ODD Odd Burger Corporation

TORONTO, Jan. 31, 2022 /CNW/ - Odd Burger Corporation ("Odd Burger" or the "Company") (TSX: ODD) ‎‎(OTCQB: ODDAF) (FSE: IA9)‎ is pleased to announce its financial results for its fiscal year, and fourth quarter, ended September 30, 2021 have been posted with Canadian securities regulatory authorities at www.sedar.com . ‎

CEO James McInnes stated, "The financial results from 2021 show that Odd Burger is a leader in the plant-based fast food market as we scale our operations across Canada and beyond.  Our goal of disrupting the fast-food industry with superior technology, sustainable food and a simple, cost-effective restaurant model is proving to be extremely successful.  In a matter of months, we have over doubled our number of locations, secured franchisees across Canada, and have been able to successfully scale our food manufacturing operations to meet demand.  With 16 restaurant sites now under development or operational, we are positioned for tremendous growth in the coming year.  We are pleased to report that our fourth quarter revenue was approximately 50% higher than our third quarter, and nearly 86% higher than the fourth quarter from the year previous.  Furthermore, our strategy of growing our business through a franchise model will allow us to extend our geographic reach, while greatly reducing our capital costs and management overhead.  We look forward to continuing our rapid growth and executing on our vision to bring plant-based fast food into communities around the world."

Summary of Restaurant Locations – Opened and Future

The following table provides a summary of existing open restaurants and restaurants expected to be opened, including whether each restaurant is corporate or franchised or to be franchised.

The Company expects that internal cash resources and equipment leases will allow it to complete the Broadview and Whitby sites and to run them as corporate stores. For franchised locations, the cost to complete the site search and franchise negotiations is financed through a $35,000 finance fee paid by the franchisee. The future focus will be to franchise locations to accelerate the Company's growth. The Company's restaurant pipeline above includes 14 active sites. With current activity levels, the Company expects to be able to reach 20 restaurants system-wide in 2022. This is short of the thirty locations initially projected. The Company had believed that financing was available for restaurant builds and there would be cash outlays of $100,000 per restaurant build. Financing has only been available for equipment leases and the resultant cash outlays per corporate restaurant has been over $300,000. This has limited the Company corporate store growth to the five corporate restaurants that were open as of December 31, 2021.

Note: Conditional leases are conditional on the Company finding a franchise partner for the location.

Summary of Franchise Agreements

The following table provides a summary of locations and projected locations for franchised restaurants.

The Company is actively searching for franchisees for its future locations. The Company previously announced its launch into the USA but has not yet found a suitable site or franchisee, and is active in the search for both.

Preposterous Foods

Preposterous Foods Inc. (a subsidiary of Odd Burger, formerly Globally Local Food Services) manufacturing facility received the Hazard Analysis Critical Control Point (HACCP) certification in August 2021, validating the measures in place to ensure food safety and quality control. The HACCP certification is the first step in enabling the Company to establish a frozen food retail brand and distribution system for their product. The next steps will be to create a brand and determine the product line. The Company is negotiating to make product available to other restaurants through its distribution partner Sysco.

In order to keep up with the pace of restaurant growth, Preposterous Foods Inc. has to grow. Rather than add distribution centers, the Company has focused on a strategic partnership with Sysco Corporation. This partnership gives the Company access to distribution across Canada and the USA. By fiscal year end, the Company will have added $200,000 in equipment to increase capacity and expects to add $200,000 more in the next twelve months to keep pace. The Company expects to finance the equipment through three-to-five-year leases. In addition, the Company is looking for co-packers to help grow our food production quickly. This will allow the company to meet future volume demands without any capital outlay.

Discussion of Results for the Years Ended September 30, 2021

Selected Annual Information

Three Year Financial Summary

Food Sales were $1,138,216 for the year ended September 30, 2021 versus $1,040,942 for the same period in the previous year. This 9.4% increase in food sales year over year is directly to the strong fourth quarter 2021 results attributable to the opening of new restaurants as previously discussed.

Franchise revenue of $30,118 was recorded in the current year versus $27,653 in the previous year. The prior year included recognition of $19,662 for initial franchise fees and $7,991 of on-going royalty payments. In the current year $3,390 was recognized as amortization of initial franchise fees and $26,729 was from on-going royalty payments.

Gross margin for the year ended September 30, 2021 was $(89,281) versus $(25,373) for the year ended September 30, 2020. The capitalized overheads for the production facility increased by $107,881 or 22% as the Company began to scale up the facility, but year-over-year food sales were only up 9.4%. This inefficiency is created by the lag in scaling up the facility to produce higher quantities versus the time it takes for the increased sales to be recognized. Depreciation in cost of goods sold was up by $28,109 as the result of new production equipment and facilities coming on-line.

Salaries and wages were $988,642 for year versus $50,430 for the fiscal year 2020. This increase includes the wages of several new hires as the Company went public and began to scale for the expansion strategy. Included in new hires for were a VP Marketing, a VP Real Estate, CFO, an operations manager, IT manager and several administrative staff. Also included in wages and salaries in the current year was $103,451 of employee stock option expenses.

Professional fees were $965,801 for the year ended September 30, 2021 versus $29,508 for the year ended September 30, 2020. This cost reflects the accounting and legal costs of preparing for the IPO and advice regarding the creation up of the appropriate governance structures. Also included in this cost are $341,902 of stock option expenses.

Selling, general and administrative expenses for the year ended September 30, 2021 were $872,891 versus $408,908 for the year ended September 30, 2020. The majority of this increase related to greater advertising expenditures as the Company worked on its branding strategy and market presence.

Interest expense for the year ended September 30, 2021 was $99,770 versus $74,524 for the year ended September 30, 2020. The increase in interest expense is a direct result of recognizing lease liabilities on the Vaughan and London Ontario sites and the related interest accretion.

The year ended September 30, 2021 included the reverse take-over by Globally Local of Black Lion Capital Corporation, in order to attain a TSXV listing and the subsequent completion of the Company's Qualifying Transaction and concurrent private placement of 10,500,000 subscription receipts for proceeds of $4,200,000. The Black Lion amalgamation with Globally Local was accounted for in accordance with IFRS2, share based payments, and the excess of the purchase price over the fair value of net assets assumed was considered an expense of acquiring a public listing. In total the listing expense was $2,528,924 and accounts for most of the drag on 2021 earnings. The listing expense comprised of $3,073,734 of total consideration, including shares and options issued to Black Lion shareholders valued at $1,864,527 and $108,207 respectively and shares issued to the agent valued at $1,125,000.

SUMMARY OF QUARTERLY RESULTS

The following table sets forth unaudited selected financial information for each of the last eight quarters.

Discussion of Results for the Quarter Ended September 30, 2021

Revenue of $384,745 for the three months ended September 30, 2021 was almost 50% higher when compared to the three months ended June 30, 2021. This was achieved with the opening of the Vaughan restaurant in mid-July and the London restaurant in mid-August. The Waterloo location also opened at the end of the quarter but there were only a few days of operation. The Windsor franchised location was in operation for both quarters.

Revenue was 86% higher than the fourth quarter of 2020 as a result of the new store openings mentioned above.

Gross margin for the fourth quarter was $7,263 versus $(62,800) for the fourth quarter 2020 and $(17,996) for the quarter ending June 30, 2021. Margin improvements have been largely attributable to restaurant expansion and therefore higher production of our Odd Burger proprietary foods by Preposterous Foods Inc.

Salaries and wages were $507,607 for the quarter versus $391,835 for third quarter and $6,361 in the fourth quarter of the fiscal year 2020. The increase over the third quarter was the result of increased stock option expense of $71,284 and the full costs of the CFO, operations manager and the hiring of an Information Technology manager. Fourth quarter 2020 salaries and wages reflect the reduction of overheads in response to COVID 19 and the furloughing of staff.

Professional fees were $253,326 for the three months ended September 30, 2021 versus $422,954 for the third quarter and 7,517 for the fourth quarter of fiscal year 2020. The fourth quarter professional fees included $52,903 of stock option compensation. The third quarter of the current year included the reverse take-over transaction and as a result, the Company incurred significant professional fees. The professional fees in fourth quarter 2020 reflect the Company costs before going public.

Selling, general and administrative expenses for the fourth quarter 2021 were $291,420 versus $279,272 for the third quarter 2021 and $107,542 for fourth quarter 2020. The increase over the third quarter 2021 was driven by administrative costs of opening new restaurants.

The third quarter of 2021 included the reverse take-over by Globally Local of Black Lion Capital Corporation, in order to attain a TSXV listing and the subsequent completion of the Company's Initial Public Offering of 10,500,000 common shares for proceeds of $4,200,000. The Black Lion statutory amalgamation with Globally Local was accounted for in accordance with IFRS2, share based payments, and the excess of the purchase price over the fair value of net assets assumed was considered an expense of acquiring a public listing. In total the listing expense was $2,528,924 and accounts for most of the drag on third quarter 2021 earnings.

Interest expense for the three months ended September 30, 2021 was $37,289 versus $36,060 for the three months ended June 30, 2021 and $31,746 for the three months ended September 30, 2020.

Other Income and Expense was a net expense of $6,765 in the fourth quarter of 2021 versus an income of $111,760 in the third quarter of 2021 and a net expense of $2,249,840 in the fiscal fourth quarter of 2020. The income in third quarter 2021 is largely attributable to government grants in response to Covid; the Company was no longer eligible for these grants in the fourth quarter of the current year. The net expense in fourth quarter fiscal 2020 was a result of a $2,275,018 loss on revaluation of the Simple Agreement for Future Equity (SAFE) arrangements and a loss of $132,001 on the derecognition of right-of-use assets at the Company's Highbury location.

About Odd Burger Corporation

Odd Burger Corporation is a chain of company-owned and franchised vegan fast-food restaurants as well as a food technology company that manufactures and distributes a proprietary line of plant-based protein and dairy alternatives to its locations. Odd Burger restaurants operate as smart kitchens, which use state-of-the art cooking technology and automation solutions to deliver a delicious food experience to customers craving healthier and more sustainable fast food. With small store footprints optimized for delivery and takeout, advanced cooking technology, competitive pricing, a vertically integrated supply chain along with healthier ingredients, Odd Burger is revolutionizing the fast-food industry by creating guilt-free fast food. Odd Burger Corporation is traded on the TSX Venture Exchange under the symbol ODD and on the OTCQB under the symbol ODDAF. For more information visit https://www.oddburger.com.

Forward-Looking Information

This news release contains forward-looking information for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Any such forward-looking information may be identified by words such as "proposed", "expects", "intends", "may", "will", and similar expressions. Forward looking information contained or referred to in this news release includes statements relating: to future restaurant openings; potential franchisees, demand for our products and other similar statements.  Forward-looking information is based on a number of factors and assumptions which have been used to develop such information, but which may prove to be incorrect including, but not limited to material assumptions with respect to the continued strong demand for the Company's products, the availability of sufficient financing on reasonable terms to fund the Company's capital requirements and the ability to obtain necessary equipment, production inputs and labour. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because the Company can give no assurance that such expectations will prove to be correct. Risks and uncertainties that could cause actual results, performance or achievements of the Company to differ materially from those expressed or implied in such forward-looking information include, among others, negative cash flow and future financing requirements to sustain and grow operations, limited history of operations and revenues and no history of earnings or dividends, expansion of facilities, competition, availability of raw materials, dependence on senior management and key personnel, general business risk and liability, regulation of the food industry, change in laws, regulations and guidelines, compliance with laws, unfavourable publicity or consumer perception, product liability and product recalls, risks related to intellectual property, difficulties with forecasts, management of growth and litigation, as well as the impact of, uncertainties and risks associated with the ongoing COVID-19 pandemic, many of which are beyond the control of the Company.

For a more comprehensive discussion of the risks faced by the Company, please refer to the Company's Annual Information Form filed with Canadian securities regulatory authorities at www.sedar.com. The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available. Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. The forward-looking information contained in this news release is expressly qualified by this cautionary statement.

Non-GAAP Measures

This news release may make reference to certain non-GAAP measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.

The TSX Venture Exchange has neither approved nor disapproved the contents of this news release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

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SOURCE Odd Burger Corporation