Freshii Inc. - Management's Discussion & Analysis

Freshii Inc. - Management's Discussion & Analysis

Freshii Inc. Management’s Discussion & Analysis For the 13 week period ended April 1, 2018 (Expressed in US Dollars)

1 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following management’s discussion and analysis (“MD&A”) for Freshii Inc. (“we”, “Freshii” or the “Company”) provides information concerning the Company’s financial condition and results of operations for the 13 week period ended April 1, 2018. The following MD&A should be read together with the Company’s unaudited Condensed Consolidated Interim Financial Statements (“interim financial statements”) and accompanying notes as at April 1, 2018, and with the Company’s Annual Consolidated Financial Statements for the 53 week period ended December 31, 2017 (“fiscal 2017”). The consolidated results from operations for the 13 week period ended April 1, 2018 are compared to the 13 week period ended March 26, 2017. The MD&A and interim financial statements have been restated for comparative purposes to reflect the adoption of the new accounting standards, please refer to note 3 of our interim financial statements for an explanation of these changes. All figures in this MD&A are expressed in US Dollars unless otherwise noted.

We operate on a 52 or 53 week fiscal year, concluding on the Sunday closest to December 31. Fiscal 2017 had 53 weeks. We prepare and report our interim financial statements in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB"). This MD&A was prepared as at May 9, 2018. Additional information relating to the Company, is available on SEDAR at www.sedar.com. Non-IFRS Financial Measures and Industry Metrics This MD&A makes reference to certain non-IFRS measures including key performance indicators used by management and typically used by our competitors in the restaurant industry. These measures are not recognized measures under IFRS and 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. We use non-IFRS measures including “EBITDA”, “Adjusted EBITDA”, “Pro Forma Adjusted EBITDA”, “free cash flow”, “free cash flow conversion”, “Adjusted Net Income” and “Pro Forma Adjusted Net Income”. This MD&A also makes reference to “AUV”, “Canada AUV”, “system-wide AUV”, “system-wide sales”, "system-wide stores", “same-store sales growth” and “U.S. AUV” which are commonly used operating metrics in the restaurant industry but may be calculated differently by other companies in the restaurant industry. These non-IFRS measures and restaurant industry metrics are used to provide investors with supplemental measures of our operating performance and liquidity and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures, including restaurant industry metrics in the evaluation of companies in the restaurant industry. Our management also uses non-IFRS measures and restaurant industry metrics, in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of executive compensation. See “How We Assess the Performance of our Business” and “Selected Quarterly Consolidated Information” below for further details concerning how the Company calculates EBITDA, Adjusted EBITDA, Pro Forma Adjusted EBITDA, free cash flow, free cash flow conversion, Adjusted Net Income and Pro Forma Adjusted Net Income and for reconciliations thereof to the most comparable IFRS measures.

2 Forward-Looking Statements Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are statements that are based on our current beliefs, expectations or assumptions regarding the future of our business, future plans and strategies, our operational results and other future conditions. Forward-looking statements can be identified by words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “seek”, “target”, “potential”, “will”, “would”, “could”, “should”, “continue”, “contemplate” and other similar expressions, although not all forward-looking statements contain these identifying words. These forward-looking statements include all matters that are not historical facts. Discussions containing forward-looking information may be found, among other places, under the headings “General Development of the Business”, “Description of the Business” and “Risk Factors”. This forward-looking information includes, among other things, statements relating to: • expectations regarding industry trends, overall market growth rates and our growth rates and growth strategies; • expectations regarding certain of our future results and information, including expectations regarding our future revenue, expenses, EBITDA, Adjusted EBITDA, Pro Forma Adjusted EBITDA, sales growth, capital expenditures, operations and use of future cash flow; • expectations regarding the growth of system-wide sales and same-store sales growth; • our business plans and strategies, including expectations regarding the growth of our franchise store base, our ability to deliver attractive new store economics and our expected drivers of same-store sales growth; • expectations regarding North American and international growth, including future revenue growth generation and our ability to enhance future profitability and free cash flow; • our competitive position in our industry; • implementation of the proposed Franchise Partner Share Purchase Program (as defined herein); and • the market price for the Class A subordinate voting shares.

The forward-looking statements and other forward-looking information are based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current trends, current conditions and expected future developments, as well as other factors that we currently believe appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking statements, there can be no assurance that the underlying opinions, estimates, and assumptions will prove to be correct. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in the “Risk Factors” section of this document, which include, but are not limited to, the following: • our failure to successfully implement our growth strategies, which include opening new stores; • our failure to identify, recruit and contract with a sufficient number of qualified franchise partners; • our franchise partners’ new stores, once opened, may not be profitable initially or at all; • our broad expansion into new markets in the U.S., Canada and internationally; • the significant dependence of our business and results of operations upon the future performance of existing and new franchise stores, and the variety of additional risks associated with our franchise partners; • our failure to manage our growth effectively; • our and our franchise partners’ failure to secure desirable store locations;

3 • our failure to support our expanding franchise system; • we may engage in litigation with our franchise partners; • changes in food and supply costs; • increased labour costs or difficulties in finding suitable employees for our and our franchise partners’ stores; • competition could adversely affect us; • failure to receive frequent deliveries of higher-quality food ingredients and other supplies meeting our specifications; • our limited number of suppliers for our major products and reliance on one custom distribution company for the majority of our distribution programs in North America; • changes in customer tastes and preferences, spending patterns and demographic trends; • governmental regulation, which could harm our ability to open new stores or increase our and our franchise partners’ operating costs; • our and our franchise partners’ failure to obtain and maintain required licenses and permits or to comply with food control regulations could lead to the loss of our and our franchise partners’ food service licenses; • litigation that could adversely affect us by distracting management, increasing our expenses or subjecting us to material money damages and other remedies; • our inability to persuade customers of the benefits of paying our prices for higher-quality food; • our dependence on the continued service of key personnel; • our marketing and advertising strategies may not be successful; • we and our franchise partners may be harmed by data security risks we face in connection with our and our franchise partners’ electronic processing and transmission of confidential customer and employee information; • our and our franchise partners’ heavy reliance on information technology; • our storage of personally identifiable information of our customers; • the inability of our insurance coverage reserves to cover future claims; • negative publicity relating to our stores or the Company; • our inability to adequately protect our intellectual property rights; • significant fluctuations in our quarterly results, which could fall below the expectations of securities analysts and investors due to various factors; • instances of food-borne or localized illnesses; • the concentration of our North American stores in local or regional areas; • the risks associated with our operations in emerging markets; • our inability to use our net operating loss carryforwards and certain other tax attributes; • our inability to generate sufficient cash flow or raise capital on acceptable terms to meet our future needs; • our franchise partners could take actions or omit to take certain actions that could harm our business; • our limited influence over the operations of our franchise partners and on-going required cooperation; • our inability to maintain good relationships with our franchise partners, which could decrease revenues and hinder our ability to expand our presence in certain markets;

4 • the number of new franchised Freshii stores that actually open in the future may differ materially from the number of signed commitments from potential, existing and new franchise partners; • changes to current franchise laws; • fluctuations in exchange rates; • the risks associated with doing business internationally; • the potential for us to be adversely affected by violations of anti-bribery and anti-kickback laws due to our international franchise operations; • disruptions in the international supply chain for our international franchised stores; • the impact of negative economic factors, including the availability of credit, on our and our franchise partners’ landlords and surrounding tenants; • changes to estimates related to our property, fixtures and equipment or results of operations that are lower than our current estimates at certain store locations, which may cause us to incur impairment charges on certain long-lived assets; • federal, state, provincial, municipal and local tax rules; • the potential for us to be treated as a passive foreign investment company under applicable U.S. tax laws; • our share structure has the effect of concentrating voting control and the ability to influence corporate matters with Matthew Corrin, our Chairman and Chief Executive Officer; • dilution; • securities analysts’ research or reports could impact price of Class A subordinate voting shares; • the forward looking statements contained in this MD&A may prove to be incorrect; and • fluctuations of quarterly results; These factors should not be construed as exhaustive and should be read with the other cautionary statements in this MD&A.

Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward- looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information contained herein, except as required by applicable securities laws.

Highlights for the 13 week period Ended April 1, 2018 Beginning with the 13 week period ended April 1, 2018 (or “Q1 2018”), the Company adopted IFRS 15, a new revenue recognition standard that affects the manner in which the Company records revenue on upfront franchise fees. The Company has restated its 2017 financials for the retrospective adoption of IFRS 15, and all figures for Q1 2018 and

5 the 13-week period ended March 26, 2017 (“Q1 2017”) below are presented as if IFRS 15 was adopted in Q1 2017 for comparability purposes. System-wide sales grew to $39.0 million in Q1 2018, compared to $29.1 million in Q1 2017 representing an increase of $9.9 million or 34%; This growth in system-wide sales is attributable to the addition of net new system wide stores, as well as same- store sales growth, as discussed below: • The Company opened a total of 95 net new stores during the 53 week period ended April 1, 2018, including 26 net new stores in Q1 2018. These 26 net new openings in Q1 2018 were comprised of 27 openings, and 1 closure.

• Same-store sales growth for Q1 2018 was 1.6% compared to 6.4% for Q1 2017. The Company estimates that the timing of the Easter weekend - and the related consumer spending patterns during that period - had a negative impact of 1.2% on same-store sales growth. In the current year, Easter weekend occurred in the last week of Q1 2018, compared to the third week of the second quarter of fiscal 2017 (the 13-week period ending June 25, 2017). Additionally, the Company estimates that unfavorable weather had a negative impact of approximately 1% on same-store sales growth in Q1 2018 • Total revenue for Q1 2018 increased to $4.8 million, up from $3.6 million in Q1 2017. This revenue increase was the result of an increase in franchise revenue, offset by a slight decrease in company-owned store revenue due to the closure of a Company-owned store for 9 weeks to complete a full remodel of the store, as discussed in further detail below: • During Q1 2018, the Company’s franchise revenue increased, as compared to Q1 2017, as a result of a significant increase in royalty revenue. Royalty revenue for Q1 2018 was $2.6 million, an increase of $0.7 million or 37% over Q1 2017. During Q1 2018, the Company’s ‘other income’ was $1.0 million, an increase of $0.3 million or 43% over Q1 2017. As a reminder, royalty revenue and ‘other income’ are the Company’s most predictable and stable recurring revenue streams. • In addition to the increase in royalty revenue in Q1 2018 the Company experienced an increase in franchise fee revenue. Quarterly franchise fee revenue increased in Q1 2018 by $0.4 million or 100% as compared to Q1 2017.

• Company-owned store revenue was $0.5 million in Q1 2018, compared to $0.6 million in Q1 2017. This decrease was due to the fact that one Company-owned store was closed for 9 weeks during the 13-week period ended April 1, 2018 for a complete remodel of the store. • Net income (loss) was $0.4 million in Q1 2018 compared to ($1.1) million in Q1 2017, representing an increase of $1.5 million for Q1 2018. This increase is largely a result of an increase in revenue period over period of $1.1 million in addition to a decrease of selling, general and administrative (“SG&A”) costs of approximately $0.9 million, and a decrease of share-based compensation expense of $0.6 million, offset by an increase of $0.8 million in income tax expense. The decrease in SG&A was largely a result of $1.6 million in costs related to the Company’s Initial Public Offering (the “Offering”) incurred in Q1 2017, which were not incurred in Q1 2018, offset by an increase in headcount related operating expenses such as payroll incurred Q1 2018.

• Adjusted EBITDA was $1.5 million for Q1 2018, representing an increase of $0.5 million or 50% from the $1 million EBITDA for Q1 2017. • Pro Forma Adjusted EBITDA was $1.5 million for Q1 2018, compared to $1.1 million for Q1 2017, representing an increase period over period of $0.4 million or 36%. • Adjusted Net Income was $1.0 million in Q1 2018 compared to $0.7 million in Q1 2017, representing an increase of $0.3 million, or 43%. The increase is due to increased revenue period over period of $1.1 million, offset by an increase in headcount related operating expenses, such as payroll in the amount of $0.8 from Q1 2017 to Q1 2018.

6 • As indicated above, in Q1 2018, the Company adopted IFRS 15. This accounting change has no effect on the cashflows of the business, or the manner in which we collect franchise fees, which is at the time of execution of each franchise agreement. The adoption of this new standard is a change to the manner in which the revenue is booked for accounting purposes under the IFRS reporting framework. Directly as a result of this accounting standard adoption, the Company has revised its 2019 Proforma Adjusted EBITDA outlook from a range of $15 million to $17 million to a range of $12 million to $14 million. A more detailed discussion on this topic can be found below in the “Outlook” section. Overview Freshii is a fast-growing restaurant brand serving a healthy and customizable menu built around high-quality ingredients such as fresh produce, lean proteins, healthy grains and ethnic spices. Founded in 2005 by Matthew Corrin in Toronto, Canada, Freshii’s core mission is to help people all over the world live healthier and better lives by making healthy food convenient and affordable. We believe Freshii is at the forefront of the global health and wellness movement, pioneering the new “healthy fast food” category.

Our goal is to bring healthy food to the masses with convenience and affordability. Our diverse menu is meticulously developed and continues to be evolved by our culinary experts and certified nutritionists and caters to a wide range of dietary preferences. Our menu includes salads, bowls, burritos, wraps, soups, juices, smoothies, frozen yogurt and breakfast all of which can be customized with flavourful combinations from a wide variety of high- quality and colourful ingredients. In addition to healthy meals, our broad menu offers snacks that energize customers throughout the day. This menu is also supplemented by seasonal and innovative offerings. Since opening our first store in 2005, Freshii has grown to 396 stores located across 17 countries and in more than 35 states and provinces in North America as of April 1, 2018. As of April 1, 2018, our store base was approximately 99% franchised, with 392 franchised locations and four Company-owned stores. Our global footprint is supported by a strong network of 288 franchise partners with signed franchise agreements, of which 234 were operating Freshii restaurants, as of April 1, 2018, and who are passionate about bringing healthier food to the masses.

Summary of Factors Affecting our Performance We believe that we have a significant growth opportunity ahead of us, building on our successful track record. We believe that our performance and ability to achieve this growth depend on a number of factors. These factors are also subject to a number of inherent risks and challenges, some of which are discussed above and in the “Forward-Looking Statements” section of this MD&A. Our Brand Freshii offers a delicious and diverse menu that energizes people “on-the-go”, appealing to a broad spectrum of customers across many demographics. We believe the Freshii brand is particularly embraced by the millennial generation, a demographic focused on maintaining a healthy and customized lifestyle. We are opening stores across various countries, demonstrating the global portability of our brand and its broad appeal. We believe Freshii is at the forefront of the global health and wellness movement, pioneering the new “healthy fast food” category. Our continued success will be based on our ability to continue to: (i) resonate with our audience of people who energize “on-the-go”, and (ii) grow in both North America and internationally. Any loss of our appeal with our customers could affect our business in a negative manner, and in turn result in adverse financial results. To ensure we mitigate our exposure to any negative impacts to our brand and customer base, we plan to continue to offer and innovate our healthy, compelling and diverse menu offerings at a compelling price point, which our customers have come to trust and expect with our brand.

7 Same-Store Sales Growth Same-store sales growth is a metric used in the restaurant industry to compare sales derived from the established stores during a certain period over the same period in a prior year. Same-store sales growth helps explain what portion of sales growth can be attributed to growth in established locations and what portion can be attributed to the opening of net new stores. Freshii calculates same-store sales growth as the percentage change in year-over-year sales for the system-wide same-store base. Freshii includes a store in the same-store base in the first full quarter following its first 52 full weeks of operations, excluding non- traditional stores. A store is not included in same-store sales if it is closed for one week or longer, such as for remodeling, during the stated period. Same-store sales growth is measured on a constant currency basis to exclude the effect of foreign currency translation.

Same-store sales growth is primarily a result of changes in the number of customer transactions and changes in the average transaction size. Freshii’s same-store sales growth is primarily impacted by the expansion of its brand awareness, continued menu innovation and the use of its mobile technology. Freshii’s same-store sales growth is also impacted by external factors including the macro-economic environment that could affect consumer spending. New Store Openings We have a meaningful opportunity to continue to grow our store network across North America and internationally. The opening and success of new stores is subject to numerous factors, including the application of passionate and qualified potential franchise partners, the availability of appropriate real estate, the negotiation of suitable lease terms for new locations, and other factors, some of which are beyond Freshii’s control. In the 13 week period ended June 25, 2017, Freshii implemented a store opening strategy that allows new locations to generate revenue in advance of being able to serve walk-in guests (“e-stores”). Subsequent to entering a lease, while the build out of a new location is proceeding, marketing efforts promoting electronic orders are carried out in the new Freshii territory. When an electronic order is placed with the new location, we are able to tie the sale to the new location’s in-territory marketing and thus, the new sale and associated revenue can properly be attributed to the new location. The new location will then engage a nearby Freshii location to prepare the order on its behalf, acting as a de facto commissary kitchen. Following a period of operation as an e-store, the new location opens its front doors to walk-in customers.

The e-store strategy results in our franchise partners’ ability to earn previously unavailable revenue and, we believe, to ramp up more quickly to steady state AUV. The store opening numbers for the 13-week period ended April 1, 2018, provided in this MD&A do not include any units opened as part of this new store opening strategy (there were a total 4 e-stores in operation as at May 9, 2018). Although the Company is excited about future opportunities to allow our franchise partners to leverage technology in order to generate additional revenue, as of the fiscal quarter ended April 1, 2018, the Company has not added e-stores to its system wide store count.

8 The following table summarizes the change in our store count from the beginning of fiscal 2016 to the end of Q1 2018: 13 Week Period Ended 14 Week Period Ended 13 Week Period Ended March 27, 2016 June 26, 2016 September 25, 2016 December 25, 2016 March 26, 2017 June 25, 2017 September 24, 2017 December 31, 2017 April 1, 2018 Franchised Store Activity: Beginning of period 172 185 211 240 274 298 329 342 367 Openings 19 25 30 36 26 24 21 22 27 E-openings — 11 13 9 — Franchise acquisition — 1 1 ( 1) Closures and relocations (6) - (2) (2) (2) (4) (21) * (6) * (1) Franchised stores at end of period 185 211 240 274 298 329 342 367 392 Company-owned Store Activity: Beginning of period 6 6 5 4 4 3 3 3 3 Openings — (Refranchised)/Acquired locations — (1) (1 — 1 Closures and relocations ( 1 — Company- owned stores at end of period 6 5 4 4 3 3 3 3 4 Total stores 191 216 244 278 301 332 345 370 396 * Closures in the 13 weeks ended September 24, 2017 and the 14 weeks ended December 31, 2017 included the closure of 17 and 1 Target Retail locations respectively as further described in the Company’s press release dated September 25, 2017. The press release is available at www.sedar.com We are targeting a system-wide store count of between 730 and 760 stores by the end of fiscal 2019. Our growth plans reflect our approach to expanding our network as evidenced by our ability to attract high-quality franchise partners and employ a rigorous vetting and selection process. Supporting our confidence in our 2019 system-wide store outlook are the following factors: • The Company has signed franchise agreements that include contractually binding commitments from new and current franchise partners to develop over 384 new stores. These 384 committed new stores represent stores for which a franchise agreement has been signed, a franchise fee (or a deposit of 50% thereof) has been paid, and a territory has been confirmed (“Committed Stores”). • The Company currently has 151 stores engaged in the active opening process. For the purposes of this MD&A, a store in the “active opening process” is in either the site selection stage, the lease negotiation stage, the executed lease stage, the design stage, the build-out stage or the training stage. Stores in the active opening process are included in our Committed Store count, as described above. • Of the stores that the Company expects to open in fiscal 2019, approximately 55% are Committed Stores (with the remaining 45% to be opened pursuant to ‘to be signed’ agreements, as further described below).

9 • Also included in the 2019 store outlook are stores that are expected to open pursuant to franchise agreements that the Company will sign during fiscal 2018 and Q1 2019 (allowing sufficient time for the relevant store to open prior to the end of fiscal 2019, given historical opening timelines). Based both on our strong net new franchise partner pipeline – we receive approximately 4,500 franchise partner applications per year – and the proportion of those applications that typically result in new franchise agreements, as well as the typical number of new franchise agreements that ‘in-system’ franchise partners sign periodically, we expect to conclude a significant number of franchise agreements in fiscal 2018 and Q1 2019 that will support our 2019 system-wide store outlook.

Competition Our primary competition for franchise partners are North American and global franchisors with franchises in the Quick Service Restaurant (“QSR”) and/or Fast Casual Restaurant categories of the Limited Service Restaurant (“LSR”) segment of the restaurant industry. Many of our direct competitors are well-established national, regional or local franchisors with franchises in the markets in which we operate or in which we anticipate operating. Our franchise partners’ stores primarily compete with LSRs, Full Service Restaurants, take-out operations, delivery operations and grocery stores that offer home meal replacements. Our stores compete for consumers based on taste, quality and price of food, customer service, ambience, location, convenience and overall experience. We believe that our stores offer customers a compelling value proposition – flavourful, healthy food that customers feel good about eating, at an affordable price – which enables us to differentiate ourselves from our competitors. Our franchise partners’ competitors are typically unable to offer a comparable scope of healthy eating options in a convenient manner and at an affordable price.

Consumer Trends The Fast Casual Restaurant and QSR categories are subject to shifts in consumer trends, preferences and consumer spending which can affect our revenue and operating results adversely. As a result, our proven track record to adapt in an efficient manner to changes in consumer preferences is key to our success over time. Our diverse menu offerings, which include salads, bowls, burritos, wraps, soups, juices, smoothies and frozen yogurt, all of which can be customized, provide us with the ability to optimize our sales mix in a flexible manner. To ensure we can innovate in a timely manner, we have an operational model that allows us to selectively change our menu based on consumers’ preferences.

Our revenue is also impacted by discretionary spending by consumers, which is affected by many factors that are beyond our control, including, but not limited to, general economic conditions, consumer disposable income levels, consumer confidence levels, consumer debt, the cost of basic necessities and other goods and the effects of weather and natural disasters. Foreign Exchange The majority of our revenue is derived from operations in North America. As our consolidated financial statements are presented in U.S. dollars, we have foreign currency exposure with respect to our Canadian operations. The revenue we earn in Canadian dollars is adversely impacted by a decrease in the value of the Canadian dollar relative to the U.S. dollar. Foreign exchange gains and losses are also impacted by the amount of cash and debt that we may have on hand in the Canadian company that is translated from US dollars. Conversely, the majority of our cost of sales and selling, general and administrative expenses are incurred in Canadian dollars and are positively impacted by a decrease in the value of the Canadian dollar relative to the U.S. dollar. The average Canadian dollar exchange rate relative to the U.S. dollar for the 13 week period ended April 1, 2018 was 1.265, while the same Canadian dollar exchange rates for the 13 week period ended March 26, 2017 was 1.269. Fluctuations in foreign currency exchange rates may impact the comparability of our results from period to period. See “Risk Factors” below.

10 How We Assess the Performance of our Business The key performance indicators below are used by management in evaluating the performance of our stores and assessing our business. We refer to certain key performance indicators used by management and typically used by our competitors in the restaurant industry, certain of which are not recognized under IFRS. IFRS Measures Revenue. Our revenue is comprised of franchise revenue and Company-owned store revenue. The following is a brief description of the components of our revenue.

Franchise revenue includes revenue that we earn in the form of royalty revenue, franchise fee revenue and other income. • Royalties consist of fees earned from our franchise partners equal to a percentage of weekly gross sales. Our franchise agreements require our traditional franchise partners to pay us royalties of 6.0% of franchised store gross sales. Additionally, traditional franchise partners are currently required to pay a corporate advertising fee of 1.5% of gross sales and spend an incremental 1.5% of gross sales on local advertising. Non-traditional franchise partners are required to pay us royalties of between 4.0% and 6.0% of franchised store gross sales and the royalty percentage payable to us could decrease over time as additional franchised stores are opened by the non-traditional franchise partner. Area development franchise partners are required to pay us royalties of 6.0% of franchised store gross sales. Additionally, area development franchise partners are currently required to pay a corporate advertising fee of 1.5% of gross sales and spend an incremental 1.5% of gross sales on local advertising. We are required to evenly split royalties with master franchise partners, which are typically between 6.0% and 8.0%, of franchised store gross sales with our master franchise partners. Additionally, certain master franchise partners are currently required to pay a corporate advertising fee of 1.5% of gross sales and spend an incremental 1.5% of gross sales on local advertising.

• Our franchise agreements provide that traditional franchise partners are required to pay an initial franchise fee of $30,000 which is due upon signing of the franchise agreement. Our non-traditional franchise partners are required to pay a franchise fee between $10,000 and $20,000, which is due upon the applicable store commencing operations. Our area development franchise partners and master franchise partners are required to pay an initial franchise fee of $30,000 to secure one location, plus an additional $15,000 to secure each additional location. Our master franchise partners are required to pay an initial franchise fee of between $30,000 and $35,000 to secure one location, plus an additional 25% to 50% of the initial franchise fee to secure each additional location. The initial franchise fees for our area development franchise partners and master franchise partners are due upon signing of the applicable agreement. After the first location under an area development or master franchise agreement is opened, an additional franchise fee of $15,000 is due upon commencement of operations of each additional location that is opened. Each of the foregoing amounts is payable in the local currency, except for amounts payable by international franchise partners, which are calculated in U.S. dollars. In fiscal 2018 the Company implemented the following revenue recognition policies as a result of the adoption of the IFRS 15: Franchise Revenue Franchise Revenue relates to: 1) the initial franchise fee received for pre-opening support services, 2) the company’s licensing of its franchise rights over the term of the respective franchise agreement, and

11 3) royalty fees based on a percentage of franchisee sales. Pre-opening support services include selecting a location, assistance with leasing space, and providing design and build out support. The performance obligation is satisfied at the point in time when the store is ready to open for operations. Licensing of franchise rights related to the access to the Freshii brand is recognized over time. This revenue is deferred and recognized over the franchise agreement term which is generally 10 years, beginning when the store is ready to open for operations. This revenue is recognized over time, as this benefit is expected to be transferred to the customer evenly over the term of the franchise agreement. Initial fees are allocated to the respective performance obligations based on the estimated relative stand- alone selling price of the respective service.

Royalty revenues are earned weekly based on a percentage of franchisees’ sales over the term of the franchise agreement. The new guidance did not materially impact the recognition of royalty income. The company does not have any contracts where the period between the transfer of promised goods or services to the customer and payment by the customer exceeds one year. Consequently, the company does not adjust any of the transaction prices for the time value of money. Other Revenue The company receives food and beverage, and product and service coordination fees relating to agreements with vendors. Fees are generally earned based on the value of purchases during the period. Agreements that contain an initial upfront fee, in addition to ongoing fees are generally recorded to income over the term of the respective agreement.

Company-owned store revenue is generated through in-store and delivery sales at our Company-owned stores. Company-owned store revenue is reported net of sales tax, which is remitted to the appropriate tax authorities. Cost of sales. Cost of sales consists of direct food, beverage, paper goods, packaging, labour costs and other store operating costs such as rent, store repair and maintenance costs and utilities at our Company-owned stores. The components of Company-owned store operating expenses are partially variable in nature and fluctuate with changes in sales volume, product mix, commodity costs and labour costs.

Selling, general and administrative expenses. Selling, general and administrative expenses are predominantly comprised of wages, benefits, franchise development expenses, other compensation, travel, marketing, accounting fees, legal fees and other expenses related to the corporate infrastructure required to support our franchise stores. We expect our selling, general and administrative expenses to continue to increase as we incur additional legal, accounting, insurance, and other expenses associated with being a public company. Industry Metrics System-wide stores. System-wide stores reflects the number of total stores, including franchised and Company-owned stores, open across the system at the end of a particular reporting period, including e-stores for fiscal 2017. The number of franchised and Company-owned stores along with the number of operating weeks is used by management to evaluate new store growth, system-wide sales, royalty and franchise fee revenue and the performance of our stores.

12 System-wide sales. System-wide sales represent sales for all of our franchised and Company-owned stores. This measure allows management to assess changes in our overall system performance, the health of our brand and the strength of our market position relative to our competitors. Our system-wide sales are driven by the number of system-wide stores open in any period and same-store sales growth, which is described below. System-wide sales are measured using the average exchange rate for the period presented to convert the total sales for our stores located outside the U.S. into U.S. dollars.

Same-store sales growth. Same-store sales growth reflects the percentage change in year-over-year sales for the system-wide same-store base. We include a store in our same-store base in the first full fiscal quarter following its first 52 full weeks of operations, excluding non-traditional stores. This measure highlights the performance of existing stores open during the period, while excluding the impact of new store openings and closures. A store is not included in same-store sales growth if it is closed for a week or longer, such as for remodeling, during the stated period. Same-store sales growth is measured on a constant currency basis, which means the results exclude the effect of foreign currency translation by using the same foreign exchange translation rate year over year. The foreign exchange rate used is the most recent year end rate of the applicable currency.

System-wide Average Unit Volume (“AUV”). System-wide AUV consists of the average annual sales of system- wide stores that have been open for a trailing 52 week period or longer. This measure is calculated by dividing total sales during the 52 week period for all stores in the system that were open for operations during the entire 52 week period by the number of stores that were open for operations during the entire 52 week period. We apply the average exchange rate over the 52 week period to convert the total sales for our stores located outside the U.S. into U.S. dollars. System-wide AUV growth is driven primarily by increases in same-store sales growth and is influenced over time by the opening of new stores as those stores have been in the system for 52 weeks. A store is not included in system-wide AUV if it is closed for a week or longer, such as for remodeling, during the 52-week period. U.S. Average Unit Volume (“AUV”). U.S. AUV consists of the average annual sales of stores that are located in the U.S., excluding non-traditional stores, and have been open for a trailing 52 week period or longer. This measure is calculated by dividing total sales during the 52 week period for all U.S. stores in the system that were open for operations during the entire 52 week period by the number of U.S. stores that were open for operations during the entire 52 week period. A store is not included in U.S. AUV if it is closed for a week or longer, such as for remodeling, during the 52 week period.

Canada Average Unit Volume (“AUV”). Canada AUV consists of the average annual sales, denominated in Canadian dollars, of Company-owned and franchised stores that are located in Canada, excluding non-traditional stores, and have been open for a trailing 52 week period or longer. This measure is calculated by dividing total sales during the 52 week period for all Canadian stores in the system that were open for operations during the entire 52 week period by the number of Canadian stores that were open for operations during the entire 52 week period. A store is not included in Canada AUV if it is closed for a week or longer, such as for remodeling, during the 52 week period.

Non-IFRS Measures EBITDA. EBITDA means net income (loss) before interest costs (net), income tax expense (recovery) and depreciation and amortization. Adjusted EBITDA. Adjusted EBITDA means EBITDA further adjusted for share-based compensation, an unrealized foreign exchange loss associated with the retired credit facility (the “Credit Facility”) settled after year end, and other expenses and costs in connection with the Offering and the reorganization of our capital structure immediately prior to completion of the Offering (the "Reorganization"). Pro Forma Adjusted EBITDA. Pro Forma Adjusted EBITDA means Adjusted EBITDA adjusted for commission costs paid under the Company’s Chicago master franchise agreement for which the Company used a portion of the net proceeds from the Offering to exercise its buyback provision. This was completed on June 19, 2017.

13 Free cash flow. Free cash flow means an amount equal to Pro Forma Adjusted EBITDA less capital expenditures. Free cash flow conversion. Free cash flow conversion means an amount equal to free cash flow divided by Pro Forma Adjusted EBITDA. Adjusted Net Income. Adjusted Net Income means net income further adjusted for share-based compensation, an unrealized foreign exchange loss associated with the Credit Facility settled after fiscal 2016 year end, and other expenses and costs in connection with the Offering and Reorganization, net of related tax effects. Pro Forma Adjusted Net Income. Pro Forma Adjusted Net Income means Adjusted Net Income further adjusted for commission costs paid under the Company’s Chicago master franchise agreement for which the Company used a portion of the net proceeds from the Offering to exercise its buyback provision which was completed on June 19, 2017, net of related tax effects.

The following table sets forth our key performance indicators for the 13 week periods ended April 1, 2018 and March 26, 2017, respectively (in thousands, except store data or otherwise noted): For the 13 weeks ended April 1, 2018 March 26, 2017 Total revenue $ 4,834 $ 3,607 System-wide stores open at end of period 396 301 System-wide sales $ 38,977 $ 29,131 System-wide AUV $ 494 $ 474 U.S. AUV $ 579 $ 602 Canada AUV C$ 627 C$ 606 Same-store base at end of period 189 135 Same-store sales growth 1.6% 6.4% Pro Forma Adjusted EBITDA $ 1,529 $ 1,148 Pro Forma Adjusted EBITDA (C$) (1) C$ 1,940 C$ 1,457 Net Income (loss) income $ 431 $ (1,119) Adjusted Net Income $ 1,010 $ 656 Pro Forma Adjusted Net Income $ 1,010 $ 737 Net (loss) income per share attributable to the Common Shareholders of the Company (in dollars): Basic EPS $ 0.01 $ (0.04) Diluted EPS $ 0.01 $ (0.04) Note: (1) Represents the C$ Pro Forma Adjusted EBITDA converted at the average exchange rates for each respective period.

14 Selected Quarterly Consolidated Information For the 13 weeks ended April 1, 2018 March 26, 2017 (in thousands) Revenue: Franchise revenue 4,355 3,023 Company-owned store revenue 479 584 Total revenue $ 4,834 $ 3,607 Costs and expenses: Cost of sales 420 502 Selling, general and administrative 2,943 3,672 Depreciation and amortization 213 60 Share based compensation expense 783 1,441 Total costs and expenses $ 4,359 $ 5,675 Income (loss) before interest costs, foreign exchange and income taxes $ 475 $ (2,068) Interest expense (income), net (110) 78 Foreign exchange loss (gain) (58) (463) Income (loss) before income tax expense 643 (1,683) Income tax expense (recovery) 212 (564) Net income (loss) $ 431 $ (1,119) Currency translation adjustment (990) (1,109) Comprehensive income (loss) $ (559) $ (2,228) Consolidated Statements of Balance Sheet Information: As at April 1, 2018 As at December 31, 2017 (in thousands) Cash $ 28,311 $ 28,584 Total assets 43,122 42,541 Non-current financial liabilities — — Total debt — — Equity (deficit) 32,004 31,792 The following table shows our cash flows information for the 13 weeks ended April 1, 2018 and March 26, 2017: For the 13 weeks ended April 1, 2018 March 26, 2017 (in thousands) Net cash provided by (used in) operations 982 (3,077) Net cash provided by (used in) investing (749) 87 Net cash provided by (used in) financing (8) 26,374 Net increase (decrease) in cash $ 225 $ 23,384

15 The following table reconciles EBITDA, Adjusted EBITDA, Pro Forma Adjusted EBITDA, free cash flow, free cash flow conversion, Adjusted Net Income and Pro Forma Adjusted Net Income to the most directly comparable IFRS financial performance measure: For the 13 weeks ended (in thousands) April 1, 2018 March 26, 2017 Net income (loss) $ 431 $ (1,119) Interest expense, net (110) 78 Income tax expense (recovery) 212 (564) Depreciation and amortization 213 60 EBITDA $ 746 $ (1,545) Adjustments: Share-based compensation expense (1) 783 1,441 Foreign exchange gain (2) — (481) Transaction and other costs (3) — 1,608 Adjusted EBITDA $ 1,529 $ 1,023 Chicago master agreement commission costs (4) — 125 Pro Forma Adjusted EBITDA $ 1,529 $ 1,148 Pro Forma Adjusted EBITDA C$ (6) C$ 1,940 C$ 1,457 Less capital expenditures $ 449 $ 43 Free cash flow $ 1,080 $ 1,105 Free cash flow conversion 70.6% 96.3% Net income (loss) 431 (1,119) Adjustments: Share-based compensation expense (1) 783 1,441 Foreign exchange gain (2) — (481) Transaction and other costs (3) — 1,608 Related tax effects (5) (204) (793) Adjusted Net Income $ 1,010 $ 656 Adjustments: Chicago master agreement commission costs (4) — 125 Related tax effects (5) — (44) Pro Forma Adjusted Net Income (loss) $ 1,010 $ 737 Notes: (1) In the 13 weeks ended April 1, 2018 and March 26, 2017, the Company granted RSUs to executive officers, management, employees, and non-management directors of the Company in conjunction with an annual employee grant and the Offering, respectively. In the 13 weeks ended April 1, 2018 and March 26, 2017, this amount includes non-cash, share-based compensation. (2) Represents non-recurring foreign exchange gain on the Credit Facility. The Credit Facility was repaid during the 13 week period ended March 26, 2017.

(3) Represents expenses relating to the Offering (that relate to the selling shareholders) and other expenses such as Reorganization and restructuring costs. (4) Represents commission costs paid under the Chicago master franchise agreement for which the Company bought back the Master Franchise Agreement as part of the acquisition of 100% of the membership interests in MHD, LLC, completed during the 13 week period ended June 25, 2017. (5) Related tax effects are calculated at statutory rates in Canada or U.S. depending on adjustment. (6) Represents the Canadian dollar Pro Forma Adjusted EBITDA converted at the average exchange rates for each respective period.

16 Factors Affecting the Comparability of our Results Store Activity New store openings and store closures impact our revenue and the comparability of our results from period to period. New stores, system-wide, typically experience a six to 12 month ramp-up period of sales volatility before sales stabilize. The following table shows the growth in our network of franchised and Company-owned stores for the 13 week periods ended April 1, 2018 and March 26, 2017, respectively: 13 Week Period Ended 14 Week Period Ended 13 Week Period Ended March 27, 2016 June 26, 2016 September 25, 2016 December 25, 2016 March 26, 2017 June 25, 2017 September 24, 2017 December 31, 2017 April 1, 2018 Franchised Store Activity: Beginning of period 172 185 211 240 274 298 329 342 367 Openings 19 25 30 36 26 24 21 22 27 E-openings — 11 13 9 — Franchise acquisition — 1 1 ( 1) Closures and relocations (6) - (2) (2) (2) (4) (21) * (6) * (1) Franchised stores at end of period 185 211 240 274 298 329 342 367 392 Company-owned Store Activity: Beginning of period 6 6 5 4 4 3 3 3 3 Openings — (Refranchised)/Acquired locations — (1) (1 — 1 Closures and relocations ( 1 — Company-owned stores at end of period 6 5 4 4 3 3 3 3 4 Total stores 191 216 244 278 301 332 345 370 396 * Closures in the 13 weeks ended September 24, 2017 and the 14 weeks ended December 31, 2017 included the closure of 17 and 1 Target Retail locations respectively, as further described in the Company’s press release dated September 25, 2017. The press release is available at www.sedar.com Store Composition Our franchised store base includes traditional and non-traditional stores. As at April 1, 2018 and March 26, 2017, the total number of traditional stores was 349 and 244, respectively. As at April 1, 2018 and March 26, 2017, the total number of non-traditional stores was 43 and 54, respectively. Our non-traditional stores are located on university campuses, in airports, in hospitals, in fitness centres and within select retailers. Some of our non- traditional locations, including stores on university campuses, do not operate for a full fiscal year as they follow a school-year schedule. As at April 1, 2018 and March 26, 2017, 20 and 20 stores, respectively, were located on university campuses and therefore closed in certain periods of the year. Due to the different store operating periods and menu offerings, the results of many of our non-traditional stores do not follow the results of our traditional stores. Consequently, our store composition will impact the comparability of our results from period to period. Segments We identify our reporting segments based on the organizational units used by management to monitor performance and make operating decisions. We have identified two operating segments: franchise store operations and Company-owned store operations.

The franchise segment consists of our North American and international franchise stores, which represent the majority of our system-wide stores. At April 1, 2018, the franchise operations segment consisted of 392 stores operated by franchise partners in 17 countries. Revenues in this segment consist primarily of franchise royalty revenue, sales of franchises, area development fees and food coordination fees received. The Company-owned segment consists of our Company-owned stores, located in Canada and the United States. As of April 1, 2018, the Company-owned segment consisted of four stores. We anticipate that the number of Company-owned stores will decrease as a percentage of system-wide stores over time and, accordingly, Company-

17 owned store revenue is expected to decrease as a percentage of total revenue as will our cost of sales. Our Company- owned stores are used as test kitchens, as training centers and for menu innovation. Accordingly, contribution to net income as a percentage of revenue from our Company-owned stores is typically less than in respect of franchised stores. Results of Operations 13 week Period Ended April 1, 2018 compared to the 13 week Period Ended March 26, 2017 The following tables summarize our results of operations for the 13 week period ended April 1, 2018 and the 13 period ended March 26, 2017 (in thousands): For the 13 weeks ended April 1, 2018 March 26, 2017 Amount Percent of Total Revenue Amount Percent of Total Revenue Revenue Franchise revenue $ 4,355 90 % $ 3,023 84 % Company-owned store revenue 479 10 584 16 Total revenue 4,834 100 3,607 100 Costs and expenses Cost of sales 420 9 502 14 Selling, general and administrative 2,943 61 3,672 102 Depreciation and amortization 213 4 60 2 Share based compensation expense 783 16 1,441 39 Total costs and expenses 4,359 90 5,675 157 Income (loss) before interest costs, foreign exchange and income taxes 475 10 (2,068) (57) Interest expense, net (110) (2) 78 2 Foreign exchange loss (gain) (58) (1) (463) (12) Income (loss) before income tax expense 643 13 (1,683) (47) Income tax expense (recovery) 212 4 (564) (16) Net income (loss) $ 431 9 ( 1,119) (31)% Total Revenue. Total revenue was $4.8 million for the 13 week period ended April 1, 2018, representing an increase of $1.2 million or 33% compared to the 13 week period ended March 26, 2017. The increase in total revenue was driven by growth in franchise revenue offset by a decrease in Company-owned store revenue, as described in more detail below.

Franchise revenue. Franchise revenue was $4.4 million for the 13 week period ended April 1, 2018, compared to $3 million in the corresponding fiscal period in the prior year, representing an increase of $1.4 million or 47%. Royalty revenue was $2.6 for the 13 week period ended April 1, 2018, an increase of $0.7 million or 37%, as compared to $1.9 million in the corresponding fiscal period in the prior year. The increase in franchise revenue and royalty revenue were primarily due to an increase in the number of franchised stores from 298 as of March 26, 2017 to 392 as of April 1, 2018 and the impact of system-wide same-store sales growth. Same-store sales growth was 1.6% in the 13 week period ended April 1, 2018 compared to same-store sales growth of 6.4% in the 13 week period ended March 26, 2017. Franchise sales were $0.8 million for the 13 week periods ended April 1, 2018, an increase of $0.4 million in comparison to $0.4 million 13 week period ended March 26, 2017, respectively. Coordination fees received from third parties were $1.0 million for the 13 week period ended April 1, 2018, an increase of $0.3 million as compared to $0.7 million for the 13 week period ended March 26, 2017. The increase was primarily due to the

18 increased number of system-wide stores in operation in the 13 week period ended April 1, 2018 together with the additional 26 net store openings in the 13 week period ended April 1, 2018. Company-owned store revenue. Company-owned store revenue was $0.5 million for the 13 week period ended April 1, 2018, a decrease of $0.1 million or 17%, as compared to $0.6 million for the 13 week period ended March 26, 2017. The decrease was due to the closure of one Company-owned store for 9 weeks during the 13-week period ending April 1, 2018, for a complete remodelling of the store.

Total costs and expenses. Total costs and expenses were $4.4 million for the 13 week period ended April 1, 2018, a decrease of $1.3 million or 23% as compared to $5.7 million during the corresponding fiscal period in the prior year. The decrease in total costs was due to costs incurred related to the offering in the amount of $1.6 million incurred in the 13 week period ended March 26, 2017, not incurred in Q1 2018. The decrease is also attributable to a reduction of $0.6 million in share-based compensation costs in the Q1 2018 compared to Q1 2017 relating to the grant of RSUs to executive officers, management, employees, and non-management directors of the Company in conjunction with the Offering and incentive plans, aligning their interests with financial goals and objectives of the Company. These reductions in costs were offset by an increase in headcount related costs as a result of an increase in headcount at our corporate headquarters related to franchise support and building a long-term corporate talent structure. Total costs and expenses as a percentage of total revenue were 90% for the 13 week period ended April 1, 2018, compared to 157% for the same fiscal period in the prior year.

Cost of sales. Cost of sales were $0.4 million for the 13 week period ended April 1, 2018, a decrease $0.1 million as compared to $0.5 million in the corresponding fiscal period of the prior year. The decrease was related to the closure of one of our company-owned stores for a period of 9 weeks for a full remodel and renovation, the sales and costs related to this location were reduced accordingly while the renovation was being complete. Cost of sales as a percentage of Company-owned stores sales were 88% for the 13 week period ended April 1, 2018, compared to 86% 13 week period ended March 26, 2017.

Selling, general and administrative. Selling, general and administrative expenses were $2.9 million for the 13 week period ended April 1, 2018, a decrease of $0.8 million, as compared to $3.7 million in the corresponding 13 week fiscal period in the prior year. During the 13 week period ended April 1, 2018 the Company experienced a reduction of costs in the amount of $1.6 million, relating to the Offering that were recorded in the same period in the prior fiscal period, which was offset by increased headcount at our corporate offices to support the franchise system and build the management team that will support our long term strategic objectives. Selling, general and administrative expenses as a percentage of total revenue was 61% for the 13 week period ended April 1, 2018, compared to 102% in the corresponding periods in the prior fiscal year.

Depreciation and amortization. Depreciation and amortization was $0.2 million for the 13 week period ended April 1, 2018, representing an increase of $0.1 million compared to the corresponding fiscal period in fiscal 2017. The acquisition of the intangible franchise rights as part of the MHD LLC. transaction in the amount of $4.2 million Q2 2017 resulted in this increase of $0.1 million in amortization over the prior fiscal year. Interest expense, net. Interest expense (income), net was ($0.1) million for the 13 week period ended April 1, 2018, a reduction in interest expense in comparison to $0.1 million for the 13 week period ended March 26, 2017. The borrowings under the Credit Facility were repaid on February 7, 2017 in conjunction with the completion of the Offering. Income generated in the 13 weeks ended April 1, 2018 related to cash invested in an interest bearing bank account.

19 Income tax (recovery) expense. Income tax expense was $0.2 million for the 13 week period April 1, 2018, as compared to an income tax recovery of $(0.6) in the corresponding fiscal period in the prior fiscal year. The tax expense in the 13 week period ended April 1, 2018 was primarily as a result of the difference between the expected tax deductible amounts of the Company’s restricted stock unit plan when compared to the underlying accounting expense. Performance Measures – Quarterly Results The following table sets forth certain unaudited operating data for each fiscal quarter of fiscal 2016, fiscal 2017 and Q1 2018. Our quarterly results are not necessarily indicative of future operating results. See “Non-IFRS Financial Measures”, “Industry Metrics” and “Risk Factors”.

Fiscal 2016 Fiscal 2017 Fiscal 2018 First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter (in thousands, except store numbers and sales percentages) Number of system- wide stores open at end of period 191 216 244 278 301 332 345 370 396 Number of franchised stores open at end of period 185 211 240 274 298 329 342 367 392 Number of company- owned stores open at end of period 6 5 4 4 3 3 3 3 4 System-wide sales $ 18,879 $ 24,545 $ 26,310 $ 26,384 $ 29,131 $ 34,467 $ 36,442 $ 37,414 $ 38,977 Same-store sales growth 7.3% 7.0% 5.3% 7.7% 6.4% 4.2% 5.1% 6.4% 1.6% Revenue $ 2,826 $ 3,451 $ 3,478 $ 3,379 $ 3,607 $ 4,350 $ 4,379 $ 4,735 $ 4,834 Seasonal factors, in addition to the timing of holidays, can cause the Company’s revenue to fluctuate from quarter to quarter. The timing of openings, which are typically slower historically in the first quarter as compared to the remainder of the quarters throughout the year, can lead to revenue fluctuations from one quarter to another. Additionally, the first quarter has historically been a slower period for sales by our restaurants given consumer spending trends following the holiday season as well as adverse weather in our legacy markets. System-wide sales grew to $39.0 million for the 13 week period ended April 1, 2018, compared to $29.1 million for the 13 week period ended March 26, 2017, representing an increase of $9.9 million or 34%. The increase relates to an increase of 95 net new locations, in addition to same store sales growth of 1.6% for the 13 week period ended April 1, 2018.

Same-store sales growth for the 13 week period ended April 1, 2018 was 1.6% compared to 6.4% for the 13 week period ended March 26, 2017.

20 Franchise revenue. Franchise revenue was $4.4 million for the 13 week period ended April 1, 2018, compared to $3 million in the corresponding fiscal period in the prior year, representing an increase of $1.4 million or 47%. Royalty revenue was $2.6 million for the 13 week period ended April 1, 2018, an increase of $0.7 million or 37% as compared to $1.9 million in the corresponding fiscal period in the prior year. The increase in franchise revenue and royalty revenue were primarily due to an increase in the number of franchised stores from 298 as of March 26, 2017 to 392 as of April 1, 2018 and the impact of system-wide same-store sales growth. Same-store sales growth was 1.6% in the 13 week period ended April 1, 2018 compared to same-store sales growth of 6.4% in the 13 week period ended March 26, 2017. Franchise sales were $0.8 million for the 13 week period ended April 1, 2018, an increase of $0.4 million in comparison to $0.4 million for the 13 week period ended March 26, 2017. Coordination fees received from third parties were $1.0 million for the 13 week period ended April 1, 2018, an increase of $0.3 million as compared to $0.7 million for the 13 week period ended March 26, 2017. The increase was primarily due to the increased number of system-wide stores in operation in the 13 week period ended April 1, 2018, together with the additional 26 net store openings in the 13 week period ended April 1, 2018.

Outlook The Company reiterates its outlook for the period through the end of fiscal 2019 that was issued on September 25, 2017, with the exception of the outlook related to Proforma Adjusted EBITDA, which is being revised solely as a result of the adoption of IFRS 15, a new accounting revenue recognition standard that effects the manner in which the Company records revenue on upfront franchise fees. This accounting change has no effect on the cashflows of the business, or the manner in which we collect these fees, which is at the time of execution of each franchise agreement.

The Company reiterates its outlook for the period through the end of fiscal 2019 as follows: • System-wide store count of between 730 and 760 stores by the end of fiscal 2019 (there are no e- stores included in this fiscal 2019 outlook); • Annual same store sales growth outlook of between 3.0% and 4.0% for the period fiscal 2018 through fiscal 2019; • System-wide sales growing to between $275 million and $285 million by the end of fiscal 2019; and • Selling, general and administrative expenses as a percentage of system-wide sales of between 5.0% and 6.0% for the period fiscal 2018 through fiscal 2019.

The Company revises its outlook for the period through the end of fiscal 2019 as follows: • Solely as a result of the adoption of IFRS 15, a non-cash accounting pronouncement that impacts the way our industry recognizes upfront franchise fee revenue, the Company revises its 2019 Proforma Adjusted EBITDA outlook from a range of $15 million to $17 million to a range of $12 million to $14 million. Prior to the adoption of IFRS 15, the Company’s outlook assumed average franchise fee revenue of approximately $30,000 per store in local currency (except for our international franchise partners, who are required to pay this amount in U.S. Dollars) would be recognized at the time of a new store opening. With the required adoption of IFRS 15, our Proforma Adjusted EBITDA outlook now assumes approximately half of the upfront franchise fee per store in local currency will be recognized at the time of a new store opening, with the remaining

21 half deferred and amortized over the life of the franchise agreement, which is typically 10 years. There is no impact to cash flows, as we will continue to collect the franchise fee at the time of execution of the franchise agreement. Selected Consolidated Statements of Balance Sheet Information As at April 1, 2018 As as December 31, 2017 As at December 26, 2016 Total assets 43,122 42,541 14,438 Non-current financial liabilities — Equity (deficit) $ 32,004 $ 31,792 $ (14,338) Total assets were $43.1 million as at April 1, 2018, an increase of $0.6 million as compared to $42.5 million as at December 31, 2017.

Non-current financial liabilities were nil as at April 1, 2018, as compared to nil as at December 31, 2017. The Credit Facility presented in current liabilities was repaid on February 7, 2017. The Company had equity of $32.0 million as at April 1, 2018, an increase of $0.2 million from the $31.8 million deficit as at December 31, 2017. The increase in equity is largely attributable to the net income in Q1 2018 of $0.5 million. Liquidity and Capital Resources General Our primary sources of liquidity and capital resources are cash generated from operating activities as well as proceeds from the Offering. Our primary requirements for liquidity and capital are working capital and general corporate needs, such as our franchise sales and support activities. We believe that our current sources of liquidity and capital will be sufficient to finance our continued operations, growth strategy and additional expenses we expect to incur for at least the next 12 months.

Our capital expenditures consist primarily of remodeling activities associated with our corporate headquarters and Company-owned stores, equipment replacements, investments in information technology, and other property and equipment which we have funded out of cash from operating activities. In the 13 week period ended April 1, 2018, total capital and intangible expenditures were $0.4 million, an increase in comparison to the corresponding period in fiscal 2017. We expect to continue to fund capital expenditures out of cash from operating activities. Our cash flows, available borrowings under our Credit Facility, and proceeds from the Offering have allowed us to pursue our growth strategies while also returning capital to shareholders, when appropriate. Our priorities in the use of available cash have been historically been: • reinvestment in core business activities that promote our strategic initiatives; • reducing long term debt; and • general corporate purposes.

22 The following table shows our cash flows information for the 13 week periods ended April 1, 2018 and March 26, 2017: For the 13 weeks ended April 1, 2018 March 26, 2017 Net cash provided by (used in) operations 982 (3,077) Net cash provided by (used in) investing (749) 87 Net cash provided by (used in) financing (8) 26,374 Net increase (decrease) in cash $ 225 $ 23,384 Comparative Cash Flow Net cash provided by (used in) operations. Our net cash provided by (used in) operations is driven by sales at both franchised stores and Company-owned stores, as well as franchise and development fees. We collect franchise royalties from our traditional franchise partners located in North America on a weekly basis and from our international and certain non-traditional franchise partners on a monthly basis. Cash receipts from our traditional franchise partners located in North America are directly debited from the franchise partners’ operating cash accounts, eliminating collection or bad debt exposure. Store-level operating costs at our Company-owned stores, unearned franchise and development fees and corporate overhead costs also impact our net cash provided by (used in) operations.

Net cash provided by operations was $1.0 million for the 13 week period ended April 1, 2018 compared to net cash used in operations of $(3.1) million for the 13 week period ended March 26, 2017. The increase in net cash provided by operations was primarily attributable to net income in the period, which accounted for $1.7 million of the change, as well as the decrease in accounts payable and accrued liabilities of $1.1 million. This decrease in accounts payable is a result of a number of expenses incurred in the fourth quarter of 2016 and first quarter of 2017 related to the Offering and paid in fiscal 2017. The increase in cash is also partially attributable to stock based compensation expense, a non-cash item of $0.8 million related to RSUs issued in conjunction with the Offering and subsequent performance grants.

Net cash provided by (used in) investing. Our net cash provided by (used in) investing include remodeling activities associated with our corporate headquarters and our Company-owned stores and providing operational support to our franchise system. Substantially all of our capital expenditures have historically been financed using cash provided by operations and borrowings. Net cash used in investing activities was $(0.7) million for the 13 week period ended April 1, 2018 compared to net cash provided by investing activities of $0.1 million for the 13 week period ended March 26, 2017. Net cash used in investing activities primarily consisted of the $0.4 million used in the acquisition of capital and intangible assets.

Net cash provided by (used in) financing. Our net cash provided by financing activities was nil for the 13 week period ended April 1, 2018 compared to net cash provided by financing activities of $26.4 million for the 13 week period ended March 26, 2017. The net cash provided by financing activities for the 13 week period ended March 26, 2017 primarily consisted of proceeds from the Offering, net of underwriting fees of $41.5 million offset by proceeds used to repay the Credit Facility of $15.0 million.

On February 7, 2017, the Company repaid the Credit Facility with a portion of the proceeds from the Offering. The $2.0 million operating line, comprising the Credit Facility, continues to be available to the Company under the original terms entered into on June 28, 2016. The $2.0 million operating line is a revolving facility that consists of: (i) U.S. dollar base rate loans, which bear interest at the U.S. base rate plus 1.00% per annum; (ii) U.S. dollar LIBOR loans, which bear interest at LIBOR plus 2.25% per annum; and (iii) Canadian dollar or U.S. dollar standby letters of credit with fees to be calculated by a Canadian chartered bank.

23 Off-Balance Sheet Arrangements We have guaranteed certain lease obligations, primarily related to franchise partners. In the event of default by the relevant franchise partner, we retain the ultimate responsibility towards the landlord for payments under the lease agreements. We have a number of options available to mitigate this potential liability and historically have not incurred any significant liabilities pertaining to these guarantees. Share Information The Company’s authorized share capital consists of an unlimited number of Class A subordinate voting shares, an unlimited number of Class B multiple voting shares and an unlimited number of preferred shares, issuable in series.

As at April 1, 2018, there were 5,248,017 Class B multiple voting shares 25,842,372 Class A subordinate voting shares and no preferred shares issued and outstanding. As at April 1, 2018, the Company had 1,021,245 options to purchase Class A subordinate voting shares issued and outstanding. On January 25, 2017, the Company granted an aggregate of 969,975 RSUs to Freshii’s executive officers, management and employees and 49,500 RSUs to Freshii’s non-management directors. One-third of these RSUs granted to our employees and executive officers vested on July 31, 2017, the date that was six months following the closing date of the Offering (the “Closing Date”) with one third of the remaining RSUs vesting on each of the first three annual anniversary dates following the Closing Date. Half of the RSUs granted to our non-management directors will vest on July 31, 2017, and the remaining RSUs granted to our non-management directors will vest on the date that is 12 months following the Closing Date. Upon settlement of any RSU for cash, the fair market value of the Class A subordinate voting share that such RSU would have otherwise been settled in exchange for, is an amount equal to, on a particular date, the closing price for the Class A subordinate voting shares on the TSX for the trading day on which the Class A subordinate voting shares traded immediately preceding such settlement date. The Company granted an aggregate of 66,323 RSUs to Freshii’s management and employees under the Annual Employee grant, and 29,154 to Freshii’s management and employees under the Employee Bonus grant. Under the Annual Grant Plan one-third of these RSUs will vest on each of the first three annual anniversary dates of the grant. Under the Employee Bonus grant these RSUs will vest in 72 hours from the date of grant. On February 26, 2018 (the “Grant Date”), the Company granted an aggregate of 452,165 restricted stock units to Freshii’s executive officers, management and employees and 72,758 RSUs to Freshii’s non-management directors. These RSUs granted to our employees and executive officers will vest on each of the first three annual anniversary dates following the Grant Date. Half of the RSUs granted to our non-management directors will vest on the date that is six months following the Grant Date, and the remaining RSUs granted to our non-management directors will vest on the date that is 12 months following the Grant Date. Upon settlement of any RSU for cash, the fair market value of the Class A subordinate voting share that such RSU would have otherwise been settled in exchange for, is an amount equal to, on a particular date, the closing price for the Class A subordinate voting shares on the TSX for the trading day on which the Class A subordinate voting shares traded immediately preceding such settlement date. Related Party Transactions The Company’s policy is to conduct all transactions with related parties at arm’s length to align with market terms and conditions. The Company has entered, or proposes to enter, into employment agreements with related parties and related parties may also participate in the Company’s share-based compensation plans. See note 20 to our consolidated financial statements.

24 Critical Accounting Policies and Estimates The preparation of the condensed consolidated interim financial statements requires significant judgments made by management in applying the Company’s accounting policies except those adopted using the judgments from the 13 week period ended April 1, 2018 and the key sources of uncertainty were the same as those that applied to the Company’s audited annual consolidated financial statements as at and for the 53 week period ended December 31, 2017. See "Critical accounting judgments and estimates" in the Company's audited annual consolidated financial statements as at and for the 53 week period ended December 31, 2017 for a full discussion of the applicable critical accounting policies and estimates of the Company.

Accounting Changes Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods beginning on or after January 1, 2018. Those pronouncements that are not applicable or do not have a significant impact to the Company have been excluded from the table below. The following have not yet been adopted and are being evaluated to determine the impact on the Company: IFRS 16, Leases (“IFRS 16”) IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, the customer (‘lessee’) and the supplier (‘lessor’). This will replace IAS 17, Leases (“IAS 17”) and related interpretations. IFRS 16 provides revised guidance on identifying a lease and for separating lease and non-lease components of a contract. IFRS 16 introduces a single accounting model for all lessees and requires a lessee to recognize right-of-use assets and lease liabilities for leases with terms of more than 12 months, unless the underlying asset is of low value, and depreciation of lease assets separately from interest on lease liabilities in the income statement. Under IFRS 16, lessor accounting for operating and finance leases will remain substantially unchanged. IFRS 16 is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted for entities that apply IFRS 15, Revenue from Contracts with Customers. As the Company has contractual obligations in the form of operating leases under IAS 17, there may be an increase to both assets and liabilities upon adoption of IFRS 16, and material changes to the timing of recognition of expenses associated with the lease arrangements. The Company is analyzing the new standard to determine its impact on the Company's consolidated balance sheet and consolidated statement of comprehensive income (loss).IFRS 16, Leases (“IFRS 16”) Risk Factors The main risks our financial instruments are exposed to are credit risk, market rate risk, foreign currency risk, interest rate risk, liquidity risk, and commodity price risk, each of which is discussed below. All of these risks arise in the normal course of business, as we do not engage in speculative trading activities. The following analysis provides quantitative information regarding these risks.

Credit risk The Company’s credit risk is primarily attributable to its trade receivables. Trade and other receivables primarily comprise amounts due from franchisees. Credit risk associated with these receivables is mitigated for a number of reasons including the following: • Other than receivables from international locations, the Company’s broad franchise base is spread mostly across Canada and U.S., which limits the concentration of credit risk. • Prior to accepting a franchisee, the Company undertakes a detailed screening process which includes the requirement that a franchisee has sufficient financing • Franchisee balances beyond a particular age are reviewed and evaluated and in cases where management considers that the expected recovery is less than the actual account receivable, the Company accounts for this with a specific bad debt provision.

25 The amounts disclosed in the consolidated balance sheet are net of allowances for bad debts, estimated by the Company’s management based on past experience and specific circumstances of the counterparty. Other financial instruments that potentially subject the Company to credit risk consist principally of cash. The Company had no significant credit risk exposure arising in relation to its financial instruments as at April 1, 2018. The Company limits its counterparty risk associated with cash by utilizing a number of different financial institutions and limiting the total amount of cash held at any individual financial institution. The majority of the cash as at April 1, 2018 was held at large U.S. and Canadian financial institutions.

Market risk Market risk is the risk that changes in market prices and interest rates will affect the Company’s net earnings or the value of financial instruments. These risks are generally outside the control of the Company. The objective of the Company is to mitigate market risk exposures within acceptable limits, while maximizing returns. The Company’s market risk consists of risks from changes in foreign exchange rates, interest rates and market prices that affect its financial liabilities, financial assets and future transactions.

Foreign currency risk The Company is exposed to foreign currency risk as a portion of the sales and purchases are made in foreign currencies. Foreign exchange risk arises due to fluctuations in foreign exchange rates, which could affect the Company's results. The total Canadian dollar ("CAD") balances as at April 1, 2018 in the amount of $1,011 were translated into United States dollars (USD) at the year-end rate of 0.7756 for CAD. Based on the above net exposures as at April 1, 2018, and assuming that all other variables remain constant, a +/- 5% in the value of the CAD against the USD would result in an increase/decrease of $39 in the consolidated statement of comprehensive income. The Company has not entered into any derivative instruments to reduce its exposure to currency risk. Liquidity risk Liquidity risk relates to the risk the Company will encounter difficulty in meeting its obligations associated with financial liabilities. The financial liabilities on its balance sheet consist of bank indebtedness, bank loans, accounts payable and accrued liabilities, and settlements payable. Management closely monitors cash flow requirements and future cash flow forecasts to ensure that it has access to funds through its committed borrowing facility and from operations to meet operational and financial obligations. The Company believes it has sufficient liquidity to meet its cash requirements for the next twelve months.

Commodity price risk The Company is exposed to increases in the prices of commodities in operating its corporate restaurants. To manage this exposure, the Company uses purchase arrangements for a portion of its needs for certain consumer products that may be commodities based.

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