Better For You Wellness, Inc. reported significant changes in its financial situation, including an increase in interest rates on its promissory notes to 18% and subsequently 22% due to default. The company received a default notice in July 2024, which resulted in the accrual of default interest. Additionally, the company entered into an amendment to its promissory notes in September 2023, which increased the interest rate and modified the repayment terms. The company also reported changes in its stock and capital structure, including the issuance of preferred stock and the amendment of its authorized capital. Furthermore, the company disclosed various transactions, including the purchase of assets and the issuance of securities, which impacted its financial position and performance. Overall, the company’s financial report highlights the challenges it faced in 2024, including the default on its promissory notes and the resulting increase in interest rates, as well as its efforts to restructure its debt and improve its financial position.
Overview of Better For You Wellness
Better For You Wellness is a growing LGBTQ+-controlled and led wellness company that produces plant-based functional beverage and skincare products. The company operates across six dimensions of wellness: appearance, fitness, health, mindfulness, nutrition, and sleep. Their flagship product is the Stephen James Curated Coffee Collection (SJCCC), which provides premium, ethically-sourced coffee to health-conscious consumers. They also offer 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 offices; and direct-to-consumer via their website. The SJCCC line has become the company’s primary focus due to its strong growth potential in the large and popular coffee market.
Product Offerings
The company’s SJCCC line currently offers 16 SKUs of premium, small-batch 100% Arabica coffee from Brazil, Papua New Guinea, and Zambia. These coffees are available in whole bean, ground, single-serve pods, and ready-to-drink nitro cold brew formats.
To expand their product range, Better For You Wellness plans to introduce a new Latin American (LatAm) Collection this summer. This will include certified organic, fair-trade coffee blends in light, medium, dark, espresso, and Swiss water decaf varieties.
The company is committed to ethical and sustainable sourcing, with all coffee beans roasted in Ohio and Massachusetts. They plan to add additional roasting and manufacturing capabilities in Ohio and Colorado to ensure quality and redundancy.
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 within the next 12 months to fund the following initiatives:
The marketing plan will allocate approximately 25% of gross revenue to advertising and marketing efforts in the next few years, gradually reducing to 21% as the company progresses. Tactics will include social media, SEO, PPC advertising, email campaigns, trade shows, and more - all guided by data-driven decision making.
To expand sales in brick-and-mortar retail, the company has retained an experienced national coffee sales director with industry contacts. They also plan to add sales/customer service representatives. For online sales growth, Better For You Wellness has developed relationships with a network of vendors including an Amazon manager, brand creative team, and sales strategy consultants.
Financial Projections and Competitive Analysis
Better For You Wellness’ financial projections assume they can raise the $4 million in growth capital within 12 months. If they fail to do so, the forecasts will need to be adjusted.
The company conducted a competitive market analysis of 10 publicly traded coffee companies, examining their 12-month trailing revenue and market capitalization. This revealed an average price-to-sales (P/S) ratio of 2.87. Better For You Wellness applied a 20% reduction to establish a projected P/S ratio of 2.29 for their own forecasts.
The key financial projections are:
Metric | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
---|---|---|---|---|---|
Total Projected Revenue | $1,076,046 | $8,037,618 | $22,128,139 | $36,944,824 | $56,347,341 |
Projected Retained Earnings | - | $(3,221,872) | $(3,322,949) | $(3,170,184) | $312,434 |
Estimated Shares Outstanding | 145,116 | 2,177,174 | 2,177,602 | 2,178,031 | 2,178,460 |
Estimated Price Per Share | $17.00 | $8.45 | $23.30 | $39.89 | $59.30 |
Projected Market Cap | $2,464,145 | $18,406,145 | $50,673,457 | $84,603,647 | $129,176,869 |
These projections indicate strong revenue growth, with the company reaching profitability by the 20th month after full funding. By year 5, they estimate sales in 4,000 stores and revenue exceeding $62 million.
Recent Financial Performance
For the three months ended August 31, 2024, Better For You Wellness reported:
For the six months ended August 31, 2024, the company reported:
The increases in revenue and cost of goods sold were driven by growth in the coffee business, including the addition of whole bean coffee sales. The decreases in operating expenses and net loss were primarily due to reduced stock-based compensation compared to the prior year periods.
Liquidity and Capital Resources
As of August 31, 2024, Better For You Wellness had $2,999 in cash and a working capital deficit of $2,638,357. The company had a total stockholders’ deficit of $2,565,494 and an accumulated deficit of $9,101,822.
For the six months ended August 31, 2024, the company used $176,829 in cash for operating activities and $490 for the purchase of fixed assets. They received $178,602 in cash from financing activities, primarily from proceeds from related parties.
The company’s critical accounting policies include revenue recognition under ASC 606 and the application of GAAP principles in their consolidated financial statements. As an emerging growth company, Better For You Wellness is exempt from certain financial disclosure and governance requirements.
Outlook and Conclusion
Better For You Wellness is a promising wellness company with a focus on premium, ethically-sourced coffee and plant-based skincare products. Their flagship SJCCC line has become the primary growth driver, capitalizing on the large and popular coffee market.
The company’s strategic plan to raise $4 million in growth capital and implement a comprehensive marketing strategy appears well-conceived. Their financial projections indicate strong revenue growth, profitability within 20 months, and a potential market capitalization exceeding $129 million by year 5.
However, the company faces liquidity challenges, with a working capital deficit and accumulated losses. Successful execution of their funding and growth plans will be critical to realizing their ambitious targets. Investors should carefully consider the company’s financial position, competitive landscape, and ability to achieve its projections before making any investment decisions.
Overall, Better For You Wellness presents an interesting opportunity in the wellness and functional beverage space, but its long-term success will depend on its ability to navigate the challenges ahead and deliver on its strategic vision.