Village Farms International, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS Village Farms International, Inc. Condensed Consolidated Sta tements of Financial Position (In thousands of United States dollars, except share data) (Unaudited) March 31, 2025 December 31, 2024 ASSETS Current assets Cash and cash equivalents $ 15,125 $ 24,631 Trade receivables, net 34,954 33,665 Inventories, net 51,459 53,137 Other receivables 38 327 Prepaid expenses and deposits 3,298 4,259 Total current assets 104,874 116,019 Non-current assets Property, plant and equipment, net 189,813 190,263 Investments 2,656 2,656 Goodwill 42,368 42,315 Intangibles, net 24,474 25,105 Deferred tax asset 918 1,005 Right-of-use assets 9,213 9,765 Other assets 2,788 2,178 Total assets $ 377,104 $ 389,306 LIABILITIES Current liabilities Line of credit $ 5,000 $ 4,000 Trade payables 15,305 24,499 Current maturities of long-term debt 4,819 8,142 Accrued sales taxes 8,392 8,740 Accrued loyalty program 763 1,029 Accrued liabilities 15,034 12,208 Lease liabilities - current 2,552 2,497 Income tax payable 1,673 51 Other current liabilities 1,023 1,053 Total current liabilities 54,561 62,219 Non-current liabilities Long-term debt 34,384 32,420 Deferred tax liability 19,213 19,940 Lease liabilities - non-current 7,932 8,573 Other liabilities 3,061 2,196 Total liabilities 119,151 125,348 MEZZANINE EQUITY Redeemable non-controlling interest 9,616 9,953 SHAREHOLDERS’ EQUITY Common stock, no par value per share - unlimited shares authorized; 112,337,049 shares issued and outstanding at March 31, 2025 and 112,337,049 shares issued and outstanding at December 31, 2024. 387,349 387,349 Additional paid in capital 30,749 30,604 Accumulated other comprehensive loss ( 18,042 ) ( 18,932 ) Retained earnings ( 151,719 ) ( 145,016 ) Total shareholders’ equity 248,337 254,005 Total liabilities, mezzanine equity and shareholders’ equity $ 377,104 $ 389,306 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 2 Village Farms International, Inc. Condensed Consolidated Statements of O perations and Comprehensive Income (Loss) (In thousands of United States dollars, except per share data) (Unaudited) Three Months Ended March 31, 2025 2024 Sales $ 77,074 $ 78,077 Cost of sales ( 65,734 ) ( 62,564 ) Gross profit 11,340 15,513 Selling, general and administrative expenses ( 16,779 ) ( 16,387 ) Interest expense ( 706 ) ( 917 ) Interest income 75 206 Foreign exchange loss ( 84 ) ( 878 ) Other income 22 104 Loss before taxes ( 6,132 ) ( 2,359 ) Provision for income taxes ( 983 ) ( 320 ) Loss including non-controlling interests ( 7,115 ) ( 2,679 ) Less: net loss (income) attributable to non-controlling interests, net of tax 412 ( 173 ) Net loss attributable to Village Farms International, Inc. shareholders $ ( 6,703 ) $ ( 2,852 ) Basic loss per share attributable to Village Farms International, Inc. shareholders $ ( 0.06 ) $ ( 0.03 ) Diluted loss per share attributable to Village Farms International, Inc. shareholders $ ( 0.06 ) $ ( 0.03 ) Weighted average number of common shares used in the computation of net loss per share (in thousands): Basic 112,337 110,249 Diluted 112,337 110,249 Loss including non-controlling interests $ ( 7,115 ) $ ( 2,679 ) Other comprehensive income (loss): Foreign currency translation adjustment 965 ( 4,251 ) Comprehensive loss including non-controlling interests ( 6,150 ) ( 6,930 ) Comprehensive (income) loss attributable to non-controlling interests 339 115 Comprehensive loss attributable to Village Farms International, Inc. shareholders $ ( 5,811 ) $ ( 6,815 ) The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 3 Village Farms International, Inc. Condensed Consolidated Statements of Changes in Shareholders’ Equity and Mezzanine Equity (In thousands of United States dollars, except for shares outstanding) (Unaudited) Three Months Ended March 31, 2025 Number of Common Shares (in thousands) Common Stock Additional Paid in Capital Accumulated Other Comprehensive (Loss) gain Retained Earnings Total Shareholders’ Equity Mezzanine Equity Balance December 31, 2024 112,337 $ 387,349 $ 30,604 $ ( 18,932 ) $ ( 145,016 ) $ 254,005 $ 9,953 Share-based compensation — 145 — — 145 — Cumulative translation adjustment — — — 890 — 890 75 Net loss income — — — — ( 6,703 ) ( 6,703 ) ( 412 ) Balance at March 31, 2025 112,337 $ 387,349 $ 30,749 $ ( 18,042 ) $ ( 151,719 ) $ 248,337 $ 9,616 Three Months Ended March 31, 2024 Number of Common Shares (in thousands) Common Stock Additional Paid in Capital Accumulated Other Comprehensive Loss Retained Earnings Non-controlling Interest Total Shareholders’ Equity Mezzanine Equity Balance at December 31, 2023 as previously reported 110,249 $ 386,719 $ 25,611 $ ( 3,540 ) $ ( 106,165 ) $ 649 $ 303,274 $ 15,667 Adjustments — - - - ( 3,000 ) - ( 3,000 ) — Balance at December 31, 2023 110,249 386,719 25,611 ( 3,540 ) ( 109,165 ) 649 300,274 15,667 Share-based compensation — — 405 — — — 405 — Cumulative translation adjustment — — — ( 3,963 ) — ( 21 ) ( 3,984 ) ( 267 ) Net (loss) income — — — — ( 2,852 ) ( 54 ) ( 2,906 ) 227 Balance at March 31, 2024 110,249 $ 386,719 $ 26,016 $ ( 7,503 ) $ ( 112,017 ) $ 574 $ 293,789 $ 15,627 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4 Village Farms International, Inc. Condensed Consolidated Statements of Cash Flows (In thousands of United States dollars) (Unaudited) Three Months Ended March 31, 2025 2024 Cash flows provided by (used in) operating activities: Loss including non-controlling interests $ ( 7,115 ) $ ( 2,679 ) Adjustments to reconcile net loss attributable to Village Farms International, Inc. shareholders to net cash provided by (used in) operating activities: Depreciation and amortization 4,973 4,558 Amortization of deferred charges — 10 Interest expense 706 917 Interest paid on long-term debt ( 794 ) ( 1,062 ) Unrealized foreign exchange loss 49 130 Non-cash lease expense 532 631 Share-based compensation 145 405 Deferred income taxes ( 663 ) 330 Changes in non-cash working capital items ( 4,209 ) ( 3,290 ) Net cash used in operating activities ( 6,376 ) ( 50 ) Cash flows used in investing activities: Purchases of property, plant and equipment ( 2,539 ) ( 1,876 ) Issuance of note receivable ( 300 ) — Net cash used in investing activities ( 2,839 ) ( 1,876 ) Cash flows provided by (used in) financing activities: Proceeds from borrowings 1,000 — Repayments on borrowings ( 1,384 ) ( 1,442 ) Net cash used in financing activities ( 384 ) ( 1,442 ) Effect of exchange rate changes on cash and cash equivalents 93 ( 238 ) Net decrease in cash, cash equivalents and restricted cash ( 9,506 ) ( 3,606 ) Cash, cash equivalents and restricted cash, beginning of period 24,631 35,291 Cash, cash equivalents and restricted cash, end of period $ 15,125 $ 31,685 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 5 VILLAGE FARMS INTERNATIONAL, INC. Notes to Condensed Consolidated Financial Statements (In thousands of United States dollars, except per share amounts, unless otherwise noted) 1. BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES 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 March 31, 2025 were Village Farms Canada Limited Partnership, Village Farms, L.P.(together, “Village Farms Fresh” or “VF Fresh”), Pure Sunfarms Corp. (“Pure Sunfarms”), Balanced Health Botanicals, LLC (“Balanced Health”) and VF Clean Energy, Inc. (“VFCE”) and Leli Holland B. V. (“Leli”). VFF also owns an 80 % interest in Rose LifeScience Inc. (“Rose”). The address of the registered office of VFF is 79 Wellington Street West, Suite 3300, Toronto, Ontario, Canada, M5K 1N2. The address of the principal executive office of VFF is 90 Colonial Center Pkwy, Lake Mary, Florida, United States, 32746. The Company’s shares are listed on Nasdaq Capital Market (“Nasdaq”) under the symbol “VFF”. On October 18, 2024, the Company received notification from Nasdaq that it is not in compliance with the minimum bid price requirement for continued listing on the Nasdaq (Nasdaq Listing Rule 5550(a)(2)) (the “Minimum Bid Requirement”) as the bid price for the Company’s common shares (the “Common Shares”) closed below US$ 1.00 from September 6, 2024 to October 17, 2024. Pursuant to this notification, the Company had an initial 180-calendar day period to regain compliance with the Minimum Bid Requirement which ended on April 16, 2025. On April 17, 2025, the Company received notification from Nasdaq that the Company’s did not regain compliance with the Minimum Bid Requirement during the initial 180 -calendar day period. Following this notification, on April 21, 2025, the Company requested, and Nasdaq approved, a 180 -calendar day extension (the "Extension") to regain compliance with the Minimum Bid Requirement. As a result of the Extension, the Company now has until October 13, 2025 (the “New Compliance Period”) to regain compliance with the Minimum Bid Requirement. The Extension has no immediate effect on the listing of the Common Shares on the Nasdaq Capital Market. During the New Compliance Period, the Common Shares will continue to trade on the Nasdaq Capital Market. If at any time before the end of the New Compliance Period, the bid price of the Common Shares closes at or above US$ 1.00 per share for a minimum of 10 consecutive business days, it is expected that Nasdaq would notify the Company that it has regained compliance with the Minimum Bid Requirement. In the event the Company does not regain compliance with the Minimum Bid Requirement by the end of the New Compliance Period, the Company may be subject to delisting of its Common Shares from the Nasdaq Capital Market, at which time the Company may request a review of the delisting determination by a Nasdaq Hearings Panel. We can provide no assurance that the Company would receive a favorable decision from a Nasdaq Hearing Panel after the end of the Compliance Period or that the Common Shares will not be delisted from Nasdaq. VFF owns and operates sophisticated, highly intensive agricultural greenhouse facilities in British Columbia and Texas, where it produces, markets and sells premium-quality tomatoes, bell peppers and cucumbers. Its wholly owned subsidiary, Pure Sunfarms, is a vertically integrated licensed producer and supplier of cannabis products sold to customers throughout Canada and internationally. Through its 80 % ownership interest of Rose, the Company has a substantial presence in the Province of Quebec as a cannabis supplier, producer and commercialization expert. The Company’s wholly owned subsidiary, Balanced Health, develops and sells high quality, cannabidiol (“CBD”) based products including ingestible, edible and topical applications within the U.S. Its wholly owned subsidiary, Leli, is a vertically integrated licensed producer and supplier of cannabis products sold to coffee shops in the Netherlands. Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying condensed consolidated statement of financial position as of December 31, 2024 is derived from the Company’s audited financial statements as of that date. Because certain information and footnote disclosures have been condensed or omitted, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2024 contained in the Company’s 2024 Annual Report on Form 10-K. In management’s opinion, all normal and recurring adjustments considered necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented have been included. When necessary, certain prior year amounts have been reclassified to conform with the current period presentation. Interim period operating results do not necessarily indicate the results that may be expected for any 6 VILLAGE FARMS INTERNATIONAL, INC. Notes to Condensed Consolidated Interim Financial Statements (In thousands of United States dollars, except per share amounts, unless otherwise noted) 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. Principals of Consolidation The accompanying condensed consolidated financial statements include Village Farms International, Inc. and its subsidiaries and include the accounts of all majority-owned subsidiaries over which the Company exercises control and, when applicable, entities in which the Company has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. Other parties’ interests in entities that the Company consolidates are reported as non-controlling interests within equity, except for mandatorily redeemable non-controlling interests, which are recorded within mezzanine equity. Net income or loss attributable to non-controlling interests is reported as a separate line item below net 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. For equity investees in which the Company has an undivided interest in the assets, liabilities and profits or losses of an unconsolidated entity, but does not exercise control over the entity, the Company consolidates its proportional interest in the accounts of the entity. Revision of Prior-Period Condensed Consolidated Financial Statements In connection with the preparation of our 2024 consolidated financial statements, the Company identified an immaterial misstatement in its estimate of its deferred tax asset valuation allowance as of Decembe r 31, 2023. As a result, retained earnings as of December 31, 2023 decreased by $ 3,000 , reflecting the correction of this item. Ou r revision had no impact to the Company’s consolidated statement of cash flows. Additionally, our revision had no impact to the Company’s segment profit measures, compliance with debt covenants, or performance metrics used in the calculation of executive compensation as the impacted line items are excluded from these calculations. We evaluated the materiality of the impact quantitatively and qualitatively and concluded it was not material to any of the prior periods. Translations of Foreign Currencies The assets and liabilities of foreign subsidiaries with a functional currency other than the U.S. dollar are translated into U.S. dollars at period-end exchange rates, with resulting translation gains or losses included within other comprehensive income or loss. Revenue and expenses are translated into U.S. dollars at average rates of exchange during the applicable period. Substantially all of the Company’s foreign operations use their local currency as their functional currency. For foreign operations for which the local currency is not the functional currency, the operation’s non-monetary assets are remeasured into U.S. dollars at historical exchange rates. All other accounts are remeasured at current exchange rates, with both gains or losses from remeasurement and currency gains or losses from transactions executed in currencies other than the functional currency included in foreign exchange (loss) gain. In these condensed consolidated financial statements, “$” means U.S. dollars and “C$” means Canadians dollars, unless otherwise noted. The exchange rates used to translate from Canadian dollars to U.S dollars is shown below: As of March 31, 2025 March 31, 2024 December 31, 2024 Spot rate 0.6966 0.7383 0.6957 Three-month period ended 0.6965 0.7417 N/A 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. 7 VILLAGE FARMS INTERNATIONAL, INC. Notes to Condensed Consolidated Interim Financial Statements (In thousands of United States dollars, except per share amounts, unless otherwise noted) 2. INVENTORIES Inventories consisted of the following as of: Classification March 31, 2025 December 31, 2024 Cannabis: Raw materials $ 7,888 $ 6,372 Work-in-progress 10,727 7,052 Finished goods 17,105 21,872 Packaging 3,380 3,100 Produce: Crop inventory 11,606 13,543 Purchased produce inventory 753 1,198 Inventory $ 51,459 $ 53,137 3. REVENUES The Company’s produce and cannabis revenue transactions consist of a single performance obligation to transfer promised goods at a fixed price. Quantities to be delivered to the customer are determined at a point near the date of delivery through purchase orders received from the customer. The Company recognizes revenue when it has fulfilled a performance obligation, which is typically when the customer receives the goods. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the goods. The amount of revenue recognized is measured at the fair value of the consideration received or receivable, reduced for excise duty, returns, and other customer credits, such as trade discounts and volume rebates. Payment terms are consistent with terms standard to the markets the Company serves. The following table disaggregates the Company’s net revenue by major source for the three months ended: Classification March 31, 2025 March 31, 2024 Cannabis: Branded (1) $ 22,761 $ 29,020 Non-Branded 6,279 6,478 International 5,388 1,499 Other 409 449 U.S. Cannabis 3,904 4,537 Netherlands Cannabis 486 0 Produce 37,421 36,094 Clean Energy 426 — Total Revenue $ 77,074 $ 78,077 (1) Branded revenues are shown net of excise tax on products. For the three months ended March 31, 2025 and 2024 excise tax on products was $ 13,947 and $ 19,703 , respectively. 4. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following as of: Classification March 31, 2025 December 31, 2024 Land $ 13,823 $ 13,771 Leasehold and land improvements 11,344 11,107 Buildings 206,999 206,794 Machinery and equipment 88,020 85,552 Construction in progress 10,982 11,147 Less: Accumulated depreciation ( 141,355 ) ( 138,108 ) Property, plant and equipment, net $ 189,813 $ 190,263 Depreciation expense on property, plant and equipment, was $ 3,517 and $ 3,728 for the three months ended March 31, 2025 and 2024, respectively. Capitalized interest was $ 188 and $ 287 for the three months ended March 31, 2025 and 2024 , respectively. 8 VILLAGE FARMS INTERNATIONAL, INC. Notes to Condensed Consolidated Interim Financial Statements (In thousands of United States dollars, except per share amounts, unless otherwise noted) 5. GOODWILL AND INTANGIBLE ASSETS Goodwill The following table presents the changes in the carrying value of goodwill by reportable segment for the three months ended March 31, 2025: Cannabis - Canada Balance as of December 31, 2024 $ 42,315 Foreign currency translation adjustment 53 Balance as of March 31, 2025 $ 42,368 Intangible Assets Intangible assets consisted of the following as of: Classification March 31, 2025 December 31, 2024 Licenses $ 17,456 $ 17,196 Brand and trademarks* 3,274 12,520 Customer relationships 12,546 12,530 Computer software 963 2,029 Other* 144 144 Less: Accumulated amortization ( 9,909 ) ( 10,064 ) Less: Impairments* — ( 9,250 ) Intangibles, net $ 24,474 $ 25,105 * Includes indefinite-lived intangible assets The expected future amortization expense for definite-lived intangible assets as of March 31, 2025 was as follows: Fiscal period Remainder of 2025 $ 2,250 2026 3,050 2027 3,050 2028 1,795 2029 1,794 Thereafter 9,117 Intangibles, net $ 21,056 Amortization expense for intangibles for the three months ended March 31, 2025 and 2024 were $ 794 and $ 830 , 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 three months ended March 31, 2025 and 2024, the Company considered qualitative factors in assessing for impairment indicators for the Company’s U.S. and Canadian Cannabis segments. At March 31, 2025 and 2024 , the Company concluded that no impairment indicators existed as no events or circumstances occurred that would, more likely than not, reduce the fair value of the reporting units to be below their carrying amounts. 9 VILLAGE FARMS INTERNATIONAL, INC. Notes to Condensed Consolidated Interim Financial Statements (In thousands of United States dollars, except per share amounts, unless otherwise noted) 6. LINE OF CREDIT AND LONG-TERM DEBT The following table provides details for the carrying values of debt as of: March 31, 2025 December 31, 2024 Term Loan - (“FCC Term Loan”) - repayable by monthly principal payments of $ 164 and accrued interest at Secured Overnight Financing Rate (“SOFR” ) plus an applicable margin per annum ( 7.87 % at March 31, 2025); matures May 3, 2027 $ 20,329 $ 20,821 Term Loan - ("Pure Sunfarms Non-Revolving Facility") - C$ 19.0 M - Canadian prime interest rate plus an applicable margin ( 6.95 % as of March 31, 2025), repayable in quarterly payments equal to 2.50 % of the outstanding principal amount, matures February 7, 2026 5,921 6,262 Term loan - ("Pure Sunfarms Term Loan") - C$ 25.0 M - Canadian prime interest rate plus an applicable margin ( 6.95 % as of March 31, 2025), repayable in quarterly payments equal to 2.50 % of the outstanding principal amount, matures February 7, 2026 10,014 10,436 Term Loan - (Pure Sunfarms "BDC Facility") - non-revolving demand loan repayable by monthly principal payments of C$ 52 and accrued interest at Canadian prime interest rate plus an applicable margin ( 8.70 % at March 31, 2025), matures December 31, 2031 2,939 3,043 Total $ 39,203 $ 40,562 Less current maturities 4,819 8,142 Total long-term debt $ 34,384 $ 32,420 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 March 31, 2025 and December 31, 2024 was $ 69,613 and $ 77,682 , 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. As of March 31, 2025, the PSF Non-Revolving Facility was secured by the Delta 2 and Delta 3 greenhouse facilities and contained customary financial and restrictive covenants. The Company has a revolving line of credit agreement with a Canadian chartered bank (the "Operating Loan") maturing May 2027. The Operating Loan can be drawn in advances of up to C$ 10,000 , had an outstanding balance of $ 5,000 and $ 4,000 drawn on the facility as of March 31, 2025 and December 31, 2024, respectively, and future availability of $ 2,588 on March 31, 2025 . Interest under the Operating Loan is payable at the Canadian prime rate plus an applicable margin per annum ( 7.87 % at March 31, 2025), payable monthly. The carrying value of the assets pledged as collateral for the Operating Loan as of March 31, 2025 and December 31, 2024 was $ 23,755 and $ 27,136 , respectively. As of March 31, 2025, Pure Sunfarms had a revolving line of credit (the “PSF Revolving Line of Credit”) with a Canadian chartered bank. The PSF Revolving Line of Credit could be drawn for advances of up to C$ 15,000 and had an outstanding balance of C$ 0 as of March 31, 2025 and December 31, 2024 . Interest under the PSF Revolving Line of Credit was payable at the Canadian prime rate plus an applicable margin per annum ( 6.95 % at March 31, 2025), payable monthly. As described below, on April 17, 2025, Pure Sunfarms replaced the Pure Sunfarms Loans and the PSF Revolving Line of Credit with the Pure Sunfarms Secured Credit Facilities (as defined below). The Company was required to comply with financial covenants, measured either quarterly or annually depending on the covenant. The Company was in compliance with all its covenants as of March 31, 2025. 10 VILLAGE FARMS INTERNATIONAL, INC. Notes to Condensed Consolidated Interim Financial Statements (In thousands of United States dollars, except per share amounts, unless otherwise noted) The weighted average annual interest rate on short-term borrowings as of March 31, 2025 and December 31, 2024 was 7.81 % and 9.44 % , respectively. Accrued interest payable on all long-term debt as of March 31, 2025 and December 31, 2024 was $ 353 and $ 271 , respectively, and these amounts are included in accrued liabilities in the Condensed Consolidated Statements of Financial Position. On April 17, 2025, the Company entered into a secured credit facility with a Canadian chartered bank as administrative agent with an aggregate borrowing capacity of C$ 37.4 million, consisting of a maximum C$ 10.0 million revolving credit facility (the "Pure Sunfarms Revolving Credit Facility"), and a C$ 27.4 million term loan facility (the "Pure Sunfarms Term Loan Facility", and collectively with the Pure Sunfarms Revolving Credit Facility, the "Pure Sunfarms Secured Credit Facilities"). The Pure Sunfarms Secured Credit Facilities are secured by the Delta 2 and Delta 3 greenhouse facilities. The Pure Sunfarms Secured Credit Facilities were used to replace, and repay remaining outstanding balances on, the Company's (i) Pure Sunfarms Term Loan, (ii) the Pure Sunfarms Non-Revolving Facility, (iii) the BDC Facility, and (iv) the PSF Revolving Line of Credit. The credit and guarantee agreements related to the Pure Sunfarms Loan, the Pure Sunfarms Non-Revolving Credit Facility, the BDC Facility, and the PSF Revolving Line of Credit were terminated. The Pure Sunfarms Secured Credit Facilities can be drawn for advances of up to C$ 10.0 million. The outstanding amount of the Pure Sunfarms Term Loan Facility will be repayable , on a quarterly basis, in an amount equal to C$ 1.0 million. Any amount remaining unpaid will be due and payable in full on the maturity date, which is on February 7, 2028 . The loans under the Pure Sunfarms Secured Credit Facilities will accrue interest at a rate equal to, at the company's option, (a) the Canadian Prime Rate plus the applicable margin, or (b) the Canadian Overnight Repo Rate Average plus the applicable margin. The applicable margin for the Pure Sunfarms Secured Credit Facility is determined based upon the leverage ratio. The Pure Sunfarms Secured Credit Facilities also contain customary covenants, customary representations and warranties, affirmative covenants, financial covenants and events of default. In accordance with ASC 470-10-45, Debt, Other Presentation Matters , because the Pure Sunfarms Secured Credit Facilities were issued subsequent to the balance sheet date of March 31, 2025, and because a portion of the Pure Sunfarms Secured Credit Facilities proceeds were used to pay off the Pure Sunfarms Term Loans and the BDC Facility, the Company reclassified the short-term portion of the of the Pure Sunfarms Term Loan, the Pure Sunfarms Non-Revolving Facility, and the BDC Facility on the balance sheet as of March 31, 2025 to long-term, except for the C$ 4.0 million ($ 2.9 million as of March 31, 2025) in current-maturities of long-term debt (which represents payments due in the next 12 months under the Pure Sunfarms Secured Credit Facilities). The aggregate annual principal maturities of long-term debt for the remainder of 2025 and thereafter are as follows: Remainder of 2025 $ 3,631 2026 4,754 2027 19,673 2028 11,145 Total $ 39,203 7. FINANCIAL INSTRUMENTS Financial assets and liabilities are recognized on the consolidated statements of financial position at fair value in a hierarchy for those assets and liabilities measured at fair value on a recurring basis. At March 31, 2025 and December 31, 2024, the Company’s financial instruments included cash and cash equivalents, trade receivables, minority investments, line of credit, trade payables, accrued liabilities, lease liabilities, and note payables. The carrying value of cash and cash equivalents, trade receivables, trade payables, and accrued liabilities approximate their fair values due to the short-term maturity of these financial instruments. The carrying value of line of credit, lease liabilities, notes payable, and debt approximate their fair values due to the short-term nature of these instruments or the use of market interest rates for debt instruments. There were no financial instruments categorized as Level 3 at March 31, 2025 and December 31, 2024 , other than the minority investments. There were no transfers of assets or liabilities between levels during the three months ended March 31, 2025 or March 31, 2024 . 11 VILLAGE FARMS INTERNATIONAL, INC. Notes to Condensed Consolidated Interim Financial Statements (In thousands of United States dollars, except per share amounts, unless otherwise noted) 8. RELATED PARTY TRANSACTIONS AND BALANCES The Company leases its Rose office building from a Company employee who also owns a minority interest in Rose. For the three months ended March 31, 2025, the Company paid C $ 36 and for the three months ended March 31, 2024 the Company paid C $ 39 to lease this office space. One of the Company’s employees is related to a member of the Company’s executive management team and received approximately $ 36 in salary and benefits during the three months ended March 31, 2025 and $ 30 in salary and benefits during the three months ended March 31, 2024 . 9. INCOME TAXES The Company has recorded a provision for income taxes of $ 983 for the three months ended March 31, 2025, compared with a provision for income taxes of $ 320 for the same period 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 valuati on allowance of $ 50,832 as of March 31, 2025 and $ 48,561 as of December 31, 2024. The Company cannot presently estimate what, if any, changes to the valuation of its deferred tax assets may be deemed appropriate in the future. As of March 31, 2025 , the Company’s net deferred tax assets totaled $ 918 a nd were primarily derived from a tax planning strategy to utilize a portion of its existing net operating loss carryforwards. 10. SEGMENT AND GEOGRAPHIC INFORMATION The Company regularly monitors its reportable segments to determine if changes in facts and circumstances would indicate whether changes in the determination or aggregation of operating segments are necessary. In the fourth quarter of 2024, the Company determined that Leli had met the quantitative threshold to be a reportable segment. In addition, during the fourth quarter of 2024, the chief operating decision-maker (“CODM”) changed the segment profit measure to operating income or loss from gross margin. We believe that segment operating (loss) income is a more useful measure because it allows management, analysts, investors, and other interested parties to evaluate the profitability of our business operations before the effects of certain expenses that directly arise from non-operating activities (other income/expense), financing decisions (interest), and tax strategies (income taxes). These changes have been applied to all periods presented. Segment reporting is prepared on the same basis that the Company’s Chief Executive Officer , who is the CODM, manages the business, makes operating decisions and assesses performance. Management has determined that the Company operates in five reportable segments: Produce, Cannabis-Canada, Cannabis-U.S., Clean Energy, and Cannabis - Netherlands (previously Leli).The Produce segment produces, markets and sells premium quality tomatoes, bell peppers and cucumbers. The Cannabis-Canada segment produces and supplies cannabis products to be sold to other licensed providers and provincial governments across Canada and internationally. The Cannabis-U.S. segment develops and sells high-quality, CBD-based health and wellness products including ingestible, edible and topical applications across the United States. The Clean Energy business receives a royalty representing a portion of the natural gas that is sold to one customer pursuant to its long-term contract. The Cannabis - Netherlands segment produces and supplies cannabis products in the Netherlands, supplying designated coffee shops. The accounting policies of the segments are the same as those described in the summary of business, basis of presentation and significant accounting policies. The Company evaluates performance for all of its reportable segments based on segment operating (loss) income from operations. 12 VILLAGE FARMS INTERNATIONAL, INC. Notes to Condensed Consolidated Interim Financial Statements (In thousands of United States dollars, except per share amounts, unless otherwise noted) For all of its reportable segments, the CODM uses segment operating (loss) income to allocate resources (including employees, property, and financial or capital resources) for each segment, predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a monthly basis for the (loss) income when making decisions about allocating capital and personnel to the segments. The CODM also uses segment (loss) income to assess the performance for each segment by comparing the results with one another. The following tables reflect the reconciliation of segment revenue, measures of a segments profit or loss, and significant segment expenses reconciled to the consolidated loss before income taxes: For the Three Months Ended March 31, 2025 VF Fresh (Produce) Cannabis Canada Cannabis U.S. Clean Energy Cannabis Netherlands Total Sales to external customers $ 37,421 $ 34,837 $ 3,904 $ 426 $ 486 $ 77,074 Cost of sales ( 41,703 ) ( 22,362 ) ( 1,311 ) ( 73 ) ( 285 ) ( 65,734 ) Selling, general and administrative expenses ( 2,875 ) ( 8,762 ) ( 2,535 ) ( 28 ) ( 439 ) ( 14,639 ) Segment operating (loss) income $ ( 7,157 ) $ 3,713 $ 58 $ 325 $ ( 238 ) $ ( 3,299 ) Reconciliation of segment operating (loss) income to net loss before taxes Other expense, net (2) ( 693 ) Other corporate expenses (3) ( 2,140 ) Loss before taxes $ ( 6,132 ) For the Three Months Ended March 31, 2024 VF Fresh (Produce) Cannabis Canada Cannabis U.S. Clean Energy Cannabis Netherlands Total Sales to external customers $ 36,094 $ 37,446 $ 4,537 $ — $ — $ 78,077 Cost of sales ( 32,784 ) ( 27,938 ) ( 1,842 ) — — ( 62,564 ) Selling, general and administrative expenses ( 2,693 ) ( 7,704 ) ( 3,406 ) ( 20 ) ( 363 ) ( 14,186 ) Segment operating income (loss) $ 617 $ 1,804 $ ( 711 ) $ ( 20 ) $ ( 363 ) $ 1,327 Reconciliation of segment operating (loss) income to net loss before taxes Other expense, net (2) ( 1,485 ) Other corporate expenses (3) ( 2,201 ) Loss before taxes $ ( 2,359 ) (1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. (2) Other income (expense), net is comprised of interest expense, interest income, foreign exchange (loss) gain, other income (expense). (3) Other corporate expenses are comprised of expenses related to centralized corporate functions such as accounting, treasury, information technology, legal, human services, and internal audit expenses. The following tables summarizes our interest income, interest expense, depreciation and amortization, other significant noncash items, and expenditures for capital assets by reportable segment: For the Three Months Ended March 31, 2025 VF Fresh (Produce) Cannabis Canada Cannabis U.S. Clean Energy Cannabis Netherlands Segment Totals Corporate Consolidated Totals Interest income — 51 — — — 51 24 75 Interest expense 515 191 — — — 706 — 706 Depreciation and amortization 1,991 2,574 49 — 315 4,929 44 4,973 Share based compensation 13 41 7 — — 61 84 145 Other significant noncash items: Non-cash lease expense 375 21 136 — — 532 — 532 Expenditures for segment assets 1,307 1,058 8 — 166 2,539 — 2,539 13 VILLAGE FARMS INTERNATIONAL, INC. Notes to Condensed Consolidated Interim Financial Statements (In thousands of United States dollars, except per share amounts, unless otherwise noted) For the Three Months Ended March 31, 2024 VF Fresh (Produce) Cannabis Canada Cannabis U.S. Clean Energy Cannabis Netherlands Segment Totals Corporate Consolidated Totals Interest income 2 50 — — — 52 154 206 Interest expense 572 345 — — — 917 — 917 Depreciation and amortization 1,334 2,796 54 — 314 4,498 60 4,558 Share based compensation — 55 42 — — 97 308 405 Other significant noncash items: Non-cash lease expense 470 22 139 — — 631 — 631 Expenditures for segment assets 1,063 82 4 — 727 1,876 — 1,876 The following tables summarizes our total assets by reportable segment: March 31, 2025 December 31, 2024 Assets Produce $ 86,538 $ 97,332 Cannabis - Canada 264,463 266,433 Cannabis - United States 6,662 6,728 Clean Energy 523 360 Cannabis - Netherlands 12,109 11,093 Total assets for reportable segments $ 370,295 $ 381,946 Corporate 6,809 7,360 Consolidated total $ 377,104 $ 389,306 The Company’s primary operations are in the United States and Canada. The following tables summarizes our assets by geographic location: Total assets March 31, 2025 December 31, 2024 United States $ 73,492 $ 87,894 Canada 291,503 290,319 Netherlands 12,109 11,093 $ 377,104 $ 389,306 Long-lived assets March 31, 2025 December 31, 2024 United States $ 43,115 $ 43,686 Canada 218,625 219,735 Netherlands 10,490 9,866 $ 272,230 $ 273,287 14 VILLAGE FARMS INTERNATIONAL, INC. Notes to Condensed Consolidated Interim Financial Statements (In thousands of United States dollars, except per share amounts, unless otherwise noted) 11. LOSS PER SHARE Basic and diluted net loss per common share is calculated as follows: Three months ended March 31, 2025 2024 Numerator: Net loss attributable to Village Farms International, Inc. shareholders $ ( 6,703 ) $ ( 2,852 ) Denominator: Weighted average number of common shares - basic 112,337 110,249 Effect of dilutive securities- share-based employee options and awards — — Weighted average number of common shares - diluted 112,337 110,249 Antidilutive options and awards 6,692 6,572 Net loss per ordinary share: Basic $ ( 0.06 ) $ ( 0.03 ) Diluted $ ( 0.06 ) $ ( 0.03 ) 12. SHAREHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION Share-based compensation expense was $ 145 and $ 405 for the three months ended March 31, 2025 and 2024, respectively. Stock option activity for the three months ended March 31, 2025 was as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding at December 31, 2024 6,518,409 $ 3.44 6.79 $ 90 Granted 225,000 $ 0.63 5.00 $ — Forfeited/expired ( 51,333 ) $ 3.22 Outstanding at March 31, 2025 6,692,076 $ 3.36 6.50 $ 2 Exercisable at March 31, 2025 4,693,932 $ 4.39 6.02 $ 1 Restricted shares activity for the three months ended March 31, 2025 was as follows: Number of Restricted Stock Grants Weighted Average Grant Date Fair Value Outstanding at December 31, 2024 700,860 $ 0.17 Granted — — Vested and Issued — — Outstanding at March 31, 2025 700,860 $ 0.17 Exercisable at March 31, 2025 — $ - 15 VILLAGE FARMS INTERNATIONAL, INC. Notes to Condensed Consolidated Interim Financial Statements (In thousands of United States dollars, except per share amounts, unless otherwise noted) 13. CHANGES IN NON-CASH WORKING CAPITAL ITEMS AND SUPPLEMENTAL CASH FLOW INFORMATION Three Months Ended March 31, 2025 2024 Trade receivables $ ( 3,589 ) $ ( 7,095 ) Inventories 1,494 3,216 Lease liabilities ( 586 ) ( 664 ) Other receivables 4 ( 1 ) Prepaid expenses and deposits 964 836 Trade payables ( 8,789 ) ( 2,993 ) Accrued liabilities 6,555 3,431 Other assets, net of other liabilities ( 262 ) ( 20 ) $ ( 4,209 ) $ ( 3,290 ) The Company paid income taxes of $ 0 for the three months ended March 31, 2025 and 2024. The Company paid interest expense of $ 794 and $ 1,062 for the three months ended March 31, 2025 and 2024 , respectively. 14. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date the condensed consolidated financial statements were available to be issued. On April 10, 2025, the Company entered into the A&R Credit Agreement with FCC as the lender, which amended and restated the terms of the FCC Term Loan. Among other things, the A&R Credit Agreement (i) adds the Company as a new borrower, (ii) adds VF Clean Energy, Inc. as a new guarantor, and (iii) provides more favorable financial covenants. On April 17, 2025, the Company entered into a secured credit facility with a Canadian chartered bank as administrative agent with an aggregate borrowing capacity of C$ 37.4 million, consisting of the Pure Sunfarms Secured Credit Facilities (Note 6). The Pure Sunfarms Secured Credit Facilities are secured by the Delta 2 and Delta 3 greenhouse facilities. The Pure Sunfarms Secured Credit Facilities were used to replace, and repay remaining outstanding balances on, the Company's (i) Pure Sunfarms Term Loan, (ii) the Pure Sunfarms Non-Revolving Credit Facility, (iii) the BDC Facility, (iv) and the PSF Revolving Line of Credit. The credit and guarantee agreements related to the Pure Sunfarms Loan, the Pure Sunfarms Non-Revolving Credit Facility, the BDC Facility, and the PSF Revolving Line of Credit were terminated. On April 22, 2025, the Company received a favorable settlement of approximately $ 4.4 million, net of transaction costs, relating to the partial recovery of historical operational losses due to the Tomato Brown Rugose Fruit Virus infestation. On May 12, 2025, the Company entered into a definitive framework agreement with a newly-formed holding company (“Vanguard”), backed by private investment firms, to privatize certain assets and operations of its Fresh Produce segment. The transaction will create a new, privately held joint venture with Village Farms as a minority owner. Village Farms is expected to receive $ 40 million in cash proceeds, as well as a 37.9 % equity ownership interest in Vanguard upon closing of the transaction, which is expected to occur during the second quarter of 2025. 16