Industry Overview - The cannabis industry is experiencing a turbulent period characterized by intense pullbacks and ongoing federal uncertainty, but solid long-term trends may drive major returns for patient investors [1] - Ancillary industries such as cannabis real estate, biotech, and consumer wellness are expected to benefit from the broader ecosystem expansion, making marijuana stock investing appealing as it offers exposure to an emerging, recession-resistant industry with high growth potential [2] Investment Opportunities - Multistate operators (MSOs), cannabis ETFs, REITs, and ancillary marijuana companies are positioned to see significant upside despite the volatility expected in 2025 [3] - The long-term investment case for marijuana stocks remains strong, and investors are encouraged to plan and strategize while weighing risks and rewards [3] Company Highlights - **Village Farms International, Inc. (NASDAQ: VFF)**: Recently regained compliance with Nasdaq's minimum closing bid price requirement of US$1.00 per share [6] - **SNDL Inc. (NASDAQ: SNDL)**: Reported Q1 2025 earnings with net revenue of US$204.914 million, a 3.6% increase from 2024, and gross profit of US$56.641 million, a 12.4% increase [11] - **High Tide Inc. (NASDAQ: HITI)**: Expanded its retail presence with the opening of two new Canna Cabana locations, bringing its total to 202 locations across Canada [13]

Core Viewpoint - Village Farms International has regained compliance with Nasdaq's minimum closing bid price requirement, indicating a positive development for the company's stock listing status [1] Company Overview - Village Farms is a large-scale, vertically-integrated supplier of high-value, plant-based Consumer Packaged Goods, leveraging decades of experience in Controlled Environment Agriculture [2] - The company has established itself as a leading fresh produce supplier in the US and Canada, now focusing on high-growth cannabinoid opportunities internationally [2] Cannabis Operations - In Canada, Pure Sunfarms, a wholly owned subsidiary, is one of the largest cannabis operations globally, with 2.2 million square feet of greenhouse production and recognized as a low-cost producer [3] - Village Farms owns an additional 2.6 million square feet of greenhouse capacity in Canada for future expansion and holds an 80% stake in Rose LifeScience, a leader in cannabis product commercialization [3] International Expansion - The company is targeting legal cannabis opportunities internationally, exporting medical cannabis from its EU GMP certified facility in Canada to markets such as Germany, the UK, Israel, Australia, and New Zealand [4] - In Europe, Leli Holland, a wholly-owned subsidiary, holds one of ten licenses to grow and distribute recreational cannabis within the Dutch Coffee Shop Experiment [4] US Market Strategy - In the US, Balanced Health Botanicals, a wholly owned subsidiary, is a leading CBD and hemp-derived brand, with plans to enter the US THC market leveraging its Texas-based greenhouse assets [5] - The company has 2.2 million square feet of existing greenhouse capacity and 950 acres of owned, unoccupied land for future expansion in the US [5] Clean Energy Initiatives - Village Farms Clean Energy, in partnership with Terreva Renewables, generates renewable natural gas from landfill gas, significantly reducing greenhouse gas emissions in Vancouver [6] - This initiative is equivalent to removing over 100,000 vehicles from the road or powering 51,300 homes for a year [6] Joint Ventures - The company holds a 37.9% equity interest in Vanguard Food LP, a joint venture aimed at creating a premier branded CPG foods company through mergers and acquisitions [7] - Vanguard Food LP plans to acquire additional produce assets and operations with the support of private investment partners [7]

Core Insights - The transaction has established Vanguard Food LP as a new leader in the North American produce industry, backed by private investment firms [1][2] - The joint venture aims to leverage its expertise in cultivation, sales, and distribution to create a premier branded CPG foods company focused on healthy lifestyles and sustainable practices [2][4] Company Overview - Vanguard Food LP is a joint venture between Kennedy Lewis Investment Management, Sweat Equities, and Village Farms International, operating 80 acres of advanced greenhouse facilities in Texas and sourcing from an additional 385 acres [4] - The company plans to pursue a roll-up strategy to acquire other produce assets and expand its product offerings through mergers and acquisitions [2][4] Strategic Vision - The leadership of Vanguard believes there is a significant opportunity to meet the growing consumer demand for healthier food alternatives, positioning the company for future growth [3] - The partnership is expected to enhance resources for innovation and value creation for customers, marking a new era for Village Farms' legacy produce business [3][4] Investment Management Background - Kennedy Lewis Investment Management manages over $28 billion across various private funds and investment vehicles, indicating strong financial backing for Vanguard [5] - Sweat Equities focuses on health and wellness investments, with approximately $100 million in invested capital across multiple funds, emphasizing its commitment to the food and beverage sector [6][7]

Core Viewpoint - Village Farms International has successfully closed a transaction to privatize the majority of its fresh produce business, positioning itself as a leader in the global cannabis industry with a net cash position and significant greenhouse assets [1][2]. Company Overview - Village Farms is a large-scale, vertically-integrated supplier of high-value, plant-based Consumer Packaged Goods, leveraging decades of experience in Controlled Environment Agriculture [3]. - The company has transitioned from being a leading fresh produce supplier to focusing on high-growth cannabinoid opportunities internationally [3]. Cannabis Operations - In Canada, Pure Sunfarms, a wholly-owned subsidiary, is one of the largest cannabis operations globally, with 2.2 million square feet of greenhouse production and recognized as a low-cost producer [4]. - The company has an additional 2.6 million square feet of greenhouse capacity in Canada for future expansion and holds an 80% stake in Rose LifeScience, a leader in cannabis product commercialization [4]. International Expansion - Village Farms is targeting emerging legal cannabis markets with significant growth potential, exporting medical cannabis to countries such as Germany, the UK, Israel, Australia, and New Zealand [5]. - The company is expanding its export business and investing in international production assets, including a license to grow and distribute recreational cannabis in the Netherlands [5]. U.S. Market Strategy - Village Farms plans to enter the U.S. THC market through various strategies, utilizing its Texas-based greenhouse assets, which include 2.2 million square feet of existing capacity and 950 acres of unoccupied land for future expansion [6]. Renewable Energy Initiative - Village Farms Clean Energy, in partnership with Terreva Renewables, generates renewable natural gas from landfill gas, significantly reducing greenhouse gas emissions in Vancouver [7]. Joint Venture and Future Plans - The company holds a 37.9% equity stake in Vanguard Food LP, which aims to create a premier branded CPG foods company through acquisitions and expansion of its product offerings [8].

Financial Performance - Village Farms reported Q1 2025 consolidated sales of $77.1 million, a slight decrease from $78.1 million in Q1 2024[10]. - The company experienced a consolidated net loss of $6.7 million, or $0.06 per share, compared to a net loss of $2.9 million, or $0.03 per share in the prior year[10]. - Adjusted EBITDA for Q1 2025 was $0.1 million, down from $3.6 million in Q1 2024, indicating a significant decline in operational profitability[10]. - Sales for the three months ended March 31, 2025, were $77,074, a decrease of 1.3% from $78,077 in the same period of 2024[21]. - Gross profit for Q1 2025 was $11,340, down 27.0% from $15,513 in Q1 2024[21]. - Net loss attributable to Village Farms International Inc. shareholders increased to $6,703 in Q1 2025 from $2,852 in Q1 2024, representing a 134.5% increase[21]. - Adjusted EBITDA for Q1 2025 was $81, a significant decline from $3,591 in Q1 2024[21]. - Basic loss per share for Q1 2025 was $(0.06), compared to $(0.03) in Q1 2024[21]. - Total current assets decreased to $104,874,000 as of March 31, 2025, from $116,019,000 at December 31, 2024, a decline of 9.6%[45]. - Total liabilities decreased to $119,151,000 as of March 31, 2025, from $125,348,000 at December 31, 2024, a reduction of 4.5%[45]. - Cash and cash equivalents at the end of Q1 2025 were $15,125,000, down 38.5% from $24,631,000 at the end of Q4 2024[48]. - Net cash used in operating activities for Q1 2025 was $6,376,000, compared to a minimal usage of $50,000 in Q1 2024[48]. - Cash flows used in investing activities totaled $2,839,000 in Q1 2025, an increase from $1,876,000 in Q1 2024[48]. - Comprehensive loss attributable to Village Farms International, Inc. shareholders was $5,811,000 in Q1 2025, compared to $6,815,000 in Q1 2024, indicating a slight improvement[46]. Cannabis Operations - Canadian Cannabis net income increased 258% year-over-year to $3.0 million, with adjusted EBITDA rising 64% to $6.7 million[5][18]. - International medical export cannabis sales surged 285% year-over-year, contributing to gross margin expansion in Canadian Cannabis to 36%[5][10]. - Village Farms commenced cannabis sales in the Netherlands, marking its entry into the European recreational market, with sales beginning in late February 2025[5][10]. - The company plans to complete its Phase II facility in Groningen by Q1 2026, which is expected to quintuple annual production capacity[4][10]. - Retail branded sales in Canadian Cannabis decreased by 20%, while non-branded sales increased by 3% in Canadian dollars[10][19]. - The company maintained a top three market share position in Canada despite a reduction in lower-margin branded sales[5][16]. - Sales breakdown for Q1 2025 included $37,421 from VF Fresh, $34,837 from Canadian Cannabis, and $3,904 from U.S. Cannabis[23]. - The company is expanding its international presence by exporting medical cannabis to markets including Germany, the UK, Israel, Australia, and New Zealand[34]. - Village Farms plans to enter the U.S. THC market leveraging its 5.5 million square feet of greenhouse capacity in West Texas[35]. - Village Farms is one of the leading CBD and hemp-derived brands in the U.S. through its subsidiary Balanced Health Botanicals[35]. Strategic Initiatives - The company expects to receive $40 million in cash proceeds and a 37.9% equity ownership interest in Vanguard Food LP from the privatization of certain Fresh Produce segment assets[3][4]. - The partnership with Terreva Renewables is expected to reduce greenhouse gas emissions by 475,000 metric tons of CO2 annually[36]. - The company is focusing on high-growth cannabinoid opportunities internationally, with strategic investments in international assets[34]. - The proposed spin-out of produce assets into a new joint venture is part of the company's future growth strategy[38]. - Village Farms has 2.6 million square feet of additional greenhouse capacity available in Canada for future expansion[33]. Management Outlook - Management cautioned that the results for the three months ended March 31, 2025, may not be indicative of future performance[22]. - For the three months ended March 31, 2024, the total net loss was $2,852,000, with a significant loss from U.S. Cannabis operations amounting to $711,000[27]. - Adjusted EBITDA for the total company was $3,591,000, with the Canadian Cannabis segment contributing $4,073,000[27].

[PART I - FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) The company's Q1 2025 results show decreased assets, a wider net loss of $6.7 million, and a post-quarter privatization of its Fresh Produce segment Condensed Consolidated Statements of Financial Position (Assets) (In thousands USD) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $104,874 | $116,019 | | **Total non-current assets** | $272,230 | $273,287 | | **Total assets** | **$377,104** | **$389,306** | Condensed Consolidated Statements of Financial Position (Liabilities and Equity) (In thousands USD) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current liabilities** | $54,561 | $62,219 | | **Total non-current liabilities** | $64,590 | $63,129 | | **Total liabilities** | **$119,151** | **$125,348** | | **Total shareholders' equity** | **$248,337** | **$254,005** | Condensed Consolidated Statements of Operations | (In thousands USD, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Sales** | $77,074 | $78,077 | | **Gross profit** | $11,340 | $15,513 | | **Loss before taxes** | $(6,132) | $(2,359) | | **Net loss attributable to VFF shareholders** | **$(6,703)** | **$(2,852)** | | **Basic and Diluted loss per share** | **$(0.06)** | **$(0.03)** | Condensed Consolidated Statements of Cash Flows | (In thousands USD) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(6,376) | $(50) | | **Net cash used in investing activities** | $(2,839) | $(1,876) | | **Net cash used in financing activities** | $(384) | $(1,442) | | **Net decrease in cash** | $(9,506) | $(3,606) | | **Cash, end of period** | $15,125 | $31,685 | - The company operates through subsidiaries including Village Farms Fresh (produce), Pure Sunfarms (Canadian cannabis), Balanced Health (U.S. CBD), VF Clean Energy, and Leli Holland (Netherlands cannabis)[23](index=23&type=chunk)[30](index=30&type=chunk) - The company received a Nasdaq notification for not meeting the minimum bid price requirement and has until **October 13, 2025**, to regain compliance[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - Subsequent to quarter end, the company announced the privatization of certain Fresh Produce assets for **$40 million in cash** and a **37.9% equity interest** in a new joint venture, Vanguard[91](index=91&type=chunk) - Subsequent to quarter end, the company entered into new and amended credit facilities with more favorable covenants for its FCC Term Loan and Pure Sunfarms operations[88](index=88&type=chunk)[89](index=89&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2025 saw a 1% sales decrease and a 27% gross profit drop, driven by Produce segment losses but offset by strong Cannabis segment performance [Executive Overview and Recent Developments](index=27&type=section&id=Executive%20Overview%20and%20Recent%20Developments) The company is focusing on its global cannabis operations, highlighted by strong international sales growth and the privatization of its Produce segment - The company's vision is to be an international leader in plant-based consumer products, leveraging its experience in fresh produce for cannabis markets[94](index=94&type=chunk) - Canadian Cannabis segment maintained a **top-three market share** in Canada and returned to its targeted gross margin range of **30-40%**[112](index=112&type=chunk) - International medical cannabis sales **increased 285% year-over-year** in Q1, with distribution expanded to New Zealand[117](index=117&type=chunk) - Netherlands Cannabis (Leli Holland) commenced sales to Dutch coffeeshops in February 2025 and broke ground on a Phase II facility to quintuple production capacity[104](index=104&type=chunk)[114](index=114&type=chunk) - Subsequent to quarter end, the company announced a transaction to privatize its Produce segment operations for **$40 million** and a **37.9% equity interest** in a new joint venture, Vanguard Food LP[114](index=114&type=chunk) [Consolidated Results of Operations](index=32&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated Q1 2025 sales decreased 1% to $77.1 million, with a 27% drop in gross profit leading to a wider net loss of $6.7 million Consolidated Financial Performance (Q1 2025 vs Q1 2024) | (In thousands USD) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Sales** | $77,074 | $78,077 | | **Gross profit** | $11,340 | $15,513 | | **Loss before taxes** | $(6,132) | $(2,359) | | **Net loss attributable to VFF** | $(6,703) | $(2,852) | | **Adjusted EBITDA** | $81 | $3,591 | - The **1% decrease in sales** was primarily due to lower Canadian and U.S. Cannabis sales, partially offset by a slight increase in VF Fresh sales[124](index=124&type=chunk) - The **27% decrease in gross profit** was mainly caused by a **$7.6 million decline** in VF Fresh gross profit, which was partially offset by a $3.0 million increase in Canadian Cannabis gross profit[126](index=126&type=chunk) - Selling, general and administrative (SG&A) expenses increased by 2% to $16.8 million, representing 22% of sales[127](index=127&type=chunk) [Segmented Results of Operations](index=35&type=section&id=Segmented%20Results%20of%20Operations) Performance varied widely by segment, with strong profitability in Canadian Cannabis contrasting sharply with a significant loss in the Produce segment Segment Operating (Loss) Income (Q1 2025 vs Q1 2024) | (In thousands USD) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Produce (VF Fresh)** | $(7,157) | $617 | | **Cannabis - Canada** | $3,713 | $1,804 | | **Cannabis - U.S.** | $58 | $(711) | | **Clean Energy** | $325 | $(20) | | **Cannabis - Netherlands** | $(238) | $(363) | Segment Sales (Q1 2025 vs Q1 2024) | (In thousands USD) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Produce (VF Fresh)** | $37,421 | $36,094 | | **Cannabis - Canada** | $34,837 | $37,446 | | **Cannabis - U.S.** | $3,904 | $4,537 | | **Clean Energy** | $426 | $0 | | **Cannabis - Netherlands** | $486 | $0 | [Canadian Cannabis Segment](index=35&type=section&id=Canadian%20Cannabis%20Segment) Despite a 7% sales decrease, the segment's gross margin improved to 36%, driving a significant increase in net income to $3.0 million - Net sales **decreased by 7% to $34.8 million**, impacted by a $2.3 million unfavorable currency fluctuation and a planned reduction in value-branded product sales[137](index=137&type=chunk)[138](index=138&type=chunk) - **Gross margin improved to 36%** from 25% YoY, due to a better sales mix with higher volumes of international and non-brand flower, and lower sales of value brands[144](index=144&type=chunk) - **International sales grew 259%**, driven by strong export volumes to Germany[138](index=138&type=chunk) - **Adjusted EBITDA increased 64% to $6.7 million** from $4.1 million in Q1 2024, reflecting the improved margins[147](index=147&type=chunk) [U.S. Cannabis Segment](index=39&type=section&id=U.S.%20Cannabis%20Segment) The segment achieved profitability with a net income of $58k despite a 14% sales decrease, driven by significant cost reductions - Net sales **decreased 14% to $3.9 million** due to new state restrictions on CBD sales and competition from unregulated hemp products[149](index=149&type=chunk) - The segment achieved **net income of $58k**, compared to a net loss of ($711k) in Q1 2024[153](index=153&type=chunk) - The improved profitability was driven by a **26% decrease in SG&A expenses** due to more efficient marketing and contract renegotiations[152](index=152&type=chunk) - **Adjusted EBITDA improved to $114k** from a loss of ($615k) in the prior-year quarter[154](index=154&type=chunk) [Netherlands Cannabis Segment](index=39&type=section&id=Netherlands%20Cannabis%20Segment) The newly operational segment recorded $486k in sales with a 41% gross margin, resulting in a net loss of $242k for its inaugural quarter - The segment commenced sales in Q1 2025 and was not operational in Q1 2024[155](index=155&type=chunk) Q1 2025 Financial Results | Metric | Amount (in thousands USD) | | :--- | :--- | | **Net Sales** | $486 | | **Cost of Sales** | $285 | | **Gross Profit** | $201 | | **Gross Margin** | 41% | | **Net Loss** | $(242) | | **Adjusted EBITDA** | $77 | [Produce Segment - VF FRESH](index=41&type=section&id=Produce%20Segment%20-%20VF%20FRESH) The segment's sales rose 4% but a 27% surge in costs led to a gross loss of $4.3 million and a net loss of $7.8 million - Sales **increased 4% to $37.4 million**, driven by a 39% increase in volume from supply partners, but partially offset by lower average selling prices for tomatoes (-15%) and peppers (-34%)[163](index=163&type=chunk)[164](index=164&type=chunk) - **Cost of sales increased 27% to $41.7 million**, primarily due to a negative crop impact from dust storms at company-owned greenhouses and higher costs from supply partners[165](index=165&type=chunk) - The segment recorded a **gross loss of ($4.3 million)** and a **net loss of ($7.8 million)**, a significant decline from a gross profit of $3.3 million and net income of $0.1 million in Q1 2024[166](index=166&type=chunk)[168](index=168&type=chunk) - **Adjusted EBITDA was negative ($5.1 million)** compared to a positive $2.0 million in the prior-year quarter[169](index=169&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity with $15.1 million in cash and has subsequently amended credit facilities for more favorable terms - At March 31, 2025, **cash and cash equivalents were $15.1 million** and **working capital was $50.3 million**[170](index=170&type=chunk) - The company was not in compliance with certain financial covenants at Dec 31, 2024, but received waivers and subsequently amended covenants to be more favorable in April 2025[171](index=171&type=chunk)[175](index=175&type=chunk) - On April 17, 2025, Pure Sunfarms replaced its existing loans with a new **C$37.4 million secured credit facility**, including a C$27.4 million term loan and a C$10.0 million revolving facility, maturing in February 2028[183](index=183&type=chunk)[184](index=184&type=chunk) Summary of Cash Flows (Three Months Ended March 31) | (in Thousands USD) | 2025 | 2024 | | :--- | :--- | :--- | | **Cash used in Operating activities** | $(6,376) | $(50) | | **Cash used in Investing activities** | $(2,839) | $(1,876) | | **Cash used in Financing activities** | $(384) | $(1,442) | [Non-GAAP Measures](index=47&type=section&id=Non-GAAP%20Measures) Consolidated Adjusted EBITDA fell to $81k from $3.6 million, as a large loss in the Produce segment offset strong Cannabis segment earnings - Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, and amortization (EBITDA), further adjusted for items like foreign currency exchange effects and share-based compensation[193](index=193&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA (Consolidated) | (in thousands USD) | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | **Net loss** | $(6,703) | $(2,852) | | Amortization and depreciation | 4,973 | 4,558 | | Foreign currency exchange (gain) loss | (18) | 775 | | Interest expense, net | 631 | 711 | | Provision for income taxes | 983 | 320 | | Share-based compensation | 145 | 405 | | Other adjustments | 70 | (326) | | **Adjusted EBITDA** | **$81** | **$3,591** | Adjusted EBITDA by Segment (Q1 2025) | (in thousands USD) | Adjusted EBITDA | | :--- | :--- | | **Produce (VF Fresh)** | $(5,122) | | **Cannabis - Canada** | $6,698 | | **Cannabis - U.S.** | $114 | | **Clean Energy** | $325 | | **Cannabis - Netherlands** | $77 | | **Corporate** | $(2,011) | | **Total** | **$81** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rate fluctuations on its $44.2 million of variable-rate debt and CAD/USD foreign exchange volatility - The company is exposed to interest rate risk on its variable-rate debt, which totaled approximately **$44.2 million** as of March 31, 2025[205](index=205&type=chunk)[206](index=206&type=chunk) - The company is exposed to foreign exchange risk due to its Canadian operations, where a **$0.10 increase in the Canadian dollar** exchange rate would result in a net foreign exchange gain of approximately **$4.4 million**[208](index=208&type=chunk) [Item 4. Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2025, having remediated previously identified material weaknesses - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective as of March 31, 2025**[211](index=211&type=chunk) - The company has **remediated the previously identified material weaknesses** related to IT general controls (user access, change management) and manual journal entry controls at its Produce segment[213](index=213&type=chunk)[214](index=214&type=chunk) - Remediation actions included enhancing IT risk assessments, limiting privileged user access, and implementing stricter review and approval controls for manual journal entries[214](index=214&type=chunk)[216](index=216&type=chunk) [PART II - OTHER INFORMATION](index=53&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company is engaged in ordinary course legal proceedings, none of which are considered material to its business - The Company is engaged in ordinary course legal proceedings, none of which are considered material to the business[217](index=217&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) Key risks include potential Nasdaq delisting due to low stock price and the uncertainty of realizing benefits from the Produce segment privatization - The company's common shares may be **delisted from Nasdaq** if it does not regain compliance with the minimum bid price requirement of US$1.00 by the extended deadline of **October 13, 2025**[219](index=219&type=chunk)[220](index=220&type=chunk) - Delisting from Nasdaq would likely decrease liquidity, increase stock price volatility, and adversely affect the ability to raise capital[221](index=221&type=chunk) - The company may fail to realize the expected benefits of privatizing its Fresh Produce segment, as it will have only a minority interest and limited control over the new joint venture[222](index=222&type=chunk) [Item 2. Unregistered Sale of Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sale%20of%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any of its common shares during the three months ended March 31, 2025 - The Company did not repurchase any of its Common Shares during the three months ended March 31, 2025[223](index=223&type=chunk) [Item 3. Defaults Upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable [Item 4. Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) During the quarter ended March 31, 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[226](index=226&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including amended credit agreements, officer certifications, and XBRL data files - Exhibits filed include an Amended and Restated Credit Agreement with Farm Credit Canada, a new Credit Agreement for Pure Sunfarms, and certifications by the Principal Executive and Financial Officers[227](index=227&type=chunk)

Core Viewpoint - Village Farms International, Inc. is undergoing a transformative transaction to privatize certain assets of its Fresh Produce division while focusing on expanding its global cannabis business, which is expected to unlock long-term value for both segments [2][4]. Financial Performance - For Q1 2025, consolidated sales were $77.1 million, a slight decrease from $78.1 million in Q1 2024 [11]. - The consolidated net loss was $6.7 million, compared to a loss of $2.9 million in the previous year [11]. - Adjusted EBITDA was $0.1 million, down from $3.6 million in Q1 2024 [11]. - Cash flow from operations was negative at $6.4 million, compared to a near break-even of $50,000 in Q1 2024 [11]. Cannabis Segment Highlights - Canadian cannabis net income and adjusted EBITDA increased by 258% and 64% year-over-year, respectively [6]. - International medical export cannabis sales surged by 285% year-over-year [6]. - The company commenced cannabis sales in the Netherlands, marking its entry into the European recreational market [6]. Fresh Produce Segment - The company is expected to receive $40 million in cash proceeds and a 37.9% equity ownership interest in Vanguard Food LP upon closing the privatization transaction [3][4]. - The privatization aims to allow the fresh produce business to operate independently with new strategic capital partners [2][4]. Strategic Developments - The completion of a Phase II facility in Groningen, Netherlands, is expected in Q1 2026, which will quintuple annual production capacity for cannabis [4]. - The company has maintained a top market share position in Canada despite a reduction in lower-margin branded sales [4][11]. - A refinancing of Canadian cannabis term loans has been completed, consolidating three loans into one with improved terms [12]. Market Position - Village Farms retains ownership of its Canadian greenhouse assets and Texas-based greenhouse assets for potential future cannabis market opportunities [18]. - The company continues to hold leading cultivars in the German market through third-party distributors [17].

Core Viewpoint - Village Farms International, Inc. has entered into a definitive agreement to privatize certain assets of its Fresh Produce segment, creating a new joint venture, Vanguard Food LP, with private investment firms, allowing Village Farms to focus on its international business and cannabis opportunities [1][2][6]. Group 1: Transaction Overview - Village Farms will receive $40 million in cash and a 37.9% equity ownership interest in the newly formed Vanguard [1][5]. - The transaction involves the privatization of Village Farms' Texas-based greenhouse assets and produce-related intellectual property, with operational control transferred to Vanguard [4][5]. - The deal is expected to close in the second quarter of 2025, pending the satisfaction of closing conditions [4]. Group 2: Strategic Implications - Vanguard's growth strategy will leverage Village Farms' expertise in cultivation, sales, and distribution to execute a roll-up strategy of other North American produce brands [2][6]. - The partnership aims to create a premier branded consumer packaged goods (CPG) company focused on healthy lifestyles and sustainable farming practices [2][6]. - Village Farms will retain ownership of its Canadian cultivation assets and continue to supply fresh produce to Vanguard through service agreements [8][9]. Group 3: Leadership and Management - Charlie Sweat, founder of Sweat Equities, will serve as Chairman of Vanguard's Board, while Michael A. DeGiglio of Village Farms will be Interim CEO [3]. - The management team is expected to drive growth through mergers and acquisitions, capitalizing on shifting consumer preferences towards healthier food options [7][6]. Group 4: Future Prospects - Village Farms is positioned to expand its cannabis operations while allowing its fresh produce business to thrive independently [6][7]. - The transaction is seen as a significant step in unlocking long-term value for both Village Farms and Vanguard, with a focus on enhancing shareholder value [6][7].

Industry Overview - The current state of marijuana stocks is characterized by a downtrend due to the lack of federal reform, tax relief, and improved banking access, leading to volatility in trading [1] - Despite over half of the US and other global regions legalizing cannabis, market saturation and taxation challenges persist, causing investors to remain cautious [2] - The cannabis stock market has seen significant price drops, presenting opportunities for investors to buy shares at lower prices, with some multi-state operators (MSOs) reporting substantial revenue growth [3] Company Highlights - **Tilray Brands, Inc.**: Engages in the research, cultivation, processing, and distribution of medical cannabis products across multiple regions including Canada and the US. Recently announced the re-release of Delayed Pilsner, aimed at providing comfort to consumers [4][6] - **Cronos Group Inc.**: Focuses on the cultivation, production, distribution, and marketing of cannabis products in Canada and internationally. Scheduled a virtual annual meeting for shareholders on June 20, 2025 [7][10] - **Village Farms International, Inc.**: Produces and markets greenhouse-grown vegetables and is planning to reschedule its Q1 conference call for May 13, 2025 [12]

Company Overview - Village Farms International, Inc. is a vertically integrated supplier focused on high-value, high-growth plant-based Consumer Packaged Goods, leveraging decades of experience in Controlled Environment Agriculture [4] - The company is a leading fresh produce supplier in the US and Canada and is expanding into high-growth opportunities in the cannabis and CBD markets [4] Cannabis Operations - In Canada, the company's subsidiary Pure Sunfarms is one of the largest cannabis operations globally and a top-selling brand [5] - Village Farms owns 80% of Rose LifeScience, a leading cannabis products commercialization expert in Québec [5] - The company exports medical cannabis from its EU GMP certified facility in Canada to various international markets, including Germany, the UK, Israel, and Australia [6] US Market Strategy - Village Farms plans to enter the US high-THC cannabis market, leveraging its extensive greenhouse operations in West Texas and expertise from Pure Sunfarms [7] Clean Energy Initiatives - Village Farms Clean Energy, in partnership with Terreva Renewables, generates clean energy from landfill gas, significantly reducing greenhouse gas emissions in Vancouver [8]