SCHEDULE: Agrify Secures $45M Note, Rebrands to RYTHM, Acquires Key Cannabis Brands

Agrify Corp announced a $45 million secured convertible note from RSLGH, a strategic name change to RYTHM, Inc., and the acquisition of prominent cannabis brands, signaling a major strategic shift.

Summary

• Reporting Persons, including Green Thumb Industries Inc. subsidiaries, now beneficially own 12,956,672 shares of Agrify Corp Common Stock, representing 49.99% of the outstanding class.
• Agrify Corp issued a $45.0 million Secured Convertible Note to RSLGH on August 25, 2025, as part of an aggregate $50.0 million series of August 2025 Notes.
• The August 2025 Note is a secured obligation, ranking senior to most company indebtedness and pari passu with the November 2024 and May 2025 Notes.
• The note bears a 10.0% annualized interest rate, with interest payable in cash, Common Stock, or Pre-Funded Warrants, starting March 1, 2026.
• The conversion price for the August 2025 Note is $29.475 per share, subject to a 49.99% beneficial ownership limitation and potential stockholder approval.
• Agrify Corp filed to change its name to RYTHM, Inc., effective September 2, 2025.
• The company acquired VCP IP Holdings, LLC from VCP23, LLC, gaining intellectual property rights to cannabis brands including RYTHM, Beboe, Dogwalkers, Doctor Solomon's, &Shine, and Good Green.
• A new Trademark and Recipe License Agreement was entered into with GTI Core, LLC (a Green Thumb subsidiary) for the Acquired Brands, replacing previous license agreements for Beboe and RYTHM.

Sentiment

Score: 7

Explanation: The filing details a significant capital infusion, strategic brand acquisitions, and a corporate rebranding, which are generally positive for a company's long-term positioning. The involvement of Green Thumb Industries suggests a strong strategic partner. However, the high beneficial ownership by the reporting group and the potential for control raise some considerations for minority shareholders.

Positives

• Secured $45.0 million in new financing through a convertible note, strengthening the company's capital structure.
• Acquisition of established cannabis brands (RYTHM, Beboe, Dogwalkers, Doctor Solomon's, &Shine, Good Green) enhances the company's intellectual property portfolio and market presence.
• Strategic rebranding to RYTHM, Inc. aligns the company's identity with a prominent acquired brand, potentially improving market recognition and brand synergy.
• The new secured convertible note ranks senior to most existing indebtedness, providing a strong position for the lender.

Negatives

• The conversion of the August 2025 Note is subject to a 49.99% beneficial ownership limitation and may require stockholder approval, which could introduce uncertainty or delays.
• Default interest rate of 14% per annum on the August 2025 Note indicates potential financial strain if covenants are breached.
• The significant beneficial ownership (49.99%) by the Reporting Persons, including Green Thumb Industries, suggests a high degree of influence or potential control, which could impact minority shareholders.

Risks

• Conversion of the August 2025 Note is subject to a 49.99% beneficial ownership limitation, potentially restricting full conversion by RSLGH.
• Stockholder approval may be required for the conversion of the August 2025 Note under Nasdaq Listing Rule 5635, introducing a potential hurdle.
• The August 2025 Note includes customary affirmative and negative covenants, and an event of default could lead to acceleration of the principal amount and accrued interest at a 14% default rate.
• The Reporting Persons explicitly state a 'control purpose' and may seek to influence the Issuer's financial position, investment strategy, capitalization, ownership structure, and Board composition.

Future Outlook

The Reporting Persons may review their positions, engage with management and the board, discuss with stockholders, make recommendations on capitalization, ownership structure, board composition, potential business combinations or dispositions, or suggestions for improving financial/operational performance. They may also purchase additional securities or sell existing ones.

Management Comments

• The Reporting Persons may, at any time and from time to time, review or reconsider their positions and formulate plans or proposals with respect thereto.
• Depending on various factors including, without limitation, the Issuer's financial position and investment strategy, the price levels of the Common Stock, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate.
• Actions may include engaging in communications with management and the board of directors, engaging in discussions with stockholders or other third parties about the Issuer and the Reporting Persons' investment, including potential business combinations or dispositions involving the Issuer or certain of its businesses.
• Actions may also include making recommendations or proposals to the Issuer concerning changes to the capitalization, ownership structure, Board structure (including Board composition), or suggestions for improving the Issuer's financial and/or operational performance.
• The Reporting Persons may also purchase additional securities of the Issuer, and/or sell some or all of the Investors securities in the Issuer.

Industry Context

This filing highlights a significant strategic maneuver within the evolving cannabis industry. The acquisition of established brands like RYTHM, Beboe, and Dogwalkers by Agrify, coupled with its rebranding to RYTHM, Inc., suggests a pivot towards a more brand-centric model, potentially moving away from or complementing its previous focus on cultivation solutions. The involvement of Green Thumb Industries (GTI), a major multi-state operator, through its subsidiaries as reporting persons and the new licensing agreement, indicates a deepening strategic alliance or integration. This could reflect a trend of consolidation and vertical integration within the cannabis sector, where strong brands and efficient supply chains are becoming increasingly critical for market leadership.

Comparison to Industry Standards

• The acquisition of multiple established cannabis brands (RYTHM, Beboe, Dogwalkers, Doctor Solomon's, &Shine, Good Green) is consistent with consolidation trends seen in the broader cannabis industry, where larger players like Curaleaf, Trulieve, and Cresco Labs have also acquired numerous regional and national brands to expand their market share and product portfolios.
• The issuance of a secured convertible note with a 10.0% interest rate and a 14% default rate is within the typical range for growth-stage companies in the cannabis sector, which often face higher borrowing costs due to regulatory complexities and limited access to traditional financing compared to other industries.
• The beneficial ownership limitation of 49.99% on conversion is a common mechanism used in the cannabis industry to avoid triggering certain regulatory or stock exchange control thresholds, particularly when a U.S. company is involved with a Canadian-listed entity like Green Thumb Industries.

Corporate Governance

Related Party Transactions

• The Company acquired all equity interests in VCP IP Holdings, LLC from VCP23, LLC. VCP23, LLC is one of the Reporting Persons.
• Immediately after the acquisition, VCP IP Holdings, LLC granted GTI Core, LLC (an indirect wholly-owned subsidiary of Green Thumb Industries Inc., also a Reporting Person) a license to use intellectual property related to the Acquired Brands.

Stakeholder Impact

• Shareholders: Potential for dilution from convertible note and warrants; strategic shift and brand acquisition could enhance long-term value; increased influence of Green Thumb Industries and related entities (Reporting Persons) due to significant beneficial ownership and 'control purpose.'
• Creditors: The new August 2025 Note is secured and ranks senior to most existing indebtedness, potentially impacting the recovery prospects of junior creditors in a default scenario.
• Customers: Acquisition of popular cannabis brands could lead to broader availability or integration of these brands within the company's offerings.

Next Steps

• Company name change to RYTHM, Inc. to become effective on September 2, 2025.
• Interest payments on the August 2025 Note to begin on March 1, 2026.
• Reporting Persons may review their investment positions and formulate future plans, including potential engagement with management/board, discussions with stockholders, recommendations on corporate structure, or further buying/selling of securities.

Key Dates

Recommendation

The filing details a significant strategic pivot for Agrify, including a substantial capital injection, a corporate rebranding to RYTHM, Inc., and the acquisition of several key cannabis brands. The involvement of Green Thumb Industries as a major beneficial owner and strategic partner suggests a potentially strong future direction within the cannabis sector. However, the high beneficial ownership by the reporting group and their stated 'control purpose' introduce a level of uncertainty regarding future corporate governance and strategic alignment for minority shareholders. While the capital raise and brand acquisitions are positive, the long-term implications of this concentrated ownership and the execution risk of integrating new brands warrant a cautious 'hold' stance until more clarity emerges on operational performance and the full strategic impact.

Keywords

Agrify, RYTHM, Green Thumb Industries, GTI, cannabis, secured convertible note, beneficial ownership, brand acquisition, intellectual property, Schedule 13D, SEC filing, corporate rebranding, warrants, financing