RYTHM, Inc. current report, 16 May 2024

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SEC Form 8-K Summary

Registrant: Agrify Corporation (Nasdaq: AGFY). The request metadata identifies RYTHM, Inc., but the filing identifies Agrify Corporation as the registrant.

Reporting date: May 16, 2024. This is a transaction-related Form 8-K and does not report results for a quarterly or annual financial period.

Business Context and Transaction

Agrify entered into a merger agreement with Nature’s Miracle Holding Inc. (Nasdaq: NMHI) and NMHI Merger Sub, Inc. Nature’s Miracle’s subsidiary will merge with and into Agrify, with Agrify surviving as the merger subsidiary’s surviving entity.

  • Each non-dissenting Agrify common share will be converted into the right to receive 0.45 shares of Nature’s Miracle common stock.
  • Agrify equity awards and warrants will be assumed and converted into corresponding Nature’s Miracle awards and warrants, generally using the exchange ratio.
  • Nature’s Miracle intends to appoint Agrify CEO Raymond N. Chang and one additional independent director to its seven-member board at closing.

Financial Metrics and Capital Structure

The filing does not provide revenue, profit, margins, operating cash flow, cash balances, liquidity ratios, or a comparable prior-period financial analysis.

  • Agrify has a secured convertible note issued to CP Acquisitions with approximately $15.1 million of outstanding principal and interest.
  • Agrify has junior secured notes issued to GIC Acquisition with approximately $2.1 million of outstanding principal and interest.
  • Nature’s Miracle will acquire $2.0 million of the CP note in exchange for 3,021,148 Nature’s Miracle shares and will pay $3.0 million in cash for another $3.0 million portion.
  • Nature’s Miracle will acquire $1.0 million of the GIC notes in exchange for 1,510,574 Nature’s Miracle shares and will pay $1.1 million in cash for another $1.1 million portion.
  • The remaining approximately $10.1 million CP note balance is expected to be assigned to Nature’s Miracle one year after closing for $7.0 million in cash, subject to specified conditions and certain equity rights relating to Agrify’s TTK Projects.
  • Nature’s Miracle may be required to acquire the remaining CP note earlier if Mr. Chang is not appointed or is removed from specified officer and director roles before the one-year anniversary.

Material Changes, Conditions, and Risks

  • Closing requires approval by Agrify stockholders and approval by Nature’s Miracle stockholders of the shares to be issued.
  • Nature’s Miracle must obtain Nasdaq listing approval for the shares issued in the merger.
  • The related Form S-4 registration statement must be declared effective by the SEC and must not be subject to a stop order or related SEC action.
  • Other conditions include required antitrust approvals, absence of prohibitive laws or orders, accuracy of representations and warranties, performance of covenants, and no material adverse effect on either party.
  • The parties agreed to customary operating, access, confidentiality, public-announcement, and non-solicitation covenants, subject to exceptions.
  • Either party may generally terminate if the merger has not closed by October 1, 2024, or by November 1, 2024 if mutually agreed. A $2.0 million termination fee applies in specified circumstances, including acceptance of a superior proposal.
  • From signing through closing, Agrify may issue up to $1.0 million of additional notes to specified related parties, subject to additional consent requirements in certain circumstances.
  • CP Acquisitions and GIC Acquisition are related parties: GIC is owned by Mr. Chang, while CP is owned by Mr. Chang and Agrify director I-Tseng Jenny Chan.

Guidance, Outlook, and Management Commentary

The filing provides no quantitative financial guidance. It states that the transaction and related business prospects are subject to forward-looking risks, including failure to close, inability to execute business plans, competitive and regulatory changes, Nasdaq listing risks, market downturns, produce pricing, transportation costs, outdoor-growing competition, and consumer demand.

Investor Verification Checklist

  • Verify the final proxy statement/prospectus and Form S-4, including the exchange ratio, transaction valuation, dilution, and pro forma ownership.
  • Confirm stockholder approvals, SEC effectiveness of the registration statement, Nasdaq listing approval, and satisfaction of all closing conditions.
  • Review the complete merger agreement for termination rights, fees, voting arrangements, and any amendments.
  • Review the debt purchase agreement and related-party disclosures, including the cash and equity consideration and the remaining CP note obligations.
  • Assess Agrify’s latest financial statements for actual debt, liquidity, going-concern matters, and operating performance, none of which are presented in this 8-K.
  • Monitor whether the merger closes by the applicable October 1 or November 1, 2024 deadline and whether any additional notes are issued before closing.