Mr. Charles Holmes reports

HEMPCO ISSUES OPERATIONAL UPDATE

Hempco Food and Fiber Inc. has provided an update on the company's operational progress.

Fiscal year 2017 gross sales

The company had gross sales (unaudited) of approximately $6.7-million for the fiscal year ended Aug. 31, 2017, reflecting solid 28-per-cent growth over the prior fiscal year (2016: $5.2-million). This growth was fuelled predominantly by international bulk sales, and predominantly growth in the European Union and U.S. markets. Additional growth was generated following the launch of the company's PlanetHemp product line of consumer packaged goods (CPG), which started selling in multiple countries, including a recent launch in Mexico.

Supporting the company's pursuit of further growth, Hempco is currently progressing negotiations with a number of larger prospective customers.

New distribution and sales contracts

Hempco secured several new distribution and sales contracts for bulk hemp seed foods and PlanetHemp CPG retail products: An agreement was signed with a Mexico-based distributor for the provision of PlanetHemp CPG products. Under the terms of the agreement, the distributor has guaranteed a minimum $200,000 per year in PlanetHemp CPG products and submitted its first purchase order for approximately $64,000. An agreement was signed with a United Kingdom-based ingredient supplier of bulk hemp protein. An agreement was signed with a U.S.-based formulator and distributor for the supply by Hempco of hemp-based products. A first purchase order for approximately $35,000 was received. The company's application for the commencement of on-line sales in the United Kingdom was approved and Hempco will commence servicing this channel.

Hempco obtains HACCP-certified (hazard analysis and critical control point) producer status

Following third party inspection of its hemp seed processing facility in MacGregor, Man., the company, together with its local service provider, has achieved HACCP-certified processor status.

Following a two-year implementation program, which included leasehold improvements and upgrades to double production capacity, the company has now obtained a positive outcome of the mandatory third party inspection, carried out by TRC, confirming the company's compliance with HACCP standards. While Hempco has operated in compliance with HACCP standards for nearly a year, to secure contracts with many large customers, a third party inspection is required to provide confidence that the company is operating at the highest level of quality control standards. The company will continue to have spot inspections by the Canadian Food Inspection Agency (CFIA), further strengthening the standing of the company as a trusted supplier.

Hempco now intends to achieve the British Retail Consortium (BRC) Global Standard for Food Safety, the world's most highly regarded standards on food safety and quality control. The efforts to comply with the BRC standards are now being implemented as part of the company's production expansion initiatives at its facility in Nisku, Alta. The facility is scheduled to be operational by winter 2017/2018.

Stock option grant

The company announces that it has granted 950,000 stock options to various directors, officers, employees and consultants of the company, at an exercise price of 53 cents per option. Directors and officer were granted 500,000 of these options. Each option will have an exercise term of three years.

Management commentary

"Obtaining HACCP producer status is an incredibly important milestone in our development and future growth as it will allow us to engage more formally with larger prospect customers who require this level of compliance," said Charles Holmes, chief executive officer of Hempco. "We are witnessing positive momentum in sales and continue to expand our footprint internationally through new agreements in markets such as the United States, Mexico and the United Kingdom. As announced recently, we have also completed the investment agreement with Aurora, which, once approved by our shareholders, we believe will help us further accelerate growth."

About Hempco Food and Fiber Inc.

For more than 12 years, Hempco has been a trusted and respected pioneer, innovator and provider of premier hemp seed foods. Hempco is committed to developing hemp foods, hemp fibre and hemp nutraceuticals -- a tri-crop opportunity for producers and processors. Hempco is expanding its processing ability to meet global demands in a 56,000-square-foot facility located at Nisku, Alta.

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