What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-10 compared with 2025-08-11 · 271 added, 293 removed, 532 unchanged (51% of the section changed)

9 unchanged sentences

(“VFF”, together with its subsidiaries, the “Company”, “Village Farms”, “we” “us” or “our”) is a corporation existing under the Business Corporations Act (Ontario).

The Company’s principal operating subsidiaries are Village Farms Canada Limited Partnership (“VFCLP”), Village Farms L.P.

(“VFLP”), Pure Sunfarms Corp.

The Company’s principal operating subsidiaries are Pure Sunfarms Corp.

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

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

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

(“Leli” or “Leli Holland”), Village Farms Canada Limited Partnership (“VFCLP”), Village Farms L.P.

(“VFLP”), 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.

30 unchanged sentences

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.

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

The tomato 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.

12 unchanged sentences

Canadian Cannabis

• 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.

• Company continues to maintain a top five overall market share position in Canada and the number two position in dried flower despite planned reductions in sales of lower-margin SKUs 1 ;

• Significantly surpassed the high end of its targeted gross margin range of 30-40%, marking the third consecutive quarter meeting or exceeding the target range, contributing to record quarterly and YTD adjusted EBITDA performance;

• Introduced several new and unique packaging innovations to the Canadian market, including the launch of a one-way aroma valve built directly into its dried flower packaging, windowed packaging for its flower products which enables

consumers to see product before purchase, and a proprietary built-in matchbox accessory for its pre-roll offerings to meet growing demand for ready-to-enjoy cannabis experiences

• 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, began expansion of cultivation capacity in its Delta 2 greenhouse to meet increasing demand in Canadian and international export markets.

The expansion is being funded with existing cash on hand and is expected to yield an incremental 40 metric tons of annualized cannabis production, expanding capacity by approximately 33%.

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

International Medical Cannabis (Reported Within Canadian Cannabis)

• 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

• International export sales increased 758% year-over-year, driven by continued strength of demand in Germany and steady performance across other international markets;

• Company believes that it remains the largest exporter of medical cannabis to Europe, and that it has gained market share sequentially in Germany in each of the past four quarters 1

• Company continues to distribute several leading cultivars in Germany through third-party partners 2

Based on German government data and Company estimates

1 unchanged sentence

Netherlands Cannabis (Leli Holland)

• 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;

• Operations in the Company’s Phase I facility in Drachten have now ramped up to full capacity, while demonstrating strong profitability and cash flow generation;

• Leli Holland products are now represented in 91% of 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;

representing increased market penetration sequentially as compared to the second quarter;

• The Company has continued to introduce new products into the market, including hash offerings and pre-rolls and it expects to launch additional products for coffeeshops 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.

When completed, the Phase II facility is expected to quintuple total annualized production capacity to approximately 10,000 kilograms.

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

New license awards are expected to be granted on December 1, 2025.

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

• 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.

• On September 29, 2025, the Company’s Board of Directors unanimously approved a US$10 million share repurchase authorization for up to 5,687,000 common shares (five percent of the Company’s issued and outstanding common shares at the date of announcement).

• On November 6, 2025, the Company announced the hiring of Brian Ellis to the role of Chief Information and Technology Officer (CITO) to lead the Company’s global technology and information strategy.

Ellis brings over 25 years of enterprise architecture, IT strategy, and large-scale digital transformation experience across various global industries, including roles at Nike, Topgolf Callaway, and Booking.com.

Presentation of Financial Results

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

Our consolidated results of operations for the three and nine months ended September 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 June 30, 2025, June 30, 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 September 30, 2025, September 30, 2024, and December 31, 2024.

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

2 unchanged sentences

dollars is shown below:

June 30, 2025

June 30, 2024

September 30, 2025

September 30, 2024

December 31, 2024

Three-month period ended

Six-month period ended

Nine-month period ended

RESULTS OF OPERATIONS

2 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of sales

2 unchanged sentences

Interest income

Foreign exchange gain (loss)

Foreign exchange (loss) gain

Other (loss) income

Goodwill and intangible asset impairments

3 unchanged sentences

Income (loss) from continuing operations

Income (loss) from discontinued operations, net of tax

(Loss) Income from discontinued operations, net of tax

Income (loss) including non-controlling interests

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

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

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

16 unchanged sentences

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 and six months ended June 30, 2025 and 2024 may not be indicative of our future performance.

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

Discussion of Financial Results

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

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

The consolidated results include all five of our operating segments:

Canadian Cannabis, U.

Cannabis, Cannabis Netherlands, Produce,

and Clean Energy, along with public company expenses.

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 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.

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

Sales for the three months ended September 30, 2025 were $66,741 compared with $54,938 for the three months ended September 30, 2024.

The increase of $11,803, or 21%, was primarily due to an increase in Canadian Cannabis sales of $10,120 due to the growth of our international business, and first year sales from Leli of $3,587, partially offset by a decrease in Produce sales of $1,499, due to a commission charged on produce sales as a result of the supply agreement with Vanguard Food LP., and a decrease in U.S.

Cannabis sales of $606.

1 unchanged sentence

Cost of Sales

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

Cost of sales for the three months ended September 30, 2025 were $34,803 compared with $41,301 for the three months ended September 30, 2024.

The decrease of $6,498, or 16%, was primarily due to a decrease in Canadian Cannabis cost of sales of $6,236, a decrease in U.S.

1 unchanged sentence

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

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.

Gross profit for the three months ended September 30, 2025 was $31,938 compared with $13,637 for the three months ended September 30, 2024.

The increase of $18,301, or 134%, was primarily due to an increase in gross profit in Canadian Cannabis of $16,356, the gross profit on first year sales from Leli of $1,659, and an increase in gross profit in Produce of $598.

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

Selling, General and Administrative Expenses

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

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

Selling, general and administrative expenses for the three months ended September 30, 2025 were $15,599 (23% of sales) compared with $14,565 (27% of sales) for the three months ended September 30, 2024.

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

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Selling, general and administrative expenses

2 unchanged sentences

Interest Expense

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

Interest expense for the three months ended September 30, 2025 was $646 compared with $779 for the three months ended September 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.

Interest income for the three months ended September 30, 2025 and was $360 compared with $229 for the three months ended September 30, 2024.

Other (Loss) Income

Other loss for the three months ended September 30, 2025 was $282 compared with other income of $379 for the three months ended September 30, 2024.

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 before taxes for the three months ended September 30, 2025 was $15,533 compared with a loss before taxes of $747 for the three months ended September 30, 2024.

The change of $16,280 was primarily due to the improved gross profit.

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

For the Three Months Ended September 30,

(Loss) income from discontinued operations, net of tax

Net (loss) income 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.

shareholders for the three months ended September 30, 2025 was $10,217 compared with a net loss of $820 for the three months ended September 30, 2024.

The increase of $11,037 was primarily due to the improved gross margin, partially offset by an increase in the provision for income taxes of $4,623.

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.

Adjusted EBITDA for the three months ended September 30, 2025 was $20,288 compared with $5,302 for the three months ended September 30, 2024.

The increase of $14,986, or 283%, was driven primarily by higher margins in Canadian Cannabis.

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

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Sales for the nine months ended September 30, 2025 were $166,320 compared with $150,522 for the nine months ended September 30, 2024.

The increase of $15,798, or 10%, was primarily due to an increase in Canadian Cannabis sales of $11,284, first year sales from Leli of $6,556, and an increase in Produce sales of $1,336, partially offset by a decrease in U.S.

Cannabis sales of $1,695, 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.

Cost of sales for the nine months ended September 30, 2025 were $97,860 compared with $112,031 for the nine months ended September 30, 2024.

The decrease of $14,171, or 13%, was primarily due to a decrease in Canadian Cannabis cost of sales of $14,802, a decrease in Produce cost of sales of $1,852, and a decrease in U.S.

Cannabis cost of sales of $889, partially offset by the cost of first year sales on Leli of $3,260.

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.

Gross profit for the nine months ended September 30, 2025 was $68,460 compared with $38,491 for the nine months ended September 30, 2024.

The increase of $29,969, or 78%, was primarily due to an increase in gross profit in Canadian Cannabis of $26,086, and gross margin on the first year sales of Leli of $3,296, partially offset by a decrease in gross profit in U.S.

Cannabis of $806.

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.

Selling, general and administrative expenses for the nine months ended September 30, 2025 were $45,629 (27% of sales) compared with $45,871 (30% of sales) for the nine months ended September 30, 2024.

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

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Selling, general and administrative expenses

2 unchanged sentences

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 expense for the nine months ended September 30, 2025 was $2,162 compared with $2,594 for the nine months ended September 30, 2024.

The decrease of $432 or 17%, was due to a decrease in the overall borrowing base and a decrease in the interest rates on the Company's various debt instruments.

Interest Income

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.

Interest income for the nine months ended September 30, 2025 and was $544 compared with $757 for the nine months ended September 30, 2024.

Other Income (Expense)

Other income for the nine months ended September 30, 2025 was $4,169 compared with other expense of $528 for the nine months ended September 30, 2024.

Other income was primarily due 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 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.

Goodwill and Intangible Assets Impairments for the nine months ended September 30, 2025 were $0 compared to $11,939 for the nine months ended September 30, 2024.

The impairment in the prior year period was primarily related to the U.S.

Cannabis reporting unit as a result of recent historical performance 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 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 before taxes for the nine months ended September 30, 2025 was $26,852 compared with a loss before taxes of $21,557 for the nine months ended September 30, 2024.

The improvement of $48,409 was primarily due to the improved gross margins and a favorable vendor settlement during the nine months ended September 30, 2025 and an impairment charge of $11,939 during the nine months ended September, 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,

For the Nine Months Ended September 30,

Loss from discontinued operations, net of tax

3 unchanged sentences

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.

shareholders for nine months ended September 30, 2025 was $30,011 compared with a net loss of $27,221 for the nine months ended September 30, 2024.

The change of $57,232 was primarily due to the higher gross margin during the nine months ended September 30, 2025, a favorable vendor settlement during the nine months ended September 30, 2025, an improvement on income (loss) from discontinued operations, net of tax, of $15,771, which includes the gain on sale, net of tax, of $19,985, and an impairment charge of $11,939 during the nine months ended September 30, 2024.

Adjusted EBITDA

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”.

Adjusted EBITDA for the nine months ended September 30, 2025 was $33,629 compared with $5,334 for the nine months ended September 30, 2024.

The increase of $28,295, or 530%, was due primarily to higher margins in Canadian Cannabis and the favorable vendor settlement in Produce.

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

SEGMENTED RESULTS OF OPERATIONS

1 unchanged sentence

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

For The Three Months Ended June 30, 2025

For The Three Months Ended September 30, 2025

Cannabis Canada

3 unchanged sentences

Selling, general and administrative expenses

Other income (expense), net

Other (expense) income, net

Income (loss) before taxes and equity method investment income

(Recovery of) provision for income taxes

Provision for income taxes

Equity method investment income, net of tax

Income (loss) from continuing operations

Income from discontinued operations net of tax

Loss from discontinued operations net of tax

Income (loss) including non-controlling interests

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

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

Net income (loss)

8 unchanged sentences

Diluted income (loss) per share

For The Three Months Ended June 30, 2024

For The Three Months Ended September 30, 2024

Cannabis Canada

6 unchanged sentences

Income (loss) before taxes and equity method investment income

Recovery of (provision for) income taxes

(Provision for) recovery of 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

Income (loss) from continuing operations

Income from discontinued operations net of tax

Income (loss) including non-controlling interests

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

Net (loss) income

Net income (loss)

Adjusted EBITDA from continuing operations

1 unchanged sentence

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 Six Months Ended June 30, 2025

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 Nine Months Ended September 30, 2025

Cannabis Canada

Cannabis U.S.

Cannabis Netherlands

Cost of sales

12 unchanged sentences

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

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 Nine Months Ended September 30, 2024

Cannabis Canada

3 unchanged sentences

Selling, general and administrative expenses

Other expense, net

Other expense (income), net

Goodwill and intangible asset impairments

Income (loss) before taxes and equity method investment income

Recovery of (provision for) income taxes

(Loss) income before taxes and equity method investment income

(Provison for) recovery of income taxes

Equity method investment income, net of tax

19 unchanged sentences

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

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

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 nine months ended September 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 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.

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

Canadian Cannabis net sales for the three months ended September 30, 2025 were $46,583 compared with $36,463 for the three months ended September 30, 2024.

The increase of $10,120, or 28%, was driven by an increase in international sales of $10,498, primarily driven by continued strength in export volumes to Germany, partially offset by a decrease in net branded sales of $431, 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 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.

For the three months ended September 30, 2025, the Company incurred excise duties of $15,712 (C$21,647), or 37% of gross branded sales, compared with $17,674 (C$24,109), or 39% of gross branded sales, for the three months ended September 30, 2024.

The decrease of $1,962 (C$2,462), or 11%, 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.

For the three months ended September 30, 2025, 58% of net sales were generated from branded flower, pre-rolls and cannabis derivative products compared with 75% for the three months ended September 30, 2024.

Non-branded, international, and other sales accounted for 42% of Canadian Cannabis net sales for the three months ended September 30, 2025, compared with 25% for the three months ended September 30, 2024.

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

1 unchanged sentence

The net average selling price of bulk non-branded flower increased by 45%, 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 13% 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,

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

For the Three Months Ended September 30,

(in thousands of U.S.

2 unchanged sentences

International sales

For the Three Months Ended June 30,

For the Three Months Ended September 30,

(in thousands of Canadian dollars)

3 unchanged sentences

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.

Canadian Cannabis cost of sales for the three months ended September 30, 2025 was $20,628 compared with $26,864 for the three months ended September 30, 2024.

The decrease of $6,236, or 23%, was primarily due to a decrease in volume (kilograms) packaged and sold of our 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 September 30, 2025 was $25,955, a 170% increase compared to $9,599 for the three months ended September 30, 2024.

Canadian Cannabis gross margin for the three months ended September 30, 2025 was 56% compared with 26% for the three months ended September 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.

Canadian Cannabis selling, general and administrative expenses for the three months ended September 30, 2025 were $9,140, or 20% of sales, compared with $7,983, or 22% of sales, for the three months ended September 30, 2024.

Canadian Cannabis net income for the three months ended September 30, 2025 was $11,678 compared with net income of $1,168 for the three months ended September 30, 2024.

The increase in net income was primarily due to the higher margin, partially offset by an increase in the tax provision expense of $4,178.

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.

Adjusted EBITDA for Canadian Cannabis for the three months ended September 30, 2025 was $19,310 compared with $4,752 for the three months ended September 30, 2024.

The increase of $14,558, or 306%, was primarily due to higher sales at a higher margin.

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

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Canadian Cannabis net sales for the nine months ended September 30, 2025 were $125,938 compared with $114,654 for the nine months ended September 30, 2024.

The increase of $11,284, or 10%, was driven by an increase in international sales of $24,871, primarily due to continued strength in export volumes to Germany, partially offset by a decrease in net branded sales, reflecting a 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.

For the nine months ended September 30, 2025, the Company incurred excise duties of $44,476 (C$62,167), or 37% of gross branded sales, compared with $57,193 (C$77,788), or 40% of gross branded sales, for the nine months ended September 30, 2024.

The decrease of $12,717 (C$15,621), or 22%, was due to a decrease in kilograms sold in the branded channel and the impact of exchange rate fluctuations.

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

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

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

For the nine months ended September 30, 2025, 59% of net sales were generated from branded flower, pre-rolls and cannabis derivative products compared with 76% for the nine months ended September 30, 2024.

Non-branded, international, and other sales accounted for 41% of Canadian Cannabis net sales for the nine months ended September 30, 2025, as compared with 24% for the nine months ended September 30, 2024.

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

1 unchanged sentence

The net average selling price of bulk non-branded flower increased by 38%, 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 10% due to a shift in product mix favoring bulk flower over packaged flower.

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

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

For the Six Months Ended June 30,

dollars and Canadian dollars, for the nine months ended September 30, 2025 and 2024:

For the Nine Months Ended September 30,

(in thousands of U.S.

2 unchanged sentences

International sales

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

(in thousands of Canadian dollars)

3 unchanged sentences

Cost of Sales

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.

Canadian Cannabis cost of sales for the nine months ended September 30, 2025 was $70,040 compared with $84,842 for the nine months ended September 30, 2024.

The decrease of $14,802, or 17%, 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.

Canadian Cannabis gross profit for the nine months ended September 30, 2025 was $55,898, a 88% increase compared to $29,812 for the nine months ended September 30, 2024.

Canadian Cannabis gross margin for the nine months ended September 30, 2025 was 44% compared with 26% for the nine months ended September 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 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.

Canadian Cannabis selling, general and administrative expenses for the nine months ended September 30, 2025 were $26,506, or 21%, of sales compared with $24,436, or 21%, of sales for the nine months ended September 30, 2024.

The increase of $2,070 was primarily due to higher commercial and marketing expenses and incremental integration costs.

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

Canadian Cannabis net income for the nine months ended September 30, 2025 was $21,199 compared with net income of $3,399 for the nine months ended September 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 $6,824 and an increase in selling, general and administrative expenses.

Adjusted EBITDA

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

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

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

Adjusted EBITDA for Canadian Cannabis for the nine months ended September 30, 2025 was $37,868 compared with $13,643 for the nine months ended September 30, 2024.

The increase of $24,225, or 178%, was primarily due to the higher margin.

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

CANNABIS SEGMENT RESULTS

Cannabis segment consists of Balanced Health.

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

For the three and nine months ended September 30, 2025 and 2024, U.S.

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

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.

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

Cannabis net sales for the three months ended September 30, 2025 were $3,337 compared with $3,943 for the three months ended September 30, 2024.

The decrease of $606, or 15%, was primarily due to lower direct-to-consumer sales resulting from the proliferation of unregulated hemp-derived products on the market and changes in state regulations restricting sales.

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 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.

Cannabis cost of sales for the three months ended September 30, 2025 was $1,348 compared with $1,443 for the three months ended September 30, 2024.

The decrease of $95, or 7%, was primarily due to lower sales.

U.S Cannabis gross profit for the three months ended September 30, 2025 decreased $511, or 20%, to $1,989, or a 60% gross margin, compared with $2,500, or a 63% gross margin, for the three months ended September 30, 2024.

Selling, General and Administrative Expenses

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.

Cannabis selling general and administrative expenses for the three months ended September 30, 2025 were $2,425 compared with $2,692 for the three months ended September 30, 2024.

The decrease of $267, or 10%, was due to more efficient marketing and brand spending as well as favorable contract renegotiations.

Cannabis net loss for the three months ended September 30, 2025 was $439 compared with a net loss of $192 for the three months ended September 30, 2024.

The increase of $247 was primarily due to lower sales at a lower margin.

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 adjusted EBITDA for the three months ended September 30, 2025 was ($332) compared with ($159) for the three months ended September 30, 2024.

The decrease of $173 was primarily due lower sales at a lower margin .

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

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Cannabis net sales for the nine months ended September 30, 2025 was $11,082 compared with $12,777 for the nine months ended September 30, 2024.

The decrease of $1,695, or 13%, was primarily due to new restrictions on 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.

Cannabis cost of sales for the nine months ended September 30, 2025 was $4,064 compared with $4,953 for the nine months ended September 30, 2024.

The decrease of $889, or 18%, was primarily due to lower sales and cost efficiencies from the internalization of our gummy manufacturing.

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

U.S Cannabis gross profit for the nine months ended September 30, 2025 decreased $806, or 10%, to $7,018, or a 63% gross margin, compared with $7,824, or a 61% gross margin, for the nine months ended September 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.

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.

Cannabis selling general and administrative expenses for the nine months ended September 30, 2025 were $7,405 compared with $9,058 for the nine months ended September 30, 2024.

The decrease of $1,653, or 18%, is due to more efficient marketing and brand spending as well as favorable contract renegotiations.

Cannabis net loss for the nine months ended September 30, 2025 was $607 compared with a net loss of $13,173 for the nine months ended September 30, 2024.

The decrease of $12,566 was primarily due to an impairment charge on goodwill and intangible assets taken in the nine months ended September 30, 2024 of ($11,939) that did not recur in 2025.

Adjusted EBITDA

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

Cannabis adjusted EBITDA for the nine months ended September 30, 2025 was ($173) compared with ($1,014) for the nine months ended September 30, 2024.

The improvement of $841 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”.

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

NETHERLANDS CANNABIS SEGMENT RESULTS

1 unchanged sentence

Leli Holland commenced sales during the first quarter of 2025.

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

Three Months Ended June 30, 2025

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

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

Three Months Ended September 30, 2025

Net sales for the three months ended September 30, 2025 were $3,587.

Cost of Sales

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.

Cost of sales for the three months ended September 30, 2025 was $1,928.

Gross profit for the three months ended September 30, 2025 was $1,659, or a 46% gross margin.

Selling, General and Administrative Expenses

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.

Selling, general and administrative expenses for the three months ended September 30, 2025 were $702.

Net income for the three months ended September 30, 2025 was $790.

Adjusted EBITDA

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.

Adjusted EBITDA for the three months ended September 30, 2025 was $1,265.

Nine Months Ended September 30, 2025

Net sales for the nine months ended September 30, 2025 were $6,556.

Cost of Sales

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.

Cost of sales for the nine months ended September 30, 2025 was $3,260.

Gross profit for the nine months ended September 30, 2025 was $3,296, or a 50% 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.

Selling, general and administrative expenses for the nine months ended September 30, 2025 were $1,698.

Net income for the nine months ended September 30, 2025 was $1,383.

Adjusted EBITDA

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

Adjusted EBITDA for the nine months ended September 30, 2025 was $2,560.

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%.

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

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

Produce sales for the three months ended September 30, 2025 were $12,841 compared with $14,340 for the three months ended September 30, 2024, a decrease of $1,499, or 10%, due to a commission charged on produce sales as a result of the supply agreement with Vanguard Food LP.

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.

Produce cost of sales for the three months ended September 30, 2025 decreased by $2,097, or 16%, to $10,833 compared with $12,930 for the three months ended September 30, 2024, primarily due to a reduction in labor costs and favorable utility rates over the prior year.

Produce gross profit for the three months ended September 30, 2025 was $2,008 compared with a gross profit of $1,410 for the three months ended September 30, 2024.

Gross margin for the three months ended September 30, 2025 was 16% compared with 10% for the three months ended September 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.

Produce selling, general and administrative expenses for the three months ended September 30, 2025 decreased by $498, or 70%, to $217 (2% of sales) compared with $715 (5% of sales) for the three months ended September 30, 2024.

Net Income From Continuing Operations

Produce net income from continuing operations for the three months ended September 30, 2025 was $1,300 compared with net income from continuing operations of $285 for the three months ended September 30, 2024.

The change of $1,015 was primarily due to the improved margins and the lower SG&A.

Produce net income for the three months ended September 30, 2025 was $1,024 compared with net income of $376 for the three months ended September 30, 2024.

The increase of $648 was primarily due to the improved margins and the lower SG&A.

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%.

Produce Adjusted EBITDA for the three months ended September 30, 2025 was $2,081 compared with $2,331 for the three months ended September 30, 2024.

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

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Produce sales for the nine months ended September 30, 2025 were $21,442 compared with $22,778 for the nine months ended September 30, 2024, a decrease of $1,336, or 6% due to a commission charged on produce sales as a result of the supply agreement with Vanguard Food LP.

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

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

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

Produce cost of sales for the nine months ended September 30, 2025 decreased by $1,852, or 8%, to $20,277 compared with $22,129 for the nine months ended September 30, 2024, primarily due to favorable utility rates over the prior year.

Produce gross profit for the nine months ended September 30, 2025 was $1,165 compared with $649 for the nine months ended September 30, 2024.

Gross margin for the nine months ended September 30, 2025 was 5% compared with 3% for the nine months ended September 30, 2024.

Selling, General and Administrative Expenses

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

Produce selling, general and administrative expenses for the nine months ended September 30, 2025 decreased by $472, or 21%, to $1,802 (8% of sales) compared with $2,274 (10% of sales) for the nine months ended September 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.

Produce net income from continuing operations for the nine months ended September 30, 2025 was $2,815 compared with a net loss from continuing operations of $3,054 for the nine months ended September 30, 2024.

The change of $5,869 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.

Produce net income for the nine months ended September 30, 2025 was $13,830 compared with a net loss of $7,810 for the nine months ended September 30, 2024.

The change of $21,640 was primarily attributable to an improvement on income (loss) from discontinued operations, net of tax of $15,771 and a favorable vendor settlement relating to the partial recovery of operational losses from the ToBRFV infestation.

Adjusted EBITDA

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”.

Produce Adjusted EBITDA for the nine months ended September 30, 2025 was ($489) compared with ($1,991) for the nine months ended September 30, 2024.

The change of $1,502 in Adjusted EBITDA was primarily due to an improvement in Adjusted EBITDA from continuing operations as a result of a favorable vendor settlement, partially offset by a decrease in Adjusted EBITDA from discontinued operations due to poor performance of the Texas Greenhouses in the first half of 2025.

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

Liquidity and Capital Resources

Capital Resources

At June 30, 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.

At September 30, 2025, cash, cash equivalents, and restricted cash were $87,561 and working capital was $100,219, 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.

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Maximum Availability

Outstanding as of June 30, 2025

Outstanding as of September 30, 2025

FCC Term Loan

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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 June 30, 2025 and December 31, 2024 was $209 and $271, respectively.

Accrued interest payable on the Credit Facilities and Pure Sunfarms Loans as of September 30, 2025 and December 31, 2024 was $183 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 $19,837 on June 30, 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 $16,345 on September 30, 2025 and $20,821 on December 31, 2024.

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

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

As of September 30, 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 Monahans greenhouses, and general security agreements over its assets.

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

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

The carrying value of the assets and securities pledged as collateral as of September 30, 2025 and December 31, 2024 was $98,423 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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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.

The outstanding amount of the Pure Sunfarms Term Loan Facility was $18,249 as of September 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.

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Summary of Cash Flows

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

(in Thousands)

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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.

For the nine months ended September 30, 2025 and 2024, cash provided by (used in) operating activities were $46,710 and $2,803, respectively.

The operating activities for the nine months ended September 30, 2025 consisted of $13,630 in changes in non-cash working capital items and $33,080 in changes before non-cash working capital items, while operating activities for the nine months ended September 30, 2024 consisted of ($3,911) in changes in non-cash working capital items and $6,714 in changes before non-cash working capital items.

The improvement when comparing the change in before non-cash working capital items for 2025 with 2024 was primarily due to 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.

For the nine months ended September 30, 2025 and 2024, cash used in investing activities were ($7,117) and ($5,607), respectively.

The increase in investing activities for the nine months ended September 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.

For the nine months ended September 30, 2025 and 2024, cash used in financing activities were ($3,611) and ($8,118), respectively.

For the nine months ended September 30, 2025, cash used in financing activities consisted of debt repayments of ($6,612), partially offset by $3,544 in proceeds from the exercise of warrants and options.

For the nine months ended September 30, 2024, cash flows used in financing activities consisted of debt repayments of ($4,301) and cash used for the acquisition of an additional 10% ownership of Rose LifeScience of ($3,817).

Contractual Obligations and Commitments

We expect to meet our contractual obligations and commitments using our working capital and our other resources described under “Capital Resources” above.

Other than with respect to our long-term debt described above, we currently do not have any material cash requirements in the near future.

Other than with respect to our long-term debt described above and our Canadian and Netherlands expansion projects, we currently do not have any material cash requirements in the near future.

Non-GAAP Measures

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Management believes that our non-GAAP measures are important measures in evaluating the historical performance of the Company because it excludes non-recurring and other items that do not reflect our business performance.

Reconciliation of Net Loss to Adjusted EBITDA

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

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Reconciliation of Net Income (Loss) to Adjusted EBITDA

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

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

(in thousands of U.S.

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Amortization and depreciation

Foreign currency exchange (gain) loss

Foreign currency exchange loss (gain)

Interest expense, net

4 unchanged sentences

Other impairments

Other expenses

Adjustments attributable to non-controlling interest

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Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect the underlying business performance of the Company.

Reconciliation of Segmented Net Loss to Adjusted EBITDA

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

For The Three Months Ended June 30, 2025

Reconciliation of Segmented Net Income (Loss) to Adjusted EBITDA

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

For The Three Months Ended September 30, 2025

(in thousands of U.S.

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Amortization and depreciation

Foreign currency exchange gain

Foreign currency exchange (gain) loss

Interest expense, net

Provision for (recovery of) income taxes

Provision for income taxes

Share-based compensation

Deferred financing fees

Other impairments

Adjustments attributable to non-controlling interest

2 unchanged sentences

Adjusted EBITDA (2)

For The Three Months Ended June 30, 2024

For The Three Months Ended September 30, 2024

(in thousands of U.S.

6 unchanged sentences

Interest expense, net

(Recovery of) provision for income taxes

Provision for (recovery of) income taxes

Share-based compensation

Goodwill and intangible impairments (1)

Other expenses

Adjustments attributable to non-controlling interest

2 unchanged sentences

Adjusted EBITDA (2)

For The Six Months Ended June 30, 2025

For The Nine Months Ended September 30, 2025

(in thousands of U.S.

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Adjusted EBITDA (2)

For The Six Months Ended June 30, 2024

For The Nine Months Ended September 30, 2024

(in thousands of U.S.

2 unchanged sentences

Cannabis Netherlands

Net income (loss) from continuing operations

Net (loss) income from continuing operations

Amortization and depreciation

Foreign currency exchange loss

Foreign currency exchange loss (gain)

Interest expense, net

(Recovery of) provision for income taxes

Provision for (recovery of) income taxes

Share-based compensation

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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), 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.

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 nine months ended September 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 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):

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

As Adjusted for Constant Currency

For the Three Months Ended June 30,

For the Three Months Ended September 30,

As Reported Change

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Constant Currency Change

2 unchanged sentences

Other (expense) income, net

Goodwill and intangible asset impairments (1)

Income (loss) before taxes and equity method investment income

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As Adjusted for Constant Currency

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

As Reported Change

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Constant Currency Change

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

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

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 nine months ended September 30, 2025 and 2024, the Company considered qualitative factors in assessing for impairment indicators for the Company’s U.S.

and Canadian Cannabis segments.

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

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

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

At September 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 September 30, 2025, the carrying value of goodwill associated with our Cannabis – Canada segment was $43.7 million and the carrying value of intangible assets associated with our Cannabis – Canada segment was $20.5 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 June 30, 2025, our variable interest rate debt was primarily related to our Credit Facilities and Term Loans.

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

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

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

As of September 30, 2025, we had approximately $34,594 in aggregate principal amounts of our Term Loans with a weighted average interest rate of 6.3%.

The current interest rates for outstanding revolving loans under our Credit Facility and Term Loans reflect basis point decreases of approximately 3.1% over the comparable period in 2024.

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Our variable rate interest debt subjects us to risk from increases in prevailing interest rates.

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

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

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

An additional 50 basis point increase in the applicable interest rates under our Credit Facility and Term Loan would have increased our interest expense by approximately $47 and $141 for the three and nine months ended September 30, 2025, respectively, and $57 and $171 for the three and nine months ended September 30, 2024, respectively.

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

Foreign Exchange Risk

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

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

foreign exchange rate was C$1.00 = US$0.7185 and C$1.00 = US$0.7398, respectively.

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

June 30, 2025

June 30, 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 September 30, 2025 and 2024 with the net foreign exchange gain or loss directly impacting comprehensive income (loss):

September 30, 2025

September 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