UPEXI INC
For the period ended Sep 30, 2024. Filed Dec 19, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Dec 19, 2024
UPXI$0.64-2.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-07-09.
0001477932-24-004117
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-12-19.
0001477932-24-008219
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 54 previous paragraphs and 31 current paragraphs.
12 unchanged; 5 reworded; 14 added; 35 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements include the accounts of all subsidiaries in which the Company holds a controlling financial interest as of the financial statement date.
Current report
Interactive Offers, LLC a Delaware limited liability corporation; VitaMedica, a Nevada corporation; and E-Core Technology, Inc. d/b/a New England Technology, Inc. have been classified as discontinued operations for the three months ended September 30, 2023 and the assets and liabilities have been classified as current assets, and liabilities of discontinued operations and assets held for sale on the balance sheets for September 30, 2023. There were no operations, assets or liabilities related to these discontinued operations for the three months ended September 30, 2024.
Current report
Revenues declined by $3,918,175 or 47% to $4,356,515 compared with revenue of $8,274,690 in the same period last year. Approximately $3,170,000 of the decline was related to the discontinued recommerce business in other subsidiaries after the sale of E-core. Management has augmented the overall strategy of the Company to focus on product sales, including the development, production and distribution of branded products. In addition, sales were affected by the manufacturing consolidation to Florida, which was completed by August 1, 2024, with manufacturing returning to full production.
Current report
Cost of revenue decreased by 1,418,754 or 50% compared with the same period last year. The cost of revenue decrease is directly related to the sales declines described above. Gross margin remained the same between the two periods with less than a 2% change.
Current report
Sales and marketing expenses decreased by $775,277 or 43% compared with the same period last year. The decrease in sales and marketing expenses was primarily related to the reduction of unnecessary agency expenses and a focused strategy on our core products.
Current report
Distribution costs decreased by $676,167 or 32% compared with the same period last year. The decrease in distribution costs was primarily related to the overall decline in the recommerce revenue. Management will continue to reduce overall distribution costs with the consolidation of products and facilities.
Current report
General and administrative expenses decreased by $210,660 or 13% compared with the same period last year. Since the consolidation to Florida and other changes in the business, management has actively been reducing general and administrative costs. Management expects that general and administrative expenses to continue to decline, with the most significant declines being realized in periods ending after December 31, 2024.
Current report
Other expenses, which is primarily interest decreased by $562,871 or 66% compared with the same period last year. The decrease in interest expense was primarily related to the elimination of the acquisition debt for E-core and the elimination of debt with the sale of VitaMedica in the prior year.
Current report
A gain of $380,624 was recognized on the sale of Interactive offers and there was net income of $100,717 from discontinued operations.
Current report
The Company had a net loss of $1,625,577 for the three months ended September 30, 2024 compared to a loss of $1,333,388 for the three months ended September 30, 2023. The increase in the net loss is primarily related to the above-mentioned changes.
Current report
On September 30, 2024, the Company had cash of $1,790,391, an increase of $1,128,976 from June 30, 2024. The increase in cash was primarily the sale of the building and the collection of the purchase price for E-core.
Current report
Net cash from operating activities benefited from non-cash expenses of $402,964, which was offset by an approximate $400,000 increase in accounts receivable and inventory and approximately $500,000 in the reduction of several liabilities. The negative cash flow from operations was anticipated by management as the Company augmented the overall strategy of the Company to focus on product sales, including the development, production and distribution of branded products.
Current report
Net cash provided by investing activities for the three months ended September 30, 2024 and 2023 was $5,838,106 and $145,324, respectively. For the three months ended September 30, 2024 the primary cash provided was the sale of the building and the collection of the purchase price for E-core. For the three months ended September 30, 2023, $940,000 was provided by the sale of Interactive offers and $500,000 and $294,676 was used for the purchase of the remaining equity of Cygnet and the acquisition of property and equipment, respectively.
Current report
Net cash flows used in financing activities for the three months ended September 30, 2024 was $2,734,538 compared to $325,942 used during the three months ended September 30, 2023. $2,634,538 used was the repayment of the loan collateralized by the building and the $100,000 advance to the Company by Allan Marshall, the CEO, was repaid during the three months ended September 30, 2024. During the three months ended September 30, 2023 the use of cash was for the scheduled repayment of debts.
Removed paragraphs (35)
Previous report
For the nine months ended March 31, 2023 the condensed consolidated financial statements of Upexi, Inc. include the accounts of the Company and its wholly-owned subsidiaries; Trunano Labs, Inc., a Nevada corporation, Steam Distribution, LLC, a California limited liability company; One Hit Wonder, Inc., a California corporation; HAVZ, LLC, d/b/a Steam Wholesale, a California limited liability company, One Hit Wonder Holdings, LLC a California corporation; SWCH LLC, a Delaware limited liability company; Cresco Management LLC, a California limited liability company; VitaMedica, Inc., a Nevada corporation, Cygnet Online, LLC a Delaware limited liability corporation; Upexi Pet Products, LLC (“LuckyTail”), a Delaware limited liability corporation as of August 12, 2022; and E-Core Technology, Inc. (“E-core”) a Florida Corporation as of October 21, 2022
Previous report
For the three months ended March 31, 2024 and March 31, 2023, the share-based compensation of 212,758 and $1,146,299, respectively was allocated to the Branded Product segment. For the nine months ended March 31, 2024 and March 31, 2023, the share-based compensation of $965,299 and 3,126,472, respectively was allocated to the Branded Product segment.
Previous report
All indirect corporate and public company general and administrative expenses are allocated to the Branded Product Segment.
Previous report
Segment Information
Previous report
The Company provides the following segments: (a) branded products segment and (b) recommerce segment.
Previous report
For the nine months ended March 31, 2024:
Previous report
For the nine months ended March 31, 2023:
Previous report
Revenues decreased by $7,438,488 or 34% to $14,444,957 compared with revenue of $21,883,445 in the same period last year. The revenue decline was primarily the result of lower recommerce revenue through both Amazon channels and wholesale. Management made a decision to discontinue sales of electronic products in its Amazon channels after analyzing the high rate of returned products, lower margins after thirty to sixty days and the low liquidation value of Amazon returns. Branded Product sales increased slightly with increases in both the pet care products, children’s toy product and other branded products that are not heavily reliant on the Amazon sales channel. Management is focused on restructuring the Company to have more consistent sales from both product sales revenue and adding service revenue.
Previous report
Cost of revenue decreased by $2,743,864 or 19% to $11,561,834 compared with cost of revenue of $14,305,698 in the same period last year. The cost of revenue decline was primarily related to the lower recommerce revenue. Gross profit decreased by approximately $1.7 million compared to the same period in the previous form significant write offs of inventory that was obsolete or unsellable. These products that were written off were primarily related to the recommerce business with many of them being Amazon returns or bulk products that could no longer be sold.
Previous report
Sales and marketing expenses decreased by $711,776 or 32% compared with the same period in the prior year. The decreased in sales and marketing expenses was primarily related to management’s efforts to refine sales strategies to focus on long-term recurring sales growth through subscription revenue and sales channel expansion. Management will continue to manage the sales and marketing expenses on branded product sales and expects the overall sales and marketing to revenue to decrease and improve profitability.
Previous report
Distribution costs decreased $60,739 or 3% compared with the same period in the prior year. The decrease in distribution costs was not related to sales and is expected to decrease overall as management has completed the consolidation of facilities and the distribution network at the end of June 2024.
Previous report
General and administrative expenses decreased by $202,925 or 8% compared with the same period in the prior year. With the consolidation of facilities and ongoing adjustments for the sale of VitaMedica, Infusionz and Interactive Offers, management has managed the general and administrative costs and will continue to implement strategies to decrease the percentage of general and administrative costs when compared to total sales.
Previous report
During the three months ended March 31, 2024, the Company had other expense of $661,878 compared to expense of $152,360 during the same period in the prior year. The increase is primarily related to the interest on debt. Management is working on eliminated this high interest debt as it restructures the Company.
Previous report
The Company had a net loss of $4,118,612 compared a loss of $1,645,939 in the same period in the prior year. The decrease in net income is related to the decreased sales, the non-cash write off of 1.7 million in inventory and the costs associated with the distribution network until it was consolidated in June of 2024. Management expects additional administrative expenses related to the consolidation of the distribution network through June of 2024 and will then be able to recognize the improvements in fiscal year 2025.
Previous report
Nine Months Ended March 31, 2024, Compared to Nine Months Ended March 31, 2023
Previous report
Revenues increased by $3,303,606 or 6% to $59,586,148 compared with revenue of $56,282,542 in the same period in the prior year. The revenue growth is based on the full nine months of E-core and Luckytail revenue in the current period compared to the prior year as those two entities were acquired during the prior year. Overall, the revenue has declined in the recommerce business in both Amazon channels and wholesale channels. Branded Product sales increased slightly with increases in both the pet care products, children’s toy product and other branded products that are not heavily reliant on the Amazon sales channel. Management is focused on restructuring the Company to have more consistent sales from both product sales revenue and adding service revenue.
Previous report
Cost of revenue increased by $7,309,111 or 21% to $42,864,857 compared with cost of revenue of $35,555,746 in the same period in the prior year. Gross profit decreased by approximately $1.8 million compared to the same period in the previous form significant write-offs of inventory that was obsolete or unsellable. These products that were written off were primarily related to the recommerce business with many of them being Amazon returns or bulk products that could no longer be sold. Management will seek to improve the gross profit and the overall gross margin in the next 12 months as we are able to leverage the consolidate our operations and restructuring management is currently in process of.
Previous report
Sales and marketing expenses increased by $95,410 or 10% compared with the same period in the previous year. The increase in sales and marketing expenses was primarily related to the increase in the Branded Products segment, although the trend of these expenses is declining and the increase was primarily during the first two quarters of the year. Management will continue to manage the sales and marketing expenses on branded product sales and expects the overall sales and marketing to revenue to decrease and improve profitability.
Previous report
Distribution costs decreased $493,625 or 6% compared with the same period in the previous year. Distribution costs are expected to continue to decrease as the consolidation efforts are completed and these operational improvements are expected to improve the Company’s profitability in fiscal year 2025. Management will continue its efforts to consolidate and streamline our distribution network and decrease the costs as a percentage of revenue.
Previous report
General and administrative expenses decreased by $121,858 or 2% compared with the same period in the previous year. As the Company has consolidated the acquisitions and adjusted for the sale of Infusionz and Interactive Offers, management has controlled the general and administrative costs and will continue to implement strategies to decrease the percentage of general and administrative costs when compared to total sales.
Previous report
Other operating expenses decreased by $1,430,571 or 22% compared with the same period in the previous year. These expenses are primarily non-cash and decreased based on the lower amortization of stock compensation offset by increases in depreciation.
Previous report
During the nine months ended March 31, 2024, the Company had other expense of $2,612,617 compared to expense of $2,224,547 during the nine months ended March 31, 2023. .
Previous report
In addition, during the nine months ended March 31, 2023, the Company recognized a gain on the sale of Interactive Offers, and an impairment on the Delray Beach facility, that was consolidated into the Tampa facility. These were offset by the gain on the lease settlement for the California facility and an income tax benefit. During the nine months ended March 31, 2024, the Company recognized a gain on the sale of Infusionz and select assets, which was later adjusted for lack of payment from the buyer and an income tax expense.
Previous report
The Company had a net loss of $7,912,919 compared to $1,568,180 in the same period in the previous year. The decrease in net income is primarily related to the items mentioned above.
Previous report
We will continue to improve the gross profit, while reducing the general and administrative expenses as compared to the sales as the Company continues to focus on sales growth while continuing to improve net income through the consolidation of operations.
Previous report
On March 31, 2024, the Company had cash of $498,287, a decrease of $3,994,004 from June 30, 2023.
Previous report
Net cash from operating activities benefited from non-cash expenses of $4,911,405, a $2,413,987 decrease in accounts receivable, which were offset $2,775,503 paydown of accounts payable and accrued liabilities.
Previous report
Net cash used in investing activities for the nine months ended March 31, 2024 was $400,721 and was primarily related to the $500,000 paid for the remaining 45% of Cygnet Online LLC and the acquisition of property and equipment, which was offset by the proceeds from the sale of interactive offers. The acquisition of property and equipment primarily related to equipment and leasehold improvement for the final phase of our consolidation strategy, which was completed in June 2024.
Previous report
Net cash used by financing activities for the nine months ended March 31, 2024, was $558,877 compared to the use of $6,836,829 during the nine months ended March 31, 2023. The cash used in financing activities during the nine months ended March 31, 2024 related to the repayment of notes payable and acquisition notes payable and was offset by the Company’s line of credit.
Previous report
For the nine months ended March 31, 2023 used by financing activities was the repayment of $7,201,079 to the line of credit, the repayment and termination of the senior convertible note and the installment payments of several other notes. The Company obtained a note from a related party and a mortgage on the building purchased in the prior year. The funds obtained were used for investing activities and the repayment of the senior convertible note.
Previous report
On October 19, 2022, the Company and its indirect wholly owned subsidiary, Upexi 17129 Florida, LLC entered into a loan agreement with Professional Bank, a Florida state-chartered bank, providing for a mortgage on the Company’s principal office in N. Clearwater, Florida. The company received $3,000,000 in connection with the transaction. The principal is to be paid back 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, net of fees and other expenses. There is a contract to sell this property that would repay this loan and provided approximately $1,350,000 of working capital.
Previous report
On October 31, 2022, Upexi, Inc. (the “Company”), paid $4,275,071 in principal, $613,466 in accrued interest, $250,000 for settlement of a put option and $7,900 in miscellaneous fees for a total of $5,146,437 to the holders of the $15 million senior secured convertible notes entered into on June 28, 2022. The payment terminated the agreement with the noteholders. The Company also terminated the registration statement covering the senior secured notes payable.
Previous report
On April 1, 2024, the Company entered into a lease agreement with MFA 2510 Merchant LLC. The lease is a for approximately 10,000 square feet of warehouse and office space, located in Odessa, Florida for $20,060 per month on a triple net basis. The initial term is five years. The estimated cost of this facility is a reduction of overall facility costs of approximately $220,000 in rent and approximately $138,000 per year in utilities, repairs and maintenance. Management also expects to have additional savings in labor and administrative costs, which is expected to add additional cash flow for fiscal year 2025.
Previous report
On May 28, 2024, the Company entered into an agreement to sell its Clearwater warehouse for a sale price of 4,300,000. The Company expects to receive approximately $1,350,000 after repayment of the mortgage and transaction expenses. The $1,350,000 will be used for working capital and the repayment of other outstanding debts. The transaction is expected to close on or around July 8, 2024.
Previous report
On June 13, 2024, Upexi, Inc. (the “Company”) entered into a Stock Purchase Agreement (“SPA”) pursuant to which the Company sold one hundred percent (100%) of the issued and outstanding equity (the “Interests”) of its wholly owned subsidiary VitaMedica, Inc. to three investors (the “Buyers”). One of the minority Interest Buyers is Allan Marshall, the Company’s Chief Executive Officers. The purchase price for the stock was Six Million Dollars ($6,000,000), subject to certain customary post-closing adjustments. In addition, the Buyers are obligated to pay the Company for services provided according to the Transition Services Agreement. The Company estimates the fees from these services provided to VitaMedica will be approximately $300,000 annually.
Reworded paragraphs (5)
Previous wording
As used in this quarterly report and unless otherwise indicated, the terms “we”, “us” and “our” mean Upexi, Inc.
Current wording
As used in this current report and unless otherwise indicated, the terms “we”, “us” and “our” mean Upexi, Inc.
Previous wording
For the three months ended March 31, 2023, the condensed consolidated financial statements of Upexi, Inc. include all of the subsidiary accounts included in the condensed consolidated financial statements for the three and nine months ended March 31, 2024.
Current wording
For the three months ended September 30, 2024, the consolidated financial statements of Upexi, Inc. include all of the subsidiary accounts included in the consolidated financial statements for the three months ended September 30, 2023.
Previous wording
The Company’s financial reporting is organized into two segments: Our Branded Product segment and our Recommerce segment. Our Branded Product segment is focused on the development, growth, and distribution of the branded products that we own. Our Recommerce segment is focused on the purchase and sale of new and used products through channels such as Amazon and wholesale distributors. Other sources of revenue and related costs are aggregated and viewed by management as immaterial or have similar economic characteristics, product production, distribution processes and regulatory environment as the other product sales.
Current wording
The Company’s financial reporting is organized into a single segment that includes production, sales and distribution of branded products, following the sale of E-Core, Technology Inc. and its subsidiaries. Other sources of revenue and related costs are aggregated and viewed by management as immaterial or have similar economic characteristics, products, production, distribution processes and regulatory environment as the other product sales or directly support the Company’s single segment.
Previous wording
Other operating expenses decreased by $915,001 or 37% compared with the same period in the prior year. These expenses are primarily non-cash expenses and have decreased based on the decreased amortization of stock compensation and offset by increases in depreciation.
Current wording
Other operating expenses decreased by $957,965 or 71% compared with the same period last year. The decrease in other operating expenses was primarily related to the change in amortization of acquired intangible assets and the decreased amortization of stock-based compensation.
Previous wording
We estimate that we will have sufficient working capital to fund our operations over the twelve months following the date of the issuance of these condensed consolidated financial statements and meet all our debt obligations.
Current wording
We estimate that we will have sufficient working capital to fund our operations over the twelve months following the date of the issuance of these condensed consolidated financial statements and meet all of our debt obligations.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
For the three months ended March 31, 2024:
Previous report — wording carried elsewhere
For the three months ended March 31, 2023: