

Results of Operations

Our operating results for the years ended December 31, 2021 and 2020 are compared below:

 

For the Year Ended December 31,

   

2021

 

2020

 

Increase/
(Decrease)

General and administrative expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation

 

$

344,943

 

 

$

320,989

 

 

 

23,954

 

Professional fees

 

 

2,151,057

 

 

 

427,587

 

 

 

1,723,470

 

Equipment rental

 

 

95,207

 

 

 

 

 

 

95,207

 

Amortization

 

 

462,165

 

 

 

462,165

 

 

 

 

Depreciation

 

 

187,711

 

 

 

197,482

 

 

 

(9,771

)

Utilities and fuel

 

 

112,092

 

 

 

36,002

 

 

 

76,090

 

Other operating expenses

 

 

511,001

 

 

 

168,708

 

 

 

342,293

 

Total G&A expense

 

 

3,864,176

 

 

 

1,612,933

 

 

 

2,251,243

 

Loss from operations

 

 

(3,864,176

)

 

 

(1,612,933

)

 

 

(2,251,243

)

   

 

 

 

 

 

 

 

 

 

 

 

Other (Income)/Expense

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency exchange (gain)/loss

 

 

(331,853

)

 

 

511,184

 

 

 

(843,037

)

Gain on sale of assets

 

 

(79,517

)

 

 

(101,555

)

 

 

22,038

 

Interest expense – related party

 

 

702,520

 

 

 

641,438

 

 

 

61,082

 

Interest expense – other

 

 

183,360

 

 

 

183,360

 

 

 

 

Other income

 

 

(45,351

)

 

 

(67,556

)

 

 

22,205

 

Total other expense

 

 

429,159

 

 

 

1,166,871

 

 

 

(737,712

)

Loss before provision for income tax

 

 

(4,293,335

)

 

 

(2,779,804

)

 

 

(1,513,531

)

Taxation

 

 

 

 

 

 

 

 

 

Net loss

 

 

(4,293,335

)

 

 

(2,779,804

)

 

 

(1,513,531

)

Less: Net loss attributable to non-controlling interests

 

 

229,368

 

 

 

245,614

 

 

 

(16,246

)

Net loss attributable to controlling interests

 

$

(4,063,967

)

 

$

(2,534,190

)

 

$

(1,529,777

)

General and administrative expenses

Total general and administrative expenses for the year ended December 31, 2021 increased by $2.25 million or 139.6%, over the year ended December 31, 2020. The primary reason for the increase was higher professional fees, equipment rental, utilities and fuel and other operating expenses all increased due to the beginning of commercial operations in earnest, expanding the operating team, which were initially paid as consultants and in increased legal expenses and audit fees as well as positioning the Company for the initial public offering process.

Other Income/Expense

Our Senegal team continues to sell or write off legacy, pre-2018 acquisition of LFT, assets particularly older and unsuitable equipment, seed and other farming inputs in addition to older intangibles, receivables and accounts payable. This work was done in conjunction with the local Senegal auditors in order to comply with local practice. Other expense declined by $737,712 in the year ended December 31, 2021 due to foreign exchange changes relating to the seller note payable relating to the prior acquisition of LFT, offset by lower sales of assets and higher imputed

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interest on the 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 party. The imputed interest increased over the prior year as a result of the increased related party payable for the year ended December 31, 2021 compared to the prior year.

Net Loss

Net loss for the year ended December 31, 2021 increased by $1.51 million, or 54.51%, compared to the prior year period. The principal reasons, as described in above relate to the commencement of our alfalfa business, supplementing the management team and the preparation for the initial public offering and the allocation of resources to these initiatives.

There was no income tax expense from continuing operations for the year ended December 31, 2021 or 2020.

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 and through the sale of non-usable equipment and inventory.

We are seeking to implement our expansion plans, and for these we will require additional capital to expand production, over time, to the full available capacity of LFT’s 25,000 hectares, to implement all the systems and processes for production, recording and reporting and to initiate wider scale marketing efforts.

Over time, it is our intention to acquire 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. We have developed a detailed business plan for covering the period 2021 through 2025 that sets forth expected costs, expenses and sales under normal growing conditions and in the current business and regulatory climate and our assumptions regarding our broader strategic initiatives. The capital that we plan to raise on the IPO, together with funds from operations, is sufficient to enable the planting and harvesting, at a minimum, 10,000 hectares with an anticipated turn of the crop 10 times annually. We intend to allocate the majority of the net proceeds from the offering of the shares made by this prospectus to the development of the alfalfa growth at LFT, as more fully described in the Use of Proceeds section. If we sell less than all of the shares and receive less than all of the proceeds from the offering of the shares, we will not be able to develop our farm as quickly as our business plan anticipates. If we do not sell all of the shares offered hereby, we may seek to raise the additional required funds by way of equity or debt financings as well as potential grants, if available. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which might make it more difficult for us to obtain additional capital and to pursue business opportunities. We might not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to develop our farm as quickly as anticipated, or at all, and to respond to business challenges could be significantly limited. To date, our majority stockholder funded the business through loans and may continue to loan money to us in the future, though the majority shareholder is under no obligation to do so. Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in the section titled “Risk Factors”.

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, 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 to generate revenues after our first harvest during the first half of 2022. We expect that all net revenue generated from the sale of alfalfa will be reinvested into business for the foreseeable future.

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As of December 31, 2021, we had working capital deficit of $451,416, compared to a working capital deficit of $853,502 as of December 31, 2020. Increased payables of approximately $518 thousand were offset by approximately $245 thousand lower accrued expenses and other payables in addition to higher receivables and inventory of approximately $674.8 thousand. These movements in working capital were consistent with the increase in farming and commercial activity as well as the corporate initiatives around a public offering.

At December 31, 2021, we had $19,093 in cash and cash equivalents. The net cash losses and expenses of the business have largely been funded by shareholder loans from the majority shareholder. The majority shareholder has made a commitment, and has demonstrated the necessary resources, to continue funding the business in the absence of new capital being raised from third party equity or debt sources.

Cash Flows

The following table presents summary cash flow information for the periods indicated.

 

For the Year Ended
December 31,

   

2021

 

2020

Net Cash Produced From/(Used)

 

 

 

 

 

 

 

 

Operating Activities

 

$

(3,539,647

)

 

$

(921,513

)

Investing Activities

 

 

(874,986

)

 

 

257,984

 

Financing Activities

 

 

4,145,634

 

 

 

463,597

 

Effects of Exchange Rate Changes

 

 

199,605

 

 

 

279,793

 

Net Increase/(Decrease) in Cash

 

$

(69,394

)

 

$

79,861

 

Cash Flows Used in Operating Activities

Cash flows used in operating activities for the year ended December 31, 2021, totalled approximately $3.5 million during which we incurred a net loss of $4.3 million. The net loss included the non-cash impacts of depreciation, amortization and the imputed interest on the related party loan. The cash flows for operating activities also reflected the increase in working capital compared to the prior year period.

Cash Flows from Investing Activities

For the year ended December 31, 2021, total cash used in investing activities was $874,986. For the year ended December 31, 2020, cash generated from investing activities was $257,984. The cash used in investing activities during the year ended December 31, 2021 were primarily driven by an increase in equipment acquired in preparation for the pilot program, offset by various asset sales. The annual period ending December 31, 2020, had no equipment purchases and there was a larger amount of proceeds from asset sales.

Cash Flow from Financing Activities

For the year ended December 31, 2021, the cash from financing activities largely reflects the principal loan amounts received from our majority shareholder offset by the amount paid on the seller note payable relating to the original LFT acquisition. The related party payable is non-interest bearing and has no fixed repayment terms. For the year ended December 31, 2020, the cash generated from financing activities reflected loans from the majority shareholder.

Off Balance Sheet Arrangements

As of December 31, 2021 and December 31, 2020, we had no off-balance sheet financing arrangements.

Contractual Commitments

Our contractual obligations as of December 31, 2021 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, a lease for various LFT staff accommodations beginning mid-August 2021 with a one-year duration,

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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. These contractual obligations impact our short-term and long-term liquidity and capital needs.

The seller note payable is due to be completely repaid in 2022. The balance of the seller note payable was $2,849,228 and $5,792,789 at December 31, 2021 and 2020, respectively. 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 acquisition. The seller note payable is presented net of unamortized discount. As of December 31, 2021 and 2020 the amount of the debt discount is $152,800 and $336,160, respectively.

Land use agreement, Camp Lease and Niger land use agreements

As of December 31, 2021, future minimum rental payments under the operating leases through 2026 are approximately as follows (using 12/31/2021 exchange rates):

2022

 

$

299,000

2023

 

 

215,000

2024

 

 

216,000

2025

 

 

217,000

2026

 

 

218,000

   

$

1,165,000

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 valued as an intangible asset in connection with the acquisition 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 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 December 31, 2021 were held at JPMorgan Chase Bank, N.A. as well as in various banks in Senegal. The cash and cash equivalents balances as of December 31, 2020, were all held in various banks in Senegal. There is no insurance securing these deposits. 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 bank accounts.

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Business

Company Overview

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. We will sell alfalfa to owners and suppliers of cattle for feed and nutritional purposes, primarily in Senegal and the surrounding regions in Africa, ECOWAS regions and the Middle East, where forage crops have been banned from production locally. Over the next three years, we expect to develop 25,000 hectares, or 62,000 acres, of land located at Les Fermes de la Teranga in the Saint Louis region of northern Senegal (the “LFT Farm”) that will be capable of producing up to 750,000 tons of alfalfa per year in conjunction with a crop yield of approximately 25 tons per hectare per year. In August 2021, we began preparing the pivots, irrigation and infrastructure to begin planting our pilot program. We will begin planting alfalfa in December across 340 hectares. We would expect that this crop will be harvested early in the first quarter of 2021 and expected to yield between 875 – 1,050 tons. It is our expectation that the crop rotation cycle will occur every four to six weeks, allowing up to eight — ten turns during an annual period. From a seasonality perspective, it is our expectation that after the initial crops have been planted before the rainy season little seasonality should impact the rotation. We expect that this will begin the program of incremental planting expansion that we anticipate will grow to 10,000 hectares within 9 months and ultimately to the predominance of the 25,000 hectares by the middle of 2023. Based on the foregoing, and by way of example, at 10,000 hectares we would expect our annualized yield to be approximately 250,000 metric tons and at 25,000 hectares, we would expect our annualized yield to be approximately 625,000 tons. Our initial expectations are that we will yield approximately 25 tons of alfalfa per hectare per year. Such expectations are based on global averages that vary in regions which have lower yielding crops per year given winter or dormancy environments to those in more optimal growth conditions such as those in Senegal and Niger that have both sun, year-round conditions and water prevalence. This assumption is predicated on 10 cuts per year and two and a half tons per cut. Colder climates such as Romania and Canada give credence to these lower yield expectations by virtue of their temperatures. On expansion in Niger, using the same metrics, we are expecting our production to be approximately 5,000,000 tons per year. We have initiated our business operations in Niger, with a local office establishment, business incorporation and performing initial survey work regarding land and soil fertility. Water evaluation, hydrogeological studies are planned for the coming months, along with active recruiting of farming operations and development. Our farming operations in Niger are expected to develop in sequence with our further commercialization of our Senegalese properties. However, there are risks and uncertainties associated with completing our developments on schedule, which include global supply chain issues and issues related to shipping logistics. In addition, while 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.

Pursuant to a Presidential Decree in Senegal, dated March 20, 2012, we can utilize 20,000 hectares, of land in conjunction with an additional 5,000 hectares of contiguous land leased from the local community in Fass Ngom. We commenced irrigation and land preparation at the LTM Farm in the spring, and utilized 400 hectares of the LFT Farm to produce rice and sweet potato as a pilot study for the benefit of the local community. As of December 31, 2021, more than $70 million has been invested by previous owners of the LFT Farm, including our majority shareholder, Global Commodities and Investments Limited, which is controlled by Mr. Frank Timis., We initiated operations to produce alfalfa in 2021. Investors should not rely on Mr. Timis’s investment decision as he may have different risk tolerances than other investors, and the investment terms and pricing offered to Mr. Timis may significantly differ from the terms and price contemplated by this offering.

Initially, we anticipate selling alfalfa to European and Arab States of the Gulf (Cooperation Council for the Arab States of the Gulf) customers as the market for exports grows in conjunction with global population growth. Beyond that we intend to sell to Senegalese owners and suppliers of cattle. We expect to expand alfalfa sales into the cattle market in the ECOWAS region that incorporates Senegal, recently tabulated at 100 million heads of cattle by the World Bank in 2020. Given a large number of artisanal cattle rearing, we believe this estimate may be conservative by up to 50%. The market in Senegal for alfalfa and cattle feed related products vastly exceeds the global price point, a number that correlates with the price point for fertilizers and other agricultural equipment such as tractors. This is partly due to logistical challenges and the high prices of imports that may incorporate items as high as 200% for duties and taxes. The market is expected to expand substantially in Africa as protein incorporated in diets grows from an estimate of 25% of that of western consumption. While the cattle market reflects an evident need for alfalfa, due to the relatively small amount of heads of cattle per owner in Senegal, and our limited experience in the Senegalese market thus far, we anticipate that the local Senegalese market will take some time to develop.

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Because of the fragmented nature of the agriculture industry, we must make a commercial decision between selling our product to larger volume purchasers at lower price points with higher consistency and certainty of longer-term contracts versus the local less-developed market for alfalfa in the Economic Community of West African States (ECOWAS) region, where a large amount of cattle exist and are malnourished. According to our estimates, based on a world average for meat pricing of $10 per kg, cattle bred for meat purposes will justify a five times return on alfalfa nutrition versus seven times that for dairy purposes.

The local customer base, which historically operated at a materially higher price point, is expected to develop rapidly. Based on an increasing cohesion as a community, farmers in the region are progressively replacing their indigenous cattle that produce only 1 – 2 liters of milk a day with exotic cattle that produce between 20 and 40 liters a day, substantially increasing both productivity and income. Various cooperatives partnered with the USAID’s West Africa Trade and Investment Hub, including the Association for the Promotion of the Livestock in the Sahel and the Savanna that cover 12 African countries involving about 15,000 members, and the West Africa’s regional livestock association, which works with national federations across the region. Additionally, in 2020 the World Bank approved a US$150 million credit from the International Development Association (IDA) to support Senegal in strengthening agricultural productivity and helping build resilient, climate-smart and competitive food systems. We believe vertical integration into livestock management may be justified given such revenue potential.

Livestock production involves at least 20 million people across West Africa, where long market chains connect producers in the Sahel with consumption basins in urban areas and the coast. Estimated heads of cattle in ECOWAS alone is 100 million according to the World Bank. Livestock production, marketing, and processing generate income for actors along the value chain and provide food and nutrition security in the region. Intraregional livestock trade is highly informal, and its true magnitude is not captured in official statistics. Livestock, consisting mostly of cattle and small ruminants, are traded live and lead the intraregional food trade. The African feed industry is predominantly driven by the poultry market. In most countries, poultry is the main source of animal protein, accounting for 80% of the commercial feed locally produced. With a current population of 1.2 billion inhabitants, a level expected to reach 2 billion by 2050 according to the Economist, Africa faces a major challenge to supply animal protein to its people, with a consumption of two to five kilograms of animal protein per year.

Alfalfa

Alfalfa plays a significant role as a type of livestock forage for animal feed, due to its high protein and digestible fiber content. The crop is mainly used for feeding dairy cows, cattle, horses, sheep, and goats. The crop is highly adapted to hot conditions, which allows in particular sun-cured alfalfa hay (dehydrated). Abundant and regular irrigation by pivots allows high yields and, under optimum conditions, a harvest per month. An alfalfa crop is usually planted for four or five years, with on average a cut each month in a country with the same heat and humidity as Senegal. In North America, despite its seasons, the average total yield is 20 to 35 tons per hectare (or 8 to 14 tons per acre) per year (distributed in five or six cuts). Top yields (intensive farming) can exceed 40 tons per hectare or 16 tons per acre per year. The alfalfa plant is highly adaptable to varying cultivation and weather conditions, showing great tolerance to drought. This can be achieved due to its root system, that can penetrate up to 15 to 30 feet. (4.5 to 9 meters), searching for water and nutrients. The average length of the root is four to five feet (1.2 – 1.5 m). The upper part of the plant is shorter compared to the root system. The plant’s height ranges from two to four feet (60 to 120 cm). The alfalfa plant thrives in well drained soils, as soggy soils promote the development of various diseases.

Furthermore, alfalfa has a high impact on carbon sequestration, and we believe can generate over 4 tons per hectare per year of carbon credits. Alfalfa is effective at sequestering carbon for a number of reasons, including its status as a perennial and a deeply rooting plant. While crops like corn and soy often have a net neutral or negative impact on carbon sequestration, carbon levels in the soil are elevated when alfalfa is included as part of the rotation. The root system of the alfalfa plant also lends itself to decreased amount of erosion potential with minimal amounts of soil leaving a field under alfalfa cultivation providing an additional key positive. Alfalfa is a nitrogen fixer that invests resources into its roots, keeping the soil dry thereby reducing decomposition, even in degraded soils.

Alfalfa is a high-protein roughage which is usually about 15 – 25% crude protein, over 50% total organic nitrogen and high in calcium. Alfalfa and corn generally complement each other, and can form the basis for cattle diets. Grass hays are frequently low in protein and some alfalfa can raise the protein level for beef cattle or dairy purposes at the time of feeding. Low quality grass hay also spends more time in the rumen during digestion than alfalfa hay (70 compared to 36 hours). Therefore, animals fed some alfalfa hay can generally eat more, gain weight faster, produce

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more milk and maintain themselves in better condition. Alfalfa has an initial rate of ruminal digestion that is five to ten times greater than that of most grasses. The rapid microbial colonization and digestion of alfalfa reduces particle size and increases the passage of digesta from the rumen, enabling the animal to consume greater quantities of forage. Alfalfa is an excellent forage for high-producing cows. Cows efficiently use the high levels of protein, calcium and high-quality fiber in alfalfa for producing milk. Alfalfa has the potential to double the weight of livestock in as few as seven weeks, based on the U.S. experience.

According to the USDA, livestock requires the following amounts of protein per day:

 

Crude Protein (lbs per day)