Simply Better Brands Corp. Announces Second Quarter 2021 Results - GlobeNewswire

VANCOUVER, British Columbia, Aug. 30, 2021 (GLOBE NEWSWIRE) -- Simply Better Brands Corp. ("SBBC" or the "Company") (TSX Venture: SBBC) announces its financial results for the quarter ended June 30, 2021. All amounts are expressed in United States dollars unless otherwise noted. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures, see "Non-IFRS Measures" below.

Corporate Developments

Purekana, LLC ("Purekana"), a subsidiary of the Company, entered into a partnership with Chemesis International Inc. ("Chemesis") - On April 13, 2021, Purekana entered into a brand partnership with Chemesis, a leading cannabis and CBD retailer, under which Purekana’s industry-leading CBD products will become available at hundreds of proprietary Chemesis kiosks throughout the United States.

Acquisition of Nirvana Group LLC ("Nirvana") - On April 28, 2021, the Company completed the acquisition of Nirvana, a Florida-based company specializing in the development, manufacturing, and distribution of all-natural pet wellness products and which includes the BudaPets brand.

Corporate Name Change - On May 3, 2021, the Company changed its name to "Simply Better Brands Corp." and adopted "SBBC" as its new trading symbol for its common shares.

Financing - On May 4, 2021, the Company issued a promissory note for cash proceeds of $630,000. The promissory note bears interest at 9% per annum and matures on May 4, 2022. At the maturity date, the note holder may convert the promissory note to the common shares of the Company at the price of the volume weighed average price ("VWAP") of the Company’s common shares on the TSX Venture Exchange (the "Exchange") during the 15 days trading days immediately preceding the maturity date.

Acquisition of Tru Brands Inc. ("TRU Brands") - On March 3, 2021, the Company entered into a binding term sheet (the "Tru Brands LOI") to acquire 100% of the issued and outstanding shares of Tru Brands. TRU Brands products are available at Costco Canada East locations in Ontario, Quebec, Nova Scotia, New Brunswick, and Newfoundland and Labrador. Tru Brands also plans to expand the sales channels, including the expansion commitments into approximately 800 Shoppers Drug Mart locations and Rexall, Metro, and Loblaws locations.

On August 17, 2021 (the "Tru Brands Closing Date"), the Company completed the acquisition. Under the terms of the acquisition, the Company acquired 24,586,477 shares of common stock with $0.001 par value per share of Tru Brands and 25,000,000 shares of Series A preferred stock with $0.001 par value per share of Tru Brands, and satisfied certain outstanding indebtedness of Tru Brands for an aggregate purchase consideration of $7,500,000, paid in the form of issuance of the Company’s shares to the shareholders and debtholders of Tru Brands, calculated on the basis of the VWAP of the Company’s shares on the Exchange determined based on the 10 trading days immediately preceding the Tru Brands Closing Date. In connection with the acquisition, the Company issued 89,462 common shares as finder’s fee.

The Company’s stock option, restricted share unit ("RSU") and deferred share unit (the "DSU") plan (the "Incentive Plan") - The Incentive Plan was approved at the Company's annual general and special shareholder meeting held on July 15, 2021.

Acquisition of Crisp Management Group Inc. ("CMG"). On August 20, 2021, the Company entered into a non-binding term sheet (the "CMG Term Sheet") to acquire 60% of CMG to focus on the sale and distribution of CBD and Hemp products through Breakaway Music Festivals in North America as well as through E-commerce. Pursuant to the terms of the CMG Term Sheet, the Company will acquire 60% of the outstanding shares of CMG for USD$500,000, to be satisfied through the issuance of common shares of the Company at a price per share equal to the ten (10) trading day VWAP of the shares on the Exchange in the ten (10) trading days immediately prior to the closing date of the transaction. It is expected that the share consideration will be subject to escrow, with 15% releasable every four months in the first 20-month after the closing date, and the remaining 25% releasable 24 months from the closing date.

RESULTS OF OPERATIONS

	For the six months ended
expressed in millions except for	June 30, 2021		June 30, 2020
earnings (loss) per share	$		$
Revenue	5.6		7.8
Gross margin (in $)	3.4		5.0
Gross margin (in %)	61%		64%
Operating expenses	4.9		4.6
Other income (expenses)	(0.4	)	-
Net income (loss)	(1.9	)	0.5
Earnings (loss) per share
- Basic	(0.1	)	1.2
- Diluted	(0.1	)	1.2
expressed in millions except for	June 30, 2021		December 31, 2020
dividend per share	$		$
Total assets	21.2		12.1
Total non-current financial liabilities	25.1		21.3
Dividend per share	-		-

The net loss for the second quarter of 2021 was $1.3 million compared to a net income of $0.3 million for the second quarter of 2020.

The net loss for the six months ended June 30, 2021 was $1.9 million compared to a net income of $0.5 million during the six months ended June 30, 2020.

Revenue

	For the three months ended
	June 30, 2021			June 30, 2020			Change in
expressed in millions	$	%		$	%		$		%
Direct to consumer	2.9	94%		3.6	90%		(0.7	)	-19%
Business to business	0.2	6%		0.4	10%		(0.2	)	-50%
	3.1	100%		4.0	100%		(0.9	)	-23%

	For the six months ended
	June 30, 2021			June 30, 2020			Change in
expressed in millions	$	%		$	%		$		%
Direct to consumer	5.2	93%		7.2	92%		(2.0	)	-28%
Business to business	0.4	7%		0.6	8%		(0.2	)	-33%
	5.6	100%		7.8	100%		(2.2	)	-28%

The Company’s revenue is generated by two segments, Direct to Consumer ("DTC") and Business to Business ("B2B").

Revenue for the second quarter of 2021 was $3.1 million, of which $2.9 million (94%) and $0.2 million (6%) was generated from the DTC and B2B, respectively, compared to $4.0 million, of which $3.6 million (90%) and $0.4 million (10%) was generated from the DTC and B2B, in the second quarter of 2020. Gross revenue excludes sales discount for the second quarter of 2021 and 2020 was $3.2 million and $4.1 million, respectively. The Company’s discount was increased to an average of 31% in the second quarter of 2021 compared to 24% in the second quarter of 2020 reflecting the increased competition the Company experienced in the CBD market.

Revenue for the six months ended June 30, 2021 was $5.6 million, of which $5.2 million (93%) and $0.4 million (7%) was generated from the DTC and B2B, respectively, compared to $7.8 million, of which $7.2 million (92%) and $0.6 million (8%) was generated from the DTC and B2B, during the six months ended June 30, 2020. Gross revenue excludes sales discount for the second quarter of 2021 and 2020 was $7.6 million and $9.8 million, respectively. The Company’s discount was increased to an average of 26% during the six months ended June 30, 2021 compared to 20% during the six months ended June 30, 2020 reflecting the increased competition the Company experienced in the CBD market. No B.S. Skincare was acquired on February 18^th and as a result approximately $1.3 million of sales were reflected in the consolidated sales for six months ended June 30, 2021.

The decrease in revenue of $0.9 million (22%) in the second quarter of 2021 and $2.2 million during the six months ended June 30, 2021 was mainly due to the increase in competition of the online CBD sales and higher discounts (31% in the second quarter of 2021 and 26% for the six months ended June 30, 2021 compared to 24% in the second quarter of 2020 and 20% for the six months ended June 30, 2020) as well as the negative impact of the Covid 19 health crisis that negatively impacted offline sales as retailers were closed for a good portion of 2020 and reluctant to add new vendors to their existing CBD product SKUs.

Cost of goods sold

	For the three months ended
	June 30, 2021			June 30, 2020			Change in
expressed in millions	$	%		$	%		$		%
Product costs	0.9	70%		0.9	65%		-		0%
Merchant processing fees	0.2	15%		0.3	21%		(0.1	)	-33%
Fulfillment costs	0.2	15%		0.2	14%		-		0%
	1.3	100%		1.4	100%		(0.1	)	-7%

	For the six months ended
	June 30, 2021			June 30, 2020			Change in
expressed in millions	$	%		$	%		$		%
Product costs	1.4	63%		1.7	62%		(0.3	)	-18%
Merchant processing fees	0.3	14%		0.5	19%		(0.2	)	-40%
Fulfillment costs	0.5	23%		0.5	19%		-		0%
	2.2	100%		2.7	100%		(0.5	)	-19%

Cost of goods sold includes the product cost, merchant processing fees, and fulfillment and delivery costs. Product costs may vary directly based on hemp's crop price and the CBD derivatives from the crops. Merchant processing fees may be affected by the CBD industry's risk and customer data security and fraud. Fulfillment costs are mainly driven by the delivery costs with the main courier companies.

Cost of goods sold was $1.3 million (includes the product costs of $0.9 million (70%), merchant processing fees of $0.2 million (15%) and fulfillment costs of $0.2 million (15%)) compared to $1.4 million (includes the product costs of $0.9 million (65%), merchant processing fees of $0.3 million (21%) and fulfillment costs of $0.2 million (14%)) in the second quarter of 2021 and 2020, respectively.

Cost of goods sold was $2.2 million (includes the product costs of $1.4 million (63%), merchant processing fees of $0.3 million (14%) and fulfillment costs of $0.5 million (23%)) compared to $2.7 million (includes the product costs of $1.7 million (62%), merchant processing fees of $0.5 million (19%) and fulfillment costs of $0.5 million (19%)) during the six months ended June 30, 2021, and 2020, respectively.

The decrease in cost of goods sold of $0.1 million (7%) and $0.5 million (19%) in the second quarter of 2021 and six months ended June 30, 2021, respectively was primarily due to the decrease in revenue.

Gross profit

	For the three months ended
	June 30, 2021			June 30, 2020			Change in
expressed in millions	$	%		$	%		$		%
Gross profit	1.8	58%		2.6	65%		(0.8	)	-31	%

	For the six months ended
	June 30, 2021			June 30, 2020			Change in
expressed in millions	$	%		$	%		$		%
Gross profit	3.4	61%		5.0	64%		(1.6	)	-32	%

Gross profit for the second quarter of 2021 was $1.8 million (58%) compared to $2.6 million (65%) in the second quarter of 2020.

Gross profit for the six months ended June 30, 2021 was $3.4 million (61%) compared to $5.0 million (64%) for the six months ended June 30, 2020.

Gross profit margin % was negatively impacted by the increase in discount during the second quarter of 2021 and the six months ended June 30, 2021. The gross margin decreases of $0.8 and $1.6 in the second quarter of 2021 and the six months ended June 30, 2021, respectively, compared prior periods was mainly due to lower sales experienced in for the six months ended June 30, 2021.

Operating expenses

Followings are the breakdown of the major operating expenses in the presented period:

	For the three months ended
	June 30, 2021			June 30, 2020			Change in
expressed in millions *	$	%		$	%		$		%
Customer service support	-	0%		0.1	4%		(0.1	)	-100%
General and administrative expenses	0.2	7%		0.1	4%		0.1		100%
Marketing expense	1.2	43%		1.2	52%		-		0%
Professional fees	0.3	11%		0.5	22%		(0.2	)	-40%
Regulatory and filing fees	0.1	4%		-	0%		0.1		100%
Salaries and wages	0.9	32%		0.3	13%		0.6		200%
Other items **	0.1	3%		0.1	5%		(0.0	)	0%
	2.8	100%		2.3	100%		0.5		22%

*Items in each presented period with a balance below $0.1M are either combined as "Other Items" or excluded from the table above.
**Other items including items with a balance below $0.1M and rounding adjustment.

Operating costs for the second quarter of 2021 were $2.8 million, an increase of $0.5 million (22%), compared to $2.3 million in the second quarter of 2020.

The majority of the operating costs incurred in the second quarter of 2021 were marketing expenses of $1.2 million (43%) and salaries and wages of $0.9 million (32%). Of the $0.9 million in salaries and wages, $0.1 million was one time salary and wages expenses (management bonuses). Salaries and wages excluding the one-time amount of $0.1 million was comparable to salaries and wages in the first quarter of 2021 ($0.7 million). The majority of the operating costs incurred in the second quarter of 2020 were marketing expenses of $1.2 million (52%), professional fees of $0.5 million (22%) and salaries and wages of $0.3 million (13%). Compared to the second quarter of 2020, the increase in salaries and wages of $0.6 million (200%) was mainly related to the increase in the company's full-time employees in the sales and marketing operations.

As the Company pursued its growth strategy through mergers and acquisitions it incurred regulatory filing fees of $0.1 million as well as legal expenses related to the acquisitions. The professional fees incurred in the second quarter of 2020 was mainly related to the acquisition of Purekana.

	For the six months ended
	June 30, 2021			June 30, 2020			Change in
expressed in millions *	$	%		$	%		$		%
Customer service support	0.1	2%		0.1	2%		-		0%
General and administrative expenses	0.4	8%		0.3	7%		0.1		33%
Marketing expense	2.1	43%		2.7	59%		(0.6	)	-22%
Professional fees	0.5	10%		0.7	15%		(0.2	)	-29%
Salaries and wages	1.6	33%		0.7	15%		0.9		129%
Regulatory and filing fees	0.2	4%		-	0%		0.2		100%
Other items **	-	0%		0.1	2%		(0.1	)	-100%
	4.9	100%		4.6	100%		0.3		7%

*Items in each presented period with a balance below $0.1M are either combined as "Other Items" or excluded from the table above.
**Other items including items with a balance below $0.1M and rounding adjustment.

Operating costs for the six months ended June 30, 2021 were $4.9 million, an increase of $0.3 million (7%), compared to $4.6 million for the six months ended June 30, 2020.

The majority of the operating costs incurred during the six months ended June 30, 2021 were marketing expenses of $2.1 million (43%), professional fees of $0.5 (10%) and salaries and wages of $1.6 million (33%). The majority of the operating costs incurred during the six months ended June 30, 2020 were marketing expenses of $2.7 million (59%), professional fees of $0.7 million (15%) and salaries and wages of $0.7 million (15%). Compared to the six months ended June 30, 2020, the increase in salaries and wages of $0.9 million (129%) was mainly related to the increase in the company's full-time employees in the sales and marketing operations.

As the Company pursued its growth strategy through mergers and acquisitions it incurred listing and regulatory filing fees of $0.2 million as well as legal expenses related to the acquisitions. The professional fees incurred during the six months ended June 30, 2020 was mainly related to the acquisition of Purekana.

Other income (expenses)

The following are the breakdown of the major operating expenses in the presented period:

	For the three months ended
	June 30, 2021				June 30, 2020			Change in
expressed in millions *	$		%		$	%		$		%
Finance costs	(1.0	)	250%		-	0%		(1.0	)	100%
Fair value adjustment of derivative liability	0.6		-150%		-	0%		0.6		100%
	(0.4	)	100%		-	0%		(0.4	)	100%

*Items in each presented period with a balance below $0.1M are either combined as "Other Items" or excluded from the table above.
**Other items including items with a balance below $0.1M and rounding adjustment.

	For the six months ended
	June 30, 2021				June 30, 2020			Change in
expressed in millions *	$		%		$	%		$		%
Finance costs	(1.6	)	400%		-	0%		(1.6	)	100%
Fair value adjustment of derivative liability	1.1		-275%		-	0%		1.1		100%
Other items **	0.1		-25%		-	0%		0.1		100%
	(0.4	)	100%		-	0%		(0.4	)	100%

*Items in each presented period with a balance below $0.1M are either combined as "Other Items" or excluded from the table above.
**Other items including items with a balance below $0.1M and rounding adjustment.

Finance costs
Finance costs of $1.0 million in the second quarter of 2021 was mainly related to the accretion of interest regarding the convertible notes, lease obligation, loan payable, preferred shares, promissory notes and provision of earn-out payments. No such accretion of interest was recognized in the second quarter of 2020.

Finance costs of $1.6 million during the six months ended June 30, 2021 was mainly related to the accretion of interest regarding the convertible notes, lease obligation, loan payable, preferred shares, promissory notes and provision of earn-out payments. No such accretion of interest was recognized during the six months ended June 30, 2020.

Gain on remeasurement of derivative liability
The Company recognized a gain on remeasurement of derivative liability of $0.6 and $1.1 million in the second quarter of 2021 and in the six months ended June 30, 2021, respectively, pursuant to IFRS 9: Financial Instruments. The Company is required to remeasure the fair value of the derivative liability at each reporting period. Any changes in the derivative liability's fair value are recognized in the income statement as a gain or loss. The gain/loss on remeasurement of derivative liability is driven by different factors such as share price of the Company, risk-free interest rate and foreign exchange rate.

Earnings before Interest, Taxes, Depreciation, and Amortization ("EBITDA") and Adjusted EBITDA (Non-GAAP Measures)

EBITDA and Adjusted EBITDA are non-GAAP 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.

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 second quarter of 2021 and 2020 and the six months ended June 30, 2021 and 2020, and a reconciliation of same to net income (loss):

	For the three months ended
	June 30,		June 30,
	2021		2020	Change in
expressed in millions *	$		$	$		%
Net income (loss)	(1.3	)	0.3	(1.6	)	-533%
Add (less):
Finance costs	1.0		-	1.0		100%
EBITDA	(0.3	)	0.3	(0.6	)	-200%
Add (less):
Fair value adjustment of derivative liability	(0.6	)	-	(0.6	)	100%
Adjusted EBITDA	(0.9	)	0.3	(1.2	)	-400%

The Adjusted EBITDA loss for the second quarter is driven by the following factors: (1) operating loss of No BS Skincare subsidiary ($0.2 million), (2) regulatory, listing fees and legal fees related to business acquisitions ($0.2 million), and (3) operating loss at Purekana ($0.5 million). Of the $0.5 million operating loss at Purekana, $0.1 million was due to one-time salary related costs.

	For the six months ended
	June 30,		June 30,
	2021		2020	Change in
expressed in millions *	$		$	$		%
Net income (loss)	(1.9	)	0.5	(2.4	)	-480%
Add (less):
Finance costs	1.6		-	1.6		100%
EBITDA	(0.3	)	0.5	(0.8	)	-160%
Add (less):
Fair value adjustment of derivative liability	(1.1	)	-	(1.1	)	100%
Adjusted EBITDA	(1.4	)	0.5	(1.9	)	-380%

The Adjusted EBITDA loss during the six months ended June 30, 2021 by the following factors: (1) operating loss of No BS Skincare subsidiary ($0.3 million), (2) regulatory, listing fees and legal fees related to business acquisitions ($0.2 million), and (3) operating loss at Purekana ($0.9 million). Of the $0.9 million operating loss at Purekana, $0.1 million was due to higher fulfillment and delivery costs in the first quarter which have subsequently being reduced in the second quarter and $0.1 million in one-time salary related costs.

LIQUIDITY AND CAPITAL RESOURCES

As at	June 30,		December 31,
	2021		2020
expressed in millions *	$		$
ASSETS
Current assets
Cash	5.0		8.3
Accounts receivable	0.4		0.2
Other receivable	0.3		-
Loan receivable	0.4		0.4
Prepaid expenses	1.3		1.9
Inventory	1.5		0.8
Other items **	(0.1	)	0.1
Total current assets	8.8		11.7
Non-current assets	12.4		0.4
TOTAL ASSETS	21.2		12.1
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	(0.7	)	(0.7	)
Current portion of derivative liability	(0.4	)	-
Current portion of lease obligation	(0.1	)	(0.1	)
Current portion of promissory note	(7.3	)	(3.7	)
Current portion of provision of earn-out payments	(0.9	)	-
Other items **	-		-
Total current liabilities	(9.4	)	(4.5	)
Long term liabilities	(25.1	)	(21.3	)
TOTAL LIABILITIES	(34.5	)	(25.8	)
WORKING CAPITAL	(0.6	)	7.2

*Items in each presented period with a balance below $0.1M are either combined as "Other Items" or excluded from the table above.
**Other items including items with a balance below $0.1M and rounding adjustment.

The Company’s primary liquidity and capital requirements are for inventory and general corporate working capital purposes. The Company currently has a cash balance of $5.0 million as of June 30, 2021 coupled with cash flows from operations, will provide capital to support the planned growth of the business and for general corporate working capital purposes. The Company’s working capital decreased from 7.2 million as of December 31, 2020 to working capital deficiency of $0.6 as of June 30, 2021. The Company continues to focus on improving its working capital position through a number of initiatives including better payment terms with key vendors, taking advantage of early payment options with its offline customers and negotiating lower costs with its key vendors.

The Company’s working capital requirements fluctuate from period to period depending on, among other factors, key consumer holidays (second and fourth quarter each year), new product introductions and vendor lead times. The Company’s principal working capital needs include accounts receivable, inventory, prepaid expenses, and accounts payable.

Purekana is subject to externally imposed capital requirements in connection with its loan. The Loan contains a financial covenant for the debt service coverage ratio (the "Debt Service Coverage Ratio") of Purekana at the end of each calendar year during the term of the loan should not be less than 1.2. Pursuant to the Loan, the Debt Service Coverage Ratio is defined as the quotient of Purekana’s EBITDA for each annual reporting period divided by a ten-year amortization of the Loan amount which is the sum of the interest expense for the reporting period and the scheduled principal payments made with respect to the Loan amount for the reporting period. The Adjusted EBITDA is defined as the unadjusted EBITDA adjusted for any non-recurring, one-time, or irregular items. Purekana was in compliance with these capital requirements as at December 31, 2020.

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 Company's MD&A for the three and six months ended June 30, 2021).

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 amounts receivable, accounts payable, accrued liabilities and unearned revenue and deposits; (ii) investing activities (iii) financing activities.

OUTSTANDING SHARE DATA

As at June 30, 2021, the Company had 21,496,896 common shares (December 31, 2020 – 21,016,875) common shares issued and outstanding.

During the six months ended June 30, 2021

• 5,160,469 common shares released from escrow.
• 22,500 warrants were exercised for cash proceeds of $23,636 (CA$30,000).
• Issued 457,521 common shares for conversion of the convertible notes.
  

Subsequent to June 30, 2021

• The Company granted 1,351,030 options with an exercise price of $5.70 to its officers, employees and consultants. The options are exercisable for a period of five years.
• The Company issued 904,100 RSUs to its directors, employees and consultants.
• The Company issued 491,000 common shares for the RSUs.
• 1,561,407 common shares were issued in connection with the acquisition of Tru Brands.

As at the date hereof, the Company had 23,530,403 common shares issued and outstanding.

In addition, as at the date hereof, the Company had 1,351,030 stock options and 413,100 RSUs issued and outstanding.

SUBSEQUENT EVENTS

• On July 27, 2021, the Company granted 1,351,030 options with an exercise price of $5.70 to its officers, employees and consultants. The options are exercisable for a period of five years.
• On July 27, 2021, the Company issued 904,100 RSUs to its directors, employees and consultants.
• On August 17, 2021, the Company completed the Acquisition of Tru Brands.
• On August 20, 2021, the Company entered into the CMG Term Sheet with CMG.
• The Company issued 491,000 common shares for the RSUs.
• 1,561,407 common shares were issued in connection with the acquisition of Tru Brands.
• The Company repaid $500,000 including interest of the promissory note issued in connect with the acquisition of No B.S.
  

OUTLOOK

The Company change of its name to Simply Better Brands Corp., highlighting the Company’s transition from a CBD and plant-based wellness company to that of a global health, wellness and lifestyle company. "Simply Better Brands" reflects the Company’s commitment to promoting healthy and active lifestyles while building the brands which make them possible. In addition to expanding its majority-owned CBD subsidiary brand, Purekana, the Company has over the past five months made or announced strategic acquisitions in industry-leading health, wellness, beauty, pet and lifestyle brands and companies. The Company expects to continue to seek out additional merger and acquisition (M&A) opportunities in these industry sectors to drive top line growth and profitability.

• Wellness Business - The wellness business is driven by the Company’s holdings in Purekana, a leading CBD brand. In the back half of 2021, we plan to prioritize three sources of growth: direct to consumer optimization, retail outlet penetration, and international expansion. We maintain a strong direct to consumer (D2C) position, as consumers buy online at a greater rate during the pandemic. To accelerate our D2C sales, we are incrementally investing in a proven customer acquisition strategy. We also see sequential monthly improvement in our CBD specialty retail channel with continued distribution expansion. We are encouraged by our monthly sales progress in this offline business channel and as a result are hiring additional sales staff to pursue additional sales opportunities. The effects of Covid 19 impacted the adoption of CBD in large brick & mortar retail outlooks, signally slower than anticipated growth in this class of trade, in the second half of 2021. Our international sales growth in key markets including the UK, the EU and Latin America in 2021 is progressing and we expect to launch our CBD products in the fourth quarter of 2021. Sales to Latin America and UK are expected to commence in the fourth quarter as well. With the acquisition of Nirvana, we also plan to launch our pet CBD products in the fourth quarter of 2021. As the result of a weaker first half of 2021, we don’t expect 30-40% sales growth in this sector in 2021. We do expect 18-20% growth in the wellness sector in the second half of 2021 based on the traction of sales initiatives we are currently seeing and the expected international sales that will commence in the fourth quarter. We also are continually working on merger and acquisition opportunities that could positively impact our fourth quarter sales in the wellness sector depending on the timing of the close of these transactions.
• Beauty Business - The beauty business is driven by the company’s No B.S. brand. We are expecting flat growth in this brand in 2021. We have a major international sales growth initiative that we expect to launch in late 2021, however any impact on sales would be in 2022.
• Plant Based Food - TRU Brands acquisition closed in August of 2021. We are expecting the contribution to SBBC consolidated sales to be material starting in the fourth quarter of 2021 driven by successful placement of the bars in the Canadian and US market with large retailers including Costco, Loblaws and Shoppers Drug Mart.
• Other Market Sectors - The Company is currently evaluating other markets for consumer offerings characterized by strong growth and appeal to its core customer segments. The Company is focused on building a direct-to-consumer platform catering to Millennial and Gen Z consumers.
• Operating Synergies - The Company will continue to focus on realizing operating synergies across its portfolio of consumer brands. This includes e-commerce platforms, finance and administration, fulfillment and marketing synergies. The Company has made progress in all areas during the first half of 2021 and expects this success to continue during the second half of 2021.

About Simply Better Brands Corp.

Simply Better Brands Corp. leads an international omni-channel platform with diversified assets in the emerging plant-based and holistic wellness consumer product categories. The Company’s mission is focused on leading innovation for the informed Millennial and Generation Z generations in the rapidly growing plant-based, natural, and clean ingredient space. The Company continues to focus on expansion into high-growth consumer product categories including CBD products, plant-based food and beverage, and the global pet care and skin care industries. 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.

Contact Information

Simply Better Brands Corp.
Brian Meadows
Chief Financial Officer
+1 (855) 553-7441
ir@simplybetterbrands.com 

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, that the Company’s financial condition and development plans do not change as a result of unforeseen events and that the Company obtains regulatory approval.

Specifically, this news release contains forward-looking statements relating to, but not limited to: completion of proposed acquisitions; expansion capabilities of PureKana, Nirvana, No BS skincare and TRU Brands; expansion and marketing plans for the Company and its subsidiaries; the Company's plans for continued M&A activity in specific industry sectors to drive top line growth and profitability; projected results of operations during 2021, including specific sales growth targets and industry growth targets; the effects of COVID-19 on retail; planned international sales growth in key markets; sales growth in the beauty industry; the Company's plan to build a direct-to-consumer platform catering to Millennial and Gen-Z consumers; operating synergies; the Company's acquisition activities; growth of opportunities in the Company's business segments, including wellness, beauty, plant based foods, and others.

The material factors and assumptions used to develop the forward-looking statements herein include, but are not limited to, the following: (i) the impact of the COVID-19 pandemic; (ii) the regulatory climate in which the Company operates; (iii) the sales success of the Company’s products; (iv) the success of sales and marketing activities; (v) the Company’s ability to complete acquisitions; (vi) there will be no significant reduction in the availability of qualified and cost-effective human resources; (vii) new products will continue to be added to the Company’s portfolio; (viii) consumer demand for the Company products will continue to grow in the foreseeable future; (ix) there will be no significant barriers to the acceptance of the Company’s products in the market; (x) the Company will be able to maintain compliance with applicable contractual and regulatory obligations and requirements; (xi) there will be adequate liquidity available to the Company to carry out its operations; (xii) products do not develop that would render the Company’s current and future product offerings undesirable and the Company is otherwise able to minimize the impact of competition and keep pace with changing consumer preferences; and (xiii) the Company will be able to successfully manage and integrate acquisitions and take advantage of synergies from acquisitions.

The Company’s forward-looking statements are subject to risks and uncertainties pertaining to, among other things, the adverse impact of the COVID-19 pandemic to the Company's operations, supply chain, distribution chain, and to the broader market for the Company's products, revenue fluctuations, nature of government regulations (both domestic and foreign), economic conditions, loss of key customers, retention and availability of executive talent, competing products, common share price volatility, loss of proprietary information, product acceptance, internet and system infrastructure functionality, information technology security, cash available to fund operations, availability of capital, international and political considerations, the successful integration of acquired businesses, and including but not limited to those risks and uncertainties discussed in the Company’s other filings with securities regulators. The impact of any one risk, uncertainty, or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent, and the Company’s future course of action depends on management’s assessment of all information available at the relevant time. Except to the extent required by law, the Company assumes no obligation to publicly update or revise any forward-looking statements made in this press release, whether as a result of new information, future events, or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on the Company’s behalf, are expressly qualified in their entirety by these cautionary statements.

These foregoing lists are not exhaustive. Additional information on these and other factors which could affect the Company's operations or financial results are included in the Company’s other public documents on file with the Canadian Securities regulatory authorities on www.sedar.com" www.sedar.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.

This news release contains financial outlook information about prospective results of operations, which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. The financial outlook information was approved by management as of the date of this news release and was provided for the purpose of providing further information about the Company’s anticipated future business operations. Readers are cautioned that reliance on such information may not be appropriate for other purposes. The Company disclaims any intention or obligation to update or revise any financial outlook information contained in this news release, whether as a result of new information, future events or otherwise, unless required by applicable securities law.

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 press release.

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