Overview of Better For You Wellness

Better For You Wellness is a growing wellness company that produces plant-based functional beverages and skincare products. The company operates in six dimensions of wellness: appearance, fitness, health, mindfulness, nutrition, and sleep. Their flagship product is the Stephen James Curated Coffee Collection (SJCCC), a premium coffee line that aims to fuel the mind, body, and soul. The company also sells skin and hair care products under the Mango Moi and Better Suds brands.

Better For You Wellness was founded in 2020 and is headquartered in Columbus, Ohio. The company sells its products through two channels: wholesale to retailers, resorts, and hotels, as well as direct-to-consumer online. The SJCCC line has become the company’s primary focus due to its strong growth potential.

Product Offerings

The company’s SJCCC line currently offers 16 SKUs of premium coffee from Brazil, Papua New Guinea, and Zambia. These small-batch, single-origin 100% Arabica coffees are certified Fair Trade, Kosher, and Organic. The coffees are available in whole bean, ground, individual pods, and ready-to-drink Nitro Cold Brew formats.

This summer, the company plans to expand its product range by introducing a Latin American (LatAm) Collection. This will include a variety of certified Fair Trade, Kosher, Organic, 100% Arabica premium coffee blends in light, medium, dark, espresso, and Swiss Water Decaf roasts. These will be available in whole bean, ground, and K-Cup-style formats.

The company is committed to ethically sourcing its coffee, focusing on sustainable cultivation, manufacturing, and production. The coffee beans are roasted in Ohio and Massachusetts, with plans to add roasting and manufacturing facilities in Ohio and Colorado.

Growth Strategy and Funding

Better For You Wellness is pursuing a long-term strategic model that aligns with proven strategies used by other premium and private coffee brands. The company plans to raise $4 million in growth capital to fund the purchase of green coffee beans, packaging, and manufacturing at commercial scale to lower per-unit costs. The capital will also support operations, retire maturing debt, and implement a comprehensive multi-channel marketing strategy.

The marketing plan allocates approximately 25% of gross revenue to advertising and marketing efforts in the next few years, gradually reducing to 21% as the company progresses. The marketing approach includes social media, SEO, PPC advertising, Amazon advertising, email campaigns, geofencing, trade shows, event marketing, video, and satellite radio. The company aims to make data-driven decisions by closely monitoring the performance and ROI of each marketing channel.

To expand sales in brick-and-mortar stores, the company has retained a seasoned national coffee sales director with extensive contacts in the grocery and retail beverage industry. The sales team will focus on building a network of stores within six hours of Columbus, Ohio, to minimize transit costs. For online sales, the company has developed relationships with a network of vendors, including an Amazon manager, brand creative, trade marketing, public relations, sales strategy, and sales action plan.

Financial Performance and Projections

Better For You Wellness is in expansion discussions with numerous grocers, retailers, resorts, and hotels. The company plans to measure performance by the number of stores it sells to and overall revenue. After receiving the full $4 million in growth capital within 12 months, the company expects to sell in 251 stores and generate over $1 million in revenue in the first year.

In the second year, the company estimates sales in 770 stores and over $8 million in gross revenue, reaching break-even/profitability within 20 months of full funding. By the third year, the company projects sales in 1,770 stores, including Nespresso-style pods, generating more than $24 million in revenue. In the fourth year, the company expects to be in over 2,700 stores, generating over $41 million in revenue. By the fifth year, the company believes it could achieve sales in 4,000 stores and anticipates sales above $62 million.

The company’s financial projections assume it can raise the $4 million in growth capital within 12 months. If the company fails to do so, the forecasts will be subject to change.

Competitive Analysis and Valuation

Better For You Wellness conducted a competitive market analysis of ten publicly traded coffee companies, examining their 12-month trailing revenue and market capitalization as of June 21, 2024. The analysis revealed an average price-to-sales (P/S) ratio of 2.87. The company applied a 20% reduction to this ratio, establishing a projected P/S of 2.29 for Better For You Wellness.

The company’s revenue projections and associated costs, such as cost of goods sold and operational expenses, were calculated using Kroger’s metrics and the company’s collective experience with manufacturing and distribution partners.

Based on the analysis, the company’s projected financial performance and the applied P/S ratio, the following estimates were made:

Year	Projected Revenue	Projected Market Cap	Estimated Price Per Share
1	$1,076,046	$2,464,145	$17.00
2	$8,037,618	$18,406,145	$8.45
3	$22,128,139	$50,673,457	$23.30
4	$36,944,824	$84,603,647	$39.89
5	$56,347,341	$129,176,869	$59.30

The projections assume a reverse stock split of 3500:1 in June 2024, followed by a forward split of 15:1 in Year 2, which the company believes would allow it to meet the requirements for up-listing to a senior exchange.

Financial Results

For the three months ended August 31, 2024, Better For You Wellness generated $5,844 in revenue, a 224% increase compared to the same period in 2023. For the six months ended August 31, 2024, the company generated $11,533 in revenue, a 216% increase compared to the same period in 2023.

The increase in revenue was primarily due to increased sales of the company’s coffee products. Cost of goods sold also increased significantly, rising by 860% and 584% for the three and six-month periods, respectively, due to higher raw material prices and the addition of whole bean coffee sales.

Gross profit increased during the current periods, reflecting the growth in the coffee business. Operating expenses decreased substantially, primarily due to a reduction in stock-based compensation.

The company recorded net losses of $303,146 and $572,287 for the three and six-month periods ended August 31, 2024, respectively. These losses were significantly lower than the same periods in 2023, again due to the reduction in operating expenses.

As of August 31, 2024, the company had a working capital deficit of $2,638,357 and a total stockholders’ deficit of $2,565,494, with an accumulated deficit of $9,101,822. The increase in the working capital deficit was primarily due to the increase in accrued interest and debt resulting from the default on the 1800 Diagonal note.

Outlook and Conclusion

Better For You Wellness is a growing LGBTQ+-controlled and led wellness company with a focus on plant-based functional beverages and skincare products. The company’s flagship SJCCC line of premium coffee has become its primary focus due to its strong growth potential in the large and popular coffee market.

The company’s long-term strategic plan involves raising $4 million in growth capital to fund its expansion, including the introduction of a new Latin American coffee collection, increased manufacturing capacity, and a comprehensive multi-channel marketing strategy. The company’s financial projections, based on a competitive analysis and its own revenue and cost estimates, suggest significant growth potential, with the possibility of reaching over $62 million in revenue by the fifth year.

While the company has faced some financial challenges, including a working capital deficit and accumulated losses, the reduction in operating expenses and the focus on the high-growth coffee business suggest a path towards profitability and long-term success. Investors should carefully consider the company’s growth plans, competitive positioning, and financial performance when evaluating an investment in Better For You Wellness.