ANNUAL
REPORT
2023
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.
The Company’s administrative
offices are based in Montreal,
Québec, with production
facilities located in the
provinces of Quebec
and Alberta.
2023
AT A GLANCE
2
PRODUCTION
FACILITIES
780
EMPLOYEES
116K
QUATERLY ACTIVE
CUSTOMERS 1
$169
REVENUES
M
The following table provides a summary of our locations currently operating:
Total number
of locations
Administrative
offices
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 financial measure which does not have a standardized meaning prescribed by IFRS and may
therefore not be comparable to similar measures presented by other issuers. Please refer to the Metrics and Non-IFRS
financial measures section in the Management’s Discussion and Analysis.
3-YEAR
FINANCIAL HIGHLIGHTS
For the years ended
September 2,
2023
September 3,
2022
August 31,
2021
Operating Results
Revenues
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
Investing activities
Financing activities
(37%)
(4%)
168,558
65,380
4,695
(16,463)
(0.22)
268,586
68,055
(40,721)
(121,761)
(1.62)
(29%)
(41%)
379,234
116,094
(15,306)
(31,792)
(0.45)
38.8%
2.8%
13.5 pp
18.0 pp
25.3%
(15.2%)
(5.3) pp
(11.2) pp
30.6%
(4.0%)
24,925
11,026
57,808
4,036
47,119
(23,442)
(9,350)
1,960
(4,570)
36,885
18,408
129,848
11,743
32,643
(11,178)
(58,981)
(37,671)
8,002
125,535
33,367
255,262
21,351
6,466
97,875
(16,358)
(18,012)
55,503
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 and cash equivalents.
3.Includes the current portion of long-term debt.
4.Includes the liability and equity components of the convertible debentures.
MESSAGE TO
SHAREHOLDERS
Dear fellow Shareholders,
Fiscal 2023 marked a successful transition year for Goodfood and our teams.
In this challenging environment; we swiftly anchored the business back to
deeper, more resilient roots. We completed our cost saving initiatives,
aligned our workforce and consolidated our facilities to meet our current
offering needs. These changes were executed at an incredibly fast pace and
drove record Adjusted EBITDA1 profitability for the year and positive free
cash flows1 in the third quarter. With this strong foundation, we remain
committed to build Canada's best and most profitable food-at-home
platform and we continue to be driven by our unwavering will to spark joy in
our customers’ kitchens and to be masters of our destiny.
Setting the Stage to Consistent Profitability
After a challenging year as consumers behaviors shifted away from e-
commerce, Fiscal 2023 was marked by record profitability levels with gross
margin at its all-time high of 38.8%, positive adjusted EBITDA1 of $5 million, a
record, and significantly better free cash flows1 which improved by $87
million compared to Fiscal 2022. Operational improvements and price
revisions have been instrumental in driving our record results and we are
pleased to report that our diligent efforts have yielded strong outcomes. The
key highlights are:
• We simplified our footprint leading to exiting 12 leases and
consolidating our production to two facilities in Montreal and Calgary;
• We aligned our workforce with scale leading to significant headcount
reductions;
• We completed Blue Ocean initiatives to drive efficiencies to continue
to improve and grow our gross margin and adjusted EBITDA1 and to
form the basis for the path to consistent positive cash flow and long-
term profitable growth;
• We continuously review and adjust our sales prices to match current
economic conditions;
• We are continuously improving our working capital management
including managing our inventories level with just-in-time inventory on
our meal kits;
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.
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
• We had record gross margin with an improvement of 13.5 percentage points compared to Fiscal 2022 as a
result of the initiatives described above and strong execution;
• Our selling, general and administrative expenses decreased by $50 million;
• We achieved record positive adjusted EBITDA1 for Fiscal 2023 and significantly improved our free cash
flow1.
Obsess About the Customer
During this year, we shared key customer insights that inform our long-term roadmap to consistently grow
our customer value proposition, thereby creating an increasingly sticky customer base as well as carefully
growing our total addressable market to serve the needs of new customer segments.
First, busy professionals and families are increasingly craving delicious and nutritious meals that can be
prepared in minutes. With this in mind, we have broadened our assortment of carb-wise, calorie smart, keto,
paleo, and high-protein recipes by 50 percent, many of which can be prepared within 20 minutes. We
partnered with key brand ambassadors to amplify the initiative, including Montreal Canadiens captain Nick
Suzuki, and paired some of the new meals with the introduction of better-for-you proteins including organic
beef, grass fed bison and steelhead trout.
Second, we are seeing strong demand from customers who are looking for experiences that spark joy
while providing an alternative to pricey restaurant options. To provide that, we have curated select
partnerships for our customers including exclusive meals co-created with Michelin-starred St. Lawrence
restaurant in Vancouver to bring dishes like Lemony Chicken Piccata with Fresh Fettuccine & Garlic-
Roasted Broccolini to our customers' homes. Another exciting product innovation we introduced to our
customers this fail is our new line of air fryer recipes in partnership with Ninja, a leading air fryer brand in
Canada.
Going forward, we are convinced that by remaining focused on consistently growing our customer value
proposition, we can grow our cash flows.
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
Continued Focus on Sustainable Profitable Growth
As we move forward, we continue to recognize that cash remains King
and we are as motivate as ever to continue growing our cash flows.
Top line growth plays a significant role in achieving this profitability
growth and we intend to grow our top line using the following key
growth drivers:
• Customer growth: building customer acquisition cost efficiencies to
enable adding more customers to the Goodfood platform and
continue to invest in our digital product to elevate the customer
experience by reducing friction and enhancing ease of use;
• Order frequency increase by offering increased product variety and
customization, recipe and ingredient diversity, partnerships with first-
rate restaurants and enticing our most loyal (and profitable) members
through our VIP program;
• Basket size enhancement: building a differentiated set of meal kits,
ready-to-eat meals and add-ons as well as the launch of upsells and
upcoming launch of customization.
• Sustainability: prioritizing planet friendly options - perfectly
portioned ingredients that save from food waste, a supply chain
removing middlemen from farm to kitchen table, offsetting carbon
emissions on deliveries, and introducing packaging innovations that
have helped us to remove the equivalent of 2.4 million plastic bags
annually from our deliveries.
With the steps we have taken and continue to take, our strategic
execution to drive profitability and cash flows continues to bear fruit,
underpinned by consistent improvement in adjusted EBITDA1 and cash
flows. Coupled with our unrelenting focus on nurturing our customer
relationships, profitable growth remains our top priority. The Goodfood
team is fully focused on building and growing Canada’s most loved
millennial food brand.
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
MOST IMPORTANTLY
Our record results this year are the fruit of the dedication and hard work of
our incredible team. Our continued path to 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, resilience and dedication over the last year. Our ability to
successfully transition to profitability this year and set the stage to thrive
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 2023 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 2, 2023
Management’s Discussion and Analysis of
GOODFOOD MARKET CORP.
For the 13 weeks and 52 weeks ended September 2, 2023
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
TABLE OF CONTENTS
BASIS OF PRESENTATION .................................................................................................................... 3
KEY FINANCIAL HIGHLIGHTS ............................................................................................................... 4
FORWARD-LOOKING INFORMATION ................................................................................................. 5
METRICS AND NON-IFRS FINANCIAL MEASURES ......................................................................... 6
COMPANY OVERVIEW ............................................................................................................................ 8
FINANCIAL OUTLOOK ............................................................................................................................. 8
FISCAL 2023 AT A GLANCE ................................................................................................................. 10
METRICS AND NON-IFRS FINANCIAL MEASURES – RECONCILIATION ................................. 10
RESULTS OF OPERATIONS – FOURTH QUARTER OF FISCAL 2023 AND 2022 ................... 13
RESULTS OF OPERATIONS – FISCAL 2023 AND 2022 ................................................................ 14
FINANCIAL POSITION ........................................................................................................................... 15
LIQUIDITY AND CAPITAL RESOURCES ........................................................................................... 16
SELECTED QUARTERLY FINANCIAL INFORMATION ................................................................... 20
TRENDS AND SEASONALITY .............................................................................................................. 21
FINANCIAL RISK MANAGEMENT........................................................................................................ 21
BUSINESS RISK ...................................................................................................................................... 22
OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS AND OTHER
COMMITMENTS ...................................................................................................................................... 22
FINANCIAL INSTRUMENTS .................................................................................................................. 23
RELATED PARTIES ................................................................................................................................ 23
SHARE-BASED PAYMENTS ................................................................................................................. 23
OUTSTANDING SHARE DATA ............................................................................................................. 24
SEGMENT REPORTING ........................................................................................................................ 24
DIVIDEND POLICY .................................................................................................................................. 24
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS .................. 24
CHANGES IN ACCOUNTING POLICIES ............................................................................................ 25
DISCLOSURE CONTROLS AND PROCEDURES AND
INTERNAL CONTROL OVER
FINANCIAL REPORTING ....................................................................................................................... 26
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Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
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 subsidiary (the “Company” or “Goodfood”) for the 13
and 52 weeks ended September 2, 2023 and should be read in conjunction with our audited annual
consolidated financial statements and the accompanying notes for the 52 weeks ended September 2, 2023.
Please also refer to Goodfood’s press release announcing its results for the 52 weeks ended September
2, 2023 issued on November 22, 2023. Quarterly reports, the Annual Report, and the Annual Information
Form can be found on SEDAR+ at www.sedarplus.ca 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.
During Fiscal 2023, the Company completed its cost reduction initiatives as part of Project Blue Ocean.
The cost saving initiatives consisted of a review of its operations and overall business to drive efficiencies,
return the Company to positive adjusted EBITDA1 and to form the basis for the path to consistent positive
cash flow and long-term profitable growth.
All amounts herein are expressed in Canadian dollars unless otherwise indicated and all references to 2023
refer to Fiscal 2023 and 2022 refer to Fiscal 2022 unless otherwise indicated.
In this MD&A, references to “we”, “our”, “Goodfood” or the “Company” refer to Goodfood Market Corp. and
its wholly owned subsidiary.
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 November 22, 2023, unless otherwise noted.
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.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
KEY FINANCIAL HIGHLIGHTS
This section provides a summary of our financial performance for the fourth quarter and Fiscal 2023
compared to the same period in 2022. 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 2023 COMPARED TO THE FOURTH QUARTER OF 2022
• Net sales were $37.2 million, a 26% decrease from $50.4 million compared to the same quarter last
year.
• Gross margin reached 38.2%, an increase of 9.9 percentage points, with gross profit at $14.2 million,
flat compared to the same quarter last year despite net sales declining by 26%.
• Net loss was $3.7 million, an improvement of $54.7 million compared to the same quarter last year. As
a result of Blue Ocean initiatives, net loss includes $0.8 million of reorganization and other related costs.
• Adjusted EBITDA margin1 was 1.9%, an improvement of 5.7 percentage points compared to the same
quarter last year.
• Net cash flows used in operating activities totalled $2.0 million, an improvement of $11.2 million
compared to the same quarter last year.
• Adjusted free cash flow1 was negative $1.1 million, an improvement of $10.5 million compared to the
same quarter last year.
• Active customers1 of 116,000 compared to 157,000 for the same quarter last year.
HIGHLIGHTS OF FISCAL 2023 COMPARED TO FISCAL 2022
• Net sales were $168.6 million, a 37% decrease from $268.6 million compared to the same period last
year.
• Gross margin reached 38.8%, an increase of 13.5 percentage points and gross profit of $65.4 million
decreased by $2.7 million or 4.0% compared to the same period last year. Gross margin and gross profit
include $1.3 million of inventories write-downs due to the discontinuance of products related to
Goodfood On-Demand grocery.
• Adjusted gross margin1 which excludes the $1.3 million charge for inventories write-downs due to the
discontinuance of products related to Goodfood On-Demand grocery totalled 39.5%, an increase of 13.7
percentage points and adjusted gross profit1 of $66.7 million decreased by $1.4 million or 2.1%
compared to the same period last year.
• Net loss was $16.5 million compared to $121.8 million in the same period last year. As a result of Blue
Ocean initiatives, net loss includes $0.5 million of reorganization and other related gains as well as a
charge of $1.3 million related to inventories write-downs due to the discontinuance of products related
to Goodfood On-Demand grocery.
• Adjusted EBITDA margin1 was 2.8%, an improvement of 18.0 percentage points compared to the same
period last year.
• Net cash flows used in operating activities was $9.4 million, an improvement of $49.6 million compared
to the same period last year.
• Adjusted free cash flow1 was negative $4.5 million, an improvement of $86.6 million compared to the
same period last year.
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.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
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 2,
2023 available on SEDAR+ at www.sedarplus.ca: limited operating history, negative operating cash flow,
going concern risk, food industry including current industry inflation levels, indebtedness and impact upon
financial condition, future capital requirements, 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, fulfillment centers and logistics channels, factors which may prevent realization of growth
targets, competition, availability and quality of raw materials, environmental and employee health and safety
regulations, online security breaches and disruptions, reliance on data centers, open source license
compliance, operating risk and insurance coverage, management of growth, limited number and scope of
products, conflicts of interest, litigation, food costs and availabilities, 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, as well as an inability to maintain high social
responsibility standards could lead to reputational damage and adversely affect our business. 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, as well as
customer demand.
In addition, net sales and operating results could be impacted by changes in the overall economic condition
in Canada and by the continuing inflationary pressures and by the impact these conditions could have on
consumer discretionary spending. Fears of a looming recession, increases in interest rates, continuing
supply chain disruptions and increased input costs are expected to have a continuing significant impact on
our economic condition that could materially affect our financial condition, results of operations and cash
flows.
Consequently, all of the forward-looking information contained herein is qualified by the foregoing
cautionary statements, and there can be no guarantee that the results or developments that we anticipate
will be realized or, even if substantially realized, that they will have the expected consequences or effects
on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise
5 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
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 second quarter of Fiscal 2023, the Company added the free cash flow metric to assess financial
strength and liquidity as well as how much cash is available to invest in growth opportunities, to finance its
ongoing operations and to service its debt. Adjusted free cash flow was also added as a metric to measure
financial and liquidity performance without the variations that could potentially distort the trends in our
liquidity performance primarily related to reorganization activities.
Metrics
Active
customers
Adjusted
gross profit
&
Adjusted
gross margin
EBITDA,
Adjusted
EBITDA
&
Adjusted
EBITDA
margin
Definitions
An active customer is a customer that has placed an order within the last three months.
For greater certainty, an active customer is only accounted for once, although different
products and multiple orders might have been purchased within a quarter. While the
active customers metric is not an IFRS or non-IFRS financial measure, and, therefore,
does not appear in, and cannot be reconciled to a specific line item in the Company’s
consolidated financial statements, we believe that the active customers metric is a
useful metric for investors because it is indicative of potential future net sales. The
Company reports the number of active customers at the beginning and end of the
period, rounded to the nearest thousand.
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 how efficiently the
Company uses its resources to service its customers as well as to assess underlying
trends in our ongoing operations without the variations caused by the impacts of
strategic initiatives such as the items described above and facilitates the comparison
across reporting periods.
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.
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 impact of the inventories write-downs due to the
discontinuance of products related to Goodfood On-Demand offering, impairment of
non-financial assets and reorganization and other related (gains) 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
6 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
Free cash flow
&
Adjusted free
cash flow
Total net
(debt) cash
Total net
(debt) cash to
total
capitalization
manner, to finance its ongoing operations and to service its debt. They also allow
comparisons between companies with different capital structures. We also believe that
these metrics are useful measures of financial performance to assess underlying
trends in our ongoing operations without the variations caused by the impacts of the
items described above and facilitates the comparison across reporting periods.
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.
Free cash flow is defined as net cash used in or provided by operating activities less
additions to fixed assets and additions to intangible assets. This measure allows the
Company to assess its financial strength and liquidity as well as to assess how much
cash is generated and available to invest in growth opportunities, to finance its ongoing
operations and to service its debt. It also allows comparisons between companies with
different capital structures. Adjusted free cash flow is defined as free cash flow
excluding cash payments made to costs related to reorganization activities. We
believe that adjusted free cash flow is a useful measure when comparing between
companies with different capital structures by removing variations caused by the
impacts of the items described above. We also believe that this metric is a useful
measure of financial and liquidity performance to assess underlying trends in our
ongoing operations without the variations caused by the impacts of the items
described above and facilitates the comparison across reporting periods.
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 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
equivalents. 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 the total net
(debt) cash measure is a useful measure to assess the Company’s overall financial
position and its ability to service its debt.
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 deficiency. 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.
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Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
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.
Together, our Montreal and Calgary facilities serve the whole of Canada, aligned with our go-forward
strategy centered around building the Goodfood brand through our weekly meal plans and add-ons
nationally, providing Goodfood branded grocery and ready-to-eat 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 November 21, 2023:
Total number
of locations
Administrative
offices
Manufacturing
centres
Fulfillment
facilities
1
2
1
X
X
X
X
X
X
X
Greater Montreal Area
(Quebec)
Greater Toronto Area
(Ontario)
Calgary (Alberta)
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 strong following from Canadians coast to coast, we are focused on
growing the Goodfood brand through our meal solutions including meal kits and prepared meals, with a
range of exciting Goodfood branded add-ons to be explored and complete a unique food experience for
customers.
The online meal solutions market continues to grow rapidly and meal kits are now estimated to have
reached approximately US$1.4 billion dollar in size in Canada as part of the C$123 billion Canadian Grocery
industry, with a penetration of only 4.8% of households (see Annual Information Form for details). We
believe there is substantial runway for additional penetration of meal kits into Canadian households, as
evidenced by industry research estimating the Canadian meal kit market to grow at a 16% CAGR between
2023 and 2027, to reach a market size of US$2.5 billion. We believe that consumers’ willingness to simplify
their weekly meal planning combined with their desire for joyful, exciting, and nourishing food experiences
at home while reducing food waste provides for significant room to increase online food delivery penetration.
Before scaling our efforts to capture an outsized share of the meal solutions market, our focus has been
and continues to be on further improving and growing cash flows. We are pleased to have now reported
8 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
three consecutive quarters and a first full year of positive adjusted EBITDA1 and have driven an adjusted
free cash flow1 improvement of $87 million this year in addition to turning in positive adjusted free cash
flows1 in the third quarter to the tune of $4 million. Having improved adjusted EBITDA1 and adjusted free
cash flows1 on the back of lower net sales highlights the cost discipline we have shown in improving our
operational efficiency and selling, general and administrative expense reductions. This improvement
positions Goodfood ideally to turn its focus to growth and to fund this growth with internally generated cash
flows.
During Fiscal 2024, Goodfood will focus on key growth pillars to drive growth in top line and, most
importantly, in profitability and cash flows: 1) customer growth, 2) order frequency increase, 3) basket size
enhancement, and 4) continue to enhance our sustainability practices.
To grow our customer base, the first step is building customer acquisition cost efficiencies to enable adding
more customers to the Goodfood platform every week with the same investment. In recent months, we
have completed a thorough review of and made significant adjustments to our acquisition channels. We
have also made and continue to make investments in our digital product to elevate the customer experience
by reducing friction and enhancing ease of use. Combined with reactivations of previous Goodfood
members, these initiatives have reduced our customer acquisition costs substantially in the fourth quarter
and improved the profitability and unit economics of customers as evidenced by the consistently increasing
sales generating ability and profitability of our customers.
A key driver that can enhance order frequency is product variety. In addition to launching our VIP program,
which rewards high frequency customers, we have increased the diversity of our recipe and ingredient
offering to provide additional choices to enhance order rate. With a focus on Better-for-You products like
organic chicken breasts, organic lean ground beef, bison, sustainably raised steelhead trout and paleo and
keto meals, combined with exciting partnerships with first-rate restaurants, we plan on offering a growing
and mouth-watering selection to customers to drive consistently increasing order frequency.
The dollar-value of the baskets our customers are building is also increasing and we are building a
differentiated set of meal kits, ready-to-eat meals and grocery add-ons to provide Canadians with an
exciting online meal solutions option and increasingly capture a larger share of their food wallet. In addition,
we have provided and continue to provide more choice of proteins to our customers, with the launch of
upsells and upcoming launch of customization within our meal-kit recipes allowing customers to swap or
double the proteins included in their chosen recipes. With these initiatives, we aim to provide customers
with an array of options to easily make their meals better and their baskets bigger.
We are also continuously looking to enhance our sustainability initiatives by prioritizing planet-friendly
options. Not only do we offer perfectly portioned ingredients that save from food waste, we also constantly
look to simplify our supply chain by removing middlemen from farm to kitchen table. This year, we are also
offsetting carbon emissions on deliveries and introducing packaging innovations that have helped us to
remove the equivalent of 2.4 million plastic bags annually from our deliveries. Our goal is clear, build a
business that helps our customers live healthier lives on a healthier planet.
In addition to focusing on these key pillars of top-line growth, we are currently testing the potential for multi-
channel partnerships that can broaden Goodfood’s customer reach and resilience.
With the steps we have taken, our strategic execution to drive profitability and cash flows continues to bear
fruit, underpinned by consistent improvement in adjusted EBITDA1 and cash flows. Coupled with our
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.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
unrelenting focus on nurturing our customer relationships, profitable growth remains our top priority. The
Goodfood team is fully focused on building and growing Canada’s most loved millennial food brand.
FISCAL 2023 AT A GLANCE
$12.675 million private placement
In February 2023, the Company announced it closed an offering of $12.675 million aggregate principal
amount of 12.5% convertible unsecured subordinated debentures due February 6, 2028, at a price of
$1,000 per Debenture, by way of non-brokered private placement. The total investment consists of $10
million from Investissement Québec and $2.675 million from management, Board members and existing
shareholders. Please refer to the “Convertible debentures” sub-section of the “Liquidity and capital
resources” section of the MD&A.
New Credit Facility
In December 2022, the Company announced it reached an agreement for an amended and restated credit
agreement with its existing syndicate providing bank financing totalling $9.5 million. The facilities include a
$5 million term loan, a $2.5 million revolving credit facility, and $2 million in additional short-term financing
and come to maturity on November 30, 2023. The facilities feature updated financial conditions, including
cash and financing related covenants. Please refer to the “Debt” sub-section of the “Liquidity and capital
resources” section of the MD&A.
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
September 3,
2022
211,000
(54,000)
157,000
September 2,
2023
119,000
(3,000)
116,000
For the 52 weeks ended
September 3,
2022
249,000
(92,000)
157,000
September 2,
2023
157,000
(41,000)
116,000
Active customers decreased by 3,000 and 41,000 for the 13 and 52 weeks ended September 2, 2023,
respectively. The decrease for the 13 weeks ended September 2, 2023 can be explained mainly by the
summer months seasonality as customers spend less time in their kitchen. The decrease for the 52 weeks
ended September 2, 2023 is mainly associated with our focus on attracting and retaining active customers
with enhanced ordering and profitability patterns. This focus has led to current active customers displaying
improved order frequency and average order value compared to same periods last year. Please refer to
the “Financial Outlook” section of this MD&A for a discussion on growth.
10 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
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
September 3,
2022
14,256
September 2,
2023
$ 14,221
$
For the 52 weeks ended
September 3,
2022
68,055
September 2,
2023
65,380
$
$
–
$ 14,221
$ 37,228
38.2%
38.2%
$
$
1,194
15,450
50,357
28.3%
30.7%
1,273
$
66,653
$ 168,558
38.8%
39.5%
$
$
1,194
69,249
268,586
25.3%
25.8%
For the 13 weeks ended September 2, 2023, the adjusted gross profit decreased by $1.2 million compared
to the same quarter last year despite net sales decreasing by $13.1 million. This result is primarily due to
operational efficiencies driving lower food and production costs as well as sales price adjustments
completed throughout the year. The increase in adjusted gross margin of 7.5 percentage points can be
explained mainly by improved food, production and shipping costs as a percentage of net sales driven by
efficiencies gained as part of the Company’s cost reduction initiatives. The improved adjusted gross margin
was partly offset by a lower net sales base.
For the 52 weeks ended September 2, 2023, the adjusted gross profit decreased by $2.6 million compared
to last year despite net sales decreasing by $100.0 million. This decrease is primarily due to lower net sales
partially offset by lower costs of goods sold mainly in food, production and shipping costs. The increase in
adjusted gross margin of 13.7 percentage points can be explained by lower food, production and shipping
costs as a percentage of net sales costs driven by efficiencies gained as part of the Company’s cost
reduction initiatives as well as sales price adjustments completed throughout the year.
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
(gains)
Adjusted EBITDA
Net sales
Adjusted EBITDA margin (%)
$
$
$
–
–
812
$
706
$ 37,228
1.9%
For the 13 weeks ended
September 3,
2022
(58,407) $
$
September 2,
2023
(16,463) $
For the 52 weeks ended
September 3,
2022
(121,761)
5,233
17,295
(1,495)
(100,728)
5,986
5,668
10,837
(61)
(19) $
3,909
1,677
4,853
39
(51,838) $
1,472
$
September 2,
2023
(3,689)
1,299
2,006
–
(384)
278
$
1,194
46,085
1,273
–
1,194
46,085
1,160
(1,927) $
50,357
(3.8)%
(468)
4,695
$ 168,558
2.8%
6,742
$
(40,721)
$ 268,586
(15.2)%
11 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
For the 13 weeks ended September 2, 2023, adjusted EBITDA margin improved by 5.7 percentage points
compared to the corresponding period in 2022 mainly driven by stronger adjusted gross margin and lower
selling, general and administrative expenses due to a lower salary base and other cost reduction initiatives.
The improved adjusted EBITDA margin was partly offset by a lower net sales base.
For the 52 weeks ended September 2, 2023, adjusted EBITDA margin improved by 18.0 percentage points
compared to the corresponding period in 2022 mainly driven by stronger adjusted gross margin and lower
selling, general and administrative expenses mainly due to a lower salary base and other cost reduction
initiatives. The improved adjusted EBITDA margin was partly offset by a lower net sales base.
FREE CASH FLOW AND ADJUSTED FREE CASH FLOW
The reconciliation of net cash flows from operating activities to free cash flow and adjusted free cash flow
is as follows:
(In thousands of Canadian dollars)
Net cash used in operating activities
Additions to fixed assets
Additions to intangible assets
Free cash flow
Payments related to discontinuance of
products related to on-demand offering
Payments made to reorganization and
other related costs
Adjusted free cash flow
For the 13 weeks ended
September 3,
2022
(13,114) $
$
$
September 2,
2023
(1,958)
(18)
(197)
(2,173)
$
(4,807)
(41)
(17,962) $
$
September 2,
2023
For the 52 weeks ended
September 3,
2022
(58,981)
(35,880)
(2,561)
(97,422)
(716)
(1,019)
(11,085) $
(9,350) $
7
–
319
–
1,047
(1,119)
$
6,319
(11,643)
6,275
(4,491)
6,319
(91,103)
For the 13 weeks ended September 2, 2023, adjusted free cash flow improved by $10.5 million compared
to the corresponding period in 2022 mainly driven by lower net loss resulting primarily from lower salary
base and other cost reduction initiatives as well as lower investments in capital expenditures as new facility
roll-outs were concluded in Fiscal 2022 and Fiscal 2023 was focused on maintenance and technology
projects.
For the 52 weeks ended September 2, 2023, adjusted free cash flow improved by $86.6 million compared
to the corresponding period in 2022 mainly driven by lower net loss resulting primarily from lower salary
base and other cost reduction initiatives, lower investments in capital expenditures as new facility roll-outs
were concluded in Fiscal 2022 and Fiscal 2023 was focused on maintenance and technology projects.
12 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
RESULTS OF OPERATIONS – FOURTH QUARTER OF FISCAL 2023 AND 2022
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 2,
2023
37,228
23,007
14,221
38.2%
13,793
2,006
–
812
1,299
(3,689)
–
(3,689)
(0.05)
September 3,
2022
($)
50,357 $ (13,129)
(13,092)
36,099
(37)
14,258 $
N/A
28.3%
(5,058)
18,851
(2,847)
4,853
(46,085)
46,085
(348)
1,160
(378)
1,677
(58,368) $ 54,679
(39)
(58,407) $ 54,718
0.73
(0.78) $
39
$
$
$
$
$
(%)
(26)%
(36)%
(0)%
9.9p.p.
(27)%
(59)%
N/A
(30)%
(23)%
94%
N/A
94%
94%
VARIANCE ANALYSIS FOR THE FOURTH QUARTER OF 2023 COMPARED TO FOURTH QUARTER
OF 2022
• The decrease in net sales is mainly driven by a decrease in the number of active customers partially
offset by an increase in average order value as a result of larger basket sizes and sales price
adjustments. The decrease in active customers is mainly driven by the Company’s focus on attracting
and retaining customers that provide higher gross margins and by changing customer behaviours.
• Gross profit remained flat compared to the same quarter last year primarily due to improved food,
production and shipping costs as a percentage of net sales driven by improved efficiencies as well as
sales price adjustments offset by a reduction in net sales.
• The decrease in selling, general and administrative expenses is primarily due to lower wages and
salaries and marketing spend driven primarily as a result of the Company’s Blue Ocean initiatives.
Selling, general and administrative expenses as a percentage of net sales decreased from 37.4% to
37.1%.
• The decrease in depreciation and amortization expense is mainly due to the reduction in fixed assets
and right-of-use assets in relation to Blue Ocean initiatives.
• The decrease in reorganization and other related costs mainly consist of lower external advisor fees and
lower headcount reduction costs as the Company completed its Blue Ocean initiatives in the fourth
quarter of Fiscal 2023.
• The decrease in net finance costs is mainly due to lower interest expense on debt and lease obligations
due to a lower debt balance and lower lease obligations in relation to Blue Ocean initiatives partially
offset by higher interest expense on the Debentures as the Company issued convertible debenture in
February 2023.
• Despite the decrease in net sales compared to same quarter last year, net loss has decreased
significantly mainly due to the Fiscal 2022 impairment of non-financial assets, lower food, production
and shipping costs as well as lower wages and salaries and marketing spend in selling, general and
administrative expenses.
13 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
RESULTS OF OPERATIONS – FISCAL 2023 AND 2022
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 (gains)
costs
Net finance costs
Loss before income taxes
Deferred income tax recovery
Net loss, being comprehensive loss
Basic and diluted loss per share
$
$
$
$
$
September 2,
2023
168,558
103,178
65,380
38.8%
65,867
10,837
–
(468)
5,668
(16,524)
(61)
(16,463)
(0.22)
September 3,
2022
$
200,531
($)
$ 268,586 $ (100,028)
(97,353)
(2,675)
N/A
(50,089)
(6,458)
(46,085)
68,055 $
25.3%
115,956
17,295
46,085
6,742
5,233
(7,210)
435
$ (123,256) $ 106,732
1,434
$ (121,761) $ 105,298
1.40
$
(1,495)
(1.62) $
(%)
(37)%
(49)%
(4)%
13.5p.p.
(43)%
(37)%
N/A
(107)%
8%
(87)%
(96)%
(86)%
(86)%
VARIANCE ANALYSIS FOR FISCAL 2023 COMPARED TO FISCAL 2022
• The decrease in net sales is primarily driven by a decrease in the number of active customers, the
Company’s decision to discontinue its on-demand offering partially offset by an increase in average
order value due to sales price adjustments and focus on meal kit offerings. The decrease in active
customers is mainly driven by the Company’s focus on attracting and retaining customers that provide
higher gross margins also by changing customer behaviours.
• The decrease in gross profit primarily resulted from a decrease in net sales partially offset by lower
production costs and food costs as a percentage of net sales costs driven by improved efficiencies.
• The decrease in selling, general and administrative expenses is primarily due to lower wages and
salaries and marketing spend driven primarily by the Company’s Blue Ocean initiatives. Selling, general
and administrative expenses as a percentage of net sales decreased from 43.2% to 39.1%.
• The decrease in depreciation and amortization expense is mainly due to the reduction in fixed assets
and right-of-use assets in relation to Blue Ocean initiatives.
• Reorganization and other related (gains) costs in Fiscal 2023 mainly consist of gains on termination of
leases partially offset by loss on disposal of non-financial assets and headcount reduction costs while
Fiscal 2022 costs mainly consist of external advisors relating to the Company’s reorganization plan.
• The increase in net finance costs is mainly due to the Company’s $30 million convertible debentures
issued in February 2023 partially offset by lower interest expense on lease obligations in relation to Blue
Ocean initiatives.
• Although net sales have decreased compared to same period last year, net loss has decreased
significantly mainly due to the reduction in selling, general and administrative expenses driven by cost
reduction initiatives as well as improved gross margin driven by improved operational efficiencies. In
addition, net loss has decreased due to the significant reduction in impairment of non-financial assets.
14 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
FINANCIAL POSITION
The following table provides the main variances in the Company’s consolidated statement of financial
position:
(In thousands of Canadian dollars)
As at
September 2,
2023
September 3,
2022
Variance Main components
Cash and cash
equivalents
$ 24,925
$ 36,885 $ (11,960)
Inventories
3,281
6,884
(3,603)
Assets held for sale
–
3,654
(3,654)
Fixed assets
11,026
18,408
(7,382)
Right-of-use assets
10,986
55,419
(44,433)
Accounts payable and
accrued liabilities
17,993
27,104
(9,111)
Debt (1)
4,036
11,743
(7,707)
Lease obligations,
including current
portion (2)
Convertible debentures,
liability component (3)
13,364
69,209
(55,845)
41,752
27,469
14,283
net
lower
to net
Mainly due
loss and
long-term debt
repayment of
partially offset by proceeds from
issuance of convertible debentures
and proceeds from disposal of non-
financial assets
Due
sales,
to
discontinuance of products related
inventory and
to on-demand
inventory
in
improvement
management process
Mainly due to disposal of assets
held for sale related to Project Blue
Ocean
Mainly due to disposal and write-
offs of fixed assets related to
Project
and
depreciation
Mainly due to derecognition of
right-of-use assets for terminated
leases related
to Project Blue
Ocean and depreciation
Mainly due to lower sales base and
lower salaries and benefits accrual
Due to repayment of debt upon
reaching an agreement to amend
the credit agreement
Mainly due to derecognition of
lease obligations for terminated
to Project Blue
leases related
Ocean
Mainly due to private placement
convertible debenture issuance
Ocean
Blue
(1) Please refer to “Capital Management” sub-section of the “Liquidity and Capital Resources” section of the MD&A for
repayment details.
(2) The following are the contractual undiscounted cash flows from lease obligations: $3.5 million repayable in less
than one year (September 3, 2022 - $11.0 million), $10.2 million repayable within one to five years (September 3,
2022 - $40.8 million) and $1.4 million repayable more than 5 years (September 3, 2022 - $27.9 million).
(3) Please refer to “Convertible Debentures” sub-section of the “Liquidity and Capital Resources” section of the MD&A
for repayment details.
15 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
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
Debt
Convertible debentures, liability component
Total debt
Shareholders’ deficiency
Total capitalization
Cash and cash equivalents
Total net debt (1)
Total net debt to total capitalization (1)
$
September 2,
2023
4,036
41,752
45,788
(23,442)
22,346
24,925
20,863
93.4%
$
$
$
$
September 3,
2022
11,743
27,469
39,212
(11,178)
28,034
36,885
2,327
8.3%
$
$
$
(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 increased by $18.5 million and total net debt to total capitalization increased by
85.1 percentage points mainly due to the 2028 Debenture issuance as well as Fiscal 2023 net loss and
lower cash and cash equivalents.
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. The Company has also generated positive cash flows from operations
and free cash flows during the third quarter of Fiscal 2023, providing a base for capital structure flexibility.
In the second quarter of Fiscal 2023, the Company reached an agreement to amend the syndicated credit
agreement with its existing lenders providing bank financing of $9.5 million. The facilities include a $5.0
million term loan, a $2.5 million revolving credit facility, and $2.0 million in additional short-term financing
and come to maturity at the end of November 2023. The facilities feature updated financial conditions,
including minimum cash balance and financing related covenants with which the Company is in compliance.
The following details some initiatives completed or ongoing to improve our liquidity:
- We raised $12.7 million from the issuance of convertible debentures in the second quarter of Fiscal
2023;
- We simplified our footprint leading to terminating leases and to consolidation of production in two
facilities in Montreal and Calgary;
- We aligned our workforce with scale leading to significant headcount reductions;
-
In Fiscal 2023, we achieved strong gross margin reaching up to 41% in the second and third
quarters;
- We achieved positive net income in the second quarter of Fiscal 2023 and achieved positive
adjusted EBITDA1 in the last three quarters of Fiscal 2023;
- We achieved positive free cash flow1 in the third quarter of Fiscal 2023;
- We completed Blue Ocean initiatives to drive efficiencies to continue to achieve and grow our gross
margin and adjusted EBITDA and to form the basis for the path to consistent positive cash flow and
long-term profitable growth.
1 Please refer to the “Metrics and Non-IFRS Financial Measures” section of this MD&A for corresponding definitions.
16 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
CASH FLOWS
A summary of net cash flows by activity for the 13 weeks ended September 2, 2023 and September 3, 2022
is presented below:
(In thousands of Canadian dollars)
For the 13 weeks ended
Cash flows provided by (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 provided by (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 2,
2023
September 3,
2022
Variance
$
$
$
$
$
121
(2,079)
(1,958) $
(3,661) $
(9,453)
(13,114) $
(4,449)
(44,401)
53
(1,538)
(3,443) $ (61,964) $
28,368
24,925
98,849
36,885
$
$
3,782
7,374
11,156
4,502
42,863
58,521
(70,481)
(11,960)
Net cash flows used in operating activities improved by $11.2 million in the fourth quarter 2023 compared
to the same quarter last year. This quarter-over-quarter improvement is primarily due to a lower net loss
before non-cash expenses as well as a favorable change in non-cash operating working capital due to a
positive change in accounts payable and accrued liabilities resulting from lower supplier payments and
improved inventory management during the fourth quarter 2023.
Net cash flows provided by investing activities were $0.1 million for the fourth quarter 2023 compared to
net cash flows used in investing activities of $4.5 million in the comparable period of 2022. This is a quarter-
over-quarter positive variance of $4.5 million primarily due to lower fixed assets additions in 2023 as facility
roll-outs were concluded in Fiscal 2022. Net cash flows provided by investing activities during the fourth
quarter of 2023 included $0.2 million of cash flows used for additions to fixed asset and intangible assets
compared to $4.8 million in the same quarter last year.
Net cash flows used in financing activities improved by $42.9 million in the fourth quarter 2023 compared
to same quarter last year primarily due to the repayment of the revolving facility in the fourth quarter of
Fiscal 2022.
A summary of net cash flows by activity for the 52 weeks ended September 2, 2023 and September 3, 2022
is presented below:
(In thousands of Canadian dollars)
For the 52 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 provided by (used in) investing
activities
Net cash flows (used in) provided by financing
activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
September 2,
2023
September 3,
2022
Variance
$
$
(3,212) $
(6,138)
(9,350) $
(47,873) $
(11,108) $
(58,981) $
44,661
4,970
49,631
1,960
(37,671)
39,631
(4,570)
8,002
$
$
(11,960) $ (88,650) $
36,885
24,925
125,535
36,885
$
$
(12,572)
76,690
(88,650)
(11,960)
Net cash flows used in operating activities improved by $49.6 million during the 52 weeks of 2023 compared
to the same period last year primarily due to a lower net loss before non-cash expenses and a favorable
change in non-cash operating working capital. The favorable change in non-cash operating working capital
17 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
is due to a favorable change in accounts payable and accrued liabilities resulting from lower net sales
volume and lower inventories mainly resulting from lower net sales and discontinuance of products related
to on-demand inventory.
Net cash flows provided by investing activities were $2.0 million during the 52 weeks of 2023 compared to
net cash flows used in investing activities of $37.7 million in the comparable period of 2022. This is a year-
over-year positive variance of $39.6 million which is primarily due to lower fixed assets additions in 2023
as new facility roll-outs were concluded in Fiscal 2022 as well as proceeds from disposal of non-financial
assets received mainly in the first quarter of 2023. Net cash flows provided by investing activities during the
52 weeks of 2023 included $1.7 million of cash flows used for additions to fixed asset and intangible assets
compared to $38.4 million in the same period last year.
Net cash flows used in financing activities were $4.6 million during the 52 weeks of 2023 compared to net
cash flows provided by financing activities of $8.0 million in the comparable period of 2022. This is a year-
over-year negative variance of $12.6 million which is primarily due to lower proceeds from issuance of
convertible debenture in 2023, lower proceeds from the drawdown of the revolving facility in 2023 compared
to 2022 as well as lower payment of lease obligation due to Blue Ocean initiatives.
DEBT
During the second quarter of Fiscal 2023, the Company reached an agreement to amend the syndicated
credit agreement (Credit Facility 2021) with its existing lenders providing bank financing of $9.5 million. The
facilities include a $5.0 million term loan, a $2.5 million revolving credit facility, and $2.0 million in additional
short-term financing. The facilities bear variable interest rates of BA plus 4.50% and mature at the end of
November 2023. The facilities feature updated financial conditions, including minimum cash balance and
financing related covenants. The term loan is repayable in quarterly installments of $313 thousand with a
bullet repayment of the balance of $4.1 million at the end of the term on November 30, 2023. The Company
will aim to extend the maturity of the term loan before it comes to maturity. As at September 2, 2023, no
amount was drawn from the revolving facility. The total drawn credit facility is presented as a current liability.
CONVERTIBLE DEBENTURES
2028 Debentures
On February 6, 2023, the Company issued 12,675 convertible unsecured subordinated debentures (the
"2028 Debentures") at a price of $1,000 per Debenture for gross proceeds of $12.7 million. The 2028
Debentures mature on February 6, 2028 (the "Maturity Date") and bear a fixed interest rate of 12.5% per
annum. The interest portion for the period commencing on the issuance date and ending in February 2025
will be capitalized semi-annually and convertible at a price equal to the volume weighted average trading
price of the Common Shares on the TSX for the five (5) consecutive trading days ending on the date on
which such interest portion becomes due, plus a premium of 50%. As of February 6, 2025 and until the
Maturity Date, the interest portion will be payable semi-annually in cash. Factoring in the 2028 Debentures
issuance costs, the effective interest rate on the Debentures is 13.5%.
The 2028 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 $0.75 (the "Conversion Price") per common share.
As of February 6, 2026, Goodfood may repurchase the non-converted portion of a 2028 Debenture at an
amount of the principal and accrued interest plus an amount providing the holder with an internal rate of
return (IRR) equal to 18% for the period during which such Debenture will have been outstanding. The
holders may require a repurchase on the same terms upon a change of control of the Company.
The 2028 Debentures are direct, subordinated unsecured obligations of the Company, subordinated to any
senior indebtedness of the Company, including the Company's credit facility, and ranking equally with one
another and with all other existing and future subordinated unsecured indebtedness of the Company to the
extent subordinated on the same terms. The Company used the net proceeds from the Offering to complete
Project Blue Ocean initiatives and for general corporate purposes.
18 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
In connection with the issuance of the 2028 Debentures, 2,425 Debentures were purchased by the 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.
As at September 2, 2023, 12,675 of 2028 Debentures were outstanding at a price of $1,000 per Debenture.
2027 Debentures
In Fiscal 2022, the Company issued 30,000 convertible unsecured subordinated debentures (the "2027
Debentures") at a price of $1,000 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 September 30, 2022. Factoring in the 2027
Debentures issuance costs, the effective interest rate on the 2027 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 2027
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 2027 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.
As at September 2, 2023, 29,046 of 2027 Debentures (September 3, 2022 – 29,256) were outstanding at
a price of $1,000 per Debenture.
2025 Debentures
In Fiscal 2020, the Company issued 30,000 convertible unsecured subordinated debentures (the "2025
Debentures") at a price of $1,000 per Debenture for gross proceeds of $30 million. The 2025 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 2025 Debentures issuance costs, the effective interest rate on the 2025 Debentures is 11.76%. The
2025 Debentures are convertible into common shares of the Company at any time at the option of the
holder at a conversion price of $4.70. Starting on March 31, 2023, under certain conditions, the debentures
may be redeemed in whole or in part at the option of the Company at a price equal to the principal amount
thereof plus accrued and unpaid interest.
As at September 2, 2023, 6,232 of 2025 Debentures (September 3, 2022 – 6,232) were outstanding at a
price of $1,000 per Debenture.
COMMON SHARES
Transactions that took place during the 13 and 52 weeks ended September 2, 2023 were as follows:
• Nil stock options were exercised;
• 76,428 and 1,421,765 restricted share units vested, respectively, and the same number of common
shares were issued;
• 2,807 and 11,283 employee share purchases vested, respectively, and the same number of common
shares were issued; and
• Nil and 210 Debentures were converted into 45,652 common shares, respectively.
19 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
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) income
Net finance costs
Depreciation and
amortization
Deferred income tax
(recovery) expense
EBITDA (1)
Share-based
payments
Discontinuance of
products related to
on-demand offering
Impairment of non-
financial assets
Reorganization and
other related costs
(gains)
Adjusted EBITDA (1)
Adjusted EBITDA
margin (1)
Basic and diluted
(loss) income per
share (2)
Q3
119,000
Q4
116,000
Fiscal 2022
Q1
246,000 254,000
$ 37,228 $ 42,139 $ 42,043 $ 47,148 $ 50,357 $ 67,031 $ 73,377 $ 77,821
17,595
18,648
24.0% 24.0%
Fiscal 2023
Q1
148,000
14,221
38.2%
17,114
40.7%
14,256
28.3%
17,556
26.2%
Q4
157,000
17,286
41.0%
16,759
35.6%
Q2
124,000
Q3
211,000
Q2
–
(1)
631
643
1,194
–
–
–
14,221
17,285
17,745
17,402
15,450
17,556
17,595 18,648
38.2%
41.0%
42.2%
$
(3,689) $ (1,164) $
1,329
1,299
36.9%
24.0% 24.0%
98 $ (11,708) $ (58,407) $ (21,104) $ (20,640) $ (21,610)
904
30.7%
26.2%
1,570
1,056
1,677
1,596
1,470
2,006
2,206
2,856
3,769
4,853
5,220
4,282
2,940
-
-
$
(384) $ 2,371 $
(72)
27
4,352 $ (6,358) $ (51,838) $ (14,290)) $ (16,861) $ (17,739)
(1,559)
(2)
39
11
278
544
794
2,293
1,472
1,177
1,984
1,353
–
–
(1)
–
631
643
1,194
–
–
46,085
–
–
–
–
–
–
812
706 $ 3,284 $
370
$
(2,769)
1,812
3,008 $ (2,303) $ (1,927) $ (10,636) $ (13,584) $ (14,574)
1,119
1,160
1,293
2,477
1.9%
7.8%
7.2%
(4.9)%
(3.8)%
(15.9)%
(18.5)%
(18.7)%
$
(0.05) $
(0.02) $
- $
(0.16) $
(0.78) $
(0.28) $
(0.28) $
(0.29)
(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) income per share on a quarterly basis may not equal basic and diluted (loss)
income per share on a year-to-date basis due to rounding.
Quarter-over-quarter variations in net sales were caused by the various factors including the following:
-
-
-
introduction of on-demand grocery offering in late Fiscal 2021 and the shutdown of this offering in
late Fiscal 2022;
seasonality which is the strongest in the second quarter due to the winter holidays and the fourth
quarter due to summer months, when the number of active customers and order rate trend lower;
impacts of COVID-19 and economic conditions which led to a shift in customer ordering behaviors
during the pandemic and after COVID-19 restrictions were eased;
- marketing campaigns and customer incentives;
-
fluctuations in inflation.
20 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
Quarter-over-quarter variations in net (loss) income were caused by the various factors including the
following:
-
-
introduction of on-demand grocery offering in late Fiscal 2021 and the shutdown of this offering in
late Fiscal 2022 which led to fluctuating net losses as high cost of product, fulfillment and delivery
eroded gross margin;
seasonality which is the strongest in the fourth quarter due to summer months and the second
quarter due to the winter holidays, when the number of active customers and order rate trend lower
and can result in lower operating margins;
impacts of COVID-19 and post-pandemic economic conditions which led to inflationary pressures
partially offset by increase in basket prices;
- marketing campaigns and customer incentives;
-
costs saving measures adopted led to a reduction in headcount and operating efficiencies in its
gross profit and selling, general and administrative expenditures as well as additional
reorganization and impairment charges throughout Fiscal 2022 quarters and Fiscal 2023.
-
TRENDS AND SEASONALITY
The Company’s net sales and expenses are impacted by seasonality. During the winter 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 majority of the Company’s net
sales are paid prior to delivery and therefore the main credit exposure to net sales is with respect to the
payment processor. 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 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 did not enter into an
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
21 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
a sufficient liquidity position to finance its general and administrative, working capital and overall capital
expenditures.
In order to manage its liquidity risk, the Company constantly reviews its operations and overall business to
drive efficiencies to form the basis for positive cash flow and long-term profitable growth. The Company
expects to have sufficient liquidities in order to repay its credit facility when it becomes due in November
2023.
This assessment could be affected by economic, financial and future competitive factors, and other future
events that are beyond the control of the Company. Management’s liquidity assessment could be impacted
if the actual operational performance is lower than the one used in the forecasted cash flows.
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 2, 2023 available on SEDAR+ at www.sedarplus.ca.
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 September 2, 2023:
Total carrying
amount
Contractual
cash flows
Less than 1
year 1 to 5 years
More than 5
years
Accounts payable and
accrued liabilities
$
17,993
$
17,993
$
17,993
$
− $
−
Debt
Debentures, liability
component
Lease obligations, including
current portion
Purchase and service
contract obligations
4,036
4,142
4,142
−
−
41,752
64,959
2,033
62,926
−
13,364
15,054
3,457
10,247
1,350
−
77,145
$
7,786
6,539
1,247
$
109,934
$
34,164
$ 74,420 $
−
1,350
As at September 2, 2023, 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.
22 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
FINANCIAL INSTRUMENTS
The Company’s financial instruments primarily consist of cash and cash equivalents, accounts and other
receivables, accounts payable and accrued liabilities, 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 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 2023, the Company was in
compliance with these financial covenants.
RELATED PARTIES
KEY MANAGEMENT PERSONNEL
The Company’s key management personnel have authority and responsibility for planning, directing and
controlling the Company’s activities and consist of the Company’s executive team and the Board of
Directors. The chief executive officer ("CEO") and the president and chief operating officer ("President and
COO") are members of the Board of the Company. The CEO is also Chairman of the Board.
The following table presents the compensation of the key management personnel recognized in net loss:
(In thousands of Canadian dollars)
For the 52 weeks ended
September 2, 2023 September 3,2022
Salaries, fees and other short-term employee benefits
Share-based payments expense
$
2,290
2,189
$
1,983
2,931
RELATED PARTY TRANSACTIONS
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 2028 Debentures 2,425 Debentures were purchased by the Board
members and key management personnel at a price of $1,000 per Debenture. In connection with the
issuance of the 2027 Debentures, 415 Debentures were purchased by Board members 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
23 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
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.
OUTSTANDING SHARE DATA
As at
Common shares outstanding (1)
Debentures outstanding (2) (3) (4)
Stock options outstanding
Stock options exercisable
Restricted share units outstanding
November 21, 2023
76,505,578
24,540,305
3,033,247
2,140,516
1,792,540
September 2, 2023 September 3, 2022
75,233,027
7,550,638
3,262,799
1,865,747
2,000,716
76,525,507
24,540,305
4,029,723
2,252,171
1,878,328
(1) As at November 21, 2023 and September 2, 2023, 382,180 and 344,678 common shares held in trust through the
employee share purchase plan (September 3, 2022 – 171,829 common shares) were excluded in the common
shares outstanding.
(2) As at November 21, 2023 and September 2, 2023, 6,232 2025 Debentures (September 3, 2022 – 6,232
Debentures) were outstanding which are convertible into 1,325,957 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.
(3) As at November 21, 2023 and September 2, 2023, 29,046 2027 Debentures (September 3, 2022 – 29,256
Debentures) were outstanding which are convertible into 6,314,348 common shares of the Company, respectively,
at a conversion price of $4.60. Please refer to the "Debt" subsection of the "Liquidity and Capital Resources" section
of this MD&A.
(4) As at November 21, 2023 and September 2, 2023, 12,675 2028 Debentures (September 3, 2022 – nil) were
outstanding which are convertible into 16,900,000 common shares of the Company, respectively, at a conversion
price of $0.75. Please refer to the "Debt" subsection of the "Liquidity and Capital Resources" section of this MD&A.
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.
24 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
The Company’s main judgements, estimates, and assumptions are presented below:
4.1
CRITICAL JUDGEMENTS
Impairment 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.
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.
4.2
KEY SOURCES OF ESTIMATES AND ASSUMPTIONS
Impairment 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.
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 2, 2023.
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.
25 | P a g e
Goodfood Market Corp.
Management’s Discussion and Analysis
13 and 52 weeks ended September 2, 2023
The amendments apply for annual reporting periods beginning on or after January 1, 2024. The Company
does not expect this amendment to have a material impact on its consolidated financial statements.
Other standards
The following new and amended standards are not expected to have a significant impact on the Company’s
consolidated financial statements.
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2).
• Definition of Accounting Estimates (Amendments to IAS 8).
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 2, 2023.
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
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 2, 2023.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
No changes were made during the Fiscal 2023 to the Company’s ICFR that have materially affected, or are
reasonably likely to materially affect, the Company’s internal controls over financial reporting.
26 | P a g e
CONSOLIDATED
FINANCIAL
STATEMENTS
YEARS ENDED SEPTEMBER 2, 2023 AND SEPTEMBER 3, 2022
Consolidated Financial Statements of
GOODFOOD MARKET CORP.
52 weeks ended September 2, 2023 and September 3, 2022
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 Deficiency
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Page
1 - 5
6
7
8
9
10 - 36
KPMG LLP
Tour KPMG
600 de Maisonneuve Blvd West, Suite 1500
Montréal, QC H3A 0A3
Canada
Telephone 514 840 2100
Fax 514 840 2187
INDEPENDENT AUDITOR’S 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
September 3, 2022
financial position as at September 2, 2023 and
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 2, 2023 and September 3, 2022, and
its consolidated financial performance and its consolidated cash flows for the 52 weeks then ended
in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
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 "Auditor’s Responsibilities for
the Audit of the Financial Statements" section of our auditor’s 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.
© 2023 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
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
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 2, 2023. These matters
were addressed in the context of our audit of the consolidated financial statements as a whole and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matters described below to be the key audit matters to be communicated
in our auditor’s report.
Assessment of existence and accuracy of net sales
Description of the matter
We draw attention to Note 3.2 and Note 4.2 to the financial statements. The Entity’s net sales
amount to $169 million. Net sales are primarily generated from the deliveries of fresh meal
solutions and add-ons ("meal solutions").
The Entity recognizes revenue at a point in time, which is upon delivery of meal solutions, as it
meets the criteria to satisfy the performance obligation. Deferred revenue is recognized for
consideration received in advance of the related revenue. Revenue from the sale of goods is
measured at the fair value of consideration received, net of refunds, sales incentives and credits.
Why the matter is a key audit matter
We identified existence and accuracy of net sales as a key audit matter. This matter represented
an area of higher risk of material misstatement given the magnitude of net sales, the high volume
of transactions, and the complexity involved in processing and recording the Entity’s sales
transactions. As a result, significant auditor attention was required in performing the audit
procedures.
How the matter was addressed in the audit
The following are the primary procedures we performed to address this key audit matter:
• We matched all of the Entity’s meal solutions net sales transactions for the year with the
corresponding cash receipts per bank statement.
• For a selection of meal solutions sales transactions over a defined period close to year-end, we
evaluated whether the performance obligation had been satisfied by examining the proof of
delivery.
• We agreed the total amount of customer payments received as of year-end for meal solutions
deliveries occurring after that date to the Entity’s deferred revenue account.
Page 3
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 auditor’s 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 auditor’s
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
auditor’s report.
We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board, 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.
Auditor’s 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 auditor’s
report that includes our opinion.
Page 4
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
intentional omissions,
resulting
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 auditor’s 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 auditor’s report. However, future events or conditions
may cause the Entity to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
Page 5
• 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 auditor’s 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 auditor’s 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 auditor’s report is Philippe Grubert.
Montréal, Canada
November 21, 2023
*CPA auditor, public accountancy permit No. A120220
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
Impairment of non-financial assets
Reorganization and other related (gains) costs
Depreciation and amortization
Operating loss
Net finance costs
Loss before income taxes
Deferred income tax recovery
Net loss, being comprehensive loss
Basic and diluted loss per share
Notes
September 2,
2023
September 3,
2022
$
168,558
103,178
$ 268,586
200,531
6,12,13,14
6
12,13,14,20
7
8
$
$
65,380
65,867
–
(468)
10,837
(10,856)
5,668
(16,524)
(61)
(16,463)
(0.22)
68,055
115,956
46,085
6,742
17,295
(118,023)
5,233
(123,256)
(1,495)
(121,761)
(1.62)
$
$
Basic and diluted weighted average number of common shares
outstanding
18
76,103,206
74,982,435
The accompanying notes are an integral part of these consolidated financial statements.
6 | P a g e
Notes
September 2,
2023
September 3,
2022
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
Liabilities and Shareholders’ Deficiency
Current liabilities:
Accounts payable and accrued liabilities
Deferred revenues
Debt
Current portion of lease obligations
Non-current liabilities:
Convertible debentures
Lease obligations
Total liabilities
Shareholders’ deficiency:
Common shares
Contributed surplus
Convertible debentures
Deficit
Total shareholders’ deficiency
10
11
6
6,12
6,13
6,14
15
17
16
17
18
19
16
$
$
$
24,925
4,136
3,281
–
366
32,708
11,026
10,986
2,776
312
57,808
17,993
4,105
4,036
2,862
28,996
41,752
10,502
81,250
180,369
8,009
5,367
(217,187)
(23,442)
Total liabilities and shareholders’ deficiency
$
57,808
$
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of Goodfood Market Corp. by:
Signed
Jonathan Ferrari, Director and
Chair of the Board
Signed
Donald Olds, Director and
Chair of the Audit Committee
$
36,885
3,596
6,884
3,654
1,178
52,197
18,408
55,419
3,174
650
$
129,848
$
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
7 | P a g e
GOODFOOD MARKET CORP.
Consolidated Statements of Changes in Deficiency
(In thousands of Canadian dollars)
For the 52 weeks ended
Notes
Common
Shares
Contributed
Surplus
Convertible
Debentures
September 3, 2022
Deficit
Total
Balance as at
August 31, 2021
Net loss
Share-based payments
expense (1)
Net convertible debenture
issuance (2)
19
16
Net convertible debenture
conversions (3)
16
Stock options exercised
19
Restricted share units vested 19
Employee share purchase
plan
Balance as at
September 3, 2022
Balance as at
September 3, 2022
Net loss
Share-based payments
expense
Net convertible debenture
issuance (2)
19
16
Net convertible debenture
conversions (3)
16
Restricted share units vested 19
Employee share purchase
plan
Balance as at
September 2, 2023
$
843 $ (78,963) $
(121,761)
97,875
(121,761)
$ 170,094
$
–
–
–
5,901
–
6,945
–
–
4,452
1,291
726
2,032
–
(216)
(2,032)
(121)
–
_
–
–
–
–
_
–
6,945
4,452
1,170
510
_
(369)
19
(355)
(14)
–
$ 173,788
$ 10,584
$ 5,174 $ (200,724) $ (11,178)
September 2, 2023
$ 173,788
–
$ 10,584
–
$ 5,174 $ (200,724)
(16,463)
–
$ (11,178)
(16,463)
–
–
196
6,475
3,903
–
–
(6,475)
19
(90)
(3)
–
202
(9)
–
–
–
–
–
–
–
3,903
202
187
–
(93)
$ 180,369
$ 8,009
$ 5,367 $ (217,187) $ (23,442)
(1) In Fiscal 2022, share based payments expense includes $1.1 million related to grants awarded to settle short-
term incentive compensation for certain employees.
(2) The equity component of the convertible debentures presented above is net of income taxes of $0.1 million (2022
– net of income taxes of $1.6 million and $0.4 million of related issue costs).
(3) The conversions of the convertible debentures presented above is net of income taxes of $11 thousands
(2022 – $0.1 million).
The accompanying notes are an integral part of these consolidated financial statements.
8 | P a g e
Notes
September 2,
2023
September
3, 2022
$
(16,463) $ (121,761)
12,13,14,20
6,12,13,14
6
6
6
19
7
8
20
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
Net loss on disposal of non-financial assets
Gain on termination of leases
Write-offs of non-financial assets
Share-based payments expense
Net finance costs
Deferred income tax recovery
Change in non-cash operating working capital
Other
Net cash used in operating activities
Investing:
Additions to fixed assets
Additions to intangible assets
Proceeds from disposal of non-financial assets
Interest received
Net cash provided by (used in) investing activities
Financing:
Net proceeds from issuance of convertible debentures
Net repayment of debt
Repayment of revolving facility
Interest paid
Payments of lease obligations
Shares purchased under employee share purchase plan
Proceeds from exercise of stock options
Other
Net cash (used in) provided by financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental cash flow information
12
14
15
15
17
19
19
20
10,837
–
2,362
(12,137)
2,252
3,903
5,668
(61)
(6,138)
427
(9,350)
(716)
(1,019)
2,580
1,115
1,960
12,249
(7,813)
–
(4,616)
(4,407)
(89)
–
106
(4,570)
(11,960)
36,885
17,295
46,085
–
–
639
5,876
5,233
(1,495)
(11,108)
255
(58,981)
(35,880)
(2,561)
–
770
(37,671)
28,061
(625)
(9,063)
(4,417)
(6,215)
(369)
510
120
8,002
(88,650)
125,535
$
24,925 $ 36,885
The accompanying notes are an integral part of these consolidated financial statements.
9 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(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 solutions 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 subsidiary on a
consolidated basis.
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 an additional operating facility in Calgary,
Alberta.
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 2, 2023 and
September 3, 2022 were authorized by the Board of Directors ("Board") on November 21, 2023 for
publication on November 22, 2023.
2.2
BASIS OF MEASUREMENT
The consolidated financial statements have been prepared on the historical cost basis except for the
following:
•
financial instruments at fair value through profit or loss;
• equity share-based payment arrangements which are measured at fair value at grant date; and
•
lease obligations, which are measured at the present value of minimum lease payments at lease
inception.
2.3
FUNCTIONAL AND PRESENTATION CURRENCY
The consolidated financial statements are stated in Canadian dollars, which is the functional and
presentation currency of Goodfood Market Corp.
3.
3.1
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts of the Company and of its
wholly owned subsidiary.
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.
10 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(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 is comprised of interest income and foreign exchange gains. Finance costs is comprised
of interest expense on debt, lease obligations, convertible debentures, foreign exchange losses and
changes in fair value of interest rate swaps. The Company classifies interest paid as financing activities
and interest 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.
11 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(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 or 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
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 10 years
3 to 20 years
3 to 5 years
Shorter of lease term and useful life
12 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(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 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 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.
13 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
The estimated useful lives for the current year and comparative periods are as follows:
Asset
Software
Intellectual property
Period
3 to 5 years
5 years
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted
prospectively, if appropriate.
3.11
IMPAIRMENT OF NON-FINANCIAL ASSETS
The Company reviews the carrying amount of its non-financial assets, which include intangible assets with
a finite useful life, fixed assets and right-of-use assets on each reporting date, in order to determine if
specific events or changes in circumstances indicate that their carrying amounts may not be recoverable.
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
FINANCIAL INSTRUMENTS
3.12.1 RECOGNITION AND INITIAL MEASUREMENT
Financial assets and financial liabilities are recognized when the Company becomes party to the contractual
provisions of the financial instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value
through profit or loss ("FVTPL"), transaction costs that are directly attributable to its acquisition or issuance.
3.12.2 CLASSIFICATION AND SUBSEQUENT MEASUREMENT
Financial assets
All financial assets are recognized at amortized cost, except for interest rate swaps, recognized at
FVTPL.
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.
14 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
3.12.3 DERECOGNITION
Financial assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows of the financial asset in a transaction
in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which
the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does
not retain control of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount of the financial asset and
the sum of the consideration received or receivable is recognized in the consolidated statements of loss.
Financial liabilities
The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled,
or expire. The Company also derecognizes a financial liability when its terms are modified and the cash
flows of the modified liability are substantially different, in which case a new financial liability based on the
modified terms is recognized at fair value.
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.
3.12.4 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.
3.12.5
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.
3.12.6 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.
3.12.7
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.
3.12.8 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.
15 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
The component parts of compound instruments issued by the Company are classified separately as
financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date
of issuance, the fair value of the liability is measured separately using an estimated market rate for a similar
liability without an equity component and the residual is allocated to the conversion option. The liability
component is subsequently recognized on an amortized cost basis using the effective interest method until
extinguished upon conversion or at the instrument’s maturity date. The equity component is recognized and
included in equity, without being subsequently remeasured. In addition, the conversion option classified as
equity will remain in equity until the conversion option is exercised, in which case, the portion recognized
in equity will be transferred to common shares. Issuance costs are divided between the liability and equity
components in proportion to their respective values.
On the early redemption or repurchase of convertible debentures, the Company allocates the consideration
paid on extinguishment to the liability based on its fair value at the date of the transaction and the residual
is allocated to the conversion option. Any resulting gain or loss relating to the liability element is credited or
charged to the consolidated statements of loss and the difference between the carrying amount and the
amount considered to be settled relating to the holder option is treated as a common share transaction.
3.13
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.
3.14
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.
3.15
EMPLOYEE SHARE PURCHASE PLAN
The Company’s contributions, used to purchase shares on the open market on behalf of employees, are
recognized when incurred as an employee benefit expense, with a corresponding increase in contributed
surplus. The amount expensed is adjusted to reflect the number of awards for which it is expected that the
vesting conditions will be me met, so that the amount ultimately expensed will depend on the number of
awards that meet the vesting conditions at the vesting date.
Unvested shares held in trust on behalf of employees are treasury shares and, therefore, deducted from
equity until they become vested.
16 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
3.16
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.
3.17
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,
restricted share units, unvested shares in connection with the employee share purchase plan (“ESPP”) and
the convertible debentures conversion option.
3.18
SEGMENT REPORTING
The Company determined that it operated a single operating segment for Fiscal 2023 and 2022.
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
CRITICAL JUDGEMENTS
Impairment 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.
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.
4.2
KEY SOURCES OF ESTIMATES AND ASSUMPTIONS
Impairment of non-financial assets
In assessing impairment, management estimates the recoverable amount of each asset or CGU.
Management estimates 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
17 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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.
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.
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 amendments apply for annual reporting periods beginning on or after January 1, 2024. The Company
does not expect this amendment to have a material impact on its consolidated financial statements.
Other standards
The following new and amended standards are not expected to have a significant impact on the Company’s
consolidated financial statements.
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2).
• Definition of Accounting Estimates (Amendments to IAS 8).
18 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
6.
REORGANIZATION AND OTHER RELATED COSTS
6.1
IMPAIRMENT OF NON-FINANCIAL ASSETS
In Fiscal 2022, as a result of the Company’s reorganization plan and the breach of certain financial
covenants, the Company decided to close several facilities as well as to shut-down its on-demand grocery
product offering. This resulted in the following CGUs being identified 1) at 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) at 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 2, 2023, the Company did not record any impairment charge (2022 -
$37.9 million on fixed assets, $7.7 million on right-of-use assets and $0.5 million on intangible assets).
Impairment charge per CGU is as follow:
CGU level
Individual assets
Leased facilities
Geographical areas
Recoverable
amount
If FVLCD, fair
value level
inputs
FVLCD
VIU
FVLCD
Level 3
N/A
Level 3
Impairment charge of non-financial assets
2023
− $
−
−
− $
$
$
Impairment charge
2022
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. In Fiscal 2022,
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 2, 2023, there are no assets held for sale as
they have been sold or written-off.
In Fiscal 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.
6.2
REORGANIZATION AND OTHER RELATED COSTS
The following table summarized the reorganization and other related costs:
Net gains related to facility closures (1)
Write-offs of non-financial assets
Net loss on disposal of non-financial assets
Employee termination and benefit costs
External advisor fees (2)
Other
2023
2022
$
$
(8,315)
2,252
2,362
2,210
1,017
6
(468)
$
$
(121)
102
–
4,321
2,440
–
6,742
(1) For the 52 weeks ended September 2, 2023, net gains related to facility closures included net gain on termination of leases
amounting to $12.1 million.
(2) External advisor fees consist of fees related to the Company’s reorganization initiatives.
19 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
7.
NET FINANCE COSTS
Interest expense on debt
Interest expense on lease obligations
Interest expense on debentures, including accretion interest
Interest income
Other finance costs
Foreign exchange (gain) loss
Fair value gain on interest rate swaps
2023
2022
$
$
618
1,474
4,487
(1,115)
254
(50)
–
5,668
$
$
1,093
2,572
2,216
(736)
106
8
(26)
5,233
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
2023
2022
(16,524)
26.21%
(4,331)
$ (123,256)
26.15%
(32,231)
$
3,454
1,043
(122)
(105)
(61)
29,210
1,525
145
(144)
$
(1,495)
$
$
$
Deferred income tax assets (liabilities) are attributable to the following items:
Lease
obligations
Net
operating
losses Debentures
Fixed
assets and
Right-of-
use assets
Deferred
income tax
assets
(liabilities)
As at August 31, 2021
Recognized in net loss
Recognized in equity
As at September 3, 2022
Recognized in net loss
Recognized in equity
$
$
$
$
17,125
(12,045)
−
5,080
(5.080)
−
318
1,779
−
2,097
(474)
−
$
$
(318) $
(284)
(1,495)
(2,097) $
535
(61)
(17,125) $
12,045
−
(5,080) $
5,080
−
As at September 2, 2023
$
−
$
1,623
$
(1,623) $
− $
−
1,495
(1,495)
−
61
(61)
−
20 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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 2,
2023
September 3,
2022
$ 33,655
14,977
907
1,526
620
$ 51,685
$ 30,456
13,018
1,334
3,140
343
$ 48,291
The Company has federal operating tax losses carried forward of $131.0 million (2022 – $$118.1 million)
which are partially recognized for an amount of $6.2 million (2022 – $8.0 million), and unrecognized
deductible temporary differences of $65.6 million (2022 – $66.0 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 2, 2023, the amounts and expiry dates of the federal tax losses carried forward
were as follows:
2035
2036
2037
2038
2039
2040
2041
2042
2043
$
49
712
3,547
8,516
18,089
812
22,625
63,531
13,139
$ 131,020
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
2023
2022
$
1,337
$
2,477
43,890
99,017
21 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
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 2, 2023 September 3, 2022
$
$
1,853
238
96
1,949
4,136
$
$
2,357
504
97
638
3,596
September 2, 2023 September 3, 2022
$
$
1,807
1,221
253
3,281
$
$
4,953
1,611
320
6,884
The cost of inventories recognized as an expense within cost of goods sold during the 52 weeks ended
September 2, 2023 was $88.6 million (2022 – $174.3 million).
The Company recorded an expense within cost of goods sold during the 52 weeks ended September 2,
2023 for a net amount of $1.1 million (2022 – $1.6 million) for the write-down of inventories. Included in this
amount is $1.3 million (2022 – $1.2 million) related to the discontinuance of products related to on-demand
grocery.
22 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
12.
FIXED ASSETS
Furniture and
fixtures
Machinery
and
equipment
Computer
hardware
and other
Leasehold
improvements
Assets under
construction (1)
Total
Cost:
As at August 31, 2021 $ 4,077
Additions (1)
2,185
61
Transfers
Transfers to assets
$ 10,014
9,239
6,962
$ 3,579
2,550
304
$ 13,282
4,887
18,211
$ 10,422 $ 41,374
35,416
–
16,555
(25,538)
held for sale
Write-offs
As at September 3,
2022
Additions
Disposal
Transfers
Transfers from
assets held for
sale
Other
As at September 2,
(152)
–
(3,830)
–
(116)
–
(134)
–
(115)
(741)
(4,347)
(741)
$ 6,171
–
(1,236)
–
$ 22,385
323
(1,247)
–
$ 6,317
14
(398)
–
$ 36,246
195
(7,226)
15
$
583 $ 71,702
532
(10,107)
–
–
–
(15)
–
–
57
(4)
19
–
–
–
–
(57)
76
(61)
2023
$ 4,935
$ 21,514
$ 5,952
$ 29,230
$
511 $ 62,142
Accumulated depreciation, impairment loss and write-offs:
As at August 31,
$
2021
845
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
$
3,290
3,155
22,056
–
$
– $
–
497
–
8,007
8,003
37,872
102
held for sale
As at September 3,
2022
Depreciation
Disposal
Write-offs
As at September 2,
2023
(61)
(541)
(57)
(31)
–
(690)
$ 4,707
337
(705)
24
$ 15,867
1,235
(495)
152
$ 3,753
1,268
(198)
135
$ 28,470
1,529
(5,860)
386
$
497 $ 53,294
4,369
(7,258)
711
–
–
14
$
4,363
$ 16,759
$ 4,958
$ 24,525
$
511 $ 51,116
Net carrying amounts:
As at September 3,
2022
As at September 2,
2023
$
1,464
$
6,518
$ 2,564
$
7,776
$
86 $ 18,408
572
4,755
994
4,705
–
11,026
(1) Additions of assets under construction include $1.6 million related to capitalized depreciation of right-of-use assets
in Fiscal 2022 and none in Fiscal 2023.
23 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
13.
RIGHT-OF-USE ASSETS
As at August 31, 2021
Additions and lease modifications
Derecognition (1)
Impairment loss (Note 6)
Depreciation
As at September 3, 2022
Additions and lease modifications
Derecognition (1)
Depreciation
Facilities
Automotive
equipment
Other
equipment
$
$
68,171
24,476
(20,875)
(7,675)
(9,570)
54,527
160
(39,504)
(4,769)
$
$
$
$
427
281
(38)
–
(195)
475
112
(57)
(210)
559 $
42
–
–
(184)
417 $
–
(12)
(153)
Total
69,157
24,799
(20,913)
(7,675)
(9,949)
55,419
272
(39,573)
(5,132)
As at September 2, 2023
$
10,414
$
320
$
252 $
10,986
(1) Derecognition of right-of-use assets include terminations of leased facilities in Fiscal 2023 as well as a change in
assumptions relating to the lease term of a facility in Fiscal 2022.
The Company recorded sublease revenue of $1.7 million (2022 – $1.1 million) within net sales during the
52 weeks ended September 2, 2023.
14.
INTANGIBLE ASSETS
Cost:
As at August 31, 2021
Additions
As at September 3, 2022
Additions
As at September 2, 2023
Software (1)
Intellectual
property
$
$
2,427
2,561
4,988
995
$
5,983
Total
2,501
2,561
5,062
995
74 $
–
74 $
–
74 $
6,057
30 $
15
–
45 $
15
–
60 $
419
931
538
1,888
1,336
57
3,281
29 $
14
3,174
2,776
$
$
$
$
$
$
$
Accumulated amortization, impairment loss and write-offs:
As at August 31, 2021
Amortization
Impairment loss (Note 6)
As at September 3, 2022
Amortization
Write-offs
As at September 2, 2023
Net carrying amounts:
As at September 3, 2022
As at September 2, 2023
$
$
$
$
389
916
538
1,843
1,321
57
3,221
3,145
2,762
(1) For the 52 weeks ended September 2, 2023, the net carrying amount of software under development amounted
to $0.3 million (2022 – $0.4 million).
24 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
15.
DEBT
As at
Interest-bearing financing:
Secured term loan, variable interest at BA (1) plus 4.50%,
maturing in November 2023
Matured borrowings:
Secured term loan, variable interest at BA (1) plus 2.50%,
maturing in November 2022
Unamortized financing costs
Current portion of debt
(1) BA is defined as the Canadian Banker’s Acceptance Rate.
CREDIT FACILITY 2022
September 2, 2023 September 3, 2022
$
4,062
$
–
–
4,062
(26)
4,036
(4,036)
–
11,875
11,875
(132)
11,743
(11,743)
–
$
$
$
$
$
$
During the second quarter of Fiscal 2023, the Company reached an agreement to amend the syndicated
credit agreement (Credit Facility 2021) with its existing lenders providing bank financing of $9.5 million. The
facilities include a $5.0 million term loan, a $2.5 million revolving credit facility, and $2.0 million in additional
short-term financing. The facilities bear variable interest rates of BA plus 4.50% and mature in November
2023. The facilities feature updated financial conditions, including minimum cash balance and financing
related covenants. The term loan is repayable in quarterly installments of $313 thousand with a bullet
repayment of the balance of $4.1 million at the end of the term in November 2023. As at September 2,
2023, no amount was drawn from the revolving facility. The total drawn credit facility is presented as a
current liability.
16.
CONVERTIBLE DEBENTURES
2028 Debentures
On February 6, 2023, the Company issued 12,675 convertible unsecured subordinated debentures (the
"2028 Debentures") at a price of $1,000 per Debenture for gross proceeds of $12.7 million. The 2028
Debentures mature on February 6, 2028 (the "Maturity Date") and bear a fixed interest rate of 12.5% per
annum. The interest portion for the period commencing on the issuance date and ending in February 2025
will be capitalized semi-annually and convertible at a price equal to the volume weighted average trading
price of the Common Shares on the TSX for the five (5) consecutive trading days ending on the date on
which such interest portion becomes due, plus a premium of 50%. As of February 6, 2025 and until the
Maturity Date, the interest portion will be payable semi-annually in cash.
The 2028 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 $0.75 (the "Conversion Price") per common share.
As of February 6, 2026, Goodfood may repurchase the non-converted portion of a 2028 Debenture at an
amount of the principal and accrued interest plus an amount providing the holder with an internal rate of
25 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
return (IRR) equal to 18% for the period during which such Debenture will have been outstanding. The
holders may require a repurchase on the same terms upon a change of control of the Company.
The 2028 Debentures are direct, subordinated unsecured obligations of the Company, subordinated to any
senior indebtedness of the Company, including the Company's credit facility, and ranking equally with one
another and with all other existing and future subordinated unsecured indebtedness of the Company to the
extent subordinated on the same terms.
The conversion option, net of related issuance costs and deferred income taxes, has been recorded in
shareholders’ equity for an amount of $0.2 million. Factoring in the 2028 Debentures issuance costs, the
effective interest rate on the Debentures is 13.5%.
2027 Debentures
On February 11, 2022, the Company issued 30,000 convertible unsecured subordinated debentures (the
"2027 Debentures") at a price of $1 thousand per Debenture for gross proceeds of $30 million. The 2027
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 2027 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 2027
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 2027 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
2027 Debentures in accordance with the make-whole premium provisions set forth by the indenture of the
2027 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 2027 Debentures issuance costs, the
effective interest rate on the Debentures is 12.6%.
2025 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.
26 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
On or after March 31, 2023, and prior to March 31, 2024, provided that the volume weighted average trading
price of the Company’s common shares on the TSX for the 20 consecutive trading days preceding the date
on which the notice of redemption is given is not less than 125% of the Conversion Price, the Debentures
may be redeemed in whole or in part at the option of the Company at a price equal to the principal amount
thereof plus accrued and unpaid interest. On or after March 31, 2024, and prior to the Maturity Date, the
Debentures may be redeemed in whole or in part at the option of the Company at a price equal to their
principal amount plus accrued and unpaid interest.
In the event of a change in control, the Company will be required to make a payment to the holders of the
Debentures in accordance with the make-whole premium provisions set forth by the indenture of the
Debentures.
The conversion option, net of related issuance costs and deferred income taxes, has been recorded in
shareholders’ equity for an amount of $3.7 million. Factoring in the Debentures issuance costs, the effective
interest rate on the Debentures is 11.76%.
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)(2)
Accretion interest
Conversion of the Debentures
Convertible debentures, liability component balance, end
of year
September 2, 2023 September 3, 2022
$
$
27,469
11,970
2,489
(176)
5,623
22,048
901
(1,103)
$
41,752
$
27,469
(1) For Fiscal 2023 issued convertible debentures, issuance costs attributable to the liability component amount to
$0.4 million. Net proceeds of $0.2 million, including $0.1 million of deferred income taxes, were recorded as the
equity component.
(2) For Fiscal 2022 issued convertible debentures, issuance costs attributable to the liability component amount 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.
The following summarizes convertible debentures for the 52 weeks ended:
In thousands of dollars
Reclassification from Convertible debentures liability
component to common shares
Reclassification from Convertible debentures equity
component to common shares
Deferred income tax expense recognized upon Debentures
conversion
Deferred income tax recovery recognized upon Debentures
issuance
In number of debentures or common shares
Number of debentures converted
Number of common shares issued from converted
debentures (Note 18)
Total number of outstanding Debentures, end of period
September 2, 2023 September 3, 2022
$
176
$
1,103
20
11
72
210
45,652
47,953
188
66
1,561
1,364
293,647
35,488
27 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
17.
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
Payment of lease obligations (1)
Interest expense on lease obligations (2)
Balance, end of year
September 2, 2023 September 3, 2022
$
$
69,209
272
(51,710)
(5,881)
1,474
73,111
24,615
(22,302)
(9,259)
3,044
$
13,364
$
69,209
(1)
(2)
In Fiscal 2022, payment of lease obligations includes $1.0 million repayment received for leasehold incentives
from a landlord.
In Fiscal 2022, interest expense on lease obligations includes $0.5 million capitalized in assets under construction
and none in Fiscal 2023.
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
Total undiscounted lease obligations
Lease obligations balance, end of year
Current portion
Non-current portion
$
September 2, 2023 September 3, 2022
11,024
40,807
27,942
3,457
10,247
1,350
$
$
$
$
$
15,054
$
13,364 $
2,862
10,502
$
$
79,773
69,209
8,468
60,741
28 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
18.
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
Debenture conversions (Note 16)
Exercise of stock options (Note 19)
Restricted share units vested
Employee share purchase units vested
Purchased and held in trust through
employee share purchase plan (Note
19)
September 2,
2023
Carrying
amount
$
173,788
196
–
6,475
3
Number of
shares
75,233,023
45,652
–
1,421,765
11,283
September 3,
2022
Carrying
amount
$ 170,094
1,291
726
2,032
14
Number of
shares
74,647,547
293,647
161,707
231,453
8,900
(186,216)
(93)
(110,231)
(369)
Balance, end of year
76,525,507
$
180,369
75,233,023
$ 173,788
As at September 2, 2023, the number of common shares issued and fully paid was 76,872,271
(2022 – 75,404,854).
LOSS PER SHARE
As at
Basic and diluted weighted average number of common shares
outstanding
September 2,
2023
September 3,
2022
76,103,206
74,982,435
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 2, 2023 and the year ended September 3, 2022, the diluted loss per share
calculation did not take into consideration the potential dilutive effect of stock options, restricted share units,
unvested shares in connection with the employee share purchase plan and the Debentures conversion
option as they are not dilutive.
29 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
19.
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 2,
2023
Weighted
average
exercise price
$
$
4.44
0.54
–
2.98
4.73
2.82
3.98
Number of
options
3,262,799
1,848,701
–
(566,551)
(515,226)
4,029,723
2,252,171
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
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.
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
2,167,191
1,409,242
453,290
4,029,723
2,252,171
2023
Weighted
average
remaining life
6.2
5.3
5.0
5.7
4.7
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
30 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
Stock options granted during the 52 weeks ended September 2, 2023 had a weighted average fair value of
$0.31 per option (2022 – $2.33), 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
2023
66%
3.03%
4.8 years
0.54
0.54
$
$
2022
58%
1.54%
4.8 years
4.72
4.72
$
$
During the 52 weeks ended September 2, 2023, an expense of $1.0 million (2022 – $1.9 million) was
recorded in the consolidated statements of loss in relation to the Stock Option Plan.
RESTRICTED SHARE UNIT PLAN
The Company granted to Participants a number of restricted share units ("RSUs") based on the volume
weighted average trading price of the common shares for the five days immediately preceding the grant
date. The expense in relation to the RSU Plan is measured at the fair value of the underlying RSU at the
grant date and is expensed over the award's vesting period. The RSU Plan provides for a maximum number
of common shares available and reserved for issuance to 10% of the Company’s issued and outstanding
common shares, less any shares reserved for issuance under the Stock Option Plan. The RSUs are time-
based awards and one third of the amount of RSUs granted will vest upon the continuous employment of
the Participants on each of the anniversaries of the RSU grant, over a period of three years starting from
the date of the grant or such other period not exceeding three years as determined by the Board.
Pursuant to the terms of the RSU Plan, Participants will receive, upon vesting of the RSUs, common shares
of the Company issued from treasury.
The following table summarizes the continuity of the RSUs during the 52 weeks ended:
Outstanding, beginning of year
Granted
Vested
Forfeited
Outstanding, end of year
September 2, 2023 September 3, 2022
625,491
2,651,498
(231,453)
(1,044,820)
2,000,716
2,000,716
2,054,907
(1,421,566)
(755,729)
1,878,328
During the 52 weeks ended September 2, 2023, an expense of $2.8 million (2022 – $3.9 million) was
recorded in the consolidated statements of loss in relation to the RSU Plan.
As at September 2, 2023, 1,779,176 stock options and RSUs (2022 – 2,276,970) were available for
issuance.
31 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
EMPLOYEE SHARE PURCHASE PLAN
On September 1, 2019, the Company implemented an employee share purchase plan ("ESPP") to attract
and retain employees and directors. Under this plan, employees or directors are permitted to contribute
between 1% and 5% of their eligible earnings, up to $10,000 annually, to purchase the 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 2, 2023
September 3, 2022
Number of
shares
Amount
Number of
shares
Amount
171,829 $
186,216
(11,283)
878
93
(3)
$
70,498
110,231
(8,900)
523
369
(14)
346,762 $
968
171,829
$
878
During the 52 weeks ended September 2, 2023, an expense of $0.1 million (2022 – $0.1 million) was
recorded in the consolidated statements of loss in relation to the employee share purchase plan.
20.
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 2, 2023 September 3, 2022
$
$
(540)
3,603
780
(8,585)
(1,396)
(6,138)
$
2,761
7,434
(224)
(21,485)
406
$
(11,108)
32 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
The following transactions had no cash impact for the 52 weeks ended:
As at
September 2, 2023 September 3, 2022
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 debenture issuance costs
$
$
−
−
−
6
$
184
24
2,061
$
−
The following had a cash impact in the net cash generated from operating activities for the 52 weeks ended:
As at
September 2, 2023 September 3, 2022
Operating activities
Payments related to discontinuance of products related to
on-demand offering
Payments made for reorganization and other related costs (1)
$
319
6,275
$
−
6,319
(1) Payments made for reorganization and other related costs are mainly composed of penalties paid upon lease
termination, employee termination and benefit costs paid as well as external advisors fees paid (refer to Note 6).
21.
COMMITMENTS
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 2, 2023 September 3, 2022
$
$
6,539
1,247
−
7,786
$
$
9,236
390
−
9,626
33 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
22.
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 debt approximates its carrying amount as it bears a variable
interest rate at BA plus 4.50% 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
2, 2023, the Company determined that the fair value of its Debentures approximates $24.8 million which
was determined based on market trading value.
23.
FINANCIAL RISKS
Credit risk:
Credit risk is the risk of an unexpected loss if a counterparty to a financial instrument fails to meet its
contractual obligation. The Company regularly monitors credit risk exposure and takes steps to mitigate the
likelihood of this exposure resulting in losses. The Company's exposure to credit risk is primarily attributable
to its cash and cash equivalents and accounts and other receivables. The majority of the Company’s net
sales are paid prior to delivery and therefore the main credit exposure to net sales is with respect to the
payment processor. 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 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 market 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.
In order to manage its liquidity risk, the Company constantly reviews its operations and overall business to
drive efficiencies to form the basis for positive cash flow and long-term profitable growth. The Company
34 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
expects to have sufficient liquidities in order to repay its credit facility when it becomes due in November
2023.
This assessment could be affected by economic, financial and future competitive factors, and other future
events that are beyond the control of the Company. Management’s liquidity assessment could be impacted
if the actual operational performance is lower than the one used in the forecasted cash flows.
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.
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 2, 2023
More than 5
years
Accounts payable and
accrued liabilities
Debt (1)
Debentures, liability
component
$
17,993
4,036
$
17,993
4,142
$
17,993
4,142
− $
$
−
−
−
41,752
64,959
2,033
62,926
−
Lease obligations, including
current portion
13,364
15,054
3,457
10,247
$
77,145
$
102,148
$
27,625
$ 73,173 $
1,350
1,350
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
Debt (1)
Debentures, liability
component
$
27,104
11,743
$
27,104
12,086
$
27,104
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
(1) As at September 2, 2023, an interest rate of 7.87% (2022 – 5.34%) was used to determine the estimated interest
payments on the variable-rate portion of the Company’s debt.
35 | P a g e
GOODFOOD MARKET CORP.
Notes to the Consolidated Financial Statements – September 2, 2023
(Unless otherwise stated, all tabular amounts are in thousands of Canadian dollars)
24.
RELATED PARTIES
KEY MANAGEMENT PERSONNEL
The Company’s key management personnel have authority and responsibility for planning, directing and
controlling the Company’s activities and consist of the Company’s executive team and the Board of
Directors. The chief executive officer ("CEO") and the president and chief operating officer ("President and
COO") are members of the Board of the Company. The CEO is also Chairman of the Board.
The following table presents the compensation of the key management personnel recognized in net loss:
Salaries, fees and other short-term employee benefits
Share-based payments expense
$
2,290
2,189
$
1,983
2,931
For the 52 weeks ended
September 2, 2023 September 3,2022
RELATED PARTY TRANSACTIONS
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 2028 Debentures, 2,425 Debentures were purchased by the Board
members and key management personnel at a price of $1,000 per Debenture. In connection with the
issuance of the 2027 Debentures, 415 Debentures were purchased by Board members 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.
36 | P a g e
CORPORATE
INFORMATION
STOCK INFORMATION
Shares listed: Toronto Stock Exchange
Ticker symbol: FOOD
Initial public offering: 2017
52-week high/low : $0.83 - $0.29
Share price as at November 21, 2023 : $0.42
Common shares outstanding as at September 2, 2023: 76,525,507
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 16, 2024
Virtual Meeting - Details to Come
MAKEGOODFOOD.CA