What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-11 compared with 2025-05-12 · 520 added, 234 removed, 305 unchanged (71% of the section changed)

12 unchanged sentences

(“Pure Sunfarms” or “PSF”), Balanced Health Botanicals, LLC (“Balanced Health”), Rose LifeScience Inc.

(“Rose LifeScience” or “Rose”), VF Clean Energy, Inc.

(“VFCE”), and Leli Holland B.

(“Leli” or “Leli Holland”).

(“Rose LifeScience” or “Rose”), Leli Holland B.

(“Leli” or “Leli Holland”), and VF Clean Energy, Inc.

The Company’s vision is to be recognized as an international leader in consumer products developed from plants, whereby we produce and market value-added products that are consistently preferred by consumers.

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As a result of the typically higher margins in international medical markets, we expect international expansion to enhance our profitability while expanding our brand and experience into emerging legal cannabis markets.

During the fourth quarter of 2024, we completed our acquisition of Leli Holland.

During September 2024, we completed our acquisition of the remaining 15% equity ownership interest in Leli Holland.

Through our ownership of Leli Holland, we hold one of ten licenses to cultivate and distribute cannabis legally in the Netherlands under that country’s Controlled Cannabis Supply Chain Experiment, with sales beginning in the first quarter of 2025.

In the U.S., Balanced Health is our industry-leading cannabinoid business, extending our portfolio into cannabidiol (“CBD”) and hemp-derived consumer products.

We also operate a large, well-established, produce business (primarily tomatoes) under the Village Farms Fresh (“VF Fresh”) brand which sells to food distribution companies and mass retail stores.

We own and operate produce cultivation assets in Texas and Delta, B.C.

and source produce from our growing partners, in Mexico and Canada.

Our intention is to use our assets, expertise and experience (across cannabis, hemp, CBD and produce ecosystems) to participate in the U.S.

Cannabis market subject to compliance with applicable U.S.

federal and state laws and applicable stock exchange rules.

We also cultivate tomatoes and market them through Village Farm Fresh (a Vanguard Holdings Company) under the Village Farms Fresh (“VF Fresh”) brand which sells to food distribution companies and mass retail stores.

Our intention is to use our assets, expertise and experience (across cannabis, hemp, CBD and produce ecosystems) to participate in the global cannabis market subject to compliance with all applicable national laws and applicable stock exchange rules.

Our Operating Segments

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Produce Segment

Our Produce segment is composed of VF Fresh, which currently consists of VFLP and VFCLP.

Through VF Fresh, we grow, market and distribute premium-quality, greenhouse-grown produce in North America.

These premium products are grown in sophisticated, highly intensive agricultural greenhouse facilities located in British Columbia and Texas.

We also market and distribute premium tomatoes, peppers and cucumbers produced under exclusive and non-exclusive arrangements from our greenhouse supply partners located in Mexico, B.C.

We primarily market and distribute under our Village Farms® brand name to retail supermarkets and dedicated fresh food distribution companies throughout the United States and Canada.

Our Produce segment currently consists of VFCLP after the sales transfer with Vanguard Holdings in May 2025.

Through our produce segment, we grow premium-quality, greenhouse-grown produce in Canada.

These premium products are grown in sophisticated, highly intensive agricultural greenhouse facilities located in British Columbia.

On May 30, 2025 the Company closed on the transformative transaction to privatize certain assets and operations of its Produce segment,, including its Marfa II and Fort Davis greenhouses, and all of its produce distribution centers, through a series of asset and lease transfers.

The Company determined that the assets that had been disposed of met the criteria for discontinued operations presentation.

For all periods presented, the operating results associated with the assets disposed of have been reclassified into net income (loss) from discontinued operations, net of income taxes, in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The associated assets and liabilities have been reflected as current and long-term assets and liabilities of discontinued operations in the Condensed Consolidated Statements of Financial Position, and the cash flows from the Company’s discontinued operations are presented in the Condensed Consolidated Statements of Cash Flows for all periods presented.

For further information on the Transaction please refer to our Form 8-K filed with the SEC on June 5, 2025.

The information contained within such Form 8-K is incorporated by reference herein.

Clean Energy Segment

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Canadian Cannabis

• Maintained top three overall market share in Canada 1 and number two position in dried flower during the first quarter despite planned reductions in sales of lower margin branded products;

• Returned to the high end of its targeted gross margin range of 30-40% and delivered its highest quarter of adjusted EBITDA performance in three years;

• Subsequent to quarter end, refinanced its syndicated Pure Sunfarms Term Loans, consolidating its three previous loans into one credit facility with two of its existing lenders.

The new Canadian cannabis credit facility carries a variable interest rate that is currently below 8.0 percent, reflecting a 50 basis point improvement to the previous interest rate, as well as improved financial covenants and a maturity date of February 7, 2028, replacing its previous credit facilities maturing on February 7, 2026.

For the first quarter of 2025.

• Maintained a top three overall market share position in Canada and the number one position in dried flower year-to-date through the month of July, despite planned reductions in sales of lower-margin SKUs1;

• Achieved the high end of its targeted gross margin range of 30-40% for the second consecutive quarter, with its strongest adjusted EBITDA performance in six years;

• Refinanced its syndicated Canadian Cannabis Term Loans, consolidating three previous loans into one credit facility with two of its existing lenders.

The new credit facility carries a variable interest rate below 6.0 percent, reflecting a 250 basis

point improvement to the previous interest rate, as well as improved financial covenants and a maturity date of February 7, 2028, replacing its previous credit facilities maturing on February 7, 2026;

• Subsequent to quarter end, published groundbreaking peer-reviewed research in Scientific Reports (Nature Portfolio), highlighting the natural variability of THC potency within cannabis plants, reinforcing a need for a greater focus on product quality versus potency and more transparent and accurate labeling across the industry;

• Subsequent to quarter end, the Company launched innovative new windowed packaging for its flower products in the Canadian market, enabling consumers to see product quality in the package before purchase

• Subsequent to quarter end, the Company announced that its Board of Directors unanimously approved an investment to expand cannabis cultivation capacity at its Delta, BC production campus to meet increasing demand in Canadian and International markets.

The expansion will be funded with existing cash on hand, and is expected to yield an incremental 40 metric tonnes of annualized cannabis production once completed.

Based on estimated retail sales from HiFyre, other third parties and provincial boards.

International Medical Cannabis (Reported Within Canadian Cannabis)

• International sales increased 285% year-over-year in the first quarter with continued growth in shipment volumes to Australia, Germany and the United Kingdom;

• Continue to hold leading cultivars in the German market through third-party distributors 1 ;

• During the first quarter, expanded international medical cannabis distribution to New Zealand through a supply agreement with Medleaf Therapeutics, an established New Zealand-based medical cannabis company with a comprehensive distribution network;

• The Company continues to expect that international medical export sales will triple in fiscal year 2025, as compared to fiscal year 2024.

Based on rankings compiled by German outlet Flowzz

• International export sales increased 690% year-over-year in the second quarter and 116% sequentially, driven by new customer relationships as well as increased sales from existing customers;

• The Company achieved its previous full-year sales outlook for International export sales during the first six months of the year, and expects similar international export sales performance in the second half of 2025;

• As a result of continued strength of sales during the third quarter, the Company now believes it has become one of the largest importers of medical cannabis to Europe 1

• Company continues to hold leading cultivars in Germany through third-party distribution partners 2

Based on German government data and Company estimates

Based on Company estimates and rankings compiled by German outlet Flowzz

Netherlands Cannabis (Leli Holland)

• Commenced sales to Dutch coffeeshops in February 2025, consistent with the Company’s previously-disclosed timeline;

• Broke ground on a Phase II indoor cultivation facility in the town of Groningen.

The Phase II facility is expected to be complete in Q1 2026 and quintuple annual production capacity.

• Balanced Health Botanicals' CBDistillery announced that its full range of hemp-derived gummies are now manufactured in-house at its GMP-certified facility south of Denver, Colorado.

Internalization of manufacturing is expected to enable greater innovation, operational flexibility, and inventory control in the future;

• Operations in the Company’s Phase I facility in Drachten continued to ramp toward full capacity during the second quarter, while demonstrating strong profitability and cash flow generation;

• Leli Holland products are now represented in 66 of 80 participating coffeeshops;

representing market penetration of 82.5%;

• The Company has continued to introduce new product categories into the market and expects to launch hash products during the fourth quarter;

• Construction of the Company’s Phase II facility in Groningen remains on track to be operational in Q1 2026.

• Once completed, the Phase II facility is expected to quintuple total annualized production capacity.

• The Company's application for a Texas medicinal marijuana license remains pending review by the Department of Public Services.

If awarded, the Company plans to work with its listing authority to structure an acceptable ownership structure and comply with all applicable regulatory requirements.

VF Fresh (Produce)

• Subsequent to quarter end, announced a transformative transaction to privatize certain assets and operations of its Fresh Produce segment.

Under the terms of the agreement, the Company will privatize Produce segment operations, including its Marfa II and Fort Davis greenhouses, and all of its produce distribution centers, through a series of asset and lease transfers, for total consideration of $40 million and a 37.9% equity ownership interest in Vanguard Food LP, a new, private-equity-backed joint venture with private investment firms including Sweat Equities.

• Vanguard is expected to be backstopped by additional capital commitments to execute a M&A roll-up strategy of other produce brands and assets in North America.

The transaction is expected to close during the second quarter of 2025.

• Village Farms will retain ownership of all its Canadian greenhouse assets, and Texas-based Marfa I and Monahans greenhouse assets for potential future cannabis market optionality.

• Appointed Yvonne Trupiano, who has led human resources functions for public and private companies across various industries and sizes, with the majority of her career at Fortune 500 global companies, as Executive Vice President and Global Chief Human Resources Officer;

• Subsequent to quarter end, the Nasdaq approved the Company’s request for a 180-calendar day extension (the “Extension”) to regain compliance with the minimum closing bid price of US$1.00 per share listing requirement (NASDAQ Listing Rule 5550(a)(2).

As a result of the Extension, the Company now has until October 13, 2025 to regain compliance with the Minimum Bid Requirement;

• Subsequent to quarter end, the Company amended its loan with Farm Credit Canada (“FCC Loan”) to among other things, replace the fixed charge ratio covenant with a more favorable liquidity coverage ratio covenant.

This amendment was a result of the Company’s considerable expansion and growth of Village Farms’ business since entering into the original credit agreement in 2013, as well a recognition of the Company’s stronger strategic focus on its growing cannabis business.

• On May 30, 2025 the Company closed on the previously-announced transaction to privatize certain assets and operations of its Produce segment.

Under the terms of the agreement, the Company privatized Produce segment operations, including its Marfa II, Marfa I and Fort Davis greenhouses, and all of its produce distribution centers, as well as its third party produce distribution business, through a series of asset and lease transfers, for total consideration of $40 million and a 37.9% equity ownership interest in Vanguard Food LP, a new, private-equity-backed partnership;

• During the second quarter, the Company entered into service and supply agreements with Vanguard Food LP for produce production in its Delta 1 and Delta 2 greenhouses, which will continue supplying produce to Vanguard for a multi-year term.

The Company’s Produce segment financial results are now predominantly comprised of activities related to operation of the Delta 1 and Delta 2 greenhouses.

Following completion of the 2025 tomato crop, the Delta 2 greenhouse will no longer supply produce to Vanguard.

• During the second quarter, the Company regained compliance with the Nasdaq minimum closing bid price of US$1.00 per share listing requirement (NASDAQ Listing Rule 5550(a)(2).

• Subsequent to quarter end, appointed Michael Carey as Corporate Treasurer.

Presentation of Financial Results

Our consolidated results of operations for the three months ended March 31, 2025 and 2024 presented below reflect the operations of our consolidated wholly-owned subsidiaries, our 70% ownership interest in Rose LifeScience through March 31, 2024, our 80% ownership interest in Rose LifeScience beginning on April 1, 2024, our 85% ownership interest in Leli through September 22, 2024, and our 100% ownership interest in Leli beginning on September 23, 2024.

Our consolidated results of operations for the three and six months ended June 30, 2025 and 2024 presented below reflect the operations of our consolidated wholly-owned subsidiaries, our 70% ownership interest in Rose LifeScience through March 31, 2024, our 80% ownership interest in Rose LifeScience beginning on April 1, 2024, our 85% ownership interest in Leli through September 22, 2024, and our 100% ownership interest in Leli beginning on September 23, 2024.

Foreign currency exchange rates

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All references to “dollars” or “$” are to U.S.

The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of March 31, 2025, March 31, 2024, and December 31, 2024.

The assets and liabilities of our foreign operations are translated into dollars at the exchange rate in effect as of June 30, 2025, June 30, 2024, and December 31, 2024.

Transactions affecting the shareholders’ equity (deficit) are translated at historical foreign exchange rates.

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dollars is shown below:

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

December 31, 2024

Three-month period ended

Six-month period ended

RESULTS OF OPERATIONS

2 unchanged sentences

dollars, except per share amounts, and unless otherwise noted)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of sales

2 unchanged sentences

Interest income

Foreign exchange loss

Loss before taxes

Foreign exchange gain (loss)

Goodwill and intangible asset impairments

Income (loss) before taxes and equity method investment income

Provision for income taxes

Loss including non-controlling interests

Equity method investment income, net of tax

Income (loss) from continuing operations

Income (loss) from discontinued operations, net of tax

Income (loss) including non-controlling interests

net loss (income) attributable to non-controlling interests, net of tax

Net loss attributable to Village Farms International Inc.

Net income (loss) attributable to Village Farms International, Inc.

Adjusted EBITDA from continuing operations

Adjustments attributable to discontinued operations

Adjusted EBITDA (1)

Basic loss per share

Diluted loss per share

Basic income (loss) per share attributable to Village Farms International, Inc.

shareholders from:

Continuing operations

Discontinued operations

Basic income (loss) per share attributable to Village Farms International, Inc.

Diluted income (loss) per share attributable to Village Farms International, Inc.

shareholders from:

Continuing operations

Discontinued operations

Diluted income (loss) per share attributable to Village Farms International, Inc.

(1) Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP.

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Adjusted EBITDA includes the Company’s 70% interest in Rose LifeScience through March 31, 2024, 80% interest in Rose LifeScience beginning on April 1, 2024, 85% interest in Leli through September 22, 2024, and our 100% interest in Leli beginning on September 23, 2024.

We caution that our results of operations for the three months ended March 31, 2025 and 2024 may not be indicative of our future performance.

We caution that our results of operations for the three and six months ended June 30, 2025 and 2024 may not be indicative of our future performance.

Discussion of Financial Results

A discussion of our consolidated results for the three months ended March 31, 2025 and 2024 is included below.

A discussion of our consolidated results for the three and six months ended June 30, 2025 and 2024 is included below.

The consolidated results include all five of our operating segments:

Produce, Canadian Cannabis, U.

Cannabis, Cannabis Netherlands, and Clean Energy, along with public company expenses.

Canadian Cannabis, U.

Cannabis, Cannabis Netherlands, Produce,

and Clean Energy, along with public company expenses.

For a discussion of our segmented results, please see “Segmented Results of Operations” below.

CONSOLIDATED RESULTS

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Sales for the three months ended March 31, 2025 were $77,074 compared with $78,077 for the three months ended March 31, 2024.

The decrease of $1,003, or 1%, was primarily due to a decrease in Canadian Cannabis sales of $2,609 resulting from an unfavorable impact of exchange rate fluctuations, and a decrease in U.S.

Cannabis sales of $633, partially offset by an increase in VF Fresh sales of $1,327.

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Sales for the three months ended June 30, 2025 were $59,899 compared with $53,597 for the three months ended June 30, 2024.

The increase of $6,302, or 12%, was primarily due to an increase in Canadian Cannabis sales of $3,773, first year sales from Leli of $2,483, and an increase in Produce sales of $140, partially offset by a decrease in U.S.

Cannabis sales of $456.

For additional information, refer to “Segmented Results of Operations” below.

Cost of Sales

Cost of sales for the three months ended March 31, 2025 were $65,734 compared with $62,564 for the three months ended March 31, 2024.

The increase of $3,170, or 5%, was primarily due to an increase in VF Fresh cost of sales of $8,919, partially offset by a decrease in both Canadian Cannabis cost of sales of $5,576 and U.S.

Cannabis cost of sales of $531.

Cost of sales for the three months ended June 30, 2025 were $37,557 compared with $39,960 for the three months ended June 30, 2024.

The decrease of $2,403, or 6%, was primarily due to a decrease in Canadian Cannabis cost of sales of $2,990, a decrease in U.S.

Cannabis cost of sales of $263 and a decrease in Produce cost of sales of $234 partially offset by the cost of first year sales of Leli of $1,047.

For additional information, refer to “Segmented Results of Operations” below.

Gross profit for the three months ended March 31, 2025 was $11,340 compared with $15,513 for the three months ended March 31, 2024.

The decrease of $4,173, or 27%, was primarily due to a decrease in gross profit at VF Fresh of $7,592, partially offset by an increase in gross profit at Canadian Cannabis of $2,967.

Gross profit for the three months ended June 30, 2025 was $22,342 compared with $13,637 for the three months ended June 30, 2024.

The increase of $8,705, or 64%, was primarily due to an increase in gross profit at Canadian Cannabis of $6,763, the gross profit on first year sales of Leli of $1,436, and an increase in gross profit at Produce of $374.

For additional information, refer to “Segmented Results of Operations” below.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2025 were $16,779 (22% of sales) compared with $16,387 (21% of sales) for the three months ended March 31, 2024.

The increase of $392, or 2%, was primarily due to an increase in operating expenses for Canadian Cannabis of $1,058 and VF Fresh of $182, partially offset by a decrease in U.S.

Cannabis operating expenses of $871.

Selling, general and administrative expenses for the three months ended June 30, 2025 were $15,411 (26% of sales) compared with $17,056 (32% of sales) for the three months ended June 30, 2024.

The decrease of $1,645, or 10%, was primarily due a decrease in share based compensation of $2,073.

For additional information, refer to “Segmented Results of Operations” below.

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Selling, general and administrative expenses

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Interest Expense

Interest expense for the three months ended March 31, 2025 was $706 compared with $917 for the three months ended March 31, 2024.

Interest expense for the three months ended June 30, 2025 was $814 compared with $901 for the three months ended June 30, 2024.

Interest Income

Interest income for the three months ended June 30, 2025 and was $109 compared with $322 for the three months ended June 30, 2024.

Other income for the three months ended June 30, 2025 was $4,430 compared with $45 for the three months ended June 30, 2024.

Other income is primarily attributable to favorable vendor settlements relating to the partial recovery of operational losses from the Tomato Brown Rugose Fruit Virus (“ToBRFV”) infestation.

Goodwill and Intangible Asset Impairments

Goodwill and Intangible Assets Impairments for the three months ended June 30, 2025 was $0 compared to $11,939 for the three months ended June 30, 2024.

The impairment was primarily related to the U.S.

Cannabis reporting unit as a result of recent historical performance during the quarter which underperformed relative to budget, a revised June 30, 2024 forecast which resulted in a shortfall compared to the March 31, 2024 forecast, the new restrictions on CBD sales in an additional eight states at July 1, 2024,and the proliferation of unregulated hemp-derived products on the market which continues to challenge market share for the CBD industry.

Income (Loss) Before Taxes and Equity Method Investment Income

Income before taxes for the three months ended June 30, 2025 was $12,448 compared with a loss before taxes of $16,295 for the three months ended June 30, 2024.

The change of $28,743 was primarily due to the improved gross margins and a favorable

vendor settlement during the three months ended June 30, 2025 and an impairment charge of $11,939 during the three months ended June 30, 2024.

Income (loss) from discontinued operations, net of tax

Income (loss) from discontinued operations, net consists of the following:

For the Three Months Ended June 30,

Loss from discontinued operations, net of tax

Gain on sale of assets, net of tax

Net income (loss) from discontinued operations, net of tax

Net Income (Loss) Attributable to Village Farms International, Inc.

Net income attributable to Village Farms International, Inc.

shareholders for the three months ended June 30, 2025 was $26,497 compared with a net loss of $23,549 for the three months ended June 30, 2024.

The increase of $50,046 was primarily due to the improved gross margins, a favorable vendor settlement during the three months ended June 30, 2025, an improvement on income (loss) from discontinued operations, net of tax of $23,297, and an impairment charge of $11,939 during the three months ended June 30, 2024.

Adjusted EBITDA

Adjusted EBITDA for the three months ended June 30, 2025 was $13,260 compared with ($3,559) for the three months ended June 30, 2024.

The change was mainly driven by improved margins on Canadian Cannabis and the favorable vendor settlement in Produce.

For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Sales for the six months ended June 30, 2025 were $99,579 compared with $95,584 for the six months ended June 30, 2024.

The increase of $3,995, or 4%, was primarily due to an increase in Canadian Cannabis sales of $1,164, first year sales from Leli of $2,969, and Produce sales of $163, partially offset by a decrease in U.S.

Cannabis sales of $1,089, For additional information, refer to “Segmented Results of Operations” below.

Cost of Sales

Cost of sales for the six months ended June 30, 2025 were $63,057 compared with $70,730 for the six months ended June 30, 2024.

The decrease of $7,673, or 11%, was primarily due to a decrease in both Canadian Cannabis cost of sales of $8,566 and U.S.

Cannabis cost of sales of $794, partially offset by the cost of first year sales on Leli of $1,332 and an increase in Produce cost of sales of $245.

For additional information, refer to “Segmented Results of Operations” below.

Gross profit for the six months ended June 30, 2025 was $36,522 compared with $24,854 for the six months ended June 30, 2024.

The increase of $11,668, or 47%, was primarily due to an increase in gross profit at Canadian Cannabis of $9,730, and gross margin on first year sales of Leli of $1,637, partially offset by a decrease in gross profit at US Cannabis of $295.

For additional information, refer to “Segmented Results of Operations” below.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six months ended June 30, 2025 were $30,030 (30% of sales) compared with $31,306 (33% of sales) for the six months ended June 30, 2024.

The decrease of $1,276, or 4% was primarily due a decrease in share based compensation of $2,333.

For additional information, refer to “Segmented Results of Operations” below.

For the Six Months Ended June 30,

Selling, general and administrative expenses

Share-based compensation

Total selling, general and administrative expenses

Interest Expense

Interest expense for the six months ended June 30, 2025 was $1,516 compared with $1,815 for the six months ended June 30, 2024.

The decrease of $299, or 16%, was due to a decrease in the overall borrowing base and a decrease in the Company's interest rates on its various debt instruments.

Interest Income

Interest income for the three months ended March 31, 2025 and was $75 compared with $206 for the three months ended March 31, 2024.

Other income for the three months ended March 31, 2025 was $22 compared with $104 for the three months ended March 31, 2024.

Loss Before Taxes

Loss before taxes for the three months ended March 31, 2025 was ($6,132) compared with ($2,359) for the three months ended March 31, 2024.

The increase of $3,773 was primarily due to the lower gross margins in VF Fresh, partially offset by the improved margins on Canadian Cannabis.

Net Loss Attributable to Village Farms International, Inc.

Net loss attributable to Village Farms International, Inc.

shareholders for the three months ended March 31, 2025 was ($6,703) compared with ($2,852) for the three months ended March 31, 2024.

The decrease of $3,851 was primarily due to lower gross margins in VF Fresh and higher selling, general, and administrative expenses in Canadian Cannabis, partially offset by the improved margins on Canadian Cannabis.

Interest income for the six months ended June 30, 2025 and was $184 compared with $528 for the six months ended June 30, 2024.

Other income for the six months ended June 30, 2025 was $4,451 compared with $149 for the six months ended June 30, 2024.

Other income is primarily attributable to favorable vendor settlements relating to the partial recovery of operational losses from the ToBRFV infestation.

Goodwill and Intangible Asset Impairments

Goodwill and Intangible Assets Impairments for the six months ended June 30, 2025 was $0 compared to $11,939 for the six months ended June 30, 2024.

The impairment was primarily related to the U.S.

Income (Loss) Before Taxes and Equity Method Investment Income

Income before taxes for the six months ended June 30, 2025 was $11,319 compared with a loss before taxes of $20,810 for the six months ended June 30, 2024.

The change of $32,129 was primarily due to the improved gross margins and a favorable vendor settlement during the six months ended June 30, 2025 and an impairment charge of $11,939 during the six months ended June 30, 2024.

Income (loss) from discontinued operations, net of tax

Income (loss) from discontinued operations, net consists of the following:

For the Six Months Ended June 30,

Loss from discontinued operations, net of tax

Gain on sale of assets, net of tax

Net income (loss) from discontinued operations, net of tax

Net Income (Loss) Attributable to Village Farms International, Inc.

Net income attributable to Village Farms International, Inc.

shareholders for six months ended June 30, 2025 was $19,794 compared with a net loss of $26,401 for the six months ended June 30, 2024.

The change of $46,195 was primarily due to the improved gross margins and a favorable vendor settlement during the six months ended June 30, 2025, an improvement on income (loss) from discontinued operations, net of tax of $16,138, and an impairment charge of $11,939 during the six months ended June 30, 2024.

Adjusted EBITDA

Adjusted EBITDA for the three months ended March 31, 2025 was $81 compared with $3,591 for the three months ended March 31, 2024.

The change was mainly driven by decreased profitability of VF Fresh offset by improved margins on Canadian Cannabis.

Adjusted EBITDA for the six months ended June 30, 2025 was $13,341 compared with $32 for the six months ended June 30, 2024.

The change was mainly driven by improved margins on Canadian Cannabis and the favorable vendor settlement in Produce.

For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.

2 unchanged sentences

dollars, except per share amounts, and unless otherwise noted)

For The Three Months Ended March 31, 2025

For The Three Months Ended June 30, 2025

Cannabis Canada

3 unchanged sentences

Selling, general and administrative expenses

Other (expense) income, net

Operating (loss) income

Provision for income taxes

(Loss) income from consolidated entities

Other income (expense), net

Income (loss) before taxes and equity method investment income

(Recovery of) provision for income taxes

Equity method investment income, net of tax

Income (loss) from continuing operations

Income from discontinued operations net of tax

Income (loss) including non-controlling interests

net loss attributable to non-controlling interests, net of tax

Net income (loss)

Adjusted EBITDA from continuing operations

Adjustments attributable to discontinued operations

Adjusted EBITDA (1)

Basic income (loss) per share from continuing operations

Basic income per share from discontinued operations

Basic income (loss) per share

Diluted income (loss) per share from continuing operations

Diluted income per share from discontinued operations

Diluted income (loss) per share

For The Three Months Ended June 30, 2024

Cannabis Canada

Cannabis U.S.

Cannabis Netherlands

Cost of sales

Selling, general and administrative expenses

Other expense, net

Goodwill and intangible asset impairments

Income (loss) before taxes and equity method investment income

Recovery of (provision for) income taxes

Equity method investment income, net of tax

(Loss) income from continuing operations

Loss from discontinued operations net of tax

(Loss) income including non-controlling interests

net (income) loss attributable to non-controlling interests, net of tax

Net (loss) income

Adjusted EBITDA from continuing operations

Adjustments attributable to discontinued operations

Adjusted EBITDA (1)

Basic (loss) income per share from continuing operations

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

For The Three Months Ended March 31, 2024

For The Six Months Ended June 30, 2025

Cannabis Canada

Cannabis U.S.

Cost of sales

Selling, general and administrative expenses

Other income (expense), net

Income (loss) before taxes and equity method investment income

Provision for income taxes

Equity method investment income, net of tax

Income (loss) from continuing operations

Income from discontinued operations net of tax

Income (loss) including non-controlling interests

net loss attributable to non-controlling interests, net of tax

Net income (loss)

Adjusted EBITDA from continuing operations

Adjustments attributable to discontinued operations

Adjusted EBITDA (1)

Basic (loss) income per share from continuing operations

Basic (loss) income per share from discontinued operations

Basic (loss) income per share

Diluted (loss) income per share from continuing operations

Diluted (loss) income per share from discontinued operations

Diluted (loss) income per share

For The Six Months Ended June 30, 2024

Cannabis Canada

Cannabis U.S.

Cannabis Netherlands

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Other expense, net

Operating income (loss)

(Provision for) recovery of income taxes

Income (loss) from consolidated entities

Goodwill and intangible asset impairments

Income (loss) before taxes and equity method investment income

Recovery of (provision for) income taxes

Equity method investment income, net of tax

(Loss) income from continuing operations

Loss from discontinued operations net of tax

(Loss) income including non-controlling interests

net (income) loss attributable to non-controlling interests, net of tax

Net income (loss)

Net (loss) income

Adjusted EBITDA from continuing operations

Adjustments attributable to discontinued operations

Adjusted EBITDA (1)

Basic income (loss) per share

Diluted income (loss) per share

Basic (loss) income per share from continuing operations

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

(1) Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP.

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The Canadian Cannabis segment consists of Pure Sunfarms and Rose LifeScience.

The comparative analysis for Canadian Cannabis is based on the consolidated results of Pure Sunfarms and our interest in Rose LifeScience for the three months ended March 31, 2025 and 2024.

The comparative analysis for Canadian Cannabis is based on the consolidated results of Pure Sunfarms and our interest in Rose LifeScience for the three and six months ended June 30, 2025 and 2024.

Beginning on April 1, 2024, our interest in Rose LifeScience increased from 70% to 80%, which is reflected in the results presented below.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Canadian Cannabis net sales for the three months ended March 31, 2025 were $34,837 compared with $37,446 for the three months ended March 31, 2024.

The decrease of $2,609, or 7%, was primarily driven by unfavorable exchange rate fluctuations of

approximately $2,258 and a decrease in net branded sales, reflecting a planned shift away from value-based product offerings, which was partially offset by an increase in international sales of 259%, primarily driven by continued strength in export volumes to Germany.

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Canadian Cannabis net sales for the three months ended June 30, 2025 were $44,518 compared with $40,745 for the three months ended June 30, 2024.

The increase of $3,773, or 9%, was primarily driven by an increase in international sales of $10,475, primarily driven by continued strength in export volumes to Germany, partially offset by a decrease in net branded sales of $5,573, reflecting a planned shift away from value-based product offerings, and a decrease in non-branded sales of $1,189.

Canadian Cannabis continues to pay a burdensome excise tax on its branded sales (sales to provincial distributors).

For the three months ended March 31, 2025, the Company incurred excise duties of $13,937 (C$20,016), or 38% of gross branded sales, compared with $19,703 (C$26,565), or 40% of gross branded sales, for the three months ended March 31, 2024.

For the three months ended June 30, 2025, the Company incurred excise duties of $14,812 (C$20,504), or 37% of gross branded sales, compared with $19,815 (C$27,114), or 39% of gross branded sales, for the three months ended June 30, 2024.

The decrease of $5,003 (C$6,610), or 25%, was due to a decrease in kilograms sold in the branded channel.

The Canadian excise duty is our single largest cost of participating in the branded adult-use market in Canada.

For the three months ended June 30, 2025, 57% of net sales were generated from branded flower, pre-rolls and cannabis derivative products compared with 75% for the three months ended June 30, 2024.

Non-branded, international, and other sales accounted for 43% of Canadian Cannabis net sales for the three months ended June 30, 2025, as compared with 25% for the three months ended June 30, 2024.

The net average selling price of branded flower and pre-roll formats increased in 2025 compared to 2024.

Excluding pre-roll formats, the average net selling price of branded flower increased by 11% in 2025 due to a lower ratio of sales for our value brand Fraser Valley Weed Co.

The net average selling price of bulk non-branded flower increased by 38%, due to a reduced need to move aged flower inventory compared to 2024.

Bulk trim decreased by 16% in 2025, due to a large sales at above average price in Q2 2024, offset by higher potencies driving slightly higher average prices during 2025.

The net average selling price of International sales decreased by 8% due to a shift in product mix favoring bulk flower over packaged flower.

The following table presents sales by Canadian Cannabis revenue stream, together with the impact of the excise tax, in U.S.

dollars and Canadian dollars, for the three months ended June 30, 2025 and 2024:

For the Three Months Ended June 30,

(in thousands of U.S.

Branded sales

Non-branded sales

International sales

For the Three Months Ended June 30,

(in thousands of Canadian dollars)

Branded sales

Non-branded sales

International sales

Cost of Sales

Canadian Cannabis cost of sales for the three months ended June 30, 2025 was $27,050 compared with $30,040 for the three months ended June 30, 2024.

The decrease of $2,990, or 10%, was primarily due to a decrease in volume (kilograms) packaged and sold of our branded and non-branded products and a shift in International sales mix favoring bulk flower which has a lower average cost per gram over packaged flower.

Canadian Cannabis gross profit for the three months ended June 30, 2025 was $17,468, a 63% increase compared to $10,705 for the three months ended June 30, 2024.

Canadian Cannabis gross margin for the three months ended June 30, 2025 was 39% compared with 26% for the three months ended June 30, 2024.

The increase in gross margin was due to higher sales volume of bulk flower in International sales, as well as lower sales of value brands within the branded sales category.

Selling, General and Administrative Expenses

Canadian Cannabis selling, general and administrative expenses for the three months ended June 30, 2025 were $8,604, or 19%, of sales compared with $8,749, or 21%, of sales for the three months ended June 30, 2024.

Canadian Cannabis net income for the three months ended June 30, 2025 was $6,489 compared with net income of $1,384 for the three months ended June 30, 2024.

The increase in net income was primarily due to the improved margins, partially offset by an increase in the tax provision expense of $2,084.

Adjusted EBITDA

Adjusted EBITDA for Canadian Cannabis for the three months ended June 30, 2025 was $11,860 compared with $4,818 for the three months ended June 30, 2024.

The increase of $7,042, or 146%, between periods was primarily due to higher sales at improved margins in the Canadian Cannabis segment.

For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Canadian Cannabis net sales for the six months ended June 30, 2025 were $79,355 compared with $78,191 for the six months ended June 30, 2024.

The increase of $1,164, or 1%, was primarily driven by an increase in international sales of $14,365, primarily driven by continued strength in export volumes to Germany, partially offset by a decrease in net branded sales, reflecting a planned shift away from value-based product offerings.

Canadian Cannabis continues to pay a burdensome excise tax on its branded sales (sales to provincial distributors).

For the six months ended June 30, 2025, the Company incurred excise duties of $28,759 (C$40,520), or 38% of gross branded sales, compared with $39,518 (C$53,679), or 40% of gross branded sales, for the six months ended June 30, 2024.

The decrease of $10,759 (C$13,159), or 27%, was due to a decrease in kilograms sold in the branded channel and the impact of exchange rate fluctuations.

The Canadian excise duty is our single largest cost of participating in the branded adult-use market in Canada.

For the three months ended March 31, 2025, 65% of net sales were generated from branded flower, pre-rolls and cannabis derivative products compared with 77% for the three months ended March 31, 2024.

Non-branded, international, and other sales accounted for 35% of Canadian Cannabis net sales for the three months ended March 31, 2025, as compared with 23% for the three months ended March 31, 2024.

For the six months ended June 30, 2025, 60% of net sales were generated from branded flower, pre-rolls and cannabis derivative products compared with 76% for the six months ended June 30, 2024.

Non-branded, international, and other sales accounted for 40% of Canadian Cannabis net sales for the six months ended June 30, 2025, as compared with 24% for the six months ended June 30, 2024.

The net average selling price of branded flower and pre-roll formats increased in 2025 compared to 2024.

Excluding pre-roll formats, the average net selling price of branded flower increased by 11% in 2025 due to a lower ratio of sales for our value brand Fraser Valley Weed Co.

The net average selling price of bulk non-branded flower increased by 33% and bulk trim increased by 43% in 2025, largely due to an increase in the market price, as well as a reduced need to move aged flower inventory compared to 2024.

The net average selling price of bulk non-branded flower increased by 45%, due primarily to a reduced need to move aged flower inventory compared to 2024.

Bulk trim pricing increased by 12% in 2025, largely due to an increase in the market price and higher potencies leading to higher average prices offset by large sales at above average price in Q2 2024.

The net average selling price of International sales decreased by 11% due to a shift in product mix favoring bulk flower over packaged flower.

The following table presents sales by Canadian Cannabis revenue stream, together with the impact of the excise tax, in U.S.

dollars and Canadian dollars, for the three months ended March 31, 2025 and 2024:

For the Three Months Ended March 31,

dollars and Canadian dollars, for the six months ended June 30, 2025 and 2024:

For the Six Months Ended June 30,

(in thousands of U.S.

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International sales

For the Three Months Ended March 31,

For the Six Months Ended June 30,

(in thousands of Canadian dollars)

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Cost of Sales

Canadian Cannabis cost of sales for the three months ended March 31, 2025 was $22,362 compared with $27,938 for the three months ended March 31, 2024.

The decrease of $5,576, or 20%, was primarily due to a decrease in volume (kilograms) packaged and sold of our branded and non-branded products and the impact of exchange rate fluctuations.

Canadian Cannabis gross profit for the three months ended March 31, 2025 was $12,475, a 31% increase compared to $9,508 for the three months ended March 31, 2024.

Canadian Cannabis gross margin for the three months ended March 31, 2025 was 36% compared with 25% for the three months ended March 31, 2024.

The increase in gross margin was due to higher sales volume of international and non-brand flower, as well as lower sales of value brands within the branded sales category.

Canadian Cannabis cost of sales for the six months ended June 30, 2025 was $49,412 compared with $57,978 for the six months ended June 30, 2024.

The decrease of $8,566, or 15%, was primarily due to a decrease in volume (kilograms) packaged and sold of our branded and non-branded products and a shift in International sales mix favoring bulk flower which has a lower average cost per gram over packaged flower.

Canadian Cannabis gross profit for the six months ended June 30, 2025 was $29,943, a 48% increase compared to $20,213 for the six months ended June 30, 2024.

Canadian Cannabis gross margin for the six months ended June 30, 2025 was 38% compared with 26% for the six months ended June 30, 2024.

The increase in gross margin was due to higher sales volume of bulk flower in International sales, as well as lower sales of value brands within the branded sales category.

Selling, General and Administrative Expenses

Canadian Cannabis selling, general and administrative expenses for the three months ended March 31, 2025 were $8,762, or 25%, of sales compared with $7,704, or 21%, of sales for the three months ended March 31, 2024.

Canadian Cannabis selling, general and administrative expenses for the six months ended June 30, 2025 were $17,366, or 22%, of sales compared with $16,453, or 21%, of sales for the six months ended June 30, 2024.

The increase of $913 was primarily due to higher commercial and marketing expenses and incremental integration costs.

Canadian Cannabis net income for the three months ended March 31, 2025 was $3,032 compared with net income of $847 for the three months ended March 31, 2024.

Canadian Cannabis net income for the six months ended June 30, 2025 was $9,521 compared with net income of $2,231 for the six months ended June 30, 2024.

The increase in net income was primarily due to the improved margins, partially offset by an increase in the tax provision expense of $2,646 and an increase in selling, general and administrative expenses.

Adjusted EBITDA

Adjusted EBITDA for Canadian Cannabis for the three months ended March 31, 2025 was $6,698 compared with $4,073 for the three months ended March 31, 2024.

Adjusted EBITDA for Canadian Cannabis for the six months ended June 30, 2025 was $18,558 compared with $8,891 for the six months ended June 30, 2024.

The increase of $9,667, or 109%, between periods was primarily due to improved margins in the Canadian Cannabis segment.

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Cannabis segment consists of Balanced Health.

For the three months ended March 31, 2025 and 2024, U.S.

For the three and six months ended June 30, 2025 and 2024, U.S.

Cannabis financial results are based on the results of Balanced Health.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Cannabis net sales for the three months ended March 31, 2025 was $3,904 compared with $4,537 for the three months ended March 31, 2024.

The decrease of $633, or 14%, was primarily due to new restrictions on CBD sales in an additional eight states beginning July 1, 2024 and lower direct-to-consumer sales resulting from the proliferation of unregulated hemp-derived products on the market.

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Cannabis net sales for the three months ended June 30, 2025 was $3,841 compared with $4,297 for the three months ended June 30, 2024.

The decrease of $456, or 11%, was primarily due to new restrictions on CBD sales in an additional eight states commencing July 1, 2024 and lower direct-to-consumer sales resulting from the proliferation of unregulated hemp-derived products on the market.

Cannabis sales were generated in the United States, with gross sales composed of 94% e-commerce sales and 6% retail sales.

Cost of Sales

Cannabis cost of sales for the three months ended March 31, 2025 was $1,311 compared with $1,842 for the three months ended March 31, 2024.

The decrease of $531, or 29%, was primarily due to cost efficiencies from the internalization of our gummy manufacturing and lower sales.

U.S Cannabis gross profit for the three months ended March 31, 2025 decreased $102, or 4%, to $2,593, or a 66% gross margin, compared with $2,695, or a 59% gross margin, for the three months ended March 31, 2024.

Cannabis cost of sales for the three months ended June 30, 2025 was $1,405 compared with $1,668 for the three months ended June 30, 2024.

The decrease of $263, or 16%, was primarily due to lower sales and cost efficiencies from the internalization of our gummy manufacturing.

U.S Cannabis gross profit for the three months ended June 30, 2025 decreased $193, or 7%, to $2,436, or a 63% gross margin, compared with $2,629, or a 61% gross margin, for the three months ended June 30, 2024.

Selling, General and Administrative Expenses

Cannabis selling general and administrative expenses for the three months ended March 31, 2025 were $2,535 compared with $3,406 for the three months ended March 31, 2024.

Cannabis selling general and administrative expenses for the three months ended June 30, 2025 were $2,445 compared with $2,960 for the three months ended June 30, 2024.

The decrease of $515, or 17%, was due to more efficient marketing and brand spending and contract renegotiation.

Cannabis net loss for the three months ended June 30, 2025 was $226 compared with net loss of $12,270 for the three months ended June 30, 2024.

The increase of $12,044 was primarily due to an impairment charge on goodwill and intangible assets taken in the three months ended June 30, 2024 of ($11,939) that did not recur in 2025.

Adjusted EBITDA

Cannabis adjusted EBITDA for the three months ended June 30, 2025 was $45 compared with ($240) for the three months ended June 30, 2024.

The improvement of $285 was primarily due to the lower selling, general, and administrative expenses.

For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Cannabis net sales for the six months ended June 30, 2025 was $7,745 compared with $8,834 for the six months ended June 30, 2024.

The decrease of $1,089, or 12%, was primarily due to new restrictions on CBD sales in an additional eight states

beginning July 1, 2024 and lower direct-to-consumer sales resulting from the proliferation of unregulated hemp-derived products on the market.

Cannabis sales were generated in the United States, with gross sales composed of 94% e-commerce sales and 6% retail sales.

Cost of Sales

Cannabis cost of sales for the six months ended June 30, 2025 was $2,716 compared with $3,510 for the six months ended June 30, 2024.

The decrease of $794, or 23%, was primarily due to lower sales and cost efficiencies from the internalization of our gummy manufacturing.

U.S Cannabis gross profit for the six months ended June 30, 2025 decreased $295, or 6%, to $5,029, or a 65% gross margin, compared with $5,324, or a 60% gross margin, for the six months ended June 30, 2024.

Selling, General and Administrative Expenses

Cannabis selling general and administrative expenses for the six months ended June 30, 2025 were $4,980 compared with $6,366 for the six months ended June 30, 2024.

The decrease of $1,386, or 22%, is due to more efficient marketing and brand spending and contract renegotiation.

Net Income (Loss)

Cannabis net income for the three months ended March 31, 2025 was $58 compared with net loss of ($711) for the three months ended March 31, 2024.

The increase of $769 was primarily due to the lower selling, general, and administrative expenses.

Cannabis net loss for the six months ended June 30, 2025 was $168 compared with net loss of $12,981 for the six months ended June 30, 2024.

The increase of $12,813 was primarily due to an impairment charge on goodwill and intangible assets taken in the six months ended June 30, 2024 of ($11,939) that did not recur in 2025.

Adjusted EBITDA

Cannabis adjusted EBITDA for the three months ended March 31, 2025 was $114 compared with ($615) for the three months ended March 31, 2024.

Cannabis adjusted EBITDA for the six months ended June 30, 2025 was $159 compared with ($855) for the six months ended June 30, 2024.

The improvement of $1,014 was primarily due to the lower selling, general, and administrative expenses.

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Leli Holland was not operational during the comparable quarter of 2024 and, as a result, comparative financial performance to the prior-year quarter is not meaningful.

Net sales for the three months ended March 31, 2025 was $486.

Three Months Ended June 30, 2025

Net sales for the three months ended June 30, 2025 was $2,483.

Cost of Sales

Cost of sales for the three months ended March 31, 2025 was $285.

Cost of sales for the three months ended June 30, 2025 was $1,047.

Gross profit for the three months ended June 30, 2025 was $1,436, or a 58% gross margin.

Selling, General and Administrative Expenses

Selling General and Administrative Expenses for the three months ended March 31, 2025 was $439.

Gross profit for the three months ended March 31, 2025 was $201, or a 41% gross margin.

Net loss for the three months ended March 31, 2025 was $242.

Selling, general and administrative expenses for the three months ended June 30, 2025 was $557.

Net income for the three months ended June 30, 2025 was $835.

Adjusted EBITDA

Adjusted EBITDA for the three months ended March 31, 2025 was $77.

PRODUCE SEGMENT RESULTS – VF FRESH

The produce segment, VF Fresh, consists of VFLP and VFCLP.

VF Fresh’s comparative analysis are based on the consolidated results of VFLP and VFCLP for the three months ended March 31, 2025 and 2024.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

VF Fresh sales for the three months ended March 31, 2025 were $37,421 compared with $36,094 for the three months ended March 31, 2024.

The increase of $1,327, or 4%, was primarily due to a 39% increase in volume from supply partners.

This was partially offset by a lower average selling price due to weaker market prices.

The average selling price for all produce sold during the three months ended March 31, 2025 compared with the three months ended March 31, 2024 was as follows:

tomatoes changed (15%), peppers changed (34%), cucumbers changed (9%), and mini cucumbers changed (1%).

Adjusted EBITDA for the three months ended June 30, 2025 was $1,218.

Six Months Ended June 30, 2025

Net sales for the six months ended June 30, 2025 was $2,969.

Cost of Sales

VF Fresh cost of sales for the three months ended March 31, 2025 increased by $8,919, or 27%, to $41,703 compared with $32,784 for the three months ended March 31, 2024.

The increase was primarily due to an increase from Company-owned greenhouses of $4,306, an increase from supply partners of $3,565, and an increase in freight expense of $1,048.

The increase in VF Fresh-owned greenhouses cost of sales was due to a negative impact to the overall crop resulting from dust storms that occurred in March 2025, the increase in supply partner costs were due to higher spot price contract commitments, and the increased freight costs were due to the increase in product volume.

Cost of sales for the six months ended June 30, 2025 was $1,332.

Gross profit for the six months ended June 30, 2025 was $1,637, or a 55% gross margin.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six months ended June 30, 2025 was $996.

Net income for the six months ended June 30, 2025 was $593.

Adjusted EBITDA

Adjusted EBITDA for the six months ended June 30, 2025 was $1,295.

PRODUCE SEGMENT RESULTS

The produce segment consists of VFCLP.

Produce’s comparative analysis are based on the consolidated results from continuing operations of VFLP and VFCLP for the three and six months ended June 30, 2025 and 2024.

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Produce sales for the three months ended June 30, 2025 were $8,574 compared with $8,434 for the three months ended June 30, 2024, an increase of $140, or 2%.

Cost of Sales

Produce cost of sales for the three months ended June 30, 2025 decreased by $234, or 3%, to $7,975 compared with $8,209 for the three months ended June 30, 2024.

Produce gross profit for the three months ended June 30, 2025 was $599 compared with a gross profit of $225 for the three months ended June 30, 2024.

Gross margin for the three months ended June 30, 2025 was 7% compared with 3% for the three months ended June 30, 2024.

Selling, General and Administrative Expenses

Produce selling, general and administrative expenses for the three months ended June 30, 2025 decreased by $133, or 13%, to $870 (10% of sales) compared with $1,003 (12% of sales) for the three months ended June 30, 2024.

Net Income (Loss) From Continuing Operations

Produce Income from continuing operations for the three months ended June 30, 2025 was $4,269 compared with a loss from continuing operations of $1,297 for the three months ended June 30, 2024.

The change of $5,566 was primarily attributable to a favorable vendor settlements relating to the partial recovery of prior period operational losses from the ToBRFV infestation.

Net Income (Loss)

Produce net income for the three months ended June 30, 2025 was $20,563 compared with a net loss of $8,300 for the three months ended June 30, 2024.

The increase of $28,863 was primarily attributable to an improvement on income (loss) from discontinued operations, net of tax of $23,297 and a favorable vendor settlement relating to the partial recovery of operational losses from the ToBRFV infestation.

Adjusted EBITDA

Produce Adjusted EBITDA for the three months ended June 30, 2025 was $2,552 compared with ($6,350) for the three months ended June 30, 2024.

The increase of $8,902 in Adjusted EBITDA was primarily attributable to a favorable vendor settlement relating to the partial recovery of operational losses from the ToBRFV infestation.

For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Produce sales for the six months ended June 30, 2025 were $8,601 compared with $8,438 for the six months ended June 30, 2024, an increase of $163, or 2%.

Cost of Sales

Produce cost of sales for the six months ended June 30, 2025 increased by $245, or 3%, to $9,444 compared with $9,199 for the six months ended June 30, 2024.

Gross (Loss) Profit

VF Fresh gross loss for the three months ended March 31, 2025 was ($4,282) compared with a gross profit of $3,310 for the three months ended March 31, 2024.

Gross margin for the three months ended March 31, 2025 was (11%) compared with 9% for the three months ended March 31, 2024.

The decreases in both gross profit and gross margin percentage were due to the increase in cost of sales at the Company-owned greenhouses and lower margins on supply partner volumes, whereas during the prior year, the decreases in both gross profit and gross margin percentage were due to unfavorable market prices.

Produce gross loss for the six months ended June 30, 2025 was $843 compared with $761 for the six months ended June 30, 2024.

Gross margin for the six months ended June 30, 2025 was (10%) compared with (9%) for the six months ended June 30, 2024.

Selling, General and Administrative Expenses

VF Fresh selling, general and administrative expenses for the three months ended March 31, 2025 increased by $182, or 7%, to $2,875 (8% of sales) compared with $2,693 (7% of sales) for the three months ended March 31, 2024.

Net (Loss) Income

VF Fresh net loss for the three months ended March 31, 2025 was ($7,757) compared with a net income of $114 for the three months ended March 31, 2024.

The decrease of $7,871 was primarily due to a lower gross margin.

Produce selling, general and administrative expenses for the six months ended June 30, 2025 increased by $26, or 2%, to $1,585 (18% of sales) compared with $1,559 (18% of sales) for the six months ended June 30, 2024.

Net Income (Loss) From Continuing Operations

Produce income from continuing operations for the six months ended June 30, 2025 was $1,515 compared with a loss from continuing operations of $3,339 for the six months ended June 30, 2024.

The change of $4,854 was primarily attributable to a favorable vendor settlements relating to the partial recovery of prior period operational losses from the ToBRFV infestation.

Net Income (Loss)

Produce net income for the six months ended June 30, 2025 was $12,806 compared with a net loss of $8,186 for the six months ended June 30, 2024.

The change of $20,992 was primarily attributable to an improvement on income (loss) from discontinued operations, net of tax of $16,138 and a favorable vendor settlement relating to the partial recovery of operational losses from the ToBRFV infestation.

Adjusted EBITDA

VF Fresh Adjusted EBITDA for the three months ended March 31, 2025 was ($5,122) compared with $2,028 for the three months ended March 31, 2024.

The decrease of $7,150 in Adjusted EBITDA was primarily due to a lower gross margin for the reasons described above.

Produce Adjusted EBITDA for the six months ended June 30, 2025 was ($2,570) compared with ($4,322) for the six months ended June 30, 2024.

The change of $1,752 in Adjusted EBITDA was primarily due to the favorable legal settlement.

For additional information, refer to the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA”.

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Capital Resources

At March 31, 2025, cash and cash equivalents were $15,125 and working capital was $50,313, compared with cash and cash equivalents of $24,631 and working capital of $53,800 at December 31, 2024.

We believe that our existing cash, cash generated from our operating activities and the availability under our Operating Loan and Pure Sunfarms Loans (each 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.

At June 30, 2025, cash, cash equivalents, and restricted cash were $64,988 and working capital was $85,753, compared with cash and cash equivalents of $24,631 and working capital of $53,800 at December 31, 2024.

We believe that our existing cash, cash generated from our operating activities and the availability under our Pure Sunfarms Revolving Credit Facility, will provide us with sufficient liquidity to meet our working capital needs, repayments of our long-term debt and future contractual obligations and fund our planned capital expenditures for the next 12 months.

An additional potential source of liquidity is access to capital markets for additional equity or debt financing.

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Maximum Availability

Outstanding as of March 31, 2025

Operating Loan

Outstanding as of June 30, 2025

FCC Term Loan

Pure Sunfarms Loans

Pure Sunfarms Revolving Line of Credit

Pure Sunfarms Term Loan Facility

Pure Sunfarm Revolving Credit Facility

The Company is required to comply with financial covenants.

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Under the Pure Sunfarms Secured Credit Facilities entered into on April 17, 2025, the Company is also required to maintain certain financial covenants.

We can provide no assurance that we will be in compliance, or receive a waiver, for any non-compliance of the financial covenants.

We can provide no assurance that 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 Credit Facilities and Pure Sunfarms Loans as of March 31, 2025 and December 31, 2024 was $353 and $271, respectively.

Accrued interest payable on the Credit Facilities and Pure Sunfarms Loans as of June 30, 2025 and December 31, 2024 was $209 and $271, respectively.

These amounts are included in accrued liabilities in the accompanying Condensed Consolidated Statements of Financial Position.

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The Company has a term loan financing agreement with Farm Credit Canada ("FCC"), a Canadian creditor (the “FCC Term Loan”).

The non-revolving variable rate term loan has a maturity date of May 3, 2027 and a balance of $20,329 on March 31, 2025 and $20,821 on December 31, 2024.

The non-revolving variable rate term loan has a maturity date of May 3, 2027 and a balance of $19,837 on June 30, 2025 and $20,821 on December 31, 2024.

The outstanding balance is repayable by way of monthly installments of principal and interest, with the balance and any accrued interest to be paid in full on May 3, 2027.

As of March 31, 2025 and December 31, 2024, borrowings under the FCC Term Loan agreement were subject to an interest rate of 7.87% and 8.12% per annum, respectively.

As collateral for the FCC Term Loan, the Company has provided promissory notes, a first mortgage on the VFF-owned Delta 1 and Texas greenhouse facilities, and general security agreements over its assets.

As of June 30, 2025 and December 31, 2024, borrowings under the FCC Term Loan agreement were subject to an interest rate of 7.83% and 8.12% per annum, respectively.

As collateral for the FCC Term Loan, the Company has provided promissory notes, a first mortgage on the VFF-owned Delta 1 and Monahans greenhouses, and general security agreements over its assets.

In addition, the Company has provided full recourse guarantees and has granted security interests in respect of the FCC Term Loan.

The carrying value of the assets and securities pledged as collateral as of March 31, 2025 and December 31, 2024 was $69,613 and $77,682, respectively.

The carrying value of the assets and securities pledged as collateral as of June 30, 2025 and December 31, 2024 was $90,997 and $101,068, respectively.

On April 10, 2025, the Company entered into the A&R Credit Agreement with respect to the FCC Term Loan.

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as a new guarantor, and (iii) replaces the fixed charged ratio covenant with a more favorable liquidity ratio covenant.

Operating Loan

The Company has a revolving line of credit agreement with Bank of Montreal (the "Operating Loan").

On May 24, 2024, the Company entered into an amendment to the Operating Loan, which extended the maturity date of the Operating Loan to May 24, 2027.

The Operating Loan is subject to margin requirements stipulated by the lender.

The Operating Loan had an outstanding balance of $5,000 and future availability of $2,844 on March 31, 2025.

As collateral for the Operating 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 pledged as collateral as of March 31, 2025 and December 31, 2024 was $23,755 and $27,136, respectively.

Pure Sunfarms Loans

As of March 31, 2025, Pure Sunfarms had a credit facility with the Business Development Bank of Canada (the "BDC Facility"), a non-revolving credit facility (the “PSF Non-Revolving Facility”) and a term loan (the “PSF Term Loan”) with two Canadian chartered banks (collectively, with the BDC Facility, the PSF Non-Revolving Facility, and the PSF Term Loan the “Pure Sunfarms Loans”).

In addition, Pure Sunfarms has a revolving line of credit (the “PSF Revolving Line of Credit”) with a Canadian chartered bank.

As described below, on April 17, 2025, Pure Sunfarms replaced the Pure Sunfarms Loans and the PSF Revolving Line of Credit with the Pure Sunfarms Secured Credit Facilities (as defined below).

As of March 31, 2025, the PSF Revolving Line of Credit could be drawn for advances of up to C$15,000 and had an outstanding balance of $0 as of 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, payable monthly.

As of March 31, 2025, the PSF Non-Revolving Facility was secured by the Delta 2 and Delta 3 greenhouse facilities and contains customary financial and restrictive covenants.

As of March 31, 2025, Pure Sunfarms was in compliance with these financial covenants.

The outstanding amount on the PSF Non-Revolving Facility was $5,921 on March 31, 2025 and $6,262 on December 31, 2024.

Interest under the PSF Non-Revolving Facility was payable at the Canadian prime rate plus an applicable margin per annum, 6.95% as of March 31, 2025, payable quarterly.

Amounts outstanding under the PSF Non-Revolving Facility would have matured on February 7, 2026.

The outstanding amount on the PSF Term Loan was $10,014 on March 31, 2025 and $10,436 on December 31, 2024.

Interest under the PSF Term Loan was payable at the Canadian prime rate plus an applicable margin per annum, 6.95% as of March 31, 2025, payable quarterly.

The PSF Term Loan would have matured on February 7, 2026.

The outstanding amount under the BDC Facility, a demand loan included in current liabilities was $2,939 on March 31, 2025 and $3,043 on December 31, 2024.

Interest under the BDC Facility was payable at an interest rate of 8.70%, payable monthly, and the amount outstanding would have matured on December 31, 2031.

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”).

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The credit and guarantee agreements related to the Pure Sunfarms Loans and the PSF Revolving Line of Credit were likewise 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.

The Pure Sunfarms Revolving Credit Facility can be drawn for advances of up to C$10.0 million.

The outstanding amount of the Pure Sunfarms Term Loan Facility was $19,266 as of June 30, 2025 and is repayable, on a quarterly basis, in an amount equal to C$1.0 million.

Any amount remaining unpaid will be due and payable in full on the maturity date, which is on February 7, 2028.

The loans under the Pure Sunfarms Secured Credit Facilities 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 loans under the Pure Sunfarms Secured Credit Facilities accrue interest at a rate equal to, at the Company’s option, (a) the Canadian Prime Rate plus the applicable margin, or (b) the Canadian Overnight Repo Rate Average plus the applicable margin.

The applicable margin for the Pure Sunfarms Secured Credit Facility is determined based upon the leverage ratio.

The Pure Sunfarms Secured Credit Facilities also contain customary covenants, customary representations and warranties, affirmative covenants, financial covenants and events of default.

Pure Sunfarms had a credit facility with the Business Development Bank of Canada (the "BDC Facility"), a non-revolving credit facility (the “PSF Non-Revolving Facility”) and a term loan (the “PSF Term Loan”) with two Canadian chartered banks (collectively, with the BDC Facility, the PSF Non-Revolving Facility, and the PSF Term Loan the “Pure Sunfarms Loans”).

In addition, Pure Sunfarms has a revolving line of credit (the “PSF Revolving Line of Credit”) with a Canadian chartered bank.

As described below, on April 17, 2025, Pure Sunfarms replaced the Pure Sunfarms Loans and the PSF Revolving Line of Credit with the Pure Sunfarms Secured Credit Facilities (as defined below).

The PSF Revolving Line of Credit could be drawn for advances of up to C$15,000 and had an outstanding balance of $0 as of December 31, 2024.

Interest under the PSF Revolving Line of Credit was payable at the Canadian prime rate plus an applicable margin per annum, payable monthly.

The outstanding amount on the PSF Non-Revolving Facility was $6,262 on December 31, 2024.

Interest under the PSF Non-Revolving Facility was payable at the Canadian prime rate plus an applicable margin per annum.

The outstanding amount on the PSF Term Loan was $10,436 on December 31, 2024.

Interest under the PSF Term Loan was payable at the Canadian prime rate plus an applicable margin per annum.

The outstanding amount under the BDC Facility, a demand loan included in current liabilities was $3,043 on December 31, 2024.

Interest under the BDC Facility was payable at an interest rate of 8.70%, payable monthly.

Summary of Cash Flows

For the Three Months Ended March 31,

For the Six Months Ended June 30,

(in Thousands)

Cash, beginning of period

Net cash flow used in:

Net cash flow provided by (used in):

Operating activities

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Financing activities

Net cash decrease for the period

Discontinued operations

Net cash increase (decrease) for the period

Effect of exchange rate changes on cash

Cash, end of the period

Operating Activities

For the three months ended March 31, 2025 and 2024, cash used in operating activities were ($6,376) and ($50), respectively.

The operating activities for the three months ended March 31, 2025 consisted of ($4,209) in changes in non-cash working capital items and ($2,167) in changes before non-cash working capital items, while operating activities for the three months ended March 31, 2024 consisted of ($3,290) in changes in non-cash working capital items and $3,240 in changes before non-cash working capital items.

The reduction when comparing the change in before non-cash working capital items for 2025 with 2024 was primarily due to a decrease in VF Fresh gross margin partially offset by improvements in Canadian Cannabis gross margin in 2025 compared with 2024.

Investing Activities

For the three months ended March 31, 2025 and 2024, cash used in investing activities were ($2,839) and ($1,876), respectively.

The increase in investing activities for the three months ended March 31, 2025 was primarily due to capital expenditures made to support VF Fresh, Canadian Cannabis, and U.S.

Cannabis operations.

Financing Activities

For the three months ended March 31, 2025 and 2024, cash used in financing activities were ($384) and ($1,442), respectively.

For the three months ended March 31, 2025, cash (used in) provided by financing activities consisted of debt repayments of ($1,384) and a draw of $1,000 from the Operating Loan.

For the three months ended March 31, 2024, cash flows used by financing activities consisted of debt repayments of ($1,442).

Operating Activities - Continuing Operations

For the six months ended June 30, 2025 and 2024, cash provided by (used in) operating activities were $22,265 and ($3,713), respectively.

The operating activities for the six months ended June 30, 2025 consisted of $6,207 in changes in non-cash working capital items and $16,058 in changes before non-cash working capital items, while operating activities for the six months ended June 30, 2024 consisted of ($6,021) in changes in non-cash working capital items and $2,308 in changes before non-cash working capital items.

The reduction when comparing the change in before non-cash working capital items for 2025 with 2024 was primarily due to a improvements in Canadian Cannabis gross margins in 2025 compared with 2024.

Investing Activities - Continuing Operations

For the six months ended June 30, 2025 and 2024, cash used in investing activities were ($5,289) and ($2,813), respectively.

The increase in investing activities for the six months ended June 30, 2025 was primarily due to capital expenditures made for the Leli Phase II indoor cultivation facility in the town of Groningen.

Financing Activities - Continuing Operations

For the six months ended June 30, 2025 and 2024, cash used in financing activities were ($4,986) and ($5,886), respectively.

For the six months ended June 30, 2025, cash used in financing activities consisted of debt repayments of ($4,554).

For the six months ended June 30, 2024, cash flows used in financing activities consisted of debt repayments of ($2,870) and cash used for the acquisition of an additional 10% ownership of Rose LifeScience.

Contractual Obligations and Commitments

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The following table reflects a reconciliation of net loss to Adjusted EBITDA, as presented by the Company:

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

(in thousands of U.S.

Net income (loss) from continuing operations

Amortization and depreciation

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Deferred financing fees

Goodwill and intangible impairments

Other impairments

Other expenses

Adjustments attributable to non-controlling interest

Adjusted EBITDA from continuing operations

Adjustments attributable to discontinued operations

Adjusted EBITDA (1)

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The following table reflects a reconciliation of segmented net loss to Adjusted EBITDA, as presented by the Company:

For The Three Months Ended March 31, 2025

For The Three Months Ended June 30, 2025

(in thousands of U.S.

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Cannabis Netherlands

Net (loss) income

Net income (loss) from continuing operations

Amortization and depreciation

Foreign currency exchange gain (loss)

Foreign currency exchange gain

Interest expense, net

Provision for income taxes

Provision for (recovery of) income taxes

Share-based compensation

Deferred financing fees

Other impairments

Adjustments attributable to non-controlling interest

Adjusted EBITDA from continuing operations

Adjustments attributable to discontinued operations

Adjusted EBITDA (2)

For The Three Months Ended March 31, 2024

For The Three Months Ended June 30, 2024

(in thousands of U.S.

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Cannabis Netherlands

Net income (loss)

Net income (loss) from continuing operations

Amortization and depreciation

Foreign currency exchange loss (gain)

Interest expense, net

(Recovery of) provision for income taxes

Share-based compensation

Goodwill and intangible impairments (1)

Other expenses

Adjustments attributable to non-controlling interest

Adjusted EBITDA from continuing operations

Adjustments attributable to discontinued operations

Adjusted EBITDA (2)

For The Six Months Ended June 30, 2025

(in thousands of U.S.

Cannabis Canada

Cannabis U.S.

Cannabis Netherlands

Net income (loss) from continuing operations

Amortization and depreciation

Foreign currency exchange gain

Interest expense (income), net

Provision for (recovery of) income taxes

Interest expense, net

Provision for income taxes

Share-based compensation

Deferred financing fees

Other expenses

Other impairments

Adjustments attributable to non-controlling interest

Adjusted EBITDA from continuing operations

Adjustments attributable to discontinued operations

Adjusted EBITDA (2)

For The Six Months Ended June 30, 2024

(in thousands of U.S.

Cannabis Canada

Cannabis U.S.

Cannabis Netherlands

Net income (loss) from continuing operations

Amortization and depreciation

Foreign currency exchange loss

Interest expense, net

(Recovery of) provision for income taxes

Share-based compensation

Deferred financing fees

Goodwill and intangible impairments (1)

Adjustments attributable to non-controlling interest

Adjusted EBITDA from continuing operations

Adjustments attributable to discontinued operations

Adjusted EBITDA (2)

(1) Reflects impairment to goodwill and intangibles of $11,939 in U.S.

Cannabis that was based on recent historical performance, near-term forecasts, and the state of the CBD industry in the United States.

See “Critical Accounting Estimates and Judgments” below for more information.

(2) Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP.

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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), operating (loss) income, loss from consolidated entities, net loss, and Adjusted EBITDA for the three months ended March 31, 2025, which are considered non-GAAP financial measures.

GAAP, we have presented constant currency adjusted financial measures for sales, cost of sales, selling, general and administrative, other income (expense), income (loss) from continuing operations, income (loss) from consolidated entities, net income (loss), and Adjusted EBITDA for the three and six months ended June 30, 2025, which are considered non-GAAP financial measures.

We present constant currency information to provide a framework for assessing how our underlying operations performed excluding the effect of foreign currency rate fluctuations.

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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.

The tables below set forth certain measures of consolidated results from continuing operations on a constant currency basis for the three months ended March 31, 2025 compared with the three months ended March 31, 2024 on an as reported and constant currency basis (in thousands):

The tables below set forth certain measures of consolidated results from continuing operations on a constant currency basis for the three and six months ended June 30, 2025 compared with the three and six months ended June 30, 2024 on an as reported and constant currency basis (in thousands):

As Adjusted for Constant Currency

For the Three Months Ended March 31,

For the Three Months Ended June 30,

As Reported Change

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Constant Currency Change

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Selling, general and administrative expenses

Other expense, net

Operating loss

Loss including non-controlling interests

Other (expense) income, net

Goodwill and intangible asset impairments (1)

Income (loss) before taxes and equity method investment income

Income (loss) from continuing operations

Income (loss) from discontinued operations, net of tax

Income (loss) including non-controlling interests

Net income (loss) attributable to Village Farms International, Inc.

Adjusted EBITDA - Constant Currency (2)

As Adjusted for Constant Currency

For the Six Months Ended June 30,

As Reported Change

For the Six Months Ended June 30,

Constant Currency Change

Cost of sales

Selling, general and administrative expenses

Other (expense) income, net

Goodwill and intangible asset impairments (1)

Income (loss) before taxes and equity method investment income

Income (loss) from continuing operations

Income (loss) from discontinued operations, net of tax

Income (loss) including non-controlling interests

Net income (loss) attributable to Village Farms International, Inc.

Adjusted EBITDA - Constant Currency (2)

(1) Reflects impairment to goodwill and intangibles of $11,939 in U.S.

Cannabis that was based on recent historical performance, near-term forecasts, and the state of the CBD industry in the United States.

See “Critical Accounting Estimates and Judgments” below for more information.

(2) Adjusted EBITDA - Constant Currency is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP.

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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.

GAAP and are included in Part I of this

Quarterly Report on Form 10-Q.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses and related disclosure of contingent assets and liabilities.

As described in Note 5, Goodwill and Intangible Assets, in our Unaudited Condensed Consolidated Interim Financial Statements included in Part 1 of this Quarterly Report on Form 10-Q, during the three months ended March 31, 2025 and 2024, the Company considered qualitative factors in assessing for impairment indicators for the Company’s U.S.

As described in Note 5, Goodwill and Intangible Assets, in our Unaudited Condensed Consolidated Interim Financial Statements included in Part 1 of this Quarterly Report on Form 10-Q, during the six months ended June 30, 2025 and 2024, the Company considered qualitative factors in assessing for impairment indicators for the Company’s U.S.

and Canadian Cannabis segments.

As part of this assessment, the Company considered both external and internal factors, including overall financial performance and outlook.

At March 31, 2025, the Company concluded that no impairment indicators existed as no events or circumstances occurred that would, more likely than not, reduce the fair value of the goodwill and intangible assets for its reporting units to be below their carrying amounts.

At March 31, 2025, the carrying value of goodwill associated with our Cannabis – Canada segment was $42.4 million and the carrying value of intangible assets associated with our Cannabis – Canada segment was $20.9 million.

At June 30, 2025, the Company concluded that no impairment indicators existed as no events or circumstances occurred that would, more likely than not, reduce the fair value of the goodwill and intangible assets for its reporting units to be below their carrying amounts.

At June 30, 2025, the carrying value of goodwill associated with our Cannabis – Canada segment was $44.5 million and the carrying value of intangible assets associated with our Cannabis – Canada segment was $20.9 million.

We believe that the estimates, assumptions and judgments involved in the accounting policies described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies.

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Interest Rate Risk

As of March 31, 2025, our variable interest rate debt was primarily related to our Credit Facilities and Term Loans.

As of June 30, 2025, our variable interest rate debt was primarily related to our Credit Facilities and Term Loans.

Outstanding borrowings under our Credit Facility and Term Loans bear interest at either the (a) Secured Overnight Financing Rate (“SOFR”) or (b) Canadian Prime Rate, as defined in the agreement, plus an applicable margin.

As of March 31, 2025, we had approximately $5,000 aggregate principal amount of outstanding revolving loans under our Operating Loan with an interest rate of 8.0% and we had approximately $39,203 in aggregate principal amounts of our Term Loans with a weighted average interest rate of 7.8%.

The current interest rates for outstanding revolving loans under our Credit Facility and Term Loans reflect basis point increases of approximately 0.7% over the comparable period in 2024.

As of June 30, 2025, we had approximately $39,103 in aggregate principal amounts of our Term Loans with a weighted average interest rate of 6.9%.

The current interest rates for outstanding revolving loans under our Credit Facility and Term Loans reflect basis point decreases of approximately 2.6% over the comparable period in 2024.

Our interest expense is affected by the overall interest rate environment.

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This risk increases in the current inflationary environment, in which the Federal Reserve has increased interest rates, resulting in an increase in our variable interest rates and related interest expense.

An additional 50 basis point increase in the applicable interest rates under our Credit Facility and Term Loan would have increased our interest expense by approximately $50 for the three months ended March 31, 2025 and $59 for the three months ended March 31, 2024.

An additional 50 basis point increase in the applicable interest rates under our Credit Facility and Term Loan would have increased our interest expense by approximately $50 and $100 for the three and six months ended June 30, 2025, respectively, and $58 and $116 for the three and six months ended June 30, 2024, respectively.

While we cannot predict our ability to refinance existing debt or the significance of the impact that interest rate movements will have on our existing debt, management evaluates our financial position on an ongoing basis.

Foreign Exchange Risk

As of March 31, 2025 and 2024, the Canadian/U.S.

As of June 30, 2025 and 2024, the Canadian/U.S.

foreign exchange rate was C$1.00 = US$0.7324 and C$1.00 = US$0.7310, respectively.

If all other variables remain constant, an increase of $0.10 in the Canadian dollar would have the following impact on the ending balances of certain statements of financial position items at March 31, 2025 and 2024 with the net foreign exchange gain or loss directly impacting net income (loss):

March 31, 2025

March 31, 2024

If all other variables remain constant, an increase of $0.10 in the Canadian dollar would have the following impact on the ending balances of certain statements of financial position items at June 30, 2025 and 2024 with the net foreign exchange gain or loss directly impacting net income (loss):

June 30, 2025

June 30, 2024

Financial assets

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis