Indigenous Bloom Hemp Corp. — Interim / Quarterly Report 2022

Sep 30, 2021

INDIGENOUS BLOOM HEMP CORP.

(formerly Veritas Pharma Inc.)

Condensed Consolidated Financial Statements Three Months Ended July 31, 2021

(Expressed in Canadian dollars)

(unaudited)

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, “Continuous Disclosure Obligations”, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The Company’s external auditors, Harbourside LLP, have not performed a review of these condensed consolidated financial statements.

INDIGENOUS BLOOM HEMP CORP.

(formerly Veritas Pharma Inc.) Condensed consolidated statements of financial position (Expressed in Canadian dollars)

	July 31,	April 30,
	2021	2021
	$	$
	(unaudited)
Assets
Current assets
Cash	438	481
Amounts receivable	249	249
Due from Indigenous Bloom Hemp Corporation (Note 8)	377,520	–
Total assets	378,207	730
Liabilities
Current liabilities
Accounts payable and accrued liabilities	572,144	580,946
Loan payable (Note 3)	500,000	–
Convertible note payable (Note 4)	76,311	68,829
Derivative liability (Note 5)	15,633	22,117
Due to related parties (Note 6)	314,199	622,847
Total current liabilities	1,478,287	1,294,739
Non-current liabilities
Accounts payable (Note 6)	124,250	–
Due to related parties (Note 6)	309,475	–
Total non-current liabilities	433,725	–
Total liabilities	1,912,012	1,284,739
Shareholders’ deficit
Share capital	29,564,397	29,564,397
Share-based payment reserve	1,443,613	1,443,613
Warrant reserve	684,135	684,135
Deficit	(33,225,950)	(32,986,154)
Total shareholders’deficit	(1,533,805)	(1,294,009)
Total liabilities and shareholders’ deficit	378,207	730

Nature of operations and continuance of business (Note 1) Contingencies (Note 9) Commitments (Note 10) Subsequent events (Note 11)

Approved and authorized for issuance on behalf of the Board of Directors on September 29, 2021:

/s/ Lorne Mark Roseborough /s/ Blair Lowther Lorne Mark Roseborough Blair Lowther, Director

(The accompanying notes are an integral part of these condensed consolidated financial statements)

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INDIGENOUS BLOOM HEMP CORP.

(formerly Veritas Pharma Inc.)

Condensed consolidated statements of operations and comprehensive loss (Expressed in Canadian dollars) (unaudited)

	Three months	Three months
	ended	ended
	July 31,	July 31,
	2021	2020
	$	$
Expenses
Consulting fees (Note 6)	151,850	63,000
Office and miscellaneous	94	826
Professional fees	61,632	73,381
Transfer agent and filing fees	25,223	7,090
Total expenses	238,799	144,297
Loss before other income (expense)	(238,799)	(144,297)
Other income (expense)
Accretion of discount on convertible note payable (Note 4)	(7,481)	–
Gain on change in fair value of derivative liability (Note 5)	6,484	–
Total other income (expense)	(997)	–
Net loss and comprehensive loss for theperiod	(239,796)	(144,297)
Lossper share,basic and diluted	(0.03)	(0.02)
Weighted average shares outstanding	8,347,330	7,715,663

(The accompanying notes are an integral part of these condensed consolidated financial statements)

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INDIGENOUS BLOOM HEMP CORP.

(formerly Veritas Pharma Inc.)

Condensed consolidated statements of changes in equity (Expressed in Canadian dollars) (unaudited)

	Share-based Total Share capital payment Warrant shareholders’ Number of shares Amount $ reserve $ reserve $ Deficit $ deficit $
Balance, April 30, 2021 Netlossforthe period	8,347,330 29,564,397 1,443,613 684,135 (32,986,154) (1,294,009) – – – – (239,796) (239,796)
Balance,July31,2021	8,347,330 29,564,397 1,443,613 684,135 (33,225,950) (1,533,805)
Balance, April 30, 2020 Netlossforthe period	7,715,663 29,381,213 1,443,613 684,135 (32,384,008) (875,047) – – – – (144,297) (144,297)
Balance,July31,2020	7,715,663 29,381,213 1,443,613 684,135 (32,528,305) (1,019,344)

(The accompanying notes are an integral part of these condensed consolidated financial statements)

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INDIGENOUS BLOOM HEMP CORP.

(formerly Veritas Pharma Inc.) Condensed consolidated statements of cash flows (Expressed in Canadian dollars) (unaudited)

	Three months	Three months
	ended	ended
	July 31,	July 31,
	2021	2020
	$	$
Operating activities
Net loss for the period	(239,796)	(144,297)
Items not involving cash:
Accretion of discount on convertible note payable	7,482	–
Gain on change in fair value of derivative liability	(6,484)	–
Changes in non-cash operating working capital:
Accounts payable and accrued liabilities	115,448	89,627
Due to relatedparties	(827)	48,225
Net cash used in operatingactivities	(122,523)	(4,491)
Investing activities
Advance to Indigenous Bloom Hemp Corporation	(500,000)	–
Repayment of advance to Indigenous Bloom HempCorporation	122,480	–
Net cash used in investingactivities	(377,520)	–
Financing activities
Proceeds from loanpayable	500,000	–
Net cashprovided byfinancingactivities	500,000	–
Change in cash	(43)	(4,491)
Cash,beginningofperiod	481	8,891
Cash, end ofperiod	438	4,400

(The accompanying notes are an integral part of these condensed consolidated financial statements)

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INDIGENOUS BLOOM HEMP CORP. (formerly Veritas Pharma Inc.) Notes to the condensed consolidated financial statements Three months ended July 31, 2021 (Expressed in Canadian dollars) (unaudited)

1. Nature of Operations and Continuance of Business

Indigenous Bloom Hemp Corp. (the “Company”) was incorporated on May 14, 2014 under the Business Corporations Act of British Columbia as Seashore Organic Marijuana Corp. for the purpose of completing the Plan of Arrangement between Noor Energy Corporation and Sechelt Organic Marijuana Corp. which was completed on August 7, 2014. On September 22, 2014, the Company changed its name from Seashore Organic Marijuana Corp. to Seashore Organic Medicine Inc. and had intentions to become a producer and distributor of medical marijuana in Canada. On December 29, 2015, the Company’s name was changed to Veritas Pharma Inc. On September 24, 2021, the Company name was changed to Indigenous Bloom Hemp Corp. Its current focus is to develop the most effective proprietary cannabis strains for specific disease conditions. The Company’s head office is located at Suite 3200, 650 West Georgia Street, Vancouver, BC, V6B 4P7.

On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, leading to an economic downturn. The impact on the Company is not currently determinable, but management continues to monitor the situation.

These condensed consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at July 31, 2021, the Company has not generated any revenues from operations, has a working capital deficit of $1,100,080, and has an accumulated deficit of $33,225,950. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors indicate the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2. Significant Accounting Policies

(a) Basis of Preparation

These condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards applicable to interim financial information, as outlined in International Accounting Standard (“IAS”) 34, “Interim Financial Reporting” and using the accounting policies consistent with those in the audited consolidated financial statements as at and for the year ended April 30, 2021.

These condensed consolidated financial statements do not include all disclosures normally provided in annual financial statements and should be read in conjunction with the annual consolidated financial statements as at and for the year ended April 30, 2021. Interim results are not necessarily indicative of the results expected for the fiscal year.

(b) Principles of Consolidation

These condensed consolidated financial statements include the accounts of the Company and its 100% owned subsidiaries, Sechelt Organic Marijuana Corp. (“Sechelt”), Cannevert Therapeutics Ltd., 12302161 Canada Inc., and Veritas Hemp Corp. All significant inter-company balances and transactions have been eliminated on consolidation.

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INDIGENOUS BLOOM HEMP CORP. (formerly Veritas Pharma Inc.) Notes to the condensed consolidated financial statements Three months ended July 31, 2021 (Expressed in Canadian dollars) (unaudited)

2. Significant Accounting Policies (continued)

• (c) Recent Accounting Pronouncements

A number of new standards, and amendments to standards and interpretations, are not yet effective for the period ended July 31, 2021, and have not been applied in preparing these consolidated financial statements. Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company’s consolidated financial statements.

3. Loan Payable

As at July 31, 2021, the Company has a loan payable of $500,000 which is non-interest bearing, unsecured, and due on demand.

4. Convertible Note Payable

On November 5, 2020, the Company issued a non-interest bearing convertible promissory note for principal of $85,000 to a former employee to settle a civil claim (refer to Note 9). The convertible promissory note will automatically convert into common shares of the Company at a price equal to the greater of (i) the closing price of the Company’s shares on the Canadian Securities Exchange (“CSE”) on the Maturity Date (the first day on which the Company’s shares are reinstated for trading on the CSE), less the maximum discount permitted by Policy 6 of the CSE; and (ii) $0.15. The Company must issue the shares to the former employee within 5 business days of the Maturity Date. At issuance, the Company recognized the host liability of the convertible note to be $54,347, and recorded accretion expense of $14,482 during the year ended April 30, 2021. For the three months ended July 31, 2021, the Company recognized accretion expense of $7,481. The conversion feature of this instrument has been identified as an embedded derivative liability. Refer to Note 4.

5. Derivative Liability

On November 5, 2020, the Company issued a non-interest bearing convertible promissory note for principal of $85,000 (refer to Note 3). The debt instrument allows for an automatic conversion into common shares upon the Company’s shares being reinstated on the CSE.

The conversion feature of this instrument has been identified as an embedded derivative liability. The fair value of the derivative liability was calculated using the Black-Scholes model, with a volatility of 100%, discount rate of 0.18%, and expected life of 1 year, and recognized on the respective issuance date of the instrument, with any fair value gains (losses) recognized in the consolidated statement of operations and comprehensive. During the year ended April 30, 2021, the Company recognized the derivative liability at initial recognition of $30,653, and recognized a gain on the change in fair value of $8,536 during the year ended April 30, 2021. For the three months ended July 31, 2021 the Company recognized a gain on the change in fair value of $6,484.

6. Related Party Transactions

• (a) As at July 31, 2021, the Company owed $58,300 (April 30, 2021 – $42,550) to a company controlled by a director of the Company, which is recorded in accounts payable and accrued liabilities. The amount is unsecured and non-interest bearing. For the amount owed, $52,500 is due on June 30, 2023 and the remainder is due on demand. During the three months ended July 31, 2021, the Company incurred consulting fees of $15,000 (2020 – $15,000) to a company controlled by a director of the Company.

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INDIGENOUS BLOOM HEMP CORP.

(formerly Veritas Pharma Inc.) Notes to the condensed consolidated financial statements Three months ended July 31, 2021 (Expressed in Canadian dollars) (unaudited)

6. Related Party Transactions (continued)

• (b) As at April 30, 2021, the Company owed $105,000 (April 30, 2021 – $42,000) to a company controlled by the Chief Executive Officer of the Company, which is recorded in accounts payable and accrued liabilities. The amount is unsecured and non-interest bearing. For the amount owed, $42,000 is due on June 30, 2021 and the remainder is due on demand. During the three months ended July 31, 2021, the Company incurred consulting fees of $60,000 (2020 – $30,000) to a company controlled by the Chief Executive Officer of the Company.

• (c) As at July 31, 2021, the Company owed $576,668 (April 30, 2021 - $575,841) to a company where a director of the Company is a director. The amount is unsecured and non-interest bearing. For the amount owed, $309,475 is due on June 30, 2023 and the remainder is due on demand.

• (d) As at July 31, 2021, the Company owed $47,006 (April 30, 2021 - $47,006) to a former director of Sechelt. The amount is unsecured, non-interest bearing, and due on demand.

• (e) During the three months ended July 31, 2021, the Company incurred consulting fees of $60,000 (2020 – $nil) to the Chairman of the Board of the Company.

• (f) During the three months ended July 31, 2021, the Company incurred consulting fees of $nil (2020 – $15,000) to a company controlled by a director of the Company.

7. Stock Options

The Company has adopted a stock option plan pursuant to which options may be granted to directors, officers, employees and consultants of the Company to a maximum of 10% of the issued and outstanding common shares. The exercise price of each option is set by the Board of Directors at the time of grant subject to a minimum price of $0.10 per share but cannot be less than the market price (less permissible discounts) on the Canadian Securities Exchange. Options can have a maximum term of five years and typically terminate ninety days following the termination of the optionee’s employment or engagement (thirty days for options granted for investor relations services), except in the case of retirement or death. Vesting of options is at the discretion of the Board of Directors at the time the options are granted.

The following table summarizes the continuity of the Company’s stock options:

							Weighted
							average
							exercise
						Number of	price
						stock options	$
Balance,April	30,	2021	and July	31,	2021	607,869	0.30

Additional information regarding stock options outstanding as at July 31, 2021 is as follows:

Range of exercise prices $	Outstanding and exercisable
	Number of stock options Weighted average remaining contractual life (years) Weighted average exercise price $
0.30	607,869 3.7 0.30

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INDIGENOUS BLOOM HEMP CORP.

(formerly Veritas Pharma Inc.) Notes to the condensed consolidated financial statements Three months ended July 31, 2021 (Expressed in Canadian dollars) (unaudited)

8. Proposed Business Acquisition

On September 4, 2020, the Company entered into an agreement to acquire (“HempCo”). The Company will acquire 100% of the issued and outstanding shares of HempCo for aggregate consideration of $28,000,000 to be provided in common shares of the Company, at a deemed price per share equal to the closing price on the Canadian Securities Exchange (“CSE”) on the day prior to closing. Prior to closing, the Company is to consolidate its common shares on a 1-for-2 basis.

On April 29, 2021, the acquisition agreement was approved by the shareholders of the Company. The closing of the acquisition is subject to regulatory and CSE approval. On September 1, 2021, the Company received conditional approval of the CSE in respect to its business combination with HempCo. Refer to Note 11(b).

9. Contingencies

• (a) On June 25, 2018, the Company advanced $1,000,000 to Liht Cannabis Corp. (formerly Marapharm Ventures Inc.) (“Liht”), which was supposed to bear interest at 10% per annum compounded daily, was to be repayable within 90 days, and was to be secured by certain assets of Liht, but the agreement was not executed. The Company and Liht had common officers and directors at the time of the advance. During the year ended April 30, 2019, the Company recorded this as an unauthorized payment in the consolidated statement of operations and comprehensive loss. On February 28, 2019, the Company filed a civil claim against Liht for the recovery of the $1,000,000 advance plus interest. The interest payable on the advance was to be 10% per annum compounded daily from June 25, 2018 through and including the date on which it was repaid in full. The advance was to be repayable within 90 days and secured by certain assets of Liht. The Company alleges that, even though the Company had advanced Liht $1,000,000, Liht had refused to execute the loan agreement and has taken no steps to perfect the security of the advance. On August 28, 2018, the Company made a demand for the return of the $1,000,000 and again on January 14, 2019 together with interest accrued totalling of $1,055,068 on or before January 21, 2019. Liht has refused to return any portion of the $1,000,000 and any interest or deliver any consideration for the advance. The civil claim is ongoing and the Company believes that the advance to Liht will be recovered, but the outcome cannot be reasonably determined at this time.

• (b) On June 26, 2019, the Company filed a civil claim against its former management for the breach of their fiduciary duty and duty of care to the Company with respect to the advance made to Liht. This resulted in a loss and damage to the Company. The civil claim is ongoing and the amount of any damages recoverable cannot be reasonable determined or estimated at this time.

• (c) On May 14, 2020, a civil claim was filed against the Company by a former employee. The former employee is claiming $114,061 in relief as follows: $31,500 in damages for breach of contract. $31,500 in damages for outstanding wages, $1,061 in damages for outstanding business expenses, and $50,000 in damages for the breach of common law duty to perform contract obligations honestly and in good faith. The Company initially recorded $63,873 in the accounts payable and accrued liabilities for previous services rendered, outstanding business expenses, and damages for breach of contract. On October 28, 2020, the Company and the former employee agreed that the Company will pay the former employee a sum of $85,000 through the issuance of a convertible promissory note. The promissory note is non-interest bearing and will automatically convert into common shares of the Company at a price equal to the greater of (i) the closing price of the Company’s shares on the Canadian Securities Exchange (“CSE”) on the Maturity Date (the first day on which the Company’s shares are reinstated for trading on the CSE), less the maximum discount permitted by Policy 6 of the CSE; and (ii) $0.15. The Company must issue the shares to the former employee within 5 business days of the Maturity Date. The settlement fee of $14,093 was recorded in the statement of operations. Refer to Note 4.

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INDIGENOUS BLOOM HEMP CORP.

(formerly Veritas Pharma Inc.) Notes to the condensed consolidated financial statements Three months ended July 31, 2021 (Expressed in Canadian dollars) (unaudited)

10. Commitments

• (a) On May 1, 2021, the Company entered into an agreement with a company controlled by the Chief Executive Officer of the Company whereby the Company agreed to pay $20,000 per month for a period of one year. The agreement can be terminated by either party by providing a minimum of 90 days’ written notice.

• (b) On May 1, 2021, the Company entered into an agreement with Chairman of the Board of Directors of the Company whereby the Company agreed to pay consulting fees of $20,000 per month for a period of one year. The agreement will automatically renew for successive one year terms until and unless either party provides to the other written notice of its desire not to automatically renew this agreement. The agreement can be terminated by either party by providing a minimum of 30 days’ written notice.

11. Subsequent Events

• (a) On September 1, 2021, the Company received conditional approval of the CSE in respect to its business combination with HempCo. Effective September 1, 2021, the Company consolidated its common shares on a 1-for-2 basis. All share amounts have been retroactively restated for all periods presented.

• (b) On September 3, 2021, the Company issued 566,667 common shares to settle the convertible note payable described in Note 4.

• (c) On September 24, 2021, the Company issued 20,601,874 common shares to complete its business combination with HempCo.

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