Village Farms International (VFF) risk factors, FY2024 10-K

Other

1. 01We will need additional financing to maintain and further develop our business
2. 02A rise in interest rates would increase our debt service costs and negatively impact our cash flows, as well as add additional burden on our ability to meet our bank covenants
3. 03The ability of our Canadian cannabis companies to sell cannabis may be restricted by the Canadian Free Trade Agreement
4. 04We may be unable to regain profitability or achieve future growth
5. 05We are dependent on the success of our Canadian Cannabis business which has a limited operating history in the cannabis industry
6. 06Our success depends on our ability to attract and retain customers. There are many factors which could impact our ability to attract and retain customers, including but not limited to the ability to continually grow and distribute desirable produce and cannabis
7. 07We are subject to restrictive covenants under our Credit Facilities
8. 08We will need additional financing to further develop our business
9. 09We have identified material weaknesses in our internal controls over financial reporting. If we fail to remediate the deficiencies in a timely manner, or at all, our shareholders could lose confidence in our financial reporting, which would harm our business and could negatively impact the price of our Common Shares
10. 10We face risks associated with the use of debt, including refinancing risk
11. 11Our operations require certain key inputs, including raw materials and energy, and we are subject to their costs, tariffs, and potential supply disruptions
12. 12We may be unable to manage our growth successfully
13. 13risks as we grow internationally. See “—Our international expansion, including through Leli, may increase our operational risks.” below
14. 14Our operations are subject to natural catastrophes
15. 15We may suffer from uninsured and underinsured losses
16. 16There can be no assurance that our previous, current or potential future acquisitions, joint ventures, investments or expansions of scope of existing relationships will have a beneficial impact on our business, financial condition and results of operations
17. 17There can be no assurance that future mergers, acquisitions, divestitures, alliances, joint ventures, investments or other strategic transactions will be consummated or have a positive impact on our business, prospects, financial condition, or results of operations
18. 18Our business and operating results rely on effective quality control
19. 19Our products may be subject to recalls
20. 20Our international expansion, including through Leli, may increase our operational risks
21. 21Our competitive position may be affected by technological advances
22. 22We face risks related to intellectual property
23. 23We may be negatively affected by the use of third-party transportation services for our products
24. 24We face risks inherent in an agricultural business
25. 25The legal cannabis and hemp-derived CBD industries are relatively new, and we cannot predict whether they will continue to grow as anticipated
26. 26Our Canadian Cannabis business has been negatively affected by and may continue to be impacted by cannabis supply and demand fluctuations
27. 27We may be negatively affected by unfavorable publicity, adverse scientific findings and/or negative consumer perception of cannabis
28. 28could arise even if the adverse effects associated with cannabis or cannabinoid products resulted from consumers’ failure to use such products legally, appropriately, or as directed
29. 29We face significant competition in the cannabis industry
30. 30Increasing legalization of cannabis and rapid growth and consolidation in the cannabis and CBD industries may further intensify competition
31. 31Third parties with whom we contract may be concerned about their reputational risks in respect of cannabis
32. 32Our Canadian and U.S. Cannabis businesses are subject to cannabis-related security breaches, which could result in significant losses
33. 33Our revenues may be impacted by fluctuating demand for our products
34. 34We may be negatively affected by the customer and vendor credit risk
35. 35We face risks associated with cross-border trade and the potential for tariffs and other trade restrictions
36. 36Retail consolidation in the markets in which we participate may negatively affect our operations and profitability
37. 37We cannot predict when, if ever, cannabis will be federally legal in the United States and any rescheduling of U.S. Schedule I cannabis to Schedule III would have an uncertain impact on our business
38. 38hemp industry, this could cause our customers to lose confidence in our products, which could have a material and adverse effect on our business, financial condition and results of operations
39. 39Our cannabis operations require licenses to grow, store and sell cannabis
40. 40Our cannabis operations in Canada are subject to laws, regulations and guidelines related to the cannabis industry
41. 41business, results of operations and financial condition. Furthermore, governmental authorities may change their administration, application, or enforcement procedures at any time, which may adversely impact our ongoing costs relating to regulatory compliance
42. 42Our cannabis operations in Canada are subject to marketing restrictions under the Cannabis Act
43. 43Our cannabis operations in Canada are subject to Canadian supplier standards
44. 44Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business, financial condition, and results of operations
45. 45Restricted access to banking, including anti-money laundering laws and regulations may adversely impact our business
46. 46Uncertainty in the laws, regulations and guidelines governing cannabis, U.S. hemp or CBD derived products has adversely impacted our business, and may continue to do so in the future
47. 47Our U.S. Cannabis business is subject to FDA and USDA regulation
48. 48CBD is an active ingredient in drug products that have been approved or authorized for investigation by the FDA and therefore, under FDA’s current position, cannot be used in dietary supplements or as a food additive
49. 49We may be subject to product liability claims
50. 50Our greenhouse produce business is subject to extensive regulations
51. 51We are subject to environmental, health and safety, and other governmental regulations and we may incur material expenses in order to comply with these regulations
52. 52We may experience environmental, health and safety incidents
53. 53The controversy surrounding vaporizers and vaporizer products may materially and adversely affect the market for vaporizer products and expose us to litigation and additional regulation
54. 54Future research may lead to findings that vaporizers, electronic cigarettes and related products are not safe for their intended use
55. 55Our marketing programs use customer information and other personal and confidential information as well as digital communications, which may subject us to liability if we misuse this information
56. 56proceeding or action could hurt our reputation, force us to spend significant amounts to defend our practices, distract our management or otherwise have an adverse effect on our business
57. 57Our operations are dependent on labor availability which includes accessing government sponsored foreign labor programs in both the United States and Canada
58. 58In addition, we are situated in the Texas “oil and gas patch” and finding and retaining farm workers at affordable rates is an ongoing challenge. Any shortage of such labor could restrict our ability to operate our greenhouses profitably, or at all
59. 59We rely on third-party distributors
60. 60Our operations depend on our key executives
61. 61VF Canada GP and VF Canada LP may be deemed to maintain a U.S. permanent establishment for tax purposes
62. 62Changes in tax treatment of companies engaged in e-commerce could materially affect our financial condition and results of operations
63. 63We may be exposed to transfer pricing risks
64. 64Our market price of our Common Shares has been and is likely to continue to be volatile and an investment in our Common Shares could suffer a decline in value
65. 65Future issuances or sales of our Common Shares could cause our share price to fall and may dilute your common shares
66. 66Our Common Shares may be delisted from the Nasdaq Capital Market if we do not regain compliance with the minimum bid price requirements by April 16, 2025
67. 67Certain Canadian laws could delay or deter a change of control
68. 68The exercise of all or any number of outstanding stock options, the award of any additional options, restricted stock units or other stock-based awards or any issuance of shares to raise funds or acquire a business may dilute your Common Shares
69. 69We do not expect to pay dividends for the foreseeable future
70. 70We face risks related to cyber security attacks and other incidents
71. 71Inflation may continue to rise and increase our operating costs
72. 72We expect that the cost of our debt could increase as a result of higher interest rates
73. 73The effect of sanctions and an escalation of the conflict in Ukraine may further disrupt supply chains and adversely impact our business
74. 74It may be difficult for non-Canadian investors to obtain and enforce judgments against us because of our Canadian incorporation and presence