Avax One Technology LTD.: Form 10-Q for the period ended Jun 30, 2025

Prospective investors should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.” You should review the “Risk Factors” section of this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Company History and Our Business

Overview

AgriFORCE Growing Systems Ltd. (“AgriFORCE™” or the “Company”) was incorporated as a private company by Articles of Incorporation issued pursuant to the provisions of the Business Corporations Act (British Columbia) on December 22, 2017. The Company’s registered and records office address is at 800 – 525 West 8th Avenue, Vancouver, British Columbia, Canada, V5Z 1C6.

Our Business

During 2024, the Company entered the sustainable Bitcoin mining industry and has completed two acquisitions since late November 2024 pursuant to which the Company now owns and operates three Bitcoin mining facilities, one in Alberta, Canada and two in Ohio, for a total of 1420 BITMAIN Antminer S19j units, 81 BITMAIN Antminer S19k Pro units and 50 BITMAIN Antminer S21 XP units. These facilities are powered by sustainable energy, advancing AgriFORCE’s mission to integrate innovative technologies that promote environmental stewardship while generating significant financial returns.

The addition in 2024 of sustainable Bitcoin mining represents the first pillar in the Company’s three pillar strategy to:

• Utilize its modular architecture to mine crypto currency, as well as to offer compute capabilities tailored for AI, edge computing, and sovereign data solutions;
• Continue developing and deploying mobile modular gas-to-power units for off-grid scalability, securing access to sizeable amounts of power; and
• Build a strategic digital reserve, accumulating up to 50% of Bitcoin mined and allocating up to 50% of new capital raised toward Bitcoin and potentially other purchases.

The Company is an energy-first digital infrastructure company pioneering high-efficiency compute environments across AI, edge computing, and distributed processing. Through its TerraHash Digital™ division, AgriFORCE deploys modular, off-grid compute platforms powered by emissions-tracked natural gas systems—enabling sustainable, scalable digital transformation. The Company’s Power & Compute Initiative bridges financial and environmental performance across multiple industries.

The Company’s legacy businesses consisted of the AgriFORCE™ Brands (“Brands”) and the AgriFORCE™ Solutions (“Solutions”) divisions. Our AgriFORCE™ Brands division has been focused on the development and commercialization of plant-based ingredients and products that deliver more nutritious food. We intend to market and commercialize ingredient supplies, like our Awakened Flour™ and Awakened Grains ™, but have not had any success doing so yet.

Brands is focused on the development and commercialization of plant-based ingredients and products that deliver healthier and more nutritious solutions. We strive to market and commercialize both branded consumer product offerings and ingredient supply.

AgriFORCE™ Brands

UN(THINK)™ Foods

The Company purchased Intellectual Property (“IP”) from Manna Nutritional Group, LLC (“Manna”), a privately held firm based in Boise, Idaho on September 10, 2021. The IP encompasses a granted patent to naturally process and convert grain, pulses and root vegetables, resulting in low-starch, low-sugar, high-protein, fiber-rich baking flour as well as produces a natural sweetener juice. The core process is covered under Patent Nr. 11,540,538 in the U.S. and key international markets. The all-natural process is designed to unlock nutritional properties, flavors, and other qualities in a range of modern, ancient and heritage grains, pulses and root vegetables to create specialized all-natural baking and all-purpose flours, sweeteners, juices, naturally sweet cereals and other valuation products, providing numerous opportunities for dietary nutritional, performance and culinary applications.

During the year ended December 31, 2024, the Company achieved milestones towards the commercialization of our UN(THINK) Awakened Flour™, the Company’s first line of products to utilize the IP. Management has defined and tested its quality controls and safety protocols for production, and produced several multi-ton batches of germinated grains, refining and scaling production processes with our partners in Canada. We are also in the process of qualifying partners in the US to establish additional production hubs – at no additional CAPEX - which will support growth and reduce logistics costs for customers in the region. Additionally, we have established our supply chain logistics with a contracted shipping company and two warehouses in Canada and the US. Our commercial team made progress in defining pricing and is starting to approach US and Canadian Bakeries and Baked Goods Companies who are now testing our new flours for integration into their manufacturing operations and innovation pipeline. Online sales logistics and advertising materials were developed during the period to support the establishment of the direct-to-consumer sales channel which will be started once the Business to Business channel sales ramp up. Lastly, the Company has developed an extensive number of recipes for the application of Awakened Flour™ product line for both customers and consumers.

The Company is developing several finished product prototypes including a line of pancake mixes, which are ready for consumer testing.

Wheat and Flour Market

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

In contrast, foods high in fiber help to satiate hunger, suppress cravings and raise metabolism(3). They also assist in weight loss, lower cholesterol, and may reduce the risk of cancer, heart disease and diabetes(4).

Advantages of the UN(THINK)™ Foods IP

Our Controlled Enzymatic Reaction & Endothermic Saccharification with Managed Natural Germination (“CERES-MNG”) patented process allows for the development and manufacturing of all-natural flours that are significantly higher in fibers, nutrients and proteins and significantly lower in carbohydrates and calories than standard baking flour.

CERES-MNG baking flour produced from soft white wheat has 40 times more fiber, three (3) times more protein and 75% less net carbohydrates than regular all- purpose flour(5).

Source: Independent analysis by Eurofins Food Chemistry Testing Madison, Inc, February 2022

The CERES-MNG patent will help develop new flours and products from modern, ancient and heritage grains, seeds, legumes and tubers/root vegetables.

Products that AgriFORCE™ intends to develop for commercialization from the CERES-MNG patented process under the UN(THINK)™ foods brand:

• High protein, high fiber, low carb modern, heritage and ancient grain flours (for use in breads, baked goods, doughs, pastry, snacks, and pasta)
• Protein flours and protein additives
• High protein, high fiber, low carb cereals and snacks
• High protein, high fiber, low carb oat based dairy alternatives
• Better tasting, cleaner label, high protein, high fiber, low carb nutrition bars
• High protein, high fiber, low carb nutrition juices
• Sweeteners – liquid and granulated
• High protein, high fiber, low carb pet foods and snacks

(1) Based on protein, fiber, and starch content results from a nationally certified independent laboratory, as compared to standard all-purpose flour.

(2) https://www.soupersage.com/compare-nutrition/flour-vs-whole-wheat-flour

(3) https://my.clevelandclinic.org/health/articles/14400-improving-your-health-with-fiber

(4) https://www.health.harvard.edu/blog/fiber-full-eating-for-better-health-and-lower-cholesterol-2019062416819

(5) Based on protein, fiber, and starch content results from a nationally certified independent laboratory, as compared to standard all-purpose flour.

We intend to commercialize these products behind two (2) main sales channels:

• Branded ingredients (B2B)
• Consumer branded products (B2B and B2C)

To produce the UN(THINK)™ power wheat flour, we are using our patented process to develop a new germinated whole grain wheat flour, which we have qualified and made available for sale through November 2023 in Canada and the USA, under the UN(THINK)™ Awakened Flour™ brand. This new Awakened Grains™ flour – available in 3 types: hard white wheat and hard red wheat for breads and soft white wheat for bakery and pastries – will provide enhanced nutrition with over five times more fiber, up to two times more protein and 23% less net carbs versus conventional all-purpose flour (source: Eurofins Food Chemistry Madison, Inc, December 2022).

GROWTH PLAN

AgriFORCE™’s organic growth plan is to actively establish and deploy the commercialization of products in four distinct phases:

PHASE 1 (COMPLETED):

• Product and process testing and validation. (completed)
• Filing of US and international patents. (completed)
• Creation of the UN(THINK)™ foods brand. (completed)
• Qualification and operational and commercial set up of the Awakened Grains™ line of products. (completed)

PHASE 2:

• Launch of the UN(THINK)™ Awakened Flour™ lightly germinated flour range of products in business to business (“B2B”) channel. (completed)
• Develop range of finished products behind the wheat grain flours, qualify patented process for pulse/legume, and rice-based protein flours
• Drive business as ingredients for bakery, snack and plant-based protein products manufacturers.
• Develop relationships with universities, nonprofit organizations and civic organizations focused on health in underserved communities to research impact of patented flour on nutrition.

PHASE 3:

• Develop range of finished products behind the wheat grain flours, qualify patented process for pulse/legume, and rice-based protein flours.
• Drive business as ingredients for bakery, snack and plant-based protein products manufacturers.
• Develop manufacturing base through partnerships and licensing.

PHASE 4:

• Expand product range in US/Canada.
• Expand business to other geographies internationally.

BUSINESS PLAN

The Company also looks to expand its efforts into development of blockchain solutions and the implementation of these solutions into FinTech systems to allow quicker and less costly transactions between commercial farmers.

The Company continues to explore opportunities to utilize its patented FORCEGH+™ structure and its related technologies in joint ventures and licensing. The Company is also studying the utilization of FORCEGH+ technologies in arctic, tropical and desert environments and artificial intelligence and blockchain in the development and implementation of FinTech systems to commercial farmers, and advancing on the commercialization of our Hydroxyl clean room systems to greatly reduce the spread of pathogens, mold and disease at processing facilities worldwide.

Through the first half of 2025, the Company has been aggressively pursuing a strategic shift towards the advancement of sustainable technology initiatives through the acquisition of Bitcoin mining facilities. The Company plans to reduce the environmental impact of the Bitcoin mining facilities while simultaneously producing revenue from high yield agricultural operations. By utilizing an integrated and automated onsite carbon sequestering agricultural operation to reuse the waste energy from the natural gas generators used in the Bitcoin mining operation, the Company aims to reduce carbon emissions while also contributing to local food security and economic growth. In addition, the Company intends to generate immediate shareholder value through the generation of Bitcoins from the mining operation.

Merger and Acquisition (“M&A”)

The Company intends to focus any M&A activity on targets which are focused the bitcoin mining space. This refocused M&A strategy will ensure that proper personnel and economic resources are allocated to the Company’s ongoing businesses, while refocusing efforts on synergistic opportunities which work to enhance the Company’s existing assets.

Sustainable Bitcoin Mining

As of the fourth quarter of 2024, the Company entered into the sustainable Bitcoin mining industry and has completed two acquisitions since late November 2024 pursuant to which the Company now owns and operates three Bitcoin mining facilities, one in Alberta, Canada and two in Ohio, for a total of 1,522 BITMAIN Antminer S19j units, 81 BITMAIN Antminer S19k Pro units and 50 BITMAIN Antminer S21 XP units. These facilities are powered by sustainable energy, advancing AgriFORCE’s mission to integrate innovative technologies that promote environmental stewardship while generating significant financial returns.

As we approach a key milestone in the progression of our growth strategy it is important to clarify how our adoption of an innovative combination of technologies will reduce the environmental impact of data centers while simultaneously producing revenue from high yield agricultural operations. We utilize our new data centers to leverage energy generated from flare natural gas-powered operations to increase the environmental mitigation and revenue potential of integrated cogeneration sites.

While benefiting from Alberta’s strong incentive programs, i.e., the Alberta Carbon Capture Incentive Program, the Company hopes to reuse waste resources to produce profit from cryptocurrency mining, Alberta carbon credits for carbon sequestration and methane reduction. Since the acquisition, the Company’s process captures natural gas flares to generate significant low-cost energy to operate the cryptocurrency mining rigs. We are developing a plan to capture and redirect heat from miners and the generator to warm an enclosure suitable for growing white-legged shrimp (Penaeus Vannamei), and controlled environment agriculture. The facility will then be utilized to produce a continuous supply of fresh shrimp, red seaweed and micro-greens for local markets and restaurants. Micro-greens are a fast-growing, nutrient-dense crop that requires relatively little space and water to produce commercial yields, while significantly reducing greenhouse gas emissions.

The facility, powered by an on-site generator, utilizing flared gas, integrates carbon capture and heat reuse technologies to support the cultivation of premium crops and aquaculture. Targeted products include white-legged shrimp, nutrient-dense micro-greens, and high-demand red seaweed—key contributors to food security and economic development in the region. These sustainable practices are designed to offset the greenhouse gas emissions associated with high-energy Bitcoin mining, demonstrating a model for future growth.

On November 28, 2024, AgriFORCE Growing Systems, Ltd. (the “Company”) entered into an agreement with Rivogenix Energy Corp. to acquire and consummated the acquisition of various assets which comprise a bitcoin mining facility in Sturgeon County, Alberta, Canada. The assets were acquired for $1.5 million in cash from the Company’s own available cashflow and are comprised of a data center and approximately 130 bitcoin miners.

On January 17, 2025, AgriForce Growing Systems, Ltd. (the “Company”) purchased assets comprising a five MW Bitcoin mining facility (on two sites) in Columbiana County Ohio (the “Facility”) from Bald Eagle County, LLC. The asset purchase price (including purchase of an option to purchase the Facility) was $4.55 million. The assets purchased consist of following assets, inter alia: Nine hundred (900) S-19 J Pro BITMAIN Antminers, transformers necessary to operate the Facility, five (5) custom 40 ft Crypto Canman housing containers including 5 power distribution boxes, one Caterpillar trailer mounted standby generator, one Doosan trailer mounted generator set, eight shipping containers and five 1 MW natural gas generator power plants. The Company also received assignment of power purchase agreements to purchase gas at $0.04 per kWh and access leases to the realty underlying the Facility.

These acquisitions represented a pivotal first step in AgriFORCE’s commitment to integrating sustainable energy solutions, advanced data operations, and innovative agricultural initiatives to create long-term value for shareholders.

Utilizing energy derived from flare natural gas, these facilities not only generate consistent revenue but also minimizes their environmental footprint. Plans are in place to enhance operations by repurposing waste heat and implementing carbon capture technology, enabling diversified revenue streams through sustainable agricultural practices, such as premium crop cultivation and aquaculture systems.

The majority of the mined assets have been held on the Company’s balance sheet, as the starting point of the Company’s Bitcoin treasury strategy. We have only sold two (2) BTC to provide the Company with the necessary cash for maintaining operations. The Company is in the process of developing a written policy to govern the cold-storage and liquidation process for selling and borrowing using our bitcoin assets. As of now, the Company holds all of its bitcoin in a BitGo wallet. There is limited risk in volatility at present in bitcoin pricing due to our policy of holding bitcoin for the long term. We intent to continue to hold up to 50% of the mined assets as we continue to build upon our treasury strategy. In May 2025, we borrowed $200,000 at an interest rate of 11% per annum for 90 days, utilizing three (3) BTC as collateral for the loan. We estimate that the increase in value of the collateral will far exceed the interest costs associated with this loan.

We have an agreement with BitGo to hold our Bitcoin in cold storage with instantaneous liquidity available. They will also act as our exchange.

Our miners have an average age of three years in all of our facilities. Statistics on our miners are as follows:

Efficiency: median: 99.86%; mean: 99.58%; range: 99.26 – 99.9%. Our average downtime for scheduled and nonscheduled is 24 hours in a month. This includes activities related to weather and optimization of the power units and miner boards.

Our weighted average of cost of Bitcoin mined is approximately $44,400. Our approximate inputs are as follows:

Alberta:

We have optimized this site some since we acquired it in November 2024 and now generate approximately 0.017 BTC per day, generating 1 BTC every 59 days at an average operating cost of $685.10/day. So, the cost for 1 BTC is approximately $40,300 at this site

Ohio:

We generate approximately 0.061 BTC per day, generating 1 BTC every 16.4 days at an average cost of $2,785/day, so the Ohio cost is $45,600/BTC mined.

A weighted average of the two sites puts the total cost of approximately $44,400 per BTC mined.

Financing Initiatives

In late January 2025, the Company also closed on the first tranche of an up to $50 million financing facility with institutional investors. The Company utilized a portion of the first $7 million tranche to pay for the acquisition of the Ohio assets.

This acquisition increased the Company’s hash rate by over 600% and highlights the Company’s strategic growth plan of stranded gas assets to be coupled with sustainable agricultural assets in the coming months. Ohio has positioned itself as a pioneer in blockchain and cryptocurrency innovation, driven by initiatives like the proposed Ohio Bitcoin Reserve Act (HB 703). This legislation, aimed at leveraging Bitcoin as a hedge against currency devaluation, underscores the state’s commitment to financial and technological advancements. AgriFORCE’s investment in the Columbiana County facility aligns with these efforts, cementing Ohio’s reputation as a leader in clean energy integration and digital asset development.

Economic and Social Benefits

The facility’s operations are expected to generate meaningful economic benefits for Ohio, including:

• Job Creation: The project will create new opportunities in advanced technology and sustainable agriculture, addressing workforce development needs in the region.
• Enhanced Food Security: By implementing agricultural practices that produce nutrient-rich crops, AgriFORCE will contribute to addressing food insecurity challenges in Ohio, where over 14% of households face such issues.

(6) BCI Labs, Gainesville Florida, February 2022; and various institutional studies.

Recent Developments

Management Restructuring

On March 4, 2025, Richard Wong and the Company mutually agreed to conclude his employment with the Company. Chris Polimeni was appointed by the board to succeed Richard Wong. Richard Wong will serve in an advisory role to ensure a smooth transition while continuing to support the company’s commitment to delivering value to shareholders and customers.

Share Repurchase Program

On June 17, 2024, the Company’s Board of Directors authorized a share repurchase program (the “Repurchase Program”) under which the Company may repurchase up to $1 million of its outstanding common shares, for a period of six months, subject to contractual requirements. The Board will periodically review the Company’s Repurchase Program and may decide to extend its term or increase the authorized amount. As of June 30, 2025, no shares have been repurchased under the program.

Acquisitions

We purchased the Redwater Bitcoin Mining Facility in November 2024, and the Bald Eagle Bitcoin Mining Facility in January 2025. A discussion of the acquisitions is set forth above in footnote 3 to our financial statements included herein.

Status as an Emerging Growth Company

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for private companies.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions from, without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board (PCAOB) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until the earliest of (a) the last day of our fiscal year following the fifth anniversary of the closing of this offering, (b) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (c) the last day of our fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, or Exchange Act (which would occur if the market value of our equity securities that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter), or (d) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period.

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024

Results of Operations

The following discussion should be read in conjunction with the condensed unaudited financial statements for the interim periods ended June 30, 2025 and 2024 included in this report.

Revenues

The Company’s primary source of revenue is from its bitcoin mining operations.

We commenced mining bitcoin late in the fourth quarter of 2024 with the acquisition of the Redwater facility. As a result, there was no revenue generated from mining operations during the three and six months ended June 30, 2024. During the three and six months ended June 30, 2025, the revenue from bitcoin mining was $451,955 and $724,768, respectively. The operations resulted in the Company mining 4.3 BTC and 7.5 BTC for the three and six months ended June 30, 2025, respectively.

During the three months and six months ended June 30, 2025 and 2024, the Company also sold its hydroxyl generating devices directly to customers and indirectly to customers through sales brokers. During the three months ended June 30, 2025 and 2024, the Company sold and delivered nil and 8 hydroxyl generating devices, resulting in gross sales of nil and $41,315, respectively. During the six months ended June 30, 2025 and 2024, the Company sold and delivered 12 and 8 hydroxyl generating devices, respectively, resulting in gross sales of $71,162 and $41,315, respectively.

Operating Expenses

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

Operating expenses increased during the three months ended June 30, 2025 by $726,747, or 60%, as compared to June 30, 2024 primarily due to the following:

• Professional fees increased by $281,805, or 177%, due to increased legal and auditing services during the second quarter of 2025.
• Office and administrative costs decreased by $120,658, or 42%, due to a reduction in office related expenses resulting from a reduction in staff and the move to a virtual office.
• Repairs and Maintenance increased by $114,723 due to the increase in the repairs required for the bitcoin facilities, which did not exist in the prior year period.
• Lease expense decreased by $9,668, or 67%, due to the shift to a virtual office.
• Research and development decreased by $509, or 100%, due to settlement and write off of RCS related expenses.
• Travel and entertainment increased by $1,912, or 55%, due to increased international travel for foreign business development.
• Shareholder and regulatory costs increased by $14,355, or 49%, due to an increase in NASDAQ fees during 2025, as well as the costs associated with the Company’s shareholders’ meeting.
• Investor and public relations increased by $24,188, or 139%, due to an increase in IR campaigns to promote company products.
• Wages and salaries increased by $223,177, or 68%, due to increased staffing for Bitcoin mining and RCS.
• Share based compensation increased by $42,551, or 110%, due to share based compensation to Chairman and CEO of the company.
• Depreciation and amortization increased by $155,399, or 95%, due to the depreciation of fixed assets acquired related to the bitcoin mining operations.

Operating expenses increased during the six months ended June 30, 2025 by $1,353,087, or 53%, as compared to June 30, 2024 primarily due to the following:

• Professional fees increased by $249,913, or 76%, due to increased legal and auditing services during Q2 2025.
• Office and administrative costs decreased by $293,907, or 51%, due to a reduction in office related expenses resulting from a reduction in staff and the move to a virtual office.
• Repairs and Maintenance increased by $200,391 due to the increase in the repairs required for the bitcoin facilities, which did not exist in the prior year period.

41

• Lease expense decreased by $45,561, or 78%, due to the shift to a virtual office.
• Research and development decreased by $4,094, or 100%, due to RCS related research and development to design improved devices and testing on its effectiveness against mold.
• Travel and entertainment increased by $13,218, or 162%, due to increased international travel for foreign business development.
• Shareholder and regulatory costs increased by $34,211, or 40%, due to an increase in NASDAQ fees, as well as the costs associated with the Company’s AGM.
• Investor and public relations increased by $67,425, or 158%, due to an increase in publicity endeavors to promote company products.
• Wages and salaries increased by $438,970, or 61%, due to increased staffing for Bitcoin mining and RCS.
• Share based compensation increased by $144,377, or 225%, due to share based compensation to Chairman and CEO of the Company.
• Increase in severance expense by $124,983 due to a severance agreement for Richard Wong (former CFO) entered into during Q1 2025
• Depreciation and amortization increased by $263,796, or 80%, due to the depreciation of fixed assets acquired related to the bitcoin mining operations.

Other Expenses / (Income)

Other expense for the three months ended June 30, 2025 increased by $3,512,036, or 114%, as compared to June 30, 2024 due to the following:

• Change in fair value of derivative liabilities improved by $716,695, 100%, due to due (1) the draw down as well as the extinguishment of conversion feature derivatives as a result of significant conversions of several tranches of debentures, and (2) the Company’s stock price stabilizing during the period between, resulting in the smaller revaluation adjustment as of June 30, 2025 and 3) derivatives reclassed to APIC in Q2 2025 and no further change in fair value after Q2 2025.
• Loss on debt extinguishment increased by $2,727,319, or 145%, due to more extinguished debt revalued at losses in Q2
• (Gain) loss on conversion of convertible debt improved by $1,119,750, or 100%, due to unscheduled conversion loss being classified as extinguishments after conversion feature reclassed to equity
• Other income increased by $26,709, or 79%, due to insurance reimbursements received.
• Accretion interest on debentures increased by $127,408, or 15%, due to increased debt levels compared to the comparable prior year period.
• Loss on disposal of business of $904,112 due to settlement of the RCS business.

Other expense for the six months ended June 30, 2025 decreased when compared to the six months ended June 30, 2024 due to the following:

• Change in fair value of derivative liabilities improved by $2,283,985, or 330%, due to due (1) the draw down as well as the extinguishment of conversion feature derivatives as a result of significant conversions of several tranches of debentures; (2) the Company’s stock price stabilizing during the period between, resulting in the smaller revaluation adjustment as of June 30, 2025; and (3) derivatives reclassed to APIC in Q2 2025 and no further change in fair value after Q2 2025.
• Loss on debt extinguishment increased by $2,432,271, or 106%, due to more extinguished debt revalued at losses in Q2
• (Gain) loss on conversion of convertible debt improved by $1,479,045, or 106%, due to unscheduled conversion loss being classified as extinguishments after conversion feature reclassed to equity
• Accretion interest on debentures decreased by $265,454, or 12%, due to a lower accretion interest rates applied to Q2 2025 outstanding debentures. The higher accretion interest rates for Q2 2024 were due to higher amounts of initial convertible debenture balance being bifurcated to derivative liabilities, creating a lower opening convertible debenture balance and higher accretion interest rate.
• Loss on disposal of business of $904,112 due to settlement of litigation from the RCS business.

Liquidity and Capital Resources

The Company’s primary need for liquidity is to fund working capital requirements, capital expenditures, and for general corporate purposes. The Company’s ability to fund operations and make planned capital expenditures and debt service obligations depends on future operating performance and cash flows, which are subject to prevailing economic conditions, financial markets, business and other factors. We have recorded a net loss of $8,205,697 for the six months ended June 30, 2025. We have recorded an accumulated deficit of $68,987,816 as of June 30, 2025 and $60,782,119 as of December 31, 2024. Net cash used in operating activities for the six months ended June 30, 2025 and June 30, 2024 was $3,056,552 and $2,228,537, respectively.

The Company held $185,313 in cash as of June 30, 2025 as compared to $489,868 as of December 31, 2024.

Our future capital requirements will depend on many factors, including:

• the cost of repairs and maintenance of our power generation and mining equipment in out bitcoin mining facilities;
• the cost and timing of our regulatory activities, especially the process to obtain regulatory approval for our intellectual properties in the U.S. and in foreign countries;
• the costs of R&D activities we undertake to further develop our technology;
• the costs of commercialization activities, including sales, marketing and production;
• the costs of our mergers and acquisitions activity;
• the level of working capital required to support our growth; and
• our need for additional personnel, accounting and auditing projects, information technology or other operating infrastructure to support our growth and operations as a public company.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. The Company is at the stage of development. As such it is certain that additional financing will be needed by the Company to fund its operations and to develop and commercialize its technology until such time as the profitability of the bitcoin mining operations is sufficient to offset the corporate overhead costs of the Company. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

For the next twelve months from issuance of these financial statements, the Company will seek to obtain additional capital through the sale of debt or equity financings, including use of its At the Market facility, or other arrangements to fund operations; however, there can be no assurance that the Company will be able to raise needed capital under acceptable terms, if at all. The sale of additional equity may dilute existing shareholders and newly issued shares may contain senior rights and preferences compared to currently outstanding common shares. Issued debt securities may contain covenants and limit the Company’s ability to pay dividends or make other distributions to shareholders. If the Company is unable to obtain such additional financing, future operations would need to be scaled back or discontinued. Due to the uncertainty in the Company’s ability to raise capital, management believes that there is substantial doubt in the Company’s ability to continue as a going concern for twelve months from the issuance of these financial statements.

Cash Flows

The net cash used by operating activities for the six months ended June 30, 2025 was $3,056,552 compared to $2,228,537 for the six months ended June 30, 2024. The increase of $828,015 was primarily due to the following:

• Increase in cash flow adjustments of $145,740 for share based compensation due to share compensation issued to the CEO and Chairman of the Company.
• Increase in prepaid expenses and other current assets used in operating activities of $217,159
• Increase in accounts payable and accrued liabilities of $646,632 due to delays in paying bills, AP turnover slowed.
• In June 2025, the Company mutually agreed to return the RCS assets to the seller and, as a result, wrote off the RCS assets, which is reflected on the Statement of Cashflow in the operating activities as Loss on disposal of business $904,112.
• Increase in net loss of $645,898 due to operating expenses and other income (expense) noted above.
• Non-cash change in fair value of derivative liabilities improved by $2,283,985 due to (1) the draw down as well as the extinguishment of conversion feature derivatives as a result of significant conversions of several tranches of debentures, and (2) the Company’s stock price stabilizing during the period between, resulting in the smaller revaluation adjustment as of June 30, 2025
• Increase in loss on debt extinguishment cash adjustment by $2,432,271 as a result of unscheduled conversions of debentures into the Company’s common shares which triggered extinguishments of debt due to the change of the fair value of the debt after the conversions.
• Improvement in (gain) loss on conversion of convertible debt cash adjustment by $1,479,045 due to a significant amount of unscheduled conversions that resulted in shares issued at a higher premium above the exercise price compared to shares issued during the six months ended June 30, 2024.

Net cash used in investing activities was $5,683,307. During six months June 2025, the Company paid $4,765,000 for the Bald Eagle Bitcoin Mining Acquisition and received $105,941 for the sale of Crypto Assets.

Net cash provided by financing activities for the six months ended June 30, 2025, represents net proceeds from debentures of $8,550,000 and Line of Credit $200,000. This was partially offset by repayments on convertible debentures of $110,000, and financing costs of debentures of $157,000. Net cash provided by financing activities for the six months ended June 30, 2024, represents net proceeds from debentures of $2,250,000. This was partially offset by repayments on convertible debentures of $802,282, financing costs of debentures of $84,463.

Off Balance Sheet Arrangements

None.

Significant Accounting Policies

See the footnotes to our unaudited financial statements for the six months ended June 30, 2025 and 2024, included with this quarterly report.

As a registrant that qualifies as a smaller reporting company, AgriFORCE™ is not required to provide the information required by this Item.

Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management is also required to assess and report on the effectiveness of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2025. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework in the 2013 COSO framework. Based on this assessment, management concluded that our disclosure controls and procedures were effective.

Changes in Internal Controls.

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this item.