SBBC Simply Better Brands Corp

• SBBC generated net revenue of $21.0 million for the six months ended June 30, 2024, a 3% increase over the prior year, and Adjusted EBITDA of $1.0 million from its continuing operations.
• During Q2-2024, SBBC announced TRUBAR^™'s increased presence in 16 U.S. states by adding over 7 new retail chains including Hy-Vee and Erewhon, in addition to onboarding over 1,000 GNC locations, and initiating a national rollout in Costco.

VANCOUVER, BC, Aug. 12, 2024 /CNW/ - Simply Better Brands Corp. ("SBBC" or the "Company") (TSXV: SBBC) (OTCQB: SBBCF), an international omni-channel platform with a portfolio of diversified assets in the rapidly growing plant-based, natural, and clean ingredient space, is pleased to announce its interim financial results for the second quarter ended June 30, 2024. All amounts are expressed in United States dollars unless otherwise noted. Certain metrics, including those expressed on an adjusted basis, are non-International Financial Reporting Standards ("IFRS") measures, see "Non-IFRS Measures" below.

Kingsley Ward, Chief Executive Officer and Chairman of SBBC commented on the second quarter results, "I am very pleased with the Company's progress over this past quarter, during which we achieved significant milestones in expanding our distribution footprint, enhancing our financial position, and strengthening our leadership team and board. We have completed our restructuring efforts after divesting non-core assets, ensuring that we are laser focused on our key growth areas. We are proud of our accomplishments this quarter and remain committed to delivering value to our shareholders."

Erica Groussman, Co-Founder and CEO of Tru Brands, Inc. added "I'm extremely proud of our team's ability to ramp up TRUBAR^™'s distribution footprint by adding several new retail chains, including Loop Neighborhood Markets to extend our geographic reach across 16 states. Additionally, our collaboration with GNC has brought TRUBAR^™ into more than 1,000 GNC retail locations across the U.S., further solidifying our market position."

Brian Meadows, Chief Financial Officer of SBBC commented, "The Company remains committed to enhancing its financial strength through a series of strategic initiatives that includes equity placements, convertible debt conversions, and securing lines of credit. This quarter, we have made significant strides in this regard. Notably, we have secured an aggregate of USD $10 million in credit facilities with a tier one Canadian bank. These new credit lines will considerably reduce our cost of capital and provide the necessary financial support for expanding TRUBAR^™ sales across the U.S., Canada, and international markets. Our focus on improving working capital has also involved establishing several lines of credit for our subsidiaries, enabling us to effectively finance large retail purchase orders and support our key customers. These initiatives are crucial as we continue to scale our operations and seize growth opportunities in the market. Our financial and strategic measures are designed to support the continued success and expansion of our brand portfolio."

Selected financial and operating information are outlined below and should be read with the Company's interim consolidated financial statements and related management's discussion and analysis for the three and six months ended June 30, 2024 ("MD&A"), which are available under the Company's profile on SEDAR+ at www.sedarplus.com.

FINANCIAL HIGHLIGHTS FOR THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2024

Financial highlights for the Company's continuing operations during the three months ended June 30, 2024 include:

• The Company generated revenue of $7.0 million for the three months ended June 30, 2024, compared to revenue of $8.4 million for the three months ended June 30, 2023, representing a decline of 17% primarily due to a decrease in revenue in the CBD segment.
• R Revenues derived from TRUBAR™ sales for the three months ended June 30, 2024, was $6.4 million compared to $6.1 million for the comparable period in 2023 (increase of $0.3 million or 5%).
• Gross profit for the three months ended June 30, 2024 was $3.3 million (or 47% gross margin percentage) compared to gross profit of $1.8 million for the three months ended June 30, 2023 (or 21% gross margin percentage). The increase in gross margin percentage was driven by lower production costs of TRUBAR^™ and from the impact of netting of coupon marketing costs against the 2023 TRUBAR^™ sales.
• Gross profits derived from TRUBAR™ sales for the three months ended June 30, 2024, was $2.9 million (45% of revenue) compared to $0.1 million (2% of revenue) for the comparable period in 2023 (increase of $2.8 million).
• Operating costs for the three months ended June 30, 2024 were $4.1 million, an increase of $0.8 million (or 24%), compared to $3.3 million for the three months ended June 30, 2023 due to marketing allowances on TRUBAR^™ retailer sales.
• The Company had Adjusted EBITDA of $0.3 million from continuing operations for the three months ended June 30, 2024, a $0.7 million improvement over the Adjusted EBITDA achieved in the comparable period in 2023. The improvement in Adjusted EBITDA was due to the higher gross profit in the second quarter of 2024 compared to the prior year.
• During the three months ended June 30, 2024, the Company recorded a net loss from continuing operations of $7.1 million compared to a net loss of $2.7 million for the three months ended June 30, 2023. The majority of the loss from continuing operations was driven by the fair value changes to warrants and derivative liabilities measured during the second quarter ($6.3 million total impact).

Financial highlights for the Company's continuing operations during the six months ended June 30, 2024 included:

• For the six months ended June 30, 2024, the Company generated revenue of $21.0 million compared to $20.3 million during the six months ended June 30, 2023.
• Revenues derived from TRUBAR™ sales for the six months ended June 30, 2024, was $19.4 million compared to $16.3 million for the comparable period in 2023 (increase of $3.1 million or 19%).
• Gross profit for the six months ended June 30, 2024 was $7.4 million (or 35% gross margin percentage) compared gross profit of $6.3 million (or 31% gross margin percentage) for the six months ended June 30, 2023.
• Gross profits derived from TRUBAR™ sales for the six months ended June 30, 2024, was $6.2 million (32% of revenue) compared to $3.2 million (20% of revenue) for the comparable period in 2023 (increase of $3.0 million).
• Operating costs for the six months ended June 30, 2024, were $7.6 million, a decrease of $1.2 million (or 14%), compared to $8.8 million for the six months ended June 30, 2023.
• The Company had Adjusted EBITDA of $1.0 million from continuing operations for the six months period ending June 30, 2024, a $0.9 million improvement over the Adjusted EBITDA achieved in the comparable period in 2023. The improvement in Adjusted EBITDA was due to higher gross profit which was partially offset by higher cash operating expenses for the six months ended June 30, 2024 compared to the prior year.
• During the six months ended June 30, 2024, the Company recorded a net loss from continuing operations of $7.3 million compared to a net loss of $5.2 million for the six months ended June 30, 2023.

Segmented financial highlights for the Company's TRUBAR^™ business included:

• TRUBAR^™'s second quarter revenue for the three months ended June 30, 2024, was $6.4 million compared to $6.1 million for the comparable period in 2023 (increase of $0.3 million or 5%).
• The No B.S. brand recorded revenue of $0.4 million in the three months ended June 30, 2024, an increase of 33% compared to revenue of $0.3 million in the three months ended June 30, 2023. The increase was driven by the national launch of the No B.S. brand in Walgreen's in Q4 2023 across the retail chain's 3,400 locations.

SECOND QUARTER 2024 BUSINESS and OPERATIONAL HIGHLIGHTS

Significant business and operational highlights for the Company during the three months ended June 30, 2024 included:

• Board Nominations: During the second quarter, the Company announced the additions of Erica Groussman, Brock Bundy and St. John Walshe to the Company's Board of Directors. Ms. Groussman is the co-founder and Chief Executive Officer of Tru Brands, Inc. Mr. Bundy has more than 30 years' experience in the financial sector. Mr. Walshe joins the SBBC Board of Directors with over a three-decade career with Omnicom Group Inc., one of the world's largest marketing services firms, and previously having served as Chief Executive Officer of BBDO in the Americas.
• National Rollout of TRUBAR^™ in Costco: On June 21, 2024, the Company announced a new national rollout of TRUBAR™. The first stage of the rollout is taking place in four Costco regions – Los Angeles, Northeast, Texas, and Northwest – with additional Costco regions to follow.

SIGNIFICANT EVENTS SUBSEQUENT TO JUNE 30, 2024

Significant business and operational highlights for the Company subsequent to June 30, 2024 included:

• CEO Appointment: On July 11, 2024, the Company announced J.R. Kingsley Ward has become SBBC's permanent CEO in addition to his role as Chairman of the SBBC Board of Directors after successfully leading the Company through a period of transition and growth since February 2024 as Interim CEO.
• Partnership with GNC: On July 4, 2024, the Company announced that it continues to build momentum expanding its North American distribution footprint for TRUBAR™ with the addition of GNC, the global leader in health and wellness. The launch of TRUBAR™ was underway in more than 1,000 GNC retail locations across the U.S. and is available online at gnc.com.
• Rollout of TRUBAR^™ in Whole Foods: On July 18, 2024, the Company announced a significant step in building out its North American distribution footprint for TRUBAR™ with the addition of Whole Foods Market to its expanding lineup of key retailers across the U.S. Beginning in July, TRUBAR™ will be available in select Whole Foods Market locations around the U.S., building on a successful initial rollout of the brand in the Denver Metro area where it has delivered strong sales velocities in the competitive nutrition bar category. The introduction of TRUBAR™ in Whole Foods Market is among the 9,500 new store locations across the U.S. where the brand is rolling out by the end of the third quarter.
• Closing of an additional $5M USD credit facility with a Tier One Canadian bank: On August 8, 2024, the Company announced it had closed the previously announced USD $5 million credit facility for its 100% owned subsidiary TRU Brands, Inc. The new credit facility is incremental to the USD $5 million credit facility previously announced on June 19, 2024. The credit facility will substantially lower the current cost of capital to 8.85-9.0% per annum compared to its current receivable factoring arrangement that averages a cost of 15%+ per annum.
• Additionally, the Company received an investment of $3 million to facilitate the repayment of an existing lender who held a first priority charge against certain assets of the Company at an interest rate of 15% per annum. This investment allowed the Company to repay an existing lender and to remove the prior security granted in order to facilitate the credit facility all of which resulted in the availability of more favourable terms under the credit facility with the Tier One Canadian bank and an overall reduction in the Company's cost of capital. The loan was made pursuant to three secured promissory notes of the Company each representing a principal amount of CAD $1 million (the "Promissory Notes"). The Promissory Notes will mature on July 31, 2025, and will bear interest at a rate of 15% per annum payable monthly in arrears.

UPDATE ON LIQUIDITY AND CAPITAL RESOURCES

The Company's primary liquidity and capital requirements are for inventory and general corporate working capital purposes. The Company had a cash balance of $2.9 million as of June 30, 2024, which will provide capital to support the planned growth of the business and for general corporate working capital purposes. The Company's working capital deficiency decreased from $12.4 million as of December 31, 2023, to a working capital deficiency of $5.1 million as of June 30, 2024 ($7.3 million decrease). Additionally, if the warrant liabilities are excluded, there would be a working capital surplus of $2 million. Warrant liabilities do not require cash to settle, only the issuance of common shares. Significant liquidity and capital related updates included:

• The PureKana subsidiary and the Mainstreet loan: PureKana filed for Chapter 7 bankruptcy on April 3, 2024. The PureKana Mainstreet loan and its accounts payable liabilities contributed materially to the working capital deficiency of the Company as of December 31, 2023. With PureKana's Chapter 7 filing on April 3, 2024, the loan and liabilities are no longer be reflected on the Company's consolidated working capital position as of April 3, 2024.
• Private Placements: The Company completed a non-brokered private placement for CA$4 million in equity to be used for working capital and for growth initiatives in 2024 on May 9, 2024. Additionally, the Company generated CA$1,497,771 from warrant exercise to date.
• Line of Credit Facilities: The Company secured several lines of credit facilities for three of its subsidiaries to support the financing of purchase orders from key customers. During the six months ended June 30, 2024, the Company raised over $5.7 million in funds from these lines of credit to finance purchase orders from its large retail customers. Over the same period, the Company repaid over $9.9 million of these credit facilities to the lender. The nature of these loans is to turnover between 3-5 months from the time the money is advanced to repayment.
• New USD$10 million credit facilities: The Company announced it had secured USD$10 million in new credit facilities with a Tier One Canadian Bank. The first USD facility was available to its TRU Brands, Inc. subsidiary in June of 2024 (Interest rates average 3.5-4% per annum) and the second asset-based lending USD$5 million facility (interest rates average 8.85 - 9% per annum) is available as of the date of the MD&A. These new facilities materially reduce the cost of borrowing to approximately 8.85-9.0% which is expected to support TRUBAR^™'s growth from the 15% it averaged over the first six months of 2024.
• Convertible Notes, Promissory Notes and Loans Payable: During the six months ended June 30, 2024, the Company reduced the balance of promissory notes and loans payable outstanding by approximately $1.0 million (see notes 9, 11 and 12 in the interim financial statements for the period ended June 30, 2024). Also subsequent to June 30, 2024, the balance of the convertible debentures was all converted into equity (CAD $655,000 or USD $481,618) thereby reducing the amount of convertible debentures to $nil at the time of filing of the MD&A.
• Promissory Notes: Subsequent to June 30, 2024, the Company secured CAD $3 million in Promissory Notes. The notes were taken out with two of the Company's directors and one of its shareholders. The funds will be used to finance the operations of the Company, specifically TRUBAR^™'s growth. The Promissory Notes are secured with a general security agreement over the assets of the Company.

For more information of the line of credit facilities please refer to note 8 in the interim financial statements for the period ended June 30, 2024.

The Company's ability to fund operating expenses will depend on its future operating performance which will be affected by general economic, financial, regulatory, and other factors including factors beyond the Company's control (See "Risk and Uncertainties" in the MD&A of the Company for the period ended June 30, 2024, which will be made available on the Company's SEDAR+ issuer profile at www.sedarplus.com).

Management continually assesses liquidity in terms of the ability to generate sufficient cash flow to fund the business. Net cash flow is affected by the following items: (i) operating activities, including the level of accounts receivable, other receivable, accounts payable, accrued liabilities and unearned revenue and deposits; (ii) investing activities (iii) financing activities.

Non-IFRS Measures (EBITDA and Adjusted EBITDA)

EBITDA and Adjusted EBITDA are non-IFRS measures used by management that are not defined by IFRS. EBITDA and Adjusted EBITDA do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Management believes that EBITDA and Adjusted EBITDA provide meaningful and useful financial information as these measures demonstrate the operating performance of the business excluding non-cash charges.

"EBITDA" is calculated as earnings before interest, taxes, depreciation, depletion, and amortization. "Adjusted EBITDA" is calculated as EBITDA adjusted for non-cash, extraordinary, non-recurring, and other items unrelated to the Company's core operating activities.

The most directly comparable measure to EBITDA and Adjusted EBITDA calculated in accordance with IFRS is net loss. The following table presents the EBITDA and Adjusted EBITDA for the three months ended June 30, 2024, and 2023, and a reconciliation of same to net income (loss):

Readers are cautioned that EBITDA and Adjusted EBITDA should not be construed as an alternative to net income as determined under IFRS; nor as an indicator of financial performance as determined by IFRS; nor a calculation of cash flow from operating activities as determined under IFRS; nor as a measure of liquidity and cash flow under IFRS. The Company's method of calculating EBITDA and Adjusted EBITDA may differ from methods used by other companies and, accordingly, the Company's EBITDA and Adjusted EBITDA may not be comparable to similar measures used by any other company. Except as otherwise indicated, EBITDA and Adjusted EBITDA are calculated and disclosed by SBBC on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods.

See also Earnings before Interest, Taxes, Depreciation, and Amortization ("EBITDA") and Adjusted EBITDA (Non-GAAP Measures) in the Company's management discussion and analysis for the quarter ended March 31, 2024, available on SEDAR+ at www.sedarplus.com.

Webcast and Conference Call Details:

SBBC will be holding a conference call and simultaneous webcast to discuss its financial results on Monday, August 12, 2024 at 5:00 pm EST (2:00 pm PST). The call will be hosted by Kingsley Ward, Chief Executive Officer, Brian Meadows, Chief Financial Officer and Erica Groussman, Co-Founder and CEO of Tru Brands, Inc. Please dial-in 10 minutes prior to the start of the call.

Date: Monday, August 12, 2024

Time: 5:00 pm EST / 2:00 pm PST

For attendees who wish to join by webcast, the event can be accessed at:

Join the meeting now
Meeting ID: 231 181 212 200
Passcode: PdZGAr

Dial in by phone
+1 437-747-0798,,440004201# Canada, Toronto
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Phone conference ID: 440 004 201#

About Simply Better Brands Corp.

Simply Better Brands Corp. is an international omni-channel platform with a portfolio of diversified assets in the rapidly growing plant-based, natural, and clean ingredient space. The Company targets informed, health-conscious Millennial and Generation Z consumers with a focus on opportunities for expansion into high-growth consumer product categories. For more information on Simply Better Brands Corp., please visit: For more information on Simply Better Brands Corp., please visit: https://www.simplybetterbrands.com/investor-relations.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Information

Certain statements contained in this news release constitute "forward-looking information" and "forward looking statements" as such terms are used in applicable Canadian securities laws. Forward-looking statements and information are based on plans, expectations and estimates of management at the date the information is provided and are subject to certain factors and assumptions, including, among others, that the Company's financial condition and development plans do not change as a result of unforeseen events, the regulatory climate in which the Company operates, and the Company's ability to execute on its business plans. Specifically, this news release contains forward-looking statements relating to, but not limited to statements with respect to: the anticipated use of proceeds from the Company's borrowing arrangements, expansion plans for TRU Brands, Inc.'s products, and the success of the Company's marketing efforts.

Forward-looking statements and information are subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking statements and information. Factors that could cause the forward-looking statements and information in this news release to change or to be inaccurate include, but are not limited to, the risk that any of the assumptions referred to prove not to be valid or reliable, that occurrences such as those referred to above are realized and result in delays, or cessation in planned work, that the Company's financial condition and development plans change, ability to obtain necessary regulatory approvals for proposed transactions, as well as the other risks and uncertainties applicable to the plant-based food, clean ingredient skincare and plant-based wellness or broader wellness industries and to the Company, and as set forth in the Company's management's discussion and analysis available under the Company's SEDAR+ profile at www.sedarplus.com.

The above summary of assumptions and risks related to forward-looking statements in this news release has been provided in order to provide shareholders and potential investors with a more complete perspective on the Company's current and future operations and such information may not be appropriate for other purposes. There is no representation by the Company that actual results achieved will be the same in whole or in part as those referenced in the forward-looking statements and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities law.

SOURCE Simply Better Brands Corp.