SCHEDULE 13D/A: Agrify Corporation Divests Cultivation Business to Affiliate, Key Shareholders Cease 5% Beneficial Ownership

Raymond Nobu Chang and affiliated entities have ceased to be beneficial owners of more than 5% of Agrify Corporation's common stock following the sale of Agrify's cultivation business to CP Acquisitions, LLC, an entity affiliated with Mr. Chang.

Summary

• This document is Amendment No. 12 to the Schedule 13D originally filed on December 30, 2022, by Raymond Nobu Chang, NXT3J Capital, LLC, and Raymond Chang Jr. (collectively, the "Former Reporting Persons").
• On December 31, 2024, CP Acquisitions, LLC ("CP"), an entity affiliated with Raymond N. Chang, signed and simultaneously closed an Asset Purchase Agreement for the purchase of the cultivation business of Agrify Corporation ("Issuer").
• The acquired assets include Agrify's Vertical Farming Units, related total-turnkey solution assets, and Agrify InsightsTM software solutions.
• In exchange for the cultivation business, CP, among other consideration, terminated the "Settled Debt" with respect to Agrify Corporation.
• As a result of this transaction, each of the Former Reporting Persons is no longer considered a "Reporting Person" because they have ceased to be the beneficial owner of more than five percent of Agrify's common stock.
• The beneficial ownership percentages were calculated based on 1,952,032 shares of Common Stock outstanding as of January 3, 2024.

Sentiment

Score: 5

Explanation: The document reports a significant asset divestiture by Agrify Corporation in exchange for debt termination, leading to a change in beneficial ownership. While debt termination is positive, the sale of core cultivation assets could be viewed negatively depending on Agrify's future strategy. The filing itself is purely factual and does not express a strong positive or negative sentiment.

Positives

• Agrify Corporation's "Settled Debt" was terminated as part of the consideration for the sale of its cultivation business, which could improve the company's balance sheet.

Negatives

• Agrify Corporation divested its cultivation business, including core assets such as Vertical Farming Units and Agrify InsightsTM software, which represents a significant reduction in its operational scope and a potential shift away from its primary offerings.

Risks

• The transaction involves a related party, CP Acquisitions, LLC, which is affiliated with Raymond N. Chang, raising potential considerations regarding valuation and conflicts of interest.

Future Outlook

The document primarily reports a past event (asset sale) and its impact on beneficial ownership, rather than providing forward-looking statements or guidance from Agrify Corporation itself. The divestiture of the cultivation business suggests a significant strategic shift for Agrify, but no specific future outlook for the company's remaining operations is provided in this filing.

Management Comments

• "Mr. Chang disclaims beneficial ownership with respect to the shares held by NXT3J, and the options and shares held by Raymond Chang Jr., in each case except to the extent of his pecuniary interest therein."

Industry Context

The divestiture of a core cultivation business segment by Agrify Corporation, a company known for its vertical farming and cultivation solutions, indicates a significant strategic pivot. This could reflect challenges within the controlled environment agriculture (CEA) or cannabis cultivation technology sectors, potentially driven by market saturation, pricing pressures, or a strategic shift towards more capital-light business models. The acquisition by an affiliated entity suggests a restructuring or consolidation within the broader ecosystem connected to the former beneficial owner.

Related Party Transactions

• CP Acquisitions, LLC, the entity that acquired Agrify's cultivation business, is affiliated with Raymond N. Chang, one of the former reporting persons.

Stakeholder Impact

• Shareholders: The divestiture of a significant business segment could impact future revenue, profitability, and strategic direction, potentially affecting share value. The termination of "Settled Debt" could improve the company's balance sheet.
• Employees: Employees associated with the cultivation business may be affected by the change in ownership and operational structure.
• Customers: Customers of Agrify's cultivation business (Vertical Farming Units, Agrify InsightsTM software) will now be dealing with CP Acquisitions, LLC for these specific assets and services.

Key Dates

Keywords

Agrify Corporation, Schedule 13D, Asset Purchase Agreement, Cultivation Business, Vertical Farming Units, Agrify Insights, Beneficial Ownership, Raymond Nobu Chang, NXT3J Capital, CP Acquisitions, SEC Filing, Debt Termination, Cannabis Technology