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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 WASHINGTON,
D.C. 20549

 FORM

 (Mark
One)

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

 For
the Fiscal Year Ended December 31, 2023

 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

 (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

 Stock, $0.001 par value share

 BTTR

 NYSE
 American

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

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

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

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

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

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.

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.

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).

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

 The
aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, as of the last business day
of the registrant's most recently completed third fiscal quarter, based on the closing sale price of $4.96 as reported on the
NYSE American was: $ 3,615,969.

 The
number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date was: 893,601
shares of $0.001 par value common stock outstanding as of April 11, 2024.

 DOCUMENTS
INCORPORATED BY REFERENCE:

 The
information required by Items 10, 11, 12, 13, and 14 will be furnished (and are hereby incorporated) by an amendment hereto or pursuant
to a definitive proxy statement pursuant to Regulation 14A that will contain such information.

 Annual
Report on Form 10-K for the Fiscal Year Ended December 31, 2023

 TABLE
OF CONTENTS

 1.

 Business

 1A.

 Risk Factors

 1B.

 Unresolved Staff Comments

 1C.

 Cybersecurity

 2.

 Properties

 3.

 Legal Proceedings

 4.

 Mine Safety Disclosures

 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 6.

 [Reserved]

 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 8.

 Financial Statements and Supplementary Data

 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 9A.

 Controls and Procedures

 9B.

 Other Information

 10.

 Directors, Executive Officers and Corporate Governance

 11.

 Executive Compensation

 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 13.

 Certain Relationships and Related Transactions, and Director Independence

 14.

 Principal Accountant Fees and Services

 15.

 Exhibits and Financial Statement Schedules

 16.

 Form 10-K Summary

 Signatures

 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;

 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

 other
 factors discussed under the headings "Risk Factors," "Business,"
 and "Management's Discussion and Analysis of Financial Condition and Results
 of Operations" in this Annual Report on Form 10-K.

 While
we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is
impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to
differ materially from our expectations, or cautionary statements, are disclosed under "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in this report. All forward-looking statements are expressly
qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this report in
the context of these risks and uncertainties.

 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 Annual Report on Form 10-K is, to our knowledge, owned by such other company. Solely
for convenience, our trademarks and trade names referred to in this Annual Report on Form 10-K 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.

 PART
I

 ITEM 1.

 BUSINESS

 Our
History

 On
December 17, 2018, Better Choice Company, Inc. (the "Company", or "Better Choice") made a $2.2 million investment
in TruPet LLC ("TruPet"), an online seller of pet foods, pet nutritional products and related pet supplies. On February 2,
2019, the Company entered into a definitive agreement to acquire the remainder of TruPet and closed the acquisition on May 6, 2019.

 On
February 28, 2019, Better Choice entered into a definitive agreement to acquire all of the outstanding shares of Bona Vida, Inc. ("Bona
Vida") and closed the acquisition on May 6, 2019.

 On
October 15, 2019, Better Choice entered into a Stock Purchase Agreement (as amended, the "Halo Agreement") with Halo, Thriving
Paws, LLC, a Delaware limited liability company ("Thriving Paws"), HH-Halo LP, a Delaware limited partnership ("HH-Halo"
and, together with Thriving Paws, the "Sellers") and HH-Halo, in the capacity of the representative of the Sellers. Pursuant
to the terms and subject to the conditions of the Halo Agreement, among other things, the Company agreed to purchase from the Sellers
100% of the issued and outstanding capital stock of Halo, Purely for Pets, Inc. ("Halo") (the "Halo Acquisition").
The Company closed the Halo Acquisition on December 19, 2019.

 Overview
of Our Business

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 has been 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 four distinct categories: E-commerce, which includes the sale of product to online retailers
such as Amazon and Chewy; Brick & Mortar, which primarily includes the sale of product to Pet Specialty retailers such as Petco,
Pet Supplies Plus and neighborhood pet stores, as well as to select grocery chains; Direct to Consumer ("DTC") which includes
the sale of product through our website halopets.com; and International, which includes the sale of product to foreign distribution partners
and to select international retailers. In December 2023, the Company made a strategic exit out of Petco stores (while remaining on Petco.com), and Pet Supplies
Plus. As of Q1 2024, the Company has made plans to exit its DTC channel in Q2 2024, in an effort to improve profitability.

 New
product innovation represents the cornerstone of our growth plan, supported by our own research and development, and acquisitions. Our
established supply and distribution infrastructure allows us to bring new products to market in nine months, generally. Our outsourced
manufacturing model is flexible, scalable and encourages innovation allowing us to offer a breadth of assortment in dog and cat food
products under the Halo brand, serving a wide variety of customer needs.

 Halo
is the brand for a new generation of pet parents. For millennial pet parents who view their pets as children, we believe Halo provides
the world's best nutrition for the world's best kids. Halo offers two premium sub-lines of natural dog and cat food for this
audience - Halo Holistic, which includes the former TruDog brand, and Halo Elevate.

 Halo
Holistic is designed for the pet parent seeking high-quality ingredients for digestive health. Halo Holistic is the only super-premium
pet food certified by the Global Animal Partnership and the Marine Stewardship Council, both of which are animal welfare organizations
recognized worldwide. Halo Holistic also supports complete digestive health with prebiotics, probiotics and postbiotics. Additionally,
it's made with whole animal proteins only and no meat meals.

 Halo
Elevate, our second sub-line which launched during 2022, provides best-in-class nutrition. We believe it's the only natural
pet food with leading nutrient levels to support the top five pet parent health concerns which include digestive health, heart and immunity
support, healthy skin and coat, hip and joint support and strength and energy. Each recipe delivers natural, science-based nutrition
for optimal health. Both Halo Holistic and Halo Elevate provide confidence and validation to empower millennial pet parents.

 Our
Products and Brands

 We
have a broad portfolio of over 100 active premium and super premium animal health and wellness products for dogs and cats, which includes
products sold under the Halo brand across multiple forms, including foods, treats, toppers, dental products, chews, and supplements.
Our products consist of naturally formulated premium kibble and canned dog and cat food, freeze-dried raw dog food and treats, vegan
dog food and treats, oral care products and supplements. Our products are sustainably sourced, derived from real whole meat and no rendered
meat meal and include non-GMO fruits and vegetables.

 Our
products are manufactured by an established network of co-manufacturers in partnership with Better Choice. We have maintained each of
our key co-manufacturing relationships for more than four years, with certain relationships in place for more than ten years and with
the launch of Halo Elevate, we expanded and engaged two new co-manufacturing partners in 2022.

 Our
Customers and Channels

 In
2023, we generated $48.6 million of gross sales and $38.6 million of net sales. By channel in 2023, E-Commerce generated approximately
$19.1 million of gross sales and $13.4 million of net sales, Direct-to-Consumer generated approximately $6.4 million of gross sales and
$5.6 million of net sales, Brick & Mortar generated approximately $9.4 million of gross sales and $5.9 million of net sales and International
generated approximately $13.7 million of gross sales and $13.7 million of net sales. The following chart provides a breakdown of our
net sales by channel for the year ended December 31, 2023:

 In
2023, approximately 50% of our net sales were made online, through a combination of E-commerce partner websites, such as Amazon, Chewy,
Petflow, Thrive Market and Vitacost, and our DTC website, hosted on Shopify. A majority of our online sales are driven by repeat purchases
from existing customers. In Packaged Facts' Surveys of Pet Owners, pet products and services are at the bottom of the list of household
spending cutbacks, second only to human medicine and healthcare. Reflecting both the higher prices and Americans' deep commitments
to their pets, pet parents remain tenacious when it comes to pet care, with 68% spending more in February 2023 vs. January 2022 even
as they looked for ways to economize. We anticipate our ability to reach a growing base of diverse customers online will continue to
improve as E-commerce penetration increases.

 In
addition to our domestic sales channels, the Halo brand's international sales declined (37)% in 2023, resulting primarily in an
effort to normalize inventory levels in our key Asian markets as well as macroeconomic factors impacting consumer behavior. With increasing
levels of economic financial status in the Asian markets and demand for premium and super-premium, western manufactured products, with
China representing the largest market opportunity for growth and 80% of Better Choice's $13.7 million of international sales in
2023.

 Supply
Chain, Manufacturing and Logistics

 Halo
partners with a number of co-manufacturing partners to produce its products. Products sold today under the Halo brand are made strictly
from naturally raised animals on sustainable farms and are manufactured in the U.S and use healthy, natural ingredients, with all purchases
transacted in U.S. dollars. By sourcing cage-free poultry, pasture-raised beef, and wild-caught fish from certified sustainable fisheries
and not including meat meals or other animal byproducts in its formulations, our Halo brand is able to provide pets and pet parents with
a nutritious and highly digestible suite of food and treats. Some products are preserved using either freeze drying or gentle air dehydration
to eliminate the need for artificial preservatives and added chemicals. Our treats and chews are oven-baked, using natural ingredients
for maximum nutrition and protein content. Halo's dog and cat foods meet The Association of American Feed Control Officials ("AAFCO")
guidelines and are small-batch tested for common contaminants prior to leaving the manufacturer.

 We
utilize logistics service providers as a part of our supply chain, primarily for shipping and logistics support. Fulfillment of orders
is managed by a third-party warehousing and logistics partner, Fidelitone. Our warehouse was located in Lebanon, Tennessee throughout
2021 and relocated to Wauconda, Illinois in 2022. Our DTC ecosystem allows us to efficiently manage and customize the online shopping
experience for customers, including a customer dashboard where shoppers can manage and track orders and order history. Our products are
shipped by trusted carriers for expeditious and reliable delivery.

 Raw
Materials and Principal Suppliers

 We
rely upon the supply of raw materials that meet our high-quality specifications and sourcing requirements. We source Global Animal Partnership
("GAP") certified cage-free chicken, GAP certified cage-free turkey, Marine Stewardship Council ("MSC") certified
wild-caught salmon and whitefish and select non-GMO fruits and vegetables, such as peas, sweet potatoes and lentils. If any raw material
is adulterated and does not meet our specifications, it could significantly impact our ability to source manufactured products and could
materially and adversely impact our business, financial condition and results of operations.

 For
the supply and co-manufacturing of our products, we have relied on: Alphia, Inc. ("Alphia" f/k/a "C.J. Foods")
for dry kibble which transitioned to Barrett Petfood Innovations during 2022, then back to Alphia during 2023; Simmons Pet Food, Inc.
("Simmons") and Thai Union Manufacturing Co., LTD. for canned wet food; BrightPet Nutrition Group, LLC ("BrightPet")
for vegan kibble and freeze dried treats; Carnivore Meat Company, LLC ("Carnivore") for the supply and co-manufacturing of
freeze-dried food and treats. We sourced approximately 64% of inventory purchases from two vendors for the year ended December 31, 2023
and approximately 69% from three vendors for the year ended December 31, 2022.

 Sales
and Marketing

 Our
marketing strategies are designed to clearly communicate to consumers about the benefits of our products and to build awareness of our
brands. We deploy a broad set of marketing tools across various forms of media to reach consumers through multiple touch points and engage
with a number of marketing agencies to develop content and product packaging. Our marketing initiatives include the use of social and
digital marketing, Search Engine Optimization, email and SMS marketing, and paid media (Facebook, Instagram & YouTube), among other
proven strategies to generate and convert sales prospects into loyal, satisfied customers. In addition to directly targeting and educating
consumers of our products, we partner with a number of retailers such as Amazon, Chewy and Petco to develop joint sales and marketing
initiatives to increase sales and acquire new customers.

 In
recent years, consumer purchasing behaviors have shifted dramatically and E-Commerce penetration has significantly increased. In the
fourth quarter of 2023, management shifted from a Brick & Mortar channel focus to a digital first strategy as a result of its annual
operating plan process and has strategically reallocated marketing investments to work more effectively and efficiently in its larger
e-commerce platforms to drive growth and brand awareness.

 Competition

 The
pet health and wellness industry is highly competitive. Competitive factors include product quality, ingredients, brand awareness and
loyalty, product variety, product packaging and design, reputation, price, advertising, promotion, and nutritional claims. We believe
that we compete effectively with respect to each of these factors. We compete with manufacturers of conventional pet food such as Mars,
Nestl and Big Heart Pet Brands (part of the J.M. Smucker Company), and manufacturers of specialty and natural pet food such as
Blue Buffalo (part of General Mills), Wellness, Fromm, Orijen, Merrick (part of Nestl), Stella and Chewy, Open Farm and Freshpet.
In addition, we compete with many regional niche brands in individual geographic markets.

 Employees
and Human Capital Resources

 As
of December 31, 2023, we had 31 full time employees and one part time employee. Our human capital resource objectives include, as applicable,
identifying, recruiting, retaining, incentivizing and integrating our existing and additional employees. The principal purposes of our
equity incentive plans are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based
compensation awards. Our employees are not represented by any labor union or any collective bargaining arrangement with respect to their
employment with us. We have never experienced any work stoppages or strikes as a result of labor disputes and we believe our overall
relationships with our employees are positive and the strength of our team is a critical success factor in becoming the most innovative
premium pet food company in the world. Our employees share an entrepreneurial spirit, a passion for excellence and the inspiration to
drive the future of the pet health and wellness industry.

 Our
core values are Integrity, Respect, Working Smarter and Faster and Building Lasting Relationships in all that we do. We continually focus
on employee engagement and a diverse, inclusive culture in order to ensure the continued strength and well-being of our workforce. We
strive to create a workplace where employees feel engaged, believe in our mission, understand their role in our strategy and are passionate
about the work they do. We conduct employee engagement surveys to provide us with valuable insights into employee perspectives and experiences.
We also hold frequent virtual town-hall meetings and team building events to provide updates, celebrate milestones in the business, communicate
initiatives, recognize significant individual accomplishments and provide a forum for employees to communicate and engage with our entire
employee base. We value and embrace diversity by fostering a culture that encompasses the unique attributes, ideas, perspectives, and
experiences of our employees, customers, suppliers and communities. We believe a more inclusive and diverse work environment allows us
to achieve better results and makes us a stronger business.

 We
operate under a "Win From Anywhere" culture, which is our approach to creating a flexible and entrepreneurial working environment
built for long term success. Winning from anywhere means our employees can work from anywhere in the country. We believe this culture
provides the ability for us to attract the best talent and we now have employees all over the U.S. that are winning from anywhere.

 Government
Regulation

 The
regulation of animal food products is complex, multi-faceted, and continually changing. The U.S. Food and Drug Administration ("FDA"),
the U.S. Federal Trade Commission ("FTC"), the U.S. Department of Agriculture ("USDA") and other regulatory authorities
at the federal, state and local levels, as well as authorities in foreign countries, extensively regulate, among other things, the research,
development, testing, composition, manufacture, import, export, labeling, storage, distribution, promotion, marketing, and post-market
reporting of animal foods. We are required to navigate a complex regulatory framework in the locations in which we wish to manufacture,
test, import, export, or sell our products.

 FDA
Regulation of Animal Foods

 The
FDA regulates foods, including foods intended for animals, under the Federal Food, Drug and Cosmetic Act ("FDCA") and its
implementing regulations. The FDCA defines "food" as articles used for food or drink for man or other animals, which includes
products that are intended primarily for nutritional use, taste, or aroma and the components of such products. For animal foods in particular,
this definition applies based on their intended use regardless of labelling as animal food, treats, or supplements. The FDA also imposes
certain requirements on animal foods relating to their composition, manufacturing, labeling, and marketing. Among other things, the facilities
in which our products and ingredients are manufactured must register with the FDA, comply with current good manufacturing practices ("cGMPs")
and comply with a range of food safety requirements.

 Although
pet foods are not required to obtain premarket approval from the FDA, any substance that is added to or is expected to become a component
of a pet food must be used in accordance with a food additive regulation, unless it is generally recognized as safe ("GRAS")
under the conditions of its intended use or if it appears on an FDA-recognized list of acceptable animal food ingredients in the Official
Publication of AAFCO. A food may be adulterated if it uses an ingredient that is neither GRAS nor an approved food additive, and that
food may not be legally marketed in the U.S.

 The
labeling of pet foods is regulated by both the FDA and state regulatory authorities. FDA regulations require proper identification of
the product, a net quantity statement, a statement of the name and place of business of the manufacturer or distributor and proper listing
of all the ingredients in order of predominance by weight. The FDA also considers certain specific claims on pet food labels to be medical
claims and therefore subject to prior review and approval by the FDA. The FDA has a list of specific factors it will consider in determining
whether to initiate enforcement action against such products if they do not comply with the regulatory requirements applicable to drugs,
including, among other things, whether the product is only made available through or under the direction of a veterinarian and does not
present a known safety risk when used as labeled. The FDA may classify some of our products differently than we do and may impose more
stringent regulations which could lead to possible enforcement action.

 Under
the FDCA, the FDA may require the recall of an animal food product if there is a reasonable probability that the product is adulterated
or misbranded, and the use of or exposure to the product will cause serious adverse health consequences or death. In addition, pet food
manufacturers may voluntarily recall or withdraw their products from the market. If the FDA believes that our products are adulterated,
misbranded or otherwise marketed in violation of the FDCA, the agency make take further enforcement action, including: restrictions on
the marketing or manufacturing of a product; required modification of promotional materials or issuance of corrective marketing information;
issuance of safety alerts, press releases, or other communications containing warnings or other safety information about a product; warning
or untitled letters; product seizure or detention; refusal to permit the import or export of products; fines, injunctions, or consent
decrees; and/or imposition of civil or criminal penalties.

 Chinese
Regulations

 General
Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China ("AQSIQ") is responsible
for the unified inspection and quarantine of imported pet food (also referred to in the regulations as "Feed"). Only registered
pet food manufacturers from AQSIQ approved countries (which includes the U.S.) can import pet food to China, and may do so only if they
have first received an import registration certificate from the Ministry of Agriculture ("MOA"). In order to obtain an import
registration certificate, a manufacturer must submit standardized application materials (in both English and Chinese) along with product
samples to the MOA for approval, and if approved, such import registration certificate shall be valid for five years. Overseas companies
are also prohibited from engaging in the direct sale of imported pet food within the territory of China and should establish a sales
organization or appoint a sales agent within the territory of China and file a record with the MOA within six months from the date the
manufacturer obtains its import registration certificate. All imported pet food must be packaged, and the packaging must comply with
China's safety and hygiene regulation and must have Chinese labels that are in conformity with the relevant regulations.

 We
are also subject to labor and employment laws, laws governing advertising, privacy laws, safety regulations and other laws, including
consumer protection regulations that regulate retailers or govern the promotion and sale of merchandise. Our operations, and those of
our distributors and suppliers, are subject to various laws and regulations relating to environmental protection and worker health and
safety matters. We monitor changes in these laws and believe that we are in material compliance with applicable laws. See additional
information under the heading "Risks Related to the Regulation of our Business and Products" in this Annual Report on Form
10-K for a discussion of risks relating to federal, state, local and international regulation of our business.

 Our
Trademarks and Other Intellectual Property

 We
believe that our intellectual property has substantial value and has contributed significantly to the success of our business. Our trademarks
are valuable assets that reinforce our brand, our sub-brands and our consumers' perception of our products. The current registrations
of these trademarks in the U.S. and foreign countries are effective for varying periods of time and may be renewed periodically, provided
that we, as the registered owner, or our licensees where applicable, comply with all applicable renewal requirements including, where
necessary, the continued use of the trademarks in connection with the goods or services identified in the applicable registrations. In
addition to trademark protection, we have registered more than 100 domain names, including www.betterchoicecompany.com, www.halopets.com,
www.trupet.com, www.trudog.com and www.rawgo.com, that are important to the successful implementation of our marketing and advertising
strategy. We rely on and carefully protect unpatented proprietary expertise, recipes and formulations, continuing innovation and other
trade secrets to develop and maintain our competitive position.

 Corporate

 We
were incorporated in the State of Nevada in 2001 under the name Cayenne Construction, Inc., and in 2009, changed our name to Sports Endurance,
Inc. Effective March 11, 2019, we changed our name to Better Choice Company Inc. after reincorporating in Delaware. We have three subsidiaries
- Halo, Purely for Pets, Inc., Bona Vida, Inc. and Wamore Corporation S.A. Our principal executive offices are located at 12400 Race
Track Road, Tampa, FL 33626. Our website is available at  Our website and the information
contained on or connected to that site are not, and should not be deemed to be part of or incorporated into this Annual Report on Form
10-K.

 Available

 We
file annual, quarterly and current reports and other information with the SEC that are publicly available at www.sec.gov. Our
SEC filings are also available under the Investor Relations section of our website at www.betterchoicecompany.com as soon as reasonably
practicable after they are filed with or furnished to the SEC. Information contained on or connected to our website are not incorporated
into this Annual Report on Form 10-K.

 ITEM 1A. RISK FACTORS

 As
a smaller reporting company, we are not required to provide a statement of risk factors. Nonetheless, we are voluntarily providing risk
factors herein. You should consider carefully the following risk factors, together with all the other information in this Annual Report
on Form 10-K, and in our other public filings with the SEC. The occurrence of any of the following risks could harm our business, financial
condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking
statements we have made in this report and those we may make from time to time. You should consider all of the risk factors described
when evaluating our business.

 Risks
Related to Our Business and Industry

 Increases
in sourcing, manufacturing, freight and/or warehousing costs, supply shortages, interruption in our sourcing operations and/or supply
changes could have an adverse effect on our business, financial condition, and operating results.

 Our
products are sourced from a limited number of independent third-party suppliers, which we depend upon for the manufacture of all our
products. Some of the ingredients, packaging materials, and other products we purchase may only be available from a single supplier or
a limited group of suppliers. While alternate sources of supply are generally available, the supply and price are subject to market conditions
and are influenced by other factors beyond our control. We do not have long-term contracts
with many of our suppliers, and therefore they could increase prices or cease doing business with us. As a result, we may be subject
to price fluctuations or demand disruptions.

 The
prices of raw materials, packaging materials and freight are subject to fluctuations in price attributable to, among other things, global
competition for resources, weather conditions, changes in supply and demand of raw materials, or other commodities, fuel prices and government-sponsored
agricultural programs. Volatility in the prices of raw materials and other supplies we purchase could increase our cost of sales and
reduce our profitability, and we have no guarantees that prices will not rise. Our ability to pass along higher costs through price increases
to our customers is dependent upon competitive conditions and pricing methodologies employed in the various sales channels in which we
compete, and we may not be successful in implementing price increases. In addition, any price increases we do implement may result in
lower sales volumes. Customers and consumers may choose to shift purchases to lower-priced private label or other value offerings which
may adversely affect our results of operations.

 We
cannot control all of the various factors that might affect our ability to ship orders of our products to customers in a timely manner
or to meet our quality standards. Such factors include, among other things, natural disasters or adverse weather and climate conditions;
political and financial instability; strikes; unforeseen public health crises, including pandemics and epidemics such as the COVID-19
pandemic; acts of war or terrorism and other catastrophic events, whether occurring in the U.S. or internationally (including, without
limitation, the conflict in Ukraine). From time to time, a co-manufacturer may experience financial difficulties, bankruptcy or other
business disruptions, which could disrupt our supply of products or require that we incur additional expense by providing financial accommodations
to the co-manufacturer or taking other steps to seek to minimize or avoid supply disruption, such as establishing a new co-manufacturing
arrangement with another provider. Further, we may be unable to locate an additional or alternate co-manufacturing arrangement in a timely
manner or on commercially reasonable terms, if at all. Any delay, interruption or increased cost in the proprietary value-branded products
that might occur for any reason could affect our ability to meet customer demand, adversely affect our net sales, increase our cost of
sales and hurt our results of operations, which in turn may injure our reputation and customer relationships, thereby harming our business.

 Our
ability to meet increases in demand may be impacted by our reliance on our suppliers and we are subject to the risk of shortages and
long lead times. We may not be able to develop alternate sources in a timely manner. Therefore, we may not be able to source sufficient
product on terms that are acceptable to us, or at all, which may undermine our ability to fill our orders in a timely manner. The occurrence
of any of the foregoing could increase our costs, disrupt our operations, or could have a materially adverse impact on our business,
financial condition, results of operations or prospects.

 If
we fail to maintain and expand our brand, or the quality of our products that customers have come to expect, our business could suffer.

 The
continued development and maintenance of our brand and the quality of our products is critical to our success. We seek to maintain, extend,
and expand our brand image through marketing investments, including advertising and consumer promotions, and product innovation. Maintaining,
promoting and positioning our brand and reputation will depend on, among other factors, the success of preserving the quality of our
products, the availability of our products, marketing and merchandising efforts, the nutritional benefits provided to pets and our ability
to provide a consistent, high-quality customer experience.

 The
success of our brand may suffer if our marketing plans or product initiatives do not have the desired impact on our brand's image
or its ability to attract customers. Brand value is based on perceptions of subjective qualities, and any incident that erodes the loyalty
of our customers, suppliers or co-manufacturers, including adverse publicity or a governmental investigation or litigation, could significantly
reduce the value of our brand and significantly damage our business. Further, our brand value could diminish significantly due to a number
of factors, including consumer perception that we have acted in an irresponsible manner, adverse publicity about our products (whether
or not valid), our failure to maintain the quality of our products, product contamination, the failure of our products to deliver consistently
positive consumer experiences, inadequate labor conditions, health or safety issues at our co-manufacturers, or the products becoming
unavailable to consumers.

 If
we are unable to build and sustain brand equity by offering recognizably superior products, we may be unable to maintain premium pricing
over private label products. The growing use of social and digital media by consumers increases the speed and extent that information
and opinions can be shared. Negative posts or comments about us or our brands or products on social or digital media could damage our
brands and reputation. If we fail to maintain the favorable perception of our brands, our business, financial condition and results of
operations could be negatively impacted.

 We
may not be able to successfully implement and/or manage our growth strategy on a timely basis or we may not grow at all.

 Our
future success depends on our ability to implement our growth strategy of introducing new products and expanding into new markets and
attracting new consumers to our brand and sub-brands. Our ability to implement this growth strategy depends, among other things, on our
ability to: establish our brands and reputation as a well-managed enterprise committed to delivering premium quality products to the
pet health and wellness industry; partner with retailers and other potential distributors of our products; continue to effectively compete
in specialty channels and respond to competitive developments; continue to market and sell our products through a multi-channel distribution
strategy and achieve joint growth targets with our distribution partners; expand and maintain brand loyalty; develop new proprietary
value-branded products and product line extensions that appeal to consumers; maintain and, to the extent necessary, improve our high
standards for product quality, safety and integrity; maintain sources from suppliers that comply with all federal, state and local laws
for the required supply of quality ingredients to meet our growing demand; identify and successfully enter and market our products in
new geographic markets and market segments; execute value-focused pricing strategies; and attract, integrate, retain and motivate qualified
personnel. We may not be able to successfully implement our growth strategy and may need to change our strategy in order to maintain
our growth. If we fail to implement our growth strategy or if we invest resources in a growth strategy that ultimately proves unsuccessful,
our business, financial condition and results of operations may be materially adversely affected.

 If
we succeed in growing our business, such growth could strain our management team and capital resources. Our ability to manage operations
and control growth will be dependent on our ability to raise and spend capital to successfully attract, train, motivate, retain and manage
new members of senior management and other key personnel and continue to update and improve our management and operational systems, infrastructure
and other resources, financial and management controls, and reporting systems and procedures. Failure to manage our growth effectively
could cause us to misallocate management or financial resources, and result in additional expenditures and inefficient use of existing
human and capital resources. Such slower than expected growth may require us to restrict or cease our operations and go out of business.
Additionally, our anticipated growth will increase the demands placed on our suppliers, resulting in an increased need for us to manage
our suppliers and monitor for quality assurance and comply with all applicable laws. Any failure by us to manage our growth effectively
could impair our ability to achieve our business objectives.

 Our
recurring losses and significant accumulated deficit have raised substantial doubt regarding our ability to continue as a going concern.

 We
have experienced recurring operating losses, have a significant accumulated deficit and are required to maintain certain thresholds to
comply with the financial covenants associated with the Alphia Term Loan, including minimum liquidity, minimum EBITDA, and maximum marketing
spend ratio. We expect to continue to generate operating losses and consume cash resources in the near term. Without generating sufficient
cash flow from operations or additional debt or equity financing, these conditions raise substantial doubt about our ability to continue
as a going concern, meaning that we may be unable to continue operations for the foreseeable future or realize assets and discharge liabilities
in the ordinary course of operations. If we need to 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 obtain sufficient funding, our business, prospects, financial
condition and results of operations will be materially and adversely affected and we may be unable to continue as a going concern. If
we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those
assets are carried on our consolidated financial statements, and it is likely that investors will lose all or a part of their investment.

 If
our amortizable intangible assets become impaired, then we could be required to record a significant charge to earnings.

 We
evaluate intangible assets for impairment at least annually. We monitor the existence of potential impairment indicators throughout the
year and will evaluate for impairment whenever events or circumstances indicate that the fair value of a reporting unit is below its
carrying value. Factors that may be considered a change in circumstances indicating that the carrying value of our amortizable intangible
assets may not be recoverable include declines in stock price, market capitalization or cash flows, and slower growth rates in our industry.
Depending on the results of these evaluations, we could be required to record a significant charge to earnings in our consolidated financial
statements during the period in which any impairment of amortizable intangible assets were determined, negatively impacting our results
of operations.

 If
we do not successfully develop additional products and services, or if such products and services are developed but not successfully
commercialized, our business will be adversely affected.

 Our
success will depend, in part, on our ability to develop and market new products and improvements to our existing products. The process
of identifying and commercializing new products is complex, uncertain and may involve considerable costs, and if we fail to accurately
predict customers' changing needs and preferences, our business could be harmed. The success of our innovation and product development
efforts is affected by, among other things, the technical capability of our team; our ability to establish new supplier relationships
and third-party consultants in developing and testing new products, and complying with governmental regulations; our attractiveness as
a partner for outside research and development scientists and entrepreneurs; and the success of our management and sales team in introducing
and marketing new products.

 We
have already and may have to continue to commit significant resources to commercializing new products before knowing whether our investments
will result in products the market will accept. Substantial promotional expenditures may be required to introduce new products to the
market, or improve our market position. To remain competitive and expand and keep shelf placement for our products, we may need to increase
our advertising spending to maintain and increase consumer awareness, protect and grow our existing market share or promote new products,
which could affect our operating results. We may not always be able to respond quickly and effectively to changes in customer taste and
demand due to the amount of time and financial resources that may be required to bring new products to market, which could result in
our competitors taking advantage of changes in customer trends before we are able to and harm our brand and reputation.

 Furthermore,
developing and commercializing new products may divert management's attention from other aspects of our business and place a strain
on management, operational and financial resources, as well as our information systems. We may not execute successfully on commercializing
those products because of errors in product planning or timing, technical hurdles that we fail to overcome in a timely fashion, or a
lack of appropriate resources. Launching new products or updating existing products may also leave us with obsolete inventory that we
may not be able to sell or we may sell at significantly discounted prices. If we are unable to successfully develop or otherwise acquire
new products, our business, financial condition and results of operations may be materially adversely affected.

 Because
we are engaged in a highly competitive business, if we are unable to compete effectively, our results of operations could be adversely
affected.

 The
pet health and wellness industry is highly competitive. We compete on the basis of product and ingredient quality, product availability,
palatability, brand awareness, loyalty and trust, product variety and innovation, product packaging and design, reputation, price and
convenience and promotional efforts. The pet products and services retail industry has become increasingly competitive due to the expansion
of pet-related product offerings by certain supermarkets, warehouse clubs, and other mass and general retail and online merchandisers
and the entrance of other specialty retailers into the pet food and pet supply market, which makes it more difficult for us to compete
for brand recognition and differentiation of our products and services. We face direct competition from companies that sell various pet
health and wellness products at a lower price point and distribute such products to traditional retailers, which are larger than we are
and have greater financial resources. Price gaps between products may result in market share erosion and harm our business. Our current
and potential competitors may also establish cooperative or strategic relationships amongst themselves or with third parties that may
further enhance their resources and offerings. Further, it is possible that domestic or foreign companies, some with greater experience
in the pet health and wellness industry or greater financial resources than we possess, will seek to provide products or services that
compete directly or indirectly with ours in the future.

 Many
of our competitors may have longer operating histories, greater brand recognition, larger fulfillment infrastructures, greater technical
capabilities, significantly greater financial, marketing and other resources and larger customer bases than we do. These factors may
allow our competitors to derive greater net sales and profits from their existing customer base, acquire customers at lower costs or
respond more quickly than we can to new or emerging technologies and changes in consumer preferences or habits. These competitors may
engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive
pricing policies, which may allow them to build larger customer bases or generate net sales from their customer bases more effectively
than we do.

 Our
competitors may be able to identify and adapt to changes in consumer preferences more quickly than us due to their resources and scale.
They may also be more successful in marketing and selling their products, better able to increase prices to reflect cost pressures and
better able to increase their promotional activity, which may impact us and the entire pet health and wellness industry. Increased competition
as to any of our products could result in price reduction, increased costs, reduced margins and loss of market share, which could negatively
affect our profitability. While we believe we are better equipped to customize products for the pet health and wellness market generally
as compared to other companies in the industry, there can be no assurance that we will be able to successfully compete against these
other companies. Expansion into markets served by our competitors and entry of new competitors or expansion of existing competitors into
our markets could materially adversely affect our business, financial condition and results of operations.

 If
we fail to attract new customers, or retain existing customers, or fail to do either in a cost-effective manner, we may not be able to
increase sales.

 We
are highly dependent on the effectiveness of our marketing messages and the efficiency of our advertising expenditures in generating
consumer awareness and sales of our products. We may not always be successful in developing effective messages and new marketing channels,
as consumer preferences and competition change, and in achieving efficiency in our advertising expenditures. We depend heavily on internet-based
advertising to market our products through internet-based media and e-commerce platforms. If we are unable to continue utilizing such
platforms, if those media and platforms diminish in importance or size, or if we are unable to direct our advertising to our target consumer
groups, our advertising efforts may be ineffective, and our business could be adversely affected. The costs of advertising through these
platforms have increased significantly, which could decrease efficiency in the use of our advertising expenditures, and we expect
these costs may continue to increase in the future.

 Consumers
are increasingly using digital tools as a part of their shopping experience. As a result, our future growth and profitability will depend
in part on:

 the
 effectiveness and efficiency of our online experience for disparate worldwide audiences,
 including advertising and search optimization programs in generating consumer awareness and
 sales of our products;

 our
 ability to prevent confusion among consumers that can result from search engines that allow
 competitors to use or bid on our trademarks to direct consumers to competitors' websites;

 our
 ability to prevent Internet publication or television broadcast of false or misleading information
 regarding our products or our competitors' products;

 the
 nature and tone of consumer sentiment published on various social media sites; and

 the
 stability of our website and other e-commerce platforms we sell our products on. In recent
 years, a number of DTC, Internet-based retailers have emerged and have driven up the cost
 of basic search terms, which has and may continue to increase the cost of our Internet-based
 marketing programs.

 If
our marketing messages are ineffective or our advertising expenditures, geographic price-points, and other marketing programs, including
digital programs, are inefficient in creating awareness and consideration of our products and brand name and in driving consumer traffic
to our website or to our other sales channels, our sales, profitability, cash flows and financial condition may be adversely impacted.
In addition, if we are not effective in preventing the publication of confusing, false or misleading information regarding our brand
or our products, or if there arises significant negative consumer sentiment on social media regarding our brand or our products, our
sales, profitability, cash flows and financial condition may be adversely impacted.

 Food
safety and food-borne illness incidents may materially adversely affect our business by exposing us to lawsuits, product recalls or regulatory
enforcement actions, increasing our operating costs and reducing demand for our product offerings.

 Selling
food for consumption involves inherent legal and other risks, and there is increasing governmental scrutiny of and public awareness regarding
food safety. Unexpected side effects, illness, injury or death related to allergens, food-borne illnesses or other food safety incidents
caused by products we sell, or involving our suppliers or co-manufacturers, could result in the discontinuance of sales of these products
or our relationships with such suppliers or co-manufacturers, or otherwise result in increased operating costs, regulatory enforcement
actions or harm to our reputation. Shipment of adulterated or misbranded products, even if inadvertent, can result in criminal or civil
liability. Such incidents could also expose us to product liability, negligence or other lawsuits, including consumer class action lawsuits.
Any claims brought against us may exceed or be outside the scope of our existing or future insurance policy coverage or limits. Any judgment
against us that is more than our policy limits or not covered by our policies or not subject to insurance would have to be paid from
our cash reserves, which would reduce our capital resources.

 The
occurrence of food-borne illnesses or other food safety incidents could also adversely affect the price and availability of affected
ingredients, resulting in higher costs, disruptions in supply and a reduction in our sales. Furthermore, any instances of food contamination
or regulatory noncompliance, whether or not caused by our actions, could compel us, our suppliers, our distributors or our customers,
depending on the circumstances, to conduct a recall in accordance with FDA regulations, comparable state laws or foreign laws in jurisdictions
in which we operate. Food recalls could result in significant losses due to their costs, the destruction of product inventory, lost sales
due to the unavailability of the product for a period of time and potential loss of existing distributors or customers and a potential
negative impact on our ability to attract new customers due to negative consumer experiences or because of an adverse impact on our brand
and reputation. The costs of a recall could exceed or be outside the scope of our existing or future insurance policy coverage or limits.

 In
addition, food companies have been subject to targeted, large-scale tampering as well as to opportunistic, individual product tampering,
and we, like any food company, could be a target for product tampering. Forms of tampering could include the introduction of foreign
material, chemical contaminants and pathological organisms into consumer products as well as product substitution. FDA regulations require
companies like us to analyze, prepare and implement mitigation strategies specifically to address tampering (i.e., intentional adulteration)
designed to inflict widespread public health harm. If we do not adequately address the possibility, or any actual instance, of intentional
adulteration, we could face possible seizure or recall of our products and the imposition of civil or criminal sanctions, which could
materially adversely affect our business, financial condition and operating results.

 We
may not be able to manage our manufacturing and supply chain effectively, which may adversely affect our results of operations.

 We
must accurately forecast demand for all of our products in order to ensure that we have enough products available to meet the needs of
our customers. Our forecasts are based on multiple assumptions that may cause our estimates to be inaccurate and affect our ability to
obtain adequate co-manufacturing capacity in order to meet the demand for our products. If we do not accurately align our manufacturing
capabilities with demand, our business, financial condition and results of operations may be materially adversely affected.

 In
addition, we must continuously monitor our inventory and product mix against forecasted demand. If we underestimate demand, we risk having
inadequate supplies. We also face the risk of having too much inventory on hand that may reach its expiration date and become unsalable,
and we may be forced to rely on markdowns or promotional sales to dispose of excess or slow-moving inventory. If we are unable to manage
our supply chain effectively, our operating costs could increase and our profit margins could decrease.

 If
any of our independent shipping providers experience delays or disruptions, our business could be adversely affected.

 We
rely on independent shipping service providers to ship raw materials and products from our third-party suppliers and to ship products
from our manufacturing and distribution warehouses to our customers. Our utilization of any shipping companies that we may elect to use,
is subject to risks, including increases in fuel prices, employee strikes, organized labor activities and inclement weather, which may
impact the shipping company's ability to provide delivery services sufficient to meet our shipping needs. If we are not able to
negotiate acceptable terms with these companies or they experience performance problems or other difficulties, it could negatively impact
our operating results and customer experience.

 Our
intellectual property rights may be inadequate to protect our business.

 We
attempt to protect our intellectual property rights, both in the U.S. and in foreign countries, through a combination of patent, trademark,
copyright and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements. Because of
the differences in foreign trademark, patent and other laws concerning proprietary rights, our intellectual property rights may not receive
the same degree of protection in foreign countries as they would in the U.S. Our failure to obtain or maintain adequate protection of
our intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial
condition.

 We
also rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar technology
or otherwise obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we require employees,
consultants, advisors and collaborators to enter into confidentiality agreements. We cannot assure you that these agreements will provide
meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation
or disclosure of such trade secrets, know-how or other proprietary information. If we are unable to maintain the proprietary nature of
our technologies, we could be materially adversely affected.

 We
rely on our trademarks, trade names, and brand names to distinguish our products from the products of our competitors, and have registered
or applied to register many of these trademarks. We cannot assure you that our trademark applications will be approved. Third parties
may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully
challenged, we could be forced to rebrand our products, which could result in loss of brand recognition, and could require us to devote
significant additional resources to advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe
our trademarks, or that we will have adequate resources to enforce our trademarks.

 We
depend on the knowledge and skills of our senior management and other key employees, and if we are unable to retain and motivate them
or recruit additional qualified personnel, our business may suffer.

 We
have benefited substantially from the leadership and performance of our senior management, as well as other key employees. Our success
will depend on our ability to retain our current management and key employees, and to attract and retain qualified personnel in the future,
and we cannot guarantee that we will be able to retain our personnel or attract new, qualified personnel. In addition, we do not maintain
any "key person" life insurance policies. The loss of the services of members of our senior management or key employees could
prevent or delay the implementation and completion of our strategic objectives, or divert management's attention to seeking qualified
replacements.

 A
failure of one or more key information technology systems, networks or processes may materially adversely affect our ability to conduct
our business.

 The
efficient operation of our business depends on our information technology systems. We rely on our information technology systems to effectively
manage our sales and marketing, accounting and financial and legal and compliance functions, engineering and product development tasks,
research and development data, communications, supply chain, order entry and fulfillment and other business processes. We also rely on
third parties and virtualized infrastructure to operate and support our information technology systems. The failure of our information
technology systems, or those of our third-party service providers, to perform as we anticipate could disrupt our business and could result
in transaction errors, processing inefficiencies and the loss of sales and customers, causing our business and results of operations
to suffer.

 In
addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including
fire, natural disasters, power outages, systems failures, security breaches, cyber-attacks and computer viruses. The failure of our information
technology systems to perform as a result of any of these factors or our failure to effectively restore our systems or implement new
systems could disrupt our entire operation and could result in decreased sales, increased overhead costs, excess inventory and product
shortages and a loss of important information.

 Further,
it is critically important for us to maintain the confidentiality and integrity of our information technology systems. To the extent
that we have information in our databases that our customers consider confidential or sensitive, any unauthorized disclosure of, or access
to, such information could result in a violation of applicable data privacy and security, data protection, and consumer protection laws
and regulations, legal and financial exposure, damage to our reputation, a loss of confidence of our customers, suppliers and manufacturers
and lost sales. Despite the implementation of certain security measures, our systems may still be vulnerable to physical break-ins, computer
viruses, programming errors, attacks by third parties or similar disruptive problems. If any of these risks materialize, our reputation
and our ability to conduct our business may be materially adversely affected.

 We
rely heavily on third-party commerce platforms to conduct our businesses. If one of those platforms is compromised, our business, financial
condition and results of operations could be harmed.

 We
currently rely upon third-party commerce platforms, including Shopify. We also rely on e-mail service providers, bandwidth providers,
Internet service providers and mobile networks to deliver e-mail and "push" communications to customers and to allow customers
to access our website. Any damage to, or failure of, our systems or the systems of our third-party commerce platform providers could
result in interruptions to the availability or functionality of our website and mobile applications. As a result, we could lose customer
data and miss order fulfillment deadlines, which could result in decreased sales, increased overhead costs, excess inventory and product
shortages.

 In
the future, the loss of access to these third-party platforms, or any significant cost increases from operating on the marketplaces,
could significantly reduce our revenues, and the success of our business depends partly on continued access to these third-party platforms.
Our relationships with our third-party commerce platform providers could deteriorate as a result of a variety of factors, such as if
they become concerned about our ability to deliver quality products on a timely basis or to protect a third-party's intellectual
property. In addition, third-party marketplace providers could prohibit our access to these marketplaces if we are not able to meet the
applicable required terms of use. If for any reason our arrangements with our third-party commerce platform providers are terminated
or interrupted, such termination or interruption could adversely affect our business, financial condition, and results of operations.

 In
addition, we exercise little control over these providers, which increases our vulnerability to problems with the services they provide.
We could experience additional expense in arranging for new facilities, technology, services and support. The failure of our third-party
commerce platform providers to meet our capacity requirements could result in interruption in the availability or functionality of our
website and mobile applications, which could adversely affect our business and results of operations.

 We
may face difficulties as we expand our business and operations into jurisdictions in which we have no prior operating experience.

 We
plan in the future to expand our operations and business into jurisdictions outside of the jurisdictions where we currently carry on
business, including internationally. There can be no assurance that any market for our products will develop in any such foreign jurisdiction.
We may face new or unexpected risks or significantly increase our exposure to one or more existing risk factors, including economic instability,
new competition, changes in laws and regulations, including the possibility that we could be in violation of these laws and regulations
as a result of such changes, and the effects of competition.

 In
addition, it may be difficult for us to understand and accurately predict taste preferences and purchasing habits of consumers in new
markets. It is costly to establish, develop and maintain operations and develop and promote our brands in new jurisdictions. As we expand
our business into other jurisdictions, we may encounter regulatory, legal, personnel, technological and other difficulties that increase
our expenses and/or delay our ability to become profitable in such countries, which may have a material adverse effect on our business
and brand. These factors may limit our capability to successfully expand our operations in, or export our products to, those other jurisdictions.

 There
may be decreased spending on pets in a challenging economic climate.

 A
challenging economic climate, including adverse changes in interest rates, volatile commodity markets and inflation, contraction in the
availability of credit in the market and reductions in consumer spending, or a slow-down in the general economy or a shift in consumer
preferences to less expensive products may result in reduced demand for our products which may affect our profitability. Pet ownership
and the purchase of pet-related products may constitute discretionary spending for some consumers and any material decline in consumer
discretionary spending may reduce overall levels of spending on pets. As a result, a challenging economic climate may cause a decline
in demand for our products which could be disproportionate as compared to competing pet food brands since our products command a price
premium.

 Since
a significant portion of our revenue has been and is expected to be derived from China, a slowdown in economic growth in China could
adversely impact the sales of our products in China, which could have a material adverse effect on our results of operations and financial
condition. In addition, a deterioration in trade relations between the U.S. and China or other countries, or the negative perception
of U.S. brands by Chinese or other international consumers, could have a material adverse effect on our results of operations and financial
condition.

 If
economic conditions result in decreased spending on pets and have a negative impact on our suppliers or distributors, our business, financial
condition and results of operations may be materially adversely affected.

 Significant
merchandise returns or refunds could harm our business.

 We
allow our customers to return products or obtain refunds, subject to our return and refunds policy. If merchandise returns or refunds
are significant or higher than anticipated and forecasted, our business, financial condition, and results of operations could be adversely
affected. Further, we modify our policies relating to returns or refunds from time to time, and may do so in the future, which may result
in customer dissatisfaction and harm to our reputation or brand, or an increase in the number of product returns or the amount of refunds
we make.

 We
may seek to grow our company and business through acquisitions, investments or through strategic alliances and our failure to identify
and successfully integrate and manage these assets could have a material adverse effect on the anticipated benefits of the acquisition
and our business, financial condition or results of operations.

 We
expect to consider opportunities to acquire or make investments in new or complementary businesses, facilities, technologies or products,
or enter into strategic alliances, which may enhance our capabilities, expand our network, complement our current products or expand
the breadth of our markets. In 2019, we completed three significant acquisitions that involved the combination of three businesses that
historically have operated as independent companies. The success of these completed acquisitions and any future acquisitions will depend
in large part on the success of our management team in integrating the operations, strategies, technologies and personnel. Potential
and completed acquisitions, investments and other strategic alliances involve numerous risks, including: problems integrating the purchased
business, facilities, technologies or products; issues maintaining uniform standards, procedures, controls and policies; assumed liabilities;
unanticipated costs associated with acquisitions, investments or strategic alliances; diversion of management's attention from
our existing business; adverse effects on existing business relationships with suppliers, manufacturers, and retail customers; risks
associated with entering new markets in which we have limited or no experience; potential write-offs of acquired assets and/or an impairment
of any goodwill recorded as a result of an acquisition; potential loss of key employees of acquired businesses; and increased legal and
accounting compliance costs.

 We
may fail to realize some or all of the anticipated benefits of the acquisitions if the integration process takes longer than expected
or is more costly than expected. Our failure to meet the challenges involved in successfully integrating acquisitions, including the
operations of Halo, or to otherwise realize any of the anticipated benefits of the acquisitions could impair our financial condition
and results of operations. Furthermore, we do not know if we will be able to identify additional acquisitions or strategic relationships
we deem suitable or whether we will be able to successfully complete any such transactions on favorable terms or at all. Our ability
to successfully grow through strategic transactions depends upon our ability to identify, negotiate, complete and integrate suitable
target businesses, facilities, technologies and products and to obtain any necessary financing. These efforts could be expensive and
time-consuming and may disrupt our ongoing business.

 Premiums
for our insurance coverage may not continue to be commercially justifiable, and our insurance coverage may have limitations and other
exclusions and may not be sufficient to cover our potential liabilities.

 We
have insurance to protect our assets, operations and employees. While we believe our insurance coverage addresses all material risks
to which we are exposed and is adequate and customary in our current state of operations, such insurance is subject to coverage limits
and exclusions and may not be available for the risks and hazards to which we are exposed. No assurance can be given that such insurance
will be adequate to cover our liabilities or will be generally available in the future or, if available, that premiums will be commercially
justifiable. If we are unable to obtain such insurances or if we were to incur substantial liability and such damages were not covered
by insurance or were in excess of policy limits, we may be prevented from entering into certain business sectors, our growth may be inhibited,
and we may be exposed to additional risk and financial liabilities, which could have a material adverse effect on our business, results
of operations and financial condition could be materially adversely affected.

 Adverse
litigation judgments or settlements resulting from legal proceedings relating to our business operations could materially adversely affect
our business, financial condition and results of operations.

 From
time to time, we are subject to allegations, and may be party to legal claims and regulatory proceedings, relating to our business operations.
Such allegations, claims and proceedings may be brought by third parties, including our customers, employees, governmental or regulatory
bodies or competitors. Defending against such claims and proceedings, regardless of their merits or outcomes, is costly and time consuming
and may divert management's attention and personnel resources from our normal business operations, and the outcome of many of these
claims and proceedings cannot be predicted. If any of these claims or proceedings were to be determined adversely to us, a judgment,
a fine or a settlement involving a payment of a material sum of money were to occur, or injunctive relief were issued against us, our
reputation could be affected and our business, financial condition and results of operations could be materially adversely affected.

 If
third parties claim that we infringe upon their intellectual property rights, our business and results of operations could be adversely
affected.

 Any
claims of intellectual property infringement, even those without merit, could be expensive and time consuming to defend; could require
us to cease selling the products that incorporate the challenged intellectual property; could require us to redesign, reengineer, or
rebrand the product, if feasible; could divert management's attention and resources; or could require us to enter into royalty
or licensing agreements in order to obtain the right to use a third party's intellectual property. Any royalty or licensing agreements,
if required, may not be available to us on acceptable terms or at all.

 A
successful claim of infringement against us could result in our being required to pay significant damages, enter into costly license
or royalty agreements, or stop the sale of certain products, any of which could have a negative impact on our business, financial condition,
results of operations and our future prospects.

 Failure
to comply with the U.S. Foreign Corrupt Practices Act, other applicable anti-corruption and anti-bribery laws, and applicable trade control
laws could subject us to penalties and other adverse consequences.

 We
operate our business in part outside of the U.S. and our operations are subject to the U.S. Foreign Corrupt Practices Act (the "FCPA"),
as well as the anti-corruption and anti-bribery laws in the countries where we do business. In addition, we are subject to U.S. and other
applicable trade control regulations that restrict with whom we may transact business, including the trade sanctions enforced by the
U.S. Treasury, Office of Foreign Assets Control ("OFAC"). We also plan to expand our operations outside of the U.S. in the
future and our risks related to the FCPA will increase as we grow our international presence. Any violations of these anti-corruption
or trade controls laws, or even allegations of such violations, can lead to an investigation and/or enforcement action, which could disrupt
our operations, involve significant management distraction, and lead to significant costs and expenses, including legal fees. In addition,
our brand and reputation, our sales activities or our stock price could be adversely affected if we become the subject of any negative
publicity related to actual or potential violations of anti-corruption, anti-bribery or trade control laws and regulations.

 Our
ability to utilize our net operating loss carryforwards may be limited.

 Our
ability to utilize our federal net operating loss carryforwards and federal tax credit may be limited under Section 382 of the Code as
amended by the Tax Cut and Jobs Act (the "TCJA"). The limitations apply if we experience an "ownership change".
Similar provisions of state tax law may also apply. If we have experienced an ownership change at any time since our formation, we may
already be subject to limitations on our ability to utilize our existing net operating losses to offset taxable income. In addition,
future changes in our stock ownership, which may be outside of our control, may trigger an ownership change and, consequently, the limitations
under Section 382. As a result, if or when we earn net taxable income, our ability to use our pre-change net operating loss carryforwards
to offset such taxable income may be subject to limitations, which could adversely affect our future cash flows.

 We
may have material liabilities that have not been discovered since the closing of the acquisitions.

 As
a result of our acquisitions in 2019, the prior business plan and management relating to Better Choice Company was abandoned. We may
have material liabilities based on activities of our subsidiaries before the acquisitions that have not been discovered or asserted.
We could experience losses as a result of any such undisclosed liabilities that are discovered in the future, which could materially
harm our business and financial condition. Although the agreements entered into in connection with the acquisitions contains customary
representations and warranties from Bona Vida, Halo and TruPet concerning their assets, liabilities, financial condition and affairs,
there may be limited or no recourse against the pre-acquisition stockholders or principals in the event those representations prove to
be untrue. As a result, our current and future stockholders will bear some, or all, of the risks relating to any such unknown or undisclosed
liabilities.

 Risks
Related to the Regulation of our Business and Products

 We
and our co-manufacturers and suppliers are subject to extensive governmental regulation and may be subject to enforcement if we are not
in compliance with applicable requirements.

 We
and our third-party suppliers are subject to a broad range of foreign, federal, state and local laws and regulations governing, among
other things, the testing, development, manufacture, distribution, marketing and post-market reporting of animal foods. These include
laws administered by the FDA, the FTC, the USDA, and other federal, state and local regulatory authorities. Because we market food, supplements
and other products that are regulated as food and cosmetic care products for animals, we and the companies that manufacture our products
are subject to the requirements of the FDCA and regulations promulgated thereunder by the FDA. The FDCA and related regulations govern,
among other things, the manufacturing, composition, ingredients, packaging, labeling and safety of food for animals. The FDA requires
that facilities that manufacture animal food products comply with a range of requirements. If our third-party suppliers cannot successfully
manufacture products that conform to our specifications and the strict regulatory requirements, they may be subject to adverse inspectional
findings or enforcement actions, which could materially impact our ability to market our products, could result in their inability to
continue manufacturing for us or could result in a recall of our products that have already been distributed.

 If
the FDA or other regulatory authority determines that we or they have not complied with the applicable regulatory requirements, our business,
financial condition and results of operations may be materially adversely impacted. If we do not comply with labeling requirements, including
making unlawful claims about our products, we could be subject to public warning letters and possible further enforcement. Failure by
us or our co-manufacturers and suppliers to comply with applicable laws and regulations or to obtain and maintain necessary permits,
licenses and registrations relating to our or our partners' operations could subject us to administrative and civil penalties,
including fines, injunctions, recalls or seizures, warning letters, restrictions on the marketing or manufacturing of our products, or
refusals to permit the import or export of products, as well as potential criminal sanctions, which could result in increased operating
costs resulting in a material effect on our operating results and business. For further detail, refer to the information under "Item
1. Business—Government Regulation" in this Annual Report on Form 10-K.

 International
expansion of our business could expose us to substantial business, regulatory, political, financial and economic risks.

 We
currently conduct business and market products in the U.S., Canada and select Asian markets, including China. The expansion of our business
outside of the U.S. could expose us to substantial risks, which may include, but are not limited to, the following:

 political,
 social and economic instability;

 higher
 levels of credit risk, corruption and payment fraud;

 regulations
 that might add difficulties in repatriating cash earned outside the U.S. and otherwise prevent
 us from freely moving cash;

 import
 and export controls and restrictions and changes in trade regulations

 compliance
 with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar laws in other
 jurisdictions;

 multiple,
 conflicting and changing laws and regulations such as privacy, security and data use regulations,
 tax laws, trade regulations, economic sanctions and embargoes, employment laws, anti-corruption
 laws, regulatory requirements, reimbursement or payor regimes and other governmental approvals,
 permits and licenses;

 failure
 by us, our collaborators or our distributors to obtain regulatory clearance, authorization
 or approval for the use of our products in various countries;

 additional
 potentially relevant third-party patent rights;

 complexities
 and difficulties in obtaining intellectual property protection and enforcing our intellectual
 property;

 logistics
 and regulations associated with shipping samples and customer orders, including infrastructure
 conditions and transportation delays;

 the
 impact of local and regional financial crises;

 natural
 disasters, political and economic instability, including wars, terrorism and political unrest,
 and outbreak of disease;

 breakdowns
 in infrastructure, utilities and other services;

 boycotts,
 curtailment of trade and other business restrictions; and

 the
 other risks and uncertainties described in this Form 10K

 Any
of these factors could significantly harm our future international expansion and operations and, consequently, our revenue and results
of operations.

 Changes
in government regulations and trade policies may materially and adversely affect our sales and results of operations.

 The
U.S. or foreign governments may take administrative, legislative, or regulatory action that could materially interfere with our ability
to sell products in certain countries and/or to certain customers, particularly in China. As part of our attempt to broaden its customer
base, we have begun offering our products to Chinese consumers. Our decision to export products to China requires us to comply with Chinese
rules, laws, and regulations, as well as certain domestic and international laws relating to the import and export of goods to foreign
countries. These laws are often changing, and the costs associated with complying with these laws and regulations may adversely affect
us. Additionally, changes in the current laws may make importing products to China more difficult, which may also negatively affect our
business. Furthermore, changes in U.S. trade policy more generally could trigger retaliatory actions by affected countries, which could
impose restrictions on our ability to do business in or with affected countries or prohibit, reduce or discourage purchases of our products
by foreign customers. Changes in, and responses to, U.S. trade policy could reduce the competitiveness of our products, cause our sales
to decline and adversely impact our ability to compete, which could materially and adversely impact our business, financial condition
and results of operations.

 There
is significant uncertainty about the future relationship between the U.S. and China with respect to trade policies, treaties, government
regulations and tariffs. An escalation of recent trade tensions between the U.S. and China has resulted in trade restrictions that could
harm our ability to participate in Chinese markets and numerous additional such restrictions have been threatened by both countries.
The U.S. and China have imposed a number of tariffs and other restrictions on items imported or exported between the U.S. and China.
We cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the U.S. and China or other
countries, what products may be subject to such actions, or what actions may be taken by the other countries in retaliation. The institution
of trade tariffs both globally and between the U.S. and China specifically carries the risk of negatively impacting China's overall
economic condition, which could have negative repercussions for our business. Our products are and may continue to be subject to export
license requirements or restrictions, particularly in respect of China.

 Our
products may be subject to recalls for a variety of reasons, which could require us to expend significant management and capital resources.

 Manufacturers
and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product
defects, such as contamination, adulteration, unintended harmful side effects or interactions with other substances, packaging safety
and inadequate or inaccurate labeling disclosure. Although we have detailed procedures in place for testing finished products, there
can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls,
regulatory action or lawsuits, whether frivolous or otherwise. If any of the animal food or care products produced by us are recalled
due to an alleged product defect or for any other reason, we could be required to incur the unexpected expense of the recall and any
legal proceedings that might arise in connection with the recall. We had to issue a recall in 2018 for one of our products after a single
retail sample collected by the Michigan Department of Agriculture tested positive for Salmonella. Although customers reported no incidents
of injury or illness in association with this product, the recall negatively affected our results. As a result of any such recall, customers
may be hesitant to purchase our products in the future and we may lose a significant amount of sales and may not be able to replace those
sales at an acceptable margin or at all. In addition, a product recall may require significant management attention or damage our reputation
and goodwill or that of our products or brands. Additionally, product recalls may lead to increased scrutiny of our operations by the
FDA or other state or federal regulatory agencies, requiring further management attention, increased compliance costs and potential legal
fees, fines, penalties and other expenses.

 Changes
in existing laws or regulations, including how such existing laws or regulations are enforced by federal, state, and local authorities,
or the adoption of new laws or regulations may increase our costs and otherwise adversely affect our business, financial condition and
results of operations.

 The
manufacture and marketing of animal food products is highly regulated, and we and our co-manufacturers and suppliers are subject to a
variety of federal and state laws and regulations applicable to pet food and treats. These laws and regulations apply to many aspects
of our business, including the manufacture, packaging, labeling, distribution, advertising, sale, quality and safety of our products.
We could incur costs, including fines, penalties, and third-party claims, in the event of any violations of, or liabilities under, such
requirements, including any competitor or consumer challenges relating to compliance with such requirements. For example, in connection
with the marketing and advertisement of our products, we could be the target of claims relating to false or deceptive advertising, including
under the auspices of the FTC and state consumer protection statutes. The regulatory environment in which we operate could change significantly
and adversely in the future. The laws and regulations that apply to our products and business may change in the future and we may incur
(directly or indirectly) material costs to comply with current or future laws and regulations or any required product recalls. New or
revised government laws and regulations could significantly limit our ability to run our business as it is currently conducted, result
in additional compliance costs and, in the event of noncompliance, lead to administrative or civil remedies, including fines, injunctions,
withdrawals, recalls or seizures and confiscations, as well as potential criminal sanctions. Any such changes or actions by the FDA or
other regulatory agencies could have a material adverse effect on our co-manufacturers, our suppliers or our business, financial condition
and results of operations.

 Risks
Related to Our Capital Structure

 We
are a holding company and rely on payments, advances and transfers of funds from our subsidiaries to meet our obligations and pay any
dividends.

 We
have limited direct operations and significant assets other than ownership of 100% of the capital stock of our subsidiaries. Because
we primarily conduct our operations through our subsidiaries, we depend on those entities for payments to generate the funds necessary
to meet our financial obligations, and to pay any dividends with respect to our common stock. Legal and contractual restrictions in our
term loan and revolving line of credit agreement and other agreements that may govern future indebtedness of our subsidiaries, as well
as the financial condition and operating requirements of our subsidiaries, may limit our ability to obtain cash from our subsidiaries.
The earnings from, or other available assets of, our subsidiaries might not be sufficient to make distributions or obtain loans to enable
us to meet certain of our obligations. Any of the foregoing could materially and adversely affect our business, financial condition,
results of operations and cash flows.

 Our
level of indebtedness and related covenants could limit our operational and financial flexibility and could significantly adversely affect
our business if we breach such covenants and default on such indebtedness.

 Our
ability to meet our debt service obligations depends upon our operating and financial performance, which is subject to general economic
and competitive conditions and to financial, business and other factors affecting our operations, many of which are beyond our control.
If we are unable to service our debt, we may need to sell inventory and other material assets, restructure or refinance our debt, or
seek additional equity capital. If our inability to meet our debt service obligations results in an event of default as defined under
our Alphia term loan and Wintrust receivables credit facility, the lenders thereunder may be able to take possession of substantially
all of our assets. Prevailing economic conditions and global credit markets could adversely impact our ability to do so.

 In
addition, our debt agreements contain limits on our ability to, among other things, incur additional debt, grant liens, undergo certain
fundamental changes, make investments, and dispose of inventory. These restrictions may prevent us from taking actions that we believe
would be in the best interests of the business and may make it difficult for us to successfully execute our business strategy or effectively
compete with companies that are not similarly restricted. If we determine that we need to take any action that is restricted under our
debt agreements, we will need to first obtain a waiver from the related lenders. Obtaining such waivers, if needed, may impose additional
costs or we may be unable to obtain such waivers. Our ability to comply with these restrictive covenants in future periods will largely
depend on our ability to successfully implement our overall business strategy. The breach of any of these covenants or restrictions could
result in a default, which could result in the acceleration of our outstanding debt. In the event of an acceleration of such debt, we
could be forced to apply all available cash flows to repay such debt, which could also force us into bankruptcy or liquidation.

 For
information regarding our outstanding debt, refer to "Note 8 - Debt" in the Notes to Consolidated Financial Statements included
in Item 8. Financial Statements and Supplementary Data of this report, which is incorporated into this Item 1A by reference.

 Our
common stock may be deemed to be a "penny stock" and the "penny stock" rules could adversely affect the market
price of our common stock.

 The
SEC has adopted Rule 3a51-1, which establishes the definition of a "penny stock" as any equity security that has a market
price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. Our common
stock may be deemed to be a penny stock. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires that a broker-dealer
must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser's
written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks;
and (iii) a signed and dated copy of a written suitability statement. Generally, brokers may be less willing to execute transactions
in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common
stock and cause a decline in the market value of our stock.

 Our
failure to meet the continued listing requirements of NYSE American could result in a delisting of our common stock and could make it
more difficult to raise capital in the future.

 NYSE
has listing requirements for inclusion of securities for trading on the NYSE American, including minimum levels of stockholders'
equity, market value of publicly held shares, number of public stockholders and stock price. There can be no assurance that we will be
successful in maintaining the listing of NYSE American as it is possible we may fail to satisfy the continued listing requirements, such
as the corporate governance requirements or the minimum stock price requirement. During the third quarter, the Company received a notice
of noncompliance from the NYSE American. If we fail to satisfy the continued listing requirements before the end of the cure period,
the NYSE American may take steps to delist our common stock. Such a delisting or the announcement of such delisting will have a negative
effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so. In
the event of a delisting, we may attempt to take actions to restore our compliance with the NYSE American listing requirements, but we
can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price
or improve the liquidity of our common stock, prevent our common stock from dropping below the NYSE American minimum listing requirements
or prevent future non-compliance with the NYSE American listing requirements. If we do not maintain the listing of our common stock on
NYSE American, it could make it harder for us to raise additional capital in the long-term. If we are unable to raise capital when needed
in the future, we may have to cease or reduce operations.

 Our
common stock prices may be volatile.

 The
market price of our common stock has been and may continue to be highly volatile and subject to wide fluctuations. Our financial performance,
government regulatory action, tax laws, interest rates and market conditions in general could have a significant impact on the future
market price of our common stock.

 The
public price of our common stock could also be subject to wide fluctuations in response to the risk factors described in this report
and others beyond our control, including: the number of shares of our common stock publicly owned and available for trading actual
or anticipated quarterly variations in our results of operations or those of our competitors; our actual or anticipated operating performance
and the operating performance of similar companies in our industry our announcements or our competitors' announcements regarding
significant contracts, acquisitions, or strategic investments general economic conditions and their impact on the pet food markets
the overall performance of the equity markets threatened or actual litigation changes in laws or regulations relating to
our industry any major change in our board of directors or management publication of research reports about us or our industry
or changes in recommendations or withdrawal of research coverage by securities analysts and sales or expected sales of shares of
our common stock by us, and our officers, directors, and significant stockholders. From time to time, our affiliates may sell stock for
reasons due to their personal financial circumstances. These sales may be interpreted by other stockholders as an indication of our performance
and result in subsequent sales of our stock that have the effect of creating downward pressure on the market price of our common stock.

 The
volatility of the market price of our common stock may adversely affect the ability of investors to purchase or sell shares of our common
stock. Investors may also experience losses on their investments in our stock due to price fluctuations. In addition, the stock market
in general has experienced extreme price and volume fluctuations that often have been unrelated or disproportionate to the operating
performance of those companies. Securities class action litigation has often been instituted against companies following periods of volatility
in the overall market and in the market price of a company's securities. Such litigation, if instituted against us, could result
in very substantial costs, divert our management's attention and resources and harm our business, operating results, and financial
condition.

 We
do not expect to pay any cash dividends to the holders of the common stock in the foreseeable future and the availability and timing
of future cash dividends, if any, is uncertain.

 We
expect to use cash flow from future operations to repay debt and support the growth of our business and do not expect to declare or pay
any cash dividends on our common stock in the foreseeable future. Our Wintrust receivables credit facility and Alphia term loan place
certain restrictions on the ability of us and our subsidiaries to pay cash dividends. We may amend our current credit facilities or enter
into new debt arrangements that also prohibit or restrict our ability to pay cash dividends on our common stock.

 Subject
to such restrictions, our board of directors will determine the amount and timing of stockholder dividends, if any, that we may pay in
future periods. In making this determination, our directors will consider all relevant factors, including the amount of cash available
for dividends, capital expenditures, covenants, prohibitions or limitations with respect to dividends, applicable law, general operational
requirements and other variables. We cannot predict the amount or timing of any future dividends you may receive, and if we do commence
the payment of dividends, we may be unable to pay, maintain or increase dividends over time. Therefore, you may not be able to realize
any return on your investment in our common stock for an extended period of time, if at all.

 Future
sales of our common stock, or the perception that such sales may occur, may depress our share price, and any additional capital through
the sale of equity or convertible securities may dilute your ownership in us.

 In
the future, we may issue our previously authorized and unissued securities. We are authorized to issue 200,000,000 shares of common stock
and 4,000,000 shares of preferred stock with such designations, preferences and rights as determined by our board of directors. The potential
issuance of such additional shares of common stock will result in the dilution of the ownership interests of the holders of our common
stock and may create downward pressure on the trading price, if any, of our common stock. The sales of substantial amounts of our common
stock pursuant to our effective registration statements, or the perception that these sales may occur, could cause the market price of
our common stock to decline and impair our ability to raise capital. These shares also may be sold pursuant to Rule 144 under the Securities
Act, depending on their holding period and subject to restrictions in the case of shares held by persons deemed to be our affiliates.
We also may grant additional registration rights in connection with any future issuance of our capital stock.

 For
information regarding our outstanding stockholders' equity and potentially dilutive securities, refer to "Note 8 - Debt",
"Note 10 - Commitments and contingencies", "Note 11 - Warrants" and "Note 12 - Share-based compensation"
in the Notes to Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report
on Form 10-K, which is incorporated into this Item 1A by reference.

 The
market price of our common stock may not attract new investors, including institutional investors, and may not satisfy the investing
requirements of those investors. Consequently, the trading liquidity of our common stock may not improve.

 There
can be no assurance that the share price of our stock will attract new investors, including institutional investors. In addition, there
can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors. As a result,
the trading liquidity of our common stock may not necessarily improve.

 We
may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.

 Our
certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred
stock having such designations, preferences, limitations and relative rights, including preferences over our common stock with respect
to dividends and distributions, as our board of directors may determine. The terms of one or more classes or series of preferred stock
could adversely impact the voting power or value of our common stock. For example, we might grant holders of preferred stock the right
to elect some number of our directors in all events or on the happening of specified events, or the right to veto specified transactions.
Similarly, the repurchase or redemption rights or liquidation preferences we might grant to holders of preferred stock could affect the
value of the common stock. The issuance of such preferred stock could also be used as a method of discouraging, delaying or preventing
a change of control.

 The
administrative and regulatory costs of public company compliance could consume a significant amount of our resources.

 The
rules and regulations related to being a public company require us to incur significant legal, accounting and other expenses. The legal
and financial compliance make some activities more time-consuming and costly, particularly after we are no longer a smaller reporting
company. Moreover, if we are not able to comply with the requirements or regulations as a public reporting company in any regard, we
could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial
and management resources.

 In
addition, the Sarbanes-Oxley Act of 2002 and rules subsequently implemented by the SEC impose various requirements on public companies,
including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management
and other personnel devote a substantial amount of time to these compliance initiatives. To achieve compliance with Section 404 within
the prescribed period, we will be engaged in a costly and challenging process to document and evaluate our internal control over financial
reporting. In this regard, we will need to continue to dedicate internal resources and potentially engage outside consultants or hire
an internal audit resource to assess and document the adequacy of internal control over financial reporting, validate through testing
that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial
reporting. Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm will be able to
conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404.
This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

 We
are a smaller reporting company which could make our securities less attractive to investors and may make it more difficult to compare
our performance with other public companies.

 We
are a smaller reporting company, as defined in Item 10(f)(1) of Regulation S-K, and we may take advantage of certain reduced disclosure
obligations. To the extent we take advantage of such reduced disclosure obligations while we continue to qualify as a smaller reporting
company, it may make comparison of our financial statements with other public companies difficult or impossible. Some investors may find
our common stock less attractive because we may rely on these exemptions, which could result in a less active trading market for our
common stock, and our stock price may be more volatile.

 Our
bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings
that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for
disputes with us or our directors, officers, employees or agents.

 Our
bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware
will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding
brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer (or affiliate
of any of the foregoing) of us to us or the our shareholders, (iii) any action asserting a claim arising pursuant to any provision of
the DGCL or our certificate of incorporation or bylaws, or (iv) any other action asserting a claim arising under, in connection with,
and governed by the internal affairs doctrine; provided that these exclusive forum provisions will not apply to suits brought to enforce
any liability or duty created by the Securities Act or the Exchange Act, or to any claim for which the federal courts have exclusive
jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have
notice of, and consented to, the provisions of our bylaws described in the preceding sentence. This choice of forum provision may limit
a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers,
employees or agents, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these provisions
of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur
additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial
condition or results of operations.

 Provisions
in our certificate of incorporation and bylaws and Delaware law may discourage a takeover attempt even if a takeover might be beneficial
to our stockholders.

 Provisions
contained in our certificate of incorporation and bylaws could make it more difficult for a third party to acquire us after we have become
a publicly traded company. Provisions in our certificate of incorporation and bylaws impose various procedural and other requirements,
which could make it more difficult for stockholders to effect certain corporate actions. For example, our certificate of incorporation
authorizes our board of directors to determine the rights, preferences, privileges and restrictions of unissued series of preferred stock
without any vote or action by our stockholders. Thus, our board of directors can authorize and issue shares of preferred stock with voting
or conversion rights that could dilute the voting power of holders of our other series of capital stock. These rights may have the effect
of delaying or deterring a change of control of our company. Additionally, our certificate of incorporation and/or bylaws establish limitations
on the removal of directors and on the ability of our stockholders to call special meetings and include advance notice requirements for
nominations for election to our board of directors and for proposing matters that can be acted upon at stockholder meetings.

 Moreover,
because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the General Corporation Law of the State
of Delaware (the "DGCL"), which prohibits an "interested stockholder" owning in excess of 15% of our outstanding
voting stock from merging or combining with us for a period of three years after the date of the transaction in which such stockholder
acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. These
provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock.

 Claims
for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us
and may reduce the amount of money available to us.

 Our
certificate of incorporation provides that we will indemnify our directors and officers, in each case to the fullest extent permitted
by Delaware law. In addition, as permitted by Section 145 of the Delaware General Corporation Law, our certificate of incorporation and
our indemnification agreements that we have entered into with our directors and officers provide that:

 We
 will indemnify our directors and officers for serving us in those capacities or for serving
 other business enterprises at our request, to the fullest extent permitted by Delaware law.
 Delaware law provides that a corporation may indemnify such person if such person acted in
 good faith and in a manner such person reasonably believed to be in or not opposed to the
 best interests of the corporation and, with respect to any criminal action or proceeding,
 had no reasonable cause to believe such person's conduct was unlawful.

 We
 may, in our discretion, indemnify employees and agents in those circumstances where indemnification
 is permitted by applicable law.

 We
 are required to advance expenses, as incurred, to our directors and officers in connection
 with defending a proceeding, except that such directors or officers shall undertake to repay
 such advances if it is ultimately determined that such person is not entitled to indemnification.

 We
 will not be obligated pursuant to the indemnification agreements entered into with our directors
 and executive officers to indemnify a person with respect to proceedings initiated by that
 person, except with respect to proceedings to enforce an indemnitees right to indemnification
 or advancement of expenses, proceedings authorized by our board of directors and if offered
 by us in our sole discretion.

 The
 rights conferred in our certificate of incorporation are not exclusive, and we are authorized
 to enter into indemnification agreements with our directors, officers, employees and agents
 and to obtain insurance to indemnify such persons.

 We
 may not retroactively amend our certificate of incorporation or indemnification agreement
 provisions to reduce our indemnification obligations to directors, officers, employees and
 agents.

 As
a result of these provisions, if an investor were able to enforce an action against our directors or officers, in all likelihood, we
would be required to pay any expenses they incurred in defending the lawsuit and any judgment or settlement they otherwise would be required
to pay. Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business, financial
condition, results of operations and cash flows, and adversely affect the value of our business.

 ITEM
 1B.
 UNRESOLVED
 STAFF COMMENTS

 None.

 ITEM
 1C.
 CYBERSECURITY

 Cybersecurity
risk management is an important part of the Company's overall risk management efforts. We maintain a comprehensive enterprise-wide
information security program that comprises policies and controls designed to identify, safeguard against, detect, respond to, mitigate
and manage reasonably foreseeable cybersecurity risks and threats. Our approach utilizes diverse security tools to prevent, identify,
investigate, resolve and recover from vulnerabilities and security incidents. These include, but are not limited to, internal reporting,
monitoring and detection tools. We use a collaborative, enterprise-wide strategy to address cybersecurity risks and allocate significant
resources to our cybersecurity and risk management processes, which efforts are intended to adapt to the evolving cybersecurity landscape
and promptly address emerging threats. Our cybersecurity risk management program aligns with the National Institute of Standards and
Technology (NIST) framework and is organized into five key functions: identification, protection, detection, response and recovery. We
regularly assess the threat landscape and employ a layered cybersecurity strategy to prevent, detect and mitigate threats.

 All
employees undergo security awareness training, with regular testing through simulated phishing emails. Certain employee positions require
additional role-based, specialized security awareness or other cybersecurity training, as applicable. Simulations, drills and assessments
are conducted to test our defenses from both a technical and an operational perspective.

 We
assess risks associated with third-party providers as part of our overall cybersecurity risk management framework by reviewing system
and organization controls reports, when available, and other independent reports. We also generally require third parties to, among other
things, maintain security controls to protect our confidential information and to promptly notify us of material breaches that may impact
our data.

 Our
Board of Directors has oversight of our enterprise risk assessment and risk management processes, as well as the steps taken to mitigate
these risks, including for cybersecurity matters. The Audit Committee of our Board of Directors has oversight of cybersecurity risk assessment
and risk management policies as part of its risk management oversight responsibilities, and is responsible for ensuring that the Company
has processes in place to identify, evaluate and manage cybersecurity risks, as well as appropriate processes and programs to mitigate
cybersecurity incidents if they occur. Significant cybersecurity matters, including those related to incidents, are escalated to the
Board of Directors.

 We
face cybersecurity threats in the ordinary course of our business and have faced cybersecurity threats and breach attempts in the past.
Such threats and breach attempts have not materially affected our business, strategy, results of operations or financial condition. At
any given time, however, we may face known or unknown cybersecurity risks and threats that cannot be fully prevented or mitigated, and
we may discover vulnerabilities in our cybersecurity programs. Therefore, we may not be successful in preventing or mitigating a cybersecurity
incident that could have a material adverse effect on us. For more information on the cybersecurity risks we face, please refer to "A
failure of one or more key information technology systems, networks or processes may materially adversely affect our ability to conduct
our business." in Item 1A. "Risk Factors."

 ITEM
 2.
 PROPERTIES

 Our
principal place of business is located at 12400 Race Track Road, Tampa, FL 33626, which consists of approximately 5,000 square feet of
office space which we lease. Our lease for this location is scheduled to expire on January 31, 2026.

 We
do not own any properties or land.

 We
believe our facilities are adequate and suitable for our current needs and that suitable additional or alternative space will be available
if the need arises in the future.

 ITEM
 3.
 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 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
 4.
 MINE
 SAFETY DISCLOSURES

 Not
applicable.

 PART
II

 ITEM
 5.
 MARKET
 FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
 EQUITY SECURITIES

 Market

 Our
common stock is currently listed on the NYSE American marketplace under the symbol "BTTR" after the consummation of our IPO
on July 1, 2021 and was previously listed on the OTC Market Group Inc.'s OTCQX market after being upgraded from the OTCQB on December
28, 2020 where it had been trading since June 2010. The following table sets forth, for the periods indicated and as reported on the
NYSE American and OTC Markets, the high and low bid prices for our common stock. Such over-the-counter market quotations reflect inter-dealer
prices, without retail mark-up, mark-downs or commissions, and may not necessarily represent actual transactions:

 High

 Low

 2022

 First Quarter (1)

 $
 158.00

 $
 84.40

 Second Quarter (1)

 $
 121.60

 $
 74.40

 Third Quarter (1)

 $
 106.00

 $
 31.20

 Fourth Quarter (1)

 $
 49.60

 $
 17.60

 2023

 First Quarter (1)

 $
 33.20

 $
 13.00

 Second Quarter (1)

 $
 22.60

 $
 7.76

 Third Quarter (1)

 $
 11.20

 $
 4.44

 Fourth Quarter (1)

 $
 23.20

 $
 4.88

 (1)
 The
 high and low bid prices for this quarter were reported by the NYSE American marketplace.

 Holders
of Common Stock

 As
of April 11, 2024, we had 893,601 shares of our common stock issued and outstanding. As of April 11, 2024, there were 154 record
holders of our common stock. Certain shares are held in "street" name and accordingly, the number of beneficial owners
of such shares is not known or included in the foregoing number. This number of holders of record also does not include stockholders
whose shares may be held in trust by other entities.

 Dividend
Policy

 We
do not currently anticipate declaring or paying cash dividends on our common stock in the foreseeable future. We currently intend to
retain our future earnings, if any, to finance the development and expansion of our business. Any future determination to pay dividends
will be at the discretion of our board of directors and will depend upon then-existing conditions, including our results of operations
and financial condition, capital requirements, business prospects, statutory and contractual restrictions on our ability to pay cash
dividends, including restrictions contained in our credit agreements, and other factors our board of directors may deem relevant. Accordingly,
you may need to sell your shares of our common stock to realize a return on your investment, and you may not be able to sell your shares
at or above the price you paid for them.

 Securities
Authorized for Issuance under Equity Compensation Plans

about our equity compensation plans is included in Item 12 of Part III of this Annual Report on Form 10-K.

 Recent
Sales of Unregistered Securities

 Since
January 1, 2022, the registrant made the following issuances and purchases of its unregistered securities as described below. All share
amounts have been retroactively adjusted to give effect to a reverse stock split of 1-for-44 effective March 20, 2024.

 (1)
On February 1, 2022, the registrant issued 4,962 shares of common stock to five non-employee directors in return for services provided
in their capacity as directors.

 (2)
On November 2, 2022, the registrant issued 927 shares of common stock to a member of its board of directors for service as interim CEO.

 (3)
On December 30, 2022, the registrant issued 562 shares of common stock to a member of its board of directors for service as interim CEO.

 (4)
On January 4, 2023, the registrant issued 20,292 shares of common stock to its board of directors in return for services provided in
their capacity as directors.

 (5)
On January 11, 2023, the registrant issued 4,545 shares of common stock to its key executives as part of their compensation packages.

 (6)
On January 31, 2023, the registrant issued 409 shares of common stock to a member of its board of directors for service as interim CEO.

 (7)
On April 30, 2023, the registrant issued 909 shares of common stock to a member of its executive management as part of their compensation
package.

 (8)
On September 5, 2023, the registrant issued 34,090 shares of common stock to two members of its board of directors in return for services
provided in their capacity as directors.

 Unless
otherwise stated above, the issuances of the above securities were deemed to be exempt from registration under the Securities Act in
reliance upon Section 4(a)(2) of the Securities Act, or Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b)
of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating
to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions
to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate
legends were placed upon the stock certificates issued in these transactions.

 Purchases
of Equity Securities by the Issuer

 There
were no repurchases of Better Choice Company common stock during the year ended December 31, 2023:

 ITEM
 6.
 [RESERVED]

 ITEM
 7.
 MANAGEMENT'S
 DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 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. The financial condition, results of operations and cash flows discussed
in this Management's Discussion and Analysis of Financial Condition and Results of Operations are those of Better Choice Company
Inc. and its consolidated subsidiaries, collectively, the "Company," "Better Choice Company," "we,"
"our," or "us". 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

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 has been 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 four distinct categories: E-commerce, which includes the sale of product to online retailers
such as Amazon and Chewy; Brick & Mortar, which primarily includes the sale of product to Pet Specialty retailers such as Petco,
Pet Supplies Plus and neighborhood pet stores, as well as to select grocery chains; Direct to Consumer ("DTC") which includes
the sale of product through our website halopets.com; and International, which includes the sale of product to foreign distribution partners
and to select international retailers. In December 2023, the Company made a strategic exit out of Petco stores (while remaining on Petco.com), and Pet Supplies
Plus. As of Q1 2024, the Company has made plans to exit its DTC channel in Q2 2024, in an effort to improve profitability.

 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 $58 billion,
or 42% of the total U.S. pet care market in 2022. According to the American Pet Product Association, between 66% of all households in
the U.S. own a pet, equating to a total pet population of more than 130 million companion animals and an average of 1.7 pets per household.
Pet spending represents a significant portion of household spend on consumer products, as this translates to an average annual spend
on pet care of more than $1,500 per pet owning household, with $460 of this spend attributed to pet food and treats.

 Historically,
consumer spending on pets grew at an approximately 3% CAGR in the decade leading up to the COVID-19 pandemic, driven by steady annual
increases in household pet ownership of approximately 1%, the continued premiumization of the category and the humanization of pets.
This surge in pet acquisition has led to an increase in the forecasted growth of the pet care industry over the next ten years. The U.S.
pet food industry is expected to grow at a 4.96% CAGR between 2021 and 2028 (Statistica).

 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 3.2 times more interested in purchasing pet food than men, and are 2.4 times 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. 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 20% in 2020, according to Euromonitor. 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. We are focused on targeting Chinese pet owners with the highest willingness to pay, which tend
to be urban dwelling millennial and Gen-Z women. In 2021, 80% of our products were purchased online, and approximately 50% of our end-consumers
were born after 1990.

 Our
Growth Strategy

 Strong
 Innovation Pipeline. We have a robust and growing pipeline of new products, and believe
 our size is an advantage as we are nimble enough to quickly bring new products to market,
 but large enough to benefit from strong existing customer relationships and established economies
 of scale with our co-manufacturers.

 Ability
 to Leverage Differentiated Omni-Channel Strategy for Growth. We believe that we can leverage
 our differentiated omni-channel strategy to design and sell products purpose-built for success
 in specific channels while maintaining our ability to leverage marketing and sales resources
 cross-channel. We believe that this strategy will allow us to deliver on core consumer needs,
 maximize gross margin and respond to changing channel dynamics that have accelerated in recent
 years.

 Capitalize
 on Continuing Trends of Humanization of Pets. We believe our combination of innovative
 products designed specifically for certain channels can assist our growth to become a leader
 in the premium and super-premium categories across dog and cat food.

 Well
 Positioned to Capitalize on a Once-in-a-Generation Demographic Shift in Asia. We believe
 that Asia represents the largest macro-growth opportunity in the global pet food industry.
 In China, the number of households that own a pet has doubled in the last five years, with
 younger pet owners leading growth.

 Recent
Corporate Developments

 On
September 13, 2022, we announced that Scott Lerner was stepping down from his role as Chief Executive Officer ("CEO"), effective
September 14, 2022. Also on September 13, 2022, we announced that Lionel F. Conacher was appointed as Interim CEO, effective September
14, 2022.

 On
March 2, 2023, we announced that Robert Sauermann was resigning from his role as Chief Operating Officer ("COO"), effective
March 17, 2023. On March 21, 2023, we announced that Sharla Cook was resigning from her role as Chief Financial Officer ("CFO"),
effective April 3, 2023. Also on March 21, 2023, we announced that Carolina Martinez was appointed as Interim CFO, effective April 3,
2023.

 On
May 11, 2023, we announced that Lionel F. Conacher was resigning from his role as Interim CEO of the Company, effective May 22, 2023.
Mr. Conacher will still continue to serve on the Board as a Director. On May 11, 2023, we announced that Kent Cunningham was appointed
as Chief Executive Officer of the Company, effective May 22, 2023.

 On
August 2, 2023, we announced that Carolina Martinez was appointed as Chief Financial Officer, Treasurer and Secretary of the Company,
effective August 7, 2023. On August 28, 2023, we announced that Donald Young, was resigning from his role as Chief Sales Officer of the
Company, effective September 8, 2023.

 In December 2023, the Company made a strategic exit out of Petco stores (while remaining on Petco.com), and Pet Supplies
Plus. As of Q1 2024, the Company has made plans to exit its DTC channel in Q2 2024, in an effort to improve profitability.

 Results
of Operations for the Years Ended December 31, 2023 and 2022

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

 Years Ended December 31,

 Change

 2023

 2022

 $

 %

 Net sales

 $
 38,592

 $
 54,660

 $
 (16,068
)

 (29
)%

 Cost of goods sold

 26,795

 39,399

 (12,604
)

 (32
)%

 Gross profit

 11,797

 15,261

 (3,464
)

 (23
)%

 Operating expenses:

 Selling, general and administrative

 24,444

 35,430

 (10,986
)

 (31
)%

 Impairment of goodwill

 —

 18,614

 (18,614
)

 (100
)%

 Impairment of intangible assets

 8,532

 —

 —

 %

 Total operating expenses

 32,976

 54,044

 (21,068
)

 (39
)%

 Loss from operations

 (21,179
)

 (38,783
)

 17,604

 %

 Other expense:

 Interest expense

 (1,353
)

 (551
)

 (802
)

 (146
)%

 Change in fair value of warrant liabilities

 (236
)

 —

 (236
)

 (100
)%

 Total other expense

 (1,589
)

 (551
)

 (1,038
)

 (188
)%

 Net loss before income taxes

 (22,768
)

 (39,334
)

 16,566

 (42
)%

 Income tax expense (benefit)

 (18
)

 %

 Net loss available to common stockholders

 $
 (22,770
)

 $
 (39,316
)

 $
 16,546

 (42
)%

 Net
sales

 We
sell our products through online retailers, pet specialty retailers, our online portal directly to our consumers and internationally
to foreign distribution partners (transacted in U.S. dollars). Generally, our sales transactions are single performance obligations that
are recorded at the time the product is shipped from our distribution centers and when control transfers. 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 include 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.

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

 Twelve Months Ended December 31,

 2023

 2022

 E-commerce (1)

 $
 13,405

 %

 $
 14,565

 %

 Brick & Mortar

 5,870

 %

 11,624

 %

 DTC

 5,597

 %

 6,620

 %

 International (2)

 13,720

 %

 21,851

 %

 Net Sales

 $
 38,592

 %

 $
 54,660

 %

 (1)
 Our
 E-commerce channel includes two customers that amounted to greater than 10% of total net
 sales. These customers had $5.9 million and $7.1 million of net sales for the year ended
 December 31, 2023, respectively and $7.5 million and $6.6 million of net sales for the year
 ended December 31, 2022, respectively.

 (2)
 One
 of our International customers that distributes products in China amounted to greater than
 10% of total net sales during the years ended December 31, 2023 and December 31, 2022 and
 represented $11.0 million and $17.7 million of net sales, respectively.

 Net
sales decreased $(16.1) million, or (29)%, to $38.6 million for the year ended December 31, 2023 compared to $54.7 million for the year
ended December 31, 2022. The decrease in net sales for the year ended December 31, 2023 is primarily attributable to supply chain constraints
and the downstream impact it has on our business. We experienced significant production delays from our dry kibble co-manufacturing partner
stemming from short-term shortages in raw materials, labor constraints, and capacity constraints. The inconsistency in supply created
material out-of-stocks which resulted in less-than-optimal fill rates of our Halo Elevate product line, sold primarily in our Brick
& Mortar channel. Since closing the Alphia Term Loan, we have fully transitioned our dry kibble manufacturing to Alphia which, albeit
a very positive change needed for stabilizing supply and for long-term sustainability, has had a short-term impact to our International
channel as it created registration delays in certain foreign markets, in turn delaying ordering and product launches.

 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 damages, 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.

the year ended December 31, 2023, gross profit decreased $(3.5) million, or (23)%, to $11.8 million compared to $15.3 million during the
year ended December 31, 2022. Gross profit margin increased 3% to 31% for the year ended December 31, 2023 compared to 28% for the year
ended December 31, 2022. The decrease in gross profit is primarily attributable to selling excess inventory at a discount. As a result,
revenue increased at a rate lower than the rate at which cost of goods sold ("COGS") increased. The increase in gross profit
margin for the year ended December 31, 2023 is primarily attributable to a decrease in revenue at a rate lower than the rate at which
cost of goods sold decreased. For the year ended December 31, 2023, the average price per pound cost $1.82, versus $1.88 for the year
ended December 31, 2022. We also implemented a 7% price increase across our Halo Holistic and Halo masterbrand wet product lines
in August 2022, and a 12.5% sales price increase on our Halo Elevate products in 2023.

 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.

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 year ended December 31,
 2023, sales and marketing costs decreased approximately $(7.0) million or (48)%, to $7.6
 million from $14.6 million during the year ended December 31, 2022. 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 increased marketing spend in our International
 sales channel during 2022.

 Employee
 compensation and benefits decreased approximately $(1.1) million or (15)% during the year
 ended December 31, 2023 to $6.4 million from $7.5 million during the year ended December
 31, 2022. The decrease was primarily related to a reduction in employee headcount, partially
 offset by higher severance costs during the first half of 2022.

 compensation includes expenses related to equity awards issued to employees and non-employee
 directors. During the year ended December 31, 2023, Share-based compensation decreased $(1.2)
 million or (40)% to $1.8 million compared to $3.0 million for the year ended December 31,
 2022. The decrease is driven by reduction of senior management headcount resulting in cancellations
 of options during 2023, partially offset by common stock issued for board service and accelerated
 vesting of a certain stock option grant during 2022, interim CEO service compensation and
 additional option grants.

 Freight,
 which is primarily related to the shipping of DTC orders to customers, decreased $(0.3) million
 or (16)% during the year ended December 31, 2023 to $1.3 million from $1.6 million during the
 year ended December 31, 2022. Freight costs are generally decreasing due to lower DTC sales
 as described above.

 Non-cash
 charges including depreciation, amortization, disposal or sale of assets and bad debt
 expense decreased $(0.2) million or (8)% to $1.7 million during the year ended December 31, 2023
 from $1.8 million during the year ended December 31, 2022. The decrease was driven by disposals
 of certain assets during 2023, offset by additional capital expenditures throughout 2022.

 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 year ended December
 31, 2023, other general and administrative costs decreased $(1.3) million, or (19)% to $5.6 million
 compared to $6.9 million in the year ended December 31, 2022. The decrease was driven by
 commission fees related to sales in our International channel, and lower professional fees
 related to investor relations.

 Impairment of goodwill included an impairment charge of $18.6 million during the year ended December 31, 2022,
while there was no corresponding activity for the year ended December 31, 2023. Impairment of long-lived intangible assets resulted
in an impairment charge of $8.5 million for the year ended December 31, 2023, with no corresponding activity for the year ended December 31,
2022. See "Note 6 - Goodwill and intangible assets" for additional information.

expense, net

the year ended December 31, 2023, interest expense increased $0.8 million, or 146% to $1.4 million from $0.6 million for the fiscal year
ended December 31, 2022. Interest expense for the year ended December 31, 2023 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. Interest expense
for the year ended December 31, 2022 is comprised of interest on our Wintrust Credit Facility, Wintrust term loan, and the amortization
of debt issuance costs.

 Change
in fair value of warrant liabilities

stock warrants classified as liabilities are revalued at each balance sheet date subsequent to the initial issuance and changes in the
fair value are reflected in the Consolidated Statements of Operations as change in fair value of warrant liabilities. See "Note 11 - Warrants"
for additional information.

 Income
taxes

 Our
income tax expense (benefit) 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 year ended
December 31, 2023, we recorded income tax expense of less than $0.1 million, which relates to the change in valuation allowance. During the year ended December 31,
2022, we recorded income tax benefit of less than $0.1 million, which relates to indefinite-lived assets. The effective tax rate for the years ended December 31, 2023 and 2022 was 0%, which differs from the U.S. Federal statutory rate of
21% due to permanent differences attributable to the impairment of goodwill in 2022 and because our losses have been fully offset by
a valuation allowance due to uncertainty of realizing the tax benefit of NOLs for the years ended December 31, 2023 and
2022.

 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 IPO, we issued and sold 181,818 shares of common stock at a price of $5.00 per share. On July 1, 2021 we received total net
proceeds of approximately $36.1 million from the IPO, after deducting underwriting discounts and commissions of $2.8 million, and offering
costs of approximately $1.1 million. On December 31, 2023 and December 31, 2022, we had cash and cash equivalents and restricted cash
of $4.5 million and $9.5 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 December 31, 2023, 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 profit margin 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
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. 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, and 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):

 Year Ended December 31,

 2023

 2022

 Cash flows (used in) provided by:

 Operating activities

 $

 $
 (20,553
)

 Investing activities

 (18
)

 (198
)

 Financing activities

 (5,097
)

 1,282

 Net (decrease) increase in cash and cash equivalents

 $
 (5,018
)

 $
 (19,469
)

 Cash
flows from operating activities

 Cash
provided by operating activities increased $20.7 million, or 100%, during the year ended December 31, 2023 compared to the year ended
December 31, 2022. The increase in cash used in operating activities was primarily driven by significant fluctuations in our working
capital, including a comparative decrease in our inventory balance of $3.6 million as we built inventory during 2022 to support
the Halo Elevate launch and the rebranding of TruDog and Halo Holistic, and focused on improving working capital and cash
conversion cycle in 2023 by bringing inventory levels down to a healthier level. Additionally, we realized a comparative increase in
accounts receivables of $2.4 million due to timing of sales and collections, and a comparative increase in accounts
payable of $4.0 million due to dry kibble inventory rebuild in 2023 after transition to a new dry kibble manufacturer.

 Cash
flows from investing activities

 Cash
used in investing activities was less than $0.0 million during the year ended December 31, 2023 and $0.2 million during the year ended
December 31, 2022. The cash used in investing activities is related to capital expenditures.

 Cash
flows from financing activities

 Cash
used in financing activities was $5.1 million, during the year ended December 31, 2023 and cash provided by financing activities was
$1.3 million during the year ended December 31, 2022. The cash used in financing activities for the year ended December 31, 2023 was
related to the pay down of the revolving line of credit of $(13.5) million and payments on the Wintrust Receivables Credit Facility of
$(6.1) million, offset by proceeds from the Wintrust revolving line of credit of $1.9 million and $5.0 million from the Alphia facility
and proceeds of $7.8 million from the Wintrust Receivables Credit Facility. The cash provided by financing activities for the year ended
December 31, 2022 was related to net proceeds from the revolving line of credit of $6.7 million and net proceeds from a short term financing
arrangement of $0.2 million, partially offset by payments on the term loan of $5.5 million and debt issuance costs of $0.1 million.

 Wintrust
Credit Facility

 On
January 6, 2021, Halo entered into a credit facility with Old Plank Trail Community Bank, N.A., an affiliate of Wintrust, consisting
of a $6.0 million term loan and a $6.0 million revolving line of credit, each scheduled to mature on January 6, 2024. The Wintrust Credit
Facility is secured by a general guaranty and security interest on the assets, including the intellectual property of us and our subsidiaries.
We have also pledged all of the capital stock of Halo held by us as additional collateral.

 The
Wintrust Credit Facility subjects us to certain financial covenants, including the maintenance of a fixed charge coverage ratio of no
less than 1.25 to 1.00, tested as of the last day of each fiscal quarter. For the test as of December 31, 2021, we failed to satisfy
the fixed charge coverage ratio and entered into a default waiver agreement with Wintrust in which Wintrust waived the existing default
through the next testing date, March 31, 2022. Additionally, on March 25, 2022, we entered into the second amendment to the Wintrust
Credit Facility, which removed the financial covenant to maintain a fixed charge coverage ratio and included a new financial covenant
to maintain a minimum liquidity, as well updated the rate at which the Wintrust Credit Facility bore interest.

 Furthermore,
on October 24, 2022, we entered into the third amendment to the Wintrust Credit Facility which provided for an increase to the revolving
line of credit, set the amount of Halo's obligation to pledge a deposit account with Wintrust to a fixed amount throughout the
remainder of the term and provided updates to the interest rate, maturity date and minimum liquidity amount associated with the financial
covenant.

 On
June 21, 2023, the Company paid off the entire balance in the sum of $13.5 million of the Wintrust Credit Facility removing any covenant
requirements to be met at December 31, 2023. As of December 31, 2023, there was no outstanding balance related to the Wintrust Credit
Facility

 See
"Note 8 - Debt" to our audited consolidated financial statements included in this Annual Report on Form 10-K for more information.

 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 75% 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 December 31, 2023, the balance outstanding on the Wintrust Receivables Credit Facility amounted to $1.7 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. The Term Loan will bear interest at a rate of 10% per annum, compounded quarterly, and will mature on June 21, 2026. Accrued
interest on the Term Loan is payable quarterly in cash or, at the election of the Company, in-kind by capitalizing such interest and
adding it to the then-outstanding principal amount of the Term Loan. The Term Loan Agreement and Term Note provide for customary financial
covenants and customary events of default, including, among others, those relating to failure to make payment, bankruptcy, breaches of
representations and material adverse effects. The Company may prepay the principal of the Term Loan at any time upon written notice to
Alphia and subject to a prepayment penalty if such prepayment occurs prior to June 21, 2025.

 The
Term Loan is secured by a general security interest on the assets, including the intellectual property, of the Company and Halo pursuant
to (i) that certain Term Loan Security Agreement, dated June 21, 2023, made by the Company and Halo in favor of Alphia (the "Security
Agreement") and (ii) that certain Intellectual Property Security Agreement, dated as of June 21, 2023 of the Company and Halo in
favor of Alphia (the "Intellectual Property Security Agreement"). The Company has also pledged all of the capital stock of
Halo held by the Company as additional collateral for the Term Loan.

 The
term Loan is guaranteed by Halo pursuant to that certain Term Loan Guaranty, dated as of June 21, 2023, by and between Halo and Alphia
(the "Term Loan Guaranty").

 In
conjunction with the Term Loan, the Company issued to Alphia (i) a warrant (the "First Tranche Warrant") to purchase 148,758
shares of the Company's common stock, par value $0.001 per share ("Common Stock") at a price of $11.44 per share, and
(ii) a warrant (the "Second Tranche Warrant" and together with the First Tranche Warrant, the "Warrants") to
purchase 186,882 shares of Common Stock at a price of $11.44 per share. Unless exercised, the Warrants expire on June 21, 2028. Alphia's
exercise of the Second Tranche Warrant is subject to the approval of the Company's stockholders. The Warrants contained certain
anti-dilution provisions in favor of Alphia in connection with any equity offering consummated by the Company prior to December 21, 2023
and equity issuances below the exercise price of the Warrants. The anti-dilution protection in the agreement that would have made Alphia
whole in the event of a capital raise or a change in control that other shareholders would not get, expired on December 31, 2023. The
Warrants also contain a cashless exercise option at the election of Alphia.

 Additionally,
in conjunction with the Term Loan, the Company entered into a Side Letter Agreement with Alphia (the "Side Letter") pursuant
to which Alphia was granted a right of first refusal on any of the following relating to the Company or any of its subsidiaries and to
the extent such transactions constitute a change of control: (i) any transfer, sale, lease or encumbrance of all or any portion of the
capital stock or assets (other than the sale of inventory in the ordinary course of business), (ii) any merger, consolidation or other
business combination, (iii) any recapitalization, reorganization or any other extraordinary business transaction, (iv) or any equity
issuance or debt incurrence. Alphia's right of first refusal is effective so long as the Term Loan remains outstanding and for
a period of 12 months thereafter. The Side Letter also provides Alphia with certain Board observer rights.

 As
of December 31, 2023, our indebtedness on the Alphia Term Loan Facility amounted to $2.9 million net of debt issuance costs of $0.2 million.
For details about the terms, covenants and restrictions contained in the Alphia Term Loan Facility, see "Note 8 - Debt" to
our audited consolidated financial statements included in this Annual Report on Form 10-K for more information.

 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 audited consolidated financial statements included
in this Annual Report on Form 10-K 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 Annual Report on Form 10-K.

 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.

 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 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 below
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. Our actual results may differ from these estimates under
different assumptions and conditions. See "Note 1 - Nature of business and summary of significant accounting policies" to
our audited consolidated financial statements included in this Annual Report on Form 10-K for a description of our significant accounting
policies.

Impairment

 We
evaluate goodwill for impairment at least annually at the reporting unit level. We monitor the existence of potential impairment indicators
throughout the year and will evaluate for impairment whenever events or circumstances indicate that the fair value of a reporting unit
is below its carrying value. Impairment testing is based on our current business strategy in light of present industry and economic conditions,
as well as future expectations. Fair value measurements used in the impairment review of goodwill are Level 3 measurements.

 When
evaluating goodwill for impairment, we have the option to first assess qualitative factors to determine whether it is more likely than
not the fair value of a reporting unit is less than its carrying amount. Qualitative factors include macroeconomic conditions, industry
and market conditions, and overall company financial performance. If, after assessing the totality of events and circumstances, we determine
that it is more likely than not the fair value of the reporting unit is greater than its carrying amount, a quantitative impairment test
is unnecessary. If the fair value exceeds the carrying value, we conclude that no goodwill impairment has occurred. If the carrying value
of the reporting unit exceeds its fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying
value of the goodwill. We consider fair value to be substantially in excess of carrying value at a 20% premium or greater.

 When
performing a quantitative impairment test, determining the fair value of a reporting unit involves the use of significant estimates and
assumptions to evaluate the impact of operational and macroeconomic changes. If a quantitative assessment is deemed necessary, we determine
fair value using a weighted average of widely accepted valuation techniques, including the income approach and market approach. The income
approach applies a fair value methodology based on discounted cash flows which contains uncertainties because it requires management
to make significant assumptions and judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation
of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of
our weighted average cost of capital or discount rate, which is risk-adjusted to reflect the specific risk profile of our business. The
market approach includes determining appropriate comparable companies and applying an estimated multiple to apply to our operating results.
The primary market multiples to which we compare are revenue and earnings before interest, taxes, depreciation and amortization. See
"Note 1 - Nature of business and summary of significant accounting policies" for further information about our policy for
fair value measurements.

 Share-Based
Compensation

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". 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". 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. See "Note
12 - Share-based compensation" to our audited consolidated financial statements included in this Annual Report on Form 10-K for
more information.

 Accounting
for Warrants

 The
fair value of warrants is estimated using a Monte Carlo and/or Black-Scholes valuation model. The assumptions used in these models included
the simulation of future stock prices based on future financing events, likelihood of mandatory exercise of the warrants, and timing
and likelihood of fundamental transactions, such as a change in control. Both valuation methodologies use key inputs, including expected
stock volatility, the risk–free interest rate, the expected life of the option and the expected dividend yield. Expected volatility
is calculated based on the analysis of other public companies within the pet wellness and internet commerce (e-commerce) sectors. Risk–free
interest rates are calculated based on risk–free rates for the appropriate term. The expected life is estimated based on contractual
terms as well as expected exercise dates. The dividend yield is based on the historical dividends issued by us. The valuation of the
warrants is subject to uncertainty as a result of the unobservable inputs. If the volatility rate or risk-free interest rate were to
change, the value of the warrants would be impacted.

 Warrants
that are classified as liabilities due to the terms of the warrant obligation are measured at fair value on a recurring basis at the
end of each reporting period and as a result, we recorded an adjustment to the warrant liabilities to reflect the fair value as of
December 21, 2023. The warrant liabilities were subsequently reclassified to equity (See "Note 11 - Warrants" for more
information). Warrants that are classified as equity or considered compensation are measured at fair value on a non-recurring basis
on the date of issuance. See "Note 11 - Warrants" to our audited consolidated financial statements included in this
Annual Report on Form 10-K for more information.

 ITEM
 7A.
 QUANTITATIVE
 AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

 ITEM 8.

 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

to Consolidated Financial Statements

 Page

 Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; Tampa, Florida; PCAOB ID # 243)

 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

 Notes to the Consolidated Financial Statements

 All
financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient
to require submission of the schedule, or because the information required is included in the consolidated financial statements and accompanying
notes.

 Report
of Independent Registered Public Accounting Firm

 To
the Shareholders and the Board of Directors

 Tampa,
Florida

 Opinion
on the Consolidated Financial Statements

 We
have audited the accompanying consolidated balance sheets of Better Choice Company Inc. (the "Company") as of December 31,
2023 and 2022, the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended,
and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and
the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted
in the United States of America.

 Going
Concern Uncertainty

 The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the consolidated financial statements, the Company has continually incurred operating losses, has an
accumulated deficit and failed to meet certain financial covenants as of December 31, 2023. These matters create substantial doubt about the Company's ability to
continue as a going concern for a period of twelve months from the date these consolidated financial statements are issued. Management's plans in regard to these matters are also described in Note 1. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis
for Opinion

 These
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 Critical
Audit Matter

 The
critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication
of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we
are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts
or disclosures to which it relates.

 Accounting
Treatment of Alphia Warrants

 As described in Note 11 to the consolidated financial statements, on June 21, 2023, the Company issued warrants to
Alphia to purchase 148,758 (First Tranche) and 186,882 (Second Tranche) shares of the Company's common stock (collectively the "Alphia
warrants"). The Company evaluated the Alphia warrants under ASC 815-40, Derivatives and Hedging-Contracts in an Entity's
Own Equity and concluded they did not meet the criteria to be classified in shareholders' equity. Specifically, there were contingent
exercise provisions and settlement provisions that existed, including provisions where the number of shares available under the warrants
may be adjusted based on a percentage of equity. Because the number of outstanding common shares was not a fair value input to a fixed-for-fixed
model, this provision violated indexation guidance. Therefore, the Alphia warrants were not indexed to the Company's stock.

 As a result, the Alphia warrants were initially recorded as liabilities and remeasured at fair value each reporting
period until provisions precluding equity classification lapsed. The anti-dilution provisions, which previously precluded equity treatment
of the Alphia warrants, expired on December 21, 2023, and thus were reclassified and presented in equity as of December 31, 2023.

 We
identified the Company's accounting treatment related to and classification of the Alphia warrants as a critical audit matter,
specifically the Company's classification of the Alphia warrants as a liability upon issuance. The principal considerations
for our determination involves management's application of the complex technical accounting matters related to the accounting
treatment and classification of the Alphia warrants as a result of certain provisions included within the Alphia warrant agreements.
Auditing these elements involved especially challenging, subjective or complex auditor judgment due to the nature and extent of
audit effort required to address this matter, including the extent of specialized skill or knowledge needed.

 The
primary procedures we performed to address this critical audit matter included:

 Inspecting the Alphia warrant agreements along with management's technical accounting memo to understand the
facts and circumstances within the Alphia warrant agreements and other assumptions impacting the appropriate accounting and classification
of the Alphia warrants.

 Utilizing
 personnel with specialized knowledge and skill in accounting for complex financial instruments to assist in evaluating the
 appropriateness of management's interpretation on how to apply the relevant accounting guidance for the classification of the Alphia warrants.

 /s/
 BDO USA, P.C.

 We
have served as the Company's auditor since 2021.

 Tampa,
Florida

 April
12, 2024

 Consolidated
Statements of Operations

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

 2023

 2022

 Year
 ended December 31,

 2023

 2022

 Net
 sales

 $
 38,592

 $
 54,660

 Cost
 of goods sold

 26,795

 39,399

 Gross
 profit

 11,797

 15,261

 expenses:

 Selling,
 general and administrative

 24,444

 35,430

 Impairment
 of goodwill

 —

 18,614

 Impairment of intangible assets

 8,532

 —

 Total
 operating expenses

 32,976

 54,044

 Loss
 from operations

 ( 21,179
)

 ( 38,783
)

 Other
 expense:

 expense

 ( 1,353
)

 ( 551
)

 Change
 in fair value of warrant liabilities

 ( 236
)

 —

 Total
 other expense

 ( 1,589
)

 ( 551
)

 Net
 loss before income taxes

 ( 22,768
)

 ( 39,334
)

 Income
 tax expense (benefit)

 ( 18
)

 Net
 loss available to common stockholders

 $
)

 $
)

 average number of shares outstanding, basic

 705,185

 667,114

 average number of shares outstanding, diluted

 705,185

 667,114

 Net
 loss per share available to common stockholders, basic

 $
 ( 32.29
)

 $
 ( 58.93
)

 Net
 loss per share available to common stockholders, diluted

 $
 ( 32.29
)

 $
 ( 58.93
)

 The
accompanying notes are an integral part of these consolidated financial statements.

 Consolidated
Balance Sheets

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

 December
 31,

 December
 31,

 2023

 2022

 Assets

 Cash
 and cash equivalents

 $
 4,455

 $
 3,173

 Restricted
 cash

 —

 6,300

 receivable, net

 4,354

 6,744

 Inventories,
 net

 6,611

 10,257

 Prepaid
 expenses and other current assets

 1,051

 Total
 Current Assets

 16,232

 27,525

 Fixed
 assets, net

 Right-of-use
 assets, operating leases

 Intangible
 assets, net

 —

 10,059

 Other
 assets

 Total
 Assets

 $
 16,737

 $
 38,676

 Liabilities
 & Stockholders' Equity

 Current
 Liabilities

 payable

 $
 6,928

 $
 2,932

 Accrued
 and other liabilities

 2,085

 2,596

 Line
 of credit

 1,741

 —

 Term
 loan, net

 2,881

 —

 lease liability

 Total
 Current Liabilities

 13,692

 5,580

 Non-current
 Liabilities

 Line
 of credit, net

 —

 lease liability

 Total
 Non-current Liabilities

 11,568

 Total
 Liabilities

 13,759

 17,148

 Stockholders'
 Equity

 Stock, $ 0.001 par value, 200,000,000 shares authorized, 729,026 & 668,869 shares issued and outstanding as of December 31, 2023
 and 2022, respectively

 Additional
 paid-in capital

 324,288

 320,071

 Accumulated
 deficit

 ( 321,342
)

 ( 298,572
)

 Total
 Stockholders' Equity

 2,978

 21,528

 Total
 Liabilities and Stockholders' Equity

 $
 16,737

 $
 38,676

 The
accompanying notes are an integral part of these consolidated financial statements.

 Consolidated
Statements of Stockholders' Equity

 (Dollars
in thousands, except shares)

 Shares

 Capital

 Deficit

 Equity

 Stock

 Additional
 Paid-In

 Accumulated

 Total
 Stockholders'

 Shares

 Capital

 Deficit

 Equity

 as of December 31, 2021

 662,417

 $

 $
 317,102

 $
 ( 259,256
)

 $
 57,875

 compensation

 6,452

 —

 2,969

 —

 2,969

 Net
 loss available to common stockholders

 —

 —

 —

)

)

 as of December 31, 2022

 668,869

 $

 $
 320,071

 $
 ( 298,572
)

 $
 21,528

 668,869

 $

 $
 320,071

 $
 ( 298,572
)

 $
 21,528

 compensation

 60,157

 1,773

 —

 1,776

 Reclassification
 of Alphia Warrants

 —

 —

 2,444

 —

 2,444

 Net
 loss available to common stockholders

 —

 —

 —

)

)

 as of December 31, 2023

 729,026

 $

 $
 324,288

 $
 ( 321,342
)

 $
 2,978

 729,026

 $

 $
 324,288

 $
 ( 321,342
)

 $
 2,978

 The
accompanying notes are an integral part of these consolidated financial statements.

 Consolidated
Statements of Cash Flows

 (Dollars
in thousands)

 2023

 2022

 Year Ended December 31,

 2023

 2022

 Cash Flow from Operating Activities:

 Net loss available to common stockholders

 $
)

 $
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Loss of disposal of assets

 —

 Depreciation and amortization

 1,678

 1,690

 Amortization of debt issuance costs and discounts

 Goodwill impairment

 —

 18,614

 Intangible asset impairment

 8,532

 —

 Share-based compensation

 1,773

 2,969

 Change in fair value of warrant liabilities

 —

 Amortization of prepaid assets

 —

 2,095

 Inventory reserve

 ( 474
)

 1,809

 PIK interest expense on term loan

 —

 Accreted interest expense on term loan

 —

 Income tax provision

 ( 2
)

 —

 Other

 Changes in operating assets and liabilities:

 Accounts receivable

 2,387

 ( 66
)

 Inventories

 4,120

 ( 6,821
)

 Prepaid expenses and other assets

 ( 1,047
)

 Accounts payable

 3,996

 ( 761
)

 Accrued and other liabilities

 ( 760
)

 Cash Provided by (Used in) Operating Activities

 $

 $
 ( 20,553
)

 Cash Flow from Investing Activities:

 Capital expenditures

 $
 ( 18
)

 $
 ( 198
)

 Cash Used in Investing Activities

 $
 ( 18
)

 $
 ( 198
)

 Cash Flow from Financing Activities:

 Proceeds from short-term financing arrangement

 $
 —

 $

 Payments on short-term financing arrangement

 —

 ( 248
)

 Proceeds from revolving lines of credit

 1,906

 12,317

 Payments on revolving lines of credit

 ( 13,500
)

 ( 5,640
)

 Proceeds from line of credit

 7,841

 —

 Payments on line of credit

 ( 6,100
)

 —

 Proceeds from term loan

 5,000

 —

 Payments on term loans

 —

 ( 5,450
)

 Payment of loan issuance costs

 ( 244
)

 ( 110
)

 Cash (Used in) Provided by Financing Activities

 $
 ( 5,097
)

 $
 1,282

 Net decrease in cash and cash equivalents and restricted cash

 $
 ( 5,018
)

 $
 ( 19,469
)

 Total cash and cash equivalents and restricted cash, beginning of period

 9,473

 28,942

 Total cash and cash equivalents and restricted cash, end of period

 $
 4,455

 $
 9,473

 Supplemental cash flow information

 Cash paid during the year for:

 Income taxes

 $
 —

 $

 $

 $

 Noncash items:

 Reclassification of warrants to equity

 $
 2,444

 $
 —

 The
accompanying notes are an integral part of these consolidated financial statements.

 Notes
to the Consolidated Financial Statements

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

 Nature
of the business

Choice Company Inc. (the "Company") is a pet health and wellness company focused on providing pet products and services that
help dogs and cats live healthier, happier and longer lives. The Company 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.

 Initial
public offering

 The
Company completed its initial public offering (the "IPO") on July 1, 2021, in which it issued and sold 181,818 shares of
its common stock at a price of $ 5.00 per share. The total net proceeds from the IPO were approximately $ 36.1 million, after deducting
underwriting discounts and commissions of $ 2.8 million, and offering costs of approximately $ 1.1 million. These IPO costs were recorded
as a reduction of stockholders' equity, and presented net of cash proceeds received in the Consolidated Statement of Cash Flows.

 Upon
the commencement of the IPO, all of the Company's outstanding convertible notes payable automatically converted into 107,555
shares of common stock and upon the consummation of the IPO, all outstanding shares of the Series F convertible preferred stock were
converted into 131,012 shares of common stock. Additionally, since the anti-dilution provision of the Series F Warrants were no longer
effective upon consummation of the Company's IPO, these warrants met the requirements to be considered equity and the outstanding
Series F Warrants were reclassified as such.

 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 Split"). In addition, the conversion rates of the Company's outstanding
preferred stock and convertible notes and 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. No fractional
shares of common stock were issued in connection with the Reverse Stock Split.

 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.

 Basis
of presentation

 The
Company's consolidated financial statements are prepared in accordance with the rules and regulations of the U.S. Securities and
Exchange Commission ("SEC") for annual financial reports and accounting principles generally accepted in the U.S. ("GAAP").

 Consolidation

 The
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 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 consolidated financial statements contain all adjustments necessary for a fair statement of the results
of operations for the years ended December 31, 2023 and 2022, the financial position as of December 31, 2023 and 2022 and the cash flows
for the years ended December 31, 2023 and 2022.

 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 continually incurred losses and has an accumulated deficit.
The Company's term loan agreement with Alphia imposes certain financial covenants, including minimum liquidity of $ 3.0 million,
minimum EBITDA of $ ( 4.5) million, and maximum marketing spend ratio of 30 %. The Company was not in compliance with certain covenants
related to the Alphia Term Loan Facility as of December 31, 2023 and the debt is callable by the lender. Our continued operating losses
along with our failure to meet the financial covenants create substantial doubt about the Company's ability to continue as a going
concern for a period of twelve months from the date these consolidated financial statements are issued. The Company does not currently
expect it will be able to generate sufficient cash flow from operations to maintain sufficient liquidity to meet the required financial
covenants in certain periods prior to maturity giving the lender the right to call the debt. The Company will need to either raise additional
capital or obtain additional financing, and/or secure future waivers or amendments from its lenders or accomplish some combination of
these items to maintain sufficient liquidity. There can be no assurance that the Company will be successful in raising additional capital,
securing future waivers and/or amendments from its lenders, 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, repay amounts owed to its lenders or sell certain
assets.

the third quarter, the Company received a notice of noncompliance from the NYSE American. If the Company fails to satisfy the
continued listing requirements before the end of the cure period, the NYSE American may take steps to delist its common stock. Such
a delisting or the announcement of such delisting will have a negative effect on the price of the Company's common stock and
would impair the ability for investors to sell or purchase the Company's common stock. In the event of a delisting, the
Company may attempt to take actions to restore its compliance with the NYSE American listing requirements, but can provide no
assurance that any such action taken by the Company would allow its common stock to become listed again, stabilize the market price
or improve the liquidity of its common stock, prevent its common stock from dropping below the NYSE American minimum listing
requirements or prevent future non-compliance with the NYSE American listing requirements. If the Company does not maintain the
listing of its common stock on NYSE American, it could make it harder for the Company to raise additional capital in the long-term.
If the Company is unable to raise capital when needed in the future, it may have to cease or reduce operations. There can be no
assurance that the Company will be able to satisfy the continued listing requirements in the future.

 The
Company is continuing to implement plans to achieve operating profitability, as well as implementing other strategic objectives to address
liquidity. The accompanying 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

 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. The Company's cash equivalents are held in government money market funds and at times may exceed federally
insured limits. For purposes of reporting cash flows, the Company considers all cash accounts that are not subject to withdrawal restrictions
or penalties to be cash and cash equivalents. At December 31, 2022, the Company had $ 8.0 million in money market funds all of which were
held in cash. As of December 31, 2023, the Company had closed its money market funds.

 Restricted
cash

 The
Company was required to maintain a restricted cash balance of $ 6.3 million as of December 31, 2022, in connection with the Wintrust Credit
Facility. As a result of the full repayment of the Wintrust Credit Facility, there are no restrictions on cash as of December 31, 2023.
See "Note 8 - Debt" for additional information.

receivable and allowance for credit losses

receivable consist of unpaid buyer invoices from the Company's customers and credit card payments receivable from third-party credit
card processing companies. Accounts receivable is stated at the amount billed to customers, net of point of sale and cash discounts.
The Company assesses the collectability of all receivables on an ongoing basis by considering its historical credit loss experience,
current economic conditions, and other relevant factors. Based on this analysis, an allowance for credit losses is recorded, and the
provision is included within SG&A expense. The Company recorded approximately $ 0.1 million allowance for credit losses for the years
ended December 31, 2023 and 2022.

 Inventories

 Inventories,
consisting of finished goods available for sale as well as packaging materials, are valued using the first-in first-out ("FIFO")
method and are recorded at the lower of cost or net realizable value. Cost is determined on a standard cost basis and includes the purchase
price, as well as inbound freight costs and packaging costs.

 The
Company regularly reviews inventory quantities on hand. Excess or obsolete reserves are established when inventory is estimated to not
be sellable before expiration dates based on forecasted usage, product demand and product life cycle. Additionally, inventory valuation
reflects adjustments for anticipated physical inventory losses that have occurred since the last physical inventory.

 Fixed
Assets

 Fixed
assets are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets, and depreciation
expense is included within SG&A expense. Expenditures for normal repairs and maintenance are charged to operations as incurred. The
cost of fixed assets that are retired or otherwise disposed of and the related accumulated depreciation are removed from the fixed asset
accounts in the year of disposal and the resulting gain or loss is included in SG&A expense.

 The
Company assesses potential impairments of its fixed assets whenever events or changes in circumstances indicate that the asset's
carrying value may not be recoverable. An impairment charge would be recognized when the carrying amount of the identified asset grouping
exceeds its fair value and is not recoverable, which would occur if the carrying amount exceeds the sum of the undiscounted cash flows
expected to result from the use and eventual disposition of the identified asset grouping.

is evaluated for impairment either through a qualitative or quantitative approach at least annually, or more frequently if an event occurs
or circumstances change that indicate the carrying value of a reporting unit may not be recoverable. If a quantitative assessment is
performed that indicates the carrying amount of a reporting unit exceeds its fair market value, an impairment loss is recognized to reduce
the carrying amount to its fair market value. The fair market value is determined based on a weighting of the present value of projected
future cash flows (the "income approach") and the use of comparative market approaches ("market approach"). Factors
requiring significant judgment include, among others, the assumptions related to discount rates, forecasted operating results, long-term
growth rates, the determination of comparable companies and market multiples. Fair value measurements used in the impairment review of
goodwill are Level 3 measurements. See further information about the Company's policy for fair value measurements within this section
below. See "Note 6 - Goodwill and intangible assets" for additional information regarding the goodwill impairment test.

 Intangible
assets

 Finite-lived Intangible assets acquired are carried at cost, less accumulated amortization. Amortization expense
is included in selling, general and administrative expenses on the consolidated statements of operations. The Company assesses long lived
assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate the carrying amount
of the asset group may not be recoverable. The Company operates as a single reporting unit and as such, is the asset group when assessing
finite-lived intangible assets for impairment. If impairment indicators are present, the Company performs a recoverability test by comparing
the sum of the estimated undiscounted future cash flows attributable to its long-lived asset group to its carrying value. If the carrying
amount of an asset group is not recoverable, an impairment loss is recognized based on the excess of the carrying value of the impaired
asset group over its fair value. An impairment loss for an asset group is allocated to the long-lived assets of the group on a pro rata
basis using the relative carrying amounts of those assets, except that the loss allocated to an individual long-lived asset of the group
shall not reduce the carrying amount of that asset below its fair value whenever that fair value is determinable without undue cost and
effort.

 Share
repurchases

 On
May 10, 2022, the Company's board of directors approved a share repurchase program that authorized the repurchase of up to $ 3.0
million of the Company's outstanding common stock in the open market through December 31, 2022. Repurchased shares are immediately
retired and returned to unissued status. During the years ended December 31, 2023 and 2022, no shares were repurchased.

stock warrants

stock warrants are recorded as either liabilities or as equity instruments, depending on the specific terms of the warrant agreement.
Warrants classified as liabilities are revalued at each balance sheet date subsequent to the initial issuance and changes in the fair
value are reflected in the Consolidated Statements of Operations as change in fair value of warrant liabilities. Upon exercise, the warrant
is marked to fair value on the exercise date and the related fair value is reclassified to equity.

 Income
taxes

 Income
taxes are recorded in accordance with FASB ASC Topic 740, "Income Taxes (ASC 740)", which provides for deferred taxes using
an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences
of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined
based on the difference between the consolidated financial statements and tax bases of assets and liabilities and for loss and credit
carryforwards using enacted tax rates anticipated to be in effect for the year in which the differences are expected to reverse. Valuation
allowances are provided, if, based upon the weight of available evidence, it is more likely than not that some or all the deferred tax
assets will not be realized.

 The
Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company
recognizes the tax benefit of tax positions to the extent that some or all the benefit will more likely than not be realized. The determination
as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position, as well as
consideration of the available facts and circumstances. As of December 31, 2023 and 2022, the Company does not have any significant uncertain
income tax positions. If incurred, the Company would classify interest and penalties on uncertain tax positions as income tax expense.

 The
Company was incorporated on May 6, 2019. Prior to this date, the Company operated as a flow through entity for state and U.S. federal
tax purposes. The Company files a U.S. federal and state income tax return, including for its wholly owned subsidiaries.

 Revenue

 Generally,
the Company's customer contracts have a single performance obligation, and revenue is recognized when the product is shipped as
this is when it has been determined that control has been transferred. Amounts billed and due from customers are classified as receivables
and require payment on a short-term basis and therefore do not have any significant financing components.

 Revenue
is measured as the amount of consideration the Company expects in exchange for transferring goods, which varies with changes in trade
incentives the Company offers to its customers. Trade incentives consist primarily of customer pricing allowances and merchandising funds,
and point of sale discounts. Estimates of trade promotion expense and coupon redemption costs are based upon programs offered, timing
of those offers, estimated redemption/usage rates from historical performance, management's experience and current economic trends.

 Cost
of goods sold

 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.

 Advertising

 The
Company charges advertising costs to expense as incurred and such charges are included in 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 record these costs as advertising expenses. Advertising costs were $ 6.8 million
and $ 12.2 million for the years ended December 31, 2023 and 2022, respectively, of which $ 2.1 million is related to the amortization
of the prepaid advertising contract with iHeart for the year ended December 31, 2022. See "Note 4 - Prepaid expenses and other
current assets" for additional information on the prepaid advertising contract with iHeart.

 Freight
Out

 Costs
incurred for shipping and handling, including moving finished product to customers are included in SG&A expense. Shipping costs associated
with moving finished products to customers were $ 1.3 million and $ 1.6 million for the years ended December 31, 2023 and 2022, respectively.

 Research
and development

 Research
and development costs related to developing and testing new products are expensed as incurred and included in SG&A expense. Research
and development costs were $ 0.1 million and $ 0.5 million for the years ended December 31, 2023 and 2022, respectively.

compensation

compensation awards are measured at their estimated fair value on each respective grant date. The Company recognizes share-based payment
expenses over the requisite service period. The Company's share-based compensation awards are subject only to service based vesting
conditions. Pursuant to ASC 718-10-35-8, the Company recognizes compensation cost for stock awards with only service conditions that
have a graded vesting schedule on a straight-line basis over the service period for each separately vesting portion of the award as if
the award was, in-substance, multiple awards. Forfeitures are recognized as they occur.

leases

 The
Company determines if a contract or arrangement meets the definition of a lease at inception. The Company has elected to make the accounting
policy election for short-term leases. For leases with terms greater than 12 months, the Company records the related asset and obligation
at the present value of lease payments over the term. Lease renewal options are only included in the measurement if the Company is reasonably
certain to exercise the optional renewals. Any variable lease costs, other than those dependent upon an index or rate, are expensed as
incurred. If a lease does not provide a readily available implicit rate, the Company estimates the incremental borrowing discount rate
based on information available at lease commencement.

 The
Company's only remaining operating lease as of December 31, 2023 relates to office space. There are no material residual value
guarantees or material restrictive covenants.

 Fair
value of financial instruments

 Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.
The fair value hierarchy uses a framework which requires categorizing assets and liabilities into one of three levels based on the inputs
used in valuing the asset or liability.

 Level
1 inputs are unadjusted, quoted market prices in active markets for identical assets or liabilities.

 Level
2 inputs are observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities
in active markets or quoted prices for identical assets or liabilities in inactive markets.

 Level
3 inputs include unobservable inputs that are supported by little, infrequent or no market activity and reflect management's own
assumptions about inputs used in pricing the asset or liability.

 Level
1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. Assets and liabilities
are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company's
financial instruments recognized on the Consolidated Balance Sheets consist of cash and cash equivalents, restricted cash, accounts receivable,
prepaid assets, accounts payable, term loan, line of credit, accrued liabilities and other liabilities.

 The
fair value of the Company's money market funds is based on quoted market prices using Level 1 inputs. The fair value for the Company's
term loan and line of credit approximates carrying value as the instrument has a variable interest rate that approximates market rates.
The inputs related to the Company's term loan and line of credit are reflected as Level 3 inputs.

 The
Company values it's warrant liabilities using Level 3 inputs.

 Fair
value measurements of non-financial assets and non-financial liabilities reflect Level 3 inputs and are primarily used to measure the
estimated fair values of goodwill, other intangible assets and long-lived assets impairment analyses.

 Basic
and diluted (loss) income per share

 Basic
and diluted (loss) income per share has been determined by dividing the net (loss) income available to common stockholders for the applicable
period by the basic and diluted weighted average number of shares outstanding, respectively. Common stock equivalents are excluded from
the computation of diluted weighted average shares outstanding when their effect is anti-dilutive.

 Segment
information

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 on
an aggregated basis. All the assets and operations of the Company are in the U.S.

 New
Accounting Standards

 Recently
adopted

 ASU
2016-13 "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments"

 In
June 2016, the FASB issued ASU 2016-13, a new standard to replace the incurred loss impairment methodology under current GAAP with a
methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information
to inform credit loss estimates. The standard was effective for the Company on January 1, 2023. The new standard did not have a material
impact on the consolidated financial statements for the year ended December 31, 2023.

 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 enables customers to accumulate points based on their spending.
A portion of revenue is deferred at the time of sale when points are earned and recognized when the loyalty points are redeemed.

 Revenue
channels

 The
Company groups its revenue channels into four categories: E-commerce, which includes the sale of product to online retailers such as
Amazon and Chewy; Brick & Mortar, which primarily includes the sale of product to Pet Specialty retailers such as Petco, Pet Supplies
Plus and neighborhood pet stores, as well as to select grocery chains; DTC, which includes the sale of product through the Company's
website; and International, which includes the sale of product to foreign distribution partners and to select international retailers
(transacted in U.S. dollars).

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

 Schedule
of Information about Revenue Channels

 Twelve Months Ended December 31,

 2023

 2022

 E-commerce (1)

 $
 13,405

 %

 $
 14,565

 %

 Brick & Mortar

 $
 5,870

 %

 $
 11,624

 %

 DTC

 $
 5,597

 %

 $
 6,620

 %

 International (2)

 $
 13,720

 %

 $
 21,851

 %

 Net Sales

 $
 38,592

 %

 $
 54,660

 %

 (1)

 The
 Company's E-commerce channel includes two customers that amounted to greater than 10 % of the Company's total net sales.
 These customers had $ 5.9 million and $ 7.1 million of net sales for the year ended December 31, 2023, respectively and $ 7.5 million
 and $ 6.6 million of net sales for the year ended December 31, 2022, respectively.

 (2)

 One
 of the Company's International customers that distributes products in China amounted to greater than 10 % of the Company's
 total net sales during the years ended December 31, 2023 and December 31, 2022 and represented $ 11.0 million and $ 17.7 million of
 net sales, respectively.

 Note
3 - Inventories

 Inventories
are summarized as follows (in thousands):

 Schedule of Inventories

 Food, treats and supplements

 $
 6,296

 $
 10,212

 Inventory packaging and supplies

 1,166

 1,699

 Total Inventories

 7,462

 11,911

 Inventory reserve

 ( 851
)

 ( 1,654
)

 Inventories, net

 $
 6,611

 $
 10,257

 Note
4 – 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

 Prepaid advertising contract with iHeart (1)

 $
 —

 $
 —

 Prepaid marketing expenses

 —

 Other prepaid expenses and other current assets

 1,051

 Total Prepaid expenses and other current assets

 $

 $
 1,051

 (1)

 On
 August 28, 2019, the Company entered into a radio advertising agreement with iHeart Media + Entertainment, Inc. ("iHeart")
 and issued 166,667 shares of common stock valued at $ 3.4 million for future advertising services. The Company issued an additional
 20,834 shares valued at $ 0.1 million on March 5, 2020 pursuant to the agreement. The current portion of the remaining value, reflected
 above, is the remaining value of services that the Company expects to utilize within the twelve months following the reporting period
 date, unless the term is extended. The Company utilized the remaining advertising services during the year ended December 31, 2022.

 Note
5 - Fixed assets

 Fixed
assets consist of the following (in thousands):

 Schedule of Fixed Assets

 Estimated Useful Life

 Equipment

 2 - 5 years

 $

 $

 Furniture and fixtures

 2 - 5 years

 Computer software, including website development

 2 - 3 years

 Computer equipment

 1 - 2 years

 Total fixed assets

 Accumulated depreciation

 ( 304
)

 ( 169
)

 Fixed assets, net

 $

 $

 Depreciation
expense was $ 0.2 million for the years ended December 31, 2023 and 2022, respectively.

 Note
6 – Goodwill and intangible assets

 The
change in the carrying amount of goodwill for the years ended December 31, 2023 and 2022 is summarized as follows (in thousands):

 Schedule of goodwill

 Beginning balance

 $
 —

 $
 18,614

 Impairment expense

 —

 ( 18,614
)

 Ending balance

 $
 —

 $
 —

is evaluated for impairment if an event occurs or circumstances change that indicate the carrying value of a reporting unit may not be
recoverable. During July 2022, the Company completed a legal merger of TruPet and Halo, Purely for Pets, Inc., a wholly owned subsidiary
of Better Choice Company Inc. ("Halo"), with Halo as the surviving entity in connection with the execution of rebranding
its former TruDog brand under the Halo brand umbrella. In conjunction with the legal merger and rebranding, the Company performed an
analysis of its reporting units and concluded it has one reporting unit after the legal merger and rebrand, and as such, the Company
performed a quantitative goodwill assessment as of July 1, 2022 in addition to its annual impairment test as of October 1, 2022.

 Under
the quantitative approach, the Company makes various estimates and assumptions to determine the estimated fair value of the
reporting unit using a combination of a discounted cash flow model and a guideline comparable analysis. The fair value measurements
used in the impairment review of goodwill are Level 3 measurements which include unobservable inputs that are supported by little,
infrequent or no market activity and reflect management's own assumptions. The key assumptions used in estimating the fair
value of its reporting units as of July 1, 2022 and October 1, 2022 utilizing the income approach include the discount rate and
revenue growth rates. The discount rate utilized in estimating the fair value of its reporting units as of July 1, 2022 and October
1 2022 was 20.0 %,
reflecting the assessment of a market participant's view of the risks associated with the projected cash flows. Revenue growth
rates varied for each year included in the valuation model based on management's best estimate of forecasted operating
results. The assumptions used in estimating the fair values are based on currently available data and management's best
estimates of revenues, EBITDA margins, and cash flows and, accordingly, a change in market conditions or other factors could have a
material effect on the estimated values. There are inherent uncertainties related to the assumptions used and to management's
application of these assumptions. As a result of the annual impairment test, the Company recorded an intangible asset impairment
charge of $ 18.6
million during the year ended December 31, 2022, resulting in full impairment to the goodwill carrying value.

 Intangible
assets

 The Company's intangible assets
include the trade name and customer relationships. As of December 31, 2023, impairment indicators were present which required a recoverability
test to be performed. As a result of the recoverability test, the carrying value of the asset group exceeded its fair value and the Company
recorded an impairment charge of $ 8.5 million for the year ended December 31, 2023, which resulted in a full impairment to the carrying
value of the trade name and customer relationships. This non-cash charge was recorded to intangible asset impairment expenses on the consolidated
statements of operations. The Company did not record any impairment loss on long-lived assets for the year ended December 31, 2022.

 The assumptions used in estimating the undiscounted future cash flows are based on currently available data and management's
best estimates of future income statement and working capital elements. A change in market conditions or other factors could have a material
effect on the estimated values. Fair value was determined based on discounted cash flows requiring judgement. These factors include, among
others, the assumptions related to discount rates, forecasted operating results, long-term growth rates, the determination of comparable
companies and market multiples. The measurements used in the impairment review of finite-lived intangible assets are Level 3 measurements.
There are inherent uncertainties related to the assumptions used and to management's application of these assumptions.

 The
Company's intangible assets (in thousands) and related useful lives (in years) are as follows:

 Schedule of Intangible Assets

 Estimated
 Useful
 Life (in years)

 Gross Carrying

 Accumulated
 Amortization

 Impairment Loss

 Net Carrying

 Customer relationships

 —

 $
 7,190

 $
 ( 4,142
)

 $
 ( 3,048
)

 $
 —

 Trade name

 —

 7,500

 ( 2,016
)

 ( 5,484
)

 —

 Total intangible assets

 $
 14,690

 $
 ( 6,158
)

 $
 ( 8,532
)

 $
 —

 Estimated
 Useful
 Life (in years)

 Gross Carrying

 Accumulated
 Amortization

 Net Carrying

 Customer relationships

 $
 7,190

 $
 ( 3,115
)

 $
 4,075

 Trade name

 7,500

 ( 1,516
)

 5,984

 Total intangible assets

 $
 14,690

 $
 ( 4,631
)

 $
 10,059

 Amortization
expense was $ 1.5 million for the years ended December 31, 2023 and 2022, respectively.

 The
Company assesses intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset or asset group may not be fully recoverable. If impairment indicators are present, the Company performs a recoverability
test by comparing the sum of the estimated undiscounted future cash flows attributable to these long-lived assets to their carrying
value. The assumptions used in estimating the undiscounted future cash flows are based on currently available data and
management's best estimates of revenues, EBITDA margins, and working capital and, accordingly, a change in market conditions
or other factors could have a material effect on the estimated values. There are inherent uncertainties related to the assumptions
used and to management's application of these assumptions. As a result of the recoverability test performed, the carrying
value of the asset group exceeded its fair value, therefore a quantitative impairment test was performed to compare the fair value
of the trade name and customer relationships assets with their carrying value. As a result, the Company recorded an impairment
charge of $ 8.5
million during the year ended December 31, 2023, resulting in full impairment to the carrying value of the trade name and customer
relationships intangible assets.

 Note
7 – Accrued and other liabilities

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

 Schedule of Accrued and Other Liabilities

 Accrued taxes

 Accrued payroll and benefits

 Accrued trade promotions and advertising

 Accrued interest

 Accrued commissions

 Deferred revenue

 Short-term financing

 Other

 Total accrued and other liabilities

 $
 2,085

 $
 2,596

 Note
8 – Debt

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

 Schedule of Components of Debt

 Rate

 Maturity

 date

 Rate

 Maturity

 date

 Term loan, net

 $
 2,881

 (2)

 6/21/2026

 $
 —

 Line of credit, net

 1,741

 (3)

 6/21/2025

 (1)

 10/31/2024

 Total debt

 4,622

 Less current portion

 4,622

 —

 Total long-term debt

 $
 —

 $

 (1)

 at a variable rate of the daily U.S. Federal Funds Rate plus 375 basis points with an interest rate floor of 3.75 % per annum.

 (2)

 at a fixed rate of 10.00 % per annum.

 (3)

 at a variable rate of the daily U.S. Federal Funds Rate plus 250 basis points with an interest rate floor of 5.50 % per annum.

 Wintrust
term loan and lines of credit

 On
January 6, 2021, Halo entered into a credit facility with Old Plank Trail Community Bank, N.A., an affiliate of Wintrust Bank, N.A. ("Wintrust")
consisting of a $ 6.0 million term loan and a $ 6.0 million revolving line of credit, each scheduled to mature on January 6, 2024 and each
bore interest at a variable rate of LIBOR plus 250 basis points, with an interest rate floor of 2.50 % per annum (the "Wintrust
Credit Facility"). The Second Wintrust Amendment described below updated the rate at which the Wintrust Credit Facility bore interest
to the greater of the daily U.S. Federal Funds Rate plus 285 basis points, or the interest rate floor, which remained unchanged. The
Third Wintrust Amendment described below updated the interest rate on the Wintrust Credit Facility to the U.S. Federal Funds Rate plus
 375 basis points, with an interest rate floor of 3.75 % and extends the maturity date of the Wintrust Credit Facility from January 6,
2024 to October 31, 2024. Accrued interest on the Wintrust Credit Facility is payable monthly which commenced on February 1, 2021. Principal
payments were required to be made monthly on the term loan commencing February 2021 with a balloon payment upon the original maturity
date. The proceeds from the Wintrust Credit Facility were used (i) to repay outstanding principal, interest and fees under the previous
revolving line of credit with Citizens Business Bank (the "ABL Facility") and (ii) for general corporate purposes.

 The
Wintrust Credit Facility subjected the Company to certain financial covenants, including the maintenance of a fixed charge coverage ratio
of no less than 1.25 to 1.00, tested as of the last day of each fiscal quarter. The numerator in the fixed charge coverage ratio was
the operating cash flow of Halo, defined as Halo EBITDA less cash paid for unfinanced Halo capital expenditures, income taxes and dividends.
The denominator was fixed charges such as interest expense and principal payments paid or payable on other indebtedness attributable
to Halo. As of December 31, 2021, the Company failed to satisfy the fixed charge coverage ratio and entered into a default waiver agreement
with Wintrust in which Wintrust waived the existing default through the next testing date, March 31, 2022. As part of the Second Wintrust
Amendment described below, the financial covenants were amended to subject the Company to a minimum liquidity covenant test in lieu of
a fixed charge coverage ratio which required the Company to maintain liquidity, tested on the last day of each fiscal quarter beginning
March 31, 2022, of no less than (i) $ 13.0 million as of the last day of each fiscal quarter ending March 31, 2022, through and including
the last day of the fiscal quarter ending December 31, 2022 and (ii) $ 12.0 million as of the last day of the fiscal quarter ending March
31, 2023, and as of the last day of each fiscal quarter thereafter. Furthermore, as part of the Third Wintrust Amendment described below,
the financial covenants were further amended to require the Company to maintain a minimum liquidity of $ 8.5 million tested on the last
day of each fiscal quarter beginning September 30, 2022 and thereafter.

 The
Wintrust Credit Facility is secured by a general guaranty and security interest on the assets, including the intellectual property, of
the Company and its subsidiaries. The Company has also pledged all of the capital stock of Halo held by the Company as additional collateral.
Furthermore, the Wintrust Credit Facility was supported by a collateral pledge by a member of the Company's board of directors;
as a result of the First Wintrust Amendment described below, this collateral pledge was terminated and released.

 On
August 13, 2021, Halo entered into the first amendment to the Wintrust Credit Facility (the "First Wintrust Amendment") to
increase the revolving line of credit from $ 6.0 million to $ 7.5 million. The First Wintrust Amendment also required Halo to secure the
credit facility with a pledge of a deposit account in the amount of $ 7.2 million, which was decreased to $ 6.9 million on January 1, 2022
and was to further decrease to $ 6.0 million on January 1, 2023. Additionally, on March 25, 2022, the Company entered into the second
amendment to the Wintrust Credit Facility (the "Second Wintrust Amendment") which provided for the release of the Company's
Bona Vida subsidiary as a guarantor, an update to the financial covenants as described above and an update to the rate at which the Wintrust
Credit Facility bore interest, which is also described above. Furthermore, on October 24, 2022, the Company entered into the third amendment
to the Wintrust Credit Facility (the "third Wintrust Amendment") which provided for an increase to the revolving line of
credit from $ 7.5 million to $ 13.5 million, set the amount of Halo's obligation to pledge a deposit account with Wintrust to a fixed
amount of $ 6.3 million throughout the remainder of the term and provided updates to the interest rate, maturity date and financial covenants
as described above.

 As
part of the Third Wintrust Amendment described above, Halo used a portion of the increased revolving credit facility to repay and retire
the outstanding term loan portion of the Wintrust Credit Facility.

 On
June 21, 2023, the Company paid off the entire balance in the sum of $ 13.5 million of the Wintrust Credit Facility removing any covenant
requirements to be met at December 31, 2023.

 As
of December 31, 2023, there was no outstanding balance related to the Wintrust Credit Facility. As of December 31, 2022, the line of
credit outstanding was $ 11.4 million, net of debt issuance costs of less than $ 0.2 million. Debt issuance costs are amortized using the
effective interest method.

 Wintrust
Receivables Credit Facility

 On
June 21, 2023, the Company entered into an account purchase agreement with Wintrust Receivables Finance (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 75 % of the face amount of all purchased invoices. The maximum outstanding balance can be $ 4.8 million. Each advance under
the Advance Purchase Agreement will bear a variable interest rate at the prime rate plus 2.5 % percentage per annum. The interest rate
at December 31, 2023 was 11.0 % 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 restrict 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.

 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 year ended December 31, 2023, the Company sold receivables having an aggregate face value of $ 10.5 million,
in exchange for cash proceeds of $ 7.8 million. As of December 31, 2023, the balance outstanding on the Wintrust Receivables Credit Facility
amounted to $ 1.7 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.

 The
Term Loan bears an interest rate of 10 % per annum, compounded quarterly, and will mature on June 21, 2026. Accrued interest on the Term
Loan is payable quarterly in cash or, at the election of the Company, in-kind by capitalizing such interest and adding it to the then-outstanding
principal amount of the Term Loan. The Term Loan Agreement provides for customary financial covenants and customary events of default,
including, among others, those relating to failure to make payment, bankruptcy, breaches of representations and material adverse effects.
The Company was not in compliance with these covenants as of December 31, 2023. The Company may prepay the principal of the Term Loan
at any time upon written notice to Alphia and subject to a prepayment penalty if such prepayment occurs prior to June 21, 2025.

 The
Term Loan is secured by a general security interest on the assets, including the intellectual property of the Company and Halo pursuant
to (i) that certain Term Loan Security Agreement, dated June 21, 2023, made by the Company and Halo in favor of Alphia (the "Security
Agreement") and (ii) that certain Intellectual Property Security Agreement, dated as of June 21, 2023, of the Company and Halo
in favor of Alphia (the "Intellectual Property Security Agreement"). The Company has also pledged all of the capital stock
of Halo held by the Company as additional collateral for the Term Loan.

 The
term Loan is guaranteed by Halo pursuant to that certain Term Loan Guaranty, dated as of June 21, 2023, by and between Halo and Alphia
(the "Term Loan Guaranty").

 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 (as defined in Note 11) 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 (see Note 11 for further discussion). 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.

 Future
Debt Maturities

 Future
debt maturities as of December 31, 2023 and for succeeding years are as follows (in thousands):

 Schedule of Future Debt Maturities

 Year ending December 31:

 2024

 $
 5,291

 2025

 $
 —

 2026

 $
 —

 Total

 $
 5,291

 Note
9 - Fair Value Measurements

 The
carrying amounts of cash and cash equivalents, trade accounts receivable, prepaid expenses 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 as variable interest rates on these instruments approximates current market
rates.

 The
Company estimates the fair value of the term loan based on a discounted cash flow method. The carrying value of the term loan was based
on an accounting entry where proceeds from the loan were first allocated to the warrants liabilities. The following table presents the
carrying amount and fair value of the Company's term note and line of credit by hierarchy level:

 Schedule of Carrying Amount and Fair Value

 Fair Value

 Hierarchy

 Carrying

 Fair

Value

 Carrying

 Fair

Value

 Term loan, net

 Level 3
 (2)

 $
 2,881

 $
 3,314

 $
 —

 $
 —

 Line of credit

 Level 2
 (1)

 $
 1,741

 $
 1,741

 $

 $

 (1)

 the
 fair value estimates are based upon observable market data

 (2)

 the
 fair value estimates are based on unobservable inputs reflecting management's assumptions about inputs used in pricing the
 asset or liability

 Note
10 – Commitments and contingencies

 The
Company has manufacturing agreements with its vendors that provides for the company to make its commercial best efforts to purchase minimum
quantities in the ordinary course of business. The Company had no material purchase obligations as of December 31, 2023 or 2022.

 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. 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
years ended December 31, 2023 and 2022:

 Schedule of Outstanding Warrants

 Warrants

 Weighted Average

 Exercise Price

 Warrants outstanding as of December 31, 2021

 214,400

 $
 5.92

 Issued

 —

 $
 —

 Exercised

 —

 $
 —

 Terminated/Expired

 —

 $
 —

 Warrants outstanding as of December 31, 2022

 214,400

 $
 5.92

 Issued

 335,639

 $
 11.44

 Exercised

 —

 $
 —

 Terminated/Expired

 —

 $
 —

 Warrants outstanding as of December 31, 2023

 550,039

 $
 2.47

 The
intrinsic value of outstanding warrants was $ 0.0
 million as of December 31, 2023 and 2022, respectively.
The following discussion provides details on the various types of outstanding warrants and the related relevant disclosures around each
type.

 The
warrants shown in the table above outstanding as of December 31, 2022, are equity classified warrants issued between May 2019 and January
2021. There was no intrinsic value associated with these equity warrants as of December 31, 2022.

 In
conjunction with the Alphia Term Loan Facility mentioned in Note 8 - Debt, the Company issued to Alphia (i) a warrant (the
"First Tranche Warrant") to purchase 148,758
shares of the Company's common stock, par value $ 0.001
per share ("Common Stock") at a price of $ 11.44
per share, and (ii) a warrant (the "Second Tranche Warrant" and together with the First Tranche Warrant, the
"Warrants" or the "Alphia Warrants") to purchase 186,882
shares of Common Stock at a price of $ 11.44
per share. Unless exercised, the Warrants expire on June
21, 2028. Alphia's exercise of the Second Tranche Warrant was subject to the approval of the Company's
stockholders and was approved on November 15, 2023. The Warrants contained certain anti-dilution provisions in favor of Alphia in
connection with any equity offering consummated by the Company prior to December 21, 2023 and equity issuances below the exercise
price of the Warrants. The Warrants also contain a cashless exercise option at the election of Alphia.

 Additionally,
in conjunction with the Term Loan, the Company entered into a Side Letter Agreement with Alphia (the "Side Letter") pursuant
to which Alphia was granted a right of first refusal on any of the following relating to the Company or any of its subsidiaries and to
the extent such transactions constitute a change of control: (i) any transfer, sale, lease or encumbrance of all or any portion of the
capital stock or assets (other than the sale of inventory in the ordinary course of business), (ii) any merger, consolidation or other
business combination, (iii) any recapitalization, reorganization or any other extraordinary business transaction, (iv) or any equity
issuance or debt incurrence. Alphia's right of first refusal is effective so long as the Term Loan remains outstanding and for
a period of 12 months thereafter. The Side Letter also provides Alphia with certain Board observer rights.

 The
Company evaluated the Alphia Warrants under ASC 815-40, Derivatives and Hedging-Contracts in Entity's Own Equity ("ASC
815-40") and concluded they did not initially meet the criteria to be classified in shareholders' equity. Specifically,
there were contingent exercise provisions and settlement provisions that existed, including provisions where the number of shares
available under the warrants may be adjusted based on a percentage of equity. Because the number of outstanding common shares was
not a fair value input to a fixed-for-fixed model, this provision violated indexation guidance. Therefore, the warrants were not
indexed to the Company's stock. The Alphia warrant liabilities were remeasured at fair value each reporting period until
provisions precluding equity classification lapsed and the Company reassessed the warrants classification on December 21, 2023. The total value of the
consideration received in connection with the Alphia Term Loan Agreement was first allocated to warrants liabilities at fair value,
with the remainder allocated to the Alphia Term Loan Agreement. Accordingly, the Company recorded a discount of $ 2.2
million on the Alphia Term Loan Agreement (see Note 8 – Debt for further discussion).

 The
Alphia warrant liabilities were determined using a risk-neutral Monte Carlo simulation based approach, a Level 3 valuation. The significant
inputs to the warrant liabilities were as follows:

 Schedule of Significant Inputs to Warrants Liabilities

 December 21, 2023

 First Tranche

 Warrant

 Second Tranche

 Warrant

 Exercise price

 $
 11.44

 $
 11.44

 Stock price

 $
 12.00

 $
 12.00

 Volatility

 62.0
 %

 62.0
 %

 Time to maturity

 5 years

 5 years

 Risk-free rate

 3.92
 %

 3.92
 %

 Dividend yield

 —
 %

 —
 %

 The
following table summarizes the Alphia warrant liability activity for twelve months ended December 31, 2023:

 Schedule of Warrant Liability Activity

 Balance as of December 31, 2022

 $
 —

 Warrant liabilities issued

 2,208

 Change in fair value of warrant liabilities

 Reclassification of warrants liabilities to equity

 ( 2,444
)

 Balance as of December 31, 2023

 $
 —

 The
change in fair value related to the Alphia warrant liabilities was $ 0.2 million for the twelve months ended December 31, 2023. There
were no transfers to/from levels 1, 2 and 3 during the twelve months ended December 31, 2023. The anti-dilution provisions which previously
precluded equity treatment of the warrants, expired on December 21, 2023, and thus the warrants were reclassified and presented in equity
as of December 31, 2023.

 Note
12 – Share-based compensation

the year ended December 31, 2023 and December 31, 2022, the Company recognized $ 1.8 million and $ 3.0 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. The Amended 2019 Plan authorized the issuance
of 24,621 shares of common stock which was increased to 34,091 after the Halo acquisition; the Amended 2019 Plan also provides for an
annual increase on the first day of each calendar year beginning on January 1, 2020 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 authorized shares for issuance was increased to 61,364 on January 1, 2021,
increased to 127,606 on January 1, 2022 and again increased to 194,493 on January 1, 2023.

 Stock
options

 The
following table provides detail of the options granted and outstanding (dollars in thousands):

 Schedule of Options Granted and Outstanding

 Options

 Average
 Exercise Price

 Average

 Remaining

 Contractual

Life (Years)

 Aggregate

 Intrinsic Value

 Options outstanding as of December 31, 2021

 $
 6.10

 8.5

 $
 —

 Granted

 $
 2.24

 Forfeited/Expired

 ( 5
)

 $
 5.26

 Options outstanding as of December 31, 2022

 $
 5.39

 7.2

 $
 —

 Options exercisable as of December 31, 2022

 $
 5.84

 6.5

 $
 —

 Fully vested options as of December 31, 2022

 $
 5.84

 6.5

 $
 —

 Options expected to vest as of December 31, 2022

 $
 4.32

 8.8

 $
 —

 Options

 Average
 Exercise Price

 Average

 Remaining

 Contractual

Life (Years)

 Aggregate

 Intrinsic Value

 Options outstanding as of December 31, 2022

 $
 5.39

 7.2

 $
 —

 Granted

 0.35

 Forfeited/Expired

 ( 21
)

 5.19

 Options outstanding as of December 31, 2023

 $
 5.03

 5.7

 $
 —

 Options exercisable as of December 31, 2023

 $
 5.54

 5.2

 $
 —

 Fully vested options as of December 31, 2023

 $
 5.54

 5.2

 $
 —

 Options expected to vest as of December 31, 2023

 $
 1.74

 8.9

 $
 —

 Options
granted under the Amended 2019 Plan vest over a period of two 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).

the years ended December 31, 2023 and 2022, $ 1.0 million and $ 2.4 million, respectively, of share-based compensation expense was recognized
related to options issued. As of December 31, 2023, unrecognized share-based compensation related to options was $ 0.2 million, which
is expected to be recognized over a weighted average period of 0.4 years.

 The
fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model, using the following
assumptions primarily based on historical data:

 Schedule
of Fair Value Assumptions

 Years Ended December 31,

 2023

 2022

 Risk-free interest rate

 0.33 - 4.02
 %

 1.70 - 4.02
 %

 Expected volatility (1)

 0.0 % - 72.5
 %

 65.0 % - 72.5
 %

 Expected dividend yield

 —
 %

 —
 %

 Expected life (years) (2)

 0 - 7.6

 6.0 - 6.5

 (1)

 Expected
 volatility was determined using a combination of historical volatility and implied volatility.

 (2)

 For
 certain options, the simplified method is utilized to determine the expected life due to the lack of historical data.

 Restricted
Stock Awards

 In
February 2022, the Company granted 4,962 shares of restricted common stock to members of its board of directors under the Amended 2019
Plan as compensation for annual board service. These restricted stock awards were immediately vested and, as such, the Company recorded
share-based compensation expense of $ 0.5 million upon issuance.

the fourth quarter of 2022, the Company granted 1,489 shares of restricted common stock to a member of its board of directors for service
as interim CEO. These restricted stock awards were immediately vested and, as such, the Company recorded share-based compensation expense
of less than $ 0.1 million upon issuance.

 In
January 2023, the Company granted 20,292 shares of restricted common stock to members of its board of directors under the Amended 2019
Plan as compensation for annual board service. These restricted stock awards were immediately vested and, as such, the Company recorded
share-based compensation expense of $ 0.5 million upon issuance.

 In
January 2023, the Company granted 4,545 shares of restricted common stock to certain executives and employees under the Amended 2019
Plan as performance bonus compensation totaling $ 0.1 million. These restricted stock awards were issued on the grant date with a one
year cliff vesting condition and the Company will recognize the expense over the vesting period.

the first quarter of 2023, the Company granted 409 shares of restricted common stock to a member of its board of directors for service
as interim CEO. These restricted stock awards were immediately vested and, as such, the Company recorded share-based compensation expense
of less than $ 0.1 million upon issuance.

the second quarter of 2023, the Company granted 909 shares of restricted common stock to certain executives and employees under the Amended
2019 Plan as performance bonus compensation totaling less than $ 0.1 million. These restricted stock awards were issued on the grant date
with a one year cliff vesting condition and the Company will recognize the expense over the vesting period.

the third quarter of 2023, the Company granted 34,090 shares of restricted common stock to two members of its board of directors. These
restricted stock awards were immediately vested and, as such, the Company recorded share-based compensation expense of less than $ 0.3
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 IRS. 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 $ 0.1 million and $ 0.2 million during the years
ended December 31, 2023 and 2022, respectively.

 Note
14 – Related party transactions

Fees

 The
Company pays quarterly board of director fees. Board of director fees totaled $ 0.3 million during the years ended December 31, 2023 and
2022. As of December 31, 2023 and 2021, $ 0.1 million of these director fees were in accounts payable on the Consolidated Balance Sheets,
respectively.

 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 member
of the Company's board of directors is a partner at Believeco. As of December 31, 2023 marketing expense related to Believeco totaled
$ 0.4 million of which $ 0.1 million is included within Accounts Payable.

 Note
15 – Income taxes

 For
the year ended December 31, 2023, the Company recorded income tax expense of less than $ 0.1 million. For the year ended December 31,
2022, the Company recorded income tax benefit of less than $ 0.1 million. For the years ended December 31, 2023 and 2022, the Company's
effective tax rate was 0 %. The Company's effective tax rate differs from the U.S. federal statutory rate of
 21 % primarily because the Company's losses have been fully offset by a valuation allowance due to uncertainty of realizing the
tax benefit of net operating losses ("NOLs") for the years ended December 31, 2023 and 2022.

 The
following table is a reconciliation of the components that caused the Company's provision for income taxes to differ from amounts
computed by applying the U.S. federal statutory rate of 21% (in thousands):

 Schedule of Effective Income Tax Rate Reconciliation

 Years Ended December 31,

 2023

 2022

 Statutory U.S. Federal income tax

 $
 ( 4,782
)

 21.0
 %

 $
 ( 8,260
)

 21.0
 %

 State income taxes, net

 ( 309
)

 1.3
 %

 ( 167
)

 0.4
 %

 Meals and entertainment

 —
 %

 —

 —
 %

 Change in valuation allowance

 5,031

 ( 22.1
)%

 5,384

 ( 13.7
)%

 Goodwill impairment

 —

 —
 %

 3,802

 ( 9.7
)%

 Warrant valuation

 ( 0.2
)%

 —

 —
 %

 Tax effect of non-deductible equity instruments

 —

 —
 %

 —

 0.1
 %

 Return to provision adjustment

 —
 %

 ( 5
)

 —
 %

 Other

 —
 %

 ( 772
)

 2.0
 %

 Total provision

 $

 0.0
 %

 $
 ( 18
)

 0.1
 %

 Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.

 Significant
components of the Company's deferred tax assets and liabilities are as follows (in thousands):

 Schedule of Deferred Tax Assets and Liabilities

 2023

 2022

 December 31,

 2023

 2022

 Deferred income tax assets:

 Net operating loss carryforwards

 $
 21,662

 $
 19,182

 ROU assets

 Share-based compensation

 5,320

 5,251

 Inventory

 Other assets

 2,508

 2,306

 Gross deferred tax assets

 29,586

 26,938

 Valuation allowance

 ( 29,509
)

 ( 24,479
)

 Net deferred tax assets

 $

 $
 2,459

 Deferred income tax liabilities:

 Fixed assets

 ( 50
)

 ( 86
)

 Operating lease liabilities

 ( 27
)

 ( 41
)

 Intangibles

 —

 ( 2,332
)

 Deferred tax liabilities, net of valuation allowance

 $
 —

 $
 —

 As
of December 31, 2023, the Company had a deferred tax asset (before valuation allowance) recorded on gross federal and state net operating
loss carryforwards of approximately $ 89.7 million and $ 59.3 million, respectively. The net operating losses will begin to expire in 2026.

 The
Internal Revenue Code, as amended ("IRC"), imposes restrictions on the utilization of NOLs and other tax attributes in the
event of an "ownership change" of a corporation. Accordingly, a company's ability to use pre-change NOLs may be limited
as prescribed under IRC Section 382. Events which may cause limitation in the amount of the NOLs and credits that can be utilized annually
include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period.

 Management
assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing
deferred tax assets in the future. A significant piece of objective negative evidence evaluated was the cumulative loss incurred through
the years ended December 31, 2023 and 2022. Such objective evidence limits the ability to consider other subjective positive evidence
such as current year taxable income and future income projections. On the basis of this evaluation, as of December 31, 2023, a valuation
allowance of $ ( 29.5) million was recorded since it is more likely than not that the deferred tax assets will not be realized.

 Changes
in valuation allowance are as follows (in thousands):

 Schedule of Valuation Allowance

 2023

 2022

 Years Ended December 31,

 2023

 2022

 Valuation allowance, at beginning of year

 $
 24,479

 $
 19,095

 Increase in valuation allowance

 5,030

 5,384

 Valuation allowance, at end of year

 $
 29,509

 $
 24,479

 As
of December 31, 2023 and 2022, the Company does not have any significant uncertain tax positions and as of December 31, 2023 and 2022,
the Company had no accrued interest and penalties related to uncertain income tax positions. The Company does not anticipate that the
amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months. If incurred, the Company would
classify interest and penalties on uncertain tax positions as income tax expense.

 The
Company is subject to taxation in the U.S. federal and various state jurisdictions. The Company is not currently under audit by any taxing
authorities. The Company remains open to examination by tax jurisdictions for tax years beginning with the 2020 tax year for federal
and 2018 for states. Federal and state net operating losses are subject to review by taxing authorities in the year utilized and future
years.

 Note
16 – Concentrations

 Major
suppliers

 The
Company sourced approximately 64 % of its inventory purchases from two vendors for the year ended December 31, 2023. The Company sourced
approximately 69 % of its inventory purchases from three vendors for the year ended December 31, 2022.

 Major
customers

receivable from two customers represented 79 % of accounts receivable as of December 31, 2023. Accounts receivable from three customers
represented 88 % of accounts receivable as of December 31, 2022. Three customers represented 62 % of gross sales for the year ended December
31, 2023. Three customers represented 58 % of gross sales for the year ended December 31, 2022.

 Credit
risk

 As
of December 31, 2023 and 2022, 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
17 – Loss per share

 The
Company presents loss per share on a basic and diluted basis. Basic (loss) earnings per share is computed by dividing net loss by the
weighted average number of common shares outstanding ("WASO") during the period. Diluted loss per share includes the dilutive
effect of common stock equivalents consisting of stock options and warrants using the treasury stock method and convertible notes and
preferred stock using the if-converted method. Under the treasury stock method, the amount the holder must pay for exercising stock options
or warrants and the amount of average compensation cost for future service that has not yet been recognized are collectively assumed
to be used to repurchase shares.

 For
the year ended December 31, 2023, the Company's basic and diluted net loss 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 December 31,
2022, 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: 214,400 of stock equivalent warrants, 69,654 of stock equivalent employee stock options and 146 of
stock equivalent other options. For the year ended December 31, 2023, 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: 335,640 of
Alphia Warrants ( 148,758 First
Tranche Warrant and 186,882 Second
Tranche Warrant); 214,400 of
stock equivalent warrants; and 53,285 of
stock equivalent employee stock options.

 The
following table sets forth basic and diluted net (loss) earnings per share attributable to common stockholders for the years ended December
31, 2023 and 2022 (in thousands, except share and per share amounts):

 Schedule of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders

 2023

 2022

 Year ended December 31,

 2023

 2022

 Numerator:

 Net loss

 $
)

 $
)

 Less: Adjustment due to warrant modifications

 —

 —

 Adjusted net loss available to common stockholders

 $
)

 $
)

 Denominator:

 Basic WASO

 705,185

 667,114

 Dilutive common stock equivalents

 —

 —

 Diluted WASO

 705,185

 667,114

 Net loss per share attributable to common stockholders, basic

 $
 ( 32.29
)

 $
 ( 58.93
)

 Net loss per share attributable to common stockholders, diluted

 $
 ( 32.29
)

 $
 ( 58.93
)

 Note
18 – Subsequent events

 On
February 9, 2024, the Company announced the acquisition of all the issued and outstanding common shares of Aimia Pet Healthco, Inc. for
consideration consisting of 45,629 shares of common stock of the Company. The Company has not yet completed its evaluation of certain
assets and liabilities acquired, or treatment of this transaction as either a business combination or asset acquisition in accordance
with Topic 805.

 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.

 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. The Company is unable to predict the outcome or impact on its business and financial results.

 ITEM
 9.
 CHANGES
 IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 None.

 ITEM
 9A.
 CONTROLS
 AND PROCEDURES

 Evaluation
of Disclosure Controls and Procedures

 Our
management, with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our
principal financial officer) evaluated the effectiveness of our disclosure controls and procedures as of the year ended December 31,
2023. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of December 31,
2023, our disclosure controls and procedures were not effective due to the material weaknesses discussed below. 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-K fairly present, 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.

 Management's
Annual Report on Internal Control Over Financial Reporting

 Management
is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f)
under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. In making this assessment, management
used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control –
Integrated Framework (2013 Framework). Based on this assessment, management concluded that, as of December 31, 2023, the Company's
internal control over financial reporting was not effective due to the material weaknesses described below.

 Material
Weaknesses

 In
July 2023, Management became aware of a cybersecurity incident via email compromise. Management investigated the matter internally and
engaged a third-party forensics expert to facilitate a full investigation to determine the exact nature, timing, and magnitude of the
breach. The root cause of the incident was traced to lack of Multi-Factor Authentication ("MFA") protection allowing a brute
force attack on the user's hosted Microsoft Exchange email account. Management determined that although there was a control that
was designed and implemented, it did not prevent the cybersecurity breach. Management has thus determined that there is a material weakness
related to the failure to maintain controls that should have been operating effectively as of December 31, 2023.

 Additionally,
our internal controls over financial reporting were not effective as of December 31, 2023, due to a material weakness in analyzing
complex accounting transactions, including the proper classification of warrants as liabilities and the related financial statement
disclosures, and the proper assessment of triggering events that occurred that would require an impairment analysis over intangible
assets. In light of this material weakness, we performed additional analysis as deemed necessary to ensure that our consolidated
financial statements were prepared in accordance with GAAP. Accordingly, management believes that the financial statements included
in this report present fairly in all material respects our financial position, results of operations and cash flows for the periods
presented.

 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.

 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 accounting for complex accounting transactions, we plan to engage outside advisors
with specialist knowledge of GAAP and valuation as it relates to our complex financial instruments.

 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 material weaknesses 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 December 31, 2023 that has materially affected, or is reasonably
likely to materially affect, those controls.

 Attestation
Report of Independent Registered Public Accounting Firm

 This
Annual Report on Form 10-K does not include an attestation report of the Company's registered public accounting firm, as non-accelerated
filers are exempt from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

 ITEM
 9B.
 OTHER
 INFORMATION

 None.

 PART
III

 ITEM
 10.
 DIRECTORS,
 EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 The
following table sets forth the names and positions of our executive officers and directors serving as of such date of filing of this
annual report on Form 10-K. Directors will be elected at our annual meeting of stockholders and serve for one year or until their successors
are elected and qualify. Officers are elected by the Board and their terms of office are, except to the extent governed by employment
contract, at the discretion of the Board.

 Name

 Age

 Position

 Director Since

 Kent Cunningham (1)

 Chief Executive Officer

 n/a

 Carolina Martinez

 Chief Financial Officer, Secretary and Treasurer

 n/a

 2021

 Arlene Dickinson (1)

 2021

 Gil Fronzaglia

 2021

 John M. Word III

 2019

 Michael Young

 Chairman of the Board of Directors

 2019

 (1)
 Ms. Dickinson resigned effective April 1, 2024, and Mr. Cunningham was appointed as a member of the Board, effective April 1, 2024, to fill the vacancy resulting
from Ms. Dickinson's resignation.

 Kent
Cunningham. Mr. Cunningham was appointed as Chief Executive Officer of the Company effective as of May 22, 2023. Prior to joining
the Company, Mr. Cunningham was a Principal with Catapult Consulting where he provided management and M&A advisory consulting services
from February 2022 to May 2023. Prior to consulting, Mr. Cunningham served as the Chief Executive Officer of 1440 Foods, a sports and
active nutrition company, between August 2021 and January 2022. Prior to 1440 Foods, he was a General Manager at The Bountiful Company,
an American dietary supplements company, from May 2019 to August 2021. Prior to The Bountiful Company, Mr. Cunningham was Chief Marketing
Officer for Whole Earth Brands, a global food company providing plant-based sweeteners and flavor enhancers, between April 2018 and May
2019. From 2013 to April 2018, Mr. Cunningham held various marketing positions at Glanbia Performance Nutrition, a global nutrition company.
From 2006 to 2013, Mr. Cunningham held various Marketing positions at MARS Petcare, owner of several health and nutrition pet food brands.
Mr. Cunningham is a passionate brand builder and business leader with over 25 years of CPG and Health & Wellness marketing and sales
experience across a range of corporate environments and categories including accelerating growth within multinationals, brand turnarounds
and high value exits in the private equity business for the likes of KKR & Co. Inc. Mr. Cunningham holds an MBA in Marketing from
Vanderbilt University and a BA in Communications from the University of Michigan. Mr. Cunningham was appointed as a member of the Board, effective April 1, 2024.

 Carolina
Martinez. Mrs. Martinez was appointed as Chief Financial Officer, effective August 2, 2023. Mrs. Martinez was previously appointed
and served as the Interim Chief Financial Officer, Secretary and Treasurer of the Company effective as of April 3, 2023, and will continue
to serve as the Secretary and Treasurer of the Company. Prior to joining the Company, Mrs. Martinez was a Director of CFO Partnership
Solutions at ONE10 Advisors, LLC, ("ONE10 Advisors") a strategic finance and accounting advisory firm in Tampa, FL. Prior
to joining ONE10 Advisors in January 2022, Mrs. Martinez spent nine years at PricewaterhouseCoopers, LLP where she served as a Manager
in the National Quality Organization office from March through December 2021, and in various assurance roles from January 2013 through
March 2021 where she primarily served publicly traded companies. Mrs. Martinez is a Certified Public Accountant in the State of Florida
and holds a Master of Science in Accounting from The University of Tampa and a Bachelor of Science in Business Administration, Accounting
from the University of Central Florida.

 Lionel
F. Conacher. Mr. Conacher has served as a director since September 2021. He has over thirty years of financial experience, spanning
senior positions in public companies in both Canada and the US, investment banking, private equity and venture capital. Mr. Conacher
currently serves as Chairman of DXL Group (NASDAQ: DXLG), where he has successfully guided the retail chain through the COVID-19 pandemic.
In 2018, Mr. Conacher co-founded a San Francisco based venture capital fund, Next Ventures, after serving as a Senior Advisor and Operating
Partner at Altamont Capital Partners, a Palo Alto based Private Equity Firm, for over seven years. Prior to his experience at Altamont
Partners, he co-founded and served as the CEO of Westwind Partners Inc., a specialized Canadian institutional investment bank that was
ultimately sold to Thomas Weisel Partners for $170 million in 2007 before being acquired by Steifel in 2010. Mr. Conacher holds an A.B.
in Economics & Art History from Dartmouth College and is also actively involved in a variety of non-profits.

 Arlene
Dickinson. Ms. Dickinson has served as a director since September 2021. She is a well-known entrepreneur and General Partner of District
Ventures Capital, a venture capital fund focused on helping market, fund and grow entrepreneurs and their companies in the food and health
space. Dickinson is widely recognized for her role as a Dragon / Venture Capitalist for over 12 seasons on the multi-award-winning CBC
television series, Dragons' Den. Prior to joining the cast of Dragons' Den, she served as the President and CEO of Venture
Communications, a Calgary based agency that became one of Canada's largest independent marketing firms. She is a three-time best-selling
author, podcaster and accomplished public speaker and sits on several public and private boards. Ms. Dickinson has won numerous awards,
including Calgary Business Owner of the year, PROFIT Magazine's Top 100 Women Business Owners and Canada's Most Powerful
Women Top 100. Ms. Dickinson resigned from the Board effective April 1, 2024.

 Gil
Fronzaglia. Mr. Fronzaglia has served as a director since April 2021. He has had a successful career serving as both a board and
management team member for large consumer products companies, natural food and beverage startups and most notably as a founding member
and VP of Operations for Blue Buffalo. In addition to joining the board of Better Choice in 2021, Gil has served as a Board Member of
Quinn Snacks since 2016, where he was the Interim COO from December 2018 through July 2019. Mr. Fronzaglia has also served as a member
of the board of Grillo's Pickles, the premium pet care brand I And Love And You and Spindrift Beverage Co. Mr. Fronzaglia is based
in Boulder, Colorado and holds a Bachelor of Science from Northeastern University, and a Masters of Business Administration from Barry
University.

 John
M. Word III. Mr. Word has served as a director since January 2020. Mr. Word founded the Word & Brown General Agency in 1984 to
market and distribute health plans through California's huge brokerage community by 1986, the company was recognized as the largest
independent small group health distributor in the nation. That same year, the company launched the nation's first COBRA administration
operation, sensing that employers needed assistance and qualified support with federal COBRA laws. CaliforniaChoice, a groundbreaking
enterprise empowering small business employees to select from multiple health plans within one program, was launched in 1996. Mr. Word's
professional credentials include Chartered Life Underwriter (CLU), Registered Health Underwriter (RHU), and Registered Employee Benefits
Consultant (REBC). He has served as President of the California Association of Health Underwriters (CAHU), President of the Orange County
Association of Health Underwriters (OCAHU), and Chairman of the National Association of Health Underwriters (NAHU) Leading Producers
Roundtable program. Mr. Word holds a Bachelor of Science in Marketing and Finance from William Jewell College in Liberty, MO. We believe
Mr. Word's qualifications to serve as a director of our Company include his background in running successful organizations, understanding
of consumer needs and marketing to those needs. Mr. Word holds a Bachelor of Science in Marketing and Finance from William Jewel College
in Liberty, MO.

 Michael
Young. Mr. Young has served as our Chairman since December 2019. Mr. Young is a founding partner of Cottingham Capital, an investment
company focused on real estate and technology investment, where he has served as Managing Partner since its inception in January 2017.
Prior to January 2017, Mr. Young served as the Managing Director and Co-Head of Trading of GMP Securities, L.P., a Canadian investment
bank. Mr. Young currently serves on the boards of Aerues Inc., an anti-microbial copper coating technology company, and XIB I Capital
Corp., a capital pool company, and was previously on the boards of Nuuvera Corp. and ICC Labs. Mr. Young holds a diploma in Finance from
George Brown College. We believe Mr. Young's qualifications to serve as a director of our Company include his extensive senior
level executive management and trading experience in the Canadian and U.S. capital markets and his experience on other public company
boards of directors.

 Board
of Directors

 The
number of members of our Board of Directors will be determined from time to time by resolution of the Board of Directors. Currently,
our Board of Directors consists of five persons. Our Directors hold office until the earlier of their death, resignation, retirement,
disqualification or removal or until their successors have been duly elected and qualified.

 Committees
of the Board

 We
have an Audit Committee, a Compensation Committee, a Nominating and Governance Committee, and a Strategic Advisory Committee. Each such
committee of the Board of Directors has or will have the composition and responsibilities described below. Each committee is governed
by a written charter. In 2022, each director attended all of the meetings of the Board and the committees on which such director serves.
Each committee charter is posted on our website at  From time to time, our Board
may also establish other, special committees when necessary to address specific issues.

 Audit
Committee

 Our
Audit Committee's responsibilities include, among other matters: appointing, approving the compensation of, and assessing the independence
of our registered public accounting firm; overseeing the work of our registered public accounting firm, including through the receipt
and consideration of reports from such firm; reviewing and discussing with management and the registered public accounting firm our annual
and quarterly financial statements and related disclosures; coordinating our Board of Directors' oversight of our internal control
over financial reporting, disclosure controls and procedures; discussing our risk management policies; meeting independently with our
internal auditing staff, if any, registered public accounting firm and management; reviewing and approving or ratifying any related person
transactions; and preparing the audit committee report required by the SEC.

 The
members of our Audit Committee are Ms. Dickinson and Messrs. Conacher, Fronzaglia and Young. Mr. Fronzaglia has been appointed as chairperson
of this committee beginning in 2022. Our Board has determined that each of Ms. Dickinson and Messrs. Conacher, Fronzaglia and Young is
independent under the applicable independence standards of Rule 10A-3 under the Exchange Act applicable to audit committee members. In
addition, our Board has determined that Ms. Dickinson and Messrs. Conacher, Fronzaglia and Young each qualifies as an "audit committee
financial expert" as defined by Item 407(d)(5)(ii) of Regulation S-K. Our Audit Committee met four times during 2023.

 Compensation
Committee

 Our
Compensation Committee's responsibilities include, among other matters: reviewing and approving, or recommending for approval by
the board of directors, the compensation of our Chief Executive Officer and our other executive officers; overseeing and administering
our cash and equity incentive plans; reviewing and making recommendations to our board of directors with respect to director compensation;
reviewing and discussing annually with management our "Compensation Discussion and Analysis," to the extent required; reviewing
and discussing the voting recommendations of our stockholders on matters involving executive compensation, to the extent required; and
preparing the annual compensation committee report required by SEC rules, to the extent required. No compensation consultant was engaged
to provide advice or recommendations on our executive or director compensation for 2022.

 The
members of our Compensation Committee are Ms. Dickinson and Messrs. Conacher, Fronzaglia and Young, and Mr. Young serves as chairman
of this committee. Our Compensation Committee met once during 2023.

 Nominating
and Governance Committee

 Our
Nominating and Corporate Governance Committee's responsibilities include, among other matters: identifying individuals qualified
to become board of directors members; recommending to our board of directors the persons to be nominated for election as directors and
to each board committee; developing and recommending to our board of directors corporate governance guidelines, and reviewing and recommending
to our board of directors proposed changes to our corporate governance guidelines from time to time; and overseeing a periodic evaluation
of our board of directors.

 The
members of our Nominating and Corporate Governance Committee are Ms. Dickinson and Messrs. Fronzaglia and Young. Ms. Dickinson was
appointed as chairperson of this committee beginning in 2022. Our Nominating and Corporate Governance Committee did not meet during
2023. Mr. Conacher was appointed as the Chairperson of this committee effective April 1, 2024, to fill the vacancy resulting
from Ms. Dickinson's resignation.

 Strategic
Advisory Committee

 Our
Strategic Advisory Committee's responsibilities include, among other matters: assessing the progress and performance of our development
programs and projects, and identifying, assessing, implementing, and monitoring corporate opportunities that may offer meaningful strategic
or commercial benefit to the Company. The members of our Strategic Advisory Committee are Messrs. Fronzaglia, Young and Word, and Messrs.
Young and Word serve as co-chairs of this committee. Our Strategic Advisory Committee did not meet during 2023.

 Code
of Ethics and Code of Conduct

 Our
Board of Directors has adopted a Code of Ethics and Business Conduct that is applicable to all of our employees, executive officers,
and directors of the Company (the "Code of Conduct"). The Code of Conduct is available on our website at
The Nominating and Governance Committee of our Board of Directors is responsible for overseeing the Code of Conduct and must approve
any waivers of the Code of Conduct for employees, executive officers, and directors. We expect that any amendments to the Code of Conduct,
or any waivers of its requirements, will be disclosed on our website.

 Risk
Oversight

 The
Audit Committee of our Board of Directors is responsible for overseeing our risk management process. Our Audit Committee focuses on our
general risk management policies and strategy, the most significant risks facing us, and oversees the implementation of risk mitigation
strategies by management. Our Board of Directors is also apprised of particular risk management matters in connection with its general
oversight and approval of corporate matters and significant transactions.

 Compensation
Committee Interlocks and Insider Participation

 None
of our executive officers serve as a member of our Board of Directors or the Compensation Committee of our Board of Directors (or other
committee performing equivalent functions) of any entity that has one or more executive officers serving on our Board of Directors or
Compensation Committee.

 Communications
with Directors

 Interested
parties may communicate with our Board or with an individual director by writing to our Board or to the particular director and mailing
the correspondence to: 12400 Race Track Road, Tampa, Florida 33626, Attention: Corporate Secretary. The Corporate Secretary will promptly
relay to the addressee all communications that require prompt attention and will regularly provide our Board with a summary of all substantive
communications.

 Board
Qualifications

 Our
Board has delegated to our Nominating and Governance Committee the responsibility for recommending to our Board the nominees for election
as directors at the annual meeting of stockholders and for recommending persons to fill any vacancy on our Board. Our Nominating and
Governance Committee selects individuals for nomination to our Board based on the following criteria. Nominees for director must:

 Possess unquestionable
 moral and ethical character and core values.

 Have a genuine interest
 in Better Choice and recognition that as a member of our Board, each director is accountable to all of our shareholders, not to any
 particular interest group.

 Have a background that
 demonstrates experience, expertise and education in areas such as consumer product marketing, corporate strategy, technology, cybersecurity,
 financial and regulatory affairs, international sales and distribution and general management.

 Have no conflict of interest
 or legal impediment that would interfere with the duty of loyalty owed to Better Choice and our stockholders.

 Have the ability and willingness
 to make the personal commitment to invest the time, schedule and workload to be an active, participatory member of our Board and
 the Board's responsibilities and commitment to corporate best practices.

 Be compatible and able
 to work well with other directors, executives and other employees in a team effort with a view to a long-term relationship with Better
 Choice as a director.

 Have independent opinions
 and be willing to state them in a constructive manner.

 Directors
are selected on the basis of talent and experience. Diversity of background, including diversity of gender, race, ethnic or geographic
origin and age, and education and experience in business, the consumer product market, the pet specialty sector, product marketing, product
distribution and manufacturing and other areas relevant to our activities are factors in the selection process. As a majority of our
Board must consist of individuals who are independent, a nominee's ability to meet the independence criteria established by the
NYSE American is also a factor in the nominee selection process. For a better understanding of the qualifications of each of our directors,
we encourage you to read their biographies set forth in this report.

Nominations

 The
Nominating and Governance Committee will consider candidates for director recommended by stockholders so long as the recommendations
comply with our Certificate of Incorporation and Bylaws and applicable laws, rules and regulations, including those promulgated by the
SEC. The Nominating and Governance Committee will evaluate such recommendations in accordance with its charter, our Bylaws, our corporate
governance guidelines, and the regular nominee criteria described above.

 Attendance
at Annual Meeting

 Directors
are expected to attend our annual meetings of stockholders. Our last annual meeting of shareholders was held on November 13, 2023.

 ITEM
 11.
 EXECUTIVE
 COMPENSATION

 The
following is a discussion and analysis of the compensation arrangements for our named executive officers, or NEOs. We are currently considered
a "smaller reporting company" for purposes of the SEC's executive compensation disclosure rules. In accordance with
such rules, we are providing a Summary Compensation Table and an Outstanding Equity Awards at Fiscal Year-End Table as well as narrative
disclosures regarding our executive compensation program. Our NEOs for 2023 consist of the following individuals:

 Kent Cunningham, Chief Executive
 Officer appointed May 2023

 Lionel F. Conacher, our former interim Chief Executive
 Officer, who resigned in May 2023;

 Carolina Martinez, Chief Financial Officer appointed
 August 2023

 Sharla A. Cook, our former Chief Financial Officer,
 who resigned in April 2023;

 Donald Young, our former Chief Sales Officer, who resigned
 in September 2023; and

 Robert Sauermann, our former Executive Vice President,
 Strategy, who resigned in March 2023.

 Executive
Compensation Components

 Base
Salaries

 The
NEOs receive a base salary to provide a fixed component of compensation reflecting the executive's skill set, experience, role
and responsibilities. Our Compensation Committee adjusts NEO base salaries based on the committee's review of available market
information. Our board of directors established an annual base salary for each of our NEOs as follows:

 Annual Base Salary

 Name

 2021

 2022

 2023

 Kent Cunningham (1)

 n/a

 n/a

 350,000

 n/a

 160,000

 160,000

 Carolina Martinez (2)

 n/a

 n/a

 Sharla A. Cook

 200,000

 225,000

 n/a

 Donald Young

 250,000

 275,000

 275,000

 Robert Sauermann

 225,000

 (1)
 Mr. Cunningham was appointed as Chief Executive Officer of the Company effective as of May 22, 2023.

 (2)
 Mrs. Martinez was appointed as Chief Financial Officer of the Company effective as of August 2, 2023. Mrs. Martinez was previously
appointed and served as the Interim Chief Financial Officer of the Company effective as of April 3, 2023.

 Annual
Incentive

 The
purpose of our annual incentive bonus program is to incent all individuals in the organization to meet or exceed both our annual budget
goals as well as individual responsibilities. Our annual incentive program requires minimum performance thresholds for any payout to
occur for specific performance measures and objectives. We believe the annual incentive effectively motivates our NEOs to drive operational
performance without encouraging unreasonable risk. The Committee believes the achievement of year-over-year gross revenue, gross margin
and Adjusted EBITDA growth goals will result in sustainable long-term stockholder value creation. Our 2023 annual incentive potential
was based on achievement levels of these financial metrics, measured against our annual plan as approved by our Board. Overall, the NEOs'
annual incentive bonus was weighted as follows: 50% Gross Revenue and Adjusted EBITDA, and 50% individual performance and achievement
of goals. The CEO was eligible for a payout of 50% of base salary while the other NEOs were eligible for a payout ranging from 25-40%
of base salary based on these metrics.

 Equity
Compensation

 The
goals of our long-term, equity-based incentive awards are to align the interests of our NEOs and other employees, non-employee directors
and consultants with the interests of our stockholders. Because vesting is based on continued employment, our equity-based incentives
also encourage the retention of our NEOs through the vesting period of the awards.

 To
reward and retain our NEOs in a manner that best aligns employees' interests with stockholders' interests, we use stock options
as the primary incentive vehicles for long-term compensation. We believe that stock options are an effective tool for meeting our compensation
goal of increasing long-term stockholder value by tying the value of the stock options to our future performance. The exercise price
of each stock option grant is the fair market value of our common stock on the grant date.

 Repricing
of Stock Options

 Effective
October 1, 2020, all outstanding stock option awards under the Amended and Restated 2019 Equity Incentive Plan held by current employees
as of October 1, 2020 were repriced concurrent with the closing of the Company's Series F Private Placement. In total, 1,012,956
stock options were repriced. The exercise price was set at a 20% premium to the Series F conversion price, or $3.60 per share. No other
terms of the stock options were changed.

 The
board of directors effectuated the repricing to realign the value of the stock options with their intended purpose, which is to retain
and motivate the holders of the stock options to continue to work in the best interests of the Company. Prior to the repricing, many
of the stock options had exercise prices well above the then recent market prices of our common stock. The stock options were repriced
unilaterally and the consent of holders was neither necessary nor obtained.

 Other
Elements of Compensation

 Retirement
Plans. We currently maintain a 401(k) retirement savings plan that allows eligible employees to contribute a portion of their compensation,
within limits prescribed by the Internal Revenue Code, on a pre-tax basis through contributions to the plan. Our NEOs are eligible to
participate in the 401(k) plan. We believe that providing a vehicle for tax-deferred retirement savings through our 401(k) plan adds
to the overall desirability of our executive compensation package and further incentivizes our NEOs in accordance with our compensation
policies. During 2020, the Company had a separate 401(k) plans for TruPet and Halo and provided an employer matching contribution under
each plan. Beginning in 2021, the Company provided an employer matching contribution of 50% up to 5% of compensation under our 401(k)
plan.

 Employee
Benefits and Perquisites. All of our full-time employees, including our NEOs, are eligible to participate in our employee benefit
plans and programs, including medical, dental, and vision benefits, health spending accounts, short and long-term disability and life
insurance, to the same extent as our other full-time employees, subject to the terms and eligibility requirements of those plans.

 Termination
and Change in Control Benefits. Our NEOs may become entitled to certain benefits or enhanced benefits in connection with certain
qualifying terminations of employment and/or a change in control of our Company. Each of our NEOs' employment agreements entitles
them to severance in the event of their termination without cause or their resignation for good reason and upon termination by reason
of death or disability.

 Summary
Compensation Table

 The
table below sets forth the compensation earned by our NEOs for the years ended December 31, 2023, 2022 and 2021.

 Name and Principal Position

 Year

 Salary
 ($)

 Bonus
 ($)

 Stock Awards
 ($)

 Option Awards (1)
 ($)

 Non-Equity Incentive Plan Compensation
 ($)

 All Other Compensation (2) ($)

 Total
 ($)

 Kent Cunningham (3)

 2023

 350,000

 53,459

 362,727

 —

 —

 8,785

 774,971

 Chief Executive Officer

 2022

 —

 —

 —

 —

 —

 —

 —

 2021

 —

 —

 —

 —

 —

 —

 —

 Lionel F. Conacher (4)

 2023

 160,000

 —

 13,334

 —

 —

 —

 173,334

 Interim Chief Executive Officer

 2022

 160,000

 —

 153,336

 18,573

 —

 —

 331,909

 2021

 —

 —

 —

 —

 —

 —

 —

 Carolina Martinez (5)

 2023

 19,200

 —

 70,000

 —

 1,106

 330,306

 Chief Financial Officer

 2022

 —

 —

 —

 —

 —

 —

 —

 2021

 —

 —

 —

 —

 —

 —

 —

 Sharla A. Cook (6)

 2023

 250,000

 —

 28,000

 —

 —

 3,206

 281,206

 Chief Financial Officer

 2022

 250,000

 100,000

 —

 153,596

 —

 9,801

 513,397

 2021

 200,000

 34,375

 —

 317,701

 —

 9,942

 562,018

 Donald Young (7)

 2023

 275,000

 —

 14,000

 —

 —

 43,744

 332,744

 Chief Sales Officer

 2022

 275,000

 110,000

 —

 492,174

 —

 9,425

 886,599

 2021

 250,000

 42,969

 —

 991,704

 —

 8,694

 1,293,367

 Robert Sauermann (8)

 2023

 —

 28,000

 —

 —

 1,811

 269,811

 Executive Vice President, Strategy

 2022

 96,000

 —

 367,435

 —

 10,250

 713,685

 2021

 225,000

 38,672

 —

 590,701

 —

 6,794

 861,167

 (1)
The amounts reported reflect the grant date fair value of the stock options granted, as computed in accordance with ASC 718. The fair
value of each option grant is estimated based on the fair market value on the date of grant using the Black-Scholes option pricing model.
The assumptions that we used to calculate these amounts are discussed in Note 12 to our financial statements included in this Annual
Report.

 (2)
The amounts reported reflect matching 401(k) payments and accrued PTO payout.

 (3)
Mr. Cunningham commenced employment with us and was appointed Chief Executive Officer effective as of May 22, 2023.

 (4)
Mr. Conacher was employed with us as interim Chief Financial Officer from September 14, 2022 until May 22, 2023.

 (5)
Mrs. Martinez was appointed as Chief Financial Officer effective as of August 2, 2023. Mrs. Martinez was previously appointed and served
as the Interim Chief Financial Officer of the Company effective as of April 3, 2023.

 (6)
Ms. Cook commenced employment with us in April 2020 and was appointed as our Chief Financial Officer in October 2020. Ms. Cook resigned
effective as of April 3, 2023.

 (7)
Mr. Young resigned effective as of September 8, 2023.

 (8)
Mr. Sauermann resigned effective as of March 17, 2023.

 Outstanding
Equity Awards at Fiscal Year-End

 The
table below sets forth the outstanding stock option awards held by the NEOs as of December 31, 2023. None of our NEOs hold stock awards.

 Option Awards

 Name

 Option Award Grant

 Number of Securities Underlying Unexercised Options (#) Exercisable

 Number of Securities Underlying Unexercised Options (#) Unexercisable

 Option Exercise Price ($)

 Option Expiration Date

 Kent Cunningham

 N/A

 —

 —

 $
 —

 N/A

 9/28/2021

 $
 90.64

 9/28/2031

 Carolina Martinez

 8/7/2023

 —

 4,545

 $
 15.40

 Sharla A. Cook

 2/1/2022

 (1)

 —

 1,136

 $
 62.00

 2/1/2032

 8/19/2021

 (1)

 $
 73.92

 8/19/2031

 7/8/2021

 (1)

 $
 100.32

 7/8/2031

 (2)

 $

 (2)

 $

 1/8/2021

 (1)

 $
 211.20

 1/8/2031

 Donald Young

 2/1/2022

 (1)

 —

 1,705

 $
 62.04

 2/1/2032

 8/19/2021

 (1)

 $
 73.92

 8/19/2031

 7/8/2021

 (1)

 $
 100.32

 7/8/2031

 (2)

 $

 (2)

 $

 1/1/2021

 (1)

 1,894

 —

 $
 —

 1/1/2031

 Robert Sauermann

 2/1/2022

 (1)

 —

 1,136

 $
 62.04

 2/1/2032

 8/19/2021

 (1)

 $
 73.92

 8/19/2031

 7/8/2021

 (1)

 $
 100.32

 7/8/2031

 (2)

 $

 (2)

 $

 1/8/2021

 (1)

 $
 211.20

 1/8/2031

 (1)
Options vest as follows: 1/3rd on the first annual anniversary of the grant date and 1/36th on each monthly anniversary thereafter.

 (2)
67% of the options shall vest as to 1/3rd on the first annual anniversary of the grant date and 1/36th on each monthly anniversary thereafter,
and 33% of the options shall vest as to 1/3rd on the 18 month anniversary of the grant date and 1/36th on each monthly anniversary thereafter.

Agreements and Potential Payments Upon Termination

 The
Company entered into an Employment Agreement with Kent Cunningham, dated as of May 22, 2023 (the "Cunningham Employment Agreement")
in connection with Mr. Cunningham's appointment as Chief Executive Officer of the Company as of May 22, 2023. Pursuant to the Cunningham
Employment Agreement, Mr. Cunningham's compensation will be an initial annual base salary of $350,000 and an annual discretionary
performance bonus target of 50% of base salary, payable 50% in cash and 50% in shares of common stock of the Company. Pursuant to the
Cunningham Employment Agreement, Mr. Cunningham will be entitled to six weeks' paid vacation and will be eligible to participate
in certain employee benefit plans offered by the Company. Further, Mr. Cunningham will receive an initial grant of 1,000,000 Restricted
Stock Units of Common Stock ("RSUs"), subject to Board approval. The RSUs will vest over a period of three years subject
to continued employment with the Company as follows: (a) 33.3% of the options will on the first anniversary of the date of the grant
date provided the stock price is at least one dollar ($1.00); (b) an additional 33.3% of such RSUs shall vest on the second anniversary
of the grant date provided the stock price is at least two dollars ($2.00); and (c) the remaining 33.4% of the RSUs shall vest on the
third anniversary of the grant date provided that the stock price on such date is at least two dollars and fifty cents ($2.50). In the
event Mr. Cunningham does not meet the time-based and performance-based vesting requirements, the applicable portion of the RSUs that
were due to vest shall be forfeited. Should Mr. Cunningham's employment be terminated, in any way or for any reason, prior to any
of the aforementioned anniversary dates, the RSUs shall vest in proportion to the time remaining to the next anniversary date.

 The
Company entered into an Employment Agreement with Carolina Martinez, dated as of August 2, 2023 (the "Martinez Employment Agreement")
in connection with Mrs. Martinez's appointment as Chief Financial Officer of the Company as of August 2, 2023. Pursuant to the
Martinez Employment Agreement, Mrs. Martinez's compensation will be an initial annual base salary of $240,000 and an annual discretionary
performance bonus target of 40% of base salary, payable 50% in cash and 50% in shares of common stock of the Company. Pursuant to the
Martinez Employment Agreement, Mrs. Martinez will be entitled to six weeks' paid vacation and will be eligible to participate in
certain employee benefit plans offered by the Company. Further, Mrs. Martinez will receive an initial grant to purchase 200,000 shares
of Common Stock at an exercise price of $0.35 per share, subject to Board approval. The options will vest in equal installments over
a period of three years.

 Pursuant
to the Cunningham Employment Agreement and the Martinez Employment Agreement (together, the NEO Employment Agreements"), each of
Mr. Cunningham and Mrs. Martinez is employed on an at-will basis. Pursuant to the NEO Employment Agreements, in the event the executive's
employment is terminated for any reason, the Company shall pay the executive any amounts due to such executive under the Company's
benefit plans and any unreimbursed expenses properly incurred prior to the date of termination (the "Accrued Obligations").
In the event the executive's employment is terminated for by the Company without Cause (as defined in the NEO Employment Agreements)
or by the executive for Good Reason or for Good Reason Upon Change in Control (as such terms are defined in the NEO Employment Agreements),
in addition to the Accrued Obligations, the executive shall also receive, subject to the execution of a release of claims in the form
delivered by the Company, severance pay in an amount equal to the executive's base salary then in effect for six (6) months, less
applicable payroll deductions and tax withholdings, payable in accordance with normal payroll policies of the Company over a six (6)
month period, with the first such payment being paid to the executive on the Company's first regular pay date on or after the sixtieth
(60th) day following the executive's employment termination date.

 The
NEO Employment Agreements also contain standard confidentiality, intellectual property assignment, non-competition and non-solicitation
covenants.

 ITEM
 12.
 SECURITY
 OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 The
following table sets forth information about the beneficial ownership of our capital stock by (i) each of our current directors,
(ii) each of our named executive officers (iii) all our current directors and executive officers as a group, and (iv) each person or
group known by us to own more than 5% of our common stock. The percentages reflect beneficial ownership, as determined in accordance
with the SEC's rules, as of April 11, 2024, and are based on 893,601 shares of common stock outstanding. Except as noted
below, the address for all beneficial owners in the table below is 12400 Race Track Road, Tampa, FL 33626:

 Shares Beneficially Owned

 Name of Beneficial Owner

 Number (1)

 %

 Named Executive Officers and Directors:

 Kent Cunningham

 7,576

 *

 Carolina Martinez

 —

 *

 Sharla A. Cook

 4,163

 *

 Donald Young

 20,476

 2.49
 %

 Robert Sauermann

 9,702

 1.18
 %

 32,845

 3.99
 %

 Arlene Dickinson

 14,083

 1.71
 %

 Gil Fronzaglia

 14,340

 1.74
 %

 John M. Word III

 149,386

 18.14
 %

 Michael Young

 52,865

 6.42
 %

 All executive officers and directors as a group (10 persons)

 305,436

 37.08
 %

 5% Shareholders:

 HH-Halo LP (12)

 54,719

 7.51
 %

 Edward J. Brown Jr TTEE

 52,496

 7.20
 %

 (*)
Represents beneficial ownership of less than 1% of class.

 (1)
In calculating the number of shares beneficially owned by an individual or entity and the percentage ownership of that individual or
entity, shares underlying options, warrants or restricted stock units held by that individual or entity that are either currently exercisable
or exercisable within 60 days from the date hereof are deemed outstanding. These shares, however, are not deemed outstanding for the
purpose of computing the percentage ownership of any other individual or entity. Unless otherwise indicated and subject to community
property laws where applicable, the individuals and entities named in the table above have sole voting and investment power with respect
to all shares of our common stock shown as beneficially owned by them.

 ITEM
 13.
 CERTAIN
 RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 Related
Party Transaction Policy

 A
"Related Party Transaction" is a transaction, arrangement or relationship in which we or any of our subsidiaries was, is
or will be a participant, the amount of which involved exceeds $50,000 in any one fiscal year, and in which any related person had, has
or will have a direct or indirect material interest. A "Related Person" means:

 any person
 who is, or at any time during the applicable period was, one of our executive officers, one of our directors, or a nominee to become
 one of our directors;

 any person who is known
 by us to be the beneficial owner of more than 5.0% of any class of our voting securities;

 any immediate family member
 of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law,
 son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than
 5.0% of any class of our voting securities, and any person (other than a tenant or employee) sharing the household of such director,
 executive officer or beneficial owner of more than 5.0% of any class of our voting securities; and

 any firm, corporation or
 other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in
 which such person has a 5.0% or greater beneficial ownership interest in any class of the Company's voting securities.

 Our
Related Party Transaction policy subjects these transactions to review and either approval or disapproval of entry into the Related Party
Transaction, subject to certain limited exceptions, by our Nominating and Governance Committee. In determining whether to approve or
disapprove entry into a Related Party Transaction, our Nominating and Governance Committee shall take into account, among other factors,
the following: (i) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated
third-party under the same or similar circumstances and (ii) the extent of the Related Person's interest in the transaction. Further,
the policy requires that all Related Party Transactions required to be disclosed in our filings with the SEC be so disclosed in accordance
with applicable laws, rules and regulations. Refer to Note 14 within this report.

 Family
Relationships

 There
are no family relationships amongst any of our executive officers or directors.

Independence

 Each
of our directors standing for election meets the definition of "independence" per Rule 803 of the NYSE American Company Guide.

 ITEM
 14.
 PRINCIPAL
 ACCOUNTING FEES AND SERVICES

 The
following table shows the fees paid or accrued for the audit and other services provided by BDO USA, P.C., our independent auditors for
the fiscal years ended December 31, 2023 and 2022:

 Year ended December 31,

 2023

 2022

 Audit fees

 Tax fees

 Total

 (1)
Audit fees consist of fees billed for services rendered for the audit of our financial statements included in our annual reports on Form
10-K and review of our financial statements included in our quarterly reports on Form 10–Q, and other fees, including fees related to our registration statements.

 (2)
Tax fees consist of fees billed for professional services related to the preparation of our U.S. federal and state income tax returns
and tax advice.

 PART
IV

 ITEM
 15.
 EXHIBITS
 AND FINANCIAL STATEMENT SCHEDULES

 The
following documents are filed as part of this report:

 (1)

 Financial
Statements - See Index to Consolidated Financial Statements appearing on page 35.

 (2)

 Financial
 Statement Schedules - None.

 (3)

 Exhibits
 - The exhibits listed on the accompanying index are filed as part of, or incorporated by reference into, this Annual Report on Form
 10-K.

 EXHIBIT

 Description

 Form

 File
 No.

 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.

 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

 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

 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

 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

 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.

 2.6

 08/11/2022

 3.1

 of Incorporation, dated January 1, 2019

 3.1

 04/15/2019

 3.2

 of Amendment to Certificate of Incorporation, dated February 1, 2019

 3.2

 04/15/2019

 3.3

 of Amendment to Certificate of Incorporation, dated March 13, 2019

 3.1

 03/20/2019

 3.4

 of Amendment to Certificate of Incorporation, dated April 18, 2019

 10-KT

 3.5

 07/25/2019

 3.5

 of Amendment to Certificate of Incorporation, dated July 30, 2020

 99.1

 07/30/2020

 3.6

 of Merger of Sport Endurance, Inc. with and into the Company

 3.4

 04/15/2019

 3.7

 Bylaws

 3.5

 04/15/2019

 3.8

 of Designation for Series F Convertible Preferred Stock

 3.1

 10/02/2020

 3.9

 Certificate of Cancellation of Series F Preferred Stock of Better Choice

 3.10

 07/29/2022

 3.10

 Certificate of Merger of TruPet LLC with and into Halo, Purely for Pets, Inc.

 3.10

 08/11/2022

 4.1

 Form
 of Warrant in connection with the November 2019 private placement

 4.2

 11/15/2019

 4.2

 Form
 of Subscription Agreement, dated December 19, 2019, by and among the Company and the Halo Sellers

 10.6

 01/31/2020

 4.3

 Form
 of Warrant, dated December 19, 2019, by and among the Company and the Halo Sellers

 4.8

 01/31/2020

 4.4

 Form
 of Warrant, dated December 19, 2019, by and among the Company and the Shareholder Personal Guarantors

 4.10

 01/31/2020

 4.5

 Form
 of Subscription Agreement dated April 25, 2019 in connection with the May 2019 private placement

 10.1

 04/30/2019

 4.6

 Form
 of Subscription Agreement in connection with the November 2019 private placement

 10.1

 11/15/2019

 Exhibit Description

 Form

 File No.

 Filing date

 4.7

 Choice Company Inc. Amended and Restated 2019 Incentive Award Plan

 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

 4.9

 Form
 of Common Stock Purchase Warrant in connection with the June 2020 private placement.

 4.11

 06/25/2020

 4.10

 Form
 of Subscription Agreement in connection with the June 2020 private placement.

 4.13

 06/25/2020

 4.11

 Form
 of July 2020 Warrants

 10.5

 07/21/2020

 4.12

 Form
 of Warrant in connection with the October 2020 Series F Private Placement

 4.1

 10/02/2020

 4.13

 Form
 of Securities Purchase Agreement in connection with the October 2020 Series F Private Placement

 10.1

 10/02/2020

 4.14

 Form
 of warrant in connection with the January 2021 Private Placement

 S-1/A

 333-251241

 4.22

 02/16/2021

 4.15

 Form
 of Securities Purchase Agreement in connection with the January 2021 Private Placement

 S-1/A

 333-251241

 4.23

 02/16/2021

 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

 10.2

 Agreement, Dated December 28, 2020 by and between Scott Lerner and the Company

 8-K/A

 10.2

 01/05/2021

 10.3

 Agreement, dated October 8, 2020, by and between Sharla Cook and the Company

 10.12

 03/30/2021

 10.4

 Agreement, dated September 27, 2020, by and between Robert Sauermann and the Company

 10.13

 03/30/2021

 10.5

 Agreement, dated January 1, 2021, by and between Donald Young and the Company

 10.14

 03/30/2021

 10.6

 Loan
 and Security Agreement, dated as of January 6, 2021, by and between Old Plank Trail Community Bank, N.A. ("Lender") and
 Halo, Purely for Pets, Inc., a Delaware corporation ("Halo")

 10.1

 10.7

 Term
 Note A, dated as of January 6, 2021, issued by Halo in favor of Lender

 10.3

 10.8

 Guaranty
 and Security Agreement, dated as of January 6, 2021, made by Better Choice Company Inc., TruPet LLC, and Bona Vida, Inc., a Delaware
 corporation

 10.4

 10.9

 Intellectual
 Property Security Agreement, dated as of January 6, 2021, executed and delivered by the Company, TruPet and Bona Vida

 10.5

 10.10

 Stock
 Pledge Agreement, dated as of January 6, 2021, executed and delivered by the Company in favor of Lender

 10.6

 10.11

 First
 Amendment to Loan and Security Agreement, dated as of August 13, 2021, by and between Old Plank Trail Community Bank, N.A. ("Lender")
 and Halo, Purely for Pets, Inc.

 10.1

 08/17/2021

 10.12

 Revolving
 Promissory Note, dated as of August 13, 2021, issued by Halo Purely for Pets, Inc.

 10.2

 08/17/2021

 10.13

 Deposit
 Account Pledge Agreement, dated as of August 13, 2021, executed and delivered by Halo Purely for Pets Inc.

 10.3

 08/17/2021

 10.14

 Second Amendment to Loan and Security Agreement, dated March 25, 2022, by and between Old Plank Trail Community Bank, N.A. and Halo, Purely for Pets, Inc.

 10.14

 03/29/2022

 10.15

 Third Amendment to Loan and Security Agreement, dated October 24, 2022, by and between Old Plank Trail Community Bank, N.A. and Halo, Purely for Pets, Inc.

 10.1

 10/25/2022

 10.16

 Revolving Promissory Note, dated as of October 24, 2022, issued by Halo in favor of Lender

 10.2

 10/25/2022

 Exhibit Description

 Form

 File No.

 Filing date

 10.17

 First Amendment to Deposit Account Pledge Agreement, dated as of October 24, 2022, executed and delivered by Halo in favor of Lender.

 10.3

 10/25/2022

 10.18
 #

 Separation Agreement, dated as of September 14, 2022, by and between the Company and Scott Lerner

 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

 10.19

 11/10/2022

 10.20

 Engagement Agreement, dated as of March 13, 2023, by and between ONE10 Advisors, LLC and Better Choice Company Inc.

 10.1

 03/21/2023

 10.21

 Interim Officer Agreement, dated as of March 20, 2023, by and between Carolina Martinez and Better Choice Company, Inc.

 10.2

 03/21/2023

 10.22

 Employment Agreement, dated as of May 22, 2023, by and between Kent Cunningham and Better Choice Company, Inc.

 10.2

 05/16/2023

 10.23

 Term Loan Credit Agreement, dated as of June 21, 2023, by and between Better Choice Company Inc. and Alphia Inc.

 10.1

 06/21/2023

 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.

 10.9

 06/21/2023

 10.25

 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing

 99.1

 09/27/2023

 10.26

 Better Choice Acquires Aimia Pet Healthco to Enter the GLP1 Pet Market

 99.1

 02/12/2024

 10.27

 Better Choice Company to Effectuate a 1 for 44 Reverse Stock Split

 99.1

 03/14/2024

 21.1
 *

 Subsidiaries of the Company

 21.1

 03/28/2023

 23.1
 *

 Consent of BDO USA, P.C.

 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

 *

 The
 following materials from the Company's Annual Report on Form 10-K for the year ended December 31, 2022 formatted in Inline
 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.

 *

 Cover
 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.

 ITEM
 16.
 FORM
 10-K SUMMARY

 None.

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

 BETTER
 CHOICE COMPANY INC.

 Date:

 By:

 /S/
 KENT CUNNINGHAM

 Kent Cunningham

 Chief Executive Officer

 (Principal
 Executive Officer)

 Date:

 By:

 /S/
 CAROLINA MARTINEZ

 Carolina
 Martinez

 Chief
 Financial Officer

 (Principal
 Financial and Accounting Officer)

 POWER
OF ATTORNEY

 KNOW
ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Sharla A. Cook his/her true and lawful
attorney-in-fact, with full power of substitution and resubstitution for him/her and in his/her name, place and stead, in any and all
capacities to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to
all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact or
his/her substitute, each acting alone, may lawfully do or cause to be done by virtue thereof.

 Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on
behalf of the Registrant in the capacities and on the dates indicated.

 Signature

 Title

 Date

 /S/
 KENT CUNNINGHAM

 Chief Executive Officer

 Kent Cunningham

 (Principal
 Executive Officer)

 /S/
 CAROLINA MARTINEZ

 Chief
 Financial Officer

 Carolina
 Martinez

 (Principal
 Financial and Accounting Officer)

 /S/ LIONEL F. CONACHER

 /s/
 GIL FRONZAGLIA

 Gil
 Fronzaglia

 /s/
 JOHN M. WORD III

 John
 M. Word III

 /s/
 MICHAEL YOUNG

 Michael
 Young