10-Q/A: Better For You Wellness Amends Quarterly Report After Typographical Errors

Better For You Wellness, Inc. has filed an amendment to its quarterly report to correct typographical errors in the financial statements, with no other changes to the original filing.

Summary

• Better For You Wellness, Inc. filed an amendment to its quarterly report for the period ended November 30, 2023, to correct typographical errors in the Condensed Consolidated Statements of Operations.
• The company's revenue decreased significantly, with $995 in revenue for the three months ended November 30, 2023, compared to $6,986 for the same period in 2022.
• For the nine months ended November 30, 2023, revenue was $4,649, down from $9,008 in the same period of 2022.
• The company reported a net loss of $397,565 for the three months ended November 30, 2023, and a net loss of $1,631,643 for the nine months ended November 30, 2023.
• Operating expenses decreased to $286,175 for the three months and $1,453,293 for the nine months ended November 30, 2023, compared to $715,575 and $2,305,290 respectively in the same periods of 2022.
• The company's cash balance was $386 as of November 30, 2023, down from $13,773 as of February 28, 2023.
• The company is reliant on related party contributions to capital and has a going concern warning due to operating losses and a working capital deficiency.
• The company has increased its authorized common shares from 500,000,000 to 2,000,000,000 to facilitate acquisitions.
• The company terminated a Membership Interest Purchase Agreement with The Ideation Lab, LLC and entered into an Asset Purchase Agreement to acquire its assets for 300,000 Series A Preferred Shares.

Sentiment

Score: 3

Explanation: The document reveals significant financial challenges, including declining revenue, substantial losses, and a going concern warning. While there are some positive steps, such as cost reductions and acquisition efforts, the overall sentiment is negative due to the company's precarious financial position and internal control weaknesses.

Positives

• Operating expenses decreased significantly for both the three and nine month periods ended November 30, 2023.
• The company is taking steps to address its financial reporting weaknesses by hiring a fractional CFO and engaging an accounting firm.
• The company is actively pursuing acquisitions to expand its business.

Negatives

• The company experienced a significant decrease in revenue for both the three and nine month periods ended November 30, 2023.
• The company reported a substantial net loss for both the three and nine month periods ended November 30, 2023.
• The company's cash balance is very low at $386 as of November 30, 2023.
• The company has a going concern warning due to operating losses and a working capital deficiency.
• The company's disclosure controls and procedures were deemed ineffective due to a material weakness in internal control over financial reporting.

Risks

• The company's ability to continue as a going concern is in doubt due to operating losses and a working capital deficiency.
• The company is heavily reliant on related party contributions to capital, which may not continue.
• The company's revenue is significantly down, and there is no guarantee that it will recover.
• The company's internal controls are weak, which could lead to further financial reporting issues.
• The company faces strong competition in the wellness market.
• The company's costs are subject to fluctuations, which could impact profitability.

Future Outlook

The company plans to achieve long-term growth through business combinations, optimize Mango Moi's product line, expand product offerings, and grow sales through direct-to-consumer marketing, subscription boxes, and wholesale relationships. The company also intends to expand into additional wellness categories with functional foods, beverages, and supplements.

Management Comments

• Management plans to fund operating expenses with related party contributions to capital.
• Management expects legal costs to taper as a percentage of overall SG&A as the company grows.
• Management believes wellness consumers purchase with intention and specifically seek out the brands and products that improve their quality of life.

Industry Context

The company is operating in the rapidly growing wellness industry, which is estimated to be a $1.5 trillion global market. The company is focusing on six goals-based wellness categories: Better Health, Better Fitness, Better Nutrition, Better Appearance, Better Sleep, and Better Mindfulness. The company is competing with other companies in the plant-based and science-focused wellness market, many of which have greater financial resources and market presence.

Comparison to Industry Standards

• The company's revenue decline is significant compared to industry growth trends in the wellness sector, which is generally experiencing expansion.
• The company's negative gross profit for the nine months ended November 30, 2022, is concerning, as most companies in the consumer packaged goods sector aim for positive gross margins.
• The company's reliance on related party funding is not typical for established companies in the wellness industry, which often have access to broader capital markets.
• The company's low cash balance and going concern warning are not in line with industry standards for companies seeking to expand through acquisitions.
• The company's internal control weaknesses are a significant concern, as most public companies in the US are expected to have robust internal controls.

Corporate Governance

Related Party Transactions

• The company received loans from related parties, including Ian James, David Deming, and GOV, a wholly-owned subsidiary of Ian James.
• The company settled a loan from related party David Deming by issuing common shares.
• The company entered into an Asset Purchase Agreement with The Ideation Lab, LLC, a related party, to acquire its assets for 300,000 Series A Preferred Shares.

Stakeholder Impact

• Shareholders are negatively impacted by the company's poor financial performance and going concern warning.
• Employees may be impacted by the company's cost-cutting measures and uncertain future.
• Customers may be impacted by the company's reformulation and repackaging of products.
• Suppliers may be impacted by the company's financial difficulties and potential for business disruption.
• Creditors face increased risk due to the company's financial instability.

Next Steps

• The company will continue to implement improvements and remedial measures in response to the material weakness in internal control over financial reporting.
• The company will continue to pursue acquisitions to expand its business.
• The company will focus on optimizing Mango Moi's product line and expanding its product offerings.
• The company will seek to grow sales through direct-to-consumer marketing, subscription boxes, and wholesale relationships.

Key Dates

Keywords

financial statements, quarterly report, revenue, net loss, operating expenses, going concern, acquisition, internal controls, related party, wellness industry