Affinor Growers: Patented Technology to Solve the Global Food Supply Crisis

Transcription

1 A F F I N O R G R O W E R S, I N C. Affinor Growers: Patented Technology to Solve the Global Food Supply Crisis Affinor Growers, Inc. Address: 410 Saint Nicolas Suite 236 Montreal, QC H2Y 2P5 Canada Phone: Status: Public: (OTCQB: RSSFF) Website: Key Contacts Chief Executive Officer: Sebastien Plouffe BUSINESS DESCRIPTION Affinor Growers ( RSSFF or the Company ) is a diversified agriculture and biotechnology company that is committed to solving the world s food security problems with proprietary growing and cultivating systems capable of producing fresh, non-gmo delicious foods and nutraceutical / medicinal foods without pesticides or dangerous chemicals with near zero water waste. Affinor leveraged its expertise and experience to industrialize and automate a profitable system, which mass produces high quality, in-demand produce and pharmacy grade plants for global distribution. The Company has developed a diversified business model, with multiple revenue streams by focusing on the development of growing technologies that span both the traditional agriculture and cannabis industries. Through its recent acquisitions, the company has also built indirect exposure to the cannabis industry, becoming the first Canadian company to legally grow and sell cannabis within the United States. Chief Financial Officer Pierre C. Miron Chief Operating Officer Jarrett Malnarick Market / Industry Snapshot Industry: Agriculture Sectors: Organic Food Market Size: 2013: $33.8 Billion 2018E: $66.2 Billion Key Financial Data Financial Snapshot 2013 Revenue: NM 2013 EBITDA: NM 2014 Revenue: NM 2014 EBITDA:NM Balance Sheet Current Assets: $2.45M Current Liabilities: $0.19M Total Liabilities: $0.19M Shareholders Equity: $3.14M Trading/Stock Price Stock Price (12/2/14): $ Wk.High/Low:$0.88-$0.14 Avg. Daily Volume: 27,034 Market Cap: 11.0M Float: 64.88M Shares Outstanding: 79.89M Validated Vertical Farming Advantage. Affinor designs and builds innovative, fully sustainable and complete vertical growing solutions which are the result of over 12 years of R&D based on predecessor systems, prototypes, and significant third party validation. A vertical farm of one square block, 30 stories high could produce the same amount of food as 24,000 acres of farmland. In addition to the normal vertical farming advantages, the Affinor System yields an estimated 30% reduction in space required to produce the same output. Leading Technology and Valuable IP. Affinor s patented and patent pending technology positions the company like no other in the vertical farming industry. Affinor can offer software driven growing solutions that produces high quality products at a fraction of the price. Traditionally, the commercial horticultural and agricultural growth of plants has been carried out in nurseries and greenhouses, where the plants are arranged horizontally and are stationary. Traditional "vertical farming" includes methods of growing plants using a central light source in which rows of plants are rotated to increase productivity, however, harvesting product can be complicated and time consuming. Affinors vertical growing technologies use and control precise combinations of light, temperature, water, and nutrients to create specific growing conditions that result in optimum crop production with maximum product quality and shelf-life. The flexibility of the system enables Affinor to produce a diverse number of high quality agricultural products. Large Market Opportunity. The global food system will experience a food security crisis over the next 40 years. On the demand side, global population size will increase from nearly seven billion today to eight billion by 2030, and probably to over nine billion by 2050, requiring global food production to increase by 70%. Affinor s proven technology can help to solve global food security and food shortage by utilizing automated, software-driven technology that is able to grow grade A1, non-gmo crops year-round without chemicals or pesticides. Diversified Business Model. Affinor Growers Inc. has diversified its business model through multiple revenue streams by focusing on the development of growing technologies that span can be used for a wide variety of products and industries, such as leafy green, natural health products, flowering fruits, and cannabis. This report is published solely for information purposes and is not to be construed as investment advice or as an offer to sell or the solicitation of an offer to buy any security in any state. See Important Disclosures on back page of this report. Broker dealer services provided through Pickwick Capital Partners, LLC. Member FINRA/SIPC. December 2014

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3 TABLE OF CONTENTS EXECUTIVE SUMMARY... 4 THE COMPANY... 4 MARKET AND OPPORTUNITY... 5 COMPANY HIGHLIGHTS... 7 GROWTH STRATEGY KEY MANAGEMENT & DIRECTORS ADVISORS RECENT NEWS AND PRESS RELEASES THE COMPANY PRODUCTS AND TECHNOLOGY OVERVIEW PATENTED TECHNOLOGY CASE STUDIES PROBLEM CROP SOLUTION STRAWBERRIES BUSINESS MODEL SALES AND MARKETING OPERATIONS RESEARCH AND DEVELOPMENT COMPETITION SELECTED FINANCIAL DATA BALANCE SHEET INCOME STATEMENT STATEMENT OF CASH FLOWS WEBSITE Page 3 of 52 December 2014

4 EXECUTIVE SUMMARY THE COMPANY Affinor Growers ( RSSFF or the Company ) is a diversified agriculture and biotechnology company that is committed to solving the world s food security problems with proprietary growing and cultivating systems capable of producing fresh, non-gmo delicious foods and nutraceutical / medicinal foods without pesticides or dangerous chemicals with near zero water waste. Affinor leveraged its expertise and experience to industrialize and automate a profitable system, which mass produces high quality, in-demand produce and pharmacy grade plants for global distribution. The dramatic rise in global food prices has created a perfect storm, which has made global food and nutrition security one of the preeminent challenges facing society today. The most common method of tapping into this market is with greenhouses. Unfortunately, this is a solution with high fixed costs and high variable costs. Due to the harsh winters and the encroachment on prime agricultural land, there is no realistic way for greenhouse growers to rapidly scale their operations to service all major urban markets. Affinor s management team has been actively creating and developing new methods and processes to grow high-quality in-demand crops such as lettuce, strawberries to help solve food security problems as consumption continues to increase while traditional agriculture production decreases, creating a reliable and existing demand for Affinor's products. Headquartered in Montreal, Quebec, Affinor has introduced new patent pending vertical farming technology to the agriculture industry, positioning the Company to become a major food producer in Canada and the United States. All of Affinor s vertical growing technology can be used for a wide variety of products and industries. Leafy Greens traditional lettuce, spinach and herbs with quick growth cycles and superior shelf life. Natural Health Products over the past few decades, the world has witnessed the explosive growth of a multi-billion dollar nutraceutical industry food and food products providing health and medical benefits. Example crops that can be exploited using Affinor's technology include: alfalfa, aloe vera, peppermint, ginger, sage, arina. Flowering fruits Affinor s proprietary pollination process allows crops like strawberries and other flowering fruits requiring pollination to be grown vertically. Cannabis seed to flower quickly, under controlled conditions to produce maximum yields, high quality marihuana in a safe secure location using specific technology. It is the mission of Affinor Growers to be the world-wide technology and market leader in creating and commercializing the most economical vertical farming technologies that use the least possible resources (e.g. land, water, and energy resources) to produce the highest quality pesticide-free produce year-round. Page 4 of 52 December 2014

5 MARKET AND OPPORTUNITY Global agriculture and food production are facing multiple pressures. Experts often believe the main challenge of global agriculture often is feeding a growing population, which is expected to increase from seven billion people today to approximately nine billion in As a result, The United Nations Food and Agriculture Organization estimates that food production must increase by 70 percent over the next forty years to satisfy increasing demand. The primary factor driving the population growth is urbanization, where the number of cities over 1,000,000 people experienced the fastest growth in the developing world. Billions of people already moved from rural areas into rapidly growing urban cities, and billions more are expected to make this transition over the next 40 years. Specifically in North American, the last 50 years have brought a major cultural shift that has removed consumers further and further away from their food sources. U.S. Census data showed around 80% of Americans living in urban areas, while the Mexican Household Survey conducted by Harvard School of Public Health found that in the last forty years, the number of Mexicans living in urban areas rose from 51 percent to 74 percent. According the Canadian Geographic, two-thirds of the entire population of Canada lives in one of eight urban environments. At the same time, there is limited opportunity to expand the land used in agricultural production, while facing an increasingly hostile environment due to climate change and diminishing resources. From mechanized feedlots to automatic irrigation systems to agricultural machinery, North American agriculture has become increasingly industrialized, placing ever-greater demands on fossil fuel, water and topsoil resources. Water around the world is becoming scarcer and contaminated while groundwater is becoming more polluted by agricultural runoff and other toxins. Irrigating crops uses 70% of all available fresh water on Earth, and rates of water extraction for irrigation are exceeding rates of replenishment in many places According to the US Geological Society, the amount of ground water drawn for use in irrigation has tripled since the 1950s. Additionally, this water after being contaminated with pesticides, herbicides, fungicides, and fertilizers seeps into rivers, streams, and aquifers and Page 5 of 52 December 2014

6 causes salinization of once arable land; this toxic runoff is responsible for more ecosystem disruption than any other kind of water pollution. While water resources are not permanently finite, they do have limits. Climate models also suggest that rainfall may become less predictable and dependable. While in the past the industry has been able to expand agricultural croplands in order to meet increased demand for food, viable land for expansion is rapidly running out. The amount of arable land available for each person has dropped from 1 acre in 1970 to half an acre in 2000 and will be one third of an acre by % of the world's land is now highly degraded, with soil erosion, water degradation and biodiversity loss. Another 8% is moderately degraded, while 36% is stable or slightly degraded and 10% is improving. The rest of the Earth's surface is either bare or covered by inland water bodies. Furthermore, climate change is creating significant pricing and demand pressures on agriculture. The recent report on future food pries commissioned by Oxfam, estimated that under normal circumstance, food commodity prices are likely to increase about 50 percent between now and If estimates of climate change are factored in, food prices could be up to 100 percent higher. The environmental challenges posed by agriculture are huge, and they will only become more pressing as we try to meet the growing need for food worldwide. This has created a massive opportunity to leverage technology that allows producers to bypass these challenges, such as vertical farming. Page 6 of 52 December 2014

7 COMPANY HIGHLIGHTS Market Penetration Affinor's advanced technologies in vertical farming methods will allow quick market penetration due to Affinor's crops and products being strategically selected and in demand to help solve food security problems. Over the next 40 years, world population is expected to swell to 9 billion people. The United Nations Food and Agriculture Organization predicts that in that time global food production will need to increase by 70 percent in order to prevent massive famine. Simultaneously, producers must learn to cope with changes in climate, intensification of floods and droughts, depletion of resources, and dramatic political shifts. Meeting the coming demand for food will mean addressing these large challenges that threaten the future of conventional agricultural production and food security worldwide. Therefore, the market's demand for local, reliable, sustainable food supply is high with no current solution. Affinor's organic and locally grown products will be pesticide free, non GMO, growing organically and locally, allowing the Company to penetrate the fresh food retail market quickly to meet this demand and provide superior products at competitive pricing. Public sampling of Affinor s products have resulted in 100% positive feedback, causing many retailers already inquiring about purchasing products. Furthermore, Affinor has already potential partnerships and strategic alliance with national retail distributors with plans to purchase and distribute all products Affinor will produce. Vertical Farming By utilizing vertical farming, Affinor has created many competitive advantages compared to traditional growing methods, such as: Year-round production anywhere in the world and on land otherwise not suitable for food production, Mechanical pollination as bee shortages continue to grow as an issue, Increased yield per square foot of land estimated to be 10 to 15 times depending on the crop. A vertical farm of one square block, 30 stories high could produce the same amount of food as 24,000 acres of farmland. Significantly reduced growth-cycle due to optimal lighting, nutrition and air flow, Dramatically reduced spoilage and extended shelf life estimated at up to 100% depending on the crop a large competitive advantage for distributors, retailers and a significant benefit to customers, Greatly reduced shipping (e.g. most spinach sold in Ontario is imported and shipped over 2,000 miles from California), Minimized environmental impact in terms of water use, land, and power, Eliminating the use of pesticides and other chemical inputs, other than organic-based fertilizer, Improved market-based pricing with consistently available local product, and Reduced capital requirements in terms of expensive to maintain large scale farming equipment. Page 7 of 52 December 2014

8 Optimal Return on Investment Affinor has optimal return on investment by focusing on a business model by minimizing capital coast which translates into superior value for everyone in the value chain, for example: The cost of land: it generally does not make sense to build vertical farms in premium retail or downtown space. There are vast amounts of less expensive land in areas close to city centers, including environmentally contaminated sites that are well suited to vertical farming. Labor: intelligent automation reduces labor by up to an estimated 70% over competing vertical farming systems, Waste: The amount of produce typically thrown away by a retail store can be as high as 30%. The consumer can also throw away a large portion because it likely only lasts a few days. The Affinor's system was designed to produce the highest quality products with the longest shelf life and best flavor. Importantly it reduces hard costs and increases value making it a preferred product of retailers and consumers, even at top end prices. Electricity: intelligent automation optimizes the impact of light on the growth cycle and improving the quality of the product. The use of alternative energies such as wind and solar, combined with recent advancements in energy storage can further increase efficiencies. Disruptive Technology The company plans to become a major grower using an integrated system of automated vertical farming techniques and cloning technologies. Affinors vertical growing technologies, use and control precise combinations of light, temperature, water, and nutrients to create specific growing conditions that result in optimum crop production with maximum product quality and shelf-life. The Affinor system can be used to produce a number of high quality agricultural products including herbs, lettuce, spinach, and plants that require pollination such as strawberries. This disruptive approach ensures quality controlled plant reproduction in a way unmatched by traditional seeding, together with a controlled environment that removes the need for all the chemicals the market is trying to escape. In addition, their vertical layering system greatly increases yield per land footprint, while minimizing the effects of weather and location. As such it is designed to promote job creation and food sustainability in previously remote and unproductive areas of the world, and even promises zero water waste. Affinor s patented technology positions the company like no other in the vertical farming industry. Affinor can offer software driven growing solutions that can produce high quality, organically grown products at a fraction of the price than traditional growers in any location. Significant advantages of the Affinor system, over what has previously been considered to be the market leading system, include: Optimized and automated air flow, temperature and CO2 at every vertical level allowing plants to breath properly and more rapid and proper tissue development, Page 8 of 52 December 2014

9 An estimated 60-70% estimated labor advantage using Reduced risk related to watering times due to unique irrigation systems, Dramatically improved lighting design for faster growth and significantly higher yield, An estimated 25-35% reduction in equipment costs by mass producing components, An estimated 30% reduction in space required to product the same output, A patent-pending pollination technology allowing Vertical Designs facilities to grow crops like strawberries that require pollination (e.g. by bees). Good Manufacturing Practices Standards Good manufacturing practices (GMP) are the practices required in order to conform to guidelines recommended by agencies which control authorization and licensing for manufacture and sale of food, drug products, and active pharmaceutical products globally, and within North America. GMP guidelines provide minimum requirements that producers must meet while manufacturing food or food products, in order to assure that the products are of high quality and do not pose any risk to the consumer or public and are safe for distribution. Affinor s GMP's are developed in collaboration with horticulturalists, compliance managers and engineers. The GMP followed by Affinor will include information on how to produce food and food products safety with zero water waste and zero pesticides using an organic medium. All analytics will be tested to comply with food labelling standards, the Canadian Food Inspection Agency, the Food and Drug standards or FDA in alignment with Standard Operational Procedures applicable for each of Affinor s equipment, product being cultivated and / or facility. Diversification through Acquisition Affinor Growers Inc. has diversified its business model by developing growing technologies that allow multiple revenue streams, in both the traditional agriculture and cannabis industries. Through its recent acquisitions, the company has also built indirect exposure to the cannabis industry, becoming the first Canadian company to legally grow and sell cannabis within the U.S. To accomplish this, the company has been extremely active in executing the acquisition strategy. Affinor s recent acquisitions include: On September 23, 2014 Affinor concluded an agreement with Herbal Analytics, a Washington State testing laboratory, to provide quality control for cannabis products. Herbal Analytics has the staff, instrumentation, and procedures necessary to comply with the scope of tests that Washington State requires for SI502 quality control of Cannabis and associated derivatives. Under the terms, Affinor Growers paid $150,000 cash, $150,000 in a repayable loan over a maximum of 4 years and issued 949,612 of Affinor common shares at $0.516 per share for 49%. The proceeds will be used to build the laboratories to meet the demand and handling the volume necessary of SI-502 and medical clients in Washington State, including, but not limited to, the equipment, employee salaries, marketing, sales and regular business needs. Page 9 of 52 December 2014

10 On September 24, 2014, Affinor concluded an agreement to acquire a 49% interest in Affinor Growers LLC ("Growers ), a medical Marijuana dispensary and grower located on the Olympic Peninsula in Washington State. Affinor Growers LLC is a Marijuana growing operation, which has brought serious attention to the Port of Willapa Harbor, an area that is set to mature with the new marijuana industry. Growers has been fully operational and in May 2014, Affinor signed a letter of intent to acquire an interest in the company founded by Robert Montoure. Affinor shall invest US$600,000 to improve the existing facility and bring it up to the strict standards required by the Washington State Liquor Control Board for growing and dispensing marijuana. Page 10 of 52 December 2014

11 GROWTH STRATEGY Affinors s management has created a growth strategy that has been effectively used in the past to build and grow strong companies across a broad spectrum of industries and includes a growth platform of market penetration, market expansion, product expansion, diversification and acquisition. Market Expansion While Affinor's immediate plan is to rapidly penetrate the North American urban retail produce market with all natural healthily fresh food products through strategic distribution partnerships with Mastronardi Produce and potentially with Loblaw's, Choices Markets and others, the Company s current plans and discussions include: Local rural communities throughout North America that are reliant on importing all or most food products. Affinor is currently in talks with large First Nation bands across North America to bring viable solutions to all communities in need. Extreme climates and growing conditions. Affinor has been approached to help meet the demand for local food production in arid conditions including Arizona, Nevada and Texas. Worldwide interest includes Dubai, Arab Nations, Mexico, Colombia, Peru, Chile, Israel, Central Africa and South American Countries. Market expansion also includes difference distribution channels and product use. Affinor will actively develop the market for frozen products and high volume processing opportunities with its products. Product Expansion Affinor's technology and growing methods will allow them to expand and develop multiple products. The Company s starting focus will be the commercialization and production of high grade June Bearing Strawberries and leafy greens including lettuce, spinach and herbs. The Company s current Product expansion and development opportunities include: Supplying the nutraceutical markets - various plants and vegetables have nutraceutical compounds that can be grown in high volumes and extracted for use. Supplying the pharmaceutical markets - various plants and vegetables have pharmaceutical compounds that can be grown in high volumes and extracted for use. Page 11 of 52 December 2014

12 Execute on Current Business Pipeline Affinor Growers plans to implement its growing technologies for its own production in its recently purchased 45-acre agricultural property in St. Chrysostome, Quebec, Canada. The high percentage of annual sunlight coupled with its proximity to national produce distributors and NY State border makes it a prime location for industrial greenhouses to operate. At the location, the company plans to build a state-of-the-art strawberry growing facility that leverages the robust and growing demand for strawberries to create jobs and long-term shareholder value. These efforts reflect management's long-term plans to become leaders in redefining the agricultural industry with its innovative growing technology that involves zero water waste, no pesticides, and guaranteed production. Future opportunities in traditional agriculture could include previously announced strawberries and romaine lettuce, as well as other crops experiencing global shortages, such as kale. By addressing these food shortages with rapid growing of high quality crops, the company aims to solve some of the key industry supply issues, while enabling growers to cut prices and/or improve their margins. Affinor has targeted Quebec as a prime location to start growing strawberries. Strategic Acquisitions The agriculture industry is very fluid and dynamic, creating many M&A opportunities for Affinor to drive inorganic growth through strategic partnerships and acquisitions. As a public company, Affinor has the added advantage of a publicly-traded equity that can be used as consideration for these strategic initiatives. Affinor has identified potential acquisition candidates with vertical integration synergies in the agriculture industry, resulting in new markets, advertisers and revenue streams for Affinor. As a result, Affinor expects to be able to generate operational efficiencies by sharing best practices across the portfolio, while leveraging size and scale. The management team evaluates acquisition candidates on a macro and micro economic basis valued at multiples below a future consolidated multiples. Affinors has created an acquisition strategy which includes the following: Strategic companies that can provide increase sales, profitability and align with the core values and direction of Affinor that increases market penetration, diversification or expansion. Technology and IP that can enhance our growing processes and systems allowing product diversification and market expansion. Page 12 of 52 December 2014

13 KEY MANAGEMENT & DIRECTORS Sebastien Plouffe President & CEO Mr. Plouffe graduated in 1994 with a bachelor s degree in Business Administration with honor (B.A.A.) from the Ecole des Hautes Etudes Commerciales (H.E.C.-Montreal). Former successful VP Senior Investment Advisor from 1995 to 2003 with such as the Canadian brokerage firm Nesbitt Burns and Canaccord Capital, for which he achieved the Chairman s Club level. Since then he cofounded and financed various private and public companies in different sectors and get specialized internationally. He s fluent in French, English and Spanish. Mr. Plouffe dedicates all his time for the success of Affinor and is presently building a very solid team of experts and management in order to become the leader in agriculture vertical farming. Through the years he has built and developed a huge recognition on management skills in different sectors and difficult areas, which shall be key and helpful for the success of Affinor. Pierre C. Miron Chief Financial Officer Mr. Miron worked over 25 years in the International audit and financing department of the banking industry, including International Auditor and Administrative Director with Scotia Bank, Banking Manager at TD Bank, Portfolio Manager and Account Director at National Bank and Director Major Account at the Caisse Centrale Desjardins. He also worked as CFO with private and public companies in different sectors such as technology, real estate management and franchise industry. Throughout his career Mr. Miron has often acted as a consultant, advising companies in their growth and M&A, which helped him to develop strong management and financial skills. Mr. Miron has held a bachelor degree in Business Administration from École des Hautes Études Commerciales. Jarrett Malnarick Chief Operating Officer Jarrett Malnarick ran his own successful consulting company for over 10 years assisting companies with acquisitions, product development, design costing and ROI analysis, organizational budgets, developmental funding through grants and tax credit programs, new facility process planning, quality engineering and product regulatory compliance to Health Canada and international standards through the design and implementing operational systems. He originally worked with Vertical Designs Ltd. as a consultant and later joined their team in Jarrett Malnarick has held a number of executive positions and has earned a Bachelor of Science from the University of Victoria. Colin Wiebe Marketing Director Colin Wiebe has over 25 years experience as a Creative Director and marketing professional. Colin began as a graphic artist and illustrator for the Vancouver Sun and The Province newspapers. He quickly became the Creative Director of advertising for both papers working on projects such as the Vancouver Sun Run, The Province Golf Classic, The Molson Indy plus continuous promotions for the BC Lions and the Vancouver Canucks and many more. He worked with the Pacific Press Page 13 of 52 December 2014

14 team which pioneered the digital advertising methods adopted by many major daily newspapers around the world. Colin foundedfastcreative.com, the world s first virtual marketing department, and has worked with a variety of clients ranging from pro audio, insurance, digital online advertising, banks, entertainment, public companies, non-profits and many others. Colin is an experienced copywriter, designer and direct marketing specialist and brings his unique knowledge of web development, lead generation and marketing strategies to the Affinor team. Nick Brusatore Chairman Nick Brusatore is known globally for being a top designer and leader in vertical farming technology. He was the Chairman of the Applied Research Committee for BCIT for several years and was nominated for the AGRI Award of Excellence for Canada in Nick was a keynote speaker at the International Conference on Marihuana in New York City and the moderator in San Francisco and regularly sits on discussion panels as an expert in this industry. Nick is the original designer of Terrasphere Systems started in 2001 and currently the major shareholder and designer of Vertical Designs Ltd started in Nick brings over 14 years experience in AGRI Designs, plant physiology and the manipulation of metabolic pathways to achieve organic chemistry. No current expert or company compares to Brusatore or his ability. It will be hard to compete with the quality and depth of knowledge to automate, industrialize and drive the marihuana markets in Canada and the USA. Nick recently worked in the Biotech sector growing transgenic Tobacco for a large pharmaceutical giant as well as transgenic Safflower to create insulin s for medical use Dr. Alan R Boyco Independent Director Alan R Boyco B.Sc., O.D. is a practicing Optometrist in Coquitlam, British Columbia with his expertise focused on anterior segment / glaucoma. Dr. Boyco is a member of the NHLTPS National Hockey League Team Physicians Society and the Official Optometrist to the Vancouver Canucks and Rogers Arena. He is also the Official Optometrist to the B.C. Lions and B.C. Place Stadium and the Official Optometrist to the Vancouver Giants and Pacific Coliseum. Dr. Boyco has a Bachelor of Science (Biology & Psychology) From the University of Alberta and is a graduate of the Pacific University School of Optometry. He appears on morning television as authority Eye specialist in a segment called "Eyes of Vancouver". Jeff Sopatyk Independent Director Jeff Sopatyk is a prominent Saskatchewan farmer and select seed grower. For the past 35 years, Mr. Sopatyk has been farming in the Saskatoon, Saskatchewan area. Mr. Sopatyk has a diploma in Agriculture from the University of Saskatchewan. Twenty years ago he established a commercial seed growing business as a pedigree and Select Status seed grower. He has been growing a wide array of seed crops including wheat, canola, barley, lentils, peas, hemp, and Faba beans on his 7,000 acre farm. He also has cooperated with several researchers from the U of S over the years with on farm research, focusing on environmental issues, germ plasm trials, inoculants, fertilizers, and plant breeding programs. For several years, Mr. Sopatyk was a director of the Saskatchewan Pulse Growers Association as well as a Director of Pulse Canada. Page 14 of 52 December 2014

15 ADVISORS Dr. Sazzad Hossain Sazzad has more than 20 years of academic and industrial experience in new drug discovery, natural health product development. He was Group Leader and Senior Scientist at Bio-technology Research Institute of National Research Council Canada, Government of Canada s prime biotechnology research organization where he set up pharmacology laboratory to evaluate safety and efficacy of new drugs under development in the areas of cancer, cardiovascular and ocular diseases. Prior to joining the National Research Council Canada, he was at Xenon Pharmaceuticals in Vancouver, B.C, where was Associate Director of Pharmacology and led pharmacology teams targeting pain, inflammation and cardiovascular diseases. Sazzad received his PhD in Biology from Moscow State Academy of Veterinary Medicine & Biotechnology and received post-doctoral training in the Department of Nutritional Science and Department of Medical Genetics of University of British Columbia. He was associate professor of pharmacology at Federal University of Minas Gerais, Brazil between He is the author of more than 40 peerreviewed papers, primarily in the pharmacology, genetics and nutritional sciences. Dr. Hyder A. Khoja Dr. Hyder A. Khoja s industrial experience spans from initiation, operation, advising and contribution towards developing several Research and Technical proposals including: Renewable resource, Biofuels & Feed-stock, Agri-Food Safety, Sovereignty & Security, Agri-Land Management, Field Exploration, Hydroponics, Breeding & Genetics for medicinal plant compounds based on geographically isolated strains and their cyto-morphological studies, Herbal Drugs Development focusing on Natural Health Products from Plant extracts. In past, he held several senior advisory roles where he dealt business and research operations. He successfully led multidisciplinary teams from (professionals-biologists, engineers, planners and scientists) at different organizations which resulted in consistent delivery of a broad range of products in a timely fashion. His work was also shortlisted for US-DOE multi-million dollars grant. While working with a team of experts; he built a foundation of strong cross-functional skills including Research & Business development. Dr. Khoja holds a Ph.D., in Cellular & Molecular Biology from the INP-ENSA Toulouse, France and Post-Doctoral training from Michigan State University. Later, he served as a Faculty for Virginia-Tech, University of Wyoming, and Texas-Tech respectively; where he demonstrated an Out-of-Box approach for R&D. His work was presented many times in government and academia and was recognized by the United Nation's-FAO Environment & Natural Resources Management. Most prominently, he has an authorship in over 18 peer-reviewed papers. Andrew Riseman Andrew Riseman, Ph.D. an influential UBC Senator and Associate Professor of Plant Breeding and Genetics to its advisory board. Dr. Riseman is in the Applied Biology Program within the Faculty of Land and Food Systems at UBC. His areas of expertise include plant breeding, genetics, cultivar development, agroecology, organic production, sustainable production systems, and horticultural and agricultural technologies. Dr. Riseman is also the Academic Director, Centre for Sustainable Page 15 of 52 December 2014

16 Food Systems (CSFS) and the co-chair of the CSFS Steering Committee. He earned his Ph.D. from The Pennsylvania State University and has strong interests in Community Based Action Research (CBAR) and the Scholarship of Teaching and Learning (SoTL). Thomas Baumann Thomas Baumann is a member of the North American Strawberry Growers Association, the American Society of Horticultural Sciences and current Director of the Pacific Berry Resource Centre at UFV to its advisory board. Thomas Baumann taught at the UBC Department of Plant Science in Small Fruit Culture, Tree Fruit Culture, Vegetable Production, and Protected Culture (Greenhouse) and continued as Sessional Lecturer at UBC as well as Kwantlen University College. He is a Professor at the University of the Fraser Valley, Agriculture Technology Department, for Vegetable, Fruit, Greenhouse, Pest Management, Nursery Production and Propagation, Introduction to Computers, Advanced Computer Training and Introduction to Horticulture Lab, responsible for a modern range of greenhouse research and teaching facilities. He is also a member of UFV Senate, Chair of the UFV Senate Awards and Honors Committee, and a member of the Senate Appeals Committee. Rick Easthom Rick Easthom's previous experience as Director of Corporate Brands for the Overwaitea Food Group, and Manager of Retail Development for Choices Markets, will give Affinor Growers an instant advantage in the merchandising and distribution its products. Mr. Easthom has extensive grocery retail experience. He is an authority in developing products, packaging, launching and merchandising them at retail while maximizing sales and profit. He has a comprehensive background in management and brings superior skills as an analyst, negotiator and planner. Rick has the unique ability to lead and direct merchandising teams. As Director of Corporate Brands for Overwaitea, he used his people skills and his negotiating talents to develop a dynamic team that created new products to meet changing market demographics and improve on old products by repackaging. These changes and his new team focus, helped to deliver exceptional increases in sales and profit. Page 16 of 52 December 2014

17 RECENT NEWS AND PRESS RELEASES Affinor Growers Engages Pierre C. Miron as VP Finance, CFO, & Director, December 2, 2014 Affinor announced that it has engaged Pierre C. Miron as VP Finance, CFO & Director. Affinor Growers Engages Secure Strategy Group, December 1, 2014 Affinor announced that it has engaged Secure Strategy Group for financial and corporate advisory services. Affinor Growers Announces Select Seed Grower Jeff Sopatyk to Board of Directors, November 20, 2014 Affinor announced Jeff Sopatyk, a prominent Saskatchewan farmer and select seed grower, has been appointed to Affinor's Board of Directors. Affinor Growers Receives an Exclusive 5 Year Purchase Order from Mastronardi Produce for Strawberries, November 5, 2014 Affinor announced that it has received an exclusive purchase order from Mastronardi Produce, a leading North American greenhouse vegetable company for all strawberries grown by Affinor at the facility in St-Chrysostome, Quebec. Affinor Growers Signs LOI with North Country Natural Solutions LLC in New York State, November 4, 2014 Affinor announced that it has signed a Letter of Intent with North Country Natural Solutions LLC and Iroquois Consulting Group LLC for a proposed Joint Venture in the agricultural business. Affinor Growers Signs NHL Veteran Georges Laraque for Business Development in Quebec, November 3, 2014 Affinor announced that 13-year, NHL veteran, Georges Laraque, will join the Affinor team for business development and to endorse their healthy products, including strawberries. Affinor Growers Signs Definitive Agreement to License Vertical Growing Technology to GeoNovus, October 23, 2014 Affinor announced that it will sub-license its patented, food growing technology licensed from Vertical Design Ltd. previously announced on October 22, 2014, to GeoNovus Minerals Corp. giving them access to the agricultural market place. Affinor Growers Signs Exclusive Licensing Agreement with Vertical Designs Ltd., October 22, 2014 Affinor announced that it has enter into an Exclusive Patent License Agreement with Vertical Designs Ltd. to become the commercial licensor of VDL patented, food growing technology on a worldwide territory excluding only Ontario, Alberta and the Maritimes. Page 17 of 52 December 2014

18 Construction Permit Approved to Build Strawberries Greenhouse in Saint-Chrysostome, Quebec, October 16, 2014 Affinor announced that the City of St-Chrysostome, Quebec, has approved the construction of the Strawberries Greenhouse on Affinor property in the Province of Quebec. Affinor Growers Announces Licensing LOI with Herbal Clone Bank Canada Inc., October 14, 2014 Affinor announced that Herbal Clone Bank Canada Inc. have entered into a letter of intent to license a new designed automated vertical cloning machine technology from Affinor. Affinor Growers Closes Acquisition of Vancouver Rooftop Growing Facility and Intellectual Property, September 11, 2014 Affinor closed the deal of previously LOI announced on July 11, 2014 and acquire all the assets of "BC" Ltd related to the operation of the Vancouver rooftop growing facility, located at 523/535 Richards Street, in Vancouver BC. Affinor Growers Partners with Herbal Analytics for Cannabis Quality Control in Washington State, September 9, 2014 Affinor signed an agreement with Herbal Analytics, a Washington State testing laboratory, to provide quality control for cannabis products. Under the terms, Affinor Growers paid $150,000 cash, $150,000 in a repayable loan over a maximum of 4 years and issued 949,612 of Affinor common shares at $0.516 per share for 49%. Former CEO of Medbox, Dr. Bruce Bedrick, Joins Affinor Growers as a Consultant, September 2, 2014 Affinor announced that former Medbox Inc. CEO and founder of Kind Clinics Medical Marijuana Dispensaries will be providing consulting services to the Company. Affinor Growers Announces DTC Approval, August 20, 2014 Affinor announced that the common shares of the Company have been made eligible for bookentry delivery and depository services of The Depository Trust Company to facilitate electronic settlement of transfers of its common shares in the United States. Affinor Growers Closed 49% Acquisition of Good to Grow in Washington State, August 5, 2014 Affinor announced the acquisition of a 49% interest in Good to Grow LLC, a medical Marijuana dispensary and grower located on the Olympic Peninsula in Washington State. Affinor Growers Completes 45-Acre Land and Facilities Acquisition in Quebec to Produce Strawberries, July 21, 2014 Affinor purchased 45 Acres of agriculture property in St-Chrysostome, Quebec, for $340,000. The Company plans to build a state-of-the-art, strawberry-growing facility in St-Chrysostome, Quebec. Page 18 of 52 December 2014

19 THE COMPANY As food production, distribution and consumption have become a growing concern due to the movement of populations into more urban settings. It is predicted that there will be a need to increase overall agricultural production by 70% before the year As a result, global food prices are increasingly becoming a significant threat to global food and nutrition security. Affinor Growers was organized for the purpose of integrating the best of breed vertical farming equipment with proprietary technology to create sustainable solutions for the cultivation of indoor and outdoor agriculture. Headquartered in Montreal, Canada, Affinor was incorporated in Canada on August 27, 1996, originally as Affinor Resources, which operated as a mining company with multiple projects in Quebec, Canada. After a change in business operations approved by the company s shareholders and Canadian Securities Exchange in May 2014, Affinor Resources became Affinor Growers. The Company has leveraged the experience of its team of expert horticulturists, engineers and scientists to industrialize and automate a profitable system to mass-produce nutrient-rich foods, free of pesticides and chemicals. To truly develop an industry leading vertical growing system, Affinor entered strategic partnership with Vertical Designs ltd. ( VDL ) to become the commercial licensor of patented food growing technology on a worldwide territory excluding only Ontario, Alberta and the Maritimes. Furthermore, this agreement provides Affinor a unique, technological advantage into the multi-billion dollar agricultural markets. VDL's automated, software-driven technology is unique for its ability to grow grade A1, non-gmo crops year-round without chemicals or pesticides. Affinor offers proven technology specifically designed to help solve global food security and food shortage issues. Affinor designs and builds innovative, fully sustainable and complete growing solutions which are the result of over 12 years of R&D based on predecessor systems, prototypes, and significant third party validation. The Company has developed one of the most scalable and profitable vertical farming systems available. The Affinor vertical growing system is essentially a controlled cultivation micro-environment, integrating lighting, climate control, anti-mildew, anti-odor and dissolved oxygen water systems. The system employs vertically stacked grow plots with an autonomous hydroponic nutrient delivery system; organic, nutrient-rich fertilizer solution mixtures. The system utilizes high efficiency lighting, with an automated-computer controlled lighting, watering and nutrient delivery cycles. The system s proprietary software automatically adjusts light and nutrient cycles based on plant variety and maturity. The technology can be customized to fill the space intended for their use, which could allow a single square foot of uncultivable desert land to subsequently become ten, fifteen or even twenty square feet of productive space, layered on top of one other. By utilizing Affinor s proprietary vertical farming system, the Company and/or sub-licensees can provide competitively-priced, locally-grown produce in large urban structures, such as warehouses or factories, incorporating the use of concentrated production in a reduced physical footprint. These cultivation facilities create many advantages compared to traditional farming facilities, due to these specialized facilities being able to be located in densely-populated areas within easy reach of consumers, resulting in dramatically reducing the costs and consequences of today's significant Page 19 of 52 December 2014

20 carbon footprint. Moreover it will result in fresher produce with longer shelf-life, as well as the technology significantly reducing, if not eliminating, the need for chemical herbicides and pesticides. By addressing the concerns of current food security issues, the fruits and vegetables produced by Affinor will experience increased consumer demand. Affinor plans to become a leading supplier of produce to large retail chains by differentiating it fruits and vegetables from other available produce and substantially lowering the shipping costs required to transport most produce from its point of origin to point of sale. To do this, the Company plans to acquire warehouse-type facilities in high-density strategic locations, beginning in Montreal, and equip them with proprietary vertical farming systems to cultivate a variety of fruits and vegetables. The technology will allow Affinor to grow fruits and vegetables with high yields using a fast growing cycle in any location regardless of the local climate. The Company will provide consumers with a desirable degree of food security in addition to the other benefits associated with vertical farming, such as a reduced ecological footprint. By integrating VDL s patented technology, the Affinor Vertical Growing system allows for efficient production utilizing minimum space and a quick growth system yielding maximum production per square foot. This has strategically positioned the company to capitalize on the rapid Globalization of Growing with Vertical Farms. As of November 20, 2014, Affinor has acquired and began building out a 45-acre food crop growing facility in Quebec, utilizing a highly controlled and automated environment of multiple growing layers to significantly increase yield per acre. At the location, the Company plans to build a state-of-the-art strawberry growing facility that leverages the proprietary technology and high growing demand for strawberries to create jobs and long-term shareholder value. The Quebec facility is expected to begin commercial-scale sales and operations by August What truly differentiates Affinor from the rest of the competition is its development and licensure of growing technologies, which has diversified applications that span both the traditional agriculture and cannabis industries. Through its recent acquisitions, the company has also built indirect exposure to the cannabis industry, becoming the first Canadian company to legally grow and sell cannabis within the U.S. Affinor Growers LLC In September 2014, Affinor concluded an agreement to acquire a 49% interest in Affinor Growers LLC, a medical marijuana dispensary and grower located on Washington's Olympic Peninsula for a consideration of $ 600,000. Once the Company receives the 502 license, which is expected to happen in spring 2015, Affinor will be able to mass produce weed for Washington State's recreational users. With a market of more than 700,000 users including out of state visitors, this provides the Company with the potential of an additional near-term revenue stream. Initiative 502 legalizes marijuana use in Washington, which opens the door to legal investment in a $1 billion plus industry. Washington is one of 4 US states that has legalized and now regulates and taxes recreational marijuana use. With the substantial tax revenues involved, additional jurisdictions could be expected to follow suit in the future. Page 20 of 52 December 2014

21 Currently, Affinor Growers LLC is fully operational with a 5,000 square foot facility. Affinor's $600,000 investment will be used to scale it up to a state of the art production facility. The company has been generating cash flow supplying the medical marijuana market from a facility that is already I-502 compliant and with the granting of 502 status it will become a major revenue generator and local employer. Part of Affinor's improvements to the facility will be the implementation of their automated vertical farming technology, since it decreases the time it takes to cultivate cannabis from seed to flower. Moreover, the system ensures controlled growing conditions, which maximize the yield of each plant, while still producing high quality cannabis. Herbal Analytics In September 2014, Affinor partnered with Herbal Analytics, a Washington State testing laboratory, to provide quality control for botanical and cannabis products. Herbal Analytics is a full service analytical and consulting laboratory for botanical quality testing and natural product drug development. Additionally, the testing lab offers I-502 compliant quality and safety testing for medical and recreational Cannabis products in Washington State. Herbal Analytics leverages its management s extensive herbal product industry experience to integrate efficient and innovative analytical platforms, based on Bio Analytical Method Validation, resulting in increased levels of accuracy and precision. Under the terms, Affinor Growers paid $150,000 cash, $150,000 in a repayable loan over a maximum of 4 years and issued 949,612 of Affinor common shares at $0.516 per share for 49%. The proceeds will be used to build the laboratories to meet the demand and handling the volume necessary of SI-502 and medical clients in Washington State, including, but not limited to, the equipment, employee salaries, marketing, sales and regular business needs. With the wide range of services and extensive background in Botanical Medicine that the testing laboratory brings, Affinor has access to critical analytical data. The Company plans on leverage this data to create additional revenue streams through product development for specific plant chemo types and standardization for efficacy. Page 21 of 52 December 2014

22 PRODUCTS AND TECHNOLOGY OVERVIEW Traditionally, the commercial horticultural and agricultural growth of plants has been carried out in nurseries and greenhouses, where the plants are arranged horizontally and are stationary. Traditional "vertical farming" include methods of growing plants using a central light source which rows of plants are rotated to increase productivity, however, harvesting product can be complicated and time consuming. Affinor s vertical growing technologies, use and control precise combinations of light, temperature, water, and nutrients to create specific growing conditions that result in optimum crop production with maximum product quality and shelf-life. The flexibility of the Affinor System allows the Company to produce a diverse number of high quality agricultural products including: Leafy Greens traditional lettuce, spinach and herbs with quick growth cycles and superior shelf life using Affinor technology. Natural Health Products over the past few decades, the world has witnessed the explosive growth of a multi-billion dollar nutraceutical industry food and food products providing health and medical benefits. Example crops that can be exploited using vertical technology include: alfalfa, aloe vera, peppermint, ginger, sage, arina. Flowering fruits Affinor s rotating design and proprietary pollination process allows crops like strawberries and other flowering fruits requiring pollination to be grown vertically. Cannabis and Marijuana seed to flower quickly, under controlled conditions to produce maximum yields, high quality marihuana in a safe secure location using vertical technology. By utilizing the Company s specialized vertical farming system, Affinor has created many benefits compared to traditional growing methods and other vertical farming systems, such as: Year round production anywhere in the world and on land otherwise not suitable for food production Increased yield per square foot of land estimated to 10 to 15 times depending on the crop Reduced growth cycles Reduced spoilage and scrap due to operational controlled conditions Longer shelf life products No chemicals or pesticides and other chemical inputs No genetically modified inputs Organically produced Locally supplied agricultural products reducing transportation cost and reliance on imports. Increase harvest volumes and decrease harvest times 50% labor advantage due to extensive automation and optimized work flow. Page 22 of 52 December 2014

23 PATENTED TECHNOLOGY Patented IP - Method and Apparatus for Automated Horticulture and Agriculture Affinor licensed patents includes Method and Apparatus for Automated Horticulture and Agriculture - international publication number: WO 2013/ A1. The patent covers A method and system for continuous automated growing of plants utilizes production lines each comprising a number of growth sections, each growth section comprising multiple horizontal transport levels, each level of each section having a source of light and liquid nutrient, and plant growing trays which move horizontally into, along and out of each transport level; whereby each subsequent growth section has a greater length than the previous section to receive a greater number of growing trays than the previous section so that as plants grow, the number of plants per growing tray is decreased but the number of plants per growth section remains constant. A group of plants is thereby broken out into an ever greater number of trays as it proceeds through the growing sections from germination to harvest, with the ability to simultaneously start the growth cycle for additional crops Affinor's exclusive licensed technology includes patented IP providing a method and system for continuous automated growth of plants. The technology utilizes one or more production lines each comprising a first and subsequent growth sections, with each growth section comprising a plurality of horizontal transport levels with each level of each section having an independent source light and nutrient supply. The growing trays are adapted to move horizontally into, along and out of each transport level. This technological advantage results in each subsequent growth section having a greater length than the previous section to receive a greater number of growing trays than the previous section so that as plants grow naturally in the growing trays. The number of plants per growing tray decreases but the number of plants per growth cycle remains constant. Page 23 of 52 December 2014

24 The process of utilizing this technology includes: 1. Plant the first group of seeds or seedlings (Batch A) in each tray being selected according to the type of plant, size of trays and relative number of lengths of growing section. 2. Start and introduce first group of seeded trays (Batch A) into the first allocated growing section - germination. 3. After germination or growth size achieved, transplant the first group of plants (Batch A) from the first group of trays into a greater number of trays and move to the next subsequent growing section - phase two equipment. 4. Replace the first growth trays with new seeds or seedlings (Batch B) to start the process again in the first allocated growing section - germination. 5. Transplant Batch A plants (now completed the second stage of growth) from the second growing area into a greater number of trays and move to the next subsequent third growing section - phase three equipment. 6. Transplant Batch B group of plants from the first growing area (germination) into a greater number of trays and move to the second growing area - phase two equipment. 7. Replace the second growth trays with new seeds or seedlings (Batch C) to start the process in the first allocated growing section - germination. 8. Repeat steps 1 through 7 until all equipment is propagated and growing at specified cycles. 9. Once the plants in a group of trays are in the final growth section and are ready to harvest, remove the group of trays from the final section and harvest the product - end of phase three. After a sufficient germination period, each tray of seedlings is broken out into the number of trays required to fill the second stage section at that transport level. The breaking out into additional trays and loading into the next section is done manually on scissor lifts. Once the entire section has been loaded the plants are permitted to grow for a sufficient period of time until it is necessary to break them out again into a greater number of trays. This is done manually as well. Again the plants are left until they are ready to harvest, meanwhile the other sections are filled and are growing with a new crop. Once the plants are sufficiently mature, the trays are manually removed from each level onto scissor lift and loaded onto conveyors. The trays are taken to the processing area where the plants are removed. Trays are then moved to the cleaning section using washer and drier and returned to the seeding section where they are refilled with seeds. The technology and equipment is designed that each grow section comprises of multi-level growing units, each independently controlled for light cycle, feeding and irrigation controlled by a central computer so the system can be programmed for different plants having different growth cycles, without any changes to the configuration of the installation. The technology includes proprietary growing trays specially designed for horizontal movement on rollers within the multi-level growing units. The growing tray has an automatic filling and draining cycle which is regulated by specially designed bell siphon. The siphon uses a baffle having passages of variable diameter creating a vacuum that can be selected and the timing of the fill and drain cycle selected as necessary. Page 24 of 52 December 2014

25 Patented IP - Method and Apparatus for Automated Vertical Horticulture and Agriculture The Company s licensed patent pending for the technology and process, includes Method and Apparatus for Automated Vertical Horticulture and Agriculture (patent pending, no international publication number) Affinor's exclusive licensed technology also includes patent pending IP providing a method and system for continuous automated growth of plants including mechanical pollinating. The specialty-designed equipment includes a vertical array of plant supporting arms extending radial from a central axis. Each arm has a plurality of pot receptacles which holds the plant seedling, nutrient and water. The potting arms are rotated beneath grow lamps and pollinating arms. The frequency of feeding is increased as the plant grow. The micro environment can be manipulated to favor plant growing requirements including CO2 enriched air, O2 enriched air, temperature and humidity. Once the plants are ready to harvest, they are manually exchanged for new seedlings and mature plants are removed. Different lighting, temperatures, humidity and nutrition can be programmed for the different growth stages of a crop and for different crops remotely by a central computer. A variety of light sources can be used including light emitting diodes (LED's), high pressure sodium lamps, metal halide lamps or incandescent light bulbs. The electrical control switches may be programmed to provide a coordinated light cycle (photoperiod) for the plants at each growth stage and used as supplemental light when grown within greenhouses. In operation, seedlings and pucks are prepared in a separate location and each plant goes through a first germination stage prior to being placed in the growing equipment. After a sufficient germination period, and once the plants are ready to be transferred to the equipment, a scissor lift is used to load the plant into the pot receptacles on each level of the potting arms. One end of a conveyor is connected to the scissor lift and the plants are loaded on the other end of the conveyor. The plants remain on each growing arm until they are ready to harvest. Once the plants are sufficiently mature, they are manually removed from each level onto a scissor lift and loaded onto the conveyor. New seedlings replace each harvested plant at the same time the plants are harvested. A growing facility may house a large number of growing until and may also include the germination area, packaging area, cold storage, cleaning area, seeding area and feed tank storage area. Page 25 of 52 December 2014

26 CASE STUDIES PROBLEM CROP SOLUTION STRAWBERRIES Strawberry Consumption has been one vertical in the agricultural industry that has experienced a steady increase over the past decade, specifically in Canada. Strawberry consumption in Canada has been on the rise fairly consistently over the last 20 years, raising around 94% since 1991, 73% of which increased in the last 10 years. Strawberry consumption in Canada has been increasing however because a large portion have been imported. In specific, Canadian production in 2011 accounted for only around 14.3% of total percent available to market, with 85.7% coming from imported berries. Moreover, most Canadian provinces have been experiencing an overall decline in production, aside from those located in Quebec whom are all members of their province s producer group (547 farms). Page 26 of 52 December 2014

27 Furthermore, the Canadian Industry s capacity to grow and provide for the population dwindles throughout the winter and spring months, when imports from USA to Canada are at their highest once most household s frozen storage of strawberries are down, and summer weather and healthcampaigns kick in for spring. With over ten years of research, development and experimentation, through its license agreements in technology, partners and the advisory board, Affinor is creating the first commercial strawberry facility that will be able to harvest year round, pesticide free, non-gmo organic strawberry fruit. Page 27 of 52 December 2014

28 Page 28 of 52 December 2014

29 Affinor's exclusive licensed technology, partners and advisory board have created a proprietary process to commercialize strawberry production. The process includes the strategic use of the patented equipment (IP's) using specific environmental triggers creating a continuous automated growth of seedlings, vegetative growth, mechanical pollinating and harvesting year round. Through years of research and experimentation, unique microenvironments and operational conditions have been discovered and developed to manipulate and control the natural metabolic pathways of the June bearing Strawberry (Fragaria x ananassa). As a result, a proprietary growing process with perpetual year round harvesting was achieved without any genetic modifications. By exposing the strawberries to specific environmental conditions (temperature, humidity, light, duration, nutrition), Affinor was able to simulate naturally occurring seasons and bring the plants into prolonged fruiting stages under controlled conditions. Page 29 of 52 December 2014

30 The above illustration depicts a typical June Bearing fruiting cycle. Affinor s proprietary strawberry cultivation system and technology condenses this natural four-year cycle to 9 months. The following is a summary technical description of the process. Seedlings are planted in the slide trays and placed within the vertical roller equipment. There are 18 machines at 14 levels. The room will be made of insulated polar panels and completely enclosed. Within this room, growth phase one to establish root mass, winter simulation, reanimation and the second growth phase will occur within 4 weeks. The plants are then transferred to the rotating towers to continue vegetative growth within the greenhouse under natural and supplemental light. The greenhouse is designed with diffused polycarbonate to reduce shadows and promote fruiting and under strict operational conditions in temperature and humidity. There will be 36 rotating towers with 13 levels per tower. Half the towers (18) are filled with the first batch of plants from the slide tray equipment or the "chill room" that have undergone the first growth phase, winter simulation, reanimate and second growth phase. The second half (remaining 18 towers) are filled 1 to 2 weeks later from a second batch of plants from the "chill room". The first fruit harvest will occur approx. in four weeks with the second harvest two weeks later once transferred to the greenhouse. Each plant within the greenhouse will have a three cycle harvest. After the last third harvest, the plant is replaced with a new one from the chill room and the cycle is repeated. Page 30 of 52 December 2014

31 The process is designed to harvest half of the towers in the greenhouse every two weeks, resulting in a full harvest every four weeks. At capacity, the greenhouse will harvest 29,952 plants per month at approx. 1 lbs. to 1.5 lbs. per plant. Seedlings are planted in starter pots, phase one Seedlings are vegetated to a proprietary stage, transplanted, trimmed and enter the winter simulation cycle. Plants undergo a proprietary winter simulation, then reanimation or "wake up" phase. Page 31 of 52 December 2014

32 After reanimation, second growth phase is started to establish root mass. End of second growth phase when plants flower. They are moved to the vegetative growth and fruiting towers. Page 32 of 52 December 2014

33 Plants are transferred to vegetative growth and fruiting towers for mechanical pollination and ripen under proprietary operating conditions. Plant continue to vegetate until the first harvest - four months from start of process. Page 33 of 52 December 2014

34 Plants are pruned and replenished with nutrients and allowed to fruit again for second harvest on the fruiting towers. Plants are kept in a constant fruiting stage under proprietary operating conditions. No chemical or genetic influence. Second harvest, usually the fruit is 20 to 30% bigger due to larger established root mass. The plants are pruned and replenished with nutrients and allowed to fruit again for a third harvest on the fruiting towers resulting often in even larger fruit again. Page 34 of 52 December 2014

35 Fist harvest average strawberry size Second harvest, average strawberry size 22.3 grams 30.2 grams Third harvest, up to 53 grams per strawberry Page 35 of 52 December 2014

36 Flow chart showing the proprietary cultivation system for a three harvest cycle per plant. The process will allow for month perpetual harvesting of strawberries using Affinor's equipment and proprietary cultivation system. Page 36 of 52 December 2014

37 BUSINESS MODEL Affinor has identified a revenue opportunity in the agricultural produce industry which the Company believes is currently underutilized. This consists primarily of producing select fruits and vegetables in a secure, indoor environment in close proximity to urban centers, where the population of potential consumers exceeds that of rural locales, regardless of regional climate or outdoor growing season constraints. As a result the Company s business model seeks to eliminate two major logistical problems facing both producers and consumers of organic and conventional fruits and vegetables today, which are the costs and delays related to shipping fresh produce from where it is grown to where it can be sold; and variations in climate that prevents certain produce from being grown in certain markets. The company plans to become a major producer by utilizing an integrated system of automated vertical farming techniques and cloning technologies. Affinor believes it will also have significant sub-licensing and consulting opportunities to commercial operators in a variety of agricultural divisions, as well as horticulture research professionals. The Company negotiates consulting and sub-license agreements with commercial growers and research professionals. During the term of the 5 years agreement, the Company renders consulting services related to the implementation and use of the technology, establishment of the facility, assist the sub licensee to use the technology and sublicensed IP to produce the sublicensed product in a specific territory. As consideration for the services rendered by the Sub licensor during the term of the consulting services, the sub-licensee agrees to pay; $500,000; outof-pocket expenses; and 3% to 5% royalty on net sales. By entering into a sublicense agreement with Affinor, these companies or individuals will gain access to innovative, fully sustainable and complete growing solutions, which are the result of over 12 years of R&D based on predecessor systems, prototypes, and significant third party validation. By leveraging the Company s expertise in advanced vertical farming designs and patented technology, Affinor is positioned to become a leading global licensor of the proprietary vertical farming technologies. 1. Revenue from sale of Company grown produce 2. Revenue from technology Sub-licensing and Consulting fees 3. Revenue from sale of Medical and Recreational Cannabis 4. Revenue from botanical and cannabis laboratory testing fees As Affinor is successful in growing and providing quality strawberries, other farming and tech companies will no doubt spark interest in similar forms of operations. Affinor s success may attract new companies interested in developing similar programs in Canada. Entrance of new companies into the Canada market for strawberries is an ongoing possibility Affinor is keenly aware of industries moderate barriers to entry, given the extensive capital involved in most farming operations and pricing of farmland in Canada (+/- 100k/acre). However, the Company already secured a purchase order from Mastronardi Produce for all its products that will be produce in the Saint-Chrysostome facility, Quebec to ensure a sustainable income stream. Also rather than seeing others as producers to compete with, Page 37 of 52 December 2014

38 Affinor will partner with these competitors to collaborate with and share resources with, working to secure its positioning as leader in the industry. In addition, while the focus of Affinor is growing plants and food crops, its advisory team is uniquely composed not only of plant and food production expertise, but also of drug and neutraceutical specialists. Working with a diversified advisory team will allow Affinor to access additional industries for product sales that may otherwise not be available. Diversifying its income stream will allow Affinor to remain stable in the face of income challenges from any one given source. Page 38 of 52 December 2014

39 SALES AND MARKETING There are strong indications that consumers interested in purchasing safe, locally-grown produce that is subject to a standard of quality such as organic certification. The recent growth of farmer s markets and the expansion of supermarket chains such as Whole Foods Market and Trader Joe s demonstrates that demand for such produce exists, as does public concern over herbicide and pesticide use, country-of-origin labeling and greenhouse gas emissions associated with shipping produce hundreds, and even thousands, of miles from farm to retail outlet. Affinor plans to capitalize on the opportunity presented by this shift in consumer attitudes by offering them fresh, non-gmo delicious foods and nutraceutical / medicinal foods without pesticides or dangerous chemicals with near zero water waste, which are competitively-priced and capable of instilling a measure of brand recognition. With the Company s ability to provide a constant supply of select high volume fruits and vegetables regardless of the local climate create a significant competitive advantage over traditional agricultural producers. Affinor plans to target markets that require bulk produce on a continuous basis by distributing its locally grown produce through the following channels: Direct through Farmer s Markets, CSAs, On Premise, and Online Grocery Store Chains, Specialty Food Stores, Mass Merchandisers, Club Stores Wholesalers Food Service Restaurants On the consumer level, Affinor is planning to capitalize on the consumer attitude shift towards locally-grown organic produce, by targeting the following produce consumers Generally well educated Higher disposable income Environmentally conscious consumer Organic purchaser When seeking to purchase strawberries for food consumption in Canada, there are countless other providers retailers, distributors and consumers can consider. Consumers look for strawberries that are affordable, available, non-gmo, organic and most importantly, that taste good. Many of the berries available on the Canadian market today (84% on estimate) have been imported from California and other southern parts of the world. Berries shipped are often picked early before ripening and left to either ripen en route or chemically supported applications. Water shortages and climate change effects are beginning to prevail in the southern parts of North America where most of our berries are currently imported from. Page 39 of 52 December 2014

40 Affinor will work with various berry associations, ministry groups and retail grocers across the Country to ensure promotions of local and Canadian strawberries are heard, enhancing consumer awareness of their availability and the importance of supporting local growers. While others may enter the realm of vertical farming to compete with Affinor s yield and quality, Affinor will continue with their R&D facility exploring and continually enhancing their designs and production methods; they will keep on top of all industry news and their competitors to ensure their products will always be the best quality at an affordable price. In regards to consulting and Sub-licensing agreements, Affinor targets two specific markets, commercial growers and Horticulture research professionals, who are currently utilizing indoor growing technologies. Commercial Growers: Commercial agriculture is beginning to migrate to control indoor environments. Due to the ability to both maximize space and mitigate energy costs, the Affinor system provides an affordable vertical farming solution for urban commercial growers who produce for local restaurants, hotels, wholesale and retail markets. Horticulture Research Professionals: The Affinor Vertical Growing System utilizes high efficiency lighting, with an automated-computer controlled lighting, watering and nutrient delivery cycles, which allows for a variety of delivery and plant support configurations. As a result, the system offers maximum flexibility to research professional, who are experimenting with different plant species and maturities, while attempting to keep costs low. The sub-licensing agreement will allow potential clients access to one of the world s most advanced and potentially profitable vertical farming systems. Moreover, the technology potentially compliments these sub-licensees current operations and opens up tremendous potential within the multi-billion dollar agricultural market place. Page 40 of 52 December 2014

41 OPERATIONS Affinor Growers, Inc. is a Canadian corporation, which is headquartered in Montreal, Canada. The Company currently has two investments in the state of Washington, Affinor Growers LLC, a company currently cultivating and supplying patients for medical marijuana in the State of Washington, and Herbal Analytics LLC, a full service analytical and consulting laboratory for botanical and cannabis quality testing and natural product drug development. Affinor owns a 49% interest in each company. The Company currently has one full time employee, five consultants, serving on the management team, and three independent consultants. Moreover, the Company s investment, Affinor Growers LLC has five employees, while Herbal Analytics LLC has four. In regards to the patented technology in the Company s vertical growing system, Affinor is engaged in an exclusive patent license agreement with Vertical Designs ltd. ( VDL ) to become the commercial licensor of VDL patented food growing technology on a worldwide territory excluding only Ontario, Alberta and the Maritimes (the Territory ). Under the terms of the agreement, the Company will use VDL s technology to produce high quality non-gmo fruits and vegetables, royalty free to VDL. The Company issued a total of 1,388,888 common shares to obtain the worldwide exclusivity to use the VDL technology. Also under the agreement, the Company will be able to sublicense VDL s technology for fruits and vegetables to any other company of facility on the territory and receive a royalty on sub-licensed production. The Company will receive 50% of any fee or royalty paid to it by any sublicense of the VDL technology, the other portion being paid to VDL. As of November 20, 2014, Affinor has acquired and began building out a Strawberry-growing facility on a 45-acres of prime agriculture property. This will be the first of its kind and it will supply organic, non-gmo, strawberries and other crops grown without pesticides to Eastern Canada and the Eastern seaboard of the United States. The unique structure of this facility is designed to increase efficiency by a timer per square meter of that of any traditional greenhouse design and will be located on 45 acres of agricultural land in Saint-Chrysostome, in the regional county municipality of Haut-Saint-Laurent in the Montérégie administrative region of the Province of Quebec. The greenhouse will include a state-of-the-art, 40m x 40m, 4 bay, fully diffused growing area and a 20m x 40m, 2 bay auxiliary facility, for the propagation, packaging, storage and shipping of high quality produce, specifically strawberries. Once Affinor has grown the organic, non-gmo produce, the Company plans to leverage the extensive network of its management to create an infrastructure, which distributes its fruits and vegetables on a cost-effective basis. Affinor anticipates entering into agreements with a variety of regional distributors in the locations in which it plans to operate once the validity of the Company s business model is established. Page 41 of 52 December 2014

42 RESEARCH AND DEVELOPMENT Affinor is currently in the final stages of releasing a new, sophisticated vertical cloning design that it would offer to third parties looking to develop pharmaceutical and cannabis clones in the U.S. Cloning ensures that plants are bred exactly the same in order to ensure the same clinical effects. This technology technologies that will also allow grape seedlings to produce grapes in just a year, versus 8 years, through safe metabolic manipulation instead of genetic manipulation. The company's technology automates the typically manual cloning process, with the ability to produce 200 clones per square foot in a 15-level stack using 50% less labor than traditional methods. The software driven, automated airflow lid removal process allows the Company to mass-produce high quality, legal cannabis seedlings. The root development system, including automated root watering, will be at least 30% faster than any traditional system and can reduce cost by 50%. Since clones sell for about $5 to $10 a piece and can be created every 10 days, there is significant revenue potential. In addition to the cannabis industry, the same technology could become incredibly valuable with the pharmaceutical and traditional agricultural industries where clones are used to ensure quality. Traditionally, the commercial horticultural and agricultural growth of plants has been carried out in nurseries and greenhouses, where the plants are arranged horizontally and are stationary. Traditional "vertical farming" include methods of growing plants using a central light source which rows of plants are rotated to increase productivity, however, harvesting product can be complicated and time consuming. Affinor has reviewed available information on existing installations in the vertical farming sector including those of SkyGreen, Alterrus Systems, Verticorp, AeroFarms, FarmedHere, Omega Gardens, Urban Barns and Terrasphere Systems. Affinor believes it has developed whole solutions that are superior in maximizing food quality while minimizing costs and maximizing productivity per square foot of growing space. Affinor's partner (Vertical Designs) Reach and Development facility located in Port Coquitlam Vancouver, British Columbia has been developing vertical farming equipment and technology for over 5 years. Vertical Design Ltd inventor and management have been developing vertical farming equipment and technology for over 20 years. The facility is over 4,000 square feet and houses both patented technology prototypes. A pilot plant was developed to grow and test various plants and crops under different operating conditions to methodically design: The equipment for best ergonomic interaction Optimal crop models for reduced harvest cycle time while maintaining shelf life integrity Design operational software and crop models Test a variety of leafy green products (non GMO, pesticide free, organically grown) Develop unique cultivation processes and operational requirements to grow fruiting crops perpetually (year round - strawberries) by designing a crop model to simulate seasonality condensing the fruiting cycle from 4 years to 9 months. Page 42 of 52 December 2014

43 The following product trials and examples over the next several pages, were performed within the Research and Development facility over the last several years to develop operational parameters, environmental controls, lighting development, crop models and automation. All product trials were successfully produced using VDL's technology, equipment prototypes and pilot processes within the facility. Leafy green development and trials within Research and Development facility. Product trial: Basil One week growth from seed Transplanted, phase two of the growing cycle Day 15 - ready for harvest Page 43 of 52 December 2014

44 Product Trial: Romaine Lettuce 10 days from seeding Transplant, phase two of the growth cycle. Day 17 Day 23 Day 31 Heart formation and harvest within 4 to 5 weeks, organic, no pesticides in natural dirt medium. Page 44 of 52 December 2014

45 Product Trial Spinach: Four weeks after seeding, ready for harvest. Page 45 of 52 December 2014

46 COMPETITION Within BC, Canada and the world, it is likely that Affinor Growers will face competition from both commercial strawberry suppliers and those committed to growing their own food. This sections seeks to first understand key risks Affinor may experience in industry, followed with mitigation efforts currently planned or underway. To begin, a list of growers by province currently producing strawberries in Canada is listed below with locations and comments on their facilities/companies. A list of strawberry growers by province as well as the 9 growers associations available to Canada are listed below. Competitors with existing installations in the vertical farming sector include those of SkyGreen, Alterrus Systems, Verticorp, AeroFarms, FarmedHere, Omega Gardens, Urban Barns and Terrasphere Systems. Affinor has developed whole solutions that are superior in maximizing food quality while minimizing costs and maximizing productivity per square foot of growing space. SkyGreens Any dependency on sunlight can result in cell elongation on cloudy days resulting in inferior shelf life and lower nutritional value. Without supplemental lighting the growing cycle can be longer when natural growing seasons shift. Alterrus / Verticorp Use of sun radiation hydroponically can result in cell elongation, unless growing baby products, inferior shelf life and lower nutritional value. Spraying feed increases susceptibility to high bacteria count and increasing possibility of washing to pass food safety regulations. If washed, then possibility of damage rises because of cell elongation. Supplemental lighting is likely insufficient in winter or if cloudy for 5 or more days which can negatively impact quality. Page 46 of 52 December 2014