6-K

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 August 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): ☐

INCORPORATION BY REFERENCE

Exhibits 99.1 and 99.2 included in this report on Form 6-K are each hereby incorporated by reference in the Registration Statement on Form S-8 of the Registrant, as may be amended from time to time (File No. 333-261149), to the extent not superseded by documents or reports subsequently filed by us under the Securities Act of 1933 or the Securities Exchange Act of 1934, in each case as amended.

EXHIBIT INDEX

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


Exhibit		Title

99.1		Unaudited condensed interim consolidated financial statements of the Company for the three and six months ended June 30, 2022 and 2021, together with the notes thereto

99.2		Management’s discussion and analysis of financial condition and results of operations of the Company for the three and six months ended June 30, 2022 and 2021

99.3		Form 52-109FV2 CEO Certification of Interim Filings

99.4		Form 52-109FV2 CFO Certification of 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.


	THE VERY GOOD FOOD COMPANY INC.

Date: August 15, 2022	By:	/s/ Pratik Patel
		Name: Pratik Patel
		Title: Chief Financial Officer

EX-99.1

Exhibit 99.1

LOGO

The Very Good Food Company CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (Unaudited—Expressed in Canadian dollars)

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

Notice of No Auditor Review

The accompanying unaudited condensed interim consolidated financial statements of The Very Good Food Company Inc. (the “Company”) have been prepared by management and approved by the Audit Committee and Board of Directors of the Company. The Company’s independent auditors have not performed a review or audit of these condensed interim consolidated financial statements.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

Condensed Interim Consolidated Statements of Financial Position

(Expressed in Canadian dollars, unaudited)



As at	Notes	June 30, 2022			December 31, 2021

Assets

Current assets

Cash and cash equivalents			$ 6,156,414			$ 21,975,653

Accounts receivable	4		1,013,985			2,101,842

Inventory	5		10,507,040			8,474,255

Prepaids and deposits	6		4,758,834			8,640,286

Loans to related party	12		–			410,268

Total current assets			22,436,273			41,602,304

Right-of-use assets	7		14,563,190			16,659,502

Property and equipment	8		17,236,365			15,450,608

Prepaids and deposits	6		564,345			707,110

Deferred financing costs	11		2,433,263			3,924,743

Total assets			$ 57,233,436			$ 78,344,267

Liabilities and shareholders’ equity

Current liabilities

Accounts payable and accrued liabilities	9		$ 5,503,691			$ 8,109,161

Deferred revenue			10,684			32,137

Current portion of lease liabilities	10		1,688,186			849,935

Current portion of loans payable and other liabilities	11		6,270,459			1,947,642

Contingent consideration	20		450,000			1,048,000

Derivative liabilities	13		13,946,578			3,942,002

Total current liabilities			27,869,598			15,928,877

Lease liabilities	10		13,136,775			16,764,458

Loans payable and other liabilities	11		98,709			5,474,605

Total liabilities			41,105,082			38,167,940



Share capital	14		85,024,964			84,751,366

Equity reserves			13,846,091			26,719,047

Subscriptions received (receivable)			4,884,687			(3,750	)

Accumulated other comprehensive loss			(77,329	)		(12,716	)

Deficit			(87,550,059	)		(71,277,620	)

Total shareholders’ equity			16,128,354			40,176,327

Total liabilities and shareholders’ equity			$ 57,233,436			$ 78,344,267

Nature of operations and going concern uncertainty (Note 1)

Commitments (Notes 10 and 23)

Events after the reporting period (Note 25)

Approved and authorized for issue by Board of Directors on August 11, 2022


*“Justin Steinbach”*				*“Dela Salem”*
Director				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 and Six Months Ended June 30, 2022 and 2021

(Unaudited)

Condensed Interim Consolidated Statements of Net Loss and Comprehensive Loss

(Expressed in Canadian dollars, unaudited)



			Three months ended				Six months ended


	Notes		June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021



Revenue				$ 1,501,446		$ 2,780,681		$ 3,519,790		$ 5,423,764

Procurement expense		7,8,21		(3,007,420)		(2,102,822)		(5,669,103)		(4,155,068)

Fulfilment expense		7,8,21		(1,256,785)		(2,045,714)		(3,174,601)		(4,028,609)

General and administrative expense		7,8,21		(2,935,624)		(6,834,880)		(7,780,315)		(16,409,437)

Marketing and investor relations expense		21		(560,537)		(2,579,656)		(2,138,931)		(4,726,001)

Research and development expense		8,21		(344,804)		(515,965)		(909,322)		(881,985)

Pre-production expense		7,8,21		(106,400)		(656,288)		(350,850)		(1,541,823)

Operating loss				(6,710,124)		(11,954,644)		(16,503,332)		(26,319,159)

Finance expense		17		(1,237,418)		(405,947)		(2,526,282)		(762,977)

Other expenses		18		(276,568)		(140,142)		(296,798)		(447,173)

Gain on debt modification		11		16,783		–		16,783		–

Change in fair value of derivative liabilities		13		1,508,197		–		3,037,190		–

Net loss				(6,699,130)		(12,500,733)		(16,272,439)		(27,529,309)

Other comprehensive income

Foreign currency translation (loss) gain				(111,135)		4,461		(64,613)		8,935

Comprehensive loss				$ (6,810,265)		$ (12,496,272)		$ (16,337,052)		$ (27,520,374)

Loss per share – basic and diluted				$ (0.05)		$ (0.13)		$ (0.14)		$ (0.28)

Weighted average number of shares outstanding – basic and diluted				122,542,033		97,603,729		120,533,795		97,381,583

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 and Six Months Ended June 30, 2022 and 2021

(Unaudited)

Condensed Interim Consolidated Statements of Changes in Equity (Deficiency)

(Expressed in Canadian dollars except share amounts, unaudited)

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

639,350

3,920,438

(1,692,856)

(20,500)

–

2,207,082

Issuance of common shares for services

42,694

227,471

–

227,471

Issuance of common shares for acquisitions

202,005

1,156,437

–

1,156,437

Issuance of warrants for loan

–

752,559

–

752,559

Share-based compensation

–

14,609,998

–

14,609,998

Subscription received

–

28,999

–

28,999

Foreign currency translation gain

–

8,935

–

8,935

Net loss for the period

–

(27,529,309)

Balance at June 30, 2021

97,623,648

$ 44,848,614

$ 18,520,188

$ 22,999

$ 15,595

$ (44,247,006)

$ 19,160,390

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

714,824

273,598

(94,892)

3,750

–

182,456

Issuance of common shares, common share equivalents, and warrants for cash

13,100,000

3,300,075

–

4,884,687

–

8,184,762

Share issuance costs

–

(936,659)

–

(936,659)

Derivative liability on issuance of common share equivalents and warrants

–

(2,363,416)

(10,678,350)

–

(13,041,766)

Share-based compensation (recovery)

–

(2,099,714)

–

(2,099,714)

Foreign currency translation gain

–

(64,613)

–

(64,613)

Net loss for the period

–

(16,272,439)

Balance at June 30, 2022

132,313,288

$ 85,024,964

$ 13,846,091

$ 4,884,687

$ (77,329)

$ (87,550,059)

$ 16,128,354

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 and Six Months Ended June 30, 2022 and 2021

(Unaudited)

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in Canadian dollars, unaudited)



Six months ended	June 30, 2022		June 30, 2021

Net loss for the period		$ (16,272,439)		$ (27,529,309	)

Adjustments for non-cash items:

Finance expense		2,526,282		764,182

Change in fair value of derivative liabilities		(3,037,190)		–

Depreciation		1,601,139		841,652

Loss on termination of lease		151,491		(1,600)

Gain on debt modification		(16,783)		–

Impairment of right-of-use assets		3,103		–

Impairment of property and equipment		122,459		–

Loss on disposal of equipment		1,490		22,561

Share-based compensation (recovery)		(2,099,714)		14,609,998

Shares, units and warrants issued for services		–		227,471

Changes in non-cash working capital items:

Accounts receivable		1,104,631		(924,659)

Inventory		(1,865,955)		(2,055,329)

Prepaids and deposits		2,645,433		(1,144,701)

Accounts payable and accrued liabilities		(2,686,481)		1,194,146

Deferred revenue		(21,453)		(56,893)

Net cash and cash equivalents used in operating activities		(17,843,987)		(14,052,481)

Cash paid for acquisitions		–		(1,250,000)

Cash acquired from acquisitions		–		9,306

Purchase of property and equipment		(2,641,780)		(3,599,115)

Security deposits paid for property and equipment		(412,608)		(3,412,197)

Security deposits refunded for property and equipment		655,008		–

Acquisition of right-of-use assets		(36,074)		(29,408)

Payment of contingent consideration		(598,000)		–

Repayment received from loans to related parties		410,268		–

Net cash and cash equivalents used in investing activities		(2,623,186)		(8,281,414)

Proceeds from the exercise of warrants		–		2,207,082

Proceeds from the exercise of stock options		182,456		55,875

Proceeds from subscriptions received		–		28,999

Proceeds from the issuance of common shares and common share equivalents		8,184,762		–

Share issuance costs		(936,659)		–

Proceeds from loans payable		32,288		1,891,092

Repayments of loans payable		(994,302)		(240,000)

Deferred financing costs paid		–		(238,164)

Payments of lease liabilities		(1,364,642)		(532,097)

Interest paid		(242,356)		–

Lease settlement paid		(168,677)		–

Net cash and cash equivalents provided by financing activities		4,692,870		3,172,787

Effect of foreign exchange rate changes on cash and cash equivalents		(44,936)		3,092

Decrease in cash and cash equivalents		(15,819,239)		(19,158,016)

Cash and cash equivalents, beginning of period		21,975,653		25,084,083

Cash and cash equivalents, end of period		$ 6,156,414		$ 5,926,067

Cash		$ 6,056,414		$ 4,861,067

Redeemable guaranteed investment certificate (“GIC”)		–		1,000,000

Restricted redeemable GIC		100,000		65,000

Total cash and cash equivalents		$ 6,156,414		$ 5,926,067

Supplemental cash flow disclosures (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 and Six Months Ended June 30, 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 six-month period ended June 30, 2022, the Company generated a net loss of $16,272,439 (2021 - $27,529,309) and negative cash flows from operations of $17,843,987 (2021 - $14,052,481).

The Company has incurred losses since inception and expects to incur further losses in the development of its business. Whether and when the Company can generate sufficient operation 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 near term 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 June 30, 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 and Six Months Ended June 30, 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 August 11, 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 have been included.

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

Critical accounting estimates and judgements

The preparation of these condensed interim consolidated financial statements in accordance with IFRS requires the Company to make judgements, 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 judgements, 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. 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 judgement 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 judgement. The assessment of any indicators of impairment of these assets is dependent upon judgements that take into account factors such as economic and market conditions and the useful lives of assets.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

2.	Basis of presentation and measurement (continued)

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 notes 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 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.

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.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

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 or 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 June 30, 2022		As at December 31, 2021

GST receivable		$ 327,248		$ 1,588,641

Trade accounts receivable		679,585		337,247

Accrued interest receivable		6,121		5,394

Other receivable		1,031		170,560

		$ 1,013,985		$ 2,101,842

Trade accounts receivable is recorded net of an allowance for doubtful accounts of $77,540 (December 31, 2021 - $41,350).

5.	Inventory

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



	As at June 30, 2022		As at December 31, 2021

Raw materials		$ 4,133,556		$ 3,446,596

Packaging supplies		1,934,474		1,282,278

Finished goods		4,439,010		3,745,381

		$ 10,507,040		$ 8,474,255

During the six months ended June 30, 2022, a total of $128,395 (2021 - $44,677) of depreciation expense related to property and equipment and $38,435 (2021 - $27,561) related to right-of-use assets used in production was added to finished goods inventory.

6.	Prepaids and deposits



	As at June 30, 2022		As at December 31, 2021

Prepaid expenses		$ 3,070,283		$ 5,234,416

Security deposits		1,677,037		3,345,611

Lease deposits (Notes 10 and 23)		575,859		767,369

		5,323,179		9,347,396

Less: current portion of prepaids and deposits		(4,758,834)		(8,640,286)

		$ 564,345		$ 707,110

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

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		–		2,661,663		–		2,661,663

Termination of lease		(2,184,688)		(115,440)		–		(2,300,128)

Lease liability reassessment		(1,860,479)		–		–		(1,860,479)

Tenant Improvement credit		(331,695)		–		–		(331,695)

Impairment		–		(13,964)		–		(13,964)

Foreign exchange translation adjustment		46,927		–		–		46,927

Balance, June 30, 2022	$	12,002,554	$	4,470,422	$	33,157	$	16,506,133

Accumulated Depreciation

Balance, December 31, 2021		$(1,471,639)		$(162,041)		$(10,627)		$(1,644,307)

Depreciation		(579,563)		(113,748)		(5,526)		(698,837)

Termination of leases		340,129		54,306		–		394,435

Impairment		–		10,861		–		10,861

Foreign exchange translation adjustment		(5,095)		–		–		(5,095)

Balance, June 30, 2022		$(1,716,168)		$(210,622)	$	(16,153)		$(1,942,943)

Carrying amounts

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

Balance, June 30, 2022	$	10,286,386	$	4,259,800	$	17,004	$	14,563,190

The additions in right-of-use assets (equipment) during the six months ended June 30, 2022, are primarily related to the Rupert Facility and Patterson Facility.

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



	As at June 30, 2022		As at June 30, 2021

Consolidated statements of financial position

Included in inventory	$	38,435	$	19,704



	Three months ended June 30,				Six months ended June 30,

	2022		2021		2022		2021

Consolidated statements of net loss and comprehensive loss

Included in procurement expense		$ 225,244		$ 99,412		$ 358,890		$ 127,240

Included in fulfilment expense		58,807		92,861		120,214		107,461

Included in general and administrative expense		47,735		40,360		78,373		42,943

Included in pre-production expense		54,557		132,304		102,925		312,186

		$ 386,343		$ 364,937		$ 660,402		$ 589,830

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

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		1,976,420		49,310		22,991		1,219,118		6,634		3,274,473

Disposals		(113,177)		–		(4,459)		–		–		(117,636)

Impairment		–		–		–		(645,082)		–		(645,082)

Foreign exchange translation adjustment		10,403		435		286		7,669		1,345		20,138

At June 30, 2022		$ 12,084,297		$ 743,546		$ 530,344		$ 5,698,051		$ 249,752		$ 19,305,990

Accumulated depreciation

At December 31, 2021		(423,325)		(84,559)		(366,804)		(410,156)		(38,645)		(1,323,489)

Depreciation		(456,799)		(75,629)		(131,729)		(383,868)		(21,106)		(1,069,131)

Disposals		41,581		–		3,368		–		–		44,949

Impairment		–		–		–		279,921		–		279,921

Foreign exchange translation adjustment		(1,100)		(96)		(134)		(449)		(96)		(1,875)

At June 30, 2022		$ (839,643)		$ (160,284)		$ (495,299)		$ (514,552)		$ (59,847)		$ (2,069,625)

Net book value

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

At June 30, 2022		$ 11,244,654		$ 583,262		$ 35,045		$ 5,183,499		$ 189,905		$ 17,236,365

As at June 30, 2022, a total of $1,605,397 (December 31, 2021 - $4,492,196) of production equipment, and $nil (December 31, 2021 - $264,060) of leasehold improvements and $nil (December 31, 2021 - $78,497) of vehicle 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. During the six months ended June 30, 2022, the Company recognized an impairment of leasehold improvements of $365,161 (2021 - $nil), of which $242,702 relating to Mount Pleasant facility and was netted against the loss on termination of lease.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 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 June 30, 2022		As at June 30, 2021

Consolidated statements of financial position

Included in inventory		$ 128,395		$ 44,704



	Three months ended June 30,				Six months ended June 30,

	2022		2021		2022		2021

Consolidated statements of net loss and comprehensive loss

Included in procurement expense		$ 516,227		$ 101,996		$ 763,704		$ 146,308

Included in fulfilment expense		7,728		1,355		17,600		2,300

Included in general and administrative expense		68,511		39,078		126,957		69,257

Included in research and development expense		2,686		1,018		5,070		2,038

Included in pre-production expense		4,259		3,784		27,406		31,919

		$ 599,411		$ 147,231		$ 940,737		$ 251,822

9.	Accounts payables and accrued liabilities



	As at June 30, 2022		As at December 31, 2021

Accounts payable		$ 4,415,505		$ 5,077,613

Accrued liabilities		1,088,186		3,031,548

		$ 5,503,691		$ 8,109,161

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 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.



	Six-months ended June 30, 2022		Six-months ended June 30, 2021

Balance, beginning of period		$ 17,614,393		$ 5,536,287

Additions		2,008,644		12,532,758

Lease payments		(1,364,642)		(532,097)

Lease liabilities reassessment		(1,860,479)		–

Termination of leases		(2,323,131)		(24,552)

Interest expense		699,883		646,299

Foreign exchange translation adjustment		50,293		(80,211)

Balance, end of period		$ 14,824,961		$ 18,078,484

Less: current portion of lease liabilities		(1,688,186)		(793,433)

Lease liabilities		$ 13,136,775		$ 17,285,051

During the six months ended June 30, 2022, the Company terminated an equipment lease and the Mount Pleasant facility lease agreement (Note 23(c)) and recognized a loss of $151,491 on termination of leases. During the six months ended June 30, 2022, the Company recognized a reduction in lease liabilities of $1,860,479 related to a reassessment of the lease renewal terms on certain 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		$ 753,098		$ 498,164		$ 6,087		$ 1,257,349

December 31, 2023		1,527,834		994,209		12,175		2,534,218

December 31, 2024		1,535,489		932,726		468		2,468,683

December 31, 2025		1,552,765		333,675		–		1,886,440

December 31, 2026		1,252,145		94,842		–		1,346,987

December 31, 2027 and thereafter		10,612,582		3,571		–		10,616,153

Total lease payments		17,233,913		2,857,187		18,730		20,109,830

Amounts representing interest over the term of the leases		(5,120,597)		(163,349)		(924)		(5,284,870)

Present value of net lease payments		12,113,316		2,693,838		17,806		14,824,960

Less: Current portion		(767,097)		(909,717)		(11,371)		(1,688,185)

Long-term portion		$ 11,346,219		$ 1,784,121		$ 6,435		$ 13,136,775

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 and Six Months Ended June 30, 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		32,287		–		–		–		32,287

Discount recognized on amendment		–		–		(16,783)		–		(16,783)

Accretion expense		–		–		83,183		11,863		95,046

Repayments		–		–		(630,000)		(533,629)		(1,163,629)

Balance, June 30, 2022		2,484,007		2,125,361		1,192,675		567,125		6,369,168

Less: Current portion		(2,484,007)		(2,125,361)		(1,192,675)		(468,416)		(6,270,459)

Long-term portion		$ –		$ –		$ –		$ 98,709		$ 98,709

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, and also subject to a further facility fee in the amount of $630,000 payable on June 7, 2023. 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, as amended: $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 (paid); $105,000 on or before July 1, 2022, $105,000 on or before August 1, 2022, $105,000 on or before September 1, 2022, $105,000 on or before October 1, 2022, $105,000 on or before November 1, 2022, $105,000 on or before December 1, 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 six months ended June 30, 2022, the Company received a total of $32,287 pursuant to the Credit Facility.

During the six months ended June 30, 2022, the Company recognized interest and accretion expense on the credit facility fee payable of $83,183 (2021 - $6,716) and interest expense of $226,917 (2021 - $6,186) related to the revolving credit facility and term loan. The Company also incurred an unused line of credit fee of $12,259 (2021 - $3,036) and recognized a gain on debt modification of $16,783 resulting from an amendment to the Credit Facility payment schedule.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

11.

Loans payable and other liabilities (continued)

As at June 30, 2022, $38,203 is outstanding for interest and $2,017 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 six months ended June 30, 2022, the Company recognized accretion expense of the deferred financing costs of $1,491,480 (2021 - $111,168). As at June 30, 2022, the remaining carrying value of the deferred financing costs was $2,433,263 (December 31, 2021 - $3,924,743).

As of June 30, 2022 the Company can borrow $497,284 from the revolving line of credit and $870,796 from the senior secured asset term loan.

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 six months ended June 30, 2022, the Company recognized accretion of the loan of $5,521 and made a repayment of $92,497. As at June 30, 2022, the carrying value of the loan payable was $256,024 (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 six months ended June 30, 2022, the Company recognized accretion of the loan of $6,105 and made a repayment of $85,226. As at June 30, 2022, the carrying value of the loan payable was $300,121 (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 six months ended June 30, 2022, the Company recognized accretion of the loan of $237 and made a repayment of $4,628. As at June 30, 2022, the carrying value of the loan was $10,980 (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 six months ended June 30, 2022, the Company repaid $364,302 and realized foreign exchange loss of $13,024. As at June 30, 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 and Six Months Ended June 30, 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 was due and payable within 60 days. Until repayment, the Loans continued 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.

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”). The former CRDO Loan provided for scheduled repayments prior to maturity. The former CRDO Loan of $500,000 was repaid in full as of June 30, 2022, and the Company received accrued interest of $16,114. As of June 30, 2022, the former CRDO owed the Company accrued interest of $5,975 which was included in accounts receivable.

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 June 30,				Six months ended June 30,

	2022		2021		2022		2021

Salaries incurred to key management personnel		$ 108,827		$ 246,923		$ 320,684		$ 540,308

Directors fees		21,135		-		41,286		6,000

Share-based compensation		(1,144,583)		2,778,908		(2,093,631)		8,086,241

		$(1,014,621)		$ 3,025,831		$(1,731,661)		$ 8,632,549

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.

On June 2, 2022, the Company issued 32,500,000 common share purchase warrants with an exercise price of US$0.2582 and expiry date of June 2, 2027. Due to the variable nature of the proceeds from exercise of these warrants, the Company recognized a derivative liability of $8,064,712 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.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

13.

Derivative Liabilities (continued)

On June 2, 2022, the Company issued 19,400,000 common share equivalents (“Pre-funded Warrants”) with an exercise price of US$0.0001. Due to the variable nature of the proceeds from exercise of these Pre-funded Warrants, the Company recognized a derivative liability of $4,977,054 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.



	Six months ended June 30, 2022

Balance, beginning of period		$ 3,942,002

Additions		13,041,766

Change in fair value of derivative liability		(3,037,190)

Balance, end of period		$ 13,946,578

The Company determine 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:



	Six months ended June 30, 2022

Risk-free interest rate		3.10%

Dividend yield		0%

Expected volatility		108.73%

Expected life (years)		4.85

Forfeiture rate		0%

14.

Share capital

Authorized share capital

Unlimited number of common shares without par value.

Issued share capital during the six months ended June 30, 2022

On June 2, 2022, the Company closed a private placement offering with an institutional investor for gross proceeds of $8,184,762 (US$6,500,000) consisting of 13,100,000 common shares, 19,400,000 common share equivalents (“Pre-funded Warrant”), and 32,500,000 share purchase warrants (“Warrant”). Each Pre-funded Warrant is exercisable to acquire one additional common share at a purchase price of US$0.0001 per share. Each Warrant is exercisable to acquire one additional common share at a purchase price of US$0.2582 per share for a period of five years. As the exercise price of the Pre-funded Warrants and the Warrants were denominated in a foreign currency, the amount of proceeds received by the Company from the exercise of these Pre-funded Warrants and Warrants will be variable. As such, the 19,400,000 Pre-funded Warrants and the 32,500,000 Warrants were treated as a derivate liability and the fair value of $13,041,766 at the issuance date was netted against the net proceeds of the 13,100,000 common shares of $2,363,416, with the balance of $10,678,350 allocated to equity reserves (Note 13). In connection with the offering, the Company incurred share issuance costs of $936,659.

During the six months ended June 30, 2022, the Company issued a total of 714,824 common shares pursuant to the exercise of stock options at $0.25 per share for gross proceeds of $178,706. During the six months ended June 30, 2022, the Company received $3,750 related to a stock option exercise which occurred during the year ended December 31, 2021.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

15.

Warrants

The following table summarizes information about the warrants at June 30, 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

Issued		51,900,000		0.21

Expired		(2,209,051)		3.79

Warrants outstanding, June 30, 2022		63,354,007		$ 0.80

The Company’s warrants are exercisable only for common shares, unless otherwise noted. The following table summarizes information about warrants outstanding and exercisable at June 30, 2022:


Exercise price	Expiry date	Warrants outstanding	Weighted average remaining contracted life (years)

$ 3.70	January 2, 2023	391,632*	0.51

$ 4.60	January 2, 2023	2,812,375	0.51

US$ 2.50	April 14, 2025	525,000	2.79

$ 5.62	June 7, 2026	225,000	3.94

US$ 2.35	October 19, 2026	7,500,000	4.31

US$ 0.2582	June 2, 2027	32,500,000	4.93

US$ 0.0001	-	19,400,000	-

		63,354,007

* 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.

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 June 30, 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

Granted		–		–

Exercised		(714,824)		0.25

Cancelled or forfeited		(4,110,518)		4.47

Outstanding, June 30, 2022		3,686,864		$ 5.07

Exercisable, June 30, 2022		3,147,416		$ 5.02

The weighted average share price at the date of exercise for share options exercised during the six months ended June 30, 2022, was $0.32 (2021 - $6.60).

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

16.

Stock options (continued)

Additional information regarding stock options outstanding as at June 30, 2022, is as follows:



Exercise price	Stock options outstanding*	Stock options exercisable	Expiry date
$ 1.31	100,000	100,000	July 10, 2022**
$ 7.03	50,000	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	10,000	10,000	July 14, 2022**
$ 3.70	2,917	2,917	July 18, 2022**
$ 3.70	40,625	40,625	July 21, 2022**
$ 6.21	550,000	550,000	July 21, 2022**
$ 7.03	212,500	212,500	July 21, 2022**
$ 4.65	32,500	32,500	July 26, 2022**
$ 6.21	20,000	20,000	July 26, 2022**
$ 3.70	15,764	15,764	July 28, 2022**
$ 3.70	10,417	10,417	August 1, 2022**
$ 3.70	11,111	11,111	August 11, 2022**
$ 6.21	10,000	10,000	August 11, 2022**
$ 9.07	5,000	5,000	August 11, 2022**
$ 4.65	16,300	16,300	August 16, 2022
$ 3.70	2,708	2,708	August 18, 2022
$ 4.65	16,400	16,400	August 18, 2022
$ 6.21	20,000	20,000	August 18, 2022
$ 7.03	10,000	10,000	August 23, 2022
$ 1.65	30,000	30,000	August 25, 2022
$ 3.70	2,708	2,708	August 25, 2022
$ 7.03	33,333	33,333	August 25, 2022
$ 4.65	16,300	16,300	August 29, 2022
$ 7.03	10,000	10,000	August 29, 2022
$ 3.70	12,500	12,500	September 8, 2022
$ 7.03	100,000	100,000	September 8, 2022
$ 4.65	8,400	8,400	September 12, 2022
$ 0.25	4,500	4,500	September 21, 2022
$ 3.70	1,042	1,042	October 4, 2022
$ 5,72	6,666	6,666	October 4, 2022
$ 7.03	15,000	10,000	October 6, 2022
$ 3.41	15,000	15,000	October 7, 2022
$ 3.70	9,375	3,125	October 12, 2022
$ 7.03	15,000	10,000	October 17, 2022
$ 6.21	135,000	90,000	January 4, 2024
$ 7.10	20,000	13,332	January 26, 2024
$ 7.03	465,000	343,331	January 29, 2024
$ 6.73	75,000	50,000	February 16, 2024
$ 5.72	25,000	25,000	March 8, 2024
$ 3.70	262,292	87,431	July 15, 2024
$ 0.25	47,000	47,000	December 31, 2024
$ 0.25	220,000	220,000	January 1, 2025
$ 0.25	85,000	85,000	June 17, 2025
$ 1.56	25,000	25,000	August 7, 2025
$ 1.70	5,506	5,506	September 17, 2025
$ 1.60	100,000	100,000	October 7, 2025
$ 4.65	231,400	231,400	November 24, 2025
$ 8.86	150,000	150,000	December 5, 2025
$ 7.03	150,000	75,000	January 29, 2026
$ 3.41	100,000	25,000	October 7, 2026

	3,686,864	3,147,416

* The weighted average remaining life of options outstanding is 1.47 years.

** Expired subsequently

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

16.

Stock options (continued)

Share-based compensation expense is determined using the Black-Scholes option pricing model. During the six months ended June 30, 2022, the Company recognized share-based compensation recovery of $2,099,714 (2021 – share-based compensation expense of $14,609,998) in equity reserves, of which $2,093,631 of share-based recovery (2021 - $8,086,241 of share-based compensation expense) pertains to directors and former officers of the Company. The Company did not grant any stock options during the six months ended June 30, 2022. The weighted average fair value of options granted during the six months ended June 30, 2022 was $4.93 per share. Weighted average assumptions used in calculating the fair value of share-based compensation expense are as follows:



	Six months ended June 30,

	2022

Risk-free interest rate		0.38%

Dividend yield		0%

Expected volatility		118%

Expected life (years)		4.3

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 June 30, 2022, there was $258,890 (December 31, 2021 - $3,950,176) of unrecognized share-based compensation related to unvested stock options which will be recognized over 1.27 years.

17.

Finance expense

Finance expense is comprised of the following:



	Three months ended June 30,				Six months ended June 30,

	2022		2021		2022		2021

Interest on finance lease obligations (Note 10)		$ 352,150		$ 284,549		$ 699,883		$ 646,299

Interest and accretion on loans and other liabilities (Note 11)		891,249		128,112		1,828,384		128,112

Other interest		1,816		16		16,045		536

Interest and other income		(7,797)		(6,730)		(18,030)		(11,970)

		$ 1,237,418		$ 405,947		$ 2,526,282		$ 762,977

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

18.

Other expense

Other expense is comprised of the following:


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021

Loss (gain) on disposal of equipment	$	(1,490)	$	2,679	$	(1,490)	$	22,561

Pre-construction costs*		18		36,325		21,235		147,283

Acquisition-related costs		–		101,138		–		277,329

Impairment of right-of-use assets		3,103		–		3,103		–

Impairment of property and equipment		122,459		–		122,459		–

Loss on termination of lease (Note 10)		152,478		–		151,491		–

	$	276,568	$	140,142	$	296,798	$	447,173

*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(f)). These costs did not meet the capitalization criteria as set out in IAS 16, Property, Plant and Equipment.

19.

Supplemental cash flow disclosures


	For the six months ended June 30,
	2022		2021

Fair value of warrants issued in connection with Loan Agreement	$	–	$	752,559

Fair value of common share equivalents and warrants issued in private placement		13,041,767		–

Finance fee included in accounts payable and accrued liabilities		–		1,904,762

Issuance of common shares for acquisitions		–		1,156,437

Lease liabilities assumed from acquisition		–		(127,543)

ROU assets acquired through leases		2,008,644		12,434,623

ROU assets acquired through acquisition		–		127,043

Property and equipment purchases included in accounts payable and accrued liabilities		2,339,729		1,723,575

20.

Financial instruments and financial risk management

Fair value measurements

At June 30, 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 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 June 30, 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:

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

20.

Financial instruments and financial risk management (continued)

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 June 30, 2022, the Company had cash and cash equivalents of $6,156,414 (December 31, 2021 - $21,975,653) and a 1% change in interest rates would increase or decrease interest income by approximately $62,000 (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 June 30, 2022, this amounted to $8,847,436 (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 June 30, 2022, the Company has $77,540 (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 $77,540 (December 31, 2021 - $41,350).

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 32% (2021 - 12%) of total revenue during the six months ended June 30, 2022. Of the Company’s trade receivables outstanding at June 30, 2022 and December 31, 2021, 87% and 58% are held with five 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.

The following is an analysis of the contractual maturities of the Company’s non-derivative financial liabilities as at June 30, 2022 and December 31, 2021:

June 30, 2022

Within 1 year

Between 1 -2 years

More than 2 years

Accounts payable and accrued liabilities

$ 5,430,494

$ –

Loans payable and other liabilities

5,802,043

–

Financing arrangements

480,760

99,367

–

Lease liabilities

1,688,186

1,786,189

11,350,586

Contingent consideration on acquisitions

450,000

–

$ 13,851,483

$ 1,885,556

$ 11,350,586

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

20.

Financial instruments and financial risk management (continued)


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 an allowance for doubtful accounts of $77,540 (December 31, 2021 – $41,350).

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 June 30, 2022, a 10% appreciation of the Canadian dollar relative to the US dollar would have decreased net financial currency denominated financial assets and foreign exchange loss by approximately $316,259 (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.

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.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

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 six months ending June 30, 2022, and 2021, are as follows:


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021

Included in procurement expense

Wages and salaries		$1,087,296		$667,604		$2,387,396		$1,309,290

Share-based compensation		14,932		284,147		54,318		542,696

Included in fulfilment expense

Wages and salaries		309,477		247,579		841,166		454,766

Share-based compensation		(43,406)		356,871		(141,484)		752,703

Included in general and administrative expense

Wages and salaries		1,520,088		902,857		3,419,976		1,883,334

Share-based compensation		(1,218,638)		4,546,887		(2,064,650)		11,887,846

Included in marketing and investor relations expense

Wages and salaries		187,033		157,796		398,692		283,996

Share-based compensation		(77,559)		272,907		(30,141)		561,106

Included in research and development expense

Wages and salaries		247,141		182,869		560,662		334,402

Share-based compensation		17,809		237,072		82,243		427,864

Included in pre-production expense

Wages and salaries		27		203,635		63,398		449,429

Share-based compensation		–		138,106		–		437,783

Total employee benefit expense		$2,044,200		$8,198,330		$5,571,576		$19,325,215

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 and 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 six months ended June 30, 2022.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 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 six months ended June 30, 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. Subsequent to the six months ended June 30, 2022, the lease expired.

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.

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 was meant to house the Company’s second restaurant, along with space for research and development, and offices. Pursuant to the lease agreement, the annual base rent was $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 would be 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. On June 30, 2022, the lease was terminated, and the Company paid a settlement fee of $357,000. Upon termination, the Company had derecognized the remaining right-of-use asset of $1,844,559, lease liability of $2,291,783 and leasehold improvements of $242,702, resulting in a loss on termination of lease of $152,478.

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.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

23.

Commitments (continued)

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 June 30, 2022, a balance of $382,216 (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 June 30, 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 June 30, 2022, a balance of $111,536 (December 31, 2021 - $111,536) is included in prepaids and deposits as a non-current asset.

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 totaling $196,514, and the balance is due in 36 equal payments totaling $22,845 per month at an annual interest rate of 3%, starting from the date of the delivery. As of June 30, 2022, the equipment has been delivered, and the deposit of $196,514 was reclassified to right-of-use asset.

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 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 which is due 30 days after shipment. As of June 30, 2022, the equipment has not been delivered and the deposit of $164,930 is included in prepaids and deposits.

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

23.

Commitments (continued)

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 the purchase price totalling $169,799 30 days after order date, 30% of the purchase price totalling $169,799 upon factory acceptance testing and 10% totalling $56,600 which is due 30 days after shipment. As of June 30, 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 the purchase price totalling $197,019 30 days after order date, 30% of the purchase price totalling $197,019 upon factory acceptance testing and 10% totalling $65,673 which is due 30 days after shipment. As of June 30, 2022, the equipment has not been delivered and the deposit of $197,019 is included in prepaids and deposits.

As at June 30, 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.

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 two geographic regions: Canada and the United States.

The following is a summary of the Company’s activities by geographic region as at June 30, 2022, and December 31, 2021:



	Canada		United States		United Kingdom		Total

Total non-current assets as at June 30, 2022	$	31,428,321		$ 3,368,781		$ –		$ 34,797,102

Total non-current assets as at December 31, 2021	$	32,563,769		$ 4,178,194		$ –		$ 36,741,963

Revenues for the three months ended June 30, 2022	$	1,075,641		$ 425,725		$ 80		$ 1,501,446

Revenues for the three months ended June 30, 2021	$	1,559,674		$ 1,221,007		$ –		$ 2,780,681

Revenues for the six months ended June 30, 2022	$	2,384,337		$ 1,131,053		$ 4,400		$ 3,519,790

Revenues for the six months ended June 30, 2021	$	2,917,033		$ 2,506,731		$ –		$ 5,423,764

The following is a summary of the Company’s revenues by revenue channel during the three months and six months ended June 30, 2022, and 2021:



	Three months ended June 30,				Six months ended June 30,

	2022		2021		2022		2021

eCommerce		$ 380,967		$ 2,206,403		$ 1,462,327		$ 4,391,497

Wholesale		987,278		455,055		1,760,197		800,960

Butcher shop, restaurant and other		133,201		119,223		297,266		231,307

Total	$	1,501,446	$	2,780,681	$	3,519,790	$	5,423,764

The Very Good Food Company | Condensed interim consolidated financial statements

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

25.

Subsequent Events

Subsequent to June 30, 2022, a total of 1,245,434 stock options expired in full without exercise.

On July 14, 2022, the Company granted 3,715,000 stock options to employees and directors. The stocks options are exercisable at an exercise price of $0.305 per share and expire on July 14, 2025. The stock options vest over a period of 12 months with 25% of the stock options vesting every four months commencing on the date of grant.

LOGO

The Very Good Food CO. The Very Good Food Company Inc. 2748 Rupert Street, Vancouver, BC, V5M 3T7 Canada 1.855.526.9254 hello@verygoodfood.com www.verygoodfood.com

EX-99.2

Exhibit 99.2

LOGO

The Very Good Food Company MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

TABLE OF CONTENTS


TABLE OF CONTENTS			1

FORWARD-LOOKING INFORMATION			2

BASIS OF PRESENTATION			3

Q2 2022 HIGHLIGHTS			4

OUR BUSINESS			4

CORPORATE OVERVIEW			5

COVID-19			8

FINANCIAL PERFORMANCE REVIEW			9

QUARTERLY RESULTS			14

NON-IFRS FINANCIAL MEASURES			15

LIQUIDITY AND CAPITAL RESOURCES			16

OFF-BALANCE SHEET AGREEMENTS			19

FINANCIAL RISK MANAGEMENT			20

RELATED PARTY TRANSACTIONS			22

CRITICAL ACCOUNTING ESTIMATES			23

ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE			25

RISKS AND UNCERTAINITIES			25

BOARD APPROVAL			25

INTERNAL CONTROLS OVER FINANCIAL REPORTING			26

CONTROLS CERTIFICATION			26

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 and six-month period ended June 30, 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 and needs to seek a financing to address near-term liquidity issues and continue operations, as well as the Company’s requirements for future financings; the Company’s belief that it will be able to raise capital through financing in the near term to fund operations as it continues to implement its new refocused strategy; the Company’s plans to manage inventory levels and its ongoing cost-reduction initiatives to manage both short and long-term liquidity and re-establish a path towards profitability; the Company’s refocused strategy and its three-prong approach to (1) Stabilize, (2) Right-Size, and (3) Optimize and the Board of Directors’ and management’s work and progress on successfully implementing such refocused strategy; the focus of the Company’s long-term strategy; the Company’s ongoing review of its eCommerce channel and the potential outcome of such review; potential strategic private label and co-manufacturing opportunities and the expected benefits that may be derived therefrom; the Company’s focus on the wholesale and food service channels; the availability of alternatives of generating cash in the short term such as disposing of non-core equipment and raw materials to extend the Company’s cash runway; the continued North American retail 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; 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 or at all, to fund VERY GOOD’s capital and operating requirements; the Company’s ability to continue 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 the Company’s ability to fund operations and 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 and growth in retail distribution through the successful placement of VERY GOOD’s products in retail stores across North America; no material deterioration in general business and economic conditions; no material fluctuations of interest rates and foreign exchange rates; 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 manage its ongoing 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 the Form 20-F filed with the U.S. Securities and Exchange Commission (“SEC”) on May 26, 2022 and 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 August 11, 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 six months ended June 30, 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 six months ended June 30, 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 and six-month periods ended June 30, 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 15, 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 August 11, 2022 unless otherwise stated.

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

Q2 2022 HIGHLIGHTS

Financial Highlights



	Three months ended June 30,		Three months ended March 31,		Three months ended June 30,		Six months ended June 30,		Six months ended June 30,

	2022		2022		2021		2022		2021

Revenue by channel

eCommerce		$ 380,967		$ 1,081,360		$ 2,206,403		$ 1,462,327		$ 4,391,497

Wholesale		987,278		772,919		455,055		1,760,197		800,960

Butcher Shop, Restaurant and Other		133,201		164,065		119,223		297,266		231,307

		$ 1,501,446		$ 2,018,344		$ 2,780,681		$ 3,519,790		$ 5,423,764

Net loss		$(6,699,130)		$(9,573,309)		$(12,500,733)		$(16,272,439)		$(27,529,309)

Adjusted EBITDA net loss⁽¹⁾		$(6,828,270)		$(9,991,892)		$(5,673,109)		$(16,820,162)		$(11,065,045)

Loss per share – basic and diluted		$ (0.05)		$ (0.08)		$ (0.13)		$ (0.14)		$ (0.28)

Weighted average number of shares outstanding – basic and diluted		122,542,033		118,503,242		97,603,729		120,533,795		97,381,583

⁽¹⁾ See “Non-IFRS Financial Measures” starting on page 15 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 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”.

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.

Our Ability to Continue as a Going Concern

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 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 indicates that there are material uncertainties which may cast significant doubt on the Company’s ability to continue as a going concern.

As of June 30, 2022, the Company had cash and cash equivalents of $6,156,414, a reduction of $15,819,239 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 the date of this MD&A, the Company’s cash balance is approximately $3.2 million to settle current accounts payable and accrued liabilities of approximately $4.3 million. The Company will need to seek additional financing within the near term in order to fulfil its outstanding obligations and fund ongoing operations and will likely be required 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 also continually 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

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

no assurance on the availability of the Company’s future financings, on acceptable terms, or at all, the Company currently believes that it will be able to raise capital through financing in the near term to fund operations as it continues to implement its new refocused strategy.

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”).

On July 11, 2022, VERY GOOD was granted an additional 180-day period from Nasdaq’s Listing Qualification Department or until January 9, 2023, to regain compliance with the minimum US$1 bid price requirement for continued listing on The Nasdaq Capital Market.

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.

Nasdaq informed VERY GOOD in the July 11 notification, that if compliance cannot be demonstrated by January 9, 2023, Nasdaq will provide written notification that VERY GOOD’s securities will be delisted – at which time, the Company may appeal Staff’s determination to a Hearings Panel (the “Panel”). If VERY GOOD appeals, the Company will be asked to provide a plan to regain compliance to the Panel.

CORPORATE OVERVIEW

Our Business Model

As at June 30, 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 June 30, 2022, our products were produced in our leased facility located in Vancouver, BC (the “Rupert Facility”) following the Company’s strategic decision to cease regular operations at the Victoria Facility, Fairview Facility, and Patterson Facility and consolidate operations into the Rupert Facility, which was announced on May 16, 2022.

The Company currently distributes and sells its products in all 10 provinces and three territories in Canada and 50 states in the United States through two main revenue channels: (1) wholesale (including food service), and (2) eCommerce (collectively, the “Distribution Network”). The Company previously utilized a third distribution and revenue channel, its Victoria Flagship Store, the Butcher Shop & Restaurant, which was permanently closed in June 2022 as part of the of the Company’s refocused strategy.

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

(1)

Wholesale – VERY GOOD is performing to expectation in the wholesale channels that it currently distributes to and is continually working to supplement and build-out its distribution. The Company markets its products to a number of large retailers in both Canada and the United States. During Q2 2022, Canadian wholesale accounts included, but were not limited to, grocery store chains such as Whole Foods Market, 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 $959,337 (120%) in the six months ended June 30, 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.


	Six months ended

Wholesale	June 30, 2022 $ 1,760,197	June 30, 2021 $ 800,960

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

(2)

eCommerce – Our eCommerce Store, accessible through the Company’s website, 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. With the Company’s new strategic focus on its wholesale and foodservice channels, it continues to evaluating potential exit plans for its eCommerce business.

eCommerce revenue decreased $2,929,170 (67%) in the six months ended June 30, 2022, compared to the same period in 2021 due to the Company’s decision to eliminate digital marketing costs to acquire new customers.


	Six months ended

eCommerce	June 30, 2022 $ 1,462,327	June 30, 2021 $ 4,391,497

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

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

Operational Update

As of the date of this MD&A, the Company has ceased regular operations at the Victoria Facility, Fairview Facility, and Patterson Facility and consolidated production operations into the Rupert Facility and permanently closed the Victoria Flagship Store in June 2022 in an effort to improve production efficiencies and reduce overhead. The Company has also terminated the lease for the location intended for the Mount Pleasant Flagship Store.

During the six-month period ended June 30, 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, significantly lowered production and headcount to manage inventory levels, and 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 June 2, 2022, VERY GOOD closed a private placement offering with an institutional investor for gross proceeds of $8,184,762 (US$6,500,000) consisting of 13,100,000 common shares, 19,400,000 common share equivalents, and 32,500,000 share purchase warrants. In connection with the offering, the Company incurred share issuance costs of $936,659.

In June and July 2022, VERY GOOD announced new U.S. retail expansion through arrangements with retailers, superstore chain Meijer Inc., The Giant Company and Weis Markets, Inc., which are expected to extend VERY GOOD’s product availability in the United States.

Management Changes

On July 4, 2022, VERY GOOD announced that as part of its succession plan, Matthew Hall stepped down as interim Co-Chief Executive Officer and as a director of the Company. Parimal Rana, a seasoned food industry professional and VERY GOOD’s Vice President of Operations, assumed the role of Chief Executive Officer and joined VERY GOOD’s board of directors (the “Board of Directors”).

On July 12, 2022, VERY GOOD announced the appointment of a new Chief Financial Officer (CFO), Pratik Patel, CPA, CGA. Pratik commenced employment as CFO of VERY GOOD on July 25, 2022. He has over fifteen years of experience as a senior accounting and finance professional, with expertise in integration and external report.

Our Refocused Strategy

The Company continues to implement its three-prong approach to (1) Stabilize, (2) Right-Size, and (3) Optimize, first announced in May 2022. The Board of Directors and its strategic advisors are focused on the stabilization prong and the management team, lead by the CEO Parimal Rana, are executing to Right-Size and Optimize. The Right-Sizing efforts have mostly been completed with the closure of the restaurant operations and consolidation of production facilities into the Rupert Facility. With the re-focusing of sales away from eCommerce and toward wholesale and food service the Company is also reviewing strategic private label and co-manufacturing opportunities to fill excess production capacity and increase revenue.

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

The Company’s long-term strategy is anticipated to continue to center around establishing and maintaining strong relationships with its customers through differentiated products, categories and channels that build 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 its results of operations or financial condition through disruptions to operations including as a result of disruptions in our supply chain and Distribution Network, temporary production suspensions at the Rupert Facility, and reduced productivity of team members.

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 June 30,		Three months ended March 31,		Three months ended June 30,		Six months ended June 30,		Six months ended June 30,

	2022		2022		2021		2022		2021

Revenue		$ 1,501,446		$ 2,018,344		$ 2,780,681		$ 3,519,790		$ 5,423,764

Procurement expense		(3,007,420)		(2,661,683)		(2,102,822)		(5,669,103)		(4,155,068)

Fulfilment expense		(1,256,785)		(1,917,816)		(2,045,714)		(3,174,601)		(4,028,609)

General and administrative expense		(2,935,624)		(4,844,691)		(6,834,880)		(7,780,315)		(16,409,437)

Marketing and investor relations expense		(560,537)		(1,578,394)		(2,579,656)		(2,138,931)		(4,726,001)

Research and development expense		(344,804)		(564,518)		(515,965)		(909,322)		(881,985)

Pre-production expense		(106,400)		(244,450)		(656,288)		(350,850)		(1,541,823)

Operating loss		(6,710,124)		(9,793,208)		(11,954,644)		(16,503,332)		(26,319,159)

Finance expense		(1,237,418)		(1,288,864)		(405,947)		(2,526,282)		(762,977)

Other income (expense)		(276,568)		(20,230)		(140,142)		(296,798)		(447,173)

Gain on debt modification		16,783		–		–		16,783		–

Change in fair value of derivative liabilities⁽¹⁾		1,508,197		1,528,993		–		3,037,190		–

Net loss		$(6,699,130)		$(9,573,309)		$(12,500,733)		$(16,272,439)		$(27,529,309)

Adjusted general and administrative expense⁽²⁾		$(4,038,034)		$(5,601,619)		$ (2,935,566)		$ (9,639,653)		$ (4,409,391)

Adjusted EBITDA⁽²⁾		$(7,028,270)		$(9,991,892)		$ (5,673,109)		$(17,020,162)		$(11,065,045)

⁽¹⁾ The Company issued common share purchase warrants and Pre-funded common share purchase warrants with an exercise prices denominated in US dollars. Due to the variable nature of the proceeds from exercise of these warrants, the Company recognized a derivative liability 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⁾ See “Non-IFRS Financial Measures” starting on page 15 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

June 30,

Three

months
ended

March 31,

Three
months
ended

June 30,

Six

months
ended

June 30,

Six

months
ended

June 30,

2022

2021

2022

2021

Canada

$1,075,641

$1,308,696

$1,559,674

$2,384,337

$2,917,033

United States

425,725

705,328

1,221,007

1,131,053

2,506,731

United Kingdom

4,320

–

4,400

–

Total

$1,501,446

$2,018,344

$2,780,681

$3,519,790

$5,423,764

Revenue by channel



	Three months ended June 30,		Three months ended March 31,		Three months ended June 30,		Six months ended June 30,		Six months ended June 30,

	2022		2022		2021		2022		2021

eCommerce		$380,967		$1,081,360		$2,206,403		$1,462,327		$4,391,497

Wholesale		987,278		772,919		455,055		1,760,197		800,960

Butcher Shop & Restaurant and Other		133,201		164,065		119,223		297,266		231,307

Total		$1,501,446		$2,018,344		$2,780,681		$3,519,790		$5,423,764

Three Months Ended June 30, 2022, compared to March 31, 2022

Revenue decreased $516,898 (26%) to $1,501,446 in Q2 2022, compared to $2,018,344 in Q1 2022, which was primarily driven by the reduction in eCommerce revenue as discussed below. Wholesale revenue remained fairly consistent relative to Q1 2022. eCommerce revenue decreased by $700,393 (65%) from $1,081,360 in Q1 2022 due to refocusing of sales away from the eCommerce channel and towards the wholesale channel.

Three Months Ended June 30, 2022, compared to June 30, 2021

Revenue decreased $1,279,215 (46%) to $1,501,446 in Q2 2022, compared to $2,780,681 in the same period in 2021. The decrease in revenue was driven by a decrease of $1,825,436 in eCommerce sales as we reduced the deployment of targeted marketing tools to reduced customer acquisition costs, offset by an increase of $523,223 in wholesale revenue.

Six Months Ended June 30, 2022, compared to June 30, 2021

Revenue decreased $1,903,974 (35%) to $3,519,790 in the six months ended June 30, 2022, compared to $5,423,764 in the same period in 2021. The decrease in revenue was driven by a decrease of $2,929,170 in eCommerce sales, offset by an increase of $959,237 in wholesale revenue.

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

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, until its permanent closure in June 2022, including food costs, direct labour and other attributable overhead expenses.

Three Months Ended June 30, 2022, compared to March 31, 2022

Procurement expense increased $345,737 (13%) to $3,007,420 in Q2 2022, compared to $2,661,683 in Q1 2022. The procurement expense increased compared to the prior quarter, despite a decrease in revenue, mainly due to the fixed procurement costs at the Company’s production facilities, as well as an increase in depreciation expense related to newly acquired production equipment.

Three Months Ended June 30, 2022, compared to June 30, 2021

Procurement expense increased $904,598 (43%) to $3,007,420 in Q2 2022, compared to $2,102,822 in Q2 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 an increase in depreciation expense related to newly acquired production equipment.

Six Months Ended June 30, 2022, compared to June 30, 2021

Procurement expense increased $1,514,035 (36%) to $5,669,103 in the six months ended June 30, 2022, compared to $4,155,068 in the same period in 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 an increase in depreciation expense related to newly acquired production equipment.

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 June 30, 2022, compared to March 31, 2022

Fulfilment expense decreased $661,031 (34%) to $1,256,785 in Q2 2022, compared to $1,917,816 in Q1 2022. The decrease in fulfilment expense was primarily driven by a decrease in the number of eCommerce orders shipped.

Three Months Ended June 30, 2022, compared to June 30, 2021

Fulfilment expense decreased $788,929 (39%) to $1,256,785 in Q2 2022, compared to $2,045,714 in Q2 2021. The decrease in fulfilment expense was primarily driven by a decrease in the number of eCommerce orders shipped.

Six Months Ended June 30, 2022, compared to June 30, 2021

Fulfilment expense decreased $854,008 (21%) to $3,174,601 in the six months ended June 30, 2022, compared to $4,028,609 in the same period in 2021. The decrease in fulfilment expense was primarily driven by a decrease in the number of eCommerce orders shipped.

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

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 15 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 June 30, 2022, compared to March 31, 2022

General and administrative expense decreased $1,909,067 (39%) to $2,935,624 in Q2 2022, compared to $4,844,691 in Q1 2022. Excluding share-based compensation and depreciation expense, adjusted general and administrative expense decreased $1,563,585 (28%) to $4,038,034 in Q2 2022 compared to $5,601,619 in Q1 2022. The decrease in adjusted general and administrative expense was primarily driven by a decrease in salaries and wages.

Three Months Ended June 30, 2022, compared to June 30, 2021

General and administrative expense decreased $3,899,256 (57%) to $2,935,624 in Q2 2022 compared to $6,834,880 in Q2 2021. Excluding share-based compensation and depreciation expense, adjusted general and administrative expense increased $1,829,479 (38%) to $4,038,034 in Q2 2022, compared to $2,208,555 in Q2 2021. The increase in adjusted general and administrative expense was primarily driven by increased legal and professional fees of $1,036,165, increased insurance fees of $659,708 due to increases in director and officer insurance as a result of the Company’s Nasdaq listing, increased wages and benefits of $616,539 due to higher head count, and offset by a decrease in recruitment fees of $139,543.

Six Months Ended June 30, 2022, compared to June 30, 2021

General and administrative expense decreased $8,629,122 (53%) to $7,780,315 in the six months ended June 30, 2022 compared to $16,409,437 in the same period in 2021. Excluding share-based compensation and depreciation expense, adjusted general and administrative expense increased $5,230,262 (119%) to $9,639,653 in the six months ended June 30, 2022, compared to $4,409,391 in the same period in 2021. The increase in adjusted general and administrative expense was primarily driven by increased legal and professional fees of $1,726,535, increased insurance fees of $1,299,644 due to increases in director and officer insurance as a result of the Company’s Nasdaq listing, increased wages and benefits of $729,179 due to higher head count and software license expense of $344,967 related to the implementation of an ERP system.

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

Marketing and investor relations expense

Three Months Ended June 30, 2022, compared to March 31, 2022

Marketing and investor relations expense decreased $1,017,857 (64%) to $560,537 in Q2 2022, compared to $1,578,394 in Q1 2022. The decrease in marketing and investor relations expense was mainly due to a decrease in marketing initiatives relating to customer acquisition.

Three Months Ended June 30, 2022, compared to June 30, 2021

Marketing and investor relations expense decreased $2,019,119 (78%) to $560,537 in Q2 2022, compared to $2,579,656 in Q2 2021. The decrease in marketing and investor relations expense was mainly due to a decrease in marketing initiatives relating to customer acquisition.

Six Months Ended June 30, 2022, compared to June 30, 2021

Marketing and investor relations expense decreased $2,587,070 (55%) to $2,138,931 in the six months ended June 30, 2022, compared to $4,726,001 in the same period in 2021. The decrease in marketing and investor relations expense was mainly due to a decrease in marketing initiatives relating to customer acquisition.

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 Victoria Flagship Store (now closed) and the previously planned but now cancelled Mount Pleasant Flagship Store. These types of expenses will be included as part of procurement expense to the extent these sites are in operation.

Three Months Ended June 30, 2022, compared to March 31, 2022

Pre-production expense decreased $138,050 (56%) to $106,400 in Q2 2022, compared to $244,450 in Q1 2022. Pre-production expense decreased due to the Company taking possession of the Rupert Facility in January 2021 and not beginning production at the Rupert Facility until May 2021.

Three Months Ended June 30, 2022, compared to June 30, 2021

Pre-production expense decreased $549,888 (84%) to $106,400 in Q2 2022, compared to $656,288 in Q2 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.

Six Months Ended June 30, 2022, compared to June 30, 2021

Pre-production expense decreased $1,190,973 (77%) to $350,850 in the six months ended June 30, 2022, compared to $1,541,823 in the same period in 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.

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

QUARTERLY RESULTS

The following table presents certain unaudited financial information for each of the eight quarters up to and including the quarter ended June 30, 2022. The information has been derived from our unaudited quarterly condensed interim consolidated financial statements.



	Three Months Ended

	June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021

Revenue		$ 1,501,446		$ 2,018,344		$ 4,298,922		$ 2,536,097

Net loss		$ (6,699,130)		$ (9,573,309)		$ (13,330,908)		$ (13,699,706)

Comprehensive loss		$ (6,810,265)		$ (9,526,787)		$ (13,334,419)		$ (13,724,506)

Loss per share (basic and diluted)		$ (0.05)		$ (0.08)		$ (0.12)		$ (0.13)



	Three Months Ended

	June 30, 2021		March 31, 2021		December 31, 2020		September 30, 2020

Revenue		$ 2,780,681		$ 2,643,083		$ 1,836,682		$ 1,373,814

Net loss		$ (12,500,733)		$ (15,028,576)		$ (5,806,392)		$ (4,497,027)

Comprehensive loss		$ (12,496,272)		$ (15,024,102)		$ (13,852,140)		$ (4,497,107)

Loss per share (basic and diluted)		$ (0.13)		$ (0.15)		$ (0.06)		$ (0.06)

The Company began making significant efforts to increase its production capacity in Q2 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.

Revenue increased steadily from Q4 2020 through Q4 2021. In Q1 and Q2 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.

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

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 loss on disposal of equipment, gain 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 June 30,		Three months ended March 31,		Three months ended June 30,		Six months ended June 30,		Six months ended June 30,

	2022		2022		2021		2022		2021

Net loss as reported		$(6,699,130)		$(9,573,309)		$(12,500,733)		$(16,272,439)		$(27,529,309)

Adjustments:

Change in fair value of derivative liabilities		(1,508,197)		(1,528,993)		-		(3,037,190)		-

Depreciation		985,754		615,385		512,168		1,601,139		841,652

Finance expense		1,237,418		1,288,864		402,432		2,526,282		764,182

Gain on debt modification		(16,783)		-		-		(16,783)		-

Impairment of right-of-use assets		3,103		-		-		3,103		-

Impairment of property and equipment		122,459		-		-		122,459		-

Loss on termination of lease¹		152,478		(987)		(239)		151,491		(1,600)

Loss on disposal of equipment		1,490		-		2,679		1,490		22,561

Share-based compensation (recovery)		(1,306,862)		(792,852)		5,835,989		(2,099,714)		14,609,998

Shares, units and warrants issued for services		-		-		74,595		-		227,471

Adjusted EBITDA		$(7,028,270)		$(9,991,892)		$(5,673,109)		$(17,020,162)		$(11,065,045)

¹During the six months ended June 30, 2022, the Company terminated an equipment lease and the Mount Pleasant facility lease agreement and recognized a loss of $151,491 on termination of leases. During the six months ended June 30, 2021, the Company terminated 1 lease agreement and recognized a $1,600 gain on termination of lease.

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

June 30,

Three months
ended

March 31,

Three months
ended

June 30,

Six months
ended

June 30,

Six months
ended

June 30,

2022

2021

2022

2021

General and administrative expense

$(2,935,624)

$(4,844,691)

$(6,834,880)

$(7,780,315)

$(16,409,437)

Adjustments:

Share-based compensation (recovery)

(1,218,638)

(846,012)

3,819,876

(2,064,650)

11,887,846

Depreciation

116,228

89,084

79,438

205,312

112,200

Adjusted general and administrative expense

$(4,038,034)

$(5,601,619)

$(2,935,566)

$(9,639,653)

$(4,409,391)

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

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2022, the Company had cash and cash equivalents of $6,156,414, a reduction of $15,819,239 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 the date of this MD&A, the Company’s cash balance is approximately $3.2 million to settle current accounts payable and accrued liabilities of approximately $4.3 million. Management will need to seek additional financing in the near term in order to fulfil its outstanding obligations and fund ongoing operations and will likely be required 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 June 30, 2022, a total of $5,802,043 is outstanding under the Credit Facility, net of an unamortized discount of $67,325, and $38,203 is outstanding for interest and $2,017 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. In such event, 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 following table summarizes our cash flows as at June, 2022 and 2021:



			Six months ended June 30

	2022		2021

Operating activities		$ (17,843,987)		$ (14,052,481)

Investing activities		(2,623,186)		(8,281,414)

Financing activities		4,692,870		3,172,787

Effect of foreign exchange on cash and cash equivalents		(44,936)		3,092

Net changes in cash and cash equivalents		$ (15,819,239)		$ (19,158,016)

Operating activities

Net cash used in operating activities for the six months ended June 30, 2022, was $17,843,987 compared to $14,052,481 for the six months ended June 30, 2021 as a result of the net loss for the period of $16,272,439; a decrease in non-cash working capital of $823,825, a recovery of non-cash share-based compensation of $2,099,714, gain on debt modification of $16,783, and change in fair value of derivative liabilities of $3,037,190, partially offset by finance expense of $2,526,282, impairment of right-of-use assets of $3,103, impairment of property and

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

equipment of $122,459, loss on termination of lease of $151,491, loss on disposal of equipment of $1,490 and depreciation of $1,601,139. The decrease in working capital was largely due to a decrease in accounts receivable of $1,104,631 and prepaid and deposits of $2,645,433, which was offset by an increase in inventory of $1,865,955 and a decrease in accounts payable and accrued liabilities of $2,686,481. During the six months ended June 30, 2021, net cash used in operating activities was $14,052,481 as a result of the net loss for the period of $27,529,309, partially offset by a change in non-cash expenses related to share-based compensation of $14,609,998, finance expense of $764,182, depreciation of $841,652 and shares and units issued for services of $227,471.

Investing activities

Net cash used in investing activities for the six months ended June 30, 2022, was $2,623,186 primarily attributed to $2,641,780 of capital expenditures and leasehold improvements incurred for the Rupert Facility and Patterson Facility in Q1, acquisition of right-of-use assets of $36,074 for equipment leased and $412,608 of security deposits paid for equipment purchases for Rupert Facility and Patterson Facility, and the payment of $598,000 of contingent consideration in relation to the acquisitions that took place in fiscal year 2021, offset by a refund of security deposits of $655,008, and repayment of $410,268 received from a loan to a related party. Net cash used in investing activities for the six months ended June 30, 2021 was $8,281,414 primarily attributed 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.

Financing activities

Net cash provided by financing activities for the six months ended June 30, 2022, was $4,692,870 mainly due to $182,456 received from the exercise of stock options, $8,184,762 received from the issuance of common shares, common share equivalents and warrants, and $32,288 of advances received from the Credit Facility partially offset by payments of lease liabilities of $1,364,642, repayment of loans payable and other liabilities of $994,302, interest payment of $242,356, and $168,677 paid for the settlement of the lease for the formerly planned Mount Pleasant Flagship Store location. The Company also incurred $936,659 of share issuance costs in relation to the private placement that closed in June 2022. Net cash used in financing activities for the six months ended June 30, 2021, was $3,172,787 due to $2,262,957 received from proceeds from the exercise of warrants and stock options, $28,999 proceeds from subscription received, and proceeds from loans payable $1,891,092; this was partially offset by payment of lease liabilities of $532,097, repayment of loans payable $240,000, and payment of deferred financing costs of $238,164.

During the six months ended June 30, 2022, the Company received a total of $32,288 pursuant to the Credit Facility. During the six months ended June 30, 2022, the Company recognized interest and accretion expense on the Credit Facility fee payable of $83,183 and interest expense of $229,599 related to the Revolving Line of Credit and Term Loan. The Company also incurred an unused line of credit fee of $12,259. As at June 30, 2022, $38,654 is outstanding for interest and $2,017 is outstanding for unused line of credit fees, which are included in accounts payable and accrued liabilities. On June 8, 2022, the loan agreement for the Credit Facility was amended to modify the Credit Facility fee payment schedule. As a result, the Company recognized a gain of $16,783 on debt modification.

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 six months ended June 30, 2022, the Company recognized accretion expense of the deferred financing costs of $1,491,480. As at June 30, 2022, the remaining carrying value of the deferred financing costs was $2,433,263.

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

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

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 June 30, 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		25,256,860

Offering expenses and placement agent fee		2,224,692		2,742,958

Total		$37,078,200		$37,078,200



	Proposed Use of Proceeds		Approximate Use of Proceeds to June 30, 2022

General corporate & other working capital		$ 8,184,762		$ 2,028,000

Total		$ 8,184,762		$ 2,028,000

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 August 11,		As at June 30,		As at December 31,

	2022		2022		2021

Common Shares		132,313,288		132,313,288		118,498,464

Warrants		63,354,007		63,354,007		13,663,058

Options		6.156.430		3,686,864		8,512,206

Common Shares

Common Shares increased by 13,814,824 during six months ended June 30, 2022, due to 714,824 common shares issued for the exercise of options and 13,100,000 common shares issued upon completion of a private placement.

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

Warrants

Common share purchase warrants increased by 49.7 million during the six months ended June 30, 2022, primarily due to 2.2 million expired common share purchase warrants and the issue of 51.9 million warrants.

Options

Options decreased by 4.8 million during the six months ended June 30, 2022, due to the following transactions:

•

0.7 million Options exercised; and

•

4.1 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.

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

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

As at June 30, 2022, the Company has $6,156,414 (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 $13,389,139 (December 31, 2021 - $10,906,738) and contingent consideration of $450,000 within this year. Also see “Our Business – Our ability to continue as a going concern”. The following is an analysis of the contractual maturities of the Company’s non-derivative financial liabilities and material cash requirements as at June 30, 2022.



June 30, 2022	Within 1 year		Between 1 - 2 years		More than 2 years*

Accounts payable and accrued liabilities		$ 5,430,494		$ –		$ –

Loans payable and other liabilities		5,802,043		–		–

Financing arrangements		480,760		99,367		–

Lease liabilities		1,688,186		1,786,189		11,350,586

Contingent consideration on acquisitions¹		450,000		–		–

		$ 13,851,483		$ 1,885,556		$ 11,350,586



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.

¹Contingent 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 the date of filing of this MD&A, the Company has paid $1,348,000 in contingent consideration related to the acquisition of The Cultured Nut Inc. and Lloyd-James Marketing Group Inc. Subsequent to June 30, 2022, the Company paid $50,000 in contingent consideration related to the acquisition of The Cultured Nut Inc.

Interest Risk

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

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 32% (2021 - 12%) of total revenue during the six months ended June 30, 2022. Of the Company’s trade receivables outstanding at June 30, 2022 and December 31, 2021, 87% 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 June 30, 2022, the Company had cash and cash equivalents of $6,156,414 (December 31, 2021 - $21,975,653) to settle current non-derivative financial liabilities of $13,389,139 (December 31, 2021 - $10, 906, 738). See “Risk Factors” in the AIF. Also see “Our Business - Our ability to continue as a going concern”.

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 June 30, 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 $316,259 (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

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

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.

Fair Value of Financial Instruments

RELATED PARTY TRANSACTIONS



	Three months ended June 30,				Six months ended June 30,

	2022		2021		2022		2021

Salaries incurred to key management personnel		$108,827		$ 246,923		$ 320,684		$ 540,308

Directors fees		21,135		-		41,286		6,000

Share-based compensation (recovery)		(1,144,583)		2,778,908		(2,093,631)		8,086,241

Total related party transactions		$(1,014,621)		$3,025,831		$(1,731,661)		$8,632,549

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



As at	June 30, 2022		December 31, 2021

Due from the former CRDO and former Director		$ -		$410,268

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

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 was due and payable within 60 days. Until repayment, the Loans continued 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.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the consolidated financial statements in accordance with IFRS requires the Company to make judgements, 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 judgements, 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 judgement applied in the preparation of the consolidated financial statements as discussed 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 judgement. The assessment of any indicators of impairment of these assets is dependent upon judgements 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 option pricing model to estimate the fair value of stock options and common share purchase 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.

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

Carrying value of inventory

Contingent consideration

Impairment of non-financial assets

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.

Leases

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

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

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 consolidated financial statements.

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.

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

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 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 August 11, 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 Chief Executive Officer and Chief Financial Officer (collectively, the “Certifying Officers”), have 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 Officers 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 Officers have 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 June 30, 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.#

LOGO

The Very Good Food CO. The Very Good Food Company Inc. 2748 Rupert Street, Vancouver, BC, V5M 3T7 Canada 1.855.526.9254 hello@verygoodfood.com www.verygoodfood.com

EX-99.3

Exhibit 99.3

Form 52-109F2

Certification of Interim Filings

Full Certificate

I, Parimal Rana, 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 Very Good Food Company Inc. (the “issuer”) for the interim period ended June 30, 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 April 1, 2022 and ended on June 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: August 15, 2022

/s/ Parimal Rana

Parimal Rana

Chief Executive Officer

EX-99.4

Exhibit 99.4

Form 52-109F2

Certification of Interim Filings

Full Certificate

I, Pratik Patel, 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 Very Good Food Company Inc. (the “issuer”) for the interim period ended June 30, 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 April 1, 2022 and ended on June 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: August 15, 2022

/s/ Pratik Patel

Pratik Patel

Chief Financial Officer