Indigenous Bloom Hemp Corp. — Interim / Quarterly Report 2021

Aug 31, 2021

INDIGENOUS BLOOM HEMP CORP.

(formerly Veritas Pharma Inc.)

Pro Forma Consolidated Financial Statements

January 31, 2021

(Expressed in Canadian dollars)

(unaudited)

INDIGENOUS BLOOM HEMP CORP.

(formerly Veritas Pharma Inc.)

Pro Forma Consolidated Statement of Financial Position

As at January 31, 2021 (Expressed in Canadian Dollars) (unaudited)

		Indigenous
	Veritas	Bloom Hemp	Note	Pro Forma	Pro Forma
	Pharma Inc.	Corporation	4	Adjustments	Consolidated
	January 31,	February 28,			January 31,
	2021	2021			2021
	$	$		$	$
Current assets
Cash	498	138,915		–	139,413
Amounts receivable	249	2,661		–	2,910
Due from Veritas	–	11,755	(e)	(11,755)	–
Total current assets	747	153,331		(11,755)	142,323
Property and equipment	–	435,000		–	435,000
Right-of-use assets	–	145,773		–	145,773
Total assets	747	734,104		(11,755)	723,096
Current liabilities
Accounts payable and accrued liabilities	533,348	231,867		–	765,215
Current of loan payable	–	27,050		–	27,050
Convertible debt	85,000	–		–	85,000
Current portion lease liabilities	–	40,959		–	40,959
Due to related parties	581,392	673,122	(e)	(11,755)	1,242,759
Total current liabilities	1,199,740	972,998		(11,755)	2,160,983
Loan payable	–	25,524		–	25,524
Lease liabilities	–	113,804		–	113,804
Total liabilities	1,199,740	1,112,326		(11,755)	2,300,311
Shareholders’ deficit
Share capital (Note 5)	29,564,397	347,501	(c)	1,252,098	1,599,599
			(e)	(29,564,397)
Share-based payment reserve	1,443,613	–	(b,c)	156,546	156,546
			(e)	(1,443,613)
Warrant reserves	684,135	–	(e)	(684,135)	–
			(b,c)	103	103
Deficit	(32,891,138)	(725,723)	(c)	(1,252,098)	(3,333,463)
			(b,c)	(156,649)
			(c)	(1,198,993)
			(e)	32,891,138
Total shareholders’deficit	(1,198,993)	(378,222)		–	(1,577,215)
				–
Total liabilities and shareholders’ deficit	747	734,104		(11,755)	723,096

1

INDIGENOUS BLOOM HEMP CORP. (formerly Veritas Pharma Inc.) Notes to the Pro Forma Consolidated Financial Statements January 31, 2021 (Expressed in Canadian Dollars) (unaudited)

1. Basis of Presentation

The unaudited pro forma consolidated statement of financial position of Veritas Pharma Inc. (“Veritas” or the “Company”) as at January 31, 2021 has been prepared by management after giving effect to the proposed transaction among the Company, Indigenous Bloom Hemp Corporation (“Hempco”), and the shareholders of Hempco (Note 3). The unaudited pro forma consolidated statement of financial position is the effect of combining the unaudited statement of financial position of Veritas as at January 31, 2021 and the unaudited statement of financial position of Hempco as at February 28, 2021. Upon completion of the transaction, the Company will change its name from Veritas Pharma Inc. to Indigenous Bloom Hemp Corp.

It is management’s opinion that the pro forma consolidated statement of financial position includes all adjustments necessary for the fair presentation, in all material respects, of the transactions described in Notes 3 and 4 in accordance with International Financial Reporting Standards applied on a basis consistent with Hempco’s accounting policies. The pro forma consolidated statement of financial position is intended to reflect the financial position of the Company had the proposed transactions been effected on the date indicated, however it is not necessarily indicative of the financial position which would have resulted if the transactions had actually occurred on January 31, 2021.

The unaudited pro forma consolidated statement of financial position should be read in conjunction with the historical financial statements and notes thereto of Hempco and Veritas. Unless otherwise noted, the unaudited pro forma consolidated statement of financial position and accompanying notes are presented in Canadian dollars.

2. Significant Accounting Policies

The unaudited pro forma consolidated statement of financial position has been compiled using the significant accounting policies as set out in the unaudited interim financial statements of Veritas as at January 31, 2021 and for the nine month period ended January 31, 2021 and Hempco’s as at February 28, 2021 and for the nine month period February 28, 2021, respectively. The significant accounting policies of Veritas conform in all material respects to those of Hempco.

3. Proposed Transaction

Veritas, Hempco, and the shareholders of Hempco entered into a business combination agreement whereby Veritas will acquire all of the issue and outstanding shares of Hempco, subject to the terms and conditions of the agreement, in exchange for $28,000,000 to be provided in common shares of Veritas. Prior to the closing of the business combination, Veritas will consolidate its common shares on a 1-for-2 basis.

As a result of the transaction, the shareholders of Hempco will acquire control of Veritas, thereby constituting a reverse takeover (“RTO”) of Veritas and for accounting purposes the acquisition is considered to be outside the scope of IFRS 3, Business Combinations . Since the acquisition will constitute an RTO, other than a business combination, Veritas’ net assets and its Canadian Stock Exchange listing by Hempco, it will be accounted for in accordance with IFRS 2, Share-based Payment whereby Hempco is deemed to have issued shares in exchange for acquiring the net assets of Veritas together with its listing status, at the fair value of the consideration deemed to be given up by Hempco.

The combination between Veritas and Hempco is subject to, amongst other things, regulatory, board and other approvals.

2

INDIGENOUS BLOOM HEMP CORP. (formerly Veritas Pharma Inc.) Notes to the Pro Forma Consolidated Financial Statements January 31, 2021 (Expressed in Canadian Dollars) (unaudited)

4. Pro Forma Assumptions and Adjustments

The unaudited pro forma consolidated statement of financial position includes the effects of the following pro forma assumptions and adjustments as if they had occurred at January 31, 2021:

• (a) As a result of the RTO, the consolidated shareholder’s equity only reflects the new share structure of Veritas together with actual share capital of Hempco. Prior to closing, Veritas is to consolidate its shares on a 1-for-2 basis. Hempco is deemed to have issued 8,347,322 Hempco shares to acquire Veritas.

• (b) The Resulting Issuer will assume the stock options and share purchase warrants at the transaction date The stock options have been valued using the Black-Scholes Option Pricing Model using an exercise price of $0.30, expected life of 4.2 years, volatility of 139%, and risk-free rate of 0.36%. The share purchase warrants have been valued using the Black-Scholes Option Pricing Model using an exercise price of $14.00, expected life of 0.2 years, volatility of 258%, and risk-free rate of 0.14%.

• (c) Since the share consideration to be allocated to the former shareholders of Veritas on closing the RTO is considered within the scope of IFRS 2, and the Company cannot identify specifically some or all of the goods or service received in return for the allocation of the shares, the value in excess of the net identifiable assets or obligations of Veritas acquired on closing is to be expensed in the consolidated statement of operations and comprehensive income as listing costs.

The purchase price is allocated as follows:

	$
	Fair value of Veritas shares (8,347,322 post-consolidation common shares at $0.15 per share) 1,252,098 Fair value of 607,869 stock options of Veritas outstanding 156,546 Fair value of 150,000 share purchase warrants of Veritas outstanding 103
	Consideration 1,408,747
	Less fair value of identifiable assets and liabilities acquired: Cash 498 Amounts receivable 249 Accounts payable and accrued liabilities (533,348) Convertible note payable (85,000) Due to related parties (581,392)
	Net liabilities (1,198,993)
	Listingcosts 2,607,740

• (d) The difference in value of the shares deemed to have been issued by the accounting acquirer from the fair value of Veritas’ net liabilities is expensed as a payment for listing costs.

• (e) Upon closing of the RTO, the share capital, reserves, and deficit of Veritas and inter-company balance are eliminated.

3

INDIGENOUS BLOOM HEMP CORP.

(formerly Veritas Pharma Inc.) Notes to the Pro Forma Consolidated Financial Statements January 31, 2021 (Expressed in Canadian Dollars) (unaudited)

5. Pro Forma Share Capital

After giving effect to the pro forma assumptions and adjustments in Notes 3 and 4, the issued and fully paid share capital of the Company is as follows:

fully paid share capital of the Company is as follows:
	Common	Shares
	Number	Amount
		$
Pre-consolidation balance, Veritas, January 31, 2021	8,347,322	29,564,397
Pre-consolidation balance, Hempco, February 28, 2021	–	347,501
Adjustment of Veritas’ share capital	–	(29,564,397)
Issued on RTO with Veritas as listing costs (4(c))	186,666,667	1,252,098
Pro forma balance,January31,2021	215,013,989	1,599,599

6. Pro Forma Statutory Income Tax Rate

The pro forma effective statutory income tax rate of the combined companies will be 27%. Veritas was incorporated under the Business Corporations Act of British Columbia and Hempco was incorporated under the Canada Business Corporations Act.

4