Hemptown announces Letter of Intent with Global Fund for Potential US$8,000,000 Financing

Portland, Oregon – October 22nd, 2020 – Hemptown Organics Corp. (the “Company” or “Hemptown“), a privately held British Columbia company, is pleased to announce that it has entered into a non-binding letter of intent (the “LOI“) with Global Fund LLC (“Global Fund“) regarding a potential US$8,000,000 investment into the Company by Global Fund via its newly established biotech target fund “Global Bio Solution Fund I” (the “Financing“).

About the Financing
Pursuant to the terms of the LOI, Global Fund has agreed, subject to due diligence and entry into definitive agreements, to subscribe for an aggregate of 5,714,285 units of the Company (each, a “Unit“) at a price of US$1.40 per Unit for minimum gross proceeds of US$8,000,000 (the “Original Investment“), with each Unit consisting of one common share in the capital of the Company (each, a “Share“) and one Share purchase warrant (each, a “Warrant“).  Each Warrant shall be exercisable into one additional Share (each, a “Warrant Share“) at US$2.80 per Warrant Share for a period of 24 months from date of issuance.

In connection with the Financing, the Company has agreed to grant certain investor rights to Global Fund.  Firstly, in the event the Company undertakes a reverse takeover or other liquidity event with a publicly listed entity pursuant to which the Shares or successor shares are listed for trading on a recognized North American securities exchange (each, a “Going Public Transaction“) and completes a CAD$2,000,000 concurrent financing to the Going Public Transaction (the “Concurrent Financing“) with a unit price less than USD$2.15, the Company has agreed to issue such number of penalty units (each, a “Penalty Unit“) at no additional cost to Global Fund at a deemed price equal to the Concurrent Financing price so as to average down Global Fund’s subscription price cost in order to retain a 35% discount to the Concurrent Financing.  Secondly, in the event that a Going Public Transaction has not been completed on or before March 31, 2021, the Company has agreed to issue an additional number of Penalty Units to Global Fund equal to 10% of the Units issued in the Original Investment at no additional cost to Global Fund.  The Company has agreed to issue the Penalty Units at the same price and on the same warrant terms as the Units.  Thirdly, if the Going Public Transaction has not been completed on or before December 31, 2021, the Company has agreed to grant Global Fund a “put” option, which option may be exercisable by Global Fund on or before by March 1, 2022 which would entitle Global Fund the right to require the Company to repurchase the Units from Global Fund at its original subscription cost plus an additional 10% in annual interest.

On the closing of the Financing, the Company has agreed to pay Global Fund a due diligence fee, success fee and corporate advisory fee in the aggregate amount of CAD$25,000 per month for a period of six months payable in cash, units, or a combination thereof at the sole discretion of the Company.

As a separate matter, the Company agreed to negotiate an exclusive distribution agreement with Global Fund for the sale of the Company’s products in Korea, Singapore and certain other Southeast Asian countries.

Completion of the Financing remains subject to a number of conditions, including: (i) the completion of satisfactory due diligence, (ii) the approval of the boards of directors of the Company and Global Fund, (iii) the execution of definitive agreements, (iv) obtaining all required consents, waivers and approvals, including approval by Global Fund’s investment committee, and (v) other closing conditions customary for transactions of this nature.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

About Hemptown Organics Corp.
Hemptown is a diversified, industry-leading cannabinoid company delivering a diverse product offering across the value chain, in multiple sales channels, to meet the growing global demand for cannabinoid-based products. State of the art cultivation in Oregon’s Rogue Valley, FDA-licensed and cGMP certified product manufacturing, and a strong leadership team with Fortune 500 experience, including Kellogg’s, Nike and Intel, are the pillars for Hemptown’s growth model as the Company pushes into the consumer-packaged goods sectors with top quality white label and branded product lines for the consumer market. For more information, visit www.hemptownusa.com.

On Behalf of the Board
HEMPTOWN ORGANICS CORP.
“Michael Townsend”
Michael Townsend, Director
Tel: 604-200-5969

Disclaimer for Forward-Looking Statements
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future, including with respect to: the Financing, the execution of definitive agreements, the closing of the Financing, and the entry into a distribution agreement. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors that may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include general market conditions, significant business, competitive, political and social risks, governmental regulations being implemented regarding the production and sale of products containing hemp/CBD and other factors beyond the control of the Company. The novel strain of coronavirus, COVID-19, also poses new risks that are currently indescribable and immeasurable. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.