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.
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The Company primarily conducts its business operations through the following subsidiaries: Upexi, Inc. (the \u201cCompany\u201d) 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 55% owned.\u00a0 The Company\u2019s fourteen active subsidiaries are as follows:
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\u00a0 | \u2610 | HAVZ, LLC, d/b/a/ Steam Wholesale, a California limited liability company | ||
\u00a0 | \u00a0 | o | SWCH, LLC, a Delaware limited liability company | |
\u00a0 | \u00a0 | o | Cresco Management, LLC, a California limited liability company | |
\u00a0 | \u2610\u00a0 | Trunano Labs, Inc., a Nevada corporation | ||
\u00a0 | \u2610 | MW Products, Inc., a Nevada corporation | ||
\u00a0 | \u2610 | Upexi Holding, LLC, a Delaware limited liability company | ||
\u00a0 | \u00a0 | o | Upexi Pet Products, LLC, a Delaware limited liability company | |
\u00a0 | \u2610 | VitaMedica, Inc, a Nevada corporation | ||
\u00a0 | \u2610 | Upexi Enterprise, LLC, a Delaware limited liability company | ||
\u00a0 | \u00a0 | o | Upexi Property & Assets, LLC, a Delaware limited liability company | |
\u00a0 | \u00a0 | \u00a0 | \u25a0 | Upexi 17129 Florida, LLC, a Delaware limited liability company |
\u00a0 | \u00a0 | o | E-Core Technology, Inc. | |
\u00a0 | \u00a0 | o | Upexi Distribution Management LLC, a Delaware limited liability company | |
\u00a0 | \u2610 | Interactive Offers, LLC (\u201cInteractive\u201d), a Delaware limited liability company | ||
\u00a0 | \u2610 | Cygnet Online, LLC (\u201cCygnet\u201d), a Delaware limited liability company, 55% owned. |
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In addition, the Company has four wholly owned subsidiaries that had no activity during the year ended June 30, 2023 or for the year ended June 30, 2022.
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\u00a0 | \u00b7 | Steam Distribution, LLC, a California limited liability company |
\u00a0 | \u00b7 | One Hit Wonder, Inc., a California corporation |
\u00a0 | \u00b7 | One Hit Wonder Holdings, LLC, a California limited liability company |
\u00a0 | \u00b7 | Vape Estate, Inc., a Nevada Corporation |
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Our products are distributed in the United States of America and internationally through multiple entities and managed through our locations in Florida, California, and Nevada.
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Upexi operates from our corporate location in Tampa, Florida where direct to consumer and Amazon sales are driven by on-site and remote teams for all brands. The Tampa location also supports all the other locations with accounting, corporate oversight, day-to-day finances, business development and operational management operating from this location.
VitaMedica operates mainly from our California location with product development and day to day management with the primary fulfillment center located in Tampa Florida.\u00a0
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Interactive Offers is operated from its Florida office with day-to-day operations supported by various off site remote positions, and majority of the development team operating through out of Portugal.
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Cygnet Online operates from our South Florida location with a full on-site GMP warehouse and distribution center, day-to-day operations of our Amazon liquidation business team from this location with support of remote team members.
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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.
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HAVZ, LLC, d/b/a/ Steam Wholesale operates manufacturing and/or distribution centers in Henderson, 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 corporate focus on larger opportunities that have warranted the majority of corporate focus and investments for the future.
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Business Acquisitions
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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.
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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 the outstanding membership interest of Interactive Offers, LLC, a Delaware limited liability company.
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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.\u00a0 On September 1, 2023 the Company purchased the remaining 45% of Cygnet Online, LLC for $500,000 cash, 90,909 shares of the Company\u2019s common stock and a $300,000 cash payment due on September 1, 2024.\u00a0\u00a0
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On August 12, 2022, the Company completed an asset purchase agreement with GA Solutions, LLC, a Delaware limited liability company (\u201cLuckyTail\u201d), 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.\u00a0
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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. (\u201cE-Core\u201d), a\u00a0Florida\u00a0corporation.\u00a0 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.\u00a0
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Business Divested
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On October 26, 2022, the Company executed a membership interest purchase agreement to sell\u00a0100% of the membership interests of Infusionz LLC, a Colorado limited liability company (\u201cInfusionz\u201d), included in the sale was all rights to Infusionz brands and the manufacturing of certain private label business.\u00a0\u00a0 Infusionz was originally purchased by the Company in July of 2020.\u00a0 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.
On August 31, 2023, Upexi, Inc. (the \u201cCompany\u201d) entered into an Equity Interest Purchase Agreement (\u201cEIPA\u201d) pursuant to which the Company sold one hundred percent (100%) of the issued and outstanding equity (the \u201cInterests\u201d) of its wholly owned subsidiary Interactive Offers, LLC (\u201cInteractive\u201d) to Amplifyir Inc. (the \u201cBuyer\u201d).\u00a0 The purchase price for the Interests was One Million Two Hundred Fifty Thousand Dollars ($1,250,000), subject to certain customary post-closing adjustments.\u00a0 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.\u00a0 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.
"}]},{"name":"rpt:f-478","factDimensions":{"xbrl:concept":"us-gaap:InvestmentsAndCash","xbrl:period":"2022-04-02T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD","us-gaap:PlanNameAxis":"upxi:SecuritiesPurchaseAgreementMember"},"factValues":[{"value":"500000","decimals":0}]},{"name":"rpt:f-479","factDimensions":{"xbrl:concept":"us-gaap:CommonStockSharesIssued","xbrl:period":"2022-04-02T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"xbrla:shares","us-gaap:PlanNameAxis":"upxi:SecuritiesPurchaseAgreementMember"},"factValues":[{"value":"90909","decimals":0}]},{"name":"rpt:f-480","factDimensions":{"xbrl:concept":"us-gaap:InvestmentsAndCash","xbrl:period":"2022-04-02T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"300000","decimals":0}]},{"name":"rpt:f-481","factDimensions":{"xbrl:concept":"us-gaap:SupplementalDeferredPurchasePrice","xbrl:period":"2023-08-01T00:00:00/2023-09-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"1250000","decimals":0}]},{"name":"rpt:f-482","factDimensions":{"xbrl:concept":"upxi:ObligatedToPay","xbrl:period":"2023-08-01T00:00:00/2023-09-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"0.025"}]},{"name":"rpt:f-483","factDimensions":{"xbrl:concept":"us-gaap:SignificantAccountingPoliciesTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Note 2. Significant Accounting Policies
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The significant accounting policies followed are:
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Use of Estimates\u00a0-\u00a0The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Significant estimates underlying the Company\u2019s reported financial position and results of operations include the allowance for doubtful accounts, useful lives of property and equipment, impairment of long-lived assets, inventory valuation, fair value of stock-based compensation and valuation allowance on deferred tax assets.
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Cash and Cash Equivalents\u00a0-\u00a0The Company considers all highly liquid investment instruments with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances.
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Accounts Receivable\u00a0-\u00a0The Company regularly reviews accounts receivable for any bad debts based on an analysis of the Company\u2019s collection experience, customer creditworthiness and current economic trends. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on management\u2019s review of accounts receivable, the Company recorded $65,500 and $57,000 as allowance for doubtful accounts at June 30, 2023 and 2022, respectively. The Company had no bad debt expenses and $131,968 for the years ended June 30, 2023 and 2022, respectively. These amounts were direct write-offs against the specific accounts receivable.
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Inventory\u00a0-\u00a0Inventory consists of finished goods and is stated at the lower of cost or net realizable value, cost is determined by the weighted average moving cost inventory method. Net realizable value is determined, with appropriate consideration given to obsolescence, excessive levels, deterioration, and other factors.\u00a0 On June 30, 2023 the Company had $11,557,128 of finished goods inventory and at June 30, 2022 had $4,725,685 of finished goods inventory with an inventory reserve of $475,000 and $50,000, respectively.
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Property and Equipment\u00a0-\u00a0Property and equipment is recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from 3 to 20 years. Leasehold improvements are amortized over the shorter of their estimated useful lives of 5 years or the related lease term. Gains and losses upon disposition are reflected in the Statements of Operations in the period of disposition. Maintenance and repair expenditures are charged to expense as incurred. The Company disposed of some equipment during 2023 and 2022 which resulted in gains on the sales as shown in the accompanying Statements of Operations.
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Business Combinations\u00a0- The Company accounts for its business combinations using the acquisition method of accounting. The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities assumed by the Company to the seller\u2019s cash consideration and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. The excess of (i) the total costs of acquisition over (ii) the fair value of the identifiable net assets of the acquiree is recorded as identifiable intangible assets and goodwill.
Goodwill - The Company evaluates its goodwill for possible impairment, simplifying the test for goodwill impairment at least annually and\u00a0when one or more triggering events or circumstances indicate that the goodwill might be impaired. Under this guidance, annual or interim goodwill impairment testing is performed by comparing the estimated fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit\u2019s fair value, not to exceed the carrying value of goodwill.
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The Company performed its annual test as of June 30, 2023, and 2022, respectively. There was no impairment charge identified in connection with the annual goodwill impairment test at June 30, 2022.\u00a0 It was determined by management that the goodwill related to Interactive Offers was completely impaired at June 30, 2023 based on the sale of the business at September 1, 2023.\u00a0 An impairment of goodwill in the amount of $2,889,158 was recorded at June 30, 2023 eliminating all of the goodwill related to Interactive Offers.
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Impairment of Long-lived Assets\u00a0-\u00a0Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company estimates the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether or not the asset values are recoverable.
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The Company did not recognize impairment on its long-lived assets during the year ended June 30, 2022.\u00a0 \u00a0The Company did recognize an impairment of $857,143 on the assets held for sale, related to the Interactive Offers long-lived assets during the years ended June 30, 2023, leaving $716,944 of intangible assets related to Interactive Offers and classified as assets available for sale.\u00a0\u00a0
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Revenue Recognition\u00a0-\u00a0The Company analyzes its contracts and purchase orders to assess whether revenue is properly recognized. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, whether for goods and services or licensing, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company acts as principal in its revenue transactions as the Company is the primary obligor in the transactions. Generally, the Company recognizes revenue for its products when ownership is transferred to the customer, provided no significant obligations remain and collection is probable.
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Product Revenue\u00a0-\u00a0Most of the Company\u2019s revenue contracts are from domestic sales and represent a single performance obligation related to the fulfillment of customer orders for the purchase of its products. Net sales reflect the transaction prices for these contracts based on the Company\u2019s selling list price, which is then reduced by estimated costs for trade promotional programs, consumer incentives, and allowances and discounts used to incentivize sales growth and build brand awareness.
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The Company recognizes revenue at the point in time that control of the ordered product is transferred to the customer, which is upon shipment to the customer or other customer-designated delivery point. Taxes collected from customers that are remitted to governmental agencies are accounted for on a net basis and not included as revenue.
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The Company does not accept sales returns from wholesale customers, as the products are pre-approved prior to production and shipment. E-Commerce product returns must be completed within 45 days of the date of purchase. The Company does not accrue estimated sales returns as historical sales returns have been minimal. The Company records deferred revenues when cash payments are received or due in advance of performance, including amounts which are refundable. Substantially all the deferred revenue as of June 30, 2022, was recognized as revenue in the year ended June 30, 2023.
Shipping and handling fees billed to customers are included in revenue, as this revenue is not directly related to the distribution costs associated with an order. Shipping fees associated with freight are generally included in distribution costs.
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Advertising\u00a0-\u00a0The Company supports its products with advertising to build brand awareness of the Company\u2019s various products in addition to other marketing programs executed by the Company\u2019s marketing team. The Company believes continual investment in advertising is critical to the development and sale of its branded products. Advertising costs of $7,978,607 and $3,225,256 were expensed as incurred during the years ended June 30, 2023, and 2022, respectively.\u00a0
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Stock Based Compensation\u00a0- The Company recognizes all share-based payments to employees, including grants of employee stock options, as compensation expense in the financial statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period) or immediately if the share-based payments vest immediately.
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Non-employee Stock-based Payments\u00a0-\u00a0The Company\u2019s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 2018-07, which simplifies the accounting for non-employee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor\u2019s own operations by issuing share-based payment awards. Stock-based payments related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor\u2019s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
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Fair Value Measurements\u00a0- The Company accounts for financial instruments in accordance with FASB Accounting Standards Codification (ASC) 820 \u201cFair value Measurement and Disclosures\u201d (ASC 820). ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity\u2019s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).
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The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
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\u00a0 | \u00b7 | Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
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\u00a0 | \u00b7 | Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
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\u00a0 | \u00b7 | Level 3 - Inputs that are both significant to the fair value measurement and unobservable. |
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The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, deferred revenue and debt are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
Leases\u00a0-\u00a0The Company determines if a contract contains a lease at inception. GAAP requires that the Company\u2019s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option will result in an economic penalty. All of the Company\u2019s real estate leases are classified as operating leases.
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Most real estate leases include one or more options to renew, with renewal terms that generally can extend the lease term for an additional two years. The exercise of lease renewal options is at the Company\u2019s discretion. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants.
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The Company\u2019s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment.
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Income Taxes\u00a0-\u00a0Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
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The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.
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The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, \u201cIncome Taxes.\u201d Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity\u2019s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
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The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date.\u00a0
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ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise\u2019s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. There are no material uncertain tax positions at June 30, 2023.
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On December 22, 2017, the U.S. government enacted the Tax Act, which made significant changes to the Internal Revenue Code of 1986, as amended, including, but not limited to, reducing the U.S. corporate statutory tax rate and the net operating loss incurred after December 31, 2017 can be carried forward indefinitely and the two year net operating loss carried back was eliminated (prohibited).
Earnings (loss) per Share\u00a0- Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted income (loss) per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and upon the conversion of notes. For the year ended, the dilutive common shares are as follows:
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\u00a0 | \u00a0 | June 30, | \u00a0 | \u00a0 | June 30, | \u00a0 | ||
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Stock options | \u00a0 | \u00a0 | 4,839,278 | \u00a0 | \u00a0 | \u00a0 | 4,279,888 | \u00a0 |
Warrants | \u00a0 | \u00a0 | 220,297 | \u00a0 | \u00a0 | \u00a0 | 106,850 | \u00a0 |
Preferred stock | \u00a0 | \u00a0 | 277,778 | \u00a0 | \u00a0 | \u00a0 | 277,778 | \u00a0 |
Convertible debt | \u00a0 | \u00a0 | 1,157,651 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total potential dilutive weighted average shares outstanding | \u00a0 | \u00a0 | 6,495,004 | \u00a0 | \u00a0 | \u00a0 | 4,664,516 | \u00a0 |
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The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company\u2019s common stock can result in a greater dilutive effect from potentially dilutive securities. During the year ended June 30, 2023, and 2022, the Company reported a net loss, so the potential effect is not reflected in the financial statements.
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Deferred Revenue\u00a0-\u00a0The Company records deposits as deferred revenue when a customer pays in advance of shipping the product. Once the product is shipped, the deposit is recorded as revenue and the related commissions are paid. All products were shipped related to deposits in deferred revenue, in less than one year.
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Convertible Debt and Securities - The Company follows beneficial conversion feature guidance in ASC 470-20, which applies to convertible stock as well as convertible debt. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option\u2019s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as interest over the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the expense must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence.
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Non-controlling Interests in Consolidated Financial Statements\u00a0-\u00a0In December 2007, the FASB issued ASC 810-10-65, \u201cNon-controlling Interests in consolidated Financial Statements\u201d. This ASC clarifies that a non-controlling (minority) interest in subsidiaries is an ownership interest in the entity that should be reported as equity in the consolidated financial statements. It also requires consolidated net income to include the amounts attributable to both the parent and non-controlling interest, with disclosure on the face of the consolidated income statement of the amounts attributed to the parent and to the non-controlling interest. In accordance with ASC 810-10-45-21, those losses attributable to the parent and the non-controlling interest in subsidiaries may exceed their interests in the subsidiary\u2019s equity. The excess and any further losses attributable to the parent and the non-controlling interest shall be attributed to those interests even if that attribution results in a deficit non-controlling interest balance.
\u00a0
Recent Accounting Pronouncements\u00a0\u2013 From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, (\u201cFASB\u201d), or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company\u2019s financial position or results of operations upon adoption. The Company has considered all other recently issued accounting pronouncements, including the new provisions of ASC 326 (\u201cFinancial Instruments \u2013 Credit Losses\u201d) pertaining to \u201ccurrent expected credit losses,\u201d and does not believe the adoption of such pronouncements will have a material impact on its financial statements.\u00a0
"}]},{"name":"rpt:f-484","factDimensions":{"xbrl:concept":"us-gaap:UseOfEstimates","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Use of Estimates\u00a0-\u00a0The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
\u00a0
Significant estimates underlying the Company\u2019s reported financial position and results of operations include the allowance for doubtful accounts, useful lives of property and equipment, impairment of long-lived assets, inventory valuation, fair value of stock-based compensation and valuation allowance on deferred tax assets.
"}]},{"name":"rpt:f-485","factDimensions":{"xbrl:concept":"us-gaap:CashAndCashEquivalentsPolicyTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Cash and Cash Equivalents\u00a0-\u00a0The Company considers all highly liquid investment instruments with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances.
"}]},{"name":"rpt:f-486","factDimensions":{"xbrl:concept":"us-gaap:TradeAndOtherAccountsReceivablePolicy","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Accounts Receivable\u00a0-\u00a0The Company regularly reviews accounts receivable for any bad debts based on an analysis of the Company\u2019s collection experience, customer creditworthiness and current economic trends. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on management\u2019s review of accounts receivable, the Company recorded $65,500 and $57,000 as allowance for doubtful accounts at June 30, 2023 and 2022, respectively. The Company had no bad debt expenses and $131,968 for the years ended June 30, 2023 and 2022, respectively. These amounts were direct write-offs against the specific accounts receivable.
"}]},{"name":"rpt:f-487","factDimensions":{"xbrl:concept":"upxi:AllowanceForDoubtfulAccountsReceivablesCurrent","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"65500","decimals":0}]},{"name":"rpt:f-488","factDimensions":{"xbrl:concept":"upxi:AllowanceForDoubtfulAccountsReceivablesCurrent","xbrl:period":"2021-07-01T00:00:00/2022-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"57000","decimals":0}]},{"name":"rpt:f-489","factDimensions":{"xbrl:concept":"upxi:BadDebtExpense","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"131968","decimals":0}]},{"name":"rpt:f-490","factDimensions":{"xbrl:concept":"us-gaap:InventoryCashFlowPolicy","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Inventory\u00a0-\u00a0Inventory consists of finished goods and is stated at the lower of cost or net realizable value, cost is determined by the weighted average moving cost inventory method. Net realizable value is determined, with appropriate consideration given to obsolescence, excessive levels, deterioration, and other factors.\u00a0 On June 30, 2023 the Company had $11,557,128 of finished goods inventory and at June 30, 2022 had $4,725,685 of finished goods inventory with an inventory reserve of $475,000 and $50,000, respectively.
"}]},{"name":"rpt:f-491","factDimensions":{"xbrl:concept":"upxi:FinishedGoodsInventory","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"11557128","decimals":0}]},{"name":"rpt:f-492","factDimensions":{"xbrl:concept":"upxi:FinishedGoodsInventory","xbrl:period":"2021-07-01T00:00:00/2022-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"4725685","decimals":0}]},{"name":"rpt:f-493","factDimensions":{"xbrl:concept":"upxi:InventoryReserve","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"475000","decimals":0}]},{"name":"rpt:f-494","factDimensions":{"xbrl:concept":"upxi:InventoryReserve","xbrl:period":"2021-07-01T00:00:00/2022-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"50000","decimals":0}]},{"name":"rpt:f-495","factDimensions":{"xbrl:concept":"us-gaap:PropertyPlantAndEquipmentPolicyTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Property and Equipment\u00a0-\u00a0Property and equipment is recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from 3 to 20 years. Leasehold improvements are amortized over the shorter of their estimated useful lives of 5 years or the related lease term. Gains and losses upon disposition are reflected in the Statements of Operations in the period of disposition. Maintenance and repair expenditures are charged to expense as incurred. The Company disposed of some equipment during 2023 and 2022 which resulted in gains on the sales as shown in the accompanying Statements of Operations.
"}]},{"name":"rpt:f-496","factDimensions":{"xbrl:concept":"upxi:PropertyPlantAndEquipmentUsefulLifes","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194","srt:RangeAxis":"srt:MinimumMember"},"factValues":[{"value":"P3Y"}]},{"name":"rpt:f-497","factDimensions":{"xbrl:concept":"upxi:PropertyPlantAndEquipmentUsefulLifes","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194","srt:RangeAxis":"srt:MaximumMember"},"factValues":[{"value":"P20Y"}]},{"name":"rpt:f-498","factDimensions":{"xbrl:concept":"upxi:LeaseTerm1","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"P5Y"}]},{"name":"rpt:f-499","factDimensions":{"xbrl:concept":"us-gaap:BusinessCombinationsPolicy","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Business Combinations\u00a0- The Company accounts for its business combinations using the acquisition method of accounting. The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities assumed by the Company to the seller\u2019s cash consideration and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. The excess of (i) the total costs of acquisition over (ii) the fair value of the identifiable net assets of the acquiree is recorded as identifiable intangible assets and goodwill.
"}]},{"name":"rpt:f-500","factDimensions":{"xbrl:concept":"us-gaap:GoodwillAndIntangibleAssetsGoodwillPolicy","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Goodwill - The Company evaluates its goodwill for possible impairment, simplifying the test for goodwill impairment at least annually and\u00a0when one or more triggering events or circumstances indicate that the goodwill might be impaired. Under this guidance, annual or interim goodwill impairment testing is performed by comparing the estimated fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit\u2019s fair value, not to exceed the carrying value of goodwill.
\u00a0
The Company performed its annual test as of June 30, 2023, and 2022, respectively. There was no impairment charge identified in connection with the annual goodwill impairment test at June 30, 2022.\u00a0 It was determined by management that the goodwill related to Interactive Offers was completely impaired at June 30, 2023 based on the sale of the business at September 1, 2023.\u00a0 An impairment of goodwill in the amount of $2,889,158 was recorded at June 30, 2023 eliminating all of the goodwill related to Interactive Offers.
"}]},{"name":"rpt:f-501","factDimensions":{"xbrl:concept":"us-gaap:GoodwillGross","xbrl:period":"2023-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"2889158","decimals":0}]},{"name":"rpt:f-502","factDimensions":{"xbrl:concept":"us-gaap:ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Impairment of Long-lived Assets\u00a0-\u00a0Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company estimates the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether or not the asset values are recoverable.
\u00a0
The Company did not recognize impairment on its long-lived assets during the year ended June 30, 2022.\u00a0 \u00a0The Company did recognize an impairment of $857,143 on the assets held for sale, related to the Interactive Offers long-lived assets during the years ended June 30, 2023, leaving $716,944 of intangible assets related to Interactive Offers and classified as assets available for sale.\u00a0\u00a0
"}]},{"name":"rpt:f-503","factDimensions":{"xbrl:concept":"us-gaap:IncreaseDecreaseInAssetsHeldForSale","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"857143","decimals":0}]},{"name":"rpt:f-504","factDimensions":{"xbrl:concept":"us-gaap:IntangibleAssetsCurrent","xbrl:period":"2023-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"716944","decimals":0}]},{"name":"rpt:f-505","factDimensions":{"xbrl:concept":"us-gaap:RevenueRecognitionLeases","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Revenue Recognition\u00a0-\u00a0The Company analyzes its contracts and purchase orders to assess whether revenue is properly recognized. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, whether for goods and services or licensing, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company acts as principal in its revenue transactions as the Company is the primary obligor in the transactions. Generally, the Company recognizes revenue for its products when ownership is transferred to the customer, provided no significant obligations remain and collection is probable.
"}]},{"name":"rpt:f-506","factDimensions":{"xbrl:concept":"us-gaap:RevenueRecognitionRevenueReductions","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Product Revenue\u00a0-\u00a0Most of the Company\u2019s revenue contracts are from domestic sales and represent a single performance obligation related to the fulfillment of customer orders for the purchase of its products. Net sales reflect the transaction prices for these contracts based on the Company\u2019s selling list price, which is then reduced by estimated costs for trade promotional programs, consumer incentives, and allowances and discounts used to incentivize sales growth and build brand awareness.
\u00a0
The Company recognizes revenue at the point in time that control of the ordered product is transferred to the customer, which is upon shipment to the customer or other customer-designated delivery point. Taxes collected from customers that are remitted to governmental agencies are accounted for on a net basis and not included as revenue.
\u00a0
The Company does not accept sales returns from wholesale customers, as the products are pre-approved prior to production and shipment. E-Commerce product returns must be completed within 45 days of the date of purchase. The Company does not accrue estimated sales returns as historical sales returns have been minimal. The Company records deferred revenues when cash payments are received or due in advance of performance, including amounts which are refundable. Substantially all the deferred revenue as of June 30, 2022, was recognized as revenue in the year ended June 30, 2023.
Shipping and handling fees billed to customers are included in revenue, as this revenue is not directly related to the distribution costs associated with an order. Shipping fees associated with freight are generally included in distribution costs.
"}]},{"name":"rpt:f-507","factDimensions":{"xbrl:concept":"us-gaap:AdvertisingCostsPolicyTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Advertising\u00a0-\u00a0The Company supports its products with advertising to build brand awareness of the Company\u2019s various products in addition to other marketing programs executed by the Company\u2019s marketing team. The Company believes continual investment in advertising is critical to the development and sale of its branded products. Advertising costs of $7,978,607 and $3,225,256 were expensed as incurred during the years ended June 30, 2023, and 2022, respectively.\u00a0
"}]},{"name":"rpt:f-508","factDimensions":{"xbrl:concept":"us-gaap:AdvertisingExpense","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"7978607","decimals":0}]},{"name":"rpt:f-509","factDimensions":{"xbrl:concept":"us-gaap:AdvertisingExpense","xbrl:period":"2021-07-01T00:00:00/2022-07-01T00:00:00","xbrl:entity":"cik:0001775194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"3225256","decimals":0}]},{"name":"rpt:f-510","factDimensions":{"xbrl:concept":"us-gaap:ShareBasedCompensationForfeituresPolicyTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Stock Based Compensation\u00a0- The Company recognizes all share-based payments to employees, including grants of employee stock options, as compensation expense in the financial statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period) or immediately if the share-based payments vest immediately.
"}]},{"name":"rpt:f-511","factDimensions":{"xbrl:concept":"upxi:NonEmployeeStockBasedPaymentspolicytextblock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Non-employee Stock-based Payments\u00a0-\u00a0The Company\u2019s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 2018-07, which simplifies the accounting for non-employee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor\u2019s own operations by issuing share-based payment awards. Stock-based payments related to non-employees is accounted for based on the fair value of the related stock or options or the fair value of the services, whichever is more readily determinable. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor\u2019s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
"}]},{"name":"rpt:f-512","factDimensions":{"xbrl:concept":"us-gaap:FairValueMeasurementPolicyPolicyTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Fair Value Measurements\u00a0- The Company accounts for financial instruments in accordance with FASB Accounting Standards Codification (ASC) 820 \u201cFair value Measurement and Disclosures\u201d (ASC 820). ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity\u2019s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).
\u00a0
The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
\u00a0
\u00a0 | \u00b7 | Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
\u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00b7 | Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
\u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00b7 | Level 3 - Inputs that are both significant to the fair value measurement and unobservable. |
\u00a0
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, deferred revenue and debt are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
"}]},{"name":"rpt:f-513","factDimensions":{"xbrl:concept":"us-gaap:LessorLeasesPolicyTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Leases\u00a0-\u00a0The Company determines if a contract contains a lease at inception. GAAP requires that the Company\u2019s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option will result in an economic penalty. All of the Company\u2019s real estate leases are classified as operating leases.
\u00a0
Most real estate leases include one or more options to renew, with renewal terms that generally can extend the lease term for an additional two years. The exercise of lease renewal options is at the Company\u2019s discretion. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants.
\u00a0
The Company\u2019s leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment.
"}]},{"name":"rpt:f-514","factDimensions":{"xbrl:concept":"us-gaap:IncomeTaxPolicyTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Income Taxes\u00a0-\u00a0Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
\u00a0
The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.
\u00a0
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, \u201cIncome Taxes.\u201d Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity\u2019s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
\u00a0
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date.\u00a0
\u00a0
ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise\u2019s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. There are no material uncertain tax positions at June 30, 2023.
\u00a0
On December 22, 2017, the U.S. government enacted the Tax Act, which made significant changes to the Internal Revenue Code of 1986, as amended, including, but not limited to, reducing the U.S. corporate statutory tax rate and the net operating loss incurred after December 31, 2017 can be carried forward indefinitely and the two year net operating loss carried back was eliminated (prohibited).
"}]},{"name":"rpt:f-515","factDimensions":{"xbrl:concept":"us-gaap:EarningsPerSharePolicyTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Earnings (loss) per Share\u00a0- Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted income (loss) per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and upon the conversion of notes. For the year ended, the dilutive common shares are as follows:
\u00a0
\u00a0 | \u00a0 | June 30, | \u00a0 | \u00a0 | June 30, | \u00a0 | ||
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Stock options | \u00a0 | \u00a0 | 4,839,278 | \u00a0 | \u00a0 | \u00a0 | 4,279,888 | \u00a0 |
Warrants | \u00a0 | \u00a0 | 220,297 | \u00a0 | \u00a0 | \u00a0 | 106,850 | \u00a0 |
Preferred stock | \u00a0 | \u00a0 | 277,778 | \u00a0 | \u00a0 | \u00a0 | 277,778 | \u00a0 |
Convertible debt | \u00a0 | \u00a0 | 1,157,651 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total potential dilutive weighted average shares outstanding | \u00a0 | \u00a0 | 6,495,004 | \u00a0 | \u00a0 | \u00a0 | 4,664,516 | \u00a0 |
\u00a0
The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of the Company\u2019s common stock can result in a greater dilutive effect from potentially dilutive securities. During the year ended June 30, 2023, and 2022, the Company reported a net loss, so the potential effect is not reflected in the financial statements.
"}]},{"name":"rpt:f-516","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfEarningsPerShareBasicByCommonClassTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"\u00a0 | \u00a0 | June 30, | \u00a0 | \u00a0 | June 30, | \u00a0 | ||
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Stock options | \u00a0 | \u00a0 | 4,839,278 | \u00a0 | \u00a0 | \u00a0 | 4,279,888 | \u00a0 |
Warrants | \u00a0 | \u00a0 | 220,297 | \u00a0 | \u00a0 | \u00a0 | 106,850 | \u00a0 |
Preferred stock | \u00a0 | \u00a0 | 277,778 | \u00a0 | \u00a0 | \u00a0 | 277,778 | \u00a0 |
Convertible debt | \u00a0 | \u00a0 | 1,157,651 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total potential dilutive weighted average shares outstanding | \u00a0 | \u00a0 | 6,495,004 | \u00a0 | \u00a0 | \u00a0 | 4,664,516 | \u00a0 |
Deferred Revenue\u00a0-\u00a0The Company records deposits as deferred revenue when a customer pays in advance of shipping the product. Once the product is shipped, the deposit is recorded as revenue and the related commissions are paid. All products were shipped related to deposits in deferred revenue, in less than one year.
"}]},{"name":"rpt:f-528","factDimensions":{"xbrl:concept":"us-gaap:MarketableSecuritiesPolicy","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Convertible Debt and Securities - The Company follows beneficial conversion feature guidance in ASC 470-20, which applies to convertible stock as well as convertible debt. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the conversion option\u2019s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as interest over the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the expense must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence.
"}]},{"name":"rpt:f-529","factDimensions":{"xbrl:concept":"upxi:NonControllingInterestsInConsolidatedFinancialStatementsPolicyTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Non-controlling Interests in Consolidated Financial Statements\u00a0-\u00a0In December 2007, the FASB issued ASC 810-10-65, \u201cNon-controlling Interests in consolidated Financial Statements\u201d. This ASC clarifies that a non-controlling (minority) interest in subsidiaries is an ownership interest in the entity that should be reported as equity in the consolidated financial statements. It also requires consolidated net income to include the amounts attributable to both the parent and non-controlling interest, with disclosure on the face of the consolidated income statement of the amounts attributed to the parent and to the non-controlling interest. In accordance with ASC 810-10-45-21, those losses attributable to the parent and the non-controlling interest in subsidiaries may exceed their interests in the subsidiary\u2019s equity. The excess and any further losses attributable to the parent and the non-controlling interest shall be attributed to those interests even if that attribution results in a deficit non-controlling interest balance.
"}]},{"name":"rpt:f-530","factDimensions":{"xbrl:concept":"us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Recent Accounting Pronouncements\u00a0\u2013 From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, (\u201cFASB\u201d), or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company\u2019s financial position or results of operations upon adoption. The Company has considered all other recently issued accounting pronouncements, including the new provisions of ASC 326 (\u201cFinancial Instruments \u2013 Credit Losses\u201d) pertaining to \u201ccurrent expected credit losses,\u201d and does not believe the adoption of such pronouncements will have a material impact on its financial statements.\u00a0
"}]},{"name":"rpt:f-531","factDimensions":{"xbrl:concept":"us-gaap:AssetAcquisitionTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Note 3. Acquisitions
\u00a0
VitaMedica Corporation
\u00a0
The Company purchased VitaMedica on August 1, 2021.\u00a0 VitaMedica Corporation is a leading online seller of supplements for surgery, recovery, skin, beauty, health, and wellness.
\u00a0
The following table summarizes the consideration transferred to acquire VitaMedica and the amount of identified assets acquired, and liabilities assumed at the acquisition date.
\u00a0
Fair value of consideration transferred: | \u00a0 | \u00a0 | \u00a0 | |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | |
Cash | \u00a0 | $ | 2,000,000 | \u00a0 |
Cash, working capital adjustment | \u00a0 | \u00a0 | 74,589 | \u00a0 |
Common stock, 100,000 shares valued at $4.82 per common share, the closing price on August 4, 2021. | \u00a0 | \u00a0 | 482,000 | \u00a0 |
Note payable | \u00a0 | \u00a0 | 500,000 | \u00a0 |
\u00a0 | \u00a0 | $ | 3,556,589 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Recognized amounts of identifiable assets acquired, and liabilities assumed: | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Accounts receivable | \u00a0 | $ | 107,446 | \u00a0 |
Inventory | \u00a0 | \u00a0 | 619,837 | \u00a0 |
Prepaid expenses | \u00a0 | \u00a0 | 117,268 | \u00a0 |
Property and equipment | \u00a0 | \u00a0 | 13,220 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 463,000 | \u00a0 |
Customer list | \u00a0 | \u00a0 | 1,329,000 | \u00a0 |
Non-compete | \u00a0 | \u00a0 | 143,000 | \u00a0 |
Right of use asset | \u00a0 | \u00a0 | 112,612 | \u00a0 |
Accounts payable | \u00a0 | \u00a0 | (140,068 | ) |
Operating lease | \u00a0 | \u00a0 | (56,894 | ) |
Operating lease | \u00a0 | \u00a0 | (112,612 | ) |
Total identifiable net assets | \u00a0 | $ | 2,595,809 | \u00a0 |
Goodwill | \u00a0 | $ | 960,780 | \u00a0 |
\u00a0
The business was acquired through an asset purchase agreement, that acquired all the tangible and intangible assets of the VitaMedica business.\u00a0 There was no contingent consideration payable under the asset purchase agreement, although a provision was used to adjust the purchase price based on the final working capital transferred to the Company.\u00a0 The purchase price was increased by $74,589 for the excess working capital that was transferred in the business and the final purchase price allocation was completed by an independent consulting firm and is no longer subject to change.\u00a0
\u00a0
The goodwill is deductible for tax purposes and attributable to the Company\u2019s added ability to enter the online seller\u2019s market for surgery supplements, recovery, skin, beauty, health and wellness and provided improved gross margins through synergies recognized with the consolidation of manufacturing and distribution operations.
\u00a0
The Company\u2019s consolidated financial statements for the year ended June 30, 2023 include the actual results for VitaMedica.\u00a0 For the year ended June 30, 2022, the Company\u2019s consolidated financial statements include the actual results of VitaMedica for the period August 1, 2021, to June 30, 2022.
\u00a0
A finder\u2019s fee of $103,740\u00a0was paid by the Company, $70,000\u00a0in cash and\u00a07,000\u00a0shares of common stock, valued at $33,740, $4.82\u00a0per common share, the closing market price on August 4, 2021 (close date of the transaction). These fees were expensed during the year ended June 30, 2022.
Interactive Offers, LLC
\u00a0
The Company acquired Interactive Offers, LLC, on October 1, 2021.\u00a0 The Company\u2019s CEO and Chairman, Allan Marshall, was the controlling stockholder and the president of MFA Holdings Corp, which owned 20% of the outstanding membership interests in Interactive. Interactive provides programmatic advertising with its SaaS platform which allows for programmatic advertisement placement automatically on any partners\u2019 sites from a simple dashboard.
\u00a0
The following table summarizes the consideration transferred to acquire Interactive and the amount of identified assets acquired, and liabilities assumed at the acquisition date.
\u00a0
Fair value of consideration transferred: | \u00a0 | \u00a0 | \u00a0 | |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | |
Cash | \u00a0 | $ | 2,100,000 | \u00a0 |
Common stock, 100,000 shares valued at $4.88 per common share, the closing price on October 1, 2021. | \u00a0 | \u00a0 | 2,733,630 | \u00a0 |
\u00a0 | \u00a0 | $ | 4,833,630 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Recognized amounts of identifiable assets acquired, and liabilities assumed: | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash | \u00a0 | $ | 245,247 | \u00a0 |
Accounts receivable | \u00a0 | \u00a0 | 23,791 | \u00a0 |
Prepaid expenses | \u00a0 | \u00a0 | 32,543 | \u00a0 |
Property and equipment | \u00a0 | \u00a0 | 3,212 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 146,000 | \u00a0 |
Customer list | \u00a0 | \u00a0 | 763,000 | \u00a0 |
Software | \u00a0 | \u00a0 | 1,590,000 | \u00a0 |
Non-compete | \u00a0 | \u00a0 | 132,000 | \u00a0 |
Accounts payable | \u00a0 | \u00a0 | (174,943 | ) |
Accrued liabilities | \u00a0 | \u00a0 | (313,800 | ) |
Accrued compensation | \u00a0 | \u00a0 | (24,193 | ) |
Deferred revenue | \u00a0 | \u00a0 | (478,385 | ) |
Total identifiable net assets | \u00a0 | $ | 1,944,472 | \u00a0 |
Goodwill | \u00a0 | $ | 2,889,158 | \u00a0 |
\u00a0
The business was acquired through an equity interest purchase agreement.\u00a0 The equity purchase agreement provided for an increase in the purchase price of up to $600,000 based on the attainment of certain sales threshold in the first year.\u00a0 Our management believed that the attainment of those sales threshold at the time of acquisition was unlikely and valued the contingency at $0.\u00a0The sales thresholds were not met, and no consideration was recorded for the contingency.\u00a0 The equity interest purchase agreement has standard provisions to adjust the purchase price based on the final working capital transferred to the Company.\u00a0 The purchase price was decreased by $638,978 and was repaid to the Company with 106,497 of the Company\u2019s common stock valued at $6.00 per share.\u00a0 \u00a0\u00a0The final purchase price allocation was completed by an independent consulting firm and is no longer subject to change.\u00a0
\u00a0
The goodwill is deductible for tax purposes and attributable to the Company having a solid entry into the programmatic ad space and added a unique in-house advertising platform to leverage and scale its current and future brands. Access by sellers to Interactive\u2019s ad platform provides further product sales growth and advertising efficiencies. These are the factors of goodwill recognized in the acquisition.
\u00a0
On September 1, 2023, the Company sold Interactive Offers.\u00a0 For the years ended June 30, 2023, and 2022 the operations have been reclassed to discontinued operations and the assets and liabilities reclassed to assets available for sale or current assets and current liabilities of discontinued operations.\u00a0 On June 30, 2023, the Company recorded an impairment of the assets available for sale of $3,746,301.\u00a0
Cygnet Online, LLC
\u00a0
The Company acquired 55% of Cygnet Online, LLC, on April 1, 2022.\u00a0 The purchase price was $5,515,756, as amended.\u00a0
\u00a0
The following table summarizes the consideration transferred to acquire Interactive and the amount of identified assets acquired, and liabilities assumed at the acquisition date.
\u00a0
Fair value of consideration transferred:
\u00a0
Cash | \u00a0 | $ | 1,500,000 | \u00a0 |
Convertible note payable, convertible at $6.00 per common share | \u00a0 | \u00a0 | 1,050,000 | \u00a0 |
Earnout payment | \u00a0 | \u00a0 | - | \u00a0 |
Common stock, 555,489 shares valued at $5.34 per common share, the closing price on April 1, 2022. | \u00a0 | \u00a0 | 2,965,756 | \u00a0 |
\u00a0 | \u00a0 | $ | 5,515,756 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Recognized amounts of identifiable assets acquired and liabilities assumed: | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash | \u00a0 | $ | 471,237 | \u00a0 |
Accounts receivable | \u00a0 | \u00a0 | 860,882 | \u00a0 |
Inventory | \u00a0 | \u00a0 | 2,337,208 | \u00a0 |
Prepaid expenses | \u00a0 | \u00a0 | 6,900 | \u00a0 |
Property and equipment | \u00a0 | \u00a0 | 7,602 | \u00a0 |
Right to use asset | \u00a0 | \u00a0 | 410,365 | \u00a0 |
Other asset | \u00a0 | \u00a0 | 6,545 | \u00a0 |
Online sales channels | \u00a0 | \u00a0 | 1,800,000 | \u00a0 |
Vendor relationships | \u00a0 | \u00a0 | 6,000,000 | \u00a0 |
Accrued liabilities | \u00a0 | \u00a0 | (701,606 | ) |
Notes payable | \u00a0 | \u00a0 | (7,298,353 | ) |
Operating lease | \u00a0 | \u00a0 | (422,479 | ) |
Total identifiable net assets | \u00a0 | $ | 3,478,301 | \u00a0 |
Goodwill | \u00a0 | $ | 2,037,455 | \u00a0 |
\u00a0
The 55% of the business was acquired through a stock purchase agreement on March 31, 2022.\u00a0 The purchase agreement provided for an increase in the purchase price of up to $700,000 based on the attainment of certain sales threshold in the first year.\u00a0 Our management believed that the attainment of those sales threshold at the time of acquisition was unlikely and valued the contingency at $0.\u00a0 The sales thresholds were not met, and no consideration was recorded for the contingency.\u00a0 The equity interest purchase agreement has standard provisions to adjust the purchase price based on the final working capital transferred to the Company.\u00a0 The purchase price was decreased by $950,000 and was repaid to the Company with the reduction in the loan to the seller.\u00a0\u00a0\u00a0 The 55% purchase price allocation is final and is no longer subject to change.\u00a0
\u00a0
The Company\u2019s consolidated financial statements for the year ended June 30, 2023, include the actual results of Cygnet and for the year ended June 30, 2022 include the results for Cygnet from April 1, 2022 to June 30, 2022.\u00a0
\u00a0
On September 1, 2023, the Company completed the acquisition of the remaining 45% interest for structured cash payments equaling $800,000 and 90,909 shares of the Company\u2019s common stock valued at $162,727.
\u00a0
The acquisition of Cygnet provided the Company with the opportunity to expand its operations as an Amazon and eCommerce seller. The resulting combination increased Cygnet\u2019s product offerings through the Company\u2019s distributors and partnerships as it continues to focus on over-the -counter supplements and beauty products. Cygnet will be the anchor company for Upexi\u2019s Amazon strategy. These are the factors of goodwill recognized in the acquisition.
LuckyTail
\u00a0
On August 13, 2022, the Company acquired the pet product brand and the rights to the products of LuckyTail from GA Solutions, LLC.\u00a0
\u00a0
The following table summarizes the consideration transferred to acquire LuckyTail and the amount of identified assets acquired, and liabilities assumed at the acquisition date.
\u00a0
Fair value of consideration transferred: | \u00a0 | \u00a0 | \u00a0 | |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | |
Cash | \u00a0 | $ | 2,000,000 | \u00a0 |
Cash payment, 90 days after close | \u00a0 | \u00a0 | 484,729 | \u00a0 |
Cash payment, 180 days after close | \u00a0 | \u00a0 | 469,924 | \u00a0 |
Contingent consideration | \u00a0 | \u00a0 | 112,685 | \u00a0 |
Cash payment, working capital adjustment | \u00a0 | \u00a0 | 460,901 | \u00a0 |
\u00a0 | \u00a0 | $ | 3,528,239 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Recognized amounts of identifiable assets acquired, and liabilities assumed: | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Inventory | \u00a0 | $ | 460,901 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 383,792 | \u00a0 |
Customer list | \u00a0 | \u00a0 | 1,834,692 | \u00a0 |
Total identifiable net assets | \u00a0 | $ | 2,679,385 | \u00a0 |
Goodwill | \u00a0 | $ | 848,854 | \u00a0 |
\u00a0
The business was acquired through an asset purchase agreement, that acquired all elements of a business, including all of the tangible and intangible assets of the LuckyTail business.\u00a0 The purchase agreement provided for an increase in the purchase price based on the attainment of certain sales thresholds in the first six months.\u00a0 The Company estimated the value of this at approximately $150,000 at the time of purchase.\u00a0 The sales calculated to a $112,685 payout and the purchase price was adjusted.\u00a0The asset purchase agreement has standard provisions to adjust the purchase price based on the final working capital transferred to the Company.\u00a0 \u00a0The purchase price was increased by $460,901 for the excess working capital that was transferred in the business and the final purchase price allocation was completed by an independent consulting firm and is no longer subject to change.\u00a0
\u00a0
\u00a0
The Company\u2019s consolidated financial statements for the year ended June 30, 2023, include the actual results of LuckyTail from August 13, 2022, through June 30, 2023.\u00a0 The Company recorded interest on the consideration of $63,282 during the year ended June 30, 2023.
\u00a0
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. The acquisition provided both top line growth and improved EBITDA for the Company. These are the factors of goodwill recognized in the acquisition.
\u00a0
E-Core, Technology Inc. and its subsidiaries
\u00a0
On October 21, 2022, the Company acquired E-Core Technology, Inc. (\u201cE-Core\u201d) d/b/a New England Technology, Inc., a Florida corporation (\u201cNew England Technology\u201d).\u00a0
The following table summarizes the consideration transferred to acquire E-Core and the amount of identified assets acquired, and liabilities assumed at the acquisition date.
\u00a0
Fair value of consideration transferred: | \u00a0 | \u00a0 | \u00a0 | |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | |
Cash | \u00a0 | $ | 100,000 | \u00a0 |
Cash payment, 120 days | \u00a0 | \u00a0 | 3,000,000 | \u00a0 |
Note payable | \u00a0 | \u00a0 | 5,189,718 | \u00a0 |
Note payable 2 | \u00a0 | \u00a0 | 4,684,029 | \u00a0 |
Convertible note payable, convertible at $4.81 per common share | \u00a0 | \u00a0 | 2,418,860 | \u00a0 |
Common stock, 1,247,402 shares valued at $4.81 per common share, the calculated closing price on October 21, 2022. | \u00a0 | \u00a0 | 6,000,000 | \u00a0 |
\u00a0 | \u00a0 | $ | 21,039,765 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Recognized amounts of identifiable assets acquired, and liabilities assumed: | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash | \u00a0 | $ | 1,014,610 | \u00a0 |
Accounts receivable | \u00a0 | \u00a0 | 6,699,945 | \u00a0 |
Inventory | \u00a0 | \u00a0 | 7,750,011 | \u00a0 |
Prepaid expenses | \u00a0 | \u00a0 | 75,721 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 1,727,249 | \u00a0 |
Customer relationships | \u00a0 | \u00a0 | 5,080,305 | \u00a0 |
Accrued liabilities | \u00a0 | \u00a0 | (192,051 | ) |
Line of credit | \u00a0 | \u00a0 | (7,201,079 | ) |
Total identifiable net assets | \u00a0 | $ | 14,635,673 | \u00a0 |
Goodwill | \u00a0 | $ | 6,404,092 | \u00a0 |
\u00a0
The business was acquired through membership interest purchase agreement on October 21, 2022.\u00a0 There was no contingent consideration payable under the asset purchase agreement, although a provision was used to adjust the purchase price based on the final working capital transferred to the Company.\u00a0 The purchase price was decreased by $33,803, net and was repaid to the Company with an adjustment to the $3,000,000 cash payment.\u00a0 The final purchase price allocation was completed by an independent consulting firm and is no longer subject to change.\u00a0
\u00a0
The Company\u2019s consolidated financial statements for the year ended June 30, 2023, include the actual results of E-Core from October 21, 2022, through June 30, 2023.\u00a0 The Company recorded interest on the consideration of $969,098 during the year ended June 30, 2023.\u00a0 At June 30, 2023 there was $1,738,295 of unamortized debt discount that will be expensed over the next two years.\u00a0
\u00a0
The acquisition of E-Core provided the Company with an entrance into the children\u2019s toy sector as well as national retail distribution for owned and non-owned branded products. The acquisition expands the Company\u2019s ability to leverage direct-to-consumer distribution and further develops the broad distribution capabilities of E-Core. These are the factors of goodwill recognized in the acquisition.
\u00a0
Revenue from acquisitions included in the financial statements.
\u00a0
Net revenue included in the financial statements:
\u00a0
\u00a0 | \u00a0 | June 30, | \u00a0 | |||||
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
VitaMedica | \u00a0 | $ | 7,610,949 | \u00a0 | \u00a0 | $ | 5,124,583 | \u00a0 |
Cygnet | \u00a0 | \u00a0 | 23,996,086 | \u00a0 | \u00a0 | \u00a0 | 7,934,153 | \u00a0 |
LuckyTail | \u00a0 | \u00a0 | 4,489,384 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
E-Core | \u00a0 | \u00a0 | 36,551,957 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | $ | 72,648,376 | \u00a0 | \u00a0 | $ | 13,058,736 | \u00a0 |
Consolidated pro-forma unaudited financial statements.
\u00a0
The following unaudited pro forma combined financial information is based on the historical financial statements of the Company, VitaMedica, Interactive, Cygnet, LuckyTail and E-Core after giving effect to the Company\u2019s acquisitions as if the acquisitions occurred on July 1, 2021.\u00a0\u00a0
\u00a0
The following unaudited pro forma information does not purport to present what the Company\u2019s actual results would have been had the acquisitions occurred on July 1, 2021, nor is the financial information indicative of the results of future operations. The following table represents the unaudited consolidated pro forma results of operations for the year ended June 30, 2023 and the year ended June 30, 2022.\u00a0 The results of operations for VitaMedica and Cygnet are included in the year ended June 30, 2023 and the results of operations for LuckyTail are included from August 13, 2022 to June 30, 2023 and the results of operations for E-Core are included from October 21, 2022 to June 30, 2023.\u00a0
\u00a0
Operating expenses have been increased for the amortization expense associated with the fair value adjustment of definite lived intangible assets of VitaMedica, Cygnet, LuckyTail and E-Core by approximately $41,363, $175,000, $44,619, and $134,625\u00a0per month, respectively.
\u00a0
Pro Forma, Unaudited | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0Proforma | \u00a0 | \u00a0 | \u00a0 | |||||||||
Year ended June 30, 2023 | \u00a0 | Upexi, Inc. | \u00a0 | \u00a0 | LuckyTail | \u00a0 | \u00a0 | E-Core | \u00a0 | \u00a0 | Adjustments | \u00a0 | \u00a0 | Proforma | \u00a0 | |||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||||
Net sales | \u00a0 | $ | 80,676,509 | \u00a0 | \u00a0 | $ | 892,270 | \u00a0 | \u00a0 | $ | 12,905,836 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | 94,474,615 | \u00a0 | |
Cost of sales | \u00a0 | $ | 47,118,189 | \u00a0 | \u00a0 | $ | 137,088 | \u00a0 | \u00a0 | $ | 11,177,032 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | 58,432,309 | \u00a0 | |
Operating expenses | \u00a0 | $ | 41,110,327 | \u00a0 | \u00a0 | $ | 383,476 | \u00a0 | \u00a0 | $ | 1,050,602 | \u00a0 | \u00a0 | $ | 538,116 | \u00a0 | \u00a0 | $ | 43,083,521 | \u00a0 |
Net income (loss) from continuing operations | \u00a0 | $ | (15,422,202 | ) | \u00a0 | $ | 371,706 | \u00a0 | \u00a0 | $ | 660,860 | \u00a0 | \u00a0 | $ | (538,116 | ) | \u00a0 | $ | (14,927,752 | ) |
Basic income (loss) per common share | \u00a0 | $ | (0.86 | ) | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 0.53 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | (0.83 | ) | |
Weighted average shares outstanding | \u00a0 | \u00a0 | 17,877,959 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 1,247,402 | \u00a0 | \u00a0 | \u00a0 | (693,001 | ) | \u00a0 | \u00a0 | 18,432,360 | \u00a0 |
\u00a0
Pro Forma, Unaudited | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Proforma | \u00a0 | \u00a0 | \u00a0 | |||||||||||||
Year ended June 30, 2022 | \u00a0 | Upexi, Inc. | \u00a0 | \u00a0 | VitaMedica | \u00a0 | \u00a0 | Cygnet | \u00a0 | \u00a0 | LuckyTail | \u00a0 | \u00a0 | E-Core | \u00a0 | \u00a0 | Adjustments | \u00a0 | \u00a0 | Proforma | \u00a0 | |||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||||||
Net sales | \u00a0 | $ | 23,065,344 | \u00a0 | \u00a0 | $ | 384,391 | \u00a0 | \u00a0 | $ | 22,583,781 | \u00a0 | \u00a0 | $ | 4,596,641 | \u00a0 | \u00a0 | $ | 50,474,510 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | 101,104,667 | \u00a0 | |
Cost of sales | \u00a0 | $ | 8,195,735 | \u00a0 | \u00a0 | $ | 93,509 | \u00a0 | \u00a0 | $ | 19,117,296 | \u00a0 | \u00a0 | $ | 802,614 | \u00a0 | \u00a0 | $ | 45,722,296 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | 73,931,450 | \u00a0 | |
Operating expenses | \u00a0 | $ | 21,358,740 | \u00a0 | \u00a0 | $ | 255,286 | \u00a0 | \u00a0 | $ | 2,086,722 | \u00a0 | \u00a0 | $ | 2,873,631 | \u00a0 | \u00a0 | $ | 3,681,298 | \u00a0 | \u00a0 | $ | 3,767,291 | \u00a0 | \u00a0 | $ | 34,022,969 | \u00a0 |
Net income (loss) from continuing operations | \u00a0 | $ | (5,869,651 | ) | \u00a0 | $ | 35,596 | \u00a0 | \u00a0 | $ | 1,147,971 | \u00a0 | \u00a0 | $ | 920,396 | \u00a0 | \u00a0 | $ | 1,178,491 | \u00a0 | \u00a0 | $ | (3,767,291 | ) | \u00a0 | $ | (6,462,064 | ) |
Basic income (loss) per common share | \u00a0 | $ | (0.36 | ) | \u00a0 | $ | 0.36 | \u00a0 | \u00a0 | $ | 2.07 | \u00a0 | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 0.86 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | (0.36 | ) | |
Weighted average shares outstanding | \u00a0 | \u00a0 | 16,224,520 | \u00a0 | \u00a0 | \u00a0 | 100,000 | \u00a0 | \u00a0 | \u00a0 | 555,489 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 1,247,402 | \u00a0 | \u00a0 | \u00a0 | (565,750 | ) | \u00a0 | \u00a0 | 18,121,831 | \u00a0 |
VitaMedica amortization expense of $496,356\u00a0annually and $41,363\u00a0monthly is based on the purchase price allocation report.\u00a0 For the year ended June 30, 2022, the proforma adjustment included $41,363, one month of amortization expense.
\u00a0
The total weighted average shares includes 560,170 shares of common stock outstanding from October 1, 2021 to June 30, 2022 for the acquisition of Interactive Offers.
\u00a0
The Company estimated the annual Cygnet amortization expense at $2,100,000\u00a0annually and $175,000\u00a0monthly, based on management\u2019s allocation of the purchase price. For the year ended June 30, 2022, the proforma adjustment included $1,575,000, nine months of amortization expense.\u00a0
\u00a0
The Company estimated the annual LuckyTail amortization expense at $535,428\u00a0annually and $44,619\u00a0monthly, based on management\u2019s preliminary allocation of the purchase price. For the year ended June 30, 2023, the proforma adjustment included $66,929 of amortization expense for one and a half months.\u00a0For the year ended June 30, 2022, the proforma adjustment included $648,000 of amortization and for the year.
\u00a0
The Company estimated the annual E-Core amortization expense at $1,615,500\u00a0annually and $134,625\u00a0monthly, based on management\u2019s preliminary allocation of the purchase price. For the year ended June 30, 2023, the proforma adjustment included $534,721 of amortization expense, three and\u00a0 a half months.\u00a0 For the year ended June 30, 2022, the proforma adjustment included $1,615,500 of amortization expense.
\u00a0
These costs are primarily external legal, accounting and consulting services directly related to completed acquisitions, due diligence, and review of possible target acquisitions.\u00a0 These acquisition-related costs are included in the general and administrative expenses on the Company\u2019s condensed consolidated statements of operations.\u00a0\u00a0\u00a0
"}]},{"name":"rpt:f-532","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194","us-gaap:BusinessAcquisitionAxis":"upxi:VitaMedicaCorporationMember"},"factValues":[{"value":"Fair value of consideration transferred: | \u00a0 | \u00a0 | \u00a0 | |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | |
Cash | \u00a0 | $ | 2,000,000 | \u00a0 |
Cash, working capital adjustment | \u00a0 | \u00a0 | 74,589 | \u00a0 |
Common stock, 100,000 shares valued at $4.82 per common share, the closing price on August 4, 2021. | \u00a0 | \u00a0 | 482,000 | \u00a0 |
Note payable | \u00a0 | \u00a0 | 500,000 | \u00a0 |
\u00a0 | \u00a0 | $ | 3,556,589 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Recognized amounts of identifiable assets acquired, and liabilities assumed: | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Accounts receivable | \u00a0 | $ | 107,446 | \u00a0 |
Inventory | \u00a0 | \u00a0 | 619,837 | \u00a0 |
Prepaid expenses | \u00a0 | \u00a0 | 117,268 | \u00a0 |
Property and equipment | \u00a0 | \u00a0 | 13,220 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 463,000 | \u00a0 |
Customer list | \u00a0 | \u00a0 | 1,329,000 | \u00a0 |
Non-compete | \u00a0 | \u00a0 | 143,000 | \u00a0 |
Right of use asset | \u00a0 | \u00a0 | 112,612 | \u00a0 |
Accounts payable | \u00a0 | \u00a0 | (140,068 | ) |
Operating lease | \u00a0 | \u00a0 | (56,894 | ) |
Operating lease | \u00a0 | \u00a0 | (112,612 | ) |
Total identifiable net assets | \u00a0 | $ | 2,595,809 | \u00a0 |
Goodwill | \u00a0 | $ | 960,780 | \u00a0 |
Fair value of consideration transferred: | \u00a0 | \u00a0 | \u00a0 | |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | |
Cash | \u00a0 | $ | 2,100,000 | \u00a0 |
Common stock, 100,000 shares valued at $4.88 per common share, the closing price on October 1, 2021. | \u00a0 | \u00a0 | 2,733,630 | \u00a0 |
\u00a0 | \u00a0 | $ | 4,833,630 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Recognized amounts of identifiable assets acquired, and liabilities assumed: | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash | \u00a0 | $ | 245,247 | \u00a0 |
Accounts receivable | \u00a0 | \u00a0 | 23,791 | \u00a0 |
Prepaid expenses | \u00a0 | \u00a0 | 32,543 | \u00a0 |
Property and equipment | \u00a0 | \u00a0 | 3,212 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 146,000 | \u00a0 |
Customer list | \u00a0 | \u00a0 | 763,000 | \u00a0 |
Software | \u00a0 | \u00a0 | 1,590,000 | \u00a0 |
Non-compete | \u00a0 | \u00a0 | 132,000 | \u00a0 |
Accounts payable | \u00a0 | \u00a0 | (174,943 | ) |
Accrued liabilities | \u00a0 | \u00a0 | (313,800 | ) |
Accrued compensation | \u00a0 | \u00a0 | (24,193 | ) |
Deferred revenue | \u00a0 | \u00a0 | (478,385 | ) |
Total identifiable net assets | \u00a0 | $ | 1,944,472 | \u00a0 |
Goodwill | \u00a0 | $ | 2,889,158 | \u00a0 |
Cash | \u00a0 | $ | 1,500,000 | \u00a0 |
Convertible note payable, convertible at $6.00 per common share | \u00a0 | \u00a0 | 1,050,000 | \u00a0 |
Earnout payment | \u00a0 | \u00a0 | - | \u00a0 |
Common stock, 555,489 shares valued at $5.34 per common share, the closing price on April 1, 2022. | \u00a0 | \u00a0 | 2,965,756 | \u00a0 |
\u00a0 | \u00a0 | $ | 5,515,756 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Recognized amounts of identifiable assets acquired and liabilities assumed: | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash | \u00a0 | $ | 471,237 | \u00a0 |
Accounts receivable | \u00a0 | \u00a0 | 860,882 | \u00a0 |
Inventory | \u00a0 | \u00a0 | 2,337,208 | \u00a0 |
Prepaid expenses | \u00a0 | \u00a0 | 6,900 | \u00a0 |
Property and equipment | \u00a0 | \u00a0 | 7,602 | \u00a0 |
Right to use asset | \u00a0 | \u00a0 | 410,365 | \u00a0 |
Other asset | \u00a0 | \u00a0 | 6,545 | \u00a0 |
Online sales channels | \u00a0 | \u00a0 | 1,800,000 | \u00a0 |
Vendor relationships | \u00a0 | \u00a0 | 6,000,000 | \u00a0 |
Accrued liabilities | \u00a0 | \u00a0 | (701,606 | ) |
Notes payable | \u00a0 | \u00a0 | (7,298,353 | ) |
Operating lease | \u00a0 | \u00a0 | (422,479 | ) |
Total identifiable net assets | \u00a0 | $ | 3,478,301 | \u00a0 |
Goodwill | \u00a0 | $ | 2,037,455 | \u00a0 |
Fair value of consideration transferred: | \u00a0 | \u00a0 | \u00a0 | |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | |
Cash | \u00a0 | $ | 2,000,000 | \u00a0 |
Cash payment, 90 days after close | \u00a0 | \u00a0 | 484,729 | \u00a0 |
Cash payment, 180 days after close | \u00a0 | \u00a0 | 469,924 | \u00a0 |
Contingent consideration | \u00a0 | \u00a0 | 112,685 | \u00a0 |
Cash payment, working capital adjustment | \u00a0 | \u00a0 | 460,901 | \u00a0 |
\u00a0 | \u00a0 | $ | 3,528,239 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Recognized amounts of identifiable assets acquired, and liabilities assumed: | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Inventory | \u00a0 | $ | 460,901 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 383,792 | \u00a0 |
Customer list | \u00a0 | \u00a0 | 1,834,692 | \u00a0 |
Total identifiable net assets | \u00a0 | $ | 2,679,385 | \u00a0 |
Goodwill | \u00a0 | $ | 848,854 | \u00a0 |
Fair value of consideration transferred: | \u00a0 | \u00a0 | \u00a0 | |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | |
Cash | \u00a0 | $ | 100,000 | \u00a0 |
Cash payment, 120 days | \u00a0 | \u00a0 | 3,000,000 | \u00a0 |
Note payable | \u00a0 | \u00a0 | 5,189,718 | \u00a0 |
Note payable 2 | \u00a0 | \u00a0 | 4,684,029 | \u00a0 |
Convertible note payable, convertible at $4.81 per common share | \u00a0 | \u00a0 | 2,418,860 | \u00a0 |
Common stock, 1,247,402 shares valued at $4.81 per common share, the calculated closing price on October 21, 2022. | \u00a0 | \u00a0 | 6,000,000 | \u00a0 |
\u00a0 | \u00a0 | $ | 21,039,765 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Recognized amounts of identifiable assets acquired, and liabilities assumed: | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Cash | \u00a0 | $ | 1,014,610 | \u00a0 |
Accounts receivable | \u00a0 | \u00a0 | 6,699,945 | \u00a0 |
Inventory | \u00a0 | \u00a0 | 7,750,011 | \u00a0 |
Prepaid expenses | \u00a0 | \u00a0 | 75,721 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 1,727,249 | \u00a0 |
Customer relationships | \u00a0 | \u00a0 | 5,080,305 | \u00a0 |
Accrued liabilities | \u00a0 | \u00a0 | (192,051 | ) |
Line of credit | \u00a0 | \u00a0 | (7,201,079 | ) |
Total identifiable net assets | \u00a0 | $ | 14,635,673 | \u00a0 |
Goodwill | \u00a0 | $ | 6,404,092 | \u00a0 |
\u00a0 | \u00a0 | June 30, | \u00a0 | |||||
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
VitaMedica | \u00a0 | $ | 7,610,949 | \u00a0 | \u00a0 | $ | 5,124,583 | \u00a0 |
Cygnet | \u00a0 | \u00a0 | 23,996,086 | \u00a0 | \u00a0 | \u00a0 | 7,934,153 | \u00a0 |
LuckyTail | \u00a0 | \u00a0 | 4,489,384 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
E-Core | \u00a0 | \u00a0 | 36,551,957 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | $ | 72,648,376 | \u00a0 | \u00a0 | $ | 13,058,736 | \u00a0 |
Pro Forma, Unaudited | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0Proforma | \u00a0 | \u00a0 | \u00a0 | |||||||||
Year ended June 30, 2023 | \u00a0 | Upexi, Inc. | \u00a0 | \u00a0 | LuckyTail | \u00a0 | \u00a0 | E-Core | \u00a0 | \u00a0 | Adjustments | \u00a0 | \u00a0 | Proforma | \u00a0 | |||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||||
Net sales | \u00a0 | $ | 80,676,509 | \u00a0 | \u00a0 | $ | 892,270 | \u00a0 | \u00a0 | $ | 12,905,836 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | 94,474,615 | \u00a0 | |
Cost of sales | \u00a0 | $ | 47,118,189 | \u00a0 | \u00a0 | $ | 137,088 | \u00a0 | \u00a0 | $ | 11,177,032 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | 58,432,309 | \u00a0 | |
Operating expenses | \u00a0 | $ | 41,110,327 | \u00a0 | \u00a0 | $ | 383,476 | \u00a0 | \u00a0 | $ | 1,050,602 | \u00a0 | \u00a0 | $ | 538,116 | \u00a0 | \u00a0 | $ | 43,083,521 | \u00a0 |
Net income (loss) from continuing operations | \u00a0 | $ | (15,422,202 | ) | \u00a0 | $ | 371,706 | \u00a0 | \u00a0 | $ | 660,860 | \u00a0 | \u00a0 | $ | (538,116 | ) | \u00a0 | $ | (14,927,752 | ) |
Basic income (loss) per common share | \u00a0 | $ | (0.86 | ) | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 0.53 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | (0.83 | ) | |
Weighted average shares outstanding | \u00a0 | \u00a0 | 17,877,959 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 1,247,402 | \u00a0 | \u00a0 | \u00a0 | (693,001 | ) | \u00a0 | \u00a0 | 18,432,360 | \u00a0 |
Pro Forma, Unaudited | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Proforma | \u00a0 | \u00a0 | \u00a0 | |||||||||||||
Year ended June 30, 2022 | \u00a0 | Upexi, Inc. | \u00a0 | \u00a0 | VitaMedica | \u00a0 | \u00a0 | Cygnet | \u00a0 | \u00a0 | LuckyTail | \u00a0 | \u00a0 | E-Core | \u00a0 | \u00a0 | Adjustments | \u00a0 | \u00a0 | Proforma | \u00a0 | |||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||||||
Net sales | \u00a0 | $ | 23,065,344 | \u00a0 | \u00a0 | $ | 384,391 | \u00a0 | \u00a0 | $ | 22,583,781 | \u00a0 | \u00a0 | $ | 4,596,641 | \u00a0 | \u00a0 | $ | 50,474,510 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | 101,104,667 | \u00a0 | |
Cost of sales | \u00a0 | $ | 8,195,735 | \u00a0 | \u00a0 | $ | 93,509 | \u00a0 | \u00a0 | $ | 19,117,296 | \u00a0 | \u00a0 | $ | 802,614 | \u00a0 | \u00a0 | $ | 45,722,296 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | 73,931,450 | \u00a0 | |
Operating expenses | \u00a0 | $ | 21,358,740 | \u00a0 | \u00a0 | $ | 255,286 | \u00a0 | \u00a0 | $ | 2,086,722 | \u00a0 | \u00a0 | $ | 2,873,631 | \u00a0 | \u00a0 | $ | 3,681,298 | \u00a0 | \u00a0 | $ | 3,767,291 | \u00a0 | \u00a0 | $ | 34,022,969 | \u00a0 |
Net income (loss) from continuing operations | \u00a0 | $ | (5,869,651 | ) | \u00a0 | $ | 35,596 | \u00a0 | \u00a0 | $ | 1,147,971 | \u00a0 | \u00a0 | $ | 920,396 | \u00a0 | \u00a0 | $ | 1,178,491 | \u00a0 | \u00a0 | $ | (3,767,291 | ) | \u00a0 | $ | (6,462,064 | ) |
Basic income (loss) per common share | \u00a0 | $ | (0.36 | ) | \u00a0 | $ | 0.36 | \u00a0 | \u00a0 | $ | 2.07 | \u00a0 | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 0.86 | \u00a0 | \u00a0 | $ | \u00a0 | \u00a0 | $ | (0.36 | ) | |
Weighted average shares outstanding | \u00a0 | \u00a0 | 16,224,520 | \u00a0 | \u00a0 | \u00a0 | 100,000 | \u00a0 | \u00a0 | \u00a0 | 555,489 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 1,247,402 | \u00a0 | \u00a0 | \u00a0 | (565,750 | ) | \u00a0 | \u00a0 | 18,121,831 | \u00a0 |
Note 4. Property and Equipment
\u00a0
Property and equipment consist of the following:
\u00a0
\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | \u00a0 | June 30, 2022 | \u00a0 | ||
Furniture and fixtures | \u00a0 | $ | 172,663 | \u00a0 | \u00a0 | $ | 51,273 | \u00a0 |
Computer equipment | \u00a0 | \u00a0 | 156,283 | \u00a0 | \u00a0 | \u00a0 | 103,615 | \u00a0 |
Internal use software | \u00a0 | \u00a0 | 608,949 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Manufacturing equipment | \u00a0 | \u00a0 | 3,325,525 | \u00a0 | \u00a0 | \u00a0 | 1,002,796 | \u00a0 |
Leasehold improvements | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 2,144,341 | \u00a0 |
Building | \u00a0 | \u00a0 | 4,923,462 | \u00a0 | \u00a0 | \u00a0 | 4,656,435 | \u00a0 |
Vehicles | \u00a0 | \u00a0 | 261,362 | \u00a0 | \u00a0 | \u00a0 | 253,229 | \u00a0 |
Property and equipment, gross | \u00a0 | \u00a0 | 9,455,848 | \u00a0 | \u00a0 | \u00a0 | 8,211,689 | \u00a0 |
Less accumulated depreciation | \u00a0 | \u00a0 | (1,921,780 | ) | \u00a0 | \u00a0 | (872,823 | ) |
\u00a0 | \u00a0 | $ | 7,526,463 | \u00a0 | \u00a0 | $ | 7,338,866 | \u00a0 |
\u00a0
Depreciation expense for the years ended June 30, 2023 and 2022 was $944,704\u00a0and $574,309, respectively.\u00a0
During the year ended June 30, 2022, the Company sold vehicles with a carrying value of $500 for cash proceeds of $6,000, which resulted in a gain on the disposal of $5,500.
"}]},{"name":"rpt:f-738","factDimensions":{"xbrl:concept":"us-gaap:PropertyPlantAndEquipmentTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | \u00a0 | June 30, 2022 | \u00a0 | ||
Furniture and fixtures | \u00a0 | $ | 172,663 | \u00a0 | \u00a0 | $ | 51,273 | \u00a0 |
Computer equipment | \u00a0 | \u00a0 | 156,283 | \u00a0 | \u00a0 | \u00a0 | 103,615 | \u00a0 |
Internal use software | \u00a0 | \u00a0 | 608,949 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Manufacturing equipment | \u00a0 | \u00a0 | 3,325,525 | \u00a0 | \u00a0 | \u00a0 | 1,002,796 | \u00a0 |
Leasehold improvements | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 2,144,341 | \u00a0 |
Building | \u00a0 | \u00a0 | 4,923,462 | \u00a0 | \u00a0 | \u00a0 | 4,656,435 | \u00a0 |
Vehicles | \u00a0 | \u00a0 | 261,362 | \u00a0 | \u00a0 | \u00a0 | 253,229 | \u00a0 |
Property and equipment, gross | \u00a0 | \u00a0 | 9,455,848 | \u00a0 | \u00a0 | \u00a0 | 8,211,689 | \u00a0 |
Less accumulated depreciation | \u00a0 | \u00a0 | (1,921,780 | ) | \u00a0 | \u00a0 | (872,823 | ) |
\u00a0 | \u00a0 | $ | 7,526,463 | \u00a0 | \u00a0 | $ | 7,338,866 | \u00a0 |
Note 5. Intangible Assets
\u00a0
Intangible assets as of June 30, 2023:
\u00a0
\u00a0 | \u00a0 | Estimated Life | \u00a0 | Cost | \u00a0 | \u00a0 | Accumulated Amortization | \u00a0 | \u00a0 | Net Book\u00a0Value | \u00a0 | |||
Customer relationships | \u00a0 | \u00a04 years | \u00a0 | $ | 8,243,897 | \u00a0 | \u00a0 | $ | 1,937,595 | \u00a0 | \u00a0 | $ | 6,306,302 | \u00a0 |
Trade name | \u00a0 | \u00a05 years | \u00a0 | \u00a0 | 2,574,041 | \u00a0 | \u00a0 | \u00a0 | 489,341 | \u00a0 | \u00a0 | \u00a0 | 2,084,700 | \u00a0 |
Non-compete agreements | \u00a0 | \u00a0Term of agreement | \u00a0 | \u00a0 | 143,000 | \u00a0 | \u00a0 | \u00a0 | 137,042 | \u00a0 | \u00a0 | \u00a0 | 5,958 | \u00a0 |
Online sales channels | \u00a0 | \u00a02 years | \u00a0 | \u00a0 | 1,800,000 | \u00a0 | \u00a0 | \u00a0 | 1,125,000 | \u00a0 | \u00a0 | \u00a0 | 675,000 | \u00a0 |
Vender relationships | \u00a0 | \u00a05 years | \u00a0 | \u00a0 | 6,000,000 | \u00a0 | \u00a0 | \u00a0 | 1,500,000 | \u00a0 | \u00a0 | \u00a0 | 4,500,000 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | $ | 18,760,938 | \u00a0 | \u00a0 | $ | 5,188,978 | \u00a0 | \u00a0 | $ | 13,571,960 | \u00a0 |
\u00a0
For the years ended June 30, 2023 and 2022, the Company amortized approximately $4,208,991 and $979,988, respectively.
\u00a0
The following intangible assets were added during the year ended June 30, 2023, from the acquisitions noted below:
\u00a0
LuckyTail:
\u00a0
Customer relationships | \u00a0 | $ | 1,834,692 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 383,792 | \u00a0 |
Intangible Assets from Purchase | \u00a0 | $ | 2,218,484 | \u00a0 |
\u00a0
E-Core:
\u00a0
Customer relationships | \u00a0 | $ | 5,080,205 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 1,727,249 | \u00a0 |
Intangible Assets from Purchase | \u00a0 | $ | 6,807,454 | \u00a0 |
\u00a0
Intangible assets as of June 30, 2022:
\u00a0
\u00a0 | \u00a0 | Cost | \u00a0 | \u00a0 | Accumulated Amortization | \u00a0 | \u00a0 | Net Book\u00a0Value | \u00a0 | |||
Customer relationships, amortized over four years | \u00a0 | $ | 1,329,000 | \u00a0 | \u00a0 | $ | 304,842 | \u00a0 | \u00a0 | $ | 1,024,158 | \u00a0 |
Trade name, amortized over five years | \u00a0 | \u00a0 | 463,000 | \u00a0 | \u00a0 | \u00a0 | 85,083 | \u00a0 | \u00a0 | \u00a0 | 377,917 | \u00a0 |
Non-compete agreements, amortized over the term of the agreement | \u00a0 | \u00a0 | 143,000 | \u00a0 | \u00a0 | \u00a0 | 65,063 | \u00a0 | \u00a0 | \u00a0 | 77,937 | \u00a0 |
Online sales channels, amortized over two years | \u00a0 | \u00a0 | 1,800,000 | \u00a0 | \u00a0 | \u00a0 | 225,000 | \u00a0 | \u00a0 | \u00a0 | 1,575,000 | \u00a0 |
Vender relationships, amortized over five years | \u00a0 | \u00a0 | 6,000,000 | \u00a0 | \u00a0 | \u00a0 | 300,000 | \u00a0 | \u00a0 | \u00a0 | 5,700,000 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | $ | 9,735,000 | \u00a0 | \u00a0 | $ | 979,988 | \u00a0 | \u00a0 | $ | 8,755,012 | \u00a0 |
The following intangible assets were added during the year ended June 30, 2022, from the acquisition of VitaMedica and Cygnet.
\u00a0
Customer relationships | \u00a0 | $ | 1,329,000 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 463,000 | \u00a0 |
Non-compete agreements | \u00a0 | \u00a0 | 143,000 | \u00a0 |
Online sales channels | \u00a0 | \u00a0 | 1,800,000 | \u00a0 |
Vender relationships | \u00a0 | \u00a0 | 6,000,000 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Intangible Assets from Purchase | \u00a0 | $ | 9,735,000 | \u00a0 |
\u00a0
Future amortization of intangible assets at June 30, 2023 are as follows:
\u00a0
June 30, 2024 | \u00a0 | $ | 4,456,740 | \u00a0 |
June 30, 2025 | \u00a0 | \u00a0 | 3,775,782 | \u00a0 |
June 30, 2026 | \u00a0 | \u00a0 | 3,775,782 | \u00a0 |
June 30, 2027 | \u00a0 | \u00a0 | 1,538,187 | \u00a0 |
June 30, 2028 | \u00a0 | \u00a0 | 25,467 | \u00a0 |
Thereafter | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | $ | 13,571,960 | \u00a0 |
\u00a0 | \u00a0 | Estimated Life | \u00a0 | Cost | \u00a0 | \u00a0 | Accumulated Amortization | \u00a0 | \u00a0 | Net Book\u00a0Value | \u00a0 | |||
Customer relationships | \u00a0 | \u00a04 years | \u00a0 | $ | 8,243,897 | \u00a0 | \u00a0 | $ | 1,937,595 | \u00a0 | \u00a0 | $ | 6,306,302 | \u00a0 |
Trade name | \u00a0 | \u00a05 years | \u00a0 | \u00a0 | 2,574,041 | \u00a0 | \u00a0 | \u00a0 | 489,341 | \u00a0 | \u00a0 | \u00a0 | 2,084,700 | \u00a0 |
Non-compete agreements | \u00a0 | \u00a0Term of agreement | \u00a0 | \u00a0 | 143,000 | \u00a0 | \u00a0 | \u00a0 | 137,042 | \u00a0 | \u00a0 | \u00a0 | 5,958 | \u00a0 |
Online sales channels | \u00a0 | \u00a02 years | \u00a0 | \u00a0 | 1,800,000 | \u00a0 | \u00a0 | \u00a0 | 1,125,000 | \u00a0 | \u00a0 | \u00a0 | 675,000 | \u00a0 |
Vender relationships | \u00a0 | \u00a05 years | \u00a0 | \u00a0 | 6,000,000 | \u00a0 | \u00a0 | \u00a0 | 1,500,000 | \u00a0 | \u00a0 | \u00a0 | 4,500,000 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | $ | 18,760,938 | \u00a0 | \u00a0 | $ | 5,188,978 | \u00a0 | \u00a0 | $ | 13,571,960 | \u00a0 |
\u00a0 | \u00a0 | Cost | \u00a0 | \u00a0 | Accumulated Amortization | \u00a0 | \u00a0 | Net Book\u00a0Value | \u00a0 | |||
Customer relationships, amortized over four years | \u00a0 | $ | 1,329,000 | \u00a0 | \u00a0 | $ | 304,842 | \u00a0 | \u00a0 | $ | 1,024,158 | \u00a0 |
Trade name, amortized over five years | \u00a0 | \u00a0 | 463,000 | \u00a0 | \u00a0 | \u00a0 | 85,083 | \u00a0 | \u00a0 | \u00a0 | 377,917 | \u00a0 |
Non-compete agreements, amortized over the term of the agreement | \u00a0 | \u00a0 | 143,000 | \u00a0 | \u00a0 | \u00a0 | 65,063 | \u00a0 | \u00a0 | \u00a0 | 77,937 | \u00a0 |
Online sales channels, amortized over two years | \u00a0 | \u00a0 | 1,800,000 | \u00a0 | \u00a0 | \u00a0 | 225,000 | \u00a0 | \u00a0 | \u00a0 | 1,575,000 | \u00a0 |
Vender relationships, amortized over five years | \u00a0 | \u00a0 | 6,000,000 | \u00a0 | \u00a0 | \u00a0 | 300,000 | \u00a0 | \u00a0 | \u00a0 | 5,700,000 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00a0 | $ | 9,735,000 | \u00a0 | \u00a0 | $ | 979,988 | \u00a0 | \u00a0 | $ | 8,755,012 | \u00a0 |
Customer relationships | \u00a0 | $ | 1,834,692 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 383,792 | \u00a0 |
Intangible Assets from Purchase | \u00a0 | $ | 2,218,484 | \u00a0 |
Customer relationships | \u00a0 | $ | 5,080,205 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 1,727,249 | \u00a0 |
Intangible Assets from Purchase | \u00a0 | $ | 6,807,454 | \u00a0 |
Customer relationships | \u00a0 | $ | 1,329,000 | \u00a0 |
Trade name | \u00a0 | \u00a0 | 463,000 | \u00a0 |
Non-compete agreements | \u00a0 | \u00a0 | 143,000 | \u00a0 |
Online sales channels | \u00a0 | \u00a0 | 1,800,000 | \u00a0 |
Vender relationships | \u00a0 | \u00a0 | 6,000,000 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Intangible Assets from Purchase | \u00a0 | $ | 9,735,000 | \u00a0 |
June 30, 2024 | \u00a0 | $ | 4,456,740 | \u00a0 |
June 30, 2025 | \u00a0 | \u00a0 | 3,775,782 | \u00a0 |
June 30, 2026 | \u00a0 | \u00a0 | 3,775,782 | \u00a0 |
June 30, 2027 | \u00a0 | \u00a0 | 1,538,187 | \u00a0 |
June 30, 2028 | \u00a0 | \u00a0 | 25,467 | \u00a0 |
Thereafter | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | $ | 13,571,960 | \u00a0 |
Note 6. Prepaid Expense and Other Current Assets
\u00a0
Prepaid and other receivables consist of the following:
\u00a0
\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | \u00a0 | June 30, 2022 | \u00a0 | ||
Insurance | \u00a0 | $ | 187,949 | \u00a0 | \u00a0 | $ | 32,045 | \u00a0 |
Prepayment to vendors | \u00a0 | \u00a0 | 263,652 | \u00a0 | \u00a0 | \u00a0 | 139,356 | \u00a0 |
Deposits on services | \u00a0 | \u00a0 | 45,678 | \u00a0 | \u00a0 | \u00a0 | 13,762 | \u00a0 |
Prepaid monthly rent | \u00a0 | \u00a0 | 27,813 | \u00a0 | \u00a0 | \u00a0 | 6,900 | \u00a0 |
Subscriptions and services being amortized over the service period | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 204,490 | \u00a0 |
Prepaid sales tax | \u00a0 | \u00a0 | 70,021 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Other deposits | \u00a0 | \u00a0 | 70,826 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Stock issued for prepaid interest on convertible note payable | \u00a0 | \u00a0 | 465,595 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Other prepaid expenses | \u00a0 | \u00a0 | 31,000 | \u00a0 | \u00a0 | \u00a0 | 364,347 | \u00a0 |
Other receivables | \u00a0 | \u00a0 | 144,765 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total | \u00a0 | $ | 1,307,299 | \u00a0 | \u00a0 | $ | 760,900 | \u00a0 |
\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | \u00a0 | June 30, 2022 | \u00a0 | ||
Insurance | \u00a0 | $ | 187,949 | \u00a0 | \u00a0 | $ | 32,045 | \u00a0 |
Prepayment to vendors | \u00a0 | \u00a0 | 263,652 | \u00a0 | \u00a0 | \u00a0 | 139,356 | \u00a0 |
Deposits on services | \u00a0 | \u00a0 | 45,678 | \u00a0 | \u00a0 | \u00a0 | 13,762 | \u00a0 |
Prepaid monthly rent | \u00a0 | \u00a0 | 27,813 | \u00a0 | \u00a0 | \u00a0 | 6,900 | \u00a0 |
Subscriptions and services being amortized over the service period | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 204,490 | \u00a0 |
Prepaid sales tax | \u00a0 | \u00a0 | 70,021 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Other deposits | \u00a0 | \u00a0 | 70,826 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Stock issued for prepaid interest on convertible note payable | \u00a0 | \u00a0 | 465,595 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Other prepaid expenses | \u00a0 | \u00a0 | 31,000 | \u00a0 | \u00a0 | \u00a0 | 364,347 | \u00a0 |
Other receivables | \u00a0 | \u00a0 | 144,765 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total | \u00a0 | $ | 1,307,299 | \u00a0 | \u00a0 | $ | 760,900 | \u00a0 |
Note 7. Operating Leases
\u00a0
The Company has operating leases for corporate offices,\u00a0warehouses and office equipment that have remaining\u00a0lease terms of 1 year to 5 years.
\u00a0
During November 2019, the Company entered into a lease for a Nevada facility that commenced on November 13, 2019, and recorded a right of use asset and corresponding lease liability. The Company uses this leased facility for office, manufacturing, and warehouse space. The Company is responsible for real estate taxes, utilities, and repairs under the terms of certain of the operating leases. Therefore, all lease and non-lease components are combined and accounted for as single lease component. Lease expense was $568,031 for the year ended June 30, 2022. Lease expenses for the year ended June 30, 2023 are included discontinued operations. The operating lease expired in 2022 and the Company continues to occupy the facility and pays rent on a month-to-month basis.
During May 2021, the Company entered into a lease for an additional Nevada facility that commenced on May 1, 2021, and recorded a right of use asset and corresponding lease liability. The Company uses this leased facility for additional warehouse space. Lease expense was $117,992 for each of the years ended June 30, 2023 and 2022.
\u00a0
During September 2020, the Company entered into a one-year lease for a Colorado facility that commenced on September 1, 2020, and recorded a right of use asset and corresponding lease liability. The Company used this facility for office and manufacturing space. Lease expense was $22,803 for the year ended June 30, 2022.
\u00a0
During November 2018, the Company entered into a lease for equipment that commenced on November 1, 2018, and recorded a right of use asset and corresponding lease liability. Lease expenses were $6,744 and $6,428 for the years ended June 30, 2023 and June 30, 2022, respectively.
\u00a0
On July 1, 2021, the Company entered into a 39-month lease for Florida facility and recorded a right to use asset and corresponding lease liability for Interactive Offers. The Company uses this facility for office space. Lease expense was $39,820 for each of the years ended June 30, 2023 and 2022 and has been included in discontinued operations.
\u00a0
During October 2021, the Company entered into a\u00a03-year lease for a California warehouse. The Company recorded a right of use asset and corresponding lease liability of $295,305. The Company will use this leased facility for assembly and distribution of finished goods. Lease expenses were $105,600 and $79,200 for the years ended June 30, 2023 and 2022, respectively.
\u00a0
On April 1, 2022, the Company acquired Cygnet which had entered into a lease for a Florida facility that commenced on October 8, 2021, and Cygnet had recorded a right of use asset and corresponding lease liability. The lease expires on October 8, 2026. The Company uses this leased facility for warehouse and office space. The Company is responsible for real estate taxes, utilities, and repairs under the terms of certain of the operating leases. Therefore, all lease and non-lease components are combined and accounted for as single lease component. Lease expenses were $102,228 and $21,800 for the years ended June 30, 2023 and 2022, respectively.
\u00a0
The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized in the condensed consolidated balance sheet as of June 30, 2023:
\u00a0
2024 | \u00a0 | $ | 318,636 | \u00a0 |
2025 | \u00a0 | \u00a0 | 143,302 | \u00a0 |
2026 | \u00a0 | \u00a0 | 121,273 | \u00a0 |
2027 | \u00a0 | \u00a0 | 33,683 | \u00a0 |
2028 | \u00a0 | \u00a0 | - | \u00a0 |
Total undiscounted future minimum lease payments | \u00a0 | \u00a0 | 616,893 | \u00a0 |
Less: Imputed interest | \u00a0 | \u00a0 | (34,091 | ) |
Present value of operating lease obligation | \u00a0 | $ | 582,802 | \u00a0 |
\u00a0
The Company\u2019s weighted average remaining lease term and weighted average discount rate for operating leases as of June 30, 2023 are:
\u00a0
Weighted average remaining lease term | \u00a0 | 29\u00a0Months | \u00a0 | |
Weighted average incremental borrowing rate | \u00a0 | \u00a0 | 5.0 | % |
\u00a0
For the years ended June 30, 2023 and 2022, the components of lease expense, included general and administrative expenses and interest expense in the condensed consolidated statement of operations, are as follows:
\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | \u00a0 | June 30, 2022 | \u00a0 | ||
Operating lease cost: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Operating lease cost | \u00a0 | $ | 341,644 | \u00a0 | \u00a0 | $ | 368,680 | \u00a0 |
Amortization of ROU assets | \u00a0 | \u00a0 | 304,827 | \u00a0 | \u00a0 | \u00a0 | 273,746 | \u00a0 |
Interest expense | \u00a0 | \u00a0 | 35,003 | \u00a0 | \u00a0 | \u00a0 | 38,290 | \u00a0 |
Total lease cost | \u00a0 | $ | 681,474 | \u00a0 | \u00a0 | $ | 680,716 | \u00a0 |
2024 | \u00a0 | $ | 318,636 | \u00a0 |
2025 | \u00a0 | \u00a0 | 143,302 | \u00a0 |
2026 | \u00a0 | \u00a0 | 121,273 | \u00a0 |
2027 | \u00a0 | \u00a0 | 33,683 | \u00a0 |
2028 | \u00a0 | \u00a0 | - | \u00a0 |
Total undiscounted future minimum lease payments | \u00a0 | \u00a0 | 616,893 | \u00a0 |
Less: Imputed interest | \u00a0 | \u00a0 | (34,091 | ) |
Present value of operating lease obligation | \u00a0 | $ | 582,802 | \u00a0 |
Weighted average remaining lease term | \u00a0 | 29\u00a0Months | \u00a0 | |
Weighted average incremental borrowing rate | \u00a0 | \u00a0 | 5.0 | % |
\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | \u00a0 | June 30, 2022 | \u00a0 | ||
Operating lease cost: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Operating lease cost | \u00a0 | $ | 341,644 | \u00a0 | \u00a0 | $ | 368,680 | \u00a0 |
Amortization of ROU assets | \u00a0 | \u00a0 | 304,827 | \u00a0 | \u00a0 | \u00a0 | 273,746 | \u00a0 |
Interest expense | \u00a0 | \u00a0 | 35,003 | \u00a0 | \u00a0 | \u00a0 | 38,290 | \u00a0 |
Total lease cost | \u00a0 | $ | 681,474 | \u00a0 | \u00a0 | $ | 680,716 | \u00a0 |
Note 8. Accrued Liabilities
\u00a0
Accrued liabilities consist of the following:
\u00a0
\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | \u00a0 | June 30, 2022 | \u00a0 | ||
Accrued expenses for loyalty program | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 6,418 | \u00a0 |
Accrued interest | \u00a0 | \u00a0 | 655,187 | \u00a0 | \u00a0 | \u00a0 | 147,887 | \u00a0 |
Accrued vendor liabilities | \u00a0 | \u00a0 | 861,664 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Accrued sales tax | \u00a0 | \u00a0 | 47,070 | \u00a0 | \u00a0 | \u00a0 | 108,425 | \u00a0 |
Derivative liability | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 81,909 | \u00a0 |
Accrued expenses from sale of manufacturing operations | \u00a0 | \u00a0 | 1,360,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Other accrued liabilities | \u00a0 | \u00a0 | 441,641 | \u00a0 | \u00a0 | \u00a0 | 471,993 | \u00a0 |
\u00a0 | \u00a0 | $ | 3,365,562 | \u00a0 | \u00a0 | $ | 816,632 | \u00a0 |
\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | \u00a0 | June 30, 2022 | \u00a0 | ||
Accrued expenses for loyalty program | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 6,418 | \u00a0 |
Accrued interest | \u00a0 | \u00a0 | 655,187 | \u00a0 | \u00a0 | \u00a0 | 147,887 | \u00a0 |
Accrued vendor liabilities | \u00a0 | \u00a0 | 861,664 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Accrued sales tax | \u00a0 | \u00a0 | 47,070 | \u00a0 | \u00a0 | \u00a0 | 108,425 | \u00a0 |
Derivative liability | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 81,909 | \u00a0 |
Accrued expenses from sale of manufacturing operations | \u00a0 | \u00a0 | 1,360,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Other accrued liabilities | \u00a0 | \u00a0 | 441,641 | \u00a0 | \u00a0 | \u00a0 | 471,993 | \u00a0 |
\u00a0 | \u00a0 | $ | 3,365,562 | \u00a0 | \u00a0 | $ | 816,632 | \u00a0 |
Note 9. Convertible Promissory Notes and Notes Payable
\u00a0
\u00a0
\u00a0 | \u00a0 | Maturity | \u00a0 | June 30, | \u00a0 | \u00a0 | June 30, | \u00a0 | ||
\u00a0 | \u00a0 | Date | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
Convertible Notes: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Promissory Note, 21- month term note, 18.11% interest payable with common stock and subordinate to the Convertible Notes | \u00a0 | November 22, 2024 | \u00a0 | $ | 2,150,000 | \u00a0 | \u00a0 | $ | - | \u00a0 |
Convertible Notes, 3-year term note, 8.5% cash interest, 3.5% PIK interest and collateralized with all the assets of the Company | \u00a0 | June 28, 2025 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 6,305,406 | \u00a0 |
Less current portion of notes payable | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,254,167 | \u00a0 | \u00a0 | \u00a0 | 3,125,000 | \u00a0 |
Notes payable, net of current portion | \u00a0 | \u00a0 | \u00a0 | $ | 895,833 | \u00a0 | \u00a0 | $ | 3,180,406 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Acquisition Notes: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Convertible Notes,\u00a036-month term notes, 0% cash interest, collateralized with all the assets of the Company | \u00a0 | October 31, 2025 | \u00a0 | \u00a0 | 3,500,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Subordinated Promissory Notes, 24-month term notes, 4% cash interest, collateralized with all the assets of the Company | \u00a0 | October 31, 2024 | \u00a0 | \u00a0 | 5,750,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Subordinated Promissory Notes, 12-month term notes, 4% cash interest, collateralized with all the assets of the Company | \u00a0 | October 31, 2023 | \u00a0 | \u00a0 | 5,750,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
VitaMedica Loan, 1-year term note, 6% interest and is convertible at $5.00 per share | \u00a0 | August 1, 2022 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 500,000 | \u00a0 |
Cygnet Loan, 1-year term note, 6% interest and is convertible at $6.00 per share | \u00a0 | April 15, 2023 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 1,050,000 | \u00a0 |
Total | \u00a0 | \u00a0 | \u00a0 | $ | 15,000,000 | \u00a0 | \u00a0 | $ | 1,550,000 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Discount on acquisition notes payable, current | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (93,380 | ) | \u00a0 | \u00a0 | - | \u00a0 |
Acquisition notes payable, current | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 5,750,000 | \u00a0 | \u00a0 | \u00a0 | 1,550,000 | \u00a0 |
Acquisition notes payable, current net | \u00a0 | \u00a0 | \u00a0 | $ | 5,656,620 | \u00a0 | \u00a0 | $ | 1,550,000 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Discount on acquisition notes payable, long-term | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (1,644,915 | ) | \u00a0 | \u00a0 | - | \u00a0 |
Acquisition notes payable, long-term | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 9,250,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Acquisition notes payable, long-term net | \u00a0 | \u00a0 | \u00a0 | $ | 7,605,085 | \u00a0 | \u00a0 | $ | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Notes Payable: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Marshall Loan,\u00a02-year term note, 8.5% cash interest, 3.5% PIK interest and subordinate to the Convertible Notes | \u00a0 | June 28, 2024 | \u00a0 | \u00a0 | 1,500,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Mortgage Loan, 10-year term note, 4.8% interest, collateralized by land and warehouse building | \u00a0 | September 26, 2032 | \u00a0 | \u00a0 | 2,841,566 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Promissory Note,\u00a021-month term note, 10% cash interest and subordinate to the Convertible Notes | \u00a0 | November 22, 2024 | \u00a0 | \u00a0 | 560,000 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
SBA note payable, 30-year term note, 6% interest rate and collateralized with all assets of the Company | \u00a0 | October 6, 2021 | \u00a0 | \u00a0 | 3,910,767 | \u00a0 | \u00a0 | \u00a0 | 4,216,248 | \u00a0 |
Inventory consignment note,\u00a060 monthly payments, with first payment due June 30, 2022, 3.5% interest rate and no security interest in the assets of the business | \u00a0 | June 30, 2027 | \u00a0 | \u00a0 | 1,099,592 | \u00a0 | \u00a0 | \u00a0 | 1,379,230 | \u00a0 |
GF Note, 6 annual payments,\u00a0with first payment due December 31, 2022, 3.5% interest rate and no security interest in the assets of the business | \u00a0 | November 7, 2026 | \u00a0 | \u00a0 | 683,968 | \u00a0 | \u00a0 | \u00a0 | 850,000 | \u00a0 |
Total notes payable | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 10,595,893 | \u00a0 | \u00a0 | \u00a0 | 6,445,478 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Discount on notes payable, current | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (94,836 | ) | \u00a0 | \u00a0 | - | \u00a0 |
Notes payable, current | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2,826,213 | \u00a0 | \u00a0 | \u00a0 | 749,752 | \u00a0 |
Notes payable, current net | \u00a0 | \u00a0 | \u00a0 | $ | 2,731,377 | \u00a0 | \u00a0 | $ | 749,752 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Discount on acquisition notes payable, long-term | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (23,522 | ) | \u00a0 | \u00a0 | - | \u00a0 |
Notes payable, long-term | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 7,769,679 | \u00a0 | \u00a0 | \u00a0 | 5,695,726 | \u00a0 |
Notes payable, long-term, net | \u00a0 | \u00a0 | \u00a0 | $ | 7,746,157 | \u00a0 | \u00a0 | $ | 5,695,726 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total convertible notes payable, acquisition notes payable and notes payable | \u00a0 | \u00a0 | \u00a0 | $ | \u00a025,889,239 | \u00a0 | \u00a0 | $ | \u00a014,330,884 | \u00a0 |
\u00a0
Future payments on notes payable are as follows:
\u00a0
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||||||
For the year ended June 30: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||||||
\u00a0 | \u00a0 | Note Payable | \u00a0 | \u00a0 | Convertible Notes | \u00a0 | \u00a0 | Acquisition Notes Payable | \u00a0 | \u00a0 | Total | \u00a0 | ||||
2024 | \u00a0 | $ | 2,826,213 | \u00a0 | \u00a0 | $ | 1,254,167 | \u00a0 | \u00a0 | $ | 5,750,000 | \u00a0 | \u00a0 | $ | 9,830,380 | \u00a0 |
2025 | \u00a0 | \u00a0 | 1,314,931 | \u00a0 | \u00a0 | \u00a0 | 895,833 | \u00a0 | \u00a0 | \u00a0 | 5,750,000 | \u00a0 | \u00a0 | \u00a0 | 7,960,764 | \u00a0 |
2026 | \u00a0 | \u00a0 | 1,130,403 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 3,500,000 | \u00a0 | \u00a0 | \u00a0 | 4,630,403 | \u00a0 |
2027 | \u00a0 | \u00a0 | 1,052,943 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,052,943 | \u00a0 |
2028 | \u00a0 | \u00a0 | 784,450 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 784,450 | \u00a0 |
Thereafter | \u00a0 | \u00a0 | 3,486,952 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 3,486,952 | \u00a0 |
\u00a0 | \u00a0 | $ | 10,595,892 | \u00a0 | \u00a0 | $ | 2,150,000 | \u00a0 | \u00a0 | $ | 15,000,000 | \u00a0 | \u00a0 | $ | 27,745,892 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Note original discount | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | (118,358 | ) | \u00a0 | $ | (1,738,295 | ) | \u00a0 | $ | (1,856,653 | ) |
\u00a0 | \u00a0 | $ | 10,595,892 | \u00a0 | \u00a0 | $ | 2,031,642 | \u00a0 | \u00a0 | $ | 13,261,705 | \u00a0 | \u00a0 | $ | 25,889,239 | \u00a0 |
Convertible Notes Payable:
\u00a0
In June 2022, the Company entered into a securities purchase agreement with two accredited investors pursuant to which the Company could receive up to $15,000,000\u00a0during the following twelve months of the agreement. The Company received $6,678,506\u00a0for Convertible Notes in the original principal amount of $7,500,000\u00a0(the \u201cConvertible Notes\u201d), representing the original purchase amount, less fees, costs and a $500,000\u00a0holdback by the investors. In addition to the Convertible Notes, the investors received Common Stock Purchase Warrants (the \u201cWarrants\u201d) to acquire an aggregate of\u00a056,250\u00a0shares of common stock. The Warrants are exercisable for five years at an exercise price of $4.44\u00a0per share, provide customary anti-dilution protection, and an investor put right to require the Company to redeem the Warrants for a total of $250,000. \u00a0There was a loss of $1,770 for the change in the derivative liability for the period ended March 31, 2023.\u00a0 On October 31, 2022, the Company entered into a letter agreement with the accredited investors in which all amounts owed were paid in full and the related convertible notes and all security interests were cancelled. Additionally, the Company terminated the related Form S-3 registration statement.
\u00a0
On February 22, 2023, the Company executed a promissory note with an investor, in the original principal amount of $2,150,000 together with the issuance of 134,000 restricted shares (\u201cthe PIK shares\u201d) of the Company\u2019s common stock at a price of $4.53 per share. The promissory note has a 21-month term and bears interest at 18.11% payable with the PIK shares. The promissory note provides for 12 monthly payments of principal beginning on December 22, 2023, and PIK interest of restricted shares on the Effective Date of the promissory note. The Company shall have the right at any time to convert all or any part of the outstanding and unpaid principal into fully paid and non-assessable shares of common stock, or any shares of capital stock or other securities, together with the PIK shares at a price per conversion share equal to $5.00.
\u00a0
Acquisition Notes Payable:
\u00a0
On August 1, 2021, the Company entered into a non-negotiable convertible promissory note related to the purchase of VitaMedica in the original principal amount of $500,000\u00a0(\u201cVitaMedica Note\u201d), convertible at $5.00\u00a0per share for a total of\u00a0100,000\u00a0shares of Company Common Stock. The Company repaid the note in full during August of 2022.
\u00a0
On April 15, 2022, the Company entered into a non-negotiable convertible promissory note in the original principal amount of $1,050,000, as adjusted, (\u201cCygnet Note\u201d) which can be converted into common stock of the Company at a price of $6.00\u00a0per share and is payable in full, to the extent not previously converted, on\u00a0April 15, 2023. The Company repaid the note in full plus all outstanding accrued interest during April 2023.
\u00a0
The Company and its wholly owned subsidiary, Upexi Enterprises, LLC entered into a securities purchase agreement with E-Core Technology, Inc. d/b/a New England Technology, Inc., a Florida corporation, and its three principals. The Company entered into a series of promissory notes with the principal parties: (a) promissory notes in the total original principal amount of $5,750,000 payable upon maturity with a term of 12 months at an interest rate of 4%, $600,000 of which shall be satisfied through the cancellation of an equal amount owed by one of the principals to the Company; (b) promissory notes in the total original principal amount of $5,750,000 payable upon maturity with a term of 24 months at an interest rate of 4%; and (c) promissory notes in the original principal amounts of $3,500,000 with a term of 36 months at an interest rate of 0%. The principals may convert the notes into shares of the Company\u2019s restricted common stock at a conversion price equal to $4.81. If the principals do not exercise their conversion rights, the principal balance of the notes will be paid in 12 equal monthly payments commencing on the two-year anniversary of the issuance of the notes, subject to adjustments based on the Company\u2019s EBITDA over the term of the notes.
Notes Payable:
\u00a0
In June 2022, the Company executed a promissory note with Allan Marshall, the Company\u2019s Chief Executive Officer, in the original principal amount of $1,500,000\u00a0(\u201cMarshall Loan\u201d). The promissory note has a 2-year term and bears cash interest at the rate of\u00a08.5% per annum with an additional PIK of\u00a03.5% per annum. The promissory note provides for monthly payments of principal, on an even line 36-month basis, plus cash interest, with a balloon payment of all outstanding principal, cash interest, and PIK interest at maturity. The Company received and deposited the principal amount on July 31, 2022.
\u00a0
On October 19, 2022, Upexi, Inc. (the \u201cCompany\u201d) and its indirect wholly owned subsidiary, Upexi 17129 Florida, LLC entered into a loan agreement, promissory note and related agreements with Professional Bank, a Florida state-chartered bank, providing for a mortgage on the Company\u2019s principal office in N. Clearwater, Florida. The Company received $3,000,000\u00a0in connection with the transaction. The principal is to be repaid to Professional Bank over a term of ten years. The proceeds of the loan were utilized by the Company to pay down its loan facility with Acorn Capital, LLC in the amount of $2,780,200.
\u00a0
On February 22, 2023, the Company executed a promissory note with an investor, in the original principal amount of $560,000. The promissory note has a 21-month term and bears cash interest at the rate of\u00a010% per annum. The promissory note provides for monthly payments of interest beginning on March 22, 2023 and 12 monthly payments of principal beginning on December 22, 2023.
\u00a0
There were certain loan outstanding prior to the acquisition of Cygnet Online prior to acquisition and continued to be outstanding post acquisition.\u00a0\u00a0\u00a0
\u00a0
\u00a0 | \u00b7 | Cygnet Online, entered into a loan for $4,436,900 with the Small Business Administration. The promissory note has a scheduled payment commencing on November 6, 2021, consisting of principal and interest. The interest rate is adjustable of prime plus 2.5% and is currently at 10.25%. The balance of the principal and interest will be payable ten years from the date of the promissory note. |
\u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00b7 | Cygnet Online, entered into a 60 month inventory consignment note with the first payment due June 30, 2022. The note bears interest at 3.5% per annum. |
\u00a0 | \u00a0 | \u00a0 |
\u00a0 | \u00b7 | Cygnet Online, executed a promissory note in the amount of $850,000 payable in six annual installments of principal and interest, the final payment due December 1, 2027. The note bears interest at 3.5% per annum. |
\u00a0 | \u00a0 | Maturity | \u00a0 | June 30, | \u00a0 | \u00a0 | June 30, | \u00a0 | ||
\u00a0 | \u00a0 | Date | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
Convertible Notes: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Promissory Note, 21- month term note, 18.11% interest payable with common stock and subordinate to the Convertible Notes | \u00a0 | November 22, 2024 | \u00a0 | $ | 2,150,000 | \u00a0 | \u00a0 | $ | - | \u00a0 |
Convertible Notes, 3-year term note, 8.5% cash interest, 3.5% PIK interest and collateralized with all the assets of the Company | \u00a0 | June 28, 2025 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 6,305,406 | \u00a0 |
Less current portion of notes payable | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,254,167 | \u00a0 | \u00a0 | \u00a0 | 3,125,000 | \u00a0 |
Notes payable, net of current portion | \u00a0 | \u00a0 | \u00a0 | $ | 895,833 | \u00a0 | \u00a0 | $ | 3,180,406 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Acquisition Notes: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Convertible Notes,\u00a036-month term notes, 0% cash interest, collateralized with all the assets of the Company | \u00a0 | October 31, 2025 | \u00a0 | \u00a0 | 3,500,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Subordinated Promissory Notes, 24-month term notes, 4% cash interest, collateralized with all the assets of the Company | \u00a0 | October 31, 2024 | \u00a0 | \u00a0 | 5,750,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Subordinated Promissory Notes, 12-month term notes, 4% cash interest, collateralized with all the assets of the Company | \u00a0 | October 31, 2023 | \u00a0 | \u00a0 | 5,750,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
VitaMedica Loan, 1-year term note, 6% interest and is convertible at $5.00 per share | \u00a0 | August 1, 2022 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 500,000 | \u00a0 |
Cygnet Loan, 1-year term note, 6% interest and is convertible at $6.00 per share | \u00a0 | April 15, 2023 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 1,050,000 | \u00a0 |
Total | \u00a0 | \u00a0 | \u00a0 | $ | 15,000,000 | \u00a0 | \u00a0 | $ | 1,550,000 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Discount on acquisition notes payable, current | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (93,380 | ) | \u00a0 | \u00a0 | - | \u00a0 |
Acquisition notes payable, current | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 5,750,000 | \u00a0 | \u00a0 | \u00a0 | 1,550,000 | \u00a0 |
Acquisition notes payable, current net | \u00a0 | \u00a0 | \u00a0 | $ | 5,656,620 | \u00a0 | \u00a0 | $ | 1,550,000 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Discount on acquisition notes payable, long-term | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (1,644,915 | ) | \u00a0 | \u00a0 | - | \u00a0 |
Acquisition notes payable, long-term | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 9,250,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Acquisition notes payable, long-term net | \u00a0 | \u00a0 | \u00a0 | $ | 7,605,085 | \u00a0 | \u00a0 | $ | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Notes Payable: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Marshall Loan,\u00a02-year term note, 8.5% cash interest, 3.5% PIK interest and subordinate to the Convertible Notes | \u00a0 | June 28, 2024 | \u00a0 | \u00a0 | 1,500,000 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Mortgage Loan, 10-year term note, 4.8% interest, collateralized by land and warehouse building | \u00a0 | September 26, 2032 | \u00a0 | \u00a0 | 2,841,566 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Promissory Note,\u00a021-month term note, 10% cash interest and subordinate to the Convertible Notes | \u00a0 | November 22, 2024 | \u00a0 | \u00a0 | 560,000 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
SBA note payable, 30-year term note, 6% interest rate and collateralized with all assets of the Company | \u00a0 | October 6, 2021 | \u00a0 | \u00a0 | 3,910,767 | \u00a0 | \u00a0 | \u00a0 | 4,216,248 | \u00a0 |
Inventory consignment note,\u00a060 monthly payments, with first payment due June 30, 2022, 3.5% interest rate and no security interest in the assets of the business | \u00a0 | June 30, 2027 | \u00a0 | \u00a0 | 1,099,592 | \u00a0 | \u00a0 | \u00a0 | 1,379,230 | \u00a0 |
GF Note, 6 annual payments,\u00a0with first payment due December 31, 2022, 3.5% interest rate and no security interest in the assets of the business | \u00a0 | November 7, 2026 | \u00a0 | \u00a0 | 683,968 | \u00a0 | \u00a0 | \u00a0 | 850,000 | \u00a0 |
Total notes payable | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 10,595,893 | \u00a0 | \u00a0 | \u00a0 | 6,445,478 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Discount on notes payable, current | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (94,836 | ) | \u00a0 | \u00a0 | - | \u00a0 |
Notes payable, current | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2,826,213 | \u00a0 | \u00a0 | \u00a0 | 749,752 | \u00a0 |
Notes payable, current net | \u00a0 | \u00a0 | \u00a0 | $ | 2,731,377 | \u00a0 | \u00a0 | $ | 749,752 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Discount on acquisition notes payable, long-term | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (23,522 | ) | \u00a0 | \u00a0 | - | \u00a0 |
Notes payable, long-term | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 7,769,679 | \u00a0 | \u00a0 | \u00a0 | 5,695,726 | \u00a0 |
Notes payable, long-term, net | \u00a0 | \u00a0 | \u00a0 | $ | 7,746,157 | \u00a0 | \u00a0 | $ | 5,695,726 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Total convertible notes payable, acquisition notes payable and notes payable | \u00a0 | \u00a0 | \u00a0 | $ | \u00a025,889,239 | \u00a0 | \u00a0 | $ | \u00a014,330,884 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||||||
For the year ended June 30: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||||||
\u00a0 | \u00a0 | Note Payable | \u00a0 | \u00a0 | Convertible Notes | \u00a0 | \u00a0 | Acquisition Notes Payable | \u00a0 | \u00a0 | Total | \u00a0 | ||||
2024 | \u00a0 | $ | 2,826,213 | \u00a0 | \u00a0 | $ | 1,254,167 | \u00a0 | \u00a0 | $ | 5,750,000 | \u00a0 | \u00a0 | $ | 9,830,380 | \u00a0 |
2025 | \u00a0 | \u00a0 | 1,314,931 | \u00a0 | \u00a0 | \u00a0 | 895,833 | \u00a0 | \u00a0 | \u00a0 | 5,750,000 | \u00a0 | \u00a0 | \u00a0 | 7,960,764 | \u00a0 |
2026 | \u00a0 | \u00a0 | 1,130,403 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 3,500,000 | \u00a0 | \u00a0 | \u00a0 | 4,630,403 | \u00a0 |
2027 | \u00a0 | \u00a0 | 1,052,943 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,052,943 | \u00a0 |
2028 | \u00a0 | \u00a0 | 784,450 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 784,450 | \u00a0 |
Thereafter | \u00a0 | \u00a0 | 3,486,952 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 3,486,952 | \u00a0 |
\u00a0 | \u00a0 | $ | 10,595,892 | \u00a0 | \u00a0 | $ | 2,150,000 | \u00a0 | \u00a0 | $ | 15,000,000 | \u00a0 | \u00a0 | $ | 27,745,892 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Note original discount | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | (118,358 | ) | \u00a0 | $ | (1,738,295 | ) | \u00a0 | $ | (1,856,653 | ) |
\u00a0 | \u00a0 | $ | 10,595,892 | \u00a0 | \u00a0 | $ | 2,031,642 | \u00a0 | \u00a0 | $ | 13,261,705 | \u00a0 | \u00a0 | $ | 25,889,239 | \u00a0 |
Note 10. Related Party Transactions
\u00a0
The Company purchased Interactive Offers, Interactive Offers, LLC, a Delaware limited liability company The Company\u2019s CEO and Chairman, Allan Marshall, is the controlling stockholder and the president of MFA Holdings Corp., which owned 20% of the outstanding membership interests in Interactive.
\u00a0
During the year ended June 30, 2022, the Company entered into a promissory note with Allan Marshall, CEO of the Company. The loan was for $1,500,000 and has a two-year term with an interest rate of 8.5% per annum with an additional PIK of 3.5% per annum.
\u00a0
The above related party transactions are not necessarily indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent parties.
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\u00a0
Convertible Preferred Stock
\u00a0
The Company\u2019s Board of Directors has authorized 1,000,000 shares of preferred stock with a par value of $0.001 and issued 500,000 shares of preferred stock for a purchase price of $50,000. This preferred stock is convertible into shares of common stock at a ratio of 1.8 shares of preferred stock for a single share of the Company\u2019s common stock with additional terms and conditions determined by the Board of Directors. During the year ended June 30, 2020, an investor converted 500,000 shares of preferred stock into 277,778 shares of common stock.
\u00a0
On February 2, 2021, the Company sold the 500,000 shares of Preferred Stock to Allan Marshall, CEO for net proceeds of $50,000. The preferred stock is convertible into the Company\u2019s common stock at a ratio of 1.8 shares of preferred stock for a single share of the Company\u2019s common stock at the holder\u2019s option, has preferential liquidation rights and the preferred stock shall vote together with the common stock as a single class on all matters to which shareholders of the Company are entitled to vote at the rate of ten votes per share of preferred stock.
\u00a0
Common Stock
\u00a0
On February 8, 2021, the Shareholders consented, and the Board of Directors approved the Reverse Stock Split at the rate of 1 share of Common Stock for each 1.8 shares of Common Stock of the Company issued and outstanding (rounded up to the nearest whole number after giving effect to the Reverse Stock Split) on the Record Date of February 5, 2021.\u00a0
\u00a0
On February 8, 2021, the Board of Directors approved the officers of the Company to file a Registration Statement on Form S-1 (the \u201cRegistration Statement\u201d) to be prepared for the purposes of registering (i) up to $20,000,000 of Common Stock at a purchase price of no less than $4.50 per share (post reverse split), including an over-allotment option for the underwriter named therein (the \u201cUnderwriter\u201d) to purchase additional shares of Common Stock amounting to 15% of the number of shares of Common Stock offered to the public; and (ii) a warrant to be issued to the Underwriter for the purchase of shares of Common Stock (the \u201cUnderwriter Warrant\u201d); and (iii) the shares of Common Stock underlying the Underwriter Warrant (collectively, the \u201cSecurities\u201d).
\u00a0
On June 28, 2021, and the Company completed the sale of 2,530,000 shares of Common Stock to the Underwriters, which includes 330,000 shares sold upon the full exercise of the option, for total gross proceeds of approximately $12,650,000. After deducting the underwriting commissions, discounts, and offering expenses payable by the Company, the Company received net proceeds of $10,950,315.\u00a0 This registration is no longer effective.\u00a0
\u00a0
During the year ended June 30, 2021, the Company issued 526,404 shares of common stock for the acquisition of Infusionz. The shares were valued at $1,235,124 and the Company issued 306,935 of the Company\u2019s stock on September 1, 2021, for the remaining acquisition liability of $1,764,876. In addition, the Company issued 83,334 shares of common stock valued at $127,500 for acquisition costs.
\u00a0
During the year ended June 30, 2022:
\u00a0
The Company issued\u00a0306,945\u00a0shares of common stock for the acquisition of Infusionz, the shares were valued at $1,764,876.
\u00a0
The Company issued\u00a0100,000\u00a0shares of common stock for the acquisition of VitaMedica, the shares were valued at $482,000.
\u00a0
During the year ended June 30, 2023:
\u00a0
The Company issued\u00a01,247,403\u00a0shares of common stock for the acquisition of E-Core Technologies Inc., a Florida corporation, valued at $6,000,000.
\u00a0
The Company issued 134,000 shares of common stock for prepayment of interest on a note payable.\u00a0 The shares were valued at $607,020 or $4.52 per common share and recorded as prepaid interest as the shares were issued at that time.
\u00a0
The Company agreed to sell 2,121,213 shares of common stock for a purchase price of approximately\u00a0$7,000,000. After deducting the underwriter\u2019s commissions, discounts, and offering expenses payable by the company, the Company expects to receive net proceeds of approximately $6,060,000.\u00a0 In addition, the Company issued warrants to purchase approximately 169,000 shares of the Company\u2019s common stock at a purchase price of $4.774 per common share.\u00a0\u00a0
In September of 2023, the Company issued 90,909 shares of common stock for the purchase of the remaining 45% of Cygnet Online, LLC.\u00a0 The shares were valued at $162,727 or $1.79 per common share.\u00a0
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12. Stock Based Compensation
\u00a0
The Company has established a Company an incentive plan, 2019 Equity Incentive Plan (the \u201c2019 Plan\u201d). The plan grants incentives to select persons who can make, are making and continue to make substantial contributions to the growth and success of the Company, to attract and retain the employment and services of such persons and to encourage and reward such contributions by providing these individuals with an opportunity to acquire or increase stock ownership in the Company through either the grant of options or restructured stock. The 2019 Plan is administered by the Compensation Committee or such other committee as is appointed by the Board of Directors pursuant to the 2019 Plan (the \u201cCommittee\u201d). The Committee has full authority to administer and interpret the provisions of the 2019 Plan including, but not limited to, the authority to make all determinations with regard to the terms and conditions of an award made under the 2019 Plan. On February 8, 2021, the Shareholders consented, and the Board of Directors approved, the amendment of the 2019 Plan to increase the maximum number of Shares that may be issued thereunder by 2,777,778 Shares to 5,555,555 Shares. On May 24, 2022, the Shareholders consented, and the Board of Directors approved the amendment of the 2019 Plan to increase the maximum number of Shares that may be issued thereunder by 4,444,445 Shares to 10,000,000 Shares.
\u00a0
The Board of Directors of the Company may from time to time, in its discretion grant to directors, officers, consultants and employees of the Company, non-transferable options to purchase common shares. The options are exercisable for a period of up to 10 years from the date of the grant.
\u00a0
The following table reflects the continuity of stock options for the year ended June 30, 2023, and 2022:
\u00a0
A summary of stock option activity is as follows:
\u00a0
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Weighted | \u00a0 | \u00a0 | Average | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Average | \u00a0 | \u00a0 | Remaining | \u00a0 | \u00a0 | Aggregated | \u00a0 | ||||
\u00a0 | \u00a0 | Options | \u00a0 | \u00a0 | Exercise | \u00a0 | \u00a0 | Contractual | \u00a0 | \u00a0 | Intrinsic | \u00a0 | ||||
\u00a0 | \u00a0 | Outstanding | \u00a0 | \u00a0 | Price | \u00a0 | \u00a0 | Life (Years) | \u00a0 | \u00a0 | Value | \u00a0 | ||||
Outstanding at June 30, 2021 | \u00a0 | \u00a0 | 2,089,000 | \u00a0 | \u00a0 | $ | 1.55 | \u00a0 | \u00a0 | \u00a0 | 7.49 | \u00a0 | \u00a0 | $ | 9,689,865 | \u00a0 |
Granted | \u00a0 | \u00a0 | 2,302,000 | \u00a0 | \u00a0 | \u00a0 | 4.36 | \u00a0 | \u00a0 | \u00a0 | 10 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Forfeited | \u00a0 | \u00a0 | (111,112 | ) | \u00a0 | \u00a0 | 1.53 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Outstanding at June 30, 2022 | \u00a0 | \u00a0 | 4,279,888 | \u00a0 | \u00a0 | $ | 3.05 | \u00a0 | \u00a0 | \u00a0 | 7.42 | \u00a0 | \u00a0 | $ | 4,919,182 | \u00a0 |
Granted | \u00a0 | \u00a0 | 1,043,000 | \u00a0 | \u00a0 | \u00a0 | 4.63 | \u00a0 | \u00a0 | \u00a0 | 10 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Forfeited | \u00a0 | \u00a0 | (483,610 | ) | \u00a0 | \u00a0 | 1.53 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Outstanding at June 30, 2023 | \u00a0 | \u00a0 | 4,839,278 | \u00a0 | \u00a0 | $ | 3.31 | \u00a0 | \u00a0 | \u00a0 | 6.23 | \u00a0 | \u00a0 | $ | 1,342,280 | \u00a0 |
Options exercisable at June 30, 2023 (vested) | \u00a0 | \u00a0 | 4,349,799 | \u00a0 | \u00a0 | $ | 3.12 | \u00a0 | \u00a0 | \u00a0 | 6.41 | \u00a0 | \u00a0 | $ | 3,131,855 | \u00a0 |
Options exercisable at June 30, 2022 (vested) | \u00a0 | \u00a0 | 2,987,772 | \u00a0 | \u00a0 | $ | 2.43 | \u00a0 | \u00a0 | \u00a0 | 7.57 | \u00a0 | \u00a0 | $ | 7,977,353 | \u00a0 |
\u00a0
The average fair value of stock options granted was estimated to be $4.63 per share for the period ended June 30, 2023, and the closing stock price on June 30, 2023, was $2.25 per common share.
\u00a0
The average fair value of stock options granted was estimated to be $4.36 per share for the period ended June 30, 2022, and the closing stock price on June 30, 2022, was $4.20 per common share.
\u00a0
Stock-based compensation expense attributable to stock options was approximately $3,664,538 and $2,755,016 for the years ended June 30, 2023 and 2022, respectively. As of June 30, 2023, there was approximately $1,454,613 unrecognized compensation expense related to unvested stock options outstanding, and the weighted average vesting period for those options was 2 years.
The value of each grant is estimated at the grant date using the Black-Scholes option model with the following assumptions for options granted during the years ended June 30, 2023 and 2022.
\u00a0
\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | June 30, 2022 | \u00a0 | |
Dividend rate | \u00a0 | - | \u00a0 | \u00a0 | - | \u00a0 |
Risk free interest rate | \u00a0 | 2.70%-4.38% | \u00a0 | 0.69%-2.91 | %\u00a0 | |
Expected term | \u00a0 | 6.5 | \u00a0 | \u00a0 | 6.5 | \u00a0 |
Expected volatility | \u00a0 | 68% - 117% | \u00a0 | 69 | % | |
Grant date stock price | $ | 1.62 \u2013 5.30 | \u00a0 | $ | 4.18 \u2013 5.34 | \u00a0 |
\u00a0
The basis for the above assumptions are as follows: the dividend rate is based upon the Company\u2019s history of dividends; the risk-free interest rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant; the expected term was calculated based on the Company\u2019s historical pattern of options granted and the period of time they are expected to be outstanding; and expected volatility was calculated based upon historical trends in the Company\u2019s stock prices.
\u00a0
Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Based on historical experience of forfeitures, the Company estimated forfeitures at 0% for each of the years ended June 30, 2023, and 2022, respectively.
\u00a0
There were 4,648,624 shares available for issuance as of September 27, 2023, under the 2019 Plan as amended.
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\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Average | \u00a0 | \u00a0 | Remaining | \u00a0 | \u00a0 | Aggregated | \u00a0 | ||||
\u00a0 | \u00a0 | Options | \u00a0 | \u00a0 | Exercise | \u00a0 | \u00a0 | Contractual | \u00a0 | \u00a0 | Intrinsic | \u00a0 | ||||
\u00a0 | \u00a0 | Outstanding | \u00a0 | \u00a0 | Price | \u00a0 | \u00a0 | Life (Years) | \u00a0 | \u00a0 | Value | \u00a0 | ||||
Outstanding at June 30, 2021 | \u00a0 | \u00a0 | 2,089,000 | \u00a0 | \u00a0 | $ | 1.55 | \u00a0 | \u00a0 | \u00a0 | 7.49 | \u00a0 | \u00a0 | $ | 9,689,865 | \u00a0 |
Granted | \u00a0 | \u00a0 | 2,302,000 | \u00a0 | \u00a0 | \u00a0 | 4.36 | \u00a0 | \u00a0 | \u00a0 | 10 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Forfeited | \u00a0 | \u00a0 | (111,112 | ) | \u00a0 | \u00a0 | 1.53 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Outstanding at June 30, 2022 | \u00a0 | \u00a0 | 4,279,888 | \u00a0 | \u00a0 | $ | 3.05 | \u00a0 | \u00a0 | \u00a0 | 7.42 | \u00a0 | \u00a0 | $ | 4,919,182 | \u00a0 |
Granted | \u00a0 | \u00a0 | 1,043,000 | \u00a0 | \u00a0 | \u00a0 | 4.63 | \u00a0 | \u00a0 | \u00a0 | 10 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Forfeited | \u00a0 | \u00a0 | (483,610 | ) | \u00a0 | \u00a0 | 1.53 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Outstanding at June 30, 2023 | \u00a0 | \u00a0 | 4,839,278 | \u00a0 | \u00a0 | $ | 3.31 | \u00a0 | \u00a0 | \u00a0 | 6.23 | \u00a0 | \u00a0 | $ | 1,342,280 | \u00a0 |
Options exercisable at June 30, 2023 (vested) | \u00a0 | \u00a0 | 4,349,799 | \u00a0 | \u00a0 | $ | 3.12 | \u00a0 | \u00a0 | \u00a0 | 6.41 | \u00a0 | \u00a0 | $ | 3,131,855 | \u00a0 |
Options exercisable at June 30, 2022 (vested) | \u00a0 | \u00a0 | 2,987,772 | \u00a0 | \u00a0 | $ | 2.43 | \u00a0 | \u00a0 | \u00a0 | 7.57 | \u00a0 | \u00a0 | $ | 7,977,353 | \u00a0 |
\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | June 30, 2022 | \u00a0 | |
Dividend rate | \u00a0 | - | \u00a0 | \u00a0 | - | \u00a0 |
Risk free interest rate | \u00a0 | 2.70%-4.38% | \u00a0 | 0.69%-2.91 | %\u00a0 | |
Expected term | \u00a0 | 6.5 | \u00a0 | \u00a0 | 6.5 | \u00a0 |
Expected volatility | \u00a0 | 68% - 117% | \u00a0 | 69 | % | |
Grant date stock price | $ | 1.62 \u2013 5.30 | \u00a0 | $ | 4.18 \u2013 5.34 | \u00a0 |
13. Income Taxes
\u00a0
The components of the provision for income taxes are as follows:
\u00a0
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Current tax provision | \u00a0 | $ | 349,260 | \u00a0 | \u00a0 | $ | 80,769 | \u00a0 |
Deferred tax provision | \u00a0 | \u00a0 | (3,601,298 | ) | \u00a0 | \u00a0 | (599,167 | ) |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Provision for income taxes (benefit) | \u00a0 | $ | (3,049,293 | ) | \u00a0 | $ | (518,398 | ) |
\u00a0
The differences between income taxes calculated at the statutory US federal income tax rate and the Company\u2019s provision for income taxes are as follows:
\u00a0
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Income tax provision at statutory federal and state tax rate | \u00a0 | \u00a0 | 21.00 | % | \u00a0 | \u00a0 | 21.00 | % |
State taxes, net of federal benefit | \u00a0 | \u00a0 | 5.04 | % | \u00a0 | \u00a0 | (2.70 | )% |
Nondeductible expense | \u00a0 | \u00a0 | (0.24 | )% | \u00a0 | \u00a0 | 2.79 | % |
Tax return to provision | \u00a0 | \u00a0 | (2.67 | )% | \u00a0 | -% | \u00a0 | |
State tax rate change | \u00a0 | \u00a0 | 1.81 | % | \u00a0 | % | \u00a0 | |
Other, net | \u00a0 | \u00a0 | 0.90 | % | \u00a0 | \u00a0 | 0.72 | % |
Valuation allowance | \u00a0 | - | % | \u00a0 | - | % | ||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Provision for income taxes | \u00a0 | \u00a0 | 25.83 | % | \u00a0 | \u00a0 | 20.37 | % |
The net deferred income tax asset balance related to the following:
\u00a0
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Net operating losses carry forward | \u00a0 | $ | 752,863 | \u00a0 | \u00a0 | $ | 296,352 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Reward points | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 1,536 | \u00a0 |
Inventory write off | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 11,965 | \u00a0 |
Impairment loss \u2013 Interactive Offers | \u00a0 | \u00a0 | 1,015,997 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Intangible assets | \u00a0 | \u00a0 | 1,714,8701 | \u00a0 | \u00a0 | \u00a0 | 691,411 | \u00a0 |
Stock Options | \u00a0 | \u00a0 | 1,999,688 | \u00a0 | \u00a0 | \u00a0 | 887,550 | \u00a0 |
Allowance for doubtful accounts | \u00a0 | \u00a0 | 56,112 | \u00a0 | \u00a0 | \u00a0 | 13,760 | \u00a0 |
Accrued compensation | \u00a0 | \u00a0 | 19,323 | \u00a0 | \u00a0 | \u00a0 | 19,970 | \u00a0 |
Deferred revenue | \u00a0 | \u00a0 | 18,196 | \u00a0 | \u00a0 | \u00a0 | 80,215 | \u00a0 |
Other, net | \u00a0 | \u00a0 | 7 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Valuation allowances | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Deferred tax asset | \u00a0 | $ | 5,604,056 | \u00a0 | \u00a0 | $ | 2,002,759 | \u00a0 |
\u00a0
There were approximately $3,097,791 and $1,411,198 of losses available to reduce federal taxable income in future years and can be carried forward indefinitely as of June 30, 2023 and June 30, 2022 respectively.
\u00a0
Future realization of the tax benefits of existing temporary differences and net operating loss carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of June 30, 2023 and 2022, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company also considered whether there was any currently available information about future years. The Company determined that it is more likely than not that the Company will have future taxable income. The Company used $2,506,514 of the federal net operating loss carryover during the year ended June 30, 2022.
\u00a0
We file federal and state income tax returns in jurisdictions with varying statutes of limitations. Income tax returns generally remain subject to examination by federal and most state tax authorities. We are not currently under examination in any federal or state jurisdiction.
"}]},{"name":"rpt:f-1145","factDimensions":{"xbrl:concept":"upxi:ScheduleOfIncomeTaxTableTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Current tax provision | \u00a0 | $ | 349,260 | \u00a0 | \u00a0 | $ | 80,769 | \u00a0 |
Deferred tax provision | \u00a0 | \u00a0 | (3,601,298 | ) | \u00a0 | \u00a0 | (599,167 | ) |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Provision for income taxes (benefit) | \u00a0 | $ | (3,049,293 | ) | \u00a0 | $ | (518,398 | ) |
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Income tax provision at statutory federal and state tax rate | \u00a0 | \u00a0 | 21.00 | % | \u00a0 | \u00a0 | 21.00 | % |
State taxes, net of federal benefit | \u00a0 | \u00a0 | 5.04 | % | \u00a0 | \u00a0 | (2.70 | )% |
Nondeductible expense | \u00a0 | \u00a0 | (0.24 | )% | \u00a0 | \u00a0 | 2.79 | % |
Tax return to provision | \u00a0 | \u00a0 | (2.67 | )% | \u00a0 | -% | \u00a0 | |
State tax rate change | \u00a0 | \u00a0 | 1.81 | % | \u00a0 | % | \u00a0 | |
Other, net | \u00a0 | \u00a0 | 0.90 | % | \u00a0 | \u00a0 | 0.72 | % |
Valuation allowance | \u00a0 | - | % | \u00a0 | - | % | ||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Provision for income taxes | \u00a0 | \u00a0 | 25.83 | % | \u00a0 | \u00a0 | 20.37 | % |
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Net operating losses carry forward | \u00a0 | $ | 752,863 | \u00a0 | \u00a0 | $ | 296,352 | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Reward points | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 1,536 | \u00a0 |
Inventory write off | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | 11,965 | \u00a0 |
Impairment loss \u2013 Interactive Offers | \u00a0 | \u00a0 | 1,015,997 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Intangible assets | \u00a0 | \u00a0 | 1,714,8701 | \u00a0 | \u00a0 | \u00a0 | 691,411 | \u00a0 |
Stock Options | \u00a0 | \u00a0 | 1,999,688 | \u00a0 | \u00a0 | \u00a0 | 887,550 | \u00a0 |
Allowance for doubtful accounts | \u00a0 | \u00a0 | 56,112 | \u00a0 | \u00a0 | \u00a0 | 13,760 | \u00a0 |
Accrued compensation | \u00a0 | \u00a0 | 19,323 | \u00a0 | \u00a0 | \u00a0 | 19,970 | \u00a0 |
Deferred revenue | \u00a0 | \u00a0 | 18,196 | \u00a0 | \u00a0 | \u00a0 | 80,215 | \u00a0 |
Other, net | \u00a0 | \u00a0 | 7 | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
Valuation allowances | \u00a0 | \u00a0 | - | \u00a0 | \u00a0 | \u00a0 | - | \u00a0 |
\u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Deferred tax asset | \u00a0 | $ | 5,604,056 | \u00a0 | \u00a0 | $ | 2,002,759 | \u00a0 |
Note 14. Risks and Uncertainties
\u00a0
There is substantial uncertainty and different interpretations among federal, state and local regulatory agencies, legislators, academics and businesses as to the scope of operation of Farm Bill-compliant hemp programs relative to the emerging regulation of cannabinoids. These different opinions include, but are not limited to, the regulation of cannabinoids by the U.S. Drug Enforcement Administration, or DEA, and/or the FDA and the extent to which manufacturers of products containing Farm Bill-compliant cultivators and processors may engage in interstate commerce. The uncertainties cannot be resolved without further federal, and perhaps even state-level, legislation, regulation or a definitive judicial interpretation of existing legislation and rules. If these uncertainties continue, they may have an adverse effect upon the introduction of our products in different markets.
\u00a0
In December 2019, a novel strain of coronavirus (COVID-19) surfaced. The spread of COVID-19 around the world in the first quarter of 2020 has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies and, as such, the Company is unable to predict with certainty the potential impact of COVID-19 on its business, results of operations, financial condition and cash flows.
"}]},{"name":"rpt:f-1194","factDimensions":{"xbrl:concept":"upxi:SignificantCustomersTextBlock","xbrl:period":"2022-07-01T00:00:00/2023-07-01T00:00:00","xbrl:entity":"cik:0001775194"},"factValues":[{"value":"Note 15. Significant Customers
\u00a0
The Company had significant customers during the year ended June 30, 2023. A significant customer is defined as one that makes up ten percent or more of total revenues in a particular year or ten percent of outstanding accounts receivable balance as of the year end.\u00a0 The Company had no significant customers during the year ended June 30, 2022.
\u00a0
Net revenues for the year ended June 30, 2023, include revenues from significant customers in the product segment as follows:
\u00a0
\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | |
Customer A | \u00a0 | \u00a0 | 7.7 | % |
Customer B | \u00a0 | \u00a0 | 4.6 | % |
Customer C | \u00a0 | \u00a0 | 18.2 | % |
\u00a0
Accounts receivable balances as of June 30, 2023, from significant customers are as follows:
\u00a0
\u00a0 | \u00a0 | June 30, | \u00a0 | |
\u00a0 | \u00a0 | 2023 | \u00a0 | |
Customer A | \u00a0 | \u00a0 | 30 | % |
Customer B | \u00a0 | \u00a0 | 13 | % |
\u00a0 | \u00a0 | June 30, 2023 | \u00a0 | |
Customer A | \u00a0 | \u00a0 | 7.7 | % |
Customer B | \u00a0 | \u00a0 | 4.6 | % |
Customer C | \u00a0 | \u00a0 | 18.2 | % |
\u00a0 | \u00a0 | June 30, | \u00a0 | |
\u00a0 | \u00a0 | 2023 | \u00a0 | |
Customer A | \u00a0 | \u00a0 | 30 | % |
Customer B | \u00a0 | \u00a0 | 13 | % |
Note 16.\u00a0 Discontinued Operations \u2013 Sale of Infusionz to Bloomios
\u00a0
On October 28, 2022, the Company determined that the best course of action related to Infusionz, LLC and certain manufacturing business was to accept an offer to sell those operations. \u00a0
\u00a0
The Company received from Bloomios, Inc.(OTCQB:BLMS), the purchaser (i) $5,500,000 paid at closing; (ii) a convertible secured subordinated promissory note in the original principal amount of $5,000,000; (iii) 85,000 shares of Series D convertible preferred stock, with a total stated value of $8,500,000; (iv) a senior secured convertible debenture with a subscription amount of $4,500,000, after original issue discount of $779,117; and (v) a common stock purchase warrant to purchase up to 2,853,910 shares of Bloomios\u2019s common stock.\u00a0 The Company recorded the consideration received at the estimated value at the time of the transaction and as part of that estimate valued the additional warrants to purchase Bloomios shares of common stock at $8,500,000 and a valuation allowance of $8,500,000.
\u00a0
The assets transferred were recorded at their respective book values, the accrued and incurred expenses estimated by management were recorded and the consideration received was recorded at managements estimated fair value based on the balance sheet on October 26, 2022, the effective closing date.
\u00a0
Tangible assets, inventory / working capital* | \u00a0 | $ | (1,344,000 | ) |
Tangible assets, warehouse and manufacturing equipment, net of accumulated depreciation* | \u00a0 | \u00a0 | (679,327 | ) |
Goodwill | \u00a0 | \u00a0 | (2,413,814 | ) |
Intangible assets, net of accumulated amortization | \u00a0 | \u00a0 | (946,996 | ) |
Accrued and incurred expenses related to the transaction and additional working capital* | \u00a0 | \u00a0 | (2,051,500 | ) |
Consideration received, including cash, debt and equity, net | \u00a0 | \u00a0 | 15,000,000 | \u00a0 |
Total gain recognized | \u00a0 | $ | 7,564,363 | \u00a0 |
\u00a0
*During the continuing transition period, all of the inventory or working capital has not been transferred to the buyer.
At closing, the Company provided working capital, in the form of inventory, in excess of the working capital agreement and during the transition period, there are certain expenses and purchases incurred that are to be netted against funds collected on behalf of the buyer.\u00a0 June 30, 2023, there was a receivable balance from the buyer of 845,443, net of a reserve of $931,613.\u00a0 \u00a0\u00a0
\u00a0
Advance for payroll | \u00a0 | $ | 50,000 | \u00a0 |
Operating expense | \u00a0 | \u00a0 | 652,891 | \u00a0 |
Management fees | \u00a0 | \u00a0 | 685,600 | \u00a0 |
Excess working capital | \u00a0 | \u00a0 | 388,565 | \u00a0 |
Accrued Interest | \u00a0 | \u00a0 | 247,885 | \u00a0 |
Subtotal due from Bloomios | \u00a0 | $ | 2,024,941 | \u00a0 |
Reserve | \u00a0 | \u00a0 | 1,179,498 | \u00a0 |
Total due from Bloomios | \u00a0 | $ | 845,443 | \u00a0 |
\u00a0
For several reasons, including but not limited to the non-payment per the terms of several agreements and the continuous delay in getting the business transitioned, the Company notified Bloomios of its termination of the transition agreement.\u00a0 Management accrued a reserve on the receivable balance of $1,179,498 leaving a receivable balance of $845,443 on June 30, 2023.\u00a0 Accrued interest and the gain from the original issue discount were reversed and the remaining balance was expensed to loss from discontinued operations.\u00a0
\u00a0
These are recorded on the balance sheet as due from Bloomios.
\u00a0
Investments - Bloomios:
\u00a0
Senior secured convertible debenture, net of unamortized original issue discount | \u00a0 | $ | 5,218,209 | \u00a0 |
Series D convertible preferred stock | \u00a0 | \u00a0 | 8,500,000 | \u00a0 |
Convertible Secured Subordinate Promissory Note | \u00a0 | \u00a0 | 5,000,000 | \u00a0 |
Reserve on Investments - Bloomios | \u00a0 | \u00a0 | (18,718,209 | ) |
Total Investments - Bloomios | \u00a0 | $ | - | \u00a0 |
\u00a0
Senior Secured convertible debenture:
\u00a0
The Company received a senior secured convertible debenture of $4,500,000, net of the original issue discount. The Debentures have a maturity date of October 26, 2024, an interest rate of 10% and are convertible into shares of Bloomios common stock.\u00a0 The debenture contains customary representations, warranties and indemnification provisions. The Debentures are secured by a senior security interest in all assets of the Company and its subsidiaries.
\u00a0
In addition, the Company received a warrant to purchase shares of Bloomios common stock.\u00a0 The Company did not place any value on this warrant.\u00a0 Bloomios has agreed to use commercially reasonable efforts to complete a Qualified Offering within six months of October 26, 2022, to file a registration statement covering the resale of the warrant shares and the underlying shares convertible with the debenture.\u00a0
\u00a0
Series D convertible preferred stock
\u00a0
85,000 shares of Series D preferred stock.\u00a0 The preferred shares have a stated value per share of $100 and we are to receive dividends equal to 8.5% per year on a monthly basis, 30 days in arrears, for each month during which the Series D Preferred shares remain outstanding.\u00a0 The preferred stock shall not receive the declared dividends until the senior secured debentures are all repaid in full for all investors, including the debentures held by the Company.\u00a0
\u00a0Convertible Secured Subordinate Promissory Note
\u00a0
The note has an interest rate of eight and one-half percent (8.5%) per annum and requires Bloomios to make a prepayment to the note in the amount equal to 40% of the net proceeds received by Bloomios in connection with any offering of securities conducted in connection with an up listing.\u00a0 Interest is due monthly and the note is convertible, at the Company\u2019s option, into shares of Bloomios common stock at a conversion price of $5.00 per share subject to adjustments.\u00a0\u00a0 The full principal and interest is due on or before October 26, 2024.
\u00a0
The note is secured by a subordinated security interest in all assets of Infusionz pursuant to a certain pledge and security agreement, dated as of October 26, 2022, which security interest shall rank junior to all liens and security interests granted by Bloomios to the senior secured convertible note, which the Company is a holder of a portion of this security.
\u00a0
Summary of discontinued operations:
\u00a0
\u00a0 | \u00a0 | Year ended June 30, | \u00a0 | |||||
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
Discontinued Operations | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Revenue | \u00a0 | $ | 3,042,878 | \u00a0 | \u00a0 | $ | 19,327,469 | \u00a0 |
Cost of sales | \u00a0 | $ | 1,803,643 | \u00a0 | \u00a0 | $ | 10,743,028 | \u00a0 |
Sales, general and administrative expenses | \u00a0 | $ | 1,300,102 | \u00a0 | \u00a0 | $ | 1,850,010 | \u00a0 |
Depreciation and amortization | \u00a0 | $ | 10,576 | \u00a0 | \u00a0 | $ | 726,195 | \u00a0 |
Income (loss) from discontinued operations, net of tax | \u00a0 | $ | (338,418 | ) | \u00a0 | $ | 4,983,781 | \u00a0 |
Accounts receivable net of allowance for doubtful accounts | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 941,465 | \u00a0 |
Fixed assets, net of accumulated depreciation | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 670,528 | \u00a0 |
Total assets | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 8,330,573 | \u00a0 |
Total liabilities | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 167,008 | \u00a0 |
Tangible assets, inventory / working capital* | \u00a0 | $ | (1,344,000 | ) |
Tangible assets, warehouse and manufacturing equipment, net of accumulated depreciation* | \u00a0 | \u00a0 | (679,327 | ) |
Goodwill | \u00a0 | \u00a0 | (2,413,814 | ) |
Intangible assets, net of accumulated amortization | \u00a0 | \u00a0 | (946,996 | ) |
Accrued and incurred expenses related to the transaction and additional working capital* | \u00a0 | \u00a0 | (2,051,500 | ) |
Consideration received, including cash, debt and equity, net | \u00a0 | \u00a0 | 15,000,000 | \u00a0 |
Total gain recognized | \u00a0 | $ | 7,564,363 | \u00a0 |
Advance for payroll | \u00a0 | $ | 50,000 | \u00a0 |
Operating expense | \u00a0 | \u00a0 | 652,891 | \u00a0 |
Management fees | \u00a0 | \u00a0 | 685,600 | \u00a0 |
Excess working capital | \u00a0 | \u00a0 | 388,565 | \u00a0 |
Accrued Interest | \u00a0 | \u00a0 | 247,885 | \u00a0 |
Subtotal due from Bloomios | \u00a0 | $ | 2,024,941 | \u00a0 |
Reserve | \u00a0 | \u00a0 | 1,179,498 | \u00a0 |
Total due from Bloomios | \u00a0 | $ | 845,443 | \u00a0 |
Senior secured convertible debenture, net of unamortized original issue discount | \u00a0 | $ | 5,218,209 | \u00a0 |
Series D convertible preferred stock | \u00a0 | \u00a0 | 8,500,000 | \u00a0 |
Convertible Secured Subordinate Promissory Note | \u00a0 | \u00a0 | 5,000,000 | \u00a0 |
Reserve on Investments - Bloomios | \u00a0 | \u00a0 | (18,718,209 | ) |
Total Investments - Bloomios | \u00a0 | $ | - | \u00a0 |
\u00a0 | \u00a0 | Year ended June 30, | \u00a0 | |||||
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
Discontinued Operations | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Revenue | \u00a0 | $ | 3,042,878 | \u00a0 | \u00a0 | $ | 19,327,469 | \u00a0 |
Cost of sales | \u00a0 | $ | 1,803,643 | \u00a0 | \u00a0 | $ | 10,743,028 | \u00a0 |
Sales, general and administrative expenses | \u00a0 | $ | 1,300,102 | \u00a0 | \u00a0 | $ | 1,850,010 | \u00a0 |
Depreciation and amortization | \u00a0 | $ | 10,576 | \u00a0 | \u00a0 | $ | 726,195 | \u00a0 |
Income (loss) from discontinued operations, net of tax | \u00a0 | $ | (338,418 | ) | \u00a0 | $ | 4,983,781 | \u00a0 |
Accounts receivable net of allowance for doubtful accounts | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 941,465 | \u00a0 |
Fixed assets, net of accumulated depreciation | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 670,528 | \u00a0 |
Total assets | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 8,330,573 | \u00a0 |
Total liabilities | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 167,008 | \u00a0 |
Note 17. Assets Held for Sale
\u00a0
\u00a0On August 31, 2023, the Company sold Interactive offers to Amplifyir Inc.\u00a0 The purchase price is $1,250,000 with a provision to adjust the final purchase price based on the business being transferred to Amplifyer Inc. with a net zero working capital.\u00a0 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.\u00a0 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.
\u00a0
Summary of discontinued operations:
\u00a0
\u00a0 | \u00a0 | Year ended June 30, | \u00a0 | |||||
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
Discontinued Operations | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Revenue | \u00a0 | $ | 1,442,279 | \u00a0 | \u00a0 | $ | 2,192,183 | \u00a0 |
Cost of sales | \u00a0 | $ | 446,332 | \u00a0 | \u00a0 | $ | 457,361 | \u00a0 |
Sales, general and administrative expenses | \u00a0 | $ | 2,118,480 | \u00a0 | \u00a0 | $ | 2,442,019 | \u00a0 |
Depreciation and amortization | \u00a0 | $ | 607,103 | \u00a0 | \u00a0 | $ | 452,963 | \u00a0 |
Income (loss) from discontinued operations | \u00a0 | $ | (1,729,636 | ) | \u00a0 | $ | (1,160,160 | ) |
Accounts receivable net of allowance for doubtful accounts | \u00a0 | $ | 67,467 | \u00a0 | \u00a0 | $ | 197,762 | \u00a0 |
Fixed assets, net of accumulated depreciation | \u00a0 | $ | 2,835 | \u00a0 | \u00a0 | $ | 4,917 | \u00a0 |
Total assets | \u00a0 | $ | 1,026,043 | \u00a0 | \u00a0 | $ | 2,460,411 | \u00a0 |
Total liabilities | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 816,321 | \u00a0 |
\u00a0 | \u00a0 | Year ended June 30, | \u00a0 | |||||
\u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | 2022 | \u00a0 | ||
Discontinued Operations | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | ||
Revenue | \u00a0 | $ | 1,442,279 | \u00a0 | \u00a0 | $ | 2,192,183 | \u00a0 |
Cost of sales | \u00a0 | $ | 446,332 | \u00a0 | \u00a0 | $ | 457,361 | \u00a0 |
Sales, general and administrative expenses | \u00a0 | $ | 2,118,480 | \u00a0 | \u00a0 | $ | 2,442,019 | \u00a0 |
Depreciation and amortization | \u00a0 | $ | 607,103 | \u00a0 | \u00a0 | $ | 452,963 | \u00a0 |
Income (loss) from discontinued operations | \u00a0 | $ | (1,729,636 | ) | \u00a0 | $ | (1,160,160 | ) |
Accounts receivable net of allowance for doubtful accounts | \u00a0 | $ | 67,467 | \u00a0 | \u00a0 | $ | 197,762 | \u00a0 |
Fixed assets, net of accumulated depreciation | \u00a0 | $ | 2,835 | \u00a0 | \u00a0 | $ | 4,917 | \u00a0 |
Total assets | \u00a0 | $ | 1,026,043 | \u00a0 | \u00a0 | $ | 2,460,411 | \u00a0 |
Total liabilities | \u00a0 | $ | - | \u00a0 | \u00a0 | $ | 816,321 | \u00a0 |
Note 18. Subsequent Events
\u00a0
On September 1, 2023 (the \u201cClosing Date\u201d), the Company exercised its option to acquire forty-five percent (45%) of the issued and outstanding equity of Cygnet Online, LLC (\u201cCygnet\u201d) As a result of the foregoing the Company now owns one hundred percent (100%) of the issued and outstanding equity of Cygnet.\u00a0 In consideration for the September 1, 2023, acquisition the Company paid Hanig Five Hundred Thousand Dollars ($500,000) on the Closing Date, issued Ninety Thousand Nine Hundred and Nine (90,909) shares of the Company\u2019s common stock to Hanig, and agreed to pay Hanig Three Hundred Thousand Dollars ($300,000) on the one-year anniversary of the Closing Date.
\u00a0
On August 31, 2023, Upexi, Inc. (the \u201cCompany\u201d) entered into an Equity Interest Purchase Agreement (\u201cEIPA\u201d) pursuant to which the Company sold one hundred percent (100%) of the issued and outstanding equity (the \u201cInterests\u201d) of its wholly owned subsidiary Interactive Offers, LLC (\u201cInteractive\u201d) to Amplifyir Inc. (the \u201cBuyer\u201d).\u00a0 The purchase price for the Interests was One Million Two Hundred Fifty Thousand Dollars ($1,250,000), subject to certain customary post-closing adjustments.\u00a0 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.
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