Business Combinations

6 Months Ended

Jun. 30, 2025

Note 7 — Business Combinations

The Company has determined that the below acquisitions meet the criteria for business combinations under ASC 805, Business Combinations. They are accounted for by applying the acquisition method, whereby the assets acquired, and the liabilities assumed are recorded at their fair values with any excess of the aggregate consideration over the fair values of the identifiable net assets allocated to goodwill (where applicable). Operating results have been included in these consolidated financial statements from the date of each respective acquisition. Supplemental pro forma financial information has not been presented as the impact was not material to the Company’s consolidated financial statements.

In determining the fair value of all identifiable assets and liabilities acquired, the most significant estimates relate to intangible assets. For the intangible assets identified, depending on the type of intangible asset and the complexity of determining its fair value, an independent valuation expert or management may develop the fair value, using appropriate valuation techniques, which are generally based on a forecast of the total expected future net cash flows and take into consideration other significant assumptions such as the expected use, market uncertainty and the intangible asset useful lives.

Acquisition of MC Brands LLC

On May 20, 2025, the Company entered into a purchase agreement with VCP IP Holdings, LLC (“VCP”), an indirect wholly-owned subsidiary of Green Thumb, a related party, pursuant to which the Company acquired all of the equity interests in MC Brands LLC and its wholly-owned subsidiary Core Growth LLC (together referred to as “MC Brands”). The assets of MC Brands consist primarily of intellectual property rights to the incredibles brand. The aggregate consideration exchanged for the equity interest was $5.1 million of cash.

The Company prepared a preliminary purchase price allocation based on management’s estimates and assumptions which are subject to change within the purchase price allocation period (generally not more than one year from the acquisition date). Final valuations of the assets acquired and liabilities assumed are not yet complete due to the inherent complexity associated with valuations and the short period of time between the acquisition date and the period end. As part of the preliminary purchase accounting, the Company recorded intangible assets of $4.8 million relating to the incredibles trade name intellectual property and $275 thousand of customer relationships. The preliminary estimates for useful lives of the identified intangibles are five years for trade names and seven years for customer relationships with a weighted average useful life of 5.11 years. As the total purchase price equaled the fair value of the net identifiable assets acquired, no goodwill was recorded.

The following table summarizes the preliminary allocation of the purchase price:

Allocation of Purchase Price (in thousands)
Accounts Receivable	$	469
Inventory		287
Prepaid		22
Tradenames		4,800
Customer Relationships		275
Total assets acquired at fair value		5,853

Accounts Payable		(778	)
Total liabilities assumed at fair value		(778	)

Total purchase price	$	5,075

Acquisition – Double or Nothing

As previously disclosed, on December 12, 2024, the Company acquired certain assets from Double or Nothing, the owner and creator of the Señorita brand of hemp-derived THC drinks. As of June 30, 2025, the Company has completed its purchase price allocation for the Double or Nothing business combination. The final allocation remains unchanged from the preliminary amounts disclosed in the Company’s financial statements for the fiscal year ended December 31, 2024. Based on the information available to management, no further adjustments are expected. Accordingly, the measurement period has ended and the purchase accounting is now considered final in accordance with ASC 805.

The following table summarizes the final allocation of purchase price for Double or Nothing:

Allocation of Purchase Price (in thousands)
Inventory	$	500
Deposits		123
Tradenames		6,100
Customer Relationships		2,800
Goodwill		9,713
Total purchase price	$	19,236

- Definition

The entire disclosure for business combination.

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+ Details

Agrify Corp 10-Q