MONTREAL — Cannara Biotech Inc., a vertically integrated producer of cannabis and derivative product offerings with two facilities based in Québec spanning over 1,650,000 sq. ft., revealed its financial and operating results for the three and six-month periods ended February 28, 2025.
The full set of interim condensed consolidated financial statements for the three and six-month periods ended February 28, 2025, and the accompanying Management’s Discussion and Analysis can be accessed by visiting the Company’s website or by accessing the Company’s SEDAR+ profile.
“Q2 2025 marks another record quarter for Cannara, driven by the continued national expansion of our premium brands, strong consumer loyalty, and disciplined execution,” said Zohar Krivorot, President & Chief Executive Officer of Cannara. “Net revenues grew by 35% year-over-year to $26.6 million, supported by increased demand across all markets. Our estimated national retail market share reached 3.9%, with notable gains in Québec, Ontario, and Alberta—reinforcing our competitive strength across Canada.”
“Operationally, we also achieved a major cultivation milestone with our 11th grow zone activated in April and our 12th coming online in May, expanding active canopy to over 300,000 sq. ft. These additions position us to support an annual production capacity of up to 40,000 kg. With over 20 product launches planned for 2025, and with our home province of Quebec implementing vape regulations in November, we remain focused on scaling into our unmet demand responsibly while delivering exceptional value to consumers and shareholders alike,” concluded Mr. Krivorot.
“Our second quarter results clearly demonstrate the strength of Cannara’s financial foundation and our ability to scale profitably,” said Nicholas Sosiak, Chief Financial Officer of Cannara. “We delivered $3.3 million in net income, a $6.7 million improvement year-over-year, while more than doubling our Adjusted EBITDA to $7.1 million. This marks our 16th consecutive quarter of positive Adjusted EBITDA, a testament to the consistency and resilience of our operating model. Gross profit before fair value adjustment for the second quarter of 2025 increased 52% to $10.8 million, and gross margins improved to 41%, reflecting the benefits of higher yields, enhanced scale, and disciplined cost control, although, operating cash flow for the quarter was impacted by the early remittance of excise taxes and increased investment in packaging materials to support sales growth in the second half of the year.”
“Importantly, we achieved these results while continuing to invest in our brands and national expansion strategy, which we are able to execute at very low capital expenditures, presenting incredibly high return on investment opportunity within our base operations,” concluded Mr. Sosiak.
Cannara Biotech’s CFO, Nicholas Sosiak, will host an earnings webcast on Tuesday, April 29, 2025, at 11:00 a.m. ET, consisting of prepared remarks followed by a question-and-answer session.
Q2 2025 FINANCIAL HIGHLIGHTS
Q2 2025 vs Q2 2024 Comparable Period
- Gross cannabis revenues before excise taxes increased by 40% to $36.8 million, reflecting strong demand across existing and new markets and the successful launch of new products and genetics;
- Net revenues rose 35% to $26.6 million, driven by national brand expansion and higher sales volumes;
- Gross profit before fair value adjustments grew 52% to $10.8 million, supported by the activation of the 10th grow zone in 2024, improved yields from newly optimized genetics, and reduced production costs;
- Gross margin before fair value adjustments improved to 41%, up from 36%, reflecting enhanced cultivation efficiency and scale;
- Operating income reached $5.9 million, compared to a $2.0 million operating loss in Q2 2024, driven by increased sales, lower cost of production, and operational leverage;
- Net income was $3.3 million, compared to a net loss of $3.4 million, and includes a $1.4 million deferred tax expense, signaling a shift to sustained taxable profitability;
- Adjusted EBITDA more than doubled to $7.1 million, up 102% from $3.5 million, marking Cannara’s sixteenth consecutive quarter of positive Adjusted EBITDA;
- The Company generated negative operating cash flow of $2.6 million in Q2 2025, compared to positive $2.4 million in Q1 2025. The decline reflects strategic investments in raw material packaging to secure bulk pricing and reduce stock-out risk, along with advance payments of excise tax obligations;
- Free cash flow for Q2 2025 fell by $5.3 million, from $1.3 million in Q2 2024 to negative $4.0 million in Q2 2025;
- Earnings per share were $0.04, compared to a loss per share of $0.04 in the prior year period.
Q2 2025 YTD vs Q2 2024 YTD Comparable Year-To-Date
- Gross cannabis revenues before excise taxes rose 36% to $71.7 million, up from $52.6 million, driven by deeper market penetration, new market entries, and expanded product offerings including new genetics and SKUs;
- Net revenues increased 32% to $51.7 million, compared to $39.2 million in the prior year period;
- Gross profit before fair value adjustments grew 37% to $20.6 million, supported by expanded production capacity from the 10th grow zone and improved cultivation yields that reduced cost per gram;
- Gross margin before fair value adjustments improved to 40%, up from 38%, reflecting efficiency gains in cultivation and processing;
- Operating income rose to $10.1 million, up from $1.5 million, reflecting stronger sales, better cost control, and operational leverage;
- Net income was $5.6 million, compared to a net loss of $1.3 million, and includes a $2.1 million deferred tax expense tied to the Company’s expectation of continued taxable profitability;
- Adjusted EBITDA increased by 51% to $13.1 million, up from $8.7 million, marking Cannara’s sixteenth straight quarter of positive Adjusted EBITDA;
- Operating cash flow totaled $3.3 million, slightly above $3.2 million in the same period of last year;
- Free cash flow improved by $1.3 million, turning positive at $0.6 million, up from negative $0.7 million in the prior year, reflecting stronger earnings and disciplined capital deployment;
- Earnings per share were $0.06, compared to a loss per share of $0.01 in the prior year period.
Q2 2025 vs Q1 2025 Quarter over Quarter (“QoQ”)
- Gross cannabis revenues before excise taxes increased by 5% to $36.8 million, up from $34.9 million, driven by strong organic growth in Québec and across other provinces, supported by focused distribution and wholesale expansion;
- Net revenues rose by 6% to $26.6 million, compared to $25.1 million, reflecting continued market share gains across key provinces;
- Gross profit before fair value adjustments increased by 11% to $10.8 million, up from $9.8 million, due to higher sales volumes and improved cost efficiencies from economies of scale;
- Gross margin before fair value adjustments improved to 41%, up from 39%, supported by higher cultivation yields and ongoing enhancements in cultivation efficiency and quality;
- Operating income increased to $5.9 million, up from $4.2 million, as revenue growth outpaced operating expenses, which remained stable quarter over quarter;
- Net income grew by 44% to $3.3 million, up from $2.3 million, supported by increased sales and margin expansion;
- Adjusted EBITDA rose 18% to $7.1 million, compared to $6.0 million, marking the Company’s sixteenth consecutive quarter of positive Adjusted EBITDA;
- Operating cash flow declined from $5.8 million to negative $2.6 million, due to advance excise tax payments and strategic raw material purchases to support long-term supply stability;
- Free cash flow was negative $4.0 million, compared to positive $4.6 million, reflecting an $8.6 million swing tied to planned inventory investments and proactive excise tax positioning.
Q2 2025 OPERATIONAL HIGHLIGHTS
OPERATIONAL
During the quarter, the Company maintained a strong focus on execution, scaling its operations and supply chain to support continued growth in sales and market share across Canada. As part of its 2025 expansion plan, Cannara advanced the activation of two additional grow rooms at its Valleyfield facility. These rooms are scheduled to come online in April and May 2025, adding 6,000 kilograms of annual production capacity and bringing the Company’s total output to nearly 40,000 kilograms per year. With these additions, Cannara has achieved its cultivation expansion objective for fiscal 2025. The Company expects its momentum to continue throughout the year as it drives forward its national sales and marketing strategies.
Innovating for Market Leadership
By growing successful product lines and strengthening its position within priority categories, Cannara is effectively capturing additional market share and reinforcing its leadership through disciplined category management and targeted innovation.
For Q3 and Q4 2025, the Company has secured a combined 16 new product listings to launch in Ontario and Quebec including three new genetics Meat Pie, Waygu Delight, and Porto Leche.
Following the SQDC’s recent announcement to open the vape category in Quebec starting November 2025, the Company has been proactively developing innovative vape formulations. These offerings are designed to align with Cannara’s reputation for quality while adhering to strict provincial regulations, including the 30% THC limit. Leveraging its leadership in live resin vape sales across the rest of Canada, Cannara is well-positioned to capture market share and lead vape category growth in Quebec upon launch.
February 2025 – Amendment of Olymbec Convertible Debenture
As previously disclosed on February 24, 2025, the convertible debenture originally issued on June 21, 2021, and most recently amended on January 30, 2024, was further amended by Olymbec Investments Inc., subject to approval by the TSX Venture Exchange (the “TSXV”). At the request of the TSXV, the Company is providing a consolidated summary of all material amendments to the Olymbec Convertible Debenture to date.
Original Issuance – June 21, 2021. The Company issued a secured convertible debenture to Olymbec Investments Inc. in the principal amount of $5.7 million, maturing on June 21, 2024, with an interest rate of 4% per annum, payable in accordance with the terms of the original agreement.
First Amendment – August 31, 2023. The maturity date was extended to January 31, 2025 and the interest rate was increased from 4% per annum to 9.25% per annum. Olymbec was granted the right to demand a partial repayment of up to $1 million on the original maturity date, inclusive of any repayments already made toward principal.
Second Amendment – January 30, 2024. The maturity date was further extended to September 30, 2025. The interest rate remained at 9.25% per annum until January 31, 2025, and increased to 10.75% per annum thereafter for the remainder of the extended term. Olymbec retained the right to demand a partial repayment of up to $1 million on the first extended maturity date (January 31, 2025), inclusive of any previous principal repayments. This amendment also removed the repayment right granted in the First Amendment.
Key changes under the Third Convertible Debenture Amendment include, as previously disclosed:
Term Extension: The maturity date of the Olymbec Convertible Debenture has been extended to March 31, 2028.
Right to Demand Partial Repayment: Olymbec shall have the right to demand a first partial repayment of up to $1 million of the Olymbec Convertible Debenture subject to BMO’s approval. Olymbec shall also have the right to demand a second partial repayment on September 30, 2025, of an amount equal to half of the principal amount then outstanding.
Javaa Convertible Debenture: Pursuant to an agreement signed with Javaa Private Equity Inc., concurrently with the execution of the Third Convertible Debenture Amendment, a new unsecured convertible debenture is anticipated be issued on or about September 29, 2025, by the Company to Javaa, in the principal amount equal to the amount required to satisfy Olymbec’s demand for the second partial repayment pursuant to the Third Convertible Debenture Amendment. The Javaa Convertible Debenture will have an initial maturity date of March 31, 2028, at the same interest rate as the Olymbec Convertible Debenture.
Interest: As previously disclosed in Cannara’s management discussion & analysis for the three-month period ended November 30, 2024, the Olymbec Convertible Debenture bears an interest rate of 10.75% per annum, compounded semi-annually effective January 31, 2025. Interest incurred prior to September 30, 2025, will be due and payable in cash, or in common shares, or in a combination thereof, at a conversion price of $1.80 per share, at the choice of the Company, subject to the approval of the TSXV. Following September 30, 2025, interest shall be paid quarterly in cash at an interest rate of 10.75% per annum.
Javaa is owned and controlled by Zohar Krivorot, the Chairman of the Board and the Chief Executive Officer of the Company. Accordingly, the future issuance of the Javaa Convertible Debenture may be considered a “related party transaction” pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions. The Company intends to rely on exemptions from the valuation and the minority approval requirements of MI 61-101 provided for in subsections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, as the future Javaa Convertible Debenture is not anticipated to represent additional consideration of a market value exceeding more than 25% of the Company’s market capitalization as determined in accordance with MI 61-101.
Derek Stern, a non-independent director of the Company, holds a significant interest in Olymbec, the holder of the convertible debenture. Accordingly, the Convertible Debenture Amendments are considered a “related party transaction” pursuant to MI 61-101. The Company intends to rely on exemptions from the valuation and the minority approval requirements of MI 61-101 provided for in subsections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, as the Convertible Debenture Amendments do not represent additional consideration of a market value exceeding more than 25% of the Company’s market capitalization as determined in accordance with MI 61-101. The Company previously relied on the same exemptions for the first amendment on August 31, 2023, and second amendment on January 30, 2024.
CAPITAL TRANSACTIONS AND OTHER EVENTS
Capital Transactions
During Q2 2025, the Company issued 625,000 common shares for RSUs that vested.
Subsequent to quarter-end, the Company granted 100,000 stock options at an exercise price of $1.25 and 84,400 stock options at an exercise price of $1.80 to employees and consultant subject to certain vesting and conditions in accordance with the Company’s employee share option plan. The Company also granted 22,500 RSUs without performance conditions and exercisable for no consideration.
About Cannara
Cannara Biotech Inc. (TSXV: LOVE) (OTCQB: LOVFF) (FRA: 8CB0), is a vertically integrated producer of affordable premium-grade cannabis and cannabis-derivative products for the Canadian markets. Cannara owns two mega facilities based in Québec spanning over 1,650,000 sq. ft., providing the Company with 100,000 kg of potential annualized cultivation output.
