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Good day, everyone. Thank you for participating in today's conference call to discuss Simply Better Brands Financial Results for the Third Quarter Ended September 30, 2022. Before we begin, let me remind everyone of the company's safe harbor disclaimer. Certain portions of our comments today will contain future expectations, plans and prospects of the company that constitute forward-looking statements for the purpose of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include all statements containing verbs such as aims, anticipates, estimates, expects, believes, intends, plans, predicts, will, may, continue, projects and targets and negative of these words and similar words or expressions. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated by forward-looking statements.
Factors that could affect our actual results include, among others, those that are discussed under the heading Risk Factors in our most recent [ field ] reports with the SEC, including our annual report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. In addition, this call includes discussions of certain non-GAAP financial measures, included -- including adjusted EBITDA. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on the company's website of simplybetterbrands.com under Investor Relations.
I would like to remind everyone that this call will be available for replay through December 21, 2022, starting 7:30 p.m. ET tonight. Executing the conference call today is Kathy Casey, CEO; and Brian Meadows, CFO of Simply Better Brands Corporation. Subsequent to the formal presentation, we will be addressing questions submitted by our investors in advance of the call, but will not be executing a live Q&A session. Should you have additional unresolved questions, we encourage you to reach out to our Investor Relations website.
Now I would like to turn the call over to CEO of Simply Better Brands, Kathy Casey.
Thank you, [ Michelle ], and thank you, everyone, for joining us today. During the call, we plan to cover 3 topics: first, a review of Simply Better Brands Corporation; secondly, a review of our Q3 financials; and finally, some insights into our growth drivers and our outlook. After taking the company public in December 2020, we are laserly focused on growth both organically and through aggressive acquisition to diversify our portfolio, expand our capability and, of course, acquire top talent.
Now we sit here less than 3 years later, and we've completed 6 acquisitions and operate in 3 core verticals: plant-based wellness, clean ingredient food and next-generation beauty. Our mandate is to profitably grow by relentlessly following the consumer and innovating to solve their problems. As a result, we source our growth through consumer-centric innovation, acquisition and expansion by category, channel and geography. The business model is fueled by buying, building and, if appropriate, selectively selling brands in both the direct-to-consumer and business of business environment.
Now we'll look into our progress to date. I'm very pleased to say that we delivered a very strong third quarter with growth of nearly 3x a year ago at sales of USD13.4 million. This marks our seventh consecutive quarter of revenue growth versus a year ago. If you look at Q3 year-to-date results now reflect revenue of $42.4 million and accretive gross margin of 66%, adjusted EBITDA profit of $300,000 and debt reduction of roughly $3.8 million.
I would like to pause here for a moment and thank many of our team members on the phone for their dedication and discipline to enable these consistent results. We thank our team, we thank our Board, and we thank many of our vendor partners and service partners that enable these outcomes. As we look at the balance of 2022, we are increasing our financial guidance today. This is the fourth time this year that we've increased our guidance, and we are taking top line revenue up to $55 million to $60 million. This is up from $50 million to $55 million or roughly 3.4x a year ago, while continuing to deliver an accretive gross margin of 63% to 65% and positive adjusted EBITDA as we finish the year.
As we close this record-setting year, we see expanded distribution of TRUBAR, continued customer acquisition on PureKana and the launch of our new brand, Vibez. These drive us a strong close and momentum as we enter Q1 2023. Let me now transition over to our mission and highlight, if you will, our [ True North ]. Our highest order is to democratize wellness authentically every day as we believe wellness should be accessible to all. And we accomplished this mission by building disruptive brands in the emerging plant-based holistic wellness space.
Our focus remains to emotionally connect with millennials and Gen Xs on their wellness and active lifestyle journey. Enabling this mission are 3 core brands: PureKana, TRUBAR, and No B.S. Skincare. PureKana is our largest plant-based wellness to-date. In a category of roughly 3,000 brands, it forms the top 10 due to its active ingredient formulas, transparency and efficacy.
TRUBAR is our absolutely delicious organic gluten-free vegan bar with 12 grams of protein and only 190 calories. It consists of -- it consistently exceeds category hurdles when placed at retail. Lastly, No B.S. Skincare bans 1,500 ingredients to garner the reputation as one of the cleanest skincare lines in the category. No B.S. successfully sources volume from lapsed users of large category players that no longer meet the needs of the consumers' demand for no bad stuff. Essentially, these 3 brands align with an informed consumer who is very mindful of what goes in, on, and around their body.
New to this page from previous quarters, you will see that we have added a brand called Vibez and one of our acquisition brands called Seventh Sense. Seventh Sense is currently sold exclusively online and primarily targets young boomers for preventative wellness solutions in the need states of pain and sleep. Our newest wellness brand, Vibez, just launched actually here in late October to start with an offering in the Keto space. It targets Gen X consumers via subscription model and direct-to-consumer.
Due to our capability in space and understanding, of course, plant-based wellness, Vibez has already sold $500,000 in the month of November alone. Now not reflected on this page but secured through one of our acquisitions is another brand called Herve Cannabis brand. With Herve, we are focusing on driving distribution in California, in Arizona on our macaron offering at outlets like Planet 13. And our intention is to ultimately migrate Herve to a licensing model over time. A new licensing agreement with Michigan-based Common Citizen launching in Q4 is actually a proof point of this particular model.
Our brands, which primarily started online, now enjoying omnichannel footprint with roughly 3/4 of our sales direct-to-consumer and the balance sourced in virtually every class of trade in the U.S. and Canada. As you can see here on the page, some noticeable retailers include Amazon, Costco, Target, Walgreens, 7-Eleven and Whole Foods. Since our last quarterly call, we have expanded our TRUBAR footprint in both Costco Canada and in the U.S. with the commitment of national distribution in Costco U.S. to ship in Q1 of 2023.
PureKana and Seventh Sense will be available on CVS.com. While our offline expansion of PureKana has netted 10 new distributors and retailers to include large players like Midwest Wholesale and the end-market convenience store chain. As we think about future growth, we remain focused on category, channel and geographic sources. On category, we see continued traction in both the weight loss and recreational consumer need states as well as an entry into focal acuity and the planned expansion of our PureKana Pet offering.
On channel, we have made recent distribution expansions into convenience, drug, travel and are executing plans to broaden our sales pressure into both CBD specialty and online marketplaces. On geography, we currently have a presence in India, Costa Rica and now have partners finalized in both the U.K. and Mexico for the first test entry of 2023. Timing of both of those entries for the U.K. and Mexico are legal and regulatory dependent. With a crowded -- with a very, very crowded U.S. market, we see our disruptive brands resonating around the globe with a market-centric offering.
We will continue to maintain an eye towards acquisitions that fit our strategy. As you've seen, we've had a very aggressive appetite in the space. However, we will be very mindful of any moves that drive dilution of our stock. Our commitment to consumer-centric innovation also remains a constant. With an eye towards innovation, which is a pillar of our growth in core and foundational to drive loyalty and stickiness with our consumers through extensive research, we follow the consumer on their wellness journey. We innovate solutions that solve problems in the following need states, calm, sleep, pain, immunity, weight loss, focal acuity, energy and recreation.
We have activated those insights as it relates to consumers with innovation either already in market or launching yet in Q1 2023. These expansions are fortified with not just line extensions, but are incremental to the categories. Vibez will transcend the need states of calm, weight loss and immunity, TRUBAR expands into protein powder and lemon and orange flavor line extensions, while No B.S. Skincare launch is an all-natural deodorant. Seventh Sense strengthens our pain offering and expands more deeply into sleep while PureKana doubles down on its recreational offerings with gummies and hard candy. Insight-driven innovation drives incrementality to the company and its core securing consumer loyalty to our brands.
To see how these strategies come to life with -- within our P&L and financially, I'll now turn the call over to our CFO, Brian Meadows. Brian? Hey, Brian, I can't hear you.
Thank you, Kathy, and good morning, everyone. This slide shows our quarterly sales growth progress from 2021 through to 2022, including our full outlook for 2022. Quarterly sales in 2021 were single-digit millions and were based on PureKana and No B.S. for most of the year. In August of 2021, we acquired Tru Brands, Inc., and they began to contribute materially to SBBC sales starting in the first quarter of 2022. PureKana's new marketing program started to produce tremendous top line results in the fourth quarter of 2021 where you see a jump and has been delivering solid numbers ever since.
In the second quarter of 2022, we also launched PureKana's Keto innovative product as well as No B.S. Skincare also launched into 3,200 CVS locations in the second quarter of 2022. We expect sales to increase in the fourth quarter over the third quarter based on TRUBAR sales in the Costco, strong revenue performance from PureKana and the contribution from our newest brand, Vibez. The company remains confident we can -- that we can increase our revenue guidance from $50 million to $55 million to $55 million to $60 million in fiscal 2022.
Next slide, please. Looking at our third quarter results. Revenue for the third quarter of 2022 was $13.4 million, an increase of $9.9 million or 283% growth compared to $3.5 million in the third quarter of 2021. Gross profit for the third quarter of 2022 was $8.8 million or 66% of sales compared to $2 million or 57% of sales in the third quarter of 2021. Gross profit margin was up 9 percentage points in the third quarter of 2022 over the gross profit in the comparable period, driven by lower product costs and higher average order values of PureKana and No B.S.
Operating costs for the third quarter of 2022 were $10.3 million, an increase of $2.6 million or 34% compared to $7.7 million in the third quarter of 2021. The majority of the operating cost increase incurred in the third quarter were -- in 2022 were marketing expenses and PureKana account for majority of those marketing expenses in the third quarter, 85%.
The operating loss was $1.5 million compared to $5.7 million for the prior period or a $4.2 million improvement over the prior period. Net loss was $1.4 million compared to a net loss of $6.4 million or a $5 million improvement over the prior period. Adjusted EBITDA came in at $0.4 million compared to an adjusted EBITDA loss of $0.7 million or a $1.1 million improvement over the prior period.
Next slide, please. Looking at our Q3 year-to-date results. Revenue for the 9 months was $42.4 million, an increase of $33.3 million or a 366% increase compared to $9.1 million in the third quarter of 2021. Gross profit for the 9-month period ending September 30 was $28.5 million or 67% of sales compared to $5.4 million or 59% in the comparable period. Operating costs for the 9 months ended September 30 were $34.3 million, an increase of $21.6 million compared to $12.7 million in the third quarter of 2021.
Again, the majority of the operating costs incurred in the 9 months ended September 30, 2022, were marketing expenses, which were 63% of operating expenses. The operating loss for the 9 months was $5.8 million compared to $7.3 million or a $1.5 million improvement over the prior period. Net loss was $7.4 million for the 9 months compared to a net loss of $8.6 million or a $1.2 million improvement over the prior period. Adjusted EBITDA for the 9 months was $0.3 million compared to an adjusted EBITDA loss of $2.1 million or a $2.4 million improvement over the prior period.
Next slide, please. This slide looks at our focus on debt reduction. We made tremendous progress to reduce short-term promissory notes and convertible debenture debt since the start of 2022. We're able to reduce short-term promissory notes by $4 million and convertible debentures by net $1 million for a total short-term debt reduction of $5 million. We have also been increasing the use of our short-term lines of credit for 3 of our subsidiaries, Tru Brands, No B.S. and Herve.
The nature of these credit lines are typically tied to large customer purchase orders or receivables. So the average life of these credit facilities are approximately 3 months in length. So we borrow the money to finance a purchase order. Once the purchase order is delivered to the customer, we collect the money and repay the loans. So it's -- we'll make use of this many times during the year for brands like Tru, which get very large purchase orders, probably 10 times to 12 times a year. And they are currently used to support our rapid growth in customers such as CVS and Costco.
Next slide, please. Looking at our outlook. We started fiscal 2022 an outlook released on February 23 of revenue expected to come in around $32 million to $35 million. As the year progressed and revenues came in stronger than originally expected, we raised our guidance to $42 million to $45 million in April and then again in July to $50 million to $55 million. Based on where we are today, we are seeing strong revenue performance in Q4 and are pleased today to revise our guidance upwards for the third time this year to $55 million to $60 million.
SBBC's year-to-date September sales are approximately 74% of the midpoint of the revised outlook. And a reminder, last year's sales were $15.6 million. Our gross margins are expected to come in between 63% to 65% for the full year. Gross margin as of September 30, 2022, were 67%. Lastly, we expect to achieve full year positive adjusted EBITDA. This compares to an adjusted EBITDA loss of $3.5 million in fiscal 2021. And as of September 30, our adjusted EBITDA was a positive $300,000.
Next slide, please. Looking at the balance sheet and outstanding securities. Balance sheet as of September 30, we had cash on hand of $1.9 million. Total assets were $35.9 million, liabilities were $20.8 million, and equity of [ $15.1 million ]. We also note that we have reduced our total liabilities from the second quarter balance by $3.1 million. Looking at our capitalization as of November 29, basic shares outstanding, a little over [ 42 million ]. RSUs and options, $2.5 million, convertible debentures and warrants, $4.3 million for a total fully diluted shares outstanding of [ 49.2 million ].
And I would like to turn it back over to Kathy to wrap up the call.
Thank you, Brian. In summary, to look at the wrap up, we'll continue to source through incremental categories, channel expansion and new geographies. As Brian had referenced, last year, we did about $15.6 million, year-to-date, we're at $42.4 million. Our guidance is now $55 million to $60 million. And as you can see, we believe that our market cap is undervalued as we sit here today.
Net-net, as you look at the conclusion, which will be the first and the last page of this presentation as we posted on to our investor website. We delivered trifecta performance in Q3 2022, strong top line growth, gross margin expansion and all while achieving year-to-date positive adjusted EBITDA. This actually will be the first quarter that we're able to communicate year-to-date adjusted EBITDA being positive and while continuing to reduce our debt. We are confident in delivering our increased 2022 outlook and excited about what Q1 opportunity presents for us as a company.
I'm now going to turn it back over to Michelle to address some questions submitted to us in advance by the call for some -- by some of our investors and our shareholders. Michelle?
Thank you, Kathy. Let me surface a series of questions. Let's start with Brian. Brian, your debt structure continues to evolve. Can you expand upon the drivers?
Certainly. The #1 driver for expanding any short-term debt will be through our lines of credit facilities, which are drawn upon to finance large retailer purchase orders, as I expressed or explained earlier in the call. We borrow the money on an average of 3 months from the time we receive a purchase order to delivery of the goods and cash collection.
We have focused on reducing short-term promissory notes and convertible debentures in 2022 and promissory notes have been reduced by $4 million and convertible notes have been reduced by $1 million for a total of $5 million reduction. So you may see some increase, but it will primarily be in short-term credit lines. Thank you.
Thank you. Kathy, the marketing expenses remain high compared to your revenue. What is your plan to reduce them?
Yes. No, thank you for the question. We often get asked this by shareholders, so we want to make sure that we get a chance today to address this one. First of all, I would say that the company operates with a high level of financial governance and any investments are always reviewed with an incredible amount of rigor.
Our Q3 marketing expense was actually down $2 million versus from Q3 versus Q2. A lot of it admittedly delivered more by activity than really by efficiency. Having said that, on the marketing spend, if you broadly look at the CBD category, which is where we spend most of our marketing against the brand of PureKana, the CBD category has been struggling post COVID, whether it be retail interventions, whether it be competitive, whether it be FDA ambiguity, but the category has been struggling a bit as evidenced by the largest player in the category, actually announcing a 28% decline versus a year ago.
Conversely, PureKana is performing quite well. It's exceeding the growth of the category and has significant growth versus a year ago. I will say this growth is driven primarily by our marketing investment. It's allowing us to add over 20,000 new customers each month, drive share awareness and loyalty to the PureKana brand. We now roughly have 35,000 of these consumers are on our subscription model.
And as we referenced earlier, there's a one-time acquisition fee and then all subscriptions come with no fees. So it'll become incredibly profitable for us as those folks come into the model and then repurchase for the second, third and multiple times. We do feel this investment is certainly aggressive, but we think it's critical to continue to lead in the category of CBD and plant-based wellness.
Broadly, if you look beyond PureKana and look at Simply Better Brands, a number of our brands are small and emerging. And we believe we need to invest to scale and drive growth, trial, awareness and ultimately, value to the company and to its shareholders that we are prioritizing investment over profit at this point in the life cycle of our company, while still ensuring great governance, financial rigor and that we remain adjusted EBITDA positive with the lens towards solving for any net income losses over time.
But we do see marketing spend as a percentage of our mix reducing because as our other brands like TRUBAR, like No B.S. increase the marketing mix, of course, across the broader portfolio will become a lower percentage of sales as it relates to the total SBBC portfolio, essentially growth cost money.
Thank you. Kathy, can you share any insight into your 2023 outlook?
Yes, yes, for sure. We've actually not finalized our 2023 outlook with our Board yet. So we're not in position to be able to share specific details today, although we will in short order. However, we do remain committed to building strong brands, driving growth through innovation and category channel and geographic expansion, while ensuring that we do remain adjusted EBITDA positive. If you look at 2023, we do anticipate PureKana, Vibez and TRUBAR to be significant drivers of our year-over-year growth.
Thank you. Kathy, in the plant-based wellness area, you now have 3 -- you now have 3 brands. Why so many?
We do get asked this question frequently as well. If you think originally, the company started with the brand of PureKana, the one that's a top 10 brand in the category. We then went and purchased Seventh Sense, which is also another plant-based wellness brand. And then now as we've announced today, we've launched our brand called Vibez. And it's fair to say, are these duplicative? Will they fall on top of each other? Is there a redundancy in the portfolio? And we believe the answer to that is no.
So although PureKana is the top 10 brand and what's a $15 billion category, it still only secures less than a 2% market share because the category is not only large, but also incredibly fragmented. So we see an opportunity for actually mutually exclusive growth through different positions in the brands and their consumer target as well as a focus on wellness agnostic of CBD, which is where the category is going and where we'll be part of leading and taking it.
If you think of the 3 brands, PureKana is a more millennial-focused brand and caters more to the recreational space of CBD and is primarily gummies. So if you will, it sits somewhat over into recreational and more millennial into a 2 box matrix. Seventh Sense is more of a young boomer focused on sleep and pain, is primarily sits in the topical space. And our new brand, Vibez, which as we referenced, sold $500,000 during the month of November, is more Gen X focused with a more preventative wellness focus.
And at this time does not even include CBD as an ingredient. So we will continue to innovate in plant-based wellness agnostic of whether CBD is a component of the formulas or not. And we will diversify by form factor by consumer, what need state people are solving for and across the continuum of it's the left from recreational to the right to preventative. So we do believe there's room for all 3 of these brands to grow.
Thank you. Kathy, any thoughts on initiatives in the area of Investor Relations?
Sure. I think I would not be alone if I think many of us around the world in the U.S. and Canada are very disappointed and frustrated with the stock market here as we sit here in 2023. Certainly, our position is not agnostic of that. Our focus is to continue to deliver results. As I referenced earlier, [ seventh ] quarter of growth versus a year ago, with pretty much every metric, financial metric improving versus a year ago and often versus the previous quarter.
Our intent is to continue to deliver the results. We do believe that we are undervalued and would hope that eventually that would be recognized as it relates to the performance of our equities. To support this, we're really focused on 3 main areas. One, we will continue to market and leverage IR efforts as we have news to share, 8-K press releases, new relationships, strategic partnerships and participation in the investment conferences.
Second, we are exploring in an institutional banking relationship, where we believe certainly that would be in the best interest in stock. And lastly, our investigating if and when it does make sense for us to uplift potentially the stock ultimately in Canada and the United States market.
Thank you. Brian, what is the current tradable float?
Current tradable float is 23,230,325 shares. Thank you.
Thank you. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your line at this time. Thank you for your participation.
And thank you, everyone, for joining us. Thank you, Michelle.
Thank you. Have a great day.