Veritas Pharma Announces Corrections to Financial Disclosures

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Vancouver, British Columbia–(Newsfile Corp. – May 21, 2020) – Veritas Pharma Inc. (CSE: VRT) (OTC Pink: VRTHF) (FSE: 2VP) (“Veritas” or the “Company”) wishes to announce that as a result of a review of its continuous disclosures record by the British Columbia Securities Commission (“BCSC”) on May 20th, 2020, the company has amended and re-filed three sets of its interim financial statements and MD&A. for the following dates: October 31, 2018; January 31, 2019; April 30th, 2019.

A detailed description of the changes made to the financial statements dated October 31, 2018; January 31, 2019; and April 30th, 2019 is provided below.

Restatements for October 31st, 2018 Financial Statements

The Company has restated its consolidated financial statements as at October 31, 2018 and for the three and six months ended to reflect the following:

  1. Write-off the $1,000,000 advance to Liht Cannabis Corp. (formerly Marapharm Ventures Inc.) as an unauthorized payment. Reversal of accrued interest recorded for this advance.

  2. Reclassification of amounts due from related parties from amounts receivable.

  3. Adjustment to the fair value of shares issued for the advance for the investment in 3 Carbon Extractions Inc. from $375,000 to $367,500.

  4. Reclassification of loan receivable from Springbank Capital Partners, LLC to non-current.

  5. Reclassification of certain related party payables to accounts payable and accrued liabilities to be consistent with comparative amounts.

Consolidated statement of financial position

  As At October 31, 2018
 
 
As Reported
$
Adjustment
$
As Restated
$
ASSETS      
Current assets      
Amounts receivable 134,203 (93,216 ) 40,987
Loans receivable 1,144,087 (1,144,087 )
Due from related parties 93,673 93,673
Total current assets 1,389,312 (1,143,630 ) 245,682
Non-current assets      
Loan receivable 108,561 108,561
Advance for investment 767,500 767,500
Investment 2,035,000 (785,000 ) 1,250,000
Total non-current assets 4,007,977 91,061 4,099,038
Total assets 5,397,289 (1,052,569 ) 4,344,720
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities 268,067 68,117 336,184
Due to related party 115,123 (68,117 ) 47,006
Total liabilities 383,190 383,190
Shareholders’ equity
Share capital 23,052,704 (29,351 ) 23,023,353
Share-based payment reserve 673,159 21,851 695,010
Deficit (20,655,899 ) (1,045,069 ) (21,700,968 )
Total shareholders’ equity 5,014,099 (1,052,569 ) 3,961,530
Total liabilities and shareholders’ equity 5,397,289 (1,052,569 ) 4,344,720

 

Consolidated statements of operations and comprehensive loss

  Three Months Ended October 31, 2018  
  As Reported
$
Adjustment
$
As Restated
$
Expenses
Professional fees 74,215 10,000 84,215
Total expenses 1,235,002 10,000 1,245,002
Loss before other income (expense) (1,235,002 ) (10,000 ) (1,245,002 )
Other income (expense)
Interest income 35,527 (35,422 ) 105
Interest and bank charges (353 ) 353
Unauthorized payment (1,000,000 ) (1,000,000 )
Total other income (expense) 35,174 (1,035,069 ) (999,895 )
Net loss and comprehensive loss for the period (1,199,828 ) (1,045,069 ) (2,244,897 )
Basic and diluted loss per share (0.02 ) (0.01 ) (0.03 )
Expenses
Professional fees 95,722 10,000 105,722
Total expenses 1,988,353 10,000 1,998,353
Loss before other income (expense) (1,988,353 ) (10,000 ) (1,998,353 )
Other income (expense)
Interest income 35,527 (35,422 ) 105
Interest and bank charges (353 ) 353
Unauthorized payment (1,000,000 ) (1,000,000 )
Total other income (expense) 35,174 (1,035,069 ) (999,895 )
Net loss and comprehensive loss for the period (1,953,169 ) (1,045,069 ) (2,998,238 )
Basic and diluted loss per share (0.03 ) (0.01 ) (0.04 )

 

Consolidated statement of changes in equity

  Six Months Ended October 31, 2018
  As Reported
$
Adjustment
$
As Restated
$
Share capital 23,052,704 (29,351 ) 23,023,353
Share-based payment reserve 673,159 21,851 695,010
Deficit (20,655,899 ) (1,045,069 ) (21,700,968 )
Total shareholders’ equity 5,014,099 (1,052,569 ) 3,961,530

 

Consolidated statement of cash flows

  Six Months Ended October 31, 2018
  As Reported
$
Adjustment
$
As Restated
$
Operating activities
Net loss for the period (1,953,169 ) (1,045,069 ) (2,998,238 )
Items not involving cash:
Depreciation 6,670 5,596 12,266
Changes in non cash operating working capital:
Amounts receivable (127,538 ) 93,216 (34,322 )
Loans receivable (1,144,087 ) 1,144,087
Accounts payable and accrued liabilities 260,903 (129,528 ) 131,375
Due to/from related parties 35,855 35,855
Net cash used in operating activities (2,134,146 ) 104,157 (2,029,989 )
Investing activities
Investments (2,035,000 ) 2,035,000
Advance for acquisition of 3 Carbon (400,000 ) (400,000 )
Purchase of investment in 1182372 B.C. Ltd. (1,250,000 ) (1,250,000 )
Loan to Springbank Capital Partners, LLC (108,561 ) (108,561 )
Purchase of property and equipment (33,706 ) (5,596 ) (39,302 )
Net cash used in investing activities (2,068,706 ) 270,843 (1,797,863 )
Financing activities
Shares issued for acquisition 375,000 (375,000 )
Proceeds from issuance of shares and shares
subscriptions  received
1,510,000 207,500 1,717,500
Proceeds from exercise of stock options 207,500 (207,500 )
Net cash provided by financing activities 2,072,500 (375,000 ) 1,697,500

 

Restatements for January 31st, 2019 Financial Statements

The Company has restated its consolidated financial statements as at January 31, 2019 and for the three and nine months then ended to reflect the following:

  1. Write-down of amounts due from related parties.

  2. Write-off the $1,000,000 advance to Liht Cannabis Corp. (formerly Marapharm Ventures Inc.) as an unauthorized payment. Reversal of accrued interest recorded for this advance.

  3. Adjustment to the fair value of shares issued to acquire shares of Indigenous Bloom Corp. from $5,000,000 to $4,166,666.

  4. Adjustment to the fair value of shares issued for the advance for the investment in 3 Carbon Extractions Inc. from $375,000 to $367,500.

  5. Reclassified the $180,000 advance from Leis Industries Limited from accounts payable and accrued liabilities to advance payable.

Consolidated statement of financial position

  As At January 31, 2019
  As Reported
$
Adjustment
$
As Restated
$
ASSETS
Current assets
Amounts receivable 68,395 (11,776 ) 56,619
Loans receivable 1,169,840 (1,060,274 ) 109,566
Due from related parties 94,243 (94,243 )
Total current assets 1,397,747 (1,166,293 ) 231,454
Non-current assets
Advance for investment 767,500 767,500
Investments 7,035,000 (1,618,334 ) 5,416,666
Total non-current assets 9,000,594 (850,834 ) 8,149,760
Total assets 10,398,341 (2,017,127 ) 8,381,214
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities 727,074 (180,000 ) 547,074
Advance payable 180,000 180,000
Total liabilities 794,438 794,438
Shareholders’ equity
Share capital 29,612,704 (847,685 ) 28,750,019
Share-based payment reserve 684,945 21,851 706,796
Deficit (21,377,881 ) (1,176,293 ) (22,554,174 )
Total shareholders’ equity 9,603,903 (2,002,127 ) 7,586,776
Total liabilities and shareholders’ equity 10,398,341 (2,002,127 ) 8,381,214

 

Consolidated statements of operations and comprehensive loss

  Three Months Ended January 31, 2019
  As Reported
$
Adjustment
$
As Restated
$
Expenses
Depreciation 7,891 (1,500 ) 6,391
Office and miscellaneous 17,932 1,500 19,432
Total expenses 747,573 747,573
Loss before other income (expense) (747,573 ) (747,573 )
Other income (expense)
Interest income 25,693 (25,307 ) 386
Interest and bank charges (102 ) 102
Write off of related party receivables (106,019 ) (106,019 )
Total other income (expense) 25,591 (131,224 ) (105,633 )
Net loss and comprehensive loss for the period (721,982 ) (131,224 ) (853,206 )
Basic and diluted loss per share (0.07 ) (0.02 ) (0.09 )

 

  Nine Months Ended January 31, 2019
  As Reported
$
Adjustment
$
As Restated
$
Expenses
Depreciation 20,157 (1,500 ) 18,657
Office and miscellaneous 62,987 1,500 64,487
Professional fees 149,503 10,000 159,503
Total expenses 2,735,916 10,000 2,745,916
Loss before other income (expense) (2,735,916 ) (10,000 ) (2,745,916 )
Other income (expense)
Interest income 61,220 (60,729 ) 491
Interest and bank charges (455 ) 455
Unauthorized payment (1,000,000 ) (1,000,000 )
Write off of related party receivables (106,019 ) (106,019 )
Total other income (expense) 60,765 (1,166,298 ) (1,105,528 )
Net loss and comprehensive loss for the period (2,675,151 ) (1,176,293 ) (3,851,444 )
Basic and diluted loss per share (0.33 ) (0.15 ) (0.48 )

 

Consolidated statement of changes in equity

  Nine Months Ended January 31, 2019
  As Reported
$
Adjustment
$
As Restated
$
Share capital 29,612,704 (855,185 ) 28,757,519
Share-based payment reserve 684,945 21,851 706,796
Deficit (21,377,881 ) (1,176,293 ) (22,554,174 )
Total shareholders’ equity 9,603,903 (2,009,627 ) 7,594,276

 

Consolidated statement of cash flows

  Nine Months Ended January 31, 2019
  As Reported
$
Adjustment
$
As Re-stated
$
Operating activities
Net loss for the period (2,675,151 ) (1,176,293 ) (3,851,444 )
Items not involving cash:
Depreciation 20,157 (1,500 ) 18,657
Shares issued for services 300,000 300,000
Write-off of related party receivables 106,019 106,019
Changes in non cash operating working capital:
Amounts receivable (61,730 ) 11,776 (49,954 )
Loans receivable (1,169,840 ) 1,169,840
Accounts payable and accrued liabilities 877,908 (535,643 ) 342,265
Due to/from related parties 43,867 43,867
Net cash used in operating activities (2,108,395 ) (81,934 ) (2,190,329 )
Investing activities
Investments (7,035,000 ) 7,035,000
Advance for acquisition of 3 Carbon (400,000 ) (400,000 )
Purchase of investment in 1182372 B.C. Ltd. (1,250,000 ) (1,250,000 )
Cash acquired from advance payable 180,000 180,000
Loan to Springbank Capital Partners, LLC (109,566 ) (109,566 )
Purchase of property and equipment (39,810 ) 1,500 (38,310 )
Net cash used in investing activities (7,074,810 ) 5,456,934 (1,617,876 )
Financing activities
Shares issued for acquisitions 6,635,000 (6,635,000 )
Proceeds from issuance of shares and shares
subscriptions received
394,500 1,323,000 1,717,500
Proceeds from exercise of stock options 63,000 (63,000 )
Net cash provided by financing activities 7,072,500 (5,375,000 ) 1,697,500

 

Restatements for April 30th, 2019 Financial Statements

The Company has restated its consolidated financial statements for the year ended April 30, 2019 to reflect the write-off of the $1,000,000 advance to Liht Cannabis Corp. as an unauthorized payment and to improve disclosures relating to various impairments recognized.

Consolidated statements of operations and comprehensive loss

  Year Ended April 30, 2019
  As Reported
$
Adjustment
$
As Restated
$
Other income (expense)
Impairment of loans receivable (1,214,580 ) 1,000,000 (214,580 )
Unauthorized payment (1,000,000 ) (1,000,000 )
Total other income (expense) (8,659,513 ) (8,659,513 )

 

Consolidated statement of cash flows

  Year Ended April 30, 2019
  As Reported
$
Adjustment
$
As Re-Stated
$
Operating activities
Items not involving cash:
Impairment of loans receivable 1,214,580 (1,000,000 ) 214,580
Net cash used in operating activities (1,244,932 ) (1,000,000 ) (2,244,932 )
Investing activities
Loan to Liht Cannabis Corp. (1,000,000 ) 1,000,000
Net cash used in investing activities (2,609,068 ) 1,000,000 (1,609,068 )

 

About Veritas Pharma

Veritas Pharma Inc. has developed some intellectual property relating to various cannabis strains. It is the Company’s aim to advance the science behind medical cannabis, by developing the most effective cannabis based treatments for specific disease conditions and acquire income producing assets in the cannabis industry. The Company’s mission is to commercialize its proprietary cannabis products. In addition, Veritas aims to utilize its expertise to enter into mergers and acquisitions with various cannabis industry participants in order to generate revenue by the end of the second quarter of 2020.

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: veritaspharmainc.com

On behalf of the Board of Directors

Peter McFadden”
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: [email protected]
Website: www.veritaspharmainc.com

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

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/56270

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