Acquisition

6 Months Ended

Dec. 31, 2021

Acquisition

Note 2. Acquisition

Note 2. Acquisitions

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.

The Company agreed to purchase substantially all of the assets of the Seller as of August 1, 2021.  The transaction was valued at an estimated fair value of $3,556,589. The purchase price consisted 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 the Company in favor of the Seller in the original principal amount of $500,000, a non-negotiable convertible promissory note from the Company 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 Company 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 six month period ended December 31, 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

The Company’s condensed consolidated financial statements for the six months ended December 31, 2021, include the actual results of VitaMedica for the period August 1, 2021, to December 31, 2021.

Interactive Offers, LLC

Effective October 1, 2021, the Company entered into an Equity Interest Purchase Agreement (the “I/O 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 (each an “I/O Seller” and collectively the “I/O Sellers”). The I/O Sellers owned all the membership interests in Interactive Offers, LLC, a Delaware limited liability company (“Interactive”). The Company’s CEO and Chairman, Allan Marshall, was the controlling stockholder and the president of MFA Holdings Corp. MFA Holdings Corp., owning 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’ sites from a simple dashboard.

The Company purchased all the outstanding membership interests of Interactive as of October 1, 2021. The purchase price for the sale was $6,700,000, which consisted of 666,667 shares of common stock of the Company valued at $4,000,000, the negotiated value of the stock for the transaction, and a cash payment of $2,100,000. Additionally, Sellers will be paid up to an additional cash payment of $600,000 in the form of an earnout payment based on certain revenue milestones. 

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 Interactive are recorded at their preliminary respective fair values as of the closing date of the I/O Agreement, and the following table summarizes these values based on the balance sheet on October 1, 2021, the effective closing date.

Tangible Assets	$	563,663
Intangible Assets		2,388,000
Goodwill		4,848,330
Liabilities Acquired		(1,099,993	)
Total Purchase Price	$	6,700,000

The Company’s condensed consolidated financial statements for the three and six months ended December 31, 2021, include the actual results of Interactive for the period October 1, 2021, to December 31, 2021.

Consolidated pro-forma unaudited financial statements.

The following unaudited pro forma combined financial information is based on the historical financial statements of the Company, VitaMedica and Interactive after giving effect to the Company’s acquisitions of both companies 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 six months ended December 31, 2021 and the three and six months ended December 31, 2020 as if the acquisition occurred on July 1, 2020 as both acquisitions operations were included in the three months ended December 31, 2021.  Operating expenses have been increased for the amortization expense associated with the fair value adjustment of definite lived intangible assets of VitaMedica and Interactive by approximately $413,000 and $531,000 per year, respectively.

Pro Forma, Unaudited									Proforma
Three months ended December 31, 2020	Grove, Inc.			VitaMedica		Interactive			Adjustments			Proforma
Net sales	$	4,164,894		$	936,582	$	367,001		$			$	5,468,477
Cost of sales	$	2,234,259		$	277,232	$	-		$			$	2,511,491
Operating expenses	$	2,173,930		$	377,153	$	1,273,688		$	236,000		$	4,060,771
Net income (loss)	$	102,520		$	15,831	$	(796,782	)	$	(236,000	)	$	(914,431	)
Basic income (loss) per common share	$	0.01		$	0.16	$	(1.20	)	$			$	(0.06	)
Weighted average shares outstanding		13,455,013			100,000		666,667						14,221,680
Pro Forma, Unaudited									Proforma
Six months ended December 31, 2021	Grove, Inc.			VitaMedica		Interactive			Adjustments			Proforma
Net sales	$	19,116,535		$	384,391	$	732,519		$			$	20,233,445
Cost of sales	$	7,023,734		$	93,509	$	-		$			$	7,117,243
Operating expenses	$	11,539,658		$	255,286	$	1,348,035		$	166,917		$	13,309,896
Net income (loss)	$	576,544		$	35,596	$	(795,507	)	$	(166,917	)	$	350,284	)
Basic income (loss) per common share	$	0.04		$	0.36	$	(1.19	)	$			$	(0.02	)
Weighted average shares outstanding		15,915,154			100,000		666,667						16,681,821
Pro Forma, Unaudited									Proforma
Six months ended December 31, 2020	Grove, Inc.			VitaMedica		Interactive			Adjustments			Proforma
Net sales	$	7,102,336		$	1,810,872	$	1,329,523		$			$	10,242,730
Cost of sales	$	3,853,467		$	522,962	$	-		$			$	4,376,429
Operating expenses	$	4,252,250		$	684,598	$	1,816,464		$	472,000		$	7,225,312
Net income (loss)	$	(706,553	)	$	90,527	$	(376,987	)	$	(472,000	)	$	(1,465,013	)
Basic income (loss) per common share	$	(0.06	)	$	0.91	$			$			$	(0.12	)
Weighted average shares outstanding		11,830,013			100,000		666,667						12,596,680

The Company estimated the annual VitaMedica amortization expense at $413,000 annually and $34,417 monthly, based on managements’ preliminary allocation of the purchase price. For the six months ended December 31, 2021, the proforma adjustment included $34,417, one month of amortization expense. For the three and six months ended December 31, 2020, the proforma adjustment includes $103,250and $206,500, three and six months of amortization expense, respectively.

The Company’s condensed consolidated financial statements for the three and six months ended December 31, 2021, include the actual results of VitaMedica for the period August 1, 2021, to December 31, 2021. Revenue for VitaMedica included in the statements of operations for the three and six months ended December 31, 2021, was $1,296,404 and $2,177,977, respectively.  Net income for VitaMedica included in the statements of operations for the three and six months ended December 31, 2021, was ($78,288) and $40,849, respectively. This includes amortization of intangible assets of $103,250 and $172,085, respectively.

The Company estimated the annual Interactive amortization expense at $531,000 annually and $44,250 monthly, based on managements’ preliminary allocation of the purchase price. For the six months ended December 31, 2021, the proforma adjustment included $132,750, three months of amortization expense. For the three and six months ended December 31, 2020, the proforma adjustment includes $132,750and $265,500, three and six months of amortization expense, respectively.

The Company’s condensed consolidated financial statements for the three and six months ended December 31, 2021, include the actual results of Interactive for the period October 1, 2021, to December 31, 2021. Revenue and net loss for Interactive included in the statement of operations for the six months ended December 31, 2021, was $853,017and $97,300, respectively.  This includes amortization of intangible assets of $132,750.