2020
annual report
2019
ANNUAL REPORT
1
Brand ambassador Anne-Marie Withenshaw and her family sharing goodfood
is a leading online grocery
company in Canada, delivering fresh meal solutions
and grocery items that make it easy for members
across Canada to enjoy delicious meals at home
every day. Goodfood’s mission is to make the
impossible come true, from farm to kitchen,
by enabling members to complete their weekly
meal planning and grocery shopping in minutes.
Goodfood members have access to a unique
selection of online products as well as exclusive
pricing made possible by its world class
direct-to-consumer fulfilment ecosystem that
eliminates food waste and costly retail overhead.
2
GOODFOOD’S NATIONAL OPERATING FOOTPRINT REACHES
95% OF THE CANADIAN POPULATION
589,000 square feet of purpose-built capacity in 7 facilities from coast to coast
7
PRODUCTION
FACILITIES
3,100
EMPLOYEES
1
2
5
6
7
4
3
WESTERN CANADA
EASTERN CANADA
1
3
6
VANCOUVER, BC
TORONTO, ON
MONTREAL, QC
84,000 sq. ft production and
distribution facility
42,000 sq. ft production and
distribution facility
HQ & 155,000 sq. ft production
and distribution facility
280,000
SUBSCRIBERS(1)
2
4
7
CALGARY, AB
TORONTO, ON
43,000 sq. ft production and
distribution facility
200,000 sq. ft production facility
(under construction)
MONTREAL, QC
45,000 sq. ft production and
distribution facility
5
MONTREAL, QC - BREAKFAST
20,000 sq. ft production and
distribution facility for breakfast
meal solutions
$285M
REVENUES
(1) This is a metric or non-IFRS financial measure which does not have a standardized meaning prescribed by IFRS and may
therefore not be comparable to similar measures presented by other issuers. Please refer to the Metrics and Non-IFRS
financial measures section in the Management’s Discussion and Analysis.
3
3
3-YEAR
FINANCIAL HIGHLIGHTS
(In thousands of Canadian dollars except active subscribers, margins and per share data)
For the years ended August 31,
2020
% ∆
2019
% ∆
2018
OPERATING RESULTS
Revenue
Gross profit
Adjusted EBITDA(1)
Net loss being comprehensive loss
Basic and diluted loss per share
OPERATING METRICS
Active subscribers(1)
Gross margin
Adjusted EBITDA Margin(1)
FINANCIAL POSITION
Cash(2)
Fixed assets
Total assets
Total debt(3)
Total convertible debentures(4)
Shareholders’ equity
CASH FLOWS PROVIDED BY (USED IN)
Operating activities
Financing activities
Investing activities
77%
114%
$285,372
86,419
4,675
(4,136)
(0.07)
$161,333
40,310
(16,164)
(20,937)
(0.38)
129%
175%
280,000
30.3%
1.6%
40%
5.3 pp
11.6 pp
200,000
25.0%
125%
4.2 pp
(10.0%)
2.1 pp
$106,902
19,191
163,046
21,678
16,425
57,558
$8,555
60,118
(9,420)
$47,649
13,545
80,783
14,031
—
17,401
$880
29,555
(9,739)
$70,502
14,660
(8,500)
(9,434)
(0.19)
89,000
20.8%
(12.1%)
$24,453
6,006
34,309
2,592
—
16,456
$176
10,901
(4,171)
(1) This is a metric or non-IFRS financial measure which does not have a standardized meaning prescribed by IFRS
and may therefore not be comparable to similar measures presented by other issuers. Please refer to the
Metrics and Non-IFRS financial measures section in the Management’s Discussion and Analysis.
(2) Includes cash, cash equivalents and restricted cash.
(3) Includes the line of credit and the current and non-current portion of long-term debt.
(4) Includes the liability and equity components of the convertible debentures.
4
2020
KEY HIGHLIGHTS
IMPROVING MEMBER EXPERIENCE
WORLD-CLASS OPERATING FOOTPRINT
• Launched Goodfood Flex: allowing subscribers to mix
• Footprint of 7 purpose-built facilities in 2021
and match products
• Launched Goodfood WOW: a monthly unlimited
same-day delivery service
• Launched Vancouver facility, first facility in the
Greater Toronto Area (“GTA”) and third facility in
Montreal
• Expanded Goodfood product offering from ~40 to
• Announced buildout of flagship second facility in GTA
~400 SKUs
• Opened in-house ready-to-eat kitchen at main
• Expanded Goodcourier: in-house last-mile delivery
Montreal facility
VIBRANT GOODFOOD COMMUNITY
STRONG FINANCIAL PERFORMANCE
• Built solid bond with customers, employees and
community throughout COVID-19 pandemic
• Net income in Q3 and Q4, positive Adjusted EBITDA(1)
for the year
• Provided meals to frontline healthcare workers across
• Added to S&P/TSX Smallcap Index, selected to TSX30
the country
as top 30 performing stocks
• Established enhanced sanitary measures
• Completed $70 million in equity and convertible
• Positive impact of pandemic on online grocery
financing
penetration and Goodfood unit economics
• Generated $9 million in cash flows from operations
• Ended 2020 in strong financial position with
$107 million of cash(2) on hand
(1) This is a metric or non-IFRS financial measure which does not have a standardized meaning prescribed by IFRS and may therefore not be comparable to similar measures
presented by other issuers. Please refer to the Metrics and Non-IFRS financial measures section in the Management’s Discussion and Analysis.
(2) Includes cash, cash equivalents and restricted cash.
5
5
EVOLUTION OF
KEY METRICS
ACTIVE SUBSCRIBERS(1)
+40%
246,000
272,000
280,000
230,000
200,000
Q4-19
Q1-20
Q2-20
Q3-20
Q4-20
REVENUES — TRAILING 12 MONTHS
(in thousands of Canadian $)
+77%
210,204
285,372
246,940
161,333
188,007
Q4-19
Q1-20
Q2-20
Q3-20
Q4-20
Revenues
ADJUSTED EBITDA(1) AND ADJUSTED EBITDA MARGIN(1)
5,984
6.9%
5,263
6.3%
+16
pp
Q3-20
Q4-20
Q4-19
Q1-20
Q2-20
-6.5%
-3,651
-5.0%
-2,921
-9.7%
-4,391
Adjusted EBITDA(1)
Adjusted EBITDA (%)(1)
6
6
(1) This is a metric or non-IFRS financial measure which does not have a standardized meaning prescribed by
IFRS and may therefore not be comparable to similar measures presented by other issuers. Please refer to
the Metrics and Non-IFRS financial measures section in the Management’s Discussion and Analysis.
MESSAGE TO
SHAREHOLDERS
This has been a year of tremendous challenges and rapid evolution for
Goodfood. We would like to begin this year’s letter to shareholders by
highlighting the immense efforts of our more than 3,000 dedicated
employees across the country who came together to deliver an essential
service to our almost 300,000 members from coast to coast. Feeding
Canadians has never been as important as it is during this global
pandemic that is affecting us all and we are incredibly proud of the role
we at Goodfood are playing to feed Canadians safely.
Jonathan Ferrari
Co-Founder, Chairman
of the Board and CEO
When we began our adventure nearly six years ago, our vision was to
build the leading online grocer in the country by using our incredible
meal kits as an entry point into Canadian kitchens and one of Canada’s
Neil Cuggy
Co-Founder, Director,
President and COO
largest industries. It allowed us to build the first few aisles of the
Goodfood grocery store with one strong line of business. We have since
worked tirelessly to develop that product further and, last year, we began
bringing more aisles to life with an expanded product offering. Today, we
boast a deep and varied offering that successfully brings online a more
complete grocery basket and shopping experience. We are strategically
and efficiently building and cementing leadership in the e-commerce
grocery landscape, and we are only just getting started.
7
MESSAGE TO SHAREHOLDERS (CONT’D)
OUR STRATEGY: FEEDING CANADIANS BETTER AND
MORE CONVENIENTLY AS WE GROW
Our strategy is simple: do the best for customers so they can make us their best option. Since
inception and again in Fiscal 2020, we have focused on growing our subscriber(1) base, now 280,000
members strong. This past year, beyond attracting more subscribers(1) to our delicious ready-to-cook
and breakfast products, we have added many arrows to our quiver: new exquisite ready-to-eat meal
solutions and top-notch grocery products. Combining new products with faster delivery times and
added flexibility has gone a long way in increasing Goodfood’s value proposition to customers. Adding
density, scale and investments in automated world-class fulfillment capabilities has bolstered our
industry-leading unit economics, allowing us in turn to add even more new satisfied subscribers(1).
That is the basis of our strategic flywheel, which you can see below.
Growth in online
grocery delivery
originally projected
to occur over years
was accelerated to a
few months, with an
existing $1-2 billion
industry becoming a
$6+ billion(3) market
almost overnight.
STRONG TAILWINDS...
The Canadian food industry continues to evolve rapidly, and we have remained at its forefront and
contributed to its continued evolution. Prior forecasts had initially estimated the online grocery market
to grow at a 21% CAGR through 2023(2) and to hit a market size of over $10 billion. These strong tailwinds
were driven by the confluence of key secular trends: the increased penetration of e-commerce across
the country, a millennial rising making this generation a powerful grocery shopper, and a stronger
product offering across the industry, including Goodfood’s, improving the quality of choices available.
(1) This is a metric or non-IFRS financial measure which does not have a standardized meaning prescribed by IFRS and may therefore not be comparable to similar measures presented by
other issuers. Please refer to the Metrics and Non-IFRS financial measures section in the Management’s Discussion and Analysis.
(2) IGD/CanadianGrocer.com.
(3) Dalhousie University, New survey on COVID-19 grocery shopping; May 2020.
8
MESSAGE TO SHAREHOLDERS (CONT’D)
...MADE EVEN STRONGER BY CURRENT CIRCUMSTANCES...
These existing tailwinds were made even stronger by the COVID-19 pandemic. Growth in online
grocery delivery originally projected to occur over years was accelerated to a few months, with an
Compared to
Fiscal 2019, we grew
existing $1-2 billion industry becoming a $6+ billion(1) market almost overnight. The tailwinds were
our member base by
40%, revenues by
77% and improved
gross margin by
5.3 percentage
points.
already strong and escalated to hurricane levels very quickly.
Early in Fiscal 2020, we were already well on our way to breaking new records in subscribers(2), revenues
and improving profitability levels. Achieving and surpassing these goals was accelerated by the current
circumstances and we are observing clear signs of sustainability and further meaningful upside as we
continue seeing growing basket sizes, member base and exciting demand levels for our existing and
new product offering.
To that effect, we continue to invest in a world-class fulfillment ecosystem with new facilities and
increased automation to grow Goodfood’s fulfillment capacity and increase the speed and efficiency of
our operations. These investments position us ideally to capitalize on the accelerated growth tailwinds
in the coming years.
...AND SUPPORTED BY A GREAT GOODFOOD COMMUNITY
Beyond financial results, making the most of growth opportunities ahead of us relies more than ever
on our community.
Throughout these challenging times, we have realized and embraced Goodfood’s increased importance
to its customers, who rely on our products to be delivered to their doors in order to feed their family,
providing a safe alternative to crowded grocery stores and long lines. Furthermore, we are proud to
provide job opportunities to Canadian workers from coast-to-coast in these difficult times.
We have received tremendous support from our community this year. It has translated not only into
great financial results, but more importantly into a deeper bond with our ecosystem, and we are
extremely grateful for that. As such, we are dedicated to giving back. During the year, we supported
frontline healthcare workers with free meals across the country and organized donations to food
banks and charitable organizations, while maintaining our commitment to providing a safe work
environment for our growing workforce across Canada.
(1) Dalhousie University, New survey on COVID-19 grocery shopping; May 2020.
(2) This is a metric or non-IFRS financial measure which does not have a standardized meaning prescribed by IFRS and may therefore not be comparable to similar measures presented by
other issuers. Please refer to the Metrics and Non-IFRS financial measures section in the Management’s Discussion and Analysis.
9
In Fiscal 2021, our
main target will
remain growth.
Growth has however
taken a broader,
deeper meaning for
Goodfood.
MESSAGE TO SHAREHOLDERS (CONT’D)
ANOTHER YEAR OF STRONG GROWTH, A FIRST YEAR OF PROFITABILITY
Fiscal 2020 marked our first year of profitability on an Adjusted EBITDA(1) basis, fueled by continued
demand, leading to revenue growth, margin improvement and stronger unit economics.
Compared to Fiscal 2019, we grew our member base by 40%, revenues by 77% and improved gross
margin by 5.3 percentage points. Combining our strong growth to gross margin improvement and
the consistent demonstration of operating leverage has resulted in Adjusted EBITDA(1) reaching
$4.6 million for the year.
Achieving profitability at this level is a milestone that we are very proud to have achieved. As the online
grocery industry continues to expand rapidly, our ambition remains to be its leader. While we will
continue to pursue profitability, we are equally proud of the growth achieved and are equally committed
to continuing on our exceptional trajectory over the coming years. We understand the economics and
shareholder value brought by strong growth and it remains our main priority.
DON’T JUST FLY, SOAR
In the six years Goodfood has been in existence, we have aimed high in order to deliver the best possible
product to Canadians with the best possible return to our shareholders, and it is only the beginning.
In Fiscal 2021, our main target will remain growth. Growth has however taken a broader, deeper
meaning for Goodfood. We plan to grow our subscriber(1) base, but will also continue to increase our
offering of delicious products as well as further improve delivery times to customers and the flexibility
we provide our members. We will continue to obsess about our clients’ happiness as it has been the
best vector of success these past six years, and we will aim to provide them with a frictionless shopping
experience with the best products available powered by our world-leading fulfillment ecosystem.
We also plan to grow our workforce; not simply in numbers, but in capabilities and support. As we all
adapt to new realities and working from home, supporting our people is paramount to the success of
Goodfood.
We plan to grow our community and sustainability efforts. Building on the great initiatives already in
place, we will rise to our role as a community leader and support our ecosystem as best we can. Despite
disruptions, our sustainability efforts have not waned. We have launched several initiatives, including
reusable boxes, paper grocery bags, bamboo-based packaging, compostable plastics, while cutting
out plastic use as much as possible. You can count on us to continue innovating on that front while
protecting our margins.
In 2021, we want Goodfood to not simply fly, but truly soar on its way to becoming a multibillion-dollar
online grocery leader.
(1) This is a metric or non-IFRS financial measure which does not have a standardized meaning prescribed by IFRS and may therefore not be comparable to similar measures presented by
other issuers. Please refer to the Non-IFRS financial measures section in the Management’s Discussion and Analysis.
10
MESSAGE TO SHAREHOLDERS (CONT’D)
STILL, MOST IMPORTANTLY
Having almost doubled our workforce to more than 3,000 employees, our exceptional performance
this year still reflects the dedication of our people. Our success would not have been possible without
their incredible contributions both in good and more challenging times. To all Goodfoodies, we want
to say thank you.
Our performance this year has still also been driven by the unwavering confidence of our shareholders,
customers, board members, suppliers and other stakeholders. We want to express our deep appreciation
for your trust and support. Having seen our stock price gain 176% in the past year(1), and having been
included in the TSX30 as one of the top thirty performers on the Toronto Stock Exchange, we are
thrilled to have rewarded your confidence in our strategy with strong returns.
When we created Goodfood, we envisioned continuously improving the experience of Canadian
grocery shoppers and our goal to be in every kitchen, every day, is even closer than last year. As we
continue to build towards that ambitious goal, it is with great pride that we share with you our Fiscal
year 2020 financial results.
Fellow shareholders, we thank you for your partnership and for another year of continued support –
onwards and upwards!
Our stock price
gained 176% in the
past year(1), and we’ve
been included in the
TSX30 as one of the
top thirty performers
on the Toronto Stock
Exchange.
Jonathan Ferrari
Neil Cuggy
Co-Founder, Chairman of the Board
Co-Founder, Director, President
and CEO
and COO
(1) This represents share price return between November 14, 2019 to November 10, 2020
11
BOARD OF
DIRECTORS
JONATHAN FERRARI
NEIL CUGGY
Co-Founder, Chairman of the Board and CEO
Co-Founder, Director, President and COO
HAMNETT HILL
Director
DONALD OLDS
Director
TERRY YANOFSKY
Director
FRANÇOIS VIMARD
Director
12
12
MANAGEMENT’S DISCUSSION
AND ANALYSIS
YEAR ENDED AUGUST 31, 2020
13
Goodfood Market Corp.
TABLE OF CONTENTS
Management’s Discussion and Analysis
Year ended August 31, 2020
BASIS OF PRESENTATION ........................................................................................................................................................................ 15
FORWARD-LOOKING STATEMENTS..................................................................................................................................................... 15
METRICS AND NON-IFRS FINANCIAL MEASURES .......................................................................................................................... 16
COMPANY OVERVIEW ................................................................................................................................................................................ 17
FINANCIAL OUTLOOK .................................................................................................................................................................................. 17
FISCAL 2020 HIGHLIGHTS .......................................................................................................................................................................... 18
SELECTED ANNUAL FINANCIAL INFORMATION .............................................................................................................................. 21
METRICS AND NON-IFRS FINANCIAL MEASURES - RECONCILIATION .................................................................................. 22
RESULTS OF OPERATIONS – FISCAL 2020 AND FISCAL 2019 ................................................................................................... 23
RESULTS OF OPERATIONS – THREE-MONTH PERIODS ENDED AUGUST 31, 2020 AND 2019 .................................. 24
FINANCIAL POSITION ................................................................................................................................................................................... 25
LIQUIDITY AND CAPITAL RESOURCES ................................................................................................................................................ 26
SELECTED QUARTERLY FINANCIAL INFORMATION ..................................................................................................................... 29
TRENDS AND SEASONALITY ................................................................................................................................................................... 29
FINANCIAL RISK MANAGEMENT ............................................................................................................................................................. 29
BUSINESS RISK .............................................................................................................................................................................................. 30
ADDITIONAL FINANCING REQUIREMENTS ........................................................................................................................................ 30
OFF-BALANCE SHEET ARRANGEMENTS ........................................................................................................................................... 31
FINANCIAL INSTRUMENTS ........................................................................................................................................................................ 31
RELATED PARTIES ....................................................................................................................................................................................... 31
STOCK OPTIONS ........................................................................................................................................................................................... 32
OUTSTANDING SHARE DATA .................................................................................................................................................................. 32
USE OF PROCEEDS FROM PUBLIC OFFERINGS ............................................................................................................................ 32
SEGMENT REPORTING .............................................................................................................................................................................. 33
DIVIDEND POLICY .......................................................................................................................................................................................... 33
CRITICAL ACCOUNTING ESTIMATES ................................................................................................................................................... 34
STANDARDS ISSUED BUT NOT YET EFFECTIVE ............................................................................................................................ 34
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING ....... 34
14 | P a g e
Goodfood Market Corp.
November 11, 2020
BASIS OF PRESENTATION
Management’s Discussion and Analysis
Year ended August 31, 2020
The following Management’s Discussion and Analysis ("MD&A") is intended to assist readers in
understanding the business environment, trends and significant changes in the results of operations and
financial condition of Goodfood Market Corp. and its subsidiary (also referred to in this MD&A as “we”, “our”,
“Goodfood” or the “Company”) for the years ended August 31, 2020 and 2019 and should be read in
conjunction with our audited consolidated financial statements and accompanying notes for the year ended
August 31, 2020 and 2019. Please also refer to Goodfood’s press release announcing its results for year
ended August 31, 2020 issued on November 11, 2020. Quarterly reports, the Annual Report, and the
Annual Information Form can be found on SEDAR at www.sedar.com and under the “Investor Relations –
Financial Information” section of our website: https://www.makegoodfood.ca/en/investors. Press releases
are available on SEDAR and under the “Investor Relations – Press Releases” section of our corporate
website.
The Company’s consolidated financial statements were prepared in accordance with International Financial
Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and the
financial information herein was derived from those statements.
All amounts herein are expressed in Canadian dollars unless otherwise indicated and all references to
Fiscal 2020 and to Fiscal 2019 are to the fiscal years ended August 31, 2020, and August 31, 2019,
respectively.
Management determines whether information is material based on whether they believe a reasonable
investor’s decision to buy, sell or hold securities of the Company would likely be influenced or changed
should the information be omitted or misstated, and discloses material information accordingly.
FORWARD-LOOKING STATEMENTS
This MD&A contains “forward-looking information” within the meaning of applicable Canadian securities
legislation. Such forward-looking information includes, but is not limited to, information with respect to our
objectives and the strategies to achieve these objectives, as well as information with respect to our beliefs,
plans, expectations, anticipations, estimates and intentions. This forward-looking information is identified
by the use of terms and phrases such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”,
“anticipate”, “plan”, “foresee”, “believe”, and “continue”, as well as the negative of these terms and similar
terminology, including references to assumptions, although not all forward-looking information contains
these terms and phrases. Forward-looking information is provided for the purposes of assisting the reader
in understanding the Company and its business, operations, prospects and risks at a point in time in the
context of historical and possible future developments and therefore the reader is cautioned that such
information may not be appropriate for other purposes.
Forward-looking information is based upon a number of assumptions and is subject to a number of risks
and uncertainties, many of which are beyond our control, which could cause actual results to differ
materially from those that are disclosed in, or implied by, such forward-looking information. These risks and
uncertainties include, but are not limited to, the following risk factors which are discussed in greater detail
under “Risk Factors” in the Company’s Annual Information Form for the year ended August 31, 2020
available on SEDAR at www.sedar.com: limited operating history, negative operating cash flow, food
industry, COVID-19 pandemic, quality control and health concerns, regulatory compliance, regulation of the
industry, public safety issues, product recalls, damage to Goodfood’s reputation, transportation disruptions,
storage and delivery of perishable foods, product liability, unionization activities, consolidation trends,
ownership and protection of intellectual property, evolving industry, reliance on management, factors which
may prevent realization of growth targets, competition, availability and quality of raw materials,
environmental and employee health and safety regulations, online security breaches and disruption,
reliance on data centers, open source license compliance, future capital requirements, operating risk and
insurance coverage, management of growth, limited number of products, conflicts of interest, litigation,
catastrophic events, risks associated with payments from customers and third parties, being accused of
infringing intellectual property rights of others and, climate change and environmental risks. Although the
forward-looking information contained herein is based upon what we believe are reasonable assumptions,
15 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
in
relation
to developments
readers are cautioned against placing undue reliance on this information since actual results may vary from
the forward-looking information. Certain assumptions were made in preparing the forward-looking
information concerning the availability of capital resources, business performance, market conditions, and
customer demand. In addition, information and expectations set forth herein are subject to and could
change materially
the
COVID-19 pandemic and its impact on product demand, labour mobility, supply chain continuity and other
elements beyond our control. Consequently, all of the forward-looking information contained herein is
qualified by the foregoing cautionary statements, and there can be no guarantee that the results or
developments that we anticipate will be realized or, even if substantially realized, that they will have the
expected consequences or effects on our business, financial condition or results of operation. Unless
otherwise noted or the context otherwise indicates, the forward-looking information contained herein is
provided as of the date hereof, and we do not undertake to update or amend such forward-looking
information whether as a result of new information, future events or otherwise, except as may be required
by applicable law.
the duration and severity of
regarding
METRICS AND NON-IFRS FINANCIAL MEASURES
The table below describes metrics and non-IFRS financial measures used by the Company throughout this
MD&A. Non-IFRS financial measures do not have standard definitions prescribed by IFRS and, therefore,
may not be comparable to similar measures presented by other companies. They are provided as additional
information to complement IFRS measures and to provide a further understanding of the Company’s results
of operations from our perspective. Accordingly, they should not be considered in isolation nor as a
substitute for analysis of our financial information reported under IFRS and should be read in conjunction
with the financial statements for the periods indicated. For a reconciliation of these non-IFRS financial
measures to the most comparable IFRS financial measures, as applicable, see the “Metrics and Non-IFRS
Financial Measures – Reconciliation” section of this MD&A.
Metrics
Active
subscribers
EBITDA,
Adjusted
EBITDA
&
Adjusted
EBITDA
margin
Definitions
An account that is scheduled to receive a delivery, has elected to skip delivery in the
subsequent weekly delivery cycle or that is registered to Goodfood WOW. Active
subscribers exclude cancelled accounts. For greater certainty, an active subscriber is
only accounted for once, although different products might have been ordered in a
given weekly delivery cycle. While active subscribers is not an IFRS or non-IFRS
financial measure, and, therefore, does not appear in, and cannot be reconciled to a
specific line item in the Company’s Consolidated Financial Statements, we believe that
active subscribers is a useful metric for investors because it is indicative of potential
future revenues. The Company reports the number of active subscribers at the
beginning and end of the period, rounded to the nearest thousand.
EBITDA is defined as net income or loss before net finance costs, depreciation and
amortization and income taxes. Adjusted EBITDA is defined as EBITDA excluding
share-based payments. Adjusted EBITDA margin is defined as the percentage of
adjusted EBITDA to revenues. EBITDA, adjusted EBITDA, and adjusted EBITDA
margin are non-IFRS financial measures. We believe that EBITDA, adjusted EBITDA,
and adjusted EBITDA margin are useful measures of financial performance because
these measures are useful to assess the Company’s ability to seize growth
opportunities in a cost-effective manner, to finance its ongoing operations and to
service its long-term debt. They also allow comparisons between companies with
different capital structures.
In the fourth quarter of the year ended August 31, 2020, the Company discontinued the reporting of Gross
Merchandise Sales, Adjusted Gross Profit and Adjusted Gross Margin as management believes these non-
IFRS measures do not provide additional information to complement IFRS measures and to understand
the financial performance of Goodfood.
16 | P a g e
Goodfood Market Corp.
COMPANY OVERVIEW
Management’s Discussion and Analysis
Year ended August 31, 2020
Goodfood (TSX:FOOD) is a leading online grocery company in Canada, delivering fresh meal solutions and
grocery items that make it easy for members from across Canada to enjoy delicious meals at home every
day. Goodfood’s mission is to make the impossible come true, from farm to kitchen, by enabling members
to complete their weekly meal planning and grocery shopping in minutes. Goodfood members have access
to a unique selection of online products as well as exclusive pricing made possible by its world class direct-
to-consumer fulfilment ecosystem that eliminates food waste and costly retail overhead. The Company’s
main production facility and administrative offices are based in Montreal, Québec, with five additional
production facilities located in the provinces of Québec, Ontario, Alberta, and British Columbia. A seventh
production
is currently under construction. As at
the province of Ontario
in
August 31, 2020, Goodfood had 280,000 active subscribers.
located
facility
FINANCIAL OUTLOOK
The online grocery industry is among the fastest growing industries in the world. As a result, Goodfood
believes there are significant opportunities and advantages to rapidly grow its subscriber base by continuing
to invest in highly targeted marketing campaigns, capacity expansion through additional facilities and
investments in automation, increasing its product offering and in continuing to expand its national platform.
Goodfood's strategy involves in part delaying short-term profitability in order to invest in generating
long-term shareholder value creation, and also to continue improving its cost structure to achieve long-term
margin and profitability goals. Growing Goodfood's subscriber base, market share, scale and product
offering will allow the Company to deliver greater value to its customers while attaining high returns on
invested capital. As the Company grows its subscriber base, it is confident that it will achieve economies of
scale and additional efficiencies which will lead to improvements in profitability while maintaining an
unrivalled customer experience.
The COVID-19 pandemic has had an impact on Goodfood’s overall business and operations. As an
essential service in Canada, Goodfood continued to operate throughout the pandemic and experienced an
acceleration of growth in demand. While subscriber orders have been fulfilled and consumer behaviour
during the pandemic has contributed to an increase in subscriber base, orders by subscribers and overall
business, operations and supply chains were significantly challenged with temporary supplier closures and
substitution of unavailable ingredients combined with workforce shortages and additional sanitary
measures, putting pressure on food and labour costs. Pressure on supply chains, inventory levels and
increased operational costs or disruptions and labour shortages could increase depending on the duration
and severity of the pandemic as well as any changes to Goodfood’s industry regulatory framework.
As a result of the COVID-19 pandemic, the number of employees working remotely has increased
significantly, which has also increased demands on information technology resources and systems and
increased the risk of phishing and other cybersecurity attacks.
The magnitude, duration, and severity of the COVID-19 pandemic are difficult to predict and could affect
the significant estimates and judgements used in the preparation of the Company’s consolidated financial
statements.
Objectives are based upon assumptions and are subject to risks and uncertainties, many of which are
beyond our control. These risks and uncertainties could cause actual results to differ materially from
objectives. See the ‘‘Forward-Looking Statements’’ and ‘‘Business Risk” sections of this MD&A.
17 | P a g e
Goodfood Market Corp.
FISCAL 2020 HIGHLIGHTS
Management’s Discussion and Analysis
Year ended August 31, 2020
HIGHLIGHTS OF FISCAL 2020 COMPARED TO FISCAL 2019
Revenues reached $285.4 million, an increase of $124.0 million, or 77% year-over-year.
Gross margin reached 30.3%, an improvement of 5.3 percentage points and gross profit reached
$86.4 million, an increase of $46.1 million, or 114%.
Goodfood reported net income for the last two quarters of Fiscal 2020, reducing the net loss for the year
ended August 31, 2020 to $4.1 million, an improvement year-over-year of $16.8 million, resulting in
basic loss per share of $0.07.
Cash flows provided by operating activities reached $8.6 million, an improvement of $7.7 million
compared to the same period last year.
The Company reported a cash balance of $106.9 million (including cash and cash equivalents and
restricted cash) as at August 31, 2020, an increase of $59.3 million compared to the same period last
year.
Goodfood reported positive Adjusted EBITDA margin for the first time since the Company’s inception,
reaching 1.6% for the year ended August 31, 2020, an improvement of 11.6 percentage points year-
over-year.
Active subscribers reached 280,000 as at August 31, 2020, an increase of 80,000, or 40%, compared
to August 31, 2019.
HIGHLIGHTS OF THE THREE-MONTH PERIOD ENDED AUGUST 31, 2020 COMPARED TO THE
THREE-MONTH PERIOD ENDED AUGUST 31, 2019
Revenues reached $83.7 million, an increase of $38.4 million, or 85% year-over-year.
Gross margin totalled 32.8%, an improvement of 6.1 percentage points and gross profit increased
$15.4 million, or 127%, to reach $27.5 million.
For the second consecutive quarter, Goodfood reported positive net income that amounted to
$1.6 million, an improvement of $7.5 million compared to the same period in 2019, resulting in basic
earnings per share of $0.03.
Cash flows provided by operating activities reached $2.4 million, an improvement of $5.1 million year-
over-year.
Adjusted EBITDA margin was positive for the second consecutive quarter and reached 6.3%, an
improvement of 16.0 percentage points year-over-year.
KEY HIGHLIGHTS OF FISCAL 2020 AND SUBSEQUENT EVENTS
Launch of Reusable Delivery Box and Green Initiatives
In October 2019, the Company launched its reusable delivery box, positioning the Company as a leader in
the industry with respect to environmental sustainability initiatives. As a result of the ongoing COVID-19
pandemic, the Company has suspended its reusable delivery box program to reduce the risk of potential
cross contamination for its members and intends to reinstate its reusable delivery box program when
sanitary conditions permit.
During the fourth quarter of Fiscal 2020, Goodfood entered into an agreement with a supplier for plant-
based packaging solutions to be used for select ready-to-eat products as part of the Company’s green
initiatives to eliminate 12 million pieces of single-serve packaging.
Chief Technology Officer Appointment
In November 2019, the Company announced the appointment of Raghu Mocharla to its management team
as Chief Technology Officer. Mr. Mocharla was most recently Vice President, E-Commerce at Indigo and
has more than 20 years of experience of progressively senior positions in technology development and
management and is charged with strengthening the Company’s competitive advantage in building a world-
class user experience and automation ecosystem for online grocery deliveries.
18 | P a g e
Goodfood Market Corp.
Meal Solutions
Management’s Discussion and Analysis
Year ended August 31, 2020
Throughout Fiscal 2020, the Company further expanded its ready-to-eat and breakfast meal solutions
across Canada. The Company’s product mix aims to expand its offerings to existing and prospective
customers in order to provide full home meal solutions across the different meals of the day. Goodfood’s
meal solutions include ready-to-blend smoothies and other breakfast items, prepared meals, cooked meats
and sides, as well as salads and soups.
During Fiscal 2020, the Company completed the construction of its ready-to-eat meal solutions kitchen in
the main Montreal, Québec facility to enable operations to expand its product offering and produce them
in-house.
Private Label Grocery Products
During the year ended August 31, 2020, the Company further expanded its private label grocery products
across Canada, with over 200 products available to purchase as at that date. The Company offers everyday
grocery essentials with exclusive prices, across an array of categories: bakery, dessert, meat and seafood,
drinks, pantry, produce, snacks, dairy and kitchen essentials. Our current member favourites include: Extra
Virgin Olive Oil, Clean Green Juice and Gourmet Triple Chocolate Cookies.
Convertible Debenture Financing
In February 2020, the Company completed a $30 million financing through the issuance of convertible
debentures. The debentures bear a fixed interest rate of 5.75% per annum, payable semi-annually, and
mature on March 31, 2025. The debentures are convertible at the holder’s option into Goodfood common
shares at a conversion price of $4.70 per common share. Net proceeds from the offering are being used to
fund the buildout of a new Toronto production and distribution facility, to further invest in capital projects
(including automation related capital projects) at the existing production facilities in Montreal, Calgary and
Vancouver as well as Toronto, and for general corporate purposes. As at August 31, 2020,
$11.3 million, net of tax, or 11,864 convertible debentures, were converted into 2.5 million common shares.
Launch of Vancouver Fulfillment Center
In March 2020, the Company announced the official launch of a 84,000 square feet fulfillment center in
Vancouver, British Columbia, which has been instrumental in helping to expand the Company’s footprint in
Western Canada.
Launch of First Toronto Fulfillment Center
In April 2020, the Company announced that it had signed a lease for its first fulfillment centre in the Greater
Toronto Area, further expanding its national operating footprint. Fulfillment of orders at the new
42,000 square feet facility began in May 2020.
New Fulfillment Center in Montreal
In July 2020, the Company signed a lease for a 45,000 square feet facility in Montreal, further expanding
its footprint and capabilities in the key urban centre. The new facility increased Goodfood’s footprint to six
facilities across Canada totalling nearly 590,000 square feet of purpose-built online grocery and meal
solution delivery fulfillment capacity. The Company began operations in the new facility in October 2020.
Flagship Fulfillment Center in the Greater Toronto Area
In May 2020, the Company announced that it had signed a lease for its second fulfillment center in the
Greater Toronto Area. The state of the art 200,000 square feet facility will expand Goodfood’s operating
footprint to seven facilities from coast-to-coast. The fulfillment center is currently under construction and
should be operational by the end of summer 2021 and is expected to create over 2,000 jobs at full capacity.
Inclusion in the S&P/TSX Smallcap Index
In June 2020, the Company announced that it had been selected to join the S&P/TSX Smallcap Index
effective June 22, 2020. The Index is a key benchmark measure for the Canadian small cap equity markets
and Goodfood’s inclusion among its constituents is a testament to the track record of strong capital markets
and financial performance delivered to date.
19 | P a g e
Goodfood Market Corp.
Launch of Flex Ordering Platform
Management’s Discussion and Analysis
Year ended August 31, 2020
In July 2020, the Company announced the launch of its new user-friendly ordering interface, Flex, to
enhance subscriber experience. The new interface provides added flexibility to members, allowing them to
freely purchase any quantity of meal solutions and private label groceries on a weekly basis. Members can
fill their basket with grocery products, meal solutions or any combination of the two.
Equity Issuance
In August 2020, the Company completed a public offering and issued 4.8 million common shares for net
proceeds of $27.1 million. The Company intends to use the proceeds for capital expenditures to build out
same-day delivery capabilities (including fulfilment technology and automation equipment) and for general
corporate purposes. Refer to the “Use of Proceeds from Public Offerings” section of this MD&A for
information on use of proceeds by the Company.
Active Subscribers
As at August 31, 2020, Goodfood reached 280,000 active subscribers, with the addition of 8,000 net new
active subscribers during the fourth quarter and 80,000 net new active subscribers during the fiscal year,
representing an increase of 40% year-over-year. A strong rise in demand, accelerated by the COVID-19
pandemic, has driven subscriber additions, and prompted higher order rates and average order values,
particularly in the second half of the fiscal year.
COVID-19 Impact and Measures
The World Health Organization declared COVID-19 a global pandemic on March 11, 2020, and the outbreak
has had an impact on Goodfood’s overall business and operations. As the Company is deemed an essential
service in Canada, Goodfood has continued to operate without interruption.
In the second half of Fiscal 2020, Goodfood experienced several positive impacts on its financial results
related to the COVID-19 pandemic such as increased subscriber growth, number of orders and average
order values, which positively impacted revenue. However, the Company also experienced staffing and
supply chain challenges which resulted in direct incremental costs of approximately $3.5 million for the year
ended August 31, 2020. The COVID-19 related costs consist of $3 million in additional production labour
costs which includes $1.7 million due to temporary wage increases and $1.3 million incurred for temporary
agency premiums (but do not include the cost of standard hourly wages), as well as $0.5 million in other
production costs and selling, general and administrative expenses (including personal protection
equipment, hand sanitizers, nursing staff and additional health and safety measures). The aforementioned
direct costs incurred do not include time spent by management throughout the crisis. In order to alleviate
pressure on operations coming from the increase in demand and to maintain high quality standards for our
existing members, the Company curtailed delivery days for a few weeks and strategically matched its
marketing spend to its supply chain capabilities on a temporary basis.
As part of the pandemic initiatives implemented by the Company:
It launched the Essential Canadian Pay Program which ended on July 5, 2020, and which increased the
pay of all hourly and salaried operations and production employees by $2 or more per hour; and
It utilized various external agencies to hire qualified production agency employees to accommodate the
increase in orders and volume.
20 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
At the onset of the pandemic, weekly newsletters from Goodfood’s CEO were sent to members providing
updates of the Company’s operations and included information regarding precautionary measures
implemented at its facilities in addition to its already rigorous food safety standards. These measures
included, but were not limited to:
Enhanced hygiene procedures, including additional cleaning at all of its facilities, mandatory hand
washing prior to entry (for both visitors and employees), and accessibility to hand sanitizer stations;
Social distancing measures put in place for the health and safety of employees, including a free shuttle
service for employees to reduce the use of public transit, mandatory non-contact temperature checks
before entering the facility, installation of physical safety barriers, requirement for all frontline employees
to wear personal protection equipment, such as face masks and face shields, and the hiring of nurses
and a security team to ensure the health screening for employees and reinforce social distancing
measures inside and outside of all facilities; and
Suspension of its Box Pick-up and Reusable Box Program to eliminate the risk of cross-contamination
in its facilities.
Launch of Goodfood WOW
In October 2020, the Company announced the launch of its new unlimited same-day grocery delivery
service, in the Greater Montreal Area. This new service is scheduled to expand to other major Canadian
cities over the next year. The new service offers an even more flexible and convenient online grocery
experience, allowing members to order any combination of meal kits, groceries, prepared meals and other
products as frequently as needed during the week, with same-day delivery included for all orders over
$35 – all for only $9.99 a month.
SELECTED ANNUAL FINANCIAL INFORMATION
(In thousands of Canadian dollars)
As at
Financial position
Cash and cash equivalents and restricted cash
Fixed assets
Total assets
Total debt (1)
Total convertible debentures (2)
Shareholders’ equity
August 31,
2020
August 31,
2019
August 31,
2018
$
$
106,902
19,191
163,046
21,678
16,425
57,558
47,649
13,545
80,783
14,031
–
17,401
$
24,453
6,006
34,309
2,592
–
16,456
(1) Total debt consists of the line of credit and the current and non-current portion of long-term debt.
(2) Total convertible debentures consist of the liability and equity components of the convertible debentures.
(In thousands of Canadian dollars, except per share information)
For the years ended August 31,
2020
2019
2018
Comprehensive loss
Revenues
Gross profit
Net loss, being comprehensive loss
Basic loss per share
Diluted loss per share
Cash flows provided by (used in):
Operating activities
Financing activities
Investing activities
$ 285,372
86,419
(4,136)
(0.07)
(0.07)
$ 161,333
40,310
(20,937)
(0.38)
(0.38)
$
$
8,555
60,118
(9,420)
880
29,555
(9,739)
$
$
70,502
14,660
(9,434)
(0.19)
(0.19)
176
10,901
(4,171)
21 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
METRICS AND NON-IFRS FINANCIAL MEASURES - RECONCILIATION
We present certain metrics to assist investors in better understanding our performance, including metrics
which are not measures recognized by IFRS. Definitions of these non-IFRS financial measures are provided
in the “Metrics and Non-IFRS Financial Measures” section at the beginning of this MD&A and are important
metrics to be considered when analyzing our performance.
ACTIVE SUBSCRIBERS
Active subscribers, beginning of period
Net change in active subscribers
Active subscribers, end of period
For the three-month
periods ended August 31,
2019
189,000
11,000
200,000
2020
272,000
8,000
280,000
For the years
ended August 31,
2019
89,000
111,000
200,000
2020
200,000
80,000
280,000
EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
The reconciliation of net income (loss) to EBITDA, adjusted EBITDA and adjusted EBITDA margin is as
follows:
(In thousands of Canadian dollars, except percentage information)
Net income (loss)
Net finance costs
Depreciation and amortization
Deferred income tax expense (recovery)
EBITDA
Share-based payments
Adjusted EBITDA
Revenues
Adjusted EBITDA margin (%)
$
$
2020
For the three-month
periods ended August 31,
2019
(5,887) $
81
874
–
(4,932) $
541
(4,391) $
2020
1,590
911
1,818
526
4,845
418
$
5,263
$ 83,691
6.3%
$
$ 45,259
(9.7%)
For the years
ended August 31,
2019
(20,937)
346
2,617
–
(17,974)
1,810
$
(16,164)
$ 161,333
(10.0%)
(4,136) $
2,380
5,361
(804)
2,801 $
1,874
4,675
$ 285,372
1.6%
$
$
For the three-month period and year ended August 31, 2020, adjusted EBITDA margin improved by
16.0 percentage points and 11.6 percentage points, respectively, compared to the corresponding period in
2019. For the three-month period and year ended August 31, 2020, the increase in adjusted EBITDA margin
resulted primarily from a larger revenue base which accelerated the operating leverage effect as selling,
general and administrative expenses as a percentage of revenues decreased, and higher gross margin,
offset by additional expenses resulting from the launch of new product offerings as well as the additional
costs incurred due to COVID-19.
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Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
RESULTS OF OPERATIONS – FISCAL 2020 AND FISCAL 2019
The following table sets forth the components of the Company’s consolidated statement of loss and
comprehensive loss:
(In thousands of Canadian dollars, except per share and percentage information)
For the years ended August 31,
Revenues
Cost of goods sold
Gross profit
Gross margin
Selling, general and administrative expenses
Depreciation and amortization
Net finance costs
Loss before income taxes
Deferred income tax recovery
Net loss, being comprehensive loss
Basic loss per share
Diluted loss per share
$
$
2020
$ 285,372
198,953
86,419
30.3%
83,618
5,361
2,380
(4,940)
(804)
(4,136)
(0.07)
(0.07)
$
$
$
2019
$ 161,333
121,023
$ 40,310
25.0%
$ 58,284
2,617
346
(20,937)
–
$
$
$
(20,937) $
(0.38) $
(0.38) $
$
$
N/A
($) (1) (%) (2)
$ 124,039 77%
(77,930) 64%
46,109 114%
N/A
(25,334) 43%
(2,744) 105%
(2,034) 588%
76%
15,997
804 100%
80%
82%
82%
16,801
0.31
0.31
(1) A positive variance represents a decrease to net loss and a negative variance represents an increase in net loss.
(2) Percentage change is presented in absolute values.
VARIANCE ANALYSIS FOR FISCAL 2020 COMPARED TO FISCAL 2019
The Company’s continued focus on its strategy to become Canada’s leading online grocer by increasing
its product offering and flexibility to members led to a positive impact on basket size and order
frequency. The increase in revenues is primarily due to growth in active subscribers, increased average
order values and the positive impacts of COVID-19 on order rates. The decrease in incentives and
credits as a percentage of revenues from 24.5% to 15.9% also contributed to the increase in revenues.
The increase in gross profit and gross margin resulted primarily from a decrease in incentives and
credits as well as lower food costs as a percentage of revenues. In addition, lower unit costs for
packaging and shipping due to increased operational efficiencies, additional automation investments,
increased density among the delivery zones and purchasing power with key suppliers contributed to
the increase in gross profit and gross margin. This was partially offset by supplementary costs incurred
directly related to the COVID-19 pandemic during the second half of Fiscal 2020 for additional
production employees, temporary wage increases, and other production costs such as personal
protection equipment and sanitizers.
The increase in selling, general and administrative expenses is primarily due to higher wages resulting
from the expansion of the management team and related administrative functions needed to support
the Company’s growth and increase in product offerings. Selling, general and administrative expenses
as a percentage of revenues decreased from 36.1% to 29.3%.
The increase in depreciation and amortization expense resulted from the recognition of new leased
assets and from the additions of fixed assets across all asset classes.
The increase in net finance costs primarily relates to interest expense resulting from a higher level of
indebtedness in Fiscal 2020 due to the issuance of convertible debentures in February 2020, as well
as an increase in lease obligations.
The deferred income tax recovery is due to the recognition of previously unrecognized tax benefits to
offset a deferred tax liability recognized on the equity component of the convertible debentures issued
in February 2020. At the issuance of the convertible debentures, an income tax recovery of $1.3 million
was recorded. During the year ended August 31, 2020, $0.5 million was reversed upon conversion of
certain convertible debentures.
The decrease in net loss is explained principally by the increase in revenues and higher gross profit.
23 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
RESULTS OF OPERATIONS – THREE-MONTH PERIODS ENDED AUGUST 31, 2020 AND 2019
The following table sets forth the components of the Company’s consolidated statement of loss and
comprehensive loss:
(In thousands of Canadian dollars, except per share and percentage information)
For the three-month periods ended August 31,
Revenues
Cost of goods sold
Gross profit
Gross margin
Selling, general and administrative expenses
Depreciation and amortization
Net finance costs
Net income (loss) before income taxes
Deferred income tax expense
Net income (loss), being comprehensive income (loss) $
$
Basic earnings (loss) per share
$
Diluted earnings (loss) per share
2020
$ 83,691
56,217
$ 27,474
32.8%
$ 22,629
1,818
911
2,116
526
1,590
0.03
0.03
2019
33,182
26.7%
$ 17,009 $
(%) (2)
($) (1)
85%
$ 45,259 $ 38,432
69%
(23,035)
127%
$ 12,077 $ 15,397
N/A
N/A
33%
(5,620)
(944)
108%
(830) 1,025%
136%
8,003
100%
(526)
127%
7,477
130%
0.13
130%
0.13
874
81
(5,887)
–
(5,887) $
(0.10) $
(0.10) $
$
$
$
(1) A positive variance represents an increase in net income or a decrease in net loss and a negative variance
represents a decrease in net income or an increase in net loss.
(2) Percentage change is presented in absolute values.
VARIANCE ANALYSIS FOR THE THREE-MONTH PERIOD ENDED AUGUST 31, 2020 COMPARED TO
THE THREE-MONTH PERIOD ENDED AUGUST 31, 2019
The Company’s continued focus on its strategy to become Canada’s leading online grocer by increasing
its product offering and flexibility to members impacted positively the average basket size and order
frequency which, combined with a larger subscriber base, in turn increased revenues. The decrease in
incentives and credits as a percentage of revenues from 23.7% to 12.1% also contributed to the increase
in revenues.
The increase in gross profit and gross margin primarily resulted from a decrease in incentives and credits
as a percentage of revenues, combined with a price increase on certain items, lower unit costs for
packaging and shipping explained by an increased density among the delivery zones and purchasing
power with key suppliers. This was offset by supplemental costs incurred directly related to the
COVID-19 pandemic for additional production employees, temporary wage increases, and other
production costs such as personal protection equipment and sanitizers.
The increase in selling, general and administrative expenses is primarily due to higher wages as the
Company continues to grow. Selling, general and administrative expenses as a percentage of revenues
decreased from 37.6% to 27.0%.
The increase in depreciation and amortization expense is mainly due to the additions of fixed assets
across all asset classes.
The increase in net finance costs is mainly due to a higher level of indebtedness arising from the
issuance of convertible debentures in February 2020, as well as higher lease obligations.
The deferred income tax expense relates to the reversal of recognized tax losses recorded in the third
quarter of Fiscal 2020 resulting from the conversion of convertible debentures into common shares in
the fourth quarter of Fiscal 2020.
The increase in net income is explained principally by higher revenues and gross profit as well as a
decrease in marketing expense, slightly offset by higher wages and salaries to support the growth of the
business.
24 | P a g e
Goodfood Market Corp.
FINANCIAL POSITION
Management’s Discussion and Analysis
Year ended August 31, 2020
The following table provides an analysis of the variances in the Company’s consolidated statement of
financial position:
(In thousands of Canadian dollars)
As at
Total Assets
Variance mainly due to:
Cash and cash equivalents
Inventories
Fixed assets
Right-of-use assets
Intangible assets
Total Liabilities
Variance mainly due to:
Accounts payable and accrued liabilities
Line of credit
Convertible debentures
Lease obligations, including current portion
Total Shareholders’ Equity
Variance mainly due to:
Common shares
Convertible debentures
Deficit
August 31, 2020 August 31, 2019
Variance
$ 163,046
$ 80,783
$ 82,263
104,402
6,962
19,191
21,130
2,203
$ 105,488
45,149
4,735
13,545
11,089
512
$ 63,382
59,253
2,227
5,646
10,041
1,691
$ 42,106
$
40,878
9,063
14,194
23,348
57,558
97,801
2,231
(45,682)
30,704
1,540
–
12,724
$ 17,401
10,174
7,523
14,194
10,624
$ 40,157
56,598
–
(41,546)
41,203
2,231
(4,136)
VARIANCE ANALYSIS FROM AUGUST 31, 2019 TO AUGUST 31, 2020
The increase in cash and cash equivalents is primarily due to the issuance of convertible debentures in
February 2020 and the issuance of shares in August 2020 combined with increased net cash flows
provided by operating activities.
The increase in inventories is primarily related to the Company’s growth, with an increase in food and
packaging inventory to support the weekly and monthly revenues cycles and also due to the product
offering expansion and additional production facilities. Despite the opening of new facilities and the launch
of several new products, inventories as a percentage of cost of goods sold decreased year-over-year.
The increase in fixed assets is primarily due to investments in capacity expansions and automation of the
Company’s production facilities in order to increase production capacity and efficiency.
The increase in right-of-use assets and lease obligations resulted from the recognition of new lease
agreements, primarily for the leased facilities in British Columbia and Ontario.
The increase in intangible assets resulted from investments in the development of an enterprise resource
planning system to optimize the Company’s operations as it continues to scale up, as well as labour costs
developing new functionalities on the Goodfood website platform to allow increased product offerings and
flexibility for our members.
The increase in accounts payable and accrued liabilities is primarily due to the Company’s growth and
expansion of its product offering and favourable payment terms as a result of increased purchasing power
with key suppliers as the Company increases its scale, which resulted in higher purchases and payroll
related accruals related to the increased headcount and expansion of the management team.
The Company drew on its line of credit during Fiscal 2020 to fund capital expenditures and as a
contingency plan to improve its liquidity position during the COVID-19 pandemic.
The increase in convertible debentures resulted from the issuance of convertible debentures in February
2020. Refer to the “Debt” section of this MD&A for additional information on the convertible debentures.
The increase in common shares is mainly due to the public offering completed in August 2020 as well as
the conversion of convertible debentures.
The increase in deficit is due to the net loss for Fiscal 2020.
25 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL MANAGEMENT
The Company’s objective in managing its capital structure is to ensure sufficient liquidity to finance its
operations and growth and to deliver competitive returns on invested capital. To fund its activities, the
Company has relied on public and private placements of equity securities, convertible debentures, cash
flows provided by operating activities and short-term or long-term debt, which are included in the Company’s
definition of capital. The Company manages its excess cash to ensure that it has sufficient reserves to fund
its operations and capital expenditures.
CASH FLOWS
A summary of net cash flows by activity is presented below:
(In thousands of Canadian dollars)
For the years ended August 31,
Net cash flows provided by operating activities
Net cash flows provided by financing activities
Net cash flows used in investing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
$
2020
8,555
60,118
(9,420)
59,253
45,149
$ 104,402
$
2019
$ 880
29,555
(9,739)
$ 20,696
24,453
45,149
$
Variance
7,675
30,563
319
38,557
20,696
59,253
$
$
$
Net cash flows provided by operating activities increased from $0.9 million to $8.6 million for the year ended
August 31, 2020 primarily due to the decrease in net loss recorded for the year ended August 31, 2020,
partly offset by a less favourable variance in non-cash operating working capital primarily resulting from
changes in accounts payable and accrued liabilities.
Net cash flows provided by financing activities for the year ended August 31, 2020 is primarily comprised
of net proceeds from the issuance of convertible debentures and common shares during Fiscal 2020 as
well as borrowing under the line of credit, partially offset by interest and lease obligation payments. Net
cash flows provided by financing activities for the year ended August 31, 2019 is made up of net proceeds
from the issuance of common shares, as well as proceeds from the issuance of long-term debt and
borrowing under the line of credit, partly offset by interest and lease obligation payments.
Net cash flows used in investing activities for the year ended August 31, 2020 is primarily comprised of
fixed asset additions driven by the buildout of the Vancouver fulfillment facility, the construction related to
the partial in-housing of the ready-to-eat production at our Montreal facility, and the continued investment
in automation equipment. Net cash flows used in investing activities for the year ended August 31, 2019 is
mainly made up of fixed assets additions driven primarily by investments in automation equipment.
A summary of net cash flows by activity is presented below:
(In thousands of Canadian dollars)
For the three-month periods ended August 31,
Net cash flows provided by (used in) operating activities $
Net cash flows provided by financing activities
Net cash flows used in investing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
2020
2,423
26,789
(2,797)
26,415
77,987
$ 104,402
$
2019
$ (2,710)
3,307
(5,161)
$ (4,564)
49,713
$ 45,149
$
Variance
5,133
23,482
2,364
$ 30,979
28,274
$ 59,253
Net cash flows provided by operating activities increased by $5.1 million to $2.4 million for the quarter ended
August 31, 2020 primarily due to the net income recorded for the three-month period ended
August 31, 2020, partially offset by an unfavourable variance in change in non-cash operating working
capital mainly explained by a decrease in deferred revenue resulting from the timing of cash receipts with
respect to the Company’s weekly delivery cycle.
26 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
Net cash flows provided by financing activities for the quarter ended August 31, 2020 is primarily comprised
of net proceeds resulting from the public issuance of common shares. Net cash flows provided by financing
activities for the three-month period ended August 31, 2019 is made up of net proceeds from the issuance
of long-term debt.
Net cash flows used in investing activities for the fourth quarter ended August 31, 2020 is primarily
comprised of fixed assets additions mainly attributable to technology implementation and redesign of
facilities layouts. Net cash flows used in investing activities for the three-month period ended
August 31, 2019 is primarily made up of fixed assets additions driven by investments in automation
equipment.
The following are amounts of cash, cash equivalents and restricted cash:
(In thousands of Canadian dollars)
As at August 31,
Cash and cash equivalents
Restricted cash (1)
2020
$ 104,402
2,500
$ 106,902
2019
$ 45,149
2,500
$ 47,649
(1) Restricted cash consists of cash held as collateral, which is subject to the terms of the financing agreement (Refer
to the “Debt” section of this MD&A).
DEBT
Significant financing transactions that took place in Fiscal 2020 were as follows:
On February 26, 2020, the Company issued 30,000 convertible unsecured subordinated debentures
(the "Debentures") at a price of $1,000 per Debenture for gross proceeds of $30 million. The Debentures
mature on March 31, 2025 and bear a fixed interest rate of 5.75% per annum, payable semi-annually in
arrears on March 31 and September 30 of each year, commencing on September 30, 2020. Factoring
in the Debentures issuance costs, the effective interest rate on the Debentures is 11.76%. The
Debentures are convertible into common shares of the Company at any time at the option of the holder
at a conversion price of $4.70. Starting on March 31, 2023, under certain conditions, the debentures
may be redeemed in whole or in part at the option of the Company at a price equal to the principal
amount thereof plus accrued and unpaid interest. As at August 31, 2020, 11,864 Debentures
($11.9 million) were converted into 2.5 million common shares, resulting in 18,136 Debentures
($18.1 million) outstanding.
As at August 31, 2020, the Company had one signed swap agreement with a Canadian financial
institution whereby the Company fixed the annual interest rates on notional amounts totalling
$11.3 million until November 2021.
As at August 31, 2020, $10 million and $2.5 million of the Company’s term loans with the same Canadian
financial institution were disbursed, as well as $9.1 million of the available $10 million revolving line of
credit, bearing variable interest at the Canadian Dollar Offered Rate (“CDOR”) plus 2.50%. The
proceeds are being used to fund the expansion, capital expenditures, invest in automation, and were
also used to refinance the Company’s long-term debt. The term loans are repayable in quarterly
thousand, beginning on November 30, 2020 and
installments of $125 thousand and $31
August 31, 2020, respectively, with a bullet repayment of the balance at the end of the term in
November 2021.
The Company’s credit facility includes a collateral requirement of $2.5 million placed in a restricted cash
account and financial covenants with which the Company was in compliance as at August 31, 2020.
27 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS
The following are amounts due on contractual maturities of financial liabilities, including estimated interest
payments, as well as commitments with respect to leases as at August 31, 2020:
(In thousands of Canadian dollars)
Accounts payable and accrued
liabilities
Line of credit (1)
Long-term debt, including current portion
Debentures, liability component
Lease obligations, including current
portion (2) (3)
Other (4)
Payments due for the years following August 31, 2020
1 – 5 years After 5 years
1 year
Total
$ 40,878
9,063
13,104
23,447
28,424
1,974
$ 116,890
$ 40,878
9,063
1,142
1,140
4,076
1,870
$ 58,169
$
–
–
11,962
22,307
$
–
–
–
–
13,822
104
$ 48,195
10,526
–
10,526
$
(1) As at August 31, 2020, letters of credit amounting to $0.9 million reduced the availability on the line of credit.
(2) As at August 31, 2020, future lease payments of $5.6 million for which the Company is reasonably certain to
exercise the renewal options have been recognized in lease obligations included in the consolidated statement of
financial position, representing an amount of $6.4 million of undiscounted cash flows.
(3) As at August 31, 2020, fixed rent payments representing a total commitment of $34 million and $1.5 million over
the term of the leases are not reflected in the measurement of lease obligations. For more information, please refer
to the “Off-balance sheet arrangements” section of this MD&A.
(4) As at August 31, 2020, Goodfood had commitments under purchase and service contract obligations for both
operating and capital expenditures. Cash on hand will be used to fund these purchase obligations.
COMMON SHARES
Significant equity transactions that took place in Fiscal 2020 were as follows:
910,641 stock options were exercised for common shares;
In connection with the issuance of 30,000 Debentures on February 26, 2020, 11,864 Debentures
($11.9 million) were converted into 2,524,242 common shares. Refer to the “Use of Proceeds from
Public Offerings” section of this MD&A for information on use of proceeds by the Company; and
In connection with the public offering completed on August 5, 2020, the Company issued
4,755,250 common shares. Refer to the “Use of Proceeds from Public Offerings” section of this MD&A
for information on use of proceeds by the Company.
28 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
SELECTED QUARTERLY FINANCIAL INFORMATION
The table below presents selected quarterly financial information for the last eight fiscal quarters:
(In thousands of Canadian dollars, except active subscribers and per share and percentage information)
Active subscribers
Revenues
Gross margin
Net income (loss)
Net finance costs
Depreciation and
amortization
Deferred income tax
expense (recovery)
Share-based
payments
Adjusted EBITDA (1)
Adjusted EBITDA
margin (1)
Basic earnings (loss)
per share (2)
Diluted earnings (loss)
per share (2)
Q4
Fiscal 2019
Q1
Q3
280,000 272,000
159,000 126,000
$ 83,691 $ 86,600 $ 58,790 $ 56,291 $ 45,259 $ 49,864 $ 36,593 $ 29,617
20.9% 21.9%
$ 1,590 $ 2,786 $ (3,360) $ (5,152) $ (5,887) $ (3,639) $ (6,560) $ (4,851)
87
Fiscal 2020
Q1
230,000
Q3
189,000
Q4
200,000
Q2
246,000
28.3%
32.8%
28.8%
26.7%
30.3%
28.8%
1,154
89
218
911
Q2
89
97
81
1,818
1,484
1,066
993
526
–
(1,330)
–
874
–
701
–
555
487
–
–
418
375
$ 5,263 $ 5,984 $ (2,921) $ (3,651) $ (4,391) $ (2,384) $ (5,487) $ (3,902)
541
411
465
485
429
560
6.3%
6.9%
(5.0)%
(6.5)%
(9.7)%
(4.8)%
(15.0)%
(13.2)%
$
0.03 $
0.05
$
(0.06) $
(0.09) $ (0.10) $
(0.06) $
(0.13) $
(0.09)
0.03
0.05
(0.06)
(0.09)
(0.10)
(0.06)
(0.13)
(0.09)
(1) For the definition of these Non-IFRS financial measures, please refer to the “Metrics and Non-IFRS Financial
Measures” section of this MD&A.
(2) The sum of basic and diluted earnings (loss) per share on a quarterly basis may not equal basic and diluted loss
per share on a year-to-date basis due to rounding.
TRENDS AND SEASONALITY
The Company’s revenues and expenses are impacted by seasonality. During the holiday and summer
seasons, the Company anticipates revenues to be lower as a higher proportion of active subscribers elect
to skip their delivery. The Company anticipates the growth rate of active subscribers to be lower during
these periods. While this is typically the case, the COVID-19 pandemic may have an impact on this trend.
During periods with warmer weather, the Company anticipates packaging costs to be higher due to the
additional packaging required to maintain food freshness and quality. The Company also anticipates food
cost to be positively affected due to improved availability during periods with warmer weather.
FINANCIAL RISK MANAGEMENT
CREDIT RISK
Credit risk is the risk of an unexpected loss if a counterparty to a financial instrument fails to meet its
contractual obligation. The Company regularly monitors credit risk exposure and takes steps to mitigate the
likelihood of this exposure resulting in losses. The Company's exposure to credit risk is primarily attributable
to its cash and cash equivalents, amounts receivable, and restricted cash. The Company's maximum credit
exposure corresponds to the carrying amount of these financial assets. Management believes the credit
risk is limited given the Company deals with major North American financial institutions and an
internationally established payment processor.
29 | P a g e
Goodfood Market Corp.
INTEREST RATE RISK
Management’s Discussion and Analysis
Year ended August 31, 2020
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due
to changes in market interest rates. The Company’s long-term debt and revolving line of credit bear interest
at variable rates which are determined by a base rate set by the lender plus a margin. As a result, the
Company is exposed to interest rate cash flow risk due to fluctuations in lenders’ base rates. The Company
manages its interest rate risk by using a variable-to-fixed interest rate swap as described in the “Liquidity
and Capital Resources” section of this MD&A.
The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through
profit or loss and does not designate derivatives (interest rate swap) as hedging instruments under a fair
value hedge accounting model. Therefore, a change in interest rates at the reporting date would not
significantly impact the fair value of the interest rate swaps and consequently, the Company’s net loss.
LIQUIDITY RISK
Liquidity risk is the risk that the Company will be unable to fulfill its obligations on a timely basis or at a
reasonable cost. The Company manages its liquidity risk by monitoring its operating requirements. The
Company prepares budgets and cash forecasts to ensure it has sufficient funds to fulfill its obligations.
For the fiscal year ending August 31, 2021, additional capital expenditures as the Company continues to
expand its footprint across Canada, as well as growing its active subscriber base and product offering, are
expected to reduce the Company’s cash balance and liquidity position compared to August 31, 2020,
absent additional financing. We believe that the Company’s cash and cash equivalents on hand and
financing capacity will provide adequate sources of funds to meet short-term requirements, finance planned
capital expenditures and fund any operating losses.
BUSINESS RISK
For a detailed discussion of the Company’s risk factors, please refer to the Company’s Annual Information
Form for the year ended August 31, 2020 available on SEDAR at www.sedar.com.
COVID-19
The COVID-19 pandemic has had an impact on Goodfood’s overall business and operations. As an
essential service in Canada, Goodfood continued to operate throughout the pandemic and experienced an
acceleration of growth in demand. While subscriber orders have been fulfilled and consumer behaviour
during the pandemic has contributed to an increase in subscriber base, orders by subscribers and overall
business, operations and supply chains were significantly challenged with temporary supplier closures and
substitution of unavailable ingredients combined with workforce shortages and additional sanitary
measures, putting pressure on food and labour costs. Pressure on supply chains, inventory levels and
increased operational costs or disruptions and labour shortages could increase depending on the duration
and severity of the pandemic as well as any changes to Goodfood’s industry regulatory framework.
As a result of the COVID-19 pandemic, the number of employees working remotely has increased
significantly, which has also increased demands on information technology resources and systems and
increased the risk of phishing and other cybersecurity attacks.
The magnitude, duration, and severity of the COVID-19 pandemic are difficult to predict and could affect
the significant estimates and judgements used in the preparation of the Company’s consolidated financial
statements.
ADDITIONAL FINANCING REQUIREMENTS
As a result of realized and anticipated growth in the number of active subscribers, planned investment in
operations, logistics, automation and technology, new product development, as well as the potential for
continued operating losses, the Company may require additional financing in the future to realize the goals
outlined in the “Financial Outlook” section of this MD&A.
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Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not currently have any off-balance sheet arrangements that have, or are reasonably
likely to have, a current or future effect on the Company’s financial condition, changes in revenues or
expenses, results of operations, liquidity, capital expenditures, or capital resources that are material, other
than the following:
During the year ended August 31, 2020, the Company signed a ten-year lease for a 200,000 square-feet
fulfillment centre located in the Greater Toronto Area, Ontario, Canada with two renewal options of five
years. As at August 31, 2020, the Company did not have access to the asset and therefore, the facility was
not reflected as a right-of-use asset and no corresponding lease liability was recorded. The expected
delivery date and the expected rent payment commencement date is by the end of summer 2021, at which
point management intends to commence operations. Fixed rent payments represent a total commitment of
$34 million over the term of the lease.
During the year ended August 31, 2020, the Company signed a thirty-month lease for a 44,967 square-feet
fulfillment center located in Montreal, Québec, Canada with two renewal options of 90 days. As at
August 31, 2020, the Company did not have access to the asset and therefore, the facility was not reflected
as a right-of-use asset and no corresponding lease liability was recorded. The lease commencement date
was October 1, 2020. Fixed rent payments represent a total commitment of $1.5 million over the term of
the lease.
FINANCIAL INSTRUMENTS
INVESTMENT POLICY
The Company invests its excess cash with varying terms to maturity selected with regards to the expected
timing of investments or expenditures for continuing operations.
DERIVATIVES
As at August 31, 2020, the Company had one interest rate swap agreement, as described in the “Liquidity
and Capital Resources” section of the MD&A.
FINANCIAL COVENANTS
As discussed in the “Liquidity and Capital Resources” section of the MD&A, the Company’s secured a credit
facility that includes financial covenants which may restrict the Company’s ability to pursue future
transactions or opportunities. As at August 31, 2020, the Company was in compliance with these financial
covenants.
RELATED PARTIES
KEY MANAGEMENT PERSONNEL
The Company’s key management personnel have authority and responsibility for planning, directing and
controlling the Company’s activities and consist of the Company’s executive team and the Board of
Directors. The chief executive officer ("CEO") and the president and chief operating officer ("President and
COO") are members of the Board of the Company. The CEO is also Chairman of the Board.
The following table presents the compensation of the key management personnel recognized in net loss:
(In thousands of Canadian dollars)
For the years ended August 31,
Salaries, fees and other short-term employee benefits
Share-based payments
$
2020
2,884
865
$
2019
1,963
1,062
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Goodfood Market Corp.
RELATED PARTY TRANSACTIONS
Management’s Discussion and Analysis
Year ended August 31, 2020
For the year ended August 31, 2020, in connection with the issuance of Debentures, 75 Debentures were
purchased by Board members and key management personnel at a price of $1,000 per Debenture.
STOCK OPTIONS
A stock option plan (the “Stock Option Plan”) was established by the Company to attract and retain
employees, consultants, directors and officers. The plan provides for the granting of stock options to
purchase common shares where at any given time the number of stock options reserved for issuance is
equal to 10% of the Company’s issued and outstanding common shares. Under the plan, stock options
generally vest over a period of four years and expire eight years from the grant date.
OUTSTANDING SHARE DATA
As at
Common shares outstanding (1)
Debentures outstanding (2)
Stock options outstanding
Stock options exercisable
November 10, 2020 August 31, 2020 August 31, 2019
58,144,400
–
3,910,169
639,039
66,311,121
3,858,723
4,751,695
896,335
67,076,723
3,122,553
4,899,143
1,017,863
(1) As at November 10, 2020 and August 31, 2020, 30,612 and 23,412 common shares, respectively, were held in trust
through the employee share purchase plan.
(2) As at November 10, 2020 and August 31, 2020, 14,676 and 18,136 Debentures were outstanding which are
convertible into 3,122,553 and 3,858,723 common shares of the Company, respectively, at a conversion price of
$4.70. For more information, please refer to the “Debt” section of this MD&A.
USE OF PROCEEDS FROM PUBLIC OFFERINGS
AUGUST 2020 PUBLIC OFFERING
On August 5, 2020, the Company completed a public offering and issued 4,755,250 common shares for
net proceeds of $27.1 million (including proceeds from over-allotment option). As at August 31, 2020, none
of the proceeds received from the public offering completed on August 5, 2020 had been used.
The following table compares the estimated use of proceeds presented in the Company's final short-form
prospectus dated July 24, 2020 with the actual use of proceeds as at August 31, 2020:
(In thousands of Canadian dollars)
Actual use of
proceeds
Estimated use
of proceeds (1)
Variance
Capital expenditures to build out same-day delivery
capabilities (including fulfilment technology and
automation equipment)
General corporate purposes
Remaining as at August 31, 2020
Total net proceeds
Share issuance costs
Gross proceeds
$
–
–
27,093
27,093
1,676
$ 28,769
$ 15,000
12,093
N/A
27,093
1,676
$ 28,769
$
(15,000)
(12,093)
27,093
–
–
–
$
(1) Included in the estimated use of proceeds for general corporate purposes are the additional net proceeds from the
exercise of the treasury over-allotment option.
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Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
FEBRUARY 2020 CONVERTIBLE DEBENTURES PUBLIC OFFERING
On February 26, 2020, the Company completed a public offering and issued $30 million of Debentures for
net proceeds of $28 million.
The following table compares the estimated use of proceeds presented in the Company's final short-form
prospectus dated February 19, 2020 with the actual use of proceeds as at August 31, 2020:
(In thousands of Canadian dollars)
Actual use of
proceeds
Estimated use
of proceeds
Variance
Buildout of a new Toronto production and
distribution facility
Capital projects (including process automation)
General corporate purposes
Remaining as at August 31, 2020
Total net proceeds
Debentures issuance costs
Gross proceeds
FEBRUARY 2019 PUBLIC OFFERING
$
385
3,069
5,007
19,501
27,962
2,038
$ 30,000
$ 10,000
10,000
8,063
N/A
28,063
1,937
$ 30,000
$
(9,615)
(6,931)
(3,056)
19,501
(101)
101
–
$
On February 22, 2019, the Company completed a public offering and issued 6,019,212 common shares for
net proceeds of $19.6 million (including proceeds from over-allotment option).
The following table compares the estimated use of proceeds presented in the Company's final short-form
prospectus dated February 18, 2019 with the actual use of proceeds as at August 31, 2020:
(In thousands of Canadian dollars)
Capital expenditures and process automation
Expansion of product offering and development of
new meal solutions
Implementation of reusable packaging initiatives
Working capital and general corporate purposes
Remaining as at August 31, 2020
Total net proceeds
Share issuance costs
Gross proceeds
Actual use of
proceeds
9,668
$
Estimated use
of proceeds (1)
$ 10,000
Variance
(332)
$
5,731
106
4,065
–
19,570
1,497
21,067
$
5,000
500
4,065
N/A
19,565
1,502
$ 21,067
731
(394)
–
–
5
(5)
–
$
(1) Included in the estimated use of proceeds for working capital and general corporate purposes are the additional net
proceeds from the exercise of the Treasury Over-Allotment Option.
SEGMENT REPORTING
The Company has one reportable segment as our principal business activity is focused on developing and
servicing the Canadian home meal solutions market.
DIVIDEND POLICY
Since its incorporation, the Company has not paid any dividend on its common shares. The Company’s
current policy is to retain future earnings to finance its growth. Any future determination to pay dividends is
at the discretion of the Company’s Board of Directors and will depend on the Company’s financial condition,
results of operations, capital requirements and other such factors as the Board of Directors of the Company
may deem relevant.
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Goodfood Market Corp.
Management’s Discussion and Analysis
Year ended August 31, 2020
CRITICAL ACCOUNTING ESTIMATES
The preparation of the Consolidated Financial Statements in conformity with IFRS requires management
to make judgements, estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these
estimates.
The Company’s significant accounting estimates and assumptions for the year ended August 31, 2020
include the uncertainties related to the COVID-19 pandemic, the estimation of the redemption percentage
for sales incentives and credits including referral credits, the date at which fixed assets are available for
intended use, the impairment of long-lived assets, the estimated term for leases, the discount rate for
leases, and the recoverability of deferred income taxes.
STANDARDS ISSUED BUT NOT YET EFFECTIVE
Please refer to Note 28 of the Company’s consolidated financial statements for the years ended
August 31, 2020 and 2019. The Company is currently assessing the impact of adopting these amended
standards and interpretations on the Company’s consolidated financial statements.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL
REPORTING
In accordance with National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim
Filings, the Company has filed certificates signed by the Chief Executive Officer and the Chief Financial
Officer (“Certifying Officers”) that, among other things, report on the design and effectiveness of disclosure
controls and procedures (“DC&P”) and the design and effectiveness of internal control over financial
reporting.
DISCLOSURE CONTROLS AND PROCEDURES
The Company has designed DC&P to provide reasonable assurance that material information relating to
the Company is made known to the Certifying Officers, and that information required to be disclosed to
satisfy the Company’s continuous disclosure obligations is recorded, processed, summarized and reported
within the time periods specified by applicable Canadian securities legislation.
Management, under the supervision of the Certifying Officers, has evaluated the effectiveness of the DC&P
and based on that evaluation, the Certifying Officers have concluded that the DC&P were effective as at
August 31, 2020.
INTERNAL CONTROLS OVER FINANCIAL REPORTING (“ICFR”)
The Certifying Officers have designed ICFR or have caused them to be designed under their supervision,
in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with IFRS. In designing and evaluating internal
controls, it should be recognized that due to inherent limitations, any controls, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired control objectives and may
not prevent or detect misstatements.
The control framework used to design the Company’s ICFR is based on the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) on Internal Control –
Integrated Framework (2013 framework).
In addition, management, under the supervision of the Certifying Officers, has evaluated the effectiveness
of ICFR and based on that evaluation, the Certifying Officers have concluded that the Company`s ICFR
was effective as at August 31, 2020.
No changes were made to the Company’s ICFR that have materially affected, or are reasonably likely to
materially affect, the Company’s ICFR.
34 | P a g e
CONSOLIDATED FINANCIAL
STATEMENTS
YEARS ENDED AUGUST 31, 2020 AND 2019
14
GOODFOOD MARKET CORP.
Table of Contents
Independent Auditors’ Report
Consolidated Financial Statements
Consolidated Statements of Financial Position
Consolidated Statements of Loss and Comprehensive Loss
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Page
37 - 40
41
42
43
44
45 - 68
36 | P a g e
KPMG LLP
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INDEPENDENT AUDITORS’ REPORT
To the Shareholders of Goodfood Market Corp.
Opinion
We have audited the consolidated financial statements of Goodfood Market Corp. (the "Entity"), which
comprise:
•
•
•
•
•
the consolidated statements of financial position as at August 31, 2020 and 2019
the consolidated statements of loss and comprehensive loss for the years then ended
the consolidated statements of changes in equity for the years then ended
the consolidated statements of cash flows for the years then ended
and notes to the consolidated financial statements, including a summary of significant accounting
policies.
(Hereinafter referred to as the "financial statements").
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Entity as at August 31, 2020 and 2019, and its
consolidated financial performance and its consolidated cash flows for the years then ended in
accordance with International Financial Reporting Standards ("IFRS").
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the "Auditors’ Responsibilities for the
Audit of the Financial Statements" section of our auditors’ report.
We are independent of the Entity in accordance with the ethical requirements that are relevant to our
audit of the financial statements in Canada and we have fulfilled our other responsibilities in accordance
with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
© 2020 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms
affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
37 | P(cid:32)a(cid:32)g(cid:32)e
Other Information
Management is responsible for the other information. Other information comprises:
•
•
the information included in Management’s Discussion and Analysis filed with the relevant Canadian
Securities Commissions;
the information, other than the financial statements and the auditors’ report thereon, included in a
document entitled "Annual Report".
Our opinion on the financial statements does not cover the other information and we do not and will not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit and remain alert for indications that the
other information appears to be materially misstated.
We obtained the information included in Management’s Discussion and Analysis filed with the relevant
Canadian Securities Commissions and the information, other than the financial statements and the
auditors’ report thereon, included in the "Annual report" as at the date of this auditors’ report. If, based
on the work we have performed on this other information, we conclude that there is a material
misstatement of this other information, we are required to report that fact in the auditors’ report.
We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with International Financial Reporting Standards, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Entity’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Entity or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that
includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists.
38 | P(cid:32)a(cid:32)g(cid:32)e
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit.
We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Entity's internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Entity's ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’
report to the related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditors’ report. However, future events or conditions may cause the Entity to cease to continue
as a going concern.
•
Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
• Communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
•
Provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
39 | P(cid:32)a(cid:32)g(cid:32)e
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group Entity to express an opinion on the financial statements. We
are responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
The engagement partner on the audit resulting in this auditors’ report is Alain Bessette.
Montréal, Canada
November 10, 2020
*CPA auditor, CA, public accountancy permit No. A115894
40 | P(cid:32)a(cid:32)g(cid:32)e
GOODFOOD MARKET CORP.
Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
Notes
August 31, 2020
August 31, 2019
As at
Assets
Current assets:
Cash and cash equivalents
Amounts receivable
Inventories
Other current assets
Non-current assets:
Restricted cash
Fixed assets
Right-of-use assets
Intangible assets
Non-current deposits
Total assets
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities
Line of credit
Deferred revenues
Current portion of long-term debt
Current portion of lease obligations
Non-current liabilities:
Long-term debt
Convertible debentures
Lease obligations
Total liabilities
Shareholders’ equity:
Common shares
Contributed surplus
Convertible debentures
Deficit
Total shareholders’ equity
4
5
6
12
7
8
9
10
11
12
12
14
12
13
14
18
13
$
$
104,402
4,464
6,962
780
116,608
2,500
19,191
21,130
2,203
1,414
$
163,046
$
$
$
40,878
9,063
5,390
656
2,990
58,977
11,959
14,194
20,358
105,488
97,801
3,208
2,231
(45,682)
57,558
Total liabilities and shareholders’ equity
$
163,046
$
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of Goodfood Market Corp. by:
(signed)
Jonathan Ferrari, Director and
Chair of the Board
(signed)
Francois Vimard, Director and
Chair of the Audit Committee
45,149
2,605
4,735
246
52,735
2,500
13,545
11,089
512
402
80,783
30,704
1,540
5,923
31
1,273
39,471
12,460
–
11,451
63,382
56,598
2,349
–
(41,546)
17,401
80,783
41 | P a g e
GOODFOOD MARKET CORP.
Consolidated Statements of Loss and Comprehensive Loss
(In thousands of Canadian dollars, except share and per share information)
For the years ended August 31,
Notes
2020
2019
Revenues
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Depreciation and amortization
Operating profit
Net finance costs
Loss before income taxes
Deferred income tax recovery
Net loss, being comprehensive loss for the period
Basic loss per share
7, 8, 9, 20
15
16
$ 285,372
198,953
$ 161,333
121,023
86,419
83,618
5,361
(2,560)
2,380
(4,940)
(804)
40,310
58,284
2,617
(20,591)
346
(20,937)
–
$
$
(4,136)
$
(20,937)
(0.07)
$
(0.38)
Basic weighted average number of common shares outstanding
18
58,919,209
55,069,384
Diluted loss per share
$
(0.07)
$
(0.38)
Diluted weighted average number of common shares outstanding
18
58,919,209
55,069,384
The accompanying notes are an integral part of these consolidated financial statements.
42 | P a g e
GOODFOOD MARKET CORP.
Consolidated Statements of Changes in Equity
(In thousands of Canadian dollars)
For the years ended August 31,
Notes
Common
Shares
Contributed
Surplus
Convertible
Debentures
Deficit
Total
2020
Balance as at
August 31, 2019
Net loss for the period
Share-based payments
Stock options exercised
Employee share purchase
plan
Share issuance, net of
issuance costs
Convertible debentures
issuance, net of issuance
costs and tax (1)
Convertible debentures
conversions, net of tax (2)
Balance as at
August 31, 2020
19
19
19
18
13
13
Balance as at
August 31, 2018
Net loss for the period
19
Share-based payments
Stock options exercised
19
Stock options settled in cash 19
Share issuance, net of
$ 56,598
–
–
2,968
$ 2,349
–
1,874
(1,015)
$
(96)
27,093
–
11,238
–
–
–
–
–
–
–
–
–
–
3,690
(1,459)
$ (41,546) $ 17,401
(4,136)
1,874
1,953
(4,136)
–
–
–
–
–
–
(96)
27,093
3,690
9,779
$ 97,801
$
3,208
$ 2,231
$ (45,682)
$ 57,558
$ 36,283
$
$
782
–
–
– 1,810
5
(2)
–
–
–
–
–
(99) –
2019
$ (20,609) $ 16,456
(20,937)
1,810
3
(99)
(20,937)
–
–
–
issuance costs
Agent compensation options
exercised
Balance as at
August 31, 2019
18
18
19,570
–
740
(142)
–
–
–
19,570
–
598
$ 56,598
$ 2,349
$
– $ (41,546) $ 17,401
(1) The equity component of the convertible debentures presented above is net of income taxes of $1.3 million.
(2) The conversions of the convertible debentures presented above is net of income taxes of $0.5 million.
The accompanying notes are an integral part of these consolidated financial statements.
43 | P a g e
GOODFOOD MARKET CORP.
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
For the years ended August 31,
Notes
2020
2019
Operating:
Net loss
Adjustments for:
Depreciation and amortization
Share-based payment
Net finance costs
Deferred income tax recovery
Change in non-cash operating working capital
Non-current deposits and other
Financing:
Net borrowing under line of credit
Proceeds from issuance of convertible debentures, net of
issuance costs
Proceeds from issuance of common shares, net of
issuance costs
Proceeds from exercise of stock options
Shares purchased under employee share purchase plan
Interest paid
Payments of lease obligations
Proceeds from issuance of long-term debt, net of
issuance costs
Repayment of long-term debt
Proceeds from exercise of agent compensation options
Investing:
Interest received
Additions and deposits on fixed assets
Additions to intangible assets
Restricted cash
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
$
(4,136)
$ (20,937)
2,617
5,361
1,874
1,810
2,380 346
–
(804)
17,234
4,400
(190)
(520)
8,555
880
7,523
1,040
20
13
18
19
27,976
27,241
1,953
(96)
(1,905)
(2,574)
12
12
–
–
–
7, 10
9
12
60,118
782
(8,426)
(1,776)
–
(9,420)
59,253
45,149
–
19,570
3
–
(911)
(1,198)
12,436
(1,983)
598
29,555
647
(7,640)
(246)
(2,500)
(9,739)
20,696
24,453
$
104,402
$ 45,149
Supplemental disclosure of cash flow information
20
The accompanying notes are an integral part of these consolidated financial statements.
44 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
NOTE 1
REPORTING ENTITY
Goodfood Market Corp. is an online grocery company in Canada, delivering fresh meal solutions and
grocery items to members across Canada.
In March 2019, the Company created a wholly-owned subsidiary, Yumm Meal Solutions Corp.
(the "Subsidiary"). These financial statements are prepared on a consolidated basis since the creation of
the Subsidiary. References to Goodfood Market Corp. (or "Goodfood", the "Company") represent the
financial position, financial performance, cash flows and disclosures of Goodfood Market Corp. and its
subsidiary.
Goodfood Market Corp. is incorporated under the Canada Business Corporations Act and is listed on the
Toronto Stock Exchange ("TSX") under the symbol "FOOD". The Company has its main production facility
and administrative offices based in Montreal, Québec, and additional production facilities in Québec,
Ontario, Alberta, and British Columbia.
NOTE 2
BASIS OF PREPARATION
2.1
STATEMENT OF COMPLIANCE
The consolidated financial statements of the Company have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board
("IASB"). Details of the Company’s accounting policies are included in Note 25.
The consolidated financial statements of the Company for the years ended August 31, 2020 and 2019 were
for publication on
authorized by
November 11, 2020.
the Board of Directors ("Board") on November 10, 2020
2.2
BASIS OF MEASUREMENT
The consolidated financials statements have been prepared on the historical cost basis except for the
following:
financial instruments at fair value through profit or loss;
equity share-based payment arrangements which are measured at fair value at grant date pursuant to
IFRS 2, Share-based payment; and
lease obligations, which are measured at the present value of minimum lease payments at lease
inception.
2.3
FUNCTIONAL AND PRESENTATION CURRENCY
The consolidated financial statements are stated in Canadian dollars, which is the functional and
presentation currency of Goodfood Market Corp.
NOTE 3
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of Goodfood Market Corp.’s consolidated financial statements in accordance with IFRS
requires management to make judgements, estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses and accompanying disclosures. Uncertainty about these
assumptions and estimates could result in outcomes that require a material adjustment to the carrying
amount of assets or liabilities affected in future periods. These assumptions and estimates are regularly
reviewed. Revisions to accounting estimates are recognized in the year in which the estimates are revised
and in any future years affected.
45 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
The Company’s main judgements, estimates, and assumptions are presented below:
3.1
ECONOMIC CONDITIONS AND UNCERTAINTIES
The COVID-19 pandemic has had an impact on Goodfood’s overall business and operations. As an
essential service in Canada, Goodfood continued to operate throughout the pandemic and experienced an
acceleration of growth in demand. While subscriber orders have been fulfilled and consumer behaviour
during the pandemic has contributed to an increase in subscriber base, orders by subscribers and overall
business, operations and supply chains were significantly challenged with temporary supplier closures and
substitution of unavailable ingredients combined with workforce shortages and additional sanitary
measures, putting pressure on food and labour costs. Pressure on supply chains, inventory levels and
increased operational costs or disruptions and labour shortages could increase depending on the duration
and severity of the pandemic as well as any changes to Goodfood’s industry regulatory framework. The
magnitude, duration, and severity of the COVID-19 pandemic are difficult to predict and could affect the
significant estimates and judgements used in the preparation of the Company’s consolidated financial
statements. Further details on the impact of the pandemic and measures implemented are provided in
Management’s Discussion and Analysis for the year ended August 31, 2020.
3.2
MEASUREMENT OF REVENUES
Revenues are presented net of refunds, sales incentives and credits, including referral credits. Credit
amounts are estimated based on the Company’s history and experience of the redemption percentage of
those credits. The corresponding estimated liability for credits is included in deferred revenue.
3.3
LONG-LIVED ASSETS
Judgement is necessary in determining the date at which fixed assets are available for their intended use.
Also, at each reporting date, management determines whether fixed assets, right-of-use assets and
intangible assets present indicators of impairment. For the purposes of its analysis, management uses its
judgement considering factors such as the economic environment and the market in which the Company
operates, budget forecasts and physical obsolescence.
3.4
ESTIMATE OF THE LEASE TERM
When the Company recognizes a lease, it assesses the lease term based on the conditions of the lease
and assesses whether it will exercise renewal options at the end of the lease term. With the exception of
one lease, the Company determined that the term of its leases is the original lease term as it is not
reasonably certain that the renewal options will be exercised. This significant estimate could affect the
Company’s financial position if the exercise of renewal options of the leases are reassessed differently.
3.5
DISCOUNT RATE FOR LEASES
IFRS 16 requires the Company to discount the lease payments using the rate implicit in the lease if that
rate is readily available. If that rate cannot be readily determined, the lessee is required to use its
incremental borrowing rate ("IBR"). The Company generally used its IBR when recording leases initially,
since the implicit rates were not readily available due to information not being available from the lessor
regarding the fair value of underlying assets and direct costs incurred by the lessor related to the leased
assets. The IBR for each lease was determined on the commencement date of the lease.
3.6
DEFERRED INCOME TAXES
Deferred tax assets are recognized for unused tax losses and other deductible temporary differences to the
extent that it is probable that taxable profit will be available against which tax attributes can be realized.
Significant management judgement is required to determine the amount of deferred tax assets that can be
recognized, based upon the likely timing and the level of future taxable profits, together with future tax
planning strategies. The Company has determined that it is not yet probable that deferred tax assets on the
tax losses carried forward and other temporary differences will be realized and has recognized deferred tax
assets to the extent of recognized deferred tax liabilities (refer to Note 16).
46 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
NOTE 4
AMOUNTS RECEIVABLE
As at
Sales taxes receivable
Rewards program receivable
Volume discounts receivable
Other receivables
NOTE 5
INVENTORIES
As at
Food
Packaging supplies
Work in process
August 31, 2020
August 31, 2019
$
$
3,063
863
421
117
4,464
$
$
2,011
288
176
130
2,605
August 31, 2020
August 31, 2019
$
$
4,534
1,928
500
6,962
$
$
2,835
1,523
377
4,735
The cost of inventories recognized as an expense within cost of goods sold during the year ended
August 31, 2020 was $172.8 million (2019 – $99.2 million).
NOTE 6
OTHER CURRENT ASSETS
As at
Prepaid expenses
Deposits and other
August 31, 2020
August 31, 2019
$
$
524
256
780
$
$
180
66
246
47 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
NOTE 7
FIXED ASSETS
Furniture and
fixtures
Machinery
and
equipment
Computer
hardware
and other
Leasehold
improvements
Assets under
construction (1)
Cost:
As at August 31, 2018 $
Additions
Transfers
Reclassification to
right-of-use assets
As at August 31, 2019
Additions
Transfers
$
$
$
223
493
–
–
716
790
–
1,775
4,827
–
(122)
6,480
2,049
–
$
$
234
440
–
–
674
736
–
$
$
4,245
55
2,779
–
7,079
1,436
3,256
As at August 31, 2020 $ 1,506
$
8,529
$ 1,410
$ 11,771
Accumulated depreciation:
As at August 31, 2018
Depreciation
Disposals
$
As at August 31, 2019
Depreciation
$
As at August 31, 2020 $
33
97
–
130
205
335
$
$
$
$
139
390
(22)
507
891
$
1,398
$
Net carrying amounts:
As at August 31, 2019
As at August 31, 2020
$
586
1,171
$
5,973
7,131
$
68
148
–
216
292
508
458
902
$
$
$
$
231
552
–
783
1,052
1,835
6,296
9,936
Total
6,477
8,826
–
$
– $
3,011
(2,779)
$
$
$
$
$
$
–
(122)
232 $ 15,181
8,086
–
3,075
(3,256)
51 $ 23,267
– $
–
–
– $
–
– $
471
1,187
(22)
1,636
2,440
4,076
232 $ 13,545
19,191
51
(1) Additions of assets under construction include $0.5 million (2019 – $38 thousand) related to capitalized depreciation
of right-of-use assets.
GOVERNMENT GRANTS
During the year ended August 31, 2020, the Company recognized $0.2 million in government grants
as a reduction to the cost of machinery and equipment.
48 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
NOTE 8
RIGHT-OF-USE ASSETS
As at August 31, 2018
Additions
Derecognition
Depreciation
As at August 31, 2019
Additions
Derecognition
Depreciation
As at August 31, 2020
NOTE 9
INTANGIBLE ASSETS
Cost:
As at August 31, 2018
Additions
As at August 31, 2019
Additions
Disposals, write-offs and transfers
As at August 31, 2020
Accumulated amortization:
As at August 31, 2018
Amortization
As at August 31, 2019
Amortization
Disposals, write-offs and transfers
As at August 31, 2020
Net carrying amounts:
As at August 31, 2019
As at August 31, 2020
Facilities
Automotive
equipment
Other
equipment
$
$
5,835
5,614
–
(1,101)
10,348
12,411
−
(2,581)
$
$
$
$
100
421
–
(231)
290
536
−
(378)
238 $
357
(39)
(105)
451 $
324
(73)
(198)
Total
6,173
6,392
(39)
(1,437)
11,089
13,271
(73)
(3,157)
$
20,178
$
448
$
504 $
21,130
Software (1)
Intellectual
property
$
$
94
414
508
1,978
(63)
$
2,423
$
$
$
$
39
31
70
222
(13)
279
438
2,144
$
$
$
$
$
$
Total
94
488
582
1,978
(63)
2,497
39
31
70
237
(13)
294
– $
74
74 $
–
–
74 $
– $
–
– $
15
–
15 $
74 $
59
512
2,203
(1) For the year ended August 31, 2020, software under development amounted to $0.6 million (2019 – $0.3 million).
NOTE 10 NON-CURRENT DEPOSITS
As at
Security deposits
Deposits on fixed assets
August 31, 2020
August 31, 2019
$
$
882
532
1,414
$
$
287
115
402
49 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
NOTE 11 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As at
Accounts payable
Accrued liabilities
NOTE 12 DEBT
As at
Interest-bearing financing:
Secured term loan, variable interest at CDOR (1) plus
2.50%, maturing in November 2021
Interest rate swap
Unamortized financing costs
Current portion of long-term debt
(1) CDOR is defined as the Canadian Dollar Offered Rate.
CREDIT FACILITY
August 31, 2020
August 31, 2019
$
$
26,068
14,810
40,878
$
$
23,961
6,743
30,704
August 31, 2020
August 31, 2019
$
$
$
$
12,500
12,500
146
(31)
12,615
(656)
11,959
$
$
$
$
12,500
12,500
46
(55)
12,491
(31)
12,460
During the year ended August 31, 2019, the Company obtained from a Canadian financial institution two
secured three-year term loans totalling $12.5 million, a $10 million revolving line of credit and $5 million in
other short-term financing. The credit facility is secured by a first-ranking hypothec on all of the Company’s
movable and immovable assets. The proceeds are being used to fund expansion, capital expenditures,
invest in automation, and were also used to refinance the Company’s long-term debt.
As at August 31, 2020 and 2019, $12.5 million of the term loans were disbursed, bearing variable interest
at CDOR plus 2.50%. The term loans are repayable in quarterly installments of $31 thousand and
$125 thousand, beginning on August 31, 2020 and November 30, 2020, respectively, with a bullet
repayment of the balance at the end of the term in November 2021.
As at August 31, 2020, $9.1 million (2019 – $1.5 million) of the revolving line of credit was drawn, bearing
variable interest at CDOR plus 2.50%.
As at August 31, 2020, Goodfood had
(2019 – $86 thousand) that reduced the availability on the line of credit.
letters of credit outstanding
totalling $0.9 million
As at August 31, 2020, the Company has corporate credit cards used for business purposes with authorized
limits totaling $7.3 million (2019 – $7.9 million), including $5 million in other short-term financing secured
from a Canadian financial institution. Amounts owing with respect to credit cards are included in accounts
payable and accrued liabilities.
The credit facility includes a collateral requirement of $2.5 million placed in a restricted cash account. As at
August 31, 2020 and 2019, the Company was in compliance with all covenants under the credit facility.
INTEREST RATE SWAPS
During the year ended August 31, 2019, the Company had entered into two swap agreements with the
same Canadian financial institution whereby the Company fixed the interest rate on a notional amount
totalling $3.8 million until November 2021.
50 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
In the first quarter of the year ended August 31, 2020, the Company entered into two additional swap
agreements with the same Canadian financial institution whereby the Company fixed the interest rate on a
notional amount of $3.2 million until November 2021.
During the third quarter of the year ended August 31, 2020, the Company consolidated its four swap
agreements totaling a notional amount of $7 million into one new swap agreement, increasing the notional
amount covered to $11.3 million. The new swap agreement fixed the interest rate until November 2021.
As at August 31, 2020, the Company’s interest rate swap is classified as a derivative financial liability not
designated as a hedging instrument. For the year ended August 31, 2020, a loss in fair value of $0.1 million
is presented in net finance costs (refer to Note 15). As at August 31, 2020, a liability of $0.1 million
(2019 – $46 thousand) is presented in long-term debt.
PRINCIPAL PAYMENTS
Principal payments due on the long-term debt in each of the following fiscal years are as follows:
2021
2022
Principal payments
$
656
11,844
NOTE 13 CONVERTIBLE DEBENTURES
On February 26, 2020, the Company issued 30,000 convertible unsecured subordinated debentures (the
"Debentures") at a price of $1 thousand per Debenture for gross proceeds of $30 million. The Debentures
mature on March 31, 2025 (the "Maturity Date") and bear a fixed interest rate of 5.75% per annum, payable
semi-annually
in arrears on March 31 and September 30 of each year, commencing on
September 30, 2020.
The Debentures are convertible into common shares of the Company at the option of the holder at any time
prior to the close of business on the earlier of the last business day immediately preceding the Maturity
Date and the last business day immediately preceding the date specified for redemption by the Company
at a price of $4.70 (the "Conversion Price") per common share.
On or after March 31, 2023, and prior to March 31, 2024, provided that the volume weighted average trading
price of the Company’s common shares on the TSX for the 20 consecutive trading days preceding the date
on which the notice of redemption is given is not less than 125% of the Conversion Price, the Debentures
may be redeemed in whole or in part at the option of the Company at price equal to the principal amount
thereof plus accrued and unpaid interest. On or after March 31, 2024, and prior to the Maturity Date, the
Debentures may be redeemed in whole or in part at the option of the Company at a price equal to their
principal amount plus accrued and unpaid interest.
In the event of a change in control, the Company will be required to make a payment to the holders of the
Debentures in accordance with the make-whole premium provisions set forth by the indenture of the
Debentures.
The conversion option, net of related issuance costs and deferred income taxes, has been recorded in
shareholders’ equity for an amount of $3.7 million. Factoring in the Debentures issuance costs, the effective
interest rate on the Debentures is 11.76%.
During the year ended August 31, 2020, 11,864 Debentures were converted into common shares of the
Company, resulting in the issuance of 2,524,242 common shares and the Company recorded a
reclassification to common shares of $9.3 million and $2.0 million from the convertible debentures liability
and equity components, respectively (refer to Note 18).
51 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
The following table summarizes the continuity of the Company’s Debentures for the year ended:
Proceeds from issuance of the Debentures
Debentures issuance costs
Net proceeds
Amount classified as equity (net of issuance costs of $366) (1)
Accretion interest
Conversion of the Debentures
Convertible debentures, liability component balance, end of year
August 31, 2020
$
$
30,000
(2,038)
27,962
(5,020)
505
(9,253)
$
14,194
(1)
In connection with the issuance of the Debentures, a net amount of $3.7 million was recorded in equity, representing gross
proceeds of $5.4 million, less allocated issuance costs of $0.4 million and a deferred income tax recovery of $1.3 million.
NOTE 14
LEASE OBLIGATIONS
The following table summarizes the continuity of the Company’s lease obligations for the years ended:
Balance, beginning of year
Additions
Derecognition
Payment of lease obligations
Interest expense on lease obligations
Balance, end of year
August 31, 2020
August 31, 2019
$
$
12,724
13,271
(73)
(3,501)
927
23,348
$
7,556
6,392
(26)
(1,840)
642
$
12,724
The following table summarizes the contractual undiscounted cash flows from lease obligations:
As at
August 31, 2020
August 31, 2019
Maturity analysis – contractual undiscounted cash flows
Less than one year
One to five years
More than 5 years (1)
Total undiscounted lease obligations
Lease obligations balance, end of year
Current portion
Non-current portion
$
$
$
$
$
4,076
13,822
10,526
$
1,874
7,050
6,944
28,424
$
23,348 $
2,990
20,358
$
$
15,868
12,724
1,273
11,451
(1) As at August 31, 2020, future lease payments of $5.6 million (2019 – $5.6 million) for which the Company is
reasonably certain to exercise the renewal options, have been recognized in lease obligations, representing an
amount of $6.4 million (2019 – $6.4 million) of undiscounted cash outflows.
During the year ended August 31, 2020, the Company signed a ten-year lease for a 200,000 square-feet
fulfillment centre located in the Greater Toronto Area, Ontario, Canada with two renewal options of five
years. As at August 31, 2020, the Company did not have access to the asset, and therefore, the facility was
not reflected as a right-of-use-asset and no corresponding lease obligation was recorded. The expected
delivery date and the expected rent payment commencement date is by the end of summer 2021, at which
point management intends to commence operations. Fixed rent payments represent a total commitment of
$34 million over the term of the lease.
52 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
During the year ended August 31, 2020, the Company signed a thirty-month lease for a 44,967 square-feet
fulfillment center located in Montreal, Québec, Canada with two renewal options of 90 days. As at
August 31, 2020, the Company did not have access to the asset and therefore, the facility was not reflected
as a right-of-use asset and no corresponding lease obligation was recorded. The lease commencement
date was October 1, 2020. Fixed rent payments represent a total commitment of $1.5 million over the term
of the lease.
NOTE 15 NET FINANCE COSTS
Interest expense on debt
Interest expense on lease obligations
Interest expense on the Debentures, including accretion interest
Interest income
Foreign exchange loss
Fair value loss on interest rate swaps
For the years ended August 31,
2020
2019
$
$
733
927
1,309
(772)
83
100
2,380
$
$
292
642
–
(687)
53
46
346
NOTE 16
INCOME TAXES
A reconciliation of the Company’s income taxes at Canadian statutory rates is as follows:
Loss before income taxes
Canadian statutory rates
Income tax benefit at the combined Canadian statutory rate
Decrease resulting from:
Change in unrecognized deferred income tax assets
Permanent differences
Other
Total income tax recovery
For the years ended August 31,
2020
2019
$
$
$
(4,940)
26.5%
(1,312)
(19)
531
(4)
(804)
$
$
(20,937)
26.6%
(5,569)
5,045
520
4
–
$
53 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
Deferred income tax assets (liabilities) are attributable to the following items:
Lease
obligations
Net
operating
losses Debentures
Deferred
income tax
assets
(liabilities)
Fixed
assets
As at August 31, 2019
Recognized in net loss
Recognized in equity
$
$
2,736
2,201
−
−
1,044
−
$
− $
(240)
(804)
(2,736) $
(2,201)
−
As at August 31, 2020
$
4,937
$
1,044
$
(1,044) $
(4,937) $
−
804
(804)
−
As at August 31, 2018
Recognized in net loss
As at August 31, 2019
Lease
obligations
Fixed
assets
Deferred
income tax
assets
(liabilities)
$
$
1,748 $
988
(1,748) $
(988)
2,736 $
(2,736) $
−
−
−
The Company had unrecognized deferred income tax assets as follows:
As at
Deferred income tax assets:
Net operating loss carry forwards
Fixed assets
Share and debt issuance costs
Intangible assets
Other
August 31,
2020
August 31,
2019
$
$
7,453
1,250
1,265
329
92
8,241
636
689
254
47
Unrecognized deferred income tax assets
$
10,389
$
9,867
The Company has operating tax losses carried forward of $32.1 million (2019 – $31.1 million) which are
partially recognized for an amount of $3.9 million, and unrecognized deductible temporary differences of
$7.1 million (2019 – $6.1 million) that are available to reduce taxable income. Deferred income tax assets
have not been recognized in respect of these items because it is not probable that future taxable profit will
be available against which the Company can realize the benefits therefrom. As at August 31, 2020, the
amounts and expiry dates of the tax losses carried forward were as follows:
2035
2036
2037
2038
2039
2040
$
49
712
3,547
8,516
18,273
967
$ 32,064
54 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
NOTE 17 SUPPLEMENTAL STATEMENT OF LOSS AND COMPREHENSIVE LOSS INFORMATION
Expense related to variable lease payments not
included in the lease obligations
Salaries, fees and other short-term employee
benefits
NOTE 18 SHAREHOLDER’S CAPITAL
COMMON SHARES
For the years ended August 31,
2020
2019
$
157
$
138
70,932
39,419
The Company is authorized to issue an unlimited number of no par value common shares.
The movements in common shares were as follows for the years ended August 31:
Balance, beginning of year
Share issuance through a bought
deal offering
Debentures conversions (Note 13)
Exercise of stock options (Note 19)
Purchased and held in trust through
employee share purchase plan
(Note 19)
Share issuance costs
Agent compensation options
exercised
Number of
shares
2020
Carrying
amount
Number of
shares
2019
Carrying
amount
58,144,400
$
56,598
51,825,245
$
36,283
4,755,250
2,524,242
910,641
(23,412)
–
28,769
11,238
2,968
(96)
(1,676)
6,019,212
–
879
–
–
21,067
–
5
–
(1,497)
–
–
299,064
740
Balance, end of year
66,311,121
$
97,801
58,144,400
$
56,598
During the year ended August 31, 2020, the Company issued 4,755,250 common shares at a price of $6.05
per common share for gross proceeds of $28.8 million, less share issuance costs of $1.7 million, in
connection with a public offering completed.
During the year ended August 31, 2019, the Company issued 6,019,212 common shares at a price of $3.50
per common share for gross proceeds of $21.1 million, less share issuance costs of $1.5 million, in
connection with the public offering completed.
In connection with the Company’s private placement completed during the year ended August 31, 2017,
the Company granted 405,002 two-year compensation options to the agents to purchase common shares
of the Company at a price of $2.00 per common share. During the year ended August 31, 2019, 299,064
options were exercised for gross proceeds of $0.6 million. The remaining balance of agent compensation
options that were not exercised expired on June 1, 2019.
55 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
LOSS PER SHARE
As at
August 31,
2020
August 31,
2019
Basic and diluted weighted average number of common shares outstanding
58,919,209
55,069,384
Issued shares from the exercise of stock options, Debenture conversions and share issuance are weighted
from the transaction date. The purchase of common shares to fund the employee share purchase plan is
weighted from the transaction date.
For the year ended August 31, 2020, the diluted loss per share calculation did not take into consideration
the potential dilutive effect of the stock options, unvested shares in connection with the employee share
purchase plan and the Debentures conversion option as they are not dilutive.
For the year ended August 31, 2019, the diluted loss per share calculation did not take into consideration
the potential dilutive effect of the stock options as they are not dilutive.
NOTE 19 SHARE-BASED PAYMENTS
STOCK OPTION PLAN
A stock option plan (the "Stock Option Plan") was established by the Company to attract and retain
employees, consultants, directors and officers. The plan provides for the granting of options to purchase
common shares where at any given time the number of stock options reserved for issuance is equal to 10%
of the Company’s issued and outstanding common shares. Under the plan, options generally vest over a
period of four years and expire eight years from the grant date. As at August 31, 2020, 1,881,758 stock
options were available for issuance (2019 – 450,661).
The following table summarizes the continuity of the stock options during the years ended August 31:
Outstanding, beginning of year
Granted
Exercised
Stock options settled in cash
Forfeited
Outstanding, end of year
Exercisable, end of year
Number of
options
3,910,169
2,299,307
(910,641)
–
(547,140)
4,751,695
2020
Weighted
average
exercise price
$
2.57
4.41
2.14
–
2.82
3.51
2.48
896,335
$
2019
Weighted
average
exercise price
$
1.96
2.89
2.62
1.62
2.85
Number of
options
1,425,471
2,661,531
(879)
(74,740)
(101,214)
3,910,169
2.57
639,039
$
1.60
For the year ended August 31, 2020, the weighted average share price of the Company’s common shares
upon the exercise date of stock options was $6.44 (2019 – $2.94).
56 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
The following table provides additional information about the Company’s stock options as at August 31:
Exercise Price
Less than $1.00
$ 1.00 – 1.99
$ 2.00 – 2.49
$ 2.50 – 2.99
$ 3.00 – 3.49
$ 3.50 – 3.99
$ 6.00 – 6.49
$ 7.00 – 7.49
Outstanding, end of year
Exercisable, end of year
Number of
options
outstanding
2020
Weighted
average
remaining life
86,658
160,830
101,106
1,469,755
1,751,790
328,532
653,024
200,000
4,751,695
896,335
5.6
5.0
5.2
6.1
7.0
7.6
7.9
8.0
6.8
6.0
Number of
options
outstanding
178,834
283,718
203,325
2,313,573
930,719
–
–
–
3,910,169
639,039
2019
Weighted
average
remaining life
6.8
6.0
6.9
7.1
7.7
–
–
–
7.1
6.7
Stock options granted were valued using the Black-Scholes option pricing model with the following
weighted-average assumptions for the years ended August 31:
Volatility
Risk-free interest rate
Expected life of options
Common share value at grant date
Weighted average exercise price
2020
2019
53%
0.97%
5.1 years
4.41
4.41
$
$
53%
1.84%
5.1 years
2.89
2.89
$
$
During the year ended August 31, 2020, an expense of $1.9 million (2019 – $1.8 million) was recorded in
the consolidated statements of loss and comprehensive loss in relation to the Stock Option Plan.
EMPLOYEE SHARE PURCHASE PLAN
On September 1, 2019, the Company implemented an employee share purchase plan ("ESPP") to attract
and retain employees and directors. Under this plan, employees or directors are permitted to contribute
between 1% and 5% of their eligible earnings, up to $10,000 annually, to purchase Company’s equity
shares. The Company, in turn, provides a matching contribution equal to 50% of the participant’s personal
contribution. Shares purchased with the Company’s contributions become vested two years from the
contribution date. All contributions are used by the plan’s trustee to purchase equity shares on the open
market, on behalf of employees.
The following table summarizes the changes in the ESPP’s position for the year ended:
Unvested contributions, beginning of year
Contributions
Vested
Unvested contributions, end of year
August 31, 2020
Number of
shares
Amount
−
$
23,412
−
23,412
$
−
96
−
96
57 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
NOTE 20 SUPPLEMENTAL CASH FLOW INFORMATION
The following summarizes the net changes in non-cash items related to operating working capital:
As at
Amounts receivable
Inventories
Other current assets
Accounts payable and accrued liabilities
Deferred revenues
August 31, 2020
August 31, 2019
$
$
(1,869)
(2,227)
(534)
9,563
(533)
$
4,400
$
(812)
(3,150)
(86)
17,881
3,401
17,234
The additional transactions that had no cash impact on investing activities for the year ended
August 31, 2020 were as follows:
Fixed asset additions of $0.9 million (2019 – $1.3 million) and intangible asset additions of $0.4 million
(2019 – $0.2 million) were unpaid and included in accounts payable and accrued liabilities; and
Assets under construction additions of $0.5 million (2019 – $38 thousand) relate to capitalized
depreciation on right-of-use assets.
The additional transaction that had no cash impact on financing activities for the year ended
August 31, 2020 was as follows:
Share issuance costs of $0.1 million (2019 – nil) were unpaid and included in accounts payable and
accrued liabilities.
The following are the amounts of cash, cash equivalents and restricted cash:
As at
Cash and cash equivalents
Restricted cash (1)
August 31, 2020
$ 104,402
2,500
$ 106,902
August 31, 2019
$
$
45,149
2,500
47,649
(1) Restricted cash consists of cash held as collateral, which is subject to the terms of the financing agreement
(refer to Note 12).
NOTE 21 COMMITMENTS
As at August 31,2020, Goodfood had commitments under purchase and service contract obligations for
both operating and capital expenditures that do not meet the definition of a lease under IFRS 16, Leases.
The following summarizes the commitments of Goodfood as at August 31, 2020 that are due in each of the
next five years and thereafter:
2021
2022
2023
2024
2025
2026 and thereafter
Total commitments
$
$
1,870
39
35
23
7
−
1,974
58 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
NOTE 22
FINANCIAL INSTRUMENTS
Goodfood has determined that the fair value of cash and cash equivalents, amounts receivable, restricted
cash, line of credit, and accounts payable and accrued liabilities approximate their respective carrying
amounts at the consolidated statement of financial position date, due to the short-term maturity of those
instruments.
Goodfood determined that the fair value of its long-term debt and Debentures approximates their carrying
amount as they bear interest at market interest rates for financial instruments with similar terms and risks.
The Company determined the valuation of its Debentures at issuance using Level 3 inputs.
The fair value of the interest rate swap as at August 31, 2020 was estimated using Level 2 inputs.
NOTE 23
FINANCIAL RISKS
Credit risk:
Credit risk is the risk of an unexpected loss if a counterparty to a financial instrument fails to meet its
contractual obligation. The Company regularly monitors credit risk exposure and takes steps to mitigate the
likelihood of this exposure resulting in losses. The Company's exposure to credit risk is primarily attributable
to its cash and cash equivalents, amounts receivable, and restricted cash. The Company's maximum credit
exposure corresponds to the carrying amount of these financial assets. Management believes the credit
risk is limited given the Company deals with major North American financial institutions and an
internationally established payment processor.
Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due
to change in market interest rates. The Company’s long-term debt and revolving line of credit bear interest
at variable rates which are determined by a base rate set by the lender plus a margin. As a result, the
Company is exposed to interest rate cash flow risk due to fluctuations in lenders’ base rates. The Company
manages its interest rate risk by using a variable-to-fixed interest rate swap as described in Note 12.
The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through
profit or loss and does not designate derivatives (interest rate swaps) as hedging instruments under a fair
value hedge accounting model. Therefore, a change in interest rates at the reporting date would not
significantly impact the fair value of the interest rate swaps and consequently, the Company’s net loss.
Sensitivity analysis for interest rate risk
An increase or decrease of 100 basis points in the interest rate would not have a significant impact on the
Company’s net loss.
Liquidity risk:
Liquidity risk is the risk that the Company will be unable to fulfill its obligations on a timely basis or at a
reasonable cost. The Company manages its liquidity risk by monitoring its operating requirements. The
Company prepares budgets and cash forecasts to ensure it has sufficient funds to fulfill its obligations.
Capital management
The Company's objective in managing its capital structure is to ensure a sufficient liquidity position to
finance its operations, to maximize the preservation of capital and to deliver competitive returns on invested
capital. To fund its activities, the Company has relied on public and private placements of equity securities,
convertible debentures, cash flows provided by operating activities and short-term or long-term debt, which
are included in the Company's definition of capital. The Company manages its excess cash to ensure that
it has sufficient reserves to fund its operations and capital expenditures.
59 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
The following are amounts due on contractual maturities of financial liabilities, including estimated interest
payments as at August 31:
Total carrying
amount
Contractual
cash flows
Less than 1
year 1 to 5 years
2020
More than 5
years
Accounts payable and
accrued liabilities
Line of credit
Long-term debt, including
current portion (1)
Debentures, liability
component
$
40,878 $
9,063
40,878
9,063
$
40,878
9,063
$
− $
−
−
−
12,615
13,104
1,142
11,962
−
14,194
23,447
1,140
22,307
−
Lease obligations, including
current portion
23,348
28,424
4,076
13,822
$ 100,098
$
114,916
$
56,299
$ 48,091 $
Total carrying
amount
Contractual
cash flows
Less than 1
year 1 to 5 years
10,526
10,526
2019
More than 5
years
Accounts payable and
accrued liabilities
Line of credit
Long-term debt, including
$
30,704
1,540
$
30,704
1,540
$
30,704
1,540
$
$
−
−
−
−
current portion (1)
12,491
13,755
597
13,158
−
Lease obligations, including
current portion
12,724
15,868
1,874
7,050
$
57,459
$
61,867
$
34,715
$ 20,208
$
6,944
6,944
(1) As at August 31, 2020, an interest rate of 3.00% (2019 – 4.46%) was used to determine the estimated interest
payments on the variable-rate portion of the Company’s long-term debt, and the fixed interest rate pursuant to the
swap agreement mentioned in Note 12 was used to determine the interest payments on the fixed-rate portion of the
Company’s long-term debt.
NOTE 24 RELATED PARTIES
KEY MANAGEMENT PERSONNEL
The Company’s key management personnel have authority and responsibility for planning, directing and
controlling the Company’s activities and consist of the Company’s executive team and the Board of
Directors. The chief executive officer ("CEO") and the president and chief operating officer ("President and
COO") are members of the Board of the Company. The CEO is also Chairman of the Board.
The following table presents the compensation of the key management personnel recognized in net loss:
Salaries, fees and other short-term employee benefits
Share-based payments
For the years ended August 31,
$
2020
2,884
865
$
2019
1,963
1,062
60 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
RELATED PARTY TRANSACTIONS
For the year ended August 31, 2020, in connection with the issuance of Debentures described in Note 13,
75 Debentures were purchased by Board members and key management personnel at a price of $1,000
per Debenture.
For the year ended August 31, 2019, in connection with the public offering described in Note 18, 26,500
common shares were purchased by Board members and key management personnel at a price of $3.50
per common share.
These transactions were recorded at the amount of consideration paid as established and agreed to by the
related parties.
NOTE 25 SIGNIFICANT ACCOUNTING POLICIES
25.1
BASIS OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts of the Company and of the
Subsidiary.
Subsidiary
A subsidiary is an entity controlled by the Company. Control is achieved where the Company has power
over the investee, exposure or rights to variable returns from its involvement with the investee, and the
ability to use its power over the investee to affect the amount of these returns. The Company reassesses
whether it controls an entity if facts and circumstances indicate that one or more of the aforementioned
points have changed. A subsidiary is consolidated from the date the Company obtains control and continues
to be consolidated until the date that such control ceases.
25.2
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash held in financial institutions, outstanding deposits and short-term
deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in
value.
25.3
GOVERNMENT GRANTS
Government grants are recognized only when the Company has reasonable assurance that it meets the
conditions and will receive the grants. Government grants related to assets, including investment tax
credits, are recognized in the consolidated statement of financial position as a deduction from the carrying
amount of the related asset. They are then recognized in profit or loss over the estimated useful life of the
depreciable asset that the grants were used to acquire, as a deduction from the depreciation expense.
Other government grants are recognized in profit or loss as a deduction from the related expenses.
25.4
INVENTORIES
Inventories are measured at the lower of cost and net realizable value. The cost of inventories is determined
using the first-in, first-out method. Cost includes acquisition costs net of discounts, and other costs incurred
to bring inventories to their present location and condition. Net realizable value is the estimated selling price
in the ordinary course of business, less the estimated selling expenses.
25.5
RESTRICTED CASH
Restricted cash is cash where specific restrictions exist on the Company’s ability to use this cash. Restricted
cash consists primarily of cash held as collateral, which is subject to the terms of the financing agreement
(refer to Note 12).
61 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
25.6
FIXED ASSETS
25.6.1 RECOGNITION AND MEASUREMENT
Items of fixed assets are recognized at cost less accumulated depreciation and any accumulated
impairment losses. Cost includes expenditures that are directly attributable to acquiring and bringing the
assets to a working condition for their intended use, as well as directly attributable payroll and consulting
costs.
When parts of an item of fixed assets have different useful lives, they are accounted for as separate items
(major components).
Gains and losses on disposal of an item of fixed assets are determined by comparing the proceeds from
disposal with the carrying amount and are recognized in net loss.
25.6.2 SUBSEQUENT EXPENDITURE
The cost of replacing a part of an item of fixed assets is recognized in the carrying amount of the item if it
is probable that the future economic benefits embodied within the part will flow to the Company and its cost
can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the
day-to-day servicing of property and equipment are recognized in net loss as incurred.
25.6.3 DEPRECIATION
Depreciation is calculated over the cost of the asset less its residual value and is recognized in net loss on
a straight-line basis over the estimated useful lives of each part of an item of fixed assets, since this most
closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.
Assets under construction are not depreciated and reflect the cost of fixed assets, which are not yet
available for their intended use. Assets under construction will start to be depreciated when they are
available for their intended use. Estimates for depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted prospectively, if appropriate.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows:
Asset
Furniture and fixtures
Machinery and equipment
Computer hardware and other
Leasehold improvements
25.7
LEASES
Period
3 to 5 years
3 to 20 years
3 to 5 years
Shorter of lease term and useful life
At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on
whether the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract conveys the right to control the use of an
identified asset, the Company assesses whether:
The contract involves the use of an identified asset;
The Company has the right to obtain substantially all of the economic benefits from use of the asset
throughout the period of use; and
The Company has the right to direct the use of the asset.
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GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
Right-of-use asset
The Company recognizes a right-of-use asset and a lease obligation at the lease commencement date.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease obligation
adjusted for any lease payments made at or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove or to restore the underlying asset or the site on
which it is located, less any lease incentives received.
The right-of-use assets are subsequently depreciated from the commencement date to the earlier of the
end of the useful life of the right-of-use asset or the end of the lease term using the straight-line method.
The lease term includes consideration of an option to renew or to terminate if the Company is reasonably
certain to exercise that option. Lease terms, including options to renew for which the Company is
reasonably certain to exercise, range from 0 to 11 years for facilities, automotive equipment and other
equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease obligation.
Lease obligation
The lease obligation is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental
borrowing rate as the discount rate.
The Company determines its incremental borrowing rate by obtaining interest rates from external financing
sources and makes certain adjustments to reflect the terms of the lease and the type of the asset leased.
Lease payments included in the measurement of the lease obligation comprise fixed payments (including
in-substance fixed payments), the exercise price under a purchase option that the Company is reasonably
certain to exercise, and lease payments in an optional renewal period if the Company is reasonably certain
to exercise a renewal option.
The lease obligation is measured at amortized cost using the effective interest method. It is remeasured
when there is a change in future lease payments arising mainly if the Company changes its assessment of
whether it will exercise a purchase, renewal or termination option, or if there is a revised in-substance fixed
lease payment.
When the lease obligation is remeasured in this way, a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use
asset has been reduced to zero.
25.8
INTANGIBLE ASSETS
25.8.1 RECOGNITION AND MEASUREMENT
Intangible assets that have finite useful lives are measured at cost less accumulated amortization and any
accumulated impairment losses. Intangible assets include the cost of software tools and licenses as well
as directly attributable payroll and consulting costs.
25.8.2 SUBSEQUENT EXPENDITURE
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is recognized in net loss as incurred.
25.8.3 AMORTIZATION
Amortization is recognized in net loss on a straight-line basis over the estimated useful lives of the finite life
of intangible assets. Intangible assets in development are not amortized and reflect the cost of developing
the intangible asset, which are not yet available for their intended use. Intangible assets in development
will start to be depreciated when they are available for their intended use.
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GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
The estimated useful lives for the current year and comparative periods are as follows:
Asset
Software
Intellectual property
Period
3 to 5 years
5 years
Amortization methods, useful lives and residual values are reviewed at each reporting and adjusted
prospectively, if appropriate.
25.9
IMPAIRMENT OF NON-FINANCIAL ASSETS
The Company reviews the carrying amount of its non-financial assets, which include intangible assets with
a finite useful life, fixed assets and right-of-use assets on each reporting date, in order to determine if
specific events or changes in circumstances indicate that their carrying amounts may not be recoverable.
For impairment testing purposes, assets that cannot be tested individually are aggregated into a cash
generating unit ("CGU"). An impairment loss is recognized if the carrying amount of an asset or a CGU
exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs
to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. Impairment losses are recognized in net loss.
25.10
FINANCIAL INSTRUMENTS
25.10.1 RECOGNITION AND INITIAL MEASUREMENT
Financial assets and financial liabilities are recognized when the Company becomes party to the contractual
provisions of the financial instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value
through profit or loss ("FVTPL"), transaction costs that are directly attributable to its acquisition or issue.
25.10.2 CLASSIFICATION AND SUBSEQUENT MEASUREMENT
On initial recognition, a financial asset is classified as measured at amortized cost, fair value through other
comprehensive income ("FVOCI") – debt investment, FVOCI – equity investment, or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its
business model for managing financial assets, in which case all affected financial assets are reclassified
on the first day of the first reporting period following the change in the business model.
Amortized cost
A financial asset is measured at amortized cost if it meets both of the following conditions and is not
designated as FVTPL: (1) it is held within a business model whose objective is to hold assets to collect
contractual cash flows; and (2) its contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Debt investment
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated
at FVTPL: (1) it is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets, and (2) its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount outstanding.
All financial assets not classified as measured at amortized cost or FVOCI are measured at FVTPL. The
Company has not designated any financial assets at fair value through profit or loss and does not have any
financial assets at FVOCI.
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GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
Financial assets at amortized costs are subsequently measured at amortized cost using the effective
interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange
gains and losses and impairment are recognized in net loss. Any gain or loss on derecognition is recognized
in net loss.
25.10.3 DERECOGNITION
Financial assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows of the financial asset in a transaction
in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which
the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does
not retain control of the financial asset.
Financial liabilities
The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled,
or expire. The Company also derecognizes a financial liability when its terms are modified and the cash
flows of the modified liability are substantially different, in which case a new financial liability based on the
modified terms is recognized at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the
consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in net
loss.
25.10.4 OFFSETTING
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
statements of financial position if there is a currently enforceable legal right to offset the recognized amounts
and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
25.10.5 IMPAIRMENT
With respect to impairment of financial assets, IFRS 9, Financial Instruments, requires applying the
expected credit losses model. Under the expected credit losses model, the Company must recognize
expected credit losses and changes in such losses at each reporting date to reflect changes in credit risk
since the initial recognition of the financial assets. Although cash and cash equivalents and restricted cash
are subject to the IFRS 9 impairment requirements, the expected credit losses identified were not
significant.
25.10.6 FAIR VALUE MEASUREMENT
In establishing the fair value, the Company uses a fair value hierarchy based on levels as defined below:
Level 1: defined as observable inputs such as quoted prices in active markets.
Level 2: defined as inputs other than quoted prices in active markets that are either directly or indirectly
observable.
Level 3: defined as inputs that are based on little or no observable market data and, therefore, requiring
entities to develop their own assumptions.
25.10.7
INTEREST RATE SWAP AGREEMENTS
In accordance with IFRS 9, the Company’s swap agreement is measured at fair value with gains and losses
in fair value presented in net finance costs in the Company’s consolidated statements of loss and
comprehensive loss.
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GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
25.10.8 CONVERTIBLE DEBENTURES
Convertible debentures are measured at amortized cost, using the effective interest rate method. They are
initially measured at fair value, which is the consideration received, net of transaction costs incurred, net of
the equity component. Transactions costs related to those instruments are included in the value of the
instruments and amortized using the effective interest rate method. The effective interest expense is
included in net finance costs in the consolidated statements of loss and comprehensive loss.
The component parts of compound instruments issued by the Company are classified separately as
financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date
of issuance, the fair value of the liability is measured separately using an estimated market rate for a similar
liability without an equity component and the residual is allocated to the conversion option. The liability
component is subsequently recognized on an amortized cost basis using the effective interest method until
extinguished upon conversion or at the instrument’s maturity date. The equity component is recognized and
included in equity, without being subsequently remeasured. In addition, the conversion option classified as
equity will remain in equity until the conversion option is exercised, in which case, the portion recognized
in equity will be transferred to common shares. Issuance costs are divided between the liability and equity
components in proportion to their respective values.
On the early redemption or repurchase of convertible debentures, the Company allocates the consideration
paid on extinguishment to the liability based on its fair value at the date of the transaction and the residual
is allocated to the conversion option. Any resulting gain or loss relating to the liability element is credited or
charged to the consolidated statement of loss and the difference between the carrying amount and the
amount considered to be settled relating to the holder option is treated as a common share transaction.
25.11
PROVISIONS
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability. The unwinding of the discount is recognized as net finance expenses.
Contingent liability
A contingent liability is a possible obligation that arises from past events and whose existence will be
confirmed only by the occurrence or non-occurrence of one or more uncertain future events not within the
control of the Company, or a present obligation that arises from past events (and therefore exists), but is
not recognized because it is not probable that a transfer or use of assets, provision of services or any other
transfer of economic benefits will be required to settle the obligation, or the amount of the obligation cannot
be estimated reliably.
25.12
SHORT-TERM EMPLOYEE BENEFITS
Short-term employee benefits are measured on an undiscounted basis and are expensed as the related
service is provided. A liability is recognized for the amount expected to be paid if the Company has a present
legal or constructive obligation to pay this amount as a result of past service provided by the employee and
the obligation can be estimated reliably.
25.13
SHARE-BASED PAYMENTS
Employees and directors of the Company receive remuneration in the form of share-based payments,
whereby employees render services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made
using an appropriate valuation model, further details of which are given in Note 19. That cost is recognized
as a compensation expense, together with a corresponding increase in equity (contributed surplus), over
the period in which the service and the performance conditions are fulfilled (the vesting period). The
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GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired. The expense or credit in the statements of loss
and comprehensive loss for a period represents the movement in cumulative expense recognized at the
beginning and end of that period.
25.14
EMPLOYEE SHARE PURCHASE PLAN
The Company’s contributions, used to purchase shares on the open market on behalf of employees, are
recognized when incurred as an employee benefit expense, with a corresponding increase in contributed
surplus. The amount expensed is adjusted to reflect the number of awards for which it is expected that the
vesting conditions will be me met, so that the amount ultimately expensed will depend on the number of
awards that meet the vesting conditions at the vesting date.
Unvested shares held in trust on behalf of employees are treasury shares and, therefore, deducted from
equity until they become vested.
25.15
REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue from the sale of goods is measured at the fair value of consideration received, net of refunds,
sales incentives and credits. Revenue is recognized at a point in time, which is upon delivery of meal
solutions, as it meets the criteria to satisfy the performance obligation. Deferred revenue is recognized for
consideration received in advance of the related revenue. Sales and referral credits are also included in
deferred revenue and are measured based on the fair value of the sales and referral credits granted, taking
into consideration the estimated redemption percentage. Sales and referral credits are recognized as
revenue upon redemption and when the Company fulfills its obligation.
25.16
TAXES
Income tax expense comprises current and deferred income taxes. It is recognized in net loss except to the
extent that it relates to a business combination, or items recognized directly in equity or in other
comprehensive loss.
Current income tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the years
and any adjustment to the tax payable or receivable in respect of previous years. The amount of current
tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted
at the reporting date. Current tax assets and liabilities are offset only if certain criteria are met.
Deferred income tax
Deferred income tax is recognized in respect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred
income tax assets are recognized for unused tax losses, unused tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which they
can be used. Deferred income tax assets are reviewed at each reporting date and are reduced to the extent
that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when
the probability of future taxable profits improves. Unrecognized deferred income tax assets are reassessed
at each reporting date and recognized to the extent that it has become probable that future taxable profits
will be available against which they can be used.
Deferred income tax is measured at the tax rates that are expected to be applied to temporary differences
when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred income tax reflects the tax consequences that would follow from the manner
in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets
and liabilities. Deferred income tax assets and liabilities are offset only if certain criteria are met.
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GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2020
(All tabular amounts are in thousands of Canadian dollars, except share information)
Sales tax
Expenses and assets are recognized net of the amount of sales tax, except:
When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case, the sales tax is recognized as part of the cost of acquisition of the asset or as
part of the expense item, as applicable; and
When receivables and payables are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the consolidated statements of financial position.
25.17
FOREIGN CURRENCY
Transactions in foreign currencies are comprised of purchases from foreign suppliers. These transactions
are translated using the functional currency of the Company at exchange rates at the dates of the
transactions. The related payables denominated in foreign currencies at the reporting date are translated
to the functional currency at the exchange rates at that date. The resulting foreign currency gains or losses
are recognized on a net basis within net finance expenses in net loss.
25.18 EARNINGS PER SHARE
Basic earnings per share are computed by dividing net loss by the weighted average number of common
shares outstanding during the year. Diluted earnings per share are computed using the weighted average
number of common shares outstanding during the year adjusted to include the dilutive impact of stock
options, unvested ESPP shares, and convertible debentures.
25.19
FINANCE INCOME AND FINANCE EXPENSES
Finance income comprises interest income and foreign exchange gains. Finance expenses comprise
interest expense on debt, lease obligations, convertible debentures, foreign exchange losses and changes
in fair value of interest rate swaps. The Company classifies interests paid as financing activities and
interests received as investing activities in the Company’s consolidated statements of cash flows.
25.20
SEGMENT REPORTING
The Company determined that it operated a single operating segment for the years ended August 31, 2020
and 2019.
NOTE 26 STANDARDS ISSUED BUT NOT YET EFFECTIVE
The below standards, amendments to standards and interpretations have been issued and are applicable
to the Company for its annual periods beginning on and after September 1, 2020, with an earlier application
permitted; however, the Company has not early adopted the new or amended standards in preparing these
consolidated financial statements. The Company is currently assessing the impact of adopting these
amended standards and interpretations on the Company’s consolidated financial statements.
Amendments to IAS 1, Presentation of Financial Statements and IAS 8, Accounting Policies, Changes in
Estimates and Errors
In October 2018, the IASB issued an amendment to IAS 1 and IAS 8 to clarify the definition of ‘material’
and to align the definition used in the Conceptual Framework and the standards themselves.
Amendment to IAS 1, Presentation of Financial Statements
In January 2020, the IASB issued an amendment to clarify how to classify debt and other liabilities as
current or noncurrent. The amendments help to determine whether, in the statement of financial position,
debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially
due to be settled within one year) or non-current. The amendments also include clarifying the classification
requirements for debt an entity might settle by converting it into equity.
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CORPORATE
INFORMATION
STOCK INFORMATION
Shares listed: Toronto Stock Exchange
Ticker symbol: FOOD
Initial public offering: 2017
52-week high/low (Sept. 1, 2019 – Aug. 31, 2020): $9.20-$1.49
Share price as at November 10, 2020: $8.29
Common shares outstanding as at August 31, 2020: 66,311,121
TRANSFER AGENT AND REGISTRAR
TSX Trust
AUDITORS
KPMG LLP
LEGAL COUNSEL
Fasken Martineau DuMoulin LLP
INVESTOR RELATIONS
IR@makegoodfood.ca
MEDIA CONTACT
media@makegoodfood.ca
CORPORATE OFFICE
4600 Hickmore Street,
Saint-Laurent, Quebec
H4T 1K2
ANNUAL MEETING OF SHAREHOLDERS
Wednesday, January 13, 2021
10:00 a.m.
Virtual Meeting - Details to Come
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makegoodfood.ca
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