Mr. Steve Bromley reports

ORGANTO FOODS ANNOUNCES TRANSACTIONS TO RESTRUCTURE OUTSTANDING DEBT AND C$5M PRIVATE PLACEMENT FINANCING

Organto Foods Inc. has proposed transactions to restructure outstanding debt and an equity capital raise of up to $5-million through a non-brokered private placement of up to 50 million common shares at a price of 10 cents per share. Assuming completion of the restructure of the outstanding debt on the proposed terms below and the full amount of private placement, the company expects to have up to approximately 150 million shares outstanding.

As disclosed in the company's news release dated March 14, 2025, as at the period ended Jan. 31, 2025, the company's outstanding debts included, among others:

• Promissory notes and short-term loans of approximately $1.9-million bearing interest at the rate of 12 per cent per annum;
• Convertible notes in the aggregate principal amount of approximately $2.6-million plus unpaid interest, bearing interest at the rate of 10 per cent per annum;
• 8.0 per cent convertible unsecured subordinated debentures due Nov. 30, 2026, in the aggregate principal amount of $8.05-million plus unpaid interest.

Promissory notes

The company proposes, subject to the acceptance of the TSX Venture Exchange, to settle all principal amounts and interest owing on the promissory notes in the aggregate amount of $1,966,906, through a shares-for-debt settlement at a price of 10 cents per common share, which would result in the issuance of 19,669,056 common shares.

Convertible notes

The convertible notes are composed of:

• Convertible notes issued on or about Dec. 29, 2022, with the aggregate principal amount of $2,058,350 and a maturity date of Dec. 29, 2024;
• Convertible notes issued on or about Feb. 28, 2023, with the aggregate principal amount of $295,000 and a maturity date of Feb. 28, 2025;
• Convertible notes issued on or about March 28, 2023, with the aggregate principal amount of $238,000 and a maturity date of March 28, 2025.

The convertible notes have a term of 24 months from the date of issuance and bear interest at a rate of 10 per cent per annum to be paid annually in arrears on the first anniversary of the date of issuance and the second anniversary of the date of issuance, respectively, and may be converted, at the holder's sole discretion, into common shares of the company at a price of $3 per share (as adjusted following completion of a one-for-10 consolidation, effective Sept. 28, 2023). In the event that the closing price of the company's common shares equals or exceeds $4.50 per share (on a postconsolidation basis) for a period of 10 consecutive trading days or more on the exchange, the company may force conversion of the convertible notes into common shares.

To date, the company has not made any interest payments as required under the terms of the convertible notes. As a result, the company proposes to amend the terms of convertible notes in the amount of $2,543,350 as follows:

• To settle the interest payments that are payable, or will become payable, as of the first interest date and the second interest date, respectively, the company will issue, subject to the acceptance of the exchange, an aggregate of up to 1,695,567 common shares at a deemed price of 30 cents per convertible note settlement share to settle interest payable on each of the first interest date and the second interest date in the aggregate amount of $508,670;
• Extend the maturity date of the convertible notes by one year in respect of 50 per cent of the principal amount and by two years in respect of the remaining 50 per cent of the principal amount;
• Replace the existing $3 conversion price with a 60-cent conversion price;
• Replace the $4.50 acceleration price with a 90-cent acceleration price.

The convertible note amendments, including the issuance of convertible note settlement shares as contemplated thereby, remain subject to the acceptance of the exchange.

Debentures

The debentures were issued pursuant to and are governed by the terms of a trust indenture dated Nov. 12, 2021, between the company and Computershare Trust Company of Canada as debenture trustee, pursuant to which, among other things:

• The debentures are unsecured subordinated convertible debentures, due Nov. 30, 2026, and bear interest at a rate of 8.0 per cent annually.
• The principal amount of the debentures is convertible into common shares at a conversion price of $5 per share (on a postconsolidation basis), and the interest is not convertible.
• If, at any time after Nov. 30, 2023, the 20-day volume-weighted average trading price of the company's shares on the exchange exceeds $6.25 (on a postconsolidation basis), the company has the right to force conversion of the debentures.

As disclosed in the company's news release dated March 11, 2025, Antares Capital Management Ltd., a private corporation, has acquired over 67 per cent of the outstanding debentures and has made an offer to all debentureholders to acquire their debentures on the same terms on which it had acquired its debentures.

The company has engaged in discussions with Antares to restructure the terms of the debentures in a mutually acceptable manner, and the parties have agreed, subject to the acceptance of the exchange, to restructure the debentures as follows:

• The company proposes to settle the outstanding principal and interest amount under the debentures through the issuance of common shares at an issue price of 20 cents per share. Should all the holders of the debentures agree to the proposed settlement, it would result in the issuance of up to an aggregate of 40.25 million debenture settlement shares.
• All debenture settlement shares will be subject to a contractual restriction on transfer whereby the debenture settlement shares will be restricted from trading for a period of 18 months from their date of issue, following which they would be released as to 25 per cent per quarter, such that all debenture settlement shares will be freely tradable after 30 months from their issuance.

Private placement

The company will conduct a non-brokered private placement of up to 50 million common shares of the company at the price of 10 cents per share for gross proceeds of $5-million.

The company may pay finders' fees in connection with the private placement. The net proceeds from the private placement will be used to finance general working capital.

Debt settlement

Finally, the company has approached certain creditors with an offer to settle outstanding amounts due in exchange for common shares at a deemed price of 10 cents per share. To date, creditors owed approximately $280,000 have agreed to the proposed debt settlement, which would result in the issuance of approximately 2.8 million common shares.

Restructuring fees

In consideration of its assistance in negotiating and implementing the above debt restructuring, the company has agreed to pay Jaluca Ltd. a finder's fee equal to 6 per cent of the gross proceeds raised from investors in the private placement introduced to the company by Jaluca and a fee of 6 per cent of the total amount of debentures that are converted into shares. The fees will be satisfied by the issuance of common shares in the capital of the company at a deemed price of 10 cents per share. Further, the company has entered into a financial and capital market advisory agreement with Jaluca for a term of 12 months, under which it has agreed to pay Jaluca an advisory fee of $8,500 per month for a one-year term. The above fees are subject to the acceptance of the exchange.

Certain directors and officers of the company may acquire securities under the private placement and shares-for-debt settlement in respect of the promissory notes. Any such participation would be considered to be a related-party transaction as defined under Multilateral Instrument 61-101. The transaction will be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of any shares issued to, nor the consideration paid by, such persons will exceed 25 per cent of the company's market capitalization.

Completion of each of the above transactions will be subject to the prior approval of the exchange, as well as all other requisite corporate, regulatory and securityholder approvals, as applicable. Further, all securities issued pursuant to the debt restructuring program described above will be subject to a minimum hold period of four months and one day from their date of issuance. There can be no assurance that the company will be successful in completing all or any of the above transactions.

Further updates will be provided as discussions progress.

About Organto Foods Inc.

Organto is a leading provider of branded, private label, and distributed organic and non-genetically modified fruit and vegetable products using a strategic asset-lighter business model to serve a growing socially responsible and health-conscious consumers. 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.

We seek Safe Harbor.