SIMPLY BETTER BRANDS CORP. PROVIDES CORPORATE UPDATE, ANNOUNCES SUSPENSION OF OPERATIONS OF PUREKANA SUBSIDIARY
VANCOUVER, BC, April 2, 2024 /CNW/ - Simply Better Brands Corp. (TSXV: SBBC) (OTCQB: PKANF) ("SBBC" or the "Company") today announced that operations of its 50.1% owned subsidiary, PureKana, LLC ("PureKana"), are being suspended. PureKana plans to commence bankruptcy proceedings under Chapter 7 of the Bankruptcy Code of the United States as soon as practicable (the "Proceedings").
The decision to commence the Proceedings follows a comprehensive review over the last seven months by a special committee of the Company's Board of Directors and the Company's Board of Directors of SBBC's investment in PureKana. The strategic review included an evaluation of PureKana's performance, customer acquisition strategy and long-term growth potential, as well as a search for a buyer.
"The special committee and our Board of Directors undertook a comprehensive review of PureKana's business and concluded that the business model, given the significant costs associated with acquiring and retaining customers, does not fit with SBBC's strategy for profitable growth," said SBBC Interim CEO J.R. Kingsley Ward. "The decision of previous management to continue investing in high-cost affiliate marketing programs in the CBD market did not meet our objectives for growth and profitability. As a result, SBBC can no longer support PureKana's operations and continued investment in PureKana is not considered to be in the best interests of SBBC and our shareholders."
In conjunction with today's announcement, SBBC released preliminary full-year 2023 financial results, reporting revenues in the range of $80-$85 million and gross profit of approximately 60% in 2023. While PureKana accounted for approximately half of SBBC's consolidated revenue in 2023, it also represented the majority of the Company's operating losses during such period. Additionally, SBBC's consolidated debt position is expected to benefit from the elimination of approximately $10M of debt owing by PureKana from the Company's financials as a result of the Proceedings.
"Looking ahead, we are excited about the opportunity to sharpen our focus on investing in the growth and continued momentum of our TRUBAR plant-based protein bar," said Mr. Ward. "Based on the brand's strong performance in 2023, we expect TRUBAR to generate revenues of $40-$45 million and gross profit of approximately 45% in 2024 with the potential to generate significantly greater revenues over the next 2 to 3 years. The Company has adequate resources to execute the profitable growth strategy going forward."