ANNUAL
REPORT
2021
Goodfood (TSX:FOOD) is a leading online
grocery company in Canada, delivering
fresh meal solutions and grocery items
on-demand, making it easy for customers
from across Canada to enjoy delicious
meals at home every day. Goodfood’s
vision is to be in every kitchen every day
by enabling customers to complete their
grocery shopping and meal planning in
minutes. Goodfood clients have access
to a unique selection of online products
as well as exclusive pricing made possible
by its direct-to-consumer fulfilment
network and technology that eliminate
food waste and costly retail overhead.
The Company’s main production facility
and administrative offices are based
in Montreal, Québec, with additional
production facilities located in the
provinces of Quebec, Ontario, Alberta,
and British Columbia.
2021
AT A GLANCE
13
PRODUCTION
FACILITIES
3,200
EMPLOYEES
298K
SUBSCRIBERS(1)
$379M
REVENUES
The following table provides a summary of our ocations, including facilities not yet open, as at August 31, 2021:
Total number
of locations
Administrative
offices
Distribution and
fulfillment centers
Manufacturing
facilities
Greater Montreal Area
(Quebec)
Ottawa
(Ontario)
Greater Toronto Area
(Ontario)
Calgary
(Alberta)
Vancouver
(British Columbia)
6
1
5
1
1
X
X
X
X
X
X
X
X
X
X
X
(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-YEAR
FINANCIAL HIGHLIGHTS
For the years ended August 31
2021
2020
2019
Operating Results
Net Sales
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
379,234
116,094
(15,306)
(31,792)
(0.45)
33%
34%
285,372
86,419
3,306
(5,341)
(0.09)
77%
114%
161,333
40,310
(16,164)
(21,221)
(0.38)
298,000
30.6%
(4.0%)
6%
0.3 pp
(5.2) pp
280,000
30.3%
1.2%
40%
5.3 pp
11.2 pp
200,000
25.0%
(10.0%)
125,535
33,367
255,262
21,351
6,466
97,875
(16,358)
55,503
(18,012)
106,902
19,191
161,557
21,678
16,245
56,069
7,186
60,118
(8,051)
47,649
13,545
80,499
14,031
-
17,117
596
27,055
(6,955)
(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.
(2) Includes cash, cash equivalents and restricted cash when applicable.
(3) Includes the line of credit and the current portion of long-term debt.
(4) Includes the liability and equity components of the convertible debentures.
2021
KEY HIGHLIGHTS
INNOVATION FOR OUR CUSTOMERS
STRONG FINANCIAL PERFORMANCE
Launched Goodfood mobile application:
over 100,000 downloads, 4.6 rating
Record net sales and gross profit, growing 33%
and 34% respectively
Introduced over 600 new grocery items to surpass
1,000 overall products
Launched 10-minute meal kits
Launched Goodfood WOW, a monthly unlimited
same-day delivery service, in Toronto, Montreal
and Vancouver
Selected to TSX30 as top 30 performing
stocks for second year in a row and made top
3 in the Financial Times list of fastest growing
companies in the Americas
Ended 2021 in strong financial position
with $125.5 million of cash on hand
EXPANDED FOOTPRINT FOR ON-DEMAND DELIVERY
TAKING CARE OF OUR COMMUNITY
Launched 1-hour or less delivery in Toronto,
soon Montreal
Footprint of 13 purpose-built facilities
Made strong progress on strategy of building
distributed network of centralized manufacturing
and distribution to feed localized, fast fulfilment
centre
Continued automation investment with Ottawa
automated fulfilment centre
Provided meals to frontline healthcare workers
across the country and raised funds for the
Breakfast Club of Canada
Goodfood partnered with CIBC to provide
frontline healthcare workers with 100,000 meals
through the initiative, called “Plate it Forward”
Hired an ESG consultant to assist in conducting
a materiality assessment of its ESG priorities
Launched compostable food packaging
for select products and first to use electric
refrigerated fleet in Canada
MESSAGE TO
SHAREHOLDERS
This year has been marked by continued growth for Goodfood.
Our subscriber and active customer base reached new records
driving a 33% growth in our net sales and 34% in our gross
profit. Beyond the record financial performance in fiscal 2021,
our business has continued to positively evolve. Our strategy of
building an on-demand fulfilment network allowing Canadians
to quickly receive their grocery and meal solutions baskets has
taken significant steps forward with our offering surpassing
the 1,000-product mark, serviced through 13 coast-to-coast
manufacturing, distribution, and fulfillment facilities, with orders
orchestrated with a revamped technology backbone. During
2021, our customers in Toronto, Montreal and Vancouver began
enjoying same-day delivery service through our Goodfood WOW
offering, and we are pleased to have launched in November
2021 our 1-hour or less grocery, ready-to-cook, and ready-to-
eat, fulfilment service in Toronto and soon Montreal – a truly
disruptive online grocery offering. Combined with a bigger
selection and faster delivery times, this represents an important
step in further digitizing Canada’s grocery consumption. And this
is only the beginning.
As we embark in the eighth year of the Goodfood journey, we
will continue to build-out more aisles of our digital grocery
store and bring further innovation to our meal solutions offering,
continuing to work tirelessly to successfully bring online a more
complete grocery and meal solutions basket, and a seamless
shopping experience to customers. Canadians are in the process
of testing on-demand grocery and meal solutions delivery and
choosing their preferred brands, and we are well-positioned to
provide them with the best on-demand value proposition.
MESSAGE TO
SHAREHOLDERS
THE (R)EVOLUTION BEGAN THIS YEAR…
At the start of the year, our nascent grocery selection offered customers approximately 400
products – it now boasts over 1,000 delicious Goodfood products. The evolution of Goodfood was
truly in full swing this year as we transitioned from a meal kit business to an online grocer and meal
solutions provider. We will continue this transition and focus on three key execution pillars:
SELECTION
SPEED
TECHNOLOGY
Our vision of the Canadian consumer
grocery basket is simple, shoppers
want to purchase the products that
allow them to answer the question
“what will we eat this week”.
Our selection of grocery, ready-to-
cook and ready-to-eat products can
answer all meal occasions on a given
week. We have made tremendous
progress on that front with the
introduction of over 600 new
grocery products, 10-minute meal
kits, and ready-to-eat meal solutions
now prepared in our kitchens. Over
the coming year and beyond, we
will continue to build our selection
to answer that question better and
better.
To continue pushing the digitization
of the grocery, it is imperative to
offer customers an experience
that rivals traditional grocery in the
speed Canadians can complete
their basket and have it in their
homes. For that reason, we have
invested significantly in and begun
setting up a distributed network
of facilities in which centralized
meal solutions manufacturing
and grocery distribution will feed
local fulfilment centres that will
efficiently and rapidly turn around
orders to customers. This network
will support our on-demand delivery
strategy and this year, it had enabled
the launch of Goodfood WOW,
our same-day delivery offering, in
Montreal, Toronto and Vancouver.
The delivery times through WOW
have also been tightened from an
11.30am cut-off for an 8pm delivery
to a 2pm cut-off for a 6pm delivery.
The orchestration of orders within
an hour or less is no simple feat. In
2021, we have invested heavily in
people and tools that have built
the technology to enable the
increasing selection and faster
delivery times to come together.
We have revamped the technology
backbone of Goodfood to develop
and incorporate all the components
that allow our
front-end customer-facing platform
to integrate with our optimized
last-mile logistics, fulfilment
operation and increasingly
complex supply chain.
MESSAGE TO
SHAREHOLDERS
…AND WILL CONTINUE IN 2022 WITH THE LAUNCH
OF ON-DEMAND DELIVERY
When we began our adventure seven years ago, our vision was
to build a leading online grocer that could make our lives and
the lives of millions of Canadians simpler, better. Seven years
on, we remain fully committed to that vision and to making the
investments to further crystallize what we accomplished thus
far and expand our market share. We are excited by the growth
we have seen in 2021 across all our growth drivers and our focus
remains on relentlessly improving customers’ lives as we move
further forward with our transition from one aisle of the grocery
store (meal kits) to building all the aisles Canadians need and
deliver to them faster in 2022.
With the recent launch of 1-hour or less delivery of all our product
categories in Toronto and soon Montreal, we are well on our way
to providing a viable on-demand alternative to brick-and-mortar
grocery shopping. As Fiscal 2022 unfolds, we will look to further
expand our product offering as well as broaden the availability of
on-demand deliveries in key urban areas across the country.
In the coming year, our technology will also continue to evolve
as we will focus on making our shopping experience even
more seamless through faster website performance and, more
importantly, an open platform where customers can shop without
a subscription.
Through selection, speed and technology, our revolution of the
Canadian grocery has truly begun.
MESSAGE TO
SHAREHOLDERS
THE BEST IS YET TO COME
Fiscal 2021 has been a tremendously successful transition year
for Goodfood and its shareholders. The milestones reached this
year are crucial in our journey, be it the 33% revenue growth, the
295% grocery sales growth, the gross margin improvement, or
the selection surpassing 1,000 products, all our accomplishments
this year have put us on the right path to online grocery and meal
solutions leadership in Canada.
As Canadians, we are also very pleased to see Canada achieving
an 88% vaccination rate for COVID-19. The pent-up demand
for restaurant dining, hospitality and travel expressed itself
throughout the summer and despite that, our business has shown
significant resilience, with revenues only declining 5% when
compared to 2020, a year in which the normal seasonal trends
of our business were muted due to the significant COVID-19
restrictions in place at the time. Despite the expected choppiness
in demand levels and the labour cost inflation absorbed in the
fourth quarter, we still achieved record gross margin this fiscal
year.
Our achievements have translated in significant shareholder value
creation, with the Goodfood stock jumping 44% this year (1) and
being selected on the TSX30 list for the second year in a row. We
are also proud to have made the top 3 in the Financial Times list
of fastest growing companies in the Americas. It undoubtedly has
been a good year. But the best is yet to come.
(1) Represents share price return from close on August 31, 2020 ($6.81) to close on August 31, 2021 ($9.84)
MESSAGE TO
SHAREHOLDERS
In Fiscal 2022 and beyond, the revolution will continue as we
launch our next phase of initiatives. We have recently launched
a 1-hour or less delivery service available in Toronto and in short
order Montreal, supplementing WOW same-day deliveries in
the broader Greater Toronto and Montreal areas, enabled by our
investments in a distributed network infrastructure. Through
local fulfilment centres fed by centralized manufacturing and
distribution centres, our customers now have access faster than
ever to ready-to-cook, ready-to-eat and grocery products. Over
the course of the year and next year, investments in these centres
will support the launch of shorter delivery times of a bigger
selection from cost to coast. What is more, our website will also
soon be open to all Canadians who wish to purchase groceries
online without requiring a subscription, a truly game-changing
step in opening our business to 38 million Canadians.
As the $142 billion grocery industry (2) continues to shift online, we
are tremendously excited by the simple fact that each 1% shift
online represents a $1.4 billion opportunity for Goodfood. We have
begun laying the foundation to capture that shift through our
execution pillars: selection, speed, and technology. With these
pillars beginning to take shape, we believe to be in an excellent
position to continuing growing through our three growth vectors:
ready-to-cook meal kits, ready-to-eat meal solutions and private
label and branded grocery products. By putting together the
right selection with on-demand delivery speed and a seamless
shopping experience, we will look to acquire more customers, and
entice them to purchase bigger baskets, more often.
(2) Statista, July 2021, “Retail sales of food and beverage in Canada”
MESSAGE TO
SHAREHOLDERS
AGAIN, MOST IMPORTANTLY
Having reached a workforce of nearly 3,200 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 for your hard
work and your steadfast trust in our strategy.
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. We are thrilled to
have rewarded your confidence in our strategy with strong returns
and will constantly work to continue doing so.
When we created Goodfood, we envisioned improving the
experience of Canadian grocery shoppers and our goal to be
in every kitchen, every day, has been accelerated in the past 18
months. As we continue to build towards that ambitious goal,
it is with great pride that we share with you our Fiscal year 2021
financial results.
Jonathan Ferrari
Co-Founder, Chairman
of the Board and CEO
Neil Cuggy
Co-Founder, Director,
President and COO
BOARD OF
DIRECTORS
JONATHAN FERRARI
Co-Founder, Chairman
of the Board and CEO
NEIL CUGGY
Co-Founder, Director,
President and COO
HAMNETT HILL
Director
DONALD OLDS
Director
TERRY YANOFSKY
Director
FRANÇOIS VIMARD
Director
MANAGEMENT’S
DISCUSSION
AND ANALYSIS
YEAR ENDED AUGUST 31, 2021
TABLE OF CONTENTS
BASIS OF PRESENTATION .................................................................................................................. 15
FORWARD-LOOKING STATEMENTS ................................................................................................ 15
METRICS AND NON-IFRS FINANCIAL MEASURES ....................................................................... 16
COMPANY OVERVIEW .......................................................................................................................... 17
FINANCIAL OUTLOOK ........................................................................................................................... 18
FISCAL 2021 HIGHLIGHTS ................................................................................................................... 19
SELECTED ANNUAL FINANCIAL INFORMATION ........................................................................... 23
METRICS AND NON-IFRS FINANCIAL MEASURES - RECONCILIATION .................................. 23
RESULTS OF OPERATIONS – FISCAL 2021 AND FISCAL 2020 ................................................. 25
RESULTS OF OPERATIONS – THREE-MONTH PERIODS ENDED AUGUST 31, 2021 AND
2020 ............................................................................................................................................................ 26
TRENDS AND SEASONALITY .............................................................................................................. 27
FINANCIAL POSITION ........................................................................................................................... 27
LIQUIDITY AND CAPITAL RESOURCES ........................................................................................... 28
SELECTED QUARTERLY FINANCIAL INFORMATION ................................................................... 31
FINANCIAL RISK MANAGEMENT........................................................................................................ 32
BUSINESS RISK ...................................................................................................................................... 33
ADDITIONAL FINANCING REQUIREMENTS .................................................................................... 33
OFF-BALANCE SHEET ARRANGEMENTS AND MATURITY ANALYSIS OF CONTRACTUAL
OBLIGATIONS ......................................................................................................................................... 33
FINANCIAL INSTRUMENTS .................................................................................................................. 34
RELATED PARTIES ................................................................................................................................ 34
SHARE-BASED PAYMENTS ................................................................................................................. 34
OUTSTANDING SHARE DATA ............................................................................................................. 35
USE OF PROCEEDS FROM PUBLIC OFFERINGS ......................................................................... 35
SEGMENT REPORTING ........................................................................................................................ 36
DIVIDEND POLICY .................................................................................................................................. 36
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS .................. 37
CHANGES IN ACCOUNTING POLICIES ............................................................................................ 38
DISCLOSURE CONTROLS AND PROCEDURES AND
INTERNAL CONTROL OVER
FINANCIAL REPORTING ....................................................................................................................... 39
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BASIS OF PRESENTATION
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 subsidiaries (the “Company” or “Goodfood”) for the
years ended August 31, 2021 and 2020 and should be read in conjunction with our audited annual
consolidated financial statements and the accompanying notes for the year ended August 31, 2021 and
2020. Please also refer to Goodfood’s press release announcing its results for year ended August 31, 2021
issued on November 17, 2021. 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 annual audited 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 2021 and to Fiscal 2020 are to the fiscal years ended August 31, 2021, and August 31, 2020,
respectively.
The information in this MD&A is current to November 17, 2021, unless otherwise noted.
In this MD&A, references to “we”, “our”, “Goodfood” or the “Company” refer to Goodfood Market Corp. and
its wholly owned subsidiaries (including Yumm Meal Solutions Corp., Goodfood Québec Inc., Goodfood
Ontario Inc., Goodfood AB Inc., and Goodfood BC Inc.).
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.
The Company implemented the April 2021’s International Financial Reporting Interpretations Committee
(“IFRIC”) agenda decision which clarified the accounting for configuration and customization in a cloud
computing arrangement. As a result of this decision, the Company changed its accounting policy for costs
incurred on cloud computing arrangements with retrospective application. Comparative figures for each
period have been restated to reflect this amendment. The adjustments to our consolidated financial
statements are discussed further in the “Changes in accounting policies” section of this MD&A.
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 trends, current condition 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, 2021
available on SEDAR at www.sedar.com: limited operating history, negative operating cash flow, food
industry, COVID-19 pandemic as well as the impact of the vaccine rollout, quality control and health
15 | P a g e
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, failure to attract or retain key employees which may impact the
Company’s ability to effectively operate and meet its financial goals, factors which may prevent realization
of growth targets, inability to effectively react to changing consumer trends, competition, availability and
quality of raw materials, environmental and employee health and safety regulations, the inability of the
Company’s IT infrastructure to support the requirements of the Company’s business, online security
breaches, disruptions and denial of service attacks, 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. This is not an exhaustive list of risks that may affect the
Company’s forward-looking statements. Other risks not presently known to the Company or that the
Company believes are not significant could also cause actual results to differ materially from those
expressed in its forward-looking statements. Although the forward-looking information contained herein is
based upon what we believe are reasonable assumptions, 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 in relation to developments
regarding the duration and severity of the COVID-19 pandemic as well as the impact of the vaccine rollout
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.
METRICS AND NON-IFRS FINANCIAL MEASURES
The table below defines metrics and non-IFRS financial measures used by the Company throughout this
MD&A. Non-IFRS financial measures do not have standardized 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 consolidated financial statements for the periods indicated.
In addition, in the fourth quarter of Fiscal 2021, the Company added a new metric called active customers
to track customers that have placed an order within the last three months. As the Company builds out its
on-demand fulfillment network, opens up its digital store platform to non-subscribers allowing for multiple
type of customers and as the grocery and ready-to-eat offering of the Company grows, the active customers
metric is a key performance indicator that is better correlated to the Company’s performance. In Fiscal
2022, the Company plans to transition to only reporting active customers and discontinuing its use of active
subscribers as a metric.
16 | P a g e
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
Active
customers
EBITDA,
Adjusted
EBITDA
&
Adjusted
EBITDA
margin
Definitions
An active subscriber is 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 the active subscribers metric 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 the active subscribers metric is a useful metric for investors
because it is indicative of potential future net sales. The Company reports the number
of active subscribers at the beginning and end of the period, rounded to the nearest
thousand.
An active customer is a customer that has placed an order within the last three months.
For greater certainty, an active customer is only accounted for once, although different
products and multiple orders might have been purchased within a quarter. While the
active customers metric 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 the active customers metric is a
useful metric for investors because it is indicative of potential future net sales. The
Company reports the number of active customers 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 expense and reorganization costs. Adjusted EBITDA margin is
defined as the percentage of adjusted EBITDA to net sales. 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 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.
COMPANY OVERVIEW
WHO WE ARE AND OUR VISION
Goodfood (TSX: FOOD) is a leading online grocery company in Canada, delivering fresh meal solutions
and grocery items that make it easy for customers from across Canada to enjoy delicious meals at home
every day. Goodfood’s vision is to be in every kitchen every day by enabling customers to complete their
grocery shopping and meal planning in minutes. Goodfood customers have access to a unique selection
of online products as well as exclusive pricing made possible by its direct-to-consumer infrastructures and
technology that eliminate food waste and costly retail overhead.
OUR OPERATIONS
The Company’s main production facility and administrative offices are based in Montreal, Québec, with
additional locations in the provinces of Québec, Ontario, Alberta, and British Columbia. Additional facilities
located in the provinces of Ontario and Québec are currently under construction.
17 | P a g e
The following table provides a summary of our locations, including facilities not yet open but for which a
lease was signed, as at August 31, 2021:
Total number
of locations
Administrative
offices
Distribution and
fulfillment centers
Manufacturing
facilities
Greater Montreal Area
(Quebec)
Ottawa (Ontario)
Greater Toronto Area
(Ontario)
Calgary (Alberta)
Vancouver (British
Columbia)
FINANCIAL OUTLOOK
6
1
5
1
1
X
X
X
X
X
X
X
X
X
X
X
The online grocery industry is among the fastest growing industries. In particular, across the globe, we have
observed that fast delivery of groceries provides a unique value proposition to customers that drives online
grocery penetration. As a result, Goodfood believes that there are significant opportunities to rapidly grow
its customer base and basket size by continuing to expand its national platform through capacity expansion
with additional locations and investment in automation to improve the speed of servicing customers,
increasing its product offering and investing in highly targeted marketing campaigns.
Goodfood's strategy in part involves delaying short-term profitability through the investment of capital in
people, processes, marketing driving online grocery penetration, and technology with the goal of generating
long-term shareholder value creation through ultimately leveraging its cost structure to achieve long-term
margin and profitability goals. Growing Goodfood's market share, scale, on-demand delivery capabilities
and product offering will allow the Company to deliver greater value to its customers while attaining
attractive returns on invested capital. As the Company continues to grow, 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 Company expects that Fiscal 2022 will be the year in which its multi-year effort of preparing for the
launch of on-demand grocery and meal-solution offering, supported by an optimized digital store platform
is realized. Over the past two years, Goodfood’s cost structure has included a growing and material amount
of operating expenses related to this initiative, and when coupled with a subscriber-centric ready-to-cook
revenue base that has not yet benefited from the additional revenue stream that an on-demand meal
solution and grocery offering can generate, net loss and Adjusted EBITDA1 have been materiality negatively
impacted. In 2022, the Company expects investments to continue and to open on-demand fulfillment
centers that can support significant incremental net sales. This will begin with the recent completion of
construction at our Vancouver facility, followed by the recently announced launch of one-hour or less meal-
solution and grocery deliveries out of our new Toronto facility to be followed in short-order by a similar
facility in Montreal, in addition to our automated local fulfilment centre in Ottawa which will begin delivering
orders early in the new calendar year, as well as additional facilities in key urban areas throughout Fiscal
2022. In addition, in Fiscal 2022, we expect an improved cost structure through realized efficiencies, further
aligning it with our on-demand one-hour grocery initiative, and we expect progressive improvement in
profitability throughout the year.
The COVID-19 pandemic has had an impact on Goodfood’s overall business and operations and it expects
that Fiscal 2022 will continue to be affected by the COVID-19 pandemic. As an essential service in Canada,
Goodfood has been operating throughout the pandemic and implemented increased safety protocols at its
locations to ensure the safety of its employees. The Company experienced an acceleration of growth in
demand. 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
1 Please refer to the "Metrics and Non-IFRS Financial Measures" section of this MD&A for corresponding definitions.
18 | P a g e
changes to Goodfood’s industry regulatory framework. Goodfood may experience a slow down in demand
due to relaxation of lock-down restrictions and the increased vaccine coverage. The magnitude, duration,
and severity of the COVID-19 pandemic as well as the impact of the vaccine rollout are difficult to predict
and could affect the significant estimates and judgements used in the preparation of the Company’s annual
consolidated financial statements. 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.
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.
FISCAL 2021 HIGHLIGHTS
This section provides a summary of our financial performance for the fiscal year ended and the three-month
period ended August 31, 2021 compared to the same periods in 2020. We present metrics and measures
to help investors better understand our performance, including certain metrics and measures which are not
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. 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.
HIGHLIGHTS OF FISCAL 2021 COMPARED TO FISCAL 2020
• Net sales reached $379.2 million, an increase of $93.9 million, or 33% year-over-year.
• Gross margin reached 30.6%, an improvement of 0.3 percentage points and gross profit reached
$116.1 million, an increase of $29.7 million, or 34% year-over-year.
• Net loss was $31.8 million compared to $5.3 million last year. Net loss includes the impact of the change
in accounting policy for costs relating to cloud computing arrangements due to the IFRIC decision
agenda of $1.4 million compared to $1.2 million last year.
• Adjusted EBITDA margin (1) was negative 4.0%, a decrease of 5.2 percentage points year-over-year.
• Cash flows used in operating activities totalled $16.4 million compared to cash flows provided by
operating activities of $7.2 million in the same period last year.
• The Company reported a cash balance (2) of $125.5 million as at August 31, 2021, an increase of
$18.6 million compared to the same period last year.
For the year-ended
Key Performance Indicator
Active subscribers (1)
Active customers (1)
August 31, 2021
August 31, 2020
(∆ %)
298,000
249,000
280,000
278,000
6%
(10)%
(in thousands of Canadian dollars, except percentage information)
Results of Operations
Net sales
Gross profit
Gross margin
Net loss
Adjusted EBITDA (1)
Adjusted EBITDA margin (1)
Financial Position and Cash Flows
$ 379,234
$ 116,094
30.6%
(31,792)
(15,306)
(4.0)%
$
$
$
$
$
$
285,372
86,419
30.3%
(5,341)
3,306
1.2%
33%
34%
0.3 p.p.
N/A
N/A
(5.2) p.p.
Cash, cash equivalents and restricted cash (2)
Cash flows (used in) provided by operating activities
17%
N/A
(1) Please refer to the "Metrics and Non-IFRS Financial Measures" section of this MD&A for corresponding definitions.
(2) Cash balance as at August 31, 2021 includes cash and cash equivalents. Cash balance as at August 31, 2020
includes cash, cash equivalents and restricted cash.
$ 125,535
(16,358)
106,902
7,186
$
19 | P a g e
HIGHLIGHTS OF THE FOURTH QUARTER OF 2021 COMPARED TO THE FOURTH QUARTER OF
2020
• Net sales were $79.4 million, a decrease of $4.3 million, or 5% compared to the same quarter last year.
• Gross margin totalled 22.9%, a decrease of 9.9 percentage points and gross profit of $18.2 million
decreased by $9.3 million or 34%.
• Net loss was $22.1 million compared to a net income of $1.2 million in the same period in 2020. Net loss
includes the impact of the change in accounting policy for costs relating to cloud computing
arrangements due to the IFRIC decision agenda of $0.4 million compared to $0.4 million last year.
• Adjusted EBITDA margin (1) was negative 22.4%, a decrease of 28.2 percentage points compared to
the same quarter last year.
• Cash flows used in operating activities totalled $23.7 million compared to cash flows provided by
operating activities of $2.0 million in the same period last year.
For the three-month periods ended
August 31, 2021
August 31, 2020
(∆ %)
Key Performance Indicator
Active subscribers (1)
Active customers (1)
(in thousands of Canadian dollars, except percentage information)
298,000
249,000
280,000
278,000
6%
(10)%
Results of Operations
Net sales
Gross profit
Gross margin
Net (loss) income
Adjusted EBITDA (1)
Adjusted EBITDA margin (1)
$
$
$
$
79,358
18,153
22.9%
(22,123)
(17,739)
(22.4)%
$ 83,691
$ 27,474
32.8%
1,225
4,839
(5)%
(34)%
(9.9) p.p.
N/A
N/A
5.8% (28.2) p.p.
$
$
Financial Position and Cash Flows
Cash, cash equivalents and restricted cash (2)
Cash flows (used in) provided by operating activities
$ 125,535
(23,726)
$ 106,902
1,999
17%
N/A
(1) Please refer to the "Metrics and Non-IFRS Financial Measures" section of this MD&A for corresponding definitions.
(2) Cash balance as at August 31, 2021 includes cash and cash equivalents. Cash balance as at August 31, 2020
includes cash, cash equivalents and restricted cash.
KEY HIGHLIGHTS OF FISCAL 2021 AND SUBSEQUENT EVENTS
1-hour delivery
In November 2021, the Company launched an even faster delivery option in certain areas of Toronto, being
a “1-hour or less” delivery option for grocery, ready-to-cook and ready-to-eat meal products. Throughout
the month of November, we will be introducing the 1-hour or less delivery to other neighbourhoods in
Toronto and Montreal. Our world class infrastructure and continued investment in technology, staffing and
fulfillment facilities is a key success factor to this initiative.
Private Label Grocery Products
During the year ended August 31, 2021, the Company further expanded its private label grocery products
across Canada, with approximately 1,000 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, frozen and kitchen essentials.
20 | P a g e
Change in fiscal year-end
In September 2021, the Company changed its fiscal year-end from a fixed year-end ending August 31 of
each year to a floating year-end ending on the first Saturday of September of each year in order to align
the Company's year-end with that of comparative companies. As a result, the Company will follow a 52-
week reporting cycle but will include a 53rd week every five to six years. For Fiscal 2022, the first quarter
will end on December 4, 2021 and the year-end will be September 3, 2022. For Fiscal 2022, we will have
3 additional days compared to Fiscal 2021.
Recognized on the 2021 TSX30 for a second year in a row
In September 2021, the Company announced that it was included in the Toronto Stock Exchange’s TSX30
for a second year in a row, a flagship program recognizing the 30 top-performing TSX stocks over a three-
year period based on share price appreciation. It is an acknowledgement of the value Goodfood has created
for shareholders through the strong growth and financial performance of the Company.
First Automated Fulfillment Center
In June 2021, the Company announced a leased facility in Ottawa, scheduled to open in the winter of 2021,
that will be its first tech-enabled fulfillment center with automation capabilities to deliver over 4,000 products
on a same-day or faster basis.
Departure and Appointment of its Chief Technology Officer
In May 2021, the Company announced the departure of Raghu Mocharla, its Chief Technology Officer,
effective July 1, 2021. In September 2021, the Company announced the appointment of Bipasha Chiu as
its new Chief Technology Officer. Bipasha is an experienced technology transformation and delivery
executive focused in retail and digital commerce that will help continue building our technology platform.
CIBC and Goodfood team up to support frontline healthcare heroes with 100,000 meals
In May 2021, Goodfood and CIBC announced an initiative in appreciation of Canada’s frontline healthcare
to deliver 100,000 meals to hospitals in cities and communities across Canada for healthcare workers to
take home, which commenced on International Nurses Day over a four-week period.
Equity Issuance
In February 2021, the Company completed a bought deal public offering with a syndicate of underwriters
and issued 4.8 million common shares for gross proceeds of $60 million.
Departure and Appointment of its Chief Financial Officer
In January 2021, the Company announced the departure of Philippe Adam, its Chief Financial Officer,
effective on April 2, 2021. In May 2021, the Company announced the appointment of Jonathan Roiter as
its new Chief Financial Officer, effective June 7, 2021. Jonathan has over 25 years of experience in defining
and executing financial roadmaps while building and leading high-performing teams.
Refinancing of Credit Facility
On November 30, 2020, the Company entered into a new syndicated bank financing totaling $46 million,
including a term loan facility of $12.5 million, a revolving credit facility of $27.5 million and other short-term
financing of $6 million. On February 16, 2021, the Company increased the revolving credit by $15 million
for a total of $42.5 million, and the other short-term financing by an amount not to exceed $15 million, and
an additional lender was added to the syndicate. This increase brought the total available financing to
$70 million. The facilities feature flexible and improved financial conditions, including variable rates of
Bankers’ Acceptance (“BA”) plus 2.50%, and come to maturity in November 2023. The Company will use
the proceeds to fund the continued growth of the Company through capital and non-capital expenditures
21 | P a g e
focusing on automation as well as the expansion of the business, refinancing of existing credit facilities and
general corporate purposes.
Launch of Goodfood WOW
In October 2020, the Company announced the launch of its new unlimited same-day grocery delivery
service, Goodfood WOW, in the Greater Montréal Area. In February 2021, the Company launched it in the
Greater Toronto Area and in October 2021 in the Vancouver area. This new service is scheduled to expand
to other major Canadian cities over the next year. Goodfood WOW offers an even more flexible and
convenient online grocery experience, allowing customers 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, for a monthly subscription fee.
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.
Starting 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 net sales and continued throughout Fiscal 2021, with
subsequent waves of the COVID-19 pandemic across Canada. With relaxation of lock-down restrictions
and the increased vaccine coverage during the fourth quarter of fiscal 2021 combined with muted
seasonality impact due to the pandemic in the fourth quarter of 2020, Goodfood experienced a decrease in
the number of active subscribers in the last quarter of 2021 compared to prior quarters in 2020.
In Fiscal 2021, the Company incurred direct COVID-19 incremental costs of approximately $0.2 million and
$1.8 million for the three-month period and year ended August 31, 2021, respectively, consisting of
additional production costs and temporary agency premiums.
At the onset of the pandemic, precautionary measures were implemented at all of the Company’s
locations across Canada 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 locations, 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, 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 a team to ensure the health screening for employees and reinforce social distancing
measures inside and outside of all locations; and
The Company continues to follow precautionary measures at its locations in addition to its already rigorous
food safety standards to safeguard the health and safety of its employees as well as ensuring the quality
of its products to its customers.
22 | P a g e
SELECTED ANNUAL FINANCIAL INFORMATION
(In thousands of Canadian dollars)
As at
Financial position
Cash and cash equivalents and restricted cash
Fixed assets
Right-of-use assets
Total assets
Total debt (1)
Total lease obligations (2)
Total convertible debentures (3)
Shareholders’ equity
August 31,
2021
August 31,
2020
August 31,
2019
$
125,535
33,367
69,157
255,262
21,351
73,111
6,466
97,875
$
106,902
19,191
21,130
161,557
21,678
23,348
16,245
56,069
$
47,649
13,545
11,089
80,499
14,031
12,724
–
17,117
(1) Total debt consists of the line of credit and the current and non-current portion of long-term debt.
(2) Total lease obligations consist of the current and non-current portion.
(3) 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,
2021
2020
2019
Comprehensive loss
Net sales
Gross profit
Net loss, being comprehensive loss
Basic and diluted loss per share
Cash flows (used in) provided by:
Operating activities
Investing activities
Financing activities
$ 379,234
116,094
(31,792)
(0.45)
$ 285,372
86,419
(5,341)
(0.09)
$ 161,333
40,310
(21,221)
(0.38)
$
(16,358)
(18,012)
55,503
$
7,186
(8,051)
60,118
$
596
(6,955)
27,055
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,
2020
272,000
8,000
280,000
2021
317,000
(19,000)
298,000
For the years
ended August 31,
2020
200,000
80,000
280,000
2021
280,000
18,000
298,000
23 | P a g e
ACTIVE CUSTOMERS
Active customers, beginning of period
Net change in active customers
Active customers, end of period
For the three-month
periods ended August 31,
2020
285,000
(7,000)
278,000
2021
296,000
(47,000)
249,000
For the years
ended August 31,
2020
233,000
45,000
278,000
2021
278,000
(29,000)
249,000
EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
The reconciliation of net (loss) income to EBITDA, adjusted EBITDA and adjusted EBITDA margin is as
follows:
(In thousands of Canadian dollars, except percentage information)
Net (loss) income
Net finance costs
Depreciation and amortization
Deferred income tax expense (recovery)
EBITDA
Share-based payments expense
Reorganization costs
Adjusted EBITDA
Net sales
Adjusted EBITDA margin (%)
$
2021
$ (22,123)
524
2,176
97
For the three-month
periods ended August 31,
2020
1,225
911
1,759
526
4,421
418
–
4,839
$
$ 83,691
5.8%
$ (17,739)
$ 79,358
(22.4)%
$ (19,326)
1,587
–
$
For the years
ended August 31,
2020
(5,341)
2,380
5,197
(804)
1,432
1,874
–
3,306
285,372
1.2%
2021
(31,792) $
2,170
8,820
500
(20,302) $
4,857
139
(15,306) $
379,234 $
(4.0)%
$
$
$
$
For the three-month period ended August 31, 2021, adjusted EBITDA margin decreased by
28.2 percentage points compared to the corresponding period in 2020 mainly due to lower revenue base
resulting from relaxation of lock-down restrictions and the increased vaccine coverage in the fourth quarter
of 2021 combined with muted seasonality impact due to the pandemic in the fourth quarter of 2020. In
addition, lower adjusted EBITDA margin can be explained by higher wages and salaries as well as
marketing spend as a percentage of net sales resulting from the expansion of the management team,
including mainly our technology, operations management and marketing groups, and related administrative
functions needed to build out the physical and digital on-demand fulfillment infrastructure, including the
growing product offering required to support the Company’s growth plan.
For the year ended August 31, 2021, adjusted EBITDA margin decreased by 5.2 percentage points
compared to last year primarily due higher wages and salaries and marketing spend resulting from the
expansion of the management team and related administrative functions needed to build out the physical
and digital on-demand fulfillment infrastructure, including the growing product offering required to support
the Company’s growth plan. The decline was partially offset by the higher gross margin driven by a larger
revenue base, a decrease in incentives and credits as a percentage of net sales as well as a decrease in
shipping cost per order.
24 | P a g e
RESULTS OF OPERATIONS – FISCAL 2021 AND FISCAL 2020
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,
Net sales
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 expense (recovery)
Net loss, being comprehensive loss
Basic and diluted loss per share
$
$
$
2021
379,234
263,140
116,094
30.6%
136,396
8,820
2,170
(31,292)
500
(31,792)
(0.45)
$
$
2020
198,953
($)
$ 285,372 $ 93,862
64,187
86,419 $ 29,675
30.3%
N/A
84,987 $ 51,409
3,623
(210)
(25,147)
1,304
(5,341) $ (26,451)
(0.36)
5,197
2,380
(6,145)
(804)
(0.09) $
$
$
(%)
33%
32%
34%
0.3 p.p.
60%
70%
(9)%
N/A
N/A
N/A
N/A
VARIANCE ANALYSIS FOR FISCAL 2021 COMPARED TO FISCAL 2020
• The Company’s continued focus on its strategy to become Canada’s leading online grocer by increasing
its product offering and flexibility for customers through same day delivery impacted positively the
average basket size and order frequency which, combined with a larger subscriber base, resulted in
increased net sales. The decrease in incentives and credits as a percentage of net sales from 15.9%
to 10.9% also contributed to the increase in net sales.
• The increase in gross profit and gross margin resulted primarily from an increase in net sales as well
as a decrease in incentives and credits as a percentage of net sales, larger basket sizes and lower
fulfillment costs per order partially offset by an increase in production costs due to a higher production
labour cost. The decrease in fulfillment costs consists mainly of a decrease in shipping costs from an
increased density among the delivery zones as well as the expansion of our internal last-mile delivery
capabilities.
• The increase in selling, general and administrative expenses is primarily due to higher wages and
salaries resulting from the expansion of the management team and related administrative functions
needed to build out the physical and digital on-demand fulfillment infrastructure, including the growing
product offering required to support the Company’s growth plan as well as higher marketing spend
resulting from lower marketing spend in Fiscal 2020 due to COVID-19 positively impacting our net sales.
Selling, general and administrative expenses as a percentage of net sales increased from 29.8% to
36.0%.
• The increase in depreciation and amortization expense is mainly due to the recognition of right-of-use
assets from new facility lease agreements and lease modification agreements as well as related to
fixed assets additions mainly attributable to the redesign of facilities layouts as well as technology and
automation implementation as the Company continues to grow and expand its operations across
Canada.
• The deferred income tax expense relates to the conversion of convertible debentures into common
shares.
• The increase in net loss is explained principally by the increase in wages and salaries as well as the
marketing spend, partially offset by the increase in net sales and gross margin.
25 | P a g e
RESULTS OF OPERATIONS – THREE-MONTH PERIODS ENDED AUGUST 31, 2021 AND 2020
The following table sets forth the components of the Company’s consolidated statement of (loss) income
and comprehensive (loss) income:
(In thousands of Canadian dollars, except per share and percentage information)
2021
For the three-month periods ended August 31,
$ 79,358
Net sales
61,205
Cost of goods sold
$ 18,153
Gross profit
22.9%
Gross margin
$ 37,479
Selling, general and administrative expenses
2,176
Depreciation and amortization
524
Net finance costs
(22,026)
Net (loss) income before income taxes
Deferred income tax expense
97
Net (loss) income, being comprehensive (loss) income $ (22,123)
(0.30)
Basic and diluted (loss) earnings per share
$
2020
$ 83,691 $
56,217
$ 27,474 $
32.8%
$ 23,053 $
1,759
911
1,751
526
($)
(4,333)
4,988
(9,321)
N/A
14,426
417
(387)
(23,777)
(429)
1,225 $ (23,348)
(0.32)
0.02 $
$
$
(%)
(5)%
9%
(34)%
(9.9) p.p.
63%
24%
(42)%
N/A
(82)%
N/A
N/A
VARIANCE ANALYSIS FOR THE THREE-MONTH PERIOD ENDED AUGUST 31, 2021 COMPARED TO
THE THREE-MONTH PERIOD ENDED AUGUST 31, 2020
• Accelerated removal of lock-down restrictions and the increased vaccine coverage during the fourth
quarter of fiscal 2021 combined with muted seasonality impact due to the pandemic in the fourth quarter
of 2020 reduced consumer demand resulting in net sales decreasing compared to the same period last
year partially offset by a decrease in incentives and credits as a percentage of net sales from 12.1% to
7.4%.
• The decrease in gross profit and gross margin primarily resulted from a decrease in net sales leading to
operating de-leverage, including production, food and overhead costs. Higher production costs primarily
resulted from an increase in production and fulfillment labour due to inflationary increases in wages and
increases in supervisory and other non-direct labour. The increase in food costs was in part driven by
the expansion of our private label grocery offering. The higher overhead costs were mainly due to our
continued investment in people to support the Company’s growth plan.
• The increase in selling, general and administrative expenses is primarily due to higher wages and
salaries resulting from the expansion of the management team, including mainly our technology,
operations management and marketing groups, and related administrative functions needed to build out
the physical and digital on-demand fulfillment infrastructure, including the growing product offering
required to support the Company’s growth plan. The increase can also be explained by higher marketing
spend resulting from a temporary reduction of marketing spend last year due to the increased demand
during the pandemic. Selling, general and administrative expenses as a percentage of net sales
increased from 27.5% to 47.2%.
• The increase in depreciation and amortization expense is mainly due to the recognition of right-of-use
assets from new or amended facility lease agreements and related additions of leasehold improvements
as the Company continues to grow and expand its operations across Canada.
• The decrease in net finance costs is mainly due to the reduction in the outstanding debt for the
convertible debentures compared to same period last year due to conversion of debentures in FY2021.
• The deferred income tax expense is lower in the fourth quarter of 2021 due to a lower amount of
convertible debentures converted into common shares.
• The net loss in the fourth quarter of 2021 compared to net income in the comparable period of 2020 is
due to lower net sales and gross profit as well as higher wages and salaries and marketing spend.
26 | P a g e
TRENDS AND SEASONALITY
The Company’s net sales and expenses are impacted by seasonality. During the holiday and summer
seasons, the Company anticipates net sales to be lower as a higher proportion of customers elect to skip
their delivery. The Company generally anticipates the growth rate of active subscribers and the number of
active customers to be lower during these periods. While this is typically the case, the COVID-19 pandemic
as well as the impact of the vaccine rollout and changing government restrictions have had, and may
continue to have, an impact on this trend. Seasonality in the fourth quarter of Fiscal 2020 was muted due
to the pandemic. In Fiscal 2021, in light of the COVID-19 vaccine rollout as well as relaxation of lock-down
restrictions in the summer, seasonality trends returned in the fourth quarter of Fiscal 2021. 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 costs to be
positively affected due to improved availability during periods with warmer weather.
FINANCIAL POSITION
The following table provides the main variances in the Company’s consolidated statement of financial
position:
(In thousands of Canadian dollars)
As at
Cash, cash equivalents
and restricted cash
August 31,
2021
August 31,
2020
Variance Main components
$ 125,535
$ 106,902
$ 18,633
Inventories
14,318
6,962
7,356
Fixed assets
33,367
19,191
14,176
Right-of-use assets
69,157
21,130
48,027
Lease obligations,
including current portion
73,111
23,348
49,763
Common shares
170,094
97,801
72,293
Public offering completed in Q2 of
Fiscal 2021
Due to the Company’s continuous
expansion of its product offering of
grocery products and the ramp-up
of new facilities across Canada
Due to redesign and fit outs of
facilities and investments in
technology and automation to
support our growth
New locations across Canada due
to the Company’s continuous
expansion
New locations across Canada due
to the Company’s continuous
expansion
Due to the public offering, the
conversion of convertible
debentures and exercise of stock
options
27 | P a g e
LIQUIDITY AND CAPITAL RESOURCES
This section examines the Company’s capital structure, sources of liquidity and various financial
instruments, including its debt instruments.
CAPITAL STRUCTURE
(In thousands of Canadian dollars, except percentage information)
As at
Cash, cash equivalents and restricted cash (1)
Long-term debt, including line of credit and current portion
Convertible debentures, liability component
Total debt
Total shareholders’ equity
Total capitalization
Total cash (1), net of debt
Total cash (1), net of debt to total capitalization
August 31,
2021
$ 125,535
21,351
5,623
26,974
97,875
$ 124,849
98,561
$
78.9%
$
August 31,
2020
106,902
21,678
14,194
35,872
56,069
91,941
71,030
77.3%
$
$
$
$
(1) Cash balance as at August 31, 2021
includes cash and cash equivalents. Cash balance as at
August 31, 2020 includes cash, cash equivalents and restricted cash.
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 structure.
CASH FLOWS
A summary of net cash flows by activity for the fiscal years ended August 31 is presented below:
(In thousands of Canadian dollars)
For the years ended August 31,
Cash flows (used in) provided by operations,
excluding change in non-cash operating working
capital
Change in non-cash operating working capital
Net cash flows (used in) provided by operating
activities
Net cash flows used in investing activities
Net cash flows provided by financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
2021
2020
Variance
$
(16,344) $ 2,786
4,400
(14)
$
(16,358) $ 7,186
(8,051)
(18,012)
60,118
55,503
$ 59,253
21,133
45,149
104,402
$ 104,402
$ 125,535
$
$
$
$
$
$
(19,130)
(4,414)
(23,544)
(9,961)
(4,615)
(38,120)
59,253
21,133
Net cash flows used in operating activities were $16.4 million for the year ended August 31, 2021 compared
to net cash flows provided by operating activities of $7.2 million in the comparable period of 2020. This is a
year-over-year negative variance of $23.5 million which is primarily due to the increase in net loss before
non-cash expenses recorded for the year and an unfavourable variance in non-cash operating working
capital mainly due to an increase in inventory to support its online grocery delivery.
Net cash flows used in investing activities increased by $10.0 million for the year ended August 31, 2021
compared to the same period last year primarily due to higher fixed assets additions and deposits mainly
attributable to the redesign and fit outs of facilities as well as technology and automation implementation.
28 | P a g e
Net cash flows provided by financing activities decreased by $4.6 million for the year ended August 31,
2021 compared to the same period last year primarily due to the Company’s lower financing activities
related to its credit facilities compared to Fiscal 2020.
A summary of net cash flows by activity for the three-month periods ended August 31 is presented below:
(In thousands of Canadian dollars)
2021
2020
Variance
For the three-month periods ended August 31,
Cash flows (used in) provided by operations,
excluding change in
non-cash operating working capital
Change in non-cash operating working capital
Net cash flows (used in) provided by operating activities $
Net cash flows used in investing activities
Net cash flows (used in) provided by financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
$
$
(17,614) $ 4,881
$
(2,882) $
(7,709)
(142)
(6,112)
(23,726) $ 1,999
(2,373)
26,789
(31,577) $ 26,415
77,987
157,112
$ 104,402
$ 125,535
(22,495)
(3,230)
$ (25,725)
(5,336)
(26,931)
$ (57,992)
79,125
$ 21,133
Net cash flows used in operating activities were $23.7 million for the fourth quarter ended August 31, 2021
compared to net cash flows provided by operating activities of $2.0 million in the comparable period of
2020. This year-over-year negative variance of $25.7 million is primarily due to the net loss before non-
cash expenses recorded as well as an unfavourable variance in change in non-cash operating working
capital mainly explained by higher accounts and other receivables and lower accounts payable and accrued
liabilities.
Net cash flows used in investing activities increased by $5.3 million for the fourth quarter ended August 31,
2021 compared to the same period last year primarily due to higher fixed assets additions mainly
attributable to the redesign and fit outs of facilities as well as automation implementation.
Net cash flows used in financing activities were $0.1 million in the fourth quarter of 2021 compared to net
cash flows provided by financing activities of $26.8 million in the comparable period of 2020. This year-
over-year negative variance of $26.9 million was primarily due to the net proceeds resulting from the public
issuance of common shares in 2020.
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)
2021
$ 125,535
–
$ 125,535
2020
$ 104,402
2,500
$ 106,902
(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
Credit Facility 2021
During the first quarter ended November 30, 2020, the Company entered into a syndicated credit agreement
totaling $46 million, including a term loan of $12.5 million, a revolving facility of $27.5 million and $6 million
in other short-term financing ("Credit Facility 2021"). During the second quarter ended February 28, 2021,
the Company increased the revolving facility by $15 million for a total of $42.5 million, and the other short-
term financing by an amount not to exceed $15 million, and an additional lender was added to the syndicate.
This increase brought the total available financing to $70 million. The Credit Facility 2021 is secured by a
first-ranking hypothec on all of the Company’s movable and immovable assets. The facilities bear variable
interest rates of BA plus 2.50% and mature in November 2023. The term loan is repayable in four quarterly
installments of $156 thousand beginning on November 30, 2021 and increasing to four quarterly
29 | P a g e
installments of $313 thousand on November 30, 2022 with a bullet repayment of the balance of $10.6 million
at the end of the term in November 2023.
As at August 31, 2021, Goodfood had outstanding
(2020 – $0.9 million) which reduced the availability on the revolving facility.
letters of credit
totalling $1.2 million
As at August 31, 2021, $9.1 million of the revolving facility was drawn. It matures in November 2023 and is
presented as a non-current liability. A balance of $33.4 million was undrawn and $32.2 million was available
as at August 31, 2021.
The Credit Facility 2021 does not include a collateral requirement and the restricted cash required under
the Credit Facility 2019 was released and reclassified to cash and cash equivalents during the first quarter
ended November 30, 2020. As at August 31, 2021, the Company was in compliance with all covenants
under the credit agreement governing the Credit Facility 2021.
As at August 31, 2021, the Company allocated $14.6 million (2020 – $7.3 million) to corporate credit cards
to be used for business purposes of the other short-term financing amount for an aggregate amount of 15
million. Amounts owing with respect to credit cards are included in accounts payable and accrued liabilities.
Credit Facility 2019
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 (“Credit Facility 2019”). The Credit Facility 2019 was secured by a first-ranking
hypothec on all of the Company’s movable and immovable assets. The proceeds were 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, $12.5 million of the term loans were disbursed, bearing variable interest at CDOR
thousand and
plus 2.50%. The
$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.
loans were repayable
installments of $31
in quarterly
term
As at August 31, 2020, $9.1 million of the revolving line of credit was drawn. The revolving line of credit
was repayable on demand and was presented as a current liability.
The Credit Facility 2019 included a collateral requirement of $2.5 million placed in a restricted cash account.
As at August 31, 2020, the Company was in compliance with all covenants under the Credit Facility 2019.
The Credit Facility 2019 was repaid in full as at November 30, 2020.
INTEREST RATE SWAP
As at August 31, 2021, Goodfood has one swap agreement in place whereby the Company fixed the interest
rate on a notional amount of $10.9 million until November 2021.
CONVERTIBLE DEBENTURES
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.
During the year ended August 31, 2021, 11,284 Debentures (2020 – 11,864) were converted into common
shares of the Company, resulting in the issuance of 2,400,819 (2020 – 2,524,242) common shares and the
Company reclassified $9.0 million (2020 - $9.3 million) and $1.9 million (2020 - $2.0 million), respectively
30 | P a g e
from the convertible debentures liability to common shares and from the equity component of the convertible
debentures to common shares. As at August 31, 2021, 6,852 Debentures were outstanding (2020 – 18,136
Debentures).
COMMON SHARES
Significant equity transactions that took place in Fiscal 2021 were as follows:
•
In connection with the public offering completed February 24, 2021, the Company issued
4,800,000 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;
• 1,182,693 stock options were exercised, respectively, for the same number of common shares; and
• 11,284 Debentures were converted into 2,400,819 common shares.
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, active customers and per share and percentage
information)
Active subscribers
Active customers
Net sales
Gross margin
Net (loss) income
Net finance costs
Depreciation and
amortization
Deferred income tax
expense (recovery)
Share-based
payments
Reorganization costs
Adjusted EBITDA (1)
Adjusted EBITDA
margin (1)
Basic and diluted
(loss) earnings per
share (2)
Q3
317,000
296,000
Q4
298,000
249,000
Fiscal 2020
Q1
246,000 230,000
227,000 233,000
$ 79,358 $ 107,795 $ 100,654 $ 91,427 $ 83,691 $ 86,600 $ 58,790 $ 56,291
30.3% 28.8%
2,894 $ (3,448) $ (6,012)
97
1,154
(4,253) $ (3,083) $ 1,225 $
675
Fiscal 2021
Q1
306,000
290,000
$ (22,123) $ (2,333) $
431
Q3
272,000
285,000
Q4
280,000
278,000
Q2
319,000
306,000
22.9%
30.4%
28.8%
32.8%
32.3%
35.0%
218
524
911
540
Q2
2,176
2,318
2,293
2,033
1,759
1,421
1,024
993
97
1,587
–
61
869
–
$ (17,739) $ 1,346 $
129
1,404
139
252 $
213
997
–
526
418
–
835 $ 4,839 $
–
(1,330)
–
560
–
411
–
6,029 $ (3,051) $ (4,511)
485
–
(22.4)%
1.2%
0.3%
0.9%
5.8%
7.0%
(5.2)%
(8.0)%
(0.30)
(0.04)
(0.06)
(0.05)
0.02
0.05
(0.06)
(0.10)
(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 (loss) earnings per share on a quarterly basis may not equal basic and diluted loss
per share on a year-to-date basis due to rounding.
Quarterly net sales have increased since the first quarter of Fiscal 2020 principally due to the Company’s
continued focus on its strategy to become Canada’s leading online grocer by increasing its product offering
and flexibility to customers which positively impacted the average basket size and order frequency. With
accelerated removal of lock-down restrictions and the increased vaccine coverage, Goodfood’s net sales
decreased in the last quarter of Fiscal 2021.
Adjusted EBITDA and adjusted EBITDA margin improved quarterly in Fiscal 2020 due to higher net sales
and gross profit primarily from a larger subscriber base. For the third and fourth quarters of Fiscal 2020,
adjusted EBITDA and adjusted EBITDA margin were further positively impacted by lower selling, general
and administrative expenses as a percentage of net sales. For Fiscal 2021, adjusted EBITDA and adjusted
EBITDA margin decreased comparatively to the third and fourth quarters of Fiscal 2020 due to higher wages
and salaries and higher marketing spend as the Company continues to grow and expand its operations and
31 | P a g e
product offerings across Canada. In addition, for the fourth quarter of Fiscal 2021, adjusted EBITDA and
adjusted margin was impacted by the decrease in net sales.
Net (loss) income improved quarter over quarter, starting in the first quarter of Fiscal 2020 due to higher
net sales and gross profit. For the third and fourth quarters of Fiscal 2020, lower selling, general and
administrative expenses as a percentage of net sales also contributed to the improvement to a net income
position. Net loss for the first two quarters of Fiscal 2021 was negatively impacted by higher depreciation
and amortization expense associated with the recognition of right-of-use assets from new and amended
facility lease agreements and related additions of leasehold improvements as well as increased share-
based payments expense. Net loss for the third and fourth quarter of Fiscal 2021 was negatively impacted
by higher wages and salaries and higher marketing spend as the Company continues to grow and expand
its operations and product offerings across Canada. In addition, for the fourth quarter of Fiscal 2021, net
loss was impacted by the decrease in net sales.
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 and accounts and other receivables. The Company's maximum credit
exposure corresponds to the carrying amount of these financial assets. Management believes the credit
risk is limited given that 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 changes in market interest rates. The Company’s long-term debt and revolving facility 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. As interest rates on Debentures are fixed, the Company is
not exposed to interest rate risk on those instruments.
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.
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, 2022, additional capital and non-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, 2021, 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.
32 | P a g e
BUSINESS RISK
For a detailed discussion of business risk factors, please refer to the Company’s Annual Information Form
for the year ended August 31, 2021 available on SEDAR at www.sedar.com.
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.
OFF-BALANCE SHEET ARRANGEMENTS AND MATURITY ANALYSIS OF CONTRACTUAL
OBLIGATIONS
The following table details the maturity of the Company’s contractual obligations as at August 31, 2021:
(In thousands of Canadian dollars)
Total carrying
amount
Contractual
cash flows
Less than 1
year 1 to 5 years
More than 5
years
Accounts payable and
accrued liabilities
Long-term debt, including
current portion (1)
Debentures, liability
component
Lease obligations, including
current portion
Purchase and service
contract obligations
$
52,207 $
52,207 $
52,207 $
− $
−
21,351
22,958
1,279
21,679
−
5,623
8,433
399
8,034
−
73,111
87,373
8,566
37,943
40,864
−
24,308
24,233
75
−
$ 152,292
$
195,279
$
86,684
$ 67,731 $
40,864
As at August 31, 2021, the Company does not 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 net
sales or expenses, results of operations, liquidity, capital expenditures, or capital resources that are
material, other than the following:
During the year ended August 31, 2021, the Company entered into a ten-year lease for a 110,000 square-
foot manufacturing center located in Ontario with two renewal options of five years. As at August 31, 2021,
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. Fixed rent payments represent a total commitment
of $16 million over the term of the leases.
During the year ended August 31, 2020, the Company signed a ten-year lease for a 200,000 square-foot
fulfillment centre located in the Greater Toronto Area, Ontario, Canada with two renewal options of five
years. As at August 31, 2021, 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. Fixed rent payments
represent a total commitment of $34 million over the term of the lease.
Subsequent to August 31, 2021, the Company entered into a 7-year lease for a Montreal fulfillment facility.
Fixed rent payments represent a total commitment of $3.0 million over the term of the lease.
33 | P a g e
FINANCIAL INSTRUMENTS
The Company’s financial instruments primarily consist of cash and cash equivalents, accounts and other
receivables, restricted cash, line of credit, accounts payable and accrued liabilities, long-term debt and
Debentures.
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, 2021, 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, 2021, 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 expense
RELATED PARTY TRANSACTIONS
$
2021
2,661
1,594
$
2020
2,884
865
Related parties of the Company include Directors and key management personnel, their family members,
and companies over which they have significant influence or control. For the year ended August 31, 2021,
the Company has not transacted with related parties. 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.
SHARE-BASED PAYMENTS
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, less any shares reserved for
issuance under the restricted share unit plan. Under the plan, stock options generally vest over a period of
four years and expire eight years from the grant date.
A restricted share unit plan (the “RSU Plan”) was established by the Company to attract and retain
employees, officers and directors. The RSU Plan provides for a maximum number of common shares
available and reserved for issuance to 10% of the Company’s issued and outstanding common shares, less
34 | P a g e
any shares reserved for issuance under the Stock Option Plan. Under the plan, RSUs generally vest over
a period of 3 years.
OUTSTANDING SHARE DATA
As at
Common shares outstanding (1)
Debentures outstanding (2)
Stock options outstanding
Stock options exercisable
Restricted share units outstanding
November 16, 2021 August 31, 2021 August 31, 2020
66,311,121
3,858,723
4,751,695
896,335
–
74,647,547
1,457,872
3,174,309
1,112,432
625,491
74,919,081
1,348,936
2,914,580
1,212,369
541,324
(1) As at November 16, 2021 and August 31, 2021, 79,914 and 70,498 common shares (August 31, 2020 – 23,412
common shares), respectively, were excluded from the common shares outstanding as they were held in trust
through the employee share purchase plan.
(2) As at November 16, 2021 and August 31, 2021, 6,340 and 6,852 Debentures (August 31, 2020 – 18,136
Debentures) were outstanding which are convertible into 1,348,936 and 1,457,872 common shares of the Company,
respectively, at a conversion price of $4.70. Please refer to the "Debt" subsection of the "Liquidity and Capital
Resources" section of this MD&A.
USE OF PROCEEDS FROM PUBLIC OFFERINGS
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, 2021:
(In thousands of Canadian dollars)
Actual use of
proceeds (1)
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, 2021
Total net proceeds
Debentures issuance costs
Gross proceeds
$
2,157
17,742
8,063
–
27,962
2,038
$ 30,000
$ 10,000
10,000
8,063
N/A
28,063
1,937
$ 30,000
$
(7,843)
7,742
–
–
(101)
101
–
$
(1) Part of the intended use of proceeds on the buildout of the new Toronto facility was not used due to a delay in
availability of the facility and given the stage of construction. Therefore, actual use of proceeds on capital projects
are higher than were originally estimated. Capital projects includes leasehold improvements, furniture and fixtures,
machinery and equipment as well as lease payments for new right-of-use assets and costs related to our cloud
computing arrangements.
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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).
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, 2021:
(In thousands of Canadian dollars)
Actual use of
proceeds (1)
Estimated use
of proceeds (2)
Variance
Capital expenditures to build out same-day delivery
capabilities (including fulfillment technology and
automation equipment)
General corporate purposes
Remaining as at August 31, 2021
Total net proceeds
Share issuance costs
Gross proceeds
$
7,052
12,093
7,948
27,093
1,676
$ 28,769
$ 15,000
12,093
N/A
27,093
1,676
$ 28,769
$
(7,948)
–
7,948
–
–
–
$
(1) Capital projects includes leasehold improvements, furniture and fixtures, machinery and equipment as well as
(2)
lease payments for new right-of-use assets and costs related to our cloud computing arrangements.
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.
FEBRUARY 2021 PUBLIC OFFERING
On February 24, 2021, the Company completed a public offering and issued 4,800,000 common shares for
net proceeds of $57.2 million.
The following table compares the estimated use of proceeds presented in the Company's final short-form
prospectus dated February 17, 2021 with the actual use of proceeds as at August 31, 2021:
(In thousands of Canadian dollars)
Capital expenditures to build out same-day delivery
capabilities (including fulfillment technology and
automation equipment)
General corporate purposes
Remaining as at August 31, 2021
Total net proceeds
Share issuance costs
Gross proceeds
SEGMENT REPORTING
Actual use of
proceeds
Estimated use
of proceeds
Variance
$
–
1,758
55,441
57,199
2,801
$ 60,000
$ 40,000
17,305
N/A
57,305
2,695
$ 60,000
$
(40,000)
(15,547)
55,441
(106)
106
–
$
The Company has one reportable segment as our principal business activity is focused on developing and
servicing the online Canadian grocery 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.
36 | P a g e
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the consolidated financial statements in accordance with IFRS requires management to
make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, net
sales 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.
The Company’s main judgements, estimates, and assumptions are presented below:
4.1
ECONOMIC CONDITIONS AND UNCERTAINTIES
The COVID-19 pandemic has had an impact on Goodfood’s overall business and operations and has
resulted in different levels of restrictions by government authorities. As an essential service in Canada,
Goodfood has been operating throughout the pandemic and implemented increased safety protocols at its
locations to ensure the safety of its employees. The Company experienced an acceleration of growth in
demand. 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 can be found in the “The financial outlook” and “Key highlights of
Fiscal 2021 and subsequent events” sections of the MD&A.
4.2
CRITICAL JUDGEMENTS
Impairments of long-lived assets
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.
4.3
KEY SOURCES OF ESTIMATES AND ASSUMPTIONS
Measurement of net sales
Net sales 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.
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.
Leases
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. The renewal options
are only included in the lease term if management is reasonably certain to renew. This significant estimate
could affect the Company’s financial position if the lease term of the leases is reassessed differently.
37 | P a g e
Discount rate
In determining the carrying amount of the right-of-use assets and lease obligations, the Company generally
uses its incremental borrowing rate ("IBR"), since the implicit rates are often 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.
CHANGES IN ACCOUNTING POLICIES
NEW AND AMENDED STANDARDS ADOPTED BY THE COMPANY
Amendment to Cloud Computing Arrangements
In April 2021, the International Financial Reporting Interpretations Committee (“IFRIC”) finalized an agenda
decision which clarified the customer’s accounting for configuration and customization in a cloud computing
arrangement. As a result of this decision, the Company changed its accounting policy for costs incurred on
cloud computing arrangements with retrospective application.
As a result of this change, the Company will now expense configuration and testing costs related to certain
cloud computing arrangements. The impact of changing this accounting policy, on a retrospective basis, to
the Company’s consolidated statements of loss for the years ended August 31, is as follows:
(In thousands of Canadian dollars)
Decrease in depreciation and amortization
Increase in selling, general and administrative expense
Increase in net loss
Increase in basic and diluted loss per share
$
2021
243
(1,606)
(1,363)
(0.02)
$
2020
164
(1,369)
(1,205)
(0.02)
In addition, intangible assets of $1.5 million were derecognized as of August 31, 2020 for which $0.3 million
related to prior period. Opening deficit for the year-ended August 31, 2020 was restated by an increase of
$0.3 million and opening deficit for the year-ended August 31,2021 was restated by an increase of $1.5
million.
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. The
amendments were adopted on September 1, 2020. The adoption of these amendments had no material
impact on the consolidated financial statements.
STANDARDS ISSUED BUT NOT YET EFFECTIVE
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 non-current. 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. For the Company, the amendments
are effective for fiscal period beginning on September 1, 2023 and are to be applied retrospectively. Earlier
application is permitted. The Company is currently evaluating the impact of the amendment on its
consolidated financial statements.
38 | P a g e
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, 2021.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
No changes were made during the fiscal year 2021 to the Company’s internal controls over financial
reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal
controls over financial reporting.
39 | P a g e
CONSOLIDATED
FINANCIAL
STATEMENTS
YEAR ENDED AUGUST 31, 2021 AND 2020
GOODFOOD MARKET CORP.
Table of Contents
Independent Auditors’ Report
Consolidated Financial Statements
Consolidated Statements of Loss and Comprehensive Loss
Consolidated Statements of Financial Position
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Page
42 - 45
46
47
48
49
50 - 75
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
2021
2020(1)
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Depreciation and amortization
Operating loss
Net finance costs
Loss before income taxes
Deferred income tax expense (recovery)
Net loss, being comprehensive loss for the period
Basic and diluted loss per share
Basic and diluted weighted average number of common shares
$ 379,234
263,140
$ 285,372
198,953
116,094
136,396
8,820
(29,122)
2,170
(31,292)
500
(31,792)
(0.45)
$
$
86,419
84,987
5,197
(3,765)
2,380
(6,145)
(804)
(5,341)
(0.09)
$
$
12,13,14, 22
6
7
outstanding
20
70,742, 923
58,919,209
(1) Refer to Note 5 for retrospective change in accounting policy.
The accompanying notes are an integral part of these consolidated financial statements.
46 | P a g e
GOODFOOD MARKET CORP.
Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
As at
Assets
Current assets:
Cash and cash equivalents
Accounts and other receivables
Inventories
Other current assets
Non-current assets:
Restricted cash
Fixed assets
Right-of-use assets
Intangible assets
Other non-current assets
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
9
10
11
17
12
13
14
15
16
17
17
19
17
18
19
20
18
Notes
August 31, 2021
August 31, 2020(1)
$
$
125,535
5,968
14,318
709
146,530
–
33,367
69,157
2,082
4,126
104,402
4,464
6,962
780
116,608
2,500
19,191
21,130
714
1,414
$
255,262
$
161,557
$
$
52,207
–
5,095
651
5,443
63,396
20,700
5,623
67,668
157,387
170,094
5,901
843
(78,963)
97,875
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
(47,171)
56,069
161,557
47 | P a g e
Total liabilities and shareholders’ equity
$
255,262
$
(1) Refer to Note 5 for retrospective change in accounting policy.
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
GOODFOOD MARKET CORP.
Consolidated Statements of Changes in Equity
(In thousands of Canadian dollars)
For the years ended August 31,
Balance as at
August 31, 2019 (1)
Net loss for the period
Share-based payments
expense
Stock options exercised
Employee share purchase
plan
Net share issuance
Net convertible debentures
issuance (2)
Net convertible debentures
conversions (3)
Balance as at
August 31, 2020 (1)
Net loss for the period
Share-based payments
expense
Stock options exercised
Employee share purchase
plan
Net share issuance
Net convertible debentures
conversions (3)
Notes
Common
Shares
Contributed
Surplus
Convertible
Debentures
Deficit
Total
$ 56,598
–
$ 2,349
–
$
–
–
$ (41,830) $ 17,117
(5,341)
(5,341)
21
21
21
20
18
18
21
21
21
20
18
– 1,874
(1,015)
2,968
–
–
(96)
27,093
–
–
–
–
–
–
3,690
11,238
–
(1,459)
–
–
–
–
–
–
1,874
1,953
(96)
27,093
3,690
9,779
$ 97,801
–
$ 3,208
–
$ 2,231 $ (47,171) $ 56,069
(31,792)
(31,792)
–
–
4,623
(427)
57,199
10,898
4,230
(1,537)
–
–
–
–
–
–
–
(1,388)
–
–
–
–
–
4,230
3,086
(427)
57,199
9,510
Balance as at
August 31, 2021
(1) Refer to Note 5 for retrospective change in accounting policy.
(2) The equity component of the convertible debentures presented above is net of income taxes of $1.3 million.
(3) The conversions of the convertible debentures presented above is net of income taxes of $0.5 million (2020 –
$ 170,094
$ (78,963)
5,901
843
$
$
$ 97,875
$0.5 million).
The accompanying notes are an integral part of these consolidated financial statements.
48 | P a g e
GOODFOOD MARKET CORP.
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
For the years ended August 31,
Notes
2021
2020(1)
Operating:
Net loss
Adjustments for:
Depreciation and amortization
Share-based payments expense
Net finance costs
Deferred income tax expense (recovery)
Change in non-cash operating working capital
Other non-current assets
Net cash (used in) provided by operating activities
Investing:
Additions and deposits to fixed assets
Additions to intangible assets
Interest received
Net cash used in investing activities
Financing:
12,13,14, 22
21
6
7
22
12,15
14
Net (repayment) borrowing under line of credit
Proceeds from drawdown of revolving facility
Net proceeds from issuance of convertible debentures
Net proceeds from issuance of common shares
Proceeds from exercise of stock options
Shares purchased under employee share purchase plan
Net payments of lease obligations
Net proceeds from issuance of long-term debt
Net repayment of long-term debt
Interest paid
Change in restricted cash
17
17
18
20
21
21
19
17
17
17
Net cash provided by financing activities
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental disclosure of cash flow information
22
(1) Refer to Note 5 for retrospective change in accounting policy.
The accompanying notes are an integral part of these consolidated financial statements.
$
125,535
$
(31,792)
$
(5,341)
5,197
8,820
1,874
4,230
2,170 2,380
(804)
500
4,400
(14)
(520)
(272)
7,186
(16,358)
(16,651)
(2,102)
741
(18,012)
(9,063)
9,063
–
57,364
3,086
(427)
(3,553)
12,193
(12,500)
(3,160)
2,500
55,503
21,133
104,402
(8,426)
(407)
782
(8,051)
7,523
–
27,976
27,241
1,953
(96)
(2,574)
–
–
(1,905)
–
60,118
59,253
45,149
$ 104,402
49 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
1.
REPORTING ENTITY
Goodfood Market Corp. is an online grocery company in Canada, delivering fresh meal solutions and
grocery items to members across Canada. 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 subsidiaries on a consolidated basis.
These financial statements are prepared on a consolidated basis and include its wholly owned subsidiaries
which do not currently conduct any activities.
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 Montréal, Québec, with additional locations in Québec, Ontario, Alberta,
and British Columbia.
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 3.
The consolidated financial statements of the Company for the years ended August 31, 2021 and 2020 were
for publication on
authorized by
November 17, 2021.
the Board of Directors ("Board") on November 16, 2021
2.2
BASIS OF MEASUREMENT
The consolidated financial 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; 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.
3.
3.1
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts of the Company and of its
wholly owned subsidiaries.
Subsidiaries
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.
50 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
3.2
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. Sales and referral credits are
recognized as revenue upon redemption and when the Company fulfills its 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.
3.3
TAXES
Income tax expense comprises current and deferred income taxes. It is recognized in the consolidated
statements of 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.
3.4
FINANCE INCOME AND FINANCE COSTS
Finance income comprises of interest income and foreign exchange gains. Finance costs comprise of
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.
3.5
CASH AND CASH EQUIVALENTS
Cash and cash equivalents is comprised of 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.
51 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
3.6
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.
3.7
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 17).
3.8
3.8.1
FIXED ASSETS
RECOGNITION AND MEASUREMENT
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 components of a fixed asset have materially different useful lives, they are accounted for separately.
Gains and losses on disposal of a fixed asset are determined by comparing the proceeds from disposal
with the carrying amount and are recognized in the consolidated statements of loss.
3.8.2
SUBSEQUENT EXPENDITURE
The cost of replacing a fixed asset 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 the consolidated statements of loss as incurred.
3.8.3
DEPRECIATION
Depreciation is calculated over the cost of the asset less its residual value and is recognized in the
consolidated statements of loss on a straight-line basis over the estimated useful lives of each part of a
fixed asset, 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
3.9
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.
52 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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 asset is 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 of 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 subsequently 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 the consolidated statements of loss if the carrying amount
of the right-of-use asset has been reduced to zero.
3.10
INTANGIBLE ASSETS
3.10.1 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.
3.10.2 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 the consolidated statements of loss
as incurred.
3.10.3 AMORTIZATION
Amortization is recognized in the consolidated statements of 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 amortized when they are available for their intended use.
53 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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 date and adjusted
prospectively, if appropriate.
3.11
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 the consolidated
statements of loss.
3.12
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 statements of financial position as a deduction from the carrying
amount of the related asset. They are then recognized in the consolidated statements of 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 the consolidated statements of loss as a deduction from the
related expenses.
3.13
FINANCIAL INSTRUMENTS
3.13.1 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 issuance.
3.13.2 CLASSIFICATION AND SUBSEQUENT MEASUREMENT
Financial assets
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.
Amortized cost
A financial asset is measured at amortized cost if it meets both of the following conditions and is not
designated as FVTPL:
It is held within a business model whose objective is to hold assets to collect contractual cash flows;
and
54 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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:
It is held within a business model whose objective is achieved by both collecting contractual cash flows
and selling financial assets, and
Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Equity investment
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect
to present subsequent changes in the investment’s fair value in Other Comprehensive Loss. This election
is done on an investment by investment basis.
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.
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 the consolidated statements of loss. Any gain or loss
on derecognition is recognized in the consolidated statements of loss.
Financial liabilities
Financial liabilities are classified and measured as amortized cost or FVTPL. A financial liability is classified
as FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses are
recognized in the consolidated statements of loss. Other financial liabilities are subsequently measured at
amortized cost using the effective interest method. Finance expense is recognized in the consolidated
statements of loss.
3.13.3 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.
On derecognition of a financial asset, the difference between the carrying amount of the financial asset and
the sum of the consideration received or receivable is recognized in the consolidated statements of loss.
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.
55 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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 the
consolidated statements of loss.
3.13.4 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.
3.13.5
IMPAIRMENT
The Company recognizes 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. The expected credit losses
identified were not significant.
3.13.6 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.
3.13.7
INTEREST RATE SWAP AGREEMENTS
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.
3.13.8 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.
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 statements 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.
56 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
3.14
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 costs.
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.
3.15
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.
3.16
SHARE-BASED PAYMENTS
The Company’s share-based payment plans consist of a stock option plan, a restricted share unit plan and
an employee share purchase plan. Employees, consultants, officers 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 the Company’s stock option plan is determined by the fair value at the date when the grant is
made using the Black-Scholes option pricing model. The cost of the Company’s restricted share unit plan
is determined based on the volume weighted average trading price of the common shares for the five days
immediately preceding the grant date. The costs are recognized as a share-based payment 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 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 for a period represents the
movement in cumulative expense recognized at the beginning and end of that period.
3.17
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.
3.18
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 costs in the consolidated statements of loss.
57 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
3.19
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 shares of the employee share purchase plan (“ESPP”), and convertible debentures.
3.20
SEGMENT REPORTING
The Company determined that it operated a single operating segment for the years ended August 31, 2021
and 2020.
4.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the consolidated financial statements in accordance with IFRS requires management to
make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, net
sales 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.
The Company’s main judgements, estimates, and assumptions are presented below:
4.1
ECONOMIC CONDITIONS AND UNCERTAINTIES
The COVID-19 pandemic has had an impact on Goodfood’s overall business and operations and has
resulted in different levels of restrictions by government authorities. As an essential service in Canada,
Goodfood has been operating throughout the pandemic and implemented increased safety protocols at its
locations to ensure the safety of its employees. The Company experienced an acceleration of growth in
demand. 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, 2021.
4.2
CRITICAL JUDGEMENTS
Impairments of long-lived assets
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.
4.3
KEY SOURCES OF ESTIMATES AND ASSUMPTIONS
Measurement of net sales
Net sales 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.
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.
58 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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.
Leases
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. The renewal options
are only included in the lease term if management is reasonably certain to renew. This significant estimate
could affect the Company’s financial position if the lease term of the leases is reassessed differently.
Discount rate
In determining the carrying amount of the right-of-use assets and lease obligations, the Company generally
uses its incremental borrowing rate ("IBR"), since the implicit rates are often 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.
5.
5.1
CHANGES IN ACCOUNTING POLICIES
NEW AND AMENDED STANDARDS ADOPTED BY THE COMPANY
Amendment to Cloud Computing Arrangements
In April 2021, the International Financial Reporting Interpretations Committee (“IFRIC”) finalized an agenda
decision which clarified the customer’s accounting for configuration and customization in a cloud computing
arrangement. As a result of this decision, the Company changed its accounting policy for costs incurred on
cloud computing arrangements with retrospective application.
As a result of this change, the Company will now expense configuration and testing costs related to certain
cloud computing arrangements. The impact of changing this accounting policy, on a retrospective basis, to
the Company’s consolidated statements of loss for the years ended August 31, is as follows:
Decrease in depreciation and amortization
Increase in selling, general and administrative expense
Increase in net loss
Increase in basic and diluted loss per share
$
2021
243
(1,606)
(1,363)
(0.02)
$
2020
164
(1,369)
(1,205)
(0.02)
In addition, intangible assets of $1.5 million were derecognized as of August 31, 2020 for which $0.3 million
related to prior period. Opening deficit for the year-ended August 31, 2020 was restated by an increase of
$0.3 million and opening deficit for the year-ended August 31, 2021 was restated by an increase of $1.5
million.
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. The
amendments were adopted on September 1, 2020. The adoption of these amendments had no material
impact on the consolidated financial statements.
59 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
5.2
STANDARDS ISSUED BUT NOT YET EFFECTIVE
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 non-current. 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. For the Company, the amendments
are effective for fiscal period beginning on September 1, 2023 and are to be applied retrospectively. Earlier
application is permitted. The Company is currently evaluating the impact of the amendment on its
consolidated financial statements.
6.
NET FINANCE COSTS
Interest expense on debt
Interest expense on lease obligations
Interest expense on the Debentures, including accretion interest
Interest income
Foreign exchange (gain) loss
Fair value (gain) loss on interest rate swaps
For the years ended August 31,
2021
2020
$
$
986
1,208
1,092
(870)
(126)
(120)
2,170
$
$
733
927
1,309
(772)
83
100
2,380
7.
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
Change in tax rates
Other
Total income tax expense (recovery)
(1) Refer to Note 5 for retrospective change in accounting policy.
For the years ended August 31,
2020 (1)
2021
$
$
$
(31,292)
25.9%
(8,105)
$
$
(6,145)
26.5%
(1,628)
7,503
1,236
244
(378)
500
297
531
−
(4)
$
(804)
60 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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
As at August 31, 2020
Recognized in net loss
Recognized in equity
$
$
$
$
2,736
2,201
−
4,937
12,188
−
$
$
−
1,044
−
1,044
(726)
−
− $
(240)
(804)
(1,044) $
226
500
(2,736) $
(2,201)
−
(4,937) $
(12,188)
−
As at August 31, 2021
$
17,125
$
318
$
(318) $
(17,125) $
−
804
(804)
−
(500)
500
−
The Company had unrecognized deferred income tax assets as follows:
As at
Net operating loss carry forwards
Fixed assets
Share and debt issuance costs
Intangible assets
Other
Unrecognized deferred income tax assets
(1) Refer to Note 5 for retrospective change in accounting policy.
August 31, 2021 August 31, 2020 (1)
$ 14,500
1,810
1,433
1,155
117
$ 19,015
$
7,453
1,250
1,265
723
92
$ 10,783
The Company has operating tax losses carried forward of $53.8 million (2020 – $32.1 million) which are
partially recognized for an amount of $1.2 million (2020 – $3.9 million), and unrecognized deductible
temporary differences of $18.8 million (2020 – $8.6 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, 2021, the amounts and expiry dates of the tax losses carried forward were as follows:
2035
2036
2037
2038
2039
2040
2041
$
49
712
3,547
8,516
18,089
921
21,991
$ 53,825
61 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
8.
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
9.
ACCOUNTS AND OTHER RECEIVABLES
As at
Sales taxes receivable
Rewards program receivable
Volume discounts receivable
Other receivables
10.
INVENTORIES
As at
Food
Packaging supplies
Work in process
For the years ended August 31,
2021
2020
$
819
$
157
121,350
70,932
August 31, 2021
August 31, 2020
$
$
4,633
1,034
147
154
5,968
$
$
3,063
863
421
117
4,464
August 31, 2021
August 31, 2020
$
$
11,814
1,742
762
14,318
$
$
4,534
1,928
500
6,962
The cost of inventories recognized as an expense within cost of goods sold during the year ended
August 31, 2021 was $236.5 million (2020 – $172.8 million).
11.
OTHER CURRENT ASSETS
As at
Prepaid expenses
Deposits and other
August 31, 2021
August 31, 2020
$
$
426
283
709
$
$
524
256
780
62 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
12.
FIXED ASSETS
Furniture and
fixtures
Machinery
and
equipment
Computer
hardware
and other
Leasehold
improvements
Assets under
construction (1)
Total
Cost:
As at August 31, 2019 $
Additions
Transfers
716
790
–
As at August 31, 2020 $ 1,506
2,571
Additions
$
$
6,480
2,049
–
8,529
1,485
$
674
736
–
$
7,079
1,436
3,256
$ 1,410
2,169
$ 11,771
1,511
$
$
232 $ 15,181
8,086
–
3,075
(3,256)
51 $ 23,267
18,107
10,371
As at August 31, 2021 $ 4,077
$ 10,014
$ 3,579
$ 13,282
$ 10,422 $ 41,374
Accumulated depreciation:
As at August 31, 2019 $
Depreciation
As at August 31, 2020 $
Depreciation
As at August 31, 2021 $
130
205
335
510
845
$
$
$
$
507
891
1,398
1,207
216
292
508
759
$
$
783
1,052
1,835
1,455
$
2,605
$ 1,267
$
3,290
Net carrying amounts:
As at August 31, 2020 $ 1,171
3,232
As at August 31, 2021
$
7,131
7,409
$
902
2,312
$
9,936
9,992
$
$
$
$
– $
–
– $
–
– $
1,636
2,440
4,076
3,931
8,007
51 $ 19,191
33,367
10,422
(1) Additions of assets under construction include $0.9 million (2020 – $0.5 million) related to capitalized depreciation
of right-of-use assets.
13.
RIGHT-OF-USE ASSETS
As at August 31, 2019
Additions
Derecognition
Depreciation
As at August 31, 2020
Additions and lease modifications
Depreciation
Facilities
Automotive
equipment
Other
equipment
$
$
10,348
12,411
–
(2,581)
20,178
52,609
(4,616)
$
$
$
$
290
536
–
(378)
448
150
(171)
451 $
324
(73)
(198)
504 $
757
(702)
Total
11,089
13,271
(73)
(3,157)
21,130
53,516
(5,489)
As at August 31, 2021
$
68,171
$
427
$
559 $
69,157
63 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
14.
INTANGIBLE ASSETS
Cost:
As at August 31, 2019
Additions
Disposals, write-offs and transfers
As at August 31, 2020
Additions
As at August 31, 2021
Accumulated amortization:
As at August 31, 2019
Amortization
Disposals, write-offs and transfers
As at August 31, 2020
Amortization
As at August 31, 2021
Software (1) (2)
Intellectual
property
$
$
$
$
$
$
224
609
(63)
770
1,657
2,427
70
58
(13)
115
274
389
$
$
$
$
$
74 $
–
–
74 $
–
74 $
– $
15
–
15 $
15
30 $
Total
298
609
(63)
844
1,657
2,501
70
73
(13)
130
289
419
Net carrying amounts:
As at August 31, 2020
As at August 31, 2021
(1) For the year ended August 31, 2021, the net carrying amount of software under development amounted to
59 $
44
655
2,038
714
2,082
$
$
$1.1 million (2020 – $0.4 million).
(2) Refer to Note 5 for retrospective change in accounting policy.
15.
OTHER NON-CURRENT ASSETS
As at
Security deposits
Deposits on fixed assets
August 31, 2021
August 31, 2020
$
$
1,054
3,072
4,126
$
$
882
532
1,414
16.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As at
Accounts payable
Accrued liabilities
August 31, 2021
August 31, 2020
$
$
30,078
22,129
52,207
$
$
26,068
14,810
40,878
64 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
17.
DEBT
As at
August 31, 2021
August 31, 2020
Interest-bearing financing:
Secured revolving facility, variable interest at BA(1) plus 2.50%,
maturing in November 2023
$
9,063
$
Secured term loan, variable interest at BA(1) plus 2.50%,
maturing in November 2023
Matured borrowings:
Secured line of credit, variable interest at CDOR(2) plus 2.50%
Secured term loan, variable interest at CDOR(2) plus 2.50%
Interest rate swap
Unamortized financing costs
Line of Credit
Current portion of long-term debt
(1) BA is defined as the Canadian Banker’s Acceptance Rate.
(2) CDOR is defined as the Canadian Dollar Offered Rate.
CREDIT FACILITY 2021
12,500
–
–
21,563
26
(238)
21,351
–
(651)
$
$
$
20,700
$
$
$
–
–
9,063
12,500
21,563
146
(31)
21,678
(9,063)
(656)
11,959
During the first quarter ended November 30, 2020, the Company entered into a syndicated credit agreement
totaling $46 million, including a term loan of $12.5 million, a revolving facility of $27.5 million and $6 million
in other short-term financing ("Credit Facility 2021"). During the second quarter ended February 28, 2021,
the Company increased the revolving facility by $15 million for a total of $42.5 million, and the other short-
term financing by an amount not to exceed $15 million, and an additional lender was added to the syndicate.
This increase brought the total available financing to $70 million. The Credit Facility 2021 is secured by a
first-ranking hypothec on all of the Company’s movable and immovable assets. The facilities bear variable
interest rates of BA plus 2.50% and mature in November 2023. The term loan is repayable in four quarterly
installments of $156 thousand beginning on November 30, 2021 and increasing to four quarterly
installments of $313 thousand on November 30, 2022 with a bullet repayment of the balance of $10.6 million
at the end of the term in November 2023.
As at August 31, 2021, Goodfood had outstanding
(2020 – $0.9 million) which reduced the availability on the revolving facility.
letters of credit
totalling $1.2 million
As at August 31, 2021, $9.1 million of the revolving facility was drawn. It matures in November 2023 and is
presented as a non-current liability. A balance of $33.4 million was undrawn and $32.2 million was available
as at August 31, 2021.
The Credit Facility 2021 does not include a collateral requirement and the restricted cash required under
the Credit Facility 2019 was released and reclassified to cash and cash equivalents during the first quarter
ended November 30, 2020. As at August 31, 2021, the Company was in compliance with all covenants
under the credit agreement governing the Credit Facility 2021.
As at August 31, 2021, the Company allocated $14.6 million (2020 – $7.3 million) to corporate credit cards
to be used for business purposes of the other short-term financing amount for an aggregate amount of
65 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
$15 million. Amounts owing with respect to credit cards are included in accounts payable and accrued
liabilities.
CREDIT FACILITY 2019
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 (“Credit Facility 2019”). The Credit Facility 2019 was secured by a first-ranking
hypothec on all of the Company’s movable and immovable assets. The proceeds were 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, $12.5 million of the term loans were disbursed, bearing variable interest at CDOR
plus 2.50%. The
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.
loans were repayable
installments of $31
in quarterly
term
As at August 31, 2020, $9.1 million of the revolving line of credit was drawn. The revolving line of credit
was repayable on demand and was presented as a current liability.
The Credit Facility 2019 included a collateral requirement of $2.5 million placed in a restricted cash account.
As at August 31, 2020, the Company was in compliance with all covenants under the Credit Facility 2019.
The Credit Facility 2019 was repaid in full as at November 30, 2020.
INTEREST RATE SWAP
As at August 31, 2021, Goodfood has one swap agreement in place whereby the Company fixed the interest
rate on a notional amount of $10.9 million until November 2021.
As at August 31, 2021, the Company’s interest rate swap is classified as a derivative financial liability and
is not designated as a hedging instrument. For the year ended August 31, 2021, a gain in fair value of
$0.1 million (2020 – loss of $0.1 million) is presented in net finance costs (refer to Note 6). As at August 31,
2021, a liability of $26 thousand is presented in the current portion of long-term debt. As at August 31, 2020,
a liability of $0.1 million was 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:
2022
2023
2024
Principal payments
$
625
1,250
19,688
66 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
18.
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, which commenced 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 a 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, 2021, 11,284 Debentures (2020 – 11,864) were converted into common
shares of the Company, resulting in the issuance of 2,400,819 (2020 – 2,524,242) common shares and the
Company reclassified $9.0 million (2020 – $9.3 million) and $1.9 million (2020 – $2.0 million), respectively
(Refer to Note 20) from the convertible debentures liability to common shares and from the equity
component of the convertible debentures to common shares. A deferred income tax expense of $0.5 million
(2020 – recovery $0.8 million) was recognized upon conversion of the Debentures for the period ended
August 31, 2021. As at August 31, 2021, 6,852 Debentures were outstanding (2020 – 18,136 Debentures).
The following table summarizes the continuity of the Company’s Debentures for the years ended:
Convertible debentures, liability component balance,
beginning of year
Net proceeds from issuance of the Debentures (1)
Accretion interest
Conversion of the Debentures
Convertible debentures, liability component balance, end
of year
August 31, 2021
August 31, 2020
$
$
14,194
–
439
(9,010)
–
22,942
505
(9,253)
$
5,623
$
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.
67 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
19.
LEASE OBLIGATIONS
The following table summarizes the continuity of the Company’s lease obligations for the years ended:
Balance, beginning of year
Additions and lease modifications
Derecognition
Payment of lease obligations
Interest expense on lease obligations (1)
Balance, end of year
August 31, 2021
August 31, 2020
$
$
23,348
53,905
–
(5,534)
1,392
73,111
$
$
12,724
13,271
(73)
(3,501)
927
23,348
(1)
Interest expense on lease obligations include $0.2 million (2020 – nil) capitalized in assets under construction.
The following table summarizes the contractual undiscounted cash flows from lease obligations:
As at
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
$
August 31, 2021
8,566
37,943
40,864
August 31, 2020
$
4,076
13,822
10,526
$
$
$
$
87,373
$
73,111 $
5,443
67,668
$
$
28,424
23,348
2,990
20,358
(1) As at August 31, 2021, future lease payments of $10.9 million (2020 – $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 $12.1 million (2020 – $6.4 million) of undiscounted cash outflows.
As at August 31, 2021, the Company entered into several lease commitments some of which the lease has
not commenced. As at August 31, 2021, these leases were not reflected as right-of-use assets and lease
obligations. Fix rent payments represent a total commitment of $50.0 million over the term of the leases.
Subsequent to August 31, 2021, the Company entered into a 7-year lease for a Montreal fulfillment facility.
Fixed rent payments represent a total commitment of $3.0 million over the term of the lease.
68 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
20.
SHAREHOLDERS’ EQUITY
COMMON SHARES
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
Net share issuance through a bought
deal offering
Debenture conversions (Note 18)
Exercise of stock options (Note 21)
Purchased and held in trust through
employee share purchase plan (Note
21)
Number of
shares
2021
Carrying
amount
Number of
shares
2020
Carrying
amount
66,311,121
$
97,801
58,144,400
$
56,598
4,800,000
2,400,819
1,182,693
57,199
10,898
4,623
4,755,250
2,524,242
910,641
27,093
11,238
2,968
(47,086)
(427)
(23,412)
(96)
Balance, end of year
74,647,547
$
170,094
66,311,121
$
97,801
During the year ended August 31, 2021, the Company issued 4,800,000 (2020 – 4,755,250) common
shares at a price of $12.50 (2020 – $6.05) per common share for gross proceeds of $60 million
(2020 – $28.8 million), less share issuance costs of $2.8 million (2020 – $1.7 million), in connection with a
public offering.
As at August 31, 2021, the number of common shares issued and fully paid was 74,718,045
(2020 – 66,334,533).
LOSS PER SHARE
As at
Basic and diluted weighted average number of common shares
outstanding
August 31, 2021 August 31, 2020
70,742, 923
58,919,209
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.
69 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
21.
SHARE-BASED PAYMENTS
The Company’s share-based payment plans consist of a stock option plan, a restricted share unit plan and
an employee share purchase plan.
STOCK OPTION PLAN
A stock option plan (the "Stock Option Plan") was established by the Company to attract and retain
employees, consultants, officers and directors. The Stock Option 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, less any shares reserved for
issuance under the restricted share unit plan. Under the Stock Option Plan, options generally vest over a
period of three or four years and expire eight years from the grant date.
The following table summarizes the continuity of the stock options during the years ended August 31:
Outstanding, beginning of year
Granted
Exercised
Forfeited
Outstanding, end of year
Exercisable, end of year
2021
Weighted
average
exercise price
$
$
3.51
8.17
2.61
4.53
4.47
3.45
Number of
options
4,751,695
647,434
(1,182,693)
(1,042,127)
3,174,309
1,112,432
2020
Weighted
average
exercise price
$
2.57
4.41
2.14
2.82
Number of
options
3,910,169
2,299,307
(910,641)
(547,140)
4,751,695
3.51
896,335
$
2.48
For the year ended August 31, 2021, the weighted average share market price of the Company’s common
shares upon the exercise date of stock options was $10.09 (2020 – $6.44).
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
$ 7.50 – 7.99
$ 8.00 – 8.49
Outstanding, end of year
Exercisable, end of year
3,174,309
1,112,432
Number of
options
outstanding
2021
Weighted
average
remaining life
25,144
47,976
36,398
734,301
992,421
226,425
433,219
200,000
196,335
282,090
4.2
4.0
4.2
5.3
5.9
6.6
6.9
7.0
7.8
7.2
6.2
5.8
Number of
options
outstanding
86,658
160,830
101,106
1,469,755
1,751,790
328,532
653,024
200,000
–
–
4,751,695
896,335
2020
Weighted
average
remaining life
5.6
5.0
5.2
6.1
7.0
7.6
7.9
8.0
–
–
6.8
6.0
70 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
Stock options granted during the year ended August 31, 2021 had a weighted average fair value of $3.87
per option (2020 – $2.05), using the Black-Scholes option pricing model with the following weighted-
average assumptions:
Expected volatility
Risk-free interest rate
Expected life of options
Common share value at grant date
Weighted average exercise price
2021
2020
57%
0.59%
4.8 years
8.17
8.17
$
$
53%
0.97%
5.1 years
4.41
4.41
$
$
During the year ended August 31, 2021, an expense of $2.8 million (2020 – $1.9 million), including fringe
benefits related to stock options exercised of $0.6 million (2020 – nil), was recorded in the consolidated
statements of loss in relation to the Stock Option Plan.
RESTRICTED SHARE UNIT PLAN
In September 2020, the Company adopted a restricted share unit plan (the "RSU Plan") to reward certain
employees, officers and directors of the Company (the "Participants"). The RSU Plan was approved in
January 2021. Following the implementation of the RSU Plan, the Company granted to Participants a
number of restricted share units ("RSUs") based on the volume weighted average trading price of the
common shares for the five days immediately preceding the grant date. The expense in relation to the RSU
Plan is measured at the fair value of the underlying RSU at the grant date and is expensed over the award's
vesting period. The RSU Plan provides for a maximum number of common shares available and reserved
for issuance to 10% of the Company’s issued and outstanding common shares, less any shares reserved
for issuance under the Stock Option Plan. The RSUs are time-based awards and one third of the amount
of RSUs granted will vest upon the continuous employment of the Participants on each of the anniversaries
of the RSU grant, over a period of three years starting from the date of the grant or such other period not
exceeding three years as determined by the Board.
Pursuant to the terms of the RSU Plan, Participants will receive, upon vesting of the RSUs, common shares
of the Company issued from treasury.
The following table summarizes the continuity of the RSUs during the year ended August 31:
Outstanding, beginning of year
Granted
Forfeited
Outstanding, end of year
2021
–
707,823
(82,332)
625,491
During the year ended August 31, 2021, an expense of $2.0 million was recorded in the consolidated
statements of loss in relation to the RSU Plan.
As at August 31, 2021, 3,672,004 stock options and RSUs were available
(2020 – 1,881,758).
for
issuance
71 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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 continuity of the ESPP during the years ended August 31:
Unvested contributions, beginning
of year
Contributions
Vested
Unvested contributions, end of
year
Number of
shares
2021
Amount
Number of
shares
2020
Amount
23,412 $
47,086
−
96
427
−
$
−
23,412
−
−
96
−
70,498 $
523
23,412
$
96
During the year ended August 31, 2021, an expense of $0.1 million (2020 – $15 thousand) was recorded
in the consolidated statements of loss in relation to the employee share purchase plan.
22.
SUPPLEMENTAL CASH FLOW INFORMATION
The following summarizes the net changes in non-cash items related to operating working capital:
As at
Accounts and other receivables
Inventories
Other current assets
Accounts payable and accrued liabilities
Deferred revenues
August 31, 2021
August 31, 2020
$
$
(1,375)
(7,356)
(29)
9,041
(295)
$
(14)
$
(1,869)
(2,227)
(534)
9,563
(533)
4,400
The additional transactions that had no cash impact for the year ended August 31, 2021 were as follows:
• Assets under construction additions of $0.9 million (2020 – $0.5 million) relating to capitalized
depreciation on right-of-use assets had no cash impact on investing activities.
• Unpaid additions to fixed assets of $3.8 million (2020 – $0.9 million) were excluded from the consolidated
statements of cash flows.
• Share issuance costs of $20 thousand (2020 – $0.1 million) were unpaid and included in accounts
payable and accrued liabilities which had no cash impact on financing activities.
72 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
23.
COMMITMENTS
As at August 31,2021, Goodfood had commitments under purchase and service contract obligations for
both operating and capital expenditures.
The following summarizes the commitments that are not recognized as liabilities:
As at
Less than 1 year
Between 1 and 5 years
More than 5 years
August 31, 2021
August 31, 2020
$
24,233
75
−
$
24,308
$
$
1,870
104
−
1,974
24.
FINANCIAL INSTRUMENTS
Goodfood has determined that the fair value of cash and cash equivalents, accounts and other receivables,
restricted cash, line of credit, and accounts payable and accrued liabilities approximate their respective
carrying amounts at the consolidated statements 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, 2021 and 2020 was estimated using Level 2 inputs.
25.
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 and accounts and other receivables. The Company's maximum credit
exposure corresponds to the carrying amount of these financial assets. Management believes the credit
risk is limited given that 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 changes in market interest rates. The Company’s long-term debt and revolving facility 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 17. As
interest rates on Debentures are fixed, the Company is not exposed to interest rate risk on those
instruments.
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.
73 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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.
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
2021
More than 5
years
Accounts payable and
accrued liabilities
Long-term debt, including
current portion (1)
Debentures, liability
component
$
52,207 $
52,207
$
52,207
$
− $
−
21,351
22,958
1,279
21,679
−
5,623
8,433
399
8,034
−
Lease obligations, including
current portion
73,111
87,373
8,566
37,943
$ 152,292
$
170,971
$
62,451
$ 67,656 $
Total carrying
amount
Contractual
cash flows
Less than 1
year 1 to 5 years
40,864
40,864
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
$
−
10,526
10,526
(1) As at August 31, 2021, an interest rate of 2.92% (2020 – 3.00%) 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 17 was used to determine the interest payments on the fixed-rate portion of the
Company’s long-term debt.
74 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – August 31, 2021
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
26.
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 expense
RELATED PARTY TRANSACTIONS
For the years ended August 31,
2021
$
2,661
1,594
$
2020
2,884
865
Related parties of the Company include Directors and key management personnel, their family members,
and companies over which they have significant influence or control. For the year ended August 31, 2021,
the Company has not transacted with related parties. For the year ended August 31, 2020, in connection
with the issuance of Debentures described in Note 18, 75 Debentures were purchased by Board members
and key management personnel at a price of $1,000 per Debenture.
These transactions were recorded at the amount of consideration paid as established and agreed to by the
related parties.
75 | P a g e
CORPORATE
INFORMATION
STOCK INFORMATION
Shares listed: Toronto Stock Exchange
Ticker symbol: FOOD
Initial public offering: 2017
52-week high/low (Sept. 1, 2020 – Aug. 31, 2021): $14.53-$6.18
Share price as at November 10, 2020: $6.96
Common shares outstanding as at August 31, 2020: 74,647,546
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
LEGAL CONTACT
legal@makegoodfood.ca
CORPORATE OFFICE
4600 Hickmore Street,
Saint-Laurent, Quebec
H4T 1K2
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, January 18, 2021
Virtual Meeting - Details to Come
MAKEGOODFOOD.CA