01:39 PM EDT, 04/02/2024 (MT Newswires) -- Simply Better Brands ( SBBCF ) shares were last seen up 7.2% after the company on Tuesday said operations of its 50.1% owned subsidiary, PureKana, LLC, are being suspended.

According to a company statement, PureKana plans to commence bankruptcy proceedings under Chapter 7 of the Bankruptcy Code of the United States as soon as practicable.

"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," SBBC interim chief executive Kingsley Ward said in a statement. "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 Tuesday's announcement, SBBC released preliminary full-year 2023 financial results, reporting revenues in the range of US$80 to US$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 US$10 million 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 Ward in a statement. "Based on the brand's strong performance in 2023, we expect TRUBAR to generate revenues of US$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."

Simply Better Brands ( SBBCF ) shares were last seen up C$0.025 to C$0.37 on the TSX Venture Exchange.

Price: 0.37, Change: +0.03, Percent Change: +7.25