Mr. Steve Bromley reports

ORGANTO ANNOUNCES PLANS TO STRENGTHEN BALANCE SHEET AND PROVIDES BUSINESS UPDATE

Organto Foods Inc. today discussed plans to strengthen its balance sheet and continue its path to positive EBITDA (earnings before interest, taxes, depreciation and amortization) in 2024.

Organto has experienced sustained growth over the past five years, growing sales from approximately $1.5-million in 2018 to approximately $28.0-million in 2023, representing five consecutive years of sales growth versus the prior year and 19 consecutive quarters of sales growth, currency adjusted, versus the same quarter in the prior year. The company continues to see numerous growth opportunities as consumers focus on healthy eating and healthy living and is targeting continued growth driven by a combination of internal growth and acquisition.

Organto continues to leverage its positioning in the organic foods value chain connecting growers around the world with premium markets, while at the same time having a positive ESG (environmental, social and governance) impact. In doing so the company continues to refine its internal processes, product lines, supply chains and go-to-market strategies with the goal of increasing sales and gross margins while reducing continuing operating costs. These initiatives are key for the company and as a result Organto expects to achieve positive EBITDA results during the first half of 2024.

Balance sheet improvement -- convertible notes and debentures

In an effort to reduce debt and increase equity, the company is working with its existing convertible note and debenture holders holding Series 2024 10 per cent notes and Series 2026 8 per cent debentures to convert a portion of the existing convertible notes and convertible debentures into common shares of the company. The convertible notes were issued in December, 2022 (see Jan. 26, 2023, news release), February, 2023 (see Feb. 24, 2023, new release), and March, 2023 (see March 23, 2023, and April 3, 2023, news releases). The convertible debentures were issued in November, 2021 (see Nov. 12, 2021, news release).

The company is targeting to realize a significant reduction in convertible debenture debt on its balance sheet and a corresponding increase in equity of the company, resulting in an improved balance sheet and reduced interest payments going forward. The company believes that this is a requirement as it executes its business plan going forward.

The company has not paid interest amounts due Dec. 29, 2023, and has been in discussions with the convertible note and debenture holders and believe a majority have agreed in principle to sign a forbearance agreement through March 15, 2024, to allow the company sufficient time to sign amended agreements with the holders based on new terms and conditions.

Concurrent equity financing to further strengthen balance sheet -- 75-per-cent-plus insider participation

The company also announced that as a result of the proposed changes to the convertible notes and convertible debentures, it will not proceed with its previously announced private placement of common shares (see Nov. 14, 2023, news release). Instead, the company plans to complete a $2.0-million private placement of common shares early in 2024. Terms of this private placement have yet to be finalized, although current insiders and strategic investors have indicated an interest to acquire approximately 75 per cent of the equity to be issued. The company believes this additional equity, coupled with the convertible note and convertible debenture changes, will give the company the added flexibility to continue to grow its business.

"We are thankful to all of our stakeholders who have come together to work on these important initiatives as we push towards positive EBITDA in 2024 and beyond. We believe we have built a relevant platform that is poised for continued growth, serving growing healthy foods markets around the globe," commented Steve Bromley, chair and co-chief executive officer of Organto. "We continue to focus on our operations to leverage our platform, drive profitable lines of business and develop new growth opportunities."

About Organto Foods Inc.

Organto is an integrated provider of branded, private label, and distributed organic and non-GMO (genetically modified organism) fruit and vegetable products using a strategic asset-light business model to serve a growing socially responsible and health-conscious consumer around the globe. Organto's business model is rooted in its commitment to sustainable business practices focused on environmental responsibility and a commitment to the communities where it operates, its people and its shareholders.

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