Agrify (US:AGFY)2025-11-07 12:11Acquisitions and Brand Development - RYTHM's acquisition of the Señorita brand in November 2024 introduced hemp-derived THC beverages, which quickly gained acclaim, winning The High Times Cannabis Cup within a year[168]. - The company reported cash consideration of $5.1 million for acquiring MC Brands, which includes the incredibles brand, and $50.0 million for acquiring VCP, which includes multiple intellectual property rights[170][171]. - RYTHM's hemp-derived beverages are available in eleven U.S. states and Canada, with plans for further expansion into premier on-premises destinations[165]. - The company has entered into distribution agreements to expand its hemp-derived beverage products in domestic markets during the first nine months of 2025[174]. - The Señorita brand offers four flavors of THC beverages, including classic Lime Jalapeño Margarita and Mango Margarita, emphasizing low-sugar and low-calorie options[169]. Financial Performance - Revenue for the three months ended September 30, 2025, was $4.043 million, an increase of $4 million compared to the same period in 2024[196]. - Non-licensing revenue for the three months ended September 30, 2025, was $3.511 million, with $696 thousand attributable to related parties[196]. - Revenue for the nine months ended September 30, 2025, was $6.623 million, an increase of $6.6 million compared to the same period in 2024[197]. - Net loss for the three months ended September 30, 2025, was $10.665 million, compared to a net loss of $18.651 million for the same period in 2024[195]. - Net loss per share attributable to common stockholders for the three months ended September 30, 2025, was $(5.33) compared to $(17.28) for the same period in 2024[195]. - The company reported a net loss of $19.7 million for the nine months ended September 30, 2025, which included $2.5 million related to depreciation and amortization[219]. Costs and Expenses - Cost of goods sold for the three months ended September 30, 2025, was $2.668 million, an increase of $2.6 million compared to the same period in 2024[198]. - Gross profit for the three months ended September 30, 2025, was $1.375 million, representing 34.0% of total revenue[200]. - Selling, general and administrative expenses for the three months ended September 30, 2025, were $10.263 million, an increase of 741% compared to the same period in 2024[202]. - SG&A expenses included $3.1 million attributable to related parties for the three months ended September 30, 2025[202]. - SG&A expenses increased by $17.7 million, or 467%, for the nine months ended September 30, 2025, compared to the same period in 2024[203]. Cash Flow and Financing - Net cash used in operating activities was $20.5 million for the nine months ended September 30, 2025, compared to $6.3 million for the same period in 2024[218]. - Net cash used in investing activities was $55.1 million for the nine months ended September 30, 2025, primarily due to the acquisition of MC Brands and VCP[221]. - Net cash provided by financing activities was $80.0 million for the nine months ended September 30, 2025, resulting from proceeds from May and August 2025 Notes[222]. - As of September 30, 2025, the company had cash and cash equivalents totaling $35.6 million[212]. Business Operations and Strategy - The company exited the Extraction Business on March 30, 2025, which previously provided innovative cultivation and extraction solutions for the cannabis industry[166]. - RYTHM's proprietary Agrify Vertical Farming Units (VFUs) were sold prior to the sale of the Cultivation Business on December 31, 2024, enabling high-quality product production[175]. - RYTHM's co-manufacturing arrangements are designed to ensure continuity of supply and minimize transportation costs, with ongoing efforts to secure additional facilities[172]. - The company recognizes the imprecision in estimating product demand, particularly for new products, which may impact its ability to satisfy market demand[173]. Interest and Liabilities - Interest expense, net was $1.1 million for the three months ended September 30, 2025, compared to $38 thousand for the same period in 2024, reflecting a 2884% increase due to a $50 million principal increase under Convertible Notes[205]. - The change in fair value of warrant liabilities increased by $14.4 million, or 96%, during the three months ended September 30, 2025, compared to the same period in 2024[207]. Accounting and Reporting - Recently issued accounting pronouncements are detailed in Note 1 of the unaudited condensed consolidated financial statements[227]. - New accounting pronouncements not yet adopted are also included in Note 1 of the unaudited condensed consolidated financial statements[228]. - As a "smaller reporting company," the company is not required to provide market risk disclosures[229].