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What changed in Village Farms International, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Village Farms International, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+541 added−510 removedSource: 10-K (2025-03-13) vs 10-K (2024-03-13)

Top changes in Village Farms International, Inc.'s 2024 10-K

541 paragraphs added · 510 removed · 335 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

166 edited+102 added−28 removed543 unchanged
Biggest changeIn addition, the issuance of Common Shares by us in connection with acquisitions or strategic alliances, or the perception that such additional issuances or sales could occur, could cause the market price of our Common Shares to decline and could have an undesirable impact on our ability to raise capital in the future. 38 Additionally, sales by existing shareholders of a large number of our Common Shares in the public market could also disrupt the market price of our Common Shares.
Biggest changeSuch issuance may cause a reduction in the proportionate ownership and voting power of all other shareholders. The dilution may result in a decline in the price of our Common Shares, a change in control, and could have an undesirable impact on our ability to raise capital in the future.
The following is a list of the key trademarks and service marks Village Farms has registered for our produce: Village Farms Logo®, BC Grown Logo®, A Revolution in Flavor®, Baby Beefs®, Blissfully Bright®, Cabernet Estate Reserve®, Cheeky Sweets®, Cherry No.9®, Cherry No.9 Fall in Love Again®, Cosmic Beefsteak TM , Delectable TOV®, Exquisite Heirloom®, Fall in Love Again®, From Our House To Your Home®, Garden Fresh Flavor®, Good for the Earth®, Good For, All TM , Good Day Sunshine TM , Heavenly Villagio Marzano®, Home Choice®, Hydroperfect®, Hydroperfect Campari®, It Takes a Village®, Juicy Beefsteak®, Lip Smackin’ Grapes®, Lorabella Blossom®, Maverick Mix®, Mini Sensations®, No.9®, Savory Roma®, Scrumptious Mini®, Sensational Sara®, Sinfully Sweet®, Sinfully Sweet Campari®, Sweet Bells®, Ture Rebel Mix®, Village Farms® , Village Fields®, Villagio Chef’s Pack® , Villagio Magic Mix® , Villagio Marzano® and Where Freshness is Always in Season®.
The following is a list of the key trademarks and service marks Village Farms has registered for our produce: Village Farms Logo®, BC Grown Logo®, A Revolution in Flavor®, Baby Beefs®, Blissfully Bright®, Cabernet Estate Reserve®, Cheeky Sweets®, Cherry No.9®, Cherry No.9 Fall in Love Again®, Cosmic Beefsteak TM , Delectable TOV®, Exquisite Heirloom®, Fall in Love Again®, From Our House To Your Home®, Garden Fresh Flavor®, Good for the Earth®, Good For, All TM , Good Day Sunshine TM , Heavenly Villagio Marzano®, Home Choice®, Hydroperfect®, Hydroperfect Campari®, It Takes a Village®, Juicy Beefsteak®, Lip Smackin’ Grapes®, Lorabella Blossom®, Maverick Mix®, Mini Sensations®, Savory Roma®, Scrumptious Mini®, Sensational Sara®, Sinfully Sweet®, Sinfully Sweet Campari®, Sweet Bells®, Ture Rebel Mix®, Village Farms® , Village Fields®, Villagio Chef’s Pack® , Villagio Magic Mix® , Villagio Marzano® and Where Freshness is Always in Season®.
Below are additional highlights of the Cannabis Act : • Places restrictions on the amount of cannabis that individuals can possess and distribute, and on public consumption and use, and prohibits the sale of cannabis unless authorized by the Cannabis Act . • Permits individuals who are 18 years of age or older to cultivate, propagate, and harvest up to and including four cannabis plants in their dwelling-house, propagated from a seed or plant material authorized by the Cannabis Act . • Restricts (but does not strictly prohibit) the promotion and display of cannabis, cannabis accessories and services related to cannabinoids to consumers, including restrictions on branding and a prohibition on false or misleading promotion and on sponsorships. • Permits the informational promotion of cannabis by entities licensed to produce, sell, or distribute cannabis in specified circumstances to individuals 18 years and older. • Introduces packaging and labelling requirements for cannabis and cannabis accessories and prohibits the sale of cannabis or cannabis accessories that could be appealing to young persons. • Provides the designated minister with the power to recall any cannabis or class of cannabis on reasonable grounds that such a recall is necessary to protect public health or public safety. • Establishes a national cannabis tracking system to monitor the movement of cannabis from where it is grown, to where it is processed, to where it is sold. 5 • Provides powers to inspectors for the purpose of administering and enforcing the Cannabis Act and a system for administrative monetary penalties.
Below are additional highlights of the Cannabis Act : • Places restrictions on the amount of cannabis that individuals can possess and distribute, and on public consumption and use, and prohibits the sale of cannabis unless authorized by the Cannabis Act . • Permits individuals who are 18 years of age or older to cultivate, propagate, and harvest up to and including four cannabis plants in their dwelling-house, propagated from a seed or plant material authorized by the Cannabis Act . • Restricts (but does not strictly prohibit) the promotion and display of cannabis, cannabis accessories and services related to cannabinoids to consumers, including restrictions on branding and a prohibition on false or misleading promotion and on sponsorships. • Permits the informational promotion of cannabis by entities licensed to produce, sell, or distribute cannabis in specified circumstances to individuals 18 years and older. • Introduces packaging and labelling requirements for cannabis and cannabis accessories and prohibits the sale of cannabis or cannabis accessories that could be appealing to young persons. • Provides the designated minister with the power to recall any cannabis or class of cannabis on reasonable grounds that such a recall is necessary to protect public health or public safety. • Establishes a national cannabis tracking system to monitor the movement of cannabis from where it is grown, to where it is processed, to where it is sold. • Provides powers to inspectors for the purpose of administering and enforcing the Cannabis Act and a system for administrative monetary penalties.
Under this bill: • a federal banking regulator is prohibited from penalizing a depository institution for providing banking services to a state-sanctioned marijuana business. • a federal banking regulator is prohibited from requesting or requiring a depository institution to terminate a deposit account unless o (1) there is a valid reason, such as the regulator has cause to believe that the depository institution is engaging in an unsafe or unsound practice; and o (2) reputational risk is not the dispositive factor. • proceeds from a transaction conducted by a state-sanctioned marijuana business are no longer considered proceeds from unlawful activity. • and, a financial institution, insurer, or federal agency may not be held liable or subject to asset forfeiture under federal law for providing a loan, mortgage, or other financial service to a state-sanctioned marijuana business.
Under this bill: 11 • a federal banking regulator is prohibited from penalizing a depository institution for providing banking services to a state-sanctioned marijuana business. • a federal banking regulator is prohibited from requesting or requiring a depository institution to terminate a deposit account unless o (1) there is a valid reason, such as the regulator has cause to believe that the depository institution is engaging in an unsafe or unsound practice; and o (2) reputational risk is not the dispositive factor. • proceeds from a transaction conducted by a state-sanctioned marijuana business are no longer considered proceeds from unlawful activity. • and, a financial institution, insurer, or federal agency may not be held liable or subject to asset forfeiture under federal law for providing a loan, mortgage, or other financial service to a state-sanctioned marijuana business.
The ACMPR provided three possible alternatives for individuals to access cannabis for medical purposes: (i) they can continue to access 4 quality-controlled cannabis by registering with federal License Holders; (ii) they can register with Health Canada to produce a limited amount of cannabis for their own medical purposes (starting materials must be obtained from a License Holder); or (iii) they can designate someone else who is registered with Health Canada to produce cannabis on their behalf (starting materials must be obtained from a License Holder).
The ACMPR provided three possible alternatives for individuals to access cannabis for medical purposes: (i) they can continue to access quality-controlled cannabis by registering with federal License Holders; (ii) they can register with Health Canada to produce a limited amount of cannabis for their own medical purposes (starting materials must be obtained from a License Holder); or (iii) they can designate someone else who is registered with Health Canada to produce cannabis on their behalf (starting materials must be obtained from a License Holder).
If applicable data privacy and marketing laws become more restrictive at the international, federal, provincial, or state levels, our compliance costs may increase, our ability to effectively engage customers via personalized marketing may decrease, our investment in our e-commerce platform may not 35 be fully realized, our opportunities for growth may be curtailed by our compliance burden and our potential reputational harm or liability for security breaches may increase.
If applicable data privacy and marketing laws become more restrictive at the international, federal, provincial, or state levels, our compliance costs may increase, our ability to effectively engage customers via personalized marketing may decrease, our investment in our e-commerce platform may not be fully realized, our opportunities for growth may be curtailed by our compliance burden and our potential reputational harm or liability for security breaches may increase.
The FinCEN guidance also does not provide any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions by the DOJ, FinCEN or other federal regulators for banks and other financial institutions and can be amended or revoked at any time and therefore most financial 11 institutions in the United States do not appear comfortable relying on this guidance to provide banking services to the cannabis industry.
The FinCEN guidance also does not provide any safe harbors or legal defenses from examination or regulatory or criminal enforcement actions by the DOJ, FinCEN or other federal regulators for banks and other financial institutions and can be amended or revoked at any time and therefore most financial institutions in the United States do not appear comfortable relying on this guidance to provide banking services to the cannabis industry.
In Delta, B.C., Pure Sunfarms collects rainwater throughout the year to minimize the use of external water sources at one of its greenhouses. All the Company's Delta, B.C. greenhouses utilize renewable hydroelectricity as their main power source. Rose LifeScience’s indoor controlled growing facility in Quebec was granted environmental rebates from the local government for its energy efficient design.
In 17 Delta, B.C., Pure Sunfarms collects rainwater throughout the year to minimize the use of external water sources at one of its greenhouses. All the Company's Delta, B.C. greenhouses utilize renewable hydroelectricity as their main power source. Rose LifeScience’s indoor controlled growing facility in Quebec was granted environmental rebates from the local government for its energy efficient design.
Cannabis operations consist of wholly-owned, Colorado-based Balanced Health. Balanced Health owns and operates one of the leading brands in the hemp-derived CBD/cannabinoid market in the United States, providing us with access to the U.S. Cannabinoid market in a consumer products category adjacent to the high-tetrahydrocannabinol (“THC”) cannabis market, as well as the broader consumer packaged goods wellness arena.
Our U.S. cannabis operations consist of wholly-owned, Colorado-based Balanced Health. Balanced Health owns and operates one of the leading brands in the hemp-derived CBD/cannabinoid market in the United States, providing us with access to the U.S. Cannabinoid market in a consumer products category adjacent to the high-tetrahydrocannabinol (“THC”) cannabis market, as well as the broader consumer packaged goods wellness arena.
Cannabis package labels must include specific information, such as (i) product source information, including brand name, the class of cannabis and the name, phone number and email of the licensed processor or cultivator, (ii) mandatory warnings, including rotating health warning 6 messages on Health Canada’s list of standard health warnings; (iii) the Health Canada standardized cannabis symbol; and (iv) information specifying THC and CBD content.
Cannabis package labels must include specific information, such as (i) product source information, including brand name, the class of cannabis and the name, phone number and email of the licensed processor or cultivator, (ii) mandatory warnings, including rotating health warning messages on Health Canada’s list of standard health warnings; (iii) the Health Canada standardized cannabis symbol; and (iv) information specifying THC and CBD content.
In addition, changes in regulations, government or judicial interpretation of regulations, or more vigorous enforcement thereof or other unanticipated events could require extensive changes to our Canadian cannabis operations, increase compliance costs or give rise to material liabilities or a revocation of its licenses and other permits, which could have a material adverse effect on our business, results of operations and financial condition.
In addition, changes in regulations, government or judicial interpretation of regulations, or more vigorous enforcement thereof or other unanticipated events could require extensive changes to our Canadian cannabis operations, increase compliance costs or give rise to material liabilities or a revocation of its licenses and other permits, which could have a material adverse effect on our 33 business, results of operations and financial condition.
Such laws, rules, regulations, and policies are administered by various federal, 33 state, provincial, regional, and local health agencies and other governmental authorities. Changes to any of these laws and regulations could have a significant impact on us. There can be no assurance that we will be able to cost effectively comply with future laws and regulations.
Such laws, rules, regulations, and policies are administered by various federal, state, provincial, regional, and local health agencies and other governmental authorities. Changes to any of these laws and regulations could have a significant impact on us. There can be no assurance that we will be able to cost effectively comply with future laws and regulations.
For example, on January 26, 2023, we completed a registered direct offering for the purchase and sale of an aggregate 18,350,000 Common Shares at a public offering price of US$1.35 per Common 19 Share for gross proceeds of approximately US$25 million coupled with 18,350,000 warrants with an exercise price of US$1.65 (the “2023 Equity Offering”).
For example, on January 26, 2023, we completed a registered direct offering for the purchase and sale of an aggregate 18,350,000 Common Shares at a public offering price of US$1.35 per Common Share for gross proceeds of approximately US$25 million coupled with 18,350,000 warrants with an exercise price of US$1.65 (the “2023 Equity Offering”).
We continue to evaluate and pursue profitable international expansion opportunities in such markets. 3 We believe that Pure Sunfarms is the leading low-cost, high-quality producer in the Canadian market and its low-cost structure, primarily driven by economies of scale and large-scale greenhouse experience, is sustainable and provides a competitive industry advantage.
We continue to evaluate and pursue profitable international expansion opportunities in such markets. We believe that Pure Sunfarms is the leading low-cost, high-quality producer in the Canadian market and its low-cost structure, primarily driven by economies of scale and large-scale greenhouse experience, is sustainable and provides a competitive industry advantage.
The Cole Memorandum offered 10 guidance to federal agencies on how to prioritize civil enforcement, criminal investigations, and prosecutions regarding marijuana in all states and quickly set a compliance standard for marijuana related businesses. The Cole Memorandum concluded that the Department of Justice should be focused on addressing only the most significant threats related to cannabis.
The Cole Memorandum offered guidance to federal agencies on how to prioritize civil enforcement, criminal investigations, and prosecutions regarding marijuana in all states and quickly set a compliance standard for marijuana related businesses. The Cole Memorandum concluded that the Department of Justice should be focused on addressing only the most significant threats related to cannabis.
The development of our proprietary technology entails significant technical and business risks, and may require significant continuing costs, development efforts and third-party commitments. We may not be successful in using new technologies or exploiting niche markets effectively or adapting our cannabis business to evolving customer or medical requirements or preferences or emerging industry standards.
The development of our proprietary technology entails significant technical and business risks, and may require significant continuing costs, development efforts and third-party commitments. We may not be successful in using new technologies or exploiting niche markets effectively or adapting our cannabis business to evolving customer or medical 26 requirements or preferences or emerging industry standards.
Employees We have approximately 1,400 employees and contract workers throughout all of our segments: Village Farms Fresh, Pure Sunfarms, Rose LifeScience, Balanced Health Botanicals and VF Clean Energy. The majority of our employees and contract workers 14 are employed in our produce and cannabis greenhouse operations. None of our employees are covered by a collective bargaining agreement.
Employees We have approximately 1,400 employees and contract workers throughout all of our segments: Village Farms Fresh, Pure Sunfarms, Rose LifeScience, Balanced Health Botanicals and VF Clean Energy. The majority of our employees and contract workers are employed in our produce and cannabis greenhouse operations. None of our employees are covered by a collective bargaining agreement.
Any debt financing secured in the future could involve additional restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including other future potential acquisitions. 21 Our operations are subject to natural catastrophes.
Any debt financing secured in the future could involve additional restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including other future potential acquisitions. Our operations are subject to natural catastrophes.
If so, we may suffer damage to our reputation and become subject to proceedings or actions against it by governmental entities or others. Any such proceeding or action could hurt our reputation, force us to spend significant amounts to defend our practices, distract our management or otherwise have an adverse effect on our business.
If so, we may suffer damage to our reputation and become subject to proceedings or actions against it by governmental entities or others. Any such 38 proceeding or action could hurt our reputation, force us to spend significant amounts to defend our practices, distract our management or otherwise have an adverse effect on our business.
As a result, our current or future intellectual property portfolio may not provide us with sufficient rights to protect our business, including our products, processes, and brands. 24 Termination or limitation of the scope of any intellectual property license may restrict or delay or eliminate our ability to develop and commercialize our products, which could adversely affect our business.
As a result, our current or future intellectual property portfolio may not provide us with sufficient rights to protect our business, including our products, processes, and brands. Termination or limitation of the scope of any intellectual property license may restrict or delay or eliminate our ability to develop and commercialize our products, which could adversely affect our business.
Any event or circumstance that adversely affects the cannabis and hemp-derived CBD industries could have a material adverse effect on our business, financial condition, and results of operations. Our Canadian Cannabis business has been negatively affected by and may continue to be impacted by cannabis supply and demand fluctuations.
Any 28 event or circumstance that adversely affects the cannabis and hemp-derived CBD industries could have a material adverse effect on our business, financial condition, and results of operations. Our Canadian Cannabis business has been negatively affected by and may continue to be impacted by cannabis supply and demand fluctuations.
These perceptions relating to the cannabis industry may interfere with our relationship with service providers in the United States and Canada, as well as other countries, particularly in the financial services and insurance industries. 28 Our Canadian and U.S. Cannabis businesses are subject to cannabis-related security breaches, which could result in significant losses.
These perceptions relating to the cannabis industry may interfere with our relationship with service providers in the United States and Canada, as well as other countries, particularly in the financial services and insurance industries. Our Canadian and U.S. Cannabis businesses are subject to cannabis-related security breaches, which could result in significant losses.
Investors should not assume that Canadian courts (i) would enforce judgments of United States courts obtained in actions against us or our directors and officers predicated upon the civil liability provisions of the United States federal securities laws or the securities or “blue sky” laws of any state within the United States or (ii) would enforce, in original actions, liabilities against us or our directors and officers predicated upon the United States federal securities laws or any such state securities or “blue sky” laws.
Investors should not assume that Canadian courts (i) would enforce judgments of United States courts obtained in actions against us or our directors and officers 43 predicated upon the civil liability provisions of the United States federal securities laws or the securities or “blue sky” laws of any state within the United States or (ii) would enforce, in original actions, liabilities against us or our directors and officers predicated upon the United States federal securities laws or any such state securities or “blue sky” laws.
The laws continue to evolve, and differences in provincial and territorial regulatory frameworks could result in, among other things, increased compliance costs, and increased supply costs. 7 Municipal and regional governments may choose to impose additional requirements and regulations on the sale of recreational cannabis, adding further uncertainty and risk to our business.
The laws continue to evolve, and differences in provincial and territorial regulatory frameworks could result in, among other things, increased compliance costs, and increased supply costs. Municipal and regional governments may choose to impose additional requirements and regulations on the sale of recreational cannabis, adding further uncertainty and risk to our business.
(C) Greenhouse Industry — Canada Among the North American greenhouse vegetable producers, Canada is the largest supplier from April to October. Several factors, including climatic advantages (cooler summer temperatures) and the proximity of greenhouse producers to consumer markets, contribute to Canada’s favorable positioning relative to the United States during that time period.
(C) Greenhouse Industry — Canada Among the North American greenhouse vegetable producers, Canada is the largest supplier from April to October. Several factors, including climatic advantages (cooler summer temperatures) and the proximity of greenhouse producers to consumer markets, 15 contribute to Canada’s favorable positioning relative to the United States during that time period.
Any such proceeding or action could hurt our reputation, force us to spend significant amounts in defense of these proceedings, distract our management, increase our costs of doing business, decrease the use of our website and mobile applications by consumers and suppliers and may result in the imposition of monetary liabilities.
Any such proceeding or action could hurt our reputation, force us to spend significant amounts in defense of these proceedings, distract our 34 management, increase our costs of doing business, decrease the use of our website and mobile applications by consumers and suppliers and may result in the imposition of monetary liabilities.
There can be no assurance that the insurance against all such potential liabilities we maintain will be adequate in all cases. In addition, even if a product liability claim was not successful or was not fully pursued, the negative publicity surrounding any such assertion could harm our reputation.
There can be no assurance that the insurance against all such potential liabilities we maintain will be adequate in all 36 cases. In addition, even if a product liability claim was not successful or was not fully pursued, the negative publicity surrounding any such assertion could harm our reputation.
In March 2023, Attorney General Merrick Garland stated during a senate hearing that “I think that it’s fair to expect what I said at my confirmation hearing with respect to marijuana and policy, that it will be very close to what was done in the Cole Memorandum”.
In March 2023, Attorney General Merrick Garland stated during a senate hearing that “I think that it’s fair to expect what I said at my confirmation hearing with respect to 10 marijuana and policy, that it will be very close to what was done in the Cole Memorandum”.
Although we strive to ensure that all of our service providers have implemented and adhered to high caliber quality control systems, any significant failure or deterioration of such quality control systems could have a material adverse effect on our business and operating results. Our products may be subject to recalls.
Although we strive to ensure that all of our service providers have implemented and adhered to high caliber quality control systems, any significant failure or deterioration of such quality control systems could have a material adverse effect on our business and operating results. 25 Our products may be subject to recalls.
We maintain cyber security insurance and have implemented processes, procedures, and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber incident, do not guarantee that our financial results will not 23 be negatively impacted by such an incident.
We maintain cyber security insurance and have implemented processes, procedures, and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber incident, do not guarantee that our financial results will not be negatively impacted by such an incident.
Disputes with customers may arise in the future relating to the non-payment of accounts receivable and may escalate to litigation or other dispute resolution processes, which could be protracted, time consuming and expensive, and there can be no assurance that we will be successful in any such disputes.
Disputes with customers may arise in the future relating to the non-payment of accounts receivable and may escalate to litigation or other dispute resolution processes, which could be protracted, time consuming and expensive, and there can be 31 no assurance that we will be successful in any such disputes.
If we are unable to comply with our debt covenants in the future, we may seek a waiver and/or an amendment(s) from the applicable lenders in respect of any such covenant in order to avoid any breach or default that might otherwise result therefrom.
If we are unable to comply with our debt covenants in the future, we may seek a waiver and/or an 21 amendment(s) from the applicable lenders in respect of any such covenant in order to avoid any breach or default that might otherwise result therefrom.
The cannabis and CBD industries are undergoing rapid growth and substantial change, and the legal landscape for recreational cannabis and CBD is rapidly changing internationally. An increasing number of jurisdictions globally are passing legislation allowing for the production and distribution of recreational cannabis and other cannabinoid-containing product, such as CBD, in some form.
The cannabis and CBD industries are undergoing rapid growth and substantial change, and the legal landscape for recreational cannabis and CBD is rapidly changing internationally. An increasing number of jurisdictions globally are passing legislation allowing for the production and distribution of recreational cannabis and other cannabinoid-containing product, such as 30 CBD, in some form.
Municipalities had until January 22, 2019 to pass such by-laws, and several municipalities have formally opted-out of the retail market. Municipalities that opted out can later lift the prohibition on retail cannabis stores by 8 subsequent resolution, which cannot be reversed at a later date.
Municipalities had until January 22, 2019 to pass such by-laws, and several municipalities have formally opted-out of the retail market. Municipalities that opted out can later lift the prohibition on retail cannabis stores by subsequent resolution, which cannot be reversed at a later date.
Our operations require certain key inputs, including raw materials and energy, and we are subject to their costs and potential supply disruptions. Our business is dependent on a number of key inputs and their related costs including raw materials, packaging materials and supplies related to our growing operations, as well as electricity, water, and other local utilities.
Our operations require certain key inputs, including raw materials and energy, and we are subject to their costs, tariffs, and potential supply disruptions. Our business is dependent on a number of key inputs and their related costs including raw materials, packaging materials and supplies related to our growing operations, as well as electricity, water, and other local utilities.
We began exporting to Israel at the end of 2022, began exporting to Germany and the UK in the fourth quarter of 2023, and continued to export to Australia throughout 2023. We expect international expansion should enhance our profitability while expanding our brand and experience into emerging new legal cannabis markets.
We began exporting to Israel at the end of 2022, began exporting to Germany and the UK in the fourth quarter of 2023, and continued to export to Australia throughout 2023. We expect international expansion to enhance our profitability while expanding our brand and experience into emerging new legal cannabis markets.
Such issuance may cause a reduction in the proportionate ownership and voting power of all other shareholders. The dilution may result in a decline in the price of our Common Shares or a change in control. We do not expect to pay dividends for the foreseeable future.
Such issuance may cause a reduction in the proportionate ownership and voting power of all other shareholders. The dilution may result in a decline in the price of our Common Shares or a change in control. 42 We do not expect to pay dividends for the foreseeable future.
In May 2020, Pure Sunfarms received its cannabis cultivation license from Health Canada for the Delta 2 facility, providing an additional 1.1 million square feet of production capacity, enhancing its ability to grow, package and sell cannabis and cannabis extracts.
Business of Pure Sunfarms In May 2020, Pure Sunfarms received its cannabis cultivation license from Health Canada for the Delta 2 facility, providing an additional 1.1 million square feet of production capacity, enhancing its ability to grow, package and sell cannabis and cannabis extracts.
The IHR defines industrial hemp as a cannabis plant, or any part of that plant, in which the concentration of tetrahydrocannabinol (“THC”) is 0.3% or less in the flowering heads and leaves. 9 Our U.S. Cannabis Segment Our U.S. Cannabis segment is Balanced Health Botanicals, LLC ("BHB").
The IHR defines industrial hemp as a cannabis plant, or any part of that plant, in which the concentration of tetrahydrocannabinol (“THC”) is 0.3% or less in the flowering heads and leaves. Our U.S. Cannabis Segment Our U.S. Cannabis segment is Balanced Health Botanicals, LLC ("BHB").
While we believe that we have sufficient personnel and review procedures to allow us to remediate the above-mentioned material weakness and maintain an effective system of internal controls in the future, we cannot assure you that we will not experience additional material weaknesses in our internal controls.
While we believe that we have sufficient personnel and review procedures to allow us to remediate the above-mentioned material weaknesses and maintain an effective system of internal controls in the future, we cannot assure you that we will not experience additional material weaknesses in our internal controls.
Acquisitions, joint ventures, investments or expansion of scope of existing relationships could result in the incurrence of additional debt, costs and contingent liabilities, and there can be no assurance that these transactions will achieve the 22 expected benefits to our business.
Acquisitions, joint ventures, investments or expansion of scope of existing relationships could result in the incurrence of additional debt, costs and contingent liabilities, and there can be no assurance that these transactions will achieve the expected benefits to our business.
Compliance with current and future environmental laws and regulations, which are likely to become more stringent over time, including those governing greenhouse gas emissions, may impose additional capital costs and financial expenditures, which could adversely affect operational results and profitability.
Compliance with current and future environmental laws and regulations, which are likely to become more stringent over 37 time, including those governing greenhouse gas emissions, may impose additional capital costs and financial expenditures, which could adversely affect operational results and profitability.
Some states, provinces, territories and municipalities in Canada and the United States have already taken steps to prohibit 34 the sale or distribution of vaping products, restrict the sale and distribution of such products or impose restrictions on flavours or use of such vaporizers. This trend may continue, accelerate and expand.
Some states, provinces, territories and municipalities in Canada and the United States have already taken steps to prohibit the sale or distribution of vaping products, restrict the sale and distribution of such products or impose restrictions on flavours or use of such vaporizers. This trend may continue, accelerate and expand.
Moreover, cannabis is phytoremediative, meaning that it may extract toxins or other undesirable chemicals or compounds from the 25 ground in which it is planted. Various regulatory agencies have established maximum limits for pathogens, toxins, chemicals, and other compounds that may be present in agricultural materials.
Moreover, cannabis is phytoremediative, meaning that it may extract toxins or other undesirable chemicals or compounds from the ground in which it is planted. Various regulatory agencies have established maximum limits for pathogens, toxins, chemicals, and other compounds that may be present in agricultural materials.
However, if the Company fails to remedy this deficiency during the Compliance Period, Nasdaq will provide notice that the Company’s Common Shares are subject to delisting. We can provide no assurance that we will regain compliance with the Minimum Bid Requirement by the end of the Compliance Period.
However, if the Company fails to remedy this deficiency during the Compliance Period, Nasdaq may provide notice that the Company’s Common Shares are subject to delisting. We can provide no assurance that we will regain compliance with the Minimum Bid Requirement by the end of the Compliance Period.
As a result of continuing consolidation of the retail grocery industry, our U.S. retail customers grow larger and become more sophisticated enabling them to demand lower pricing, special packaging or varieties as well 29 as increased promotional programs.
As a result of continuing consolidation of the retail grocery industry, our U.S. retail customers grow larger and become more sophisticated enabling them to demand lower pricing, special packaging or varieties as well as increased promotional programs.
Approved licensed New Brunswick cannabis producers are not permitted to sell products that they grow and produced locally at their facilities, and private companies may enter into agreements with Cannabis NB to operate cannabis stores under private brands.
Approved licensed New Brunswick cannabis producers are not permitted to sell products that they grow and 8 produced locally at their facilities, and private companies may enter into agreements with Cannabis NB to operate cannabis stores under private brands.
In its 8,000 square foot facility, BHB provides on-site bottling, labeling and packaging that follow the FDA’s Current Good Manufacturing Practice (“cGMP”) guidelines, and is NSF GMP certified. BHB was awarded U.S.
In its 8,000 square foot facility, BHB provides on-site bottling, labeling and packaging that follow the FDA’s Current Good Manufacturing Practice (“cGMP”) guidelines, and is 9 NSF GMP certified. BHB was awarded U.S.
On October 17, 2018, the Cannabis License Act, 2018 (Ontario) became law and other legislation, including the Cannabis Control Act, 2017 , the Ontario Cannabis Retail Corporation Act, 2017 and the Liquor Control Act were amended to create a private retail framework for the sale of recreational cannabis in Ontario.
On October 17, 2018, the Cannabis License Act, 2018 (Ontario) became law and other legislation, including the Cannabis Control Act, 2017 , the Ontario Cannabis Retail Corporation Act, 2017 and the Liquor Control Act were amended to create a private 7 retail framework for the sale of recreational cannabis in Ontario.
Hemp Authority 15 Certification for its commitment to quality and safety of its products and has also achieved Generally Recognized as Safe designation, an evaluation that its products are recognized as safe for consumption for full-spectrum, broad-spectrum and isolate CBD.
Hemp Authority Certification for its commitment to quality and safety of its products and has also achieved Generally Recognized as Safe designation, an evaluation that its products are recognized as safe for consumption for full-spectrum, broad-spectrum and isolate CBD.
Shortages in qualified personnel or the loss of key personnel could adversely affect the financial condition of our Canadian cannabis segment, results of operations of the business and could limit our ability to develop and market our cannabis-related products.
Shortages in qualified personnel or the loss of key personnel 39 could adversely affect the financial condition of our Canadian cannabis segment, results of operations of the business and could limit our ability to develop and market our cannabis-related products.
While we maintain insurance coverage, we cannot predict that all potential insurable risks have been foreseen or that adequate coverage is maintained against known risks. We may suffer from uninsured and underinsured losses.
While we maintain insurance coverage, we cannot predict that all potential insurable risks have been foreseen or that adequate coverage is maintained against known risks. 24 We may suffer from uninsured and underinsured losses.
This adverse publicity could arise even if the adverse effects associated with cannabis or cannabinoid products resulted from consumers’ failure to use such products legally, appropriately, or as directed.
This adverse publicity 29 could arise even if the adverse effects associated with cannabis or cannabinoid products resulted from consumers’ failure to use such products legally, appropriately, or as directed.
The FD&C Act is intended to assure the consumer that drugs and devices are safe and effective for their intended uses and that all labeling and packaging is truthful, 32 informative, and not deceptive.
The FD&C Act is intended to assure the consumer that drugs and devices are safe and effective for their intended uses and that all labeling and packaging is truthful, informative, and not deceptive.
Historically, the Company sold its bulk flower inventory in both the retail 26 (higher pricing) and wholesale channels (lower pricing) at an average price in excess of its historical cost.
Historically, the Company sold its bulk flower inventory in both the retail (higher pricing) and wholesale channels (lower pricing) at an average price in excess of its historical cost.
Our Canadian cannabis business is focused on recreational (adult-use) sales which are primarily sold through the various Provincial boards who are effectively the sole wholesaler in their respective Provinces. As such, we had a concentration of adult-use branded sales to our three biggest provincial boards for the years ended December 31, 2023 and 2022 of 93% and 93%, respectively.
Our Canadian cannabis business is focused on recreational (adult-use) sales which are primarily sold through the various Provincial boards who are effectively the sole wholesaler in their respective Provinces. As such, we had a concentration of adult-use branded sales to our three biggest provincial boards for the years ended December 31, 2024 and 2023 of 93% and 93%, respectively.
Amendments to current laws, regulations and guidelines governing the production, sales and use of cannabis-based and CBD products, more stringent implementation of enforcement thereof or other unanticipated events, including changes in political conditions, regimes or political instability, currency controls, changes in taxation laws, restrictions on foreign exchange and repatriation between U.S. and Canada, governmental regulations relating to foreign investment and changes in the attitudes toward cannabis, are beyond our control and could require extensive changes to our operations, which in turn may result in a material adverse effect on or business, financial condition and results of operations.
Additions of new restrictions, amendments to current laws, regulations and guidelines governing the production, sales and use of cannabis-based and CBD products, more stringent implementation of enforcement thereof or other unanticipated events, including changes in political conditions, regimes or political instability, currency controls, changes in taxation laws, restrictions on foreign exchange and repatriation between U.S. and Canada, governmental regulations relating to foreign investment and changes in the attitudes toward cannabis, are beyond our control 35 and could require extensive changes to our operations, which in turn may result in a material adverse effect on or business, financial condition and results of operations.
We primarily market and distribute produce under our Village Farms ® brand name and proprietary produce trademarks to retail supermarkets and dedicated fresh food distribution companies throughout the United States and Canada. Our Canadian cannabis operations consist of wholly-owned, British Columbia-based Pure Sunfarms and 70% ownership interest in Quebec-based Rose LifeScience.
We primarily market and distribute produce under our Village Farms ® brand name and proprietary produce trademarks to retail supermarkets and dedicated fresh food distribution companies throughout the United States and Canada. Our Canadian cannabis operations consist of wholly-owned, British Columbia-based Pure Sunfarms and 80% ownership interest in Quebec-based Rose LifeScience.
If we fail to remediate the material weakness in a timely manner, or at all, and are unable to achieve adequate internal control over financial reporting in the future, we may not be able to produce reliable financial reports or help prevent fraud, which could prevent us from complying with our reporting obligations on a timely basis, which could result in the loss of investor confidence 20 in the reliability of our consolidated financial statements, harm our business and negatively impact the trading price of our Common Shares.
If we fail to remediate the material weaknesses in a timely manner, or at all, and are unable to achieve adequate internal control over financial reporting in the future, we may not be able to produce reliable financial reports or help prevent fraud, which could prevent us from complying with our reporting obligations on a timely basis, which could result in the loss of investor confidence in the reliability of our consolidated financial statements, harm our business and negatively impact the trading price of our Common Shares.
Village Farms Clean Energy (“VFCE”) has partnered with Terreva Renewables (formerly Mas Energy) for a 20-year contract, which commenced in the first quarter of 2024 (including a five-year option to extend) with the City of Vancouver to capture landfill gas at the Delta, B.C. landfill site (the "Delta RNG Project").
Village Farms Clean Energy (“VFCE”) has partnered with Terreva Renewables (formerly Mas Energy) for a 20-year contract, which commenced in 2024 (including a five-year option to extend) with the City of Vancouver to capture landfill gas at the Delta, B.C. landfill site (the "Delta RNG Project").
In addition, environmental laws, rules and regulations in Canada and the United States is evolving in a manner which may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors, and employees.
In addition, environmental laws, rules and regulations in Canada and the United States are evolving in a manner which may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors, and employees.
Our primary objective for Pure Sunfarms is to be the leading low-cost, high-quality cannabis producer in Canada and in selected international markets. Rose is a leading vertically integrated, branded cannabis producer, supplier and commercialization expert in the Province of Quebec and is the Quebec operational unit of our Canadian cannabis segment. Our U.S.
Our primary objective for Pure Sunfarms is to be the leading low-cost, high-quality cannabis producer in Canada and in selected international markets. Rose is a leading vertically integrated, branded cannabis producer, supplier and commercialization expert in the Province of Quebec and is the Quebec operational unit of our Canadian cannabis segment.
In order to continue our growth, we will need to add administrative, management and other personnel, and make additional investments in operations and systems. We may not be able to locate and train qualified personnel, or do so on a timely basis, or expand our operations and systems to the extent, and in the time, required.
In order to manage our growth, we will need to add administrative, management and other personnel, and make additional investments in operations and systems. We may not be able to locate and train qualified personnel, or do so on a timely basis, or expand our operations and systems to the extent, and in the time, required.
As of March 9, 2024 there were 6,151,854 Common Shares issuable upon exercise of outstanding options at a weighted-average exercise price of $4.14 per share; 4,161,317 Common Shares reserved and available for issuance upon exercise of additional options and other stock-based awards that may be granted in the future under our equity compensation plans.
As of March 6, 2025 there were 6,151,854 Common Shares issuable upon exercise of outstanding options at a weighted-average exercise price of $4.14 per share; 4,161,317 Common Shares reserved and available for issuance upon exercise of additional options and other stock-based awards that may be granted in the future under our equity compensation plans.
We were also not in compliance with one of the financial covenants of our FCC Term Loan on December 31, 2022 (the annual testing date) but likewise had obtained a waiver from FCC for our annual 2022 financial covenants.
We were also not in compliance with one of the financial covenants of our FCC Term Loan on December 31, 2023 (the annual testing date) but likewise had obtained a waiver from FCC for our annual 2023 financial covenants.
However, the ability to access public capital for all legitimate cannabis-related companies could provide the industry with additional financing avenues not available today as well as reducing the overall cost of capital.
However, the ability to access public capital for all legitimate cannabis-related companies could provide the industry with additional financing avenues not available today as well as reducing the overall cost of capital. U.S.
Historical excess supply of product and a large number of federally-licensed cannabis producers ("License Holders" or "LPs") have contributed to price compression. During 2023, many LPs have chosen to either curtail or halt cannabis production to right size their supply to meet consumer demand, which we view as a positive for industry profitability.
Historical excess supply of product and a large number of federally-licensed cannabis producers ("License Holders" or "LPs") have contributed to price compression. Starting in 2023, many LPs have chosen to either curtail or halt cannabis production to right size their supply to meet consumer demand, which we view as a positive for industry profitability.
Even if we are able to remediate the outstanding material weakness, because of the inherent limitations of internal controls, our internal controls over financial reporting may not prevent or detect fraud or misstatements.
Even if we are able to remediate the outstanding material weaknesses, because of the inherent limitations of internal controls, our internal controls over financial reporting may not prevent or detect fraud or misstatements.
Factors affecting our Common Share price include but are not limited to: (i) our ability to continue as a going concern; (ii) general market conditions; (iii) our ability to raise additional capital and/or secure additional financing on acceptable terms, or at all; (iv) market and/or industry developments in produce, cannabis or hemp that may directly or indirectly affect us; (v) regulatory and legislative developments, particularly with respect to cannabis and/or CBD, in Canada, the United States or elsewhere to the extent applicable; (vi) our ability to operate in the U.S. and Canada under the circumstances of current economic conditions, including as a result of the unfavorable interest rate environment, global supply chain issues, and inflation; (vii) potentially unfavorable report published by securities analysts; (viii) public concern as to the safety of the products that we and our competitors develop; and (ix) fluctuations of shareholder interest in our Common Shares.
Factors affecting our Common Share price include but are not limited to: (i) our ability to continue as a going concern; (ii) general market conditions; (iii) our ability to raise additional capital and/or secure additional financing on acceptable terms, or at all; (iv) market and/or industry developments in produce, cannabis or hemp that may directly or indirectly affect us; (v) regulatory and legislative developments, particularly with respect to cannabis and/or CBD, in Canada, the United States or elsewhere to the extent applicable; (vi) our ability to operate in the U.S. and Canada under the circumstances of current economic conditions, including as a result of the unfavorable interest rate environment, global supply chain issues, and inflation; (vii) potentially unfavorable report published by securities analysts; (viii) public concern as to the safety of the products that we and our competitors develop; (ix) our material weaknesses in our internal controls over financial reporting; and (x) fluctuations of shareholder interest in our Common Shares.
Pure Sunfarms’ and Rose LifeScience’s ability to grow, store, sell and distribute cannabis in Canada is solely dependent on its ability to maintain licenses to cultivate and sell cannabis under the Cannabis Ac t (a “License”) for each of the greenhouses at which it proposes to grow cannabis.
Our cannabis operations require licenses to grow, store and sell cannabis. Pure Sunfarms’ and Rose LifeScience’s ability to grow, store, sell and distribute cannabis in Canada is solely dependent on its ability to maintain licenses to cultivate and sell cannabis under the Cannabis Ac t (a “License”) for each of the greenhouses at which it proposes to grow cannabis.
Additionally, in 2022, we implemented an at-the-market (“ATM”) program through which we have sold 3,175,000 shares for proceeds of US$6.9 million as of March 8, 2023. We will require additional equity financing which may have a dilutive effect and may not be achievable due to market conditions or other reasons.
Additionally, in 2022 and 2023, we implemented an at-the-market (“ATM”) program through which we sold a total of 3,175,000 shares for proceeds of US$6.9 million. We will require additional equity financing which may have a dilutive effect and may not be achievable due to market conditions or other reasons.
In addition, we face additional risks as we grow internationally. See “—Our international expansion may increase our operational risks.” below. In particular, we may not have the capacity to meet customer demand or to meet future demand when it arises in respect of our Canadian and U.S. Cannabis businesses.
In addition, we face additional 23 risks as we grow internationally. See “—Our international expansion, including through Leli, may increase our operational risks.” below. In particular, we may not have the capacity to meet customer demand or to meet future demand when it arises in respect of our Canadian and U.S. Cannabis businesses.
Future issuances or sales of our Common Shares by us or by our shareholders could cause our share price to fall. The issuance of Common Shares by us will result in dilution in the equity interest of existing shareholders and adversely affect the market price of our Common Shares.
Future issuances or sales of our Common Shares could cause our share price to fall and may dilute your common shares. The issuance of Common Shares by us will result in dilution in the equity interest of existing shareholders and adversely affect the market price of our Common Shares.
Retail direct sales were approximately 68%, 70% and 69% of total produce sales for 2023, 2022 and 2021, respectively, with the balance to wholesale customers who service small retailers or other markets such as food service. There is seasonality in produce revenues.
Retail direct sales were approximately 65%, 68% and 70% of total produce sales for 2024, 2023, and 2022, respectively, with the balance to wholesale customers who service small retailers or other markets such as food service. There is seasonality in produce revenues.
The foregoing could have a material adverse impact on our business, financial condition, results of operations and prospects. We face risks associated with cross-border trade. Our Canadian and U.S. produce is actively sold cross-border. In addition, we utilize third party suppliers to grow and distribute produce from Canada and Mexico.
The foregoing could have a material adverse impact on our business, financial condition, results of operations and prospects. We face risks associated with cross-border trade and the potential for tariffs and other trade restrictions. Our Canadian and U.S. produce is actively sold cross-border. In addition, we utilize third party suppliers to grow and distribute produce from Canada and Mexico.
If we fail to remediate the errors in a timely manner, or at all, our shareholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our Common Shares. 16 • A rise in interest rates would increase our debt service costs and negatively impact our cash flows, as well as add additional burden on our ability to meet our bank covenants. • There can be no assurance that our previous, current, or potential future acquisitions, joint ventures, investments or expansions of scope of existing relationships will have a beneficial impact on our business, financial condition and results of operations. • Our international expansion may heighten our operational risks. • We may be negatively affected by the use of third-party transportation services for our products.
If we fail to remediate the deficiencies in a timely manner, or at all, our shareholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our Common Shares. • We face risks associated with the use of debt, including refinancing risk. • A rise in interest rates would increase our debt service costs and negatively impact our cash flows, as well as add additional burden on our ability to meet our bank covenants. • There can be no assurance that our previous, current, or potential future acquisitions, joint ventures, investments or expansions of scope of existing relationships will have a beneficial impact on our business, financial condition and results of operations. • Our international expansion, including Leli, may heighten our operational risks. • We may be negatively affected by the use of third-party transportation services for our products.
We also have the following trademarks registered for Pure Sunfarms in Canada: Pure Sunfarms TM , Pure Sunfarms BC Grown TM , Pure Sun CBD TM , Everyday Premium TM , Farm to Flower TM , Hit The Gas TM , No Sun No Flower TM , Plants and People First TM , Pure Provisions TM , Rise with the Sun TM , Sundaises TM , Soar TM , Soar Cannabis TM , The Bakery TM , Purple Sun God TM , The Original Fraser Valley Weed Co.
We also have the following trademarks registered for Pure Sunfarms in Canada: Pure Sunfarms TM , Pure Sunfarms BC Grown TM , Pure Sun CBD TM , Everyday Everywhere TM , Everyday Premium TM , Farm to Flower TM , Flowerhood TM , Hit The Gas TM , No Sun No Flower TM , Plants and People First TM , Pure Provisions TM , Rise with the Sun TM , Sundaises TM , Soar TM , Soar Cannabis TM , The Bakery TM , Pure Sunfarms Pink Kush TM , Pure Sunfarms Trails TM , Purple Sun God TM , The Original Fraser Valley Weed Co.
In addition, although we intend to remediate the material weakness in 2024, we can provide no assurance that remediation will be completed during the year. Accordingly, we may be at risk of making a material misstatement in our financial reporting which would harm our business and could negatively impact the price of our Common Shares.
In addition, although we intend to remediate these material weaknesses in 2025, we can provide no assurance that remediation will be completed during the year. Accordingly, we may be at risk of making a material misstatement in our financial reporting which would harm our business and could negatively impact the price of our Common Shares.
The H-2A worker adds additional costs to the greenhouse grower as the H-2A program set a Texas state-level minimum prevailing wage of $14.87 in 2023 and $15.55 effective January 1, 2024. Additionally, growers must pay for worker expenses, such as transportation costs and housing.
The H-2A worker adds additional costs to the greenhouse grower as the H-2A program set a Texas state-level minimum prevailing wage of $15.55 in 2024 and $15.79 effective January 1, 2025. Additionally, growers must pay for worker expenses, such as transportation costs and housing.
For example, we have recently commenced the Delta RNG Project through our partnership with Terreva Resources, and we recently commenced construction of one of our operations of the Dutch cannabis facilities owned by Leli. We can provide no assurance that we will achieve the anticipated benefits from these ventures.
For example, in 2024 we commenced the Delta RNG Project through our partnership with Terreva Resources, and we completed construction of one of our operations of the Dutch cannabis facilities owned by Leli. We can provide no assurance that we will achieve the anticipated benefits from these ventures.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe monitor evolving risks and threat events to implement security controls where applicable. 40 We believe in continuous improvement as part of the effort to optimize security, and we work to foster that culture through various initiatives: • Cybersecurity Awareness Trainings: We educate employees on best practices for online safety and for identifying potential cybersecurity threats, including by initiating training programs for our entire workforce. • Security Monitoring: We monitor our information technology environment with both our internal cybersecurity resources and third-party service providers. • Proactive Reporting and Investigation: As part of our training initiatives, we educate employees on how to report any suspicious cyber activity or potential cybersecurity issues, and we investigate reported concerns.
Biggest changeWe believe in continuous improvement as part of the effort to optimize security, and we work to foster that culture through various initiatives: • Cybersecurity Awareness Trainings: We educate employees on best practices for online safety and for identifying potential cybersecurity threats, including by initiating training programs for our entire workforce. • Security Monitoring: We monitor our information technology environment with both our internal cybersecurity resources and third-party service providers. • Proactive Reporting and Investigation: As part of our training initiatives, we educate employees on how to report any suspicious cyber activity or potential cybersecurity issues, and we investigate reported concerns.
Our cybersecurity team includes personnel that have obtained credentials from the International System Security Certification Consortium and the SANS Institute, such as Certified Information Systems Security Professional (CISSP), as well as experienced information systems security professionals and information security managers. We recognize the ever-present global risk of cyberattacks from diverse threat actors, including nation-states, cybercriminals, hacktivists, insiders and organized crime.
Our cybersecurity team includes personnel that have obtained credentials from the International System Security Certification Consortium and the SANS Institute, such as Certified Information Systems Security Professional (CISSP), as well as experienced information systems security professionals and information security managers. 44 We recognize the ever-present global risk of cyberattacks from diverse threat actors, including nation-states, cybercriminals, hacktivists, insiders and organized crime.
For additional information regarding risks from cybersecurity threats, including our business strategy, results of operations, or financial condition, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K, including the risk factor entitled “We face risks related to cyber security attacks and other incidents.” 41
For additional information regarding risks from cybersecurity threats, including our business strategy, results of operations, or financial condition, please refer to Item 1A, “Risk Factors,” in this Annual Report on Form 10-K, including the risk factor entitled “We face risks related to cyber security attacks and other incidents.”
While no organization is immune to attack attempts and we cannot eliminate all risks from cybersecurity threats or provide assurance that we have not experienced an undetected cybersecurity incident, in 2023 we did not identify any material cybersecurity events that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition.
While no organization is immune to attack attempts and we cannot eliminate all risks from cybersecurity threats or provide assurance that we have not experienced an undetected cybersecurity incident, in 2024 we did not identify any material cybersecurity events that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition .
We use both external and internal threat intelligence sources to inform our defensive measures, including information from industry vendors and government agencies.
We use both external and internal threat intelligence sources to inform our defensive measures, including information from industry vendors and government agencies. We monitor evolving risks and threat events to implement security controls where applicable.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. P ROPERTIES Our headquarters are located at 4700-80th Street Delta, British Columbia, Canada V4K 3N3. The following table outlines the Company’s greenhouse facilities.
Biggest changeITEM 2. P ROPERTIES Our primary executive offices are located at 90 Colonial Parkway, Lake Mary, Florida, 32746. The following table outlines the Company’s greenhouse facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAdditionally, there were no matters requiring disclosure pursuant to the requirement to disclose certain environmental matters involving potential monetary sanctions in excess of $300,000. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 42 PAR T II
Biggest changeAdditionally, there were no matters requiring disclosure pursuant to the requirement to disclose certain environmental matters involving potential monetary sanctions in excess of $300,000. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 45 PAR T II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividend Policy We have not paid any cash dividends or distributions on any class of our securities, and we have no current plans to pay dividends as we are growth focused. Recent Sales of Unregistered Securities None.
Biggest changeDividend Policy We have not paid any cash dividends or distributions on any class of our securities, and we have no current plans to pay dividends as we are growth focused. Recent Sales of Unregistered Securities None. Repurchases of Equity Securities The Company did not repurchase any of its Common Shares during the three months ended December 31, 2024.
Resident Holder or a person described in (ii) holds a membership interest directly or indirectly through one or more partnerships; and (b) more than 50% of the fair market value of the Common Shares and Common Warrant Shares, as applicable, was derived, directly or indirectly, from one or any combination of: (i) real or immovable property situated in Canada, (ii) “Canadian resource properties” (as defined in the Tax Act), (iii) “timber resource properties” (as defined in the Tax Act), 44 and (iv) options in respect of, or interests in, or for civil law rights in, property described in any of (b)(i) to (iii), whether or not the property exists.
Resident Holder or a person described in (ii) holds a membership interest directly or indirectly through one or more partnerships; and (b) more than 50% of the fair market value of the Common Shares and Common Warrant Shares, as applicable, was derived, directly or indirectly, from one or any combination of: (i) real or immovable property situated in Canada, (ii) “Canadian resource properties” (as defined in the Tax Act), (iii) “timber resource properties” (as defined in the Tax Act), and (iv) options in respect of, or interests in, or for civil law rights in, property described in any of (b)(i) to (iii), whether or not the property exists.
This summary takes into account all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”) and assumes that all Tax Proposals will be enacted in the form proposed.
This 46 summary takes into account all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”) and assumes that all Tax Proposals will be enacted in the form proposed.
Resident Holder does not hold such shares and Common Warrants 43 in the course of carrying on a business of trading or dealing in securities and has not acquired them in one or more transactions considered to be an adventure or concern in the nature of trade.
Resident Holder does not hold such shares and Common Warrants in the course of carrying on a business of trading or dealing in securities and has not acquired them in one or more transactions considered to be an adventure or concern in the nature of trade.
Notwithstanding the foregoing, the Common Shares, Common Warrants and Common Warrant Shares may otherwise be deemed to be “taxable Canadian property” in certain circumstances as set out in the Tax Act. In the case of a U.S.
Notwithstanding the foregoing, the Common Shares, Common Warrants and Common Warrant Shares may otherwise be deemed to be “taxable Canadian property” in certain circumstances as set out in the Tax Act. 47 In the case of a U.S.
Holders of Record As of March 6, 2024, there were approximately 10 shareholders of record of our Common Shares, which included Cede & Co., a nominee for Depository Trust Company, which represents two shareholders of record and CDS & Co., a nominee for The Canadian Depository for Securities Ltd.
Holders of Record As of March 6, 2025, there were approximately 10 shareholders of record of our Common Shares, which included Cede & Co., a nominee for Depository Trust Company, which represents two shareholders of record and CDS & Co., a nominee for The Canadian Depository for Securities Ltd.
Removed
Securities Authorized for Issuance under Equity Compensation Plans Information about our equity compensation plan is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K. Repurchases of Equity Securities The Company did not repurchase any of its Common Shares during the three months ended December 31, 2023.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeManagement 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. 62 Reconciliation of Net Income to Adjusted EBITDA The following table reflects a reconciliation of net income to Adjusted EBITDA, as presented by the Company: For the Year Ended December 31, (in thousands of U.S. dollars) 2023 (1) 2022 (1) 2021 (1) Net loss $ (31,798 ) $ (101,146 ) $ (9,079 ) Add: Amortization 12,828 10,260 13,004 Foreign currency exchange (gain) loss (750 ) 2,268 329 Interest expense, net 3,353 3,038 2,709 Provision for (recovery of) income taxes 4,451 4,681 (3,526 ) (Provision for) recovery of income taxes attributable to non-controlling interest (98 ) 737 — Share-based compensation 2,898 3,808 7,533 Interest expense for JV's 97 38 53 Amortization for JV's 2,331 1,554 71 Foreign currency exchange loss for JV's 7 1 — Share-based compensation for JV's 151 124 — Other expense, net for JV's (63 ) (26 ) — Deferred financing fees 136 214 300 Incremental utility costs due to storm — — 1,400 Impairments (2) 14,020 43,299 — (Gain) loss on disposal of assets — (7 ) 254 Other expense, net 22 200 (16 ) JV exit-related costs (3) — 592 — Purchase price adjustment (4) — (4,268 ) 980 Adjusted EBITDA (5) $ 7,585 $ (34,633 ) $ 14,012 Adjusted EBITDA for JV's $ — $ (327 ) $ (260 ) Adjusted EBITDA excluding JV's (6) $ 7,585 $ (34,306 ) $ 14,272 Notes: (1) For the years ended December 31, 2023 and 2022 and for the period August 16, 2021 to December 31, 2021, Balanced Health is fully consolidated in the financial results of the Company.
Biggest changeReconciliation of Net Income to Adjusted EBITDA The following table reflects a reconciliation of net income to Adjusted EBITDA, as presented by the Company: For the Year Ended December 31, (in thousands of U.S. dollars) 2024 (1) 2023 (1) 2022 (1) Net loss $ (35,850 ) $ (34,798 ) $ (101,146 ) Add: Amortization and depreciation 18,838 15,926 12,480 Foreign currency exchange loss (gain) 2,635 (740 ) 2,269 Interest expense, net 2,451 3,492 3,038 Provision for income taxes (1,662 ) 7,451 4,681 Share-based compensation 3,747 3,111 3,987 Deferred financing fees 10 136 214 Goodwill and intangible impairments (2) 11,939 14,020 43,299 Other intangibles 439 — — Loss (gain) on disposal of assets 17 — (7 ) Other expense, net — (67 ) 161 Adjustments attributable to non-controlling interest (776 ) (946 ) 29 Interest expense for JV's — — 38 JV exit-related costs (3) — — 592 Purchase price adjustment (4) — — (4,268 ) Adjusted EBITDA (5) $ 1,788 $ 7,585 $ (34,633 ) Adjusted EBITDA for JV's $ — $ — $ (327 ) Adjusted EBITDA excluding JV's (6) $ 1,788 $ 7,585 $ (34,306 ) Notes: (1) For the years ended December 31, 2024, 2023 and 2022, Rose LifeScience’s financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net (income) loss attributable to non-controlling interests, net of tax.
(2) Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers.
(2) Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers.
Other (Expense) Income, net Other (expense) income, net was ($2,136) for the year ended December 31, 2023 compared to ($2,023) for the year ended December 31, 2022. Net Income Net income for the years ended December 31, 2023 and 2022 was $2,936 and $117 respectively.
Other (Expense) Income, net Other expense, net was $2,136 for the year ended December 31, 2023 compared to $2,023 for the year ended December 31, 2022. Net Income Net income for the years ended December 31, 2023 and 2022 was $2,936 and $117 respectively.
See “Critical Accounting Policies, Estimates and Judgments” below for more information. (3) Represents exit-related costs incurred due to the winding down of the VFH joint venture. (4) The purchase price adjustment primarily reflects the non-cash accounting charge resulting from the revaluation of Pure Sunfarms’ inventory to fair value at the acquisition date.
See “Critical Accounting Policies, Estimates and Judgments” below for more information. (3) Represents exit-related costs incurred due to the winding down of the VFH joint venture. (4) The purchase price adjustment primarily reflects the non-cash accounting charge resulting from the revaluation of Pure Sunfarms’ inventory to fair value at the acquisition date.
In 2022, when distillate inventory acquired from Pure Sunfarms was sold, the Company realized a gain of $4,268 that offset the initial inventory write-down taken in connection with the 2020 acquisition of the business.
In 2022, when distillate inventory acquired from Pure Sunfarms was sold, the Company realized a gain of $4,268 that offset the initial inventory write-down taken in connection with the 2020 acquisition of the business.
This gain did not accurately reflect the actual economic impact on the Company’s operations because the distillate was sold for more than it was valued in 2020 according to the purchase price accounting rules.
This gain did not accurately reflect the actual economic impact on the Company’s operations because the distillate was sold for more than it was valued in 2020 according to the purchase price accounting rules.
Accordingly, the Company included a non-GAAP adjustment of $(4,268) in 2022 to reduce Adjusted EBITDA to better reflect the actual effect of sales of distillate inventory on the Company’s results. (5) Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP.
Accordingly, the Company included a non-GAAP adjustment of $(4,268) in 2022 to reduce Adjusted EBITDA to better reflect the actual effect of sales of distillate inventory on the Company’s results. (5) Adjusted EBITDA is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP.
(2) Adjusted EBITDA - Constant Currency is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA - Constant Currency may not be comparable to similar measures presented by other issuers.
(2) Adjusted EBITDA - Constant Currency is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP. Therefore, Adjusted EBITDA - Constant Currency may not be comparable to similar measures presented by other issuers.
In addition, for the year ended December 31, 2022, we previously included 50 adjustments for $11,038 of loss on inventory write-down to net realizable value for Canadian Cannabis and $2,284 of obsolete inventory associated with the JV exit that are now being excluded from 2022 Adjusted EBITDA in response to comments from and discussions with the Staff of the U.S.
In addition, for the year ended December 31, 2022, we previously included adjustments for $11,038 of loss on inventory write-down to net realizable value for Canadian Cannabis and $2,284 of obsolete inventory associated with the JV exit that are now being excluded from 2022 Adjusted EBITDA in response to comments from and discussions with the Staff of the U.S.
Adjusted EBITDA Adjusted EBITDA for the year ended December 31, 2023 increased by $42,218 to $7,585 from ($34,633) for the year ended December 31, 2022, due to an improved adjusted EBITDA of VF Fresh of $24,875, as well as our Canadian cannabis division of $12,717 and our U.S. Cannabis division of $638.
Adjusted EBITDA Adjusted EBITDA for the year ended December 31, 2023 increased $42,218 to $7,585 from ($34,633) for the year ended December 31, 2022, due to an improved adjusted EBITDA of VF Fresh of $24,875, as well as our Canadian cannabis division of $12,717 and our U.S. Cannabis division of $638.
For the year ended December 31, 2023 and for the period July 19, 2022 to December 31, 2022, Leli’s financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net (income) loss attributable to non-controlling interests, net of tax.
For the year ended December 31, 2024 and 2023 and for the period July 19, 2022 to December 31, 2022, Leli’s financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net (income) loss attributable to non-controlling interests, net of tax.
The decrease in cost of sales from the greenhouses is primarily due to lower pounds produced, cost reductions, and reduced losses from the ToBRFV infestation at the Texas greenhouses. The decrease in supply partner cost is related to the (11%) decrease in pounds received from our supply partners.
The decrease in cost of sales from the greenhouses is primarily 62 due to lower pounds produced, cost reductions, and reduced losses from the ToBRFV infestation at the Texas greenhouses. The decrease in supply partner cost is related to the 11% decrease in pounds received from our supply partners.
Our focus for our Canadian Cannabis segment is to produce high quality cannabis, leveraging our low-cost production to provide preferred products at an attractive price that address the largest consumer segments in the market.
Our focus for our Canadian Cannabis segment is to produce high quality cannabis, leveraging our low-cost production to provide preferred products at an attractive price that address the preferred consumer segments in the market.
Cannabis gross margin for the year ended December 31, 2023 was $13,328, or 66%, compared to $15,659, or 67% for the year ended December 31, 2022. 56 Selling, General and Administrative Expenses U.S.
Cannabis gross margin for the year ended December 31, 2023 was $13,328, or 66%, compared to $15,659, or 67% for the year ended December 31, 2022. Selling, General and Administrative Expenses U.S.
The decrease in sales of (6%) was primarily due to a decrease in supply partner revenues of ($14,141), partially 57 offset by an increase in sales at the VF Fresh owned greenhouses of $5,132.
The decrease in sales of 6% was primarily due to a decrease in supply partner revenues of $14,141, partially offset by an increase in sales at the VF Fresh owned greenhouses of $5,132.
Shipping and handling costs are included in cost of sales as incurred or at the time revenue is recognized for the related goods, whichever comes first. 71
Shipping and handling costs are included in cost of sales as incurred or at the time revenue is recognized for the related goods, whichever comes first.
The increase of $12,717, or 621%, between periods was primarily due to an inventory impairment charge of $11,038 during the year ended December 31, 2022 and lower selling, general and administrative expenditures in 2023 versus 2022. See the reconciliation of Adjusted EBITDA to net income in “Non-GAAP Measures—Reconciliation of Net Earnings to Adjusted EBITDA”.
The increase of $12,717, or 621%, between periods was primarily due to an inventory impairment charge of $11,038 during the year ended December 31, 2022 and lower selling, general and administrative expenditures in 2023 versus 2022. See the reconciliation of Adjusted EBITDA to net income in “Non-GAAP Measures—Reconciliation of Net Earnings to Adjusted EBITDA”. U. S.
Cannabis net sales for the year ended December 31, 2023 were $20,330, a decrease of ($2,972) or (13%), from the prior year net sales of $23,302. The decrease was primarily due to lower direct-to-consumer sales due to the proliferation of hemp derived cannabinoid sales. All U.S.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Sales U.S. Cannabis net sales for the year ended December 31, 2023 were $20,330, a decrease of $2,972 or 13%, from the prior year net sales of $23,302. The decrease was primarily due to lower direct-to-consumer sales due to the proliferation of hemp derived cannabinoid sales. All U.S.
Reconciliation of Segmented Net (Loss) Income to Adjusted EBITDA The following table reflects a reconciliation of segmented net loss to Adjusted EBITDA, as presented by the Company: For the Year Ended December 31, 2023 (in thousands of U.S. dollars) VF Fresh (Produce) Cannabis Canada (1) Cannabis U.S.
Reconciliation of Segmented Net (Loss) Income to Adjusted EBITDA The following table reflects a reconciliation of segmented net loss to Adjusted EBITDA, as presented by the Company: For the Year Ended December 31, 2024 (in thousands of U.S. dollars) VF Fresh (Produce) Cannabis Canada (1) Cannabis U.S.
The decrease from the prior year was primarily due to a non-recurring write-down of inventory at VF Hemp in 2022 that was not present in the 2023 period. Net Loss Attributable to Village Farms International, Inc.
The decrease from the prior year was primarily due to a non-cash write-down of inventory at VF Hemp in 2022 that was not present in the 2023 period. Net Loss Attributable to Village Farms International, Inc.
S. dollars and Canadian dollars, for the years ended December 31, 2023 and 2022: For The Year Ended (in thousands of U.S. dollars) December 31, 2023 December 31, 2022 Branded sales $ 149,929 $ 135,649 International sales 4,600 3,869 Non-branded sales 15,457 17,848 Other 2,059 2,642 Less: excise taxes (58,015 ) (50,126 ) Net Sales $ 114,030 $ 109,882 For The Year Ended (in thousands of Canadian dollars) December 31, 2023 December 31, 2022 Branded sales $ 202,367 $ 177,234 International sales 6,208 5,153 Non-branded sales 20,967 23,285 Other 2,778 3,411 Less: excise taxes (78,315 ) (65,555 ) Net Sales $ 154,005 $ 143,528 Cost of Sales Cost of sales for the years ended December 31, 2023 and 2022 was $78,090 and $80,494, respectively, representing a decrease of 3%, or $2,404.
S. dollars and Canadian dollars, for the years ended December 31, 2023 and 2022: For The Year Ended (in thousands of U.S. dollars) December 31, 2023 December 31, 2022 Branded sales $ 149,929 $ 135,649 International sales 4,600 3,869 Non-branded sales 15,457 17,848 Other 2,059 2,642 Less: excise taxes (58,015 ) (50,126 ) Net Sales $ 114,030 $ 109,882 For The Year Ended (in thousands of Canadian dollars) December 31, 2023 December 31, 2022 Branded sales $ 202,367 $ 177,234 International sales 6,208 51,153 Non-branded sales 20,967 23,285 Other 2,778 3,411 Less: excise taxes (78,315 ) (65,555 ) Net Sales $ 154,005 $ 189,528 59 Cost of Sales Cost of sales for the years ended December 31, 2023 and 2022 was $78,090 and $80,494, respectively, representing a decrease of 3%, or $2,404.
The increase was solely due to an increase in the Company's interest rates on its various debt instruments.
The increase was due to an increase in the Company's interest rates on its various debt instruments.
Selling, General and Administrative Expenses 49 Selling, general and administrative expenses for the year ended December 31, 2023 decreased $6,764 to $65,501, or 23% of sales, from $72,265, or 25% of sales, for the year ended December 31, 2022.
Selling, General and Administrative Expenses Selling, general and administrative expenses for the year ended December 31, 2023 decreased $6,764, or 9%, to $65,501 or 23% of sales from $72,265 or 25% of sales for the year ended December 31, 2022.
Management believes that Adjusted EBITDA - Constant Currency is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect our business performance. Adjusted EBITDA - Constant Currency includes the Company’s 70% interest in Rose LifeScience since acquisition, 85% interest in Leli since acquisition, and 65% interest in VFH.
Management believes that Adjusted EBITDA - Constant Currency is a useful supplemental measure in evaluating the performance of the Company because it excludes items that do not reflect our business performance. Adjusted EBITDA - Constant Currency includes the Company’s 70% interest in Rose LifeScience since acquisition, 85% interest in Leli since acquisition, and 65% interest in VFH.
The primary reason for the decrease from the prior year was due to a non-recurring inventory write down 54 of ($11,038) (C$15,000) during the year ended December 31, 2022, which represented lower potency flower that was harvested in 2021 or earlier.
The primary reason for the decrease from the prior year was due to a non-cash inventory write down of $11,038 (C$15,000) during the year ended December 31, 2022, which represented lower potency flower that was harvested in 2021 or earlier.
The Delta RNG Project, which commenced operations in January 2024, converts VFCE’s previous landfill gas-to-electricity business into a state-of-the-art landfill gas to high-demand renewable natural gas ("RNG") facility. Terreva Renewables will sell the renewable natural gas and VFCE will receive a portion of the revenue in the form of a royalty.
The Delta RNG Project, which commenced operations in 2024, converts VFCE’s previous landfill gas-to-electricity business into a state-of-the-art landfill gas to high-demand renewable natural gas ("RNG") facility. Terreva Renewables sells the renewable natural gas and VFCE will receive a portion of the revenue in the form of a royalty.
Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. 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 our business performance.
Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes items that do not reflect our business performance.
For the year ended December 31, 2023 and for the period July 19, 2022 to December 31, 2022, Leli’s financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net (income) loss attributable to non-controlling interests, net of tax.
For the years ended December 31, 2024 and 2023 and for the period July 19, 2022 to December 31, 2022, Leli’s financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net (income) loss attributable to non-controlling interests, net of tax.
For the year ended December 31, 2023 and for the period July 19, 2022 to December 31, 2022, Leli’s financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net (income) loss attributable to non-controlling interests, net of tax.
For the years ended December 31, 2024 and 2023 and for the period July 19, 2022 to December 31, 2022, Leli’s financial results are fully consolidated in the financial results of the Company with the minority non-controlling interest presented in net (income) loss attributable to non-controlling interests, net of tax.
See “Risk Factors—Business and Operational Risk Factors—We are subject to restrictive covenants under our Credit Facilities.” Accrued interest payable on the Credit Facilities and Pure Sunfarms Loans as of December 31, 2023 and 2022 was $390 and $398, respectively, and these amounts are included in accrued liabilities in the Consolidated Statements of Financial Position.
See “Risk Factors—Business and Operational Risk Factors—We are subject to restrictive covenants under our Credit Facilities.” Accrued interest payable on the Credit Facilities and Pure Sunfarms Loans as of December 31, 2024 and 2023 was $271 and $398, respectively, and these amounts are included in accrued liabilities in the Consolidated Statements of Financial Position.
For the year ended December 31, 2023 and for the period July 19, 2022 to December 31, 2022, Leli’s financial results are fully consolidated in the financial results of the Company with the non-controlling interest presented in net loss attributable to non-controlling interests, net of tax.
For the years ended December 31, 2024 and 2023 and for the period July 19, 2022 to December 31, 2022, Leli’s financial results are fully consolidated in the financial results of the Company with the non-controlling interest presented in net loss attributable to non-controlling interests, net of tax.
For the twelve months ended December 31, 2023, our effective tax rate, including both current and deferred income taxes was 16.3%, and included a change in valuation allowance against our U.S. deferred tax assets of $4,823, and a $4,288 valuation allowance against our Canadian deferred tax assets on a net basis, recorded as of December 31, 2023.
For the twelve months ended December 31, 2023, our effective tax rate, including both current and deferred income taxes was 27.2%, and included a change in valuation allowance against our U.S. deferred tax assets of $4,823, and a $4,288 valuation allowance against our Canadian deferred tax assets on a net basis, recorded as of December 31, 2023.
("Rose LifeScience” or “Rose”), and VF Clean Energy, Inc. (“VFCE”). The Company’s vision is to be recognized as an international leader in consumer products developed from plants, whereby we produce and market value-added products that are consistently preferred by consumers.
("Rose LifeScience” or “Rose”), VF Clean Energy, Inc. (“VFCE”), and Leli Holland B. V. ("Leli" or "Leli Holland"). 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.
Management believes that Adjusted EBITDA excluding JV’s is a useful supplemental measure in evaluating the performance of the Company because in addition to excluding non-recurring and other items that do not reflect our business performance, as reflected in Adjusted EBITDA, it further excludes the results of our joint ventures that management does not believes reflects the principal operations of the business.
Management believes that Adjusted EBITDA excluding JV’s is a useful supplemental measure in evaluating the performance of the Company because in addition to excluding items that do not reflect our business performance, as reflected in Adjusted EBITDA, it further excludes the results of our joint ventures that management does not believes reflects the principal operations of the business.
In addition, there were lower selling, general and administrative expenses in all segments. (Provision for) Recovery of Income Taxes The provision for income taxes for the years ended December 31, 2023 and 2022 was ($4,451) and ($4,681), respectively.
In addition, there were lower selling, general and administrative expenses in all segments. (Provision for) Recovery of Income Taxes The provision for income taxes for the year ended December 31, 2023 and 2022 was $7,451 and $4,681, respectively.
Securities and Exchange Commission. (6) Adjusted EBITDA excluding JV’s is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP, and therefore may not be comparable to similar measures presented by other issuers.
(6) Adjusted EBITDA excluding JV’s is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP, and therefore may not be comparable to similar measures presented by other issuers.
Securities and Exchange Commission. (6) Adjusted EBITDA excluding JV’s is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP, and therefore may not be comparable to similar measures presented by other issuers.
(6) Adjusted EBITDA excluding JV’s is not a recognized earnings measure and does not have a standardized meaning prescribed by GAAP, and therefore may not be comparable to similar measures presented by other issuers.
Management believes that Adjusted EBITDA excluding JV’s is a useful supplemental measure in evaluating the performance of the Company because in addition to excluding non-recurring and other items that do not reflect our business performance, as reflected in Adjusted EBITDA, it further excludes the results of our joint ventures that management does not believes reflect the principal operations of the business.
Management believes that Adjusted EBITDA excluding JV’s is a useful supplemental measure in evaluating the performance of the Company because in addition to excluding items that do not reflect our business performance, as reflected in Adjusted EBITDA, it further excludes the results of our joint ventures that management does not believes reflect the principal operations of the business.
(“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 LP ("VFCLP"), Village Farms LP ("VFLP"), Pure Sunfarms Corp (“Pure Sunfarms” or "PSF"), Balanced Health Botanicals, LLC (“Balanced Health”), Rose LifeScience Inc.
(“VFF”, together with its subsidiaries, the “Company”, “Village Farms”, “we” “us” or “our”) is a corporation existing under the Business Corporations Act (Ontario). The Company’s principal operating subsidiaries are Village Farms Canada Limited Partnership ("VFCLP"), Village Farms L.P. ("VFLP"), Pure Sunfarms Corp. (“Pure Sunfarms” or "PSF"), Balanced Health Botanicals, LLC (“Balanced Health”), Rose LifeScience Inc.
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 December 31, 2023 and 2022, borrowings under the FCC Term Loan agreement were subject to an interest rate of 8.96% and 7.71% per annum, respectively.
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 December 31, 2024 and 2023, borrowings under the FCC Term Loan agreement were subject to an interest rate of 8.12% and 8.96% per annum, respectively.
Net Loss Net loss for the year ended December 31, 2023 was ($8,235) compared to ($40,487) for the year ended December 31, 2022.
Net Loss Net loss for the year ended December 31, 2023 was $11,235 compared to $40,487 for the year ended December 31, 2022.
Therefore, Adjusted EBITDA presented for these segments may not be comparable to similar measures presented for comparable segments by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company’s segments because it excludes non-recurring and other items that do not reflect the business performance of our segments.
Therefore, Adjusted EBITDA presented for these segments may not be comparable to similar measures presented for comparable segments by other issuers. Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes items that do not reflect our business performance.
Balanced Health is one of the leading cannabinoid brands and e-commerce platforms in the United States. Balanced Health develops and sells high-quality CBD and hemp-based health and wellness products, distributing its diverse portfolio of consumer products through retail storefronts and its top-ranked e-commerce platform, CBDistillery TM .
Cannabis segment includes Balanced Health. Balanced Health is one of the leading cannabinoid brands and e-commerce platforms in the United States. Balanced Health develops and sells high-quality CBD and hemp-derived health and wellness products, distributing its diverse portfolio of consumer products through retail storefronts and its top-ranked e-commerce platform, CBDistillery TM .
Shareholders Net loss attributable to Village Farms International, Inc. shareholders for the year ended December 31, 2023 was ($31,798) as compared to ($101,146) for the year ended December 31, 2022, an improvement of $69,348, or 69%, due to improved performance from VF Fresh and lower selling, general and administrative expenses in all segments.
Shareholders Net loss attributable to Village Farms International, Inc. shareholders for the years ended December 31, 2023 was $34,798 as compared to $101,146 for the year ended respectively. an improvement of $66,348, or 66%, due to improved performance from VF Fresh and lower selling, general and administrative expenses in all segments.
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 December 31, 2023 and 2022 was $28,034 and $26,666, respectively.
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 December 31, 2024 and 2023 was $27,136 and $28,034, respectively.
For the year ended December 31, 2023, 80% of Canadian Cannabis net sales was generated from branded flower, pre-roll sales, and cannabis derivative products, net of excise tax. For the year ended December 31, 2022, 77% of Canadian Cannabis net sales was generated from branded flower, pre-roll sales and cannabis derivative products, net of excise tax.
For the year ended December 31, 2024, 75% of Canadian Cannabis net sales was generated from branded flower, pre-roll, and cannabis derivative products, net of excise tax. For the year ended December 31, 2023, 80% of Canadian Cannabis net sales was generated from branded flower, pre-roll sales and cannabis derivative products, net of excise tax.
The investing activities for the year ended December 31, 2022 primarily consisted of $14,292 in capital 61 expenditures for Pure Sunfarms’ conversion of its Delta 2 facility and the addition of hang drying rooms at its Delta 3 facility, and $4,693 invested in an additional 85% ownership in Leli.
The investing activities for the year ended December 31, 2022 primarily consisted of $14,292 in capital expenditures for Pure Sunfarms’ partial conversion of its Delta 2 facility and the addition of hang drying rooms at its Delta 3 facility, and $4,693 invested the acquisition of our 85% ownership in Leli.
Non-branded sales accounted for 23% of revenue in 2022, as compared to 26% of revenue in 2021. The decrease in non-branded sales was driven by the oversupplied LP market, particularly for lower specification biomass, which drove down prices. The net average selling price of branded flower and pre-roll formats decreased in 2022 as compared to 2021.
The decrease in non-branded sales was driven by the oversupplied LP market, particularly for lower specification biomass, which drove down prices. The net average selling price of branded flower and pre-roll formats decreased in 2023 as compared to 2022.
Securities and Exchange Commission. We caution that our results of operations for the years ended December 31, 2023, 2022 and 2021 may not be indicative of our future performance. Discussion of Financial Results A discussion of our consolidated results for the years ended December 31, 2023, 2022 and 2021 is included below.
We caution that our results of operations for the years ended December 31, 2024, 2023 and 2022 may not be indicative of our future performance. Discussion of Financial Results A discussion of our consolidated results for the years ended December 31, 2024, 2023 and 2022 is included below.
In addition, we currently have material long-term debt and lines of credit that we rely on to meet the financing needs of the Company. The long-term debt and lines of credit have interest rate terms that have been affected by rising interest rates which have impacted the cost of capital for the Company.
In addition, we currently have material long-term debt and lines of credit that we rely on to meet the financing needs of the Company. The long-term debt and lines of credit have interest rate terms that may be affected by rising interest rates which can impact the cost of capital for the Company.
FCC Term Loan 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 $22,788 and $24,755 on December 31, 2023 and 2022, respectively.
FCC Term Loan 63 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 $20,821 and $24,755 on December 31, 2024 and 2023, respectively.
During the year ended December 31, 2023, the Company did not issue or sell any Common Shares under the Sales Agreement. During the year ended December 31, 2022, the Company issued and sold 3,175,000 Common Shares under the Sales Agreement, resulting in net proceeds of approximately $6,692 after deducting commissions and offering expenses.
During the year ended December 31, 2022, the Company issued and sold 3,175,000 Common Shares under the Sales Agreement, resulting in net proceeds of approximately $6,692 after deducting commissions and offering expenses.
Our long-term objective for our Canadian Cannabis segment is to garner and sustain the leading retail market share in Canada stemming from our leading position as the low-cost, high-quality cannabis producer in Canada and expand our Canadian success into the growing foreign cannabis medicinal markets across the globe. U.S. Cannabis Segment Our U.S. Cannabis segment includes Balanced Health.
Our long-term objective for our Canadian Cannabis segment is to garner and sustain a leading retail market share in Canada, as well as a leading exporter of medicinal cannabis, stemming from our position as a leading low-cost, high-quality cannabis producer in Canada and expand our Canadian success into growing international cannabis markets across the globe. U.S. Cannabis Segment Our U.S.
See the reconciliation of Adjusted EBITDA to net income in “Non-GAAP Measures—Reconciliation of Net Earnings to Adjusted EBITDA”. PRODUCE SEGMENT RESULTS Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Sales Sales for the year ended December 31, 2023 decreased by ($9,009) to $151,243, compared to $160,252 for the year ended December 31, 2022.
See the reconciliation of Adjusted EBITDA to net (loss) income in “Non-GAAP Measures—Reconciliation of Net Loss to Adjusted EBITDA.” Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Sales Sales for the year ended December 31, 2023 decreased by $9,009 to $151,243, compared to $160,252 for the year ended December 31, 2022.
Non-GAAP Measures References in this Management’s Discussion and Analysis to “Adjusted EBITDA” are to earnings (including the equity losses of the VFH joint venture) before interest, taxes, depreciation, and amortization (“EBITDA”), as further adjusted to exclude foreign currency exchange gains and losses on translation of long-term debt, share-based compensation, gains and losses on asset sales and the other adjustments set forth in the table below.
Non-GAAP Measures References in this Management’s Discussion and Analysis to “Adjusted EBITDA” are to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as further adjusted to exclude foreign currency exchange gains and losses, share-based 65 compensation, gains and losses on asset sales and the other adjustments set forth in the table below.
Interest under the BDC Loan is payable at an interest rate of 10.95%, payable monthly. Equity Offerings On January 30, 2023, the Company issued and sold 18,350,000 Common Shares under a registered direct equity offering, at a price of $1.35 per share, resulting in net proceeds for approximately $22,000 after deducting commissions and offering expenses (the "2023 Equity Offering").
Equity Offerings On January 30, 2023, the Company issued and sold 18,350,000 Common Shares under a registered direct equity offering, at a price of $1.35 per share, resulting in net proceeds for approximately $22,000 after deducting commissions and offering expenses (the "2023 Equity Offering").
The table below sets forth certain measures of consolidated results from continuing operations on a constant currency basis for the year ended December 31, 2023 compared to the year ended December 31, 2022 on an as reported and constant currency basis (in thousands): As Reported As Adjusted for Constant Currency (1) For The Year Ended December 31, As Reported Change For The Year Ended December 31, Constant Currency Change 2023 2022 $ % 2023 $ % Sales $ 285,603 $ 293,572 $ (7,969 ) (3 %) $ 289,897 $ (3,675 ) (1 %) Cost of sales (236,177 ) (266,075 ) 29,898 11 % (239,118 ) 26,957 10 % Selling, general and administrative expenses (65,501 ) (72,265 ) 6,764 9 % (66,605 ) 5,660 8 % Other (expense) income, net 2,727 (5,407 ) 8,134 150 % 2,642 8,049 149 % Write-off of joint venture loan — (592 ) 592 100 % — 592 100 % Impairments (14,020 ) (43,299 ) 29,279 68 % (14,020 ) 29,279 68 % Operating (loss) income (27,368 ) (94,066 ) 66,698 71 % (27,204 ) 66,862 71 % Loss including non-controlling interests and before equity losses (31,819 ) (98,747 ) 66,928 68 % (31,709 ) 67,038 68 % Net loss (31,798 ) (101,146 ) 69,348 69 % (31,694 ) 69,452 69 % Adjusted EBITDA - Constant Currency (2) 7,585 (34,633 ) 42,218 122 % 8,134 42,767 123 % 66 Notes: (1) Assumes a constant exchange rate of C$1.00 = US$0.7689 (the CDN/U.S. average exchange rate for the year ended December 31, 2022) for each of the years ended December 31, 2023 and 2022.
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. 69 The table below sets forth certain measures of consolidated results from continuing operations on a constant currency basis for the year ended December 31, 2023 compared to the year ended December 31, 2022 on an as reported and constant currency basis (in thousands): As Reported As Adjusted for Constant Currency (1) For The Year Ended December 31, As Reported Change For The Year Ended December 31, Constant Currency Change 2023 2022 $ % 2023 $ % Sales $ 285,603 $ 293,572 $ (7,969 ) (3 %) $ 289,897 $ (3,675 ) (1 %) Cost of sales (236,177 ) (266,075 ) 29,898 11 % (239,118 ) 26,957 10 % Selling, general and administrative expenses (65,501 ) (72,265 ) 6,764 9 % (66,605 ) 5,660 8 % Other (expense) income, net 2,727 (5,407 ) 8,134 150 % 2,642 8,049 149 % Write-off of joint venture loan — (592 ) 592 (100 %) — 592 (100 %) Goodwill and intangible impairments (14,020 ) (43,299 ) 29,279 (100 %) (13,856 ) 29,443 (100 %) Operating (loss) income (27,368 ) (94,066 ) 66,698 71 % (27,421 ) 66,645 71 % Loss including non-controlling interests and before equity losses (34,819 ) (98,747 ) 63,928 65 % (34,709 ) 64,038 65 % Net loss (34,798 ) (101,146 ) 66,348 66 % (34,804 ) 66,342 66 % Adjusted EBITDA - Constant Currency (2) 7,585 (34,633 ) 42,218 122 % 7,689 42,322 122 % Notes: (1) Assumes a constant exchange rate of C$1.00 = US$0.7689 (the CDN/U.S. average exchange rate for the year ended December 31, 2022) for each of the years ended December 31, 2023 and 2022.
We evaluate the presentation of revenue on a gross or net basis based on whether we control the service provided to the end-user and are the principal (i.e. “gross”), or we arrange for other parties to provide the service to the end-user and are an agent (i.e. “net”). Revenue received from shipping and handling fees is reflected in net sales.
We evaluate the presentation of revenue on a gross or net basis based on whether we control the service provided to the end-user and are the principal (i.e. “gross”), or we arrange for other parties to provide the service to the end-user and are an agent (i.e. “net”).
The condensed consolidated statements of operations and comprehensive income (loss) and condensed consolidated statements of cash flows of our foreign operations are translated into dollars by applying the average foreign exchange rate in effect for the reporting period.
Transactions affecting the shareholders’ equity (deficit) are translated at historical foreign exchange rates. The condensed consolidated statements of operations and comprehensive income (loss) and condensed consolidated statements of cash flows of our foreign operations are translated into dollars by applying the average foreign exchange rate in effect for the reporting period.
(1) Clean Energy Corporate Total Sales $ 151,243 $ 114,030 $ 20,330 $ — $ — $ 285,603 Cost of sales (151,064 ) (78,090 ) (7,002 ) (21 ) — (236,177 ) Selling, general and administrative expenses (10,625 ) (29,275 ) (13,118 ) (32 ) (12,451 ) (65,501 ) Other expense, net 3,495 (2,136 ) (18 ) (133 ) 1,519 2,727 Impairments — — (14,020 ) — — (14,020 ) Operating (loss) income (6,951 ) 4,529 (13,828 ) (186 ) (10,932 ) (27,368 ) Provision for income taxes (1,284 ) (1,431 ) — — (1,736 ) (4,451 ) (Loss) income from consolidated entities (8,235 ) 3,098 (13,828 ) (186 ) (12,668 ) (31,819 ) Less: net (income) loss attributable to non-controlling interests, net of tax — (162 ) — — 183 21 Net (loss) income $ (8,235 ) $ 2,936 $ (13,828 ) $ (186 ) $ (12,485 ) $ (31,798 ) Adjusted EBITDA (2) $ 506 $ 14,764 $ 861 $ (186 ) $ (8,360 ) $ 7,585 Basic (loss) income per share $ (0.07 ) $ 0.03 $ (0.13 ) $ (0.00 ) $ (0.12 ) $ (0.29 ) Diluted (loss) income per share $ (0.07 ) $ 0.03 $ (0.13 ) $ (0.00 ) $ (0.12 ) $ (0.29 ) 52 For the Year Ended December 31, 2022 VF Fresh (Produce) Cannabis Canada (1) Cannabis U.S.
Clean Energy Leli (1) Corporate Total Sales $ 151,243 $ 114,030 $ 20,330 $ — $ — $ — $ 285,603 Cost of sales (151,064 ) (78,090 ) (7,002 ) (21 ) — — (236,177 ) Selling, general and administrative expenses (10,625 ) (29,275 ) (13,118 ) (32 ) (1,265 ) (11,186 ) (65,501 ) Other expense, net 3,495 (2,136 ) (18 ) (133 ) — 1,519 2,727 Goodwill and intangible impairments — — (14,020 ) — — — (14,020 ) Loss before taxes and loss from equity method investments (6,951 ) 4,529 (13,828 ) (186 ) (1,265 ) (9,667 ) (27,368 ) ('Provision for) recovery of income taxes (4,284 ) (1,431 ) — — 48 (1,784 ) (7,451 ) (Loss) income from consolidated entities (11,235 ) 3,098 — (13,828 ) — (186 ) — (1,217 ) — (11,451 ) (34,819 ) Less: net (income) loss attributable to non-controlling interests, net of tax — (162 ) — — 183 — 21 Net (loss) income $ (11,235 ) $ 2,936 $ (13,828 ) $ (186 ) $ (1,034 ) $ (11,451 ) $ (34,798 ) Adjusted EBITDA (2) $ 506 $ 14,764 $ 861 $ (186 ) $ (157 ) $ (8,203 ) $ 7,585 Basic (loss) income per share $ (0.10 ) $ 0.03 $ (0.13 ) $ (0.00 ) $ (0.01 ) $ (0.11 ) $ (0.32 ) Diluted (loss) income per share $ (0.10 ) $ 0.03 $ (0.13 ) $ (0.00 ) $ (0.01 ) $ (0.11 ) $ (0.32 ) 56 For the Year Ended December 31, 2022 VF Fresh (Produce) Cannabis Canada (1) Cannabis U.S.
VF Hemp was a joint venture which ceased operations in 2022, and its results are included in “Loss from Equity Method Investments” for the years ended December 31, 2022 and 2021. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Sales U.S.
CANNABIS SEGMENT RESULTS The U.S. Cannabis segment currently consists of Balanced Health. VF Hemp was a joint venture which ceased operations in 2022, and its results are included in “Loss from Equity Method Investments” for the year ended December 31, 2022. Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Sales U.S.
Impact of Inflation and World Conflicts Our business has been affected, and we expect will continue to be affected for the foreseeable future, by rising inflation and supply chain issues arising from COVID-19, and indirectly, world conflicts (e.g., Russia/Ukraine) which may negatively affect our operating results.
In addition, our business has been affected, and we expect will continue to be affected for the foreseeable future, by rising inflation, and indirectly, world conflicts (e.g., Russia/Ukraine) which may negatively affect our operating results.
Constant Currency To supplement the consolidated financial statements presented in accordance with U.S. GAAP, we have presented constant currency-adjusted financial measures for sales, cost of sales, selling, general and administrative, other income (expense), operating (loss) income, loss from consolidated entities, net loss, and Adjusted EBITDA for the years ended December 31, 2023 and 2022, 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), operating (loss) income, loss from consolidated entities, net loss, and Adjusted EBITDA for the year ended December 31, 2024 and 2023, which are 68 considered non-GAAP financial measures.
Summary of Cash Flows For the Year Ended December 31, (in Thousands) 2023 2022 2021 Cash beginning of year $ 21,676 $ 58,667 $ 25,679 Net cash flow provided by (used in): Operating activities 5,315 (19,889 ) (39,567 ) Investing activities (6,231 ) (20,899 ) (63,470 ) Financing activities 14,137 4,496 135,883 Net cash increase (decrease) for the year 13,221 (36,292 ) 32,846 Effect of exchange rate changes on cash 394 (699 ) 142 Cash, end of the year $ 35,291 $ 21,676 $ 58,667 Operating Activities For the years ended December 31, 2023 and 2022 and 2021 cash flows provided by (used in) operating activities were $5,315, ($19,899), and ($39,567), respectively.
Summary of Cash Flows For the Year Ended December 31, (in Thousands) 2024 2023 2022 Cash beginning of year $ 35,291 $ 21,676 $ 58,667 Net cash flow provided by (used in): Operating activities 10,348 5,315 (19,889 ) Investing activities (10,241 ) (6,231 ) (20,899 ) Financing activities (9,526 ) 14,137 4,496 Net cash (decrease) increase for the year (9,419 ) 13,221 (36,292 ) Effect of exchange rate changes on cash (1,241 ) 394 (699 ) Cash, end of the year $ 24,631 $ 35,291 $ 21,676 Operating Activities For the years ended December 31, 2024 and 2023 and 2022 cash flows provided by (used in) operating activities were $10,348, $5,315, and ($19,899), respectively.
Investing Activities For the years ended December 31, 2023, 2022, and 2021 cash flows used in investing activities were $(6,231), ($20,889), and ($63,470) respectively. The investing activities for the year ended December 31, 2023 primarily consisted of $6,518 invested in capital expenditures to support the VF Fresh, Canadian Cannabis, and U.S.
Investing Activities For the years ended December 31, 2024, 2023, and 2022 cash flows used in investing activities were $10,241, $6,231, and $20,889, respectively. The investing activities for the year ended December 31, 2024 consisted primarily of $6,061 in capital expenditures for Leli and $4,022 in capital expenditures to support the VF Fresh, Canadian Cannabis, and U.S. Cannabis operations.
We expect this ASU to only impact our disclosures with no impact to our results of operations, cash flows, and financial condition. Critical Accounting Policies, Estimates and Judgments Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP.
Critical Accounting Policies, Estimates and Judgments Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Sales Canadian cannabis net sales for the years ended December 31, 2023 increased by $4,148, or 4%, to $114,030 from $109,882, for the year ended December 31, 2023.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Sales Canadian cannabis net sales for the years ended December 31, 2024 increased by $34,826, or 31%, to $148,856 from $114,030, for the year ended December 31, 2024.
Financing Activities For the years ended December 31, 2023, 2022, and 2021 cash flows provided by financing activities were $14,137, $4,496, and $135,883, respectively.
Financing Activities For the years ended December 31, 2024, 2023, and 2022 cash flows provided by (used in) financing activities were ($9,562), $14,137, and $4,496, respectively.
To present this information, current and comparative prior period statement of operations results in currencies other than U.S. dollars are converted into U.S. dollars using the average exchange rates comparative periods in 2022 and 2021, respectively, rather than the actual average exchange rates in effect during the respective current periods.
To present this information, current and comparative prior period income statement results in currencies other than U.S. dollars are converted into U.S. dollars using the average exchange rates from the annual comparative period rather than the actual average exchange rates in effect during the respective current periods. All growth comparisons relate to the corresponding periods.
We concluded that as of December 31, 2023, the fair value was lower than its carrying amount and, as a result, an impairment charge to goodwill of $11,300 was allocated to the Cannabis – U.S. segment for the year ended December 31, 2023.
Management concluded that as of December 31, 2023, the fair value was lower than its carrying amount and as a result, an impairment charge to goodwill of $11,300 was allocated to the reporting unit.
Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recuring and other items that do not reflect our business performance. Adjusted EBITDA includes the Company’s 70% interest in Rose LifeScience since acquisition, 85% interest in Leli since acquisition, and 65% interest in VFH.
Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recuring and other items that do not reflect our business performance.
Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recuring and other items that do not reflect our business performance. Adjusted EBITDA includes the Company’s 70% interest in Rose LifeScience since acquisition, 85% interest in Leli since acquisition, and 65% interest in VFH.
Management believes that Adjusted EBITDA is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recuring and other items that do not reflect our business performance.
Other Income (Expense) Other income for the year ended December 31, 2023 was $5,616 as compared to other expense of ($115) for the year ended December 31, 2022.
Interest Income Interest income for the years ended December 31, 2023 and 2022 was $1,018 and $207, respectively. 54 Other Income (Expense) Other income for the year ended December 31, 2023 was $5,616 as compared to other expense of ($115) for the year ended December 31, 2022.
The increase was due to an increase in the Company's interest rates on its various debt instruments. Interest Income Interest income for the years ended December 31, 2023 and 2022 was $1,018 and $207, respectively.
The decrease 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 years ended December 31, 2024 and 2023 was $914 and $1,018, respectively.
The exchange rates used to translate from Canadian dollars ("C") to dollars is shown below: As of December 31, 2023 2022 2021 Spot rate 0.7543 0.7380 0.7874 For the year ended 0.7410 0.7689 0.7977 Results of Operations Consolidated Financial Performance (In thousands of U.S. dollars, except per share amounts) For the Year Ended December 31, 2023 (1) 2022 (1) 2021 (1) Sales $ 285,603 $ 293,572 $ 268,020 Cost of sales (236,177 ) (266,075 ) (222,841 ) Gross margin 49,426 27,497 45,179 Selling, general and administrative expenses (65,501 ) (72,265 ) (53,917 ) Interest expense (4,509 ) (3,244 ) (2,835 ) Interest income 1,018 207 126 Foreign exchange gain (loss) 602 (2,255 ) (476 ) Other income (expense) 5,616 (115 ) (420 ) Write-off of joint venture loan — (592 ) — Impairments (14,020 ) (43,299 ) — Loss before taxes and loss from equity method investments (27,368 ) (94,066 ) (12,343 ) (Provision for) recovery of income taxes (4,451 ) (4,681 ) 3,526 Loss including non-controlling interests and before equity losses (31,819 ) (98,747 ) (8,817 ) Less: net loss attributable to non-controlling interests, net of tax 21 269 46 Loss from equity method investments — (2,668 ) (308 ) Net loss attributable to Village Farms International, Inc. shareholders $ (31,798 ) $ (101,146 ) $ (9,079 ) Adjusted EBITDA (2) $ 7,585 $ (34,633 ) $ 14,012 Basic loss per share $ (0.29 ) $ (1.13 ) $ (0.11 ) Diluted loss per share $ (0.29 ) $ (1.13 ) $ (0.11 ) 48 (1) For the years ended December 31, 2023 and 2022 and for the period August 16, 2021 to December 31, 2021, Balanced Health is fully consolidated in the financial results of the Company.
The exchange rates used to translate from Canadian dollars to U.S. dollars is shown below: As of December 31, 2024 2023 2022 Spot rate 0.6957 0.7543 0.7380 For the year ended 0.7301 0.7410 0.7689 51 Results of Operations Consolidated Financial Performance (In thousands of U.S. dollars, except per share amounts) For the Year Ended December 31, 2024 2023 2022 Sales $ 336,181 $ 285,603 $ 293,572 Cost of sales (288,781 ) (236,177 ) (266,075 ) Gross margin 47,400 49,426 27,497 Selling, general and administrative expenses (71,048 ) (65,501 ) (72,265 ) Interest expense (3,365 ) (4,509 ) (3,244 ) Interest income 914 1,018 207 Foreign exchange (loss) gain (2,843 ) 602 (2,255 ) Other income (expense) 4,015 5,616 (115 ) Write-off of joint venture loan — — (592 ) Goodwill and intangible asset impairments (11,939 ) (14,020 ) (43,299 ) Other impairments (439 ) — — Loss before taxes and loss from equity method investments (37,305 ) (27,368 ) (94,066 ) Provision for income taxes 1,662 (7,451 ) (4,681 ) Loss including non-controlling interests and before equity losses (35,643 ) (34,819 ) (98,747 ) Less: net (income) loss attributable to non-controlling interests, net of tax (1) (207 ) 21 269 Loss from equity method investments — — (2,668 ) Net loss attributable to Village Farms International, Inc. shareholders $ (35,850 ) $ (34,798 ) $ (101,146 ) Adjusted EBITDA (2) $ 1,788 $ 7,585 $ (34,633 ) Basic loss per share $ (0.32 ) $ (0.32 ) $ (1.13 ) Diluted loss per share $ (0.32 ) $ (0.32 ) $ (1.13 ) (1) For the years ended December 31, 2024, 2023 and 2022 Rose LifeScience’s financial results are fully consolidated in the financial results of the Company with the non-controlling interest presented in net loss attributable to non-controlling interests, net of tax.
Management believes that Adjusted EBITDA - Constant Currency is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recurring and other items that do not reflect our business performance. Adjusted EBITDA - Constant Currency includes the Company’s 70% interest in Rose LifeScience since acquisition, 85% interest in Leli since acquisition, and 65% interest in VFH.
Management believes that Adjusted EBITDA - Constant Currency is a useful supplemental measure in evaluating the performance of the Company because it excludes non-recuring and other items that do not reflect our business performance.
We own and operate produce cultivation assets in Texas and Delta, B.C. and source 45 produce from our growing partners, in Mexico and Canada. Our intention is to use our assets, expertise and experience (across cannabis, CBD and produce) to participate in the U.S.
We own and operate produce cultivation assets in Texas and Delta, B.C. and source produce from growing partners in Mexico and Canada. 48 Our intention is to use our assets, expertise and experience (across the cannabis, hemp, CBD and produce ecosystems) to participate in U.S. cannabis markets subject to compliance with applicable U.S. federal and state laws and applicable stock exchange rules.
To do so, we leverage decades of cultivation expertise, investment, and experience in fresh produce across profitable, high growth plant-based opportunities. In Canada, we converted two produce facilities to grow cannabis for the Canadian legal adult use (recreational) market.
To do so, we leverage decades of cultivation expertise, investment, and experience in fresh produce into branded and wholesale cannabis products within markets with legally permissible opportunities. In Canada, we converted two produce facilities to grow cannabis for the Canadian legal adult use (recreational) market.
Inventoriable costs are expensed to cost of goods sold on the Consolidated Statement of Income (Loss) in the same period as finished products are sold. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period when the write-down or loss occurs.
The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period when the write-down or loss occurs.
(1) Clean Energy Corporate Total Sales $ 160,252 $ 109,882 $ 23,302 $ 136 $ — $ 293,572 Cost of sales (177,634 ) (80,494 ) (7,643 ) (304 ) — (266,075 ) Selling, general and administrative expenses (12,004 ) (31,608 ) (16,305 ) (58 ) (12,290 ) (72,265 ) Other expense, net (1,187 ) (2,023 ) (247 ) (43 ) (1,907 ) (5,407 ) Write-off of joint venture loan — — — — (592 ) (592 ) Impairments — — (43,299 ) — — (43,299 ) Operating loss (30,573 ) (4,243 ) (44,192 ) (269 ) (14,789 ) (94,066 ) (Provision for) recovery of income taxes (9,914 ) 4,091 — — 1,142 (4,681 ) Loss from consolidated entities (40,487 ) (152 ) (44,192 ) (269 ) (13,647 ) (98,747 ) Less: net loss attributable to non-controlling interests, net of tax — 269 — — — 269 Loss from equity method investments — — — — (2,668 ) (2,668 ) Net (loss) income $ (40,487 ) $ 117 $ (44,192 ) $ (269 ) $ (16,315 ) $ (101,146 ) Adjusted EBITDA (2) $ (24,369 ) $ 2,047 $ 223 $ (263 ) $ (12,271 ) $ (34,633 ) Basic (loss) income per share $ (0.45 ) $ 0.00 $ (0.52 ) $ 0.00 $ (0.16 ) $ (1.13 ) Diluted (loss) income per share $ (0.45 ) $ 0.00 $ (0.52 ) $ 0.00 $ (0.16 ) $ (1.13 ) For the Year Ended December 31, 2021 VF Fresh (Produce) Cannabis Canada (1) Cannabis U.S.
Clean Energy Leli (1) Corporate Total Sales $ 160,388 $ 109,882 $ 23,302 $ 0 $ — $ — $ 293,572 Cost of sales (177,777 ) (80,494 ) (7,643 ) (161 ) — — (266,075 ) Selling, general and administrative expenses (12,004 ) (31,608 ) (16,305 ) (58 ) (275 ) (12,015 ) (72,265 ) Other expense, net (1,187 ) (2,023 ) (247 ) (43 ) — (1,907 ) (5,407 ) Write-off of joint venture loan — — — — — (592 ) (592 ) Goodwill and intangible asset impairments — — (43,299 ) — — — (43,299 ) Loss before taxes and loss from equity method investments (30,580 ) (4,243 ) (44,192 ) (262 ) (275 ) (14,514 ) (94,066 ) (Provision for) recovery of income taxes (9,914 ) 4,091 — — 39 1,103 (4,681 ) Loss from consolidated entities (40,494 ) (152 ) (44,192 ) (262 ) (236 ) (13,411 ) (98,747 ) Less: net loss attributable to non-controlling interests, net of tax — 269 — — — — 269 Loss from equity method investments — — — — — (2,668 ) (2,668 ) Net (loss) income $ (40,494 ) $ 117 $ (44,192 ) $ (262 ) $ (236 ) $ (16,079 ) $ (101,146 ) Adjusted EBITDA (2) $ (24,376 ) $ 2,047 $ 223 $ (256 ) $ (275 ) $ (11,996 ) $ (34,633 ) Basic (loss) income per share $ (0.45 ) $ 0.00 $ (0.52 ) $ (0.00 ) $ (0.00 ) $ (0.16 ) $ (1.13 ) Diluted (loss) income per share $ (0.45 ) $ 0.00 $ (0.52 ) $ (0.00 ) $ (0.00 ) $ (0.16 ) $ (1.13 ) (1) For the years ended December 31, 2024, 2023, and 2022, Rose LifeScience’s financial results are fully consolidated in the financial results of the Company with the non-controlling interest presented in net (income) loss attributable to non-controlling interests, net of tax.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−1 removed1 unchanged
Biggest changeDecember 31, 2023 December 31, 2022 Financial assets Cash and cash equivalents $ 1,686 $ 978 Trade receivables 3,005 2,758 Inventories 8,211 7,386 Prepaid and deposits 667 979 Financial liabilities Trade payables and accrued liabilities (5,623 ) (4,701 ) Loan payable (3,378 ) (4,369 ) Net foreign exchange gain $ 4,568 $ 3,031 Our exposure to foreign exchange risk and the impact of foreign exchange rates are monitored by the Company’s management but generally the Company tries to match its sales (trade receivables) and vendor payments (trade payables) such that the net impact is not material.
Biggest changeDecember 31, 2024 December 31, 2023 Financial assets Cash and cash equivalents $ 2,260 $ 1,686 Trade receivables 3,557 3,005 Inventories 3,929 8,211 Prepaid and deposits 198 667 Financial liabilities Trade payables and accrued liabilities (4,025 ) (5,623 ) Loan payable (2,883 ) (3,378 ) Net foreign exchange gain $ 3,036 $ 4,568 Our exposure to foreign exchange risk and the impact of foreign exchange rates are monitored by the Company’s management but generally the Company tries to match its sales (trade receivables) and vendor payments (trade payables) such that the net impact is not material.
Assuming that 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 December 31, 2023 and 2022 with the net foreign exchange gain or loss directly impacting net income (loss).
Assuming that 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 December 31, 2024 and 2023 with the net foreign exchange gain or loss directly impacting net income (loss).
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 2022. Our interest expense is affected by the overall interest rate environment. Our variable rate interest debt subjects us to risk from increases in prevailing interest rates.
The current interest rates for outstanding revolving loans under our Credit Facility and Term Loans reflect basis point decrease of approximately 0.7% over the comparable period in 2023. Our interest expense is affected by the overall interest rate environment. Our variable rate interest debt subjects us to risk from increases in prevailing interest rates.
ITEM 7A. QUALITATIVE AND QUANTITAT IVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk As of December 31, 2023, our variable interest rate debt was primarily related to our Credit Facilities and Term Loans.
ITEM 7A. QUALITATIVE AND QUANTITAT IVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk As of December 31, 2024, our variable interest rate debt was primarily related to our Credit Facilities and Term Loans.
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 December 31, 2023 and 2022, the Canadian/U.S. foreign exchange rate was C$1.00 = US$0.7543 and C$1.00 = US$0.7380, 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. 74 Foreign Exchange Risk As of December 31, 2024 and 2023, the Canadian/U.S. foreign exchange rate was C$1.00 = US$0.7301 and C$1.00 = US$0.7543, respectively.
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 $254 and $288 for the years ended December 31, 2023 and 2022, respectively.
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 $222 and $254 for the years ended December 31, 2024 and 2023, respectively.
ITEM 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA The financial statements required by this item are included beginning on page 80 of this Annual Report on Form 10-K. See also Item 15, “Exhibits, Financial Statement Schedules.” ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
ITEM 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA The financial statements required by this item are included beginning on page 80 of this Annual Report on Form 10-K. See also Item 15, “Exhibits, Financial Statement Schedules.”
As of December 31, 2023, we had approximately $4,000 aggregate principal amount of outstanding revolving loans under our Operating Loan with an interest rate of 6.9% and we had approximately $48,058 in aggregate principal amounts with Term Loans with a weighted average interest rate of 9.1%.
As of December 31, 2024, we had approximately $4,000 aggregate principal amount of outstanding revolving loans under our Operating Loan with an interest rate of 8.0% and we had approximately $40,562 in aggregate principal amounts with Term Loans with a weighted average interest rate of 8.4%.
Removed
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.

Other VFF 10-K year-over-year comparisons