- CubicFarms Board of Directors approves transaction to lease all FreshHub machinery and equipment to Langley Indoor Produce Ltd. (“Langley Indoor Produce”)
- CubicFarms to grant Langley Indoor Produce a license for the existing FreshHub intellectual property, with such license being limited to the sole purpose of indoor, non-containerized configurations
- The rationale for pursuing this transaction is to allow for the continuation of research and development on the indoor FreshHub system through external, third-party capital and maintain focus on strengthening the HydroGreen line of business
- CubicFarms will have the option to retain up to 97.6% of the equity interest in Langley Indoor Produce at the point of closing
VANCOUVER, British Columbia, January 17, 2023 – CubicFarm® Systems Corp. (“CubicFarms” or the “Company”) (TSX:CUB), announces the lease of the FreshHub machinery and equipment to a separate entity.
CubicFarms’ Special Committee and Board of Directors have approved the lease of FreshHub machinery and equipment to Langley Indoor Produce (the “FreshHub Transaction”), of which CubicFarms will have the option to retain up to 97.6% of the equity interest of this entity at the point of closing. As part of this transaction, CubicFarms will grant a license for the underlying FreshHub intellectual property to Langley Indoor Produce. The use of the license grant will be limited to the indoor, non-containerized implementation of the CubicFarms patented equipment. Ongoing funding of Langley Indoor Produce will come from third-party investors.
The Company’s rationale for pursuing this transaction is to allow for the continuation of research and development on the indoor FreshHub system, while retaining focus on the HydroGreen business without diverting cash for research and development activities.
Daniel Burns, Chair of the Board of Directors and Special Committee, stated, “The Special Committee is continuing its work to determine the highest value strategic and tactical opportunities for the Company. We believe this transaction will allow CubicFarms to prioritize and maximize the value of the HydroGreen business, protect shareholder interests, and ensure the FreshHub prototype project is able to deliver on its potential for at-scale success using third-party capital.”
John de Jonge, Interim Chief Executive Officer of CubicFarms, added, “With our recent HydroGreen machine sales, and our robust HydroGreen sales pipeline, it is important for our management team to stay focused on HydroGreen to leverage this momentum and rapidly achieve positive operating cashflow on the HydroGreen business. This transaction will make this possible, while retaining the upside of ongoing FreshHub development.”
Following the FreshHub Transaction, Langley Indoor Produce will initially raise up to $1,000,000 through an ongoing private placement of convertible preferred shares (the “Private Placement”). Proceeds from the Private Placement will be used to fund the completion of the FreshHub Validation Project, cover other operating costs of Langley Indoor Produce, and construct FreshHub units, either at separate or existing FreshHub facilities. To the extent Langley Indoor Produce raises the full $1,000,000 financing, CubicFarms will have the option to retain approximately 85% of the equity interest of Langley Indoor Produce.
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 Company executing its option to retain an equity interest in Langley Indoor Produce; the closing of the Private Placement and funding of Langley Indoor Produce in general; the use of proceeds derived from the Private Placement and funding of Langley Indoor Produce in general; the level of equity interest of Langley Indoor Produce that CubicFarms will have options to retain; and other factors which may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements including the continuation of research and development on the indoor FreshHub system may prove to be inaccurate. 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 and CubicFarms
HydroGreen’s Automated Vertical Pastures™ technology produces high-energy fresh forage at commercial scale 365 days a year using a unique process to sprout grains, such as barley and wheat, in a controlled environment with minimal use of land, labour, and water. Automated Vertical Pastures™ not only provides a superior nutritious feed to benefit the animal, improving feed efficiency, cow health, nutrition, and performance outcomes, but also enables significant environmental benefits to the farm while helping to meet increasing demand for valuable farm-based inset and offset carbon credits.
CubicFarms is a leading agricultural technology company developing and deploying proprietary ag-tech technologies to 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 on-site, indoors, year-round.