RYTHM, Inc. (RYM) 2025 Annual Report (10-K) Summary
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 2025. RYTHM, Inc. (formerly Agrify Corporation) rebranded in September 2025 following the acquisition of the RYTHM brand and VCP IP Holdings. The Company has pivoted from a provider of cannabis cultivation and extraction equipment to a developer of hemp-derived THC consumer-packaged goods (CPG) and a licensor of intellectual property. Key brands include Señorita, RYTHM, incredibles, and Beboe. The Company operates as a single segment and is classified as a "smaller reporting company" and an "emerging growth company."
Key Financial Metrics
| Metric (in thousands) | 2025 | 2024 |
|---|---|---|
| Total Revenue | $17,283 | $18 |
| Gross Profit | $10,190 | $(71) |
| Operating Loss | $(32,336) | $(5,073) |
| Net Loss | $(33,257) | $(41,746) |
| Cash and Cash Equivalents | $32,218 | $31,170 |
| Total Debt (Convertible Notes) | $80,000 | $10,000 |
| Net Cash Used in Operating Activities | $(23,537) | $(11,583) |
Note: 2024 figures reflect the reclassification of the Cultivation and Extraction businesses as discontinued operations. 2025 revenue includes $7.8 million in Licensing Revenue and $9.5 million in Non-licensing Revenue.
Material Changes vs. Prior Period
- Revenue Surge: Revenue increased from $18,000 in 2024 to $17.3 million in 2025. This is primarily due to the commencement of Licensing Revenue from related party agreements (Green Thumb) and the sale of hemp-derived products, contrasted with the 2024 revenue which was almost entirely from discontinued operations.
- Discontinued Operations: The Company sold its Cultivation Business in December 2024 and exited its Extraction Business in March 2025. These are now reported as discontinued operations. The 2025 period included a $3.5 million gain on the disposal of the Extraction business.
- Debt Expansion: Total debt increased significantly to $80 million, driven by the issuance of $30 million in May 2025 and $50 million in August 2025 in Secured Convertible Notes. $72 million of this debt is held by Green Thumb Industries (a related party).
- Impairment Charges: The Company recorded $8.5 million in impairment of long-lived assets in 2025, largely due to changes in legislation regarding hemp-derived THC products.
Guidance, Outlook, Risks, and Contingencies
Regulatory Risk (Critical): The 2026 Appropriations Act (passed Nov 2025) amends the 2018 Farm Bill to effectively prohibit currently commercialized hemp-derived THC products, effective November 2026. While the Company is monitoring efforts to repeal or delay this, the legislation poses an existential threat to its core product line.
Repurchase Rights: The Company's acquisitions of MC Brands and VCP IP include repurchase rights held by Green Thumb. If the 2026 Appropriations Act becomes effective without modification, it triggers an eligibility condition allowing Green Thumb to repurchase these assets, potentially eliminating a significant portion of the Company's revenue stream.
Liquidity and Going Concern: While the Company holds $32.2 million in cash, it has $80 million in debt maturing between late 2026 and early 2027. Management believes obligations will be addressed via conversion or extension, but the election of notes to be paid in cash could raise substantial doubt about the Company's ability to continue as a going concern.
Related Party Dependence: The Company relies heavily on Green Thumb for shared services (CFO, operations, sales), licensing revenue, and debt financing. Green Thumb beneficially owns approximately 33% of the Company's stock.
Investor Verification Checklist
- Legislative Status: Verify the current status of the 2026 Appropriations Act (Section 781) and any pending repeal or delay efforts, as this directly impacts the legality of the Company's primary products.
- Debt Conversion Terms: Review the specific conversion prices ($23.53 for May Notes; $29.475 for August Notes) and beneficial ownership limitations (49.99% for Green Thumb) to assess potential dilution.
- Repurchase Option Triggers: Confirm the specific conditions under which Green Thumb can exercise its repurchase rights on the MC Brands and VCP assets.
- Cash Burn Rate: Analyze the $23.5 million operating cash burn against the $32.2 million cash balance to determine runway without additional financing or debt conversion.
- Related Party Transactions: Scrutinize the $7.8 million in Licensing Revenue and $10.6 million in SG&A expenses attributable to related parties to assess the sustainability of these revenue streams independent of Green Thumb.