CubicFarm Systems Corp. completes strategic acquisition of HydroGreen, Inc.
Vancouver, BC – (AccessWire – January 3, 2020) – CubicFarm® Systems Corp. (TSXV:CUB) (“CubicFarms” or the “Company”) is pleased to announce that, further to its press release dated December 11, 2019, it has completed the acquisition of HydroGreen, Inc. (“HydroGreen”), a South Dakota-based private company headquartered in South Dakota (the “Acquisition”).
HydroGreen™ is a manufacturer of fully-automated hydroponic growing systems that produce live, green animal feed, prioritizing animal health and performance. HydroGreen’s unique process sprouts grains, such as barley and wheat, in a controlled environment with minimal use of land, labour and water. Its system performs all growing functions including seeding, watering, lighting, harvesting, and re-seeding – all with the push of a button – to deliver animal feed without the typical investment in fertilizer, chemicals, fuel, field equipment and transportation.
Dave Dinesen, Chief Executive Officer of CubicFarms, commented: “With the acquisition of HydroGreen, CubicFarms emerges as a true global leader in the automated controlled-environment-agriculture space. The combination of both Cubic and HydroGreen technologies allows us to address both fresh produce and animal feed markets, and leverage the learning and assets of both companies to lead the market worldwide. As the world’s population increases, so does the demand on livestock producers to produce more food while retaining quality and affordable prices. Addressing the automated controlled-environment-agricultural market in the animal feed space is a key growth catalyst for the company.
“In the past few weeks, we have also shored up our go-to-market plan to build on HydroGreen’s impressive sales pipeline through our reseller agreement with the Artex group – a leader in dairy farm equipment sales for 40 years, with a vast network of dealers in 40 countries – and we look forward to announcing our first sales imminently.”
The Acquisition was completed by way of a reverse triangular merger of CubicFeed Systems U.S. Corp., a wholly owned subsidiary of the Company, and HydroGreen, resulting in HydroGreen being renamed “of CubicFeed Systems U.S. Corp” and becoming an indirect and wholly-owned subsidiary of the Company. The new CubicFarms subsidiary will operate the existing business of HydroGreen moving forward.
Under the terms of the merger agreement, holders of HydroGreen shares (“HydroGreen Shareholders”) received 10,000,000 common shares of CubicFarms on the closing date, with a further 1,000,000 shares to be issued on the six-month anniversary of closing, subject to any set-off relating to indemnification (the “Consideration Shares”). The Acquisition did not result in any of the shareholders of HydroGreen holding more than 5% of the common shares of the Company.
In connection with the closing, principals of HydroGreen holding in excess of 80% of the Consideration Shares entered into a pooling agreement with respect to their Consideration Shares. Under the terms of the pooling agreement, 25% of their Consideration Shares were released on the closing of the Acquisition and an additional 25% will be released on each of the dates which are 6 months, 12 months and 18 months following closing of the Acquisition.
Sales and marketing strategy for the HydroGreen system
CubicFarms has signed an authorized reseller agreement with Artex Feed Solutions. Artex Feed Solutions is a joint venture company owned by CubicFarms and Artex Barn Solutions. Artex Barn Solutions was founded by John de Jonge – also a board member of CubicFarms – who purchased Artex Barn and grew it into a global provider of cattle handling equipment, ventilation and cow cooling. He has deep expertise in establishing and scaling up multiple manufacturing facilities in China and North America.
Artex and Mr. de Jonge plan to market the HydroGreen system to their existing dealership network in the USA and Canada, and to qualified leads in China, Indonesia and the Middle East – areas with substantial market potential due to changing food consumption patterns and supportive government policies toward agricultural technology.
Internationally, Artex dealers will target existing agriculture animal producers looking to enhance profitability and environmental sustainability, early-stage farmers with minimal capital and land constraints, small- to medium-size farms seeking feed alternatives to benefit their operations and urban farmers without access to land.
John de Jonge, President of Artex Feed Solutions, commented: “As a lifelong dairy industry participant, I believe the animal feed market is ripe for disruption, urgently requiring predictable, year round production of nutritious feed while minimizing the inputs of land, labour and water. I am excited to lead the expansion of CubicFarms’ animal feed business by leveraging Artex’s broad network of dealers in 40 countries to bring the HydroGreen solution to market.”
Clarification to press release dated December 11, 2019
CubicFarms wishes to clarify that John de Jonge remains on CubicFarms’ Board of Directors, and has transitioned from his previous role as the Company’s Chief Design and Installation Officer to President of Artex Feed Solutions. He is not Chief Executive Officer of CubicFarms subsidiary CubicFeed Systems, as previously indicated in CubicFarms’ December 11, 2019 press release.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States. The Consideration Shares to be issued as part of the Acquisition have not been, nor will be, registered under the Unites States Securities Act of 1933, as amended (the “U.S. Securities Act”), and such securities may only be offered or sold within the United States pursuant to an exemption from the registration requirements under the U.S. Securities Act and all applicable state securities laws.
About CubicFarm® Systems Corp.
CubicFarm® Systems Corp. (“CubicFarms”) is an ag-tech company providing automated growing systems for fresh produce and animal feed. Founded in 2015, the Company’s mission is to provide customers around the world with efficient growing systems capable of producing predictable crop yields. CubicFarms offers turnkey, commercial scale, hydroponic, automated controlled-environment growing systems that can grow predictably and sustainably for 12 months of the year virtually anywhere on earth. CubicFarms enables its customers to grow locally and to provide their markets with safe, sustainable, secure and fresh ingredients that are consistent in colour, size, taste, nutrition and allows for a longer shelf life. Further support and value is provided to customers through the Company’s patent-pending germination technology and proprietary auto harvesting and processing methods.
Using its unique, undulating growing system, the Company addresses the main challenges within the indoor farming industry by significantly reducing the need for physical labour and energy, and maximizing yield per cubic foot. The Company has sold and installed systems in Canada and the US, and is currently negotiating with a global pipeline of prospective customers. It also operates one wholly owned facility in Pitt Meadows, British Columbia, and sells its produce in the province to retail and wholesale customers under the brand name Thriiv Local Garden™.
Cautionary statement on forward-looking information
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 HydroGreen’s sales and growth prospects. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of CubicFarm Systems Corp. and its subsidiaries, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements or information. Such statements can be identified by the use of words such as “may”, “would”, “could”, “will”, “intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate”, “scheduled”, “forecast”, “predict”, and other similar terminology, or state that certain actions, events, or results “may”, “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.