Rainy Hollow Ventures Inc. and Sustainable Produce Urban Delivery Inc. Announce Execution of Arrangement Agreement and Update Regarding Concurrent Private Placement

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Vancouver, British Columbia–(Newsfile Corp. – December 22, 2020) – Rainy Hollow Ventures Inc. (TSXV: RHV.P) (“Rainy Hollow“) and Sustainable Produce Urban Delivery Inc. (“SPUD“) are pleased to announce that, further to their joint news release dated October 1, 2020, they have entered into an arrangement agreement dated December 21, 2020 between Rainy Hollow and SPUD (the “Arrangement Agreement“), which sets out the terms of the reverse take-over of Rainy Hollow by SPUD by way of a statutory plan of arrangement under Section 288 the Business Corporations Act (British Columbia) (the “BCBCA“) involving Rainy Hollow, SPUD and the securityholders of SPUD (the “Arrangement“). It is anticipated that the Arrangement will constitute the Qualifying Transaction (as such term is defined in Policy 2.4 – Capital Pool Companies of the Corporate Finance Manual of the TSX Venture Exchange (the “TSXV“)) of Rainy Hollow and Rainy Hollow is seeking conditional acceptance from the TSXV in respect of same.

Concurrently with the Arrangement, Rainy Hollow intends to consolidate the common shares of Rainy Hollow (the “Rainy Hollow Shares“) on an eight (8) to one (1) basis (the “Consolidation“) and change its name to “Sustainable Produce Urban Delivery Inc.” or such other name as may be agreed to by SPUD and Rainy Hollow and accepted by the relevant regulatory authorities (the “Name Change“). Upon completion of the Arrangement, the combined entity (the “Resulting Issuer“) will carry on the current business of SPUD and will qualify as a Tier 1 Industrial Issuer pursuant to the policies of the TSXV.

The Arrangement Agreement

The Arrangement Agreement contemplates that, among others, the following conditions precedent be met prior to the closing of the Arrangement: (a) receipt of all required regulatory approvals with respect to the Arrangement and listing of the common shares of the Resulting Issuer (the “Resulting Issuer Shares“) on the TSXV or the Toronto Stock Exchange (the “TSX“), as the case may be; (b) all third party consents and corporate approvals are obtained, including approval of SPUD shareholders and the Supreme Court of British Columbia (the “Court“) both necessary to complete the Arrangement, and approval of the Name Change and the Consolidation by the board of directors of Rainy Hollow; (c) no adverse material change in the business, affairs, financial condition or operations of SPUD or Rainy Hollow has occurred between the date of entering into the Arrangement Agreement and the closing date of the Arrangement; (d) no order or decree is in effect restraining closing of the Arrangement; (d) SPUD shareholders holding no more than 5% of the issued and outstanding common shares of SPUD (the “SPUD Shares“) have exercised dissent rights; (e) the signature of lock-up agreements required of certain SPUD and Rainy Hollow shareholders; (f) the signature of voting agreements required of certain SPUD shareholders; and (g) the Concurrent Financing (as defined below) shall have been completed.

The Arrangement will not constitute a Non-Arm’s Length Qualifying Transaction (as such term is defined in the policies of the TSXV). No person who or which is a Non-Arm’s Length Party (as such term is defined in the policies of the TSXV) of Rainy Hollow has any direct or indirect beneficial interest in SPUD or its assets prior to giving effect to the Arrangement and no such person is an insider of SPUD. Similarly, there is no known relationship between or among any person who or which is a Non-Arm’s Length Party of Rainy Hollow and any person who or which is a Non-Arm’s Length Party to SPUD.

If all conditions to the implementation of the Arrangement have been satisfied or waived, Rainy Hollow and SPUD will carry out the Arrangement. Pursuant to the terms of the Arrangement, it is expected that the following security conversions, exercise and issuance will occur among Rainy Hollow, SPUD and the securityholders of SPUD immediately prior to completion of the Arrangement:

(a) all Convertible Debentures (as defined below) and Subscription Receipts (as defined below) shall automatically convert into SPUD Shares in accordance with their respective governing documents;

(b) all or a portion of the principal amount of outstanding convertible notes of SPUD plus accrued interest shall, pursuant to a written agreement to be entered into with the holders thereof, convert into SPUD Shares at a price of $6.00 per share;

(c) all the 3,600,000 outstanding convertible note warrants of SPUD shall, pursuant to a written agreement to be entered into with the holders thereof, be exercised, on a cashless exercise basis, into 720,000 SPUD Shares; and

(d) SPUD shall issue an aggregate of 2,967,013 SPUD Share purchase warrants to certain SPUD shareholders, pursuant to a right to receive such SPUD Share purchase warrants upon the occurrence of the Arrangement as set forth in pre-existing SPUD Share subscription agreements entered into with such SPUD shareholders.

The following security exchanges, cancellations and issuances will occur or be deemed to occur among Rainy Hollow, SPUD and the securityholders of SPUD sequentially upon completion of the Arrangement:

(a) all issued and outstanding SPUD Shares outstanding immediately prior to the effective time of the Arrangement, being the 35,536,681 SPUD Shares currently issued and outstanding plus all the SPUD Shares to be issued pursuant (a), (b) and (c) above, shall be transferred by each SPUD shareholder to Rainy Hollow in exchange for post-Consolidation Rainy Hollow Shares, such that each holder of SPUD Shares will receive one (1) post-Consolidation Rainy Hollow Share for each SPUD Share held;

(b) all the 4,437,200 outstanding SPUD stock options (each a “SPUD Option“) shall be cancelled in exchange for Rainy Hollow issuing to each holder of a SPUD Option an option to purchase post-Consolidation Rainy Hollow Shares from Rainy Hollow pursuant to Rainy Hollow’s existing stock option plan (each a “Rainy Hollow Replacement Option“), such that: (i) upon exercise of each Rainy Hollow Replacement Option, the holder will be entitled to acquire, and will accept in lieu of the number of SPUD Shares to which such holder was entitled immediately before the Arrangement upon the exercise of each SPUD Option held by such holder, the number of post-Consolidation Rainy Hollow Shares equal to the number of SPUD Shares subject to the SPUD Option immediately before the Arrangement; (ii) each such Rainy Hollow Replacement Option will have an exercise price per post-Consolidation Rainy Hollow Share equal to the exercise price per SPUD Share subject to such SPUD Option immediately before the Arrangement; and (iii) all other terms and conditions of such SPUD Option in effect immediately prior to the Arrangement will govern the Rainy Hollow Replacement Option for which such SPUD Option is so exchanged; and

(c) all of the aforementioned 2,967,013 SPUD Share purchase warrants and all outstanding SPUD broker purchase warrants (which includes the Debenture Broker Warrants (as defined below) and the Subscription Receipt Broker Warrants (as defined below)) (each a “SPUD Warrant“) shall be cancelled in exchange for Rainy Hollow issuing to the holders of such SPUD Warrants for each such SPUD Warrant a warrant to purchase post-Consolidation Rainy Hollow Shares from Rainy Hollow (each a “Rainy Hollow Replacement Warrant“), such that: (i) on exercise of each Rainy Hollow Replacement Warrant, the holder will be entitled to acquire, and will accept in lieu of the number of SPUD Shares to which such holder was entitled immediately before the Arrangement upon the exercise of each SPUD Warrants held by such holder, the number of post-Consolidation Rainy Hollow Shares equal to the number of SPUD Shares subject to the SPUD Warrant immediately before the Arrangement; (ii) each such Rainy Hollow Replacement Warrant will have an exercise price per post-Consolidation Rainy Hollow Share equal to the exercise price per SPUD Share subject to such SPUD Warrant immediately before the Arrangement; and (iii) all other terms and conditions of such SPUD Warrant in effect immediately prior to the Arrangement will govern the Rainy Hollow Replacement Warrant for which such SPUD Warrant is so exchanged.

Upon completion of the Arrangement, it is anticipated that an aggregate of 43,267,801 post-Consolidation Rainy Hollow Shares will be issued to former holders of SPUD Shares and that an aggregate of 8,292,349 post-Consolidation Rainy Hollow Shares will be reserved for issuance to former holders of SPUD Options and SPUD Warrants pursuant to the terms and conditions of the Rainy Hollow Replacement Options and the Rainy Hollow Replacement Warrants, respectively.

The Arrangement requires approval by the Court. SPUD intends to seek an interim order, which shall provide for the calling and holding of the special meeting of the shareholders of SPUD (the “Special Meeting“) and other procedural matters, and a final order from the Court to approve the Arrangement.

In connection with the Special Meeting being held to approve the Arrangement, an information circular will be prepared, filed and sent to all shareholders of SPUD in accordance with the requirements of the BCBCA. The only securityholders entitled vote at the Special Meeting will be the holders of SPUD Shares as at the record date for Special Meeting. Although no other holders of SPUD securities are expected to have a right, to vote at the Special Meeting, either under the BCBCA nor pursuant to the documents governing such other SPUD securities, SPUD intends to provide the holders of such other SPUD securities the right to attend the hearing for the final order from the Court and oppose the Arrangement if they so choose.

Trading in the Rainy Hollow Shares is currently halted and will remain halted until completion of the Arrangement. Rainy Hollow does not intend to apply to the TSXV for reinstatement of trading of the Rainy Hollow Shares at this time.

About Rainy Hollow

Rainy Hollow was incorporated under the BCBCA and is a Capital Pool Company governed by the policies of the TSXV. Rainy Hollow’s principal business is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction. Investors are cautioned that trading in the securities of a Capital Pool Company should be considered highly speculative.

About SPUD

SPUD is a corporation resulting from the amalgamation of Small Potatoes Urban Delivery Inc. and Spud USA Holdings Corp. on September 28, 2014 under the BCBCA and carries on business in the Provinces of British Columbia and Alberta. SPUD provides an online grocery shopping platform focused on organic and natural foods through SPUD.ca, where consumers can order and schedule home delivery of groceries and other essentials.

FoodX Technologies is the software behind SPUD.ca’s integrated food business eco-system that includes online retail, community retail locations, food preparation services, wholesale and last mile distribution. FoodX Technologies is the only scalable end-to-end eGrocery Management Solution (eGMS) designed to meet the needs of large and small grocery retailers while providing profitable unit economics. FoodX’s award winning eGrocery platform is the culmination of 20 years of experience in online grocery and has a proven track record of delivering efficiency, sustainability and profitability. FoodX utilizes Microsoft as its technology partner and has partnered with Canada’s Digital Technology Super Cluster in the advancement of its innovation pipeline.

No registered or beneficial shareholder of SPUD holds, directly or indirectly, a controlling interest in SPUD.

SPUD is headquartered in Vancouver, British Columbia. For more information, please visit http://spud.ca.

Financial Information

The following financial information is based on SPUD’s unaudited financial statements as at and for the year ended October 3, 2020 and on audited financial statements as at and for the years ended September 28, 2019 and September 29, 2018:

(In thousands of Canadian dollars) Year ended October 3, 2020
(unaudited)
($)
Year ended September 28, 2019
(audited)
($)
Year ended September 29, 2018
(audited)
($)
Net sales or total revenues 107,538 76,528 76,163
Adjusted operating loss before depreciation and amortization(1) 9,340 13,502 6,383
Total assets 45,535 36,672 25,941
Active Customers (1)(2) 18,408 11,835 13,120
eGrocery Average Order Size (1)(3) $114.79 $95.24 $100.41

 

(1) Non-IFRS financial measure. For an explanation of non-IFRS financial measures, see “Non-IFRS Financial Measures and Metrics” below.

(2) Based on the number of individual customer accounts that have completed an order on our ecommerce platform in the past 30 days, measured as of the period end noted.

(3) The eGrocery Average Order Size (“AOS“) is defined as total sales net of returns and credits, divided by number of orders made for the period. We believe that AOS is a useful metric for the readers because it is indicative of eGrocery adoption, consumers expanding their share of purchases made online and the strength of our online consumer business.

Management of the Resulting Issuer

Subject to TSXV approval, upon completion of the Arrangement, it is expected that the board of directors and the senior officers of the Resulting Issuer will be the current directors and senior officers of SPUD. The following is a brief biography of each of the proposed individuals:

Peter van Stolk Chief Executive Officer and a Director

Mr. van Stolk brings more than 30 years of experience to SPUD and serves as its Chief Executive Officer. Mr. van Stolk oversees all marketing, branding and purchasing, and sets the strategic direction for SPUD. As founder of Jones Soda Co. in 1987, Mr. van Stolk served as Chief Executive Officer and Chairman of the Board of Directors through 2007. Jones Soda was one of the first consumer branded companies recognizing the potential of social media to create an emotional connection with its consumers. Jones Soda invited its followers to participate and interact with the brand through proprietary custom labeling and unique flavor development. Mr. van Stolk has been recognized for his innovative branding strategy and business savvy in publications such as The New York Times, CNN, The Wall Street Journal, Fast Company, Inc. Magazine, and People Magazine. He has received numerous business awards including PricewaterhouseCoopers’ 40 under 40, Brand Week’s Top 100 Marketers, and was chosen as one of Canada’s Top One Hundred Canadians by MacLean’s Magazine.

Monique A. Wilberg Director

Ms. Wilberg is a founding shareholder of Gateway Casinos and Entertainment Inc. Founded in 1992, the small company of two properties with 150 employees grew to nine properties with a staff of 3,000. As the Chief Operating Officer of Gateway Casinos and Entertainment, Ms. Wilberg was responsible for strategic operating decisions as well as management of execution and measurement of performance. The company was sold in 2007 to Crown Casinos and Macquarie Group. Ms. Wilberg is an active angel investor and mentor to several local, gluten-free, niche vegan food operations. A musician, she sits on the Board and plays the flute with Ambleside Orchestra. Ms. Wilberg is Chair of the Finance Committee and Board Member of the Vancouver Academy of Music and holds an ICD. D designation granted by the Institute of Corporate Directors.

Todd Cherniak Director

Mr. Cherniak is the Chief Executive Officer and General Counsel of Canadian Magnetic Imaging (CMI), a diagnostic imaging company he founded in 2002. CMI operates a full-service MRI clinic that offers both routine and specialized imaging, as well as contrast-enhanced studies and arthrograms. CMI operates in Vancouver, BC and is fully accredited by the College of Physicians and Surgeons of British Columbia. Prior to founding CMI, Mr. Cherniak practiced as a commercial trial lawyer with Walsh & Company, a litigation boutique he co-founded in 1990. In practice, Mr. Cherniak specialized in complex commercial disputes, shareholder actions, product liability law, and securities litigation acting for both Plaintiffs and Defendants at all levels of the Courts. Mr. Cherniak continues to be a full practicing member of the Law Society of British Columbia and provides legal services to CMI.

Eric Phaneuf Director

Mr. Phaneuf is the President & Chief Executive Officer of Walter Capital Partners. Mr. Phaneuf has occupied a number executive positions, mainly in North American publicly traded companies active in international markets. Over the years, he has developed extensive experience in mergers and acquisitions, business process improvement and growth strategies. Mr. Phaneuf holds a degree in business administration and the title of Chartered Financial Analyst (CFA). He currently serves on several Board of Directors for Canadian-based companies specifically focusing on food, healthcare and technology sectors.

Terry Vanderkruyk Director

Mr. Vanderkruyk is an experienced executive in the life sciences sector, with a focus on business development and finance. Most recently, he was part of the senior management team at Coastal Contacts, a world leading ecommerce optical company that was acquired by Essilor International. Mr. Vanderkruyk is the President of ZT Capital Inc., which focuses on investing in early stage companies and assisting in their growth. He holds a BA Economics from the University of Victoria.

Adrienne Uy Chief Financial Officer

Ms. Uy is the Chief Financial Officer of SPUD, where she oversees all finance, accounting, payroll and legal operations at SPUD. Prior to SPUD, Ms. Uy was Corporate Controller for 3TIER, a global, renewable energy information-to-decision technology company with offices in Seattle, Panama, India, Germany and Australia. Prior to that she was Vice-President at Jones Soda Company, where she was responsible for the distribution and logistics for both the company’s independent distribution and direct store delivery (DSD) networks across North America and its e-commerce business units. In addition, Ms. Uy has held roles at Starbucks Coffee Company in their Financial Policies & Compliance, Financial Reporting and Corporate Accounting groups. Ms. Uy holds an MBA from Seattle University and is a CPA (WA state).

Jef King Chief Technology Officer

Mr. King is the Chief Technology Officer of SPUD, where he oversees all technology advancement including software development at SPUD and FoodX. This also includes all operational uptime through to customer satisfaction. Prior to SPUD, Mr. King held several senior roles at Microsoft including the distinguished title of Principal Technical Evangelist. While at Microsoft Mr. King, incubated and accelerated hundreds of western Canada’s high-tech companies. Prior to that, he worked with numerous start-ups and founded five. Mr. King is a graduate from the British Columbia Institute of Technology.

Following the proposed Arrangement, including the Concurrent Financing, a director will indirectly control more than 10% of the Resulting Issuer, namely Eric Phaneuf, director, (15.05% held by Walter Capital Partners. (Mr. Phaneuf is the President & Chief Executive Officer of Walter Capital)).

Closing of the Convertible Debenture Financing

On October 21, 2020, SPUD completed a brokered private placement financing (the “Convertible Debenture Financing“) pursuant to which it issued an aggregate principal amount of $15,500,000 unsecured convertible debentures (the “Convertible Debentures“), each Convertible Debenture being convertible into a SPUD Share at a price of $6.375. In connection with the Convertible Debenture Financing Canaccord Genuity Corp. (“Canaccord“) and Desjardins Securities Inc. (“Desjardins“) acted as lead agents and received, as consideration for their services, a commission equal to 6.0% of the aggregate gross proceeds of the Convertible Debenture Financing. Canaccord and Desjardins also received 124,000 broker warrants (the “Debenture Broker Warrants“), each entitling the holder thereof upon a liquidity event, such as the Arrangement, to purchase one (1) SPUD Share or one (1) Resulting Issuer Share, as applicable, at a price of $6.375 until October 21, 2022.

Immediately prior to closing the Arrangement, the Convertible Debentures will automatically be converted into an aggregate of 2,431,365 SPUD Shares at a price of $6.375 per SPUD Share, representing a 15% discount to the listing price of the Resulting Issuer Shares on the TSXV or the TSX, as the case may be.

Concurrent Financing

In connection with, and as a condition of, the Arrangement, SPUD will complete a brokered private placement financing of subscription receipts (the “Subscription Receipts“), at an issue price of $7.50 per Subscription Receipt (the “Purchase Price“), for aggregate gross proceeds of up to $25,000,000, with an additional agents’ over-allotment option of 15% (the “Concurrent Financing“). The Subscription Receipts will be governed by the terms of a subscription receipt agreement (the “Subscription Receipt Agreement“) to be entered into between SPUD, Computershare Trust Company of Canada, as subscription receipt agent (the “Subscription Receipt Agent“) and Canaccord and Desjardins (the “Co-Lead Agents“). Each Subscription Receipt will be automatically exchanged, without any further action by the holder of such Subscription Receipt, and for no additional consideration, for one (1) SPUD Share upon the satisfaction of certain Escrow Release Conditions (as defined below). Upon completion of the Arrangement, each underlying SPUD Share issued pursuant to exchange of the Subscription Receipts will then be exchanged for one (1) post-Consolidation Rainy Hollow Share. The Co-Lead Agents, and Cormark Securities Inc. and PI Financial Corp. (collectively, the “Agents“) have been engaged to act on a commercially reasonable efforts agency basis in connection with the Concurrent Financing.

Proceeds of the Concurrent Financing will be held in escrow pending satisfaction of certain escrow release conditions (the “Escrow Release Conditions“), including completion of the Arrangement, as will be set forth in the Subscription Receipt Agreement to entered into.

It is anticipated that net proceeds of the Concurrent Financing will be used: (a) to fund the business plan of SPUD; (b) for Arrangement expenses; and (c) for general corporate purposes and future working capital of the Resulting Issuer. Although SPUD intends to use the net proceeds of the Concurrent Financing as described herein, the actual allocation of proceeds may vary from the uses set forth herein, depending on future operations or unforeseen events or opportunities.

In connection with the Concurrent Financing, the Agents will act as agents and receive, as consideration for their services, a commission equal to 6.0% of the aggregate gross proceeds of the Concurrent Financing (provided that the foregoing will be 3.0% of the aggregate gross proceeds raised in the Concurrent Financing in respect of certain purchasers on the “president’s list” provided by SPUD). Furthermore, the Agents will also be issued that number of broker warrants (the “Subscription Receipt Broker Warrants“) as is equal to 6.0% of the number of Subscription Receipts issued under the Concurrent Financing (provided that the foregoing will be 3.0% of the number of Subscription Receipts issued under the Concurrent Financing to purchasers on the “president’s list” provided by SPUD), each entitling the holder thereof to purchase one (1) SPUD Share or one (1) Resulting Issuer Share, as applicable, at the Purchase Price for a period of 24 months following the release of escrow funds. In addition, Canaccord shall also be entitled to receive a corporate finance fee of $100,000 plus applicable taxes, of which $50,000 shall be payable in cash and $50,000 shall be payable by the issuance of SPUD Shares at the Purchase Price.

Sponsorship of the Arrangement

Sponsorship of the Arrangement, as the Qualifying Transaction of Rainy Hollow, is required by the TSXV unless an exemption from this requirement can be obtained in accordance with the policies of the TSXV. Rainy Hollow intends to apply for an exemption to the sponsorship requirement. There is no assurance that an exemption from this requirement will be obtained.

Further Information

Rainy Hollow will provide further details in respect of the Arrangement and Concurrent Financing in due course by way of a subsequent news release, however, Rainy Hollow will make available to the TSXV or the TSX, as the case may be, all information, including financial information, as may be requested or required by the TSXV or the TSX.

All information contained in this news release with respect to Rainy Hollow and SPUD was supplied by the respective party, for inclusion herein, without independent review by the other party, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Completion of the Arrangement is subject to a number of conditions, including but not limited to, TSXV or TSX acceptance and if applicable pursuant to TSXV or TSX requirements, majority of the minority shareholder approval. The Arrangement cannot close until the required SPUD shareholder approval is obtained. There can be no assurance that the Arrangement or the Concurrent Financing will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular of SPUD or filing statement of Rainy Hollow to be prepared in connection with the Arrangement, any information released or received with respect to the Arrangement may not be accurate or complete and should not be relied upon. Trading in the securities of Rainy Hollow should be considered highly speculative.

Neither the TSXV nor the TSX has in any way passed upon the merits of the proposed Arrangement and has neither approved nor disapproved the contents of this news release.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

For further information:

Rainy Hollow Ventures Inc.
Michael Atkinson – Chief Executive Officer, Chief Financial Officer, Corporate Secretary, and
Director
Phone: (604) 689-1428

Sustainable Produce Urban Delivery Inc.
Peter van Stolk – Chief Executive Officer
Phone: (604) 215-7783

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Notice on Forward Looking Information

Certain statements and information herein, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include but are not limited to statements or information with respect to: the Concurrent Financing, including amounts anticipated to be raised thereunder, the Escrow Release Conditions and the use of net proceeds therefrom; the terms and conditions of the Arrangement, including receipt of TSXV and SPUD shareholder approval; mailing of the SPUD information circular; holding the SPUD shareholder meeting; the details of any securities issuances, conversions, exchanges or cancellations; obtaining the interim order and final order from the Court to approve the Arrangement; the anticipated directors, officers and insiders of the Resulting Issuer; and the closing of the Arrangement. Often, but not always, forward-looking statements or information can be identified by the use of words such as “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information.

With respect to forward-looking statements and information contained herein, Rainy Hollow and SPUD have made numerous assumptions including among other things, assumptions about general business and economic conditions of SPUD and the market in which it operates. The foregoing list of assumptions is not exhaustive.

Although management of Rainy Hollow and SPUD believe that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that forward-looking statements or information herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. These factors include, but are not limited to: risks relating to the Concurrent Financing; risks relating to the receipt of all requisite approvals for the Arrangement, including the approval of SPUD shareholders and the TSXV; risks associated with the business of SPUD; business and economic conditions in the eGrocery industry generally; the supply and demand for labour and other project inputs; changes in commodity prices; changes in interest and currency exchange rates; risks relating to unanticipated operational difficulties (including failure of technology or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters); changes in general economic conditions or conditions in the financial markets; changes in laws; risks related to the direct and indirect impact of COVID-19 including, but not limited to, its impact on general economic conditions, the ability to obtain financing as required; and other risk factors as detailed from time to time. Rainy Hollow and SPUD do not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Non-IFRS Financial Measures and Metrics

This news release contains certain non-IFRS financial measures and metrics as defined under applicable securities legislation, including adjusted operating loss before depreciation and amortization. In determining these measures, SPUD excludes certain items which are otherwise included in determining the comparable IFRS financial measures. SPUD believes such non-IFRS financial measures improve the period-to-period comparability of SPUD’s results and provide investors with more insight into SPUD’s operating results from management’s perspective. They also serve as additional tools to understand and assess, the performance of SPUD’s ongoing core business operations. Investors and other readers should consider non-IFRS financial measures and metrics only as a supplement to, and not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with IFRS.

Adjusted operating loss before depreciation and amortization, a non-IFRS financial measure, represents Operating loss before depreciation and amortization, accounting for installation fees net of capitalized costs, less gain (loss) on disposal of property and equipment, and share-based compensation. The term “adjusted operating loss before depreciation and amortization” does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted operating loss is not a measurement of financial performance under IFRS and should not be considered as an alternative to Net Earnings (loss) as an indicator of SPUD’s operating performance or any other measures of performance derived in accordance with IFRS. SPUD has included this non-IFRS financial measure because it believes that it allows investors to make a more meaningful comparison of the SPUD’s performance between periods presented by excluding certain non-operating expenses, non-cash expenses and, where indicated, non-recurring expenses. In addition, adjusted operating earnings (loss) is used by management in evaluating SPUD’s performance because it believes it provides an indicator of the SPUD’s performance that is often more meaningful than IFRS financial measures or the reasons stated in the previous sentence.

Not for distribution to U.S. Newswire Services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. Securities laws.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/70817