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Acquisition

3 Months Ended

Sep. 30, 2021

Note 2. Acquisitions

Trunano Labs Inc.

On July 1, 2020, the noncontrolling shareholders of the Company’s subsidiary, Trunano Labs Inc., converted 1,761,261 shares of Trunano Labs, Inc. stock, representing all the outstanding stock by minority interest holders, into 1,277,778 shares of Grove, Inc. common stock, 10.8% of the then outstanding shares. As of July 1, 2020, Trunano Labs, Inc. is a wholly owned subsidiary of Grove, Inc.

Infusionz LLC

On July 1, 2020, the Company entered into an agreement and plan of merger with Infusionz LLC (the “Infusionz Agreement”) with the members of Infusionz LLC. Pursuant to the terms of the Infusionz Agreement, on July 1, 2020, the Company acquired 100% of the outstanding membership interests of Infusionz LLC.

On September 1, 2021, the Company issued 306,945 shares of Common Stock in relations to the July 1, 2020, acquisition of Infusionz LLC. The shares were issued at a $5.75 per common share and extinguished the remaining acquisition liability related to the Infusionz LLC acquisition.

VitaMedica Corporation

Effective August 1, 2021, the Company entered into and closed an asset purchase agreement (the “VitaMedica Agreement”) with Grove Acquisition Subsidiary, Inc., a Nevada corporation and wholly owned subsidiary of the Company and VitaMedica Corporation, a California corporation, David Rahm and Yvette La-Garde (Seller). VitaMedica Corporation is a leading online seller of supplements for surgery, recovery, skin, beauty, health and wellness.

Pursuant to the terms and conditions of the VitaMedica Agreement, the Company agreed to purchase substantially all of the assets of the Seller as of August 1, 2021. The purchase price for the sale consists of $500,000 of Grove’s common stock, a non-negotiable promissory note from Grove in favor of the Seller in the original principal amount of $500,000, a non-negotiable convertible promissory note from Grove in favor of the Seller in the original principal amount of $500,000, convertible at $5.00 per share for a total of 100,000 shares of Grove Common Stock and a cash payment of $2,000,000, which was paid August 5, 2021.

Under the purchase method of accounting, the transaction was valued at an estimated fair value of $3,556,589. The purchase price for the sale consists of 100,000 shares of the Company’s common stock valued at $482,000, $4.82 per common share, the closing price on August 4, 2021 (close date of the transaction), a non-negotiable promissory note from Grove in favor of the Seller in the original principal amount of $500,000, a non-negotiable convertible promissory note from Grove in favor of the Seller in the original principal amount of $500,000, convertible at $5.00 per share for a total of 100,000 shares of Grove Common Stock and a cash payment of $2,000,000 which was paid on August 5, 2021. In addition, $74,589 cash payment was made on October 29, 2021, for the excess working capital acquired.

A finder’s fee of $103,740 was paid by the Company, $70,000 in cash and 7,000 share of common stock, valued at $33,740, $4.82 per common share, the closing market price on August 4, 2021 (close date of the transaction). These fees were expensed in the three month period ended September 30, 2021.

The intangibles will be recorded, based on the Company’s preliminary estimate of fair value, which are expected to consist primarily of customer lists with an estimated life of five to ten years and goodwill. Upon completion of a purchase price allocation, the allocation intangible assets will be adjusted accordingly.

The assets and liabilities of VitaMedica are recorded at their preliminary respective fair values as of the closing date of the VitaMedica Agreement, and the following table summarizes these values based on the balance sheet on August 1, 2021, the effective closing date.

Tangible Assets	$	860,738
Intangible Assets		1,624,000
Goodwill		1,271,780
Liabilities Acquired		(199,929	)
Total Purchase Price	$	3,556,589

Consolidated pro-forma unaudited financial statements.

The following unaudited pro forma combined financial information is based on the historical financial statements of the Company and VitaMedica, after giving effect to the Company’s acquisition as if the acquisitions occurred on July 1, 2020.

The following unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisitions occurred on July 1, 2020, 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 three months ended September 30, 2021 and 2020 as if the acquisition occurred on July 1, 2020. Operating expenses have been increased for the amortization expense associated with the fair value adjustment of definite lived intangible assets of approximately $413,000 per year.

Pro Forma, Unaudited					Proforma
Three months ended September 30, 2021	Grove, Inc.		VitaMedica		Adjustments			Proforma

Net sales	$	8,449,754	$	384,391				$	8,834,145
Cost of sales	$	3,067,376	$	93,509				$	3,160,885
Operating expenses	$	4,946,835	$	255,286	$	34,417		$	5,236,538
Net income (loss)	$	511,711	$	35,596		(34,417	)	$	512,890
Basic income per common share	$	0.03	$	0.36				$	0.03
Weighted average shares outstanding		15,452,453		100,000					15,552,453

Pro Forma, Unaudited						Proforma
Three months ended September 30, 2020	Grove, Inc.			VitaMedica		Adjustments			Proforma

Net sales	$	2,937,442		$	874,290				$	3,811,732
Cost of sales	$	1,619,208		$	245,628				$	1,864,836
Operating expenses	$	2,078,320		$	553,965	$	103,250		$	2,735,535
Net income (loss)	$	(809,073	)	$	74,696		(103,250	)	$	(837,627	)
Basic income (loss) per common share	$	(0.08	)	$	0.75				$	(0.08	)
Weighted average shares outstanding		10,384,439			100,000					10,484,439

The Company estimated the annual amortization expense at $413,000 annually and $34,417 monthly, based on managements’ preliminary allocation of the purchase price. For the three months ended September 30, 2021, the proforma adjustment included $34,417, one month of amortization expense. For the three months ended September 30, 2020, the proforma adjustment includes $103,250, three months of amortization expense.

The Company’s consolidated financial statements for the three months ended September 30, 2021 include the actual results of VitaMedica for the period August 1, 2021 to September 30, 2021. Revenue and net income for VitaMedica included in the statement of operations for the two months ended September 30, 2021 was $881,573 and $119,137, respectively. This includes amortization of intangible assets of $68,834.