CubicFarm announces closing of marketed offering of units

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRE SERVICES

Canaccord Genuity Corp. and Raymond James Ltd. acted as joint bookrunners and co-lead agents (collectively, the “Co-Lead Agents”) for the Offering.

Each Unit consists of one common share of the Company (a “Common Share”) and one common share purchase warrant (the “Warrant”). Each Warrant entitles the holder thereof to acquire one Common Share of the Company at an exercise price of C$0.10 (the “Exercise Price”) per Common Share for a period of 36 months from March 17, 2023 (the “Closing Date”).

Pursuant to the Offering, the Company issued a total of 56,027,000 Units at a price of C$0.05 per Unit (the “Offering Price”) for gross proceeds of C$2,801,350, including 10,261,000 Units issued to reduce working capital obligations of the Company for C$513,050 in payables (“Debt-for-Equity Swap”).

As partial compensation for services rendered in connection with the Offering, the Company has agreed to pay the Co-Lead Agents a cash commission equal up to 6% of the aggregate gross proceeds of the Offering, including the amounts raised in the Debt-for-Equity Swap. As additional compensation, the Company issued to the Co-Lead Agents 3,061,620 non-transferable compensation warrants (the “Compensation Warrants”). Each Compensation Warrant will be exercisable to acquire one Common Share of the Company at the Offering Price for a period of 36 months from the Closing Date, subject to adjustment in certain events.

The net proceeds from the Offering will be used for settlement of debt, working capital obligations, and general corporate purposes, including the full settlement of the amount owed to the Company’s auditor, KPMG LLP, pursuant to which settlement the Company’s auditors will immediately resume their audit activities in connection with the year ended December 31, 2022 (see news release of the Company dated March 13, 2023).

The Common Shares have been conditionally approved for listing on the TSX.

The Offering was conducted pursuant to an amended and restated prospectus supplement, dated March 13, 2023, amending and restating the prospectus supplement dated February 21, 2023 (the “Prospectus Supplement”), to the short form base shelf prospectus dated January 30, 2023 (the “Base Shelf”). The Prospectus Supplement was filed with the securities commissions and other similar regulatory authorities in each of the provinces of Canada, except the Province of Quebec on March 13, 2023, the Company and the Co-Lead Agents entered into an agency agreement on February 21, 2023. Copies of the Prospectus Supplement and accompanying Base Shelf are available under the Company’s profile on SEDAR at www.sedar.com.

Jerry Li, President of CubicFarm Systems (Shanghai) Corp., a wholly owned subsidiary of the Company, subscribed for 5,000,000 Units for total consideration of C$250,000.00, representing a total of 10,000,000 Common Shares issuable to Mr. Li, which is approximately 4.8% of the currently issued and outstanding Shares of the Company.

The participation of Mr. Li constitutes a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) and the policies of the Toronto Stock Exchange (the “TSX”). This transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to sections 5.5(a) and 5.7(1)(a) of MI 61-101 as neither the fair market value of any securities issued nor the consideration paid by such person exceeds 25% of the Company’s market capitalization.

The Company will not file a material change report related to Mr. Li’s participation in the Offering more than 21 days before the expected closing of the Offering as required by MI 61-101 as the Company requires the consideration it will receive in connection with the Offering immediately for working capital purposes.

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 the United States or in any other jurisdiction in which such offer, solicitation, or sale would be unlawful. The securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements thereunder.

Forward looking and other cautionary statements

Certain statements in this release constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws, including, without limitation, statements with respect to: the Offering and the use of proceeds from the Offering, amongst others. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of CubicFarm Systems Corp., or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements or information including the Company obtaining the approval of the Offering from the TSX and the other factors disclosed under “Risk Factors” in the Company’s annual information form for the year ended December 31, 2021, and those risks described in other documents incorporated or deemed to be incorporated by reference in the prospectus. Such statements can be identified by the use of words such as “intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate”, “scheduled”, “forecast”, “predict”, and other similar terminology, or state that certain actions, events, or results “may”, “can”, “could”, “would”, “might”, or “will” be taken, occur, or be achieved.

These statements reflect the Company’s current expectations regarding future events, performance, and results and speak only as of the date of this news release. Consequently, there can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Except as required by securities disclosure laws and regulations applicable to the Company, the Company undertakes no obligation to update these forward-looking statements if the Company’s expectations regarding future events, performance, or results change.

About HydroGreen

HydroGreen produces Automated Vertical Pastures™, a type of smart farming equipment that uses a unique process to sprout grains such as wheat and barley, in a controlled growing environment to efficiently produce a high-performance feed ingredient for livestock 365 days a year. HydroGreen’s equipment is simple and easy to operate and performs all growing functions automatically, including seeding, watering, lighting, harvesting, and re-seeding, which allows livestock businesses to feed consistent nutrition every day with minimal labour. When balanced correctly in the ration, HydroGreen sprouted grain modifies animal digestion which enhances productivity and reduces the amount of enteric methane emitted in ruminant livestock. The result also enables environmental benefits to the farm while helping to meet increasing demand for valuable farm-based inset and offset carbon credits.

About CubicFarms

CubicFarms is a leading local chain agricultural technology company developing and deploying technology to feed a changing world. Its proprietary ag-tech solutions enable growers to produce high quality, predictable produce and fresh livestock feed with HydroGreen Nutrition Technology, a division of CubicFarm Systems Corp. The CubicFarms™ system contains patented technology for growing leafy greens and other crops onsite, indoors, all year round. CubicFarms provides an efficient, localized food supply solution that benefits our people, planet, and economy.

For further information: info@cubicfarms.com for media or investors@cubicfarms.com for investor inquiries.

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