NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization and Description of Business
Better For You Wellness, Inc. (we, us, our, the “Company” or the “Registrant”) was initially incorporated with the name Fast Track Solutions, Inc. in the State of Nevada on December 1, 2020. A plant-based, science-focused wellness consumer packaged goods and sustainable services Company evaluating opportunities targeting six goals-based wellness categories within the rapidly growing wellness industry to create a leading global wellness conglomerate.
The Company’s current business plan is to explore and evaluate various opportunities in the plant-based skincare, personal care, food and beverage, natural supplement and consumer packaged goods and services sectors.
The Company acquired Mango Moi, a natural skincare company in May 2022 and intends to optimize Mango Moi’s product formulae and packaging, as well as secure new manufacturing relationships to scale production capacity. Additionally, the Company plans to expand Mango Moi’s product offerings to include additional products and product bundles. Furthermore, the Company intends to grow sales through direct-to-consumer marketing efforts, subscription box sales, and pursuing wholesale sales relationships.
On December 4, 2023, The Company acquired the assets of The Ideation Lab, LLC, and its functional beverage division, The Jordre Well. The Ideation Lab is a brand solutions incubator and accelerator focused on the plant-based wellness and hemp-infused industry. The Ideation Lab has been developing plant-based wellness brands since 2020, including Garrett and Emmett’s Pet Treats, a pet lifestyle brand; E.J. Well Co, a women’s wellness brand; and others. Stephen James Curated Coffee Collection (“SJCCC ") is a premium coffee brand sold in 35 select Ohio Kroger stores, direct-to-consumer at the website GetSJCoffee.com, through Amazon.com. BFYW is in discussions with major national grocers and retailers about expanding sales. Amazon, the e-commerce giant, carries 14 of SJCCC’s premium coffee products and ships to more than 100 countries around the globe.
The Company’s current business plan is to explore and evaluate various opportunities in the plant-based food and beverage and consumer packaged goods sectors, including but not limited to mergers, acquisitions, or business combination transactions. The Company’s principal business objective for the next 12 months and beyond will be to achieve long-term growth potential by selling its premium coffee, Stephen James Curated Coffee Collection.
On December 6, 2023, the Company filed a Schedule Pre-14C to increase the authorized shares to 2,000,000,000 shares of common stock at a par value of $0.0001. The effective date of the increase of authorized shares was January 17, 2024.
Note 2 - Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Mango Moi and Glow Markets, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.
This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.
On an ongoing basis, the Company evaluates its estimates, including those related to the bad debt allowance, sales returns, stock-based compensation, goodwill, useful lives of property and equipment, income taxes, and contingent liabilities, among others. The Company bases its estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Cash at February 28, 2024 and February 28, 2023 were $1,716 and $13,773, respectively.
The Company previously adopted Accounting Standards Update No. 2016-02, Leases (Topic 842) in accounting for its operating lease right-of-use assets and operating lease liabilities. At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Company assesses whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset. The right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Company recognizes operating lease expenses on a straight-line basis over the lease term. We use our estimated incremental borrowing rate in determining the present value of lease payments considering the term of the lease, which is derived from information available at the lease commencement date. The lease term includes renewal options when it is reasonably certain that the option will be exercised and excludes termination options. See Note 1
.
The Company has also utilized the following practical expedients:
Short-term leases – for leases that are for a period of 12 months or less, the Company will not apply the recognition requirements of ASC
842
.
For leases that contain related non-lease components, such as maintenance, the Company will account for these payments as
Concentration of Credit Risks
Financial instruments that potentially subject the Company to significant concentration of credit risk primarily consist of cash, cash equivalents, and accounts receivable. As of February 28, 2024, and 2023, the Company’s cash was held by financial institutions that management believes have acceptable credit. Accounts receivable
s
are typically unsecured. The risk with respect to accounts receivable is mitigated by regular credit evaluations that the Company performs on its distribution partners and its ongoing monitoring of outstanding balances.
The Company accounts for goodwill in accordance with ASC 350. ASC 350 requires that goodwill with indefinite useful lives no longer be amortized but instead be evaluated for impairment at least annually. In accordance with ASC 350, goodwill is allocated to reporting units. On an annual basis and more frequently based on triggering events, each year, management reviews goodwill for impairment by first assessing qualitative factors to determine whether the existence of events or circumstances makes it more likely than not that the fair value of a reporting unit is less than it is carrying amount. In
the
current year goodwill was analyzed
as of
November 30, 2023. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, goodwill is further tested for impairment by comparing the carrying amount to the estimated fair value of its reporting units, determined using externally quoted prices (if available) or a discounted cash flow model and, when deemed necessary, a market approach. Goodwill impairment, if any, is measured as the amount by which a reporting unit’s carrying amount exceeds its fair value.
Application of goodwill impairment tests requires significant management judgment, including the identification of reporting units, assigning assets, liabilities, and goodwill to reporting units, and determination of fair value of each reporting unit. Judgment applied when performing the qualitative analysis includes consideration of macroeconomic, industry, and market conditions, overall financial performance of the reporting unit, composition, personnel or strategy changes affecting the reporting unit and recoverability of asset groups within a reporting unit. Judgments applied when performing the quantitative analysis includes estimating future cash flows, determining appropriate discount rates, and making other assumptions. Changes in these judgments, estimates and assumptions could materially affect the determination of fair value for each reporting unit.
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of related assets (
three
to five years).
The Company adopted FASB Accounting Standards Update (“ASU”) No. 2016-13
, Measurement of Credit Losses on Financial Instruments.
In accordance with this standard, the Company recognizes an allowance for credit losses for its trade receivables to present the net amount expected to be collected as of the balance sheet date. This allowance is based on the credit losses expected to arise over the asset's life and is based on Current Expected Credit Losses. Accounts receivable
s
are reported on the balance sheet at the net amounts expected to be collected by the Company. Management closely monitors outstanding accounts receivable and has recognized no allowance for credit losses as of February 28, 2024 and 2023, respectively. As of February 28, 2024, and 2023, the Company had net accounts receivable of $2,634 and $1,460, respectively.
The carrying amount of receivables is reduced by a valuation allowance for expected credit losses, as necessary, that reflects management’s best estimate of the amount that will not be collected. This estimation takes into consideration historical experience, current conditions and as applicable, reasonable supportable forecasts. Actual results could vary from the estimate. Accounts are charged against the allowance when management deems them to be uncollectible. Based on its assessment, management determined that the risk of credit loss was not material; therefore, there was no valuation allowance recorded as of February 28, 2024 and 2023.
Inventory primarily consists
of
related component parts for sale online and at select retailers
, are stated at the lower of cost or net realizable value, with cost computed on a first-in, first-out basis.
As of February
28
, 2024 and 2023 the balance of inventory was $55,416 and $979
,
respectively.
Out of total inventory as
of February 28, 2024
,
$51,374 was obtained on December 4, 2023, pursua
nt to an asset purchase agreement with The Ideation Lab, LLC
T
he Company periodically reviews its inventories to determine whether any inventory has become obsolete or has declined in value and records a charge to operations for known and estimated inventory obsolescence. At February 28, 2024 and 2023, the allowance for inventory obsolescence was $0 and $0, respectively.
Revenue is recognized when control of the promised goods or services are
transferred
to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
Step 1: Identify the contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to performance obligations
Step 5: Recognize revenue when the entity satisfies a performance obligation
Revenue for products is recognized when the products are delivered to the customer and the customer completes the product inspection. Cash
receipts
for undelivered products are recorded as deferred revenues. As of February 28, 2024 and February 28, 2023, the Company had no deferred revenues.
The Company accounts for income taxes under ASC 740, “
.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized at February 28, 2024, as the Company has recorded a full valuation analysis.
Earnings (Loss) Per Share
The Company computes basic and diluted earnings (loss) per share in accordance with ASC Topic 260,
. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.
Potential common shares include options and warrants to purchase common shares, preferred shares and convertible promissory notes, unless they were anti-dilutive. The computation of diluted net loss per share does not assume conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect (i.e., an increase in earnings per share amounts or a decrease in loss per share amounts) on net loss per share.
Advertising and marketing costs are expensed as incurred. $2,796 and $19,037 in advertising and marketing costs were incurred during the years ended February 28, 2024 and 2023, respectively.
Research and Development costs are expensed as incurred. No research and development costs were incurred during the years ended February 28, 2024, and 2023.
See Notes
,
10,
1
2,
and
13
.
ASC 718, “
Compensation – Stock Compensation
”, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities or issuing or offering to issue shares, options, and other equity instruments, such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expenses in the financial statements based on their grant date fair values. That expense is recognized over the period when an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period) or the straight-line attribution method.
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, “
Equity-Based Payments to Non-Employees.”
Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the grant date.
Except as specified for the Independent Directors’ compensation, the Company had no stock-based compensation plans as of February 28, 2024, and 2023.
Recently Issued Accounting Pronouncements
n November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves financial reporting by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included with each reported measure of significant profit or loss on an annual and interim basis. This ASU also requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU is required to be applied retrospectively for all prior periods presented in the financial statements. We are evaluating the adoption impact of this ASU on our consolidated financial statements and related disclosures but do not expect any material impact upon adoption.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which amends the guidance in ASC 740, Income Taxes. The ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard “for annual financial statements that have not yet been issued or made available for issuance.” We are currently evaluating the impact of this ASU but do not expect any material impact upon adoption.
There are no other accounting standards that have been issued but not yet adopted that we believe could have a material impact on our consolidated financial statements.
Reclassification of Prior Year Presentation
Certain prior year amounts have been reclassified for consistency with the current year’s presentation. These reclassifications had no effect on the reported results of the operation.
The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.
The Company demonstrates adverse conditions that raise substantial doubt about the Company’s ability to continue as a going concern for one year following the issuance of these financial statements. These adverse conditions are negative financial trends, specifically operating loss, working capital deficiency, and other adverse key financial ratios.
The Company has not established enough sources of revenue to cover its operating costs. Management plans to fund operating expenses with related party contributions to capital. There is no assurance that management’s plan will be successful. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.
The Company accounts for income taxes under ASC 740, “
Income Taxes
.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized at February 28, 2024, as the Company has recorded a full valuation analysis.
The Company has completed one acquisition that has been accounted for as a business combination and has resulted in the recognition of goodwill in the Company’s Consolidated Financial Statements. This goodwill arises because the purchase prices for the business exceed the fair value of acquired identifiable net assets due to the purchase prices reflecting a number of factors, including the future earnings and cash flow potential of these businesses, the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers, the competitive nature of the processes by which the Company acquired the businesses and the complementary strategic fit and resulting synergies these businesses bring to existing operations.
For acquisitions, the Company makes an initial allocation of the purchase price at the date of acquisition based on its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains the information used for the purchase price allocation during due diligence and through other sources. In the months after closing, as the Company obtains additional information about the acquired assets and liabilities, including through tangible and intangible asset appraisals, and learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price.
The Company has completed the below acquisition during the year ended February 28, 2023. The accompanying consolidated financial statements include the operations of the acquired entity from their respective acquisition date.
On April 29, 2022 the Company entered into a Membership Interest Purchase Agreement (the “MIPA”) with Amanda Cayemitte and Yapo M’be (referred to together as the “Sellers”) to acquire the right, title and interest in, including all of the outstanding membership interests (referred to together as the “MM Interests”) of Mango Moi, LLC (“Mango Moi”).
The acquisition was accounted for in accordance with GAAP and was made to expand our market share in the personal care category and due to synergies of product lines and services between the Companies. The acquisition closed May 26, 2022.
Mango Moi is a hair and skincare business located in Chicago, Illinois. Pursuant to the MIPA, in exchange for the MM Interests, the Company agreed to pay the Sellers a purchase price consisting of shares of the Company’s common stock, par value $0.0001 per share which consists of 11,000,000 shares of common stock (the “Company Common Stock”), with a fair market value of approximately $550,000, with 5,720,000 shares of Company Common Stock issued to Amanda Cayemitte and 5,280,000 shares of Company Common Stock issued to Yapo M’be (referred to together herein as the “Purchase Price”).
The purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair value of such assets and liabilities at the date of acquisitions as follows:
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Notes Payable - PayPal Capital |
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Notes Payable Shopify Capital |
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Total Liabilities Assumed |
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Total identifiable net assets |
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Goodwill - Excess of purchase price over fair value of net assets acquired on acquisition date |
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The purchase price of $557,000 was paid in stock and discharge of liability. Goodwill in the amount of $583,484
was recognized in the acquisition of Mango Moi LLC and is attributable to the cash flows of the business derived from our potential to outperform the market due to its existing relationship and other synergies created within the Company.
Note
6
- Asset Purchase Agreement - Related Party
On December 4, 2023, the Company acquired the assets of The Ideation Lab, LLC, and its functional beverage division, The Jordre Well. The Ideation Lab is a brand solutions incubator and accelerator focused on the plant-based wellness and hemp-infused industry. The Ideation Lab has been developing plant-based wellness brands since 2020, including Garrett and Emmett’s Pet Treats, a pet lifestyle brand; E.J. Well Co, a women’s wellness brand; and others. Stephen James Curated Coffee Collection (“SJCCC ") is a premium coffee brand sold in 35 select Ohio Kroger stores, direct-to-consumer at the website GetSJCoffee.com, through Amazon.com. BFYW is in discussions with major national grocers and retailers about expanding sales. Amazon, the e-commerce giant, carries 14 of SJCCC’s premium coffee products and ships to more than 100 countries around the globe.
The Company acquired the equipment and the inventory against the Series A Preferred Shares which were issuable as of February 28, 2024, and subsequently issued on March 24, 2024, for consideration of $56,243. See below for the details of assets acquired:
Note 7 - Convertible Notes Payable
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On April 12, 2022, the Company entered into a Securities Purchase Agreement with Mast Hill Fund, L.P., in which Mast Hill purchased a promissory note, with a principal amount of $310,000 for a purchase price of $279,000 (the "Note"). The Note bears an original issue discount of $31,000, and interest of 12% per year and had an original maturity date of April 12, 2023 (the "Maturity Date"). On June 7, 2022, the Company entered into a second Securities Purchase Agreement with Mast Hill Fund, L.P., Pursuant to the June 7, 2022 Security Purchase Agreement, Mast Hill purchased a promissory note, with a principal amount of $310,000 for a purchase price of $279,000 (the “Note”). The Note bears an original issue discount of $31,000, each bear interest of 12% per year and had an original maturity date of June 7, 2023 (the “Maturity Date”). On September 18, 2023, the Company entered into an amendment of both promissory. The outstanding principal balance of the notes increased by $40,891 and $40,023, respectively. The interest rate on both notes has been increased to 18% as a result of the amendment, and the maturity date has been extended to September 13, 2024. Because the fair value of consideration issued was greater than 10% of the present value of the remaining cash flows under the modified notes, the transaction was treated as a debt extinguishment and reissuance of new debt instruments pursuant to the guidance of ASC 470-50. A loss on debt extinguishment was recorded of $80,914 on the consolidated statement of operations. There was no change in fair value of the debt instruments subsequent to the amendment date, since the extinguishment transaction occurred on September 18, 2023. |
The above notes are convertible into shares of the Company's common stock at conversion price of $0.037 per share, subject to adjustment as provided therein. The Company has the right to prepay the Note in full, including accrued but unpaid interest, without prepayment penalty provided an event of default, as defined therein, has not occurred. In the seven (7) trading days prior to any prepayment Mast Hill shall have the right to convert their Note into Common Stock of the Company in accordance with the terms of such Note. The Note contains events of defaults and certain negative covenants that are typical in the types of transactions contemplated by the Purchase Agreements.
Pursuant to the Purchase Agreements, the Company issued to Mast Hill 4,960,000 shares of the Company’s common stock (the “Commitment Shares”) as a condition to closing. Further, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Mast Hill, pursuant to which the Company is obligated to file a registration statement. On October 11, 2022, Mast Hill Fund agreed to extend the timeframes in section 2(a) of the Registration Rights Agreement dated April 12, 2022 until February 9, 2023, and to have the Registration Statement become effective on or before February 9, 2037.
The total interest expense and accrued interest on both the Mast Hill Fund promissory notes were
$129,877 and $164,924
respectively for the years ended February 28, 2024.
The total interest expense and accrued interest on both the Mast Hill Fund promissory notes were $60,244 and $60,243 respectively for the years ended February 28, 2023.
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On January 17, 2024, the Company entered into a convertible promissory note with 1800 Diagonal Lending, LLC with the principal amount of $65,000 , maturity date November 30, 2024 , and interest at rate of 12% per annum. The note includes a conversion discount of 35 % and the conversion price shall be determined on the basis of the average of three lowest trading price of Common stock during the ten trading days period and is limited to convert no more than 4.99% of the issued and outstanding Common Stock at time of conversion at any one time. |
The total interest expense and accrued expense on the 1800 Diagonal Lending promissory note was
$919
for the year ended February 28, 2024.
As of February 28, 2024 and 2023 the balances of convertible notes payable were $766,419 and $594,804 respectively.
Note
- Other Receivable Related Party
As of February 28, 2024 the balance of other receivable related party w
as
$5,152 and is related to the sale of beverages through TJW which is a common control entity.
Note
9
- Property and Equipment, net
The Company’s property and equipment for the year ended February 28, 2024 and 20
2
3 are as follows:
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Equipment acquired, net of depreciation |
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Less: accumulated depreciation |
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The Company recorded depreciation expense of $1,156 and $776 during the years ended February 28, 2024, and 2023, respectively.
Note 1
– Operating Lease Right of Use Asset and Lease Liability
On April 1, 2023 Company entered into the lease agreement to lease
square feet office in Columbus, OH. The lease
term is
from April 1, 2023 to March 31, 2026, with two one-year options to extend. The monthly rental payment of $6,650 has been accrued for
the year ended February 28, 2024.
The
ROU asset obtained in exchange for
the
new operating lease liability
was
$200,215.
The company uses the implicit rate when it is readily determinable. The present value of the lease obligations for the lease was calculated using an incremental borrowing rate of
12%.
The lease includes the following physical space: 9,247 square feet (SF) on the first, second, and third floors, the 3,000 SF of storage and fulfillment in the sublevel finished basement, and nearly 1,000 SF of lab space in the first floor of the Carriage House (a cumulative total of approximately 10,247 SF), and secure off-street parking.
Operating lease right of use (ROU) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.
Future lease payments are as follows:
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Less: present value discount | | | | |
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Non-current lease liabilities | | | | |
The following table set forth additional information pertaining to our leases:
For the twelve months ending February 28, | | | |
Cash paid for amounts included in the measurement of lease liabilities: | | | | |
Operating cash flows from operating leases | | | | |
Weighted average remaining lease term – operating leases | | | | |
Weighted average discount rate – operating leases | | | | |
Note 1
1
– Accounts Payable
For the years ended February 28, 2024, and 2023, the balance of accounts payable were $601,487 and $393,777, respectively. The balance of accounts payable as of February 28, 2024 consist of $50,000
due to Carter Ledyard Milburn towards legal fees, professional fees of $177,225 including audit and accounting fees and remaining balance of $374,262.
On January 25, 2024, Carter, Ledyard, and Milburn, LLP, the Company’s former SEC Counsel, filed a complaint in the New York Superior Court seeking payment for past legal fees of $99,698.91. Carter, Ledyard and Milburn, LLP, and BFYW reached a settlement filed on May 21, 2024, with the New York Clerk stipulating a settlement of $50,000. A settlement adjustment was recorded of $49,699 as a reduction to SG&A expenses on the consolidated statement of operations.
Note 1
2
- Note Payable Related Party
As of February 28, 2024, and 2023, the balance of
n
otes payable to related part
ies
was $449,287 and $293,000, respectively.
During the year ended February 28, 2024, the Company received $174,473 from Green Ohio Ventures (GOV) a company owned by a related party through common ownership, $64,417 from our Audit Chairman David Deming and $164,897 from Mr. James, CEO. These notes are non-interest bearing, unsecured and payable on demand. In addition, on July 18, 2023, the Board of Directors authorized the issuance of 5,270,271 Common Shares at $0.037 per share to settle a $195,000 loan from related party David Deming with the issuance of common shares.
During the year ended February 28, 2023, Company received $32,500 from Mr. James, $48,000 from GOV,
and
$195,000 from our Audit Chairman, David Deming.
On October 12, 2022, the Board of Directors authorized the issuance of
760,870 Common Shares at $0.023 per share to retire $17,500 of the $35,000
l
oan that was obtained from Mango Moi, LLC
.
T
he remaining balance of $17,500 was entirely paid to the lender during fiscal year 2024.
Note 1
– Deferred Compensation
The Company has recognized $85,823 and $379,759 as of February 28, 2024 and 2023 in deferred compensation related to the Employment Agreements for Chief Executive Officer, Chief Branding Officer and Chief Business Development Officer.
Note 1
- Stock Purchase Warrant Liability
On April 18, 2022, we entered into a Standby Equity Commitment Agreement with MacRab LLC, a Florida limited liability company providing us with an option to sell up to $5,000,000 worth of our Common Stock, par value $0.0001, to MacRab LLC, in increments, over the period ending 24 months after the date that the Company’s registration statement is deemed effective by the U.S. Securities and Exchange Commission, pursuant to the terms and conditions contained in the SECA. Additionally, we issued MacRab LLC a Common Stock purchase warrant for the purchase of 1,785,714 shares of our common stock as a commitment fee in connection with the execution of the Standby Equity Commitment Agreement. We also entered into a Registration Rights Agreement with the Investor requiring the Company to file a registration statement providing for the registration of the Common Stock issuable to MacRab LLC under the Standby Equity Commitment Agreement and their common stock purchase warrant, and the subsequent resale by MacRab LLC of such Common Stock.
JH Darbie & Co., Inc. (“JH Darbie”) and the Company are parties to a Finder’s Fee Agreement, signed March 15, 2020 (“Finder’s Agreement”) pursuant to which JH Darbie would introduce the Issuer to third-party investors. Pursuant to the Finder’s Agreement, in relation to the April 12, 2022, and the June 7, 2022 Securities Purchase Agreement with Mast Hill Fund, L.P., two equal payments of fees of approximately $22,320 were paid to JH Darbie. In addition, JH Darbie is to receive non-callable warrants of equal to 8% warrant coverage of the amount raised. The warrants shall entitle JH Darbie thereof to purchase common stock of the Company at a purchase price equal to 120% of the exercise price of the transaction or the public market closing price of the Issuer’s common stock on the date of the Transaction, whichever is lower (such price, the “Warrant Price”). The warrants shall be exercisable immediately after the date of issuance, shall have anti-dilutive price protection, participating registration rights, and shall expire 5 years after the date of issuance, in accordance with the Finder’s Agreement.
Note 1
- Shareholder Equity
The Company's authorized preferred stock consists of 200,000,000 shares with a par value of $0.0001. As of February 28, 2024 and 2023, 700,000 shares were issued and outstanding, respectively.
On December 6, 2023, the Company filed a Schedule Pre-14C to increase the authorized shares to 2,000,000,000 shares of common stock at a par value of $0.0001. The effective date of the increase of authorized shares was January 17, 2024.
There were 419,509,183 and 404,014,987 issued and outstanding as of February 28, 2024, and 2023, respectively.
Common stock of 2,528,230 are reserved for exercise of warrants issued to JH Darbie & Co. Inc. and MacRab LLC.
On April 12, 2022, 125,000 shares of Restricted Common Stock were issued to five Directors serving on the Company’s Board of Directors as compensation for services to the Company. The shares were valued at the closing share price on that date of $0.0535, as listed on the OTC Markets, totalling approximately $6,687.
On April 12, 2022, the Company entered into a Securities Purchase Agreement with Mast Hill Fund, L.P., in which Mast Hill purchased a promissory note with a principal amount of $310,000 for a purchase price of $279,000 (the "Note"). The closing of the Purchase Agreements occurred on April 12, 2022. The Note bears an original issue discount of $31,000, and interest of 12% per year and matures on April 12, 2023 (the "Maturity Date"). The Note is convertible into shares of the Company's common stock at conversion price of $0.037 per share, subject to adjustment as provided therein. The Company has the right to prepay the Note in full, including accrued but unpaid interest, without prepayment penalty provided an event of default, as defined therein, has not occurred. In the seven (7) trading days prior to any prepayment Mast Hill shall have the right to convert their Note into Common Stock of the Company in accordance with the terms of such Note. The Note contains events of defaults and certain negative covenants that are typical in the types of transactions contemplated by the Purchase Agreements.
Pursuant to the Purchase Agreements, the Company issued to Mast Hill 4,960,000 commitment shares of the Company's common stock (the "Commitment Shares") as a condition to closing.
On May 26, 2022, 11,000,000 shares of Restricted Common Stock were issued to the two Sellers of Mango Moi, LLC. The shares were valued at the closing share price on the day prior to closing at $0.05, as listed on the OTC Markets, which totalled approximately $550,000. On July 12, 2022, 100,000 shares of Restricted Common Stock were issued to four Directors serving on the Company’s Board of Directors as compensation for services to the Company. The shares were valued at the closing share price of on that date of $0.0399, as listed on the OTC Markets, which totalled $3,990.
On July 27, 2022 the Company filed a
Schedule Pre-14C
notice and accompanying Information Statement and furnished this information to the holders of shares of common stock, par value $0.0001 per share, of Better For You Wellness, Inc., a Nevada corporation (the “Company”), pursuant to Section 78.320 of the Nevada General Corporation Law, Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulation 14C and Schedule 14C thereunder, in connection with the approval of the following actions taken by the Company’s Board of Directors (the “Board”) and by written consent of the holders of a majority of the voting power of the issued and outstanding capital stock of the Company, to amend our certificate of incorporation, as amended (the “Certificate”), to increase the number of authorized shares of common stock from 500,000,000 to 1,000,000,000 (the “Authorized Share Increase” or “Corporate Action”).
During the period ended August 31, 2022, a total of 30,282 shares of Restricted Common Stock were sold to two shareholders
for
proceeds totalling approximately $3,750.
On October 12, 2022, the Board of Directors authorized the issuance of 2,686,667 Common Shares to Mast Hill for consideration of $64,211 for the extension of the April 12, 2022 Registration Rights Agreement.
On October 12, 2022, the Board of Directors authorized the issuance of 760,780 Common Shares to Joseph Gushy, to whom the Company had a $35,000 debt in relation to the Mango Moi acquisition. The Issuance of Common Shares retired half of the Debt (i.e., $17,500). The Company shall pay Holder the balance of $17,500 in the First Quarter of 2023.
On October 12, 2022, the Board of Directors authorized the issuance of 1,250,000 to SRAX pursuant to its Platform Account Contract with an Effective Date of October 12, 2022, for consideration of $30,000.00 for access to the Platform for a 12-month period from the Effective Date.
On December 1, 2022, 100,000 shares of Restricted Common Stock were issued to four Directors serving on the Company’s Board of Directors
as
compensation for services to the Company. The shares were valued at the closing share price on that date, as listed on the OTC Markets, which totalled $1,750.
On December 7, 2022, 13,918,999 restricted Common Shares were issued to SRAX as a part of the September 17, 2021, contract with SRAX, Inc. in which payment in the amount of $380,000 for services was made in securities. The share issuance addresses the “Dilutive Issuance” of securities pursuant to section 4(d)
of the contract.
On January 31, 2023, the Company entered into an agreement with Aprari Solutions for accounting and financial reporting services (the “Engagement Letter”). Established in 2018, Aprari Solutions is a leading audit and accounting firm in India with a team consisting of qualified CPAs, Chartered Accountants, CFAs, Ph.D. and MBAs from top institutions, and experienced professionals well-trained in US GAAP and PCAOB audit standards and procedures. Aprari Solutions will be paid $25,000 over 12 months for accounting and auditing assistance services and for fractional CFO services, $30,000 in cash, and $10,000 in stock over 12 months.
On December 4, 2023, the Company entered into the asset purchase agreement with The Ideation Lab LLC(“TIL”) effective which the Company approves the issuance of 300,000 Series A Preferred Shares at $0.14862 per share to TIL for the sale of assets. The shares were issued subsequent to year end
as
on March 25, 2024.
On February 28, 2024, 300,000 shares of Restricted Common Stock including 25,000 shares issuable as of November 30, 2023 were issued to four Directors serving on the Company’s Board of Directors as compensation for services to the Company. The shares were valued at the closing share price on that date, as listed on the OTC Markets, totalling $840.
During the year that ended February 28, 2023, the Company granted options exercisable for up to 20,000,000 shares of Common Stock, of which 14,000,000 were
fully vested on February 28, 2023. The remaining 6,000,000 shares were fully vested during the current year ended February 28, 2024. The outstanding options have an exercise price of $.25 per share. These options expire 5 years after issuance.
The estimates at the grant date are shown below:
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Total fair valued stock option | | | | |
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The Company is amortizing the expense using a straight-line method over the vesting terms of each. The total stock option expense for the years ending February 28, 2024, and 2023 were $614,614 and $1,241,373, respectively.
Stock option granted to Director Leslie Bumgarner
of
$703,891 expired due to resignation effective December 31, 2021 and stock option granted to Dr. Nicola Finley of $444,563 was forfeited
on
her resignation dated June 18, 2022.
Goodwill results from our acquisitions, representing the excess of the fair value of consideration transferred over the fair value of the net assets acquired. We monitor vital assumptions and other factors utilized in our goodwill impairment analysis. If business or other market conditions develop that are materially different than we currently anticipate, we will conduct an additional impairment evaluation. We test goodwill for impairment at the reporting unit level annually and whenever events or circumstances make it more likely than not that an impairment may have occurred.
In December 2023, the Company entered into the Asset Purchase Agreement with The Ideation Lab, LLC, a brand solutions incubator and accelerator focused on the plant-based wellness and hemp-infused industry. Due to the asset purchase agreement, the Mango Moi product development and reformulation plan has been pushed back and the Company’s focus has shifted toits new beverage brand.
Due to the strategic shift, it was determined that the carrying value of the reporting unit exceeded its estimated fair value. The excess of the carrying value over the estimated fair value of the reporting unit was primarily due to the aforementioned strategic shift leading to lower than expected future cash flows. The Company recorded a full impairment charge of $583,484 and the goodwill balance was reduced to zero.
Note
- Commitments and Contingencies
On July 21, 2022, the Company’s Compensation Committee approved a formal Employment Agreement with Ian James, the Company’s Chief Executive Officer, Stephen Letourneau, the Company’s Chief Branding Officer and Jacob Ellman, the Company’s Chief Business Development Officer.
Beginning March 1, 2022, as compensation under the Employment Agreement, Ian James will earn a Base Salary in the amount of $199,196 per annum, $16,599.67 per month, and be eligible to earn an additional payment (BONUS) of $68,328, Stephen Letourneau will earn a Base Salary in the amount of $152,787 per annum, $12,732.25 per month, and be eligible to earn an additional payment (BONUS) of $41,140, and Jacob Ellman will earn a Base Salary in the amount of $128,656 per annum, $10,721.33 per month, and be eligible to earn an additional payment (Bonus) of $70,632. Each Employee salary less statutory and other required deductions, for all work and services the Employee respectively performs for the Company. The Company calculates Annual Base Salary on a January 1 through December 31 basis (i.e., a calendar year). Base Salary payments shall be subject to applicable federal, state, and local withholding. Under the Agreement, the Employee and Company mutually agree that until the Company is cash flow positive, the Company shall pay Employee a mutually agreeable amount each month toward the Employee’s Base Salary, and the balance of Base Salary unpaid, shall be accrued and recorded as an obligation of the Company. It shall become payable to the Employee when the Company is cash flow positive or at a time mutually agreed by the Company and Employee.
The Employees and Company consider the Bonus Pay as “at-risk” and therefore not guaranteed. Bonus Pay could include a cash bonus, commission, and other at-risk pay categories. Bonus shall be determined at the sole discretion of the Company. The Employee’s Bonus shall be based on Employee’s annual performance reviews and overall company performance, subject to the terms and conditions of applicable incentive plans and policies.
Should the Employee’s Contract be terminated, payments under Section 2 shall cease; provided, however, that Employee shall be entitled to Base Salary and accrued Base Salary for periods or partial periods that occurred before the date of termination and for which the Employee has not yet been paid and for any commission earned per the Company’s customary procedures, if applicable.
After completion of 90-days of Employment, Employee shall be entitled to a pro-rated 15 days paid time per year for utilization by Employee for personal business, illness, care of another person, or vacation. Personal Leave shall be calculated from the effective date of this Contract as of the date first above written through December 31
st
.
Employee shall be permitted to carry over into the following year of employment a maximum of five days of Personal Leave; however, as of December 31, Employee shall forfeit unused Personal Leave benefits above five days. Further, Employee shall not be permitted to carry over or accumulate more than ten days of Personal Leave from one year to the next.
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| On March 25, 2024, the Company sought a change in SIC Code from 2844 (Perfumes, Cosmetics, and Other Toilet Preparations) to 5149 (Groceries and Related Products, Not Elsewhere Classified) to better reflect its financial classification. |
| | On March 25, 2024 The Company entered into an Amended and Restated Asset Purchase Agreement (the “Agreement”) with The Ideation Lab, LLC, an Ohio Limited Liability Company pursuant to which the Company agreed to purchase assets owned by TIL for 300,000 shares of the Company’s shares of Series A Preferred Stock. The effective date of the Agreement is December 4, 2023. |
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| On April 8, 2024 , The Board and the holders of a majority of the voting power of our shareholders approved an amendment to our articles of incorporation to effect a reverse split within the range of 500-to-1 to 5000-to-1, with the Board having the discretion as to the exact date and ratio of any reverse split to be set at a whole number within the above range. The reverse split will become effective upon the filing of the amendment to the articles of incorporation with the Secretary of State of the State of Nevada. A Schedule Pre-14C was filed with the SEC regarding the reverse split April 11, 2024. |
| On May 21, 2024 – Carter, Ledyard and Milburn, LLP (CLM), and BFYW reached a settlement to CLM’s January 25, 2024, complaint filed with the New York Superior Court seeking payment for past legal fees of $99,698.91. The settlement stipulates BFYW shall pay a total of $50,000 in three installments: $15,000 by July 15, 2024, $15,000 due by January 1, 2025, and the remaining balance of $20,000 shall be due by April 1, 2025. |
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| On July 19, 2024, the Company received a notice of default and demand (the “Default Notice”) from 1800 Diagonal Lending LLC (the “Lender”) related to its $65,000 (the “Note”) promissory note of January 17, 2024. The Lender demanded the immediate payment of 150% of the remaining outstanding principal balance ($65,000.00 (current balance) * 1.5 = $97,500.00), together with accrued interest and “Default Interest,” as provided for in the Note. |