What changed in this filing

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Item 1. Business

2024-12-16 compared with 2023-10-03 · 79 added, 154 removed, 96 unchanged (71% of the section changed)

General Overview

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

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”) is a Nevada corporation with fifteen active subsidiaries.

The Company’s fifteen active subsidiaries are as follows:

As used in this annual report and unless otherwise indicated, the terms “we”, “us”, “our”, “Upexi”, and the “Company” mean Upexi, Inc., a Nevada corporation formed in 2018.

The Company has eleven active subsidiaries, which include:

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

Gummy Labs, LLC, a Delaware limited liability company

MW Products, Inc., a Nevada corporation

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Upexi Pet Products, LLC, a Delaware limited liability company

VitaMedica, Inc, a Nevada corporation

Upexi Enterprise, LLC, a Delaware limited liability company

Upexi Distribution LLC, a Delaware limited liability company

Upexi Distribution Management LLC, a Delaware limited liability company

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

Upexi 17129 Florida, LLC, a Delaware limited liability company

Cygnet Online, LLC (“Cygnet”), a Delaware limited liability company (100% owned as of September 1, 2023)

The following subsidiaries had no activity during the years ended June 30, 2024 and 2023:

Upexi CP, LLC, a Delaware limited liability company

Upexi CP / Canada Inc., a Canadian corporation

Prax Products, LLC, a Florida limited liability company

Upexi Development and Marketing, LLC., a Delaware limited liability company

Trunano Labs, Inc., a Nevada corporation

The following subsidiaries were divested during the years ended June 30, 2024 and 2023:

VitaMedica, Inc.

a Nevada corporation

E-Core Technology, Inc.

a Florida corporation

Upexi Distribution Management 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 (100% owned as of September 1, 2023)

Business Acquisitions

On August 1, 2021, the Company completed an asset purchase agreement with Grove Acquisition Subsidiary, Inc., a Nevada corporation and wholly owned subsidiary of the Company, and the members of VitaMedica Corporation, a California corporation, to purchase all the assets and assume certain liabilities of VitaMedica.

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.

On September 1, 2023, the Company purchased the remaining 45% of Cygnet Online, LLC for $500,000 cash, 90,909 shares of the Company’s common stock and a $300,000 cash payment due on September 1, 2024.

On August 12, 2022, the Company completed an asset purchase agreement with GA Solutions, LLC, a Delaware limited liability company (“LuckyTail”), pursuant to which the Company acquired substantially all assets of LuckyTail.

LuckyTail sells pet nail grinders and other pet products through various sales channels including some international sales channels.

On October 31, 2022, the Company and its wholly owned subsidiary Upexi Enterprise, LLC, completed a securities purchase agreement to purchase the outstanding stock of E-Core Technology, Inc.

d/b/a New England Technology, Inc.

(“E-Core”), a Florida corporation.

E-Core distributes non-owned branded products to national retail distributors and has branded products in the toy industry that E-Core sells direct to consumers through online sales channels and to national retail distributors.

Business Divested

On October 26, 2022, the Company executed a membership interest purchase agreement to sell 100% of the membership interests of Infusionz LLC, a Colorado limited liability company (“Infusionz”), included in the sale was all rights to Infusionz brands and the manufacturing of certain private label business.

Infusionz was originally purchased by the Company in July of 2020.

The divestiture of Infusionz and related private label manufacturing represents a strategic shift in our operations and will allow us to become a predominantly product distribution focused company for both our Company owned brands and non-owned brands.

Accordingly, the results of the business were classified as discontinued operations in our condensed statements of operations and excluded from both continuing operations and segment results for all periods presented.

The Company has transferred Infusionz LLC corporate ownership and the information necessary to operate the business.

On June 30, 2023, operations were still not transitioned, and the Buyer still had not cured the defaults dating back to December of 2022.

The Company has notified the Buyer of the defaults and has notified the Buyer that all obligations and undertakings to the Buyer are terminated.

On August 31, 2023, Upexi, Inc.

(the “Company”) entered into an Equity Interest Purchase Agreement (“EIPA”) pursuant to which the Company sold one hundred percent (100%) of the issued and outstanding equity (the “Interests”) of its wholly owned subsidiary Interactive Offers, LLC (“Interactive”) to Amplifyir Inc.

(the “Buyer”).

The purchase price for the Interests was One Million Two Hundred Fifty Thousand Dollars ($1,250,000), subject to certain customary post-closing adjustments.

In addition, the Buyer is obligated to pay the Company two-and one-half percent (2.5%) of certain advertising revenues of Interactive for a two-year period post-closing.

Accordingly, the results of the business were classified as discontinued operations in our statements of operations and excluded from both continuing operations and segment results for all periods presented.

Infusionz LLC, a Colorado limited liability company

Interactive Offers, LLC, a Delaware limited liability company

In addition, the Company has six wholly owned subsidiaries that had no activity during the years ended June 30, 2024 and 2023.

All of the entities were dissolved or canceled as of June 30, 2024.

Steam Distribution, LLC, a California limited liability company

One Hit Wonder, Inc., a California corporation

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

Vape Estate, Inc., a Nevada Corporation

SWCH, LLC, a Delaware limited liability company

Cresco Management, LLC, a California limited liability company

Emerging Growth Company Status

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DESCRIPTION OF BUSINESS

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.

(the “Company”) is a Nevada corporation and operates through fifteen active subsidiaries in the digital first brand business, Amazon and wholesale distribution, and customer insights businesses.

Upexi specializes in acquiring, building, and growing digital first, omnichannel brands in high growth, high margin sectors such as health, wellness, pet, and beauty.

Leveraging our in-house expertise and technology, we scale our brands with a consumer centric approach, tapping into our in-house core capabilities and market insights across our portfolio to foster innovation and accessibility.

Our growing consumer database has been key to the year-over-year gains in sales and profits.

Further bolstering growth, we have and will continue to acquire profitable Amazon and eCommerce businesses that can be scaled quickly and profitably while reducing costs through corporate synergies.

Upexi’s Enterprise LLC operates two wholly subsidiaries;

Cygnet and E-Core.

Cygnet primarily sells products through Amazon with a focus on the wellness industry, while E-Core has historically focused on product liquidation of consumer electronics and luxury goods.

Tytan Tiles is a growing brand in the children’s STEM toy category.

The Brand is available in Walmart’s 3,900 stores, Sam’s Club, BJ’s, Target, and other select box retail locations.

The brand also holds a Disney License for new children sets being sold into Amazon and DTC year end 2023.

VitaMedica’s mission is to empower wellness journeys through science-based holistic natural health solutions.

Through The Science of Natural Health® we believe in a world where everyone can take ownership of their health, happiness, and vitality.

For over 25 years, VitaMedica clinician-originated nutraceuticals and cosmeceuticals have been recommended by thousands of doctors to serve millions of patients.

VitaMedica’s sales model includes wholesale distribution through surgeons and med spas and direct to consumers through eCommerce and marketplaces.

Upexi is a brand owner specializing in the development, manufacturing, and distribution of consumer products.

We reach consumers through our direct-to-consumer network, wholesale partnerships, and major third-party platforms like Amazon.

LuckyTail, where at-home care meets innovation.

We connect pet owners with the products they need to simplify and improve at-home wellness and grooming care for their beloved pets, empowering pet parents to provide their cherished furry companions with the pampering they deserve in the comfort of their own space.

Lucky tails products consist of its flagship nail grinder and healthy all-natural pet supplements.

LuckyTail products consist of its flagship nail grinder and healthy all-natural pet supplements

At PRAX, we fuel modern go-getters to achieve their best selves through innovative energy solutions.

Powered by paraxanthine—an advanced alternative to caffeine, our mission is to support your hustle and power your ambitions.

Energize better, perform smarter, fuel different.

We are launching this new brand in October of 2024 with several innovative products to follow.

At Cure Mushrooms, we have harnessed the extraordinary benefits of nature’s most powerful superfood:

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From fortifying your immune system, to sharpening cognition, to combating the rigors of daily stress, our products are designed to deliver full-body wellness and convenience with every serving.

Moonwlkr Health is on a mission to elevate wellness through flavorful innovation.

We are committed to providing innovative and nutritious gummy supplements that effortlessly integrate into your daily routine.

Our formulations boast quality ingredients you can trust, paired with flavors that delight and inspire.

With Moonwlkr Health, nourishing your body has never been so simple, delicious, and enjoyable.

Join us in embracing a lifestyle of vitality, where wellness meets indulgence.

The Company’s fifteen 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

MW Products, Inc., a Nevada corporation

Upexi Holding, LLC, a Delaware limited liability company

Upexi Pet Products, LLC, a Delaware limited liability company

VitaMedica, Inc, 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

E-Core Technology, Inc.

At Moonwlkr, we craft cannabinoid experiences that take you beyond the ordinary.

By combining award-winning natural flavors and one-of-a-kind blends, we invite you to feel the thrill of the unknown, the calm of weightless relaxation, or the anticipation of a new adventure.

At Gumi Labs we manufacture gummies and other products supporting our health and wellness products, including those products manufactured with hemp ingredients.

Our manufacturing facility has been moved to Florida and is at full capacity as of August of 2024.

At Upexi Distribution, we manage the warehousing and logistic needs of the Company and provide storage, consolidation, assembly, Amazon preparation, distribution and fulfilment services to our brands and our manufacturing operation.

The Company operates manufacturing and/or distribution centers in Nevada supporting health and wellness products, including those products manufactured with hemp ingredients and our overall distribution operations.

July 2020 - the Company purchased Infusionz LLC.

Infusionz was a similar business in the manufacturing and distribution of products and owned certain product brands that we believe could be expanded through the merger.

June 2021 - Upexi Inc.

became a listed company on the NASDAQ stock exchange.

August 2021 - The Company purchased the assets of VitaMedica Corporation, a California corporation (VitaMedica).

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

October 2021 - The Company purchased Interactive Offers, LLC, a Delaware limited liability company.

Interactive provides programmatic advertising with its SAAS platform which allows for programmatic advertisement placement automatically on any partners’ sites from a simple dashboard.

April 2022 – The Company purchased 55% of Cygnet Online, LLC, a Delaware limited liability company (“Cygnet”).

Cygnet operates a warehouse and distribution center for the management of day-to-day operations for product liquidation through Amazon and other on-line resellers.

August 2022 – The Company purchased the assets to the brand LuckyTail.

The acquisition of LuckyTail provided the Company with a foothold in the pet care industry and a strong presence on Amazon and its eCommerce store, offering nutritional and grooming products domestically and internationally.

October 2022 - The Company purchased E-Core Technology, Inc.

d/b/a New England Technology, Inc.

(“E-Core”), a Florida corporation.

October 2022 – The Company sold all rights to Infusionz brands and the manufacturing of certain private label business.

Infusionz was originally purchased by the Company in July of 2020.

July 2023 – The Company notified the Buyer of the Infusionz brands and the manufacturing business of the defaults and notified the Buyer that all obligations and undertakings to the Buyer are terminated.

The Company started manufacturing again for brands owned by the Company to ensure there was no interruption to the supply chain of the products.

August 2023 – The Company purchased the remaining ownership of Cygnet.

August 2023 – The Company sold one hundred percent (100%) of the issued and outstanding equity of its wholly owned subsidiary Interactive Offers, LLC.

May 2024 – The Company sold its equity interest in the wholly owned subsidiary VitaMedica, a Nevada corporation.

June 2024 – The Company sold its equity interest in the wholly owned subsidiary E-Core Technology, Inc.

d/b/a New England Technology, Inc.

a Florida corporation.

Upexi Distribution Management LLC, a Delaware limited liability company

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

Cygnet Online, LLC, a Delaware limited liability company, 55% owned (100% owned as of September 1, 2023)

In addition, the Company has four wholly owned subsidiaries that had no activity during the year ended June 30, 2023.

Steam Distribution, LLC, a California limited liability company

One Hit Wonder, Inc., a California corporation

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

Vape Estate, Inc., a Nevada Corporation

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.

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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.

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 trends are expected to grow 50 percent in the U.S.

in the next few years.

eCommerce sales 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.

Upexi is a brand owner specializing in the development, manufacturing, and distribution of consumer products.

We reach consumers through our direct-to-consumer network, wholesale partnerships, and major third-party platforms like Amazon.

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

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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;

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Our Competitive Strengths

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 lower 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.

We attribute our success to our consumer products by controlling each phase of the process from manufacturing to order fulfillment.

As the manufacturer of our primary products, we are able to control our costs and improve profitability at each step of the process, starting with the development of new products.

Our products take priority in manufacturing give us a higher inventory turnover rate and accelerates the timeline for new product launches.

In addition, we are able to adjust to market demands and change production schedules to ensure we maintain optimized inventory levels.

Our primary sales channel is our ecommerce site and our marketing team is led by an expert in the online direct to consumer sales as she has been with the brand since its inception.

We have the ability to direct product manufacturing and increase sales with special promotions and product variations with little or no delay in bringing the product to market.

Our direct to consumer focus reduces the overall supply costs as we do not have retail outlets or maintain distribution networks for small retail operations.

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 our 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.

As a result, we are able to expand our network, build new relationships, and sell branded products without the 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 have 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 fosters highly dedicated employees who provide our customers with unsurpassed customer service.

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.

Our senior management team brings experience in accounting, mergers and acquisitions, financial services, consumer packaged goods, retail operations and third-party logistics.

Our Growth Strategy

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

Our growth will focus on the expansion of our brands portfolio through organic growth and optimization of our supply chain.

Direct-to-Consumer expansion.

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.

Our direct-to-consumer business is expected to be our growth driver for the next several years with additional brands and products.

Talent acquisition.

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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 U.S.

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 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.

There is heavy competition in our products and we are able to carve out certain niche markets within the industry and there are few competitors that control their manufacturing to distribution as we do.

Our goal is to compete through our product delivery and introduction of new products that we manufacture and deliver directly to the consumer giving us an advantage on our competitors.

We will focus on profitability, and grow efficiently, without the requirement of additional capital.

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

Presently, Upexi 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 95 full-time employees working out of its headquarters in Tampa Florida, its Henderson, Nevada, manufacturing facility, its offices and distribution warehouses in Southern Florida or individuals’ home-based offices.

The Company has 64 full-time employees working out of its headquarters in Tampa, Florida, its Odessa, Florida, manufacturing facility, its distribution warehouse in Tampa Florida 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