DEF 14C: Better Choice Company Announces Reverse Stock Split to Maintain NYSE Listing

Better Choice Company is implementing a reverse stock split, with a ratio between 1-for-25 and 1-for-45, to meet NYSE American listing requirements and enhance the appeal of its common stock.

Summary

• Better Choice Company's board of directors has approved a reverse stock split of its common stock.
• The reverse stock split ratio will be in the range of 1-for-25 to 1-for-45, to be determined by the Board.
• The primary reason for the reverse stock split is to comply with NYSE American listing requirements, as the company's stock price has been trading at a low level.
• The company received a notice from the NYSE American on September 21, 2023, stating that it needed to effect a reverse stock split or demonstrate sustained price improvement by March 21, 2024.
• The reverse stock split was approved by stockholders owning a majority (50.5%) of the outstanding voting capital stock on February 16, 2024.
• The reverse stock split is expected to be effective on or about March 31, 2024, at least 20 calendar days after the mailing of the information statement on February 27, 2024.
• The number of outstanding shares will be reduced from 36,240,690 to between approximately 1,449,628 and 805,349, depending on the final ratio.
• The company believes the reverse stock split could enhance the appeal of its common stock to institutional investors and the general investing public.
• The Board has the discretion to implement the Reverse Stock Split only upon the Board's determination that a reverse stock split would be in the best interests of the Company's stockholders at that time, and only (without further stockholder approval) up to March 31, 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the reverse stock split is being done to avoid delisting, it could also improve the company's appeal to investors.

Positives

• The reverse stock split is expected to help the company maintain its listing on the NYSE American.
• A higher stock price may attract institutional investors and improve trading liquidity.
• The reverse stock split could provide flexibility for future equity offerings, strategic transactions, and equity incentives.
• The Board believes that the intended increase in the stock price could decrease price volatility.

Negatives

• There is no guarantee that the reverse stock split will increase the market price of the common stock or maintain it at a higher level.
• The reverse stock split may result in some stockholders owning odd lots of less than 100 shares, which may be more difficult to sell.
• Some investors may view a reverse stock split negatively, which could result in a decrease in the company's market capitalization.
• The company cannot assure that all or any of the anticipated beneficial effects on the trading market for the Company's common stock will occur.

Risks

• The reverse stock split may not result in a sustained increase in the stock price.
• The company may not be able to maintain ongoing continued listing requirements on the NYSE American even after the reverse stock split.
• The reduced number of outstanding shares after the reverse stock split could adversely affect liquidity.
• The reverse stock split could have a potential anti-takeover effect.

Future Outlook

The company anticipates that the reverse stock split will become effective on or about March 31, 2024, and believes it will help maintain its NYSE American listing and potentially attract more investors.

Management Comments

• The Board is recommending the Reverse Stock Split for several important reasons.
• The Board believes that stockholder approval of a range of Reverse Stock Split ratios (rather than a single exchange ratio) is in the best interests of the Company's stockholders because it provides the Board with the flexibility to achieve the desired results of the Reverse Stock Split and because it is not possible to predict market conditions at the time the Reverse Stock Split would be implemented.

Industry Context

Reverse stock splits are a common strategy for companies facing delisting from exchanges due to low stock prices. This action aims to increase the per-share price and potentially improve investor perception and liquidity.

Comparison to Industry Standards

• Many companies facing similar listing compliance issues have implemented reverse stock splits.
• The success of a reverse stock split depends on various factors, including the company's underlying financial performance and market conditions.
• Comparable companies that have undertaken reverse stock splits include those in the biotechnology and resource sectors, often facing similar challenges in maintaining listing compliance.

Stakeholder Impact

• The reverse stock split will reduce the number of shares held by existing stockholders, but their percentage ownership will remain the same (except for fractional shares).
• The reverse stock split could potentially increase the value of stockholders' investments if it leads to a higher stock price.
• Employees holding stock options or warrants will see adjustments to the number of shares and exercise prices.

Next Steps

• The Board will determine the final reverse stock split ratio within the approved range.
• The company will file a Current Report on Form 8-K with the SEC within four business days upon the effectiveness of the Reverse Stock Split.

Key Dates

Keywords

reverse stock split, NYSE American, listing requirements, common stock, stockholders, board of directors, BTTR, equity, shares