Company Performance - OrganiGram reported a quarterly loss of $0.03 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.01, marking an earnings surprise of -200.00% [1] - The company posted revenues of $51.16 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 5.86%, and showing a significant increase from $30.01 million in the same quarter last year [2] - Over the last four quarters, OrganiGram has not surpassed consensus EPS estimates, but it has topped consensus revenue estimates three times [2] Stock Performance - OrganiGram shares have declined approximately 1.2% since the beginning of the year, contrasting with the S&P 500's gain of 9.6% [3] - The current Zacks Rank for OrganiGram is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.01 on revenues of $49.86 million, and for the current fiscal year, it is $0.07 on revenues of $170.56 million [7] - The trend of estimate revisions for OrganiGram was mixed ahead of the earnings release, which could change following the recent report [6] Industry Context - The Medical - Products industry, to which OrganiGram belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, which may impact the stock's performance [8] - The top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [8]

Financial Data and Key Metrics Changes - In Q3 fiscal 2025, gross sales increased by 73% year over year and 7.2% sequentially, reaching a record $110.2 million [28] - Net revenue also reached a record high, growing 72% year over year and 7.9% sequentially to $70.8 million [28] - Adjusted EBITDA for the quarter was $5.7 million, a 64% increase year over year [34] - Net loss for the quarter was $6.3 million compared to net income of $2.8 million in the prior year period [35] - Cash flow from operations was $14.6 million, a significant improvement from cash used of $3.7 million in the prior year [35] Business Line Data and Key Metrics Changes - Organigram maintained its position as the number one licensed producer in Canada with an 11.6% market share, leading in pre-rolls and vapes [7] - In the vape segment, Organigram held a 20.4% market share, while in the pre-roll segment, it held 8.3% [7] - The company achieved its highest edibles market share of 18.2% in the last twelve months [11] - International revenue reached $7.4 million, a 208% year over year increase [22] Market Data and Key Metrics Changes - The Canadian recreational cannabis market grew by 6.6% year over year, reaching $1.4 billion in retail sales [7] - Organigram's market share in flower increased to 10.6%, up 60 basis points from Q2 [7] - The beverage market share held by Organigram was 6.2% as of June [12] Company Strategy and Development Direction - The company is focused on balancing domestic and international market demands while expanding its product offerings [27] - Organigram is enhancing its operational capacity and efficiency, with significant investments in its facilities [16][20] - The company is optimistic about the long-term potential of the cannabis beverage market, especially with favorable regulatory changes in Canada [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a gross margin of approximately 35% for the full year, driven by seasonal throughput and synergies from the Motif acquisition [41][43] - The company remains cautious about shifting too much supply to international markets at the expense of domestic brands [29] - Management highlighted ongoing improvements in operational efficiency and the potential for margin expansion in the coming quarters [34][31] Other Important Information - The company is awaiting EU GMP certification, which is expected to enhance international sales and margins [26][56] - Management noted that approximately 27% of Moncton's harvest was seed-based, contributing to lower production costs [26] Q&A Session Summary Question: Outlook on gross margins and expected expansion - Management confirmed the expectation of a 35% average gross margin for the year, driven by seasonal throughput and synergies from the Motif acquisition [41][43] Question: Cultivation capacity and balancing domestic vs international demand - Management discussed ongoing capacity expansion projects and the reevaluation of previous investment plans to optimize production for both domestic and international markets [45][48] Question: Timing and impact of EU GMP certification - Management indicated that while the timing of the certification is uncertain, it will significantly enhance margins and reduce delays in product delivery [56][58] Question: Investment opportunities in the U.S. and potential federal reform - Management expressed excitement about the U.S. market but emphasized that current focus remains on international markets due to existing legal frameworks [66][67]

Financial Performance - Record gross revenue of $110.2 million, a 73% increase year-over-year and a 7.2% sequential increase[86] - Record net revenue of $70.8 million, a 72% increase year-over-year and a 7.9% sequential increase[86] - Adjusted EBITDA of $5.7 million, a 64% increase year-over-year and a 16% sequential increase[86] - International revenue reached $7.4 million, a 208% increase year-over-year and a 21% sequential increase[86] - Free cash flow was $5.0 million, compared to ($4.8) million in the prior year period[86] Strategic Initiatives - Completed the acquisition of Motif Labs Ltd, expecting approximately $15 million in run-rate cost synergies[44] - Completed the acquisition of Collective Project Limited, fast-tracking entry into the cannabinoid beverages category and the U S market[47] - Strategic investments from BAT totaled over $345 million to fund research & development and international M&A[48] - Invested $21 million into German cannabis leader Sanity Group to establish a foothold in the rapidly growing German market and expand export volume to Europe[61] - 27% of flower harvest at Moncton facility was seed-based in Q3 Fiscal 2025[65] Market Position - Organigram is the 1 LP in market share in Canada[17] - 1 in vapes, 1 in pre-rolls, 1 in milled flower, 1 in hash, 3 in edibles, 3 in dried flower in Canada[86]

[Condensed Consolidated Interim Statements of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Financial%20Position) This statement presents the company's financial position, detailing assets, liabilities, and equity at specific interim dates | ASSETS (CDN $000's) | JUNE 30, 2025 | SEPTEMBER 30, 2024 | | :--------------------------------- | :------------ | :----------------- | | Current assets | 277,783 | 262,219 | | Property, plant and equipment | 123,537 | 96,231 | | Intangible assets | 53,283 | 8,092 | | Goodwill | 49,796 | — | | Other financial assets | 51,915 | 40,727 | | **Total Assets** | **564,615** | **407,860** | | LIABILITIES (CDN $000's) | | | | Current liabilities | 107,275 | 53,322 | | Total Liabilities | 179,119 | 101,871 | | SHAREHOLDERS' EQUITY (CDN $000's) | | | | Share capital | 918,418 | 852,891 | | Accumulated deficit | (570,763) | (583,968) | | **Total Shareholders' Equity** | **385,496** | **305,989** | | **Total Liabilities & Equity** | **564,615** | **407,860** | - Total assets increased by approximately **CDN $156.75 million** from September 30, 2024, to June 30, 2025, primarily driven by increases in property, plant and equipment, intangible assets, and the recognition of goodwill[3](index=3&type=chunk) - Total liabilities significantly increased from **CDN $101.87 million** to **CDN $179.12 million**, with current liabilities nearly doubling[3](index=3&type=chunk) - Shareholders' equity grew by approximately **CDN $79.5 million**, largely due to an increase in share capital and a reduction in accumulated deficit[3](index=3&type=chunk) [Condensed Consolidated Interim Statements of Operations and Comprehensive (Loss) Income](index=4&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Operations%20and%20Comprehensive%20%28Loss%29%20Income) This statement outlines the company's financial performance, including revenue, expenses, and net loss or income over interim periods | Metric (CDN $000's) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Gross revenue | 110,205 | 63,605 | 279,774 | 177,300 | | Net revenue | 70,792 | 41,060 | 179,122 | 115,143 | | Gross margin | 26,146 | 14,008 | 58,378 | 30,308 | | Total operating expenses | 28,251 | 18,635 | 74,867 | 65,421 | | Loss from operations | (2,105) | (4,627) | (16,489) | (35,113) | | Net (loss) income | (6,294) | 2,818 | 13,205 | (40,007) | | Comprehensive (loss) income | (6,081) | 2,813 | 13,220 | (40,197) | | Net (loss) earnings per common share, basic | (0.047) | 0.027 | 0.105 | (0.385) | - Net revenue for the three months ended June 30, 2025, increased by **72.4%** year-over-year to **CDN $70,792 thousand**, and for the nine months, it increased by **55.6%** to **CDN $179,122 thousand**[4](index=4&type=chunk) - The company reported a net loss of **CDN $6,294 thousand** for the three months ended June 30, 2025, compared to a net income of **CDN $2,818 thousand** in the prior year period[4](index=4&type=chunk) - For the nine months, it achieved a net income of **CDN $13,205 thousand**, a significant improvement from a **CDN $40,007 thousand** loss in the previous year[4](index=4&type=chunk) - Loss from operations decreased for both the three-month and nine-month periods, indicating improved operational efficiency despite increased expenses[4](index=4&type=chunk) [Condensed Consolidated Interim Statements of Changes in Equity](index=5&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Changes%20in%20Equity) This statement details the changes in the company's equity components, such as share capital and accumulated deficit, over interim periods | Equity Component (CDN $000's) | Balance - October 1, 2024 | Shares issued related to business combination | Private placement | Share-based compensation | Net income | Other comprehensive income | Balance - June 30, 2025 | | :------------------------------ | :------------------------ | :-------------------------------------------- | :---------------- | :----------------------- | :--------- | :------------------------- | :---------------------- | | Share Capital | 852,891 | 39,050 | 23,963 | — | — | — | 918,418 | | Equity Reserves | 37,129 | — | — | 3,270 | — | — | 37,889 | | Accumulated Deficit | (583,968) | — | — | — | 13,205 | — | (570,763) | | Shareholders' Equity | 305,989 | 39,050 | 23,963 | 3,270 | 13,205 | 15 | 385,496 | - Shareholders' equity increased from **CDN $305,989 thousand** at October 1, 2024, to **CDN $385,496 thousand** at June 30, 2025, primarily driven by share issuances related to business combinations and private placements, as well as net income[6](index=6&type=chunk) - Share capital increased by **CDN $65,527 thousand**, reflecting new shares issued for the Motif acquisition and the Follow-on BAT Investment[6](index=6&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) - The accumulated deficit decreased by **CDN $13,205 thousand**, moving from a deficit of **CDN $583,968 thousand** to **CDN $570,763 thousand**, reflecting the net income achieved during the nine-month period[6](index=6&type=chunk) [Condensed Consolidated Interim Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities during interim periods | Activity (CDN $000's) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash used in operating activities | (6,139) | (5,021) | | Net cash provided by financing activities | 39,898 | 66,768 | | Net cash used in investing activities | (81,280) | (24,808) | | (Decrease) Increase in cash and restricted cash | (47,574) | 36,939 | | Cash and restricted cash, end of period | 85,031 | 88,696 | - Net cash used in operating activities increased slightly to **CDN $6,139 thousand** for the nine months ended June 30, 2025, from **CDN $5,021 thousand** in the prior year[8](index=8&type=chunk) - Net cash provided by financing activities decreased significantly to **CDN $39,898 thousand** in 2025 from **CDN $66,768 thousand** in 2024, primarily due to lower proceeds from private placements and unit financing[8](index=8&type=chunk) - Net cash used in investing activities substantially increased to **CDN $81,280 thousand** in 2025 from **CDN $24,808 thousand** in 2024, largely driven by the acquisition of a subsidiary (Motif) and increased purchases of property, plant and equipment[8](index=8&type=chunk) - The company experienced a decrease of **CDN $47,574 thousand** in cash and restricted cash for the nine months ended June 30, 2025, resulting in an end-of-period balance of **CDN $85,031 thousand**[8](index=8&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) These notes provide detailed explanations and disclosures supporting the condensed consolidated interim financial statements [1. Nature of Operations](index=7&type=section&id=1.%20NATURE%20OF%20OPERATIONS) Organigram Global Inc. is a publicly traded Canadian cannabis company operating through subsidiaries, with a recent name change and strategic amalgamations - The Company changed its name from "Organigram Holdings Inc." to "Organigram Global Inc." on **March 31, 2025**, after shareholder and regulatory approvals[10](index=10&type=chunk)[11](index=11&type=chunk) - Key wholly-owned subsidiaries include Organigram Inc. (a licensed cannabis producer in Canada), Collective Project Limited (CPL, a cannabis beverage brand), and Organigram USA Inc[12](index=12&type=chunk) - Organigram Inc. amalgamated with The Edibles and Infusions Corporation (EIC) and Laurentian Organic Inc. on **October 1, 2023**, and with Motif Labs Ltd. (Motif) on **April 1, 2025**, continuing as a single corporation[13](index=13&type=chunk)[14](index=14&type=chunk) [2. Basis of Preparation](index=7&type=section&id=2.%20BASIS%20OF%20PREPARATION) These interim financial statements are prepared in accordance with IAS 34 and IFRS, using a historical cost basis with certain fair value measurements and consolidated accounts [i. Statement of compliance](index=7&type=section&id=i.%20Statement%20of%20compliance) The interim financial statements adhere to IAS 34 Interim Financial Reporting and should be read with the audited annual statements prepared under IFRS - The interim financial statements are prepared in accordance with International Accounting Standard (IAS 34) Interim Financial Reporting as issued by the International Accounting Standards Board (IASB)[15](index=15&type=chunk) - They should be read in conjunction with the audited consolidated financial statements for the year ended September 30, 2024, which were prepared under International Financial Reporting Standards (IFRS)[15](index=15&type=chunk) [ii. Basis of measurement](index=7&type=section&id=ii.%20Basis%20of%20measurement) The interim financial statements are primarily prepared on a historical cost basis, with specific assets and liabilities measured at fair value - The interim financial statements are prepared on a historical cost basis, except for biological assets, share-based compensation, contingent share consideration, short-term investments, preferred shares, other financial assets, and derivative liabilities, which are measured at fair value[17](index=17&type=chunk) [iii. Basis of consolidation](index=7&type=section&id=iii.%20Basis%20of%20consolidation) The interim financial statements consolidate the accounts of the Company and its subsidiaries, with intercompany transactions eliminated and associates accounted for using the equity method - The interim financial statements include the accounts of the Company and its subsidiaries on a consolidated basis, eliminating intercompany transactions and balances[19](index=19&type=chunk) - Investments in associates are accounted for using the equity method[21](index=21&type=chunk) [iv. Foreign currency translation](index=8&type=section&id=iv.%20Foreign%20currency%20translation) The financial statements are presented in Canadian dollars, which serves as the functional currency for most entities, with exceptions for OGI USA and Alpha-Cannabis Pharma GmbH - The financial statements are presented in Canadian dollars, which is the functional currency for most entities, except for OGI USA (United States dollars) and Alpha-Cannabis Pharma GmbH (Euros)[22](index=22&type=chunk) [3. Material Accounting Policies](index=8&type=section&id=3.%20MATERIAL%20ACCOUNTING%20POLICIES) The Company's accounting policies are consistent with its Annual Consolidated Financial Statements, with critical estimates for business combinations relying on future performance assumptions - Accounting policies are consistent with Annual Consolidated Financial Statements, with recent amendments to IAS 1, IFRS 16, IAS 7, and IFRS 7 having no material impact[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk) - Critical accounting estimates and judgments include valuation analysis for business combinations, specifically determining the fair value of acquired identifiable assets, liabilities, and contingent share consideration[28](index=28&type=chunk)[29](index=29&type=chunk) - Valuations for business combinations are highly dependent on management's assumptions regarding future performance and discount rates[29](index=29&type=chunk) [4. Restricted Cash](index=9&type=section&id=4.%20RESTRICTED%20CASH) Restricted cash balances increased to CDN $49,155 thousand, contractually limited for specific uses under agreements with BT DE Investments Inc., with a temporary unrestricted portion | Metric (CDN $000's) | June 30, 2025 | September 30, 2024 | | :------------------ | :------------ | :----------------- | | Restricted cash | 49,155 | 25,860 | - Restricted cash balances represent proceeds from product development collaboration and subscription agreements with BT DE Investments Inc. (BAT), subject to contractual use limitations[31](index=31&type=chunk) - The Company gained temporary access to **CDN $10 million** of previously restricted funds for general purposes through November 8, 2026, due to a waiver from BAT[32](index=32&type=chunk) [5. Accounts and Other Receivables](index=9&type=section&id=5.%20ACCOUNTS%20AND%20OTHER%20RECEIVABLES) Accounts and other receivables increased to CDN $57,547 thousand, primarily due to higher gross trade receivables, partially offset by increased expected credit losses | Metric (CDN $000's) | June 30, 2025 | September 30, 2024 | | :-------------------------- | :------------ | :----------------- | | Gross trade receivables | 62,040 | 37,851 | | Less: reserves for product returns and price adjustments | (598) | (501) | | Less: expected credit losses | (4,872) | (4,695) | | Trade receivables | 56,570 | 32,655 | | Receivable from related party | 541 | 3,169 | | Other receivables | 310 | 816 | | **Total** | **57,547** | **37,153** | - Gross trade receivables increased by **CDN $24,189 thousand**, while expected credit losses also rose by **CDN $177 thousand**[33](index=33&type=chunk) - Receivable from related party decreased significantly from **CDN $3,169 thousand** to **CDN $541 thousand**[33](index=33&type=chunk) [6. Biological Assets](index=9&type=section&id=6.%20BIOLOGICAL%20ASSETS) Biological assets, measured at fair value less costs to sell, increased to CDN $16,123 thousand, influenced by unrealized gains and production costs, offset by transfers to inventory - Biological assets are measured at fair value less costs to sell up to the point of harvest[34](index=34&type=chunk) | Metric (CDN $000's) | September 30, 2024 | Unrealized gain on changes in fair value | Production costs capitalized | Transfer to inventory upon harvest | June 30, 2025 | | :------------------ | :----------------- | :--------------------------------------- | :--------------------------- | :--------------------------------- | :------------ | | Biological Assets | 15,173 | 43,772 | 30,336 | (73,158) | 16,123 | - Expected harvest yield increased to **31,295 kg** at June 30, 2025, from **28,889 kg** at September 30, 2024[37](index=37&type=chunk) | Significant Inputs & Assumptions | June 30, 2025 | September 30, 2024 | | :------------------------------- | :------------ | :----------------- | | Average selling price per gram (excluding trim) | $1.80 | $1.59 | | Expected average yield per plant | 174 grams | 187 grams | [7. Inventories](index=10&type=section&id=7.%20INVENTORIES) Total inventories increased to CDN $109,063 thousand, with significant growth in dry cannabis and formulated extracts, reflecting increased sales volume and cost of sales | Inventory Category (CDN $000's) | June 30, 2025 | September 30, 2024 | | :------------------------------ | :------------ | :----------------- | | Plants in drying stage | 3,468 | 3,615 | | Dry cannabis available for packaging | 43,191 | 22,629 | | Packaged inventory | 6,326 | 5,790 | | Flower and trim available for extraction | 2,430 | 3,304 | | Concentrated extract | 11,050 | 11,116 | | Formulated extracts available for packaging | 25,688 | 8,049 | | Packaged inventory | 6,441 | 3,485 | | Packaging and supplies | 10,469 | 9,363 | | **Total Inventories** | **109,063** | **67,351** | - Inventory expensed in cost of sales for the nine months ended June 30, 2025, was **CDN $106,526 thousand**, a significant increase from **CDN $64,628 thousand** in the prior year[40](index=40&type=chunk) - Inventory provisions and waste for the nine months ended June 30, 2025, decreased to **CDN $5,099 thousand** from **CDN $6,990 thousand** in the prior year[40](index=40&type=chunk) - Realized fair value on inventories sold and other inventory charges for the nine months ended June 30, 2025, increased to **CDN $41,719 thousand** from **CDN $36,713 thousand**[41](index=41&type=chunk) [8. Property, Plant and Equipment](index=11&type=section&id=8.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT) The net book value of property, plant and equipment significantly increased to CDN $123,537 thousand, driven by acquisitions through business combinations and additional capital expenditures | Category (CDN $000's) | September 30, 2024 (Net Book Value) | Acquisitions through business combinations | Additions | Depreciation | June 30, 2025 (Net Book Value) | | :-------------------- | :---------------------------------- | :----------------------------------------- | :-------- | :----------- | :----------------------------- | | Land | 1,984 | — | — | — | 1,984 | | Buildings | 56,592 | — | 772 | (2,254) | 55,110 | | Growing & Processing Equipment | 31,368 | 7,596 | 2,097 | (4,049) | 37,012 | | Leasehold Improvements | 140 | 10,383 | 214 | (757) | 9,980 | | Right-of-Use Assets | 3,225 | 5,744 | — | (836) | 8,133 | | **Total** | **96,231** | **25,608** | **10,381**| **(8,683)** | **123,537** | - Total additions to property, plant, and equipment (including right-of-use lease assets) for the nine months ended June 30, 2025, were **CDN $35,989 thousand**, significantly higher than **CDN $2,679 thousand** in the prior year[43](index=43&type=chunk) - Purchases of property, plant and equipment, as per cash flow statements, were **CDN $17,786 thousand** for the nine months ended June 30, 2025, compared to **CDN $2,921 thousand** in the prior year[43](index=43&type=chunk) [9. Intangible Assets and Goodwill](index=12&type=section&id=9.%20INTANGIBLE%20ASSETS%20AND%20GOODWILL) Intangible assets and goodwill substantially increased to CDN $53,283 thousand and CDN $49,796 thousand respectively, primarily due to acquisitions through business combinations | Category (CDN $000's) | September 30, 2024 (Net Book Value) | Acquisitions through business combinations | Amortization | June 30, 2025 (Net Book Value) | | :-------------------- | :---------------------------------- | :----------------------------------------- | :----------- | :----------------------------- | | License Agreements | 5,897 | — | (1,593) | 4,331 | | Brands | 2,020 | 43,506 | (2,017) | 43,509 | | Computer Software | — | 130 | (8) | 122 | | Non-Compete Agreement | 175 | — | (88) | 87 | | Customer Relationship | — | 5,860 | (626) | 5,234 | | **Total Intangible Assets** | **8,092** | **49,496** | **(4,332)** | **53,283** | | Goodwill | — | 49,796 | — | 49,796 | - The significant increase in intangible assets and the recognition of goodwill are primarily attributable to the Motif and CPL acquisitions (Note 21)[44](index=44&type=chunk)[109](index=109&type=chunk)[117](index=117&type=chunk) [10. Other Financial Assets](index=12&type=section&id=10.%20OTHER%20FINANCIAL%20ASSETS) Other financial assets increased to CDN $51,915 thousand, mainly due to fair value changes in secured convertible loans and common shares, particularly for Phylos Bioscience Inc. and Sanity Group GmbH | Entity | Asset Type | September 30, 2024 (CDN $000's) | Fair Value Changes (CDN $000's) | June 30, 2025 (CDN $000's) | | :-------------------------------- | :-------------------- | :------------------------------ | :------------------------------ | :------------------------- | | Weekend Holdings Corp. ("WHC") | Preferred shares | 5,441 | 15 | 5,456 | | Phylos Bioscience Inc. ("Phylos") | Secured convertible loan | 9,285 | 5,306 | 14,591 | | Steady State LLC (d/b/a Open Book Extracts) ("OBX") | Convertible loan | 2,881 | 263 | 3,144 | | Sanity Group GmbH ("Sanity Group") | Convertible loan | 19,153 | 5,118 | 24,271 | | Sanity Group | Common shares | 3,967 | 486 | 4,453 | | **Total** | | **40,727** | **11,188** | **51,915** | - The fair value of the secured convertible loan to Phylos increased by **CDN $5,306 thousand**, and the convertible loan to Sanity Group increased by **CDN $5,118 thousand**[46](index=46&type=chunk) [11. Derivative Liabilities](index=12&type=section&id=11.%20DERIVATIVE%20LIABILITIES) Derivative liabilities decreased to CDN $12,042 thousand, primarily due to a reduction in warrant liabilities and derecognition of preferred share commitments, partially offset by Top-up Rights fair value increase [i. Top-up Rights](index=12&type=section&id=i.%20Top-up%20Rights) The fair value of BAT's Top-up Rights increased to CDN $9,631 thousand, resulting in a CDN $3,293 thousand fair value change for the nine months ended June 30, 2025 - The fair value of BAT's Top-up Rights increased to **CDN $9,631 thousand** at June 30, 2025, from **CDN $6,338 thousand** at September 30, 2024[49](index=49&type=chunk) - An increase in fair value change of **CDN $3,293 thousand** was recorded for the nine months ended June 30, 2025[49](index=49&type=chunk) | Input | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :------------ | :----------------- | | Expected future volatility of Common Shares | 40.00% | 60.00% | | Expected life (years) | 0.67 | 1.41 | [ii. Secured Convertible Loan Agreement](index=13&type=section&id=ii.%20Secured%20Convertible%20Loan%20Agreement) The derivative liability for the commitment to fund the Phylos secured convertible loan decreased to CDN $12 thousand, reflecting a CDN $356 thousand fair value decrease - The derivative liability for the commitment to fund the remainder of the third tranche of the Phylos secured convertible loan decreased to **CDN $12 thousand** at June 30, 2025, from **CDN $368 thousand** at September 30, 2024[52](index=52&type=chunk) - A decrease in fair value of **CDN $356 thousand** was recorded for the nine months ended June 30, 2025[52](index=52&type=chunk) [iii. Non-voting Class A preferred shares](index=13&type=section&id=iii.%20Non-voting%20Class%20A%20preferred%20shares) The derivative liability for Non-voting Class A preferred shares was derecognized in February 2025 upon the closing of the final tranche of the Follow-on BAT Investment, recognizing a CDN $6,937 thousand fair value gain - The derivative liability related to Non-voting Class A preferred shares was derecognized in **February 2025** upon the closing of the third and final tranche of the Follow-on BAT Investment[53](index=53&type=chunk) - A fair value gain of **CDN $6,937 thousand** was recognized for the nine months ended June 30, 2025[53](index=53&type=chunk) [iv. Warrants](index=13&type=section&id=iv.%20Warrants) The derivative liability for warrants decreased to CDN $2,399 thousand, resulting in a CDN $5,373 thousand fair value decrease for the nine months ended June 30, 2025 - The derivative liability for warrants decreased to **CDN $2,399 thousand** at June 30, 2025, from **CDN $7,772 thousand** at September 30, 2024[48](index=48&type=chunk)[54](index=54&type=chunk) - A decrease in fair value of **CDN $5,373 thousand** was recorded for the nine months ended June 30, 2025[54](index=54&type=chunk) | Input | June 30, 2025 | | :-------------------------------- | :------------ | | Risk free interest rate | 2.90 % | | Life of Warrants (years) | 2.76 | | Market price of Common Shares | $1.84 | | Expected future volatility of Common Shares | 72.60 % | | Fair value per Warrant | $0.54 | [12. Other Current and Long-Term Liabilities](index=14&type=section&id=12.%20OTHER%20CURRENT%20AND%20LONG-TERM%20LIABILITIES) Other current and long-term liabilities significantly increased to CDN $7,829 thousand and CDN $20,898 thousand respectively, primarily due to contingent and deferred consideration from recent acquisitions | Liability (CDN $000's) | June 30, 2025 (Current) | June 30, 2025 (Long-Term) | September 30, 2024 (Current) | September 30, 2024 (Long-Term) | | :--------------------- | :---------------------- | :------------------------ | :--------------------------- | :----------------------------- | | Lease liabilities | 1,110 | 7,998 | 1,026 | 3,344 | | Contingent consideration | 5,372 | 12,900 | — | — | | Deferred consideration | 1,307 | — | — | — | | Long-term debt | 40 | — | 60 | 25 | | **Total** | **7,829** | **20,898** | **1,086** | **3,369** | - Contingent consideration of **CDN $18,272 thousand** (**CDN $5,372 current**, **CDN $12,900 long-term**) and deferred consideration of **CDN $1,307 thousand** were recognized, primarily from the Motif and CPL acquisitions[56](index=56&type=chunk)[109](index=109&type=chunk)[117](index=117&type=chunk) [13. Preferred Shares](index=14&type=section&id=13.%20PREFERRED%20SHARES) The fair value of Preferred Shares increased to CDN $44,804 thousand, mainly due to the issuance of 5,330,728 Preferred Shares as part of the final tranche of the Follow-on BAT Investment | Metric (CDN $000's) | June 30, 2025 | September 30, 2024 | | :------------------ | :------------ | :----------------- | | Preferred Shares | 44,804 | 31,070 | - **5,330,728 Preferred Shares** were issued in **February 2025** as part of the third and final tranche of the Follow-on BAT Investment, initially valued at **CDN $15,053 thousand**[57](index=57&type=chunk) - A fair value loss of **CDN $9,771 thousand** was recognized for the three months ended June 30, 2025, and a gain of **CDN $1,319 thousand** for the nine months ended June 30, 2025[58](index=58&type=chunk) [14. Share Capital](index=14&type=section&id=14.%20SHARE%20CAPITAL) Share capital increased significantly due to common share issuances for the Motif Labs Ltd. acquisition and the Follow-on BAT Investment, while share-based compensation charges decreased [i. Issuances of share capital](index=14&type=section&id=i.%20Issuances%20of%20share%20capital) Share capital increased due to the issuance of 17,233,950 Common Shares for the Motif acquisition and 7,562,447 Common Shares for the Follow-on BAT Investment - **17,233,950 Common Shares** were issued for the Motif Labs Ltd. acquisition on **December 6, 2024**, with a fair value of **CDN $39,121 thousand**[59](index=59&type=chunk)[111](index=111&type=chunk) - **7,562,447 Common Shares** were issued in **February 2025** as part of the final tranche of the Follow-on BAT Investment, contributing to gross proceeds of **CDN $41,520 thousand**[60](index=60&type=chunk) - During the nine months ended June 30, 2025, **2,500 stock options**, **625,676 RSUs**, and **12,102 PSUs** were exercised, increasing share capital by **CDN $11 thousand**, **CDN $2,363 thousand**, and **CDN $140 thousand**, respectively[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) [ii. Share-based compensation](index=15&type=section&id=ii.%20Share-based%20compensation) Total share-based compensation charges decreased to CDN $3,270 thousand for the nine months ended June 30, 2025, reflecting changes in stock options, RSUs, and PSUs | Share-based Compensation (CDN $000's) | Three Months Ended June 30, 2025 | Nine Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------ | :------------------------------- | :------------------------------ | | Total charges | 1,007 | 3,270 | 2,087 | 6,089 | | Stock option plan | — | 23 | 192 | 875 | | Restricted share units (RSUs) | 725 | 2,566 | 1,763 | 4,858 | | Performance share units (PSUs) | 282 | 681 | 132 | 356 | - The estimated fair value of equity-settled RSUs granted during the nine months ended June 30, 2025, was **CDN $2,713 thousand**, down from **CDN $6,859 thousand** in the prior year[70](index=70&type=chunk) - The estimated fair value of equity-settled PSUs granted during the nine months ended June 30, 2025, was **CDN $915 thousand**, up from **CDN $792 thousand** in the prior year[72](index=72&type=chunk) [15. Related Party Transactions and Balances](index=16&type=section&id=15.%20RELATED%20PARTY%20TRANSACTIONS%20AND%20BALANCES) Key management and Board compensation decreased to CDN $6,088 thousand, primarily due to lower share-based compensation, with a receivable balance from BAT of CDN $541 thousand | Compensation (CDN $000's) | Three Months Ended June 30, 2025 | Nine Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------ | :------------------------------- | :------------------------------ | | Salaries and bonus | 1,370 | 3,996 | 1,459 | 4,509 | | Share-based compensation | 671 | 2,092 | 1,427 | 3,814 | | **Total key management compensation** | **2,041** | **6,088** | **2,886** | **8,323** | - For the nine months ended June 30, 2025, BAT incurred **CDN $1,997 thousand** and the Company incurred **CDN $4,132 thousand** in direct expenses related to the product development collaboration agreement[78](index=78&type=chunk) - A receivable balance from BAT of **CDN $541 thousand** was outstanding at June 30, 2025, down from **CDN $3,169 thousand** at September 30, 2024[79](index=79&type=chunk) - The Company closed the third and final tranche of the **CDN $124.6 million** Follow-on BAT Investment in **February 2025**, issuing Common and Preferred Shares[80](index=80&type=chunk) [16. Capital Management](index=16&type=section&id=16.%20CAPITAL%20MANAGEMENT) The Company's total capital increased to CDN $442,382 thousand, with management continuously reviewing its capital structure to fund growth without changes to its approach | Metric (CDN $000's) | June 30, 2025 | September 30, 2024 | | :------------------ | :------------ | :----------------- | | Total Capital | 442,382 | 356,333 | - Capital is managed to fund growth, with the Board relying on management's expertise rather than quantitative return on capital criteria[82](index=82&type=chunk) - No changes were made to the Company's capital management approach during the period[83](index=83&type=chunk) [17. Fair Value of Financial Instruments and Financial Risk Factors](index=17&type=section&id=17.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS%20AND%20FINANCIAL%20RISK%20FACTORS) The Company recorded a net fair value loss of CDN $21,865 thousand on financial instruments, which are classified using a three-level hierarchy, and manages credit, liquidity, and market risks [i. Fair value of financial instruments](index=17&type=section&id=i.%20Fair%20value%20of%20financial%20instruments) Financial instruments are classified using a three-level fair value hierarchy, with many valuations relying on Level 3 unobservable inputs and complex models - Financial instruments are classified using a three-level fair value hierarchy (Level 1: quoted prices, Level 2: observable inputs, Level 3: unobservable inputs)[84](index=84&type=chunk)[93](index=93&type=chunk) - Many valuations, including investments in WHC, Phylos, OBX, Sanity Group, Top-up Rights, contingent consideration, and Preferred Shares, rely on Level 3 unobservable inputs and complex models (e.g., Cox-Ross-Rubinstein binomial lattice, Monte Carlo pricing)[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) | Fair Value Changes (CDN $000's) | Three Months Ended June 30, 2025 | Nine Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------ | :------------------------------- | :------------------------------ | | Investment in Phylos | (1,787) | (5,306) | 637 | 434 | | Investment in Sanity Group (convertible loan) | (2,289) | (5,118) | — | — | | Top-up Rights | 4,835 | 3,293 | 2,249 | 3,138 | | Warrants | 373 | (5,373) | (2,546) | (2,546) | | Preferred shares | 9,771 | (1,319) | — | — | | **Total** | **10,795** | **(21,865)** | **(6,909)** | **6,076** | [ii. Financial risk factors](index=18&type=section&id=ii.%20Financial%20risk%20factors) The Company manages credit risk through sound counterparties and security, liquidity risk by reviewing capital, and deems interest rate risk to have no material impact - Credit risk is managed by dealing with financially sound counterparties and, for certain receivables, obtaining insurance, guarantees, or security agreements[97](index=97&type=chunk) | Trade Receivables Aging (CDN $000's) | June 30, 2025 | September 30, 2024 | | :----------------------------------- | :------------ | :----------------- | | 0-90 days | 51,968 | 32,349 | | More than 90 days | 10,072 | 5,502 | | Gross trade receivables | 62,040 | 37,851 | | Less: Expected credit losses and reserve for product returns and price adjustments | (5,470) | (5,196) | | **Net Trade Receivables** | **56,570** | **32,655** | - Liquidity risk is managed by reviewing capital requirements and liquidity position, with access to capital markets for additional financing if needed[98](index=98&type=chunk) | Liquidity (CDN $000's) | June 30, 2025 | September 30, 2024 | | :--------------------- | :------------ | :----------------- | | Cash (unrestricted) | 35,876 | 106,745 | | Working capital | 170,508 | 208,897 | - Interest rate risk is not expected to have a material impact on the interim financial statements, with a **1%** change in rates deemed insignificant[101](index=101&type=chunk) [18. Revenue](index=19&type=section&id=18.%20REVENUE) Net revenue significantly increased for both the three and nine months ended June 30, 2025, driven by substantial growth in Canadian recreational and international wholesale business | Revenue Category (CDN $000's) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Recreational wholesale revenue (Canadian) | 99,330 | 59,011 | 255,090 | 166,168 | | International wholesale (business to business) | 7,418 | 2,367 | 16,817 | 5,576 | | Wholesale to Licensed Producers (Canadian) | 2,767 | 1,900 | 5,971 | 4,241 | | Direct to patient medical and medical wholesale revenue (Canadian) | 606 | 325 | 1,812 | 1,219 | | Other revenue | 84 | 2 | 84 | 96 | | **Gross revenue** | **110,205** | **63,605** | **279,774** | **177,300** | | Excise taxes | (39,413) | (22,545) | (100,652) | (62,157) | | **Net revenue** | **70,792** | **41,060** | **179,122** | **115,143** | - Recreational wholesale revenue (Canadian) increased by **68.3%** for the three months and **53.5%** for the nine months ended June 30, 2025, compared to the prior year[103](index=103&type=chunk) - International wholesale revenue saw significant growth, increasing by **213.4%** for the three months and **201.6%** for the nine months ended June 30, 2025[103](index=103&type=chunk) - The Company had four customers that individually represented more than **10%** of its net revenue for both the three and nine months ended June 30, 2025[104](index=104&type=chunk) [19. General and Administrative Expenses by Nature](index=20&type=section&id=19.%20GENERAL%20AND%20ADMINISTRATIVE%20EXPENSES%20BY%20NATURE) Total general and administrative (G&A) expenses for the nine months ended June 30, 2025, increased to CDN $41,880 thousand from CDN $35,485 thousand in the prior year. This rise was primarily driven by increases in wages and benefits, professional fees, and depreciation and amortization | Expense Category (CDN $000's) | Three Months Ended June 30, 2025 | Nine Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------ | :------------------------------- | :------------------------------ | | Office and general | 5,126 | 13,153 | 3,098 | 15,072 | | Wages and benefits | 5,072 | 16,338 | 3,717 | 11,650 | | Professional fees | 2,772 | 5,728 | 1,170 | 4,906 | | Depreciation and amortization | 2,248 | 5,509 | 964 | 2,889 | | Travel and accommodation | 231 | 601 | 169 | 527 | | Utilities | 231 | 551 | 161 | 441 | | **Total general and administrative expenses** | **15,680** | **41,880** | **9,279** | **35,485** | - Wages and benefits increased by **CDN $4,688 thousand** for the nine months ended June 30, 2025, reflecting higher personnel costs[106](index=106&type=chunk) - Professional fees more than doubled for the three months and increased by **CDN $822 thousand** for the nine months, indicating increased external service utilization[106](index=106&type=chunk) [20. Income Taxes](index=20&type=section&id=20.%20INCOME%20TAXES) The Company recognized a deferred tax recovery of CDN $10,009 thousand for the nine months ended June 30, 2025, primarily from temporary differences related to intangible assets and property, plant and equipment acquired in the Motif and CPL acquisitions. This includes a CDN $8,759 thousand recovery offsetting a previously recognized deferred tax liability from the Motif acquisition - A deferred tax recovery of **CDN $10,009 thousand** was recognized for the nine months ended June 30, 2025, compared to **CDN $30 thousand** in the prior year[4](index=4&type=chunk)[108](index=108&type=chunk) - The recovery primarily arises from temporary differences related to intangible assets and property, plant and equipment acquired in the Motif and CPL acquisitions[108](index=108&type=chunk) - **CDN $8,759 thousand** of the deferred tax recovery offsets a previously recognized deferred tax liability associated with the Motif acquisition[108](index=108&type=chunk) [21. Acquisition of Subsidiaries](index=20&type=section&id=21.%20ACQUISITION%20OF%20SUBSIDIARIES) The Company completed two significant acquisitions: Motif Labs Ltd. on December 6, 2024, for CDN $90 million (CDN $50 million cash, CDN $40 million shares, plus contingent consideration), and Collective Project Limited (CPL) on March 31, 2025, for CDN $6 million cash plus up to CDN $24 million in contingent consideration. Both acquisitions were determined to be businesses under IFRS 3, contributing significantly to intangible assets and goodwill, and are expected to bring economies of scale and growth [i. Acquisition of Motif](index=20&type=section&id=i.%20Acquisition%20of%20Motif) The Company acquired Motif Labs Ltd. for CDN $90 million upfront consideration plus contingent consideration, resulting in CDN $38,229 thousand in goodwill - On **December 6, 2024**, the Company acquired **100%** of Motif Labs Ltd. for **CDN $90 million** upfront consideration (**CDN $50 million cash**, **CDN $40 million in common shares**)[109](index=109&type=chunk) - Motif's former shareholders are entitled to an additional **CDN $10 million** in contingent consideration, payable in common shares, conditional on the Company's share price performance[109](index=109&type=chunk) | Motif Acquisition (CDN $000's) | Fair Value on Acquisition | | :----------------------------- | :------------------------ | | Total identifiable net assets | 56,905 | | Consideration transferred | 95,134 | | Goodwill arising on acquisition | 38,229 | - Acquisition-related costs for Motif totaled **CDN $3,849 thousand**, with **CDN $3,778 thousand** expensed and **CDN $71 thousand** capitalized as share issuance costs[112](index=112&type=chunk) - If the Motif acquisition had occurred on **October 1, 2024**, management estimates consolidated gross revenue for the nine months ended June 30, 2025, would have been approximately **CDN $310,874 thousand**, and consolidated net income approximately **CDN $3,450 thousand**[116](index=116&type=chunk) [ii. Acquisition of CPL](index=21&type=section&id=ii.%20Acquisition%20of%20CPL) The Company acquired Collective Project Limited (CPL) for CDN $6 million cash plus up to CDN $24 million in contingent consideration, resulting in CDN $11,567 thousand in goodwill - On **March 31, 2025**, the Company acquired **100%** of Collective Project Limited (CPL) for **CDN $6 million** upfront cash consideration[117](index=117&type=chunk) - CPL's former shareholders are entitled to up to **CDN $24 million** in contingent consideration, subject to achievement of certain milestone and earnout targets[117](index=117&type=chunk) | CPL Acquisition (CDN $000's) | Fair Value on Acquisition | | :--------------------------- | :------------------------ | | Total identifiable net assets | 12,680 | | Consideration transferred | 24,247 | | Goodwill arising on acquisition | 11,567 | - Acquisition-related costs for CPL totaled **CDN $172 thousand**, which were expensed[120](index=120&type=chunk) - The fair value of the Contingent Consideration for CPL was estimated at **CDN $17,090 thousand** at acquisition date and adjusted to **CDN $17,560 thousand** as of June 30, 2025[124](index=124&type=chunk) [22. Operating Segments](index=23&type=section&id=22.%20OPERATING%20SEGMENTS) The Company operates as a single operating segment, as its chief operating decision maker reviews discrete financial information and assesses performance on a consolidated basis for resource allocation and business activity decisions - The Company has only one operating segment, as its chief operating decision maker reviews and allocates resources based on consolidated operating results[125](index=125&type=chunk) [23. Comparative Figures](index=23&type=section&id=23.%20COMPARATIVE%20FIGURES) Certain reclassifications have been made to prior period comparative figures to enhance comparability with the current period financial statements. These reclassifications do not impact net loss or shareholders' equity - Certain reclassifications were made to prior period comparative figures to enhance comparability, without changing net loss or shareholders' equity[126](index=126&type=chunk)

Core Viewpoint - OrganiGram reported a quarterly loss of $0.05 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.03, marking a significant earnings surprise of -66.67% [1][2] Financial Performance - OrganiGram's revenues for the quarter ended March 2025 were $45.69 million, exceeding the Zacks Consensus Estimate by 8.09% and showing a year-over-year increase from $27.91 million [2] - Over the last four quarters, the company has surpassed consensus revenue estimates three times [2] Stock Performance and Outlook - OrganiGram shares have declined approximately 26.7% since the beginning of the year, contrasting with the S&P 500's decline of -3.8% [3] - The company's earnings outlook is currently unfavorable, leading to a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Future Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $45.73 million, and for the current fiscal year, it is -$0.16 on revenues of $166.74 million [7] Industry Context - The Medical - Products industry, to which OrganiGram belongs, is currently ranked in the bottom 33% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

Company Performance - OrganiGram reported a quarterly loss of $0.13 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.03, representing an earnings surprise of -333.33% [1] - The company posted revenues of $29.76 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 29.59%, compared to revenues of $27.91 million a year ago [2] - Over the last four quarters, OrganiGram has surpassed consensus EPS estimates only once and has topped consensus revenue estimates two times [2] Stock Outlook - OrganiGram shares have declined approximately 26.7% since the beginning of the year, while the S&P 500 has decreased by -3.8% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $45.73 million, and for the current fiscal year, it is -$0.16 on revenues of $166.74 million [7] - The estimate revisions trend for OrganiGram is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Medical - Products industry, to which OrganiGram belongs, is currently in the bottom 33% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact OrganiGram's stock performance [5]

[Introduction](index=2&type=section&id=INTRODUCTION) This section provides an overview of the report and the financial standards used, including IFRS and Non-IFRS Measures, and their intended use and limitations [Overview of Report and Financial Standards](index=2&type=section&id=Overview%20of%20Report%20and%20Financial%20Standards) This MD&A analyzes Organigram's Q2 Fiscal 2025 financial performance under IFRS, detailing Non-IFRS Measures and their limitations - Financial data is prepared in accordance with **International Financial Reporting Standards (IFRS)** as issued by the IASB[2](index=2&type=chunk) - The MD&A includes **Non-IFRS Measures** like **Adjusted gross margin**, **Adjusted gross margin %**, and **Adjusted EBITDA**, which management uses to evaluate operating results and performance[4](index=4&type=chunk)[8](index=8&type=chunk) - **Non-IFRS Measures** are not standardized and may not be directly comparable to those used by other companies; they should be considered as additional information, not a substitute for IFRS measures[5](index=5&type=chunk) [Cautionary Statement Regarding Forward-Looking Information](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20INFORMATION) This section outlines forward-looking information, emphasizing its inherent uncertainties and risks that could cause actual results to differ materially [Nature and Scope of Forward-Looking Information](index=3&type=section&id=Nature%20and%20Scope%20of%20Forward-Looking%20Information) This section outlines the nature of forward-looking information, including expectations about future events, operational capacities, strategic collaborations, market demand, and regulatory changes, emphasizing that such statements are not historical facts and involve inherent uncertainties and risks that could cause actual results to differ materially - Forward-looking information includes expectations regarding production capacity, facility licensing, collaboration with BAT, demand for cannabis products, and changes in legislation[10](index=10&type=chunk) - Statements are based on management's beliefs about future events, which are inherently uncertain and beyond control, and do not guarantee future performance[9](index=9&type=chunk)[11](index=11&type=chunk) - Factors that could cause actual results to differ materially include financial risks, industry competition, global events, regulatory changes, supply risks, and the ability to maintain licenses or certifications[12](index=12&type=chunk) [Cautionary Statement Regarding Certain Non-IFRS Measures](index=5&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20CERTAIN%20NON-IFRS%20MEASURES) This section defines key Non-IFRS Measures like Adjusted Gross Margin and Adjusted EBITDA, explaining their utility and reiterating they are not standardized or substitutes for IFRS results [Definitions and Utility of Non-IFRS Measures](index=5&type=section&id=Definitions%20and%20Utility%20of%20Non-IFRS%20Measures) This section defines key Non-IFRS Measures used by Organigram, including Adjusted Gross Margin and Adjusted EBITDA, explaining their calculation methodologies and why management considers them useful indicators of operating performance, reiterating that these measures are not standardized and should not be viewed in isolation from IFRS results - **Adjusted gross margin** is calculated by subtracting cost of sales before specific non-cash fair value adjustments and inventory charges, providing a normalized view of operational profitability[17](index=17&type=chunk) - **Adjusted EBITDA** is calculated as net income (loss) excluding various non-operating and non-cash items, serving as a proxy for operating cash flow and future financial performance[17](index=17&type=chunk)[18](index=18&type=chunk) - Management changed the calculation of **Adjusted EBITDA** in Q2 Fiscal 2024 to include provisions for expected credit losses, conforming prior quarters for consistency[17](index=17&type=chunk) [Business Overview](index=6&type=section&id=BUSINESS%20OVERVIEW) This section provides an overview of Organigram's business as a licensed cannabis cultivator and producer, detailing its facilities and recent entry into the U.S. hemp-derived THC beverage market [Nature of the Company's Business](index=6&type=section&id=NATURE%20OF%20THE%20COMPANY%27S%20BUSINESS) Organigram is a licensed cannabis cultivator and producer of consumer packaged goods in Canada, distributing to recreational and medical markets, and exporting internationally, operating five facilities across Canada and recently acquiring CPL to enter the U.S. hemp-derived THC beverage market - Organigram is a licensed cannabis cultivator and producer of consumer packaged goods, authorized to manufacture and distribute to Canadian recreational and medical markets, and export internationally[21](index=21&type=chunk) - The company operates five facilities across Canada: Moncton Campus, Winnipeg Facility, Lac-Supérieur Facility, Aylmer Facility, and London Facility[23](index=23&type=chunk)[26](index=26&type=chunk) - On March 31, 2025, Organigram acquired CPL, marking its commercial entry into the U.S. hemp-derived THC beverage market and fast-tracking its entry into the Canadian cannabis beverage category[23](index=23&type=chunk) [Strategy](index=6&type=section&id=STRATEGY) Organigram's corporate strategy focuses on increasing market share, driving profitability, expanding internationally, and delivering long-term shareholder value through four pillars: Innovation, Consumer Focus, Efficiency, and Market Expansion, including product development with BAT, maintaining market leadership in key categories, optimizing operations, and pursuing strategic acquisitions and international exports - Organigram's strategy is built on four pillars: **Innovation**, **Consumer Focus**, **Efficiency**, and **Market Expansion**, aiming to increase market share, drive profitability, and expand internationally[24](index=24&type=chunk)[27](index=27&type=chunk) - Innovation is driven by a **Product Development Collaboration (PDC)** with BAT, establishing a 'Centre of Excellence' (CoE) for next-generation cannabis products, with Organigram holding a worldwide, royalty-free license for developed IP[25](index=25&type=chunk) - The company holds the **1 market position** as of Q2 Fiscal 2025, with product category leadership in **SHRED**, **Hash**, **SHRED'ems**, **Monjour**, and **Boxhot**, demonstrating strong consumer appeal[28](index=28&type=chunk)[35](index=35&type=chunk) - Efficiency initiatives include three-tier cultivation, proprietary IT tracking, automation in post-harvest production, and strategic investments in facilities like Motif and Phylos for seed-based production and cost reduction[29](index=29&type=chunk)[32](index=32&type=chunk) - Market expansion is pursued through domestic acquisitions, international exports to Germany, Australia, and the UK, the 'Jupiter Pool' investment fund with BAT for international opportunities, and entry into the U.S. hemp-derived THC beverage market via CPL acquisition[34](index=34&type=chunk)[36](index=36&type=chunk) [Key Quarterly Financial and Operating Results](index=8&type=section&id=KEY%20QUARTERLY%20FINANCIAL%20AND%20OPERATING%20RESULTS) This section summarizes Organigram's Q2 Fiscal 2025 financial and operating performance, highlighting key metrics like net revenue, gross margin, and Adjusted EBITDA compared to the prior year [Summary of Q2 Fiscal 2025 Performance](index=8&type=section&id=Summary%20of%20Q2%20Fiscal%202025%20Performance) Organigram reported significant financial improvements in Q2 Fiscal 2025 compared to Q2 Fiscal 2024, with net revenue increasing by 74% to $65.6 million and Adjusted EBITDA turning positive at $4.9 million from a loss, while gross margin before fair value adjustments remained stable at 30%, Adjusted Gross Margin improved to 33%, and dried flower kilograms sold also increased by 17% Key Quarterly Financial and Operating Results (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Metric | Q2-2025 ($ thousands) | Q2-2024 ($ thousands) | Change ($ thousands) | % Change | | :----------------------------------- | :-------------------- | :-------------------- | :------------------- | :------- | | Net revenue | 65,600 | 37,628 | 27,972 | 74 % | | Cost of sales | 45,813 | 26,366 | 19,447 | 74 % | | Gross margin before fair value adjustments | 19,787 | 11,262 | 8,525 | 76 % | | Gross margin % before fair value adjustments | 30 % | 30 % | — % | — % | | Operating expenses | 26,001 | 24,747 | 1,254 | 5 % | | Adjusted EBITDA | 4,908 | (1,045) | 5,953 | nm | | Net income (loss) | 42,456 | (27,075) | 69,531 | nm | | Net cash used in operating activities | (16,585) | (13,217) | (3,368) | 25 % | | Adjusted Gross Margin | 21,921 | 11,609 | 10,312 | 89 % | | Adjusted Gross Margin % | 33 % | 31 % | 2 % | | | Kilograms harvested - dried flower | 21,133 | 20,962 | 171 | 1 % | | Kilograms sold - dried flower | 19,701 | 16,811 | 2,890 | 17 % | [Revenue](index=8&type=section&id=REVENUE) Net revenue for Q2 Fiscal 2025 increased by 74% year-over-year to $65.6 million, primarily driven by a significant increase in recreational cannabis revenue, boosted by contributions from Motif, and higher international sales, with the volume of dried flower sales also rising by 17% - Net revenue for Q2 Fiscal 2025 was **$65.6 million**, a **74% increase** from Q2 Fiscal 2024[39](index=39&type=chunk) - Recreational cannabis sales accounted for **87% ($56.7 million)** of net revenue, international sales for **9% ($6.1 million)**, and other revenues for **4% ($2.9 million)**[39](index=39&type=chunk) - The increase in net revenue was primarily due to a **$23.5 million increase** in recreational cannabis revenue (driven by Motif) and a **$3.9 million increase** in international sales[39](index=39&type=chunk) - Volume of flower sales increased by **17% to 19,701 kg** in Q2 Fiscal 2025, attributed to large format value products, increased international sales, and higher infused pre-roll sales[40](index=40&type=chunk) [Cost of Sales](index=8&type=section&id=COST%20OF%20SALES) Cost of sales for Q2 Fiscal 2025 increased to $45.8 million, mirroring the 74% rise in net revenue, and includes $0.5 million in inventory provisions for unsaleable items - Cost of sales increased to **$45.8 million** in Q2 Fiscal 2025 from **$26.4 million** in Q2 Fiscal 2024, a **74% increase**, primarily due to the corresponding increase in net revenue[41](index=41&type=chunk) - Included in Q2 Fiscal 2025 cost of sales are **$0.5 million** of inventory provisions for unsaleable inventories, compared to **$0.3 million** in Q2 Fiscal 2024[41](index=41&type=chunk) [Gross Margin Before Fair Value Adjustments and Adjusted Gross Margin](index=8&type=section&id=GROSS%20MARGIN%20BEFORE%20FAIR%20VALUE%20ADJUSTMENTS%20AND%20ADJUSTED%20GROSS%20MARGIN) Gross margin before fair value adjustments for Q2 Fiscal 2025 was $19.8 million, maintaining a 30% margin, while Adjusted gross margin improved to $21.9 million, or 33% of net revenue, up from 31% in the prior year, driven by higher sales volumes and lower per-unit costs, with Organigram's standalone margin (excluding Motif) at 37% - Gross margin before fair value adjustments for Q2 Fiscal 2025 was **$19.8 million**, or **30% of net revenue**, consistent with Q2 Fiscal 2024[42](index=42&type=chunk) - Adjusted gross margin for Q2 Fiscal 2025 was **$21.9 million**, or **33% of net revenue**, an increase from **31%** in Q2 Fiscal 2024[43](index=43&type=chunk) - The improvement in adjusted gross margin was largely due to higher overall sales volumes and a lower cost of sales per unit[43](index=43&type=chunk) - Organigram's standalone adjusted gross margin, excluding Motif, was **37%** in Q2 Fiscal 2025[43](index=43&type=chunk) [Operating Expenses](index=9&type=section&id=OPERATING%20EXPENSES) Total operating expenses increased by 5% to $26.0 million in Q2 Fiscal 2025, with sales and marketing expenses rising by 39% due to increased trade investment, while general and administrative and R&D costs remained flat, and share-based compensation decreased by 53% due to the timing of equity award vesting Operating Expenses (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Expense Category | Q2-2025 ($ thousands) | Q2-2024 ($ thousands) | Change ($ thousands) | % Change | | :----------------------- | :-------------------- | :-------------------- | :------------------- | :------- | | General and administrative | 14,967 | 14,929 | 38 | nm | | Sales and marketing | 7,523 | 5,403 | 2,120 | 39 % | | Research & development | 2,662 | 2,606 | 56 | nm | | Share-based compensation | 849 | 1,809 | (960) | (53)% | | **Total operating expenses** | **26,001** | **24,747** | **1,254** | **5 %** | - Sales and marketing expenses increased by **39% to $7.5 million**, but decreased as a percentage of net revenue from **14% to 11%**[46](index=46&type=chunk) - Share-based compensation decreased by **53% to $0.8 million**, primarily due to the timing of equity award vesting, with no new awards granted in Q2 Fiscal 2025[48](index=48&type=chunk) [Other (Income) / Expenses](index=10&type=section&id=OTHER%20(INCOME)%20/%20EXPENSES) Other (income)/expenses shifted significantly from an expense of $12.0 million in Q2 Fiscal 2024 to an income of $49.9 million in Q2 Fiscal 2025, primarily driven by a substantial gain from changes in the fair value of derivative liabilities, preferred shares, and other financial assets, as well as a gain from contingent consideration revaluation Other (Income)/Expenses (Q2 Fiscal 2025 vs. Q2 Fiscal 2024) | Item | Q2-2025 ($ thousands) | Q2-2024 ($ thousands) | Change ($ thousands) | % Change | | :---------------------------------------------------- | :-------------------- | :-------------------- | :------------------- | :------- | | Investment income, net of financing costs | (179) | (650) | (471) | (72)% | | Acquisition and transaction costs | 974 | (170) | (1,144) | nm | | Change in fair value of contingent consideration | (3,899) | — | 3,899 | (100)% | | Change in fair value of derivative liabilities, preferred shares and other financial assets | (47,155) | 12,529 | 59,684 | nm | | **Total other (income)/expenses** | **(49,933)** | **11,958** | **(61,891)** | **(518)%** | - A gain of **$47.2 million** was recognized from the change in fair value of derivative liabilities, preferred shares, and other financial assets in Q2 Fiscal 2025, compared to a **$12.5 million loss** in Q2 Fiscal 2024[54](index=54&type=chunk) - A gain of **$3.9 million** was recorded from the revaluation of contingent consideration related to the Motif acquisition in Q2 Fiscal 2025[53](index=53&type=chunk) - Acquisition and transaction costs increased to **$1.0 million**, primarily due to costs associated with the Motif and CPL acquisitions[51](index=51&type=chunk) [Adjusted EBITDA](index=10&type=section&id=ADJUSTED%20EBITDA) Adjusted EBITDA significantly improved to a positive $4.9 million in Q2 Fiscal 2025, a $6.0 million increase from a loss of $1.0 million in Q2 Fiscal 2024, with this turnaround primarily driven by higher net flower revenue, increased international sales, and improved adjusted gross margins - Adjusted EBITDA was **$4.9 million** in Q2 Fiscal 2025, compared to a loss of **$1.0 million** in Q2 Fiscal 2024, representing a **$6.0 million increase**[55](index=55&type=chunk) - The increase in Adjusted EBITDA is primarily attributed to higher net flower revenue, increased international sales, and improved adjusted gross margins[55](index=55&type=chunk) [Net Income (Loss)](index=10&type=section&id=NET%20INCOME%20(LOSS)) Organigram achieved a net income of $42.5 million in Q2 Fiscal 2025, a substantial improvement from a net loss of $27.1 million in Q2 Fiscal 2024, with this positive shift mainly due to higher adjusted gross margins and significant fair value gains on derivative liabilities, contingent considerations, preferred shares, and other financial assets - Net income for Q2 Fiscal 2025 was **$42.5 million**, a significant improvement from a net loss of **$27.1 million** in Q2 Fiscal 2024[55](index=55&type=chunk) - The increase in net income is primarily due to higher adjusted gross margins and higher fair value gains on derivative liabilities, contingent considerations, preferred shares, and other financial assets[55](index=55&type=chunk) [Key Developments During the Quarter and Subsequent to March 31, 2025](index=10&type=section&id=KEY%20DEVELOPMENTS%20DURING%20THE%20QUARTER%20AND%20SUBSEQUENT%20TO%20MARCH%2031%2C%202025) This section outlines key strategic investments and corporate actions, including the final BAT Investment tranche, company rebranding, and the CPL acquisition for U.S. hemp-derived THC beverage market entry [Strategic Investments and Corporate Actions](index=10&type=section&id=Strategic%20Investments%20and%20Corporate%20Actions) Organigram completed the final tranche of the $124.6 million Follow-on BAT Investment in February 2025, securing approximately $41.5 million, rebranded to Organigram Global Inc., and entered the U.S. and Canadian beverage categories through the acquisition of CPL in April 2025, with CPL beverages already available in multiple states and provinces - In February 2025, Organigram closed the third and final tranche of the **$124.6 million Follow-on BAT Investment**, receiving approximately **$41.5 million**[56](index=56&type=chunk) - In March 2025, shareholders approved the company's name change and rebranding to **Organigram Global Inc.**, reflecting its market leadership and international presence[57](index=57&type=chunk) - In April 2025, Organigram acquired CPL for an upfront consideration of approximately **$6.2 million**, entering the U.S. hemp-derived THC beverage market and the Canadian cannabis beverage category[58](index=58&type=chunk) - CPL beverages are currently available in **six Canadian provinces** and **10 U.S. states**, with further expansion planned by the end of calendar 2025[58](index=58&type=chunk) [Discussion of Operations](index=10&type=section&id=DISCUSSION%20OF%20OPERATIONS) This section details Organigram's operational facilities, production capabilities, and ongoing research and product development initiatives, including the Centre of Excellence collaboration with BAT [Operational Facilities and Production Capabilities](index=10&type=section&id=Operational%20Facilities%20and%20Production%20Capabilities) Organigram operates five key facilities, each specialized for different aspects of cannabis production, with the Moncton Campus harvesting 21,133 kg of dried flower in Q2 Fiscal 2025, the Winnipeg Facility producing over 4 million gummies monthly, Lac-Supérieur focusing on craft flower and hash, the Aylmer Facility handling advanced extraction and pre-roll production, and the London Facility serving as a centralized distribution hub - Moncton Campus, the flagship facility, harvested **21,133 kg of dried flower** in Q2 Fiscal 2025, equipped for in-house extraction, testing, and automated production[59](index=59&type=chunk)[61](index=61&type=chunk) - Winnipeg Facility is highly automated, capable of producing over **4 million gummies monthly**, including products utilizing nanoemulsion technology[62](index=62&type=chunk) - Lac-Supérieur Facility produces **2,400 kg of flower** and over **2 million packaged units of hash annually**, including SHRED X Rip Strip Hash[63](index=63&type=chunk) - Aylmer Facility has advanced extraction capabilities (hydrocarbon and CO2) and an estimated monthly production capacity of **1,200 kg of distillate**, **600 kg of hydrocarbon extract**, and **1.6 million pre-rolls**[64](index=64&type=chunk) - London Facility is a centralized warehouse and distribution hub in Ontario, aimed at optimizing fulfillment and reducing logistics costs[65](index=65&type=chunk) [Research and Product Development](index=11&type=section&id=RESEARCH%20AND%20PRODUCT%20DEVELOPMENT) Organigram emphasizes product innovation through R&D, including a collaboration with BAT at the Centre of Excellence (CoE) for next-generation cannabis products and fundamental science, which has developed nanoemulsion technology, clinically validated for faster onset in edibles, and is exploring minor cannabinoids and novel formulations, while plant science R&D focuses on unique, high-terpene, and high-THC cultivars, supported by a collaboration with Phylos - The **Centre of Excellence (CoE)**, a collaboration with BAT, focuses on R&D for next-generation cannabis products and fundamental cannabis science, with costs funded equally by Organigram and BAT[67](index=67&type=chunk) - The CoE's BioLab conducts advanced plant science research, leading to the introduction of minor cannabinoids into the product portfolio and the development of emulsions, vapor formulations, and flavor innovations[68](index=68&type=chunk) - A pharmacokinetics (PK) study validated **nanoemulsion technology (FAST™)**, enabling the commercial launch of Edison Sonics gummies with faster onset and higher peak cannabinoid levels, with plans to extend to beverages[69](index=69&type=chunk) - Plant science R&D in Moncton focuses on developing unique, high-terpene, and high-THC cultivars, leveraging the BioLab for quality, potency, and disease-resistance marker discovery, supported by Phylos collaboration[70](index=70&type=chunk) [Outlook](index=11&type=section&id=OUTLOOK) This section provides Organigram's market outlook, including projected cannabis sales, international export growth, and the rapidly expanding U.S. hemp-derived beverage market, alongside business strategy and industry trends [Market Size](index=11&type=section&id=Market%20Size) Organigram maintains a positive outlook on the cannabis market, projecting Canada-wide legal sales to reach $5.3 billion by 2028, with Canadian cannabis exports significantly growing to $218 million in 2024, driven by global reform and the pursuit of higher margins, and the company also entered the rapidly growing U.S. hemp-derived beverage market, projected to reach $4 billion by 2028 - Canada-wide legal cannabis sales are expected to total **$5.3 billion** in calendar 2028[72](index=72&type=chunk) - Canada's cannabis exports increased from **$8 million** in 2020 to approximately **$218 million** in 2024, driven by global cannabis reform and the pursuit of higher margins[72](index=72&type=chunk) - The U.S. hemp-derived beverages market is experiencing rapid growth, generating over **$1 billion** in retail sales and projected to reach **$4 billion** by 2028[73](index=73&type=chunk) [Business Outlook](index=12&type=section&id=Business%20Outlook) Organigram anticipates revenue growth from innovative products, particularly FAST™ nanoemulsion technology in gummies and future beverages, offering a competitive edge, with international sales expected to increase, supported by investments in Sanity Group and anticipated EU-GMP certification, and the company targets an average adjusted gross margin of 35% for Fiscal 2025, aiming for 40% in H2 Fiscal 2026, along with positive full-year Adjusted EBITDA and cash flow from operations - Organigram expects revenue growth from innovative products, especially through the commercialization of **FAST™ nanoemulsion technology** in Edison Sonics gummies, which offer faster onset and higher cannabinoid concentration[74](index=74&type=chunk) - International sales are projected to increase throughout Fiscal 2025, driven by diversified supply partners, investment in Germany's Sanity Group, and anticipated **EU-GMP certification** for the Moncton Campus[74](index=74&type=chunk) - The company expects adjusted gross margin to average approximately **35% for Fiscal 2025**, targeting **40% in the second half of Fiscal 2026**[75](index=75&type=chunk) - Organigram anticipates **positive full-year Fiscal 2025 Adjusted EBITDA**, surpassing Fiscal 2024 levels, and **positive cash flow from operations** before working capital changes[75](index=75&type=chunk) - Margin improvement opportunities include increased sales of higher-margin ready-to-consume products, growth in high-margin international sales (especially Germany), and continued operational efficiencies from Motif integration and seed-based production[77](index=77&type=chunk) [Industry Trends](index=13&type=section&id=Industry%20Trends) The cannabis industry remains highly competitive but is seeing stabilizing supply-demand dynamics due to consolidation and international market diversion, with consumer preferences favoring large-format value products, high THC potency, and innovation in formats like infused pre-rolls, vapes, and beverages, while regulatory scrutiny on THC potency labeling is increasing, pushing for greater transparency, and Organigram holds strong market positions in flower, pre-rolls, hash, and vapes, and is expanding into beverages - The cannabis industry is highly competitive, but supply and demand dynamics are stabilizing due to industry consolidation and diversion of surplus cultivation to international markets[78](index=78&type=chunk) - Consumer preferences show sustained demand for large-format value products, higher THC potency (especially in dried flower), and innovation in formats like infused pre-rolls, vapes, beverages, and edibles[78](index=78&type=chunk) - Regulatory efforts are intensifying to address inflated THC potency labeling, with initiatives from CSAC, Health Canada, and OCS to establish consistent testing protocols and verify potency claims[79](index=79&type=chunk) - Organigram holds the **3 market share in the flower category**, **2 in infused pre-rolls**, **1 in all pre-rolls**, **1 in hash**, and **3 in the gummy category** as of March 31, 2025[80](index=80&type=chunk)[81](index=81&type=chunk) - Through the Motif acquisition, Organigram leads in the vape category and is leveraging Greentank technology, while the CPL acquisition has given Organigram **5.6% of the Canadian beverage category** and entry into the U.S. hemp-derived THC beverage market[82](index=82&type=chunk)[84](index=84&type=chunk) [International Market](index=14&type=section&id=International%20Market) Organigram serves international medical supply customers in Australia, Germany, and the UK, with a strategic investment in Germany's Sanity Group to establish a foothold in the European market, and has submitted its EU-GMP certification application for its Moncton Campus, while the $124.6 million Follow-on BAT Investment includes $83 million earmarked for the 'Jupiter Pool' investment fund for future international expansion - Organigram serves international medical supply customers in Australia, Germany, and the UK, with a strategic investment in Germany's Sanity Group to establish a foothold in the European market[86](index=86&type=chunk) - The company submitted its **EU-GMP certification application** for its Moncton Campus in Q1 Fiscal 2024, completed the audit in November 2024, and is awaiting final certification[87](index=87&type=chunk) - The **$124.6 million Follow-on BAT Investment** includes **$83 million** earmarked for the 'Jupiter Pool' investment fund, with approximately **$23 million** already deployed into OBX and Sanity Group, and **$59 million** remaining for future international expansion[88](index=88&type=chunk)[89](index=89&type=chunk) [Financial Results and Review of Operations](index=15&type=section&id=FINANCIAL%20RESULTS%20AND%20REVIEW%20OF%20OPERATIONS) This section provides a detailed review of Organigram's financial results for the six months ended March 31, 2025, covering net revenue, gross margin, operating expenses, and net income, with a cautionary note on Non-IFRS Measures [Cautionary Note Regarding Non-IFRS Financial Measures](index=15&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20NON-IFRS%20FINANCIAL%20MEASURES) This section reiterates the cautionary statement regarding Non-IFRS Measures like Adjusted EBITDA and adjusted gross margin, emphasizing that these are not IFRS-compliant, may not be comparable across companies, and should be used as supplementary information, not as substitutes for IFRS measures - **Non-IFRS Measures** (Adjusted EBITDA, adjusted gross margin) are not calculated in accordance with IFRS and may not be comparable to similar data from other companies[91](index=91&type=chunk) - These measures are intended to provide additional information and should not be considered in isolation or as a substitute for IFRS performance measures[91](index=91&type=chunk) [Financial Highlights (Six Months Ended March 31, 2025 vs. 2024)](index=15&type=section&id=FINANCIAL%20HIGHLIGHTS) For the six months ended March 31, 2025, Organigram reported a significant increase in net revenue by 46% to $108.3 million and a turnaround to net income of $19.5 million from a loss, with Adjusted Gross Margin improving to 32%, Adjusted EBITDA turning positive at $6.3 million, and total assets growing by 62% to $537.9 million Financial Highlights (Six Months Ended March 31, 2025 vs. 2024) | Financial Results | 2025 ($ thousands) | 2024 ($ thousands) | $ Change | % Change | | :------------------------------------ | :----------------- | :----------------- | :------- | :------- | | Gross revenue | 169,569 | 113,695 | 55,874 | 49 % | | Net revenue | 108,330 | 74,083 | 34,247 | 46 % | | Cost of sales | 74,428 | 53,310 | 21,118 | 40 % | | Gross margin before fair value adjustments | 33,902 | 20,773 | 13,129 | 63 % | | Gross margin % before fair value adjustments | 31 % | 28 % | 3 % | | | Gross margin | 32,232 | 16,300 | 15,932 | 98 % | | Operating expenses | 46,616 | 46,786 | (170) | nm | | Net income (loss) | 19,499 | (42,825) | 62,324 | nm | | Net earnings (loss) per common share, basic | 0.161 | (0.497) | 0.658 | nm | | Net cash used in operating activities | (20,765) | (1,291) | 19,474 | 1,508 % | | Adjusted Gross Margin | 34,614 | 22,805 | 11,809 | 52 % | | Adjusted Gross Margin % | 32 % | 31 % | 1 % | | | Adjusted EBITDA | 6,318 | (909) | 7,227 | nm | | **Financial Position** | | | | | | Working capital | 182,879 | 138,228 | 44,651 | 32 % | | Inventory and biological assets | 115,049 | 83,264 | 31,785 | 38 % | | Total assets | 537,903 | 331,778 | 206,125 | 62 % | | Non-current financial liabilities | 43,266 | 34,439 | 8,827 | 26 % | [Net Revenue](index=16&type=section&id=NET%20REVENUE) For the six months ended March 31, 2025, net revenue increased by 46% to $108.3 million, primarily due to higher international and recreational cannabis sales, including contributions from the Motif acquisition, with the average selling price of recreational flower also increasing to $1.72 per gram, reflecting a more balanced supply and demand - Net revenue for the six months ended March 31, 2025, was **$108.3 million**, a **46% increase** from **$74.1 million** in the comparative period[96](index=96&type=chunk) - The increase was primarily driven by higher international revenue, recreational revenue, and contributions from Motif's sales post-acquisition[96](index=96&type=chunk) - The average selling price (ASP) of recreational flower increased to **$1.72 per gram** from **$1.65 per gram**, indicating a more balanced supply and demand dynamic[97](index=97&type=chunk) - Sales volumes of all flower in grams increased by **17% to 36,961 kg**, primarily due to increased adult-use recreational and international sales[98](index=98&type=chunk) [Revenue Composition](index=16&type=section&id=REVENUE%20COMPOSITION) For the six months ended March 31, 2025, recreational flower remained the largest revenue category at $46.4 million, while recreational vapes saw a substantial increase to $22.5 million, and international flower and oil sales nearly tripled to $9.4 million, with recreational edibles and ingestible extracts/oil experiencing declines Net Revenue Composition by Product Category (Six Months Ended March 31, 2025 vs. 2024) | Product Category | 2025 ($ thousands) | 2024 ($ thousands) | | :------------------------------------ | :----------------- | :----------------- | | Recreational Flower, net of excise duty | 46,402 | 39,401 | | Recreational Vapes, net of excise duty | 22,488 | 1,832 | | Recreational Hash, net of excise duty | 5,622 | 5,694 | | Recreational Infused Pre-rolls, net of excise duty | 9,905 | 5,794 | | Recreational Edibles, net of excise duty | 10,453 | 11,398 | | Recreational Ingestible Extracts and Oil, net of excise duty | 348 | 3,426 | | Medical, net of excise duty | 1,206 | 894 | | International Flower and Oil | 9,399 | 3,209 | | Wholesale and Other | 2,507 | 2,435 | | **Total Net Revenue** | **108,330** | **74,083** | - Recreational Vapes revenue saw a significant increase from **$1.8 million** in 2024 to **$22.5 million** in 2025[99](index=99&type=chunk) - International Flower and Oil revenue nearly tripled from **$3.2 million to $9.4 million**[99](index=99&type=chunk) [Cost of Sales and Gross Margin](index=17&type=section&id=COST%20OF%20SALES%20AND%20GROSS%20MARGIN) Gross margin for the six months ended March 31, 2025, nearly doubled to $32.2 million, driven by higher recreational cannabis and international sales, lower cultivation costs, and increased unrealized gains on biological assets, however, Motif's sales contributed lower margins post-acquisition, and the adjusted gross margin for Q2 Fiscal 2025 was 33%, with Organigram's standalone margin at 37% - Gross margin for the six months ended March 31, 2025, was **$32.2 million**, a **98% increase** from **$16.3 million** in the comparative period[100](index=100&type=chunk) - Key factors impacting gross margin include higher recreational cannabis revenue, increased international sales, lower cultivation and post-harvest costs, and higher unrealized gains on biological assets[100](index=100&type=chunk) - Unrealized gain on changes in the fair value of biological assets was **$25.6 million** for the six months ended March 31, 2025, up from **$18.5 million**[101](index=101&type=chunk) - Adjusted gross margin for Q2 Fiscal 2025 was **33%**, reflecting Motif's margin before full synergy realization, while Organigram's standalone margin was **37%**[105](index=105&type=chunk) [Operating Expenses](index=17&type=section&id=OPERATING%20EXPENSES) Total operating expenses for the six months ended March 31, 2025, remained flat at $46.6 million, with sales and marketing expenses increasing by 33% due to higher trade investments, while R&D costs decreased by 29% due to reduced activity under the BAT PDC Agreement and Motif acquisition synergies, and share-based compensation also decreased by 41% due to fewer immediate vesting equity awards Operating Expenses (Six Months Ended March 31, 2025 vs. 2024) | Expense Category | 2025 ($ thousands) | 2024 ($ thousands) | Change ($ thousands) | % Change | | :----------------------- | :----------------- | :----------------- | :------- | :------- | | General and administrative | 26,200 | 26,206 | (6) | nm | | Sales and marketing | 13,327 | 9,998 | 3,329 | 33 % | | Research and development | 5,031 | 7,073 | (2,042) | (29)% | | Share-based compensation | 2,058 | 3,509 | (1,451) | (41)% | | **Total operating expenses** | **46,616** | **46,786** | **(170)** | **nm** | - Sales and marketing expenses increased by **33% to $13.3 million**, driven by higher trade investments with retail partners[108](index=108&type=chunk) - R&D costs decreased by **29% to $5.0 million**, primarily due to reduced activity under the PDC Agreement with BAT and headcount reductions from Motif acquisition synergies[109](index=109&type=chunk) - Share-based compensation expense decreased by **41% to $2.1 million**, mainly due to the absence of immediate vesting equity awards granted in the prior period[110](index=110&type=chunk) [Other (Income) Expenses](index=18&type=section&id=OTHER%20(INCOME)%20EXPENSES) Other (income)/expenses shifted from a $12.4 million expense in the prior six-month period to a $33.8 million income for the six months ended March 31, 2025, with this significant change primarily driven by a substantial fair value gain on derivative liabilities, preferred shares, and other financial assets, despite increased acquisition and transaction costs Other (Income)/Expenses (Six Months Ended March 31, 2025 vs. 2024) | Item | 2025 ($ thousands) | 2024 ($ thousands) | Change ($ thousands) | % Change | | :---------------------------------------------------- | :----------------- | :----------------- | :------- | :------- | | Investment income, net of financing costs | (1,004) | (1,172) | (168) | (14)% | | Acquisition and transaction costs | 5,478 | 420 | 5,058 | 1,204 % | | Change in fair value of contingent consideration | (3,899) | (50) | 3,849 | 7,698 % | | Change in fair value of derivative liabilities, preferred shares and other financial assets | (32,660) | 12,985 | 45,645 | nm | | **Total other (income)/expenses** | **(33,777)** | **12,369** | **(46,146)** | **nm** | - A fair value gain of **$32.7 million** was recognized on derivative liabilities, preferred shares, and other financial assets, a significant improvement from a **$13.0 million loss** in the prior period[116](index=116&type=chunk) - Acquisition and transaction costs increased substantially to **$5.5 million**, mainly due to due diligence, regulatory filings, and integration expenses for the Motif and CPL acquisitions[115](index=115&type=chunk) [Net Income](index=18&type=section&id=NET%20INCOME) Organigram reported a net income of $19.5 million for the six months ended March 31, 2025, a significant turnaround from a net loss of $42.8 million in the prior year, with this primarily driven by higher gross margins and substantial fair value gains on derivative liabilities, preferred shares, and other financial assets - Net income for the six months ended March 31, 2025, was **$19.5 million ($0.161 per Common Share basic)**, compared to a net loss of **$42.8 million ($0.497 per Common Share basic and diluted)** in the comparative period[117](index=117&type=chunk) - The increase in net income is primarily attributable to higher gross margins and higher fair value gains recognized on Top-Up-Rights, preferred shares, share warrants, and other financial assets[117](index=117&type=chunk) [Summary of Quarterly Results](index=19&type=section&id=SUMMARY%20OF%20QUARTERLY%20RESULTS) This section summarizes Organigram's quarterly financial and operational trends, including net revenue, net income, and Adjusted EBITDA, highlighting fluctuations and key drivers over the past eight quarters [Quarterly Financial and Operational Trends](index=19&type=section&id=Quarterly%20Financial%20and%20Operational%20Trends) Organigram's net revenue showed fluctuations, with Q2 Fiscal 2025 reaching the highest level in eight quarters at $65.6 million, driven by record international sales and increased recreational revenue, while net income also saw a significant positive shift to $42.5 million in Q2 Fiscal 2025, primarily due to higher gross margins and fair value gains on financial instruments, contrasting with prior quarters' losses Summary of Quarterly Financial and Operational Results | Metric | Q3-F23 | Q4-F23 | Q1-F24 | Q2-F24 | Q3-F24 | Q4-F24 | Q1-F25 | Q2-F25 | | :------------------------------------ | :----- | :----- | :----- | :----- | :----- | :----- | :----- | :----- | | Recreational cannabis revenue (net of excise) ($ thousands) | 29,202 | 44,596 | 34,425 | 33,118 | 36,467 | 38,839 | 38,558 | 56,658 | | Medical, international, wholesale and other revenue ($ thousands) | 3,583 | 1,444 | 2,030 | 4,510 | 4,593 | 5,859 | 4,172 | 8,942 | | Net revenue ($ thousands) | 32,785 | 46,040 | 36,455 | 37,628 | 41,060 | 44,698 | 42,730 | 65,600 | | Net income (loss) ($ thousands) | (213,451) | (32,991) | (15,750) | (27,075) | 2,818 | (5,433) | (22,957) | 42,456 | | Net earning (loss) per common share, basic ($) | (2.708) | (0.420) | (0.194) | (0.297) | 0.027 | (0.050) | (0.202) | 0.329 | | Harvest (kg) - dried flower | 18,604 | 28,071 | 19,946 | 20,962 | 21,420 | 23,323 | 21,087 | 21,133 | | Employee headcount () | 923 | 935 | 984 | 987 | 914 | 875 | 1,241 | 1,150 | - Net revenue in Q2 Fiscal 2025 reached its **highest level** in the preceding eight quarters, driven by record international sales and increased recreational net revenue[119](index=119&type=chunk) - Net income in Q2 Fiscal 2025 was **$42.5 million**, a significant increase from a net loss of **$22.9 million** in Q1 Fiscal 2025, primarily due to higher gross margins and fair value gains on derivative liabilities and other financial assets[120](index=120&type=chunk) [Adjusted EBITDA](index=21&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA showed a positive trend, reaching $4.9 million in Q2 Fiscal 2025, up from $1.4 million in Q1 Fiscal 2025 and a loss in Q2 Fiscal 2024, with this improvement primarily due to higher international sales and improved adjusted gross margins, following periods of losses and fluctuations Adjusted EBITDA Reconciliation (Quarterly) | Metric | Q3-F23 | Q4-F23 | Q1-F24 | Q2-F24 | Q3-F24 | Q4-F24 | Q1-F25 | Q2-F25 | | :------------------------------------ | :----- | :----- | :----- | :----- | :----- | :----- | :----- | :----- | | Net (loss) income as reported ($ thousands) | (213,451) | (32,991) | (15,750) | (27,075) | 2,818 | (5,433) | (22,957) | 42,456 | | Adjusted EBITDA ($ thousands) | (2,914) | (1,890) | 136 | (1,045) | 3,465 | 5,860 | 1,410 | 4,908 | | Adjusted EBITDA Margin % | (9)% | (4)% | — % | (3)% | 8 % | 13 % | 3 % | 7 % | - Adjusted EBITDA increased to **$4.9 million** in Q2 Fiscal 2025, driven by higher international sales and improved adjusted gross margins[126](index=126&type=chunk) - The company returned to a positive Adjusted EBITDA position in Q1 Fiscal 2024 due to higher adjusted gross margin from lower cultivation costs and Edison Jolts sales[126](index=126&type=chunk) [Balance Sheet, Liquidity and Capital Resources](index=21&type=section&id=BALANCE%20SHEET%2C%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section reviews Organigram's financial position, including cash flows, working capital, and total assets as of March 31, 2025, highlighting changes due to acquisitions and financing activities [Financial Position and Cash Flows](index=21&type=section&id=Financial%20Position%20and%20Cash%20Flows) As of March 31, 2025, Organigram's total cash decreased to $83.4 million, primarily due to $64.9 million in cash payments for the Motif and CPL acquisitions, while total assets increased by 32% to $537.9 million, and working capital decreased by 12%, with cash used in operating activities increasing significantly, mainly due to working capital investments for anticipated business requirements Selected Balance Sheet Highlights (March 31, 2025 vs. September 30, 2024) | Metric | March 31, 2025 ($ thousands) | September 30, 2024 ($ thousands) | % Change | | :------------------------------------ | :--------------------------- | :----------------------------- | :------- | | Cash, restricted cash and short-term investments | 83,373 | 133,426 | (38)% | | Inventories | 101,341 | 67,351 | 50 % | | Working capital | 182,879 | 208,897 | (12)% | | Total assets | 537,903 | 407,860 | 32 % | | Total current and long-term debt | 55 | 85 | (35)% | | Non-current financial liabilities | 43,266 | 34,439 | 26 % | | Total shareholders' equity | 390,566 | 305,989 | 28 % | - Total cash (including restricted cash and short-term investments) decreased by **38% to $83.4 million**, primarily due to a **$64.9 million cash payment** for the Motif and CPL acquisitions[128](index=128&type=chunk) - Cash used in operating activities after working capital changes increased to **$16.6 million** for the three months and **$20.8 million** for the six months ended March 31, 2025, mainly due to incremental working capital investments[132](index=132&type=chunk) - Cash provided by financing activities was **$40.7 million** for the three months and **$40.5 million** for the six months, primarily from the Follow-on BAT Investment[133](index=133&type=chunk) - Cash used in investing activities increased significantly to **$71.9 million** for the six months, mainly due to **$59.2 million** in cash consideration for subsidiary acquisitions[134](index=134&type=chunk) [Off Balance Sheet Arrangements](index=22&type=section&id=OFF%20BALANCE%20SHEET%20ARRANGEMENTS) This section confirms the absence of any off-balance sheet arrangements for Organigram during the three and six months ended March 31, 2025 [Absence of Off-Balance Sheet Arrangements](index=22&type=section&id=Absence%20of%20Off-Balance%20Sheet%20Arrangements) Organigram reported no off-balance sheet arrangements during the three and six months ended March 31, 2025 - There were no off-balance sheet arrangements during the three and six months ended March 31, 2025[135](index=135&type=chunk) [Related Party Transactions](index=22&type=section&id=RELATED%20PARTY%20TRANSACTIONS) This section details Organigram's related party transactions, including key management compensation and significant transactions with associates like BAT under the Product Development Collaboration Agreement [Management and Board Compensation](index=22&type=section&id=MANAGEMENT%20AND%20BOARD%20COMPENSATION) Total key management compensation decreased for both the three and six months ended March 31, 2025, primarily due to a reduction in share-based compensation as fewer equity awards were granted compared to the prior year Key Management and Board of Directors Compensation | Compensation Type | Three Months Ended March 31, 2025 ($ thousands) | Three Months Ended March 31, 2024 ($ thousands) | Six Months Ended March 31, 2025 ($ thousands) | Six Months Ended March 31, 2024 ($ thousands) | | :------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Salaries and bonus | 1,324 | 1,479 | 2,626 | 3,050 | | Share-based compensation | 646 | 1,450 | 1,421 | 2,387 | | **Total key management compensation** | **1,970** | **2,929** | **4,047** | **5,437** | - Share-based compensation for key management decreased significantly, with no stock options, RSUs, or PSUs granted in the three months ended March 31, 2025, compared to the prior year[137](index=137&type=chunk) [Significant Transactions with Associates and Joint Operations](index=23&type=section&id=SIGNIFICANT%20TRANSACTIONS%20WITH%20ASSOCIATES%20AND%20JOINT%20OPERATIONS) Organigram engages in transactions with related parties, including BAT under the Product Development Collaboration (PDC) Agreement, with both companies contributing equally to the Centre of Excellence (CoE), and Organigram's direct expenses for the CoE decreasing in the current period, while the final tranche of the $124.6 million Follow-on BAT Investment was closed in February 2025, resulting in the issuance of Common and Preferred Shares to BAT - Under the PDC Agreement with BAT, Organigram incurred **$1.5 million** (three months) and **$2.9 million** (six months) in direct expenses for the Centre of Excellence (CoE) in 2025, a decrease from 2024[140](index=140&type=chunk) - The balance receivable from BAT as at March 31, 2025, was **$2.0 million**[141](index=141&type=chunk) - In February 2025, Organigram closed the third and final tranche of the **$124.6 million Follow-on BAT Investment**, issuing **7,562,447 Common Shares** and **5,330,728 Preferred Shares** to BAT[142](index=142&type=chunk) [Fair Value Measurements](index=23&type=section&id=FAIR%20VALUE%20MEASUREMENTS) This section explains Organigram's fair value measurements for financial instruments and biological assets, detailing the three-level hierarchy and unobservable inputs used for valuation models [(i) Financial Instruments](index=23&type=section&id=(i)%20Financial%20Instruments) Organigram classifies financial instruments at fair value using a three-level hierarchy, with many key valuations (e.g., investments in WHC, Phylos, OBX, Sanity Group, Top-up Rights, Motif's contingent consideration, CPL contingent consideration, Preferred Shares) relying on Level 3 unobservable inputs and complex models like binomial lattice and Monte Carlo, while derivative warrant liabilities are classified as Level 1 and 2, with fair value changes recognized in the statement of operations - Fair value measurements are classified into a three-level hierarchy: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than quoted prices), and **Level 3** (unobservable inputs)[143](index=143&type=chunk)[148](index=148&type=chunk) - Investments in WHC, Phylos, OBX, Sanity Group, Top-up Rights, and contingent considerations for Motif and CPL are primarily based on **Level 3 unobservable inputs**, using models like market-based approach, Cox-Ross-Rubinstein binomial lattice, and Monte Carlo pricing[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Derivative warrant liabilities are based on **Level 1 and 2 inputs** using a Black-Scholes option pricing model, with fair value changes recognized in the statement of operations[151](index=151&type=chunk)[159](index=159&type=chunk) - The fair value of Top-up Rights for BAT was revalued to **$4.8 million** as of March 31, 2025, with a decrease in estimated fair value change of **$20.5 million** for the three months[168](index=168&type=chunk) - The commitment to issue Preferred Shares and the Preferred Shares themselves are classified as derivative liabilities and liabilities, respectively, measured at FVTPL, with fair value gains recognized in the current period[174](index=174&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) [(ii) Biological Assets](index=27&type=section&id=(ii)%20Biological%20Assets) Biological assets, consisting of cannabis plants, are measured at fair value less costs to sell up to harvest, forming the basis for finished goods inventory cost, with the fair value determined using a model that estimates harvest yield, average selling price, wastage, post-harvest costs, and stage of completion, all relying on Level 3 unobservable inputs, and as of March 31, 2025, expected yield was 28,651 kg, with an unrealized gain on fair value changes of $25.6 million - Biological assets (cannabis plants) are measured at fair value less costs to sell up to harvest, which then becomes the cost basis for finished goods inventories[180](index=180&type=chunk) - The fair value model uses **Level 3 unobservable inputs**: average selling price per gram (**$1.63**), expected average yield per plant (**169 grams**), wastage, post-harvest costs, and stage of completion[183](index=183&type=chunk)[184](index=184&type=chunk) - As of March 31, 2025, the expected yield from biological assets is **28,651 kg**, and an unrealized gain on changes in fair value of biological assets of **$25.6 million** was recognized[181](index=181&type=chunk)[182](index=182&type=chunk) [Outstanding Share Data](index=28&type=section&id=OUTSTANDING%20SHARE%20DATA) This section summarizes Organigram's outstanding share data, including common shares, preferred shares, options, warrants, and other securities, as of March 31, 2025, and May 7, 2025 [(i) Outstanding Shares, Warrants and Options and Other Securities](index=28&type=section&id=(i)%20Outstanding%20Shares%2C%20Warrants%20and%20Options%20and%20Other%20Securities) As of March 31, 2025, Organigram had 133.8 million Common Shares issued and outstanding, along with 13.8 million Preferred Shares, with the total fully diluted shares standing at 177.4 million, including options, warrants, Top-up Rights, RSUs, and PSUs Outstanding Shares, Warrants and Options and Other Securities | Security Type | March 31, 2025 | May 7, 2025 | | :------------------------------------ | :------------- | :---------- | | Common shares issued and outstanding | 133,835,963 | 133,883,932 | | Preferred shares | 13,794,163 | 13,794,163 | | Options | 2,621,774 | 2,595,099 | | Warrants | 4,450,500 | 4,450,500 | | Top-up Rights | 17,533,616 | 17,498,926 | | Restricted share units | 3,505,128 | 3,443,280 | | Performance share units | 1,704,931 | 1,679,640 | | **Total fully diluted shares** | **177,446,075** | **177,345,540** | - Preferred shares are eligible for conversion into Common Shares, with **13,794,163 original preferred shares** converting into one common share each, plus accretion amounts[186](index=186&type=chunk) [Critical Accounting Estimates and Judgments](index=28&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES%20AND%20JUDGMENTS) This section discusses Organigram's critical accounting estimates and judgments, noting no significant changes except for the Motif acquisition, and the non-material impact of recent IFRS amendments [Accounting Estimates and New Pronouncements](index=28&type=section&id=Accounting%20Estimates%20and%20New%20Pronouncements) The preparation of financial statements requires management to make significant judgments and estimates, which are reviewed continuously, with no changes to critical accounting estimates in Q2 Fiscal 2025, except for a new estimate related to the Motif acquisition, and recent IFRS amendments regarding liability classification (IAS 1) and lease liability in sale and leaseback (IFRS 16) did not materially impact the company, nor did amendments to IAS 7 and IFRS 7 on supplier finance arrangements - No changes in critical accounting estimates occurred during the three months ended March 31, 2025, except for a new estimate and judgment related to the Motif acquisition[189](index=189&type=chunk) - Amendments to **IAS 1 (Classification of Liabilities)** and **IFRS 16 (Lease Liability in Sale and Leaseback)** did not have a material impact on the Company's interim financial statements[191](index=191&type=chunk)[192](index=192&type=chunk) - Amendments to **IAS 7 and IFRS 7 (Supplier Finance Arrangements)** are not expected to impact the Company's consolidated financial statements[194](index=194&type=chunk) [Product Development Collaboration](index=29&type=section&id=PRODUCT%20DEVELOPMENT%20COLLABORATION) This section details Organigram's Product Development Collaboration (PDC) with BAT, outlining the joint operation for the Centre of Excellence (CoE) and equal funding contributions [BAT Product Development Collaboration](index=29&type=section&id=BAT%20Product%20Development%20Collaboration) Organigram's Product Development Collaboration (PDC) with BAT involves a joint operation for the Centre of Excellence (CoE), with both companies contributing equally to costs, and a portion of BAT's initial investment is reserved for Organigram's funding obligations, with Organigram recognizing $1.1 million and $2.1 million, respectively, in CoE expenses for the three and six months ended March 31, 2025 - The **PDC Agreement with BAT** involves a joint operation for the **Centre of Excellence (CoE)**, with costs funded equally by Organigram and BAT[195](index=195&type=chunk)[196](index=196&type=chunk) - A balance of **$7.3 million** in restricted funds related to the CoE remained as of March 31, 2025[195](index=195&type=chunk) - Organigram recognized **$1.1 million** (three months) and **$2.1 million** (six months) of CoE expenses within research and development in the interim statements of operations[196](index=196&type=chunk) [Acquisition of Subsidiaries](index=29&type=section&id=ACQUISITION%20OF%20SUBSIDIARIES) This section details Organigram's acquisitions of Motif and CPL, outlining the consideration, assets, liabilities, and goodwill, along with their strategic implications [i. Acquisition of Motif](index=29&type=section&id=i.%20Acquisition%20of%20Motif) On December 6, 2024, Organigram acquired Motif for $90 million upfront ($50 million cash, $40 million in common shares), plus potential contingent consideration of $10 million, with this acquisition aiming to leverage combined competitive advantages and generate economies of scale, and Motif contributed $42.8 million in gross revenue and $1.2 million in net income for the three months ended March 31, 2025 - Organigram acquired **100% of Motif** on December 6, 2024, for **$90 million upfront ($50 million cash, $40 million in common shares)**, plus potential contingent consideration of **$10 million**[197](index=197&type=chunk) - Motif contributed **$42.8 million in gross revenue** and **$1.2 million in net income** to consolidated results for the three months ended March 31, 2025[198](index=198&type=chunk) - The fair value of the **17,233,950 Common Shares** issued was **$39.1 million**[199](index=199&type=chunk) Provisional Recognition of Motif Assets Acquired and Liabilities Assumed | Item | Fair Value on Acquisition ($ thousands) | | :------------------------------------ | :------------------------------------ | | **Assets** | | | Accounts and other receivable | 21,618 | | Cash | 5,055 | | Inventories | 24,474 | | Property, plant and equipment | 19,864 | | Right-of-use assets | 5,744 | | Intangible assets | 34,330 | | Prepaid expenses and deposits | 1,338 | | **Total assets** | **112,423** | | **Liabilities** | | | Accounts payable and accrued liabilities | 27,708 | | Lease liability | 5,681 | | Other liabilities | 12,056 | | Loan payable | 236 | | Deferred income taxes | 10,100 | | **Total liabilities** | **55,781** | | **Total identifiable net assets at fair value** | **56,642** | | **Consideration transferred** | | | Cash consideration | 52,171 | | Equity instruments (17,233,950 Common Shares) | 39,121 | | Contingent consideration | 4,472 | | Settlement of pre-acquisition relationship | (89) | | Working capital adjustment | (541) | | **Total consideration transferred** | **95,134** | | **Goodwill arising on acquisition** | **38,492** | - Goodwill of **$38.5 million** arose from the acquisition, representing expected synergies, future income, and growth[201](index=201&type=chunk) - A gain of **$3.9 million** was recognized from the change in fair valuation of Motif's contingent consideration during the three and six months ended March 31, 2025[203](index=203&type=chunk) [ii. Acquisition of CPL](index=30&type=section&id=ii.%20Acquisition%20of%20CPL) On March 31, 2025, Organigram acquired CPL for $6 million upfront, with potential additional contingent consideration of up to $24 million tied to sales milestones and earnout targets, with this acquisition representing a business combination under IFRS 3, bringing in formulations, distributor relationships, and an organized workforce, and goodwill of $11.3 million arose from the acquisition - Organigram acquired **100% of CPL** on March 31, 2025, for **$6 million upfront**, with potential contingent consideration of up to **$24 million** based on sales milestones and earnout targets[204](index=204&type=chunk)[205](index=205&type=chunk) - The acquisition was determined to be a business under **IFRS 3**, including inputs (formulations), distributor relationships, and an organized workforce[206](index=206&type=chunk) Provisional Recognition of CPL Assets Acquired and Liabilities Assumed | Item | Fair Value on Acquisition ($ thousands) | | :------------------------------------ | :------------------------------------ | | **Assets** | | | Accounts and other receivable | 1,243 | | Cash | 118 | | Inventories | 1,072 | | Intangible assets | 15,166 | | Prepaid expenses and deposits | 13 | | **Total assets** | **17,612** | | **Liabilities** | | | Accounts payable and accrued liabilities | 1,119 | | Deferred income taxes | 3,564 | | **Total liabilities** | **4,683** | | **Total identifiable net assets at fair value** | **12,929** | | **Consideration transferred** | | | Cash consideration | 4,893.199 | | Contingent consideration | 18,397 | | Working capital adjustment | 957 | | **Total consideration transferred** | **24,247** | | **Goodwill arising on acquisition** | **11,318** | - Goodwill of **$11.3 million** arose from the acquisition, representing expected synergies, future income, and growth[208](index=208&type=chunk) - The contingent consideration includes milestone payments of **$2 million each** for achieving **US$500** and **US$1 million** in cumulative U.S. hemp-derived beverage sales by June 30, 2025, and September 30, 2025, respectively[209](index=209&type=chunk)[210](index=210&type=chunk) - Earnout payments are based on **2.5 times trailing twelve months' net revenue** to September 30, 2025, and September 30, 2026, with **50% payable in cash** and **50% in company shares**[218](index=218&type=chunk) [Contingent Liabilities](index=32&type=section&id=CONTINGENT%20LIABILITIES) This section describes Organigram's policy for recognizing and estimating loss contingency provisions, emphasizing the use of reasonable estimates and continuous review at each reporting date [Recognition and Estimation of Loss Contingencies](index=32&type=section&id=Recognition%20and%20Estimation%20of%20Loss%20Contingencies) Organigram recognizes loss contingency provisions for probable losses when a reasonable estimate can be made, using the best estimate within a range or the mid-point if no single amount is better, with these estimates reviewed and revised at each reporting date - Loss contingency provisions are recognized for probable losses when management can reasonably estimate the loss[213](index=213&type=chunk) - Estimates are based on the best probable loss within a range, or the mid-point if no single amount is superior, and are reviewed and revised at each reporting date[213](index=213&type=chunk) [Disclosure Controls and Procedures and Internal Control Over Financial Reporting](index=32&type=section&id=DISCLOSURE%20CONTROLS%20AND%20PROCEDURES%20AND%20INTERNAL%20CONTROL%20OVER%20FINANCIAL%20REPORTING) This section reports on the ineffectiveness of Organigram's Disclosure Controls and Procedures (DCP) and Internal Control Over Financial Reporting (ICFR) due to material weaknesses, particularly in general IT controls, and ongoing remediation efforts [Effectiveness of Controls and Remediation Efforts](index=32&type=section&id=Effectiveness%20of%20Controls%20and%20Remediation%20Efforts) Organigram's Disclosure Controls and Procedures (DCP) and Internal Control Over Financial Reporting (ICFR) were deemed ineffective as of March 31, 2025, due to identified material weaknesses, particularly in general IT controls, and while a material weakness related to biological assets and inventory spreadsheets was remediated, efforts continue to address the remaining IT control deficiencies, with full remediation expected by the end of Fiscal 2025 - The Company's independent registered public accounting firm, PKF O'Connor Davies, issued an **adverse report** on the effectiveness of ICFR for the year ended September 30, 2024[215](index=215&type=chunk) - Management concluded that **DCP were not effective** as of March 31, 2025, due to material weaknesses in ICFR[216](index=216&type=chunk) - A material weakness was identified in **ineffective general IT controls** related to security, administration, and monitoring of service organizations[224](index=224&type=chunk) - A material weakness related to management review controls over biological assets and inventory complex spreadsheets was successfully **remediated in Q1 Fiscal 2025**[222](index=222&type=chunk)[226](index=226&type=chunk) - Remedial activities for remaining material weaknesses are in progress, with full remediation expected before the end of Fiscal 2025[225](index=225&type=chunk)[228](index=228&type=chunk) - The scope of evaluation for DCP and ICFR excluded controls over recently acquired entities: Motif (acquired December 6, 2024), CPL, and CPL USA (both acquired March 31, 2025)[219](index=219&type=chunk) [Risk Factors](index=35&type=section&id=RISK%20FACTORS) This section outlines Organigram's key risk factors, including credit, liquidity, market, and concentration risks, as well as risks related to trade policies, third-party data, international operations, and information systems [(i) Credit Risk](index=35&type=section&id=(i)%20Credit%20Risk) Organigram faces credit risk from deposits, investments, and receivables, but mitigates this by dealing with financially sound counterparties and obtaining guarantees for other receivables, with the maximum exposure to credit risk for cash, investments, and receivables being approximately $180.9 million as of March 31, 2025 - Credit risk arises from deposits, short-term investments, trade and other receivables, and restricted cash[232](index=232&type=chunk) - Risk is mitigated by dealing with financially sound counterparties and obtaining guarantees for non-trade receivables[232](index=232&type=chunk) - Maximum exposure to credit ri

Group 1 - Alan Brochstein is a pioneer in the cannabis investment sector, having focused exclusively on this industry since 2007 [1] - He founded AB Analytical Services to provide independent consulting to registered investment advisors and has been managing partner of New Cannabis Ventures since 2015, which offers financial information in the cannabis industry [1] - Alan has been leading the investing group 420 Investor since 2013, which focuses on publicly-traded cannabis stocks and moved to Seeking Alpha in 2023 [2] Group 2 - The 420 Investor group covers 23 cannabis stocks, providing investment news, earnings report previews, and post-report analyses [2] - Features of the group include 2 model portfolios, 10 weekly videos with chart analysis, 3 weekly summary pieces, a monthly newsletter, and a chat service for questions [2] - A sub-service called The Big Picture is offered to help investors stay updated on the cannabis sector [2]

Financial Data and Key Metrics Changes - The company reported a net revenue increase of 17% to $42.7 million compared to Q1 of the previous year, driven by growth in flagship brands SHRED and BOXHOT [32][34] - Adjusted gross margin increased to $14.3 million or 33%, up from 31% in the prior year, attributed to increased international sales and operational efficiencies [34] - The net loss for the quarter was $23 million compared to a net loss of $15.8 million in Q1 fiscal 2024, with adjustments indicating a net loss of $4.1 million when excluding fair value losses [40][41] Business Line Data and Key Metrics Changes - The recreational business grew by 15%, with significant contributions from both core and newly acquired product lines [32][33] - The company expanded its national market share by 500 basis points year-over-year, with notable growth in vapes and pre-rolls, where it achieved the number one position [11][12] - Supporting brands like Big Bag O' Buds and Debunk saw impressive growth, doubling their market share compared to Q1 last year [10][11] Market Data and Key Metrics Changes - The Canadian cannabis industry grew by 7.7% year-over-year in Q1, driven by strong demand in pre-rolls and vapes [11] - International sales reached $3.3 million, reflecting a 2.3 times year-over-year increase [34] - The company anticipates continued growth in international sales throughout fiscal 2025, supported by strategic investments and partnerships [30] Company Strategy and Development Direction - The integration of the Motif acquisition is a key focus, with expected operational synergies of $10 million over 24 months [22][38] - The company is investing in seed-based cultivation to enhance efficiency and reduce costs, with plans to increase flower output significantly [20][25] - International expansion remains a priority, particularly in the German market, with a $21 million investment in Sanity Group to capitalize on growth opportunities [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving operational efficiencies and market position improvements, anticipating a stabilization of adjusted gross margin around 35% in fiscal 2025 [35][44] - The company is optimistic about the international market growth, particularly in Germany, and plans to leverage its EU GMP certification to enhance margins [29][72] - Management highlighted the potential for favorable changes in government policy regarding cannabis regulation and taxation, which could benefit the industry [76][81] Other Important Information - The company plans to invest $8 million to $10 million in sustaining capital expenditures during fiscal 2025, alongside an additional $16 million for capacity enhancement projects [42] - Cash position as of December 31 was $71.2 million, with negligible debt, indicating a strong balance sheet [41][43] Q&A Session Summary Question: Insights on international market growth and investment opportunities - Management highlighted the growth of the German medical market and the potential for increased demand through strategic partnerships, particularly with Sanity Group [51][72] Question: Pro-forma financials and profitability trends - Management indicated that consolidated EBITDA is expected to exceed last year's figures, with significant synergies anticipated in the back half of the year [61][62] Question: Strength of international markets and EU GMP certification timing - Management noted that the EU GMP certification will enhance margins and demand, despite increased competition in the international market [70][72] Question: Potential impacts of government changes on the cannabis industry - Management discussed the potential for favorable regulatory changes under a new government, which could support industry growth and reduce excise taxes [76][81]

Financial Performance - OrganiGram reported a quarterly loss of $0.05 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.03, representing an earnings surprise of -66.67% [1] - The company posted revenues of $30.54 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 10.57%, compared to year-ago revenues of $26.78 million [2] - Over the last four quarters, OrganiGram has surpassed consensus EPS estimates only once and topped consensus revenue estimates two times [2] Stock Performance and Outlook - OrganiGram shares have increased approximately 7.5% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is -$0.03 on revenues of $46.67 million, and -$0.09 on revenues of $177.82 million for the current fiscal year [7] Industry Context - The Medical - Products industry, to which OrganiGram belongs, is currently in the top 30% of over 250 Zacks industries, indicating a favorable industry outlook [8] - The performance of OrganiGram's stock may be influenced by the overall industry outlook, as research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]