Agrify Corporation (Nasdaq:AGFY) (“Agrify” or the “Company”), the most innovative provider of premium cultivation and extraction solutions for the cannabis and hemp industry, today announced it has acquired Lab Society, a leader in distillation and solvent separation solutions for the cannabis extraction industry.
Cannabis represents a potential cornucopia of medicinal and pharmaceutical advancement. Cannabis produces over 550 different phytochemicals, over 120 of which are cannabinoids like THC and CBD. Other cannabinoids like Varins (CBGV, THCV, and CBDV) are less well known and potentially offer significant value. As we continue to learn more about the complex chemical composition of cannabis, the need for distillation solutions is clear. Distillation enables the identification, isolation, and separation of valuable cannabis metabolites. The ability to take cannabis compounds distilled into their pure forms, and then recombine them into specific, purposeful end-products could have significant potential for the pharmaceutical industry in the future.
“We are ecstatic to add Lab Society to our portfolio of high-quality extraction solutions,” said Raymond Chang, Chairman and CEO of Agrify. “As federal legalization edges closer to reality, we believe the United States government will likely increase its role in setting the quality, consistency, and safety standards for medical and recreational cannabis products. By owning the top key solutions that produce the highest quality and the widest range of extracted cannabis products at scale, we expect it will provide Agrify with a significant competitive differentiation, enhanced customer value-add, superior industry leadership position and significant growth opportunities globally.”
Since September 2021, Agrify has been strategically focused on establishing the Company as the global leader in the cannabis extraction industry. Agrify became the global leader in extraction solutions by acquiring four of the top brand names in the industry:
Precision Extraction Solutions – Market leader in developing and producing high-quality hydrocarbon extraction solutions
Cascade Sciences – Market leader in developing and producing high-quality vacuum purge ovens and decarboxylation ovens
PurePressure – Market leader in developing and producing high-quality solventless extraction solutions
Lab Society – Market leader in developing and producing high-quality distillation and solvent separation extraction solutions
Combined, the four acquisitions listed above provide the most comprehensive extraction solutions from a single provider, with over 10,000 customers, including some of the best extraction labs in the industry. In 2022, Agrify anticipates its extraction division to produce approximately $65 million in annual revenue, and as the cannabis industry continues to experience rapid growth globally, Agrify expects the sales of its extraction solutions to follow a similar growth trajectory.
“We are excited to be a part of Agrify’s extraction division,” said Michael Maibach Jr., Founder and CEO of Lab Society. “With a much larger sales team and additional resources, we are excited to be in a position to drive rapid growth and future innovative product development.”
Agreement Details
Lab Society’s annual revenue for 2021 was approximately $10 million, and the acquisition is expected to be accretive in early 2022. The Company inherits Lab Society’s intellectual property, talent, and outstanding reputation for quality and reliability.
The purchase price for Lab Society was $8 million, consisting of $4 million in cash and $4 million in unregistered shares of Agrify common stock, subject to adjustments as set forth in the definitive agreement. There is also an additional earnout opportunity of up to $3.5 million if the revenue generated from Lab Society’s products reaches certain milestones in 2022 and 2023. The definitive agreement includes customary representations, warranties, and covenants regarding Lab Society and Agrify.
