Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
x
Yes
¨
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Balances, February 28, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Common shares cancelled and returned to the Company | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Common shares issued for shares payable | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Common shares issued for services to the company | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Common shares issued for purchase of Mango Moi | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Common shares issued for cash received | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Common shares issued for notes payable extension | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Common shares issued for Debt settlement | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Forfeiture of stock compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Balances, November 30, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Balances, February 28, 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Common shares issued for services to the company | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Common shares issued for settlement of debt | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Common shares issued for settlement of deferred compensation | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | | | | |
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Common share issuable for services to the company | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | | |
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Balances, November 30, 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | |
Note 8- Notes Payable - Related Party
As of November 30, 2023 and February 28, 2023 the balance of
N
otes payable related part
y
was $
309,500 and $
293,000 respectively.
During the nine months period ended November 30, 2023, Company received $
171,000 from GOV wholly owned subsidiary of Ian James, $
64,000 from our Audit Chairman David Deming and $
4,000 from Ian James. The original loan of $
35,000 that was obtained from Mango Moi, LLC and had a remaining
balanc
e of $
17,500 which was entirely paid to the lender, and $
10,000 was also repaid to GOV. These are non-interest bearing and 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 the $
195,000 loan from
related
party David Deming into common shares.
During the year ended February 28, 2023, Company received $32,500 from Mr. James, $48,000 from GOV wholly owned subsidiary of Ian James and $195,000 from our Audit Chairman, David Deming. These are non-interest bearing and unsecured and payable on demand.
In addition, the Company acquired $35,000 on October 12, 2022 a loan payable by Mango Moi, LLC to a related party of the seller, Amanda Cayemitte. 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 loan and remaining balance of $17,500 was paid in cash on May 31, 2023.
Note 10 - 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.
The authorized common stock of the Company consists of 500,000,000 shares with a par value of $0.0001. There were 419,209,183 and 404,014,987 shares of common stock issued and outstanding as of November 30, 2023 and February 28, 2023, respectively.
25,000
shares of Restricted Common Stock were issuable to one of our director 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 totaled approximately $
.
On July 11, 2022, the Company entered into a Common Share Option Cancellation and Forfeiture Agreement with former Director Dr. Nicola Finley (the “Option Cancellation and Forfeiture Agreement”). Under the Option Cancellation and Forfeiture Agreement, Dr. Nicola Finley forfeited, and the Company canceled Dr. Nicola Finley’s option to purchase 4,000,000 common shares of the Company that was granted to the optionee pursuant to the Director Agreement dated August 29, 2021. Upon such forfeiture and cancellation, Dr. Nicola Finley has no further rights to exercise the option to purchase 4,000,000 common shares of the Company. The cancellation and forfeiture set forth in the Option Cancellation and Forfeiture Agreement shall not affect the restricted common shares granted by the Company to Dr. Nicola Finley pursuant to the Director Agreement dated as of August 29, 2021. As a payment in lieu of whatever benefits, if any, to which Dr. Nicola Finley may have been entitled to under the option to purchase 4,000,000 common shares of the Company, the Company shall pay Dr. Nicola Finley $1.00.
No shares were cancelled during three- or nine-months period ended November 30, 2023.
During the year ended February 28, 2023, the Company granted options exercisable for up to 20,000,000 shares of Common Stock of which 14,000,000 fully vested on February 28, 2023. The remaining 6,000,000 shares vest over the next year. The outstanding options have an exercise price of $.25 per share. These options expire 5 years after issuance.
The Company fair valued the stock options on the grant date September 30, 2021 at
$
4,445,628 using a Black-Scholes option pricing model. The assumptions for option granted: stock price of
$
.22
per share (based on the quoted trading price on the date of grant 9/30/2021), volatility of
172%, expected term of
5 years, and a risk-free interest rate range of
1.01% for options with grant date September 30,
2021
.
The Company fair valued the stock options on the grant date January 1, 2022 at $408,121 using a Black-Scholes option pricing model. The assumptions for option granted: stock price of
$
.11
per share (based on the quoted trading price on the date of grant 1/1/2022), volatility of
163%, expected term of
5 years, and a risk-free interest rate range of
1.26%.
The
estimates at the grant date are shown below:
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Total fair valued stock option | | | | | | | | |
The Company is amortizing the expense using straight line method over the vesting terms of each. The total stock option expense for the nine months period ended November 30, 2023 and 2022 were $597,609 and $1,301,499 respectively.
Note 13 – Business Combination
On April 29, 2022, we entered into an asset purchase agreement to acquire substantially all of the assets of 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.
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 preliminarily 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 | | | | |
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 | | | | |
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 14 - 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 31st.
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.
Refer Note 7 for operating lease details.
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.”
These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.
Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
We are a sustainable brands and services company headquartered in Columbus, Ohio. We are evaluating opportunities targeting six goals-based wellness categories within the rapidly growing wellness industry to create a leading global wellness conglomerate.
Through our dual buy and build model, we evaluate the wellness industry in the following six goals-based categories:
As an early-stage company, our Company generated $995 and $6,986 in revenue for the three months ended November 30, 2023, and 2022 respectively. Our Company generated $4,649 and $9,008 in revenue for the nine months ended November 30, 2023, and 2022 respectively. Our strategy is designed to offer wellness consumers a diverse synergistic portfolio of brands and products that will allow them to live a life of intention and improve their quality of life.
We believe wellness consumers purchase with intention and specifically seek out the brands and products that improve their quality of life. Furthermore, we believe wellness consumers pursue these six goals-based dimensions of wellness and are positioning the Company to capitalize on this demand. With skin being humans’ largest organ, we have initially prioritized skincare and haircare to help wellness consumers look and feel better with clean and natural products. We intend to expand into additional wellness categories with functional foods, beverages, supplements, and more.
Our management team brings deep expertise in heavily regulated industries, operating, brand identity, genetics, and services, and raising capital to the public market. We seek synergistic and complementary mergers and acquisition opportunities, implementing operational efficiencies to eliminate duplicative measures and centralize administrative operations to achieve more significant revenues and profitability. Additionally, we expect to leverage our network of retail relationships and acquire and manage brands and services cultivated in the beauty and wellness industry to secure sales in major retailers in the United States and globally.
Our management team monitors various trends and factors that follow, which could impact our operating performance. As an early-stage company, the Company has relatively few transactions to date.
Our management team monitors various trends and factors that could impact our operating performance.
— Our revenue growth strategy follows a dual buy-and-build business model in which we acquire brands and related infrastructure and develop brands and related infrastructure in-house. In addition to scaling the Company’s wholly-owned subsidiary, Glow Market LLC, which currently owns and operates our Better Suds soap brand, we have executed multiple non-binding letters of intent to acquire companies within the skincare sector, including a vertically-integrated skincare manufacturer and multiple brands. The closing of these respective transactions depends on numerous factors, including but not limited to the satisfactory completion of due diligence, capital constraints, and more. Furthermore, any of these contemplated transactions would likely have a material impact on the Company’s operating performance. On May 26, 2022, our Company closed its first acquisition of the right, title and interest in, including all of the outstanding membership interests of Mango Moi, LLC, a hair and skincare business located in Chicago, Illinois.
We will compete with companies that operate in the plant-based and science-focused wellness market. Many of our competitors will have substantially greater financial resources, a broader market presence, longer-standing relationships with distributors, retailers, and suppliers, longer operating histories, more extensive production and distribution capabilities, robust brand recognition, and significant marketing resources, and more comprehensive product lines than us. We believe that principal competitive factors in this category include, among others, quality ingredients, wellness profile, cost, convenience, branding, and marketing.
As we continue to grow our “BFYW” product portfolio, we expect to expand our sales and marketing team by adding dedicated personnel to service additional retail customers. Outside sales representatives and brokers may be added to expand our sales efforts. We further envision engaging, developing, and possibly acquiring a subscription box retail operation. Marketing expenditures are expected to begin primarily online and in product fees (as we engage retail store expansion), as well as other similar in-store marketing costs. These expenses will be categorized as net deductions to revenue under GAAP instead of marketing expenses. We plan to hire a national marketing firm to implement digital video and display campaigns, connected television, social media, and search engine marketing. As we expand and grow revenue, we will build a brand management team (to support Management, who oversees all “BFYW” marketing efforts) to focus on digital marketing, social media, and other marketing functions.
Our operating costs include raw materials, labor, related benefits, manufacturing overhead, marketing, sales, distribution, shipping, and other general and administrative expenses. We attempt to manage the impact of our operating costs through fixed hourly rate agreements with legal counsel and certain consultants. We have begun to reduce our labor force to right size the operations costs, as we reformulate the Mango Moi line of products for commercial scaling.
Our costs are subject to fluctuations, particularly due to changes in commodity prices, transportation costs, and our productivity efforts. If we are unable to manage cost fluctuations through pricing actions, cost savings projects, sourcing decisions, and consistent productivity improvements, it may adversely impact our gross margin, operating margin, and net earnings. Sales can also be adversely impacted following pricing actions if there is a negative impact on the consumption of our products. We strive to implement, achieve, and sustain cost improvement plans, including supply chain optimization, general overhead, workforce optimization, and outsourcing projects as deemed appropriate.
As an Early-Stage Company with few transactions, the Company’s expenditures were heavily Selling General, and Administrative (“SG&A”). The Company engaged Anthony L.G., PLLC as legal counsel, to be consulted on a case-by-case basis as may be necessary for corporate legal services and securities counsel. Payroll expenses, including deferred compensation, were the single largest category of cash expenditures for the quarter. Pursuant to their Employment Agreements, Ian James, Stephen Letourneau and Jacob Ellman have deferred compensation. Accordingly, the following represents each individual’s deferred compensation since March 1, 2022: Ian James has deferred $149,398, Stephen Letourneau has deferred $114,590, and Jacob Ellman has deferred $85,148. Effective July 2023 the board has approved the conversion of at least 66% of deferred compensation of both Mr. James and Mr. Letourneau into restricted Common Shares at a $0.037 per share price as and when exercised to be consistent with the Mast Hill per share pricing. Management expects legal costs to taper as a percentage of overall SG&A as the company grows. The Company’s SG&A further includes the cost of EDGAR and news release filing services, payroll of a single person, website development and publishing, professional services such as accounting, SRAX for regular updates of NOBO data for the shareholder lists for ongoing shareholder communications, Governmental filing fees including business licensing.
As an early-stage company, the Company has very few transactions to date. The Company’s Board of Directors comprises 6 members,
4 of which are non-executive independent directors. The Board of Directors’ reviews transactions, and the CEO signs off on transactions. The Company is developing revenue recognition processes and procedures for the business, including revenue streams, point of performance obligation discharged, etc., to comply with applicable State, Provincial, Federal, and International Laws and Regulations.
We prepare our unaudited condensed consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Under Note 2 – Summary of Significant Accounting Policies, the unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.
The Company adopted ASC 606 - Revenue from contracts with Customers: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
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 November 30, 2023, the Company had no deferred revenues.
The Company’s 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 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 has been engaged in organizational efforts and obtaining initial financing. The Company was formed as a vehicle to pursue a business combination. The Company’s business purpose is to seek the acquisition of or merger with an existing company.
The Company is an “emerging growth company” (“EGC”) that is exempt from certain financial disclosure and governance requirements for up to five years as defined in the Jumpstart Our Business Startups Act (the JOBS Act), which eases restrictions on the sale of securities; and increases the number of shareholders a company must have before becoming subject to the U.S. Securities and Exchange Commissions (SEC’s) reporting and disclosure rules (See Emerging Growth Companies Section Below).
The Company has elected February 28th as its fiscal year-end.
The company generated $995 and $6,986 for the three months ended November 30, 2023, and 2022 respectively, decrease of $5,991 or 86%.
The decrease was due to the Company having to reformulate and repackage Mango Moi operation
, and thus not have Mango Moi sales during that time.
The company generated $4,649 and $9,008 for the nine months ended November 30, 2023, and 2022 respectively, decrease of $4,359 or 48%.
The decrease was due to the Company reformulating and repackage Mango Moi operation
, and thus not have Mango Moi sales during that time.
We recorded $583 and $5,823 for Cost of Goods Sold for the three months ended November 30,2023, and 2022 respectively, a decrease of $5,240 or 90%. The decrease was due
to reformulation and repackaging of the Mango Moi
product line.
We recorded $1,896 and $15,381 for Cost of Goods Sold for the nine months ended November 30,2023, and 2022 respectively, a decrease of $13
,485 or 88%.
The decrease was due
to reformulation and repackaging of the Mango Moi
product line.
We recorded $412 and $1,163 in gross profit for the three months ended November 30, 2023, and 2022 respectively, decrease of $751 or 65%.
The decrease was due to reformulation and repackaging of the Mango Moi
product line.
We recorded $2,753 and $6,373 in gross profit and loss respectively for the nine months ended November 30, 2023, and 2022 respectively, an increase of $9,126 or 143%.
The decrease was due to reformulation and repackaging of the Mango Moi
product line.
Our cash balance was $386 and $13,773 as of November 30, 2023, and February 28, 2023 respectively. We presently are largely reliant on capital contributions towards expenses from Mr. Ian James, the Company’s Chief Executive Officer, President, Treasurer, and Chairman of the Board of Directors Company received $171,000 loan from GOV wholly owned subsidiary of Ian James,
$64,000 from our Audit Chairman David Deming and $4,000 from Ian James in the nine months ended November 30, 2023.
Mr. Ian James has not guaranteed that he will continue to support our capital needs. Therefore, we may not be able to continue as a going concern. We may require further funding to implement our operations plan for the next twelve months. Being a start-up stage company, we have a very limited operating history. After a twelve-month period, we may need additional financing but currently do not have any arrangements for such financing with the exception of the Standby Equity Commitment Agreement with MacRab LLC.
If we need additional cash and cannot raise it, we will either have to suspend operations until our Company raises the necessary financing or cease operations entirely.
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. The Company has two wholly owned subsidiaries: Glow Market LLC, an Ohio Limited Liability Company, to build and operate digitally native, mission-driven brands within the clean beauty sector in multiple consumer product categories. In December 2021, Glow Market LLC launched its first brand, Better Suds, an impact-driven brand that sells cruelty-free natural soap. In May 2022, the Company acquired its second wholly owned subsidiary, Mango Moi, LLC, a natural skincare and body care product line with naturally clean ingredients to soothe dry skin, eczema, psoriasis, and cracked skin.
The Company seeks to acquire The Ideation Lab, LLC, a brand solutions incubator and accelerator focused on the plant-based wellness and hemp-infused industry since 2020. The Ideation Lab Garrett and Emmett’s Pet Treats, a pet lifestyle brand, E.J. Well Co, a women’s wellness brand (natural supplements), and others.
We began trading under the symbol BFYW on OTC Markets Pink Tier in September 2021, and applied to the OTC Markets Group to up-list its Common Stock for trading on the OTC Markets Venture Market, or the OTCQB. In February 2022, the Company began trading on OTCQB.
On September 18, 2023, the Company entered into Membership Interest Purchase Agreement (
the “
MIPA
”)
with The Ideation Lab, LLC, an Ohio limited liability company
” or the “
Sellers”). The purchase price as determined is $3M valuation. In connection with MIPA agreement On October 1, 2023, each Seller was given the choice to receive their pro-rata portion of the Consideration Shares in the form of restricted Better For You Wellness, Inc. Series A Preferred Stock $0.0001 par value or restricted Better For You Wellness, Inc. Common Stock par value $0.0001. Each share of BFYW Preferred Stock has voting rights equal to
1,000
votes of each share of BFYW Common Stock.
Subsequently, on December 4, 2023, the Company’s Board of Directors and the Sellers terminated MIPA. The Sellers are a related party to the Company, having majority control of both The Ideation Lab and the Company. The Company and Seller agreed to terminate the MIPA and pursue an Asset Purchase Agreement due to the treatment of the Sellers’ liabilities and the Sellers inability to secure a timely audit of two years of its financials. The registrant incurs no early termination penalties.
Further, on December 4, 2023, Better For You Wellness, Inc. (the "Company") entered into an Asset Purchase Agreement (the "APA") with The Ideation Lab, LLC (the "Sellers") to acquire the right, title, and interest in, including all of the assets of The Ideation Lab, LLC ("TIL") located in Columbus, Ohio, for the consideration and on the terms set forth in the APA including the perpetual rights to The Ideation Lab’s portfolio of brands, including the Premium Coffee line, Stephen James Curated Coffee Collection, and sales agreements, contracts, customer and vendor agreements, formulas, intellectual property, inventory, equipment, and centralized administrative operations, which excel in the consumer packaged goods sector. The Sellers are a related party to the Company, having majority control of The Ideation Lab and the Company. The Terms of the APA the Company and Seller agree to
an asset purchase transaction in which the Company will issue 300,000 Series A Preferred Shares to Sellers. Each Series A Preferred Share has the voting rights of 1,000 votes, but unlike Common Shares, are not publicly traded.
Independent Board of Directors
On August 27, 2021, Montel Williams, Joseph J. Watson, Leslie Bumgarner, David H. Deming, and Dr. Nicola Finley were appointed by our Board of Directors to serve as Independent Directors of the Company. On January 1, 2022, Christina Jefferson was appointed to fill the vacancy left by outgoing Director Leslie Bumgarner, whose resignation was not the result of any disagreement with the Company on any matter relating to its operations, policies, or practices. Each Director agreed to serve a two-year term. In October 2021, an Audit Committee was seated with Mr. Deming, Mr. Watson, and Mr. Williams as its members. Mr. Deming was elected its Chair. Dr. Finley resigned as a Director of the Company effective June 2022 due to time constraints and professional bandwidth, and she was replaced temporarily by Mellise Gelula, who, in August 2022, notified the Board that she was unable to commit to the director role and its requirements but would remain a member of the Company's Strategic Advisory Committee. The vacant Board of Director seat remains unfilled. Also, in October 2021, A Compensation Committee was seated with Ms. Leslie Bumgarner, Mr. Watson, and Mr. Williams as its members. Mr. Watson was elected its Chair, and in February 2022, Ms. Jefferson was appointed to fill the vacancy left by Ms. Bumgarner’s resignation.
I
TEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our fractional Chief Financial Officer to allow for timely decisions regarding required disclosure.
As of November 30, 2023, our management, with the participation of, and under the supervision of, our Chief Executive Officer and fractional Chief Financial Officer, evaluated the effectiveness of the design and the operation of our disclosure controls and procedures. Based upon that evaluation, management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of November 30, 2023, due to the identification of a material weakness in the Company’s internal control over financial reporting as of November 30, 2023.
We are in the process of implementing improvements and remedial measures in response to the material weakness, including the hiring of a fractional Chief Financial Officer with over 24 years of diverse professional experience in financial reporting and auditing under GAAP and IFRS, with expertise in PCAOB audits. Additionally, we entered into an agreement with Apari Solutions for accounting and audit-related services. 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 GAAP and PCAOB audit standards and procedures.
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls system, no matter how well designed and operated, can provide only reasonable assurance of achieving its desired objectives. In addition, the design of disclosure controls and procedures must reflect resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Our management does not expect the Company’s disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management overriding internal controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.