Delaware |
5961 |
88-2840659 | ||
(State or Other Jurisdiction of Incorporation or Organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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F-1 |
• |
competition and the ability of the business to grow and manage growth profitably; |
• |
expansion plans and opportunities, including future acquisitions or additional business combinations; |
• |
litigation, complaints, and/or adverse publicity; |
• |
the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends, and employee availability; |
• |
privacy and data protection laws, privacy or data breaches, or the loss of data; |
• |
our financial and business performance following the Merger, including financial projections and business metrics; |
• |
changes in the market for the Company’s products, and expansion plans and opportunities; |
• |
anticipated customer retention by the Company; |
• |
the extent to which the Company is able to protect its intellectual property rights and not infringe on the intellectual property rights of others; |
• |
new or adverse regulatory developments relating to automatic renewal laws; |
• |
our use of proceeds from the sale of shares pursuant to the Purchase Agreement; and |
• |
the effect of COVID-19 on the foregoing, including its effect on the business and financial conditions of the Company. |
• | Our significant growth may not be indicative of our future growth and, if we continue to grow rapidly, we may not be able to effectively manage our growth or evaluate our future prospects. If we fail to effectively manage our future growth, our business could be adversely affected. |
• | We have incurred significant losses since inception, we expect to incur losses in the future, and we may not be able to generate sufficient revenue to achieve and maintain profitability. |
• | Grove’s independent registered public accounting firm has expressed substantial doubt about Grove’s ability to continue as a going concern, and if we are unable to generate significant revenue or secure additional financing, we may be unable to implement our business plan and grow our business. |
• | We will require additional financing to achieve our goals, and a failure to obtain this necessary capital when needed could force us to delay, limit, reduce our investments in advertising and other strategic initiatives planned for future growth. |
• | Competition in the natural and sustainable consumer products market presents an ongoing threat to the success of our business. |
• | We must find sustainable solutions that support our brand and long-term growth. |
• | If we fail to cost-effectively acquire new consumers or retain our existing consumers, our business could be adversely affected. |
• | Our brand and reputation may be diminished due to real or perceived quality, safety, efficacy or environmental impact issues with our products, which could have an adverse effect on our business, financial condition, results of operations and prospects. |
• | Failure to introduce new products that meet the expectations of our customers may adversely affect our ability to continue to grow. |
• | We pursue acquisitions to expand our business, and if any of those acquisitions are unsuccessful, our business may be harmed. |
• | We are dependent on our management team, and the loss of one or more key employees or groups could harm our business and prevent us from implementing our business plan in a timely manner. |
• | If we cannot successfully manage the unique challenges presented by international markets, we may not be successful in expanding our operations outside of the United States. |
• | Our business, including our costs and supply chain, is subject to risks associated with sourcing, manufacturing, warehousing, distribution, infrastructure and logistics to third-party providers, and the loss of any of our key suppliers or logistical service providers could negatively impact our business. |
• | If we or our distribution partners do not successfully optimize, operate and manage the expansion of the capacity of our warehouse fulfillment centers, our business, financial condition, results of operations and prospects could be adversely affected. |
• | Risks associated with the outsourcing of our fulfillment process and other technology-related functions could materially and adversely affect our business, financial condition, and results of operations. |
• | We have only recently expanded to offer our own branded products in retail stores and our inability to secure, maintain and increase our presence in retail stores could adversely impact our revenue. |
• | We may be unable to adequately obtain, maintain, protect, defend and enforce our intellectual property rights. |
• | We rely on trademark, copyright, and patent law, trade secret protection, and confidentiality and/or license agreements with our employees, customers, and others to protect our proprietary rights. |
• | Indemnity provisions in various agreements to which we are party potentially expose us to substantial liability for infringement, misappropriation or other violation of intellectual property rights. |
• | If we (or our vendors) are unable to protect against or adequately respond to mitigate the impacts of a service interruption, data corruption, or cybersecurity attack, our operations could be disrupted, our reputation may be harmed and we could face significant costs to remediate the incident and defend against claims by business partners, customers, or regulators. Such security breaches or other cybersecurity incidents may harm our reputation and expose us to loss of consumers and business. |
• | The actual or perceived failure by us or our vendors to comply with applicable privacy and data protection laws, regulations or industry standards could have an adverse effect on our business, financial condition, results of operations and prospects. |
• | Advertising inaccuracies or product mislabeling may have an adverse effect on our business by exposing us to lawsuits, product recalls or regulatory enforcement actions, increasing our operating costs and reducing demand for our product offerings. |
• | We may become subject to product liability claims, which could harm our reputation, financial condition, and liquidity if Grove is not able to successfully defend or insure against such claims. |
• | It is not possible to predict the actual number of shares we will sell under the Purchase Agreement to the Selling Holder, or the actual gross proceeds resulting from those sales. |
• | The sale and issuance of our Class A Common Stock to the Selling Holder will cause dilution to our existing stockholders, and the sale of the shares of Class A Common Stock acquired by the Selling Holder, or the perception that such sales may occur, could cause the price of our Class A Common Stock to fall. |
• | Investors who buy shares of Class A Common Stock at different times will likely pay different prices. |
• | Our management team will have broad discretion over the use of the net proceeds from our sale of shares of Class A Common Stock to the Selling Holder. |
• | The price of Class A Common Stock and our warrants may be volatile. |
• | Warrants will become exercisable for Class A Common Stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders. |
• | The Public Warrants may never be in the money, and they may expire worthless and the terms of the warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then-outstanding Public Warrants approve of such amendment. |
• | We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless. |
• | Our dual-class structure may impact the stock price of Class A Common Stock. |
Issuer |
Grove Collaborative Holdings, Inc. |
Shares of Class A Common Stock Offered by the Selling Holder |
Up to 32,544,366 shares of Class A Common Stock that we may elect, in our discretion, to issue and sell to the Selling Holder under the Purchase Agreement from time to time. |
Terms of the Offering |
The Selling Holder will determine when and how it will dispose of any shares of Class A Common Stock registered under this prospectus for resale. |
Class A Common Stock Outstanding After this Offering |
73,785,722 shares of Class A Common Stock. |
Use of Proceeds |
We will not receive any proceeds from the resale of shares of Class A Common Stock included in this prospectus by the Selling Holder. However, we may receive up to $100,000,000 in aggregate gross proceeds, before deducting any discount to the Selling Holder or expenses payable by us, under the Purchase Agreement from sales of Class A Common Stock that we may elect to make to the Selling Holder pursuant to the Purchase Agreement, if any, from time to time in our discretion. |
We expect to use the net proceeds that we receive under the Purchase Agreement for working capital and general corporate purposes, which may include capital expenditures, potential acquisitions, growth opportunities, strategic transactions, and stock repurchases. However, we have not designated any specific uses and have no current agreement with respect to any acquisition or strategic transaction. See “Use of Proceeds.” |
Risk Factors |
See “Risk Factors” and other information included in this prospectus for a discussion of factors you should consider before investing in our securities. |
Trading Symbol |
Our Class A Common Stock is listed and traded on the NYSE under the symbol “GROV.” |
• | 121,561,877 shares of outstanding Class B Common Stock; |
• | 4,517,208 shares of Class A Common Stock issuable upon the settlement of restricted stock units (“RSUs”) granted under the 2016 Equity Incentive Plan (the “2016 Plan”); |
• | 1,184,158 shares of Class B Common Stock issuable upon the settlement of RSUs granted under the 2016 Plan; |
• | 9,323,547 shares of Class A Common Stock issuable upon the exercise of outstanding stock options granted under the 2016 Plan; |
• | 15,312,140 shares of Class B Common Stock issuable upon the exercise of outstanding stock options granted under the 2016 Plan; |
• | 24,523,328 shares of Class A Common Stock available for future issuance under the 2022 Equity and Incentive Plan; |
• | 3,274,070 shares of Class A Common Stock available for future issuance under the 2022 Employee Stock Purchase Plan; |
• | 6,700,000 shares issuable upon the exercise of outstanding private warrants to purchase Class A Common Stock (the “Private Placement Warrants”); |
• | 8,050,000 shares issuable upon the exercise of outstanding public warrants to purchase Class A Common Stock, (the “Public Warrants,”) with an exercise price of $11.50 per share; |
• | 923,857 shares issuable upon the exercise of outstanding warrants to purchase Class B Common Stock (the “Legacy Grove Warrants”); and |
• | 3,875,028 shares issuable upon the exercise of outstanding warrants to purchase Class A Common Stock pursuant to the Backstop Subscription Agreement (the “Backstop Warrants”). |
• | The FDA regulates product labels and other product claims for the consumer products subject to its jurisdiction and has the authority to challenge product labels and claims that it believes are non-compliant or false or misleading, through the use of a variety of enforcement tools (e.g., Warning Letters, untitled letters, and seizure actions). In limited circumstances, the FDA has taken regulatory action against products labeled “natural” but that nonetheless contain synthetic ingredients or components. |
• | The FTC has the authority to challenge claims made in product advertising and requires that such claims are adequately substantiated prior to use. The FTC similarly has enforcement tools that it uses to challenge advertising claims that it deems non-compliant with the law. |
• | The USDA enforces federal standards for organic production and use of the term “organic” on product labeling. These laws prohibit a company from selling or labeling products as organic unless they are produced and handled in accordance with the applicable federal law. Failure to comply with these requirements may subject us to liability or regulatory enforcement. Consumers may also pursue state law claims challenging use of the organic label as being intentionally mislabeled or misleading or deceptive to consumers. |
• | In addition, certain products, including the disinfectant products, we sell may require approval from and registration with the EPA and state regulatory agencies prior to sale. Products that expressly or impliedly claim to control microorganisms that pose a threat to human health may be subject by additional regulatory scrutiny and need to be supported by additional efficacy data. Should we advertise or market these regulated products with claims that are not permitted by the terms of their registration or are otherwise false or misleading, the EPA and states may be authorized to take enforcement action to prevent the sale or distribution of disinfectant products. |
• | changes in the industries in which we and our customers operate; |
• | variations in our operating performance and the performance of our competitors in general; |
• | material and adverse impact of the COVID-19 pandemic on the markets and the broader global economy; |
• | actual or anticipated fluctuations in our quarterly or annual results of operation; |
• | publication of research reports by securities analysts about us or our competitors or our industry; |
• | the public’s reaction to our press releases, our other public announcements, and our filings with the SEC; |
• | our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; |
• | additions and departures of key personnel; |
• | changes in laws and regulations affecting our business; |
• | commencement of, or involvement in, litigation involving us; |
• | changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; |
• | the volume of shares of Class A Common Stock available for public sale; |
• | sales of shares of Class A Common Stock by the PIPE Investors; and |
• | general economic and political conditions such as recessions, interest rates, fuel prices and general inflationary pressures, foreign currency fluctuations, international tariffs, social, political, and economic risks, and acts of war or terrorism. |
• | a limited availability of market quotations for our securities; |
• | reduced liquidity for our securities; |
• | a determination that our Class A Common Stock is a “penny stock” which will require brokers trading in our Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
• | a limited amount of news and analyst coverage; and |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
• | a classified board of directors; |
• | the dual-class structure that provides for Class B Common Stock being entitled to ten votes per share; |
• | the ability of the Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; |
• | the limitation of the liability of, and the indemnification of, our directors and officers; |
• | the requirement that a special meeting of stockholders may only be called by a majority of the entire Board, the Chairman of the Board, or our Chief Executive Officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; |
• | controlling the procedures for the conduct and scheduling of Board and stockholder meetings; |
• | the ability of the Board to amend the Bylaws, which may allow the Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and |
• | advance notice procedures with which stockholders must comply to nominate candidates to the Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Board, and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us. |
• | the accuracy in all material respects of our representations and warranties included in the Purchase Agreement; |
• | there being an effective registration statement pursuant to which the Selling Holder is permitted to utilize the prospectus thereunder to resell all of the Advance Shares pursuant to such Advance Notice; |
• | the sale and issuance of such Advance Shares being legally permitted by all laws and regulations to which we are subject; |
• | no Material Outside Event (as such term is defined in the Purchase Agreement) shall have occurred and be continuing; |
• | us having performed, satisfied, and complied in all material respects with all covenants, agreements, and conditions required by the Purchase Agreement to be performed, satisfied, or complied with by us; |
• | no statute, rule, regulation, executive order, decree, ruling, or injunction having been enacted, entered, promulgated, or endorsed by any court or governmental authority of competent jurisdiction that prohibits or directly, materially, and adversely affects any of the transactions contemplated by the Purchaser Agreement; and |
• | the Class A Common Stock being quoted for trading on the NYSE and us having not received any written notice that is then still pending threatening the continued quotation of the Class A Common Stock on the NYSE. |
• | the first day of the month next following the 36-month anniversary of the date of the Purchase Agreement; and |
• | the date on which the Selling Holder shall have purchased shares of Class A Common Stock under the Purchase Agreement for an aggregate gross purchase price equal to $100,000,000. |
Assumed Average Purchase Price Per Share |
Number of Registered Shares to be Issued if Full Purchase(1) |
Percentage of Outstanding Shares After Giving Effect to the Issuance to the Selling Holder(2) |
Gross Proceeds from the Sale of Shares to the Selling Holder Under the Purchase Agreement |
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$2.00 |
50,000,000 | 23.5% | $100,000,000 | |||||
$3.00 |
33,333,333 | 17.0% | $ 99,999,999 | |||||
$4.00 |
25,000,000 | 13.3% | $100,000,000 | |||||
$4.42(3) |
22,624,434 | 12.2% | $ 99,999,998 | |||||
$4.92(4) |
20,325,203 | 11.1% | $ 99,999,998 | |||||
$5.00 |
20,000,000 | 10.9% | $100,000,000 |
(1) | The number of shares of Class A Common Stock offered by this prospectus may not cover all the shares we ultimately sell to the Selling Holder under the Purchase Agreement, depending on the purchase price per share. We have included in this column only those shares being offered for resale by the Selling Holder under this prospectus, without regard for the Beneficial Ownership Limitation. The assumed average |
purchase prices are solely for illustration and are not intended to be estimates or predictions of future stock performance. |
(2) | The denominator is based on 162,803,233 shares outstanding as of June 30, 2022, adjusted to include the issuance of the number of shares set forth in the second column that we would have sold to the Selling Holder, assuming the average purchase price in the first column. The numerator is based on the number of shares of Class A Common Stock set forth in the second column. |
(3) | Represents the closing price of the Class A Common Stock on the NYSE on July 11, 2022, five trading days prior to the execution of the Purchase Agreement and filing of the registration statement of which this prospectus forms a part. |
(4) | Represents the closing price of the Class A Common Stock on the NYSE on July 15, 2022, the trading day prior to the execution of the Purchase Agreement and filing of the registration statement of which this prospectus forms a part. |
Years Ended December 31, |
Three Months Ended March 31, |
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2019 |
2020 |
2021 |
2021 |
2022 |
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Financial and Operating Data |
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Grove Brands % Net Revenue |
37 | % | 45 | % | 49 | % | 51 | % | 52 | % | ||||||||||
DTC Total Orders |
5,618 | 6,860 | 6,659 | 1,786 | 1,558 | |||||||||||||||
DTC Active Customers |
1,696 | 1,732 | 1,640 | 1,774 | 1,653 | |||||||||||||||
DTC Net Revenue Per Order |
$ | 41 | $ | 53 | $ | 56 | $ | 56 | $ | 55 |