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, 2026
☐
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 7, 2026, 122,286,297 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
6
Notes to Condensed Consolidated Financial Statements
7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
20
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
35
Item 4.
Controls and Procedures
PART II - OTHER INFORMATION
37
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
38
Signatures
39
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 Verdexa (formally 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”), Balanced Health Botanicals, LLC (“Balanced Health”) and Village Farms International B.V ("VFN"); the limited operational history of the Delta RNG Project in our energy segment; the legal status of the cannabis business of Pure Sunfarms, Rose, and VFN and the hemp business of Balanced Health and uncertainty regarding the legality and regulatory status of cannabis and cannabinoid (CBD) products in the United States; risks relating to the implementation and enforcement of the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extension Act, 2026, which may materially and adversely affect our CBD business in the United states; risks relating to operation of our collaboration with Verdexa; risks relating 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 VFN; 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 our 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, 2026
December 31, 2025
ASSETS
Current assets
Cash and cash equivalents
$
72,931
81,189
Restricted cash
—
5,063
Trade receivables, net
32,406
23,151
Inventories, net
46,669
41,519
Other receivables
1,397
324
Prepaid expenses and deposits
6,923
3,191
Total current assets
160,326
154,437
Non-current assets
Property, plant and equipment, net
190,058
185,712
Investments
6,276
Goodwill
42,775
44,365
Intangibles, net
21,137
23,647
Deferred tax asset
564
694
Right-of-use assets
5,388
4,066
Other assets
1,943
3,899
Total assets
428,467
423,096
LIABILITIES
Current liabilities
Trade payables
17,587
15,747
Current maturities of long-term debt
5,249
4,885
Accrued sales taxes
7,068
8,695
Accrued liabilities
16,699
13,960
Lease liabilities - current
1,169
1,198
Income tax payable
12,151
Other current liabilities
2,836
1,950
Total current liabilities
50,608
58,586
Non-current liabilities
Long-term debt
34,713
28,769
Deferred tax liability
17,329
18,494
Lease liabilities - non-current
5,058
3,855
Other non-current liabilities
2,111
3,330
Total liabilities
109,819
113,034
MEZZANINE EQUITY
Redeemable non-controlling interest
6,447
10,164
SHAREHOLDERS’ EQUITY
Common shares, no par value per share - unlimited shares authorized;121,844,464 shares issued and outstanding at June 30, 2026 and 115,722,312 common shares issued and outstanding at December 31, 2025.
407,031
392,380
Additional paid in capital
24,931
29,374
Accumulated other comprehensive loss
(17,248
)
(9,281
Retained earnings
(102,513
(112,575
Total shareholders’ equity
312,201
299,898
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,
2026
2025
Sales
63,977
59,899
114,215
99,579
Cost of sales
(34,004
(37,557
(63,256
(63,057
Gross profit
29,973
22,342
50,959
36,522
Selling, general and administrative expenses
(18,811
(15,411
(34,753
(30,030
Interest expense
(477
(814
(1,000
(1,516
Interest income
343
109
951
184
Foreign exchange (loss) gain
(597
1,792
(1,145
1,708
Other income (loss)
24
4,430
(159
4,451
Income before taxes and equity method investment income
10,455
12,448
14,853
11,319
Provision for income taxes
(3,262
(2,503
(4,930
(3,486
Equity method investment income, net of tax
Income from continuing operations
7,193
9,945
9,923
7,833
Income from discontinued operations, net of tax
16,294
11,291
Income including non-controlling interests
26,239
19,124
Less: net (income) loss attributable to non-controlling interests, net of tax
(48
258
139
670
Net income attributable to Village Farms International, Inc. shareholders
7,145
26,497
10,062
19,794
Basic income per share attributable to Village Farms International, Inc. shareholders from:
Continuing operations
0.06
0.09
0.08
Discontinued operations
-
0.15
0.10
Basic income per share attributable to Village Farms International, Inc. shareholders
0.24
0.18
Diluted income per share attributable to Village Farms International, Inc. shareholders from:
0.14
Diluted income 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
116,192
112,347
115,728
112,342
Diluted
124,721
112,736
125,824
112,607
Other comprehensive income (loss):
Foreign currency translation adjustment
(4,665
9,870
(8,196
10,835
Comprehensive loss including non-controlling interests
2,528
36,109
1,727
29,959
Comprehensive loss (income) attributable to non-controlling interests
72
(239
418
100
Comprehensive income attributable to Village Farms International, Inc. shareholders
2,600
35,870
2,145
30,059
(In thousands of United States dollars, except for shares outstanding)
Three Months Ended June 30, 2026
Number of CommonShares (in thousands)
Common Shares
Additional Paid in Capital
Accumulated Other Comprehensive Loss
Retained Earnings
Total Shareholders’Equity
Mezzanine Equity
Balance April 1, 2026
114,048
392,898
23,382
(12,654
(109,658
293,968
9,819
Net proceeds from issuance of common shares
7,500
14,054
Shares repurchased
(149
(419
Share-based compensation
293
Shares issued on vesting of restricted share awards, net of tax witholding
356
(394
Shares issued on exercise of options
89
79
Acquisition of redeemable non-controlling interest
2,069
(3,349
Cumulative translation adjustment
(4,594
(71
Net income
48
Balance at June 30, 2026
121,844
Three Months Ended June 30, 2025
Accumulated OtherComprehensive (Loss) income
Balance at April 1, 2025
112,337
387,349
30,749
(18,042
(151,719
248,337
9,616
306
123
Shares issued on exercise of warrants
9,373
497
Net income (loss)
(258
Balance at June 30, 2025
112,644
387,350
30,878
(8,669
(125,222
284,337
9,855
Six Months Ended June 30, 2026
Number of CommonShares
Additional Paid inCapital
Accumulated OtherComprehensive (loss) income
Total Shareholders’ Equity
Balance January 1, 2026
115,722
Shares Repurchased
(2,214
(6,787
669
221
389
259
208
(7,967
(229
(139
Six Months Ended June 30, 2025
Accumulated OtherComprehensive Loss
Balance January 1, 2025
30,604
(18,932
(145,016
254,005
9,953
268
10,263
572
(670
5
(In thousands of United States dollars)
Cash flows provided by (used in) operating activities:
Income from continuing operations including non-controlling interests
Adjustments to reconcile net income attributable to Village Farms International, Inc. shareholders to net cash used in operating activities of continuing operations:
Depreciation and amortization
8,582
8,410
Amortization of deferred charges
47
1,000
1,516
Interest paid on long-term debt
(757
(1,613
Unrealized foreign exchange loss (gain)
217
(87
Loss on disposal of assets
87
Non-cash lease expense
491
619
Deferred income taxes
200
(935
Changes in non-cash working capital items
(28,435
6,207
Net cash (used in) provided by operating activities from continuing operations
(7,884
22,265
Cash flows used in investing activities:
Purchases of property, plant and equipment
(15,462
(5,289
Net cash used in investing activities from continuing operations
Cash flows provided by (used in) financing activities:
Proceeds from issuance of common shares
15,000
Issuance costs
(958
Proceeds from borrowings
8,952
Repayments on borrowings
(2,387
(4,554
Share repurchases
(1,280
Proceeds from exercise of warrants and options
182
Other financing activities
(182
(432
Net cash provided by (used in) financing activities from continuing operations
12,540
(4,986
Discontinued Operations
Net cash (used in) provided by operating activities from discontinued operations
(6,818
Net cash (used in) provided by investing activities from discontinued operations
38,710
Net cash (used in) provided by financing activities from discontinued operations
(4,000
Net cash flows provided by discontinued operations
27,892
Effect of exchange rate changes on cash and cash equivalents
(2,515
475
Net (decrease) increase in cash, cash equivalents and restricted cash
(13,321
40,357
Cash, cash equivalents and restricted cash, beginning of period
86,252
24,631
Cash, cash equivalents and restricted cash, end of period
64,988
(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, 2026 were Pure Sunfarms Corp. (“Pure Sunfarms”), Balanced Health Botanicals, LLC (“Balanced Health”), Village Farms International, B.V. (“VFN”), Village Farms Canada Limited Partnership ("VFCLP"), Village Farms, L.P., and VF Clean Energy, Inc. (“VFCE”). VFF also owns an 86.6% 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 Parkway, Lake Mary, Florida, United States, 32746.
The common shares of the Company (the "Common 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 86.6% 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, VFN, is a vertically integrated licensed producer and supplier of cannabis products sold to coffee shops in the Netherlands. VFF also owns and operates a sophisticated, highly intensive agricultural greenhouse facility in British Columbia, where it produces premium-quality tomatoes.
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, 2025 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, 2025 contained in the Company’s 2025 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 May 30, 2025, the Company determined that certain assets that had been disposed of met the criteria for discontinued operations presentation. For the three and six month periods ended June 30, 2025, the operating results associated with the assets disposed of have been reclassified into income (loss) from discontinued operations, net of tax, in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and the cash flows from the Company’s discontinued operations are presented in the Condensed Consolidated Statements of Cash Flows for all periods presented. The notes to the condensed consolidated financial statements are presented on a continuing operations basis unless otherwise noted. Refer to Note 8 Discontinued Operations and Disposals for additional information on the Company's discontinued operations.
Principles 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 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.
Translations of Foreign Currencies
Notes to Condensed Consolidated Interim Financial Statements
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, 2025
Spot rate
0.7033
0.7310
0.7294
Three-month period ended
0.7222
0.7308
Six-month period ended
0.7256
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
4,357
5,852
Work-in-progress
8,463
10,599
Finished goods
26,734
20,227
Packaging
4,523
2,965
Produce:
Crop inventory
2,592
1,876
Inventory
3. REVENUES
The Company’s 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.
8
For the Three Months Ended June 30,
Canadian Branded (1)
23,017
24,962
Canadian Non-Branded
3,040
7,077
International Exports
20,897
11,980
U.S. Cannabis
3,224
3,841
Netherlands Branded
3,345
2,483
Other
499
Total Cannabis
53,523
50,842
Produce
10,185
8,574
Clean Energy
269
483
Total Revenue
For the Six Months Ended June 30,
46,865
47,713
8,417
13,367
35,478
17,368
6,357
7,745
6,008
2,969
142
907
103,267
90,069
10,293
8,601
655
909
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following as of:
Land
13,649
14,040
Leasehold and land improvements
9,204
9,388
Buildings
188,275
188,464
Machinery and equipment
59,287
58,672
Construction in progress
31,458
22,410
Less: Accumulated depreciation
(111,815
(107,262
Depreciation expense on property, plant and equipment, was $3,175 and $3,796 for the three months ended June 30, 2026 and 2025, respectively, and $6,971 and $6,779 for the six months ended June 30, 2026 and 2025, respectively.
Capitalized interest was $92 and $0 for the six months ended June 30, 2026 and 2025, respectively.
5. ACQUISITIONS
Rose Acquisition
On May 21, 2026, the Company entered into a Share Purchase Agreement with one of the non-controlling shareholders for the acquisition of an additional 6.6% interest in Rose for a total cash purchase price of approximately $1,280, which resulted in a
9
reduction of mezzanine equity of $3,349 and an increase in additional paid-in capital of $2,069. The Company's ownership interest in Rose is now 86.6%.
6. 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, 2026:
Cannabis
Balance as of December 31, 2025
(1,590
Balance as of June 30, 2026
Intangible Assets
Intangible assets consisted of the following as of:
Licenses
17,896
18,508
Brands and trademarks*
12,555
12,678
Customer relationships
12,666
13,137
Computer software
424
1,621
Other*
144
Less: Accumulated amortization
(13,298
(13,191
Less: Impairments*
(9,250
* Includes indefinite-lived intangible assets
The expected future amortization expense for definite-lived intangible assets as of June 30, 2026 was as follows:
Fiscal period
Remainder of 2026
1,584
2027
3,171
2028
1,834
2029
1,831
2030
1,791
Thereafter
7,477
17,688
Amortization expense was $802 and $837 for the three months ended June 30, 2026 and 2025, respectively, and $1,611 and $1,631 for the six months ended June 30, 2026 and 2025, 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, 2026 and 2025, the Company considered qualitative factors in assessing impairment indicators for the Canadian Cannabis reporting unit.
At June 30, 2026 and 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 unit to be below its carrying amounts.
10
7. 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 (6.86% at June 30, 2026); matures February 3, 2031
14,875
15,855
Term loans - ("Pure Sunfarms Term Loan Facility") - C$42.4M - repayable by quarterly principal payments of C$1.2 million and accrued interest at Canadian prime rate or Canadian Overnight Repo Rate Average ("CORRA") plus an applicable margin (4.86% at June 30, 2026), matures February 7, 2029.
25,087
17,799
Total
39,962
33,654
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, 2026 and December 31, 2025 was $77,157 and $84,653, 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 March 30, 2026, the Company extended the maturity date of the FCC Term Loan to February 3, 2031 and reduced the applicable margin on the annual interest rate by 50 basis points.
The Company has a secured credit facility with a Canadian chartered bank as administrative agent 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. On February 20, 2026, the Company amended and extended its Pure Sunfarms Secured Credit Facility, which increased loan commitments with existing lenders by C$15 million and extended maturities by one year to February 2029. The incremental debt financing comes in the form of a delayed draw term loan, from which the Company drew an initial C$5 million on February 20, 2026 and C$8.3 million on June 30, 2026. All other terms of the credit facility loans remain unchanged.
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 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.
At June 30, 2026, the Company was compliant with all of its financial covenants.
The weighted average annual interest rate on short-term borrowings as of June 30, 2026 and December 31, 2025 was 5.7% and 8.2%, respectively.
Accrued interest payable on all long-term debt as of June 30, 2026 and December 31, 2025 was $211 and $166, respectively, and these amounts are included in accrued liabilities in the Condensed Consolidated Statements of Financial Position.
11
The aggregate annual principal maturities of long-term debt for the remainder of 2026 and thereafter are as follows:
2,622
5,244
18,844
1,961
After
6,047
8. DISCONTINUED OPERATIONS AND DISPOSALS
On May 30, 2025, the Company closed on a transaction with a newly-formed holding company, Verdexa L. P. (formally Vanguard Food, L. P.) (“Verdexa”), backed by private investment firms, to privatize certain assets and operations of its Produce operations (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 Verdexa 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 Verdexa common units, less the carrying amount of net assets disposed. The following table outlines the calculation of the gain on sale of the Transaction:
Cash proceeds
35,000
Cash held in indemnity escrow (Restricted cash released May 31, 2026)
5,000
Fair value of Verdexa common units
3,530
Carrying value of lease to Verdexa
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) have been adjusted for the prior period to reflect the historical results as discontinued operations.
Details of the income from discontinued operations, net of tax, were as follows for the:
25,358
62,753
(25,613
(65,846
Gross loss
(255
(3,093
(2,568
(4,729
(3
(7
Gain on sale of assets
Income from discontinued operations before income taxes
17,159
12,156
(865
9. EQUITY INVESTMENTS
On May 30, 2025, the Company closed on the Transaction with Verdexa (Note 8). As part of the Transaction, the Company received a 37.9% equity ownership interest in Verdexa 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 Verdexa 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 Verdexa arrangement, we apply the
12
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 were 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 Verdexa of $0 for the three and six months ended June 30, 2026 and 2025.
10. FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognized on the Condensed 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, 2026 and December 31, 2025, the Company’s financial instruments included cash and cash equivalents, restricted cash, trade receivables, other receivables, line of credit, trade payables, income tax payables, accrued liabilities, lease liabilities, and long-term debt. The carrying value of cash, cash equivalents, and restricted cash, trade receivables, other receivables, trade payables, income tax 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, and long-term 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, 2026 and December 31, 2025. There were no transfers of assets or liabilities between levels during the six months ended June 30, 2026 and 2025.
11. RELATED PARTY TRANSACTIONS AND BALANCES
The Company leases its Rose office building from a former Company employee who also owns a minority interest in Rose. For the three and six months ended June 30, 2026, the Company paid C$44 and C$80, respectively, and for the three and six months ended June 30, 2025, the Company paid C$78 and C$114, respectively, to lease this office space.
The Company has entered into a Transition Services Agreement with Village Fresh, a Verdexa 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. Under this agreement, the Company recorded revenues of $10,185 and $10,293 for the three and six months ended June 30, 2026, respectively, and $4,207 and $4,207 for the three and six months ended June 30, 2025, respectively. The Company had outstanding receivables under this agreement of $3,420 as of June 30, 2026 and $637 as of December 31, 2025.
12. INCOME TAXES
The Company has recorded a provision for income taxes of $3,262 and $4,930 for the three and six months ended June 30, 2026, compared with a provision for income taxes of $2,503 and $3,486 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 $47,850 as of June 30, 2026 and $47,425 as of December 31,
13
2025. 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, 2026, the Company’s net deferred tax assets totaled $564.
13. 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. During the first quarter of 2026, the Company realigned its structure toward a unified cannabis operating model, including changes and additions to our leadership team, to gain operational efficiencies and better align our resources with customer and market opportunities. As a result of the reorganization, the Company revised its reportable segment structure to reflect how the Chief Executive Officer, as chief operating decision maker ("CODM"), manages the business, allocates resources, and assesses performance.
Therefore, the Company's operations are now organized, managed and classified into one reportable segment - Cannabis. The Company’s remaining operations are not reportable segments, as defined by the applicable accounting standard, and are classified as Other.
We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.
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. The Cannabis segment, which is comprised of the previously reported Canadian Cannabis, U.S. Cannabis, and Cannabis - Netherlands segments, produces and supplies cannabis and CBD-based health and wellness products to be sold to consumers via provincial governments, coffee shops, licensed providers, and direct to consumers in the United States.
Other is comprised of the previously reported Produce and Clean Energy segments and includes operations that are not reported in the Company’s Cannabis segment.
Corporate expenses reflect the operations costs that are not allocated to the Company's operating units.
The accounting policies of the Cannabis segment are the same as those described in the summary of business, basis of presentation and significant accounting policies. The Company evaluates segment performance based on segment operating income (loss).
The CODM uses segment operating income (loss) to allocate resources (including employees, property, and financial or capital resources), predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances and current-to-prior year variances on a monthly basis for the operating income (loss) when making decisions about allocating capital and personnel to the Cannabis segment.
Discontinued operations are not included in the applicable reportable segment.
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, 2026
Segment Totals
Corporate (3)
Sales to external customers
10,454
(26,246
(7,758
(15,203
(712
(2,896
Segment operating income (loss)
12,074
1,984
11,162
Reconciliation of segment operating income (loss) to income from continuing operations before taxes and income from equity method investments(1)
Other expense, net (2)
(707
Income from continuing operations before taxes and equity method investments
14
For the Three Months Ended June 30, 2025
9,057
(29,502
(8,055
(11,606
(843
(2,962
9,734
159
6,931
Reconciliation of segment operating income (loss) to loss from continuing operations before taxes and income from equity method investments(1)
Other income, net (2)
5,517
For the Six Months Ended June 30, 2026
10,948
(54,682
(8,574
(30,023
(1,224
(3,506
18,562
1,150
16,206
Reconciliation of segment operating income to income from continuing operations before taxes and income from equity method investments(1)
(1,353
For the Six Months Ended June 30, 2025
9,510
(53,460
(9,597
(23,342
(1,586
(5,102
13,267
(1,673
6,492
Reconciliation of segment operating income to loss from continuing operations before taxes and income from equity method investments(1)
4,827
15
The following tables summarize our interest income, interest expense, depreciation and amortization, other significant noncash items, and expenditures for capital assets by reportable segment:
Corporate
Consolidated Totals
414
149
388
468
532
6,985
1,560
Share based compensation
134
535
Other significant noncash items:
377
114
Expenditures for segment assets
14,215
1,247
15,462
49
592
924
6,055
2,273
82
85
19
164
534
4,581
708
5,289
The following tables summarize our total assets by reportable segment:
Assets
346,323
335,428
Total assets for reportable segment
46,915
49,038
35,229
38,630
Consolidated total assets from continuing operations
The Company’s primary operations are in the United States, Canada, and the Netherlands. The following tables summarize our assets by geographic location:
Total assets from continuing operations
United States
29,283
36,039
Canada
367,036
363,702
Netherlands
32,148
23,355
Long-lived assets from continuing operations
27,300
28,970
212,223
218,582
28,618
21,107
268,141
268,659
16
14. INCOME (LOSS) PER SHARE
Basic and diluted net income (loss) per common share is calculated as follows:
Numerator:
Net income attributable to Village Farms International, Inc. shareholders from continuing operations
10,203
8,503
Denominator:
Weighted average number of common shares - basic
Effect of dilutive securities - share-based employee options and awards
8,529
10,096
265
Weighted average number of common shares - diluted
Antidilutive options and awards
14,308
6,501
12,741
6,625
Net income per common share:
15. SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION
On June 8, 2026, the Company closed a registered direct offering (the "Offering") of 7,500,000 Common Shares at a price of US$2.00 per Common Share. The gross proceeds from the Offering were approximately US$15 million before deducting placement agent fees and other offering expenses payable by the Company. The proceeds from the Offering are being used for working capital and general corporate purposes.
Share-based compensation expense was $293 and $123 for the three months ended June 30, 2026 and 2025, respectively, and $669 and $268 for the six months ended June 30, 2026 and 2025, respectively.
Stock option activity for the six months ended June 30, 2026 was as follows:
Number ofOptions
WeightedAverageExercise Price
WeightedAverageRemainingContractualTerm (years)
AggregateIntrinsicValue
Outstanding at December 31, 2025
6,462,746
3.42
5.36
10,869
Granted
Exercised
(280,001
1.07
Forfeited/expired
(255,000
5.59
Outstanding at June 30, 2026
5,927,745
5.09
3,740
Exercisable at June 30, 2026
5,124,041
3.82
5.13
2,857
17
Restricted Common Share activity for the six months ended June 30, 2026 was as follows:
Number ofRestricted Share Grants
Weighted Average Grant Date Fair Value
2,545,524
0.73
Vested and issued
(495,560
0.60
Forfeited
(439,148
1,610,816
0.80
Common Share buyback program
On September 29, 2025, the Board of Directors authorized a $10 million Common Share repurchase program for up to 5,687,000 Common Shares. Such purchases may be made on the open market, in private transactions and/or pursuant to purchase plans designed to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The Company is not obligated to repurchase any specific number of Common Shares, and the timing and actual number of Common Shares repurchased will depend on a variety of factors, including the Company’s Common Share price, general economic, business and market conditions, and alternative investment opportunities. The Company may discontinue any repurchases of its Common Shares at any time without prior notice. During the six months ended June 30, 2026, the Company repurchased 2,213,855 Common Shares for an aggregate amount of $6,787 (excluding the 2% Canadian tax on stock repurchases). As of June 30, 2026, $242 remains available for repurchases. Common Shares repurchased by the Company are accounted for when the transaction is settled. As of June 30, 2026, there were no unsettled Common Share repurchases. Direct costs incurred to acquire the Common Shares are included in the total cost of such shares.
Warrants
Warrant activity for the six months ended June 30, 2026 was as follows:
Number ofShares Underlying the Warrants
15,533,900
1.65
2.50
(235,000
Issued
Expired
15,298,900
2.00
16. CHANGES IN NON-CASH WORKING CAPITAL ITEMS AND SUPPLEMENTAL CASH FLOW INFORMATION
Trade receivables
(7,188
(4,180
Inventories
(6,929
3,473
Lease liabilities
(607
(506
(27
(3,811
(1,628
713
546
5,286
4,433
Taxes payable
(12,030
5,355
Other assets, net of other liabilities
(3,842
(1,289
The Company paid income taxes of $17,988 and $0 for the six months ended June 30, 2026 and 2025, respectively.
18
17. 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. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements.
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, 2025 (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 Pure Sunfarms Corp. (“Pure Sunfarms” or “PSF”), Balanced Health Botanicals, LLC (“Balanced Health”), Rose LifeScience Inc. (“Rose LifeScience” or “Rose”), Village Farms International B.V. (“VFN”), Village Farms Canada Limited Partnership (“VFCLP”), Village Farms L.P. (“VFLP”), and VF Clean Energy, Inc. (“VFCE”).
Village Farms' mission is to apply decades of innovation in intensive agriculture to lead a sustainable path forward for the global cannabis industry. To do so, we leverage a proven track record of asset investment and development and cultivation expertise and experience in controlled environment agriculture to produce branded and wholesale cannabis products for global markets with legally permissible regulatory frameworks.
In Canada, we converted two large-scale, advanced greenhouse facilities to cannabis production to serve the Canadian legal adult use (recreational) market and international medical markets through exportation. Through our ownership of VFN, we hold one of ten licenses to cultivate and distribute cannabis legally in the Netherlands under that country’s Controlled Cannabis Supply Chain Experiment. In the U.S., Balanced Health is our industry-leading cannabinoid business, extended our portfolio into cannabidiol (“CBD”) and hemp-derived consumer products, and the Company also owns 2.2 million square feet of advanced greenhouse facilities in Texas which may be converted to cannabis production in the future if and when permissible by all regulatory authorities.
Our focus for Cannabis 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 a leading producer of dried flower nationally and one of the few Canadian licensed producers with consistently strong operating results.
Through strategic and disciplined organic growth, expansion of export markets and/or acquisitions, we intend 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 business received European Union Good Manufacturing Practice (“EU GMP”) certification for our 1.1 million square foot Delta 3 cannabis facility located in Delta, British Columbia (“B.C.”) which permits us to export EU GMP-certified medical cannabis to importers and distributors in international markets that require EU GMP certification. In late 2022, we commenced exports to Israel. In 2023, we began exporting cannabis products to Germany and the United Kingdom for the medical markets in those countries. In 2025, we began exporting cannabis products to New Zealand. As a result of the typically higher margins in international markets (predominantly due to lower taxation compared with Canada), we expect international expansion to enhance our profitability while expanding our brand and experience into emerging legal cannabis markets.
We also cultivate tomatoes and market them through Village Farms Fresh (a Verdexa Holdings Company) under the Village Farms Fresh (“VF Fresh”) brand, which sells to mass retail grocery stores and food distribution companies.
Change in Our Operating Segments
During the first quarter of 2026, the Company realigned its structure toward a unified cannabis operating model, including changes and additions to our leadership team, to gain operational efficiencies and better align our resources with customer and market opportunities. As a result of the reorganization, the Company revised its reportable segment structure to reflect how the Chief Executive Officer, as chief operating decision maker ("CODM"), manages the business, allocates resources, and assesses performance.
Cannabis Segment
Our Cannabis segment includes wholly owned Pure Sunfarms, VFN, Balanced Health, and an 86.6% 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, fully EU-GMP certified, and owns several of the leading flower brands in Canada and Germany. We leverage 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 Canada is to be the leading low-cost, high-quality cannabis producer.
Our Netherlands cannabis reporting unit is comprised of wholly owned subsidiary, VFN. Through VFN, 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.
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.
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™.
Corporate and Other
Corporate expenses reflect the operations costs that are not allocated to our reporting units.
Recent Developments and Updates
21
Presentation of Financial Results
Our results of operations for the three and six months ended June 30, 2026 and 2025 presented below reflect the operations of our consolidated wholly-owned subsidiaries and our 80% ownership interest in Rose LifeScience through May 21, 2026, and 86.6% ownership after May 21, 2026.
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, 2026, June 30, 2025, and December 31, 2025. 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:
22
Consolidated Results of Operations
(In thousands of U.S. dollars, except per share amounts, and unless otherwise noted)
Other income (expense)
Adjusted EBITDA from continuing operations
15,411
17,111
25,311
20,560
Segment Results of Operations
During the first quarter of 2026, the Company revised its reportable segment structure to reflect how the CODM manages the business, allocates resources, and assesses performance. The Company's operations are now organized, managed, and classified into one reportable segment - Cannabis.
The Company’s remaining operations are not reportable segments, as defined by the applicable accounting standard, and are classified as Other.
23
For The Three Months Ended June 30, 2026
Consolidated
Other expense, net
(207
(204
(296
Income (loss) before taxes and equity method investment income
11,867
1,780
(3,192
(3,216
(46
Income (loss) including non-controlling interests
8,651
1,734
Less: net income attributable to non-controlling interests, net of tax
8,603
Adjusted EBITDA from Continuing Operations (1)
15,273
2,776
(2,638
Basic income (loss) per share
0.01
(0.03
Diluted income (loss) per share
For The Three Months Ended June 30, 2025
Other (expense) income, net
(507
4,471
1,553
9,227
4,630
(1,409
(135
Income (loss) from continuing operations
6,840
4,495
(1,390
Income from discontinued operations net of tax
20,789
Less: net loss attributable to non-controlling interests, net of tax
7,098
Adjusted EBITDA from continuing operations (1)
13,123
6,833
(2,845
Basic income (loss) per share from continuing operations
0.04
(0.01
Basic income per share from discontinued operations
0.19
Diluted income (loss) per share from continuing operations
0.05
Diluted income per share from discontinued operations
For The Six Months Ended June 30, 2026
(517
(426
(410
18,045
724
(3,916
(4,801
(129
13,244
595
13,383
25,479
2,753
(2,921
0.12
0.11
For The Six Months Ended June 30, 2025
Other expense (income), net
(709
3,943
1,593
12,558
2,270
(3,509
(3,282
9,276
2,066
13,357
9,946
20,012
5,404
(4,856
Basic (loss) income per share from continuing operations
0.02
Basic loss per share from discontinued operations
Basic (loss) income per share
Diluted (loss) income per share from continuing operations
Diluted loss per share from discontinued operations
Diluted (loss) income per share
We caution that our results of operations for the three and six months ended June 30, 2026 and 2025 may not be indicative of our future performance.
25
RESULTS
Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025
Sales for the three months ended June 30, 2026 and 2025 were as follows:
The increase in consolidated revenues of $4,078, or 7%, was primarily due to an increase in International Exports of $8,917, or 74%, driven by continued growth in export volumes to Germany, partially offset by a decrease in the net average selling price of 16% due to a shift in product mix in favor of bulk flower over packaged flower. For the three months ended June 30, 2026, International Export sales represented 33% of revenue, compared with 20% of revenue for the three months ended June 30, 2025.
Canadian Branded Sales decreased by $1,945, or 8%, to $23,017, or 36% of sales, from $24,962, or 42% of sales, primarily due to a decrease in volume of value brands, while the average net selling price increased 5% over the prior period.
Netherlands Branded sales increased by $862 over the prior year, due to an increase in volume.
Canadian Non-Branded sales decreased by $4,037, or 57%, due to a shift in volume towards International Exports.
Sales for U.S. Cannabis decreased by $617, or 16%, due to lower direct-to-consumer sales resulting from the proliferation of unregulated hemp-derived products on the market and the continuing effect of changes in state regulations restricting sales.
We continue to pay a burdensome excise tax on our Canadian Branded sales (sales to provincial distributors). For the three months ended June 30, 2026, the Company incurred excise duties of $14,909, or 39% of gross Canadian Branded sales, compared with $14,812, or 37% of gross Canadian Branded sales, for the three months ended June 30, 2025. The Canadian excise duty is our single largest cost of participating in the branded adult-use market in Canada.
Cost of Sales
Cost of sales for the three months ended June 30, 2026 were $34,004 compared with $37,557 for the three months ended June 30, 2025. The decrease of $3,553, or 9%, was primarily due to improved yields and a favorable shift in sales mix towards bulk flower, from packaged flower, within our International Export sales, which has a lower average cost per gram over other packaged products.
Gross Profit
Gross profit for the three months ended June 30, 2026 was $29,973, or a 47% gross margin, compared with $22,342, or a 37% gross margin, for the three months ended June 30, 2025. The increase in gross margin of 10 percentage points, was primarily due to higher sales volumes of International Exports as well as lower sales of value brands within the branded sales category.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended June 30, 2026 were $18,811 (29% of sales) compared with $15,411 (26% of sales) for the three months ended June 30, 2025.
Cannabis SG&A increased by approximately $3,597, or 24%, primarily due to higher commercial and marketing expenses and an update to the Company's transfer pricing policies.
Interest Expense
26
Interest expense for the three months ended June 30, 2026 was $477 compared with $814 for the three months ended June 30, 2025 due to a decrease in the average debt balance and a decrease in interest rates from the prior year.
Interest Income
Interest income for the three months ended June 30, 2026 was $343 compared with $109 for the three months ended June 30, 2025 due primarily to an increase in the average cash, cash equivalents, and restricted cash.
Other Income
Other income for the three months ended June 30, 2026 was $24 compared to $4,430 for the three months ended June 30, 2025. Other income for the three months ended June 30, 2025 included a favorable vendor settlement relating to the partial recovery of prior period operational losses from the ToBRFV infestation.
Income Before Taxes and Equity Method Investment Income
Income before taxes for the three months ended June 30, 2026 was $10,455 compared with $12,448 for the three months ended June 30, 2025. The decrease of $1,993 was primarily due to the favorable vendor settlement in 2025, offset by the improved gross profit for the three months ended June 30, 2026.
Income (Loss) from Discontinued Operations, Net of Tax
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) from discontinued operations, net of tax
Net Income Attributable to Village Farms International, Inc. Shareholders
Net income attributable to Village Farms International, Inc. shareholders for the three months ended June 30, 2026 was $7,145 compared with $26,497 for the three months ended June 30, 2025. The decrease of $19,352 was primarily due to $16,294 from discontinued operations resulting from the sale of the Texas greenhouses and a favorable vendor settlement in 2025. This was partially offset by higher sales and an improved gross margin during the three months ended June 30, 2026.
Adjusted EBITDA from Continuing Operations
Adjusted EBITDA from Continuing Operations for the three months ended June 30, 2026 was $15,411 compared with $17,111 for the three months ended June 30, 2025. The decrease of $1,700, or 10%, was driven primarily by the favorable vendor settlement in 2025, partially offset by higher sales and higher margins during the three months ended June 30, 2026. For additional information, refer to the reconciliation of Adjusted EBITDA from Continuing Operations to net income (loss) in “Non-GAAP Measures—Reconciliation of Net Income (Loss) to Adjusted EBITDA”.
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Sales for the six months ended June 30, 2026 and 2025 were as follows:
27
The increase in consolidated revenues of $14,636, or 15%, was primarily due to an increase in International Exports of $18,110, or 104%, driven by continued growth in export volumes to Germany, partially offset by a decrease in the net average selling price of 15% due to a shift in product mix in favor of bulk flower over packaged flower. For the six months ended June 30, 2026, International Export sales represented 31% of revenue, compared with 17% of revenue for the six months ended June 30, 2025.
Canadian Branded Sales decreased by $848, or 2%, to $46,865, or 41% of sales, from $47,713, or 48% of sales, primarily due to a decrease in volume of value brands, while the average net selling price remained in line with the prior period.
Netherlands Branded sales increased by $3,039 over the prior year period, as the prior year only had four months of sales.
Canadian Non-Branded sales decreased by $4,950, or 37%, due to a shift in volume to International Exports.
Sales for U.S. Cannabis decreased by $1,388, or 18%, due to lower direct-to-consumer sales resulting from the proliferation of unregulated hemp-derived products on the market and the continuing effect of changes in state regulations restricting sales.
We continue to pay a burdensome excise tax on our Canadian Branded sales (sales to provincial distributors). For the six months ended June 30, 2026, the Company incurred excise duties of $30,812, or 40% of gross Canadian Branded sales, compared with $28,759, or 38% of gross Canadian Branded sales, for the six months ended June 30, 2025. The increase of $2,053, or 7%, was due to an increase in Cannabis 2.0 products sold in the Canadian Branded channel, which have a higher proportional excise tax. The Canadian excise duty is our single largest cost of participating in the branded adult-use market in Canada.
Cost of sales for the six months ended June 30, 2026 were $63,256 compared with $63,057 for the six months ended June 30, 2025. During the six months ended June 30, 2026, the increase in volume was offset by shift to bulk flower, from packaged flower, within our International Exports sales, lower sales of value brands within the branded sales category, as well as an improvement in year over year yields leading to a lower cost per gram.
Gross profit for the six months ended June 30, 2026 was $50,959 compared with $36,522 for the six months ended June 30, 2025. The increase of $14,437, or 40%, was primarily due to a shift in sales mix towards bulk flower, from packaged flower, within our International Exports sales, lower sales of value brands within the branded sales category, as well as an improvement in year-over-year yields leading to a lower cost per gram.
Selling, general and administrative expenses for the six months ended June 30, 2026 were $34,753 (30% of sales) compared with $30,030 (30% of sales) for the six months ended June 30, 2025.
Cannabis SG&A increased by approximately $6,681, or 29%, primarily due to higher commercial and marketing expenses and an update to the Company's transfer pricing policies.
Interest expense for the six months ended June 30, 2026 was $1,000 compared with $1,516 for the six months ended June 30, 2025 due to a decrease in the average debt balance and a decrease in interest rates from the prior year.
Interest income for the six months ended June 30, 2026 was $951 compared with $184 for the six months ended June 30, 2025 due primarily to an increase in the average cash, cash equivalents, and restricted cash.
Other (Expense) Income
Other expense for the six months ended June 30, 2026 was $159 compared with other income of $4,451 for the six months ended June 30, 2025. Other income for the six months ended 2025 included a favorable vendor settlement relating to the partial recovery of operational losses from the ToBRFV infestation.
Income (Loss) Before Taxes and Equity Method Investment Income
Income before taxes for the six months ended June 30, 2026 was $14,853 compared with $11,319 for the six months ended June 30, 2025. The change of $3,534 was primarily due to the improved gross profit.
28
(7,829
Net income attributable to Village Farms International, Inc. shareholders for the six months ended June 30, 2026 was $10,062 compared with $19,794 for the six months ended June 30, 2025. The decrease of $9,732 was primarily due to $11,291 from discontinued operations resulting from the sale of the Texas greenhouses and a favorable vendor settlement in 2025. This was partially offset by higher sales and an improved gross margin during the six months ended June 30, 2026.
Adjusted EBITDA from Continuing Operations for the six months ended June 30, 2026 was $25,311 compared with $20,560 for the six months ended June 30, 2025. The increase of $4,751, or 23%, was driven primarily by higher sales and higher margins in Cannabis, partially offset by the favorable vendor settlement in 2025. For additional information, refer to the reconciliation of Adjusted EBITDA from Continuing Operations to net income (loss) in “Non-GAAP Measures—Reconciliation of Net Income (Loss) to Adjusted EBITDA”.
Liquidity and Capital Resources
Capital Resources
At June 30, 2026, cash, cash equivalents, and restricted cash were $72,931 and working capital was $109,718, compared with cash, cash equivalents, and restricted cash of $86,252 and working capital of $95,851 at December 31, 2025. We believe that our existing cash, cash generated from our operating activities and the availability under our Pure Sunfarms Revolving Credit Facility (as defined below), will provide us with sufficient liquidity to meet our working capital needs, repayments of our long-term debt and future contractual obligations and fund our planned capital expenditures for the next 12 months. An additional potential source of liquidity is access to capital markets for additional equity or debt financing. We intend to use our cash on hand for daily operational funding requirements.
(in thousands of U.S. dollars unless otherwise noted)
Maximum Availability
Outstanding as of June 30, 2026
FCC Term Loan
Pure Sunfarms Term Loan Facility
26,277
Pure Sunfarms Revolving Credit Facility
C$
10,000
At June 30, 2026, the Company was in compliance with all of its financial covenants. We can provide no assurance that, in the future, we will be in compliance, or receive a waiver for any 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 FCC Term Loan and Pure Sunfarms Secured Credit Facilities (as defined below) as of June 30, 2026 and December 31, 2025 was $211 and $166, 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”). On March 30, 2026, the Company extended the maturity date of the FCC Term Loan to February 3, 2031 and reduced the applicable margin on the annual interest rate by 50 basis points. The non-revolving variable rate term loan has a balance of $14,875 on June 30, 2026 and $15,855 on December 31, 2025. 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 February 3, 2031. As of June 30, 2026 and December 31, 2025, borrowings under the FCC Term Loan agreement were subject to an interest rate of 6.86% and 7.45% 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, 2026 and December 31, 2025 was $77,157 and $84,653, respectively.
29
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 Secured Credit Facilities
On April 17, 2025, the Company entered into a secured credit facility with a Canadian chartered bank as administrative agent 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. Amounts drawn under the Pure Sunfarms Secured Credit Facilities are being used for working capital and other general corporate purposes, and were also used to replace and repay remaining outstanding balances on the Company’s previously outstanding debt.
On February 20, 2026, the Company amended and extended its Pure Sunfarms Term Loan Facility, which increased loan commitments with existing lenders by C$15 million and extended maturities one year to February 2029. The incremental debt financing comes in the form of a delayed draw term loan, from which the Company drew an initial CAD $5 million on February 20, 2026 and C$8.3M on June 30, 2026. All other terms of the credit facility loans remain unchanged.
The outstanding amount of the Pure Sunfarms Term Loan Facility was $25,087 as of June 30, 2026 and is repayable, on a quarterly basis, in an amount equal to C$1.2 million. Any amount remaining unpaid will be due and payable in full on the maturity date, which is on February 7, 2029.
The Pure Sunfarms Revolving Credit Facility can be drawn for advances of up to C$10.0 million, none of which is currently drawn. Outstanding amounts drawn 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.
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 decrease for the period
(10,806
39,882
Effect of exchange rate changes on cash
Cash, end of the period
Operating Activities - Continuing Operations
For the six months ended June 30, 2026 and 2025, cash used in and provided by operating activities was ($7,884) and $22,265, respectively. The operating activities for the six months ended June 30, 2026 consisted of ($28,435) in changes in non-cash working capital items and $20,551 in changes before non-cash working capital items, while 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. The decrease when comparing the change in non-cash working capital items for 2026 with 2025 was primarily due to income tax payments of approximately $18 million and an increase in inventory.
Investing Activities - Continuing Operations
For the six months ended June 30, 2026 and 2025, cash used in investing activities was ($15,462) and ($5,289), respectively. The increase in investing activities for the six months ended June 30, 2026 was primarily due to capital expenditures made for the conversion of the Delta 2 greenhouse for cannabis cultivation and the VFN Phase II indoor cultivation facility in the town of Groningen.
30
Financing Activities - Continuing Operations
For the six months ended June 30, 2026 and 2025, cash provided by and used in financing activities was $12,540 and ($4,986), respectively. For the six months ended June 30, 2026, cash provided by financing activities primarily consisted of proceeds from the issuance of Common Shares of $15,000, less issuance costs of ($958), and proceeds from borrowings of $8,952, partially offset by share repurchases of ($6,787), debt repayments of ($2,387), and acquisition of non-controlling interest of ($1,280). For the six months ended June 30, 2025, cash flows used in financing primarily activities consisted of debt repayments of ($4,554).
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 and our Canadian and Netherlands expansion projects, 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 from continuing operations” 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 from continuing operations – Constant Currency” which excludes the effect of foreign currency rate fluctuations. See “Adjusted EBITDA from Continuing Operations—Constant Currency” below. Adjusted EBITDA from continuing operations and Adjusted EBITDA from continuing operations - 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 our operating and financial performance. 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.
Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA from Continuing Operations
The following table reflects a reconciliation of net income from continuing operations Adjusted EBITDA from continuing, as presented by the Company:
(in thousands of U.S. dollars)
Net income from continuing operations
Add:
Amortization and depreciation
4,279
5,068
Foreign currency exchange loss (gain)
(1,743
937
(1,761
Interest expense, net
705
59
1,332
3,262
2,503
4,930
3,486
Deferred financing fees
67
(Gain) loss on disposal of assets
(31
Adjustments attributable to non-controlling interest
(127
(12
(154
58
Reconciliation of Cannabis Segment to Segmented Net Income for the Cannabis Segment to Adjusted EBITDA from Continuing Operations for the Cannabis Segment
The following table reflects a reconciliation of net income from continuing operations for the Cannabis segment to Adjusted EBITDA from Continuing Operations for the Cannabis segment, as well as reconciliation to such measures for the Company on a Consolidated basis:
31
Net income (loss) from continuing operations
3,483
777
Foreign currency exchange (gain) loss
(60
43
406
Interest expense (income), net
207
(108
3,216
46
56
237
Gain on disposal of assets
3,117
1,913
(84
(130
(1,529
316
(25
Provision for (recovery of) income taxes
2,387
135
(19
80
Other Impairments
1,554
Foreign currency exchange gain
799
64
383
(388
4,801
129
128
541
Loss (gain) on disposal of assets
118
(82
(1,544
457
(49
3,282
204
Other impairments
32
Adjusted EBITDA from Continuing Operations – 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 from continuing operations for the three and six months ended June 30, 2026, 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 2025 rather than the actual average exchange rates in effect during the current period. All growth comparisons relate to the corresponding period in 2025. We have provided this non-GAAP financial information to aid investors in better understanding our performance 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, 2026 compared with the three and six months ended June 30, 2025 on an as reported and constant currency basis (in thousands):
As Reported
As Adjusted for Constant Currency
As Reported Change
Constant Currency Change
%
4,078
64,535
4,636
3,553
(34,276
3,281
(3,400
(22
%)
(18,950
(3,539
(23
(6,224
113
(6,226
(1,993
10,600
(1,848
(2,752
7,299
(2,646
(16,294
(19,046
73
(18,940
(19,352
7,144
(19,353
Adjusted EBITDA - Constant Currency (1)
(1,700
15,516
(1,595
33
14,636
115,553
15,974
(199
(0
(63,970
(913
(1
(4,723
(16
(35,097
(5,067
(17
(6,180
(1,360
(6,187
3,534
15,127
3,808
(34
2,090
10,122
2,289
(29
(11,291
(9,201
(9,002
(9,732
(9,531
4,751
25,677
5,117
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. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, including the potential future effects of macroeconomic trends and events, such as inflation and interest rate levels; supply chain disruptions; uncertainty from potential recessionary effects; climate-related matters; market, industry and regulatory factors; global events, and public health matters. These estimates form the basis for making judgments about our operating results and the carrying values of assets and liabilities, that are not readily apparent from other sources. Given that management estimates, by their nature, involve judgments regarding future uncertainties, actual results could differ materially from these estimates if conditions change or if certain key assumptions used in making these estimates ultimately prove to be inaccurate. Our accounting policies and critical accounting estimates are reviewed periodically by the Audit Committee of the Board of Directors.
As described in Note 6, 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, 2026 and 2025, the Company considered qualitative factors in assessing for impairment indicators for the Canadian Cannabis reporting unit. As part of this assessment, the Company considered both external and internal factors, including overall financial performance and outlook. At June 30, 2026, the Company concluded that no events or circumstances occurred that would, more likely than not, reduce the fair value of the goodwill and intangible assets for its operating unit to be below their carrying amounts. At June 30, 2026, the carrying value of goodwill associated with our Canadian Cannabis reporting unit was $42.8 million and the carrying value of intangible assets associated with our Cannabis reporting unit was $21.1 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.
34
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
As of June 30, 2026, our variable interest rate debt was primarily related to our Pure Sunfarms Secured Credit Facilities and FCC Term Loan. Outstanding borrowings under our Pure Sunfarms Secured Credit Facility and FCC Term Loan 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, 2026, we had approximately $39,962 in aggregate principal amounts of our Pure Sunfarms Secured Credit Facilities and FCC Term Loan with a weighted average interest rate of 5.7%. The current interest rates for outstanding revolving loans under our Pure Sunfarms Credit Facility and FCC Term Loan reflect basis point decreases of approximately 1.2% over the comparable period in 2025.
Our interest expense is affected by the overall interest rate environment. Our variable interest rate debt subjects us to risk from increases in prevailing interest rates. This risk increases in the current inflationary environment, in which the Federal Reserve may increase 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 Pure Sunfarms Credit Facility and FCC Term Loan would have increased our interest expense by approximately $46 and $92 for the three and six months ended June 30, 2026, respectively, and $50 and $100 for the three and six months ended June 30, 2025, 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, 2026 and 2025, the Canadian/U.S. foreign exchange rate was C$1.00 = US$0.7033 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, 2026 and 2025 with the net foreign exchange gain or loss directly impacting comprehensive income (loss):
Financial assets
4,840
1,535
3,862
4,180
5,319
5,626
331
176
Financial liabilities
Trade payables and accrued liabilities
(4,621
(4,334
Loan payable
(2,865
(2,750
Net foreign exchange gain
6,866
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, 2026, the Company maintained effective disclosure controls and procedures.
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) during the six months ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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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 will have a material impact on 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 12, 2026, 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.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Repurchases of Equity Securities
The table below provides information about Company purchases of its Common Shares during the three months ended June 30, 2026.
Total Number of Shares Purchased(a)
Average Price Paid per Share(b)
Total Number of Shares Purchased as Part of Publicly Announced Program
Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in thousands of U.S. dollars)
April 1 - 30, 2026
149,229
2.81
242
May 1 - 31, 2026
0
June 1 - 30, 2026
(a) On September 29, 2025, the Board of Directors authorized a $10 million share repurchase for up to 5,687,000 of the Company’s outstanding Common Shares.
(b) Average price paid includes costs associated with the repurchases.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosure.
Item 5. Other Information.
During the quarter ended June 30, 2026, 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
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
104
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 10, 2026