SCHEDULE 13D/A: Green Thumb Industries Affiliates Boost Agrify Stake to 49.99% with $27 Million Convertible Note and Strategic Brand Licenses

Affiliates of Green Thumb Industries Inc. have significantly increased their beneficial ownership in Agrify Corporation to 49.99% through a new $27 million secured convertible note and a series of strategic brand licensing and shared services agreements.

Summary

• This Amendment No. 2 to Schedule 13D updates the beneficial ownership of Agrify Corporation by a group of reporting persons, including RSLGH, LLC, Wellness Mgmt, LLC, For Success Holding Company, VCP23, LLC, GTI23, INC., and Green Thumb Industries Inc. (GTI).
• The reporting persons are deemed to beneficially own an aggregate of 8,169,334 shares of Agrify's Common Stock, representing 49.99% of the outstanding shares as of May 22, 2025.
• On May 22, 2025, Agrify issued a Secured Convertible Note with an original principal amount of $27.0 million to RSLGH, LLC, as part of a larger $30.0 million series of May 2025 Notes.
• The May 2025 Note bears interest at a 10.0% annualized rate, payable in Pre-Funded Warrants, and is convertible into Common Stock at a price of $23.53 per share, subject to a 49.99% beneficial ownership limitation and potential stockholder approval.
• Amendments were made to the November 2024 Note held by RSLGH, LLC, including the issuance of 18,614 Pre-Funded Warrants on May 8, 2025, and an additional 11,373 Pre-Funded Warrants to be issued on September 1, 2025, in lieu of cash interest payments.
• Agrify entered into exclusive license agreements on May 20, 2025, with For Success Holding Company for the 'Beboe' brand and with VCP23, LLC for the 'Rythm' brand, both for hemp-derived products, with license fees payable in cash or Pre-Funded Warrants.
• An Amended and Restated Shared Services Agreement was executed on May 20, 2025, between Agrify and Vision Management Services, LLC (a GTI subsidiary), with service fees payable in cash, Common Stock, or Pre-Funded Warrants.
• Agrify also acquired intellectual property rights to the 'incredibles' brand from a GTI subsidiary and subsequently granted an exclusive license back to another GTI subsidiary for its state-licensed cannabis businesses.
• The November 2024 Note is not currently convertible and is not anticipated to be convertible within the next 60 days, except for warrants issued as interest payments.

Sentiment

Score: 7

Explanation: The filing indicates a significant strategic investment and partnership with a major industry player (Green Thumb Industries), providing substantial capital and brand access, which is generally positive for Agrify. However, the potential for significant dilution and increased debt burden are notable considerations, balancing the overall sentiment.

Positives

• Agrify received a significant capital infusion of $27.0 million from RSLGH, LLC, part of a total $30.0 million in May 2025 Notes, providing crucial financing.
• The strategic partnerships and licensing agreements with Green Thumb Industries (GTI) for 'Beboe', 'Rythm', and 'incredibles' brands, along with a shared services agreement, indicate a deeper collaboration and potential for expanded market reach and operational efficiencies.
• The conversion of interest payments on the November 2024 Note into Pre-Funded Warrants helps Agrify preserve cash, which is beneficial for liquidity.

Negatives

• The beneficial ownership of 8,169,334 shares, representing 49.99% of Agrify's outstanding Common Stock, indicates significant potential dilution for existing shareholders upon conversion of the notes and warrants.
• The May 2025 Note adds $27.0 million to Agrify's debt burden, which is a secured obligation and ranks senior to most other indebtedness.
• The conversion of the May 2025 Note is subject to a 49.99% beneficial ownership limitation and may require stockholder approval, which could complicate full conversion and introduce uncertainty.

Risks

• The beneficial ownership limitations (49.99% and 4.99%) on warrant and note conversions may restrict the full exercise or conversion of securities without triggering additional Nasdaq listing rules or requiring stockholder approval.
• Compliance with Nasdaq listing rules is explicitly mentioned as a condition for certain warrant and stock issuances, posing a potential hurdle.
• The May 2025 Note includes a default interest rate of 14%, which could significantly increase financial obligations if an event of default occurs.
• The success of the new licensing agreements for 'Beboe', 'Rythm', and 'incredibles' brands is dependent on the legal and regulatory landscape for hemp-derived products in the United States, which can be subject to change.

Future Outlook

The Reporting Persons may, at any time, review or reconsider their positions and formulate new plans or proposals. This includes potentially engaging in communications with Agrify's management and board, discussing with other stockholders, making recommendations concerning capitalization, ownership structure, board composition, potential business combinations or dispositions, or suggestions for improving financial and operational performance. They may also purchase additional securities or sell existing holdings. The November 2024 Note is not anticipated to be convertible within the next 60 days, except for warrants issued as interest payments.

Management Comments

• Benjamin Kovler signed on behalf of Green Thumb Industries Inc. (as Chairman and Chief Executive Officer), For Success Holding Company (as CEO & President), VCP23, LLC (as Manager), GTI23, INC. (as Director & Authorized Signatory), and Wellness Mgmt, LLC (as Authorized Signatory), indicating his central role in these transactions.
• Bret Kravitz signed on behalf of RSLGH, LLC as Corporate Secretary.

Industry Context

This filing signifies a deepening strategic alliance between Agrify Corporation, a provider of cultivation solutions, and Green Thumb Industries (GTI), a leading multi-state cannabis operator. The substantial investment via convertible notes, coupled with licensing agreements for prominent cannabis/hemp brands ('Beboe', 'Rythm', 'incredibles') and a shared services agreement, suggests a move towards vertical integration or a strong partnership model within the broader cannabis and hemp industry. This collaboration allows Agrify to potentially leverage GTI's brand recognition and market presence, while GTI expands its reach into hemp-derived products and potentially optimizes its operations through Agrify's services.

Comparison to Industry Standards

• The 49.99% beneficial ownership limitation is a common strategy employed by large investors, particularly in the cannabis sector, to gain significant influence and economic interest without triggering full control thresholds that might necessitate complex regulatory approvals or change of control provisions, especially for Multi-State Operators (MSOs) like Green Thumb Industries.
• The use of secured convertible notes with interest payable in warrants or stock is a prevalent financing mechanism for growth-stage companies, particularly in capital-intensive industries like cannabis cultivation and technology, as it allows for cash preservation while attracting investment.
• Brand licensing agreements, such as those for 'Beboe', 'Rythm', and 'incredibles', are standard practice in the consumer goods and cannabis industries for companies to expand their product portfolios and market reach without directly acquiring the underlying operational assets or intellectual property, leveraging established brand equity.

Related Party Transactions

• Issuance of the May 2025 Secured Convertible Note to RSLGH, LLC, which is an indirect subsidiary of Green Thumb Industries Inc. (a Reporting Person).
• Amendments to the November 2024 Note, also held by RSLGH, LLC.
• Beboe License Agreement between For Success Holding Company (an indirect subsidiary of Green Thumb Industries Inc.) and Core Growth, LLC (an indirect wholly-owned subsidiary of Agrify Corporation).
• Rythm License Agreement between VCP23, LLC (an indirect subsidiary of Green Thumb Industries Inc.) and Core Growth, LLC.
• Amended and Restated Shared Services Agreement between Agrify Corporation and Vision Management Services, LLC (an indirect wholly-owned subsidiary of Green Thumb Industries Inc.).
• Purchase Agreement for the 'incredibles' brand intellectual property between Agrify Corporation and VCP IP Holdings, LLC (an indirect wholly-owned subsidiary of Green Thumb Industries Inc.).
• Trademark and Recipe License Agreement for the 'incredibles' brand between MC Brands LLC (now an Agrify subsidiary) and GTI Core, LLC (an indirect wholly-owned subsidiary of Green Thumb Industries Inc.).

Stakeholder Impact

• **Shareholders**: Face potential significant dilution from the conversion of the new convertible notes and warrants. The 49.99% beneficial ownership stake by GTI affiliates could influence future strategic direction, but the limitation prevents outright control without further shareholder action.
• **Creditors**: The new May 2025 Note is secured and ranks senior to most other indebtedness, potentially affecting the recovery prospects of existing junior creditors.
• **Customers/Suppliers**: May benefit from expanded product offerings through the licensing of 'Beboe', 'Rythm', and 'incredibles' brands, and potentially improved services due to the shared services agreement with GTI's affiliate.

Next Steps

• Potential requirement for stockholder approval for the conversion of the May 2025 Note, if deemed necessary by Nasdaq listing rules.
• Issuance of an additional 11,373 Pre-Funded Warrants on September 1, 2025, as an interest payment for the November 2024 Note.
• The Reporting Persons may continue to review their investment, engage with Agrify's management and board, discuss with other stockholders, and potentially make recommendations or adjust their holdings.

Key Dates

Recommendation

Keywords

Agrify Corporation, Green Thumb Industries, SEC filing, Schedule 13D/A, convertible note, warrants, beneficial ownership, intellectual property license, cannabis industry, hemp products, strategic partnership, financing, debt, dilution, corporate governance