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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File Number: 001-36316
AgroFresh Solutions, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware46-4007249
(State or other jurisdiction of incorporation)(IRS Employer Identification Number)
One Washington Square
510-530 Walnut Street, Suite 1350
Philadelphia, PA 19106
(Address of principal executive offices)
(267) 317-9139
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareAGFSThe NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

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 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes x No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
The number of shares of common stock outstanding as of April 29, 2021 was 52,963,452.


Table of Contents

TABLE OF CONTENTS
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2

Table of Contents
PART I - FINANCIAL INFORMATION
AgroFresh Solutions, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
 March 31,
2021
December 31,
2020
ASSETS  
Current Assets:
Cash and cash equivalents$52,868 $50,030 
Accounts receivable, net of allowance for doubtful accounts of $2,286 and $2,061, respectively
54,871 63,204 
Inventories22,729 24,579 
Other current assets17,987 17,219 
Total Current Assets148,455 155,032 
Property and equipment, net11,941 12,432 
Goodwill6,622 6,925 
Intangible assets, net577,863 589,201 
Deferred income tax assets10,298 9,699 
Other assets11,542 12,494 
TOTAL ASSETS$766,721 $785,783 
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY  
Current Liabilities:
Accounts payable$15,561 $19,634 
Current portion of long-term debt3,434 3,378 
Income taxes payable3,719 3,471 
Accrued expenses and other current liabilities24,720 25,976 
Total Current Liabilities47,434 52,459 
Long-term debt255,243 264,491 
Other noncurrent liabilities5,880 6,432 
Deferred income tax liabilities39,595 37,834 
Total Liabilities348,152 361,216 
Commitments and contingencies (see Note 20)
Temporary Equity:
Series B convertible preferred stock, par value $0.0001; 150,000 shares authorized and designated and 145,046 shares outstanding at March 31, 2021, and 150,000 shares authorized, designated and outstanding at December 31, 2020
141,400 143,728 
Redeemable non-controlling interest8,207 8,446 
Stockholders’ Equity:  
Common stock, par value $0.0001; 400,000,000 shares authorized, 53,051,476 and 53,092,328 shares issued and 52,390,095 and 52,430,947 outstanding at March 31, 2021 and December 31, 2020, respectively
5 5 
Preferred stock, par value $0.0001; 1 share authorized and outstanding at March 31, 2021 and December 31, 2020
  
Treasury stock, par value $0.0001; 661,381 shares at March 31, 2021 and December 31, 2020
(3,885)(3,885)
Additional paid-in capital547,480 552,776 
Accumulated deficit(236,413)(244,836)
Accumulated other comprehensive loss(38,225)(31,667)
Total Stockholders' Equity268,962 272,393 
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY$766,721 $785,783 

 See accompanying notes to unaudited condensed consolidated financial statements.

3

Table of Contents
AgroFresh Solutions, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended
March 31, 2021
Three Months Ended
March 31, 2020
Net sales$38,992 $33,023 
Cost of sales (excluding amortization, shown separately below)10,314 8,528 
Gross profit28,678 24,495 
Research and development expenses3,298 2,642 
Selling, general and administrative expenses13,551 13,709 
Amortization of intangibles10,763 10,957 
Operating income (loss)1,066 (2,813)
Other income14,398 1,507 
Gain on foreign currency exchange433 627 
Interest expense, net(5,890)(6,966)
Income (loss) before income taxes10,007 (7,645)
Income taxes expense (benefit)1,823 (3,831)
Net income (loss) including non-controlling interest8,184 (3,814)
Less: Net loss attributable to non-controlling interests(239)(97)
Net income (loss) attributable to AgroFresh Solutions, Inc.8,423 (3,717)
Less: Dividends on convertible preferred stock6,005  
Net income (loss) attributable to AgroFresh Solutions, Inc. common stockholders$2,418 $(3,717)
Earnings (loss) per share of common shares:
Basic$0.03 $(0.07)
Diluted$0.03 $(0.07)
Weighted average shares of common stock outstanding:
Basic51,031,457 50,525,781 
Diluted52,296,288 50,525,781 
 
See accompanying notes to unaudited condensed consolidated financial statements.


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AgroFresh Solutions, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands)
Three Months Ended
March 31, 2021
Three Months Ended
March 31, 2020
Net income (loss)$8,184 $(3,814)
Other comprehensive (loss) income: 
Foreign currency translation adjustments(6,558)(9,098)
Unrealized loss on hedging activity, net of tax of $ and ($198), respectively
 (745)
Recognition of gain on hedging activity reclassified to net loss, net of tax of $ and ($78), respectively
 (279)
Comprehensive income (loss), net of tax
$1,626 $(13,936)
 
See accompanying notes to unaudited condensed consolidated financial statements.


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AgroFresh Solutions, Inc.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share and per share data)
Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
SharesAmountSharesAmountAmount
Balances, December 31, 20201 $ 53,092,328 $5 $(3,885)$552,776 $(244,836)$(31,667)$272,393 
Stock-based compensation— — — — — 752 — — 752 
Issuance of stock, net of forfeitures— — (20,242)— — — — — — 
Shares withheld for taxes— — (20,610)— — (43)— — (43)
Convertible preferred dividend— — — — — (6,005)— — (6,005)
Net income attributable to AgroFresh Solutions, Inc.— — — — — — 8,423 — 8,423 
Comprehensive loss— — — — — — — (6,558)(6,558)
Balances, March 31, 20211 $ 53,051,476 $5 $(3,885)$547,480 $(236,413)$(38,225)$268,962 

Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
SharesAmountSharesAmountAmount
Balances, December 31, 20191 $ 51,839,527 $5 $(3,885)$560,890 $(192,264)$(31,060)$333,686 
Stock-based compensation— — — — — 643 — — 643 
Issuance of stock, net of forfeitures— — 26,829 — — — — — — 
Shares withheld for taxes— — (30,368)— — (166)— — (166)
Adjustment of NCI to redemption value— — — — — (69)69 — — 
Net loss attributable to AgroFresh Solutions, Inc.— — — — — — (3,717)— (3,717)
Comprehensive loss— — — — — — — (10,122)(10,122)
Balances, March 31, 20201 $ 51,835,988 $5 $(3,885)$561,298 $(195,912)$(41,182)$320,324 

See accompanying notes to unaudited condensed consolidated financial statements.

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AgroFresh Solutions, Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)Three Months Ended
March 31, 2021
Three Months Ended
March 31, 2020
Cash flows from operating activities:
Net income (loss)$8,184 $(3,814)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization11,423 11,577 
Provision for bad debts396  
Stock-based compensation 752 643 
Amortization of deferred financing costs774 577 
Interest income on interest rate swap (357)
Deferred income taxes937 (5,231)
Loss on sales of property and equipment7 15 
Changes in operating assets and liabilities:
Accounts receivable5,576 5,773 
Inventories1,256 (3,503)
Prepaid expenses and other current assets(1,645)(2,414)
Accounts payable(2,584)421 
Accrued expenses and other liabilities(607)(1,995)
Income taxes payable447 125 
Other assets and liabilities(1,590)(763)
Net cash provided by operating activities
23,326 1,054 
Cash flows from investing activities:
Cash paid for property and equipment(430)(438)
Net cash used in investing activities(430)(438)
Cash flows from financing activities:
Repayment of long-term debt(9,904)(1,305)
Payment for redemption of convertible preferred stock(5,330) 
Payment of preferred dividends(3,002) 
Proceeds from long-term debt 1,070 
Net cash used in financing activities(18,236)(235)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(1,822)(1,369)
Net increase (decrease) in cash and cash equivalents and restricted cash2,838 (988)
Cash and cash equivalents and restricted cash, beginning of period50,030 29,817 
Cash and cash equivalents and restricted cash, end of period$52,868 $28,829 
Supplemental disclosures of cash flow information:
Cash paid for:
Cash paid for interest$5,012 $6,600 
Cash paid for income taxes$842 $1,441 
Supplemental schedule of non-cash investing and financing activities:
Accrued purchases of property and equipment$95 $32 
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents$52,868 $28,300 
Restricted cash within other current assets 529 
Total cash and cash equivalents and restricted cash$52,868 $28,829 
See accompanying notes to unaudited condensed consolidated financial statements.

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AgroFresh Solutions, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    Description of Business

AgroFresh Solutions, Inc. (the “Company”) is a global leader in delivering innovative food preservation and waste prevention solutions for fresh produce. The Company is empowering the food industry with a range of integrated solutions designed to help growers, packers and retailers improve produce freshness and quality while reducing waste. The Company has an extensive portfolio of solutions to extend freshness across the produce supply chain from near-harvest up to the point-of-sale. These include HarvistaTM for near-harvest optimization and the SmartFreshTM Quality System, the Company's flagship post-harvest freshness solutions. Additional post-harvest freshness solutions include fungicides that can be applied to meet various customer operational requirements in both foggable (ActiMist™) and liquid (ActiSeal™) delivery options. The Company has a controlling interest in Tecnidex Fruit Protection, S.A. (“Tecnidex”), a leading regional provider of post-harvest fungicides, disinfectants, coatings and packinghouse equipment for the citrus market. Beyond apples and pears, SmartFresh technology can provide ready-to-eat freshness for other fruits and vegetables including avocados, bananas, melons, tomatoes, broccoli and mangos. Additionally, LandSpringTM eases transplant shock for higher potential yields, and RipeLockTM is the Company's modified atmosphere packaging technology for fruits and vegetables. The Company has key products registered in approximately 50 countries and supports customers by protecting over 25,000 storage rooms globally.

The end-markets that the Company serves are seasonal and are generally aligned with the seasonal growing patterns of the Company’s customers. For those customers growing, harvesting or storing apples and pears, the Company’s core crops, the peak season in the southern hemisphere is the first and second quarters of each year, while the peak season in the northern hemisphere is the third and fourth quarters of each year. Within each half-year period (i.e., January through June for the southern hemisphere, and July through December for the northern hemisphere) the growing season has historically occurred during both quarters. A variety of factors, including weather, may affect the timing of the growing, harvesting and storing patterns of the Company’s customers and therefore shift the consumption of the Company’s services and products between the first and second quarters primarily in the southern hemisphere or between the third and fourth quarters primarily in the northern hemisphere.

2.    Basis of Presentation and Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. These financial statements include all adjustments that are necessary for a fair presentation of the Company's condensed consolidated results of operations, financial condition and cash flows for the periods shown, including normal, recurring accruals and other items. The condensed consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year. For additional information, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2020.

COVID-19

In March 2020, the COVID-19 outbreak was declared a National Public Health Emergency which continues to spread throughout the world and has adversely impacted global activity and contributed to significant declines and volatility in financial markets. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. There have been numerous obstacles presented and some localized financial impacts of the pandemic, including fluctuations in foreign currency exchange rates and customer demand and spending pattern changes. During the three months ended March 31, 2021, the COVID-19 pandemic did not have a significant adverse impact on the Company’s results of operations. While we are following the requirements of governmental authorities and taking additional preventative and protective measures to ensure the safety of our workforce, including remote working arrangements and varying procedures for essential workforce, the outbreak presents some uncertainty and risk with respect to the Company and its performance and financial results.

Adoption of Highly Inflationary Accounting in Argentina

GAAP requires the use of highly inflationary accounting for countries whose cumulative three-year inflation rate exceeds 100 percent. The Company closely monitors the inflation data and currency volatility in Argentina, where there are multiple data sources for measuring and reporting inflation. In the second quarter of 2018, the Argentine peso rapidly devalued relative to the U.S. dollar, which along with increased inflation, indicated that the three-year cumulative inflation rate in that country exceeded 100 percent as of June 30, 2018. As a result, the Company elected to adopt highly inflationary accounting as of July 1, 2018 for its subsidiary in Argentina. Under highly inflationary accounting, the functional currency of the Company's subsidiary in Argentina

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became the U.S. dollar, and its income statement and balance sheet will be measured in U.S. dollars using both current and historical rates of exchange. The effect of changes in exchange rates on Argentine peso-denominated monetary assets and liabilities will be reflected in earnings. As the three-year cumulative inflation rate exceeded 100 percent as of March 31, 2021, there is no change to highly inflationary accounting. As of March 31, 2021, the Company’s subsidiary in Argentina had net assets of ($4.4) million. Net sales attributable to Argentina were approximately 11% and 15% of the Company’s consolidated net sales for each of the three months ended March 31, 2021 and 2020, respectively.

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers into geographic region, product and timing of transfer of goods and services. The Company determined that disaggregating revenue into these categories achieves the disclosure objective of depicting how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Revenues for the three months ended March 31, 2021
(in thousands)
RegionNorth America
 (1)
EMEA
(2)
Latin America
(3)
Asia Pacific (4)Total Revenues
Product
1-MCP based$1,764 $5,362 $18,741 $5,963 $31,830 
Fungicides, disinfectants and coatings14 4,546 1,547  6,107 
Other*156 400 451 48 1,055 
$1,934 $10,308 $20,739 $6,011 $38,992 
Pattern of Revenue Recognition
Products transferred at a point in time$1,767 $9,908 $20,627 $5,972 $38,274 
Services transferred over time167 400 112 39 718 
$1,934 $10,308 $20,739 $6,011 $38,992 

Revenues for the three months ended March 31, 2020
(in thousands)
RegionNorth America
 (1)
EMEA
(2)
Latin America
(3)
Asia Pacific (4)Total Revenues
Product
1-MCP based$561 $5,320 $16,582 $4,815 $27,278 
Fungicides, disinfectants and coatings 3,873 594  4,467 
Other*442 439 355 42 1,278 
$1,003 $9,632 $17,531 $4,857 $33,023 
Pattern of Revenue Recognition
Products transferred at a point in time$581 $9,203 $17,439 $4,815 $32,038 
Services transferred over time422 429 92 42 985 
$1,003 $9,632 $17,531 $4,857 $33,023 

*Other includes FreshCloud, technical services and sales-type equipment leases related to Tecnidex.
(1)North America includes the United States and Canada.
(2)EMEA includes Europe, the Middle East and Africa.
(3)Latin America includes Argentina, Brazil, Chile, Costa Rica, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Peru and Uruguay.
(4)Asia Pacific includes Australia, China, India, Japan, New Zealand, the Philippines, South Korea, Taiwan and Thailand.


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Contract Assets and Liabilities

Accounting Standards Codification ("ASC") 606 Revenue from contracts with Customers requires an entity to present a revenue contract as a contract asset when the entity performs its obligations under the contract by transferring goods or services to a customer before the customer pays consideration or before payment is due. ASC 606 also requires an entity to present a revenue contract as a contract liability in instances when a customer pays consideration, or an entity has a right to an amount of consideration that is unconditional (e.g., receivable), before the entity transfers a good or service to the customer. The following table presents changes in the Company’s contract assets and liabilities during the three months ended March 31, 2021 and the year ended December 31, 2020:
(in thousands)Balance at
January 1, 2021
AdditionsDeductionsBalance at
March 31, 2021
Contract assets:
Unbilled revenue$1,484 4,125 (4,014)$1,595 
Contract liabilities:   
Deferred revenue$1,474 2,436 (2,414)$1,496 
(in thousands)Balance at
January 1, 2020
AdditionsDeductionsBalance at
December 31, 2020
Contract assets:
Unbilled revenue$1,666 13,624 (13,806)$1,484 
Contract liabilities:
Deferred revenue$1,175 5,348 (5,049)$1,474 

The Company recognizes contract assets in the form of unbilled revenue in instances where services are performed by the Company but not billed by period end. The Company recognizes contract liabilities in the form of deferred revenue in instances where a customer pays in advance for future services to be performed by the Company. The Company generally receives payments from its customers based on standard terms and conditions. No significant changes or impairment losses occurred to contract balances during the three months ended March 31, 2021. Amounts reclassified from unbilled revenue to accounts receivable for the three months ended March 31, 2021 and for the year ended December 31, 2020 were $4.0 million and $13.8 million, respectively. Amounts reclassified from deferred revenue to revenue for the three months ended March 31, 2021 and for the year ended December 31, 2020 were $2.4 million and $5.0 million, respectively.

Recently Issued Accounting Standards and Pronouncements

In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-04, "Intangibles - Goodwill and Other", which simplifies the test for goodwill impairment. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. The Company adopted this standard on January 1, 2020. The adoption of this standard did not have a material impact on the condensed consolidated financial statements of the Company.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments”, which introduces a new
current expense credit loss model to measure impairment on certain types of financial instruments. This update requires an entity to use a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. In addition, the FASB issued various amendments during 2018 and 2019 to clarify the provisions of ASU 2016-13. The standard was effective for fiscal years beginning January 1, 2020, including interim periods. The Company adopted the new guidance on January 1, 2020. The adoption of this standard did not have a material impact on the condensed consolidated financial statements of the Company.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which is part of the FASB disclosure framework project to improve the effectiveness of disclosures in the notes to the financial statements. The amendments in the new guidance remove, modify and add
certain disclosure requirements related to fair value measurements covered in Topic 820, "Fair Value Measurement". The new standard was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted the new guidance on January 1, 2020. The adoption of this standard did not have a material impact on the notes to condensed consolidated financial statements of the Company.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, "Income Taxes" and also improve consistent application by clarifying and amending existing guidance. The new standard is

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effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted the new guidance on January 1, 2021. The adoption of the new guidance did not have a material impact on the condensed consolidated financial statements of the Company.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are intended to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. The new standard is effective on a date selected by the Company between March 12, 2020 and December 31, 2022. The Company is currently evaluating the impact of adopting this guidance.

3.    Related Party Transactions
On June 13, 2020, in connection with the execution of the Investment Agreement (as defined in Note 15- Series B Convertible Preferred Stock and Stockholders’ Equity), the Company, PSP AGFS Holdings, L.P. (the “Investor”) and Rohm and Haas Company ("R&H") entered into a side agreement, pursuant to which the parties agreed that if the Investor or its affiliates has the right to designate at least 50% of the total directors on the Company’s board of directors pursuant to the Investment Agreement, so long as R&H or its affiliates beneficially owns at least 20% of the Company’s outstanding common stock (on a fully diluted, “as converted” basis), the Company and the board of directors will increase the size of the board of directors by one member and the board will elect a designee selected by R&H to fill the newly-created vacancy. Such right is in addition to any right that R&H has to appoint a member of the board pursuant to its ownership of the Company’s Series A preferred stock (see Note 15- Series B Convertible Preferred Stock and Stockholders’ Equity).

During 2016, the Company made a minority investment in RipeLocker, LLC ("RipeLocker"), a company led by George Lobisser who was a director of the Company. In February 2019, the Company made a further minority investment in RipeLocker. As of and for the three months ended March 31, 2021, there were no material amounts paid or owed to RipeLocker or Mr. Lobisser. Mr. Lobisser resigned as a director of the Company on February 18, 2021.

4.    Inventories
Inventories at March 31, 2021 and December 31, 2020 consisted of the following:
(in thousands)March 31, 2021December 31, 2020
Raw material$3,267 $3,100 
Work-in-process7,900 7,079 
Finished goods10,846 13,288 
Supplies716 1,112 
Total inventories$22,729 $24,579 

5.     Other Current Assets
The Company's other current assets at March 31, 2021 and December 31, 2020 consisted of the following:
(in thousands)March 31, 2021December 31, 2020
VAT receivable$10,399 $9,348 
Income tax receivable4,878 4,716 
Prepaid and other current assets2,710 3,155 
Total other current assets$17,987 $17,219 


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6.    Property and Equipment
Property and equipment at March 31, 2021 and December 31, 2020 consisted of the following:
(in thousands, except for useful life data)Useful life
(years)
March 31, 2021December 31, 2020
Buildings and leasehold improvements
7-20
$7,000 $6,416 
Machinery & equipment
1-12
11,998 11,981 
Furniture
1-12
2,968 3,031 
Construction in progress1,163 1,146 
23,129 22,574 
Less: accumulated depreciation(11,188)(10,142)
Total property and equipment, net$11,941 $12,432 

Depreciation expense was $0.7 million and $0.6 million for the three months ended March 31, 2021 and 2020, respectively. Depreciation expense is recorded in cost of sales, selling, general and administrative expense and research and development expense in the condensed consolidated statements of operations.

7.    Goodwill and Intangible Assets
Changes in the carrying amount of goodwill for the three months ended March 31, 2021 and the year ended December 31, 2020 were as follows:
(in thousands)March 31, 2021December 31, 2020
Beginning balance$6,925 $6,323 
Foreign currency translation
(303)602 
Ending balance$6,622 $6,925 

The Company’s intangible assets at March 31, 2021 and December 31, 2020 consisted of the following:
March 31, 2021December 31, 2020
(in thousands)Gross Carrying
Amount
Accumulated
Amortization
NetGross Carrying
Amount
Accumulated
Amortization
Net
Other intangible assets:
Developed technology$798,270 $(264,397)$533,873 $798,260 $(254,629)$543,631 
Trade name27,168 — 27,168 27,343 — 27,343 
Service provider network2,000 — 2,000 2,000 — 2,000 
Customer relationships18,580 (4,330)14,250 19,072 (4,042)15,030 
Software10,714 (10,163)551 10,865 (9,693)1,172 
Other100 (79)21 100 (75)25 
Total intangible assets$856,832 $(278,969)$577,863 $857,640 $(268,439)$589,201 

At March 31, 2021, the weighted-average amortization periods remaining for developed technology, customer relationships, software and other was 14.2, 11.7, 1.2, and 1.3 years, respectively, and the weighted-average amortization periods remaining for these finite-lived intangible assets was 14.1 years.


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Estimated annual amortization expense for finite-lived intangible assets subsequent to March 31, 2021 is as follows:
(in thousands)Amount
2021 (remaining)$31,049 
202240,912 
202340,781 
202440,778 
202540,753 
Thereafter354,422 
Total$548,695 

Amortization expense for intangible assets was $10.8 million and $11.0 million for the three months ended March 31, 2021 and 2020, respectively.

8.    Other Assets

The Company’s other assets at March 31, 2021 and December 31, 2020 consisted of the following:
(in thousands)March 31, 2021December 31, 2020
Right-of-use asset$5,521 $6,184 
Long term sales-type lease receivable2,655 2,821 
Other long term receivable3,366 3,489 
Total other assets$11,542 $12,494 

9.    Accrued and Other Current Liabilities
The Company’s accrued and other current liabilities at March 31, 2021 and December 31, 2020 consisted of the following:
(in thousands)March 31, 2021December 31, 2020
Accrued compensation and benefits$6,687 $7,778 
Accrued taxes8,286 6,649 
Lease liability1,607 1,708 
Deferred revenue1,496 1,474 
Accrued rebates payable949 390 
Insurance premium financing payable310 695 
Severance378 598 
Accrued interest69 83 
Other4,938 6,601 
Total accrued and other current liabilities$24,720 $25,976 

Other current liabilities include primarily professional services, litigation and research and development accruals.


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10.    Debt
The Company’s debt, net of unamortized deferred issuance costs, at March 31, 2021 and December 31, 2020 consisted of the following:
(in thousands)March 31, 2021December 31, 2020
Total term loan outstanding$264,563 $274,313 
Unamortized deferred issuance costs(7,847)(8,588)
Tecnidex loan outstanding1,961 2,144 
Less: Amounts due within one year3,434 3,378 
Total long-term debt due after one year$255,243 $264,491 

Restated Credit Facility

On July 27, 2020, the Company completed a comprehensive refinancing (the Refinancing) by (i) entering into an Amended and Restated Credit Agreement (the “Restated Credit Agreement”) with the other loan parties party thereto, Bank of Montreal, as administrative agent and the lenders party thereto, and (ii) consummating the transactions contemplated by the Investment Agreement (as defined and described in Note 15 – Series B Convertible Preferred Stock and Stockholders’ Equity). The Restated Credit Agreement amends and restates in its entirety the Prior Credit Facility (defined below).

The Restated Credit Agreement provides for a $25.0 million revolving credit facility (the “Restated Revolving Loan”), which matures on June 30, 2024, and a $275.0 million term credit facility (the “Restated Term Loan” and, together with the Restated Revolving Loan, the “Restated Credit Facility”), which matures on December 31, 2024. The Restated Credit Facility includes a $5.0 million swingline commitment and a $10.0 million letter of credit sub-limit. Loans under the Restated Term Loan bear interest at a rate equal to, at the Company’s option, either the Adjusted Eurodollar Rate for the interest period in effect for such borrowing plus an Applicable Rate of 6.25% per annum, or the Alternate Base Rate plus an Applicable Rate of 5.25% per annum. Loans under the Restated Revolving Loan bear interest at a rate equal to, at the Company’s option, the Adjusted Eurodollar Rate for the interest period in effect for such borrowing plus the Applicable Rate ranging from 6.25% to 6.0% per annum, based on certain ratios. The interest rate was 7.25% for the three months ended March 31, 2021. The Company is also required to pay a commitment fee on the unused portion of the Restated Revolving Loan at a rate ranging from 0.5% to 0.375%, based on certain ratios. The Company is required to make mandatory prepayments of outstanding indebtedness under the Restated Credit Agreement under certain circumstances. During the three months ended March 31, 2021, a prepayment of principal of $9.1 million was made.

The obligations of AgroFresh Inc., a wholly-owned subsidiary of the Company and the borrower under the Restated Credit Facility, are initially guaranteed by the Company and the Company’s wholly-owned subsidiary, AF Solutions Holdings LLC (together with AgroFresh Inc. and the Company, the “Loan Parties”) and may in the future be guaranteed by certain other domestic subsidiaries of the Company. The obligations of the Loan Parties under the Credit Agreement and other loan documents are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in all tangible and intangible assets of the Loan Parties, except for certain excluded assets, and equity interests of certain foreign subsidiaries of the Loan Parties held by the Loan Parties (subject to certain exclusions and limitations).

The Refinancing was deemed a partial extinguishment of the Term Loan (as defined below) under ASC Topic No. 470-50, “Debt – Modifications and Extinguishments” (Topic No. 470), whereby $107.1 million of the $403.8 million outstanding at the time of the Refinancing was deemed an extinguishment and $296.7 million was deemed a modification of debt. As such, unamortized deferred issuance costs related to the extinguishment of $0.7 million were written off in debt modification and extinguishment expenses and the remaining $1.9 million was deferred and amortized over the term of the Restated Term Loan.

In connection with the Restated Term Loan, expenses incurred related to existing lenders of $4.4 million were recognized in debt modification and extinguishment expenses. Expenses to new lenders of $1.1 million were deferred and amortized over the term of the Restated Term Loan along with $6.4 million of lender fees and issue discounts.

In total, the Company deferred debt issuance costs of $7.5 million related to the Restated Term Loan, $1.9 million related to the modification of the Term Loan and $0.5 million related to the Restated Revolving Loan. The debt issuance costs associated with the Restated Term Loan were capitalized against the principal balance of the debt, and the Restated Revolving Loan costs were capitalized in Other Assets. All issuance costs will be accreted through interest expense using the effective interest method for the duration of each respective debt facility. The interest expense related to the amortization of the Restated Credit Facility debt

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issuance costs during the three months ended March 31, 2021 was $0.5 million. As of March 31, 2021 there were $7.8 million of unamortized deferred issuance costs.

At March 31, 2021, there was $264.6 million outstanding under the Restated Term Loan and no balance outstanding under the Restated Revolving Loan. Due to the prepayment, an additional $0.3 million of deferred financing costs were expensed based on the portion of debt paid. At March 31, 2021, the Company evaluated the amount recorded under the Restated Term Loan and determined that the fair value was approximately $263.9 million. The fair value of the debt is based on quoted inactive market prices and is therefore classified as Level 2 within the valuation hierarchy.

Certain restrictive covenants are contained in the Restated Credit Agreement, and the Company was in compliance with these covenants as of March 31, 2021.

Prior Credit Facility

On July 31, 2015 (the "Closing Date"), the Company consummated a business combination (the "Business Combination"), by and between the Company and The Dow Chemical Company ("Dow), AgroFresh Inc. as the borrower and AF Solutions Holdings LLC as the guarantor, entered into a Credit Agreement with Bank of Montreal, as administrative agent (as subsequently amended prior to the Refinancing, the “Prior Credit Facility”). The Prior Credit Facility consisted of a $425.0 million term loan (the “Term Loan”), with an amortization equal to 1.00% per year, and a revolving loan facility (the “Revolving Loan”). The net proceeds of the Term Loan were used to fund a portion of the purchase price payable to Dow in connection with the Business Combination.

The Revolving Loan included a $10.0 million letter-of-credit sub-facility, issuances against which reduced the available capacity for borrowing. The Term Loan had a scheduled maturity date of July 31, 2021. As discussed above, the Prior Credit Facility was refinanced on July 27, 2020, and there were no amounts outstanding as of March 31, 2021. The interest rates on borrowings under the facilities were either the alternate base rate plus 3.75% or LIBOR plus 4.75% per annum, with a 1.00% LIBOR floor (with step-downs in respect of borrowings under the Revolving Loan dependent upon the achievement of certain financial ratios).

As of Closing Date, the Company incurred approximately $12.9 million in debt issuance costs related to the Term Loan and $1.3 million in costs related to the Revolving Loan. The debt issuance costs associated with the Term Loan were capitalized against the principal balance of the debt, and the Revolving Loan costs were capitalized in Other Assets. The interest expense related to the amortization of the Term Loan debt issuance costs during the three months ended March 31, 2020 was approximately $0.6 million.

Tecnidex Debt

On March 23, 2020, Tecnidex entered into a €1.0 million loan agreement with Banco Santander, S.A., which provides funding through March 2023 at a 1.5% interest rate. In May 2020, Tecnidex entered into a €0.3 million loan agreement with BBVA, which provides funding through May 2025 at a 2.2% interest rate. In July 2020, Tecnidex entered into a €0.6 million loan agreement with Banco Santander, S.A., which provides funding through July 2025 at a 2.5% interest rate.

Scheduled principal repayments of the Company's debt subsequent to March 31, 2021 are as follows:
(in thousands)Amount
2021 (remaining)$2,561 
20223,444 
20233,130 
2024257,263 
2025126 
Total$266,524 

Interest Rate Swap

The Company entered into an interest rate swap contract in August 2019 to hedge interest rate risk remaining outstanding with the Prior Credit Facility (which swap was rolled over to the Restated Credit Facility). During the three months ended March 31, 2020, an unrealized loss of $0.9 million was recognized in connection with this swap. The interest rate swap contract matured on December 31, 2020.


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The Company entered into an interest rate swap contract in January 2018 to hedge interest rate risk associated with the Term Loan. The hedge was settled in September 2018 for $4.0 million, which was amortized through December 31, 2020, the remaining period of the original hedge.

PPP Loan

As part of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), the Company received a Paycheck Protection Program ("PPP") loan to offset eligible costs incurred during the period. Under the terms of the PPP, PPP loans and accrued interest are forgivable after twenty-four weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the forgiveness period.

As of March 31, 2021, the Company has used the entire loan proceeds to fund its eligible payroll expenses and mortgage interest, avoiding furlough of office employees. As a result, the Company believes that it has met the PPP eligibility criteria for forgiveness and has concluded that the loan represents, in substance, a government grant that is expected to be forgiven. As such, in accordance with IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance” the Company recognized the entire loan amount as Grant Income during the three months ended June 30, 2020.

The Company does not anticipate that any portion of the loan will be ineligible for forgiveness. However, to the extent that any amount is deemed unforgivable, such amount is payable over two to five years at an interest rate of 1%, with a deferral of payments for the first six months.

11.    Leases
The Company enters into lease agreements for certain facilities and vehicles that are primarily used in the ordinary course of business. These leases are accounted for as operating leases, whereby lease expense is recognized on a straight-line basis over the term of the lease.

Most leases include an option to extend or renew the lease term. The exercise of the renewal option is at the Company's discretion. The operating lease liability includes lease payments related to options to extend or renew the lease term if the Company is reasonably certain of exercising those options. The Company, in determining the present value of lease payments, uses the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease.

Lease expense is primarily included in general and administrative expenses in the condensed consolidated statements of operations. Additional information regarding the Company's operating leases is as follows:
(in thousands)Three months ended March 31, 2021Three months ended March 31, 2020
Operating Lease Cost
Operating leases$555 $606 
Short-term leases (1)
190 87 
Total lease expense$745 $693 
(1)    Leases with an initial term of twelve months or less are not recorded on the balance sheet.

Other information on operating leases:
Three months ended March 31, 2021Three months ended March 31, 2020
Cash payments included in operating cash flows601 521 
Right-of-use assets obtained in exchange for new lease123 21 
Weighted average discount rate8.77 %9.33 %
Weighted average remaining lease term in years4.505.30


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The following table presents the contractual maturities of the Company's lease liabilities as of March 31, 2021.

(in thousands)Lease Liability
Remainder of 2021$1,596 
20221,804 
20231,438 
2024757 
2025559 
Thereafter1,177 
Total undiscounted lease payments7,331 
Less: present value adjustment1,594 
Operating lease liability$5,737 
12.    Other Noncurrent Liabilities
The Company’s other noncurrent liabilities at March 31, 2021 and December 31, 2020 consisted of the following:
(in thousands)March 31, 2021December 31, 2020
Lease liability$4,130 $4,650 
Other (1)
1,750 1,782 
Total other noncurrent liabilities$5,880 $6,432 

(1) Other noncurrent liabilities include long-term rebates and pension liabilities.

13.    Severance
Severance expense was $0.02 million and $0.04 million for the three months ended March 31, 2021 and 2020, respectively. These amounts, which do not include stock compensation expense, were recorded in selling, general and administrative expense in the condensed consolidated statements of operations. As of March 31, 2021 and December 31, 2020, the Company had a $0.4 million and $0.6 million severance liability, respectively.

14.     Redeemable Non-Controlling Interest

On November 7, 2017, the Company entered into a definitive agreement to acquire a controlling-interest in Tecnidex. The transaction was closed on December 1, 2017. At the effective date of the acquisition, the Company acquired 75% of the outstanding capital stock of Tecnidex. In connection with the acquisition of Tecnidex, the Company concurrently entered into option agreements ("Option Agreement") with the Seller related to the remaining 25% equity interest. The Option Agreement permits the residual interest to be "put" by the Seller to the Company, or to allow the Company to "call" the residual interest gradually over time as outlined in the agreement. The Seller's ownership of Tecnidex represents a non-controlling interest ("NCI") to the Company, which is classified outside of stockholders' equity as the option of the Seller is redeemable. As of March 31, 2021 the carrying amount of the NCI was $8.2 million in the condensed consolidated balance sheet. Any changes in the redemption value of the NCI are included as an adjustment to Additional paid-in capital on the balance sheet.

The following table summarizes the changes to the Company's Redeemable non-controlling interest.
(in thousands)March 31, 2021December 31, 2020
Beginning balance$(8,446)$(7,701)
Net loss attributable to redeemable non-controlling interest239 394 
Adjustment of NCI to redemption value (1,139)
Ending balance$(8,207)$(8,446)

15.    Series B Convertible Preferred Stock and Stockholders’ Equity
Series B Convertible Preferred Stock

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On June 13, 2020, the Company entered into an Investment Agreement (the “Investment Agreement”) with the Investor, an affiliate of Paine Schwartz Partners, LLC (“PSP”), pursuant to which, subject to certain closing conditions, the Investor agreed to purchase in a private placement an aggregate of $150,000,000 of convertible preferred equity of the Company. The transaction closed on July 27, 2020 and a total of 150,000 shares of the Company’s newly-designated Series B-1 Convertible Preferred Stock, par value $0.0001 per share (the “Series B-1 Preferred Stock”) were purchased in such transaction (the “Private Placement”). On September 22, 2020, following the approval of the transactions contemplated by the Investment Agreement by the necessary regulatory body, the Company issued to the Investor, for no additional consideration, a total of 150,000 shares of the Company’s newly-designated Series B-2 Convertible Preferred Stock, par value $0.0001 per share (the “Series B-2 Preferred Stock”). On September 25, 2020 (the "Exchange Date"), the Investor elected to exchange the shares of the Company’s Series B-1 Convertible Preferred Stock and Series B-2 Preferred Stock held by it for a total of 150,000 shares of the Company’s newly-designated Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”). Accordingly, effective as of the Exchange Date, the Company issued 150,000 shares of Series B Convertible Preferred Stock, par value $0.0001 per share, to the Investor and all of the shares of Series B-1 Preferred Stock and Series B-2 Preferred Stock held by the Investor were cancelled. No shares of Series B-1 Preferred Stock or Series B-2 Preferred Stock are outstanding as of March 31, 2021.

The Series B Preferred Stock ranks senior to the shares of the Company’s common stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The Series B Preferred Stock has a liquidation preference of $1,000 per share (the “Stated Value”). Holders of the Series B Preferred Stock are entitled to a cumulative dividend at a rate of 16% per annum, of which 50% will be payable in cash and 50% will be payable in kind until the first anniversary of the Closing Date, after which 50% will be payable in cash, 37.5% will be payable in kind, and the remaining 12.5% will be payable in cash or in kind, at the Company’s option, subject in each case to adjustment under certain circumstances. Dividends on the Series B Preferred Stock are cumulative and payable quarterly in arrears. All dividends that are paid in kind will accrete to, and increase, the Stated Value. The applicable dividend rate is subject to increase by 2% per annum during any period that the Company is in breach of certain provisions of the applicable Certificate of Designation of the Preferred Stock. The Series B Preferred Stock has been classified as temporary equity as it may be contingently redeemable in the event of a change of control, which is outside of the Company's control.

Associated with the Series B Preferred Stock, the Company paid $6.0 million of total dividends, of which $3.0 million were in additional preferred shares and $3.0 million were in cash for the three months ended March 31, 2021. For the three months ended March 31, 2020, the Company paid no dividends. As of March 31, 2021 and December 31, 2020, the Company had no accrued dividends.

The Series B Preferred Stock is convertible into Common Stock at the election of the holder at any time at an initial conversion price of $5.00 (the “Conversion Price”). The Conversion Price is subject to customary adjustments, including for stock splits and other reorganizations affecting the Common Stock and pursuant to certain anti-dilution provisions for below market issuances. As of March 31, 2021 and December 31, 2020, the maximum number of shares of common stock that could be issued upon conversion of the outstanding shares of Series B Preferred Stock was 30,583,399 and 31,048,800 shares, respectively.

During the three months ended March 31, 2021, the Company redeemed 4,954 shares of Series B Preferred Stock for $5.3 million. The below table outlines the change in Series B Preferred Stock during the three months ended March 31, 2021 and the year ended December 31, 2020.
Series B-1 Convertible Preferred StockSeries B-2 Convertible Preferred StockSeries B Convertible Preferred Stock
(in thousands, except share)SharesAmountSharesAmountSharesAmount
Balance at December 31, 2019 $  $  $ 
Issuance of preferred stock150,000 150,000 150,000    
Exchange to Series B preferred stock(150,000)(150,000)(150,000) 150,000 150,000 
Issuance-related expenses—  —  — (11,516)
In kind dividend—  —  — 5,244