false --12-31 Q1 0001471727 0001471727 2025-01-01 2025-03-31 0001471727 2025-05-12 0001471727 2024-01-01 2024-03-31 0001471727 2025-03-31 0001471727 2024-12-31 0001471727 us-gaap:CommonStockMember 2024-12-31 0001471727 us-gaap:AdditionalPaidInCapitalMember 2024-12-31 0001471727 us-gaap:RetainedEarningsMember 2024-12-31 0001471727 us-gaap:CommonStockMember 2023-12-31 0001471727 us-gaap:AdditionalPaidInCapitalMember 2023-12-31 0001471727 us-gaap:RetainedEarningsMember 2023-12-31 0001471727 2023-12-31 0001471727 us-gaap:CommonStockMember 2025-01-01 2025-03-31 0001471727 us-gaap:AdditionalPaidInCapitalMember 2025-01-01 2025-03-31 0001471727 us-gaap:RetainedEarningsMember 2025-01-01 2025-03-31 0001471727 us-gaap:CommonStockMember 2024-01-01 2024-03-31 0001471727 us-gaap:AdditionalPaidInCapitalMember 2024-01-01 2024-03-31 0001471727 us-gaap:RetainedEarningsMember 2024-01-01 2024-03-31 0001471727 us-gaap:CommonStockMember 2025-03-31 0001471727 us-gaap:AdditionalPaidInCapitalMember 2025-03-31 0001471727 us-gaap:RetainedEarningsMember 2025-03-31 0001471727 us-gaap:CommonStockMember 2024-03-31 0001471727 us-gaap:AdditionalPaidInCapitalMember 2024-03-31 0001471727 us-gaap:RetainedEarningsMember 2024-03-31 0001471727 2024-03-31 0001471727 2024-03-08 2024-03-08 0001471727 SRXH:UnderwritingagreementMember SRXH:ThinkEquityLLCMember 2024-07-29 2024-07-29 0001471727 SRXH:ThinkEquityLLCMember SRXH:UnderwritingagreementMember 2024-07-29 0001471727 SRXH:ThinkEquityLLCMember SRXH:UnderwritingagreementMember SRXH:PreFundedWarrantsMember 2024-07-29 0001471727 SRXH:PreFundedWarrantMember 2024-07-29 2024-07-29 0001471727 SRXH:UnderwritingagreementMember SRXH:ThinkEquityLLCMember SRXH:PreFundedWarrantsMember 2024-07-29 2024-07-29 0001471727 SRXH:UnderwritingagreementMember SRXH:ThinkEquityLLCMember us-gaap:OverAllotmentOptionMember 2024-07-29 2024-07-29 0001471727 SRXH:UnderwritingagreementMember SRXH:ThinkEquityLLCMember us-gaap:OverAllotmentOptionMember 2024-07-29 0001471727 SRXH:UnderwritingagreementMember us-gaap:OverAllotmentOptionMember 2024-08-02 2024-08-02 0001471727 SRXH:UnderwritingagreementMember us-gaap:OverAllotmentOptionMember 2024-08-02 0001471727 2024-09-03 2024-09-03 0001471727 2024-09-03 0001471727 us-gaap:SubsequentEventMember SRXH:SingleInvestorMember 2025-04-24 0001471727 us-gaap:SubsequentEventMember us-gaap:CommonStockMember 2025-04-24 0001471727 us-gaap:SubsequentEventMember us-gaap:PrivatePlacementMember 2025-04-24 2025-04-24 0001471727 us-gaap:SubsequentEventMember 2025-04-25 2025-04-25 0001471727 2024-04-30 0001471727 2025-04-17 0001471727 SRXH:DigitalMember 2025-01-01 2025-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember SRXH:SalesChannelConcentrationRiskMember SRXH:DigitalMember 2025-01-01 2025-03-31 0001471727 SRXH:DigitalMember 2024-01-01 2024-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember SRXH:SalesChannelConcentrationRiskMember SRXH:DigitalMember 2024-01-01 2024-03-31 0001471727 SRXH:InternationalMember 2025-01-01 2025-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember SRXH:SalesChannelConcentrationRiskMember SRXH:InternationalMember 2025-01-01 2025-03-31 0001471727 SRXH:InternationalMember 2024-01-01 2024-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember SRXH:SalesChannelConcentrationRiskMember SRXH:InternationalMember 2024-01-01 2024-03-31 0001471727 SRXH:BrickAndMortarMember 2025-01-01 2025-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember SRXH:SalesChannelConcentrationRiskMember SRXH:BrickAndMortarMember 2025-01-01 2025-03-31 0001471727 SRXH:BrickAndMortarMember 2024-01-01 2024-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember SRXH:SalesChannelConcentrationRiskMember SRXH:BrickAndMortarMember 2024-01-01 2024-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember SRXH:SalesChannelConcentrationRiskMember 2025-01-01 2025-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember SRXH:SalesChannelConcentrationRiskMember 2024-01-01 2024-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember us-gaap:CustomerConcentrationRiskMember SRXH:TwoWholesaleCustomersMember SRXH:DigitalMember 2025-01-01 2025-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember us-gaap:CustomerConcentrationRiskMember SRXH:TwoWholesaleCustomersMember SRXH:DigitalMember 2024-01-01 2024-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember us-gaap:CustomerConcentrationRiskMember SRXH:TwoWholesaleCustomersMember 2025-01-01 2025-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember us-gaap:CustomerConcentrationRiskMember SRXH:TwoWholesaleCustomersMember 2024-01-01 2024-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember us-gaap:CustomerConcentrationRiskMember SRXH:TwoWholesaleCustomersMember SRXH:DirectToConsumerMember 2024-01-01 2024-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember us-gaap:CustomerConcentrationRiskMember SRXH:OneCustomerMember SRXH:InternationalMember 2025-01-01 2025-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember us-gaap:CustomerConcentrationRiskMember SRXH:OneCustomerMember SRXH:InternationalMember 2024-01-01 2024-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember us-gaap:CustomerConcentrationRiskMember SRXH:OneCustomerMember SRXH:BrickAndMortarMember 2025-01-01 2025-03-31 0001471727 us-gaap:RevenueFromContractWithCustomerMember us-gaap:CustomerConcentrationRiskMember SRXH:OneCustomerMember SRXH:BrickAndMortarMember 2024-01-01 2024-03-31 0001471727 SRXH:DefinitiveAgreementMember 2024-08-15 0001471727 SRXH:DefinitiveAgreementMember 2024-08-15 2024-08-15 0001471727 SRXH:DefinitiveAgreementMember 2025-01-01 2025-03-31 0001471727 SRXH:ServicesAgreementMember 2025-01-01 2025-03-31 0001471727 us-gaap:ConvertibleDebtMember SRXH:ServicesAgreementMember 2025-03-31 0001471727 us-gaap:RevolvingCreditFacilityMember 2024-09-20 0001471727 us-gaap:RevolvingCreditFacilityMember 2024-09-20 2024-09-20 0001471727 us-gaap:RevolvingCreditFacilityMember 2025-01-01 2025-03-31 0001471727 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2025-03-31 0001471727 us-gaap:EquipmentMember 2025-03-31 0001471727 us-gaap:EquipmentMember 2024-12-31 0001471727 us-gaap:EquipmentMember srt:MinimumMember 2025-03-31 0001471727 us-gaap:EquipmentMember srt:MaximumMember 2025-03-31 0001471727 us-gaap:FurnitureAndFixturesMember 2025-03-31 0001471727 us-gaap:FurnitureAndFixturesMember 2024-12-31 0001471727 us-gaap:FurnitureAndFixturesMember srt:MinimumMember 2025-03-31 0001471727 us-gaap:FurnitureAndFixturesMember srt:MaximumMember 2025-03-31 0001471727 us-gaap:ComputerSoftwareIntangibleAssetMember 2025-03-31 0001471727 us-gaap:ComputerSoftwareIntangibleAssetMember 2024-12-31 0001471727 us-gaap:ComputerSoftwareIntangibleAssetMember srt:MinimumMember 2025-03-31 0001471727 us-gaap:ComputerSoftwareIntangibleAssetMember srt:MaximumMember 2025-03-31 0001471727 us-gaap:ComputerEquipmentMember 2025-03-31 0001471727 us-gaap:ComputerEquipmentMember 2024-12-31 0001471727 us-gaap:ComputerEquipmentMember srt:MinimumMember 2025-03-31 0001471727 us-gaap:ComputerEquipmentMember srt:MaximumMember 2025-03-31 0001471727 SRXH:TermLoanMember 2025-03-31 0001471727 SRXH:TermLoanMember 2024-12-31 0001471727 us-gaap:LineOfCreditMember 2025-03-31 0001471727 us-gaap:LineOfCreditMember 2025-01-01 2025-03-31 0001471727 us-gaap:LineOfCreditMember 2024-12-31 0001471727 us-gaap:LineOfCreditMember 2024-01-01 2024-03-31 0001471727 us-gaap:LineOfCreditMember SRXH:FederalFundsRateMember 2025-01-01 2025-03-31 0001471727 us-gaap:LineOfCreditMember SRXH:FederalFundsRateMember 2024-01-01 2024-12-31 0001471727 SRXH:WintrustReceivablesCreditFacilityMember 2023-06-21 2023-06-21 0001471727 SRXH:WintrustReceivablesCreditFacilityMember 2023-06-21 0001471727 SRXH:WintrustReceivablesCreditFacilityMember 2025-03-31 0001471727 SRXH:WintrustReceivablesCreditFacilityMember 2025-01-01 2025-03-31 0001471727 us-gaap:LineOfCreditMember SRXH:AlphiaTermLoanFacilityMember 2023-06-21 0001471727 us-gaap:LineOfCreditMember SRXH:AlphiaTermLoanFacilityMember 2023-12-31 0001471727 us-gaap:LineOfCreditMember SRXH:AlphiaTermLoanFacilityMember 2023-01-01 2023-12-31 0001471727 us-gaap:LineOfCreditMember SRXH:AlphiaTermLoanFacilityMember 2024-03-25 0001471727 us-gaap:LineOfCreditMember SRXH:AlphiaTermLoanFacilityMember 2024-03-25 2024-03-25 0001471727 us-gaap:LineOfCreditMember SRXH:AlphiaTermLoanFacilityMember 2024-12-31 0001471727 SRXH:AimiaPetHealthcoIncMember 2024-03-31 0001471727 SRXH:AimiaPetHealthcoIncMember 2025-01-01 2025-03-31 0001471727 SRXH:AimiaPetHealthcoIncMember 2025-03-31 0001471727 SRXH:AimiaPetHealthcoIncMember 2023-11-01 2023-11-30 0001471727 SRXH:AimiaPetHealthcoIncMember 2024-01-01 2024-03-31 0001471727 SRXH:AlphiaLoanFacilityMember us-gaap:LineOfCreditMember 2025-03-31 0001471727 SRXH:UnderwritingagreementMember SRXH:PreFundedWarrantsMember 2024-07-29 0001471727 SRXH:RepresentativeWarrantsMember 2024-07-29 0001471727 SRXH:UnderwritingagreementMember SRXH:ThinkEquityLLCMember us-gaap:CommonStockMember 2024-07-29 0001471727 SRXH:UnderwritingagreementMember us-gaap:OverAllotmentOptionMember 2025-03-31 0001471727 SRXH:UnderwritingagreementMember us-gaap:OverAllotmentOptionMember SRXH:PreFundedWarrantMember 2025-03-31 0001471727 SRXH:TwoThousandNineteenIncentiveAwardPlanMember 2021-07-16 0001471727 SRXH:TwoThousandNineteenIncentiveAwardPlanMember 2021-07-16 2021-07-16 0001471727 SRXH:TwoThousandNineteenIncentiveAwardPlanMember 2022-01-01 0001471727 SRXH:TwoThousandNineteenIncentiveAwardPlanMember 2023-01-01 0001471727 SRXH:TwoThousandNineteenIncentiveAwardPlanMember 2024-01-01 0001471727 us-gaap:EmployeeStockOptionMember srt:MinimumMember 2025-01-01 2025-03-31 0001471727 us-gaap:EmployeeStockOptionMember srt:MaximumMember 2025-01-01 2025-03-31 0001471727 SRXH:DirectorsofficersAndEmployeesMember 2024-06-26 2024-06-26 0001471727 SRXH:DirectorsofficersAndEmployeesMember 2025-01-01 2025-03-31 0001471727 us-gaap:RestrictedStockMember SRXH:BoardOfDirectorsMember SRXH:TwoThousandNineteenIncentiveAwardPlanMember 2024-02-01 2024-02-28 0001471727 us-gaap:RestrictedStockMember SRXH:BoardOfDirectorsMember SRXH:TwoThousandNineteenIncentiveAwardPlanMember 2024-06-30 2024-06-30 0001471727 us-gaap:RestrictedStockMember SRXH:BoardOfDirectorsMember SRXH:TwoThousandNineteenIncentiveAwardPlanMember 2025-03-31 2025-03-31 0001471727 2024-01-01 2024-12-31 0001471727 2023-01-01 2023-12-31 0001471727 SRXH:BoardOfDirectorsMember 2025-01-01 2025-03-31 0001471727 SRXH:BoardOfDirectorsMember 2024-01-01 2024-03-31 0001471727 srt:DirectorMember 2025-03-31 0001471727 srt:DirectorMember 2024-12-31 0001471727 SRXH:BelievecoMember srt:DirectorMember 2024-01-01 2024-03-31 0001471727 srt:MaximumMember 2025-01-01 2025-03-31 0001471727 srt:MaximumMember 2024-01-01 2024-03-31 0001471727 SRXH:DirectMember 2025-01-01 2025-03-31 0001471727 SRXH:DirectMember 2024-01-01 2024-03-31 0001471727 SRXH:IndirectMember 2025-01-01 2025-03-31 0001471727 SRXH:IndirectMember 2024-01-01 2024-03-31 0001471727 country:US 2025-01-01 2025-03-31 0001471727 country:US 2024-01-01 2024-03-31 0001471727 country:CN 2025-01-01 2025-03-31 0001471727 country:CN 2024-01-01 2024-03-31 0001471727 SRXH:OtherMember 2025-01-01 2025-03-31 0001471727 SRXH:OtherMember 2024-01-01 2024-03-31 0001471727 us-gaap:InventoriesMember us-gaap:SupplierConcentrationRiskMember SRXH:OneVendorMember 2025-01-01 2025-03-31 0001471727 us-gaap:InventoriesMember us-gaap:SupplierConcentrationRiskMember SRXH:TwoVendorsMember 2024-01-01 2024-03-31 0001471727 us-gaap:InventoriesMember us-gaap:SupplierConcentrationRiskMember 2025-03-31 0001471727 us-gaap:InventoriesMember us-gaap:SupplierConcentrationRiskMember 2024-12-31 0001471727 us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember SRXH:FourCustomersMember 2025-01-01 2025-03-31 0001471727 us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember SRXH:TwoCustomersMember 2024-01-01 2024-12-31 0001471727 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember SRXH:FourCustomersMember 2025-01-01 2025-03-31 0001471727 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember SRXH:FourCustomersMember 2024-01-01 2024-03-31 0001471727 us-gaap:WarrantMember 2025-01-01 2025-03-31 0001471727 us-gaap:EmployeeStockMember 2025-01-01 2025-03-31 0001471727 us-gaap:SubsequentEventMember 2025-04-01 2025-04-30 0001471727 us-gaap:SubsequentEventMember 2025-04-30 0001471727 us-gaap:SubsequentEventMember 2025-05-31 0001471727 SRXH:AsianBusinessMember 2025-01-01 2025-03-31 0001471727 SRXH:AsianBusinessMember 2024-01-01 2024-03-31 0001471727 SRXH:AsianBusinessMember 2024-01-01 2024-12-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares SRXH:Segment SRXH:Integer xbrli:pure

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

Or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40477

SRx Health Solutions Inc.

(Exact name of registrant as specified in its charter)

Delaware |  | 83-4284557
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

12400 Race Track Road Tampa, Florida 33626 |  | (212) 896-1254
(Address of Principal Executive Offices) (Zip Code) |  | (Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class |  | Trading Symbol(s) |  | Name of Each Exchange on which Registered
Common Stock, $0.001 par value share |  | SRXH |  | NYSE American

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date was: 11,667,074 shares of $0.001 par value common stock outstanding as of May 12, 2025.

EXPLANATORY NOTE

On April 24, 2025, subsequent to the fiscal quarter to which this Quarterly Report on Form 10-Q (this “Quarterly Report”) relates, SRx Health Solutions, Inc., a Delaware corporation (formerly known as Better Choice Company, Inc.) (“BCC”), consummated the previously announced business combination (the “Business Combination”) with SRx Health Solutions, Inc. (“SRx Health”), a corporation existing under the laws of the Province of Ontario. In the Business Combination, on April 24, 2025, 1000994476 Ontario Inc. (“AcquireCo”), a corporation existing under the laws of the Province of Ontario and an indirect wholly-owned subsidiary of BCC, amalgamated with and into SRx Health. SRx Health was the surviving corporation of the amalgamation and, in connection with such amalgamation, adopted the legal name “SRx Health Solutions (Canada) Inc.” under Ontario statute. As a result of the Business Combination, BCC acquired the business of SRx Health and will continue the existing business operations of SRx Health as a wholly-owned subsidiary. In connection with the Business Combination, on April 24, 2025 BCC changed its corporate name from “Better Choice Company Inc.” to “SRx Health Solutions, Inc.” by the filing of a Certificate of Amendment of its Certificate of Incorporation with the Secretary of State of the State of Delaware, a copy of which is attached hereto as Exhibit 3.6.

Unless stated otherwise, this Quarterly Report contains information about BCC prior to the Business Combination. References to the “Company,” “our,” “us” or “we” in this Quarterly Report refer to BCC before the consummation of the Business Combination and to SRx Health Solutions, Inc. after the Business Combination, unless stated otherwise or the context otherwise requires.

For more information regarding the Business Combination, see SRx Health Solutions, Inc. Definitive Proxy Statement on Form DEF-14A filed on January 28, 2025.

Except as otherwise expressly provided herein, the information in this Quarterly Report does not reflect the consummation of the Business Combination, which occurred subsequent to the period covered by this Quarterly Report.

SRx Health Solutions Inc.

TABLE OF CONTENTS

| Part I |
1. | Unaudited Condensed Consolidated Financial Statements | 4
2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21
3. | Quantitative and Qualitative Disclosures About Market Risk | 30
4. | Controls and Procedures | 30
| Part II |
1. | Legal Proceedings | 31
1A. | Risk Factors | 31
2. | Unregistered Sales of Equity Securities and Use of Proceeds | 31
3. | Defaults Upon Senior Securities | 31
4. | Mine Safety Disclosures | 31
5. | Other Information | 32
6. | Exhibits | 32
| Signatures | 33

2

Table of Contents

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this report are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “should,” “will,” “would,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. They appear in a number of places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including, but not limited to, those summarized below:

● | our ability to continue as a going concern;
● | the impact of damage to or interruption of our information technology systems due to cyber-attacks or other circumstances beyond our control;
● | business interruptions resulting from geopolitical actions, including war and terrorism;
● | our ability to successfully implement our growth strategy;
● | failure to achieve growth or manage anticipated growth;
● | our ability to achieve or maintain profitability;
● | the loss of key members of our senior management team;
● | our ability to generate sufficient cash flow or raise capital on acceptable terms to run our operations, service our debt and make necessary capital expenditures;
● | our dependence on our subsidiaries for payments, advances and transfers of funds due to our holding company status;
● | our ability to successfully develop additional products and services or successfully market and commercialize such products and services;
● | competition in our market;
● | our ability to attract new and retain existing customers, suppliers, distributors or retail partners;
● | allegations that our products cause injury or illness or fail to comply with government regulations;
● | our ability to manage our supply chain effectively;
● | our or our co-manufacturers’ and suppliers’ ability to comply with legal and regulatory requirements;
● | the effect of potential price increases and shortages on the inputs, commodities and ingredients that we require, whether as a result of the continued actual or perceived effects of broader geopolitical and macroeconomic conditions, including the military conflict between Russia and Ukraine;
● | our ability to develop and maintain our brand and brand reputation;
● | compliance with data privacy rules;
● | inflationary pressures;
● | our compliance with applicable regulations issued by the U.S. Food and Drug Administration (“FDA”), the U.S. Federal Trade Commission (“FTC”), the U.S. Department of Agriculture (“USDA”), and other federal, state and local regulatory authorities, including those regarding marketing pet food, products and supplements;
● | risk of our products being recalled for a variety of reasons, including product defects, packaging safety and inadequate or inaccurate labeling disclosure;
● | risk of shifting customer demand in relation to raw pet foods, premium kibble and canned pet food products, and failure to respond to such changes in customer taste quickly and effectively; and
● | the other risks identified in this Quarterly Report including, without limitation, Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Part II, Item 1A “Risk Factors” as such factors may updated from time to time in our other public filings.

NOTE REGARDING TRADEMARKS

We own or have rights to use the trademarks and trade names that we use in conjunction with the operation of our business. Each trademark or trade name of any other company appearing in this Quarterly Report on Form 10-Q is, to our knowledge, owned by such other company. Solely for convenience, our trademarks and trade names referred to in this Quarterly Report on Form 10-Q may appear without the ® or ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks and trade names.

3

Table of Contents

PART I

ITEM 1. | FINANCIAL STATEMENTS

SRx Health Solutions Inc.

Unaudited Condensed Consolidated Statements of Operations

(Dollars in thousands, except share and per share amounts)

|  | 2025 |  |  | 2024 |
|  | Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
Net sales |  | $ | 7,159 |  |  | $ | 7,903 |
Cost of goods sold |  |  | 4,776 |  |  |  | 5,289 |
Gross profit |  |  | 2,383 |  |  |  | 2,614 |
Operating expenses: |  |  |  |  |  |  |  |
Selling, general and administrative |  |  | 3,471 |  |  |  | 5,080 |
Total operating expenses |  |  | 3,471 |  |  |  | 5,080 |
Loss from operations |  |  | (1,088 | ) |  |  | (2,466 | )
Other income (expense): |  |  |  |  |  |  |  |
Interest income (expense), net |  |  | 83 |  |  |  | (362 | )
Other income |  |  | 43 |  |  |  | — |
Total other income (expense), net |  |  | 126 |  |  |  | (362 | )
Loss before income taxes |  |  | (962 | ) |  |  | (2,828 | )
Income tax expense |  |  | 2 |  |  |  | 2 |
Net loss |  | $ | (964 | ) |  | $ | (2,830 | )
Weighted average number of shares outstanding, basic |  |  | 2,605,843 |  |  |  | 786,745 |
Weighted average number of shares outstanding, diluted |  |  | 2,605,843 |  |  |  | 786,745 |
Net loss per share, basic |  | $ | (0.37 | ) |  | $ | (3.60 | )
Net loss per share, diluted |  | $ | (0.37 | ) |  | $ | (3.60 | )

See accompanying notes to the unaudited condensed consolidated financial statements.

4

Table of Contents

SRx Health Solutions Inc.

Unaudited Condensed Consolidated Balance Sheets

(Dollars in thousands, except share and per share amounts)

|  | March 31, 2025 |  |  | December 31, 2024 |
Assets |  |  |  |  |  |
Cash and cash equivalents |  | $ | 1,137 |  |  | $ | 3,066 |
Accounts receivable, net |  |  | 4,770 |  |  |  | 5,371 |
Notes receivable |  |  | 3,331 |  |  |  | 2,211 |
Inventories |  |  | 4,512 |  |  |  | 3,869 |
Prepaid expenses and other current assets |  |  | 779 |  |  |  | 484 |
Total Current Assets |  |  | 14,529 |  |  |  | 15,001 |
Fixed assets, net |  |  | 118 |  |  |  | 138 |
Right-of-use assets, operating leases |  |  | 50 |  |  |  | 64 |
Goodwill |  |  | 405 |  |  |  | 405 |
Other assets |  |  | 186 |  |  |  | 193 |
Total Assets |  | $ | 15,288 |  |  | $ | 15,801 |
Liabilities & Stockholders’ Equity |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |
Accounts payable |  | $ | 4,440 |  |  | $ | 3,137 |
Accrued and other liabilities |  |  | 1,604 |  |  |  | 1,535 |
Credit facility, net |  |  | 1,228 |  |  |  | 2,414 |
Operating lease liability |  |  | 47 |  |  |  | 62 |
Total Current Liabilities |  |  | 7,319 |  |  |  | 7,148 |
Non-current Liabilities |  |  |  |  |  |  |  |
Operating lease liability |  |  | 5 |  |  |  | 5 |
Total Non-current Liabilities |  |  | 5 |  |  |  | 5 |
Total Liabilities |  |  | 7,324 |  |  |  | 7,153 |
Stockholders’ Equity |  |  |  |  |  |  |  |
Common Stock, $0.001 par value, 200,000,000 shares authorized, 2,520,882 & 1,830,097 shares issued and outstanding as of March 31, 2025, and December 31, 2024, respectively |  |  | 3 |  |  |  | 2 |
Additional paid-in capital |  |  | 330,435 |  |  |  | 330,156 |
Accumulated deficit |  |  | (322,474 | ) |  |  | (321,510 | )
Total Stockholders’ Equity |  |  | 7,964 |  |  |  | 8,648 |
Total Liabilities and Stockholders’ Equity |  | $ | 15,288 |  |  | $ | 15,801 |

See accompanying notes to the unaudited condensed consolidated financial statements.

5

Table of Contents

SRx Health Solutions Inc.

Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Dollars in thousands, except shares)

|  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | Equity |
|  | Common Stock |  |  | Additional Paid-In |  |  | Accumulated |  |  | Total Stockholders’ |
|  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | Equity |
Balance as of December 31, 2024 |  |  | 1,830,097 |  |  | $ | 2 |  |  | $ | 330,156 |  |  | $ | (321,510 | ) |  | $ | 8,648 |
Share-based compensation |  |  | 139,785 |  |  |  | — |  |  |  | 280 |  |  |  | — |  |  |  | 280 |
Warrant exercise |  |  | 551,000 |  |  |  | 1 |  |  |  | (1 | ) |  |  | — |  |  |  | — |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (964 | ) |  |  | (964 | )
Balance as of March 31, 2025 |  |  | 2,520,882 |  |  | $ | 3 |  |  | $ | 330,435 |  |  | $ | (322,474 | ) |  | $ | 7,964 |

|  | Common Stock |  |  | Additional Paid-In |  |  | Accumulated |  |  | Total Stockholders’ |
|  | Shares |  |  | Amount |  |  | Capital |  |  | Deficit |  |  | Equity |
Balance as of December 31, 2023 |  |  | 729,026 |  |  | $ | 1 |  |  |  | 324,288 |  |  | $ | (321,342 | ) |  | $ | 2,947 |
Balance |  |  | 729,026 |  |  | $ | 1 |  |  |  | 324,288 |  |  | $ | (321,342 | ) |  | $ | 2,947 |
Share-based compensation |  |  | 42,088 |  |  |  | — |  |  |  | 518 |  |  |  | — |  |  |  | 518 |
Share issuance |  |  | 6,818 |  |  |  | — |  |  |  | 58 |  |  |  | — |  |  |  | 58 |
Equity issued in business combinations |  |  | 45,629 |  |  |  | — |  |  |  | 400 |  |  |  | — |  |  |  | 400 |
Shares issued in lieu of fractional shares |  |  | 89 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Net loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,830 | ) |  |  | (2,830 | )
Balance as of March 31, 2024 |  |  | 823,650 |  |  | $ | 1 |  |  | $ | 325,264 |  |  | $ | (324,172 | ) |  | $ | 1,093 |
Balance |  |  | 823,650 |  |  | $ | 1 |  |  | $ | 325,264 |  |  | $ | (324,172 | ) |  | $ | 1,093 |

See accompanying notes to the unaudited condensed consolidated financial statements.

6

Table of Contents

SRx Health Solutions Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

|  | 2025 |  |  | 2024 |
|  | Three Months Ended |
|  | March 31, |
|  | 2025 |  |  | 2024 |
Cash Flow from Operating Activities: |  |  |  |  |  |  |  |
Net income (loss) |  | $ | (964 | ) |  | $ | (2,830 | )
Adjustments to reconcile net income (loss) to net cash used in operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 26 |  |  |  | 35 |
Amortization of debt issuance costs |  |  | — |  |  |  | 20 |
Inventory reserve |  |  | — |  |  |  | (123 | )
Share-based compensation |  |  | 280 |  |  |  | 518 |
PIK interest expense on term loan |  |  | — |  |  |  | 125 |
Accreted interest expense on term loan |  |  | — |  |  |  | 153 |
Other |  |  | — |  |  |  | 49 |
Bad debt expense |  |  | 43 |  |  |  | — |
Income tax provision |  |  | 2 |  |  |  | 2 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | 558 |  |  |  | 24 |
Inventories |  |  | (643 | ) |  |  | 1,533 |
Prepaid expenses and other assets |  |  | (289 | ) |  |  | (355 | )
Accounts payable |  |  | 1,304 |  |  |  | 550 |
Accrued and other liabilities |  |  | 67 |  |  |  | (707 | )
Cash (Used in) Provided by Operating Activities |  | $ | 384 |  |  | $ | (1,006 | )
Cash Flow from Investing Activities: |  |  |  |  |  |  |  |
Capital expenditures |  | $ | (7 | ) |  | $ | (3 | )
Notes receivable |  |  | (1,120 | ) |  |  | — |
Cash Used in Investing Activities |  | $ | (1,127 | ) |  | $ | (3 | )
Cash Flow from Financing Activities: |  |  |  |  |  |  |  |
Proceeds from Wintrust Facility |  |  | 2,197 |  |  |  | 3,010 |
Payments on Wintrust Facility |  |  | (3,383 | ) |  |  | (2,580 | )
Cash Provided by (Used in) Financing Activities |  | $ | (1,186 | ) |  | $ | 430 |
Net decrease in cash and cash equivalents |  | $ | (1,929 | ) |  | $ | (579 | )
Total cash and cash equivalents, beginning of period |  |  | 3,066 |  |  |  | 4,455 |
Total cash and cash equivalents, end of period |  | $ | 1,137 |  |  | $ | 3,876 |
Supplemental schedule of cash flow information: |  |  |  |  |  |  |  |
Cash paid for interest during the period |  |  | — |  |  |  | 64 |
Disclosure of non-cash financing activities: |  |  |  |  |  |  |  |
Aimia acquisition |  |  | — |  |  |  | 400 |

See accompanying notes to the unaudited condensed consolidated financial statements.

7

Table of Contents

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Note 1 – Nature of business and summary of significant accounting policies

Nature of the business

SRx Health Solutions, Inc. (the “Company”) operates a pet health and wellness company through its subsidiary Halo, Purely for Pets, Inc., a Delaware corporation (“Halo”). Halo has a broad portfolio of pet health and wellness products for dogs and cats sold under its Halo brand across multiple forms, including foods, treats, toppers, dental products, chews and supplements. The products consist of kibble and canned dog and cat food, freeze-dried raw dog food and treats, vegan dog food and treats, oral care products and supplements. Beginning April 24, 2025, subsequent to the fiscal quarter to which this Quarterly Report relates, the Company also operates a specialty pharmacy business through its wholly-owned subsidiary SRx Health Solutions (Canada) Inc., a corporation organized under the laws of the Province of Ontario (“SRx Health”).

Reverse stock split

On March 8, 2024, the Company’s Board of Directors approved a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for-44, effective March 20, 2024 (the “Reverse Stock Split”). In addition, the exercise prices of the Company’s underlying common stock purchase warrants and stock options were proportionately adjusted at the applicable reverse stock split ratio in accordance with the terms of such instruments. Proportionate voting rights and other rights of common stockholders were not affected by the Reverse Stock Split, other than as a result of the rounding up of fractional shares. In April 2024, in connection with the Reverse Stock Split, 70,039 shares of common stock were issued in lieu of fractional shares.

Accordingly, all share and per share amounts related to the Company’s common stock for all periods presented in the accompanying consolidated financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the Reverse Stock Split. The number of authorized shares and the par values of the common stock and convertible preferred stock were not adjusted as a result of the Reverse Stock Split.

July 2024 public offering

On July 29, 2024, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with ThinkEquity LLC (the “Underwriter”), for an underwritten public offering (the “Offering”) of 639,000 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”) at a public offering price of $3.00 per share and pre-funded warrants to purchase 1,028,000 shares of Common Stock (the “Pre-Funded Warrants” and together with the Shares, the “Securities”) at a public offering price of $2.99 per Pre-Funded Warrant, for aggregate gross proceeds of approximately $5.0 million prior to deducting approximately $0.5 million of underwriting discounts, commissions, and other offering expenses. In addition, the Company granted the Underwriter a 45-day option to purchase an additional 100,000 shares of Common Stock, at the public offering price per share, less the underwriting discounts and commissions, to cover over-allotments (the “Over-allotment Option”). The Company also issued representative warrants to purchase 83,350 shares of common stock (equal to 5% of the total number of shares sold in the public offering). The representative warrants will be exercisable at $3.75 per share, a per share exercise price equal to 125% of the public offering price per share of common stock sold in the offering. The Company has determined these warrants are equity classified in accordance with Topic 480. Refer to Note 11 - Warrants for more information. The Securities were offered and sold to the public pursuant to the Company’s registration statement on Form S-1 (File No. 333-280714), filed by the Company with the Securities and Exchange Commission on July 8, 2024, as amended, which became effective on July 29, 2024. The sale of the Securities in connection with the Offering closed on July 31, 2024.

On August 2, 2024, pursuant to and in compliance with the terms and conditions of the Underwriting Agreement and the Offering, the Underwriters provided notice that they would exercise the Over-allotment Option to purchase 100,000 shares of Common Stock at $3.00 per share. The sale of 100,000 shares of Common Stock in connection with the exercise of the Over-Allotment Option closed on August 2, 2024. The Company has received gross proceeds of approximately $5.3 million for the Offering to date, including in connection with the exercise of the Over-Allotment Option, prior to deducting $0.5 million of underwriting discounts and commissions and offering expenses payable by the Company.

Reverse Merger

On September 3, 2024, BCC, SRx Health, AcquireCo and 1000994085 Ontario Inc., a direct wholly-owned subsidiary of the Company and corporation existing under the laws of the Province of Ontario (“CallCo”) entered into an Arrangement Agreement (the “Arrangement Agreement”), and the Business Combination was completed on April 24, 2025 (which we refer to as the “Closing Date”), subsequent to the fiscal quarter to which this Quarterly Report relates.

8

Table of Contents

Pursuant to the Arrangement Agreement, on the Closing Date, AcquireCo, a wholly-owned subsidiary of BCC, amalgamated with and into SRx Health, with SRx Health remaining as the surviving entity. BCC acquired the business of SRx Health pursuant to the Business Combination and will continue the existing business operations of SRx Health as a wholly-owned subsidiary.

On the Closing Date, BCC issued to certain holders of the common stock of SRx Health 8,898,069 shares of the Company’s common stock, par value $0.001 per share (the “Company Common Stock”), and AcquireCo issued to certain holders of the common stock of SRx Health 19,701,935 shares in the capital stock of AcquireCo which shares are exchangeable into Company Common Stock (the “Exchangeable Shares”) on a one-for-one basis. The common stockholders of BCC before the Merger retained 5,403,460 shares of our Company Common Stock. As a result, immediately following the Closing, SRx Health’s former stockholders and BCC’s existing stockholders held approximately 84% and 16%, respectively, of the total combined voting power of all classes of the Company’s stock entitled to vote (including the Exchangeable Shares).

The acquisition will be accounted for as a business combination in accordance with the Accounting Standards Codification (ASC) 805, Business Combinations. The Company has begun the process to determine the purchase price allocation for the assets acquired and liabilities assumed including estimating the fair values of intangible and tangible assets. Due to the limited time since the acquisition, these estimates and the initial accounting for the business combination have not been completed. As a result, the Company is unable to provide the amounts recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed.

In connection with the Business Combination on April 24, 2025, we issued to a single investor a combination of 4,036,697 shares of Company Common Stock and pre-funded warrants to purchase Company Common Stock at a price of $2.18 per share, or $8.8 million in the aggregate, in a private placement transaction (the “Private Placement”). The issuance of shares of Company Common Stock in the private placement was exempt from registration under Section 4(2) of the Securities Act.

On April 25, 2025, we entered into a consulting agreement with Terra Nova Business Holdings Inc., a corporation governed by the laws of the British Virgin Islands (“Terra Nova”), pursuant which Terra Nova will provide us with international logistics and business development strategies globally, including potential global licensing or distribution arrangements, for our specialty pharmacy business. The term of the consulting agreement is 36 months and the consulting fee payable to Terra Nova thereunder is $0.2 million per month.

Basis of presentation

The Company’s condensed consolidated financial statements are prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reports and accounting principles generally accepted in the U.S. (“GAAP”). Accordingly, the Condensed Consolidated Balance Sheet as of December 31, 2024 has been derived from the audited consolidated financial statements at that date but does not include all of the information required by GAAP for complete financial statements. Results of operations for interim periods may not be representative of results to be expected for the full year.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in the Company’s Annual Report for the year ended December 31, 2024, filed with the SEC.

Consolidation

The condensed financial statements are presented on a consolidated basis and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On an ongoing basis, the Company evaluates these assumptions, judgments and estimates. Actual results may differ from these estimates.

In the opinion of management, the condensed consolidated financial statements contain all adjustments necessary for a fair statement of the results of operations for the three months ended March 31, 2025 and 2024, the financial position as of March 31, 2025 and December 31, 2024 and the cash flows for the three months ended March 31, 2025 and 2024.

Fiscal, Regulation and Other Federal Policies

Significant changes in, and uncertainty with respect to, legislation, regulation, government policy and economic conditions could adversely affect the Company’s business. Specific legislative and regulatory proposals that could have a material impact on the Company include, but are not limited to, modifications to international trade policy (such as tariffs); public company reporting requirements; and environmental regulation.

The Company cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the U.S. and other countries, what products may be subject to such actions, or what actions may be taken by the other countries in retaliation. Accordingly, it is difficult to predict how such actions may impact the Company’s business, or the business or habits of its customers. The Company’s business operations, as well as the businesses of its customers on which it is substantially dependent, are located in countries at risk for escalating trade disputes, including the U.S. Any resulting trade wars could have a significant adverse effect on world trade and could adversely impact the Company’s consolidated financial condition, results of operations and cash flows.

Going concern considerations

The Company is subject to risks common in the pet wellness consumer market including, but not limited to, dependence on key personnel, competitive forces, successful marketing and sale of its products, the successful protection of its proprietary technologies, ability to grow into new markets, and compliance with government regulations. The Company has historically incurred losses, has an accumulated deficit, and expects to continue to generate operating losses and consume cash resources in the near term. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date these interim condensed consolidated financial statements are issued, meaning that we may be unable to generate sufficient operating cash flows to pay our short-term obligations. The Company will need to either raise additional capital or obtain additional financing to maintain sufficient liquidity. There can be no assurance that the Company will be successful in raising additional capital, renewing or refinancing its existing debt or securing new financing. If the Company is unsuccessful in doing so, it may need to reduce the scope of its operations or sell certain assets.

9

Table of Contents

The Company has implemented and continues to implement plans to achieve operating profitability, including various margin improvement initiatives, the consolidation of and introduction of new co-manufacturers, the optimization of pricing strategy and ingredient profiles, and new product innovation. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and payments of liabilities in the ordinary course of business. Accordingly, the consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of and classification of liabilities that may result should the Company be unable to continue as a going concern.

Summary of significant accounting policies

For additional information, please refer to the most recently filed Annual Report regarding the Company’s summary of significant accounting policies.

Cash and cash equivalents

Cash and cash equivalents include demand deposits held with banks and highly liquid investments with original maturities of ninety days or less at acquisition date. Cash and cash equivalents are stated at cost, which approximates fair value because of the short-term nature of these instruments.

Share repurchases

In April 2024, the Company’s board of directors authorized and approved a stock repurchase plan (the “Repurchase Plan”) for up to $5.0 million of the currently outstanding shares of the Company’s common stock through December 31, 2024. Repurchased shares are immediately retired and returned to unissued status. During the three months ended March 31, 2025, no shares were repurchased. On April 17, 2025, the Repurchase Plan was reinstated and authorization increased to $6.5 million.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statement of operations. The Pre-Funded and Representative Warrants (as defined in Note 11) are equity classified.

Advertising

The Company charges advertising costs to expense as incurred and such charges are included in selling, general and administrative (“SG&A”) expense. The Company’s advertising expenses consist primarily of online advertising, search costs, email advertising and radio advertising. In addition, the Company reimburses its customers and third parties for in store activities and records these costs as advertising expenses. Advertising costs were $0.6 million and $1.1 million for the three months ended March 31, 2025 and 2024, respectively.

Fair value measurements

The carrying amounts of cash and cash equivalents, trade accounts receivable, notes receivable and other current assets, accounts payable and accrued expenses approximate fair value because of the short-term nature of these financial instruments. The carrying amounts of borrowings under credit facilities approximates fair value because of the short-term nature and variable interest rates on these instruments approximates current market rates.

Segment information

Operating segments are defined as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company has viewed its operations and manages its business as one segment. The Company’s CODM reviews operating results and makes decisions based on consolidated financial information. All the assets and operations of the Company are in the U.S. See Note 16 - Segment information for additional disclosures on segment reporting.

10

Table of Contents

New Accounting Standards

Recently adopted

There were no new standards that would have an impact on the condensed consolidated financial statements for the three months ended March 31, 2025.

Note 2 – Revenue

The Company records revenue net of discounts, which primarily consist of trade promotions, certain customer allowances and early pay discounts.

The Company excludes sales taxes collected from revenues. Retail-partner based customers are not subject to sales tax.

The Company’s direct-to-consumer (“DTC”) loyalty program enabled customers to accumulate points based on their spending. A portion of revenue was deferred at the time of sale when points are earned and recognized when the loyalty points were redeemed. The Company closed its DTC channel effective June 1, 2024 and expired the loyalty program as of June 30, 2024. Net sales for the period ended March 31, 2024 were $1.2 million.

Revenue channels

The Company groups its revenue channels into three categories: Digital, which includes the sale of product to online retailers such as Amazon and Chewy, as well as DTC sales, which included the sale of product through the Company’s website through June 1, 2024; Brick & Mortar, which primarily includes the sale of product to Pet Specialty retailers, independent pet stores, and regional distributors; and International, which includes the sale of product to foreign distribution partners and to select international retailers (transacted in U.S. dollars). Refer to “Note 19 - Subsequent events” for discussion on the sale of the Halo Asia business.

Information about the Company’s net sales by revenue channel is as follows (in thousands):

Schedule of information about revenue channels

|  | Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
Digital (1) |  | $ | 2,732 |  |  |  | 38 | % |  | $ | 4,474 |  |  |  | 57 | %
International (2) |  |  | 3,995 |  |  |  | 56 | % |  |  | 2,874 |  |  |  | 36 | %
Brick & Mortar (3) |  |  | 432 |  |  |  | 6 | % |  |  | 555 |  |  |  | 7 | %
Net Sales |  | $ | 7,159 |  |  |  | 100 | % |  | $ | 7,903 |  |  |  | 100 | %

(1) | The Company’s Digital channel includes two wholesale customers that amounted to greater than 10% of the Company’s total net sales for the three months ended March 31, 2025 and 2024, and represented $2.7 million and $3.2 million of net sales for the three months ended March 31, 2025 and 2024, respectively. Additionally, DTC sales within the Digital channel amounted to greater than 10% of the Company’s total net sales for the three months ended March 31, 2024. DTC sales within the Digital channel were approximately $1.3 million for the three months ended March 31, 2024. As of June 1, 2024, the Company has exited its DTC channel in an effort to improve profitability. The Company historically reported the sales in this channel as E-commerce and DTC separately and has been consolidated into one revenue stream as of March 31, 2025.
(2) | One of the Company’s International customers amounted to greater than 10% of the Company’s total net sales during the three months ended March 31, 2025 and 2024, and represented $3.3 million and $2.2 million of net sales for the three months ended March 31, 2025, and 2024, respectively.
(3) | None of the Company’s Brick & Mortar customers represented greater than 10% of net sales for the three months ended March 31, 2025 or 2024. For the three months ended March 31, 2024, Petco was included within the Brick & Mortar channel. Beginning in Q1 2024, Petco is presented within Digital as a result of the strategic exit out of Petco stores, while remaining on Petco.com.

Note 3 - Inventories

Inventories are summarized as follows (in thousands):

Schedule of inventories

|  | March 31, 2025 |  |  | December 31, 2024 |
Food, treats and supplements |  | $ | 3,772 |  |  | $ | 3,104 |
Inventory packaging and supplies |  |  | 740 |  |  |  | 765 |
Inventories |  | $ | 4,512 |  |  | $ | 3,869 |

11

Table of Contents

Note 4 – Notes receivable

On September 3, 2024, the Company entered into a definitive agreement to acquire SRx Health Solutions Inc. (“SRx” or the “Borrower”) in an all-stock transaction, subject to customary closing conditions. On August 15, 2024, the Company entered into a Convertible Promissory Note (the “Convertible Note”) with SRx, whereby SRx promises to repay the principal amount of $1.5 million with an interest rate of 25% per annum. As the Holder of this Convertible Note, the Company can convert the total amount owed, including unpaid interest and fees, into shares of SRx stock. The Company can elect to convert the principal of the Convertible Note plus accrued and unpaid interest into shares of SRx common stock upon an Event of Default, given the Event of Default is not cured within the applicable cure period. The Convertible Note matures two days after the Business Combination between SRx and the Company is consummated or upon termination of the business combination. The issuance price reflects the perceived value of both the note receivable component and the embedded conversion option, which is initially determined based on market expectations. As there have not been drastic changes in market conditions or the Borrower’s financial standing, the transaction price at issuance approximates the fair value of the note receivable on March 31, 2025. Accrued interest on the Convertible Note was $0.2 million and is recorded in prepaid expenses and other current assets on March 31, 2025.

The Convertible Note has been classified and accounted for as available-for-sale. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying maturity date. Unrealized gains and losses on marketable debt securities classified as available-for-sale are recognized in other comprehensive income/(loss) (“OCI”).

In conjunction with the Convertible Note, the Company entered into a Services Agreement whereby the Company is to provide financial planning, reporting and analysis services, utilizing the Company’s in-house financial organization. In exchange for such services, the Company shall receive $0.02 million per month, payable on the last day of the month in which services are provided, commencing on September 30, 2024. Income related to the Services Agreement was $0.05 million for the three months ended March 31, 2025 and is accrued for within prepaid expenses and other current assets on the consolidated balance sheets, and as other income in the consolidated statements of operations. The Company does not have a variable nor controlling financial interest in SRx as it does not have the power to direct significant activities of SRx that most significantly impact SRx’s economic performance. Additionally, the Company does not have an obligation to absorb the losses of, or the right to receive benefits from, SRx that could potentially be significant to SRx. Therefore, SRx is not consolidated as of March 31, 2025.

On September 20, 2024, the Company entered into a revolving credit facility (“Promissory Note”) with SRx whereby SRx may borrow, repay, and reborrow in accordance with the terms set out in the Promissory Loan Agreement, not to exceed $750,000 (USD) at any time outstanding with an interest rate of 12% per annum. The Borrower shall make payments of principal in accordance with the Repayment Schedule set forth in the agreement. Interest under the Promissory Note shall be due and payable in monthly installments until the Promissory Note matures on March 20, 2025. The Promissory Note was subsequently amended to include for additional borrowings of up to $1.9 million. The Promissory Note was also amended to allow the Company to convert the total amount owed, including unpaid interest and fees, into shares of SRx stock.

The outstanding principal on both notes was $3.3 million as of March 31, 2025 and accrued interest of $0.3 million is included within prepaid expenses and other current assets as of March 31, 2025. Subsequently, in conjunction with the Reverse Merger, the Notes were settled for an amount that approximated fair value at March 31, 2025 (the “Notes Settlement”).

Note 5 – Prepaid expenses and other current assets

Prepaid expenses and other current assets are summarized as follows (in thousands):

Schedule of prepaid expenses and other current assets

|  | March 31, 2025 |  |  | December 31, 2024 |
SRx interest receivable |  | $ | 281 |  |  | $ | 159 |
Other prepaid expenses and other current assets |  |  | 498 |  |  |  | 325 |
Total Prepaid expenses and other current assets |  | $ | 779 |  |  | $ | 484 |

12

Table of Contents

Note 6 - Fixed assets

Fixed assets consist of the following (in thousands):

Schedule of fixed assets

|  | Estimated Useful Life |  | March 31, 2025 |  |  | December 31, 2024 |
Equipment |  | 2 - 5 years |  | $ | 34 |  |  | $ | 28 |
Furniture and fixtures |  | 2 - 5 years |  |  | 214 |  |  |  | 214 |
Computer software, including website development |  | 2 - 3 years |  |  | 201 |  |  |  | 201 |
Computer equipment |  | 1 - 2 years |  |  | 89 |  |  |  | 89 |
Total fixed assets |  |  |  |  | 538 |  |  |  | 532 |
Accumulated depreciation |  |  |  |  | (420 | ) |  |  | (394 | )
Fixed assets, net |  |  |  | $ | 118 |  |  | $ | 138 |

Depreciation expense was $0.03 million and $0.04 million for the three months ended March 31, 2025 and 2024, respectively.

Note 7 – Accrued and other liabilities

Accrued and other liabilities consist of the following (in thousands):

Schedule of accrued and other liabilities

|  | March 31, 2025 |  |  | December 31, 2024 |
Accrued taxes |  | $ | 107 |  |  | $ | 128 |
Accrued payroll and benefits |  |  | 251 |  |  |  | 203 |
Accrued trade promotions and advertising |  |  | 217 |  |  |  | 197 |
Accrued commissions |  |  | 308 |  |  |  | 358 |
Deferred revenue |  |  | 500 |  |  |  | 500 |
Other |  |  | 221 |  |  |  | 149 |
Total accrued and other liabilities |  | $ | 1,604 |  |  | $ | 1,535 |

Note 8 – Debt

The components of the Company’s debt consist of the following (in thousands):

Schedule of Components of Debt

|  | March 31, 2025 |  | December 31, 2024
|  | Amount |  |  | Rate |  | Maturity date |  | Amount |  |  | Rate |  | Maturity date
Term loan, net |  | $ | — |  |  | (1) |  | N/A |  | $ | — |  |  | (1) |  | N/A
Line of credit, net |  | $ | 1,228 |  |  | (2) |  | 6/21/2025 |  | $ | 2,414 |  |  | (2) |  | 6/21/2025
Less current portion |  |  | 1,228 |  |  |  |  |  |  |  | — |  |  |  |  |
Total long-term debt |  | $ | — |  |  |  |  |  |  | $ | 2,414 |  |  |  |  |

(1) | Interest at a fixed rate of 10.00% per annum.
(2) | Interest at a variable rate of the daily U.S. Prime Rate plus 250 basis points with an interest rate floor of 5.50% per annum.

Wintrust Receivables Credit Facility

On June 21, 2023, the Company entered into an account purchase agreement with Wintrust Receivables Finance (the “AP Agreement”), a division of Wintrust Bank N.A. (“Wintrust”) pursuant to which Wintrust will purchase, at its discretion, eligible customer invoices and advance up to 70% of the face amount of all purchased invoices, the maximum outstanding balance can be $4.8 million. Each advance under the AP Agreement will bear a variable interest rate at the prime rate plus 2.5% percentage per annum. The interest rate at March 31, 2025 was 10.0% per annum. The AP Agreement has an initial term of two years and will automatically renew annually unless terminated by the Company on at least 60 days’ notice. The Wintrust Receivables Credit Facility is guaranteed and secured by a general security interest in the assets of the Company. The Company continues to service the receivables, the transfers are at full recourse and the eligible customer invoices are not legally isolated from the Company. As such, the Wintrust Receivables Credit Facility was accounted for as a secured borrowing under ASC 860.

The Wintrust Receivables Credit Facility limits or restricts the ability of the Company to incur additional indebtedness; incur additional liens; make dividends and other restricted payments; make investments; sell, assign, transfer or dispose of certain assets; make optional prepayments of other indebtedness; engage in transactions with affiliates; and enter into restrictive agreements. The Wintrust Receivables Credit Facility does not include any financial covenants and if an event of default occurs, Wintrust is entitled to accelerate the advances made thereunder and exercise rights against the collateral. As of March 31, 2025, the Company was in compliance with its restrictive covenants.

13

Table of Contents

Borrowing under the Wintrust Receivables Credit Facility are classified as current debt as a result of a required lockbox arrangement and a subjective acceleration clause. During the three months ended March 31, 2025, the Company sold receivables having an aggregate face value of $3.1 million, in exchange for cash proceeds of $2.2 million. As of March 31, 2025, the balance outstanding on the Wintrust Receivables Credit Facility amounted to $1.2 million.

Alphia Term Loan Facility

On June 21, 2023, the Company entered into a term loan credit agreement (the “Term Loan Agreement”) with Alphia Inc. (“Alphia”), a custom manufacturer of super-premium pet food in the U.S. Pursuant to the Term Loan Agreement, Alphia made a term loan to the Company in the original principal amount of $5.0 million (the “Term Loan”). In conjunction with the Term Loan Agreement, the Company issued warrants to Alphia (see “Note 11 - Warrants” for further discussion). The proceeds of the Term Loan, together with a portion of the Company’s cash on hand, were used to retire all of the outstanding obligations of Halo, Purely for Pets, Inc. (“Halo”), a wholly-owned subsidiary of the Company, under Halo’s long-term credit facility with Old Plank Trail Community Bank, N.A., an affiliate of Wintrust Bank, N.A described above.

As of December 31, 2023, the Company’s indebtedness on the Alphia Term Loan Facility is $5.0 million and $0.3 million of payable-in-kind (“PIK”) interest. As discussed below, the total value of the consideration received in connection with the Term Loan Agreement was first allocated to the Warrants at fair value, with the remainder allocated to debt. Accordingly, the Company recorded a debt discount of $2.2 million on the Alphia Term Loan Agreement. Furthermore, the Company incurred debt issuance costs of $0.2 million. The discount and debt issuance costs associated with the Term Loan Agreement are amortized using the effective interest method.

On March 25, 2024, the Company initiated a legal action to enforce a right of first refusal option exercised by Alphia pursuant to the terms of a written agreement between Alphia and the Company whereby Alphia was to acquire the assets of Halo. On June 20, 2024, the Company agreed to settlement terms of the lawsuit. The agreement dismisses the Company’s ongoing litigation with Alphia and provides for the forgiveness of the Company’s term loan, including $5.0 million in principal and $0.5 million of payable-in-kind (“PIK”) accrued interest, the termination of 335,640 warrants with a strike price of $11.44 per share that were set to expire in 2028, and the forgiveness of up to $2.6 million in accounts payable due to Alphia, provided the remaining outstanding accounts payable balance is paid within 90 days of the settlement date. The accounts payable were paid prior to December 31, 2024, resulting in a gain of $2.6 million. The book value of the Alphia term loan and the unamortized debt issuance costs were $3.2 million and $0.2 million, respectively, on the date of forgiveness.

As a result of the settlement terms described above, the Company is not indebted to Alphia as it relates to the Term Loan Facility as of March 31, 2025 and December 31, 2024.

Note 9 - Business Combinations

On February 9, 2024, the Company completed the acquisition of Aimia Pet Healthco, Inc. (“Aimia”) to develop treats and toppers that safely combat pet obesity.

The Company completed a business combination for a purchase price of $0.4 million during the three months ended March 31, 2024 with common shares issued as consideration, which have been adjusted herein to reflect the Reverse Stock Split effective March 20, 2024. In accordance with ASC Topic 805, Business Combinations (“Topic 805”), total consideration was first allocated to the fair value of assets acquired, including liabilities assumed, with the excess being recorded as goodwill. For financial statement purposes, goodwill is not amortized but rather is evaluated for impairment at least annually or more frequently if an event or change in circumstances occurs that indicates goodwill may be impaired. Goodwill is deductible for tax purposes and will be amortized over a period of 15 years. No business combinations were completed during the three months ended March 31, 2025.

The recorded purchase price for the business combination includes an estimation of the fair value of equity interests, which is calculated based on the value of the Company’s common stock on the closing date.

Under ASC 805, a business combination involves the acquisition of a business, defined as an integrated set of activities and assets capable of being conducted and managed for the purpose of providing a return to investors. The Company assessed whether the acquired entity constituted a business by evaluating its assets, processes, and outputs and determined the acquired set to be a business based on the inputs and substantive processes that together significantly contribute to the ability to create outputs.

Aimia is a pre-revenue business and there were no operating results related to this business combination to include in the condensed consolidated statements of operations for the three months ended March 31, 2025 since the acquisition date.

In November 2023, Aimia entered into a memorandum of understanding (“MOU”) which establishes a research and development (“R&D”) partnership with doctors and a lab which would facilitate the development of a GLP-1 supplement for pets. In connection with the MOU, the Company issued 6,818 shares to the R&D partners and the Company incurred $0.1 million of acquisition-related costs, which are recorded in selling, general, and administrative expenses in the consolidated statement of operations for the three months ended March 31, 2024. No such costs were incurred during the three months ended March 31, 2025.

14

Table of Contents

The table below provides a summary of the total consideration and the purchase price allocation made for the business combination that became effective during the three months ended March 31, 2024.

Schedule of estimated purchase price allocation made for business combination

|  | Aimia |
Common stock |  | $ | 399,713 |
Total consideration |  | $ | 399,713 |
Subscription receipts receivable |  | $ | 1,100 |
HST Receivable |  |  | 856 |
Goodwill |  |  | 405,194 |
Total assets acquired |  | $ | 407,150 |
AP and accruals |  | $ | 7,437 |
Total liabilities acquired |  | $ | 7,437 |
Net assets acquired |  | $ | 399,713 |

The factors contributing to the recognition of the amount of goodwill are based on expanding research and development to develop dog treats that mirror the weight loss benefits of brands including Slentrol, Wegovy, Ozempic, and Mounjaro with added protein and nutrients from the Company’s Halo products to promote lean muscle and overall pet health.

Note 10 – Commitments and contingencies

The Company has manufacturing agreements with its vendors that provide for the company to make its commercial best efforts to purchase minimum quantities in the ordinary course of business. There are no other purchase obligations as of March 31, 2025 or December 31, 2024.

The Company may be involved in legal proceedings, claims, and regulatory, tax, or government inquiries and investigations that arise in the ordinary course of business resulting in loss contingencies. The Company accrues for loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. Legal costs such as outside counsel fees and expenses are charged to expense in the period incurred and are recorded in SG&A expenses. The Company does not accrue for contingent losses that are considered to be reasonably possible, but not probable; however, the Company discloses the range of such reasonably possible losses if estimable. Loss contingencies considered remote are generally not disclosed.

Litigation is subject to numerous uncertainties and the outcome of individual claims and contingencies is not predictable. It is possible that some legal matters for which reserves have or have not been established could result in an unfavorable outcome for the Company and any such unfavorable outcome could be of a material nature or have a material adverse effect on the Company’s consolidated financial condition, results of operations and cash flows. Management is not aware of any claims or lawsuits that may have a material adverse effect on the consolidated financial position or results of operations of the Company.

Note 11 – Warrants

The following summarizes the Company’s outstanding warrants to purchase shares of the Company’s common stock as of and for the periods ended March 31, 2025 and December 31, 2024:

Schedule of outstanding warrants

|  | Warrants |  |  | Weighted Average Exercise Price |
Warrants outstanding as of December 31, 2024 |  |  | 1,019,345 |  |  | $ | 39.28 |
Issued |  |  | — |  |  | $ | — |
Exercised |  |  | (551,000 | ) |  | $ | 0.01 |
Terminated |  |  | — |  |  | $ | — |
Warrants outstanding as of March 31, 2025 |  |  | 468,345 |  |  | $ | 85.49 |

15

Table of Contents

The outstanding warrants had an intrinsic value of $0.3 million and $1.8 million as of March 31, 2025 and December 31, 2024, respectively. The warrants exercised during the three months ended March 31, 2025 had an intrinsic value of $1.1 million.

The settlement terms discussed in Note 8 - Debt provide for the termination of all 335,640 Warrants, which resulted in a net zero impact on equity. As a result, there are no Alphia warrants outstanding as of March 31, 2025.

In connection with the Offering discussed in Note 1, the Company issued pre-funded warrants to purchase 1,028,000 shares of Common Stock (the “Pre-Funded Warrants” and together with the Shares, the “Securities”) at a public offering price of $2.99 per Pre-Funded Warrant. The Pre-Funded Warrants do not expire until conversion and the warrant shares fully vest upon issuance. The aggregate exercise price of the Pre-Funded Warrant, except for a nominal exercise price of $0.01 per Warrant Share, was pre-funded to the Company on or prior to the Initial Exercise Date of July 31, 2024. Consequently, no additional consideration (other than the nominal exercise price of $0.01 per Warrant Share) shall be required to be paid by the Holder to effect the exercise of the Pre-Funded Warrant. The Pre-Funded Warrants are transferable, in whole or in part, upon surrender of the Warrant. The Pre-Funded Warrants do not entitle the Holder to any voting rights, dividends, or other rights as a stockholder of the Company prior to exercise. In no event shall the Company be required to net cash settle an exercise of the Pre-Funded Warrant.

The Company also issued representative warrants to purchase 83,350 shares of common stock which are exercisable at $3.75 per share. The representative warrants expire on July 29, 2029 and have an exercise price of $3.75 per share of Common Stock. The representative warrant shares fully vest upon issuance. The representative warrants are non-transferable until the initial exercise date of January 25, 2025, unless transferred to ThinkEquity LLC or an underwriter. After the exercise date, the warrants are fully transferable. The representative warrants do not entitle the Holder to any voting rights, dividends, or other rights as a stockholder of the Company prior to exercise.

During the three months ended March 31, 2025, 551,000 pre-funded warrants were exercised. As of March 31, 2025, 199,000 Pre-Funded and 83,350 representative warrants remain outstanding.

Note 12 – Share-based compensation

During the three months ended March 31, 2025 and 2024, the Company recognized $0.3 million and $0.5 million, respectively, of share-based compensation expense.

On November 11, 2019, the Company received shareholder approval for the Amended and Restated 2019 Incentive Award Plan (the “Amended 2019 Plan”). The Amended 2019 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units, other stock or cash-based awards or a dividend equivalent award. On July 16, 2021, the Company registered 61,364 shares of its common stock issuable under the Amended 2019 Plan in a registration statement on Form S-8. The Amended 2019 Plan provides for an annual increase on the first day of each calendar year beginning on January 1, 2021 and ending on and including January 1, 2029, equal to the lesser of (A) 10% of the shares of common stock outstanding (on an as-converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares of common stock as determined by the Board; provided, however, not more than 204,546 shares of common stock shall be authorized for issuance. The number of shares eligible for issuance increased to 127,606 on January 1, 2022, increased to 194,493 on January 1, 2023, and increased to the maximum allowable of 204,546 on January 1, 2024.

Stock options

The following table provides detail of the options granted and outstanding:

Schedule of options granted and outstanding

|  | Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Aggregate Intrinsic Value |
Options outstanding as of December 31, 2024 |  |  | 99,440 |  |  | $ | 105.51 |  |  |  | 7.3 |  |  | $ | — |
Granted |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Forfeited/Expired |  |  | (1,586 | ) |  |  | 7.44 |  |  |  |  |  |  |  |  |
Options outstanding as of March 31, 2025 |  |  | 97,854 |  |  | $ | 107.06 |  |  |  | 6.87 |  |  | $ | — |
Options exercisable as of March 31, 2025 |  |  | 45,473 |  |  | $ | 224.58 |  |  |  | 4.39 |  |  | $ | — |

16

Table of Contents

|  | Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Aggregate Intrinsic Value |
Options outstanding as of December 31, 2023 |  |  | 53,342 |  |  | $ | 221.40 |  |  |  | 5.7 |  |  | $ | — |
Granted |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Forfeited/Expired |  |  | (2,360 | ) |  |  | 298.21 |  |  |  |  |  |  |  |  |
Options outstanding as of March 31, 2024 |  |  | 50,982 |  |  | $ | 217.77 |  |  |  | 5.7 |  |  | $ | — |
Options exercisable as of March 31, 2024 |  |  | 45,310 |  |  | $ | 238.38 |  |  |  | 5.4 |  |  | $ | — |

Options granted under the Amended 2019 Plan vest over a period of one 1 to three years. All vested options are exercisable and may be exercised through the ten-year anniversary of the grant date (or such earlier date described in the applicable award agreement).

On June 26, 2024, the Company granted 47,285 options to acquire common stock to certain of its directors, officers and employees, at a weighted-average exercise price of $5.00 per share. The stock options were granted with a one-year vesting period and the Company recognized less than $0.1 million of share-based compensation expense in its consolidated statements of operations for the three months ended March 31, 2025. As of March 31, 2025, unrecognized share-based compensation related to these options was less than $0.1 million, which is expected to be recognized over a weighted average period of less than one year.

Restricted Stock Awards

In February 2024, the Company granted 42,088 shares of restricted common stock to members of its Board of Directors as part of their equity compensation pursuant to the Amended and Restated 2019 Incentive Award Plan. These restricted stock awards were immediately vested and, as such, the Company recorded share-based compensation expense of $0.4 million upon issuance.

In June 2024, the Company granted 22,727 shares of restricted common stock to certain executives under the Amended 2019 Plan as performance bonus compensation. These restricted stock awards were immediately vested and, as such, the Company recorded share-based compensation expense of $0.1 million upon issuance.

In March 2025, the Company granted 139,785 shares of restricted common stock to certain executives under the Amended 2019 Plan as performance bonus compensation. These restricted stock awards were immediately vested and, as such, the Company recorded share-based compensation expense of $0.2 million upon issuance.

Note 13 – Employee benefit plans

The Company has a qualified defined contribution 401(k) plan, which covers substantially all of its employees. Participants are entitled to make pre-tax and/or Roth post-tax contributions up to the annual maximums established by the Internal Revenue Service. The Company matches participant contributions pursuant to the terms of the plan, which contributions are limited to a percentage of the participant’s eligible compensation. The Company made contributions related to the plan and recognized expense of less than $0.1 million during the three months ended March 31, 2025 and 2024.

Note 14 – Related party transactions

Director Fees

The Company pays quarterly board of director fees. Board of director fees totaled $0.1 million during the three months ended March 31, 2025 and 2024. As of March 31, 2025 and December 31, 2024, $0.1 million of these director fees were in accrued and other liabilities on the Consolidated Balance Sheets.

Marketing Support Services

On March 7, 2023, the Company entered into an agreement with Believeco to provide marketing support services for an interim period. A previous member of the Company’s board of directors, whose resignation was effective April 1, 2024, is a partner at Believeco. As of March 31, 2025, Believeco is no longer considered a related party. Marketing expenses related to Believeco for the three months ended March 31, 2024 was less than $0.01 million, all of which was included within Accounts Payable.

Note 15 – Income taxes

For the three months ended March 31, 2025 and 2024, the Company recorded an income tax provision of less than $0.01 million. For the three months ended March 31, 2025 and 2024, the Company’s effective tax rate was less than 1%, respectively. The Company’s effective tax rate differs from the U.S. federal statutory rate of 21% primarily because the Company’s net operating losses (“NOLs”) included in deferred tax assets have been fully offset by a valuation allowance due to uncertainty of realizing the tax benefit of NOLs for the three months ended March 31, 2025 and March 31, 2024.

17

Table of Contents

Note 16 – Segment information

The Company evaluated its operating segments in accordance with ASC 280, “Segment Reporting” and determined it operates as one reportable segment, pet food products. The Company provides a comprehensive range of premium pet products, including dry kibble, wet food, freeze dried raw food, treats, and toppers for dogs and cats. In 2024, these products were sold through the three different revenue channels described in “Note 2 - Revenue” - Digital, Brick-and-Mortar and International. The Company has concluded each of the three different channels met the three characteristics of an operating segment. While the company’s products are offered across three operating segments, they are aggregated into a single reporting segment, as there are no material differences in the nature of the products and services, the nature of the production processes, the type or class of customer for their products and services, the methods of distribution, and the regulatory environment in which they operate.

The Company’s Chief Executive Officer, who is the designated chief operating decision maker (“CODM”), evaluates performance and makes decisions based on consolidated financial information. The CODM does not separately evaluate distinct groups of products or services, nor are resources allocated differently based on individual product lines or geographic regions. Rather, performance is assessed on an overall basis, considering consolidated metrics such as total revenues, gross margin, and net loss of the Company as a whole, and resources are allocated to support the Company’s overall business plan.

The CODM of Better Choice Company does not review total assets when evaluating the results of the pet food products segment, as the Company operates with an asset-light business model. As the Company utilizes a third-party logistics (3PL) provider and does not manage its own manufacturing, asset-related information is not considered in performance assessments and is therefore not presented.

Consolidated sales, gross margin, and net loss of premium pet food products generate the Company’s revenues and are reflected in the condensed consolidated statement of operations. The CODM also evaluates significant segment expenses, which consist of the following (in thousands):

Schedule of segment information

|  | 2025 |  |  | 2024 |
|  | Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
Net sales |  | $ | 7,159 |  |  | $ | 7,903 |
Cost of goods sold: |  |  |  |  |  |  |  |
Direct |  |  | 4,576 |  |  |  | 4,773 |
Indirect |  |  | 200 |  |  |  | 516 |
Total cost of goods sold |  |  | 4,776 |  |  |  | 5,289 |
Gross profit |  |  | 2,383 |  |  |  | 2,614 |
Segment expenses: |  |  |  |  |  |  |  |
Discretionary marketing |  |  | 536 |  |  |  | 1,072 |
Outbound freight |  |  | 12 |  |  |  | 276 |
Other segment expenses (a) |  |  | 2,923 |  |  |  | 3,732 |
Total segment expenses |  |  | 3,471 |  |  |  | 5,080 |
Loss from operations |  |  | (1,088 | ) |  |  | (2,466 | )
Other income (expense): |  |  |  |  |  |  |  |
Interest income (expense), net |  |  | 83 |  |  |  | (362 | )
Other income (expense) |  |  | 43 |  |  |  | — |
Total other income (expense) |  |  | 126 |  |  |  | (362 | )
Net loss before income taxes |  |  | (962 | ) |  |  | (2,828 | )
Income tax expense |  |  | 2 |  |  |  | 2 |
Net loss |  | $ | (964 | ) |  | $ | (2,830 | )

(a) |  | Other segment expenses include employee compensation and benefits, share based compensation, non-cash charges, other sales and marketing costs, professional fees, broker commissions, and other general expenses

The accounting policies of the segment are consistent with those described in Note 1 - Summary of Significant Accounting Policies.

18

Table of Contents

Geographic Information

Revenue by geography is based on where the customer is based. Summary financial data attributable to various geographic regions for the periods indicated is as follows:

Schedule of revenue by geography

|  | 2025 |  |  | 2024 |
|  | Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
United States |  | $ | 3,164 |  |  | $ | 5,030 |
China |  |  | 3,262 |  |  |  | 2,190 |
Other |  |  | 733 |  |  |  | 683 |
Total |  | $ | 7,159 |  |  | $ | 7,903 |

Note 17 – Concentrations

Major suppliers

The Company sourced approximately 82% of its inventory purchases from one vendor for the three months ended March 31, 2025. The Company sourced approximately 75% of its inventory purchases from two vendors for the three months ended March 31, 2024. As of March 31, 2025 and December 31, 2024, $2.0 million and $1.0 million of inventory purchases from major suppliers were in accounts payable on the Condensed Consolidated Balance Sheets, respectively.

Major customers

Accounts receivable from four customers represented 96% of accounts receivable as of March 31, 2025. Accounts receivable from two customers represented 86% of accounts receivable as of December 31, 2024. Three customers represented 84% of gross sales for the three months ended March 31, 2025. Three customers represented 70% of gross sales for the three months ended March 31, 2024.

Credit risk

As of March 31, 2025 and December 31, 2024, the Company’s cash and cash equivalents were deposited in accounts at several financial institutions and may maintain some balances in excess of federally insured limits. The Company maintains its cash and cash equivalents with high-quality, accredited financial institutions and, accordingly, such funds are subject to minimal credit risk. The Company has not experienced any losses historically in these accounts and believes it is not exposed to significant credit risk in its cash and cash equivalents.

Note 18 – Earnings per share

The Company presents net loss per share on a basic and diluted basis for the three months ended March 31, 2025 and 2024. Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding (“WASO”) during the period. In the calculation of basic weighted-average shares outstanding, the shares issuable under equity-classified pre-funded warrants, as described in Note 11 – Warrants, have been included in the denominator. For the three months ended March 31, 2025 and 2024, the Company’s basic and diluted net income per share attributable to common stockholders are the same as the Company generated a net loss and common stock equivalents are excluded from diluted net loss per share as they have an anti-dilutive impact. Therefore, the Company did not have any dilutive securities and/or other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company.

For the year ended March 31, 2025, potentially dilutive securities not included in the calculation of diluted net loss per share, because to do so would be anti-dilutive, are as follows: 269,345 of stock equivalent warrants; and 97,854 of stock equivalent employee stock options.

19

Table of Contents

The following table sets forth basic and diluted net loss per share attributable to common stockholders for the three months ended March 31, 2025 and 2024 (in thousands, except share and per share amounts):

Schedule of basic and diluted net loss per share attributable to common stockholders

|  | 2025 |  |  | 2024 |
|  | Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
Numerator: |  |  |  |  |  |
Net loss |  | $ | (964 | ) |  | $ | (2,830 | )
Adjusted net loss available to common stockholders |  | $ | (964 | ) |  | $ | (2,830 | )
Denominator: |  |  |  |  |  |  |  |
Basic WASO |  |  | 2,605,843 |  |  |  | 786,745 |
Diluted WASO |  |  | 2,605,843 |  |  |  | 786,745 |
Net loss per share attributable to common stockholders, basic |  | $ | (0.37 | ) |  | $ | (3.60 | )
Net loss per share attributable to common stockholders, diluted |  | $ | (0.37 | ) |  | $ | (3.60 | )

Note 19 – Subsequent events

The Company has evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued for potential recognition or disclosure. The Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements, other than the reverse merger and share repurchases described in Note 1, the Notes Settlement described in Note 4, and the following:

In April 2025, the Company successfully completed the sale of its Asian business, to CZC Company LTD (the “Buyer”) for total gross proceeds of $8.1 million including $6.5 million in cash, along with a 5-year royalty agreement. This guarantees a minimum total royalty payment of $1.7 million, based on a 3% royalty on sales over the next five years, with a minimum annual payment of $0.3 million. Summary financial data attributable to the Asian business for the periods indicated is as follows:

Summary Financial Data Attributable to Asian Business

|  | 2025 |  |  | 2024 |
|  | Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
Net sales |  | $ | 3,262 |  |  | $ | 2,190 |
Cost of goods sold |  |  | (2,124 | ) |  |  | (1,318 | )
Other direct expenses (a) |  |  | (665 | ) |  |  | (559 | )
Total |  | $ | 473 |  |  | $ | 313 |

| (a) | Other direct expenses are costs directly tied to the Halo Asia business, including commissions and trade promotions.

Summary financial data attributable to the Asian business for the year ended December 31, 2024 is as follows:

|  | 2024 |
Net sales |  | $ | 12,808 |
Cost of goods sold |  |  | (5,403 | )
Other direct expenses (a) |  |  | (3,213 | )
Total |  | $ | 4,192 |

| (a) | Other direct expenses are costs directly tied to the Halo Asia business, including commissions and trade promotions.

In April 2025, 100,000 pre-funded warrants were exercised.

In May 2025, 50,000 pre-funded warrants were exercised.

20

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

References in this report (the “Quarterly Report”) to “we,” “us,” the “Company” or “BCC” refer to Better Choice Company, Inc. prior to the consummation of the Business Combination and to SRx Health Solutions, Inc. as of and following the consummation of the Business Combination. The following discussion includes forward-looking statements about our business, financial condition and results of operations, including discussions about management’s expectations for our business. These statements represent projections, beliefs and expectations based on current circumstances and conditions and in light of recent events and trends, and you should not construe these statements either as assurances of performance or as promises of a given course of action. Instead, various known and unknown factors are likely to cause our actual performance and management’s actions to vary, and the results of these variances may be both material and adverse. A description of material factors known to us that may cause our results to vary or may cause management to deviate from its current plans and expectations, is set forth under “Risk Factors.” See “Cautionary Note Regarding Forward-Looking Statements.” The following discussion should also be read in conjunction with our audited consolidated financial statements including the notes thereto appearing elsewhere in this filing. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We undertake no obligation to publicly release the results of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview and Outlook

Better Choice is a pet health and wellness company committed to leading the industry shift toward pet products and services that help dogs and cats live healthier, happier and longer lives. Our mission is to become the most innovative premium pet food company in the world, and we are motivated by our commitment to making products with integrity and treating pets and their parents with respect. We believe that our broad portfolio of pet health and wellness products are well positioned to benefit from the trends of growing pet humanization and an increased consumer focus on health and wellness, and have adopted a laser focused, channel specific approach to growth that is driven by new product innovation.

We sell our premium and super-premium products (which we believe generally includes products with a retail price greater than $0.20 per ounce) under the Halo brand umbrella, including Halo Holistic™, Halo Elevate® and the former TruDog brand, which was rebranded and successfully integrated under the Halo brand umbrella during the third quarter of 2022. Our core products sold under the Halo brand are made with high-quality, thoughtfully sourced ingredients for natural, science based nutrition. Each innovative recipe is formulated with leading veterinary and nutrition experts to deliver optimal health. Our diverse and established customer base has enabled us to penetrate multiple channels of trade, which we believe enables us to deliver on core consumer needs and serve pet parents wherever they shop. We group these channels of trade into three distinct categories: Digital, which includes the sale of product to online retailers such as Amazon and Chewy, as well as DTC which included the sale of product through the Company’s website, halopets.com, through June 1, 2024; International, which includes the sale of product to foreign distribution partners and to select international retailers; and Brick & Mortar, which primarily includes the sale of product to pet specialty retailers, independent pet stores, and regional distributors.

A concerted effort to drive brand awareness behind distinctive positioning and messaging is the cornerstone of our growth plan, supported by innovation. Halo’s future growth is driven through an extensive brand positioning workstream executed over the last year. New consumer messaging will build awareness with pet parents, persuade them that Halo is the right choice for their pet, and move the consumer towards purchase. The creative campaign will be brought to life on Amazon and Chewy platforms as well as outside those platforms. By shifting media investment from bottom-of-funnel-driven DTC activities to full funnel activation across the Amazon and Chewy platforms, Halo will see improvements in both media effectiveness, efficiency, and reach.

In addition to incremental consumer media activation, innovation plays a key role in Halo’s growth plans, supported by our own research and development, and acquisitions. Our established supply and distribution infrastructure allows us to bring new products to market in less than a year. Our outsourced manufacturing model is flexible, scalable and encourages innovation allowing us to offer a breadth of assortment in dog and cat food main meal as well as pet treat products under the Halo brand, serving a wide variety of consumer needs, dayparts, and occasions.

The Halo portfolio offers a variety of platforms through which to innovate. Halo Holistic™ is designed for the pet parent seeking complete digestive health with prebiotics, probiotics and postbiotics. Additionally, it’s one of the only brands made with only whole animal proteins and no meat meals. Halo Elevate®, features leading nutrient levels supporting the top five pet parent health concerns including digestive health, heart and immunity support, healthy skin and coat, hip and joint support and strength and energy. Halo Freeze Dried Raw recipes preserve the natural flavor and nutrition of raw food with 100% protein from natural sources.

21

Table of Contents

The Global Pet Food and Treat Market

The U.S. represents the largest and most developed market for pet food globally, with food and treats accounting for approximately $64 billion of total spend in the pet care market in 2024. According to the American Pet Product Association (“APPA”), approximately 63% of all households in the U.S. own a pet, equating to a 180 million adult consumers living in a household with a pet. Pet spending represents a significant portion of household spend on consumer products, as this translates to an average annual spend on pet products of more than $738 in 2024, which represents a 7.4% increase over the previous year.

US retail sales of dog and cat food reached $65.8 billion in 2024, up 2.1% over 2023. This increase represents a significant slow-down in pet food growth, following four consecutive years of double-digit increases and a 2018-2023 compound annual growth rate (CAGR) of 13.0%. While much of the pre-pandemic growth in the pet food market can be attributed to continued premiumization and pet population growth among higher-income households, price inflation was almost entirely behind more recent growth, specifically in 2022 and early 2023. These gains were especially impressive given a simultaneous decline in the dog population. Pet food has proven itself to be amazingly resilient in both this and previous economic crises, and pet food’s position as a non-discretionary item has spared it many of the cutbacks seen in the non-food pet supplies sector.

Due to its ready access and “contactless” advantages, e-commerce saw a huge boost from the pandemic and continued to make inroads into brick-and-mortar’s share of the market in the following years. Packaged Facts expects the channel to continue bleeding share away from others at a somewhat slower pace in the years to come, with the ongoing, intensive, competitive pushes of Amazon.com driving the momentum. Appeals continue to be the convenience of having large bags of pet food home delivered, the “endless aisles” and product comparison benefits of online shopping, the movement toward fresh pet food sold online, and online shopping in general.

In Packaged Facts’ January 2024 survey, pet food was cited as an important pet health and wellness product by the largest share of pet owners—80% of dog owners and 82% of cat owners. By comparison, 50% and 49%, respectively, view pet treats as an important pet health product. Pet parents are on the lookout for products that improve their pet’s health and wellness, with 79% liking the idea of healthier pet snacks and treats and 73% viewing high-quality pet foods as effective for preventive healthcare. Pet owners are also willing to spend more on pet foods with extra health and wellness benefits, and this attitude appears to be growing, with 74% agreeing with this sentiment in Packaged Facts July-August 2024 survey, up from 66% in the September-October 2023 survey.

Packaged Facts projects moderate (in relation to the past four years) but steady pet food performance through 2028, with the sales to experience a compound annual growth rate (CAGR) of 4.4% for the 2023-2028 period. This increase reflects a 4.3% increase for dog food and 4.6% increase in cat food. Although the days of double-digit increases will likely remain in the past, given the mature nature of the pet food market, should the dog population rebound more quickly than anticipated, this growth could reach beyond 5% or even 6%.

From a demographic perspective, younger pet owners are more likely to spend a higher percentage of their income on pets, treat their pet as an important member of the family and to purchase products from pet specialty and online retailers rather than from grocery stores. Along these lines, women are more interested in purchasing pet food than men, and are more likely to engage with search ads than men. Taken holistically, these traits suggest a preference to purchase more premium and super-premium pet food and treats from brands like Halo, with a tendency to purchase products in the channels where we compete.

Globally, Asia is the second largest market for pet products, with China representing the largest market opportunity for growth. Like the U.S., growth in the Asian pet care industry has been driven by dramatic increases in household pet ownership. The global plant-based pet food market is set to expand its roots in the global market at a promising CAGR of 9.2%, while the market is anticipated to hold a revenue of USD $57.43 billion in 2032. We believe that growth in Asia is fueled by increasing levels of economic financial status and demand for premium, western manufactured products as a result of product quality concerns. This demand has been supported by a rapidly growing middle class in China, where a McKinsey report estimated that in 2018 roughly 730 million people in urban areas fell into the income categories of “aspirants” and “affluents,” with the Brookings group estimating that approximately 60 million people are added to these income categories each year. We believe that this growth drove the increase in the number of dog-owning Chinese households as measured by Euromonitor, which increased from 12% in 2015 to 22% in 2023, according to one 2024 study. According to Euromonitor, the Chinese market for premium dry dog and cat food is anticipated to grow at a 20% CAGR and 28% CAGR, respectively, from 2015 through 2025, suggesting that the Chinese pet market has significant room for growth in the foreseeable future.

Our Growth Strategy

● | Build the Halo Brand with sharpened positioning, improved storytelling, increased share-of-voice, and a defined innovation strategy and platform-based approach to consumer qualified new products.
● | Capture Fair Share Online via increased and efficient investment, full funnel activation, enhanced discoverability, and maximizing tent-pole events.

22

Table of Contents

● | Omnichannel Expansion strategy development while maximizing current distribution relationships, expanding independent distributor network, and introducing innovation across core product lines.
● | Win Globally with scalable go-to-market strategy and long-term partnerships to accelerate growth, including actively pursuing new Latin American markets.
● | Create Fuel for Growth via continuous supply chain improvements, pursuing global formula harmonization for cost savings and improving portfolio efficiency through more effective portfolio managements.
● | Maximize Operating Leverage to optimize overhead infrastructure for scale efficiency, driving greater governance through financial visibility and KPI tracking with a ruthless focus on working capital.

Recent Corporate Developments

In December 2023, the Company made a strategic exit out of Petco stores (while remaining on Petco.com), and Pet Supplies Plus. As of June 1, 2024, the Company has exited its DTC channel, in an effort to improve profitability. On March 25, 2024, Better Choice Company, Inc. (“BTTR”) initiated a legal action to enforce a right of first refusal (“ROFR”) option exercised by Alphia, Inc. (“Alphia”), which is controlled by a Paris-based private equity firm, PAI Partners. On June 20, 2024, the Company agreed to settlement terms of the lawsuit. The agreement dismisses the Company’s ongoing litigation with Alphia and provides for the forgiveness of the Company’s term loan, including $5.0 million in principal and $0.5 million of payable-in-kind (“PIK”) accrued interest, the termination of 335,640 warrants with a strike price of $11.44 per share that were set to expire in 2028, and the forgiveness of up to $2.6 million in accounts payable due to Alphia, provided the remaining outstanding accounts payable balance is paid within 90 days of the settlement date. These accounts payable were paid and settled prior to December 31, 2024, resulting in a gain of $2.6 million.

The Company was not in compliance with certain covenants related to the Alphia Term Loan Facility as of December 31, 2023 and the debt was callable by the lender. In connection with the Alphia settlement noted above, the Company was no longer subject to Alphia-related covenants as of December 31, 2024.

On April 15, 2024, the Company’s board of directors authorized and approved a stock repurchase plan (the “Repurchase Plan”) for up to $5 million of the currently outstanding shares of the Company’s common stock through December 31, 2024. Under the Repurchase Plan, the Company is authorized to repurchase shares through open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act. The Board also authorized the Company to enter into written trading plans under Rule 10b5-1 of the Exchange Act. Adopting a trading plan that satisfies the conditions of Rule 10b5-1 would allow a company to repurchase its shares at times when it might otherwise be prevented from doing so due to self-imposed trading blackout periods or pursuant to insider trading laws. Under any Rule 10b5-1 trading plan, the Company’s third-party broker, subject to Securities and Exchange Commission regulations regarding certain price, market, volume and timing constraints, would have authority to purchase the Company’s common stock in accordance with the terms of the plan. The Company may from time to time enter into Rule 10b5-1 trading plans to facilitate the repurchase of its common stock pursuant to its Repurchase Plan. The Company has purchased 102,597 shares of common stock under the Repurchase Plan, during the year ended December 31, 2024.

On April 24, 2024, the Company received a notice of noncompliance from the NYSE American. On May 24, 2024, we submitted a plan of compliance to NYSE American addressing how we intend to regain compliance. The plan has been accepted by the NYSE American. However, if we are not in compliance with the continued listing standards before the cure period ends on October 24, 2025, or if we do not make progress consistent with the plan, the NYSE American may take steps to delist our common stock. Further, we received correspondence from the NYSE American on July 9, 2024, indicating noncompliance under a different requirement of the listing standards, since we reported stockholders’ equity of $1.1 million as of March 31, 2024, and had losses from continuing operations and/or net losses in three out of its four most recent fiscal years ended December 31, 2023, and that which requires us to maintain a minimum stockholders’ equity of $4.0 million. We will need to take additional steps to regain compliance under this requirement as well, or the NYSE American may take steps to delist our common stock.

Arrangement Agreement

On September 3, 2024, the Company announced it entered into an Arrangement Agreement (the “Arrangement Agreement”) with SRx Health Solutions, Inc., a corporation organized under the laws of the Province of Ontario (“SRx” or “SRx Health”), 1000994476 Ontario Inc., an indirect wholly-owned subsidiary of the Company and a corporation existing under the laws of the Province of Ontario (“AcquireCo”), and 1000994085 Ontario Inc., a direct wholly-owned subsidiary of the Company and corporation existing under the laws of the Province of Ontario (“CallCo”). Pursuant to the Arrangement Agreement, and the Plan of Arrangement adopted in connection therewith, the Company will acquire SRx in an all-stock transaction pursuant to a statutory amalgamation of SRx and AcquireCo under Canadian law (the “Amalgamation”). As a result of the Amalgamation, all of the property, rights, interests and obligations of SRx shall become the property, rights, interests and obligations of the resulting entity (“Amalco”), and Amalco will be an indirect wholly-owned subsidiary of the Company. The Arrangement Agreement was amended on December 6, 2024, and the Arrangement Agreement and Plan of Arrangement were each amended on January 24, 2025 and February 25, 2025.

23

Table of Contents

In the Amalgamation, each issued and outstanding common share of SRx will be converted based on the Exchange Ratio (as defined below) into shares of common stock of the Company (“BTTR Common Stock”) or, at the option of the holder thereof, exchangeable shares of Amalco that will be exchangeable at the option of the holder (or under certain other circumstances) on a one-for-one basis for shares of BTTR Common Stock. The Exchange Ratio will be determined five business days prior to the consummation of the Amalgamation (the “Closing”) and will be based on the trailing 30-day volume weighed average price of the Better Choice Common Stock on the NYSE America, subject to an aggregate share collar of 19,750,000 shares and 30,000,000 shares, with any resulting fractional shares to be rounded to the nearest whole share (the “Exchange Ratio”). The Amalgamation assigns an equity value of SRx of U.S. $80 million, assuming net debt at Closing of U.S. $43 million (which will be subject to a two-way adjustment prior to the Closing). All outstanding warrants and restricted stock units of SRx will be converted into common shares of SRx or terminated prior to the Closing.

The transaction has been unanimously approved by the boards of directors of the Company and SRx. The transaction was approved by the stockholders of the Company at a special meeting on March 21, 2025 and by the SRx shareholders at a shareholder meeting on February 26, 2025. The merger closed on April 25, 2025.

SRx Health operates one of the largest specialty pharmacy networks in Canada with specialty pharmacies, specialty health/infusion clinics, clinical trial sites and wholesale distribution facilities spanning the region. SRx Health is only one of a few specialty pharma operators in Canada with a network that extends across Canada, making it one of the most accessible providers of specialty healthcare in the country. Better Choice will continue to operate its portfolio of established premium and super-premium pet products under the Halo brand.

Results of Operations for the three months ended March 31, 2025 and 2024

The following table sets forth our consolidated results for the periods presented (in thousands):

|  | Three Months Ended March 31, |  |  | Change |
|  | 2025 |  |  | 2024 |  |  | $ |  |  | % |
Net sales |  | $ | 7,159 |  |  | $ | 7,903 |  |  | $ | (744 | ) |  |  | (9 | )%
Cost of goods sold |  |  | 4,776 |  |  |  | 5,289 |  |  |  | (513 | ) |  |  | (10 | )%
Gross profit |  |  | 2,383 |  |  |  | 2,614 |  |  |  | (231 | ) |  |  | (9 | )%
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative |  |  | 3,471 |  |  |  | 5,080 |  |  |  | (1,609 | ) |  |  | (32 | )%
Total operating expenses |  |  | 3,471 |  |  |  | 5,080 |  |  |  | (1,609 | ) |  |  | (32 | )%
Loss from operations |  |  | (1,088 | ) |  |  | (2,466 | ) |  |  | 1,378 |  |  |  | (56 | )%
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income (expense), net |  |  | 83 |  |  |  | (362 | ) |  |  | 445 |  |  |  | 123 | %
Other income |  |  | 43 |  |  |  | — |  |  |  | 43 |  |  |  | 100 | %
Total other income (expense), net |  |  | 126 |  |  |  | (362 | ) |  |  | 488 |  |  |  | 135 | %
Loss before income taxes |  |  | (962 | ) |  |  | (2,828 | ) |  |  | 1,866 |  |  |  | 66 | %
Income tax expense |  |  | 2 |  |  |  | 2 |  |  |  | — |  |  |  | — | %
Net loss |  | $ | (964 | ) |  | $ | (2,830 | ) |  | $ | 1,866 |  |  |  | 66 | %

Net sales

We sell our products through online retailers, pet specialty and independent pet retailers and distributors, internationally to foreign distribution partners (transacted in U.S. dollars), and our website directly to consumers. We offer a variety of trade promotions, discounts and incentives to our customers, which impacts the transaction price of our products and our net sales accordingly. DTC net sales within the Digital channel includes revenue derived from shipping fees and are net of loyalty points earned (a portion of revenue is deferred at the time of the sale as points are earned and not recognized until the redemption of the points, estimated based on historical experience). We record a revenue reserve based on historical return rates to account for customer returns.

Information about our revenue channels is as follows (in thousands):

|  | Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
Digital (1) |  | $ | 2,732 |  |  |  | 38 | % |  | $ | 4,474 |  |  |  | 57 | %
International (2) |  |  | 3,995 |  |  |  | 56 | % |  |  | 2,874 |  |  |  | 36 | %
Brick & Mortar (3) |  |  | 432 |  |  |  | 6 | % |  |  | 555 |  |  |  | 7 | %
Net Sales |  | $ | 7,159 |  |  |  | 100 | % |  | $ | 7,903 |  |  |  | 100 | %

24

Table of Contents

(1) | The Company’s Digital channel includes two wholesale customers that amounted to greater than 10% of the Company’s total net sales for the three months ended March 31, 2025 and 2024, and represented $2.7 million and $3.2 million of net sales for the three months ended March 31, 2025 and 2024, respectively. Additionally, DTC sales within the Digital channel amounted to greater than 10% of the Company’s total net sales for the three months ended March 31, 2024. DTC sales within the Digital channel were approximately $1.3 million for the three months ended March 31, 2024. As of June 1, 2024, the Company has exited its DTC channel in an effort to improve profitability. The Company historically reported the sales in this channel as E-commerce and DTC separately and has been consolidated into one revenue stream as of March 31, 2025.
(2) | One of the Company’s International customers amounted to greater than 10% of the Company’s total net sales during the three months ended March 31, 2025 and 2024, and represented $3.3 million and $2.2 million of net sales for the three months ended March 31, 2025, and 2024, respectively.
(3) | None of the Company’s Brick & Mortar customers represented greater than 10% of net sales for the three months ended March 31, 2025 or 2024. For the three months ended March 31, 2024, Petco was included within the Brick & Mortar channel. Beginning in Q1 2024, Petco is presented within Digital as a result of the strategic exit out of Petco stores, while remaining on Petco.com.

Net sales decreased $(0.7) million, or (9)%, to $7.2 million for the three months ended March 31, 2025 compared to $7.9 million for the three months ended March 31, 2024. The decrease in net sales for the three months ended March 31, 2025 is primarily attributable to the shutdown of the DTC revenue stream in the second quarter of 2024.

Key factors that we expect to affect our future sales growth include new product innovation and launches, our expansion strategy in each of the sales channels and our key supplier relationships.

Gross profit

Cost of goods sold consists primarily of the cost of product obtained from co-manufacturers, packaging materials, freight costs for shipping inventory to the warehouse, as well as third-party warehouse and order fulfillment costs. We review inventory on hand periodically to identify damaged, slow-moving inventory, and/or aged inventory. Based on this analysis, we record inventories at the lower of cost or net realizable value, with any reduction in value expensed as cost of goods sold.

Our products are manufactured to our specifications by our co-manufacturers using raw materials. We work with our co-manufacturers to secure a supply of raw materials that meet our specifications. In addition to procuring raw materials that meet our formulation requirements, our co-manufacturers manufacture, test and package our products. We design our packaging for our co-manufacturers and the packaging is shipped directly to them.

Our gross profit has been and will continue to be affected by a variety of factors, primarily product sales mix, volumes sold, discounts offered to newly acquired and recurring customers, the cost of our manufactured products, and the cost of freight from the manufacturer to the warehouse.

During the three months ended March 31, 2025, gross profit decreased $(0.2) million, or (9)%, to $2.4 million compared to $2.6 million during the three months ended March 31, 2024.

Gross margin stayed consistent at 33% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. We continue to actively work with our co-manufacturing and freight partners to generate future cost savings and realize improved gross margins in future periods. We could see continued margin variability due to the current economic environment and pricing pressures due to inflationary costs for both transportation and raw materials. We will continue to refine and optimize our overall pricing strategy as we evaluate the future impact of inflation and align ourselves with the market.

25

Table of Contents

Operating expenses

Our Selling, general and administrative (“SG&A”) expenses consist of the following:

| ● | Sales and marketing costs, for specific customer promotional programs, paid media, content creation expenses and our DTC selling platform. Marketing costs are geared towards customer acquisition and retention and building brand awareness. During the three months ended March 31, 2025, sales and marketing costs decreased approximately $(0.5) million or (42)%, to $0.7 million from $1.2 million during the three months ended March 31, 2024. The decrease was driven primarily by lower marketing and advertising agency fees related to the Halo brand renovation and migration from the former TruDog brand, as well as decreased marketing spend in our International sales channel.
| ● | Employee compensation and benefits decreased approximately $(0.4) million or (23)% during the three months ended March 31, 2025 to $1.1 million from $1.5 million during the three months ended March 31, 2024. The decrease was primarily related to a reduction in employee headcount, partially offset by higher severance costs during the first half of 2024.
| ● | Share-based compensation includes expenses related to equity awards issued to employees and non-employee directors. During the three months ended March 31, 2025, share-based compensation decreased $(0.2) million or (46)% to $0.3 million compared to $0.5 million for the three months ended March 31, 2024. The decrease is driven by a decrease in the annual board grant, which was postponed until Q2 2025.
| ● | Freight, which is primarily related to the shipping of DTC orders to customers, decreased $(0.3) million or (96)% during the three months ended March 31, 2025 to $0.01 million compared to $0.3 million during the three months ended March 31, 2024. Freight costs have been generally decreasing due to lower DTC sales as described above. The DTC channel was shut down as of June 1, 2024, which contributed to the decrease in freight costs for the three months ended March 31, 2025.
| ● | Non-cash charges including depreciation, amortization, disposal or sale of assets and bad debt expense increased by $0.05 million or 188% to $0.07 million during the three months ended March 31, 2025 from $0.02 million during the three months ended March 31, 2024. The increase was driven by an increase to bad debt expense in the first quarter of 2025.
| ● | Other general and administrative costs for various general corporate expenses, including professional services, information technology, insurance, travel, costs related to merchant credit card fees, product development costs, rent, and certain tax costs. During the three months ended March 31, 2025, other general and administrative costs decreased $(0.3) million, or (20)% to $1.3 million compared to $1.6 million during the three months ended March 31, 2024. The decrease for the three months ended March 31, 2025 was driven by a decrease in insurance and financial-related professional fees.

Interest income (expense), net

During the three months ended March 31, 2025, we had interest income of $0.1 million, compared to interest expense of $0.4 million for the three months ended March 31, 2024. Interest income for the three months ended March 31, 2025 is attributable to interest on the SRx note receivable. Interest expense for the three months ended March 31, 2024 is comprised of interest on our Wintrust Receivables Credit Facility, Alphia Term Loan, the amortization of debt issuance costs, and interest accretion on the Alphia Term Loan. The decrease in interest expense for the three months ended March 31, 2025 is related to the forgiveness of the Alphia Term Loan, as discussed in Note 8 - Debt.

Income taxes

Our income tax provision consists of an estimate of federal and state income taxes based on enacted federal and state tax rates, as adjusted for any allowable credits, deductions and uncertain tax positions as they arise. During the three months ended March 31, 2025, we recorded income tax expense of less than $0.01 million, which relates to state income tax expense. During the three months ended March 31, 2024 we recorded income tax expense of less than $0.1 million, which related to indefinite-lived assets. The effective tax rate for the three months ended March 31, 2025 was less than 1%, which differs from the U.S. Federal statutory rate of 21% primarily because our losses have been fully offset by a valuation allowance due to uncertainty of realizing the tax benefit of NOLs.

26

Table of Contents

Non-GAAP Measures

Adjusted EBITDA

We define Adjusted EBITDA to supplement the financial measures prepared in accordance with GAAP. Adjusted EBITDA adjusts EBITDA to eliminate the impact of certain items that we do not consider indicative of our core operations. Adjusted EBITDA is determined by adding the following items to net loss: interest expense, tax expense (benefit), depreciation and amortization, share-based compensation, gain on extinguishment of debt and accounts payable, loss on disposal of assets, transaction-related expenses, and other non-recurring expenses.

We present Adjusted EBITDA as it is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. We believe that the disclosure of Adjusted EBITDA is useful to investors as this non-GAAP measure forms the basis of how our management team reviews and considers our operating results. By disclosing this non-GAAP measure, we believe that we create for investors a greater understanding of and an enhanced level of transparency into the means by which our management team operates our company. We also believe this measure can assist investors in comparing our performance to that of other companies on a consistent basis without regard to certain items that do not directly affect our ongoing operating performance or cash flows.

Adjusted EBITDA does not represent cash flows from operations as defined by GAAP. Adjusted EBITDA has limitations as a financial measure and you should not consider it in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net loss, gross margin, and our other GAAP results.

The following table presents a reconciliation of net loss, the closest GAAP financial measure, to EBITDA and Adjusted EBITDA for each of the periods indicated (in thousands):

|  | Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
Net loss |  | $ | (964 | ) |  | $ | (2,830 | )
Interest (income) expense, net |  |  | (83 | ) |  |  | 362 |
Income tax expense |  |  | 2 |  |  |  | 2 |
Depreciation and amortization |  |  | 26 |  |  |  | 35 |
EBITDA |  |  | (1,019 | ) |  |  | (2,431 | )
Non-cash share-based compensation (a) |  |  | 280 |  |  |  | 518 |
Transaction related (b) |  |  | 8 |  |  |  | 323 |
Non-recurring strategic branding initiatives (c) |  |  | 39 |  |  |  | 26 |
Non-recurring and other expenses (d) |  |  | 43 |  |  |  | 164 |
Adjusted EBITDA |  | $ | (649 | ) |  | $ | (1,400 | )

(a) Non-cash expenses related to equity compensation awards. Share-based compensation is an important part of the Company’s compensation strategy and without our equity compensation plans, it is probable that salaries and other compensation related costs would be higher.

(b) Transaction-related legal fees and professional fees related to single occurrence business matters.

(c) Single occurrence expenses related to marketing agency and design, strategic re-branding initiatives, Elevate® launch, product innovation and reformulations.

(d) Other single occurrence expenses such as legal settlements, employee severance, executive recruitment, transition of our dry kibble co-manufacturing supplier, and other non-recurring fees.

27

Table of Contents

Liquidity and capital resources

Historically, we have financed our operations primarily through the sales of shares of our common stock, warrants, preferred stock, and loans. In connection with our July 2024 public offering, we issued and sold 739,000 shares of common stock at a public offering price of $3.00 per share and pre-funded warrants to issue 1,028,000 shares of Common Stock at a public offering price of $2.99 per Pre-Funded Warrant. On March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $1.1 million and $3.1 million, respectively.

We are subject to risks common in the pet wellness consumer market including, but not limited to, dependence on key personnel, competitive forces, successful marketing and sale of our products, the successful protection of our proprietary technologies, ability to grow into new markets, and compliance with government regulations. As of March 31, 2025, we have not experienced a significant adverse impact to our business, financial condition or cash flows resulting from geopolitical actions or threat of cyber-attacks. However, we have seen adverse impacts to our gross margin from time to time due to inflationary pressures in the current economic environment. Uncertainties regarding the continued economic impact of inflationary pressures, geopolitical actions and threat of cyber-attacks are likely to result in sustained market turmoil, which could negatively impact our business, financial condition, and cash flows in the future.

We have historically incurred losses and expect to continue to generate operating losses and consume cash resources in the near term. These conditions raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the date these consolidated financial statements are issued, meaning that we may be unable to generate sufficient operating cash flows to pay our short-term obligations. We have implemented and continue to implement plans to achieve operating profitability, including various margin improvement initiatives, the consolidation of and introduction of new co-manufacturers, the optimization of our pricing strategy and ingredient profiles, and new product innovation.

Our ability to raise additional capital may be adversely impacted by the potential worsening of global economic conditions, including inflationary pressures, the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from geopolitical tensions. If we seek additional financing to fund our business activities in the future and there remains doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all. If we are unable to raise the necessary funds when needed or achieve planned cost savings, or other strategic objectives are not achieved, we may not be able to continue our operations, or we could be required to modify our operations that could slow future growth.

A summary of our cash flows is as follows (in thousands):

|  | Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
Cash flows (used in) provided by: |  |  |  |  |  |  |  |
Operating activities |  | $ | 384 |  |  | $ | (1,006 | )
Investing activities |  |  | (1,127 | ) |  |  | (3 | )
Financing activities |  |  | (1,186 | ) |  |  | 430 |
Net decrease in cash and cash equivalents |  | $ | (1,929 | ) |  | $ | (579 | )

Cash flows from operating activities

Cash used in operating activities decreased by $1.4 million, or 138%, to cash provided by operating activities during the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase in cash was primarily driven by significant fluctuations in our working capital, including a comparative increase in accounts payable of $0.8 million and a decrease to accounts receivable of $0.5 million. These increases in cash used were partially offset by a decrease in net loss of $1.9 million, or 66%, to $(1.0) million for the three months ended March 31, 2025.

28

Table of Contents

Cash flows from investing activities

Cash used in investing activities was $1.1 million during the three months ended March 31, 2025. The cash used in investing activities related to the issuance of a $1.1 million note receivable, there were also capital expenditures of less than $0.1 million. Cash used in investing activities was less than $0.1 million during the three months ended March 31, 2024. The cash used in investing activities is related to capital expenditures.

Cash flows from financing activities

Cash used in financing activities was $(1.2) million, during the three months ended March 31, 2025 and cash provided by financing activities was $0.4 million during the three months ended March 31, 2024. The cash used in financing activities for the three months ended March 31, 2025 was related to proceeds from the Wintrust revolving line of credit of $2.2 million, offset by payments on the Wintrust revolving line of credit of $(3.4) million. The cash used in financing activities for the three months ended March 31, 2024 was related to proceeds from the Wintrust revolving line of credit of $3.0 million, offset by payments on the Wintrust revolving line of credit of $(2.6) million.

Wintrust Receivables Credit Facility

On June 21, 2023, the Company entered into an account purchase agreement with Wintrust Receivables Finance, a division of Wintrust Bank N.A. (“Wintrust”) pursuant to which Wintrust will purchase, at its discretion, eligible customer invoices and advance up to 70% of the face amount of all purchased amounts up to $4,750,000. Each advance under the AP Agreement will bear interest at the U.S. prime rate, plus 2.5%. The AP Agreement has an initial term of two years and will automatically renew annually unless terminated by the Company on at least 60 days’ notice. The Wintrust Receivables Credit Facility is secured by a general security interest in the assets of the Company. The Wintrust Receivables Credit Facility is guaranteed secured by the Company pursuant to that certain Unlimited Continuing Guaranty Agreement dated as of June 21, 2023.

As of March 31, 2025, the balance outstanding on the Wintrust Receivables Credit Facility amounted to $1.2 million.

Alphia Term Loan

On June 21, 2023, the Company entered into a term loan credit agreement with Alphia Inc., a leading custom manufacturer of super-premium pet food in the U.S. Pursuant to the Term Loan Agreement, Alphia made a term loan to the Company in the original principal amount of $5,000,000 (the “Term Loan”). The Term Loan is also evidenced by that certain Term Note dated as of June 21, 2023 issued by the Company to Alphia (the “Term Note”). The proceeds of the Term Loan, together with a portion of the Company’s cash on hand, were used to retire all of the outstanding obligations of Halo, Purely for Pets, Inc. (“Halo”), a wholly-owned subsidiary of the Company, under Halo’s long-term credit facility with Old Plank Trail Community Bank, N.A., an affiliate of Wintrust Bank, N.A.

As described in Note 8 - Debt, on March 25, 2024, the Company initiated a legal action to enforce a right of first refusal option exercised by Alphia pursuant to the terms of a written agreement between Alphia and the Company whereby Alphia was to acquire the assets of Halo. On June 20, 2024, the Company agreed to settlement terms of the lawsuit. The agreement dismisses the Company’s ongoing litigation with Alphia and provides for the forgiveness of the Company’s term loan, including $5.0 million in principal and $0.5 million of payable-in-kind (“PIK”) accrued interest, the termination of 335,640 warrants with a strike price of $11.44 per share that were set to expire in 2028, and the forgiveness of up to $2.6 million in accounts payable due to Alphia, provided the remaining outstanding accounts payable balance is paid within 90 days of the settlement date. These accounts payable were paid and settled prior to December 31, 2024, resulting in a gain of $2.6 million.

As a result of the settlement terms described above, we are not indebted to Alphia as it relates to the Term Loan Facility as of March 31, 2025.

Contractual Commitments and Obligations

We are contractually obligated to make future cash payments for various items, including debt arrangements, certain purchase obligations, as well as the lease arrangement for our office. See “Note 8 - Debt” to our interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information about our debt obligations. Our purchase obligations include certain ongoing marketing projects, software subscriptions as well as in-transit or in-production purchase orders with our suppliers, for which amounts vary depending on the purchasing cycle. The majority of our software subscriptions are not under long-term contracts, and we do not have long-term contracts or commitments with any of our suppliers beyond active purchase orders. These purchase obligations were not material as of the date of this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined by applicable regulations of the SEC, that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

29

Table of Contents

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our unaudited condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgements that affect the reported amounts of assets, liabilities, net sales, costs and expenses and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies described in our Annual Report for the year ended December 31, 2024 have the greatest potential impact on our financial statements and, therefore, we consider these to be our critical accounting estimates. Accordingly, we evaluate our estimates and assumptions on an ongoing basis, especially in light of recent economic volatility, and may adjust projections if market conditions change. Our actual results may differ from these estimates under different assumptions and conditions. There have been no material changes to our critical accounting estimates compared to the descriptions in our Annual Report for the year ended December 31, 2024.

Share-Based Compensation

Share-based compensation expense is measured based on the estimated fair value of awards granted to employees, directors, officers and consultants on the grant date. Forfeitures are accounted for as they occur, therefore there are no forfeiture related estimates required.

The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model, which requires the development of input assumptions, as described in “Note 12 - Share-based compensation” of the Company’s Annual Form 10-K. Determining the appropriate fair value model and calculating the fair value of share-based payment awards requires the input of the subjective assumptions described in “Note 12 - Share-based compensation” of the Company’s Annual Form 10-K. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment.

Notes Receivable

Notes receivable represent amounts owed to the Company by other parties under formal written agreements that stipulate the repayment terms, including interest rates, repayment schedule, and maturity date. Notes receivable are initially recognized at the amount due under the terms of the agreement. The Company records any related interest income over the life of the note using the effective interest rate method. Notes receivable are classified as either current or non-current, based on their respective due dates. Notes receivable classified and accounted for as available-for-sale have unrealized gains and losses recognized in other comprehensive income/(loss) (“OCI”). See “Note 4 - Notes receivable” to our audited consolidated financial statements included in this Annual Report on Form 10-K for more information.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this Item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of management, including our Chief Executive Officer (our Principal Executive Officer or “PEO”) and our Chief Financial Officer (our Principal Financial Officer or “PFO”), we evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, because of the material weaknesses in our internal control over financial reporting described in our Annual Report on Form 10-K for the year ended December 31, 2024, our disclosure controls and procedures were not effective as of March 31, 2025. We are actively remediating these weaknesses, with ongoing improvements being made to the design and operating effectiveness of our internal controls.

Notwithstanding the material weaknesses in our internal control over financial reporting, we have concluded that the condensed consolidated financial statements included in this Form 10-Q, when read with the notes thereto, present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.

30

Table of Contents

Material Weaknesses

Management has determined that we did not design and maintain effective controls to support proper revenue recognition. Specifically, management did not have effective controls (i) to ensure the accuracy of data input for price and quantity and (ii) to ensure that there was effective testing of period end sales cutoff, including a proper review and comparison of invoices.

Management assessed the design and operating effectiveness of our General IT Controls (GITCs) for the fiscal year ended December 31, 2024. Based on this assessment, we identified certain control deficiencies within our IT systems and processes. While each individual deficiency was considered to be small in nature, their aggregate impact on the overall control environment has resulted in a material weakness. Specifically, the identified deficiencies relate to the access controls, change management, and cybersecurity.

Remediation Plan

To address the material weakness associated with failure to maintain controls over the operating effectiveness of IT general controls, we transitioned to a new outsourced managed IT service provider with an appropriate level of knowledge and technical experience to design and maintain IT general controls. We have also planned to (i) establish policies and procedures for the design and operation of IT general controls, (ii) implement an IT general controls framework, and (iii) where necessary, we have identified, implemented, and documented IT general controls. We continue to evaluate the appropriate controls to design and maintain effective controls supporting financial systems relevant to our financial reporting processes. We continue to evaluate staffing requirements and technology improvement opportunities to further address and achieve remediation.

To address the material weakness in internal controls related to the revenue recognition, we continue to evaluate the appropriate controls to design and maintain effective controls supporting revenue recognition and are in the process of enhancing certain controls over revenue, including adding resources and training programs addressing the design, implementation, and documentary evidence requirement of control procedures over revenue recognition for appropriate personnel.

Although we implemented measures and plan to implement additional measures to remedy our internal control deficiencies, there can be no assurance that our efforts will be successful. In addition, until the remediation steps have been completed and operated for a sufficient period of time, and subsequent evaluation of their effectiveness is completed, the material weaknesses identified and described above will continue to exist.

Changes in Internal Control Over Financial Reporting

Other than the changes described above, there has not been any change in our internal controls over financial reporting identified in connection with the evaluation that occurred during the quarter ended March 31, 2025 that has materially affected, or is reasonably likely to materially affect, those controls.

PART II

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are subject to litigation and other proceedings that arise in the ordinary course of our business. Subject to the inherent uncertainties of litigation and although no assurances are possible, we believe after discussing with legal counsel that there are no pending lawsuits or claims that, individually or in the aggregate, will have a material adverse effect on our business, financial condition or our yearly results of operations.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors described under the heading “Risk Factors” in our Annual Report filed on March 31, 2025. While we believe there have been no material changes from the risk factors previously disclosed, you should carefully consider, in addition to the other information set forth in this report, the risk factors discussed in our Annual Report that could materially affect our business, financial condition or future results. The risks described in our Annual Report are not the only risks facing our Company. In addition to risks and uncertainties inherent in forward-looking statements contained in this Quarterly Report, additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

31

Table of Contents

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are filed herewith.

EXHIBIT INDEX

Exhibit |  | Exhibit Description |  | Form |  | File No. |  | Exhibit |  | Filing date
2.1 |  | Agreement and Plan of Merger, dated February 28, 2019, by and among the Company, BBC Merger Sub, Inc. and Bona Vida, Inc. |  | 8-K |  | 333-161943 |  | 2.1 |  | 05/10/2019
2.2 |  | First Amendment to Agreement and Plan of Merger, dated February 28, 2019, by and among the Company, BBC Merger Sub, Inc., and Bona Vida, Inc., dated May 3, 2019 |  | 8-K |  | 333-161943 |  | 2.2 |  | 05/10/2019
2.3 |  | Securities Exchange Agreement, dated February 2, 2019, by and among the Company, TruPet LLC and the members of TruPet LLC |  | 8-K |  | 333-161943 |  | 2.3 |  | 05/10/2019
2.4 |  | First Amendment to Securities Exchange Agreement, dated February 2, 2019, by and among the Company, TruPet LLC and the members of TruPet LLC, dated May 6, 2019 |  | 8-K |  | 333-161943 |  | 2.4 |  | 05/10/2019
2.5 |  | Amended and Restated Stock Purchase Agreement, dated December 18, 2019, by and among the Company, Halo, Purely For Pets, Inc., Thriving Paws, LLC and HH-Halo LP |  | 8-K |  | 333-161943 |  | 2.1 |  | 12/26/2019
2.6 |  | Agreement and Plan of Merger, dated July 28, 2022, by and among TruPet LLC and Halo, Purely for Pets, Inc. |  | 10-Q |  | 001-40477 |  | 2.6 |  | 08/11/2022
3.1 |  | Certificate of Incorporation, dated January 1, 2019 |  | 10-Q |  | 333-161943 |  | 3.1 |  | 04/15/2019
3.2 |  | Certificate of Amendment to Certificate of Incorporation, dated February 1, 2019 |  | 10-Q |  | 333-161943 |  | 3.2 |  | 04/15/2019
3.3 |  | Certificate of Amendment to Certificate of Incorporation, dated March 13, 2019 |  | 8-K |  | 333-161943 |  | 3.1 |  | 03/20/2019
3.4 |  | Certificate of Amendment to Certificate of Incorporation, dated April 18, 2019 |  | 10-KT |  | 333-161943 |  | 3.5 |  | 07/25/2019
3.5 |  | Certificate of Amendment to Certificate of Incorporation, dated July 30, 2020 |  | 8-K |  | 333-161943 |  | 99.1 |  | 07/30/2020
3.6 |  | Certificate of Merger of Sport Endurance, Inc. with and into the Company |  | 10-Q |  | 333-161943 |  | 3.4 |  | 04/15/2019
3.7 |  | Bylaws |  | 10-Q |  | 333-161943 |  | 3.5 |  | 04/15/2019
3.8 |  | Certificate of Designation for Series F Convertible Preferred Stock |  | 8-K |  | 333-161943 |  | 3.1 |  | 10/02/2020
3.9 |  | Certificate of Cancellation of Series F Preferred Stock of Better Choice |  | 8-K |  | 001-40477 |  | 3.10 |  | 08/11/2022
3.10 |  | Certificate of Merger of TruPet LLC with and into Halo, Purely for Pets, Inc. |  | 10-Q |  | 001-40477 |  | 3.10 |  | 08/11/2022
4.7† |  | Better Choice Company Inc. Amended and Restated 2019 Incentive Award Plan |  | 10-K |  | 333-161943 |  | 10.19 |  | 05/04/2020
4.8† |  | Form of 2019 Incentive Award Plan Stock Option Agreement |  | S-1 |  | 333-234349 |  | 10.7 |  | 10/28/2019
10.1† |  | Form of Indemnification Agreement by and among the Company and its officers and directors |  | S-1 |  | 333-234349 |  | 10.8 |  | 10/28/2019
10.18 †# |  | Separation Agreement, dated as of September 14, 2022, by and between the Company and Scott Lerner |  | 10-Q |  | 001-40477 |  | 10.18 |  | 11/10/2022
10.19 †# |  | Advisory Consulting Agreement, dated as of November 2, 2022, by and between the Company and Lionel F. Conacher |  | 10-Q |  | 001-40477 |  | 10.19 |  | 11/10/2022
10.21 † |  | Interim Officer Agreement, dated as of March 20, 2023, by and between Carolina Martinez and Better Choice Company, Inc. |  | 8-K |  | 001-40477 |  | 10.1 |  | 03/21/2023
10.22 † |  | Employment Agreement, dated as of May 22, 2023, by and between Kent Cunningham and Better Choice Company, Inc. |  | 8-K |  | 001-40477 |  | 10.2 |  | 05/16/2023
10.24 † |  | Account Purchase Agreement, dated as of June 21, 2023, by and between Wintrust Receivables Finance, a division of Wintrust Bank N.A., and Halo, Purely for Pets, Inc. |  | 8-K |  | 001-40477 |  | 10.9 |  | 06/21/2023
10.28 |  | Arrangement Agreement, dated September 3, 2024, between Better Choice Company Inc., and SRx Health Solutions, Inc., as amended December 6, 2024, January 24, 2025 and February 25, 2025 |  | 8-K |  | 001-40477 |  | 10.1 |  | 09/09/2024
21.1 * |  | Subsidiaries of the Company |  | 10-K |  | 001-40477 |  | 21.1 |  | 03/28/2023
19* |  | Insider Trading Policy |  |  |  |  |  |  |  |
24.1 * |  | Power of Attorney (included on the signature page to this report) |  |  |  |  |  |  |  |
31.1 * |  | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |  |  |  |  |  |  |  |
31.2 * |  | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |  |  |  |  |  |  |  |
32.1 * |  | Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  |  |  |  |  |  |  |
101 * |  | The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 formatted in Inline Extensible Business Reporting Language (“iXBRL”): (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) related notes, tagged as blocks of text and including detailed tags. |  |  |  |  |  |  |  |
104 * |  | Cover page from the Company’s Annual Report on Form 10-K for the year ended March 31, 2025, formatted in iXBRL (included as Exhibit 101). |  |  |  |  |  |  |  |

† | Indicates a management contract or any compensatory plan, contract or arrangement.

* | Filed or furnished herewith.

# | Certain schedules and similar attachments to this agreement have been omitted in accordance with Item 601(b)(5) of Regulation S-K. The Company will furnish copies of any schedules or similar attachments to the SEC upon request.

*** | Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.

32

Table of Contents

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| BETTER CHOICE COMPANY INC.
Date: May 15, 2025 | By: | /S/ KENT CUNNINGHAM
|  | Kent Cunningham
|  | Chief Executive Officer (Principal Executive Officer)
Date: May 15, 2025 | By: | /S/ CAROLINA MARTINEZ
|  | Carolina Martinez
|  | Chief Financial Officer (Principal Financial and Accounting Officer)

33