Today's News

Vancouver, BC, February 25, 2022--(T-Net)--Freshlocal Solutions Inc. (TSX: LOCL ) reported its financial results for the first quarter ended January 1, 2022. All amounts are expressed in Canadian dollars.

Q1 FY2022 Financial Highlights

• Revenue was $29.0 million, a decrease of $2.9 million, or 9.1% as compared to Q1 FY2021;
  
  
• Gross profit1 was $9.8 million, a decrease of $1.9 million, or 16.0% as compared to Q1 FY2021; and
  
  
• Consolidated gross profit margin1 was 33.9%, a decrease of 2.8% as compared to Q1 FY2021

"The Company's quarterly results in Q1 FY2022 were impacted by COVID-related supply chain and capacity challenges, significant regional flooding in Alberta and British Columbia, and non-recurring revenue related to our now-retired third-party logistics efforts in the comparable quarter. These one-time impacts are now largely behind us, the Company is managing expenditures, optimizing operations and accelerating growth marketing strategies with a goal of being cash flow positive in our eGrocery sector this year. Furthermore, we are advancing our FoodX platform and operations, and will deploy in a second country in the first half of calendar 2022," said Simon Cairns, CEO of Freshlocal.

Changes to the Company's Board of Directors and Appointment of Mr. Douglas Harrison:

It is with great sadness that Freshlocal's Board of Directors announces the passing of its board member, Terry Vanderkruyk, on February 4, 2022. Mr. Vanderkruyk served as an independent director of the Company since April 2021, chair of the Company's Audit Committee, and member of the Compensation and the Sustainability and Governance Committees. The Board would like to recognize his many contributions to the Company and wishes to express its condolences to his family during this difficult time.

Douglas Harrison, a member of Freshlocal's Advisory Board, has been appointed to the Board of Directors, effective February 11, 2022, and has been appointed to Audit Committee Chair. He will hold office until the next annual meeting of the shareholders of the Company.

Mr. Harrison has over 20 years of executive and Board experience across a range of businesses, including a focus on global supply chain management and food businesses. He was previously the CEO of VersaCold Logistics, a global leader in the provision of temperature sensitive logistics and supply chain management services, including transportation, processing, warehousing, and packaging. Mr. Harrison has deep experience with companies that provide technology-as-a-service and expertise in building businesses ranging from early-stage start-ups to global commercial enterprises. Mr. Harrison holds an MBA, CPA, CCLP as well as his ICD.D.

Key Financial Information

The quarterly financial information presented above should be read in conjunction with Freshlocal's unaudited interim condensed consolidated financial statements and management's discussion and analysis as at and for the three months ended January 1, 2022 and January 2, 2021, available on SEDAR at www.sedar.com.

Business Highlights

Q1 FY 2022 and the Period Subsequent to Quarter-End:

• Private Placement - In December 2021, the Company completed a $13.9 million brokered private placement of convertible debenture units ("Convertible Debenture Units"). The private placement was completed in two tranches as follows: (i) on December 2, 2021, 12,415 Convertible Debenture Units were issued for aggregate gross proceeds of $12.4 million; and (ii) on December 23, 2021, 1,500 Convertible Debenture Units were issued for aggregate gross proceeds of $1.5 million. Each Convertible Debenture Unit is comprised of: (i) one 8% subordinated unsecured Convertible Debenture in a principal amount of $1,000 (collectively, the "Convertible Debentures"), is convertible into common shares of the Company at a conversion price of $1.90 per common share, subject to adjustment in certain events ("the Conversion Price") and maturing on the December 31, 2024 (the "Maturity Date"); and (ii) 263 common share purchase warrants of the Company (the "Warrants"). Each Warrant entitles the holder thereof to purchase one common share of the Company at a price of $1.25 per common share until the Maturity Date. The Convertible Debentures were created and issued pursuant to a trust indenture dated December 2, 2021 between the Company and Computershare Trust Company of Canada ("Computershare") as debenture trustee, as supplemented by the first supplemental indenture dated December 23, 2021 (together the "Trust Indenture") and the Warrants were created and issued pursuant to a warrant indenture (the "Warrant Indenture") dated December 2, 2021 between the Company and Computershare, as warrant agent.
  
  
• Silicon Valley Bank "SVB" Forbearance Agreement - In connection with the breach of certain financing covenants under the terms of the Company's debt facility with SVB (the "SVB Debt Facility"), on December 2, 2021, the Company entered into a forbearance agreement with SVB under which SVB granted the Company certain relief provisions through January 15, 2022. These relief provisions are subject to, among other things, the completion of certain financing milestones and repayment terms that have been materially completed. On February 15, 2022, SVB extended the Forbearance Period to March 31, 2022 to allow for the completion of certain administrative requirements and the reset of the minimum Adjusted EBITDA target by March 15, 2022.
  
  
• Appointment of Chief Executive Officer - On December 15,2021, the Company announced the appointment of Simon Cairns, President of Food-X Technologies Inc. ("FoodX"), as the new Chief Executive Officer of Freshlocal, replacing Peter van Stolk who remains on the Company's Board of Directors. Mr. Cairns brings over 20 years of leadership experience centered on the design, development, and sales of SaaS-based eCommerce platforms, most recently as Chief Executive officer and General Manager of PNI Media.
  
  
• Digital Supercluster Funding - On December 28, 2021, the Company secured an additional $800,000 in non-dilutive funding to further enhance the FoodX eGrocery Management Solution ("eGMS"), with a focus on ensuring waste reduction and safe food delivery. Freshlocal is excited to once again partner with the Supercluster to support our frontline workers in providing solutions for safe food processes during the COVID-19 pandemic.
• Export Development Canada ("EDC") Secured Credit Facility - On December 28, 2021, the Company entered into a secured $8.8 million credit facility agreement with EDC (the "EDC Facility") to support Freshlocal's international expansion efforts related to its FoodX SaaS-based eGMS. Pursuant to the terms of the EDC Facility, the Company can make periodic withdrawals for a period of six months, subject to the satisfaction of certain customary conditions.

Subsequent Event:

• Departure of Chief Technology Officer - On February 14, 2022, Jeffery King, the Chief Technology Officer of the Company departed from the Company.

About Freshlocal Solutions Inc.

Freshlocal is a Vancouver-based company that is building a leadership position in the provision of end-to-end grocery e-commerce solutions. The Company operates two primary businesses, FoodX and eGrocery, both of which support its corporate mission to leverage innovation and technology to create a sustainable and profitable food system for all. Food-X Technologies Inc. ("FoodX") is Freshlocal's' scalable end-to-end SaaS-based eGrocery Management Solution (eGMS) which is designed to meet the needs of large and small grocery retailers while providing profitable unit economics. The FoodX eGMS is the culmination of over 20 years of experience in online grocery and the company's proven track record of delivering efficient, sustainable and profitable online grocery solutions. The Company's consumer eGrocery business has expanded into one of Canada's largest online grocery companies, with a focus on delivering fresh, local, organic produce and groceries, along with exceptional customer experiences. Freshlocal serves the main urban markets in Alberta and British Columbia through its brick and mortar store locations operating under the Blush Lane and Be Fresh banners, as well as through SPUD.ca which is the Company's award-winning online eGrocery platform. Freshlocal's common shares are listed on the Toronto Stock Exchange under the symbol "LOCL". Please visit www.freshlocalsolutions.com.