Annual report [Section 13 and 15(d), not S-K Item 405]

Segment information

v3.25.1
Segment information
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
Segment information

Note 18 – 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 consolidated statement of operations. The CODM also evaluates significant segment expenses, which consist of the following (in thousands):

 

 Schedule of Segment information

             
    Twelve months Ended December 31,  
    2024     2023  
Net sales   $ 34,975     $ 38,592  
Cost of goods sold:                
Direct     20,998       25,274  
Indirect     988       1,521  
Total cost of goods sold     21,986       26,795  
Gross profit     12,989       11,797  
Segment expenses:                
Discretionary marketing     5,885       6,233  
Outbound freight     511       1,318  
Other segment expenses (a)     12,560       25,425  
Total segment expenses    

18,956

      

32,976

  
Loss from operations   (5,967 )   (21,179 )
Other income (expense):                
Interest expense     (467 )     (1,353 )
Change in fair value of warrant liabilities     —       (236 )
Gain on extinguishment of debt and accounts payable     6,206       —  
Other income     69       —  
Total other income (expense)     5,808       (1,589 )
Net loss before income taxes     (159 )     (22,768 )
Income tax expense     (9 )     (2 )
Net loss   $ (168 )   $ (22,770 )

 

(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.

 

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:

    2024     2023  
    Year Ended December 31,  
    2024     2023  
United States   $ 17,795     $ 23,568  
China     12,808       11,000  
Other     4,372       4,024  
Total   $ 34,975     $ 38,592