Organto Foods : Quarterly Report

Organto Foods Inc. 1090 Hamilton Street Vancouver, B.C. V6B 2R9 Canada www.organto.com

ORGANTO FOODS INC.

CONDENSED INTERIM

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the Nine Months Ended

September 30, 2021

(Stated in Canadian Dollars)

Organto Foods Inc.

Condensed Interim Consolidated Statements of Financial Position (Unaudited - expressed in Canadian Dollars)

	September 30,	December 31,
	2021	2020
	($)	($)
Assets
Current assets
Cash	1,610,978	4,133,730
Receivables (note 3)	1,652,684	915,203
Inventories (note 4)	107,207	40,163
Prepaid expenses (note 5)	1,698,956	641,390
	5,069,825	5,730,486
Non-current assets
Investment securities (note 6)	1,157,701	1,040,582
Intangible assets (note 7)	427,688	-
	6,655,214	6,771,068
Liabilities and shareholders' deficit
Current liabilities
Accounts payable and accrued liabilities (note 15(c))	4,064,669	2,854,444
Short-term loans payable (note 8)	-	295,954
	4,064,669	3,150,398
Non-current liabilities
Bank loan (note 9)	-	829,454
CEBA loan (note 10)	60,000	60,000
Convertible debentures (note 11)	2,896,408	2,969,127
Total liabilities	7,021,077	7,008,979
Shareholders' deficit
Share capital (note 12(a))	27,970,303	24,344,434
Shares to be issued (note 12(a))	-	72,006
Reserves (note 12(e))	4,239,691	3,569,819
Deficit	(32,575,857)	(28,224,170)
Total shareholders' deficit	(365,863)	(237,911)
	6,655,214	6,771,068

Nature of operations and going concern (note 1)

Commitments (note 19)

Subsequent events (note 20)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Organto Foods Inc.

Condensed Interim Consolidated Statements of Comprehensive Loss (Unaudited - expressed in Canadian Dollars)

	Three months ended		Nine months ended
	September 30		September 30
	2021	2020	2021	2020
	($)	($)		($)	($)
Sales	4,298,282	2,737,081	14,443,506	6,510,856
Cost of sales (note 13)	3,769,264	2,451,130	12,807,686	5,831,924
Gross profit	529,018	285,951	1,635,820	678,932
Selling, general and administration expenses (note 14)	558,968	163,250	1,509,388	538,566
Management fees (note 16(a))	236,040	175,180	703,585	482,070
Labour costs and benefits	650,954	285,025	1,803,121	704,660
Stock-based compensation (notes 12(b) and 12(c))	154,948	97,691	760,426	226,696
	(1,071,892)	(435,195)	(3,140,700)	(1,273,060)
Interest expense and accretion, net	(176,980)	(91,765)	(620,833)	(233,129)
Other income	18,505	3,890	67,540	12,466
Unrealized gain on investment securities (note 6)	-	-	93,411	-
Foreign exchange gain (loss)	(2,414)	78,868	(35,721)	76,995
Gain (loss) on settlement of debt (note 15)	(715,384)	4,735	(715,384)	4,735
Financing costs	-	(70,500)	-	(97,396)
Net loss for the period	(1,948,165)	(509,967)	(4,351,687)	(1,509,389)
Other comprehensive loss for the period:
Foreign currency translation	(20,585)	(25,966)	(43,944)	(225,184)
Comprehensive loss for the period	(1,968,750)	(535,933)	(4,395,631)	(1,734,573)
Loss per share:
Basic and diluted	(0.01)	(0.00)	(0.02)	(0.01)
Shares used in computing loss per share:
Basic and diluted	257,660,258	195,094,834	252,844,118	181,180,859

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Organto Foods Inc.

Condensed Interim Consolidated Statements of Cash Flows (Unaudited - expressed in Canadian Dollars)

	Nine months ended
	September 30
	2021	2020
	($)	($)
Operating activities
Net loss for the period	(4,351,687)	(1,509,389)
Items not involving cash
Amortization	27,644	3,377
Bad debt expense	3,761	30,538
Stock-based compensation	760,426	226,696
Interest expense and accretion	620,835	233,129
Foreign currency translation	(44,963)	(119,691)
Other income	(52,505)	8,178
Unrealized gain on investment securities	(93,411)	-
Loss (gain) on extinguishment of debt	715,384	(4,735)
Financing costs	-	74,966
	(2,414,516)	(1,056,931)
Changes in non-cash working capital (note 17)	(981,632)	(219,376)
Cash used in operating activities	(3,396,148)	(1,276,307)
Investing activities
Cash paid to purchase Fresh Organic Choice BV	(230,475)	-
Cash acquired on purchase of Fresh Organic Choice BV	70,229	-
Cash used in investing activities	(160,246)	-
Financing activities
Proceeds from convertible debentures, net of issue costs	292,000	996,500
Proceeds from private placement of shares, net of issue costs	-	1,443,895
Proceeds from exercise of warrants	1,152,920	-
Proceeds from exercise of stock options	55,250	-
Proceeds from sale of investment securities	10,292	-
Proceeds from bank loan, net of issue costs	-	680,367
Repayments of bank loan	-	(680,367)
Proceeds from short term loans	-	489,920
Repayments of short term loans	(295,954)	(613,611)
Interest paid	(198,319)	(163,581)
Cash from financing activities	1,016,189	2,153,123
Effect of foreign exchange on cash	17,453	(47,154)
Increase (decrease) in cash	(2,522,752)	829,662
Cash, beginning of period	4,133,730	54,565
Cash, end of period	1,610,978	884,227

Supplemental cash flow information (note 17)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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Organto Foods Inc.

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Deficit) For the Nine Months Ended September 30, 2021 and 2020

(Unaudited - expressed in Canadian Dollars)

			Shares
		Share	to be issued
	Number of	capital	(cancelled)	Reserves	Deficit	Total
	shares	($)	($)	($)	($)	($)
Balance at January 1, 2020	165,016,934	17,061,697	(440,494)	2,737,436	(21,169,425)	(1,810,786)
Stock-based compensation	-	-	-	226,696	-	226,696
Shares issued in private placement	30,077,900	1,503,895	-	-	-	1,503,895
Warrants issued in private placement	-	(70,000)	-	70,000	-	-
Finders warrants issued	-	-	-	4,466	-	4,466
Warrants issued on loan extension	-	-	-	70,500	-	70,500
Conversion option of convertible debentures	-	-	-	70,100	-	70,100
Comprehensive loss for the period	-	-	-	(225,184)	(1,509,389)	(1,734,573)
Balance at September 30, 2020	195,094,834	18,495,592	(440,494)	2,954,014	(22,678,814)	(1,669,702)
Balance at January 1, 2021	243,647,951	24,344,434	72,006	3,569,819	(28,224,170)	(237,911)
Stock-based compensation	2,000,000	512,500	(512,500)	760,426	-	760,426
Exercise of warrants	11,668,932	1,152,920	-	-	-	1,152,920
Exercise of stock options	480,000	55,250	-	-	-	55,250
Shares issued on purchase of Fresh Organic Choice BV	839,570	179,495	-	-	-	179,495
Shares issued on conversion of debentures	2,839,995	577,000	-	(54,465)	-	522,535
Shares issued to settle bank loan	3,210,500	1,589,198	-	-	-	1,589,198
Shares cancelled as part of sale of processing plant	(5,873,357)	(440,494)	440,494	-	-	-
Conversion option of convertible debentures	-	-	-	7,855	-	7,855
Comprehensive loss for the period	-	-	-	(43,944)	(4,351,687)	(4,395,631)
Balance at September 30, 2021	258,813,591	27,970,303	-	4,239,691	(32,575,857)	(365,863)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

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