8-K
SRx Health Solutions, Inc. (SRXH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
_______________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 10, 2021
_______________________
Better Choice Company Inc.
(Exact name of Registrant as Specified in its Charter)
_______________________
| Delaware | 001-40477 | 83-4284557 |
|---|---|---|
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
12400 Race Track Road
Tampa, Florida 33626
(Address of Principal Executive Offices) (Zip Code)
_______________________________________________
(Registrant's Telephone Number, Including Area Code): (212) 896-1254
N/A
(Former name or former address, if changed since last report.)
_______________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.001 par value share | BTTR | NYSE American |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On November 10, 2021, Better Choice Company Inc., a Delaware corporation (the “Company”), announced its financial results for the quarter ended September 30, 2021. A copy of the press release is attached hereto as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure
Better Choice Third Quarter 2021 Financial Results Conference Call
On November 10, 2021, at 8:30 am EDT, the Company will host a conference call to discuss results for the third quarter ended September 30, 2021. Interested parties, including analysts, investors and the media, may listen live via the details below.
| Event: | Better Choice Third Quarter 2021 Earnings Call |
|---|---|
| Date: | Wednesday, November 10, 2021 |
| Time: | 8:30 a.m. Eastern Time |
| Live Call: | +1-877-407-4018 (U.S. Toll-Free) or +1-201-689-8471 (International) |
| Webcast: | https://viavid.webcasts.com/starthere.jsp?ei=1505309&tp_key=4b2e767e8c |
Updated Investor Presentation
On November 10, 2021, the Company posted an updated investor presentation (the “Investor Presentation”) to its website and it is available in the Company Info section of the Company’s website at https://ir.betterchoicecompany.com. A copy of the Investor Presentation is included as Exhibit 99.2 to this Current Report.
The Company intends to use the Investor Presentation in presentations to investors and analysts from time to time in the future. The furnishing of the information in this Current Report is not intended to, and does not, constitute a determination by the Company that the information in this Current Report is material or complete, or that investors should consider this information before making an investment decision with respect to any security of the Company. The information in the materials is presented as of November 10, 2021, and the Company does not assume any obligation to update such information in the future.
The information in Item 7.01 of this Current Report shall not be deemed to be "filed" for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Management's projections and expectations are subject to a number of risks and uncertainties that could cause actual performance to differ materially from that predicted or implied. Forward-looking statements may be identified by the use of words such as "expect," "anticipate," "believe," "estimate," "potential," "should" or similar words intended to identify information that is not historical in nature. Forward-looking statements contained herein include, among others, statements concerning management's expectations about future events and the Company’s operating plans and performance, the effects of the COVID-19 outbreak, including levels of consumer, business and economic confidence generally, the regulatory environment, litigation, sales, and the expected benefits of acquisitions, and such statements are based on the current beliefs and expectations of the Company’s management, as applicable, and are subject to known and unknown risks and uncertainties. There are a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. These statements speak only as of the date they are made, and the Company does not intend to update or otherwise revise the forward-looking information to reflect actual results of operations, changes in financial condition, changes in estimates, expectations or assumptions, changes in general economic or industry conditions or other circumstances arising and/or existing since the preparation of this Current Report on Form 8-K or to reflect the occurrence of any unanticipated events. For further information regarding the risks associated with the Company’s business, please refer to the Company’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the most recent fiscal year end, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| Exhibits | Description |
|---|---|
| 99.1 | Press Release datedNovember 10, 2021 |
| 99.2 | Better Choice Company Inc.'s Investor Presentation |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Better Choice Company Inc. | ||
|---|---|---|
| By: | /s/ Sharla A. Cook | |
| Name: | Sharla A. Cook | |
| Title: | Chief Financial Officer | |
| November 10, 2021 |
3
Document
Better Choice Company Reports Record Third Quarter 2021 Financial Results
and Provides Update to Target Store Count for 2022 Launch of Halo Elevate
NEW YORK, NY, November 10, 2021 -- Better Choice Company Inc. (NYSE: BTTR) (the “Company” or “Better Choice”), a pet health and wellness company, today reported its financial results for the third quarter ended September 30, 2021.
“We are excited to share our Q3 2021 results with the investor community, which represented a record quarter for Better Choice. In spite of unprecedented supply chain disruptions felt across the consumer-packaged goods industry, we were able to deliver 19% growth in net sales relative to Q3 2020, driven by 43% growth in International sales and 35% growth in E-commerce sales. The $15.9m of gross sales generated in this quarter represents an all-time high for Better Choice, surpassing Q1 2020 (which included COVID-19 stock piling orders) by $1.0m and representing sequential quarterly growth of $2.8m, or 21% relative to Q2 2021. We believe we have created a strong foundation for continued growth through our diverse omni-channel approach, and are excited to continue to drive growth in 2022,” said Scott Lerner, CEO of Better Choice.
“This quarter, our supply chain and logistics team did a fantastic job navigating temporary, macro-economic pressures to margin and supply to satisfy our growing customer demand and has pivoted when needed with one goal in mind – to keep product on the shelf and available for our loyal and growing customer base. In addition, we’ve made significant progress regarding the 2022 launch of Halo Elevate, and are increasing our target store count from 1,500 pet specialty and independent stores to a range of 2,000 to 2,500, anchored by our key launch partners, Pet Supplies Plus and Petco. To support this launch, we have also onboarded two new, state of the art co-manufacturing partners to ensure long-term supply at strong target gross margins. I can confidently say that with the passage of each quarter I am increasingly excited and proud of what our team has been able to accomplish in such a short period of time,” continued Mr. Lerner.
Third Quarter 2021 Operational Updates
•Successfully finalized uplist to the NYSE American Exchange, raising $40m of gross proceeds and automatically converting $23m of debt into common equity upon listing.
•Secured two anchor partnerships for the national launch of Halo Elevate in 2022 – Petco and Pet Supplies Plus – which together represent approximately 1,500 stores.
•Significant incremental investment in marketing and innovation and developing a three-year pipeline of new offerings to drive organic growth.
•Onboarded two new co-manufacturing partnerships for Halo Elevate and Halo Holistic to increase production capacity.
•Realized $4.7m E-commerce sales in Q3, representing 35% quarter-over-quarter growth.
•Realized $4.3m International Sales in Q3, representing 43% quarter-over-quarter growth.
Financial Results for the Third Quarter and Year-to-Date 2021
•Third Quarter 2021 Gross Sales of $15.9m
•Year-to-date 2021 Gross Sales of $42.4m
•Third Quarter 2021 Net Sales of $13.2m
•Year-to-date 2021 Net Sales of $35.0m
•Third Quarter 2021 Loss from Operations of $4.0m
•Year-to-date 2021 Loss from Operations of $12.3m
•Third Quarter 2021 Net loss available to common stockholders of $(3.5)m
•Year-to-date 2021 Net income available to common stockholders of $8.5m
•Third Quarter 2021 Adjusted EBITDA of $(1.4)m
•Year-to-date 2021 Adjusted EBITDA of $(4.2)m
Conference Call and Webcast Information
The Company will host a conference call and audio webcast on Wednesday, November 10, 2021 at 8:30 am (Eastern Time) to answer questions about the Company's operational and financial highlights for the third quarter of 2021.
| Event: | Better Choice Third Quarter 2021 Earnings Call |
|---|---|
| Date: | Wednesday, November 10, 2021 |
| Time: | 8:30 a.m. Eastern Time |
| Live Call: | +1-877-407-4018 (U.S. Toll-Free) or +1-201-689-8471 (International) |
| Webcast: | https://viavid.webcasts.com/starthere.jsp?ei=1505309&tp_key=4b2e767e8c |
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until November 24, 2021 and can be accessed by dialing +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International) and entering replay pin number: 13724307.
Better Choice Company Inc.
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except share and per share amounts)
| Nine Months Ended September 30, | Three Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||
| Net sales | $ | 35,019 | $ | 33,302 | $ | 13,200 | $ | 11,135 |
| Cost of goods sold | 22,407 | 20,563 | 8,762 | 6,678 | ||||
| Gross profit | 12,612 | 12,739 | 4,438 | 4,457 | ||||
| Operating expenses: | ||||||||
| General and administrative | 11,778 | 23,158 | 3,727 | 3,545 | ||||
| Sales and marketing | 9,619 | 6,847 | 4,018 | 2,650 | ||||
| Share-based compensation | 3,517 | 7,047 | 660 | 1,543 | ||||
| Total operating expenses | 24,914 | 37,052 | 8,405 | 7,738 | ||||
| Loss from operations | (12,302) | (24,313) | (3,967) | (3,281) | ||||
| Other expense (income): | ||||||||
| Interest expense, net | 3,148 | 7,268 | 79 | 2,537 | ||||
| (Gain) Loss on extinguishment of debt, net | (457) | 88 | — | 88 | ||||
| Change in fair value of warrant liabilities | (23,463) | (2,118) | (590) | (4,213) | ||||
| Total other (income) expense, net | (20,772) | 5,238 | (511) | (1,588) | ||||
| Net income (loss) | 8,470 | (29,551) | (3,456) | (1,693) | ||||
| Preferred dividends | — | 103 | — | 35 | ||||
| Net income (loss) available to common stockholders | $ | 8,470 | $ | (29,654) | $ | (3,456) | $ | (1,728) |
| Weighted average number of shares outstanding, basic | 16,799,796 | 8,134,957 | 29,466,520 | 8,160,242 | ||||
| Weighted average number of shares outstanding, diluted | 23,685,351 | 8,134,957 | 29,466,520 | 8,160,242 | ||||
| Earnings (loss) per share, basic | $ | 0.48 | $ | (3.65) | $ | (0.12) | $ | (0.21) |
| Earnings (loss) per share, diluted | $ | 0.34 | $ | (3.65) | $ | (0.12) | $ | (0.21) |
Non-GAAP Measures
Better Choice Company defines Adjusted EBITDA as EBITDA further adjusted to eliminate the impact of certain items that we do not consider indicative of our core operations. Adjusted EBITDA is determined by adding the following items to net income (loss): depreciation and amortization, interest expense, share-based compensation, warrant expense and dividends, loss on disposal of assets, change in fair value of warrant liabilities, gain or loss on extinguishment of debt, acquisition related expenses, purchase accounting adjustments, equity and debt offering expenses and other non-recurring expenses.
The Company presents Adjusted EBITDA as it is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. We believe that the disclosure of Adjusted EBITDA is useful to investors as this non-GAAP measure forms the basis of how our management team reviews and considers our operating results. By disclosing this non-GAAP measure, we believe that we create for investors a greater understanding of and an enhanced level of transparency into the means by which our management team operates our company. We also believe this measure can assist investors in comparing our performance to that of other companies on a consistent basis without regard to certain items that do not directly affect our ongoing operating performance or cash flows.
Adjusted EBITDA does not represent cash flows from operations as defined by GAAP. Adjusted EBITDA has limitations as a financial measure and you should not consider it in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss), gross margin, and our other GAAP results.
The following table presents a reconciliation of net income (loss), the closest GAAP financial measure, to EBITDA and Adjusted EBITDA for each of the periods indicated:
Better Choice Company Inc.
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
(Dollars in thousands)
| Three Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|
| 2020 | 2021 | 2020 | |||||
| Net income (loss) available to common stockholders | 8,470 | $ | (29,654) | $ | (3,456) | $ | (1,728) |
| Depreciation and amortization | 1,298 | 431 | 432 | ||||
| Interest expense | 7,268 | 79 | 2,537 | ||||
| EBITDA | (21,088) | (2,946) | 1,241 | ||||
| Non-cash share-based compensation, warrant expense and dividends (a) | 17,136 | 660 | 1,577 | ||||
| Loss on disposal of assets | — | 10 | — | ||||
| Non-cash change in fair value of warrant liability and warrant derivative liability | (2,118) | (590) | (4,213) | ||||
| Gain on extinguishment of debt, net (b) | 88 | — | 88 | ||||
| Acquisition related expenses/(income) (c) | 1,236 | — | (57) | ||||
| Non-cash effect of purchase accounting and inventory write-off on cost of goods sold (d) | 894 | — | — | ||||
| Offering relating expenses (e) | 987 | 10 | 338 | ||||
| Non-recurring and other expenses (f) | 2,022 | 1,467 | 712 | ||||
| Adjusted EBITDA | (4,217) | $ | (843) | $ | (1,389) | $ | (314) |
| (a) Reflects non-cash expenses related to equity compensation awards. The nine months ended June 30, 2021 additionally includes non-cash expenses related to stock purchase warrants issues for third-party services provided. The three and nine months ended September 30, 2020 includes non-cash dividends, stock purchase warrants associated with a contract that was subsequently terminated and stock purchase warrants issued in connection with convertible notes. Share-based compensation is an important part of the Company's compensation strategy and without our equity compensation plans, it is probable that salaries and other compensation related costs would be higher. | |||||||
| (b) The nine months ended September 30, 2021 includes the gain on extinguishment of debt resulting from the full forgiveness of 0.9m in PPP loans offset by a loss of 0.4m related to the extinguishment of our former term loan and ABL facility. | |||||||
| (c) Reflects costs incurred related to acquisition and integration activities that will not recur and operating expenses that will not recur due to acquisition related synergies. | |||||||
| (d) Reflects non-cash expense recognized in cost of goods sold related to the step-up of inventory required under the accounting rules for business combinations. | |||||||
| (e) Reflects administrative costs associated with the registration of common shares and other debt and equity financing transactions. | |||||||
| (f) For the three months ended September 30, 2021, includes non-cash third party share-based compensation of 1.3 million and director costs of 0.2 million. The nine months ended September 30, 2021 additionally includes non-recurring severance costs of 0.7 million, non-cash third party share-based compensation of 0.6 million, non-recurring consulting costs of 0.4 million and director costs of 0.1 million, partially offset by a 0.5 million reduction to sales tax liability. For the three months ended September 30, 2020, includes 0.4m non-recurring contract termination costs and other non-recurring expenses. For the nine months ended September 30, 2020, also includes 1.1 million non-recurring contract termination costs and 0.2 million of non-recurring costs related to a warehouse facility that was outsourced to a third party logistics facility in Q4 2020. |
All values are in US Dollars.
Better Choice Company Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
| September 30, 2021 | December 31, 2020 | |||
|---|---|---|---|---|
| Unaudited | Audited | |||
| Assets | ||||
| Cash and cash equivalents | $ | 26,048 | $ | 3,926 |
| Restricted cash | 7,213 | 63 | ||
| Accounts receivable, net | 7,524 | 4,631 | ||
| Inventories, net | 3,424 | 4,869 | ||
| Prepaid expenses and other current assets | 3,726 | 4,074 | ||
| Total Current Assets | 47,935 | 17,563 | ||
| Property and equipment, net | 168 | 252 | ||
| Right-of-use assets, operating leases | 68 | 345 | ||
| Intangible assets, net | 11,968 | 13,115 | ||
| Goodwill | 18,614 | 18,614 | ||
| Other assets | 114 | 1,364 | ||
| Total Assets | $ | 78,867 | $ | 51,253 |
| Liabilities & Stockholders’ Equity (Deficit) | ||||
| Current Liabilities | ||||
| Term loans, net | $ | 780 | $ | 7,826 |
| PPP loans | — | 190 | ||
| Accrued and other liabilities | 1,607 | 3,400 | ||
| Accounts payable | 4,047 | 3,137 | ||
| Operating lease liability | 52 | 173 | ||
| Warrant liability | — | 39,850 | ||
| Total Current Liabilities | 6,486 | 54,576 | ||
| Non-current Liabilities | ||||
| Notes payable, net | — | 18,910 | ||
| Term loans, net | 4,779 | — | ||
| Lines of credit, net | 4,846 | 5,023 | ||
| PPP loans | — | 662 | ||
| Operating lease liability | 19 | 184 | ||
| Total Non-current Liabilities | 9,644 | 24,779 | ||
| Total Liabilities | 16,130 | 79,355 | ||
| Stockholders’ Equity (Deficit) | ||||
| Common Stock, $0.001 par value, 200,000,000 shares authorized, 29,241,317 and 8,651,400 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | 29 | 9 | ||
| Series F Preferred Stock, $0.001 par value, 30,000 shares authorized, — shares and 21,754 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | — | — | ||
| Additional paid-in capital | 316,554 | 232,530 | ||
| Accumulated deficit | (253,846) | (260,641) | ||
| Total Stockholders’ Equity (Deficit) | 62,737 | (28,102) | ||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | 78,867 | $ | 51,253 |
About Better Choice Company Inc.
Better Choice Company Inc. is a rapidly growing pet health and wellness company committed to leading the industry shift toward pet products and services that help dogs and cats live healthier, happier and longer lives. We take an alternative, nutrition-based approach to pet health relative to conventional dog and cat food offerings and position our portfolio of brands to benefit from the mainstream trends of growing pet humanization and consumer focus on health and wellness. We have a demonstrated, multi-decade track record of success selling trusted pet health and wellness products and leverage our established digital footprint to provide pet parents with the knowledge to make informed decisions about their pet’s health. We sell the majority of our dog food, cat food and treats under the Halo and TruDog brands, which are focused, respectively, on providing sustainably sourced kibble and canned food derived from real whole meat, and minimally processed raw-diet dog food and treats. For more information, please visit https://www.betterchoicecompany.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. The Company has based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Some or all of the results anticipated by these forward-looking statements may not be achieved. Further information on the Company’s risk factors is contained in our filings with the SEC. Any forward-looking statement made by us herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Company Contact:
Better Choice Company, Inc.
Scott Lerner, CEO
Investor Contact:
KCSA Strategic Communications
Valter Pinto, Managing Director
T: 212-896-1254
Valter@KCSA.com
bttr-q32021earningsprese
1 November 10, 2021 Q3 2021 Earnings Presentation
Safe Harbor This presentation regarding Better Choice Company, Inc. (“the Company”, “Better Choice”, “BTTR”, “we”, “us” or “our”) is strictly confidential and is for you to familiarize yourself with the Company. This presentation contains information, statements, beliefs and opinions which are forward-looking, and which reflect current estimates, expectations and projections about future events, referred to herein and which constitute “forward-looking statements” or “forward-looking information” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this document, regarding our strategy, future operations, financial position, prospects, plans and objectives of management are forward-looking statements. Statements containing the words “could”, “believe”, “expect”, “intend”, “should”, “seek”, “anticipate”, “will”, “positioned”, “project”, “risk”, “plan”, “may”, “estimate” or, in each case, their negative and words of similar meaning are intended to identify forward-looking statements. By their nature, forward-looking statements involve a number of known and unknown risks, uncertainties and assumptions, most of which are difficult to predict and many of which are beyond the Company’s control, concerning, among other things, the Company’s anticipated business strategies, anticipated trends in the Company’s business and anticipated market share, that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. In addition, even if the outcome and financial effects of the plans and events described herein are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in subsequent periods. Although the Company has attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors and risks that cause actions, events or results not to be as anticipated, estimated or intended. Forward-looking information contained in this presentation is based on the Company’s current estimates, expectations and projections, which the Company believes are reasonable as of the current date. The Company can give no assurance that these estimates, expectations and projections will prove to have been correct. Given these uncertainties, you should not place undue reliance on these forward-looking statements. All statements contained in this presentation are made only as of the date of this presentation, and the Company undertakes no duty to update this information unless required by law. You are also reminded that during this presentation, certain non-GAAP financial measures, such as Adjusted EBITDA, may be discussed. These measure should not be considered an alternative to net income, or any other measure of financial performance or liquidity presented in accordance with generally accepted accounting principles (GAAP). These measures are not necessarily comparable to a similarly titled measure of another company. Please refer to our reconciliations of these discussed figures with the most comparable GAAP measures. The known risks, uncertainties and factors are described in detail under the caption “Risk Factors” in documents the Company has filed with the Securities and Exchange Commission (the “SEC”). that are incorporated by reference in this presentation. Certain information contained in this presentation may be derived from information provided by industry sources. The Company believes such information is accurate and that the sources from which it has been obtained are reliable. However, the Company cannot guarantee the accuracy of, and has not independently verified, such information. All trademarks, service marks, and trade names appearing in this presentation are the property of their respective holders. 2
Better Choice Overview 3 * Includes subscription purchases made by end customers on our partner websites. Company Overview: • Dynamic and forward-thinking pet food company targeting the premium pet food market • Flexible omni-channel go to market strategy with four differentiated sales channels • Exciting three-year product pipeline with game changing innovation • World class and diversified team with significant success in the pet food industry • Uplisted to NYSE American on July 1, 2021 concurrent with $40m of common equity raise to drive growth $50M+ 2020 Actual Gross Sales $100M 2023 Target Gross Sales 1,500+ Pet Specialty Stores Launching Halo Elevate in 2022 43% International Quarter-over-Quarter Growth 35% E-Commerce Quarter-over- Quarter Growth ~50% Of online sales made via recurring subscriptions*
Better Choice’s Brand Portfolio 4 Current Halo Brand 2022 Pet Specialty Launch Brand Consolidation Opportunity Pet Parent Target Female Millennials With High Willingness to Pay Core Benefit Holistic, Benefit-Based Solutions (Digestion, Vegan, etc.) Best In-Class Nutrition with Transparent Recipes Real Animal Protein Your Dog Needs and Craves Channels Ecommerce, International, DTC Pet Specialty, International, DTC Ecommerce, International, DTC Companion Animal Type Dog & Cat Dog & Cat Dog Only Products Dry Kibble, Canned Wet, Treats Dry Kibble, Canned Wet, Treats Freeze-Dried Food, Toppers & Treats; Dental Chews and Supplements SKUs Dry Dog: 12 Wet Dog: 23 Vegan Dog: 8 Treats (Dog): 6 Dry Cat: 24 Wet Cat: 25 Treats (Cat): 2 Dry Kibble (Dog & Cat): 31 Canned Wet (Dog & Cat): 10 Freeze Dried Food: 7 Freeze Dried Toppers: 7 Freeze Dried Treats & Supplements: 31
Better Choice Investment Highlights 5 Note: Premium and super premium segments defined as being sold with a retail price greater than $0.20 per ounce. Executive Team Purpose Built for Success in the Pet Industry Recurring Revenue Represents Majority of Online Sales Rapidly Growing International Presence Asset Light Model with Established Long Term High Quality Co-Manufacturing Partners Portfolio of Established Premium and Super-Premium Pet Brands With a History of Success Exposure to Fastest Growing Sub-Sectors of Premium Pet
Lionel Conacher YEAR JOINED BOD: 2021 Seasoned Management Team & Board 6 Scott Lerner CEO 20+ YEARS CONSUMER PRODUCTS EXPERIENCE Management Team Board of Directors YEAR JOINED BOD: 2019 Management and key insiders own 27% of Better Choice as of September 30, 2021 Donald Young EVP Sales 29 YEARS PET INDUSTRY EXPERIENCE Rob Sauermann EVP Strategy $100M GROWTH CAPITAL DEPLOYED Jenny Condon EVP Digital Sales ECOMM EXPERT WITH 15+ YEARS EXPERIENCE 18+ YEARS FINANCE & ACCOUNTING EXPERIENCE Sharla Cook CFO Ryan Wilson VP Marketing 5+ YEARS PET INDUSTRY EXPERIENCE Alex Vournas VP Supply Chain & Logistics 5+ YEARS PET INDUSTRY EXPERIENCE Mike Young Arlene Dickinson Gil Fronzaglia John Word III YEAR JOINED BOD: 2021 YEAR JOINED BOD: 2021 YEAR JOINED BOD: 2020
A World-Class Foundation Built For Growth 7 Infrastructure A wide scope of systems ensures scalable success • World class ERP system • Shopify (third party ecommerce platform) • IT expertise and work from anywhere support • Integrated SEC reporting Suppliers • All dry kibble and freeze-dried food and treats are made in the USA • Best-in-class certifications ensure product quality and drive performance Team • 44 FTEs with hubs in Chicago, Nashville and Tampa • Win-from-anywhere culture driving productivity • Equity incentive plans in place to attract top tier talent Partners • We team with key customers and international distributors to drive successful new product launches • Marketing relationships include Humanaut and Little Big Brands
A True Omni-Channel Approach 8 We Believe Our Differentiated Omni-Channel Strategy Is A Key To Success: 1. Eliminates Channel Conflict 2. Increases Operating Leverage 3. Accelerates Topline Growth A laser focused, channel-specific approach to growth that is driven by new product innovation International Ecommerce $100M Gross Sales Target by 2023 Brick & Mortar Direct-to- Consumer • 43% QoQ growth in Asia • $100M contracted minimum sales in Asia over the next five years • Long term partnerships with Chewy and Amazon • ~50% of revenue is subscription based • Exciting growth strategy in pet specialty channel • Drives recommendation and brand trial • Building a dynamic platform for future innovation • Consolidation of TruDog underneath the Halo Umbrella
9 Halo is the brand for a new generation of pet parents
Illustrative Path to $100M Gross Sales by Channel 10 Potential M&A % 2020 Net Sales 2020 Net Sales Illustrative Growth Opportunities E-Commerce Organic Growth34% DTC Organic Growth25% International Contracted Volumes20% Brick & Mortar Pet Specialty Expansion21%
Pet Specialty Channel Key to Customer Acquisition 11 • A significant number of “success stories” in branded pet have built loyalty in the neighborhood pet and pet specialty channels, including Blue Buffalo, WellPet, Nutro and Merrick, prior to significant strategic exits Mars Pet Care Acquires Nutro (2007) • Donald Young (EVP of Better Choice Sales) joined Nutro in the early 1990’s, becoming Senior Group Vice President in 2004 • Several Better Choice sales team members worked with Donald at Nutro and later Merrick • Better Choice recently onboarded two brand managers from Mars Petcare Nestle Purina Acquires Merrick (2015) • Donald Young (EVP of Better Choice Sales) joined Merrick in 2011 to lead sales team • Several Better Choice sales team members worked with Donald at Merrick • Two leadership team members, Ryan Wilson and Jenny Condon, joined Better Choice from Nestle
Pet Specialty 2022 Launch Partners are Secured 12 • Specifically built for millennial pet parents • Designed by in-house formulation experts & veterinarians • Product gross margin targets exceed current Better Choice gross margin • 3rd Largest Pet Specialty Retailer • 560+ US Locations • 2nd Largest Pet Specialty Retailer • 1,500+ NA Locations 1,500 Larger Pet Specialty Stores 500 – 1,000 Independent Pet Stores
Halo Elevate Production Runs are Happening Now 13 Innovation pipeline centered on Halo Elevate, a highly nutritious food that takes the uncertainty and complexity out of what you are feeding your dog and provides recipe transparency you can see and trust. Future Innovation Halo Holistic 2022 Refresh Halo Elevate (Dry & Wet) 2022 Launch Three Year Innovation Pipeline Elevate Freeze Dried Treats Expansion New “Kibble” Technology Vegan Expansion Sustainability & Regenerative International Offerings
14 International Growth Driven by Asian Demand International Growth is Centered Around Strong Asian Demand • Chinese pet market estimated to be ~$7 billion by 2022, with premium dry dog and cat food markets growing at 20% and 28% CAGRs1 • $10.8m in YTD 2021 net sales represents 46% increase, with significant future growth supported by contracted minimum volumes • Halo’s target consumer in Asia is very similar to target consumer in US (for example 50%+ of Halo’s Chinese customers were born after 1990) 0 20 40 60 80 100 2015 2016 2017 2018 2019 2020E 0% 5% 10% 15% 20% 25% Pet Ownership in China is Growing1 # China Households (Cats) # China Households (Dogs) % China Households (Cats) % China Households (Dogs) (Millions of Households) 85 (% Households) 67% U.S. Pet Ownership (2020) 1) From 2015 to 2025; Euromonitor, American Pet Products Association. $100M of contracted minimum sales with Asian distribution partners in 2021-2025 Winner of the “2020 Best Selling Brand of the Year Award” (China Pet Fair)
Strategic Acquisition Update In-House M&A Capabilities Stand Out Relative To Other Brand Platforms • Potential brands must meet stringent investment criteria (valuation, channel mix, supply chain, customer profile, etc.) • Ability to source proprietary / non-auction transactions as an operating brand • Preference for asset light models that avoid channel confliction / competition • Better Choice can use stock, cash and debt to optimize cost of capital 15 TruDog Acquisition (Closed May 2019) Halo Acquisition (Closed December 2019) Investment Criteria / Transaction Rationale Direct-to-Consumer Platform in High Growth Sub-Category (Super Premium Freeze-Dried) Complementary Pet Specialty Platform With Subscription Sales + Growing International Footprint Sourcing Capabilities Preempted Capital Raise / Non-Auction Consideration Structured Transaction via Shared Banking Partner Relationship Asset Light Structure Outsourced Manufacturing (Carnivore, etc.) Outsourced Manufacturing (Alphia, Simmons, Bright Pet, etc.) Transaction Consideration Transaction Consideration (100% Stock) Cash Consideration: $0 Common Shares: 15,027,533 Transaction Consideration (54% Cash, 46% Equity / Converts) Cash Consideration: $20.5M Convertible Seller Notes: $15.0M Common Shares: 2,134,390
Q3 2021 Financial Snapshot 16 2020 Annual Results 3Q 2021 Net Sales1 ($ in millions) 3Q 2021 Gross Profit & Margin1 ($ in millions) 1. For three months ended September 30 3Q 2021 Commentary $16.1M Gross Profit $42.6M Net Sales ($1.9)M Adj. EBITDA Domestic & International Sales • Strong E-Commerce net sales in Q3 2021, representing 35% QoQ growth • International channel successfully delivering contracted volumes • $10.8m of Net Sales in YTD 2021 represents 46% YoY Growth • Secured between 4ft – 8ft of space in 1,500 Pet Specialty locations for Halo Elevate Launch in 2022 – anchored by PSP & Petco Operations and Gross Margin • YTD Q3 2021 gross margin of 36% slightly below YTD Q3 2020 gross margin of 38%, driven by dry kibble price increases • Industry wide increases to commodity costs and freight as a result of COVID-19 have negatively impacted gross margin • Canned wet food capacity constraints have had $2.5m - $3.0m OOS impact 37.8% Gross Margin $4.5 $4.4 40% 34% Q3 2020 Q3 2021 YTD Q3 ‘20 GM: 38% +19% QoQ Growth $11.1 $13.2 Q3 2020 Q3 2021 YTD Q3 ‘21 GM: 36%
Q3 2021 Income Statement 17
Q3 2021 Adjusted EBITDA Reconciliation 18
Capital Raise Has Enabled Growth Closing of $40m Underwritten Public Offering on July 1, 2021 • Listing of BTTR on NYSE American • $40m Primary Proceeds raised at $5.00 / share (~3x 2020 Net Sales) • Automatic Conversion of ~$23m of Convertible Debt into Common Shares • 29.2m common shares outstanding after accounting for the following: • Conversion of Series F Preferred • Conversion of Convertible Notes • Reverse Share Split of 1 : 6 • Repurchase of $1.3m of common stock 19
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