Forafric pivots to drones as auditors flag going concern

Forafric Global PLC, the Nasdaq-listed Moroccan flour miller that produces semolina, pasta and couscous under the Maymouna and Tria brands, announced on April 23 that it intends to pivot toward “artificial intelligence, aerial drones, anti-drone laser applications and advanced defence technologies.” The announcement arrived 3 days after Morocco’s Competition Council formally authorised the sale of control of the company’s main Moroccan operating subsidiary to Cap Holding, the conglomerate belonging to Chakib Alj, the president of Morocco’s national employers’ federation. It arrived almost exactly 1 year after Forafric’s auditors told the world they had serious doubts about whether the company could continue to exist.

The juxtaposition is striking enough that a second press release, described by Le Desk as a “correction,” quickly replaced the original announcement, apparently to dial back the ambition of the language or clarify the scope. Whatever the revision said, the original message had already landed: a company simultaneously handing off its flagship flour operations, carrying $179 million in financial debt, reporting a net loss of $10.88 million in the first half of 2025 and operating under a formal going concern flag from its auditors had just told investors it was going to be a drone company.

The flour business that isn’t going well

Forafric’s problems are not subtle. The company has been losing commercial ground for 2 consecutive years. Full-year revenue for 2024 came in at $274.2 million, already down 9.2% from the prior year. The trailing 12 months to June 30, 2025 showed revenue of $201.9 million. The first half of 2025 alone saw revenue fall 45% year on year to $87.35 million.

On April 30, 2025, UHY LLP, the firm that has audited Forafric since 2021, signed its audit report on the company’s annual 20-F filing with the US Securities and Exchange Commission. Inside that report sat a section with the heading “Substantial Doubt as to the Company’s Ability to Continue as a Going Concern.” That phrase is the most alarming thing an auditor can write about a public company. It means the auditors are not confident the business can survive the next 12 months without material changes to its financial position.

The company had been working toward those changes. In February 2025, Forafric announced a balance-sheet strengthening strategy built around Morocco and soft wheat, which involved divesting non-core assets: operations outside Morocco, durum wheat businesses and certain logistics activities. Management estimated gross proceeds of $80 million to $100 million from those disposals. A $29 million asset disposal plan had already been launched.

What the Cap Holding deal means

The Competition Council’s authorisation on April 20 to transfer control of Forafric’s core Moroccan subsidiary to Cap Holding represents the central transaction in that disposal strategy. Chakib Alj is one of Morocco’s most prominent businessmen, running a conglomerate of more than 3,500 employees that spans milling, agri-food, poultry farming, packaging, logistics and renewables. He began his business career in 1987 by running Société Nouvelle des Moulins du Maghreb, one of Morocco’s established flour milling houses, which means he understands the asset he is acquiring.

Cap Holding taking control of Forafric’s Moroccan operations would effectively move the company’s most valuable producing assets into the hands of a deep-pocketed domestic operator with the sectoral knowledge and financial capacity to run them without the liquidity pressures that have been strangling Forafric’s performance. The flour stays in Morocco. The Moroccan milling industry consolidates around established local capital. That part of the story is straightforward.

What is less straightforward is what Forafric itself becomes after the transaction.

The drone announcement

Yariv Elbaz, the reference shareholder and controlling figure at Forafric, has been looking for a way to reposition a company whose core operations are being handed to someone else. The April 23 announcement described an intention to operate “at the intersection of three high-growth sectors: food security, defence and energy infrastructure,” with specific reference to joint ventures in AI, drone technology, anti-drone lasers and advanced defence applications. The company also said it was examining a possible name change.

The timing, whatever its strategic logic, is jarring. Morocco is genuinely becoming a hub for drone and defence technology. The US military is establishing Africa’s first dedicated drone training centre in the country, backed by AFRICOM. Morocco’s defence-industrial base has been expanding around Benslimane near Casablanca, with investments in loitering munitions, unmanned systems and aerospace facilities. The defence pivot that Forafric is signalling is not an invented opportunity. There is a real market there.

But the gap between signalling a pivot and executing one is enormous, and it is substantially larger for a company that has been generating net losses, carries nearly $180 million in debt and is in the process of transferring its main operating assets to a third party. The going concern warning from April 2025 has not been formally lifted. The auditors who issued it have seen 1 more half-year of declining revenue since then.

The flour business built since 1926 is being passed on. What replaces it remains an aspiration on a press release that was quickly revised. The market will be watching the next filing with the SEC to understand how much of the drone vision comes with a credible financial plan behind it.