Very Good Food Co Inc. (Form: 6-K, Received: 06/30/2022 08:46:16)

THE VERY GOOD FOOD COMPANY INC.

Date: June 30, 2022

/s/ Dela Salem

Name: Dela Salem

Title: Interim Co-Chief Executive Officer & Director

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of June 2022

Commission File Number: 001-40892

The Very Good Food Company Inc.

(Translation of the registrant’s name into English)

2748 Rupert Street

Vancouver, British Columbia

Canada V5M 3T7

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

EXHIBIT INDEX

The following documents, which are attached as exhibits hereto, are incorporated by reference herein:


Exhibit		Title

99.1		Condensed interim consolidated financial statements of the Company for the three months ended March 31, 2022 and 2021, together with the notes thereto, as restated

99.2		Management’s discussion and analysis of financial condition and results of operations of the Company for the three months ended March 31, 2022 and 2021, as restated

99.3		Form 52-109F2R CEO Certification of Refiled Interim Filings

99.4		Form 52-109F2R CFO Certification of Refiled Interim Filings

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Exhibit 99.1

LOGO

The Very Good Food Company CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS, as restated FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021 (Unaudited—Expressed in Canadian dollars)

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

Condensed Interim Consolidated Statements of Financial Position

(Expressed in Canadian dollars, unaudited)


As at	Notes	March 31, 2022			December 31, 2021
		(Restated Note 2)
Assets
Current assets
Cash and cash equivalents		$	6,382,705		$	21,975,653
Accounts receivable	4		1,775,699			2,101,842
Inventory	5		10,722,308			8,474,255
Prepaids and deposits	6		6,849,188			8,640,286
Loan to related party	12		409,326			410,268

Total current assets			26,139,226			41,602,304
Right-of-use assets	7		17,794,773			16,659,502
Property and equipment	8		17,512,636			15,450,608
Prepaids and deposits	6		702,142			707,110
Deferred financing costs	11		3,156,816			3,924,743

Total assets		$	65,305,593		$	78,344,267

Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities	9	$	6,505,933		$	8,109,161
Deferred revenue			8,831			32,137
Current portion of lease liabilities	10		1,211,299			849,935
Current portion of loans payable and other liabilities	11		1,578,698			1,947,642
Contingent considerations	20		1,048,000			1,048,000
Derivative liabilities	13		2,413,009			3,942,002

Total current liabilities			12,765,770			15,928,877
Lease liabilities	10		17,254,061			16,764,458
Loans payable and other liabilities	11		5,424,074			5,474,605

Total liabilities			35,443,905			38,167,940

Shareholders’ equity
Share capital	14		84,753,280			84,751,366
Equity reserve			25,925,531			26,719,047
Subscription received and receivable			—			(3,750	)
Accumulated other comprehensive income (loss)			33,806			(12,716	)
Deficit			(80,850,929	)		(71,277,620	)

Total shareholders’ equity			29,861,688			40,176,327

Total liabilities and shareholders’ equity		$	65,305,593		$	78,344,267

Nature of operations and going concern uncertainty (Note 1)
Commitments (Notes 10 and 23)
Subsequent events (Notes 12 and 25)

Approved and authorized for issue by Board of Directors on June 29, 2022


/s/ Bill Tolany						/s/ Justin Steinbach
						Director

The accompanying notes are an integral part of these condensed interim consolidated financial statements

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

Condensed Interim Consolidated Statements of Net Loss and Comprehensive Loss

(Expressed in Canadian dollars, unaudited)


Three months ended	Notes	March 31, 2022 (Restated Note 2)			March 31, 2021
Revenue		$	2,018,344		$	2,643,083
Procurement expense	7, 8, 21		(2,661,683	)		(2,108,963	)
Fulfilment expense	7, 8, 21		(1,917,816	)		(1,420,827	)
General and administrative expense	7, 8, 21		(4,844,691	)		(10,522,987	)
Marketing and investor relations expense	21		(1,578,394	)		(1,746,318	)
Research and development expense	7, 8, 21		(564,518	)		(366,020	)
Pre-production expense	21		(244,450	)		(842,483	)

Operating loss			(9,793,208	)		(14,364,515	)
Finance expense	17		(1,288,864	)		(357,030	)
Other expense	18		(20,230	)		(307,031	)
Change in fair value of derivative liabilities	13		1,528,993			—

Net loss			(9,573,309	)		(15,028,576	)
Foreign currency translation gain			46,522			4,474

Total comprehensive loss		$	(9,526,787	)	$	(15,024,102	)

Loss per share - basic and diluted		$	(0.08	)	$	(0.15	)

Weighted average number of shares outstanding - basic and diluted			118,503,242			97,156,969

The accompanying notes are an integral part of these condensed interim consolidated financial statements

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

Consolidated Statements of Changes in Equity

(Expressed in Canadian dollars except share amounts)


	Number of common shares		Share capital		Equity reserves			Subscriptions received and receivable			Accumulated other comprehensive (loss) income			Deficit			Total shareholders’ equity
Balance at January 1, 2021		96,640,432	$	39,335,150	$	5,009,980		$	8,250		$	6,660		$	(16,717,697	)	$	27,642,343
Issuance of common shares pursuant to the exercise of stock options		99,167		209,118		(159,493	)		6,250			—			—			55,875
Issuance of common shares and units pursuant to the exercise of warrants		609,050		3,859,839		(1,692,855	)		(14,500	)		—			—			2,152,484
Issuance of common shares for services		25,818		152,876		—			—			—			—			152,876
Issuance of common shares for acquisitions		202,005		1,156,437		—			—			—			—			1,156,437
Share-based compensation		—		—		8,774,009			—			—			—			8,774,009
Foreign currency translation loss		—		—		—			—			4,474			—			4,474
Net loss for the period		—		—		—			—			—			(15,028,576	)		(15,028,576	)

Balance at March 31, 2021		97,576,472	$	44,713,420	$	11,931,641		$	—		$	11,134		$	(31,746,273	)	$	24,909,922

Balance at January 1, 2022		118,498,464	$	84,751,366	$	26,719,047		$	(3,750	)	$	(12,716	)	$	(71,277,620	)	$	40,176,327
Issuance of common shares pursuant to the exercise of stock options		5,000		1,914		(664	)		3,750			—			—			5,000
Share-based compensation recovery		—		—		(792,852	)		—			—			—			(792,852	)
Foreign currency translation gain		—		—		—			—			46,522			—			46,522
Net loss for the period		—		—		—			—			—			(9,573,309	)		(9,573,309	)

Balance at March 31, 2022 (Restated Note 2)		118,503,464	$	84,753,280	$	25,925,531		$	—		$	33,806		$	(80,850,929	)	$	29,861,688

The accompanying notes are an integral part of these condensed interim consolidated financial statements

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in Canadian dollars, unaudited)


	March 31, 2022 (Restated Note 2)			March 31, 2021
Operating activities
Net loss for the period	$	(9,573,309	)	$	(15,028,576	)
Adjustments for items not affecting cash:
Finance expense		1,288,864			361,750
Change in fair value of derivative liabilities		(1,528,993	)		—
Depreciation		615,385			329,484
Gain on termination of lease		(987	)		(1,361	)
Loss on disposal of equipment		—			19,882
Share-based compensation (recovery)		(792,852	)		8,774,009
Shares, units and warrants issued for services		—			152,876
Changes in non-cash working capital items
Accounts receivable		335,247			(426,174	)
Inventory		(2,011,317	)		(366,695	)
Prepaids and deposits		1,558,936			(243,502	)
Accounts payable and accrued liabilities		(2,247,742	)		1,760,552
Deferred revenue		(23,306	)		(8,888	)

Net cash and cash equivalents used in operating activities		(12,380,074	)		(4,676,643	)

Investing activities
Cash paid for acquisitions, net of cash acquired		—			(1,240,694	)
Purchase of property and equipment		(1,460,795	)		(2,060,906	)
Security deposits paid for property and equipment		(405,290	)		(1,921,344	)
Acquisition of right-of-use assets		(308,934	)		(29,408	)
Repayment received from loans to related parties		942			—

Net cash and cash equivalents used in investing activities		(2,174,077	)		(5,252,352	)

Financing activities
Proceeds from the exercise of warrants		—			2,152,484
Proceeds from the exercise of stock options		5,000			55,875
Proceeds from loans payable		31,738			—
Repayment of loans payable and other liabilities		(364,302	)		—
Payments of lease liabilities		(649,634	)		(143,961	)
Interest paid		(119,144	)		—

Net cash and cash equivalents (used in) provided by financing activities		(1,096,342	)		2,064,398

Effects of exchange rate changes on cash and cash equivalents		57,545			992

Decrease in cash and cash equivalents		(15,592,948	)		(7,863,605	)
Cash and cash equivalents, beginning of period		21,975,653			25,084,083

Cash and cash equivalents, end of period	$	6,382,705		$	17,220,478

Cash and cash equivalents consist of:
Cash	$	6,282,705		$	16,155,478
Redeemable guaranteed investment certificate (“GIC”)		—			1,000,000
Restricted redeemable GIC		100,000			65,000

Total cash and cash equivalents	$	6,382,705		$	17,220,478

Supplemental cash flow information (Note 19)

The accompanying notes are an integral part of these condensed interim consolidated financial statements

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

1.	Nature of operations and going concern uncertainty

The Very Good Food Company Inc. (the “Company”) was incorporated on December 27, 2016, under the laws of the province of British Columbia, Canada. The Company is an emerging plant-based food technology company that designs, develops, produces, distributes, and sells a variety of plant-based meats and other food alternatives. To date, the Company has developed a core product line under The Very Good Butchers brand. The Company changed its name from The Very Good Butchers Inc. to The Very Good Food Company Inc. on October 1, 2019.

Effective June 18, 2020, the Company’s common shares commenced trading on the Canadian Securities Exchange (the “CSE”) under the symbol “VERY”. Effective July 27, 2020, the Company’s shares commenced trading on the Frankfurt Stock Exchange under the symbol “0SI”. Effective October 14, 2020, the Company’s shares commenced trading on the OTC QB Market under the symbol “VRYYF”. Effective March 17, 2021, the Company’s shares commenced trading on the TSX Venture Exchange. The Company ceased trading on the CSE on March 16, 2021. Effective October 13, 2021, the Company’s common shares commenced trading on the Nasdaq Capital Market under the symbol “VGFC”.

The Company’s registered and records office are located at 800 – 885 West Georgia Street, Vancouver, British Columbia, BC V6C 3H1.

These condensed interim consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes that the Company will be able to realize its assets and satisfy its liabilities in the normal course of business for the foreseeable future. For the three-month period ended March 31, 2022, the Company generated a net loss of $9,573,309 (2021—$15,028,576) and negative cash flows from operations of $12,380,074 (2021—$4,676,643).

The Company has incurred losses since the inception and expects to incur further losses in the development of its business. Whether and when the Company can generate sufficient operating cash flows to pay for its expenditures and settle its obligations as they fall due is uncertain. The Company’s ability to continue as a going concern is dependent on its ability to manage costs, raise additional equity or debt on reasonable terms, and/or to commence profitable operations in the future. while the Company has been successful in the past in obtaining debt and equity financings, there is no assurance that the Company will be able to do so going forward. The existence of these conditions indicate that there are material uncertainties which may cast significant doubt on the Company’s ability to continue as a going concern. Management believes that it will need to seek additional financing within the coming months in order to fulfil its outstanding obligations and fund ongoing operations. While there may be uncertainty on the success of the Company’s future financings, the Company believes it is able to raise capital through financing in the near term to support its new refocused strategy.

These condensed interim consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary were the going concern assumption inappropriate. These adjustments could be material.

Covid-19 Estimation Uncertainty

On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus (“COVID-19”) a global pandemic. This has resulted in governments worldwide, including the Canadian government, to enact emergency measures to combat the spread of the virus. These measures, which include social distancing, the implementation of travel bans, and closures of non-essential businesses, have caused material disruption to businesses globally, resulting in an economic slowdown. As at March 31, 2022, the Company has not observed any material impairments of our assets or a significant change in the fair value of assets due to the COVID-19 pandemic.

The situation is dynamic and the ultimate duration and magnitude of the impact of COVID-19 on the economy and the financial effect on our business, financial position and operating results remain unknown at this time. These impacts could include the ability of the Company to raise capital, the impairment in the value of our long-lived assets, or potential future decreases in revenue or the profitability of our ongoing and future operations. The Company is closely monitoring the impact of the pandemic on all aspects of its business.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

2.	Basis of presentation and measurement

Statement of compliance

These condensed interim consolidated financial statements have been prepared in conformity with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, using the same accounting policies as detailed in the Company’s annual audited consolidated financial statements for the year ended December 31, 2021. These condensed financial statements do not include all the information required for full annual financial statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). These condensed interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements.

These condensed interim consolidated financial statements of the Company were authorized for issue by the Board of Directors on June 29, 2022.

Basis of presentation

These condensed interim consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: The Very Good Butchers Inc., 1218169 B.C. Ltd., 1218158 B.C. Ltd., The Cultured Nut Inc., and Lloyd-James Marketing Group Inc., companies incorporated in the province of British Columbia, Canada, and VGFC Holdings LLC, a company incorporated in the state of Delaware, U.S.A.

The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences. Control exists when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All inter-company balances and transactions have been eliminated on consolidation.

These condensed interim consolidated financial statements have been prepared on an accrual basis and are based on historical costs. The presentation and functional currency of the Company is the Canadian dollar. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation of the financial statements have been included.

The Company structures its condensed interim consolidated statements of net loss and comprehensive loss on a functional basis.

Restatement

The Company has restated the general and administrative expense for the three-month period ended March 31, 2022 in the amount of $1,211,000 to increase such expense from $3,633,691 to $4,844,691. The adjustment related to the correction of an error in the determination of the share-based compensation recovery for the period which reduced the share-based compensation recovery from $2,003,852 to $792,852. As a result of such restatement net loss and comprehensive loss for the three-month period ended March 31, 2022 increased from $8,362,309 and $8,315,787 to $9,573,309 and $9,526,787 respectively. The loss per share for the period increased from $0.07 per common share to $0.08 per common share as a result of the restatement.

Corresponding changes were made to increase amount of the equity reserve and deficit balances by $1,211,000 in the statements of financial position and changes in equity and to the net loss for the period and share-based compensation (recovery) in the statement of cash flows.

Critical accounting estimates and judgements

The preparation of these condensed interim consolidated financial statements in accordance with IFRS requires the Company to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities and contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period. The Company’s management reviews these judgments, estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised. Actual results may differ from these judgements, estimates and assumptions.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

2.	Basis of presentation and measurement (continued)

Information on significant areas of judgement that have the most significant effect on the amounts recognized in the condensed interim consolidated financial statements relate to the following:

The determination of the ability of the Company to continue as a going concern is a key area of judgment applied in the preparation of the condensed interim consolidated financial statements as discussed above in note 1. Amortization of right-of-use assets and property and equipment are dependent upon the estimated useful lives, which are determined through the exercise of judgment. The assessment of any indicators of impairment of these assets is dependent upon judgments that take into account factors such as economic and market conditions and the useful lives of assets.

Information on significant areas of uncertainty and critical estimates in applying accounting policies that have the most significant effect on the amounts recognized in the condensed interim consolidated financial statements relate to the following:

Share-based compensation

The Company utilizes the Black-Scholes Option Pricing Model (“Black-Scholes”) to estimate the fair value of stock options and warrants granted to directors, officers, employees and service providers and to determine the fair value of its warrant derivative liability. The use of Black-Scholes requires management to make various estimates and assumptions that impact the value assigned to the stock options including the forecast future volatility of the stock price, the risk-free interest rate, dividend yield and the expected life of the stock options. Any changes in these assumptions could have a material impact on the share-based compensation calculation value. See also note 13 and 16.

Carrying value of inventory

The Company records valuation adjustments for inventory by comparing the inventory cost to its net realizable value. The process requires the use of estimates and assumptions related to future market demand, costs and prices. Such assumptions are reviewed periodically and may have a significant impact on the valuation adjustments for inventory.

Contingent consideration

Contingent consideration arising from a business combination that is classified as a liability is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

Impairment

The Company assesses impairment of non-financial assets such as right-of-use assets, and property and equipment.

At each reporting period, the Company reviews whether there are indicators that the recoverable amount of long-lived assets may be less than their carrying amount.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

2.	Basis of presentation and measurement (continued)

Long-lived assets are reviewed for impairment by estimating the recoverable amount of each cash generating unit (“CGU”) or groups of CGUs to which the long-lived assets relate. Management estimates the recoverable amount of the CGUs based on the higher of value-in-use (“VIU”) and fair value less costs of disposal (“FVLCD”). The VIU calculations are based on the present value of expected future cash flows. When measuring expected future cash flows, management makes key assumptions about future growth of profits which relate to future events and circumstances. Estimation uncertainty relates to assumptions about future operating results and the application of an appropriate discount rate. Actual results could vary from these estimates which may cause significant adjustments to the Company’s long-lived assets in subsequent reporting periods.

Leases

The lease liability and right-of-use asset valuation is based on the present value of the lease payments over the lease term. The lease term is determined as the non-cancellable term of the lease, which may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company applies judgment in evaluating whether it is reasonably certain whether or not to exercise the option to extend or terminate the lease, and any modifications to the lease term will result in the revaluation of the lease. The present value of the lease payments is dependent on the Company’s estimate of its incremental borrowing rates.

3.	Future accounting pronouncements

The following IFRS standards have been recently issued by the IASB. Pronouncements that are irrelevant or not expected to have a significant impact have been excluded.

Amendments to IAS 1: Classification of Liabilities as Current or Non-Current

The amendment clarifies the requirements relating to determining if a liability should be presented as current or non-current in the statement of financial position. Under the new requirement, the assessment of whether a liability is presented as current or non-current is based on the contractual arrangements in place as at the reporting date and does not impact the amount tor timing of recognition. The amendment applies retrospectively for annual reporting periods beginning on or after January 1, 2023. The Company is currently evaluating the potential impact of this amendment on the Company’s condensed interim consolidated financial statements.

4.	Accounts receivable


	As at March 31, 2022		As at December 31, 2021
GST receivable	$	1,130,717	$	1,588,641
Trade accounts receivable		630,543		337,247
Accrued interest receivable		14,439		5,394
Other receivables		—		170,560

	$	1,775,699	$	2,101,842

Trade accounts receivable is recorded net of an allowance for doubtful accounts of $146,044 (December 31, 2021—$41,350).

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

5.	Inventory

Inventory consisted primarily of raw materials, packaging and restaurant supplies and finished goods which were either at the retail location, warehouses, storage space or held with third party distributors.


	As at March 31, 2022		As at December 31, 2021
Raw materials	$	4,304,185	$	3,446,596
Packaging and restaurant supplies		1,436,451		1,282,278
Finished goods		4,981,672		3,745,381

	$	10,722,308	$	8,474,255

During the three months ended March 31, 2022, a total of $166,184 (2021—$12,649) of depreciation expense related to property and equipment and $70,552 (2021—$7,668) related to right-of-use assets used in production was added to finished goods inventory.

6.	Prepaids and deposits


	As at March 31, 2022			As at December 31, 2021
Prepaid expenses	$	4,057,424		$	5,234,416
Security deposits		2,738,569			3,345,611
Lease deposits (Notes 10 and 23)		755,337			767,369

		7,551,330			9,347,396
Less: current portion of prepaids and deposits		(6,849,188	)		(8,640,286	)

	$	702,142		$	707,110

7.	Right-of-use assets


	Right-of-use building			Right-of-use equipment			Right-of-use vehicle			Total
Cost
Balance, December 31, 2021	$	16,332,489		$	1,938,163		$	33,157		$	18,303,809
Additions		—			1,573,499			—			1,573,499
Termination of lease		—			(115,440	)		—			(115,440	)
Foreign exchange translation adjustment		(36,199	)		—			—			(36,199	)

Balance, March 31, 2022	$	16,296,290		$	3,396,222		$	33,157		$	19,725,669

Accumulated Depreciation
Balance, December 31, 2021	$	(1,471,639	)	$	(162,041	)	$	(10,627	)	$	(1,644,307	)
Depreciation		(290,267	)		(51,793	)		(2,551	)		(344,611	)
Termination of leases		—			54,306			—			54,306
Foreign exchange translation adjustment		3,716			—			—			3,716

Balance, March 31, 2022	$	(1,758,190	)	$	(159,528	)	$	(13,178	)	$	(1,930,896	)

Carrying amounts
Balance, December 31, 2021	$	14,860,850		$	1,776,122		$	22,530		$	16,659,502

Balance, March 31, 2022	$	14,538,100		$	3,236,694		$	19,979		$	17,794,773

The additions in right-of-use assets (equipment) during the three months ended March 31, 2022, are primarily related to the Rupert Facility and Patterson Facility.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

7.	Right-of-use assets (continued)

Depreciation of right-of-use assets included in the condensed interim consolidated financial statements is split as follows:


	As at March 31,
	2022		2021
Consolidated statements of financial position
Included in inventory	$	70,552	$	7,668


	Three month period ended March 31,
	2022		2020
Consolidated statements of net loss and comprehensive loss
Included in procurement expense	$	133,646	$	27,828
Included in fulfilment expense		61,407		14,600
Included in general and administrative expense		30,638		2,583
Included in pre-production expense		48,368		179,882

	$	274,059	$	224,893

8.	Property and equipment


	Restaurant, production, and R&D equipment			Furniture and fixtures			Computer equipment and software			Leasehold improvements			Vehicle			Total
Cost
At December 31, 2021	$	10,210,651		$	693,801		$	511,526		$	5,116,346		$	241,773		$	16,774,097
Additions		1,878,309			48,201			22,991			699,462			6,634			2,655,597
Disposals		(113,177	)		—			—			—						(113,177	)
Foreign exchange translation adjustment		(8,025	)		(335	)		(220	)		(5,915	)		(1,037	)		(15,532	)

At March 31, 2022	$	11,967,758		$	741,667		$	534,297		$	5,809,893		$	247,370		$	19,300,985

Accumulated depreciation
At December 31, 2021	$	(423,325	)	$	(84,559	)	$	(366,804	)	$	(410,156	)	$	(38,645	)	$	(1,323,489	)
Depreciation		(196,622	)		(37,421	)		(82,896	)		(180,034	)		(10,537	)		(507,510	)
Disposals		41,581			—			—			—			—			41,581
Foreign exchange translation adjustment		624			55			83			252			55			1,069

At March 31, 2022	$	(577,742	)	$	(121,925	)	$	(449,617	)	$	(589,938	)	$	(49,127	)	$	(1,788,349	)

Net book value
At December 31, 2021	$	9,787,326		$	609,242		$	144,722		$	4,706,190		$	203,128		$	15,450,608

At March 31, 2022	$	11,390,016		$	619,742		$	84,680		$	5,219,955		$	198,243		$	17,512,636

As at March 31, 2022, a total of $1,954,206 (December 31, 2021—$4,492,196) of production equipment, $86,454 (December 31, 2021—$264,060) of leasehold improvements and $nil (December 31, 2021—$78,497) of vehicle was related to property and equipment under construction, and no depreciation has been recognized. The Company will begin recognizing depreciation once the underlying assets are ready for their intended use.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

8.	Property and equipment (continued)

Depreciation of property and equipment included in the condensed interim consolidated financial statements is split as follows:


	As at March 31,
	2022		2021
Consolidated statements of financial position
Included in inventory	$	166,184	$	12,649


	Three months ended March 31,
	2022		2021
Consolidated statements of net loss and comprehensive loss
Included in procurement expense	$	247,477	$	44,312
Included in fulfilment expense		9,872		945
Included in general and administrative expense		58,446		30,179
Included in research and development expense		2,384		1,020
Included in pre-production expense		23,147		28,135

	$	341,326	$	104,591

9.	Accounts payables and accrued liabilities


	As at March 31, 2022		As at December 31, 2021
Accounts payable	$	4,769,627	$	5,077,613
Accrued liabilities		1,736,306		3,031,548

	$	6,505,933	$	8,109,161

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

10.

Lease liabilities

Lease liabilities consist of leases for retail, production and distribution facilities, equipment and a vehicle. The leases have been discounted using weighted average interest rates ranging between 3.0% and 12.5% as estimated incremental borrowing rates of the Company for similar assets.


	Three months ended March 31,
	2022			2021
Balance, beginning of period	$	17,614,393		$	5,536,287
Additions		1,223,046			12,444,573
Lease payments		(649,634	)		(143,960	)
Termination of leases		(31,347	)		(19,186	)
Interest expense		347,733			361,750
Foreign exchange translation adjustment		(38,831	)		(41,825	)

Balance, end of period	$	18,465,360		$	18,137,639
Less: current portion of lease liabilities		(1,211,299	)		(659,353	)

Lease liabilities	$	17,254,061			17,478,286

During the three months ended March 31, 2022, the Company terminated one lease agreements and recognized $987 of gain on termination of leases.

The Company’s future minimum lease payments for the leases for retail, warehouse, production facilities, equipment and vehicle are as follows:


Fiscal year ending:	Retail, warehouse and production facilities			Equipment			Vehicle			Total
December 31, 2022	$	1,374,147		$	541,633		$	9,365		$	1,925,145
December 31, 2023		1,853,849			720,064			12,175			2,586,088
December 31, 2024		1,871,545			658,581			468			2,530,594
December 31, 2025		1,888,450			265,139			—			2,153,589
December 31, 2026		1,926,700			94,842			—			2,021,542
December 31, 2027 and thereafter		18,944,991			3,571			—			18,948,562

Total lease payments		27,859,682			2,283,830			22,008			30,165,520
Amounts representing interest over the term of the leases		(11,545,335	)		(153,561	)		(1,264	)		(11,700,160	)

Present value of net lease payments		16,314,347			2,130,269			20,744			18,465,360
Less: Current portion		(553,150	)		(646,974	)		(11,175	)		(1,211,299	)

Long-term portion	$	15,761,197		$	1,483,295		$	9,569		$	17,254,061

Further information about our leases facilities is provided in Note 23 Commitments.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

11.

Loans payable and other liabilities


	Revolving line of credit Note 11(a)		Senior secured term loan Note 11(a)		Credit facility fee liability Note 11(a)			Financing arrangements Notes 11(b) - (e)			Total
Balance, December 31, 2021	$	2,451,720	$	2,125,361	$	1,756,275		$	1,088,891		$	7,422,247
Additions		31,738		—		—			—			31,738
Accretion expense		—		—		42,896			6,398			49,294
Repayments		—		—		—			(500,507	)		(500,507	)

Balance, March 31, 2022		2,483,458		2,125,361		1,799,171			594,782			7,002,772
Less: Current portion		—		—		(1,180,352	)		(398,346	)		(1,578,698	)

Long-term portion	$	2,483,458	$	2,125,361	$	618,819		$	196,436		$	5,424,074

On June 7, 2021, the Company entered into a loan agreement (the “Loan Agreement”) for a senior secured credit facility (the “Credit Facility”) with Waygar Capital Inc. (the “Agent”), as agent for Ninepoint Canadian Senior Debt Master Fund L.P. (the “Lender”). The Credit Facility consists of a $20,000,000 revolving line of credit and a $50,000,000 senior secured asset term loan. The Company can borrow against 85% of eligible accounts receivable balances and 85% of eligible inventory up to a maximum of $3,000,000 on the revolving line of credit. Additionally, the Company can borrow up 85% of the liquidation value of eligible equipment. All amounts drawn under the Credit Facility will incur interest at a rate of 9.95% per annum on the unpaid principal amount of outstanding advances, will be repaid in full upon maturity, and are secured by a first-priority security interest on substantially all of the Company’s assets. The revolving line of credit is also subject to an unused line fee of 1% per annum. The Credit Facility will become due on June 7, 2023, subject to the Company’s option to extend the maturity date for an additional 12 months on terms and conditions to be mutually agreed to between the Company and the Lender. In connection with the Loan Agreement, the Company issued 225,000 common share purchase warrants to the Agent with a fair value of $752,559, which are exercisable for one common share of the Company at a price of C$5.62 for a period of 60 months from the date of issuance. In addition, the Company agreed to pay a credit facility fee of $2,520,000 to the Agent, which is payable as follows: $210,000 payable within 5 days of closing (paid); $105,000 payable on or before July 7, 2021 (paid); $105,000 payable on or before August 8, 2021 (paid); $105,000 on or before September 8, 2021 (paid); $105,000 on or before October 5, 2021 (paid); $630,000 on or before June 6, 2022; $630,000 on or before June 8, 2022; and $630,000 on or before June 7, 2023. The Company also incurred other financing costs in cash of $2,262,039 in connection with the financing, consisting of a finder’s fee of $2,037,000 and legal and filing fees of $225,039.

During the year ended December 31, 2021, the Company received a total of $4,577,081 pursuant to the Credit Facility and recognized the net present value of the credit facility fee payable of $2,288,965, including a present value discount of $231,035. During the three months ended March 31, 2022, the Company received a total of $31,738 pursuant to the Credit Facility.

During the three months ended March 31, 2022, the Company recognized interest and accretion expense on the credit facility fee payable of $42,896 (2021—$nil) and interest expense of $113,780 (2021—$nil) related to the revolving credit facility and term loan. The Company also incurred an unused line of credit fee of $6,134 (2021—$nil). As at March 31, 2022, $39,847 is outstanding for interest and $2,092 is outstanding for unused line of credit fees, which are included in accounts payable and accrued liabilities.

The Company incurred debt financing costs totalling $5,303,563, which will be amortized over the term of the Credit Facility at the effective interest rate. During the three months ended March 31, 2022, the Company recognized accretion expense of the deferred financing costs of $767,927 (2021—$nil). As at March 31, 2022, the remaining carrying value of the deferred financing costs was $3,156,816 (December 31, 2021—$3,924,743).

As of March 31, 2022 the Company can borrow $99,216 from the revolving line of credit and $870,796 from the senior secured asset term loan.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

11.

Loans payable and other liabilities (continued)

On January 28, 2021, the Company entered into an agreement for the purchase of production equipment for $569,214. Pursuant to the agreement, the Company paid a 35% deposit of the purchase price totalling $199,225, and the balance is due in 24 equal payments totalling $15,416 per month, starting from the date of the delivery. On September 27, 2021, the equipment was delivered and the deposit was capitalized in property and equipment. The loan is interest free, secured by the production equipment acquired, and was measured at a fair value of $354,853.

The carrying value of the loan payable will be accreted to the face value of $369,989 over the term of the loan. During the year ended December 31, 2021, the Company recognized accretion of the loan of $3,563 and made a repayment of $15,416. During the three months ended March 31, 2022, the Company recognized accretion of the loan of $2,978 and made a repayment of $77,081. As at March 31, 2022, the carrying value of the loan payable was $268,897 (December 31, 2022—$343,000).

On January 28, 2021, the Company entered into an agreement for the purchase of production equipment for $629,358. Pursuant to the agreement, the Company paid a 35% deposit of the purchase price totalling $220,275, and the balance is due in 24 equal payments totalling $17,045 per month, starting from the date of the delivery. On September 22, 2021, the equipment was delivered and the deposit was capitalized in property and equipment. The loan is interest free, secured by the production equipment acquired, and was measured at a fair value of $392,133. The carrying value of the loan payable will be accreted to the face value of $409,083 over the term of the loan. During the year ended December 31, 2021, the Company recognized accretion of the loan of $4,154 and made a repayment of $17,045. During the three months ended March 31, 2022, the Company recognized accretion of the loan of $3,292 and made a repayment of $68,180. As at March 31, 2022, the carrying value of the loan payable was $314,354 (December 31, 2021—$379,242).

On June 10, 2021, the Company entered into an agreement for the purchase of production equipment for $24,412. Pursuant to the agreement, the Company paid a 35% deposit of the purchase price totalling $8,544, and the balance is due in 24 equal payments totalling $661 per month, starting from the date of the delivery. On October 1, 2021, the equipment was delivered and the deposit was capitalized in property and equipment. The loan is interest free, secured by the production equipment acquired, and was measured at a fair value of $15,225. The carrying value of the loan payable will be accreted to the face value of $15,868 over the term of the loan. During the year ended December 31, 2021, the Company recognized accretion of the loan of $146. During the three months ended March 31, 2022, the Company recognized accretion of the loan of $128 and made a repayment of $3,967. As at March 31, 2022, the carrying value of the loan was $11,532 (December 31, 2021—$15,371).

On October 29, 2021, the Company refinanced its directors and officer insurance for $594,141 (US$478,500) The loan bears interest at 15.49% per annum, is secured by the insurance policies, and is repayable in 5 equal instalments of US$99,438. During the year ended December 31, 2021, the Company repaid $242,863. During the three months ended March 31, 2022, the Company repaid $364,302 and realized foreign exchange loss of $13,024. As at March 31, 2022, the carrying value of the loan payable was $nil (December 31, 2021—$351,278).

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

12.

Related party balances and transactions

Related party balances

On November 16, 2021, the Company entered into loan agreements with its former CEO and its former CRDO to provide individual loans in the amounts of $750,000 and $500,000 to the former CEO and former CRDO, respectively (collectively, the “Loans”). With the express consent of the former CEO and former CRDO, the Loans were amended on November 23, 2021 such that all accrued principal and interest under the former CEO Loan was immediately due and payable and the former CRDO Loan is due and payable within 60 days. Until repayment, the Loans continue to bear interest at a rate of 9% per annum, payable monthly, and, if for any reason a Loan is not paid in full on or before January 18, 2022, the Loan will be secured by certain financial assets commencing on such date. The former CEO Loan of $750,000 was repaid in full as at December 31, 2021 and the Company received interest of $2,772. The former CRDO Loan provides for scheduled repayments prior to maturity. As at March 31, 2022, the former CRDO repaid $90,674 and the Company accrued interest of $14,418 which was included in accounts receivable.

On February 4, 2022, the Company entered into a Share Pledge Agreement (“Pledge Agreement”) with the former CRDO whereby the former CRDO pledged 1,000,000 common shares of the Company (“Pledged Shares”). Subsequent to the three months ended March 31, 2022, the former CRDO Loan was repaid in full.

Related party transactions

The Company’s key management personnel have the authority and responsibility for planning, directing, and controlling the activities of the Company and consists of the Company’s executive management team and directors. Compensation was as follows:


	Three Months ended March 31,			Three Months ended March 31,
	2022			2021
Salaries incurred to key management personnel	$	211,857		$	371,154
Directors’ fees		20,151			6,000
Share-based compensation (recovery) (Note 16)		(949,048	)		5,307,333

	$	(717,040	)	$	5,684,487

13.

Derivative Liabilities

On October 19, 2021, the Company issued 7,500,000 common share purchase warrants with an exercise price of US$2.35 and expiry date of October 19, 2026. Due to the variable nature of the proceeds from exercise of these warrants, the Company recognized a derivative liability of $11,864,649 at the issuance date. The fair value of these liabilities will be revalued at the end of every reporting period and the change in fair value will be reported in profit or loss as a gain or loss on derivative financial instruments.


	Three months ended March 31,
	2022
Balance, beginning of period	$	3,942,002
Change in fair value of derivative liabilities		(1,528,993	)

Balance, end of period	$	2,413,009

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

13.

Derivative Liabilities (continued)

The Company determined the fair value for the purchase warrant derivative liabilities using the Black-Scholes option pricing model. The following table shows the assumptions used in the calculations:


	March 31, 2022
Risk-free interest rate		2.39	%
Dividend yield		0	%
Expected volatility		102.27	%
Expected life (years)		4.56
Forfeiture rate		0	%

14.

Share capital

Authorized share capital

Unlimited number of common shares without par value.

Issued share capital during the three months ended March 31, 2022

During the three months ended March 31, 2022, the Company issued a total of 5,000 common shares pursuant to the exercise of stock options at $0.25 per share for gross proceeds of $1,250. During the three months ended March 31, 2021, the Company received $3,750 related to a stock option exercise which occurred during the year ended December 31, 2021.

15.

Warrants

The following table summarizes information about the warrants at March 31, 2022, and the changes for the period then ended:


	Number of warrants			Weighted average exercise price
Warrants outstanding, December 31, 2021		13,663,058		$	3.51
Expired		(598,977	)		1.98

Warrants outstanding, March 31, 2022		13,064,081		$	3.56

The Company’s warrants are exercisable only for common shares, unless otherwise noted. The following table summarizes information about warrants outstanding and exercisable at March 31, 2022:


Exercise price	Expiry date	Warrants outstanding			Weighted average remaining contracted life (years)
$ 3.50	June 4, 2022		57,441	*		0.18
$ 4.50	June 4, 2022		1,552,633			0.18
$ 3.70	January 2, 2023		391,632	**		0.76
$ 4.60	January 2, 2023		2,812,375			0.76
US$ 2.50	April 14, 2025		525,000			3.04
$ 5.62	June 7, 2026		225,000			4.19
US$ 2.35	October 19, 2026		7,500,000			4.56

			13,064,081

*	Exercisable to acquire one unit at $3.50 per unit until June 4, 2022. Each unit consists of one common share and one-half of one warrant, with each whole warrant exercisable at $4.50 until June 4, 2022.

**	Exercisable to acquire one unit at $3.70 per unit until January 2, 2023. Each unit consists of one common share and one-half of one warrant, with each whole warrant exercisable at $4.60 until January 2, 2023.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

16.

Stock options

Pursuant to the Company’s stock incentive plan, the Board of Directors is authorized to grant options to directors, officers, consultants or employees to acquire up to 10% of the issued and outstanding common shares of the Company. The exercise price will not be less than $0.10 per share and the market price of the common shares on the trading day immediately preceding the date of the grant, less applicable discounts permitted by the TSX-V. The options that may be granted under this plan must be exercisable for over a period of not exceeding 5 years. The following table summarizes the continuity of the Company’s stock options at March 31, 2022, and the changes for the period then ended:


	Number of options			Weighted average exercise price
Outstanding, December 31, 2021		8,512,206		$	4.38
Exercised		(5,000	)		0.25
Cancelled or forfeited		(1,139,976	)		5.54

Outstanding, March 31, 2022		7,367,230		$	4.20

Exercisable, March 31, 2022		5,684,171		$	3.70

The weighted average share price at the date of exercise for share options exercised during the three months ended March 31, 2022, was $1.02 (2021 - $6.60). Additional information regarding stock options outstanding as at March 31, 2022, is as follows:


Exercise price	Stock options outstanding*		Stock options exercisable		Expiry date
$ 7.03		5,000		5,000		April 13, 2022**
$ 7.03		5,000		5,000		April 14, 2022**
$ 6.21		10,000		10,000		April 21, 2022**
$ 1.56		25,000		25,000		April 28, 2022**
$ 4.65		97,800		97,800		April 28, 2022**
$ 6.21		50,000		50,000		April 28, 2022**
$ 7.03		5,000		5,000		April 28, 2022**
$ 7.03		10,000		10,000		June 27, 2022
$ 7.10		6,666		6,666		June 27, 2022
$ 0.25		900,000		900,000		June 30, 2022
$ 0.25		900,000		900,000		June 30, 2022
$ 3.70		10,000		3,333		June 30, 2022
$ 7.03		1,050,000		525,000		June 30, 2022
$ 1.31		100,000		100,000		July 10, 2022
$ 7.03		75,000		50,000		July 10, 2022
$ 0.25		75,000		75,000		July 11, 2022
$ 7.03		75,000		75,000		July 11, 2022
$ 4.65		24,600		24,600		July 14, 2022
$ 6.21		15,000		10,000		July 14, 2022
$ 3.70		8,750		2,917		July 18, 2022
$ 3.70		150,000		37,500		July 21, 2022
$ 6.21		500,000		500,000		July 21, 2022
$ 7.03		425,000		212,500		July 21, 2022
$ 3.70		8,750		2,917		July 28, 2022
$ 3.41		15,000		11,250		October 7, 2022
$ 9.07		5,000		5,000		December 7, 2023
$ 6.21		285,000		190,000		January 4, 2024
$ 7.10		20,000		13,332		January 26, 2024
$ 7.03		575,000		416,664		January 29, 2024
$ 6.73		75,000		50,000		February 16, 2024
$ 5.72		35,000		31,667		March 8, 2024
$ 3.70		476,458		158,819		July 15, 2024
$ 0.25		48,500		48,500		December 31, 2024
$ 0.25		223,000		223,000		January 1, 2025
$ 0.25		85,000		85,000		June 17, 2025
$ 1.56		25,000		25,000		August 7, 2025
$ 1.65		30,000		30,000		September 4, 2025
$ 1.70		5,506		5,506		September 17, 2025
$ 1.60		100,000		100,000		October 7, 2025
$ 4.65		332,200		332,200		November 24, 2025
$ 8.86		150,000		150,000		December 5, 2025
$ 7.03		250,000		175,000		January 29, 2026
$ 3.41		100,000		—		October 7, 2026

		7,367,230		5,684,171

*	The weighted average remaining life of options outstanding is 3.07 years.

**	expired subsequently

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

16.

Stock options (continued)

Share-based compensation expense is determined using the Black-Scholes option pricing model. During the three months ended March 31, 2022, the Company recognized a share-based compensation recovery of $792,852 (2021 – share-based compensation expense of $8,774,009) in equity reserves, of which $949,048 of share-based compensation recovery (2021 - $5,307,333 of share-based compensation expense) pertains to directors and officers of the Company. The Company did not grant any stock options during the three months ended March 31, 2022. The weighted average fair value of options granted during the three months ended March 31, 2021, was $5.00 per share. Weighted average assumptions used in calculating the fair value of share-based compensation expense are as follows:


	Three months ended March 31,
	2021
Risk-free interest rate		0.36	%
Dividend yield		0	%
Expected volatility		118	%
Expected life (years)		4.4
Forfeiture rate		0	%

Expected annualized volatility was determined through the comparison of historical share price volatilities used by similar publicly listed companies in similar industries.

At March 31, 2022, there was $1,383,982 (December 31, 2021 - $3,950,176) of unrecognized share-based compensation related to unvested stock options which will be recognized over 1.52 years.

17.

Finance expense

Finance expense is comprised of the following:


	Three months ended March 31,
	2022			2021
Interest on finance lease obligations (Note 10)	$	347,733		$	361,750
Interest and accretion on loans and other liabilities (Note 11)		937,135			—
Other interest		14,229			520
Other interest income		(10,233	)		(5,240	)

	$	1,288,864		$	357,030

18.

Other expense

Other expense is comprised of the following:


	Three months ended March 31,
	2022			2021
Loss on disposal of equipment	$	—		$	19,882
Pre-construction costs*		21,217			110,958
Acquisition-related costs		—			176,191
Gain on termination of lease (Note 10)		(987	)		—

	$	20,230		$	307,031

Pre-construction costs consist of conceptual design and preliminary engineering expenditures incurred on building-out its Mount Pleasant facility (Note 23(c)) and Rupert facility (Note 23(g)). These costs did not meet the capitalization criteria as set out in IAS 16, Property, Plant and Equipment.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

19.

Supplemental cash flow disclosures


	Three months ended March 31,
	2022		2021
Issuance of common shares for acquisitions		—	$	1,156,437
Lease liabilities assumed from acquisition		—		(127,543	)
Property and equipment purchases included in accounts payable and accrued liabilities		3,059,070		—
ROU assets acquired through leases		1,223,046		8,400,677
ROU assets acquired through acquisition		—		127,043

20.

Financial instruments and financial risk management

Fair value measurements

The Company does not have any financial instruments measured at fair value in the consolidated statement of financial position, except for its contingent consideration, which relates to the previous purchases of The Cultured Nut Inc. and Lloyd-James Marketing Group Inc. and for which there has been no change in fair value to March 31, 2022, and derivative liabilities, which was estimated at fair value using the Black-Scholes option pricing model (Note 13).

Financial risk management

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Interest risk

The Company’s exposure to interest risk relates to its investment of surplus cash and cash equivalents, including restricted and unrestricted short-term investments. The Company may invest surplus cash in highly liquid investments with short terms to maturity and would accumulate interest at prevailing rates for such investments. At March 31, 2022, the Company had cash and cash equivalents of $6,382,705 (December 31, 2021 - $21,975,653) and a 1% change in interest rates would increase or decrease interest income by approximately $64,000 (December 31, 2021 - $220,000).

Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, security deposits, accounts receivable and loan to related party. The carrying amount of cash and cash equivalents, security deposits, trade and other receivables and loan to related party represent the maximum exposure to credit risk, and as at March 31, 2022, this amounted to $11,306,299 (December 31, 2021 - $27,833,734).

The Company’s cash and cash equivalents are held through large Canadian financial institutions and no losses have been incurred in relation to these items. The Company’s receivables are comprised of trade accounts receivable and GST receivable. At March 31, 2022, the Company has $165,133 (December 31, 2021 - $90,822) in trade accounts receivable outstanding over 60 days, of which the Company has recognized an allowance for doubtful accounts of $146,044 (December 31, 2021 - $41,350).

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

20.

Financial instruments and financial risk management (continued)

Concentration of credit risk

Concentration of credit risk is the risk of reliance upon a select number of customers which significantly impact the financial performance of the Company. The Company recorded sales from 3 wholesale distributors of the Company representing 21% (2021—12%) of total revenue during the three months ended March 31, 2022. Of the Company’s trade receivables outstanding at March 31, 2022 and December 31, 2021, 68% and 58% are held with 5 customers of the Company, respectively.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to pay financial instrument liabilities as they come due. The Company manages its liquidity risk by reviewing on an ongoing basis its capital requirements.

As at March 31, 2022, the Company has $6,382,705 (December 31, 2021 – $21,975,653) of cash and cash equivalents. The Company is obligated to pay accounts payable and accrued liabilities, the current portion of the lease liabilities, and the current portion of loans payable and other liabilities with a carrying amount of $9,295,930 (December 31, 2021 - $10,906,738) and contingent consideration of $1,048,000 within this year (see also note 1).

The following is an analysis of the contractual maturities of the Company’s non-derivative financial instrument liabilities as at March 31, 2022 and December 31, 2021:


March 31, 2022	Within 1 year		Between 1 - 2 years		More than 2 years*
Accounts payable and accrued liabilities	$	6,505,933	$	—	$	—
Loans payable and other liabilities		1,180,352		5,227,638		—
Financing arrangements		414,515		198,735		—
Lease liabilities		1,211,299		1,302,956		15,951,105
Contingent consideration on acquisitions		1,048,000		—		—

	$	10,360,099	$	6,729,329	$	15,951,105


December 31, 2021	Within 1 year		Between 1 - 2 years		More than 2 years*
Accounts payable and accrued liabilities	$	8,109,161	$	—	$	—
Loans payable and other liabilities		1,151,945		5,181,411		—
Financing arrangements		815,654		298,103		—
Lease liabilities		849,935		912,090		15,852,368
Contingent consideration on acquisitions		1,048,000		—		—

	$	11,974,695	$	6,391,604	$	15,852,368

*	See Note 10 for an analysis of the future minimum lease payments of the lease liabilities due in more than 2 years.

Foreign Currency Risk

The Company is exposed to foreign currency risk on fluctuations related to cash, accounts receivable, accounts payable and accrued liabilities, and deferred revenue that are denominated in US dollars. As at March 31, 2022, a 10% appreciation of the Canadian dollar relative to the US dollar would have decreased the net foreign currency denominated financial assets and foreign exchange loss by approximately $294,193(December 31, 2021 – $1,398,296). A 10% depreciation of the Canadian dollar relative to the US dollar would have had the equal but opposite effect.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

20.

Financial instruments and financial risk management (continued)

Price Risk

The Company is exposed to price risk with respect to commodity prices. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices of raw materials to determine the appropriate course of action to be taken by the Company.

21.

Employee benefit expense

The breakdown of the wages and salaries costs within the condensed interim consolidated statements of net loss and comprehensive loss for the three months ending March 31, 2022, and 2021, are as follows:


	For the three months ended March 31,

	2022			2021

Included in procurement expense
Wages and salaries	$	1,300,100		$	666,029
Share-based compensation		39,386			303,075
Included in fulfilment expense
Wages and salaries		531,689			26,580
Share-based compensation (recovery)		(98,078	)		14,372
Included in general and administrative expense
Wages and salaries		1,899,888			1,202,106
Share-based compensation (recovery) (Restated Note 2)		(846,012	)		8,067,970
Included in marketing and investor relations expense
Wages and salaries		211,659			—
Share-based compensation		47,418			14,372
Included in research and development expense
Wages and salaries		313,521			151,533
Share-based compensation		64,434			190,792
Included in pre-production expense
Wages and salaries		63,371			318,992
Share-based compensation		—			183,428

Total employee benefit expense	$	3,527,376		$	11,139,249

22.

Capital management

The Company’s primary objectives when managing capital is to maintain a capital structure that allows financing options to the Company in order to benefit from potential opportunities as they arise. The Company manages its capital structure and adjusts it based on the funds available to the Company in order to maintain existing operations, fund expansion opportunities and continue as a going concern (Note 1). The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The Company is continually evaluating expansion opportunities both domestically and within certain international markets. Depending on the timing and scope of expansion opportunities identified by the Company, there will be a requirement for the investment of additional capital for the Company to continue to successfully execute on its growth strategy. Based on the ongoing analysis of potential growth opportunities, the Company is not able to currently quantify any specific non-committed future capital requirements. The Company has historically relied on debt and equity markets to fund its activities. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable to ensure optimal capital structure to reduce cost of capital. There were no changes to the Company’s approach to capital management during the three months ended March 31, 2022.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

22.

Capital management (continued)

The Company is subject to externally imposed capital requirement. Pursuant to the loan agreement as described in 11(a), the Company shall maintain a cash coverage ratio of not less than 2.50 to 1.00 as the end of each fiscal quarter. The cash coverage ratio shall mean the ratio of the following: (a) cash on hand as at the end of each fiscal quarter; to (b) (i) at the end of each fiscal quarter prior to the one year anniversary of the closing date of the loan agreement, interest expense of the Company during the most recent fiscal quarter multiplied by four, and (ii) at the end of each fiscal quarter from and after the one year anniversary of the closing date of the loan agreement, interest expense of the Company during for the immediately preceding four fiscal quarters.

23.

Commitments

On December 22, 2017, the Company entered into a lease agreement for retail and storage space located at 6-1701 Douglas Street, Victoria, BC. The lease is for a 5-year term, commencing on August 1, 2017 and expiring on July 31, 2022. The base rent due under the lease agreement is $1,252 per month during the first year and increases each subsequent year. For years 2-5, the monthly rent payable is equal to the current monthly minimum rent multiplied by the annual increase of the Consumer Price Index (“CPI”) for the current lease year just ended over the previous lease year. CPI is defined as the consumer price index for the Greater Victoria Area issued by any bureau of statistics for the Government of Canada. The Company will also pay additional rent equivalent to 4% of the Company’s gross retail sales, excluding sales from wholesale orders, in excess of $2,000,000 per annum. During the three months ended March 31, 2022 and 2021, the Company did not pay additional rent as the gross retail sales, excluding sales from wholesale orders, were under $2,000,000 per annum.

On January 1, 2019, the Company entered into a sub-lease agreement for kitchen and retail space located at 2527 Government Street, Victoria, BC. The lease is for a 4.5-year term, expiring on June 30, 2023. The remaining base rent due under the sub-lease agreement is $3,950 per month for the period from January 1 to June 30, 2019, $4,350 per month for the period from July 1, 2019 to June 30, 2020, $4,600 per month for the period from July 1, 2020 to June 30, 2021, $4,800 per month for the period from July 1, 2021 to June 30, 2022, and $5,050 per month for the period from July 1, 2022 to June 30, 2023.

Also, in relation to the January 1, 2019 sub-lease agreement, the Company entered into a rental agreement for the use of fixtures and equipment located at 2527 Government Street, Victoria, BC. The lease is for a 4.5-year term, expiring on June 30, 2023. The remaining rent due under the rental agreement is $250 per month for the period from January 1, 2019 to June 30, 2020, $300 per month for the period from July 1, 2020 to June 30, 2021, and $350 per month for the period from July 1, 2021 to June 30, 2023.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

23.

Commitments (continued)

On January 22, 2020, the Company entered into a lease agreement for a facility located in the Mount Pleasant area of Vancouver, BC, which commenced September 1, 2020 for a 10-year term. The facility will house the Company’s second restaurant, along with space for research and development, and offices. Pursuant to the lease agreement, the annual base rent is $332,832 per annum for years 1-3, $348,434 per annum for years 4-6, and $369,236 per annum for years 7-10. The Company paid a security deposit of $246,237, which will be partially applied towards the rent due for each of the 3rd, 13th, and 25th months of the term, with the balance being held as a security deposit. As at March 31, 2022, a balance of $188,323 (December 31, 2021—$188,323) is included in prepaids and deposits. Of this amount, $44,418 (Note 6) is presented as a current asset and the remaining balance as a non-current asset. The lease agreement includes an option to renew for two consecutive five-year periods.

On April 8, 2020, the Company entered into a lease agreement for storage space located in Victoria, BC. The lease is for 2 years and 16 days, commencing on April 15, 2020 and expiring on April 30, 2022. The base rent due under the lease agreement is $1,445 per month during the first year and $1,576 per month during the second year. The Company paid a security deposit of $2,565. As at March 31, 2022, a balance of $2,565 (December 31, 2021—$2,565) is included in prepaids and deposits as a current asset.

On August 31, 2020, the Company entered into a lease agreement for a production and distribution facility located in Patterson, California, which commenced on September 1, 2020. The term of this lease is for 5 years and 7 months, expiring on February 28, 2026, with 2 options to extend the term of the lease, each for an additional term of 5 years. Pursuant to the lease agreement, the annual base rent is US$24,743 per month starting April 1, 2021 and no rent is required for the period from September 1, 2020 to June 30, 2021. The base rent is to be adjusted by 3% on the 1st of April of each year commencing from April 1, 2021. The Company paid a security deposit of US$321,659. As at March 31, 2022, a balance of $370,805 (US$296,916) (December 31, 2021—$375,774 (US$296,916)) is included in prepaids and deposits as a non-current asset.

On September 22, 2020, the Company entered into a lease agreement for a facility located in Victoria, BC, which commenced January 1, 2021 for a 10-year term. The facility will house the Company’s third restaurant. Pursuant to the lease agreement, the annual base rent is $44,975 per annum for years 1-2, $47,545 per annum for years 3-4, $50,115 per annum for years 5-6, $51,400 per annum for years 7-8, and $52,685 per annum for year 9-10. The lease agreement includes an option to renew for two consecutive five-year periods. The Company paid a security deposit of $12,256. As at March 31, 2022, a balance of $6,212 (December 31, 2021—$12,256) is included in prepaids and deposits as a current asset.

On November 11, 2020, the Company entered into a lease agreement for the Rupert facility located in Vancouver, BC, for an initial 10-year term with renewal options for two additional 5-year terms. The facility comprises several units of approximately 45,000 square feet of production, refrigeration, warehousing, R&D and office space. Pursuant to the agreement, the lease commences June 1, 2021, with early possession permitted between January 11, 2021 and March 1, 2021. The annual base rent is $870,061 per annum for years 1 to 2, $948,546 per annum for years 3 to 4, $993,875 per annum in years 5 to 7, $1,039,204 per annum in years 8 to 9, and $1,084,533 per annum in year 10. The Company paid a security deposit of $222,249. As at March 31, 2022, a balance of $111,536 (December 31, 2021—$111,536) is included in prepaids and deposits as a non-current asset.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

23.

Commitments (continued)

On January 20, 2021, the Company entered into an agreement for the lease of production equipment. Pursuant to the agreement, the Company is required to pay 20% deposit of the purchase price totalling $196,514, and the balance is due in 36 equal payments totalling $22,845 per month at an annual interest rate of 3%, starting from the date of the delivery. As of March 31, 2022, only 30% of the equipment has been delivered with the reminder yet to be delivered, as such the deposit of $196,514 is included in prepaids and deposits.

On February 1, 2021, the Company entered into a lease agreement for a warehouse facility located in Victoria, BC. The lease is for a 5-year term commencing February 1, 2021 and expiring on January 31, 2026. The facility comprises approximately 6,288 square feet of warehousing space. Pursuant to the lease agreement, the annual base rent is $94,320 per annum for years 1-2, and $100,608 per annum for years 3-5. The Company paid a security deposit of $63,823, which is included in prepaids and deposits as a non-current asset.

On March 12, 2021, the Company entered into an agreement for the purchase of production equipment. Pursuant to the purchase agreement, the Company is required to pay 30% deposit of the purchase price totalling $164,930 at the order date, 20% of the purchase price totalling $109,953 60 days after the order date, 40% of the purchase price totalling $219,907 prior to shipment, and 10% of the purchase price totalling $54,977 30 days after shipment. As of March 31, 2022, the equipment has not been delivered and the deposit of $164,930 is included in prepaids and deposits.

On June 21, 2021, the Company entered into an agreement for the construction of leasehold improvements. Pursuant to the construction agreement, the Company is required to pay 20% deposit of the budgeted cost totalling $500,000, and the balance will be billed based on the progress of the construction. As of March 31, 2022, the construction has not been completed and the deposit of $500,000 is included in prepaids and deposits.

On December 7, 2021, the Company entered into agreement for the purchase of production equipment. Pursuant to the purchase agreement, the Company is required to pay 30% deposit of the purchase price totalling $169,799 at the order date, 30% of purchase price totalling $169,799 30 days after order date, 30% of purchase price totalling $169,799 upon factory acceptance testing and 10% totalling $56,600 30 days after shipment. As of March 31, 2022, the equipment has not been delivered and the deposit of $169,799 is included in prepaids and deposits.

On December 9, 2021, the Company entered into agreement for the purchase of production equipment. Pursuant to the purchase agreement, the Company is required to pay 30% deposit of the purchase price totalling $197,019 at the order date, 30% of purchase price totalling $197,019 90 days after order date, 30% of purchase price totalling $197,019 upon factory acceptance testing and 10% totalling $65,673 30 days after shipment. As of March 31, 2022, the equipment has not been delivered and the deposit of $197,019 is included in prepaids and deposits.

As at March 31, 2022, the Company did not have any future payments required under non-cancellable short-term or low value leases contracted for but not capitalized in the condensed interim consolidated financial statements.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)

24.

Segmented Information

The Company’s chief operating decision makers currently review the operating results of the Company as a single reportable operating segment – being the manufacture and distribution of vegan meat and cheese alternatives. The Company operates in three geographic regions: Canada, the United States and the United Kingdom.

The following is a summary of the Company’s activities by geographic region as at March 31, 2022 and December 31, 2021:


	Canada		United States		United Kingdom		Total
Total non-current assets as at March 31, 2022	$	34,321,988	$	4,844,379	$	—	$	39,166,367
Total non-current assets as at December 31, 2021	$	32,563,769	$	4,178,194	$	—	$	36,741,963

Revenues for the three months ended March 31, 2022*	$	1,308,696	$	705,328	$	4,320	$	2,018,344
Revenues for the three months ended March 31, 2021*	$	1,357,359	$	1,285,724	$	—	$	2,643,083

*	Geographical allocation is based on the location of the customer.

The following is a summary of the Company’s revenues by revenue channel during the three months ended March 31, 2022, and 2021:


	Three months ended March 31, 2022		Three months ended March 31, 2021
eCommerce	$	1,081,360	$	2,185,095
Wholesale		772,919		345,905
Butcher shop, restaurant and other		164,065		112,083

Total	$	2,018,344	$	2,643,083

25.

Subsequent Events

Subsequent to the three months ended March 31, 2022, the Company paid a total of $750,000 in contingent consideration related to the acquisition of The Cultured Nut Inc.

Subsequent to the three months ended March 31, 2022, a total of 1,194,746 stock options with exercise prices ranging between $1.56 per share and $7.03 per share expired unexercised or were cancelled upon termination of employment.

On June 2, 2022, the Company completed a private placement for gross proceeds of approximately USD$6,500,000 (the “Offering”). Pursuant to the Offering, the Company issued 13,100,000 common shares of the Company (“Shares”) at a purchase price of US$0.20 per Share, 19,400,000 common share equivalents (“Common Share Equivalents”) which entitle the holder to purchase 19,400,000 Shares at a price of $0.0001 per Common Share and 32,500,000 warrants (“Warrants”) to purchase 32,500,000 Shares at a price of US$0.2582 per Share. The Warrants are exercisable for a period of five years from issuance. In connection with the financing, the Company paid a cash commission equal to 5.5% of the gross proceeds of the Offering.

Exhibit 99.2

LOGO

The Very Good Food Company MANAGEMENT’S DISCUSSION AND ANALYSIS, as restated FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

TABLE OF CONTENTS


TABLE OF CONTENTS			1

FORWARD-LOOKING INFORMATION			2

BASIS OF PRESENTATION			3

Q1 2022 HIGHLIGHTS			4

OUR BUSINESS			4

CORPORATE OVERVIEW			5

COVID-19			8

FINANCIAL PERFORMANCE REVIEW			9

QUARTERLY RESULTS			13

NON-IFRS FINANCIAL MEASURES			14

LIQUIDITY AND CAPITAL RESOURCES			15

OFF-BALANCE SHEET AGREEMENTS			18

FINANCIAL RISK MANAGEMENT			18

RELATED PARTY TRANSACTIONS			21

CRITICAL ACCOUNTING ESTIMATES			21

ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE			23

RISKS AND UNCERTAINITIES			23

BOARD APPROVAL			23

INTERNAL CONTROLS OVER FINANCIAL REPORTING			24

CONTROLS CERTIFICATION			24

The Very Good Food Company | Management’s Discussion and Analysis

FORWARD-LOOKING INFORMATION

The following management’s discussion and analysis (“MD&A”) of the financial condition and results of operation of The Very Good Food Company Inc. (“VERY GOOD” or the “Company”), constitutes management’s review of the factors that affected the Company’s financial and operational performance for the three-month period ended March 31, 2022.

This MD&A contains “forward-looking information” within the meaning of applicable securities laws in Canada and “forward-looking statements” within the meaning of United States Private Securities Litigation Reform Act of 1995, including Section 21E of the Securities Exchange Act of 1934, as amended (collectively referred to as “forward-looking information”). Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. Any such forward-looking information may be identified by words such as “proposed”, “expects”, “intends”, “may”, “will”, and similar expressions.

This forward-looking information includes, but is not limited to, statements relating to: the Company’s ability to satisfy its existing and future cash obligations and to continue as a going concern; the Company’s plans to address the current liquidity issues, including a potential financing, and its intentions to re-focus its business strategy and growth plans; management’s belief that it will need to seek additional financing within the coming months in order to fulfil its outstanding obligations and fund ongoing operation; the Company’s ability to finance capital expenditures and fund its operations; the Company’s plans to lower throughput and headcount at some locations, manage inventory levels and implement initiatives, such as temporarily pausing non-critical capital expenditures and lowering selling, general and administrative spending, to manage both short and long-term liquidity and re-establish a path towards profitability; the Company’s intended transition from a focus on top line growth to balancing top line growth and profitability; future workforce reductions; the Company’s strategic review of its go-to market channels and the potential outcome of such review; the Company’s focus on the wholesale and food service channels; management’s belief that, upon obtaining near-term financing, initiatives being evaluated will allow the Company to manage its long-term liquidity and increase its cash runway; the availability of other alternatives of generating cash in the short term such as disposing of non-core equipment and certain raw material to extend the current cash runway; the timing and costs of the planned closures of production facilities and restaurants, the continued geographic expansion for VERY GOOD’s products; the Company’s ability to compete; trends and growth expectations in the plant-based industry; the impact of the COVID-19 pandemic on VERY GOOD’s business; the Company’s ability to mitigate turnover; ceasing regular operations at the Victoria Facility (as defined herein), Fairview Facility (as defined herein), and Patterson Facility (as defined herein) and the consolidation of operations into the Rupert Facility (as defined herein; the closure of the Victoria Flagship Store (as defined herein and the timing thereof; and the Company’s ability to remediate the material weakness in its internal controls over financial reporting and the timing of such remediation.

Forward-looking information is based on the Company’s opinions, estimates and assumptions in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company currently believes are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct.

Certain assumptions with respect to, the availability of sufficient financing on reasonable terms to fund VERY GOOD’s capital and operating requirements; the Company’s ability to successfully implement the cost improvement initiatives and measures and achieve their intended benefits; the Company’s ability to manage its liquidity risk, including extending accounts payable and maintaining compliance with the Company’s debt covenants under the Credit Facility (as defined herein), and to continue as a going concern; the Company’s ability to remain listed on The Nasdaq Stock Market LLC (“Nasdaq”); the continued impact of COVID-19; continued growth of the popularity of plant-based foods and, in particular, vegan meat alternatives; the continued strong demand for VERY GOOD’s products; no material deterioration in general business and economic conditions; no material fluctuations of interest rates and foreign exchange rates; the successful placement of VERY GOOD’s products in retail stores, VERY GOOD’s relationship with its suppliers, distributors and third-party logistics providers; the Company’s ability to position VERY GOOD competitively; and the Company’s ability to remediate the material weakness in its internal controls over financial reporting are all material assumptions made in preparing forward-looking information and management’s expectations.

Forward-looking information is based on a number of opinions, estimates and assumptions that we considered appropriate and reasonable as of the date such statements are made and is subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. These risks, uncertainties and other factors include, but are not limited to, the Company’s ability to mange its liquidity risk and those set forth in VERY GOOD’s most recent annual information form filed (“AIF”) with Canadian securities regulatory authorities at www.sedar.com and as an exhibit to a Report on Form 6-K filed with the U.S. Securities and Exchange Commission (“SEC”) on April 1, 2022 and is available at www.sec.gov. Moreover, as disclosed in Note 1 of the Company’s condensed interim consolidated financial statements, there are material uncertainties related to events and conditions that may cast significant doubt upon the Company’s ability to raise funds and continue as a going concern. If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. Accordingly, readers should not place undue reliance on forward-looking information.

The forward-looking information contained in this MD&A represents the Company’s expectations as of June 29, 2022 and is subject to change after such date. VERY GOOD disclaims any intent or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

The Very Good Food Company | Management’s Discussion and Analysis

BASIS OF PRESENTATION

The following MD&A is intended to help the reader understand the financial condition and results of the operations of the Company and constitutes management’s review of the factors that affected the Company’s financial and operating performance for the three months ended March 31, 2022. This MD&A has been prepared in compliance with the requirements of National Instrument 51-102—Continuous Disclosure Obligations. This discussion should be read in conjunction with the unaudited condensed interim consolidated financial statements of the Company for the three months ended March 31, 2022 and 2021, together with the notes thereto and the audited annual consolidated financial statements for the Company for the years ended December 31, 2021 and 2020 together with the notes thereto, prepared in accordance with International Financial Reporting Standards (“IFRS”). The results for the three-month period ended March 31, 2022, are not necessarily indicative of the results that may be expected for any future period.

Some of the financial measures provided in this MD&A are non-IFRS financial measures that have no standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. See “Non-IFRS Financial Measures”, starting on page 14, for more information on the Company’s non-IFRS financial measures and reconciliations thereof.

All amounts in this MD&A are expressed in Canadian dollars, except where otherwise indicated. All references to “we”, “us” or “our” refer to the Company, together with its subsidiaries, on a consolidated basis. The information contained in this MD&A, including forward-looking statements, is current as of June 29, 2022 unless otherwise stated.

Corresponding changes were made to increase the amount of the equity reserve and deficit balances by $1,211,000 in the statements of financial position and changes in equity and to the net loss for the period and share-based compensation (recovery) in the statement of cash flows.

Additional information regarding the Company is available on the SEDAR website for Canadian regulatory filings at www.sedar.com; the EDGAR website for U.S. regulatory filings with the SEC at www.sec.gov; and on the Company’s website at www.verygoodfood.com. Our reference to our website is an inactive textual reference only and accordingly, information contained on the Company’s website shall not be deemed to be a part of this MD&A or incorporated by reference herein.

The Very Good Food Company | Management’s Discussion and Analysis

Q1 2022 HIGHLIGHTS

Financial Highlights


	Three months ended March 31,			Three months ended December 31,			Three months ended March 31,
	2022			2021			2021
Revenue by channel
eCommerce	$	1,081,360		$	3,340,107		$	2,185,095
Wholesale		772,919			781,363			345,905
Butcher Shop, Restaurant and Other		164,065			177,452			112,083

	$	2,018,344		$	4,298,922		$	2,643,083
Net loss	$	(9,573,309	)	$	(13,330,908	)	$	(15,028,576	)
Adjusted EBITDA net loss⁽¹⁾	$	(8,462,899	)	$	(5,014,266	)	$	(5,396,656	)
Loss per share – basic and diluted	$	(0.08	)	$	(0.12	)	$	(0.15	)
Weighted average number of shares outstanding – basic and diluted		118,503,242			115,381,279			97,156,969

⁽¹⁾	See “Non-IFRS Financial Measures” starting on page 14 for more information on non-IFRS financial measures and reconciliations thereof to the nearest comparable measures under IFRS.

OUR BUSINESS

VERY GOOD is an emerging plant-based food technology company that designs, develops, produces, distributes and sells a variety of plant-based meat and cheese alternatives.

The Company was incorporated on December 27, 2016, under the laws of the province of British Columbia, Canada (“BC”) under its original name “The Very Good Butchers Inc.” The Company changed its name to “The Very Good Food Company Inc.” on October 1, 2019. Our head office is located at 2748 Rupert Street, Vancouver, BC, V5M 3T7 and our registered and records office is located at 800 – 885 West Georgia Street, Vancouver, BC, V6C 3H1.

The common shares in the capital of the Company (the “Common Shares”) trade on the TSX Venture Exchange (the “TSXV”) under the symbol “VERY.V”, the Frankfurt Stock Exchange under the symbol “OSI”, and the Nasdaq under the “VGFC”.

Our Ability to Continue as a Going Concern

As of March 31, 2022, the Company had cash and cash equivalents of $6,382,705, a reduction of $15,592,948 from $21,975,653 as of December 31, 2021. This decrease is primarily related to the Company’s greater than expected cash burn during the quarter. As of May 16, 2022, the Company’s cash balance is approximately $3.3 million to settle current accounts payable and accrued liabilities of approximately $6.7 million .Management believes that the company will need to seek additional financing within the coming months in order to fulfil its outstanding obligations and fund ongoing operations and will likely require us to obtain subsequent financings in future periods. In order to address its lack of necessary liquidity, the Company has reduced its cash outflow related to paying trade payables while it evaluates its financing options. The Company is evaluating other alternatives of generating cash in the short term such as disposing of non-core equipment and certain raw material inventory to extend the current cash runway. There can be no assurance that disposing of non-core equipment and certain raw material inventory will be successful. While there is no assurance on the availability of the Company’s future financings, on acceptable terms, or at all, the Company believes it is able to raise capital through financing in the near term to support its new refocused strategy.

The Very Good Food Company | Management’s Discussion and Analysis

Nasdaq Listing Notification

On January 11, 2022, VERY GOOD received notification from the Listing Qualifications Department of Nasdaq that, for the previous 30 consecutive business days, the bid price of the Common Shares had closed below the minimum US$1.00 per share requirement for continued inclusion on the Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). The Nasdaq notification has no immediate effect on the listing of the Common Shares. VERY GOOD is also listed on the TSXV and the notification does not affect the Company’s compliance status with such listing.

Under Nasdaq rule 5810(c)(3)(A), VERY GOOD has until July 11, 2022, to regain compliance with the Bid Price Rule. If at any time over this period the bid price of the Common Shares closed at US$1.00 per Common Share or more for a minimum of 10 consecutive business days, VERY GOOD will regain compliance with the Bid Price Rule, unless Nasdaq exercises its discretion and extends the 10-day compliance period.

In the event the Company does not regain compliance with the Bid Price Rule, the Company may be eligible for an additional compliance period of 180 calendar days. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards of the Nasdaq, with the exception of the Bid Price Rule, and will need to provide written notice of its intention to cure the deficiency during this second compliance period. If the Company does not qualify for the additional compliance period, then the Common Shares will be subject to delisting from the Nasdaq, at which time the Company may appeal the delisting determination to a Nasdaq hearings panel.

The Very Good Food Company | Management’s Discussion and Analysis

CORPORATE OVERVIEW

Our Business Model

As at March 31, 2022, the Company’s product portfolio consisted of 24 products: 19 products developed under The Very Good Butchers brand and 5 products developed under The Very Good Cheese Co. brand. As at March 31, 2022, our products were produced in four leased facilities located in Victoria, BC, Canada (the “Victoria Facility”), Vancouver, BC, Canada (the “Rupert Facility”), Esquimalt, BC, Canada (the “Fairview Facility”), and Patterson, California, United States (the “Patterson Facility”). In November 2021, the Patterson Facility commenced production by producing Taco Stuff’er, one of our most popular products, on commercial kitchen grade equipment. On May 16, 2022, the Company made a strategic decision to cease regular operations at the Victoria Facility, Fairview Facility, and Patterson Facility and consolidate operations into the Rupert Facility.

We currently distribute and sell our products in all 10 provinces and three territories in Canada and 50 states in the United States through three main revenue channels: (1) wholesale (including food service), (2) eCommerce, and (3) our butcher shop and restaurant located in Victoria, BC (the “Victoria Flagship Store”) (collectively, the “Distribution Network”). On May 16, 2022, the Company made the strategic decision to close the Victoria Flagship Store in Q2 2022.

(1)

Wholesale – VERY GOOD is performing to expectation in the wholesale channels that it currently distributes to and is working on improving its distribution. The Company continues to market its products to a number of large retailers in both Canada and the United States. During Q1 2022, Canadian wholesale accounts included, but were not limited to grocery store chains such as Whole Foods Markets, Thrifty Foods, Country Grocer, Save-On-Foods, Fresh St. Market, Nesters Market, Choices Markets, Safeway, IGA, Farmboy, Goodness Me, Rachelle Bery, Healthy Planet, Loblaws, Sobeys, and Voila; as well as smaller independent grocers. United States wholesale accounts included, but were not limited to, Wegman’s, Harmon’s, PCC, Earth Fare, Erewhon and Metro Markets. Wholesale revenue increased $427,014 (123%) in the three months ended March 31, 2022, compared to the same period in 2021 due to an increase in the number of stores and distribution points as well as increased unit velocities on core and new items.


	Three months ended
	March 31, 2022		March 31, 2021
Wholesale	$	772,919	$	345,905

See “Our Strategic Progress” section of the AIF for further details.

(2)

eCommerce – Our eCommerce Store, accessible through the Company’s website and Amazon U.S., sells VERY GOOD’s products both individually and in boxed sets. In addition, the Company offers a monthly subscription service which allows customers to receive monthly boxed sets at a discount over a selected period of time. The Company has made a strategic decision to focus on its wholesale and foodservice channels and is evaluating potential exit plans for its eCommerce business.

eCommerce revenue decreased $1,103,735 (51%) in the three months ended March 31, 2022, compared to the same period in 2021 due to the Company’s strategic decision to eliminate digital marketing costs to acquire new customers.


	Three months ended
	March 31, 2022		March 31, 2021
eCommerce	$	1,081,360	$	2,185,095

The Very Good Food Company | Management’s Discussion and Analysis

See “Our Strategic Progress” section of the AIF for further details.

(3)

Victoria Flagship Store – The Victoria Flagship Store was designed to showcase our products, serve as a test kitchen, and be utilized as a marketing and branding tool. On May 16, 2022, the Company made the strategic decision to exit the restaurant channel and intends to close the Victoria Flagship Store in Q2 2022. The Company no longer plans to open a second flagship store, based in Vancouver, BC (the “Mount Pleasant Flagship Store”).

Operational Update

During the three-month period ended March 31, 2022, VERY GOOD made the strategic shift to focus on sustainable growth and a path to profitability as opposed to solely focusing on top line growth. As part of this shift, VERY GOOD decided to limit its eCommerce sales due to high digital marketing costs to acquire new customers, lowered production throughput and headcount at some locations to manage inventory levels, implemented initiatives such as pausing non-critical capital expenditures and lowering general and administrative expenses.

VERY GOOD intends to continue to focus on the wholesale and food service channels, particularly in the United States, which it views as critical to realizing its vision to scale the Company.

On May 16, 2022, the Company made a strategic decision to cease regular operations at the Victoria Facility, Fairview Facility, and Patterson Facility and consolidate operations into the Rupert Facility. The Company has also decided to close the Victoria Flagship Store in Q2 2022 and no longer plans to open the Mount Pleasant Flagship Store. The Company made these decisions in an effort to create production efficiencies and reduce overhead. The Company is evaluating strategies as to how it can utilize these facilities going forward.

VERY GOOD expects to further right-size its workforce across its corporate business functions as it streamlines operations. It is worth mentioning that the Company has experienced higher than normal turnover over the last quarter and there is a risk of losing some critical talent. The Company is evaluating options as to how to improve employee retention.

Management Changes

On April 4, 2022, VERY GOOD announced that Mitchell Scott’s employment as Chief Executive Officer had been terminated. The Company also announced that James Davison has resigned as Chief Research & Development Officer (the “CRDO”) and as a member of the board of directors of the Company (the “Board of Directors”).

On April 14, 2022, VERY GOOD announced the appointment of three of its functional leaders to executive positions within the Company.

•

Jordan Rogers, formerly the head of Canadian retail sales, who joined VERY GOOD as part of its acquisition of the Lloyd-James Marketing Group Inc., was appointed as the Company’s Chief Commercial Officer.

•

Kevin Callaghan, previously head of US retail sales, was appointed as Vice President of Sales – North America.

•

Parimal Rana, formerly Director of Food Safety & Regulatory and Interim Director of Supply Chain, assumed the role of Vice President of Operations.

All three executives served on the Company’s newly formed executive committee (the “Executive Committee”). The Executive Committee was used temporarily by the Company to review and approve key organizational, financial, operational and strategic decisions for the Company, by drawing upon the collective knowledge, experience, business acumen and skills of the senior management team.

On April 25, 2022, VERY GOOD announced the appointment of a new Interim Chief Executive Officer and director, Matthew Hall. Matthew was a 31-year global senior executive with Nestlé, the world’s largest food and beverage manufacturer. The Company further announced accepting the resignation of Ms. Ana Silva, both from the Board of Directors and her position as President, Interim Chief Financial Officer, and Interim Corporate secretary. Subsequent to quarter end, Dela Salem, a director of the Company, was appointed as the interim co-Chief Executive Officer, to assist with the Company’s management transitions.

Our Refocused Strategy

Matthew started his tenure with the Company as Interim Chief Executive Officer effective May 2, 2022. In the very brief two-week period since his appointment, he has brought transparency to our short term liquidity challenges and has recommended to the Board of Directors a detailed near-term strategy to improve liquidity and endeavor towards profitability

The Very Good Food Company | Management’s Discussion and Analysis

This strategy will follow a three-prong approach: (1) Stabilize, (2) Right-Size, and (3) Optimize.

The stabilization prong of this strategy focuses on obtaining capital that will enable the Company to execute on the other two prongs. Mathew will largely focus on the rightsizing and optimization prongs of this strategy while the Board of Directors and strategic advisors work on the stabilization prong. Some initiatives related to our near-term strategy are already approved and in the process of being implemented, including facility consolidation, closure of restaurant operations, and re-focusing of sales away from eCommerce and toward wholesale and food service.

We anticipate that our long-term strategy will continue to center around establishing and maintaining strong relationships with our customers through differentiated products, and our commitment to long-term profitable growth.

COVID-19

Along with businesses globally, VERY GOOD is subject to the continuing risk that COVID-19, and its current and/or any future variants, may impact our results of operations or financial condition through disruptions to our operations including as a result of disruptions in our supply chain and Distribution Network, temporary production suspensions at our production facilities, reduced productivity of our team members or new indoor dining restrictions.

We continue to utilize and refine our health and safety protocols to ensure the health and wellness of our employees and to reduce risk within our facilities and mitigate the direct impacts of COVID-19 including the implementation of a company-wide vaccination policy to mandate COVID-19 vaccination in our facilities as a key element of our safety protocols to maintain a safe work environment. We have required compliance with such policy for all of our team members since December 2021, subject to any special exceptions or other approved reasonable accommodations.

In Q1 2022, our operations continued to be affected by indirect impacts of COVID-19 through delays in the delivery of production equipment and in the approval of building permits for both the Rupert Facility and the Mount Pleasant Flagship Store as well as the tightening of the local labour markets in the areas surrounding the Rupert Facility and the Patterson Facility which made it more challenging to secure the personnel needed to staff operations from time to time. We also encountered challenges posed by unstable supply chains caused by port congestion, freight equipment shortages, higher freight rates and fluctuating prices of raw materials. In addition, we incurred increased costs to implement additional health safety measures, including our mandatory vaccination policy.

COVID-19 continues to have an impact on the global economy, leading to increased inflation and ongoing uncertainty due to the risk of a re-emergence of the virus. As such, the extent of the impact of COVID-19 on future periods will depend on future developments, all which are uncertain and cannot be predicted, including the duration or resurgence of the pandemic, government responses and health and safety measures or directives put in place by public health authorities and sustained pressure on global supply chains causing supply and demand imbalances. See “Risk Factors” section in the AIF for further details.

The Very Good Food Company | Management’s Discussion and Analysis

FINANCIAL PERFORMANCE REVIEW

Selected Financial Information


	Three months ended March 31,			Three months ended December 31,			Three months ended March 31,
	2022			2021			2021
Revenue	$	2,018,344		$	4,298,922		$	2,643,083
Procurement expense		(2,661,683	)		(2,645,660	)		(2,108,963	)
Fulfilment expense		(1,917,816	)		(4,434,376	)		(1,420,827	)
General and administrative expense		(4,844,691	)		(8,630,775	)		(10,522,987	)
Marketing and investor relations expense		(1,578,394	)		(4,371,771	)		(1,746,318	)
Research and development expense		(564,518	)		(525,873	)		(366,020	)
Pre-production expense		(244,450	)		(345,965	)		(842,483	)

Operating loss		(9,793,208	)		(16,655,498	)		(14,364,515	)
Finance expense		(1,288,864	)		(1,172,470	)		(357,030	)
Other income (expense)		(20,230	)		53,948			(307,031	)
Change in fair value of derivative liabilities⁽¹⁾		1,528,993			7,922,647			—
Impairment of goodwill⁽²⁾		—			(3,479,535	)		—

Net loss	$	(9,573,309	)	$	(13,330,908	)	$	(15,028,576	)

Adjusted general and administrative expense⁽³⁾	$	(5,601,619	)	$	(5,741,337	)	$	(2,422,255	)
Adjusted EBITDA⁽³⁾	$	(8,462,899	)	$	(5,014,266	)	$	(5,396,656	)

⁽¹⁾

On October 19, 2021, the Company issued 7,500,000 common share purchase warrants with an exercise price of US$2.35. Due to the variable nature of the proceeds from exercise of these warrants, the Company recognized a derivative liability of $11,864,649 at the issuance date. The fair value of these liabilities will be revalued at the end of every reporting period and the change in fair value will be reported in profit or loss as a gain or loss on derivative financial instruments.

⁽²⁾	During the year ended December 31, 2021, the Company recorded an impairment of goodwill of $3,479,535 on the basis that synergies originally expected from integration with its acquisitions of The Cultured Nut Inc. and Lloyd-James Marketing Group Inc. have not materialized.

⁽³⁾	See “Non-IFRS Financial Measures” starting on page 14 for more information on non-IFRS financial measures and reconciliations thereof to the nearest comparable measures under IFRS.

The Very Good Food Company | Management’s Discussion and Analysis

Revenue

Revenue by geographic region


	Three months ended March 31,		Three months ended December 31,		Three months ended March 31,
	2022		2021		2021
Canada	$	1,308,696	$	1,802,495	$	1,357,359
United States		705,328		2,494,344		1,285,724
United Kingdom		4,320		2,083		—

Total	$	2,018,344	$	4,298,922	$	2,643,083

Revenue by channel


	Three months ended March 31,		Three months ended December 31,		Three months ended March 31,
	2022		2021		2021
eCommerce	$	1,081,360	$	3,340,107	$	2,185,095
Wholesale		772,919		781,363		345,905
Butcher Shop & Restaurant and Other		164,065		177,452		112,083

Total	$	2,018,344	$	4,298,922	$	2,643,083

Three Months Ended March 31, 2022, compared to December 31, 2021

Revenue decreased $2,280,578 (53%) to $2,018,344 in Q1 2022, compared to $4,298,922 in Q4 2021, which was primarily driven by the reduction in eCommerce revenue as discussed below. VERY GOOD shipped 11,489 eCommerce orders in Q1 2022 compared to 35,823 in the previous quarter. Wholesale revenue remained fairly consistent relative to Q4 2021. eCommerce revenue decreased by $2,258,747 (68%) from $3,340,107 in Q4 2021 due to refocusing of sales away from the eCommerce channel and towards the wholesale channel.

Three Months Ended March 31, 2022, compared to March 31, 2021

Revenue decreased $624,739 (24%) to $2,018,344 in Q1 2022, compared to $2,643,083 in the same period in 2021. The decrease in revenue was driven by a decrease of $1,103,735 in eCommerce sales, offset by an increase of $427,014 in wholesale revenue.

Procurement expense

Procurement expense consists of the cost of raw materials, supplies and inventory packaging, inbound shipping charges, employee wages and benefits, and other attributable overhead expenses incurred in the procurement and manufacturing of the Company’s finished goods. Procurement expense also includes expense associated with the Victoria Flagship Store including food costs, direct labour and other attributable overhead expenses.

The Very Good Food Company | Management’s Discussion and Analysis

Three Months Ended March 31, 2022, compared to December 31, 2021

Procurement expense increased $16,023 (1%) to $2,661,683 in Q1 2022, compared to $2,645,660 in Q4 2021. The procurement expense was consistent with the prior quarter, despite a decrease in revenue, mainly due to the fixed procurement costs at the Company’s production facilities, as well as due to the wages and benefits incurred by production staff during the scaled-back production in Q1 2022.

Three Months Ended March 31, 2022, compared to March 31, 2021

Procurement expense increased $552,720 (26%) to $2,661,683 in Q1 2022, compared to $2,108,963 in Q1 2021. The procurement expense increased in 2022 despite a decrease in revenues, mainly due to the fixed procurement costs at the Company’s production facilities, as well as due to the wages and benefits incurred by production staff during the scaled-back production in Q1 2022.

Fulfilment expense

Fulfilment expense represents third-party fulfilment costs for picking and packing of inventory into orders, fulfilment packaging costs, direct fulfilment labor, outbound shipping and freight, and warehousing costs.

Three Months Ended March 31, 2022, compared to December 31, 2021

Fulfilment expense decreased $2,516,560 (57%) to $1,917,816 in Q1 2022, compared to $4,434,376 in Q4 2021. Fulfilment expenses decreased due to a decrease in the number of eCommerce orders shipped. During Q1 2022, VERY GOOD shipped 11,489 eCommerce orders compared to 35,823 in the previous quarter.

Three Months Ended March 31, 2022, compared to March 31, 2021

Fulfilment expense increased $496,989 (35%) to $1,917,816 in Q1 2022, compared to $1,420,827 in Q1 2021. The increase in fulfilment expense was primarily driven by storage and warehousing costs associated with the higher level of inventory on hand compared to the prior year.

General and administrative expense and adjusted general and administrative expense

General and administrative expense are primarily comprised of administrative expenses, selling expenses, salaries, wages and benefits, including associated share-based compensation not directly associated with other functions, non-production rent expense, depreciation and amortization expense on non-production assets and other non-production operating expenses. Administrative expenses include the expenses related to management, accounting, legal, information technology, and other support functions.

Adjusted general and administrative expense is a Non-IFRS measure calculated as total general and administrative expense less share-based compensation and depreciation. See “Non-IFRS Financial Measures” on page 14 for more information on management’s use of adjusted general and administrative expense and a reconciliation thereof to general and administrative expense.

Three Months Ended March 31, 2022, compared to December 31, 2021

General and administrative expense decreased $3,786,084 (44%) to $4,844,691 in Q1 2022, compared to $8,630,775 in Q4 2021. Excluding share-based compensation and depreciation expense, adjusted general and administrative expense decreased $139,718 (2%) to $5,601,619 in Q1 2022 compared to $5,741,337 in Q4 2021. The decrease in adjusted general and administrative expense was primarily driven by a decrease in salaries and wages.

Three Months Ended March 31, 2022, compared to March 31, 2021

General and administrative expense decreased $5,678,296 (54%) to $4,844,691 in Q1 2022 compared to $10,522,987 in Q1 2021. Excluding share-based compensation and depreciation expense, adjusted general and administrative expense increased $3,179,364 (131%) to $5,601,619 in Q1 2022, compared to $2,422,255 in Q1 2021. The increase in adjusted general and administrative expense was primarily driven by increased legal and professional fees of $760,245, increased insurance fees of $643,215 due to increases in director and officer insurance as a result of the Company’s Nasdaq listing, increased wages and benefits of $697,782 due to higher head count, increased recruiting fees of $164,624 attributed to growing the sales team, and increased general office expenses such as supplies and software licenses of $321,796.

The Very Good Food Company | Management’s Discussion and Analysis

Marketing and investor relations expense

Three Months Ended March 31, 2022, compared to December 31, 2021

Marketing and investor relations expense decreased $2,793,377 (64%) to $1,578,394 in Q1 2022, compared to $4,371,771 in Q4 2021. The decrease in marketing and investor relations expense was mainly due to a decrease of $2,359,549 in digital marketing expenses related to customer acquisition, and a decrease in investor relations expense of $319,507.

Three Months Ended March 31, 2022, compared to March 31, 2021

Marketing and investor relations expense decreased $167,924 (10%) to $1,578,394 in Q1 2022, compared to $1,746,318 in Q1 2021. The decrease in marketing and investor relations expense was mainly due to a decrease of $361,033 in marketing initiatives relating to customer acquisition and a decrease of $47,851 in investor relation expenses. These decreases were partly offset by an increase of $211,659 in wages and benefits due to a higher head count in the marketing team compared to the prior year.

Pre-production expense

Pre-production expense includes wages and benefits, right-of-use assets and property and equipment depreciation expense and other operating expense related to the commissioning of the Rupert Facility, the Patterson Facility, the newly located Victoria Flagship Store, which we intend to close in Q2 2022 and the previously planned Mount Pleasant Flagship Store, which we are no longer intending to open. These types of expenses will be included as part of procurement expense to the extent these sites are in operation.

Three Months Ended March 31, 2022, compared to December 31, 2021

Pre-production expense decreased $101,515 (29%) to $244,450 in Q1 2022, compared to $345,965 in Q4 2021. Pre-production expense decreased as scaling of existing and new SKU’s wound down and products were commercially launched.

Three Months Ended March 31, 2022, compared to March 31, 2021

Pre-production expense decreased $598,033 to $244,450 in Q1 2022, compared to $842,483 in Q1 2021 due to the Company taking possession of the Rupert Facility in January 2021 and not beginning production at the Rupert Facility until May 2021.

QUARTERLY RESULTS

The following table presents certain unaudited financial information for each of the eight quarters up to and including the quarter ended March 31, 2022. The information has been derived from our unaudited quarterly condensed interim consolidated financial statements.


	Three Months Ended
	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Revenue	$	2,018,344		$	4,298,922		$	2,536,097		$	2,780,681
Net loss	$	(9,573,309	)	$	(13,330,908	)	$	(13,699,706	)	$	(12,500,733	)
Comprehensive loss	$	(9,526,787	)	$	(13,334,419	)	$	(13,724,506	)	$	(12,496,272	)
Loss per share (basic and diluted)	$	(0.08	)	$	(0.12	)	$	(0.13	)	$	(0.13	)

The Very Good Food Company | Management’s Discussion and Analysis


	Three Months Ended
	March 31, 2021			December 31, 2020			September 30, 2020 ⁽¹⁾			June 30, 2020
Revenue	$	2,643,083		$	1,836,682		$	1,373,814		$	1,087,790
Net loss	$	(15,028,576	)	$	(5,813,132	)	$	(4,497,027	)	$	(2,418,665	)
Comprehensive loss	$	(15,024,102	)	$	(5,806,392	)	$	(4,497,107	)	$	(2,418,665	)
Loss per share (basic and diluted)	$	(0.15	)	$	(0.06	)	$	(0.06	)	$	(0.05	)

Revenue has increased over the last eight quarters, other than Q1 2022 and Q3 2021. In Q1 2022 revenues decreased due to lower eCommerce sales which was a direct result of the Company’s strategic decision to eliminate digital marketing costs to acquire new customers. Sales growth has been achieved in wholesale channels in Canada and the United States. The Company began making significant efforts to increase its production capacity in H2 2020 with the addition of the Patterson Facility. Ramp-up continued throughout 2021, with the addition of the Rupert Facility in January 2021, the commissioning of the first line at the Rupert Facility (“Rupert Line 1”) in April 2021 and the commencement of commercial production on Rupert Line 1 in June 2021. The Company also partnered with new third party logistics providers to extend its reach in North America. The Company also incurred higher general and administration expense to build out its teams in Victoria, Vancouver and California to support this growth with the hiring of employees, increased office expense, recruitment fees, information technology and licensing cost. High marketing cost necessary to support the eCommerce business in combination with financing costs associated with the Company’s various financings have also had a significant drag on its profitability. Further fluctuations in net loss have been impacted by the timing and amount of share-base compensation expense related to the fair value of stock options (“Options”) and common share purchase warrants granted by the Company. After investing heavily in the infrastructure build-out required to support the Company’s business as a public company in Canada and in the United States, the Company announced that it was shifting to finding opportunities to maximize its efficiency and leverage in general and administrative expenses. See “Corporate Overview—Operational Update” above.

NON-IFRS FINANCIAL MEASURES

Non-IFRS financial measures are metrics used by management that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

Adjusted EBITDA

Management defines adjusted EBITDA as net loss before finance expense, tax, depreciation and amortization, share-based compensation and other non-cash items, including impairment of goodwill, loss on disposal of equipment, loss on termination of leases, and shares, units and warrants issued for services. Management believes adjusted EBITDA is a useful financial metric to assess its operating performance because it adjusts for items that either do not relate to the Company’s underlying business performance or that are items that are not reasonably likely to recur.


	Three months ended March 31,			Three months ended December 31,			Three months ended March 31,
	2022			2021			2021
Net loss as reported	$	(9,573,309	)	$	(13,330,908	)	$	(15,028,576	)
Adjustments:
Depreciation		615,385			480,272			329,484
Impairment of goodwill		—			3,479,535			—
Loss on disposal of equipment		—			—			19,882
Gain on termination of lease¹		(987	)		—			(1,361	)
Finance expense		1,288,864			1,157,411			357,030
Share-based compensation (recovery)		(792,852	)		3,199,424			8,774,009
Shares, units and warrants issued for services		—			—			152,876

Adjusted EBITDA	$	(8,462,899	)	$	(5,014,266	)	$	(5,396,656	)

¹	During the three months ended March 31, 2022, the Company terminated 2 lease agreements and recognized a $987 gain on termination of lease. During the three months ended March 31, 2021, the Company terminated 1 lease agreement and recognized a $1,361 gain on termination of lease.

The Very Good Food Company | Management’s Discussion and Analysis

Adjusted General and Administrative Expense

Management defines adjusted general and administrative expense as general and administrative expense excluding non-cash items such as share-based compensation and depreciation expense. Management believes adjusted general and administrative expense provides useful information as it represents the corporate costs to operate the business excluding any non-cash items.


	Three months ended March 31,			Three months ended December 31,			Three months ended March 31,
	2022			2021			2021
General and administrative expense	$	(4,844,691	)	$	(8,630,775	)	$	(10,522,987	)
Adjustments:
Share-based compensation (recovery)		(846,012	)		2,808,617			8,067,970
Depreciation		89,084			80,821			32,762

Adjusted general and administrative expense	$	(5,601,619	)	$	(5,741,337	)	$	(2,422,255	)

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2022, the Company had cash and cash equivalents of $6,382,705, a reduction of $15,592,948 from $21,975,653 as of December 31, 2021. This decrease is primarily related to the Company’s greater than expected cash burn during the quarter. As of May 16, 2022, the Company’s cash balance is approximately $3.3 million to settle current accounts payable and accrued liabilities of approximately $6.7 million .Management believes that it will need to seek additional financing within the coming months in order to fulfil its outstanding obligations and fund ongoing operations and will likely require us to obtain subsequent financings in future periods. In order to address its lack of necessary liquidity, the Company has reduced its cash outflow related to paying trade payables while it evaluates its financing options. The Company also is evaluating other alternatives of generating cash in the short term such as disposing of non-core equipment and certain raw material inventory to extend the current cash runway. There can be no assurance that disposing of non-core equipment and certain raw material inventory will be successful. While there is no assurance on the availability of the Company’s future financings, on acceptable terms, or at all, the Company believes it is able to raise capital through financing in the near term to support its new refocused strategy.

As disclosed in Note 1 of the Company’s condensed interim consolidated financial statements, there are material uncertainties related to events and conditions that may cast significant doubt upon the Company’s ability to raise funds and continue as a going concern.

Credit Facility

In June 2021, the Company entered into a senior secured credit facility (the “Credit Facility”) with Waygar Capital Inc., as agent for Ninepoint Canadian Senior Debt Master Fund L.P. The Credit Facility consists of a $20 million revolving line of credit (the “Revolving Line of Credit”) and a $50 million senior secured asset backed term loan (the “Term Loan”). All amounts drawn are subject to specific borrowing requirements and under the Credit Facility will pay interest at a rate of 9.95% per annum and will be repaid in full upon maturity. The Credit Facility has a term of 24 months with an option to renew, upon mutual consent, for another 12 months and is secured by a first-priority security interest on substantially all of VERY GOOD’s assets (refer to Note 11 of condensed interim consolidated financial statements). The amount we may draw under the term loan at any given time is tied to a prescribed proportion of the appraised value of our eligible equipment from time to time. Only certain equipment may be financed, and no value is given for equipment installation costs. As at March 31, 2022, a total of $6,407,990 is outstanding under the Credit Facility, net of an unamortized discount of $90,829, and $39,847 is outstanding for interest and $2,092 is outstanding for unused line fee, which is included in accounts payable and accrued liabilities.

We may fail to comply with our debt covenants under our Credit Facility if we are not able to maintain a specified cash coverage ratio with respect to interest payments that is tested on a quarterly basis. In addition, our Credit Facility requires us to meet certain EBITDA targets, as adjusted from time to time, on a quarterly basis. If we fail to satisfy our debt covenants and our lenders are unwilling to waive non-compliance, we would be in default under our Credit Facility and our indebtedness may be accelerated. Accordingly, we will need to raise additional equity or debt financing, and/or re-negotiate the Credit Facility, to the extent available to us, to continue to operate and expand our business. There is no assurance that any financing will be available to the Company or, if a financing is available, that such will be on terms and conditions acceptable to the Company. See “Risk Factors” in the AIF.

The Very Good Food Company | Management’s Discussion and Analysis

The following table summarizes our cash flows as at March 31, 2022 and 2021:


	Three months ended March 31
	2022			2021
Operating activities	$	(12,380,074	)	$	(4,676,643	)
Investing activities		(2,174,077	)		(5,252,352	)
Financing activities		(1,096,342	)		2,064,398
Effect of foreign exchange on cash and cash equivalents		57,545			992

Net changes in cash and cash equivalents	$	(15,592,948	)	$	(7,863,605	)

Operating activities

Net cash used in operating activities for three months ended March 31, 2022, was $12,380,074 compared to $4,676,643 in Q1 2021 as a result of the net loss for the period of $9,573,309; an increase in non-cash working capital of $2,388,182, a recovery of non-cash share-based compensation of $792,852 and change in fair value of derivative liabilities of $1,528,994, partially offset by finance expense of $1,288,864 and depreciation of $615,385. The increase in working capital was largely due to an increase in inventory of $2,011,317, which was offset by a decrease in accounts receivable, prepaid and deposits and accounts payable and accrued liabilities of $335,247, $1,558,936 and $2,247,742, respectively. During the period ended March 31, 2021, net cash used in operating activities was $4,676,643 as a result of the net loss for the period of $15,028,576, partially offset by a change in non-cash working capital of $715,293, non-cash expense related to share-based compensation of $8,774,009, finance expense of $361,750, depreciation of $329,484 and Common Shares and units issued for services of $152,876.

Investing activities

Net cash used in investing activities for the three months ended March 31, 2022, was $2,174,077 primarily attributed to capital expenditures and leasehold improvements incurred for the commissioning of the Rupert Facility and Patterson Facility and acquisition of right-of-use assets of $308,934 for equipment leased for Rupert Facility and Patterson Facility. During the period ended March 31, 2021, net cash used in investing activities was $5,252,352 relating to capital expenditures and leasehold improvements incurred for the commissioning of the Rupert Facility. In addition, the Company paid $1,250,000 for the acquisition of The Cultured Nut Inc. and Lloyd-James Marketing Group Inc. in Q1 2021.

Financing activities

Net cash used in financing activities for the three months ended March 31, 2022, was $1,096,342 mainly due to payments of lease liabilities of $649,634, repayment of loans payable and other liabilities of $364,302, and interest payment of $119,144; this was partially offset by $5,000 received from the exercise of stock options and $31,738 of advances received from the Credit Facility. During the period ended March 31, 2021, net cash received from financing activities was $2,064,398 mainly due to $2,152,484 received from proceeds from the exercise of common share purchase warrants, $55,875 received from the exercise of Options and $143,961 incurred for lease liabilities payments.

During the three months ended March 31, 2022, the Company received a total of $31,738 pursuant to the Credit Facility. During the three months ended March 31, 2022, the Company recognized interest and accretion expense on the Credit Facility fee payable of $42,896 and interest expense of $113,780 related to the Revolving Line of Credit and Term Loan. The Company also incurred an unused line of credit fee of $6,134. As at March 31, 2022, $39,847 is outstanding for interest and $2,092 is outstanding for unused line of credit fees, which are included in accounts payable and accrued liabilities.

The Company incurred debt financing costs totalling $5,303,563, which will be amortized over the term of the Credit Facility at the effective interest rate. During the three months ended March 31, 2022, the Company recognized accretion expense of the deferred financing costs of $767,927. As at March 31, 2022, the remaining carrying value of the deferred financing costs was $3,156,816.

The Very Good Food Company | Management’s Discussion and Analysis

Prospectus Offerings and Registration Statement Use of Proceeds

On October 5, 2021, the Company filed a Form F-10 registration statement (File No. 333-260064) (the “F-10 Registration Statement”) which was made effective by the SEC on October 8, 2021 and registered $100,000,000 (US$79,026,394.80) of an indeterminate amount of common shares, warrants, debt securities, subscriptions receipts and units. Pursuant to this F-10 Registration Statement, on October 19, 2021, the Company closed a registered direct offering (the “October 2021 Offering”) with certain U.S. institutional investors for the purchase and sale of an aggregate of 15,000,000 units of the Company consisting of one Common Share and one half of one Common Share purchase warrant (each, an “October 2021 Unit”) at a price of US$2.00 per October 2021 Unit for gross proceeds of $37,078,200 (US$30,000,000). The October 2021 Offering was fully subscribed and the lead placement agents were A.G.P./Alliance Global Capital and Roth Capital Partners, with placement agent fees totaling $2.2 million (US$1.8 million). In addition, there were estimated expenses for the October 2021 Offering totaled $617,970 (US$500,000), consisting of regulatory filing fees, transfer agent costs, professional advisory fees, auditor review, and legal fees and expenses. The net proceeds from the October 2021 offering after deducting these expenses was $34,335,242 (US$27.7 million). The 15,000,000 October 2021 Units sold in this transaction remain the only securities sold in connection with the F-10 Registration Statement. The following table provides an update on the anticipated use of proceeds raised in the October 2021 Offering, along with amounts expended. None of the payments listed in the table below constitute direct or indirect payments to directors, officers, general partners of the issuer or their associates; to persons owning 10% or more of any class of the issuer’s equity securities; and to affiliates of the issuer. With the exception of salary payments to directors and officers as part of the general corporate and other working capital expense.


	Proposed Use of Proceeds		Approximate Use of Proceeds to March 31, 2022
Scale operations	$	12,977,370	$	4,711,375
Expand geographical reach		3,337,038		21,501
Accretive acquisitions within plant-based food sector		3,707,820		—
Research & development		3,089,850		621,891
Marketing initiatives		4,325,790		3,723,615
General corporate & other working capital		7,415,640		19,356,173
Offering expenses and placement agent fee		2,224,692	$	2,742,958

Total	$	37,078,200	$	31,177,513

OUTSTANDING COMMON SHARES, OPTIONS AND WARRANTS

The Company is authorized to issue an unlimited number of Common Shares. The table below outlines the number of issued and outstanding Common Shares, common share purchase warrants and Options as at the dates indicated.


	As at May 16,		As at March 31,		As at December 31,
	2022		2022		2021
Common Shares		118,503,464		118,503,464		118,498,464
Warrants		13,064,081		13,064,081		13,663,058
Options		6,172,484		7,367,230		8,512,206

Common Shares

Common Shares increased by 5,000 during three months ended March 31, 2022, due to Common Shares issued for Options exercised.

Warrants

Common share purchase warrants decreased by 0.6 million during the three months ended March 31, 2022, primarily due to expired common share purchase warrants.

The Very Good Food Company | Management’s Discussion and Analysis

Options

Options decreased by 1.1 million during the three months ended March 31, 2022, due to the following transactions:

•

5,000 Options exercised; and

•

1.1 million Options cancelled.

OFF-BALANCE SHEET AGREEMENTS

The Company does not have any off-balance sheet arrangements such as obligations under guaranteed contracts, a retained or contingent interest in assets transferred to an unconsolidated entity, any obligation under derivative instruments or any obligation under a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the Company or engages in leasing or hedging services with the Company.

FINANCIAL RISK MANAGEMENT

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors is responsible for approving and monitoring the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Contractual Obligations and Material Cash Requirements

The following is an analysis of the contractual maturities of the Company’s non-derivative financial liabilities and material cash requirements as at March 31, 2022. As at March 31, 2022, the Company has $6,382,705 (December 31, 2021 - $21,975,653) of cash and cash equivalents. The Company is obligated to pay accounts payable and accrued liabilities, the current portion of the lease liabilities, and the current portion of loans payable and other liabilities with a carrying amount of $9,295,930 (December 31, 2021 - $10,906,738) and contingent consideration of $1,048,000 within the next year. Also see “Our Business – Our ability to continue as a going concern”.


March 31, 2022	Within 1 year		Between 1 - 2 years		More than 2 years*
Accounts payable and accrued liabilities	$	6,505,933	$	—	$	—
Loans payable and other liabilities		1,180,352		5,227,638		—
Financing arrangements		414,515		198,735		—
Lease liabilities		1,211,299		1,302,956		15,951,105
Contingent consideration on acquisitions¹		1,048,000		—		—

	$	10,360,000	$	6,729,329	$	15,951,105


December 31, 2021	Within 1 year		Between 1 - 2 years		More than 2 years*
Accounts payable and accrued liabilities	$	8,109,161	$	—	$	—
Loans payable and other liabilities		1,151,945		5,181,411		—
Financing arrangements		815,654		298,103		—
Lease liabilities		849,935		912,090		15,852,368
Contingent consideration on acquisitions¹		1,048,000		—		—

	$	11,974,695	$	6,391,604	$	15,852,368

*	See Note 10 of the condensed interim consolidated financial statements for an analysis of the future minimum lease payments of the lease liabilities due in more than 2 years.

Contingent on the successful achievement of certain milestones related to the integration of The Cultured Nut Inc. and Lloyd-James Marketing Group Inc. over a 12-month period from the acquisition dates of February 23, 2021 and March 11, 2021, respectively. As of May 16, 2022, the Company has paid $750,000 in contingent consideration related to the acquisition of The Cultured Nut Inc.

The Very Good Food Company | Management’s Discussion and Analysis

Interest Risk

Credit Risk

Concentration of Credit Risk

Concentration of credit risk is the risk of reliance upon a select number of customers which significantly impact the financial performance of the Company. The Company recorded sales from three wholesale distributors of the Company representing 21% (2021 - 12%) of total revenue during the three months ended March 31, 2022. Of the Company’s trade receivables outstanding at March 31, 2022 and December 31, 2021, 68% and 58% are held with five customers of the Company, respectively.

Liquidity Risk

To date, the Company has been able to rely on the public equity markets and private debt to provide the necessary capital for it to maintain existing operations and fund expansion opportunities. The Company manages its capital structure and adjusts based on the funds available to the Company. The Board of Directors works with management and ultimately oversees and approves key decisions related to sustainability and future development of the business.

With the change in the sentiment in the public equity markets in recent months, the Company is making some significant pivots in its strategy to adapt to this new environment. The Company is transitioning from a focus on top line growth, to a focus of balancing top line growth and profitability. As discussed in “Corporate Overview—Operational Update” above, VERY GOOD has temporarily lowered production throughput and headcount to manage inventory levels and implemented initiatives such as pausing non-critical capital expenditures and lowering general and administrative expenditures, to manage both short and long-term liquidity and to establish a path towards profitability.

As of March 31, 2022, the Company had cash and cash equivalents of $6,382,705 (December 31, 2021 - $21,975,653) to settle current non-derivative financial liabilities of $10,352,761 (December 31, 2021 - $11,986,875). See “Risk Factors” in the AIF. Also see “Our Business – Our ability to continue as a going concern”.

The Very Good Food Company | Management’s Discussion and Analysis

Foreign Currency Risk

The Company is exposed to foreign currency risk on fluctuations related to cash, accounts receivable, accounts payable and accrued liabilities, and deferred revenue that are denominated in US dollars. As at March 31, 2022, a 10% appreciation of the Canadian dollar relative to the US dollar would have decreased the net foreign currency denominated financial assets and foreign exchange loss by approximately $294,193 (December 31, 2021 – $1,398,296). A 10% depreciation of the Canadian dollar relative to the US dollar would have had the equal but opposite effect.

Commodity Price Risk

Equity Price Risk

In recent years, securities markets have experienced extremes in price and volume volatility. The market price of securities of many early-stage companies, among others, have experienced fluctuations in price which may not necessarily be related to the operating performance, underlying asset values or prospects of such companies. It may be anticipated that any market for the Common Shares will be subject to market trends generally and the value of the Common Shares on a stock exchange may be affected by such volatility.

The Very Good Food Company | Management’s Discussion and Analysis

Fair Value of Financial Instruments

At March 31, 2022, the carrying value of the Company’s cash and cash equivalents, accounts receivable, loan to related party, deposits, accounts payable and accrued liabilities, and loans payable and other liabilities, all of which are carried at amortized cost, approximate their fair value given their short-term nature or discount rate applied. The Company does not have any financial instruments measured at fair value in the consolidated statement of financial position, except for its contingent consideration, which was estimated at fair value as part of the purchase price allocations and for which there has been no change in fair value to March 31, 2022, and derivative liabilities, which was estimated at fair value using the Black-Scholes option pricing model (“Black-Scholes”).

RELATED PARTY TRANSACTIONS


	Three months ended March 31,
	2022			2021
Salaries incurred to key management personnel	$	211,857		$	371,154

Directors fees		20,151			6,000

Share-based compensation (recovery)		(949,048	)		5,307,333

Total related party transactions	$	(717,040	)	$	5,684,487

The following is a summary of the significant related party balances:


As at	March 31, 2022		December 31, 2021
Due from the former CRDO and former Director	$	409,326	$	410,268

On November 16, 2021, the Company entered into loan agreements with its former Chief Executive Officer (“CEO”), Mitchell Scott, and its former CRDO, James Davison, to provide individual loans in the amounts of $750,000 and $500,000 to the former CEO (the “former CEO Loan”) and former CRDO (the “former CRDO Loan” and together with the former CEO Loan, the “Loans”), respectively. With the express consent of the former CEO and former CRDO, the Loans were amended on November 23, 2021, such that all accrued principal and interest under the former CEO Loan was immediately due and payable and the former CRDO Loan is due and payable within 60 days. Until repayment, the Loans continue to bear interest at a rate of 9% per annum, payable monthly, and, if for any reason a Loan is not paid in full on or before January 18, 2022, the Loan will be secured by certain financial assets commencing on such date. The former CEO Loan was repaid in full as at December 31, 2021, and the Company received interest of $2,772. The former CRDO Loan provides for scheduled repayments prior to maturity. As at March 31, 2022, the former CRDO repaid $90,674 and the Company accrued interest of $14,418, which was included in accounts receivable.

On February 4, 2022, the Company entered into a share pledge agreement with the former CRDO whereby the former CRDO pledged 1,000,000 Common Shares (“Pledged Shares”). Subsequent to the three months ended March 31, 2022, the former CRDO Loan was repaid in full.

The Very Good Food Company | Management’s Discussion and Analysis

CRITICAL ACCOUNTING ESTIMATES

The preparation of the consolidated financial statements in accordance with IFRS requires the Company to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities and contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised. Actual results may differ from these judgements, estimates and assumptions. While our significant accounting policies are more fully described in our annual consolidated financial statements, we believe that the following accounting policies and estimates are critical to our business operations and understanding our financial results.

The following are the key judgements and sources of estimation uncertainty that we believe could have the most significant impact on the amounts recognized in our condensed interim consolidated financial statements.

The determination of the ability of the Company to continue as a going concern is a key area of judgment applied in the preparation of the consolidated financial statements as discussed above in note 1 of the condensed interim consolidated financial statements. Amortization of right-of-use assets and property and equipment are dependent upon the estimated useful lives, which are determined through the exercise of judgment. The assessment of any indicators of impairment of these assets is dependent upon judgments that take into account factors such as economic and market conditions and the useful lives of assets.

Share-based compensation

The Company utilizes the Black-Scholes to estimate the fair value of Options and common share purchase warrants granted to directors, officers, employees and service providers. The use of Black-Scholes requires management to make various estimates and assumptions that impact the value assigned to the Options including the forecast future volatility of the stock price, the risk-free interest rate, dividend yield and the expected life of the Options. Any changes in these assumptions could have a material impact on the share-based compensation calculation value.

Business combinations

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition and assessing whether the amounts paid on achievement of milestones represents contingent consideration or compensation for post-acquisition services. Contingent consideration that is classified as a liability is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss. Accounting for acquisitions requires estimates with respect to the fair value of the assets acquired and liabilities assumed.

Impairment of non-financial assets

The Company assesses impairment of non-financial assets such as goodwill, right-of-use assets, and property and equipment. In assessing impairment, management estimates the recoverable amount of each asset or cash generating unit (“CGU”) based on expected future cash flows. When measuring expected future cash flows, management makes assumptions about future growth of profits which relate to future events and circumstances. Actual results could vary from these estimated future cash flows. Estimation uncertainty relates to assumptions about future operating results and the application of an appropriate discount rate.

Goodwill is subject to impairment testing on an annual basis. However, if indicators of impairment are present, the Company will review goodwill for impairment when such indicators arise. In addition, at each reporting period, the Company reviews whether there are indicators that the recoverable amount of long-lived assets may be less than their carrying amount.

At December 31, 2021, the Company determined that the goodwill associated with both The Cultured Nut Inc. and Lloyd-James Marketing Group Inc. acquisitions was impaired and goodwill of $2,422,916 and $1,056,619 respectively was expensed. Goodwill and long-lived assets are reviewed for impairment by determining the recoverable amount of each CGU or groups of CGUs to which the goodwill or long-lived assets relate. Management estimated at year end that the recoverable amount of the CGUs based on value-in-use (“VIU”) was nil. The VIU calculations are based on expected future cash flows. When measuring expected future cash flows, management makes key assumptions about future growth of profits which relate to future events and circumstances. Estimation uncertainty relates to assumptions about future operating results and the application of an appropriate discount rate. Actual results could vary from these estimates which may cause significant adjustments to the Company’s goodwill or long-lived assets in subsequent reporting periods.

The Very Good Food Company | Management’s Discussion and Analysis

Leases

ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

The following IFRS standards have been recently issued by the International Accounting Standards Board. Pronouncements that are irrelevant or not expected to have a significant impact have been excluded.

Amendments to IAS 1: Classification of Liabilities as Current or Non-Current

RISKS AND UNCERTAINITIES

VERY GOOD is subject to a number of risks and uncertainties related to its businesses that may have adverse effects on its results of operations and financial position. Details on some of these can be found in VERY GOOD’s most recent AIF filed with Canadian securities regulatory authorities at www.sedar.com and with the SEC at www.sec.gov. Readers should carefully review and evaluate these risk factors together with all of the other information contained in this discussion and analysis. Furthermore, it should be noted that the risk factors described in the AIF are not the only risk factors facing VERY GOOD and it may be subject to risks and uncertainties not described therein or that it is not presently aware of or that it may currently deem insignificant.

BOARD APPROVAL

The Board of Directors oversees management’s responsibility for financial reporting and internal control systems through an Audit Committee. The Audit Committee meets periodically with management and annually with the independent auditors to review the scope and results of the annual audit and to review the financial statements and related financial reporting and internal control matters before the financial statements are approved by the Board of Directors and submitted to the shareholders of the Company.

The Board of Directors has approved the financial statements and the disclosure contained in this MD&A.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

Internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with IFRS. Management is responsible for establishing adequate policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; (ii) are designed to provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the Company are being made in accordance with authorisations of management and the Board of Directors; and (iii) are designed to provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

The Very Good Food Company | Management’s Discussion and Analysis

The Company determined that a material weakness in internal control over financial reporting existed as of December 31, 2021 as a result of misstatements identified by the Company’s auditors during their audit of the consolidated financial statements as of and for the year then ended. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual financial statements will not be prevented or detected on a timely basis. The material weakness resulted from a lack of review of journal entries and insufficient management review of accounts and balances in the preparation of the consolidated financial statements. The misstatements were corrected in the December 2021 consolidated financial statements and there is no material effect on previously issued financial statements however, the material weakness remains as of May 16, 2022.

Due to several vacancies within the accounting department and high turnover at the very senior leadership level within the finance department, VERY GOOD has not been able to remediate the material weakness in its internal controls over financial reporting.

The Company plans to remediate this matter, including designing and operating enhanced management review controls over accounts and balances as part of the financial close process in future periods. Successful remediation requires further assessment of the skills and resources in the Company’s finance function as well as an evaluation of the Company’s financial close process.

CONTROLS CERTIFICATION

The Company’s Interim Co-Chief Executive Officer in such capacity (as well as in the capacity as Chief Financial Officer) (the “Certifying Officer”), has designed, or caused to be designed under their supervision, disclosure controls and procedures to provide reasonable assurance that: material information relating to the Company is made known to the Certifying Officer by others, particularly during the period in which the annual and interim filings are being prepared; and information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarised and reported within the time period specified in securities legislation.

The Certifying Officer has designed, or caused to be designed under their supervision, internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company is required to disclose herein any change in the Company’s internal controls over financial reporting that occurred during the period beginning on January 1, 2022, and ending on March 31, 2022, that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting. During the period, the Company designed and implemented the Company’s disclosure controls and procedures framework based on the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

It should be noted that a control system, including the Company’s disclosure and internal controls and procedures, no matter how well conceived can provide only reasonable, but not absolute assurance that the objectives of the control system will be met, and it should not be expected that the disclosure and internal controls and procedures will prevent all errors or fraud.

Exhibit 99.3

Form 52-109F2R

Certification of Refiled Interim Filings

This certificate is being filed on the same date that The Very Good Food Company Inc. (the “issuer”) has refiled the interim financial report and interim MD&A for the three months ended March 31, 2022.

I, Dela Salem, Interim Co-Chief Executive Officer of The Very Good Food Company Inc., certify the following:

1.	*Review:* I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of the issuer for the interim period ended March 31, 2022.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.	*Design:* Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1	*Control framework:* The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2	*ICFR – material weakness relating to design:* The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period:

(a)

a description of the material weakness;

(b)

the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3	*Limitation on scope of design:* N/A.

6.	*Reporting changes in ICFR:* The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2022 and ended on March 31, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: June 30, 2022

/s/ Dela Salem

Dela Salem

Interim Co-Chief Executive Officer

Exhibit 99.4

Form 52-109F2R

Certification of Refiled Interim Filings

I, Dela Salem, Interim Co-Chief Executive Officer of The Very Good Food Company Inc. (certifying as the Chief Financial Officer of The Very Good Food Company Inc.), certify the following:

1.	*Review:* I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of the issuer for the interim period ended March 31, 2022.

5.	*Design:* Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

(b)

5.1	*Control framework:* The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2	*ICFR – material weakness relating to design:* The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period:

(a)

a description of the material weakness;

(b)

the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3	*Limitation on scope of design:* N/A.

6.	*Reporting changes in ICFR:* The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2022 and ended on March 31, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: June 30, 2022

/s/ Dela Salem

Dela Salem

Interim Co-Chief Executive Officer

(certifying as Chief Financial Officer)