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OGO: TSX-V Building the Leading Organic Produce Company May 2016 Photo: Organic French-Bean crop field - Monjas, Jalapa, Guatemala

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Page 1: Building the Leading Organic Produce Company€¦ · Organic Produce Company . May 2016 . ... - The natural and organics industry has been growing at over 15% per annum over the past

OGO: TSX-V

Building the Leading Organic Produce Company May 2016

Photo: Organic French-Bean crop field - Monjas, Jalapa, Guatemala

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Disclaimer

This presentation contains certain forward-looking statements which may not be based on historical fact, including without limitation, statements regarding Organto Foods Inc.’s ("Organto") expectations in respect of its business strategy, plans for future growth and expansion, access to capital, management expectations and events or developments that Organto expects to take place in the future. All statements, other than statements of historical facts, are forward-looking information and statements. The words “believe”, “expect”, “anticipate”, “contemplate”, “target”, “intends”, “continue”, “budget”, “estimate”, “may”, “will”, and similar expressions identify forward-looking information and statements. In addition to the forward-looking information and statements noted above, this presentation includes those that relate to the ability to raise additional capital and complete future financings, capital expenditures and costs, the expected growth in the organic food industry and the ability of Organto to successfully execute its growth strategy. Such growth strategy includes acquiring additional land, acquiring or building additional greenhouses, potential acquisitions of assets or companies, and increasing capacity of existing facilities, among other plans discussed in this presentation. Such forward-looking information and statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Organto as of the date of such information and statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking information and statements. Such factors include, but are not limited to, the inability of Organto to generate sufficient revenues or raise sufficient funds to carry out its business plan, changes in government legislation, taxation, controls, regulations and political or economic developments in Guatemala, risks associated with farming activities generally, compliance with importation and exportation laws of various countries, significant fluctuation in food prices, including the risk of obtaining necessary licenses and permits, inability to identify, negotiate and complete a potential acquisition for any reason, ability to retain key employees, and general economic conditions. Many of these uncertainties and contingencies could affect Organto’s actual performance and could cause actual performance to differ materially from those expressed or implied in any forward-looking information and statements made by, or on behalf of, Organto. Readers are cautioned that forward-looking information and statements are not guarantees of future performance. There can be no assurance that such information and statements will prove to be accurate and actual results and future events could differ materially from those acknowledged in such information and statements. Organto disclaims any intention or obligation to update or revise any forward-looking information and statements whether as a result of new information, future events or otherwise, except to the extent required by applicable laws.

2016-03-17

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Organto seeks to be the leading, vertically-integrated branded organic fresh produce company in the world by 2018

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More than 85 years combined experience

in the natural and organic food industry.

Fund expansion in fastest growing

segment of consumer sector.

Social Balanced and Responsible

Company seeking to change the

produce industry

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Industry Analysis

Strong Industry Fundamentals - The natural and organics industry has been growing at over 15% per annum over the past 10

years

- It is projected to continue to grow at over 14% per annum over the next 5 years

- The organics segment is growing at over 5x the conventional segment

- The organic fruit and vegetable segment has been growing at over 12-13% per annum and has reached close to US$15 billion in the United States

- Industry is fragmented with many small producers producing specialty products in unorganized and unprofessional manner (source of acquisitions)

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Industry Analysis

Strong Industry Fundamentals - Sourcing of fresh organic products year

round has become major issue for retailers and distributors - Consistent, stable producers are

rewarded with larger market share

- Difficulty of obtaining or converting conventional land to organic land has exacerbated the problem of supply - Minimum of three years

- Uneconomical greenhouses built in areas

that are too expensive to construct or operate

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Current Products – Exotic Vegetables

Sugar Snaps Snow Peas Haricot Verts Baby Carrots Brussels Sprouts

Romanesco Cauliflower

Broccoli Florets Baby Broccoli Broccoli Crowns

Organto strives to be the largest provider of organic, branded exotic vegetables in the world by 2018

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Organto Global Locations

Vancouver, Canada Corporate Headquarters

Amsterdam, Holland Sales, Distribution & Importing

Miami, Florida Sales, Importing & Logistics

Monjas, Guatemala Organic Farm & Greenhouses

Patzún, Guatemala Plant & Greenhouses

General Roca, Argentina Organic Farm & Plant

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Advancements Organto has made substantial changes to the business since the signing of the merger in May 2015

Organic Farmland

•Acquired 53 hectare farm in Monjas, Guatemala •Added additional organic farmland near Monjas •Hired Andres Pullin to oversee entire operations in Guatemala •Drilled deep water well

Organic Greenhouses

•Acquired 3.2 hectare organic greenhouse in Jalapa •Purchased additional 1.5 hectare organic greenhouse in Patzun •Hired Cristian Marin to manage greenhouse operation

Plant Improvements

•Built separate storage facility •Drilled deep water well •Added to operations and plant management team • Improved reporting and accountability

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Vertically Integrated Model Our ability to control and operate more of the chain allows us to offer a more consistent product at more competitive prices

Importing & Distribution

• Organto B.V. (Amsterdam)

• Organto U.S.A. (Miami, FL)

Packing & Processing

• Company-Owned Plant in Patzún, Guatemala

• Organic & Conventional Plant

Farming & Greenhouses

• Organic Greenhouses • Organic Farmland • Sub-Contracted Growers

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Vertically Integrated - Strategy Farm to Table: Better quality at more competitive prices

Farming Operations

Packing & Processing Plant - Certified organic processing plant - Employing over 190 workers (all indigenous) in plant - Experienced team with over 50 years working in processing/packing plants

Importing & Distribution

- Organto BV – Dutch company responsible for European market - Organto USA – U.S. company responsible for U.S./North American market - Better information and additional margin for company

- Approximately 50 hectares of certified organic production - 5 Hectares of Organic Greenhouses (3.2 hectares currently certified) - Close relations with indigenous farming communities

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Analysis of Vertical Integration – Risk vs Reward

Risk Risk (Analysis) Working Capital Rewards

Farming (Company Owned)

High Main risk is loss of production (8-12 week cycles)

Moderate/High High (40%-60% GM)

Farming (Sub-Contracted)

Low Main risk is not delivering into sales contracts

Low/Moderate None

Packing & Processing Moderate Risk of logistics and product loss due to operational inefficiencies

Moderate/High Moderate (25%-35% GM)

Importing Low Not delivering into sales contracts because of lack of quality product

Low/None Low (8%-12% GM)

Distribution Low Very low. No risk except for strikes, fuel prices, etc.

Low/None Low (6%-8% GM)

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+85 years of combined experience in farming, packing, distribution and retail segments

Management

Organic certification at Monjas, Jalapa, Guatemala

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Current Management Team Peter Gianulis - Chief Executive Officer • 20+ years of experience in consumer sector, particularly in the natural products and organic food industry. Invested in and

advised more than 20 companies in the sector including Whole Foods, Hain Celestial, Wild Oats, SunOpta, and UNIFI. • Founder of Carrelton Asset Management, an asset management and PE firm specializing in small and micro-cap

companies with the mandate to invest in the natural product, consumer, and mining sectors. • MBA from Cornell University in International Business with a B.A. in Quantitative Economics from UCSD

Andrés Barresi - Chief Operating Officer • 20+ years experience in agricultural and food industries for conventional and organic operations. • Consultant with McKinsey and partner at Hermes Management Consulting, with over 25 years of experience working in

Latin America. • MBA from Cornell University in Operations and Strategy with a BS in Industrial Engineering from University of Buenos Aires.

Marcus Meurs - Founder & Chief Marketing Officer • Dynamic Dutch entrepreneur with more than 25 years of experience in the global conventional & organic food industry. • Founder of Pure Nature Organics and it’s “Pure Nature” brand in 2003 and grew the company to +$35 million in sales. Pure

Nature was acquired by SunOpta in 2009. • Vast experience in managing all facets of an international food company : Operations, Processing, Logstics, Pricing, Sales

Strategies, Product Development and Packaging, among others. • MBA from European University in International Management with a BBA and BIS from EU Antwerp

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Recent Key Addition Rients van der Wal - Managing Director – Europe • Rients brings over 15 years of experience in the produce and organic food industry. • Previously worked with Total Produce in Amsterdam and is in charge of our importing and distribution business (Organto

B.V.) in Europe based in Amsterdam. • Prior to joining Organto and Total Produce, he managed operations for numerous production and farming companies. • Joined Organto in October 2015.

Andres Pullin – Regional Manager – Guatemala • Strong knowledge of local Guatemala farming and plant operations. • Responsible for all facets of operations including organic farming, community relations and packing plant. • Family with long-history of organic farming in Guatemala – Organic coffee plantations.

Gabriel Leal – Local Finance Head – Guatemala • Over 10 years of experience working in local Guatemalan finance operations. • Previous financial accountant to CapGemini Business Services in Guatemala. • Strong knowledge of designing and implementing internal financial control systems.

Wesley Cornell– Director of Research & Development • Responsible for research & development of organic farming and relationships with agricultural universities • Development of organic farming programs and protocols for all farms and cooperatives • Graduate (Cum Laude) at Cornell University Natural and Agricultural Resource Management

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Operational Team in Guatemala Organto team in Guatemala has grown to over 200 employees with strong leadership

Andres Barresi COO

Andres Pullin Regional Manager

Hector Cruz Plant Manager

Norberto Patal Head of Farming

Christian Marin Head of

Greenhouses

Gabriel Leal Local Finance Head

Raul Jimenez Quality Control

Wes Cornell Head of Organic

R&D

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Corporate Social Responsibility Is Organto (H30)

Socially Conscious Business Practices

Harvested organic French-Bean - Monjas, Jalapa, Guatemala

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Socially Conscious Business Practices

Commitment to communities and employees

Develop Social Programs for employees.

Establish Key Partnerships with leading universities to train employees

and members of the community on best practices in organic farming.

Formalize employment contracts vs sub-contracting (industry standard).

Free Meals for employees.

Provide Medical Service for employees on a weekly basis through

charity foundations.

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Engagement

Government Relations

Community Relations

Key Stakeholders

- Ministry of Agriculture, Livestock and Food

- Non-Governmental Organizations (NGOs)

Fully immersed in the communities where we operate.

- Indigenous Communities

- Funcef, Doctors without Borders, Manos de Sur

- Employees - Growing Associations (Q’Anil, etc.)

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Associations and Certifications

Our strategy is to partner with some of the leading associations and certifications in the world:

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Farming & Greenhouse Operations

Organto greenhouse operation - Guatemala

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Market-leading organic greenhouses

State of the art processing and production plant

- Allow for on-going production throughout the seasons - Sustainable & Organic - Cluster strategy of 4-6 hectares for operational & cost efficiency - On-site testing lab & facility for product verification (to be operational in 2Q16)

Industry Leadership

Certified organic land in Guatemala

- Ability to process 20 million lbs/annum of product - Planned expansion to double capacity and separate organics

- Currently 50 hectares of organically-certified open field farms - 2016 plan to add additional 100 hectares of certified organic farmland

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Increased operating platform with redesign – in progress - Created easier work flow in plant with more operating efficiency - Implemented new protocols for hygiene and cold-chain process - Completed new mechanized well with filter system - Built enclosed “bodega” for improved storage and sanitation

Plant Operations – Improvements & Efficiency

2016-2017 Business Plan for Expansion & Protocols - Plan expansion to add additional 300-400 m2 cold storage and separate areas

for organic processing

- Open up two new loading bays for finished product - Installation of new sanitation system for entering employees - Built enclosed “bodega” for improved storage and sanitation - Adding new raw product washing system for more automation and greater

efficiency

Processing plant, Patzún, Guatemala

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Greenhouse Structure

GH

GH

GH

GH

GH

GH Pum

p

Waterwell

Pum

p

Waterwell

Cluster Monjas

Cluster Patzún

GH

GH

GH

GH

GH

GH

Greenhouses for 2017

- Goal: 15 hectares in total by the end of 2016

Pum

p

Waterwell

Cluster – To Be Funded

GH

GH

GH

GH

GH

GH

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Guatemala Ideal Location for Greenhouse Construction - Mild climate allows for inexpensive systems to be constructed without use of artificial heating and

cooling systems - Lack of natural disasters allow for efficiency in construction (reduced building costs) - Year round growing ideal for vegetables

Organic Greenhouses – Year Round Efficiency

- Ability to get 3.7-4.5 turns (i.e. harvests) per year on greenhouse grown products (versus 2.7-3.0 for open-field organic farming)

- Organically-certified products grown in organic grow bags (i.e. organic soil) - Payback period of less than 18 months with average gross margins of 50-60% - More efficient and predictable growing cycles and yields (15%-25% higher per harvest

versus open-field farming)

High Value-Added Products Allow for Quick Return on Capital

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Corporate Strategy Growing “Organically” and Strategic Initiatives

Organic French-Bean crop field - Monjas, Jalapa, Guatemala

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Strategic Initiatives

Branding & Packaging

Increase Company-Owned Organic Farming

Organto intends on revolutionizing the produce industry

- Complete organic farming build-out in Guatemala (additional 100 hectares of open field farming plus add 10-15 hectares of organic greenhouses by 2017

- Seeking opportunities for additional organic land - Working with well-known Argentine farming group for new organic initiative

Social Balance

- Re-Education of organic farming techniques to indigenous communities - Team-Up with other local groups working with indigenous groups - Integrate with foundations and social groups to provide services

- Introduction of branded sub-family of products - Innovative new packaging design

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Innovative Packaging Introduction of innovative and sustainable packaging for branded products

Aesthetically “pleasing”

Environmentally friendly - Working with advanced packing companies to develop new packaging that better represents our

values and philosophies - “Organic” consumers demanding more responsible behaviour

Food Safety

- Retailers requiring growers and companies to protect the food chain - Challenge is allowing consumers to “feel,” “touch,” “smell” their products

- Historically been “after-thought” in produce industry - Innovative new packaging design

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Financial Information

72 million shares outstanding in Organto - Approximately 70% held by insiders subject to lock-up period (up to 3 years) - Last financing C$1.5 million at C$0.20 per share completed in July 2015

Profitable existing operations in Guatemala - Profitable operations in Guatemala - Targeting over 25%-28% in gross margins for 2017 - Ability to grow sales by over 100% in 2016

CAPEX vs Working Capital - Current working capital lines in place – look to expand debt facilities - Future sales growth will require additional CAPEX and Working Capital

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Contact Information

Panos “Peter” Gianulis

President & CEO +1 786 252 4948 [email protected]

Marcus Meurs

Head of Sales & Distribution +1 305 496 4487 [email protected]

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Organto Foods Inc. 1090 Hamilton St

Vancouver, BC V6B 2R9 Canada

+1 888 818-1364

[email protected]

Organto Foods Inc. 1548 Brickell Avenue Miami, FL 33129 USA +1 786 252-4948 [email protected]