Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Significant operating losses and cash outflow from operations.
• The anticipated level of cash flows from operating activities for the next twelve months is not assured to be sufficient to sustain operations.
• Severe adverse conditions and material uncertainties, including, without limitation, no products demand, may cast significant doubt upon the Company’s ability to continue as a going concern.

Mitigation Strategies

• The Company is continuing efforts to increase sales and attract additional equity and capital investors to continue R&D activities, and, from the other side, implement effective cost control measures to maintain adequate levels of working capital.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Environmental Metrics

ESG Focus Areas

• Environmental Sustainability
• Social Impact
• Governance

Environmental Achievements

• Reduced water consumption significantly (growing two heads of lettuce per liter of water, compared to 24 liters conventionally)
• Reduced land use (a CubicFarm System can replace one to four acres of conventional farmland)
• Reduced greenhouse gas emissions (HydroGreen hydroponic system shows net measurable benefit in greenhouse gas reduction)

Social Achievements

• Created CubicFarms Garden, a farm and market consulting services division to help facilitate pre-sales and provide additional produce sales/brokerage services
• Employs 79 employees and full-time contractors as of December 31, 2020, and approximately 95 as of the date of the AIF

Governance Achievements

• Established an Audit Committee with independent members
• Appointed a Scientific Advisory Board

Climate Goals & Targets

Environmental Challenges

• Competition from other growers, especially in summer months
• Price volatility of vegetable plants and animal feed
• Risks inherent in the agricultural business (plant diseases)
• Dependence on third-party suppliers and manufacturers
• Foreign exchange exposure
• COVID-19 pandemic impacts
• Cybersecurity risks
• Risks associated with cross-border trade
• Environmental risks
• Potential conflicts of interest

Mitigation Strategies

• Maintaining insurance coverage
• Implementing processes, procedures, and controls to mitigate cybersecurity risks
• Developing strategic partnerships
• Implementing cost reduction strategies
• Strict adherence to industrial hygiene and occupational health guidelines
• Developing new products and features to meet customer requirements
• Implementing risk mitigation and management strategies

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes

Opportunities

• Development of energy-efficient products

Sustainable Products & Innovation

• CubicFarm System
• HydroGreen System

Awards & Recognition

• Nexus Innovation Award

Environmental Metrics

ESG Focus Areas

• Climate Change
• Water Conservation
• Land Use Efficiency
• Food Security
• Animal Welfare
• Employee Diversity and Inclusion
• Community Engagement

Environmental Achievements

• 95% less fresh water than traditional farming
• Significantly less land required to grow the same amount of food
• Zero pesticides or herbicides used
• 80% less waste due to shortened supply chain
• 7.4% fewer greenhouse gas emissions (per nutrient mass) than conventional barley grain fodder farming (HydroGreen)

Social Achievements

• Created a Diversity and Inclusion Committee
• Community Giving Program (food banks, World Vision)
• Improved animal health and well-being through HydroGreen feed
• Localizing food production, creating local jobs

Governance Achievements

• Open and transparent communications with stakeholders
• Corporate Governance Committee on the Board
• HydroGreen Advisory Board and CubicFarms’ Scientific Advisory Board

Climate Goals & Targets

Environmental Challenges

• Competition from traditional and other vertical farmers
• Supply chain disruptions
• Fluctuations in commodity prices
• Climate change impacts
• COVID-19 pandemic impacts

Mitigation Strategies

• Strategic partnerships (Ospraie, HGG, Burnett)
• Diversification of manufacturing capabilities
• Focus on cost reduction and efficiency improvements
• Insurance coverage
• Implementation of processes, procedures and controls to mitigate cyber security risks

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes

Opportunities

• Development of energy-efficient products

UN Sustainable Development Goals

• Goal 2 (Zero Hunger)
• Goal 6 (Clean Water and Sanitation)
• Goal 7 (Affordable and Clean Energy)
• Goal 13 (Climate Action)
• Goal 15 (Life on Land)

CubicFarms' technologies contribute to these goals by reducing water and land use, lowering greenhouse gas emissions, and increasing food production efficiency.

Sustainable Products & Innovation

• CubicFarm System
• HydroGreen Automated Vertical Pastures™

Awards & Recognition

• Nexus Innovation Award
• Sustainability Product of the Year

Environmental Metrics

ESG Focus Areas

• Climate Change
• Water Conservation
• Sustainable Agriculture
• Food Security
• Employee Well-being
• Diversity & Inclusion
• Corporate Governance

Environmental Achievements

• Reduced freshwater use by 95% compared to traditional farming (CubicFarm System and HydroGreen)
• Reduced energy consumption by 54-62% with Crop Motion Technology™
• Reduced waste by 80% (CubicFarm System)
• Reduced methane emissions by 24% in dairy cows fed HydroGreen forage
• Zero pesticides and herbicides used

Social Achievements

• Launched ALLWays Local, a consumer brand to support farmer partners
• Advocated for government support for indoor growing and financing opportunities for farmers
• Implemented comprehensive health and safety plans
• Offered employee share purchase program ('Grow Together')
• Community engagement through school tours and food bank donations

Governance Achievements

• Established a Scientific Advisory Board (SAB) and Corporate Governance Committee
• Committed to transparent communication with stakeholders
• Implemented Diversity and Inclusion Committee

Climate Goals & Targets

Environmental Challenges

• Severe drought and scarcity of arable land
• Daily need for nutritious fresh livestock feed
• Increasing severe weather events
• Dependence on feed suppliers

Mitigation Strategies

• Developed HydroGreen and CubicFarm Systems to increase yield with reduced footprint and methane

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Drought
• Severe weather

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI, UN Sustainable Development Goals (SDGs)

Sustainable Products & Innovation

• CubicFarm System
• HydroGreen Automated Vertical Pastures™

Environmental Metrics

ESG Focus Areas

• Climate Change
• Water Conservation
• Land Use
• Food Security
• Food Equality
• Animal Welfare
• Diversity & Inclusion
• Community Engagement

Environmental Achievements

• 95% less fresh water used than traditional farming
• Reduced energy and heat consumption through Crop Motion Technology™
• 80% less waste due to shortened supply chains
• Zero pesticides or herbicides used
• Significantly less land required to grow the same amount of food
• 7.4% fewer greenhouse gas emissions (HydroGreen) compared to conventional farming

Social Achievements

• Launched CubicFarms Community Giving program supporting food banks and water initiatives
• Increased workforce by 77% in Fresh Division and 83% in Feed Division (March 31, 2022 vs March 31, 2021)
• Established a Diversity and Inclusion Committee
• Improved dairy cattle health through HydroGreen feed (preliminary results)

Governance Achievements

• Appointment of G. David Cole to the Board of Directors
• Appointment of Tom Wiltrout to HydroGreen Business Advisory Board
• Appointment of Daniel Burns as interim CFO
• Appointment of Edoardo De Martin as President

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to COVID-19 and semiconductor chip shortages
• Shipping delays and increased freight costs from China
• Lockdowns in China affecting shipping ports

Mitigation Strategies

• Securing alternative sources of supply for semiconductor chips
• Working with customers to manage increased shipping costs

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: UN Sustainable Development Goals

UN Sustainable Development Goals

• Goal 2 (Zero Hunger)
• Goal 6 (Clean Water and Sanitation)
• Goal 7 (Affordable and Clean Energy)
• Goal 13 (Climate Action)
• Goal 15 (Life on Land)

CubicFarms' technologies contribute to these goals by reducing water and land use, lowering emissions, and increasing food production.

Sustainable Products & Innovation

• CubicFarm™ System
• HydroGreen Grow System
• Automated Vertical Pastures™ (DG66 and GLS808)
• FreshHub

Awards & Recognition

• 2022 Real Leaders Top Impact Companies
• 2021 Business Intelligence Group Sustainability Product of the Year (HydroGreen Grow System)
• 2022 SXSW Innovation Awards finalist (HydroGreen Automated Vertical Pastures™)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Water Conservation
• Land Use
• Food Security
• Animal Welfare
• Governance

Environmental Achievements

• Reduced fresh water used by 95% than traditional farming.
• Crop Motion Technology™ innovation uses a single row of light to reduce energy consumption.
• Shortened supply chain needs by growing local, resulting in 80% less waste.
• Zero pesticides or herbicides used in the process.
• Significantly less land required to grow the same amount of food.
• Fewer greenhouse gas emissions by about 7% using hydroponic technology.

Social Achievements

• Attracting and retaining world-class talent.
• Promoting sustainable access to fresh food and livestock in local communities.
• Preliminary results on dairy cattle show impressive health improvements using HydroGreen feed.

Governance Achievements

• Commitment to open and transparent communications with stakeholders.
• Governance and oversight by the Corporate Governance Committee on the Board of Directors.

Climate Goals & Targets

Environmental Challenges

• Significant losses and deficits, casting doubt on the Company’s ability to continue as a going concern.
• Current liabilities exceeding current assets.
• Slower-than-expected product sales.
• Reduced cash position and short-term liquidity.

Mitigation Strategies

• Implementation of cost reduction measures.
• Seeking additional equity and capital investors.
• Seeking strategic options to extend cash runway.
• Efforts to increase sales.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

UN Sustainable Development Goals

• Goal 7
• Goal 13

The Company’s technologies help significantly reduce the amount of fresh water, land, and energy used by farmers. It is not just using fewer natural resources, it also eliminates the need for pesticides, herbicides, and/or fertilizer.

Sustainable Products & Innovation

• CubicFarm™ System
• Automated Vertical Pastures™

Environmental Metrics

ESG Focus Areas

• Climate Change
• Water Conservation
• Land Use
• Food Security
• Animal Welfare
• Sustainable Agriculture
• Governance

Environmental Achievements

• Reduced fresh water used by 95% than traditional farming (both Fresh and Feed Divisions)
• Reduced energy consumption through Crop Motion Technology™ (Fresh Division)
• Reduced waste by 80% through shortened supply chains (Fresh Division)
• Eliminated pesticides and herbicides (both Fresh and Feed Divisions)
• Significantly reduced land required for food and feed production (both Fresh and Feed Divisions)
• Increased nutrients in produce by 45% compared to traditionally transported produce (Fresh Division)
• Reduced greenhouse gas emissions by about 7% using hydroponic technology (Feed Division)

Social Achievements

• Improved health of dairy cattle consuming HydroGreen feed, showing better health during weaning and feeding periods compared to non-HydroGreen calves.
• Promoting food security and equality globally by localizing food and livestock feed production.
• Attracting and retaining world-class talent.
• Supporting local communities with sustainable access to fresh food and livestock.

Governance Achievements

• Open and transparent communications with stakeholders.
• Governance and oversight by the Corporate Governance Committee on the Board of Directors.
• Dissemination of material information in a fair, timely, and cost-efficient manner.

Climate Goals & Targets

Environmental Challenges

• Fluctuating sales on a quarter-by-quarter basis.
• Previous unprofitability of the Fresh Division's small-scale containerized systems.
• Default on $261,600 of accrued interest on convertible loans.
• Significant losses and deficits casting doubt on the Company’s ability to continue as a going concern.
• Slower-than-expected product sales resulting in a reduction in the Company’s cash position and short-term liquidity.
• Litigation with Burnett Land & Livestock LLP.

Mitigation Strategies

• Cost reduction plan to optimize operating efficiency.
• Scaling down Fresh Division to focus on large systems (FreshHub).
• Discussions for repayment of defaulted interest on convertible loans.
• Seeking other strategic options to extend cash runway.
• Implementation of cost reduction measures and maintaining a certain level of non-discretionary monthly expenditures.
• Filing an answer to Complaint and Counterclaim in the Burnett Land & Livestock LLP litigation.

Supply Chain Management

Climate-Related Risks & Opportunities

UN Sustainable Development Goals

• Goal 6 (Clean Water and Sanitation)
• Goal 7 (Affordable and Clean Energy)
• Goal 12 (Responsible Consumption and Production)
• Goal 2 (Zero Hunger)
• Goal 13 (Climate Action)
• Goal 15 (Life on Land)

CubicFarms' technologies contribute to these goals through reduced water and land use, energy efficiency, reduced waste, and sustainable food production.

Sustainable Products & Innovation

• HydroGreen Automated Vertical Pastures™
• CubicFarm™ System

Environmental Metrics

ESG Focus Areas

• Climate Change
• Water Conservation
• Land Use
• Food Security
• Animal Welfare
• Employee Health and Safety
• Sustainable Supply Chains
• Governance

Environmental Achievements

• Reduced fresh water use by 95% compared to traditional farming (both Fresh and Feed Divisions)
• Reduced energy consumption through Crop Motion Technology™ innovation (Fresh Division)
• Reduced waste by 80% through shortened supply chains (Fresh Division)
• Eliminated pesticides and herbicides (Fresh Division)
• Significantly reduced land required for food and feed production (both divisions)
• Reduced greenhouse gas emissions by about 7% using hydroponic technology (Feed Division)

Social Achievements

• Improved health of dairy cattle consuming HydroGreen fresh livestock feed
• Attracting and retaining world-class talent
• Providing sustainable access to fresh food and livestock feed in local communities

Governance Achievements

• Open and transparent communications with stakeholders
• Governance and oversight by the Corporate Governance Committee

Climate Goals & Targets

Environmental Challenges

• Slower-than-expected product sales
• Reduction in the Company’s cash position and short-term liquidity
• Material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern

Mitigation Strategies

• Implementation of cost reduction measures
• Seeking additional equity and capital investors
• Seeking other strategic options to extend its cash runway

Supply Chain Management

Climate-Related Risks & Opportunities

UN Sustainable Development Goals

• Goal 6 (Clean Water and Sanitation)
• Goal 7 (Affordable and Clean Energy)
• Goal 2 (Zero Hunger)
• Goal 13 (Climate Action)
• Goal 15 (Life on Land)

CubicFarms' technologies contribute to these goals through reduced water and energy use, increased food production efficiency, reduced greenhouse gas emissions, and reduced land use.

Sustainable Products & Innovation

• HydroGreen Automated Vertical Pastures™
• CubicFarm™ System

Environmental Metrics

ESG Focus Areas

• Climate Change
• Water Conservation
• Land Use
• Food Security
• Animal Welfare
• Sustainable Agriculture
• Governance

Environmental Achievements

• Reduced fresh water used by 95% than traditional farming.
• Crop Motion Technology™ innovation uses a single row of light to reduce energy consumption.
• Shortened supply chain needs by growing local, resulting in 80% less waste.
• Zero pesticides or herbicides used in the process.
• Significantly less land required to grow the same amount of food.
• Fewer greenhouse gas emissions by about 7% using hydroponic technology.

Social Achievements

• Attracting and retaining world-class talent.
• Local communities using CubicFarms’ technologies for indoor automated growing are experiencing more sustainable access to fresh food and livestock and are using natural resources more sustainably.
• Preliminary results on a sample of dairy cattle are showing impressive health improvements for close up cows and calves, that showed much better health during the weaning and feeding periods, compared to a sample of non-HydroGreen calves.

Governance Achievements

• Committed to open and transparent communications with all stakeholders.
• Advised with governance and oversight by the Corporate Governance Committee on the CubicFarms Board of Directors which is composed solely of experienced and independent member Directors.

Climate Goals & Targets

Environmental Challenges

• Cash constraints
• Inability to raise additional capital through the market due to the FFCTO (Failure-to-File Cease Trade Order)
• Slower-than-anticipated product sales
• High-risk nature of accounts receivable
• Material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

Mitigation Strategies

• Cost reduction efforts and a focus on essential expenses
• Renegotiating the maturity dates for loans
• Negotiating a number of sale deals
• Seeking other strategic options in order to extend its cash runway
• Implementing effective cost control measures to maintain adequate levels of working capital.

Supply Chain Management

Climate-Related Risks & Opportunities

UN Sustainable Development Goals

• Goal 6 (Clean Water and Sanitation)
• Goal 7 (Affordable and Clean Energy)
• Goal 12 (Responsible Consumption and Production)
• Goal 2 (Zero Hunger)
• Goal 13 (Climate Action)

The company's technologies contribute to these goals through reduced water usage, energy efficiency, waste reduction, increased food production, and reduced greenhouse gas emissions.

Sustainable Products & Innovation

• HydroGreen Automated Vertical Pastures™
• CubicFarm™ System