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 SeptemberJune 30, 20202021
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 StockNASDAQ Global Select Market LLC

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 October 22, 2020July 27, 2021 was 53,054,960.52,145,077.

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PART I - FINANCIAL INFORMATION
AgroFresh Solutions, Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)thousands)
 September 30,
2020		December 31,
2019
ASSETS  
Current Assets:
Cash and cash equivalents$25,149 $29,288 
Accounts receivable, net of allowance for doubtful accounts of $2,025 and $2,232, respectively69,580 68,634 
Inventories24,444 22,621 
Other current assets17,265 11,802 
Total Current Assets136,438 132,345 
Property and equipment, net13,275 13,177 
Goodwill6,605 6,323 
Intangible assets, net599,236 631,369 
Deferred income tax assets10,502 10,317 
Other assets11,449 12,161 
TOTAL ASSETS$777,505 $805,692 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current Liabilities:
Accounts payable$13,784 $15,105 
Current portion of long-term debt3,316 4,675 
Income taxes payable7,629 5,648 
Accrued expenses and other current liabilities26,665 24,350 
Total Current Liabilities51,394 49,778 
Long-term debt264,850 398,064 
Other noncurrent liabilities5,989 7,246 
Deferred income tax liabilities35,577 16,574 
Total Liabilities357,810 471,662 
Commitments and contingencies (see Note 20)
Series B convertible preferred stock, par value $0.0001; 150,000 and 0 shares authorized, 150,000 and 0 shares designated and outstanding at September 30, 2020 and December 31, 2019, respectively140,684 0 
Stockholders’ Equity:  
Common stock, par value $0.0001; 400,000,000 shares authorized, 53,054,960 and 51,839,527 shares issued and 52,393,579 and 51,178,146 outstanding at September 30, 2020 and December 31, 2019, respectively5 5 
Preferred stock, par value $0.0001; 1 share authorized and outstanding at September 30, 2020 and December 31, 2019, respectively0 0 
Treasury stock, par value $0.0001; 661,381 shares at September 30, 2020 and December 31, 2019, respectively(3,885)(3,885)
Additional paid-in capital559,037 561,006 
Accumulated deficit(241,710)(199,621)
Accumulated other comprehensive loss(41,164)(31,060)
Total AgroFresh Stockholders’ Equity272,283 326,445 
Non-controlling interest6,728 7,585 
Total Stockholders' Equity279,011 334,030 
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY$777,505 $805,692 

 June 30,
2021		December 31,
2020
ASSETS  
Current Assets:
Cash and cash equivalents$56,694$50,030
Accounts receivable, net of allowance for doubtful accounts of $2,108 and $2,061, respectively33,46963,204
Inventories23,77324,579
Other current assets20,30817,219
Total Current Assets134,244155,032
Property and equipment, net11,62312,432
Goodwill6,7156,925
Intangible assets, net568,055589,201
Deferred income tax assets7,0579,699
Other assets11,18912,494
TOTAL ASSETS$738,883$785,783
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY  
Current Liabilities:
Accounts payable$12,909$19,634
Current portion of long-term debt3,4703,378 
Income taxes payable3,6673,471
Accrued expenses and other current liabilities22,11025,976
Total Current Liabilities42,15652,459
Long-term debt254,871264,491
Other noncurrent liabilities5,6916,432
Deferred income tax liabilities37,26637,834
Total Liabilities339,984361,216
Commitments and contingencies (see Note 20)00
Temporary Equity:
Series B convertible preferred stock, par value $0.0001; 150 shares authorized and designated and 145 shares outstanding at June 30, 2021, and 150 shares authorized, designated and outstanding at December 31, 2020144,666143,728
Redeemable non-controlling interest8,1878,446
Stockholders’ Equity:  
Common stock, par value $0.0001; 400,000 shares authorized, 52,806 and 53,092 shares issued and 52,145 and 52,431 outstanding at June 30, 2021 and December 31, 2020, respectively55
Preferred stock, par value $0.0001; 0.001 share authorized and outstanding at June 30, 2021 and December 31, 202000
Treasury stock, par value $0.0001; 661 shares at June 30, 2021 and December 31, 2020(3,885)(3,885)
Additional paid-in capital541,185552,776
Accumulated deficit(253,435)(244,836)
Accumulated other comprehensive loss(37,824)(31,667)
Total Stockholders' Equity246,046272,393
TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY$738,883$785,783

 See accompanying notes to unaudited condensed consolidated financial statements.

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AgroFresh Solutions, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)

Three Months Ended June 30,Six Months Ended June 30,
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2019		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2019		2021202020212020
Net salesNet sales$52,770 $48,972 $105,775 $109,095 Net sales21,92419,98260,91653,005
Cost of sales (excluding amortization, shown separately below)Cost of sales (excluding amortization, shown separately below)13,511 13,892 28,492 31,516 Cost of sales (excluding amortization, shown separately below)7,1046,45317,41814,981
Gross profitGross profit39,259 35,080 77,283 77,579 Gross profit14,82013,52943,49838,024
Research and development expensesResearch and development expenses2,852 2,566 8,389 9,720 Research and development expenses3,4962,8956,7945,537
Selling, general and administrative expensesSelling, general and administrative expenses13,494 14,998 39,925 47,044 Selling, general and administrative expenses13,62012,72227,17126,431
Amortization of intangiblesAmortization of intangibles10,973 11,754 32,866 35,136 Amortization of intangibles10,49910,93621,26221,893
Impairment of long lived assets0 0 0 992 
Change in fair value of contingent consideration0 (229)0 128 
Grant incomeGrant income0 0 (2,974)0 Grant income0(2,974)0(2,974)
Operating income (loss)11,940 5,991 (923)(15,441)
Other income (expense)96 (81)1,596 (119)
Debt modification and extinguishment expenses(5,028)0 (5,028)0 
Gain (loss) on foreign currency exchange1,390 54 2,466 (2,884)
Operating lossOperating loss(12,795)(10,050)(11,729)(12,863)
Other (expense) incomeOther (expense) income(46)(7)14,3521,500
Gain on foreign currency exchangeGain on foreign currency exchange9214491,3541,076
Interest expense, netInterest expense, net(4,922)(8,606)(18,401)(26,021)Interest expense, net(5,216)(6,513)(11,106)(13,479)
Gain (loss) before income taxes3,476 (2,642)(20,290)(44,465)
Loss before income taxesLoss before income taxes(17,136)(16,121)(7,129)(23,766)
Income taxes expense (benefit)Income taxes expense (benefit)25,857 (5,653)22,656 (12,530)Income taxes expense (benefit)1446301,967(3,201)
Net (loss) income including non-controlling interests(22,381)3,011 (42,946)(31,935)
Less: Net loss attributable to non-controlling interests(494)(278)(857)(336)
Net (loss) income attributable to AgroFresh Solutions, Inc(21,887)3,289 (42,089)(31,599)
Net loss including non-controlling interestNet loss including non-controlling interest(17,280)(16,751)(9,096)(20,565)
Less: Net (loss) income attributable to non-controlling interestsLess: Net (loss) income attributable to non-controlling interests(20)130(259)33
Net loss attributable to AgroFresh Solutions, Inc.Net loss attributable to AgroFresh Solutions, Inc.(17,260)(16,881)(8,837)(20,598)
Less: Dividends on convertible preferred stockLess: Dividends on convertible preferred stock4,400 0 4,400 0 Less: Dividends on convertible preferred stock6,327012,3320
(Loss) income attributable to AgroFresh Solutions, Inc. common stockholders$(26,287)$3,289 $(46,489)$(31,599)
Net loss attributable to AgroFresh Solutions, Inc. common stockholdersNet loss attributable to AgroFresh Solutions, Inc. common stockholders($23,587)($16,881)($21,169)($20,598)
Net (loss) income per share:
Loss per share of common shares:Loss per share of common shares:
BasicBasic$(0.52)$0.06 $(0.92)$(0.64)Basic($0.46)($0.33)($0.41)
DilutedDiluted$(0.52)$0.06 $(0.92)$(0.64)Diluted($0.46)($0.33)($0.41)
Weighted average shares outstanding: 
Weighted average shares of common stock outstanding:Weighted average shares of common stock outstanding:
BasicBasic51,001,852 50,227,590 50,765,829 50,138,835 Basic51,348 50,758 51,191 50,647 
DilutedDiluted51,001,852 50,288,304 50,765,829 50,138,835 Diluted51,348 50,758 51,191 50,647 
 
See accompanying notes to unaudited condensed consolidated financial statements.


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AgroFresh Solutions, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)INCOME (LOSS)
(In thousands)

Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2019		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2019
Net (loss) income$(22,381)$3,011 $(42,946)$(31,935)
Other comprehensive (loss) income: 
Unrealized gain (loss) on hedging activity, net of tax of $61, $24, ($81) and $24, respectively229 83 (304)83 
Recognition of gain on hedging activity reclassified to net loss, net of tax of ($239), ($78), ($398) and ($235), respectively(857)(278)(1,411)(834)
Foreign currency translation adjustments296 (3,823)(8,389)(903)
Comprehensive loss, net of tax$(22,714)$(1,007)$(53,050)$(33,589)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Net loss($17,280)($16,751)($9,096)($20,565)
Other comprehensive income (loss): 
Foreign currency translation adjustments401417(6,157)(8,682)
Unrealized gain (loss) on hedging activity, net of tax of $0, ($57), $0 and $142, respectively02130(533)
Recognition of gain on hedging activity reclassified to net loss, net of tax of $0, $78, $0 and $157, respectively0(279)0(556)
Comprehensive loss, net of tax($16,879)($16,400)($15,253)($30,336)
 
See accompanying notes to unaudited condensed consolidated financial statements.


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AgroFresh Solutions, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share and per share data)thousands)

Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Non-Controlling InterestTotal
Stockholders’
Equity		Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balances, December 31, 20191 $0 51,839,527 $5 $(3,885)$561,006 $(199,621)$(31,060)$7,585 $334,030 
Balances, December 31, 2020Balances, December 31, 20200 $053,092 $5($3,885)$552,776($244,836)($31,667)$272,393
Stock-based compensationStock-based compensation— — — — — 2,473 — — — 2,473 Stock-based compensation— — — — — 1,082—1,082
Issuance of stock, net of forfeituresIssuance of stock, net of forfeitures— — 1,178,663 — — — — — — — Issuance of stock, net of forfeitures— — (258)— — —
Shares withheld for taxesShares withheld for taxes— — (47,599)— — (239)— — — (239)Shares withheld for taxes— — (121)— — (266)—(266)
Issuance of common stock under employee stock purchase planIssuance of common stock under employee stock purchase plan— — 84,369 — — 197 — — — 197 Issuance of common stock under employee stock purchase plan— — 92 — — 163—163
Convertible preferred dividendConvertible preferred dividend— — — — — (4,400)— — — (4,400)Convertible preferred dividend— — — — — (12,332)—(12,332)
Adjustment of NCI to redemption valueAdjustment of NCI to redemption value— — — — — (238)238—
Net loss attributable to AgroFresh Solutions, Inc.Net loss attributable to AgroFresh Solutions, Inc.— — — — — —(8,837)—(8,837)
Comprehensive lossComprehensive loss— — — — — — (42,089)(10,104)(857)(53,050)Comprehensive loss— — — — — —(6,157)
Balances, September 30, 20201 $0 53,054,960 $5 $(3,885)$559,037 $(241,710)$(41,164)$6,728 $279,011 
Balances, June 30, 2021Balances, June 30, 20210 $052,806 $5($3,885)$541,185($253,435)($37,824)$246,046

Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Non-Controlling InterestTotal
Stockholders’
Equity		Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated
Deficit		Accumulated
Other
Comprehensive
Gain (loss)		Total
Stockholders’
Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balances, June 30, 20201 $0 52,875,089 5 (3,885)$562,584 $(219,823)$(40,831)$7,222 $305,272 
Balances, March 31, 2021Balances, March 31, 20210 $053,051 $5($3,885)$547,480($236,413)($38,225)$268,962
Stock-based compensationStock-based compensation— — — — — 872 — — — 872 Stock-based compensation— — — — — 330—330
Issuance of stock, net of forfeituresIssuance of stock, net of forfeitures— — 187,302 — — — — — — — Issuance of stock, net of forfeitures— — (237)— — —
Shares withheld for taxesShares withheld for taxes— — (7,431)— — (19)— — — (19)Shares withheld for taxes— — (100)— — (223)—(223)
Issuance of common stock under employee stock purchase planIssuance of common stock under employee stock purchase plan— — 0 — — 0 — — — 0 Issuance of common stock under employee stock purchase plan— — 92 — — 163—163
Convertible preferred dividendConvertible preferred dividend— — — — — (4,400)— — — (4,400)Convertible preferred dividend— — — — — (6,327)—(6,327)
Comprehensive (loss) income— — — — — — (21,887)(333)(494)(22,714)
Balances, September 30, 20201 $0 53,054,960 5 (3,885)$559,037 $(241,710)$(41,164)$6,728 $279,011 
Adjustment of NCI to redemption valueAdjustment of NCI to redemption value— — — — — (238)238—
Net loss attributable to AgroFresh Solutions, Inc.Net loss attributable to AgroFresh Solutions, Inc.— — — — — —(17,260)—(17,260)
Comprehensive gainComprehensive gain— — — — — —401
Balances, June 30, 2021Balances, June 30, 20210 $052,806 $5($3,885)$541,185($253,435)($37,824)$246,046

Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Non-Controlling InterestTotal
Stockholders’
Equity
SharesAmountSharesAmountAmount
Balances, December 31, 20181 $0 51,071,573 $5 $(3,885)$535,819 $(138,789)$(28,837)$8,263 $372,576 
Stock-based compensation— — — — — 2,256 — — — 2,256 
Issuance of stock, net of forfeitures— — 521,386 — — — — — — — 
Comprehensive loss— — — — — — (31,599)(1,654)(336)(33,589)
Balances, September 30, 20191 $0 51,592,959 $5 $(3,885)$538,075 $(170,388)$(30,491)$7,927 $341,243 
See accompanying notes to unaudited condensed consolidated financial statements.

Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Non-Controlling InterestTotal
Stockholders’
Equity
SharesAmountSharesAmountAmount
Balances, June 30, 20191 $0 51,620,770 $5 $(3,885)$537,259 $(173,677)$(26,473)$8,205 $341,434 
Stock-based compensation— — — — — 816 — — — 816 
Forfeiture of stock, net of issuances— — (27,811)— — — — — — — 
Comprehensive income (loss)— — — — — — 3,289 (4,018)(278)(1,007)
Balances, September 30, 20191 $0 51,592,959 $5 $(3,885)$538,075 $(170,388)$(30,491)$7,927 $341,243 














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AgroFresh Solutions, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Continued)
(In thousands)

Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Stockholders’
Equity
SharesAmountSharesAmountAmount
Balances, December 31, 20190 $051,840 $5($3,885)$560,890($192,264)($31,060)$333,686
Stock-based compensation— — — — — 1,601——1,601
Issuance of stock, net of forfeitures— — 991 — — ————
Shares withheld for taxes— — (40)— — (220)——(220)
Issuance of common stock under employee stock purchase plan— — 84 — — 197——197
Adjustment of NCI to redemption value— — — — — (396)396——
Net loss attributable to AgroFresh Solutions, Inc.— — — — — —(20,598)—(20,598)
Comprehensive loss— — — — — ——(9,771)(9,771)
Balances, June 30, 20200 $052,875 $5($3,885)$562,072($212,466)($40,831)$304,895

Preferred StockCommon StockTreasury StockAdditional Paid-in CapitalAccumulated
Deficit		Accumulated
Other
Comprehensive
Gain (Loss)		Total
Stockholders’
Equity
SharesAmountSharesAmountAmount
Balances, March 31, 20200 $051,836 $5($3,885)$561,298($195,912)($41,182)$320,324
Stock-based compensation— — — — — 958——958
Issuance of stock, net of forfeitures— — 965 — — ————
Shares withheld for taxes— — (10)— (54)——(54)
Issuance of common stock under employee stock purchase plan— — 84 — — 197——197
Adjustment of NCI to redemption value— — — — — (327)327——
Net loss attributable to AgroFresh Solutions, Inc.— — — — — —(16,881)—(16,881)
Comprehensive gain— — — — — ——351351
Balances, June 30, 20200 $052,875 $5($3,885)$562,072($212,466)($40,831)$304,895

See accompanying notes to unaudited condensed consolidated financial statements.
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AgroFresh Solutions, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
(in thousands)20212020
Cash flows from operating activities:
Net loss($9,096)($20,565)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization22,60023,145
Stock-based compensation1,0821,600
Amortization of deferred financing costs1,2661,163
Interest income on interest rate swap0(713)
Deferred income taxes2,042(5,668)
Provision (benefit) for bad debts190(81)
Loss on sales of property and equipment56126
Changes in operating assets and liabilities:
Accounts receivable27,07824,901
Inventories(506)(3,957)
Prepaid expenses and other current assets(3,804)(5,942)
Accounts payable(6,243)83
Accrued expenses and other liabilities(3,848)(4,545)
Income taxes payable2401,669
Other assets and liabilities(181)(2,061)
Net cash provided by operating activities30,8769,155
Cash flows from investing activities:
Capital expenditures(1,304)(905)
Net cash used in investing activities(1,304)(905)
Cash flows from financing activities:
Repayment of long-term debt(10,729)(2,683)
Payment for redemption of convertible preferred stock(5,330)0
Payment of preferred dividends(6,065)0
Proceeds from long-term debt01,395
Proceeds from issuance of stock under employee stock purchase plan163197
Net cash used in financing activities(21,961)(1,091)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(947)(1,357)
Net increase in cash and cash equivalents6,6645,802
Cash and cash equivalents, beginning of period50,03029,817
Cash and cash equivalents, end of period$56,694$35,619
Supplemental disclosures of cash flow information:
Cash paid for:
Cash paid for interest$9,899$12,726
Cash paid for income taxes$2,196$2,345
Supplemental schedule of non-cash investing and financing activities:
Accrued purchases of property and equipment$105$419
(in thousands)Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2019
Cash flows from operating activities:
Net loss$(42,946)$(31,935)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization34,775 36,692 
 (Benefit) provision for bad debts(124)215 
Stock-based compensation2,473 2,256 
Impairment of intangible assets0 992 
Amortization of deferred financing costs2,342 2,032 
Interest income on interest rate swap(1,809)(1,070)
Accretion of contingent consideration0 2,669 
Change in fair value of contingent consideration0 128 
Deferred income taxes18,086 (14,499)
Loss on sales of property and equipment155 2 
Changes in operating assets and liabilities:
Accounts receivable(4,297)(1,499)
Inventories(2,281)(4,424)
Prepaid expenses and other current assets(6,784)(1,429)
Accounts payable(1,274)3,855 
Accrued expenses and other liabilities2,344 (2,958)
Income taxes payable2,846 (95)
Other assets and liabilities(3,865)384 
Net cash used in operating activities(359)(8,684)
Cash flows from investing activities:
Cash paid for property and equipment(2,131)(3,271)
Other investments0 (250)
Net cash used in investing activities(2,131)(3,521)
Cash flows from financing activities:
Net proceeds from issuance of convertible preferred stock145,490 0 
Costs associated with issuance of convertible preferred stock(7,006)0 
Payment of preferred dividends(2,200)0 
Proceeds from long-term debt2,042 0 
Repayment of long-term debt(131,599)(5,056)
Payment of deferred financing costs(7,988)0 
Proceeds from issuance of stock under employee stock purchase plan259 0 
Net cash used in financing activities(1,002)(5,056)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(1,176)1,682 
Net decrease in cash and cash equivalents and restricted cash(4,668)(15,579)
Cash and cash equivalents and restricted cash, beginning of period29,817 34,852 
Cash and cash equivalents, end of period$25,149 $19,273 
Supplemental disclosures of cash flow information:
Cash paid for:
Cash paid for interest$18,381 $18,007 
Cash paid for income taxes$1,733 $2,469 
Supplemental schedule of non-cash investing and financing activities:
Accrued purchases of property and equipment$146 $62 

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 preventingreducing 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 solution.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, waxes, disinfectants, coatings and packinghouse equipment for the citrus market.market and other crops. 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.yields, and RipeLockTM is the Company's modified atmosphere packaging technology for fruits and vegetables. The Company has key products registered in overapproximately 50 countries and supports customers withby 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, and fruit quality, 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 of America ("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, 2019.2020.

COVID-19

In March 2020, the World Health Organization characterized the coronavirus ("COVID-19") a pandemic,The global health crisis caused by COVID-19 and the President ofrelated government actions and stay at home orders have negatively impacted economic activity and increased political instability across the United States declared the COVID-19globe. The outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. During the three months ended September 30, 2020, as the Company’s primary sales regions moved to the northern hemisphere, the COVID-19 pandemic continued to notcould have a significantcontinued material adverse impact on the Company’s resultseconomic and market conditions and trigger a period of operations. However, there wereglobal 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 six months ended June 30, 2021, the COVID-19 pandemic did not have a significant adverse impact on the Company’s results of operations. While the Company iswe are following the requirements of governmental authorities and taking additional preventative and protective measures to ensure the safety of itsour workforce, including implementing remote working arrangements and varying procedures for essential workforce, the Company cannot be 100% certain there will not be any incidents across its global operations that may cause service interruptions. The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of the coronavirus outbreak, although the Company operates in an industry that thus far has not been as severely impacted as others. Nevertheless, 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
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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 adoptedelected 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 became the U.S. dollar, and its income statement and balance sheet arewill be measured in U.S. dollars using both current and

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historical rates of exchange. The effect of changes in exchange rates on Argentine peso-denominated monetary assets and liabilities arewill be reflected in earnings. As the three-year cumulative inflation rate exceeded 100 percent as of SeptemberJune 30, 2020,2021, there is no change to highly inflationary accounting. As of SeptemberJune 30, 2020,2021, the Company’s subsidiary in Argentina had a net asset positionassets of $3.0($4.5) million. Net sales attributable to Argentina were approximately 6%8% and 6%11% of the Company’s consolidated net sales for each of the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, 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 SeptemberJune 30, 2020
(in thousands)
RegionNorth America
(1)		EMEA
(2)		Latin America
(3)		Asia Pacific (4)Total Revenues
Product
1-MCP based$17,122 $28,906 $845 $1,165 $48,038 
Fungicides, waxes, coatings and disinfectants534 3,011 575 0 4,120 
Other*190 115 210 97 612 
$17,846 $32,032 $1,630 $1,262 $52,770 
Pattern of Revenue Recognition
Products transferred at a point in time$17,663 $31,921 $1,420 $1,165 $52,169 
Services transferred over time183 111 210 97 601 
$17,846 $32,032 $1,630 $1,262 $52,770 
2021
(in thousands)
RegionNorth America
 (1)		EMEA
(2)		Latin America
(3)		Asia Pacific
(4)		Total Revenues
Product
1-MCP based$580$5,434$5,623$5,212$16,849
Fungicides, disinfectants and coatings03,31799904,316
Other*23574350100759
$815$8,825$6,972$5,312$21,924
Pattern of Revenue Recognition
Products transferred at a point in time$588$8,755$6,725$5,218$21,286
Services transferred over time2277024794638
$815$8,825$6,972$5,312$21,924

Revenues for the three months ended SeptemberJune 30, 20192020
(in thousands)
RegionNorth America
 (1)		EMEA
(2)		Latin America
(3)		Asia Pacific
(4)		Total Revenues
Product
1-MCP based$1,581$2,997$5,790$5,558$15,926
Fungicides, disinfectants and coatings02,76658103,347
Other*90146373100709
$1,671$5,909$6,744$5,658$19,982
Pattern of Revenue Recognition
Products transferred at a point in time$1,579$5,763$6,479$5,558$19,379
Services transferred over time92146265100603
$1,671$5,909$6,744$5,658$19,982
(in thousands)
RegionNorth America
(1)		EMEA
(2)		Latin America
(3)		Asia Pacific (4)Total Revenues
Product
1-MCP based$19,726 $22,377 $1,680 $1,605 $45,388 
Fungicides, waxes, coatings and disinfectants0 2,857 198 0 3,055 
Other*218 86 108 117 529 
$19,944 $25,320 $1,986 $1,722 $48,972 
Pattern of Revenue Recognition
Products transferred at a point in time$19,802 $25,238 $1,877 $1,605 $48,522 
Services transferred over time142 82 109 117 450 
$19,944 $25,320 $1,986 $1,722 $48,972 








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Revenues for the ninesix months ended SeptemberJune 30, 20202021
(in thousands)(in thousands)(in thousands)
RegionRegionNorth America
(1)		EMEA
(2)		Latin America
(3)		Asia Pacific (4)Total RevenuesRegionNorth America
 (1)		EMEA
(2)		Latin America
(3)		Asia Pacific
(4)		Total Revenues
ProductProductProduct
1-MCP based1-MCP based$19,264 $37,223 $23,217 $11,538 $91,242 1-MCP based$2,344$10,796$24,364$11,176$48,680
Fungicides, waxes, coatings and disinfectants534 9,650 1,750 0 11,934 
Fungicides, disinfectants and coatingsFungicides, disinfectants and coatings147,8632,546010,423
Other*Other*722 700 938 239 2,599 Other*3914738011481,813
$20,520 $47,573 $25,905 $11,777 $105,775 $2,749$19,132$27,711$11,324$60,916
Pattern of Revenue RecognitionPattern of Revenue RecognitionPattern of Revenue Recognition
Products transferred at a point in timeProducts transferred at a point in time$19,823 $46,887 $25,338 $11,538 $103,586 Products transferred at a point in time$2,355$18,663$27,352$11,191$59,561
Services transferred over timeServices transferred over time697 686 567 239 2,189 Services transferred over time3944693591331,355
$20,520 $47,573 $25,905 $11,777 $105,775 $2,749$19,132$27,711$11,324$60,916

Revenues for the ninesix months ended SeptemberJune 30, 20192020
(in thousands)
RegionNorth America
(1)		EMEA
(2)		Latin America
(3)		Asia Pacific (4)Total Revenues
Product
1-MCP based$23,084 $31,965 $27,503 $11,287 $93,839 
Fungicides, waxes, coatings and disinfectants0 11,365 1,458 0 12,823 
Other*954 927 381 171 2,433 
$24,038 $44,257 $29,342 $11,458 $109,095 
Pattern of Revenue Recognition
Products transferred at a point in time$23,380 $43,374 $29,159 $11,309 $107,222 
Services transferred over time658 883 183 149 1,873 
$24,038 $44,257 $29,342 $11,458 $109,095 

(in thousands)
RegionNorth America
 (1)		EMEA
(2)		Latin America
(3)		Asia Pacific
(4)		Total Revenues
Product
1-MCP based$2,142$8,317$22,372$10,373$43,204
Fungicides, disinfectants and coatings06,6391,17507,814
Other*5325857281421,987
$2,674$15,541$24,275$10,515$53,005
Pattern of Revenue Recognition
Products transferred at a point in time$2,160$14,966$23,918$10,373$51,417
Services transferred over time5145753571421,588
$2,674$15,541$24,275$10,515$53,005

*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)             
(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.

Contract Assets and Liabilities

ASCAccounting Standards Codification ("ASC") 606Revenue 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

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table presents changes in the Company’s contract assets and liabilities during the ninesix months ended SeptemberJune 30, 20202021 and the year ended December 31, 2019:2020:

(in thousands)Balance at
January 1, 2021		AdditionsDeductionsBalance at
June 30, 2021
Contract assets:
Unbilled revenue$1,4847,331(7,667)$1,148
Contract liabilities:   
Deferred revenue$1,4742,762(3,349)$887
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(in thousands)Balance at
January 1, 2020		AdditionsDeductionsBalance at
September 30, 2020
Contract assets:
Unbilled revenue$1,666 11,670 (9,423)$3,913 
Contract liabilities:   
Deferred revenue$1,175 4,437 (4,239)$1,373 

(in thousands)(in thousands)Balance at
January 1, 2019		AdditionsDeductionsBalance at
December 31, 2019		(in thousands)Balance at
January 1, 2020		AdditionsDeductionsBalance at
December 31, 2020
Contract assets:Contract assets:Contract assets:
Unbilled revenueUnbilled revenue$1,956 10,029 (10,319)$1,666 Unbilled revenue$1,66613,624(13,806)$1,484
Contract liabilities:Contract liabilities:Contract liabilities:
Deferred revenueDeferred revenue$1,280 3,032 (3,137)$1,175 Deferred revenue$1,1755,348(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 ninesix months ended SeptemberJune 30, 2020.2021. Amounts reclassified from unbilled revenue to accounts receivable for the ninesix months ended SeptemberJune 30, 20202021 and for the year ended December 31, 20192020 were $9.4$7.7 million and $10.3$13.8 million, respectively. Amounts reclassified from deferred revenue to revenue for the ninesix months ended SeptemberJune 30, 20202021 and for the year ended December 31, 20192020 were $4.2$3.3 million and $3.1$5.0 million, respectively.

Recently Issued Accounting Standards and Pronouncements

In January 2017, the Financial Accounting Standards Board ("FASB") issued ASUAccounting Standards Update ("ASU") No. 2017-04, "Intangibles - Goodwill and Other", which simplifies the test for goodwill impairment. The guidance wasis 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 receivable,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 this standardthe 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 820.820, "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 this standardthe 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 effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. EarlyThe Company adopted the new guidance on January 1, 2021. The adoption is permitted, withof the amendments to be applied onnew guidance did not have a retrospective, modified retrospective or prospective basis, dependingmaterial impact on the specific amendment. The Company is currently evaluatingcondensed consolidated financial statements of the impact of adopting this guidance.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

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are met. The amendments are intended to ease the potential burden in accounting for, or recognizing the effects of, reference rate
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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.     Business Combinations and Asset Acquisition

Business Combination with Dow

On July 31, 2015 (the "Closing Date"), the Company consummated a business combination (the “Business Combination”) pursuant to the Stock Purchase Agreement, dated April 30, 2015 (the “Purchase Agreement”), by and between the Company and The Dow Chemical Company ("Dow") providing for the acquisition by the Company of the AgroFresh business from Dow, resulting in AgroFresh Inc. becoming a wholly-owned, indirect subsidiary of the Company. Pursuant to the Purchase Agreement, the Company paid the following consideration to Rohm and Haas Company (“R&H”), a subsidiary of Dow: (i) 17.5 million shares of common stock and (ii) $635 million in cash.

Pursuant to a Tax Receivables Agreement among the Company, Dow, R&H and AgroFresh Inc. entered into in connection with the consummation of the Business Combination, as amended on April 4, 2017 (as so amended, the “Tax Receivables Agreement”), the Company was required to pay to Dow 50% of the annual tax savings, if any, in U.S. federal, state and local income tax or franchise tax that the Company actually realized as a result of the increase in tax basis of the AgroFresh assets resulting from a Section 338(h)(10) election that the Company and Dow made in connection with the Business Combination. In December 2019, the Tax Receivables Agreement was terminated, and the Company paid to Dow an aggregate of $16 million in settlement of all past and estimated future liabilities that would have been owed under the Tax Receivables Agreement. Based on this termination, the Company recorded a reduction of liabilities of $27.9 million. This reduction, net of deferred income taxes of $5.9 million, has been recorded to additional paid-in capital since the Tax Receivable Agreement was with a related party and is treated as a capital transaction.

Acquisition of Tecnidex
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. Tecnidex is a leading regional provider of post-harvest fungicides, waxes, coatings, and disinfectants for the citrus market, with clients in 18 countries. For over 35 years, Tecnidex has been helping fruit and vegetable producers offer clean, safe and high-quality products to their regional clients. The acquisition was accounted for as a purchase in accordance with ASC 805, Business Combination.
At the effective date of the acquisition, the Company agreed to pay holders of Tecnidex an estimated $25.0 million in cash for 75% of the outstanding capital stock, of which $20.0 million was paid on December 1, 2017. In 2018, the purchase price was finalized as $22.3 million after giving effect to working capital, net debt and other adjustments. The remaining $2.3 million was paid during 2018.
In accordance with the acquisition method of accounting, the Company has allocated the purchase price to the estimated fair values of the identifiable assets acquired and liabilities assumed, with any excess allocated to goodwill. The preliminary assessment of fair value of the contingent consideration payments on the acquisition date was approximately $0.7 million and was estimated by applying a probability-based income approach utilizing an appropriate discount rate. This estimation was based on significant inputs that are not observable in the market, referred to as Level 3 inputs. During the year ended December 31, 2019 there was a final adjustment made to consideration payable to holders of Tecnidex which resulted in a fair value adjustment of $0.4 million.

4.    Related Party Transactions
The Company is a party to an ongoing transition services agreement with Dow, a related party. The Company incurred expenses for such transition services for the nine months ended September 30, 2020 and 2019 of $0.04 million and $0.09 million, respectively. As of September 30, 2020 and December 31, 2019, the Company had outstanding amounts payable to Dow of $0.0 million and $0.1 million, respectively.

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&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
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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).

Refer to Note 3 - Business Combinations and Asset Acquisition regarding the contingent consideration owed to Dow as part of the Business Combination, as well as certain other agreements entered into in connection with the Business Combination, including the termination of the Tax Receivables Agreement in 2019.

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 ninesix months ended SeptemberJune 30, 2020,2021, there were 0 material amounts paid or owed to RipeLocker or Mr. Lobisser. Mr. Lobisser resigned as a director of the Company on February 18, 2021.

5.4.    Inventories
Inventories at SeptemberJune 30, 20202021 and December 31, 20192020 consisted of the following:
(in thousands)September 30, 2020December 31, 2019
Raw material$3,026 $3,401 
Work-in-process8,575 7,278 
Finished goods11,619 10,974 
Supplies1,224 968 
Total inventories$24,444 $22,621 
(in thousands)June 30, 2021December 31, 2020
Raw material$3,077$3,100
Work-in-process5,5427,079
Finished goods14,36213,288
Supplies7921,112
Total inventories$23,773$24,579

6.5.     Other Current Assets
The Company's other current assets at SeptemberJune 30, 20202021 and December 31, 20192020 consisted of the following:
(in thousands)(in thousands)September 30, 2020December 31, 2019(in thousands)June 30, 2021December 31, 2020
VAT receivableVAT receivable$7,627 $4,925 VAT receivable$11,192$9,348
Prepaid income tax asset5,349 3,616 
Income tax receivableIncome tax receivable7,0724,716
Prepaid and other current assetsPrepaid and other current assets4,289 3,261 Prepaid and other current assets2,0443,155
Total other current assetsTotal other current assets$17,265 $11,802 Total other current assets$20,308$17,219

7.6.    Property and Equipment
Property and equipment at SeptemberJune 30, 20202021 and December 31, 20192020 consisted of the following:
(in thousands, except for useful life data)Useful life
(years)		September 30, 2020December 31, 2019
Buildings and leasehold improvements7-20$7,032 $6,508 
Machinery & equipment1-1211,953 10,954 
Furniture1-122,944 2,681 
Construction in progress1,149 902 
23,078 21,045 
Less: accumulated depreciation(9,803)(7,868)
Total property and equipment, net$13,275 $13,177 
(in thousands, except for useful life data)Useful life
(years)		June 30, 2021December 31, 2020
Buildings and leasehold improvements7-20$7,036$6,416
Machinery & equipment1-1212,32811,981
Furniture1-122,9973,031
Construction in progress1,0971,146
23,45822,574
Less: accumulated depreciation(11,835)(10,142)
Total property and equipment, net$11,623$12,432


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Depreciation expense was $0.7 million and $0.6 million for the three months ended SeptemberJune 30, 20202021 and 2019,2020, respectively and $1.9 million and $1.6$1.3 million for each of the ninesix months ended SeptemberJune 30, 20202021 and 2019, respectively.2020. 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.

8.7.    Goodwill and Intangible Assets
Changes in the carrying amount of goodwill for the ninesix months ended SeptemberJune 30, 20202021 and the year ended December 31, 20192020 were as follows:
(in thousands)June 30, 2021December 31, 2020
Beginning balance$6,925$6,323
Foreign currency translation
(210)602
Ending balance$6,715$6,925

The Company’s intangible assets at June 30, 2021 and December 31, 2020 consisted of the following:
June 30, 2021December 31, 2020
(in thousands)Gross Carrying
Amount		Accumulated
Amortization		NetGross Carrying
Amount		Accumulated
Amortization		Net
Other intangible assets:
Developed technology$798,253($274,345)$523,908$798,260($254,629)$543,631
Trade name27,222—27,22227,343—27,343
Service provider network2,000—2,0002,000—2,000
Customer relationships18,731(4,758)13,97319,072(4,042)15,030
Software11,342(10,407)93510,865(9,693)1,172
Other100(83)17100(75)25
Total intangible assets$857,648($289,593)$568,055$857,640($268,439)$589,201

At June 30, 2021, the weighted-average amortization periods remaining for developed technology, customer relationships, software and other was 14.0, 11.5, 1.9, and 1.0 years, respectively, and the weighted-average amortization periods remaining for these finite-lived intangible assets was 13.9 years.

Estimated annual amortization expense for finite-lived intangible assets subsequent to June 30, 2021 is as follows:
(in thousands)Amount
2021 (remaining)$20,778
202241,054
202340,931
202440,812
202540,729
Thereafter354,529
Total$538,833

Amortization expense for intangible assets was $10.5 million and $10.9 million for the three months ended June 30, 2021 and 2020, respectively and $21.3 million and $21.9 million for the six months ended June 30, 2021 and 2020, respectively.

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(in thousands)September 30, 2020December 31, 2019
Beginning balance$6,323 $6,670 
Foreign currency translation
282 (347)
Ending balance$6,605 $6,323 

The Company’s intangible assets at September 30, 2020 and December 31, 2019 consisted of the following:
September 30, 2020December 31, 2019
(in thousands)Gross Carrying
Amount		Accumulated
Amortization		ImpairmentNetGross Carrying
Amount		Accumulated
Amortization		ImpairmentNet
Other intangible assets:
Developed technology$798,240 $(244,918)$— $553,322 $758,760 $(206,998)$— $551,762 
In-process research and development0 0 — 0 39,000 (7,222)— 31,778 
Trade name27,158 — — 27,158 27,200 — 27,200 
Service provider network2,000 — — 2,000 2,000 — — 2,000 
Customer relationships18,551 (3,548)— 15,003 18,058 (2,993)— 15,065 
Software10,691 (8,967)0 1,724 9,861 (5,347)(992)3,522 
Other100 (71)— 29 100 (58)— 42 
Total intangible assets$856,740 $(257,504)$0 $599,236 $854,979 $(222,618)$(992)$631,369 

During 2019, the Company recognized an impairment charge of $1.0 million associated with Verigo software following a partnership agreement with a new technology provider. During the Company's annual impairment testing conducted for the year ended December 31, 2019, the Company accelerated the amortization of Ripelock developed technology based on the Company's remaining expected useful life of the technology. This resulted in an increase to amortization expense of $34.0 million.

At September 30, 2020, the weighted-average amortization periods remaining for developed technology, in-process R&D, customer relationships, software and other was 14.8, 14.0, 12.1, 1.0, and 1.8 years, respectively, and the weighted-average amortization period remaining for these finite-lived intangible assets was 14.6 years.

Estimated annual amortization expense for finite-lived intangible assets subsequent to September 30, 2020 is as follows:
(in thousands)Amount
2020 (remaining)$12,045 
202141,730 
202240,893 
202340,791 
202440,791 
Thereafter393,828 
Total$570,078 

Amortization expense for intangible assets was $11.0 million and $11.8 million for the three months ended September 30, 2020 and 2019, respectively, and $32.9 million and $35.1 million for the nine months ended September 30, 2020 and 2019, respectively.

9.8.    Other Assets

The Company’s other assets at SeptemberJune 30, 20202021 and December 31, 20192020 consisted of the following:
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(in thousands)(in thousands)September 30, 2020December 31, 2019(in thousands)June 30, 2021December 31, 2020
Right-of-use assetRight-of-use asset$5,657 $6,599 Right-of-use asset$5,283$6,184
Long term sales-type lease receivableLong term sales-type lease receivable2,354 2,501 Long term sales-type lease receivable2,5832,821
Other long term receivableOther long term receivable3,438 3,061 Other long term receivable3,3233,489
Total other assetsTotal other assets$11,449 $12,161 Total other assets$11,189$12,494

10.9.    Accrued and Other Current Liabilities
The Company’s accrued and other current liabilities at SeptemberJune 30, 20202021 and December 31, 20192020 consisted of the following:
(in thousands)(in thousands)September 30, 2020December 31, 2019(in thousands)June 30, 2021December 31, 2020
Accrued compensation and benefitsAccrued compensation and benefits$7,111 $7,307 Accrued compensation and benefits$7,382$7,778
Accrued taxesAccrued taxes6,501 3,017 Accrued taxes6,6656,649
Lease liabilityLease liability1,368 1,493 Lease liability1,6101,708
Deferred revenueDeferred revenue8871,474
Accrued rebates payableAccrued rebates payable3,001 1,377 Accrued rebates payable221390
Insurance premium financing payableInsurance premium financing payable1,151 1,000 Insurance premium financing payable0695
SeveranceSeverance218 444 Severance1,297598
Deferred revenue1,373 1,175 
Accrued interestAccrued interest66 71 Accrued interest7683
Interest rate swap290 0 
OtherOther5,586 8,466 Other3,9726,601
Total accrued and other current liabilitiesTotal accrued and other current liabilities$26,665 $24,350 Total accrued and other current liabilities$22,110$25,976

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

11.10.    Debt
The Company’s debt, net of unamortized deferred issuance costs, at SeptemberJune 30, 20202021 and December 31, 20192020 consisted of the following:
(in thousands)(in thousands)September 30, 2020December 31, 2019(in thousands)June 30, 2021December 31, 2020
Total term loan outstandingTotal term loan outstanding$275,000 $405,875 Total term loan outstanding$263,876$274,313
Unamortized deferred issuance costsUnamortized deferred issuance costs(9,018)(3,886)Unamortized deferred issuance costs(7,387)(8,588)
Tecnidex loan outstandingTecnidex loan outstanding2,184 750 Tecnidex loan outstanding1,8522,144
Less: Amounts due within one yearLess: Amounts due within one year3,316 4,675 Less: Amounts due within one year3,4703,378
Total long-term debt due after one yearTotal long-term debt due after one year$264,850 $398,064 Total long-term debt due after one year$254,871$264,491

RestatedAmended 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“Amended 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 RestatedAmended Credit Agreement amends and restates in its entirety the Prior Credit Facility (defined below).

The RestatedAmended Credit Agreement provides for a $25.0 million revolving credit facility (the “Restated“Amended Revolving Loan”), which matures on June 30, 2024, and a $275.0 million term credit facility (the “Restated“Amended Term Loan” and, together with the RestatedAmended Revolving Loan, the “Restated“Amended Credit Facility”), which matures on December 31, 2024. The RestatedAmended Credit Facility includes a $5.0 million swingline commitment and a $10.0 million letter of credit sub-limit. Loans under the RestatedAmended 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 RestatedAmended Revolving Loan bear interest at a rate equal to, at the Company’s option, the Adjusted Eurodollar Rate

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for the interest period in effect for such borrowing plus the Applicable Rate ranging from 6.25% to 6.0% per annum, based on
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certain ratios. The interest rate was 7.25% for the three and six months ended SeptemberJune 30, 2020.2021. The Company is also required to pay a commitment fee on the unused portion of the RestatedAmended 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 RestatedAmended 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 RestatedAmended 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���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 RestatedAmended Term Loan.

In connection with the RestatedAmended 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 RestatedAmended 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 RestatedAmended Term Loan, $1.9 million related to the modification of the Term Loan and $0.5 million related to the RestatedAmended Revolving Loan. The debt issuance costs associated with the RestatedAmended Term Loan were capitalized against the principal balance of the debt, and the RestatedAmended 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 RestatedAmended Credit Facility debt issuance costs during the three and six months ended SeptemberJune 30, 20202021 was $0.3$0.5 million and $0.9 million. As of SeptemberJune 30, 20202021 there were $9.0$7.4 million of unamortized deferred issuance costs.

At SeptemberJune 30, 2020,2021, there was $275.0$263.9 million outstanding under the RestatedAmended Term Loan and 0 balance outstanding under the RestatedAmended 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 SeptemberJune 30, 2020,2021, the Company evaluated the amount recorded under the RestatedAmended Term Loan and determined that the fair value was approximately $267.4$264.9 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 RestatedAmended Credit Agreement, and the Company was in compliance with these covenants as of SeptemberJune 30, 2020.2021.

Prior Credit Facility

On July 31, 2015 in connection with(the "Closing Date"), the consummation ofCompany consummated a business combination (the "Business Combination"), by and between the Business Combination,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 reducereduced 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 0 amounts outstanding as of SeptemberJune 30, 2020.2021. The interest rates on borrowings under the facilitiesPrior Credit Facility 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 the 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

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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 and six months ended SeptemberJune 30, 2020 and 2019, was approximately $0.2$0.6 million, and $0.6 million, respectively. The interest expense related to the amortization of the Term Loan
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debt issuance costs during the nine months ended September 30, 2020 and 2019 was approximately $1.4 million and $1.7$1.2 million, respectively.

Tecnidex Debt

OnIn 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 SeptemberJune 30, 20202021 are as follows:
(in thousands)(in thousands)Amount(in thousands)Amount
2020 (remaining)$815 
20213,348 
2021 (remaining)2021 (remaining)$1,744
202220223,390 20223,453
202320233,181 20233,136
2024 and thereafter$266,450 
20242024257,267
20252025128
TotalTotal$277,184 Total$265,728

Interest Rate Swap

The Company entered into an interest rate swap contract in August 2019 to hedge interest rate risk remaining outstanding with the RestatedPrior Credit Facility.Facility (which swap was rolled over to the Amended Credit Facility). During the three and ninesix months ended SeptemberJune 30, 2020, an unrealized gain of $0.3 million and an unrealized loss of $0.4$0.7 million was recognized, respectively, in connection with this swap, which is still outstanding.swap. The interest rate swap contract maturesmatured on December 31, 2020.

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 is beingwas 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 bewould have been reduced if the borrower terminatesterminated employees or reducesreduced salaries during the forgiveness period.

As of September 30, 2020, theThe 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 believesbelieved that it hashad 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 has recognized the entire loan amount as Grant Income at Septemberduring the three months ended June 30, 2020.

The Company does not anticipate taking any action that would cause any portionfull amount of this loan was forgiven during the loan to 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.three months ended June 30, 2021.

12.11.    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
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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.


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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 September 30, 2020Three months ended September 30, 2019Nine months ended September 30, 2020Nine months ended September 30, 2019
Operating leases$662 $591 $1,916 $1,849 
Short-term leases (1)
6 5 182 52 
Total lease expense$668 $596 $2,098 $1,901 

Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2021202020212020
Operating Lease Cost
Operating leases$548$648$1,103$1,254
Short-term leases (1)
22489414176
Total lease expense$772$737$1,517$1,430
(1)    Leases with an initial term of twelve months or less are not recorded on the balance sheet.

Other information on operating leasesNine months ended September 30, 2020Nine months ended September 30, 2019
Cash payments included in operating cash flows$1,645 $1,625 
Right-of-use assets obtained in exchange for new lease$769 $376 
Weighted average discount rate9.11 %9.33 %
Weighted average remaining lease term in years5.095.53
Other information on operating leases:
Six Months Ended June 30,
20212020
Cash payments included in operating cash flows$1,145$854
Right-of-use assets obtained in exchange for new lease$242$795
Weighted average discount rate8.79 %9.03 %
Weighted average remaining lease term in years4.4 years5.0 years

The following table presents the contractual maturities of the Company's lease liabilities as of SeptemberJune 30, 2020:
(in thousands)Lease Liability
Remainder of 2020$485 
20211,784 
20221,496 
20231,228 
2024 and thereafter2,290 
Total undiscounted lease payments7,283 
Less: present value adjustment1,450 
Operating lease liability$5,833 
2021.

The following table presents the contractual maturities of the Company's lease liabilities as of December 31, 2019:
(in thousands)(in thousands)Future lease Payments(in thousands)Lease Liability
2020$1,939 
20211,670 
Remainder of 2021Remainder of 2021$1,058
202220221,509 20221,864
202320231,294 20231,487
2024 and thereafter2,380 
20242024782
20252025576
ThereafterThereafter1,182
Total undiscounted lease paymentsTotal undiscounted lease payments8,792 Total undiscounted lease payments6,949
Less: present value adjustmentLess: present value adjustment1,960 Less: present value adjustment1,467
Operating lease liabilityOperating lease liability$6,832 Operating lease liability$5,482
13.12.    Other Noncurrent Liabilities
The Company’s other noncurrent liabilities at SeptemberJune 30, 20202021 and December 31, 20192020 consisted of the following:
(in thousands)September 30, 2020December 31, 2019
Lease liability$4,465 $5,339 
Other (1)
1,524 1,907 
Total other noncurrent liabilities$5,989 $7,246 
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(in thousands)June 30, 2021December 31, 2020
Lease liability$3,872$4,650
Other (1)
1,8191,782
Total other noncurrent liabilities$5,691$6,432

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

14.13.    Severance
Severance expense was $0.4$1.5 million and $0.3$0.1 million for the three months ended SeptemberJune 30, 20202021 and 2019,2020, respectively, and $0.5$1.6 million and $1.0$0.1 million for the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, 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 SeptemberJune 30, 20202021 and December 31, 2019,2020, the Company had a $0.2$1.3 million and $0.4$0.6 million severance liability, respectively.


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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 June 30, 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)June 30, 2021December 31, 2020
Beginning balance($8,446)($7,701)
Net loss attributable to redeemable non-controlling interest497394
Adjustment of NCI to redemption value(238)(1,139)
Ending balance($8,187)($8,446)

15.    Series B Convertible Preferred Stock and Stockholders’ Equity
Series B Convertible Preferred Stock
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. NoNaN shares of Series B-1 Preferred Stock or Series B-2 Preferred Stock are outstanding as of SeptemberJune 30, 2020.2021.

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 beis payable in cash and 50% will beis 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 $4.4 million of total dividends of which $2.2$3.3 million were in additional preferred shareskind and $2.2$3.1 million were in cash forduring the three months ended June 30, 2021. The Company paid dividends of $6.3 million in kind and $6.1 million in cash during the six months ended June 30, 2021. The Company paid 0 dividends during the three and ninesix months ended SeptemberJune 30, 2020 respectively. Forassociated with the three and nine months ended September 30, 2019, the Company paid 0 dividends.Series B Preferred Stock. As of SeptemberJune 30, 20202021 and December 31, 2019,2020, the Company had 0 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

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other reorganizations affecting the Common Stock and pursuant to certain anti-dilution provisions for below market issuances. As of SeptemberJune 30, 20202021 and December 31, 2019,2020, the maximum number of shares of common stock that could be issued upon conversion of the outstanding shares of Series B Preferred Stock was 30,440,000approximately 31.2 million and 031.0 million shares, respectively.

During the six months ended June 30, 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 ninesix months ended SeptemberJune 30, 2021 and the year ended December 31, 2020.
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Series B-1 Convertible Preferred StockSeries B-2 Convertible Preferred StockSeries B Convertible Preferred StockSeries B-1 Convertible Preferred StockSeries B-2 Convertible Preferred StockSeries B Convertible Preferred Stock
(in thousands, except share)SharesAmountSharesAmountSharesAmount
(in thousands)(in thousands)SharesAmountSharesAmountSharesAmount
Balance at December 31, 2019Balance at December 31, 20190 $0 0 $0 0 $0 Balance at December 31, 20190 $00 $00 $0
Issuance of preferred stockIssuance of preferred stock150,000 150,000 150,000 0 150,000 150,000 Issuance of preferred stock150 150,000150 0
Exchange to Series B preferred stockExchange to Series B preferred stock(150,000)(150,000)(150,000)0 0 0 Exchange to Series B preferred stock(150)(150,000)(150)0150 150,000
Issuance-related expensesIssuance-related expenses— 0 — 0 — (11,516)Issuance-related expenses— 0— 0— (11,516)
Additional preferred shares0 0 0 0 0 2,200 
Balance at September 30, 20200 $0 0 $0 150,000 $140,684 
In kind dividendIn kind dividend— 0— 0— 5,244
Balance at December 31, 2020Balance at December 31, 20200 00 0150 143,728
Redemption of sharesRedemption of shares— 0— 0(5)(5,330)
In kind dividendIn kind dividend0 00 00 6,268
Balance at June 30, 2021Balance at June 30, 20210 $00 $0145 $144,666

In connection with the consummation of the Investment Agreement, the Company and the Investor entered into a Registration Rights Agreement (the “Registration Rights Agreement”), dated as of July 27, 2020. The Registration Rights Agreement provides that the Company will use its commercially reasonable efforts to prepare and file a shelf registration statement with the SEC no later than the first business day following January 27, 2022, and to use its commercially reasonable efforts to cause such shelf registration statement to be declared effective as promptly as is reasonably practicable after its filing to permit the public resale of registrable securities covered by the Registration Rights Agreement. The registrable securities generally include any shares of the Company’s common stock into which the Series B Preferred Stock is convertible, and any other securities issued or issuable with respect to any such shares of common stock by way of share split, share dividend, distribution, recapitalization, merger, exchange, replacement or similar event or otherwise.

Common Stock

The authorized common stock of the Company consists of 400,000,000400.0 million shares with a par value of $0.0001 per share. Holders of the Company’s common stock are entitled to 1 vote for each share of common stock. As of SeptemberJune 30, 2020,2021, there were 52,393,57952.1 million shares of common stock outstanding.

Warrants

On July 31, 2020, all outstanding warrants, consisting of warrants to purchase 15,983,07216.0 million shares of the Company’s common stock outstanding at a strike price of $11.50, expired. Of the 15,983,07216.0 million warrants, 9,823,0729.8 million were issued as part of the units sold in the Company's initial public offering in February 2014 (1,201,928(1.2 million warrants were subsequently repurchased during 2015) and 6,160,0006.2 million warrants were sold in a private placement at the time of such public offering.

Series A Preferred Stock

In connection with and as a condition to the consummation of the Business Combination, the Company issued R&H 1 share of Series A Preferred Stock. R&H, voting as a separate class, is entitled to appoint 1 director to the Company’s board of directors for so long as R&H beneficially holds 10% or more of the aggregate amount of the outstanding shares of common stock and non-voting common stock of the Company. The Series A Preferred Stock has no other rights.

ATM Facility

In December 2018, the Company filed a shelf registration statement (File No. 333-229002) (the “Form S-3 Shelf”) with the Securities and Exchange Commission, that became effective in February 2019. On June 25, 2020, the Company established an at-the-market offering facility (the “ATM Facility”) under the Form S-3 Shelf, with Virtu Americas LLC, acting as sales agent with

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support from H.C. Wainwright & Co and Roth Capital Partners. The Company’s board of directors approved sales of up to $30,000,000 maximum aggregate offering of the Company’s common stock under the ATM Facility. Effective as of August 7, 2020, the Company suspended sales under its ATM Facility, in light of the Company’s recent completion of the Refinancing and current market conditions. No sales have beenwere effected pursuant to the ATM Facility. Effective as of August 10, 2021, the ATM Facility to date.was terminated, and no future issuances will occur under the ATM Facility.

16.    Stock-based Compensation
In July 2015,The Company's stock based compensation is in accordance with the Company adopted theCompany's amended 2015 Incentive Compensation Plan (as amended, the(the “Plan”), pursuant to which the Compensation Committee of the Company is authorized to grant up to 7,150,0007.2 million shares to officers and employees of the Company, in the form of equity-based awards, including time or performance based options and restricted stock. In addition, the Company may grant cash-settled awards, including stock-appreciation rights (SARs) and phantom stock awards.

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In June 2019, the Company's shareholders approved the 2019 Employee Stock Purchase Plan (the "ESPP"), which becamewas effective July 1, 2019. 500,000 shares of common stock are reserved for issuance under the ESPP. The ESPP allows eligible employees to purchase shares of common stock at a discount of up to 15% through payroll deductions of their eligible compensation, subject to any plan limitations. The ESPP provides for six-month offering periods beginning January 1 and July 1 of each year, and each offering period consists of a six-month purchase period. On each purchase date, eligible employees may purchase the Company's common stock at a price per share equal to 85% of the lesser of (1) the fair market value of the common stock on the offering date or (2) the fair market value of the common stock on the purchase date. As of SeptemberJune 30, 2020, 253,0422021, 406,476 shares had been issued under the ESPP.

Stock compensation expense for equity-classified and liability-classified awards was $0.9$0.3 million and $1.0 million for the three months ended SeptemberJune 30, 20202021 and 2019,2020, respectively. Stock compensation expense for equity-classified and liability-classified awards was $2.7$1.2 million and $2.1$1.8 million for the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, respectively. Stock compensation expense is recognized in cost of goods sold, selling, general and administrative expenses and research and development expenses. At SeptemberJune 30, 2020,2021, there was $5.3$7.3 million of unrecognized compensation cost relating to outstanding unvested equity instruments expected to be recognized over the weighted average period of 1.92.4 years.

During the three months ended June 30, 2021, the Company granted the following share-based awards to members of management and employees. These awards will be settled in shares of the Company's common stock and are equity-classified. The grant date fair value of the time-based award will be recognized on a straight-line basis over the vesting period. The grant date fair value of the performance-based award will be recognized on a straight-line basis over the vesting period based on the probability of achieving the performance condition. The performance-based restricted stock units each have a performance period that ends on December 31, 2023.

(in thousands)Number of shares
Time-based restricted stock units1,308 
Performance-based restricted stock units808 
Stock options545 
Total2,661 

The stock options were valued with a Black-Scholes option pricing model using the assumptions in the table below. The expected life was estimated using the simplified method. Based on these assumptions, the grant-date fair value of the stock options was estimated to be $1.38.

During the three months ended June 30, 2021, the Company also granted the following share-based awards to members of management employed in certain countries outside of the United States. These awards will be settled in cash and are liability-classified. Therefore, the fair value of these liability-classified awards will be re-measured on each balance sheet date. The performance-based phantom shares each have a performance period that ends on December 31, 2023.
(in thousands)Number of shares
Time-based phantom shares35 
Performance-based phantom shares13 
Total48 


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17.    Earnings Per Share
Basic (loss) incomeloss per share is calculated by dividing net (loss) incomeloss attributable to AgroFresh Solutions, Inc. common stockholders by the weighted average number of common shares outstanding for the period. The Company had a loss for the ninethree and six months ended SeptemberJune 30, 20202021 and 2019.2020. Therefore, the effecteffects of stock-based awards including options, restricted stock, restricted stock units and warrants outstanding at SeptemberJune 30, 20202021 and 2019,2020, respectively, have not been included in the computation of diluted loss per share because their inclusion would have been anti-dilutive.

The following is a reconciliation of the weighted-average common shares outstanding used for the computation of basic and diluted net (loss) incomeloss per common share:
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2019		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2019
Basic weighted-average common shares outstanding51,001,852 50,227,590 50,765,829 50,138,835 
Effect of dilutive options, performance stock units and restricted stock0 60,714 0 0 
Diluted weighted-average shares outstanding51,001,852 50,288,304 50,765,829 50,138,835 

Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2021202020212020
Basic weighted-average common shares outstanding51,348 50,758 51,191 50,647 
Effect of dilutive options, restricted stock, and restricted stock units0 0 0 0 
Diluted weighted-average shares outstanding51,348 50,758 51,191 50,647 

Securities that could potentially be dilutive are excluded from the computation of diluted (loss) incomeloss per share when a loss from continuing operations exists, when the exercise price exceeds the average closing price of the Company's common stock during the period, or for contingently issued shares, if the contingency is not met at the end of the reporting period, because their inclusion would result in an anti-dilutive effect on per share amounts.

The following represents the weighted-averageweighted average number of shares that could potentially dilute basic earnings per share in the future:
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2019		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2019		Three Months Ended June 30,Six Months Ended June 30,
(in thousands)(in thousands)2021202020212020
Convertible preferred stockConvertible preferred stock21,526,522 — 7,227,883 — Convertible preferred stock30,591 0 30,810 0 
Stock-based compensation awards(1):
Stock-based compensation awards(1):
Stock-based compensation awards(1):
Stock optionsStock options799,570 1,028,583 804,267 949,987 Stock options899 861 849 862 
Restricted stock to non-directors1,811,016 749,510 1,079,151 624,930 
Restricted stock awards and restricted stock unitsRestricted stock awards and restricted stock units2,655 1,268 2,161 930 
Warrants:Warrants:Warrants:
Private placement warrantsPrivate placement warrants2,075,652 6,160,000 4,788,613 6,160,000 Private placement warrants0 6,160 0 6,160 
Public warrantsPublic warrants3,309,948 9,823,072 7,636,184 9,823,072 Public warrants0 9,823 0 9,823 
(1) SARs and Phantom Sharesstocks are payable in cash so will therefore have no impact on number of shares.
Warrants and options are considered anti-dilutive and excluded when the exercise price exceeds the average market value of the Company’s common stock price during the applicable period.

18.    Income Taxes
The provision for income taxes consists of provisions for federal, state and foreign incomesincome taxes. The effective tax rates for the periods ended SeptemberJune 30, 20202021 and SeptemberJune 30, 2019,2020, reflect the Company’s expected tax rate on reported income (loss)
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from continuing operations before income tax and tax adjustments. The Company operates in a global environment with significant operations in the U.S. and various other jurisdictions outside the U.S. Accordingly, the consolidated income tax rate is a composite rate reflecting the Company’s earnings and the applicable tax rates in the various jurisdictions where the Company operates.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.Act was enacted in the U.S. The CARES Act includesincluded tax changes and financial aid designed to protect the American people from the public health and economic impacts of COVID-19. The tax changes includeincluded allowing net operating losses to be carried back five years, suspending the 80% of taxable income limitation on the use of net operating losses, an increase of the 30% of EBITDA limitation on the deduction of interest expense from 30% to 50%, excluding any grant income associated with forgiven PPP loans, and the acceleration of the refund for alternative minimum tax credits granted under the 2017 Tax Cuts and Jobs Act (“TCJA”). Most significant to the Company are the modifications on the limitation ofon business interest deductions for tax years beginningyear 2020, allowing an increase for

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deductible interest expense in 2019 andthe U.S. In addition, the grant income associated with the PPP loans was non-taxable income in the U.S. for tax year 2020. The modifications to Section 163(j) increase the allowable business interest deduction from 30% to 50% of adjusted taxable income.

The Company's U.S. operations have incurred cumulative taxable losses through SeptemberJune 30, 2020.2021. The Company’s U.S. net operating loss carry forwards and carry forwards of other tax attributes are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. The utilization of the tax attributes mayhave become restricted in the eventbecause of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions. This could limitlimits the amount of the tax attributes that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will generally bewas determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. Please refer to Note 43 - Related Party Transactions regarding the ownership change in the quarter ended September 30, 2020. The Company completed a Section 382 study and determined the ownership change gave rise to the restrictions that will limit the realizability of certain U.S. tax attributes.

Typically,attributes and built-in losses related to future intangible amortization tax deductions. These limitations apply to the Company has calculated its provision for income taxes during its interim reporting periods by applying an estimate ofcorresponding tax attributes and built-in losses incurred before the annual effective tax rate for the full year "ordinary" income or loss for the respective reporting period. For the nine months ended September 30, 2020, the Company has computed its provision for income taxes under the discrete method which allows the Company to calculate its tax provision based upon the actual effective tax rate for the year-to-date. The discrete method was determined to be an appropriate method for estimating its tax provision for the nine months ended September 30, 2020 as it provides a reliable estimate as opposed to changes in estimated "ordinary" income or loss which would have resulted in significant fluctuations when estimating the annual effective tax rate.ownership change.

The effective tax rate for the ninesix months ended SeptemberJune 30, 20202021 differs from the U.S. statutory tax rate of 21%, primarily because of changes in valuation allowance positions related to the United States and certain foreign jurisdictions and by foreign exchange currency gains and losses, offset by foreign provision to return tax benefits, primarily in France. The Company recorded an increase of $24.7 million in the valuation allowance forcertain non-taxable items. For the three months ended Septemberending June 30, 2020, primarily as2021, the largest change in valuation allowance positions was a result oftax expense for deferred tax assets that were no longer deemed to be realizable. The tax expense adversely affected the ownership change that will limiteffective tax rate due to the realizability of certain U.S. tax attributes.Company’s consolidated pre-tax losses.

The Company's effective tax rate for the three and ninesix months ended SeptemberJune 30, 20202021 was 743.9%(0.8)% and (111.7)(27.6)%, respectively, compared to the effective tax rate for the three and ninesix months ended SeptemberJune 30, 20192020 of 214.0%(3.9)% and 28.2%13.5%, respectively.

19.    Segment Information
The authoritative guidance for disclosures about segments of an enterprise establishes standards for reporting information about segments. It defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker in deciding how to allocate resources and in assessing performance. We currently operate and manage our business as 2 operating segments. Our chief operating decision-makers allocate resources and assess performance of the business for each segment. Accordingly, we consider ourselves to have 2 operating and reportable segments (i) AgroFresh core and (ii) Tecnidex. AgroFresh core business is providing produce preservation and waste preventionreduction solutions for growers and packers. Its products include SmartFreshTM, Harvista RipeLockTM and FreshCloud. Tecnidex is a provider of fungicides, disinfectants waxes and coatingscoatings. Its revenues primarily focused onrelate to sales of these products, as well as equipment, in the citrus market.EMEA and Latin America region.

Our chief operating decision-maker doesdecision-makers do not evaluate operating segments using asset or liability information. The following table presents a breakdown of our revenues and gross profit based on reportable segments for the three and ninesix months ended SeptemberJune 30, 20202021 and 2019.
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(in thousands)Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2019		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2019
AgroFresh Core
Revenues$49,343 $45,917 $94,723 $96,272 
Gross Profit38,283 34,182 73,080 72,679 
Tecnidex
Revenues3,427 3,055 11,052 12,823 
Gross Profit976 898 4,203 4,900 
Total Revenues$52,770 $48,972 $105,775 $109,095 
Total Gross Profit$39,259 $35,080 $77,283 $77,579 
2020.

Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2021202020212020
AgroFresh Core
Revenues$17,931$16,738$51,623$45,380
Gross Profit14,13012,40241,76534,797
Tecnidex
Revenues3,9933,2449,2937,625
Gross Profit6901,1271,7333,227
Total Revenues$21,924$19,982$60,916$53,005
Total Gross Profit$14,820$13,529$43,498$38,024

20.    Commitments and Contingencies
The Company is currently involved in various claims and legal actions that arise in the ordinary course of business. The Company has recorded reserves for loss contingencies based on the specific circumstances of each case. Such reserves are recorded when it

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is probable that a loss has been incurred as of the balance sheet date and can be reasonably estimated. Although the results of litigation and claims can never be predicted with certainty, the Company does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company’s business, financial condition or results of operations.

On October 14, 2019, the Company was awarded a verdict of $31.1 million in damages, related to, among other things, trade secret misappropriation and willful patent infringement, in its litigation against Decco Post-Harvest, Inc. ("Decco") and Decco's parent company, UPL Limited. The award is subject towas subsequently reduced by $18 million in connection with post-verdict review by the CourtCourt. During the six months ended June 30, 2021, the lawsuit was settled, paid and any appeals that may be taken by the parties in the future.

In July 2020, 3 separate putative class action lawsuits were filed against the Company, each alleging that the Company’s disclosures regarding the transactions contemplated by the Investment Agreement contained in its proxy statement for the 2020 annual meeting of the Company’s stockholders were inadequate.is considered closed.
 
Purchase Commitments
 
The Company has various purchasing contracts for contract manufacturing and research and development services which are based on the requirements of the business. Generally, the contracts are at prices not in excess of current market pricesprice and do not commit the business to obligations outside the normal customary terms for similar contracts.

21.    Fair Value Measurements
Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the fair value of the Company’sCompany's financial instruments that are measured at fair value on a recurring basis as of SeptemberJune 30, 2020:2021.
(in thousands)Level 1Level 2Level 3Total
Liability-classified stock compensation (1)
$0 $0 $294 $294 
Interest rate swap0 0 290 290 
Total$0 $0 $584 $584 
(in thousands)Level 3
Liability-classified stock compensation (1)
$197

The following table presents the fair value of the Company’sCompany's financial instruments that are measured at fair value on a recurring basis as of December 31, 2019:2020.
(in thousands)Level 1Level 2Level 3Total
Liability-classified stock compensation (1)
$0 $0 $218 $218 
Interest rate swap0 0 (95)(95)
Total$0 $0 $123 $123 
(in thousands)Level 3
Liability-classified stock compensation (1)
$282

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(1) The fair values of performance-based phantom stock unitsshares granted in 2019 and 2020 were estimated using a Monte Carlo simulation pricing model with the assumptions described below:
September 30, 2020June 30, 2021
Grant date fair valueGrant date fair value$1.70 —$7.28Grant date fair value$1.70—$7.28
Risk-free interest rateRisk-free interest rate0.27 %—2.39%Risk-free interest rate0.27%—2.39%
Expected life (years)Expected life (years)2.71—2.75Expected life (years)2.71—2.75
Estimated volatility factorEstimated volatility factor65.1 %—69.9%Estimated volatility factor65.1%—69.9%
Expected dividendsExpected dividendsNaNExpected dividendsNaN

There were no0 transfers between Level 1 and Level 2 and no0 transfers out of Level 3 of the fair value hierarchy during the ninesix months ended SeptemberJune 30, 2020.2021.

At SeptemberJune 30, 2020,2021, the Company evaluated the amount recorded under the RestatedAmended Term Loan and determined that the fair value was approximately $267.4$264.9 million. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value.

Changes in Financial Instruments Measured at Level 3 Fair Value on a Recurring Basis
The following table presents the changes during the periodperiods presented in the Company'sour Level 3 financial instrument liabilitiesinstruments that are measured at fair value on a recurring basis.
(in thousands)Liability-classified stock compensationInterest rate swapTotal
Balance, December 31, 2019$218 $(95)$123 
Stock compensation activity76 0 76 
Mark-to-market adjustment0 385 385 
Balance, September 30, 2020$294 $290 $584 
(in thousands)Liability-classified stock compensation
Balance, December 31, 2020$282
 Stock compensation activity(85)
Balance, June 30, 2021$197

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22.    Other Income

During the three months ended June 30, 2021 and 2020, the Company had other expense of $0.05 million and $0.01 million, respectively. During the six months ended June 30, 2021 and 2020, the Company had other income of $14.4 million and $1.5 million, respectively, related to the receipt of proceeds from the settlement of litigation matters.

23.    Correction of Prior Period Errors

As previously disclosed in Note 24 to the Company’s consolidated financial statements as of and for the year ended December 31, 2020, management of the Company identified an immaterial accounting error in the Company’s previously reported unaudited interim condensed consolidated financial statements related to the accounting for the Company’s NCI. As a result, the accompanying unaudited interim condensed consolidated financial statements and related notes hereto for the three and six months ended June 30, 2020 have been revised to give effect to the correction of this error. The correction of this error resulted in a reclassification of the carrying value of the NCI from previously reported permanent equity to temporary equity as of June 30, 2020, and a charge to previously reported additional paid-in capital to increase the carrying value of the Redeemable NCI during the three and six months ended June 30, 2020 by $0.3 million and $0.5 million, respectively, which has been applied as an adjustment to previously reported net (loss) income attributable to AgroFresh Solutions, Inc. in the determination of basic and fully diluted net (loss) income per share attributable to AgroFresh stockholders for the three and six months ended June 30, 2020.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), the terms “Company,” “AgroFresh,” “we,” “us” and “our” refer to AgroFresh Solutions, Inc. and its consolidated subsidiaries, unless the context otherwise requires or it is otherwise indicated.

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Report. As disclosed in Note 23 - Correction of Prior Period Errors of the unaudited condensed consolidated financial statements, the Company’s unaudited condensed consolidated financial statements for the period ended June 30, 2020 have been revised to give effect to the correction of certain errors we identified during the 2020 year-end financial reporting process. As a result, the Management’s Discussion and Analysis of the Company’s Financial Condition and Results of Operation set forth below has been revised to give effect to the correction of these accounting errors.

This MD&A contains the financial measures EBITDA and Adjusted EBITDA, which are not presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These non-GAAP financial measures are being presented because management believes that they provide readers with additional insight into the Company’s operational performance relative to earlier periods and relative to its competitors and they are key measures used by the Company to evaluate its performance. The Company does not intend for these non-GAAP financial measures to be a substitute for any GAAP financial information. Readers of this MD&A should use these non-GAAP financial measures only in conjunction with the comparable GAAP financial measures. A reconciliation of EBITDA and Adjusted EBITDA to the most comparable GAAP measure is provided in this MD&A.

Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report including, without limitation, statements in this MD&A regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements. When used in this Report, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to the Company or its management, identify forward looking statements. Such forward looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, management. Actual results and/or the timing of events could differ materially from those contemplated by these forward-looking statements due to a number of factors, including those discussed under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 20192020 (the "2019"2020 Form 10-K") as well as the update to those Risk Factors disclosed in Part II, Item 1A of this Report. Any forward-looking statements included in this Report are based only on information currently available to the Company and speak only as of the date on which such statements are made. The Company undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. All subsequent written or oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are qualified in their entirety by this paragraph.

Business Overview
AgroFresh is a global leader in delivering innovative food quality preservation and waste preventionreduction 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. AgroFresh has key products registered in overapproximately 50 countries, and supports customers withby protecting over 25,000 storage rooms globally. AgroFresh has an extensive portfolio of freshnessAgroFresh's solutions rangingrange from LandSpringTM for transplanted seedlings, near-harvest with HarvistaTM and LandSpringTM to its post-harvest including its flagship SmartFreshTM technology.Quality System. Additional post-harvest freshness solutions include fungicides that can be applied to meet various customer operational requirements, in either a foggable (ActiMist™) or liquid (ActiSeal™) delivery form. To supplement our near- and post-harvest product solutions, our suite of FreshCloud™ digital technology platform includes analytical, diagnostic and tracking services that provide a range of value-added capabilities thatto help customers optimize the quality of their produce. Beyond apples, SmartFresh technology can provide ready-to-eat freshness for other fruits and vegetables including avocados, bananas, melons, tomatoes, broccoli and mangos. AgroFresh is also providing customers with packaging-based advisory services and custom packaging solutions includingunder the RipeLock ourbrand, which focuses on packaging-based freshness technology solutions for fruits and vegetables.

In December 2017, AgroFresh acquired a controlling interest in Tecnidex. With this acquisition, AgroFresh expanded its industry-leading post-harvest presence into additional crops and increased its penetration of the produce market in southern Europe, Latin America and Africa. This acquisition expanded AgroFresh's product portfolio into waxes and coatings and reinforced its position in fungicides. For over 35 years, Tecnidex has been helping fruit and vegetable producers offer clean, safe and high-quality produceproducts to its regional customers now reachingin 18 countries. Through itsa portfolio of post-harvest fungicides, coatings waxes,and disinfectants, packinghouse equipment and associated consulting and after-sale services, Tecnidex improves the quality and

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value of its clients’our customers’ fruit and vegetables while respecting the environment. Tecnidex further diversified AgroFresh’s revenue by expandingallowing the Company's abilityCompany to provide solutions and service to the citrus industry.

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Freshness is the most important driver of consumer satisfaction when it comes to produce and, at the same time, lack of freshness results infood waste which is a major issue in the industry. About one third of the total food produced worldwide is lost or wasted each year. Nearly 45% of all fresh fruits and vegetables, 40% of apples and 20% of bananas, are lost to spoilage. AgroFresh plays a key role in the value chain by offering products and services that maintain produce freshness and reduce waste.

AgroFresh’s current flagship product, SmartFresh Quality System regulates the post-harvest ripening effects of ethylene, the naturally occurring plant hormone that triggers ripening in certain fruits and vegetables. SmartFresh isdegrades naturally biodegradable,and leaves no detectable residue and has been approved for use by many domestic and global regulatory organizations. Harvista extends the Company’s proprietary technology into the field, including treatment of cherries and blueberries early in the growing season and near-harvest management of apples, pears and pears.blueberries. FreshCloud™ is our digital technology services platform, which continues to expand. Launched in 2020, FreshCloud Storage InsightsTMQuality Inspection is an atmospheric monitoring systema proprietary cloud-based mobile quality management service that leverages the Company's extensive understanding of fruit physiology, fruit respiration, controlled atmosphere technologydigitizes what was formerly a manual quality control process and new proprietary diagnostic tools to provide improved real-time guidance to producerscaptures, organizes and packers of fresh produce regarding storage conditions so timely corrective measures can be taken. LandSpringTM analyzes quality metrics in real time. LandSpringTM is an innovative 1-MCP technology targeted to transplanted vegetable seedlings. It is currently registered for use on tomatoes, peppers and 14 other crops in the U.S.US. It reduces transplant shock, resulting in less seedling mortality and faster crop establishment, which leads to a healthier crop and improved yields.

AgroFresh’s business is highly seasonal, driven by the timing of the apple and pear harvests in the northern and southern hemispheres. For apples and pears, theThe first half of the year is when the southern hemisphere harvest occurs, and the second half of the year is when the northern hemisphere harvest occurs. Since the northern hemisphere harvest of apples our primary crop,and pears is typically larger, a significant portion of our sales and profits are historically generated in the second half of the year. In addition to this seasonality, factors such as weather patterns may impact the timing of the harvest within the two halves of the year. Diversifying into other crops is a key strategy to balance seasonality, therefore there is a strategic importance of the Tecnidex acquisition since the citrus harvest in northern hemisphere countries occurs in the last and first quarters of the year.

On July 31, 2015 (the “Closing Date”), we consummated a business combination (the “Business Combination”) pursuant to a Stock Purchase Agreement, dated April 30, 2015 (the “Purchase Agreement”), with Dow, providing for the acquisition by us of the AgroFresh business from Dow. In connection with the closing of the Business Combination, we entered into a tax receivables agreement (the "TRA"), as amended in April 2017, pursuant to which Dow was entitled to receive 50% of the tax savings, if any, that the Company realized as a result of the increase in the tax basis of assets acquired pursuant to the Business Combination. The TRA was terminated in December 2019. Also in connection with the closing of the Business Combination, AgroFresh entered into a transition services agreement with Dow. Under the agreement, Dow provided AgroFresh a suite of services for a period of time ranging from six months to five years depending on the service. While most of the Dow-provided services were complete as of December 31, 2018, certain services are expected to continuecontinued through 2020.
 
Factors Affecting the Company’s Results of Operations
The Company’s results of operations are affected by a number of external factors. Some of the more important factors are briefly discussed below.

Impact of COVID-19

In March 2020,The global health crisis caused by COVID-19 and the COVID-19 outbreak was declared a National Public Health Emergency which continues to spread throughout the worldrelated government actions and has adverselystay at home orders have negatively impacted globaleconomic activity and contributed to significant declines and volatility in financial markets.increased political instability across the globe. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. During the threesix months ended SeptemberJune 30, 2020, as the Company’s primary sales regions moved to the northern hemisphere,2021, the COVID-19 pandemic continued todid not have a significant adverse impact on our results of operations. However, there were 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. While we are following the requirements of governmental authorities and taking additional preventative and protective measures to ensure the safety of our workforce, including implementing remote working arrangements and varying procedures for essential workforce, we cannot be 100% certain that there will not be any incidents across our global operations that may cause service interruptions. The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of the coronavirus outbreak, although the Company operates in an industry that thus far has not been as severely impacted as others. Nevertheless, the outbreak presents some uncertainty and risk with respect to the Company and its performance and financial results.

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Demand for the Company’s Offerings

The Company servicessells to customers in overapproximately 50 countries and derives its revenue by assisting growers and packers to optimize the value of their crops primarily throughin the near and post-harvest period. ItsThe Company's products and services add value to customers by reducing food spoilage and extending the life of perishable fruits. The U.S. Food and Agriculture Organization of

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the United Nations has estimated that a growing global population will require a near doubling of food production in developing countries by 2050 to meet the expected demand of a worldwide population of nineexpected to reach 9 billion people.
 
This global trend, among others, creates demand for the Company’s solutions. The Company’s offerings are currently protected by patent filings in 51 countries.
 
The global produce market is a function of both the size and the yield of the crop harvested, and variations in either will affect total production. Given the nature of the agricultural industry, weather patterns may impact total production and the Company's resulting commercial opportunities. The Company supports a diverse customer base whose end markets vary due to the type of fruit and quality of the product demanded in their respective markets. Such variation across end markets also affects demand for the Company’s services.

Customer Pricing
The Company’s service offerings are priced based on the value they provide to the Company’s customers. From time to time, the Company may adjustadjusts the pricing of its pricing policyofferings to incorporate new offerings or address market and volume trends. The Company does not typically price its products in relation to any underlying cost of materials or services; therefore, its margins can fluctuate with changes in these costs. The Company’s pricing may include rebate arrangements with customers in exchange for mutually beneficial long-term relationships and growth.

Integrated Service Model
AgroFresh uses a direct service model to offeroffers the Company’s commercially available products, including SmartFresh and Harvista.Harvista, primarily through a direct service model. Sales and technicalsales support personnel maintain face-to-face relationships with customers year round. Technical sales and support personnel work directly with customers to provide value-added advisory services regarding the application of SmartFresh. The actual application of SmartFresh is performed by service providers that are typically third-party contractors or, for some product variations, madecontractors. Harvista is applied by our customers directly. The Harvista application service, through both ground and aerial and ground application, is alsoapplications, which are administered by third-party service providers or made by our customers directly.
 
Most of the Company’s service providers are operating under multi-year contracts. Management believes the quality and experience of its service providers deliver clear commercial benefits.

Seasonality
 
The Company’s operations are subject to seasonal variation due to the timing of the growing seasons around the world. For our core crops of apples and pears, northern hemisphere growers harvest from August through November, and southern hemisphere growers harvest from late January to early May. As we diversify into otherFor citrus crops, such as citrus, we also anticipatethere are seasonal variations in this business due to the northern hemisphere citrus harvest, which spans from October to March. Since the majority of the Company’s sales are in northern hemisphere countries, a proportionately greater share of its revenue is realized during the second half of the year. There are also variations in the seasonal demands from year to year depending on weather patterns and crop size. This seasonality and variations in seasonal demand could impact the ability to compare results between periods.
 
Foreign Currency Exchange Rates
With a global customer base and geographic footprint, the Company generates revenue and incurs costs in a number of different currencies, with the Euro comprising the most significant non-U.S. currency. Fluctuations in the value of these currencies relative to the U.S. dollar can increase or decrease the Company’s overall revenue and profitability as stated in U.S. dollars, which is the Company’s reporting currency. In certain instances, if sales in a given geography have been adversely impacted on a long-term basis due to foreign currency depreciation, the Company has been able to adjust its pricing so as to mitigate the impact on profitability.

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Domestic and Foreign Operations
The Company has both domestic and foreign operations. Fluctuations in foreign exchange rates, regional growth-related spending in research and development (“R&D”)&D and marketing expenses, and changes in local selling prices, among other factors, may impact the profitability of foreign operations in the future.

Critical Accounting Policies and Use of Estimates
Critical accounting policies are those accounting policies that can have a significant impact on the presentation of our financial condition and results of operations and that require the use of complex and subjective estimates based upon management’s

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judgment. Because of the uncertainty inherent in such estimates, actual results may differ materially from these estimates. There have been no material changes to our critical accounting policies and estimates previously disclosed in the 20192020 Form 10-K. For a description of our critical accounting policies and estimates as well as a listing of our significant accounting policies, see “Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Use of Estimates” and “Note 2 - Basis of Presentation and Summary of Significant Accounting Policies” in the 20192020 Form 10-K.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements. Management believes these critical accounting policies reflect its most significant estimates and assumptions used in the preparation of the financial statements.
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Results of Operations
The following table summarizes the results of operations for the three and ninesix months ended SeptemberJune 30, 20202021 and SeptemberJune 30, 2019:2020:
(in thousands)Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2019		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2019
Net sales$52,770 $48,972 $105,775 $109,095 
Cost of sales (excluding amortization, shown separately below)13,511 13,892 28,492 31,516 
Gross profit39,259 35,080 77,283 77,579 
Research and development expenses2,852 2,566 8,389 9,720 
Selling, general and administrative expenses13,494 14,998 39,925 47,044 
Amortization of intangibles10,973 11,754 32,866 35,136 
Impairment of long lived assets— — — 992 
Change in fair value of contingent consideration— (229)— 128 
Grant income— — (2,974)— 
Operating income (loss)11,940 5,991 (923)(15,441)
Other income (expense)96 (81)1,596 (119)
Debt modification and extinguishment expenses(5,028)— (5,028)— 
Gain (loss) on foreign currency exchange1,390 54 2,466 (2,884)
Interest expense, net(4,922)(8,606)(18,401)(26,021)
Gain (loss) before income taxes3,476 (2,642)(20,290)(44,465)
Income taxes expense (benefit)25,857 (5,653)22,656 (12,530)
Net (loss) income including non-controlling interests(22,381)3,011 (42,946)(31,935)
Less: Net loss attributable to non-controlling interests(494)(278)(857)(336)
Net (loss) income attributable to AgroFresh Solutions, Inc(21,887)3,289 (42,089)(31,599)
Less: Dividends on convertible preferred stock4,400 — 4,400 — 
(Loss) income attributable to AgroFresh Solutions, Inc. common stockholders$(26,287)$3,289 $(46,489)$(31,599)

Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2021202020212020
Net sales$21,924$19,982$60,916$53,005
Cost of sales (excluding amortization, shown separately below)7,1046,45317,41814,981
Gross profit14,82013,52943,49838,024
Research and development expenses3,4962,8956,7945,537
Selling, general and administrative expenses13,62012,72227,17126,431
Amortization of intangibles10,49910,93621,26221,893
Grant income—(2,974)—(2,974)
Operating loss(12,795)(10,050)(11,729)(12,863)
Other (expense) income(46)(7)14,3521,500
Gain on foreign currency exchange9214491,3541,076
Interest expense, net(5,216)(6,513)(11,106)(13,479)
Loss before income taxes(17,136)(16,121)(7,129)(23,766)
Income taxes expense (benefit)1446301,967(3,201)
Net loss including non-controlling interest(17,280)(16,751)(9,096)(20,565)
Less: Net (loss) income attributable to non-controlling interest(20)130(259)33
Net loss attributable to AgroFresh Solutions, Inc.(17,260)(16,881)(8,837)(20,598)
Less: Dividends on convertible preferred stock6,327—12,332—
Net loss attributable to AgroFresh Solutions, Inc. common stockholders($23,587)($16,881)($21,169)($20,598)
Comparison of Results of Operations for the three months ended SeptemberJune 30, 20202021 versus the three months ended SeptemberJune 30, 2019.2020.

Net Sales

Net sales were $52.8$21.9 million for the three months ended SeptemberJune 30, 2020,2021, as compared to net sales of $49.0$20.0 million for the three months ended SeptemberJune 30, 2019,2020, an increase of 7.8%9.7%. The impact of the change in foreign currency exchange rates compared to the thirdsecond quarter of 20192020 increased revenue by $1.1$1.0 million. Excluding this impact, revenue increased approximately 5.6%4.7%. TheThe net sales increase was primarily the resultdriven by diversification product categories beyond SmartFreshTM for apples, with an emphasis on other 1-MCP solutions such as SmartFresh for other crops. This was partially offset by a slight decrease in sales of SmartFresh growth in Europefor apples, which was largely due in part to timing as the normalization ofseasonal harvest seasonality versuswas earlier than the prior year, increased traction of Harvista in European markets, and positive contributions from Tecnidex.year.

Cost of Sales

Cost of sales was $13.5$7.1 million for the three months ended SeptemberJune 30, 2020,2021, as compared to $13.9$6.5 million for the three months ended SeptemberJune 30, 2019.2020. Gross profit margin was 74.4%67.6% for the three months ended SeptemberJune 30, 20202021 versus 71.6%67.7% for the three months ended SeptemberJune 30, 2019.2020. The higher grossGross margin was primarily the result of the Company's supply chain efficiencies and further supported by price discipline.

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Research and Development Expenses

Research and development expenses were $2.9 million and $2.6 million, respectively, for the three months ended September 30, 2020 and September 30, 2019.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $13.5 million for the three months ended September 30, 2020, compared to $15.0 million for the three months ended September 30, 2019, a decrease of 10.0%. Included in selling, general and administrative expenses were $0.4 million in the current year and $1.6 million inlargely consistent with the prior year of costs associated with non-recurring items that included M&A, litigation, refinancing and severance costs. Excluding these items, selling general and administrative expenses decreased approximately 1.6% in the third quarter versus the prior year period, which reflects the Company's ongoing cost optimization initiatives, as well as a temporary decrease in travel and other miscellaneous expenses as a result of the global pandemic.

period.
Amortization of Intangibles

Amortization of intangible assets was $11.0 million for the three months ended September 30, 2020, compared to $11.8 million for the three months ended September 30, 2019. The reduction in the amortization expense for the three months ended September 30, 2020 is due to the accelerated amortization of RipeLock in December 2019 of $38.0 million, which resulted in lower quarterly amortization of $0.6 million.

Impairment of Intangibles

There were no indicators of impairment during the three months ended September 30, 2020 and September 30, 2019.

Change in Fair Value of Contingent Consideration
The Company recorded no gain or loss for the three months ended September 30, 2020 related to a change in the fair value of contingent consideration, as compared to a $0.2 million gain in the three months ended September 30, 2019. As discussed in Note 3 - Business Combinations and Asset Acquisition of the unaudited condensed consolidated financial statements, pursuant to the Business Combination the Company entered into various forms of contingent consideration, including the tax amortization benefit contingency. These liabilities are measured at fair value each reporting date and any mark-to-market fluctuations are recognized in earnings. In December 2019, the TRA with Dow was terminated, and the Company paid to Dow an aggregate of $16 million in settlement of all past and estimated future liabilities that would have been owed under the TRA. The fair value adjustment of the contingent consideration related to the Tecnidex acquisition was settled in 2019.

Other Income (Expense)

Other income was $0.1 million for the three months ended September 30, 2020, as compared to expense of $0.1 million for the three months ended September 30, 2019.

Debt Modification and Extinguishment Expenses

The Company recognized debt modification and extinguishment expense of $5.0 million for the three months ended September 30, 2020 as a result of closing the Restated Credit Facility as discussed in Note 11 - Debt of the unaudited condensed consolidated financial statements and below. There was no such expense recognized during the three months ended September 30, 2019.

Interest Expense, Net

Interest expense was $4.9 million for the three months ended September 30, 2020, as compared to $8.6 million for the three months ended September 30, 2019. The decrease was primarily due to $1.9 million lower interest on the long-term debt due to a lower variable rate and principal balance and $0.9 million lower accretion on the TRA due to the settlement of the TRA in December 2019 and an increase in hedge income of $0.7 million.

Gain (loss) on Foreign Currency

Gain on foreign currency was $1.4 million for the three months ended September 30, 2020, as compared to a gain of $0.1 million for the three months ended September 30, 2019.
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During the three months ended September 30, 2020, foreign currency gains were recognized related to U.S. dollar intercompany payables to the Brazilian real and Turkish lira, which grew weaker relative to the U.S. dollar.

Income Taxes

Income tax expense was $25.9 million for the three months ended September 30, 2020, compared to income tax benefit of $5.7 million for the three months ended September 30, 2019. During the three months ended September 30, 2020, the Company recorded a valuation allowance of $24.7 million, primarily as a result of the ownership change (related to the new preferred stock investment) that will limit the realizability of certain U.S. tax attributes. For the three months ended September 30, 2019, the quarter’s largest effective tax rate modification related to the elimination of intercompany profits resulted in an income tax benefit.

Comparison of Results of Operations for the nine months ended September 30, 2020 versus the nine months ended September 30, 2019.

Net Sales

Net sales were $105.8 million for the nine months ended September 30, 2020, as compared to net sales of $109.1 million for the nine months ended September 30, 2019, a decrease of 3.0%. The impacts of the change in foreign currency rates reduced revenue by $2.7 million for the nine months ended September 30, 2020. Excluding this impact, revenue decreased approximately 0.5%. The slight decrease in net sales on a constant currency basis was primarily the result of geographic mix, where the relatively strong sales in the EMEA and APAC regions were more than offset by relatively weaker sales in the North America and Latin America regions.

Cost of Sales

Cost of sales was $28.5 million for the nine months ended September 30, 2020, as compared to $31.5 million for the nine months ended September 30, 2019. Gross profit margin was 73.1% for the nine months ended September 30, 2020 versus 71.1% for the nine months ended September 30, 2019. The year over year improvement was a result of the supply chain cost optimizations that were implemented at the end of 2019 and are expected to carry through the balance of 2020.

Research and Development Expenses

Research and development expenses were $8.4$3.5 million and $9.7$2.9 million, respectively, for the ninethree months ended SeptemberJune 30, 2021 and June 30, 2020. The increase was primarily related to timing of projects.


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Selling, General and Administrative Expenses

Selling, general and administrative expenses were $13.6 million for the three months ended June 30, 2021, compared to $12.7 million for the three months ended June 30, 2020, and Septemberan increase of 7.1%, due primarily to increased severance expenses.

Amortization of Intangibles

Amortization of intangible assets was $10.5 million for the three months ended June 30, 2019.2021, compared to $10.9 million for the three months ended June 30, 2020.

Interest Expense, Net

Interest expense was $5.2 million for the three months ended June 30, 2021, as compared to $6.5 million for the three months ended June 30, 2020. The decrease was primarily due to $1.3 million lower interest on the long-term debt due to a lower variable rate and principal balance.

Gain on Foreign Currency

Gain on foreign currency was $0.9 million for the three months ended June 30, 2021, as compared to a gain of $0.4 million for the three months ended June 30, 2020.

Income Taxes

Income tax expense was $0.1 million for the three months ended June 30, 2021, compared to income tax expense of $0.6 million for the three months ended June 30, 2020. For the three months ended June 30, 2021, the quarter’s largest effective tax rate modification related to the changes in researchvaluation allowance positions related to the United States and certain foreign jurisdictions and by foreign exchange currency gains and losses, offset by certain non-taxable items.

Comparison of Results of Operations for the six months ended June 30, 2021 versus the six months ended June 30, 2020.

Net Sales

Net sales were $60.9 million for the six months ended June 30, 2021, as compared to net sales of $53.0 million for the six months ended June 30, 2020, an increase of 14.9%. The impact of the change in foreign currency exchange rates compared to the first half of 2020 increased revenue by $1.1 million. Excluding this impact, revenue increased approximately 12.8%. The net sales increase was primarily the result of strength in Other 1-MCP solutions, such as SmartFresh diversification and Harvista, as well as strong growth in the Fungicides & Disinfectants and Coatings categories. Sales of SmartFresh for apple crops realized modest growth for the period.

Cost of Sales

Cost of sales was $17.4 million for the six months ended June 30, 2021, as compared to $15.0 million for the six months ended June 30, 2020. Gross profit margin was 71.4% for the six months ended June 30, 2021 versus 71.7% for the six months ended June 30, 2020. Gross margin was largely consistent with the prior year period.

Research and Development Expenses

Research and development expenses were $6.8 million and $5.5 million, respectively, for the ninesix months ended SeptemberJune 30, 20202021 and 2020. The increase was partially driven by theprimarily related to timing of projects.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $39.9$27.2 million for the ninesix months ended SeptemberJune 30, 20202021, compared to $47.0$26.4 million for the ninesix months ended September 30, 2019, a decrease of 15.1%. There were non-recurring costs associated with M&A, litigation, refinancing and severance in the amount of $2.8 million in the current year and $6.9 million in the prior year period. Excluding these items, selling general and administrative expenses decreased approximately 7.6% over the same period last year driven by ongoing cost optimization initiatives, and to a lesser extent, the temporary decrease in travel and other miscellaneous expenses as a result of the global pandemic.

Amortization of Intangibles

Amortization of intangible assets was $32.9 million for the nine months ended SeptemberJune 30, 2020, compared to $35.1 million for the nine months ended September 30, 2019. The reduction in the amortization expense for the nine months ended September 30, 2020 isan increase of 2.8%, primarily due to the accelerated amortization of RipeLock in December 2019 of $38.0 million, which resulted in lower amortization of $1.9 million during the period.increased severance expenses.


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ImpairmentAmortization of Intangibles

There were no indicatorsAmortization of impairment duringintangible assets was $21.3 million for the ninesix months ended SeptemberJune 30, 2020. The Company recorded an impairment charge of $1.02021, compared to $21.9 million duringfor the ninesix months ended SeptemberJune 30, 2019 associated with the Verigo software following a partnership agreement with a new technology provider.

Change in Fair Value of Contingent Consideration
The Company recorded no gain or loss for the nine months ended September 30, 2020, as compared to a $0.1 million loss in the nine months ended September 30, 2019. As discussed in Note 3 - Business Combinations and Asset Acquisition of the unaudited condensed consolidated financial statements, pursuant to the Business Combination the Company entered into various forms of contingent consideration, including the tax amortization benefit contingency. These liabilities are measured at fair value each reporting date and any mark-to-market fluctuations are recognized in earnings. In December 2019, the TRA with Dow was terminated, and the Company paid to Dow an aggregate of $16 million in settlement of all past and estimated future liabilities that would have been owed under the TRA. The fair value adjustment of the contingent consideration related to the Tecnidex acquisition was settled in 2019.

Grant Income

The Company recorded income of $3.0 million in the nine months ended September 30, 2020. Pursuant to the CARES Act, the Company received a Paycheck Protection Program loan to offset eligible costs incurred during the period. As the Company believes it is in compliance with the forgiveness criteria under this loan program, the full amount was recognized as grant income.

Other Income (Expense)

Other income was $1.6$14.4 million for the ninesix months ended SeptemberJune 30, 2020,2021, as compared to $0.1 million expense for the nine months ended September 30, 2019. The Company received $1.6 million in cash from settlement of a litigation matter during the nine months ended September 30, 2020.

Debt Modification and Extinguishment Expenses

The Company recognized debt modification and extinguishment expenses of $5.0$1.5 million for the ninesix months ended SeptemberJune 30, 2020 as a resultand relate to the receipt of closingproceeds from the Restated Term Facility as discussed in Note 11 - Debtsettlement of the unaudited condensed consolidated financial statements and below. There was no such expense recognized during the nine months ended September 30, 2019.litigation matters.

Interest Expense, Net

Interest expense was $18.4$11.1 million for the ninesix months ended SeptemberJune 30, 2020,2021, as compared to $26.0$13.5 million for the ninesix months ended SeptemberJune 30, 2019.2020. The decrease was primarily due to $4.9$2.9 million lower interest on the long-term debt due to a lower variable rate and principal balance, and $2.6 million lower accretion on the TRA due to the settlementoffset by reduction in interest rate swap income of the TRA in December 2019.$0.7 million.

Gain (loss) on Foreign Currency

Gain on foreign currency was $2.5$1.4 million for the ninesix months ended SeptemberJune 30, 2020,2021, as compared to a lossgain of $2.9$1.1 million for the ninesix months ended SeptemberJune 30, 2019.

During the nine months ended September 30, 2020, foreign currency gains were recognized related to the U.S. dollar and euro intercompany payables to Turkish lira, South African rand and Brazilian real, which experienced inflation during the period, offset by foreign currency losses recognized in Argentina due to inflation during the period and hyperinflationary accounting. During the nine months ended September 30, 2019, the loss was primarily related to foreign currency losses in Argentina due to inflation during the period and hyperinflationary accounting.2020.

Income Taxes

Income tax expense was $22.7$2.0 million for the ninesix months ended SeptemberJune 30, 2020,2021, compared to income tax benefit of $12.5$3.2 million for the ninesix months ended SeptemberJune 30, 2019. During2020. For the ninesix months ended SeptemberJune 30, 2020, there was an increase in2021, the valuation allowance, primarily as a result of the ownership change that will limit the realizability of certain U.S. tax
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attributes. For the nine months ended September 30, 2019, the period’s largest effective tax rate modification related to the elimination of intercompany profits resultedchanges in an income tax benefit.valuation allowance positions related to the United States and certain foreign jurisdictions and by foreign exchange currency gains and losses, offset by certain non-taxable items.


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Non-GAAP Measures

The following table sets forth the non-GAAP financial measures of EBITDA and Adjusted EBITDA. The Company believes these non-GAAP financial measures provide meaningful supplemental information as they are used by the Company’s management to evaluate the Company’s performance (including for incentive bonuses and for bank covenant reporting), are more indicative of future operating performance of the Company, and facilitate a better comparison among fiscal periods. These non-GAAP results are presented for supplemental informational purposes only and should not be considered a substitute for the financial information presented in accordance with GAAP.
 
The following is a reconciliation between the non-GAAP financial measures of EBITDA and Adjusted EBITDA to their most directly comparable GAAP financial measure, net loss:loss including non-controlling interest:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)(in thousands)Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2019		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2019		(in thousands)2021202020212020
GAAP net (loss) income including non-controlling interests$(22,381)$3,011 $(42,946)$(31,935)
Expense (benefit) for income taxes25,857 (5,653)22,656 (12,530)
GAAP net loss including non-controlling interestGAAP net loss including non-controlling interest($17,280)($16,751)($9,096)($20,565)
Depreciation and amortizationDepreciation and amortization11,17811,56822,60023,145
Interest expense (1)
Interest expense (1)
4,922 8,606 18,401 26,021 
Interest expense (1)
5,2166,51311,10613,479
Depreciation and amortization11,630 12,356 34,775 36,692 
Income taxes expense (benefit)Income taxes expense (benefit)1446301,967(3,201)
Non-GAAP EBITDANon-GAAP EBITDA$20,028 $18,320 $32,886 $18,248 Non-GAAP EBITDA(742)1,96026,57712,858
Share-based compensationShare-based compensation943 959 2,705 2,111 Share-based compensation2809741,1711,762
Severance related costs (2)
Severance related costs (2)
356 344 430 1,040 
Severance related costs (2)
1,587741,58774
Other non-recurring costs (3)
Other non-recurring costs (3)
— 1,297 2,383 6,305 
Other non-recurring costs (3)
7546391,5202,383
(Gain) loss on foreign currency exchange (4)
(1,390)(54)(2,466)2,884 
Debt modification and extinguishment costs5,028 — 5,028 — 
Mark-to-market adjustments, net (5)
— (229)— 128 
Impairment of intangible assets (6)
— — — 992 
Gain on foreign currency exchange (4)
Gain on foreign currency exchange (4)
(921)(449)(1,354)(1,076)
Grant incomeGrant income— — (2,974)— Grant income—(2,974)—(2,974)
Litigation recovery— — (1,600)— 
Litigation settlementLitigation settlement—(14,392)(1,600)
Non-GAAP Adjusted EBITDANon-GAAP Adjusted EBITDA$24,965 $20,637 $36,392 $31,708 Non-GAAP Adjusted EBITDA$958$224$15,109$11,427

(1)    Interest on debt and accretion for debt discounts, debt issuance costs and contingent consideration.discounts.
(2)    Severance costs related to ongoingrestructuring and cost optimization initiatives.
(3)    Costs related to certain professional and other infrequent or non-recurring fees, including those associated with refinancing,restructuring, litigation and M&A related fees.
(4)    (Gain) lossGain on foreign currency exchange relates to net lossesgains and gainslosses resulting from transactions denominated in a currency other than the entity'sCompany's functional currency.
(5)    Non-cash adjustment to the fair value of contingent consideration, including the TRA and contingent payment related to the Tecnidex acquisition.
(6)    Impairment of intangible assets related to software.

The following is a reconciliation between net sales on a non-GAAP constant currency basis to GAAP net sales:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2021202020212020
GAAP net sales$21,924$19,982$60,916$53,005
Impact from changes in foreign currency exchange rates(1,000)—(1,143)—
Non-GAAP constant currency net sales (1)
$20,924$19,982$59,773$53,005

(in thousands)Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2019		Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2019
GAAP net sales$52,770 $48,972 $105,775 $109,095 
Impact from changes in foreign currency exchange rates(1,064)— 2,738 — 
Non-GAAP constant currency net sales (1)
$51,706 $48,972 $108,513 $109,095 
(1)     The company provides net sales on a constant currency basis to enhance investors’ understanding of underlying business trends and operating performance, by removing the impact of foreign currency exchange rate fluctuations. The impact from foreign currency, calculated on a constant currency basis, is determined by applying prior period average exchange rates to current year results.
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Liquidity and Capital Resources
Cash Flow
(in thousands)Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2019
Net cash used in operating activities$(359)$(8,684)
Net cash used in investing activities$(2,131)$(3,521)
Net cash used in financing activities$(1,002)$(5,056)
Flows
Six Months Ended June 30,
(in thousands)20212020
Net cash provided by operating activities$30,876$9,155
Net cash used in investing activities($1,304)($905)
Net cash used in financing activities($21,961)($1,091)

Cash used inprovided by operating activities was ($0.4)$30.9 million for the ninesix months ended SeptemberJune 30, 2020,2021, as compared to cash used inprovided by operating activities of ($8.7)$9.2 million for the ninesix months ended SeptemberJune 30, 2019.2020. In 2021, net income before non-cash depreciation and amortization was $13.5 million. Other non-cash charges included stock-based compensation of $1.1 million, $1.3 million of deferred financing costs and a $2.0 million increase in net deferred taxes. Additionally, the change in net operating assets was $12.7 million in 2021. For the six months ended June 30, 2020, net income before non-cash depreciation and amortization was ($8.2)$2.6 million. Other non-cash charges included stock-based compensation of $2.5$1.6 million, $2.3$1.2 million of deferred financing costs, a $18.1($5.7) million increase in net deferred taxestax assets and interest income recognized on the interest rate swap of ($1.8)0.7) million. Additionally, the change in net operating assets was ($13.3) million in 2020. For the nine months ended September 30, 2019, net loss before non-cash depreciation and amortization and changes in fair value of contingent consideration (including accretion) was $7.6 million. Other non-cash charges included interest income recognized on the interest rate swap of ($1.1) million, stock-based compensation of $2.3 million, $2.0 million of deferred financing costs, a ($14.5) million increase in net deferred tax assets, impairment of $1.0 million and other non-cash items of $0.2 million. Additionally, the change in net operating assets was ($6.2)$10.1 million for the ninesix months ended SeptemberJune 30, 2019.2020.
Cash used in investing activities was ($2.1)1.3) million and ($0.9) million for the ninesix months ended SeptemberJune 30, 2021 and 2020, as compared to ($3.5) million for the nine months ended September 30, 2019.respectively. Cash used in investing activities in 2020both periods was for the purchase of fixed assets, and leasehold improvements of ($2.1) million. Cash used in 2019 was for the purchase of fixed assets and leasehold improvements of ($3.3) million and other investments of ($0.3) million.software.

Cash used in financing activities was ($1.0)22.0) million for the ninesix months ended SeptemberJune 30, 2020,2021, as compared to ($5.1)1.1) million for the ninesix months ended SeptemberJune 30, 2019.2020. Cash used in financing activities in 2021 was for the repayment of debt in the amount of ($10.7) million, payment of preferred stock redemption of ($5.3) million and payment of dividends of ($6.1) million, offset by proceeds from issuance of stock of $0.2 million. Cash used in 2020 was for the repayment of debt in the amount of ($131.6) million, payment of deferred financing costs of ($8.0) million, payment of preferred stock costs of ($7.0) million and payment of dividends of ($2.2)2.7) million, offset by proceeds from the issuance of preferred stock, net of issuance costs of $145.5 million, long-term borrowings of $2.0$1.4 million and proceeds from the issuance of stock of $0.3 million. Cash used in 2019 was for the repayment of debt in the amount of ($5.1)$0.2 million.

Liquidity

At SeptemberJune 30, 2020,2021, we had $25.1$56.7 million of cash and cash equivalents, compared to $29.3$50.0 million at December 31, 2019.2020.

RestatedAmended 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“Amended 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 below)in Note 15 – Series B Convertible Preferred Stock and Stockholders’ Equity). The RestatedAmended Credit Agreement amends and restates in its entirety the Prior Credit Facility (defined below).

The RestatedAmended Credit Agreement provides for a $25.0 million revolving credit facility (the “Restated“Amended Revolving Loan”) which matures on June 30, 2024, and a $275.0 million term credit facility (the “Restated“Amended Term Loan” and, together with the RestatedAmended Revolving Loan, the “Restated“Amended Credit Facility”), which matures on December 31, 2024. The RestatedAmended Credit Facility includes a $5.0 million swingline commitment and a $10.0 million letter of credit sub-limit. Loans under the RestatedAmended 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 RestatedAmended 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 and six months ended SeptemberJune 30, 2020.2021. The Company is also required to pay a commitment fee on the unused portion of the RestatedAmended 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 RestatedAmended Credit Agreement under certain circumstances. During the three months ended March 31, 2021, a prepayment of principal of $9.1 million was made.

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The obligations of AgroFresh Inc., a wholly-owned subsidiary of the Company and the borrower under the RestatedAmended 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

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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 of $0.7 million 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 RestatedAmended Term Loan.

In connection with the RestatedAmended Term Loan, third-party expenses of $4.4 million 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 RestatedAmended 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 RestatedAmended Term Loan, $1.9 million related to the modification of the Term Loan and $0.5 million related to the RestatedAmended Revolving Loan. The debt issuance costs associated with the RestatedAmended Term Loan were capitalized against the principal balance of the debt, and the RestatedAmended 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 RestatedAmended Credit Facility debt issuance costs during the three and six months ended SeptemberJune 30, 20202021 was $0.3$0.5 million and $0.9 million. As of SeptemberJune 30, 20202021 there were $9.0$7.4 million of unamortized deferred issuance costs.

At SeptemberJune 30, 2020,2021, there was $275.0$263.9 million outstanding under the RestatedAmended Term Loan and no balance outstanding under the RestatedAmended 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 SeptemberJune 30, 2020,2021, the Company evaluated the amount recorded under the RestatedAmended Term Loan and determined that the fair value was approximately $267.4$264.9 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 RestatedAmended Credit Agreement, and the Company was in compliance with these covenants as of SeptemberJune 30, 2020.2021.

Prior Credit Facility

On July 31, 2015, in connection with the consummation of the Business Combination by and between the Company and 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 reducereduced 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 SeptemberJune 30, 2020.2021. The interest rates on borrowings under the facilitiesPrior Credit Facility 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 the 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 and six months ended SeptemberJune 30, 2020, and 2019, was approximately $0.2$0.6 million and $0.6 million, respectively. The interest expense related to the amortization of the Term Loan debt issuance costs during the nine months ended September 30, 2020 and 2019 was approximately $1.4 million and $1.7$1.2 million, respectively.

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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,

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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.

Preferred Stock Financing

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 SeptemberJune 30, 2020.2021.

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 beis payable in cash and 50% will beis 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 $4.4 million of total dividends of which $2.2$3.3 million were in additional preferred shareskind and $2.2$3.1 million were in cash forduring the three months ended June 30, 2021. The Company paid dividends of $6.3 million in kind and $6.1 million in cash during the six months ended June 30, 2021. The Company paid no dividends during the three and ninesix months ended SeptemberJune 30, 2020 respectively. Forassociated with the three and nine months ended September 30, 2019, the Company paid no dividends.Series B Preferred Stock. As of SeptemberJune 30, 20202021 and December 31, 2019,2020, 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 SeptemberJune 30, 20202021 and December 31, 2019,2020, the maximum number of shares of common stock that could be issued upon conversion of the outstanding shares of Series B Convertible Preferred Stock was 30,440,000approximately 31.2 million and 031.0 million shares, respectively.

Off-Balance Sheet Arrangements
As of SeptemberJune 30, 2020,2021, the Company did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations other than as disclosed in Note 2021 - Commitments and Contingencies of the unaudited condensed consolidated financial statements. The Company has not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.


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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was carried outThe Company maintains disclosure controls and procedures within the meaning of Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Company's disclosure controls are designed to ensure that information required to be disclosed by us in the reports we file or submit under the supervisionExchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and withreported within the participation oftime periods specified in the Securities and Exchange Commission's rules and forms. The Company's disclosure controls are also designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer ("CEO") and our Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our Disclosure Controls, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily applied its judgment in evaluating and implementing possible controls and procedures.

As of June 30, 2021, our management, with the participation of our CEO and CFO, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.procedures. Based on thethat evaluation, of our disclosure controlsCEO and procedures, our Chief Executive Officer and Chief Financial Officer haveCFO concluded that our disclosure controls and procedures were not effective as of June 30, 2021, due to ensurematerial weaknesses in the Company's internal control over financial reporting as disclosed below.

Management's Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of published financial statements in accordance with generally accepted accounting principles.

Our internal control over financial reporting include those policies and procedures that:

•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and
•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2021. In making this assessment, management used the criteria in Internal Control-Integrated Framework (2013) set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment using those criteria, management concluded that our internal control over financial reporting as of June 30, 2021 was not effective.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

During 2020, the Company identified material weaknesses related to the design and operation of controls over significant nonrecurring transactions and the preparation and review of our income tax provision. Our controls over significant nonrecurring transactions were not sufficient to consider all accounting and disclosure ramifications nor the ongoing accounting requirements of such transactions. Our controls over the review of the income tax provision relied upon insufficient reviews over underlying information used in the preparation of the tax provision. These material weaknesses resulted in immaterial misstatements in our 2019 financial statements related to the accounting for redeemable non-controlling interest and the computation of the consolidated (benefit) provision for income taxes, which were corrected prior to issuance of the Company’s 2020 financial statements. Furthermore, a reasonable possibility exists that material misstatements in the Company’s 2020 financial statements will not be prevented or detected on a timely basis.

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Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the information requireddegree of compliance with the policies or procedures may deteriorate.

Plan to be disclosed by usRemediate Material Weaknesses

The Company is currently in the reportsprocess of remediating the material weaknesses and has taken and continues to take steps that we file or submit underaddress the Exchange Act was recorded, processed, summarizedunderlying causes of the material weaknesses including improving the sufficiency of review of the information underlying the income tax provision and reported withinenhancing the time periods specified inreview steps associated with significant and nonrecurring transactions. The Company has also implemented quarterly evaluations of the SEC’s rulesaccounting implications of current and formsprior period significant and nonrecurring transactions that affect the Company's consolidated financial statements. The Company has instituted enhanced controls including review processes and reconciliations related to the tax provision. The Company intends to remediate these deficiencies as soon as possible and believes these actions will be sufficient to remediate the identified material weaknesses and strengthen the Company's internal control over financial reporting; however, there can be no guarantee that such information requiredremediation will be sufficient. The Company will continue to be disclosed is accumulatedmonitor the effectiveness of its controls and communicated towill make any further changes management including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.determines appropriate.

Changes in Internal Controls

There were no changes in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time we are named as a defendant in legal actions arising from our normal business activities. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, we do not believe any currently pending legal proceeding to which we are a party will have a material adverse effect on our business, prospects, financial condition, cash flows or results of operations.

ITEM 1A. RISK FACTORS

Ownership of our securities involves a high degree of risk. Holders of our securities should carefully consider, in addition to the historical financial statements and related notes and other information set forth in this Report, the risk factors discussed in Part I - Item 1A - Risk Factors included in our 20192020 Form 10-K, all of which could materially affect our business or future results. Other than the amended and restated risk factors and the additional risk factors set forth below, we are not currently aware of any material changes to the risk factors disclosed in our 20192020 Form 10-K. If any of the risks or uncertainties described in any of such risk factors actually occur, our business, financial condition and operating results could be adversely affected in a material way. This could cause the trading prices of our securities to decline, perhaps significantly, and you may lose part or all of your investment.

The Investor and The Dow Chemical Company (“Dow”) have significant influence over us, which could limit your ability to influence the outcome of key transactions, including a change of control.

As of SeptemberJune 30, 2020,2021, the Investor owned 150,000145,046 shares of our Series B preferred stock (the “Series B Preferred Stock”), which is currently convertible into approximately 30.431.2 million shares of our outstanding common stock representing approximately 36%37% of our outstanding common stock on an as-converted basis (and which votes with our common stock on an as-converted basis), and Dow owned approximately 2121.0 million shares of our outstanding common stock. In addition, we will issue additional shares of Preferred Stock to the Investor as dividends payable-in-kindpay dividends-in-kind on the Series B Preferred Stock. Because of the degree of concentration of voting power (and the potential for such power to increase upon the purchase of additional stock and/or the payment of dividends-in-kind), your ability to elect members of our board of directors and influence our business and affairs, including any determinations with respect to mergers or other business combinations, the acquisition or disposition of assets, the incurrence of indebtedness, the issuance of any additional common stock or other equity securities, the repurchase or redemption of common stock and the payment of dividends, may be diminished.

In addition, the Investor and Dow have representation on the Company’s board of directors and have significant control over the management and affairs of the Company. The Investor currently has twothree designees on the board of directors and commencing on July 27, 2021 (or earlier under certain circumstances) willhas the right to appoint one additional director to the board, and may have the right to appoint one or more additional directors to the board, such that the total number of its designees would be proportionate to its ownership of common stock, on an as-converted basis. Dow (or an affiliate) has one designee on the board of directors and would have the right to appoint an additional director in the future under certain circumstances. The Investor also has class approval rights over certain specified actions that would affect the holders of the Preferred Stock, and has the right to approve certain corporate actions for so long as it continues to hold at least 10% of the shares of common stock outstanding (on an as-converted basis).

Our ability to utilizeIf we do not successfully manage the transition associated with the appointment of a new chief executive officer, our net operating loss carryforwards and certain other tax attributesbusiness may be limited.harmed.

AsOn April 12, 2021, we announced the hiring of December 31, 2019,a new chief executive officer. Any changes in our business strategy that may result from hiring our new chief executive officer may have a disruptive impact on our ability to implement our business strategy and could have a material adverse effect on our business. Any changes in business strategies can create uncertainty, may negatively impact our ability to execute our business strategy quickly and effectively and may ultimately be unsuccessful. In addition, management transition periods can be difficult as the new management gains detailed knowledge of our operations, and friction or further management changes or disruptions could result from changes in strategy and management style. Until we had aggregate U.S. net operating loss carryforwards of approximately $102.6 million, These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities. Under the Tax Cuts and Jobs Act, federal net operating losses incurred in taxable years ending after December 31, 2017integrate our new chief executive officer, we may be carried forward indefinitely, but the deductibility of federal net operating losses generated in tax years beginning after December 31, 2017 is limited. It is uncertain ifunable to successfully manage our business and to what extent various states will conform to the Tax Cutsgrowth objectives, and Jobs Act. In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change” (which is generally definedour business could suffer as a greater than 50% change (by value) in its equity ownership over a three-year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited. We experienced an ownership change as a result of the consummation of the sale of the Preferred Stock to the Investor. Such ownership change may materially limit certain U.S. tax attributes, which may harm our future operating results by effectively increasing our future tax obligations. The Company will continue to review the realizability of the net operating losses and other tax attributes and may make additional adjustments to the valuation allowance.
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Risks associated with the current uncertainty with respect to rapid expansion of the COVID-19 pandemicresult.

We are cognizant of the rapid expansion of the COVID-19 pandemic and the resulting global implications. To date, we have been able to manage our day-to-day operations without significant disruptions. However, there continues to be a possibility for potential developments that could adversely affect our operations, research and development and marketing plans. The impact of these restrictions on the results of our business, if implemented, is currently unknown but could be significant.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.Effective as of August 10, 2021, the Company terminated the ATM Sales Agreement, dated as of June 25, 2020, between the Company and Virtu Americas LLC, as its sales agent, which ATM Sales Agreement was described in the Current Report on Form 8-K filed by the Company on June 26, 2020.

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ITEM 6. EXHIBITS
Exhibit No. Description
3.1
(1)Second Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on July 31, 2015.
3.2
(4)Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation.
3.3
(1)Series A Certificate of Designation.
3.4
(6)Certificate of Designation of Series B Convertible Preferred Stock.
3.5
(2)Amended and Restated Bylaws.
3.6
(3)Amendment to the Amended and Restated Bylaws of AgroFresh Solutions, Inc., effective as of September 3, 2015.
3.7
(5)Amendment to the Amended and Restated Bylaws of AgroFresh Solutions, Inc., effective as of November 2, 2017.
4.1
(1)Specimen Common Stock Certificate.
4.2
(1)Specimen Warrant Certificate.
10.1
(7)Amended and Restated Credit Agreement, dated July 27, 2020.
10.2
(7)Registration Rights Agreement, dated July 27, 2020, between the Company and PSP AGFS Holdings, L.P.
31.1
*Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
31.2
*Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Act of 1934, as amended.
32.1
*Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*XBRL Instance Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit No. Description
3.1
(1)Second Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on July 31, 2015.
3.2
(4)Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation.
3.3
(1)Series A Certificate of Designation.
3.4
(6)Certificate of Designation of Series B Convertible Preferred Stock.
3.5
(2)Amended and Restated Bylaws.
3.6
(3)Amendment to the Amended and Restated Bylaws of AgroFresh Solutions, Inc., effective as of September 3, 2015.
3.7
(5)Amendment to the Amended and Restated Bylaws of AgroFresh Solutions, Inc., effective as of November 2, 2017.
4.1
(1)Specimen Common Stock Certificate.
4.2
(1)Specimen Warrant Certificate.
10.1
(7)Employment Agreement, dated April 12, 2021, between the Company and Clinton Lewis.
10.2
(7)Change in Control Executive Severance Agreement, dated April 12, 2021, between the Company and Clinton Lewis.
10.3
(8)Separation Agreement and Release between the Company and Jordi Ferre.
31.1
*Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange Act of 1934, as amended.
31.2
*Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Act of 1934, as amended.
32.1
*Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*XBRL Instance Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document

———————————————————————————————
*    Filed herewith.
(1)Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on August 6, 2015.
(2)Incorporated by reference to Annex A to the Company’s definitive proxy statement (File No. 001-36197) filed with the Securities and Exchange Commission on July 16, 2015.
(3)Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on September 10, 2015.
(4)Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on June 7, 2017.
(5)Incorporated by reference to an exhibit to the Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange Commission on November 9, 2017.
(6)Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on August 6, 2015.
(2)Incorporated by reference to Annex A to the Company’s definitive proxy statement (File No. 001-36197) filed with the Securities and Exchange Commission on July 16, 2015.
(3)Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on September 10, 2015.
(4)    Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on June 7, 2017.
(5)    Incorporated by reference to an exhibit to the Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange Commission on November 9, 2017.
(6)    Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on September 28, 2020.
(7) Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on July 29, 2020.
(7)Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on April 12, 2021.
(8)Incorporated by reference to an exhibit to the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on May 5,2021.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 AgroFresh Solutions, Inc.
 Date:November 5, 2020August 10, 2021
 /s/ Jordi FerreClinton A. Lewis, Jr.
 By:Jordi FerreClinton A. Lewis, Jr.
Title:Chief Executive Officer
 
/s/ Graham Miao
By:Graham Miao
Title:Chief Financial Officer

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