Indigenous Bloom Hemp Corp. — Capital/Financing Update 2021

Aug 31, 2021

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Veritas Announces Conditional Approval For Acquisition of Indigenous Bloom Hemp Corporation and Share Consolidation

VANCOUVER, British Columbia, August 27, 2021 -- Veritas Pharma Inc. (CSE: VRT; OTC: VRTHF; and Frankfurt: 2VP) (“the “ Company ”) is pleased to announce that it has obtained the conditional approval of the Canadian Securities Exchange (the “ CSE ”) in respect of its business combination (the “ Business Combination ”) whereby it will acquire all off the issued and outstanding common shares (the “ Hempco Shares ”) of Indigenous Bloom Hemp Corporation (“ Hempco ”). Listing is subject to the Company completing the Business Combination and completion and filing of all outstanding documentation with the CSE. Details of the Business Combination are in the Company’s Information Circular dated March 1, 2021, the amendment thereto dated March 24, 2021 (collectively the “ Information Circular ”) and in the Company’s news release dated September 9, 2020. Further details are set forth below.

Prior to closing of the Business Combination, the Company will consolidate its common shares (the “ Consolidation ”) on the basis of one post-consolidation share for every two pre-consolidation shares. The Consolidation will become effective on September 1, 2021, and the Company’s common shares will commence trading on a consolidated basis on September 1, 2021. The new CUSIP number will be 92347A304 and the new ISIN number will be CA92347A3047.

Following the Consolidation, which was approved by the shareholders of Veritas by special resolution at the Annual General & Special Meeting of shareholders held on April 29, 2021, the Company’s issued and outstanding common shares will be reduced from 16,694,644 common shares to approximately 8,347,322 common shares. Any resulting fractional share entitlement remaining after conversion at 0.5 or over will be rounded up to the nearest whole number and below 0.5 will be cancelled.

A letter of transmittal will be sent by mail to registered shareholders advising that the Consolidation has taken effect. The letter of transmittal will contain instructions on how registered shareholders can exchange their share certificates evidencing their pre-consolidation common shares for new share certificates representing the number of post-consolidation common shares to which they are entitled. No action is required by non-registered shareholders (shareholders who hold their shares through an intermediary) to effect the Consolidation.

Pursuant to the Business Combination, Hempco will amalgamate with the Company’s wholly owned subsidiary, 12302161 Canada Inc, the amalgamated corporation will become a wholly owned subsidiary of the Company, and the shareholders of Hempco will receive post-consolidation common shares of the Company having an aggregate value of $28,000,000. The aggregate number of post-consolidation common share issuable to the Hempco shareholders will be determined on the basis of the following formula: $28,000,000 ÷ closing price of the Company’s consolidated common shares on the CSE on the last trading day prior to the effective date of the Business Combination. On completion of the Business Combination, the Company will change its name to “Indigenous Bloom Hemp Corp.”

It is anticipated that the Company’s common shares will be halted from trading on the CSE effective September 16, 2021 pending closing of the Business Combination, which is expected to occur on or before October 1, 2021. There is no assurance, however, that the Business Combination will be completed as proposed or at all.

About Indigenous Bloom Hemp Corporation

Hempco currently operates a large-scale industrial hemp farm in Southern Manitoba on approximately 310 acres of zoned farmland. The farmland is leased by Chris Federowich and Delores Federowich, pursuant to a lease agreement dated April 2, 2021. The lease is for a term of two years expiring on April 1, 2023 and covers 310 acres. Lease costs are $75 plus GST per acre per year and are paid by Hempco.

Hempco has entered into a contract for farming services dated July 20, 2020, as extended May 18, 2021 (the ” Independent Contractors Services Agreement ”) with Federowich Farms (the “ Contractor ”) to provide farming, cultivating and harvesting services for industrial hemp on the leased farmland. The agreement expires on May 31, 2022. The Contractor is operating under a licence from Health Canada which allows for the cultivation of hemp and the sale of seed, grain, flowering heads, leaves and branches. The licence expires on April 16, 2026. In consideration for the farming services, Hempco pays the contactor a fee of $200 per acre

The CSE has not reviewed, nor approved or disapproved the content of this press release.

planted. The Contactor has also been granted the option to purchase 50,000 post-consolidation common shares of the Company at a price of $0.34 per share on or before June 1, 2022. Under the Independent Contractors Services Agreement, the Contractor is required to farm, cultivate and harvest 200 acres.

Hempco has made an application to Health Canada for an Industrial Hemp Licence which will allow for the cultivation and sale of industrial hemp in the form of seed, grain, flowering heads, leaves and branches. Hempco’s licence application is currently being processed by Health Canada and Hempco has been advised by Health Canada that its application is in the final stage.

The primary business of Hempco is the sale of hemp biomass and flower for processing into phytocannabinoid rich (“ PCR ”) extracts derived from hemp biomass. Hempco is currently planting crops using cannabidiol (“ CBD ”) dominant genetics. Hempco also intends to develop or acquire the rights to additional hemp products such as health supplements, nutritional products, food stuffs and beauty products for general consumer end-use. All of the PCR hemp, hemp extracts and hemp products produced or sold by Hempco will contain less than 0.3% THC, ensuring that they are compliant with the Industrial Hemp Regulations, thus falling under the definition of industrial hemp. Plans include the development of various product lines and propagation through A-Sexual reproduction which is expected to increase production capacity and accelerate the development of genetic stock.

Cultivation Operations

The growing region in Manitoba is widely regarded in the industry as one of the best climates in North America for the cultivation of hemp. Hempco intends to seed and harvest one crop per year. During 2020, Hempco seeded 200 acres and harvested approximately 50,000 kilograms of hemp biomass. The biomass was processed through the proprietary separation technology referred to below, achieving a throughput of 18,600 kilograms in a two hour period. The resulting CBD content was concentrated up to an average of 8% and reduced the biomass content by 96%. The resulting material has been sent to Bioscision in Winnipeg, MB for analytical testing. Hempco currently has approximately 1200 kilograms of CBD rich product moving through additional research and development.

During 2021, Hempco seeded 200 acres of which 160 acres are planted with Abound seed and 40 acres are planted with a combination of female clones of the Cherry Blossom and Sentium varieties. The anticipated yield from the seed is estimated to be between approximately 36,000 kilograms and 54,000 kilograms of biomass which is anticipated to be reduced to a concentrated kief with a 9% CBD concentration. The anticipated yield from the clones is estimated to be approximately 15,000 kilograms of biomass which is anticipated to be reduced to a concentrated kief with a 10% to 12% CBD concentration.

As part of its long-term growth and efficiency protocols, Hempco has mechanized substantial parts of its operation, including the use of combines for harvesting, and tunnel/barrel dryers for post harvesting. Hempco has acquired an exclusive worldwide license to patent pending technology (the “ Licensed Technology ”) for separating hemp and cannabis plant matter during the harvesting process that management of the Company believes will provide a cost-effective, energy efficient, carbon neutral process of separation.

Hempco acquired the license to use and sell products utilizing the Licensed Technology pursuant to an agreement (the “ Technology License Agreement ”) dated November 30, 2020 with 1251683 B.C. Ltd. (the “ Licensor ”). As consideration for the license, Hempco is required to pay the Licensor $1,200,000 and a royalty of 8% of any monies received by Hempco from the sale, lease, rental, sublicense or other disposition of products utilizing the Licensed Technology. Payments to the Licensor over the ensuing twelve months are expected to be $1,993,000.

Processing and Sales

Hempco is negotiating with a Health Canada licenced extraction firm to perform contract extraction services of CBD from the hemp produced by Hempco.

Hempco’s Products

Hempco currently has two products which it plans to sell and is in the process of expanding its product line. Hempco’s primary product to date is hemp biomass, which will be sold pre-processed to customers and partners who process the biomass into CBD oil. Its secondary product consists of bulk hemp material such as grain (seeds) for both food and agriculture (replanting) and separated CBD rich kief for further extraction and processing into consumer goods.

The CSE has not reviewed, nor approved or disapproved the content of this press release.

Development of Business

The Licensed Technology will allow for onsite processing as the 2021 crop is harvested. Hempco intends to apply for a licence from Health Canada to process hemp extract and is investigating the viability and cost of constructing its own extraction facility.

Financial Data – Hempco

The following table summarizes financial information of Hempco for the period from July 31, 2019 (date of incorporation) to May 31, 2020 and for the nine month period ended February 28, 2021. This summary financial information should be read in conjunction with the audited financial statements of Hempco for the period from July 31, 2019 (date of incorporation) to May 31, 2020 and with the unaudited financial statements of Hempco for the nine month period ended February 28, 2021, which are available under the Company’s profile on the SEDAR website at www.sedar.com.

	For the Period July 31, 2019 (date of Nine Month Period Ended
	incorporation) to May 31, 2020 February 28, 2021
	(Audited) (Unaudited)
	($) ($)
Total Revenues Net Loss from operations Loss Per Share – Basic and Diluted Total Assets Total Liabilities Working Capital (Deficit) Shareholders’ Equity (Deficiency) Weighted Average Common Shares Issued and Outstanding (end of period)	Nil Nil (384,449) (341,274) (3,844) (0.02)
	607,281 734,104 991,729 1,112,326 (792,620) (819,667) (384,448) (378,222) 100 18,901,104

Pro-forma Financial Information

The following table summarizes pro-forma financial information of the Company as at January 31, 2021. Pro-forma consolidated financial statements of the Company as at January 31, 2021, after giving effect to the Business Combination, are available under the Company’s profile on the SEDAR website at www.sedar.com.

	January 31, 2021 (Unaudited) ($)
Total Current Assets	142,323
Total Assets	723,096
Total Current Liabilities	2,160,983
Total Liabilities	2,300,311
Working Capital (Deficit)	(2,018,660)
Shareholders’Equity (Deficiency)	(1,577,215)

Since January 31, 2021, the current liabilities of the Company and Hempco, on a consolidated basis, have been reduced by $1,370,800, which amounts are now classified as long term liabilities.

The CSE has not reviewed, nor approved or disapproved the content of this press release.

About Veritas Pharma

Veritas Pharma Inc. is a publicly traded company in Canada, on the Canadian Securities Exchange under the ticker VRT; in the United States, on the OTC under the ticker VRTHF; and in Germany, on the Frankfurt exchange under the ticker 2VP.

For more information, please visit our website: www.veritaspharmainc.com

Investor Advisory

Completion of the Business Combination is subject to a number of conditions, including but not limited to, final CSE acceptance. There can be no assurance that the Business Combination will be completed as proposed or at all. Trading in the securities of the Company should be considered highly speculative.

Cautionary Statement Regarding Forward-Looking Information

Statements contained in this news release that are not historical facts are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements evaluating the market and general economic conditions and discussing future-oriented costs and expenditures. In certain cases, forwardlooking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to the agricultural industry, such as weather, climate conditions, market prices and exchange risks; environmental risks; reliance on licences from Health Canada; reliance on contract farmers; risks related to leasehold property; fluctuating prices for CBD oil; risks related to the integration of the Company’s business; risks related to the Company’s operations; risks associated with the Company’s potential product liabilities; the effects of changes in technologies that might affect the Company’s business plans; general economic conditions; actions by government authorities; uncertainties associated with legal proceedings and negotiations; industry supply levels; competitive pricing pressures; and misjudgments in the course of preparing forward-looking statements, as well as those factors discussed in the section entitled “Risk Factors” in the Information Circular and in the Company’s MD&A.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forwardlooking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this new release are made as of the date of this news release and, except as required under applicable securities laws, the Company does not undertake any obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise.

On behalf of the Board of Directors

Peter McFadden Interim Chief Executive Officer & CFO

Further information about the Company is available on our website at www.veritaspharmainc.com or under our profile on SEDAR at www.sedar.com, and on the CSE website at www.thecse.com.

Investor and Public Relations Contact

Veritas Pharma Inc. Telephone: +1.416.918.6785 Email: ir@veritaspharmainc.com Website: www.veritaspharmainc.com

The CSE has not reviewed, nor approved or disapproved the content of this press release.