RYM 10-K

RYTHM, Inc. (RYM)

10-K 2022-03-31 For: 2021-12-31

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Added on April 11, 2026

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(Title of Class)		Trading Symbol (s)		(Name of exchange on which registered)
Common Stock, par value $0.001 per share		AGFY		NASDAQ Capital Market

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

		Page #
PART I

Item 1.	Business	1
Item 1A.	Risk Factors	15
Item 1B	Unresolved Staff Comments	32
Item 2.	Properties	32
Item 3.	Legal Proceedings	32
Item 4.	Mine Safety Disclosures	32

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33
Item 6.	[Reserved]	34
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 8.	Financial Statements and Supplementary Data	49
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	49
Item 9A.	Controls and Procedures	49
Item 9B.	Other Information	50
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	50

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	51
Item 11.	Executive Compensation	51
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	51
Item 13.	Certain Relationships and Related Transactions, and Director Independence	51
Item 14.	Principal Accounting Fees and Services	51

PART IV

Item 15.	Exhibits and Financial Statement Schedules	52
Item 16.	Form 10-K Summary	53

Signatures		54

	●	*Emphasis on Precision and Consistency Through Our Extraction Division.* In addition to our premium grow solutions, we have begun offering our customers industry leading cannabis and hemp extraction equipment, design and training solutions. By acquiring leading brands earlier this year, we are immediately able to offer our customers premium solutions to meet their processing needs in this rapidly expanding sector.

	●	*Market Knowledge and Understanding*. We have extensive experience with controlled agriculture environments, extraction, post-processing and scale-up manufacturing, as well as industry technical knowledge and relationships. We are keenly aware of the struggles that indoor cultivators and extractors face, and we serve as a credible and collaborative partner through the entire customer lifecycle. We believe that our fully integrated TTK Solution, extraction equipment and ancillary services are the key to resolving many of the challenges our customers face.

	●	*Differentiated Business Model*. Unlike many of our competitors, we offer a diversified mix of hardware, software and services, which leads to multiple revenue streams. Given the nature of our deployments, we become deeply embedded in our customers’ operations through our numerous product offerings, which include our TTK Solutions and the direct sale of our VFUs, and various extraction and processing equipment and this puts us in a position where their success is directly tied to our equipment. Our ability to differentiate our business model, through both our TTK Solutions, as well as through our direct VFU hardware sales, provides us with multiple opportunities to expand our installed user base, which we believe will lead to future high-margin and stable recurring SaaS revenues, via our Agrify Insights software, and production fee revenues.

	●	Novel Equipment Financing Solution. Limited access to outside capital is a significant issue for cultivators as it can inhibit growth and cultivation facility expansion. We help solve this problem by offering equipment financing plans for select good credit customers, which we believe further enables us to become a vendor of choice. Qualified customers pay approximately 30%-50% upfront and finance the balance through a two-year payment plan.

	●	*Direct Marketing*. We capitalize on our direct marketing efforts by utilizing our internal CRM database, as well as the external help of trusted industry databases to target the right audience. Emails go out on a weekly basis and are subdivided by product focus and state, depending on the campaign. We use A/B testing in our email campaign strategy to harness meaningful messages that result around 35%-40% engagement for open and click rates. The average open and click rates for all industries is 21.33%.
	●	*Social Media and Thought Leadership.* Through the creation and promotion of engaging content that positions us as a thought leader, we continue to organically grow our social media audience. We share original video, photography, industry-related articles, and blog content on a consistent basis. By developing strategic partnerships with well-known and respected brands, we are working to better position ourselves with marketing and branding efforts on social. Furthermore, we promote our social media in our communication via email and on our website. We also keep our finger on the pulse of trends and competitors in the market, remaining in-the-know.
	●	*Trade Shows.* Trade shows and events related to the cannabis industry have proven to be highly effective. When attending trade shows and events, we typically position ourselves front and center, with high-level sponsorships, outstanding booth placement, and speaking opportunities. Our product and subject matter experts take advantage of speaking opportunities, positioning Agrify as industry thought leaders. We expect to continue to grow our industry presence by generating leads using conferences as a platform. The trade show plan has been carefully vetted to ensure that these shows are reputable, have a strong business to business focus, high foot-traffic rates, as well as hosted in a desirable market.
	●	*Paid Advertising*. We utilize paid advertising such as banner ads on high-trafficked media sites that largely focus on cannabis and other relevant topics. We provide content offers and other downloadable materials in order to capture these leads. As we gain experience through these different marketing initiatives, we will make appropriate spending adjustments with our most effective outlets. We seek to expand our business both nationally and internationally, and will do so when we have proven, viable marketing options available to us.
	●	*Public Relations Campaigns.* We have successfully gained the interest of press from networks such as CFN and a number of other cannabis media outlets. With our industry positioning using thought-leadership and on-going participation in industry conferences, we have been highlighted through the Newswire and featured in a variety of media outlets. We will continue to sponsor and keynote in industry-related events including technology and agriculture conferences, podcasts, radio shows and more to continue to gain press and ultimately more exposure.

	●	Facility and lab buildout project management

	●	Agrify state of the art VFUs

	●	Agrify data driven Insights SaaS software

	●	Agrify state of the art extraction products

	●	Expert horticulturist training and ongoing support

	●	our ability to implement our operational plans;

	●	termination of the lock-up agreement or other restrictions on the ability of our stockholders to sell shares;

	Years ended December 31,
(Dollar amounts, excluding share and per share amounts, in thousands)	2021			2020
Revenue, net	$	59,859		$	12,087
Cost of goods sold		54,625			11,517
Gross profit		5,234			570

Selling, general and administrative		34,970			9,832
Research and development		3,925			3,354
Change in contingent consideration		1,412			—
Total operating expenses		40,307			13,186
Loss from operations		(35,073	)		(12,616	)

Interest income (expense), net		74			(481	)
Other expenses		(31	)		—
Gain (loss) on extinguishment of notes payable		2,685			(5,618	)
Gain on forgiveness of PPP loan		45			—
Change in fair value of derivative liabilities		—			(2,924	)
Other income (expense), net		2,773			(9,023	)
Net loss before income taxes		(32,300	)		(21,639	)
Income tax provision		25			—
Net loss		(32,325	)		(21,639	)
Income (loss) attributable to non-controlling interest		140			(22	)
Net loss attributable to Agrify Corporation	$	(32,465	)	$	(21,617	)
Net loss per share attributable to common stockholders – basic and diluted	$	(1.69	)	$	(5.32	)
Weighted average common shares outstanding – basic and diluted		19,090,932			4,175,867

	Year ended December 31,
(Dollar amounts in thousands)	2021		2020		Change			% Change
Cultivation solutions, including ancillary products and services	$	11,354	$	4,883	$	6,471			133	%
Agrify Insights software		8		24		(16	)		(67	)%
Facility build-outs		36,193		7,180		29,013			404	%
Extraction solutions		12,304		—		12,304			100	%
	$	59,859	$	12,087	$	47,772			395	%

	Year ended December 31,
(Dollar amounts in thousands)	2021		2020		Change		% Change
Gross profit	$	5,234	$	570	$	4,664		818	%

	Year ended December 31,
(Dollar amounts in thousands)	2021		2020		Change		% Change
Selling, general and administrative	$	34,970	$	9,832	$	25,138		256	%

	Year ended December 31,
(Dollar amounts in thousands)	2021			2020			Change			% Change
Interest income (expense), net	$	74		$	(481	)	$	555			115	%
Other expenses		(31	)		—			(31	)		(100	)%
Gain (loss) on extinguishment of notes payable		2,685			(5,618	)		8,303			148	%
Gain on forgiveness of PPP loan		45			—			45			100	%
Change in fair value of derivative liabilities		—			(2,924	)		2,924			100	%
	$	2,773		$	(9,023	)	$	11,796			131	%

	Year ended December 31,
(Dollar amounts in thousands)	2021		2020		Change		% Change
Income tax provision	$	25	$	—	$	25		100	%

(Dollar amounts in Thousands)	December 31, 2021			December 31, 2020
Net cash (used in) provided by:
Operating activities	$	(30,149	)	$	(14,782	)
Investing activities		(104,740	)		(1,228	)
Financing activities		138,792			23,915
Net increase in cash and cash equivalents	$	3,903		$	7,905

Exhibit No.		Description

2.1±		Agreement and Plan of Merger dated January 22, 2020 between the Registrant and TriGrow Systems, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020)
2.2±		Plan of Merger and Equity Purchase Agreement, dated as of September 29, 2021, among the Registrant, Sinclair Scientific, LLC, Mass2Media, LLC dba PX2 Holdings, LLC, and each of the equity holders of Sinclair Scientific, LLC named therein (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2021
2.3		Amendment to Plan of Merger and Equity Purchase Agreement, dated as of October 1, 2021, between the Registrant and Sinclair Scientific, LLC (incorporated by reference to Exhibit 2.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 4, 2021)
2.4±		Membership Interest Purchase Agreement, dated as of December 31, 2021, among the Registrant, PurePressure, LLC, Benjamin Britton as Member Representative, and each of the equity holders of PurePressure, LLC named therein (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 5, 2022)
2.5±		Merger Agreement, dated as of February 1, 2022, among the Registrant, LS Holdings Corp., Lab Society NewCo, LLC, Michael S. Maibach Jr. as Owner Representative, and each of the Owners named therein (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 2, 2022).
3.1		Articles of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 13, 2021)
3.2		Third Amended and Restated Certificate of Designations of the Series A Convertible Preferred Stock of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 13, 2021)
3.3		Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 26, 2021)
4.1		Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 26, 2021)
4.2		Form of Representative’s Warrant dated February 19, 2021 (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 11, 2021)
4.3		Form of Representative’s Warrant dated January 27, 2021 (incorporated by reference to Exhibit 4.2 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 26, 2021)
4.4		Form of Warrant issued to Noteholders (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020)
4.5		Description of Registrant’s Securities (incorporated by reference to Exhibit 4.5 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 2, 2021).
4.6		Form of Pre-Funded Warrant dated January 28, 2022 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 26, 2022).
4.7		Form of Common Stock Purchase Warrant dated January 28, 2022 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 26, 2022).
4.8		Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 18, 2022)
4.9		Form of Senior Secured Note (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 18, 2022)
10.1		Operating Agreement of Agrify-Valiant, LLC dated December 8, 2019 (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020)
10.2		Distribution Agreement dated June 7, 2019 between the Registrant and Bluezone Products, Inc.± (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020)
10.3		Distribution Agreement dated March 9, 2020 between the Registrant and Enozo Technologies Inc.± (incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020)

10.4		Purchase Agreement dated as of July 10, 2020 between the Registrant and 4D Bios Inc.± (incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020)
10.5		Employment Agreement dated as of January 4, 2021 between the Registrant and Raymond Chang † (incorporated by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 2, 2021)
10.9		2020 Omnibus Equity Incentive Plan † (incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020)
10.10		Form of Note and Warrant Purchase Agreement (incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020)
10.11		Form of Convertible Promissory Note (incorporated by reference to Exhibit 10.13 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 13, 2021)
10.12		Intellectual Property Assignment and Transfer Agreement by and among the Registrant, Agrify Brands, LLC and The Holden Company effective as of January 1, 2020 (incorporated by reference to Exhibit 10.16 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020)
10.13		Supply Agreement by and among the Registrant and Mack Molding Co. dated December 7, 2020 ± (incorporated by reference to Exhibit 10.15 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 13, 2021)
10.14		Amended and Restated Operating Agreement of Agrify Brands, LLC effective as of August 12, 2020 (incorporated by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020)
10.15*		Separation Agreement of Niv Krikov, dated November 3, 2021
10.16		Form of Indemnification Agreement with directors and executive officers (incorporated by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 11, 2021)
10.17		Employment Agreement, dated as of November 10, 2021, between the Registrant and Thomas Massie † (incorporated by reference to Exhibit 10.19 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 8, 2021)
10.18		Employment Agreement, dated as of November 10, 2021, between the Registrant and Timothy Oakes † (incorporated by reference to Exhibit 10.20 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 8, 2021)
10.19±		Form of Securities Purchase Agreement, dated as of January 25, 2022, between the Registrant and the Purchasers party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 26, 2022.
10.20		Form of Registration Rights Agreement, dated as of January 25, 2022, between the Registrant and the Purchasers party thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 26, 2022.
10.21±		Form of Securities Purchase Agreement, dated as of March 14, 2022, between the Registrant and High Trail Special Situations LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 18, 2022)
14.1		Code of Ethics of Agrify Corporation Applicable To Directors, Officers And Employees (incorporated by reference to Exhibit 14.1 to the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 22, 2020)
21.1*		Subsidiaries of the Registrant
23.1*		Consent of Independent Registered Public Accounting Firm
31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of Principal 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		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

	AGRIFY CORPORATION

Date: March 31, 2022	By:	/s/ Raymond Chang
		By: Raymond Chang
		Title: Chief Executive Officer (principal executive officer)

Signature	Title	Date
/s/ Raymond Chang	Chief Executive Officer and Director	March 31, 2022
Raymond Chang	(Principal Executive Officer)
/s/ Timothy Oakes	Chief Financial Officer	March 31, 2022
Timothy Oakes	(Principal Financial and Accounting Officer)
/s/ Thomas Massie	Chief Operating Officer and Director	March 31, 2022
Thomas Massie
/s/ Guichao Hua	Director	March 31, 2022
Guichao Hua
/s/ Krishnan Varier	Director	March 31, 2022
Krishnan Varier
/s/ Timothy Mahoney	Director	March 31, 2022
Timothy Mahoney
/s/ Stuart Wilcox	Director	March 31, 2022
Stuart Wilcox

/s/ Leonard Sokolow	Director	March 31, 2022
Leonard Sokolow

Fiscal Years Ended December 31, 2021 and 2020:

Independent Auditors’ Report (PCAOB ID # 688)		F-2
Consolidated Financial Statements
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Stockholders’ Equity (Deficit)		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7 – F-43

	As of December 31,
	2021			2020
Assets:
Cash and cash equivalents	$	12,014		$	8,111
Marketable securities		44,550			—
Accounts receivable, net of allowance for doubtful accounts of $1,415 and $54, as of December 31, 2021 and December 31, 2020, respectively		7,222			4,014
Inventory, net of reserves of $942 and $0, as of December 31, 2021 and December 31, 2020, respectively		20,498			5,170
Deferred IPO costs		—			981
Prepaid expenses and other current assets		2,452			364
Total current assets		86,736			18,640

Loan receivable		22,255			—
Property and equipment, net		6,232			873
Right-of-use assets, net		1,479			—
Goodwill		50,090			632
Intangible assets, net		14,072			1,694
Other non-current assets		1,184			—
Total Assets	$	182,048		$	21,839

Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	9,151		$	693
Accrued expenses and other current liabilities		28,764			6,550
Notes payable, net of debt discount of $0 and $4,777 as of December 31, 2021 and December 31, 2020, respectively		—			12,493
Derivative liabilities		—			7,141
Operating lease liabilities, current		814			—
Long-term debt, current		1,089			—
Deferred revenue		3,772			152
Total current liabilities		43,590			27,029

Other non-current liabilities		318			435
Operating lease liabilities, non-current		704			—
Long-term debt		12			829
Total Liabilities		44,624			28,293

Commitments and contingencies (Note 21)

Stockholders’ Equity (Deficit)
Common stock, 50,000,000 shares, $0.001 par value authorized as of December 31, 2021 and December 31, 2020, respectively; 22,207,103 and 4,211,677 shares issued and outstanding at December 31, 2021 and 2020, respectively		21			4
Preferred stock 2,895,000 shares, $0.001 par value authorized as of December 31, 2021 and 2020, respectively; 0 shares issued and outstanding as of December 31, 2021 and 2020, respectively		—			—
Preferred A stock 105,000, $0.001 par value authorized as of December 31, 2021 and 2020, respectively; 0 and 100,000 shares issued and outstanding at December 31, 2021 and 2020, respectively		—			—
Additional paid-in capital		196,013			19,827
Accumulated deficit		(58,975	)		(26,510	)
Total Stockholders’ Equity (Deficit)		137,059			(6,679	)
Non-controlling Interests		365			225
Total Liabilities and Stockholders’ Equity	$	182,048		$	21,839

	Year ended December 31,
	2021			2020
Revenue, net	$	59,859		$	12,087
Cost of goods sold		54,625			11,517
Gross profit		5,234			570

Selling, general and administrative		34,970			9,832
Research and development		3,925			3,354
Change in contingent consideration		1,412			—
Total operating expenses		40,307			13,186
Loss from operations		(35,073	)		(12,616	)
Interest income (expense), net		74			(481	)
Other expenses		(31	)		—
Gain (loss) on extinguishment of notes payable		2,685			(5,618	)
Gain on forgiveness of PPP loan		45			—
Change in fair value of derivative liabilities		—			(2,924	)
Other income (expense), net		2,773			(9,023	)
Net loss before income taxes		(32,300	)		(21,639	)
Income tax provision		25			—
Net loss		(32,325	)		(21,639	)
Income (loss) attributable to non-controlling interest		140			(22	)
Net loss attributable to Agrify Corporation	$	(32,465	)	$	(21,617	)
Net loss per share attributable to common stockholders – basic and diluted	$	(1.69	)	$	(5.32	)
Weighted average common shares outstanding – basic and diluted		19,090,932			4,175,176

	Common Stock				Preferred A Stock					Additional Paid-In			Subscription			Accumulated			Total Stockholders’ Equity (Deficit) attributable			Non- controlling			Total Stockholders’ Equity
	Shares		Amount		Shares			Amount		Capital			Receivable			Deficit			to Agrify			Interests			(Deficit)
Balance, January 1, 2020		3,616,125	$	4		—		$	—	$	4,124		$	(40	)	$	(4,893	)	$	(805	)	$	—		$	(805	)
Stock based compensation		—		—		—			—		1,921			—			—			1,921			—			1,921
Stock subscription		—		—		—			—		—			40			—			40			—			40
Issuance of Preferred A Stock		—		—		100,000			—		10,000			—			—			10,000			—			10,000
Investment in Agrify Valiant		—		—		—			—		—			—			—						40			40
Acquisition of TriGrow Systems		595,552		—		—			—		1,356			—			—			1,356			207			1,563
Warrants issued and recorded as debt discount in connection with notes payable issuances		—		—		—			—		2,426			—			—			2,426			—			2,426
Net loss		—		—		—			—		—			—			(21,617	)		(21,617	)		(22	)		(21,639	)
Balance, December 31, 2020		4,211,677	$	4		100,000		$	—	$	19,827		$	—		$	(26,510	)	$	(6,679	)	$	225		$	(6,454	)
Balance, January 1, 2021		4,211,677	$	4		100,000		$	—	$	19,827		$	—		$	(26,510	)	$	(6,679	)	$	225		$	(6,454	)
Stock-based compensation		—		—		—			—		5,552			—			—			5,552			—			5,552
Beneficial conversion feature associated with amended Convertible Promissory Notes		—		—		—			—		3,869			—			—			3,869			—			3,869
Conversion of Convertible Notes		1,697,075		2		—			—		13,098			—			—			13,100			—			13,100
Issuance of common shares in connection with acquisition		8,000		—		—			—		176			—			—			176			—			176
Issuance of common stock – Initial Public Offering (“IPO”), net of fees		6,210,000		6		—			—		56,955			—			—			56,961			—			56,961
Issuance of common stock – Secondary public offering, net of fees		6,388,888		6		—			—		79,833			—			—			79,839						79,839
Conversion of Preferred A Stock		1,373,038		1		(100,000	)		—		(1	)		—			—			—			—			—
Acquisition of Precision and Cascade		666,403		1		—			—		12,354			—			—			12,355			—			12,355
Acquisition of PurePressure		240,301		—		—			—		2,211			—			—			2,211			—			2,211
Exercise of options		657,620		—		—			—		2,132			—			—			2,132			—			2,132
Exercise of warrants		754,101		1		—			—		7			—			—			8			—			8
Net loss		—		—		—			—		—			—			(32,465	)		(32,465	)		140			(32,325	)
Balance December 31, 2021		22,207,103	$	21		—		$	—	$	196,013		$	—		$	(58,975	)	$	137,059		$	365		$	137,424

	For the Year ended December 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss attributable to Agrify Corporation	$	(32,465	)	$	(21,617	)
Adjustments to reconcile net loss attributable to Agrify Corporation to net cash used in operating activities:
Depreciation and amortization		1,310			407
Amortization of premium on investment securities		951			—
Interest on investment securities		(1,035	)		—
Change in fair value of contingent consideration		1,412			—
Provision for doubtful accounts		1,187			54
Provision for inventory obsolescence		942			—
Compensation in connection with the issuance of stock options		5,552			1,921
Issuance of common shares in connection with acquisition		176			—
Non-cash interest (income) expense		(42	)		447
(Gain) loss on extinguishment of notes payable, net		(2,685	)		5,618
Gain on forgiveness of PPP loan		(45	)		—
Change in fair value of derivative liabilities		—			2,924
Deferred income taxes		25			—
(Gain) loss from disposal of fixed assets		(5	)		120
(Gain) loss attributable to non-controlling interests		140			(22	)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		(3,391	)		(3,709	)
Inventory		(6,568	)		(2,941	)
Prepaid expenses and other current assets		(1,745	)		12
Right of use assets, net		29			—
Accounts payable		1,127			(527	)
Accrued expenses and other current liabilities		8,284			4,780
Deferred revenue		(3,303	)		(2,249	)
Net cash used in operating activities		(30,149	)		(14,782	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(2,220	)		(136	)
Purchases of intangibles assets		(104	)		—
Purchase of securities		(62,209	)		—
Proceeds from the sale of securities		17,743			—
Proceeds from the sale of fixed assets		101			—
Issuance of loan receivable		(22,143	)		—
Cash paid for business combination, net of cash acquired		(35,908	)		(1,092	)
Net cash used in investing activities		(104,740	)		(1,228	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Preferred A Stock		—			10,000
Proceeds from IPO, net of fees		56,961			—
Proceeds from Secondary public offering, net of fees		79,839			—
Proceeds from exercise of options		2,132			—
Proceeds from exercise of warrants		8			—
Payments of financing leases		(148	)		—
Minority interest in Valiant		—			40
Proceeds from PPP Loans		—			823
Payments of financing leases		—			(88	)
Proceeds from notes payable		—			13,100
Proceeds from issuance of common stock		—			40
Net cash provided by financing activities		138,792			23,915
Net increase in cash		3,903			7,905
Cash and cash equivalents – Beginning of period		8,111			206
Cash and cash equivalents – End of period	$	12,014		$	8,111
Supplemental disclosure of non-cash investing and financing activities:
Equipment sold for loan receivable to customer	$	289		$	—
Warrants issued and recorded as debt discount in connection with notes payable issuances	$	—		$	2,426
Bifurcated embedded conversion options recorded as derivative liabilities and debt discount	$	—		$	2,769

	●	our reporting $1.0 billion or more in annual gross revenues;

	●	our issuance, in a three-year period, of more than $1.0 billion in non-convertible debt;

	●	the end of the fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million on the last business day of our second fiscal quarter; and

	●	December 31, 2026.

		Estimated Useful Life (Years)
Computer and office equipment		2 to 3
Furniture and fixtures		2
Software		3
Vehicles		5
Research and development laboratory equipment		5
Machinery and equipment		3 to 5
Leased equipment at customer		5 to 13
Trade show assets		3 to 5
Leasehold improvements		Lower of estimated useful life or remaining lease term

Trade names		5 to 7 years
Acquired developed technology		5 to 8 years
Non-compete agreements		5 years
Customer relationships		5 to 8 years
Capitalized website costs		3 to 5 years

	Level 1:	Observable inputs such as quoted prices for identical assets or liabilities in active markets.
	Level 2:	Other inputs that are observable directly or indirectly, such as quoted prices for similar instruments in active markets or for similar markets that are not active.
	Level 3:	Unobservable inputs for which there is little or no market data which require the Company to develop its own assumptions about how market participants would price the asset or liability.

	December 31, 2021								December 31, 2020
	Fair Value Measurements Using Input Types								Fair Value Measurements Using Input Types
(Dollar Amounts in Thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Assets
Mutual funds (included in cash and cash equivalents)	$	178	$	—	$	—	$	178	$	—	$	—	$	—	$	—
Held to maturity securities
Municipal bonds		9,961		—		—		9,961		—		—		—		—
Corporate bonds		34,589		—		—		34,589		—		—		—		—
Total held to maturity securities	$	44,728	$	—	$	—	$	44,728	$	—	$	—	$	—	$	—
Liabilities
Notes payables, net of discount	$	—	$	—	$	—	$	—	$	—	$	—	$	12,493	$	12,493
Derivative liabilities		—		—		—		—		—		—		7,141		7,141
Contingent consideration		—		—		6,137		6,137		—		—		—		—
Total liabilities	$	—	$	—	$	6,137	$	6,137	$	—	$	—	$	19,634	$	19,634

	●	Cash and cash equivalents, accounts receivable, accounts payable and deferred revenue liabilities fair values approximate their carrying values, due to the expected duration of these instruments.

	●	Marketable securities classified as held to maturity securities are recorded at amortized cost, which as of December 31, 2021, approximated fair value.

	●	The Company had certain derivative instruments accounted for at fair value. The Company held a convertible promissory note with a preferential conversion feature which qualifies as a derivative instrument. The fair value assumptions consider the nature of the conversion feature and the expected timeline to a qualifying conversion event.

	●	The Company’s deferred consideration was recorded in connection with acquisitions during the year ending December 31, 2021 using an estimated fair value discount at the time of the transaction. As of December 31, 2021, the carrying value of the deferred consideration approximated fair value.

(Dollar Amounts in Thousands)	Amortized cost		Unrealized loss			Estimated fair value
Current marketable securities (due within 1 year)
Municipal bonds	$	9,961	$	(9	)	$	9,952
Corporate bonds		34,589		(72	)		34,517
	$	44,550	$	(81	)	$	44,469

(Dollar Amounts in Thousands)	December 31, 2021
Contingent consideration – beginning of year	$	—
Accrued contingent consideration		4,725
Change in estimated fair value		1,412
Contingent consideration – end of year	$	6,137

	Fiscal Year
(Dollar Amounts in Thousands)	2021		2020
Balance as of the beginning of the year	$	54	$	—
Provision for doubtful accounts		1,187		54
Other adjustments		174		—
Balance as of the end of the year	$	1,415	$	54

	Intangible Assets, Gross						Accumulated Amortization									Intangible Assets, Net
(Dollar Amounts in Thousands)	January 1, 2021		Additions and retirements, net		December 31, 2021		January 1, 2021			Expense and retirements, net			December 31, 2021			January 1, 2021		December 31, 2021
Trade names	$	930	$	1,488	$	2,418	$	(88	)	$	(139	)	$	(227	)	$	842	$	2,191
Customer Relationships		850		5,326		6,176		(89	)		(213	)		(302	)		761		5,874
Acquired developed Technology		—		4,911		4,911		—			(191	)		(191	)		—		4,720
Non-compete		—		1,202		1,202		—			(60	)		(60	)		—		1,142
Capitalized website costs		139		106		245		(48	)		(52	)		(100	)		91		145
Total	$	1,919	$	13,033	$	14,952	$	(225	)	$	(655	)	$	(880	)	$	1,694	$	14,072