May 9, 2022 — (Vancouver, BC) good natured Products Inc. (the “Company” or “good natured®”) (TSX-V: GDNP), a North American leader in plant-based products, today announced that it will be seeking a 5 business day extension of the time period to file the prospectus supplement for its previously announced bought deal offering of units (the “Offering”) described in the Company’s press releases of May 4, 2022 and May 5, 2022, pending resolution of an issue described further below.
On Friday, May 6, 2022, the Company was made aware that for the fourth quarter of 2021, the Company has not met its fixed charge coverage ratio (“FCCR”) covenant under the senior credit agreement dated October 28, 2021 between the Company and its primary lender. As of the date of this press release, the Company is of the view that, based on interpretation, there may not be a breach of the FCCR covenant. If it is determined there was a breach of the FCCR covenant, the Company and its primary lender would work on a plan to try to waive that covenant for the period ended December 31, 2021 and the underlying default under the senior credit agreement. If a breach is confirmed this may impact the classification of debt obligations in the Company’s financial statements for the year ended December 31, 2021.
The Company reaffirms that it expects to report revenue for the first quarter of 2022 (Q1 2022) in the $24.0 million to $26.0 million range, an increase of approximately 200% to 230%, compared to $7.9 million for the three months ended March 31, 2021, with gross margin estimated between 24% and 26%. The Company intends to proceed with its acquisition of the assets of Formtex Plastics Corporation (the “Acquisition”), as announced in its press release dated May 4, 2022. The Company also believes to be in compliance with the FCCR covenant and all other covenants, under the senior credit agreement with its primary lender for Q1 2022.
The Company, with Beacon Securities Limited and National Bank Financial Inc. as co-lead underwriters, have entered into an amendment to the previously announced engagement letter dated May 4, 2022 that provides the Company with up to 5 additional business days to file a prospectus supplement relating to the Offering, subject to the Company obtaining exemptive relief from the B.C. securities commission to permit the foregoing. The Company will be contacting the B.C. securities commission to seek such exemptive relief, but at this time, there can be no assurances that such relief will be available.
The good natured® corporate profile can be found at: investor.goodnaturedproducts.com
About good natured Products Inc.
good natured® is passionately pursuing its goal of becoming North America’s leading earth-friendly product company by offering the broadest assortment of plant-based products made from rapidly renewable resources instead of fossil fuels. The Company is focused on making it easy and affordable for business owners and consumers to shift away from petroleum to better everyday products® that use more renewable materials, less fossil fuel, and no chemicals of concern.
good natured® offers over 400 products and services through wholesale, direct to business, and retail channels. From plant-based home organization products to certified compostable food containers, bio-based industrial supplies and medical packaging, the Company is focused on making plant-based products more readily accessible to people as a means to create meaningful environmental and social impact.
For more information: goodnaturedproducts.com
On behalf of the Company:
Paul Antoniadis – Executive Chair & CEO
1-877-286-0617 ext. 113
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.
Cautionary Statement Regarding Forward-Looking Information
This press release contains “forward-looking statements” within the meaning of applicable securities laws. Forward-looking statements can be identified by words such as: ”anticipate,” “intend,” “plan,” “budget,” “believe,” “project,” “estimate,” “expect,” “scheduled,” “forecast,” “strategy,” “future,” “likely,” “may,” “to be,” “could,”, “would,” “should,” “will” and similar references to future periods or the negative or comparable terminology, as well as terms usually used in the future and the conditional. Examples of forward-looking statements include, among others, the expected closings of the Acquisition and the Offering, the availability of exemptive relief to permit the prospectus supplement for the Offering to be filed late, the availability of a waiver of any potential breach of the FCCR covenant under the Credit Agreement, the possibility of converting the Offering into another form of securities offering such as a private placement, or completing a different offering of securities in the future, and the possibility of a requirement to restate the Company’s previously filed annual financial statements for the year ended December 31, 2021.
By their nature, forward-looking statements involve known and unknown risks, uncertainties, changes in circumstances and other factors that are difficult to predict and many of which are outside of the Company’s control which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on the Company’s current beliefs, expectations and assumptions regarding the Company’s ability to successfully close the Acquisition and the Offering, the future of its business, future plans and strategies, projections, anticipated events and trends, general market conditions, the economy and other future conditions. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results and financial conditions to differ materially from those indicated in the forward-looking statements include, among others:
- The risk that exemptive relief to permit the Company to file a prospectus supplement late for the Offering will not be available, or that the Company may be required to terminate the Offering and to have a cooling off period before any offering of securities may be permitted.
- The risk that the Company may be required to restate its annual financial statements if the FCCR covenant was breached.
- The risk that the Company, if required to restate its annual financial statements, may not be able to proceed with any offering of securities until restated annual financial statements are filed.
- The risk that the primary lender does not provide a waiver of any breach of the FCCR covenant and attendant risk that the Company is in default under its senior credit agreement with the primary lender.
- The risk that the closing conditions for completion of the Offering are not satisfied.
- The risk that the closing conditions for completion of the Acquisition are not satisfied, including due to lack of financing.
- Risks relating to general economic, market and business conditions.
- Unforeseen delays in the timelines for any of the transactions or events described in this press release.
The Company considers its assumptions to be reasonable based on currently available information, but cautions the reader that its assumptions regarding future events, many of which are beyond the control of the Company, may ultimately prove to be incorrect since they are subject to risks and uncertainties that affect the Company and its businesses. When relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to above will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
Other than as required under securities laws, the Company does not undertake to update this information at any particular time.
Forward-looking statements contained in this news release are based on the Company’s current estimates, expectations and projections regarding, among other things, sales volume and pricing which it believes are reasonable as of the current date. The reader should not place undue importance on forward-looking statements and should not rely upon these statements as of any other date. All forward-looking statements contained in this news release are expressly qualified in their entirety by this cautionary statement.