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Item 1. Business

2023-11-28 compared with 2022-03-31 · 552 added, 760 removed, 95 unchanged (93% of the section changed)

Unless otherwise stated or the context otherwise

requires, references in this report to “Agrify”, the “Company,” “we,” “us,” “our,”

or similar references mean Agrify Corporation and its subsidiaries on a consolidated basis.

We are a rapidly growing developer of proprietary

hardware and software cultivation and extraction solutions for the cannabis and hemp industry.

We believe we are passionately transforming

cannabis cultivation and extraction methods through innovation.

Our mission is to become the world’s most vertically integrated

solution provider for the cannabis and hemp industry globally, while driving superior quality, consistency, and Return on Investment

(“ROI”) for our valued customers.

We currently have three primary areas of business focus:

Unless otherwise stated

or the context otherwise requires, references in this report to “Agrify”, the “Company,” “we,” “us,”

“our,” or similar references mean Agrify Corporation and its subsidiaries on a consolidated basis.

Business Overview

We are a leading provider

of innovative cultivation and extraction solutions for the cannabis industry, bringing data, science, and technology to the forefront

of the market.

Our proprietary micro-environment-controlled Agrify Vertical Farming Units (or “VFUs”) enable cultivators to

produce high quality products with what we believe to be unmatched consistency, yield, and return investment at scale.

Our comprehensive

extraction product line, which includes hydrocarbon, alcohol, solventless, post-processing, and lab equipment, empowers producers to maximize

the quantity and quality of extract required for premium concentrates.

inception, we have gone from primarily developing, selling, and supporting our VFUs along with our fully integrated Agrify Insights™

cultivation software (“Agrify Insights™”) to being able to offer customers a far more complete set of solutions, products,

and services across both cultivation and extraction .

This has been a function of both our

natural evolution and through a set of strategic mergers and acquisitions.

Since 2020, we have integrated

six new brands into Agrify ’s broader organization .

Our first acquisition, TriGrow Systems,

Inc., was completed in January 2020 .

TriGrow Systems, Inc.

was formerly the exclusive distributor of Agrify’s VFUs.

added Harbor Mountain Holdings, LLC to our portfolio on July 21, 2020, to help scale up our manufacturing strategy with engineering,

prototyping, manufacturing, testing, warehousing, and installation services.

Since October 2021, we have been strategically focused on

establishing ourselves as a global leader in the cannabis and hemp extraction equipment industry, complementing our cutting-edge cannabis

and hemp cultivation solutions.

Over five months, we acquired four of the top brand names in the industry.

On October 1, 2021, we acquired

Precision Extraction Solutions, a market leader in developing and producing high-quality hydrocarbon and alcohol extraction solutions,

and Cascade Sciences, LLC, a market leader in developing and producing high-quality vacuum purge ovens and decarboxylation ovens.

31, 2021, we acquired PurePressure, LLC, a market leader in developing and producing high-quality solventless extraction solutions and

advanced ice-water hash processing equipment in the cannabis and hemp industry.

Lastly, on February 1, 2022, we completed our acquisition

of LS Holdings Corp., a market leader in developing and producing high-quality distillation and solvent separation solutions for the cannabis

and hemp industry.

We now offer our customers

an extensive ecosystem of solutions, products, training, and service capabilities in what has historically been a highly fragmented market.

Our offerings, which are described in more detail below, are compelling on their own.

However, we believe what sets us apart is our ability

to bring to the market the most comprehensive set of cultivation and extraction solutions from a single provider.

As a result, we believe

we are well-positioned to capture market share and create a dominant market position in the indoor cannabis sector.

We currently have

two primary areas of business focus:

Cultivation Solutions;

Extraction Solutions.

Facility Design & Building Services

Cultivation Solutions

While we do not cultivate, come in contact

with, distribute, process, or dispense cannabis or hemp or any cannabis or hemp derivatives that are currently prohibited under

United States federal law, our equipment and business solutions can be used within indoor grow and processing facilities by fully

licensed cannabis and hemp cultivators and processors or in some cases, by individual processors for individual use in compliance

with applicable law.

We sell our proprietary cultivation solutions to independent licensed cultivators.

The two primary products we

sell are the Agrify Vertical Farming Unit and Agrify Insights SaaS (“Software-as-a-Service”) software.

Agrify Vertical Farming Unit (“VFU”)

We believe our proprietary VFU technology is the

only product in the market that offers a modular, compartmentalized micro-climate growing system for indoor vertical farming.

system is designed for large-state and multi-state operators who are looking to consistently produce higher-quality crops at scale.

ideal facility size that we target in our sales process ranges from 20,000 square feet to 50,000 square feet.

The VFU is an integrated

hardware and software growing system.

These units are designed to line up horizontally in rows, and they can be stacked vertically up

to 3 units tall, taking advantage of unused indoor vertical space with the below advantages:

While we do not cultivate,

come in contact with, distribute, or dispense cannabis or any cannabis derivatives that are currently prohibited under U.S.

our equipment and business solutions can be used within indoor grow facilities by fully licensed cannabis cultivators.

We sell our proprietary

cultivation solutions to independent licensed cultivators.

The two primary products we sell are the VFUs and Agrify Insights™.

believe we are one of a limited number of companies offering a fully integrated cultivation solution optimized for precision growing with

robust automation capabilities in the industry.

Agrify Vertical Farming Unit

Our proprietary VFU technology

offers a modular, compartmentalized micro-climate growing system for indoor vertical farming.

Our VFU system is designed for craft farmers,

single-state operators, and multi-state operators who are looking to consistently produce higher-quality crops at scale.

designed to line up horizontally in rows, and can be stacked vertically up to three units tall, taking advantage of unused indoor vertical

space with the below benefits:

Superior Floor Space Utilization .

Each VFU provides two growing rows.

Our design introduces

an open-room facility design approach to maximize available cultivation floor print while offering superior risk mitigation via individual

compartmentalized cultivation chambers.

Each VFU provides two tiers of growing canopy.

Our units introduce an open-room facility design approach to maximize available cultivation floor space while offering superior risk mitigation via individual compartmentalized cultivation chambers which aim to contain potential biological threats to cultivation facilities.

Precise Environmental Controls .

Each VFU has an environmental control unit that is

integrated with our proprietary cultivation software, Agrify Insights software.

This integration allows for precise control

and automation over light photoperiod and intensity, temperature, humidity, vapor pressure deficit (“VPD”), carbon dioxide,

fertigation, and irrigation throughout the life cycle of the plants.

Each VFU has an Environmental Control Unit that is integrated with our proprietary cultivation software, Agrify Insights™.

This integration allows for precise control and automation over light photoperiod and intensity, temperature, humidity, vapor pressure deficit (“VPD”), carbon dioxide, fertigation, and irrigation throughout the lifecycle of the plants.

Modular Scalability .

The VFU is designed with proper loading to stack up to 3 units

tall, sextupling production volume over the same footprint.

Each unit is designed to easily integrate with a mezzanine catwalk system.

The VFU is designed to stack up to three units tall, sextupling production volume over the same traditional footprint.

Each unit is designed to easily integrate with a mezzanine catwalk system providing unparalleled access to all levels of cultivation.

Worker Safety & Efficiency .

The VFU’s design was thoughtful and intentional;

from the ergonomic dimensions that facilitate safe, easy access to plants for scouting and plant husbandry, to the integrated catwalks that allow cultivators to work from a safe sitting or standing position without the need for scissor lifts, ladders or removable platforms.

Biosecurity and Risk Mitigation .

The VFU has a motorized curtain on both sides of

the unit that enclose the grow area to prevent light-leak and spread of disease that would typically lead to facility-wide crop failure.

The VFU has a motorized curtain on both sides of the unit that encloses the grow area to prevent light pollution and the spread of disease that would typically lead to facility-wide crop failure.

Contamination can be controlled and limited to the affected units, which are designed with sanitation in mind.

From the aluminum

frame to the selection of antimicrobial plastics and down to the IP65 electronics and polycarbonate-lensed LED lights, the entire

VFU can be easily sanitized.

Worker Safety .

The VFU’s working area is 8 feet tall, allowing easy access

to both rows of plants within the unit.

As the motorized curtains can be lifted on either side, this also allows efficient ergonomics

at arm’s length.

Similarly, our Interlight LED technology is dimmed or turned-off when the curtains are raised for a more ambient

working environment.

of VFU infrastructure verse traditional grows

To further illustrate the benefit of going with

the VFU infrastructure versus a more traditional indoor cultivation setup with conventional LED lights or conventional HPS lights, we

have conducted a comparative analysis internally on an approximately 45,000 square foot facility.

While the upfront cost is more for the facility

that is outfitted in VFUs, that is quickly offset by the fact that a VFU outfitted facility has the capacity to generate about 4x the

amount of estimated annual revenue and over 4x the annual estimated EBITDA.

In looking at the numerical values in the model, it becomes

even more compelling when comparing the VFU facility to a facility with a traditional grow room.

Assuming an initial investment of approximately

$27.7 million for the VFU facility build-out, our model indicates that the facility owner would recoup their initial investment and produce

significant free cash flow in the first year of operation assuming the facility should be able to achieve almost $88 million of estimated

annual revenue and roughly $78.4 million in annual estimated EBITDA.

In contrast, the traditional indoor facilities would cost approximately

$8.8 million or a little less than $16.5 million to build out depending on which lights are used and would generate approximately $20.4

million or $22.5 million in estimated annual revenue and right around $16 million or just under $19 million in annual estimated EBITDA.

When comparing the different facility types on a side-by-side analysis, we believe the VFU facility is far more attractive than either

type of traditional facility given the financial upside is significantly higher and is a far more sophisticated way to grow crops.

We have also modelled out another scenario in

which a prospective customer has a license that stipulates that they are permitted to operate with at most 16,200 square feet of canopy

space in their facility (which is the exact same amount of canopy square footage displayed in the above model for the traditional setup

in the 45,000 square foot facility).

However, given the modular and stackable nature of the VFUs, we are able to help the customer achieve

the same canopy square footage with 253 VFUs in a facility that is only 20,000 square feet, which is less than half the size of the traditional

While canopy square footage is basically identical for all of the different cultivation approaches we looked at in this particular

simulation, the VFU setup requires a much smaller and theoretically much less expensive facility, and because the VFUs are more productive,

the estimated annual yield is about 31% higher than in the facility with the traditional grow room setup and conventional LED lights and

45% higher than in the facility with the traditional grow room setup and conventional HPS lights.

Agrify Insights SaaS Software Solution

Each individual VFU sold includes a license for

Agrify Insights SaaS Software (“Agrify Insights software”), and a monthly SaaS subscription fee is charged, per VFU.

cannot operate successfully without the use of Agrify Insights software, and we typically charge between $2,400 to $3,600 per VFU sold,

On average Agrify Insights SaaS Software license agreement is for a multi-year term, with an annual auto renewal.

Agrify Insights software is cloud-based software

as a service that interfaces with a microservices middleware and relational database that integrates with our hardware and provides our

managers, facility owners, facility managers, and growers real-time control and monitoring of facilities, growing conditions, and insights

into both production and profit optimization.

The combination of precise environmental control and automation with data collection and

actionable insights empowers our customers to be more efficient, more productive, and more intelligent about how they run their businesses.

We believe that the robust data analytics capabilities from our Agrify Insights software platform coupled with our VFU system is enabling

our customers to transform their businesses and quality of the product they are cultivating.

The Agrify Insights software is focused around

optimizing four key components:

From the aluminum frame to the selection of antimicrobial plastics and down to the IP65 electronics and polycarbonate-lensed LED lights, the entire VFU can be easily sanitized, especially with the VFU’s High Heat mode, which helps sanitize all internal VFU surfaces effortlessly.

Agrify Insights™

The VFUs are designed to

work in conjunction with our Agrify Insights™ software.

Each VFU sold includes a license for Agrify Insights™ and a monthly

Software-as-a-Service (“SaaS”) subscription fee is charged per VFU.

The VFU cannot operate successfully without Agrify Insights™,

and we typically charge between $1,500 to $2,400 per VFU sold annually.

Agrify Insights™ license agreements are generally for a

multi-year term, with an annual auto-renewal.

Agrify Insights™ is

a SaaS-based solution that interfaces with our proprietary hardware to provide customers with real-time control and monitoring of facilities,

growing conditions and insights into both production and profit optimization.

The combination of precise environmental control and automation

with data collection and actionable insights empowers our customers to be more efficient, more productive, and more intelligent about

how they run their businesses.

We believe that the robust data analytics capabilities from our Agrify Insights™ platform, coupled

with our VFU system, is enabling our customers to transform their businesses and quality of the product they are cultivating.

Agrify Insights™ is focused on optimizing

four key components:

Optimization at the plant level;

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Optimization at the business level.

When these key components are combined, they encompass

the cultivation operations of an Agrify customer.

By reducing human error and providing insights through data collection and analysis,

Agrify Insights software minimizes risk and increases operational efficiencies.

Ultimately, our customers are seeking to produce the same

consistent end product no matter where they are located.

When these key components

are combined, they encompass the cultivation operations of an Agrify customer.

By reducing human error and providing insights through

data collection and analysis, Agrify Insights™ minimizes risk and increases operational efficiencies.

Ultimately, our customers

seek to produce end products with the highest level of consistency no matter where they are located.

Plant-Level Optimization

Central to our solution is granular control of

the cultivation environment.

The end-product of a crop is determined by both the plant’s genetics and the environment in which the

plants are grown.

Control over the growing environment is accomplished through the Agrify Insights software.

By recording over 1.5 million

data points per VFU per year and being able to reproduce specific environments based on the data, cultivators are effectively able to

minimize the variation in their crops and dial-in the maximum quality.

Further individual plant varietals can be optimized by tailoring

the grow plan (recipe for cultivation) to enhance particular genetic traits;

increasing the temperature can speed chemical processes and

growth rates and adjusting the length of different phases of a plant’s lifecycle can maximize the crop’s yield.

Additionally,

when new varieties of plants are cultivated, having multiple controlled, compartmentalized, growth chambers allow for iterative experiments

which offer real insight into how new varieties are best cultivated.

For example, you can grow a new variety in 5 different VFUs that

are set to mimic the climate of different geographies to see where the varieties are suited to grow.

Our “Grow Plans” are the templates

or recipes that define the parameters for each lifecycle.

Grow Plans define the environmental settings (light - photoperiod and intensity/

temperature / humidity / VPD / CO2 / irrigation / fertilization) for each crop variety and cultivator as well as the schedule for completing,

as applicable, “plant-hands-on” tasks such as bottoming, pruning, and harvest.

Agrify Insights software ships to the customer

with many pre-developed Grow Plans and customers can create their own Grow Plans, electing to share them with other customers or not.

Central to our solution is

granular control of the cultivation environment.

A crop’s end-product is determined by the plant’s genetics and the environment

in which the plants are grown.

Control over the growing environment is accomplished through the integration of Agrify Insights™.

Agrify Insights collects data from multiple sensors on a per plant basis between 4 and 60 times an hour.

This can result in between 100

thousand and 151 million data points annually, depending on the number of plants and fluctuations in the VFU microclimate.

data points and reproducing specific environments based on the data, cultivators can effectively minimize the variation in their crops

and dial-in the maximum quality.

Individual plant varietals can be optimized by tailoring the grow plan (recipe for cultivation) to enhance

genetic traits;

increasing the temperature can speed chemical processes and growth rates and adjusting the length of different phases

of a plant’s lifecycle can maximize the crop’s yield.

Additionally, when new varieties of plants are cultivated, having multiple

controlled, compartmentalized, growth chambers allow for iterative experiments which offer real insight into how new varieties are best

cultivated which is beneficial for research and development purposes.

Our “Grow Plans”

are the templates or recipes that define the parameters for each lifecycle.

Grow Plans define the environmental settings (light - photoperiod

and intensity, temperature, humidity, VPD, CO2, irrigation, fertigation) for each crop variety and cultivator as well as the schedule

for completing, as applicable, “plant touching” tasks such as bottoming, pruning, and harvesting.

Agrify Insights™ ships

to the customer with many pre-developed Grow Plans and customers can create their own Grow Plans, electing to share them with other customers

Individual VFU Level Optimization

Our VFU hardware provides cultivation environmental

control within the growth chamber.

This hardware and its component valves, motors and sensors are directed and controlled by Agrify

Insights software.

Our VFU hardware provides

cultivation environmental control within the grow chamber.

This hardware and its component valves, motors and sensors are directed and

controlled by Agrify Insights™.

Monitor and Control Agrify Hardware .

Agrify Insights software can either automatically

or manually control our hardware.

For example, the water-chilled fan coil can keep temperature in a range accurate to 1.5 degrees

Agrify Insights™ can either automatically or manually control our hardware.

For example, the water-chilled fan coil can keep the temperature in a range accurate to 1.5 degrees Fahrenheit.

Cultivation Environmental Control .

Using Agrify Insights software, users can

view environmental charts that plot temperature, humidity, carbon dioxide over time.

It also shows when the plants were irrigated

and whether the unit is in cooling, circulating, or dehumidifying mode.

We sample these values every minute and report them back

to the cloud every 15 minutes, or more often if there have been significant changes.

Each growing chamber reports approximately 1.5

million data points annually, enabling our clients to perform in-depth analysis of grow performance.

The manual control screen visualizes

the current state of the grow chamber and enables our technicians to take direct control for troubleshooting, if necessary.

log shows us what decisions were made by the onboard Agrify Insights software and why.

Using Agrify Insights™, users can view environmental charts that plot temperature, humidity, and carbon dioxide over time.

It also shows when plant irrigation occurs and whether the unit is in cooling, circulating, or dehumidifying mode.

We sample these values every minute and report them back to the cloud every 15 minutes or more often if significant changes occur.

Each growing chamber reports millions of data points annually, enabling our clients to perform an in-depth analysis of their grow performance.

The manual control screen visualizes the current state of the grow chamber and allows our technicians to take direct control for troubleshooting, if necessary.

The device log shows us what decisions were made by Agrify Insights™ and why.

Facility Level Optimization

Our modular VFUs are deployed in scale at a customer’s facility

with the smallest commercial operation deployment to date being 63 VFUs.

Agrify Insights software is designed to operate these individual

VFUs as a combined facility.

Agrify Insights software features at the facility level include:

Our modular VFUs are deployed

in scale at a customer’s facility with the smallest commercial operation deployment being 60 VFUs to date.

Agrify Insights™

is designed to operate these individual VFUs as a combined facility.

Agrify Insights™ features at the facility level include:

Production Planning .

The production planning feature is designed to maximize a facility’s

utilization by executing a “best-fit” scheduling algorithm to selected Grow Plans across the growing units that have

been deployed at a customer facility.

Since grow plans typically have a different number of growing days that start on staggered

schedules, this module is a critical component for optimizing the planting and moving schedules, significantly increasing plant production,

and reducing the cost per pound of harvest.

The production planning feature is designed to maximize a facility’s utilization by executing a “best-fit” scheduling algorithm to selected Grow Plans across VFUs that have been deployed at a customer facility.

Since grow plans typically have a different number of growing days that start on staggered schedules, this module is a critical component for optimizing the planting and moving schedules, significantly increasing plant production, and reducing the cost per pound of harvest.

Workforce Management .

Agrify Insights software includes a workforce planning

feature to assign tasks to staff.

These tasks can be automatically assigned based on user role or their knowledge, skills, and abilities.

The calendar displays the estimated amount of time required to complete plant-touching tasks on any given day.

Agrify Insights™ includes a workforce planning feature to assign tasks to staff.

These tasks can be automatically assigned based on the user role or their knowledge, skills, and abilities.

The calendar displays the estimated time required to complete plant-touching tasks on any given day.

Automatic Notification System .

Users can select to subscribe to anomalous events,

and users are notified in the order in which they are listed.

If a user does not acknowledge the notification within the specified

time frame, the next user in the list is notified, providing the business with 24/7 monitoring and notifications.

Users can select to subscribe to anomalous events, and users are notified in the order in which they are listed.

If a user does not acknowledge the notification within the specified time frame, the next user in the list is notified, providing the business with 24/7 monitoring and notifications.

Preventative Maintenance .

Our equipment and facility preventative maintenance schedules

and related tasks are contained, tracked and monitored within Agrify Insights software.

Our equipment and facility preventative maintenance schedules and related tasks are contained, tracked, and monitored within Agrify Insights™.

Facility Infrastructure Controls .

Agrify Insights software controls the irrigation

on a facility level as well as connects with the water chilled HVAC system and ambient lighting system, providing our customers a

central piece of software for facility management.

Optimization at the Business Level

Agrify Insights software analysis features

enable customers to understand how cultivation decisions impact their overall business.

Understanding the data from the cultivation facility

can help our customers better plan and make informed decisions that impact downstream parts of their business.

Agrify Insights™ controls the irrigation on a facility level and connects with the water chilled HVAC system and ambient lighting system, providing our customers with a central piece of software for facility management.

Optimization at the Business

Agrify Insights™ analysis

features enable customers to understand how cultivation decisions impact their overall business.

Understanding the data from the cultivation

facility can help our customers better plan and make informed decisions that impact downstream parts of their business.

Consumables Procurement Integration .

Each task can also be assigned a set of consumables

whose inventory will be reduced when the task is started.

This feature can help customers manage supply levels and can automatically

create purchase orders so that they never run out of required supplies.

Each task can also be assigned a set of consumables whose inventory will be reduced when the task is started.

This feature can help customers manage supply levels and can automatically create purchase orders so that they never run out of required supplies.

Online Standard Operating Procedures (“SOPs’’) and Safety Datasheets .

Agrify Insights software hosts digital copies of our included Standard Operating Procedures and datasheets, or users can upload their own via our content management system, ensuring that the most recent version of SOPs and forms are available to users.

Agrify Insights™ hosts digital copies of our included Standard Operating Procedures and datasheets, or users can upload their own via our content management system, ensuring that the most recent version of SOPs and forms are available to users.

Roles-Based Dashboards .

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Data Collection .

Agrify Insights software is a centralized repository for

all data relating to the cultivation aspects of our clients’ business, including research and development testing data, and

the ability to capture and compare test results.

By doing so, Agrify Insights software becomes a customers’ cultivation

statement of record.

Agrify Insights™ is a centralized repository for all data relating to the cultivation aspects of our clients’ business, including research and development testing data, and the ability to capture and compare test results.

By doing so, Agrify Insights™ becomes a customers’ cultivation statement of record.

Financial Simulator / What If Scenarios .

Our operating expenses (“OpEx”)

calculator enables users to evaluate impacts to profitability by changing hundreds of attributes including, but not limited to, changes

to costs in labor, electric, water, CO2, and growing media as well as potential volatility in yields and pricing.

Our operating expenses (“OpEx”) calculator enables users to evaluate impacts to profitability by changing hundreds of attributes including, but not limited to, changes to costs in labor, electric, water, CO 2 , and growing media as well as potential volatility in yields and pricing.

Regulatory Reporting Integration.

We have integrated our software with Metrc, a leading

seed-to-harvest compliance management and tracking solution, which will enable our customers to handle most regulatory reporting

directly through Agrify Insights software.

We have integrated our software with Metrc, a leading seed-to-harvest compliance management and tracking solution, which will enable our customers to handle most regulatory reporting directly through Agrify Insights™.

Cultivation Deployment

Rapid Deployment Pack (“RDP”)

program was established in 2022 to make it easier for a broader range of customers to access our award-winning cultivation technology.

Featuring our flagship VFUs in a prepackaged, self-contained, and quick-to-deploy format, the thoughtfully designed and engineered RDPs

offer an accelerated path to production, cash flow, and profitability for customers.

By removing certain barriers and points of friction

with the RDPs, we can provide customers who have properly equipped facilities with best-in-class cultivation capabilities in potentially

as little as 90 days.

Once installed, the modular nature of the RDPs allows for seamless expansion opportunities, enabling customers the

flexibility to grow and scale.

While we do not intend to

enter into any new TTK Solutions for the foreseeable future, we have deployed this program with certain key customers.

We also believe

that our data-driven TTK Solution for cultivation solutions is unlike any other customer solution being offered and enables our customers

to get to market faster by providing them with our seamlessly integrated hardware and software offerings as well as access to capital

and a wide range of associated services from experts including consulting, training, design, engineering, and construction to form what

we believe is the most complete solution available from a single provider.

We engage qualified cannabis operators in the early phases

of their business plans and provide critical support, typically over a 10-year period.

Our TTK Solution provides

our valued customers with the benefit of working with a single, highly qualified provider in what has historically been a decentralized

market full of piecemeal solutions that were not necessarily designed and engineered to work harmoniously with one another.

significant shortcomings associated with traditional indoor grow methods across all commercial agriculture segments, it was apparent that

a new paradigm in indoor cultivation was needed, which is why we have brought a more modern, manufacturing style approach that is process

driven through technology and measured via data and analytics.

Overall, our holistic approach to addressing our customers’ cultivation

needs treats their production facilities as an end-to-end ecosystem whose success depends on all components working together optimally.

Despite the rapidly growing cannabis and hemp industry, many growers and processors face some significant obstacles to their operations

that pose a serious threat to their long-term viability.

We believe Agrify’s

proprietary TTK Solution is the key to resolving many of the challenges our customers encounter.

We have set ourselves apart by bringing

to market a horticulturist expertise, bundled solution of state-of-the-art equipment, software and services that is turn-key, end-to-end,

fully integrated and optimized for precision growing and extraction.

Agrify’s TTK Solution provides customers with the following

bundled equipment and services:

Facility design, lab design, and engineering services

Facility and lab build-out project management

Agrify data driven Agrify Insights™

Agrify extraction products

Expert horticulturist training and ongoing support

Extraction Solutions

While we do not extract,

come in contact with, distribute, process, or dispense cannabis or hemp or any cannabis or hemp derivatives that are currently

prohibited under United States federal law, our extraction equipment and business solutions can be used within indoor processing

facilities by fully licensed cannabis and hemp cultivators and processors or in some cases, by individual processors for individual

use in compliance with applicable law.

We sell our proprietary extraction solutions to independent, licensed cultivators and

processing labs.

Cannabis represents a potential cornucopia of

medicinal and pharmaceutical advancement.

Cannabis produces over 550 different phytochemicals, over 120 of which are cannabinoids like

tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”).

come in contact with, distribute, process, or dispense cannabis or hemp or any cannabis or hemp derivatives that are currently prohibited

federal law, our extraction equipment and business solutions can be used within indoor processing facilities by fully licensed

cannabis and hemp cultivators and processors or in some cases, by individual processors for individual use in compliance with applicable

We sell our proprietary extraction solutions to independent, licensed cultivators and processing labs.

Cannabis represents a potential

cornucopia of medicinal and pharmaceutical advancement.

Cannabis produces over 550 different phytochemicals, over 120 of which are cannabinoids

like tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”).

Other cannabinoids like varins, cannabigerivarin (“CBGV”),

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industry in the future.

Since October 2021, we have been strategically

focused on establishing ourselves as a global leader in the cannabis and hemp extraction equipment industry, complementing our cutting-edge

cannabis and hemp cultivation solutions.

Over a 5-month period, we acquired four of the top brand names in the industry:

Mass2Media, LLC, d/b/a PX2 Holdings, LLC, d/b/a Precision Extraction Solutions (“Precision”)

- Market leader in developing and producing high-quality hydrocarbon extraction solutions was acquired by Agrify on October

Cascade Sciences, LLC (“Cascade”)- Market leader in developing and producing high-quality vacuum

purge ovens and decarboxylation ovens was acquired by Agrify on October 1, 2021.

PurePressure, LLC (“PurePressure”) - Market leader in developing and producing high-quality solventless

extraction solutions was acquired by Agrify on December 31, 2021.

LS Holdings Corp.

(“Lab Society”) - Market leader in developing and producing

high-quality distillation and solvent separation extraction solutions was acquired by Agrify on February 1, 2022.

Combined, the four acquisitions listed above provide

what we believe to be the most comprehensive extraction solutions from a single provider, with over 7,000 customers, including over 30

Multi-State-Operators, and some of the best extraction labs in the industry.

Our leading extraction brands provide equipment and solutions

for extraction, post-processing, and testing for the cannabis and hemp industry.

The extraction, post-processing and testing services

are complementary and highly attractive areas of the supply chain.

Our extraction division now offers cutting-edge

technologies and end-to-end service solutions.

Solutions from the extraction division include equipment, technology, facility and lab

design, and extensive research and development capabilities.

By providing new hardware-as-a-service we intend to capture higher margin

recurring revenue and supply chain optimization through streamlined product sourcing, purchasing, manufacturing, and warehousing.

These acquisitions have greatly expanded our product

and service offerings in the post-harvest segment of the supply chain, and believe we are positioning the Company as the most vertically

integrated total solutions provider for our cannabis and hemp customers.

The global cannabis extraction market is expected to potentially

grow to $24 billion by 2028, and as the cannabis industry continues to experience rapid growth globally, we expect the sales of our extraction

solutions to follow a similar growth trajectory.

Facility Design & Building Services

Agrify provides fully integrated architectural,

engineering, and project management oversight of qualified General Contractors for its customers commercial cannabis facilities buildouts.

Each custom commercial cannabis facility is specifically designed to maximize the production output of Agrify’s proprietary VFU’s

and cannabis extraction product solutions.

stated previously, we strategically acquired four of the top brands in the extraction space in late 2021 and early 2022 in Precision Extraction,

PurePressure, Lab Society, and Cascade Sciences.

These iconic brands encompass everything from hydrocarbon, alcohol, and solventless extraction

to distillation and post-processing and have supported and continue to support over 90% of legal operators in one fashion or another.

Combined, these four acquisitions

provide what we believe to be the most comprehensive extraction solutions from a single provider, with over 7,000 customers, including

over 30 Multi-State-Operators, and some of the best extraction labs in the industry.

Our leading extraction brands provide equipment and

solutions for extraction, post-processing, and testing for the cannabis and hemp industries.

The extraction, post-processing and testing

services are complementary and highly attractive areas of the supply chain.

Our extraction division now

offers cutting-edge technologies and end-to-end service solutions.

Solutions from the extraction division include equipment, technology,

facility and lab design, training, and extensive research and development capabilities.

By providing new hardware-as-a-service we intend

to capture higher margin recurring revenue and supply chain optimization through streamlined product sourcing, purchasing, manufacturing,

and warehousing.

These acquisitions have greatly

expanded our product and service offerings in the post-harvest segment of the supply chain.

We believe we are positioning Agrify as one

of the most vertically integrated total solutions provider for our cannabis and hemp customers.

According to a report published by Grand

View Research in November 2022, the global cannabis extraction market is expected to potentially grow to $15.5 billion by 2030, and as

the cannabis industry continues to experience rapid growth globally, we expect the sales of our extraction solutions to follow a similar

growth trajectory.

Cannabis Market Opportunity

While we do not cultivate, come in contact with,

distribute or dispense cannabis or any cannabis derivatives that are currently prohibited under U.S.

federal law, our cultivation solutions

can be used within indoor grow facilities by cannabis cultivators if they choose to do so.

In the U.S., the development and growth of the

regulated medical and recreational (adult use) cannabis industry has generally been driven by state law and regulation, and accordingly,

the market varies on a state-by-state basis.

State laws that legalize and regulate cannabis for medicinal reasons allow patients to consume

cannabis with a designated healthcare provider’s recommendation, subject to various requirements and limitations.

As of December

31, 2021, 38 states have passed laws allowing their citizens to use medical cannabis.

On top of this medical condition growth trend, there

has been a slower but steady increase in the number of states that have chosen to legalize cannabis for recreational use.

As of December

31, 2021, 18 states have passed laws allowing their citizens to use recreational cannabis.

Shifting public attitudes and state law and

legislative activity are driving this change as indicated by a 2019 poll by Quinnipiac University that found that 93% of Americans support

patient access to medical-use cannabis, if recommended by a doctor, which was the same level of support from a similar poll conducted

While we do not cultivate,

come in contact with, distribute or dispense cannabis or any cannabis derivatives that are currently prohibited under U.S.

our cultivation solutions can be used within state-licensed indoor grow facilities by cannabis cultivators if they choose to do so.

In the U.S., the development

and growth of the regulated medical and recreational (adult-use) cannabis industry has generally been driven by state law and regulation,

and accordingly, the market varies on a state-by-state basis.

State laws that legalize and regulate cannabis for medicinal reasons allow

patients to consume cannabis with a designated healthcare provider’s recommendation, subject to various requirements and limitations.

As of January 2023, 39 states have passed laws allowing their citizens to use medical cannabis.

On top of this medical condition growth

trend, there has been a slow but steady increase in the number of states that have chosen to legalize cannabis for recreational use.

of January 2023, 21 states have passed laws allowing their citizens to use recreational cannabis.

Shifting public attitudes and state

law and legislative activity are driving this change as indicated by a 2019 poll by Quinnipiac University that found that 93% of Americans

support patient access to medical-use cannabis if recommended by a doctor, which was the same level of support from a similar poll conducted

by Quinnipiac University in 2018.

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is expected to significantly increase over time.

Given that the market size of legal cannabis in

in 2020 was expected to be $17 billion according to New Frontier, and 53% of cannabis volume is currently grown indoors according

to New Leaf Data Services, we estimate that the indoor segment of the legal U.S.

cannabis sector is a $9 billion market with the expectation

that there will be even more growth on the horizon.

In fact, according to a report from April 2020, BDSA, the leading provider of cannabis

industry market research, in conjunction with Arcview Market Research, forecasted that U.S.

legal cannabis sales will approach $34 billion

by 2025, which represents 72% of their projection for total global sales of $47 billion in 2025.

The different cultivation environments for cannabis

each have advantages and disadvantages, and this leads to a variance in price points based on quality, actual and perceived, and process.

According to New Leaf Data Services’ March 25, 2022 U.S.

cannabis spot index, the average wholesale price per pound of outdoor grown

flower was $502 per pound, greenhouse flower averaged $840 per pound, while indoor grown flower averaged $1,651 per pound and the total

market on average was $1,242 per pound.

Based on the breakdown of production by cultivation environment, indoor grown flower represents

53% of total volume by type while greenhouse and outdoor represent 23% and 24%, respectively.

Additionally, based on the breakdown of

percentage of observed transactions, indoor grown flower represents 64% of total volume by type while greenhouse and outdoor represent

18% and 18%, respectively.

Outdoor cannabis has the lowest initial capital

expenditures required to start cultivation.

According to Marijuana Business Daily (“MBD”), the average start-up cost per

square foot of outdoor cultivation is $10.

The expansive size of outdoor grows and their reliance on natural soil, lighting and weather

conditions means cultivators have relatively few infrastructure needs.

They can get their business off the ground quickly and with minimal

upfront expenditures trading quality for lower cost production.

Greenhouse grown cannabis commands a higher price

per pound than field grown cannabis as the more protected environment produces higher quality flower.

According to MBD, the average start-up

cost per square foot for greenhouse cultivation is $50, but the true costs tend to be all over the map with an executive from Ohio-based

Rough Brothers, an 84-year-old greenhouse company that started taking on cannabis clients in 2013, opining that such costs can vary greatly,

going so far as to say “I could build you a cannabis greenhouse for $20 a square foot or $200 a square foot.”

Indoor grown cannabis commands the highest price

per pound as it produces the highest quality flower due to the fact that growers have the most control over the environment.

Indoor cultivation

facilities vary significantly in sophistication and technology with the build-out costs reflecting that fact.

While MBD states that the

average start-up cost per square foot for indoor cultivation is $75, anything close to that cost would inevitably yield a primitive and

arguably insufficient setup.

In contrast, Jennifer Martin, a prominent cannabis cultivation consultant, indicated on MarijuanaPropagation.com

that a far more advanced and scalable configuration would likely cost between $400 to $500 per square foot.

In general, the more a company

invests up front, the higher the upside will be in the future.

However, beyond initial build-out costs, it has historically been very

expensive to grow cannabis in an indoor facility.

The industry norm for direct production-related operating costs ranges from approximately

$436 per pound according to a competitive cost analysis conducted by MJardin to $516 per pound, which is based on another examination

of cultivation costs by the website CannaBusinessPlans.com.

Our premium indoor grow solutions, whether it’s

our VFUs or our LED lights, are designed, engineered, and calibrated to drive significant improvements for our customers, who trust us

to deliver the type of productivity and quality that was previously unattainable.

Given that the market size

of legal cannabis in the U.S.

in 2022 was estimated to be $27.7 billion according to MarketsandMarkets research Pvt Ltd, and 88% of legal

cannabis cultivators grow indoors (Fluence 2022 Industry lighting report), we estimate that the indoor segment of the legal U.S.

cannabis sector is a $10 billion market with the expectation that there will be even more growth on the horizon.

A recent report from

statista.com projected global cannabis revenue to reach $47.2 billion in 2023, with annual growth rate of 12.69%, with a projected global

market volume of $76.1 billion by 2027.

The different cultivation

environments for cannabis each have advantages and disadvantages, and this leads to a variance in price points based on quality, actual

and perceived, and process.

According to New Leaf Data Services January 27, 2023 U.S.

cannabis spot index, the average wholesale price

per pound of an outdoor-grown flower was $408 per pound, greenhouse flower averaged $633 per pound, while indoor-grown flower averaged

$1,298 per pound and the total market on average was $977 per pound.

Based on the Fluence 2022 state of the cannabis industry lighting

report, 88% of cultivators have some or all of their facilities growing indoors, up 9% over 2021.

Competitive Landscape

We believe our full suite of product offerings

form an unmatched ecosystem for indoor growing and extraction.

At this time, our Agrify Vertical Farming Unit, Agrify Insights

software, Extraction solutions, our facility design and build services, and our engineering/installation services are highly differentiated

from anything else on the market.

At the same time, our customers are actively being

approached by a variety of companies who do offer compelling standalone products and services, so we recognize that our customers do have

choices and alternatives, and they also need to factor in opportunity cost whenever they make purchasing decisions.

Consequently, we more

broadly define our competition as any other company going after the same finite budget dollars as us in the indoor agriculture space.

We have highlighted below the most notable players that operate across some of the same functional, highly fragmented areas of agriculture

technology that we operate.

We believe our full suite

of product offerings forms an unmatched ecosystem for indoor growing and extraction.

At this time, our VFUs, Agrify Insights™, extraction

solutions, our facility design and build services, and our engineering/installation services are highly differentiated from anything else

on the market.

At the same time, our customers

are actively being approached by a variety of companies who do offer compelling standalone products and services, so we recognize that

our customers do have choices and alternatives, and they also need to factor in opportunity costs whenever they make purchasing decisions.

Consequently, we more broadly define our competition as any other company going after the same finite budget dollars as us in the indoor

agriculture space.

We have highlighted below the most notable players that operate across some of the same functional, highly fragmented

areas of agriculture technology that we operate.

Semi-Integrated Vertical Cultivation Systems — Sprout AI

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Horticultural Lighting — Gavita, Fluence, VividGro, Hydrofarm, GrowGeneration, Hawthorne and Heliospectra

Extraction Solutions — Extraction Tech Solutions, Galenja

Extraction Solutions — ExtractionTek Solutions, Mach Technologies, Decimal Engineering, Low Temp Plates, Whistler Technologies, Maratek and Hashatron

Monitoring Software — Grownetics and Trym

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Vertical Cultivation Racking Systems — Pipp Horticulture and Montel

Despite the presence of some well-funded and

well-established competitors who offer pieces of what we do, we are able to compete on the basis of several defensible factors including

our industry experience, our technical expertise, the differentiated value proposition of our individual offerings, and our positioning

as a single-source provider.

However, we believe above all else, it is our ability to offer an unrivaled level of precision through a

total end-to-end turnkey solution that sets us apart from existing competitors and potential new market entrants.

Despite the presence of some

well-funded and well-established competitors who offer pieces of what we do, we are able to compete on the basis of several defensible

factors including our industry experience, our technical expertise, the differentiated value proposition of our individual offerings,

and our positioning as a single-source provider.

However, we believe above all else, it is our ability to offer an unrivaled level of

precision through a total end-to-end turnkey solution that sets us apart from existing competitors and potential new market entrants.

Our Competitive Strengths

We believe our business has, and our future success

will be driven by, the following competitive strengths:

We believe our business has,

and our future success will be driven by, the following competitive strengths:

Innovative Technology in an Attractive Growing Industry .

Our innovative solutions

are aimed at large and growing U.S.

Our innovative solutions are aimed at large and growing U.S.

domestic and global markets.

We believe we are the only provider of a fully integrated end-to-end

hardware and software turnkey solution for indoor cultivation and extraction facilities that allows customers to produce at scale,

high-quality products with consistency that meet the growing demand and needs of end users at a relatively low cost.

believe we have a first mover advantage due to innovating this new type of smart cannabis and hemp cultivation and processing solution,

which is already designed, manufactured, and implemented in a number of commercial scale deployments across multiple states within

We believe we are the only provider of a fully integrated end-to-end hardware and software turnkey solution for indoor cultivation and extraction facilities that allows customers to produce high-quality products with consistency at scale while meeting the growing demand and needs of end users at a relatively low cost.

As such, we believe we have a first mover advantage due to innovating this new type of smart cannabis and hemp cultivation and processing solution, which is already designed, manufactured, and implemented in several commercial scale deployments across multiple states within the U.S.

Integrated Proprietary Components .

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Emphasis on Precision and Consistency Through Our Proprietary Grow Solutions .

being able to help our customers increase capacity, yield and consequently revenues hold a tremendous amount of value, we believe

that our biggest differentiator is our ability to impact the actual quality and consistency of the output by controlling the environment

in which the crops are grown and all of the variables that influence harvests with an unparalleled level of precision.

The by-product

of our Agrify total turn-key solution (“TTK Solution”) is that our customers are able to create consistent high-quality

products with repeatability from anywhere similar to any other consumer product company that provides a branded food or drink product.

While being able to help our customers increase capacity, yield and consequently revenues holds a tremendous amount of value, we believe that our biggest differentiator is our ability to impact the actual quality and consistency of the output by controlling the environment in which the crops are grown and all the variables that influence harvests with an unparalleled level of precision.

The by-product of our TTK Solution is that our customers can create consistent high-quality products with repeatability from anywhere similar to any other consumer product company that provides a branded food or drink product.

Emphasis on Precision and Consistency Through Our Extraction Division.

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.

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.

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

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.

Experienced and Proven Management Team .

Our leadership team has entrepreneurial experience,

technical expertise, and a track record of scaling up businesses and operating public companies.

Additionally, our team is supported

by strong advisors and leading strategic and institutional investors.

Unlike many of our competitors, we offer a diversified mix of hardware, software, and services, which leads to potential multiple revenue streams.

Given the nature of our deployments, we become deeply embedded in our customers’ operations through our numerous product offerings.

This puts us in a position where customer success is directly tied to our equipment.

Our ability to differentiate our business model 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™ and production fee revenues.

Our Customers

We primarily market and sell our products to

newly licensed, well-funded producers in a single market as well as multi-state operators.

Our customers choose us for a number of reasons,

including the breadth and availability of the products we offer, our extensive expertise, and the quality of our customer service.

large multi-state operators, our solutions allow operators to produce consistent high-quality products regardless of the geographic locations

where they are licensed to operate.

Our system removes the variations of local grow environment, and also provides consistent standard

operating procedures across different facilities, helping every facility to achieve the highest Good Manufacturing Processes standards.

Our ability to provide a “one-stop shop” experience allows us to be the preferred vendor to many of these customers by streamlining

their entry into or expansion of their cultivation capabilities.

In addition, we believe our customers find great value in the advice

and recommendations provided by our knowledgeable sales and service associates, which further increases demand for our products.

We believe the nature of our solutions and our

high-touch customer service model strengthens relationships, builds loyalty and drives repeat business as our customers’ businesses

In addition, we feel as if our premium product lines and comprehensive product portfolio position us well to meet our customers’

Furthermore, we fully anticipate that we will be able to leverage all of the data that we are collecting from our existing customer

base to make continuous improvements to our offerings and better serve our current and new customers in the future.

To date, we have customers across the U.S.

internationally in the cannabis and hemp industry and are of all sizes, ranging from small, single location/ single vertical businesses

to multi-state enterprise operations who use Agrify family of solutions.

In 2021, we had two customers that represented

more than 10% of total revenues and accounts receivable.

In 2020, we had three customers that represented more than 10% of total revenues

and accounts receivable.

We primarily market and sell

our products to newly licensed, well-funded producers in a single market as well as multi-state operators.

Our customers choose us for

several reasons, including the breadth and availability of the products we offer, our extensive expertise, and the quality of our customer

For large multi-state operators, our solutions allow operators to produce consistent high-quality products regardless of the

geographic locations where they are licensed to operate.

Our system removes the variations of local grow environments, and also provides

consistent standard operating procedures across different facilities, helping every facility to achieve the highest Good Manufacturing

Processes standards.

Our ability to provide a “one-stop shop” experience allows us to be the preferred vendor to many of these

customers by streamlining their entry or expansion of their cultivation capabilities.

In addition, we believe our customers find great

value in the advice and recommendations provided by our knowledgeable sales and service associates, which further increases demand for

our products.

We believe the nature of

our solutions and our high-touch customer service model strengthens relationships, builds loyalty and drives repeat business as our customers’

businesses expand.

In addition, we feel as if our premium product lines and comprehensive product portfolio position us well to meet our

customers’ needs.

Furthermore, we fully anticipate that we will be able to leverage all the data that we are collecting from our

existing customer base to make continuous improvements to our offerings and better serve our current and new customers in the future.

To date, we have customers

across the U.S.

and internationally in the cannabis and hemp industry and are of all sizes, ranging from small, single location businesses

to multi-state enterprise operations that use Agrify’s solutions.

For each of the fiscal years ended December 31, 2022 and December

31, 2021, we had two customers that represented more than 10% of total revenues.

Our Growth Strategy

We have developed a multi-pronged growth strategy

as described below to help us capitalize on the sizable opportunity at hand.

Through methodical sales and marketing efforts, cultivation

and extraction solutions, facility design and building services, scale-up manufacturing, and equipment financing, we believe we have implemented

several key initiatives we can use to grow our business more effectively.

We also intend to opportunistically pursue the strategies described

below to continue our upward trajectory and enhance shareholder value.

In 2021 we believe we have significantly improved our new bookings

and qualified pipeline.

With our expanded product line to included quality extraction solutions, we become more attractive to our prospects

and customers, enhancing our value-add and improved wallet share opportunities.

We expect our qualified pipeline and new bookings of opportunities

to continue to grow.

We have developed a multi-pronged

growth strategy as described below to help us capitalize on the sizable opportunity at hand.

Through methodical sales and marketing efforts,

cultivation and extraction solutions, and scale-up manufacturing, we believe we have implemented several key initiatives we can use to

grow our business more effectively.

We also intend to opportunistically pursue the strategies described below to continue our upward trajectory

and enhance shareholder value.

We believe we have significantly improved our new bookings and qualified pipeline.

With our expanded product

line that includes quality extraction solutions, we have become more attractive to our prospects and customers, enhancing our overall

appeal and the scope of opportunities we are able to pursue.

We expect our qualified pipeline and new bookings of opportunities to continue

Sales and Marketing

Rigorous Sales Process and Strong Infrastructure

in Place to Drive Revenue Growth

We embrace and utilize a rigorous Sandler sales

process to evaluate potential new opportunities and then advance vetted prospects through the different phases of our qualified pipeline.

The Sandler sales process is the leading enterprise sales process globally, which is based on the psychology of human behavior, is consistent

with the values and culture we have chosen to implement at Agrify, and consequently our salespeople spend most of their time building

relationships and qualifying opportunities in order to make closing new business more streamlined, collaborative and organic in nature.

There are specific requirements, milestones, and events that we have identified along the sales process that must be met to move prospects

through and convert them from vetted opportunities into committed sales orders within a 12-month period.

At each phase of the pipeline,

a prospect opportunity is assigned a probability value for closing, providing management production forecast ability.

Our professional proactive sales team works to

convert our qualified pipeline of opportunities into confirmed contractual bookings.

Given our emphasis on enterprise sales opportunities

we believe we are able to significantly scale our business in the coming year without significant increases our headcount.

of this report, our sales team was made up of Sales Operations Specialist, Order Management Representatives, Solution Architects, Account

Managers, Director of Business Development, and Director of Channel Partners totaled 19 full-time employees.

We believe our business has, and our future success

will be driven by, the following sales and marketing strategy:

Marketing Team Aligned

with Sales Force to Maximize Our Industry Visibility to Drive Revenue .

Our marketing department works in tandem with our sales

and business development representatives to best represent and sell our cultivation and extraction solutions to the cannabis industry.

The sales and business development representatives advance prospects

through our sales funnel, also known as a “buyer’s journey”.

Our sales funnel duties are completed using a customer relationship management (“CRM”) system, which allows us to track,

qualify, and report on the pipeline velocity and ROI of our marketing

Leads are added into our funnel predominantly through our digital marketing efforts, including direct marketing, organic

social media growth, thought leadership, events, and demand generation

via paid advertisements.

Rigorous Sales Process

and Strong Infrastructure in Place to Drive Revenue Growth

We utilize a highly structured

sales process to evaluate potential new opportunities and then advance vetted prospects through the different phases of our qualified

Our salespeople spend most of their time building relationships and qualifying opportunities to make closing new business more

streamlined, collaborative, and organic in nature.

There are specific requirements, milestones, and events that we have identified along

the sales process that must be met to move prospects through and convert them from vetted opportunities into committed sales orders within

a 12-month period.

At each phase of the pipeline, a prospect opportunity is assigned a probability value for closing, providing management

production forecast ability.

Our sales team works to convert

our qualified pipeline of opportunities into confirmed contractual bookings.

Given our emphasis on enterprise sales opportunities, we

believe we are able to significantly scale our business in the coming year without significant increases in our headcount.

of this report, our sales team was comprised of one Sales Vice President, Directors of Business Development, Account Managers, Channel

Partner Managers, Customer Support and Success Manager, Customer Service Support Reps, and a Sales Support Admin.

Additionally, we take

measures to ensure that all members of the sales organization are cross-trained on cultivation and extraction products.

We believe our business has,

and our future success will be driven by, the following sales and marketing strategy:

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.

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%.

We use A/B testing in our email campaign strategy to harness meaningful messages.

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.

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.

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 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.

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 videos, photography, industry-related articles, and blog content on a consistent basis.

By developing strong relationships with our customers and sharing testimonials as well as live footage of our products being in action, we are better positioning ourselves on social.

Furthermore, we promote our social media in our email communications, on our website, and through paid advertising.

We also keep our finger on the pulse of trends and competitors in the market, remaining in the know.

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 an industry thought leader.

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.

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.

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 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.

Agrify Total Turn-key Solutions

We also believe that our data-driven TTK Solution

for cultivation solutions is unlike any other customer solution being offered and enables our customers to get to market faster

by providing them with our seamlessly integrated hardware and software offerings as well as access to capital and a wide range of associated

services from experts including consulting, training, design, engineering, and construction to form what we believe is the most complete

solution available from a single provider.

Agrify’s TTK Solution provides our valued

customers with the benefit of working with a single, highly qualified provider in what has historically been a decentralized market full

of piecemeal solutions that were not necessarily designed and engineered to work harmoniously with one another.

Given the significant

shortcomings associated with traditional indoor grow methods across all commercial agriculture segments, it was apparent that a new paradigm

in indoor cultivation was desperately needed, which is precisely why we are bringing a more modern, manufacturing style approach that

is process driven through technology and measured via data and analytics.

Overall, our holistic approach to addressing our customers’

cultivation needs treats their production facilities as an end-to-end ecosystem whose success depends on all of its components working

together optimally.

Despite the rapidly growing cannabis and hemp industry, many grower and processor customers face some significant

obstacles to their operations that pose a serious threat to their long-term viability.

We believe Agrify proprietary TTK Solution is

the key to resolving many of the challenges our customers encounter.

Since launching our TTK Solution in June of 2021, we have generated

significant momentum in the United States market and over time, we expect to have significant future TTK Solution opportunities both

domestically and abroad.

We have set ourselves apart by bringing to market a horticulturist expertise, bundled solution of state-of-the-art

equipment, software and services that is turn-key, end-to-end, fully integrated and optimized for precision growing and extraction.

TTK Solution provides customers with the following bundled equipment and services:

Facility design, lab design, and engineering services

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

Agrify’s TTK Solution agreement terms are typically for ten years.

If facility design and building services are provided, on average the customer pays Agrify an annual interest rate ranging from 12% to

18% per annum and the money owed for the design and build services are completely repaid withing 24 months of facility occupancy certification.

During the remaining term of the agreement the Agrify receives monthly recurring SaaS fees and for a production success fee based on the

amount of each harvest.

For extraction equipment and products, Agrify TTK Solution agreements range from five years to ten years and the

Company receives a production success fee based on the amount produced.

Equipment Financing

We recognize that many new cultivators face particular

capital and time constraints, and we also recognize that the initial cost of our equipment can be a deterrent for some.

We solve this

problem by offering equipment financing plans for select good credit customers, which we believe further enables us to become a vendor

While we proactively show our prospects that the strong and immediate return on investment derived from Agrify solutions will

more than make up for associated start-up costs, we wanted to do even more to support our prospective customers, which is why we unveiled

an equipment financing program to help remove this final barrier to entry for otherwise excited cultivators.

This requires participating

credit-worthy customers to pay a substantial down payment, typically between 30% and 50% of the purchase price, with the balance financed

over two years, with interest, under commercially reasonable terms.

Our individual offerings, which are described

in more detail below, are compelling on their own.

However, we believe what really sets us apart is our ability to bring to the market

a tech-forward, bundled solution of equipment, software and services that is turn-key, end-to-end, fully integrated and optimized for

precision growing.

Scale-Up Manufacturing Capabilities in Order to Meet the Increasing

Demand for Our Grow Solutions

We currently use contract manufacturers (“CMs”)

and in Asia for prototyping and volume manufacturing, and we plan to expand our capabilities in order to meet the increasing

demand for our grow solutions.

We design the systems internally, and then work with our CMs and suppliers to refine, prototype, and test

The designs are documented at a level that allows us to have our products manufactured at multiple CMs, both in the U.S.

Additionally, we work with domestic suppliers

on a wide range of metal fabrication to allow for rapid prototyping and product development.

One such CM and metal fabrication shop that

we have worked with extensively in the past is Harbor Mountain Holdings, LLC (“HMH”), which is based in the Atlanta, GA area.

HMH has been producing and assembling many of our products for over three years, and they have served our needs well as a versatile and

valued partner.

On July 21, 2020, we acquired HMH, including the acquisition of HMH’s research and development, testing, and flexible

manufacturing plant located just outside Atlanta, GA, along with key personnel and equipment.

We believe this acquisition fits in nicely

with our overall scale-up manufacturing strategy.

We expect HMH to evolve into more of a service, engineering development and prototyping,

and test facility.

On December 7, 2020, we entered into a five-year

supply agreement with Mack Molding Co., a Vermont corporation (“Mack”), pursuant to which Mack will become a key supplier

of Company’s VFUs.

Mack is a leading supplier of molded plastic parts, fabricated metal parts and high-level assemblies to the medical,

industrial, transportation, energy/environment, computer and business equipment, defense, aerospace and consumer markets.

Founded in 1920,

Mack is a wholly owned subsidiary of the privately held Mack Group corporation, which also includes Mack Technologies and Mack Prototype.

The supply agreement contemplates that, following an introductory period, we will negotiate a minimum percentage of our VFU requirements

that we will purchase from Mack each year based on the agreed upon pricing formula.

The introductory period is not time-based but rather

refers to the production of an initial number of units after which the parties have rights to adjust pricing and negotiate a certain minimum

requirements percentage.

We believe this approach will result in both parties making a more informed decision with respect to the pricing

and other terms of the supply agreement with Mack.

In the event we are unable to agree with Mack on pricing or a minimum requirements

percentage, either party may terminate the agreement upon notice without further consequence or obligation.

We believe the supply agreement with Mack provides

us with several key benefits, including:

Rapid Scaling :

We can scale to customer orders, as Mack has agreed to maintain a minimum

safety stock of VFUs in inventory and allow us to store additional inventory pending customer deliveries;

Long-Term Efficiencies :

Under a strategic partner governance structure, we intend to meet

with Mack at least quarterly in efforts to improve components acquisition and logistics, to lower production costs over time, provide

additional alternatives for third party component vendors and allow us to provide input as to Mack’s overall production process

and operational effectiveness.

We anticipate that this key strategic relationship

with Mack will grow with our continued and expanding need for additional VFUs.

Overall, our approach to manufacturing is to

use CMs to prototype, iterate, and begin initial production, then transition to volume production including in lower cost geographies,

which results in both rapid time-to-market and low production costs.

As we grow, we intend to continually analyze and evolve our manufacturing

capabilities to best meet our customer needs while always focusing on ways to maximize operating margins.

We have actively utilized press releases, industry and investor events, and interviews and speaking engagements to increase awareness of our brand, solutions, customer engagements, and other relevant company developments.

With our industry positioning using thought leadership and ongoing 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 present keynotes at industry-related events including technology and agriculture conferences, podcasts, radio shows and more to continue to gain press and ultimately more exposure.

Scale-Up Manufacturing Capabilities in Order

to Meet the Increasing Demand for Our Grow Solutions

We currently use both internal

and external manufacturing to support our increasing demand.

Internal production is primarily at our Michigan, Colorado, and Georgia facilities.

Externally, we use a variety of contract manufacturers (“CMs”) in the U.S.

and in Asia for prototyping and volume manufacturing,

and we plan to expand our capabilities to meet the increasing demand for our grow solutions.

We design the systems internally, and then

work with our CMs and suppliers to refine, prototype, and test the designs.

The designs are documented at a level that allows us to have

our products manufactured at multiple CMs, both in the U.S.

As demand increases beyond our internal capacities additional

volume can be shifted to external manufacturing to ensure market demands are met.

Overall, our approach to

manufacturing is to use both internal and external manufacturing capabilities to prototype, iterate, and begin initial production, then

transition to volume production.

As volumes increase, this will also include increasing production in lower-cost geographies, which results

in both rapid time-to-market and low production costs.

As we grow, we intend to continually analyze and evolve our manufacturing capabilities

to best meet our customers’ needs while always focusing on ways to maximize operating margins.

Intellectual Property

We rely on a combination of patent, trademark,

copyright, trade secret, including federal, state and common law rights in the United States and other countries, nondisclosure agreements,

and other measures to protect our intellectual property.

We rely on a combination

of patent, trademark, copyright, and trade secret, including federal, state and common law rights in the U.S.

and other countries, nondisclosure

agreements, and other measures to protect our intellectual property.

We require our employees, consultants, and advisors to execute confidentiality

6 unchanged sentences

patents, domain names, copyrights and other proprietary rights.

We hold 17 patents in the United States and 3

international patents.

We also have nine pending patent applications.

These patents and patents applications are directed to, among other

things, extraction and processing of botanicals and particular compounds.

We hold 20 patents in the

We also have one pending patent application.

These patents and patents applications are directed to, among other things, extraction

and processing of botanicals and particular compounds.

Trademarks and Copyrights

We own or have applications for numerous national

and state trademarks which are essential to our businesses, including Agrify, Precision, PurePressure, PressWare, Lab Society and Elitelab,

among others.

In addition, we recognize common-law trademark rights AGRIFY INSIGHTS and AGRINAMICS for different software as a service

Our subsidiary, Agrify Brands, LLC is the owner

of certain common-law trademarks that it licenses to third parties.

Marks covered by the license include, DAWG STAR (including multiple

logo designs), WESTERN CULTURED (including multiple logo designs), TWISTED LEGION (logo), WAXTRONAUT (including multiple logo designs)

and WAXTRONAUT COSMICALLY CURATED EXTRACTS.

Although we have not sought copyright registration

for our technology or works to date, we rely on common law copyright and trade secret protections in relation to our TechOps/ Agrify

Insights software computer program for indoor agriculture management.

We have registered our Internet domain names related to our business.

We own or have applications

for numerous national and state trademarks which are essential to our businesses, including Agrify, Precision, PurePressure, PressWare,

Lab Society and Elitelab, among others.

In addition, we recognize common-law trademark rights AGRIFY INSIGHTS and AGRINAMICS for SaaS

Our subsidiary, Agrify Brands,

LLC is the owner of certain common-law trademarks that it licenses to third parties.

Marks covered by the license include, DAWG STAR (including

multiple logo designs), WESTERN CULTURED (including multiple logo designs), TWISTED LEGION (logo), WAXTRONAUT (including multiple logo

designs) and WAXTRONAUT COSMICALLY CURATED EXTRACTS.

Although we have not sought

copyright registration for our technology or works to date, we rely on common law copyright and trade secret protections in relation to

our TechOps/ Agrify Insights™ computer program for indoor agriculture management.

We have registered our Internet domain names related

to our business.

We license software from third parties and utilize open-source software for integration into our applications.

In addition, while we know that our current product

and service capabilities are highly novel and compelling, we do not intend to be complacent.

We will continue to learn from our customers

and from the market, and if there is an opportunity to deploy a new and improved version of one of our offerings or if we decide there

is room in the market for a new type of solution, we fully intend to diligently explore those possibilities to augment our existing business

and grow our reach.

Employees and Human Capital Resources

As of December 31, 2021, we had a total of 141

employees, of which 136 are full-time employees, with 36 located in the New England area, 35 in Georgia, 31 in Michigan, 17 in Oregon

and 22 in other states.

In addition, while we know

that our current product and service capabilities are highly novel and compelling, we do not intend to be complacent.

We will continue

to learn from our customers and from the market, and if there is an opportunity to deploy a new and improved version of one of our offerings

or if we decide there is room in the market for a new type of solution, we fully intend to diligently explore those possibilities to augment

our existing business and grow our reach.

Human Capital Resources

As of October 1, 2023, we

had a total of 72 employees, of which 72 are full-time employees, with 10 located in the New England area, 18 in Colorado, 26 in Michigan,

5 in Georgia, and 13 located in other states.

None of our employees are subject to collective bargaining agreements.

We consider our relationship with our

employees to be good.

Our human capital resources objectives include,

as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees, advisors, and consultants.

The principal purposes of our equity incentive plan are to attract, retain and reward personnel through the granting of stock-based compensation

awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of

their abilities and achieve our objectives.

Legal Proceedings

From time to time, we may be subject to various

claims, legal actions and regulatory proceedings arising in the ordinary course of business.

On January 5, 2021, we received a demand

letter from Nicholas Cooper and Richard Weinstein, two of our former employees (and one of Mr.

Cooper’s affiliated entities), asserting

that such individuals were entitled to compensation arising out of their employment by us, as well as their partial ownership of TriGrow

Systems, Inc.

The demand letter asserts that the former employees are due certain sales commissions under their applicable bonus plan,

equity earn-outs based on certain sales targets, and various equity purchases through our employee stock ownership plan.

The demand letter

also asserts various employment claims, including, but not limited to, statutory wage withholding violations, wrongful termination, breach

of contract, breach of the duty of good faith and fair dealing, fraud in the inducement, promissory estoppel, minority shareholder oppression,

breach of fiduciary duty, unjust enrichment, and violations of state and federal securities laws.

On January 19, 2021, Messrs.

Cooper and Weinstein

filed a lawsuit against Agrify Corporation in the United States District Court for the Western District of Washington, alleging the same

claims made in their demand letter based on the same facts disclosed above.

The plaintiffs are seeking relief in the form of monetary

damages in an amount to be determined.

Cooper and Weinstein are also seeking relief in the form of reinstatement and Mr.

is seeking rescission of Mr.

Weinstein’s Release of Claims Agreement.

On March 10, 2021, we moved to dismiss all of Cooper and Weinstein’s

claims, asserting that the claims failed to allege legal grounds for relief.

A decision on our motion is expected in the summer of 2021.

On May 12, 2021, a Magistrate issued a preliminary Report and Recommendation, which recommended dismissal of certain of Cooper and Weinstein’s

claims, and recommended others for additional factual discovery.

On July 27, 2021, a District Judge entered an order partially adopting

the Report and Recommendation, dismissing one claim with prejudice, dismissing a second claim with leave to amend, and permitting the

remaining claims to proceed.

Additionally, on July 29, 2021, the Company

filed a separate arbitration in Boston, Massachusetts against Cooper and Weinstein, in which the Company alleges that Cooper and

Weinstein were liable for certain conduct during the time they were TriGrow employees, including breach of fiduciary duty, unjust

enrichment, usurpation of corporate opportunity, conversion, fraudulent concealment, and false representation.

29, 2021, the Company submitted a claim for indemnification to certain legacy TriGrow Systems, LLC.

shareholders.

for indemnification relates to conduct by Cooper and Weinstein during the time they were TriGrow employees.

We do not believe these

claims have any merit and intend to vigorously defend against them (see Note 21, Commitments and Contingencies, in the notes to our

audited consolidated financial statements as of December 31, 2021).

Corporate History

Agrify Corporation was incorporated in the state

of Nevada on June 6, 2016, originally incorporated as Agrinamics, Inc.

(or Agrinamics).

On September 16, 2019, Agrinamics amended its

articles of incorporation to reflect a name change to Agrify Corporation.

On December 8, 2019, we formed Agrify-Valiant, LLC, a 60/40 joint-venture

limited liability company, in which we are the 60% majority owner with Valiant-America, LLC, one of the largest premium integrated consulting

and general contracting firms in North America with more than ten years of facility general contracting experience across many states.

On January 22, 2020, we and Agrify Merger

Sub, Inc., our newly formed wholly owned subsidiary (or “Merger Sub”), entered into an Agreement of Merger with TriGrow

Systems, Inc., a Nevada corporation (or “TriGrow”), pursuant to which TriGrow was merged with and into Merger Sub, with

Merger Sub as the surviving corporation, resulting in our indirect acquisition of TriGrow.

On July 21, 2020, we acquired HMH, who we have

had a close working relationship with for over three years, including the acquisition of HMH’s research and development, testing,

and flexible manufacturing plant located just outside Atlanta, GA, along with key personnel and equipment.

We believe this acquisition

will give us increased, and in some respects, new in-house resources and capabilities around engineering, prototyping, manufacturing,

testing, warehousing, and installation services.

On October 1, 2021, we acquired Mass2Media, LLC, d/b/a PX2 Holdings, LLC, d/b/a

Precision Extraction Solutions (“Precision”) and Cascade Sciences, LLC (“Cascade”).

As part of the acquisition

of Precision, Precision merged with and into a wholly owned subsidiary of the Company, Precision Extraction NewCo, LLC.

On December 31, 2021, we acquired PurePressure,

LLC (“PurePressure”), a leader in solventless extraction and advanced ice water hash processing equipment in the cannabis

and hemp industry.

Subsequent to December 31, 2021, on February 1, 2022, we acquired

LS Holdings Corp.

(“Lab Society”), a leader in distillation and solvent separation for the cannabis and hemp industry.

part of the acquisition of Lab Society, Lab Society merged with and into a wholly owned subsidiary of the Company, Lab Society NewCo,

Regulatory Implications of Providing Equipment and Services in

the Cannabis and Hemp Industry

We sell products and services that end users

may purchase for use in industries or segments, including the growing of cannabis and hemp, which are subject to varying, inconsistent,

and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations, and consumer perceptions.

We consider our relationship

with our employees to be good.

We strive to attract and

retain diverse, high-caliber employees who raise the talent bar by offering competitive compensation and benefit packages, regardless

of their gender, race, or other personal characteristics.

We regularly review and survey our compensation and benefit programs against

the market to ensure we remain competitive in our hiring practices.

We provide employee salaries that are competitive and consider factors

such as an employee’s role and experience, the location of their job and their performance.

In addition to our competitive salaries,

to enhance our employees’ sense of participation in the company and to further align their interests with those of our stockholders,

we offer equity packages to a majority of our employees.

The principal purposes of our equity incentive plan are to attract, retain and

reward personnel through the granting of stock-based compensation awards, in order to increase stockholder value and the success of our

company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

strive to hire, develop, and retain talent that continuously raises the performance bar.

We encourage, support, and compensate our employees

based on our philosophy of recognizing and rewarding exceptional performance.

We believe that performance and development is an ongoing

process in which all employees should be active participants.

Individual and company key performance goals are linked to employee compensation.

Regulatory Implications of Providing

Equipment and Services in the Cannabis and Hemp Industry

We sell products and services

that end users may purchase for use in industries or segments, including the growing and processing of cannabis and hemp, which are subject

to varying, inconsistent, and rapidly changing laws, regulations, administrative practices, enforcement approaches, judicial interpretations,

and consumer perceptions.

For example, certain countries and 36 U.S.

states have adopted frameworks that authorize, regulate, and tax the cultivation, processing,

sale, and use of cannabis for medicinal and/or non-medicinal use, while the U.S.

Controlled Substances Act and the laws of other U.S.

states have adopted frameworks that authorize, regulate, and tax

the cultivation, processing, sale, and use of cannabis for medicinal and/or non-medicinal use, while the U.S.

Controlled Substances Act

and the laws of other U.S.

states prohibit growing cannabis.

In addition, with the passage of the Farm Bill in December 2018, hemp cultivation is now broadly permitted.

The Farm Bill explicitly allows the transfer of hemp-derived products across state lines for commercial or other purposes.

It also removes

restrictions on the sale, transport, or possession of hemp-derived products, so long as those items are produced in a manner consistent

with the law.

Our products are multi-purpose products and may be used on a wide range of plants and are purchased by cultivators who

may grow any variety of plants, including cannabis and hemp.

Despite well over a majority of state laws decriminalizing

varying types of its use, marijuana remains a Schedule I drug under the Controlled Substances Act, making it illegal under federal law

in the United States to, among other things, cultivate, distribute or possess cannabis in the United States.

In those states in which

the use of marijuana has been legalized, its use remains a violation of federal law pursuant to the Controlled Substances Act.

The Controlled

Substances Act classifies marijuana as a Schedule I controlled substance, and as such, medical and adult cannabis use is illegal under

In addition, with the passage of the Farm Bill in December 2018, hemp cultivation

is now broadly permitted.

The Farm Bill explicitly allows the transfer of hemp-derived products across state lines for commercial or other

It also removes restrictions on the sale, transport, or possession of hemp-derived products, so long as those items are produced

in a manner consistent with the law.

Our products are multi-purpose products and may be used on a wide range of plants and are purchased

by cultivators who may grow any variety of plants, including cannabis and hemp.

Although the majority of

states now have laws that regulate or decriminalize various types of cannabis use, marijuana remains a Schedule I drug under the Controlled

Substances Act, making it illegal under federal law in the U.S.

to, among other things, cultivate, distribute or possess cannabis in the

In those states in which the use of marijuana has been legalized, its use remains a violation of federal law pursuant to the Controlled

Substances Act.

The Controlled Substances Act classifies marijuana as a Schedule I controlled substance, and as such, medical and adult

cannabis use is illegal under U.S.

Unless and until the U.S.

Congress amends the Controlled Substances Act with respect to marijuana (and the President

approves such amendment), there is a risk that federal authorities may enforce current federal law.

Financial transactions involving

proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution

under applicable U.S.

Congress amends the Controlled Substances Act with respect to

marijuana (and the President approves such amendment), there is a risk that federal authorities may enforce current federal law.

transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the U.S.

may form the basis

for prosecution under applicable U.S.

federal money laundering legislation.

The approach to enforcement of such laws by the federal government in the

United States has trended toward non-enforcement against individuals and businesses that comply with medical or adult-use cannabis regulatory

The approach to enforcement of such laws by the federal government

has trended toward non-enforcement against individuals and businesses that comply with medical or adult-use cannabis regulatory

programs in states where such programs are legal, strict compliance with state laws with respect to cannabis.

In most states that have legalized medical- and

recreational-use cannabis in some form, the growing, processing and/or dispensing of cannabis generally requires that the operator obtain

one or more licenses in accordance with applicable state requirements.

In addition, many states regulate various aspects of the growing,

processing and/or dispensing of cannabis and hemp.

Local governments in some cases also impose rules and regulations on the manner of

operating cannabis and hemp businesses.

As a result, applicable state and local laws and regulations vary widely, including, but not

limited to, regulations governing the medical cannabis program, product testing, the level of enforcement by state and local authorities

In most states that have

legalized medical- and recreational-use cannabis in some form, the growing, processing and/or dispensing of cannabis generally requires

that the operator obtain one or more licenses in accordance with applicable state requirements.

In addition, many states regulate various

aspects of the growing, processing and/or dispensing of cannabis and hemp.

Local governments in some cases also impose rules and regulations

on the manner of operating cannabis and hemp businesses.

As a result, applicable state and local laws and regulations vary widely, including,

but not limited to, regulations governing the medical cannabis program, product testing, the level of enforcement by state and local authorities

on non-licensed cannabis operators, state and local taxation of regulated cannabis products, local municipality bans on operations and

operator licensing processes and renewals.

As part of its rigorous due diligence policy

on all potential customers, the Company carefully reviews the appropriate licensure of each potential customers in the cannabis and hemp

industry for compliance with applicable local, state, and federal laws.

The Company is not involved in the cultivation, processing or

retail of cannabis products and never takes a controlling interest in any of the operations of its cannabis customers as a matter of

Implications of Being an Emerging Growth Company and Smaller Reporting

We qualify as an “emerging growth company” as

defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act.

As a result, we are permitted to, and intend

to, rely on exemptions from certain disclosure requirements that are applicable to other companies that are not emerging growth companies.

As part of its rigorous due

diligence policy on all potential customers, the Company carefully reviews the appropriate licensure of each potential customer in the

cannabis and hemp industry for compliance with applicable local, state, and federal laws.

The Company is not involved in the cultivation,

processing, or retail of cannabis products and never takes a controlling interest in any of the operations of its cannabis customers as

a matter of state law.

Implications of Being an Emerging Growth Company

and Smaller Reporting Company

We qualify as an “emerging

growth company” as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act.

As a result, we

are permitted to, and intend to, rely on exemptions from certain disclosure requirements that are applicable to other companies that are

not emerging growth companies.

Accordingly, for so long as we are an “emerging growth company,” we will not be required to:

engage an auditor to report on our internal controls over financial reporting pursuant to Section

404(b) of the Sarbanes–Oxley Act of 2002, or the Sarbanes–Oxley Act;

comply with any requirement that may be adopted by the Public Company Accounting Oversight Board,

or the PCAOB, regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information

about the audit and the financial statements (i.e., an auditor discussion and analysis);

submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay,”

“say-on-frequency,” and “say-on-golden parachutes;” or

disclose certain executive compensation related items such as the correlation between executive

compensation and performance and comparison of the chief executive officer’s compensation to median employee compensation.

In addition, the JOBS Act provides that an “emerging

growth company” can use the extended transition period for complying with new or revised accounting standards.

We will remain an “emerging growth company”

until the earliest to occur of:

engage an auditor to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes–Oxley Act of 2002, or the Sarbanes–Oxley Act;

comply with any requirement that may be adopted by the Public Company Accounting Oversight Board, or the PCAOB, regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay,” “say-on-frequency,” and “say-on-golden parachutes;” or

disclose certain executive compensation-related items such as the correlation between executive compensation and performance and the comparison of the chief executive officer’s compensation to median employee compensation.

In addition, the JOBS Act

provides that an “emerging growth company” can use the extended transition period for complying with new or revised accounting

We will remain an “emerging

growth company” until the earliest to occur of:

our reporting $1 billion or more in annual gross revenues;

our issuance, in a three-year period, of more than $1 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;

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;

December 31, 2026.

We cannot predict if investors will find our

securities less attractive because we may rely on these exemptions, which could result in a less active trading market for our securities

and increased volatility in the price of our securities.

Finally, we are a “smaller reporting company”

(and may continue to qualify as such even after we no longer qualify as an emerging growth company) and accordingly may provide less

public disclosure than larger public companies, including the inclusion of only two years of audited financial statements and only two

years of management’s discussion and analysis of financial condition and results of operations disclosure.

As a result, the information

that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity

We cannot predict if investors

will find our securities less attractive because we may rely on these exemptions, which could result in a less active trading market for

our securities and increased volatility in the price of our securities.

Finally, we are a “smaller

reporting company” (and may continue to qualify as such even after we no longer qualify as an emerging growth company) and accordingly

may provide less public disclosure than larger public companies, including the inclusion of only two years of audited financial statements

and only two years of management’s discussion and analysis of financial condition and results of operations disclosure.

the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which

you hold equity interests.

Corporate Information

Our executive offices are

located at 2468 Industrial Row, Dr., Troy, Michigan 48084.

Our telephone number at our executive offices is (855) 420-0020.

Corporation was incorporated in the state of Nevada on June 6, 2016, originally incorporated as Agrinamics, Inc.

(or Agrinamics).

16, 2019, Agrinamics amended its articles of incorporation to reflect a name change to Agrify Corporation.

Available Information

The Company’s Form

10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d)

of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are filed with the SEC.

We are subject to the informational

requirements of the Exchange Act and file or furnish reports, proxy statements and other information with the SEC.

Such reports and other

information filed by us with the SEC are available free of charge at https://ir.agrify.com/financials-and-filings/sec-filings when

such reports are available on the SEC’s website.

The SEC maintains an Internet site that contains reports, proxy and information

statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

We periodically provide other

information for investors on our corporate website, www.agrify.com, and our investor relations website, investor.gnln.com.

This includes

press releases and other information about financial performance, information on corporate

governance and details related to our annual meeting of shareholders.

The information contained on the websites referenced in this Form

10-K is not incorporated by reference into this filing.

Further, our references to website URLs are intended to be inactive textual references

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business