UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
☒
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the quarterly period ended June 30, 2025
☐
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the transition period from to
Commission File Number 001-38783
VILLAGE FARMS INTERNATIONAL, INC.
(Exact name of Registrant as Specified in its Charter)
Ontario
98-1007671
(State or other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
90 Colonial Parkway
Lake Mary, Florida
32746
(Address of Principal Executive Offices) (Zip Code)
(407) 936-1190
Issuer’s phone number, including area code
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares, without par value
VFF
The Nasdaq Stock Market LLC
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Not Applicable ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “small reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 8, 2025, 112,644,169 common shares of the registrant were outstanding.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1.
Financial Statements
Condensed Consolidated Statements of Financial Position
2
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
3
Condensed Consolidated Statements of Changes in Shareholders’ Equity and Mezzanine Equity
4
Condensed Consolidated Statements of Cash Flows
5
Notes to Condensed Consolidated Financial Statements
6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
21
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
46
Item 4.
Controls and Procedures
PART II - OTHER INFORMATION
48
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sale of Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
49
Signatures
50
Forward Looking Statements
As used in this Quarterly Report on Form 10-Q, the terms “Village Farms”, “Village Farms International”, the “Company”, “we”, “us”, “our” and similar references refer to Village Farms International, Inc. and our consolidated subsidiaries, and the term “Common Shares” refers to our common shares, no par value. Our financial information is presented in U.S. dollars and all references in this Quarterly Report on Form 10-Q to “$” means U.S. dollars and all references to “C$” means Canadian dollars.
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the U.S. Securities Act of 1933, as amended, (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and is subject to the safe harbor created by those sections. This Quarterly Report on Form 10-Q also contains "forward-looking information" within the meaning of applicable Canadian securities laws. We refer to such forward-looking statements and forward-looking information collectively as "forward-looking statements". Forward-looking statements may relate to the Company's future outlook or financial position and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, expansion plans, litigation, projected production, projected costs, capital expenditures, financial results, tariffs, taxes, plans and objectives of or involving the Company or statements regarding the anticipated benefits from the closing of the transaction involving Vanguard Food LP. Particularly, statements regarding future results, performance, achievements, prospects or opportunities for the Company, the greenhouse vegetable or produce industry, the cannabis industry and market and our energy segment are forward-looking statements. In some cases, forward-looking information can be identified by such terms as "can", "outlook", "may", "might", "will", "could", "should", "would", "occur", "expect", "plan", "anticipate", "believe", "intend", "try", "estimate", "predict", "potential", "continue", "likely", "schedule", "objectives", or the negative or grammatical variation thereof or other similar expressions concerning matters that are not historical facts. The forward-looking statements in this Quarterly Report on Form 10-Q are subject to risks that may include, but are not limited to: our limited operating history in the cannabis and cannabinoids industry, including that of Pure Sunfarms, Corp. (“Pure Sunfarms”), Rose LifeScience Inc. (“Rose” or “Rose LifeScience”) and Balanced Health Botanicals, LLC (“Balanced Health”); the limited operational history of the Delta RNG Project in our energy segment and Leli Holland B.V. ("Leli"); the legal status of the cannabis business of Pure Sunfarms and Rose and the hemp business of Balanced Health and uncertainty regarding the legality and regulatory status of cannabis in the United States; risks relating to the integration of Balanced Health and Rose into our consolidated business; risks relating to obtaining additional financing on acceptable terms, including our dependence upon credit facilities and dilutive transactions; potential difficulties in achieving and/or maintaining profitability; variability of product pricing; risks inherent in the cannabis, hemp, CBD, cannabinoids, and agricultural businesses; our market position and competitive position; our ability to leverage current business relationships for future business involving hemp and cannabinoids; the ability of Pure Sunfarms and Rose to cultivate and distribute cannabis in Canada as well as exports; risks related to the start-up of international production at our Netherlands operations under Leli; existing and new governmental regulations, including risks related to regulatory compliance and regarding obtaining and maintaining licenses required under the Cannabis Act (Canada), the Criminal Code and other Acts, S.C. 2018, C. 16 (Canada) for its Canadian operational facilities, and changes in our regulatory requirements; legal and operational risks relating to expected conversion of our greenhouses to cannabis production in Canada and in the United States; risks related to rules and regulations at the U.S. Federal (Food and Drug Administration and United States Department of Agriculture), state and municipal levels with respect to produce and hemp, cannabidiol-based products commercialization; retail consolidation, technological advances and other forms of competition; transportation disruptions; product liability and other potential litigation; retention of key executives; labor issues; uninsured and underinsured losses; vulnerability to rising energy costs; inflationary effects on costs of cultivation and transportation; recessionary effects on demand of our products; environmental, health and safety risks, foreign exchange exposure, risks associated with cross-border trade and the potential for tariffs and other trade restrictions; difficulties in managing our growth; restrictive covenants under our credit facilities; natural catastrophes; elevated interest rates; and tax risks.
The Company has based these forward-looking statements on factors and assumptions about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. Although the forward-looking statements contained in this Quarterly Report on Form 10-Q are based upon assumptions that management believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond the Company's control, which may cause the Company's or the industry's actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the factors contained in the Company's filings with securities regulators, including this Quarterly Report on Form 10-Q and the Company’s most recently filed annual report on Form 10-K.
When relying on forward-looking statements to make decisions, the Company cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future results, performance, achievements, prospects and opportunities. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events or information as of the date on which the statements are made in this Quarterly Report on Form 10-Q. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
1
Item 1. FINANCIAL STATEMENTS
Village Farms International, Inc.
(In thousands of United States dollars, except share data)
(Unaudited)
June 30, 2025
December 31, 2024
ASSETS
Current assets
Cash and cash equivalents
$
59,988
24,631
Restricted cash
5,000
—
Trade receivables, net
27,826
22,160
Inventories, net
39,476
41,256
Other receivables
225
247
Prepaid expenses and deposits
4,550
2,806
Current assets of discontinued operations
508
24,919
Total current assets
137,573
116,019
Non-current assets
Property, plant and equipment, net
181,837
175,226
Investments
6,268
2,656
Goodwill
44,544
42,315
Intangibles, net
24,980
25,105
Deferred tax asset
802
1,005
Right-of-use assets
3,728
4,372
Other assets
4,012
2,178
Non-current assets of discontinued operations
20,430
Total assets
403,744
389,306
LIABILITIES
Current liabilities
Line of credit
4,000
Trade payables
11,203
11,254
Current maturities of long-term debt
7,897
8,142
Accrued sales taxes
8,834
8,740
Accrued loyalty program
574
1,029
Accrued liabilities
14,343
8,972
Lease liabilities - current
1,113
1,060
Income tax payable
5,388
51
Other current liabilities
853
1,053
Current liabilities of discontinued operations
1,615
17,918
Total current liabilities
51,820
62,219
Non-current liabilities
Long-term debt
31,206
32,420
Deferred tax liability
19,800
19,940
Lease liabilities - non-current
3,649
4,199
Other liabilities
3,077
2,196
Non-current liabilities of discontinued operations
4,374
Total liabilities
109,552
125,348
MEZZANINE EQUITY
Redeemable non-controlling interest
9,855
9,953
SHAREHOLDERS’ EQUITY
Common stock, no par value per share - unlimited shares authorized;112,644,169 shares issued and outstanding at June 30, 2025 and 112,337,049 shares issued and outstanding at December 31, 2024.
387,350
387,349
Additional paid in capital
30,878
30,604
Accumulated other comprehensive loss
(8,669
)
(18,932
Retained earnings
(125,222
(145,016
Total shareholders’ equity
284,337
254,005
Total liabilities, mezzanine equity and shareholders’ equity
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
(In thousands of United States dollars, except per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
Sales
59,899
53,597
99,579
95,584
Cost of sales
(37,557
(39,960
(63,057
(70,730
Gross profit
22,342
13,637
36,522
24,854
Selling, general and administrative expenses
(15,411
(17,056
(30,030
(31,306
Interest expense
(814
(901
(1,516
(1,815
Interest income
109
322
184
528
Foreign exchange gain (loss)
1,792
(403
1,708
(1,281
Other income
4,430
45
4,451
149
Goodwill and intangible asset impairments
(11,939
Income (loss) before taxes and equity method investment income
12,448
(16,295
11,319
(20,810
Provision for income taxes
(2,503
(260
(3,486
(580
Equity method investment income, net of tax
Income (loss) from continuing operations
9,945
(16,555
7,833
(21,390
Income (loss) from discontinued operations, net of tax
16,294
(7,003
11,291
(4,847
Income (loss) including non-controlling interests
26,239
(23,558
19,124
(26,237
Less: net loss (income) attributable to non-controlling interests, net of tax
258
9
670
(164
Net income (loss) attributable to Village Farms International, Inc. shareholders
26,497
(23,549
19,794
(26,401
Basic income (loss) per share attributable to Village Farms International, Inc. shareholders from:
Continuing operations
0.09
(0.15
0.08
(0.20
Discontinued operations
0.15
(0.06
0.10
(0.04
Basic income (loss) per share attributable to Village Farms International, Inc. shareholders
0.24
(0.21
0.18
(0.24
Diluted income (loss) per share attributable to Village Farms International, Inc. shareholders from:
0.14
Diluted income (loss) per share attributable to Village Farms International, Inc. shareholders
Weighted average number of common shares used in the computation of net income (loss) per share (in thousands):
Basic
112,347
110,960
112,342
110,604
Diluted
112,736
112,607
Other comprehensive income (loss):
Foreign currency translation adjustment
9,870
(2,001
10,835
(6,252
Comprehensive income (loss) including non-controlling interests
36,109
(25,559
29,959
(32,489
Comprehensive (income) loss attributable to non-controlling interests
(239
117
100
232
Comprehensive income (loss) attributable to Village Farms International, Inc. shareholders
35,870
(25,442
30,059
(32,257
(In thousands of United States dollars, except for shares outstanding)
Three Months Ended June 30, 2025
Number of CommonShares (in thousands)
Common Stock
Additional Paid in Capital
Accumulated Other Comprehensive (Loss) gain
Retained Earnings
Total Shareholders’Equity
Mezzanine Equity
Balance April 1, 2025
112,337
30,749
(18,042
(151,719
248,337
9,616
Share-based compensation
306
123
Shares issued on exercise of warrants
7
Cumulative translation adjustment
9,373
497
Net income (loss)
(258
Balance at June 30, 2025
112,644
Three Months Ended June 30, 2024
Accumulated OtherComprehensive Loss
Non-controlling Interest
Balance at April 1, 2024
110,249
386,719
26,016
(7,503
(112,017
293,789
15,627
1,479
Acquisition of Redeemable non-controlling interest
2,193
(5,209
(1,891
(6
(1,897
(102
Net (loss) income
(51
(23,600
42
Balance at June 30, 2024
111,728
30,405
(9,394
(135,566
517
272,681
10,358
Six Months Ended June 30, 2025
Number of CommonShares
Additional Paid inCapital
Accumulated OtherComprehensive (loss) income
Total Shareholders’ Equity
Balance January 1, 2025
268
10,263
572
(670
Six Months Ended June 30, 2024
Balance at January 1, 2024
25,611
(3,540
(109,165
649
300,274
15,667
2,601
(5,854
(26
(5,880
(369
(106
(26,507
269
(In thousands of United States dollars)
Cash flows provided by (used in) operating activities:
Income (loss) from continuing operations including non-controlling interests
Adjustments to reconcile net loss attributable to Village Farms International, Inc. shareholders to net cash provided by (used in) operating activities of continuing operations:
Depreciation and amortization
8,410
8,356
Amortization of deferred charges
47
10
1,516
1,815
Interest paid on long-term debt
(1,613
(2,172
Unrealized foreign exchange (gain) loss
(87
172
11,939
Non-cash lease expense
619
388
Deferred income taxes
(935
589
Changes in non-cash working capital items
6,207
(6,021
Net cash provided by (used in) operating activities from continuing operations
22,265
(3,713
Cash flows provided by (used in) investing activities:
Purchases of property, plant and equipment
(5,289
(2,733
Purchases of intangibles
(80
Net cash provided by (used in) investing activities from continuing operations
(2,813
Cash flows (used in) provided by financing activities:
Repayments on borrowings
(4,554
(2,870
Purchase of Non-controlling interest
(3,016
Other financing activities
(432
Net cash used in financing activities from continuing operations
(4,986
(5,886
Discontinued Operations
Net cash (used in) provided by operating activities from discontinued operations
(6,818
9,365
Net cash provided by (used in) investing activities from discontinued operations
38,710
(2,146
Net cash used in financing activities from discontinued operations
(4,000
Net cash flows (used in) provided by discontinued operations
27,892
7,219
Effect of exchange rate changes on cash and cash equivalents
475
(441
Net increase (decrease) in cash, cash equivalents and restricted cash
40,357
(5,634
Cash, cash equivalents and restricted cash, beginning of period
35,291
Cash, cash equivalents and restricted cash, end of period
64,988
29,657
(In thousands of United States dollars, except per share amounts, unless otherwise noted)
Nature of Business
Village Farms International, Inc. (“VFF” and, together with its subsidiaries, the “Company”, “we”, “us”, or “our”) is a corporation existing under the Ontario Business Corporations Act. VFF’s principal operating subsidiaries as of June 30, 2025 were Village Farms Canada Limited Partnership ("VFCLP"), Village Farms, L.P., Pure Sunfarms Corp. (“Pure Sunfarms”), Balanced Health Botanicals, LLC (“Balanced Health”), VF Clean Energy, Inc. (“VFCE”) and Leli Holland B.V. (“Leli”). VFF also owns an 80% interest in Rose LifeScience Inc. (“Rose”).
The address of the registered office of VFF is 79 Wellington Street West, Suite 3300, Toronto, Ontario, Canada, M5K 1N2.
The address of the principal executive office of VFF is 90 Colonial Center Pkwy, Lake Mary, Florida, United States, 32746.
The Company’s shares are listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “VFF”.
VFF's wholly owned subsidiary, Pure Sunfarms, is a vertically integrated licensed producer and supplier of cannabis products sold to customers throughout Canada and internationally. Through its 80% ownership interest of Rose, the Company has a substantial presence in the Province of Quebec as a cannabis supplier, producer and commercialization expert. The Company’s wholly owned subsidiary, Balanced Health, develops and sells high quality, cannabidiol (“CBD”) based products including ingestible, edible and topical applications within the U.S. Its wholly owned subsidiary, Leli, is a vertically integrated licensed producer and supplier of cannabis products sold to coffee shops in the Netherlands. VFF owns and operates sophisticated, highly intensive agricultural greenhouse facilities in British Columbia, where it produces, markets and sells premium-quality tomatoes, bell peppers and cucumbers.
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated statement of financial position as of December 31, 2024 is derived from the Company’s audited financial statements as of that date. Because certain information and footnote disclosures have been condensed or omitted, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2024 contained in the Company’s 2024 Annual Report on Form 10-K. In management’s opinion, all normal and recurring adjustments considered necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented have been included. When necessary, certain prior year amounts have been reclassified to conform with the current period presentation. Interim period operating results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. The Company believes that the disclosures made in these condensed consolidated financial statements are adequate to make the information not misleading.
As of June 30, 2025, the Company determined that certain assets that had been disposed of met the criteria for discontinued operations presentation. For all periods presented, the operating results associated with the assets disposed of have been reclassified into net income (loss) from discontinued operations, net of income taxes, in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The associated assets and liabilities have been reflected as current and long-term assets and liabilities of discontinued operations in the Condensed Consolidated Statements of Financial Position, and the cash flows from the Company’s discontinued operations are presented in the Condensed Consolidated Statements of Cash Flows for all periods presented.
Certain prior period balances related to the Company's reportable segments and discontinued operations have been reclassified to conform to the current presentation in the financial statements and accompanying notes. The notes to the Condensed Consolidated Financial Statements are presented on a continuing operations basis unless otherwise noted. Refer to Note 7 Discontinued Operations and Disposals for additional information on the Company's discontinued operations.
Principals of Consolidation
The accompanying Condensed Consolidated Financial Statements include Village Farms International, Inc. and its subsidiaries and include the accounts of all majority-owned subsidiaries over which the Company exercises control and, when applicable, entities in which the Company has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. Other parties’ interests in entities that the Company consolidates are reported as non-controlling interests within equity, except for mandatorily redeemable non-controlling interests, which are recorded within mezzanine equity. Net income or loss attributable to non-controlling interests is reported as a separate line item below net
Notes to Condensed Consolidated Interim Financial Statements
income or loss. The Company applies the equity method of accounting for its investments in entities for which it does not have a controlling financial interest, but over which it has the ability to exert significant influence.
Revision of Prior-Period Condensed Consolidated Financial Statements
In connection with the preparation of our 2024 consolidated financial statements, the Company identified an immaterial misstatement in its estimate of its deferred tax asset valuation allowance as of December 31, 2023. As a result, we recorded a decrease to deferred tax assets as of December 31, 2023 and increase in income tax expense for the year ended December 31, 2023 for $3,000, which decreased total assets and retained earnings as of December 31, 2023 and increased our net loss for the year ended December 31, 2023 by $3,000, reflecting the correction of this item. Our revision had no impact to the Company’s consolidated statement of cash flows. Additionally, our revision had no impact to the Company’s segment profit measures, compliance with debt covenants, or performance metrics used in the calculation of executive compensation as the impacted line items are excluded from these calculations. We evaluated the materiality of the impact quantitatively and qualitatively and concluded it was not material to any of the prior periods.
Translations of Foreign Currencies
The assets and liabilities of foreign subsidiaries with a functional currency other than the U.S. dollar are translated into U.S. dollars at period-end exchange rates, with resulting translation gains or losses included within other comprehensive income or loss. Revenue and expenses are translated into U.S. dollars at average rates of exchange during the applicable period. Substantially all of the Company’s foreign operations use their local currency as their functional currency. For foreign operations for which the local currency is not the functional currency, the operation’s non-monetary assets are remeasured into U.S. dollars at historical exchange rates. All other accounts are remeasured at current exchange rates, with both gains or losses from remeasurement and currency gains or losses from transactions executed in currencies other than the functional currency included in foreign exchange (loss) gain.
In these condensed consolidated financial statements, “$” means U.S. dollars and “C$” means Canadian dollars, unless otherwise noted.
The exchange rates used to translate from Canadian dollars to U.S dollars are shown below:
As of
June 30, 2024
Spot rate
0.7324
0.7310
0.6957
Three-month period ended
0.7226
0.7308
Six-month period ended
0.7096
0.7363
General Economic, Regulatory and Market Conditions
The Company has experienced, and may continue to experience, direct and indirect negative effects on its business and operations from negative economic, regulatory and market conditions, including inflationary effects on fuel prices, labor and materials costs, elevated interest rates, tariffs, potential recessionary impacts and supply chain disruptions that could negatively affect demand for new projects and/or delay existing project timing or cause increased project costs. The extent to which general economic, regulatory and market conditions could affect the Company’s business, operations and financial results is uncertain as it will depend upon numerous evolving factors that management may not be able to accurately predict, and, therefore, any future impacts on the Company’s business, financial condition and/or results of operations cannot be quantified or predicted with specificity.
Recent Accounting Pronouncements
No accounting pronouncements recently issued or newly effective have had, or are expected to have, a material impact on the Company’s Condensed Consolidated Financial Statements.
2. INVENTORIES
Inventories consisted of the following as of:
Classification
Cannabis:
Raw materials
6,191
6,372
Work-in-progress
9,766
7,052
Finished goods
14,225
21,872
Packaging
3,100
Produce:
Crop inventory
4,294
2,860
Inventory
3. REVENUES
The Company’s produce and cannabis revenue transactions consist of a single performance obligation to transfer promised goods at a fixed price. Quantities to be delivered to the customer are determined at a point near the date of delivery through purchase orders received from the customer. The Company recognizes revenue when it has fulfilled a performance obligation, which is typically when the customer receives the goods. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the goods. The amount of revenue recognized is measured at the fair value of the consideration received or receivable, reduced for excise duty, returns, and other customer credits, such as trade discounts and volume rebates. Payment terms are consistent with terms standard to the markets the Company serves.
The following tables disaggregate the Company’s net revenues from continuing operations by major source.
For the Three Months Ended June 30,
Branded (1)
24,962
30,535
Non-Branded
7,077
8,266
International
11,980
1,505
U.S. Cannabis
3,841
4,297
Netherlands Cannabis
2,483
Other
499
439
Produce
8,574
8,434
Clean Energy
483
121
Total Revenue
For the Six Months Ended June 30,
47,713
59,555
13,367
14,736
17,368
3,003
7,745
2,969
0
907
896
8,601
8,438
909
8
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following as of:
Land
14,082
13,451
Leasehold and land improvements
9,750
8,799
Buildings
187,102
180,091
Machinery and equipment
58,926
55,637
Construction in progress
13,624
10,971
Less: Accumulated depreciation
(101,647
(93,723
Depreciation expense on property, plant and equipment, was $3,796 and $3,494 for the three months ended June 30, 2025 and 2024, respectively, and $6,779 and $6,706 for the six months ended June 30, 2025 and 2024, respectively.
Capitalized interest was $0 and $277 for the three months ended June 30, 2025 and 2024, respectively, and $188 and $564 for the six months ended June 30, 2025 and 2024, respectively.
5. GOODWILL AND INTANGIBLE ASSETS
The following table presents the changes in the carrying value of goodwill by reportable segment for the six months ended June 30, 2025:
Cannabis - Canada
Balance as of December 31, 2024
2,229
Balance as of June 30, 2025
Intangible Assets
Intangible assets consisted of the following as of:
Licenses
18,560
17,196
Brand and trademarks*
3,442
12,520
Customer relationships
13,190
12,530
Computer software
1,012
2,029
Other*
144
Less: Accumulated amortization
(11,368
(10,064
Less: Impairments*
(9,250
* Includes indefinite-lived intangible assets
The expected future amortization expense for definite-lived intangible assets as of June 30, 2025 was as follows:
Fiscal period
Remainder of 2025
1,634
2026
3,249
2027
2028
1,888
2029
1,886
Thereafter
9,488
21,394
Amortization expense was $837 and $820 for the three months ended June 30, 2025 and 2024, respectively, and $1,631 and $1,650 for the six months ended June 30, 2025 and 2024, respectively.
Assessment for Indicators of Impairment
At the end of each reporting period, the Company assesses whether events or changes in circumstances have occurred that would indicate an impairment. The Company considers external and internal factors, including overall financial performance and relevant entity-specific factors, as part of this assessment.
During the six months ended June 30, 2025 and 2024, the Company considered qualitative factors in assessing for impairment indicators for the Company’s U.S. and Canadian Cannabis segments.
At June 30, 2025, the Company concluded that no impairment indicators existed as no events or circumstances occurred that would, more likely than not, reduce the fair value of the reporting units to be below their carrying amounts.
Cannabis - U.S.
At June 30, 2024, when the Company considered qualitative factors in assessing impairment indicators it concluded that the Company's U.S. - Cannabis segment more likely than not was impaired. The Company reviewed the reporting segment's assets, including goodwill and intangible assets. Based on recent historical performance during the quarter which underperformed relative to budget, a revised June 30, 2024 forecast which showed a shortfall compared to the March 31, 2024 forecast, the new restrictions on CBD sales in an additional eight states at July 1, 2024, and the proliferation of unregulated hemp-derived products on the market which continues to challenge market share for the CBD industry, the Company concluded that as of June 30, 2024, the fair value of the brand intangible asset and goodwill was fully impaired and an impairment charge to intangibles of $1,900 and goodwill of $10,039 was recorded to the U.S. Cannabis reporting unit.
Cannabis - U.S. - Goodwill
At June 30, 2024, the fair value of the reporting unit was determined based on a discounted cash flow projection using projections for 2024 to 2028 with an average revenue growth rate of 6% between 2025 to 2028, followed by a terminal growth rate of 2%. Management concluded that as of June 30, 2024, the fair value was lower than its carrying amount and as a result, an impairment charge to goodwill of $10,039 was recorded to the reporting unit.
The significant assumptions applied to the determination of the fair value are described below:
Post-tax discount rate: A market participant post-tax discount rate applied to the after-tax forecast cash flows was 12%. A decrease of 1% to the discount rate, would not result in a material change to the impairment charge.
Terminal growth rate: An increase of 1% in the terminal growth rate would not result in a material change to the impairment charge.
Future cash flows: An increase in future cash flows by 10% would not result in a material change to the impairment charge.
Cannabis – U.S. Brand
At June 30, 2024, the fair value of the brand was determined based on a discounted cash flow projection. Specifically, the Company utilized a relief from royalty valuation technique to arrive at the fair value of the brand. Management concluded that as of June 30, 2024, the fair value was lower than its carrying value of $1,900 as the notional brand maintenance costs exceeded the incremental royalty of 3.5%. Therefore, an impairment charge to the brand intangible of $1,900 was allocated to the reporting unit.
At June 30, 2024, when the Company considered qualitative factors in assessing impairment indicators for Canadian Cannabis it concluded that as of June 30, 2024, no impairment indicators existed as no events or circumstances occurred that would, more likely than not, reduce the fair value of the reporting units to be below their carrying amounts.
6. LINE OF CREDIT AND LONG-TERM DEBT
The following table provides details for the carrying values of debt as of:
Term Loan - (“FCC Term Loan”) - repayable by monthly principal payments of $164 and accrued interest at Secured Overnight Financing Rate (“SOFR”) plus an applicable margin per annum (7.83% at June 30, 2025); matures May 3, 2027
19,837
20,821
Term loan - ("Pure Sunfarms Term Loan Facility") - C$27.4M - repayable by quarterly principal payments of C$1.0 million and accrued interest at Canadian prime interest or Canadian Overnight Repo Rate Average ("CORRA") plus an applicable margin (5.25% at June 30, 2025), matures February 7, 2028.
19,266
Term Loan - ("Pure Sunfarms Non-Revolving Facility") - C$19.0M - Canadian prime interest rate plus an applicable margin , repayable in quarterly payments equal to 2.50% of the outstanding principal amount, matures February 7, 2026 . Terminated on April 17, 2025 and replaced with the "Pure Sunfarms Secured Credit Facilities"
6,262
Term loan - ("Pure Sunfarms Term Loan") - C$25.0M - Canadian prime interest rate plus an applicable margin, repayable in quarterly payments equal to 2.50% of the outstanding principal amount, matures February 7, 2026. Terminated on April 17, 2025 and replaced with the "Pure Sunfarms Secured Credit Facilities"
10,436
Term Loan - (Pure Sunfarms "BDC Facility") - non-revolving demand loan repayable by monthly principal payments of C$52 and accrued interest at Canadian prime interest rate plus an applicable margin, matures December 31, 2031. Terminated on April 17, 2025 and replaced with the "Pure Sunfarms Secured Credit Facilities"
3,043
Total
39,103
40,562
Less current maturities
Total long-term debt
As collateral for the FCC Term Loan, the Company has provided promissory notes and a first priority security interest over its accounts receivable and inventory. In addition, the Company has granted full recourse guarantees and security therein. The carrying value of the assets and securities pledged as collateral for the FCC Term Loan as of June 30, 2025 and December 31, 2024 was $90,997 and $101,068, respectively.
On April 10, 2025, the Company entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) with Farm Credit Canada (“FCC”) as the lender, which amended and restated the terms of the FCC Term Loan. Among other things, the A&R Credit Agreement (i) adds the Company as a new borrower, (ii) adds VF Clean Energy, Inc. as a new guarantor, and (iii) provides more favorable financial covenants.
On April 17, 2025, the Company entered into a secured credit facility with a Canadian chartered bank as administrative agent with an aggregate borrowing capacity of C$37.4 million, consisting of a maximum C$10.0 million revolving credit facility (the "Pure Sunfarms Revolving Credit Facility"), and a C$27.4 million term loan facility (the "Pure Sunfarms Term Loan Facility", and collectively with the Pure Sunfarms Revolving Credit Facility, the "Pure Sunfarms Secured Credit Facilities"). The Pure Sunfarms Secured Credit Facilities are secured by the Delta 2 and Delta 3 greenhouse facilities. The Pure Sunfarms Secured Credit Facilities were used to replace, and repay remaining outstanding balances on, the Company's (i) Pure Sunfarms Term Loan, (ii) the Pure Sunfarms Non-Revolving Facility, (iii) the BDC Facility, and (iv) the PSF Revolving Line of Credit. The credit and guarantee agreements related to the Pure Sunfarms Loan, the Pure Sunfarms Non-Revolving Credit Facility, the BDC Facility, and the PSF Revolving Line of Credit were terminated.
The outstanding amount of the Pure Sunfarms Term Loan Facility will be repayable, on a quarterly basis, in an amount equal to C$1.0 million. Any amount remaining unpaid will be due and payable in full on the maturity date, which is on February 7, 2028.
The loans under the Pure Sunfarms Secured Credit Facilities will accrue interest at a rate equal to, at the company's option, (a) the Canadian Prime Rate plus the applicable margin, or (b) the Canadian Overnight Repo Rate Average plus the applicable
11
margin. The applicable margin for the Pure Sunfarms Secured Credit Facility is determined based upon Pure Sunfarms leverage ratio. The Pure Sunfarms Secured Credit Facilities can be drawn for advances of up to C$10.0 million.
The Pure Sunfarms Secured Credit Facilities also contain customary covenants, customary representations and warranties, affirmative covenants, financial covenants and events of default.
The weighted average annual interest rate on short-term borrowings as of June 30, 2025 and December 31, 2024 was 6.9% and 9.4%, respectively.
Accrued interest payable on all long-term debt as of June 30, 2025 and December 31, 2024 was $209 and $271, respectively, and these amounts are included in accrued liabilities in the Condensed Consolidated Statements of Financial Position.
The aggregate annual principal maturities of long-term debt for the remainder of 2025 and thereafter are as follows:
5,448
4,897
16,816
11,942
7. DISCONTINUED OPERATIONS AND DISPOSALS
On May 30, 2025, the Company closed on a transaction with a newly-formed holding company, Vanguard Food, LP (“Vanguard”), backed by private investment firms, to privatize certain assets and operations of its Fresh Produce segment (the "Transaction"). As part of the Transaction, the Company received $40 million in cash proceeds, subject to working capital adjustments, and common units representing a 37.9% equity ownership interest in Vanguard with an estimated fair value of $3.5 million. In accordance with ASC 810-10-40, the Company recognized a gain upon deconsolidation of the Produce operations, based on the fair value of consideration received and fair value of Vanguard common units, less the carrying amount of net assets disposed. The gain on sale was recorded based on available data and management estimates as of June 30, 2025 and is subject to post-closing selling price adjustments which could result in further adjustments to the gain on sale. The following table outlines the calculation of the initial gain on sale of the Transaction:
Cash proceeds
35,000
Cash held in indemnity escrow (Restricted cash)
Fair value of Vanguard common units
3,530
Carrying value of lease to Vanguard
1,245
Estimated future distributions for working capital adjustments and other obligations
(4,290
Less: Carrying value of net assets disposed
(20,500
Gain on sale
19,985
The Company concluded the Transaction met the criteria under ASC 205-20 to be classified as discontinued operations because the Transaction represented a strategic shift in the Company's business model that had a major effect on the Company’s operations and financial results. Accordingly, the Condensed Consolidated Statements of Operations and Comprehensive Income (loss) and the Condensed Consolidated Statements of Financial Position have been adjusted for all prior periods to reflect the historical results as discontinued operations.
The Company has entered into a Transition Services Agreement with Village Fresh, a Vanguard subsidiary, to provide certain transition services for specified fees and a multi-year Sales, Marketing & Distribution Agreement with Village Fresh, which sets forth the terms, conditions, rights and obligations governing the sales, marketing and distribution by Village Fresh of all hydroponically grown tomatoes produced at VFCLP's British Columbia greenhouse growing facilities. The price paid by Village Fresh to the Company is based on amounts paid by Village Fresh’s customers, net of a marketing fee to be received by Village Fresh.
Details of the net loss from discontinued operations, net of tax, were as follows:
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25,358
38,586
62,753
74,675
(25,613
(42,974
(65,846
(74,768
Gross loss
(255
(4,388
(3,093
(93
(2,568
(2,611
(4,729
(4,747
(3
(4
(7
Gain on sale of assets
Income (loss) from discontinued operations before income taxes
17,159
12,156
(865
Net income (loss) from discontinued operations, net of tax
The following table summarizes the assets and liabilities of the discontinued operations:
11,505
11,881
Other Receivables
80
1,453
Total current assets of discontinued operations
15,037
5,393
Total non-current assets of discontinued operations
Total assets of discontinued operations
45,349
1,304
13,245
311
3,236
1,437
Total current liabilities of discontinued operations
Total liabilities of discontinued operations
22,292
8. EQUITY INVESTMENTS
On May 30, 2025, the Company closed on the Transaction with Vanguard to privatize certain assets and operations of its Fresh Produce segment (Note 7). As part of the Transaction, the Company received a 37.9% equity ownership interest in Vanguard with an estimated fair value of $3,530, included in investments within the Condensed Consolidated Statements of Financial Position. We account for our investment in Vanguard under the equity method of accounting in accordance with ASC 323, Investments – Equity Method and Joint Ventures. Under the equity method of accounting, the initial investment is recorded at cost and the investment is subsequently adjusted for, among other things, its proportionate share of earnings or losses. However, given the capital structure of the Vanguard arrangement, we apply the Hypothetical Liquidation Book Value ("HLBV") method to determine the allocation of profits and losses since our liquidation rights and priorities, as defined by the Amended and Restated Limited Partnership Agreement of Vanguard Food LP (the "Vanguard LPA"), differ from our underlying ownership interest. The HLBV method calculates the proceeds that would be attributable to each partner in an investment based on the liquidation provisions of the Vanguard LPA if the partnership was to be liquidated at book value as of the balance sheet date. Each partner’s allocation of income or loss in the period is equal to the change in the amount of net equity they are legally able to claim based on a hypothetical liquidation of the entity at the end of a reporting period compared to the beginning of that period, adjusted for any capital transactions. Based on the terms of the Vanguard LPA and related Transaction documents, we recorded income on equity method investments attributable to Vanguard of $0 for the three and six months ended June 30, 2025.
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9. FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognized on the consolidated statements of financial position at fair value in a hierarchy for those assets and liabilities measured at fair value on a recurring basis.
At June 30, 2025 and December 31, 2024, the Company’s financial instruments included cash and cash equivalents, trade receivables, minority investments, line of credit, trade payables, accrued liabilities, lease liabilities, and note payables. The carrying value of cash and cash equivalents, trade receivables, trade payables, and accrued liabilities approximate their fair values due to the short-term maturity of these financial instruments. The carrying value of line of credit, lease liabilities, notes payable, and debt approximate their fair values due to the short-term nature of these instruments or the use of market interest rates for debt instruments.
There were no financial instruments categorized as Level 3 at June 30, 2025 and December 31, 2024, other than the minority investments. There were no transfers of assets or liabilities between levels during the six months ended June 30, 2025 and 2024.
10. RELATED PARTY TRANSACTIONS AND BALANCES
The Company leases its Rose office building from a Company employee who also owns a minority interest in Rose. For the three and six months ended June 30, 2025, the Company paid C$78 and C$114, respectively, and for the three and six months ended June 30, 2024 the Company paid C$151 and C$190, respectively, to lease this office space.
One of the Company’s employees is related to a member of the Company’s executive management team and received approximately $63 and $99 and in salary and benefits during the three and six months ended June 30, 2025 and $24 and $54 in salary and benefits during the three and six months ended June 30, 2024.
11. INCOME TAXES
The Company has recorded a provision for income taxes of $2,503 and $3,486 for the three and six months ended June 30, 2025, respectively, compared with a provision for income taxes of $260 and $580 for the same periods last year.
The Company’s income tax provision is based on management’s estimate of the effective tax rate for the full year. The tax (provision) benefit in any period will be affected by, among other things, permanent, as well as discrete items, differences in the deductibility of certain items, changes in the valuation allowance related to net deferred tax assets, in addition to changes in tax legislation. As a result, the Company may experience significant fluctuations in the effective book tax rate (that is, tax expense divided by pre-tax book income) from period to period.
In order to fully utilize the net deferred tax assets, the Company will need to generate sufficient taxable income in future years. The Company analyzed all positive and negative evidence to determine if, based on the weight of available evidence, it is more likely than not to realize the benefit of the net deferred tax assets. The recognition of the net deferred tax assets and related tax benefits is based upon the Company’s conclusions regarding, among other considerations, estimates of future earnings based on information currently available and current and anticipated customers, contracts, and product introductions, as well as historical operating results and certain tax planning strategies.
Based on the analysis of all available evidence, both positive and negative, the Company has concluded that it does not have the ability to generate sufficient taxable income in the necessary periods to utilize the entire benefit for its deferred tax assets. Accordingly, the Company established a valuation allowance of $44,084 as of June 30, 2025 and $48,561 as of December 31, 2024. The Company cannot presently estimate what, if any, changes to the valuation of its deferred tax assets may be deemed appropriate in the future.
As of June 30, 2025, the Company’s net deferred tax assets totaled $802 and were primarily derived from a tax planning strategy to utilize a portion of its existing net operating loss carryforwards.
12. SEGMENT AND GEOGRAPHIC INFORMATION
The Company regularly monitors its reportable segments to determine if changes in facts and circumstances would indicate whether changes in the determination or aggregation of operating segments are necessary. In the fourth quarter of 2024, the Company determined that Leli had met the quantitative threshold to be a reportable segment. In addition, during the fourth quarter of 2024, the chief operating decision-maker (“CODM”) changed the segment profit measure from gross margin to operating income or loss. We believe that segment operating (loss) income is a more useful measure because it allows management, analysts, investors, and other interested parties to evaluate the profitability of our business operations before the
14
effects of certain expenses that directly arise from non-operating activities (other income/expense), financing decisions (interest), and tax strategies (income taxes). These changes have been applied to all periods presented.
Segment reporting is prepared on the same basis that the Company’s Chief Executive Officer, who is the CODM, manages the business, makes operating decisions and assesses performance. Management has determined that the Company operates in five reportable segments: Cannabis-Canada, Cannabis-U.S., Cannabis - Netherlands (previously Leli), Produce, and Clean Energy. The Cannabis-Canada segment produces and supplies cannabis products to be sold to other licensed providers and provincial governments across Canada and internationally. The Cannabis-U.S. segment develops and sells high-quality, CBD-based health and wellness products including ingestible, edible and topical applications across the United States. The Cannabis - Netherlands segment produces and supplies cannabis products in the Netherlands, supplying designated coffee shops. The Produce segment produces, markets and sells premium quality tomatoes, bell peppers and cucumbers. The Clean Energy business receives a royalty representing a portion of the natural gas that is sold to one customer pursuant to its long-term contract.
The accounting policies of the segments are the same as those described in the summary of business, basis of presentation and significant accounting policies. The Company evaluates performance for all of its reportable segments based on segment operating (loss) income from operations.
For all of its reportable segments, the CODM uses segment operating (loss) income to allocate resources (including employees, property, and financial or capital resources) for each segment, predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a monthly basis for the (loss) income when making decisions about allocating capital and personnel to the segments. The CODM also uses segment (loss) income to assess the performance for each segment by comparing the results with one another.
Discontinued operations are not included in the applicable reportable segments.
The following tables reflect the reconciliation of segment revenue and significant segment expenses from continuing operations reconciled to the consolidated income (loss) from continuing operations before income taxes and equity method investments:
For the Three Months Ended June 30, 2025
Cannabis Canada
Cannabis U.S.
CleanEnergy
Cannabis Netherlands
Sales to external customers
44,518
(7,975
(27,050
(1,405
(1,047
(870
(8,604
(2,445
27
(557
(12,449
Segment operating income (loss)
(271
8,864
(9
430
879
9,893
Reconciliation of segment operating (loss) income to income from continuing operations before taxes and income from equity method investments(1)
Other income, net (2)
5,517
Other corporate expenses (3)
(2,962
Income from continuing operations before taxes and income from equity method investments
15
For the Three Months Ended June 30, 2024
40,745
(8,209
(30,040
(1,668
(43
(1,003
(8,749
(2,960
(17
(341
(13,070
Segment operating (loss) income
(778
1,956
(331
61
567
Reconciliation of segment operating (loss) income to loss from continuing operations before taxes and income from equity method investments(1)
Other expense, net (2)
(937
(3,986
Loss from continuing operations before taxes and income from equity method investments
For the Six Months Ended June 30, 2025
79,355
(9,444
(49,412
(2,716
(153
(1,332
(1,585
(17,366
(4,980
(1
(996
(24,928
(2,428
12,577
755
641
11,594
4,827
(5,102
For the Six Months Ended June 30, 2024
78,191
(9,199
(57,978
(3,510
(1,559
(16,453
(6,366
(37
(704
(25,119
(2,320
3,760
(1,042
41
(265
(2,419
(6,187
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The following tables summarize our interest income, interest expense, depreciation and amortization, other significant noncash items, and expenditures for capital assets by reportable segment:
Segment Totals
Corporate
Consolidated Totals
134
135
924
592
2,273
5,303
98
654
8,328
82
Share based compensation
19
73
104
164
Other significant noncash items:
85
493
Expenditures for segment assets
708
1,230
3,344
5,289
188
191
337
1,145
1,639
5,880
627
8,250
106
97
83
180
2,421
62
43
283
738
127
26
1,842
2,733
The following tables summarize our total assets by reportable segment:
Assets
64,327
51,983
280,945
266,433
Cannabis - United States
5,734
6,728
577
360
Cannabis - Netherlands
17,024
11,093
Total assets for reportable segments
368,607
336,597
34,629
7,360
Consolidated total assets from continuing operations
403,236
343,957
The Company’s primary operations are in the United States, Canada, and the Netherlands. The following tables summarizes our assets by geographic location:
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Total assets from continuing operations
United States
55,684
46,922
Canada
330,528
285,942
Netherlands
Long-lived assets from continuing operations
30,400
26,930
222,104
216,061
13,666
9,866
266,171
252,857
13. INCOME (LOSS) PER SHARE
Basic and diluted net income (loss) per common share is calculated as follows:
Three months ended June 30,
Numerator:
Net income (loss) attributable to Village Farms International, Inc. shareholders from continuing operations
10,203
(16,546
8,503
(21,554
Denominator:
Weighted average number of common shares - basic
Effect of dilutive securities- share-based employee options and awards
389
265
Weighted average number of common shares - diluted
Antidilutive options and awards
6,501
6,572
6,625
Net income (loss) per ordinary share:
18
14. SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION
Share-based compensation expense was $123 and $268 for the three and six months ended June 30, 2025, respectively, and $2,196 and $2,601 for the three and six months ended June 30, 2024, respectively.
Stock option activity for the six months ended June 30, 2025 was as follows:
Number ofOptions
WeightedAverageExercise Price
WeightedAverageRemainingContractualTerm (years)
AggregateIntrinsicValue
Outstanding at December 31, 2024
6,968,409
3.30
6.79
90
Granted
450,000
0.76
4.80
Forfeited/expired
(78,000
3.41
Outstanding at June 30, 2025
7,340,409
3.15
6.07
731
Exercisable at June 30, 2025
4,988,752
4.17
5.81
288
Restricted shares activity for the six months ended June 30, 2025 was as follows:
Number ofRestricted Stock Grants
Weighted Average Grant Date Fair Value
700,860
0.86
2,358,198
0.60
Vested and issued
(306,120
0.98
Forfeited
(73,566
2,679,372
0.62
-
15. CHANGES IN NON-CASH WORKING CAPITAL ITEMS AND SUPPLEMENTAL CASH FLOW INFORMATION
Trade receivables
(4,180
(6,549
Inventories
3,473
7,946
Lease liabilities
(506
(2,759
(122
(1,628
2,988
546
(4,529
9,788
(1,278
Other assets, net of other liabilities
(1,289
(1,718
The Company paid income taxes of $0 for the three and six months ended June 30, 2025 and 2024.
The Company paid interest expense of $1,613 and $2,172 for the three and six months ended June 30, 2025 and 2024, respectively.
16. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date the condensed consolidated financial statements were available to be issued.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U. S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation
has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements.
On August 4, 2025, the Company made a principal payment of approximately $3 million on the FCC Term Loan.
On August 4, 2025, the Company announced that it will be converting the remaining 550,000 sq. ft. of its Delta 2 greenhouse in Delta, British Columbia to cannabis production.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report and the Management’s Discussion and Analysis of Financial Condition and Results of Operations and consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2024 (our "Annual Report on Form 10-K"). This discussion and analysis contains forward-looking statements about our plans and expectations of what may happen in the future. Forward-looking statements are based on assumptions and estimates that are inherently subject to significant risks and uncertainties, and our actual results could differ materially from the results anticipated by our forward-looking statements. We encourage you to review the risks and uncertainties described in “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K, and in Part II, Item 1A of this Quarterly Report. These risks and uncertainties could cause actual results to differ materially from those projected or implied by our forward-looking statements contained in this report. These forward-looking statements are made as of the date of this management’s discussion and analysis, and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law.
EXECUTIVE OVERVIEW
Village Farms International, Inc. (“VFF”, together with its subsidiaries, the “Company”, “Village Farms”, “we” “us” or “our”) is a corporation existing under the Business Corporations Act (Ontario). The Company’s principal operating subsidiaries are Village Farms Canada Limited Partnership (“VFCLP”), Village Farms L.P. (“VFLP”), Pure Sunfarms Corp. (“Pure Sunfarms” or “PSF”), Balanced Health Botanicals, LLC (“Balanced Health”), Rose LifeScience Inc. (“Rose LifeScience” or “Rose”), Leli Holland B. V. (“Leli” or “Leli Holland”), and VF Clean Energy, Inc. (“VFCE”).
The Company’s vision is to be recognized as an international leader in consumer products developed from plants, whereby we produce and market value-added products that are consistently preferred by consumers. To do so, we leverage decades of cultivation expertise, investment, and experience in fresh produce into branded and wholesale cannabis products within markets with legally permissible opportunities.
In Canada, we converted two produce facilities to grow cannabis for the Canadian legal adult use (recreational) market. Our focus for our Canadian Cannabis segment is to produce high quality cannabis, leveraging our low-cost production to provide preferred products at an attractive price that address the preferred consumer segments in the market. This market positioning, combined with our cultivation expertise, has enabled us to evolve into the top-five best-selling producer nationally and one of the few Canadian licensed producers with consistently strong operating results.
Additionally, through organic growth, exports and/or acquisitions, we have a strategy to participate in other international markets where cannabis attains legal status. In September 2021, our Canadian Cannabis business began exporting cannabis products to Australia for that country’s medical market. In March 2022, our Canadian Cannabis business received European Union Good Manufacturing Practice (“EU GMP”) certification for Pure Sunfarms’ 1.1 million square foot Delta 3 cannabis facility located in Delta, British Columbia (“B.C.”) which permits Pure Sunfarms to export EU GMP-certified medical cannabis to importers and distributors in international markets that require EU GMP certification. In late 2022, Pure Sunfarms commenced exports to Israel, in 2023 Pure Sunfarms began exporting cannabis products to Germany and the United Kingdom for the medical markets in those countries, and in 2025 it began exporting cannabis products to New Zealand. As a result of the typically higher margins in international medical markets, we expect international expansion to enhance our profitability while expanding our brand and experience into emerging legal cannabis markets.
During September 2024, we completed our acquisition of the remaining 15% equity ownership interest in Leli Holland. Through our ownership of Leli Holland, we hold one of ten licenses to cultivate and distribute cannabis legally in the Netherlands under that country’s Controlled Cannabis Supply Chain Experiment, with sales beginning in the first quarter of 2025.
In the U.S., Balanced Health is our industry-leading cannabinoid business, extending our portfolio into cannabidiol (“CBD”) and hemp-derived consumer products.
We also cultivate tomatoes and market them through Village Farm Fresh (a Vanguard Holdings Company) under the Village Farms Fresh (“VF Fresh”) brand which sells to food distribution companies and mass retail stores.
Our intention is to use our assets, expertise and experience (across cannabis, hemp, CBD and produce ecosystems) to participate in the global cannabis market subject to compliance with all applicable national laws and applicable stock exchange rules.
Our Operating Segments
Canadian Cannabis Segment
Our Canadian Cannabis segment includes wholly owned Pure Sunfarms and an 80% ownership interest in Rose LifeScience.
Pure Sunfarms is one of the single largest cannabis growing operations in the world, one of the lowest-cost greenhouse producers and one of the leading flower brands in Canada. Pure Sunfarms leverages our 30 years of experience as a vertically integrated greenhouse grower for cannabis growth opportunities in Canada with commercial distribution in all Canadian provinces and territories. Our long-term objective for Pure Sunfarms is to be the leading low-cost, high-quality cannabis producer in Canada.
Rose is one of the top-selling licensed producers of cannabis in the Province of Quebec, as well as a prominent cannabis products commercialization expert in Quebec, acting as the exclusive, direct-to-retail sales, marketing and distribution entity for some of the best-known brands in Canada, as well as Quebec-based micro and craft growers.
Our long-term objective for our Canadian Cannabis segment is to garner and sustain a leading retail market share in Canada, as well as a leading exporter of medicinal cannabis, stemming from our position as a leading low-cost, high-quality cannabis producer in Canada and expand our Canadian success into growing international cannabis markets across the globe by becoming a leading exporter of medicinal cannabis.
Netherlands Cannabis Segment (Leli Holland)
Our Netherlands Cannabis operating segment is comprised of wholly owned subsidiary, Leli Holland. Through Leli, we hold one of ten licenses to cultivate and distribute recreational cannabis legally in the Netherlands under that country’s Closed Supply Chain Experiment program, with sales commencing in February 2025.
U.S. Cannabis Segment
Our U.S. Cannabis segment includes wholly owned subsidiary, Balanced Health.
Balanced Health is one of the leading cannabinoid brands and e-commerce platforms in the United States. Balanced Health develops and sells high-quality CBD and hemp-based health and wellness products, distributing its diverse portfolio of consumer products through its top-ranked e-commerce platform, CBDistillery™.
Produce Segment
Our Produce segment currently consists of VFCLP after the sales transfer with Vanguard Holdings in May 2025.
Through our produce segment, we grow premium-quality, greenhouse-grown produce in Canada. These premium products are grown in sophisticated, highly intensive agricultural greenhouse facilities located in British Columbia.
On May 30, 2025 the Company closed on the transformative transaction to privatize certain assets and operations of its Produce segment,, including its Marfa II and Fort Davis greenhouses, and all of its produce distribution centers, through a series of asset and lease transfers. The Company determined that the assets that had been disposed of met the criteria for discontinued operations presentation. For all periods presented, the operating results associated with the assets disposed of have been reclassified into net income (loss) from discontinued operations, net of income taxes, in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The associated assets and liabilities have been reflected as current and long-term assets and liabilities of discontinued operations in the Condensed Consolidated Statements of Financial Position, and the cash flows from the Company’s discontinued operations are presented in the Condensed Consolidated Statements of Cash Flows for all periods presented. For further information on the Transaction please refer to our Form 8-K filed with the SEC on June 5, 2025. The information contained within such Form 8-K is incorporated by reference herein.
Clean Energy Segment
Our Clean Energy segment is comprised of wholly owned subsidiary, VF Clean Energy Inc.
VFCE, which has partnered with Terreva Renewables (formerly Mas Energy) for the Delta RNG Project based on VFCE’s 20-year contract (including a five-year option to extend) with the City of Vancouver to capture landfill gas at the Delta, B.C. landfill site (the "Delta RNG Project"). The Delta RNG Project, which commenced operations in 2024, converts VFCE’s landfill gas into high-demand renewable natural gas ("RNG") through a state-of-the-art facility. Terreva Renewables sells the renewable natural gas and VFCE receives a portion of the revenue in the form of a royalty.
Recent Developments and Updates
Canadian Cannabis
22
1. Based on estimated retail sales from HiFyre, other third parties and provincial boards.
International Medical Cannabis (Reported Within Canadian Cannabis)
1. Based on German government data and Company estimates
2. Based on Company estimates and rankings compiled by German outlet Flowzz
Netherlands Cannabis (Leli Holland)
23
Presentation of Financial Results
Our consolidated results of operations for the three and six months ended June 30, 2025 and 2024 presented below reflect the operations of our consolidated wholly-owned subsidiaries, our 70% ownership interest in Rose LifeScience through March 31, 2024, our 80% ownership interest in Rose LifeScience beginning on April 1, 2024, our 85% ownership interest in Leli through September 22, 2024, and our 100% ownership interest in Leli beginning on September 23, 2024.
Foreign currency exchange rates
All currency amounts in this Quarterly Report are stated in U.S. dollars, which is our reporting currency, unless otherwise noted. All references to “dollars” or “$” are to U.S. dollars. The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of June 30, 2025, June 30, 2024, and December 31, 2024. Transactions affecting the shareholders’ equity (deficit) are translated at historical foreign exchange rates. The condensed consolidated statements of operations and comprehensive income (loss) and condensed consolidated statements of cash flows of our foreign operations are translated into dollars by applying the average foreign exchange rate in effect for the reporting period.
The exchange rates used to translate from Canadian dollars to U.S. dollars is shown below:
24
RESULTS OF OPERATIONS
Consolidated Financial Performance
(In thousands of U.S. dollars, except per share amounts, and unless otherwise noted)
Adjusted EBITDA from continuing operations
17,111
2,914
20,560
3,830
Adjustments attributable to discontinued operations
(3,851
(6,473
(7,219
(3,798
Adjusted EBITDA (1)
13,260
(3,559
13,341
32
We caution that our results of operations for the three and six months ended June 30, 2025 and 2024 may not be indicative of our future performance.
Discussion of Financial Results
A discussion of our consolidated results for the three and six months ended June 30, 2025 and 2024 is included below. The consolidated results include all five of our operating segments: Canadian Cannabis, U. S. Cannabis, Cannabis Netherlands, Produce,
25
and Clean Energy, along with public company expenses. For a discussion of our segmented results, please see “Segmented Results of Operations” below.
CONSOLIDATED RESULTS
Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024
Sales for the three months ended June 30, 2025 were $59,899 compared with $53,597 for the three months ended June 30, 2024. The increase of $6,302, or 12%, was primarily due to an increase in Canadian Cannabis sales of $3,773, first year sales from Leli of $2,483, and an increase in Produce sales of $140, partially offset by a decrease in U.S. Cannabis sales of $456. For additional information, refer to “Segmented Results of Operations” below.
Cost of Sales
Cost of sales for the three months ended June 30, 2025 were $37,557 compared with $39,960 for the three months ended June 30, 2024. The decrease of $2,403, or 6%, was primarily due to a decrease in Canadian Cannabis cost of sales of $2,990, a decrease in U.S. Cannabis cost of sales of $263 and a decrease in Produce cost of sales of $234 partially offset by the cost of first year sales of Leli of $1,047. For additional information, refer to “Segmented Results of Operations” below.
Gross Profit
Gross profit for the three months ended June 30, 2025 was $22,342 compared with $13,637 for the three months ended June 30, 2024. The increase of $8,705, or 64%, was primarily due to an increase in gross profit at Canadian Cannabis of $6,763, the gross profit on first year sales of Leli of $1,436, and an increase in gross profit at Produce of $374. For additional information, refer to “Segmented Results of Operations” below.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended June 30, 2025 were $15,411 (26% of sales) compared with $17,056 (32% of sales) for the three months ended June 30, 2024. The decrease of $1,645, or 10%, was primarily due a decrease in share based compensation of $2,073. For additional information, refer to “Segmented Results of Operations” below.
15,288
14,860
Total selling, general and administrative expenses
15,411
17,056
Interest Expense
Interest expense for the three months ended June 30, 2025 was $814 compared with $901 for the three months ended June 30, 2024.
Interest Income
Interest income for the three months ended June 30, 2025 and was $109 compared with $322 for the three months ended June 30, 2024.
Other Income
Other income for the three months ended June 30, 2025 was $4,430 compared with $45 for the three months ended June 30, 2024. Other income is primarily attributable to favorable vendor settlements relating to the partial recovery of operational losses from the Tomato Brown Rugose Fruit Virus (“ToBRFV”) infestation.
Goodwill and Intangible Asset Impairments
Goodwill and Intangible Assets Impairments for the three months ended June 30, 2025 was $0 compared to $11,939 for the three months ended June 30, 2024. The impairment was primarily related to the U.S. Cannabis reporting unit as a result of recent historical performance during the quarter which underperformed relative to budget, a revised June 30, 2024 forecast which resulted in a shortfall compared to the March 31, 2024 forecast, the new restrictions on CBD sales in an additional eight states at July 1, 2024,and the proliferation of unregulated hemp-derived products on the market which continues to challenge market share for the CBD industry.
Income (Loss) Before Taxes and Equity Method Investment Income
Income before taxes for the three months ended June 30, 2025 was $12,448 compared with a loss before taxes of $16,295 for the three months ended June 30, 2024. The change of $28,743 was primarily due to the improved gross margins and a favorable
vendor settlement during the three months ended June 30, 2025 and an impairment charge of $11,939 during the three months ended June 30, 2024.
Income (loss) from discontinued operations, net consists of the following:
Loss from discontinued operations, net of tax
(2,826
Gain on sale of assets, net of tax
19,120
Net Income (Loss) Attributable to Village Farms International, Inc. Shareholders
Net income attributable to Village Farms International, Inc. shareholders for the three months ended June 30, 2025 was $26,497 compared with a net loss of $23,549 for the three months ended June 30, 2024. The increase of $50,046 was primarily due to the improved gross margins, a favorable vendor settlement during the three months ended June 30, 2025, an improvement on income (loss) from discontinued operations, net of tax of $23,297, and an impairment charge of $11,939 during the three months ended June 30, 2024.
Adjusted EBITDA
Adjusted EBITDA for the three months ended June 30, 2025 was $13,260 compared with ($3,559) for the three months ended June 30, 2024. The change was mainly driven by improved margins on Canadian Cannabis and the favorable vendor settlement in Produce. For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Sales for the six months ended June 30, 2025 were $99,579 compared with $95,584 for the six months ended June 30, 2024. The increase of $3,995, or 4%, was primarily due to an increase in Canadian Cannabis sales of $1,164, first year sales from Leli of $2,969, and Produce sales of $163, partially offset by a decrease in U.S. Cannabis sales of $1,089, For additional information, refer to “Segmented Results of Operations” below.
Cost of sales for the six months ended June 30, 2025 were $63,057 compared with $70,730 for the six months ended June 30, 2024. The decrease of $7,673, or 11%, was primarily due to a decrease in both Canadian Cannabis cost of sales of $8,566 and U.S. Cannabis cost of sales of $794, partially offset by the cost of first year sales on Leli of $1,332 and an increase in Produce cost of sales of $245. For additional information, refer to “Segmented Results of Operations” below.
Gross profit for the six months ended June 30, 2025 was $36,522 compared with $24,854 for the six months ended June 30, 2024. The increase of $11,668, or 47%, was primarily due to an increase in gross profit at Canadian Cannabis of $9,730, and gross margin on first year sales of Leli of $1,637, partially offset by a decrease in gross profit at US Cannabis of $295. For additional information, refer to “Segmented Results of Operations” below.
Selling, general and administrative expenses for the six months ended June 30, 2025 were $30,030 (30% of sales) compared with $31,306 (33% of sales) for the six months ended June 30, 2024. The decrease of $1,276, or 4% was primarily due a decrease in share based compensation of $2,333. For additional information, refer to “Segmented Results of Operations” below.
29,762
28,705
30,030
31,306
Interest expense for the six months ended June 30, 2025 was $1,516 compared with $1,815 for the six months ended June 30, 2024. The decrease of $299, or 16%, was due to a decrease in the overall borrowing base and a decrease in the Company's interest rates on its various debt instruments.
Interest income for the six months ended June 30, 2025 and was $184 compared with $528 for the six months ended June 30, 2024.
Other income for the six months ended June 30, 2025 was $4,451 compared with $149 for the six months ended June 30, 2024. Other income is primarily attributable to favorable vendor settlements relating to the partial recovery of operational losses from the ToBRFV infestation.
Goodwill and Intangible Assets Impairments for the six months ended June 30, 2025 was $0 compared to $11,939 for the six months ended June 30, 2024. The impairment was primarily related to the U.S. Cannabis reporting unit as a result of recent historical performance during the quarter which underperformed relative to budget, a revised June 30, 2024 forecast which resulted in a shortfall compared to the March 31, 2024 forecast, the new restrictions on CBD sales in an additional eight states at July 1, 2024,and the proliferation of unregulated hemp-derived products on the market which continues to challenge market share for the CBD industry.
Income before taxes for the six months ended June 30, 2025 was $11,319 compared with a loss before taxes of $20,810 for the six months ended June 30, 2024. The change of $32,129 was primarily due to the improved gross margins and a favorable vendor settlement during the six months ended June 30, 2025 and an impairment charge of $11,939 during the six months ended June 30, 2024.
(7,829
Net income attributable to Village Farms International, Inc. shareholders for six months ended June 30, 2025 was $19,794 compared with a net loss of $26,401 for the six months ended June 30, 2024. The change of $46,195 was primarily due to the improved gross margins and a favorable vendor settlement during the six months ended June 30, 2025, an improvement on income (loss) from discontinued operations, net of tax of $16,138, and an impairment charge of $11,939 during the six months ended June 30, 2024.
Adjusted EBITDA for the six months ended June 30, 2025 was $13,341 compared with $32 for the six months ended June 30, 2024. The change was mainly driven by improved margins on Canadian Cannabis and the favorable vendor settlement in Produce. For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.
28
SEGMENTED RESULTS OF OPERATIONS
For The Three Months Ended June 30, 2025
Other income (expense), net
4,471
(290
(217
1,553
4,200
(226
(1,409
(Recovery of) provision for income taxes
69
(2,343
(204
(44
4,269
6,231
226
835
(1,390
Income from discontinued operations net of tax
20,563
Less: net loss attributable to non-controlling interests, net of tax
6,489
6,403
11,860
1,218
(2,845
2,552
Basic income (loss) per share from continuing operations
0.03
0.06
0.01
(0.01
Basic income per share from discontinued operations
Basic income (loss) per share
Diluted income (loss) per share from continuing operations
0.04
Diluted income per share from discontinued operations
Diluted income (loss) per share
29
For The Three Months Ended June 30, 2024
Other expense, net
(523
(270
(144
(1,301
1,686
(12,270
(4,130
Recovery of (provision for) income taxes
(259
(5
(Loss) income from continuing operations
(1,297
1,427
(4,135
Loss from discontinued operations net of tax
(Loss) income including non-controlling interests
(8,300
Less: net (income) loss attributable to non-controlling interests, net of tax
52
1,384
(289
4,818
(240
(23
(1,825
(6,350
Basic (loss) income per share from continuing operations
(0.11
Basic loss per share from discontinued operations
Basic (loss) income per share
(0.07
Diluted (loss) income per share from continuing operations
Diluted loss per share from discontinued operations
Diluted (loss) income per share
30
For The Six Months Ended June 30, 2025
Leli
3,943
(492
1,593
1,515
12,085
(168
(3,509
(3,234
(48
8,851
551
593
12,806
9,521
4,649
18,558
159
1,295
(4,856
(2,570
(0.03
Basic (loss) income per share from discontinued operations
0.11
Diluted (loss) income per share from discontinued operations
31
For The Six Months Ended June 30, 2024
(1,023
(671
(725
(3,343
3,089
(12,981
(6,912
(588
(3,339
2,501
(6,908
(8,186
2,231
(598
(524
8,891
(855
(65
(3,658
(4,322
0.02
(0.12
CANADIAN CANNABIS SEGMENT RESULTS
The Canadian Cannabis segment consists of Pure Sunfarms and Rose LifeScience. The comparative analysis for Canadian Cannabis is based on the consolidated results of Pure Sunfarms and our interest in Rose LifeScience for the three and six months ended June 30, 2025 and 2024. Beginning on April 1, 2024, our interest in Rose LifeScience increased from 70% to 80%, which is reflected in the results presented below.
Canadian Cannabis net sales for the three months ended June 30, 2025 were $44,518 compared with $40,745 for the three months ended June 30, 2024. The increase of $3,773, or 9%, was primarily driven by an increase in international sales of $10,475, primarily driven by continued strength in export volumes to Germany, partially offset by a decrease in net branded sales of $5,573, reflecting a planned shift away from value-based product offerings, and a decrease in non-branded sales of $1,189.
Canadian Cannabis continues to pay a burdensome excise tax on its branded sales (sales to provincial distributors). For the three months ended June 30, 2025, the Company incurred excise duties of $14,812 (C$20,504), or 37% of gross branded sales, compared with $19,815 (C$27,114), or 39% of gross branded sales, for the three months ended June 30, 2024. The decrease of $5,003 (C$6,610), or 25%, was due to a decrease in kilograms sold in the branded channel. The Canadian excise duty is our single largest cost of participating in the branded adult-use market in Canada.
For the three months ended June 30, 2025, 57% of net sales were generated from branded flower, pre-rolls and cannabis derivative products compared with 75% for the three months ended June 30, 2024. Non-branded, international, and other sales accounted for 43% of Canadian Cannabis net sales for the three months ended June 30, 2025, as compared with 25% for the three months ended June 30, 2024.
The net average selling price of branded flower and pre-roll formats increased in 2025 compared to 2024. Excluding pre-roll formats, the average net selling price of branded flower increased by 11% in 2025 due to a lower ratio of sales for our value brand Fraser Valley Weed Co. The net average selling price of bulk non-branded flower increased by 38%, due to a reduced need to move aged flower inventory compared to 2024. Bulk trim decreased by 16% in 2025, due to a large sales at above average price in Q2 2024, offset by higher potencies driving slightly higher average prices during 2025. The net average selling price of International sales decreased by 8% due to a shift in product mix favoring bulk flower over packaged flower.
The following table presents sales by Canadian Cannabis revenue stream, together with the impact of the excise tax, in U.S. dollars and Canadian dollars, for the three months ended June 30, 2025 and 2024:
(in thousands of U.S. dollars)
Branded sales
39,774
50,350
Non-branded sales
International sales
Less: excise taxes
(14,812
(19,815
Net Sales
(in thousands of Canadian dollars)
55,041
68,896
9,613
11,314
16,579
2,059
690
601
(20,504
(27,114
61,419
55,756
Canadian Cannabis cost of sales for the three months ended June 30, 2025 was $27,050 compared with $30,040 for the three months ended June 30, 2024. The decrease of $2,990, or 10%, was primarily due to a decrease in volume (kilograms) packaged and sold of our branded and non-branded products and a shift in International sales mix favoring bulk flower which has a lower average cost per gram over packaged flower.
Canadian Cannabis gross profit for the three months ended June 30, 2025 was $17,468, a 63% increase compared to $10,705 for the three months ended June 30, 2024. Canadian Cannabis gross margin for the three months ended June 30, 2025 was 39% compared with 26% for the three months ended June 30, 2024. The increase in gross margin was due to higher sales volume of bulk flower in International sales, as well as lower sales of value brands within the branded sales category.
Canadian Cannabis selling, general and administrative expenses for the three months ended June 30, 2025 were $8,604, or 19%, of sales compared with $8,749, or 21%, of sales for the three months ended June 30, 2024.
Net Income
Canadian Cannabis net income for the three months ended June 30, 2025 was $6,489 compared with net income of $1,384 for the three months ended June 30, 2024. The increase in net income was primarily due to the improved margins, partially offset by an increase in the tax provision expense of $2,084.
Adjusted EBITDA for Canadian Cannabis for the three months ended June 30, 2025 was $11,860 compared with $4,818 for the three months ended June 30, 2024. The increase of $7,042, or 146%, between periods was primarily due to higher sales at improved margins in the Canadian Cannabis segment. For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.
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Canadian Cannabis net sales for the six months ended June 30, 2025 were $79,355 compared with $78,191 for the six months ended June 30, 2024. The increase of $1,164, or 1%, was primarily driven by an increase in international sales of $14,365, primarily driven by continued strength in export volumes to Germany, partially offset by a decrease in net branded sales, reflecting a planned shift away from value-based product offerings.
Canadian Cannabis continues to pay a burdensome excise tax on its branded sales (sales to provincial distributors). For the six months ended June 30, 2025, the Company incurred excise duties of $28,759 (C$40,520), or 38% of gross branded sales, compared with $39,518 (C$53,679), or 40% of gross branded sales, for the six months ended June 30, 2024. The decrease of $10,759 (C$13,159), or 27%, was due to a decrease in kilograms sold in the branded channel and the impact of exchange rate fluctuations. The Canadian excise duty is our single largest cost of participating in the branded adult-use market in Canada.
For the six months ended June 30, 2025, 60% of net sales were generated from branded flower, pre-rolls and cannabis derivative products compared with 76% for the six months ended June 30, 2024. Non-branded, international, and other sales accounted for 40% of Canadian Cannabis net sales for the six months ended June 30, 2025, as compared with 24% for the six months ended June 30, 2024.
The net average selling price of branded flower and pre-roll formats increased in 2025 compared to 2024. Excluding pre-roll formats, the average net selling price of branded flower increased by 11% in 2025 due to a lower ratio of sales for our value brand Fraser Valley Weed Co. The net average selling price of bulk non-branded flower increased by 45%, due primarily to a reduced need to move aged flower inventory compared to 2024. Bulk trim pricing increased by 12% in 2025, largely due to an increase in the market price and higher potencies leading to higher average prices offset by large sales at above average price in Q2 2024. The net average selling price of International sales decreased by 11% due to a shift in product mix favoring bulk flower over packaged flower.
The following table presents sales by Canadian Cannabis revenue stream, together with the impact of the excise tax, in U.S. dollars and Canadian dollars, for the six months ended June 30, 2025 and 2024:
76,472
99,073
(28,759
(39,518
107,726
134,589
18,622
20,046
24,314
4,080
1,277
(40,520
(53,679
111,419
106,254
Canadian Cannabis cost of sales for the six months ended June 30, 2025 was $49,412 compared with $57,978 for the six months ended June 30, 2024. The decrease of $8,566, or 15%, was primarily due to a decrease in volume (kilograms) packaged and sold of our branded and non-branded products and a shift in International sales mix favoring bulk flower which has a lower average cost per gram over packaged flower.
Canadian Cannabis gross profit for the six months ended June 30, 2025 was $29,943, a 48% increase compared to $20,213 for the six months ended June 30, 2024. Canadian Cannabis gross margin for the six months ended June 30, 2025 was 38% compared with 26% for the six months ended June 30, 2024. The increase in gross margin was due to higher sales volume of bulk flower in International sales, as well as lower sales of value brands within the branded sales category.
34
Canadian Cannabis selling, general and administrative expenses for the six months ended June 30, 2025 were $17,366, or 22%, of sales compared with $16,453, or 21%, of sales for the six months ended June 30, 2024. The increase of $913 was primarily due to higher commercial and marketing expenses and incremental integration costs.
Canadian Cannabis net income for the six months ended June 30, 2025 was $9,521 compared with net income of $2,231 for the six months ended June 30, 2024. The increase in net income was primarily due to the improved margins, partially offset by an increase in the tax provision expense of $2,646 and an increase in selling, general and administrative expenses.
Adjusted EBITDA for Canadian Cannabis for the six months ended June 30, 2025 was $18,558 compared with $8,891 for the six months ended June 30, 2024. The increase of $9,667, or 109%, between periods was primarily due to improved margins in the Canadian Cannabis segment. For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.
U.S. CANNABIS SEGMENT RESULTS
The U.S. Cannabis segment consists of Balanced Health. For the three and six months ended June 30, 2025 and 2024, U.S. Cannabis financial results are based on the results of Balanced Health.
U.S. Cannabis net sales for the three months ended June 30, 2025 was $3,841 compared with $4,297 for the three months ended June 30, 2024. The decrease of $456, or 11%, was primarily due to new restrictions on CBD sales in an additional eight states commencing July 1, 2024 and lower direct-to-consumer sales resulting from the proliferation of unregulated hemp-derived products on the market. All U.S. Cannabis sales were generated in the United States, with gross sales composed of 94% e-commerce sales and 6% retail sales.
U.S. Cannabis cost of sales for the three months ended June 30, 2025 was $1,405 compared with $1,668 for the three months ended June 30, 2024. The decrease of $263, or 16%, was primarily due to lower sales and cost efficiencies from the internalization of our gummy manufacturing.
U.S Cannabis gross profit for the three months ended June 30, 2025 decreased $193, or 7%, to $2,436, or a 63% gross margin, compared with $2,629, or a 61% gross margin, for the three months ended June 30, 2024.
U.S. Cannabis selling general and administrative expenses for the three months ended June 30, 2025 were $2,445 compared with $2,960 for the three months ended June 30, 2024. The decrease of $515, or 17%, was due to more efficient marketing and brand spending and contract renegotiation.
Net Loss
U.S. Cannabis net loss for the three months ended June 30, 2025 was $226 compared with net loss of $12,270 for the three months ended June 30, 2024. The increase of $12,044 was primarily due to an impairment charge on goodwill and intangible assets taken in the three months ended June 30, 2024 of ($11,939) that did not recur in 2025.
U.S. Cannabis adjusted EBITDA for the three months ended June 30, 2025 was $45 compared with ($240) for the three months ended June 30, 2024. The improvement of $285 was primarily due to the lower selling, general, and administrative expenses. For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.
U.S. Cannabis net sales for the six months ended June 30, 2025 was $7,745 compared with $8,834 for the six months ended June 30, 2024. The decrease of $1,089, or 12%, was primarily due to new restrictions on CBD sales in an additional eight states
35
beginning July 1, 2024 and lower direct-to-consumer sales resulting from the proliferation of unregulated hemp-derived products on the market. All U.S. Cannabis sales were generated in the United States, with gross sales composed of 94% e-commerce sales and 6% retail sales.
U.S. Cannabis cost of sales for the six months ended June 30, 2025 was $2,716 compared with $3,510 for the six months ended June 30, 2024. The decrease of $794, or 23%, was primarily due to lower sales and cost efficiencies from the internalization of our gummy manufacturing.
U.S Cannabis gross profit for the six months ended June 30, 2025 decreased $295, or 6%, to $5,029, or a 65% gross margin, compared with $5,324, or a 60% gross margin, for the six months ended June 30, 2024.
U.S. Cannabis selling general and administrative expenses for the six months ended June 30, 2025 were $4,980 compared with $6,366 for the six months ended June 30, 2024. The decrease of $1,386, or 22%, is due to more efficient marketing and brand spending and contract renegotiation.
U.S. Cannabis net loss for the six months ended June 30, 2025 was $168 compared with net loss of $12,981 for the six months ended June 30, 2024. The increase of $12,813 was primarily due to an impairment charge on goodwill and intangible assets taken in the six months ended June 30, 2024 of ($11,939) that did not recur in 2025.
U.S. Cannabis adjusted EBITDA for the six months ended June 30, 2025 was $159 compared with ($855) for the six months ended June 30, 2024. The improvement of $1,014 was primarily due to the lower selling, general, and administrative expenses. For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.
NETHERLANDS CANNABIS SEGMENT RESULTS
The Netherlands Cannabis segment consists of Leli Holland. Leli Holland commenced sales during the first quarter of 2025. Leli Holland was not operational during the comparable quarter of 2024 and, as a result, comparative financial performance to the prior-year quarter is not meaningful.
Net sales for the three months ended June 30, 2025 was $2,483.
Cost of sales for the three months ended June 30, 2025 was $1,047.
Gross profit for the three months ended June 30, 2025 was $1,436, or a 58% gross margin.
Selling, general and administrative expenses for the three months ended June 30, 2025 was $557.
Net income for the three months ended June 30, 2025 was $835.
Adjusted EBITDA for the three months ended June 30, 2025 was $1,218.
Net sales for the six months ended June 30, 2025 was $2,969.
36
Cost of sales for the six months ended June 30, 2025 was $1,332.
Gross profit for the six months ended June 30, 2025 was $1,637, or a 55% gross margin.
Selling, general and administrative expenses for the six months ended June 30, 2025 was $996.
Net income for the six months ended June 30, 2025 was $593.
Adjusted EBITDA for the six months ended June 30, 2025 was $1,295.
PRODUCE SEGMENT RESULTS
The produce segment consists of VFCLP. Produce’s comparative analysis are based on the consolidated results from continuing operations of VFLP and VFCLP for the three and six months ended June 30, 2025 and 2024.
Produce sales for the three months ended June 30, 2025 were $8,574 compared with $8,434 for the three months ended June 30, 2024, an increase of $140, or 2%.
Produce cost of sales for the three months ended June 30, 2025 decreased by $234, or 3%, to $7,975 compared with $8,209 for the three months ended June 30, 2024.
Produce gross profit for the three months ended June 30, 2025 was $599 compared with a gross profit of $225 for the three months ended June 30, 2024. Gross margin for the three months ended June 30, 2025 was 7% compared with 3% for the three months ended June 30, 2024.
Produce selling, general and administrative expenses for the three months ended June 30, 2025 decreased by $133, or 13%, to $870 (10% of sales) compared with $1,003 (12% of sales) for the three months ended June 30, 2024.
Net Income (Loss) From Continuing Operations
Produce Income from continuing operations for the three months ended June 30, 2025 was $4,269 compared with a loss from continuing operations of $1,297 for the three months ended June 30, 2024. The change of $5,566 was primarily attributable to a favorable vendor settlements relating to the partial recovery of prior period operational losses from the ToBRFV infestation.
Net Income (Loss)
Produce net income for the three months ended June 30, 2025 was $20,563 compared with a net loss of $8,300 for the three months ended June 30, 2024. The increase of $28,863 was primarily attributable to an improvement on income (loss) from discontinued operations, net of tax of $23,297 and a favorable vendor settlement relating to the partial recovery of operational losses from the ToBRFV infestation.
Produce Adjusted EBITDA for the three months ended June 30, 2025 was $2,552 compared with ($6,350) for the three months ended June 30, 2024. The increase of $8,902 in Adjusted EBITDA was primarily attributable to a favorable vendor settlement relating to the partial recovery of operational losses from the ToBRFV infestation. For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.
37
Produce sales for the six months ended June 30, 2025 were $8,601 compared with $8,438 for the six months ended June 30, 2024, an increase of $163, or 2%.
Produce cost of sales for the six months ended June 30, 2025 increased by $245, or 3%, to $9,444 compared with $9,199 for the six months ended June 30, 2024.
Gross (Loss) Profit
Produce gross loss for the six months ended June 30, 2025 was $843 compared with $761 for the six months ended June 30, 2024. Gross margin for the six months ended June 30, 2025 was (10%) compared with (9%) for the six months ended June 30, 2024.
Produce selling, general and administrative expenses for the six months ended June 30, 2025 increased by $26, or 2%, to $1,585 (18% of sales) compared with $1,559 (18% of sales) for the six months ended June 30, 2024.
Produce income from continuing operations for the six months ended June 30, 2025 was $1,515 compared with a loss from continuing operations of $3,339 for the six months ended June 30, 2024. The change of $4,854 was primarily attributable to a favorable vendor settlements relating to the partial recovery of prior period operational losses from the ToBRFV infestation.
Produce net income for the six months ended June 30, 2025 was $12,806 compared with a net loss of $8,186 for the six months ended June 30, 2024. The change of $20,992 was primarily attributable to an improvement on income (loss) from discontinued operations, net of tax of $16,138 and a favorable vendor settlement relating to the partial recovery of operational losses from the ToBRFV infestation.
Produce Adjusted EBITDA for the six months ended June 30, 2025 was ($2,570) compared with ($4,322) for the six months ended June 30, 2024. The change of $1,752 in Adjusted EBITDA was primarily due to the favorable legal settlement. For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.
Liquidity and Capital Resources
Capital Resources
At June 30, 2025, cash, cash equivalents, and restricted cash were $64,988 and working capital was $85,753, compared with cash and cash equivalents of $24,631 and working capital of $53,800 at December 31, 2024. We believe that our existing cash, cash generated from our operating activities and the availability under our Pure Sunfarms Revolving Credit Facility, will provide us with sufficient liquidity to meet our working capital needs, repayments of our long-term debt and future contractual obligations and fund our planned capital expenditures for the next 12 months. An additional potential source of liquidity is access to capital markets for additional equity or debt financing. We intend to use our cash on hand for daily operational funding requirements.
(in thousands of U.S. dollars unless otherwise noted)
Maximum Availability
Outstanding as of June 30, 2025
FCC Term Loan
Pure Sunfarms Term Loan Facility
Pure Sunfarm Revolving Credit Facility
C$
10,000
The Company is required to comply with financial covenants. At December 31, 2024, the Company was not in compliance with financial covenants related to the fixed charge coverage ratio under the FCC Term Loan (as defined below) and the PSF Term Loan (as defined below), for which the Company received waivers. The covenants were reinstated at the end of the first quarter for the PSF Term Loan and at the end of the fiscal year for the FCC Term Loan. On April 10, 2025, the Company entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) with FCC as the lender, which amended and restated the FCC Term Loan. Among other things, the A&R Credit Agreement replaced the current financial covenants with more favorable financial covenants . Under the Pure Sunfarms Secured Credit Facilities entered into on April 17, 2025, the Company is also required to maintain certain financial covenants. We can provide no assurance that we will be in compliance, or receive a waiver, for any
38
non-compliance of the financial covenants. See “Risk Factors—Business and Operational Risk Factors—We are subject to restrictive covenants under our Credit Facilities” in our most recently filed Annual Report on Form 10-K.
Accrued interest payable on the Credit Facilities and Pure Sunfarms Loans as of June 30, 2025 and December 31, 2024 was $209 and $271, respectively. These amounts are included in accrued liabilities in the accompanying Condensed Consolidated Statements of Financial Position.
The Company has a term loan financing agreement with Farm Credit Canada ("FCC"), a Canadian creditor (the “FCC Term Loan”). The non-revolving variable rate term loan has a maturity date of May 3, 2027 and a balance of $19,837 on June 30, 2025 and $20,821 on December 31, 2024. The outstanding balance is repayable by way of monthly installments of principal and interest, with the balance and any accrued interest to be paid in full on May 3, 2027. As of June 30, 2025 and December 31, 2024, borrowings under the FCC Term Loan agreement were subject to an interest rate of 7.83% and 8.12% per annum, respectively.
As collateral for the FCC Term Loan, the Company has provided promissory notes, a first mortgage on the VFF-owned Delta 1 and Monahans greenhouses, and general security agreements over its assets. In addition, the Company has provided full recourse guarantees and has granted security interests in respect of the FCC Term Loan. The carrying value of the assets and securities pledged as collateral as of June 30, 2025 and December 31, 2024 was $90,997 and $101,068, respectively.
On April 10, 2025, the Company entered into the A&R Credit Agreement with respect to the FCC Term Loan. Among other things, the A&R Credit Agreement (i) adds the Company as a new borrower, (ii) adds VF Clean Energy, Inc. as a new guarantor, and (iii) replaces the fixed charged ratio covenant with a more favorable liquidity ratio covenant.
Pure Sunfarms Loans
On April 17, 2025, the Company entered into a secured credit facility with a Canadian chartered bank as administrative agent with an aggregate borrowing capacity of C$37.4 million, consisting of a maximum C$10.0 million revolving credit facility (the “Pure Sunfarms Revolving Credit Facility”), and a C$27.4 million term loan facility (the “Pure Sunfarms Term Loan Facility”, and collectively with the Pure Sunfarms Revolving Credit Facility, the “Pure Sunfarms Secured Credit Facilities”). The Pure Sunfarms Secured Credit Facilities are secured by the Delta 2 and Delta 3 greenhouse facilities. The Pure Sunfarms Secured Credit Facilities will be used for working capital and other general corporate purposes, and was used to replace, and repay remaining outstanding balances on, the Company’s (i) Pure Sunfarms Loans and (ii) the PSF Revolving Line of Credit. The credit and guarantee agreements related to the Pure Sunfarms Loans and the PSF Revolving Line of Credit were likewise terminated.
The Pure Sunfarms Revolving Credit Facility can be drawn for advances of up to C$10.0 million. The outstanding amount of the Pure Sunfarms Term Loan Facility was $19,266 as of June 30, 2025 and is repayable, on a quarterly basis, in an amount equal to C$1.0 million. Any amount remaining unpaid will be due and payable in full on the maturity date, which is on February 7, 2028.
The loans under the Pure Sunfarms Secured Credit Facilities accrue interest at a rate equal to, at the Company’s option, (a) the Canadian Prime Rate plus the applicable margin, or (b) the Canadian Overnight Repo Rate Average plus the applicable margin. The applicable margin for the Pure Sunfarms Secured Credit Facility is determined based upon the leverage ratio.
Pure Sunfarms had a credit facility with the Business Development Bank of Canada (the "BDC Facility"), a non-revolving credit facility (the “PSF Non-Revolving Facility”) and a term loan (the “PSF Term Loan”) with two Canadian chartered banks (collectively, with the BDC Facility, the PSF Non-Revolving Facility, and the PSF Term Loan the “Pure Sunfarms Loans”). In addition, Pure Sunfarms has a revolving line of credit (the “PSF Revolving Line of Credit”) with a Canadian chartered bank. As described below, on April 17, 2025, Pure Sunfarms replaced the Pure Sunfarms Loans and the PSF Revolving Line of Credit with the Pure Sunfarms Secured Credit Facilities (as defined below).
The PSF Revolving Line of Credit could be drawn for advances of up to C$15,000 and had an outstanding balance of $0 as of December 31, 2024. Interest under the PSF Revolving Line of Credit was payable at the Canadian prime rate plus an applicable margin per annum, payable monthly.
The outstanding amount on the PSF Non-Revolving Facility was $6,262 on December 31, 2024. Interest under the PSF Non-Revolving Facility was payable at the Canadian prime rate plus an applicable margin per annum.
The outstanding amount on the PSF Term Loan was $10,436 on December 31, 2024. Interest under the PSF Term Loan was payable at the Canadian prime rate plus an applicable margin per annum.
The outstanding amount under the BDC Facility, a demand loan included in current liabilities was $3,043 on December 31, 2024. Interest under the BDC Facility was payable at an interest rate of 8.70%, payable monthly.
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Summary of Cash Flows
(in Thousands)
Cash, beginning of period
Net cash flow provided by (used in):
Operating activities
Investing activities
Financing activities
Net cash increase (decrease) for the period
39,882
(5,193
Effect of exchange rate changes on cash
Cash, end of the period
Operating Activities - Continuing Operations
For the six months ended June 30, 2025 and 2024, cash provided by (used in) operating activities were $22,265 and ($3,713), respectively. The operating activities for the six months ended June 30, 2025 consisted of $6,207 in changes in non-cash working capital items and $16,058 in changes before non-cash working capital items, while operating activities for the six months ended June 30, 2024 consisted of ($6,021) in changes in non-cash working capital items and $2,308 in changes before non-cash working capital items. The reduction when comparing the change in before non-cash working capital items for 2025 with 2024 was primarily due to a improvements in Canadian Cannabis gross margins in 2025 compared with 2024.
Investing Activities - Continuing Operations
For the six months ended June 30, 2025 and 2024, cash used in investing activities were ($5,289) and ($2,813), respectively. The increase in investing activities for the six months ended June 30, 2025 was primarily due to capital expenditures made for the Leli Phase II indoor cultivation facility in the town of Groningen.
Financing Activities - Continuing Operations
For the six months ended June 30, 2025 and 2024, cash used in financing activities were ($4,986) and ($5,886), respectively. For the six months ended June 30, 2025, cash used in financing activities consisted of debt repayments of ($4,554). For the six months ended June 30, 2024, cash flows used in financing activities consisted of debt repayments of ($2,870) and cash used for the acquisition of an additional 10% ownership of Rose LifeScience.
Contractual Obligations and Commitments
We expect to meet our contractual obligations and commitments using our working capital and our other resources described under “Capital Resources” above. Other than with respect to our long-term debt described above, we currently do not have any material cash requirements in the near future.
Non-GAAP Measures
References in this Management’s Discussion and Analysis to “Adjusted EBITDA” are to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as further adjusted to exclude foreign currency exchange gains and losses, share-based compensation, gains and losses on asset sales and the other adjustments set forth in the table below. In addition, we present below “Adjusted EBITDA – Constant Currency” which excludes the effect of foreign currency rate fluctuations. See “—Constant Currency” below. Adjusted EBITDA and Adjusted EBITDA - Constant Currency are measures of operating performance that are not recognized under GAAP and do not have a standardized meaning prescribed by GAAP. Therefore, these non-GAAP measures may not be comparable to similar measures presented by other issuers. Investors are cautioned that our non-GAAP measures should not be construed as an alternative to net income or loss determined in accordance with GAAP as an indicator of our performance. Our non-GAAP measures are used as additional measures to evaluate the operating and financial performance of our segments. Management believes that our non-GAAP measures are important measures in evaluating the historical performance of the Company because it excludes non-recurring and other items that do not reflect our business performance.
40
Reconciliation of Net Loss to Adjusted EBITDA
The following table reflects a reconciliation of net loss to Adjusted EBITDA, as presented by the Company:
Net income (loss) from continuing operations
Add:
Amortization and depreciation
5,068
4,314
Foreign currency exchange (gain) loss
(1,743
349
(1,761
1,124
Interest expense, net
705
579
1,332
1,287
2,503
260
3,486
580
Deferred financing fees
Goodwill and intangible impairments
Other impairments
217
Other expenses
Adjustments attributable to non-controlling interest
(12
(212
58
(513
Reconciliation of Segmented Net Loss to Adjusted EBITDA
The following table reflects a reconciliation of segmented net loss to Adjusted EBITDA, as presented by the Company:
1,913
2,729
339
Foreign currency exchange gain
(130
(84
(1,529
414
316
(25
Provision for (recovery of) income taxes
(69
2,343
204
44
(19
Adjusted EBITDA (2)
821
3,084
313
Foreign currency exchange loss (gain)
329
(183
259
2,113
Goodwill and intangible impairments (1)
(165
(47
(82
(135
(1,544
457
(49
3,234
Foreign currency exchange loss
1,064
1,142
482
(337
588
(419
(94
Adjusted EBITDA – Constant Currency
To supplement the consolidated financial statements presented in accordance with U.S. GAAP, we have presented constant currency adjusted financial measures for sales, cost of sales, selling, general and administrative, other income (expense), income (loss) from continuing operations, income (loss) from consolidated entities, net income (loss), and Adjusted EBITDA for the three and six months ended June 30, 2025, which are considered non-GAAP financial measures. We present constant currency information to provide a framework for assessing how our underlying operations performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period income statement results in currencies other than U.S. dollars are converted into U.S. dollars using the average exchange rates from the three month comparative period in 2024 rather than the actual average exchange rates in effect during the current period. All growth comparisons relate to the corresponding period in 2024. We have provided this non-GAAP financial information to aid investors in better understanding the performance of our segments without taking into account the effect of exchange rate fluctuations. The non-GAAP financial measures presented in this Quarterly Report should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP.
The tables below set forth certain measures of consolidated results from continuing operations on a constant currency basis for the three and six months ended June 30, 2025 compared with the three and six months ended June 30, 2024 on an as reported and constant currency basis (in thousands):
As Reported
As Adjusted for Constant Currency
As Reported Change
Constant Currency Change
%
6,302
60,403
6,806
2,403
(37,863
2,097
1,645
(15,508
1,548
Other (expense) income, net
6,454
689
5,514
6,451
688
Goodwill and intangible asset impairments (1)
28,743
176
12,545
28,840
177
26,500
160
10,015
26,570
23,297
333
49,797
211
26,309
49,867
212
50,046
213
50,119
Adjusted EBITDA - Constant Currency (2)
16,819
473
13,394
16,953
476
3,995
102,601
7,017
7,673
(64,923
5,807
1,276
(30,684
622
7,246
300
4,808
7,227
299
32,129
154
11,802
32,612
157
29,223
137
8,187
29,577
138
16,138
45,361
173
19,478
45,715
174
46,195
175
20,173
46,574
13,309
41591
14,068
14,036
43863
Recent Accounting Pronouncements Not Yet Adopted
No accounting pronouncements recently issued or newly effective have had, or are expected to have, a material impact on the Company’s condensed consolidated financial statements.
Critical Accounting Estimates and Judgments
Our discussion and analysis of our financial condition and results of operations are based upon our Unaudited Condensed Consolidated Interim Financial Statements, which have been prepared in accordance with U.S. GAAP and are included in Part I of this
Quarterly Report on Form 10-Q. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses and related disclosure of contingent assets and liabilities.
As described in Note 5, Goodwill and Intangible Assets, in our Unaudited Condensed Consolidated Interim Financial Statements included in Part 1 of this Quarterly Report on Form 10-Q, during the six months ended June 30, 2025 and 2024, the Company considered qualitative factors in assessing for impairment indicators for the Company’s U.S. and Canadian Cannabis segments. As part of this assessment, the Company considered both external and internal factors, including overall financial performance and outlook. At June 30, 2025, the Company concluded that no impairment indicators existed as no events or circumstances occurred that would, more likely than not, reduce the fair value of the goodwill and intangible assets for its reporting units to be below their carrying amounts. At June 30, 2025, the carrying value of goodwill associated with our Cannabis – Canada segment was $44.5 million and the carrying value of intangible assets associated with our Cannabis – Canada segment was $20.9 million.
We believe that the estimates, assumptions and judgments involved in the accounting policies described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Actual results could differ from the estimates we use in applying our critical accounting policies. We are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
As of June 30, 2025, our variable interest rate debt was primarily related to our Credit Facilities and Term Loans. Outstanding borrowings under our Credit Facility and Term Loans bear interest at either the (a) Secured Overnight Financing Rate (“SOFR”) or (b) Canadian Prime Rate, as defined in the agreement, plus an applicable margin. As of June 30, 2025, we had approximately $39,103 in aggregate principal amounts of our Term Loans with a weighted average interest rate of 6.9%. The current interest rates for outstanding revolving loans under our Credit Facility and Term Loans reflect basis point decreases of approximately 2.6% over the comparable period in 2024.
Our interest expense is affected by the overall interest rate environment. Our variable rate interest debt subjects us to risk from increases in prevailing interest rates. This risk increases in the current inflationary environment, in which the Federal Reserve has increased interest rates, resulting in an increase in our variable interest rates and related interest expense. An additional 50 basis point increase in the applicable interest rates under our Credit Facility and Term Loan would have increased our interest expense by approximately $50 and $100 for the three and six months ended June 30, 2025, respectively, and $58 and $116 for the three and six months ended June 30, 2024, respectively.
While we cannot predict our ability to refinance existing debt or the significance of the impact that interest rate movements will have on our existing debt, management evaluates our financial position on an ongoing basis.
Foreign Exchange Risk
As of June 30, 2025 and 2024, the Canadian/U.S. foreign exchange rate was C$1.00 = US$0.7324 and C$1.00 = US$0.7310, respectively. If all other variables remain constant, an increase of $0.10 in the Canadian dollar would have the following impact on the ending balances of certain statements of financial position items at June 30, 2025 and 2024 with the net foreign exchange gain or loss directly impacting net income (loss):
Financial assets
3,166
2,847
3,707
3,853
4,735
6,760
Prepaid and deposits
494
285
Financial liabilities
Trade payables and accrued liabilities
(4,591
(4,306
Loan payable
(2,665
(3,153
Net foreign exchange gain
4,846
6,286
Our exposure to foreign exchange risk and the impact of foreign exchange rates are monitored by the Company’s management but generally the Company tries to match its sales (trade receivables) and vendor payments (trade payables) such that the net impact is not material.
Other than the interest rate risk and foreign exchange risk discussed above, there have been no material changes to our market risks from those disclosed in Part II, Item 7A of our Annual Report on Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified by the U.S. Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(b) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2025, the Company maintained effective internal control over financial reporting.
Remediation of Previously Identified Material Weakness
As disclosed in Part II Item 9A Controls and Procedures in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, we identified material weaknesses in internal control over financial reporting as the Company (i) did not effectively design and implement internal controls related to our information technology general controls (“ITGCs”) in the areas of user access and program change-management over the information technology (“IT”) system that is utilized to support the Produce segment’s financial reporting processes. Specifically, under our existing ITGCs, we determined that there were insufficient controls to limit user access to this system and to enable oversight of changes being made to the financial inputs under this system; and (ii) did not effectively design and implement internal controls over the review, approval, and documentation of manual journal entries by individuals separate from the preparer at our Produce segment which resulted in the unmitigated risk of management override of manual journal entries.
During the quarter ended March 31, 2025, the Company’s management designed and implemented corrective actions to remediate the control deficiencies that contributed to the material weaknesses.
The remediation actions included:
Information Technology
Journal Entries
During the quarter ended March 31, 2025, the Company completed our testing of the operating effectiveness of the implemented controls and found them to be effective. Based on the steps implemented, management concluded that we have remediated the previously disclosed material weaknesses as of March 31, 2025.
Changes in Internal Control over Financial Reporting
The Company’s management, including the Chief Executive Officer and Principal Financial and Accounting Officer, has reviewed the Company’s internal control over financial reporting. There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), other than to address the material weaknesses described above, during the six months ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time the Company is engaged in legal proceedings in the ordinary course of business. We do not believe any current legal proceedings are material to our business.
Item 1A. Risk Factors
Our business, operations, and financial condition are subject to various risks and uncertainties. The risk factors described in Part I, Item 1A, “Risk Factors” contained in our Annual Report on Form 10-K, as filed with the SEC on March 13, 2025, and the risk factor described below, should be carefully considered, together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings filed with the SEC in connection with evaluating us, our business, and the forward-looking statements contained in this Quarterly Report on Form 10-Q.
The Company may fail to realize the expected benefits of privatizing certain assets and operations of its Produce Segment (the "Transaction").
The Company believes that the Transaction will provide certain benefits to the Company and its shareholders, including enabling the Company to focus on its growing international cannabis business, repositioning its fresh produce business to flourish independently with new strategic capital partners and improving the upside potential for its produce business. However, these expected benefits may not be achieved, or may take longer than expected to realize, and other assumptions upon which the Company had determined the benefits of the Transaction may prove to be incorrect. The produce business will be operated through a partnership, in which the Company has a minority interest. The Company cannot control the actions of its partners, including any non-performance, default, or bankruptcy of the partners. As a result, the Company may have limited control over such arrangements and experience returns that are not proportional to the risks and resources contributed. To the extent that the anticipated benefits of the Transaction are not achieved, or take longer than expected to achieve, the results of operations and the financial condition of the Company may suffer, which may materially adversely affect the Company’s business, operations and financial performance and cash flows.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Repurchases of Equity Securities
The Company did not repurchase any of its Common Shares during the three months ended June 30, 2025.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosure.
Item 5. Other Information.
During the quarter ended June 30, 2025, no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as each term is defined in Item 408 of Regulation S-K).
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this report:
Exhibit
Number
Description of Document
10.1
Framework Agreement Regarding Partnership and Membership Interests, Contributions, and Exchanges by and Among Village Farms International, Inc., Village Farms Canada Limited Partnership, and Village Farms, L. P; Vanguard Food GP LLC, Vanguard Food LP, Vanguard Food Holdings LLC, Vanguard Food LLC, and Vanguard Produce Canada ULC; and Kennedy Lewis Capital Partners Master Fund II LP; and Sweat Equities SPV LLC dated May 12, 2025 (incorporated by reference to the Exhibit 2.1 to the Company’s Form 8-K/A filed with the SEC on May 22, 2025)^
10.2
Amendment and Restated Limited Partnership Agreement of Vanguard Food LP, dated May 30, 2025^
10.3
Amendment and Restated Limited Liability Company Agreement by and among Vanguard Food GP LLC, Sweat Equities SPV LLC, Kenedy Lewis Capital Partners Master Fund II LP, and Village Farms International Inc., dated May 30, 2025^
10.4
Transition Service Agreement by and Among Village Farms International, Inc., Village Farms, L.P., Village Farms Canada Limited Partnership, Vanguard Food LP, Vanguard Food GP LLC, Vanguard Food Holdings LLC, Vanguard Food LLC, and Vanguard Produce Canada ULC, dated May 30, 2025^
10.5
Marfa Sublease Agreement between Agro Power Development, Inc. and Vanguard Food LLC., dated May 30, 2025^
10.6
Sales, Marketing & Distribution Agreement, by and among Village Farms Canada Limited Partnership and Vanguard Produce Canada ULC, dated May 30, 2025^
31.1
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
Cover page formatted as Inline XBRL and contained in Exhibit 101
^ Certain confidential portions of this exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K. The Company agrees to furnish to the Securities and Exchange Commission a copy of any omitted portions of the exhibit upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
By:
/s/ Stephen C. Ruffini
Name:
Stephen C. Ruffini
Title:
Executive Vice President and Chief Financial Officer
(Authorized Signatory and Principal Financial and
Accounting Officer)
Date: August 11, 2025