What changed in this filing

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Item 1. Business

2022-09-28 compared with 2021-09-28 · 156 added, 126 removed, 63 unchanged (82% of the section changed)

General Overview

As used in this current report and unless otherwise indicated, the terms “we”, “us” and “our” mean Grove, Inc., unless otherwise indicated.

We are in the business of developing, producing, marketing, and selling raw materials, white label products and end consumer products containing the hemp plant extract, Cannabidiol (“CBD”).

We sell to numerous consumer markets including the nutraceutical, beauty care, pet care and functional food sectors.

We seek to take advantage of an emerging worldwide trend to re-energize the production of industrial hemp and to foster its many uses for consumers.

In addition, with the close of the acquisition of VitaMedica on August 1, 2021 we are expanding our product offerings beyond only products containing hemp plant extract.

In addition, we are an operator of an annual tradeshow in the United States related to the CBD industry.

The Company only has one trade show, CBD.IO, which is held in November each year.

Because event revenue is recognized when a particular event is held, the Company experiences fluctuations in quarterly revenue based on the completion of the trade show event.

(the “Company”) is a Nevada Corporation and has eight wholly owned subsidiaries, Trunano Labs, Inc., a Nevada corporation, Cresco Management, a California corporation, Steam Distribution, LLC, a California limited liability company;

As used in this current report and unless otherwise indicated, the terms “we”, “us” and “our” mean Upexi, Inc., unless otherwise indicated.

Upexi is a multi-faceted brand owner with established brands in the health, wellness, pet, beauty and other growing markets.

We operate in emerging industries with high growth trends and look to drive organic growth of our current brands.

We focus on direct to consumer and Amazon brands that are scalable and have anticipated, high industry growth trends.

Our goal is to continue to accumulate consumer data and build out a significant customer database across all industries we sell into.

The growth of our current database has been key to the year over year gains in sales and profits.

To drive additional growth, we have and will continue to acquire profitable Amazon and eCommerce businesses that can scale quickly and reduce costs through corporate synergies.

We utilize our in-house, SaaS programmatic ad technology to help achieve a lower cost per acquisition and accumulate consumer data for increased cross-selling between our growing portfolio of brands.

(the “Company”) is a Nevada corporation with fourteen active subsidiaries, including thirteen wholly owned subsidiaries and one subsidiary, Cygnet Online, LLC, a Delaware limited liability company, that is majority owned with 55% ownership by the Company.

The Company’s fourteen active subsidiaries are as follows:

HAVZ, LLC, d/b/a/ Steam Wholesale, a California limited liability company

SWCH, LLC, a Delaware limited liability company

Cresco Management, LLC, a California limited liability company

Trunano Labs, Inc., a Nevada corporation

Infusionz, Inc., a Nevada corporation

Upexi Holding, LLC, a Delaware limited liability company

Upexi Pet Products, LLC, a Delaware limited liability company

Infusionz LLC (“Infusionz”), a Colorado limited liability company

Grove Acquisition Subsidiary, Inc.

(“VitaMedica”), a Nevada corporation

Upexi Enterprise, LLC, a Delaware limited liability company

Upexi Property & Assets, LLC, a Delaware limited liability company

Upexi 17129 Florida, LLC, a Delaware limited liability company

Interactive Offers, LLC (“Interactive”), a Delaware limited liability company

Cygnet Online, LLC (“Cygnet”), a Delaware limited liability company, 55% owned

In addition, the Company has four wholly owned subsidiaries that had no activity during the year ended June 30, 2022.

Steam Distribution, LLC, a California limited liability company

One Hit Wonder, Inc., a California corporation

Havz, LLC, d/b/a Steam Wholesale, a California limited liability company, and One Hit Wonder Holdings, LLC a California corporation, Infusionz LLC, a Colorado corporation and SWCH, a Delaware corporation.

One Hit Wonder Holdings, LLC, a California limited liability company

Vape Estate, Inc., a Nevada Corporation

Consolidations

On July 1, 2020, the noncontrolling shareholders of the Company’s subsidiary, Trunano Labs Inc., converted 1,761,261 shares of Trunano Labs, Inc.

stock, representing all the outstanding stock held by minority interest holders, into 1,277,778 shares of Grove Inc.

common stock, 10.8% of the then outstanding shares.

stock, representing all the outstanding stock held by minority interest holders, into 1,277,778 shares of Upexi Inc.

common stock, 10.8% of our then outstanding shares.

As of July 1, 2020, Trunano Labs, Inc.

is a wholly owned subsidiary of Grove Inc.

is a wholly owned subsidiary of Upexi Inc.

Business Acquisitions

On July 1, 2020, the Company entered into an Agreement and Plan of Merger with Infusionz LLC (the “Infusionz Agreement”) with the members of Infusionz LLC (the “Sellers”).

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VitaMedica is a leading online seller of supplements for surgery, recovery, skin, beauty, health, and wellness.

On October 1, 2021, the Company entered into an equity interest purchase agreement with Gyprock Holdings LLC, a Delaware limited liability company, MFA Holdings Corp., a Florida corporation, and Sherwood Ventures, LLC, a Texas limited liability company, to acquire all of the outstanding membership interest of Interactive Offers, LLC, a Delaware limited liability company.

On April 1, 2022, the Company entered into a securities purchase agreement with the single investor to purchase 55% of the equity interest in Cygnet Online, LLC, a Delaware limited liability company, and agreements to enable the Company to purchase the remaining 45% over the following two years.

Emerging Growth Company Status

We are an emerging growth company under the JOBS Act.

We are an emerging growth company under the Jumpstart our Business Startups (JOBS) Act of 2012.

We shall continue to be deemed an emerging growth company until the earliest of:

The last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,007,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,007,000) or more;

The last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective IPO registration statement;

The date on which such issuer has, during the previous 3-year period, issued more than $1,007,000,000 in non- convertible debt;

The date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 46, Code of Federal Regulations, or any successor thereto.

As an emerging growth company, we are exempt from Section 404(b) of Sarbanes Oxley.

The last day of our fiscal year during which our total annual gross revenues exceed $1,235,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics);

The last day of our fiscal year in which the fifth anniversary of the first sale of our common equity securities pursuant to an effective IPO registration statement occurred;

The date on which the Company has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt;

The date on which the Company qualifies as a ‘large accelerated filer’, as defined in section 240.12b-2(2) of title 46, Code of Federal Regulations, or any successor thereto.

As an emerging growth company, we are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002.

Section 404(a) requires issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting.

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Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment and the effectiveness of the internal control structure and procedures for financial reporting.

As an emerging growth company, we are also exempt from Section 14A (a) and (b) of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes.

These exemptions are also available to us as a Smaller Reporting Company.

As an emerging growth company, we are also exempt from Section 14A and B of the Securities Exchange Act of 1934, which require the shareholder approval of executive compensation and golden parachutes.

These exemptions are also available to us as a smaller reporting company that qualifies as a non-accelerated filer.

DESCRIPTION OF BUSINESS

We are in the business of developing, producing, marketing and selling raw materials, white label products and end consumer products containing the industrial hemp plant extract, Cannabidiol (“CBD”).

We sell to numerous consumer markets including the botanical, beauty care, pet care and functional food sectors.

We seek to take advantage of an emerging worldwide trend to re-energize the production of industrial hemp and to foster its many uses for consumers.

The development of products in this highly regulated industry carries significant risks and uncertainties that are beyond our control.

As a result, we cannot assure that we will successfully market and sell our products or, if we are able to do so, that we can achieve sales volume levels that will allow us to cover our fixed costs.

The Company primarily conducts its business operations through its wholly-owned subsidiaries:

Steam Distribution, LLC, a California limited liability company (“Steam Distribution”), One Hit Wonder, Inc., a California corporation (“One Hit Wonder”), Havz, LLC, d/b/a Steam Wholesale, a California limited liability company (“Steam Wholesale”), and One Hit Wonder Holdings, LLC, a California limited liability company (“OHWH”, and collectively known with Steam Distribution, One Hit Wonder, and Steam Wholesale as “HAVZ Consolidated”);

SWCH LLC, a Delaware limited liability company (“SWCH”);

Trunano Labs, Inc., a Nevada corporation (“Trunano”);

Infusionz LLC, a Colorado limited liability company (“Infusionz”);

and Cresco Management, LLC, a California limited liability company (“Cresco”).

Historically cultivated for industrial and practical purposes, hemp is used today for textiles, paper, auto parts, biofuel, cosmetics, animal feed, supplements and much more - an impressive scope for such a historically misunderstood and restricted commodity.

The market for hemp-derived products is expected to increase exponentially over the next five years 2 , and we believe Grove is well positioned to take advantage of this growth in the hemp industry.

In the U.S., hemp products that are manufactured by Grove are regulated by the Federal Food and Drug Administration, the Federal Trade Commission, the United States Department of Agriculture and various agencies within the individual States.

As an initial matter, the hemp products manufactured and distributed by Grove must meet the requirements of the Agricultural Improvement Act of 2018 (the “Farm Bill”).

Upexi is a multi-faceted brand owner with established brands in the health, wellness, pet, beauty and other growing markets.

We operate in emerging industries with high growth trends and look to drive organic growth of our current brands.

We focus on direct to consumer and Amazon brands that are scalable and have anticipated, high industry growth trends.

Our goal is to continue to accumulate consumer data and build out a significant customer database across all industries we sell into.

The growth of our current customer database has been key to the year over year gains in sales and cash flow.

To drive additional growth, we have and will continue to acquire profitable Amazon and eCommerce businesses that can scale quickly and reduce costs through corporate synergies.

We utilize our in-house, SaaS programmatic ad technology to help achieve a lower cost per acquisition and accumulate consumer data for increased cross-selling between our growing portfolio of brands.

On August 17, 2022, the Company changed its name from Grove, Inc.

to Upexi, Inc.

to better reflect the evolution of the business from a single focus to the overall product distribution of product brands owned by the Company and other select brands that align with our overall product distribution strategy.

The Company primarily conducts its business operations through the following subsidiaries:

HAVZ, LLC, d/b/a/ Steam Wholesale, a California limited liability company

SWCH, LLC, a Delaware limited liability company

Cresco Management, LLC, a California limited liability company

Trunano Labs, Inc., a Nevada corporation

Infusionz, Inc., a Nevada corporation

Upexi Holding, LLC, a Delaware limited liability company

Upexi Pet Products, LLC, a Delaware limited liability company

Infusionz LLC (“Infusionz”), a Colorado limited liability company

Grove Acquisition Subsidiary, Inc.

(“VitaMedica”), a Nevada corporation

Upexi Enterprise, LLC, a Delaware limited liability company

Upexi Property & Assets, LLC, a Delaware limited liability company

Upexi 17129 Florida, LLC, a Delaware limited liability company

Interactive Offers, LLC (“Interactive”), a Delaware limited liability company

Cygnet Online, LLC (“Cygnet”), a Delaware limited liability company, 55% owned

We operate throughout our locations in the USA with operations in Florida, California, Nevada and Colorado through our various Brands and entities.

Upexi operates from our corporate location in Clearwater, Florida where direct to consumer and Amazon sales are driven by on-site and remote teams for all brands.

The location also supports all the other locations with the accounting, corporate oversight, day to day finances and all business growth and management operating from this location.

VitaMedica operates mainly from our California location with product development, fulfillment and day to day operations from that location

Interactive offers operate from its Florida office with day to day operations supported by various off site remote positions, and majority of the development team operating out of Portugal.

Cygnet Online operates from our South Florida location with a full on-site GMP warehouse and distribution center, including day to day operations of our Amazon liquidation business team with support of remote team members.

Lucky Tail operates from our Clearwater, Florida location with sales and marketing driven by on-site and remote teams that operate the Amazon sales strategy and daily business operations

HAVZ, LLC, d/b/a/ Steam Wholesale operates manufacturing and/or distribution centers in Las Vegas, Nevada supporting our health and wellness products, including those products manufactured with hemp ingredients and our overall distribution operations.

We have continued to manage these operations with our corporate focus moving towards other larger opportunities and investments for the future.

In the United States, hemp products that are manufactured by Upexi are regulated by the U.S.

Food and Drug Administration, the Federal Trade Commission, the United States Department of Agriculture (“USDA”), and various state agencies within the individual States.

As an initial matter, the hemp products manufactured and distributed by Upexi must meet the requirements of the Agricultural Improvement Act of 2018 (the “Farm Bill”).

Under the Farm Bill, all hemp products must contain no more than 0.3% of 9-delta-tetraydrocannabidiols (“9-delta”) on a dry weight basis.

To ensure compliance with this section, Grove requires that all hemp products it manufactures and distributes to contain no more than 0.3% of all tetraydrocannabidiols not simply 9-delta.

The Farm Bill also requires that Grove only use hemp that are duly licensed under state law or pursuant to the regulations issued by the USDA.

To ensure compliance with this provision, Upexi requires all hemp products it manufactures and distributes to contain no more than 0.3% of all tetraydrocannabidiols not simply 9-delta.

The Farm Bill also requires that Upexi only use hemp [manufacturers/producers] that are duly licensed under state law or pursuant to the regulations issued by the USDA.

Consequently, the Company processes, develops, manufactures, and sells its products pursuant to the Farm Bill.

CBD products manufactured and distributed by Grove Inc.

CBD products manufactured and distributed by Upexi Inc.

must also meet the requirements of the federal Food, Drug, and Cosmetic Act (“FDCA”) and the federal Food and Drug Administration’s (the “FDA”) regulations implementing the FDCA.

While neither the FDCA nor FDA has specific provisions that related to the marketing of hemp products, the products are subject to the general adulteration and labeling provisions of the FDCA and FDA’s regulations depending on whether the product is marketed as a cosmetic, dietary supplement of food.

While neither the FDCA nor FDA has specific provisions that relate to the marketing of hemp products, the products are subject to the general adulteration and labeling provisions of the FDCA and FDA’s regulations depending on whether the product is marketed as a cosmetic, dietary supplement or food.

The permissibility of hemp products containing cannabinoids remains in a state of flux.

The FDA has issued guidance titled “FDA Regulation of Cannabis and Cannabis-Derived Products, Including Cannabidiol (CBD)” pursuant to which the FDA has taken the position that cannabidiol (“CBD”) is prohibited from use as an ingredient in a food or beverage or as a dietary ingredient in or as a dietary supplement based on several provisions of the FDCA.

In the definition of “dietary supplement” found in the FDCA at 201 201(ff), an article authorized for investigation as a new drug, antibiotic, or biological for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public, is excluded from the definition of dietary supplement.

In the definition of “dietary supplement” found in the FDCA at Section 201(ff), an article authorized for investigation as a new drug, antibiotic, or biological for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public, is excluded from the definition of dietary supplement.

A similar provision in the FDCA at 301(ll) makes it a prohibited act to introduce or deliver into commerce any food with a substance that was investigated as a new drug prior to being included in a food.

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Finally, the Federal Trade Commission is the agency that is vested with ensuring that all marketing claims for hemp products are truthful and non-misleading.

In addition, through one of our wholly owned subsidiaries, we produce primarily business-to-business CBD related trade shows in the United States and were looking to expand prior to the COVID-19 pandemic.

The trade shows have been profitable and allow Grove to market its own CBD products while also increasing the awareness of the expanding CBD market to the public.

The following is the ownership structure chart of the Company and its wholly owned subsidiaries as of June 30, 2021:

Grove is committed to providing high quality hemp products at competitive prices in retail, white label, private label and custom formulation programs.

Our white label manufacturing is the partner of choice for many of the industries brands and the list of brands and products we service continues to expand.

We have also set out to develop a world-class portfolio of our own proprietary brands that we believe will, over time, deliver higher margins and create long-term value.

We operate manufacturing and distribution centers in Las Vegas, Nevada and Denver, Colorado and expect to expand into the eastern US with a new sale and distribution center in Florida scheduled to be opened in late 2021.

While we currently do not export our products directly to Europe, in the prior 12 months, we sold flavoring products (which do not include hemp or CBD) to one end user customer that in turn distributed such product to several European countries in which it operates.

We have no immediate plans to export or distribute any products to Europe.

is focused on the manufacturing of CBD products through custom manufacturing, wholesale distribution and retail sales.

Our primary products are Gummies, Tinctures, Topical Cosmetics and Flower, with a variety of formulas of cannabinoids and other additives.

Our products use Full-spectrum CBD, Broad-spectrum and CBD isolate.

The industrial hemp market is projected to grow at a Compound Annual Growth Rate (“CAGR”) of 34% from USD 4.6 billion in 2019 to USD 26.6 billion by 2025.

The growth of this market is attributed to the increased consumption of hemp-based products.

However, the complex regulatory structure for the usage of industrial hemp in different countries is expected to hinder the market growth of industrial hemp.

The market, customers and distribution methods for hemp-based products are large and diverse.

These markets range from hemp-based consumables, cosmetics, bio plastics and textiles, to list a few.

This is an ever-evolving distribution system that today includes early adopter retailers and ecommerce entities, and product development companies that use our manufacturing capabilities to produce their internally developed consumer products for distribution.

In addition, many of our customers use our propriety products and sell them under their own labels.

There are approximately 60 outlets in mainstream commercial and retail stores that currently stock and sell our products, with the most significant concentration in Arkansas, Tennessee and Texas.

However, we believe that as awareness continues to grow for hemp-based products, such as CBD and other products derived from hemp, the market has and will continue to grow over the next several years.

Our target customers are first and foremost end consumers via internet sales, direct-to-consumer retail stores, cooperatives, affiliate sales and master distributors.

Secondarily, we are targeting developers of products that we can easily produce with our manufacturing capabilities, national and regional broker networks and major distribution companies who have preexisting relationships with major retail chain stores.

Upexi is a multi-faceted brand owner with established brands in the health, wellness, pet, beauty and other growing markets.

We operate in emerging industries with high growth trends and look to drive organic growth of our current brands.

We focus on direct to consumer and Amazon brands that are scalable and have anticipated, high industry growth trends.

Our goal is to continue to accumulate consumer data and build out a significant customer database across all industries we sell into.

The growth of our current customer database has been key to the year over year gains in sales and profits.

To drive additional growth, we have and will continue to acquire profitable Amazon and eCommerce businesses that can scale quickly and reduce costs through corporate synergies.

We utilize our in-house, SaaS programmatic ad technology to help achieve a lower cost per acquisition and accumulate consumer data for increased cross-selling between our growing portfolio of brands

The global ecommerce growth rate for 2022 is forecast at 12.2 percent, bringing global ecommerce sales worldwide to $5.542 trillion.

Online shopping trend is expected to grow 50 percent in the US in the next few years.

Ecommerce sales there are forecast to increase by a whopping 50 percent from $907.9 billion in 2022 to $1.4 trillion in 2025.

The industry saw exponential growth during the pandemic, as consumers were more apt to buy online than go into stores, but while the CAGR has dipped from 2020, the industry continues to grow steadily.

The market, customers and distribution methods for eCommerce products are large and diverse.

While Amazon remains the largest eCommerce channel, others are carving out a big chunk of the market, including Walmart, eBay, and Etsy.

More opportunities are popping up for sellers as well.

Being able to navigate multiple marketplaces is a key to our success and helps reach different demographics and consumers with specific buying behaviors.

Each of our brands creates new opportunities for us to target additional markets and consumers.

Our goal through this diverse portfolio is to create products that can be cross-sold between brands to help take advantage of our growing list of consumer data.

Our target customers are first and foremost end consumers via internet sales, however, we see growth opportunities in direct-to-consumer retail stores, cooperatives, affiliate sales and master distributors.

As we continue to develop our business, these markets may change, be re-prioritized or eliminated as management responds to consumer and regulatory developments.

Our Competitive Strengths

We attribute our success to the following Growth in CBD Manufacturing.

Growing Participant in CBD Product Manufacturing .

We are a growing North American distributor and manufacturer of premium CBD products for many of the largest CBD distributors and brands.

We manufacture most of our products in our Henderson Nevada leased facility.

We believe that loyalty to our brands continues to strengthen as we continue to expand our capabilities and product offering to existing and new customers.

Market Knowledge and Understanding .

Due to our experience and our research and development of quality CBD products as well as expansion into new and varied formulations and product categories, we believe our long-term industry relationships will continue to expand .

We continue to have a keen understanding of customer needs and desires in both our B2B and B2C customer categories.

Custom formulations and a continued commitment to new and improved products at the best possible price has created strong customer demand and a robust pipeline.

Comprehensive Product Offering.

We believe we offer a comprehensive portfolio of CBD products and maintain over 1,000 SKUs (stock keeping units) for our customers to choose from.

This broad product offering creates a “one-stop” shop for our customers and positively distinguishes us from our competitors.

In addition, we are cultivating a portfolio of well-known brands and premium products.

Trade Show Market.

Our market position in the CBD industry trade show continues to drive sales and market exposure.

Although COVID-19 led to cancelation of our November 2020 show, we believe that the latest breakthroughs with the vaccine and additional precautionary measures will enable us to conduct our next show in the late 2021 expected to take pace in Las Vegas.

The brand loyalty and the exposure our show customers receive with premium booth placements has driven a large demand and we anticipate continuing the growth of the tradeshow business in fiscal year 2022.

We attribute our success to our diverse portfolio of consumer products.

Diversification of Product Offerings.

As an aggregator, our research and development team carefully tracks the growth rates for various consumer products, which serves as the first means of identifying profitable brands that have significant opportunities for scale.

While many companies continue to spend on growth at all costs, we have spent to increase our profitability and build a foundation for profits in the toughest of times.

We remained patient when other aggregators were over-extending their means which has provided us for better opportunities at more favorable valuations.

Advertising Technology .

We understand that advertising and consumer data is the key to growth when it comes to any eCommerce business.

Our investment in such technology helps lowering our advertising costs, while providing a revenue stream from others who we outsource this programmatic SAAS to.

This ownership of data allows us to help cross-sell any brand we acquire or launch.

Logistical Expertise.

Our executive team comes from a background in logistics, with CEO, Allan Marshall, the founder of XPO Logistics (formerly known as Segmentz, Inc.).

With increased shipping costs affecting online retailers, our strength is understanding this and finding ways to lower or costs and overhead, thus increasing profit margins on all of our products.

Liquidation Markets.

Resellers on and off Amazon represent a significant part of our business, which allows us to use our capital to buy in bulk with quick resale opportunities, whether it be direct Amazon listings or through partnerships with the likes of Walmart, BJ’s, Costco, Sam’s Club, etc.

We are able to expand our network, build new relationships, and sell branded products without added cost of advertising.

Retail Partnerships.

While eCommerce is our direct line of business, we have grown and continue to expand our relationships with big box retailers in order to sell branded products as resellers or to place our in-house brands in those stores.

With longstanding accounts that we’ve taken ownership of through acquisitions, we have grown our network and have untapped additional revenue streams.

Professionalism and Entrepreneurial Culture .

Our professionalism and entrepreneurial culture foster highly dedicated employees who provide our customers with unsurpassed customer service.

We continue to invest in our talent by providing every sales representative with an extensive and ongoing education and have successfully developed programs that provide comprehensive product knowledge and the tools needed to have a unique understanding of our customers’ personalities and decision-making processes.

Relationships and Superior Service first.

We aim to be the premier partner for our customers and suppliers.

We strive to offer unsurpassed solutions to our customers and also provide comprehensive product offering, proprietary industry formulations and development.

We deliver products to our customers in a precise, safe and timely manner with complementary support from our dedicated sales and service teams.

Our industry knowledge, market reach and resources allow us to establish trusted professional relationships with many of our product suppliers.

Our expanding product lines continue to drive demand for our raw materials, the continuing increases have allowed us to negotiate what we believe to be the best possible pricing for our customers, while maintaining a quality growing relationship with the suppliers.

Experienced and Proven Management Team Driving Growth through Organic and Accretive Acquisition Oppor tunities.

We continue to invest in our talent by providing every employee with an extensive and ongoing education and have successfully developed programs that provide comprehensive product knowledge and the tools needed to have a unique understanding of our customers’ personalities and decision-making processes.

Experienced and Proven Management Team Driving Growth through Organic and Accretive Acquisition Opportunities.

We believe our management team has extensive experience in the industry.

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Our Growth Strategy

Our growth will continue to be focused on the vertical integration and growth of all segments of the CBD space:

CBD Product Research and Development .

Our team provides custom products and proprietary formulations for some of the most popular industry items.

We also continue to expand product offerings with the development and launch of new items on a regular basis.

Custom formulations for outside brands build long term commitments from our customers.

Our growth will focus on the expansion of our brand portfolio through organic growth and strategic acquisitions.

Direct-to-Consumer Expansion.

Our direct-to-consumer business is expected to be our growth driver for the next several years.

The lower cost of our in-house research, development and manufacturing give us a measurable cost and production advantage, which we believe to be the key to our future success, as margins in the industry compress and are expected to continue to compress over the next several years.

CBD.io Market Place and Trade Show.

Our launch of the CBD.io market platform in 2021 is expected to be a driver for growth into 2022 and a driver of retention for the brands that manufacture for us and list acceptable products on the platform.

This high margin business should be a driver for future growth in all segments of the business.

Dependable White/Private Label Manufacturing Service .

Our experience and dedicated team continue to refine and expand our white label program and has become a manufacturer to many regional and nationwide brands.

Our operations in this segment have doubled over 2020, which we attribute to our commitment to high quality and on time manufacturing.

Our market position in the CBD industry trade show continues to drive sales and market exposure.

Although COVID-19 led to cancelation of our November 2020 show, we believe that the latest breakthroughs with the vaccine and additional safety measures will enable us to conduct our next show in late 2021 expected to take place in Las Vegas.

The brand loyalty and the exposure our show customers receive with premium booth placements has driven a large demand and we anticipate expansion of shows and venues in fiscal year 2022.

Core Brand Distribution.

The nationwide rollout of our in-house brands will be another substantial driver of growth for the foreseeable future, we began expansion of our sales and marketing teams into the beginning of 2021 and will look to add talented people in all areas of the business to push current and future growth opportunities .

Acquisition Strategy .

We have completed two acquisitions through June 30, 2021 with the consolidation and synergies expected to be completed October 2021.

In addition, we have acquired VitaMedica Corporation on August 1, 2021 and expect distribution and administrative functions to be completed prior to December 31, 2021.

We will continue to search for target acquisitions that meet our acquisition criteria and are accretive to our business.

Our platform was built from the ground up to promote acquisitions expansion as a driver of substantial growth as the industry matures and margins compress.

Our relationships and partners in the trade show and manufacturing business will be a key source for possible candidates.

Our criteria will be stringent, and we will look at any and all opportunities that allow us to use our low-cost manufacturing to drive higher margins in acquisition candidates.

Small regional brands with distribution would benefit greatly in both low-cost manufacturing and quality research and development of new and current product offerings available from our inhouse brands and products.

As margins compress in the industry, the low-cost manufacturing capabilities will be a key component to higher profits leading to consolidation which we intend to capitalize on in the coming years.

There is vigorous competition within each market where our CBD products are sold.

Brand recognition, quality, performance, availability, and price are some of the factors that impact consumers’ choices among competing products and brands.

Advertising, promotion, merchandising and the pace and timing of new product introductions also have a significant impact on consumers’ buying decisions.

Our direct-to-consumer business is expected to be our growth driver for the next several years, driven by acquisitions of profitable Amazon and eCommerce businesses.

This allows us to tap into multiple markets and helps us acquire proven brands that are at a stage in their lifecycle when they lack the resources (capital and personnel) to grow rapidly on their own.

Our model helps inject those resources into the business in hopes to scale the business efficiently.

Resellers & liquidators.

While direct-to-consumer brands represent a major part of our growth, our company has realized the potential of acquiring profitable resellers who sell on/to Amazon, Walmart, Costco, BJ’s, Sam’s Club, and more.

Our first acquisition in the space, Cygnet Online, sells branded OTC products on Amazon.

A letter of intent was signed on August 2, 2022 for the acquisition of E-Core, Inc.

and its subsidiaries to further expand this segment of our business.

We believe this is a lucrative industry that also helps establish strong, big box retail partnerships.

Talent acquisition.

A large part of our acquisition process is to not only evaluate the brand/product offerings, but to understand the team that has been responsible for its success.

In a tough market for hiring, this has proven to be a strategic method for bringing on talent.

We not only get a great brand, but look to retain the personnel, often the heartbeat of said brand, give them resources, and even utilize them for other brands that we have launched internally or acquired.

We strongly believe that continued success relies on a growing team of experts across various industries.

Advertising technology.

With online sales increasing, so has the cost of advertising.

Our in-house, programmatic advertising technology, Interactive Offers, not only acts as a revenue stream for our business, but provides us with endless research, consumer data, and allows us to achieve lower advertising costs for our brands.

The business has a growing list of publishers and advertisers who also utilize our technology to monetize their data, achieve better CPMs, and even increase their average order values.

International expansion.

Our primary focus has been on the US eCommerce market which, as mentioned, is forecasted to grow stronger than others.

However, with recently acquired brands and their presence in international markets, we expect nearly all of our products to be offered worldwide over the next few years.

Acquiring Aggregators.

The aggregation craze took off in 2019 to 2020, but many found themselves overpaying for brands and not being able to support the growth they had forecasted.

Recently, these aggregators have been looking for funding and/or selling their assets.

We seek to take advantage of this opportunity to bring on additional brands and talent that, for better or worse, were overwhelmed and unprepared.

There is heavy competition in the aggregation market, but each company seems to be trying to carve their own niche in the space.

We compete against several national and international companies, most of which have substantially greater resources than we do.

Our principal competitors consist of large, well-known, multinational manufacturers and marketers of CBD products, most of which market and sell their products under multiple brand names.

They include, among others, 3CHI, Spring Creek Labs, Kazmira LLC, Global Cannabinoids, Triangle Trading Company, Harbor City Hemp and many others.

We also face competition from several independent brands, as well as some retailers that have developed their own CBD brands.

Certain of our competitors also have ownership interests in retailers that are customers of ours.

While we expect we will seek to address the aspirations of our customers at attainable price points which we believe may give us a competitive advantage, there are no assurances we will ever be able to effectively compete within this sector.

Our principal competitors consist of large, well-known and funded, private companies.

Our goal is never to compete against these aggregators, but to do our own research, focus on profitability, and grow efficiently, rather than overextend ourselves and pay up for valuations that don’t make sense.

Government Regulation

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Unless Congress specifically enacts laws preempting the state regulations of hemp products, we will continue to be subject not only to federal law but various state laws.

Presently, Grove and only distributes hemp-products in states that it is legal to do so.

Presently, Upexi and only distributes hemp-products in states that it is legal to do so.

Changes in the state laws and regulations could again either positively or adversely affect our ability to sell products in those states.

The Company has 122 full-time employees working out of its headquarters in Henderson, Las Vegas, its Denver Colorado manufacturing facility, Los Angeles California or individuals’ home-based offices.

The Company has 130 full-time employees working out of its headquarters in Clearwater Florida, its Henderson, Nevada, manufacturing facility, its offices and distribution warehouses in Southern, Florida and Los Angeles California or individuals’ home-based offices.

WHERE YOU CAN FIND MORE INFORMATION

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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