SUGR Sucro Limited

Sugarbud Craft Growers Corp. (TSXV: SUGR, SUGR.WT, SUGR.WS, SUGR.WR, SUGR.DB) (OTCQB: SBUDF) ("Sugarbud" or the "Company") announces that it has agreed to amend the terms of its previously announced marketed public offering (the “Offering”) of convertible debenture units (each a "Debenture Unit") to: (i) lower the conversion price at which the convertible debentures of the Company (each a “Convertible Debenture”) are convertible into common shares of the Company (“Common Shares”) from $1.29 to $1.00 per Common Share, representing the closing market price of the Common Shares on April 21, 2022, (ii) lower the exercise price at which the Common Share purchase warrants of the Company (each a “Warrant”) will be exercisable from $1.29 to $1.00 per Warrant, (iii) revise the number of warrants per Debenture Unit from 775 Warrants to 1,000 Warrants, (iv) revise the frequency of interest payment dates such that interest payments will be payable semi-annually, rather than quarterly, (v) revise the make-whole provision such that, upon conversion of the Convertible Debentures, the Effective Interest (as defined herein) shall be payable in units of the Company (each a “Unit”), each such Unit consisting of one Common Share and one Warrant. Each Warrant underlying a Unit will entitle the holder thereof to acquire one Common Share at an exercise price equal to the daily volume weighted average trading price for the 20 trading days preceding the date of the conversion election, at any time up to 5 years following the date of such election, and (v) make the Convertible Debentures subordinate to the outstanding convertible debentures of the Company issued in June 2020 in the principal amount of $138,000. The remainder of the terms of the Offering continue without further amendment. The Offering is being led by Research Capital Corporation as the sole agent and sole bookrunner (the “Agent”).

Each Debenture Unit will consist of: (i) one 12.0% secured Convertible Debenture; and (ii) 1,000 Warrants. Each Warrant will entitle the holder to purchase one Common Share at an exercise price of $1.00, for a period of 5 years following the closing of the Offering.

The Debentures will bear interest at a rate of 12.0% per annum from the date of issue, payable on a semi-annual basis, and will be: (i) paid in-kind in Common Shares based on the daily volume weighted average trading price for the 20 trading days preceding the date of interest payment or (ii) in cash, at the Company’s option. The Convertible Debentures will mature 5 years from the closing of the Offering (the "Maturity Date") and the principal amount of the Debenture will be repaid in cash only.

The principal amount of each Convertible Debenture will be convertible into Common Shares at the option of the holder at a conversion price equal to $1.00. If the holder elects to convert the Convertible Debentures, then the holder will also receive an amount equal to the interest that the holder would have received if the holder had held the Convertible Debentures until the Maturity Date (the “Effective Interest”), payable in: (i) Units (or if the holder is a Non-Arm’s Length Party (as such term is defined in the policies of the TSXV), Common Shares) based on the daily volume weighted average trading price for the 20 trading days preceding the date of such election; (ii) cash; or (iii) a combination of cash and Common Shares, at the Company's option.

Each Unit shall consist of one Common Share and one Warrant. Each Warrant entitles the holder thereof to acquire one Common Share at an exercise price equal to the daily volume weighted average trading price for the 20 trading days preceding the date of the conversion election, at any time up to 5 years following the date of such election (subject to adjustments in certain customary events).

Each holder of Convertible Debentures may, at their option, elect to exchange the aggregate principal amount of such holder's Convertible Debentures for an equivalent aggregate principal amount of 15.0% non-convertible secured notes expiring on the Maturity Date (each, a "Secured Note") on a one for one basis at any time prior to the Maturity Date. Any accrued interest from the date of exchanging the Convertible Debentures into Secured Notes will be carried forward and be payable on the applicable interest payment date, together with the interest accruing from the Secured Notes beginning on the date of exchange.

The Convertible Debentures and Secured Notes shall be secured by a security interest in the Company’s Stavely facility (the “Stavely Facility”) and shall be subordinate in priority and ranking to: (1) current senior indebtedness ("Existing Indebtedness") of the Company for amounts up to 70% Loan to Value against the Company’s Stavely Facility, including any additional credit extended pursuant to Existing Indebtedness, or the assignment, assumption, transfer or replacement of such Existing Indebtedness with any other form of credit arrangement ("Alternative Indebtedness") provided that: (A) the lender(s) in respect of such Alternative Indebtedness is a chartered Canadian or U.S. bank or a credit union formed under the Credit Union Act (Alberta) or similar legislation in any other province of Canada; and (B) Existing Indebtedness is paid out in full concurrent with the execution of a definitive credit agreement in respect of Alternative Indebtedness under which funds can be unconditionally drawn by the Company; (2) any capital equipment financing in respect of the HVAC, lighting and other equipment at the Stavely Facility; and (3) the outstanding convertible debentures of the Company issued in June 2020.

The Company has granted to the Agent an option (the “Over-Allotment Option”) to increase the size of the Offering by up to an additional number of Debenture Units, and/or the components thereof, that in aggregate would be equal to 15% of the total number of Debenture Units (or the securities underlying the Debenture Units) to be issued under the Offering, to cover over-allotments, if any, and for market stabilization purposes, exercisable at any time and from time to time up to 30 days following the closing of the Offering.

The net proceeds from the Offering are intended to be used for additional processing and production equipment purchases, facility upgrades and working capital and other corporate purposes.

Upon a change of control of the Company, holders of the Convertible Debentures and Secured Notes will have the right to require the Company to repurchase their Convertible Debentures and Secured Notes, in whole or in part, on the date that is 30 days following the giving of notice of the change of control, at a price equal to 104% of the principal amount of the Convertible Debentures and Secured Notes then outstanding plus accrued and unpaid interest thereon (the "Offer Price"). If 90% or more of the principal amount of the Convertible Debentures and Secured Notes outstanding on the date of notice of the change of control have been tendered for redemption, the Company will have the right to redeem all of the remaining Convertible Debentures and Secured Notes at the Offer Price.

The Company will use commercially reasonable efforts to obtain the necessary approvals to list the Convertible Debentures, the Warrants and the Common Shares issuable upon conversion of the Convertible Debentures and the exercise of the Warrants and the compensation warrants to be issued to the Agent as additional consideration for the services rendered in connection with the Offering ("Compensation Warrants") on the TSXV.

The closing of the Offering is expected to occur on or about the week of April 25, 2022 and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory approvals, including the approval of the TSXV.

In connection with the Offering, the Company has filed a prospectus supplement (the "Supplement") to the Company's short form base shelf prospectus dated February 26, 2021 (the "Shelf Prospectus"), with the securities regulatory authorities in each of the provinces of Canada, except Quebec. Copies of the Shelf Prospectus and, the Supplement filed in connection with the Offering, can be found on SEDAR at www.sedar.com. The Shelf Prospectus, the Supplement and the documents incorporated by reference therein contain important detailed information about the Company and the Offering. Prospective investors should read the Supplement and accompanying Shelf Prospectus and the other documents the Company has filed on SEDAR at www.sedar.com before making an investment decision.  

This press release is not an offer to sell or the solicitation of an offer to buy the securities in the United States or in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification or registration under the securities laws of such jurisdiction. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from U.S. registration requirements and applicable U.S. state securities laws.

About Sugarbud

Sugarbud is a leading consumer-driven craft cannabis company focused on the cultivation and production of superior, select-batch, craft cannabis products. The Sugarbud Craft Cannabis Collection offers consumers "Hand-Crafted Cannabis for a New Era". The Company is proudly Albertan and is proud to share Western Canada's long tradition of exceptional craft cannabis with the most discerning of enthusiasts.

Sugarbud strives to define the intersection of product craftsmanship, quality, and value for consumers in the Canadian craft cannabis space. Our vision and mission are to become a trusted and well-respected consumer brand renowned for providing exceptional high-quality craft cannabis products to legal markets.

We Take Pride.

We Take Our Time.

Experience The Difference.

Sugarbud Craft Cannabis products are currently available to adult recreational consumers in the Yukon Territory, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and nationally to registered medical patients through MendoCannabis.ca. Sugarbud products are also distributed in the Province of Quebec through ROSE LifeScience.

CONTACTS:

John Kondrosky Chief Executive Officer Sugarbud Craft Growers Corp. Phone: (604) 499-7847 E-mail: johnk@sugarbud.caInvestor Relations ContactChris MoulsonChief Financial OfficerSugarbud Craft Growers Corp.Tel: (778) 388-8700E-mail: chrism@sugarbud.ca

Websites:

http://www.sugarbud.ca/

http://craftcannabiscollection.ca

Forward Looking and Cautionary Statements

This news release contains forward-looking statements. More particularly, and without limitation, this news release contains statements concerning: the Offering, including the receipt, in a timely manner, of regulatory and other required approvals and clearances, including the approval of the TSXV; the number of Debenture Units to be sold; the maximum gross proceeds of the Offering; the number of Debentures, Warrants and Compensation Warrants to be issued by the Company; the payment of interest and the principal amount, and the conversion or exercise of other rights attached to the Debentures, the Warrants and the Compensation Warrants; the listing of the Debentures, Warrants and the Common Shares issuable upon conversion of the Debentures or the exercise of the Warrants and Compensation Warrants on the TSXV; the use of the net proceeds of the Offering; the Company's ability to close the Offering; and the business plan of the Company, generally. When used in this document, the words "will," "anticipate," "believe," "estimate," "expect," "intent," "may," "project," "should," and similar expressions are intended to be among the statements that identify forward-looking statements. The forward-looking statements are founded on the basis of expectations and assumptions made by Sugarbud. Forward-looking statements are subject to a wide range of risks and uncertainties, and although Sugarbud believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including, but not limited to: currently contemplated expansion and development plans may cease or otherwise change; production of cannabis may be lower than expected; ability to ship cannabis products may be lower than expected; demand for Sugarbud's products may be lower than anticipated; results of production and sale activities; results of scientific research; changes in prices and costs of inputs; demand for labour; demand for products; failure of counter-parties to perform contractual obligations; failure to maintain consumer brand recognition and loyalty of customers; reliance on relationships with wholesalers and retailers for distribution of products and failure to maintain strategic business relationships; intense competition, including from illicit sources; uncertainty and continued evolution of markets; product liability litigation; reliance on information technology; infringement on intellectual property; failure to benefit from partnerships; sensitivity of end-customers to increased sales taxes and economic conditions; failure to comply with certain regulations; departure of key management personnel or inability to attract and retain talent; actions and initiatives of federal and provincial governments and changes to government actions, initiatives and policies and the execution and impact thereof; the ability to implement corporate strategies; the state of domestic capital markets; the ability to obtain financing; changes in general market conditions; industry conditions and events; the size of the medical marijuana market and the recreational marijuana market; government regulations, including future legislative and regulatory developments involving medical and recreational marijuana; construction delays; risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks which can have a significant impact on the size and quality of the harvest of cannabis crops; competition from other industry participants; and other factors more fully described from time to time in the reports and filings made by Sugarbud with securities regulatory authorities. In addition, the Company cautions that current global uncertainty with respect to the spread of the COVID-19 virus, and variant strains of the virus, and its effect on the broader global economy may continue to have a significant negative effect on the Company. While the precise impact of the COVID-19 virus on the Company remain unknown, rapid spread of the COVID-19 virus may continue to have a material adverse effect on global economic activity, and can result in volatility and disruption to global supply chains, operations, mobility of people and the financial markets, which could affect interest rates, credit ratings, credit risk, inflation, business, financial conditions, results of operations and other factors relevant to the Company. Please refer to Sugarbud's most recent annual information form and management's discussion and analysis for additional risk factors relating to Sugarbud, which can be accessed under Sugarbud's profile on www.sedar.com. Except as required by applicable laws, Sugarbud does not undertake any obligation to publicly update or revise any forward-looking statements.

Neither the TSXV nor its regulation services provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.