SRXH 8-K
SRX Global Inc. (SRXH)
8-K
2020-11-18
For: 2020-11-18
View Original
Added on
April 11, 2026
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 18, 2020
_______________________
Better Choice Company Inc.
(Exact name of Registrant as Specified in its Charter)
_______________________
| Delaware | 333-161943 | 26-2754069 | ||||||
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
| 164 Douglas Rd E, Oldsmar, Florida | 34677 | ||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||
(Registrant's Telephone Number, Including Area Code): (646) 846-4280
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 Symbol(s) | Name of each exchange on which registered | ||||||
| N/A | N/A | N/A | ||||||
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 18, 2020, Better Choice Company Inc., a Delaware corporation (the “Company”), announced its financial results for the quarter ended September 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure
Better Choice Third Quarter 2020 Financial Results Conference Call
On November 18, 2020, at 8:30 am EDT, the Company will host a conference call to discuss results for the nine months ended September 30, 2020. Interested parties, including analysts, investors and the media, may listen live via the details below.
| Event: | Better Choice Third Quarter 2020 Financial Results Conference Call | ||||
| Date: | Wednesday, September 18, 2020 | ||||
| Time: | 8:30 a.m. Eastern Time | ||||
| Live Call: | +1-877-407-4018 (U.S. Toll-Free) or +1-201-689-8471 (International) | ||||
| Webcast: | http://public.viavid.com/index.php?id=142446 | ||||
Updated Investor Presentation
On November 18, 2020, 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://betterchoicecompany.com/wp-content/uploads/2020/11/BTTR-3Q20-Earnings-Presentation-vNov-17-Final.pdf. 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 18, 2020, 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.
2
| Exhibits | Description | ||||
3
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/ Werner von Pein | ||||||||||
| Name: | Werner von Pein | ||||||||||
| Title: | Chief Executive Officer | ||||||||||
| November 18, 2020 | |||||||||||
4
Exhibit 99.1
Better Choice Company Reports Third Quarter and Year-to-Date 2020 Financial Results
NEW YORK, NY, November 18, 2020 -- Better Choice Company, Inc. (OTCQB: BTTR) (the “Company” or “Better Choice”), an animal health and wellness company, today reported its financial results for the third quarter ended September 30, 2020.
“We are very excited to share our third quarter 2020 results with the investor community. 2020 has been a “banner year” for Better Choice and we are excited to be a leader in the highest growth areas of the pet food industry as we move into 2021,” said Werner von Pein, CEO of Better Choice.
“We have a strong presence in the highest growth segments of animal health with e-commerce and direct-to-consumer sales representing ~60% of consolidated revenue,” continued Mr. von Pein. “We are uniquely positioned to benefit in the current global environment as consumers move online and we are focused on continuing to convert a large number of our customer base into “sticky” subscription or recurring revenue purchasers. Our international expansion continues to accelerate and represented 27% and 22% of net sales for Q3 and year-to-date, respectively. A strong internal focus on achieving cash flow positivity, managing costs and adopting industry best practices provides a strong foundation for us as we execute on organic growth and evaluate M&A opportunities, with both avenues presenting compelling expansion opportunities.”
Operational Updates
•Continued to grow the business throughout the COVID-19 recession, primarily in e-commerce, direct-to-consumer and international (sold through domestic distributors).
•Successfully integrating the TruPet and Halo subsidiaries.
•Received approval in June 2020 from the Chinese Ministry of Agriculture to ship 15 diets directly to mainland China. Net sales in China were $1.8mm and $3.5mm for Q3 and year to date, respectively, and expect annual revenue in China to be ~$7mm and growing. We expect total international annual revenue to be ~$12mm.
•Consolidated warehouse operations in October 2020 into one location, just outside of Nashville, TN.
•Raised more than $20mm of equity in October 2020 to support growth and de-lever the balance sheet, including more than $11mm invested by Company insiders.
Financial Results for the Third Quarter and Year-to-Date 2020
•Year-to-date 2020 Net Sales of $33.3mm
•Third quarter 2020 Net Sales of $11.1mm
•Year-to-date 2020 Loss from operations of $24.3mm
•Third quarter 2020 Loss from operations of $3.3mm
•Year-to-date 2020 Adjusted EBITDA of ($1.1mm)
•Third quarter 2020 Adjusted EBITDA of ($0.4mm)
Conference Call and Webcast Information
The Company will host a conference call and audio webcast on Wednesday, November 18 at 8:30 a.m. ET to answer questions about the Company's operational and financial highlights for the third quarter of 2020.
| Event: | Better Choice Third Quarter 2020 Financial Results Conference Call | ||||
| Date: | Wednesday, November 18, 2020 | ||||
| Time: | 8:30 a.m. Eastern Time | ||||
| Live Call: | +1-877-407-4018 (U.S. Toll-Free) or +1-201-689-8471 (International) | ||||
| Webcast: | http://public.viavid.com/index.php?id=142446 | ||||
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until September 1, 2020 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: 13713159.
Better Choice Company Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
(Dollars in thousands, except share and per share amounts)
| Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net sales | $ | 33,302 | $ | 11,567 | $ | 11,135 | $ | 3,932 | |||||||||||||||
| Cost of goods sold | 20,567 | 7,178 | 6,681 | 3,096 | |||||||||||||||||||
| Gross profit | 12,735 | 4,389 | 4,454 | 836 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| General and administrative | 23,298 | 12,031 | 3,648 | 4,856 | |||||||||||||||||||
| Share-based compensation | 7,047 | 6,708 | 1,543 | 2,496 | |||||||||||||||||||
| Sales and marketing | 6,203 | 8,452 | 2,396 | 2,856 | |||||||||||||||||||
| Customer service and warehousing | 500 | 854 | 148 | 303 | |||||||||||||||||||
| Total operating expenses | 37,048 | 28,045 | 7,735 | 10,511 | |||||||||||||||||||
| Loss from operations | (24,313) | (23,656) | (3,281) | (9,675) | |||||||||||||||||||
| Other expense (income): | |||||||||||||||||||||||
| Interest expense, net | 7,268 | 165 | 2,537 | 41 | |||||||||||||||||||
| Loss on extinguishment of debt | 88 | — | 88 | — | |||||||||||||||||||
| Loss on acquisitions | — | 147,376 | — | (2,612) | |||||||||||||||||||
| Change in fair value of warrant derivative liability | (2,118) | (886) | (4,213) | (1,079) | |||||||||||||||||||
| Total other expense (income), net | 5,238 | 146,655 | (1,588) | (3,650) | |||||||||||||||||||
| Net and comprehensive loss | (29,551) | (170,311) | (1,693) | (6,025) | |||||||||||||||||||
| Preferred dividends | 103 | 70 | 35 | 43 | |||||||||||||||||||
| Net and comprehensive loss available to common stockholders | $ | (29,654) | $ | (170,381) | $ | (1,728) | $ | (6,068) | |||||||||||||||
| Weighted average number of shares outstanding, basic and diluted | 48,809,740 | 28,624,230 | 48,961,447 | 43,575,010 | |||||||||||||||||||
| Loss per share, basic and diluted | $ | (0.61) | $ | (5.95) | $ | (0.04) | $ | (0.14) | |||||||||||||||
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 and comprehensive loss: depreciation and amortization, interest expense, share-based compensation, warrant expense and dividends, change in fair value of warrant derivative liability, loss on extinguishment of debt, loss on acquisitions, acquisition related expenses, purchase accounting adjustments, equity and debt offering expenses and COVID-19 expenses.
The Company presents Adjusted EBITDA 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 loss, gross margin, and our other GAAP results.
The following table presents a reconciliation of net and comprehensive loss, the closest GAAP financial measure, to EBITDA and Adjusted EBITDA for each of the periods indicated:
Better Choice Company Inc.
Reconciliation of Net Loss to EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA
(Dollars in thousands)
| Nine Months Ended September 30, | Three Months Ended September 30, | Three Months Ended June 30, | Three Months Ended March 30, | ||||||||||||||||||||
| 2020 | 2020 | 2020 | 2020 | ||||||||||||||||||||
| Net and comprehensive loss | $ | (29,654) | $ | (1,728) | $ | (18,438) | $ | (9,488) | |||||||||||||||
| Depreciation and amortization | 1,298 | 432 | 409 | 457 | |||||||||||||||||||
| Interest expense, net | 7,268 | 2,537 | 2,430 | 2,301 | |||||||||||||||||||
| EBITDA | (21,088) | 1,241 | (15,599) | (6,730) | |||||||||||||||||||
| Non-cash share-based compensation(a) | 7,047 | 1,543 | 3,020 | 2,484 | |||||||||||||||||||
| Non-cash warrant expense(b) | 9,986 | — | 7,390 | 2,594 | |||||||||||||||||||
| Non-cash dividends(c ) | 103 | 34 | 34 | 35 | |||||||||||||||||||
| Non-cash change in fair value of warrant derivative liability | (2,118) | (4,213) | 3,474 | (1,379) | |||||||||||||||||||
| Loss on extinguishment of debt | 88 | 88 | — | — | |||||||||||||||||||
| Acquisition related expenses/(income)(d) | 1,236 | (57) | 616 | 677 | |||||||||||||||||||
| Non-cash effect of purchase accounting on cost of goods sold(e) | 894 | — | — | 894 | |||||||||||||||||||
| Offering relating expenses(f) | 987 | 338 | 334 | 315 | |||||||||||||||||||
| Non-recurring expenses(g) | 1,719 | 658 | 79 | 982 | |||||||||||||||||||
| COVID-19 expenses(h) | 30 | 5 | 25 | — | |||||||||||||||||||
| Adjusted EBITDA | $ | (1,117) | $ | (362) | $ | (627) | $ | (128) | |||||||||||||||
| (a) Reflects non-cash expenses related to equity compensation awards. 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) Reflects non-cash expenses related to stock purchase warrants associated with a contract that was subsequently terminated. | |||||||||||||||||||||||
| (c) Reflects non-cash expenses related dividends that were settled in October 2020 in connection with the issuance of Series F preferred stock. | |||||||||||||||||||||||
| (d) 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. | |||||||||||||||||||||||
| (e) 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. | |||||||||||||||||||||||
| (f) Reflects administrative costs associated with the registration of previously issued common shares and other debt and equity financing transactions. | |||||||||||||||||||||||
| (g) Reflects contract termination costs and the write off of a prepaid asset related to the termination of a contract entered into during 2019, including $0.8 million and $0.4 million of non-cash expenses, respectively, for the nine month period; and other non-recurring costs. | |||||||||||||||||||||||
| (h) Reflects cleaning, sanitizing, protective equipment and hazard compensation related to COVID-19. | |||||||||||||||||||||||
During October 2020, we completed the outsourcing of certain warehouse operations to a third party logistics facility. We expect that this operational improvement would have provided approximately $0.3mm in cost savings for the year-to-date period had it been implemented on January 1, 2020.
About Better Choice Company, Inc.
Better Choice Company Inc. is a rapidly growing animal 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 animal 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 animal 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.
Werner von Pein, CEO
Investor Contact:
Red Chip Companies, Inc
Dave Gentry
407-491-4498 [email protected]
Third Quarter 2020 Earnings Presentation November 18, 2020
Safe Harbor 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 and the effects of the COVID- 19 outbreak, 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 this presentation contains certain non-GAAP financial measures, such as Adjusted EBITDA. These measures 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 measures with the most comparable GAAP measures. CANNABIS-RELATED ACTIVITIES ARE ILLEGAL UNDER U.S. FEDERAL LAWS: The U.S. Federal Controlled Substances Act classifies “marijuana” as a Schedule I controlled substance. Accordingly, cannabis-related activities, including without limitation, the cultivation, manufacture, importation, possession, use or distribution of cannabis and cannabis products are illegal under U.S. federal law. Strict compliance with state and local laws with respect to cannabis will neither absolve the Company of liability under U.S. federal law, nor will it provide a defense to any federal prosecution which may be brought against the Company with respect to adult-use or recreational cannabis. Any such proceedings brought against the Company may adversely affect the Company’s operations and financial performance. Prospective investors should carefully consider the risk factors before investing directly or indirectly in the Company and purchasing the securities described herein. 1
BTTR Investment Highlights ▪ Approximately 56% of BTTR 3Q20 net sales are concentrated in E- Commerce and Direct-to-Consumer. Both of these channels are BTTR Well Positioned in projected to grow at 20%+ annually High Growth Channels ▪ Primary SKUs are canine and feline food, treats and supplements in the premium and ultra-premium category ▪ International sales account for ~27% of BTTR 3Q20 net sales Strong and Growing ▪ Q3 net sales of ~$3.0mm = ~$12.0mm annualized International Presence ▪ China is expected to be BTTR’s highest growth market. Annual revenue run-rate ~$7mm post direct imports commencing in June ▪ Solid Gold (direct competitor) acquired for ~$163mm M&A and IPOs ▪ Carlyle “re-acquires” Manna Pro from Morgan Stanley Continues to be Active in Pet ▪ PetCo files to go public (owned by CVC and Canada Pension Plan) ▪ Two contract manufacturers (BrightPet, CJ Foods) completed M&A processes ▪ FreshPet (FRPT) is the only publicly traded competitor to BTTR Public Market Scarcity ▪ FRPT trades at >20x 2019A revenue vs BTTR at ~2.5x 2
Business Profile & Key Growth Areas ▪ 32% of net sales in 3Q20 E-Commerce ▪ Primary customers are Amazon and Chewy ▪ Covid-19 has accelerated the shift to online pet purchasing ▪ 27% of net sales 3Q20, primarily in Asia-Pacific International ▪ China the primary growth driver, expected to be 30%+ annually ▪ 24% of net sales in 3Q20 Direct to Consumer ▪ High growth, first mover opportunity ▪ Millennial demographic is an important focus area for DTC growth ▪ Food-Drug-Mass (“FDM”) Other Growth Areas ▪ Other International: Europe, Latin America ▪ Specialized Products: Vegan, etc. $s in mm YTD20 Net Sales 3Q20 Net Sales $ % $ % E-Commerce (Amazon, Chewy) $11.0 33% $3.5 32% Direct to Consumer (TruDog) $8.1 24% $2.7 24% International (Asia, China) $7.4 22% $3.0 27% Pet Specialty $6.2 19% $1.9 17% Food-Drug-Mass, Other $0.6 2% $0.0 0% Total $33.3 100% $11.1 100% 3
Public Market Scarcity – Equity Value Creation (000’s) (OTCQB: BTTR) (000’s) (NASDAQ: FRPT) E-Commerce, Direct-to-Consumer, Pet Key Channels Grocery & Mass Specialty, International, Grocery & Mass Product Attributes Premium Natural Whole Meat Super Premium Refrigerated Halo: Canned & Kibble Products Natural Whole Meat TruPet: Freeze Dried and Dehydrated Manufacturing & Co-Packaged: Industry Leading Sourcing In-House Manufacturing Supply Chain of High Quality Proteins Dog / Cat Split Halo: 50% Dog, 50% Cat 96% Dog, 4% Cat TruPet: 100% Dog Source: Company Management, Public Company Filings BTTR trades at a significant discount to FRPT. This presents a significant opportunity for shareholder value creation as the discount narrows 4
Brand Overview 5
Two Brands, One Company: Halo & TruDog Halo Overview TruPet Overview ▪ Halo is a 30-year-old, premium, natural pet food brand based ▪ TruPet is a 7-year old brand based in Tampa, FL that produces in Tampa, FL that is uniquely differentiated from its and markets raw freeze-dried and dehydrated food, treats, competitors and supplements for dogs and cats ▪ Uses natural whole meat and no rendered meat meal ▪ Well positioned as industry shifts toward products that create longer, better, lives for pets and helping pet owners ▪ Highly digestible due to use of real whole protein understand the benefits of feeding a species an appropriate diet. Brands include: ▪ History of top line growth driven by continued premiumization of the pet food industry ▪ TruDog – DTC Pet Wellness Products ▪ Flexible and scalable outsourced manufacturing model with ▪ Rawgo! – DTC Dehydrated Dog Food capacity to grow or insource ▪ Orapup and TruDog Dental – DTC Oral Care Products ▪ E-Commerce and International are Halo’s largest and fastest growing channel ▪ TruCat – DTC Cat Wellness Products E-Commerce & Direct to Consumer Expertise Diverse Product Portfolio Key Customers Customer Acquisition Channels Social Google YouTube Email Direct Radio Networks Mail 6
Differentiated Product Offering Halo and TruDog produce unique products using ingredients that are better for pets Merrick® Natural Wellness® Halo® Holistic TruDog Feed Blue™ Life Classic Real Balance® Complete Chicken and Me Turkey Protection Chicken + Original Ultra® Health® Adult Chicken Liver Grain-Free Formula® Green Peas Whole Body Deboned Recipe for Freeze-Dried Adult Chicken Recipe with Health® Chicken & Adult Dogs Raw Dog Food & Brown Rice Ancient Grains Chicken, Oatmeal Recipe Dry Adult Dry Dog Chicken Meal, Recipe Dry Dog Food Food Duck Meal Dry Dog Food Dog Formula (WHOLE) Chicken Ground Turkey Deboned Chicken Deboned Chicken Chicken Deboned Chicken (WHOLE) Chicken Liver Turkey Heart Chicken Meal Chicken Meal Chicken Meal Chicken Meal Dried Egg Product Turkey Liver Brown Rice Peas Peas Oatmeal Oatmeal Herring Oil Barley Turkey Meal Potatoes Ground Barley Top 5 Ingredients 5 Top Pearled Barley Oatmeal Brown Rice Chicken Fat Peas 7
International Growth Strategy Better Choice has experienced a significant growth in international sales, with a current focus on key Asian markets such as China, Korea and Japan ▪ Growth in Asia is fueled by increasing levels of economic financial status and demand for premium, western manufactured products, with China representing the largest market opportunity for growth ▪ 3Q20 net sales in Asia were ~$3.0M, a ~27% increase over 2Q20 and a ~47% increase over 1Q20 ▪ Better Choice has experienced successful traction and accelerating sales growth in Japan, South Korea, Taiwan, Philippines, China and Australia, and in June 2020 received Product Import Registrations from the Ministry of Agriculture and Rural Affairs of China to ship branded product directly into mainland China ▪ Chinese shoppers are set to spend $7 billion on their pets by 2022, according to Reuters. Based on data from Euromonitor, dog and cat food sales in China were $2.2 billion in 2018 and are expected to reach $6.1 billion in 2025, a 28.9% CAGR. While the market is still relatively young, it is growing rapidly ▪ In 2021, Better Choice plans to continue its expansion in Asia and enter other international markets Net Sales - By Geography Q1 2020 Q2 2020 Q3 2020 YTD Q3 2020 ($ 000's) China $255 $1,455 $1,829 $3,539 Korea $474 $657 $382 $1,513 Japan $621 $44 $397 $1,062 Taiwan $697 $209 $355 $1,261 Other $0 $0 $37 $37 Total International Net Sales $2,047 $2,366 $2,999 $7,413 8
Actionable Near-Term Growth Opportunities ▪ Fastest growing channel in pet food, especially due to Covid-19 E-Commerce ▪ Prioritizing with Amazon and Chewy ▪ Recent advertising using Amazon Media Group has cross-channel impact ▪ Large and growing natural pet market in Asia and other markets ▪ Successful traction and accelerating sales growth in Japan, South Korea, Taiwan, Philippines, International China and Australia ▪ Growth in Asia is fueled by increasing levels of economic financial status and demand for premium, western manufactured products ▪ Strong reception to launch of Garden of Vegan® dog food Vegan ▪ Second Product (Ocean of Vegan®) launched recently Products ▪ Great for families with vegan lifestyles as well as protein sensitivities ▪ Awarded #1 Brand in the Vegan Dog Category by VegNews Food, Drug & ▪ In addition to recent innovation (including Vegan line), plan to launch differentiated product Mass: New for Food, Drug, Mass Accounts Product Innovation ▪ Initial conversations with retailers already underway 9
Financials 10
BTTR Financial Highlights Strong Growth in ▪ E-Commerce net sales of ~$11mm YTD20 Accelerating Channels ▪ Int’l net sales of ~$7.4mm YTD20 Inflected to near- breakeven Pro Forma ▪ 3Q20 Pro Forma Adjusted EBITDA of ($0.3mm) Adjusted EBITDA Strong Insider ▪ Recent $21.7mm equity raise included more than Support from $11mm of commitments from Insiders Recent Equity Raise ▪ BTTR intends to uplist to either the Nasdaq or NYSE in ~mid-2021 post filing its 2020 10-K. BTTR expects this 2021 “Uplist” Planned to be a material catalyst for the company from a capital market perspective 11
Non-GAAP Measures Non-GAAP Measures Better Choice Company defines Adjusted EBITDA and Pro Forma 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 and comprehensive loss: depreciation and amortization, interest expense, share-based compensation, warrant expense and dividends, change in fair value of warrant derivative liability, loss on extinguishment of debt, loss on acquisitions, acquisition related expenses, purchase accounting adjustments, equity and debt offering expenses and COVID-19 expenses. Pro Forma Adjusted EBITDA is determined by adding annualized cost savings related to certain operational cost improvements to Adjusted EBITDA. We define Adjusted Loss from operations as Loss from operations as defined by GAAP adjusted for the same non-cash and non-recurring items added to net and comprehensive loss to determine Adjusted EBITDA and Pro Forma Adjusted EBITDA. The Company presents Adjusted EBITDA, Pro Forma Adjusted EBITDA and Adjusted Loss from operations because they are key measures 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, Pro Forma Adjusted EBITDA and Adjusted Loss from operations is useful to investors as these non-GAAP measures form the basis of how our management team reviews and considers our operating results. By disclosing these non-GAAP measures, 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 these measures 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, Pro Forma Adjusted EBITDA and Adjusted Loss from operations do not represent cash flows from operations as defined by GAAP. Adjusted EBITDA, Pro Forma Adjusted EBITDA and Adjusted Loss from operations have limitations as a financial measure and you should not consider any of these measures 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, Pro Forma Adjusted EBITDA and Adjusted Loss from operations alongside other financial performance measures, including various cash flow metrics, net loss, gross margin, and our other GAAP results. The following table presents a reconciliation of net and comprehensive loss, the closest GAAP financial measure, to EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA for each of the periods indicated. Source: Public Company Filings 12
Adjusted EBITDA Reconciliation Better Choice Company Inc. Reconciliation of Net Loss to EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA Nine Months Ended Three Months Ended Three Months Ended Three Months Ended ($ in 000’s) September 30, September 30, June 30, March 31, 2020 2020 2020 2020 Net and comprehensive loss $ (29,654) $ (1,728) $ (18,438) $ (9,488) Depreciation and amortization 1,298 432 409 457 Interest expense, net 7,268 2,537 2,430 2,301 EBITDA (21,088) 1,241 (15,599) (6,730) Non-cash share-based compensation, warrant expense and dividends (a) 17,135 1,578 10,445 5,112 Non-cash change in fair value of warrant derivative liability (2,118) (4,213) 3,474 (1,379) Loss on extinguishment of debt 88 88 - - Acquisition related expenses/(income)(b) 1,236 (57) 616 677 Non-cash effect of purchase accounting on cost of goods sold(c) 894 - - 894 Offering relating expenses (d) 987 338 334 315 Non-recurring expenses (e) 1,719 658 79 982 COVID-19 expenses(f) 30 5 25 - Adjusted EBITDA $ (1,117) $ (362) $ (627) $ (129) Cost savings(g) 274 48 111 115 Pro Forma Adjusted EBITDA $ (843) $ (313) $ (516) $ (14) (a) Reflects non-cash expenses related to equity compensation awards, dividends and stock purchase warrants associated with a contract that was subsequently terminated. 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) Reflects costs incurred related to acquistition and integration activities that will not recur and operating expenses that will not recur due to acquisition related synergies. (c) 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. (d) Reflects administrative costs associated with the registration of previously issued common shares and other debt and equity financing transactions. (e ) Reflects contract termination costs and the write off of a prepaid asset related to the termination of a contract entered into during 2019, including $0.8 million and $0.4 million of non-cash expenses, respectively, for the nine month period and other non-recurring costs. (f) Reflects cleaning, sanitizing, protective equipment and hazard compensation related to COVID-19. (g) Represents an adjustment to reflect the annualized cost savings from certain operational cost improvements related to warehouse operations that have been outsourced to a third party logistics facility in October 2020 as if implemented as of January 1, 2020. Source: Public Company Filings 13
3Q20 Income Statement -> Adjusted EBITDA Reconciliation The following tables present a reconciliation of Loss from operations, the closest GAAP financial measure, to Adjusted Loss from operations for each of the periods indicated. Better Choice Company Inc. Reconciliation of Loss from Operations to Adjusted Loss from Operations Adjusting for Non-Cash and Non-Recurring Charges,(Unaudited) Q320 Pro Forma Adjusted EBITDA was ($313k) (dollars in thousands) ($ in 000’s) Three Months Ended September 30, 2020 Non-Cash Non-Recurring Adjusted Net sales $ 11,135 $ 11,135 Cost of goods sold 6,681 6,681 Gross profit 4,454 - - 4,454 Operating expenses: General and administrative 3,648 (516) A (434) D 2,699 Share-based compensation 1,543 (1,543) B - Sales and marketing 2,396 (425) C 1,971 Customer service and warehousing 148 (51) E 97 Total operating expenses 7,735 (2,484) (485) 4,767 Loss from operations (3,281) 2,484 485 (313) Non-Cash and Non-Recurring Adjustments: A Reflects non-cash depreciation and amortization and bad debt expense. B Reflects non-cash expenses related to equity compensation awards and stock purchase warrants. 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. C Reflects non-cash write off of prepaid asset related to a contract entered into during the prior year and terminated in 2020. D See below: $338 Reflects legal and advisory costs associated with the registration of previously issued common shares and other debt and equity financing transactions. Reflects costs incurred related to acquistition and integration activities that will not recur and operating expenses that will not recur due to acquisition related ($57) synergies. $153 Other non-recurring costs $434 E Represents the annualized cost savings from certain operational cost improvements related to warehouse operations that have been outsourced to a third party logistics facility in October 2020. Source: Public Company Filings 14
YTD20 Income Statement -> Adjusted EBITDA Reconciliation Adjusting for Non-Cash and Non-Recurring Charges, YTD20 Pro Forma Adjusted EBITDA was ($843k) Nine Months Ended ($ in 000’s) September 30, 2020 Non-Cash Non-Recurring Adjusted Net sales $ 33,302 $ 33,302 Cost of goods sold 20,567 (894) A 19,673 Gross profit 12,735 894 - 13,629 Operating expenses: General and administrative 23,298 (12,412) B (2,491) E 8,395 Share-based compensation 7,047 (7,047) C - Sales and marketing 6,203 (425) D 5,778 Customer service and warehousing 500 (201) F 299 Total operating expenses 37,048 (19,884) (2,692) 14,472 Loss from operations (24,313) 20,778 2,692 (843) Non-Cash and Non-Recurring Adjustments: A 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. B Reflects non-cash contract termination costs ($11.0m), depreciation and amortization ($1.3m) and non-cash bad debt expense ($0.1m). C Reflects non-cash expenses related to equity compensation awards and stock purchase warrants. 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. D Reflects non-cash write off of prepaid asset related to a contract entered into during the prior year and terminated in 2020. E See below: $987 Reflects legal and advisory costs associated with the registration of previously issued common shares and other debt and equity financing transactions. $1,236 Reflects costs incurred related to acquistition and integration activities that will not recur and operating expenses that will not recur due to acquisition related synergies. $73 Reflects non-recurring costs related to a warehouse that has been outsourced to a third party logistics facility. $195 Other non-recurring costs. $2,491 F Represents the annualized cost savings from certain operational cost improvements related to warehouse operations that have been outsourced to a third party logistics facility in October 2020. Source: Public Company Filings 15