Ms. Kathy Casey reports

SIMPLY BETTER BRANDS CORP. ANNOUNCES RECORD FINANCIAL FIRST QUARTER SALES AT $24.6 M

Simply Better Brands Corp. has released its first quarter interim financial results for the quarter ended March 31, 2023. All amounts are expressed in U.S. dollars unless otherwise noted. Certain metrics, including those expressed on an adjusted basis, are non-international financial reporting standards (IFRS) measures.

2023 FIRST QUARTER KEY COMMERCIAL ACHIEVEMENTS

• TRUBAR Protein Bar: In addition to supporting U.S. and Canadian-based retailers, TRUBAR was able to expand into roughly 50% of U.S. and Canadian Costco Clubs throughout 2022. As a result of TRUBAR exceeding the bar category sales velocities at Costco, TRUBAR was able to access national distribution at Costco. Supporting the brands' continued expansion are four initiatives: manufacturing capacity expansion, continued omni-channel distribution growth with retailers like Sodexo, bar flavor extensions, and the entry into the $21.5 billion protein powder category in 2022 per Global Market Insights.
• PureKana Wellness: PureKana, a leading plant-based wellness brand, remained focused on a its customer acquisition initiative, adding over 18,600 customers per month and enabling the sales funnel into a subscription model. To expand beyond human consumption, PureKana announced its 2023 entry into the $196 million hemp-based pet category (per Grandview Research) with offerings in with calming chews, hip & joint chews, and hair & coat drops. As an estimated 60% of PureKana's loyal customers have pets, the growth opportunity is expected to be sizeable.
• No B.S. Skincare: Originally, the No B.S. brand was sourced exclusively online at livenobs.com and Amazon. In 2022, the brand entered 3,200 CVS Health stores for a Back-to-School Event and continues to maintain a on shelf presence in CVS's healthy skin section. Initial brick and mortar success has the brand slotted to enter an additional large, national chain in expected in summer 2023, as well as TJ Maxx expected in Q2 2023. Sources of growth include omni-channel expansion supported by insight-driven innovation with an expanded facial acne patch portfolio (overnight pimple patch and acne patch plus retinol night cream) and a natural deodorant category entry.
• Vibez Wellness: The Vibez Wellness line was launched in November 2022 to capture incremental millennial consumers on their preventative wellness journey. With an initial keto gummy supplement offering, the new brand achieved nearly $1.0MM in revenue in Q1 2023. Vibez's primary focus is non-CBD solutions into the weight management, focal acuity, and healthy hair consumer need states. Through portfolio expansion, Vibez is forecasted to exceed $7.0M in 2023.

"As our strong Q1 2023 financial and commercial results illustrate, we are positioned for continued revenue growth, profit improvement, and debt reduction in 2023. Our strategic priorities remain to lead consumer-centric innovation and relentlessly acquire customers to these emerging brands by driving category and channel expansion. With our recent $7 million finance raise, we are aptly fueled to deliver the 2023 outlook of $80 million in revenue and $3-4 million in adjusted EBITDA at a gross margin target range of 58-60%." says SBBC CEO, Kathy Casey.

For the three months ended March 31, 2023, the Company generated revenue of $24.6 million with a gross profit of $13.9 million (57%) compared to $12.1 million with a gross profit of $8.0 million (66%) during the three months ended March 31, 2022. Revenue increased by $12.5 million (103% increase) over the prior period's revenues. The Company's revenue is generated by one segment – consumer products and within that segment by four main subsidiaries, PureKana's, Tru, BRN, No BS and other subsidiaries which do not generate material revenue currently. PureKana's first quarter revenue for the three months ended March 31, 2023, was $12.5 million compared to $9.3 million for the comparable period in 2022 (increase of $3.2 million or 34%). PureKana's revenue increase was driven by growth of new customers. Tru's first quarter revenue for the three months ended March 31, 2023, was $10.2 million compared to $2.5 million for the comparable period in 2022 (increase of $7.7 million or 308%). Tru's strong sales performance in the first quarter was driven primarily by orders from Costco in the US for a national promotion (Multi Vendor Mailers "MVM") and from major retailers in Canada. No BS's first quarter revenue for the three months ended March 31, 2023, was $0.3 million compared to $0.3 million for the comparable period in 2022. Revenue from BRN (Vibez and Seventh Sense) was $1.4 million compared to nil as BRN was acquired in the second quarter of 2022. SBBC's other subsidiaries contributed $0.2 million in the first quarter compared to 0.0 million.

SBBC's cost of sales increased in the first quarter relative to the fourth quarter of 2022 by 13 percentage points due to a higher mix of lower margin retails sales (41% of Q1 sales compared to 15% of sales in Q4 of 2022) which has lower gross margins than online sales. The Company continues to manage its finished goods costs with co-manufacturers with the higher order volumes it has been able to place. Cost of goods sold for online sales (Direct to consumer "DTC") typically range in the low to mid 70's and retailer (Business to Business "B2B") gross margins range in the mid 30's to higher 40's.

Gross profit for the first quarter of 2023 was $13.9 million (57%) compared to $8.0 million (66%) in the first quarter of 2022. The gross profit margin was down nine percentage points in the first quarter of 2023 over the gross profit in the comparable period driven by a higher mix of B2B sales in the first quarter of 2023 (B2B was 41% of Q1 2023 sales) compared to the first quarter of 2022 (B2B was 15% of Q1 2022 sales).

Operating costs for the first quarter of 2023 were $14.8 million, an increase of $4.3 million (or 41%), compared to $10.5 million in the first quarter of 2022. The majority of the operating costs increase incurred in the three months ended March 31, 2023, were marketing expenses ($10.7 million for Q1 or 72% of operating expenses) and they increased $3.7 million over the previous year directly related to the increase in PureKana and Tru sales. PureKana accounted for $7.6 million of the $10.7 million in marketing expenses in the quarter ended March 31, 2023 (71%). Tru Brand also accounts for $2.1 million in marketing expenses. These were higher in the first quarter directly related to the national Costco MVM promotion. The national promotional costs are significantly higher than the regular Costco promotional allowances. The national promotion averages 22% compared to the regular promotional; allowance of approximately 10%. The Company chose to participate as it expected to exit the national promotion in a favorable position where additional Costco regions would continue to order the product after the national promotion had ended. The MVM will run through the Company's second quarter and marketing expenses will be higher also in the second quarter. Non-cash items of $1.7 million (Share-based payments of $0.7 million and amortization of $1.0 million) represented 12% of the operating expenses and increased $0.4 million from the prior year.

Operating loss for the three months ended March 31, 2023 was $1.0 million compared to a loss of $2.5 million in the prior period or an improvement of $1.5 million.

Other expenses for the first quarter 2023 were $1.7 million compared to other expenses of $0.7 million in the first quarter of 2022 or an increase of $1.0 million. The main components in the first quarter of 2023 for other income and expenses were finance costs of $0.7 million and loss on re-measurement of warrant liabilities of $0.9 million.

During the three months ended March 31, 2023, the Company recorded a net loss of $2.7 million compared to a net loss of $3.2 million for the three months ended March 31, 2022 or an improvement of $0.5 million.

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 $5.7 million as of March 31, 2023, 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 $9.3 million as of December 31, 2022, to a working capital deficiency of $6.5 million as of March 31, 2023 ($2.8 million decrease). Working capital deficiency included the Mainstreet loan ($10.3 million) which is classified as current whereas the term of the loan is 5 years maturing in December 2025. The Mainstreet loan has a five-year term with principal repayments due to start in December 2023 with the first $1.5 million principal repayment. This loan has several covenants including annual and quarterly reporting and debt service coverage. The Company was not compliant with the debt service covenant as of December 31, 2022 although it made progress in improving the Adjusted EBITDA performance of Purekana LLC during the year. For example, Adjusted EBITDA reported for Purekana LLC for the year ended December 31, 2022 was $1.4 million compared to an Adjusted EBITDA loss of $1.4 million for the year ended December 31, 2021 or a $2.8 million improvement. No notice of default has been received by the Company as of the date of this MD&A and has been paying the interest on a regular basis. It has been classified as current as a result of the noncompliance with the debt service covenant.

The Company continues to focus on improving its working capital position through a number of initiatives including equity and convertible debt private placements, issuance of promissory notes and establishment of lines of credit for its subsidiaries.

Private Placements

The Company completed a private placement for CAD $7 million in equity to be used for further debt reduction, working capital and for growth initiatives in 2023.

Convertible Debentures

The Company paid down $1.7 million in convertible debentures including accrued interest that were due in February 2023.

Line of Credit Facilities

Additionally, the Company has secured several lines of credit facilities for three of its subsidiaries to support the financing of purchase orders from key customers. These lines of credit have been critical to finance the large retail purchase orders the Company's subsidiaries have successfully generated during the quarter ended March 31, 2023. For more information of the line of credit facilities please refer to note 8 in the interim financial statements for the three months ended March 31, 2023. During the three months ended March 31, 2023, the Company raised over $5.3 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 $5.5 million of these credit facilities to the lender. TRU was able to increase its primary line of credit with this lender to USD 6 million in December 2022. The nature of these loans is to turnover between 3-5 months from the time the money is advanced to repayment.

Promissory Notes

During the three months ended March 31, 2023, the Company reduced the balance of promissory notes outstanding by approximately $0.2 million (see note 10 in the financial statements for the three months ended March 31, 2023). All promissory notes paid off during the year had a maturity less than 12 months. Subsequent to the quarter the Company paid off a promissory note with accrued interest in the amount of $0.75 million.

2023 OUTLOOK

For our 2023 Outlook:

• The Company's expectation for consolidated net sales to exceed $80 million.
• The Company expects gross margin as a percentage of net sales to be between 58% and 60%.
• The Company expects to achieve positive Adjusted EBITDA in the range of $3-4 million.

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 plant-based food, clean ingredient skincare and plant-based wellness.

We seek Safe Harbor.