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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

 

FORM 10-Q

 

(Mark One)

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the quarterly period ended June 30, 2021 

 

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from                      to                     

Commission File Number 001-38783

 

VILLAGE FARMS INTERNATIONAL, INC.

(Exact name of Registrant as Specified in its Charter)

 

 

Canada

 

98-1007671

(State or other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

4700-80th Street

Delta, British Columbia Canada

V4K 3N3

(Address of Principal Executive Offices) (Zip Code)

(604) 940-6012

Issuer’s phone number, including area code

N/A

(Former name, former address and former fiscal year, if changed since last report).

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Shares, without par value

 

VFF

 

The Nasdaq Stock Market LLC

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.    Yes      No      Not Applicable  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer”, “small reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

  

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of August 8, 2021, 80,964,491 shares of common stock were outstanding.

 



 

 

 

TABLE OF CONTENTS

 

 

 

 

Page

PART I - FINANCIAL INFORMATION

 

 

Item 1.

 

Condensed Consolidated Interim Financial Statements (Unaudited)

 

 

 

 

Condensed Consolidated Interim Statements of Financial Position

 

2

 

 

Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss)

 

3

 

 

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

 

4

 

 

Condensed Consolidated Interim Statements of Cash Flows

 

5

 

 

Notes to Condensed Consolidated Interim Financial Statements

 

6

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

34

Item 4.

 

Controls and Procedures

 

34

 

PART II - OTHER INFORMATION

 

35

Item 1.

 

Legal Proceedings

 

35

Item 1A.

 

Risk Factors

 

35

Item 6.

 

Exhibits

 

36

 

 

 

 

 

 

 

Signatures

 

37

 

 

 


PART 1 – FINANCIAL STATEMENTS

Item 1.  Financial Statements

 

 

Forward Looking Statement

As used in this Quarterly Report on Form 10-Q, the terms “Village Farms”, “Village Farms International”, the “Company”, “we”, “us”, “our” and similar references refer to Village Farms International, Inc. and our consolidated subsidiaries, and the term “Common Shares” refers to our common shares, no par value. Our financial information is presented in U.S. dollars and all references in this Quarterly Report on Form 10-Q to “$” means U.S. dollars and all references to “C$” means Canadian dollars.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is subject to the safe harbor created by those sections. This Quarterly Report on Form 10-Q also contains “forward-looking information” within the meaning of applicable Canadian securities law. We refer to such forward-looking statements and forward-looking information collectively as “forward-looking statements”. Forward-looking statements may relate to the Company’s future outlook or financial position and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, expansion plans, litigation, projected production, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving the Company. Particularly, statements regarding future results, performance, achievements, prospects or opportunities for the Company, the greenhouse vegetable industry or the cannabis industry are forward-looking statements. In some cases, forward-looking information can be identified by such terms as “outlook”, “may”, “might”, “will”, “could”, “should”, “would”, “occur”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “try”, “estimate”, “predict”, “potential”, “continue”, “likely”, “schedule”, “objectives”, or the negative or grammatical variation thereof or other similar expressions concerning matters that are not historical facts. The forward-looking statements in this Quarterly Report on Form 10-Q are subject to risks that may include, but are not limited to: our limited operating history, including that of Pure Sunfarms and our operations of growing hemp in the United States; the legal status of Pure Sunfarms cannabis business; risks relating to obtaining additional financing, including our dependence upon credit facilities; potential difficulties in achieving and/or maintaining profitability; variability of product pricing; risks inherent in the cannabis, hemp and agricultural businesses; the ability of Pure Sunfarms to cultivate and distribute cannabis in Canada; existing and new governmental regulations, including risks related to regulatory compliance and licenses (e.g., Pure Sunfarms ability to maintain licenses for its Delta 2 and Delta 3 greenhouse facilities under the Canadian act respecting cannabis to amend to the Controlled Drugs and Substances Act, the Criminal Code and other Acts, S.C. 2018, c. 16 (Canada)), and changes in our regulatory requirements; risks relating to conversion of our greenhouses to cannabis production for Pure Sunfarms; risks related to rules and regulations at the U.S. federal (including Food and Drug Administration and United States Department of Agriculture), state and municipal levels with respect to produce and hemp; retail consolidation, technological advances and other forms of competition; transportation disruptions; product liability and other potential litigation; retention of key executives; labor issues; uninsured and underinsured losses; vulnerability to rising energy costs; environmental, health and safety risks, foreign exchange exposure, risks associated with cross-border trade; difficulties in managing our growth; restrictive covenants under our credit facilities; natural catastrophes; the ongoing and developing COVID-19 pandemic; and tax risks.

The Company has based these forward-looking statements on factors and assumptions about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. Although the forward-looking statements contained in this Quarterly Report on Form 10-Q are based upon assumptions that management believes are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond the Company’s control, that may cause the Company’s or the industry’s actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the factors contained in the Company’s filings with securities regulators, including this Quarterly Report on Form 10-Q. In particular, we caution you that our forward-looking statements are subject to the ongoing and developing circumstances related to the COVID-19 pandemic, which may have a material adverse effect on our business, operations and future financial results.

When relying on forward-looking statements to make decisions, the Company cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future results, performance, achievements, prospects and opportunities. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events or information as of the date on which the statements are made in this Quarterly Report on Form 10-Q. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

 

1


 

 

 

Village Farms International, Inc.

Condensed Consolidated Interim Statements of Financial Position

(In thousands of United States dollars, except share data)

(Unaudited)

 

 

 

 

June 30, 2021

 

 

December 31, 2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

114,029

 

 

$

21,640

 

Restricted cash

 

 

9,157

 

 

 

4,039

 

Trade receivables

 

 

41,303

 

 

 

23,222

 

Inventories

 

 

48,607

 

 

 

46,599

 

Other receivables

 

 

756

 

 

 

145

 

Income tax receivable

 

 

21

 

 

 

18

 

Prepaid expenses and deposits

 

 

8,127

 

 

 

6,145

 

Total current assets

 

 

222,000

 

 

 

101,808

 

Non-current assets

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

196,236

 

 

 

187,020

 

Investment in minority interests

 

 

2,227

 

 

 

1,226

 

Note receivable - joint venture

 

 

3,344

 

 

 

3,545

 

Goodwill

 

 

24,698

 

 

 

24,027

 

Intangibles

 

 

17,311

 

 

 

17,311

 

Deferred tax asset

 

 

15,869

 

 

 

13,312

 

Operating right-of-use assets

 

 

3,267

 

 

 

3,797

 

Finance right-of-use assets

 

 

 

 

 

35

 

Other assets

 

 

2,432

 

 

 

1,950

 

Total assets

 

$

487,384

 

 

$

354,031

 

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Line of credit

 

$

 

 

$

2,000

 

Trade payables

 

 

19,425

 

 

 

15,064

 

Current maturities of long-term debt

 

 

10,889

 

 

 

10,166

 

Note payable

 

 

 

 

 

15,314

 

Accrued liabilities

 

 

28,818

 

 

 

22,438

 

Operating lease liabilities - current

 

 

1,134

 

 

 

1,107

 

Finance lease liabilities - current

 

 

15

 

 

 

27

 

Income tax payable

 

 

1,760

 

 

 

4,523

 

Other current liabilities

 

 

4,752

 

 

 

1,641

 

Total current liabilities

 

 

66,793

 

 

 

72,280

 

Non-current liabilities

 

 

 

 

 

 

 

 

Long-term debt

 

 

54,583

 

 

 

53,913

 

Deferred tax liability

 

 

18,292

 

 

 

18,059

 

Operating lease liabilities - non-current

 

 

2,284

 

 

 

2,855

 

Finance lease liabilities - non-current

 

 

1

 

 

 

8

 

Other liabilities

 

 

1,895

 

 

 

1,633

 

Total liabilities

 

 

143,848

 

 

 

148,748

 

Commitments and contingencies (note 17)

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Common stock, no par value per share - unlimited shares authorized; 81,392,588 shares issued and 80,964,491 shares outstanding at June 30, 2021, and 66,911,811 shares issued and outstanding at December 31, 2020.

 

 

302,497

 

 

 

145,668

 

Additional paid in capital

 

 

6,748

 

 

 

17,502

 

Accumulated other comprehensive income

 

 

10,332

 

 

 

6,255

 

Retained earnings

 

 

23,959

 

 

 

35,858

 

Total shareholders’ equity

 

 

343,536

 

 

 

205,283

 

Total liabilities and shareholders’ equity

 

$

487,384

 

 

$

354,031

 

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Statements of Financial Position.

2


 

 

Village Farms International, Inc.

Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss)

(In thousands of United States dollars, except per share data)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Sales

 

$

70,374

 

 

$

47,573

 

 

$

122,770

 

 

$

79,685

 

Cost of sales

 

 

(65,109

)

 

 

(44,044

)

 

 

(115,198

)

 

 

(75,391

)

Gross margin

 

 

5,265

 

 

 

3,529

 

 

 

7,572

 

 

 

4,294

 

Selling, general and administrative expenses

 

 

(9,025

)

 

 

(3,813

)

 

 

(17,117

)

 

 

(7,734

)

Share-based compensation

 

 

(1,887

)

 

 

(328

)

 

 

(3,885

)

 

 

(857

)

Interest expense

 

 

(598

)

 

 

(437

)

 

 

(1,339

)

 

 

(974

)

Interest income

 

 

46

 

 

 

93

 

 

 

49

 

 

 

476

 

Foreign exchange gain (loss)

 

 

193

 

 

 

530

 

 

 

(311

)

 

 

(396

)

Gain on settlement agreement

 

 

 

 

 

 

 

 

 

 

 

4,681

 

Other (expense) income

 

 

(166

)

 

 

26

 

 

 

(235

)

 

 

65

 

Loss on disposal of assets

 

 

(40

)

 

 

 

 

 

(40

)

 

 

(6

)

Loss before taxes and earnings of unconsolidated entities

 

 

(6,212

)

 

 

(400

)

 

 

(15,306

)

 

 

(451

)

Recovery of (provision for) income taxes

 

 

1,781

 

 

 

(69

)

 

 

3,620

 

 

 

943

 

(Loss) income from consolidated entities after income taxes

 

 

(4,431

)

 

 

(469

)

 

 

(11,686

)

 

 

492

 

Equity (losses) earnings from unconsolidated entities

 

 

(86

)

 

 

350

 

 

 

(213

)

 

 

3,579

 

Net (loss) income

 

$

(4,517

)

 

$

(119

)

 

$

(11,899

)

 

$

4,071

 

Basic (loss) income per share

 

$

(0.06

)

 

$

(0.00

)

 

$

(0.15

)

 

$

0.07

 

Diluted (loss) income per share

 

$

(0.06

)

 

$

(0.00

)

 

$

(0.15

)

 

$

0.07

 

Weighted average number of common shares used in the

   computation of net (loss) income  per share (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

81,071

 

 

 

56,339

 

 

 

78,560

 

 

 

54,636

 

Diluted

 

 

81,071

 

 

 

56,339

 

 

 

78,560

 

 

 

55,756

 

Net (loss) income

 

$

(4,517

)

 

$

(119

)

 

$

(11,899

)

 

$

4,071

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

2,366

 

 

 

55

 

 

 

4,077

 

 

 

(72

)

Comprehensive (loss) income

 

$

(2,151

)

 

$

(64

)

 

$

(7,822

)

 

$

3,999

 

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss).

3


 

 

Village Farms International, Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

(In thousands of United States dollars, except for shares outstanding)

(Unaudited)

 

 

 

Three Months Ended June 30, 2021

 

 

 

Number of Common

Shares (in thousands)

 

 

Common Stock

 

 

Additional Paid in

Capital

 

 

Accumulated Other

Comprehensive

(Loss) Income

 

 

Retained Earnings

 

 

Total Shareholders’

Equity

 

Balance at April 1, 2021

 

 

81,191

 

 

$

301,092

 

 

$

9,353

 

 

$

7,966

 

 

$

28,476

 

 

$

346,887

 

Shares issued on exercise of warrants

 

 

143

 

 

 

1,307

 

 

 

(475

)

 

 

 

 

 

 

 

 

832

 

Shares issued on exercise of stock options

 

 

58

 

 

 

98

 

 

 

(37

)

 

 

 

 

 

 

 

 

61

 

Share re-purchases

 

 

(428

)

 

 

 

 

 

(3,980

)

 

 

 

 

 

 

 

 

(3,980

)

Share-based compensation

 

 

 

 

 

 

 

 

1,887

 

 

 

 

 

 

 

 

 

1,887

 

Cumulative translation adjustment

 

 

 

 

 

 

 

 

 

 

 

2,366

 

 

 

 

 

 

2,366

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,517

)

 

 

(4,517

)

Balance at June 30, 2021

 

 

80,964

 

 

$

302,497

 

 

$

6,748

 

 

$

10,332

 

 

$

23,959

 

 

$

343,536

 

 

 

 

Three Months Ended June 30, 2020

 

 

 

Number of Common

Shares (in thousands)

 

 

Common Stock

 

 

Additional paid in

capital

 

 

Accumulated Other

Comprehensive Loss

 

 

Retained Earnings

 

 

Total Shareholders’

Equity

 

Balance at April 1, 2020

 

 

56,250

 

 

$

105,656

 

 

$

4,880

 

 

$

(602

)

 

$

28,440

 

 

$

138,374

 

Shares issued in public offering, net of issuance costs

 

 

 

 

 

(29

)

 

 

 

 

 

 

 

 

 

 

 

(29

)

Shares issued on exercise of stock options

 

 

152

 

 

 

202

 

 

 

(80

)

 

 

 

 

 

 

 

 

 

 

122

 

Share-based compensation

 

 

 

 

 

 

 

 

328

 

 

 

 

 

 

 

 

 

328

 

Cumulative translation adjustment

 

 

 

 

 

 

 

 

 

 

 

55

 

 

 

 

 

 

55

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(119

)

 

 

(119

)

Balance at June 30, 2020

 

 

56,402

 

 

$

105,829

 

 

$

5,128

 

 

$

(547

)

 

$

28,321

 

 

$

138,731

 

 

 

 

Six Months Ended June 30, 2021

 

 

 

Number of

Common

Shares

 

 

Common

Stock

 

 

Additional

paid in

capital

 

 

Accumulated

Other

Comprehensive

Loss

 

 

Retained

Earnings

 

 

Total

Shareholders’

Equity

 

Balance at January 1, 2021

 

 

66,912

 

 

$

145,668

 

 

$

17,502

 

 

$

6,255

 

 

$

35,858

 

 

$

205,283

 

Shares issued in public offering, net of issuance costs

 

 

10,887

 

 

 

127,489

 

 

 

 

 

 

 

 

 

 

 

 

127,489

 

Warrants issued in public offering

 

 

3,188

 

 

 

29,050

 

 

 

(10,555

)

 

 

 

 

 

 

 

 

18,495

 

Shares issued on exercise of stock options

 

 

162

 

 

 

290

 

 

 

(104

)

 

 

 

 

 

 

 

 

186

 

Share re-purchases

 

 

(428

)

 

 

 

 

 

(3,980

)

 

 

 

 

 

 

 

 

(3,980

)

Share-based compensation

 

 

243

 

 

 

 

 

 

3,885

 

 

 

 

 

 

 

 

 

3,885

 

Cumulative translation adjustment

 

 

 

 

 

 

 

 

 

 

 

4,077

 

 

 

 

 

 

4,077

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,899

)

 

 

(11,899

)

Balance at June 30, 2021

 

 

80,964

 

 

$

302,497

 

 

$

6,748

 

 

$

10,332

 

 

$

23,959

 

 

$

343,536

 

 

 

 

Six Months Ended June 30, 2020

 

 

 

Number of

Common

Shares

 

 

Common

Stock

 

 

Additional paid

in capital

 

 

Accumulated Other

Comprehensive

(Loss) Income

 

 

Retained

Earnings

 

 

Total

Shareholders’

Equity

 

Balance at January 1, 2020

 

 

52,657

 

 

$

98,333

 

 

$

4,351

 

 

$

(475

)

 

$

24,250

 

 

$

126,459

 

Shares issued in public offering, net of issuance costs

 

 

3,593

 

 

 

7,294

 

 

 

 

 

 

 

 

 

 

 

 

7,294

 

Shares issued on exercise of stock options

 

 

152

 

 

 

202

 

 

 

(80

)

 

 

 

 

 

 

 

 

122

 

Share-based compensation

 

 

 

 

 

 

 

 

857

 

 

 

 

 

 

 

 

 

857

 

Cumulative translation adjustment

 

 

 

 

 

 

 

 

 

 

 

(72

)

 

 

 

 

 

(72

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,071

 

 

 

4,071

 

Balance at June 30, 2020

 

 

56,402

 

 

$

105,829

 

 

$

5,128

 

 

$

(547

)

 

$

28,321

 

 

$

138,731

 

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity.

4


 

 

Village Farms International, Inc.

Condensed Consolidated Interim Statements of Cash Flows

(In thousands of United States dollars)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Cash flows (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(11,899

)

 

$

4,071

 

Adjustments to reconcile net (loss) income to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

6,536

 

 

 

3,021

 

Amortization of deferred charges

 

 

166

 

 

 

38

 

Share of loss (income) from joint ventures

 

 

213

 

 

 

(3,579

)

Interest expense

 

 

1,339

 

 

 

974

 

Interest income

 

 

(49

)

 

 

(476

)

Interest paid on long-term debt

 

 

(1,909

)

 

 

(1,018

)

Unrealized foreign exchange gain/loss

 

 

161

 

 

 

 

Gain on settlement agreement

 

 

 

 

 

(4,681

)

Loss on disposal of assets

 

 

40

 

 

 

6

 

Non-cash lease expense

 

 

(254

)

 

 

(627

)

Interest paid on finance lease

 

 

(1

)

 

 

(2

)

Share-based compensation

 

 

3,885

 

 

 

857

 

Deferred income taxes

 

 

(3,199

)

 

 

(400

)

Changes in non-cash working capital items

 

 

(10,239

)

 

 

3,961

 

Net cash (used in) provided by operating activities

 

 

(15,210

)

 

 

2,145

 

Cash flows used in investing activities:

 

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(11,355

)

 

 

(452

)

Advances to joint ventures

 

 

(12

)

 

 

(125

)

Investment in joint ventures

 

 

 

 

 

(11,713

)

Investment in minority interests

 

 

(1,001

)

 

 

 

Net cash used in investing activities

 

 

(12,368

)

 

 

(12,290

)

Cash flows provided by financing activities:

 

 

 

 

 

 

 

 

Proceeds from borrowings

 

 

4,227

 

 

 

3,000

 

Repayments on borrowings

 

 

(6,026

)

 

 

(2,652

)

Proceeds from issuance of common stock and warrants

 

 

135,000

 

 

 

7,957

 

Issuance costs

 

 

(7,511

)

 

 

(663

)

Proceeds from exercise of stock options

 

 

186

 

 

 

122

 

Proceeds from exercise of warrants

 

 

18,495

 

 

 

 

Share re-purchases

 

 

(3,980

)

 

 

 

Payments on capital lease obligations

 

 

(310

)

 

 

(39

)

Payment of note payable related to acquisition

 

 

(15,498

)

 

 

 

Net cash provided by financing activities

 

 

124,583

 

 

 

7,725

 

Effect of exchange rate changes on cash and cash equivalents

 

 

502

 

 

 

(1

)

Net increase in cash and cash equivalents

 

 

97,507

 

 

 

(2,421

)

Cash and cash equivalents, beginning of period

 

 

25,679

 

 

 

11,989

 

Cash and cash equivalents, end of period

 

$

123,186

 

 

$

9,568

 

 

The accompanying notes are an integral part of these Condensed Consolidated Interim Statements of Cash Flows.

 

 

 

5


 

 

VILLAGE FARMS INTERNATIONAL, INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of United States dollars, except per share amounts, unless otherwise noted)

1

NATURE OF OPERATIONS

Village Farms International, Inc. (“VFF” and, together with its subsidiaries, the “Company”, “we”, “us”, or “our”) is incorporated under the Canada Business Corporations Act. VFF’s principal operating subsidiaries as of June 30, 2021 are Village Farms Canada Limited Partnership (“VFCLP”), Village Farms, L.P. (“VFLP”), VF Clean Energy, Inc. (“VFCE”), and Pure Sunfarms Corp. (“Pure Sunfarms” or “PSF”). The address of the registered office of VFF is 4700-80th Street, Delta, British Columbia, Canada, V4K 3N3. VFF also owns a 65% equity interest in Village Fields Hemp USA LLC (“VF Hemp”), which is recorded as an equity investment (note 9).  

The Company’s shares are listed on both the Toronto Stock Exchange and Nasdaq Capital Market (“Nasdaq”), in each case, under the symbol “VFF”.

The Company owns and operates sophisticated, highly intensive agricultural greenhouse facilities in British Columbia and Texas, where it produces, markets and sells premium-quality tomatoes, bell peppers and cucumbers. The Company, through Pure Sunfarms, is a licensed producer and supplier of cannabis products to be sold to other licensed providers and provincial governments across Canada and internationally.  The Company, through VFCE, owns and operates a 7.0 MW power plant that generates electricity.

2

BASIS OF PRESENTATION

The accompanying unaudited Condensed Consolidated Interim Financial Statements for the three and six months ended June 30, 2021 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature considered necessary for fair presentation have been included. Operating results for the three and six months ended June 30, 2021 are subject to seasonal variations and accordingly are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. For further information, refer to the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal years ended December 31, 2020 and 2019.

 

3

NEW ACCOUNTING PRONOUNCEMENTS

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to debt instruments, derivatives, and other contracts that reference LIBOR or other reference rates expected to be discontinued as a result of reference rate reform. This guidance is optional and may be elected through December 31, 2022 using a prospective application on all eligible contract modifications. The Company has a line of credit that incorporates LIBOR as a referenced interest rate. It is difficult to predict what effect, if any, the phase-out of LIBOR and the use of alternative benchmarks may have on the Company’s business or on the overall financial markets. The Company has not adopted any of the optional expedients or exceptions through June 30, 2021 but will continue to evaluate the possible adoption of any such expedients or exceptions.

 

6


VILLAGE FARMS INTERNATIONAL, INC.

Notes to Condensed Consolidated Interim Financial Statements

(In thousands of United States dollars, except per share amounts, unless otherwise noted)

 

 

4

INVENTORIES

Inventories consisted of the following as of:

 

Classification

 

June 30, 2021

 

 

December 31, 2020

 

Cannabis:

 

 

 

 

 

 

 

 

Available for sale - flower and trim

 

$

14,347

 

 

$

12,720

 

Distilled oil

 

 

15,530

 

 

 

13,511

 

Capitalized production costs

 

 

978

 

 

 

3,438

 

Other

 

 

4,342

 

 

 

2,552

 

Produce and Energy:

 

 

 

 

 

 

 

 

Crop inventory

 

 

11,909

 

 

 

13,441

 

Purchased produce inventory

 

 

1,371

 

 

 

810

 

Spare parts inventory

 

 

130

 

 

 

127

 

Inventory

 

$

48,607

 

 

$

46,599

 

 

5

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

 

Classification

 

June 30, 2021

 

 

December 31, 2020

 

Land

 

$

10,650

 

 

$

10,447

 

Leasehold and land improvements

 

 

4,164

 

 

 

4,154

 

Buildings

 

 

144,389

 

 

 

142,060

 

Machinery and equipment

 

 

71,130

 

 

 

69,390

 

Construction in progress

 

 

64,262

 

 

 

52,960

 

Less: Accumulated depreciation

 

 

(98,359

)

 

 

(91,991

)

Property, plant and equipment, net

 

$

196,236

 

 

$

187,020

 

 

 

6