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Any qualifying shareholders or new investors who are "accredited investors" within the meaning of National Instrument 45-106 – Prospectus Exemptions or the Securities Act (Ontario), or other qualified persons in jurisdictions outside of Canada as determined by Big Rock and are interested in participating in the Private Placement should contact the Corporation at privateplacement@bigrockbeer.com. Subscriptions from qualifying shareholders or new investors will be subject to rejection or allotment as determined solely by Big Rock in whole or in part of their subscription amount. If any subscription amount is rejected or reduced by Big Rock, the subscription amount or any reduction to the subscription amount and all monies tendered therewith will be returned forthwith to the subscriber, without interest or deduction.

Pursuant to the Debt Settlement Agreement, Big Rock and VN Capital have agreed to settle all indebtedness and liabilities owing by the Corporation to VN Capital under the Second Lien Facility (which is anticipated to be $11,332,691 as of January 20, 2025 (assuming no changes to current rates))as follows: (i) $9,000,000 of the aggregate indebtedness outstanding under the Second Lien Facility shall be converted to Common Shares at a conversion price equal to the Subscription Price, being, for clarity, the same price per Common Share as under the Private Placement; and (ii) the Corporation shall repay the balance of the aggregate indebtedness outstanding under the Second Lien Facility to VN Capital from proceeds received from the Private Placement without premium or penalty (collectively, the "Settlement Amount"). The remaining proceeds from the Private Placement shall be used to repay $700,000 of indebtedness under the Corporation's credit agreement with its senior lender, ATB Financial ("ATB"), for investment in capital projects and for working capital purposes. The Corporation's indebtedness under its ATB facility is expected to be the only long term debt outstanding following completion of the Debt Settlement and the Private Placement. See below for a breakdown of the expected uses of proceeds from both the Maximum Private Placement and the Minimum Private Placement.

The Second Lien Facility is due March 31, 2025 and Big Rock currently has no available undrawn capacity under the Second Lien Facility nor access to sufficient funds to repay the Second Lien Facility. The Corporation and VN Capital have negotiated a number of extensions of the maturity of the Second Lien Facility. VN Capital has not indicated that they are willing to extend the maturity date of the Second Lien Facility beyond March 31, 2025. If the Private Placement and Debt Settlement (or alternative financing activities) are not completed by March 31, 2025, and no alternative arrangements are negotiated with VN Capital, VN Capital has the ability to enforce its rights under the Second Lien Facility and there is a high likelihood that Big Rock may not be able to meet its obligations.

Private Placement and the Debt Settlement

It is a condition of the Debt Settlement that the Corporation complete the Minimum Private Placement concurrently. Big Rock would not have entered into the Debt Settlement Agreement without undertaking the Private Placement and the proceeds of the Private Placement are intended to be used in connection therewith (as reviewed above). The Subscription Price (being $1.00) is equal to the five-day volume weighted average trading price of the Common Shares on the Toronto Stock Exchange ("TSX") as of January 6, 2025, being the date immediately preceding execution of the Debt Settlement Agreement, less a discount of approximately 9.0%.

The Corporation has retained Acumen Capital Finance Partners Limited ("Acumen") as a placement agent in respect of the Private Placement and Acumen will be entitled to a finder's fee of 7.0% on orders solicited by Acumen.

The Minimum Private Placement is expected to result in the issuance of approximately 90.0% of the current total issued and outstanding Common Shares, with 8.7% of the Common Shares issuable under the Minimum Private Placement being to insiders, with 8.4% expected to be issued to directors of the Corporation and 0.3% expected to be issued to other insiders (in each case on a non-diluted basis). Alternatively, the Maximum Private Placement is expected to result in the issuance of approximately 114.3% of the current total issued and outstanding Common Shares, with 6.9% of the Common Shares issuable under the Maximum Private Placement being to insiders, with 6.6% expected to be issued to directors of the Corporation and 0.3% expected to be issued to other insiders (in each case on a non-diluted basis). Additionally, the Debt Settlement is expected to result in 9,000,000 Common Shares being issued to VN Capital. Assuming 6,300,000 Common Shares are issued pursuant to the Minimum Private Placement, following completion of the Minimum Private Placement and the Debt Settlement, VN Capital is expected to own or control (directly or indirectly), approximately 11,017,100 Common Shares, being approximately 49.4% of the total issued and outstanding Common Shares on a post-closing non-diluted basis. Alternatively, assuming 8,000,000 Common Shares are issued pursuant to the Maximum Private Placement, following completion of the Maximum Private Placement and the Debt Settlement, VN Capital is expected to own or control (directly or indirectly), approximately 11,017,100 Common Shares, being approximately 45.9% of the total issued and outstanding Common Shares on a post-closing non-diluted basis. There is not expected to be a material change in the control of Big Rock following completion of the Private Placement and the Debt Settlement as VN Capital is, as of the date hereof, Big Rock's largest shareholder and will continue to be Big Rock's largest shareholder post-closing.

James Howard Homas Riddell currently holds, directly or indirectly, 336,203 Common Shares, being approximately 4.8% of the total issued and outstanding Common Shares on a pre-closing non-diluted basis. In connection with the Private Placement, it is expected that Mr. Riddell will subscribe for and acquire 3,750,000 Common Shares, which will result in Mr. Riddell holding, directly or indirectly, 4,086,203 Common Shares, being approximately 18.3% of the total issued and outstanding Common Shares on a post-closing non-diluted basis assuming the Minimum Private Placement and the Debt Settlement or 4,086,203 Common Shares, being approximately 17% of the total issued and outstanding Common Shares on a post-closing non-diluted basis assuming the Maximum Private Placement and the Debt Settlement.

In addition to the requirement under the terms of the Debt Settlement Agreement for the Corporation to concurrently complete the Private Placement, the Corporation is also required to: (i) obtain TSX approval for each of the Debt Settlement and Private Placement on or before January 14, 2025, on a basis satisfactory to VN Capital, including approval by the TSX of the Corporation's application for an exemption from the TSX securityholder approval requirements on the basis of the recommendation by the Independent Directors (as defined below) that the Corporation is in serious financial difficulty; (ii) obtain the consent of ATB, as senior lender, with respect to the Debt Settlement (the "ATB Consent") and use commercially reasonable efforts to amend, on or prior to March 31, 2025, the Corporation's credit agreement with ATB to extend the term for a period of no less than one year, all on terms satisfactory to VN Capital, acting reasonably; (iii) enter into an Investor Rights Agreement with VN Capital pursuant to which VN Capital will be granted customary rights to participate in future equity issuances to maintain its ownership percentage; and (iv) enter into a Registration Rights Agreement providing customary demand and piggyback distribution rights to VN Capital pursuant to which the Corporation will facilitate the resale of Common Shares by VN Capital by way of prospectus offering, subject to such restrictions and limitations as may be mutually agreed by the Corporation and VN Capital.

Assuming the application for exemptive relief is granted by the TSX and receipt of the ATB Consent, closing of the Private Placement and the Debt Settlement are subject to customary conditions precedent and applicable regulatory approvals and the policies of the TSX. The Private Placement and the Debt Settlement are expected to close on or prior to January 20, 2025.

Application for Exemptive Relief

As the Private Placement and Debt Settlement will, collectively, result in the issuance of Common Shares to insiders of the Corporation in an amount greater than 10% of the number of Common Shares outstanding and greater than 25% of the number of Common Shares outstanding, disinterested shareholder approval of such issuances would be required pursuant to subsections 604(a)(ii) and 607(g) of the TSX Company Manual (the "Requisite Approvals"). As VN Capital is not considered a disinterested shareholder for the purposes of securities laws it would not be entitled to vote its 2,017,100 Common Shares in respect of the Requisite Approvals.

Big Rock, having sought the guidance of its legal counsel and management, considered whether it would be feasible to proceed to obtain the Requisite Approvals by way of shareholder meeting out of concern as to how announcement of "financial hardship" may be perceived by customers and counterparties. However, as further described below, the Corporation's existing financial circumstances together with a lack of improvement in the working capital situation at Big Rock and concerns (including those of VN Capital as well as certain counterparties to the Private Placement) around timing, cost and certainty of shareholder approval have led Big Rock to determine that proceeding by way of shareholder meeting is not a tenable solution.

The Corporation has applied to the TSX for an exemption from the requirement to seek the Requisite Approvals, in accordance with subsection 604(e) of the TSX Company Manual, on the basis that the Corporation is in serious financial difficulty and the transactions in question are designed to improve the Corporation's financial situation. Similarly, the Corporation is relying on the financial hardship exemption from the requirement for a formal valuation and minority security holder approval, as necessary, contained in MI 61-101 in connection with Private Placement.

Background to the Private Placement

As previously announced, from March of 2023 to January of 2024, Big Rock undertook a strategic review process with a view to enhancing shareholder value (the "Strategic Review"). The Strategic Review was led by a special committee of the Board of Directors of the Corporation (the "Board") and Acumen was engaged as strategic advisor to the special committee. The special committee was to review the Corporation's operations and investigate alternate courses of actions including, but not limited to, further cost reductions, restructuring, refinancing, a potential sale of all or part Corporation's assets, a business combination with another party or other strategic initiatives. During the course of the Strategic Review the Corporation was unable to secure additional funding on terms more advantageous than those presented by VN Capital and, as a result, the Corporation announced on January 17, 2024 that it had added an additional $4.2 million in borrowings from VN Capital under the Second Lien Facility (the "Second Lien Amendments"). Such funds were to be used to provide short term liquidity and grow the business through the introduction of new technology. The maturity date for the combined $8.5 million Second Lien Facility was December 31, 2024.

Following the Second Lien Amendments, Big Rock explored and sought additional sources of financing to settle the amount outstanding under the Second Lien Facility. During such time, VN Capital and certain other insiders of the Corporation indicated, on a non-binding basis, that they would be willing to participate in a private placement of Common Shares to repay the amounts owing under the Second Lien Facility. Big Rock, having received such expressions of interest, sought the advice of its Board, financial advisors and legal counsel and determined to explore what level of third-party interest there would be in such a private placement.

Throughout the third and fourth quarters of 2024, Big Rock actively sought out financing partners and considered multiple strategies to source the requisite equity capital to fund its obligations. During the period, multiple discussions were held with private equity parties and investment banks.

On November 20, 2024, the Corporation announced that it had expanded the Second Lien Facility by $500,000 and had extended the maturity date to March 31, 2025. Such additional funds were received by the Corporation on December 20, 2024.

From September through early December 2024, Big Rock sought the assistance of multiple financial advisors and held discussions with a number of interested parties in a proposed private placement to refinance the Second Lien Facility. Ultimately it was unable to secure sufficient interest to fully meet its obligations under the Second Lien Facility.

On December 2, 2024, Big Rock entered into a non-binding term sheet with VN Capital providing for the illustrative terms of the proposed Debt Settlement Agreement subject to negotiation of definitive documentation.

Insider participation in negotiations and other contemplated transactions

Senior management and the Chair of the Board of Big Rock led the negotiations with VN Capital on the terms and conditions of the Debt Settlement, including with respect to the required concurrent Private Placement and setting the Subscription Price. At all times representatives from VN Capital were excluded from Board consideration of the Debt Settlement and Private Placement. The independent directors of the Board, being Mr. Stephen J. Giblin, Ms. Linda A. Thomas and Mr. George Croft (the "Independent Directors") acted as an independent committee (the "Independent Committee") of the Board for the purposes of considering the financial condition of the Corporation, providing independent stewardship and oversight regarding the negotiations of the Debt Settlement and the Private Placement and, ultimately, to consider the terms of the Debt Settlement and the Private Placement and make a recommendation to the Board in this respect.

As disclosed above, VN Capital is the Corporation's largest shareholder, owning or controlling (directly or indirectly), as of the date of this press release, 2,017,100 Common Shares (representing approximately 28.8% of the issued and outstanding Common Shares on a non-diluted basis) and as such is considered an "insider" of the Corporation for the purposes of the TSX Company Manual and a "related party" of the Corporation pursuant to MI 61-101. P. Donnell Noone, a director of Big Rock, is a co-founder, principal and managing partner of VN Capital Management, LLC, the manager of VN Capital.

Manner in which the Private Placement and the Debt Settlement will help remedy the financial problems of Big Rock

The Private Placement (together with the Debt Settlement) will provide Big Rock with immediate financial stability as it will allow Big Rock to address its significant working capital deficiency, settle all amounts owing under the Second Lien Facility and provide operating capital to Big Rock, allowing Big Rock to go forward as a going concern.

The Private Placement (together with the Debt Settlement) will provide Big Rock with immediate balance sheet improvement by removing approximately $11.3 million of outstanding secured debt under the Second Lien Facility and eliminating Big Rock's annual interest expenses under the Second Lien Facility of approximately $1.4 million. After paying the Settlement Amount, the additional gross proceeds of the Private Placement of approximately $6.3 million will be used by Big Rock to repay $700,000 of indebtedness under the Corporation's senior credit agreement with ATB, for investment in capital projects and for working capital. The removal of all debt under the Second Lien Facility, elimination of future interest payments and ability for Big Rock to deploy capital into its development programs are anticipated to increase cash flow and sustain the Corporation into the foreseeable future. As such, the contemplated transactions are expected to put Big Rock in a position to be able to work to create a profitable, sustainable and growing company, for the benefit of shareholders, employees and all other stakeholders.

Shareholder approval

Given: (i) Big Rock's financial condition, and (ii) the March 31, 2025 maturity date of the Second Lien Facility, which has already been extended on multiple occasions by VN Capital and VN Capital has expressed unwillingness to provide any further extensions, it is imperative that Big Rock complete the Private Placement and Debt Settlement as soon as possible.

Big Rock has submitted to the TSX that the time and cost of holding a shareholder meeting would represent a significant risk to Big Rock and it is highly unlikely that Big Rock would have sufficient time, after a shareholder meeting, to find an alternative source of financing to repay the Second Lien Facility prior to its maturity. Further, Big Rock has submitted to the TSX that it is not reasonable to expect that Big Rock could obtain majority written approval of its disinterested shareholders before March 31, 2025, or at all, and as such that it is appropriate in the circumstances to permit Big Rock to proceed with the Private Placement and the Debt Settlement in timely manner and without the requirement to obtain shareholder approval of the Private Placement or the Debt Settlement.

Financial and legal advisors, Board of Directors and advice and determinations of the same

Burnet, Duckworth & Palmer LLP is principal legal counsel to the Board and has been actively involved in advising Big Rock on the structure of the Private Placement and Debt Settlement.

The Independent Directors acted as the Independent Committee for the purposes of having reviewed and considered the Private Placement and Debt Settlement. These directors will not participate in the Private Placement and are free from any interest in the Private Placement and are unrelated to VN Capital. The Independent Committee met periodically during the period in which negotiations were being undertaken respecting the Private Placement and Debt Settlement, both formally and informally, in order to receive updates from management, receive legal advice, provide guidance and input to management and consider relevant matters. The Independent Committee met on December 18, 2024 to consider in detail the terms and conditions of the Private Placement and Debt Settlement transactions and concluded that the Corporation is in serious financial difficulty, the proposed Private Placement and Debt Settlement are designed to considerably improve the Corporation's financial condition, and the Private Placement and Debt Settlement are reasonable for the Corporation in the circumstances. Negotiations with VN Capital in respect of the Debt Settlement were conducted primarily by management and the Chair of the Board, with input from time to time from the Independent Committee. The proposed final terms of the Private Placement and Debt Settlement were reviewed in detail and approved by the Independent Committee on January 7, 2025.

In reviewing the Private Placement and Debt Settlement, the Independent Committee considered, among other things: (a) the amounts outstanding under the Second Lien Facility; (b) the near term maturity of the Second Lien Facility and VN Capital's expressed unwillingness to provide any further extensions having already agreed most recently to extend such maturity from December 31, 2024 to March 31, 2025; (c) the efforts by the Corporation over the past number of years to find additional financing, or a suitable strategic transaction to refinance some or all of the Second Lien Facility and to fund ongoing operations, including that such efforts had taken on a greater sense of urgency over the past year; (d) legal advice from Burnet, Duckworth & Palmer (e) the fact that the Corporation had been unsuccessful to date in finding a financing source in replacement for the Second Lien Facility; (f) the fact that despite the Corporation's best efforts, the Corporation's distressed financial condition has made it extremely difficult for Big Rock to refinance its debt obligations, including with respect to the Second Lien Facility; (g) based on discussions with ATB, it has indicated its willingness to provide the ATB Consent, subject to certain conditions including repayment of $700,000 of indebtedness under the ATB senior credit facility; and (h) the inability of the Corporation to seek securityholder approval and subsequently complete the approved financing activities prior to the maturity of the Second Lien Facility on March 31, 2025. The Independent Committee also considered the need to hire a financial advisor in respect of the transactions under consideration, and concluded it was not in the best interests of the Corporation to do so, in all the circumstances.

The Corporation has pursued a number of other financing alternatives and potential M&A opportunities, all designed to improve the Corporation's distressed financial condition and ensure its ongoing viability as a going concern, and has been unable to bring any such alternatives or opportunities to fruition.

Given the above and all the relevant circumstances, the Independent Committee has unanimously recommended that the Board approve the Private Placement and Debt Settlement (pursuant to the terms and conditions of the Debt Settlement Agreement), unanimously recommended to the Board that the Corporation to enter into the Debt Settlement Agreement and all ancillary agreements required thereunder and unanimously recommended to the Board that the Corporation make the application to the TSX for an exemption from the securityholder approval requirements of the TSX Company Manual, as such requirements relate to the issuance of Common Shares under the Private Placement and the Debt Settlement. The Board with the representative of VN Capital abstaining has unanimously approved each of the recommendations of the Independent Committee.

There is no certainty that the TSX will grant such exemption, or that it will approve the issuances of Common Shares under the Private Placement and the Debt Settlement.

In connection with reliance on the above described "financial hardship" exemption from the TSX's shareholder approval requirements, it is expected that the TSX will place Big Rock under remedial delisting review, which is normal practice when a listed issuer seeks to rely on this exemption. No assurance can be provided as to the outcome of such review and, therefore, on the Corporation's continued qualification for listing on the TSX.

About Big Rock Brewery Inc.

In 1985, Ed McNally founded Big Rock to contest the time's beer trends. Three bold, European-inspired offerings – Bitter, Porter and Traditional Ale – forged an industry at a time heavy on easy drinking lagers and light on flavour. Today, our extensive portfolio of signature beers, ongoing seasonal offerings, six ciders (Rock Creek Cider® series), custom-crafted private label products and other notable, licensed alcoholic beverages keeps us at the forefront of the craft beer revolution and still proudly contesting the beer and alcoholic beverage trends of today. Big Rock has brewing operations in Calgary, Alberta and Toronto, Ontario. Big Rock trades on the TSX under the symbol "BR". For more information on Big Rock visit www.bigrockbeer.com.

CAUTIONARY STATEMENTS:

Forward-Looking Statements

This press release contains forward‐looking statements regarding: the Debt Settlement and the Private Placement closing of the Debt Settlement and the Private Placement and the timing of the same, the anticipated benefits therefrom, including with respect to balance sheet improvement and Big Rock's ability to execute its strategic plan; use of proceeds of Private Placement; the anticipated amount to be owed by the Corporation to VN Capital as of January 20, 2025; the Corporation's ability to continue as a going concern; the anticipated number of Common Shares to be issued to directors of the Corporation and other insiders under the Private Placement; and the Corporation's continued qualification for listing on the TSX. These forward‐looking statements are provided as of the date of this press release, or the effective date of the documents referred to in this press release, as applicable, and reflect predictions, expectations or beliefs regarding future events based on the Corporation's beliefs at the time the statements were made, as well as various assumptions made by and information currently available to them. In making the forward-looking statements included in this press release, the Corporation has applied several material assumptions, including, but not limited to, the assumption that regulatory approval of the Debt Settlement and the Private Placement will be obtained in a timely manner; that all conditions precedent to the completion of the Debt Settlement and Private Placement will be satisfied in a timely manner; that the rates under the Second Lien Facility will remain constant; that the Corporation will be unable to obtain alternative financing in a timely manner; and that general economic and business conditions will not change in a materially adverse manner. Although management considers these assumptions to be reasonable based on information available to it, they may prove to be incorrect. By their very nature, forward‐looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward‐looking statements will not be achieved or that assumptions on which they are based do not reflect future experience. We caution readers not to place undue reliance on these forward‐looking statements as a number of important factors could cause the actual outcomes to differ materially from the expectations expressed in them. These risk factors may be generally stated as the risk that the assumptions expressed above do not occur, but specifically include, without limitation, risks relating to: general market conditions; the Corporation's ability to secure financing on favourable terms; and the additional risks described in the Corporation's latest Annual Information Form, and other disclosure documents filed by the Corporation on SEDAR+. The foregoing list of factors that may affect future results is not exhaustive. When relying on our forward‐looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Corporation does not undertake to update any forward‐looking statement, whether written or oral, that may be made from time to time by the Corporation or on behalf of the Corporation, except as required by law.

SOURCE Big Rock Brewery Inc.

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