ANNUAL
REPORT
2022
Goodfood (TSX: FOOD) is a leading digitally native meal solutions
brand in Canada, delivering fresh meals and add-ons that make it
easy for customers from across Canada to enjoy delicious meals
at home every day. The Goodfood team is building Canada’s
most loved millennial food brand, with the mission to create
experiences that spark joy and help our community live longer
on a healthier planet.
Goodfood customers have access to uniquely fresh and
delicious products, as well as exclusive pricing, made
possible by its world class culinary team and direct-to-consumer
infrastructures and technology. We are passionate about
connecting our partner farms and suppliers to our customers’
kitchens while eliminating food waste and costly
retail overhead.
The Company’s administrative
offices are based in Montreal,
Québec, with production
facilities located in the
provinces of Quebec
and Alberta.
2022
AT A GLANCE
4
PRODUCTION
FACILITIES
1,300
EMPLOYEES
157K
QUATERLY ACTIVE
CUSTOMERS 1
The following table provides a summary of our locations currently operating:
Total number
of locations
Administrative
offices
Distribution and
manufacturing
centers
Fulfillment
facilities
Greater Montreal Area
(Quebec)
Greater Toronto Area
(Ontario)
Calgary
(Alberta)
1
2
1
X
X
X
X
X
X
X
1 This is a metric or non-IFRS inancial 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.
$269M
NET SALES
3-YEAR
FINANCIAL HIGHLIGHTS
For the years ended
September 3,
2022
August 31,
2021
August 31,
2020
Operating Results
Net Sales
Gross Profit
Adjusted EBITDA1
Net loss being comprehensive loss
Basic and diluted loss per share
Operating Metrics
Gross Margin
Adjusted EBITDA Margin1
Financial Position
Cash2
Fixed assets
Total assets
Total debt3
Total convertible debentures4
Shareholders’ equity (deficit)
Cash flows provided by (used in)
Operating activities
Financing activities
Investing activities
(29%)
(41%)
268,586
68,055
(40,721)
(121,761)
(1.62)
379,234
116,094
(15,306)
(31,792)
(0.45)
33%
34%
25.3%
(15.2%)
(5.3) pp
(11.2) pp
30.6%
(4.0%)
0.3 pp
(5.2) pp
36,885
18,408
129,848
11,743
32,643
(11,178)
(58,981)
8,002
(37,671)
125,535
33,367
255,262
21,351
6,466
97,875
(16,358)
55,503
(18,012)
285,372
86,419
3,306
(5,341)
(0.09)
30.3%
1.2%
106,902
19,191
161,557
21,678
16,425
56,069
7,186
60,118
(8,051)
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, term loan, long-term debt and the current portion of long-term debt.
4.
Includes the liability and equity components of the convertible debentures.
MESSAGE TO
SHAREHOLDERS
Dear fellow Shareholders,
Goodfood has seen its fair share of challenges this year. From
consumer behaviour moving away from e-commerce purchases, a
behaviour that we do believe is temporary in nature, to tough capital
markets conditions on the back of macroeconomic forces not seen
in over forty years, we have faced headwinds that have made Fiscal
2022 Goodfood’s most difficult year since its inception in 2014.
A DIFFICULT YEAR
After two years of strong growth and profitability driven by
the quality of our offering and further accelerated by
pandemic-driven restrictions, Fiscal 2022 has been marked by
the re-opening of economies and consumer behaviour shifting
away from e-commerce as a whole. This change drove lower sales
and volume de-leverage, affecting our cost structure and
materially negatively impacting our financial results. Combined
with inflation and our significant investments in on-demand delivery,
lower volumes translated into lower gross margin, Adjusted EBITDA1
and cash flows.
The tough conditions faced this year should not overshadow the
significant progress made to consistently improve the operating and
financial performance of the Company quarter after quarter.
Through Project Blue Ocean, a series of operational and strategic
initiatives implemented for the most part this year, our gross margin
improved from 23% in the fourth quarter of last year to 28% in the
fourth quarter of this year, while our Adjusted EBITDA1 loss was
improved from $18 million in the Q4 of Fiscal 2021 to $2 million this
Q4.
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.
MESSAGE TO
SHAREHOLDERS
BACK TO OUR ROOTS, WITH A TWIST
In October of 2022, we announced the decision to stop our on-demand delivery and re-focus our
efforts on the differentiated weekly subscription offering that has always been the cornerstone of our
customer value proposition.
Our rapid on-demand delivery had strong consumer fit, with net promoter scores being consistently
high. It allowed new and existing Goodfood customers to experience an instant grocery solution
rivaling trips to brick-and-mortar stores. Due in part to the high attachment rate of our
meal-kits, the on-demand
changing capital and consumer
decision to discontinue our on-demand
growth.
proposition had attractive at-scale economics. However, considering the
markets context, we made the difficult but financially responsible
offering, to position the company to return to profitable
This decision does have the silver lining of allowing us to focus squarely on our weekly
meal-kit experience. Our teams are now fully focused and aligned on building Canada’s
best weekly meal planning solution. Our culinary team is consistently innovating and delivering
flavors that spark joy, while our fulfilment teams are continuously working to improve the delivery
experience and flexibility that will serve to further enhance our customer value proposition. We are also
adding depth to our weekly meal solution offering, by offering a growing selection of Goodfood
branded add-on products to our customers. Providing a wider offering to complement our meal kits is
the twist that will drive larger baskets, more frequent orders, and higher retention
While discontinuing our on-demand offering was tough, we are very excited by our re-focused and
re-energized meal kit offering and our customers are too. We are doubling down on building
Canada’s most loved millennial food brand through our weekly deliveries and more, creating
experiences that spark joy while helping our community live longer on a healthier planet.
MESSAGE TO
SHAREHOLDERS
CASH IS KING: OUR FOCUS IS ON POSITIVE CASH
FLOWS AND PROFITABILITY
Adjusted EBITDA1 profitability and reaching positive cash flow from
operations, while building a customer value proposition that will
provide years of growth are driving all our strategic decisions.
We established Project Blue Ocean in the Spring of Fiscal 2022 and we
have implemented the majority of the identified initiatives:
• Ingredients simplification with ingredients sourced declining from
over 400 to below 200
• Alignment of workforce with scale leading to significant headcount
reductions
• Footprint rationalization leading to consolidation of production in
2 facilities in Montreal and Calgary
• Reduction of capital investments (capex)
• Meal kit and add on products price increases
These initiatives have driven the substantial improvements in gross
margin and Adjusted EBITDA1 achieved this year. But we will not
stop there. To achieve positive and growing quarterly Adjusted
EBITDA1 in the first half of Fiscal 2023, we have taken more important steps,
namely discontinuing on-demand grocery delivery and further
reducing overhead costs. We currently expect to be Adjusted
EBITDA1 positive in the first half of Fiscal 2023.
Our focus on profitability and cash flows has started to bear fruit and
coupled with our unrelenting focus on continuously improving our
customer experience remains our top priority. This is our foundation for
profitable growth for years to come.
1 This is a metric or non-IFRS inancial measure which does not have a standardized meaning prescribed by IFRS and may
therefore not be comparable to similar measures presented by other issuers. Please refer to the Metrics and Non-IFRS
financial measures section in the Management’s Discussion and Analysis.
MESSAGE TO
SHAREHOLDERS
MOST IMPORTANTLY
Our consistent improvement this year is the result of the dedication and
hard work of our incredible team. Our current path towards profitability
would not be possible without our team’s incredible contributions both in
good and challenging times. To all Goodfoodies, we want to say thank you
for your hard work and your trust in our strategy. Our ability to overcome
this year’s challenges and thrive for success in the coming years has also
been driven by the confidence of our major shareholders, customers,
board members, suppliers, and other stakeholders. We want to express our
deep appreciation for your trust and support.
Over the years, we have stayed true to the purpose that powers our brand
and products. Our core purpose is to spark joy by making cooking and
eating a fun, exciting and enjoyable experience, to help Canadians live
longer by achieving a balanced and healthy diet, and to live on a healthier
planet by offering planet-conscious products that are sourced, packaged
and delivered sustainably. As we continue to build towards that ambitious
purpose, we share with you our Fiscal year 2022 financial results.
Thank you,
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
JOHN KHABBAZ
Director
DONALD OLDS
Director
TERRY YANOFSKY
Director
MANAGEMENT’S
DISCUSSION
AND ANALYSIS
YEAR ENDED SEPTEMBER 3, 2022
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
TABLE OF CONTENTS
BASIS OF PRESENTATION .................................................................................................................... 3
KEY FINANCIAL HIGHLIGHTS ............................................................................................................... 4
FORWARD-LOOKING INFORMATION ................................................................................................. 5
METRICS AND NON-IFRS FINANCIAL MEASURES ......................................................................... 6
COMPANY OVERVIEW ............................................................................................................................ 7
FINANCIAL OUTLOOK ............................................................................................................................. 8
FISCAL 2022 AT A GLANCE ................................................................................................................... 9
METRICS AND NON-IFRS FINANCIAL MEASURES – RECONCILIATION ................................. 10
RESULTS OF OPERATIONS – FOURTH QUARTER OF FISCAL 2022 AND 2021 ................... 12
RESULTS OF OPERATIONS – FISCAL 2022 AND 2021 ................................................................ 13
FINANCIAL POSITION ........................................................................................................................... 14
LIQUIDITY AND CAPITAL RESOURCES ........................................................................................... 15
SELECTED QUARTERLY FINANCIAL INFORMATION ................................................................... 19
TRENDS AND SEASONALITY .............................................................................................................. 20
FINANCIAL RISK MANAGEMENT........................................................................................................ 20
BUSINESS RISK ...................................................................................................................................... 21
OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS AND OTHER
COMMITMENTS ...................................................................................................................................... 22
FINANCIAL INSTRUMENTS .................................................................................................................. 22
RELATED PARTIES ................................................................................................................................ 23
SHARE-BASED PAYMENTS ................................................................................................................. 23
OUTSTANDING SHARE DATA ............................................................................................................. 24
USE OF PROCEEDS FROM PUBLIC OFFERINGS ......................................................................... 24
SEGMENT REPORTING ........................................................................................................................ 25
DIVIDEND POLICY .................................................................................................................................. 25
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS .................. 25
CHANGES IN ACCOUNTING POLICIES ............................................................................................ 27
INTERNAL CONTROL OVER
DISCLOSURE CONTROLS AND PROCEDURES AND
FINANCIAL REPORTING ....................................................................................................................... 27
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Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
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
52-weeks ended September 3, 2022 and August 31, 2021 and should be read in conjunction with our
audited annual consolidated financial statements and the accompanying notes for the 52-weeks ended
September 3, 2022. Please also refer to Goodfood’s press release announcing its results for the 52-weeks
ended September 3, 2022 issued on December 2, 2022. 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.
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
with comparative companies who are using floating year-ends. As a result, the Company is following a
52-week reporting cycle but will include a 53rd week every five to six years. For Fiscal 2022, the fourth
quarter ended on September 3, 2022 is comprised of 1 less day compared to the fourth quarter in Fiscal
2021 and the 52-weeks ended September 3, 2022 is comprised of 3 additional days compared to Fiscal
2021. For simplicity, in this transition year, we refer to 13-weeks ended September 3, 2022 which is 13
weeks, we refer to 13-weeks ended August 31, 2021 even though it is 13-weeks and one day, we refer to
52-weeks ended September 3, 2022 which is 52-weeks and four days and we refer to 52-weeks ended
August 31, 2021 which is 52 weeks and one day.
The consolidated financial statements for the 52-weeks ended September 3, 2022 have been prepared on
the basis that the Company will continue as a going concern, which presumes that the Company will be
able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable
future and will be able to realize its assets and discharge its liabilities and commitments in the normal course
of business. During the fourth quarter of Fiscal 2022, the Company entered into a tolerance letter with its
lenders as a result of a failure to meet certain financial covenants. The lenders agreed to tolerate such
covenant breaches under certain conditions which include restricting Goodfood from using the revolver
portion of the facility, under which no amount is currently outstanding other than letters of credit. In addition,
the Company launched its Blue Ocean initiative, a review of its operations and overall business to drive
efficiencies, return the Company to positive Adjusted EBITDA1 by the first half of 2023 and to form the basis
for the path to positive cash flow and long-term profitable growth. As part of the Blue Ocean initiative, the
Company optimized its manufacturing footprint via the consolidation of several facilities throughout Canada
and the Company shutdown its Goodfood On-Demand offering resulting in the following charges of $46.1
million of impairment of non-financial assets and $1.2 million of discontinuance of products related to
Goodfood On-Demand grocery in the fourth quarter of 2022. The Company’s ability to continue as a going
concern is dependent on initiatives, including Project Blue Ocean, being realized and/or its ability to secure
additional financing to meet anticipated cash needs for working capital and capital expenditures as required.
As a result and in the context of the Blue Ocean initiatives and current status of the Company’s credit facility
and financing needs, there exists a material uncertainty about the Company's ability to continue as a going
concern.
All amounts herein are expressed in Canadian dollars unless otherwise indicated and all references to 2022
refer to Fiscal 2022 and 2021 refer to Fiscal 2021 unless otherwise indicated.
In this MD&A, references to “we”, “our”, “Goodfood” or the “Company” refer to Goodfood Market Corp. and
its wholly owned subsidiaries.
1 Please refer to the “Metrics and Non-IFRS Financial Measures” section of this MD&A for corresponding definitions.
3 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
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 information in this MD&A is current to December 2, 2022, unless otherwise noted.
KEY FINANCIAL HIGHLIGHTS
This section provides a summary of our financial performance for the fourth quarter of Fiscal 2022
compared to the same period in 2021 and for Fiscal 2022 compared to the same period in 2021. 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 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 THE FOURTH QUARTER OF 2022 COMPARED TO THE FOURTH QUARTER OF
2021
• Net sales were $50.4 million, a decrease of $29.0 million, or 37% compared to the same quarter last
year.
• Gross margin totalled 28.3%, an increase of 5.4 percentage points and gross profit of $14.3 million
decreased by $3.9 million or 21% compared to the same quarter last year. Gross margin and gross profit
include $1.2 million of write-down due to the discontinuance of products related to Goodfood On-
Demand grocery.
• Adjusted gross margin1 which excludes the $1.2 million charge of write-down due to the discontinuance
of products totalled 30.7%, an increase of 7.8 percentage points and adjusted gross profit1 of $15.5
million decreased by $2.7 million or 15% compared to the same quarter last year.
• Net loss was $58.4 million compared to $22.1 million in the same quarter in 2021, an increase in net
loss of $36.3 million. As a result of Blue Ocean initiatives, net loss includes a $46.1 million impairment
charge and $1.2 million of write-down due to the discontinuance of products related to Goodfood On-
Demand grocery.
• Adjusted EBITDA margin1 was negative 3.8%, an improvement of 18.6 percentage points compared to
the same quarter last year.
• Cash flows used in operating activities totalled $13.1 million, an improvement of $10.6 million compared
to the same quarter last year.
• Active customers1 of 157,000 compared to 249,000 for the same quarter in 2021
HIGHLIGHTS OF FISCAL 2022 COMPARED TO THE SAME PERIOD OF 2021
• Net sales were $268.6 million, a decrease of $110.6 million, or 29% compared to the same period last
year.
• Gross margin totalled 25.3%, a decrease of 5.3 percentage points and gross profit of $68.1 million
decreased by $48.0 million or 41% compared to the same period last year. Gross margin and gross
profit include $1.2 million of write-down due to the discontinuance of products related to Goodfood On-
Demand grocery.
• Adjusted gross margin1 which excludes the $1.2 million charge of write-down due to the discontinuance
of products totalled 25.8%, a decrease of 4.8 percentage points and adjusted gross profit1 of $69.2
million decreased by $46.9 million or 40% compared to the period last year.
• Net loss was $121.8 million compared to $31.8 million in the same period in 2021, an increase in net
loss of $90.0 million. As a result of Blue Ocean initiatives, net loss includes a $46.1 million impairment
1 Please refer to the “Metrics and Non-IFRS Financial Measures” section of this MD&A for corresponding definitions.
4 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
charge and $1.2 million of write-down due to the discontinuance of products related to Goodfood On-
Demand grocery.
• Adjusted EBITDA margin1 was negative 15.2%, a decrease of 11.2 percentage points compared to the
same period last year.
• Cash flows used in operating activities totalled $59.0 million, an increase of $42.6 million compared to
the same period last year.
FORWARD-LOOKING INFORMATION
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, assumptions, estimates and intentions, including, without limitation,
statements in the “Financial Outlook” section of the MD&A. 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 52-weeks ended September 3,
2022 available on SEDAR at www.sedar.com: limited operating history, negative operating cash flow and
net losses, going concern risk, food industry including current industry inflation levels, COVID-19 pandemic
impacts and the appearance of COVID variants, quality control and health concerns, regulatory compliance,
regulation of the industry, public safety issues, product recalls, damage to Goodfood’s reputation,
transportation disruptions, storage and delivery of perishable foods, product liability, unionization activities,
consolidation trends, ownership and protection of intellectual property, evolving industry, reliance on
management, 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 and the appearance of COVID variants 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
5 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
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 the fourth quarter of Fiscal 2022, the Company added the adjusted gross profit and adjusted gross margin
metrics to measure performance from one period to the next without the variations that could potentially
distort the trends in our operating performance primarily related to the discontinuation of our Goodfood On-
Demand service offering.
Metrics
Active
customers
Adjusted
gross profit
&
Adjusted
gross margin
Definitions
An active customer is a customer that has placed an order within the last three months.
Active customers include customers who have placed an order (1) received as part of
our weekly meal subscription plan, a subscription active customer; and (2) received
on a next-day, same-day or less basis, an on-demand active customer. 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.
A subscription active customer and an on-demand active customer should be
evaluated independently, as a customer of the Company’s platform can be counted as
both a subscription active customer and an on-demand active customer. For example,
this could occur if the customer has made an on-demand order in the three months
prior to the relevant measurement date and holds a subscription account which has
not been cancelled on or before the relevant measurement date.
Pursuant to the Company shutting down its Goodfood On-Demand offering as result
of Project Blue Ocean, the Company will no longer differentiate active customers as
subscription active customers or on-demand active customers in future quarters.
Adjusted gross profit is defined as gross profit excluding the impact of the
discontinuance of products related to Goodfood On-Demand offering pursuant to the
Company’s Blue Ocean initiative. Adjusted gross margin is defined as the percentage
of adjusted gross profit to net sales. The Company uses adjusted gross profit and
adjusted gross margin to measure its performance from one period to the next
excluding the variation caused by the items described above. Adjusted gross profit
and adjusted gross margin are non-IFRS financial measures. We believe that these
metrics are useful measures of financial performance to assess underlying trends in
our ongoing operations.
Please refer to the “Metrics and non-IFRS financial measures – reconciliation” section
of the MD&A for a reconciliation of these non-IFRS financial measures to the most
comparable IFRS financial measures.
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Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
EBITDA,
Adjusted
EBITDA
&
Adjusted
EBITDA
margin
to
the
impact of
the write-down due
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,
the
discontinuance of products related to Goodfood On-Demand offering, impairment of
non-financial assets and reorganization and other related costs pursuant to the
Company’s Blue Ocean initiative. 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.
Please refer to the “Metrics and non-IFRS financial measures – reconciliation” section
of the MD&A for a reconciliation of these non-IFRS financial measures to the most
comparable IFRS financial measures.
Total net
(debt) cash
Total net
(debt) cash to
total
capitalization
Total net (debt) cash is a non-IFRS measure that measures how much total cash the
Company has after taking into account its total debt. Total cash include cash and cash
equivalent. Total debt includes the current and long-term portions of the debt as well
as the liability component of the convertible debentures. We believe that total net
(debt) cash measure is a useful measure to assess the Company’s overall financial
position.
Total net (debt) cash to total capitalization is a non-IFRS measure that is calculated
as total net (debt) cash over total capitalization. Total capitalization is measured as
total debt plus shareholder’s equity. We believe this non-IFRS financial ratio to be a
useful measure to assess the Company’s financial leverage.
Please refer to the “Liquidity and capital resources” section of the MD&A for a
reconciliation of these non-IFRS financial measures to the most comparable IFRS
financial measure.
COMPANY OVERVIEW
WHO WE ARE AND OUR VISION
Goodfood (TSX: FOOD) is a leading digitally native meal solutions brand in Canada, delivering fresh meals
and add-ons that make it easy for customers from across Canada to enjoy delicious meals at home every
day. The Goodfood team is building Canada’s most loved millennial food brand, with the mission to create
experiences that spark joy and help our community live longer on a healthier planet. Goodfood customers
have access to uniquely fresh and delicious products, as well as exclusive pricing, made possible by its
world-class culinary team and direct-to-consumer infrastructures and technology. Goodfood is passionate
about connecting its partner farms and suppliers to its customers’ kitchens while eliminating 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 Ontario and Alberta.
As part of our Blue Ocean initiative and driven by our objective to return to a positive Adjusted EBITDA1
position in the first half of 2023, we simplified our Western operations by consolidating our British Columbia
production facility into our Calgary facility. Together, our Montreal and Calgary facilities serve the whole of
1 Please refer to the “Metrics and Non-IFRS Financial Measures” section of this MD&A for corresponding definitions.
7 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
Canada. In addition, we concluded a strategic review of our Goodfood On-Demand delivery model including
the MFCs and announced the closing of all our MFCs and the shutdown of our wider 30-minute on-demand
offering. Our go-forward strategy is centered on building the Goodfood brand through our weekly meal
plans and add-ons nationally, providing approximately 500 Goodfood branded products, as well as
increasing flexibility and access to our products over time.
The following table provides a summary of our operating locations, as at December 1, 2022:
Total number
of locations
Administrative
offices
Distribution and
manufacturing
centres
Fulfillment
facilities
Greater Montreal Area
(Quebec)
Greater Toronto Area
(Ontario)
Calgary (Alberta)
1
2
1
X
X
X
X
X
X
X
FINANCIAL OUTLOOK
Goodfood’s core purpose is to create experiences that spark joy and help our community live longer on a
healthier planet. As a food brand with a cult following from Canadians coast to coast, Goodfood is focused
on growing its brand through our meal solutions including meal kits and prepared meals with a range of
exciting Goodfood branded add-ons to be explored.
Meal kits are estimated to have reached over $1 billion dollar in size in Canada as part of the $144 billion
Canadian Grocery industry, with roughly 8.4% of households subscribed to a meal kit service (see Annual
Information Form for additional details). We believe that consumers’ willingness to simplify their meal
planning combined with their desire for joyful and nourishing food experiences at home while reducing food
waste provides for significant room to increase online food delivery penetration. With a future household
penetration of 20%, the market for weekly meal plans including meal kits, prepared meals and add-ons in
Canada could reach approximately $3 billion in the coming years and Goodfood is ideally positioned to
capture a significant share of that market.
Investing in efficient and highly targeted marketing strategies to capture new customers, increase order
frequency and grow basket sizes through effective cross selling remains at the forefront of Goodfood’s
near-and-long-term goals. The Company’s current focus however is centered around growing Adjusted
EBITDA1 and cash flows in the coming quarters while continuing to invest in a customer value proposition
that will provide years of profitable growth. We established Project Blue Ocean to drive profitability and
have implemented the majority of the identified initiatives:
Ingredients simplification with ingredients sourced declining from over 400 to below 200
-
- Alignment of workforce with scale leading to significant headcount reductions
- Footprint rationalization leading to consolidation of production in 2 facilities in Montreal and Calgary
- Reduction of capital investments (capex)
- Meal kit and add on products price increases
These initiatives and the recently announced discontinuation of on-demand are having a positive impact on
the financial performance of the business. For the first quarter of 2023, in light of the stable demand driven
by our weekly subscriptions and improved margins, we now expect net sales of approximately $46-48
million and a gross margin in the 32-34% range. Towards the end of the first quarter of fiscal 2023, we
initiated further selling general and administrative expenses reduction through headcount streamlining and
8 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
contract re-negotiations to align our cost-structure to our go-forward operating model. As a result, we are
reconfirming our expected path to return to positive quarterly Adjusted EBITDA1 in the first half of 2023 with
continued growth thereafter.
Despite recent challenges (see the discussions in the ”Basis of Presentation” and ”Capital Management”
sections of the MD&A including material uncertainty regarding our ability to continue as a going concern),
our focus on profitability and cash flows has started to bear fruit and, coupled with our unrelenting focus on
nurturing our customer relationships, remains our top priority towards which we continue to strive. The
Goodfood team is fully focused on building Canada’s most loved millennial food brand.
FISCAL 2022 AT A GLANCE
Board of Director Francois Vimard departure
On October 26, 2022, the Company announced that François Vimard had stepped down as a director of
the Company to focus on his other Board commitments and to pursue other interests.
Blue Ocean initiative
As announced on July 13th, 2022, the Company launched its Blue Ocean initiative, a review of its operations
and overall business to drive efficiencies, return the Company to positive Adjusted EBITDA1 by the first half
of 2023 and to form the basis for the path to positive cash flow and long-term profitable growth. As part of
the Blue Ocean initiative, the Company increased its pricing, simplified its ready-to-cook operations through
the optimization of its raw ingredient portfolio and optimized its manufacturing footprint via the consolidation
of its breakfast facility in Montreal into its main production facility and the consolidation of its British
Columbia production facility into its Calgary facility. In addition, after a strategic review completed in the
fourth quarter of 2022, the Company announced on October 14th, 2022, the shutdown of its Goodfood On-
Demand offering and the closing of all its MFCs and its and a return to a strategy centered on building the
Goodfood brand through its weekly meal plans and add-ons nationally, providing approximately 500
Goodfood branded products, as well as increasing flexibility and access to its products over time. The
Company is continuing to develop and implement additional cost savings measures. The result of the
aforementioned resulted in an impairment charge of $46.1 million in the fourth quarter of 2022 as well as a
charge for the discontinuance of products related to Goodfood On-Demand offering of $1.2 million.
Appointment of John Khabbaz to our Board of Directors replacing Hamnett Hill
In April 2022, the Company announced the appointment of its newest Board of Directors member John
Khabbaz. John Khabbaz is the Founder and Chief Investment Officer of Phoenician Capital, an investment
management firm headquartered in New York City. Phoenician’s mission is to invest in high-quality
businesses built on foundations of strong unit economics and often led by pioneering founders. Mr. Khabbaz
earned his undergraduate degree from McGill University and then attended Columbia University, where he
received his MBA. Prior to founding Phoenician Capital in 2007, Khabbaz held leadership roles at a multi-
asset class financial firm. Before that, he was the founder and CEO of a manufacturing business based in
New York, with global operations spanning three continents.
$30 million bought deal offering of convertible unsecured debentures
In February 2022, the Company completed a $30 million bought deal offering of convertible unsecured
debentures. The Company intended to use the net proceeds from the Offering to accelerate the scaling of
Goodfood’s on-demand grocery and meal solutions network, through the signing of multiple incremental
new micro-fulfillment centers leases, fund their required capital expenditures as well as their initial start-up
and expenses, and for general corporate purposes, as further detailed in the Final short-form prospectus
dated February 4, 2022. For more detail refer to the “Use of Proceeds from Public Offerings” section of the
MD&A.
1 Please refer to the “Metrics and Non-IFRS Financial Measures” section of this MD&A for corresponding definitions.
9 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
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
with comparative companies who are using floating year-ends. 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 fourth quarter
ended on September 3, 2022 is comprised of 1 less day compared to the fourth quarter in Fiscal 2021 and
the year ending September 3, 2022 is comprised of 3 additional days compared to Fiscal 2021.
Appointment of its Chief Technology Officer
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.
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 CUSTOMERS
Active customers, beginning of period
Net change in active customers
Active customers, end of period
For the 13-weeks ended
August 31,
2021
296,000
(47,000)
249,000
September 3,
2022
211,000
(54,000)
157,000
For the 52-weeks ended
August 31,
2021
278,000
(29,000)
249,000
September 3,
2022
249,000
(92,000)
157,000
ADJUSTED GROSS PROFIT AND ADJUSTED GROSS MARGIN
The reconciliation of gross profit to adjusted gross profit and adjusted gross margin is as follows:
(In thousands of Canadian dollars, except percentage information)
Gross profit
Discontinuance of products related to
on-demand offering
Adjusted gross profit
Net sales
Gross margin
Adjusted gross margin (%)
For the 13-weeks ended
August 31,
2021
18,153
September 3,
2022
$ 14,256
$
For the 52-weeks ended
August 31,
2021
116,094
September 3,
2022
68,055
$
$
1,194
$ 15,450
$ 50,357
28.3%
30.7%
$
$
1,194
–
18,153 $
69,249
79,358 $ 268,586
25.3%
22.9%
25.8%
22.9%
$
$
–
116,094
379,234
30.6%
30.6%
For the fourth quarter of 2022, adjusted gross margin increased by 7.8 percentage points compared to the
corresponding period in 2021 mainly due to larger basket sizes, lower credit and incentives as a percentage
of net sales as well as lower product costs and lower fulfilment costs driven by improved efficiencies partially
offset by a lower sales base resulting from a shift in customer behaviors driven by post COVID-19 effects
and the current economic conditions.
10 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
For the 52-weeks ended September 3, 2022, adjusted gross margin decreased by 4.8 percentage points
compared to the corresponding period in 2021 mainly due to a decrease in net sales leading to operating
de-leverage as well as the timing gap between inflationary pressures across all input costs and subsequent
price increases.
EBITDA, ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
The reconciliation of net loss to EBITDA, adjusted EBITDA and adjusted EBITDA margin is as follows:
(In thousands of Canadian dollars, except percentage information)
Net loss
Net finance costs
Depreciation and amortization
Deferred income tax expense (recovery)
EBITDA
Share-based payments expense
Discontinuance of products related to
on-demand offering
Impairment of non-financial assets
Reorganization and other related costs
Adjusted EBITDA
Net sales
Adjusted EBITDA margin (%)
For the 13-weeks ended
August 31,
2021
(22,123) $
524
2,176
97
(19,326) $
1,587
September 3,
2022
$ (58,408)
1,677
4,853
39
$ (51,839)
1,472
For the 52-weeks ended
August 31,
2021
(31,792)
2,170
8,820
500
(20,302)
4,857
September 3,
2022
(121,761) $
5,233
17,295
(1,495)
(100,728) $
5,986
$
$
1,194
46,085
1,160
$
(1,928)
$ 50,357
(3.8)%
$
$
1,194
46,085
6,742
–
–
–
(17,739) $
79,358 $ 268,586
(15.2)%
(22.4)%
(40,721) $
$
–
–
139
(15,306)
379,234
(4.0)%
For the fourth quarter of 2022, adjusted EBITDA margin improved by 18.6 percentage points compared to
the corresponding period in 2021 mainly driven by stronger adjusted gross margin and lower selling, general
and administrative expenses resulting in lower marketing expense and lower salary base from Blue Ocean
initiatives, partly offset by a lower net sales base.
For the 52-weeks ended September 3, 2022, adjusted EBITDA margin decreased by 11.2 percentage
points compared to the corresponding period in 2021 mainly due to a lower sales base. The lower sales
were the result of a shift in customer behaviors from post COVID-19 effects as well as the current economic
conditions partially offset by a higher on-demand active customer base compared to Fiscal 2021. A
decrease in gross margin contributed to the lower adjusted EBITDA margin primarily due to a decrease in
net sales leading to operating de-leverage as well as the timing gap between inflationary pressures across
all input costs and subsequent price increases. In addition, lower adjusted EBITDA margin can be explained
mainly by higher wages and salaries as a percentage of net sales 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 product offering required to support the Company’s
Goodfood On-Demand offering as well as marketing spend as a percentage of net sales.
11 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
RESULTS OF OPERATIONS – FOURTH QUARTER OF FISCAL 2022 AND 2021
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 13-weeks periods ended
Net sales
Cost of goods sold
Gross profit
Gross margin
Selling, general and administrative expenses
Depreciation and amortization
Impairment of non-financial assets
Reorganization and other related costs
Net finance costs
Loss before income taxes
Deferred income tax expense
Net loss, being comprehensive loss
Basic and diluted loss per share
$
$
$
$
$
September 3,
2022
50,357
36,101
14,256
28.3%
18,850
4,853
46,085
1,160
1,677
(58,369)
39
(58,408)
(0.78)
August 31,
2021
($)
79,358 $ (29,001)
(25,104)
61,205
(3,897)
18,153 $
22.9%
N/A
(18,629)
37,479
2,677
2,176
46,085
–
1,160
–
1,153
524
(22,026) $ (36,343)
(58)
(22,123) $ (36,285)
(0.47)
(0.31) $
97
$
$
$
$
$
(%)
(37)%
(41)%
(21)%
5.4 p.p.
(50)%
123%
N/A
N/A
220%
(165)%
(60)%
(164)%
(152)%
VARIANCE ANALYSIS FOR THE FOURTH QUARTER OF 2022 COMPARED TO FOURTH QUARTER
OF 2021
• Net sales decreased compared to the same period last year mainly due to the change in customer
behaviors driven by removal of lock-down restrictions, the increased vaccine coverage as well as the
current economic conditions partially offset by a higher on-demand active customer base in the fourth
quarter of Fiscal 2022 compared to the same quarter last year.
• The decrease in gross profit primarily resulted from a decrease in net sales. The increase in gross
margin was driven by larger basket sizes, lower credit and incentives, lower product costs and lower
fulfilment costs as a percentage of sales driven by improved efficiencies.
• The decrease in selling, general and administrative expenses is primarily due to lower marketing spend
and wages and salaries driven primarily by lower net sales and the Company’s Blue Ocean initiatives.
Selling, general and administrative expenses as a percentage of net sales decreased from 47.2% to
37.4%.
• Reorganization and other related costs were incurred in the fourth quarter of Fiscal 2022 mainly
consisting of headcount reduction costs and external advisor fees related to the execution of Project
Blue Ocean.
•
Impairment of non-financial assets incurred in the fourth quarter of Fiscal 2022 was primarily related to
the discontinuation of Goodfood On-Demand and other Blue Ocean initiatives primarily related to closure
of facilities.
• The increase in depreciation and amortization expense is mainly due to the recognition of right-of-use
assets from new facility lease agreements and related additions of leasehold improvements.
• The increase in net finance costs is mainly due to the Company’s $30 million convertible debenture
issued in February 2022 and higher lease obligations compared to the same quarter last year.
• The increase in net loss in the fourth quarter of 2022 compared to the same quarter last year is mainly
due to an impairment of non-financial assets, lower net sales and higher depreciation and amortization
partly offset by higher gross margin and lower wages and salaries and marketing spend.
12 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
RESULTS OF OPERATIONS – FISCAL 2022 AND 2021
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 52-weeks periods ended
Net sales
Cost of goods sold
Gross profit
Gross margin
Selling, general and administrative expenses
Depreciation and amortization
Impairment of non-financial assets
Reorganization and other related costs
Net finance costs
Loss before income taxes
Deferred income tax (recovery) expense
Net loss, being comprehensive loss
Basic and diluted loss per share
$
$
$
$
$
September 3,
2022
268,586
200,531
68,055
25.3%
115,956
17,295
46,085
6,742
5,233
(123,256)
(1,495)
(121,761)
(1.62)
August 31,
2021
($)
$ 379,234 $ (110,648)
(62,609)
(48,039)
N/A
(20,301)
8,475
46,085
6,603
3,063
(91,964)
(1,995)
(89,969)
(1.17)
263,140
$ 116,094 $
30.6%
136,257
8,820
–
139
2,170
(31,292) $
500
(31,792) $
(0.45) $
$
$
$
(%)
(29)%
(24)%
(41)%
(5.3) p.p.
(15)%
96%
N/A
4,750%
141%
(294)%
N/A
(283)%
(260)%
VARIANCE ANALYSIS FOR FISCAL 2022 COMPARED TO FISCAL 2021
• Net sales decreased year-over-year mainly due to the change in customer behaviors driven by the
removal of lock-down restrictions and the increased vaccine coverage and the current economic
conditions partially offset by a higher Goodfood On-Demand active customer base during Fiscal 2022.
• The decrease in gross profit and gross margin primarily resulted from a decrease in net sales leading to
operating de-leverage as well as the current extraordinary inflationary pressures, both impacting our
input costs mainly on food, labour, production and shipping costs. The increase in food costs was also
driven by the expansion of our private label grocery offering. Higher production costs primarily resulted
from an increase in production and fulfillment labour due to inflationary increases in wages and operating
de-leverage.
• The decrease in selling, general and administrative expenses is primarily due to lower marketing spend
driven by lower net sales and the Company’s reorganization initiatives, including Project Blue Ocean, to
align its workforce and marketing spend towards its current net sales base which primarily impacted the
second half of Fiscal 2022 results. Selling, general and administrative expenses as a percentage of net
sales increased from 35.9% to 43.2%, primarily due to volume deleverage and the timing of impacts
realized from Project Blue Ocean impacting results in the second half of Fiscal 2022.
• Reorganization and other related costs were incurred in Fiscal 2022 mainly consisting of headcount
reduction costs and external advisor fees related to the execution of Project Blue Ocean.
• The increase in depreciation and amortization expense is mainly due to the recognition of right-of-use
assets from new facility lease agreements and related additions of leasehold improvements as the
Company expanded its product offering of grocery products and the ramp-up of new facilities across
Canada prior to the strategic review of its strategy which began in the fourth quarter of Fiscal 2022.
•
Impairment of non-financial assets incurred in the fourth quarter of Fiscal 2022 was primarily related to
the discontinuation of Goodfood On-Demand and other Blue Ocean initiatives mainly related to closure
of facilities.
• The increase in net finance costs is mainly due to the Company’s increase of new facilities as the
Company expanded its product offering of grocery products and the ramp-up of new facilities across
Canada as well as the Company’s $30 million convertible debenture issued in February 2022.
• A deferred income tax recovery was recognized due to the issuance of $30 million convertible
debentures in February 2022.
13 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
• The increase in net loss year-over-year is mainly due to lower net sales and gross profit as well as the
previously referenced impairment of non-financial assets, higher depreciation and amortization expense
as well as higher reorganization and other related costs.
FINANCIAL POSITION
The following table provides the main variances in the Company’s consolidated statement of financial
position:
(In thousands of Canadian dollars)
September 3,
2022
August 31,
2021
Variance Main components
As at
Cash and cash
equivalents
$ 36,885 $ 125,535 $ (88,650)
Inventories
6,884
14,318
(7,434)
Assets held for sale
3,654
–
3,654
Fixed assets
18,408
33,367
(14,959)
Right-of-use assets
55,419
69,157
(13,738)
Accounts payable and
accrued liabilities
Long-term debt, including
current portion
27,104
52,207
(25,103)
11,743
21,351
(9,608)
Lease obligations,
including current portion
69,209
73,111
(3,902)
Convertible debentures,
liability component
27,469
5,623
21,846
in
reclassification
to our Blue Ocean
Due to the year-to-date net loss
and capital investments in facilities
partially offset by the convertible
debenture issuance in February
2022
lower net sales and
Due
to
improvement
inventory
management process as well as
discontinuance of products related
to our on-demand offering
Related
Initiatives
Mainly due to impairment of fixed
assets and
to
assets held for sale
Mainly due to impairment of right-
of-use assets related to our Blue
Ocean
initiatives as well as
termination of leases
Mainly due to lower sales base and
lower salaries and benefits accrual
Mainly due to repayment. Debt is
classified fully as short-term due to
the breach of certain
financial
covenants
New locations were added to the
Company’s facility portfolio partially
offset by a termination of a lease
and repayment terms
Liability component of the $30
million
debentures
issued in February 2022
convertible
As a result of the Company’s reorganization plan and the breach of certain financial covenants, the
Company has decided to close several facilities as well as shut-down its on-demand grocery product
offering. This resulted in the following cash generating units (“CGUs") being identified 1) the individual asset
level, 2) at the leased facility level (including right-of-use asset and fixed assets pertaining to the leased
premises) and 3) the geographical area level based on where customers are served that generate
independent cash inflows. Consequently, the Company performed an impairment test of its non-financial
assets since it had reason to believe that the carrying amount of the CGUs might not be recoverable.
14 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
During the year ended September 3, 2022, the Company recorded an impairment charge of $37.9 million
on fixed assets, $7.7 million on right-of-use assets and $0.5 million on intangible assets from the following
CGUs:
CGU level
Individual assets
Leased facilities
Geographical areas
Impairment charge of non-financial assets
Recoverable
amount
If FVLCD, fair value
level inputs
Impairment charge
FVLCD
VIU
FVLCD
Level 3
N/A
Level 3
$
$
9,022
37,063
−
46,085
When determining the fair value less costs of disposal (“FVLCD”) of its individual assets, the Company
used market inputs based on the expected price the Company would be able to sell the asset for on a
secondary market. Subsequent to the impairment test, the individual assets were reclassified as assets
held for sale as they met the condition to be classified as such as at September 3, 2022.
When determining the value in use (“VIU”) of its leased facilities, the Company used a discounted cash flow
model in which the main assumptions included the length of time the Company would expect to find a
market participant to take over the lease and market rental rates. In addition, the discount rate employed
for each cash flow projection was determined to be 8% based on capitalization rates according to the market
in which the facilities are located.
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
Long-term debt, including current portion
Convertible debentures, liability component
Total debt
Shareholders’ (deficiency) equity
Total capitalization
Cash and cash equivalents
Total net (debt) cash (1)
Total net (debt) cash to total capitalization (1)
$
September 3,
2022
11,743
27,469
39,212
(11,178)
28,034
36,885
(2,327)
(8.3)%
$
$
$
August 31,
2021
21,351
5,623
26,974
97,875
124,849
125,535
98,561
78.9%
$
$
$
$
(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.
Goodfood’s total net debt was $2.3 million compared to total net cash of $98.6 million last year. This year-
over-year negative variance of $100.9 million drove a decrease in total (debt) cash to total capitalization
mainly due to its net loss as well as its investment in capital partially offset by the issuance of convertible
debentures in February 2022.
15 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
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 and convertible debentures, as
well as short-term or long-term debt.
The Company entered into a tolerance letter with its lenders as a result of a failure to meet certain financial
covenants. The lenders agreed to tolerate such covenant breaches under certain conditions which include
restricting Goodfood from using the revolver portion of the facility, under which no amount is currently
outstanding or available other than letters of credit. Goodfood is in the process of negotiating the terms of
a revised credit facility arrangement. In the event that a new credit facility is not in place in the near term,
the Company would expect to have in place a further extension of the current tolerance letter. There can
be no assurance as to a credit facility arrangement being put in place in a timely manner, the terms of such
an arrangement or obtaining a further extension of the current tolerance letter. As a results of the covenant
breach, a charge of $0.7 million related to external advisor fees was recorded in the fourth quarter of 2022
in reorganization and other related cost.
The Company’s ability to continue as a going concern is dependent upon management’s initiatives,
including Project Blue Ocean, being realized and/or its ability to secure financing to meet anticipated cash
needs for working capital and capital expenditures as required. However, there can be no assurance that
the Company will be able to achieve its stated goals or that it will obtain additional financing or what the
terms of such financing might be or for what period of time a tolerance letter will remain in place with the
Company’s lenders. As a result, material uncertainty currently exists with respect to our ability to continue
as a going concern.
The following details initiatives completed or ongoing to reduce our liquidity risk:
- We continue to work through Blue Ocean initiative to drive efficiencies and return the Company to
positive Adjusted EBITDA by the first half of 2023 and to form the basis for the path to positive cash
flow and long-term profitable growth;
- We continue to work with our lenders to pursue a revised credit facility arrangement;
- We continue to evaluate and examine other financing options.
CASH FLOWS
A summary of net cash flows by activity for the 13-weeks ended September 3, 2022 and August 31, 2021
is presented below:
(In thousands of Canadian dollars)
For the 13-weeks ended
Cash flows used in operations, excluding change in
non-cash operating working capital
Change in non-cash operating working capital
Net cash flows used in operating activities
Net cash flows used in investing activities
Net cash flows used in financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
September 3,
2022
August 31,
2021
Variance
$
$
$
$
(3,661) $
(9,453)
(17,614) $
(6,112) $
(23,726) $
(13,114) $
(7,709)
(142)
(4,449)
(44,401)
(61,964) $ (31,577) $
98,849
36,885
157,112
$ 125,535
$
13,953
(3,341)
10,612
3,260
(44,259)
(30,387)
(58,263)
(88,650)
Net cash flows used in operating activities improved by $10.6 million for the fourth quarter 2022 compared
to the same period last year primarily due to a lower net loss before non-cash expenses partially offset by
lower accounts payable and accrued liabilities driven by a lower sales base.
16 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
Net cash flows used in investing activities improved by $3.3 million for the fourth quarter 2022 compared to
the same period last year primarily due to lower fixed assets additions as facility roll-outs came were
concluded before fourth quarter of Fiscal 2022.
Net cash flows used in financing activities increased by $44.3 million for the fourth quarter 2022 compared
to the same period last year primarily due to the Company’s repayment of its revolver.
A summary of net cash flows by activity for the 52-weeks ended September 3, 2022 and August 31, 2021
is presented below:
(In thousands of Canadian dollars)
For the 52-weeks ended
Cash flows used in by operations, excluding change
in non-cash operating working capital
Change in non-cash operating working capital
Net cash flows used in 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
September 3,
2022
August 31,
2021
$
$
$
$
(47,873) $
(11,108)
(58,981) $
(37,671)
8,002
(16,344) $
(14) $
(16,358) $
(18,012)
55,503
(88,650) $ 21,133
104,402
125,535
$ 125,535
36,885
$
$
Variance
(31,529)
(11,094)
(42,623)
(19,659)
(47,501)
(109,783)
21,133
(88,650)
Net cash flows used in operating activities increased by $42.6 million for the 52-weeks of 2022 compared
to the same period last year primarily due to the increase in net loss and lower accounts payable and
accrued liabilities driven by a lower sales base.
Net cash flows used in investing activities increased by $19.7 million for the 52-weeks of 2022 compared
to the same period last year primarily due to higher fixed assets additions and deposits mainly attributable
to the build-out of facilities.
Net cash flows provided by financing activities decreased by $47.5 million for the 52-weeks of 2022
compared to the same period last year primarily due to last year’s issuance of common shares being higher
in comparison to Fiscal 2022’s issuance of convertible debentures.
DEBT
During the first quarter of Fiscal 2021, 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 of Fiscal 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 the Canadian Banker’s Acceptance 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.
For more detail with respect to the status of the Credit Facility 2021 and the existence of a tolerance letter
with the Company’s lenders, please refer to the subsection “Capital Management” of the “Liquidity and
Capital Resources” section of this MD&A.
INTEREST RATE SWAP
Goodfood had one swap agreement in place whereby the Company fixed the interest rate on a notional
amount of $10.9 million which matured in November 2021. Goodfood has not entered into a new swap as
at the end of the fourth quarter of Fiscal 2022.
17 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
CONVERTIBLE DEBENTURES
On February 11, 2022, the Company issued 30,000 convertible unsecured subordinated debentures (the
"2022 Debentures") at a price of $1 thousand per Debenture for gross proceeds of $30 million. The
Debentures mature on March 31, 2027 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, 2022. Factoring in the 2022 Debentures issuance costs, the effective interest rate on the
2022 Debentures is 12.6%. 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 conversion price of $4.60 per common share.
On or after March 31, 2025, and prior to March 31, 2026, 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 2022
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, 2026, and prior to the
Maturity Date, the 2022 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 Fiscal 2020, the Company issued 30,000 convertible unsecured subordinated debentures (the "2020
Debentures") at a price of $1,000 per Debenture for gross proceeds of $30 million. The 2020 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 2020 Debentures issuance costs, the effective interest rate on the 2020 Debentures is 11.76%. The
2020 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 52-weeks ended September 3, 2022, 1,364 Debentures (2021 – 11,284) were converted into
common shares of the Company, resulting in the issuance of 293,647 (2021 – 2,400,819) common shares
and the Company reclassified $1.1 million (2021 – $9.0 million) and $0.2 million (2021 – $1.9 million),
respectively from the convertible debentures liability to common shares and from the equity component of
the convertible debentures to common shares. A deferred income tax recovery of $1.6 million (2021 – nil)
was recognized upon issuance of the 2022 Debentures for the 52-weeks ended September 3, 2022 (2021
– nil). A deferred income tax expense of $0.1 million (2021 – $0.5 million) was recognized upon conversion
of the Debentures for the 52-weeks ended September 3, 2022. As at September 3, 2022, 35,488
Debentures (2021 – 6,852 Debentures) were outstanding.
COMMON SHARES
Significant equity transactions that took place during the 13-weeks and 52-weeks ended September 3, 2022
were as follows:
• Nil and 161,707 stock options were exercised, respectively, for the same number of common shares;
• 72,897 and 231,453 restricted share units vested, respectively, and the same number of common shares
were issued; and
• 744 and 1,364 Debentures were converted into 161,737 and 293,647 common shares.
18 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
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 customers and per share and percentage information)
Active customers (1)
Net sales
Gross profit
Gross margin
Discontinuance of
products related to
on-demand
offering
Adjusted Gross
profit (1)
Adjusted Gross
margin (1)
Net loss
Net finance costs
Depreciation and
amortization
Deferred income tax
expense (recovery)
EBITDA (1)
Share-based
payments expense
Discontinuance of
products related to
on-demand offering
Impairment of non-
financial assets
Reorganization and
other related costs
Adjusted EBITDA (1)
Adjusted EBITDA
margin (1)
Basic and diluted
loss per share (2)
Q3
211,000
Q4
157,000
Fiscal 2021
Q1
306,000 290,000
$ 50,357 $ 67,031 $ 73,377 $ 77,821 $ 79,358 $ 107,795 $ 100,654 $ 91,427
29,573
30,636
30.4% 32.3%
Fiscal 2022
Q1
254,000
14,256
28.3%
17,595
24.0%
18,153
22.9%
37,732
35.0%
17,556
26.2%
Q4
249,000
18,648
24.0%
Q2
246,000
Q3
296,000
Q2
1,194
–
–
–
–
–
–
–
15,450
17,556
17,595
18,648
18,153
37,732
30,636 29,573
26.2%
30.7%
30.4% 32.3%
$ (58,408) $ (21,103) $ (20,640) $ (21,610) $ (22,123) $ (2,333) $ (4,252) $ (3,083)
675
24.0%
22.9%
35.0%
24.0%
1,596
1,677
1,056
540
904
524
431
4,853
5,220
4,282
2,940
2,176
2,318
2,292
2,033
39
(1,559)
$ (51,839) $ (14,289) $ (16,861) $ (17,739) $ (19,326) $
(2)
97
27
61
129
477 $ (1,291) $
213
(162)
1,472
1,177
1,984
1,353
1,587
869
1,404
997
1,194
46,085
–
–
–
–
–
–
1,160
2,477
1,293
1,812
–
–
–
$
(1,928) $ (10,635) $ (13,584) $ (14,574) $ (17,739) $
–
–
–
–
–
–
–
1,346 $
139
252 $
–
835
(3.8)%
(15.9)% (18.5)%
(18.7)%
(22.4)%
1.2%
0.3%
0.9%
$
(0.78) $
(0.28) $
(0.28) $
(0.29) $
(0.31) $
(0.03) $
(0.06) $
(0.05)
(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 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 increased sequentially for the first three quarters of Fiscal 2021, principally due to the
Company’s increasing product offering and flexibility as well as the ongoing impact of Covid-19 restrictions
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. Transitioning into the first quarter of Fiscal 2022, weekly orders and active customers
increased throughout the quarter compared to the seasonal lows experienced in the latter part of the fourth
quarter of Fiscal 2021, while net sales of the first quarter of Fiscal 2022 came in slightly lower than the
fourth quarter of Fiscal 2021 as the quarterly order frequency was slightly lower. Net sales decreased in
the second quarter of Fiscal 2022 due to four less days in the quarter compared to the first quarter of Fiscal
2021 coupled with the normal seasonal impact of Christmas and New Year holidays. With the change in
customer behaviors from post COVID-19 effects and the current economic conditions, net sales decreased
in the third quarter of Fiscal 2022. Fourth quarter net sales were impacted by the expected seasonal slow-
19 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
down associated with the summer months as well as the weakening macro-economic environment driven
in part by on-going high inflation rates.
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 continued 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. Net loss improved in the first and second quarter of Fiscal 2022
compared to the last quarter of Fiscal 2021 beginning with a progressively stronger gross margin throughout
the quarter and cost efficiencies with selling, general and administration expenses partially offset by lower
net sales. Net loss increased in the third quarter of Fiscal 2022 mainly due to higher depreciation and
amortization and reorganization and related costs. Lastly net loss increased in the fourth quarter of Fiscal
2022 was due to the charges regarding the impairment of non-financial assets and the discontinuance of
products related to on-demand offering.
For Fiscal 2021, the first quarter saw a decrease in quarterly adjusted EBITDA and adjusted EBITDA margin
due to higher wages and salaries and higher marketing spend as the Company continued to grow and
expand its operations and product offerings across Canada. The second and third quarter of the year saw
a sequential increase in adjusted EBITDA and adjusted EBITDA margin driven primarily by rising quarterly
net sales. The fourth quarter of Fiscal 2021, adjusted EBITDA and adjusted EBITDA margin was impacted
by the decrease in net sales and the operating deleverage it created across both gross profit and selling,
general and administrative expenses. Adjusted EBITDA and adjusted EBITDA margin improved in the first
and second quarter of Fiscal 2022 compared to the last quarter of Fiscal 2021, beginning with a
progressively stronger gross margin throughout the quarter and cost efficiencies with selling, general and
administration expenses partially offset by lower net sales. As the Company continues to focus on improving
profitability through its reorganization initiatives including Project Blue Ocean, adjusted EBITDA and
adjusted EBITDA margin the third quarter of Fiscal 2022 continues to improve mainly driven by stronger
gross margin in the quarter and continued cost efficiencies with selling, general and administration
expenses partially offset by lower net sales. The fourth quarter of Fiscal 2022 saw a significant sequential
improvement in the Adjusted EBITDA and Adjusted EBITDA margin, driven by both adjusted gross margin
improvement as well as a reduction in the selling, general and administrative expenses required to support
the business driven from the implementation of Blue Ocean initiatives, partly offset by a decline in net sales.
TRENDS AND SEASONALITY
The Company’s net sales and expenses are impacted by seasonality. During the holiday season and the
summer season, the Company anticipates net sales to be lower as a higher proportion of customers elect
to skip their delivery. The Company generally anticipates the number of active customers to be lower during
these periods. 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 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.
20 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
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
managed its interest rate risk by using a variable-to-fixed interest rate swap which matured in November
2021. To date, the Company did not enter into a new interest rate swap. Refer to 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.
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.
The Company monitors its risk of shortage of funds by monitoring forecasted and actual cash flows and
maturity dates of existing financial liabilities and commitments and is actively managing its capital to ensure
a sufficient liquidity position to finance its general and administrative, working capital and overall capital
expenditures. However, the Company concluded that material uncertainty exists with respect to the
Company’s ability to continue as a going-concern for at least the next twelve months to realize its assets
and satisfy its liabilities in the normal course of operations as they come due.
In order to address these uncertainties, the Company will rely on Blue Ocean initiatives, a review of its
operations and overall business to drive efficiencies, return the Company to positive Adjusted EBITDA by
the first half of 2023 and to form the basis for the path to positive cash flow and long-term profitable growth
as well as negotiating the terms of a revised credit facility arrangement with its lenders. There can be no
assurance that the Company will be successful in achieving positive results. Please refer to the “Basis of
Presentation” section of the MD&A.
BUSINESS RISK
For a detailed discussion of business risk factors, please refer to the Company’s Annual Information Form
for the 52-weeks ended September 3, 2022 and the Company’s final short-form prospectus dated February
4, 2022, both documents available on SEDAR at www.sedar.com.
21 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS AND OTHER
COMMITMENTS
The following are amounts due on contractual maturities of financial liabilities, including estimated interest
payments as at 52-weeks ended:
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
Debentures, liability
component
Lease obligations, including
current portion
Purchase and service
contract obligations
$
27,104
$
27,104
$
27,104
$
− $
−
11,743
12,086
12,086
−
−
27,469
45,220
2,282
42,938
−
69,209
79,773
11,024
40,807
27,942
−
9,626
9,236
390
−
$ 135,525
$
173,809
$
61,732
$ 84,135 $
27,942
As at September 3, 2022, 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.
FINANCIAL INSTRUMENTS
The Company’s financial instruments primarily consist of cash and cash equivalents, accounts and other
receivables, 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.
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 the end of the fourth quarter of Fiscal 2022, the Company was in not in
compliance with these financial covenants. Refer to the “Liquidity and Capital Resources” section of the
MD&A for further discussion on the covenant breaches.
22 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
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 52-weeks ended,
Salaries, fees and other short-term employee benefits
Share-based payments expense
RELATED PARTY TRANSACTIONS
September 3,
2022
1,983
2,931
$
August 31,
2021
2,661
1,594
$
Related parties of the Company include Directors and key management personnel, their family members,
and companies over which they have significant influence or control.
In connection with the issuance of the 2022 Debentures, 415 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.
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
three or 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
any shares reserved for issuance under the Stock Option Plan. Under the plan, RSUs generally vest over
a period of three years.
23 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
OUTSTANDING SHARE DATA
As at
Common shares outstanding (1)
Debentures outstanding (2)
Stock options outstanding
Stock options exercisable
Restricted share units outstanding
December 1, 2022
75,474,962
7,505,957
3,058,789
1,973,515
1,641,141
September 3,
2022 August 31, 2021
74,718,045
1,457,872
3,174,309
1,112,432
625,491
75,233,027
7,550,638
3,262,799
1,865,747
2,000,716
(1) As at December 1, 2022 and September 3, 2022, 227,765 and 171,829 common shares held in trust through the
employee share purchase plan (August 31, 2021 – 70,498 common shares) were included in the common shares
outstanding.
(2) As at December 1, 2022 and September 3, 2022, 35,278 and 35,488 Debentures (August 31, 2021 – 6,852
Debentures) were outstanding which are convertible into 7,501,584 and 7,547,236 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 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 September 3, 2022:
(In thousands of Canadian dollars)
Capital expenditures to build out same-day delivery
capabilities (including fulfillment technology and
automation equipment) (1)
General corporate purposes
Remaining as at September 3, 2022
Total net proceeds
Share issuance costs
Gross proceeds
Actual use of
proceeds
Estimated use
of proceeds
Variance
$ 35,166
22,033
–
57,199
2,801
$ 60,000
$ 40,000
17,305
N/A
57,305
2,695
$ 60,000
$
(4,834)
4,728
–
(106)
106
–
$
(1) 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.
24 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
FEBRUARY 2022 CONVERTIBLE DEBENTURES PUBLIC OFFERING
On February 11, 2022, the Company completed a public offering and issued $30 million of convertible
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 4, 2022 with the actual use of proceeds as at September 3, 2022. Pursuant to
the shutdown of its Goodfood On-Demand offering and the closing of all its MFCs as part of its Blue Ocean
initiatives, the Company will no longer be investing in capital expenditures for its MFCs. Going forward, the
Company will use the proceeds of this public offering to fund general corporate purposes including leases
and Blue Ocean initiatives.
(In thousands of Canadian dollars)
Micro-Fulfillment Related Capital Expenditures
Micro-Fulfillment Centres Start-Up Costs Including
Leases (1)
General corporate purposes
Remaining as at September 3, 2022
Total net proceeds
Debentures issuance costs
Gross proceeds
Actual use of
proceeds
1,049
$
Estimated use
of proceeds
$ 9,500
Variance
(8,451)
$
2,830
5,760
18,423
28,062
1,938
$ 30,000
9,500
9,223
N/A
28,223
1,777
$ 30,000
(6,670)
(3,463)
18,423
(161)
161
–
$
(1) Start-up costs includes costs incurred before the launch of a micro-fulfillment centre as well as expenses related
to opening and ramping up the micro-fulfillment centre.
SEGMENT REPORTING
The Company has one reportable segment as our principal business activity is focused on developing and
servicing the online meal-kit and grocery add-on 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.
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.
25 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
The Company’s main judgements, estimates, and assumptions are presented below:
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 during the pandemic which has stabilized since the last quarters of Fiscal 2021. 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 and actual
economic conditions are difficult to predict and could affect the significant estimates and judgements used
in the preparation of the Company’s consolidated financial statements.
2
CRITICAL JUDGEMENTS
Impairments of non-current 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.
Leases 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 judgement
could affect the Company’s financial position if the lease term of the leases is reassessed differently.
3
KEY SOURCES OF ESTIMATES AND ASSUMPTIONS
Impairments of non-financial assets
In assessing impairment, management estimates the recoverable amount of each asset or CGU.
Management estimated the recoverable amount of the CGUs based on the higher of value-in-use (“VIU”)
and fair value less costs of disposal (“FVLCD”). The VIU is based on expected future cash flows. When
measuring expected future cash flows, management makes key assumptions about future economic
benefits which relate to future events and circumstances. Estimation uncertainty relates to assumptions
about future economic benefits and the application of an appropriate discount rate. When measuring
FVLCD, management makes key assumptions on expected fair values and costs of disposal. Actual results
could vary from these estimates which may cause significant adjustments to the Company’s long-lived
assets in subsequent reporting periods.
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
26 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
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
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
No changes in accounting policies were adopted during the 52-weeks ended September 3, 2022.
STANDARDS ISSUED BUT NOT YET EFFECTIVE
Amendment to IAS 1, Presentation of Financial Statements
In January 2020, the IASB issued an amendment to IAS 1 Presentation of Financial Statements to clarify
the classification of liabilities as current or non-current (the “2020 amendments”). For the purposes of non-
current classification, the amendment removed the requirement for a right to defer settlement or roll over
of a liability for at least twelve months to be unconditional. Instead, such a right must have substance and
exist at the end of the reporting period. The 2020 amendment is effective for annual periods beginning on
or after September 3, 2023. The 2020 amendments are subject to future developments and in November
2021 the IASB proposed to defer the effective date to no earlier than January 2024. The Company is
currently evaluating the impact of the amendment on its consolidated financial statements.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL
REPORTING
In accordance with National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim
Filings, the Company has filed certificates signed by the Chief Executive Officer and the Chief Financial
Officer (“Certifying Officers”) that, among other things, report on the design and effectiveness of disclosure
controls and procedures (“DC&P”) and the design and effectiveness of internal control over financial
reporting (“ICFR”).
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
September 3, 2022.
INTERNAL CONTROLS OVER FINANCIAL REPORTING
The Certifying Officers have designed ICFR or have caused them to be designed under their supervision,
in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with IFRS. In designing and evaluating internal
controls, it should be recognized that due to inherent limitations, any controls, no matter how well designed
27 | P a g e
Goodfood Market Corp.
52-weeks ended September 3, 2022
Management’s Discussion and Analysis
and operated, can provide only reasonable assurance of achieving the desired control objectives and may
not prevent or detect misstatements.
The control framework used to design the Company’s ICFR is based on the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) on Internal Control –
Integrated Framework (2013 framework).
Management, under the supervision of the Certifying Officers, has evaluated the effectiveness of ICFR and
based on that evaluation, the Certifying Officers have concluded that the Company’s ICFR was effective as
at September 3, 2022.
No changes were made during the Fiscal 2022 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.
28 | P a g e
CONSOLIDATED
FINANCIAL
STATEMENTS
YEARS ENDED SEPTEMBER 3, 2022 AND AUGUST 31, 2021
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
1 - 6
7
8
9
10
11 - 39
KPMG LLP
600 de Maisonneuve Blvd. West
Suite 1500, Tour KPMG
Montréal (Québec) H3A 0A3
Canada
Telephone
Fax
Internet
(514) 840-2100
(514) 840-2187
www.kpmg.ca
INDEPENDENT AUDITORS’ REPORT
To the Shareholders of Goodfood Market Corp.
Opinion
We have audited the consolidated financial statements of Goodfood Market Corp. (the "Entity"), which
comprise:
•
•
•
•
the consolidated statements of financial position as at September 3, 2022 and August 31, 2021;
the consolidated statements of loss and comprehensive loss for the 52-weeks then ended;
the consolidated statements of changes in equity for the 52-weeks then ended;
the consolidated statements of cash flows for the 52-weeks then ended; and
• notes to the consolidated financial statements, including a summary of significant accounting
policies.
(Hereinafter referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the
consolidated financial position of the Entity as at September 3, 2022 and August 31, 2021, and its
consolidated financial performance and its consolidated cash flows for the 52-weeks then ended in
accordance with International Financial Reporting Standards ("IFRS").
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the "Auditors’ Responsibilities for
the Audit of the Financial Statements" section of our auditors’ report.
We are independent of the Entity in accordance with the ethical requirements that are relevant to our
audit of the financial statements in Canada and we have fulfilled our other responsibilities in
accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 2.2 in the financial statements, which indicates that the Entity has incurred
net losses and negative cash flows from operating activities for the 52-weeks ended September 3,
2022, has a deficit as at September 3, 2022, that it was in breach of certain of its financial covenants
which resulted in the related debt being classified as a current liability at September 3, 2022, and that
its operations are dependent on generating positive cash flow from operations, the continued financial
support of its shareholders and lenders, and/or raising additional funds to finance operations within
and beyond the next twelve months.
KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. KPMG
Canada provides services to KPMG LLP.
Page 2
As stated in Note 2.2 in the financial statements, these events or conditions, along with other matters
as set forth in Note 2.2 in the financial statements, indicate that a material uncertainty exists that may
cast significant doubt on the Entity's ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements for the 52-weeks ended September 3, 2022. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the "Material Uncertainty related to Going Concern" section of
the auditor’s report, we have determined the matters described below to be the key audit matters to
be communicated in our auditor’s report.
Evaluation of the impairment of the individual assets and of the leased
facilities cash generating units following the reorganization
Description of the matter
We draw attention to Notes 6, 13 and 14 to the financial statements. The Entity has fixed assets of
$18,408 thousand, right-of-use assets of $55,419 thousand and assets held for sale of $3,654
thousand. As a result of the Entity’s reorganization plan and the breach of certain financial covenants,
the Entity has decided to close several facilities as well as shut-down its on-demand grocery product
offering. This resulted, amongst other, in the following cash generating unit ("CGU"). CGUs being
identified 1) at the individual asset level and 2) at the leased facility level (including right-of-use asset
and fixed assets pertaining to the leased premises). Consequently, the Entity performed an
impairment test of its non-financial assets since it had reason to believe that the carrying amount of
the CGUs might not be recoverable. The Entity has recorded an impairment charge of $9,022
thousand at the individual assets level and of $37,063 thousand at the leased facilities level.
The Entity reviews the carrying amount of its non-financial assets, which include 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. If any such indication
exists, the recoverable amount of the asset is estimated. For impairment testing purposes, assets that
cannot be tested individually are aggregated into a 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 (or a CGU’s) fair value less costs of disposal ("FVLCD") and its value in use
("VIU"). In assessing VIU, 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 or the CGU. Impairment losses are allocated to reduce the carrying
amounts of the assets in the CGU on a pro rata basis and are recognized in the consolidated
statements of loss.
Page 3
For individual assets subsequently classified as assets held for sale, the Entity’s significant
assumptions in determining FVLCD include:
• expected price the Entity would be able to sell the asset on a secondary market.
For the leased facilities CGUs, the Entity used a discounted cash flow model to determine VIU in
which the Entity’s significant assumptions include:
•
•
length of time the Entity would expect to find a market participant to take over the lease and
market rental rates;
the discount rate employed for each cash flow projection based on capitalization rates according
to the market in which the facilities are located.
Why the matter is a key audit matter
We identified the evaluation of the impairment of the individual assets and of the leased facilities
CGUs following the reorganization as a key audit matter. This matter represented an area of
significant risk of material misstatement given the magnitude of fixed assets, right-of-use assets and
assets held for sale, and the high degree of estimation uncertainty in determining the recoverable
amounts of the individual assets and the leased facilities CGUs. In addition, significant auditor
judgement and specialized skills and knowledge were required in evaluating the results of our audit
procedures due to the sensitivity of the recoverable amounts determined by the Entity to minor
changes in significant assumptions.
How the matter was addressed in the audit
The primary procedures we performed to address this key audit matter included the following:
We compared the lease information inputs used in the determination of the recoverable amount of the
leased facilities CGUs, such as contractual rental rates, lease period and additional rent to the lease
agreements.
For a selection of individual assets subsequently classified as assets held for sale, we involved
valuation professionals with specialized skills and knowledge, who assisted in evaluating the
appropriateness of:
•
the inputs on the expected price the Entity would be able to sell the asset on a secondary market,
used by the Entity in determining FVLCD, by comparing them to comparable market data and
inquiring of used equipment dealers and vendors.
For a selection of leased facilities CGUs, we involved valuation professionals with specialized skills
and knowledge, who assisted in evaluating the appropriateness of:
•
the inputs on the length of time the Entity would expect to find a market participant to take over
the lease and market rental rates used by the Entity in determining VIU by comparing to external
information such as industry reports and commercial real estate property listings and transactions;
Page 4
•
the discount rate used for each cash flow projection based on capitalization rates according to the
market in which the facilities are located used by the Entity in determining VIU by comparing them
to a discount rate range that was independently developed using publicly available market data
for comparable properties.
Other Information
Management is responsible for the other information. Other information comprises:
•
•
the information included in Management’s Discussion and Analysis filed with the relevant
Canadian Securities Commissions;
the information, other than the financial statements and the auditors’ report thereon, included in a
document entitled "Annual Report".
Our opinion on the financial statements does not cover the other information and we do not and will
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for
indications that the other information appears to be materially misstated.
We obtained the information included in Management’s Discussion and Analysis filed with the
relevant Canadian Securities Commissions and the information, other than the financial statements
and the auditor’s report thereon, included in the "Annual report" as at the date of this auditors’ report.
If, based on the work we have performed on this other information, we conclude that there is a
material misstatement of this other information, we are required to report that fact in the auditors’
report.
We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with IFRS, and for such internal control as management determines is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, management is responsible for assessing the Entity’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Entity or to
cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity’s financial reporting
process.
Page 5
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report
that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit.
We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting
intentional omissions,
misrepresentations, or the override of internal control.
involve collusion,
from error, as
fraud may
forgery,
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Entity's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Entity's ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditors’ report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditors’ report. However, future events or conditions may cause the Entity to
cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
Page 6
• Communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
• Provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group Entity to express an opinion on the financial statements. We
are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
• Determine, from the matters communicated with those charged with governance, those matters
that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditors’ report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our auditors’ report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
The engagement partner on the audit resulting in this auditors’ report is Alain Bessette.
Montréal, Canada
December 1, 2022
*CPA auditor, public accountancy permit No. A115894
GOODFOOD MARKET CORP.
Consolidated Statements of Loss and Comprehensive Loss
(In thousands of Canadian dollars, except share and per share information)
For the 52-weeks ended
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Depreciation and amortization
Impairment of non-financial assets
Reorganization and other related costs
Operating loss
Net finance costs
Loss before income taxes
Deferred income tax (recovery) expense
Net loss, being comprehensive loss
Basic and diluted loss per share
Notes
September 3,
2022
August 31,
2021
$ 268,586
200,531
$ 379,234
263,140
68,055
115,956
17,295
46,085
6,742
(118,023)
5,233
(123,256)
(1,495)
(121,761)
(1.62)
$
$
116,094
136,396
8,820
–
–
(29,122)
2,170
(31,292)
500
(31,792)
(0.45)
$
$
13,14,15, 23
6, 13,14,15
6
7
8
Basic and diluted weighted average number of common shares
outstanding
21
74,982,435
70,742, 923
The accompanying notes are an integral part of these consolidated financial statements.
7 | P a g e
Notes
September 3,
2022
August 31,
2021
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
Assets held for sale
Other current assets
Non-current assets:
Fixed assets
Right-of-use assets
Intangible assets
Other non-current assets
Total assets
10
11
6
12
6, 13
6, 14
6, 15
16
Liabilities and Shareholders’ (Deficiency) Equity
Current liabilities:
Accounts payable and accrued liabilities
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’ (deficiency) equity:
Common shares
Contributed surplus
Convertible debentures
Deficit
17
18
20
18
19
20
21
22
19
Total shareholders’ (deficiency) equity
Total liabilities and shareholders’ (deficiency) equity
$
$
36,885
3,596
6,884
3,654
1,178
52,197
18,408
55,419
3,174
650
125,535
5,968
14,318
–
709
146,530
33,367
69,157
2,082
4,126
$
129,848
$
255,262
$
$
27,104
5,501
11,743
8,468
52,816
–
27,469
60,741
141,026
173,788
10,584
5,174
(200,724)
(11,178)
$
129,848
$
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
255,262
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of Goodfood Market Corp. by:
(s) Jonathan Ferrari
Jonathan Ferrari, Director and
Chair of the Board
(s) Donald Olds
Donald Olds, Director and
Chair of the Audit Committee
8 | P a g e
GOODFOOD MARKET CORP.
Consolidated Statements of Changes in Equity
(In thousands of Canadian dollars)
For the 52-weeks ended
Notes
Common
Shares
Contributed
Surplus
Convertible
Debentures
August 31, 2021
Deficit
Total
Balance as at
August 31, 2020
Net loss
Share-based payments
expense
Stock options exercised
Employee share purchase
plan
Net share issuance
Net convertible debentures
conversions (3)
Balance as at
August 31, 2021
Balance as at
August 31, 2021
Net loss
Share-based payments
expense (1)
Net convertible debenture
issuance (2)
22
22
22
21
19
22
19
Net convertible debenture
conversions (3)
19
Stock options exercised
22
Restricted share units vested 22
Employee share purchase
plan
Balance as at
September 3, 2022
$ 3,208
–
$ 2,231 $ (47,171) $
–
(31,792)
56,069
(31,792)
$ 97,801
–
–
4,623
(427)
57,199
4,230
(1,537)
–
–
–
–
–
–
–
–
–
–
–
4,230
3,086
(427)
57,199
9,510
10,898
–
(1,388)
$ 170,094
$
5,901
$
843 $
(78,963) $
97,875
September 3, 2022
$ 170,094
–
$
5,901
–
$
843 $ (78,963)
(121,761)
–
$ 97,875
(121,761)
–
–
1,291
726
2,032
6,945
–
–
4,452
–
(216)
(2,032)
(121)
–
–
–
22
(355)
(14)
–
–
–
–
–
–
6,945
4,452
1,170
510
–
(369)
$ 173,788
$ 10,584
$ 5,174 $ (200,724) $ (11,178)
(1) Share based payments expense includes $1.1 million related to grants awarded to settle short-term incentive
compensation for certain employees (2021 – nil).
(2) The equity component of the convertible debentures presented above is net of income taxes of $1.6 million and
$0.4 million related issue costs.
(3) The conversions of the convertible debentures presented above is net of income taxes of $0.1 million
(2021 – $0.5 million).
The accompanying notes are an integral part of these consolidated financial statements.
9 | P a g e
Notes
September 3,
2022
August 31,
2021
$
(121,761)
$ (31,792)
GOODFOOD MARKET CORP.
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
For the 52-weeks ended
Operating:
Net loss
Adjustments for:
Depreciation and amortization
Impairment of non-financial assets
Share-based payments expense
Net finance costs
Deferred income tax (recovery) expense
Change in non-cash operating working capital
Other
Net cash used in operating activities
Investing:
Additions and deposits to fixed assets
Additions to intangible assets
Interest received
Net cash used in investing activities
Financing:
13,14,15, 23
6, 13,14,15
22
7
8
23
13,16
15
18
18
18
19
21
20
18
18
Net repayment under line of credit
Proceeds from drawdown of revolving facility
Repayment of revolving facility
Net proceeds from issuance of convertible debentures
Net proceeds from issuance of common shares
Net payments of lease obligations
Net proceeds from issuance of long-term debt
Repayment of long-term debt
Interest paid
Proceeds from exercise of stock options
Shares purchased under employee share purchase plan
Change in restricted cash
Other
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
22
18
23
(88,650)
125,535
$
36,885
The accompanying notes are an integral part of these consolidated financial statements.
17,295
46,085
5,876
5,233
(1,495)
(11,108)
894
(58,981)
(35,880)
(2,561)
770
(37,671)
–
–
(9,063)
28,061
–
(6,215)
–
(625)
(4,417)
510
(369)
–
120
8,002
8,820
–
4,230
2,170
500
(14)
(272)
(16,358)
(16,651)
(2,102)
741
(18,012)
(9,063)
9,063
–
–
57,364
(3,553)
12,193
(12,500)
(3,160)
3,086
(427)
2,500
–
55,503
21,133
104,402
$ 125,535
10 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
1.
REPORTING ENTITY
Goodfood Market Corp. is a digital meal solutions brand in Canada, delivering fresh meal and add-ons that
make it easy for customers from across Canada to enjoy delicious meals at home every day. 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 facilities in Québec, Ontario, Alberta,
and other non-operational facilities in Quebec, Ontario and British Columbia (Refer to Note 6).
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 52-weeks ended September 3, 2022 and
August 31, 2021 were authorized by the Board of Directors ("Board") on December 1, 2022 for publication
on December 2, 2022.
2.2
GOING CONCERN
These financial statements have been prepared on the basis that the Company will continue as a going
concern, which presumes that the Company will be able to realize its assets and discharge its liabilities in
the normal course of business for the foreseeable future.
During the 52-weeks ended September 3, 2022, the Company recorded a net loss of $121.8 million as well
as had cash used in operating activities of $58.9 million. As at September 3, 2022, current liabilities exceed
current assets by $0.6 million and the Company has an accumulated deficit of $200.7 million. In addition,
as at September 3, 2022, the Company was in breach of certain of its financial covenants which resulted
in the related debt being classified as a current liability at that date. The Company entered into a tolerance
letter with its lenders pursuant to which the lenders agreed under certain conditions which include restricting
Goodfood from using the revolver portion of the facility, under which no amount is currently outstanding
other than letters of credit. As of the date of issuance of these consolidated financial statements, Goodfood
is in the process of negotiating the terms of a revised credit facility arrangement. In the event that a new
credit facility is not in place in the near term, the Company would expect to have in place a further extension
of the current tolerance letter. There can be no assurance as to a credit facility arrangement being put in
place in a timely manner, the terms of such an arrangement or obtaining a further extension of the current
tolerance letter.
The Company has relied upon external financing to fund its operations in the past, primarily through the
issuance of debt and equity. The Company’s business plan is dependent upon generating positive cash
flows, the continued financial support of its shareholders and lenders and/or raising additional funds to
finance operations within and beyond the next twelve months. While the Company has been successful in
securing financing in the past, raising additional funds is dependent on a number of factors outside the
Company’s control, and as such there is no assurance that it will be able to do so in the future. If the
Company is unable to realize its projected revenues and generate positive cash flows from operations
11 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
and/or obtain sufficient additional financing, it may have to curtail operations and development activities,
any of which could harm the business, financial condition and results of operations.
Due to the factors described above, management has concluded that a material uncertainty exists that may
cast significant doubt about the Company’s ability to continue operating as a going concern and realize its
assets and settle its liabilities and commitments in the normal course of business. The financial statements
have been prepared on a going concern basis and do not include any adjustments to the amounts and
classifications of the assets and liabilities that might be necessary should the Company be unable to
achieve its plan and continue in business. If the going concern assumption was not appropriate for these
financial statements, then adjustments would be necessary to the carrying value of assets and liabilities,
the reported expenses and the classification of items in the consolidated statements of financial position.
Such adjustments could be material.
2.3
BASIS OF MEASUREMENT
financial instruments at fair value through profit or loss;
The consolidated financial statements have been prepared on the historical cost basis except for the
following:
•
• 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.
2.4
FUNCTIONAL AND PRESENTATION CURRENCY
The consolidated financial statements are stated in Canadian dollars, which is the functional and
presentation currency of Goodfood Market Corp.
2.5 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
with comparative companies who are using floating year-ends. As a result, the Company is following a 52-
week reporting cycle but will include a 53rd week every five to six years. For Fiscal 2022, the 52-weeks
ended September 3, 2022 is comprised of 3 additional days compared to Fiscal 2021. For simplicity, in this
transition year, we refer to 52-weeks ended August 31, 2021 which is 52 weeks and one day and we refer
to 52-weeks ended September 3, 2022 even though it is 52-weeks and four days.
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.
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GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(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.
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GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(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
ASSETS HELD FOR SALE
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held for sale if it
is highly probable that they will be recovered primarily through sale rather than through continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair
value less costs to sell. Any impairment loss on a disposal group is allocated to the assets and liabilities on
a pro rata basis, except that no loss is allocated to inventories, financial assets, which continue to be
measured in accordance with the Company’s other accounting policies. Impairment losses on initial
classification as held-for-sale and subsequent gains and losses on remeasurement are recognized in the
consolidated statements of loss.
Once classified as held-for-sale, intangible assets and fixed assets are no longer amortized or depreciated
and are classified as current assets.
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
fixed assets 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
Period
3 to 5 years
3 to 20 years
3 to 5 years
Shorter of lease term and useful life
14 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
3.9
LEASES
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.
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.
15 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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.
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.
If any such indication exists, the recoverable amount of the asset is estimated.
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 (or a CGU’s) fair value
less costs of disposal (“FVLCD”) and its value in use (“VIU”). In assessing VIU, 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 or the CGU. Impairment losses
are allocated to reduce the carrying amounts of the assets in the CGU on a pro rata basis and are
recognized in the consolidated statements of loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased
to the revised estimate but is limited to the carrying amount that would have been determined if no
impairment loss had been recognized in prior years. A reversal of impairment loss is 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.
16 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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
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
17 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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.
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
18 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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.
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.
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GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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.
3.19
LOSS PER SHARE
Basic loss per share is computed by dividing net loss by the weighted average number of common shares
outstanding during the year. Diluted loss per share is 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 Fiscal 2022 and 2021.
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 during the pandemic which has stabilized since the last quarters of Fiscal 2021. 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 and actual
economic conditions are difficult to predict and could affect the significant estimates and judgements used
in the preparation of the Company’s consolidated financial statements.
4.2
CRITICAL JUDGEMENTS
Impairments of non-current 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.
20 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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 judgement
could affect the Company’s financial position if the lease term of the leases is reassessed differently.
4.3
KEY SOURCES OF ESTIMATES AND ASSUMPTIONS
Impairments of non-financial assets
In assessing impairment, management estimates the recoverable amount of each asset or CGU.
Management estimated the recoverable amount of the CGUs based on the higher of VIU and FVLCD. The
VIU is based on expected future cash flows. When measuring expected future cash flows, management
makes key assumptions about future economic benefits which relate to future events and circumstances.
Estimation uncertainty relates to assumptions about future economic benefits and the application of an
appropriate discount rate. When measuring FVLCD, management makes key assumptions on expected
fair values and costs of disposal. Actual results could vary from these estimates which may cause significant
adjustments to the Company’s long-lived assets in subsequent reporting periods.
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
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.
21 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
5.
STANDARDS ISSUED BUT NOT YET EFFECTIVE
Amendment to IAS 1, Presentation of Financial Statements
In January 2020, the IASB issued an amendment to IAS 1 Presentation of Financial Statements to clarify
the classification of liabilities as current or non-current (the “2020 amendments”). For the purposes of non-
current classification, the amendment removed the requirement for a right to defer settlement or roll over
of a liability for at least twelve months to be unconditional. Instead, such a right must have substance and
exist at the end of the reporting period. The 2020 amendment is effective for annual periods beginning on
or after September 3, 2023. The 2020 amendments are subject to future developments and in November
2021 the IASB proposed to defer the effective date to no earlier than January 2024. The Company is
currently evaluating the impact of the amendment on its consolidated financial statements.
6.
REORGANIZATION AND OTHER RELATED COSTS
6.1
IMPAIRMENT OF NON-FINANCIAL ASSETS
As a result of the Company’s reorganization plan and the breach of certain financial covenants, the
Company has decided to close several facilities as well as shut-down its on-demand grocery product
offering. This resulted in the following CGUs being identified 1) the individual asset level, 2) at the leased
facility level (including right-of-use asset and fixed assets pertaining to the leased premises) and 3) the
geographical area level based on where customers are served that generate independent cash inflows.
Consequently, the Company performed an impairment test of its non-financial assets since it had reason
to believe that the carrying amount of the CGUs might not be recoverable.
During the year ended September 3, 2022, the Company recorded an impairment charge of $37.9 million
on fixed assets, $7.7 million on right-of-use assets and $0.5 million on intangible assets from the following
CGUs:
CGU level
Individual assets
Leased facilities
Geographical areas
Recoverable
amount
FVLCD
VIU
FVLCD
If FVLCD, fair value
level inputs
Level 3
N/A
Level 3
Impairment charge of non-financial assets
Impairment charge
$
$
9,022
37,063
−
46,085
When determining the FVLCD of its individual assets, the Company used market inputs based on the
expected price the Company would be able to sell the asset for on a secondary market. Subsequent to the
impairment test, the individual assets were reclassified as assets held for sale as they met the condition to
be classified as such as at September 3, 2022.
When determining the VIU of its leased facilities, the Company used a discounted cash flow model in which
the main assumptions included the length of time the Company would expect to find a market participant
to take over the lease and market rental rates. In addition, the discount rate employed for each cash flow
projection was determined to be 8% based on capitalization rates according to the market in which the
facilities are located.
22 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
6.2
REORGANIZATION AND OTHER RELATED COSTS
The following table summarized the reorganization and other related costs:
Employee termination and benefit costs
External advisor fees (1)
Other
2022
4,321
2,440
(19)
6,742
$
2021
−
−
−
$
−
$
$
(1) External advisor fees consist of fees related to the Company’s reorganization initiatives and the debt covenant breach.
7.
NET FINANCE COSTS
Interest expense on debt
Interest expense on lease obligations
Interest expense on debentures, including accretion interest
Interest income
Foreign exchange loss (gain)
Fair value gain on interest rate swaps
Other finance costs
2022
1,093
2,572
2,216
(736)
8
(26)
106
5,233
$
2021
986
1,208
1,092
(870)
(126)
(120)
−
$
2,170
$
$
8.
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 (recovery) expense
2022
(123,256)
26.15%
(32,231)
29,210
1,525
145
(144)
(1,495)
$
$
$
$
2021
(31,292)
25.90%
(8,105)
$
7,503
1,236
244
(378)
500
$
23 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
Deferred income tax assets (liabilities) are attributable to the following items:
As at August 31, 2020
Recognized in net loss
Recognized in equity
As at August 31, 2021
Recognized in net loss
Recognized in equity
$
Lease
obligations
4,937
12,188
−
$
17,125
(12,045)
−
losses Debentures
$
(1,044) $
226
500
(4,937) $
(12,188)
−
Fixed
assets and
Right-of-
use assets
Deferred
income tax
assets
(liabilities)
−
(500)
500
Net
operating
1,044
(726)
−
$
$
$
318
1,779
−
(318) $
(284)
(1,495)
(17,125) $
12,045
−
−
1,495
(1,495)
As at September 3, 2022
$
5,080
$
2,097
$
(2,097) $
(5,080) $
−
The Company had unrecognized deferred income tax assets as follows:
As at
Net operating losses carry forwards
Fixed assets and right-of-use assets
Shares and debt issuance costs
Intangible assets
Other
Unrecognized deferred income tax assets
September 3, 2022
August 31, 2021
$ 30,456
13,018
1,334
3,140
343
$ 48,291
$ 14,500
1,810
1,433
1,155
117
$ 19,015
The Company has federal operating tax losses carried forward of $118.1 million (2021 – $53.8 million)
which are partially recognized for an amount of $8.0 million (2021 – $1.2 million), and unrecognized
deductible temporary differences of $66.0 million (2021 – $18.8 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 September 3, 2022, the amounts and expiry dates of the federal tax losses carried forward
were as follows:
2035
2036
2037
2038
2039
2040
2041
2042
$
49
712
3,547
8,516
18,089
812
22,625
63,739
$ 118,089
24 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
9.
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
2022
2021
$
2,477
$
819
99,017
121,350
10.
ACCOUNTS AND OTHER RECEIVABLES
As at
Sales taxes receivable
Rewards program receivable
Volume discounts receivable
Other receivables
11.
INVENTORIES
As at
Food
Packaging supplies
Work in process
September 3, 2022
August 31, 2021
$
$
2,357
504
97
638
3,596
$
$
4,633
1,034
147
154
5,968
September 3, 2022
August 31, 2021
$
$
4,953
1,611
320
6,884
$
$
11,814
1,742
762
14,318
The cost of inventories recognized as an expense within cost of goods sold during the 52-weeks ended
September 3, 2022 was $174.3 million (2021 – $236.5 million).
The Company recorded an expense within cost of goods sold during the 52-weeks ended September 3,
2022 of $1.6 million (2021 – $0.1 million) for the write-down of inventories. Included in this amount is $1.2
million (2021 – nil) related to the discontinuance of products related to on-demand grocery.
12.
OTHER CURRENT ASSETS
As at
Prepaid expenses
Deposits and other
September 3, 2022
$
$
August 31, 2021
426
$
283
921
257
1,178
$
709
25 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
13.
FIXED ASSETS
Furniture and
fixtures
Machinery
and
equipment
Computer
hardware
and other
Leasehold
improvements
Assets under
construction (1)
Total
Cost:
As at August 31, 2020 $ 1,506
2,571
Additions
As at August 31, 2021 $ 4,077
2,185
Additions
Transfers
61
Transfers to assets
$
8,529
1,485
$ 10,014
9,239
6,962
$ 1,410
2,169
$ 3,579
2,550
304
$ 11,771
1,511
$ 13,282
4,887
18,211
$
51 $ 23,267
18,107
10,371
$ 10,422 $ 41,374
35,416
–
16,555
(25,538)
held for sale
Write-offs
As at September 3,
(152)
–
(3,830)
–
(116)
–
(134)
–
(115)
(741)
(4,347)
(741)
2022
$ 6,171
$ 22,385
$ 6,317
$ 36,246
$
583 $ 71,702
Accumulated depreciation, impairment loss and write-offs:
508
335
As at August 31, 2020 $
759
510
Depreciation
1,398
1,207
$
$
845
As at August 31, 2021 $
Depreciation
1,086
Impairment loss (Note 6) 2,824
Write-offs
13
Transfers to assets
$
2,605
2,236
11,554
13
$ 1,267
1,526
941
76
$
$
$
1,835
1,455
$
3,290
3,155
22,056
–
– $
–
4,076
3,931
– $
–
497
–
8,007
8,003
37,872
102
held for sale
As at September 3,
2022
(61)
(541)
(57)
(31)
–
(690)
$ 4,707
$ 15,867
$ 3,753
$ 28,470
$
497 $ 53,294
Net carrying amounts:
As at August 31, 2021 $ 3,232
As at September 3,
2022
1,464
$
7,409
$ 2,312
$
9,992
$ 10,422 $ 33,367
6,518
2,564
7,776
86
18,408
(1) Additions of assets under construction include $1.6 million (2021 – $0.9 million) related to capitalized depreciation
of right-of-use assets.
26 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
14.
RIGHT-OF-USE ASSETS
As at August 31, 2020
Additions and lease modifications
Depreciation
As at August 31, 2021
Additions and lease modifications
Derecognition (1)
Impairment loss (Note 6)
Depreciation
$
$
Facilities
20,178
52,609
(4,616)
68,171
24,476
(20,875)
(7,675)
(9,570)
Automotive
equipment
448
$
150
(171)
Other
equipment
$
504 $
757
(702)
$
$
427
281
(38)
–
(195)
559 $
42
–
–
(184)
Total
21,130
53,516
(5,489)
69,157
24,799
(20,913)
(7,675)
(9,949)
As at September 3, 2022
$
54,527
$
475
$
417 $
55,419
(1) Includes a termination of a leased facility as well as a change in assumptions relating to the lease term of a facility.
The Company recorded sublease revenue of $1.1 million (2021 – nil) within net sales during the 52-weeks
ended September 3, 2022.
15.
INTANGIBLE ASSETS
Cost:
As at August 31, 2020
Additions
As at August 31, 2021
Additions
As at September 3, 2022
Accumulated amortization and impairment loss:
As at August 31, 2020
Amortization
As at August 31, 2021
Amortization
Impairment loss (Note 6)
As at September 3, 2022
Net carrying amounts:
As at August 31, 2021
As at September 3, 2022
Software (1)
Intellectual
property
$
$
770
1,657
2,427
2,561
$
4,988
$
$
115
274
389
916
538
$
1,843
$
2,038
3,145
$
$
$
$
$
$
Total
844
1,657
2,501
2,561
5,062
130
289
419
931
538
1,888
74 $
–
74 $
–
74 $
15 $
15
30 $
15
–
45 $
44 $
29
2,082
3,174
(1) For the 52-weeks ended September 3, 2022, the net carrying amount of software under development amounted
to $0.4 million (2021 – $1.1 million).
27 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
16.
OTHER NON-CURRENT ASSETS
As at
Security deposits and prepaid rent
Deposits on fixed assets
September 3, 2022
August 31, 2021
$
$
650
–
650
$
$
1,054
3,072
4,126
17.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As at
Accounts payable
Accrued liabilities
18.
DEBT
As at
September 3, 2022
August 31, 2021
$
$
16,810
10,294
27,104
$
$
30,078
22,129
52,207
September 3, 2022
August 31, 2021
Interest-bearing financing:
Secured revolving facility, variable interest at BA(1) plus 2.50%,
maturing in November 2023
Secured term loan, variable interest at BA(1) plus 2.50%,
maturing in November 2023
Interest rate swap
Unamortized financing costs
Current portion of long-term debt
$
$
$
$
–
11,875
11,875
–
(132)
11,743
(11,743)
–
$
$
$
$
9,063
12,500
21,563
26
(238)
21,351
(651)
20,700
(1) BA is defined as the Canadian Banker’s Acceptance Rate.
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
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.
28 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
During the fourth quarter of Fiscal 2022, the Company did not meet all the financial covenants under its
credit facility resulting in an event of default as at September 3, 2022. The Company received a tolerance
letter from its lenders pursuant to which the lenders agreed, subject to certain terms and conditions, to
refrain from enforcing their rights, remedies and resources under the Credit Facility agreement as well as
restrict Goodfood from using the revolver portion of the facility, under which no amount is currently
outstanding or available other than letters of credit. In addition, the other short-term financing available to
the Company was reduced to $7.3 million and an additional 1.00% was added to the interest calculation.
Goodfood is in the process of negotiating the terms of a revised credit facility arrangement. In the event
that a new credit facility is not in place in the near term, the Company would expect to have in place a
further extension of the current tolerance letter. The Company cannot provide assurance as to a credit
facility arrangement being put in place in a timely manner, the terms of such an arrangement or obtaining
a further extension of the current tolerance letter. As a result, the outstanding loan on the credit facility is
recognized in the Company’s current liabilities due to the lenders’ ability to demand full repayment after the
expiry of the tolerance letter, unless otherwise extended.
As at August 31, 2021, $9.1 million of the revolving facility was drawn, a balance of $33.4 million was
undrawn and $32.2 million was available.
As at September 3, 2022, Goodfood had outstanding
(2021 – $1.2 million) which reduced the availability on the revolving facility.
letters of credit
totalling $0.7 million
As at September 3, 2022, the Company allocated $7.3 million (2021 – $14.6 million) to corporate credit
cards to be used for business purposes of the other short-term financing amount. Amounts owing with
respect to credit cards are included in accounts payable and accrued liabilities.
INTEREST RATE SWAP
Goodfood had one swap agreement in place whereby the Company fixed the interest rate on a notional
amount of $10.9 million until November 2021. Since November 2021, the Company has not entered into a
new interest rate swap. As at August 31, 2021, the Company’s interest rate swap was classified as a
derivative financial liability and was not designated as a hedging instrument.
For the 52-weeks ended September 3, 2022, a gain in fair value of $26 thousand was presented in net
finance costs (2021 - $0.1 million).
PRINCIPAL PAYMENTS
Had there been no breach in financial covenants and the debt was classified as a long-term debt, the
principal payments due in each of the following fiscal years as per the long-term debt terms are as follows:
2023
2024
Principal payments
1,250
10,625
29 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
19.
CONVERTIBLE DEBENTURES
2022 Debentures
On February 11, 2022, the Company issued 30,000 convertible unsecured subordinated debentures (the
"2022 Debentures") at a price of $1 thousand per Debenture for gross proceeds of $30 million. The 2022
Debentures mature on March 31, 2027 (the "Maturity Date") and bear a fixed interest rate of 5.75% per
annum, payable semi-annually in arrears on March 31 and September 30 of each year, commencing on
September 30, 2022.
The 2022 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 $4.60 (the "Conversion Price") per common share.
On or after March 31, 2025, and prior to March 31, 2026, 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 2022
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, 2026, and prior to the
Maturity Date, the 2022 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
2022 Debentures in accordance with the make-whole premium provisions set forth by the indenture of the
2022 Debentures.
The conversion option, net of related issuance costs and deferred income taxes, has been recorded in
shareholders’ equity for an amount of $4.5 million. Factoring in the 2022 Debentures issuance costs, the
effective interest rate on the Debentures is 12.6%.
2020 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.
30 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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%.
The following table summarizes the continuity of the Company’s Debentures for the 52-weeks 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
September 3, 2022
August 31, 2021
$
$
5,623
22,048
901
(1,103)
14,194
–
439
(9,010)
$
27,469
$
5,623
(1)
Issuance costs attributable to the liability component amounts to $1.5 million. Net proceeds of $4.5 million, including $0.4
million of issuance costs and $1.6 million of deferred income taxes, were recorded as the equity component.
During the 52-weeks ended September 3, 2022, 1,364 Debentures (2021 – 11,284) were converted into
common shares of the Company, resulting in the issuance of 293,647 (2021 – 2,400,819) common shares
and the Company reclassified $1.1 million (2021 – $9.0 million) and $0.2 million (2021 – $1.9 million),
respectively (Refer to Note 21) from the convertible debentures liability to common shares and from the
equity component of the convertible debentures to common shares. A deferred income tax recovery of $1.6
million (2021 – nil) was recognized upon issuance of the 2022 Debentures for the 52-weeks ended
September 3, 2022. A deferred income tax expense of $0.1 million (2021 – $0.5 million) was recognized
upon conversion of the Debentures for the 52-weeks ended September 3, 2022. As at September 3, 2022,
35,488 Debentures (2021 – 6,852 Debentures) were outstanding.
20.
LEASE OBLIGATIONS
The following table summarizes the continuity of the Company’s lease obligations for the 52-weeks ended:
Balance, beginning of year
Additions and lease modifications
Derecognition (Note 14)
Payment of lease obligations (1)
Interest expense on lease obligations (2)
Balance, end of year
September 3, 2022
August 31, 2021
$
$
73,111
24,615
(22,302)
(9,259)
3,044
$
69,209
$
23,348
53,905
–
(5,534)
1,392
73,111
(1)
(2)
In Fiscal 2022, payment of lease obligations includes $1.0 million repayment received for leasehold incentives
from a landlord.
Interest expense on lease obligations includes $0.5 million (2021 – $0.2 million) capitalized in assets under
construction.
31 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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
September 3,
2022
August 31, 2021
$
$
$
$
$
$
11,024
40,807
27,942
79,773
$
69,209 $
$
$
8,468
60,741
8,566
37,943
40,864
87,373
73,111
5,443
67,668
(1) As at September 3, 2022, future lease payments of $5.6 million (2021 – $10.9 million) for which the Company is
reasonably certain to exercise the renewal options, have been recognized in lease obligations, representing an
amount of $6.4 million (2021 – $12.1 million) of undiscounted cash outflows.
21.
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 52-weeks ended:
Balance, beginning of year
Net share issuance through a bought
deal offering
Debenture conversions (Note 19)
Exercise of stock options (Note 22)
Restricted share units vested
Employee share purchase units vested
Purchased and held in trust through
employee share purchase plan (Note
22)
September 3,
2022
Carrying
amount
Number of
shares
August 31,
2021
Carrying
amount
Number of
shares
74,647,547
$
170,094
66,311,121
$
97,801
–
293,647
161,707
231,453
8,900
–
1,291
726
2,032
14
4,800,000
2,400,819
1,182,693
–
–
57,199
10,898
4,623
–
–
(110,231)
(369)
(47,086)
(427)
Balance, end of year
75,233,023
$
173,788
74,647,547
$ 170,094
During the 52-weeks ended August 31, 2021, the Company issued 4,800,000 common shares at a price of
$12.50 per common share for gross proceeds of $60 million, less share issuance costs of $2.8 million, in
connection with a public offering.
As at September 3, 2022, the number of common shares issued and fully paid was 75,404,854
(2021 – 74,718,045).
32 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
LOSS PER SHARE
As at
Basic and diluted weighted average number of common shares
outstanding
September 3, 2022 August 31, 2021
74,982,435
70,742, 923
Issued shares from the exercise of stock options, Debenture conversions and share issuance are weighted
from the transaction date. The purchase of common shares to fund the employee share purchase plan is
weighted from the transaction date.
For the year ended September 3, 2022 and the year ended August 31, 2021, the diluted loss per share
calculation did not take into consideration the potential dilutive effect of stock options, restricted share units
and employee share purchase plan units as they are anti-dilutive.
22.
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 52-weeks ended:
September 3,
2022
Weighted
average
exercise price
$
$
4.47
4.72
3.03
5.48
4.61
4.44
4.04
Number of
options
3,174,309
979,912
(161,707)
(541,301)
(188,414)
3,262,799
1,865,747
August 31,
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
Outstanding, beginning of year
Granted
Exercised
Forfeited
Expired
Outstanding, end of year
Exercisable, end of year
For the 52-weeks ended September 3, 2022, the weighted average share market price of the Company’s
common shares upon the exercise date of stock options was $7.79 (2021 – $10.09).
33 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
The following table provides additional information about the Company’s stock options as at year end:
Exercise Price
Less than $2.99
$ 3.00 – 5.99
$ 6.00 – 8.99
Outstanding, end of year
Exercisable, end of year
Number of
options
outstanding
712,491
1,821,368
728,940
3,262,799
1,865,747
2022
Weighted
average
remaining life
4.0
6.2
6.2
5.7
5.0
Number of
options
outstanding
843,819
1,218,846
1,111,644
3,174,309
1,112,432
2021
Weighted
average
remaining life
5.1
6.1
7.1
6.2
5.8
Stock options granted during the 52-weeks ended September 3, 2022 had a weighted average fair value
of $2.33 per option (2021 – $3.87), 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
2022
58%
1.54%
4.8 years
4.72
4.72
$
$
2021
57%
0.59%
4.8 years
8.17
8.17
$
$
During the 52-weeks ended September 3, 2022, an expense of $1.9 million (2021 – $2.8 million), including
fringe benefits related to stock options exercised of $0.1 million (2021 – $0.6 million), 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.
34 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
The following table summarizes the continuity of the RSUs during the 52-weeks ended:
Outstanding, beginning of year
Granted
Vested
Forfeited
Outstanding, end of year
September 3,
2022
625,491
2,651,498
(231,453)
(1,044,820)
2,000,716
August 31,
2021
–
707,823
–
(82,332)
625,491
During the 52-weeks ended September 3, 2022, an expense of $3.9 million (2021 – $2.0 million) was
recorded in the consolidated statements of loss in relation to the RSU Plan.
As at September 3, 2022, 2,276,970 stock options and RSUs (2021 – 3,672,004) were available for
issuance.
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 52-weeks ended:
Unvested contributions, beginning
of year
Contributions
Vested
Unvested contributions, end of
year
September 3, 2022
August 31, 2021
Number of
shares
Amount
Number of
shares
Amount
70,498 $
110,231
(8,900)
523
369
(14)
$
23,412
47,086
−
96
427
−
171,829 $
878
70,498
$
523
During the 52-weeks ended September 3, 2022, an expense of $0.1 million (2021 – $0.1 million) was
recorded in the consolidated statements of loss in relation to the employee share purchase plan.
35 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
23.
SUPPLEMENTAL CASH FLOW INFORMATION
The following summarizes the 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
September 3,
2022
$
2,761
7,434
(224)
(21,485)
406
$
August 31,
2021
(1,375)
(7,356)
(29)
9,041
(295)
$
(11,108)
$
(14)
The following transactions had no cash impact for the 52-weeks ended:
As at
Investing activities
Unpaid fixed assets additions
Unpaid intangible assets additions
Capitalized depreciation on right-of-use assets and interest
expense on lease obligations included in assets under
construction additions
Financing activities
Unpaid share issuance costs
24.
COMMITMENTS
September 3,
2022
August 31,
2021
$
184
24
2,061
$
3,800
−
1,073
$
−
$
20
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
September 3,
2022
$
$
9,236
390
−
9,626
August 31,
2021
$
24,233
75
−
$
24,308
36 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
25.
FINANCIAL INSTRUMENTS
Goodfood has determined that the fair value of cash and cash equivalents, accounts and other receivables,
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 approximates its carrying amount as it bears
a variable interest rate at BA plus 2.50% which is a similar market interest rate for financial instruments with
similar terms and risks.
The Company determined the valuation of its Debentures at issuance using Level 3 inputs. As at September
3, 2022, the Company determined that the fair value of its Debentures approximates $7.0 million which was
determined based on market trading value.
26.
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
managed its interest rate risk by using a variable-to-fixed interest rate swap which matured in November
2021. As interest rates on Debentures are fixed, the Company is not exposed to interest rate risk on those
instruments.
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.
The Company monitors its risk of shortage of funds by monitoring forecasted and actual cash flows and
maturity dates of existing financial liabilities and commitments and is actively managing its capital to ensure
a sufficient liquidity position to finance its general and administrative, working capital and overall capital
expenditures. However, the Company concluded that material uncertainty exists with respect to the
Company’s ability to continue as a going-concern for at least the next twelve months to realize its assets
and satisfy its liabilities in the normal course of operations as they come due (Refer to Note 2.2 on going
concern).
37 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
In order to address these uncertainties, the Company will rely on its reorganization initiatives, a review of
its operations and overall business to drive efficiencies to form the basis for positive cash flow and long-
term profitable growth as well as actively negotiating the terms of a revised credit facility arrangement with
its lenders. There can be no assurance that the Company will be successful in achieving positive results.
Capital management
The Company's objective in managing its capital structure is to ensure a sufficient liquidity position 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, as
well as short-term or long-term debt. As of the end of its fourth quarter of Fiscal 2022, the Company had
$36.9 million in cash on its consolidated statement of financial position benefiting from a term loan of $11.7
million outstanding which is currently classified as a current liability. For more information on the debt
covenant, refer to Note 18.
The following are amounts due on contractual maturities of financial liabilities, including estimated interest
payments as at:
Total carrying
amount
Contractual
cash flows
Less than 1
year 1 to 5 years
September 3, 2022
More than 5
years
Accounts payable and
accrued liabilities
Long-term debt, including
current portion (1)
Debentures, liability
component
$
27,104
$
27,104
$
27,104
$
− $
−
11,743
12,086
12,086
−
−
27,469
45,220
2,282
42,938
−
Lease obligations, including
current portion
69,209
79,773
11,024
40,807
$ 135,525
$
164,183
$
52,496
$ 83,745 $
27,942
27,942
Total carrying
amount
Contractual
cash flows
Less than 1
year 1 to 5 years
August 31, 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 $
40,864
40,864
(1) As at September 3, 2022, an interest rate of 5.34% (2021 – 2.92%) was used to determine the estimated interest
payments on the variable-rate portion of the Company’s long-term debt. In addition, in Fiscal 2021 the fixed interest
rate pursuant to the swap agreement mentioned in Note 18 was used to determine the interest payments on the
fixed-rate portion of the Company’s long-term debt.
38 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 3, 2022
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
27.
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 52-weeks ended
September 3, 2022 August 31, 2021
2,661
1,594
1,983
2,931
$
$
Related parties of the Company include Directors and key management personnel, their family members,
and companies over which they have significant influence or control.
In connection with the issuance of the 2022 Debentures, 415 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.
39 | 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 – Sep. 3, 2022): $10.09 - $1.02 Share
price as at November 28, 2022 : $0.32
Common shares outstanding as at September 3, 2022: 75,233,027
TRANSFER AGENT AND REGISTRAR
TSX Trust
AUDITORS
KPMG LLP
LEGAL COUNSEL
Fasken Martineau DuMoulin LLP
INVESTOR RELATIONS
IR@makegoodfood.ca
MEDIA CONTACT
media@makegoodfood.ca
CORPORATE OFFICE
4600 Hickmore Street,
Saint-Laurent, Quebec
H4T 1K2
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, January 17, 2023
Virtual Meeting - Details to Come
MAKEGOODFOOD.CA