Operational Plan

For

VITEX NUTRITION LTD.

September 2018

1. Summary

This operational plan addresses the on-site business in accordance with the Business Plan. The business will

start up and grow for the GMP compliant production of oral dosage products, plus packaging. Basic

elements (personnel, facility, equipment, process, quality system, GMP programs) are proposed in

detail.

Introduction of VITEX NUTRITION LTD (VITEX). (vision, mission)

2. Objectives and Strategies

2.1 Objectives /activities

VITEX is performing the following activities that are subject to Establishment/Site Licensing in Canada:

Fabricating of oral dosage (Vegan soft capsule, DR caps, (delayed release vegan hard capsule),

tablet, powder) NHP, dietary supplement and drugs

Packaging/Labelling (powder, bottle, blister) of oral dosage products

Importing and exporting of oral dosage products

2.2 Strategies

Initially, VITEX will produce product in accordance with the Vitex Business Plan. VITEX will

establish a quality system, submit regulatory licensing or certificates, pursue compliance

approval/recognition along with setting up of manufacturing for NHP supplement products.

Additionally, VITEX. will provide contract manufacturing and packaging service to the public, with

in-house process scale-up or improvements that are necessary. VITEX will also upgrade its quality

system and pursue licensing to cover drug product manufacturing/packaging business.

3. Personnel

VITEX’s team is made up of qualified individuals to be responsible for jobs that support the

corporate mission and objectives. On-going training will be held periodically to ensure occupational

safety, hygiene, GMP compliances and technical competence of the team.

3.1 Organizational Chart.

See attachment 1

3.2 Job description.

See attachment 1a

To start up, key personnel (e.g. encapsulation operator, QC associate, QA manager, packaging,

inspection technician) are required to establish the production lines, quality system and initiate

GMP programs.

4.Premises and Equipment

4.1 Canadian site

The proposed GMP manufacturing facility is a 35,000 sq. ft commercial building consisting of two floors. The facility is built with air-conditioning, supply of power (110v, 220v), water (city water) and waste disposal service. Additional utility requirements may include: HVAC, Pressure zoning, Purified water, Compressed air, Nitrogen gas, Vacuum system.

Proposed Details

Main Floor 25,000 sq. ft. Mezzanine 10,000 sq. ft. Total Area 35,000 sq. ft.

Value of building @ $300.00 sq. ft. $ 10,500,000

Down payment (25%) $ 2,600,000

3.72% 10-year term mortgage on $7,900,000 {30-year amortization} Principle & Interest (monthly) $ 37,306 Maintenance + taxes @ $3.65 sq./ft. $ 10,646

Monthly payment $ 47,952

NOTE: Building is custom built to GMP specifications to facilitate full manufacturing requirement.

4.2 Foreign sites

Foreign sites are pharmaceutical or nutraceutical firms that are qualified as per US or Canadian

GMP regulations. Foreign sites support manufacturing or packaging operations for the Canadian

site.

4.3 Process flow

A day-by-day production operation covering work order, production through to finished product

release is illustrated in a Process Flow Chart. See attachment 2.

4.4 Equipment list

Table 2 lists equipment needed for manufacturing, utility, or QC activities.

5 Production Process for oral dosages

5.2 Blending, granulation

5.3 Encapsulation

5.4 Tablet pressing

5.5 Coating

5.6 Packaging-bottle packaging

5.7 Supporting activities

6 Quality System

Based on the philosophy “Quality should be built into the product and testing alone cannot be relied on

to ensure product quality”, a quality system addresses the goal of providing a high-quality drug/NHP

product to patients and prescribers.

A quality system will be coupled with manufacturing process and product knowledge and risk

management practices, to ensure cGMP compliances and to guarantee the quality, safety, and efficacy of

products. A well- built quality system will reduce the number of (or prevent) recalls, returned or

salvaged products, and defective products entering the marketplace.

6.2 Quality unit

Quality unit is responsible for quality work, and generally divided into Quality Control (QC) and Quality

Assurance (QA) functions.

QC usually involves (1) assessing the suitability of incoming components, containers, closures, labeling,

in- process materials, and the finished products; (2) evaluating the performance of the manufacturing

process to ensure adherence to proper specifications and limits; and (3) determining the acceptability of

each batch for release.

QA primarily involves (1) review and approval of all procedures related to production and maintenance,

(2) review of associated records, and (3) auditing and performing/evaluating trend analyses.

Quality unit represents the authority to create, monitor, and implement a quality system. Such activities

do not substitute for, or preclude, the daily responsibility of manufacturing personnel to build quality

into the product.

6.3 Certifications, licensing, and compliances

Regulatory Affair (RA) and QA oversee the quality system and ensure its compliances with regulations.

Compliances status that will be represented by licensing, or certification granted by national authorities,

or by 3rd party inspecting institutes, including:

NHPD site licensing, ITC for GMP Compliance, Canada

NHPD product licensing, Natural Product Number (NPN),

Canada Drug Establishment License (DEL), Canada

Drug Identification Number (DIN), Canada

US Food and Drug Administration (FDA) oversees

current good manufacturing practices (cGMP) for

Foods as per requirements of 21 CFR Part 110

Supplements as per requirements of 21 CFR Part 111

Pharmaceuticals as per requirements of 21 CFR Part 211

The Natural Products Association (NPA) is a third-party

providing certification for FDA GMP requirements of 21

CFR Part 111

The National Sanitation Foundation (now NSF

International) is a third-party providing certification, e.g.

NSF supplement GMP registration program

Quality Assurance International (QAI) is a USDA-

accredited organic product certifying agency serving US

and Canada.

US Department of Agriculture (USDA) National Organic

Program issues organic labeling certifies organic products,

and claims

Islamic Society of North America (ISNA®) is a certifying

agency certifying foods, drinks that conform to the Halal in

Islam

Kosher certifies foods that conform to the regulations of

kashrut (Jewish dietary law).

SO (International Organization for Standardization) is a third-

party providing certification. ISO 9001:2008 sets out he

requirements of a quality management system

6.4 GMP programs

Good Manufacturing Practice (GMP) ensures that products are consistently produced and controlled to

the quality standards appropriate to their intended use and as required by the marketing authorization or

product specification.

Good Manufacturing Practice is concerned with both production and quality control. The basic

requirements of GMP are that:

All manufacturing processes are clearly defined, systematically reviewed in the

light of experience, and shown to be capable of consistently manufacturing medicinal

products of the required quality and complying with their specifications;

Critical steps of manufacturing processes and significant changes to the process are

validated;

All necessary facilities for GMP are provided including:

6.4.3.1 appropriately qualified and trained personnel;

6.4.3.2 adequate premises and space;

6.4.3.3 suitable equipment and services;

6.4.3.4 correct materials, containers, and labels;

6.4.3.5 approved procedures and instructions;

6.4.3.6 suitable storage and transport;

Instructions and procedures are written in an instructional form in clear and

unambiguous language, specifically applicable to the facilities provided;

Operators are trained to carry out procedures correctly;

Records are made, manually and/or by recording instruments, during manufacture

which demonstrate that all the steps required by the defined procedures and instructions

were in fact taken and that the quantity and quality of the product was as expected. Any

significant deviations are fully recorded and investigated;

Records of manufacture including distribution which enable the complete history of a

batch to be traced, are retained in a comprehensible and accessible form;

Distribution (wholesaling) of the products minimizes any risk to their quality;

A system is available to recall any batch of product, from sale or supply;

Complaints about marketed products are examined, the causes of quality

defects investigated, and appropriate measures taken in respect of the defective

products and to prevent re-occurrence.

The quality unit implements the following on-going programs to support/ensure GMP compliance.

GMP training

Pest control

Sanitation/hygiene

Preventive maintenance

Calibration

Change control

Change control is another well-known CGMP concept that focuses on managing change to prevent

unintended consequences. It regards creating a regulatory environment that encourages change towards

continual improvement that empowers effective activities (e.g., quality planning and control of revisions

to specifications, process parameters, procedures)

Validation

Documentation

Specification, standard operational procedures (SOP), batch production record (BPR) are basis for a

controlled, trackable documentation that support GMP requirements.

DIR review

Deviation requires timely investigation and review via a collaborative effort between initiator and the

quality unit.

CAPA

To follow up a DIR, corrective and preventive actions require planning, execution, and documentation.

Complaint, Return, Recall

Quality of a product should cover its life cycle from manufacture to expiry date. Client’s complaint and

the subsequent return or recall of product challenges the quality system, and should be dealt with

internally, or as per regulation.

Stability

Authority/Contractor audit/inspection

Regulatory inspection/audit

Projects that implement operations

Project name Year 1 Year 2 Year 3

Site renovation ○ ○ ○

Recruiting personnel ○

Equipment ○ ○

Quality system ○ ○ ○ ○

Licensing ○ ○ ○ ○ ○ ○

Trial runs ○ ○

GMP programs ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Commercial runs ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Marketing/Sales ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

2

Diagram 5: EQUIPMENT PURCHASES

VANGUARD Tablet/Capsule Bottle Filling Line

Price

(60-90 Counts – 50-60 Bottles per min.) $US $CDN

VL 1000 (39”) Bottle Infeed Turntable 4,600

VSL-16 Automatic Counter and Filler (2 Heads) 79,600

VSZ-3 Automatic Desiccant Inserter 22,500

VSZ-2 Cotton Inserter 22,500

Bottle funnels for 3 different size 2,400

VSG-200 Automatic In-Line Capper 38,900

Cap feeding System 6,500

VFL-2000 Automatic Induction Sealer 12,800

VTP-200 Automatic Labeler 23,000

Foil Detection System/Rejection 1,750

VA 1000 Accumulating Turntable 4,500

Thermal Ribbon Printer 3,900

12 Meters Conveyor and Drivers Integration 15,000

Crating and Onsite setup and training 15,000

TOTAL 249,050

327,058

V-35 V BLENDER 35 cu ft 35,800

316 Upgrade Contact Parts 10,500

Stainless Steel Ladder 4,500

Wooden Crating 1,500

TOTAL 52,300

69,560

VANGUARD CAPSULE FILLING MACHINE

VAF 900C Auto Capsule Filler - 54,000/hr. 61,200

VAF-900C Change Parts (#1, #0, #00) 27,000

PCX-3 Capsule Polisher & Sorter (150,000 capsules per hour)

7,900

I-500 Inspection Machine with 60 L Volume Hopper 27,800

Set of Spare Parts 2,300

Crating and training (3 days) 3,050

TOTAL 129,250

172,330

LABORATORY EQUIPMENT 300,000

400,000

Sub Total (Phase 1) 730,600 974,109

VANGUARD TABLET PRESS

VRP-1124A Rotary tablet press 24 station (106,000 tablets per hour) 65,600

Stainless Steel Upgrade 2,000

Round shape tablet tooling (24 x 165) 3,960

Other shaped tablet tooling (24 x 295) 7,080

VSZ-800B Uphill Tablet Deduster 10,500

Industrial Dust Collector 6,900

Crating and Training (3 days) 3,050

TOTAL 99,090 132,087

FILM COATING

VSB-150E Film Coating System w/Siemens Touch Screen control 115,900

Electrical Heating Integration 6,000

Three Head Coating Solution Pump System 3,700

Swing Arm Touch Screen Control 3,700

Solution Mixing Tank (Heated Jacket & Mixer Mounted) 5,700

Wooden Crating & 2 Tech onsite set-up & training (5 days) 15,000

TOTAL 150,000 200,000

IR520 CHILSONATOR FULL SYSTEM WITH RECYCLE 483,550

OPTIONS 56,405

Crating 4,685

Setup & Training (5 days) 7,800

TOTAL 552,244 736,568

Sub Total (phase 2) 801,133 1,068,443

TOTAL (Phase 1 & 2)

1,531,733

2,042,301

Examples of production equipment (not necessarily the exact ones Vitex will use)

150 kg aqueous film coating machine

V Blender

Capsule filling machine

Tablet pressing machine

Chilsonator roll compacting machine

ER-Kang StarchGel™

First to market with Non-GMO products

100% Vegetarian Source from cassava root; Halal and Kosher certified; No risk of animal-

transmitted diseases.

No cross-linking reaction

Tapioca is stable and has no cross-linking reaction with filled material.

Better thermal stability

Non-sticky/ Minimum deformation/Global shipping.

Good at 50 ℃ and RH 75% for 19 hours.

Quick response & full on-site production support

We are always there to deliver fast service and offer on-site technical support to our clients

global wide.

StarchGel™ is a revolutionary product developed by Er-Kang Pharmaceutical through a

significant technical breakthrough in starch film forming process. This vege-based durable

softgel brings your products to a new level by offering the above advantages.

Proposed building details.

Main Floor 25,000 sq. ft. Mezzanine 10,000 sq. ft. Total Area 35,000 sq. ft.

Value of building @ $300.00 sq. ft. $ 10,500,000

Down payment (25%) $ 2,600,000

3.72% 10-year term mortgage on $7,900,000 {30-year amortization} Principle & Interest (monthly) $ 36,434 Maintenance + taxes @ $3.65 sq. ft. $ 10,646 Monthly payment $ 47,080 Lease: Long term lease rate @ 1.00 / sq. ft. per month $ 35,300 Maintenance + taxes @ $3.65 sq. ft. $ 10,646 Monthly payment $ 45,946

NOTE: Building is custom built to GMP specifications to facilitate full manufacturing requirement.