Mr. Dave Dinesen reports
CUBICFARM SYSTEMS CORP. COMPLETES STRATEGIC ACQUISITION OF HYDROGREEN, INC.
Further to its press release dated Dec. 11, 2019, Cubicfarm Systems Corp. has completed the acquisition of HydroGreen Inc., a South Dakota-based private company headquartered in South Dakota.
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 reseeding -- 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 Cubicfarm, 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 Cubicfarm subsidiary will operate the existing business of HydroGreen moving forward.
Under the terms of the merger agreement, holders of HydroGreen shares received 10 million common shares of Cubicfarm on the closing date, with a further one million shares to be issued on the six-month anniversary of closing, subject to any set-off relating to indemnification. The acquisition did not result in any of the shareholders of HydroGreen holding more than 5 per cent of the common shares of the company.
In connection with the closing, principals of HydroGreen holding in excess of 80 per cent of the consideration shares entered into a pooling agreement with respect to their consideration shares. Under the terms of the pooling agreement, 25 per cent of their consideration shares were released on the closing of the acquisition and an additional 25 per cent will be released on each of the dates which are six months, 12 months and 18 months following closing of the acquisition.
Sales and marketing strategy for the HydroGreen system
Cubicfarm has signed an authorized reseller agreement with Artex Feed Solutions. Artex Feed Solutions is a joint venture company owned by Cubicfarm and Artex Barn Solutions. Artex Barn Solutions was founded by John de Jonge -- also a board member of Cubicfarm -- 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 United States 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 Dec. 11, 2019
Cubicfarm wishes to clarify that Mr. de Jonge remains on Cubicfarm's 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 Cubicfarm subsidiary CubicFeed Systems, as previously indicated in Cubicfarm's Dec. 11, 2019, press release.
About Cubicfarm Systems Corp.
Cubicfarm Systems is an ag-tech company, commercializing large-scale, vertical farming solutions for global industrial markets. Founded in 2015, the company's mission is to provide industries around the world with efficient growing systems capable of producing predictable crop yields. Cubicfarm offers turnkey, commercial-scale, hydroponic, automated vertical farm growing systems that can grow predictably and sustainably for 12 months of the year virtually anywhere on earth. Cubicfarm enables its customers in the fresh produce, animal feed, nutraceutical and hemp/cannabis industries to grow locally and to provide their markets with safe, sustainable, secure and fresh ingredients that are consistent in colour, size, taste and nutrition, and allows for a longer shelf life.
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